<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
INFONOW CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
INFONOW CORPORATION
1875 Lawrence Street, Suite 1100
Denver, CO 80202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 1997
To Our Stockholders:
The Annual Meeting of Stockholders of InfoNow Corporation, a Delaware
corporation (the "Company"), will be held at 3:00 p.m. MDT, on April 25, 1997,
at the InfoNow corporate offices, 1875 Lawrence Street, Suite 1100, Denver,
Colorado, for the following purposes, all of which are more completely set forth
in the accompanying Proxy Statement.
1. To elect four (4) director to serve until the next Annual Meeting of
Stockholders or until their respective successors are elected and
qualified.
2. To amend the Company's 1990 Stock Option Plan to (a) allow the
Company to grant nonstatutory stock options to non-employee directors
of the Company and (b) increase the number of shares of Common Stock
available for purchase from 1,000,000 to up to 1,700,000 shares.
3. To consider and vote upon a proposal to ratify the appointment of Hein
+ Associates LLP as the Company's independent public accountants for
the fiscal year ending December 31, 1997.
4. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
The four director nominees receiving the highest number of votes in favor
of election will be elected. In order for the other proposals listed above to
be approved, each proposal must be approved by the affirmative vote of holders
of a majority of shares, voting as a group.
All Stockholders are cordially invited to attend the meeting, although only
Stockholders of record at the close of business on March 14, 1997 will be
entitled to notice of, and to vote at, the meeting or any and all adjournments
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Kevin D. Andrew
Secretary of the Corporation
April 3, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. YOUR
PROMPT RETURN OF THE PROXY WILL HELP TO ASSURE A QUORUM AT THE MEETING AND AVOID
ADDITIONAL COMPANY EXPENSE FOR FURTHER SOLICITATION. YOUR PROXY MAY BE REVOKED
AT ANY TIME BEFORE IT IS VOTED.
<PAGE>
INFONOW CORPORATION
1875 Lawrence Street, Suite 1100
Denver, CO 80202
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1997
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of InfoNow Corporation, a Delaware corporation
("InfoNow" or the "Company"), for use at the Annual Meeting of Stockholders of
the Company to be held on April 25, 1997 at 3:00 p.m. MDT, at the Company's
offices, 1875 Lawrence Street, Suite 1100, Denver, Colorado, and at any and all
adjournments of such meeting.
If the enclosed Proxy Card is properly executed and returned in time to be
voted at the meeting, the shares of Common Stock represented will be voted in
accordance with the instructions contained therein. Executed proxies that
contain no instructions will be voted FOR each of the proposals described
herein. Abstentions (proxies not returned) and broker non-votes will be treated
as Stockholders absent from the Annual Meeting. The proxies will be tabulated
and votes counted by American Securities Transfer & Trust, Inc. It is
anticipated that this Proxy Statement and the accompanying Proxy Card will be
mailed to the Company's Stockholders on or about April 3, 1997.
STOCKHOLDERS WHO EXECUTE PROXIES FOR THE ANNUAL MEETING MAY REVOKE THEIR
PROXIES AT ANY TIME PRIOR TO THEIR EXERCISE BY DELIVERING WRITTEN NOTICE OF
REVOCATION TO THE COMPANY, BY DELIVERING A DULY EXECUTED PROXY CARD BEARING A
LATER DATE, OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
The costs of the meeting, including the costs of preparing and mailing the
Proxy Statement and Proxy, will be borne by the Company. Additionally, the
Company may use the services of its Directors, officers and employees to solicit
proxies, personally or by telephone, but at no additional salary or
compensation. The Company will also request banks, brokers, and others who hold
shares of Common Stock of the Company in nominee names to distribute proxy
soliciting materials to beneficial owners, and will reimburse such banks and
brokers for reasonable out-of-pocket expenses which they may incur in so doing.
OUTSTANDING CAPITAL STOCK
The record date for Stockholders entitled to vote at the Annual Meeting is
March 14, 1997. At the close of business on that day, there were 5,515,872
shares of no par value Common Stock (the "Common Stock") of the Company
outstanding and entitled to vote at the meeting.
<PAGE>
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of the
outstanding Common Stock is necessary to constitute a quorum for each matter
voted upon at the Annual Meeting. In deciding all questions, a holder of Common
Stock is entitled to one vote, in person or by proxy, for each share held in his
or her name on the record date. Abstentions and broker non-votes, if any, will
not be included in vote totals and, as such, will have no effect on any
proposal.
ACTION TO BE TAKEN AT THE MEETING
The accompanying proxy, unless the Stockholder otherwise specifies in the
proxy, will be voted (i) FOR the election of each of the four nominees named
herein for the office of director, (ii) FOR approval of an amendment to the
InfoNow Corporation 1990 Stock Option Plan to (a) allow the Company to grant
nonstatutory stock options to non-employee directors of the Company and (b)
increase the number of shares of common stock reserved for issuance thereunder
from 1,000,000 to up to 1,700,000, (iii) FOR the selection of Hein + Associates
LLP, independent public accountants, as the auditors of the Company for the
fiscal year ending December 31, 1997; and (iv) at the discretion of the proxy
holders, on any other matter that may properly come before the meeting or any
adjournment thereof.
Where Stockholders have appropriately specified how their proxies are to be
voted, they will be voted accordingly. If any other matter of business is
brought before the meeting, the proxy holders may vote the proxies at their
discretion. The directors do not know of any such other matter or business.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes set forth as of March 19, 1997, the number of
shares of the Company's outstanding Common Stock beneficially owned by (i) the
executive officers of the Company (ii) each director and nominee for director
of the Company, (iii) all executive officers and directors of the Company as a
group and (iv) each person or group of persons known by the Company to
beneficially own more than five percent (5%) of the outstanding Common Stock.
All information is taken from or based upon ownership filings made by such
persons with the Commission or upon information provided by such persons to the
Company.
<TABLE>
SHARES
AMOUNT AND BENEFICIALLY OWNED
NATURE OF WHICH MAY BE
NAME AND ADDRESS OF BENEFICIAL PERCENT OF CLASS ACQUIRED WITHIN
BENEFICIAL OWNER OWNERSHIP BENEFICIALLY OWNED(1) 60 DAYS(7)
- ---------------- --------- ------------------ -------
<S> <C> <C> <C>
OFFICERS AND DIRECTORS
Donald E. Cohen 541,050 9.7% 48,716
1875 Lawrence, Suite 1100
Denver, CO 80202
Michael W. Johnson 511,562 9.0% 198,126
1875 Lawrence, Suite 1100
Denver, CO 80202
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<PAGE>
Nahum Rand 341,910(5) 6.1% 133,666
2200 Sacramento St #105
San Francisco, CA 94115
Gene R. Copeland 156,184(4) 2.8% 106,184
1875 Lawrence, Suite 1100
Denver, CO 80202
W. Brad Browning 139,444 2.5% 72,777
1875 Lawrence, Suite 1100
Denver, CO 80202
Kevin D Andrew 107,834 1.9% 90,056
1875 Lawrence, Suite 1100
Denver, CO 80202
All Officers and Directors 1,797,984 29.2% 649,525
as a Group ( 6 persons)
PRINCIPAL STOCKHOLDERS:
Dieter Heidrich 594,944(2)(3) 10.6% 102,695
1113 Spruce Street
Boulder, CO 80302
Daryl Yurek 594,944(2)(3) 10.6% 102,695
1113 Spruce Street
Boulder, CO 80302
Robertson Stephens 535,715 9.4% 178,572
Orphan Fund
555 California Street, Suite 2600
San Francisco, CA 94104
Robertson Stephens 428,573 7.6% 142,858
Diversified Growth Fund
555 California Street, Suite 2600
San Francisco, CA 94104
Robertson Stephens 321,429 5.7% 107,143
Global Low-Price Fund
555 California Street, Suite 2600
San Francisco, CA 94104
</TABLE>
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(1) Beneficial ownership is determined in accordance with the rules of the
Commission, and includes generally voting power and/or investment power
with respect to securities. Shares of Common Stock subject to options or
warrants which are currently exercisable or exercisable within 60 days are
deemed outstanding for computing the percentage of the person holding such
options or warrants but are not deemed outstanding for computing the
percentage of any other person. Except as indicated by footnote, the
Company understands that the persons named in the table above have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
(2) Includes 76,923 shares of common stock which is owned by Opus Capital, Inc.
Messrs. Yurek and Heidrich are each 50% owners and Managing General
Directors of Opus Capital, Inc. which provides financial advisory services
to the Company. Messrs. Yurek and Heidrich disclaim beneficial ownership
of these shares.
(3) Includes 142,857 shares of common stock and warrants to purchase 71,429
shares of common stock held by Opus Capital Fund, LLC, which is managed by
Opus Capital, Inc.
(4) Includes 147,530 warrants held by Copeland Consulting Group, Inc. of which
Mr. Copeland and his spouse are sole owners of 100% of the outstanding
shares.
(5) Includes 208,244 shares of common stock and warrants to purchase 128,000
shares of common stock held by the Rand Family Trust of which Mr. Rand is a
trustee and beneficiary.
(6) Represents the number of common shares set forth in column 1 that can be
obtained through the exercise of warrants or options that are currently
exercisable or that are exercisable within the next 60 days from March 19,
1997.
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<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
NOMINEES
Pursuant to the Bylaws, the authorized number of directors of the Company
has been set at five. The Board of Directors has nominated four persons to be
directors, with one vacancy, and four directors are to be elected at the
meeting. Each nominee will be elected to hold office until the next annual
meeting of Stockholders or until his successor is elected and qualified. Proxy
holders will not be able to vote the proxies held by them for more than four
persons. If a quorum is present, the four nominees having the highest number of
votes cast in favor of their election will be elected. Should any nominee
become unable or unwilling to accept nomination or election, the proxy holders
may vote the proxies for the election, in his stead, of any other person the
Board of Directors may recommend. Each nominee has expressed his intention to
serve the entire term for which election is sought.
THE BOARD OF DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE FOR EACH NOMINEE
FOR THE BOARD OF DIRECTORS.
The Board of Directors' nominees for the office of director are as follows:
Year First
Became a
Name Age Director
- ---- --- ----------
Michael W. Johnson 35 1995
Donald E. Cohen 43 1995
Gene R. Copeland 54 1994
(A)(C)
Nahum Rand 60 1991
(A)(C)
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(A) Member of the Audit Committee
(C) Member of the Compensation Committee
The principal occupation and business experience of each director is set
forth below:
MICHAEL W. JOHNSON has been Chief Executive Officer and President and a director
of the Company since October 1995. From 1990 to October 1995, Mr. Johnson was a
consultant with McKinsey & Company, an international management consulting firm,
where he served leading technology companies in the United States and Europe on
issues of growth, strategy, operations improvement, and mergers and
acquisitions. Mr. Johnson received a Bachelor of Science degree in Applied and
Engineering Physics, a Bachelors of Arts degree in English from Cornell
University, a DIPLOME in French Literature from Universite de Paris, and a
Masters of Business Administration degree from Stanford University Graduate
School of Business.
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<PAGE>
GENE R. COPELAND has been a director of the Company since 1994. From October
1994 to May 1995, Mr. Copeland served as interim President and Chief
Executive Officer of the Company. Since 1994 Mr. Copeland has provided
consulting services to clients of Opus Capital, Inc., a financial advisory
firm to the Company. Since September 1996, Mr. Copeland has been Managing
Director of Transition Partners, a financial advisory firm. From 1989 to the
present, Mr. Copeland has served as President of Copeland Consulting Group,
Inc. which specializes in business turnarounds, leveraged buyout
transactions, and on-site operations management. Through his work with
Copeland Consulting Group, Inc., Mr. Copeland has held senior management
positions with Translogic Corporation, Southwestern General Corporation,
Building Technologies Industries, Inc., and Amrion Corporation.
DONALD E. COHEN has been a director of the Company since May 1995 and has served
as the Company's Creative Director and Vice Chairman since October 1995. Mr.
Cohen served as President and Chief Executive Officer of the Company from May
1995 until October 1995. Mr. Cohen founded Cimarron in 1978, serving as its
President and Chief Executive Officer from Cimarron's inception until May 1995
when it became a subsidiary of the Company. During the time Mr. Cohen served as
President of Cimarron, it has won several awards including an EMMY, TELLY, DAF
Alfie, and B/PAA Gold Spike. Mr. Cohen earned a Bachelor in Arts degree in Mass
Communications from the University of Denver.
NAHUM RAND has been a director since April 1991 and was elected Chairman of the
Board in October 1994. He served as a consultant to the Company from April 1991
through December 1992. From November 1990 to the present, he has served as the
chairman and chief executive officer of Regions, Inc., an investment company
which he founded.
There are presently four (4) directors serving on the Company's Board of
Directors. Directors are elected annually to serve until the next annual
meeting of stockholders or until their successors are duly elected.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee and a Compensation Committee. The
Audit Committee is responsible for (i) reviewing the scope of, and the fees for,
the annual audit, (ii) reviewing with the independent auditors the corporate
accounting practices and policies, (iii) reviewing with the independent auditors
their final report, and (iv) being available to the independent auditors during
the year for consultation purposes. The Audit Committee met one time in the
fiscal year ended December 31, 1996. The Compensation Committee determines the
compensation of the officers of the Company and performs other similar
functions. The Compensation Committee met one time in the fiscal year ended
December 31, 1996. The Board of Directors may, from time to time, establish
certain other committees to facilitate the management of the Company.
Directors are reimbursed for expenses incurred for attending any Board or
committee meeting. There is no family relationship between any current or
prospective director of the Company and any other current or prospective
executive officer of the Company.
During the fiscal year ended December 31, 1996, there were five meetings of
the Board of Directors. All directors attended at least 75% of the meetings of
the Board and committees of the Board on which they were members.
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<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of the
Company's Common Stock to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common Stock
of the Company. Except as stated below in this paragraph, based solely upon a
review of Forms 3 and 4 and amendments thereto furnished to the Company during
the fiscal year ended December 31, 1996 and Forms 5 and amendments thereto
furnished to the Company with respect to the fiscal year ended December 31,
1996, to the best of the Company's knowledge, the Company's directors, officers
and holders of more than 10% of its Common Stock complied with all Section 16(a)
filing requirements. Michael Johnson, President and Chief Executive Officer of
the Company, and Kevin Andrew, Vice President and Chief Financial Officer of the
Company, each filed one late report of ownership on Form 4 in connection with
their purchase of Common Stock and warrants in September 1996. H. Brad
Browning, Vice President of the Company, filed one late initial statement of
beneficial ownership on Form 3 in connection with his appointment as an officer
of the Company in January 1996.
EXECUTIVE OFFICERS
The following persons are the executive officers of the Company:
NAME AGE POSITION(S)
- ---- --- -----------
Michael W. Johnson 35 Chief Executive Officer and President
Kevin D. Andrew 38 Vice President and Chief Financial
Officer, Secretary and Treasurer
W. Brad Browning 32 Vice President and General Manager,
Internet Products Group
Information concerning the business experience of Mr. Johnson is provided
under the section entitled "Election of Directors."
KEVIN D. ANDREW was elected to his current positions in March 1996. Prior to
joining InfoNow, Mr. Andrew was President of Andrew Consulting, LLC, a financial
management services firm. From 1992 to 1995 he served as Chief Financial Officer
of Air Methods Corporation, a publicly held provider of emergency air ambulance
services, and from 1983 to 1991 served in various financial management positions
at CRSS, Inc., a New York Stock Exchange listed diversified services company.
During his tenure at CRSS, Mr. Andrew served as chief accountant, director of
general accounting, director of internal audit and Vice President and controller
of Natec Resources, Inc., a 50%-owed affiliate of CRSS, Inc. Prior to 1983, Mr.
Andrew was with KPMG Peat Marwick. Mr. Andrew has held CPA certificates in both
Colorado and Texas. He earned his Bachelor of Science degree in Business from
Arizona State University.
W. BRAD BROWNING has been a Vice President and General Manager of the Company's
Internet Products Group since January 1996. From 1990 to 1995, Mr. Browning was
a consultant with McKinsey & Company, an international management consulting
firm. Mr. Browning joined McKinsey & Company in June 1990 after obtaining an
Masters of Business Administration degree from Harvard University Graduate
School of Business. While with McKinsey, he led technology and consumer clients
on major
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<PAGE>
marketing and sales initiatives focused on driving growth and
significant profit improvement. He earned his Bachelor of Business
Administration degree in Marketing from the University of Georgia.
All executive officers are appointed by the Board of Directors and serve at
the Board's discretion.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the cash compensation
earned for the fiscal years ended December 31, 1996 and 1995 by the Company's
Chief Executive Officer and by the highest compensated executive officers who
were serving as executive officers at the end of the 1996 fiscal year whose
individual total cash compensation for the 1996 fiscal year exceeded $100,000
(the "Named Executive Officers"). Neither of the Named Executive Officers was
employed by the Company prior to 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
Long Term Compensation
Annual Compensation Awards
------------------- ----------------------
Restricted
Name and Principal Stock Options/ All Other
Position Year Salary Bonus Awards SARS Compensation
- ------------------ ---- ------ ----- ------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Michael W. Johnson(1) 1996 101,778(4) -0- -0- 105,705 -0-
Chief Executive Officer, 1995 22,372 -0- -0- 170,038(2) -0-
President and Chairman
W. Brad Browning(3) 1996 103,918 -0- -0- 85,000 15,000(5)
Vice President -
Internet Products Group
</TABLE>
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(1) Mr. Johnson joined the Company in October 1995.
(2) Includes warrants to purchase 8,500 shares of Common Stock, issued to Mr.
Johnson in connection with his service as a director of the Company. See
"Management - Director Compensation".
(3) Mr. Browning joined the Company in January 1996.
(4) The Company accrued and deferred $72,611 of Mr. Johnson's 1996 salary, of
which $58,000 was satisfied by way of issuance on September 13, 1996 of
51,555 shares of Common Stock at a price of $1.12 per share.
(5) Represents reimbursement of relocation expenses.
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<PAGE>
The following table presents information concerning individual grants of
options to purchase Common Stock of the Company made during the fiscal year
ended December 31, 1996 to each of the Named Executive Officers.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Number of
Securities Percent of Total Exercise
Underlying Options/SARs or
Options/SARs Granted to Employees Base Price
Name Granted (#) in Fiscal Year ($/Sh.) Expiration Date
- ---- ------------ -------------------- ---------- ---------------
<S> <C> <C> <C> <C>
Michael W. Johnson 10,000 (1) 2.1% 2.56 1/31/06
750 (2) -- 2.81 2/1/06
17,455 (3) 3.7% 2.06 5/15/06
2,500 (4) 0.5% 2.25 5/18/06
75,000 (5) 15.8% 1.38 10/16/06
W. Brad Browning 75,000 (6) 15.8% 3.63 1/9/06
10,000 (7) 2.1% 1.88 11/8/06
</TABLE>
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(1) Immediately exercisable in full.
(2) Vests over 36 months from the grant date of February 1, 1996, with 7/36ths
vesting seven months after grant, and an additional 1/36th vesting each
month thereafter.
(3) Vests over 36 months from the grant date of May 15, 1996, with 7/36ths
vesting seven months after grant, and an additional 1/36th vesting
each month thereafter.
(4) Vests over 36 months from the grant date of May 18, 1996, with 7/36ths
vesting seven months after grant, and an additional 1/36th vesting
each month thereafter.
(5) Vests over twelve months from the grant date of October 19, 1996, with
1/12th vesting each month after grant.
(6) Immediately exercisable as to 5,000 of such shares. The remaining
70,000 shares vest over 36 months from the grant date of January 9,
1996, with 7/36ths vesting seven months after grant, and an additional
1/36th vesting each month thereafter.
(7) Vests over 18 months from the grant date of November 8, 1996, with
1/18th vesting each month after grant.
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<PAGE>
The following table sets forth the fiscal year-end value of unexercised
options to purchase Common Stock of the Company for each Named Executive
Officer. No options or SARs were exercised by the Named Executive Officers
during the fiscal year ended December 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/SAR VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at FY-End (#) at FY-End ($)(1)
---------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Michael W. Johnson 97,934 169,309 6,969 34,844
W. Brad Browning 26,945 58,055 31 544
- --------------------
(1) Based upon the difference between the exercise price and the fair market
value of the Common Stock for those options which at December 31, 1996 had
an exercise price less than the fair market value of the Common Stock on
such date. The fair market value of Company Common Stock at December 31,
1996, measured as the mean of the closing bid and asked prices of the
Common Stock on such date, was $1.94 per share.
DIRECTOR COMPENSATION
Directors who are employees of the Company receive no additional
compensation for service on the Board of Directors. Each director who is not a
full-time employee of the Company is reimbursed expenses for attendance at Board
and Committee meetings. In addition to the above, non-employee director Nahum
Rand was granted 48,077 shares of Common Stock in consideration for services
rendered as Chairman of the Company during the twelve month period ended
June 30, 1995. In 1995, the Company granted warrants to each employee and
non-employee director to purchase 8,500 shares of Common Stock at an exercise
price equal to at least the fair market value of the Common Stock at the date
of the grant. In May 1995, the Company granted warrants to purchase 8,500
shares to each of directors Nahum Rand, Gene Copeland and Donald Cohen at an
exercise price of $1.30 per share. In August 1995, the Company granted a
warrant to purchase 8,500 shares to former director Michael Yates, at an
exercise price of $4.25. In October 1995, the Company granted a warrant to
purchase 8,500 shares to director Michael Johnson at an exercise price of
$3.68 per share. Each warrant vests one-third each year over a three-year
period conditioned upon continued board service and expires ten years from
the date of grant. The warrant granted to former director Michael Yates
remains outstanding and exercisable for 2,361 shares. All 36,361 of such
director warrants outstanding expire in 2005.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
On May 22, 1995, the Company entered into a three-year employment agreement
with Donald E. Cohen, Vice Chairman of the Company providing for an annual base
salary as follows: $100,008 during the first year, $115,008 during the second
year and $125,004 during the third year. Mr. Cohen is eligible for an annual
bonus up to forty percent (40%) of the base salary depending upon achievement of
certain criteria. In connection with the employment agreement, Mr. Cohen was
granted an option to purchase a number of shares of the Company's Common Stock
consistent with option grants to other senior executive of the Company at $1.30
per share. The option grant shall be subject to three-year annual vesting. On
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<PAGE>
November 8, 1996, the Company entered into a letter agreement with Mr. Cohen,
setting forth amended compensation terms for Mr. Cohen's services as Chief
Operations Officer of Cimarron and Creative Director and Vice Chairman of
InfoNow. The agreement as amended provides for a annual salary of $50,000 until
December 31, 1996 and an increase to $70,000 annually, effective January 1,
1997. Pursuant to the agreement, the Company shall provide total cash
compensation deferrals for services in 1996 in the amount of $31,929, the
amount to be repaid beginning on January 15, 1997 over one (1) year. The
repayment was contingent upon completion of financing resulting in gross
proceeds of at least $500,000 to InfoNow prior to December 31, 1996, which
condition was satisfied. The agreement further provides for the Company to
grant to Mr. Cohen an option to purchase 9,717 shares of the Company's Common
Stock at a price per share equal to the average between the bid and ask price of
the stock on November 8, 1996. The option shall be exercisable immediately upon
issuance and shall expire ten (10) years from the date of issuance.
On October 9, 1995, the Company entered into a two-year employment
agreement with Michael W. Johnson, Chief Executive Officer and President of the
Company. The agreement provides for an annual base salary of $100,000 and a
cash performance bonus based on defined financial performance targets based on
earnings before interest, taxes, depreciation, amortization and any other
non-cash or extraordinary charges. The bonus becomes payable if during a
fiscal quarter the Company exceeds its financial plan for the quarter by a
certain amount, and is capped at 60% of Mr. Johnson's base salary for the
quarter. As part of the employment agreement, the Company agreed to grant
Mr. Johnson an incentive stock option to purchase a number of shares of
Common Stock equal to five percent (5%) of the Company's Common Stock
outstanding on the date of the agreement. Pursuant to such provision, on
October 10, 1995 the Company entered into an Incentive Stock Option Agreement
(the "Option Agreement") with Mr. Johnson pursuant to which it granted Mr.
Johnson an option to purchase 150,000 shares at $3.68 per share. The Option
Agreement contains an anti-dilution feature that provides that to the extent
other derivative securities outstanding on the date of the Option Agreement
(the "Derivatives") are exercised, the Company will grant additional options
to Mr. Johnson equal to five percent (5%) of the number of shares of Common
Stock issued upon exercise of the Derivatives. All options vest over a 36
month period beginning October 10, 1995. Pursuant to the employment
agreement, the Company is required to grant to Mr. Johnson additional stock
options to purchase an additional 3% of the Common Stock of the Company,
measured on a fully-diluted basis, if the price of the Company's Common Stock
reaches certain prices. All options are to be issued at the fair market value
on the date when the options are awarded. When and if granted, these
performance based options vest over 12 months from the date of grant. All
options vest immediately upon a change of control of the Company. If Mr.
Johnson is terminated without cause, he is entitled to a one-time severance
payment equal to 75% of annual base salary then in effect.
On January 14, 1996, the Company entered into a two-year employment
agreement with W. Brad Browning, Vice President and General Manager of the
Company's Internet Products Group. The agreement provides for an annual base
salary of $110,000, including a non-recoverable draw against bonus of $25,000.
Mr. Browning is eligible for an annual performance bonus equal to a percentage
of revenues of the Internet Products Group, with total annual compensation
capped at $200,000. In connection with the employment agreement, Mr. Browning
was granted incentive stock options to purchase up to 75,000 shares of the
Company's Common Stock at $3.625 per share, the fair market value on the date of
the issuance. Pursuant to the employment agreement, the Company is required to
grant to Mr. Browning options to purchase an additional 25,000 shares of Common
Stock if cumulative gross sales of the Internet Products Group reach certain
specified levels. All options vest over a 36 month period from date of grant.
All options are to be issued at the fair market value of the date when the
options are awarded. All options vest immediately upon a change of control of
the Company. If Mr. Browning is terminated without cause, he is entitled to a
severance payment equal to 50% of his annual base compensation then in effect.
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On February 28, 1996, the Company entered into an employment agreement with
Kevin Andrew, Vice President and Chief Financial Officer of the Company. The
agreement currently provides for an annual base annual salary of $88,000. Mr.
Andrew is eligible for a performance bonus of up to $30,000 depending upon
achievement of certain criteria. In connection with the employment agreement,
Mr. Andrew was granted incentive stock options to purchase 40,000 shares of the
Company's Common Stock at $2.50 per share, the fair market value on the date of
the grant. Pursuant to the employment agreement, the Company granted Mr.
Andrew an option to purchase an additional 25,000 shares of Common Stock at
$1.63 per share. All options vest over a 12 to 36 month period from date of
issuance. All options were issued at the fair market value of the date options
were awarded. All options vest immediately upon a change of control of the
Company. If Mr. Andrew is terminated without cause, he is entitled to a
severance payment equal to 25% of his annual base salary then in effect.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 29, 1996, the Company borrowed $100,000 from Kevin Andrew, Vice
President and Chief Financial Officer of the Company. In consideration
therefor, the Company issued Mr. Andrew a promissory note in the principal
amount of $100,000, due March 29, 1997, bearing interest at the prime rate plus
2.75%, and secured by all of the accounts receivable of the Company. The
promissory note is convertible at the option of the holder at any time into
shares of Common Stock of the Company at the rate of $3.00 per share.
On September 13, 1996, the Company issued shares of Common Stock to three
officers of the Company as follows: (i) the Company issued 82,667 shares of
Common Stock at a price of $1.12 and warrants to purchase 41,333 shares at $1.50
per share to Michael Johnson, President and Chief Executive Officer of the
Company, in consideration for $20,000 in cash and $73,000 in accrued salary and
expense obligations; (ii) the Company issued 17,778 shares of Common Stock at a
price of $1.12 and warrants to purchase 8,889 shares at $1.50 per share to Kevin
Andrew, Vice President and Chief Financial Officer of the Company in
consideration for $20,000 in accrued salary obligations; (iii) the Company
issued 66,667 shares of Common Stock at a price of $1.12 and warrants to
purchase 33,333 shares at $1.50 per share to W. Brad Browning, Vice President of
the Company, in consideration for $75,000 in cash. All such warrants are
exercisable until September 13, 1998.
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PROPOSAL 2 - AMENDMENT OF 1990 STOCK OPTION PLAN
On March 28, 1997, the Board of Directors amended, subject to stockholder
approval, the InfoNow Corporation 1990 Stock Option Plan (the "Plan"). The
number of shares of Common Stock available for issuance under the Plan was
increased to 1,700,000 (or such lesser number as may be acceptable to the
Vancouver Stock Exchange regulatory authority) from 1,000,000 shares of Common
Stock, subject to adjustment for dividend, stock split or other relevant changes
in the Company's capitalization, and the class of persons eligible to receive
nonstatutory stock options was expanded to include non-employee directors of the
Company. The Plan, as proposed to be amended, is set forth as Exhibit A to this
Proxy Statement.
The Company is applying to have the Common Stock listed on the Vancouver
Stock Exchange (the "Exchange"). If the Company's Common Stock is listed on the
Exchange, the increase in the number of shares available for issuance under the
Plan will require the approval of the Exchange. There is no assurance that the
Company will obtain such approval. A condition of granting any such approval is
that the increase be approved by a majority of votes attached to the outstanding
Common Stock held by "disinterested shareholders" who vote on the matter. All
shareholders who are not insiders of the Company ("insiders" are officers,
directors and holders of more than 10% of the outstanding shares of Common
Stock), or associates of such insiders, are "disinterested shareholders". If
the Common Stock is listed on the Exchange and the requisite disinterested
shareholder vote is not obtained, the amendment to the Plan will be deemed not
approved.
The Plan currently provides that the only persons eligible to receive stock
options under the Plan are key employees of the Company, including directors who
are employees. The proposed amendment to the Plan would expand the class of
persons eligible to receive nonstatutory options to include non-employee
directors of the Company. Stock-based compensation is a key component of
director compensation for many companies, and commonly includes nonstatutory
options as a portion thereof. The Company does not pay cash compensation to its
non-employee directors for their services. The Board of Directors believes that
the best interests of the Company and its stockholders require that the Company
be able to grant nonstatutory stock options to its non-employee directors.
The Board of Directors believes that the Plan has been of material benefit
to the Company by assisting the Company and its subsidiaries in attracting,
retaining and motivating key employees of proven ability. The Board of Directors
also believes that the best interests of the Company and its Stockholders
require that the Company continue to be in a position to offer options to
present and prospective key personnel and expand its ability to offer options to
present and prospective consultants and to present and prospective directors who
are not employees of the Company or any subsidiary of the Company.
The purpose of the Plan is to promote the interests of the Company and its
Stockholders by helping the Company and its subsidiaries attract, retain, and
motivate key employees and consultants, including officers and directors who are
employees of or consultants to the Company or any of its subsidiaries and, as
proposed to be amended, non-employee directors of the Company.
The Board of Directors adopted the Plan on February 22, 1990 and it was
approved by the Company's stockholders in October 1990.
As of February 28, 1997, options to purchase an aggregate of 716,745 shares
of Common Stock are outstanding pursuant to the Plan and 59,475 options have
been exercised since inception of the Plan. As of February 28, 1997, the market
value of all shares of Common Stock subject to outstanding options was
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$1,791,862 (based upon the average bid and asked prices as reported by the NASD
Electronic Bulletin Board trading system as of such date).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE PLAN
INCREASING THE NUMBER OF COMMON SHARES AVAILABLE FOR ISSUANCE THEREUNDER TO
1,700,000 FROM 1,000,000 AND EXPANDING THE CLASS OF PERSONS ELIGIBLE TO RECEIVE
NONSTATUTORY STOCK OPTIONS TO INCLUDE NON-EMPLOYEE DIRECTORS OF THE COMPANY.
The amendment to the Plan will be approved if a majority of the shares
present in person or represented by proxy at the meeting are voted in favor of
the amendment. Unless otherwise specified, proxies solicited by the Board of
Directors will be voted FOR the adoption of the amendment to increase the number
of shares reserved to 1,700,000 from 1,000,000 shares for issuance thereunder
and to expand the class of persons eligible to receive nonstatutory stock
options to include non-employee directors of the Company. The following
description of the Plan, as amended, is qualified in its entirety by reference
to the Plan included herewith as Exhibit A.
SUMMARY OF THE PLAN
ADMINISTRATION. The Board of Directors is responsible for administering
the Plan. The Board of Directors has full authority, subject to the terms of
the Plan, to make all determinations under the Plan. The Board of Directors may
delegate administration of the Plan to a committee composed of two or more
directors, each of whom is a "non-employee director" as such term is defined in
Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act"). The
Company will indemnify each member of the Board of Directors for actions taken
under the Plan.
INCENTIVE AND NONSTATUTORY STOCK OPTIONS. The Board of Directors may grant
incentive stock options under the Plan and options which do not qualify as
incentive stock options ("nonstatutory stock options").
ELIGIBILITY. Employees of the Company and its subsidiaries, including
officers and directors who are employees of the Company or any subsidiary of the
Company, will be eligible to receive incentive stock options and nonstatutory
stock options under the Plan. As of February 28, 1997, the Company had
approximately 34 total employees. If the proposed amendment is adopted, members
of the Company's Board of Directors who are not employees of the Company or any
subsidiary of the Company will be eligible to receive nonstatutory stock options
under the Plan. There are currently two non-employee directors of the Company.
The benefits or amounts that will be received by or allocated to persons
eligible to receive options under the Plan are not determinable.
EXERCISE PRICE. The Plan provides that the exercise price under each
incentive stock option shall be no less than 100% of the fair market value (110%
of the fair market value for employees owning more than 10% of the Company's
Common Stock) of the Common Stock on the day the option is granted. The exercise
price for each nonstatutory stock option granted under the Plan will be the
price established by the Board of Directors which normally is expected to be no
less than 100% of the fair market value on the date the option is granted. The
exercise price of an option is to be paid in cash or in such other consideration
as the Board deems acceptable. The Board may also permit a participant to
surrender previously owned shares to the Company, the fair market value of which
would be applied to the option exercise price.
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NON-TRANSFERABILITY. All options granted under the Plan may be exercised
during the optionee's lifetime only by the optionee and are non-transferable
except by will or the laws of descent and distribution. Notwithstanding the
above, the Board may, at its discretion, permit the transfer of a nonstatutory
option.
EXERCISE. The duration of each option will be as specified by the Board
but will not exceed ten years from the date of grant (five years for incentive
stock options granted to holders of more than 10% of the Company's Common
Stock). The Board, at its discretion, may establish a vesting schedule for any
option granted under the Plan.
EFFECT OF TERMINATION OF SERVICES. If an optionee's employment is
terminated because of the optionee's death or disability, exercisable options
held by the optionee may be exercised no later than twelve months following the
optionee's termination. If termination is because of dismissal for cause or
breach of an employment agreement, the option will terminate on the date the
optionee ceases to be an employee. If termination is for any other reason,
exercisable options may be exercised no later than the last day of the month
following the month in which the optionee ceases to be an employee of the
Company. In each case, the options may be exercised only to the extent
exercisable on the date of termination of employment and in no event is an
option exercisable after the termination date specified in the option grant.
STOCK DIVIDENDS AND STOCK SPLITS. The number, kind and price of the shares
subject to each outstanding option will be proportionately and appropriately
adjusted in the event of any stock dividend, stock split, recapitalization,
reclassification, or other similar change in the Company's outstanding
securities. The number of the shares of Common Stock of the Company reserved for
issuance pursuant to options granted under the Plan will be adjusted by the
Board of Directors for any such changes.
CORPORATE TRANSACTIONS. If within the duration of the stock option there
is a corporate merger or consolidation of which the Company is not the survivor,
sale of assets, or change in control (defined below) ("Transaction"), the
purchaser of the assets or stock may deliver to the optionee the same kind and
amount of consideration the optionee would have received as a result of the
Transaction had the option been exercised (to the extent then exercisable)
immediately prior to the Transaction, or the Board of Directors of the Company
may cancel such options in exchange for equivalent consideration. For purposes
of the Plan, a "change in control" shall occur if a person or group who prior to
such event owned less than 25% of the then outstanding Common Stock shall
acquire additional shares of Common Stock in one or more transactions, such that
following such transaction(s) such person or group beneficially own 50% or more
of the Common Stock outstanding. In addition, the vesting schedule of some or
all options may, at the sole discretion of the Board of Directors, be
accelerated so that all or any portion of options outstanding under the Plan as
of the day before the consummation of such Transaction, to the extent not
exercised, shall for all purposes under the Plan become exercisable as of such
date.
TERM OF PLAN; AMENDMENT. The Plan will terminate on February 20, 2000, ten
years from the date the Plan was adopted by the Board of Directors, or, if
earlier, upon the purchase of all Common Stock subject to the Plan pursuant to
the exercise of options granted under the Plan. Any options outstanding after
the termination of the Plan will remain in effect in accordance with their
terms. The Board of Directors may terminate or amend the Plan, except that the
Board may not, without shareholder approval, increase the number of shares of
Common Stock as to which options may be granted, materially increase the
benefits accruing to participants or materially modify the eligibility
requirements.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS. Certain of the federal
income tax consequences to optionees and the Company of options with respect to
Company stock granted under the 1990 Plan should generally be as set forth in
the following summary.
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An employee to whom as ISO which qualifies under Section 422 of the Code
is granted will not recognize income at the time of grant or exercise of such
option. However, upon the exercise of an ISO, any excess in the fair market
price of the Common Stock over the option price constitutes a tax preference
item which may have alternative minimum tax consequences for the employee.
If the employee sells such shares more than one year after the date of
transfer of such shares and more than two years after the date of grant of
such ISO, the employee will generally recognize a long-term capital gain or
loss equal to the difference, if any, between the sale prices of such shares
and the option price. The Company will not be entitled to a federal income
tax deduction in connection with the grant or exercise of an ISO. If the
employee does not hold such shares for the required period, when the employee
sells such shares the employee will recognize ordinary compensation income
and possibly capital gain or loss (long-term or short-term, depending on the
holding period of the stock sold) in such amounts as are prescribed by the
Code and the regulations thereunder and the Company will generally be
entitled to a federal income tax deduction in the amount of such ordinary
compensation income recognized by the employee.
An employee to whom an NSO is granted will not recognize income at the time
of grant of such option. When such employee exercises such NSO, the employee
will recognize ordinary compensation income equal to the excess, if any, of the
fair market value, as of the date of the option exercise, of the shares that the
employee receives upon such exercise over the option price paid. The tax basis
of such shares to such employee will be equal to the option price paid plus the
amount, if any, includable in the employee's gross income, and the employee's
holding period for such shares will commence on the date on which the employee
recognizes taxable income in respect of such shares. Gain or loss upon a
subsequent sale of any Company Common Stock received upon the exercise of a NSO
generally would be taxed as capital gain or loss (long-term or short-term,
depending upon the holding period of the stock sold). Certain additional rules
apply if the employee pays the option price in shares previously owned by the
employee. Subject to the applicable provisions of the Code and regulations
thereunder, the Company will be entitled to a federal income tax deduction in
respect of a NSO in an amount equal to the ordinary compensation income
recognized by the employee. This deduction will, in general, be allowed for the
taxable year of the Company in which the optionee recognizes such ordinary
income.
Participants in the Plan should consult their own tax advisors to determine
the specific tax consequences of the Plan for them.
PROPOSAL 3 - APPOINTMENT OF AUDITORS
The Board of Directors has appointed the firm of Hein + Associates LLP,
independent public accountants, as the auditors of the Company for the fiscal
year ending December 31, 1997, subject to the approval of such appointment by
Stockholders at the Annual Meeting. Hein + Associates LLP has audited the
Company's financial statements since the Company's 1996 fiscal year.
The ratification of the appointment of Hein + Associates LLP will be
determined by the vote of the holders of a majority of the shares present in
person or represented by proxy at the Annual Meeting.
If the foregoing appointment of Hein + Associates LLP is not ratified by
Stockholders, the Board of Directors will appoint other independent accountants
whose appointment for any period subsequent to the 1997 Annual Meeting of
Stockholders will be subject to the approval of Stockholders at that meeting. A
representative of Hein + Associates LLP is expected to be present at the Annual
Meeting and will have an opportunity to make a statement should he so desire and
to respond to appropriate questions.
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THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO RATIFY THE
APPOINTMENT OF THE FIRM OF HEIN + ASSOCIATES LLP.
STOCKHOLDER PROPOSALS
Any proposals from Stockholders to be presented for consideration for
inclusion in the proxy material in connection with the 1998 annual meeting of
Stockholders of the Company must be submitted in accordance with the rules of
the Securities and Exchange Commission and received by the Secretary of the
Company at the Company's principal executive offices no later than the close of
business on November 11, 1997.
OTHER MATTERS
All information contained in this Proxy Statement relating to the
occupations, affiliations and securities holdings of directors and officers of
the Company and their relationship and transactions with the Company is based
upon information received from the individual directors and officers. All
information relating to any beneficial owner of more than 5% of the Company's
Common Stock is based upon information contained in reports filed by such owner
with the Securities and Exchange Commission.
The Company's independent public accountants for the fiscal year 1996 are
Hein + Associates LLP. Representatives of such firm are expected to be present
at the annual meeting, will have the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
The Annual Report to Stockholders of the Company for the fiscal year ended
December 31, 1996, which includes financial statements and accompanies this
Proxy Statement, does not form any part of the material for the solicitation of
proxies.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM
10-K, INCLUDING THE FINANCIAL STATEMENTS, FOR THE FISCAL YEAR ENDED DECEMBER 31,
1996, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 TO ANY STOCKHOLDER (INCLUDING
ANY BENEFICIAL OWNER) UPON WRITTEN REQUEST TO KEVIN D. ANDREW, CHIEF FINANCIAL
OFFICER, 1875 LAWRENCE STREET, SUITE 1100, DENVER, COLORADO 80202. A COPY OF
THE EXHIBITS TO SUCH REPORT WILL BE FURNISHED TO ANY STOCKHOLDER UPON WRITTEN
REQUEST THEREFOR AND PAYMENT OF A NOMINAL FEE.
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INFONOW CORPORATION EXHIBIT A
1990 STOCK OPTION PLAN
(AMENDED AND RESTATED AS OF MARCH 28, 1997)
1. PURPOSE OF THE PLAN.
This stock option plan (the "Plan") is intended to encourage ownership
of the stock of INFONOW CORPORATION, a Delaware corporation (the "Company"), by
employees of the Company and its subsidiaries, to induce qualified personnel to
enter and remain in the employ of the Company or its subsidiaries and otherwise
to provide additional incentive for optionees to promote the success of its
business.
2. STOCK SUBJECT TO THE PLAN.
(a) The total number of shares of the authorized but unissued or
treasury shares of the common stock, $.001 par value, of the Company ("Common
Stock") for which options may be granted under the Plan shall not exceed
1,700,000 shares, subject to adjustment as provided in Section 12 hereof.
(b) If an option granted or assumed hereunder shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares subject thereto shall again be available for subsequent option grants
under the Plan.
(c) Stock issuable upon exercise of an option granted under the Plan
may be subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board of Directors of the Company
(the "Board").
3. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Board of Directors (the
"Board") or by a committee composed solely of two or more directors
("Committee") each of whom is a Non-Employee Director. A Non-Employee Director
is a person who satisfies the definition of a "non-employee director" set forth
in Rule 16b-3 under the Exchange Act or any successor rule or regulation, as it
may be amended from time to time. The Committee or the Board, as the case may
be, shall have full authority to administer the Plan, including authority to
interpret and construe any provision of the Plan and any stock options granted
thereunder, and to adopt such rules and regulations for administering the Plan
as it may deem necessary in order to comply with the requirements of the Code or
in order that stock options that are intended to be incentive stock options will
be classified as incentive stock options under the Code, or in order to conform
to any regulation or to any change in any law or regulation applicable thereto.
The Board shall
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have the power to reprice and accelerate the vesting of stock options. The
Board may reserve to itself any of the authority granted to the Committee as
set forth herein, and it may perform and discharge all of the functions and
responsibilities of the Committee at any time that a duly constituted
Committee is not appointed and serving. All references in this Plan to the
"Committee" shall be deemed to refer to the Board whenever the Board is
discharging the powers and responsibilities of the Committee, and to any
special committee appointed by the Board to administer particular aspects of
this Plan. All actions taken and all interpretations and determinations made
by the Committee in good faith (including determinations of fair market
value) shall be final and binding upon all participants, the Company and all
other interested persons. No member of the Committee shall be personally
liable for any action, determination or interpretation made in good faith
with respect to this Plan, and all members of the Committee shall, in
addition to their rights as directors, be fully protected by the Company with
respect to any such action, determination or interpretation.
(b) Rule 16b-3 under the Securities Exchange Act of 1934 (the "Act")
provides that the grant of a stock option to a director or officer of a company
will be exempt from the provisions of Section 16(b) of the Act if the conditions
set forth in said Rule are satisfied. Unless otherwise specified by the Board,
grants of options hereunder to individuals who are officers or directors of the
Company shall be made in a manner that satisfies the conditions of said Rule.
4. TYPE OF OPTIONS.
Options granted pursuant to the Plan shall be authorized by action of
the Board (or a committee designated by the Board) and may be designated as
either incentive stock options meeting the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or non-qualified options
which are not intended to meet the requirements of such Section 422 of the Code,
the designation to be in the sole discretion of the Board. Options designated as
incentive stock options that fail to continue to meet the requirements of
Section 422 of the Code shall be redesignated as non-qualified options
automatically without further action by the Board on the date of such failure to
continue to meet the requirements of Section 422 of the Code.
5. ELIGIBILITY.
Options designated as incentive stock options may be granted only to
officers and key employees (including directors who are employees) of the
Company or of any subsidiary corporation (herein called "subsidiary" or
"subsidiaries"), as defined in Section 424(f) of the Code and the Treasury
Regulations promulgated thereunder (the "Regulations"). Options designated as
non-qualified options may be granted to directors, officers and key employees of
the Company or of any of its subsidiaries.
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In determining the eligibility of an individual to be granted an
option, as well as in determining the number of shares to be optioned to any
individual, the Board shall take into account the position and responsibilities
of the individual being considered, the nature and value to the Company or its
subsidiaries of his or her service and accomplishments, his or her present and
potential contribution to the success of the Company or its subsidiaries, and
such other factors as the Board may deem relevant.
No option designated as an incentive stock option shall be granted to
any employee of the Company or any subsidiary if such employee owns, immediately
prior to the grant of an option, stock representing more than 10% of the voting
power or more than 10% of the value of all classes of stock of the Company or a
parent or a subsidiary (a "Ten-Percent Shareholder"), unless the purchase price
for the stock under such option shall be at least 110% of its fair market value
at the time such option is granted and the option, by its terms, shall not be
exercisable more than five (5) years from the date it is granted. In determining
the stock ownership under this paragraph, the provisions of Section 424(d) of
the Code shall be controlling. In determining the fair market value under this
paragraph, the provisions of Section 7 hereof shall apply.
6. OPTION AGREEMENT.
Each option shall be evidenced by an option agreement (the
"Agreement") duly executed on behalf of the Company and by the optionee to whom
such option is granted, which Agreement shall comply with and be subject to the
terms and conditions of the Plan. The Agreement may contain such other terms,
provisions and conditions which are not inconsistent with the Plan as may be
determined by the Board, including provisions for longer post-termination
exercise periods, provided that options designated as incentive stock options
shall meet all of the conditions for incentive stock options as defined in
Section 422 of the Code. No option shall be granted within the meaning of the
Plan and no purported grant of any option shall be effective until the Agreement
shall have been duly executed on behalf of the Company and the optionee. More
than one option may be granted to an individual.
7. OPTION PRICE.
The option price or prices of shares of Common Stock for options
designated as non-qualified stock options shall be the fair market value of
Common Stock as determined by the Board. The option price or prices of shares of
Common Stock for incentive stock options shall be the fair market value of such
Common Stock at the time the option is granted as determined by the Board in
accordance with the Regulations promulgated under Section 422 of the Code. If
such shares are then listed on any national securities exchange, the fair market
value shall be the mean between the high and low sales prices, if any, on the
largest such exchange on the date of the grant of the option or, if none, shall
be determined by taking a weighted average of the means between the highest and
lowest sales on the nearest date before and the nearest date after the date
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of grant in accordance with Treasury Regulations Section 25.2512-2. If such
shares are not then listed on any such exchange, the fair market value of
such shares shall be the mean between the closing "Bid" and the closing
"Asked" prices, if any, as reported in the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") for the date of the grant of
the option, or, if none, shall be determined by taking a weighted average of
the means between the highest and lowest sales on the nearest date before and
the nearest date after the date of grant in accordance with Treasury
Regulations Section 25.2512-2. If such shares are not then either listed on
any such exchange or quoted on NASDAQ, the fair market value shall be the
mean between the average of the "Bid" and the average of the "Asked" prices,
if any, as reported in the National Daily Quotation Service for the date of
the grant of the option, or, if none, shall be determined by taking a
weighted average of the means between the highest and lowest sales on the
nearest date before and the nearest date after the date of grant in
accordance with Treasury Regulations Section 25.2512-2. If the fair market
value cannot be determined under the preceding three sentences, it shall be
determined in good faith by the Board.
8. MANNER OF PAYMENT: MANNER OF EXERCISE.
(a) Options granted under the Plan may provide for the payment of the
exercise price in the manner set forth in the Option Agreement or as otherwise
authorized by the Board, which shall be (i) delivery of cash or a check payable
to the order of the Company in an amount equal to the exercise price of such
options, (ii) delivery of shares of Common Stock of the Company owned by the
optionee having a fair market value equal in amount to the exercise price of the
options being exercised, (iii) having the Company withhold whole shares of
Common Stock issuable upon exercise of the stock option, as part or full payment
for the exercise of a stock option, or (iv) any combination of (i), (ii) and
(iii), provided, however, that payment of the exercise price by delivery of
shares of Common Stock owned by such optionee may be made only if such payment
does not result in a charge to earnings for financial accounting purposes as
determined by the Board. The fair market value of any shares of Common Stock
which may be delivered upon exercise of an option shall be determined by the
Board in accordance with Section 7 hereof. Pyramiding of options is permitted
in the sole discretion of the Board.
(b) To the extent that the right to purchase shares under an option
has accrued and is in effect, options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the option
at such time, during ordinary business hours, not more than thirty days (30)
from the date of receipt of the notice by the Company, as shall be designated in
such notice, or at such time, place and manner as may be agreed upon by the
Company and the person or persons exercising the option.
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(c) With respect to any non-qualified option granted under the Plan,
the Company's obligation to deliver shares upon the exercise of such option
shall be subject to the option holder's satisfaction of all applicable federal,
state and local income and employment tax withholding requirements. The Company
and an employee optionee may agree to withhold shares of Common Stock purchased
upon exercise of an option to satisfy any such withholding requirements.
9. EXERCISE OF OPTIONS.
Each option granted under the Plan shall, subject to Section 10(b) and
Section 12 hereof, be exercisable at such time or times and during such period
as shall be set forth in the Agreement; provided, however, that no option
granted under the Plan shall have a term in excess of ten (10) years from the
date of grant.
To the extent that an option to purchase shares is not exercised by an
optionee when it becomes initially exercisable, it shall not expire but shall be
carried forward and shall be exercisable, on a cumulative basis, until the
expiration of the exercise period. No partial exercise may be made for less than
1,000 full shares of Common Stock.
10. TERMS OF OPTIONS: EXERCISABILITY.
(a) TERM.
(1) Options granted under the Plan shall be for a term fixed by
the Board at the time of grant; provided, however, that each incentive stock
option granted to an employee other than a Ten-Percent Shareholder shall expire
not more than ten (10) years from the date of the granting thereof, and shall be
subject to earlier termination as herein provided.
(2) Each incentive stock option granted to a Ten Percent
Shareholder shall expire not more than five (5) years from the date of the
granting thereof, and shall be subject to earlier termination as herein
provided.
(3) Except as otherwise provided in this Section 10, an option
granted to any employee optionee who ceases to be an employee of the Company or
one of its subsidiaries shall terminate on the last day of the month next
following the month in which such optionee ceases to be an employee of the
Company or one of its subsidiaries, or on the date on which the option expires
by its terms, whichever occurs first.
(4) If such termination of employment is because of dismissal
for cause or because the employee is in breach of any employment agreement, such
option will terminate on the date the optionee ceases to be an employee of the
Company or one of its subsidiaries.
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(5) If such termination of employment is because the optionee
has become permanently disabled (within the meaning of Section 22 of the Code),
such option shall terminate on the last day of the twelfth month from the date
such optionee ceases to be an employee, or on the date on which the option
expires by its terms, whichever occurs first.
(6) In the event of the death of any optionee, any option
granted to such optionee shall terminate on the last day of the twelfth month
from the date of death, or on the date on which the option expires by its terms,
whichever occurs first.
(b) EXERCISABILITY.
(1) Except as provided below, an option granted to an employee
optionee who ceases to be an employee of the Company or one of its subsidiaries
shall be exercisable only to the extent that the right to purchase shares under
such option has accrued and is in effect on the date such optionee ceases to be
an employee of the Company or one of its subsidiaries.
(2) An option granted to an employee optionee who ceases to be
an employee of the Company or one of its subsidiaries because he or she has
become permanently disabled, as defined above, shall be exercisable for the full
number of shares covered by such option.
(3) In the event of the death of any optionee, the option
granted to such optionee may be exercised for the full number of shares covered
thereby, whether or not under provisions of Section 9 hereof the optionee was
entitled to do so at the date of his or her death, by the estate of such
optionee, or by any person or persons who acquired the right to exercise such
option by bequest or inheritance or by reason of the death of such optionee.
11. ASSIGNABILITY.
The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferable by such optionee otherwise than by will
or the laws of descent and distribution, and any such option shall be
exercisable during the lifetime of such optionee only by him. Notwithstanding
the preceding sentence, the Committee, in its sole discretion, may permit the
assignment or transfer of a nonstatutory stock option and the exercise thereof
by a person other than the optionee, on such terms and conditions as the
Committee in its sole discretion may determine. Any such terms shall be set
forth in the Option Agreement. Any option granted under the Plan shall be null
and void and without effect upon the bankruptcy of the optionee to whom the
option is granted, or upon any attempted assignment or transfer, except as
herein provided, including without limitation any purported assignment, whether
voluntary or by operation of law, pledge, hypothecation or other disposition,
attachment, trustee process or similar process, whether legal or equitable, upon
such option. The terms of any rights under this
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Plan in the hands of a transferee or assignee shall be determined as if held
by the optionee and shall be of no greater extent or term than if the
transfer or assignment had not taken place.
12. RECAPITALIZATIONS. REORGANIZATIONS AND THE LIKE.
In the event that the outstanding shares of Common Stock are changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation by reason of any reorganization,
merger, consolidation, recapitalization, reclassification, stock split-up,
combination of shares, or dividends payable in capital stock, appropriate
adjustment shall be made in the number and kind of shares as to which options
may be granted under the Plan and as to which outstanding options or portions
thereof then unexercised shall be exercisable, to the end that the proportionate
interest of the optionee shall be maintained as before the occurrence of such
event; such adjustment in outstanding options shall be made without change in
the total price applicable to the unexercised portion of such options and with a
corresponding adjustment in the option price per share.
In addition, unless otherwise determined by the Board in its sole
discretion, in the case of any (i) sale or conveyance to another entity of all
or substantially all of the property and assets of the Company or (ii) Change in
Control (as hereinafter defined) of the Company, the purchaser(s) of the
Company's assets or stock may, in his, her or its discretion, deliver to the
optionee the same kind of consideration that is delivered to the shareholders of
the Company as a result of such sale, conveyance or Change in Control, or the
Board may cancel all outstanding options in exchange for consideration in cash
or in kind which consideration in both cases shall be equal in value to the
value of those shares of stock or other securities the optionee would have
received had the option been exercised (to the extent then exercisable) and no
disposition of the shares acquired upon such exercise been made prior to such
sale, conveyance or Change in Control, less the option price therefor. Upon
receipt of such consideration by the optionee, his or her option shall
immediately terminate and be of no further force and effect. The value of the
stock or other securities the optionee would have received if the option had
been exercised shall be determined in good faith by the Board, and in the case
of shares of Common Stock, in accordance with the provisions of Section 7
hereof. The Board shall also have the power and right to accelerate the
exercisability of any options, notwithstanding any limitations in this Plan or
in the Agreement upon such a sale, conveyance or Change in Control. Upon such
acceleration, any options or portion thereof originally designated as incentive
stock options that no longer qualify as incentive stock options under Section
422 of the Code as a result of such acceleration shall be redesignated as
non-qualified stock options. A "Change in Control" shall be deemed to have
occurred if any person, or any two or more persons acting as a group, and all
affiliates of such person or persons, who prior to such time owned less than
twenty-five percent (25%) of the then outstanding Common Stock, shall acquire
such additional shares of Common Stock in one or more transactions, or series of
transactions, such that following such transaction or transactions, such person
or group and affiliates beneficially own fifty percent (50%) or more of Common
Stock outstanding.
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Upon dissolution or liquidation of the Company, all options granted
under this Plan shall terminate, but each optionee (if at such time in the
employ of or otherwise associated with the Company or any of its subsidiaries)
shall have the right, immediately prior to such dissolution or liquidation, to
exercise his or her option to the extent then exercisable.
If by reason of a corporate merger, consolidation, acquisition of property or
stock, separation, reorganization, or liquidation, the Board shall authorize the
issuance or assumption of a stock option or stock options in a transaction to
which Section 424(a) of the Code applies, then, notwithstanding any other
provision of the Plan, the Board may grant an option or options upon such terms
and conditions as it may deem appropriate for the purpose of assumption of the
old option, or substitution of a new option for the old option, in conformity
with the provisions of such Section 425(a) of the Code and the Regulations
thereunder, and any such option shall not reduce the number of shares otherwise
available for issuance under the Plan.
No fraction of a share shall be purchasable or deliverable upon the
exercise of any option, but in the event any adjustment hereunder of the number
of shares covered by the option shall cause such number to include a fraction of
a share, such fraction shall be adjusted to the nearest smaller whole number of
shares.
13. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in the Plan or in any option granted under the Plan
shall confer upon any option holder any right with respect to the continuation
of his or her employment by the Company (or any subsidiary) or interfere in any
way with the right of the Company (or any subsidiary), subject to the terms of
any separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the option holder from
the rate in existence at the time of the grant of an option. Whether an
authorized leave of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Board at the
time.
14. RESTRICTIONS ON ISSUE OF SHARES.
(a) Notwithstanding the provisions of Section 8, the Company may
delay the issuance of shares covered by the exercise of any option and the
delivery of a certificate for such shares until one of the following conditions
shall be satisfied:
(1) The shares with respect to which such option has been
exercised are at the time of the issue of such shares effectively registered or
qualified under applicable federal and state securities acts now in force or as
hereafter amended; or
(2) Counsel for the Company shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such shares are
exempt from registration and qualification under applicable federal and state
securities acts now in force or hereafter amended.
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(b) It is intended that all exercises of options shall be effective,
and the Company shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Company shall be
under no obligation to qualify shares or to cause a registration statement or a
post effective amendment to any registration statement to be prepared for the
purpose of covering the issue of shares in respect of which any option may be
exercised, except as otherwise agreed to by the Company in writing.
15. PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT REGISTRATION.
Unless the shares to be issued upon exercise of an option granted
under the Plan have been effectively registered under the Securities Act of
1933, as now in force or hereafter amended (the "1933 Act"), the Company shall
be under no obligation to issue any shares covered by any option unless the
person who exercises such option, in whole or in part, shall give a written
representation and undertaking to the Company which is satisfactory in form and
scope to counsel for the Company and upon which, in the opinion of such counsel,
the Company may reasonably rely, that he or she is acquiring the shares issued
pursuant to such exercise of the option for his or her own account as an
investment and not with a view to, or for sale in connection with, the
distribution of any such shares, and that he or she will make no transfer of the
same except in compliance with any rules and regulations in force at the time of
such transfer under the 1933 Act, or any other applicable law, and that if
shares are issued without such registration, a legend to this effect may be
endorsed upon the securities so issued. In the event that the Company shall,
nevertheless, deem it necessary or desirable to register under the 1933 Act or
other applicable statutes any shares with respect to which an option shall have
been exercised, or to qualify any such shares for exemption from the 1933 Act or
other applicable statutes, then the Company may take such action and may require
from each optionee such information in writing for use in any registration
statement, supplementary registration statement, prospectus, preliminary
prospectus or offering circular as is reasonably necessary for such purpose and
may require reasonable indemnity to the Company and its officers and directors
from such holder against all losses, claims, damages and liabilities arising
from such use of the information so furnished and caused by any untrue statement
of any material fact therein or caused by the omission to state a material fact
requires to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made.
16. LOANS.
The Company may make loans to optionees to permit them to exercise
options. If loans are made, the requirements of all applicable federal and state
laws and regulations regarding such loans must be met.
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17. MODIFICATION OF OUTSTANDING OPTIONS.
The Board may authorize the amendment of any outstanding option with
the consent of the optionee when and subject to such conditions as are deemed to
be in the best interests of the Company and in accordance with the purposes of
the Plan.
18. APPROVAL OF STOCKHOLDERS.
The Plan shall be subject to approval by the vote of stockholders
holding at least a majority of the voting stock of the Company voting in person
or by proxy at a duly held stockholders meeting, or by written consent of all of
the stockholders, within twelve (12) months after the adoption of the Plan by
the Board and shall take effect as of the date of adoption by the Board upon
such approval. The Board may grant options under the Plan prior to such
approval, but any such option shall become effective as of the date of grant
only upon such approval and, accordingly, no such option may be exercisable
prior to such approval.
19. TERMINATION AND AMENDMENT OF PLAN.
Unless sooner terminated as herein provided, the Plan shall terminate
on February 22, 2000, ten (10) years from the date upon which the Plan was duly
adopted by the Board. The Board may at any time terminate the Plan or make such
modification or amendment thereof as it deems advisable; provided, however, that
except as provided in this Section 19, the Board may not, without the approval
of the stockholders of the Company obtained in the manner stated in Section 18,
increase the maximum number of shares for which options may be granted or change
the designation of the class of persons eligible to receive options under the
Plan. Termination or any modification or amendment of the Plan shall not,
without the consent of an optionee, affect his or her rights under an option
theretofore granted to him or her.
20. RESERVATION OF STOCK.
The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
21. LIMITATION OF RIGHTS IN THE OPTION SHARES.
An optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.
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22. NOTICES.
Any communication or notice required or permitted to be given under
the Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an optionee, to the address as appearing on the
records of the Company.
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INFONOW CORPORATION PROXY
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD APRIL 25, 1997
The undersigned hereby constitutes, appoints and authorizes Michael W.
Johnson or Kevin D. Andrew, and each of them, the true and lawful attorneys and
Proxies of the undersigned, with full power of substitution and appointment, for
and in the name, place and stead of the undersigned to act for and vote as
designated below, all of the undersigned's shares of the $.001 par value common
stock of InfoNow Corporation, a Delaware corporation, at the Annual Meeting of
Stockholders to be held at the InfoNow corporate offices at 1875 Lawrence
Street, Suite 1100, Denver, Colorado, at 3:00 p.m. MDT, on April 25, 1997, and
at any and all adjournments thereof, with respect to the matters set forth below
and described in the Notice of Annual Meeting dated April 3, 1997.
1. To elect four (4) Directors:
/ / For all nominees listed below (except as marked to the contrary):
/ / Withhold authority to vote for all nominees listed below:
Michael W. Johnson, Donald E. Cohen, Gene R. Copeland and Nahum Rand
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, DRAW
A LINE THROUGH OR OTHERWISE STRIKE OUT HIS NAME. IF AUTHORITY TO VOTE FOR THE
ELECTION OF ANY NOMINEE IS NOT WITHHELD, THE EXECUTION OF THIS PROXY SHALL BE
DEEMED TO GRANT SUCH AUTHORITY.)
2. To amend the Company's 1990 Stock Option Plan to (a) allow the Company to
grant nonstatutory stock options to non-employee directors of the Company
and (b) increase the number of shares of Common Stock available for purchase
from 1,000,000 to up to 1,700,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the selection of Hein + Associates LLP as the Company's
independent accountants for 1997.
/ / FOR / / AGAINST / / ABSTAIN
4. To transact such other business as may properly come before the meeting, or
any adjournment thereof.
<PAGE>
The undersigned hereby revokes any Proxies as to said shares heretofore
given by the undersigned, and ratifies and confirms all that said attorneys and
Proxies may lawfully do by virtue hereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL PROPOSALS. THIS PROXY CONFERS DISCRETIONARY AUTHORITY IN
RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE MAILING OF THE
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS TO THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders and Proxy Statement furnished herewith.
Dated _______________________, 1997
___________________________________
Signature(s) of Stockholder(s)
___________________________________
Signature(s) of Stockholder(s)
Signature(s) should agree with the name(s) shown hereon. Executors,
administrators, trustees, guardians and attorneys should indicate their capacity
when signing. Attorneys should submit powers of attorney. When shares are held
by joint tenants, both should sign. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INFONOW
CORPORATION. PLEASE SIGN AND RETURN THIS PROXY USING THE ENCLOSED PRE-PAID
ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF
YOU ATTEND THE MEETING.
