Example Labs option grant
Example Labs Inc. · sample stock option grant letter
A grant of 4,000 stock options under a company option plan. This is a sample written for CheckTOS to show how a read of an ESOP document works; Example Labs Inc. is not a real company.
Short clauses, but each leans on terms from a separate plan document and on financial terms like "right of first refusal".
Leave Example Labs and you have 90 days to pay for your vested options, or you lose them.
- Nothing vests for the first year; then a quarter vests, and the rest monthly over three years.Your options
- You cannot sell the shares until a listing or a sale of the company, unless the Board approves.Your money
- If Example Labs fires you for cause, every option goes, vested or not.Your options
- You pay all the tax, and Example Labs can hold shares back until tax is withheld.Your money
- If most shareholders sell the company, you must sell on the same terms.Your shares
What you are granted
An option to buy 4,000 shares at USD 1.20 each, under the Example Labs 2025 Stock Option Plan, granted on 1 October 2026.
"Example Labs Inc. (the "Company") grants you an option to buy 4,000 shares of the Company’s common stock at an exercise price of USD 1.20 per share, under the Example Labs 2025 Stock Option Plan (the "Plan")."Section 1 · Grant
Not reached: the Plan itself was not provided with the letter.
Vesting
A quarter vests after one year, then the rest monthly over 36 months, while you stay. If Example Labs is bought and you are let go without cause within a year, half your unvested options vest at once.
"25% vests on the first anniversary of the grant date, and the rest vests in equal monthly instalments over the following 36 months, as long as you remain in continuous service."Section 2 · Vesting
"If the Company is acquired and your employment is terminated without cause within 12 months after the acquisition, 50% of your unvested options will vest immediately."Section 2 · Vesting
Exercising
You can buy vested shares any time within 10 years of the grant by sending a notice and paying in full. A cashless exercise needs the Board’s agreement.
"You may exercise vested options at any time before the option expires, by submitting an exercise notice and paying the exercise price in full."Section 3 · Exercise
"The Board may, at its discretion, permit a cashless exercise."Section 3 · Exercise
When you leave
Unvested options end on your last day. Vested options must be bought within 90 days, or they lapse. If you leave for cause, everything lapses at once.
"If your service ends for any reason other than cause, you may exercise vested options within 90 days after your last day of service."Section 4 · Leaving the Company
"If your service ends for cause, all options, vested and unvested, lapse immediately."Section 4 · Leaving the Company
The letter does not define "cause".
Selling and getting paid
You cannot sell until a listing or a sale of the company, unless the Board agrees in writing. Example Labs gets first refusal on any sale, and you must sell alongside a majority sale.
"Shares may not be sold or transferred until the Company completes an initial public offering or a sale, except with the Board’s written approval."Section 5 · Transfer and sale
"If holders of a majority of the Company’s shares agree to sell the Company, you must sell your shares on the same terms."Section 5 · Transfer and sale
Tax and costs the documents name
Every tax on the grant, vesting, exercise or sale is yours. Example Labs can withhold tax before it issues shares.
"You are responsible for all taxes arising from the grant, vesting, exercise or sale of the option or shares."Section 6 · Tax
The letter names no tax amounts. CheckTOS does not estimate tax.
What the company can change
The Board can amend or end the Plan, but cannot cut your rights under this option without your consent. It adjusts share numbers and price after splits or mergers as it considers fair.
"The Board may amend or terminate the Plan at any time, but no amendment may reduce your rights under this option without your consent."Section 7 · Changes to the Plan
"In the event of a stock split, merger or similar change, the Board will adjust the number of shares and the exercise price as it considers fair."Section 7 · Changes to the Plan
Disputes and governing law
Delaware law applies, and disputes go to binding arbitration in San Francisco.
"Any dispute will be resolved by binding arbitration in San Francisco, California."Section 8 · Law and disputes
Structure summary
We quote each item below and name its place in the documents.
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How to reach them
Taken from the documents and sorted by what you need.
Caveats
This breakdown explains what a sample esop document says. The document and Example Labs Inc. are fictional, written for CheckTOS to show how a read works. It is not legal advice, does not assess whether any clause would hold up, and does not judge anyone. Every quote is word for word from the sample document. Read on 30 September 2026.
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