Shareholders' agreement

SHAREHOLDERS' AGREEMENT

This shareholders' agreement (hereinafter the "Agreement") has been entered into in [City where the contract is signed] on [Contract date] between the following parties:

1. PARTIES

1.1 Founder 1:
[Founder 1's name]
Personal identification code: [Founder 1's personal identification code]
Address: [Founder 1's address]
Role: [Founder 1's role]

1.2 Founder 2:
[Founder 2's name]
Personal identification code: [Founder 2's personal identification code]
Address: [Founder 2's address]
Role: [Founder 2's role]

1.3 Founder 3:
[Founder 3's name]
Personal identification code: [Founder 3's personal identification code]
Address: [Founder 3's address]
Role: [Founder 3's role]

(hereinafter jointly the "Founders" and each individually a "Founder")

2. THE COMPANY AND NATURE OF THE AGREEMENT

2.1 Name of the planned company: [(Planned) name of the company]. Legal form: [Legal form]. (hereinafter the "Company")

2.2 The Agreement is an agreement between the Founders which binds the Founders personally. Restrictions on the transfer of shareholdings, pre-emptive rights, consent requirements and special rights attached to a share apply in relation to the Company and third parties only to the extent that they are set out, in accordance with the law, in the Company's articles of association (in the case of a private limited company, § 149 (2)–(3) and § 154¹ of the Commercial Code).

2.3 The Founders do everything in their power to have the Company founded and entered in the commercial register on the terms agreed in the Agreement, and vote and perform other necessary acts so that the Company's founding documents and articles of association conform to the Agreement to the extent permitted by law.

2.4 A Founder enters into transactions on behalf of the Company being founded before the Company is entered in the commercial register only with the prior consent of the other Founders. The persons who entered into such transactions are jointly and severally liable for the obligations arising from them until the obligations pass to the Company in accordance with the law (in the case of a private limited company, § 147 of the Commercial Code).

2.5 Justified costs related to the founding of the Company (e.g. state fees and notary fees) are borne by the Founders in proportion to the shareholdings referred to in clause 3.1, unless they agree otherwise in writing.

3. DISTRIBUTION OF SHAREHOLDINGS

3.1 The Founders' planned distribution of shareholdings:
Founder 1 ([Founder 1's name]): [Founder 1's shareholding (%)]%
Founder 2 ([Founder 2's name]): [Founder 2's shareholding (%)]%
Founder 3 ([Founder 3's name]): [Founder 3's shareholding (%)]%

3.2 The shareholding percentages referred to in clause 3.1 must add up to 100%. The distribution of shareholdings agreed in this Agreement is an intention between the Founders. The actual issue and transfer of shareholdings takes place separately, by a document complying with the Commercial Code.

3.3 Each Founder makes a contribution for its shareholding in the amount, manner and term specified in the Company's founding documents and articles of association. The value of a non-monetary contribution is assessed in accordance with the procedure provided by law (in the case of a private limited company, §§ 142–143 of the Commercial Code).

3.4 A Founder may not, without the Founder's consent, be obliged to make contributions to the Company exceeding those referred to in clause 3.3.

4. VESTING

4.1 Vesting applies to the shareholding according to the following schedule: [Vesting schedule] ([Vesting schedule (custom)]).

4.2 Vesting means that a Founder's shareholding is deemed acquired (vested) gradually according to the schedule referred to in clause 4.1, from the conclusion of the Agreement, unless otherwise provided in the schedule.

4.3 If a Founder's entire shareholding has been issued to the Founder, vesting does not restrict the Founder's rights as a shareholder before leaving. Vesting determines only the part of the shareholding to which the transfer obligation referred to in clause 8.3 applies.

4.4 The manner of implementing vesting (e.g. an obligation to transfer or buy back the shareholding) is formalised in the separate document referred to in clause 3.2.

5. DECISION-MAKING

5.1 Day-to-day decisions are made as follows: [Day-to-day decision-making].

5.2 The following decisions require the unanimous consent of all Founders: [Decisions requiring the consent of all Founders].

5.3 The Founders exercise their votes in decisions of the shareholders of the Company so that the decisions conform to what has been agreed in clauses 5.1 and 5.2.

5.4 If the law or the articles of association require a larger majority or the consent of all shareholders for the adoption of a decision, that requirement applies. The Agreement does not reduce the majority requirements provided by law.

5.5 If the Founders fail to reach agreement on a matter referred to in clause 5.2, they negotiate in good faith and may, by agreement, involve an independent mediator; until agreement is reached, the decision is not deemed adopted.

5.6 Each Founder has the right to receive information on the activities of the Company and to examine the Company's documents to the extent provided by law (in the case of a private limited company, § 166 of the Commercial Code). The Founders inform one another without delay of circumstances that may significantly affect the activities of the Company or the performance of the Agreement.

6. ROLES AND OBLIGATIONS OF THE FOUNDERS

6.1 Each Founder performs the role referred to in clause 1 and contributes to the activities of the Company in good faith, loyally and in the interests of the Company. The roles of the Founders are changed by written agreement of all Founders.

6.2 The role referred to in clause 1 does not in itself make a Founder a member of the management board or an employee of the Company. A Founder is elected as a member of the management board by a decision of the competent body of the Company, and the Founder's remuneration and other terms are agreed in a separate contract (e.g. a management board member's contract or an employment contract).

6.3 A Founder who is a member of the management board of the Company performs the Founder's duties with the diligence of a prudent businessperson. The Agreement does not restrict or replace the statutory duties of a management board member (in the case of a private limited company, § 187 of the Commercial Code; in the case of a public limited company, § 315).

7. INTELLECTUAL PROPERTY

7.1 Each Founder hereby undertakes to transfer or license to the company the intellectual property created in the course of the company's activities as soon as the company has been founded and is legally capable of this. Until the company is founded, such intellectual property belongs to the Founder who created it.

7.2 The intellectual property referred to in clause 7.1 includes, in particular, the author's economic rights (including in computer programs and databases), inventions, designs, trademarks, domain names, know-how and trade secrets created for the activities of the Company or in connection with the Company's business idea. If a Founder does not create them under an employment contract, § 32 of the Copyright Act concerning works created in the course of performing duties of employment does not apply to the Founder, and the rights pass to the Company only by the transfer or licence referred to in clause 7.1.

7.3 The moral rights of the author (§ 12 of the Copyright Act) are not transferable. The Founder undertakes not to exercise them in a manner that prevents or hinders the Company's use of the transferred rights.

7.4 Intellectual property which a Founder created before the conclusion of the Agreement or independently of the activities of the Company remains with the Founder. If such intellectual property is necessary for the activities of the Company, the Founders agree separately in writing on the terms of its use.

7.5 A Founder signs the documents and performs the acts that are reasonably necessary for transferring or registering the rights referred to in clause 7.1 in the name of the Company. Unless the Founders have agreed otherwise in writing, no separate fee is paid for the transfer.

8. LEAVING

8.1 For the purposes of the Agreement, leaving means a situation where a Founder ceases to act for the Company in the role referred to in clause 1.

8.2 Definition of a "bad leaver": [Definition of a "bad leaver"].

8.3 If vesting applies under clause 4, the leaving Founder undertakes to transfer the Founder's unacquired (unvested) shareholding to the Company or to the other Founders on the basis of a document to be entered into separately in accordance with the procedure referred to in clause 3.2. This clause does not in itself transfer the shareholding.

8.4 Whether the company or the other Founders have a right to buy back the vested shareholding of the leaving Founder: [Does the company have the right to buy back the acquired (vested) shareholding on leaving?]. The buy-back price, terms and deadlines are agreed in a separate written agreement at the time of leaving — this Agreement does not establish a buy-back price or procedure.

8.5 Whether and how bad leaver status affects the terms of transfer or buy-back of the shareholding is agreed by the Founders in the separate document referred to in clause 3.2.

8.6 Shareholdings are transferred in the form provided by law. A real right contract for the transfer of a share in a private limited company must be notarially authenticated, except in the case referred to in § 149 (6) of the Commercial Code (§ 149 (4) of the Commercial Code).

8.7 Leaving does not release a Founder from the obligations set out in clauses 7, 9 and 10 or from obligations that arose before leaving.

9. RESTRAINT OF TRADE AND NON-SOLICITATION

9.1 While participating in the Company, a Founder does not act, without the prior written consent of the other Founders, as an entrepreneur, shareholder, member of a management body, employee or adviser in an undertaking competing with the Company in the same field of activity. The restriction does not cover holding shares of listed companies as an ordinary investment.

9.2 Duration of the restraint of trade after leaving: [Duration of the restraint of trade after leaving (months)] months.

9.3 Duration of the prohibition on soliciting employees/customers after leaving: [Duration of the prohibition on soliciting employees/customers after leaving (months)] months.

9.4 The restrictions referred to in clauses 9.2 and 9.3 apply only within the actual field of activity of the Company and in the territory where the Company operated at the time of leaving, and to the extent necessary to protect the legitimate interests of the Company. If the duration referred to in clause 9.2 or 9.3 is 0 months, the corresponding restriction does not apply after leaving.

9.5 A Founder who is a member of the management board of the Company additionally complies with the statutory prohibition on competition applicable to management board members (in the case of a private limited company, § 185 of the Commercial Code; in the case of a public limited company, § 312).

10. CONFIDENTIALITY

10.1 The Founders keep the company's trade secrets confidential both during the term of the Agreement and after its termination.

10.2 Non-public information about the Company's business, customers, technology and financial position, as well as the terms of the Agreement, is deemed confidential, except for information which must be disclosed by law. A Founder may disclose such information to the Founder's advisers who are subject to an equivalent confidentiality obligation.

11. VALIDITY AND TERMINATION OF THE AGREEMENT

11.1 The Agreement enters into force once all Founders have signed it and is valid for an unspecified term.

11.2 The Agreement terminates by written agreement of all Founders, including where the Founders decide to abandon the founding of the Company.

11.3 In respect of a Founder who has left, the Agreement terminates when the Founder is no longer a shareholder of the Company. The obligations set out in clauses 7, 9 and 10 continue to apply to the extent specified therein.

12. DISPUTE RESOLUTION

12.1 The Founders first seek to resolve disputes arising from the Agreement by negotiation. If no agreement is reached, disputes are resolved as follows: [Dispute resolution]. Arbitration applies on the basis of an agreement of the Parties.

12.2 The Agreement is governed by the law of [Governing law].

13. FINAL PROVISIONS

13.1 Amendments and supplements to the Agreement are valid only if all Founders have confirmed them in writing or in a format which can be reproduced in writing.

13.2 A Founder may not transfer rights and obligations arising from the Agreement to a third party without the prior written consent of the other Founders.

13.3 If any provision of the Agreement is or becomes invalid, this does not affect the validity of the remaining provisions. The Founders replace the invalid provision with a valid one that is as close as possible to the invalid provision in its economic substance. The Agreement constitutes the entire agreement between the Founders and supersedes all prior agreements relating to the subject matter of the Agreement.

LEGAL BASIS

This Shareholders' Agreement is an internal agreement based on freedom of contract (general part of the Law of Obligations Act (VÕS)) and does not replace the procedure provided in the Commercial Code for founding a private limited company/public limited company or for transferring shares. A real right contract for the transfer of a share in a private limited company must be notarially authenticated (§ 149 (4) of the Commercial Code), unless the share capital of the private limited company is at least 10,000 euros and fully paid up and the articles of association waive the notarial form and provide for at least a form which can be reproduced in writing (§ 149 (6) of the Commercial Code).