Considerations such as vesting for Founder Agreement


1

I'm planning to file a Delaware LLC for a partnership where I'm the majority owner of our self-funded startup.

One key goal for me is to incorporate a vesting option among owners where equity is a reflection of capital, time, and execution put into the product. I've already reached out to another lawyer and below are estimates that I was given:

  • Certificate of Formation and Delaware filing fees: $500
  • Limited Liability Company Operating Agreement: $1000
  • Subscription Agreement for you: included in fee
  • Subscription and Equity Restriction Agreement (with repurchase provisions): $1000
  • Joinder Agreement for you and other individual to become Members: included in fee
  • Inventions Agreement: $500
  • Promissory Note: $500

My concern is that the lawyer is complicating this in the interest of ensuring protection of the majority owner (me).

From your experience, are all these documents necessary and at the costs suggested?

LLC Equity Founders Agreement Delaware Vesting

asked Sep 28 '11 at 05:35
Blank
Sheepish
6 points
  • Why are you not using a C corp, if you care about capital and vesting? I'm guessing for tax purposes. – Alain Raynaud 8 years ago

1 Answer


1

I don't think they're necessary at these prices. In fact, I have formed some successful companies doing this paperwork myself with no problem.

You may be able to get the certificate of formation and/or LLC agreement from the State of Delaware. You should be able to find a good subscription documents, equity restriction agreement, inventions agreement, and promissory note from the internet.

It is sometimes possible to copy these from another company's filings and modify them to fit your own situation.

There are some pitfalls to doing it yourself. Probably it would never make a difference, but there is a very small chance it could be important in a lawsuit if you made a serious mistake.

A middle course would be to write all these up yourself and take them to a lawyer for review. It should be cheaper, and the lawyer can point out any glaring mistakes or omissions.

answered Sep 28 '11 at 06:24
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Xpda
652 points
  • Your middle course is my favorite because it forces you to think through all of the choices that go into the agreements and then consider their impact for the owners and the organization. It makes you a more intelligent consumer of legal services, in my opinion. I do recommend that you have a lawyer review the documents though, I've never been sorry to have proper legal counsel on something I've pulled together myself. – Ttongue 8 years ago

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LLC Equity Founders Agreement Delaware Vesting