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Phantom Unit Award Agreement

Phantom Unit Award Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Phantom Unit Award Agreement

"I need a Phantom Unit Award Agreement for our UAE-based technology company, granting 1,000 phantom units to our new Chief Technology Officer with a 4-year vesting schedule starting March 1, 2025, including special provisions for acceleration upon a successful IPO."

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Document background
The Phantom Unit Award Agreement is a critical document used in the UAE corporate environment to implement alternative compensation structures that align employee interests with company performance. This agreement type is particularly valuable in the UAE context where companies may face restrictions on direct equity ownership or wish to maintain specific shareholding structures while still offering competitive, performance-based compensation. The document establishes a contractual right to receive cash payments based on the company's value appreciation, structured in compliance with UAE Federal Law No. 33 of 2021 (Labor Law) and other relevant regulations. It outlines detailed terms including grant size, vesting conditions, valuation methods, and payment mechanisms, while addressing specific UAE legal requirements and tax considerations.
Suggested Sections

1. Parties: Identifies the company granting the phantom units and the employee receiving the award

2. Background: Explains the context of the phantom unit program and its purpose within the company's compensation structure

3. Definitions: Defines key terms including Phantom Units, Fair Market Value, Vesting Date, and other program-specific terminology

4. Grant of Phantom Units: Specifies the number of phantom units granted and the effective date of the grant

5. Vesting Schedule: Details the vesting timeline and conditions for the phantom units

6. Valuation Method: Explains how the phantom units will be valued, including the calculation methodology

7. Payment Terms: Specifies when and how payments will be made upon vesting of the phantom units

8. Employment Conditions: Outlines the relationship between continued employment and the phantom unit award

9. Termination Provisions: Describes the treatment of phantom units upon various types of employment termination

10. Confidentiality: Addresses the confidential nature of the agreement and award details

11. Governing Law and Jurisdiction: Specifies UAE law as governing law and establishes jurisdiction for disputes

12. Amendment and Termination: Outlines procedures for modifying or terminating the agreement

Optional Sections

1. Change of Control Provisions: Include when the company wants to specify treatment of phantom units in case of merger, acquisition, or other corporate transactions

2. International Tax Compliance: Include for expatriate employees or when cross-border tax implications need to be addressed

3. Non-Competition and Non-Solicitation: Include when the company wants to tie the phantom unit award to restrictive covenants

4. Shareholder Rights Disclaimer: Include to explicitly state that phantom units do not confer actual shareholder rights

5. Currency Conversion: Include when payments may be made in multiple currencies

6. Clawback Provisions: Include when the company wants the right to recoup payments under certain circumstances

7. Data Protection: Include when personal data processing needs to be addressed, especially for international companies

Suggested Schedules

1. Schedule 1: Vesting Schedule: Detailed breakdown of vesting dates and corresponding percentages

2. Schedule 2: Valuation Methodology: Detailed formula and procedures for calculating the value of phantom units

3. Schedule 3: Notice Forms: Template forms for various notices required under the agreement

4. Schedule 4: Payment Election Form: Form for employee to elect payment preferences where applicable

5. Appendix A: Tax Treatment Summary: Overview of tax implications and treatment of phantom unit payments

6. Appendix B: Administrative Procedures: Internal procedures for managing the phantom unit program

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
Award
Award Date
Base Value
Board
Cause
Change in Control
Company
Competitive Activity
Confidential Information
Disability
Fair Market Value
Good Reason
Grant Notice
Grantee
Unit Holder
Payment Date
Performance Conditions
Performance Period
Phantom Unit
Plan
Retirement
Settlement Amount
Settlement Date
Termination Date
Termination of Employment
Trade Secret
Unit Value
Unvested Units
Valuation Date
Valuation Methodology
Vested Units
Vesting Date
Vesting Period
Vesting Schedule
Working Day
Relevant Industries

Financial Services

Professional Services

Technology

Real Estate

Manufacturing

Healthcare

Retail

Energy

Construction

Telecommunications

Family Businesses

Private Equity

Consulting

Relevant Teams

Human Resources

Legal

Finance

Executive Leadership

Compensation & Benefits

Corporate Governance

Payroll

Tax

Compliance

Treasury

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Senior Executive

Managing Director

Department Head

Regional Manager

Senior Manager

Key Account Manager

Technical Director

Operations Manager

Sales Director

Research & Development Lead

Project Manager

Business Development Manager

Financial Controller

Industries
UAE Federal Law No. 33 of 2021 (Labor Law): Governs employment relationships and employment-related benefits in the UAE, including compensation structures and employee incentive schemes
UAE Federal Law No. 32 of 2021 (Companies Law): Regulates corporate entities and their operations, including matters related to share capital, shareholder rights, and corporate governance
UAE Civil Code (Federal Law No. 5 of 1985): Provides the fundamental principles of contract law, including formation, validity, and enforcement of contracts
UAE Central Bank Regulations: Relevant for phantom units as they may be considered synthetic financial instruments, requiring compliance with financial regulations
UAE Securities and Commodities Authority (SCA) Regulations: May apply to phantom unit schemes if they fall under the definition of securities or if the company is listed
UAE Federal Decree-Law No. 47 of 2022 on Taxation: Relevant for understanding the tax treatment of phantom unit awards and payments to employees
DIFC Employment Law No. 2 of 2019 (if DIFC-based): Specific employment regulations that apply if the company is based in the Dubai International Financial Centre
ADGM Employment Regulations 2019 (if ADGM-based): Specific employment regulations that apply if the company is based in the Abu Dhabi Global Market
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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