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Founders' Agreement

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  1. The company and the founders
  2. Equity split and vesting
  3. Intellectual property and restraint
  4. Roles, decisions and deadlock
  5. Disputes and signing

Step 1 of 5

The company and the founders

For example: Northline Analytics Private Limited

Status of the companyNeeded
Registered office, or proposed registered office, of the companyNeeded

A long answer. Several lines are fine, and a break you make between paragraphs is the break the document keeps.

For example: Developing and selling a subscription analytics platform for retail businesses.

For example: Rohit Nair

First Founder — addressNeeded

For example: AAECN5678L

For example: Chief Executive Officer

For example: Kavita Bansal

Second Founder — addressNeeded

For example: AFRPB2212K

For example: Chief Technology Officer

More details — you may leave these

Leave blank if there are only two Founders.

A long answer. Several lines are fine, and a break you make between paragraphs is the break the document keeps.

For example: Faisal Sheikh, Plot No. 8, Phase 8-B, Industrial Area, S.A.S. Nagar (Mohali) 160055, PAN AAFPS3344M, Chief Product Officer

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FOUNDERS' AGREEMENT

This Founders' Agreement (this "Agreement") is made at __________ on __________.

BETWEEN

  1. __________, of __________, PAN __________ ("First Founder");
  1. __________, of __________, PAN __________ ("Second Founder");

together the "Founders", each a "Founder", in relation to

__________, __________, having its registered office (or proposed registered office) at __________ (the "Company").

RECITALS

A. The business of the Company is: __________

B. The Founders wish to record their equity, roles and the terms on which they will work together to build the Company.

NOW THIS AGREEMENT WITNESSES AS FOLLOWS.

  1. ROLES

1.1 The First Founder's role is __________. The Second Founder's role is __________. Each Founder shall carry out that role diligently and in good faith, and the Founders may change roles between themselves by the consent required under clause 15.

  1. EQUITY

2.1 The Founders' equity in the Company is fixed as follows: First Founder __________%; Second Founder __________%.

2.2 Where the Company is not yet incorporated, this equity split shall be implemented by the allotment of equity shares in these proportions on incorporation; where it is already incorporated, the Founders shall procure that the share register and any necessary transfer or allotment reflect this split within a reasonable time of this Agreement, subject to clause 11.

  1. VESTING

3.1 __________

  1. IF A FOUNDER LEAVES — UNVESTED EQUITY

4.1 If a Founder ceases to be involved with the Company for any reason before that Founder's equity is fully vested, the unvested portion __________.

  1. IF A FOUNDER LEAVES — VESTED EQUITY

5.1 __________

  1. INTELLECTUAL PROPERTY

6.1 __________

6.2 Each Founder warrants that intellectual property assigned or to be assigned under this clause does not, to that Founder's knowledge, infringe the rights of any third party, and that the Founder has not granted, and shall not grant, any conflicting right in it to anyone else.

  1. CONFIDENTIALITY

7.1 Each Founder shall keep confidential all non-public information of the Company or of another Founder that comes to that Founder's knowledge in connection with the business, and shall not use or disclose it other than for the purposes of the business, except to the extent it is or becomes public other than through that Founder's breach, or is required to be disclosed by law or a competent authority.

7.2 This clause 7 survives a Founder ceasing to be involved with the Company, and survives termination or expiry of this Agreement, for __________ years.

  1. NON-SOLICITATION

8.1 A Founder who ceases to be involved with the Company shall not, for __________ year(s) from ceasing, solicit for employment any person who was an employee or engaged founder of the Company at that date, or solicit away any customer or client of the Company with whom that Founder had material dealings while involved with it.

  1. NO BROAD NON-COMPETE

9.1 This Agreement does not restrain a Founder who has left from working in the same field or industry generally. Under section 27 of the Indian Contract Act, 1872, an agreement restraining a person from exercising a lawful profession, trade or business is void in India, subject to narrow statutory exceptions that do not extend to an ordinary company founder on leaving; clauses 7 and 8 are drawn to fit within what the law does allow, and are not to be read as a wider restraint by implication.

  1. TIME COMMITMENT

10.1 __________

  1. IF THE COMPANY IS NOT YET INCORPORATED

11.1 Where the Company has not yet been incorporated as of the date of this Agreement, the Founders shall apply to incorporate it within a reasonable time, on terms consistent with this Agreement, and shall procure that its Memorandum and Articles of Association, its share allotments and its first board resolutions give effect to the equity split, vesting and governance terms of this Agreement. Until incorporation, references in this Agreement to the Company's obligations are undertakings by the Founders to procure that performance once the Company exists, and do not themselves bind a company not yet in existence.

  1. DECISION-MAKING

12.1 Ordinary decisions of the Founders shall be made __________.

  1. RESERVED MATTERS

13.1 The matters listed in the heading to this clause require __________, and, once the Company is incorporated, also whatever consent the Companies Act, 2013 or the Articles of Association separately require for that matter.

  1. DEADLOCK

14.1 If the Founders cannot agree on a matter properly before them, __________

  1. AMENDMENT

15.1 This Agreement may be amended only by the consent required under clause 13, in writing, signed by every Founder then bound by it.

  1. COMPENSATION

16.1 Compensation to Founders is not fixed by this Agreement other than as stated below, if anything is, and shall otherwise be decided separately, consistently with clause 12 and, once the Company is incorporated, by its board.

  1. DISPUTE RESOLUTION AND GOVERNING LAW

17.1 __________

17.2 The seat and venue of any arbitration under this Agreement, and the place of any court proceedings, is __________, and the courts at __________ have exclusive jurisdiction, subject to any arbitration agreed above.

17.3 This Agreement is governed by the laws of India as in force in __________.

  1. STAMP DUTY

18.1 This Agreement is executed in __________. Stamp duty on this Agreement is borne by __________.

  1. GENERAL

19.1 This Agreement is the entire agreement between the Founders about its subject matter and supersedes all prior discussion, whether oral or in writing, but does not, by itself, override a provision the Companies Act, 2013 or the Articles of Association of the Company (once incorporated) fix by law.

19.2 If a Shareholders' Agreement is later executed covering the Company and its Founders, this Agreement continues in effect only to the extent that later agreement does not cover the same ground; the Founders shall state expressly, in the later agreement, which clauses of this one it replaces.

19.3 If any provision is held invalid or unenforceable, the rest of this Agreement continues in effect.

IN WITNESS WHEREOF the Founders have executed this Agreement at __________ on __________.

SIGNED by the FIRST FOUNDER
__________

Signature: ______________________________

SIGNED by the SECOND FOUNDER
__________

Signature: ______________________________

SCHEDULE

Company: __________, __________

The rest stays out of view until every answer is in.

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FOUNDERS' AGREEMENT

This Founders' Agreement (this "Agreement") is made at __________ on __________.

BETWEEN

  1. __________, of __________, PAN __________ ("First Founder");
  1. __________, of __________, PAN __________ ("Second Founder");

together the "Founders", each a "Founder", in relation to

__________, __________, having its registered office (or proposed registered office) at __________ (the "Company").

RECITALS

A. The business of the Company is: __________

B. The Founders wish to record their equity, roles and the terms on which they will work together to build the Company.

NOW THIS AGREEMENT WITNESSES AS FOLLOWS.

  1. ROLES

1.1 The First Founder's role is __________. The Second Founder's role is __________. Each Founder shall carry out that role diligently and in good faith, and the Founders may change roles between themselves by the consent required under clause 15.

  1. EQUITY

2.1 The Founders' equity in the Company is fixed as follows: First Founder __________%; Second Founder __________%.

2.2 Where the Company is not yet incorporated, this equity split shall be implemented by the allotment of equity shares in these proportions on incorporation; where it is already incorporated, the Founders shall procure that the share register and any necessary transfer or allotment reflect this split within a reasonable time of this Agreement, subject to clause 11.

  1. VESTING

3.1 __________

  1. IF A FOUNDER LEAVES — UNVESTED EQUITY

4.1 If a Founder ceases to be involved with the Company for any reason before that Founder's equity is fully vested, the unvested portion __________.

  1. IF A FOUNDER LEAVES — VESTED EQUITY

5.1 __________

  1. INTELLECTUAL PROPERTY

6.1 __________

6.2 Each Founder warrants that intellectual property assigned or to be assigned under this clause does not, to that Founder's knowledge, infringe the rights of any third party, and that the Founder has not granted, and shall not grant, any conflicting right in it to anyone else.

  1. CONFIDENTIALITY

7.1 Each Founder shall keep confidential all non-public information of the Company or of another Founder that comes to that Founder's knowledge in connection with the business, and shall not use or disclose it other than for the purposes of the business, except to the extent it is or becomes public other than through that Founder's breach, or is required to be disclosed by law or a competent authority.

7.2 This clause 7 survives a Founder ceasing to be involved with the Company, and survives termination or expiry of this Agreement, for __________ years.

  1. NON-SOLICITATION

8.1 A Founder who ceases to be involved with the Company shall not, for __________ year(s) from ceasing, solicit for employment any person who was an employee or engaged founder of the Company at that date, or solicit away any customer or client of the Company with whom that Founder had material dealings while involved with it.

  1. NO BROAD NON-COMPETE

9.1 This Agreement does not restrain a Founder who has left from working in the same field or industry generally. Under section 27 of the Indian Contract Act, 1872, an agreement restraining a person from exercising a lawful profession, trade or business is void in India, subject to narrow statutory exceptions that do not extend to an ordinary company founder on leaving; clauses 7 and 8 are drawn to fit within what the law does allow, and are not to be read as a wider restraint by implication.

  1. TIME COMMITMENT

10.1 __________

  1. IF THE COMPANY IS NOT YET INCORPORATED

11.1 Where the Company has not yet been incorporated as of the date of this Agreement, the Founders shall apply to incorporate it within a reasonable time, on terms consistent with this Agreement, and shall procure that its Memorandum and Articles of Association, its share allotments and its first board resolutions give effect to the equity split, vesting and governance terms of this Agreement. Until incorporation, references in this Agreement to the Company's obligations are undertakings by the Founders to procure that performance once the Company exists, and do not themselves bind a company not yet in existence.

  1. DECISION-MAKING

12.1 Ordinary decisions of the Founders shall be made __________.

  1. RESERVED MATTERS

13.1 The matters listed in the heading to this clause require __________, and, once the Company is incorporated, also whatever consent the Companies Act, 2013 or the Articles of Association separately require for that matter.

  1. DEADLOCK

14.1 If the Founders cannot agree on a matter properly before them, __________

  1. AMENDMENT

15.1 This Agreement may be amended only by the consent required under clause 13, in writing, signed by every Founder then bound by it.

  1. COMPENSATION

16.1 Compensation to Founders is not fixed by this Agreement other than as stated below, if anything is, and shall otherwise be decided separately, consistently with clause 12 and, once the Company is incorporated, by its board.

  1. DISPUTE RESOLUTION AND GOVERNING LAW

17.1 __________

17.2 The seat and venue of any arbitration under this Agreement, and the place of any court proceedings, is __________, and the courts at __________ have exclusive jurisdiction, subject to any arbitration agreed above.

17.3 This Agreement is governed by the laws of India as in force in __________.

  1. STAMP DUTY

18.1 This Agreement is executed in __________. Stamp duty on this Agreement is borne by __________.

  1. GENERAL

19.1 This Agreement is the entire agreement between the Founders about its subject matter and supersedes all prior discussion, whether oral or in writing, but does not, by itself, override a provision the Companies Act, 2013 or the Articles of Association of the Company (once incorporated) fix by law.

19.2 If a Shareholders' Agreement is later executed covering the Company and its Founders, this Agreement continues in effect only to the extent that later agreement does not cover the same ground; the Founders shall state expressly, in the later agreement, which clauses of this one it replaces.

19.3 If any provision is held invalid or unenforceable, the rest of this Agreement continues in effect.

IN WITNESS WHEREOF the Founders have executed this Agreement at __________ on __________.

SIGNED by the FIRST FOUNDER
__________

Signature: ______________________________

SIGNED by the SECOND FOUNDER
__________

Signature: ______________________________

SCHEDULE

Company: __________, __________

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