Most equity explainer kits cover the same ground: what an option is, what vesting and strike price mean, and an FAQ entry for what happens if you leave. That entry usually names a post-termination exercise window, often 90 days, and stops there. Nobody recalculates it for the person who leaves. An incentive stock option carries a second deadline these kits rarely mention: a federal tax-qualification clock that lapses three calendar months after the last day worked, regardless of what the company's contract promises.
At Marloe Logistics, Anders Lindqvist is laid off holding 12,000 vested ISOs, strike price $2.10, current fair value $11.00, a spread of $106,800. His separation agreement extends his exercise window to 180 days. The federal ISO clock does not read separation agreements: it lapses three months after his last day under 26 U.S.C. § 422(a)(1), landing 91 days before his contract's deadline. Exercising in that gap still works contractually, but the spread becomes ordinary income instead of a qualifying ISO exercise, a $34,176 tax bill at 32 percent that an earlier exercise would not owe.
The pack opens with the Plain-language Explainer and Scenario Guide, then the Exercise and Tax Note, which walks through how the two deadlines diverge. The Individual Grant Summary and Vesting Timeline track every grant's next vesting event, and Scenario Values computes both deadlines for every departed holder, flagging rows where the dates differ. A 2021 survey found 60 percent of companies give departing employees 90 days to exercise after an involuntary termination (NASPP, via myStockOptions.com), close enough to the federal clock that most leavers never notice they differ.
Exercise Window Register