The ESOP loan and pledge agreement is one wherein an employee of an organization can pledge his employee stock option obtained during the previous financial year for the purpose of taking a loan. The loan is availed by the employee against the exercised stocks and accrued in his name from the company. The employee has to pledge the stocks that are available with the loan company in order to obtain a running loan facility. On this running loan facility interest is charged on the amount of loan that has been utilized from the account.
The agreement of ESOP loan and pledge should have details such as name and office address of the employee along with designation and years of service, the company name, number of stocks exercised and held by the employee, pledge document and promissory note, duration of loan, maturity date of loan, interest rate chargeable on the loan, margin required on the loan etc.
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