Announcement of the Board of Directors resolution on Employee Stock Option Plan

Date of the board of directors resolution:

May 09, 2019

Issue period:

The Company may based on its actual needs, grant options in one or more tranches within 1 year from the date on which the Company receives the approval letter for this option program from the competent authority.  The actual date of the grant (“Grant Date”) shall be determined by the Chairman of the Board (“Chairman”).

Conditions of eligibility for subscription rights:

1. Restricted to full-time employees of either the Company or any of its domestic or foreign subsidiaries whose employments are confirmed before the Grant Date.

2. The employees who are awarded with stock options and the numbers of such options awarded will be decided by the President and then approved by the Board of Directors, with consideration given to factors such as seniority, job rank, work performance, overall contribution, special merit or other  conditions that management needs to consider etc.. However, for employees who are officers or hold management positions, the award of such options is first subject to approval by the Remuneration Committee.

3. Pursuant to Article 60 of “Regulations Governing the Offering and Insurance of Securities by Foreign Issuers” which stipulates that where the Company issues stock options under Article 56-1.1 of “Regulations Governing the Offering and Issuance of Securities by Securities Issuers”, the cumulative number of options plus the number of shares of restricted shares granted to an optionee shall not exceed 0.3% of the total number of issued shares of the Company. Pursuant to Article 56-1.1 of Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the total number of shares subscribed by each optionee by way of exercising options granted to him/her shall not exceed 1% of the total issued shares of the Company.

Number of total issued units of the employee stock option  certificates:

4,550 units

Number of shares each unit represents:

1,000 shares

Total number of new shares to be issued due to exercise of stock option or the number of shares for share buy-back as required by Article 28-2 of the  Securities and Exchange Act:

4,550,000 shares

Exercise price:

The exercise price should be the closing price of the common shares of the Company on the Grant Date.

Exercise period:

1. The stock options shall be valid for four years from the Grant Date and shall expire after such period.  The rights attaching to the options may not be transferred, pledged, assigned as a gift or otherwise disposed by the optionee, except by inheritance.  The optionee may fully exercise stock options for subscribing new shares after three years from the Grant Date.

2. The Company shall have the right to revoke and cancel all unvested options and vested but unexercised options in the event that the optionee has malice or gross negligence such as breaching his/her employment contracts, non-competition restrictions, confidentiality obligations, or work rules.

3. The Board may adjust the vesting period and the percentage of options that may be exercised as mentioned above based on the circumstances.

The class of shares with which to exercise stock option:

The shares underlying the options shall be the common shares of the Company.

The handling process in case of inheritance/employee  resignation:

1. Termination (including voluntary termination, expelled, dismissal, or severance)
When the optionee resigns, the Company will cancel all unvested options (including exercisable options which are vested after 3 years)

2. Retirement
When the optionee retires, the Company will cancel all unvested options (including exercisable options which are vested after 3 years)

3. Death
Upon the death of an optionee, the successor of such optionee may exercise the options according to stock options that are vested set forth in Article 5 (2) of this Plan on pro-rata basis.  But such options should become exercisable after two years from the Grant Date.  All options shall be exercised within 6 months following the date of death or the second anniversary of the Grant Date, whichever is later.

4. Disability or Death Caused by Work Injury
In the event an optionee is physically disabled and cannot continue his/her employment due to work injury, all unvested options shall be deemed vested but these options should become exercisable after two years from the Grant Date. 
All options shall be exercised within six months following the date of termination or the second anniversary of the Grant Date, whichever is later.
In the event of an optionee’s death as a result of a work injury, the successor of such optionees may exercise 100% of the granted options but these options should become exercisable after two years from the Grant Date.  All options shall be exercised within 6 months following the date of death or the second anniversary of the Grant Date, whichever is later.
Note: The definition of work injury should be dealt with in accordance with the relevant local rules.

5. Temporary Leave without Pay
For optionees who have been approved by the Company for temporary leave without pay pursuant to the relevant laws and regulations as well as due to reasons such as major personal illness, major family events and study abroad, the vested and exercisable options shall be deemed suspended and shall not be exercised until the employee resumes his/her position.  Upon resuming his/her position, the optionee’s rights and interests to any unvested options shall be restored; provided, however, that the vesting period shall be extended by the same duration as the period of temporary leave without pay, subject at all times to the original validity period of the options. During the period of temporary leave without pay, if the employee is disqualified for temporary leave without pay for any reason, the rules of voluntary termination under this Plan shall apply instead.

6. Transfer to Affiliates
In the event that an optionee is transferred to other affiliate, the rights and obligations of the options granted shall not be affected by such transfer and relevant rules shall still apply. In the event that an optionee is transferred as instructed by the Company to an invested company, the rights and obligations of the options granted shall not be affected by such transfer.

7. For any reason other than those specified above or where adjustment is necessary for implementing the rules specified above, the Chairman is authorized to determine or adjust the rules depending on the actual situation or each individual's contribution.

8. If an optionee or his/her successor is unable to exercise the options within the periods set forth above, the unexercised options shall expire and become forfeited.

Other terms and conditions for exercising stock option:

Disposal of options of which the rights herein have been forfeited:
The Company has the right to revoke and cancel options of which rights herein have been forfeited.

Method for performance of contract:

Delivery of new shares issued by the Company

Adjustment of exercise price:

1. After the options are granted, except the Company issues all kinds of securities which are convertible or subscription to shares or newly issued shares through capitalization of employee bonus, upon the occurrence of certain events relating to the change in the number of common shares of the Company (including the issuance of new shares for cash, recapitalization from retained earnings, recapitalization from capital reserves, issue of new shares in connection with the merger or acquisition of shares of another company, share split and the issuance of new shares for issuing overseas depositary receipts, etc.), the exercise price shall be adjusted in accordance with the following formula (to be rounded to the nearest tenth) :

Adjusted exercise price = Exercise price prior to adjustment * [total number of issued shares + (paid purchase price per share * total number of newly issued shares) ÷ market price per share] / (total number of issued shares + total number of newly issued shares)

1.1 Total number of issued shares refers to total number of issued shares minus the number of treasury shares repurchased by the Company but have not been transferred or cancelled.

1.2 In the event of distribution of free shares or stock splits, the paid purchase price per share shall be zero.

1.3 If the adjusted exercise price is higher than the exercise price prior to adjustment, the exercise price shall not be adjusted.

1.4 If the adjusted exercise price is lower than the face value of share, the exercise price shall be the face value of Share.

1.5 In the event of issuance of new shares for merger or acquisition of shares of another company, the paid purchase price per share shall be the average of the closing prices of the shares of the Company for 30 business days immediately prior to the record date of merger or acquisition of shares of another company.

2. After the options are granted, the exercise price shall be subject to adjustment in accordance with the following formula (to be rounded to the nearest tenth) in the case of cash dividend per share exceeding 1.5% of the market price per share: 

Adjusted exercise price = Exercise price prior to adjustment * (1 – cash dividend per share / market price per share)

2.1 The market price per share shall be the simple arithmetic average of the closing prices of shares on the first, third or fifth business day immediately prior to the date when the Company announces that the Company’s shareholders’ register is closed as for cash dividends.

2.2 If the cash dividends and stock dividends are issued at the same time (including recapitalization from retained earnings and recapitalization from capital reserves), the exercise price shall be adjusted in accordance with the cash dividends and then the stock dividends.

3. After the options are granted, the exercise price shall be subject to adjustment in accordance with the following formula (to be rounded to the nearest tenth) in case of the Company’s capital reduction not caused by the cancellation of treasury shares of the Company:

3.1 Capital reduction to offset the accumulated losses
Adjusted exercise price = Exercise price prior to adjustment × (total number of issued shares before capital reduction / total number of issued shares after capital reduction)

3.2 Capital Reduction by cash refund
Adjusted exercise price = (Exercise price prior to adjustment–cash refund per share) × (total number of issued shares before capital reduction / total number of issued shares after capital reduction)

4. In the event of capitalization from retained earnings and capitalization from capital reserves, the exercise price shall only be adjusted in accordance with Article 7 (1) of this Plan and the Company will not grant additional options or adjust the number of shares to be issued upon the exercise of options.

Procedures for exercising option:

1. Except during the statutory book closure period and Blackout Periods (as defined in Article 9, Paragraph 1 of the Plan), an optionee may exercise options in accordance with the schedule set forth in Article 5, Paragraph 2 of the Plan by submitting an “Exercise Notice” to the options management department or stock agent of the Company.  Exercise of options shall become effective upon service of the Exercise Notice and the optionee may not withdraw such Exercise Notice after service.

2. Upon receipt of the Exercise Notice, the options management department or stock agent of the Company will inform the optionee of the amount of the payment for exercising the options that is to be deposited in a designated bank within a specified period. If the payment is not made in the specified period, the optionee shall be deemed to voluntarily waive the rights to exercise such options. The options for which the optionee has submitted the Exercise Notice but failed to make the payment shall be deemed unexercised and the optionee shall re-submit the Exercise Notice. Upon payment for exercise of the options, it cannot be revoked.

3. Unless otherwise provided by the relevant laws and regulations or Articles of Association of the Company, the options management department or the stock agent of the Company will register the optionee and his/her shares in the shareholders’ register upon the Company’s confirmation of receipt of the payment and will transfer the newly issued common shares of the Company to the optionee through the book-entry system within five (5) business days of receipt of the Company’s confirmation.  The common shares so issued are tradable on the Taiwan Stock Exchange (”TSE”) upon the date of issuance.

4. If an optionee fails to exercise the options within the validity period of the options, the options that have not been exercised shall be deemed invalid, and the optionee may not claim any exercise rights therein against the Company.

5. the Company will handle matters related to the public announcement of the number of shares delivered due to the exercise of employee stock options in a given quarter within 15 days after the end of such quarter in accordance with relevant laws and regulations as well as the Articles of Association of the Company.

Rights and obligations after exercising options:

1. Unless otherwise provided by relevant laws and regulations or Articles of Association of the Company, the options granted by the Company are not exercisable during the following periods of each year (each, a “Blackout Period”):

1.1 Statutory book closure period before the annual shareholders’ meeting;

1.2 In case of a board meeting that determines the record date for a merger, the period from the date of the board meeting to the record date of such merger; in the case of a board meeting that determines the record date for a spin-off, the period from the date of the board meeting to the record date of such spin-off; or in the case of a board meeting that determines the record date for compensated distribution of shares, the period from the date of the board meeting to the record date of such distribution.

1.3 The period from 15 business days prior to the book closure date of free distribution of shares, distribution of cash dividend or rights issues applied to the TSE, to the record date of allocation of the dividends and rights.

1.4 In case of capital reduction, the period from the record date of capital reduction to one day before the trading of shares is resumed upon the new share certificates are issued.

1.5 Other statutory book closure periods.

2. The rights and obligations of the common shares delivered by the Company pursuant to this Plan shall be the same as that of the common shares of the Company; tax incurred from the subscription of shares and relevant transactions by the optionee under this Plan shall be handled pursuant to relevant tax laws and regulations stipulated by the competent authority.

The record date for share conversion, if conversion, exchange, or  subscription rights are attached:

Not applicable

Possible dilution of equity, if conversion, exchange, or subscription  rights are attached:

Not applicable

Other important stipulations:

This Plan shall be adopted with the approval of 1/2 of the directors attending the Board meeting and who represent more than 2/3 of the Board of directors and be effective with the approval of competent authority.  Amendments of relevant laws before the Grant date shall apply the same to this Plan.

During the review process, the Company may authorise the Chairman to amend the Plan as requested by the competent authority, and submit to the Board of Directors for ratification afterwards.

Any other matters not set forth herein shall be dealt with in accordance with the relevant laws and regulations and the Articles of Association of the Company.

Any other matters that need to be specified:

None