The Kings New York Stock Option Plan is a comprehensive program designed to provide employees with various stock-based incentives. This plan encompasses three main types of stock options and rights: Incentive Stock Options (SOS), Nonqualified Stock Options (SOS), and Stock Appreciation Rights (SARS). 1. Incentive Stock Options (SOS): This type of stock option is typically reserved for key employees and is governed by specific requirements outlined in the Internal Revenue Code. SOS offer employees the option to purchase company stock at a predetermined exercise price, which is usually set at or near the fair market value of the stock on the date of the grant. The grant of SOS can be a valuable tool for attracting and retaining top talent, as it offers potential tax advantages for employees if certain holding requirements are met. 2. Nonqualified Stock Options (SOS): Unlike SOS, SOS do not meet the requirements outlined in the Internal Revenue Code and therefore do not offer the same tax advantages. However, SOS provide flexibility in terms of granting options to various employees, including those who may not meet the eligibility criteria for SOS. SOS allow employees to purchase company stock at a predetermined exercise price, and the gains are typically subject to ordinary income tax rates at the time of exercise. 3. Stock Appreciation Rights (SARS): SARS are a different type of equity-based incentive that does not involve the actual granting of stock options. Instead, SARS provide employees with the right to receive the appreciation in the value of a certain number of company shares over a specific period. Upon exercise, employees are entitled to receive cash or company stock worth the appreciation value. SARS can be a valuable tool for rewarding employees without diluting the company's share capital. The Kings New York Stock Option Plan offers a comprehensive framework for granting these three types of stock options and rights, providing employees with various ways to participate in the company's growth and success. By offering both SOS and SOS, the plan allows for flexibility in accommodating employees' eligibility and tax status. Additionally, including SARS in the plan enables the company to offer additional incentives beyond traditional stock options. This holistic approach to equity-based compensation helps attract and retain talent while aligning employees' interests with the long-term success of Kings New York.