Simple Stock Option Agreement Template for India

The Simple Stock Option Agreement is utilized when a company in India wishes to grant stock options to its employees or eligible participants as part of their compensation package. This document is essential for companies implementing Employee Stock Option Plans (ESOPs) and must comply with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, Companies Act, 2013, and other relevant Indian legislation. The agreement serves as the primary document defining the relationship between the company and the option holder, detailing crucial elements such as vesting conditions, exercise procedures, and restrictions on transfer. It is particularly important for startups and growing companies looking to attract and retain talent by offering equity-based compensation. The Simple Stock Option Agreement includes all necessary provisions to protect both the company's and optionee's interests while ensuring regulatory compliance.

1. Parties: Identifies the company granting the options and the employee/optionee receiving them

2. Background: Sets out the context of the agreement, including the company's stock option plan and the basis for granting options

3. Definitions: Defines key terms including Exercise Price, Grant Date, Vesting Schedule, Expiration Date, and other relevant terms

4. Grant of Option: Specifies the number of shares subject to the option and the type of option being granted

5. Exercise Price: States the price per share at which the option can be exercised

6. Vesting Schedule: Details the timeline and conditions under which the options become exercisable

7. Exercise Period: Specifies the duration during which vested options can be exercised

8. Method of Exercise: Outlines the procedure for exercising options, including payment methods

9. Termination of Employment: Describes what happens to options upon various types of employment termination

10. Non-Transferability: Restricts the transfer or assignment of options

11. Compliance with Laws: Ensures compliance with Indian securities laws and regulations

12. Taxes: Addresses tax obligations and responsibilities

13. Governing Law: Specifies Indian law as governing law and jurisdiction

14. Notices: Details how formal communications between parties should be made

15. Entire Agreement: Confirms this document as the complete agreement between parties