The Vested Equity Agreement is a fundamental document used by Philippine companies to grant equity compensation that vests over time, typically to attract and retain key talent. It's particularly important in high-growth sectors where companies need to conserve cash while offering compelling compensation packages. The agreement must comply with the Corporation Code of the Philippines, Securities Regulation Code, and relevant BIR regulations. It includes essential elements such as vesting schedules, performance conditions, transfer restrictions, and tax provisions. This document type is commonly used in startup environments, tech companies, and other businesses where equity compensation is a strategic tool for alignment between the company and key stakeholders. The agreement must incorporate specific Philippine legal requirements, including spousal consent provisions and local securities law compliance.
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1. Parties: Identification of the company and the equity recipient, including their complete legal names and addresses
2. Background: Context of the agreement, including the recipient's relationship with the company and the basis for the equity grant
3. Definitions: Definitions of key terms used throughout the agreement, including 'Vesting Period', 'Shares', 'Cause', etc.
4. Grant of Equity: Details of the equity being granted, including number of shares, class of shares, and nominal value
5. Vesting Schedule: Specific timeline and milestones for the vesting of shares, including cliff period if applicable
6. Vesting Conditions: Conditions that must be met for vesting to occur, including continued employment or service
7. Transfer Restrictions: Limitations on the transfer of unvested and vested shares, including any lock-up periods
8. Taxation: Tax obligations and responsibilities of both parties under Philippine tax laws
9. Termination Provisions: Effects of various types of termination on vested and unvested shares
10. Representations and Warranties: Standard declarations by both parties regarding their capacity and authority
11. Confidentiality: Provisions protecting company confidential information
12. Governing Law and Jurisdiction: Specification of Philippine law as governing law and jurisdiction for disputes
13. General Provisions: Standard boilerplate clauses including amendments, notices, and severability
1. Shareholder Rights: Details of voting rights, dividend rights, and other shareholder privileges - include if the vested shares carry specific rights
2. Tag-Along Rights: Rights of the equity holder to join in sale of shares by major shareholders - include for key employees or executives
3. Drag-Along Rights: Company's right to force equity holder to join in sale of company - include for significant equity grants
4. Right of First Refusal: Company's right to purchase shares before they can be sold to third parties - include if share transfers are anticipated
5. Put and Call Options: Rights to force purchase/sale of shares under specific circumstances - include for senior executives
6. Non-Competition: Restrictions on competing activities - include for senior positions or significant equity holders
7. Board Matters: Provisions regarding board representation or observer rights - include for substantial equity holders
1. Schedule A - Vesting Schedule: Detailed breakdown of vesting dates and percentages
2. Schedule B - Share Details: Specific details of the shares including class, rights, and restrictions
3. Schedule C - Consent of Spouse: Required under Philippine law for married equity recipients
4. Schedule D - Board Resolution: Copy of board resolution approving the equity grant
5. Schedule E - Deed of Assignment: Form of share transfer document required under Philippine law
6. Appendix 1 - Securities Law Compliance: Required disclosures and acknowledgments under Philippine securities regulations
7. Appendix 2 - Tax Elections: Forms and elections related to tax treatment of the equity grant
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