ESOP Plan + Grant Letter — India

Combined ESOP Plan document (governing rules) and a standard Grant Letter. India-compliant: SEBI ESOP guidelines (for listed) plus Section 62(1)(b) Companies Act 2013 for unlisted. Includes 4-year vesting / 1-year cliff, good-leaver / bad-leaver mechanics, and exercise rules pre and post liquidity event.

Jurisdiction

India

Length

895 words

Licence

Free reuse, no attribution

Last reviewed

2026-08-19

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. --- 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: ________________________

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

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.

ESOP Plan + Grant Letter — India

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