Founders agreement template

Founders Agreement

Contract no.: Contract number

Date: Contract date

Place: City of signing

Parties

First Party (First Founder): First party name, CR / ID no. First party CR, national address: First party address, e-mail: First party e-mail, mobile: First party mobile, represented by First party signatory as First party signatory title.

Second Party (Second Founder): Second party name, CR / ID / freelance document no. Second party CR, VAT no.: Second party VAT no., national address: Second party address, e-mail: Second party e-mail, mobile: Second party mobile, represented by Second party signatory as Second party signatory title.

Article 1: Recitals and definitions

1.1 Whereas the parties are founding the venture Project name, and wish to set out equity, roles and decisions, they agree as follows.

1.2 The recitals and schedules form an integral part of this Contract and are read with it. In a conflict, this Contract prevails, then the schedules in numerical order.

1.3 "Business Day" means any day other than Friday, Saturday and an official holiday in the Kingdom of Saudi Arabia. "Laws" means the laws and regulations in force in the Kingdom.

1.4 Each party confirms that it has legal capacity to contract, that its signatory is authorised, and that entering into this Contract breaches no other obligation binding on it.

Article 2: Subject and structure

2.1 The parties shall form: Company type within Formation period. This Agreement is reflected in the articles as far as possible; in a conflict the legal requirements apply, and they shall avoid conflict between them.

2.2 Roles: First Founder: First founder role; Second Founder: Second founder role. Time from each: Commitment.

Article 3: Shares and financial terms

| Founder | Equity | Contribution |

| --- | --- | --- |

| First | First partner share% | First partner contribution |

| Second | Second partner share% | Second partner contribution |

3.1 Vesting: equity vests over Vesting period years, with a cliff of Cliff period. Unvested equity goes back to the company or is bought by the others at nominal value, within the limits of the Companies Law.

Article 4: Rights, profit and obligations

4.1 No profit is distributed in the first years except by joint decision: Dividend policy. No monthly income is a guaranteed return; any salary is for actual work: Founder salaries.

4.2 All intellectual property in the venture passes to the company on formation, including code, logo and domain, and the founders sign whatever is needed.

Article 5: Management and decisions

5.1 Daily decisions belong to the one responsible. All must approve: issuing shares, taking an investor, borrowing, selling the company, changing roles, salaries, and contracting with a relative.

5.2 On deadlock, they turn to a neutral adviser: Neutral adviser, then the exit procedure.

Article 6: Exit and ending

6.1 Founder exit: a good leaver (resignation after the period, illness) keeps what has vested. A bad leaver (fraud, serious breach) sells what has vested at nominal or the lower value the Laws allow. A sale to others is subject to pre-emption and tag-along and drag-along rights: Tag and drag rights.

6.2 A founder shall not compete or solicit staff while working and for Non-compete period after leaving, in Non-compete scope.

Article 7: Liability and warranties

7.1 Each party confirms that the information it gave is true, its licences are valid and no legal bar exists. Each bears the direct loss its breach causes the other, and the injured party shall limit that loss.

7.2 Neither party answers for loss of profit or indirect loss, except for fraud, gross error or a harmful act, and without prejudice to mandatory rules.

7.3 Neither party binds the other without written authority, and one exceeding its authority answers for the result.

Article 8: Representations and warranties

8.1 The First Founder and the Second Founder each confirm the following at signing, and shall tell the other at once if any of it changes:

• the details and documents it has provided are true and complete on everything affecting the other's decision, and it has hidden nothing it knows to be material.

• no claim, seizure, disposal ban, bankruptcy or legal bar prevents performance of this Contract.

• the source of funds and purpose of contracting are lawful, and this Contract is no cover for any prohibited dealing.

• it holds the licences, approvals and legal capacity needed to sign and perform this Contract, and will keep them valid throughout.

8.2 An untrue material statement is a breach of this Contract, subject to its terms and the Civil Transactions Law; deliberately misleading information is deceit that allows annulment and compensation to be sought.

Article 9: Breach and its effects

9.1 A breach notice is in writing, states the obligation breached, what is needed to cure it and a reasonable time of at least 15 days, unless this Contract sets another period. No notice is needed if cure is impossible or the party at fault has said it will not perform.

9.2 Each party may withhold its corresponding obligation that has fallen due if the other has not performed its own, unless that would run against good faith or the failure is minor, under the Civil Transactions Law.

9.3 The injured party shall make reasonable efforts to limit its loss and is not compensated for what it could have avoided. Compensation follows proved loss. Nothing is charged as compensation or increase merely for lateness in paying a sum of money, and the actual costs awarded by the competent authority may be claimed.

9.4 On termination the parties are restored as far as possible, each answering for what it actually benefited from. This Contract does not affect statutory limitation periods or the terms that survive its end by their nature.

Article 10: Documents, correspondence and proof

10.1 Each party keeps a copy of this Contract, its schedules, payment receipts and handover reports for at least 5 years after it ends, or any longer statutory period.

10.2 Correspondence through the e-mail or mobile at the head of this Contract, and approved government platforms, is proof where it can be attributed to its sender, under the Electronic Transactions Law and the Evidence Law. Nothing said orally changes this Contract.

10.3 The party receiving money gives a receipt for each sum, stating what it covers. No payment is a final release unless that is stated in writing.

Article 11: Personal data protection

11.1 The parties shall comply with the Personal Data Protection Law and its regulations. Where the Second Founder processes personal data for the First Founder, it acts as processor and processes it only on the First Founder's written instructions and for the purpose of this Contract.

11.2 The Second Founder shall apply suitable security and technical measures, limit access to those who need it, and use a sub-processor only with the First Founder's prior written approval and on equivalent terms.

11.3 The Second Founder shall notify the First Founder of any leak or unauthorised access without delay and within 24 hours of becoming aware, with the information the First Founder needs to report to the competent authority within the statutory 72 hours.

11.4 Data leaves the Kingdom only in line with the statutory controls. When the Contract ends, data is returned or securely deleted within 30 days unless a law requires it to be kept.

Article 12: Confidentiality

12.1 Each party shall keep the other's non-public information confidential, use it only to perform this Contract, and disclose it only to staff and advisers who need it and are bound by confidentiality.

12.2 This excludes information that is public through no fault of the recipient, or that a competent authority lawfully requires, provided the other party is told where possible. The duty lasts 3 years after the Contract ends, and information is returned or destroyed on request.

Article 13: Force majeure and exceptional circumstances

13.1 A party is not liable for delay or failure caused by an event beyond its control that was unforeseeable and unavoidable, provided it notifies the other within 7 days and makes reasonable efforts to limit the effect. Force majeure does not excuse paying what fell due before it occurred.

13.2 Affected obligations are suspended for the duration. If the event lasts more than 60 days, either party may terminate by written notice, with payment for work actually performed.

13.3 If unforeseeable general exceptional circumstances make performance so onerous as to threaten a heavy loss, the affected party may request renegotiation without delay while continuing to perform, as provided by the Civil Transactions Law.

Article 14: General provisions

14.1 Notices are in writing and sent to the addresses at the head of this Contract; the registered e-mail is valid, and a notice counts as received on the next Business Day. Each party shall report any change of address.

14.2 Neither party may assign this Contract or subcontract without the other's prior written approval, and it remains responsible for its subcontractors.

14.3 Delay in using a right does not waive it, and this Contract changes only by a signed written annex. If a provision is void the rest stays in force, unless that provision was the reason for contracting.

14.4 The parties shall comply with the rules against bribery, corruption and money laundering.

14.5 This Contract may be signed electronically under the Electronic Transactions Law, and electronic signatures and records have their legal force. It is made in two copies, one for each party.

Article 15: Governing law and disputes

15.1 This Contract is governed by the laws of the Kingdom of Saudi Arabia, including the Civil Transactions Law, and in a manner consistent with Islamic Sharia.

15.2 The parties shall try to settle any dispute amicably through their representatives within 30 days of notice, and may then use conciliation through the Taradhi platform.

15.3 If it remains unresolved, it shall be decided by: Forum: the competent courts in the city of ... / arbitration under the rules of the Saudi Center for Commercial Arbitration, seated in .... The parties shall keep performing whatever the dispute does not affect.

15.4 Where made in Arabic and English, the Arabic text prevails in any difference.

Schedules

• Schedule 1: operating and financial plan.

• Schedule 2: authority forms and licences.

Signatures

The parties sign this Contract after reading and accepting all of its terms.

| First Party (First Founder) | Second Party (Second Founder) |

| --- | --- |

| Name: First party signatory | Name: Second party signatory |

| Signature: First party signature | Signature: Second party signature |

| Date: Signing date | Date: Signing date |