Simple Shareholder Agreement Template

SIMPLE SHAREHOLDER AGREEMENT TEMPLATE FREE

1. DOCUMENT PREAMBLE & RECITALS

THIS SIMPLE SHAREHOLDER AGREEMENT (the "Agreement") is entered into and made effective as of this [Day] day of [Month], [Year] (the "Effective Date"), by and among:

1. [Company Name], a [State/Country of Incorporation] [corporation/limited liability company], with its principal place of business located at [Company Address] (the "Company"); and

2. [Shareholder 1 Name], an individual / [Entity Type] residing at / with a principal place of business at [Address] ("Shareholder 1"); and

3. [Shareholder 2 Name], an individual / [Entity Type] residing at / with a principal place of business at [Address] ("Shareholder 2").

(Shareholder 1 and Shareholder 2 are hereinafter collectively referred to as the "Shareholders" and individually as a "Shareholder".)

RECITALS

WHEREAS, the Company is duly organized, validly existing, and in good standing under the laws of the jurisdiction of [Jurisdiction], with an authorized capitalization consisting of [Number] shares of common stock, par value [Currency Symbol] [Amount] per share (the "Common Stock");

WHEREAS, the Shareholders are the legal and beneficial owners of the number of shares of Common Stock of the Company set forth opposite their respective names on Schedule A attached hereto; and

WHEREAS, the parties hereto desire to enter into this Agreement to govern their respective rights, duties, and obligations as shareholders of the Company, to provide for the orderly management and operation of the Company, and to restrict the transfer of the shares of the Company.

NOW, THEREFORE, in consideration of the mutual covenants, promises, and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

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2. OPERATIONAL DEFINITIONS

For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following terms shall have the meanings ascribed to them below:

2.1 "Affiliate" means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

2.2 "Board" or "Board of Directors" means the Board of Directors of the Company as constituted from time to time.

2.3 "Business Day" means any day other than a Saturday, Sunday, or any other day on which commercial banks in [City, State/Country] are authorized or required by law to close.

2.4 "Common Stock" means the common stock of the Company, par value [Currency Symbol] [Amount] per share, and any securities issued in respect thereof, or in exchange therefor, in connection with any stock split, stock dividend, recapitalization, merger, or reorganization.

2.5 "Defaulting Shareholder" has the meaning ascribed to such term in Section 4.1 hereof.

2.6 "Dispute" means any dispute, controversy, or claim arising out of, relating to, or in connection with this Agreement, including the breach, termination, or validity thereof.

2.7 "Encumbrance" means any mortgage, pledge, lien, security interest, charge, claim, option, equitable interest, proxy, voting trust agreement, restriction on transfer (other than restrictions imposed by applicable federal or state securities laws), or other encumbrance or restriction of any kind whatsoever.

2.8 "Fair Market Value" means the cash price that a willing buyer would pay to a willing seller in an arm's-length transaction, as determined in good faith by the Board of Directors or an independent appraiser mutually agreed upon by the affected parties.

2.9 "Person" means an individual, corporation, partnership, limited liability company, association, trust, unincorporated organization, or other legal entity or governmental authority.

2.10 "Pro Rata Share" means, with respect to any Shareholder, the proportion that the number of shares of Common Stock held by such Shareholder bears to the total number of shares of Common Stock held by all Shareholders party to this Agreement at the time of calculation.

2.11 "Transfer" means any direct or indirect sale, assignment, transfer, conveyance, gift, pledge, hypothecation, encumbrance, or other disposition of any kind whatsoever, whether voluntary, involuntary, by operation of law, or otherwise, of any shares of Common Stock or any legal, beneficial, or economic interest therein.

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3. SUBSTANTIVE TERMS & OBLIGATIONS

3.1 Governance and Board Composition

(a) The management and control of the Company shall be vested in the Board of Directors. (b) Each Shareholder agrees to vote all shares of Common Stock owned or controlled by them at any annual or special meeting of shareholders, or in any written consent in lieu thereof, to elect and maintain the Board of Directors composed as follows: (i) [Name/Designee] as the representative designated by Shareholder 1; (ii) [Name/Designee] as the representative designated by Shareholder 2; and (iii) [Name/Independent] as an independent director mutually agreed upon by Shareholders 1 and 2.

3.2 Restrictions on Transfer of Shares

(a) General Prohibition: No Shareholder shall Transfer any shares of Common Stock, or any right, title, or interest therein, except in strict compliance with the terms and conditions of this Agreement. Any attempted Transfer in violation of this Agreement shall be null and void ab initio, shall not be recognized by the Company, and shall confer no rights upon any purported transferee. (b) Right of First Refusal (ROFR): If any Shareholder (the "Selling Shareholder") desires to Transfer all or any portion of their shares of Common Stock to a third party, the Selling Shareholder shall first deliver written notice (the "Transfer Notice") to the Company and the non-selling Shareholders. The Transfer Notice shall state the identity of the proposed transferee, the number of shares to be transferred (the "Offered Shares"), the purchase price per share, and all other material terms of the proposed Transfer. The Company shall have the primary right, exercisable within [Number] days of receipt of the Transfer Notice, to purchase all or any portion of the Offered Shares at the same price and terms. If the Company declines or fails to exercise such right, the non-selling Shareholders shall have the secondary right, exercisable within [Number] days thereafter, to purchase their Pro Rata Share of the remaining Offered Shares.

3.3 Representations and Warranties

Each Shareholder severally, and not jointly, represents and warrants to the Company and each other Shareholder that: (a) Such Shareholder has full power, legal capacity, and authority to execute, deliver, and perform this Agreement. (b) This Agreement constitutes a legal, valid, and binding obligation of such Shareholder, enforceable against such Shareholder in accordance with its terms. (c) The execution, delivery, and performance of this Agreement do not and will not violate, conflict with, or result in a breach of any material agreement, judgment, order, or law applicable to such Shareholder. (d) Such Shareholder is the sole legal and beneficial owner of the shares of Common Stock set forth opposite their name on Schedule A, free and clear of any and all Encumbrances.

3.4 Information and Inspection Rights

The Company shall deliver to each Shareholder: (a) Within [Number] days after the end of each fiscal year, audited or reviewed annual financial statements of the Company, including a balance sheet, income statement, and statement of cash flows. (b) Within [Number] days after the end of each fiscal [quarter/month], unaudited financial statements for such period. (c) Upon reasonable prior written notice, each Shareholder (or their designated certified public accountant) shall have the right to inspect the books, records, and facilities of the Company during normal business hours.

3.5 Additional Capital Contributions

Shareholders shall not be required to make any additional capital contributions to the Company except as unanimously agreed upon in writing by all Shareholders. If the Board determines that additional capital is required and a majority of Shareholders approve a cash call, each Shareholder shall have the option, but not the obligation, to fund their Pro Rata Share of such required capital.

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4. DEFAULT, TERMINATION, AND REMEDIES

4.1 Events of Default

The occurrence of any one or more of the following events shall constitute an "Event of Default" under this Agreement: (a) The failure of any Shareholder to pay any required financial contribution, or to perform, keep, or fulfill any material covenant, obligation, or undertaking set forth in this Agreement; (b) The material inaccuracy of any representation or warranty made by any Shareholder in this Agreement; (c) The filing of a voluntary petition in bankruptcy by a Shareholder, the adjudication of a Shareholder as bankrupt or insolvent, the execution by a Shareholder of an assignment for the benefit of creditors, or the appointment of a receiver, liquidator, or trustee for all or a substantial part of a Shareholder's assets; or (d) Any attempted Transfer of shares of Common Stock in violation of Section 3.2 hereof.

4.2 Notice of Default and Cure Period

Upon the occurrence of an Event of Default, the non-defaulting party or parties (or the Company) shall provide written notice of default to the defaulting party (the "Defaulting Shareholder"). The Defaulting Shareholder shall have thirty (30) Business Days from the date of receipt of such notice to cure the specified default (the "Cure Period"), provided that this cure period shall apply solely to monetary defaults or curable performance defaults, and shall not apply to breaches of Section 3.2.

4.3 Remedies Upon Default

If an Event of Default is not cured within the applicable Cure Period (or immediately in the case of a non-curable default such as an unauthorized Transfer), the non-defaulting parties and/or the Company may, at their sole discretion, pursue any and all available legal and equitable remedies, including, without limitation: (a) Compulsory Buyout: The non-defaulting Shareholders or the Company may elect to purchase all, but not less than all, of the shares of Common Stock owned by the Defaulting Shareholder at a purchase price equal to [E.g., eighty percent (80%)] of the Fair Market Value of such shares, determined as of the date of default. (b) Injunctive Relief: The parties acknowledge that a breach of this Agreement may cause irreparable harm for which monetary damages alone would be inadequate. Accordingly, the non-defaulting parties shall be entitled to seek injunctive relief, specific performance, and other equitable remedies without the necessity of posting a bond. (c) Suspension of Rights: The suspension of the Defaulting Shareholder's voting rights, information rights, and right to receive dividends or distributions until the default is fully cured or their shares are acquired.

4.4 Termination

This Agreement shall terminate automatically upon the occurrence of any of the following events: (a) The written agreement of all Shareholders to terminate this Agreement; (b) The dissolution, liquidation, or winding up of the Company; or (c) The closing of a firmly underwritten initial public offering (IPO) of the Company's Common Stock on a recognized national securities exchange, or the sale of all or substantially all of the assets or capital stock of the Company to an unaffiliated third party.

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5. BOILERPLATE LEGAL PROVISIONS

5.1 Severability

If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid, legal, and enforceable. If such modification is not possible, the invalid, illegal, or unenforceable provision shall be deemed severed from this Agreement, and the remaining provisions shall remain in full force and effect and shall in no way be affected, impaired, or invalidated.

5.2 Entire Agreement

This Agreement, together with Schedule A and any exhibits attached hereto, constitutes the sole and entire agreement between the parties with respect to the subject matter hereof, and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to such subject matter.

5.3 Force Majeure

No party shall be liable or responsible to the other parties, nor be deemed to have defaulted under or breached this Agreement, for any failure or delay in fulfilling or performing any term of this Agreement when and to the extent such failure or delay is caused by acts of God, flood, fire, earthquake, explosion, war, terrorism, invasion, riot or other civil unrest, embargoes or blockades in effect on or after the date of this Agreement, national or regional emergencies, pandemics, epidemics, or strikes, labor stoppages or slowdowns, or other industrial disturbances (each, a "Force Majeure Event"), provided that the defaulting party gives prompt written notice to the other parties stating the period of time the occurrence is expected to continue.

5.4 Governing Law

This Agreement, and all claims or causes of action (whether in contract, tort, or statute) that may be based upon, arise out of, or relate to this Agreement, shall be governed by, and enforced in accordance with, the internal laws of the State/Country of [Jurisdiction], without regard to its conflict of laws principles.

5.5 Dispute Resolution and Arbitration

Any Dispute arising out of or relating to this Agreement, including its formation, breach, termination, or validity, shall be finally settled by binding arbitration administered by [Arbitration Body, e.g., the American Arbitration Association] in accordance with its commercial arbitration rules. The place of arbitration shall be [City, State]. The arbitration shall be conducted by a single arbitrator appointed in accordance with such rules. The language of the arbitration shall be English. The award rendered by the arbitrator shall be final and binding on the parties, and judgment upon the award may be entered in any court having jurisdiction thereof.

5.6 Amendments and Waivers

No amendment to this Agreement shall be effective unless it is in writing and signed by each of the parties hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving.

5.7 Notices

All notices, requests, consents, claims, demands, waivers, and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective addresses set forth on the signature pages hereof (or to such other address that may be designated by a party from time to time in accordance with this Section).

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6. FORMAL EXECUTION BLOCK

IN WITNESS WHEREOF, the parties hereto have executed this Simple Shareholder Agreement as of the Effective Date written above.

THE COMPANY:

[Company Name]

By: [Signature]
Name: [Signatory Name]
Title: [Title, e.g., Chief Executive Officer]
Date: [Date]

Address for Notices:
[Company Notice Address]
Email: [Company Email]

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SHAREHOLDER 1:

[Shareholder 1 Name]

Signature: [Signature]
Name: [Shareholder 1 Name]
Title: [If entity, Title; if individual, leave blank]
Date: [Date]

Address for Notices:
[Shareholder 1 Address]
Email: [Shareholder 1 Email]

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SHAREHOLDER 2:

[Shareholder 2 Name]

Signature: [Signature]
Name: [Shareholder 2 Name]
Title: [If entity, Title; if individual, leave blank]
Date: [Date]

Address for Notices:
[Shareholder 2 Address]
Email: [Shareholder 2 Email]

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SCHEDULE A

SCHEDULE OF SHAREHOLDERS AND SHARE OWNERSHIP