EMPLOYEE STOCK OPTION AGREEMENT
THIS EMPLOYEE STOCK OPTION AGREEMENT ("Agreement") is made as of [Grant Date],
BETWEEN:
[Company Name], a [State] corporation ("Company"),
AND:
[Employee Name], an individual ("Optionee").
1. GRANT OF OPTION
1.1 Option Grant. Company hereby grants Optionee an option to purchase [Number] shares of Company's Common Stock ("Option Shares") at an exercise price of $[Price] per share ("Exercise Price").
1.2 Type of Option. This option is designated as: [ ] Incentive Stock Option (ISO) under Section 422 of the Internal Revenue Code / [ ] Non-Qualified Stock Option (NSO).
1.3 Fair Market Value. The fair market value of Company's Common Stock on the Grant Date is $[Amount] per share, as determined by the Board of Directors based on [409A valuation / most recent appraisal].
2. VESTING SCHEDULE
2.1 Vesting Period. The Option Shares shall vest according to the following schedule: (a) [25]% of Option Shares shall vest on the first anniversary of the Vesting Commencement Date of [Date] ("Cliff Date"); (b) the remaining [75]% shall vest in equal monthly installments of [1/48th] over the following [36] months, subject to Optionee's continued Service.
2.2 Acceleration. Vesting shall accelerate in full upon: (a) a Change of Control if Optionee's Service is terminated within [12] months following such event ("Double Trigger"); or (b) [other acceleration events as specified by the Board].
2.3 Service. "Service" means Optionee's continuous employment or service relationship with Company or any subsidiary.
3. EXERCISE OF OPTION
3.1 Exercise Period. The Option may be exercised at any time after vesting and before the Expiration Date of [Date], being [10] years from the Grant Date (or [5] years if Optionee is a 10% shareholder and this is an ISO).
3.2 Method of Exercise. To exercise, Optionee shall deliver to Company: (a) written notice of exercise specifying the number of shares; (b) payment of the aggregate Exercise Price; (c) any tax withholding amounts.
3.3 Payment Methods. The Exercise Price may be paid by: (a) cash or check; (b) wire transfer; (c) cashless exercise through a broker; (d) net exercise (surrendering Option Shares with a value equal to the Exercise Price); (e) tender of already-owned shares, subject to Board approval.
3.4 Partial Exercise. The Option may be exercised in whole or in part, provided partial exercises are for at least [100] shares (or the remaining vested shares if less).
4. TERMINATION OF SERVICE
4.1 Voluntary Resignation or Termination Without Cause. If Optionee's Service terminates voluntarily or without Cause, the vested portion may be exercised within [90] days after termination.
4.2 Termination for Cause. If terminated for Cause (defined as fraud, embezzlement, willful misconduct, or material breach), all options (vested and unvested) terminate immediately.
4.3 Death or Disability. If Service ends due to death or Disability, the vested portion may be exercised within [12] months by Optionee or their estate.
4.4 Unvested Shares. All unvested Option Shares are immediately forfeited upon termination of Service for any reason.
5. RESTRICTIONS ON TRANSFER
5.1 The Option is personal to Optionee and may not be transferred, assigned, pledged, or sold, except by will or the laws of descent, or to a revocable trust for Optionee's benefit.
5.2 Option Shares acquired upon exercise are subject to: (a) Company's right of first refusal; (b) any lock-up agreements; (c) applicable securities law restrictions.
6. TAX MATTERS
6.1 Withholding. Company shall withhold applicable federal, state, and local taxes upon exercise. Optionee authorizes deduction from salary or other compensation.
6.2 ISO Limitations. For ISOs, the aggregate fair market value of shares (determined at grant) first exercisable in any calendar year shall not exceed $100,000. Any excess shall be treated as NSOs.
6.3 83(b) Election. If Optionee exercises unvested options (if permitted), Optionee may file an 83(b) election within 30 days of exercise.
6.4 No Tax Advice. Company makes no representation regarding tax consequences. Optionee should consult a tax advisor.
7. COMPANY REPRESENTATIONS
7.1 The Option Shares, when issued upon exercise, shall be duly authorized, validly issued, fully paid, and non-assessable.
8. ADJUSTMENTS
8.1 In the event of a stock split, stock dividend, recapitalization, or similar change, the number of Option Shares and Exercise Price shall be proportionally adjusted by the Board.
9. CHANGE OF CONTROL
9.1 "Change of Control" means: (a) sale of all or substantially all Company assets; (b) merger or consolidation where existing shareholders hold less than 50% post-transaction; (c) any person acquiring more than 50% of voting power.
10. GOVERNING LAW
10.1 This Agreement shall be governed by and construed in accordance with the laws of the State of [State/Jurisdiction].
10.2 Disputes shall be resolved in the courts of [County], [State].
11. SEVERABILITY
11.1 If any provision is held invalid, the remaining provisions continue in full force.
12. ENTIRE AGREEMENT
12.1 This constitutes the entire agreement between the Parties. No amendment is valid unless in writing signed by both Parties.
13. NOTICES
13.1 All notices shall be in writing, delivered by certified mail or overnight courier to the addresses above.
DISCLAIMER: This template is for informational purposes only and does not constitute legal advice. Consult qualified legal counsel.
SIGNATURES
[PARTY A]:
Signature: _________________________ Name: [Full Name] Title: [Title] Date: __________
[PARTY B]:
Signature: _________________________ Name: [Full Name] Title: [Title] Date: __________
