Stock Option Agreement With Commentary

State:
Multi-State
Control #:
US-0547BG
Format:
Word; 
Rich Text
Instant download

Description

The Stock Option Agreement is a legal document that outlines the terms under which a corporation grants stock options to key employees. This agreement includes important provisions such as the number of shares offered, the exercise price based on fair market value, and the duration of the option, typically lasting for a specific number of years. It details conditions under which the option may be terminated, such as the employee's death or employment termination. The form restricts transfer of the option and specifies how and when it can be exercised, emphasizing that it is for investment purposes only. Additionally, it addresses potential adjustments due to changes in stock structure and the obligations of the corporation regarding shares registration. This form is essential for attorneys, partners, owners, associates, paralegals, and legal assistants as it ensures compliance with corporate regulations and protects the interests of both the corporation and its employees. Users must complete and customize the agreement with pertinent information, ensuring clarity in the terms and the involved parties' roles.
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  • Preview Stock Option Agreement between Corporation and Officer or Key Employee
  • Preview Stock Option Agreement between Corporation and Officer or Key Employee

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FAQ

For example, a stock option is for 100 shares of the underlying stock. Assume a trader buys one call option contract on ABC stock with a strike price of $25. He pays $150 for the option. On the option's expiration date, ABC stock shares are selling for $35.

Stock options are a form of compensation. Companies can grant them to employees, contractors, consultants and investors. These options, which are contracts, give an employee the right to buy, or exercise, a set number of shares of the company stock at a preset price, also known as the grant price.

When negotiating stock options, ask if the company has a standard scale. That scale typically means that those on the executive level (CEOs, CFOs, COOs, CIOs, the VPs) will be given a much greater amount of stock options than a person coming into the company at a middle management role.

There are two key types of employee stock options: incentive stock options, or ISOs, and nonqualified stock options, called NSOs.

What Is a Stock Option? A stock option gives an investor the right, but not the obligation, to buy or sell a stock at an agreed-upon price and date. There are two types of options: puts, which is a bet that a stock will fall, or calls, which is a bet that a stock will rise.

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Stock Option Agreement With Commentary