Shareholders' Agreement (England & Wales)

Parties

This agreement is dated the date on which it is signed by the last of the parties.

This agreement is made between (1) [Shareholder 1: legal name and details (the founder or majority-side holder)] ("Shareholder 1"); (2) [Shareholder 2: legal name and details (the investor or minority-side holder)] ("Shareholder 2"); (3) the other shareholders of the Company listed in [Other shareholders who sign now] and any person who signs a deed of adherence (together with Shareholder 1 and Shareholder 2, the "Shareholders"); and (4) [Company: legal name and registration details], a private company limited by shares registered in England and Wales (the "Company").

Key Terms

"Company" means [Company: legal name and registration details].

"Business" means [Business of the Company] and any other business the Board approves in accordance with this agreement.

"Cap Table" means the table of the Shares held by each Shareholder on the date of this agreement set out in [Cap table: each shareholder, class and number of shares held, and percentage], as it is updated under this agreement.

"Qualifying Holding" means, for a Shareholder together with its Affiliates and Permitted Transferees, holding at least 10% of the Shares in issue.

"Working Shareholders" means [Working Shareholders].

"Lock-up Period" means 24 months from the date of this agreement.

"Drag Threshold" means [Drag-along threshold] of the Shares in issue, and "Minimum Drag Price" means [Minimum price per share].

"Vesting Period" means 48 months from the date of this agreement and "Cliff" means 12 months from that date.

"Restricted Period" means [Restricted period after ceasing to be a shareholder] and "Restricted Area" means [Restricted area for the non-compete (a defined territory, not a vague region)].

Definitions

"Shares" means the shares in the capital of the Company of every class; "Shareholder" means each holder of Shares that is a party to this agreement; "Articles" means the articles of association of the Company as amended; "Board" means the board of directors of the Company; "Director" means a director of the Company; and "Shareholder 1" and "Shareholder 2" are the parties so named.

"Vested Shares" means the Shares of a Working Shareholder that have vested under the Vesting of Working Shareholders' Shares clause, and "Unvested Shares" means the Shares that have not.

"Affiliate" means, for a person, any person that controls it, is controlled by it, or is under common control with it, and for an investment fund includes its manager, its general partner and any other fund managed or advised by the same manager.

"Business Day" means a day other than a Saturday, a Sunday or a public holiday in London on which banks in that place are open for general business.

"Good Leaver" means a Working Shareholder who is a Good Leaver under the Bad Leaver clause.

"Cause" means fraud, dishonesty, conviction of an offence carrying imprisonment, material breach of this agreement or of the Working Shareholder's engagement that is not remedied within 30 days of notice, wilful neglect of duties, or conduct that brings the Company into serious disrepute.

"Fair Value" means the price per Share that a willing buyer would pay a willing seller for all the Shares on an arm's-length sale of the Company as a going concern, as agreed between the seller and the buyer or, failing agreement within 15 Business Days, as determined by an independent valuer under the Valuation clause, with no premium for a controlling holding and no discount for a minority holding.

"Exit" means a sale of all or substantially all of the Shares or of the business and assets of the Company to a third party, or the admission of the Shares or of a holding company's shares to trading on a recognised exchange (a "Listing").

"Permitted Transferee" means, for an individual, a trust or company controlled by that individual and established for the benefit of that individual or the individual's family; for a company, a member of its group; and for an investment fund, an Affiliate or a successor fund managed by the same manager.

In this agreement "including" does not limit what comes before it, headings are for convenience only, a reference to a clause is to a clause of this agreement, a reference to the law includes the law as amended or re-enacted, and "in writing" includes email unless this agreement says otherwise.

Purpose

The Shareholders agree to hold their Shares in the Company, and to manage the Company, on the terms of this agreement. The Company shall carry on the Business and shall not carry on any other business without the consent required for a Reserved Matter.

Business plan and budget

The Board shall prepare a business plan and an annual budget for each financial year and circulate a draft to every Director at least 30 days before that year starts. The Board approves the budget by a majority of Directors that includes at least one Director appointed by each Shareholder entitled to appoint a Director. Until a new budget is approved, the Company continues on the last approved budget, increased only by amounts needed for commitments already made.

Shareholdings

On the date of this agreement the Shareholders hold the Shares shown in the Cap Table, which each Shareholder confirms is correct for its own holding. Each Shareholder shall hold its Shares free of any pledge, charge or other security except as this agreement permits, and the Company shall keep its register of members in line with this agreement and shall not record a transfer or issue that is in breach of it.

Further funding

No Shareholder is obliged to invest more in the Company. If the Board decides that the Company needs further funding, it shall first offer new Shares to the Shareholders under the Pre-emption on new shares clause and may borrow within the limit set by the Reserved Matters.

Board composition

The Board consists of 3 Directors. Shareholder 1 may appoint and remove 2 of them and Shareholder 2 may appoint and remove 1 of them, each right lasting while the appointing Shareholder holds a Qualifying Holding. The Directors may co-opt a further independent director, [Independent director: how chosen and any requirements (leave blank if none)], with the approval of a Director appointed by each of Shareholder 1 and Shareholder 2.

Chair and casting vote

The Board appoints one of its Directors as chair. Except under the Deadlock resolution clause, the chair has no second or casting vote, and a matter on which the votes are tied is treated as not approved. A tie on a matter that is not a Reserved Matter and on which the Directors cannot agree is dealt with under the Deadlock clause.

Board meetings and quorum

The Board shall meet at least once every month, unless it decides otherwise. Notice of at least five Business Days, with an agenda and papers, is required for each meeting, unless every Director agrees to shorter notice. A quorum is present only if a majority of the Directors is present and includes at least one Director appointed by each Shareholder that has appointed a Director. If a quorum is not present, the meeting is adjourned to the same time and place five Business Days later, and at the adjourned meeting any two Directors constitute a quorum for matters on the original agenda that are not Reserved Matters.

Duties of appointed Directors

A Director appointed by a Shareholder must act in the way he or she considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, whoever appointed him or her, and the appointing Shareholder shall not direct or ask the Director to act otherwise. A Director may report to the appointing Shareholder only to the extent the Information rights clause permits and subject to his or her duties of confidentiality and to the management of conflicts of interest under the Articles and the law.

Observer

A Shareholder with a Qualifying Holding that has not appointed a Director may appoint one observer to attend and speak, but not vote, at Board meetings and to receive Board papers. The Board may exclude the observer from part of a meeting to protect privilege, to deal with a conflict of interest, or if the observer is connected with a competitor of the Business, and the observer shall sign a confidentiality undertaking in favour of the Company.

Removal and vacancy

A Shareholder that has the right to appoint a Director may remove that Director and appoint a replacement by notice to the Company, and the other Shareholders shall vote their Shares to give effect to it. Unless the Board composition clause gives a Shareholder a Director in all cases, a Director's seat reserved for a Shareholder ends when that Shareholder stops holding a Qualifying Holding, and the Director shall resign on request. A vacancy shall be filled only by the Shareholder with the right to appoint to that seat.

Director insurance and indemnity

The Company shall maintain directors' and officers' liability insurance for the Directors with limits the Board approves, and shall indemnify each Director against costs and liabilities incurred in that capacity to the fullest extent the law allows, except for liabilities arising from the Director's fraud, wilful default or breach of this agreement.

Reserved Matters

The Company shall not, and the Shareholders shall procure that it and its subsidiaries do not, do any of the following without the prior written consent of Shareholder 1 and Shareholder 2: (a) change the constitution of the Company or the rights attached to any Shares; (b) allot, issue, redeem or buy back any Shares or grant any option over Shares, other than as this agreement requires; (c) change the nature of the Business or begin a new line of business; (d) sell, acquire or dispose of any business or any asset worth more than [Spend limit above which a transaction outside the budget is a Reserved Matter]; (e) incur borrowing above [Borrowing limit above which new debt is a Reserved Matter] or give a guarantee or security; (f) spend outside the budget more than [Spend limit above which a transaction outside the budget is a Reserved Matter] in a financial year; (g) enter into a transaction with a Shareholder or its Affiliate otherwise than on arm's-length terms; (h) appoint or remove the chief executive, the chair or the auditors; (i) declare a dividend or make a distribution other than under the Dividend Policy; (j) start or settle a legal proceeding above [Spend limit above which a transaction outside the budget is a Reserved Matter]; (k) approve the business plan or the annual budget; or (l) pass a resolution to wind up the Company or apply for an insolvency procedure, other than because the Company is insolvent.

Giving consent

A Reserved Matter consent must be in writing and signed by or for the Shareholder concerned (email counts). A Shareholder shall respond to a request for consent within 10 Business Days and shall not unreasonably delay, but silence is not consent, and a Shareholder may withhold consent in its absolute discretion for a matter that affects the rights attached to its Shares.

Acting without consent

The Shareholders shall exercise their votes and powers so that no Reserved Matter is done without the required consent. A transaction done in breach is a breach of this agreement by the Shareholders who voted for or allowed it, and each Shareholder may seek an injunction or an order to reverse the act, as the law permits, in addition to damages. This clause does not make the Company's dealings with third parties acting in good faith ineffective.

When consent rights end

A right to consent under the Reserved Matters clause held by a Shareholder ends when the Shareholder stops holding a Qualifying Holding. After that, the Reserved Matters that remain are those that the constitution or the law makes a matter for the Shareholders, and any right under this clause ends with the Shareholder.

Entrenchment in the Articles

The Shareholders shall ensure that the provisions of the Articles that give effect to the Reserved Matters, the rights to appoint Directors and the transfer provisions are entrenched, so that they may be amended or repealed only if Shareholder 2 consents in writing, for as long as it holds a Qualifying Holding. Because entrenchment can be added to the Articles after incorporation only by an amendment that all members agree to, each Shareholder consents to it and shall sign any resolution needed to adopt it.

Shareholder meetings

At a general meeting of the Company a quorum requires the presence of Shareholders holding a majority of the Shares, including a holder of Shares from each of Shareholder 1 and Shareholder 2 for as long as each holds a Qualifying Holding. If a quorum is not present within half an hour, the meeting is adjourned for five Business Days, and at the adjourned meeting those present form a quorum, except for a Reserved Matter. A Shareholder may attend and vote by a proxy it appoints.

Voting commitment

Each Shareholder shall exercise its votes, including by written resolution, so that this agreement is carried out, including by voting to appoint and remove Directors as the Board composition and removal clauses provide, to amend the Articles to match this agreement, and to approve an Exit that complies with the Drag-along clause. The Company cannot restrict by contract the powers the law gives it, so any obligation placed on the Company in this agreement that would do so takes effect as an undertaking by each Shareholder to procure the result so far as it lawfully can.

Information rights

The Company shall give every Shareholder with a Qualifying Holding: (a) management accounts and a summary of cash and key performance measures within 30 days of each month end; (b) annual accounts within 120 days of the year end; (c) the annual budget; and (d) any further information about the business and finances that a Shareholder reasonably asks for.

Inspection

On reasonable notice during business hours, each Shareholder with a Qualifying Holding may inspect, and take copies of, the books and records of the Company and, through one adviser bound to confidentiality, the premises, once in each financial year at its own cost unless the inspection reveals a material misstatement.

Competitors and privileged information

The Company may withhold information from a Shareholder, or an Affiliate, that carries on a business competing with the Business, except for information that the Shareholder's appointed Director needs to carry out the duties of a Director. The Company may also withhold anything that is subject to legal privilege or that the law prevents it from disclosing.

Pre-emption on new shares

If the Company proposes to issue new Shares or any right to acquire Shares, it shall first offer them to every Shareholder in proportion to the Shares it holds, by a written notice that states the number, class, price and other terms. A Shareholder may accept all or part of its entitlement within 15 Business Days and, if it accepts all, may ask for any Shares that others do not take up. The Company may sell Shares not taken up to another person within 90 days on terms no better for that person than those offered.

Statutory pre-emption and authority to allot

The Company shall not allot Shares or grant any right to subscribe for Shares unless the directors have the authority the Articles or a resolution of the Company require. The offer procedure in the Pre-emption on new shares clause is in addition to, and not instead of, any statutory right of pre-emption on a cash allotment, and the Shareholders shall pass the resolutions needed to disapply the statutory right for an allotment made in compliance with this agreement, or the Articles shall provide for the process in this agreement in place of the statutory one.

Excluded issues

Pre-emption does not apply to: (a) options and shares under an employee share plan up to [Employee option pool, as a percentage of fully diluted share capital, excluded] of the fully diluted share capital; (b) Shares issued on conversion of an instrument already in existence on the date of this agreement; (c) Shares issued by way of a bonus issue or share split to all Shareholders in proportion; or (d) Shares issued as consideration for an acquisition approved as a Reserved Matter.

Lock-up

No Shareholder shall transfer, charge or otherwise deal with any Share before the end of the Lock-up Period, except to a Permitted Transferee, under the Tag-along or Drag-along clause, or with the written consent of the other Shareholders.

General restriction on transfers

No Shareholder may transfer any Share or any interest in a Share except as this agreement permits. A transferee that is not already a party shall, as a condition of the transfer, sign a deed of adherence to this agreement, and the Company shall not register a transfer that does not follow this agreement. A Shareholder shall not grant an option over, or enter into a voting or other arrangement about, its Shares that conflicts with this agreement.

Registration of transfers

The Board shall register a transfer of Shares that complies with this agreement and the Articles, and shall refuse a transfer that does not. If the Board refuses, it shall tell the transferee as soon as practicable and in any event within two months of the transfer being lodged, and shall give reasons. The Board may register a transfer only when it holds the information needed for the register of members and the transferee has signed a deed of adherence.

Stamp duty on transfers

A transfer of Shares may attract stamp duty, which the buyer pays unless the parties agree otherwise. Where duty is payable or a certificate is needed, the transfer instrument shall be submitted to HM Revenue & Customs and stamped before it is lodged with the Company, and the Board shall not register an unstamped transfer. A seller shall give the buyer the information it needs to complete the stamp duty return and shall have no liability for duty that is due on the buyer's side.

Permitted transfers

A Shareholder may transfer Shares to a Permitted Transferee without the Right of First Refusal or the Lock-up Period applying, if the transferee first signs a deed of adherence. If the transferee stops being a Permitted Transferee, it shall transfer the Shares back to the original Shareholder (or another Permitted Transferee) before that happens. A transfer to a Permitted Transferee does not release the original Shareholder from its obligations.

Right of first refusal

A Shareholder that wants to sell Shares to a third party shall first send a transfer notice to the Company and the other Shareholders that states the Shares, the proposed buyer, the price and the other terms. The other Shareholders may buy all the offered Shares at that price, in proportion to their holdings, by notice within 20 Business Days. If they do not take all of them, the seller may sell the remaining Shares to the named buyer within 60 days at no lower price and on terms no more favourable to the buyer, subject to the Tag-along clause.

Tag-along

If a sale of Shares by one or more Shareholders would result in a buyer, with persons acting in concert, holding more than 50% of the Shares, the sellers shall not complete the sale unless the buyer offers to buy all other Shares for the same price and on the same terms per Share. Each Shareholder may accept within 20 Business Days. If the buyer offers different forms of consideration, each Shareholder may elect the same form as the sellers.

Drag-along

If holders of at least the Drag Threshold (the "Sellers") want to sell all their Shares to a bona fide third party that is not connected with them, they may by a drag notice require every other Shareholder to sell all its Shares to that buyer on the same terms per Share, provided the price per Share is at least the Minimum Drag Price and, if the Sellers include Shareholder 1, Shareholder 2 consents or is paid cash on completion. Completion must take place within 90 days of the drag notice.

Protection of dragged Shareholders

A Shareholder required to sell under the Drag-along clause (a) receives the same price and form of consideration per Share of the same class as every other seller, subject to the proceeds order in the Distribution of exit proceeds clause; (b) gives warranties only about its own title, capacity and authority; (c) is liable only severally, in proportion to its share of the price, and not for more than the amount it receives; (d) is not required to enter into a non-compete or a non-solicit other than the confidentiality undertaking; and (e) bears its share of costs in proportion to its proceeds. Escrows and holdbacks are borne by all sellers pro rata.

Statutory buy-out of minority holders

This agreement does not limit the right that an offeror may have by law to buy out the remaining holders after a takeover offer has been accepted by holders of at least 90 per cent in value of the shares to which the offer relates. The Drag-along clause provides a contractual route to a sale at a lower threshold, and a Shareholder that is dragged is not dragged into a price less favourable than the price offered to any other Shareholder of the same class.

Drag-along completion

On receipt of a drag notice each dragged Shareholder shall sign the transaction documents, deliver its share certificates or other evidence of title and give the buyer good title on completion. If a dragged Shareholder fails to do so within 10 Business Days, that Shareholder irrevocably appoints each Director who is not a seller, and the Company's company secretary, severally as its attorney to sign those documents and to give the Shareholder's instructions on the sale in its name, by way of security for its obligations under this clause, and the Company may register the transfer.

Deed of adherence

A person that becomes a Shareholder after the date of this agreement shall, as a condition of its registration, sign a deed of adherence in the form the Board approves under which it takes on the rights and obligations of the Shareholder from whom it takes its Shares, and, for a new subscriber, of the class of Shareholder its holding corresponds to. The Company shall hold the signed deed with this agreement.

Vesting of Working Shareholders' Shares

The Shares held by each Working Shareholder on the date of this agreement vest in equal monthly instalments over the Vesting Period, with nothing vesting before the Cliff and the instalments that would have vested during the Cliff vesting when it ends. Shares that have not vested are Unvested Shares. On a sale of the Company that is an Exit all Unvested Shares vest if the Working Shareholder is then still engaged in the Business.

Bad Leaver

A Working Shareholder is a Bad Leaver if it ceases to be engaged in the Business because of dismissal for Cause, resigns without good reason within the first 24 months, or breaches the Restricted Period covenant or the confidentiality clause. A Working Shareholder who ceases to be engaged for any other reason is a Good Leaver.

Leaver call option

On a Working Shareholder ceasing to be engaged in the Business (the "Leaving Date"), the Company, the other Shareholders in proportion, or a person they nominate, may within 60 days by notice require the Working Shareholder to sell all or part of its Unvested Shares and, if it is a Bad Leaver, all its Shares. The Company may buy Shares only in the way and to the extent the law on a company buying its own shares allows, including as to distributable profits, approval and payment, and otherwise the other Shareholders or their nominee may buy them. The Shareholders shall ensure that the Articles contain a compulsory transfer provision that matches this clause.

Leaver price

The price of Shares bought on a Good Leaver is the lower of the Fair Value and the price the leaver paid, for Unvested Shares, and the Fair Value for Vested Shares. The price on a Bad Leaver is the lower of the price paid by the leaver, being [Subscription price per share paid by the Working Shareholders] per Share, and the Fair Value, for all the Shares bought.

Completion of leaver sales

A sale under the Leaver call option completes within 30 days of the price being agreed or determined. The leaver shall sign the transfer and deliver its certificates. If it does not, the leaver irrevocably appoints each Director who is not the leaver, severally, as its attorney by way of security to sign the transfer in its name, and the Company may register the transfer and hold the price on trust for the leaver until the share certificate or an indemnity for its loss is delivered. Dividends and votes of Shares subject to a call option may be suspended from the notice date until completion.

Valuation

If the Fair Value is not agreed within 15 Business Days, either party may require it to be determined by an independent valuer chosen by agreement, or if not agreed within five Business Days, nominated by [Body that nominates the independent valuer if the parties cannot agree]. The valuer acts as an expert and not as an arbitrator, his or her decision is final and binding except in the case of fraud or manifest error, and the costs are shared equally between the buyer and the seller unless the valuer decides otherwise.

Deadlock

A "Deadlock" arises if a Reserved Matter or a matter the Board has to decide has been put to two consecutive duly convened meetings of the Board, or of the Shareholders, on at least ten Business Days' notice, and has failed to be approved at both because the Directors or Shareholders appointed by Shareholder 1 and by Shareholder 2 have voted in opposite ways, and a party has given a Deadlock notice to the others.

Escalation

On a Deadlock notice, the chief executives, or a senior representative with authority, of Shareholder 1 and Shareholder 2 shall meet within 30 days and try in good faith to resolve the matter. If the representatives do not resolve it within that time, the Deadlock continues to the next step of the Deadlock resolution clause.

Deadlock resolution

If escalation does not resolve the Deadlock, the Shareholders shall refer it to mediation by a mediator chosen by agreement or nominated by [Body that nominates the independent valuer if the parties cannot agree], which is to be completed within 30 days. If the Deadlock concerns a matter of valuation or of fact that an expert can decide, either may refer it to an independent expert whose decision binds the parties.

Business during a Deadlock

While a Deadlock is being resolved, the Company shall continue to carry on the Business in the ordinary course within the last approved budget, no Shareholder shall use a Deadlock to stop the Company paying debts as they fall due, and each Shareholder shall keep voting rights and information rights and shall not use confidential information about the Deadlock against the Company.

Minority protections and unfair prejudice

Nothing in this agreement removes a Shareholder's right to apply to the court for relief on the ground of unfair prejudice. The Shareholders agree that conduct that follows this agreement, and the use of the Deadlock, leaver and drag-along clauses in the way they provide, is conduct the Shareholders have contemplated and agreed to, and a Shareholder shall first use the Deadlock resolution clause before it starts such an application, except for urgent relief.

Anti-dilution protection

If the Company issues Shares for a price per Share lower than the price Shareholder 2 paid for its Shares (the "Original Price"), other than an excluded issue, the Original Price of Shareholder 2's Shares is reduced to the price given by the following broad-based weighted-average formula: NCP = OCP x (A + B) / (A + C), where OCP is the Original Price, A is the number of Shares in issue before the new issue on a fully diluted basis, B is the number of Shares that the total new consideration would buy at the Original Price, and C is the number of new Shares issued. The Company shall issue to Shareholder 2, as a bonus issue or at nominal price, the Shares needed to give effect to the reduced price, and the Shareholders shall vote to approve the issue and to disapply any pre-emption right.

Excluded issues for anti-dilution

No anti-dilution adjustment applies to Shares issued: (a) under the employee share plan up to the option pool of [Employee option pool, as a percentage of fully diluted share capital, excluded]; (b) on conversion of an instrument in existence at the date of this agreement; (c) as a bonus issue or share split; (d) in consideration for an acquisition approved as a Reserved Matter; or (e) where Shareholder 2 has agreed in writing that the issue is excluded.

Exit planning

Once in each financial year the Board shall review options for an Exit and record its conclusions, and a Shareholder may require the Board to consider a proposal that it puts forward. No Shareholder is obliged to support an Exit that does not meet the Drag-along conditions.

Listing cooperation

If the Board and the holders of the Drag Threshold decide to seek a Listing, each Shareholder shall cooperate, including by agreeing to a lock-up of up to 180 days if the sponsor or underwriters ask, voting for the re-registration of the Company as a public company and the changes to the Articles and share capital that the market needs, and giving the customary confirmations, as long as every Shareholder is treated alike.

Distribution of exit proceeds

On an Exit or a winding up, the proceeds are shared among the Shareholders in proportion to the Shares they hold, after the costs of the Exit, with the same price for every Share of the same class.

Dividend policy

The Board may declare dividends out of distributable profits after providing for the budget, working capital and reserves, up to [Percentage of distributable profits the board may distribute each year] of the distributable profits each year, and every dividend is paid on all Shares of the same class in proportion to the Shares held.

Non-compete

While a Working Shareholder holds Shares, and for the Restricted Period after it stops holding them, it shall not in the Restricted Area carry on, be engaged in or hold more than 3 per cent of a business that competes with the Business. This clause applies only to the extent necessary to protect the Company's confidential information and goodwill, and is separate from each of the other restrictions in this clause.

Non-solicit

While a Working Shareholder holds Shares and for the Restricted Period after it stops holding them, it shall not solicit or hire any employee or key contractor of the Company with whom it worked in the last 12 months, or solicit any customer or supplier of the Company with whom it dealt in that period for a competing purpose.

Reasonableness and restraint of trade

Each Shareholder agrees that the restrictions in the covenant clauses are no wider than is reasonably needed to protect the Company's confidential information, goodwill and workforce stability. The parties accept that an English court will not enforce a restraint of trade that goes beyond what is reasonable, and that a covenant given as a shareholder is tested more leniently than a pure employment covenant but still must be justified. Each restriction is separate and, if any is unenforceable as drafted, the others remain.

Confidentiality

Each Shareholder shall keep confidential, and use only to manage its investment in the Company, all information it receives about the Company, the other Shareholders and this agreement. This does not apply to information that is public other than through a breach of this clause or that the Shareholder holds independently.

Permitted disclosure

A Shareholder may disclose confidential information to its Affiliates, officers, advisers and financiers, and, for an investment fund, to its partners and investors under a duty of confidence, to a bona fide prospective buyer of its Shares who signs a confidentiality undertaking, and as the law, a court or a regulator requires, after telling the Company where it can lawfully do so.

Related-party dealings

A contract between the Company and a Shareholder, a Director or any of their Affiliates must be at arm's length and in writing, and is a Reserved Matter unless it is on terms disclosed in this agreement. An interested Director shall declare the interest and, unless the constitution and the law allow it, shall not vote on the matter.

Shareholder warranties

Each Shareholder warrants to the others and to the Company that it has full power and authority to sign and perform this agreement, that it is the legal and beneficial owner of its Shares shown in the Cap Table free from any security, that signing this agreement does not breach any law or agreement binding on it, and that, if it is an individual, it has received or had the chance to take independent legal advice.

Company confirmations

The Company confirms that it is validly existing, has power to sign and perform this agreement and has issued the Shares in the Cap Table in accordance with its constitution and the law, and that the Cap Table is accurate on the date of this agreement. The Company is not liable under this clause for anything in the Cap Table that a Shareholder has itself provided.

Tax relief scheme cooperation

If a Shareholder has told the Company in writing before it subscribes that it intends to claim a tax relief for its investment, such as relief under the enterprise investment scheme or the seed enterprise investment scheme, the Company shall use reasonable endeavours to keep the conditions for the relief met and shall provide the compliance statements the Shareholder reasonably needs. The Company gives no promise that the relief will be available, and each Shareholder takes its own tax advice.

Consistency with the constitution

The Articles bind the Company and its members as its constitution, whereas this agreement binds only its parties, so the Shareholders shall ensure that the Articles contain the provisions of this agreement that need to bind the Company and future members, including pre-emption, transfer restrictions, tag-along, drag-along, the leaver provisions, rights to appoint and remove Directors and the rights attached to each class of Share. If the Articles and this agreement conflict, then as among the Shareholders this agreement prevails, and each Shareholder shall vote to amend the Articles so they match, by special resolution where one is needed.

Amending the constitution

If the constitution of the Company is inconsistent with this agreement, the Shareholders shall vote their Shares, and procure that the Directors act, to amend the constitution so that it matches this agreement, except that the Shareholders do not have to vote for an amendment that would unfairly reduce the rights of Shareholders of the same class. The Shareholders shall not vote for an amendment that is inconsistent with this agreement without the consent of all of them.

Duration

This agreement starts on the date of this agreement and continues until the earliest of: an Exit completes; the Shareholders agree in writing to end it; only one person holds all the Shares; or the Company is wound up and removed from the register. A Shareholder that ceases to hold any Shares stops being bound by this agreement, except for the clauses that survive.

Survival

The provisions of this agreement on confidentiality, restrictive covenants (including any non-compete and non-solicitation undertakings, for the periods they state), warranties, notices, governing law and the resolution of disputes, any right that has already arisen, and any liability for an earlier breach survive the end of this agreement or a Shareholder's ceasing to be bound by it.

Notices

A notice under this agreement must be in writing and sent by hand, by courier, or by email, to the address or email address given for that party in the Parties clause or later notified, and a notice to the Company is sent to its registered office, marked for the attention of the Board.

When a notice is received

A notice delivered by hand or courier is received when it is left at the address, an email is received at the time it is sent if sent before 5 pm on a Business Day, and otherwise at 9 am on the next Business Day, unless the sender gets a bounce-back or failure message.

No partnership or agency

Nothing in this agreement makes the parties partners or agents of each other, and no party may bind another or the Company except as this agreement expressly states.

Entire agreement

This agreement, with the constitution of the Company and any deed of adherence, is the entire agreement among the parties about its subject matter, and replaces earlier discussions and drafts. A party has no claim for a statement that this agreement does not contain, except for fraud.

Variation

A change to this agreement is effective only if it is in writing and signed by Shareholder 1, Shareholder 2 and the Company, and, for a change that would impose an additional obligation on another Shareholder, by that Shareholder as well. A change that treats a Shareholder differently from the other Shareholders of the same class needs that Shareholder's consent.

Waiver

A delay or a failure to exercise a right is not a waiver of it, and a waiver is effective only if it is given in writing and signed by the party giving it.

Assignment

A party may not assign or transfer its rights or obligations under this agreement except together with the Shares to which they relate, and only as this agreement permits.

Severance

If any provision of this agreement is or becomes invalid or unenforceable, the remaining provisions are not affected, and the parties shall replace it with a valid provision that has the closest possible effect.

Further assurance

Each party shall sign and do all things that are reasonably needed to give effect to this agreement, including passing resolutions, signing transfer documents and filing notices with the registrar or authority that keeps the company's records.

Filings with the Registrar

The Company shall make on time every filing with the Registrar of Companies that this agreement and the law require, including returns of allotment with the statement of capital, appointments and removals of Directors, amendments to the Articles with the resolutions that adopt them, the register of people with significant control and the annual confirmation statement, and shall send each Shareholder a copy of anything lodged that affects its rights.

Costs

Each party bears its own costs of negotiating and signing this agreement. The Company bears the costs of any amendment to its constitution and of any share issue needed to implement this agreement.

Third-party rights

The Company, and any Permitted Transferee that has signed a deed of adherence, may enforce the terms of this agreement that are expressed to benefit it. Nobody else who is not a party has any right under the Contracts (Rights of Third Parties) Act 1999 to enforce a term of this agreement, and the parties may change or end this agreement without the consent of anyone who is not a party.

Counterparts and electronic signature

This agreement may be signed in counterparts, and by electronic signature to the extent the law allows, and each counterpart is an original and all together are one agreement. This agreement is intended to be executed as a deed by each party, in the way the law requires for an individual or for a company, because the powers of attorney in it are meant to be irrevocable.

Dispute escalation

Before starting proceedings other than for urgent relief, a party shall give notice of a dispute, and the Shareholders' senior representatives shall meet within 15 Business Days and try in good faith to settle it. A party may start proceedings after 30 days from the notice if the dispute has not been settled.

Injunctive relief

Damages alone would not be an adequate remedy for a breach of the transfer, voting, Reserved Matters, confidentiality or covenant provisions of this agreement, and a party may seek an injunction or specific performance for any such breach, in addition to any other remedy.

Governing law

This agreement and any dispute or claim arising out of or in connection with it, including a non-contractual claim, are governed by the law of England and Wales.

Courts or arbitration

The courts of England and Wales have exclusive jurisdiction to settle any dispute arising out of or in connection with this agreement, including a non-contractual claim. A Shareholder that is not resident in England and Wales shall appoint an agent in England to accept service of proceedings.