Page:United States Statutes at Large Volume 78.djvu/109

 78 STAT. ]

PUBLIC LAW 88.272-FEB. 26, 1964

67

amount realized on such sale or exchange over the adjusted basis of such share. "(5)

CERTAIN TRANSFERS BY INSOLVENT INDIVIDUATE.—If an in-

solvent individual holds a share of stock acquired pursuant to his exercise of a qualified stock option, and if such share is transferred to a trustee, receiver, or other similar fiduciary, in any proceeding under the Bankruptcy Act or any other similar insol- gj^gtatr^s/o!^' vency proceeding, neither such transfer, nor any other transfer 11 USC i note. of such share for the benefit of his creditors in such proceeding, shall constitute a 'disposition of such share' for purposes of subsection (a)(1). " (6) APPLICATION OF SUBSECTION (b)(5) WHERE OPTIONS ARE FOR STOCK OF SAME CLASS IN SAME CORPORATION.—The requirement of subsection (b)(5) shall be considered to have been met in the case of any option (referred to in this paragraph as 'new option') granted to an individual if— " (A) the new option and all outstanding options referred to in subsection (b)(5) are to purchase stock of the same class in the same corporation, and " (B) the new option by its tenns is not exercisable while there is outstanding (within the meaning of paragraph (2)) any qualified stock option (or restricted stock option) which was granted, before the granting of the new option, to such individual to purchase stock in such corporation at a price (determined as of the date of grant of the new option) higher than the option price of the new option.

"SEC. 4 3 EMPLOYEE STOCK PURCHASE PLANS. 2. " (a) GENFJIAL RULE.—Section 421(a) shall apply with respect to the transfer of a share of stock to an individual pursuant to his exercise of an option granted after December 81, 1963 (other than a restricted stock option granted pursuant to a plan described in section 4 2 4 (c)(3)(B)), under an employee stock purchase plan (as defined in subsection (b)) if— "(1) no disposition of such share is made by him within 2 years after the date of the granting of the option nor within 6 months after the transfer of such share to him; and "(2) at all times during the period beginning with the date of the granting of the option and ending on the day 8 months before the date of such exercise, he is an employee of the corporation granting such option, a parent or subsidiary corporation of such corporation, or a corporation or a parent or subsidiary corporation of such corporation issuing or assuming a stock option in a transaction to which section 425(a) applies. " (b) EMPLOYEE STOCK PURCHASE P L A N. — For purposes of this part, the term 'employee stock purchase plan' means a plan which meets the following requirements: "(1) the plan provides that options are to be granted only to employees of the employer corporation or of its parent or subsidiary corporation to purchase stock in any such corporation; "(2) such plan is approved by the stockholders of the granting corporation within 12 months before or after the date such plan is adopted; " (3) under the terms of the plan, no employee can be granted an option if such employee, immediately after the option is granted, owns stock possessing 5 percent or more of the total combined voting power or value of all classes of stock of the employer corporation or of its parent or subsidiary corporation. For purposes of this paragraph, the rules of section 425(d) shall apply in determining the stock ownership of an individual, and

^"*e, p. 63.

Post, p. 69.

Post, p. 71.

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