NETGATEWAY, INC.
STOCK GRANT AGREEMENT
Stock Grant Agreement (the "Agreement"), dated as of this 19th day of
October, 1999, between Netgateway, Inc., a Nevada corporation (the "Company"),
and David Bassett-Parkins (the "Grantee").
The Grantee is a senior executive of the Company.
Prior to the date hereof, the Grantee held compensation and performance
options to purchase up to an aggregate of 640,000 shares of common stock of the
Company (the "Options"). By separate Letter Agreement dated of even date
herewith, the Grantee has agreed to terminate the Options.
In exchange for terminating the Options, the Compensation Committee (the
"Committee") of the Board of Directors has determined that it is in the best
interests of the Company to issue to the Grantee restricted common stock of the
Company as compensation for the services that the Grantee has rendered and will
continue to render to the Company, on the terms and conditions set forth herein.
In consideration of the premises and the mutual agreements set forth
below, the parties hereto agree as follows:
1. Grant of Stock. Pursuant to the terms and conditions set forth herein,
the Company hereby grants and issues to the Grantee (the "Grant") as of the date
hereof (the "Grant Date), up to an aggregate of 400,000 shares (the "Shares") of
the common stock, par value $.01 per share, of the Company (the "Common Stock")
as hereinafter provided.
2. Nontransferability. Until the Shares hereunder shall vest in accordance
with Section 3 hereof, the Shares and any other rights granted hereunder shall
not be transferable or assignable by the Grantee (whether by operation of law or
otherwise) except by will or the laws of descent and distribution or, if then
permitted under Rule 16b-3, pursuant to a qualified domestic relations order as
defined under the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.
3. Vesting of Shares. Subject to the other terms set forth herein, the
Shares will vest in the Grantee in full on March 31, 2000.
4. Taxes. The Company or any Subsidiary or Affiliate is authorized to
withhold from any distribution of Shares amounts of withholding and other taxes
due in connection with any transaction involving the Grant, and to take such
other action as the Committee may deem advisable to enable the Company or such
Subsidiary or Affiliate and the Grantee to satisfy obligations for the payment
of withholding taxes and other tax obligations relating to the Grant, if any.
This authority shall include authority to withhold or receive Shares or other
property and to make cash payments in respect thereof in satisfaction of the
Grantee's tax obligations.
5. Termination of Employment, etc. Upon termination of the Grantee's
employment for any reason, including the breach by the Grantee of the Employment
Agreement among the Grantee, the Company and Netgateway, a corporation organized
under the laws of the State of Nevada and a wholly owned Subsidiary of the
Company, dated as of January 1, 1999 (the "Employment Agreement"), any Shares
not already vested in accordance with Section 3 hereof, shall be subject to
immediate forfeiture in all respects and Grantee shall have no right or claim to
any such unvested Shares.
6. Adjustments. In the event that the Committee shall determine, in its
sole discretion, that any dividend or other distribution (whether in the form of
cash, shares of Common Stock or other property), recapitalization, stock split,
reverse split, any reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange, license arrangement, strategic alliance or other
similar corporate transaction or event affects the Shares such that an
adjustment is appropriate to prevent dilution or enlargement of the rights of
the Grantee, then the Committee shall make such equitable changes or adjustments
as it deems necessary or appropriate to any or all of the number and kind of
Shares which may thereafter be issued in connection herewith.
7. No Rights as Stockholder. The Grantee shall have no rights as a
stockholder with respect to any Shares subject to the Grant prior to the date on
which such Shares shall vest in accordance with Section 3 hereof.
8. Representations of the Company.
a. Organization and Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
b. Corporate Power. The Company has all necessary corporate power and
authority to execute, deliver and perform this Agreement and the transactions
contemplated hereby, and has all requisite corporate power and authority to
issue the Shares hereunder and to carry out the transactions contemplated
hereby.
c. Shares. Upon issuance, the Shares will be duly authorized, validly
issued, fully paid and nonassessable, and issued in accordance with applicable
laws.
9. Representations of the Grantee.
a. Authority. The Grantee has duly executed and delivered this Agreement to
the Company, and its obligations hereunder are the legal, valid and binding
obligations of the Grantee and are enforceable in accordance with their terms
b. Restriction on Transfer; Risk of Forfeiture. The Grantee hereby
acknowledges and agrees that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), or qualified with the securities
regulatory agency of any state and may not be resold or otherwise disposed of
unless registered under the Act or qualified with the securities regulatory
agency of any state which has jurisdiction over any such transfer or unless an
exemption from such registration or qualification is available. The Grantee will
transfer the Shares only in accordance with the applicable requirements of all
federal and state securities laws. The Grantee acknowledges that the
certificate(s) evidencing the Shares will bear a legend regarding restriction on
transfer. The Grantee further acknowledges that the Shares are subject to a
substantial risk of forfeiture as set forth in Section 5 hereof.
c. Investment. The Grantee is receiving the Shares for its own account, for
investment purposes only, and not for the account of any other person, and not
with a view to, or for offer or sale in connection with, any distribution,
assignment or resale to others or to fractionalization in whole or in part.
10. No Rights to Continued Employment. Nothing in the Grant or this
Agreement shall confer upon the Grantee the right to continue in service or be
entitled to any remuneration or benefits not set forth in this Agreement or to
interfere with or limit in any way the right of the Company or any Subsidiary or
Affiliate to terminate the Grantee's service as an officer of the Company or any
Subsidiary or Affiliate.
11. Compliance with Legal and Exchange Requirements. The granting, issuance
and delivery of the Shares pursuant to the terms of this Agreement and the other
obligations of the Company hereunder shall be subject to all applicable federal
and state laws, rules and regulations, and to such approvals by any regulatory
or governmental agency as may be required. The Company, in its discretion, may
postpone the issuance or delivery of Shares hereunder until completion of such
stock exchange listing or registration or qualification of such Shares or other
required action under any state, federal or foreign law, rule or regulation as
the Company may consider appropriate, and may require the Grantee to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of Shares in compliance with applicable
laws, rules and regulations.
12. Change in Control Provisions. In the event of a Change in Control (as
defined in the Employment Agreement), the Shares shall become fully vested,
whether or not theretofore vested as forth herein, as more fully described in
Section 4(g) of the Employment Agreement.
13. Notices. All notices or any other communications hereunder shall be in
writing and delivered personally or by registered or certified mail or overnight
courier, addressed, if to the Company, to Netgateway, Inc., 300 Oceangate, Long
Beach, California 90802; Attention: Secretary, and if to the Grantee, at the
address set forth on the signature page hereof, subject to the right of either
party to designate at any time hereafter in writing some other address.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without giving effect to the
conflict of laws principles thereof.
15. No Assignment. Neither this Agreement nor any of the rights or
obligations of the Grantee hereunder may be transferred or assigned by the
Grantee except as set forth in paragraph 2 hereof.
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16. Benefits. This Agreement shall be binding upon and inure to the benefit
of the parties hereto. This Agreement is for the sole benefit of the parties
hereto and not for the benefit of any other party.
17. Severability. If any provision of this Agreement shall be determined to
be illegal and unenforceable by any court of law, the remaining provisions shall
be severable and enforceable in accordance with their terms.
18. Amendments. No modification, amendment or waiver or any provision of
this Agreement shall be effective unless it is in writing and signed by the
parties hereto.
19. Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
the Chief Executive Officer, and Grantee has executed this Agreement, both as of
the day and year first above written.
NETGATEWAY, INC.
By: /s/ Roy W. Camblin, III
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Roy W. Camblin, III
Chief Executive Officer
/s/ David Bassett-Parkins
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David Bassett-Parkins
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