ESOP Plan + Grant Letter — India

Source: https://lexvio.ai/library/esop-plan-and-grant-letter-india

LICENCE: Free to use, copy, modify and redistribute, including commercially, without attribution.

DISCLAIMER: Provided as-is as a drafting starting point. This is not legal advice and does not create an attorney-client or advocate-client relationship. Indian law is fact- and state-specific — stamp duty, registration and several employment obligations vary by state. Have a qualified advocate or company secretary review any document before you sign it.

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EMPLOYEE STOCK OPTION PLAN

PART A — PLAN

1. NAME AND PURPOSE

1.1 This plan shall be known as the "{{COMPANY_SHORT_NAME}} Employee Stock
Option Plan {{PLAN_YEAR}}" (the "Plan").

1.2 The purpose of the Plan is to attract, retain, motivate and reward
eligible employees by enabling them to participate in the future growth and
financial success of the Company.

2. DEFINITIONS

"Board" means the board of directors of the Company.

"Cliff" means the initial period during which no Options vest, as set out
in the relevant Grant Letter.

"Eligible Person" means a permanent employee, director (other than a
promoter or independent director, in compliance with Companies Act 2013
Section 62(1)(b) and the relevant SEBI / MCA notifications) or an employee
of a subsidiary, as the Board may designate.

"Exercise Price" means the price per Equity Share at which an Option may
be exercised, as specified in the Grant Letter, and shall not be less than
the par value of the Equity Share.

"Good Leaver" means a Participant whose employment terminates by reason of
(a) death; (b) permanent disability; (c) retirement at or after the normal
retirement age; (d) termination by the Company without Cause; or (e) such
other circumstance as the Board determines in writing.

"Bad Leaver" means a Participant whose employment terminates other than as
a Good Leaver, including termination for Cause or voluntary resignation
before the Cliff.

"Option" means a right to subscribe to Equity Shares granted under this
Plan.

"Participant" means an Eligible Person to whom Options have been granted.

"Vesting Schedule" means the schedule set out in the Grant Letter.

3. ADMINISTRATION

3.1 The Plan shall be administered by the Compensation Committee of the
Board, or in its absence, by the Board (the "Administrator").

3.2 The Administrator shall have full power to interpret the Plan, determine
the Eligible Persons, grant Options, set Exercise Prices, and adopt rules
necessary for administration.

4. POOL SIZE

The maximum number of Equity Shares that may be issued under the Plan shall
be {{POOL_SIZE_NUMBER}} Equity Shares, representing approximately
{{POOL_SIZE_PERCENT}}% of the issued and paid-up share capital of the
Company on a fully-diluted basis as on the Plan's effective date.

5. VESTING

5.1 Default Vesting Schedule: 25% of Options vest on the first anniversary
of the grant date (the "Cliff"), and the remaining 75% vest in equal monthly
instalments over the following 36 months, subject to continuous employment.

5.2 The Board may adopt a different vesting schedule for any specific grant,
provided it is reflected in the Grant Letter.

5.3 Acceleration. On a Change of Control, {{ACCELERATION_PERCENT}}% of
unvested Options shall vest immediately (single-trigger), with the balance
vesting in accordance with their original schedule subject to continued
employment with the surviving entity.

6. EXERCISE

6.1 Vested Options may be exercised at any time prior to the earlier of
(a) the expiry of the Exercise Period set out in the Grant Letter, or
(b) the Termination Date determined under Clause 7.

6.2 Exercise shall be by written notice to the Company, accompanied by
payment of the aggregate Exercise Price.

7. TERMINATION OF EMPLOYMENT

7.1 Good Leaver. Vested Options shall remain exercisable for a period of
{{GOOD_LEAVER_EXERCISE_WINDOW_MONTHS}} months from the date of cessation.
Unvested Options shall lapse on the date of cessation.

7.2 Bad Leaver. All Options (vested and unvested) shall lapse on the date
of cessation, except that vested Options held by a Participant whose
employment terminates after the Cliff for reasons other than Cause may, at
the Board's discretion, remain exercisable for up to
{{BAD_LEAVER_EXERCISE_WINDOW_MONTHS}} months.

8. RESTRICTIONS

8.1 Options are personal to the Participant and may not be transferred,
pledged or assigned, save by operation of law on death.

8.2 Equity Shares issued on exercise of Options shall be subject to such
transfer restrictions, lock-in periods and rights of first refusal as are
set out in the Articles of Association or any Shareholders' Agreement then
in force.

9. AMENDMENT AND TERMINATION

The Board may amend, suspend or terminate the Plan at any time, provided
that no amendment shall adversely affect Options already granted without
the Participant's written consent.

10. TAX AND REGULATORY

10.1 Participants are solely responsible for all taxes (including perquisite
tax under Income-tax Act 1961 Section 17(2)(vi) at exercise, and capital
gains at sale) arising out of their participation in the Plan.

10.2 The Plan shall comply with the Companies Act 2013, the Companies
(Share Capital and Debentures) Rules 2014, and (where applicable to listed
companies) the SEBI (Share-Based Employee Benefits and Sweat Equity)
Regulations 2021.

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PART B — GRANT LETTER (Template)

Date: {{GRANT_DATE}}

To: {{PARTICIPANT_NAME}}
    {{PARTICIPANT_ADDRESS}}

Dear {{PARTICIPANT_FIRST_NAME}},

We are pleased to grant you Options to subscribe to Equity Shares of
{{COMPANY_NAME}} (the "Company") under the Company's Employee Stock Option
Plan {{PLAN_YEAR}} (the "Plan"), on the following terms:

1. Number of Options granted: {{OPTIONS_GRANTED}}
2. Exercise Price: ₹{{EXERCISE_PRICE_PER_OPTION}} per Equity Share
3. Grant Date: {{GRANT_DATE}}
4. Vesting Schedule: 25% on first anniversary of Grant Date (Cliff),
   thereafter 1/48 per month for 36 months
5. Exercise Period: 10 years from Grant Date, subject to earlier expiry on
   termination per Clause 7 of the Plan
6. Acceleration on Change of Control: 25% single-trigger acceleration

By signing below, you confirm that you have received and read a copy of the
Plan, and you agree to be bound by all its terms.

For and on behalf of {{COMPANY_NAME}}            Accepted by:

________________________________                  ________________________________
{{COMPANY_SIGNATORY_NAME}}                        {{PARTICIPANT_NAME}}
{{COMPANY_SIGNATORY_TITLE}}                       Date: ________________________