Equity Grant Agreement: Definition, Terms, Example
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Quick Facts — Equity Grant Agreement Lawyers
- Avg cost to draft an Equity Grant Agreement: $1040.00
- Avg cost to review an Equity Grant Agreement: $520.00
- Lawyers available: 61 employment lawyers
- Clients helped: 42 recent equity grant agreement projects
- Avg lawyer rating: 5.0 (8 reviews)
What is an Equity Grant Agreement?
An equity grant agreement is a legal document that defines the terms and conditions of an employee's company ownership. It is essential to have this contract drawn up before hiring new employees, as it can help protect both the company and its business partner(s) if there are any disputes or disagreements down the road.
This type of contract should be implemented before hiring any new employees. It will ensure all parties involved understand their rights if there ever comes a time when they want to leave or disagree with something related to work ethics or job duties.
Common Sections in Equity Grant Agreements
Below is a list of common sections included in Equity Grant Agreements. These sections are linked to the below sample agreement for you to explore.
Equity Grant Agreement Sample
(a) | The Units are or will be acquired for investment for an indefinite period for Grantee's own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof, and Grantee has no present intention of selling, granting participation in, or otherwise distributing the same. By executing this Agreement, Grantee further represents that he does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer, or grant participations, to such person or to any third person, with respect to any of the Units. |
(b) | Grantee understands that the Units have not been registered under the Securities Act of 1933, as amended (the "Act"), on the grounds that the transactions provided for in this Agreement are exempt from the registration requirements of the Act, and that the Company's reliance on such exemption is predicated on Grantee's representations set forth herein. |
(c) | Grantee acknowledges that he understands that any sale of the securities that might be made by Grantee in reliance upon Rule 144 under the Act may be made only in limited amounts in accordance with the terms and conditions of that rule and that Grantee may not be able to sell the Units at the time or in the amount Grantee so desires. Grantee is familiar with Rule 144 and understands that the Units constitute "restricted securities" within the meaning of that Rule. |
(d) | In connection with the investment representations made herein Grantee represents that he is able to fend for himself in the transactions contemplated by this Agreement, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of his investment, has the ability to bear the economic risks of his investment and has been furnished with and has had access to such information as he has requested and deem appropriate to his investment decision. |
(e) | Grantee agrees that in no event will he make a disposition of any of the Units unless and until (a) he has notified the Company of the proposed disposition and has furnished the Company with a statement of the circumstances surrounding the proposed disposition, and (b) he has furnished the Company with an opinion of counsel satisfactory to the Company to the effect that (i) such disposition will not require registration of such Units under the Act, or (ii) that appropriate action necessary for compliance with the Act has been taken, or (c) the Company shall have waived, expressly and in writing, its rights under clauses (a) and (b) of this subparagraph. In addition, prior to any disposition of any of the Units the Company may require the transferee or assignee to provide investment representations in writing and in a form acceptable to the Company. |
(f) | The Company shall not be required (i) to transfer on its books any Units of the Company which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement, or (ii) to treat as owner of such Units or to accord the right to vote as such owner or to pay dividends to any transferee to whom such Units shall have been so transferred. |
Reference:
Security Exchange Commission - Edgar Database, EX-10.1 2 a101-equitygrantagreement.htm, Viewed January 7, 2022, View Source on SEC.
Who Helps With Equity Grant Agreements?
Lawyers with backgrounds working on equity grant agreements work with clients to help. Do you need help with an equity grant agreement?
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Meet some of our Equity Grant Agreement Lawyers
Justin K.
I have been practicing law exclusively in the areas of business and real estate transactions since joining the profession in 2003. I began my career in the Corporate/Finance department of Sidley's Los Angeles office. I am presently a solo practitioner/freelancer, and service both business- and attorney-clients in those roles.
"Justin was great to work with, we hope to work with him again in future."
Scott S.
I have over 25 years' experience representing individual and company clients, large and small, in transactions such as mergers and acquisitions, private offerings of securities, commercial loans and commercial endeavors (supply contracts, manufacturing agreements, joint ventures, intellectual property licenses, etc.). My particular specialty is in complex and novel drafting.
"Scott had a quick turnaround on my company’s operating agreement."
Daniel R.
NY Admitted Lawyer 20+ years of experience. Focused on Startups , Entrepreneurs, Entertainers, Producers, Athletes and SMB Companies. I have been a part of numerous startups as Founder, CEO, General Counsel and Deal Executive. I have been through the full life cycle from boot strap to seed investors to large funds-public companies to successful exit. Let me use my experiences help you as you grow your business through these various stages. We saw a market for an on-line platform dedicated to Virtual General Counsel Services to Start Ups and Private Companies.
"Quick and he found a number of things we were missing. Thanks."
Ramanathan C.
Triple Qualified New York Attorney, Australian Lawyer & Enrolled NZ Barrister & Solicitor
"Rama was timely and responsive to all my needs & questions. From day one, he presented a tailored proposal for my project that felt personalized and thoughtful. He is pleasant to work with and professional with his legal advice. I'd be happy to work with him again."
Jason H.
Jason has been providing legal insight and business expertise since 2001. He is admitted to both the Virginia Bar and the Texas State Bar, and also proud of his membership to the Fellowship of Ministers and Churches. Having served many people, companies and organizations with legal and business needs, his peers and clients know him to be a high-performing and skilled attorney who genuinely cares about his clients. In addition to being a trusted legal advisor, he is a keen business advisor for executive leadership and senior leadership teams on corporate legal and regulatory matters. His personal mission is to take a genuine interest in his clients, and serve as a primary resource to them.
"Jason was outstanding! Professional and Proactive. I was very happy with the services he provided."
April 15, 2021
Samantha B.
Samantha has focused her career on developing and implementing customized compliance programs for SEC, CFTC, and FINRA regulated organizations. She has worked with over 100 investment advisers, alternative asset managers (private equity funds, hedge funds, real estate funds, venture capital funds, etc.), and broker-dealers, with assets under management ranging from several hundred million to several billion dollars. Samantha has held roles such as Chief Compliance Officer and Interim Chief Compliance Officer for SEC-registered investment advisory firms, “Of Counsel” for law firms, and has worked for various securities compliance consulting firms. Samantha founded Coast to Coast Compliance to make a meaningful impact on clients’ businesses overall, by enhancing or otherwise creating an exceptional and customized compliance program and cultivating a strong culture of compliance. Coast to Coast Compliance provides proactive, comprehensive, and independent compliance solutions, focusing primarily on project-based deliverables and various ongoing compliance pain points for investment advisers, broker-dealers, and other financial services firms.
April 19, 2021
Pritesh P.
Experienced General Counsel/Chief Legal Officer
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"Ryenne was amazing to work with. She understood my issues and provided a red-lined agreement which aligned exactly with my goals."
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Can you explain the key terms and considerations in an Equity Grant Agreement?
I recently received an Equity Grant Agreement from my employer, outlining the terms of my stock options as part of my compensation package. While I understand the basics, I would like a lawyer's perspective on the key terms and considerations I should be aware of before signing the agreement. I want to ensure that I fully understand my rights and obligations, any vesting schedules, and potential tax implications associated with the equity grant.
Dolan W.
Hello! My name is Dolan and I'm happy to help. What you want to do first is make sure you understand the type of equity you’re being granted. Is it stock options, RSUs or another form of equity, for example? Stock options often come with the right to purchase shares at a specific price (the "exercise price"), while RSUs usually represent shares given to you outright after meeting certain conditions. Each type of equity has its own rules and tax implications. Also, look at the vesting schedule. This determines when you gain full ownership of the equity. Then, you want to consider the exercise terms. Basically, is there a date you can or must exercise them (turn them from stock to cash). The company may have repurchase agreements or clauses in place giving them right of first refusal before a sale. ' Typically, if there is a merger, other rules apply. I can always draft or review them for you.
Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.
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Management Incentive Unit Grant Agreement Review prior to signature
Location: California
Turnaround: Less than a week
Service: Contract Review
Doc Type: Equity Grant Agreement
Page Count: 15
Number of Bids: 5
Bid Range: $350 - $700
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