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Stock Option Purchase Agreement

Stock Option Purchase Agreement Template for India

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Key Requirements PROMPT example:

Stock Option Purchase Agreement

"I need a Stock Option Purchase Agreement for my Series B funded technology startup in Bangalore, granting options to senior executives with a 4-year vesting period and special provisions for acceleration upon acquisition."

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Document background
The Stock Option Purchase Agreement is a fundamental document used by Indian companies to formalize the granting of stock options to employees, directors, or other eligible individuals. It is particularly crucial for startups, growing companies, and established corporations looking to attract and retain talent through equity-based compensation. The agreement must comply with various Indian regulations, including the Companies Act 2013, SEBI guidelines, and relevant tax laws. It typically includes detailed provisions about the number of options granted, exercise price, vesting schedule, exercise procedures, and restrictions on transfer. This document becomes especially important during funding rounds, IPO preparation, or when companies are establishing employee stock option pools as part of their compensation strategy.
Suggested Sections

1. Parties: Identification of the company granting the options and the option holder

2. Background: Context of the agreement, relationship between parties, and purpose of granting stock options

3. Definitions: Definitions of key terms used throughout the agreement

4. Grant of Options: Details of the stock options being granted, including number of shares, grant date, and exercise price

5. Vesting Schedule: Timeline and conditions for vesting of the options

6. Exercise of Options: Procedures and conditions for exercising the options, including payment methods and timing

7. Term and Expiration: Duration of the option grant and circumstances of expiration

8. Restrictions on Transfer: Limitations on transferability of options and resulting shares

9. Taxation: Tax obligations and responsibilities of both parties

10. Representations and Warranties: Standard representations by both parties regarding capacity and authority

11. Termination: Consequences of termination of employment/engagement on stock options

12. Governing Law and Jurisdiction: Applicable law and jurisdiction for dispute resolution

13. Notices: Process for sending formal communications between parties

14. General Provisions: Standard boilerplate clauses including amendments, waiver, and severability

Optional Sections

1. Lock-in Period: Restrictions on sale of shares post-exercise, included for companies wanting to ensure retention

2. Tag-Along Rights: Rights of option holders to participate in sale of company shares, typically included for senior executives

3. Drag-Along Rights: Company's right to force option holders to sell shares, included when company anticipates future sale

4. Foreign Exchange Compliance: Required when option holder is a non-resident of India

5. Corporate Governance: Additional provisions for listed companies or those planning an IPO

6. Confidentiality: Detailed confidentiality obligations, included when not covered in employment agreement

7. Non-Competition: Restrictions on competing activities, included when not covered in employment agreement

Suggested Schedules

1. Option Certificate: Formal certificate detailing the grant of options

2. Vesting Schedule Details: Detailed breakdown of vesting dates and conditions

3. Exercise Notice Form: Template form for exercising options

4. Shareholder Agreement: Key terms from company's shareholder agreement applicable to option holders

5. Tax Computation Guidelines: Guidelines for calculating tax implications at various stages

6. Regulatory Compliance Checklist: Checklist of compliance requirements under SEBI and other regulations

7. Share Valuation Report: Independent valuation report determining the fair market value of shares

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
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Relevant Industries

Technology

Financial Services

E-commerce

Healthcare

Manufacturing

Professional Services

Telecommunications

Real Estate

Consumer Goods

Education Technology

Biotechnology

Consulting

Software Services

Retail

Relevant Teams

Legal

Human Resources

Finance

Corporate Secretarial

Compliance

Executive Leadership

Board of Directors

Corporate Governance

Relevant Roles

CEO

CFO

HR Director

Legal Counsel

Company Secretary

Finance Manager

HR Manager

Compensation & Benefits Manager

Corporate Finance Manager

Compliance Officer

Board Member

Senior Executive

Department Head

General Manager

Managing Director

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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