Free Shareholder Agreement Template

PARTIES AND RECITALS

This Shareholder Agreement ("Agreement") is entered into as of the date of execution set forth below by and among:

Apex Innovations, Inc., a corporation organized and existing under the laws of the State of Delaware (and, where incorporated in Delaware, subject to the Delaware General Corporation Law ("DGCL"), 8 Del. C. §§ 101 et seq., or, in Model Act jurisdictions, the Model Business Corporation Act ("MBCA") as adopted therein), with its principal office located at 1200 Tech Park Drive, Suite 500, Austin, TX 78759 (the "Corporation"), and

The undersigned shareholders of the Corporation (each a "Shareholder" and collectively the "Shareholders").

RECITALS:

WHEREAS, the Corporation is a duly organized corporation under the laws of the State of Delaware, with capital stock authorized pursuant to DGCL § 151 (or analogous provision of state law), and authorized to issue 10,000,000 shares of Common Stock;

WHEREAS, the Shareholders are the holders of shares of the Corporation as set forth in the ownership schedule above;

WHEREAS, the Shareholders desire to enter into this Agreement to establish the terms and conditions governing their relationship as shareholders, the management and operation of the Corporation, the transfer of shares, and other matters of mutual concern;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

PURPOSE AND SCOPE

This Agreement is intended to govern the rights and obligations of the Shareholders with respect to the Corporation, including but not limited to the management and governance of the Corporation, the issuance and transfer of shares, distributions to Shareholders, and the resolution of disputes among Shareholders. This Agreement is a written stockholders' agreement contemplated by DGCL § 218(c) (and, in MBCA jurisdictions, MBCA § 7.32), and the Shareholders intend that it be given full effect as such.

This Agreement is binding upon the Corporation and all current and future shareholders who become parties to this Agreement. Any person or entity acquiring shares of the Corporation shall be required to execute a joinder agreement agreeing to be bound by the terms of this Agreement as a condition of share acquisition.

In the event of any conflict between this Agreement and the Corporation's Articles of Incorporation or Bylaws, the terms of this Agreement shall control to the maximum extent permitted by applicable law, including DGCL §§ 141(a) and 218.

GOVERNANCE

Board of Directors: The Corporation shall be governed by a Board of Directors consisting of 3 members. Directors shall be elected by majority vote of shareholders at annual meeting. Directors shall serve for a term of one (1) year and until their successors are duly elected and qualified, or until their earlier resignation, removal, or death.

Voting Rights: One vote per share of Common Stock. All actions of the Shareholders shall require a majority vote of the outstanding shares unless a higher voting threshold is required by this Agreement, the Bylaws, or applicable law. Voting agreements and voting trusts entered into by the Shareholders are specifically contemplated and authorized by DGCL § 218 (and, where applicable, MBCA § 7.31).

Meetings: Shareholders' meetings shall be held quarterly, and written consents in lieu of meetings may be used to the extent permitted by DGCL § 228 or the corresponding provision of applicable state law. Special meetings may be called by the Board of Directors or by Shareholders holding at least twenty-five percent (25%) of the outstanding shares upon at least ten (10) days' written notice to all Shareholders.

Quorum: Majority of outstanding shares (51%). If a quorum is not present, the meeting may be adjourned to a later date upon notice to all Shareholders.

Officers: The Corporation shall have the following officers: President/CEO, Secretary, Treasurer/CFO. Officers shall be appointed by the Board of Directors and shall serve at the pleasure of the Board. Officers may be removed with or without cause by a majority vote of the Board.

Supermajority Matters: The following actions shall require the affirmative vote of Shareholders holding at least seventy-five percent (75%) of the outstanding shares:

• Amendment or modification of the Articles of Incorporation or Bylaws.
• Issuance of new shares or creation of new classes of shares.
• Merger, acquisition, consolidation, or sale of substantially all of the Corporation's assets.
• Entry into any transaction or agreement with a value exceeding one hundred thousand dollars ($100,000) outside the ordinary course of business.
• Voluntary dissolution or winding up of the Corporation.
• Incurrence of indebtedness exceeding fifty thousand dollars ($50,000) outside the ordinary course of business.
• Amendment or modification of this Agreement.
• Hiring, termination, or material change in compensation of any executive officer.

PREEMPTIVE RIGHTS

Each Shareholder shall have the right of first refusal to participate in any new issuance of shares by the Corporation ("Preemptive Rights"), the Shareholders acknowledging that preemptive rights do not exist by default in Delaware (see DGCL § 102(b)(3)) and are conferred here by contract. Before the Corporation may issue new shares to any person or entity, the Corporation shall first offer such shares to the existing Shareholders on a pro rata basis in proportion to their existing ownership percentages.

The Corporation shall provide written notice to all Shareholders of any proposed new issuance, including the number of shares to be issued, the price per share, and the terms and conditions of the issuance. Each Shareholder shall have thirty (30) days from receipt of such notice to exercise their Preemptive Rights by providing written notice to the Corporation. If any Shareholder declines to exercise their Preemptive Rights or fails to respond within the thirty-day period, the remaining Shareholders shall have an additional fifteen (15) days to purchase the unsubscribed shares on a pro rata basis. The Corporation and the Shareholders intend that any such issuance qualify for an exemption from registration under Section 4(a)(2) of the Securities Act of 1933 and/or Rule 506 of Regulation D thereunder (17 C.F.R. § 230.506), and shall comply with applicable state blue sky laws.

Preemptive Rights shall not apply to shares issued: (a) as part of an approved employee stock option or equity incentive plan (including offerings made pursuant to Rule 701, 17 C.F.R. § 230.701); (b) in connection with a merger, acquisition, or strategic partnership approved by the required Shareholder vote; or (c) upon conversion of existing convertible securities.

SHARE TRANSFERS

Transfer Restrictions: Shares are restricted and may not be transferred without compliance with this Agreement.

No Shareholder shall sell, assign, transfer, pledge, hypothecate, gift, or otherwise dispose of ("Transfer") any shares of the Corporation except in compliance with the provisions of this Agreement and all applicable federal and state securities laws, including the registration requirements of Section 5 of the Securities Act of 1933 (or an available exemption such as Section 4(a)(2), Rule 506, or Rule 144 (17 C.F.R. § 230.144) for resales of restricted securities), and any applicable state blue sky laws. Each stock certificate (or book-entry notation) shall bear a restrictive legend reflecting these transfer restrictions, as contemplated by DGCL § 202. Any attempted Transfer in violation of this Agreement shall be void and of no effect, and the Corporation shall not register any such Transfer on its books and records.

Permitted transfers without triggering the Right of First Refusal include: (a) transfers to a Shareholder's immediate family members (spouse, children, parents, siblings) or to a revocable trust for the benefit of such family members; (b) transfers between existing Shareholders; provided that in each case the transferee executes a joinder agreement agreeing to be bound by the terms of this Agreement.

Right of First Refusal: Before any Shareholder may Transfer shares to a third party (other than a permitted transfer as described above), the selling Shareholder ("Selling Shareholder") must first offer the shares to the remaining Shareholders and the Corporation on the following terms:

• The Selling Shareholder shall deliver written notice ("Transfer Notice") to the Corporation and all other Shareholders specifying the number of shares to be sold, the proposed purchase price, and the identity of the proposed third-party buyer.
• The remaining Shareholders shall have thirty (30) days from receipt of the Transfer Notice to exercise their Right of First Refusal by notifying the Selling Shareholder in writing of their intention to purchase all or any portion of the offered shares at the price and on the terms specified in the Transfer Notice.
• If the remaining Shareholders elect to purchase fewer than all of the offered shares, the Corporation shall have an additional fifteen (15) days to purchase the remaining unsubscribed shares.
• If the Right of First Refusal is not exercised in full, the Selling Shareholder may proceed with the Transfer to the third-party buyer at a price not less than the price specified in the Transfer Notice, provided the Transfer is completed within ninety (90) days of the expiration of the Right of First Refusal period.

Tag-Along Rights: If any Shareholder holding more than fifty percent (50%) of the outstanding shares proposes to Transfer shares to a third party, each remaining Shareholder ("Tag-Along Shareholder") shall have the right to participate in such Transfer on the same terms and conditions by selling a proportionate number of their own shares. The selling Shareholder shall include the Tag-Along Shareholders' shares in the proposed transaction, and the third-party buyer must agree to purchase the Tag-Along shares as a condition of the transaction. Tag-Along Shareholders must exercise their rights within fifteen (15) days of receiving notice of the proposed Transfer.

Drag-Along Rights: If Shareholders holding at least seventy-five percent (75%) of the outstanding shares approve a sale of all or substantially all of the Corporation's shares or assets to a bona fide third-party buyer, all remaining Shareholders ("Dragged Shareholders") shall be obligated to participate in such transaction on the same terms and conditions. Dragged Shareholders shall execute all documents and take all actions reasonably necessary to consummate the transaction. The purchase price shall be allocated among all Shareholders on a pro rata basis according to their respective ownership percentages.

SHARE VALUATION

Valuation Method: For purposes of any buy-sell transaction, Right of First Refusal exercise, or other share transfer under this Agreement, the shares of the Corporation shall be valued using the following method: Fair Market Value.

Fair Market Value shall be the price at which the shares would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. If the parties cannot agree on Fair Market Value within thirty (30) days, the valuation shall be determined by an independent business appraiser (ASA or CVA certified) selected by mutual agreement, or if the parties cannot agree on an appraiser, each party shall select one appraiser and the two appraisers shall select a third, whose determination shall be final and binding.

Discounts for minority interest or lack of marketability shall not be applied in any valuation conducted under this Agreement, unless all parties agree otherwise in writing.

BUY-SELL PROVISIONS

Upon the occurrence of any of the following trigger events, the Corporation and/or the remaining Shareholders shall have the right and obligation to purchase the affected Shareholder's shares in accordance with this section:

Death: Upon the death of a Shareholder, the Corporation shall have the first option to purchase the deceased Shareholder's shares from the estate or legal representative at the valuation determined under this Agreement. If the Corporation does not exercise this option within sixty (60) days of receiving written notice of the death, the remaining Shareholders shall have the right to purchase the shares on a pro rata basis within an additional thirty (30) days. The Shareholders are encouraged to maintain key-person life insurance policies to fund the purchase of shares upon a Shareholder's death. Payment may be made in a lump sum or in equal installments over a period not to exceed thirty-six (36) months, with interest at the applicable federal rate.

Disability: If a Shareholder becomes permanently disabled (defined as the inability to perform the essential functions of their role for a continuous period of one hundred eighty (180) days, as certified by a licensed physician), the Corporation shall have the option to purchase the disabled Shareholder's shares at the valuation determined under this Agreement. The disabled Shareholder shall have thirty (30) days from receipt of the Corporation's notice of intent to purchase to accept or negotiate the terms. Payment may be structured over a period not to exceed thirty-six (36) months.

Retirement: A Shareholder who wishes to retire shall provide at least one hundred eighty (180) days' written notice to the Corporation and all other Shareholders of their intention to retire and sell their shares. Upon receipt of such notice, the Corporation and remaining Shareholders shall have the right to purchase the retiring Shareholder's shares at the valuation determined under this Agreement. The purchase shall be completed within ninety (90) days of the effective retirement date. Payment may be structured over a period not to exceed forty-eight (48) months.

Termination of Employment: If a Shareholder's employment or service relationship with the Corporation is terminated (whether voluntary or involuntary, with or without cause), the Corporation shall have the option to repurchase the departing Shareholder's shares at the valuation determined under this Agreement. In the case of termination for cause (defined as fraud, embezzlement, criminal conviction, material breach of fiduciary duty, or willful misconduct), the repurchase price may be reduced by up to twenty percent (20%) as a forfeiture penalty. The Corporation must exercise this option within ninety (90) days of the termination date.

DISTRIBUTIONS

Dividend Policy: Dividends declared at the discretion of the Board from legally available profits, after maintaining minimum cash reserves of $100,000

Distribution Schedule: Distributions shall be made on a quarterly basis. All distributions shall be made to Shareholders on a pro rata basis in proportion to their respective ownership percentages. The Corporation shall maintain adequate cash reserves for operations, working capital, and anticipated capital expenditures before declaring any distribution.

Tax Distributions: To the extent the Corporation is taxed as an S-Corporation or otherwise passes through income to Shareholders, the Corporation shall make quarterly tax distributions to all Shareholders in amounts sufficient to cover each Shareholder's estimated federal and state income tax liability arising from the Corporation's pass-through income, calculated at the highest applicable marginal tax rate for individuals in the state of the Corporation's principal office. Tax distributions shall be made no later than fifteen (15) days prior to the due date of each quarterly estimated tax payment.

NON-COMPETE

During the term of each Shareholder's ownership of shares in the Corporation and for a period of 2 years after departure following the date on which the Shareholder ceases to own shares (the "Restricted Period"), each Shareholder agrees not to, directly or indirectly:

• Own, manage, operate, control, be employed by, provide consulting services to, or participate in the ownership, management, operation, or control of any business that competes with the Corporation within a radius of fifty (50) miles of the Corporation's principal office or any location where the Corporation conducts substantial business operations.
• Solicit, recruit, or hire any employee, contractor, or consultant of the Corporation, or induce any such person to terminate their relationship with the Corporation.
• Solicit, contact, or transact business with any customer, client, vendor, or supplier of the Corporation for the purpose of providing products or services that compete with those offered by the Corporation.

If any provision of this non-compete clause is found by a court of competent jurisdiction to be unreasonable in scope, duration, or geographic area, the court shall have the authority to modify such provision to the minimum extent necessary to make it enforceable. The Parties acknowledge that the restrictions in this section are reasonable and necessary to protect the Corporation's legitimate business interests. The Parties further acknowledge that non-compete enforceability varies by jurisdiction: California (Cal. Bus. and Prof. Code § 16600), North Dakota (N.D. Cent. Code § 9-08-06), Oklahoma (15 Okla. Stat. § 219A), and Minnesota (Minn. Stat. § 181.988) generally prohibit or sharply restrict such clauses, and the FTC Non-Compete Rule (16 C.F.R. Part 910) may further limit enforceability. In any jurisdiction that limits enforcement to sale-of-business contexts, the Parties acknowledge that these restrictions are entered into in connection with the Shareholder's ownership interest in the Corporation.

CONFIDENTIALITY

Each Shareholder acknowledges that they will have access to confidential and proprietary information of the Corporation ("Confidential Information"), including information that may qualify as a "trade secret" under the Defend Trade Secrets Act of 2016, 18 U.S.C. § 1839(3), and the Uniform Trade Secrets Act as enacted in the applicable state. Confidential Information includes, but is not limited to, business plans, financial data, customer and supplier lists, pricing information, trade secrets, product designs, marketing strategies, technology, software, and other proprietary information.

Each Shareholder agrees to:

• Hold all Confidential Information in strict confidence and not disclose it to any third party without the prior written consent of the Board of Directors.
• Use Confidential Information solely for purposes of fulfilling their duties and obligations as a Shareholder, director, or officer of the Corporation.
• Take all reasonable precautions to prevent unauthorized disclosure of Confidential Information, including securing physical and electronic documents and limiting access to need-to-know personnel.
• Promptly return or destroy all Confidential Information upon cessation of their status as a Shareholder.

This confidentiality obligation shall survive indefinitely, regardless of whether the Shareholder ceases to own shares in the Corporation.

DEADLOCK RESOLUTION

Deadlock: A "Deadlock" shall be deemed to exist when the Shareholders or the Board of Directors are unable to reach agreement on a material matter that requires Shareholder or Board approval, despite good-faith efforts to resolve the matter over a period of at least thirty (30) days.

Resolution Mechanism: In the event of a Deadlock, the Parties agree to resolve the matter through mediation by a neutral third party.

The Parties shall select a mutually acceptable mediator within fifteen (15) days of declaring a Deadlock. If the Parties cannot agree on a mediator, they shall request the American Arbitration Association to appoint one. The mediation shall be completed within sixty (60) days. If mediation is unsuccessful, either Party may pursue binding arbitration or other legal remedies as set forth in this Agreement.

DISSOLUTION

The Corporation may be dissolved upon the occurrence of any of the following events, subject to compliance with DGCL §§ 275 and 281 (or the corresponding dissolution and wind-up provisions of the state of incorporation): Unanimous vote of all shareholders, bankruptcy or insolvency of the Corporation, court order.

Upon dissolution, the Corporation's assets shall be liquidated in the following order of priority consistent with DGCL § 281: (a) payment of all outstanding debts and obligations of the Corporation and provision for contingent and conditional claims; (b) payment of all accrued but unpaid distributions to Shareholders; (c) distribution of remaining assets to Shareholders on a pro rata basis in proportion to their respective ownership percentages.

The Board of Directors shall appoint a liquidating agent to oversee the orderly winding up of the Corporation's affairs. The liquidating agent shall provide regular reports to all Shareholders regarding the status of the liquidation. The Corporation shall continue to exist for the purpose of winding up its affairs until all assets have been distributed and all obligations have been satisfied.

DISPUTE RESOLUTION

Dispute Resolution: Any dispute, controversy, or claim arising out of or relating to this Agreement shall be resolved by binding arbitration. Such arbitration shall be conducted in the State of Delaware in accordance with the Commercial Arbitration Rules of the American Arbitration Association and the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. The arbitrator's decision shall be final and binding, and judgment upon the award may be entered in any court of competent jurisdiction.

The prevailing Party in any dispute resolution proceeding shall be entitled to recover its reasonable attorneys' fees and costs from the non-prevailing Party.

REPRESENTATIONS AND WARRANTIES

Each Shareholder represents and warrants to the Corporation and to each other Shareholder that:

• The Shareholder has the legal capacity and authority to enter into this Agreement and to perform all obligations hereunder.
• The execution and performance of this Agreement will not conflict with any other agreement, obligation, or order to which the Shareholder is a party or by which the Shareholder is bound.
• The shares owned by the Shareholder are free and clear of all liens, encumbrances, pledges, and security interests, except as disclosed in writing to the Corporation.
• The Shareholder is acquiring and holding shares for investment purposes and not with a view to distribution in violation of applicable securities laws, and understands that the shares are "restricted securities" within the meaning of Rule 144 under the Securities Act of 1933 (17 C.F.R. § 230.144) and have been issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D (17 C.F.R. § 230.506).
• The Shareholder has had the opportunity to consult with independent legal and financial advisors prior to entering into this Agreement.

GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware (including, where applicable, the Delaware General Corporation Law, 8 Del. C. §§ 101 et seq., or the state's enactment of the Model Business Corporation Act), together with applicable federal securities laws (including the Securities Act of 1933, the Securities Exchange Act of 1934, and the rules and regulations of the Securities and Exchange Commission), in each case without regard to its conflict of laws principles. Any legal action or proceeding arising under this Agreement shall be brought exclusively in the courts located in the State of Delaware, and the Parties hereby consent to personal jurisdiction and venue therein.

ENTIRE AGREEMENT

This Agreement, together with all exhibits and schedules attached hereto, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written. No amendment or modification of this Agreement shall be valid unless made in writing and signed by Shareholders holding at least seventy-five percent (75%) of the outstanding shares.

If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect. The Parties agree to negotiate in good faith to replace any invalid or unenforceable provision with a valid provision that achieves, to the extent possible, the original intent of the invalid provision.

Any notices required or permitted under this Agreement shall be in writing and shall be deemed delivered when personally delivered, sent by certified mail (return receipt requested), or sent by email to the addresses on file with the Corporation. Each Party shall promptly notify the Corporation of any change in address or contact information.