Paragon Banking Group PLC

Remuneration Information • Feb 16, 2023

Paragon Banking Group plc Paragon Deferred Share Bonus Plan 2023

Shareholder approval: [1 March 2023] Board adoption: [2 March 2023] Plan expires: [28 February 2033]

PricewaterhouseCoopers LLP, 1 Embankment Place, London, WC2N 6RH T: +44 (0) 20 7583 5000, F: +44 (0) 20 7822 4652, www.pwc.co.uk PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH.PricewaterhouseCoopers LLP is authorised and regulated by theFinancial Conduct Authority for designated investment business.

Table of contents

1.	Grant of Awards	1
2.	Plan limits	3
3.	Exercise Price	4
4.	Malus and clawback	4
5.	Vesting of Awards (and exercise of Options)	4
6.	Holding Period	7
7.	Vesting of Awards (and exercise of Options) in special circumstances	8
8.	Takeover and other corporate events	9
9.	Exchange of Awards	11
	10. Lapse of Awards	12
	11. Adjustment of Awards on Reorganisation	12
	12. Tax and social security withholding	13
	13. Rights and listing of Shares	13
	14. Relationship of the Plan to contract of employment	13
	15. Administration of the Plan	14
	16. Amendment of the Plan	15
	17. Notices	15
	18. Governing law and jurisdiction	16
	19. Interpretation	16

1. Grant of Awards

Determination of participation and Market Value

Subject to the Rules, the Board will in its absolute discretion decide whether the Plan shall be operated for any particular Financial Year, the identity of any Award Holder and the terms of their participation.

The Board shall, in its absolute discretion, determine the percentage (which may be nil) of an Eligible Employee's Bonus which will be paid in cash and the percentage which will be delivered in the form of an Award.

As soon as practicable after the end of the performance period to which a Bonus relates, the Board will determine the number of Shares over which an Award shall be made. The maximum number of Shares subject to an Eligible Employee's Award shall be calculated by dividing the amount of their Bonus to be delivered in the form of an Award by the average Market Value over the five Dealing Days ending on the Award Date (unless the Board determines Market Value should be assessed on some other basis). The number of Shares shall be rounded down to the nearest whole Share.

Procedure for grant of Awards and Award Date

An 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 1.4. The grant of an 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 general meeting, the terms of an 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.

An Award Certificate or a Forfeitable Share Agreement (as applicable) shall be issued to each Award Holder as soon as reasonably practicable following the grant of the Award setting out details of the Award determined in accordance with Rule 1.3 and, where applicable, Rule 1.11.

Terms and conditions set at grant

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

• 1. whether the Award comprises an Option, a Conditional Award or Forfeitable Shares;
• 1. the Award Date;
• 1. the number of Shares subject to the Award or the basis on which the number of Shares will be calculated;
• 1. the Exercise Price (if any);
• 1. the date or dates on which the Award will normally Vest (which may be the same date as the Award Date);
• 1. whether or not any dividend equivalents will be payable under Rule 5.10 and, if so, the basis on which they will be payable;
• 1. in the case of an Option, the Exercise Period;
• 1. any Holding Period(s) (and the proportion of the Award to which any Holding Period applies, if not 100 per cent);
• 1. whether Rule 4 (Malus and clawback) shall apply to the Award;
• 1. any other conditions of the Award; and
• 1. where the Award comprises Forfeitable Shares, any provisions which must be determined under Rule 1.11.

The Board may grant an 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 Award.

When Awards may be granted

Subject to Rule 1.5, the Board may grant Awards only during the 42 days beginning on:

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

When Awards may not be granted

Awards may not be granted:

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

Who can be granted Awards

An Award may only be granted to an individual who is an Eligible Employee at the Award Date.

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

Confirmation of acceptance of Award

The Board may require an Eligible Employee who is (or is to be) granted an Award to confirm their acceptance of the Rules and the terms of any Award granted to them by a specified date. Such confirmation will be in a form set by the Board (which may require the Eligible Employee to confirm acceptance on a portal or execute a document). The Board may provide that the 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 Award will not Vest until they do so agree in writing.

Right to refuse Award

An Award Holder may by notice in writing to the Company within 60 days after the Award Date say they do not want their Award in whole or part. In such a case, the Award shall to that extent be treated as never having been granted.

No payment for an Award

An Award Holder shall not be required to make payment for the grant of an Award unless the Board determines otherwise. Where an Award Holder refuses their Award, no payment in connection with the refusal is required from the Award Holder or the Company.

Awards non-transferable

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

Awards which are Forfeitable Shares

This Rule 1.11 sets out specific provisions in relation to Forfeitable Shares.

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

2. Plan limits

General

The aggregate number of Shares over which Awards may be granted shall be limited as set out in this Rule 2. In the event of any conflict between the limits in this Rule 2, the lower limit shall prevail.

10 per cent in 10 years

An Award may not be granted if the result of granting the Award would be that the aggregate number of Shares issued or committed to be issued in the preceding 10 year period under:

• 1. Awards under the Plan; or
• 1. 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.

5 per cent in 10 years

An Award may not be granted if the result of granting the Award would be that the aggregate number of Shares issued or committed to be issued in the preceding 10 year period under:

• 1. Awards under the Plan; or
• 1. options or awards granted under any other discretionary Employees' Share Scheme adopted by the Group,

would exceed 5 per cent of the Company's issued ordinary share capital at that time.

Calculation

For the purpose of the limits contained in this Rule 2:

• 1. for as long as required by The Investment Association Principles of Remuneration treasury shares shall be included in the limit as if they were new issue shares;
• 1. there shall be disregarded any Shares where the right to acquire the Shares has lapsed or been renounced;
• 1. there shall be disregarded any Shares which the Trustees have purchased, or determined that they will purchase, in order to satisfy an 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

• any Shares issued or issuable in relation to an 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 Award is granted or the option is granted or the right awarded) and shall not fall out of account when the Award Vests, the option is exercised or other rights vest.

Scaling down

If the granting of an Award would cause the limits in this Rule 2 to be exceeded, such Award shall take effect as an Award over the maximum number of Shares which does not cause the limit to be exceeded. If more than one Award is granted on the same Award Date, the number of Shares which would otherwise be subject to each Award shall be reduced pro rata.

3. Exercise Price

The Exercise Price (if any) shall be determined by the Board and may be any price.

Where the Board has determined that an Award will be satisfied by the issue of Shares and the Exercise Price per Share is less than the nominal value of a Share, the Company will ensure that at the time of the issue of Shares arrangements are in place to pay up at least the nominal value of the relevant Shares.

4. Malus and clawback

The Malus and Clawback Policy shall apply to any Award to which the Board has specified under Rule 1.3 that this Rule 4 applies.

5. Vesting of Awards (and exercise of Options)

Earliest date for Vesting of Awards

Subject to Rules 7 and 8, an Award will Vest on the later of:

• 1. the relevant date specified under Rule 1.3; and
• 1. the date on which the Board determines that any conditions imposed under Rule 1.3.10 have been satisfied.

Effect of Award Vesting

Subject to the Rules, the effect of an Award Vesting shall be:

• 1. in the case of an Option, that the Award Holder is entitled to exercise the Option at any time during the Exercise Period to the extent that it has Vested;
• 1. in the case of a Conditional Award, that the Award Holder shall become entitled to the Shares to the extent that the Award has Vested; and
• 1. in the case of Forfeitable Shares, the restrictions set out in the relevant Forfeitable Share Agreement shall cease to apply to the extent that the Award has Vested.

No Vesting or exercise while Dealing Restrictions or Directors' Remuneration Policy restrictions apply

Where the Vesting of an Award is prevented by any Dealing Restriction, the Vesting of that Award shall be delayed until the Dealing Restriction no longer prevents it. Shares may not be issued or transferred to an Award Holder while Dealing Restrictions prevent such issue or transfer. In the case of an Option, the Option may not be exercised while Dealing Restrictions prevent such exercise.

Where the Company has in place a Directors' Remuneration Policy:

1. the Vesting of an Award held by an Award Holder who is or was a director of the Company;

2. 1. the delivery of Shares or payment of cash pursuant to the Vesting of an Award held by an Award Holder who is or was a director of the Company; and
3. 1. in the case of an Option held by an Award Holder who is or was a director of the Company, the exercise of the Option

must where relevant fall within the scope of the Directors' Remuneration Policy most recently approved by the Company in a general meeting prior to the relevant event in paragraphs 1 to 3 above.

Vesting or exercise subject to any Post-Employment Shareholding Requirement

Where required by the Board, an Award shall Vest and an Option may be exercised only if the Award Holder has taken any action (including entering into any agreement) in relation to the Award reasonably required by the Board in connection with any Post-Employment Shareholding Requirement.

Effect of cessation of Relevant Employment

Subject to Rule 7, an Award shall Vest and an Option may be exercised only while the Award Holder is in Relevant Employment and if an Award Holder ceases to be in Relevant Employment, any Award granted to them shall lapse on cessation. This Rule 5.5 shall apply where the Award Holder ceases to be in Relevant Employment in any circumstances (including, in particular, but not by way of limitation, where the Award Holder is dismissed unfairly, wrongfully, in breach of contract or otherwise).

An Award Holder who has given or received notice of termination of Relevant Employment (whether or not lawful) may not exercise an Option during any period when the notice is effective and an Award granted to them shall not Vest during this period, unless the Board determines otherwise. If an Award would otherwise have Vested during this period, and the notice is withdrawn by the relevant party, subject to the Rules the Award will Vest when the notice is withdrawn.

Options may be exercised in whole or in part

Subject to Rules 5.3, 5.5 and 12, a Vested Option may be exercised in whole or in multiples of 1000 Shares (unless it is being exercised to the full extent outstanding) at any time. If exercised in part, the unexercised part of the Option shall not lapse as a result and shall remain exercisable until such time as it lapses in accordance with the Rules.

Procedure for exercise of Options

An Option shall be exercised by the Award Holder giving notice to the Board (or any person appointed by the Board) in the form from time to time prescribed by the Board, which may include (for the avoidance of doubt) any electronic and/or online notification. Such notice shall specify the number of Shares in respect of which the Option is being exercised, and be accompanied by either the Exercise Price (if any) in full or confirmation of arrangements satisfactory to the Board for the payment of the Exercise Price, together with any payment and/or documentation required under Rule 12 and, if required, the Award Certificate.

For the avoidance of doubt, the date of exercise of an Option shall be the later of the date of receipt of a duly completed valid notice of exercise (or any later date as may be specified in that notice of exercise) and the date of compliance with the requirements of the first paragraph of this Rule 5.7.

Issue or transfer of Shares

Subject to Rules 5.3, 5.9 and 12 and to any necessary consents and to compliance by the Award Holder with the Rules, the Board shall, as soon as reasonably practicable after:

1. the exercise date, in the case of an Option, arrange for the issue or transfer to the Award Holder (or a nominee specified or permitted by the Company) of the number of Shares specified in the notice of exercise and make available to the Award Holder, in the case of the partial exercise of an Option, an Award Certificate in respect of, or the original Award Certificate updated to show, the unexercised part of the Option; and

2. the Vesting of an Award, in the case of a Conditional Award, arrange for the issue or transfer to the Award Holder (or a nominee specified or permitted by the Company) of the number of Shares in respect of which the Award has Vested.

Net or cash settling

Subject to Rule 12, the Board may on exercise of an Option:

• 1. make a cash payment as soon as reasonably practicable following exercise of the Option to the Award Holder equal to the Gain on the date of exercise of the Option; or
• 1. arrange for the issue or transfer to the Award Holder of Shares with a Market Value equal to the Gain on the date of exercise of the Option (rounded down to the nearest whole Share). The Award Holder shall not be required to make payment for these Shares.

Subject to Rule 12, the Company may on the Vesting of a Conditional Award make a cash payment as soon as reasonably practicable following Vesting to the Award Holder equal to the Market Value of the Shares in respect of which the Conditional Award has Vested, less the Exercise Price (if any).

Where the Board settles an Award in the manner described in this Rule 5.9, this shall be in full and final satisfaction of the Award Holder's rights under the Award.

Dividend equivalents

An Award (except an Award comprising Forfeitable Shares where the right to dividends has not been waived) may include the right to receive an amount in Shares or cash on or following Vesting (or if there is a Holding Period and the Board so specifies, following the end of the Holding Period) equal in value to the dividends which were payable on the number of Shares in respect of which the Award has Vested during such period as specified by the Board.

The Board may determine at its absolute discretion whether or not the method used to calculate the value of dividends shall assume that such dividends have been reinvested into Shares, on such basis as the Board determines.

The Board may decide at any time not to apply this Rule 5.10 to all or any part of a special dividend or dividend in specie.

US Taxpayers

Notwithstanding anything to the contrary contained in the Plan:

• No Option may be exercised later than 2.5 calendar months after the end of the Taxable Year in which the Option first becomes no longer subject to a substantial risk of forfeiture (as that term is defined for purposes of section 409A of the US Internal Revenue Code), provided that the Option shall lapse on the date it would have lapsed had this rule not applied. The Rules of the Plan shall be interpreted accordingly.
• A Conditional Award shall be settled as soon as practicable upon Vesting and in no event later than 2.5 calendar months after the end of the Taxable Year in which the Conditional Award is no longer subject to a substantial risk of forfeiture (as that term is defined for purposes of section 409A of the US Internal Revenue Code).
• Any dividend equivalents must be paid within 2.5 calendar months after the end of the Taxable Year in which the underlying Award is no longer subject to a substantial risk of forfeiture (as that term is defined for purposes of section 409A of the US Internal Revenue Code).

For the purposes of this Rule 8.10, Taxable Year means the 12 month period in respect of which the Award Holder is obliged to pay US tax or, if it would result in a longer exercise period, the 12 month period in respect of which the Award Holder's employing company is obliged to pay tax. US Taxpayer means a person who is subject to taxation under the tax rules of the United States of America which does not include an Award Holder who is a non-resident alien throughout the period of participation in the Plan and who has no US workdays during such participation.

Awards under the Plan are intended to be exempt from the requirements of section 409A of the US Internal Revenue Code and shall be construed and operated in accordance with that intent.

6. Holding Period

Definitions

In this Rule 6:

• 1. Holding Period Holder means a trustee or nominee designated by the Board in accordance with this Rule 6; and
• 1. Holding Period Shares means Shares which are or were the subject of an Award to which a Holding Period applies, and in respect of which the Holding Period has not ended in accordance with this Rule 6.

Application

This Rule 6 applies to the extent that some or all of the Shares acquired on Vesting of an Award (or exercise of an Option) are subject to a Holding Period.

Issue or transfer to Holding Period Holder

Instead of arranging for the issue or transfer of the Holding Period Shares to the Award Holder on Vesting of a Conditional Award or exercise of an Option under Rule 5.8, the Board may arrange for the Holding Period Shares to be issued or transferred to the Holding Period Holder, as designated by the Board, to be held for the benefit of the Award Holder. Any balance of the Shares in respect of which an Award Vests or is exercised will be issued or transferred as described in Rule 5.8.

If the Award took the form of Forfeitable Shares, the Holding Period Shares will be transferred to (or continue to be held by) the Holding Period Holder on the terms of this Rule 6.

No transfer during Holding Period

The Award Holder or Holding Period Holder may not transfer, assign or otherwise dispose of any of the Holding Period Shares or any interest in them (and the Award Holder may not instruct the Holding Period Holder to do so) during the Holding Period except in the following circumstances:

• 1. the sale of sufficient entitlements nil-paid in relation to Holding Period Shares to take up the balance of the entitlements under a rights issue; and
• 1. the sale of sufficient Holding Period Shares to satisfy any liability to tax or employee social security contributions (or where Rule 12.2 applies, Employer's NIC) arising in relation to Holding Period Shares

Shareholder rights during Holding Period

• Unless the Board decides otherwise, the restrictions in this Rule 6 will apply to any cash or assets (other than ordinary dividends, but including any special dividend or other distribution if the Board so determines) received in respect of the Holding Period Shares and such cash or assets will be held by the Holding Period Holder until the end of the Holding Period.
• During the Holding Period, the Holding Period Holder will be entitled to vote and have all other rights of a shareholder in respect of the Holding Period Shares.

Ceasing Relevant Employment during the Holding Period

Ceasing Relevant Employment during the Holding Period will have no impact on the provisions of this Rule 6, unless the Board otherwise decides, save where cessation is by reason of death in which case the Holding Period shall immediately be deemed to have ended.

Clawback

For the avoidance of doubt, Rule 4 shall apply to the Holding Period Shares in the same way that it applies to Shares acquired by an Award Holder following Vesting of an Award or exercise of an Option which are not Holding Period Shares.

End of Holding Period

Subject to the provisions of this Rule 6 a Holding Period will end on the earliest of the following:

• 1. the date set as the end of the Holding Period under Rule 1.3;
• 1. subject to Rule 9.1, the relevant date on which an Award would have Vested under Rules 8.1 to 8.4;
• 1. if the Board so allows, the circumstances in which any event described in Rule 8.5 would apply; and
• 1. any other circumstances in the absolute discretion of the Board. Where this paragraph 4 applies, the Board may additionally determine that the Holding Period shall end only for such number of Holding Period Shares as it may specify.

7. Vesting of Awards (and exercise of Options) in special circumstances

Death

If an Award Holder dies, any Award held by them which has not Vested will continue until the normal time of Vesting. Alternatively, the Board may determine that the Award will Vest immediately. In either case, the Vesting of an Award shall be subject to such terms and conditions as the Board may specify.

In the case of an Option, if an Award Holder dies, their personal representatives (having established title to the satisfaction of the Company) shall be entitled to exercise the Vested Option (whether Vested under this Rule or otherwise) at any time during the 12 month period following death or, if later, following Vesting or, in either case, during such other longer period as the Board determines. The Option shall lapse at the end of such period.

Injury, disability, redundancy, retirement etc.

If an Award Holder ceases to be in Relevant Employment by reason of:

• 1. injury, ill-health or disability evidenced to the satisfaction of the Board;
• 1. redundancy within the meaning of the Employment Rights Act 1996 (or any applicable equivalent overseas legislation) evidenced to the satisfaction of the Board;
• 1. retirement by agreement with the company by which they are employed, and provided that, in the reasonable opinion of the Board, the Award Holder has not accepted an executive role at a company, firm or enterprise outside the Group by the normal Vesting date;
• 1. the Award Holder being employed by a company which ceases to be a Group Member;
• 1. the Award Holder being employed in an undertaking or part of an undertaking which is transferred to a person who is not a Group Member; or
• 1. any other circumstances if the Board decides in any particular case

any Award held by them which has not Vested will continue until the normal time of Vesting, subject to such terms and conditions as the Board may specify.

Alternatively, and except in the case of retirement, the Board may decide that an Award will Vest early in which case t the terms on which it shall Vest will be determined by the Board in its absolute discretion (but subject always to the application of any regulatory requirements as to Vesting and Holding Periods) taking into account such factors as the Board may consider relevant.

In the case of an Option, the Award Holder shall be entitled to exercise the Vested Option (whether Vested under this Rule or otherwise) at any time during the period ending 12 months after the cessation of Relevant Employment or, if later, following Vesting or, in either case, during such other longer period as the Board determines. The Option shall lapse at the end of such period.

Where this Rule 7.2 applies to an Award, and the relevant Award Holder fails at any subsequent time to comply with any Post-Employment Shareholding Requirement, the Board may determine that the relevant Award shall lapse.

Award Holder relocated abroad

If it is proposed that an Award Holder, while continuing to be in Relevant Employment, should work in a country other than the country in which they are currently working and, by reason of the change, the Award Holder would:

• 1. suffer less favourable tax treatment in respect of their Award; or
• 1. become subject to a restriction on their ability to exercise an Option, to have issued or transferred to them the Shares subject to an Award or to hold or deal in such Shares or the proceeds of sale of such Shares

an Award may, determined at the absolute discretion of the Board (but subject always to the application of any regulatory requirements as to Vesting and Holding Periods), Vest early either in full or to the extent determined by the Board in its absolute discretion and subject to such conditions as it may require taking into account such factors as the Board may consider relevant including, but not limited to, the period of time the relevant Award has been held. Where the Award is an Option and has become Vested pursuant to this Rule 7.3, the Award Holder may exercise their Vested Option at any time during the period beginning 3 months before the proposed date of their transfer and ending 3 months after the date of their actual transfer. If not so exercised, the Option shall not lapse but shall cease to be treated as having Vested and shall continue in force in accordance with the Rules.

Meaning of ceasing to be in Relevant Employment

For the purposes of the Plan, an Award Holder shall not be treated as ceasing to be in Relevant Employment until they no longer hold any office or employment with any Group Member.

The Board may determine that an Award Holder will be treated as ceasing to be in Relevant Employment when they give or receive notice of termination of their employment (whether or not lawful).

Interaction of Rules

In the case of an Option:

• 1. If the Option has become exercisable under Rule 7.2 and, during the period allowed for the exercise of the Option under Rule 7.2 the Award Holder dies, the period allowed for the exercise of the Option shall be the period allowed by Rule 7.1; and
• 1. If the Option has become exercisable under Rule 7 and, during the period allowed for the exercise of the Option under Rule 7, the Option becomes exercisable under Rule 8 also (or vice versa), the period allowed for the exercise of the Option shall end on the earlier of the end of the period allowed by Rule 7 and the end of the period allowed by Rule 8.

8. Takeover and other corporate events

Takeover

Subject to Rule 9, where a person obtains Control of the Company as a result of making an offer to acquire Shares, Awards shall Vest on the date the person obtains Control as set out below.

The proportion of an Award which shall Vest will 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 time the Award has been held by the Award Holder.

In the case of an Option, the Vested proportion of the Option (whether Vested under this Rule 8.1 or otherwise) may be exercised at any time during the period of 6 months (or, if the Board determines a longer period shall apply, that period) beginning with the time when the person making the offer has obtained Control. The Option shall lapse at the end of such period unless the Board determines that a longer period for exercise shall apply, in which case the Option shall continue in force until the end of such extended period or until it otherwise lapses in accordance with the Rules.

If the extent of Vesting of an Award which Vests under this Rule 8.1 has been reduced by the Board to reflect the period of time that the Award has been held by the Share Holder, the Board may determine that Rule 9 shall apply to the proportion of the Award reflecting such reduction which has not Vested.

Compulsory acquisition of shares in the Company

Subject to Rule 9, if a person becomes entitled or bound to acquire shares in the Company under sections 979 to 982 of the Companies Act 2006, Awards shall Vest as set out below.

The proportion of an Award which shall Vest will 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 time the Award has been held by the Award Holder.

In the case of Option, the Vested proportion of the Option (whether Vested under this Rule 8.2 or otherwise) may be exercised at any time during the period beginning with the date the person serves a notice under section 979 and ending 7 clear days before the date on which the person ceases to be entitled to serve such a notice. The Option shall lapse at the end of the 7 days.

If the extent of Vesting of an Award which Vests under this Rule 8.2 has been reduced by the Board to reflect the period of time that the Award has been held by the Award Holder, the Board may determine that Rule 9 shall apply to the proportion of the Award reflecting such reduction which has not Vested.

Scheme of arrangement

Subject to Rule 9, 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 Awards shall Vest on the date of the court sanction as set out below.

The proportion of an Award which shall Vest will 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 time the Award has been held by the Award Holder.

In the case of an Option, the Vested proportion of the Option (whether Vested under this Rule 8.3 or otherwise) may be exercised at any time during the period of 6 months from the compromise or arrangement being sanctioned by the court The Option shall lapse at the end of such period.

If the extent of Vesting of an Award which Vests under this Rule 8.3 has been reduced by the Board to reflect the period of time that the Award has been held by the Award Holder, the Board may determine that Rule 9 shall apply to the proportion of the Award reflecting such reduction which has not Vested.

Winding-up of the Company

If notice is given of a resolution for the voluntary winding-up of the Company, Awards shall Vest on the date notice is given.

The proportion of an Award which shall Vest will 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 time the Award has been held by the Award Holder.

In the case of an Option, the Vested proportion of the Option (whether Vested under this Rule 8.4 or otherwise) may be exercised at any time during the period of 6 months from the date of the notice or, if earlier, on completion of the winding up. The Option shall lapse at the end of such period.

Demergers and other events

The Board may determine that Awards Vest 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 proportion of an Award which shall Vest will be determined by the Board in its absolute discretion and subject to such conditions as it may require taking into account such factors as the Board may consider relevant including, but not limited to, the time the Award has been held by the Award Holder.

In the case of an Option, the Vested proportion of the Option (whether Vested under this Rule 8.5 or otherwise) may be exercised at any time during a period as shall be determined by the Board. The Option shall lapse at the end of such period.

Meaning of "obtains Control of the Company"

For the purpose of Rule 8 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.

References to Board within this Rule 8

For the purposes of this Rule 8, any reference in this Rule 8 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 this Rule 8 applies.

Notification of Award Holders

The Board shall, as soon as reasonably practicable, notify each Award Holder of the occurrence of any of the events referred to in this Rule 8 and explain how this affects their position under the Plan.

Vesting of Awards in advance of a corporate event

Where the Board is aware that an event is likely to occur under Rule 8:

• 1. in respect of which Awards will Vest in circumstances where the conditions for relief under Part 12 of the Corporation Tax Act 2009 may not be satisfied, or
• 1. if the Board in its absolute discretion considers it appropriate,

the Board may, in its absolute discretion and by notice in writing to all Award Holders, declare that all Awards that are expected to Vest as a result of the relevant event shall Vest (and in the case of any such Award which is an Option, shall be exercisable) in accordance with Rule 8 during such period prior to the relevant event as determined by the Board.

Interaction with Rule 4 (Malus and clawback)

Where an event occurs under Rules 13.1 to 13.5 which:

• results in the Vesting of Awards; or
• would so result if there was any subsisting Award which had not already Vested or, in relation to an event referred to in Rule 13.5, if the Board had permitted Vesting of Awards under Rule 13.5 in relation to such event,

the Board may, at its absolute discretion, determine that Rule 4 (Malus and clawback) shall only apply to such extent (if at all) that the Board determines to any Award which was granted on the basis that Rule 4 applied to that Award. Where the Board makes such a determination, it will specify which Awards such determination applies to (which may include Awards which have already Vested and Options which have already been exercised).

9. Exchange of Awards

Where exchange applies

An Award will not Vest under Rule 8 but will be exchanged for a new award (New Award) under this Rule to the extent that:

• 1. an offer to exchange the Award for a New Award is made and accepted by the Award Holder; or
• 1. the Board, with the consent of the persons acquiring Control if relevant, decides that Awards will be automatically exchanged for New Awards. The circumstances in which the Board may make such a decision include (but are not limited to) where an event occurs under Rules 8.1, 8.2, or 8.3 and:
• a. 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
• b. the obtaining of Control amounts in the opinion of the Board to a merger with the Company.

Terms of exchange

The following applies in respect of the New Award:

• 1. The Award Date of the New Award shall be deemed to be the same as the Award Date of the Award.
• 1. The New Award will be in respect of the shares in a company determined by the Board.
• 1. In the application of the Plan to the New Award, where appropriate, references to Company and Shares shall be read as if they were references to the company to whose shares the New Award relates.
• 1. The New Award must be equivalent to the Award (including with respect to any Holding Period(s)) and subject to paragraph 5 below it will Vest at the same time and in the same manner as the Award.
• 1. Either the Vesting of the New Award must be subject to any conditions which are so far as possible equivalent to any conditions applying to the Award or no conditions will apply but the value of shares comprised in the New Award shall have substantially the same value of the number of Shares which would have Vested under Rule 8 as applicable.

10. Lapse of Awards

Notwithstanding any other provision of the Rules, an Award shall lapse on the earliest of:

• 1. in the case of Options, the expiry of the Exercise Period;
• 1. subject to Rule 7, the Award Holder ceasing to be in Relevant Employment;
• 1. any date for lapse provided for under these Rules; and
• 1. the date on which the Award Holder becomes bankrupt or enters into a compromise with their creditors generally.

11. Adjustment of Awards on Reorganisation

Power to adjust Awards

In the event of a Reorganisation, the number of Shares subject to an Award which is an Option or a Conditional Award, the description of the Shares, the Exercise Price, or any one or more of these, shall be adjusted in such manner as the Board shall determine.

In the case of Forfeitable Shares, subject to the relevant Forfeitable Share Agreement, the Award Holder shall have the same rights as any other shareholder in respect of Forfeitable Shares in the event of a Reorganisation, subject to compliance with applicable law. Any shares, securities or other rights allotted to an Award Holder for no consideration or with the proceeds of sale of such rights (but not with new consideration provided by the Award Holder) as a result of such Reorganisation shall be treated as if they were awarded to the Award Holder at the same time as the Forfeitable Shares in respect of which the rights were conferred and subject to the Rules the terms of the Forfeitable Share Agreement and applicable law.

Exercise Price

No adjustment shall be made to the Exercise Price which would result in the Shares subject to an Option or Conditional Award being issued at a price per Share lower than the nominal value of a Share except where the Board puts in place arrangements to pay up the nominal value at the date of issue of the Shares (or the difference between the adjusted Exercise Price and the nominal value as the case may be).

Notification of Award Holders

The Board shall, as soon as reasonably practicable, notify each Award Holder of any adjustment made under this Rule 11 and explain how this affects their position under the Plan.

12. Tax and social security withholding

Deductions

Unless the Award Holder discharges any liability that may arise, the Board, the Company or any Group Member or former Group Member (as the case may be) may withhold such amount, or make such other arrangements as it may determine appropriate, for example to sell or withhold Shares, to meet any liability to taxes or social security contributions in respect of such Award Holder's Awards, including where applicable, Employer's NIC transferred under Rule 12.2. The Award Holder will be responsible for all taxes, employee's social security contributions and other liabilities arising in respect of the Award Holder's Awards.

Transfer of Employer's NIC

The Board may, at its discretion and to the extent permitted by law, require the Award Holder to pay all or any part of the Employer's NIC in relation to an Award.

Execution of document by Award Holder

The Board may require an Award Holder to execute a document in order to bind the Award Holder contractually to any such arrangement as is referred to in Rules 12.1 and 12.2 and return the executed document to the Company by a specified date. It shall be a condition of Vesting and where applicable exercise of the Award that the executed document be returned by the specified date unless the Board determines otherwise.

Tax elections

The Board may, at its discretion, determine that an Option may not be exercised and/or the Shares subject to a Conditional Award and/or the Shares the subject of an Award comprising Forfeitable Shares may not be issued or transferred to the Award Holder (or for their benefit) unless the Award Holder has beforehand signed an election under Chapter 2 of Part 7 of ITEPA 2003 and/or section 165 of the Taxation of Chargeable Gains Act 1992 or entered into broadly similar local arrangements.

13. Rights and listing of Shares

Rights attaching to Shares

Except as set out in Rule 1.10 (Forfeitable Shares), all Shares issued or transferred under the Plan shall, as to voting, dividend, transfer and other rights, including those arising on a liquidation of the Company, rank equally in all respects and as one class with the shares of the same class in issue at the date of issue or transfer save as regards any rights attaching to such Shares by reference to a record date prior to the date of such issue or transfer.

Listing and admission to trading of Shares

If and so long as Shares are listed on the Official List and traded on the London Stock Exchange or traded on the Alternative Investment Market of the London Stock Exchange, the Company will apply for the listing and admission to trading of any Shares issued under the Plan as soon as reasonably practicable.

14. Relationship of the Plan to contract of employment

Contractual provisions

Notwithstanding any other provision of the Plan:

• 1. the Plan shall not form part of any contract of employment between any Group Member and an Eligible Employee;
• 1. unless expressly so provided in their contract of employment, an Eligible Employee has no right to be granted an Award and the receipt of an Award in one year (and the calculation of the Exercise Price in a particular way) is no indication that the Award Holder will be granted any subsequent Awards (or that the calculation of the Exercise Price will be made in the same or a similar way);
• 1. the Plan does not entitle any Award Holder to the exercise of any discretion in their favour;
• 1. the benefit to an Eligible Employee of participation in the Plan (including, in particular but not by way of limitation, any Awards held by them and any Shares received by them) shall not form any part of their remuneration or count as their remuneration for any purpose and shall not be pensionable; and
• 1. if an Eligible Employee ceases to be in Relevant Employment for any reason, they shall not be entitled to compensation for the loss or diminution in value of any right or benefit or prospective right or benefit under the Plan (including, in particular but not by way of limitation, any Awards held by them which lapse by reason of their ceasing to be in Relevant Employment) whether by way of damages for unfair dismissal, wrongful dismissal, breach of contract or otherwise or anything analogous thereto in any jurisdiction.

Deemed agreement

By accepting the grant of an Award, an Award Holder is deemed to have agreed to the provisions of these Rules, including this Rule 14.

15. Administration of the Plan

Responsibility for administration

The Board shall be responsible for, and shall have the conduct of, the administration of the Plan. The Board may from time to time make, amend or rescind regulations for the administration of the Plan provided that such regulations shall not be inconsistent with the Rules.

Board's decision final and binding

The decision of the Board shall be final and binding in all matters relating to the Plan, including but not limited to the resolution of any dispute concerning, or any inconsistency or ambiguity in the Rules or any document used in connection with the Plan.

Discretionary nature of Awards

All Awards shall be granted entirely at the discretion of the Board and the form and structure of all Awards shall be entirely at the discretion of the Board.

Provision of information

An Award Holder shall provide to the Company or any Group Member as soon as reasonably practicable such information as the Company reasonably requests for the purpose of complying with its obligations under section 421J of ITEPA 2003 or similar requirements of tax legislation in any relevant jurisdiction.

Cost of the Plan

The cost of introducing and administering the Plan shall be met by the Company. The Company shall be entitled, if it wishes, to charge an appropriate part of such cost or the costs of an and Award to a Subsidiary.

Data protection

Participation in the Plan will be subject to:

• 1. any data protection policies applicable to any relevant Member of the Group; and
• 1. any applicable privacy notices.

Third party rights

Nothing in these Rules confers any benefit, right or expectation on a person who is not an Award Holder. No such third party has any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any terms of these Rules.

16. Amendment of the Plan

Power to amend the Plan

Subject to Rules 16.3 and 16.2, the Board may from time to time amend the Rules (including, for the purposes of establishing a sub-plan for the benefit of employees located overseas).

Amendments to the Plan

Without the prior approval of the Company in general meeting, an amendment may not be made for the benefit of existing or future Award Holders to the Rules relating to:

• 1. the basis for determining an Eligible Employee's entitlement (or otherwise) to be granted an Award and/or to acquire Shares on the exercise of an Option and/or to become absolutely entitled to Shares subject to a Conditional Award and/or an Award of Forfeitable Shares (as the case may be) under the Plan;
• 1. the persons to whom an Award may be granted;
• 1. the limit on the aggregate number of Shares over which Awards may be granted;
• 1. the adjustment of Awards on a Reorganisation; or
• 1. this Rule 16.2,

except for:

• a. an amendment which is of a minor nature and benefits the administration of the Plan; or
• b. an amendment which is of a minor nature and is necessary or desirable in order to take account of a change of legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for participants in the Plan, the Company or some other Group Member.

Rights of existing Award Holders

An amendment may not materially adversely affect the rights of an existing Award Holder except:

• 1. where the amendment is made to take account of any matter or circumstance which the Board reasonably considers is a legal or regulatory requirement which the Board reasonably considers is relevant and requires an amendment to be made in order for any Group Member to comply with such requirement; or
• 1. where the Award Holder affected by the change has been notified of such amendment and the majority of Award Holders holding Awards affected by the change who have responded to such notification have approved the amendment.

17. Notices

Notice by the Board or the Company

Save as provided for by law, any notice, document or other communication given by, or on behalf of, the Board or the Company to any person in connection with the Plan shall be deemed to have been duly given if delivered to them at their place of work, if they are in Relevant Employment, if sent by e-mail to such e-mail address as may be specified by them from time to time or, in the case of an Award Holder who remains in Relevant Employment, to such e-mail address as is allocated to them by any Group Member, or sent through the post in a pre-paid envelope to the postal address last known to the Company to be their address and, if so sent, shall be deemed to have been duly given on the date of posting.

Deceased Award Holders

Save as provided for by law, any notice, document or other communication so sent to an Award Holder shall be deemed to have been duly given notwithstanding that such Award Holder is then deceased (and whether or not the Company has notice of their death) except where their personal representatives have established title to the satisfaction of the Company and supplied to the Company an e-mail or postal address to which notices, documents and other communications are to be sent.

Notice to the Board or the Company

Save as provided for by law any notice, document or other communication given to the Board or the Company (or any relevant person appointed by the Board or the Company, as the case may be) in connection with the Plan shall be delivered by hand or sent by email, fax or post to the Company Secretary (or any relevant person appointed by the Board or the Company, as the case may be) at the Company's registered office (or such other e-mail or postal address as may from time to time be notified to Award Holders) but shall not in any event be duly given unless it is actually received at the registered office or such e-mail or postal address.

18. Governing law and jurisdiction

Plan governed by English law

The formation, existence, construction, performance, validity and all aspects whatsoever of the Plan, any term of the Plan and any Award granted under it shall be governed by English law.

English courts to have jurisdiction

The English courts shall have jurisdiction to settle any dispute which may arise out of, or in connection with, the Plan.

Jurisdiction agreement for benefit of the Company

The jurisdiction agreement contained in this Rule 18 is made for the benefit of the Company only, which accordingly retains the right to bring proceedings in any other court of competent jurisdiction.

Award Holder deemed to submit to such jurisdiction

By accepting the grant of an Award, an Award Holder is deemed to have agreed to submit to such jurisdiction.

19. Interpretation

Definitions

In this Plan, unless the context otherwise requires, the following words and expressions have the following meanings:

Acting In Concert has the meaning given to that expression in The City Code on Takeovers and Mergers in its present form or as amended from time to time;

Award means an Option, a Conditional Award or Forfeitable Shares granted under the Plan;

Award Certificate means a statement in a form, which may include an electronic form, determined by the Company setting out details of the Award which is an Option or a Conditional Award determined in accordance with Rule 1.3;

Award Date means the date on which an Award is granted in accordance with Rule 1.1;

Award Holder means an individual who holds an Award or, where the context permits, their legal personal representatives. Where relevant, Award Holder(s) shall include reference to former Award Holder(s);

Board means, subject to Rule 8.7, either (i) the remuneration committee established by the board of directors of the Company or if there is not a remuneration committee, the board of directors of the Company or (ii) a person duly authorised by the remuneration committee or if there is not a remuneration committee, the board of directors of the Company;

Bonus means value which may be provided to the Eligible Employee under any bonus plan or arrangement operated by a Group Member if the performance conditions and other conditions applicable to it are satisfied and to which the Board determines that the Plan shall relate;

Company means Paragon Banking Group plc incorporated in England and Wales under company number 02336032;

Conditional Award means a conditional right under the Plan to acquire Shares;

Control has the meaning given to it by section 995 of ITA 2007;

Dealing Day means any day on which the London Stock Exchange is open for the transaction of business;

Dealing Restrictions means any restrictions imposed by legislation, regulation or any other code or guidance on share dealing with which the Company seeks to comply;

Directors' Remuneration Policy has the meaning given to it by section 422A (6) of the Companies Act 2006;

Eligible Employee means an individual who is an employee of a Group Member;

Employees' Share Scheme has the meaning set out in section 1166 of the Companies Act 2006;

Employer's NIC means employer's secondary class 1 National Insurance contributions liability or any local equivalent.

Exercise Period means the period set by the Board on the Award Date during which an Option may be exercised, ending no later than the 10th anniversary of the Award Date;

Exercise Price means the amount (if any), expressed either as an amount per Share or a total amount, payable in respect of the exercise of an Option, determined in accordance with Rule 3;

Financial Conduct Authority means the "competent authority" as that expression is defined in Part VI of the Financial Services and Markets Act 2000;

Financial Year means the financial year of the Company;

Forfeitable Shares means Shares where the Award Holder is the beneficial owner of the Shares from the Award Date subject to the Forfeitable Share Agreement;

Forfeitable Share Agreement means the agreement referred to in Rule 1.10;

Gain means the difference between (i) the Market Value of a Share on the date of exercise of an Option and (ii) the Exercise Price, multiplied by the number of Shares in respect of which the Option is being exercised;

Group means the Company and its Subsidiaries from time to time and Group Member shall be interpreted accordingly;

HMRC means His Majesty's Revenue & Customs;

Holding Period means in relation to an Award (or proportion of an Award) a period or periods (if any) specified under paragraph 8 of Rule 1.3 during which the restrictions contained in Rule 6 apply;

ITA 2007 means the Income Tax Act 2007;

ITEPA 2003 means the Income Tax (Earnings and Pensions) Act 2003;

London Stock Exchange means London Stock Exchange plc or any successor body;

Malus and Clawback Policy means the Group's policy on the application and operation of malus and clawback as amended from time to time;

Market Value on any day means:

• 1. if at the relevant time Shares are listed on the Official List (or on any other recognised stock exchange within the meaning of section 1005 of ITA 2007 or the Alternative Investment Market of the London Stock Exchange), the closing middle market quotation (as derived from the Daily Official List of the London Stock Exchange or the equivalent list or record for the recognised stock exchange on which the Shares are listed) or, if the Board so decides, the closing price on the preceding Dealing Day; or
• 1. where Shares are not so listed, the market value of a Share calculated as described in the Taxation of Chargeable Gains Act 1992;

Official List means the list maintained by the Financial Conduct Authority in accordance with section 74(1) of the Financial Services and Markets Act 2000 for the purposes of Part VI of the Act;

Option means a right to acquire Shares granted under the Plan;

Plan means the Paragon Deferred Share Bonus Plan 2023 as amended from time to time;

Post-Employment Shareholding Requirement means any requirement, guideline or policy determined by the Board from time to time pursuant to which an individual must hold Shares following their ceasing to hold office or employment with a Group Member;

Shares means ordinary shares in the capital of the Company (or any shares representing them);

Regulatory Information Service means a service that is approved by the Financial Conduct Authority on meeting the Primary Information Provider criteria and is on the list of Regulatory Information Services maintained by the Financial Conduct Authority (or any overseas equivalent);

Relevant Employment means employment with any Group Member;

Reorganisation means any variation in the share capital of the Company, including but without limitation a capitalisation issue, rights issue, demerger or other distribution, a special dividend or distribution, rights offer or bonus issue and a sub-division, consolidation or reduction in the capital of the Company;

Rules mean the rules of the Plan;

Subsidiary has the meaning set out in section 1159 of the Companies Act 2006;

Trustees means the trustees of any trust created by a Group Member which, when taken together with the Plan, constitutes an Employees' Share Scheme;

Vest means:

• 1. in relation to an Option, the Award Holder becoming entitled to exercise the Option;
• 1. in relation to a Conditional Award, the Award Holder becoming entitled to have the Shares issued or transferred to them (or to a nominee specified or permitted by the Company); and
• 1. in relation to Forfeitable Shares means the restrictions set out in the Forfeitable Share Agreement ceasing to have effect; and Vesting and Vested shall be construed accordingly; and

Vesting Period means the period from the Award Date to the normal date of Vesting.

Interpretation

In the Plan, unless otherwise specified:

• 1. save as provided for by law a reference to writing includes any mode of reproducing words in a legible form and reduced to paper or electronic format or communication including, for the avoidance of doubt, correspondence via e-mail; and
• 1. the Interpretation Act 1978 applies to the Plan in the same way as it applies to an enactment.