Shareholders Agreement

SHAREHOLDERS’ AGREEMENT

[date of agreement]

Relating to:

[company name]

 ([country] Company number: [company number])

Made and entered into by and between:

[names of founding shareholders]

INDEX                                                             

PARTIES.. 3

DEFINITIONS.. 3

INTERPRETATION.. 4

PREAMBLE.. 5

SHAREHOLDING.. 5

MAIN OBJECT OF THE COMPANY.. 6

DIRECTORS AND MANAGEMENT OF THE COMPANY.. 7

RESTRICTIVE COVENANTS AND OBLIGATIONS.. 10

THE SHAREHOLDERS’ VOTING RIGHTS AND MEETINGS.. 13

MATTERS REQUIRING THE CONSENT OF A SPECIAL MAJORITY.. 13

DIVIDEND POLICY AND NET PROFITS.. 17

BORROWING AND GUARANTEES.. 18

FINANCIAL MATTERS.. 19

TRANSFER OF SHARES.. 19

OBLIGATORY TRANSFER EVENTS.. 21

COMPLETION OF SHARE PURCHASE.. 24

FAIR VALUE AND COMPULSORY PURCHASE OF SHARES.. 26

ISSUE OF FURTHER SHARES.. 27

DRAG ALONG.. 28

TAG ALONG.. 30

CONFIDENTIALITY.. 31

NOTICES.. 32

SERIOUS DEADLOCKS: RESOLUTION OF DISPUTES.. 33

TERMINATION.. 34

GOVERNING LAW AND JURISDICTION.. 35

UTMOST GOOD FAITH.. 35

SEVERENCE.. 36

VARIATION AND WAIVER.. 36

ASSIGNMENT.. 37

COSTS.. 37

CONFLICT WITH MEMORANDUM AND ARTICLES.. 37

ENTIRE AGREEMENT.. 37

THIRD PARTIES.. 38

COUNTERPARTS.. 38

SIGNATORIES.. 38

SCHEDULE 1. 41

SCHEDULE 2. 42

SCHEDULE 3. 44

PARTIES

[name and address of shareholder 1]

[name and address of shareholder 2]

[name and address of shareholder 3]

etc

[company name] Company Number ([country] [company number])

DEFINITIONS

“Agreement” means this Agreement together with any schedules and/or attachments hereto;

“Business Day” means each day other than a Saturday, Sunday or public holiday in the [country];

“Company” means the Company referred to in clause 1.5 above;

“Equity” means, in relation to any of the Shareholders, such Shareholders’ Shares and Loan Account;

“Loan Accounts” means all non-liquidated, acknowledged claims of whatsoever nature and howsoever arising which the Shareholders may have against the Company and “Loan Account” in relation to any of the Shareholders means that Shareholder’s claims of whatsoever nature and howsoever arising against the Company;

“Parties” means the parties to this Agreement referred to in clause 1 above;

“Serious Deadlock” means any deadlock, disagreement or dispute, whether at Shareholder or Board level, which relates to the core business activities of the Company and which cannot be resolved within 10 (ten) Business days after such deadlock, disagreement or dispute shall have arisen, by the exercise of voting powers or by discussion and debate amongst the Shareholders and/or the Directors (as the case may be) of the Company.

“Shareholder 1” means [1st shareholder name] referred to in clause 1.1 above;

“Shareholder 2” means  [2nd shareholder name] referred to in clause 1.2 above;

“Shareholders” means Shareholder 1 and Shareholder 2, in their capacities as members of the Company (the “Founder Shareholders”), and any other person or company or corporation who becomes a member of the Company (the “New Shareholders”), and who are specified in Schedule 2 and whose rights and obligations as an Shareholder have not terminated as provided by clause 24;

“Shares” means the issued Shares in the Company;

“Share Ratio” means the ratio in which the Shareholders hold Shares in the Company;

INTERPRETATION

Where the context so indicates, reference to the singular shall be deemed to include the plural and vice versa and reference to one gender shall be deemed to include the other genders.

Clause headings shall not affect the interpretation of this Agreement.

References to a person shall include a natural person, as well as a corporate or unincorporated body (whether or not they have separate legal personality).

References to “in writing” or “written” shall include faxes but not e-mails.

References to a particular law shall be deemed to be references to the law as it is in force for the time being, taking into account any amendment, extension, application or re-enactment, and shall include any subordinate legislation for the time being in force made under it.

This Agreement constitutes the sole memorandum of the agreement between the parties relating to the subject matter hereof and no variation or addition hereto or consensual cancellation hereof shall be of any force or effect unless reduced to writing and signed by the relevant parties.

No indulgence granted by any party to any of the others in regard to the enforcement of its rights under this Agreement shall be construed as a waiver of such rights (unless expressed as such in a written document signed by the indulgent party), nor shall it serve to prevent the indulgent party from strictly enforcing its rights in the event of a subsequent breach thereof.

PREAMBLE

It is recorded that –

[the company] is a private company limited by shares incorporated and registered in [country] with company number [company number] whose registered office is at Registered office address of Company is [company address];

This document sets out the terms of the Agreement between the Shareholders, governing their relationship as Shareholders in the Company.

SHAREHOLDING

It is recorded that the Company was created on [incorporation date] and on [date] had a share capital of [insert amount] made up by way of [insert number]  ordinary Shares of [insert value] each. The said issued Shares in the Company are held as follows -

By Shareholder 1 - [insert amount] shares and [insert percentage]% of total;

Shareholder 2 - [insert amount] shares and [insert percentage] % of total;

[shareholder 3 etc]

No subsequent issue or transfer of Shares in the Company shall take place otherwise than in accordance with this Agreement.

All ordinary Shares in the Company shall be issued, and shall remain, in registered form.

Notwithstanding the terms applicable to clauses 10, 14 and 18 for the transfer and issuance of Shares to any New Shareholders, all existing Shareholders will be diluted in their percentage shareholdings in relation to each in the Company on a pari passu basis.

MAIN OBJECT OF THE COMPANY

The main object of the Company shall be to carry on [enter description of what the company does] (the “Business”).

DIRECTORS AND MANAGEMENT OF THE COMPANY

Management of the Company shall vest in the Board of Directors (the “Board”).

The Founder Shareholders shall each be entitled to appoint themselves as a Director onto the Board of Directors of the Company. Unless otherwise agreed, [insert name] shall be the Managing Director and CEO of the Company and the Chairman shall be appointed by the Directors, from their number, but on the basis that the Chairman will be someone other than the Managing Director and CEO.  In the initial instance [insert name] shall be appointed as the Chairman of the Company.  The Founder Shareholders will each lose the right to appoint themselves as Director or another party pursuant to clause 7.2 if their Shareholding, falls below 20% of Shares.

A quorum for a meeting of the Directors shall be shall be a simple majority of Directors personally present, provided that the director appointed by the largest shareholder is also present .

Should a quorum not be present within 30 (thirty) minutes after the time appointed for the commencement of any meeting of the Directors of the Company, that meeting shall stand adjourned to the same day in the following week, at the same time and place, or such other date, time or place as the chairman of the meeting shall decide, provided that it may not be sooner than the same day in the following week and nor shall it be later than the same day 4 (four) weeks later. The adjourned meeting may only deal with the matters which were on the agenda of the meeting which was adjourned. Where a meeting has been adjourned as aforesaid, the Company shall be obliged to inform the Directors who were not present at the meeting that was adjourned of the time, date and place to which the meeting has been adjourned by giving written notice of such adjourned meeting to those Directors. If at any adjourned meeting a quorum is not present within 30 (thirty) minutes after the time appointed for the commencement of such meeting on account of the absence of a Director(s) representing the same Shareholders as was/were absent at the previous meeting, the Directors present shall form a quorum. If any meeting is adjourned on account of the absence of a Director(s) representing 1 (one) Shareholder and at the adjourned meeting a quorum is not present on account of the absence of a Director representing another Shareholder, the Directors present shall not form a quorum and the meeting shall be adjourned again on the same basis, and on the same terms, as provided for herein.

None of the Directors shall have a casting vote.

A round-robin resolution, signed by all of the Directors, shall be as valid and effective as a resolution of Directors taken at a properly constituted meeting of the Directors

Meetings of the Board of Directors shall be held as and when needed but, in any event, at least on a quarterly basis

Unless the Directors agree otherwise, the Directors shall be given at least 5 (five) Business days prior written notice of any Directors meeting, the object being that the Directors should liaise in regard to proposed meeting dates, times and venues in order to accommodate the reasonable requirements of the Directors. A notice of the meeting shall be accompanied by the agenda for the meeting. The meeting shall be convened by the chairman of the Board of Directors provided that a meeting of Directors must be convened within not less than 5 (five) Business days nor more than 20 (twenty) Business days after written request of any of the other Directors of the Company, which request shall be delivered to the Company and to each of the Shareholders.

Directors of the Company may participate in and act at any Board meeting through the use of a conference telephone or other communication equipment by means of which all persons participating in the meeting can hear each other. Such participation shall constitute attendance and presence in person at the meeting by the person or persons so participating.

Subject to the provisions of this Agreement and any applicable legislation, the Board shall have the exclusive responsibility for the management and control of the Company’s Business and affairs and shall have the power and authority to do all things necessary to carry out the purpose of the Company and shall carry on and manage the same with the assistance from time to time of the other Shareholders and of agents, servants or other employees of the Company as they shall deem necessary.  The Shareholders (otherwise than in their capacity as Board members) shall have no right or authority to act for the Company or to take any part in the management of the Company or to vote on matters relating to the Company other than as provided in the Act, the Regulations or any other statutory provision applicable to the Company due, but not exclusively referred to in clauses 10, 13, 14, and 31, and  or as set forth in this Agreement, but they shall at all reasonable times, subject to having given reasonable notice, have access to and the right to inspect the books and records of the Company at its registered office or at such other place as the Board shall designate.  In the event that the Act or the Regulations or any other statutory provision applicable to the Company shall require a meeting of the Shareholders then such meeting shall be convened by the Board.

Without prejudice to the generality of Clause 10, the Board shall have full power and authority on behalf of the Company and with the power to bind the Company thereby:-

To take such actions as they deem necessary or desirable to manage the Business including, but not limited to, the opening of bank accounts, and the paying or authorising the payment of distributions to the Shareholders and of the expenses incurred in relation to the Business out of the funds of the Company;

To enter into, without limitation, discretionary investment management agreements and distribution agreements with clients of the Company and on behalf of such clients (whether as principal or agent) and otherwise conduct the Business to the extent permitted by any applicable law and the rules of any regulatory authority of which the company is from time to time a member or by which it is regulated;

To take such action as they deem necessary or desirable to promote or develop the Business;

To engage and remunerate, on behalf of the Company, from funds of the Company, such persons, firms, or corporations, including any Associated Company, as the Board in their sole judgement shall deem advisable or desirable for the conduct and operation of the Business; and

To borrow money for any of the purposes of the Company pursuant to Clauses 10 and 12 and to charge the assets of the Company as security for money borrowed there under.

The Board members shall not be liable, responsible or accountable in damages or otherwise to the Company or to any of the other Shareholders, their successors, or assigns, except by reason of acts or omissions due to bad faith, negligence or wilful default, by acts or omissions arising from breaches of clause 8 and 26, or for not having acted in good faith in the reasonable belief that their actions were in, or not opposed to, the best interests of the Company.

RESTRICTIVE COVENANTS AND OBLIGATIONS

Each of the Shareholders undertakes to each of the other Shareholders that they shall not (whether directly or indirectly, or whether solely or jointly with or as agent, Director, Shareholder, partner, manager, employee, consultant or independent contractor of, in or to any other person) at any time whilst they are a holder of any Shares in the Company and for a period of one year from the date of ceasing to be a Shareholder in the Company (“the Relevant Date”) without the prior written consent of all the Shareholders:

Compete, directly or indirectly, with the Business of the Company in any territory in which the Company carried on such business at the Relevant Date;

Solicit or endeavour to entice away from or discourage from dealing with the Company any person who was at any time during the period of one year preceding the Relevant Date a customer or client of the Company;

Supply or provide any goods or services which are competitive with or of the type supplied by the Company to any person who was at any time during the period of one year preceding the Relevant Date a customer or client of the Company to whom the Company had during that period supplied or provided goods or services in the ordinary course of its business; or

Solicit or endeavour to entice away from or discourage from being employed by the Company any individual who was at the Relevant Date an officer or employee of the Company.

Hold or participate in an Outside Interest that conflicts with clause 26.1.3 or that the Board has deemed to constitute a material competition with the Company.  In the event that the Outside Interest is deemed to be in conflict, the Shareholder shall immediately resign from such position or terminate such relationship. 

Derive any benefit from the use of the name of the Company or the property or the business connections of the Company not introduced to the Company by the Shareholder as the result of a pre-existing relationship, and in the event of any breach of this sub-clause the Shareholder shall account to the Company for any profit derived by him from the use in question;

By his actions or omissions bring the name or reputation of the Company into serious disrepute or seriously prejudices the interests of the Business;

Each of the Shareholders undertakes to each of the other Shareholders that they shall (whether directly or indirectly, or whether solely or jointly with or as agent, Director, Shareholder, partner, manager, employee, consultant or independent contractor of, in or to any other person) at any time whilst they are a holder of any Shares in the Company:

Conduct himself in a proper and responsible manner and use his best skill and endeavour to promote and conduct the Business;

By his actions or omissions not bring the name or reputation of the Company into serious disrepute or seriously prejudice the interests of the Business or Company;

Comply will all applicable statutes, regulations, professional standards and other provisions as may govern the conduct of the Business from time to time;

Each of the sub-clauses of this clause shall be treated as a separate obligation and shall be severally enforceable as such.

Founder Shareholders will enter into and be bound by the terms of employment contracts agreed with the Company

Each Shareholders at the time of entering into the Agreement represents and warrants:

Factual information, including personal CVs and documentation provided to the Company or other Shareholders, delivered for the purposes of due diligence and entering into this Agreement, are to the best of the Shareholder’s knowledge true and factual, legal or not under any sanction but available for distribution, as at the date of signing the Agreement;

The Shareholder is not bankrupt, does not have an existing criminal record or is not the subject of on-going criminal, civil or regulatory proceedings or investigations;

The Shareholder has the authority to enter into and commit to be bound by the Agreement;

The Shareholders undertake to abide by the undertakings of confidentiality pursuant to clause 21.

The Shareholders undertake not to disparage or to comment negatively about the Company, its officers and management, and/or current or former employees.

The Shareholders consider the restrictions in this clause to be reasonable, but if a court of competent jurisdiction finds any of them to be unenforceable, the Shareholders agree to accept any modification as to the area, extent or duration of the restriction concerned which the court sees fit to impose or which is reasonably necessary to render the restriction enforceable.

THE SHAREHOLDERS’ VOTING RIGHTS AND MEETINGS

Written notice of Shareholders’ meetings shall be given in accordance with the Articles of Association of the Company and a quorum for meetings of the Shareholders shall be both Shareholders present in person or by proxy.

Save as is otherwise provided for in this Agreement (see especially clause 10 below) or in the Articles of Association or by any relevant law, all decisions at Shareholders’ meetings shall be taken by a simple majority of eligible votes from Shareholders deemed to be in attendance based each Shareholder being eligible to cast one vote for each Share that they own.

Shareholders of the Company may participate in and act at any Shareholders’ meeting through the use of a conference telephone or other communication equipment by means of which all persons participating in the meeting can hear each other. Such participation shall constitute attendance and presence in person at the meeting by the person or persons so participating.

Shareholders of the Company who have elected to be Sellers or are holders of Shares that are subject to the Compulsory Purchase of Shares by the Company will lose any and all rights to representation and to voting associated with those Shares that the Company has compulsory purchased.

MATTERS REQUIRING THE CONSENT OF A SPECIAL MAJORITY

Notwithstanding anything to the contrary contained in this Agreement, the following matters (whether decided on at a meeting of the Board of Directors or at a meeting of the Shareholders) will require the consent of the Shareholders who together hold not less than 70% (seventy percent) of the voting rights in the Company eligible for voting under this clause 10 and clause 9, except when the Board has made a decision on the relevant matters that has been recorded in Board minutes as having been agreed unanimously:

Any special resolution of the Company;

The variance, in any respect, of the Company’s memorandum or Articles of Association or the rights attaching to any of its Shares;

The permitting of the registration (upon subscription or transfer) of any person as a member of the Company other than the parties and/or permitted transferees;

The increasing of the amount of the Company’s authorised or issued share capital, granting any option or other interest (in the form of convertible securities or in any other form) over or in its share capital, redeeming or purchasing any of its own Shares or effecting any other reorganisation of its share capital;

The sale or disposal by the Company of the whole or the greater part of its business or the whole or the greater part of its assets;

The employment by the Company of any employee in a managerial position or higher;

The issuing of any Shares in the share capital of the Company or entering into any commitment with any person with respect to the issue of any loan capital;

The entering into of any borrowing by the Company;

Applying for the listing or trading of any Shares or debt securities on any stock exchange or market;

Passing of any resolution for the Company’s winding up or presenting any petition for its administration (unless it has become insolvent);

Altering the name of the Company or its registered office;

Adopting or amending the Business Plan in respect of each financial year;

Encumbering any of the assets of the Company otherwise than in the ordinary course of business;

Executing a Deed of Suretyship by the Company;

The Advancing by the Company of any loan(s) to any of the Directors or employees of the Company in an aggregate amount(s) in excess of [insert amount];

Any changes in the nature of the main business of the Company or the commencement of any new business by the Company, which is not ancillary to the business;

The acquisition, disposal or lease of any immovable property by the Company;

The disposal of any of the Company’s assets otherwise than in the normal course of business;

The establishment by the Company of any new business or subsidiary or acquiring Shares in any other Company or participating in any partnership or joint venture (incorporated or not);

Amalgamating or merging with any other Company or business undertaking;

Making any loan (otherwise than by way of deposit with a bank or other institution the normal business of which includes the acceptance of deposits or in the ordinary course of business) or granting any credit (other than in the normal course of trading) or giving any guarantee (other than in the normal course of trading) or indemnity;

Altering any mandate given to the Company’s bankers relating to any matter concerning the operation of the Company’s bank accounts;

Entering into any arrangement, contract or transaction outside the normal course of its business or otherwise, other than on arm’s length terms;

Giving notice of termination of any arrangements, contracts or transactions which are material in the nature of the Company’s business, or materially varying any such arrangements, contracts or transactions;

Adopting or amending any standard terms of business (including prices) on which the Company is prepared to provide goods or services to third parties;

Granting any rights (by license or otherwise) in or over any intellectual property owned or used by the Company;

Factoring or assigning any of the book debts of the Company;

Changing the auditors of the Company or its financial year end;

Making or permitting to be made any material change in the accounting policies and principles adopted by the Company in the preparation of its audited (and management) accounts (except as may be required to ensure compliance with relevant accounting standards under the Companies Acts or any other generally accepted accounting principles in the United Kingdom);

Declaring or paying any dividend or making any other distribution (by way of capitalisation, repayment or in any other manner) out of the Company’s distributable profits or any of its reserves;

Establishing or amending any profit-sharing, share option, bonus or other incentive scheme of any nature for Directors or employees;

Establishing or amending any pension scheme or granting any pension rights to any Director, officer, employee, former Director, officer or employee, or any member of any such person’s family;

Dismissing any Director, officer or employee in circumstances in which the Company incurs or agrees to bear redundancy or other costs in excess of [insert amount] in total;

Agreeing to remunerate (by payment of fees, the provision of benefits-in-kind or otherwise) any officer of or consultant to the Company at a rate in excess of [insert amount] per annum or increasing the remuneration of any such person to a rate in excess of [insert amount] per annum;

Entering into or varying any contract of employment providing for the payment of remuneration (including pension and other benefits) in excess of a rate of [insert amount] per annum or increasing the remuneration of any staff (including pension and other benefits) to a rate in excess of [insert amount] per annum;

Instituting, settling or compromising any material legal proceedings (other than debt recovery proceedings in the ordinary course of business) instituted or threatened against the Company or submitting to arbitration or alternative dispute resolution over any dispute involving the Company;

Making an agreement with any revenue or tax authorities or making any claim, disclaimer, election or consent exceeding [insert amount] for tax purposes in relation to the Company or its business;

Changing the financial year end of the Company;

The appointment of additional Directors to the Board over and above those provided for in clause 7.

The parties shall ensure that any Directors appointed by them shall comply with the provisions of this clause.

DIVIDEND POLICY AND NET PROFITS

The dividend policy of the Company shall be determined from time to time by the Board of Directors of the Company. In this respect unless the Board agree unanimously to a different policy, [at least one third of the Net Profits] of the Company shall be declared as dividends subject always, however, to the overriding considerations of the financial commitments and gearing of the Company.

The net profits of the Company after taxes (the “Net Profits”) are deemed as those annual Company’s profits, after deduction for but not limited to all its direct and indirect costs, employee bonuses, preferred dividends, interest and debt repayments, and taxes, and as agreed by the Board having voted acceptance of the Company’s Accounts as prepared and presented by the Company’s Auditors for the relevant financial year.

It is recorded that it is the intention of the parties that Net Profits are anticipated to result from applying a waterfall of decreasing priority and subject to the Company having available profits to make such payments:

First priority payment of all direct and indirect costs, including taxes and employee salaries and benefits; then

Second priority payment of an Employee Bonus Pool, from which the Founder Shareholders will not be entitled to receive any payments; then

Third priority payment of Dividends to Shareholders

BORROWING AND GUARANTEES

The Shareholders undertake to use their best endeavours and good offices with appropriate financial institutions in order to borrow funds if and when such are reasonably required by the Company for the purposes of its business.

To the extent that the Shareholders are asked to guarantee the obligations of the Company in order to procure finance or any other contractual arrangement with the Company, then, provided that the Shareholders agree with each other to execute any such guarantees, they shall endeavour to do so, firstly, on the basis that their liability to the creditor shall be joint, in proportion to the Share Ratio. If, however, any of the Shareholders provides a guarantee, approved of by the other, or if all Shareholders provide a guarantee on the basis of which their liability is joint and several, the Shareholders shall, as between them, be liable pro-rata to the Share Ratio and accordingly shall indemnify each other to the extent necessary to ensure that each shall have only been liable for their pro-rata share of the ultimate liability.

FINANCIAL MATTERS

Once the business of the Company has commenced, it shall be a policy of the Company to ensure that appropriate management accounts are produced on a quarterly basis which accounts shall include an income and expenditure statement. 

An annual budget shall be prepared 6 (six) weeks prior to each financial year end of the Company which budget shall be accompanied by a forecast of income and expenditure for the 2 (two) years immediately following the financial year which is the subject of the budget.  Each of the Shareholders shall be given a copy of such annual budget and forecast immediately such budget is completed.

It shall be the policy of the Company to procure that [audited] financial statements for the Company and its subsidiaries (if any) are completed within 4 (four) months of the end of each financial year of the Company.

The Company shall adopt and comply with the principles of generally accepted accounting practice.

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TRANSFER OF SHARES

No Shareholder shall sell, transfer, assign, pledge, charge or otherwise dispose of any share or any interest in any share in the Company (the “Transfer of Shares”) except as permitted by this Agreement or with the prior written consent of all the Shareholders or prior written consent of the Board who have voted unanimously to agree to the Transfer of Shares.

A Shareholder wishing to transfer Shares (the “Seller”) shall give notice in writing (the “Transfer Notice”) to the other parties (the “Ongoing Shareholders”) specifying the details of the proposed transfer, including the number of Shares they wish to transfer and either;

The identity of the proposed buyer(s) and the price for the Transfer of Shares as agreed with the buyers; or

The Shares to be purchased by the Company as a Compulsory Purchase of Shares pursuant to clause 17.

Within 20 (twenty) Business Days of receiving the Transfer Notice, the Ongoing Shareholders shall be entitled to give written notice to the Seller stating their intention to:

Purchase a proportion of the Shares in the Transfer Notice, which the number of ordinary Shares held by him bears to the total number of ordinary Shares held by the Ongoing Shareholders at the price specified.

Completion of the sale of the Shares pursuant to clause 14.3.1 (as the case may be) or as a Compulsory Purchase of Shares, shall take place in accordance with clause 16.

If the Ongoing Shareholders fail to give notice under clause 14.3:

The Seller is entitled to transfer his Shares to the third party buyer identified in the Transfer Notice at a price not less than the price specified in the Transfer Notice (or the Fair Value, if lower); or

The Seller shall procure that any buyer of Shares that is not a party to this Agreement shall, at completion, enter into a Shareholders’ Agreement in relation to such Shares with the parties to this Agreement on the same terms that apply to the Seller.

To enable the Shareholders and/or Directors to determine whether or not there has been any disposal of Shares in the capital of the Company (or any interest in Shares in the capital of the Company) in breach of this clause, the Shareholders and/or Directors may require any holder or the legal personal representatives of any deceased holder or any person named as transferee in any transfer lodged for registration or any other person who the Shareholders and/or Directors may reasonably believe to have information relevant to that purpose, to provide to the Company and the Shareholders any information and evidence that the Shareholders and/or Directors request regarding any matter which they deem relevant to that purpose. If the information or evidence is not provided to enable the Shareholders and/or Directors to determine to their reasonable satisfaction that no breach has occurred, or that as a result of the information and evidence the Shareholders and/or Directors are reasonably satisfied that a breach has occurred, the Shareholders and/or Directors shall immediately notify the holder of such Shares in the capital of the Company in writing of that fact and the holder may be required, at any time following receipt of the notice, to transfer some or all of its Shares to any person(s) at the price that the Shareholders and/or Directors may require by notice in writing to that holder. 

OBLIGATORY TRANSFER EVENTS

If anything mentioned in this clause occurs in respect of a Shareholder, it will be deemed an Obligatory Transfer Event and the provisions of clause 15.4 shall apply.

In the case of an individual:

Who in the following situations will be deemed to be a good leaver (“Good Leaver”):

Death; or

A bankruptcy order being made against the Shareholder or an arrangement or composition being made with the Shareholder’s creditors, or where the Shareholder otherwise takes the benefit of any statutory provision for the time being in force for the relief of insolvent debtors; or

The Shareholder suffers a physical or mental deterioration which, in the opinion of the Board, is sufficiently serious to prevent the Shareholder from performing his normal duties or which seriously prejudices the Shareholder's earning capacity;

The Shareholder has given notice under 14.2.2.

Who in the following situations will be deemed to be a bad leaver (“Bad Leaver”)

If the Shareholder commits a material breach of any obligation under this Agreement and fails to remedy such breach within 25 (twenty-five) Business Days of notice to remedy the breach being served by all the other Shareholders: or

The Shareholder is guilty of any misconduct or neglect in the discharge of his duties which, if he were an employee of the Company, would justify his summary dismissal or otherwise fails in any material respect to fulfil the role and carry out the duties expected of a Shareholder as agreed from time to time between the Shareholder and the Board or to comply with the directions and requirements of the Board to the extent which could reasonably be expected if the Shareholder were engaged as a full time employee in the Business.

In the case of a body corporate:

Who in the following situations will be deemed to be a good leaver (“Good Leaver”):

The liquidation (voluntary or otherwise) of the party, other than a genuine solvent reconstruction or amalgamation in which the new entity assumes (and is capable of assuming) all of the obligations of the party; or

A change of control of the party; or

An order made by a court of competent jurisdiction, or a resolution is passed for the administration of a party, or documents are filed with the court for the appointment of an administrator, or notice of intention to appoint an administrator is given by the party, or its Directors, or by a qualifying floating charge holder (as defined in paragraph 14 of Schedule B1 to the Insolvency Act 1986); or

Any step is taken by any person other than a member of the other party’s Group (and is not withdrawn or discharged within 65 Business days to appoint a receiver, administrative receiver or manager in respect of the whole or a substantial part of the assets or undertaking of the party; or

The party is unable to pay its debts as they fall due for the purposes of section 123 of the Insolvency Act 1986; or

The party enters into a composition or arrangement with its creditors; or

If a process has been instituted that could lead to the party being dissolved and its assets being distributed among the party’s creditors, Shareholders or other contributors; or

The party ceases to carry on its business or substantially all of its business.

Who in the following situations will be deemed to be a bad leaver (“Bad Leaver”):

The party commits a material or persistent breach of this Agreement which, if capable of remedy, has not been so remedied within 25 (twenty-five) Business Days of the other party requiring such remedy.

A Shareholder subject to an Obligatory Transfer Event shall immediately be deemed to have become a Seller and given a Transfer Notice in respect of the whole of his shareholding except that:

The deemed Transfer Notice takes effect on the basis that it does not identify a proposed buyer or state a price for the Shares and the parties shall refer the question of a valuation to the Valuation Agent under clause 17 (Fair Value).

The price for the Shares shall be determined in accordance whether the Seller is deemed to be a Good Leaver or a Bad Leaver pursuant to clause 15.2 or clause 15.3:

In the case of a Good Leaver the price for the Shares will be determined as the Compulsory Purchase Consideration in clause 17: or

In the case of a Bad Leaver the price for the Shares shall be the lesser of the Fair Value as determined in accordance with clause 17 and the original subscription price paid by the Seller for his Shares .

The Seller does not have a right of withdrawal of the Transfer Notice.

On the completion of any sale in accordance with this clause, the Buyer is not required to procure the discharge of any security given by the Seller or to procure the release of any debts of the Company to him.

COMPLETION OF SHARE PURCHASE

Completion of the sale and purchase of Shares under clause 14 and clause 15 of this Agreement shall take place on 20 (twenty) Business Days after:

The day of delivery of the Transfer Notice, unless the Valuation Agent has been requested to determine Fair Value; or

The day of delivery of the Valuation Agent’s Fair Value notice: or

The Board of the Company has confirmed it has agreed to the Compulsory Purchase of Shares.

At such completion:

The Seller shall deliver, or procure that there is delivered to the Ongoing Shareholders, a duly completed Share Transfer Form transferring the legal and beneficial ownership of the relevant Shares to the Ongoing Shareholders, together with the relevant share certificates and such other documents as the Ongoing Shareholders may reasonably require to show good title to the Shares, or to enable them to be registered as the holders of the Shares except in the case of the Compulsory Purchase of Shares by the Company, when the Board will vote in determining if the Shares purchased should be issued pro-rata to Ongoing Shareholders, cancelled or held in Company treasury;

The Ongoing Shareholders shall deliver or procure that there is delivered to the Seller a bankers’ draft made payable to the Seller to his order for the purchase price, except in the case of the Compulsory Purchase of Shares when payment will be made pursuant to clause 17; and

If following the sale the Seller holds no further Shares in the Company, the Seller shall deliver, or procure that there are delivered to the Company, resignations from any Directors appointed by the Seller, such resignations to take effect at completion of the sale of the Shares.

The Shares are sold by the Seller with full title guarantee.  For the avoidance of doubt in the case of the Compulsory Purchase of Shares by the Company, the Seller will retain no rights to those Shares sold to the Company, but retain only the right to receive Partial Compulsory Purchase Payments from the Company after completion and pursuant to clause 17.  

If the Seller does not on completion deliver executed transfer(s) in respect of all the relevant Shares held by it, the defaulting Seller shall be deemed to have irrevocably appointed any person nominated for the purpose by the Ongoing Shareholders to be his agent and attorney to execute all necessary transfer(s) on his behalf, and to deliver such transfer(s) to the Ongoing Shareholders as the holder thereof.

If any Ongoing Shareholder fails to pay the purchase price on the due date, without prejudice to any other remedy which the Seller may have, the outstanding balance of the purchase price shall accrue interest at a rate equal to 2% above the official bank rate as set by the Bank of England from time to time.

The parties shall procure the registration (subject to due stamping by the Ongoing Shareholders) of the transfers of Shares in the Company effected pursuant to this clause and each of them consents to such transfers and registrations under this Agreement and the Articles of Association.

FAIR VALUE AND COMPULSORY PURCHASE OF SHARES

The Fair Value for any Shares to be transferred under this Agreement is that proportion of the amount that an agreed valuing party (the “Valuation Agent”) considers to be the Fair Value of the entire issued share capital of the Company that the Seller’s Shares bear to the entire issued share capital of the Company (with no discount for the size of the Seller’s shareholding).

In determining the Fair Value of the entire issued share capital of the Company, the Valuation Agent relies on the following assumptions:

The sale is between a willing Seller and a willing Buyer;

The Shares are sold free of all restrictions, liens, charges and other encumbrances; and

The sale is taking place on the date the Valuation Agent was requested to determine the Fair Value.

The Valuation Agent shall be that party agreed between the Board of Directors and the Seller to undertake an independent valuation of the Shares.  Subject to clause 15, in the event that agreement cannot be reached within 5 (five) business days after the parties have failed to agree a price then the Company’s Auditors will be appointed to undertake the valuation.

In the case of a Good Leaver, the consideration paid  for a compulsory purchase of Shares by the Company (the “Compulsory Purchase of Shares”) to be transferred under this Agreement will comprise a total amount paid to the Seller (the “Compulsory Purchase Consideration”) made as follows:

A total of 10 (ten) payments in succeeding years, paid each year by the Company to the Seller due Compulsory Purchase Consideration (the “Partial Compulsory Purchase Payments”) and paid within 65 (sixty-five) business days of the Board having voted acceptance of the Company’s Accounts as prepared and presented by the Company’s Auditors; and

The respective year’s Partial Compulsory Purchase Payment to a Shareholder being a percentage (“Seller’s Compulsory Payout Percentage”) of the Net Profits declared for that year determined such that:

Partial Compulsory Purchase Payment comprises that proportion of the total of the entire issued share capital of the Company that in the Transfer Notice the Seller’s Shares bear to the entire issued share capital of the Company; and

There is no discount for the size of the Seller’s shareholding; and

The Seller’s Compulsory Payout Percentage has been adjusted down in percentage size to reflect any pari passu dilutions that Ongoing Shareholders may have experienced to their holdings pursuant to clause 5; and

The Seller’s Compulsory Payout Percentage is reduced each succeeding year in size on a linear basis by 10% when a Compulsory Purchase Payment has been declared for the previous year and paid (even when the payment amount is £0) and in a manner such that for the avoidance of doubt, in the 10th (tenth) and final year of the Shareholder’s Compulsory Purchase Consideration, the Seller’s Compulsory Payout Percentage is set to 10% (ten percent) of the Seller’s Compulsory Payout Percentage in the first year as calculated from the Seller’s Transfer Notice.

In the event of any Party becoming a Controlling Shareholder or of a Controlling Shareholder ceasing to be a Controlling Shareholder, the Seller may opt to have their Compulsory Purchase of Shares accelerated such that the remaining Partial Compulsory Purchase Payments can be allowed to participate in the Tag Along clause 21 as if his Shares had not been the subject of a Compulsory Purchase of Shares. Any Shares not sold as part of the Tag Along process will continue to be subject to the Compulsory Purchase of Shares with all remaining Partial Compulsory Purchase Payments will be reduced to reflect the proportion of Shares sold under the Tag Along agreement. 

ISSUE OF FURTHER SHARES

If the Company wishes to issue further Shares, the Shareholders shall procure (so far as is possible in the exercise of their rights and powers) that the Company gives notice to each Shareholder stating the number of Shares to be issued and the price of the Shares.

Except in those circumstances when Shares are only to be offered to a New Shareholder, pursuant to clauses 10.1.4 and 18.4, each Shareholder shall have the option, but not the obligation, to subscribe for, at the price stated in the notice, that proportion of the Shares proposed to be issued which the number of ordinary Shares held by him bears to the total number of ordinary Shares in issue at the time the Company gives its notice. Each Shareholder may exercise the option by giving notice to the Company, at any time within 15 (fifteen) Business Days following the Company’s notice, accompanied by a banker’s draft made payable to the Company in respect of full payment for the Shares to be subscribed for.

Any Shares referred to in the Company’s notice, in respect of which the Shareholders do not exercise their options, may be issued by the Company in accordance with its notice, provided that any such issue is completed within 15 (fifteen) Business Days after the Company’s notice.

No issue of ordinary Shares shall be made to any person who is not already a party to this Agreement unless that person first enters into a Deed of Adherence as a Shareholder.

Where a person who is already a party to this Agreement acquires ordinary Shares he shall automatically be bound by, and entitled to the benefit of, the continuing provisions of this Agreement relating to holders of ordinary Shares.

Where a New Shareholder has executed a Deed of Adherence pursuant to clause 18.4, he shall become a party to this Agreement and shall agree to be bound by and be entitled to the benefit of this Agreement as if an original party hereto. 

DRAG ALONG

Provided that the Company’s Valuation Agent certifies that the price intended to be accepted is fair as contemplated in clause 17 of this Agreement, then if the holders of 60% (sixty percent) of the Shares in issue for the time being (“Selling Shareholders”) wish to transfer all of their interest in the Shares (“Sellers’ Shares”) to a bona fide arm’s length purchaser (“Proposed Buyer”), the Selling Shareholders may require all other Shareholders (“Called Shareholders”) to sell and transfer all their Shares to the Proposed Buyer (or as the Proposed Buyer directs) in accordance with the provisions of this clause (“Drag Along Option”). The Selling Shareholders may exercise the Drag Along Option by giving written notice to that effect (“Drag Along Notice”) at any time before the transfer of the Sellers’ Shares to the Proposed Buyer. The Drag Along Notice shall specify:

That the Called Shareholders are required to transfer all their Shares (“Called Shares”) pursuant to this clause;

The person to whom the Called Shares are to be transferred;

The consideration payable for the Called Shares which shall, for each Called Share, be an amount equal to the price per share offered by the Proposed Buyer for the Sellers’ Shares; and

The proposed date of the transfer.

Once issued, a Drag Along Notice shall be irrevocable. However, a Drag Along Notice shall lapse if, for any reason, the Selling Shareholders do not sell the Sellers’ Shares to the Proposed Buyer.

No Drag Along Notice shall require a Called Shareholder to agree to any terms except those specifically set out in this clause.

Completion of the sale of the Called Shares shall take place on the Completion Date. Completion Date means the date proposed for completion of the sale of the Sellers’ Shares unless:

All of the Called Shareholders and the Selling Shareholders agree otherwise in which case the Completion Date shall be the date agreed in writing by all of the Called Shareholders and the Selling Shareholders; or

That date is less than 15 (fifteen) Business Days after the date on which the Drag Along Notice is served, in which case the Completion Date shall be the 5 (five) Business Days after delivery of the Drag Along Notice.

The right of pre-emption set out in clause 15 shall not apply to any transfer of Shares to a Proposed Buyer (or as it may direct) pursuant to a sale for which a Drag Along Notice has been duly served.

Within 15 (fifteen) Business Days of the Selling Shareholders serving a Drag Along Notice on the Called Shareholders, the Called Shareholders shall deliver stock transfer forms for the Called Shares, together with the relevant share certificates (or a suitable indemnity for any lost share certificates) to the Company. On the Completion Date, the Company shall pay the Called Shareholders, on behalf of the Proposed Buyer, the amounts they are due for their Shares pursuant to clause 19.1.3 to the extent that the Proposed Buyer has put the Company in the requisite funds. The Company’s receipt for the price shall be a good discharge to the Proposed Buyer. The Company shall hold the amounts due to the Called Shareholders pursuant to clause 19.1.3 in trust for the Called Shareholders without any obligation to pay interest.

If any Called Shareholder does not, on completion of the sale of the Called Shares, execute transfer(s) in respect of all of the Called Shares held by it, the defaulting Called Shareholder shall be deemed to have irrevocably appointed any person nominated for the purpose by the Selling Shareholders to be his agent and attorney to execute all necessary transfer(s) on his behalf, against receipt by the Company (on trust for such holder) of the consideration payable for the Called Shares, to deliver such transfer(s) to the Proposed Buyer (or as they may direct) as the holder thereof.  After the Proposed Buyer (or its nominee) has been registered as the holder, the validity of such proceedings shall not be questioned by any such person. Failure to produce a share certificate shall not impede the registration of Shares under this clause.

TAG ALONG

Except in the case of transfers pursuant to clause 15 (Obligatory Transfer Events) and after going through the pre-emption procedure set out in clause 14 (Transfer of Shares) or where the drag along provisions of clause 19 have been exercised, no sale or transfer of any of the Shares in issue, by one or more Shareholder, to any person (the “Buyer”) shall be made or registered unless the prior written consent of all the Shareholders is obtained or the provisions of this clause are complied with.

Before making a Proposed Transfer, a Seller shall procure that the Buyer makes an offer (the “Offer”) to the all Shareholders to purchase the total number of Shares that the Buyer wishes to purchase for a consideration in cash per Share that is equal to the highest price per Share offered or paid by the Buyer (the “Specified Price”). All Shareholders may then choose to sell up to their entire holding of Shares save that should the total number of Shares offered to be sold by the Shareholders exceed the number of Shares the Buyer wishes to purchase then each Shareholder will only sell up to a maximum number of Shares which corresponds to their holding as a proportion of the total holdings of the Shareholders wishing to sell of the Shares the Buyer wishes to buy.

The Offer shall be given by written notice (the “Offer Notice”), at least 15 (fifteen) Business Days (the “Offer Period”) before the proposed sale date (the “Sale Date”). To the extent not described in any accompanying documents, the Offer Notice shall set out:

The identity of the Buyer;

The purchase price and other terms and conditions of payment;

The Sale Date; and

The number of Shares proposed to be purchased by the Buyer (the “Offer Shares”).

If the Buyer fails to make the Offer to all holders of the Shares in the Company in accordance with this clause, the Seller shall not be entitled to complete the proposed transfer and the Company shall not register any transfer of Shares effected in accordance with the proposed transfer.

If the Offer is accepted by any Shareholder (the “Accepting Shareholder”) within the Offer Period, the completion of any sale of Shares by an Accepting Shareholder shall be conditional on completion of the purchase of all the Offer Shares held by Accepting Shareholders.

The sale of Shares by an Accepting Shareholder shall not be subject to the pre-emption provisions contained in clause 14 of this Agreement.

CONFIDENTIALITY

Each Shareholder undertakes that he shall not at any time after the date of this Agreement use, divulge or communicate to any person (except to his professional representatives or advisers or as may be required by law or any legal or regulatory authority) any Confidential Information concerning the terms of this Agreement, the business or affairs of the other Shareholders or the Company which may have (or may in future) come to his knowledge, and each of the Shareholders shall use his reasonable endeavours to prevent the publication or disclosure of any Confidential Information concerning such matters.

All material written or encoded or in graphic or other tangible form delivered or revealed by the Company to Shareholders shall be deemed Confidential Information.  Information may include, but is not limited to, intellectual property, trade secrets, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, diagrams, data, Company communications both internal and external including emails, computer programs, computer databases, algorithms, software programs, current and proposed products, samples, inserts, research, experimental work, procurement requirements, investors, employee information, forecasts business activities, facilities, systems design, communications networks, finances, financial information, product development plans, business directions, marketing plans, prospective and existing customer names and operations, presentations, reports, studies and other technical, business, trading statements and any other document marked ‘confidential’, (collectively, “Confidential Information”).

NOTICES

Any notice given under this Agreement shall be in writing and shall be delivered by hand, transmitted by fax, or sent by pre-paid first class post or recorded delivery post to the address of the party as set out in clause 1, or to such other address notified to the other parties.  A notice delivered by hand is deemed to have been received when delivered (or if delivery is not in business hours, 09h00 on the first Business Day following delivery). A correctly addressed notice sent by pre-paid first class post or recorded delivery post shall be deemed to have been received at the time at which it would have been delivered in the normal course of post. A notice sent by fax to the fax number of the relevant party shall be deemed to have been received at the time of transmission.

The addresses for service of notice of each Shareholder shall be the address set out in Schedule 1 or such other address notified by any Shareholder to the others.

SERIOUS DEADLOCKS: RESOLUTION OF DISPUTES

Should any Serious Deadlock arise as between the parties at any time, whether in their capacities as Shareholders or Directors of the Company, the dispute shall be submitted to and decided by summary arbitration as provided for in this clause.

The arbitration referred to in clause 25.1 above shall be held:

At London;

In a summary manner; that is, on the basis that it shall not be necessary to observe or carry out either the usual formalities or procedures as prescribed by the Arbitrations Act;

As soon as is reasonably practicable in the circumstances and with a view to it being completed within 20 (twenty) Business Days after it is demanded.

The arbitrator shall be a person agreed between the disputing parties and, failing agreement, (unless otherwise provided for in this Agreement) a suitably qualified person having regard to the nature of the dispute, nominated for such purpose by the Centre for Effective Dispute Resolution (CEDR).

The arbitrator shall determine:

The issue submitted to him according to what he considers just and equitable in the circumstances and accordingly shall not be obliged to adhere to the Strict Rules of Law;

Which party shall pay the costs of and incidental to the arbitration or, if each is to contribute, the ratio of their respective contributions.

The said arbitrator shall be deemed to act as an arbitrator and not as an expert.

The disputing parties shall be bound by the decision of the arbitrator and agree that it shall be carried into effect and shall be capable of being made an Order of any Court of competent jurisdiction.

In the event that the arbitrator fails to reach a decision, then either party is free to register the dispute on www.disputesregister.org.

The parties agree that this clause shall be severable from the rest of this Agreement and, accordingly, will remain effective between them even if this Agreement is terminated.

TERMINATION

This Agreement terminates immediately upon the occurrence of any of the following events:

A resolution is passed for the winding up of the Company; or

A receiver, administrator or administrative receiver is appointed over the whole or any part of the assets of the Company or the affairs, business and property of the Company is to be managed by a supervisor under any arrangement made with the creditors of the Company; or

All of the Shares become beneficially owned by any one party;

The admission to official listing on a stock exchange or any other investment exchange; or

In respect of the rights and obligations of a Shareholder, upon that person ceasing to hold any Shares in the Company.

Termination of this Agreement shall be without prejudice to the rights of Shareholders’ accrued prior to such termination, or under any provision which is expressly stated not to be affected by such termination including in respect of any prior breach of this Agreement.

On a winding-up, the Shareholders shall endeavour to agree a suitable basis for dealing with the interests and assets of the Company and shall endeavour to ensure that:

All existing contracts of the Company are performed so far as resources permit;

No new contractual obligations are entered into by the Company; and

The Company is wound up as soon as practicable.

In the event that a Shareholder no longer holds any Shares in the Company, the Shareholder agrees to represent and warrant in writing to the Company, in the form of a Declaration of Continuing Confidentiality in Schedule 5, to be delivered within 5 (five) working days of no longer holding Shares, that he has returned and destroyed all Confidential Information he directly or indirectly holds and has access to.

The provisions of clauses 8.1, 8.7, 21, 22, 23, 24.4 and 26 shall survive Termination of this Agreement.

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GOVERNING LAW AND JURISDICTION

This Agreement and any disputes or claims arising out of or in connection with its subject matter are governed by and construed in accordance with the laws of [insert country].

The parties irrevocably agree that the courts of [insert country] have exclusive jurisdiction to settle any dispute or claim that arises out of or on connection with this Agreement.

UTMOST GOOD FAITH

The Shareholders shall at all times:

Display the highest degree of good faith towards each other in all matters relating to the Company;

Make full disclosure to each other of all information relating to the affairs of the Company, including the furnishing of accounts and explanations and any information as to any matter concerning the Company which may be reasonably required of it by the other; and

Make full disclosure to each other of any relationship, employment, partnership, advisory or directorship in any third party which may reasonably be considered to directly or indirectly compete or which may reasonably be expected in the future to compete directly or indirectly with the business of the Company, each of which is considered an “Outside Interest”.

SEVERENCE

If any provision (or party of a provision) of this Agreement is found by any court or administrative body of competent jurisdiction to be invalid, unenforceable or illegal the other provisions shall remain in force.

If any invalid, unenforceable or illegal provision would be valid, enforceable and legal if some part of it were deleted, the provision shall apply with whatever modification is necessary to give effect to the commercial intention of the Shareholders.

VARIATION AND WAIVER

Any variation of this Agreement shall be in writing and signed by or on behalf of all the Shareholders for the time being.

No failure or delay by a Shareholder to exercise any right or remedy provided under this Agreement or by law shall constitute a waiver of that or any other right or remedy, nor shall it preclude or restrict the further exercise of that or any other right or remedy. No single or partial exercise of such right or remedy shall preclude or restrict the further exercise of that or any other right or remedy.

Unless specifically provided otherwise, rights and remedies arising under this Agreement are cumulative and do not exclude rights and remedies provided by law.

ASSIGNMENT

No Shareholder may assign, or grant any encumbrance over, or deal in any way with, any of his rights under this Agreement or any document referred to in it, or purport to do any of the same, without, in each case, the prior written consent of all the Shareholders for the time being (such consent not to be unreasonably conditioned, withheld or delayed).

Each Shareholder that has rights under this Agreement is acting on his own behalf.

COSTS

The costs in respect of and incidental to the preparation of this Agreement shall be for the account of the Company.

CONFLICT WITH MEMORANDUM AND ARTICLES           

In the event of there being any conflict between the terms of this Agreement and any of the terms of the Memorandum or Articles of Association of the Company then, as between the Shareholders, the terms of this Agreement shall prevail.

ENTIRE AGREEMENT

This Agreement constitutes the whole agreement between the parties and supersedes any previous arrangement, understanding or agreement between them relating to the subject matter they cover.

Each party acknowledges that, in entering into this Agreement, he does not rely on, and shall have no remedy in respect of, any statement, representation, assurance or warranty of any person other than as expressly set out in this Agreement or those documents.

Nothing in this clause operates to limit or exclude any liability for fraud.

THIRD PARTIES

A person who is not a party to this Agreement shall not have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement but this shall not affect any right or remedy of a third party which exists or is available apart from the Act.

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COUNTERPARTS

This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall constitute an original of that Agreement, but all the counterparts shall together constitute the same Agreement. No counterpart shall be effective until each party has executed at least one counterpart.

SIGNATORIES

SIGNED at [insert place] on this [insert day, month and year] in the presence of the undersigned witnesses.

SIGNED at [insert place] on this [insert day, month and year] in the presence of the undersigned witnesses.

SIGNED at [insert place] on this [insert day, month and year] in the presence of the undersigned witnesses.

SIGNED by the Company at [insert place] on this [insert day, month and year] in the presence of the undersigned witnesses.

SCHEDULE 1

Shareholders

Existing Shareholders

New Shareholders

SCHEDULE 2

Form of Deed of Adherence

THIS DEED is made on • by • of • (the New Shareholder).

WHEREAS:

(A)             The New Shareholder proposes to purchase/subscribe • • Shares of • each in the capital of • (the Company) [from •].

(B)             This deed is made by the New Shareholder in compliance with clause 17 of the Shareholders Agreement dated • made between (1) the Company, and (2) certain persons referred to in that agreement as the New Shareholders (the Agreement).

THIS DEED WITNESSES as follows:

The New Shareholder confirms that he has been supplied with a copy of the Agreement.

[the new shareholder hereby subscribes for • • shares of • each in the capital of the company at a subscription price of • per share and agrees to hold the shares subject to the memorandum and articles of association of the company.]

The New Shareholder undertakes to be bound by the Agreement in all respects as if the New Shareholder was a party to the Agreement and named in it as an Investor and a Shareholder and to observe and perform all the provisions and obligations of the Agreement applicable to or binding on an Investor and a Shareholder under that agreement insofar as they fall to be observed or performed on or after the date of this deed.

This deed is made for the benefit of (a) the parties to the Agreement and (b) every other person who after the date of the Agreement (and whether before or after the execution of this deed) assumes any rights or obligations under the Agreement or adheres to it.

The address [and facsimile number] of the New Shareholder for the purposes of clause [24] (Notices) of the Agreement is [as above] [as follows:

[address:]

[fax no: •]

(attention of •)

This deed and any non-contractual obligations arising out of or in connection with it shall be governed by the laws of England.

IN WITNESS of which this deed has been executed and has been delivered on the date which appears first on page 1.

[if individual:]

SIGNED as a deed by in the presence of:        

[witness's signature]

[name 1]

[address 1]

[or if company:]

EXECUTED as a deed by •  acting by •, a director in the presence of:  

[witness's signature 1]

[name 2]

[address 2]

SCHEDULE 3

Form of Declaration of Continuing Confidentiality

THIS DEED is made on • by • of • (the Departing Shareholder).

WHEREAS:

(A)             The Departing Shareholder no longer holds any Shares in the capital of • (the Company) [from •].

(B)             This deed is made by the Departing Shareholder in compliance with clause 24.5 of the Shareholders Agreement [dated •]

THIS DEED WITNESSES as follows:

The Departing Shareholder confirms that he no longer holds any Shares in the Company as [from •].

The Departing Shareholder represents and warrants that he has returned and destroyed all Confidential Information, as defined in clause 20 of the Agreement that he directly or indirectly holds and has access to.

The Departing Shareholder undertakes to continue to be bound by the provisions of clause 20 of the Agreement which will survive any termination of the Agreement, pursuant to clause 24 of the Agreement.

This deed is made for the benefit of (a) the parties to the Agreement and (b) every other person who after the date of the Agreement (and whether before or after the execution of this deed) assumes any rights or obligations under the Agreement or adheres to it.

The address [and facsimile number] of the Departing Shareholder for the purposes of clause [22] (Notices) of the Agreement is [as above] [as follows:

[Address:                                                         

]

[fax no: •]

(attention of •)

This deed and any non-contractual obligations arising out of or in connection with it shall be governed by the laws of England.

IN WITNESS of which this deed has been executed and has been delivered on the date which appears first on page 1.

[if individual:]

SIGNED as a deed by  ·  in the presence of:     

[witness's signature]

[name 1]

[address 1]

[or if company:]

EXECUTED as a deed by • acting by •, a director  in the presence of:                     

[witness's signature 1]

[name 2]

[address 2]