Stock Option Cancellation Agreement Template for Denmark

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Key Requirements PROMPT example:

Stock Option Cancellation Agreement

I need a Stock Option Cancellation Agreement under Danish law for cancelling unvested options of our departing CTO, who holds 10,000 options granted in January 2025, with no consideration being paid for the cancellation.

What is a Stock Option Cancellation Agreement?

The Stock Option Cancellation Agreement is utilized when a company and an option holder mutually agree to terminate previously granted stock options, whether due to employee departure, corporate restructuring, or other strategic reasons. This document, governed by Danish law, is crucial for companies offering equity-based compensation and needs to comply with the Danish Companies Act and Stock Options Act. It typically becomes relevant during corporate reorganizations, M&A transactions, or when modifying compensation structures. The agreement must carefully address tax implications under Danish law, particularly regarding any consideration paid for the cancellation. It serves as a formal record of the cancellation and includes mutual releases to prevent future claims related to the cancelled options.

What sections should be included in a Stock Option Cancellation Agreement?

1. Parties: Identification of the option holder and the company

2. Background: Context of the original option grant and reason for cancellation

3. Definitions: Key terms used in the agreement including 'Options', 'Original Grant Date', 'Exercise Price', etc.

4. Cancellation of Options: Clear statement of which options are being cancelled and the effective date

5. Consideration: Details of any payment or other consideration for the cancellation

6. Tax Matters: Handling of tax obligations and responsibilities related to the cancellation

7. Representations and Warranties: Statements by both parties about their authority and understanding

8. Mutual Release: Release of claims related to the cancelled options

9. Governing Law and Jurisdiction: Specification of Danish law and jurisdiction

10. Counterparts and Execution: Provisions for signing and executing the agreement

What sections are optional to include in a Stock Option Cancellation Agreement?

1. Surviving Employment Terms: Used when the option holder remains employed - confirms continuation of employment terms

2. Multiple Tranches: Used when only some options are being cancelled while others remain

3. Confidentiality: Used when parties want to keep the cancellation terms confidential

4. Board Approval: Used when board approval is required for the cancellation

5. Market Abuse Regulations: Required for listed companies to address insider trading concerns

6. Future Options: Used to address eligibility for future option grants

What schedules should be included in a Stock Option Cancellation Agreement?

1. Schedule 1 - Cancelled Options Details: Detailed description of the options being cancelled including grant dates, vesting schedules, and exercise prices

2. Schedule 2 - Consideration Calculation: If applicable, methodology for calculating any consideration paid for the cancellation

3. Schedule 3 - Tax Calculations: Details of tax implications and calculations

4. Appendix A - Copy of Original Option Agreement: Reference copy of the original option grant agreement

5. Appendix B - Board Resolution: If applicable, copy of board resolution approving the cancellation

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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