New York Founders Agreement

• Category: Corporations - Officers and Employees
• State: Multi-State
• Control #: US-ENTREP-0027-3
• Format: Word; Rich Text

Description

A founders' agreement is a document created by the founders of a company to establish how the company will function. It is the product of pre-incorporation discussions that should take place among the company's founders before they establish the company. It includes provisions on ownership structure, decision making, dispute resolution, choice of law, transfer of ownership, ownership percentages, voting rights, intellectual property rights, and more.

The New York Founders Agreement is a legally binding document commonly used in the start-up ecosystem to formalize the rights, obligations, and responsibilities of founders in a company based in New York. It sets the foundation for the founders' relationship, outlines the company's ownership structure, and addresses critical issues that may arise during the early stages of a business venture. Key elements of a New York Founders Agreement typically include equity distribution, founder roles and responsibilities, intellectual property ownership, vesting schedules, dispute resolution mechanisms, and confidentiality provisions. It serves as a roadmap for the founders, promoting transparency, clarity, and alignment among team members. There are several types of New York Founders Agreements available, tailored to meet different situations and needs. These variations address specific issues and concerns that may be relevant to a particular start-up. Some notable types include: 1. Standard New York Founders Agreement: This is the most common type, serving as a comprehensive document that covers all major aspects of founder relationships, equity distribution, intellectual property rights, and dispute resolution. 2. Vesting Agreement: Often used in conjunction with a Standard New York Founders Agreement, a Vesting Agreement establishes a vesting schedule that governs how founder equity is earned over time. It ensures that founders who leave the company prematurely forfeit their invested shares, incentivizing commitment and long-term involvement. 3. Non-Compete Agreement: This type of New York Founders Agreement prohibits founders from engaging in activities or businesses that directly compete with the start-up during their tenure and for a specified period after leaving the company. It safeguards the start-up's interests and minimizes conflicts of interest. 4. Intellectual Property (IP) Assignment Agreement: An IP Assignment Agreement is included within the New York Founders Agreement to ensure that any intellectual property created by the founders belongs to the company. It clarifies ownership rights, prevents disputes, and enables smooth operations, particularly if technology or innovation is a significant part of the start-up's business. 5. Buy-sell Agreement: Relevant to situations where a founder wishes to leave the start-up or there is a desire to sell the company, a Buy-sell Agreement outlines the conditions, terms, and mechanisms for buying or selling shares among the founders or with external parties. It establishes a fair process and prevents potential conflicts during such transactions. In summary, the New York Founders Agreement is a crucial legal document that outlines the terms and conditions of the founder relationship, equity ownership, intellectual property rights, and dispute resolution mechanisms. By utilizing specific types of New York Founders Agreements, start-ups can tailor the agreement to their unique needs, promoting a solid foundation for the company's growth and success.