INFONOW CORP /DE
S-8, 1999-08-02
COMPUTERS & PERIPHERAL EQUIPMENT & SOFTWARE
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           As filed with the Securities and Exchange Commission on July 29, 1999
                                                      SEC Registration No.

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM S-8
                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933

                               INFONOW CORPORATION
                               -------------------
             (Exact name of registrant as specified in its charter)


        Delaware                                                04-3083360
        --------                                                ----------
 (State or other juris-                                       (IRS Employer
diction of incorporation)                                 Identification Number)

                        1875 Lawrence Street, Suite 1100
                                Denver, CO 80202
                                ----------------
                         (Address of principal executive
                          Offices, including zip code)

                   INFONOW CORPORATION 1999 STOCK OPTION PLAN
                   ------------------------------------------
                            (Full title of the plan)

                                 Kevin D. Andrew
                             Chief Financial Officer
                               INFONOW CORPORATION
                        1875 Lawrence Street, Suite 1100
                                Denver, CO 80202
                                 (303) 293-0212
                                 --------------
                (Name, address, including zip code, and telephone
               number, including area code, of agent for service)

                                    Copies to
                                    ---------
                               David J. Cook, Esq.
                         Chrisman, Bynum & Johnson, P.C.
                              1900 Fifteenth Street
                                Boulder, CO 80302
                                 (303) 546-1300

                         CALCULATION OF REGISTRATION FEE

                                                       Proposed
                                     Proposed          maximum
                      Amount         maximum           aggregate    Amount of
Title of securities   to be          offering price    offering     registration
to be registered      registered     per share (1)     price (1)    fee
- --------------------------------------------------------------------------------

Common Stock
(Par Value, $.001)    600,000        $4.0625           $2,437,500   $726.38


(1)  Estimated  solely for the  purpose of  calculating  the  registration  fee.
Computed  pursuant  to Rule  457(c)  using the  average  of the high and low bid
prices  for the  Registrant's  Common  Stock as  quoted  on the NASD  Electronic
Bulletin Board system on July 21, 1999.

This  Registration  Statement  registers  600,000  shares of the $.001 par value
common stock ("Common  Stock") of InfoNow  Corporation  (the "Company")  offered
pursuant to the InfoNow  Corporation  1999 Stock Option Plan (the  "Plan").  The
Plan was adopted by the board of directors of the Company on April 23, 1999.

<PAGE>


                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference.
- ------------------------------------------------

     The following  documents and all other documents  subsequently filed by the
Company  pursuant  to  Sections  13(a),  13(c),  14 and 15(d) of the  Securities
Exchange Act of 1934,  prior to the filing of a  post-effective  amendment which
indicates  that all the  Common  Stock  offered  hereby  has been  sold or which
deregisters all such Common Stock then remaining unsold, are hereby incorporated
herein by reference to be a part of this Registration Statement from the date of
filing such documents:

     (a) The Company's  latest annual report filed  pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934;

     (b) All other  reports  filed  pursuant  to  Section  13(a) or 15(d) of the
Securities  Exchange Act of 1934 since the end of the fiscal year covered by the
annual reports referred to in (a) above; and

     (c) The description of the Common Stock which is contained in the Company's
Registration Statement No. 33-43035 filed under the Securities Act of 1933.

Item 4. Description of Securities.
- ----------------------------------

     Not applicable.

Item 5. Interests of Named Experts and Counsel.
- -----------------------------------------------

     Not applicable.

Item 6. Indemnification of Directors and Officers.
- --------------------------------------------------

     Section  145 of the  General  Corporation  Law of  the  State  of  Delaware
contains provisions  permitting  corporations  organized thereunder to indemnify
directors,  officers and other  representatives  from  liabilities in connection
with any threatened,  pending or completed action,  suit or proceeding,  whether
civil,  criminal,  administrative or  investigative,  by reason of the fact that
such person was or is a director, officer, employee or agent of the corporation,
against  liabilities  arising in any such action,  suit or proceeding,  expenses
incurred in connection therewith, and against certain other liabilities. Article
Seven  of the  Registrant's  Certificate  of  Incorporation  provides  that  the
personal  liability of the directors of the  Registrant to the Registrant or its
stockholders  for monetary  damages for a breach of fiduciary duty as a director
is eliminated to the maximum extent  permitted by Delaware law.  Article Five of
the  Registrant's  Bylaws  provides  for  indemnification  of  the  Registrant's
directors  and  officers  in a  variety  of  circumstances,  which  may  include
liabilities under the Securities Act of 1933.

Item 7. Exemption from Registration Claimed.
- --------------------------------------------

     Not applicable.

<PAGE>


Item 8. Exhibits.
- -----------------

Exhibit No.         Description of Exhibit
- -----------         ----------------------

4.1                 Form of Certificate of Common Stock.(1)

4.4                 Form of Class C Warrant (2)

5.1                 Opinion of Chrisman, Bynum & Johnson, P.C.

23.1                Consent of  Chrisman,  Bynum & Johnson,  P.C.  (included  in
                    Exhibit 5.1).

23.2                Consent of Hein & Associates LLP.

99.1                InfoNow Corporation 1999 Stock Option Plan.

- ------------------------------

(1)  Incorporated by reference from Registration  Statement No. 33-43035 on Form
     S-1 dated February 14, 1992.

(2)  Incorporated   by  reference  from   Post-Effective   Amendment  No.  2  to
     Registration Statement No. 33-43035 on Form S-1 dated July 13, 1993.

Item 9. Undertakings.
- ---------------------

     (a) The undersigned registrant hereby undertakes:

          (1) To file,  during  any  period  in which  offers or sales are being
made, a post-effective  amendment to this registration statement and include any
material  information  with respect to the plan of  distribution  not previously
disclosed  in  the  registration  statement  or  any  material  change  to  such
information in the registration statement.

          (2) That,  for the  purpose of  determining  any  liability  under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.


<PAGE>



                                   SIGNATURES


     Pursuant to the  requirements of the Securities Act of 1933, the Registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized,  in the City of Denver, State of Colorado,  on the 27th day of July,
1999.

                                     INFONOW CORPORATION


                                     By: /s/ Michael W. Johnson
                                     --------------------------
                                     Michael W. Johnson, Chief Executive Officer

     Pursuant to the  requirements  of the  Securities  Act of 1933, as amended,
this  Registration  Statement  has been signed by the  following  persons in the
capacities and on the dates indicated.

SIGNATURE                       TITLE                              DATE
- ---------                       -----                              ----


/s/ Michael W. Johnson          Chairman, Chief Executive          July 23, 1999
- ----------------------          Officer, President and Director
Michael W. Johnson              (Principal Executive Officer)



/s/ Kevin D. Andrew             Chief  Financial Officer,          July 23, 1999
- -------------------             Secretary and Treasurer
Kevin D. Andrew                 (Principal Financial and
                                Accounting Officer)

/s/ Donald E. Cohen             Vice Chairman and Director         July 23, 1999
- -------------------
Donald E. Cohen


/s/ Duane H. Wentworth          Director                           July 23, 1999
- ----------------------
Duane H. Wentworth


/s/ Michael D. Basch            Director                           July 27, 1999
- --------------------
Michael D. Basch


/s/ Stuart Fullinwider          Director                           July 23, 1999
- ----------------------
Stuart Fullinwider


<PAGE>



                                  EXHIBIT INDEX



Sequential
Exhibit No.        Description of Exhibit
- -----------        ----------------------

4.1                Form of Certificate of Common Stock.(1)

4.4                Form of Class C Warrant (2)

5.1                Opinion of Chrisman, Bynum & Johnson, P.C.

23.1               Consent of Chrisman, Bynum & Johnson, P.C.
                   (included in Exhibit 5.1).

23.2               Consent of Hein & Associates LLP.

99.1               InfoNow Corporation 1999 Stock Option Plan.

- ------------------------------

(1)  Incorporated by reference from Registration  Statement No. 33-43035 on Form
     S-1 dated February 14, 1992.

(2)  Incorporated   by  reference  from   Post-Effective   Amendment  No.  2  to
     Registration Statement No. 33-43035 on Form S-1 dated July 13, 1993.





                      May 27, 1997
                      Page 1

                                                                     Exhibit 5.1

July 26, 1999


InfoNow Corporation
1875 Lawrence Street, Suite 1100
Denver, CO 80202



Gentlemen:

We have acted as counsel to InfoNow  Corporation  (the  "Company") in connection
with  the  preparation  and  filing  of a  Registration  Statement  on Form  S-8
("Registration  Statement")  covering  registration  under the Securities Act of
1993 of 600,000 shares of the Company's  Common Stock, par value $.001 per share
("Shares").  The Shares are offered  pursuant to the  InfoNow  Corporation  1999
Stock Option Plan.

Based on the  foregoing,  and assuming that the Shares will be sold according to
the  Registration  Statement  at a time when  effective  and that  there will be
compliance with all applicable securities laws involved in those states in which
the shares may be sold, we are of the opinion that,  upon issuance of the Shares
according to the Registration  Statement and receipt of the  consideration to be
paid  for the  Shares,  the  Shares  will be  validly  issued,  fully  paid  and
nonassessable shares of Common Stock of the Company.

We  consent  to the  use of  this  opinion  as an  exhibit  to the  Registration
Statement.

Sincerely,

/s/ Chrisman, Bynum & Johnson, P.C.
- -----------------------------------

CHRISMAN, BYNUM & JOHNSON, P.C.



                                                                    Exhibit 23.2

                          INDEPENDENT AUDITOR'S CONSENT

We consent to the  incorporation by reference in the  Registration  Statement of
InfoNow  Corporation  of our report dated  February 19, 1999,  accompanying  the
consolidated  financial  statements of InfoNow  Corporation also incorporated by
reference in such Registration Statement.


HEIN + ASSOCIATES LLP


Denver, Colorado
July 27, 1999





                                   EXHIBIT A


                  -------------------------------------------

                              INFONOW CORPORATION

                  -------------------------------------------



                               STOCK OPTION PLAN





                           DATED AS OF APRIL 23, 1999







Prepared by Chrisman,  Bynum & Johnson,  P.C., 1900 Fifteenth  Street,  Boulder,
Colorado 80302

<PAGE>


                              INFONOW CORPORATION

                             1999 STOCK OPTION PLAN
                               Table of Contents

ARTICLE 1
         Purpose                                                              1

ARTICLE 2
         Incentive Stock Options and Non-Incentive Stock Options              1

ARTICLE 3
         Administration                                                       1

ARTICLE 4
         Definitions                                                          2
                  4.1      "Change in Control"                                3
                  4.2      "Common Stock"                                     3
                  4.3      "Corporate Transaction"                            3
                  4.4      "Employee"                                         3
                  4.6      "Secondary Public Offering"                        4
                  4.7      "Non-Employee Director"                            4
                  4.9      "Securities Act"                                   4
                  4.10     "Stock Option"                                     4

ARTICLE 5
         Eligibility and Participation                                        4

ARTICLE 6
         Shares of Common Stock Subject to the Plan                           5
                  6.1      Maximum Number                                     5
                  6.2      Capital Changes                                    5

ARTICLE 7
         Exercise of Stock Options                                            5
                  7.1      Time of Exercise                                   5
                  7.2      Exchange of Outstanding Stock                      6
                  7.3      Use of Promissory Note: Exercise Loans             6
                  7.4      Termination of Employment before Exercise          6
                  7.5      Disposition of Forfeited Stock Options             7
                  7.6      Conditions of Exercise                             7

ARTICLE 8
         No Contract of Employment                                            8

<PAGE>


ARTICLE 9
         No Rights as a Stockholder                                           8

ARTICLE 10
         Assignability                                                        9

ARTICLE 11
         Corporate Transactions and Changes in Control                        9

ARTICLE 12
         Amendment                                                           10

ARTICLE 13
         Registration of Optioned Shares                                     10

ARTICLE 14
         Withholding Taxes                                                   11
                 14.1 Satisfaction of Withholding Obligations                11
                 14.2 Notification of Inquiries and Agreements               11
                 14.3 Use of Outstanding Stock for Withholding Obligations   11

ARTICLE 15
         Brokerage Arrangements                                              12

ARTICLE 16
         Nonexclusivity of the Plan                                          12

ARTICLE 17
         State Law Provisions                                                12

ARTICLE 18
         Effective Date                                                      12


<PAGE>



                              INFONOW CORPORATION

                             1999 STOCK OPTION PLAN

                                   ARTICLE 1
                                    Purpose

     The INFONOW  CORPORATION  CORPORATION  1999 STOCK  OPTION PLAN (the "Plan")
provides for the grant of Stock Options to employees,  directors and consultants
of INFONOW CORPORATION (the "Company"), and such of its subsidiaries (as defined
in  Section  424(f)  of the  Internal  Revenue  Code of 1986,  as  amended  (the
"Code")), as the Board of Directors of the Company (the "Board") shall from time
to time  designate  ("Participating  Subsidiaries")  in  order  to  advance  the
interests  of  the  Company  and  its  Participating  Subsidiaries  through  the
motivation, attraction and retention of key personnel.

                                   ARTICLE 2
            Incentive Stock Options and Non-Incentive Stock Options

     2.1 The Stock Options granted under the Plan may be either:

          2.1.1     Incentive  Stock Options  ("ISOs")  which are intended to be
                    "Incentive Stock Options" as that term is defined in Section
                    422 of the Code; or

          2.1.2     Nonstatutory Stock Options ("NSOs") which are intended to be
                    options  that do not qualify as  "Incentive  Stock  Options"
                    under Section 422 of the Code.

          2.1.3     All Stock Options shall be ISOs only to the extent specified
                    in the Option Agreement.  Subject to the other provisions of
                    the Plan,  a  Participant  may receive  ISOs and NSOs at the
                    same  time,  provided  that the  ISOs  and NSOs are  clearly
                    designated as such,  and the exercise of one does not affect
                    the exercise of the other.  All Stock  Options shall be NSOs
                    unless the Board determines otherwise.

     2.2 Except as otherwise  expressly  provided herein,  all of the provisions
and  requirements  of the Plan relating to Stock Options shall apply to ISOs and
NSOs.

                                   ARTICLE 3
                                 Administration

     3.1 The Plan shall be administered by the Board, or by a committee composed
solely of two or more  directors  ("Committee")  each of whom is a  Non-Employee
Director.  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 ISOs 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 have the

                                       1
<PAGE>


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.

     3.2 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. Rule 16b-3 under the Securities Exchange Act of
1934  (the  "Exchange  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  Exchange  Act if the  conditions  set  forth  in  that  Rule  are
satisfied.  Unless otherwise specified by the Committee, grants of Stock Options
hereunder to  individuals  who are officers or directors of the Company shall be
made in a manner that satisfies the conditions of that Rule.

                                   ARTICLE 4
                                  Definitions

     4.1 "Change in Control."  Change in Control shall mean any of the following
events occurring after April 23, 1999.

          4.1.1  If any one  Person  (as  defined  below),  after  the date of a
Secondary Public Offering of the Company, in a single transaction or in a series
of  transactions  shall  purchase or otherwise  acquire or become the beneficial
owner of securities of the Company representing  fifty-one percent (51%) or more
of the combined voting power of the Company's then outstanding voting securities
(including  any  voting  securities  issuable  upon  conversion  of  convertible
securities of the Company held by such Person);

          4.1.2 If at any  annual or special  meeting  of  Company  stockholders
following a contested election the Board of Directors of the Company shall cease
to be an  Authorized  Board.  For  purposes  of  this  paragraph,  a  "contested
election"  shall mean (i) an election  contest  subject to Rule 14a-11 under the
Exchange Act or (ii) an election which would have been subject to Rule 14a-11 if
at the time of such election the Company had securities  registered  pursuant to
Section 12 of the Exchange Act;

                                       2
<PAGE>


          4.1.3 If a  change  of  control  of the  Company  (i)  required  to be
reported in  accordance  with Item 6 of Schedule 14A under the Exchange  Act, or
(ii)  which  would be  required  to be  reported  in  accordance  with Item 6 of
Schedule  14A if at the  time  of  such  election  the  Company  had  securities
registered  pursuant to Section 12 of the Exchange Act, has  otherwise  occurred
unless a  Constitutional  Majority of an Authorized Board approves the Change of
Control and specifically waives the application of this Section;

          4.1.4 A dissolution or liquidation of the Company;

          4.1.5 A sale of all or substantially all the Company's assets;

          4.1.6 A determination  by the Board or the Committee (as  applicable),
in its sole discretion, that there has been a change in control of the Company.

               4.1.6.1 For  purposes  of this  Section  "Person"  shall have the
meaning set forth in Sections  13(d) and  14(d)(2)  of the  Exchange  Act, as in
effect  on  the  date  thereof,  and  shall  include,  without  limitation,  any
"Affiliate" or "Associate" of such Person (as those terms are used in Rule 12b-2
under the Exchange  Act);  provided,  however,  that the term "Person" shall not
include the Company or any trustee or other fiduciary  holding  securities under
any employee  benefit  plan of the  Company.  For purposes of this Section , (i)
beneficial  ownership  shall be computed in accordance with Rule 13d-3 under the
Exchange Act; and (ii) "Authorized Board" shall mean a Board of Directors of the
Company of which a number of  directors  equal to a majority  of the  authorized
number of  directors  constituting  the entire  Board,  including  vacancies  (a
"Constitutional Majority"), were either members of the Board of Directors on the
date of the Company's  Initial  Public  Offering or were  nominated or elected a
director by a  Constitutional  Majority at the date of nomination or election of
an Authorized Board.

     4.2 "Common  Stock." A share of Common  Stock  means a share of  authorized
common stock of the Company.

     4.3 "Corporate  Transaction."  Corporate Transaction shall mean one or more
of the following  transactions  unless  persons who were holders of  outstanding
voting capital stock of the Company which was outstanding  immediately  prior to
such transaction are immediately  after such transaction  holders of 51% or more
of the outstanding voting capital stock of the surviving or acquiring entity (or
equivalent  equity interest if the entity is not a  corporation):  (i) a merger,
consolidation   or  acquisition  (ii)  a  share  exchange  (with  or  without  a
stockholder  vote) in which 95% or more of the outstanding  capital stock of the
Company is  exchanged  for capital  stock of another  corporation;  or (iii) the
sale, transfer or other disposition of all or substantially all of the Company's
assets.

     4.4  "Employee."  An  Employee  is  an  employee  of  the  Company  or  any
Participating Subsidiary.

     4.5 "Fair Market Value." If the Common Stock is traded  publicly,  the Fair
Market  Value of a share of Common Stock on any date shall be the average of the
representative  closing bid and closing asked prices,  as quoted by the National
Association of Securities Dealers, Inc. through NASDAQ (its automated system for

                                       3
<PAGE>


reporting quotes),  for the date in question,  or, if the Common Stock is listed
on the NASDAQ  National  System or is listed on a national stock  exchange,  the
officially quoted closing price on NASDAQ or such exchange,  as the case may be,
on the date in question.  If the Common Stock is not traded  publicly,  the Fair
Market Value of a share of Common Stock on any date shall be  determined in good
faith by the Committee after such consultations  with outside legal,  accounting
and other  experts as the Committee  may deem  advisable,  and the Committee may
maintain a written record of its method of determining such value.

     4.6 "Secondary Public Offering." "Secondary Public Offering" shall mean any
offering of securities to the public by the Company which is registered pursuant
to the Securities Act.

     4.7  "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.

     4.8 "Participant." A Participant is an Employee,  director or consultant of
the Company to whom a Stock Option is granted.

     4.9 "Securities Act." Securities Act shall mean the Securities Act of 1933,
as amended.

     4.10 "Stock  Option." A Stock Option is the right granted under the Plan to
an Employee,  director,  or consultant to purchase, at such time or times and at
such price or prices  ("Option  Price") as are determined by the Committee,  the
number of shares of Common Stock determined by the Committee.

                                   ARTICLE 5
                         Eligibility and Participation

Grants of ISOs may be made to  Employees  of the  Company  or any  Participating
Subsidiary.  Grants  of NSOs  may be made  to  Employees  or  directors  of,  or
consultants to, the Company or any Participating Subsidiary. Any director of the
Company or of a  Participating  Subsidiary who is also an Employee shall also be
eligible  to  receive  ISOs.  The  Board or  Committee  shall  from time to time
determine the Participants to whom Stock Options shall be granted, the number of
shares of Common  Stock  subject to each Stock Option to be granted to each such
Participant, and the Option Price of such Stock Options, all as provided in this
Plan.  The Option  Price of any ISO shall be not less than the Fair Market Value
of a share of Common Stock on the date on which the Stock Option is granted, and
the Option Price of an NSO shall be not less than  eighty-five  percent (85%) of
the Fair Market Value on the date the NSO is granted. If an ISO is granted to an
Employee  who then owns  stock  possessing  more than 10% of the total  combined
voting power of all classes of stock of the Company or any parent or  subsidiary
corporation of the Company,  the Option Price of such ISO shall be at least 110%
of the Fair Market Value of the Common Stock subject to the ISO at the time such
ISOs are granted,  and such ISO shall not be exercisable  after five years after
the date on which it was  granted.  Each Stock  Option  shall be  evidenced by a
written agreement ("Option  Agreement")  containing such terms and provisions as
the Committee may determine, subject to the provisions of this Plan.

                                       4
<PAGE>


                                   ARTICLE 6
                   Shares of Common Stock Subject to the Plan

     6.1 Maximum Number.  The maximum aggregate number of shares of Common Stock
that may be made subject to Stock Options shall be 600,000 authorized shares. To
the extent the aggregate Fair Market Value (determined as of the time the ISO is
granted) of the stock with respect to which ISOs are  exercisable  for the first
time by an  individual  in a particular  calendar  year exceeds  $100,000,  such
excess  Stock  Options  shall be treated as NSOs.  If any shares of Common Stock
subject to Stock  Options are not  purchased or  otherwise  paid for before such
Stock Options expire, such shares may again be made subject to Stock Options.

     6.2  Capital  Changes.  In the event any  changes are made to the shares of
Common  Stock  (whether  by reason of  reorganization,  recapitalization,  stock
dividend  paid in capital  stock of the  Company,  stock split,  combination  of
shares,  exchange  of  shares,  change in  corporate  structure  or  otherwise),
appropriate  adjustments  shall be made in:  (i) the  number of shares of Common
Stock theretofore made subject to Stock Options, and in the Option Price of said
shares;  and (ii) the  aggregate  number of shares  which may be made subject to
Stock Options in the future. If any of the foregoing adjustments shall result in
a fractional  share,  the fraction shall be  disregarded,  and the Company shall
have no  obligation  to make any cash or other  payment  with  respect to such a
fractional  share.  Without  limitation,  a distribution  to shareholders of the
Company of  securities  of a  subsidiary  of the  Company  does not result in an
adjustment under Section 6.1 or permit the holder to acquire  securities of such
subsidiary.

                                   ARTICLE 7
                           Exercise of Stock Options

     7.1 Time of Exercise. Subject to the provisions of the Plan, the Committee,
in its discretion, shall determine the time when a Stock Option, or a portion of
a Stock Option, shall become exercisable, and the time when a Stock Option, or a
portion of a Stock Option,  shall expire.  Such time or times shall be set forth
in the Option Agreement evidencing such Stock Option. Unless otherwise specified
in an Option Agreement, a Stock Option shall become exercisable (i) with respect
to 7/36 of the shares subject thereto seven months after the date of grant,  and
(ii) with respect to 1/36 of the shares subject thereto at the end of each month
thereafter,  (so that all Stock  Options are fully  vested three (3) years after
the date of  grant)  subject  to  continued  employment  with the  Company  or a
Participating Subsidiary and Section hereof. A Stock Option shall expire, to the
extent not exercised,  no later than the tenth  anniversary of the date on which
it was granted.  The Committee may accelerate  the vesting of any  Participant's
Stock Option by giving written notice to the  Participant.  Upon receipt of such
notice,  the  Participant  and the Company  shall amend the Option  Agreement to
reflect the new vesting  schedule.  The acceleration of the exercise period of a
Stock  Option  shall not affect the  expiration  date of that Stock  Option.  No
fractional shares shall be issued as a result of the exercise of a Stock Option.
In computing  the number of shares to be received as a result of the exercise of
a Stock Option, the Committee will "round down" to the nearest whole share.

                                       5
<PAGE>


     7.2 Exchange of Outstanding  Stock. The Committee,  in its sole discretion,
may permit a Participant  to (i) surrender to the Company whole shares of Common
Stock  previously  acquired  by the  Participant  and/or (ii)  request  that 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.  Such
surrendered or withheld shares shall be valued at their Fair Market Value on the
date of exercise.  Shares credited to a Participant shall again be available for
grant under the Plan.

     7.3 Use of Promissory Note;  Exercise Loans. The Committee may, in its sole
discretion,  impose terms and conditions,  including  conditions relating to the
manner and timing of payments,  on the exercise of Stock Options. Such terms and
conditions  may include,  but are not limited to,  permitting a  Participant  to
deliver to the Company his  promissory  note as full or partial  payment for the
exercise of a Stock Option. The Committee, in its sole discretion, may authorize
the Company to make a loan to a Participant  in connection  with the exercise of
Stock  Options,  or  authorize  the Company to arrange or  guarantee  loans to a
Participant  by a third  party.  Any  loan by the  Company  or  acceptance  of a
promissory  note  shall  be made in  accordance  with the  corporate  law of the
Company's state of incorporation.

     7.4  Termination  of Employment  before  Exercise.  If the  employment of a
Participant  who was an employee of the  Company or a  Participating  Subsidiary
when the Stock Option was granted shall  terminate for any reason other than the
Participant's  death or  disability or for cause (as defined  below),  any Stock
Option  granted to the  Participant,  to the extent then  exercisable  under the
applicable Option  Agreement(s),  shall remain exercisable after the termination
of the Participant's employment for a period ending on the last day of the month
next following the month of such  termination  (but not later than the specified
expiration  date).  If the  Participant's  employment is terminated  because the
Participant is disabled within the meaning of Section  22(e)(3) of the Code, any
Stock Option granted to the Participant,  to the extent then  exercisable  under
the  applicable  Option   Agreement(s),   shall  remain  exercisable  after  the
termination of his  employment  until the last day of the twelfth month (but not
later than the specified expiration date from the date of such termination).  If
the  Participant   dies  while  employed  by  the  Company  or  a  Participating
Subsidiary,  or during the one-month or twelve-month  periods referred to above,
his Stock Options may be exercised by the Participant's  estate,  duly appointed
representative  or beneficiary  who acquires the Stock Options by will or by the
laws of descent and  distribution,  to the extent that they were  exercisable on
the date of  cessation of his  employment,  but no further  installments  of the
Participant's   Stock   Options  will  become   exercisable   and  each  of  the
Participant's Stock Options shall terminate on the last day of the twelfth month
from the date of the  Participant's  death  (but not  later  than the  specified
expiration  dates).  If a Stock Option is not  exercised  during the  applicable
period,  it shall be deemed to have been  forfeited  and of no further  force or
effect.

     Notwithstanding  the foregoing  provisions of this Section , but subject to
the other  provisions  of this Plan,  the Option  Agreement  may specify  longer
periods for exercise of a NSO or ISO after any such an event.

     Upon action of the Committee in its sole discretion,  except as provided in
a written  employment or consulting  agreement of the Company or a Participating
Subsidiary with the  Participant,  which is referenced in the Option  Agreement,
any Stock Option shall terminate immediately,  and may not be exercised,  (i) if
prior to the date of exercise  and/or  delivery of  certificate(s)  representing

                                       6
<PAGE>


shares  received upon the option  exercise (but in any event not later than five
(5) days after  date of  exercise)  Participant  is  terminated  for cause as an
Employee of the Company or its Participating  Subsidiary, or if not an Employee,
for cause as a director  or  consultant  for the  Company  or its  Participating
Subsidiary;  or (ii) if subsequent to a  Participant's  termination and prior to
the  expiration  of the  term  of  the  Stock  Option  conditions  arise  or are
discovered with respect to a Participant that would have  constituted  cause for
termination.  "Cause"  shall have the meaning  given to it in the  Participant's
written  employment,  consultant  or  director  agreement  with the  Company  or
Participating  Subsidiary.  If no such written agreement  exists,  "cause" shall
mean (i)  dishonesty  which is not the  result  of an  inadvertent  or  innocent
mistake  with  respect to the Company or any of its  subsidiaries;  (ii) willful
misfeasance  or  nonfeasance  of duty intended to injure or having the effect of
injuring  in  some  material  fashion  the  reputation,   business  or  business
relationships  of  the  Company  or  any of  its  subsidiaries  or any of  their
respective officers,  directors or employees;  (iii) conviction upon a charge of
any crime  involving  moral  turpitude  or a crime other than a vehicle  offense
which could reflect in some material fashion unfavorably upon the Company or any
of its  subsidiaries;  or (iv)  willful or  prolonged  absence  from work by the
Participant  (other  than by  reason of  disability  due to  physical  or mental
illness) or failure, neglect or refusal by the Participant to perform his duties
and  responsibilities  without  the same being  corrected  upon thirty (30) days
prior written notice. In addition,  unless  specifically  provided  otherwise in
reference to this Plan in a written employment, consultant or director agreement
with the  Company or  Participating  Subsidiary,  "cause"  for  purposes of this
Section shall exist (and  termination  of the Stock Option may occur even if not
so provided in the written employment, consultant or director agreement with the
Company or Participating  Subsidiary) if the Participant materially breaches any
provision  of an  agreement  with the  Company or any of its  subsidiaries  with
respect  to  obligations  regarding   non-competition,   invention,   ownership,
confidentiality,  non-solicitation  of customers,  and non-hire of customers and
employees  of the  Company  or a  Subsidiary,  or if the  Participant  commits a
material  breach  of  any  other  obligation  to  the  Company  or  any  of  its
subsidiaries under conditions where the existence of this risk of termination of
the Stock Option would not  constitute a substantial  risk of  forfeiture  under
Section 83 of the Code if Section 83 of the Code would  apply in respect of such
Stock Options in such  circumstance  and require such Stock Option to be treated
as taxable income to the Participant  prior to exercise or transfer of the Stock
Option.

     7.5  Disposition  of Forfeited  Stock  Options.  Any shares of Common Stock
subject to Stock  Options  forfeited by a  Participant  shall not  thereafter be
eligible  for  purchase  by the  Participant,  but may be made  subject to Stock
Options granted to other Participants.

     7.6  Conditions  of  Exercise.  Notice  of  exercise  shall  be in the form
attached to the Option  Agreement and shall,  in the  discretion of the Company,
contain a representation,  in the form provided by the Company,  that the shares
are being purchased for investment only and not for resale or distribution,  and
such other representations and agreements as the Company may reasonably require,
and may in addition  require as a condition  of  exercise  that the  Participant
execute any applicable stockholders agreement. The Company may also require as a
condition  of exercise  that the  Participant  will agree,  if  requested by the
Company in connection  with a public  offering of the Company's  securities,  to
adhere to lock-up  arrangements  between the Company and an underwriter involved
in such public offering.

                                       7
<PAGE>


                                   ARTICLE 8
                           No Contract of Employment

     Nothing  in this  Plan  shall  confer  upon the  Participant  the  right to
continue  as  an  employee,  consultant  or  director  of  the  Company  or  any
Participating  Subsidiary,  nor shall it  interfere in any way with the right of
the Company,  or any Participating  Subsidiary,  to discharge the Participant at
any time for any reason whatsoever,  with or without cause. The grant of a Stock
Option  does not imply that the  Company  does not  anticipate  either a general
reduction  in  force  or the  termination  of the  employment,  directorship  or
consulting  position of a Participant.  Nothing in this Article shall affect any
rights or  obligations  of the  Company  or any  Participant  under any  written
contract of employment.

     The  grant of a Stock  Option  does not  create  a  fiduciary  relationship
between  the  Participant  and the  Company or any other  person or entitle  the
Participant  to  require  the  Company  or  any  other  person  to  provide  any
information  except as required by applicable  securities  or employee  benefits
statutes and rules and regulations issued thereunder.

                                   ARTICLE 9
                           No Rights as a Stockholder

     A Participant shall have no rights as a stockholder with respect to any
shares of Common Stock subject to a Stock Option.  Except as provided in Section
, no adjustment  shall be made in the number of shares of Common Stock issued to
a  Participant,  or in any other rights of the  Participant  upon  exercise of a
Stock Option by reason of any dividend,  distribution  or other right granted to
stockholders  for which the record  date is prior to the date of exercise of the
Participant's  Stock Option.  The  Committee,  the Board and the Company have no
continuing  duty to  provide  a  Participant  with  information  concerning  the
Company. The Company,  its subsidiaries,  the Board and the Committee shall have
no liability to the Participant,  or the Participant's  estate or transferee if:
(i) a Stock  Option  intended  to be an ISO does not at any time  qualify  as an
incentive stock option under the Code; or (ii) a Stock Option grant or exercise,
or the subsequent sale of securities received on such exercise, does not qualify
as exempt from the  application  of Section  16(b) of the Exchange  Act; in each
case  even if the  Participant,  estate  to  transferee  was  informed  it would
qualify.





                                       8
<PAGE>


                                   ARTICLE 10
                                 Assignability

     No Stock Option granted under this Plan,  nor any other rights  acquired by
Participant   under  this  Plan,  shall  be  assignable  or  transferable  by  a
Participant,  other  than by  will or the  laws  of  descent  and  distribution.
Notwithstanding the preceding sentence,  the Committee,  in its sole discretion,
may permit the  assignment  or transfer of an NSO and the exercise  thereof by a
person other than a  Participant,  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 Plan in the hands of a permitted
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. In the event of a Participant's  death, the Stock Option may be exercised
by the personal  representative of the Participant's  estate or by the successor
or successors in interest  determined under the Participant's  will or under the
applicable laws of descent and distribution.  The terms of any rights under this
Plan in the hands of a transferee or assignee  shall be determined as if held by
the  Participant  and shall be of no greater extent or term than if the transfer
or assignment had not taken place.

                                   ARTICLE 11
                 Corporate Transactions and Changes in Control

     11.1 At least  fifteen (15) days prior to the  consummation  of a Corporate
Transaction,  the Company shall give Participants written notice of the proposed
Corporate  Transaction.  The vesting  schedules of all Stock Options may, at the
sole discretion of the Committee, be accelerated so that the Stock Options shall
become  exercisable  as to those  shares  which could be  purchased  under those
vesting  schedules 12 months after the date of  consummation  of the Corporation
Transaction.  In addition, at the sole discretion of the Committee,  the vesting
schedule of some or all other Stock  Options may be  accelerated  so that all or
any portion of Stock Options outstanding under the Plan immediately prior to the
consummation  of the Corporate  Transaction  shall,  for all purposes under this
Plan,  become  exercisable  as of such time.  If a Corporate  Transaction  is to
occur,  in lieu of allowing a Participant  to exercise the  Participant's  Stock
Options, the Board may, in its sole discretion, require some or all Participants
to  accept  a  cash  payment  in  consideration   for  the  termination  of  the
Participant's  Stock Options.  The termination  shall occur immediately prior to
the  consummation  of the  Corporate  Transaction  and the cash payment shall be
equal to the  difference  between  the price  per  share of Common  Stock in the
Corporate  Transaction  as determined  by the Board and the exercise  price of a
Participant's  Stock Options.  All Stock  Options,  to the extent not previously
exercised,  shall terminate upon the consummation of such Corporate  Transaction
and  cease  to  be  exercisable   unless  expressly  assumed  by  the  successor
corporation  or  parent  thereof.  Provided,  however,  that  if  the  Corporate
Transaction is to be accounted for as a "pooling-of-interest,"  then unexercised

                                       9
<PAGE>


stock  options  shall be  exchanged  for  similar  options  of the  acquiror  or
surviving  entity or voting  common stock of the  acquiror or  surviving  entity
based on the value of the options,  as and to the extent required by APB No. 16,
accounting  pronouncements of the Securities and Exchange Commission,  and other
authoritative  principles  and  pronouncements  concerning   pooling-of-interest
accounting.  Notwithstanding the foregoing, the vesting of a Participant's Stock
Options shall not be accelerated  (if and to the extent  requested in writing by
the  Participant)  upon  a  Corporate   Transaction  if  the  participant  is  a
"disqualified  individual"  as  that  term is  defined  in  Section  280G of the
Internal Revenue Code.

     11.2 The vesting  schedules  of all Stock  Options  shall be  automatically
accelerated so that the Stock Options shall become  exercisable as to all shares
subject  to the Stock  Options if the  Participant's  employment  is  terminated
without cause by the Company  within one (1) year following a Change in Control.
"Without cause" means that "cause" did not exist as defined in Section .

     11.3 The employment,  consulting or directorship  agreement,  or the Option
Agreement of a  Participant  may contain terms which vary from Sections and upon
approval of the Board and the Committee.

                                   ARTICLE 12
                                   Amendment

     The Board of  Directors  may from time to time  alter,  amend,  suspend  or
discontinue  the  Plan,  including,   where  applicable,  any  modifications  or
amendments  as it shall deem  advisable in order that ISOs 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; provided, however,
that no such  action  shall  adversely  affect the rights and  obligations  with
respect to Stock Options at any time  outstanding  under the Plan;  and provided
further that no such action shall,  without the approval of the  stockholders of
the Company,  (i) increase the maximum number of shares of Common Stock that may
be made subject to Stock  Options  (unless  necessary to effect the  adjustments
required by Section ), (ii) materially modify the requirements as to eligibility
for  participation  in the  Plan,  or (iii)  materially  increase  the  benefits
accruing to Participants under the Plan.

                                   ARTICLE 13
                        Registration of Optioned Shares

     The Stock  Options  shall not be  exercisable  unless the  purchase of such
optioned shares is pursuant to an applicable  effective  registration  statement
under the Securities Act and applicable state securities laws or unless,  in the
opinion of counsel to the Company, the proposed purchase of such optioned shares
would be exempt from the  registration  requirements  of the  Securities Act and
from  the  registration  or  qualification   requirements  of  applicable  state
securities  laws.  Any  certificates  for such shares shall bear such legends as
deemed appropriate by the Committee.

                                       10
<PAGE>


                                   ARTICLE 14
                               Withholding Taxes

     14.1 Satisfaction of Withholding Obligations.  The Company or Participating
Subsidiary may take such steps as it may deem  necessary or appropriate  for the
withholding  of any  taxes or  funds  which  the  Company  or the  Participating
Subsidiary is required by any law or regulation of any  governmental  authority,
whether federal,  state or local, domestic or foreign, to withhold in connection
with any Stock Options (collectively, "Withholding Obligations"). Such steps may
include, by way of example only and not limitation,  (i) requiring a Participant
to remit to the Company in cash an amount sufficient to satisfy such Withholding
Obligations;  (ii) allowing the  Participant  to tender to the Company shares of
Common  Stock,  the Fair Market Value of which at the tender date the  Committee
determines  to be  sufficient  to satisfy such  Withholding  Obligations;  (iii)
withholding  shares of Common Stock  otherwise  issuable  upon the exercise of a
Stock Option and which have a Fair Market Value at the exercise date  sufficient
to satisfy such Withholding Obligations;  (iv) agreement with the Participant to
withhold amounts from Participant's  paycheck amounts sufficient to satisfy such
Withholding Obligations; or (iv) any combination of the foregoing.

     14.2  Notification  of Inquiries and  Agreements.  Each  Participant  shall
notify the Company in writing within 10 days after the date such Participant (i)
first  obtains  knowledge  of  any  Internal  Revenue  Service  inquiry,  audit,
assertion,  determination,  investigation, or question relating in any manner to
the value of any shares of Common  Stock or Stock  Options  granted or  received
hereunder;  (ii)  includes  or agrees  (including,  without  limitation,  in any
settlement,  closing or other similar agreement) to include in gross income with
respect  to any  shares of Common  Stock or Stock  Options  received  or granted
hereunder  (A) any amount in excess of the amount  reported on Form 1099 or Form
W-2 to such Participant by the Company, or (B) if no such Form was received, any
amount; (iii) exercises,  sells, disposes of, or otherwise transfers (other than
to such Person's successors, heirs, executors or administrators, as the case may
be) a Stock Option acquired  pursuant to this Plan; or (iv) sells,  disposes of,
or otherwise transfers (other than to such Person's successors, heirs, executors
or administrators,  as the case may be) shares of Common Stock acquired pursuant
to the exercise of an Incentive  Stock Option  within the  Disqualified  Period.
Upon request,  a Participant  shall  provide to the Company any  information  or
document  relating to any event  described in the preceding  sentence  which the
Company (in its sole discretion) requires in order to calculate and substantiate
any  change  in  the  Company's  tax  liability  as  a  result  of  such  event.
"Disqualified  Period"  means,  in the case of any Incentive  Stock Option,  the
period  beginning  on the date such Stock  Option is  granted  and ending on the
later of the date (i) two years after the date such Stock Option is granted,  or
(ii) one year after the transfer of any Common Stock to a  Participant  pursuant
to the exercise of such Stock Option.

     14.3 Use of Outstanding  Stock for Withholding  Obligations.  The Committee
may, in its sole discretion,  permit a Participant to satisfy such Participant's
Withholding Obligations with shares of Common Stock which such Participant would
otherwise be entitled to receive upon exercise,  provided however,  (i) that the
amount of any Withholding Obligations  representing federal income tax which may
be  satisfied  in such a manner  shall not exceed the lessor of: (a) the regular
federal income tax withholding rate to which such  Participant  would be subject
in respect of the taxable income  arising from such  exercise;  and (b) the flat

                                       11
<PAGE>


withholding  rate applicable to supplemental  wages in effect at such time under
Treasury Regulations Section  31.3402(g)-1(a)(2)(ii) (or any successor provision
of the Code or Treasury Regulations);  (ii) provided further, that the Committee
may, in its  discretion,  permit a  Participant  to satisfy  federal  income tax
withholding in excess of the amount  described in (i) above by (A)  surrendering
to the Company shares of Company capital stock having a Fair Market Value at the
time of surrender equal to such additional withholding and which have been owned
by such  Participant  for at  least 6  months  prior  to such  exercise,  or (B)
attesting  in writing to such  Participant  ownership  of shares of Common Stock
having a Fair Market Value at the time of attestation  equal to such  additional
Withholding  Obligations  and allowing  the Company to withhold  from the shares
such  Participant  would  otherwise  receive an equal number of shares of Common
Stock.

                                   ARTICLE 15
                             Brokerage Arrangements

     The Committee,  in its discretion,  may enter into arrangements with one or
more  banks,   brokers  or  other  financial   institutions  to  facilitate  the
disposition  of shares  acquired upon the exercise of Stock  Options  including,
without limitation,  arrangements for the simultaneous exercise of Stock Options
and the sale of shares acquired upon exercise.

                                   ARTICLE 16
                           Nonexclusivity of the Plan

     Neither  the  adoption of the Plan by the Board nor the  submission  of the
Plan to  stockholders of the Company for approval shall be construed as creating
any  limitations  on the power or  authority of the Board to adopt such other or
additional  incentive or other  compensation  arrangements of whatever nature as
the Board of Directors may deem  necessary or desirable or preclude or limit the
continuation  of any other  plan,  practice  or  arrangement  for the payment of
compensation or fringe benefits to employees generally, or to any class or group
of employees, which the Company or any Participating Subsidiary now has lawfully
put into effect, including, without limitation, any retirement, pension, savings
and stock purchase plan, insurance,  death and disability benefits and executive
short-term or long-term incentive plans.

                                   ARTICLE 17
                              State Law Provisions

     All  grants  and  exercises  of  Stock  Options,  and  the  sale  or  other
disposition  of  securities  received  on such  exercise,  shall be  subject  to
applicable provisions of local, state and foreign laws.

                                   ARTICLE 18
                                 Effective Date

     This Plan was adopted by the Board on April 23, 1999,and  became  effective
on that date subject to the approval of the Company's stockholders within twelve
(12) months thereafter. However, if such approval is not obtained all provisions
of this Plan, and all grants hereunder,  shall  nevertheless be effective except
that all ISOs shall be NSOs. No Stock Options shall be granted subsequent to ten
(10) years  after the  effective  date of the Plan.  Stock  Options  outstanding
subsequent to ten years after the effective  date of the Plan shall  continue to
be governed by the provisions of the Plan.

                                       12
<PAGE>


                      NON-STATUTORY STOCK OPTION AGREEMENT


     This NON-STATUTORY  STOCK OPTION AGREEMENT is made ________,  199 , between
INFONOW   CORPORATION   (hereinafter   referred  to  as  the   "Company"),   and
_______________ (hereinafter referred to as "Optionee").

     WHEREAS,  Optionee is an important and valuable  contributor to the Company
and the  Company  deems  it to be in its  interest  and in the  interest  of its
shareholders  to secure the  services of Optionee for the Company or such of its
subsidiary companies as may be designated by the Company; and

     WHEREAS,  the Company, as an incentive to Optionee to continue to serve the
Company or its subsidiaries and to increase Optionee's  proprietary  interest in
the  Company,  desires to enter  into this  Agreement  containing  the terms and
conditions  hereinafter  set forth and to grant  Optionee  an option to purchase
shares of the Common Stock of the Company.

     NOW, THEREFORE,  in consideration of the promises and the mutual agreements
hereinafter  contained,  and for  other  good and  valuable  consideration,  the
parties agree as follows:

     1. Grant of Option.  In consideration of the foregoing,  the Company hereby
grants to  Optionee  the  right  and  option  (hereinafter  referred  to as "the
option") to purchase  __________ shares of the Company's Common Stock ("Shares")
pursuant to the following schedule: subject to Section 7.4 of the Company's 1999
Stock Option Plan (the "Plan"),  __________.  The option shall  terminate on the
tenth  anniversary  of the date hereof and,  accordingly,  may not be  exercised
after that date.  The purchase price to be paid for such Shares upon exercise of
the option  shall be $______ per share,  being not less than the  percentage  of
Fair Market Value of the Shares on the date of this Agreement required under the
Plan.  This  option is  granted  pursuant  to,  and is  subject to the terms and
conditions  of the Plan,  a copy of which has been  furnished  to  Optionee  and
receipt of which Optionee hereby acknowledges.

     2. Method of Exercising  Option.  The option may be exercised,  in whole at
any time or in part  from  time to time,  by  giving  to the  Company  notice in
writing to that  effect.  Within  thirty  (30) days  after the  receipt by it of
notice of exercise  of the option and upon due  satisfaction  of all  conditions
pertaining to the option as set forth in this Agreement, the Company shall cause
certificates  for the  number  of Shares  with  respect  to which the  option is
exercised   to  be  issued  in  the  name  of   Optionee,   or  his   executors,
administrators, or other legal representatives, heirs, legatees, next of kin, or
distributees, and to be delivered to Optionee or his executors,  administrators,
or other legal representatives,  heirs, legatees,  next of kin, or distributees.
Payment of the purchase price for the shares with respect to which the option is
exercised shall be made to the Company upon the delivery of such stock, together
with revenue stamps or checks in an amount  sufficient to pay any stock transfer
taxes  required on such  delivery.  The Company shall give the person or persons
entitled  to the same at least  five (5) days'  notice of the time and place for
delivery and for the payment of such purchase  price.

<PAGE>


     3. Conditions of Option. The option is subject to the following  additional
conditions:

          (a) The option  herein  granted to  Optionee  is not  transferable  by
     Optionee during Optionee's lifetime,  but may be transferred by will or the
     laws of descent and distribution.

          (b) The option may be exercised  by Optionee  pursuant to the terms of
     the Plan,  but only to the extent that  Optionee  had the right to exercise
     such option at the date of  termination  of the  Optionee's  service to the
     Company.

     4.  Representation  as to Investment.  Unless the Option and the shares are
registered pursuant to a then effective  registration  statement pursuant to the
Securities Act of 1933 and applicable state law, the exercise of such option and
the  delivery of the Shares  subject to it will be  contingent  upon the Company
being  furnished  by  Optionee,  his  legal  representatives,  or other  persons
entitled to exercise such option,  with a statement in writing, in substantially
the form  attached as Exhibit 2 hereto,  that at the time of such exercise it is
his or their  intention  to  acquire  the  Shares  being  purchased  solely  for
investment purposes and not with a view to distribution.

     5.  Notices.  Any  notice  to be  given by  Optionee  as  required  by this
Agreement  shall be sent to the Company at its principal  executive  offices and
any notice from the Company to Optionee shall be sent to Optionee at his address
as it appears on the  Company's  books and records.  Either party may change the
address to which  notices are to be sent by informing the other party in writing
of the new address.

     6. Restriction Against  Assignment.  Except as otherwise expressly provided
above,   Optionee  agrees  on  behalf  of  himself  and  of  his  executors  and
administrators,  heirs, legatees,  distributees, and any other person or persons
claiming any benefits under him by virtue of this Agreement, that this Agreement
and the  rights,  interests,  and  benefits  under  it  shall  not be  assigned,
transferred,  pledged,  or  hypothecated in any way by Optionee or any executor,
administrator,  heir,  legatee,  distributee,  or other  person  claiming  under
Optionee by virtue of this Agreement.  Such rights,  interest, or benefits shall
not be subject to  execution,  attachment,  or similar  process.  Any  attempted
assignment,  transfer,  pledge or  hypothecation,  or other  disposition of this
Agreement or of such rights,  interests,  and benefits contrary to the preceding
provisions, or the levy of any attachment or similar process thereupon, shall be
null and void and without effect.

     7. Further  Agreements.  The  undersigned  agrees,  in connection  with the
issuance of the Shares,  and  thereafter  from time to time as  requested by the
Company,  to execute any  stockholders  agreement  as provided in the Plan.  The
undersigned  will,  if  requested,  by the Company in  connection  with a public
offering of the Company's securities, adhere to lock-up arrangements between the
Company and an underwriter involved in such public offering.

     The Company or Participating  Subsidiary may take such steps as it may deem
necessary or  appropriate  for the  withholding  of any taxes or funds which the
Company or the Participating  Subsidiary is required by any law or regulation of
any  governmental  authority,  whether  federal,  state or  local,  domestic  or
foreign,  to  withhold  in  connection  with any  Stock  Options  (collectively,
"Withholding  Obligations").  Such steps may include, by way of example only and
not  limitation,  (i) requiring a Participant to remit to the Company in cash an

<PAGE>


amount  sufficient to satisfy such  Withholding  Obligations;  (ii) allowing the
Participant  to tender to the Company  shares of Common  Stock,  the Fair Market
Value of which at the tender date the  Committee  determines to be sufficient to
satisfy such Withholding  Obligations;  (iii) withholding shares of Common Stock
otherwise  issuable  upon the  exercise of a Stock  Option and which have a Fair
Market  Value at the  exercise  date  sufficient  to  satisfy  such  Withholding
Obligations; or (iv) any combination of the foregoing.

     The  Optionee  understands  that the Company  will  require the Optionee to
satisfy any applicable Withholding Obligations in connection with this option or
Common  Stock  received  pursuant  thereto.  The  Optionee  agrees to notify the
Company in writing  within 10 days after the date the Optionee (i) first obtains
knowledge  of  any  Internal   Revenue  Service   inquiry,   audit,   assertion,
determination, investigation, or question relating in any manner to the value of
this  option or any  shares of  Common  Stock  received  pursuant  hereto;  (ii)
includes or agrees (including, without limitation, in any settlement, closing or
other similar  agreement) to include in gross income with respect to this option
or any shares of Common Stock received  pursuant hereto (A) any amount in excess
of the amount  reported on Form 1099 or Form W-2 to the Optionee by the Company,
or (B) if no such Form was  received,  any amount;  or (iii)  exercises,  sells,
disposes of, or otherwise  transfers  (other than to the Optionee's  successors,
heirs,  executors  or  administrators,  as the case may be)  this  option.  Upon
request,  the Optionee shall provide to the Company any  information or document
relating to any event described in the preceding  sentence which the Company (in
its sole discretion)  requires in order to calculate and substantiate any change
in the Company's tax liability as a result of such event.

     IN WITNESS  WHEREOF,  the  Company  and the  Optionee  have  executed  this
Non-Statutory Stock Option Agreement as of the day and year first above written.

ATTEST:                                       INFONOW CORPORATION


By:________________________                  By:___________________________
         Secretary                           President

                                              _____________________________
                                              ______________, Optionee

<PAGE>


EXHIBIT 1

NOTICE OF EXERCISE

TO: INFONOW CORPORATION

     1. The undersigned hereby elects to purchase  ___________________ shares of
Common  Stock of  INFONOW  CORPORATION  pursuant  to the  terms of the  attached
Non-statutory  Stock  Option  Agreement,  and  tenders  herewith  payment of the
purchase price of such shares in full.

     2. Please issue a certificate or certificates  representing  said shares of
Common  Stock  in the  name  of the  undersigned  or in  such  other  name as is
specified below:



__________________________
         (Name)




__________________________
         (Address)




Date:                      _______________________________
                                    Optionee


<PAGE>


EXHIBIT 2

INVESTMENT REPRESENTATION STATEMENT

TO: INFONOW CORPORATION

With respect to the  ____________________  shares of Common Stock  ("Shares") of
INFONOW  CORPORATION   ("Company")  which  the  undersigned   ("Purchaser")  has
purchased from the Company today, the Purchaser  hereby  represents and warrants
as follows:

1. The  Purchaser  acknowledges  that he has  received no formal  prospectus  or
offering  memorandum  describing the business and operations of the Company.  He
has, however, by virtue of his relationship with the Company,  been given access
to all information  that he believes is material to his decision to purchase the
Shares.  The Purchaser has had the  opportunity to ask questions of, and receive
answers from, representatives of the Company concerning its business operations.
Any questions raised by the Purchaser have been answered to his satisfaction.

2.  The  Shares  are  being  acquired  by the  Purchaser  for his  account,  for
investment  purposes  only,  and not with a view to the  distribution  or resale
thereof.

3. No representations or promises have been made concerning the marketability or
value of the Shares. The Purchaser understands that there is currently no market
for the transfer of the Shares. The Purchaser further acknowledges that, because
the Shares have not been registered under the Securities Act of 1933, and cannot
be resold unless they are subsequently registered under said Act or an exemption
from registration is available, the Purchaser must continue to bear the economic
risk  of his  investment  in  the  Shares  for an  indefinite  period  of  time.
Specifically,  the Purchaser agrees that the Shares may not be transferred until
the Company has  received an opinion of counsel  reasonably  satisfactory  to it
that the proposed  transfer will not violate  federal or state  securities  laws
unless the  Company  receives  this  requirement.  The Company has not agreed or
represented  to the Purchaser that the Shares will be purchased or redeemed from
the  Purchaser  at  any  time  in  the  future.  Further,  there  have  been  no
representations,  promises,  or  agreements  that the Shares will be  registered
under  the  Securities  Act of  1933  at any  time in the  future  or  otherwise
qualified for sale under the applicable  securities laws. The Purchaser  further
understands  that a  notation  will be made on the  appropriate  records  of the
Company  and on the  Stock  Certificate  representing  the  Shares  so that  the
transfer of Shares will not be effected on those records without compliance with
the restrictions referred to above.

Date:______________________________
     Purchaser


<PAGE>


                        INCENTIVE STOCK OPTION AGREEMENT


     This  INCENTIVE  STOCK  OPTION  AGREEMENT is made  ________,  199 , between
INFONOW   CORPORATION   (hereinafter   referred  to  as  the   "Company"),   and
_______________ (hereinafter referred to as "Optionee").

     WHEREAS,  Optionee is an important and valuable employee of the Company and
the  Company  deems  it to be in  its  interest  and  in  the  interest  of  its
shareholders  to secure the  services of Optionee for the Company or such of its
subsidiary companies as may be designated by the Company; and

     WHEREAS,  the Company, as an incentive to Optionee to continue to remain in
the  employment of the Company or its  subsidiaries  and to increase  Optionee's
proprietary  interest  in the  Company,  desires  to enter  into this  Agreement
containing the terms and conditions  hereinafter set forth and to grant Optionee
an option to purchase shares of the Common Stock of the Company.

     NOW, THEREFORE,  in consideration of the promises and the mutual agreements
hereinafter  contained,  and for  other  good and  valuable  consideration,  the
parties agree as follows:

     1. Grant of Option.  In consideration of the foregoing,  the Company hereby
grants to  Optionee  the  right  and  option  (hereinafter  referred  to as "the
option") to purchase  __________ shares of the Company's Common Stock ("Shares")
pursuant to the following schedule: subject to Section 7.4 of the Company's 1999
Stock Option Plan (the "Plan"),  ____________. The option shall terminate on the
[tenth]/[fifth]/[______]1  anniversary of the date hereof and, accordingly,  may
not be exercised  after that date. The purchase price to be paid for such Shares
upon  exercise  of the option  shall be $______  per share,  being not less than
[100%]/[110%]  2 of the  fair  market  value of the  Shares  on the date of this
Agreement.  This option is granted  pursuant to, and is subject to the terms and
conditions  of the Plan,  a copy of which has been  furnished  to  Optionee  and
receipt of which Optionee hereby acknowledges.

     2. Method of Exercising  Option.  The option may be exercised,  in whole at
any time or in part  from  time to time,  by  giving  to the  Company  notice in
writing to that  effect.  Within  thirty  (30) days  after the  receipt by it of
notice of exercise  of the option and upon due  satisfaction  of all  conditions
pertaining to the option as set forth in this Agreement, the Company shall cause
certificates  for the  number  of Shares  with  respect  to which the  option is
exercised   to  be  issued  in  the  name  of   Optionee,   or  his   executors,
administrators, or other legal representatives, heirs, legatees, next of kin, or
distributees, and to be delivered to Optionee or his executors,  administrators,
or other legal representatives,  heirs, legatees,  next of kin, or distributees.
Payment of the purchase price for the shares with respect to which the option is
exercised shall be made to the Company upon the delivery of such stock, together
with revenue stamps or checks in an amount  sufficient to pay any stock transfer
taxes  required on such  delivery.  The Company shall give the person or persons
entitled  to the same at least  five (5) days'  notice of the time and place for
delivery and for the payment of such purchase price.

     3. Conditions of Option. The option is subject to the following  additional
conditions:

          (a) The option herein granted to Optionee shall not be transferable by
     Optionee  other than by will or the laws of descent and  distribution,  and
     shall be exercisable, during his lifetime, only by him.

          (b) The option may be exercised  by Optionee  pursuant to the terms of
     the Plan,  but only to the extent that  Optionee  had the right to exercise
     such option at the date of termination of the  Optionee's  employment  with
     the Company.

     4.  Representation  as to Investment.  Unless the Option and the shares are
registered pursuant to a then effective  registration  statement pursuant to the
Securities Act of 1933 and applicable state law, the exercise of such option and
the  delivery of the Shares  subject to it will be  contingent  upon the Company
being  furnished  by  Optionee,  his  legal  representatives,  or other  persons
entitled to exercise such option,  with a statement in writing, in substantially
the form  attached as Exhibit 2 hereto,  that at the time of such exercise it is
his or their  intention  to  acquire  the  Shares  being  purchased  solely  for
investment purposes and not with a view to distribution.

     5.  Qualification  of  Option.  The  option is  intended  to  qualify as an
incentive stock option within the meaning of the Internal  Revenue Code of 1986,
as amended, and shall be so construed,  provided,  however,  that nothing herein
shall be deemed to be or interpreted as a  representation,  guarantee,  or other
undertaking on the part of the Company that such option is or will be determined
to be an incentive stock option within that or any other section of the Internal
Revenue Code.

<PAGE>


     6.  Notices.  Any  notice  to be  given by  Optionee  as  required  by this
Agreement  shall be sent to the Company at its principal  executive  offices and
any notice from the Company to Optionee shall be sent to Optionee at his address
as it appears on the  Company's  books and records.  Either party may change the
address to which  notices are to be sent by informing the other party in writing
of the new address.

     7. Restriction Against  Assignment.  Except as otherwise expressly provided
above,   Optionee  agrees  on  behalf  of  himself  and  of  his  executors  and
administrators,  heirs, legatees,  distributees, and any other person or persons
claiming any benefits under him by virtue of this Agreement, that this Agreement
and the  rights,  interests,  and  benefits  under  it  shall  not be  assigned,
transferred,  pledged,  or  hypothecated in any way by Optionee or any executor,
administrator,  heir,  legatee,  distributee,  or other  person  claiming  under
Optionee by virtue of this Agreement.  Such rights,  interest, or benefits shall
not be subject to  execution,  attachment,  or similar  process.  Any  attempted
assignment,  transfer,  pledge or  hypothecation,  or other  disposition of this
Agreement or of such rights,  interests,  and benefits contrary to the preceding
provisions, or the levy of any attachment or similar process thereupon, shall be
null and void and without effect.

     8. Further  Agreements.  The  undersigned  agrees,  in connection  with the
issuance of the Shares,  and  thereafter  from time to time as  requested by the
Company,  to execute any  stockholders  agreement  as provided in the Plan.  The
undersigned  will,  if  requested,  by the Company in  connection  with a public
offering of the Company's securities, adhere to lock-up arrangements between the
Company and an underwriter involved in such public offering.

     The Company or Participating  Subsidiary may take such steps as it may deem
necessary or  appropriate  for the  withholding  of any taxes or funds which the
Company or the Participating  Subsidiary is required by any law or regulation of
any  governmental  authority,  whether  federal,  state or  local,  domestic  or
foreign,  to  withhold  in  connection  with any  Stock  Options  (collectively,
"Withholding  Obligations").  Such steps may include, by way of example only and
not  limitation,  (i) requiring a Participant to remit to the Company in cash an
amount  sufficient to satisfy such  Withholding  Obligations;  (ii) allowing the
Participant  to tender to the Company  shares of Common  Stock,  the Fair Market
Value of which at the tender date the  Committee  determines to be sufficient to
satisfy such Withholding  Obligations;  (iii) withholding shares of Common Stock
otherwise  issuable  upon the  exercise of a Stock  Option and which have a Fair
Market  Value at the  exercise  date  sufficient  to  satisfy  such  Withholding
Obligations; or (iv) any combination of the foregoing.

     The  Optionee  understands  that the Company  will  require the Optionee to
satisfy any applicable Withholding Obligations in connection with this option or
Common  Stock  received  pursuant  thereto.  The  Optionee  agrees to notify the
Company in writing  within 10 days after the date the Optionee (i) first obtains
knowledge  of  any  Internal   Revenue  Service   inquiry,   audit,   assertion,
determination, investigation, or question relating in any manner to the value of
this  option or any  shares of  Common  Stock  received  pursuant  hereto;  (ii)
includes or agrees (including, without limitation, in any settlement, closing or
other similar  agreement) to include in gross income with respect to this option
or any shares of Common Stock received  pursuant hereto (A) any amount in excess
of the amount  reported on Form 1099 or Form W-2 to the Optionee by the Company,
or (B) if no such  Form  was  received,  any  amount;  (iii)  exercises,  sells,
disposes of, or otherwise  transfers  (other than to the Optionee's  successors,
heirs,  executors or  administrators,  as the case may be) this option;  or (iv)
sells,  disposes  of, or otherwise  transfers  Stock  acquired  pursuant to this
Agreement within the Disqualified  Period.  "Disqualified  Period" means, in the
case of any Option,  the period beginning on the date such Option is granted and
ending  on the later of the date (a) two  years  after  the date such  Option is
granted, or (b) one year after the transfer of any Stock to an Optionee pursuant
to the exercise of such Option. Upon request,  the Optionee shall provide to the
Company any  information  or document  relating  to any event  described  in the
preceding sentence which the Company (in its sole discretion)  requires in order
to calculate  and  substantiate  any change in the  Company's tax liability as a
result of such event.  IN WITNESS  WHEREOF,  the Company and the  Optionee  have
executed  this  Incentive  Stock  Option  Agreement as of the day and year first
above written.

ATTEST:                                       INFONOW CORPORATION


By:________________________                   By:___________________________
         Secretary                            President

                                              ______________________________
                                              ______________, Optionee




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