Board Approval of Option Grant

The Company's Board of Directors must approve each grant of stock options. Often this will be done on a monthly basis depending on the Board’s meeting schedule, and offer letters should always say that the employee's options are "subject to Board approval."

This document is part of the Start-Up Forms Library provided by Orrick's Emerging Companies Group, which can be found at: http://www.orrick.com/practices/corporate/emerg...

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Company Name

Meeting of the Board of Directors

Meeting Address

Meeting Date

Pursuant to notice duly given to all directors of Company Name, a Delaware corporation (the “Company”), a meeting of the Company’s Board of Directors (the “Board”) was held at the above date and place at Start Time. The following directors were present in person or by telephone and constituted a quorum: [Director 1, Director 2 and Director 3]. Also present were Director Name 1, Director Name 2 and Director Name 3 of the Company and Name of Company Counsel of Orrick, Herrington & Sutcliffe LLP, as counsel to the Company, who kept the minutes of the meeting. 

  1. Issuance of Options

    After a general discussion, upon motion duly made and seconded, it was unanimously:

    Resolved: That each person whose name is set forth on Exhibit A attached hereto shall be granted an option (each an “Option” and collectively the “Options”) to purchase the number of shares of the Company’s Common Stock set forth opposite the name of such person on Exhibit A pursuant to the Company’s stock plan set forth opposite the name of such person on Exhibit A. 

    Current Valuation: 

    Resolved Further: That the Board has reviewed the written valuation report dated Written Valuation Report Date and has determined that $Per Share Value per share (the per share value reflected in the written valuation report) is the current fair market value of the Company’s Common Stock, which determination has been made in good faith, based on all of the relevant facts and circumstances as of the date hereof and taking into account, to the extent applicable, some or all of the following factors: the value of the Company's tangible and intangible assets, the present value of future expected cash-flows of the Company, the market value of the stock or other equity interests of similarly situated companies whose value can be readily determined through objective means, and other relevant factors such as control premiums or discounts for lack of marketability. 

    Resolved Further: That, unless otherwise set forth on Exhibit A, the exercise price for the Options shall be $__________ per share.] or

    Past Valuation: 

    Resolved Further: That the Board has reviewed the written valuation report dated [Date] and has determined, in good faith and based on all of the relevant facts andcircumstances as of the date hereof, that there have not been any changes that would materially affect the value of the Company since the written valuation report was previously reviewed and approved and, therefore, $__________ per share (the per share value reflected in the written valuation report) is hereby determined to be the fair market value of the Company’s Common Stock as of the date hereof. 

    Resolved Further: That, unless otherwise set forth on Exhibit A, the exercise price for the Options shall be $__________ per share.] or

    Board Determination of Value: 

    Whereas: The Board has considered the following factors in determining the fair market value of the Company’s Common Stock: 

    • the value of tangible and intangible assets of the Company;
       
    • the present value of future cash flows; 
       
    • the public trading price or private sale price of comparable companies; 
       
    • control premiums and discounts for lack of marketability; 
       
    • whether the method is used for other purposes; 
       
    • whether all available information is taken into account in determining value. 

    Whereas: In accordance with the above factors, the Board determined that the fair market value of the Company’s Common Stock is $__________ per share. 

    Now, Therefore, Be It Hereby Resolved: That based on the factors and the Board’s analysis detailed above, the fair market value of the Company’s Common Stock as of the date hereof is hereby determined to be $__________

    Resolved Further: That, unless otherwise set forth on Exhibit A, the exercise price for the Options shall be $__________ per share.] or

    Internal Valuation: 

    Whereas: The Board has determined that a formal valuation should be prepared by the Company considering the following factors in determining the fair market value of the Company’s Common Stock: 

    • the value of tangible and intangible assets of the company;
       
    • the present value of future cash flows; 
       
    • the public trading price or private sale price of comparable companies; 
       
    • control premiums and discounts for lack of marketability; 
       
    • whether the method is used for other purposes; and 
       
    • whether all available information is taken into account in determining value. 

    Now, Therefore, Be It Hereby Resolved: That within one month of the date hereof, Title or Name shall prepare a formal valuation of the fair market value of the Company’s Common Stock, based on the illiquid start-up presumption outlined in the tax regulations pursuant to Internal Revenue Code Section 409A (the “Formal Valuation”); 

    Resolved Further: That the fair market value of the Company’s Common Stock shall be the fair market value as determined by the Formal Valuation.] 

    Resolved Further: That, unless otherwise set forth on Exhibit A, each of the Options shall have a ten-year term and be exercisable at the rate of 25% of the shares on the 12-month anniversary of the Vesting Commencement Date, which shall be the date of this meeting (unless otherwise set forth on Exhibit A), and 1/48th of the shares shall vest and become exercisable on the same day of each month thereafter for so long as the recipient of the Option remains an employee of or consultant to the Company. 

    Resolved Further: That each of the Options, unless otherwise indicated on Exhibit A or unless and to the extent limited by applicable law, shall be an Incentive Stock Option under Section 422 of the Internal Revenue Code of 1986, as amended. 

    Resolved Further: That the grant of each Option shall be subject to compliance with applicable securities laws. 
     
  2. Omnibus Resolution

    Upon motion duly made and seconded it was unanimously:

    Resolved: That each of the officers of the Company is authorized and empowered to take such other actions and sign such other documents as may be necessary or advisable to carry out the intent and accomplish the purposes of the foregoing resolutions. 
     
  3. Future Meetings

    The Board scheduled the next meeting for Time and Date at Place
     
  4. Adjournment

    There being no further business, the meeting was adjourned.

Secretary of the Meeting Name, Secretary of the Meeting

Exhibit A

Stock Option Grants

Name ISO Shares NSO Shares Stock Plan & Vesting Schedule
Advisor Name _________ _________ Stock Plan Name   __________ shares vest on Vesting Date and 1/48th of total shares vest each month thereafter[, subject to ___% acceleration (single trigger) upon a Change of Control (as defined in the Plan) ] or [, subject to __ month(s) acceleration (double trigger) upon termination of Purchaser's Continuous Service Status (as defined in the Plan) within __ month(s) of a Change of Control (as defined in the Plan)].
       

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