新至陞科技股份有限公司

1. Date of board resolution: 06/27/2017

2. Period of issuance: To be issued in one time of by installment within one year after receiving the effective data approved by competent authorities. The board authorizes the chairperson to determine the actual date of issuance.

3. Qualifications of subscribers:

Subscribers are limited to direct labor of this company and subsidiaries at home and abroad. Employees qualified for award and the quantity of shares awarded will be subject to their work performance, overall contribution, special deeds, and other conditions. Such shall be approved by the chairman and board adoption. However, stocks awarded to employees who are directors and/or members of the management shall first be approved by the Compensation Committee.

When issuing employee stock warrants under paragraph 1 of Article 56-1, Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the cumulative quantity of shares valid for subscription along with the cumulative quantity of new restricted employee shares obtained by a single holder of employee stock warrants shall not exceed three per mille (3‰) of the company’s total issued shares. Furthermore, the cumulative quantity of shares valid for subscription by a single holder of employee stock warrants issued by the company under paragraph 1 of Article 56-1, shall not exceed one percent (1%) of the company’s total issued shares.

However, with the special approval of the national competent authorities of business objectives, a single employee may be exempted from the above restrictions on the total number of employee stock warrants and new restricted employee shares.

“Subsidiary” under this provision shall comply with one of the following criteria:

I. A company of which this company holds directly or indirectly over fifty percent (50%) of its voting shares.

II. A company of which this company holds directly or indirectly below fifty percent (50%) but up to twenty percent (20%) of its voting shares, complies with one of the following conditions specified in SFASs 5 and 7, and includes in the latest consolidated financial statement certified or reviewed by a CPA:

(1) Holding over half the company’s voting shares through arrangements with other investors.

(2) Controlling the finance, operations, and human resources policy of the company by law or by contract.

(3) Having entitlement to appoint and dismiss over half of board members and control over the board.

(4) Having the right to direct over half of the board’s voting rights and control the board.

III. Before issuing employee stock warrants to employees of the subsidiaries complying with subparagraph 2, the company shall consult a CPA to express opinion on the eligibility of a subsidiary. This will be adopted after the board’s approval.

4. Total units of employee stock warrants: 600 units.

5. Quantity of shares valid for subscription per unit: 1,000 shares.

6. Total new shares to be issued for the exercise of subscription or subject to Article 28-2 of the Securities and Exchange Act that require quantity of shares for repurchase: All 600,000 newly issued shares.

7. Subscription price: The closing price of the Japan company common share on the date of issuance.

8. Validity of subscription:

I. Lock-up period of rights:

According to competent authorities, a stock warrant holder shall not exercise its rights to stock subscription within two years after the award of employee stock warrants.

II. After the lock-up period, stock warrant holders may exercise their rights to stock subscription at the proportion and the time specified below: A stock warrant is valid for a term of five years. Except as part of legacy, all stock warrants are non-transferrable, non-mortgageable, non-presentable as gifts, or non-disposable in any form. Failure to exercise stock subscription will be considered as a waiver after their validity. Under no circumstances shall a stock warrant holder claim its stock subscription rights.

Stock Warrant Award Period	Exercisable Proportion (cumulative)
After two years from award	50%
After three years from award	75%
After four years from award	100%

III. This Company is entitled to retrieve and annul the unexercised stock warrants or exercised but unsubscribed stock warrants when employees violate the labor contract, employment contract, or work rules constituting gross negligence at work after the award.

IV. The board of directors may adjust the said exercise periods and proportions based on situation of each time of issuance.

9. Type of share for subscription: Common share

10. Handling stock warrants after employee exits or succession:

I. Exit (including resignation and discharge)

Holders of exercisable stock warrants may exercise their right to stock subscription within 30 days after the exit. Where a temporary suspension of stock transfer is in effect, the right to exercise will be postponed accordingly. Failure to exercise the right to stock subscription will be considered as a waiver. Stock warrants invalid for subscription will be waived automatically on the date of exit, and this company is entitled to retrieve and annul the awarded stock warrants.

II. Retirement

Holders of exercisable stock warrants under Article 2 may exercise their rights to stock subscription during the warrant’s validity. When retirees violate the non-compete agreement (covenant not to compete), however, this company is entitled to retrieve and annul the awarded stock warrants. Stock warrants invalid for subscription will be waived automatically on the date of retirement.

III. Deaths by natural causes

When a holder of exercisable stock warrants dies, the successor may exercise the rights to stock subscription within one year after the death of the deceased. Stock warrants invalid for subscription will be waived automatically.

IV. Work-related disabilities

Employees disabled by work and unable to continue to work anymore can exercise their rights to subscribe all shares contained in the stock warrants held upon their exit. However, such employees shall exercise their rights to stock subscription two years after the award regardless of the restrictions on subscription proportion. Holders of stock warrants shall exercise their rights to stock subscription within one year after the date of exit or two years after the award, whichever comes last.

The successor of the holders of stock warrants killed in an occupational accident or occurrence may exercise the rights to subscription to all shares contained in the stock warrants awarded. However, such employees shall exercise their rights to stock subscription two years after the award regardless of the restrictions on subscription proportion as specified in paragraph 2 of this article. Successors of holders of stock warrants shall exercise their right to stock subscription within one year after the date of death or two years after the award, whichever comes last.

V. Leave of absence

Employees approved for a leave of absence based on the Labor Standards Act or the Employee Work Rules of this company holding exercisable stock warrants may exercise the right to stock subscription within 30 days from the start of the leave of absence. Should the stock transfer be temporarily suspended by law, the period of exercise will be postponed accordingly. Stock warrants invalid for exercise will be re-validated after the reinstatement, provided that the period of exercise will be postponed accordingly during the validity of the stock warrant.

VI. Severance

Holders of exercisable stock warrants may exercise their right to stock subscription within 30 days after the date of severance. Should stock transfer be temporarily suspended by law, the period of exercise will be postponed accordingly. Stock warrants invalid for exercise will be waived automatically on the date of severance.

VII. Transfer

A holder of stock warrants transferred to a subsidiary as specified in Article 2 of the Regulations may extend its rights and interest according to the original regulations.

VIII. When an adjustment is required not for the above reasons or as requested by law by following the above items, the chairman is authorized to make decisions or adjustments based on individual situations.

IX. The right to stock subscription of holders of stock warrants or their successors failing to exercise their right to stock subscription as specified in paragraph 2 of this article will be waived automatically.

11. Other stock subscription requirements:

Handling waived stock warrants: This company will annul stock warrants voluntarily waived by holders or revoked by this company without re-issuance.

12. Performance: Stocks will be delivered in the new shares issued by this company.

13. Adjustment of stock subscription price:

If there is a change (cash capitalization, capitalization with earnings, capitalization with additional paid-in capital, issuance of new shares of acceptance of new shares from other companies, cash capitalization, or issuance of global depositary receipts) in the common stock, the company after stock warrants are issued, may adjust the stock subscription price according to the equation below (rounding to NT$1).

If the adjustment of stock subscription price may bring unfavorable effect to the tax burden of subscribers, apart from determining not to adjust the stock subscription price independently, this company will not claim any responsibility from subscribers for the non-adjustment of stock subscription price.

Adjusted Stock Subscription Price = Unadjusted Stock Subscription Price x [Quantity of Issued Shares + (Billing Amount Per Share x Quantity of New Issued Shares) / Market Price Per Share] / (Quantity of Issued Shares + Quantity of New Issued Shares)

(I) Quantity of Issued Shares: The total quantity of issued common shares (including shares issued through private placement). The purchased but not yet annulled or transferred treasury stocks shall be deducted.

(II) Billing Amount Per Share: No fee will be billed for bonus shares or stock split.

(III) After a merger with another company, the billing amount per share issued for capitalization will be the average closing price of 20 consecutive days from 45 business days before the base date of merger.

(IV) The stock subscription price will remain the same when it is higher after the adjustment.

(V) After stock warrants are issued, if the ration of the cash dividend per share of common shares is 1.5% higher than their market price, the stock subscription price will be adjusted according to the equation below:

Adjusted Stock Subscription Price = Unadjusted Stock Subscription Price x (1 – Ratio of the Cash Dividend Per Share in the Market Price of Common Shares)

The market price per share shall be the simple arithmetic mean of the closing price of common shares one, three, or five business days prior to the announcement of the date of stock transfer suspension for cash dividend.

(VI) Except for the reduction of the quantity of common shares after annulling treasury stocks for capital reduction, the adjusted stock subscription price shall be calculated based on the equation below and adjusted on the base date of capital reduction:

Capital reduction as compensation for deficits:

Adjusted Exchange Price = Unadjusted Exchange Price x (Quantity of Common Shares Issued Before Capital Reduction / Quantity of Common Shares Issued After Capital Reduction).

Cash capital reduction

Adjusted Exchange Price = (Unadjusted Exchange Price – Refunded Amount Per Share) x (Quantity of Common Shares Issued Before Capital Reduction / Quantity of Common Shares Issued After Capital Reduction).

14. Process for excise of stock subscription:

(I) Except outside the following periods, a subscriber may exercise the rights to a stock subscription during the period as specified in paragraph 2 of Article 5, of these regulations. A subscriber shall also fill in the “Stock Subscription Request Form” to apply for stock subscription to the stock transfer agent. The right to stock subscription will take effect immediately after delivery and is irrevocable.

(1) The statutory period of stock transfer suspension prior to an AGM.
(2) The statutory suspension of stock transfer, and from three business days prior to the date of ex-rights announcement for suspension of bonus share transfer, the date of ex-dividend for suspension of cash dividend transfer, or the date of ex-rights for suspension of stock subscription for cash capitalization reported to competent authorities by this company, until the base date of rights distribution.

(3) The period between “the board meeting deciding on the combined base date of the year” and the combined base date of the year; between “the board meeting deciding on the base date of split of the year” and the base date of split of the year; or between the “board meeting deciding on the date of issuance of paid shares of the year” and the base date of issuance of paid shares of the year.

(4) Other periods of statutory stock transfer suspension according to occurrence of other events.

(II) After accepting a request for stock subscription, the stock transfer agent shall notify the subscriber to pay the billing amount to the designated banking account.

(III) After confirming the billing amount and registering the exact quantity of subscription in the list of shareholders, the stock transfer agent shall transfer common shares directly to the TDCC account of the subscriber within five business days.

(IV) The common shares subscribed under the stock warrant will be transacted on the market from the date of delivery to the subscriber.

(V) This company shall apply for a capital amount change to competent authorities at least once a quarter after the completion of stock subscription.

15. Rights and obligations after stock subscription: The rights and obligations of the common shares subscribed with stock warrants will be the same as the common shares issued by the company.

16. Base date of exchange for shares with conversion, exchange or subscription: N/A.

17. Potential dilution of shares with conversion, exchange or subscription:

After receiving the approval for issuance from competent authorities, holders of stock warrants can only subscribe stocks with the stock warrants of this issuance based on the schedules specified in the stock subscription regulations two years after the award.

18. Other important agreements: N/A.

19. Other information to disclose:

(1) These Regulations shall take effect with the approval of over half of the directors in a board meeting attended by over two thirds of all directors and the approval of competent authorities. The same shall apply to amendments thereof. Where amendments are required by competent authorities in the review process, the board of directors authorizes the chairman to amendment these Regulations accordingly and report to the board for adoption prior to release.

(2) Matters not provided for herein shall be subject to related laws and regulations.