Employee Stock Ownership Plan
(Private Company)

Summary

This template is an employee stock ownership plan (ESOP) for a U.S. privately held company that provides beneficial equity interests to its employees in a tax-qualified defined contribution account. The template contains practical guidance, drafting notes, and alternate and optional clauses. The template identifies certain plan features required for an ESOP sponsored by S Corporations and C Corporations, which have similar but not identical plan document and operational requirements. It also reflects optional features not required under the Internal Revenue Code or the Employee Retirement Income Security Act (ERISA). The template assumes that the ESOP will be leveraged, that is, an acquisition loan will be outstanding, but also sets forth language that applies where an acquisition loan is not outstanding and employer contributions are either made in the form of company stock, or in cash for the purchase of company stock, to allocate to participant accounts. For a full listing of key content that can be used by in-house counsel to develop, revise, and implement a company's employee and third-party-related policies, see In-House Company Policies Resource Kit. For an ESOP document for a publicly-held company, see Employee Stock Ownership Plan (Public Company). For more information on ESOPs, see Employee Stock Ownership Plan Design and Compliance and Employee Stock Ownership Plans in Corporate Transactions. For materials relating to retirement plans holding employer securities for investment, see Employer Securities in Retirement Plans Resource Kit. For a full listing of key content covering 401(k) and other defined contribution plan compliance, see 401(k) and Other Defined Contribution Plan Compliance Resource Kit. Following are a few ESOP documents that have been filed with the SEC by publicly reporting companies: • BankPlus Corporation Employee Stock Ownership Plan (with 401(k) Provisions) • Eastern Bank Employee Stock Ownership Plan • Form of Newton Federal Bank Employee Stock Ownership Plan • Trinity Capital Corporation Employee Stock Ownership Plan and Trust