This form should be used by companies that desire to incentivize their employees through stock ownership. Employee stock ownership ties the employee’s financial interests to overall company performance. The agreement grants an employee an option to purchase company stock at a set price and according to a specified vesting schedule. This document contains standard clauses commonly used in these types of agreements, but can be customized to ensure the specific terms of the parties’ agreement are addressed.
This form should be used by companies that desire to incentivize their employees through stock ownership. Employee stock ownership ties the employee’s financial interests to overall company performance. The agreement grants an employee an option to purchase company stock at a set price and according to a specified vesting schedule. This document contains standard clauses commonly used in these types of agreements, but can be customized to ensure the specific terms of the parties’ agreement are addressed. Employee Stock Option Plan __________________ [insert name of company]: Employee Stock Option Plan On _________________ [insert date], the Board of Directors for _________________ (“Company”) passed a resolution establishing the terms of the Employee Stock Option Plan (the “Plan”) of the corporation; the intent of the Plan being to foster employee relations, to encourage and assist its employees and the employees of its affiliates (including officers and directors who are employees) in acquiring a share ownership interest, and to help them provide for their future security by issuing incentive stock options pursuant to the laws of the Internal Revenue Code. No more than _________________ number of shares shall be made subject to options under the Plan. Appointment of Committee: A committee called _________________ (“Committee”) shall administer the Plan. The Board of Directors shall appoint the Committee members_________________, and the number of Committee members shall be _________________. The Committee shall only consist of employees who are not eligible to take part in the Plan. Duties of Committee: The duties and responsibilities of the Committee shall consist of the following: (i) Determine which employees are eligible to partake in the Plan. (ii) Establish the rules for administering the Plan. (iii) Meet as a group as often as is reasonably necessary to properly perform its responsibilities. (iv) Seek necessary legal and accounting services for the Plan. (v) The Committee may require an employee to provide evidence of the legality of the exercise of the option. (vi) ______________________________________________________ (vii) ______________________________________________________ [insert any additional responsibilities] Terms of Options: The Committee, in its sole discretion, may grant options to eligible employees subject to the following conditions: (a) Option price. The option price shall be ________ percent of the fair market value of the shares of the Company on the date of the granting of the option, which fair market value shall be the last traded price of such shares on the date of the execution of the stock option, or, if there has been no sale of such shares on such Exchange on that date, then the closing price of such stock on such Exchange on the last preceding business day on which such stock was traded. (b) Exercise of option. The option shall expire _________________ months from the © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 2 date such option is granted. The option may be exercised in whole at any time, or in part from time to time, during its term, by written notice of exercise served upon the Company, specifying the number of shares in respect of which the option is being exercised, accompanied by payment to the Company of the purchase price for the shares so specified. The option shall be deemed to have been duly and fully exercised in respect of the shares specified in any such notice of exercise, upon the due service of such notice by registered mail in the manner herein specified for the service of notices hereunder, and the completion of payment in full as set forth above. (c) Payment. The purchase price for shares purchased upon each exercise of the option shall be paid in cash in full. (d) Rights as a stockholder. The employee shall not be, nor have any of the rights or privileges of, a shareholder of the corporation in respect of any of the shares issuable upon the option granted him, unless and until certificates representing such shares have been purchased by, or issued to, him; and he shall have no right to any dividend, distribution, or other right upon the optioned shares, and no right to subscribe for or purchase shares or other securities of the Company. (e) Changes in capitalization. In the event that, prior to the delivery by the Company of all of the shares covered by the option, there shall be any increase or reduction (without the Company's receiving compensation therefor in money, services, or property) in the number of its shares outstanding, by reason of any one or more share dividends or split-offs or other readjustments, or in the event that the outstanding shares of the Company shall be exchanged for securities of the Company, or another corporation by reason of any merger, consolidation, or other recapitalization, or in the event of any other material change in the capital structure of the Company by reason of any reclassification, reorganization, recapitalization, or otherwise, there shall be a proportionate and equitable adjustment of the terms of the option with respect to the amount and class of shares remaining subject to the option and the purchase price to be paid therefor, as follows: in the event that the outstanding shares of the Company shall be exchanged for other security of the Company or of another corporation, the employee shall be entitled to purchase, pursuant to his or her option, such number of shares or amount of other securities of the Company or of such other corporation as were exchangeable for the number of shares of the Company which the employee would have been entitled to purchase except for such action, and the cash consideration payable per share shall be proportionately and equitably adjusted in the discretion of the Company's Board of Directors; and in the event of any other material change in the capital structure of the Company, or if, in any of the events hereinabove specified, the Board of Directors of the Company shall be of the opinion that the foregoing provisions will not effect an equitable and proportionate adjustment of the terms of the option with respect to the amount and class of shares remaining subject thereto and the purchase price to be paid therefor, there shall be such other or further adjustments in the terms of the option as shall be necessary in the opinion of the Company's Board of Directors to effectuate an equitable and proportionate adjustment in any such event of the terms of the option in such respects. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 3 (f) Nonassignability. The option shall be nonassignable and nontransferable by the employee other than by will or the laws of descent and distribution, and shall be exercisable during his lifetime only by him. (g) Death or termination of employment. If the employee shall die before exercising his option in full, the legal representative of his estate may, within six months after the employee’s death or before the expiration date of his option (whichever shall be the earlier) exercise his option as to all or a part of the shares as to which such option has not been exercised at the time of his death, by written notice of exercise served upon the Company, specifying the number of shares in respect of which such option is being exercised, accompanied by the payment to the Company in cash of the full purchase price for the shares so specified. If any employee’s employment by the Company is terminated, for any reason, other than death of the employee, before his option has been fully exercised, such employee may, within 30 days after the termination of his employment or before the expiration date of his option (whichever shall be the earlier), exercise his option as to all or a part of the shares as to which such option has not then been exercised, by written notice of exercise served upon the Company specifying the number of shares in respect of which the option is being exercised, accompanied by payment to the Company in cash of the full purchase price for the shares so specified. If, in any such case of death or termination of employment, such option is not so exercised as, and within the time, above provided, or if it is so exercised as to a portion only of the shares covered by the option, then such option shall forthwith terminate as to any then unexercised portion thereof. (h) Ratification. No option shall be granted under the Plan unless, upon the submission of the Plan to the shareholders of the Company at their next annual meeting for their approval (and the Plan shall be so submitted), a majority of the shareholders of the Company present in person or by proxy at such meeting shall approve the Plan. (i) No obligation to exercise option. The granting of an option shall impose no obligation upon the employee to exercise such option. (j) Number of shares. Each option shall state the total number of shares to which it pertains. Board of Directors: The Board of Directors of Company, in its sole discretion, may review all the actions of the Committee, provided however that the Committee may not increase the number of options granted to an employee or grant options to employees who were not selected by the Committee. The Board of Directors may at any time discontinue the Plan, change the number of shares that may be sold under the Plan, and change the requirements for eligibility in the Plan. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 4 Indemnification: The Company shall indemnify all members of the Committee to the full extent of the law for their actions, so long as the actions are made in good faith. Continuance of employment. Nothing herein contained shall be deemed to create any limitation or restriction upon such rights as the Company would otherwise have to terminate the employment of any purchasing employee at any time for any reason or for no reason. Application of funds. The proceeds received by Company from the sale of its shares pursuant to the Plan, except as otherwise provided herein, will be used for general corporate purposes. No fractional shares. No fractional shares shall be purchasable or issuable under the Plan, either directly or upon the exercise of an option. Dated: ___________________ Company ______________________________________ By ______________________________________ Its ______________________________________ ______________________________________ Attest: Secretary © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 5
Pages to are hidden for
"Employee Stock Option Plan"Please download to view full document