• Vesting of Founder’s Stock. Founders may agree that their interest in the stock of the company will “vest” over time (typically 1-3 years), and grant to the company the right to acquire any unvested stock when the Founder’s service with the company ends.

• Termination. The agreement may define the circumstances in which a Founder’s service with the company can be terminated. If termination is for “cause” (i.e. bad acts by the Founder), the company and/or the other Founders may have a right to purchase some or all of the terminated Founder’s stock in the company (including vested stock).

• Restrictions on Transfer of Founder’s Stock. Founders typically agree not to transfer their shares in the company without the consent of the other Founders, except in limited circumstances such as transfers to specified persons (ex. children or spouse) or for estate planning purposes. Founders often grant to the company and/or the other Founders a right of first refusal to purchase any shares proposed to be transferred by a Founder, except as permitted by the agreement.

• Tag-along Rights. Founders may grant each other the right to participate in any sale of a Founder’s shares to a third party. Any potential purchaser of stock from a Founder would then be required to purchase shares held by all Founders, usually pro rata based on the Founders’ relative ownership interest.

• Voting of Founder’s Stock. Founders often agree to vote all of their shares to elect specified individuals (usually including each Founder) to the company’s Board of Directors.

• Non-competition. Founders sometimes agree not to compete with the business of the company or solicit employees or customers for a certain period of time following the end of their service with the company.

While these provisions are common, a Founders Agreements should be customized to fit the needs of the Founders. Your lawyer can help you create an agreement that’s right for you and your company.