What is a Founders Agreement?
Founders Agreements actualize a able framework that allows your startup to abide able as it advances appear assimilation and axis into a all-encompassing business. It is the best way for teams that are not accessible to anatomy a association to actualize a able accustomed framework about the startup but appetite to actuate basal items such as disinterestedness distribution.
The primary purpose is to authorize who the founders are, what technology and business is actuality developed, what everyone’s role and responsibilities are and how the disinterestedness is actuality broadcast and on what terms. The Founders Agreements helps to assure founders in the accident that one or added of a team’s founders try to “run away” or exclude added founders from profits or allowances of the technology or business that was created.
Founders Agreements are not a backup for corporations which accommodate a added able-bodied framework to accomplish your business from. However, for teams that are not yet able to accomplish the banking advance to basic a corporation, Founders Agreements are a acceptable alternative.
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PRE-INCORPORATION FOUNDERS AGREEMENT
AMONG THE UNDERSIGNED PARTIES, EFFECTIVE [DATE SIGNED].
WHEREAS the undersigned individuals (each a “Founder”, and collectively, the “Founders”) are accommodating as a aggregation with a appearance to developing a business abstraction and accompanying artefact or account essentially as declared at Schedule A absorbed hereto (the “Product or Service” or the “Startup”).
AND WHEREAS it is the ambition of the Founders that already the Artefact or Account is developed, or essentially developed to their satisfaction, the Founders shall anatomy a association (the “Corporation”) and will and shall as of assimilation abruptly alteration all interest, rights, claims, acreage (whether proprietary, tangible, abstract or otherwise), as able-bodied as abandon any and all moral rights the Founders accept now, accept had in the accomplished or may accept in the approaching in the Artefact or Account such that the Association will backpack on the Artefact or Account as of and afterward the date of assimilation and own any and all of the aloft rights and interests.
NOW THEREFORE in appliance of the covenants independent herein, and for added acceptable and admired consideration, the cancellation and capability of which is acknowledged, the Founders hereby accede as follows:
“Agreement” agency this Pre-incorporation Founders Acceding and all absorbed schedules and all instruments added to or in alteration or acceptance of this Agreement, as the aforementioned may be acclimatized or acclimatized and restated from time to time.
“Board of Directors” agency the lath of admiral of the Corporation, as constituted from time to time.
“Change of Control” means:
(i) the accretion of the Association by addition article by agency of any transaction or alternation of accompanying diplomacy (including any reorganization, amalgamation, arrangement, alliance or alliance or allotment transfer, but excluding any such transaction accomplished primarily for the purpose of alteration the abode of the Corporation), unless the Corporation’s shareholders of almanac anon above-mentioned to such transaction or alternation of accompanying diplomacy hold, anon afterwards such transaction or alternation of accompanying transactions, at atomic 50% of the voting adeptness of the actual or accepting article (provided that the auction by the Association of its balance for the purposes of adopting added funds shall not aggregate a Change of Control hereunder);
(ii) the sale, alteration or added disposition of all or essentially all of the acreage and assets of the Association to any actuality (other than a actuality that was, above-mentioned to such sale, alteration or added disposition, a Founder); or
(iii) the dissolution or defalcation of the Association (except in affiliation with the administration of assets of the Association to one or added bodies that were Founders above-mentioned to such event).
“Cliff Expiry Date” agency the day anon afterwards the date of the aboriginal ceremony of the Assimilation Date.
“Common Voting Shares” agency Shares of the aforementioned alternation and chic of the Association that backpack the appropriate to vote.
“Constructive Dismissal” shall be accounted to accept occurred if there exists any actual adverse change afterwards the accord of a Architect in the title, status, position, Role and Responsibility of such Architect from those set out in this Acceding as bent by a cloister or added attorneys of competent jurisdiction.
“Effective Date” means:
(a) in the accident of the afterlife of a Founder, the date of death;
(b) in the accident of Permanent Disability, the date that the assurance of Permanent Disability is fabricated by a cloister of competent administration or as contrarily bent pursuant to the analogue of Permanent Disability below;
© if a Founder’s employment, casework or Lath of Admiral position is concluded by acumen of retirement by a Architect (“Retiring Founder”), the date which is appointed by the Retiring Architect as the able date of retirement which date shall be no afterwards than the aftermost day that such Retiring Architect is active by or provides casework to the Association on a full-time basis;
(d) if a Founder’s employment, casework or Lath of Admiral position is concluded by acumen of abandonment by a Founder, the date which is appointed by the Association as the able date of resignation;
(e) if a Founder’s appliance or casework is concluded by the Association afterwards cause, the date which is appointed by the Association as the able date of such termination; or
(f) if a Founder’s appliance or casework is concluded by the Association for cause, the date which is appointed by the Association as the able date of such termination.
“Incorporation Date” agency the date added to the Corporation’s affidavit of incorporation.
“Role and Responsibility” agency the roles and responsibilities of ceremony Architect as declared at Schedule B absorbed hereto.
“Shareholder” agency any actuality captivation Shares in the basic of the Association on or afterwards the Assimilation Date.
“Shares” agency all accustomed shares in the Corporation, as set alternating in the Corporation’s accessories of assimilation on and afterwards the Assimilation Date, as amended.
“Simple Majority” agency added than fifty percent of the Founders.
“Trigger Event” means, with account to a Founder, the:
(b) Permanent Disability;
(d) abandonment added than a abandonment afterward Constructive Dismissal; or
(e) abortion of appliance of such Founder, with cause, by the Corporation, provided that such Architect is not thereafter active by the Corporation;
“Parties” means, collectively, the Founders and any added actuality that becomes a affair to this Agreement.
“Permanent Disability” and “Permanently Disabled” agency a Architect who is declared mentally amateur or erfingers of managing his or her diplomacy by a cloister of competent administration or, if no appliance is brought for such a declaration, who is certified by accustomed acknowledgment of two appropriately able medical practitioners to be mentally incompetent.
“Monthly Belong Day” agency the aftermost day of ceremony agenda ages afterward the Assimilation Date.
The afterward schedules are absorbed hereto and anatomy allotment of this Agreement:
Schedule A — Description of the Artefact or Service
Schedule B — Description of Founders Roles and Responsibilities
Schedule C — Form of Analogue Signature Page
Schedule D — Initial Basic Contribution of the Founders
ARTICLE 1 — CAPITAL CONTRIBUTIONS AND EXPENSES
1. Basic Contribution. Ceremony Architect has contributed such amounts as set-out at Schedule D absorbed hereto appear the costs of the Startup above-mentioned to incorporation, as non-refundable and non-repayable basic contributions.
2. Reimbursement. Ceremony Architect shall balance any Architect that incurs an amount accompanying to the Startup appropriately to such Founder’s Disinterestedness Administration pursuant to Section 6.
ARTICLE 2 — ROLES AND RESPONSIBILITIES
3. Founder’s Contribution. The Founders shall, application best efforts, accord to the development of the Artefact or Account pursuant to ceremony Founder’s “Role and Responsibility” description as set-out at Schedule B absorbed hereto.
ARTICLE 4 — INCORPORATION AND FORMATION OF CORPORATION
4. Accomplishments Required. Already it is bent by a Simple Majority that the Association will be congenital and formed, ceremony Architect shall admission and accredit to the Association anon aloft its assimilation all of his or her right, title, and absorption in and to the Artefact or Account (including all right, appellation and absorption to bookish acreage and all applications thereto), including waiving all moral rights, and allotment all patents, designs, automated designs, trade-marks, copyrights, barter secrets, account (however formed or unformed) and activity and/or appointment artefact that after-effects from any appointment or appointment performed by the Architect that relates to the Artefact or Account for the abounding appellation of such rights (the “Transfer”). Such Alteration shall be fabricated pursuant to a accepted acquaintance and bookish acreage appointment acceding in favour of the Corporation. Ceremony Architect shall aftereffect such Alteration afterwards affirmation for advantage in any abode or anatomy whatsoever both at the time of the Alteration or at any time in the approaching thereafter. Ceremony Architect shall additionally accomplish any and all acts and assassinate all abstracts and instruments as may be appropriate by the Association at its sole acumen to complete appellation in the Alteration to the Artefact or Service, and any accompanying bookish acreage (the “Required Actions”).
5. Alteration to Corporation. The Founders accede and accede that any discovery, invention, abstruse activity or advance in activity fabricated or apparent by any of the Founders in affiliation with or in any way affecting or apropos to the Artefact or Account or able of actuality acclimated or acclimatized for use in the Artefact or Account shall anon be appear to the Association and shall accord to and be the complete acreage of the Association anon as of and afterward the Assimilation Date.
ARTICLE 5 — EQUITY DISTRIBUTION & VESTING
6. Disinterestedness Distribution. Accountable to this Article 5, on the Assimilation Date, the Shares of the Association shall be issued to the Founders according to the administration blueprint beneath (the “Founder Equity”):
Equity Administration (%)
8. Vesting. The Architect Disinterestedness to be issued pursuant to Section 6 shall belong to ceremony Architect over [ENTER NUMBER OF YEARS FOR VESTING], and ceremony Architect shall access into a accepted banal brake acceding on the Assimilation Date analogue such vesting:
ARTICLE 6 — TRANSFER RESTRICTIONS
9. Restrictions. The Founders may not transfer, acceding or contrarily block any Shares or any buying or alms to buying of the Association or of the Artefact or Account declared herein afterwards the accepted accounting accord of the Founders.
ARTICLE 7 — CONFIDENTIALITY AND NON-COMPETE
10. Confidentiality. The Founders accede to accumulate the Artefact or Account confidential; acknowledgment of the Artefact or Account will activity abandoned on an as-needed base and abandoned aloft accord of all Founders. Notwithstanding such accepted consensual disclosures, the Founders shall booty all all-important accomplish to accumulate the Artefact or Account arcane until the accumulation of the Corporation, at which time the Founders shall added detail and ascertain any acquaintance obligations.
11. Non-Competition. Anon afterward the assimilation of the Corporation, the Founders shall not at any time while actuality a Architect and for a aeon of 12 months afterwards he/she ceases (i) to be a Founder; (ii) to accommodate any casework to the Corporation, whether as partner, employee, contractor, officer, administrator or otherwise; or (iii) to authority Shares, whichever is latest, either abandoned or accordingly or in any accommodation whatsoever anon or indirectly, in the [PROVINCE/STATE] of [COUNTRY].
(i) backpack on, participate, assist, be engaged, anxious or absorbed in any business which competes with the Artefact or Service;
(ii) baffle or seek to baffle or booty such accomplish as may baffle with the constancy of food to the Startup (or the acceding apropos to such supplies) from any suppliers who accept been bartering materials, components, products, appurtenances or casework to the Startup;
(iii) accost or attract abroad or activity appliance to or endeavour to accost or attract abroad or activity appliance to any actuality who has at any time been a Founder, employee, administrator or administrator of the Association afterwards the accurate above-mentioned accounting accord of the Founders; or
(iv) use or accept or acceptation to use or accept the name or any barter or business name of the Association for any purpose.
ARTICLE 8 — EXTENSION OF AGREEMENT
12. Shareholder Agreement. Aloft the accumulation of the Corporation, the Founders will access into a Accepted Shareholder Acceding to ascertain all acceding of this Agreement, unless contrarily agreed to by all the Shareholders.
13. New Founders. Accounting accord of all Founders is appropriate to accept any added affair to this Agreement. If a actuality not called as a Architect hereto joins the Founders in the Startup above-mentioned to accumulation of the Association on the base that such actuality shall authority an disinterestedness absorption in the Association back formed (a “New Founder”), the Founders shall crave such New Architect to assassinate a analogue signature folio and accepting essentially in the anatomy set out at Schedule C absorbed hereto so that such actuality is a affair to and apprenticed by this Acceding and shall appropriately alter this Agreement.
ARTICLE 9 — DISSOLUTION OF STARTUP
14. Acceding Timetable. Within [THREE (3)] agenda months of the date of this Agreement, if the Founders accept not yet congenital the Corporation, the Founders accede to altercate the allowances of connected accord accompanying to the Artefact or Account and will altercate a mutually acceptable calendar for the assimilation of the Corporation.
15. Dissolution. In the accident that all of the Founders do not ambition to abide their alternate collaboration, the Founders shall altercate a mutually acceptable break and analysis of assets of their collaboration, if any. The Founders shall added ascertain any and all acquaintance obligations accompanying to the Artefact or Account and shall aish this Agreement.
16. Dispute Resolution. In the accident that the Founders are not able to accede to a mutually acceptable break pursuant to this Article 9, the Founders accede that they will abide to a bounden arcane adjudication to be captivated in [CITY] and conducted by a mutually agreed to arbitrator. The Founders accede and accede that all accoutrement of this Agreement, including acquaintance provisions, shall be bounden up through the end of this adjudication process. Costs of the adjudication shall be borne appropriately by all Founders.
ARTICLE 10 — GENERAL PROVISIONS
17. Acceptable Faith. All accomplishments taken pursuant to this Acceding shall be fabricated in acceptable acceptance afterwards ambition to disproportionately bankrupt a Architect of any interests, rights or benefits.
18. Representations and Warranties. Ceremony Architect represents and warrants that he or she is not a affair to any added acceding that would bind such Founder’s adeptness to accomplish its obligations as set alternating in this Agreement. Ceremony Architect represents and warrants that no third affair can affirmation any rights to any bookish acreage or added proprietary appropriate bedevilled by that Architect as it relates to the Artefact or Service.
19. Biased Enrichment. Nothing in this Agreement, precludes, blocks or contrarily eliminates a Founder’s continuing to accompany a affirmation adjoin the added Founders or the Association for biased accessory or added agnate account of action.
20. Association to Enforce. The Founders hereby accede that afterwards incorporation, the Association shall accomplish the rights and obligations of the Founders hereunder.
21. Assignment. This Acceding shall not be assigned by any Architect afterwards the accounting accord of all added Founders.
22. Attornment. The Parties attorn to the absolute administration of the courts in the City of [CITY] in account of any disputes arising out of this Acceding or the diplomacy advised herein.
23. Notices. Any notice, accord or approval appropriate or acceptable to be accustomed in affiliation with this Acceding (in this Section referred to as a “Notice”) charge be in autograph and is abundantly accustomed if delivered (whether in person, by bagman account or added claimed adjustment of delivery), or if transmitted by fax to ceremony Architect at the abode as apparent aing to ceremony Founder’s name on Schedule B absorbed hereto.
24. Governing Law and Jurisdiction. This Acceding shall be absolute by and interpreted in accordance with the laws of [STATE/PROVINCE] and the laws of [COUNTRY] applicative therein.
25. Severability. If any accouterment of this Acceding or any allotment thereof shall for any acumen be captivated to be invalid or unenforceable in any respect, again such invalid or unenforceable accouterment or allotment shall be severable and burst from this Acceding and the added accoutrement of this Acceding shall abide in aftereffect and be construed as if such invalid or unenforceable accouterment or allotment had never been independent herein.
26. Amendment. No amendment, supplement or modification of this Acceding is bounden unless accustomed by all Founders hereto in writing, and any amendment, supplement, modification, or approval so accustomed in accordance with this Section 33 shall be bounden aloft ceremony of the Founders, provided that, the Founders accede to such amendments to the Schedules absorbed hereto from time to time as may be all-important to reflect acceptable changes in the Founders.
27. Waiver. Any abandonment of any aperture or absence beneath this Acceding shall abandoned be able if in autograph active by the affair adjoin whom the abandonment is approved to be enforced, and no abandonment shall be adumbrated by any added act or conduct or by any indulgence, adjournment or omission. Any abandonment shall abandoned administer to the specific amount waived and abandoned in the specific instance in which it is waived.
28. Gender. “Him” or “his” is a all-encompassing advertence to the accountable of the accordant book in this Agreement. Such advertence applies appropriately to changeable or gender-neutral persons.
29. Currency. Except as contrarily declared herein, all amounts are declared in [COUNTRY] currency.
30. Absolute Agreement. The Parties accede that this Acceding constitutes the absolute acceding amid the Parties with account to the accountable amount hereof, and may abandoned be assorted by added accounting acceding active by all the Parties. It is accustomed and agreed that there are no articulate representations or warranties of any affectionate amid the parties.
31. Acceding Confidential. The Parties shall accumulate the acceding and altitude of this Acceding arcane except as may be appropriate to accomplish any accouterment of this Acceding or as may contrarily be appropriate by any law, adjustment or added authoritative requirement. Notwithstanding the generality of the foregoing, the Parties may acknowledge this Acceding to his accustomed and/or banking advisors.
32. Counterparts. This Acceding may be accomplished by the Founders in counterparts and may be accomplished and delivered by fax or added cyberbanking means, and all such counterparts and facsimiles calm aggregate one agreement.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Parties hereto accept accomplished this Acceding with aftereffect on the [ day of , 20 .]
This is the signature folio to the Pre-Incorporation Founders Acceding amid the aloft accounting parties.
Description of the Artefact or Service
Product or Service
This can be added or adapted later.
Description of Founders Roles and Responsibilities
Name and Address
Form of Analogue Signature Page
IN WITNESS WHEREOF, the Parties hereto accept accomplished this Acceding with aftereffect on the [ day of , 20 .]
[ENTER NAME OF ADDITIONAL FOUNDER]
This does not charge to be abounding out until or if a new architect is added.
Initial Basic Contribution of the Founders
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