The Maryland Stock Option Plan of Hayes Wheels International, Inc. is a comprehensive program designed to grant both Incentive Stock Options (SOS) and Nonqualified Stock Options (Nests) to eligible employees of the company. This plan serves as an important tool for attracting, incentivizing, and retaining top talent within the organization. Under this stock option plan, Hayes Wheels International, Inc. offers two main types of stock options: Incentive Stock Options (SOS) and Nonqualified Stock Options (Nests). 1. Incentive Stock Options (SOS): These options are typically offered to key employees and are governed by specific rules outlined in Section 422 of the Internal Revenue Code (IRC). SOS offer potential tax advantages as they may qualify for preferential tax treatment upon exercise and disposition. However, there are certain requirements that must be met for SOS, such as holding the options for a specific period of time before exercising them and limiting the total value of SOS exercisable in a calendar year. 2. Nonqualified Stock Options (Nests): Unlike SOS, Nests do not qualify for preferential tax treatment. They are more flexible in terms of eligibility and can be offered to a broader range of employees, including consultants and independent contractors. Nests give the option recipient the ability to purchase company stock at a predetermined strike or exercise price, regardless of the stock's fair market value at the time of exercise. Hayes Wheels International, Inc.'s Maryland Stock Option Plan provides detailed guidelines on the grant, exercise, and vesting of both SOS and Nests. The plan typically outlines eligibility criteria, such as job position, tenure, and performance benchmarks that employees must meet to be eligible for participation. Participating employees may receive a specific number of options or have the options granted based on a formula tied to company performance or individual achievements. The plan also includes provisions for a vesting schedule that specifies the period over which the options become exercisable. Once options are vested, employees have the right to exercise their options by purchasing company stock at the predetermined exercise price. The exercise price is typically set at the fair market value of the stock on the date of the grant. This allows employees to benefit from any increase in the company's stock price over time. The Maryland Stock Option Plan of Hayes Wheels International, Inc. is designed to align the interests of employees with those of the company's shareholders, motivating and rewarding outstanding performance while fostering long-term loyalty and commitment. By offering both Incentive Stock Options and Nonqualified Stock Options, the plan provides flexibility and potential tax advantages to eligible employees, supporting both personal financial growth and the overall success of the organization.