Cofounder Agreement: Definition & Sample
A cofounder agreement is a legal document that outlines the relationship and rights and responsibilities of the cofounders of a company. This document can help to avoid misunderstandings and disputes between cofounders and can protect both parties in the event of a breakup.
A good cofounder agreement should include details on things like vesting, decision-making processes, intellectual property ownership, and funding. Having a well-drafted cofounder agreement can help ensure the success of your business.
Common Sections in Cofounder Agreements
Below is a list of common sections included in Cofounder Agreements. These sections are linked to the below sample agreement for you to explore.
Cofounder Agreement Sample
THIS FOUNDERS AGREEMENT (this “ Agreemen t”), effective as of September 1, 2017, is made and entered into by and between Triple-V (1999) Ltd., a limited liability company, registered under the laws of the State of Israel (“ TV ”) and A-Labs Finance and Advisory Ltd., a limited liability company, registered under the laws of the State of Israel (“ A-Labs ”, and collectively with TV, the “ Founders ”). Each of the Founders shall sometimes be referred to as a “ Party ” and collectively, as the “ Parties ”.
WHEREAS, the Founders have been engaged in development activities with respect to the Project (as defined below), and desire to operate the Project by a company registered under the laws of England and Wales (the “ Company ”); and
WHEREAS, the Company shall be primarily engaged in the development of a unique marketplace for virtual currency exchange (the “ Project ”); and
WHEREAS, the Founders desire that they shall be the owners of all of the issued and outstanding share capital of the Company; and
WHEREAS, the Founders desire to regulate certain rights and obligations in connection with their founding of the Company, their holdings of securities of the Company and the management of the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, the Parties agree as follows:
| 1.1. | Promptly following the execution hereof, the Founders shall act to amend the corporate documents of the Company, in accordance with the terms herein. |
| 1.2. | The authorized share capital of the Company shall be GBP 2,500 divided into 25,000,000 Ordinary Shares, par value GBP 0.0001 each (the “ Ordinary Shares ” or “ Shares ”). |
| 1.3. | Issuance of Shares . The Founders shall be issued Ordinary Shares as follows: |
| ii. | A-Labs - 1,120,000 Shares. |
| 1.4. | Parties acknowledge that, subject to the approval of the Board (as such term is defined below), the Company shall reserve 480,000 Ordinary Shares of the Company, par value GBP 0.0001 each, constituting approximately 8.57% of the issued share capital of the Company for the purpose of grant of options to employees and service providers of the Company. Subject to applicable law, the terms of such grants shall be subject to the sole discretion of the Board. |
| 1.5. | Investment by the Founders . The Founders acknowledge that TV, directly or via a third party on its behalf, invested certain funds for the financing of the initial operations of the Company and paid certain payments to service providers of the Company on behalf of the Company prior to the date hereof. Such funds shall be invested under the terms set forth in the Share Purchase Agreement in the form attached hereto as Exhibit A . |
| 1.6. | The Ordinary Shares issued hereunder shall have the rights, preferences and privileges as set forth in the Memorandum of Association of the Company, attached hereto as Exhibit B (the “ Memorandum ”), as may be amended from time to time. |
| 1.7. | The Company shall provide each Founder a validly executed share certificate, representing the Shares issued in the name of such Founder and shall register the allotment of the Shares in the share register of the Company. |
| 1.8. | The Founders undertake to cause the Company to ratify this Agreement, including all schedules and exhibits attached hereto, by a shareholders’ resolution, and to take all the necessary actions to comply therewith. |
The Founders agree that the name of the Company shall be amended and restated by the name “ INX Systems Ltd .” or, in the event that it shall not be possible to register the Company under this name, similar wording as shall be agreed between the Founders.
| 3.1. | Each of the Parties hereby confirms that any and all intellectual property, developed by or for the Company using resources provided by the Parties, including intellectual property developed by the Parties in connection with the Project, shall be the sole and exclusive property of the Company, its successors and assigns, as shall be designated by the Company. |
| 3.2. | Nothing herein shall derogate from the rights of any Party in intellectual property developed outside the scope of this Agreement by himself, its employees or service providers. |
| 3.3. | Each of the Parties, hereby undertakes to execute any additional document required or advisable for the duly transfer of Intellectual Property to the Company and to fully cooperate with the Company in regards with this matter. In the event that the Company is unable for any reason whatsoever to secure any of the Founder’s signature to any document as set forth above, each of the Founders hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as his agents and attorneys-in-fact to act for and on his behalf and in its stead, to execute and file any such document and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed or done by such Founder. |
| 4. | Board of Directors; Management of the Company; Use of Proceeds and Budget |
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| 4.1. | Board of Directors . |
The management and policy of the Company shall be entrusted with the Board of Directors of the Company (the “ Board ”).
Unless otherwise determined by the shareholders of the Company, the Board shall include no less than 1 (one) Board member and no more than 7 (seven) Board members.
The members of the Board (and the members of the Board of INX Gib) shall be appointed and removed as follows:
| i. | TV shall have the right to appoint, remove or replace six (6) Board members; and |
| ii. | A-Labs shall have the right to appoint, remove or replace one (1) Board member. |
Until otherwise determined by the Board, an officer of TV, or any third party designated for such purpose by TV, shall be appointed as the CEO of the Company. The Board shall determine the terms of engagement of the CEO.
| 4.3. | Repurchase of Shares . |
The Founders agree that Company’s entire business activity shall be administered through the bank account of the Company, including any and all of payments made and/or funds received by the Company (the “ Bank Accoun t”).
The signature rights in the name and on behalf of the Company shall be determined by the Board from time to time. The initial signatory rights of the Company will be as follows:
The sole signature of Mr. Shy Datika (“ SD ”), or any other person appointed for such purpose by SD, accompanied with the Company’s stamp or printed name, shall bind the Company in any and all matters, including without limitation in respect of the Bank Account and (if applicable) other bank accounts of the Company (including, without limitation, with respect to checks, payments, transfers, debt instruments, withdrawals, monetary obligations and other banking activities) without limitation in sum.
The Founders acknowledge that the Company holds 100% of the issued share capital of INX Ltd., a fully owned subsidiary of the Company which was incorporated under the laws of Gibraltar (“ INX Gib ”). The main principles of the use of proceeds of INX Gib and its budget shall be as set forth in Exhibit C attached hereto. In the event that the receipts of the ICO of INX Gib shall not suffice in order to fully cover all of the contemplated payments set forth in Exhibit C in full, then such funds shall be allocated pro-rata in accordance with the preferences set forth in Exhibit C. In addition, the Founders agree that, following approval of the Board, 20% of the annual EBITDA of INX Gib, at the end of each calendar year following the date hereof, shall be paid pro-ratably to the purchasers of the Tokens in the ICO (as such terms are defined in the Engagement Agreement). The use of proceeds and the budget of the Company shall be determined by the Board and may be adjusted by it from time to time.
| 5.1. | The Founders agree not to compete or to assist others to compete with the Company in any engagement or activity related to the Project or otherwise support such activity, whether directly or indirectly, for so long as they hold shares of the Company or are members of the Board (or are entitled to appoint any of the members of the Board) and for one year after the later of the above lapses (the “ Non-Compete Period ”). |
| 5.2. | Each of the Founders undertakes that, during the Non-Compete Period, Founder will not solicit, approach or endeavor to solicit or approach any person or entity who, during the Non-Compete Period (i) was employed by the Company or provided services to the Company; and/or (ii) to whom the Company, or its subsidiaries, provided services, for the purpose of offering services or products which compete with the services or products provided by the Company. |
| 5.3. | Nothing contained herein shall be interpreted as preventing a Party from engagement in other activities related to virtual coins, not related to the Project. |
| 6. | Representations and Warranties of the Founders |
