Share Option Agreement - Exercise Within Agreed Period

This Share Option Agreement - Exercise within Agreed Period is between a company and a grantee, giving the grantee the right to exercise the option to subscribe for new shares within a specified period of time.

It assumes the grantee is a director or full-time employee of the company (or both), but a different relationship (such as a contractor) can be specified.

Exercise period and when the option lapses

The option must be exercised within the agreed period, otherwise it will lapse.

If the grantee ceases to be a director, employee or other specified relationship, or dies, the option will also lapse.

Protections before exercise

The company may vary its share capital, but if new shares are issued before the option is exercised, the grantee is protected because they will be treated as a shareholder for these purposes.

The grantee is also given protection where the company’s entire share capital is to be sold or the company is to be wound up, by being given ample opportunity to exercise the option.

What happens to shares after exercise in certain circumstances

If the option is exercised but the grantee then ceases to be a director, employee or other specified relationship, or dies, their shares are offered to the other shareholders at a price specified by the auditors.

If there are any remaining shares, the grantee can require them to be bought by the company.

Key defined terms and relationship-specific drafting points

Details of the “Option Exercise Period”, “Option Shares”, “Ordinary Shares”, and the “Subscription Price” in the Interpretation section should be completed.

If the grantee is not an employee, the agreement provides for specified employment-related wording to be removed.

The agreement also includes other optional phrases and clauses that should be selected so as to be compatible with one another, with unused options removed.

Share Option Agreement - Exercise Within Agreed Period is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.