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Stock Option Award Agreement

Stock Option Award Agreement Template for Philippines

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Key Requirements PROMPT example:

Stock Option Award Agreement

"I need a Stock Option Award Agreement under Philippine law for our pre-IPO technology company, with specific provisions for cliff vesting over 4 years starting January 2025 and including market stand-off provisions for our planned IPO."

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Document background
The Stock Option Award Agreement serves as a critical instrument in Philippine corporate practice for companies looking to attract, retain, and motivate key employees through equity-based compensation. This document is typically used when a company has established an Employee Stock Option Plan and needs to formalize individual grants to specific employees or eligible participants. It must comply with Philippine securities regulations, particularly the Securities Regulation Code and SEC Memorandum Circular No. 8 (Series of 2003), while also addressing tax implications under the National Internal Revenue Code. The agreement is especially relevant for growing companies, pre-IPO businesses, and established corporations looking to align employee interests with company success through equity participation. It includes detailed provisions on grant terms, vesting conditions, exercise procedures, and regulatory compliance requirements.
Suggested Sections

1. Parties: Identification of the Company granting the options and the Employee/Grantee receiving them

2. Background: Context of the agreement, reference to the Stock Option Plan, and corporate approvals obtained

3. Definitions: Key terms used throughout the agreement including Exercise Price, Grant Date, Vesting Schedule, etc.

4. Grant of Option: Specific details of the option grant including number of shares, exercise price, and type of options

5. Vesting Schedule: Timeline and conditions for when options become exercisable

6. Exercise of Option: Procedures and requirements for exercising the options

7. Term and Expiration: Duration of the option grant and circumstances of expiration

8. Restrictions on Transfer: Limitations on transferability of the options

9. Termination of Employment: Impact of employment termination on the options

10. Compliance with Laws: Requirements for compliance with Philippine securities laws and regulations

11. Tax Obligations: Tax responsibilities and withholding requirements

12. General Provisions: Standard legal provisions including governing law, amendments, and notices

Optional Sections

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

2. Foreign Ownership Restrictions: Required when options are granted to foreign nationals, addressing Philippine foreign ownership limitations

3. Market Standoff Agreement: Required for pre-IPO companies, restricting sale of shares during IPO process

4. Electronic Delivery: Optional provisions for electronic delivery of notices and documents

5. Data Privacy Consent: Additional privacy provisions when collecting and processing personal data

6. Clawback Provisions: Optional terms allowing company to recoup benefits in cases of misconduct

Suggested Schedules

1. Schedule A - Notice of Grant: Detailed information about the specific grant including number of shares, exercise price, and grant date

2. Schedule B - Exercise Notice: Form to be completed by grantee when exercising options

3. Schedule C - Vesting Schedule: Detailed breakdown of the vesting timeline and conditions

4. Appendix 1 - Tax Implications: Summary of relevant Philippine tax considerations

5. Appendix 2 - Regulatory Compliance: Summary of relevant SEC and other regulatory requirements

6. Appendix 3 - Spousal Consent: Required consent form for married grantees under Philippine family law

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
Agreement
Board
Cause
Change in Control
Code
Company
Confidential Information
Disability
Exercise Notice
Exercise Period
Exercise Price
Expiration Date
Fair Market Value
Good Standing
Grant Date
Grantee
Immediate Family Member
Option
Option Shares
Plan
Philippine SEC
Regulatory Approvals
Securities Regulation Code
Service
Shares
Stock
Stockholder
Subsidiary
Tax Code
Transfer
Vest
Vesting Commencement Date
Vesting Schedule
Withholding Obligations
Market Stand-off Period
Non-Qualified Stock Option
Notice of Grant
Parent Corporation
Performance Criteria
Plan Administrator
Securities Act
Stock Option Plan
Trading Day
Board of Directors
Corporate Secretary
Exchange
Lock-up Period
Termination Date
Term Sheet
Retirement
Clauses
Grant of Option
Vesting
Exercise Rights
Term and Expiration
Exercise Price
Payment Terms
Transfer Restrictions
Employment Conditions
Termination Provisions
Change in Control
Tax Obligations
Regulatory Compliance
Confidentiality
Non-Competition
Non-Solicitation
Data Privacy
Representations and Warranties
Amendment and Modification
Governing Law
Dispute Resolution
Notice Requirements
Assignment
Severability
Entire Agreement
Electronic Delivery
Market Stand-off
Share Issuance
Stockholder Rights
Clawback
Force Majeure
Indemnification
Foreign Ownership Restrictions
Securities Law Compliance
Documentation Requirements
Relevant Industries

Technology

Financial Services

Manufacturing

Telecommunications

Professional Services

Healthcare

Real Estate

Retail

Energy

Consumer Goods

Business Process Outsourcing

E-commerce

Relevant Teams

Legal

Human Resources

Finance

Compliance

Corporate Secretariat

Executive Management

Compensation and Benefits

Treasury

Internal Audit

Corporate Governance

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Human Resources Director

Legal Counsel

Compensation Manager

Corporate Secretary

Stock Plan Administrator

Compliance Officer

Finance Manager

Human Resources Manager

Employee Benefits Specialist

Executive Director

Senior Manager

Department Head

Key Employee

Industries
Securities Regulation Code (Republic Act No. 8799): Primary legislation governing securities, including the issuance and trading of stock options. Regulates registration requirements and disclosure obligations.
Revised Corporation Code of the Philippines (Republic Act No. 11232): Governs corporate actions, stockholder rights, and the issuance of shares and other securities by Philippine corporations.
Labor Code of the Philippines (Presidential Decree No. 442): Relevant for stock options granted as part of employment compensation packages and employee benefits.
National Internal Revenue Code (Republic Act No. 8424): Covers tax implications of stock option grants, exercise, and subsequent sale of shares, including capital gains tax and income tax considerations.
Foreign Investments Act (Republic Act No. 7042): Relevant if stock options are granted to foreign nationals or if foreign ownership limitations apply to the company.
Securities and Exchange Commission Memorandum Circular No. 8 (Series of 2003): Provides specific guidelines on the registration and disclosure requirements for employee stock option plans.
Bureau of Internal Revenue Regulations: Various BIR regulations and rulings that specify the tax treatment of stock options, including timing of taxation and valuation methods.
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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