XP Factory : 2022 AGM Notice

XP FACTORY PLC

ANNUAL GENERAL MEETING

29 June 2022

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are recommended to immediately seek your own advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under the Financial Services and Markets Act 2000. If you have sold or otherwise transferred all of your shares in XP Factory plc, please send this document and the accompanying form of proxy at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee.

XP Factory plc

Belmont House

Station Way

Crawley, England

RH10 1JA

6 June 2022

Dear Shareholder,

I am pleased to send you details of the forthcoming annual general meeting ("AGM") of XP Factory plc ("Company"), together with the annual report and accounts for the financial year ended 31 December 2021.

The AGM will be held on 29 June 2022 at 10.00 a.m. at the offices of Irwin Mitchell LLP, 40 Holborn Viaduct, London EC1N 2PZ. The AGM Notice is set out on page 5 of this document.

Whether you are planning to attend the meeting or not, we encourage all shareholders to complete and return the accompanying Form of Proxy appointing the Chair of the meeting as their proxy. This will ensure that your vote will be counted if ultimately you (or any other proxy you might otherwise appoint) are not able to attend the meeting. A proxy card is attached to this Notice and is also available on the Company's website at www.xpfactory.com/investors/. Please note the deadline for the receipt of proxies by our registrar, Equiniti Limited, is 10.00 a.m. on 27 June 2022. Proxy appointments should be submitted in accordance with the Notes to the AGM Notice on pages 8, 9 and 10.

All resolutions at the AGM will be decided on a poll.

A copy of this document is available on the Company's website at www.xpfactory.com/investors/. Neither the content of the Company's website nor any website accessible by hyperlinks to the Company's website is incorporated in, or forms part of, this document.

The following documents are enclosed with this letter:

• Notice of AGM
• Report and Accounts
• Form of Proxy (and prepaid envelope)

Action to be taken

You are requested to complete and return the Form of Proxy in accordance with the instructions printed on it so that it arrives no later than 10.00 a.m. on 27 June 2022.

Recommendation

The Board considers the resolutions to be proposed at the AGM to be in the best interests of the Company and its shareholders as a whole. The Directors unanimously recommend that you vote in favour of the resolutions as they intend to do in respect of their own beneficial holdings. In making this recommendation, any Director who is standing for reappointment abstains in relation to the resolution for his or her own reappointment.

Yours sincerely

Richard Rose

Chairman

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Resolutions to be proposed at the AGM

Set out below is an explanation of the resolutions set out in the Notice of AGM.

Resolution 1 - to receive the annual report and accounts - ordinary resolution

The Chairman will present the Annual Report and Accounts for the year ended 31 December 2021 to the annual general meeting. A copy of the Annual Report and Accounts accompanies this notice to shareholders.

Resolutions 2 and 3 - appointment of auditors and auditors' remuneration - ordinary resolutions

Resolution 2 relates to the appointment of HW Fisher LLP as auditors of the Company to hold office until the next general meeting of the Company at which accounts are laid, expected to be the next annual general meeting of the Company.

Resolution 3 authorises the Directors to set the remuneration of the Company's auditors.

Resolutions 4 - 7 - reappointment of Directors - ordinary resolutions

In line with best practice, all of the Directors will retire and be proposed for re-election at the annual general meeting. Resolutions 4 - 7 seek your approval to re-elect these individuals as Directors of the Company.

All of the Directors have indicated their willingness to offer themselves for re-election. The Board, having considered the mix of skills, knowledge and experience of each of the Directors, confirms that each Director continues to perform his or her duties effectively, showing integrity and high ethical standards whilst maintaining sound, independent judgement in respect of all decisions taken at both Board and, where applicable, Board Committee level to ensure the Company's long term sustainable success.

Resolution 8 - authority to allot shares - ordinary resolution

The Companies Act 2006 provides that Directors shall only allot shares with the authority of shareholders in general meeting. The authority given to the Directors at the last annual general meeting to allot (or issue) shares pursuant to section 551 of the Companies Act 2006 expires on the date of this year's annual general meeting.

Resolution 8 will be proposed as an ordinary resolution for the renewal of the Directors' general authority to issue shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of £626,596.58 representing approximately one third of the current issued share capital of the Company (excluding treasury shares). In addition, the resolution seeks authority for the Directors to allot shares by way of a pre-emptive rights issue up to an aggregate nominal amount of £626,596.58 representing a further one third of the current issued share capital of the Company (excluding treasury shares). The Directors have no present intention of exercising either of these authorities.

Resolution 9 - authority to allot consideration shares - ordinary resolution

The resolution passed on 22 November 2021 authorising the allotment of consideration shares in connection with the Acquisition of Boom Battle Bars is proposed to be renewed with respect to the consideration shares that have yet to be issued.

Resolutions 10 and 11 - disapplication of pre-emption rights - special resolutions

The Companies Act 2006 also provides that any allotment of new shares for cash must be made pro rata to individual shareholders' holdings, unless such provisions are disapplied under section 570 of the Companies Act 2006.

Resolution 10 will be proposed as a special resolution for the renewal of the Directors' authority to allot equity securities for cash, without first offering them to shareholders pro rata to their holdings. This authority facilitates issues made by way of rights to shareholders which are not strictly in accordance with section 561(1) of the Companies Act 2006, and authorises other allotments of shares up to a maximum aggregate nominal amount of £93,989.49, representing approximately 5 per cent. of the current issued ordinary share capital of the Company. The Directors have no present intention of exercising this authority.

Resolution 11 will be proposed as a special resolution. It will, in addition to any authority granted pursuant to resolution 10 above, give the Directors authority to allot equity securities free of preemption rights, up to a nominal value of £93,989.58, representing an additional 5 per cent. of the issued share capital, for transactions which the Board determines to be an acquisition or other specified capital investment.

The disapplication authority proposed by resolutions 10 and 11 is in line with institutional shareholder guidance and, in particular, with the Pre-Emption Group's Statement of Principles of 2015 (the "Pre-Emption

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Principles"). The Pre-Emption Principles were revised in 2015 to allow the authority for an issue of shares otherwise than in connection with a pre-emptive offer to be increased from 5 per cent. to 10 per cent. of the Company's issued ordinary share capital, provided that the Company confirms that it intends to use the additional 5 per cent. authority only in connection with an acquisition or specified capital investment. The Board therefore confirms, in accordance with the Pre-Emption Principles that, to the extent that the authority in paragraph (i) of resolution 11 is used for an issue of ordinary shares in addition to the amount referred to at paragraph (ii) of resolution 10, it intends that it will only be used in connection with an acquisition or specified capital investment which is announced contemporaneously with the issue, or which has taken place in the preceding six-month period and is disclosed in the announcement of the issue.

To reflect best practice, as set out in the Pre-Emption Group's monitoring report and template resolutions published in May 2016, resolutions 10 and 11 are proposed as two separate resolutions.

The Board also confirms, in accordance with the Preemption Principles, that it does not intend to issue shares for cash representing more than 7.5 per cent. of the Company's issued ordinary share capital in any rolling three-year period other than to existing shareholders, save as permitted in connection with an acquisition or specified capital investment as described above, without prior consultation with shareholders.

The authorities granted under resolutions 8, 9, 10 and 11 will expire at the next annual general meeting, or, if earlier, at the close of business on the date falling 15 months after the date of the annual general meeting.

Resolution 12 - purchase of own shares - special resolution

Resolution 12 will be proposed as a special resolution for the renewal of the Company's authority to purchase its own shares in the market during the period until the next annual general meeting of the Company for up to 15,038,318 Ordinary Shares, representing approximately 10 per cent. of the issued ordinary share capital of the Company. The price payable shall not be more than 5 per cent. above the average of the middle market quotation for ordinary shares as derived from the AIM Appendix to the Daily Official List of the London Stock Exchange for the 5 business days before the purchase is made and in any event not more than the higher of the price of the last independent trade and the highest current independent purchase bid on the trading venue where the purchase was carried out and not less than 1.25p per share, being the nominal value of the shares.

This powerwill only be used if the Directors considerthat to do so would be in the best interests of shareholders generally. Save to the extent purchased pursuant to the regulations concerning treasury shares, any Ordinary Shares purchased in this way will be cancelled and the number of shares in issue will be accordingly reduced. The Company may hold in treasury any of its own Ordinary Shares that it purchases pursuant to the relevant regulations and the authority conferred by this resolution. This would give the Company the ability to re-issue treasury shares quickly and cost effectively and would provide the Company with greater flexibility in the management of its capital base.

As at 27 May 2022 (the last practicable date prior to the publication of this document) options to subscribe for a total of 16,966,667 Ordinary Shares were outstanding under the Company's 2020 EMI Scheme representing 11.6 per cent of the issued share capital of the Company (excluding treasury shares) at that date and 12.9 per cent of the issued share capital of the Company (excluding treasury shares) if the authority sought by this resolution were to be exercised in full.

Resolution 13 - disapplication of pre-emption rights re consideration shares - special resolution

Resolution 13 will be proposed as special resolution to waive statutory pre-emption rights with respect to the consideration shares in connection with the Acquisition of Boom Battle Bars to the extent they have not yet been allotted.

Resolution 14 - holding general meetings on 14 days' notice - special resolution

The Companies Act 2006 provides that the notice period for general meetings for traded companies is 21 clear days unless shareholders approve a shorter notice period, which cannot be less than 14 clear days. The Company is not a traded company pursuant to the Companies Act 2006. However, it has chosen to put resolution 14 to shareholders to comply with the UK Corporate Governance Code and best practice.

Resolution 14 will be proposed as a special resolution to authorise the calling of general meetings of the Company (other than an annual general meeting) on not less than 14 clear days' notice.

The authority granted by this resolution 14 (if passed) will be effective until the next annual general meeting of the Company. It is the Directors' intention not to call a general meeting on less than 14 working days' notice unless there is a need for urgency and the shorter notice period is not intended to be used as a matter of routine.

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XP FACTORY PLC

(Registered in England and Wales with number 10184316)

("Company")

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the annual general meeting of the Company will be held at 10.00 a.m. on 29 June 2022 at the offices of Irwin Mitchell LLP, 40 Holborn Viaduct, London EC1N 2PZ for the following purposes:

Ordinary Business

1. To receive and adopt the accounts for the year ended 31 December 2021, together with the Reports of the Directors and of the Auditors thereon.
2. To appoint HW Fisher LLP as auditors to the Company, to hold office until the end of the next general meeting at which accounts are laid before the Company.
3. To authorise the Directors to determine the remuneration of the auditors of the Company.
4. To re-elect Richard Rose, who is retiring by rotation in accordance with the Company's articles of association, as a Director.
5. To re-elect Richard Harpham, who is retiring by rotation in accordance with the Company's articles of association, as a Director.
6. To re-elect Graham Bird, who is retiring by rotation in accordance with the Company's articles of association, as a Director.
7. To re-elect Karen Bach, who is retiring by rotation in accordance with the Company's articles of association, as a Director.

To transact any other ordinary business of the Company.

Special Business

As special business, to consider and if thought fit pass the following resolutions which will be proposed as to resolutions 8, 9 and 10 as ordinary resolutions and as to resolutions, 11, 12, 13 and 14 as special resolutions:

1. (i) THAT, subject to and in accordance with Article 7 of the Articles of Association of the Company, the board be and it is hereby generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 (in substitution for any existing authority to allot shares) to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of £626,596.58 provided that such authority shall expire at the end of the next annual general meeting of the Company after the passing of this resolution (or, if earlier, at the close of business on 29 September 2023), save that the Company may, before such expiry, make an offer or agreement which would or might require such shares to be allotted or rights to subscribe for or convert securities into shares to be granted after such expiry, and the board may allot shares and grant rights to subscribe or convert securities into shares in pursuance of such offer or agreement as if the authority conferred by this resolution had not expired, and further,
2. 1. THAT, the board be and it is hereby generally and unconditionally authorised to exercise all powers of the Company to allot equity securities (within the meaning of section 560 of the said Act) in connection with a rights issue in favour of ordinary shareholders where the equity securities respectively attributable to the interests of all ordinary shareholders are proportionate (as nearly as may be) to the respective numbers of ordinary shares held by them up to an aggregate nominal amount of £626,596.58 provided that this authority shall expire at the end of the next annual general meeting of the Company after the passing of this resolution (or, if earlier at the close of business on 29 September 2023), save that the Company may, before such expiry, make an offer or agreement which would or might require equity securities to be allotted after such expiry and the board may allot equity securities in pursuance of such an offer or agreement as if the authority conferred hereby had not expired.
3. THAT, in connection with the Acquisition entered into by the Company and the resolutions passed in connection therewith on 22 November 2021, and to the extent such allotments have not already been made in connection with the Acquisition at the date of this resolution, subject to and conditional upon

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