Cofounder Terms- November 06, 2015

This term sheet is for use in connection with the Founders' Agreement Template. The founders can agree in principle on what the basic business terms of their relationship will be, should the project prove successful. But postpone the details of a definitive agreement until it becomes necessary. If that never happens, then this term sheet will become moot. All of these terms are subject to negotiation with other parties if the company admits new f... show more

This is a non-binding, draft term sheet, for discussion purposes only. It is intended to be used as an attachment to a pre-incorporation Founders' Agreement.

The Company

Muslim student Abroad

Equity Grants

Restricted common stock grants in following proportion:

%50 to Haris Kamran

%50 to Omar Taha

%50 to

The above percentages will be diluted equally by the admission of any other founder pre-incorporation. If the founders are eligible to participate in any company equity compensation program, they will do so according to the same proportion, and under substantially the same terms as apply to the initial grants (subject to board approval and other necessary tax and legal considerations related to the specific form of equity comp).

Scheduled Vesting

[4] years withyear cliff

vesting after cliff

% of each founder’s initial grant will be vested on the grant date

Accelerated Vesting

100% of each founder's initial grant will vest automatically upon [change of control] [if the founder is terminated or demoted afterward].

100% of each founder's initial grant will vest automatically if the company files for an initial public offering.

Board and Management

Max of 5 directors

Initial directors will be 2.

Chair elected by majority of directors, and initially will be.

Advisory board serving in unofficial capacity may be appointed, but has no formal role.

Officer positions include President, Secretary, and Treasurer.

Preemptive Rights; Drag-Along

[Participation in sales by cofounders]

[Right of first refusal on sale by cofounders]

[Absolute restriction on transfer unless unanimously approved by cofounders]

[If a majority in interest of stockholders approves a sale of the company, then the majority may compel the minority stockholders to participate on the same terms, without any right to seek an appraisal of their shares.]

Limits on Rights of Other Stockholders

Stockholder management, preemptive, and consent rights do not inure to the benefit of transferees who are:

  • non-permitted transferees as defined in stockholder agrt
  • [heirs]
  • [former spouses]

Stockholder Rights / Approvals

The following decisions require [majority] [ ? ] [unanimous] stockholder approval:

  • equity issuance / capital raise in any amount
  • incurring debt over a minimum amount
  • sale of equity by cofounder
  • sale of the company / substantially all assets
  • outbound license of core IP
  • change-of-control
  • voluntary bankruptcy
  • change to number of directors
  • conflicted transactions

[Unanimous] consent required to amend stockholders’ agreement[; except that an amendment may be approved by the [unanimous] consent of such class or classes of stockholders as are affected by such amendment, without obtaining the approval of stockholders who are not affected by it].

Employment Terms

The founders' employment will be at-will, subject to any negotiated contractual and employment policy limitations

Copyright, trademark, and invention assignment self-executing for IP within scope of business, with carefully-defined exclusions.

Initial salaries and benefits will be set by the Board of Directors.

Confidentiality agreement to preserve trade secret protections.

[Non-compete, non-solicitation of clients and employees]

  • geographical scope of non-compete limited to [Canada] [North America] [the World];

[Non-compete expires [1] year post-termination]

Termination may be for “cause” or without cause. Resignation may be without “good reason” or with good reason.

Unvested stock canceled without payment upon termination or resignation for any reason.

[Company right to repurchase vested stock at “fair market value” if cofounder terminated or resigns [prior to [2nd] anniversary] of cofounding.]

[Company right to repurchase vested stock at cost if cofounder terminated for cause or resigns without good reason.]

Governing Law

Canadian

Dispute Resolution

[New York State and Federal Courts located in Manhattan.]

[Arbitration by a single arbitrator in NYC under AAA rules.]

[Mandatory mediation, or early neutral evaluation under AAA rules, prior to bringing suit / arbitration.]