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Co Founder Vesting Agreement

Co Founder Vesting Agreement Template for Germany

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Key Requirements PROMPT example:

Co Founder Vesting Agreement

"I need a Co-Founder Vesting Agreement for our Berlin-based AI startup with three co-founders, implementing a 4-year vesting schedule starting January 2025, with a one-year cliff and monthly vesting thereafter, including accelerated vesting provisions in case of acquisition."

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Document background
The Co-Founder Vesting Agreement is a crucial document used when establishing or formalizing relationships between co-founders in a German company. It is particularly relevant during company formation or when implementing formal vesting structures in existing companies. The agreement, governed by German law, ensures founder commitment by gradually vesting their shares over time, typically including a cliff period and monthly or quarterly vesting thereafter. This document addresses specific German legal requirements including notarization where necessary, compliance with GmbH-Gesetz or Aktiengesetz depending on company structure, and consideration of German tax implications. The agreement typically includes comprehensive provisions for various scenarios including departure events, share transfers, and company sale situations, while ensuring compliance with German corporate governance requirements.
Suggested Sections

1. Parties: Identification of the co-founders, the company, and any other relevant parties to 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 Period', 'Cliff', 'Good Leaver', 'Bad Leaver', etc.

4. Share Allocation: Details of initial share distribution and ownership structure

5. Vesting Schedule: Specific terms of the vesting arrangement, including duration, cliff period, and vesting intervals

6. Vesting Conditions: Performance criteria, time-based conditions, and other requirements for vesting

7. Leaver Provisions: Consequences and procedures for when a co-founder leaves the company

8. Transfer Restrictions: Limitations on share transfers and required procedures

9. Company's Right of First Refusal: Company's rights to purchase shares before they can be sold to third parties

10. Tag-Along and Drag-Along Rights: Rights of co-founders in case of company sale or third-party investment

11. Confidentiality: Obligations regarding company and agreement confidentiality

12. Notices: Procedures for formal communications between parties

13. Governing Law and Jurisdiction: Specification of German law application and jurisdiction

14. General Provisions: Standard clauses including severability, entire agreement, and amendments

Optional Sections

1. Accelerated Vesting: Provisions for accelerated vesting in case of company sale or other trigger events

2. Reverse Vesting: Provisions for company's right to repurchase already vested shares under specific circumstances

3. Non-Competition: Restrictions on competitive activities, subject to German law limitations

4. Intellectual Property Rights: Assignment and handling of IP rights, particularly relevant for technology companies

5. Board Representation: Rights regarding board membership and voting

6. Dispute Resolution: Alternative dispute resolution procedures before court litigation

7. Tax Provisions: Specific arrangements regarding tax treatment and obligations

8. Special Voting Rights: Any special voting arrangements or veto rights

Suggested Schedules

1. Schedule 1 - Share Ownership Table: Detailed breakdown of share ownership and vesting schedule

2. Schedule 2 - Vesting Calculation Examples: Practical examples of how vesting calculations work in different scenarios

3. Schedule 3 - Form of Deed of Adherence: Template for new shareholders to agree to the terms of the agreement

4. Schedule 4 - Company Valuation Principles: Agreed methods for share valuation in case of transfers or exits

5. Schedule 5 - Leaver Scenarios: Detailed breakdown of different leaver scenarios and their consequences

6. Appendix A - Share Certificate Template: Template for share certificates if physical certificates are used

7. Appendix B - Shareholders' Resolution: Required shareholders' resolutions approving the vesting arrangement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Articles of Association
Bad Leaver
Board
Business Day
Cause
Change of Control
Cliff Period
Company
Competitor
Confidential Information
Co-Founder(s)
Deed of Adherence
Disability
Effective Date
Encumbrance
Fair Market Value
Fully Diluted Share Capital
Good Leaver
Group
Independent Expert
Initial Business Plan
Intellectual Property Rights
IPO
Liquidation Event
Managing Director
Material Breach
Parties
Permanent Incapacity
Permitted Transfer
Purchase Price
Qualified IPO
Related Persons
Relevant Securities
Repurchase Notice
Repurchase Price
Restricted Business
Share(s)
Shareholders
Shareholders' Agreement
Share Capital
Subscription Price
Tag-Along Right
Territory
Transfer
Unvested Shares
Valuation
Vested Shares
Vesting Commencement Date
Vesting Period
Vesting Schedule
Clauses
Interpretation
Share Allocation
Vesting Provisions
Transfer Restrictions
Leaver Provisions
Share Valuation
Tag-Along Rights
Drag-Along Rights
Right of First Refusal
Confidentiality
Non-Competition
Non-Solicitation
Intellectual Property
Board Representation
Information Rights
Assignment
Amendment
Severability
Notices
Governing Law
Dispute Resolution
Entire Agreement
Force Majeure
Termination
Acceleration Events
Tax Provisions
Representations and Warranties
Share Certificate Requirements
Shareholders' Approval
Voting Rights
Dividend Rights
Change of Control
Death and Disability
Costs and Expenses
Relevant Industries

Technology

Software Development

E-commerce

Fintech

Biotech

Healthcare Technology

Clean Technology

Digital Media

Professional Services

Manufacturing

Consumer Goods

Artificial Intelligence

Retail Technology

Educational Technology

Internet of Things

Blockchain

Consulting Services

Relevant Teams

Legal

Executive Leadership

Corporate Development

Finance

Human Resources

Corporate Governance

Compliance

Board of Directors

Investment

Operations

Relevant Roles

Chief Executive Officer

Chief Technology Officer

Chief Financial Officer

Chief Operating Officer

Managing Director

Founder

Co-Founder

General Counsel

Legal Director

Corporate Secretary

Head of Legal

Investment Director

Startup Lawyer

Corporate Lawyer

Business Development Director

Venture Capital Associate

Company Director

Industries
German Civil Code (Bürgerliches Gesetzbuch - BGB): Fundamental law governing contracts, legal transactions, and obligations in Germany. Particularly relevant sections include §§ 311 (contractual obligations), §§ 241-432 (general contract law), and provisions on good faith (§ 242)
German Limited Liability Companies Act (GmbH-Gesetz): Governs the formation and operation of GmbHs, including regulations on share transfers, shareholder rights, and corporate governance
German Stock Corporation Act (Aktiengesetz - AktG): Relevant for stock corporations (AG), containing provisions on share issuance, transfer restrictions, and shareholder rights
German Income Tax Act (Einkommensteuergesetz - EStG): Governs taxation of vesting benefits and share transfers, particularly relevant for determining tax implications of vesting schedules
Securities Trading Act (Wertpapierhandelsgesetz - WpHG): Regulates securities trading and may be relevant for share transfer restrictions and reporting requirements
Commercial Code (Handelsgesetzbuch - HGB): Contains provisions relevant to commercial partnerships and business relationships between merchants
German Labor Court Act (Arbeitsgerichtsgesetz - ArbGG): Relevant for disputes arising from vesting agreements that have employment law implications
General Data Protection Regulation (GDPR/DSGVO): Must be considered for personal data processing aspects of the agreement and documentation requirements
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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