The Colorado Stock Option Plan of Sunrise Assisted Living, Inc. is a comprehensive program designed to provide employees, consultants, and advisers with the opportunity to acquire and benefit from stock options in the company. This plan consists of two main options: Incentive Stock Options (SOS) and Nonqualified Stock Options (Nests). 1. Incentive Stock Options (SOS): SOS are stock options granted to employees as a form of compensation to motivate and retain them. These options come with certain tax advantages, as any potential profits from exercising the options are subject to long-term capital gains tax rates, rather than ordinary income tax rates. SOS have specific eligibility requirements and limitations outlined in the plan. 2. Nonqualified Stock Options (Nests): Nests are stock options that can be granted to employees, consultants, and advisers. Unlike SOS, Nests do not qualify for the same favorable tax treatment. When Nests are exercised, the difference between the grant price and the fair market value of the stock is considered ordinary income and subject to ordinary income tax rates. Nests provide flexibility in terms of eligibility and are typically used for individuals who do not meet the eligibility criteria for SOS. The Colorado Stock Option Plan of Sunrise Assisted Living, Inc. aims to align the interests of employees, consultants, and advisers with the company's success, encouraging them to contribute to its growth and overall performance. By granting stock options, Sunrise Assisted Living provides individuals with an opportunity to participate in the company's success and increase their personal financial benefits. It should be noted that the specific terms, conditions, exercise prices, vesting schedules, and other details of the Colorado Stock Option Plan may vary and are outlined in the official plan documents provided to eligible participants. The plan follows relevant laws, regulations, and guidelines to ensure compliance and fairness in the granting and exercise of stock options.