Adjustments to Incentive Stock Options Clause Samples

The "Adjustments to Incentive Stock Options" clause defines how the terms of incentive stock options (ISOs) may be modified in response to certain corporate events, such as stock splits, mergers, or acquisitions. Typically, this clause outlines the procedures for adjusting the number of shares, exercise price, or other key terms of outstanding ISOs to ensure that option holders are neither unfairly advantaged nor disadvantaged by changes in the company’s capital structure. Its core practical function is to maintain the intended value and fairness of stock options for employees, while ensuring compliance with tax and regulatory requirements.
Adjustments to Incentive Stock Options. Any Option Agreement providing for the grant of Incentive Stock Options shall indicate that adjustments made pursuant to the Plan with respect to Incentive Stock Options could constitute a “modification” of such Incentive Stock Options (as that term is defined in Section 424(h) of the Code) or could cause adverse tax consequences for the holder of such Incentive Stock Options and that the holder should consult with his or her tax advisor regarding the consequences of such “modification” on his or her income tax treatment with respect to the Incentive Stock Option.
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Adjustments to Incentive Stock Options. For purposes of this Agreement, the number of Incentive Stock Options referenced herein shall be adjusted for stock splits or stock dividends, if any, as declared by the Board of Directors and approved by a majority of the shareholders of the Company as may be required by the Company's Articles of Incorporation and Bylaws.
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Related to Adjustments to Incentive Stock Options

  • Incentive Stock Options If the Shares are held for more than twelve (12) months after the date of the transfer of the Shares pursuant to the exercise of an ISO and are disposed of more than two (2) years after the Date of Grant, any gain realized on disposition of the Shares will be treated as long term capital gain for federal and California income tax purposes. If Shares purchased under an ISO are disposed of within the applicable one (1) year or two (2) year period, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price.