WEEKLY EXERCISE

June 2022

Exercises on Co-Founders Agreement

Week Duration: 10/06/2022 to 16/06/2022

Weekly Exercise
Co-Founders Agreement

Learning objectives:

To understand the essentials of a Co-founders Agreement.

To learn how to draft key clauses mentioned in the aforesaid Co-founders

Agreements.

Reference Material:

Module Number Module Details

Module : Corporate Contracts - Chapter on Co-Founder’s

Agreements

- Template: Co-Founder’s
Agreement

Exercise 1: Co-founders Agreement

Arya Stark, Jon Snow, and Tyrion Lannister are graduates of IIM - Ahmedabad. Arya
and Jon are from the Batch of 2013, while Tyrion is from the Batch of 2011. Jon reports
to Tyrion at Castle Black, a modern furniture start-up. Jon also mentions to Tyrion how
his friend Arya and he are serious about having their own entrepreneurial venture.
Fascinated by the idea, Tyrion persuades Arya and Jon into deep discussions. After a
few months of intense debate and collaboration, Tyrion, Jon and Arya decide to start
their own venture under the name “Claim Your Throne” (hereinafter “Venture”). The
goal of the Venture is to cater to corporates with customised office furniture, interiors,

© Addictive Learning Technology Pvt. Ltd.

Any unauthorized use, circulation or reproduction P-2
shall attract suitable action under applicable law.
Weekly Exercise
Co-Founders Agreement

and amenity space. That the Venture will only deal with modern office furniture and not
anything else.

They plan on opening the Venture sometime in the month of February 2022. With a few
months left, they have been referred to you by a common friend.

As an independent Legal Consultant, please go through the queries mentioned below

and answer each of them carefully. Arya, Jon, and Tyrion want to collaborate together to
implement the Venture but they are not clear whether they want to enter into a
Partnership, LLP, or Company. Hence during the trial period of the venture, they want to
draft a ‘Co-founders Agreement’.

Exercise 1: Co-founders Agreement: Basic conceptual discussion

1. Why is a Co-founders Agreement the right choice for the situation here? How does
a Co-Founders agreement compare to a Partnership, LLP or Company ?

2. What are some of the important clauses that you will include in this Agreement?

3. What happens if one of the co-founders decides to leave before the expiry of the
term of the Agreement? What are vesting methods used in a co-founder's
agreement to deal with this situation? Which one would you advise the founders to
use here ?

(10 Marks)

Exercise 2: Drafting a Co-founders Agreement

1] The founders specifically want to know if it is possible to have a lock-in clause in

the Agreement, where all 3 of them cannot leave the venture for at least 24 months (02
years) from the date of the execution of the Agreement. Draft the same

(Hint - A lock-in clause is one of the most essential clauses of the Agreement, where
the founders are bound to not terminate/exit the Agreement until the prescribed term.)

2] The founders further decide that in case any one of them leaves the venture,
they shall not claim any right over the Intellectual Property of the venture and must

© Addictive Learning Technology Pvt. Ltd.

Any unauthorized use, circulation or reproduction P-3
shall attract suitable action under applicable law.
Weekly Exercise
Co-Founders Agreement

relinquish all claims towards the same. Kindly draft an IPR clause stating the same.

(Hint -IP includes any codes, layouts, business plans, marketing and financial plans,
and any other content created for the business. Such content can only be used for the
purpose of the business. He or she should also not be allowed to disclose any
information, details, plans or insights pertaining to the business to any third party,
without written consent from the other co-founders.)

3] Draft a non-compete clause stating that founders will not directly or indirectly
engage in any activity which competes in any manner with the business of the Venture.
They should also not engage in such activities after 1 year of leaving the Venture. Also,
draft a non-solicit clause.

(Hint: Refer to the non-compete clause in the reference chapter. Ensure that you don’t
mix up the concepts between non-compete and non-solicit so make the distinction very
clear while drafting the clause.)

4] Draft a clause stating, if the founders agree to engage in the business for a long
term they may do so by forming a structure such as Company, LLP or Partnership by
fulfilling the relevant documentation.

(10 Marks)

NOTE:

1. You can access your Class Schedule here.

2. Contacts:

● For any technical issues, discord link, LMS portal issue write to Support Team -
support@lawsikho.in

● For assignment related queries

Mukulika Baghel

https://calendly.com/mukulika (Weekly assignment evaluator)

© Addictive Learning Technology Pvt. Ltd.

Any unauthorized use, circulation or reproduction P-4
shall attract suitable action under applicable law.
Weekly Exercise
Co-Founders Agreement

Or drop a mail on mukulika@lawsikho.in

● For Course related queries

Aishwarya Sinari

http://calendly.com/renukamahajan (Course Anchor)

Or drop a mail on : aishwarya@lawsikho.in

3. Writing Article Team - writingassignment@lawsikho.in

4. Placement & Mentorship - mentorships@lawsikho.in

5. Freelancing Team - nlfreelancing@lawsikho.in

© Addictive Learning Technology Pvt. Ltd.

Any unauthorized use, circulation or reproduction P-5
shall attract suitable action under applicable law.