I'm looking for some general information on the use of option plans by LLCs. This type of plan would grant an employee the right to purchase a membership interest in the LLC. Does anyone know of a good website or article that addresses the major issues associated with these arrangements? Thanks.

You might check www.mystockoptions.com. The more detailed explanations require a payment for membership.

I don't think option programs are available to LLC's and other non incorporated entities.

However, why not create a membership interest buy-in formula or structure as a part of the LLC operation agreement.

There is no reason why you can't add forfeiture clauses, vesting clauses, etc as part of tht formula or structure.

Although not as common as your typical stock option program, these types of arrangements do exist. They present some interesting tax issues that are not applicable to stock option plans. Let me know if you are interested in seeing some articles.