The Stock Option Purchase Agreement is a crucial document used in Saudi Arabian companies to formalize the granting of stock options to employees, executives, or other eligible individuals. It has gained increasing importance with Saudi Arabia's economic diversification efforts and the growth of private sector employment under Vision 2030. This agreement is essential when companies wish to offer equity incentives while ensuring compliance with Saudi Arabian corporate law, Capital Market Authority regulations, and Sharia principles. The document typically includes detailed provisions on option grants, vesting schedules, exercise procedures, and restrictions on transfer, while addressing specific requirements of Saudi Arabian tax law and corporate governance regulations. It's particularly relevant for companies looking to attract and retain talent through equity-based compensation structures.
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1. Parties: Identification of the company granting the options and the option holder, including full legal names and addresses
2. Background: Context of the agreement, relationship between parties, and purpose of the option grant
3. Definitions: Detailed definitions of key terms used throughout the agreement, including technical terms related to options and shares
4. Grant of Option: Specific details of the option grant, including number of shares, class of shares, and grant date
5. Exercise Price: Specification of the price at which options can be exercised and payment terms
6. Vesting Schedule: Detailed timeline and conditions for when options become exercisable
7. Exercise Period: Timeframe during which options can be exercised and procedures for exercise
8. Restrictions on Transfer: Limitations on transferability of options and resulting shares
9. Termination Provisions: Consequences of termination of employment or relationship with the company
10. Company's Obligations: Company's commitments regarding share issuance and maintaining option scheme
11. Option Holder's Representations: Warranties and representations by the option holder
12. Compliance with Laws: Provisions ensuring compliance with Saudi laws, regulations, and Sharia principles
13. Tax Matters: Treatment of tax implications and responsibilities
14. Notices: Process for formal communications between parties
15. Governing Law and Jurisdiction: Specification of Saudi law as governing law and jurisdiction for disputes
16. Execution: Signature blocks and execution requirements
1. Change of Control Provisions: Special provisions applying in case of company sale or merger - include for senior executives or key employees
2. Shareholder Rights: Rights attached to shares post-exercise - include if different from standard shareholder rights
3. Non-Competition and Confidentiality: Additional restrictions on option holder - include for senior positions or when handling sensitive information
4. Sharia Compliance Declaration: Explicit statement of Sharia compliance - include when required by investors or company policy
5. Drag-Along and Tag-Along Rights: Special share transfer rights - include for senior management or significant option grants
6. International Tax Provisions: Special tax considerations - include for international option holders
7. Currency Provisions: Specifications for foreign currency handling - include for international option holders or if exercise price is in foreign currency
1. Option Certificate: Formal certificate detailing the option grant specifics
2. Exercise Notice Form: Template form for exercising options
3. Vesting Schedule Details: Detailed breakdown of vesting dates and conditions
4. Shareholders' Agreement: Copy or relevant excerpts of the shareholders' agreement that will apply post-exercise
5. Company's Articles of Association: Relevant excerpts relating to share issuance and transfer
6. Regulatory Compliance Checklist: List of required regulatory filings and approvals
7. Tax Computation Examples: Illustrative examples of tax treatment on exercise
8. CMA Approval Documents: Copies of relevant Capital Market Authority approvals or filings
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