FOUNDERS' AGREEMENT
This Founders' Agreement is made on between and (each a "Founder" and together the "Founders"), in relation to .
Founders, shareholding and roles
| Founder | Equity | Role |
|---|---|---|
| 50% | Chief Executive Officer | |
| 50% | Chief Technology Officer | |
| Total | 100% |
- Purpose and business: The Founders have agreed to carry on the business of through (the "Company"), and this Agreement records the terms on which they will do so.
- Shareholding: The Founders shall hold shares in the Company in the proportions set out in the table above. Any change to those proportions requires the agreement of all Founders in writing.
- Vesting: Notwithstanding the shareholding above, each Founder's shares shall vest over 4 year(s) from the date of this Agreement (or from that Founder's start date, if later), with a cliff of 12 month(s) and monthly vesting thereafter. No shares vest before the cliff. Unvested shares are subject to the buy-back provisions below.
- Good and bad leavers: A Founder who ceases to be involved other than for cause (a "Good Leaver") shall retain their vested shares, and the Company or the continuing Founders may buy back their unvested shares at nominal value. A Founder who leaves in circumstances amounting to cause — including material breach of this Agreement, gross misconduct, or fraud (a "Bad Leaver") — may in addition be required to transfer their VESTED shares at the lower of nominal value and fair value.
- Acceleration on an exit: If the Company is sold and a Founder's involvement is terminated by the acquirer other than for cause within twelve months of completion, that Founder's unvested shares shall vest in full (a "double trigger"). No acceleration occurs on a sale alone.
- Employee option pool: The Founders shall reserve shares representing up to 10% of the Company's fully diluted share capital for issue to employees, consultants and advisers under an employee stock option plan. Unless the Founders agree otherwise in writing, the pool shall dilute the Founders in proportion to their holdings.
- Commitment: Each Founder shall devote their full working time and attention to the business of the Company, and shall not engage in any other business or employment without the prior written consent of the other Founders.
- Roles and responsibilities: Each Founder shall discharge the role recorded against their name in the table above, together with such other responsibilities as the Founders may agree from time to time.
- Intellectual property: Each Founder hereby assigns to the Company, absolutely and free of encumbrance, all intellectual property rights created by that Founder before or during their involvement with the Company insofar as such rights relate to the business of the Company. Each Founder shall execute such further documents as the Company may reasonably require to give effect to this assignment.
- Confidentiality: Each Founder shall keep the Company's confidential information confidential, both during and after their involvement with the Company, and shall use it only for the Company's benefit.
- Reserved matters: The following decisions require the unanimous written consent of all Founders: issuing shares or other securities; raising external funding; selling, merging or winding up the Company; materially changing the nature of the business; incurring indebtedness beyond the ordinary course; and appointing or removing a director.
- Transfer restrictions: No Founder shall transfer, pledge or otherwise deal with any of their shares without first offering them to the other Founders on the same terms (a right of first refusal), and in any event not without the prior written consent of the other Founders.
- Departure: A Founder who ceases to be involved in the business shall resign from the board and from any office held, return all Company property and confidential information, and cooperate in an orderly handover. The leaver provisions above apply to their shares.
- Non-solicitation: For 12 month(s) after ceasing to be involved with the Company, a departing Founder shall not solicit any employee, consultant or customer of the Company. The Founders acknowledge that any restriction on a departing Founder competing with the Company is subject to applicable law, including Section 27 of the Indian Contract Act, 1872.
- Deadlock: If the Founders are unable to agree a reserved matter within fifteen (15) business days of it first being proposed, any Founder may refer it to an independent adviser agreed between the Founders, whose recommendation the Founders shall consider in good faith. Failing resolution within a further fifteen (15) business days, the matter shall be treated as a dispute under the clause below.
- Disputes: The Founders shall first seek in good faith to resolve any dispute between them by discussion. Failing resolution, the dispute shall be referred to arbitration in accordance with the Arbitration and Conciliation Act, 1996, seated at , before a sole arbitrator appointed by agreement between the parties.
- Relationship with the Company's constitutional documents: This Agreement binds the Founders as between themselves. To the extent it is inconsistent with the Company's articles of association, the articles prevail as against the Company and third parties, and the Founders shall take such steps as are necessary to amend the articles to reflect this Agreement.
- Amendment and entire agreement: This Agreement may be amended only in writing signed by all Founders, and constitutes the entire agreement between them in respect of its subject matter. It is governed by the laws of India, and the courts at shall have jurisdiction subject to the arbitration clause above.
Agreed and signed by the Founders as of the date first written above.
_______________________________
Chief Executive Officer
Date: ____________________
_______________________________
Chief Technology Officer
Date: ____________________