Startup Founders' Agreement

This Startup Founders' Agreement (the "Agreement") is made effective as of [Insert Date], by and among the undersigned individuals (collectively, the "Founders") of [Your Company Name] (“Company”), a Limited Liability Company, with its principal place of business located at [Your Company Address].

Preamble

WHEREAS, the Founders have agreed to collaborate in the establishment and operation of Company, based on a shared vision and mutual goals for the development, launch, and growth of [brief description of business concept, product, or service];

WHEREAS, the Founders recognize the importance of clearly defining their respective roles, responsibilities, contributions, and rights within the Company to ensure its efficient management and success;

WHEREAS, the Founders wish to set forth the terms under which they will work together in the pursuit of the Company's goals, including but not limited to the ownership structure, governance, management, and procedures for resolving disputes that may arise;

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Founders agree to the terms and conditions set forth in this Agreement.

A. Purpose of the Agreement

The purpose of this Agreement is to establish the framework within which the Founders shall conduct the operations of Company. This includes defining the roles and responsibilities of each Founder, the equity ownership and capital contributions of the Founders, the governance structure of the Company, and the procedures for decision-making, dispute resolution, and the potential exit or entry of Founders. This Agreement aims to ensure that all Founders share a common understanding and commitment to the Company's goals, operational strategies, and future direction, thereby facilitating a cooperative and productive working relationship among the Founders.

B. Names and Roles of the Founding Members

The following individuals are recognized as the Founders of Company and agree to undertake the roles and responsibilities as outlined below:

1. [Founder 1 Name] - Role: CEO

2. [Founder 2 Name] - Role: CTO

3. [Founder 3 Name] - Role: COO
   

Each Founder agrees to dedicate their time, expertise, and resources to their designated roles to the best of their abilities, with the common goal of ensuring the success and growth of Company. The Founders acknowledge that the success of the Company is dependent upon their collective efforts and commitment to their roles and responsibilities as outlined in this Agreement.

C. Business Concept

Company is founded with the purpose of developing innovative software solutions for small businesses. Our goal is to address the gap in affordable, user-friendly software that can help small businesses streamline their operations and improve productivity. The Company intends to design, develop, and market a suite of software products tailored to the unique needs of small business owners, focusing on ease of use, scalability, and customer support.

The vision of Company is to become a leader in the small business software industry, by delivering products that not only meet the current needs of our target market but also anticipate and evolve with their future challenges. We are committed to innovation, excellence, and the creation of value for our customers, employees, and stakeholders.

D. Roles and Responsibilities

The Founders shall have the following roles and responsibilities within Company:

1. [Founder 1 Name] - As Chief Executive Officer (CEO), [Founder 1] is responsible for setting the strategic direction of the Company, leading fundraising efforts, managing investor relations, and overseeing the overall growth and profitability of the business. [Founder 1] will also be responsible for building and maintaining key partnerships and ensuring that the Company's vision and values are communicated and upheld.
   

2. [Founder 2 Name] - As Chief Technology Officer (CTO), [Founder 2] will lead the product development team, oversee the creation and implementation of the Company's technology strategy, and ensure the technical scalability and security of our products. [Founder 2] is also tasked with staying ahead of technological trends and competitive developments in our industry.
   

3. [Founder 3 Name] - As Chief Operating Officer (COO), [Founder 3] will manage the day-to-day operations of the Company, focusing on optimizing our operational processes, supply chain management, and internal efficiency. [Founder 3] will work closely with other team members to ensure operational goals are met and that the Company operates smoothly and effectively.
   

Each Founder agrees to perform their duties to the best of their abilities, to act in the best interests of the Company at all times, and to support the other Founders in their respective roles. The Founders will meet regularly to discuss the progress of the Company, address any challenges, and make decisions on strategic directions and priorities. Additional responsibilities may be assigned to the Founders as needed, with the agreement of all parties involved.

E. Ownership and Equity Structure

The equity of Company shall be divided among the Founders as follows, reflecting each Founder's contribution to the Company and commitment to its success:

1. [Founder 1 Name]: 40% of the Company's equity.

2. [Founder 2 Name]: 30% of the Company's equity.

3. [Founder 3 Name]: 30% of the Company's equity.

These percentages represent the Founders' ownership in the Company and are subject to adjustments based on future capital contributions, the issuance of new equity to investors or employees, and other events that may dilute ownership percentages. The Agreement includes provisions for the vesting of Founder shares, over a period of four years, with a one-year cliff, to ensure commitment to the Company.

F. Capital Contributions

The Founders agree to the following initial capital contributions to cover the startup costs and initial operating expenses of Company:

1. [Founder 1 Name]: $10,000.

2. [Founder 2 Name]: $7,500.

3. [Founder 3 Name]: $7,500.

These contributions shall be deposited into the Company's bank account within 30 days of executing this Agreement. Future capital requirements will be addressed as needed, with decisions on additional contributions or external financing to be made collectively by the Founders based on the Company's operational needs and strategic direction.

G. Intellectual Property

All intellectual property created by the Founders related to Company's business before and during the term of this Agreement shall be deemed the property of the Company. This includes, but is not limited to, inventions, designs, software, trademarks, trade secrets, and patents ("Intellectual Property"). The Founders agree to execute any documents necessary to assign such Intellectual Property to the Company.

The Founders acknowledge that any Intellectual Property created outside the scope of the Company's business, without the use of the Company's resources, and not related to the Company's current or reasonably anticipated business, shall remain the sole property of the creator, unless otherwise agreed in writing.

To protect the Company's Intellectual Property, the Founders agree to take reasonable steps to maintain its confidentiality and to not disclose or use such Intellectual Property for any purpose other than the Company's benefit without prior written consent from the other Founders.

H. Decision Making and Governance

The governance of Company shall be structured to ensure efficient decision-making and alignment with the Company’s long-term objectives. The Founders agree to the following decision-making framework:

1. Major Decisions: Decisions that significantly affect the company's strategic direction, financial health, or ownership structure require unanimous consent from all Founders. This includes but is not limited to decisions regarding mergers and acquisitions, sale of the company, issuance of new equity, and taking on substantial debt.
   

2. Operational Decisions: Day-to-day operational decisions can be made by the Founder responsible for that area of the business, within pre-agreed limits. Significant operational decisions that exceed these limits require approval from at least a majority of the Founders.
   

3. Dispute Resolution: In the event of a disagreement among Founders on major decisions, the Founders agree to seek mediation as an initial step. If mediation fails to resolve the disagreement, arbitration or other agreed-upon methods will be employed.
   

The Founders shall also establish a board of advisors to provide strategic guidance and insights. The board will meet quarterly to review the Company’s progress and offer advice on key strategic decisions.

I. Employment and Compensation

The Founders may also serve as employees of Company, taking on roles critical to the operation and growth of the Company. Compensation for these roles will be determined based on the Company’s financial health, market standards, and the responsibilities undertaken by each Founder. Initially, the Founders agree to prioritize the allocation of resources towards the Company's growth and may defer compensation until the Company secures its first round of external funding or achieves profitability.

Equity compensation in the form of stock options may be offered to employees, including Founders, as part of their compensation package, under terms to be defined in a separate Stock Option Plan.

J. Exit Strategy

The Founders acknowledge that circumstances may change, and a Founder may wish to exit the Company. The Agreement outlines the following terms for a Founder’s exit:

1. Voluntary Exit: A Founder wishing to leave the Company must give six months’ written notice to the other Founders, allowing sufficient time for transition planning.
   

2. Buyout Options: Remaining Founders have the first right to buy out the exiting Founder’s equity at a valuation agreed upon at the time of exit, based on standard valuation methods or a pre-agreed formula.
   

3. Involuntary Exit: Conditions under which a Founder may be required to exit, including breach of this Agreement or failure to perform agreed-upon responsibilities, will be addressed with specific remedies and processes to ensure fairness and transparency.

K. Non-Compete and Confidentiality

Non-Compete: To protect the company's proprietary information and business interests, the Founders agree not to engage in or start a business that is in direct competition with Company during their tenure and for a period of two years following their departure from the company. This non-compete clause is limited to the same geographic regions where Company operates.

Confidentiality: The Founders commit to maintaining the confidentiality of proprietary and sensitive information of Company, including but not limited to business strategies, customer lists, operations, and financial data. This obligation remains in effect during their time with the Company and indefinitely after leaving the Company, unless such information becomes publicly known through no fault of the Founder.

L. Dispute Resolution

In the event of a dispute arising from or related to this Agreement, the Founders agree to seek resolution through the following steps:

1. Negotiation: The Founders will attempt to resolve the dispute through direct negotiations.
   

2. Mediation: If negotiation fails, the dispute will be submitted to mediation, with a neutral third-party mediator facilitating discussions to reach a voluntary settlement.
   

3. Arbitration: If mediation is unsuccessful, the dispute will be resolved through binding arbitration. The arbitration will be conducted by the American Arbitration Association in accordance with its rules applicable to commercial disputes. The decision of the arbitrator(s) shall be final and binding on the parties.

M. Amendments

This Agreement may be amended or modified only by a written document signed by all Founders. No oral modifications will be considered valid. The Founders agree to review the Agreement annually or as needed to ensure it remains relevant and aligned with the Company's objectives and the Founders' intentions.

N. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflict of law principles. Any disputes or legal proceedings arising from this Agreement will be resolved in the courts of the State of California, and the Founders consent to the jurisdiction of such courts.

Signatures

This Agreement is entered into voluntarily by the Founders, with a full understanding of its contents and implications. Each Founder acknowledges that they have had the opportunity to consult legal counsel before signing.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date first written above.

[Founder 1 Name]

[Date]

[Founder 2 Name]

[Date]

[Founder 3 Name]

[Date]

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