A founders agreement template is a contract or agreement letter that is created by the founders of company. This agreement helps the founders realize and acknowledge their respective rights, responsibilities and tasks. It also assists the founders to own an organization while knowing all of the aspects that they need to be aware of. This agreement is preferably carried out when the organization has not been found yet. This way the founders can be ready to take on their duties and protect their rights as soon as the organization comes into being. This agreement is a crucial part of any foundation because it is the legal document that declares the lawful rights and duties of all individual founders. This document is usually created in the presence of a lawyer or lawyers of each founder. When the agreement is created, it is read by all the founders and their respective lawyers, then after the approval of every founder, the agreement is finalized. It is vital for each founder to take their time to read all the contents of an agreement. If the contents are not properly read by the founders, it can cause disputes and other arguments to arise in the future, which in an extreme case could lead to destruction of the foundation.
Elements of a Founders Agreement:
A founders agreement is composed of the following elements:
INTRODUCTION: The agreement has detailed information about each of the founders. This information is basically just their introduction, which includes their names, contact information, respective addresses and their status in the organization.
TERMS: This part of the agreement gives detailed information about their respective responsibilities, rights, duties and obligations. This agreement is based on the agreement of the founders to these terms. The agreement can only be initiated once all the founders have agreed to the terms.
CONFIDETIALITY: This part states that the founders are required to keep all the information about this agreement strictly confidential. However, it can be disclosed to certain individuals only after the approval of all founders.
TIME PERIOD: The time period till which this agreement will stay effective. Usually, this time period lasts as long as the organization does and it cannot be predicted. However, the agreement can state that the agreement will stay effective until the organization does.
VIOLATION OF TERMS: It is another important element of the agreement. This part describes what will be the outcome if anyone of the founders decides to disobey the terms previously agreed to. In most cases, such situations result in some fines implemented on the violator or exterminating them from the foundation.
DISPUTE MANAGEMENT: When there are two parties or more involved in the same project or agreement, the disputes and misunderstandings can be easily predicted. This agreement also declares how such cases will be handled in the future. This is done to ensure that the dispute does not result in a bigger calamity.
All the founders are required to put their signature on the sheet and agree to the whole agreement for it to be made effective.
Template for Founders Agreement
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