Income Tax Information
following paragraphs are a summary of the general federal income tax consequences to U.S. taxpayers and the Company of awards
granted under the ESPP. Tax consequences for any particular individual may be different.
to purchase shares granted under the plan are intended to qualify for favorable federal income tax treatment associated with rights
granted under an employee stock purchase plan which qualifies under the provisions of Section 423(b) of the Code. Under these
provisions, no income will be taxable to a participant until the shares purchased under the ESPP are sold or otherwise disposed
of. If the shares are disposed of within two years from the stock purchase right grant date (i.e., the beginning of the offering
period or, if later, the date the participant entered the offering period) or within one year from the purchase date of the shares,
a transaction referred to as a “disqualifying disposition,” the participant will realize ordinary income in the year
of such disposition equal to the difference between the fair market value of the stock on the purchase date and the purchase price.
The amount of such ordinary income will be added to the participant’s basis in the shares and any additional gain or resulting
loss recognized on the disposition of the shares after such basis adjustment will be a capital gain or loss. A capital gain or
loss will be long-term if the participant holds the shares for more than one year after the purchase date.
the stock purchased under the ESPP is sold (or otherwise disposed of) more than two years after the stock purchase right grant
date and more than one year after the stock is transferred to the participant, then the lesser of (i) the excess of the sale price
of the stock at the time of disposition over the purchase price and (ii) the excess of the fair market value of the stock as of
the date the participant entered the offering period over the purchase price (determined as of the date the participant entered
the offering period) will be treated as ordinary income. If the sale price is less than the purchase price, no ordinary income
will be reported. The amount of such ordinary income will be added to the participant’s basis in the shares and any additional
gain or resulting loss recognized on the disposition of the shares after such basis adjustment will be long-term capital gain
Company will generally be entitled to a deduction in the year of a disqualifying disposition equal to the amount of ordinary income
realized by the participant as a result of such disposition, subject to the satisfaction of any tax-reporting obligations. In
all other cases, no deduction is allowed.
FOREGOING IS ONLY A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO THE PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE
GRANT AND EXERCISE OF AWARDS UNDER THE EMPLOYEE STOCK PURCHASE PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS
THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN
COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.
Topic 718 requires the estimated fair market value of all share-based payments to employees, including grants of employee stock
options, to be recognized as expense in the statement of operations. The Employee Stock Purchase Plan has been structured in a
way that no related compensation expense under the provisions of ASC Topic 718 will be required in the Company’s financial