Stock Purchase Option Agreement

Startups also spend purchase rights, as it is often difficult to obtain financing from banks when a company has not yet made a profit. For example, a company announces the development of a consumer product that is expected to conquer the world in the storm, such as a virtual reality headset that is no larger than a pair of sunglasses. According to initial estimates, the product will be a great success and the share price is expected to retire. The company`s management could offer purchase rights to existing shareholders, and those who exercise their rights to the additional shares will benefit if the proceeds succeed and the share price increases. Conversely, if the launch of the product is a failure, the investor can bear the losses resulting from the investment.