Vesting; Limits on Exercise; Incentive Stock Option Status Clause Samples

This clause defines the rules governing when and how stock options granted to employees or other recipients become exercisable (vesting), sets boundaries on the exercise of those options, and addresses whether the options qualify as incentive stock options (ISOs) under tax law. Typically, vesting schedules require recipients to remain with the company for a certain period before they can exercise their options, and there may be restrictions on the timing or amount of options that can be exercised. The clause also clarifies whether the options meet the requirements for favorable tax treatment as ISOs. Its core function is to ensure that option grants are structured to incentivize continued service, comply with legal requirements, and manage the tax implications for both the company and the option holder.