Is the issuance of shares upon exercise of a stock option distinguishable from the issuance of the option?  The answer under California's Corporate Securities Law of 1968 may surprise some.  Corporations Code Section 25017 adopts a unified view of option exercises:

Every sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, as well as every sale or offer of a security which gives the holder a present or future right or privilege to convert the security into another security of the same or another issuer, includes an offer and sale of the other security only at the time of the offer or sale of the warrant or right or convertible security; but neither the exercise of the right to purchase or subscribe or to convert nor the issuance of securities pursuant thereto is an offer or sale.

Put more succinctly, the exercise of an option is not an offer or sale.   However, an option exercise is considered a sale under the federal Securities Act of 1933.  If this were not the case, there would be no need for SEC reporting companies to file registration statements on Form S-8 to register the sale of shares upon exercise of employee stock options.

It also may not be true as a matter of contract law.  In Richards v. Centripetal Networks, Inc., 2024 WL 24327 involved a dispute over a settlement agreement:

As noted, the carveout in the Settlement Agreement provides that the "issuance of options and/or warrants" does not trigger Centripetal's obligations under the notes.  Plaintiff contends that the language in the carveout does not apply to the sale and issuance of common stock upon the exercise of those options, and contends that the "issuance" of "warrants" is too general and ambiguous to bar his allegations related to warrants.

Judge Haywood S. Gilliam, Jr. ruled that the plaintiff had adequately pled that "his rights were triggered when Centripetal issued shares of stock upon the exercise of stock options by their holders".