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Meeting with a Lawyer: Employee Stock Option Plans

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This document is designed to help you collect a variety of information about your company in order to assist your attorney in assessing your company's situation and advise you about creating an employee stock option plan (ESOP). You should also collect the following documents (if they exist) to include in the file you'll take to your attorney:

Today's Date: __________________

General Information

Name of Company:   ________________________________________

Company Address:   ________________________________________

                           ________________________________________

                           ________________________________________

                           City                     State                     Zip

Contact Person:       ________________________________________

Telephone Number:  ________________________________________

                           Area Code                                Extension

E-mail Address:       ________________________________________

Name of Accountant: ________________________________________

Telephone Number:  ________________________________________

                           Area Code                                Extension

BUSINESS INFORMATION

What business is the company in?______________________________

_________________________________________________________

Business form:

_____  Corporation   _____  Partnership     _____   Sole-proprietorship

If your company is a corporation,

         in what state is the company incorporated?         _______________

         what kind of tax treatment does it have?

         ______   "C" corporation             ______   "S" corporation

Affiliated companies, parent or subsidiaries:

Name of Company                      Relationship to Your Company

_________________________   ____________________________

_________________________   ____________________________

_________________________   ____________________________

Stock Information

Is your company's stock publicly traded?           ______   Yes ______   No

         If "yes," which stock exchange?     ______________________

How many shareholders are there?           ______________________

(Provide an estimate if your company is publicly traded.)

How many stockholders hold 5% or

more of the company's stock?                         ______________________

What percentages of stock do your major shareholders own? (List from

most to least (5%).)

         ___________________________________     ______________%

         ___________________________________     _____________%

         ___________________________________     _____________%

         ___________________________________     _____________%

         ___________________________________     _____________%

Are major shareholders active in the business?  _____   Yes  _____  No

Are family members of major shareholders active in the business

         ______   Yes          ______   No

         If you answered "Yes,"  what are the relationships?

Stockholder                    Family Member                Relationship

_________________        ___________________    ________________

_________________        ___________________    ________________

_________________        ___________________    ________________

_________________        ___________________    ________________

_________________        ___________________    ________________

What classes of stock are outstanding?

_____   Common shares       _____   Preferred shares      ______   Other

Please provide more detail about the classes of stock if appropriate. 

__________________________________________________________

__________________________________________________________

__________________________________________________________

Is any sale of stock pending?

         ______   Yes                   ______   No

Are any options or warrants outstanding?

         ______   Yes                   ______   No

Tax Information

What tax bracket is the company in this year?

         Federal                  _______________

         State            _______________

What bracket do you expect the company to be in next year?

         Federal                  _______________

         State            _______________

How is your company taxed?

                  ______   "C" corporation    ______     "S" corporation

                  Other: ________________________________________

Past taxable income and federal taxes:

Net taxable income            Federal taxes paid

1997           $______________________       $______________________

1998           $______________________       $______________________

1999           $______________________       $______________________

2000           $______________________       $______________________

2001           $______________________       $______________________

Projected taxable income and federal taxes:

Net taxable income            Federal taxes paid

2000           $______________________       $______________________

2001           $______________________       $______________________

2002           $______________________       $_______________________

2003           $______________________       $_______________________

Employee Information

How many employees does your company have?           ____________

How may of your employees are unionized?                          ____________

What is the total payroll?                                        $___________

What portion of the payroll is for unionized employees? $___________

Do you plan to include unionized employees?    ______ Yes______ No

As a percentage, how long have your employees been with the company? 

0-6 months                     _________%

6 mos. to 1 year                _________%

1-3 years                         _________%

4-5 years                         _________%

> 5 years                         _________%

Current Key Employees And Officers

Name: ________________________________________

Position:      __________________________________

Age:   __________ Compensation:________________

Stock ownership:     _______________ %

Name: ________________________________________

Position:      __________________________________

Age:   __________ Compensation:__________________

Stock ownership:     _______________ %

Name: __________________________________________

Position:      ____________________________________

Age:   __________ Compensation:__________________

Stock ownership:     _______________ %

Name: __________________________________________

Position:      ____________________________________

Age:   __________ Compensation:__________________

Stock ownership:     _______________ %

Possible Future Key Employees

Name: ___________________________________________

Current Position:     _______________________________

Potential Position:   _______________________________

Compensation:       _______________________________

Name: ___________________________________________

Current Position:     _______________________________

Potential Position:   _______________________________

Compensation:       _______________________________

Name: ___________________________________________

Current Position:     _______________________________

Potential Position:   _______________________________

Compensation:       _______________________________

Employee Benefits

Does your company currently have any qualified benefit plans? 

         ______   Yes                   ______   No

Please provide the following information about your company's employee benefit plans. 

Retirement Plans

1.       Kind of plan: ________________________________________

         Current assets:        ________________________________________

         Current contribution:        __________________________________

         Current contribution expressed as a percentage of pay: ______%

         Type of Investments:         __________________________________

2.       Kind of plan: ________________________________________

         Current assets:        ________________________________________

         Current contribution:        __________________________________

         Current contribution expressed as a percentage of pay: ______%

         Type of Investments:         __________________________________

3.       Kind of plan: ________________________________________

         Current assets:        ________________________________________

         Current contribution:        __________________________________

         Current contribution expressed as a percentage of pay: ______%

         Type of Investments:         __________________________________

Welfare Plans                                                      

1.       Kind of plan: ________________________________________

         Benefits offered:      __________________________________

         ____________________________________________________

         Cost to company:    __________________________________

2.       Kind of plan: ________________________________________

         Benefits offered:      __________________________________

         ____________________________________________________

         Cost to company:    __________________________________

3.       Kind of plan: ________________________________________

         Benefits offered:      __________________________________

         ____________________________________________________

         Cost to company:    __________________________________

Does your company have any unqualified plans?

         ______   Yes                   ______   No

If yes, what kind of plans are they and how many employees participate?

         1.       Kind of plan: ___________________________________

                  Number of participants:      _______________________

                  Cost to company:    _____________________________

         2.       Kind of plan: ___________________________________

                  Number of participants:      _______________________

                  Cost to company:    _____________________________

         3.       Kind of plan: ___________________________________

                  Number of participants:      _______________________

                  Cost to company:    _____________________________

Are any of the company's qualified plans "top heavy?"

         ______   Yes                   ______   No

Financial Information

Current valuation, as of _______________:               $________________

Who provided the valuation of your company?   __________________

____________________________________________________________

Retained earnings, as of  ______________:                $_________________

Why Do You Want To Create An ESOP?

______   To motivate employees

______   To convert current profit-sharing plan, accounted for as an expense

______   To obtain working capital

______   To refinance existing debt

______   To increase cash flow by creating tax deductions

______   To pass control of the business

______   To aid in estate planning

______   To guard against corporate takeovers

______   Other        Please describe:       ______________________________

Find the Right Attorney for Your Stock Option Plan

Offering stock options is a great way to attract top talent to a startup that has yet to make a profit, as it directly rewards their effort in building the company. Find the right business and commercial law attorney near you for professional assistance.

See Basic Terms for Shareholders and Investors for more information.

Next Steps
Contact a qualified business attorney to help you
address potential challenges a business can face.
(e.g., Chicago, IL or 60611)

Help Me Find a Do-It-Yourself Solution