Option Grant Agreement Template

What’s Included

This Option Grant Agreement Template contains comprehensive provisions governing the grant of stock options to employees, consultants, or other service providers. Key sections include the Grant of Option, Exercise Price, Vesting Schedule, Term and Expiration, and Conditions to Exercise. The template also addresses important legal concepts such as non-transferability of options, adjustment mechanisms for stock splits or corporate events, and termination conditions affecting option rights.

Additionally, the agreement covers representations and warranties by the optionee, compliance with securities laws, and provisions for withholding taxes. Detailed clauses outline the mechanics of option exercise, including procedures for notice and payment, as well as remedies for breach. This template ensures clarity and legal enforceability in the grant and administration of equity compensation.

Who This Template Is For

This template is designed for startup founders, corporate counsel, human resources professionals, and legal advisors involved in structuring equity compensation plans. It is particularly useful for companies issuing stock options as incentives to employees, consultants, or directors, as well as for attorneys drafting or reviewing equity award agreements to ensure compliance with relevant securities regulations and corporate governance standards.

How to Use

To customize this Option Grant Agreement, first review the standard terms to ensure alignment with your company’s equity compensation plan and corporate policies. Update specific information such as the optionee’s name, grant date, number of shares, exercise price, and vesting schedule to reflect the agreed-upon terms. Pay special attention to the governing law provision and any references to the company’s stock plan documents, ensuring these correspond to your jurisdiction and internal policies.

Next, verify that all placeholders related to tax withholding, transfer restrictions, and termination scenarios are accurately tailored to your situation. Consider adding or modifying clauses that address unique circumstances, such as acceleration of vesting upon change of control or post-termination exercise periods. Finally, have the document reviewed by legal counsel to confirm compliance with applicable securities laws and corporate governance requirements before execution.

Customize with LexDraft

Leverage LexDraft AI to automatically generate a fully tailored Option Grant Agreement directly within Microsoft Word. By inputting key transaction details and company information, LexDraft’s intelligent drafting engine produces precise legal language that reflects current best practices and jurisdiction-specific requirements. This streamlines the creation process, reduces manual drafting errors, and ensures your equity compensation agreements maintain professional rigor and legal validity.