Founders' agreement

FOUNDERS' AGREEMENT

PRIVATE AND CONFIDENTIAL

FOUNDERS' AGREEMENT

THIS FOUNDERS' AGREEMENT (the "Agreement") is made and entered into at Place of execution on this Day of execution day of Month of execution, Year of execution (the "Execution Date"),

BY AND AMONG:

(each a "Founder" and collectively the "Founders").

WHEREAS:

A. The Founders propose to incorporate, or have incorporated, a private limited company under the Companies Act, 2013, bearing the proposed name Proposed company name (the "Company");

B. The Founders intend that the Company carry on the business of Business description (the "Business");

C. The Founders wish to record their mutual rights, obligations, shareholding arrangements, and the terms governing their association prior to and upon incorporation of the Company.

NOW THIS AGREEMENT WITNESSETH AND IT IS HEREBY AGREED AS FOLLOWS:

1.1 In this Agreement, unless the context otherwise requires:

(a) "Act" means the Companies Act, 2013, together with the rules made thereunder, as amended from time to time;

(b) "Business Day" means a day (other than a Saturday, Sunday or public holiday) on which scheduled commercial banks are open for business in City for Business Day reference;

(c) "Escrow Period" has the meaning ascribed in Clause 5.3;

(d) "Lock-in Period" has the meaning ascribed in Clause 5.2;

(e) "Good Faith Departure" means a voluntary cessation of active engagement with the Company by a Founder on account of death, permanent incapacity, or mutual written consent of all other Founders;

(f) "Bad Faith Departure" means a voluntary resignation by a Founder without cause, termination of a Founder for fraud, gross negligence, wilful misconduct or material breach of this Agreement, or conviction of a Founder for an offence involving moral turpitude;

(g) "Intellectual Property" means all patents, trademarks, copyrights, designs, trade secrets, domain names, source code, and all other intellectual property rights anywhere in the world, whether registered or not;

(h) "Transfer" means any sale, assignment, gift, pledge, hypothecation, encumbrance, or other direct or indirect disposition of Equity Shares or any interest therein.

1.2 Headings are for convenience only. Words importing the singular include the plural and vice versa. References to Clauses are to clauses of this Agreement.

2.1 The Founders shall, within Days to incorporate days of the Execution Date, take all steps necessary to incorporate the Company under the Act, with its registered office at Registered office address.

2.2 The authorised share capital of the Company shall be ₹Authorised share capital (₹) divided into Number of equity shares equity shares of ₹Face value per share (₹) each.

2.3 Each Founder shall bear, in proportion to his shareholding, the costs of incorporation, and the Company shall reimburse the same upon incorporation to the extent permitted by law.

3.1 The Founders shall subscribe to the equity shares of the Company in the following proportions:

3.2 The Founders shall not issue further equity shares without the prior written consent of all Founders, save pursuant to an employee stock option scheme approved unanimously.

3.3 Any further capital contribution, if required, shall be offered to the Founders in proportion to their existing shareholding, and no Founder shall be obliged to contribute beyond his agreed proportion.

4.1 The Board of Directors of the Company shall initially consist of Number of directors directors, being:

(a) Founder 1 name — Managing Director;

(b) Founder 2 name — Director; and

(c) Founder 3 name — Director.

4.2 A Founder shall cease to be a director only in accordance with the Act and this Agreement, and any removal shall require prior written notice of Director removal notice (days) days to the Board.

4.3 The quorum for a meeting of the Board shall be a majority of the directors then in office, and a director representing a Founder shall be deemed present only if such Founder or his alternate participates.

4.4 The following matters shall require the unanimous consent of the Board and the affirmative vote of all Founders' nominee directors:

(a) any change in the authorised share capital;

(b) any issue, allotment or buy-back of securities;

(c) any merger, demerger, amalgamation, or scheme of arrangement;

(d) any sale, transfer or disposal of the whole or substantially the whole of the undertaking of the Company;

(e) any borrowing or security in excess of ₹Borrowing threshold requiring consent (₹);

(f) alteration of the Memorandum or Articles of Association;

(g) declaration of any dividend;

(h) appointment or removal of any statutory auditor;

(i) entering into any transaction with a related party;

(j) any change in the nature of the Business.

5.1 Each Founder undertakes that he shall not, directly or indirectly, Transfer any equity shares of the Company held by him except in accordance with this Clause 5.

5.2 Each Founder shall not Transfer any equity shares for a period of Lock-in period (years) years from the Execution Date or from the date of incorporation of the Company, whichever is later (the "Lock-in Period").

5.3 During the Lock-in Period, the equity shares held by each Founder shall be deposited in escrow with Escrow agent name pursuant to an escrow agreement in the form agreed by the Founders, to be released upon expiry of the Lock-in Period or as otherwise provided herein (the "Escrow Period").

5.4 Notwithstanding Clauses 5.2 and 5.3, a Founder who suffers a Good Faith Departure may, with the written consent of all other Founders, Transfer his shares to other Founders or to a nominee approved by them.

6.1 If any Founder (the "Selling Founder") desires to Transfer equity shares after the Lock-in Period, he shall first offer such shares in writing to the other Founders (the "Remaining Founders") at the price proposed to the third party (the "Transfer Notice").

6.2 The Remaining Founders shall have ROFR acceptance period (days) days from receipt of the Transfer Notice to accept, in proportion to their existing shareholding, and to pay the consideration within ROFR payment period (days) days of acceptance.

6.3 If the Remaining Founders decline or fail to accept within the aforesaid period, the Selling Founder may Transfer the offered shares to the identified third party at a price not lower than that stated in the Transfer Notice, within Third-party transfer window (days) days thereafter, failing which this Clause 6 applies afresh.

7.1 The equity shares of each Founder shall vest over a period of Vesting period (years) years in equal annual instalments, subject to continued association with the Company.

7.2 Upon a Bad Faith Departure, the departing Founder shall, and shall procure that his nominees and legal heirs shall, offer to Transfer all unvested shares to the remaining Founders at the face value thereof, and all vested shares at fair value determined under Clause 7.4.

7.3 Upon a Good Faith Departure, the departing Founder shall be entitled to retain all vested shares and shall Transfer all unvested shares to the remaining Founders at face value.

7.4 "Fair Value" shall be determined by a valuer registered under Section 247 of the Act, jointly appointed by the Company and the departing Founder, failing agreement by the president for the time being of the Professional institute for valuer appointment upon the application of either party.

8.1 Each Founder covenants that, during his association with the Company and for a period of Non-compete period (years) years thereafter, he shall not, directly or indirectly, within Non-compete territory, engage in, be employed by, or be interested in any business competing with the Business.

8.2 Each Founder shall not, for a period of Non-solicitation period (years) years from cessation of association, solicit any employee, customer or supplier of the Company with whom he dealt during such association.

8.3 Each Founder shall keep confidential all information of a confidential nature relating to the Company obtained during his association and shall not disclose the same except as required by law or with the prior written consent of the Board.

8.4 The Founders acknowledge that the covenants in this Clause 8 are reasonable and necessary for the protection of the Company's legitimate business interests.

9.1 All Intellectual Property created, developed or conceived by any Founder in the course of, or in connection with, the Business shall vest absolutely in the Company upon incorporation, and each Founder hereby assigns all such rights to the Company.

9.2 Each Founder shall execute all documents and do all acts necessary to perfect the vesting and registration of such Intellectual Property in favour of the Company.

9.3 Pre-existing Intellectual Property brought by a Founder, if any, is listed in Schedule A and shall be licensed to the Company on the terms set out therein.

10.1 The respective roles and responsibilities of the Founders are as follows:

10.2 Each Founder shall be paid a monthly remuneration of ₹Founder 1 monthly remuneration (₹), ₹Founder 2 monthly remuneration (₹) and ₹Founder 3 monthly remuneration (₹) respectively, subject to applicable tax deduction at source and revision by unanimous Board consent.

10.3 No Founder shall draw any amount from the Company by way of loan, advance or otherwise except in accordance with the Act and as approved unanimously by the Board.

11.1 This Agreement shall be governed by and construed in accordance with the laws of India, and the courts at Exclusive jurisdiction city shall have exclusive jurisdiction, save as provided in Clause 11.2.

11.2 Any dispute arising out of or in connection with this Agreement which is not resolved amicably within Amicable resolution period (days) days of written notice of dispute shall be referred to arbitration by a sole arbitrator mutually appointed by the Founders, under the Arbitration and Conciliation Act, 1996. The seat and venue of arbitration shall be Arbitration seat, and the language of arbitration shall be English. The award shall be final and binding.

11.3 Subject to Clause 11.2, nothing herein shall bar any party from seeking urgent interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, from a court of competent jurisdiction.

12.1 This Agreement, together with its Schedules, constitutes the entire understanding between the Founders on its subject matter and supersedes all prior discussions and understandings.

12.2 No amendment or variation of this Agreement shall be valid unless made in writing and signed by all Founders.

12.3 No waiver of any provision shall be effective unless in writing, and no waiver shall constitute a continuing waiver.

12.4 If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall continue in full force, and the parties shall substitute a valid provision reflecting the original intent to the extent permissible.

12.5 This Agreement may be executed in counterparts, including by electronic signature as valid under the Information Technology Act, 2000, each of which shall be deemed an original.

12.6 No Founder may assign his rights or obligations under this Agreement without the prior written consent of all other Founders.

12.7 This Agreement shall be stamped in accordance with the applicable Stamp Act of the State of State of stamping and shall take effect from the Execution Date.

IN WITNESS WHEREOF the Founders have hereunto set their hands on the day, month and year first above written.

SCHEDULE A — PRE-EXISTING INTELLECTUAL PROPERTY