Founders' Agreement — India

Source: https://lexvio.ai/library/founders-agreement-india

LICENCE: Free to use, copy, modify and redistribute, including commercially, without attribution.

DISCLAIMER: Provided as-is as a drafting starting point. This is not legal advice and does not create an attorney-client or advocate-client relationship. Indian law is fact- and state-specific — stamp duty, registration and several employment obligations vary by state. Have a qualified advocate or company secretary review any document before you sign it.

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FOUNDERS' AGREEMENT

This Founders' Agreement (this "Agreement") is entered into on
{{EXECUTION_DATE}} between:

(1) {{COMPANY_NAME}}, a company incorporated under the Companies Act 2013
    having its registered office at {{COMPANY_ADDRESS}} (the "Company"); and

(2) The persons listed in Schedule 1 (each a "Founder", collectively the
    "Founders").

RECITALS

A. The Founders have established the Company to carry on the business of
   {{BUSINESS_DESCRIPTION}} (the "Business").

B. The Founders wish to record their respective roles, contributions,
   shareholding and obligations to the Company on the terms set out below.

1. ROLES AND TIME COMMITMENT

1.1 Each Founder shall hold the title and have the responsibilities set
out against its name in Schedule 1.

1.2 Each Founder shall devote substantially all of its professional time,
attention and skill to the Business, and shall not, without the prior
written consent of all other Founders (and following any investment, the
Board), engage in any other business or employment that may compete with
or detract from the Business.

2. FOUNDER SHAREHOLDING

2.1 The initial shareholding of each Founder is as set out in Schedule 1.

2.2 Reverse Vesting. Notwithstanding that each Founder owns the number of
Equity Shares set against its name, those shares shall be subject to
reverse vesting in favour of the Company on the following schedule:

    (a) 25% of the Founder Shares shall vest on the first anniversary of
        the Effective Date (the "Cliff");
    (b) the remaining 75% shall vest in 36 equal monthly instalments
        thereafter.

2.3 If a Founder ceases to be actively engaged in the Business prior to
full vesting:

    (a) Good Leaver (death, permanent disability, removal without Cause):
        all unvested Founder Shares shall be deemed vested on the cessation
        date;
    (b) Bad Leaver (voluntary resignation before the Cliff, or termination
        for Cause): the Company shall have the right (but not the
        obligation) to repurchase the unvested Founder Shares at face value;
    (c) all vested Founder Shares shall remain with the leaving Founder,
        subject to the transfer restrictions in any Shareholders' Agreement.

3. INTELLECTUAL PROPERTY

3.1 Each Founder hereby assigns, transfers and conveys to the Company all
its right, title and interest in any intellectual property, work product,
inventions, software, designs, copyrights, patents, trademarks and trade
secrets (whether existing or hereafter created) related to the Business.

3.2 Each Founder shall execute all documents and take all actions
reasonably required by the Company to perfect such assignment.

3.3 Each Founder warrants that the assigned IP is free from third-party
claims and does not infringe any third-party right.

4. CONFIDENTIALITY

4.1 Each Founder shall keep confidential all non-public information of the
Company during its association with the Company and for a period of
{{CONFIDENTIALITY_YEARS}} years thereafter.

5. NON-SOLICIT

5.1 During the period of association and for {{NON_SOLICIT_MONTHS}} months
following cessation, no Founder shall solicit for employment any then-
employee of the Company, except where the employee responds to a public
job advertisement not specifically targeted at Company employees.

5.2 The Parties acknowledge that under Section 27 of the Indian Contract
Act 1872, a post-termination non-compete is unenforceable, and accordingly
no such restraint is imposed on any Founder.

6. DECISION MAKING

6.1 Day-to-day operating decisions shall be made by the Chief Executive
Officer.

6.2 The matters set out in Schedule 2 shall require the unanimous written
consent of all Founders (the "Founder Reserved Matters"), pending which
nothing shall be undertaken by the Company on those matters.

7. DISPUTE RESOLUTION

7.1 The Founders shall attempt in good faith to resolve any dispute by
mediation, and if mediation fails within 30 days, by arbitration under
the Arbitration and Conciliation Act 1996 by a sole arbitrator seated at
{{SEAT_OF_ARBITRATION}}.

8. TERM AND TERMINATION

8.1 This Agreement shall commence on the Effective Date and shall continue
until terminated by mutual agreement of all Founders or by superseding
provisions in a Shareholders' Agreement entered into with future Investors.

9. MISCELLANEOUS

9.1 This Agreement is governed by Indian law.

9.2 Amendments must be in writing and signed by all Founders.

9.3 The Schedules form an integral part of this Agreement.

SCHEDULES

Schedule 1 — Founders, Titles and Initial Shareholding
Schedule 2 — Founder Reserved Matters

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.

[Signature blocks for each Founder + the Company]