Gym : Incentive Plan

RULES OF

THE GYM GROUP PLC

INCENTIVE PLAN

CONTENTS

1.	Grant of Cash Awards	1
2.	Testing of Performance Targets and conditions and calculation of Cash Award Value	2
3.	Grant of Deferred Share Awards	5
4.	Plan limits	7
5.	Deferred Share Award Price	8
6.	Conditions	8
7.	Malus	9
8.	Clawback	10
9.	Vesting of Deferred Share Awards (and exercise of Options)	13
10.	Holding Period	16
11.	Vesting of Deferred Share Awards (and exercise of Options) in special circumstances	16
12.	Takeover and other corporate events	18
13.	Exchange of Deferred Share Awards	20
14.	Lapse of Deferred Share Awards	20
15.	Adjustment of Deferred Share Awards on Reorganisation	21
16.	Tax and social security withholding	21
17.	Rights and listing of Plan Shares	22
18.	Relationship of the Plan to contract of employment	22
19.	Administration of the Plan	23
20.	Amendment of the Plan	24
21.	Notices	25
22.	Governing law and jurisdiction	25
23.	Interpretation	26

1. GRANT OF CASH AWARDS

Determination of participation

Subject to the Rules, whether the Plan shall be operated for any particular Financial Year, the identity of any Participant and the terms of their participation shall be determined by the Board in its absolute discretion. The selection of an Eligible Employee to participate in the Plan and the receipt of a Cash Award and/or Deferred Share Award (whether on one or more occasions) does not entitle that Eligible Employee to receive or be considered for participation in the Plan on any other occasion.

A Cash Award may only be granted to an individual who is an Eligible Employee on the date on which the Cash Award is granted.

Where the Company has in place a Directors' Remuneration Policy approved by the Company in a general meeting, the terms of a Cash Award to be granted to an Eligible Employee who is a director of the Company must fall within the scope of the Directors' Remuneration Policy most recently approved by the Company in a general meeting. Such terms may include by way of example but without limitation any relevant individual limit in Rule 1.2 and any Performance Targets imposed under Rule 1.7.

Annual limit

The maximum Cash Award Value of a Cash Award made to a Participant, who is a director, in respect of any Financial Year must not exceed any applicable limit set out in the Company's Directors' Remuneration Policy in place as at the date the Cash Award is granted.

Procedure for granting and notifying Participants of Cash Awards

The Board shall grant Cash Awards by such method as it shall determine (which may include by the Board passing a resolution to make or approve the grant of Cash Awards).

A Cash Award Certificate shall be issued to each Participant as soon as reasonably practicable following the grant of the Cash Award setting out details of the Cash Award determined in accordance with Rule 1.4.

Contents of a Cash Award Certificate

A Cash Award Certificate shall state:

1. the date on which the Cash Award was granted;
2. the maximum potential Cash Award Value (or how such amount will be calculated) expressed as a percentage of the Participant's basic salary;
3. any Performance Targets and conditions applicable to the Cash Award;
4. any other conditions of the Cash Award;
5. the Financial Year to which it relates; and
6. whether Rule 7 (Malus) and/or Rule 8 (Clawback) shall apply to the Cash Award and any Cash Payment delivered under such Cash Award.

Subject to the above, a Cash Award Certificate shall be in such form as the Board may determine from time to time.

The Board may require a Participant who is (or is to be) granted a Cash Award to confirm their acceptance of the Rules and the terms of any Cash Award granted to them by a specified date. Such confirmation will be in a form set by the Board (which may require the Participant to confirm acceptance on a portal or execute a document). The Board may provide that the Cash Award will lapse (and as a result be treated as never having been granted) if the confirmation of acceptance is not provided by the specified date or provide that no Cash Payment will become payable under the Cash Award until they do so agree in writing.

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Right to refuse Cash Award

A Participant may by notice in writing to the Company within 30 days after the date on which the Cash Award is granted say they do not want their Cash Award in whole or part. In such a case, the Cash Award shall to that extent be treated as never having been granted. Where a Participant refuses their Cash Award pursuant to the terms of this Rule 1.5, no payment in connection with the refusal is required from the Participant or the Company.

Cash Awards non-transferable

A Cash Award shall be personal to the Participant and, except in the case of the death of a Participant, a Cash Award shall not be capable of being transferred, charged or otherwise alienated and shall lapse immediately if the Participant purports to transfer, charge or otherwise alienate the Cash Award.

Performance Targets and conditions

The Cash Award will be subject to the satisfaction of the Performance Targets for the relevant Financial Year and/or any other conditions set by the Board.

Substitution, variation or waiver of Performance Targets and conditions

The Board may waive or change any Performance Targets and any other conditions imposed under Rule 1.7 in accordance with their terms.

If an event occurs which causes the Board to consider that any Performance Target and/or any other condition to which a Cash Award has been made is no longer appropriate, the Board may substitute, vary or waive that Performance Target and/or any other condition in such manner (and make such consequential amendments to the Rules) as it determines.

The Cash Award shall then take effect subject to the Performance Targets and/or any other conditions as substituted or varied or waived.

Notification of Cash Award Holders

The Board shall, as soon as practicable, notify each Participant concerned of any determination made by it under Rule 1.7 or Rule 1.8.

2. TESTING OF PERFORMANCE TARGETS AND CONDITIONS AND CALCULATION OF CASH AWARD VALUE

Testing of Performance Targets and conditions

As soon as practicable following the end of the Financial Year in respect of which a Cash Award was granted, the Board shall determine the extent to which the Performance Targets and/or any other conditions imposed on the Cash Award under Rule 1.7, in their original form or as substituted or varied from time to time, have been satisfied and the Board shall determine the Cash Award Value (if any) in respect of the relevant Cash Award.

The Board may in addition adjust the Cash Award Value relating to a Cash Award upwards or downwards (including for the avoidance of doubt to nil) after the application of any Performance Target and/or any other conditions imposed on the Cash Award if in its opinion:

the Cash Award Value resulting from the application of the Performance Target and/or any other conditions is not a fair and accurate reflection of the performance of the Company, the Group or any Group Member(s); and/or

the Cash Award Value resulting from the application of the Performance Target and/or any other conditions is not a fair and accurate reflection of the performance of the Participant; and/or

there is any other factor or there are any other circumstances which would make the Cash Award Value resulting from the application of the Performance Target and/or any other conditions inappropriate without adjustment.

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Payment of Cash Payment

When the Board makes its determinations under Rule 2.1, it shall also determine the amount of any Cash Payment payable in respect of the Cash Award. Payment of any Cash Payment shall be made as soon as practicable after the Board has made its determinations under Rule 2.1.

Effect of cessation of Relevant Employment

Subject to Rule 2.4, a Cash Award shall be determined only while the Participant is in Relevant Employment and if a Participant ceases to be in Relevant Employment, any Cash Award granted to them shall lapse on the date the Participant ceases to be in Relevant Employment.

Cessation of Relevant Employment during Financial Year

Notwithstanding Rule 2.3, if a Participant ceases to be in Relevant Employment before any Cash Award for the relevant Financial Year is due to be paid by reason of:

1. death;
2. injury, ill-health or disability evidenced to the satisfaction of the Board;
3. redundancy within the meaning of the Employment Rights Act 1996 (or any applicable equivalent overseas legislation) evidenced to the satisfaction of the Board;
4. retirement by agreement with the company by which they are employed; or
5. any other circumstances if the Board decides in any particular case at its absolute discretion ,

the Cash Award will continue with the Performance Targets for the relevant Financial Year and any other conditions imposed under Rule 1.7 considered at the time the Cash Award is determined under Rule 2.1. Any Cash Award Value payable in respect of the Cash Award shall be delivered in the same way and at the same time as if the Participant had not ceased to be in Relevant Employment, unless the Board in its absolute discretion decides otherwise.

Unless the Board in its absolute discretion decides otherwise, the Cash Award Value will be reduced pro rata to reflect the period of time from the beginning of the relevant Financial Year to which the Cash Award relates until the date of cessation of Relevant Employment as a proportion of the relevant Financial Year.

Meaning of ceasing to be in Relevant Employment

For the purposes of the Plan, a Participant shall not be treated as ceasing to be in Relevant Employment until they no longer hold any office or employment with any Group Member. In addition, unless the Board otherwise decides, a Participant shall not be treated as so ceasing if within 7 days they recommence employment or become an office holder with any Group Member.

The Board may decide that a Participant will be treated as ceasing to be in Relevant Employment when they give or receive notice of termination of employment (whether or not lawful).

Takeover

Subject to Rule 2.11, where a person obtains Control of the Company as a result of making an offer to acquire Plan Shares, any outstanding Cash Awards shall be determined by the Board on or as soon as practicable after the person obtains Control as set out below.

The amount of the Cash Award Value shall be determined by the Board in its absolute discretion taking into account such factors as the Board may consider relevant including, but not limited to, the Performance Targets for the relevant Financial Year and any other condition imposed under Rule 1.7.

Unless the Board in its absolute discretion decides otherwise, the Cash Award Value will be reduced pro rata to reflect the period of time from the beginning of the relevant Financial Year to which the Cash Award relates until the person obtains Control as a proportion of the relevant Financial Year.

Any Cash Award determined under this Rule 2.6 shall be paid in the form of a Cash Payment as soon as practicable following the Board's determination.

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Compulsory acquisition of shares in the Company

Subject to Rule 2.11, if a person becomes entitled or bound to acquire shares in the Company under sections 979 to 982 of the Companies Act 2006, any outstanding Cash Awards shall be determined by the Board on or as soon as practicable after the person becomes so entitled or bound as set out below.

The amount of the Cash Award Value shall be determined by the Board in its absolute discretion taking into account such factors as the Board may consider relevant including, but not limited to, the Performance Targets for the relevant Financial Year and any other condition imposed under Rule 1.7.

Unless the Board in its absolute discretion decides otherwise, the Cash Award Value will be reduced pro rata to reflect the period of time from the beginning of the relevant Financial Year to which the Cash Award relates until the person becomes so bound or entitled as a proportion of the relevant Financial Year.

Any Cash Award determined under this Rule 2.7 shall be paid in the form of a Cash Payment as soon as practicable following the Board's determination.

Scheme of arrangement

Subject to Rule 2.11, if a person proposes to obtain Control of the Company in pursuance of a compromise or arrangement sanctioned by the court under section 899 of the Companies Act 2006, any outstanding Cash Award shall be determined by the Board on or as soon as practicable after the date of the court sanction as set out below.

The amount of the Cash Award Value shall be determined by the Board in its absolute discretion taking into account such factors as the Board may consider relevant including, but not limited to, the Performance Targets for the relevant Financial Year and any other condition imposed under Rule 1.7.

Unless the Board in its absolute discretion decides otherwise, the Cash Award Value will be reduced pro rata to reflect the period of time from the beginning of the relevant Financial Year to which the Cash Award relates until the date the compromise or arrangement becomes (or is expected to become) effective as a proportion of the relevant Financial Year.

Any Cash Award determined under this Rule 2.8 shall be paid in the form of a Cash Payment as soon as practicable following the Board's determination.

Demergers and other events

The Board may determine that a Cash Award Value shall be payable if it becomes aware that the Company will be affected by a demerger, distribution (which is not an ordinary dividend) or other transaction not otherwise covered by the Rules.

The amount of the Cash Award Value shall be determined by the Board in its absolute discretion taking into account any Performance Targets and/or any other conditions imposed under Rule 1.7.

Unless the Board in its absolute discretion decides otherwise, the Cash Award Value will be reduced pro rata to reflect the period of time from the beginning of the relevant Financial Year to which the Cash Award relates until the relevant event as a proportion of the relevant Financial Year.

Any Cash Award determined under this Rule 2.9 shall be paid in the form of a Cash Payment as soon as practicable following the Board's determination but conditional on the relevant event taking place.

Meaning of "obtains Control of the Company"

For the purpose of Rule 2 a person shall be deemed to have obtained Control of the Company if they and others Acting In Concert with them have together obtained Control of it.

Reorganisation or merger

Where an event occurs under Rules 2.6, 2.7 or 2.8 and:

1. the shareholders of the acquiring company, immediately after it has obtained Control, are substantially the same as the shareholders of the Company immediately before the event; or

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2. the obtaining of Control amounts in the opinion of the Board to a merger with the Company

the Board, with the consent of the person acquiring Control (if relevant) may determine that Rules 2.6, 2.7 and 2.8 will not apply and Cash Awards shall continue and the amount of any Cash Award Value shall be considered in accordance with Rule 2.1.

References to Board within this Rules 2.6 to 2.11

For the purposes of Rules 2.6 to 2.11, any reference to the Board shall be taken to be a reference to those individuals who were members of the Board immediately before the event by virtue of which Rules 2.6 to 2.11 applies.

Notification of Participants

The Board shall, as soon as reasonably practicable, notify each Participant of the occurrence of any of the events referred to in this Rule 2 and explain how this affects their position under the Plan.

Tax and social security withholding

Where, in relation to any payment under this Plan, any Group Member or former Group Member is liable, or is in accordance with current practice believed by the Board to be liable, to account to any revenue or other authority (whether in the UK or overseas) for any sum in respect of any tax or social security contributions liability of the Participant, their employer (or former employer as the case may be) may deduct, or procure the deduction of, such amount from the value of the payment before paying, or procuring the payment of, the net amount to the Participant.

3. GRANT OF DEFERRED SHARE AWARDS

Procedure for grant of Deferred Share Awards and Award Date

A Deferred Share Award shall be granted by the Board passing a resolution. The Award Date shall be the date on which the Board passes the resolution or any later date specified in the resolution and allowed by Rule 3.3. The grant of a Deferred Share Award shall be evidenced by a deed executed by or on behalf of the Company. Where the Company has in place a Directors' Remuneration Policy approved by the Company in a general meeting, the terms of a Deferred Share Award to be granted to a Participant who is a director of the Company must fall within the scope of the Directors' Remuneration Policy most recently approved by the Company in a general meeting.

The number of Plan Shares subject to a Participant's Deferred Share Award shall be calculated by dividing the amount of their Deferred Share Award Opportunity by the average Market Value (measured over the last 5 Dealing Days prior to the Award Date or such other measurement period as determined by the Board in its absolute discretion) of a Plan Share. The number of Plan Shares shall be rounded down to the nearest whole Plan Share.

A Deferred Share Award Certificate or a Restricted Share Agreement (as applicable) shall be issued to each Deferred Share Award Holder as soon as reasonably practicable following the grant of the Deferred Share Award setting out details of the Deferred Share Award determined in accordance with Rule 3.2 and, where applicable, Rule 3.10.

Terms and conditions set at grant

The Board shall, at the time of grant, determine:

1. whether the Deferred Share Award comprises an Option, a Conditional Share Award or Restricted Shares;
2. the Award Date;
3. the Deferred Share Award Opportunity;
4. the number of Plan Shares subject to the Deferred Share Award or the basis on which the number of Plan Shares will be calculated;
5. the Deferred Share Award Price (if any);

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1. the date or dates on which the Deferred Share Award will normally Vest;
2. whether or not any dividend equivalents will be payable under Rule 9.9;
3. in the case of an Option, the Exercise Period;
4. any Holding Period (and the proportion of the Award to which it applies, if not 100 per cent);
5. whether Rule 7 (Malus) and/or Rule 8 (Clawback) shall apply to the Deferred Share Award;
6. any other conditions of the Deferred Share Award imposed under Rule 6; and
7. where the Deferred Share Award comprises Restricted Shares, any provisions which must be determined under Rule 3.10.

The Board may grant a Deferred Share Award in any number of tranches, where the terms (as referred to in this Rule) are different. In these circumstances, the Rules will be interpreted as if each tranche was a standalone Deferred Share Award.

When Deferred Share Awards may be granted

Subject to Rule 3.4, the Board may grant Deferred Share Awards only during the 42 days beginning on:

1. the date of shareholder approval of the Plan; and
2. the day after the announcement of the Company's results, including a preliminary announcement, for any period through a Regulatory Information Service;
3. any day on which the Board determines that circumstances are sufficiently exceptional to justify the grant of the Deferred Share Award at that time; or
4. the day after the lifting of any Dealing Restrictions which prevented the grant of Deferred Share Awards during any of the times described above.

When Deferred Share Awards may not be granted

Deferred Share Awards may not be granted:

1. when prevented by any Dealing Restrictions; or
2. after the 10th anniversary of shareholder approval of the Plan.

Who can be granted Deferred Share Awards

A Deferred Share Award may only be granted to an individual who is an Eligible Employee on the date on which the Deferred Share Award is granted.

Unless the Board decides otherwise, a Deferred Share Award will not be granted to a Participant who on or before the Award Date has given or received notice of termination of employment (whether or not lawful).

Confirmation of acceptance of Deferred Share Award

The Board may require a Participant who is (or is to be) granted a Deferred Share Award to confirm their acceptance of the Rules and the terms of any Deferred Share Award granted to them by a specified date. Such confirmation will be in a form set by the Board (which may require the Participant to confirm acceptance on a portal or execute a document). The Board may provide that the Deferred Share Award will lapse (and as a result be treated as never having been granted) if the confirmation of acceptance is not provided by the specified date or provide that the Deferred Share Award will not Vest until they do so agree in writing.

Right to refuse Deferred Share Award

A Deferred Share Award Holder may by notice in writing to the Company within 30 days after the Award Date say they do not want their Deferred Share Award in whole or part. In such a case, the Deferred Share Award shall to that extent be treated as never having been granted.

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No payment for a Deferred Share Award

A Deferred Share Award Holder shall not be required to make payment for the grant of a Deferred Share Award unless the Board determines otherwise. Where a Deferred Share Award Holder refuses their Deferred Share Award pursuant to the terms of Rule 3.7, no payment in connection with the refusal is required from the Deferred Share Award Holder or the Company.

Deferred Share Awards non-transferable

A Deferred Share Award shall be personal to the Deferred Share Award Holder and, except in the case of the death of a Deferred Share Award Holder, a Deferred Share Award shall not be capable of being transferred, charged or otherwise alienated and shall lapse immediately if the Deferred Share Award Holder purports to transfer, charge or otherwise alienate the Deferred Share Award.

Deferred Share Awards which are Restricted Shares

This Rule 3.10 sets out specific provisions in relation to Restricted Shares.

1. A Participant who is to be granted Restricted Shares must enter into a Restricted Share Agreement with the Company providing that to the extent the Deferred Share Award lapses, the Restricted Shares are forfeited and the Restricted Shares will immediately be transferred for no (or nominal) consideration to any person specified by the Board. The Restricted Share Agreement will also provide that, except for transfer on death of the Deferred Share Award Holder to their personal representatives or to the extent agreed by the Board (and subject to such conditions as it may decide), the Deferred Share Award Holder will not transfer, give security over or assign the Restricted Shares subject to their Deferred Share Award during the Vesting Period.
2. The Deferred Share Award Holder must sign any document (including a blank stock transfer form) requested by the Board relating to the Restricted Shares. The Board may provide that the Deferred Share Award will lapse if any such document is not signed within any specified period.
3. On or as soon as practicable after the Award Date of Restricted Shares the Board will procure that the relevant number of Restricted Shares are issued or transferred (including out of treasury or otherwise) to the Deferred Share Award Holder or another person to be held for the benefit of the Deferred Share Award Holder.
4. Except to the extent set out in the Restricted Share Agreement, the Deferred Share Award Holder shall have all the rights in respect of Restricted Shares from the date of transfer until any date on which the Deferred Share Award comprising the Restricted Shares lapses (whether in whole or in part).

4. PLAN LIMITS

General

The aggregate number of Plan Shares over which Deferred Share Awards may be granted shall be limited as set out in this Rule 4.

10 per cent in 10 years

A Deferred Share Award may not be granted if the result of granting the Deferred Share Award would be that the aggregate number of Plan Shares issued or committed to be issued in the preceding

10 year period under:

1. Deferred Share Awards under the Plan; or
2. options or awards granted under any other Employees' Share Scheme (whether or not discretionary) operated by the Group,

would exceed 10 per cent of the Company's issued ordinary share capital at that time.

Calculation

For the purpose of the limit contained in this Rule 4:

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1. for as long as required by The Investment Association guidelines treasury shares shall be included in the limit as if they were new issue shares;
2. there shall be disregarded any Plan Shares where the right to acquire the Plan Shares has lapsed or been renounced;
3. there shall be disregarded any partnership shares under any Share Incentive Plan operated by the Company;
4. there shall be disregarded any Plan Shares which the Trustees have purchased, or determined that they will purchase, in order to satisfy a Deferred Share Award or the exercise of an option or the vesting of other rights of an employee under any other Employees' Share Scheme operated by the
   Group; and
5. any Plan Shares issued or issuable in relation to a Deferred Share Award, or on the exercise of an option or the vesting of other rights of an employee under any other Employees' Share Scheme operated by the Group, shall be taken into account once only (when the Deferred Share Award is granted or the option is granted or the right awarded) and shall not fall out of account when the Deferred Share Award Vests, the option is exercised or other rights vest.

Scaling down

If the granting of a Deferred Share Award would cause the limit in this Rule 4 to be exceeded, such Deferred Share Award shall take effect as a Deferred Share Award over the maximum number of Plan Shares which does not cause the limit to be exceeded. If more than one Deferred Share Award is granted on the same Award Date, the number of Plan Shares which would otherwise be subject to each Deferred Share Award shall be reduced pro rata.

1. DEFERRED SHARE AWARD PRICE
   The Deferred Share Award Price (if any) shall be determined by the Board and may be any price.
   Where the Board has determined that a Deferred Share Award will be satisfied by the issue of new shares and the Deferred Share Award Price per Plan Share is less than the nominal value of a Plan Share, the Company will ensure that at the time of the issue of the Plan Shares arrangements are in place to pay up at least the nominal value of the relevant Plan Shares.
2. CONDITIONS

Setting of conditions

The Vesting of a Deferred Share Award and the extent to which it Vests will be subject to the satisfaction of any applicable conditions set by the Board on or before the Award Date.

The Board may in addition adjust the level of Vesting of a Deferred Share Award upwards or downwards (including for the avoidance of doubt to nil) after the application of any conditions set by the Board if in its opinion:

the level of Vesting resulting from the application of the conditions is not a fair and accurate reflection of the performance of the Company, the Group or any Group Member(s); and/or

the level of Vesting resulting from the application of the conditions is not a fair and accurate reflection of the performance of the Deferred Share Award Holder; and/or

there is any other factor or there are any other circumstances which would make the level of Vesting resulting from the application of the conditions inappropriate without adjustment.

Nature of conditions

Any condition imposed under Rule 6.1 shall be: 1. objective; and

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