Coats : Proposed 2024 Deferred Annual Bonus Plan (DABP) Rules

COATS GROUP PLC DEFERRED ANNUAL BONUS PLAN

ADOPTED BY THE BOARD ON [INSERT DATE]

APPROVED BY SHAREHOLDERS ON [INSERT DATE]

EXPIRY DATE: [INSERT DATE]

CONTENTS
____________________________________________________________
Clause
1.	INTERPRETATION	3
2.	ELIGIBILITY AND GRANT OF DEFERRED ANNUAL BONUS AWARDS	11
3.	RIGHTS IN RELATION TO SHARES AND DIVIDEND EQUIVALENTS	12
4.	INDIVIDUAL GRANT LIMITS	13
5.	OVERALL GRANT LIMITS	13

6. PURPORTED GRANT OF A DEFERRED ANNUAL BONUS AWARD IN

	EXCESS OF LIMITS	14
7.	US AWARD HOLDERS	14
8.	FORFEITABLE SHARE AWARDS	14
9.	VESTING DATE	15
10.	SUSPENSION OF DEFERRED ANNUAL BONUS AWARDS	15
11.	CIRCUMSTANCES IN WHICH MALUS AND CLAWBACK CAN APPLY	16
12.	OPERATION OF MALUS AND CLAWBACK	17
13.	EXERCISE OF OPTIONS	20
14.	MANNER OF EXERCISE OF OPTIONS	20

15. SETTLEMENT OF DEFERRED ANNUAL BONUS AWARDS OTHER THAN

FORFEITABLE SHARE AWARDS

21

16. ALTERNATIVE METHODS OF SETTLEMENT OF DEFERRED ANNUAL

	BONUS AWARDS	22
17.	LAPSE OF DEFERRED ANNUAL BONUS AWARDS	22
18.	TERMINATION OF EMPLOYMENT (OPTIONS)	23
19.	TERMINATION OF EMPLOYMENT (NON-OPTION AWARDS)	24
20.	TERMINATION OF EMPLOYMENT (TIMING)	24
21.	AWARD HOLDER RELOCATED ABROAD	24
22.	TAKEOVERS AND LIQUIDATIONS	25
23.	VARIATION OF SHARE CAPITAL	26
24.	TAX LIABILITIES	28
25.	RELATIONSHIP WITH EMPLOYMENT CONTRACT	29
26.	NOTICES	30
27.	ADMINISTRATION AND AMENDMENT	31
28.	THIRD PARTY RIGHTS	33
29.	CONFIDENTIALITY	33

1

30.	DATA PRIVACY	33
31.	SEVERABILITY	34
32.	GOVERNING LAW	34
33.	JURISDICTION	34

2

1. Interpretation

1.1 In this Plan, unless otherwise stated, the words and expressions below have the following meanings.

Acceptance Notice: a document, in the form prescribed by the Remuneration Committee from time to time, in which the Award Holder accepts these Rules and the terms of their Award.

Acquiror: a person who obtains Control of the Company either alone or together with persons Acting in Concert (as defined in the City Code on Takeovers and Mergers published by the Panel on Takeovers and Mergers) with them or it.

Adoption Date: the date of the approval of the Plan by the Company's shareholders (or, where shareholder approval is not sought, the date of the adoption of the Plan by the Board).

Award Certificate: a certificate setting out the terms of a Deferred Annual Bonus Award, in accordance with rule 2.4, in the form prescribed by the Remuneration Committee from time to time.

Award Holder: an individual who holds a Deferred Annual Bonus Award or, where applicable, that individual's personal representatives, and for the purposes of rules 11, 12, 24, 25, 29 and 30 shall include a former Award Holder.

Bad Leaver: an Award Holder who ceases to be an Employee due to personal misconduct or any other reason at the discretion of the Remuneration Committee (acting fairly and reasonably).

Board: the board of directors of the Company.

Bonus: means a bonus determined under any bonus arrangement operated by a Group Company.

Business Day: a day other than a Saturday, Sunday or public holiday in England when banks in London are open for business.

Cash-onlyAward: a Phantom Option or a Phantom Share Award (which confer no right on the Award Holder to receive Shares or any interest in Shares).

Clawback Amount: an amount of value determined in accordance with rule 12.

Closed Period: has the same meaning as in UK MAR.

Company: Coats Group Plc, incorporated and registered in England with number 00103548.

Conditional Share Award: a right to acquire for no cost a specified number of Shares on the Vesting Date.

Control: has the meaning given to it in section 995 of the Income Tax Act 2007.

3

Change of Control: an Acquiror acquires Control of the Company.

Daily Official List: the daily record setting out the prices of all trades in securities conducted on the London Stock Exchange.

Dealing Day: a day on which the London Stock Exchange is open for business.

Dealing Restrictions: restrictions imposed by the Company's share dealing code, UK MAR, the Listing Rules, or any applicable laws, codes or regulations which impose restrictions on dealing in shares and other securities, or otherwise.

Deferred Annual Bonus Award: any of the following:

1. a Conditional Share Award;
2. a Nil or Nominal Cost Option;
3. a Phantom Share Award
4. a Phantom Option, or
5. a Forfeitable Share Award.

Deferred Bonus: the part of an Award Holder's Bonus which is required to, or the Remuneration Committee has decided shall, be delivered by way of a Deferred Annual Bonus Award.

Dilutive Shares: on any date, all shares of the Company which:

1. have been issued, or transferred out of treasury, on the exercise of options granted, or in satisfaction of any other awards made, under any Employees' Share Scheme (including the Plan) during the shorter of:

1. the period of ten years ending on (and including) that date; and
2. the period since the Company's shares were first admitted to the Official List; and

1. remain capable of issue, or transfer out of treasury, under any Existing Award.

For the purposes of the above:

1. shares by reference to which a cash payment under a Cash-only Award (or any cash-based award under any other plan operated by a Group Company) is calculated, and Shares subject to Transfer Only Awards (or similar under any other Employee Share Scheme operated by a Group Company), are not Dilutive Shares;
2. shares which were subject to rights which (i) lapsed or (ii) were surrendered or cancelled, will be ignored;
3. if, in the opinion of the Remuneration Committee, institutional investor guidelines cease to require treasury shares to be counted toward the above limit,

4

paragraphs a and b in the definition of Dilutive Shares above shall be read without the words "or transferred out of treasury" and "or transfer out of treasury" respectively, and

1. where an event under rule 23 has taken place between the date of issue of the shares and the date on which the limit is to be calculated, the number of shares to be taken into account for the purposes of the above limit will be adjusted in the manner the Remuneration Committee considers appropriate to take account of such event.

Discretionary Dilutive Shares: Dilutive Shares which were acquired pursuant to, or remain subject to awards granted under, the Plan or any other discretionary Employees' Share Scheme.

Dividend Equivalent: has the meaning set out in rule 3.

Employee: any individual who is an employee (including an Executive Director) of a Group Company.

Employer Company: the Award Holder's employer or former employer.

Employees' Share Scheme: has the meaning given to it by section 1166 of the Companies Act 2006.

Executive Director: (a) a director of the Company who is a member of the Board but is not a non-executive director, and (b) where applicable, a person who is not a director of the Company but who is (i) its chief executive officer (however described), or (ii) where such a function exists in the Company, its deputy chief executive officer (however described).

Exercise Date: in relation to an Option, the date on which it is validly exercised.

Exercise Notice: a document in the form prescribed by the Remuneration Committee from time to time that the Award Holder must complete and return (together with any other documents or payments required under the Plan) to the Company in order to exercise an Option.

Existing Award: an option or any other right or award under which shares in the Company may be acquired or received, granted under any Employees' Share Scheme (including the Plan) after the Shares were first admitted to the Official List.

Forfeitable Shares: Shares which are the subject of a Forfeitable Share Award.

Forfeitable Share Award: an award of Shares which are subject to forfeiture for a period, as set out in rule 8.

Good Leaver: an Award Holder who ceases to be an Employee and is not a Bad Leaver.

Grant Date: the date on which a Deferred Annual Bonus Award is, was, or is to be granted.

Grant Period: the period of 42 days commencing on the Adoption Date and, thereafter, the period of 42 days commencing on the Dealing Day immediately after the Company's

5

announcement of its results for any period (unless, in each case, the Company is restricted from granting Deferred Annual Bonus Awards during such periods as a result of any Dealing Restrictions, in which case the relevant Grant Period will be 42 days commencing on the Dealing Day after such Dealing Restrictions are lifted).

Group: the Company, any Subsidiary of the Company, any holding company of the Company (within the meaning of section 1159 of the Companies Act 2006) or any Subsidiary of the Company's holding company, each from time to time.

Group Company: any member of the Group from time to time.

ITEPA 2003: the Income Tax (Earnings and Pensions) Act 2003.

Listed: means that any part of the Company's ordinary share capital is admitted to the Official List (with consequent admission to trading on the Main Market of the London Stock Exchange) or any other internationally recognised investment exchange (which shall for these purposes be construed as the stock exchanges that are determined "recognised stock exchanges" in accordance with section 1005 of the Income Tax Act 2007 plus the Alternative Investment Market of the London Stock Exchange).

Listing Rules: the Listing Rules issued by the Financial Conduct Authority, as amended from time to time.

London Stock Exchange: London Stock Exchange plc or any successor body carrying on the business of the London Stock Exchange.

Market Value: whichever of the following applies:

1. For the purposes of determining on any Grant Date on which Shares are Listed the Market Value of a Deferred Annual Bonus Award for the purposes of rule 4, Market Value means an amount equal to the Middle Market Quotation for a Share on the Dealing Day immediately preceding the Grant Date or, where the Remuneration Committee decides in respect of any Deferred Annual Bonus Award, the average of the Middle Market Quotations for a period not exceeding the five consecutive Dealing Days immediately preceding the Grant Date (but excluding any Dealing Days that fall in a Closed Period).
2. For the purposes of calculating on any Exercise Date or Vesting Date on which Shares are Listed (i) the payment due from a Phantom Option or Phantom Share Award or (ii) the Market Value of a Share for the purposes of rules 12 and 16, Market Value means the Middle Market Quotation of a Share on the day on which the Market Value is measured or if that day is not a Dealing Day, on the immediately preceding Dealing Day (or, if the Remuneration Committee so decides in respect of any Phantom Option or Phantom Share Award, the average of the Middle Market Quotations for the day on which the Market Value is measured and a period not exceeding the four consecutive Dealing Days immediately preceding the day on which

6

the Market Value is measured (but excluding any Dealing Days that fall in

1. a Closed Period)).

2. If Market Value has to be determined in relation to any day on which Shares are not Listed, the Remuneration Committee shall determine it to its satisfaction having regard to Part VIII of the Taxation of Chargeable Gains Act 1992.

Middle Market Quotation: the mid-point between the closing 'buy' and 'sell' prices quoted on the relevant date (where the Shares are listed on the Official List and traded on the London Stock Exchange's market for listed securities, as derived from the Daily Official List).

NICs: National Insurance contributions or equivalent social security contributions in any other relevant jurisdiction.

Nil Cost Option: an option to acquire Shares for no payment.

Nominal Cost Option: an option to acquire Shares for payment of an exercise price equal to their nominal value (or such other exercise price as the Remuneration Committee may determine and specify in the Award Certificate).

Nominee: the person (including a trustee of an employee benefit trust) nominated by the Remuneration Committee to hold Shares on bare trust for the Award Holder subject to the rules and the terms of the Nominee Agreement.

Nominee Agreement: a document in the form prescribed by the Remuneration Committee from time to time, executed by the Nominee and the Award Holder that sets out the terms on which the Nominee holds Shares for the Award Holder (or former Award Holder).

Non-OptionAward: any of the following:

1. a Conditional Share Award;
2. a Forfeitable Share Award, or
3. a Phantom Share Award;

Official List: means the Official List maintained by the Financial Conduct Authority.

Option: a Nil Cost Option, a Nominal Cost Option or a Phantom Option.

Ordinary Vesting Date: in respect of a Deferred Annual Bonus Award, the first Dealing Day following the end of the Vesting Period (provided that if that date falls in a Closed Period, the Ordinary Vesting Date will be the first Dealing Day following the end of that Closed Period).

Phantom Option: an option to receive (for no payment) a cash payment on exercise equal to the Market Value of a specified number of Shares.

7

Phantom Share Award: a right to receive (for no payment) a cash payment on the Vesting Date equal to the Market Value of a specified number of Shares.

Plan: the Employees' Share Scheme constituted and governed by these rules, as amended from time to time.

Remuneration Committee: the remuneration committee of the Board as designated by the Board from time to time.

Relevant Company: the Award Holder's Employer Company or any other person who is or could be required to account to any Tax Authority for a Tax Liability in respect of an Award Holder.

Relevant Restriction: a restriction stated in an Award Certificate that applies to Shares issued or transferred pursuant to the Deferred Annual Bonus Award.

Scheme of Arrangement: a compromise or arrangement under either section 899 or section 901F of the Companies Act 2006.

Share: a fully paid ordinary share of £0.05 nominal value (subject to rule 23) in the capital of the Company.

Share-settledAward: a Conditional Share Award, Forfeitable Share Award, Nominal Cost Option or Nil Cost Option.

Subsidiary: a subsidiary as defined in section 1159 of the Companies Act 2006.

Tax Authority: His Majesty's Revenue & Customs (or any successor authority from time to time) or, where relevant, its equivalent in another jurisdiction.

Taxable Event: any event or circumstance that gives or may give rise to a liability for the Award Holder to pay (or for any Relevant Company to account to any Tax Authority for or in respect of the Award Holder or former Award Holder) a Tax Liability, in respect of:

1. the Deferred Annual Bonus Award, including its Vesting, exercise, assignment or surrender for consideration, or the receipt of any benefit in connection with it;
2. any Shares (or other securities or assets):

1. 'earmarked' or held to satisfy (or in respect of which another 'relevant step' is taken in connection with) the Deferred Annual Bonus Award (with the terms in inverted commas having the meaning given to them in Part 7A of ITEPA 2003);
2. acquired as a result of holding the Deferred Annual Bonus Award (including on its Vesting or exercise), or
3. acquired in consideration of the assignment or surrender of the Deferred Annual Bonus Award;

8

1. any securities (or other assets) acquired or earmarked as a result of holding Shares (or other securities or assets) mentioned in paragraph (b);
2. entering into an election under section 430 or 431 of ITEPA 2003; or
3. any amount due under PAYE in respect of securities or assets within paragraph (a) to paragraph (d), including any failure by the Award Holder to make good such an amount within the time limit specified in section 222 of ITEPA 2003.

Tax Liability: the total of any income tax and primary class 1 (employee) NICs (but not secondary class 1 (employer) NICs), or the equivalent in any jurisdiction, for which any Relevant Company is or may be liable to account (or reasonably believes it is or may be liable to account) as a result of any Taxable Event and any related fines, penalties and interest.

Transfer Only Award: a Deferred Annual Bonus Award which the Remuneration Committee has designated can be satisfied only by the transfer of Shares, other than treasury shares. A Deferred Annual Bonus Award is not a Transfer Only Award if it can be satisfied using Shares which have been issued to a person who holds those Shares in a fiduciary capacity for the purposes of an Employees' Share Scheme.

UK MAR: the retained EU law version of the Market Abuse Regulation (Regulation (EU) 596/2014) which applies in the UK.

US Award Holder: means an Award Holder (or proposed Award Holder, where the context so permits or requires) who is, becomes, or is expected to become, subject to US income tax.

Vest: means

1. in relation to an Option, that it becomes exercisable;
2. in relation to a Conditional Share Award, that the Award Holder becomes entitled to beneficial ownership of the relevant Shares;
3. in relation to a Forfeitable Share Award, that the Shares subject to the Award cease to be subject to forfeiture, and
4. in relation to a Phantom Share Award, that the Award Holder becomes entitled to payment of the amount due under the Phantom Share Award

in each case, in accordance with these rules, and "Vesting" and "Vested" shall have a corresponding meaning.

Vesting Date: is the date on which the Award Vests, which shall (save where the Deferred Annual Bonus Award has lapsed or been surrendered before such date) be the Ordinary Vesting Date or such other date as the Deferred Annual Bonus Award Vests in accordance with these rules.

9