The Co-Founder Vesting Agreement serves as a critical document in the UAE startup ecosystem, designed to protect the interests of both the company and its founding members. It is typically implemented at the company's formation or during early-stage operations when establishing formal equity arrangements between co-founders. The agreement ensures that co-founders earn their equity stakes over time through continued contribution to the business, rather than receiving full ownership immediately. This document is particularly important in the UAE context, where company formation and equity arrangements must comply with specific local regulations, including the UAE Commercial Companies Law and, where applicable, free zone regulations. The agreement addresses key aspects such as vesting schedules, cliff periods, termination scenarios, and share transfer restrictions, while ensuring alignment with UAE legal requirements and market practices.
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1. Parties: Identification of the co-founders and the company entering into the agreement
2. Background: Context of the agreement, including company formation details and purpose of the vesting arrangement
3. Definitions: Key terms used throughout the agreement, including vesting-specific terminology
4. Vesting Schedule: Detailed explanation of the vesting timeline, including cliff period and vesting increments
5. Share Rights and Restrictions: Rights attached to shares and restrictions on transfer during vesting period
6. Founder Commitments: Full-time commitment requirements and key responsibilities of founders
7. Termination Provisions: Consequences of various termination scenarios (voluntary departure, termination for cause, death, disability)
8. Company's Right to Repurchase: Terms under which the company can repurchase unvested shares
9. Confidentiality: Protection of company confidential information and trade secrets
10. Intellectual Property Rights: Assignment and ownership of IP developed during the founder's involvement
11. Governing Law and Jurisdiction: Specification of UAE law as governing law and relevant courts for dispute resolution
1. Acceleration Provisions: Optional provisions for accelerated vesting in case of change of control or IPO
2. Non-Competition and Non-Solicitation: Restrictive covenants, if enforceable under UAE law and appropriate for the situation
3. Tag-Along Rights: Rights of co-founders to join in sale of shares by other founders
4. Drag-Along Rights: Rights to compel co-founders to join in sale of company
5. Board Representation: Rights to board seats during and after vesting period
6. Dispute Resolution: Alternative dispute resolution mechanisms such as arbitration or mediation
7. Free Zone Specific Provisions: Additional provisions required if company is established in a UAE free zone
1. Schedule 1 - Vesting Schedule: Detailed breakdown of vesting dates and percentages
2. Schedule 2 - Share Details: Specific details of shares subject to vesting, including class and number
3. Schedule 3 - Founder Information: Detailed information about each founder, including shareholding and roles
4. Schedule 4 - Company Information: Details of the company, including registration number and address
5. Appendix A - Share Transfer Form: Template for share transfers upon vesting or repurchase
6. Appendix B - Deed of Adherence: Template for new shareholders to agree to terms of shareholders agreement
7. Appendix C - Resignation Letter: Template resignation letter for various termination scenarios
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