Han Kang-KY Chuang Announces Board Resolution to Issue Employee Stock Options Below Market Price

1. Board Resolution Date: 115/06/18

2. Issuance Period: The securities may be issued once or in multiple tranches within two years from the date of notification of regulatory approval. The actual number of issuances and issuance dates shall be determined by the Chairman.

3. Eligibility for Stock Options: Limited to employees of the company and its subsidiaries who have been employed prior to the eligibility benchmark date. Employees include full-time and part-time staff, where part-time employees are defined as hourly workers employed by the company or subsidiaries, compensated based on days or hours worked as stipulated in employment contracts.

The eligibility benchmark date shall be determined by the Chairman. The actual list of eligible employees and the number of options granted will be determined by the Chairman, considering seniority, job level, performance, overall contribution, and special achievements, and then approved by the Board with at least two-thirds of directors present and more than half of those present voting in favor.

However, employees holding managerial positions or directors who are also employees must first be reviewed by the Compensation Committee before Board approval. Non-managerial employees must first be reviewed by the Audit Committee before Board approval.

The company complies with Article 60 of the "Regulations Governing the Offering and Issuance of Securities by Foreign Issuers," which applies Article 56-1, Paragraph 1 of the "Regulations Governing the Offering and Issuance of Securities by Issuers." The cumulative number of shares granted to a single option holder through employee stock options, plus the total number of restricted shares previously granted, shall not exceed 0.3% of the total issued shares. Additionally, the cumulative number of shares granted to a single option holder under Article 56, Paragraph 1 of the same regulations shall not exceed 1% of the total issued shares.

4. Total Number of Employee Stock Option Units Issued: 3,000,000 units

5. Number of Shares per Unit: 1 share

6. Total Number of New Shares to be Issued upon Exercise or Shares to be Repurchased under Article 28-2 of the Securities and Exchange Act: A total of 3,000,000 new ordinary shares will be issued upon exercise of the stock options.

7. Exercise Price: 60% of the arithmetic average of the closing prices over the 30 business days preceding June 17, 2026 (inclusive), which equals NT$88 per share.

8. Exercise Period:

(1) Option holders may exercise their rights according to the following schedule after two years from the grant date:

- After two years from the grant date: up to 40% of the granted options may be exercised. - After three years from the grant date: cumulative exercise up to 70% of the granted options. - After four years from the grant date: cumulative exercise up to 100% of the granted options.

(2) The validity period of the employee stock options is five years. Any unexercised options upon expiration of the validity period (or a shorter period specified in the stock option agreement with the employee) shall automatically become void, and the holder shall have no right to claim any remedy or compensation.

(3) The stock options are non-transferable, non-pledgeable, and cannot be gifted or otherwise disposed of, except in the case of inheritance.

9. Type of Shares to be Subscribed: Ordinary shares of the company.

10. Handling upon Employee Resignation or Inheritance:

(1) Voluntary Resignation: For options already exercisable at the time of resignation, the employee may exercise them within three months of resignation (provided it does not exceed the validity period of the option). Options not yet exercisable shall be deemed forfeited upon resignation. However, if the exercise falls within the company's share transfer restriction period, the exercise period shall be extended accordingly.

(2) Death: For exercisable options, the heir may exercise them within one year from the date of death. Non-exercisable options shall be deemed forfeited on the date of death. Exercise during the transfer restriction period shall extend the exercise period.

(3) Dismissal or Layoff: For exercisable options at the time of dismissal or layoff, the employee may exercise them within three months of termination. Non-exercisable options shall be forfeited or may be reassigned by the Chairman within the exercise schedule, subject to subsequent Board ratification. Exercise during the transfer restriction period shall extend the exercise period.

(4) Transfer to Affiliate: If an option holder is transferred to an affiliate company due to operational needs, their rights and obligations under the granted stock options remain unaffected.

(5) For shares transferred to foreign employees' sell-only accounts or mainland Chinese employees' pooled accounts, the shares must be disposed of within three months of losing employee status. Any remaining balance after three months will be forcibly sold, and the proceeds transferred to the employee’s bank account.

11. Other Exercise Conditions: Stock option certificates that are abandoned or expire unexercised shall automatically become void and be canceled by the company, and the quota will not be reissued.

12. Settlement Method: The company shall deliver newly issued ordinary shares through capital increase.

13. Adjustment of Exercise Price:

(i) After issuance of the stock options, except for conversions of convertible securities or employee bonus share issuances, if there are changes in the company's ordinary shares (including but not limited to cash capital increase, retained earnings capitalization, capital reserve capitalization, mergers, stock splits, acquisition of other companies’ shares, issuance of global depositary receipts, or private placements), the exercise price shall be adjusted on the benchmark date of each event using the following formula (rounded to the nearest NT$0.1, with cents rounded to the nearest dime):

Adjusted Exercise Price = Previous Exercise Price × [ (Issued Shares + (Per-Share Payment Amount × New Shares Issued) / Per-Share Market Price) / (Issued Shares + New Shares Issued) ]

Note: The Per-Share Market Price shall be the simple arithmetic average of the closing prices of the company’s ordinary shares on one of the 1st, 3rd, or 5th business days prior to the ex-right date, pricing benchmark date, or stock split date.

(1) Issued Shares refers to the total number of issued ordinary shares, excluding shares from convertible bond certificates, and deducting treasury shares repurchased but not yet transferred or canceled.

(2) The "Per-Share Payment Amount" shall be zero for free share distributions or stock splits.

(3) In the case of a merger, the per-share payment amount for new shares issued shall be the average closing price of the company’s ordinary shares over the 15 business days prior to (excluding) the merger benchmark date. If the company’s stock was not yet listed 15 business days before the merger benchmark date, the per-share payment amount shall be the net asset value per share on the merger benchmark date.

(4) If the adjusted exercise price is higher than the previous price, no adjustment shall be made.

(5) If the adjusted exercise price is lower than the par value of the ordinary shares, the par value shall be used as the exercise price.

(6) Adjustment methods for mergers or spin-offs shall be separately prescribed by law.

(ii) If the company distributes cash dividends after issuing the stock options, the exercise price shall be adjusted using the following formula (rounded to the nearest NT$0.1, with cents rounded to the nearest dime):

Adjusted Exercise Price = Previous Exercise Price × (1 - Cash Dividend per Share / Per-Share Market Price)

The Per-Share Market Price shall be the simple arithmetic average of the closing prices of the company’s ordinary shares on one of the 1st, 3rd, or 5th business days prior to the ex-dividend announcement date.

(iii) For capital increases from retained earnings or capital reserves, only the exercise price shall be adjusted under clause (i) above; no additional stock options shall be issued nor the number of exercisable shares adjusted.

(iv) If there is a reduction in ordinary shares due to capital reduction (excluding treasury share cancellation), the adjusted exercise price shall be calculated on the capital reduction benchmark date using the following formula (rounded to the nearest NT$0.1, with cents rounded to the nearest dime). No adjustment shall be made if the adjusted price is higher than the previous price:

For capital reduction to offset losses: Adjusted Exercise Price = Previous Exercise Price × (Pre-Reduction Issued Ordinary Shares / Post-Reduction Issued Ordinary Shares)

For cash capital reduction: Adjusted Exercise Price = (Previous Exercise Price - Cash Refund per Share) × (Pre-Reduction Issued Ordinary Shares / Post-Reduction Issued Ordinary Shares)

14. Procedure for Exercising Stock Options:

(1) Except during statutory share transfer restriction periods, option holders may exercise their rights in accordance with these regulations.