Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 141

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 6
Chunk 141
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of 1,825,729 options were granted and outstanding under the Pre-IPO ESOP.

2023 Employee Share Option Plan

We have adopted a new employee
share purchase plan, or 2023 ESOP, for the purpose of granting share-based compensation awards to our employees, directors and consultants
to incentivize their performance and align their interests with ours. The following discussion is qualified in its entirety by the full
text of the 2023 ESOP.

When adopted in November 2023,
the 2023 ESOP authorized the issuance of 1,000,000 Class A Ordinary shares. In April 2024, the shareholders approved increasing shares
available for grant under the 2023 ESOP to 3,200,000 shares, and, in November 2024, the shareholders approved increasing shares available
under the 2023 Plan to 5,200,000 shares. Annually on January 1, shares are added to the 2023 Plan in an amount up to 10% of the Company’s
issued and outstanding Class A Ordinary Shares as of December 31 of the prior year; provided that the total number of Class A Ordinary
Shares which may be issued upon exercise of all options to be granted to all participants under the 2023 ESOP shall not in aggregate exceed
15% of the Company’s issued and outstanding Class A Ordinary Shares. We estimate that on January 1, 2025, approximately 6,600,000
additional shares were automatically added to the 2023 ESOP as a result of this provision.

In November 2024, holders of the following agreed
to terminated their options and restricted stock grants: (i) 1,285,272 options granted under the Pre-IPO ESOP that are exercisable at
prices above $1.50 per share, and (ii) 3,774,038 options and restricted shares under the 2023 ESOP and substantially all of which have
exercise prices in excess of the current price of the Company’s Class A Ordinary Shares (collectively (i) and (ii) are the “ Underwater
Grants”). The Compensation Committee of the board determined that the Underwater Grants are providing little if any value to the
Company and the option holders and the Compensation Committee deemed it in the best interest of the Company and its shareholders to cancel
the Underwater Grants. The Compensation Committee has also determined that cancellation of the Underwater Options is not intended to constitute
a re-pr