The Stock Option Award Agreement is a crucial document used in the UAE corporate environment to formalize the grant of stock options as part of compensation or incentive packages. It is typically implemented when companies wish to align employee interests with corporate success, retain key talent, or provide additional compensation beyond base salary. The agreement must comply with UAE Federal Law No. 8 of 1984 (Companies Law), UAE Federal Law No. 2 of 2015 (Commercial Companies Law), and relevant Securities and Commodities Authority regulations. For UAE companies, special consideration must be given to foreign ownership restrictions, Shariah compliance (if applicable), and the specific requirements of free zones such as DIFC or ADGM where different regulations may apply. The document serves as both a legal instrument and a detailed guide for option holders regarding their rights, obligations, and procedures for exercise.
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1. Parties: Identification of the Company and the Option Holder
2. Background: Context of the agreement, reference to any equity incentive plan
3. Definitions: Key terms including Option, Exercise Price, Vesting Date, Expiration Date, etc.
4. Grant of Option: Details of the stock option grant including number of shares and exercise price
5. Vesting Schedule: Timeline and conditions for option vesting
6. Exercise of Option: Procedures and requirements for exercising the options
7. Term and Expiration: Duration of the option and expiration conditions
8. Termination of Employment: Impact of employment termination on options
9. Restrictions on Transfer: Limitations on transferring or assigning the options
10. Compliance with Laws: Requirements for compliance with UAE securities and corporate laws
11. Tax Obligations: Responsibilities for taxes related to the options
12. General Provisions: Standard clauses including notices, amendments, governing law
1. Change in Control Provisions: Special terms applying in case of company merger or acquisition
2. Foreign Exchange Compliance: Required for non-UAE nationals receiving options
3. Electronic Acceptance: For agreements to be executed electronically
4. Shariah Compliance: For companies requiring Shariah-compliant option structures
5. Data Privacy: Required when personal data processing crosses international borders
6. Clawback Provisions: Optional recovery rights for the company in specific circumstances
7. Lock-up Period: Additional holding period requirements after exercise
1. Schedule 1 - Option Details: Specific details of the option grant including number of shares, exercise price, and vesting dates
2. Schedule 2 - Notice of Exercise: Form for exercising the stock options
3. Schedule 3 - Equity Incentive Plan: Copy or summary of the relevant equity incentive plan
4. Appendix A - Tax Summary: Summary of tax implications in relevant jurisdictions
5. Appendix B - Compliance Certificate: Template for confirming compliance with exercise conditions
6. Appendix C - Consent Forms: Required regulatory and corporate consents
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