STOCK OPTION AGREEMENT
Note: This template grants a stock option to an individual under a company stock plan. It supports both option types. An Incentive Stock Option (ISO) is the tax-advantaged form available only to employees and only if the requirements of Internal Revenue Code Section 422 are met. A Nonstatutory Stock Option (NSO) has no statutory limits and is used for contractors, advisors, non-employee directors, and for grants that exceed the ISO limits. Choose the type in Section 2 before completing anything else. Complete every yellow field and complete Exhibit A.
Note: This Agreement assumes the Company has adopted a written stock plan approved by its stockholders. Section 422(b)(1) requires an ISO to be granted under a plan that states the aggregate number of shares issuable and the class of employees eligible, and that was approved by stockholders within 12 months before or after adoption. An option granted without that plan cannot be an ISO.
This Stock Option Agreement (this "Agreement") is entered into as of [grant date] by and between [full legal name of the company], a [state of incorporation of the company] corporation (the "Company"), and [full name of the optionee] (the "Optionee").
RECITALS
WHEREAS, the Company maintains the [name of the stock plan] (the "Plan"), which has been approved by the stockholders of the Company; and
WHEREAS, the Company desires to grant to the Optionee an option to purchase shares of its common stock on the terms set forth in this Agreement and in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants set forth below, the parties agree as follows:
1. GRANT OF OPTION
1.1 The Company hereby grants to the Optionee, effective as of the Grant Date, an option (the "Option") to purchase [number of option shares] shares of the Company's common stock (the "Shares") at the Exercise Price set forth in Section 3, subject to the terms of this Agreement and the Plan. In the event of any conflict between this Agreement and the Plan, the Plan controls. Capitalized terms used but not defined in this Agreement have the meanings given in the Plan. "Code" means the Internal Revenue Code of 1986, as amended. References to a "parent" or "subsidiary" corporation mean a parent corporation or subsidiary corporation within the meaning of Sections 424(e) and 424(f) of the Code, and "fair market value" means the fair market value of a Share as determined by the Company's Board of Directors (or its authorized committee) in accordance with the Plan and Section 409A of the Code.
2. TYPE OF OPTION
The Option is designated in Exhibit A, Part 1, as either an incentive stock option (Option A) or a nonstatutory stock option (Option B). Only the alternative so designated applies, and Sections 2.1, 2.2, 9.1 and 9.2 apply only if the Option is designated an incentive stock option.
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