Common use of Certain Exceptions Clause in Contracts

Certain Exceptions. (1) A call op- tion is not treated as a second class of stock for purposes of this paragraph (l) if it is issued to a person that is ac- tively and regularly engaged in the business of lending and issued in con- nection with a commercially reason- able loan to the corporation. This para- graph (l)(4)(iii)(B)(1) continues to apply if the call option is transferred with the loan (or if a portion of the call op- tion is transferred with a cor- responding portion of the loan). How- ever, if the call option is transferred without a corresponding portion of the loan, this paragraph (l)(4)(iii)(B)(1) ceases to apply. Upon that transfer, the call option is tested under paragraph (l)(4)(iii)(A) (notwithstanding anything in that paragraph to the contrary) if, but for this paragraph, the call option would have been treated as a second class of stock on the date it was issued. (2) A call option that is issued to an individual who is either an employee or an independent contractor in connec- tion with the performance of services for the corporation or a related cor- poration (and that is not excessive by reference to the services performed) is not treated as a second class of stock for purposes of this paragraph (l) if— (i) The call option is nontransferable within the meaning of § 1.83–3(d); and (ii) The call option does not have a readily ascertainable fair market value as defined in § 1.83–7(b) at the time the option is issued. If the call option becomes transferable, this paragraph (l)(4)(iii)(B)(2) ceases to apply. Solely for purposes of this para- graph (l)(4)(iii)(B)(2), a corporation is related to the issuing corporation if more than 50 percent of the total vot- ing power and total value of its stock is owned by the issuing corporation. (3) The Commissioner may provide other exceptions by Revenue Ruling or other published guidance.

Certain Exceptions. (1) A call op- tion is not treated as a second class of stock for purposes of this paragraph (l) if it is issued to a person that is ac- tively and regularly engaged in the business of lending and issued in con- nection with a commercially reason- able loan to the corporation. This para- graph (l)(4)(iii)(B)(1) continues to apply if the call option is transferred with the loan (or if a portion of the call op- tion is transferred with a cor- responding portion of the loan). How- ever, if the call option is transferred without a corresponding portion of the loan, this paragraph (l)(4)(iii)(B)(1) ceases to apply. Upon that transfer, the call option is tested under paragraph (l)(4)(iii)(A) (notwithstanding anything in that paragraph to the contrary) if, but for this paragraph, the call option would have been treated as a second class of stock on the date it was issued. (2) A call option that is issued to an individual who is either an employee or an independent contractor in connec- tion with the performance of services for the corporation or a related cor- poration (and that is not excessive by reference to the services performed) is not treated as a second class of stock for purposes of this paragraph (l) if— (i) The call option is nontransferable within the meaning of § 1.83–3(d); and (ii) The call option does not have a readily ascertainable fair market value as defined in § 1.83–7(b) at the time the option is issued. If the call option becomes transferable, this paragraph (l)(4)(iii)(B)(2) ceases to apply. Solely for purposes of this para- graph (l)(4)(iii)(B)(2), a corporation is related to the issuing corporation if more than 50 percent of the total vot- ing power and total value of its stock is owned by the issuing corporation. (3) The Commissioner may provide other exceptions by Revenue Ruling or other published guidance.