The Phantom Equity Agreement is utilized when companies wish to provide employees or contractors with equity-like incentives without altering their corporate structure or shareholding. This document, governed by Danish law, is particularly valuable for private companies, subsidiaries of international groups, or organizations with restrictions on actual share issuance. The agreement comprehensively outlines the phantom equity scheme, including grant terms, vesting conditions, valuation methodologies, and payment mechanisms. It addresses key aspects such as tax implications, termination scenarios, and corporate events while ensuring compliance with Danish legal requirements. The document is structured to protect both the company's interests and participant rights, making it an effective tool for talent retention and alignment of interests without the complexities of actual share issuance.
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Key Requirements PROMPT example:
Phantom Equity Agreement
I need a Phantom Equity Agreement for our Danish tech startup, granting 1000 phantom units to our new CTO with 4-year vesting starting March 1, 2025, and accelerated vesting upon company sale.
1. Parties: Identification of the company and the participant entering into the phantom equity arrangement
2. Background: Context of the agreement, including the company's intention to implement a phantom equity scheme
3. Definitions: Detailed definitions of key terms, including 'Phantom Units', 'Fair Market Value', 'Exit Event', and other technical terms
4. Grant of Phantom Units: Details of the phantom units being granted, including number of units and grant date
5. Economic Rights: Description of the economic rights attached to phantom units, including participation in exit proceeds and dividend equivalents
6. Vesting Provisions: Vesting schedule and conditions for the phantom units
7. Valuation: Methodology and process for determining the value of phantom units
8. Payment Terms: Timing and method of payments for vested phantom units
9. Tax Treatment: Tax implications and responsibilities regarding the phantom equity
10. Termination Provisions: Effects of various types of employment termination on phantom units
11. Confidentiality: Confidentiality obligations regarding the agreement and company information
12. Assignment and Transfer: Restrictions on transfer or assignment of phantom unit rights
13. Governing Law and Jurisdiction: Specification of Danish law as governing law and jurisdiction for disputes
1. Change of Control: Specific provisions dealing with company sale, merger, or other change of control events
2. International Provisions: Additional terms for participants based outside Denmark
3. Anti-dilution Protection: Provisions protecting phantom unit holders from dilution in certain corporate events
4. Clawback Provisions: Terms allowing company to recoup payments in cases of misconduct or financial restatement
5. Alternative Dispute Resolution: Provisions for mediation or arbitration as alternatives to court proceedings
6. Data Protection: GDPR compliance provisions for handling personal data
7. Non-Competition: Restrictions on competitive activities, if not covered in employment agreement
1. Schedule 1: Vesting Schedule: Detailed vesting timeline and conditions
2. Schedule 2: Valuation Methodology: Detailed procedures and formulas for calculating phantom unit value
3. Schedule 3: Notice Forms: Template forms for exercise notices and other formal communications
4. Schedule 4: Tax Calculations: Examples of tax calculations and withholding methodology
5. Schedule 5: Participant Information: Specific details of the participant's grant, including number of units and grant date
6. Appendix A: Corporate Events: Detailed procedures for handling various corporate events
7. Appendix B: Definitions of Good Leaver/Bad Leaver: Detailed criteria for determining leaver status and corresponding rights
Authors
Relevant legal definitions
Agreement
Appointment
Board
Business Day
Cause
Change of Control
Company
Company Group
Competitor
Confidential Information
Corporate Event
Disability
Effective Date
Eligible Employee
Exercise Date
Exercise Notice
Exercise Price
Exit Event
Fair Market Value
Financial Year
Good Leaver
Bad Leaver
Grant Date
Group Company
IPO
Liquidity Event
Market Value
Notice
Parent Company
Participant
Payment Date
Phantom Equity Plan
Phantom Units
Plan Administrator
Reference Price
Relevant Employment
Sale
Service
Share
Shareholder
Termination Date
Transfer
Valuation Date
Valuation Event
Vested Phantom Units
Vesting Commencement Date
Vesting Date
Vesting Period
Vesting Schedule
Appointment
Board
Business Day
Cause
Change of Control
Company
Company Group
Competitor
Confidential Information
Corporate Event
Disability
Effective Date
Eligible Employee
Exercise Date
Exercise Notice
Exercise Price
Exit Event
Fair Market Value
Financial Year
Good Leaver
Bad Leaver
Grant Date
Group Company
IPO
Liquidity Event
Market Value
Notice
Parent Company
Participant
Payment Date
Phantom Equity Plan
Phantom Units
Plan Administrator
Reference Price
Relevant Employment
Sale
Service
Share
Shareholder
Termination Date
Transfer
Valuation Date
Valuation Event
Vested Phantom Units
Vesting Commencement Date
Vesting Date
Vesting Period
Vesting Schedule
Clauses
Grant of Phantom Units
Economic Rights
Vesting
Valuation
Payment Terms
Exit Events
Corporate Reorganization
Change of Control
Termination Rights
Good Leaver/Bad Leaver
Tax Obligations
Withholding Rights
Information Rights
Confidentiality
Non-Competition
Non-Solicitation
Assignment and Transfer
Notices
Amendment
Severability
Entire Agreement
Third Party Rights
Data Protection
Dispute Resolution
Governing Law
Jurisdiction
Economic Rights
Vesting
Valuation
Payment Terms
Exit Events
Corporate Reorganization
Change of Control
Termination Rights
Good Leaver/Bad Leaver
Tax Obligations
Withholding Rights
Information Rights
Confidentiality
Non-Competition
Non-Solicitation
Assignment and Transfer
Notices
Amendment
Severability
Entire Agreement
Third Party Rights
Data Protection
Dispute Resolution
Governing Law
Jurisdiction
Relevant Industries
Technology
Financial Services
Professional Services
Manufacturing
Retail
Healthcare
Biotechnology
Real Estate
Construction
Energy
Media and Entertainment
Telecommunications
Consulting
Relevant Teams
Human Resources
Legal
Finance
Executive Leadership
Operations
Sales
Business Development
Research and Development
Product Development
Information Technology
Strategy
Corporate Development
Relevant Roles
Chief Executive Officer
Chief Financial Officer
Chief Operating Officer
Senior Vice President
Vice President
Managing Director
Department Head
Senior Manager
Project Manager
Key Account Manager
Senior Developer
Principal Engineer
Senior Consultant
Business Development Director
Sales Director
Research Director
Product Manager
Technical Lead
Senior Analyst
Key Specialist
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