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Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice
A modern equity incentive plan (ISOs + NSOs + restricted stock), a fill-in option grant notice with 4-year/1-year-cliff vesting, and an optional early-exercise election with 83(b).
What is an Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice?
An Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice is a modern equity incentive plan (ISOs + NSOs + restricted stock), a fill-in option grant notice with 4-year/1-year-cliff vesting, and an optional early-exercise election with 83(b).
Companies ready to grant equity to employees, advisors, and contractors. It combines the umbrella plan, the individual grant notice, and, if you allow it, the early-exercise mechanics, with clear 83(b) guidance under the current electronic-filing rules.
Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice template, current for 2026
409A fair-market-value discipline, ISO vs. NSO auto-selection, early-exercise with an integrated 83(b) reminder reflecting IRS acceptance of electronic 83(b) filing (Form 15620, e-filing accepted since 2025), extended post-termination exercise option, and contractor/ABC-test-aware eligibility language.
How HDAi does this differently
Unlike a static form, HDAi runs a guided interview and assembles your Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice as you answer. When you want it finished, a licensed Hart David Carson attorney reviews it and tailors it to your facts before you sign. The interview and the first draft are automated. The judgment belongs to an attorney.
What you’ll be asked
A short interview in plain language that asks only what this document needs.
- What is the full legal name of the company adopting the Plan? This is the corporation whose stock will be issued under the Plan and granted in the option.
- In which U.S. state is the Company incorporated? Corporate law and the plan's governing law follow the state of incorporation.
- What type of entity is the Company? ISOs require a corporation; S-corp status affects how many/what class of shares may be issued.
- What should the Plan be called? The formal title used throughout the plan document and grant paperwork.
- On what date did (or will) the Board adopt the Plan? The Board-adoption date starts the 10-year clock for ISO grants and other plan deadlines.
- On what date did (or will) the stockholders approve the Plan? Stockholder approval within 12 months of Board adoption is required for ISOs and for the Rule 701 exemption to apply cleanly.
- How many shares of common stock are reserved for issuance under the Plan? This is the total pool available for all awards; it caps how much equity the Company can grant.
- Should the share reserve automatically increase each year (an 'evergreen' provision)? Evergreens auto-refill the pool but dilute stockholders over time; many early-stage boards prefer a fixed reserve.
- If evergreen, what annual increase (as a % of outstanding shares)? A common range is 3% to 5% of fully diluted shares outstanding, added on the first day of each fiscal year.
- Who will administer the Plan? Early-stage companies usually let the full Board administer; later a Compensation Committee takes over.
- Which award types should the Plan authorize? ISOs get favorable tax treatment for employees, NSOs can go to anyone, and restricted stock and RSUs are direct share awards.
- Set the maximum ISO shares issuable under the Plan. The Code requires the plan to state the maximum number of shares issuable as ISOs; setting it to the full reserve is simplest.
- If a separate ISO sublimit, how many shares? This caps only ISO issuances; remaining pool shares can still be used for NSOs and other awards.
- Will ISOs be granted to employees of the Company's parent or subsidiary corporations as well as the Company itself? ISOs may be granted only to employees of the Company or of a parent or subsidiary corporation under Section 424 of the Code. Confirm here so eligibility language covers your corporate group.
- Should all Awards be subject to the Company's compensation-recovery (clawback) policy and applicable exchange listing standards? A Rule 10D-1 / listing-standard clawback hook is now standard and is required if the Company later lists on a national exchange. Recommended to include even for private companies so no re-papering is needed at IPO.
- What is the full name of the person receiving this option grant? The optionee is the individual the grant notice is issued to.
- What is the optionee's relationship to the Company? Only employees may receive ISOs; the relationship also drives the service-provider definitions and tax treatment.
- Is this grant an Incentive Stock Option or a Nonstatutory Stock Option? ISOs offer capital-gains treatment but only for employees and within Code limits; NSOs are more flexible.
- What is the grant date of this option? The grant date fixes the exercise price (fair market value that day) and starts the option term.
- How many shares are subject to this option? The total number of shares the optionee may purchase if fully vested.
- What is the per-share exercise price? Must be at least fair market value on the grant date (110% of FMV for a 10%+ owner receiving an ISO) to avoid tax penalties under 409A/422.
- What is the vesting commencement date? Vesting is measured from this date, which is often the optionee's start date rather than the grant date.
- Which vesting schedule applies? The market-standard schedule vests 25% at the 1-year cliff, then 1/48th monthly. Choose custom to describe a different schedule.
- If custom, describe the full vesting schedule. Spell out cliff, increments, and timing so the grant notice is unambiguous.
- What is the maximum option term, in years? ISOs may not exceed 10 years (5 years for a 10%+ owner). Ten years is standard.
- May the optionee early-exercise (buy unvested shares now, subject to repurchase)? Early exercise lets the optionee start capital-gains holding and file an 83(b) election early; unvested shares are subject to Company repurchase at cost if service ends.
- How many days after service ends may a vested option be exercised (general case)? 90 days is standard and preserves ISO status; death/disability typically get a longer window (often 12 months).
- Should the Company keep a right of first refusal on shares acquired under the Plan? An ROFR lets the Company or its assignee match any third-party offer before a holder sells private shares.
- Should vesting accelerate on a change of control? Double-trigger is most common and most acquirer-friendly; single-trigger is more employee-favorable.
- If acceleration applies, what percentage of then-unvested shares accelerate? Often 100% of unvested shares, but partial acceleration (e.g., 50%) is sometimes negotiated.
- If acceleration is tied to a change of control, should a 280G 'better-of net' cutback apply? A better-of cutback reduces change-of-control payments to just under the 280G threshold only if that leaves the Participant better off after excise tax; it protects the Company's deduction and the Participant from a 20% excise tax without a costly gross-up.
- If RSUs are authorized, should they carry dividend equivalents? Dividend equivalents credit RSU holders with the value of dividends paid on the underlying shares, paid only if and when the RSUs vest and settle (never accrued on forfeited units).
- Who signs the grant notice on behalf of the Company? An authorized officer (e.g., CEO or Secretary) executes the grant on the Company's behalf.
- What is that signatory's title? Confirms the person has authority to bind the Company.
- Which state's law governs the Plan and the grant documents? Usually the state of incorporation; this controls interpretation and enforcement.
- What is the Company's address for notices? Where legal notices under the documents must be delivered.
Frequently asked
About the Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice and how HDAi works.
What is an Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice? +
An Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice is a modern equity incentive plan (ISOs + NSOs + restricted stock), a fill-in option grant notice with 4-year/1-year-cliff vesting, and an optional early-exercise election with 83(b). Companies ready to grant equity to employees, advisors, and contractors turn to it, and it combines the umbrella plan, the individual grant notice, and, if you allow it, the early-exercise mechanics, with clear 83(b) guidance under the current electronic-filing rules.
Is HDAi's Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice legally binding? +
Yes. Once it is completed, reviewed, and properly signed, the professionally drafted Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice HDAi generates is binding. A licensed Hart David Carson attorney can finish it for you after a planning call. The firm's flat-fee packages, the Illinois Family Plan and Company Launch, cover the most common needs, and for any other draft an Illinois attorney will tell you on the call what finishing it would involve.
Do I need a lawyer to use this Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice? +
You can generate and download the Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice in minutes, free of charge. A licensed Hart David Carson attorney can then review it and tailor it to your facts before you sign, which is the part no template can do.
What makes this Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice current for 2026? +
409A fair-market-value discipline, ISO vs. NSO auto-selection, early-exercise with an integrated 83(b) reminder reflecting IRS acceptance of electronic 83(b) filing (Form 15620, e-filing accepted since 2025), extended post-termination exercise option, and contractor/ABC-test-aware eligibility language.
How long does the Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice take? +
Estimated time about 18 min (36 questions), depending on how much you already know. The document assembles as you answer. Export it as PDF or Word, or send it to a Hart David Carson attorney for review.
Does this Equity Incentive Plan + Stock Option Grant + Early-Exercise Notice work in my state? +
HDAi's interview is state-aware. If you ask an attorney to finish the draft, a licensed Hart David Carson attorney confirms it against your state's requirements before you rely on it. Validity and required formalities vary by state.
Fundraising & Equity
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