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Employee Stock Option Agreement

Employee Stock Option Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Employee Stock Option Agreement

"I need an Employee Stock Option Agreement for our Dubai-based tech startup, granting 10,000 options to our new CTO with a 4-year vesting period starting March 2025, including specific provisions for an anticipated IPO in 2025."

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Document background
The Employee Stock Option Agreement is a critical document used by UAE companies to provide employees with the right to purchase company shares at a predetermined price within a specified period. This agreement is particularly relevant for companies looking to attract and retain talent by offering equity-based compensation, especially in competitive sectors such as technology and financial services. The document must comply with UAE Federal Laws, including Labor Law No. 33 of 2021 and Companies Law No. 32 of 2021, while also considering specific regulations if the company operates in free zones such as DIFC or ADGM. It typically includes detailed provisions on vesting schedules, exercise procedures, tax implications, and regulatory compliance requirements, making it essential for both private and public companies operating in the UAE market.
Suggested Sections

1. Parties: Identification of the Company and the Employee (Option holder)

2. Background: Context of the agreement, including reference to employment relationship and stock option plan

3. Definitions: Key terms used throughout the agreement including 'Option', 'Exercise Price', 'Shares', 'Vesting Date', etc.

4. Grant of Option: Details of the stock option grant, including number of shares, exercise price, and grant date

5. Vesting Schedule: Timeline and conditions for when options become exercisable

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

7. Term and Expiration: Duration of the option grant and circumstances of expiration

8. Termination of Employment: Impact of employment termination on options (including good leaver/bad leaver provisions)

9. Restrictions on Transfer: Limitations on transferring or assigning options

10. Regulatory Compliance: Compliance with UAE securities laws and corporate regulations

11. Tax Obligations: Responsibility for taxes and other fiscal obligations

12. Governing Law and Jurisdiction: Specification of UAE law application and dispute resolution procedures

Optional Sections

1. Change in Control Provisions: Include when company anticipates potential merger, acquisition, or IPO scenarios

2. Lock-up Period: Include for pre-IPO companies or when share trading restrictions are needed

3. Free Zone Specific Provisions: Include when company operates in DIFC, ADGM, or other free zones

4. Shareholder Rights: Include for unlisted companies or when specific voting/dividend rights attach to options

5. Clawback Provisions: Include when company wants right to recoup benefits in case of misconduct

6. Non-Competition and Confidentiality: Include when not covered in separate employment agreement

7. Currency Conversion: Include when exercise price is in currency other than AED

Suggested Schedules

1. Schedule 1 - Option Certificate: Formal certificate detailing the specific grant terms including number of shares and exercise price

2. Schedule 2 - Exercise Notice: Template form for employee to use when exercising options

3. Schedule 3 - Stock Option Plan Rules: Complete copy or summary of the company's stock option plan

4. Schedule 4 - Regulatory Compliance Certificate: Employee certifications regarding compliance with UAE securities laws

5. Schedule 5 - Acceptance Form: Employee acknowledgment and acceptance of option grant terms

6. Appendix A - Vesting Schedule Details: Detailed breakdown of vesting dates and conditions

7. Appendix B - Tax Treatment Summary: Overview of tax implications in relevant jurisdictions

Authors

Alex Denne

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Applicable Law
Board
Cause
Change in Control
Company
Competitor
Confidential Information
Corporate Transaction
Date of Grant
Disability
Effective Date
Eligible Employee
Employment Agreement
Exercise Notice
Exercise Period
Exercise Price
Expiration Date
Fair Market Value
Free Zone Regulations
Good Leaver
Grant
Group
Initial Public Offering
Lock-up Period
Market Price
Notice
Option
Option Certificate
Option Holder
Parent Company
Plan
Regulatory Authority
Restricted Period
Securities Laws
Shares
Shareholder Agreement
Stock Option Plan
Subsidiary
Tax
Termination Date
Transfer
UAE
Vested Options
Vesting Date
Vesting Period
Vesting Schedule
Clauses
Grant of Options
Vesting
Exercise Rights
Exercise Price
Exercise Period
Payment Terms
Share Issuance
Transfer Restrictions
Termination of Employment
Good Leaver/Bad Leaver
Change of Control
Regulatory Compliance
Securities Laws Compliance
Tax Obligations
Confidentiality
Non-Competition
Non-Solicitation
Data Protection
Representations and Warranties
Assignment
Amendment
Waiver
Notices
Entire Agreement
Severability
Force Majeure
Governing Law
Dispute Resolution
Shareholder Rights
Lock-up Provisions
Clawback
Plan Administration
Corporate Events
Share Capital Adjustments
Termination of Agreement
Relevant Industries

Technology

Financial Services

Professional Services

E-commerce

Healthcare

Manufacturing

Real Estate

Telecommunications

Media and Entertainment

Consulting

Start-ups and Scale-ups

Relevant Teams

Human Resources

Legal

Finance

Executive Leadership

Corporate Governance

Compensation and Benefits

Stock Administration

Compliance

Corporate Secretary

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Technology Officer

Chief Operating Officer

Senior Software Engineer

Product Manager

Sales Director

Department Head

Vice President

Managing Director

Senior Manager

Technical Lead

Key Account Manager

Research Director

Principal Consultant

Industries
UAE Federal Law No. 33 of 2021 (UAE Labor Law): The primary legislation governing employment relationships in the UAE, which needs to be considered for the basic framework of employee benefits and rights
UAE Federal Law No. 32 of 2021 (Commercial Companies Law): Regulates corporate entities and share ownership in the UAE, including provisions related to share issuance and transfer
Securities and Commodities Authority (SCA) Decision No. 3/R.M of 2017: Concerning the Regulation of Promotion and Introduction, which governs the offering of securities in the UAE
UAE Central Bank Resolution 164/8/94: Regulations concerning financial investment companies and banking, financial and investment consultation establishments, which may be relevant if the stock options involve financial services companies
Federal Decree-Law No. 47 of 2022 on Taxation of Corporations and Businesses: New corporate tax law that needs to be considered for tax implications of stock options
DIFC Employment Law No. 2 of 2019 (if applicable): Specific employment regulations for companies operating in the Dubai International Financial Centre free zone
ADGM Employment Regulations 2019 (if applicable): Specific employment regulations for companies operating in the Abu Dhabi Global Market free zone
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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