The Co-Founder Exit Agreement is a crucial document used when one of the founding members decides to leave a business venture in South Africa. It becomes necessary when co-founders part ways due to various circumstances such as strategic disagreements, personal reasons, or pursuit of other opportunities. The agreement ensures a smooth transition by addressing key aspects including share valuations, transfer mechanisms, and post-exit obligations, all while complying with South African legislative requirements including the Companies Act 71 of 2008 and relevant tax laws. This document is particularly important in protecting both the departing co-founder's interests and the company's future operations, incorporating necessary provisions for confidentiality, non-competition, and intellectual property rights. The agreement serves as a comprehensive record of the separation terms and helps prevent future disputes by clearly outlining all parties' rights and obligations.
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1. Parties: Identification of the departing co-founder, remaining co-founders, and the company
2. Background: History of the company formation, current shareholding structure, and reasons for exit
3. Definitions: Definitions of key terms used throughout the agreement
4. Share Transfer Terms: Details of share transfer including pricing, payment terms, and mechanics of transfer
5. Resignation from Positions: Terms of resignation from directorship, employment, and other official positions
6. Payment and Settlement: Financial settlement details including any earn-outs, deferred payments, or adjustments
7. Confidentiality Obligations: Ongoing confidentiality requirements and handling of sensitive information
8. Non-Compete and Non-Solicitation: Restrictions on future competitive activities and solicitation of employees/clients
9. Mutual Release: Release of claims between parties post-exit
10. Representations and Warranties: Standard representations regarding authority, share ownership, and disclosure
11. Transition Arrangements: Handover of responsibilities and ongoing transition support
12. General Provisions: Standard boilerplate clauses including governing law, notices, and entire agreement
1. Intellectual Property Assignment: Specific provisions for transfer or retention of IP rights, used when significant IP exists
2. Ongoing Consultancy Arrangement: Terms of any continuing advisory or consultancy role, if applicable
3. Employee Share Option Scheme: Treatment of existing share options or employee share schemes, if relevant
4. Tax Indemnities: Specific tax-related indemnities, used when complex tax implications exist
5. Dispute Resolution: Detailed dispute resolution procedures, recommended for high-value exits
6. Family Members Involvement: Provisions dealing with family members' interests, if family members are involved in the business
7. Outstanding Loans: Treatment of any loans between co-founder and company, if applicable
8. Future Cooperation: Terms for future cooperation or reference-giving, if agreed
1. Share Transfer Details: Detailed breakdown of shares being transferred, including share certificates and values
2. Payment Schedule: Detailed payment terms including installments, earn-outs, and conditions
3. Company Assets Register: List of company assets and their allocation/treatment post-exit
4. Intellectual Property Register: Complete list of IP rights and their disposition
5. Outstanding Obligations: List of any ongoing obligations, loans, or liabilities
6. Handover Checklist: Detailed list of items and responsibilities to be handed over
7. Non-Compete Terms: Detailed terms of non-compete including geographical and temporal scope
8. Required Resignations: Forms and letters of resignation from various positions
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