Non-statutory Stock Option (Nonqualified Stock Option) Option Fully Transferable or Not Subject to Risk of Forfeiture

Applicable Option Date Federal Nonqualified Pennsylvania Federal Treatment Employee Federal Treatment Employer Pennsylvania Personal Income Tax Treatment Employee Pennsylvania Personal Income Tax Treatment Employer IRC § 83 Election to include in gross income in year of transfer. PA PIT was amended to make, with certain exceptions, section 83 of the IRC of 1986 and regulations applicable for taxable years beginning after December 31, 2004, respect to property transferred to a service provider (or beneficiary) in connection with the performance of services. No tax impact Option has readily ascertainable fair market value on date of grant (Option fully transferable or not subject to risk of forfeiture) Grant Date The value of the option less any amount paid for the option will be taxed as compensation. Compensation (ordinary) deduction equal to income subject to withholding or federal Form 1099 issued to employee or independent contractor. No tax impact No tax impact Exercise Date No tax impact No tax impact The value of the option less any amount paid for the option will be taxed as compensation Compensation deduction equal to income subject to withholding or federal Form 1099 issued to employee or independent contractor Stock Disposition Date Capital gain equal to difference between sale price and fair market value at the date of exercise option No tax impact Gain or loss on sale of the stock is the difference between the sale price and the taxpayer's basis in the stock which equals the exercise price of the option plus any compensation recognized as a result of exercising the option No tax impact Option not publicly traded or does not have readily ascertainable fair market value on date of grant (Option fully transferable or not subject to risk of forfeiture) Grant Date No tax impact No tax impact No tax impact No tax impact Exercise Date The fair market value of the stock less any amount paid for the stock will be taxed as compensation Compensation (ordinary) deduction equal to income amount recognized by employee The fair market value of the stock less any amount paid for the stock will be taxed as compensation Compensation deduction equal to income subject to withholding or federal Form 1099 issued to employee or independent contractor Stock Disposition Date Capital gain equal to difference between sale price and fair market value at the date of exercise option No tax impact Gain or loss on sale of the stock is the difference between the sale price and the taxpayer's basis in the stock which equals the exercise price of the option plus any compensation recognized as a result of exercising the option No tax impact Exercise Date No tax impact No tax impact The value of the option less any amount paid for the option will be taxed as compensation Compensation deduction equal to income subject to withholding or federal Form 1099 issued to employee or independent contractor