HTC Board of Directors Resolved the Issuance and Subscription of Employee Stock Options

View printer-friendly version << Back

PDF Version

1.Date of the board of directors resolution:2018/05/05

2.Issue period:

The options will be issued within one year from the date of receipt of

notice of effective registration from the competent authority. The

issue may be done in a single or multiple installments, as actually

needed. The chairman is authorized to set the actual issue date.

3.Conditions of eligibility for subscription rights:

(1) Eligibility is limited to those who are full-time formal

employees in the organizations of HTC and its domestic and

overseas subsidiaries and branches on the share subscription

record date ("subsidiary" means an invested company in which

HTC directly or indirectly holds more than 50 percent of the

voting rights, and over which it has controlling power, in

compliance with Securities and Futures Bureau Letter No.

Financial-Supervisory-Securities-I- 0960073134 of 26 December 2007.

(2) The determination of employees who are actually eligible for stock

options and the numbers of stock options for which they are

eligible will be decided by the chairman, subject to approval

by the board of directors, with consideration to factors such

as work performance, overall contribution, special merit, or

job level.

(3) The limit on the cumulative quantity of stock options that

HTC allocates to any single employee will be determined in

accordance with the relevant provisions of Articles 60-9 of

the Regulations Governing the Offering and Issuance of Securities

by Securities Issuers (the "Offering Regulations").

4.Number of total issued units of the employee stock option

certificates:20,000 units

5.Number of shares each unit represents:1,000 shares

6.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:

The total number of new shares of common stock that must be issued

for the purpose of exercise of the options is 20,000,000 shares.

7.Exercise price:

The share purchase price shall be the closing price of HTC common

stock on the date of issuance of the employee stock options.

8.Exercise period:

(1) After 2 full years have elapsed from the time the stock option

holder is allocated the employee stock options, the option

holder may exercise the share purchase rights according to

the schedule set out below. The duration of the stock options

is 10 years. The stock options and rights and interests therein

may not be transferred, pledged, given to others, or disposed

in any other manner, except by succession. After the expiration

of the duration of the employee stock options, any unexercised

options shall be deemed forfeited, and the stock option holder

may not make any further claim to share purchase rights.

Percentage of share purchase rights that may be exercised

according to the time elapsed since the allocation of the stock

options (cumulative):

Two full years have elapsed: 60％

Three full years have elapsed: 100％

(2) If, after the allocation of employee stock options by the

company, the stock option holder breaches any provision of

the HTC work rules or employee handbook and disciplinary

measures of a major demerit or higher penalty are determined

upon, HTC shall be entitled to withdraw and cancel any stock

options that are not yet exercisable and any stock options

that are already exercisable but have not yet been exercised.

9.The class of shares with which to exercise stock option:

HTC common stock.

10.The handling process in case of inheritance/employee

resignation:

(1) Voluntary departure from employment

For stock options that are already exercisable under the provisions

of paragraph (2) of this Article, the share purchase rights may

be exercised within 3 months from the date of departure (but not

beyond the duration of the stock options); if this happens to

fall within a period during which, as specified under these Rules,

exercise of the stock options is prohibited, the exercise period

shall, from the date the options may be exercised, be extended

by the number of days that they could not be exercised. If the

share purchase rights are not exercised within the aforesaid period,

the rights shall be deemed forfeited. For stock options that have

not yet become exercisable, the share purchase rights shall be

deemed forfeited from the date of departure from employment, and

HTC shall be entitled to withdraw and cancel the stock options

already allocated to the stock option holder.

(2) Dismissal from employment

If a stock option holder breaches any provision of the HTC work

rules or employee handbook and a disposition of dismissal is

determined upon, the share purchase rights under any stock

options already allocated to the employee, shall, from the

date of dismissal, be deemed forfeited.

(3) Retirement

For stock options that are already exercisable under the

provisions of paragraph (2) of this Article, the share purchase

rights may be exercised during the effective duration of the

stock options. However, if there is any breach of non-competition

restrictions, HTC shall be entitled to withdraw and cancel the

stock options already exercisable. For stock options that

have not yet become exercisable, the share purchase rights

shall be deemed forfeited from the date of retirement.

(4) Death

For stock options that have already been allocated, upon

the death of the stock option holder, the heir may exercise

all of the share purchase rights. The heir shall remain

subject to the restriction that he or she may exercise the

stock options only after two full years have elapsed from

the time of allocation, but apart from that restriction, the

heir shall be free from the restrictions in paragraph (2) of

this article regarding the schedule imposed on the percentages

of exercisable stock rights. The share purchase rights may be

exercised only after 2 full years have elapsed from the date

of death or the date of allocation of the stock options

(whichever date is later). Anyone entitled by statutory

succession to share purchase rights under the options shall,

after the occurrence of the fact, complete the statutorily

required procedures and provide relevant documentary evidence

in accordance with the laws and regulations governing succession

of the stock option holder's home country and the provisions of

the Regulations Governing the Administration of Shareholder

Services of Public Companies concerning transfer by inheritance.

Only after these procedures are complete may an application be

submitted for the exercise of the purchase rights to which the

heir shall succeed. However, no application and purchase procedures

may be done beyond the effective duration of the stock options.

(5) Sufferers of disability due to an occupational accident

In the event of inability to continue in employment as a result

of a physical disability due to an occupational accident, for

stock options that are already exercisable under the provisions

of paragraph (2) of this Article, the share purchase rights may

be exercised during the effective duration of the stock options.

For stock options that have not yet become exercisable, the

restrictions in paragraph (2) of this article regarding the

schedule imposed on the percentages of exercisable stock

rights shall continue to apply, and the rights shall be exercisable

only during the effective duration of the stock options.

(6) Leave without pay

In the case of any option holder who has received approval from

HTC to take leave without pay, when calculating whether that

option holder has satisfied the time period specified in paragraph (2),

subparagraph 1 of this Article, (i.e. whether 2 full years or

3 full years have elapsed since the date of allocation of the

employee stock options), the period of the leave without pay may

not be counted. The period specified in paragraph (2),

subparagraph 1 of this Article shall be extended by the period of

the leave without pay. Additionally, the effective duration of

the options (10 years from the date of issue by HTC) shall not be

extended on grounds of leave without pay. If the stock option holder,

as a result of taking leave without pay, fails or is unable to

exercise the option rights within the effective duration of the

options, the option holder is deemed to have forfeited the option

rights.

(7) Severance

For stock options that are already exercisable under the provisions

of paragraph (2) of this Article, the share purchase rights may

be exercised within 3 months from the effective date of severance

(but not beyond the duration of the stock options); if this happens

to fall within a period during which, as specified under these

Rules, exercise of the stock options is prohibited, the exercise

period shall, from the date the options may be exercised, be extended

by the number of days that they could not be exercised. If the share

purchase rights are not exercised within the aforesaid period, the

rights shall be deemed forfeited. For stock options that have not

yet become exercisable, the share purchase rights shall be deemed

forfeited from the effective date of severance.

(8) Job position transfer to an affiliate

If due to HTC's operational needs, HTC decides that it is necessary

to transfer a holder of HTC stock options to a position at an HTC

affiliate, the transfer shall have no effect on the rights and

obligations in connection with the stock options already allocated.

(9) When a stock option holder leaves employment for a reason other

than those listed above or when some adjustment must be made

pursuant to laws or regulations in the course of actual

execution of the measures above, the chairman is authorized

to adopt or adjust relevant measures on an ad hoc basis

according to the actual circumstances.

(10) If the stock option holder or heir is unable to exercise the

option rights within the time period set out above, the holder

or heir is deemed to have forfeited the share purchase rights.

11.Other terms and conditions for exercising stock option:

Method for handling of stock options of which the share purchase rights

have been forfeited.

When the share purchase rights of a stock option are forfeited, HTC

shall cancel the option and shall not reissue it.

12.Method for performance of contract:

The method for the performance of the options is as follows:

HTC will issue new shares in dematerialized form by book-entry

transfer; furthermore, it will first issue the stock and then

subsequently carry out registration of the change to its amount

of registered capital, pursuant to the proviso of Article 161,

paragraph 1 of the Company Act.

13.Adjustment of exercise price:

(1) If, after the stock options are issued, except for the Company

issuing new common shares due to the exercise of conversion

rights or subscription rights of equity-linked instruments,

or employee bonuses, after issuing employee stock options

or restricted employee shares, the subscription price per

share will be adjusted when then number of the Company's

outstanding common shares is changed under certain situations,

(including any private placement, cash capital increase,

capitalization of earnings, capitalization of reserves,

stock split, issue of new shares in connection with a merger,

consolidation, or transfer of shares from another company,

or issue of overseas depositary receipts for a cash capital

increase, or so forth), the purchase price may be adjusted

by the formula set out below (calculated to the 10th of a

New Taiwan Dollar, with sums below that rounded off).

However, if the adjustment of the purchase price might

have an adverse effect on the tax burden of the stock

option holder, HTC does not bear any liability to the stock

option holder in connection with the decision to adjust

the purchase price.

Adjusted purchase price ＝ purchase price before adjustment ×

﹝number of shares already issued + (amount paid per share ×

number of new shares issued) / market price per share ﹞/

(number of shares already issued + number of new shares issued)

1. "Number of shares already issued" means the total number of

common shares already issued, minus treasury shares that

HTC has bought back but has not yet canceled or transferred.

2. In the case of bonus shares or a stock split, the "amount paid

per share" is zero.

3. In the event that the adjusted purchase price is higher than

the purchase price before adjustment, the adjustment will not

be made.

4. When new shares are issued in connection with a merger,

consolidation, or transfer of shares from another company,

the "amount paid per share" for the new capital increase

shares shall be the average closing price of HTC common

shares over the sequential 30 business days commencing

from the day that is the 45 business day prior to the

record date of such merger.

5. The determination of the market price per share shall be

done by calculating the simple arithmetic mean of the

closing price of the common stock for either the 1, 3,

or 5 business days prior to the ex-rights record date,

the price determination record date, or the stock split

record date.

(2) If, after the employees stock options are issued, if the

ratio of the cash dividend per share of the Company's

common shares to the current share price of the Company

is more than 1.5%, the purchase price will be adjusted

by the formula set out below (calculated to the 10th of

a New Taiwan Dollar, with sums below that rounded off).

Adjusted purchase price per share = purchase price per

share before adjustment × [1-(Cash dividend per share /

Current share price)]

The above-mentioned current share price shall be the

simple arithmetic average closing prices of the Company's

common shares over the period of one, three or five

business day(s) prior to the date of the Company's making

public announcements of a record date for determination of

shareholders entitled to receive annual dividends distributions.

(3) If, after the stock options are issued, there is any capital

reduction resulting in a decrease in the shares of common stock,

from a cause other than cancellation of treasury shares, the

purchase price will be adjusted by the formula set out below

(calculated to the 10th of a New Taiwan Dollar, with sums

below that rounded off).

When capital reduction for loss compensation:

Exercise price after adjustment = exercise price before

adjustment × (Number of shares already issued/shares

issued after capital reduction)

When cash capital reduction:

Exercise price after adjustment = (exercise price before

adjustment -the amount of money returned per share) ×

(Number of shares already issued/shares issued after

capital reduction)

14.Procedures for exercising option:

(1) Except during a book closure period as provided by law or regulation

and except as provided in paragraph (4) of this Article, the stock

option holder may exercise share purchase rights in accordance with

these Rules, and may complete a share purchase request and submit

its application to HTC.

(2) After processing the purchase request, HTC will notify the stock

option holder to pay the share price at a designated bank within

the time limit. If the price is not paid within the time limit,

the holder is deemed to have voluntarily forfeited the share

purchase rights in that request, and the portion requested

but not paid for shall be deemed not to have been purchased,

and the stock option holder will need to submit a new request

for purchase. Furthermore, once a stock option holder has made

a payment for a share purchase, the payment may not be canceled.

(3) Once HTC has verified that the share price has been fully received,

it will instruct HTC's shareholder services agent to enter the number

of shares purchased by the employee and the employee's name into

HTC's shareholder register, and to transfer within 5 business days,

by book-entry through the central depository, the shares of new

common stock issued by HTC. Those shares of common stock shall be

listed for trading from the date that they are delivered to the

stock option holder.

(4) A stock option holder may, within the scope and time limits set

out in Article 6, paragraph (2) of these Rules, complete a share

purchase request and submit the application to HTC's shareholder

services agent, except during the following periods, during which

the option holder is prohibited from exercising option rights:

1. The statutory book closure period before the annual shareholder

meeting of the given fiscal year.

2. When HTC arranges a book closure date with the Taiwan Stock

Exchange for an issue of bonus shares, cash dividends, or a

cash capital increase rights issue: the period from 15

business days before the book closure date until the record

date of the rights distribution.

3. The period from the record date of a capital reduction until

the day before the commencement of trading of the replacement

shares issued in connection with the capital reduction.

(5) Within 15 days after the end of each quarter, HTC shall publicly

announce the number of shares delivered for the exercise of

employee stock options in the preceding quarter. And at least

once each quarter, it shall apply to the competent authority

for company registration to make an amendment to its registered

capital to reflect the shares that have been purchased under the

options.

(6) If a stock option holder referred to in paragraphs (1) to (4)

hereinabove is an employee who has a household registration in

the mainland area, the exercise of option rights shall be

performed on the option holder's behalf by the option holder's

agent or representative in the Taiwan area.

15.Rights and obligations after exercising options:

(1) The rights and obligations pertaining to common stock shares

delivered by HTC under these Rules are identical to those of other

HTC common stock. The stock purchased by stock option holders under

these Rules, and tax burdens arising in connection with any

transaction thereof, shall without exception be subject to and

handled in compliance with the then-current tax regulations adopted

by ROC tax authorities and the tax regulations of the places of

registration of the overseas subsidiaries where the options are

allocated and the countries where the employees are located.

(2) If an employee who has a household registration in the mainland

area holds common shares delivered by HTC under these Rules, the

voting rights of those shares, unless otherwise provided by law or

regulation, may not be exercised in any matter that would involve

substantial control or influence over the operations or management

of the company, and the rights may be exercised only through its

Taiwan agent or representative who attends a shareholder meeting

on its behalf.

16.The record date for share conversion, if conversion, exchange, or

subscription rights are attached:None

17.Possible dilution of equity, if conversion, exchange, or subscription

rights are attached:None

18.Other important stipulations:

(1) Confidentiality: after a stock option holder has been allocated stock

options, the option holder shall comply with confidentiality

requirements, and except as required by law or regulation or by

demand of a competent authority, may not disclose any information

related to the content or quantity of the stock options allocated.

Any violation will be handled pursuant to Article 6, paragraph (2),

subparagraph 2 of these Rules.

(2) These Rules shall become effective after they have been passed by a

majority of the directors present at a board of directors meeting

attended by at least two-thirds of the directors, and have been

reported to and approved by the competent authority. The same

shall apply in the event of any amendment to these Rules before

they are actually issued. Any amendments request by competent

authority, the Chairman is authorized to amend the Rules and

become effective upon the Board of Directors' approval.

(3) The limit on the quantity of stock options issued by HTC

shall be determined in accordance with Article 60-8 and other

applicable provisions of the Offering Regulations.

(4) Any matter on which these Rules are silent shall be handled in

accordance with applicable laws and regulations.

19.Any other matters that need to be specified:None1.Date of

HTC Investors