Option Cancellation Agreement

Option Cancellation Agreement Template for Australia

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Key Requirements PROMPT example:

"I need an Option Cancellation Agreement for cancelling 50,000 employee stock options issued to our departing Chief Technology Officer, with the cancellation to take effect from 15 March 2025, including a mutual release clause and consideration of AUD 25,000."

Document background

The Option Cancellation Agreement is a crucial document used in Australian corporate transactions when parties wish to terminate existing option arrangements. It's commonly required in scenarios such as corporate restructuring, employee departures, merger and acquisition activities, or when options are no longer aligned with business objectives. The agreement must comply with Australian corporate law, particularly the Corporations Act 2001 (Cth), and for listed entities, ASX Listing Rules. This document typically includes details of the options being cancelled, any consideration paid, mutual releases, and necessary regulatory compliance steps. It's essential for managing company share capital structures and maintaining accurate corporate records.

Suggested Sections

1. Parties: Identifies and defines the parties to the agreement, including the option holder and the option issuer

2. Background: Describes the existing option arrangement, including reference to original option agreement/deed and reason for cancellation

3. Definitions: Defines key terms used throughout the agreement

4. Option Details: Specifies the options being cancelled, including number, class, exercise price, and expiry date

5. Cancellation: Sets out the agreement to cancel the options and the effective date of cancellation

6. Mutual Release: Contains mutual releases from claims relating to the cancelled options

7. Representations and Warranties: Standard representations about authority to enter agreement and ownership of options

8. General Provisions: Standard boilerplate provisions including governing law, counterparts, and entire agreement

9. Execution: Signature blocks and execution provisions

Optional Sections

1. Consideration: Required if there is any payment or other consideration for the cancellation

2. Tax Implications: Include when there are specific tax consequences that need to be acknowledged

3. Surviving Obligations: Include when certain obligations from the original option agreement need to survive

4. Confidentiality: Include when parties wish to keep the cancellation terms confidential

5. ASX Compliance: Required for listed options or when parties are listed entities

6. Further Assurance: Include when additional documentation or actions may be required to effect the cancellation

Suggested Schedules

1. Option Details Schedule: Detailed description of the options being cancelled, including certificate numbers if applicable

2. Original Option Terms: Copy or summary of the relevant terms from the original option agreement

3. Cancellation Payment Details: If applicable, schedule detailing any consideration and payment terms

4. Required Notices and Forms: Any regulatory forms or notices required to effect the cancellation

Authors

Alex Denne

Head of Growth (Open Source Law) @ ��Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Financial Services

Technology

Startups

Mining and Resources

Healthcare

Professional Services

Manufacturing

Retail

Real Estate

Agriculture

Relevant Teams

Legal

Finance

Corporate Governance

Human Resources

Compliance

Company Secretariat

Board

Treasury

Share Registry

Investor Relations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Company Secretary

Legal Counsel

Corporate Lawyer

Finance Director

HR Director

Compliance Officer

Board Director

Investment Manager

Equity Compensation Manager

Corporate Advisory Manager

Stock Plan Administrator

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