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Employee Stock Option Agreement
"I need an Employee Stock Option Agreement for a Series B funded tech startup in Bangalore, with a 4-year vesting schedule starting March 2025 and including special provisions for remote employees working from other states in India."
1. Parties: Identification of the Company and the Employee (Option Grantee)
2. Background: Context of the ESOP scheme, reference to shareholder approvals, and basis for grant
3. Definitions: Definitions of key terms including Exercise Price, Grant Date, Vesting Period, Option Pool, etc.
4. Grant of Options: Details of the stock options being granted, including number of options and exercise price
5. Vesting Schedule: Timeline and conditions for vesting of options
6. Exercise of Options: Process, timeframe, and conditions for exercising vested options
7. Payment Terms: Methods and requirements for paying the exercise price
8. Tax Obligations: Responsibilities for tax payments and withholding requirements
9. Termination Provisions: Treatment of options upon various types of employment termination
10. Transferability Restrictions: Limitations on transfer of options and shares
11. Adjustments: Provisions for corporate actions like splits, bonus, merger etc.
12. Governing Law and Jurisdiction: Applicable law and dispute resolution mechanism
1. Lock-in Period: Additional restrictions on sale of shares after exercise - used when company wants to ensure employee retention
2. Clawback Provisions: Company's right to recover shares/benefits - used in cases of misconduct or policy violations
3. Tag-Along Rights: Employee's right to participate in sale of shares - relevant for private companies
4. Put Option: Employee's right to sell shares back to company - useful for private companies without clear exit mechanism
5. International Tax Provisions: Additional tax clauses for expatriate employees or multinational companies
6. Non-Competition and Confidentiality: Additional restrictions tied to the ESOP grant - used when not covered in employment agreement
1. Schedule 1 - Option Certificate: Formal certificate detailing the grant including number of options, exercise price, and grant date
2. Schedule 2 - Vesting Schedule: Detailed breakdown of vesting dates and quantities
3. Schedule 3 - Exercise Notice: Template form for exercising options
4. Schedule 4 - Shareholder Agreement Deed of Adherence: Document to be signed when exercising options to become shareholder
5. Appendix A - ESOP Scheme Rules: Complete rules of the ESOP scheme as approved by shareholders
6. Appendix B - Tax Illustration: Example calculations of tax implications at grant, vesting, and exercise
Authors
Technology
Financial Services
E-commerce
Healthcare
Manufacturing
Professional Services
Telecommunications
Retail
Consumer Goods
Biotechnology
Software
Consulting
Start-ups
Human Resources
Legal
Finance
Compliance
Corporate Secretarial
Board Secretariat
Employee Benefits
Compensation & Benefits
CEO
CFO
HR Director
Legal Counsel
Company Secretary
HR Manager
Compensation & Benefits Manager
Finance Manager
Legal Manager
Compliance Officer
Board Secretary
Employee Benefits Administrator
ESOP Administrator
Corporate Counsel
HR Business Partner
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