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Employee Share Option Agreement

Employee Share Option Agreement Template for Philippines

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Key Requirements PROMPT example:

Employee Share Option Agreement

"I need an Employee Share Option Agreement for our Philippine tech startup, covering 50,000 stock options with a 4-year vesting schedule starting March 2025, including special provisions for remote workers and a change of control clause."

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Document background
The Employee Share Option Agreement is a crucial document used by companies in the Philippines to provide employees with the right to purchase company shares at a predetermined price within a specified timeframe. This type of agreement is commonly implemented as part of employee retention and incentivization strategies, particularly for key personnel and high-performing staff. The document must comply with Philippine corporate law, specifically the Corporation Code of the Philippines and Securities Regulation Code, while also adhering to requirements set by the Securities and Exchange Commission and Bureau of Internal Revenue. The agreement typically forms part of a broader employee share option plan (ESOP) and includes detailed provisions on vesting schedules, exercise procedures, and tax implications. It's particularly relevant for both private companies planning for future liquidity events and public companies offering long-term incentive programs.
Suggested Sections

1. Parties: Identification of the Company and the Employee (Option holder)

2. Background: Context of the agreement, reference to any employee share option plan, and board approvals

3. Definitions: Definitions of key terms used throughout the agreement including Option, Exercise Price, Vesting Date, etc.

4. Grant of Option: Details of the share options being granted, including number of shares and exercise price

5. Vesting of Option: Vesting schedule and conditions that must be met before options can be exercised

6. Exercise of Option: Process and requirements for exercising options, including payment methods and notice requirements

7. Lapse of Option: Circumstances under which options will lapse or be forfeited

8. Restrictions on Transfer: Limitations on transferring or assigning the options

9. Taxes: Tax obligations and responsibilities of both parties

10. Relationship with Employment: Clarification that the option grant does not affect employment terms

11. Data Protection: Provisions regarding handling of personal data related to the option scheme

12. Notices: How formal communications between parties should be made

13. Governing Law: Specification of Philippine law as governing law and jurisdiction

14. Execution: Signature blocks and execution formalities

Optional Sections

1. Change of Control Provisions: Special provisions that apply in case of company merger, acquisition, or restructuring

2. International Provisions: Additional terms for employees based outside Philippines or dealing with foreign securities laws

3. Clawback Provisions: Terms allowing company to recoup benefits in case of misconduct or specific triggers

4. Share Capital Adjustments: Provisions for adjusting option terms in case of share splits, consolidations, or other capital changes

5. Shareholders' Agreement Adherence: Requirement to adhere to existing shareholders' agreement upon exercise

6. Bad Leaver Provisions: Specific consequences for employees leaving under negative circumstances

7. Lock-up Period: Restrictions on selling shares for a period after exercise

Suggested Schedules

1. Schedule 1 - Option Certificate: Formal certificate detailing the specific option grant

2. Schedule 2 - Notice of Exercise: Form to be completed when exercising options

3. Schedule 3 - Vesting Schedule: Detailed breakdown of vesting dates and conditions

4. Schedule 4 - Company's Share Option Plan Rules: Full terms of the company's share option plan

5. Schedule 5 - Deed of Adherence: Form for adhering to shareholders' agreement if required

6. Schedule 6 - Fair Market Value Calculation: Methodology for calculating share value for tax purposes

7. Schedule 7 - SEC and Other Regulatory Confirmations: Copies of relevant regulatory approvals and filings

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Acceptance Date
Applicable Law
Board
Business Day
Cause
Change of Control
Company
Competitor
Confidential Information
Corporate Event
Date of Grant
Deed of Adherence
Director
Disability
Employee
Employment
Exercise Date
Exercise Notice
Exercise Period
Exercise Price
Expiry Date
Fair Market Value
Good Leaver
Group
Group Company
IPO
Listing
Lock-up Period
Market Value
Option
Option Certificate
Option Holder
Option Shares
Parent Company
Performance Conditions
Plan
Plan Administrator
Regulatory Authority
Related Party
Relevant Employment
SEC
Share
Share Capital
Share Option Plan Rules
Shareholders' Agreement
Subsidiary
Tax
Termination Date
Transfer
Vested Options
Vesting Date
Vesting Period
Vesting Schedule
Clauses
Grant of Option
Vesting Conditions
Exercise Rights
Exercise Price
Exercise Period
Option Lapse
Transfer Restrictions
Taxation
Employment Relationship
Confidentiality
Non-Competition
Share Capital Adjustments
Corporate Events
Change of Control
Termination of Employment
Good Leaver/Bad Leaver
Data Protection
Regulatory Compliance
Share Restrictions
Option Certificate
Plan Administration
Securities Law Compliance
Notice Requirements
Amendment
Assignment
Severability
Entire Agreement
Governing Law
Dispute Resolution
Force Majeure
Shareholder Rights
Lock-up Provisions
Tag-Along Rights
Drag-Along Rights
Registration Rights
Representations and Warranties
Costs and Expenses
Third Party Rights
Waiver
Counterparts
Relevant Industries

Technology

Financial Services

Professional Services

Manufacturing

Retail

Healthcare

Telecommunications

Real Estate

Energy

E-commerce

Media and Entertainment

Consumer Goods

Business Process Outsourcing

Construction

Education

Relevant Teams

Legal

Human Resources

Finance

Corporate Secretarial

Executive Management

Board of Directors

Compensation and Benefits

Compliance

Corporate Governance

Employee Relations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer

Chief Technology Officer

Chief Human Resources Officer

General Counsel

Finance Director

Human Resources Director

Legal Director

Company Secretary

Senior Manager

Department Head

Technical Lead

Software Engineer

Sales Director

Operations Manager

Project Manager

Research and Development Manager

Product Manager

Business Development Manager

Industries
Corporation Code of the Philippines (Batas Pambansa Blg. 68): Primary law governing corporations in the Philippines, including provisions on share capital, issuance of shares, and corporate governance requirements
Securities Regulation Code (Republic Act No. 8799): Regulates the offering and trading of securities, including employee stock options, and sets requirements for disclosure and registration
Labor Code of the Philippines (Presidential Decree No. 442): Contains provisions on employee benefits and compensation, which are relevant when structuring employee share option schemes
National Internal Revenue Code (Republic Act No. 8424): Governs the taxation of employee stock options, including when and how they are taxed as benefits or income
SEC Memorandum Circular No. 8 (Series of 2003): Provides guidelines on the registration requirements for employee stock option plans
BIR Revenue Regulations No. 7-2011: Specific regulations on the taxation of stock options, including the timing of taxation and valuation methods
Foreign Investments Act (Republic Act No. 7042): Relevant if the share options involve foreign ownership considerations, as it sets limitations on foreign equity ownership
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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