The Board Approval of Stock Option Grant is one of a group of documents that formally chronicles the approval of a “resolution” by your startup’s board of directors. A resolution is a decision or objective that has been voted on (and was agreed to) by your startup’s board members. The process of formal documentation is generally reserved for important or significant resolutions – examples of this sort are the approval of a Restricted Stock Award, and the issuance of stock options to a given individual. Many less-impactful decisions involving your startup will be discussed and voted on by board members (replacing a non-critical vendor or changing the appearance of your employees’ uniforms might qualify), however – while these should always be recorded – they do not require formal documentation.
The Board Approval of Stock Option Grant allows your startup’s board of directors (per share value of your startup’s Common Stock having been determined) to transfer incentive stock options to one or more optionee(s) named in the document. It is your board’s prerogative to determine the number of shares of Common Stock each optionee will be entitled to purchase if and when the options are exercised. The Board Approval of Stock Option Grant generated by SmackDocs specifies an exercise price per share equal to the Common Stock valuation (or 110% of this amount should an optionee hold at least 10% of your startup’s outstanding common shares). Options in the SmackDocs version of this agreement have a 10-year (maximum) term, and are exercisable over a four-year period (48 months) with an initial 12-month vesting cliff.