The Option To Purchase Shares Agreement is a strategic instrument used in the UAE business environment to provide individuals or entities with the opportunity to acquire ownership interests in a company at a future date. This document is commonly utilized for employee incentivization, investment structuring, or as part of broader commercial arrangements. It must comply with UAE Federal Law No. 32 of 2021 and related regulations, particularly regarding share transfer restrictions and foreign ownership limitations. The agreement typically includes detailed provisions on exercise mechanics, pricing, timeframes, and conditions precedent to exercise, while accounting for local corporate governance requirements and shareholder approval processes. It's especially relevant for companies looking to attract and retain key talent, structure investment deals, or create strategic business alignments through potential ownership opportunities.
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1. Parties: Identification of the option grantor (typically the company or existing shareholders) and the option holder(s)
2. Background: Context of the agreement, including company information and purpose of granting the option
3. Definitions: Key terms used throughout the agreement, including 'Option Shares', 'Exercise Price', 'Option Period', etc.
4. Grant of Option: Clear statement of the option being granted, number of shares, and type of shares
5. Exercise Price: Specification of the price at which the option can be exercised and payment terms
6. Option Period: Duration of the option and any specific exercise windows
7. Exercise Mechanism: Detailed process for exercising the option, including notice requirements and completion mechanics
8. Representations and Warranties: Standard warranties about share ownership, authority to grant option, and compliance with laws
9. Transferability and Assignment: Restrictions on transfer of the option rights
10. Termination: Circumstances under which the option agreement can be terminated
11. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction for disputes
12. Notices: Process for serving formal notices under the agreement
13. General Provisions: Standard boilerplate clauses including entire agreement, amendments, and severability
1. Vesting Schedule: Include when the option rights vest over time or are subject to performance conditions
2. Tag-Along Rights: Include when option holders should have the right to participate in future sales of shares
3. Drag-Along Rights: Include when majority shareholders want the right to force option holders to sell upon exercise
4. Anti-Dilution Provisions: Include to protect option holders from dilution through new share issuances
5. Shareholder Approval: Include when shareholder approval is required for option grant or exercise
6. Tax Provisions: Include specific tax treatment and obligations where relevant
7. Change of Control Provisions: Include acceleration or special terms in case of company sale or merger
8. Confidentiality: Include detailed confidentiality obligations if not covered in other agreements
1. Schedule 1 - Company Information: Details of the company including registration number, registered office, and share capital structure
2. Schedule 2 - Share Details: Detailed description of the shares subject to the option, including class rights and restrictions
3. Schedule 3 - Option Exercise Notice: Form of notice to be used when exercising the option
4. Schedule 4 - Deed of Adherence: Form of deed to be signed upon exercise if required by shareholders' agreement
5. Schedule 5 - Vesting Schedule: Detailed vesting terms and conditions if applicable
6. Appendix A - Board ReΊμΠΣΦ±²₯: Copy of board reΊμΠΣΦ±²₯ approving the grant of the option
7. Appendix B - Shareholder ReΊμΠΣΦ±²₯: Copy of shareholder reΊμΠΣΦ±²₯ approving the grant of the option if required
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