Stock Option Agreement Without Consideration

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

Description

The Stock Option Agreement without consideration is a legal document that allows a corporation to grant stock options to an officer or key employee. This agreement outlines the grant of options to purchase shares at a specified price, which is based on the fair market value at the time of the agreement. It details the duration of the option, conditions for termination, and rules regarding exercise of the option. The agreement emphasizes that the options are not a form of compensation and cannot be transferred except under certain circumstances. It also includes provisions for what happens in the event of the optionee's death and underlines the importance of the optionee's continuous employment for the options to be exercisable. The structure of the document aids clarity and includes sections that require clear completion, making it accessible for all users. This form is particularly useful for attorneys, partners, owners, associates, paralegals, and legal assistants as it establishes rights and obligations clearly, aiding in compliance with corporate governance and employee incentive structures.
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FAQ

Option Contract ExampleYou expect Company XYZ's stock price to go up to $90 within the next month. You find out that you can buy an option contract for this company at $4.50 with a strike price of $75 per share. That means you'll pay $450 for your options contract ($4.50 x 100 shares).

In many cases it can be advantageous to exercise your stock options early (provided you have the cash, and assuming you believe in the company given you accepted a job there). The first benefit of exercising early is that you will likely have zero (or very little) tax liability at the time of exercise.

When a merger is completed the two companies that merged combine into a new entity. At that time, trading in the options of the previous entities will cease and all options on that security that were out-of-the-money will become worthless. Generally, this is determined by the very last closing price on that stock.

Key TakeawaysIn most cases, options can be closed (rather than exercised) through offsetting transactions prior to expiration. It doesn't make a lot of sense to exercise options that have time value because that time value will be lost in the process.

Option Account Agreement must be received by member firm within 15 calendar days from time the account is approved.

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Stock Option Agreement Without Consideration