OPTION AGREEMENT
This option agreement (hereinafter the "Agreement") has been entered into in [Place of signing] on [Date of signing] between the following parties (hereinafter together the "Parties"):
1. PARTIES
1.1 [Name of the company]
Registry code: [Registry code of the company]
Representative: [Name of the company's representative]
(hereinafter the "Company")
1.2 [Name of the option holder]
Personal identification code: [Personal identification code of the option holder]
Role in the Company: [Role of the option holder]
(hereinafter the "Option Holder")
2. SUBJECT MATTER OF THE OPTION
2.1 The Company grants the Option Holder the right to acquire in the future a holding in the Company in the amount of [Size of the option (% of share capital)] of the share capital.
2.2 The exercise price of the option is [Exercise price (€)] euros.
2.3 The option is a RIGHT to acquire a holding, not the holding itself. Until the exercise of the option, the Option Holder is not a shareholder of the Company: the Option Holder has no voting rights, no right to dividends and no other shareholder rights.
2.4 Entry into the Agreement does not change the terms of the employment, service or other contract between the Option Holder and the Company.
3. VESTING
3.1 The option is granted on [Grant date of the option] and vests over [Total vesting period (months)] months.
3.2 The waiting period (cliff) is [Cliff, i.e. waiting period (months)] months. No part of the option vests before the expiry of the waiting period.
3.3 After the expiry of the waiting period, the option vests in steps of the following frequency until the end of the total vesting period: [Vesting step].
3.4 The option vests only for the time during which the Option Holder is in an employment, service or other contractual relationship with the Company. The Company keeps records of the extent of the vested option and informs the Option Holder thereof at the Option Holder's request.
4. EXERCISE
4.1 The Option Holder may exercise the vested option by submitting a written application to the Company and paying the exercise price. The application specifies the extent to which the option is exercised.
4.2 The transfer of the holding is formalised in the form prescribed by law. The grant of the holding requires resolutions of the competent bodies of the Company (e.g. an increase of share capital or the transfer of an existing holding); the Company initiates and arranges their adoption within a reasonable time after receipt of the application and the exercise price.
4.3 The Parties take into account that the tax consequences specified in clause 7 depend on the time of exercise; the Option Holder chooses the time of exercise within the limits set out in clauses 4.1 and 5.
5. LEAVING
5.1 For the purposes of this Agreement, leaving for a good reason means the termination of the contractual relationship between the Option Holder and the Company for any reason other than a material breach of the Option Holder's obligations.
5.2 If the Option Holder leaves the Company for a good reason, the vested option is retained and may be exercised within [Exercise period after leaving (months)] months after leaving.
5.3 The unvested part of the option lapses at the moment of leaving in any case.
5.4 If the Option Holder leaves due to a material breach of the Option Holder's obligations, the entire option lapses, including the vested part.
6. ACCELERATION AND CHANGES IN THE COMPANY
6.1 In the event of a sale of the holdings in the Company or a merger, the entire option is deemed vested immediately.
6.2 In the event of a change of the share capital of the Company, a split or consolidation of shares, a merger, division or transformation, the extent of the option and the exercise price are adjusted so that the economic position of the Option Holder remains as equivalent as possible. The Company informs the Option Holder of such a change within a reasonable time.
7. TAXATION
7.1 The taxation of the option depends on the terms and time limits of the option. If the Option Holder is an employee within the meaning of § 48 (3) of the Income Tax Act, the following applies: the grant of a share option is not deemed a fringe benefit; if the underlying asset of the option is a holding in the employer or in a company belonging to the same group as the employer, the acquisition of the holding is not deemed a fringe benefit if it is acquired not earlier than three years after the grant of the option (TuMS § 48 (5³)). If the three-year term is not complied with, the acquisition of the underlying asset of the option may be taxable as a fringe benefit.
7.2 In the event of a change of the underlying asset of the option, the three-year term is calculated from the grant of the original option. If the entire holding in the employer or in a company belonging to the same group as the employer is transferred during the term of an option agreement with a term of at least three years, or if the Option Holder is found to have no work ability or dies, the acquisition of the holding is not deemed a fringe benefit to the extent proportionally corresponding to the period for which the option was held before that event (TuMS § 48 (5³)).
7.3 The Option Holder notifies the Company of the transfer of the option. If the Agreement has not been digitally signed or notarially certified, the Company submits it to the Tax and Customs Board within five working days after its conclusion (TuMS § 48 (5³)).
7.4 Each Party is liable for its tax obligations arising from law. The Parties separately verify the tax matters before signing the Agreement. This Agreement does not constitute tax advice.
8. RESTRICTION ON TRANSFER AND CONFIDENTIALITY
8.1 The option cannot be transferred, pledged or otherwise encumbered. The option is personal.
8.2 The Option Holder keeps confidential the terms of the Agreement and the information that has become known to the Option Holder under the Agreement concerning the shareholders of the Company, the distribution of holdings, its financial position and transactions, except to the extent that disclosure is required by legislation or necessary for obtaining tax or legal advice.
9. LEGAL BASIS AND FINAL PROVISIONS
9.1 The Agreement is governed by the law of the Republic of Estonia, in particular the Commercial Code and the Law of Obligations Act.
9.2 Notices related to the Agreement are given in writing or in a form reproducible in writing. Amendments to the Agreement are made in writing. If any provision of the Agreement is or becomes invalid, this does not affect the validity of the remaining provisions.
9.3 Disputes arising from the Agreement are resolved through negotiations and, failing agreement, in court. The Agreement enters into force once both Parties have signed it.