The Washington Stock Option Plan is a comprehensive program that offers various types of stock options and stock appreciation rights to eligible employees in Washington state. This plan is designed to incentivize and reward employees for their contributions to the company's growth and success. One of the primary components of the plan is the grant of Incentive Stock Options (SOS). SOS are a type of stock option that provides certain tax advantages to the employee. These options can only be granted to employees and must meet specific requirements set by the Internal Revenue Service (IRS). SOS typically have a vesting period and an exercise price that is set at or above the fair market value of the stock on the grant date. In addition to SOS, the Washington Stock Option Plan also offers Nonqualified Stock Options (SOS). SOS are stock options that do not meet the requirements for SOS. Unlike SOS, SOS are not subject to specific tax advantages and can be granted to employees, directors, consultants, and other service providers. Similar to SOS, SOS typically have a vesting schedule and an exercise price set at or above the fair market value of the stock on the grant date. Furthermore, the plan includes Stock Appreciation Rights (SARS), which are a form of equity-based compensation. SARS provide employees with the opportunity to receive cash or stock equal to the appreciation in the value of the company's stock over a predetermined period. Unlike stock options, SARS do not require the employee to purchase the underlying stock at a predetermined exercise price. Instead, employees receive the value in cash or shares in proportion to the increase in stock price. Overall, the Washington Stock Option Plan is a comprehensive program that grants employees in Washington state the opportunity to receive Incentive Stock Options, Nonqualified Stock Options, and Stock Appreciation Rights. These options serve as valuable incentives to motivate and reward employees, while aligning their interests with the company's long-term success.