You would typically utilize the 'Lapse' function if any employee were to leave the company and you do not wish for them to retain a portion of (or all) the allocated options. See here for more information on 'What Happens if an Employee Leaves the Company'.
There are 2 methods for Lapsing the Options. Regardless of which method you choose, any lapsed options will be put back into the unallocated pool of options to be issued through a new offer. Options can only be lapsed by a user with Edit or Admin access to the company account on Cake.
You can Lapse the Options based on your vesting rules:
Full Offer: This option entails the expiration of all vested and unvested shares, including those that have already vested.
Time-Based: With this option, you have the flexibility to choose the date when vesting will cease. Typically, this corresponds to the date an employee departs from the company.
Milestone: This choice allows for the specific expiration of shares tied to particular milestone achievements.
Method 1:
Click 'Equity Plans' and then 'Options/Stock Options' from the left main menu.
Click 'View pool' on the relevant option pool.
Find the option holder from the 'Offer' list, whose options you would like to exercise.
On the left side, you will see different icons for each activity. (from left to right Duplicate offer, Pause Auto-vesting, Vest Options, Lapse vesting, and delete offer)
Select the Lapse vesting icon.
Choose from the prompts to Lapse options as: Full offer, Time based or Milestone based depending on how you wish to handle the options. This often depends on what has been outlined in the Plan Rules.
Enter the Lapse date and for Time based lapsing, the system will calculate how many options will be lapsed based on the unvested number of options as at the Lapse date. You can also 'accelerate' the vesting if you wish for an additional portion of their unvested options to vest as at the Lapse date.
Click Lapse.
Method 2:
Click 'Cap Table from the main menu and then 'Options Holders'.
Click 'More' in the top right corner.
Select 'Lapse' from the dropdown menu.
Search for the relevant Option holder and Pool
Choose from the prompts to Lapse options as: Full offer, Time based or Milestone based depending on how you wish to handle the options. This often depends on what has been outlined in the Plan Rules.
Enter the Lapse date and for Time based lapsing, the system will calculate how many options will be lapsed based on the unvested number of options as at the Lapse date. You can also 'accelerate' the vesting if you wish for an additional portion of their unvested options to vest as at the Lapse date.
Click 'Lapse'.