What happens to options on an Exit Event?

If you’re using the Vestd option agreements, you’ll see that “Exit Event” is a defined term that covers Share Sales, Asset Sales and full and partial Listings. In case your company goes through an Exit Event while your option agreements are in force, it's important to be aware of the implications. 

Under the terms of the agreement, option holders may be able to exercise any vested options (possibly including any options that have received accelerated vesting) when an Exit Event occurs.

If the terms of the option agreement state that the option holder isn’t able to exercise all of their options, then the unexercised options will immediately lapse following the completion of the Exit Event. 

If you have an EMI agreement that’s already in force and make changes to it, there’s a risk that HMRC will see this as a material amendment to the commercial terms of the agreement and therefore withdraw the EMI tax benefit. For more information, read our FAQ on what is a material change

You may want to incentivise employees to stay with the company after they leave and have exercised their options. In this case, you could enter into a contract with them, or include terms in the subscription agreement or other such documents, about how and when they can dispose of their shares.


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