HanKang-KY Chuang Announces Board Resolution to Issue Restricted Employee Stock Rights

1. Board Resolution Date: 115/06/18

2. Expected Issue Price: The restricted employee shares are issued for consideration, with issue prices set at NT$33.2, NT$50, NT$65, and NT$80 respectively.

3. Expected Total Issuance (Shares): A total of 1,501,036 shares will be issued, each with a par value of NT$10, amounting to a total of NT$15,010,360.

4. Vesting Conditions: Eligibility is based on individual performance and employment start date as defined in the company's '2026 First Restricted Employee Stock Rights Issuance Rules,' and employees must not have violated labor contracts, service agreements, work rules, or company policies of the company or its subsidiaries during each vesting period.

5. Handling of Unvested or Inherited Shares: If an employee fails to meet vesting conditions, the company will repurchase the unvested restricted shares at the original issue price and cancel them. In exceptional cases (including inheritance), the matter will be handled according to the '2026 First Restricted Employee Stock Rights Issuance Rules.'

6. Other Issuance Terms: To be implemented in accordance with the '2026 First Restricted Employee Stock Rights Issuance Rules.'

7. Employee Eligibility: Only employees of the company or its subsidiaries who are employed on the grant date are eligible. This includes full-time and part-time employees, with part-time employees defined as hourly workers employed by the company or its subsidiaries and paid based on days or hours worked per employment contract. Employees who are also directors or managers must first obtain approval from the Compensation Committee before board resolution. Non-managerial employees must first obtain Audit Committee approval before board resolution.

(1) The actual employees eligible for grants and their respective share allocations will be determined by the Chairman, subject to board approval, based on job level, seniority, performance evaluation, overall contribution, special achievements, or other management-relevant criteria. However, if a grant recipient violates the company's labor contract, work rules, or company policies—regardless of whether such violation occurred before or after the grant—the company may, depending on the severity, revoke all or part of the exercisable but unexercised shares.

(2) The total number of shares underlying employee stock options issued under Rule 56-1(1) of the 'Securities Offering Rules,' plus previously issued and outstanding options under the same rule, plus restricted employee shares issued under Rule 60-2 and previously issued unvested restricted shares, shall not exceed 5% of the total issued shares. Additionally, when combined with employee stock options issued under Rule 56(1) of the same rules, the total shall not exceed 15% of the total issued shares.

(3) The cumulative number of shares a single employee may acquire under employee stock options issued under Rule 56-1(1) of the 'Securities Offering Rules,' plus cumulative restricted shares received, shall not exceed 0.3% of total issued shares. Furthermore, when combined with cumulative shares granted under Rule 56(1) of the same rules, the total shall not exceed 1% of total issued shares. Should regulatory authorities update relevant regulations, the updated laws and requirements shall apply.

8. Rationale for Issuing Restricted Employee Shares: To attract and retain key talent required for the company’s development, enhance employee motivation to serve the company, strengthen employee loyalty and sense of belonging, and jointly create value for the company and its shareholders.

9. Estimated Expense Amount: The estimated expensed amount is approximately NT$167,342 thousand (based on the closing price of NT$155.50 on June 10, 2026). Based on vesting conditions, the estimated annual expense is NT$58,539 thousand in 2026, NT$72,113 thousand in 2027, and NT$36,690 thousand in 2028.

10. Dilution Impact on Earnings Per Share: As the company is still in the drug development phase and currently operating at a loss, the issuance is expected to increase the loss per share by NT$0.45 in 2026, NT$0.55 in 2027, and NT$0.28 in 2028, based on preliminary estimates from 2026 to 2028 after expense allocation.

11. Other Matters Affecting Shareholder Equity: The increase in loss per share after issuance is limited; therefore, there is no significant impact on shareholder equity.

12. Restricted Rights Before Vesting: Prior to meeting vesting conditions, all shares must be fully entrusted to an institution designated by the company, and employees must cooperate in completing all procedures and signing relevant documents. In addition to the custody agreement, employees may not sell, mortgage, transfer, gift, pledge, or otherwise dispose of unvested shares, except in cases of inheritance. Other restrictions will be governed by the '2026 First Restricted Employee Stock Rights Issuance Rules.'

13. Other Key Agreements (including stock trust custody): To be implemented in accordance with the '2026 First Restricted Employee Stock Rights Issuance Rules.'

14. Other Disclosures:

(1) The issuance period for these restricted employee shares shall be within two years from the date the regulatory authority’s approval notice is received. Issuance may occur once or in multiple tranches depending on actual needs. The actual number of issuances and issuance dates shall be determined by the Board of Directors or by the Chairman authorized by the Board.

(2) This plan shall take effect upon approval by the Board of Directors and Shareholders’ Meeting and upon regulatory approval. Any amendments prior to issuance shall follow the same process. If amendments are required during the review process due to regulatory requests, it is proposed to seek authorization from an extraordinary shareholders’ meeting for the Chairman to make preliminary revisions, which will subsequently be submitted to the Board for ratification before issuance.