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Employee Stock Options Agreement

Employee Stock Options Agreement Template for New Zealand

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Key Requirements PROMPT example:

Employee Stock Options Agreement

"I need an Employee Stock Options Agreement for our New Zealand tech startup, granting 10,000 options to new software engineers with a 4-year vesting period starting March 2025 and a one-year cliff period."

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Document background
The Employee Stock Options Agreement is a crucial document for companies in New Zealand looking to offer equity-based compensation to their employees. It is commonly used by startups, growth companies, and established businesses seeking to align employee interests with company success and retain key talent. The agreement must comply with New Zealand's Financial Markets Conduct Act 2013 and related regulations while establishing clear terms for option grants, vesting schedules, exercise procedures, and tax obligations. This document is particularly important in the current competitive employment market where equity compensation has become an essential tool for attracting and retaining talented employees. The agreement typically forms part of a broader employee share scheme and should be reviewed alongside the company's constitution and shareholders' agreement.
Suggested Sections

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

2. Background: Explains the context of the agreement and the company's stock option plan

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

4. Grant of Option: Specifies the number of options granted, exercise price, and grant date

5. Vesting Schedule: Details the vesting timeline and conditions for the options to become exercisable

6. Exercise of Options: Procedures and requirements for exercising vested options

7. Payment and Tax Obligations: Describes payment methods for exercising options and tax responsibilities

8. Termination of Employment: Effects of employment termination on vested and unvested options

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

10. Adjustments: Provisions for adjusting options in case of corporate events like stock splits

11. Compliance with Laws: Ensures compliance with NZ securities laws and regulations

12. General Provisions: Standard contract terms including notices, amendments, and governing law

Optional Sections

1. Change in Control: Provisions for what happens to options in case of company sale or merger

2. Shareholder Rights: Details any rights the option holder has before exercise (typically used for voting rights)

3. International Provisions: Special terms for employees based outside New Zealand

4. Clawback Provisions: Terms allowing company to recoup benefits in case of misconduct

5. Lock-up Period: Restrictions on selling shares after exercise, typically used for pre-IPO companies

6. Data Privacy Consent: Specific consent for handling personal data, particularly relevant for international schemes

Suggested Schedules

1. Option Grant Notice: Formal notice detailing specific grant terms including number of options and exercise price

2. Exercise Notice Form: Template form for employees to use when exercising options

3. Tax Summary: Summary of tax implications for NZ employees (for information only)

4. Vesting Schedule Details: Detailed breakdown of vesting dates and conditions

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

6. Share Plan Rules: Complete rules of the employee share option plan that this agreement operates under

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
Board
Business Day
Cause
Change in Control
Company
Competing Business
Confidential Information
Constitution
Director
Effective Date
Eligible Employee
Employee Share Scheme
Exercise Notice
Exercise Period
Exercise Price
Expiry Date
Fair Market Value
Financial Markets Conduct Act
Good Leaver
Grant Date
Group
Hold Period
IPO
Issue Price
Listing Rules
Lock-up Period
Market Price
Notice
Option
Option Holder
Ordinary Shares
Parent Company
Permanent Disability
Plan
Plan Rules
Related Company
Relevant Interest
Securities
Share Register
Shareholders Agreement
Shares
Subsidiary
Tax
Termination Date
Transfer
Vested Options
Vesting Conditions
Vesting Date
Vesting Period
Vesting Schedule
Relevant Industries

Technology

Software Development

Financial Services

Professional Services

Biotechnology

E-commerce

Healthcare Technology

Manufacturing

Media and Entertainment

Consulting

Startups

Scale-ups

Relevant Teams

Human Resources

Legal

Finance

Executive Leadership

Corporate Governance

Compensation and Benefits

Payroll

Compliance

Company Secretariat

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

Operations Manager

Research Scientist

Business Development Manager

Department Head

Technical Lead

Senior Analyst

Project Manager

Industries
Companies Act 1993: Governs corporate structure, share issuance, and shareholders' rights in New Zealand companies
Financial Markets Conduct Act 2013: Regulates how financial products (including employee share schemes) are offered, promoted, and sold
Employment Relations Act 2000: Provides the fundamental framework for employment relationships in New Zealand
Income Tax Act 2007: Governs the tax treatment of employee share schemes and stock options, including timing of taxation and value assessment
Financial Reporting Act 2013: Sets requirements for financial reporting, which may be relevant for accounting for employee share schemes
Contract and Commercial Law Act 2017: Provides the general framework for contract formation and enforcement
Fair Trading Act 1986: Ensures fair trading practices and prohibits misleading conduct in trade, including in relation to financial products
Privacy Act 2020: Governs the collection, use, and disclosure of personal information in the context of employee records and share scheme participation
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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