ESR AR 2019 EN

107 DIRECTORS’ REPORT ESR Annual Report 2019 EQUITY-LINKED AGREEMENTS Save as the information disclosed in paragraphs headed “KM ESOP, Tier 1 ESOP and Post-IPO Share Option Scheme” in this report, the Company did not enter into any equity-linked agreement for the year ended 31 December 2019, nor was there any equity-linked agreement entered into by the Company subsisting as at 31 December 2019. KM ESOP, TIER 1 ESOP AND POST-IPO SHARE OPTION SCHEME 1. KM ESOP Below is a summary of the principal terms of the KM ESOP of the Company. The terms of the KM ESOP are not subject to the provisions of Chapter 17 of the Listing Rules. (i) Purpose The purpose of the KM ESOP is to incentivise or reward eligible participants for their contribution towards our Company’s operations, so as to: (a) motivate and encourage recipients to continue to perform well; (b) to retain the services of recipients whose work is vital to the growth and continued success of our Company; and (c) to link the personal interests of members of the Board and the employees with those of the Shareholders. (ii) Who may join The Board may, at its discretion, grant an option to any director or employee of our Group, or any director or employee of any company which is under the control of our Company (an “ Eligible Person ”). (iii) Classes of shares that may be issued Under the KM ESOP, ordinary shares may be issued. For the year ended 31 December 2019, the Company did not issue any ordinary shares under the KM ESOP. (iv) Maximum number of shares The number of shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the KM ESOP at any time shall not exceed 63,558,343 Shares (approximately 2.09% of the issued share capital of the Company as at 31 December 2019). (v) Maximum entitlement of each participant The scheme does not set a limit of maximum entitlement of each participant under the scheme. (vi) Period within which the securities must be taken up under an option An option shall lapse automatically (to the extent not already exercised and subject always to the terms and conditions upon which the option was granted) on the earliest of: (a) the tenth anniversary of the date of grant; (b) the expiry of three months from the date on which the participant ceases to be an Eligible Person; (c) If the participant ceases to be an employee by reason of his death, the options may be exercised by his personal representatives within twelve months from the date of death. If the participant ceases to be an employee by reason of his injury, ill-health or disability, the options may be exercised, to the extent it is vested, within six months from the date of cessation of employment. (“ Rights on Death, Retirement, Injury and Disability ”) (d) If a participant’s employment with our Company or any member of our Group is terminated by way of: (a) his voluntary resignation within three months from the date of grant; (b) fundamental breach of his employment agreement or a material breach of his non-disclosure undertaking; or (c) his serious misconduct, the option will lapse and cease to be exercisable immediately. If a participant ceases to be employed by our Company by reason of redundancy or dismissal other than by summary dismissal, the option may be exercised to the extent that it is vested within three months from the date of cessation of employment. (“ Effect of Dismissal or Ceasing Employment ”)