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Incentive Stock Option Agreement

Incentive Stock Option Agreement Template for Hong Kong

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Key Requirements PROMPT example:

Incentive Stock Option Agreement

"I need an Incentive Stock Option Agreement for our Hong Kong pre-IPO technology company, granting 100,000 options to our new Chief Technology Officer with a 4-year vesting schedule starting March 2025, including specific provisions for a potential IPO in 2025."

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Document background
The Incentive Stock Option Agreement is a crucial document used when companies wish to offer employees the right to purchase company shares at a predetermined price as part of their compensation package. It is particularly relevant for Hong Kong companies seeking to align employee interests with company growth and retain key talent through equity participation. The agreement must comply with Hong Kong's Companies Ordinance, Securities and Futures Ordinance, and relevant tax laws. It typically forms part of a broader employee share option plan and requires board approval before implementation. The document specifies all essential elements of the option grant, including vesting conditions, exercise procedures, and restrictions on transfer, while addressing specific requirements of Hong Kong's legal and regulatory framework.
Suggested Sections

1. Parties: Identification of the company granting the options and the employee receiving them

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

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

4. Grant of Option: Details of the option grant including number of shares, exercise price, and grant date

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

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

7. Term of Option: Duration of the option and expiration conditions

8. Termination of Employment: Impact of employment termination on vesting and exercise rights

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

10. Rights as a Shareholder: Clarification of rights before and after exercise of options

11. Compliance with Laws: Requirements for compliance with securities laws and other regulations

12. Tax Obligations: Responsibilities for tax payments and withholding

13. Data Privacy: Consent for collection and processing of personal data

14. Governing Law: Specification of Hong Kong law as governing law

15. Execution: Signature blocks and execution requirements

Optional Sections

1. Change in Control Provisions: Special terms that apply in case of company merger, acquisition, or other change in control events

2. Clawback Provisions: Terms allowing the company to recoup options or proceeds in cases of misconduct or specified events

3. Lock-up Period: Restrictions on selling shares for a specified period after exercise, typically used for pre-IPO companies

4. Tag-Along Rights: Rights to participate in sale of shares by major shareholders, relevant for private companies

5. Drag-Along Rights: Obligation to participate in sale of shares when triggered by major shareholders

6. International Supplement: Additional terms for options granted to employees in multiple jurisdictions

7. Electronic Acceptance: Provisions for electronic acceptance of the agreement, if applicable

Suggested Schedules

1. Schedule 1 - Option Certificate: Formal certificate detailing the specific grant including number of shares, exercise price, and vesting schedule

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. Appendix A - Share Option Plan: Copy or summary of the main terms of the company's share option plan

5. Appendix B - Shareholders' Agreement: Summary of or reference to key shareholders' agreement provisions affecting option holders

6. Appendix C - Tax Information: Summary of tax implications and obligations in Hong Kong

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 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

Technology

Financial Services

Professional Services

Healthcare

Biotechnology

Manufacturing

Retail

E-commerce

Telecommunications

Media and Entertainment

Real Estate

Education

Consulting

Software Development

Pharmaceuticals

Relevant Teams

Legal

Human Resources

Finance

Executive Leadership

Corporate Governance

Compensation & Benefits

Company Secretarial

Compliance

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Technology Officer

Chief Operating Officer

Senior Vice President

Vice President

Director

Senior Manager

Manager

Software Engineer

Product Manager

Sales Executive

Research Scientist

Legal Counsel

Financial Analyst

Business Development Manager

Human Resources Manager

Marketing Manager

Operations Manager

Technical Lead

Industries







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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