Option Online Services - Sundae Captial

Option Online ServicesSundae Capital Advisors Private Limited

As a Systematic Investment Plan (“SIP”) adds value to yourinvestments in long term, the Stock Incentive Plans (The SIPs forBusiness”) adds value to your Business in long term.

Option Online provides complete solutions for your SIPs. Weprovide you 360O services to design, structure, document andimplement your SIPs, be stock option, share purchase,appreciation rights, phantom stocks, RSUs, etc. Our spectrum ofservices includes:

Designing and structuring of SIP Documentation for SIP and its implementation Implementation of SIP Drafting of trust deed ESOP Trust formation Advising on Financial accounting Advising on Taxation aspects Valuation Listing services Review of existing schemes

And above all, with complete confidentiality and security.

Division of: Sundae Capital Advisors Private Limited

Option Online Services

Pre SIP ServicesDiscuss the requirements of the clients at lengths to provide themvarious alternatives and structures to arrive at the optimal solution forthe needs of the clients. We tend to create a transparent structure forimplementation of SIPs to address all possible concerns arising infuture. We create SIP structures for the client, draft the scheme &related documentation and create templates to implement the Schemeand monitor the same.

Post SIP ServicesAssist the clients by providing them the fair valuation of the stockoptions and also assisting them in P&L accounting, statutorydisclosures under Companies Act / SEBI Regulations, taxation,compliances, etc. We provide reliable valuation report for accountingpurposes also. We also undertake the services for review of existingESOP schemes of the Company and suggest modifications for makingthe plans better.

Support ServicesSupport services for liaison with the stock exchanges for in‐principleapproval, documentation for in‐principle approval, drafting of trustdeed, registration of trust, trusteeship services, exit opportunities,documentation and other support services for the SIPs.

ESOP: Stock options are granted to an employee whichwill vest in him over a defined period at a pre‐agreedprice or pricing formula.ESPS: Equity shares are allotted to an employee which aresubject to certain lock‐in period.SAR: A right is conferred to an employee to gain monetarybenefits arising out of increase in the price of equityshares & such monetary benefit is settled in cash or kind.RSU: Units granted to a participant, but shares are notissued at the time of the grant. After the participant of aRSU satisfies the vesting requirement, the companydistributes shares, or the cash equivalent of the numberof shares used to value the unit.RSA: Grant of company’s shares in which the recipient’srights in the shares are restricted until the shares vest. Oncompletion of vesting requirements, employee has theright to own and deal with his shares independently.TSR: Is a performance based stock awards plan, wherevesting and / or exercise is linked with company’s stockoutperforming an index or a defined peerset.


Kind of SIPs

Retaining Key employees and reducing attrition Attract fresh talent in the Organisation Substitution for variable pay in long run Reduces cash outflow in initial years of growth Sharing success with employees Tax efficient earnings for employees No upper cap on returns Lets the market reward the performance of employees Improves corporate image

Benefits of SIPs

Grant Date: It is the date on which options are deemed tobe granted to an employee

Grant Price: It is the price at which the options aregranted to an employee and by paying which he can ownequity in the Company. It is also referred to as ExercisePrice

Vesting Period: It is the period for which an employeeshould be associated with the Company to becomeeligible to apply for equity shares under SIP. The minimumrequired period is one year.

Vesting Date: It is the date on which the Vesting period isover.

Exercise: It refers to the act of applying for equity sharesin the Company after completion of the Vesting Period.

Exercise Period: It refers to the period within which, aftercompletion of the Vesting Period, the employee canexercise his Vested Options.


Decoding SIPs

Vested Options: It refers to the options for which theVesting Period has been successfully completed.

Unvested Options: It refers to the options for which theVesting Period is still continuing.

Intrinsic Value: It is the difference between the fair valueof equity shares on the date of grant of options and theexercise price.

Fair Value: It is the value of an option generally derivedthrough Black Scholes Option Pricing Model or in certaincases through Binomial Model. This method derives valueof an option after considering various parameters like fairvalue of equity shares, exercise price, volatility, dividendyield, risk free rate of return and life of options.

One time vis‐à‐vis Regular PracticeOne time: Recognizes the existing employees and theirpast performanceRegular practice: Helps to attract and retain new talent, inaddition to rewarding the present employees

Stock Options vis‐à‐vis Direct Equity participationStock Options: Gives an option to exercise for equity infuture, which need not immediately dilute the votingcapitalEquity Schemes: Immediately dilutes the existingshareholders and primarily rewards the pastperformances

Primary Issuance vis‐à‐vis Secondary SchemesPrimary issuance: Results in dilution of all shareholdersSecondary schemes: Avoids dilution and existing sharecapital pool can be allocated


Options with SIPs

Trust vis‐à‐vis non‐trust routeTrust route: Adopted for convenience purposes anddisclosure, which removes the administrative hassles atthe Board levelNon trust route: Generally adopted for companies withsmall size of population covered under SIPs

Intrinsic value vis‐à‐vis Fair valueIntrinsic value: Reflects the difference between the fairvalue of stock price and the offered priceFair value: Reflects the value of the option taking intoaccount other factors viz. time value, interest rate,volatility, dividend yield, etc.


Key Factors Impacting Decision

What ???

Option Plan Equity Plan Appreciation rights / stock award

Plan

All employees Identified employees Directors

Whom ???

One time approach Regular practice Part of annual appraisal policy

When ???

Quantum ???

Strike a balance between Entrepreneurship value created Sharing wealth with employees

At fair value At discount to fair value Discount linked to performance

Price ???

Period of vesting Period of exercise Lock‐in of shares

Restrictions ???

Vesting ???

Uniform / Bullet vesting Back / front ended cliff vesting Performance based vesting

Listing Buyback Change in control / PE exit

Monetization ???

Complexity in accounting Valuation Review with changing times

Other ???

Sundae Capital Advisors Private Limited

Corporate Advisory & Transaction Services: Transaction structuring for M&A Due Diligence Identifying alternate structures Compliances Advising and assisting in obtaining all regulatory

approvals Liaison with regulatory authorities Co‐ordinating with other intermediaries Documentation and drafting of scheme,

applications, etc. Obtaining listing approvals Listing under Rule 19(2)(b) Post transaction assistance


Capital Market Advisory Services: Advisory on the structuring and raising of funds

through public offer, rights issue, etc. Independent and objective advice on the Pre

IPO structuring, strategic alternatives, assistingin documentation, record room creation, etc.

Advisory on capital structuring through buyback, open offers, consolidation of holding, etc.

Advising on direct listing, delisting, exit offer fordissemination board companies, etc.

Opportunities for mergers, de‐mergers,consolidation, acquisitions

Interaction with the regulatory authorities Pre and post transaction advisory services Minority shareholders issues

Service Portfolio

Stock Incentive Plans: Advising on the structuring for stock incentive

plans, including vanilla option plan, sharepurchase plan, appreciation rights, restrictedstock units awards, etc

Discussion with the Management on theirphilosophy for SIPs

Drafting of SIP and related documents Advisory on implementation of SIPs ESOP Trust formation Advising on accounting and taxation aspects Valuation for the stock options Assistance for allotment and listing of equity

shares SIP agreements with participants Review of existing SIP / ESOP / similar schemes


Start‐up Advisory Services: Advisory on structuring of start‐up enterprises Fund raising for start ups Pitch presentations Advising on stock incentive plans Drafting of various agreements for fund raising Advising on compliances Valuation for fund raising and regulatory

compliances

Service Portfolio

As the name suggests, at SUNDAE, we tend to workamongst various limiting situations and diversebusiness challenges in the corporate structure withthe right blend of advisory to arrive at the bestsolution suited to all stakeholders with valueenhancement strategies, policies and transactions Innovation: Provide strategic alternative

solutions to all your needs Integrity: Transaction execution till the end with

personal involvement Passion: We co‐own the implementation of

solutions and take an additional mile even ifrequired after completion of the project

Domain knowledge: Strong understanding ofthe regulatory framework

Catalyst: Co‐ordinate with all intermediaries andregulatory authorities involved to produce endresults


Why Sundae

Dedicated & experienced

team

Agile capable network for specific jobs

Focused approach

With passion and Trust

Strategic alternative solutions

Deep and practical

experience

NitiN Somani:Managing Director and FounderHaving an experience of more than 1½ decade in capitalmarkets, investment banking, corporate & financialstructuring, valuations, structuring of stock incentiveplans, finance and secretarial compliances.

Radhika Somani:Director and FounderHaving a varied experience of over 7 years into finance,audit and management.


Management Team

NitiN Somani / Radhika SomaniSundae Capital Advisors Private LimitedA ‐ 404, Vasundhra ApartmentsPlot No. 16, Sector 6Dwarka, New Delhi ‐ 110 075

Cell: +91 98 1069 4501Tel.: +91 11 4306 1409

E‐mail: [email protected]: www.sundaecapital.com / www.optionline.in

Contact us

Let Passion work for you!!!