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Employee Stock Option Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Employee Stock Option Agreement

"I need an Employee Stock Option Agreement under Saudi law for our tech startup, covering options for both local and international employees, with a four-year vesting schedule starting March 2025 and including special provisions for remote workers."

Document background
The Employee Stock Option Agreement is utilized by Saudi Arabian companies seeking to implement equity-based compensation programs for their employees. This document has gained increasing importance following Saudi Arabia's Vision 2030 initiatives and modernization of business practices. It serves as a crucial tool for attracting and retaining talent by offering employees the opportunity to share in the company's growth. The agreement must navigate complex regulatory requirements, including Saudi Labor Law, Companies Law, Capital Market Authority regulations, and Sharia compliance considerations. It typically includes detailed provisions on option grants, vesting schedules, exercise procedures, and restrictions on transfer, while addressing tax implications and regulatory compliance. This document is particularly relevant for growing companies, technology firms, and businesses seeking to align employee interests with company success through equity participation.
Suggested Sections

1. Parties: Identification of the Company and the Employee (Option Holder), including full legal names and addresses

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

3. Definitions: Key terms including Option, Exercise Price, Grant Date, Vesting Schedule, Shares, Plan, etc.

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

5. Vesting of Option: Vesting schedule and conditions for the options to become exercisable

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

7. Termination of Employment: Impact of employment termination on options under different scenarios

8. Restrictions on Transfer: Limitations on transferring or encumbering the options

9. Compliance with Laws: Requirements for compliance with Saudi regulations and Sharia principles

10. Tax Obligations: Responsibilities for taxes and zakat related to the options

11. General Provisions: Standard clauses including notices, amendments, governing law, and dispute resolution

Optional Sections

1. Change of Control: Provisions addressing what happens to options in case of company merger or acquisition - include if company anticipates potential M&A activity

2. Lock-up Period: Restrictions on selling shares after exercise - include if required by company policy or investors

3. Shareholder Rights: Rights of option holder before and after exercise - include if granting any special rights

4. International Provisions: Special provisions for international employees - include if agreement will be used for non-Saudi employees

5. Clawback Provisions: Company's right to recoup shares or profits in certain circumstances - include if part of corporate governance policy

Suggested Schedules

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

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

3. Schedule 3 - Vesting Schedule: Detailed breakdown of vesting dates and conditions

4. Schedule 4 - Company's Stock Option Plan: Summary or extract of relevant plan provisions

5. Schedule 5 - Regulatory Compliance Checklist: Summary of key Saudi regulatory requirements and compliance steps

6. Appendix A - Tax Summary: Overview of tax implications under Saudi law

7. Appendix B - Shareholder Agreement Extract: Relevant provisions from company's shareholder agreement affecting option holders

Authors

Alex Denne

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

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Relevant Industries

Technology

Financial Services

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Manufacturing

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Relevant Teams

Human Resources

Legal

Finance

Executive Leadership

Corporate Governance

Compensation & Benefits

Compliance

Company Secretariat

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Technology Officer

Senior Software Engineer

Product Manager

Human Resources Director

Legal Counsel

Financial Controller

Operations Manager

Sales Director

Marketing Manager

Research Scientist

Business Development Manager

Department Head

Project Manager

Technical Lead

Senior Analyst

Executive Director

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, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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