This Phantom Equity Agreement template is designed for use by Dutch companies seeking to implement incentive schemes that align employee interests with company performance without diluting actual shareholding. The document is particularly useful for private companies, subsidiaries of international groups, or organizations with complex shareholding structures where actual share transfers may be impractical or undesirable. The agreement complies with Dutch employment law, tax regulations, and corporate governance requirements while providing detailed terms for phantom equity rights, including grant provisions, vesting schedules, valuation methods, and payment conditions. It addresses key aspects such as exit events, termination scenarios, and tax implications within the Dutch legal framework.
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1. Parties: Identification of the company and the participant receiving phantom equity rights
2. Background: Context of the agreement and explanation of the phantom equity concept
3. Definitions: Key terms including Phantom Units, Fair Market Value, Exit Event, Vesting Date, etc.
4. Grant of Phantom Equity Rights: Details of the phantom equity units granted, including number and grant date
5. Vesting Provisions: Vesting schedule and conditions for the phantom equity rights
6. Valuation Methodology: Method for determining the value of phantom units
7. Payment Terms: Conditions and timing for payments of phantom equity benefits
8. Exit Events: Definition and treatment of phantom equity rights in case of company sale, IPO, or other exit events
9. Termination Provisions: Treatment of phantom equity rights upon employment termination
10. Tax Provisions: Tax treatment and responsibilities regarding phantom equity payments
11. Confidentiality: Obligations regarding confidential information
12. Governing Law and Jurisdiction: Application of Dutch law and jurisdiction for disputes
1. Good Leaver/Bad Leaver Provisions: Detailed provisions for different types of employment termination scenarios
2. Change of Control: Specific provisions for company restructuring or ownership changes
3. Non-Competition and Non-Solicitation: Additional restrictions on participant's activities
4. Works Council Approval: Required when works council consultation was needed for the scheme
5. International Tax Provisions: Required for participants subject to multiple tax jurisdictions
6. Currency Conversion: Required when payments might be made in different currencies
7. Clawback Provisions: Optional provisions for recouping payments in specific circumstances
8. Administrative Procedures: Detailed procedures for managing the phantom equity scheme
1. Schedule 1 - Grant Notice: Formal notice detailing the specific grant of phantom units
2. Schedule 2 - Vesting Schedule: Detailed timeline and conditions for vesting of phantom units
3. Schedule 3 - Valuation Methodology: Detailed calculations and procedures for determining phantom unit value
4. Schedule 4 - Payment Calculation Examples: Examples illustrating how payments will be calculated in various scenarios
5. Schedule 5 - Tax Treatment Summary: Summary of tax implications and calculations
6. Schedule 6 - Participation Agreement Form: Template for participant's formal acceptance of the phantom equity rights
7. Schedule 7 - Exercise Notice Template: Template for exercising phantom equity rights when applicable
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