Author Question: Describe the purpose of a nondisclosure agreement. Provide an example of when a nondisclosure ... (Read 24 times)

jCorn1234

  • Hero Member
  • *****
  • Posts: 545
Describe the purpose of a nondisclosure agreement. Provide an example of when a nondisclosure agreement kicks in.
 
  What will be an ideal response?

Question 2

What is a founders' agreement? Describe the purpose of a buyback clause and why it's important?
 
  What will be an ideal response?



ashely1112

  • Sr. Member
  • ****
  • Posts: 347
Answer to Question 1

A nondisclosure agreement is a promise made by an employee or other party (e.g., a supplier) to not disclose the company's trade secrets. An example would be an employee who is privy to a company's marketing strategy. If the employee quit her job and went to work for a competitor, it would be a violation of her nondisclosure agreement to tell her new employer the details of her previous employer's marketing strategy.

Answer to Question 2

A founders' (or shareholders') agreement is a written document that deals with issues such as the relative split of the equity among the founders of the firm, how individual founders will be compensated for the cash or the sweat equity they put into the firm, and how long the founders will have to remain with the firm for their shares to fully vest. An important issue addressed by most founders' agreements is what happens to the equity of a founder if the founder dies or decides to leave the firm. Most founders' agreements include a buyback clause, which legally obligates the departing founders to sell to the remaining founders their interest in the firm if the remaining founders are interested. In most cases, the agreement also specifies the formula for computing the dollar value to be paid. The presence of a buyback agreement is important for at least two reasons. First, if a founder leaves the firm, the remaining founders may need the shares to offer to a replacement person. Second, if founders leave because they are disgruntled, the buyback clause provides the remaining founders a mechanism to keep the shares of the firm in the hands of people who are fully committed to a positive future for the venture.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

When Gabriel Fahrenheit invented the first mercury thermometer, he called "zero degrees" the lowest temperature he was able to attain with a mixture of ice and salt. For the upper point of his scale, he used 96°, which he measured as normal human body temperature (we know it to be 98.6° today because of more accurate thermometers).

Did you know?

Green tea is able to stop the scent of garlic or onion from causing bad breath.

Did you know?

If you use artificial sweeteners, such as cyclamates, your eyes may be more sensitive to light. Other factors that will make your eyes more sensitive to light include use of antibiotics, oral contraceptives, hypertension medications, diuretics, and antidiabetic medications.

Did you know?

The horizontal fraction bar was introduced by the Arabs.

Did you know?

Earwax has antimicrobial properties that reduce the viability of bacteria and fungus in the human ear.

For a complete list of videos, visit our video library