EXHIBIT 10.3
XXXXXX.XXX, INC.
1999 EMPLOYEE BONUS AGREEMENT
RECITALS
--------
WHEREAS, drkoopcom, Inc. (the "Company") desires to compensate certain of
its employees for exemplary service to the Company; and
WHEREAS, the Company desires to grant to certain of its employees an option
to purchase shares of Common Stock pursuant to this form of Bonus Agreement in
accordance with Rule 701 of the Securities Act of 1933, as amended.
A. NOTICE OF STOCK OPTION GRANT
The undersigned employee of the Company ("Optionee") has been granted an
Option (the "Option") to purchase Common Stock of the Company, subject to the
terms and conditions of the Plan and this Agreement, as follows:
Date of Grant ______
Vesting Commencement Date ______
Exercise Price per Share $_____
Total Number of Shares Granted (the "Shares") ______
Total Exercise Price $_____
Type of Option: Nonstatutory Stock Option
Term/Expiration Date ______
1. Vesting Schedule:
----------------
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
Twenty-Five percent (25%) of the Shares subject to the Option shall become
exercisable twelve months after the Vesting Commencement Date, and 1/48 of the
Shares subject to the Option shall become exercisable at the end of each full
month thereafter provided that Optionee continues to be a service provider to
the Company (a "Service Provider") on such dates.
2. Termination Period:
------------------
This Option shall be exercisable for three months after Optionee ceases to
be a Service Provider, but in no event may Optionee exercise this Option after
the Term/Expiration Date as provided above.
B. AGREEMENT
---------
1. Grant of Option. The Company hereby grants to the Optionee named in
---------------
the Notice of Grant the option to purchase the number of Shares set forth in the
Notice of Grant, at the exercise price per share set forth in the Notice of
Grant (the "Exercise Price").
2. Exercise of Option.
------------------
a. Right to Exercise. This Option shall be exercisable during its term
-----------------
in accordance with the Vesting Schedule set out in the Notice of Grant and with
the applicable provisions of this Option Agreement.
b. Method of Exercise. This Option shall be exercisable by delivery of
------------------
an exercise notice in the form attached as Exhibit A (the "Exercise Notice")
---------
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice accompanied by the
aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with applicable securities laws.
Assuming such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.
3. Lock-Up Period. Optionee hereby agrees that, if so requested by the
--------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. The Company may impose stop-transfer instructions with respect
to securities subject to the foregoing restrictions until the end of such Market
Standoff Period.
4. Method of Payment. Payment of the aggregate Exercise Price shall be by
-----------------
cash or check.
2
5. Restrictions on Exercise. This Option may not be exercised if the
------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
law.
6. Termination of Relationship. In the event an Optionee's continuous
---------------------------
status as an employee or consultant terminates, Optionee may, to the extent the
Option was vested at the date of such termination (the "Termination Date"),
exercise this Option during the Termination Period set out in the Notice of
Grant. To the extent that Optionee was not vested in this Option at the date of
such termination, or if Optionee does not exercise this Option within the time
specified herein, the Option shall terminate.
7. Disability of Optionee. Notwithstanding the provisions of Sections A.2.
----------------------
and B.6. above, in the event of termination of an Optionee's continuous status
as an employee or consultant as a result of his or her disability, Optionee may,
but only within twelve (12) months from the date of such termination (and in no
event later than the expiration date of the term of such Option as set forth in
Section A herein, exercise the Option to the extent the Option was vested at the
date of such termination. To the extent that Optionee is not vested in the
Option at the date of termination, or if Optionee does not exercise such Option
within the time specified herein, the Option shall terminate.
8. Death of Optionee. In the event of termination of Optionee's Continuous
-----------------
Status as an Employee or Consultant as a result of the death of Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the date of expiration of the term of this
Option as set forth in Section 11 below), by Optionee's estate or by a person
who acquires the right to exercise the Option by bequest or inheritance, but
only to the extent the Option was vested at the date of death. To the extent
that Optionee is not vested in the Option at the date of death, or if the Option
is not exercised within the time specified herein, the Option shall terminate.
9. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
this Option Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
10. Term of Option. This Option may be exercised only within the term set
--------------
out in Section A herein, and may be exercised during such term only in
accordance with the terms of this Option.
11. Tax Consequences. Set forth below is a brief summary as of the date of
----------------
this Option of some of the federal tax consequences of exercise of this Option
and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE COMPANY IS NOT RESPONSIBLE
FOR ANY TAX CONSEQUENCES RELATING TO THE GRANT OR EXERCISE OF THIS OPTION NOR
THE DISPOSITION OF SHARES ACQUIRED UPON EXERCISE OF THIS OPTION. THE OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
3
There may be a regular federal income tax liability upon the exercise of
Option. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the fair
market value of the Shares on the date of exercise over the Exercise Price. If
Optionee is an employee or a former employee, the Company will be required to
withhold from Optionee's compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
12. Entire Agreement; Governing Law. This Option Agreement constitutes the
-------------------------------
entire agreement of the parties with respect to the subject matter hereof and
supersedes in its entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing signed by the
Company and Optionee. This agreement is governed by the internal substantive
laws (but not the choice of law rules) of Delaware.
13. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES
---------------------------------
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE AND WITH OR WITHOUT NOTICE.
OPTIONEE: XXXXXX.XXX, INC.
______________________________________ _____________________________________
Authorized Signatory
Name:_________________________________
Address:______________________________
______________________________
______________________________
4
EXHIBIT A
XXXXXX.XXX, INC.
1999 EMPLOYEE BONUS AGREEMENT
EXERCISE NOTICE
xxxxxx.xxx, Inc.
0000 Xxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Exercise of Option. Effective as of today, ___________, 19__, the
------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of xxxxxx.xxx, Inc. (the
"Company") under and pursuant to the Employee Stock Bonus Agreement dated
____________________ (the "Option Agreement").
Delivery of Payment. Purchaser herewith delivers to the Company the full
-------------------
purchase price of the Shares, as set forth in the Option Agreement.
Representations of Optionee.
---------------------------
In connection with the purchase of the Shares, the undersigned Optionee
represents to the Company the following:
Conditions of the Option Agreement. Optionee acknowledges that
----------------------------------
Optionee has received, read and understood the Option Agreement and agrees to
abide by and be bound by its terms and conditions.
Purchase for Own Account. Optionee is aware of the Company's business
------------------------
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Shares. Optionee is acquiring the Shares for investment for Optionee's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
Restricted Securities. Optionee acknowledges and understands that the
---------------------
Shares constitute "restricted securities" under the Securities Act and have not
been registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this regard,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
the Shares for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Shares, or for a period of one year or any other fixed period in the future.
Optionee further understands that the Shares must be held indefinitely unless
they are
5
subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Shares.
Rule 701 and Rule 144. Optionee is familiar with the provisions of
---------------------
Rule 701 and Rule 144, each promulgated under the Securities Act, which, in
substance, permit limited public resale of "restricted securities" acquired,
directly or indirectly from the issuer thereof, in a non-public offering subject
to the satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Optionee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or
such longer period as any market stand-off agreement may require) the Shares
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (1) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, (3) the amount of Shares being
sold during any three month period not exceeding the limitations specified in
Rule 144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of grant of the Option, then the Shares may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Shares were sold
by the Company or the date the Shares were sold by an affiliate of the Company,
within the meaning of Rule 144; and, in the case of acquisition of the Shares by
an affiliate, or by a non-affiliate who subsequently holds the Shares less than
two years, the satisfaction of the conditions set forth in sections (1), (2),
(3) and (4) of the paragraph immediately above.
Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that
any such other registration exemption will be available in such event.
Rights as Shareholder. Until the issuance of the Shares (as evidenced by
---------------------
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the stock subject to
the Option, notwithstanding the exercise of the Option. The Shares shall be
issued to the Optionee as soon as practicable after the Option is exercised. No
adjustment shall
6
be made for a dividend or other right for which the record date is prior to the
date of issuance except as provided in Section 13 of the Plan.
Tax Consultation. Optionee understands that Optionee may suffer adverse
----------------
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
Legends. Optionee understands and agrees that the Company shall cause
-------
the legends set forth below or legends substantially equivalent thereto, to be
placed upon any certificate(s) evidencing ownership of the Shares together with
any other legends that may be required by the Company or by state or federal
securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR,
IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER
OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE
OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST
REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH
IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL
HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT
THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS
AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF
THESE SHARES.
Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance
---------------------
with the restrictions referred to herein, the Company may issue appropriate
"stop transfer" instructions to its transfer agent, if any, and that, if the
Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
Refusal to Transfer. The Company shall not be required (i) to transfer on
-------------------
its books any Shares that have been sold or otherwise transferred in violation
of any of the provisions of this Agreement or (ii) to treat as owner of such
Shares or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such Shares shall have been so transferred.
7
Successors and Assigns. The Company may assign any of its rights under
----------------------
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.
Governing Law; Severability. This Agreement is governed by the internal
---------------------------
substantive laws (but not the choice of law rules) of Delaware.
Entire Agreement. The Option Agreement is incorporated herein by
----------------
reference. This Agreement, and the Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing signed by the
Company and Optionee.
Submitted by: Accepted by:
OPTIONEE: XXXXXX.XXX, INC.
_____________________________________ _____________________________________
Name:________________________________ Name:________________________________
Address:_____________________________ Title:_______________________________
_____________________________
_____________________________
8
