“This offer includes a proposaed grant of a stock option to purchase 35,000 shares of company Common Stock. This grant is subject to approval by the Board of Directors. Your stock option will be granted at an exercise price equal to fair market value on the date of grant, with such date of grant generally being the first meeting date of the Board of Directors after your start date. It will have a term of seven years, and vest as to one-fourth of the shares after your first full year of employment and 1/36th of the remaining shares each onth for 36 months thereafter, subject to continued employment. Options cease to vest upon termination of employment for any reason, and shares then vested can only be exercised for three months following such termination”.

1. You may see some value in the options even before an IPO, assuming the option plan calls for any type of independent valuation. Barring that, you would like have to wait for the IPO or for some type of corporate transaction.

2. The Company may in fact have a repurchase clause attached to the grant, so even if you exercise your right to exercise vested options, the Company can buy them back (perhaps even at the price you paid) and there’s nothing legally you can do about it.

3. Pursuant to #1, if you feel you are in a position of power in your negotiation, you can always ask for accelerated vesting in the even of a Corporate transaction. Many companies will consider this, especially for important hires.

4. Kurt is correct about the dilution and overhang, but for the majority of people, there is not much that can be done. For Senior level hires or critical talent, consider getting your employment agreement to discuss options in percentage terms of ownership which can be adjusted as the outstanding options change.

Hope this is helpful.