SHAREHOLDER AGREEMENT
(Comprehensive Universal Template)
[// GUIDANCE: This template is drafted for use by U.S.-based or international counsel. Jurisdiction-specific tweaks (e.g., statutory references to the applicable corporate code) should be inserted by local counsel before execution. All bracketed items must be completed, deleted, or conformed.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
3.1 Capitalization and Share Issuance
3.2 Transfer Restrictions
3.3 Pre-Emptive Rights
3.4 Drag-Along / Tag-Along
3.5 Information & Inspection Rights
3.6 Board Composition & Voting Agreements - Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
SHAREHOLDER AGREEMENT (this “Agreement”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and among:
(a) [COMPANY NAME], a corporation organized under the laws of [STATE/COUNTRY] (the “Company”); and
(b) the Persons listed on Schedule A hereto (each, a “Shareholder” and, collectively, the “Shareholders”).
Recitals
A. The Company has authorized the issuance of shares of its capital stock (the “Shares”).
B. The Shareholders desire to set forth their respective rights and obligations concerning the Company and the Shares.
C. In consideration of the mutual covenants herein, the Parties agree as follows:
2. DEFINITIONS
[// GUIDANCE: Definitions are alphabetical for quick reference. Add or delete as needed.]
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person.
“Agreement” has the meaning set forth in the opening paragraph.
“Arbitration Rules” means the [American Arbitration Association (AAA) Commercial Arbitration Rules / UNCITRAL Rules / other], as amended from time to time.
“Board” means the Company’s board of directors.
“Business Day” means any day other than a Saturday, Sunday, or legal holiday in [PRIMARY FORUM].
“Company” has the meaning set forth in the Preamble.
“Confidential Information” means all non-public information regarding the Company or the Shareholders, whether oral or written, in any form.
“Drag-Along Right” has the meaning given in Section 3.4(a).
“Effective Date” has the meaning set forth in the Preamble.
“Exempt Issuance” means any issuance of Shares (i) pursuant to board-approved equity incentive plans, (ii) upon conversion of outstanding convertible securities, or (iii) as otherwise unanimously approved by the Shareholders.
“Indemnified Party” and “Indemnifying Party” have the meanings set forth in Section 7.2.
“Injunctive Relief” means temporary, preliminary, or permanent injunctive relief or specific performance.
“Law” means any statute, rule, regulation, ordinance, or other binding requirement of any governmental authority.
“Liability Cap” has the meaning set forth in Section 7.3.
“Person” means an individual, partnership, corporation, limited liability company, trust, or other entity.
“Shares” has the meaning set forth in the Recitals.
“Tag-Along Right” has the meaning given in Section 3.4(b).
“Transfer” means any sale, assignment, pledge, encumbrance, or other disposition, whether voluntary or involuntary.
[Add further definitions as necessary.]
3. OPERATIVE PROVISIONS
3.1 Capitalization and Share Issuance
(a) Authorized Shares. The authorized capital of the Company consists of [NUMBER] shares of [CLASS] common stock, par value [$0.0001] per share, of which [NUMBER] are issued and outstanding as of the Effective Date.
(b) Issuance Restrictions. No additional Shares shall be issued without (i) Board approval, and (ii) the affirmative vote of Shareholders holding at least [THRESHOLD %] of the then-outstanding Shares, unless such issuance constitutes an Exempt Issuance.
3.2 Transfer Restrictions
(a) General Lock-Up. No Shareholder may Transfer any Shares except in compliance with this Agreement and applicable Law.
(b) Right of First Refusal (“ROFR”). Prior to any permitted Transfer to a third party, the selling Shareholder shall deliver a written offer (“Transfer Notice”) to the Company and the non-selling Shareholders. The Company (first) and the non-selling Shareholders (second) shall have an aggregate [30]-day period to elect to purchase all (but not less than all) of the offered Shares on the same terms.
(c) Permitted Transfers. The ROFR shall not apply to Transfers (i) among Affiliates, (ii) to immediate family members for estate planning, or (iii) otherwise unanimously approved by the Shareholders.
3.3 Pre-Emptive Rights
Each Shareholder shall have the right, but not the obligation, to purchase its pro rata share of any new equity securities issued by the Company, subject to customary exceptions for Exempt Issuances. The Company shall provide at least [15] Business Days’ written notice before closing any such issuance.
3.4 Drag-Along / Tag-Along
(a) Drag-Along. If Shareholders holding at least [THRESHOLD %] of the outstanding Shares (the “Drag-Along Sellers”) approve a bona fide third-party sale of [>50 %] of the Company’s voting power, each other Shareholder shall (i) vote in favor of, and (ii) consummate, such sale on the same terms (the “Drag-Along Right”).
(b) Tag-Along. If any Shareholder (the “Selling Holder”) proposes to Transfer more than [20 %] of the outstanding Shares to a third party in a single transaction or series of related transactions, each other Shareholder may participate on a pro rata basis (the “Tag-Along Right”).
3.5 Information & Inspection Rights
The Company shall deliver to each Shareholder: (i) annual audited financial statements within [120] days after fiscal year-end; (ii) quarterly unaudited statements within [45] days after each fiscal quarter; and (iii) reasonable access to books and records during normal business hours upon [5] Business Days’ notice, subject to a confidentiality undertaking.
3.6 Board Composition & Voting Agreements
(a) Board Size. The Board shall consist of [NUMBER] directors.
(b) Designation Rights. Shareholders holding at least [X %] of the Shares may designate [ONE] director, subject to removal and replacement at their discretion.
(c) Voting Agreement. Each Shareholder shall vote its Shares, or cause them to be voted, to give effect to the Board composition provisions of this Section.
4. REPRESENTATIONS & WARRANTIES
4.1 Company Representations
The Company represents and warrants to each Shareholder that, as of the Effective Date:
(a) Organization; Good Standing. The Company is duly organized, validly existing, and in good standing under the Laws of [STATE/COUNTRY];
(b) Authorization. The execution, delivery, and performance of this Agreement have been duly authorized;
(c) No Conflict. The execution and performance do not violate any charter document, Law, or material contract binding upon the Company;
(d) Valid Issuance. The Shares issued to the Shareholders have been duly authorized and validly issued, fully paid, and non-assessable.
4.2 Shareholder Representations
Each Shareholder, severally and not jointly, represents and warrants to the Company and the other Shareholders that:
(a) Authority. Such Shareholder has full power and authority to execute and deliver this Agreement;
(b) Sophistication. Such Shareholder is an informed and sophisticated investor capable of evaluating the risks of an investment in the Company; and
(c) No Litigation. There is no pending action that would adversely affect such Shareholder’s ability to perform hereunder.
4.3 Survival
All representations and warranties shall survive the Effective Date for [24] months, except for claims for fraud, which shall survive indefinitely.
5. COVENANTS & RESTRICTIONS
5.1 Affirmative Covenants of the Company
(a) Legal Compliance. The Company shall at all times comply with applicable Laws;
(b) Maintenance of Books. The Company shall maintain complete and accurate books of account in accordance with [GAAP/IFRS];
(c) Insurance. The Company shall maintain director & officer (D&O) liability insurance with policy limits of at least [$____].
5.2 Negative Covenants
Without the prior written approval of Shareholders holding at least [THRESHOLD %] of the outstanding Shares, the Company shall not:
(i) Amend its charter documents;
(ii) Make any dividend or distribution other than pro rata;
(iii) Enter into any transaction with an Affiliate, except on arms-length terms;
(iv) Incur indebtedness in excess of [$____] in any fiscal year.
5.3 Notice & Cure
The Company shall notify the Shareholders in writing within [5] Business Days after becoming aware of any breach of this Agreement, and shall have [30] days to cure such breach, if curable.
6. DEFAULT & REMEDIES
6.1 Events of Default
The occurrence of any of the following constitutes an “Event of Default”:
(a) Material breach by any Party that remains uncured after the applicable cure period;
(b) Insolvency, bankruptcy, or receivership of the Company;
(c) Misrepresentation in any representation or warranty herein.
6.2 Remedies
Upon an Event of Default, the non-defaulting Party(ies) may:
(a) Suspend or withhold any rights of the defaulting Party under this Agreement;
(b) Purchase the defaulting Party’s Shares at the lesser of Fair Market Value or [___ %] of the price offered by a bona fide third-party purchaser;
(c) Seek Injunctive Relief or specific performance;
(d) Recover reasonable attorneys’ fees and costs.
[// GUIDANCE: Tailor graduated remedies to balance deterrence with enforceability; avoid penalties unenforceable under local Law.]
7. RISK ALLOCATION
7.1 Mutual Indemnification
Each Party (the “Indemnifying Party”) shall indemnify, defend, and hold harmless each other Party and their respective Affiliates (each, an “Indemnified Party”) from and against all losses, liabilities, damages, and expenses arising out of or relating to:
(i) any breach by the Indemnifying Party of its representations, warranties, covenants, or obligations under this Agreement; or
(ii) the fraud, gross negligence, or willful misconduct of the Indemnifying Party.
7.2 Procedures
The Indemnified Party shall give the Indemnifying Party prompt written notice of any claim. Failure to provide prompt notice shall not relieve the Indemnifying Party of its obligations except to the extent prejudiced.
7.3 Liability Caps
The aggregate liability of each Indemnifying Party under Section 7.1 shall not exceed [“Liability Cap”: $__ or __ % of the consideration received], except that no Liability Cap shall apply to claims arising from fraud, gross negligence, or willful misconduct.
7.4 Insurance Offset
Amounts payable under Section 7.1 shall be reduced by any insurance proceeds actually received by the Indemnified Party with respect to the underlying claim.
7.5 Force Majeure
No Party shall be liable for any delay or failure in performance caused by events beyond its reasonable control, including acts of God, war, terrorism, labor disputes, governmental orders, or pandemics, provided that the affected Party (i) promptly notifies the others, and (ii) uses commercially reasonable efforts to mitigate the effects.
8. DISPUTE RESOLUTION
8.1 Governing Law
This Agreement and any dispute arising hereunder shall be governed by and construed in accordance with the Laws of [GOVERNING LAW STATE/COUNTRY], without regard to its conflict-of-laws principles.
8.2 Exclusive Jurisdiction
Subject to Section 8.3, the Parties irrevocably submit to the exclusive jurisdiction of the state or federal courts located in [COUNTY, STATE/COUNTRY] for any suit, action, or proceeding arising out of or relating to this Agreement.
8.3 Arbitration (Preferred)
(a) Any dispute not resolved within [30] days after written notice of dispute shall be finally settled by binding arbitration administered by [AAA / other] in accordance with the Arbitration Rules then in effect.
(b) Seat of Arbitration: [CITY, STATE/COUNTRY].
(c) Number of Arbitrators: [ONE / THREE].
(d) Language: English.
(e) Consolidation: Multiple arbitration proceedings arising out of or relating to this Agreement may be consolidated at the request of any Party.
(f) Judgment on the award may be entered in any court of competent jurisdiction.
8.4 Injunctive Relief Carve-Out
Notwithstanding Section 8.3, any Party may seek temporary, preliminary, or permanent Injunctive Relief from a court of competent jurisdiction to prevent irreparable harm.
8.5 Jury Trial Waiver
EACH PARTY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY COURT PROCEEDING ARISING OUT OF THIS AGREEMENT.
9. GENERAL PROVISIONS
9.1 Amendments and Waivers
No amendment or waiver of any provision of this Agreement shall be effective unless in writing and signed by (i) the Company and (ii) Shareholders holding at least [THRESHOLD %] of the Shares; provided that no amendment that disproportionately and adversely affects any Shareholder relative to other Shareholders shall be effective against such Shareholder without its written consent.
9.2 Assignment
No Party may assign or delegate this Agreement or any rights or obligations hereunder without the prior written consent of the Company and Shareholders holding at least [THRESHOLD %] of the Shares, except to a Permitted Transferee that becomes a party hereto.
9.3 Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.
9.4 Severability
If any provision is held invalid or unenforceable, such provision shall be reformed to the minimum extent necessary, and the remaining provisions shall remain in full force and effect.
9.5 Entire Agreement
This Agreement (including all schedules and exhibits) constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, and negotiations.
9.6 Counterparts; Electronic Signatures
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. Signatures delivered by facsimile, PDF, or DocuSign ® (or similar) shall be effective.
9.7 Notices
All notices shall be in writing and deemed given: (i) when delivered personally; (ii) on the next Business Day after being sent by a recognized overnight courier; or (iii) on the third Business Day after being mailed by certified mail, return receipt requested, to the addresses set forth on Schedule B, or to such other address as a Party may designate by notice.
9.8 No Third-Party Beneficiaries
Except as expressly provided herein, this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and does not confer any rights on any other Person.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties have executed this Shareholder Agreement as of the Effective Date.
| COMPANY | SHAREHOLDER(S) | |
|---|---|---|
| [COMPANY NAME] | [NAME] | |
| By: ________ | _____ | |
| Name: [AUTHORIZED SIGNATORY] | Name: [NAME] | |
| Title: [TITLE] | ||
| Date: _______ | Date: ______ |
[Repeat Shareholder signature blocks as necessary.]
Schedule A – Shareholder Ownership
| Shareholder | Class/Series | # Shares | % Ownership |
|---|---|---|---|
Schedule B – Notice Addresses
| Party | Address | Attention | |
|---|---|---|---|
[// GUIDANCE:
1. Customization—All bracketed items (e.g., thresholds, dollar amounts, governing law) must be tailored to the transaction.
2. Local Law Review—Counsel should confirm that choice-of-law, arbitration, ROFR, Drag/Tag, and liability-cap provisions are enforceable under the selected jurisdiction’s corporate and public policy rules.
3. Securities Compliance—If Shares are subject to U.S. securities Laws, ensure proper exemption (e.g., Regulation D) or registration.
4. State Corporate Statutes—Insert statutory cross-references (e.g., Del. Code Ann. tit. 8, § 202) only when certain of accuracy.]