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Co Founder Agreement for the United States

Co Founder Agreement Template for United States

A Co-Founder Agreement is a legally binding document used in the United States that establishes the relationship between two or more individuals starting a business venture together. It outlines crucial elements such as equity distribution, roles and responsibilities, intellectual property rights, decision-making processes, and exit strategies. This agreement serves as the foundation for the business relationship and helps prevent future disputes by clearly defining each party's rights and obligations under U.S. federal and state laws.

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Co Founder Agreement

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What is a Co Founder Agreement?

A Co-Founder Agreement is essential when two or more individuals join forces to establish a business venture in the United States. This foundational document should be created at the earliest stages of the business relationship, ideally before or during the company's formation. The agreement addresses critical aspects such as equity division, vesting schedules, roles and responsibilities, intellectual property rights, and decision-making authority. It provides legal protection under U.S. law and helps prevent potential disputes by clearly defining expectations and obligations. The document is particularly crucial for startups and new ventures where multiple founders contribute different resources, skills, or capital to the business. A well-drafted Co-Founder Agreement can save significant time and money by avoiding costly legal disputes and providing clear guidelines for handling various business scenarios and potential conflicts.

What sections should be included in a Co Founder Agreement?

1. Parties: Identification of all co-founders, including full legal names and addresses

2. Background: Brief description of the business venture and purpose of the agreement

3. Definitions: Key terms used throughout the agreement

4. Roles and Responsibilities: Detailed outline of each co-founder's position and duties

5. Equity Structure: Distribution of ownership and vesting schedules

6. Intellectual Property: Assignment and ownership of IP created during the venture

7. Decision Making: Voting rights and management structure

8. Confidentiality: Protection of company secrets and proprietary information

9. Term and Termination: Duration of agreement and conditions for termination

What sections are optional to include in a Co Founder Agreement?

1. Non-Compete: Restrictions on competing activities - include when protecting against immediate competition is crucial

2. Salary and Compensation: Details of any salary or benefits - include when co-founders will receive compensation beyond equity

3. Investment Obligations: Required capital contributions - include when co-founders are expected to contribute capital

4. Drag-along/Tag-along Rights: Rights related to sale of shares - include when planning for potential exit scenarios

What schedules should be included in a Co Founder Agreement?

1. Schedule A - Initial Equity Allocation: Detailed breakdown of ownership percentages

2. Schedule B - Vesting Schedule: Detailed vesting terms and conditions

3. Schedule C - IP Assignment: List of pre-existing IP brought into the venture

4. Schedule D - Business Plan: Initial business plan and strategy

5. Appendix 1 - Shareholders Agreement: Supplementary shareholder terms if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Document Type

Agreement Contract

Cost

Free to use
Clauses































Industries

Business Organization Laws: Includes state-specific corporation/LLC laws, Delaware General Corporation Law (if applicable), and securities laws related to entity formation and governance

Employment and Labor Laws: Covers Fair Labor Standards Act (FLSA), state-specific employment laws, worker classification regulations, and non-compete restrictions

Intellectual Property Laws: Encompasses Copyright Act, Patent Act, Trademark Act, and Trade Secrets Protection Act for protecting company innovations and IP

Tax Laws: Includes Internal Revenue Code, state tax regulations, partnership tax rules, and stock option/equity compensation regulations

Securities Laws: Covers Securities Act of 1933, Securities Exchange Act of 1934, state 'blue sky' laws, and SEC regulations regarding equity issuance

Contract Laws: Encompasses state-specific contract laws, Uniform Commercial Code, and Statute of Frauds governing agreement formation and enforcement

Dispute Resolution Laws: Includes state-specific arbitration laws and Federal Arbitration Act for handling potential conflicts between co-founders

Equity Distribution Provisions: Requirements for documenting ownership splits, vesting schedules, and stock/membership interest allocations between co-founders

Role Definition Requirements: Legal framework for defining co-founder roles, responsibilities, time commitment, and decision-making authority

Exit and Termination Provisions: Legal requirements for documenting departure scenarios, including voluntary/involuntary exits, death, disability, and company sale

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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