Shareholders' Agreement (SHA)

Date: [DD-MM-YYYY]

Among:

1. [Founder 1 Name] ("Promoter 1"),
2. [Founder 2 Name] ("Promoter 2"),
3. [Investor / Fund Name], a [type of entity] having its registered office at [Address] ("Investor"); and
4. [Company Name] Private Limited, CIN [XXXXXX], with its registered office at [Address] ("Company").

(The Promoters and the Investor together, the "Shareholders".)

This Agreement records the Shareholders’ rights and obligations in respect of the Company.

1. Capital structure (post-investment)

| Shareholder | Equity shares | % | Class | |---|---|---|---| | Promoter 1 | [X] | [X]% | Equity | | Promoter 2 | [X] | [X]% | Equity | | Investor | [X] | [X]% | CCPS, Series [A] |

Conversion ratio of CCPS: 1:1 at the option of the holder, subject to anti-dilution.

2. Board composition

The Board shall comprise [5] directors:

• 2 nominees of Promoters (one of whom shall be the Chair);
• 1 nominee of the Investor ("Investor Director");
• 2 independent directors mutually agreed.

Quorum: 1 Promoter director + 1 Investor Director must be present (in person or by VC) for a valid Board meeting.

3. Reserved matters

The following actions require prior written consent of the Investor (in addition to Board approval):

1. Amendment of MoA / AoA;
2. Issue of new equity, debentures, or convertibles (other than under an approved ESOP up to [10]% of capital);
3. Borrowing exceeding ₹[2,00,00,000] in aggregate;
4. Sale or transfer of any IP outside the ordinary course;
5. Acquisition or merger;
6. Change in auditor;
7. Payment of dividend;
8. Annual budget approval and material variances thereto;
9. Termination or replacement of the CEO / CFO.

4. Anti-dilution

Investor shall be protected on a broad-based weighted average basis against future down-rounds. The conversion price of CCPS shall be adjusted accordingly. Standard carve-outs apply (ESOP, employee bonus shares, IPO-stage issuances).

5. Liquidation preference

On a Liquidation Event, the Investor shall receive, in priority to other shareholders:

• 1× non-participating preference on its invested amount, plus declared but unpaid dividends.
• Remaining proceeds: distributed pro-rata to equity shareholders.

A "Liquidation Event" includes a sale of all/substantially all assets, a merger where Company shareholders cease to control the surviving entity, and a winding up.

6. Pre-emptive rights

If the Company proposes to issue new securities, the Investor has a right to participate to maintain its fully-diluted percentage. Carve-outs: ESOP, IPO, M&A consideration shares.

7. Right of First Refusal (ROFR) and Tag-Along

• ROFR — If a Promoter proposes to transfer shares, other Shareholders have a 30-day right to purchase on the same terms.
• Tag-Along — Investor may participate proportionately in any sale by Promoters > [10]% of holdings.

8. Drag-along

If Shareholders holding ≥ [75]% of equity (computed fully-diluted) approve a sale of the Company, all Shareholders shall participate on the same terms, subject to the Investor receiving at least its 1× preference.

9. Information rights

The Company shall furnish to the Investor:

• Monthly MIS (P&L, balance sheet, cash flow) within 15 days of month-end;
• Quarterly board pack;
• Audited annual financials within 90 days of FY end;
• Cap table on each issuance.

10. Founder vesting (re-confirmation)

Founder equity shall remain subject to 48-month vesting with 12-month cliff as set out in the Founder Agreement. On a "Bad Leaver" exit (fraud, material breach), unvested shares forfeit at face value.

11. Non-compete & non-solicit

Each Promoter agrees, for the duration of association and 24 months thereafter, not to compete with the Company or solicit its employees / customers. Geographic scope: India + [other relevant territories].

12. Exit

The Parties acknowledge the Investor’s exit objective by [Year]. The Company shall use reasonable efforts to enable an exit through:

• (a) IPO,
• (b) trade sale,
• (c) buyback by promoters at fair-market value, or
• (d) secondary sale to another investor.

If no exit by [Year + 7], the Investor may invoke a "drag" or buyback at the higher of fair-market value or [X]× of investment.

13. Dispute resolution

Disputes shall be referred to arbitration under the Arbitration & Conciliation Act, 1996, before a 3-member tribunal. Seat: [City]. Language: English.

14. Governing law & jurisdiction

Indian law. Courts at [City] for any non-arbitrable dispute.

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Executed at [City] this [Day] of [Month], [Year]

| | | | |---|---|---| | Promoter 1 | Promoter 2 | Investor | | Sign: ________ | Sign: ________ | Sign: ________ | | Witness: ________ | Witness: ________ | Witness: ________ |

For the Company: ___________ [Authorised Signatory]