The Colorado Stock Option Plan is a comprehensive and flexible program designed to reward and incentivize employees in Colorado-based companies. This plan provides various types of stock options, including Incentive Stock Options (SOS), Nonqualified Stock Options (SOS), and Exchange Options. 1. Incentive Stock Options (SOS): The Colorado Stock Option Plan offers SOS as a means to provide employees with a sense of ownership in the company. SOS come with favorable tax treatment, allowing employees to potentially receive capital gains tax rates upon exercising the options. These options can only be granted to employees, not consultants or non-employee directors. 2. Nonqualified Stock Options (SOS): The plan also includes SOS, which are a more commonly used type of stock option. SOS do not have the same tax advantages as SOS, but they are more flexible in terms of eligibility. SOS can be granted to employees, consultants, and non-employee directors, providing broader participation in the stock option plan. 3. Exchange Options: Colorado Stock Option Plan also allows for the issuance of Exchange Options. These options enable employees to exchange their existing SOS or SOS for a different type of stock option or for other equity-based awards. This exchange provides employees with the opportunity to adapt their stock options based on changing circumstances or preferences. Overall, the Colorado Stock Option Plan aims to motivate and retain talented individuals by providing them with a stake in the company's success. By offering a combination of SOS, SOS, and Exchange Options, this plan caters to different scenarios and empowers employees to participate in the growth of the organization.