PROPRIETARY INFORMATION AND INVENTIONS RELEASE

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February 19, 2024

PROPRIETARY INFORMATION AND INVENTIONS RELEASE

Here is a simplified overview of the terms:

  1. Stock Option Award: In exchange for the services provided by Anthony to DocSide, DocSide will grant Anthony a non-statutory stock option award of common stock. Before exercising the option to acquire shares, Anthony must agree in writing to be bound by the terms and conditions of the DocSide shareholder agreement.
  2. Ownership of Products and Deliverables: Anthony assigns to DocSide all rights, title, and interest in the Deliverables, including ideas, work on Products or creations, applications, software, and other related items. These contributions become the sole property of DocSide. Anthony is also obligated to disclose and assign any future ideas, inventions, or works created in connection with his services for DocSide. Any works of authorship created by Anthony in relation to his services for DocSide are considered “works made for hire” and become the sole property of DocSide.
  3. Obtaining Letters Patent, Copyright Registrations, and Other Protections: Anthony is required to assist DocSide in obtaining and enforcing proprietary rights related to inventions, works of authorship, developments, improvements, or trade secrets in the United States and foreign countries. If Anthony fails to provide his signature, he designates DocSide as his attorney-in-fact to act on his behalf. Anthony also releases any claims of infringement on proprietary rights assigned to DocSide.
  4. No Ownership; Return of Property; Release of Claims: Except for the stock transferred to Anthony, he disclaims any ownership in DocSide, the Products, the Deliverables, or any intellectual property rights associated with DocSide. Within five business days after the Effective Date, Anthony must return all DocSide’s property in his possession. In exchange for the stock transfer, Anthony releases any claims he may have against DocSide, its owners, agents, employees, and partners.
  5. Confidentiality: Anthony is obligated to keep any Confidential Information received from DocSide confidential and not use it without prior written consent. Confidential Information includes all information related to DocSide’s business, finances, applications, software, trade secrets, and more. There are exceptions for information already in the public domain, in Anthony’s possession prior to disclosure, or disclosed by someone other than DocSide without any obligation of confidence.
  6. Governing Law, Venue & Fees: The agreement is governed by the laws of Montana. Any disputes related to the agreement will be resolved in a court of competent jurisdiction in Gallatin County, Montana. The prevailing party in any dispute may be awarded costs and reasonable attorneys’ fees.
  7. Notices: Any required notices must be in writing and sent to the respective addresses of the parties mentioned in the agreement.
  8. Amendment: No changes or waivers to the agreement’s provisions will be valid unless made in writing and signed by authorized representatives of both parties.
  9. Counterparts: The agreement can be executed electronically and in multiple counterparts, all of which will be considered a single agreement.

Potential “gotchas” in the agreement could include:

  • The specific terms of the stock option, such as the exercise price, the number of shares, and any vesting requirements, are not mentioned in the provided excerpt. These details may be outlined in the separate DocSide shareholder agreement.
  • The agreement is subject to the laws of Montana, which may have implications depending on the jurisdiction in which you reside or operate.
  • The confidentiality obligations may restrict your ability to disclose certain information, even after the termination of your services.
  • The agreement includes a release of claims, which means you are giving up any legal claims you may have against DocSide. It’s important to carefully consider the implications of this release.

To rectify any potential “gotchas” or address any concerns:

  • Review the complete DocSide shareholder agreement to understand

 

2023 DOCSIDE STOCK OPTION PLAN STOCK OPTION AWARD

NOTICE OF GRANT

Based on the provided Notice of Grant, here is a simplified overview of the terms and conditions:

  1. Grantee: Nick Anthony
  2. Grant Date: May 11, 2023
  3. Number of shares subject to NSO: 3662
  4. Exercise price per share: $0.40
    • The exercise price is the Fair Market Value of one share of Common Stock determined by the Board.
    • For Grantees who are 10% owners, the exercise price is 110% of the Fair Market Value.
  5. Expiration Date: 1 year after the grant date
  6. Vesting commencement date: Grant Date
  7. Vesting schedule: The shares are fully vested on the Grant Date.
  8. Additional terms: Refer to the Award Agreement for detailed terms regarding vesting, forfeiture, exercise procedures, transfer restrictions, and other relevant provisions.

 

STOCK OPTION AWARD AGREEMENT

Overview of the Stock Option Award Agreement:

  1. Grant of NSOs: The Agreement grants the Grantee the right to purchase a specified number of shares of Common Stock at a predetermined exercise price.
  2. Vesting: The Award is subject to vesting terms outlined in the Notice of Grant. The vesting schedule determines when the Grantee can exercise the stock options.
  3. Termination Period: The stock options must be exercised before the Term/Expiration Date specified in the Notice of Grant. There may also be earlier termination provisions outlined in Section 7(c) of the Plan.
  4. Irrevocable Proxy: Upon conversion of the stock options into Common Stock, the Grantee grants a proxy to Richard Popwell and any individual designated by him to vote the shares on behalf of the Grantee.
  5. Forfeiture: The Grantee may forfeit the unvested portion of the stock options under certain circumstances, such as breaching non-disclosure, non-competition, or non-solicitation obligations, or violating written agreements with the Company.
  6. Change in Control: If a Change in Control occurs, specific provisions outlined in Section 10(c) of the Plan may apply to the stock options.
  7. Exercising the Award: The Grantee can exercise the vested stock options by providing written notice, paying the exercise price, and complying with any additional requirements set by the Committee. The exercise must occur before the Expiration Date and during permissible trading periods.
  8. Lock-Up Period: The Grantee agrees not to sell or transfer any Common Stock acquired through the exercise of the stock options for a specified period after the effective date of a registration statement filed by the Company, subject to underwriters’ restrictions.
  9. Form of Settlement: Upon exercise, the Company will issue whole shares of Common Stock to the Grantee, subject to applicable withholding and compliance with laws and regulations. The Committee may require the Grantee to make additional covenants and representations.
  10. Tax Obligations: The Grantee is responsible for satisfying all applicable tax withholding requirements. The Agreement aims to comply with Section 409A of the Internal Revenue Code, and the Company may modify the Agreement to ensure compliance if necessary.
  11. No Assignment or Transfer: The stock options may not be sold, assigned, or transferred except through a will or the laws of descent or distribution. Any transfer requires written notice and agreement by the transferee to comply with the terms of the Agreement.
  12. Restrictions on Exercise: The stock options cannot be exercised until the Plan is approved by the stockholders or if the exercise violates any applicable laws.
  13. Grantee Representations: By accepting the Award, the Grantee acknowledges reviewing the Plan and Agreement, understands the tax consequences, and recognizes that participation does not guarantee continued employment or additional compensation. The Grantee consents to the collection and use of personal data by the Company.
  14. Adjustments: In the event of certain corporate events, such as stock dividends or splits, the Committee may adjust the number of shares and exercise price of the stock options.

“Gotchas” and Recommended Steps to Rectify:

The Agreement doesn’t explicitly mention any significant “gotchas,” but there are a few points to consider:

  1. Timely Execution: The Grantee must acknowledge receipt and acceptance of the Award within two weeks of receiving the Notice of Grant. Failure to do so may render the Award and Agreement null and void. To avoid this, ensure prompt acknowledgment.
  2. Compliance with Obligations: The Grantee should carefully review and adhere to any non-disclosure, non-competition, or non-solicitation obligations owed to the Company. Additionally, any breaches of written agreements or conduct that may result in forfeiture should be avoided.
  3. Exercise Period: The Grantee must exercise the stock options before the Term/Expiration Date specified in the Notice of Grant. It’s important to keep track of the expiration date and ensure that the options are exercised in a timely manner to avoid losing the opportunity.
  4. Tax Obligations: The Grantee should consult with a tax advisor to understand the tax implications of exercising the stock options. It’s important to plan for any tax obligations and ensure that sufficient funds are available to cover any taxes that may arise upon exercise.
  5. Change in Control: In the event of a Change in Control, the Grantee should carefully review the provisions outlined in Section 10(c) of the Plan. This section may specify how the stock options will be treated in the event of a merger, acquisition, or other significant corporate event. Understanding these provisions can help the Grantee make informed decisions regarding the stock options.
  6. Lock-Up Period: If the Agreement includes a lock-up period, the Grantee should be aware of the restrictions on selling or transferring the acquired Common Stock during this period. It’s important to comply with the lock-up provisions to avoid any potential penalties or legal issues.
  7. Proxy Voting: The Grantee should understand that upon conversion of the stock options into Common Stock, they are granting a proxy to Richard Popwell and any individual designated by him to vote the shares on their behalf. The Grantee should be comfortable with this arrangement and trust the designated proxy holders to vote in their best interests.
  8. Document Retention: It’s advisable to keep a copy of the signed Agreement, along with any related documents and communications, for future reference. This will help in case of any disputes or the need to refer back to specific provisions of the Agreement.

EXHIBIT B: INVESTMENT REPRESENTATION STATEMENT

The provided agreement is an Investment Representation Statement related to the purchase of stock options in DocSide, Inc:

  1. Purpose and Investment Intent: The Grantee (the person receiving the stock options) acknowledges that they are aware of the Company’s business affairs and financial condition. They state that they are acquiring the Securities (stock options) for their own investment purposes and not for resale or distribution. The intention is to hold the Securities as an investment.
  2. Restricted Securities and Exemptions: The Grantee understands that the Securities are considered “restricted securities” under the Securities Act of 1933. These securities have not been registered under the Securities Act but are exempt from registration based on the Grantee’s investment intent. It is important to note that the exemption might be unavailable if the Grantee’s representation was solely based on a short-term intention or for certain fixed periods. The Securities must be held indefinitely unless they are registered or an exemption is available.
  3. Registration Exemption: The Grantee acknowledges that the Company is under no obligation to register the Securities. The certificate representing the Securities may have legends or statements required by applicable state securities laws.
  4. Rule 701 and Rule 144: The Grantee states they are familiar with Rule 701 and Rule 144, which provide conditions for limited public resale of restricted securities. If the Company qualifies under Rule 701, the exercise of the stock options may be exempt from registration. If the Company becomes subject to reporting requirements under the Securities Exchange Act of 1934, the Securities exempt under Rule 701 may be resold after a specified period and satisfaction of conditions specified by Rule 144.
  5. Resale Under Rule 144: If the Company does not qualify under Rule 701, the resale of the Securities may be subject to the provisions of Rule 144. These provisions require the availability of current public information about the Company, a specified period of time to elapse after the purchase, and satisfaction of conditions for the sale of Securities by an affiliate.

Now, addressing your specific questions:

  1. Waiting Period or Steps to Redeem Stock Options: The agreement does not explicitly mention the waiting period or steps necessary to redeem stock options. It primarily focuses on investment representation and compliance with securities laws.
  2. “Gotchas”: One potential “gotcha” is that the Securities being acquired are restricted and cannot be freely sold or transferred without registration or an exemption. The Grantee needs to understand the restrictions on reselling the Securities and the conditions specified by Rule 701 or Rule 144.
  3. Recommended Steps to Rectify “Gotchas”: To rectify any potential issues, the Grantee should ensure compliance with the representations made in the agreement. They should familiarize themselves with the requirements of Rule 701 and Rule 144, as well as any applicable securities laws. If there are any doubts or concerns, it is advisable to consult with the Company to clarify the specific steps and timelines for exercising the stock options and any subsequent resale.

DOCSIDE STOCK OPTION PLAN

Here is a breakdown of the key points mentioned in the document:

  1. Purposes of the Plan: The plan aims to attract and retain talented personnel, provide incentives to employees and consultants, and contribute to the success of the company’s business. It allows for the granting of Incentive Stock Options, Nonstatutory Stock Options, and Restricted Stock.
  2. Stock Subject to the Plan: The maximum number of shares that can be issued under the plan is 761,000 shares. These shares can be authorized, unissued, or reacquired shares. If an option expires or becomes unexercisable, the unissued shares will remain available for future awards. Similarly, shares retained by the company to satisfy exercise or purchase prices or withholding taxes will also be available for future grants. Forfeited or repurchased shares will be added back to the pool for future grants.
  3. Administration of the Plan: The plan is administered by the Board or a Committee appointed by the Board. The administrator has the authority to determine the fair market value, select recipients, determine the number of shares covered by each award, approve agreements and documents, set terms and conditions of awards, amend outstanding awards, and interpret the terms of the plan.
  4. Eligibility: Nonstatutory Stock Options and Restricted Stock may be granted to employees and consultants. Incentive Stock Options are only granted to employees, excluding employees of affiliates. The plan does not confer any employment rights and does not interfere with the company’s right to terminate employment or consulting relationships.
  5. Term of Plan: The plan becomes effective upon adoption by the Board and remains in effect for ten years, unless terminated earlier.
  6. Options: Options granted under the plan have a specified term, exercise price, and consideration. The term of an option is determined by the administrator but cannot exceed ten years. The exercise price is set by the administrator and must comply with applicable laws. The consideration for exercising an option can be cash, check, promissory note, cancellation of indebtedness, previously owned shares, cashless exercise, or a combination of these methods.
  7. Restricted Stock: (a) The terms, conditions, and restrictions related to the offer of Restricted Stock are communicated to the recipient in writing, including the number of shares, purchase price (if any), and acceptance deadline. (b) Repurchase Option:
  • The Company has the right to repurchase the Restricted Stock if the recipient’s Continuous Service Status terminates, voluntarily or involuntarily.
  • The repurchase price is equal to the original purchase price, and it may be paid by canceling any indebtedness of the purchaser to the Company.
  • The Administrator determines the rate at which the repurchase option lapses.
  • The lapsing of repurchase rights may be tolled during certain leaves of absence. (c) The Restricted Stock Purchase Agreement may include additional terms and provisions determined by the Administrator. (d) Once the Restricted Stock is purchased, the participant has rights equivalent to a holder of capital stock.
  1. Taxes: (a) Participants are responsible for satisfying any applicable tax obligations related to the grant, vesting, and exercise of an Award before the Company issues any shares. (b) The Administrator may allow participants to satisfy tax obligations by using Cashless Exercise or surrendering previously acquired shares, subject to certain limitations and restrictions.
  2. Adjustments Upon Changes in Capitalization, Merger, or Certain Other Transactions: (a) Changes in Capitalization:
  • In the event of stock splits, dividends, consolidations, mergers, or similar events, the numbers, classes, exercise prices, and repurchase prices of shares covered by outstanding Awards are automatically adjusted.
  • The Administrator has discretion in making these adjustments. (b) Dissolution or Liquidation: Awards terminate upon the dissolution or liquidation of the Company, unless otherwise determined by the Administrator. (c) Corporate Transactions: The treatment of outstanding Awards is determined by the Administrator in the event of a transfer of assets, merger, consolidation, or similar transaction. The Administrator’s determination may include continuing, assuming, substituting, canceling, or providing a payment in exchange for the Awards.
  1. Non-Transferability of Awards: Awards generally cannot be sold, pledged, transferred, or disposed of, except through inheritance or by will. Limited transferability rights may be granted under certain circumstances.
  2. Non-Transferability of Stock Underlying Awards: Shares acquired through Awards cannot be transferred without prior approval from the Company. Any unauthorized transfers are null and void.

 

In conclusion, the Proprietary Information and Inventions Release agreement, the Stock Option Award agreement, and the Investment Representation Statement all contain important terms and conditions that you, Grantee, Anthony, should carefully review and understand before proceeding. Each agreement addresses different aspects and obligations related to stock options, ownership of intellectual property, confidentiality, compliance with securities laws, and other relevant provisions.

To rectify potential issues or concerns, it is crucial to:

  1. Review the complete DocSide shareholder agreement to understand the specific terms of the stock option, such as exercise price, number of shares, and vesting requirements.
  2. Consider the implications of the agreement being governed by the laws of Montana, as it may have implications depending on the jurisdiction in which you reside or operate.
  3. Adhere to confidentiality obligations to protect any confidential information received from DocSide and seek prior written consent before using such information.
  4. Carefully evaluate the release of claims provision and understand the implications of giving up any legal claims against DocSide.
  5. Consult with a tax advisor to understand the tax implications of exercising stock options and plan for any potential tax obligations.
  6. Familiarize yourself with the provisions related to Change in Control events, lock-up periods, and proxy voting, if applicable.
  7. Keep a copy of all signed agreements and related documents for future reference and potential disputes.
  8. For the Investment Representation Statement, ensure compliance with the representations made in the agreement, understand the restrictions on reselling the securities, and familiarize yourself with the requirements of Rule 701 and Rule 144, as well as any applicable securities laws.

By carefully reviewing and understanding these agreements, and adhering to their terms and conditions, you can protect your rights and ensure compliance with the obligations outlined in the agreements.

 

 

 

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