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Option Exercise Agreement Template: Shares, Price and Terms
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Option Exercise Agreement Template
This Option Exercise Agreement is made on [Date] by and between:
Company: [Company Name]
Address: [Address]
Option Holder: [Full Name]
Address: [Address]
1. Background
The Option Holder holds an option to purchase equity interests of the Company under the following documents:
Equity Plan Name: [Plan Name]
Option Agreement Date: [Date]
Grant Date: [Date]
Grant Number or Reference Number: [Number, if applicable]
The Option Holder wishes to exercise all or part of the vested option rights described above, and the Company agrees to accept that exercise subject to this Agreement and the applicable plan documents.
2. Option Exercise
The Option Holder hereby exercises:
☐ all vested option rights available for exercise
☐ a portion of vested option rights
Number of Shares or Units Being Exercised: [Number]
Type of Security to Be Issued: [Common Stock / Preferred Stock / Units / Other]
3. Exercise Price
Exercise Price Per Share or Unit: [$Amount]
Total Exercise Price: [$Amount]
The Option Holder agrees to pay the exercise price in full in accordance with this Agreement and the applicable option documents.
4. Payment Method
Payment shall be made by the following method:
☐ cash
☐ check
☐ wire transfer
☐ cashless exercise, if permitted
☐ net exercise, if permitted
☐ payroll deduction, if permitted
☐ other: [Describe]
Additional payment details, if any:
[Insert details]
5. Tax and Withholding
The Option Holder understands that the exercise may create tax obligations.
Any required withholding, reporting, or related tax amount shall be handled as follows:
☐ paid directly by the Option Holder
☐ withheld through payroll, if permitted
☐ withheld from shares, if permitted
☐ other: [Describe]
The Company may require additional forms, certifications, or payments before issuing the shares.
6. Conditions to Issuance
The Company’s obligation to issue the shares or units is subject to:
receipt of full payment of the exercise price;
satisfaction of any required tax withholding;
compliance with the option plan and option agreement;
delivery of any additional documents reasonably required by the Company;
compliance with applicable law and securities restrictions.
7. Share Issuance
Upon satisfaction of the conditions above, the Company shall issue the exercised shares or units as follows:
☐ in the name of the Option Holder
☐ jointly with: [Name]
☐ in book-entry or uncertificated form
☐ in certificated form, if available
☐ to the following account or transfer instructions: [Details]
8. Representations of Option Holder
The Option Holder represents that:
the Option Holder has authority to enter into this Agreement;
the exercise is being made in accordance with the applicable option documents;
the Option Holder understands that the shares may be subject to transfer restrictions or other company requirements;
the Option Holder has reviewed the relevant plan and grant terms before signing this Agreement.
9. No Other Changes
Except for the exercise described in this Agreement, the original option plan and option agreement remain unchanged and in full effect.
Any remaining unexercised option rights shall continue to be governed by the applicable plan and grant documents unless they expire or are otherwise terminated according to their terms.
10. Governing Law
This Agreement shall be governed by the laws of the state of [State].
11. Entire Agreement
This Agreement contains the full understanding between the parties regarding the option exercise described above and replaces prior discussions on that subject unless otherwise stated in writing.
12. Signatures
Option Holder Signature: __________________________
Name: [Full Name]
Date: [Date]
Company Signature: __________________________
Name: [Full Name]
Title: [Job Title]
Date: [Date]
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Option Exercise Agreement Template: Shares, Price and Terms
OPTION EXERCISE AGREEMENT TEMPLATE FAQ
What is an option exercise agreement?
An option exercise agreement is a written agreement used when an option holder exercises the right to purchase shares or other equity interests under an existing option grant. It usually identifies the original option award, the number of shares being exercised, the exercise price, the payment method, and the terms for issuing the securities. It helps create a clear record of the exercise transaction between the company and the option holder.
Why do you need an option exercise agreement?
You need an option exercise agreement to clearly document the terms of the exercise and reduce misunderstandings. It helps confirm which option grant is being exercised, how many shares are being purchased, how payment will be made, and what conditions must be satisfied before issuance. A written agreement also supports company records, cap table updates, and internal approval processes.
When should you use an option exercise agreement?
Use an option exercise agreement when an employee, consultant, founder, director, or other eligible holder is exercising vested options under an option plan or grant agreement. It is especially useful when the company wants a fuller agreement than a simple exercise notice, including payment terms, tax acknowledgments, and issuance instructions.
How to write an option exercise agreement?
Start with the names of the company and option holder, then identify the stock option plan, grant date, and option agreement being exercised. After that, state the number of shares being exercised, the exercise price, the total amount due, and the payment method. Finish with tax acknowledgments, company conditions, share issuance terms, and signatures so the agreement is clear and complete.
Can AI Lawyer help if finance, legal, and stock administration all need to review?
AI Lawyer can help by organizing the agreement into clear sections so each reviewer can find the relevant details quickly. It can also add internal reference fields, payment notes, and placeholders that make updates easier to track. A consistent structure helps reduce repeated edits and lowers the chance of missing key details like grant dates, share counts, exercise price, tax handling, or issuance instructions before the agreement is signed.
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