The Advisor Stock Option Agreement is commonly used when companies want to attract and retain high-quality advisors by offering equity compensation instead of or in addition to cash compensation. This document type is particularly prevalent in the U.S. startup ecosystem, where it helps companies conserve cash while aligning advisor interests with long-term company success. The agreement must comply with various U.S. regulations, including SEC rules, tax laws (particularly IRC 409A), and state corporate laws. It typically includes detailed provisions about vesting schedules, exercise procedures, and restrictions on transfer, making it a crucial document for establishing clear terms of equity compensation.
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Key Requirements PROMPT example:
Advisor Stock Option Agreement
"I need an Advisor Stock Option Agreement for our Silicon Valley-based tech startup, granting 50,000 stock options to a technical advisor with a four-year vesting schedule and a one-year cliff, starting March 1, 2025."
1. Parties: Identifies the company granting options and the advisor receiving them
2. Background: States the advisor's relationship with the company and the company's desire to grant stock options
3. Definitions: Defines key terms including Option Shares, Exercise Price, Grant Date, Vesting Schedule
4. Grant of Option: Details of the stock option grant, including number of shares and exercise price
5. Vesting Schedule: Specifies how and when options become exercisable
6. Exercise Procedure: Process for exercising options, including payment methods and notice requirements
7. Term and Expiration: Duration of the option and circumstances causing expiration
1. Change of Control Provisions: Acceleration or special handling of options in case of company sale
2. Lock-up Agreement: Restrictions on sale of shares post-IPO
3. Right of First Refusal: Company's right to purchase shares before sale to third party
1. Notice of Exercise Form: Standard form for advisor to exercise options
2. Copy of Stock Plan: Company's equity incentive plan under which options are granted
3. Tax Election Forms: Required tax forms including 83(b) election form if applicable
4. Vesting Schedule Details: Detailed breakdown of vesting dates and amounts
Authors
Relevant legal definitions
Agreement
Advisor
Board of Directors
Cause
Change in Control
Company
Common Stock
Confidential Information
Effective Date
Exercise Notice
Exercise Period
Exercise Price
Fair Market Value
Grant Date
Option
Option Shares
Plan
Securities Act
Service Provider
Service Relationship
Termination Date
Transfer
Unvested Shares
Vested Shares
Vesting Commencement Date
Vesting Schedule
Advisor
Board of Directors
Cause
Change in Control
Company
Common Stock
Confidential Information
Effective Date
Exercise Notice
Exercise Period
Exercise Price
Fair Market Value
Grant Date
Option
Option Shares
Plan
Securities Act
Service Provider
Service Relationship
Termination Date
Transfer
Unvested Shares
Vested Shares
Vesting Commencement Date
Vesting Schedule
Clauses
Grant of Option
Exercise Terms
Vesting
Term and Expiration
Transfer Restrictions
Termination of Service
Change in Control
Adjustment of Shares
Tax Obligations
Confidentiality
Compliance with Laws
Securities Law Compliance
Market Stand-off
Right of First Refusal
Drag-along Rights
Tag-along Rights
Representations and Warranties
Notice Requirements
Assignment
Amendment
Governing Law
Dispute Resolution
Entire Agreement
Severability
Exercise Terms
Vesting
Term and Expiration
Transfer Restrictions
Termination of Service
Change in Control
Adjustment of Shares
Tax Obligations
Confidentiality
Compliance with Laws
Securities Law Compliance
Market Stand-off
Right of First Refusal
Drag-along Rights
Tag-along Rights
Representations and Warranties
Notice Requirements
Assignment
Amendment
Governing Law
Dispute Resolution
Entire Agreement
Severability
Relevant Industries
Relevant Teams
Relevant Roles
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