A Stock Incentive Agreement is an agreement between an employee and a company
whereby the employee is compensated for their services with shares in the company.
Upon adequate performance by the employee, the company provides the employee with
a pre-determined amount of shares. Additionally, this agreement provides a non-
competition and non-solicitation clause which prevents the employee from directly
competing with the company. This agreement can be used by small businesses or
other entities that want to provide stock incentives to employees.
STOCK INCENTIVE AGREEMENT
This Stock Incentive Agreement (this “Agreement”) is hereby made and entered into on
this __________ day of __________, _____ by and between _____________________________
(“Company”) and __________________ (“Employee”).
WHEREAS, Company is in the business of ___________________________ [BRIEF
DESCRIPTION OF COMPANY’S ACTIVITIES];
WHEREAS, Company is desirous to provide stock purchase incentives to Employee in
respect of Employee’s performance and future performance as an employee of Company; and
WHEREAS, Employee is desirous to provide services to Company.
NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein, Company and Employee hereby acknowledge and agree as follows:
1.00 PERFORMANCE BY EMPLOYEE
1.01 Employee hereby acknowledges and agrees that he/she will use all of his/her reasonable
best efforts in the performing, executing, and carrying out Employee’s duties and responsibilities
throughout Employee’s continuous employment with Company to enhance, improve, and
otherwise increase the profitability of Company.
1.02 Employee shall fulfill and of his/her responsibilities as set forth and required by
Company and shall be under the supervision and direction of Company’s Board of Directors.
Employee hereby agrees that he/she shall carry out his/her responsibilities and duties in a
professional, quality, and skillful manner and shall devote as much of his/her time and attention
and services to Company as reasonably requested or required by Company.
1.03 Employee hereby acknowledges and agrees that he/she shall not at any time or times seek
or become employed or engage in any business endeavor that may be deemed in direct
competition with Company, while Employee is employed by Company.
2.00 STOCK INCENTIVE
2.01 Company hereby acknowledges and agrees that it shall provide to Employee __________
[AMOUNT IN WORDS] (___ [AMOUNT IN NUMERALS]) shares (the “Shares”) in the
capital stock of Company in respect of Employee’s performance and service to Company.
2.02 Employee shall be entitled to all rights and privileges associated with the Shares issued to
Employee by Company, which may include voting rights and the eligibility to receive dividends
2.03 In the event Employee terminates his/her employment with Company for any reason
whatsoever, prior to the first anniversary of this Agreement, ________ (___) of the Shares issued
to Employee by Company pursuant to this Agreement shall be forfeited back to Company.
2.04 In the event Employee terminates his/her employment with Company after the first
anniversary of the Agreement, __________ [AMOUNT IN WORDS] (___ [AMOUNT IN
NUMERALS]) of the Shares shall be forfeited to Company.
2.05 In the event Employee terminates his/her employment with the Company after
__________ [AMOUNT IN WORDS] (___ [AMOUNT IN NUMERALS]) years from the date
of this Agreement but before __________ [AMOUNT IN WORDS] (___ [AMOUNT IN
NUMERALS]) years from the date of this Agreement, __________ [AMOUNT IN WORDS]
(___ [AMOUNT IN NUMERALS]) of the Shares shall be forfeited to Company.
2.06 In the event that forfeiture would result in the creation of fractional shares, the number of
shares to be forfeited shall be rounded to the nearest whole number.
2.07 Any and all shares issued to Employee pursuant to this Agreement shall be adjusted to
preserve the value of the bonus in the event of a stock dividend, stock split, reverse stock split,
recapitalization, merger, consolidation, reorganization, cash or property dividend, exchange of
shares, repurchase of shares, or any other change in corporate structure of or by Company that in
any such event materially affects the outstanding shares in the capital stock of Company.
[OPTIONAL CLAUSE: All stock distributed under this Agreement shall be subject to the
Shareholders Agreement, a copy of which is attached hereto as Exhibit “A.”]
3.00 NON-COMPETITION AND NON-SOLICITATION
3.01 Employee hereby acknowledges and agrees with Company as follows:
(i) Employee shall not, for a period of __________ [AMOUNT IN WORDS] (___
[AMOUNT IN NUMERALS]) years from the date of this Agreement, or for a
period of __________ [AMOUNT IN