Equity Incentive (Stock Option) Plan Template

1. Purpose

Provide equity-based incentives to attract, retain, and motivate employees, directors, and consultants of [Company Name].

2. Definitions

• Board: Board of Directors of the Company.
• Committee: Compensation committee or board acting to administer plan.
• Eligible Individuals: Employees, directors, consultants.
• Fair Market Value: Defined per plan (e.g., last 409A valuation or closing market price).
• Option: Nonstatutory or incentive stock option granted under plan.

3. Shares Reserved

• Total shares available: [Number] shares of [Common Stock].
• Adjustments for stock splits, recapitalizations, etc.
• Share recycling rules for forfeited or expired awards.

4. Administration

• Committee authority to interpret plan, select participants, set terms.
• Committee may delegate to officers for non-executive grants within limits.

5. Eligibility

• Eligibility criteria for employees, directors, consultants.
• Incentive stock options limited to employees (per IRC §422).

6. Option Terms

• Grant date and exercise price (not less than Fair Market Value for ISO).
• Vesting schedule (e.g., 4-year vest with 1-year cliff).
• Exercise period: [Number] years from grant.
• Termination provisions: 90-day post-termination exercise, disability, death.
• Non-transferability except by will or laws of descent and distribution.

7. Exercise of Options

• Payment methods: cash, check, cashless exercise, net settlement, promissory note (if permitted).
• Withholding taxes obligations.
• Issuance of shares subject to compliance with laws and company policies.

8. Adjustments for Corporate Events

• Provisions for stock splits, mergers, recapitalizations.
• Assumption, substitution, or acceleration upon change in control.

9. Term of Plan

• Plan effective upon board and shareholder approval.
• Plan terminates on [10th] anniversary unless earlier terminated or extended.

10. Amendment and Termination

• Board may amend, suspend, or terminate plan; shareholder approval required for material amendments affecting share pool or exercise price.
• No adverse effect on outstanding awards without participant consent.

11. Compliance with Laws

• Plan intended to comply with Section 409A, securities laws, and other applicable regulations.
• Options conditioned on execution of option agreements and investment representations.

12. Miscellaneous

• Governing law: [State].
• No right to continued service.
• Clawback policy compliance.

Exhibits

• Exhibit A: Form of Stock Option Grant Notice
• Exhibit B: Option Agreement (ISOs and NSOs)
• Exhibit C: Exercise Notice

Customize share numbers, vesting, and compliance provisions to align with company’s corporate governance and regulatory requirements.