A Vesting Agreement is an agreement between a company and an employee of the
company regarding company stock. This agreement provides that the employee will not
have control over the vested stocks until a certain period of time or upon the happening
of a said occurrence. During the vesting period, the employee may not sell or transfer
the stock to another party. This agreement can be used by small companies or other
entities that plan to provide stock to employees.
This Stock Vesting Agreement (this “Agreement”) is hereby made and entered into on
this ____ day of _______________, 20_________ (the “Effective Date”) by and between
__________________________ (“Company”) and __________________ (“Shareholder”).
WHEREAS, Shareholder is the registered and beneficial owner of ______________
(____) Shares in the capital Stock of Company;
WHEREAS, Company considers it necessary and expedient in the interests of Company
to request that Shareholder agree to ___________ (___) of its issued and outstanding Shares in
the capital of Company be subject to vesting (the “Vested Shares”); and
WHEREAS, in exchange for certain consideration, the receipt and sufficiency of which is
hereby acknowledged, Company and Shareholder are desirous to enter into this Agreement for
the purpose of specifying the terms and conditions relating to vesting of the Vested Shares.
NOW, THEREFORE, in consideration of the promises and mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Company and Shareholder, Company and Shareholder hereby agree
with one another as follows.
1. FORFEITURE OF VESTED SHARES
A. The Vested Shares shall be subject to forfeiture until the occurrence of either of
the following conditions set forth below (the “Vesting Event”) or the ________ (__) anniversary
of the date of this Agreement (the “Vesting Termination Date”).
B. A Vesting Event shall be deemed to have occurred if, prior to the Vesting
Termination Date, one (1) of the following conditions shall have been satisfied:
i. Company’s revenues for any fiscal period ending after the date of this
Agreement increase by _______________ percent (_____%) compared to
revenues for any previous fiscal period ending after the Effective Date of
ii. Company’s financial reserves for any fiscal period ending after the date of
this Agreement increase by ______________ percent (_____%)
compared to financial reserves for any previous fiscal period ending after
the Effective Date of this Agreement; or
iii. Shareholder obtains and presents more than one (1) acquisition
opportunity to Company’s Board of Directors;
© 2013 by Docstoc®, Inc. registered document proprietary, copy not 2
C. Upon the occurrence of a Vesting Event, the Vested Shares shall vest on the filing
by Company of its report for the fiscal year in which such Vesting Event occurred or as soon as
possible following Company filing its report for such fiscal year.
D. Upon Company filing its report for such fiscal year, Company shall provide or
deliver to Shareholder, the share certificate(s) representing such Vested Shares.
E. Should a Vesting Event not have occurred, the Vested Shares shall be determined
to not have vested and will be cancelled by Company.
F. In the event that Shareholder terminates his or her employment with Company or
is terminated by Company with cause before the _________ (__)-year anniversary of this
Agreement, the Vested Shares shall be automatically forfeited and turned over to Company by
Shareholder and cancelled.
G. Should Shareholder die or become incapacitated before the _________ (__)-year
anniversary date of this Agreement, _________ (___%) percent of the Vested Shares will be
released by Company and will no longer be subject to forfeiture.
H. Any and all share certificates representing the Vested Shares shall be held in trust
I. Until such time as the Vested Shares are cancelled by Company, Shareholder
shall retain all of his or her right, title, and interest in and to the Vested Shares, and shall
continue to have the right to vote the Vested Shares in respect of all matters.
J. Shareholder understands that pursuant to Section 83 of the Internal Revenue Code
of 1986, as amended (the “Code”), the fair market value of the Vested Shares on the date any
forfeiture restrictions applicable to the Vested Shares lapse will be reportable as ordinary income
on the lapse date. Shareholder understands that he or she may elect under Code Section 83(b) to
be taxed at the time the Vested Shares are received hereunder, based on the fair market value of
the Vested Shares on that date, rather than when and as the Shares cease to be subject to such
forfeiture restrictions. Such election must be filed with the Internal Revenue Service within
thirty (30) days after the date of purchase of the Vested Shares. Shareholder understands that
failure to make this filing within the applicable thirty (30) day period will result in the
recognition of ordinary income by Shareholder as the forfeiture restrictions lapse.
K. In the event Shareholder tries to sell, exchange, transfer or otherwise dispose of
the Vested Shares prior to their release, such sale, exchange, transfer or otherwise will be
deemed null and void.
L. Company and Shareholder hereby agree that each of them shall execute and
deliver all such further instruments and documents, and shall perform any and all acts, necessary
to give full force and effect to all of the terms of this Agreement.
© 2013 by Docstoc®, Inc. registered document proprietary, copy not 3
M. Shareholder shall pay to Company any and all amounts due and owing in respect
of withholding taxes payable with respect to the Vested Shares. If any withholding tax is due at
the time the restrictions lapse, no share certificate will be delivered to Shareholder until
withholding requirements have been satisfied.
In the event Shareholder is desirous of selling or transferring the Vested Shares,
Shareholder shall provide to Company the legal opinion of an attorney attesting that the
transaction is except from registration.
3. GENERAL PROVISIONS
A. This Agreement may not be transferred or assigned to any other party without
Shareholder obtaining the prior written consent of Company.
B. Any notice or other communication provided under or for the purposes of this
Agreement shall be given or made in writing, marked “Private and Confidential,” and shall be
served personally or by courier or mailed by prepaid registered mail:
i. In the case of Company, to:
Fax: (___) _________________________
ii. In the case of any Shareholder, to the last known address of Shareholder as
recorded in the records of Company.
Or to such other address as any of the parties shall have last notified in the manner provided
herein. The date of receipt of any such notice or other communication shall be deemed to be the
date of delivery of such notice or other communication if served personally or by courier
(provided, however, that no notice or other communication shall be delivered by courier to a
residential address), or if mailed as aforesaid, the fourth day of business following the date of
mailing, provided that no day on which there is an interruption of postal service which would
affect such mailing shall be a day for determining whether effective notice has been give.
C. Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and assigns of the
parties (including transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their respective successors
and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
© 2013 by Docstoc®, Inc. registered document proprietary, copy not 4
D. This Agreement may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original and such counterparts together shall
constitute one agreement deemed to be dated as of the date hereof.
E. This Agreement constitutes the entire agreement between Company and
Shareholder with respect to the specific subject matter hereof and supersedes all prior
agreements or understandings of any kind with respect to the specific subject matter hereof.
F. This Agreement inures to the benefit of and is binding upon the parties hereto and
their respective successors and assigns.
G. This Agreement is to be construed in accordance with and governed by the laws
of the State of ____________________.
IN WITNESS WHEREOF, Company and Shareholder hereto have executed this
Agreement as of the day and year first above written.
I have authority to bind Company.
I have authority to bind Shareholder.
If shareholder is an individual:
SIGNED, SEALED AND DELIVERED )
in the presence of: )
_________________________________ ) __________________________________
Witness ) Shareholder
© 2013 by Docstoc®, Inc. registered document proprietary, copy not 5