The Arizona Nonqualified and Incentive Stock Option Plan of Intercargo Corp. is a comprehensive stock option plan designed to provide incentives to employees and executives of the company. This plan is established under the laws and regulations of the state of Arizona and is specifically tailored to meet the unique needs and requirements of Intercargo Corp. Under this plan, eligible employees are granted the opportunity to purchase company stock at a predetermined price, also known as the exercise price. The stock options are divided into two categories: nonqualified stock options (SOS) and incentive stock options (SOS). Nonqualified stock options are the most common type of stock options offered under this plan. These options allow employees to purchase company stock at a discounted price, typically lower than the market value at the time of grant. The exercise price of SOS is determined by the company and remains fixed throughout the option's life. Employees can exercise their options after a certain vesting period, typically four years, and may choose to sell the purchased shares immediately or hold them for future gain. On the other hand, incentive stock options are special stock options that provide specific tax advantages to employees. SOS are typically granted to key employees or executive personnel to promote long-term retention and performance. The exercise price of SOS is set at or above the market value of the stock at the time of grant. If the employee holds the SOS for a specified period, known as the "required holding period," any future gains on the sale of the stock are taxed at the more favorable long-term capital gains rate. The Arizona Nonqualified and Incentive Stock Option Plan of Intercargo Corp. also outlines various rules and regulations regarding the administration, amendment, and termination of stock options. It includes provisions for stock option grants, how the exercise price is determined, vesting schedules, and limitations on the transferability of options. This plan is an integral part of Intercargo Corp.'s overall compensation and benefits strategy, aimed at attracting and retaining top talent while aligning employee interests with the success and growth of the company. It provides employees with the opportunity to participate in the company's financial performance and share in its long-term success. Overall, the Arizona Nonqualified and Incentive Stock Option Plan of Intercargo Corp. is a robust and carefully designed stock option plan that offers employees the chance to acquire company stock, aligning their interests with the company's growth and success.