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Employee Share Option Agreement

Employee Share Option Agreement Template for Germany

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Key Requirements PROMPT example:

Employee Share Option Agreement

"I need an Employee Share Option Agreement for our German tech startup that grants senior developers 1000 stock options each, with a 4-year vesting period starting March 2025 and a one-year cliff period, including specific provisions for remote workers."

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Document background
Employee Share Option Agreements are commonly used by German companies as part of their employee incentive and retention strategies. This document type is particularly relevant for companies looking to attract and retain talent while aligning employee interests with company growth. The Employee Share Option Agreement, governed by German law, provides a detailed framework for granting share options to employees, including specific terms for vesting, exercise, and termination. It must comply with various German regulations including the Stock Corporation Act (AktG), Securities Trading Act (WpHG), and relevant tax laws. The agreement is typically part of a broader employee participation program and may require works council consultation in accordance with German labor law. It's especially common in growth-oriented companies, startups, and established corporations implementing long-term incentive plans.
Suggested Sections

1. Parties: Identification of the company granting the options and the employee receiving them

2. Background: Context of the agreement, including reference to any employee incentive scheme or program

3. Definitions: Definitions of key terms used throughout the agreement, including Option, Exercise Price, Shares, Vesting Period, etc.

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

5. Vesting Schedule: Specification of the vesting period and conditions for the options to become exercisable

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

7. Termination of Employment: Treatment of options upon various types of employment termination

8. Taxation: Tax obligations and responsibilities of both parties

9. Data Protection: Provisions regarding the handling of personal data in accordance with GDPR and BDSG

10. Transferability and Assignment: Restrictions on transfer or assignment of options

11. Governing Law and Jurisdiction: Specification of German law as governing law and jurisdiction for disputes

Optional Sections

1. Change of Control: Provisions addressing what happens to options in case of company merger, acquisition, or restructuring

2. Bad Leaver Provisions: Additional provisions for forfeit or modified terms in case of termination for cause

3. Corporate Events: Treatment of options in case of stock splits, rights issues, or other corporate actions

4. International Provisions: Additional terms for employees working across multiple jurisdictions

5. Works Council Approval: Reference to works council approval where required under BetrVG

6. Malus and Clawback: Provisions allowing company to reduce or reclaim options in specific circumstances

7. Lock-up Period: Additional restrictions on selling shares after exercise of options

Suggested Schedules

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

2. Vesting Schedule Details: Detailed breakdown of vesting dates and proportions

3. Exercise Notice Form: Template form for employee to use when exercising options

4. Tax Calculation Examples: Illustrative examples of tax treatment in different scenarios

5. Shareholders' Agreement Extract: Relevant provisions from the company's shareholders' agreement that option holders must comply with

6. Company Share Plan Rules: Full rules of the share plan under which the options are granted

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
Articles of Association
Bad Leaver
Board
Business Day
Cause
Change of Control
Company
Confidential Information
Corporate Event
Date of Grant
Disability
Employee
Exercise Notice
Exercise Period
Exercise Price
Exit Event
Fair Market Value
Good Leaver
Good Reason
Grant
Group
IPO
Issue Price
Notice
Option
Option Certificate
Option Holder
Option Period
Parent Company
Parties
Plan
Plan Administrator
Retirement
Share
Share Capital
Shareholders' Agreement
Stock Exchange
Subsidiary
Tax
Tax Authority
Termination Date
Transfer
Vesting Commencement Date
Vesting Date
Vesting Period
Vesting Schedule
Works Council
Clauses
Grant of Options
Vesting
Exercise Rights
Exercise Price
Exercise Procedure
Share Issuance
Termination of Employment
Transfer Restrictions
Confidentiality
Data Protection
Tax Obligations
Compliance with Laws
Corporate Events
Change of Control
Non-Competition
Non-Solicitation
Works Council Approval
Share Capital Changes
Option Adjustments
Notices
Assignment
Amendment
Severability
Entire Agreement
Governing Law
Jurisdiction
Good/Bad Leaver Provisions
Lock-up Period
Shareholder Rights
Information Rights
Malus and Clawback
Costs and Expenses
Force Majeure
Third Party Rights
Representations and Warranties
Relevant Industries

Technology

Financial Services

Professional Services

Healthcare

Manufacturing

E-commerce

Biotechnology

Software Development

Consulting

Telecommunications

Media and Entertainment

Renewable Energy

Real Estate

Consumer Goods

Automotive

Relevant Teams

Legal

Human Resources

Finance

Executive Leadership

Compensation and Benefits

Corporate Governance

Compliance

Payroll

Employee Relations

Internal Communications

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Technology Officer

Senior Software Engineer

Product Manager

Sales Director

Marketing Manager

Human Resources Director

Legal Counsel

Finance Manager

Department Head

Senior Manager

Principal Engineer

Research Scientist

Business Development Manager

Operations Director

Project Manager

Account Executive

Technical Lead

Strategy Consultant

Industries
German Stock Corporation Act (Aktiengesetz - AktG): Regulates the issuance of shares and share options, corporate governance requirements, and shareholder rights in German stock corporations
German Civil Code (Bürgerliches Gesetzbuch - BGB): Contains fundamental contract law provisions and employment relationship regulations that apply to option agreements
German Securities Trading Act (Wertpapierhandelsgesetz - WpHG): Governs securities trading and relevant disclosure requirements for listed companies offering share options
German Income Tax Act (Einkommensteuergesetz - EStG): Determines the tax treatment of employee share options, including taxation points and valuation methods
German Works Constitution Act (Betriebsverfassungsgesetz - BetrVG): May require works council involvement in implementing employee participation programs including share option schemes
General Data Protection Regulation (GDPR) and German Federal Data Protection Act (BDSG): Governs the processing of personal data in connection with the administration of share option plans
German Banking Act (Kreditwesengesetz - KWG): Relevant for certain aspects of option schemes, particularly if they involve financial institutions or banking services
German Labor Court Act (Arbeitsgerichtsgesetz - ArbGG): Governs jurisdiction and procedures for disputes arising from employee share option agreements
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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