Free founders' agreement template generator

Important — read before signing

IMPORTANT: This document is a discussion draft generated from the information provided. It is not legal advice and may not be suitable for your jurisdiction, entity type, tax situation, or corporate structure. Have a qualified lawyer review this document before signing or relying on it.

This draft records the Founders' intended terms and is written to be reviewed and adapted by a lawyer before it is signed.

1. Parties and purpose

This Founders' Agreement (the "Agreement") is made effective as of the date last signed below between Founder 1, Founder 2 (each a "Founder" and together the "Founders") in connection with the Company, a C corporation organised under the laws of Delaware, USA (the "Company").

The Founders are entering into this Agreement to record their understanding of equity ownership, vesting, roles, intellectual property, decision-making and departure before those questions become disputed. This Agreement governs the Founders' relationship with one another and is intended to be reflected in the Company's constitutional documents and share issuance records.

2. Equity ownership

The founding equity of the Company is allocated between the Founders as follows, subject to the vesting provisions below:

Founder 1 — 50% of the issued founding shares.

Founder 2 — 50% of the issued founding shares.

The Founders acknowledge that these percentages are stated before any employee option pool, convertible instrument or future financing round, each of which will dilute the Founders proportionately unless otherwise agreed in writing.

3. Roles and commitment

Each Founder shall hold the role set out below and shall be responsible for the decisions ordinarily falling within that role, reporting to the Founders collectively:

Founder 1 — Chief Executive Officer, serving on a full-time basis, devoting substantially all of their working time to the Company.

Founder 2 — Chief Technology Officer, serving on a full-time basis, devoting substantially all of their working time to the Company.

A Founder may not materially reduce their agreed commitment, or take up employment or a directorship that competes with or materially detracts from the Company, without the prior written consent of the other Founders.

4. Vesting

Each Founder's shares shall vest over 4 years of continuous service to the Company, measured from that Founder's own vesting commencement date, which is the date that Founder's service to the Company commences.

The vesting commencement date for each Founder is:

Founder 1 — Vesting commencement date: [to be inserted before signing].

Founder 2 — Vesting commencement date: [to be inserted before signing].

No shares vest until the Founder has completed 12 months of continuous service (the "Cliff"). On completion of the Cliff, 12/48 of that Founder's shares vest in a single tranche, and the balance vests in equal monthly instalments thereafter until fully vested.

If a Founder ceases to provide services to the Company for any reason, vesting stops on the date service ceases. Unvested shares are dealt with in the departure clause below.

Double-trigger acceleration applies: unvested shares vest in full only if a change of control occurs and the Founder is terminated without Cause, or resigns for Good Reason, within twelve (12) months after that change of control.

5. Intellectual property

A. Intellectual property assigned to the Company. Each Founder hereby assigns to the Company all right, title and interest in and to any invention, software, design, data, brand, domain name, content or other work product created by that Founder in the course of, or in connection with, the business of the Company, other than any pre-existing intellectual property expressly retained under paragraph B below.

Each Founder shall execute any further document reasonably required to perfect that assignment, including assignments recordable with a patent or trademark registry, and shall not incorporate third-party or open-source material into the Company's products in a way that would compromise the Company's ownership without disclosing it to the other Founders.

B. Pre-existing intellectual property. No relevant pre-existing intellectual property has been declared by any Founder. Nothing in paragraph A operates to assign intellectual property created by a Founder before joining the Company that is unrelated to the Company's business. If a Founder later identifies pre-existing intellectual property relevant to the Company's business, it must be recorded in a written schedule signed by all Founders before the Company uses it.

6. Confidentiality

Each Founder shall keep confidential all non-public information relating to the Company, including its technology, financials, customer and investor lists, product plans and the terms of this Agreement, and shall use that information solely for the benefit of the Company.

These obligations survive the departure of a Founder and continue for so long as the information remains non-public, other than through a breach of this clause.

7. Departure of a Founder

A Founder may resign on thirty (30) days' written notice to the other Founders. A Founder may be removed from their role for Cause, meaning material breach of this Agreement, fraud, gross negligence, or conviction of an offence involving dishonesty, by the vote of all other Founders.

Unvested shares: on departure for any reason, all unvested shares held by the departing Founder are forfeited and cancelled.

Vested shares: the departing Founder retains their vested shares, subject to any transfer restrictions in this Agreement. No repurchase right applies.

A departing Founder shall promptly return Company property, transfer all accounts, credentials, domains and repositories under their control to a remaining Founder, and resign from any office held with the Company.

8. Decision-making and deadlock

Day-to-day decisions within a Founder's role may be taken by that Founder alone. Decisions outside the ordinary course require the approval of a simple majority of the Founders (by shareholding).

The following are Reserved Matters and require the unanimous written consent of all Founders regardless of the threshold above: issuing new shares or options; taking on debt outside the ordinary course; selling the Company or substantially all of its assets; changing the principal business of the Company; and amending the Company's constitutional documents.

If the Founders remain deadlocked after a good-faith discussion of no less than seven (7) days, the Founder holding the office of Chief Executive Officer shall have a casting vote on operational matters, excluding Reserved Matters.

9. Transfer restrictions

No Founder may sell, pledge or otherwise transfer any share in the Company without first offering those shares to the Company and then to the other Founders pro rata, on the same terms and at the same price as the proposed transfer, by written notice allowing at least thirty (30) days to accept.

Any purported transfer in breach of this clause is void and shall not be registered by the Company.

10. General

This Agreement may only be amended by a written instrument signed by all Founders.

This Agreement is governed by the laws of Delaware, USA, and the Founders submit to the exclusive jurisdiction of the courts of Delaware, USA in respect of any dispute not resolved under the deadlock clause above.

If any provision of this Agreement is held unenforceable, the remaining provisions continue in full force. This Agreement may be signed in counterparts, including electronically, each of which is an original.

This Agreement records the Founders' complete understanding on the matters it covers and supersedes any prior discussion or arrangement between them on those matters.

Signatures

This draft should be reviewed by a qualified lawyer before signature.

Signed by each Founder as of the effective date first written above:

Founder 1 Signature: ______________________________ Date: ______________

Founder 2 Signature: ______________________________ Date: ______________