The New Jersey Stock Option Plan is a program designed for companies operating in New Jersey to establish and administer stock option grants for employees of Pacific Animated Imaging Corp. This plan offers various types of options, including Incentive Stock Options (SOS), to provide additional incentives and rewards to employees. As part of the New Jersey Stock Option Plan, the approval process for the Incentive Stock Option Plan of Pacific Animated Imaging Corp. involves considering several key factors. These factors include the eligibility criteria for employees, the number of options to be granted, and the exercise price of the options. It is important to note that Incentive Stock Options are subject to certain tax provisions under the Internal Revenue Code. In particular, the New Jersey Stock Option Plan includes the following types of options to be approved as part of Pacific Animated Imaging Corp.'s Incentive Stock Option Plan: 1. Incentive Stock Options (SOS): These options are intended to provide favorable tax treatment to eligible employees. SOS grant the right to purchase company stock at a predetermined price, typically referred to as the exercise or strike price. To qualify for this type of option, employees must meet specific criteria and adhere to the holding period requirements set forth in the Internal Revenue Code. 2. Nonqualified Stock Options (SOS): While not specifically mentioned as part of the New Jersey Stock Option Plan, SOS are another type of stock option that Pacific Animated Imaging Corp. may consider implementing. SOS do not qualify for the same tax benefits as SOS but offer more flexibility in terms of eligibility criteria and exercise price. These options are often used as alternatives if employees do not meet the requirements for SOS. 3. Restricted Stock Units (RSS): Although not technically considered stock options, RSS are another form of equity compensation that Pacific Animated Imaging Corp. may choose to include in its Incentive Stock Option Plan. RSS represents an agreement to receive a specific number of company shares at a future date, subject to certain vesting conditions. RSS are often considered more straightforward and easier to administer than traditional stock options. To ensure compliance with New Jersey regulations and the specific requirements of Pacific Animated Imaging Corp., it is recommended to consult legal and tax professionals for guidance when approving and implementing the Incentive Stock Option Plan under the New Jersey Stock Option Plan.