Put & Call Option Agreement

Simply described, a put option is an option granted to a person to require another person to buy their shares under certain events; and a call option is an option granted to a person to require another person to sell their shares under certain events.

These agreements are entered into by parties as creative mechanisms to mitigate risks. For example, an investor requesting a level of security from his investment may ask to be provided with a put option in the event that certain performance milestones are not met ie. the founders have to buy or find another investor to buy the investor’s shares if certain performance milestones are not met.

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