A Restricted Stock Unit Agreement is undoubtedly an agreement made from your company along with a recipient or purchaser of their companies restricted stock, usually a member of staff. A Restricted Stock Unit is really a grant valued with regard to company stock, in such a situation, company stock just isn’t issued during the time of the grant. After the person receiving a unit satisfies the vesting requirement, the corporation distributes shares, or cash equal of the number of shares familiar with value it. Depending on plan rules, the participant or donor could be allowed to choose getting in touch with settle in stock or cash.
Common in corporate settings, Restricted Stock Unit Agreements generally address these issues:
- Parties. The name of the organization and the employee should be identified.
- Number of Shares and Price. The amount of restricted shares, the expense of each share, and also the total final cost should be identified. When and the way payment will be made should also be discussed. Details regarding the cost may stop important if your shares get to the employee without cost.
- Covenant Not to Sell. The most important provision from the agreement may be the employee’s promise to not sell, assign, transfer, or otherwise not dispose of any or all from the restricted shares before termination date(s) set forth.
- Termination Dates. This provision should set forth the dates the restrictions on selling the stock terminates. The date could possibly be the same for everyone shares or might be broken off. For example, perhaps 1/3 on the shares lose their restrictions after one full year, 1/3 the following year, and 1/3 these year.
- Termination of Agreement. The agreement should talk about specific provisions from the employment agreement regarding addressing the issue in the termination in the employee’s employment with the organization. Generally, when the employee is terminated without cause, the real key gets to keep your shares and so they lose their restricted status. If the worker is terminated for cause, then this employee loses the shares altogether.
- Clear Explanation of Restricted Status. The agreement should clearly notify the employee how the certificate for restricted shares shall bear a legend for the effect which the transferability of every share is fixed in accordance while using provisions from the agreement and that they haven’t been registered together with the SEC thereby they is probably not sold or transferred.
- Employee Representations. The employee must represent and warrant to the organization that the restricted shares are acquired for your ex solely for own account rather than with a view to, and for sale connected with, the distribution thereof.
- Miscellaneous. A provision needs to be included that states the agreement, together together with the Employment Agreement, embodies the whole understanding between this company and the staff member and supersedes all prior agreements and understandings relating for the matter covered.