1. (a) There is hereby exempted from the provisions of Section 25110 of the Code as not being comprehended within the purposes of the Corporate Securities Law of 1968 and the qualification of which is not necessary or appropriate in the public interest or for the protection of investors, any offer or sale of incentive stock options as defined in, and complying with all terms of, the United States Internal Revenue Code of 1986, if

   1. (1) the company issuing such options is the issuer of any security registered under Section 12 of the Securities Exchange Act of 1934, (15 USC 781), and
   2. (2) the total number of shares of stock of the company subject to such incentive stock options (and all other employee stock options outstanding), does not exceed 10% of the outstanding shares of the same class of the company (excluding all shares subject to promotional waivers) and (3) options granted prior to shareholder approval are by their terms not exercisable until shareholder approval has been obtained and are void if shareholder approval is not obtained within the time prescribed by the Internal Revenue Code of 1986.

2. (b) There is hereby exempted from the provisions of Section 25120 of the Code as not being comprehended within the purposes of the Corporate Securities Law of 1968 and the qualification of which is not necessary or appropriate in the public interest or for the protection of investors, any offer or sale of incentive stock options as a result of the amendment of outstanding options to conform to the requirements for incentive stock options, as defined in the United States Internal Revenue Code of 1986, provided one of the following applies:

   1. (1) The outstanding options were qualified under Section 25110 of the Code.
   2. (2) The transaction conforms to the requirements of subsections (1), (2) and (3) of subsection (a).
   3. (3) The transaction conforms to the requirements of subsections (1) and (3) of subsection (a) and, at the time the options were issued, that transaction conformed to the limitation in subsection (2) of subsection (a).

Note: Authority cited: Sections 25105 and 25610, Corporations Code. Reference: Section 25105, Corporations Code.

History

1. New section filed 5-14-69; effective thirtieth day thereafter (Register 69, No. 20).

2. Amendment filed 10-20-83; effective thirtieth day thereafter (Register 83, No. 43).

3. Change without regulatory effect amending subsections (a), (a)(3) and (b) filed 9-25-2002 pursuant to section 100, title 1, California Code of Regulations (Register 2002, No. 39).