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An Option Plan, also known as an Employee Stock Option Plan (ESOP), defines how employees or other stakeholders can become owners of something in the future. Here you’ll find the legal elaboration of that in the form of Terms. These Terms are intentionally kept general and flexible so they apply to a wide variety of organizations and situations. For example, one clause states: “The Issuer determines, at its sole discretion, whether, when, and to whom Options are granted.” In practice, your organization can give this its own interpretation, often without needing to modify these Terms.

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The Terms

These Terms consist of seven Articles:
  • Definitions, explanation of defined terms
  • Grant, how, when, and to whom options are granted
  • Exercise, when and how options may be exercised
  • Cancellation, circumstances under which options lapse
  • Transfer, rules regarding the transfer or succession of options
  • Special events, what happens in case of reorganisation, sale, or other extraordinary situations
  • Miscellaneous, general provisions on language, communication, governing law, and interpretation