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.