FOUNDERS’ UNDERTAKINGS Clause Samples
The Founders’ Undertakings clause sets out specific obligations and commitments that the founders of a company agree to uphold, often as a condition of investment or partnership. Typically, this clause requires founders to act in the best interests of the company, refrain from competing businesses, maintain confidentiality, and sometimes remain actively involved in the business for a defined period. By clearly outlining these responsibilities, the clause helps ensure alignment between the founders and other stakeholders, reducing the risk of conflicts and protecting the company’s long-term interests.
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FOUNDERS’ UNDERTAKINGS. Each of the Founders, jointly and severally, warrants, undertakes and covenants to each Investor as set forth below. Each of the Founders acknowledges that each Investor entered or is entering into the Series A Basic Documents, the Series B Basic Documents, the Series C Basic Documents, the Series D Basic Documents, and the ZJ Basic Documents in reliance on each of the warrants, undertakings and covenants given herein and that each of the warrants, undertakings and covenants has been given with the intention of inducing such Investor to enter into the Series A Basic Documents, the Series B Basic Documents, the Series C Basic Documents, the Series D Basic Documents, and the ZJ Basic Documents.
FOUNDERS’ UNDERTAKINGS. Each of […] and […] shall, as long as he/she is an employee or service provider of the Company, devote [entire/at least [...]%] of his/her business time and attention to the Company and not undertake additional business activities without a Shareholders’ consent. [As an exception, the following Shareholders are entitled to undertake the following business activities, provided that this does not interfere with the relevant Shareholder’s ability to perform its duties under this Agreement: […] is entitled to undertake the following business activities: […]; […] is entitled to undertake the following business activities: […]. Each Shareholder’s role and main responsibilities are described in Schedule 4.
FOUNDERS’ UNDERTAKINGS. Each of the Founders hereby severally undertakes with the Investors and the Company that for as long as they remain an employee, consultant or director of the Company, (save with the prior written consent of an Investor Majority):
8.1 they shall not be or become a director or executive officer of any other company (except a Group Company);
8.2 they shall comply with the terms and conditions of any contract of service or consultancy agreement which they have with the Company or any Group Company from time to time;
8.3 they shall not be concerned or interested in any business (other than holding shares in the Company or as holder of not more than 5% of the share capital of a quoted company); and
8.4 they shall use their best endeavours to ensure that the Company is at Completion and continues to be a “qualifying company” carrying on a “qualifying trade” for the purposes of the Enterprise Investment Scheme as contained in the Income and Corporation Taxes Act 1988 Part VII, Chapter III (as amended) and shall take all reasonable steps within their power to ensure that following Completion all necessary applications are made to the Inland Revenue for the grant of Enterprise Investment Scheme relief to the Investors.
FOUNDERS’ UNDERTAKINGS. The Company irrevocably and unconditionally undertakes to the Investor that:
(a) it shall promptly notify the Investor in writing with all reasonable details, provide the Investor with all relevant information it is aware of and documents in its possession, and deliver to the Investor all written notices or communications it receives, in respect of any fact, matter or circumstance which is reasonably likely to give rise or has given rise to any breach of any obligation by the Founder under the Founder-Company Undertaking, and any claims, demands, disputes and/or proceedings relating thereto provided that the Company shall not be obligated to provide any information to the Investor, which, if provided, could result in the loss of the attorney-client privilege between the Company or any of its Subsidiaries and their respective counsel, in the good faith determination of the Board based on the opinion of counsel;
(b) it shall, at all times, diligently enforce its rights and the Founder’s obligations under the Founder-Company Undertaking;
(c) it shall not terminate, amend, modify or vary in any way the terms of the Founder-Company Undertaking or grant any consent to, waive or defer or give any consent under or pursuant to, (or purport to grant any consent to, waive or defer or give any consent under or pursuant to) any provisions or rights or obligations thereunder; and
(d) it shall not transfer, novate, assign or otherwise alienate any of its rights under the Founder-Company Undertaking (or do anything which has a similar effect).
FOUNDERS’ UNDERTAKINGS