Drax : 2024 Sharesave Plan rules

RULES

OF THE

DRAX GROUP PLC 2024 SHARESAVE PLAN

Board adoption:	[date]
Shareholders' approval:	[25 April 2024]
Expiry date:	The date of the
	Company's annual
	general meeting in
	2034
HMRC registered:	[date]
HMRC reference:	[INSERT]

Table of Contents
1.	Meaning of words used	1
2.	Purpose	3
3.	Eligible Employees	3
4.	Issuing invitations	3
5.	Applications for Options	5
6.	Expected Repayments	6
7.	Scaling down	6
8.	Granting Options	7
9.	Share dilution limit	8
10.	Exercise of Options	8
11.	Lapsing	9
12.	Settlement of Options	9
13.	Leaving	10
14.	Takeovers and restructurings	11
15.	Exchange of Options	13
16.	Variations in share capital	15
17.	Tax	15
18.	Terms of employment	16
19.	General	16
20.	Administration	18
21.	Changing the Plan and termination	18
22.	Governing law and jurisdiction	19

Drax Group plc 2024 Sharesave Plan

(i)

Drax Group plc 2024 Sharesave Plan

1. Meaning of words used

1.1 General

In these rules:

"Appropriate Period" means the relevant period referred to in paragraph 38(3) of Schedule 3;

"Board" means the board of directors of the Company or a duly authorised committee thereof. For the purposes of Rules 14 (Takeovers and restructurings) and 15 (Exchange of Options), it means those persons who were members of the Board immediately before the relevant event;

"Bonus Date" means the date on which any Bonus becomes payable, which will only occur after all the Contributions have been made;

"Bonus" means the bonus (if any) payable under a Savings Contract linked to an Option;

"Business Day" means a day on which the London Stock Exchange is open for the transaction of business;

"Company" means Drax Group plc with registered number 05562053;

"Contribution" means the monthly contribution under a Savings Contract; "Control" has the meaning in section 719 of ITEPA;

"Dealing Restrictions" means any internal or external restrictions on dealings or transactions in securities;

"Eligible Employee" means a person who is eligible to participate in the Plan under Rule 3.1 (Eligibility) at the relevant time;

"Employee" means any employee or director of any Member of the Group and, for the purposes of Rule 18 (Terms of employment) it includes a former employee or director;

"Expected Repayment" has the meaning given in Rule 6.1 (Meaning of Expected Repayment); "Grant Date" means the date on which an Option is granted;

"Group" means the Company and any company that is a subsidiary of the Company (within the meaning of section 1159 of the Companies Act 2006), and "Member of the Group" will be understood accordingly;

"HMRC" means His Majesty's Revenue & Customs;

"Invitation Date" means the date an invitation to apply for an Option is issued under the Plan; "ITEPA" means the Income Tax (Earnings and Pensions) Act 2003;

"Market Value" on any day means:

1. when Shares are listed on the London Stock Exchange:
2. 1. the average of the closing prices of those Shares shown in the Stock Exchange Daily Official List for the three consecutive Business Days ending on the previous Business Day (or if two closing prices are shown, the lower price plus one-half of the difference between those two figures); or

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1. 1. if the Board decides otherwise, the price determined from the Stock Exchange Daily Official List in accordance with the principles under (a) above on the previous Business Day only; or
2. otherwise, the market value of a Share as determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed in advance with HMRC,

and if Shares are subject to a Restriction, Market Value will be determined as if the Shares were not subject to the Restriction;

"Maximum Contribution" means the maximum permitted Contribution determined in accordance with Rule 4.9;

"Minimum Contribution" means the minimum permitted Contribution determined in accordance with Rule 4.8;

"Option" means a right to acquire Shares granted under, and exercisable in accordance with, the Plan;

"Option Price" means the amount payable for each Share on the exercise of an Option, determined in accordance with Rule 4.5 (Option Price);

"Participant" means a person holding an Option or, after death, that person's personal representatives;

"Participating Companies" means the Company and any company that is a subsidiary of the Company (within the meaning of section 1159 of the Companies Act 2006), of which the Company has Control and that is:

1. incorporated in England and Wales, Scotland or Northern Ireland; or
2. not incorporated in any of the locations in (i) above and is designated by the Board at the relevant time as a participating company for the purposes of the Plan;

"Plan" means the plan constituted by these Rules and known as the Drax Group plc 2024 Sharesave Plan, as amended from time to time;

"Qualifying Period" means a qualifying period of continuous service with a Participating Company, in accordance with Rule 3.2 (Qualifying Period);

"Restriction" means a restriction within the meaning of paragraph 48(3) of Schedule 3;

"Rules(s)" mean the respective rules set forth herein;

"Savings Arrangement" means a certified SAYE savings arrangement within the meaning of section 703(1) of the Income Tax (Trading and Other Income) Act 2005 that has been approved by HMRC for the purposes of Schedule 3 and is linked to a Schedule 3 SAYE Option Scheme;

"Savings Contract" means a savings contract under a Savings Arrangement linked to this Plan;

"SAYE Code" means the relevant parts of the tax legislation governing the Plan as specified in section 516(3) of ITEPA;

"Schedule 3" means Schedule 3 to ITEPA;

"Schedule 3 SAYE Option Scheme" means a sharesave plan that meets the legislative requirements of Schedule 3, as set out in paragraph 1(A1) of Schedule 3; and

"Share" means an ordinary share in the capital of the Company that satisfies paragraphs 18 to 20 (inclusive) and 22 of Schedule 3.

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1. General interpretation
   In this Plan, the singular includes the plural and the plural includes the singular. References to any enactment or statutory requirement will be understood as references to that enactment or requirement as amended or re-enacted and they include any subordinate legislation made under it.
2. Interpretation consistent with Schedule 3
   Words and expressions used in the Plan will have the meanings given in the SAYE Code unless the context requires otherwise. The Plan will be interpreted consistently with Schedule 3.

1. Purpose
   The Plan is intended to operate as a Schedule 3 SAYE Option Scheme. The Company has established the Plan to provide benefits to Eligible Employees in the form of Options, and these benefits will only be provided in accordance with Schedule 3.
2. Eligible Employees

3.1 Eligibility

A person is an Eligible Employee if that person:

1. is either:
2. 1. an employee of a Participating Company; or
   2. a director of a Participating Company who is required to work for one or more Participating Companies for more than 25 hours a week in aggregate (excluding meal breaks); and
3. has earnings in respect of the office or employment under Rule 3.1.1 that are general earnings to which section 15 of ITEPA (Earnings for year when employee UK resident) applies (or the earnings would be subject to that section, if the person had any); and
4. satisfies any Qualifying Period.

The Board may also permit any other person who satisfies Rule 3.1.1(i) to participate in the Plan as an Eligible Employee.

3.2 Qualifying Period

The Board may decide to impose a Qualifying Period. The Qualifying Period will be the period the Board decides from time to time but must not exceed five years prior to the Grant Date or such other maximum period under Schedule 3.

4. Issuing invitations

1. Operation
   The Board has discretion to decide whether the Plan will be operated. When the Plan is operated, the Board must invite all Eligible Employees to apply for an Option.
2. Similar terms
   Where invitations are issued under the Plan, all Eligible Employees must be invited to participate on similar terms.

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4.3 Time of invitation

Invitations under the Plan may only be issued within 42 days starting on any of the following:

1. the day on which the Company's shareholders approve the Plan;
2. the Business Day following the day on which the Company's financial results are announced for any period or the issue by the Company of any prospectus, listing particulars or other document containing equivalent information relating to Shares;
3. a day on which a new bonus rate for Savings Arrangements becomes effective;
4. a day on which any amendment to the Plan takes effect in accordance with Rule 21;
5. any day on which changes to the legislation or regulations affecting the Plan are announced or take effect;
6. any day on which the Board resolves that exceptional circumstances exist which justify the issue of invitations; and
7. the day Dealing Restrictions, which prevented the issuing of invitations during the periods specified above, are lifted.

No invitations may be issued after the termination of the Plan.

1. Form of invitation
   An invitation under the Plan will be in a form approved by the Board. The invitation must specify:
2. 1. the Option Price, or how the Option Price is to be calculated;
   2. the form and method of an application for an Option;
   3. the deadline for a valid application for an Option to be received by or on behalf of the Company;
   4. the length of the Savings Contract;
   5. the Minimum Contribution;
   6. the Maximum Contribution;
   7. any maximum number of Shares over which Options may be granted on this occasion;
   8. where a maximum number of Shares has been specified in an Offer pursuant to Rule 4.4.7, that applications will be scaled down in accordance with Rule 7 (Scaling down) if necessary;
   9. where applicable under Rule 6.2 (Bonus decision), that any Bonus will not be included for the purposes of calculating the Expected Repayment and therefore the number of Shares subject to the Option; and
   10. that the invitation is subject to the provisions of this Plan, the terms of the relevant Savings Contract and the SAYE Code.
3. Option Price
   The Option Price must:
4. 1. not be manifestly less than 80 per cent of the Market Value per Share; and
   2. be at least the nominal value of a Share, if the Option may be satisfied with newly issued Shares,

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as measured on the Invitation Date.

When calculating the Option Price, any date used to determine Market Value must be a date when invitations could be issued under Rule 4.3 (Time of invitation).

1. Deadline for applications
   The Board will specify the deadline for receiving applications for Options, which must not be less than 14 days after the Invitation Date.
2. Length of the Savings Contract
   The Board will decide whether the Savings Contract will be for three years or five years (or any other standard periods available for Savings Contracts from time to time). Alternatively, the Board may decide that the Eligible Employee can choose either or both of a three-year and a five-year Savings Contract.
3. Minimum Contribution
   The Minimum Contribution will be £10, or such lower amount decided by the Board which is not below £5, or an amount within such other range as is permitted by Schedule 3.
4. Maximum Contribution
   The Maximum Contribution will be an amount decided by the Board. The Maximum Contribution must not exceed £500 (or such other amount specified in Schedule 3). An Eligible Employee's contributions under all Savings Arrangements must not exceed £500 (or such other amount specified in Schedule 3).
5. Invitation to enter into a Savings Contract
   An invitation to apply for an Option must be accompanied by an invitation to enter into a Savings Contract.

5. Applications for Options

5.1 Requirements of an application The application must:

1. state:
2. 1. the proposed Contribution the Eligible Employee wishes to make; and
   2. the chosen length of the Savings Contract, where a choice is offered;
3. require an Eligible Employee to confirm that the proposed Contribution will not exceed:
4. 1. £500 (or such other amount as may be specified in Schedule 3) when added to any contributions the Eligible Employee makes under any other Savings Arrangements; and
   2. if lower than (i), the Maximum Contribution;
5. require an Eligible Employee to authorise:
6. 1. the Eligible Employee's employing company to deduct the Contributions from the Eligible Employee's pay and to transfer those deductions to the Savings Contract provider; and
   2. scaling down, where necessary;

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1. require an Eligible Employee to agree to be bound by the provisions of the Plan, the terms of the Savings Contract and the SAYE Code; and
2. include or be accompanied by a completed application for a Savings Contract.

5.2 Modification of application

If an application for a Savings Contract specifies a Contribution that exceeds any amount in Rule 5.1.2, the application will be deemed to have been made in such a way that the relevant maximum will not be exceeded.

6. Expected Repayments

1. Meaning of Expected Repayment The Expected Repayment is the total of:
2. 1. the aggregate of all the Eligible Employee's Contributions over the Savings Contract payable under the Savings Contract; and
   2. any Bonus and/or interest payable to the Eligible Employee under the Savings Contract, unless the Board decides otherwise under Rule 6.2 (Bonus decision).
3. Bonus decision
   Unless the Board decides otherwise on or prior to the Grant Date, the Expected Repayment will include the maximum Bonus payable.
4. Number of Shares
   Each Eligible Employee's application will be for an Option over the largest whole number of Shares that the Eligible Employee could acquire at the Option Price using the Expected Repayment. The Expected Repayment must, as nearly as possible, equal the total Option Price payable if the Option was exercised in full.

7. Scaling down

1. When scaling down may be applied
   The Board will scale down applications if Options would otherwise be granted in excess of any Share limits specified in the invitation or Rule 9 (Share dilution limit).
2. Method of scaling down
   The Board will scale down applications by applying the following successive steps until Options will be granted over a total number of Shares that does not exceed the limits:
3. 1. treating Bonuses as excluded from the Expected Repayment;
   2. reducing proposed Contributions pro-rata, but only to the extent that they exceed the Minimum Contribution specified in the invitation; and
   3. deeming any application for a five-year Savings Contract to be an application for a three-year Savings Contract (or reducing Savings Contracts to any shorter periods as may be available for Savings Contracts).

If the limits would still be exceeded, the Board may then apply Rule 7.3 (Cancel grant or choose by lot).

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1. Cancel grant or choose by lot
   The Board may either decide not to grant any Options or will select by lot the applications that will be accepted. Applications selected by lot will be deemed to:
2. 1. be made in respect of a Contribution equal to the Minimum Contribution specified in the invitation;
   2. be made in respect of a three-year Savings Contract (or the shortest period as may be available for Savings Contracts); and
   3. treat Bonuses as excluded from the Expected Repayment.
3. Modified applications
   Where the Board scales down applications, each application will be deemed to have been modified or withdrawn accordingly, and the Expected Repayment will be adjusted accordingly.

8. Granting Options

1. Grant to all Eligible Employees
   Where Options are to be granted, the Company will grant an Option to every Eligible Employee whose valid application has been received by or on behalf of the Company, subject to Rule 7 (Scaling down).
2. Grant only to employees and directors
   An Option cannot be granted to a person who is not an employee or director of a Participating Company on the Grant Date. Any attempt to do so will be ineffective.
3. Similar terms
   Where Options are granted under the Plan, all Eligible Employees who participate in the Plan must do so on similar terms.
4. Price and number Options will be granted:
5. 1. at the Option Price; and
   2. over the number of Shares calculated under Rule 6.3 (Number of Shares), after any adjustments for scaling down.
6. Manner of grant
   Options will be granted by the Company in any way which ensures they are contractually enforceable.
7. Timing of grant
   Where required by HMRC's guidance, the Grant Date must be:
8. 1. within 30 days following the earliest date used in the calculation of Market Value when setting the Option Price; or
   2. within 42 days of this date if scaling down is applied.

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1. Terms specified at grant
   At the Grant Date, the Board will specify:
2. 1. the number of Shares subject to each Option;
   2. the Option Price; and
   3. whether or not the Shares subject to the Options may be subject to a Restriction and, if so, details of that Restriction.
3. Notification to Participants
   The Board will notify Participants of the grant of Options as soon as reasonably practicable.
4. No payment
   A Participant is not required to pay for the grant of an Option.
5. Administrative errors
   If the Board grants an Option which is inconsistent with any provisions in this Plan, it will take effect only to the extent permissible under the Plan.

9. Share dilution limit

1. Share limit
   An Option may not be granted that would cause the total number of Shares that have been Allocated in the previous ten years (or could still be Allocated by virtue of rights granted) under the Plan and under any other employee share plans operated by the Company to exceed 10% of the ordinary share capital of the Company in issue.
2. Calculating the number of Shares
   For the purposes of this Rule 9 (Share dilution limit):
3. 1. Shares are considered to be "Allocated" when allotted and issued as new shares or transferred from treasury. However, if relevant institutional investor guidelines cease to require treasury shares to be taken into account for these purposes, then treasury shares will not count towards this Share limit;
   2. where there has been a variation in the share capital of the Company as described in Rule 16.1 (Adjustment of Options), the number of Shares taken into account for the purposes of the Share limit will be adjusted as the Board considers appropriate to take account of the variation.

10. Exercise of Options

1. Becoming exercisable
   An Option will become exercisable from the Bonus Date of the Savings Contract. An Option will not be exercisable before the Bonus Date, except in accordance with Rules 13 (Leaving) or 14 (Takeovers and restructurings).
2. Exercise period
   An Option will lapse six months after the Bonus Date, subject only to Rule 13.5 (Death).

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