Generate a comprehensive stock option grant agreement with ISO or NSO support, custom vesting schedules, early exercise provisions, change of control acceleration, and full tax compliance language. Built for startups granting equity to employees, advisors, and consultants.
I built this stock option grant agreement generator to help startups and growing companies properly document equity grants to their team members. Stock options are the cornerstone of startup compensation, allowing companies to attract and retain top talent by offering ownership stakes without immediate cash outlay. However, improperly drafted option agreements can create serious tax liabilities for both the company and the option holder, violate securities laws, or fail to protect the company's interests during critical events like acquisitions.
This generator produces a comprehensive stock option grant agreement that addresses all the critical provisions: proper ISO and NSO classification with the correct tax language for each, customizable vesting schedules with cliff and monthly vesting calculations, early exercise rights with 83(b) election provisions, detailed exercise procedures, post-termination exercise windows, and change of control acceleration triggers. The document includes securities law compliance language covering Rule 144 restrictions, accredited investor representations, and company repurchase rights that are essential for private company stock.
Every field updates the live preview instantly, so you can see exactly how your agreement will look before downloading. The generator dynamically adjusts the tax consequences section based on whether you select ISO or NSO, includes a vesting schedule table showing projected vesting dates and cumulative share counts, and conditionally includes early exercise and acceleration provisions based on your selections. Whether you are granting options under a formal equity incentive plan or as a standalone grant, this tool generates a professional document that protects both the company and the option holder.
Key features include: ISO vs NSO selection with automatic tax language adjustment, 409A valuation compliance references, customizable vesting schedules with cliff periods, early exercise with 83(b) election provisions, single-trigger and double-trigger acceleration on change of control, detailed exercise procedures with multiple payment methods, comprehensive securities law compliance sections, company repurchase rights for unvested shares, and drag-along provisions for corporate transactions.
Incentive Stock Options (ISOs) are available only to employees and offer favorable tax treatment if holding period requirements are met. The gain is taxed at long-term capital gains rates upon sale, though the spread at exercise may trigger AMT. Non-Qualified Stock Options (NSOs) can be granted to anyone and the spread at exercise is taxed as ordinary income.
The most common vesting schedule is a 4-year total period with a 1-year cliff. No shares vest during the first 12 months; then 25% vest at the cliff, and the remaining 75% vest monthly over the next 36 months. Some companies use 3-year schedules or custom arrangements for senior hires.
An 83(b) election lets you pay taxes on stock value at exercise rather than at vesting. This is valuable for early-stage employees who early-exercise options when stock value is low. The election must be filed with the IRS within 30 days of exercise, and missing this deadline cannot be corrected.
Unvested options are forfeited upon termination. Vested options typically have a 90-day post-termination exercise window. For ISOs, you must exercise within 3 months to maintain favorable tax treatment. Termination for cause usually results in immediate forfeiture of all options.
Single-trigger acceleration vests all unvested options upon a Change of Control. Double-trigger requires both a Change of Control and subsequent termination without cause or resignation for good reason within a specified period. Double-trigger is more common and preferred by acquirers.
The exercise price must be at or above fair market value on the grant date. Private companies determine FMV through a 409A valuation, which should be updated annually or after material events. Setting the price below FMV triggers Section 409A penalties including a 20% additional tax.