The Tarrant Texas Stock Option Plan is a comprehensive program designed to provide employees with the opportunity to acquire company stock through various stock options and stock appreciation rights. This plan offers three types of options: Incentive Stock Options (SOS), Nonqualified Stock Options (SOS), and Stock Appreciation Rights (SARS). 1. Incentive Stock Options (SOS): SOS are a type of stock option given to employees that qualify for certain tax advantages. These options can only be granted to employees, must meet specific requirements outlined in the Internal Revenue Code, and are subject to holding periods. 2. Nonqualified Stock Options (SOS): SOS are stock options that do not qualify for the preferential tax treatment available to SOS. They can be granted to employees and non-employees, such as consultants or directors, and offer more flexibility in terms of exercise price and exercise timing. 3. Stock Appreciation Rights (SARS): SARS are a form of equity compensation that entitles the holder to the appreciation in the company's stock value over a specified period. SARS can be granted to employees and non-employees and typically have a predetermined exercise price. The Tarrant Texas Stock Option Plan aims to incentivize employees by providing them with the opportunity to share in the company's success and align their interests with those of the shareholders. By offering a variety of stock options and SARS, the plan allows for flexibility in granting equity-based compensation to attract and retain talent. This plan provides employees with the ability to participate in the growth and success of the company, fostering a sense of ownership and motivation. It also serves as a means of attracting high-caliber individuals, as stock-based compensation can be an attractive element of a comprehensive benefits package. In conclusion, the Tarrant Texas Stock Option Plan offers Incentive Stock Options, Nonqualified Stock Options, and Stock Appreciation Rights to employees and non-employees, providing a range of options to align the interests of individuals with the long-term success of the company.