]
International treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR
DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.
Employee Stock Option Agreement Template
How to use this template
1. All fields where your input is required are marked in green
2. No information is included regarding tax treatment and compliance
because these are highly individual per jurisdiction
3. An example of a vesting schedule table is included in the appendix
Reminder:
This template serves as a starting point for business owners and employees. The
contract is not tailored to your unique circumstances and situation, thus you are
strongly advised to seek the assistance of a legal adviser.
Additional legal information is provided at the end of this document.
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International treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR
DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.
EMPLOYEE STOCK OPTION AGREEMENT
This Employee Stock Option Agreement (“Option Agreement”) is made and entered into as of
the date of grant set forth below (“Date of Grant”)
BETWEEN: [Your Company Name] (the "Company"), [type of legal entity], organized and
existing under the laws of [country of corporate domicile], with its head office
located at [full address of the company head office],
AND: [Employee Full Name] (the "Participant"), an individual with his/her main
address at [full residence address of the employee].
1. DEFINITIONS
1.1. In the following clauses:
a) “Participant” means an individual who is a manager, employee or a contractor of the
Company, who is selected at the discretion of the [competent corporate organ] of the
Company to be granted stock options;
b) “Option” means the stock option that gives the right to the Participant to acquire [ type
of shares] shares of the Company during the Exercise Period against payment of the
Exercise Price as provided for in Article 3 below;
c) “Option Shares” means the total amount of [ type of shares] shares of the Company
which are made available for purchase by the Participant by means of the present
Employee Stock Option Agreement;
d) “Date of Grant” means the date on which the Participant and the Company enter
into this Employee Stock Option Agreement and on which the Participant receives
the Option;
e) “Vesting” means the process throughout which the Participant earns the Option
Shares granted to him/her by means of the present Employee Stock Option
Agreement;
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International treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR
DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.
f) “Vesting Period” means the time period between the Date of Grant and the
Anniversary Date on which the Participant earns the right to exercise all Option
Shares granted to him/her by means of the present Employee Stock Option
Agreement;
g) “Vesting Schedule” means a table indicating the number of Option Shares that will
vest throughout the Vesting Period, which the Participant may purchase after the
Vesting Period or upon the occurrence of any of the triggering events under Articles
9,10, 11, 12;
h) “Vested Option Shares” means a portion of the total amount of Option Shares which
the Participant has earned the right to acquire throughout the Vesting Period and the
total amount of Option Shares which the Participant has earned the right to acquire
after the Vesting Period has ended;
i) “Anniversary Date” means the date that is [ number of years] years from the Date of
Grant of the Option and as of which the Option may be exercised;
j) “Exercise” means the purchase of all Option Shares by the Participant after the
Vesting Period has ended, or the purchase of a fraction of vested Option Shares by
the Participant upon the occurrence of certain triggering events, as provided for in
Article 4.a;
k) “Exercise Price” means the price, determined at the Date of Grant, at which an
Option Share can be purchased by the Participant;
l) “Exercise Period” means the period of time during which the Participant may
purchase the Option Shares;
1.2. Terms and phrases not defined herein shall be given their ordinary meaning.
1.3. This agreement includes a Vesting Schedule, attached to it in Appendix 1, which shall be
an integral part thereof.
2. GRANT OF OPTION
On the date of entering into force of this Agreement, [Date-Month-Year] (the “Date of Grant”) the
Company grants to the Participant an Option (the “Option”) to purchase the total number of
[number of shares] [type of shares] shares of the Company as set forth above (the “Option Shares”)
against payment of the Exercise Price per Share of [price per share] as set forth above (the
“Exercise Price”) during the Exercise Period commencing on [starting date of the exercise period] and
expiring on [end date of the exercise period], subject to all the terms and conditions of the present
Agreement.
3. EXERCISE PRICE
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International treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR
DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.
The Exercise Price is set at [price per share] per share, which represents the fair market value per
Share of the Company at the Date of Grant as determined by the [ competent corporate organ] of the
Company.
4. EXERCISE OF OPTION
This Option shall be exercisable during the Exercise Period in accordance with the following
provisions:
a. Vesting and One-Year Cliff
i. This Option shall not become exercisable as to any of the Option Shares until
the date that is [number of years] years from the Date of Grant of the Option (the
"Anniversary Date"). As of the Anniversary Date, this Option may be
exercised for a total of [number of shares] [type of shares] shares of the Company.
Exceptionally the Option may be exercised at the occurrence of the triggering
events provided for in Articles 8, 9, 10 and 11 as set out therein.
ii. None of the Option Shares shall vest throughout the first one year after the
Date of Grant and shall only start vesting under the condition that the
Participant has continued his/her employment at the Company throughout
and after the mentioned period of one year starting from the Date of Grant
and ending on [date-month-year]. After the first year has expired and until the
Anniversary Date, the Option shall vest every calendar month for a fraction of
the Total Option Shares (the "Monthly Vesting Amount") as provided for in
the Vesting Schedule in Appendix 1 to this Agreement.
iii. The Option shall be exercisable after the Anniversary Date under the
condition that the Participant remained in an employment relationship with the
Company or any Subsidiary of the Company throughout the Vesting Period
and including on the Anniversary Date. In the event of termination of the
employee status of the Participant during or after the Vesting Period, of
disability or death of the Participant, the provisions of Articles 8, 9, 10 and 11
shall apply to the way in which this Option may be exercised.
iv. The Option may only be exercised in full and not for a fraction of the Option
Shares. An exception to this is provided for under Article 8 below referring to
the Participant who becomes a Good Leaver during the Vesting Period and
receives the right to exercise the fraction of the Option Shares that has
vested until the date on which he/she has become a Good Leaver.
v. In no event may this Option be exercised after the date of expiration of this
Option as set forth in Article 13 below.
b. Method of Exercise
This Option shall be exercisable by means of a written notice which shall clearly
state the decision to exercise the Option, the number of Option Shares in respect of
which the Option is being exercised, and such other representations as may be
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International treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR
DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.
required by the Company. Such written notice shall be signed by the Participant and
shall be delivered in person or by email to the Managing Director of the Company.
The written notice shall be accompanied by payment of the Exercise Price, as
specified in Article 6 below.
c. Adjustments of Exercise Terms
The number of the Option Shares and the Exercise Price specified above are subject
to appropriate adjustments in the event of changes in the capital structure of the
Company by reason of split-ups, reclassifications, mergers, consolidations,
reorganizations or liquidations. Subject to any required action of the shareholders of
the Company, if the Company shall be the surviving entity in any merger or
consolidation, this Option (to the extent that it is still outstanding) shall continue to
apply. A dissolution or liquidation of the Company, or a merger or consolidation in
which the Company is not the surviving entity, will cause this Option to terminate,
unless the merger or consolidation agreement shall provide otherwise, provided that
in such event the Participant shall, if the [competent corporate organ] of the Company
expressly authorizes, have the right immediately prior to such dissolution or
liquidation, or merger or consolidation, to exercise this Option in whole or part. To the
extent that the foregoing adjustments relate to shares of the Company, such
adjustments shall be made by the [competent corporate organ], whose decisions in that
respect shall be final, binding and conclusive.
5. PARTICIPANT'S REPRESENTATIONS
With regards to receiving this Option, to its vesting and its exercise, the Participant
acknowledges and confirms to the Company that he/she fully comprehends the following:
a. Both this Option and the Option Shares purchased upon its exercise are securities,
the issuance by the Company of which requires compliance with the relevant
procedures as prescribed under [applicable national law];
b. The Participant confirms to have carried out a reasonable investigation of the affairs
of the Company sufficient for him/her to be well informed as to the rights and the
value of the securities made available to him/her.
6. METHOD OF PAYMENT
Payment of the Exercise Price for the Option Shares shall be made by means of a cash
payment, a cashless payment, or by any other payment method as determined at the sole
discretion of the [competent corporate organ] of the Company in negotiation with the Participant.
7. TERMINATION OF STATUS AS AN EMPLOYEE
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International treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR
DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.
In the event of termination of the Participant's employment relationship with the Company or any
Subsidiary of the Company for any reason other than death or disability on the side of the
Participant, the Participant may lose his/her entitlement to exercise this Option, depending on
the circumstances having led to such termination and subject to Articles 8 and 9 below.
8. GOOD LEAVER
In the event that the Participant's employment relationship with the Company has ended
because he/she has become a Good Leaver (i.e. not being a Bad Leaver) the following terms
shall govern the Participant's entitlement to the Option:
a. Vesting of Option Shares shall immediately cease;
b. Any Unvested Option Shares shall lapse;
c. If the Participant becomes a Good Leaver during the Vesting Period or after the Vesting
Period but before Exercise, the Vested Option Shares shall be exercisable for a
maximum period of [number of years] years after notice of termination of the Employment
Agreement between the Participant and the Company is given, after which period the
Vested Option Shares shall automatically lapse if not exercised;
d. If the Participant becomes a Good Leaver after Exercise, he/she may retain the
exercised Option Shares or choose to offer them to the Company and if such offer is
accepted, transfer all or part of the Option Shares to the Company. The above does not
impose an obligation on the Company to acquire the Option Shares offered.
9. BAD LEAVER
In the event that the Participant's employment relationship with the Company has ended
because he/she has become a Bad Leaver (i.e. dismissal due to an urgent reason as defined
under [applicable national law], a material breach of the Participant's Employment Agreement or of
the Employee Stock Option Agreement, or similar reasons as determined by the [ competent
corporate organ] of the Company:
a. Vesting of Option Shares shall immediately cease;
b. If the Participant becomes a Bad Leaver during the Vesting Period, any Vested
Option Shares as well as any unvested Option Shares shall lapse and the Participant
shall have no more rights in respect of such Vested or unvested Option Shares;
c. If the Participant becomes a Bad Leaver after Exercise of the Option Shares, he/she
shall offer and, if such offer is accepted by the Company, transfer all Option Shares
held by him/her to the Company, which is under no obligation to accept the above
offer. If the Participant who is a Bad Leaver refuses to carry out the transfer, the
Company has the right to cancel all outstanding Option Shares of the Participant and
pay the Participant the nominal value of the Option Shares thus canceled.
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International treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR
DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.
10. DISABILITY OF PARTICIPANT
In the event of termination of the Employment Agreement of the Participant as a result of
disability on the side of the Participant ("disability termination"), the Participant may, but only
within [number of months] months from the date of termination of employment (but in no event later
than the date of expiration of the term of this Option as set forth in Article 13 below), exercise
this Option to the extent that the Participant was entitled to exercise it at the date of such
termination. To the extent that the Participant was not entitled to exercise this Option at the date
of disability termination, or if the Participant does not exercise such Option within the time
periods specified herein, this Option shall terminate.
11. DEATH OF PARTICIPANT
In the event of death of the Participant which occurs during the term of this Option and while the
Participant is an Employee of the Company, under the condition that the Participant has had a
continuous status of an Employee since the Date of Grant of this Option, this Option may be
exercised, at any time within [number of months] following the date of death by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the time of death of the Participant. To the extent that the
Participant was not entitled to exercise the Option at the date of his/her death, or if an
authorized by the Participant person does not exercise such Option within the [ number of months]
time period specified herein, this Option shall terminate.
12. NON-TRANSFERABILITY OF OPTION
Transferability of this Option is subject to the approval of the [ competent corporate organ] of the
Company. If transferred, this Option may be exercised by the person(s) it is transferred to and
the terms of this Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Participant.
13. TERM OF OPTION
This Option may not be exercised more than [ number of years] years from the Date of Grant of this
Option, and may be exercised during such term only in accordance with the terms prescribed in
the present Agreement.
14. PRIVILEGES OF STOCK OWNERSHIP
The Participant shall not be entitled to any shareholder rights with respect to any of the Option
Shares until he/she exercises this Option and pays the Exercise Price as specified under Article
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International treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR
DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.
3 above. As from the moment of exercise of this Option, the Participant shall acquire all
shareholder privileges with respect to the Shares in the Company.
15. NO GUARANTEE OF CONTINUED EMPLOYMENT
The vesting of the Option Shares is earned only under the condition that the Participant
continues his/her service as an employee of the Company throughout the Vesting Period. This
Option, the transactions contemplated hereunder and the Vesting Schedule attached in
Appendix 1 to this Agreement constitute neither an express nor an implied guarantee of a
continued employment relationship of the Participant with the Company and shall by no means
interfere with the rights of the Participant and the Company to terminate the Participant's
employment relationship as provided for in the Employment Agreement applicable.
16. RESTRICTIONS ON SUBSEQUENT USAGE OF OPTION SHARES
16.1. In case of an Exit, a merger, a split, a consolidation, a change in control of the Company, a
share-for-share exchange or a similar transaction involving the Company, the [competent corporate
organ] of the Company has the right to undertake the following actions:
i) provide for the exchange of the outstanding Option Shares;
ii) accelerate the vesting of the outstanding Options;
iii) cancel the outstanding Options in exchange for a payment;
iv) in case of an IPO, exchange the outstanding Option Shares;
v) take whatever discretionary steps it considers appropriate.
16.2. Unless having obtained the prior approval of the [ competent corporate organ] of the Company
for that purpose, the Participant may not pledge, mortgage or use in another way the Option
Shares for the purpose of securing indebtedness of any kind.
17. SEVERABILITY
In the event that any of the provisions contained in this Agreement is held invalid or
unenforceable, it is the fair intention of both parties that such invalidity or unenforceability shall
have no impact whatsoever on the remaining provisions of the Agreement.
18. DAMAGES
Any violation of this Agreement (other than a default in the payment of money) that cannot be
compensated for by damages shall entitle the aggrieved party to the right and privilege to obtain
specific performance of this Option in the court having jurisdiction in the event of such a
violation, as indicated in Article 20 below.
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International treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR
DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.
19. COMPLETE AGREEMENT
This Agreement and the attached to it Appendix 1 constitute the entire agreement between the
parties with respect to its subject matter, and supersedes all other prior or contemporaneous
agreements and understandings, both oral and written. An amendment of this Agreement may
only be made in writing signed by the Company and the Participant.
20. GOVERNING LAW
This Employee Stock Option Agreement shall be governed by and construed in accordance with
[governing national law]. Disputes shall in the first place be attempted to be settled by amicable
means and if amicable resolution is not possible within a reasonable period of [number of months]
months, the [competent court] shall have jurisdiction over any dispute arising out of, in connection
with, or by reason of this Agreement.
Dated: [date-month-year]
SIGNATURES
[COMPANY NAME]:
___________________________
By:
Title:
[PARTICIPANT NAME]:
___________________________
By:
Title:
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International treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR
DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.
(Optional Appendix 1: Vesting Schedule follows on the next page)
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International treaties. IT IS ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR
DISCLOSE TO ANY OTHER PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.
Appendix 1: Vesting Schedule
Individual Parameters of the Option:
Total granted Option Shares: [number] [type] shares
Starting Date:
Ending Date:
Cliff: first one year
Months of vesting after the cliff:
Period Date Option Shares Cumulative Vested
Vested
1 start date [date-month-year] - -
2 … … …
3
4
5
6
7
8
9
10
11
12 expiry of one-year cliff First vesting [number cumulative]
[date-month-year] [number vested shares]
13 start of monthly vesting [number] [number cumulative]
[date-month-year]
14 … … …
DISCLAIMER: NO LEGAL SERVICES PROVIDED
While it is our intention to allow the general public to benefit from the present template document, the
latter is in no way aimed to replace professional legal advice when appropriate and necessary. Everyone
making or intending to make use of this template shall be aware of the following:
- We are not a law firm and do not engage in the practice of law. Accordingly, we do not provide
legal advice and opinions regarding possible legal rights, remedies, defenses or strategies. This
template is not an attempt to provide legal advice to its recipients – it is merely a self-help tool
that you may use at your sole discretion.
- The content and information provided to you by means of the present template are for
informational purposes only and are not intended to be a substitute for professional legal advice.
- Because laws change per geography and get updated over time, we cannot guarantee the accuracy
of the information contained in the present template. Furthermore, be aware of the fact that in
different jurisdictions courts of law may give different interpretations depending on the situation.
Therefore, before taking any action based on the present template, make sure you consult with the
appropriate legal and tax professional(s). WE HEREBY WAIVE ANY LIABILITY TO YOU
FOR ANY RELIANCE ON THE PRESENT TEMPLATE – SUCH RELIANCE SHALL BE
SOLELY AT YOUR OWN RISK.
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