The South Dakota Stock Option and Stock Award Plan is a comprehensive and highly beneficial program offered by the American Stores Company. This plan is designed to reward and motivate employees by providing them with stock options and stock awards based on their exceptional performance and dedication to the company's growth. Under this plan, employees are granted the opportunity to purchase shares of the company's stock at a predetermined price known as the exercise price. These stock options are generally granted with a vesting period, which means that employees need to fulfill specific requirements or wait for a specific period before exercising their options. The stock options are usually offered as an incentive for employees to remain with the company and contribute to its long-term success. Additionally, the South Dakota Stock Option and Stock Award Plan of American Stores Company also includes stock awards. These awards are granted to employees in the form of restricted stock units (RSS) or outright stock grants. RSS are typically subject to a vesting period, while outright stock grants are awarded to employees without any restrictions. The different types of stock options and stock awards available under this plan may include: 1. Non-Qualified Stock Options (Nests): These stock options do not qualify for special tax treatment and are typically granted to employees at a discounted exercise price. Nests are subject to ordinary income tax upon exercise. 2. Incentive Stock Options (SOS): SOS are a special type of stock option that offers preferential tax treatment to eligible employees. They must meet specific requirements set by the Internal Revenue Service (IRS) to enjoy potential tax advantages. 3. Restricted Stock Units (RSS): RSS are typically subject to a vesting schedule, and employees receive shares of stock once the vesting conditions are met. RSS provide employees with a direct stake in the company's performance and are usually converted to common stock after vesting. 4. Outright Stock Grants: These grants provide employees with immediate ownership of company stock without any vesting requirements. Outright stock grants are often used to reward exceptional performance or retain top talent within the company. The South Dakota Stock Option and Stock Award Plan of American Stores Company is a valuable tool for attracting and retaining talented employees. It serves as an effective way to align the interests of employees with the overall success of the company. By offering various types of stock options and stock awards, the plan creates a sense of ownership and encourages employees to contribute to the long-term growth and profitability of the organization.