Call Option Agreement: shares

Call Option Agreement: shares

Call option agreement over shares in a private limited company

Background

What is a call option?

A call option is a right of a buyer – the buyer has the option to require (if the buyer exercises the call option) that a holder of shares sells those shares to the buyer.  The buyer is the option holder in this case – the buyer can “call” for the shares to be sold.

About this Call Option Agreement

This Call Option Agreement is for a call option over shares in a private limited company.

What are the main negotiation points for a call option agreement?

The principal matters which the parties to a call option agreement will need to negotiate include:

• option shares: the number of option shares
• exercise conditions: whether the call option exercise is subject to satisfaction of any pre-conditions
• exercise period: the exercise period during which the buyer may exercise the call option
• exercise price: the price payable for the shares

Document features

Features include:

• 24 clauses over 14 pages
• call option grant, including definitions of option shares, exercise conditions and exercise period
• call option exercise and form of exercise notice
• mechanics for sale and purchase of option shares
• warranties and undertaking from the seller

Explanatory guidance

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