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Employee Share Option Agreement

Employee Share Option Agreement Template for Australia

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Key Requirements PROMPT example:

Employee Share Option Agreement

"I need an Employee Share Option Agreement for our Australian technology startup that grants 10,000 options to our new Chief Technology Officer, with a 4-year vesting period and a cliff vesting after the first year."

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Document background
Employee Share Option Agreements are commonly used by Australian companies as part of their employee incentivization and retention strategies. These agreements are particularly prevalent in growth-stage companies and industries where attracting and retaining talent is crucial. The document is designed to comply with Australian regulatory requirements, including the Corporations Act 2001 (Cth), ASIC regulations, and tax legislation. An Employee Share Option Agreement typically includes detailed provisions about option grants, vesting schedules, exercise conditions, and tax obligations. It's especially relevant for companies looking to align employee interests with company growth and success, while providing potential tax benefits under Australian employee share scheme provisions. The agreement needs careful structuring to ensure compliance with both corporate and tax laws while meeting commercial objectives.
Suggested Sections

1. Parties: Identifies the company (grantor) and the employee (option holder)

2. Background: Sets out the context of the agreement, including the employee's role and the company's share option scheme

3. Definitions: Defines key terms used throughout the agreement including Option, Exercise Price, Vesting Date, Expiry Date, etc.

4. Grant of Options: Details of the options being granted, including number of options and exercise price

5. Vesting Conditions: Specifies the vesting schedule and any performance conditions that must be met

6. Exercise of Options: Process and requirements for exercising options, including timing and payment methods

7. Lapse of Options: Circumstances under which options will lapse or be forfeited

8. Restrictions on Transfer: Limitations on the employee's ability to transfer or encumber the options

9. Adjustments: Provisions for adjusting options in case of corporate events like restructuring or capital changes

10. Tax Obligations: Tax responsibilities and implications for both parties

11. Compliance with Laws: Requirements to comply with relevant laws and regulations

12. General Provisions: Standard contractual provisions including notices, amendments, and governing law

Optional Sections

1. Change of Control: Special provisions that apply if the company undergoes a change in control - include if company anticipates potential sale or merger

2. Bad Leaver Provisions: Specific consequences if employment terminates under negative circumstances - include if company wants stronger protection

3. Shareholder Rights: Rights of option holders prior to exercise - include if providing any pre-exercise rights

4. Drag Along/Tag Along: Rights and obligations in case of sale of company shares - include if company has or anticipates other major shareholders

5. International Provisions: Special provisions for international employees - include if grant covers multiple jurisdictions

6. Clawback Provisions: Company's right to recoup benefits in certain circumstances - include if required by company policy or regulation

Suggested Schedules

1. Option Certificate: Formal certificate detailing the specific grant of options

2. Vesting Schedule: Detailed timeline and conditions for option vesting

3. Exercise Notice: Template form for exercising options

4. Tax Summary: Summary of tax implications and obligations

5. Company's Share Trading Policy: Company's policy regarding trading in company securities

6. Worked Examples: Examples illustrating vesting, exercise, and tax calculations

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
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Relevant Industries

Technology

Professional Services

Financial Services

Healthcare

Retail

Manufacturing

Mining

Energy

Telecommunications

Media and Entertainment

Real Estate

Biotechnology

Software Development

Consulting

Relevant Teams

Legal

Human Resources

Finance

Executive Leadership

Company Secretariat

Compensation & Benefits

Corporate Governance

Risk & Compliance

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Technology Officer

Senior Developer

Product Manager

Sales Director

Marketing Manager

Human Resources Director

Legal Counsel

Operations Manager

Research Scientist

Business Development Manager

Department Head

Regional Manager

Technical Lead

Senior Consultant

Industries





Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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