Subject NTC's Board of Directors Approved the Issuance of Employee Stock Options
Date 2025/02/26
Statement
  1. Date of the board of directors' resolution: 2025/02/26
  2. Issuance period: The employee stock options shall be issued in one or multiple tranches within two years from the date of receipt of the effective registration notice from the competent authority, depending on actual needs. The Chairman is authorized to determine the actual issuance date.
  3. Eligibility criteria for optionees:
    (1) Employee stock option holders shall be limited to full-time employees who were officially employed by the Company prior to the stock subscription eligibility record date.
    (2) The actual employees eligible as stock option holders and the number of stock options granted shall be determined based on allocation standards or principles formulated with reference to factors such as job level, title, work performance, overall contribution, special achievements, or other management considerations. The allocation shall be approved by the Chairman and submitted to the Board of Directors for approval. Furthermore, for employees who hold the position of director or managerial officers of the Company, the allocation must first be approved by the Compensation Committee before being submitted to the Board of Directors for approval. For employees who are not directors or managerial officers of the Company, the allocation must first be approved by the Audit Committee before being submitted to the Board of Directors for approval.
    (3) The cumulative number of shares that a single stock option holder is entitled to subscribe to under the employee stock options issued by the Company in accordance with Article 56-1, Paragraph 1 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, together with the cumulative number of new restricted employee shares acquired by the same holder, shall not exceed 0.3% of the total issued shares. Furthermore, when adding the cumulative number of shares that the same holder is entitled to subscribe to under the employee stock options issued by the Company in accordance with Article 56, Paragraph 1 of the same regulations, the total shall not exceed 1% of the total issued shares. However, these restrictions may be waived upon special approval from the industry competent authority.
  4. Number of total issued units of the employee stock warrants: 140,000 units
  5. Number of shares each stock warrant unit may subscribe for: 1,000 shares
  6. Total number of new shares to be issued due to exercise of options, or the no.of shares for shares buyback as required by Article 28-2 of the Securities and Exchange Act: 140,000,000 shares
  7. Subscription price: The subscription price shall be based on the closing price of the Company's common shares on the issuance date. If the closing price on that day is lower than the par value, the subscription price shall be set at the par value of the common shares.
  8. Period of subscription rights:
    (1)Stock option holders may exercise their rights according to the following vesting schedule starting from two years after being granted the employee stock options. The stock options shall have a validity period of six years and are non-transferable, except in the case of inheritance.
    A. Upon completion of two years from the grant date, 50% of the stock options may be exercised cumulatively.
    B. Upon completion of three years from the grant date, 75% of the stock options may be exercised cumulatively.
    C. Upon completion of four years from the grant date, 100% of the stock options may be exercised cumulatively.
    (2) If a stock option holder commits a material breach of the employment contract or work rules, the Company has the right to revoke and cancel any stock options that have not yet vested.
  9. Types of shares which may be subscribed for: the Company's common shares
  10. Handling method for employee resignation/inheritance:
    (1) Voluntary Resignation or Lawful Dismissal by the Company
    A. Vested stock options may be exercised within three months from the termination date.
    B. Unvested stock options shall be deemed forfeited as of the termination date.
    (2) Death
    If an employee passes away during employment, the vested stock options may be inherited and exercised by the legal heirs within one year from the date of death. Unvested stock options shall be deemed forfeited as of the date of death.
    (3) Retirement
    Upon retirement, the employee may retain all granted stock options. However, these options may only be exercised after completing a two-year period from the grant date. The retired employee shall not be subject to the exercise schedule specified in Article 5, Paragraph 2, Subparagraph 1 of the relevant regulations. Nonetheless, the stock options must be exercised within one year from the later of the retirement date or the completion of the two-year period. Failure to exercise within this period shall be deemed as a waiver of the stock options.
    (4) Disability or Death Due to Occupational Injury
    A. If an employee becomes disabled or passes away due to an occupational injury and is unable to continue employment, they (or their heirs, in the case of death) may retain all granted stock options. However, these options may only be exercised after completing a two-year period from the grant date. The employee (or their heirs) shall not be subject to the exercise schedule specified in Article 5, Paragraph 2, Subparagraph 1 of the relevant regulations. Nonetheless, the stock options must be exercised within one year from the later of the termination date or the completion of the two-year period. Failure to exercise within this period shall be deemed as a waiver of the stock options.
    B. In the event of an employee's death due to an occupational injury, the employee's heirs may exercise all granted stock options. However, these options may only be exercised after completing a two-year period from the grant date. The heirs shall not be subject to the exercise schedule specified in Article 5, Paragraph 2, Subparagraph 1 of the relevant regulations. Nonetheless, the stock options must be exercised within one year from the later of the death date or the completion of the two-year period. Failure to exercise within this period shall be deemed as a waiver of the stock options.
    (5) Termination Due to Layoff in Accordance with the Labor Standards Act
    A. Vested stock options may be exercised within three months from the effective date of termination.
    B. Unvested stock options shall be deemed forfeited as of the effective date of termination. However, the President may determine the stock option rights and exercise period within the exercise schedule specified in Article 5, Paragraph 2, Subparagraph 1 of the relevant regulations.
    (6) Leave of Absence without Pay
    A. For stock option holders who have been approved for a leave of absence without pay, any vested stock options must be exercised within three months from the start date of the leave.
    B. If the leave coincides with a period during which stock options are restricted from being exercised under these regulations, the exercise period shall be extended by the number of days corresponding to the restriction period. Failure to exercise within the extended period shall be deemed as a waiver of the stock options.
    C. Any unvested stock options shall be reinstated upon resumption of employment. However, the vesting and exercise schedule shall be deferred for a period equal to the leave duration, provided that the exercise period does not exceed the stock option validity period.
    (7) Transfer to a Related or Another Company
    A. If a stock option holder voluntarily requests a transfer to a related or another company for personal reasons, their stock options shall be handled in accordance with the provisions for ”voluntary resignation” under Article 5, Paragraph 4, Subparagraph 1 of the relevant regulations.
    B. If a stock option holder is assigned to transfer to a related or another company due to business needs, the exercisable stock option rights shall be determined by the President and granted based on the following principles. However, the exercise period shall still follow the schedule stipulated in Article 5, Paragraph 2, Subparagraph 1 of the relevant regulations.
    (a) If the transfer date is one year or less from the issuance date, the cumulative exercisable percentage is 0%.
    (b) If the transfer date is more than one year but not more than two years from the issuance date, the cumulative exercisable percentage is calculated as (the period between the transfer date and the issuance date / 24 months) × 50%. Exercisability is conditional upon the stock option holder remaining employed at an approved related or other company at the two-year mark from the issuance date. If the employee leaves before meeting this condition, the stock options shall be handled in accordance with Article 5, Paragraph 4, Subparagraph 1 of the relevant regulations.
    (c) If the transfer date is more than two years but not more than three years from the issuance date, the cumulative exercisable percentage is calculated as (the period between the transfer date and the issuance date / 36 months) × 75%.Exercisability is conditional upon the stock option holder remaining employed at an approved related or other company at the three-year mark from the issuance date. If the employee leaves before meeting this condition, the stock options shall be handled in accordance with Article 5, Paragraph 4, Subparagraph 1 of the relevant regulations.
    (d) If the transfer date is more than three years but not more than four years from the issuance date, the cumulative exercisable percentage is calculated as (the period between the transfer date and the issuance date / 48 months) × 100%. Exercisability is conditional upon the stock option holder remaining employed at an approved related or other company at the four-year mark from the issuance date. If the employee leaves before meeting this condition, the stock options shall be handled in accordance with Article 5, Paragraph 4, Subparagraph 1 of the relevant regulations.
    (e) If the transfer date is more than four years from the issuance date, the cumulative exercisable percentage is 100%. Exercisability is conditional upon the stock option holder remaining employed at an approved related or other company for at least four years from the issuance date. If the employee leaves before meeting this condition, the stock options shall be handled in accordance with Article 5, Paragraph 4, Subparagraph 1 of the relevant regulations.
    -  The period between the transfer date and the issuance date shall be calculated in full months. Any period of less than one month shall not be counted.
    -  The number of stock options exercisable based on the cumulative exercisable percentage shall be rounded down to the nearest whole unit (1,000 shares) without rounding up.
    (8) If the stock option holder or their heirs fail to exercise the stock options within the specified period, the stock option rights shall be deemed forfeited, and the stock option holder shall have no further claims to such rights.
  11. Other criteria for subscription: Stock options that employees have forfeited shall be canceled by the Company.
  12. Method for performance of contract: The new shares issued by the Company shall be delivered via a scripless book-entry transfer. In accordance with the proviso of Article 161, Paragraph 1 of the Company Law, the Company shall issue the shares first and subsequently proceed with the registration of the capital change.
  13. Adjustment of subscription price:
    (1) After the issuance of these stock options, except for the issuance of common shares due to the conversion or exercise of various securities with conversion or subscription rights issued by the Company, or for employee compensation purposes, if there is any change in the Company's common shares (including private placements), such as cash capital increases, stock dividends from earnings, stock dividends from capital reserves, issuance of new shares due to mergers or for acquiring another company's shares, stock splits, and cash capital increases for participation in overseas depository receipt offerings, the subscription price shall be adjusted in accordance with the ”Securities Dealers Association of the Republic of China Self-Regulatory Rules for the Offering and Issuance of Securities by Issuing Companies.” The adjustment formula is as follows (rounded to the nearest tenth of a New Taiwan Dollar). If an increase in the number of issued common shares results from a change in the par value of shares, the adjustment shall be made on the base date of the share exchange. However, if actual payment is required, the adjustment shall be made on the date when the payment is fully received.
    Adjusted Subscription Price = Subscription Price Before Adjustment × {[Number of Issued Shares + (Subscription Payment Per Share × Number of Newly Issued Shares / Market Price Per Share)] / [Number of Issued Shares + Number of Newly Issued Shares]}
    In the event of a change in the par value of shares:
    Adjusted Subscription Price = Subscription Price Before Adjustment × (Number of Issued Common Shares Before the Change in Par Value / Number of Issued Common Shares After the Change in Par Value)
    A. "Number of Issued Shares" refers to the total number of issued common shares, excluding treasury shares that have been repurchased by the Company but have not yet been canceled or transferred. It also does not include stock subscription payment certificates or convertible bond conversion right certificates.
    B."Subscription Payment Per Share" shall be zero in the event of stock dividends or stock splits.
    C. "Market Price Per Share" shall be determined based on the simple arithmetic average of the closing prices of common shares on either one, three, or five business days prior to the ex-rights record date, pricing record date, or stock split base date.
    D. In the event of a merger with another company, the subscription payment per share for new shares issued due to a capital increase shall be determined based on the average closing price of the Company's common shares over a continuous 30-business-day period, starting from the 45th business day prior to the merger base date.
    E. In the event of issuing new shares for the acquisition of another company's shares, the subscription payment per share for new shares issued due to a capital increase shall be determined based on the average closing price of the Company's common shares over a continuous 30-business-day period, starting from the 45th business day prior to the completion date of the share transfer.
    F. If the adjusted subscription price is higher than the subscription price before adjustment, no adjustment shall be made.
    (2) After the issuance of these stock options, when the Company distributes cash dividends on common shares, the subscription price shall be adjusted on the ex-dividend record date according to the following formula (rounded to the nearest tenth of a New Taiwan Dollar):
    Adjusted Subscription Price = Subscription Price Before Adjustment × (1 - Ratio of Cash Dividend to Market Price per Share)
    The market price per share mentioned above shall be determined based on the simple arithmetic average of the closing prices of common shares on either one, three, or five business days prior to the ex-dividend suspension announcement date for cash dividends.
    (3) After the issuance of these stock options, if the Company undergoes a capital reduction (excluding treasury stock cancellation) that results in a decrease in common shares, the subscription price shall be adjusted according to the following formulas (rounded to the nearest tenth of a New Taiwan Dollar). If the decrease in common shares is due to a change in the par value of shares, the adjustment shall be made on the base date of the share exchange.
    Capital Reduction to Offset Losses:
    Adjusted Subscription Price = Subscription Price Before Adjustment × (Number of Issued Common Shares Before Capital Reduction / Number of Issued Common Shares After Capital Reduction)
    Cash Capital Reduction:
    Adjusted Subscription Price = (Subscription Price Before Adjustment- Cash Refund per Share) × (Number of Issued Common Shares Before Capital Reduction / Number of Issued Common Shares After Capital Reduction)
    Change in Par Value of Shares:
    Adjusted Subscription Price = Subscription Price Before Adjustment × (Number of Issued Common Shares Before Par Value Change / Number of Issued Common Shares After Par Value Change)
    (4) If there is a simultaneous occurrence of changes in common shares and the distribution of cash dividends, the subscription price shall first be adjusted according to the method specified in Section 2 and then further adjusted based on the method outlined in Section 1.
    (5)If the adjusted subscription price is lower than the par value of common shares, the subscription price shall be set at the par value of the common shares.
  14. Procedures for exercising options:
    (1) Except during the legally mandated share transfer suspension period and from three business days before the ex-rights suspension announcement date for stock dividends, the ex-dividend suspension announcement date for cash dividends, or the ex-rights suspension announcement date for cash capital increases, until the record date for rights distribution, the stock option holders may exercise their subscription rights in accordance with these regulations. They must submit a stock subscription request form to the Company, and the subscription shall take effect upon receipt, with no option for revocation.
    (2) Upon receiving a stock subscription request, the Company shall notify the stock option holder to remit the payment to a designated bank.
    (3) After confirming full payment, the Company shall record the subscribed shares in the shareholder register and issue them in scripless form via book-entry transfer within five business days.
    (4) The common shares issued by the Company shall be listed and traded on the stock exchange upon delivery to the stock option holders.
    (5) The Company shall apply for capital registration changes with the relevant regulatory authority at least once per quarter.
  15. Rights and obligations after exercising options: The common shares obtained through the exercise of stock options shall have the same rights and obligations as the common shares issued by the Company.
  16. Record date for any additional share exchange, stock swap, or subscription: NA
  17. Possible dilution of equity in case of any additional share exchange, stock swap, or subscription: The number of shares to be issued due to the exercise of stock options accounts for approximately 4.3% of the Company's total issued shares.
  18. Other important terms and conditions: Options holders must strictly comply with the Company's confidentiality regulations after being granted stock options. They shall not inquire about or disclose relevant details and quantities to others. In the event of a violation, the Company has the right to immediately revoke any stock options that have not yet vested.
  19. Any other matters that need to be specified:
    (1) The issuance and subscription regulations shall take effect upon the approval of the Board of Directors with the attendance of at least two-thirds of the directors and the consent of more than half of the attending directors, followed by approval from the competent authority. The same procedure applies to any amendments before issuance. If modifications are required during the review process by the competent authority, the Chairman is authorized to make the necessary revisions, which shall later be submitted to the Board of Directors for ratification before issuance.
    (2) Any matters not covered in these regulations shall be handled in accordance with applicable laws and regulations.