Rights of Founders in Escrow Shares Clause Samples

The 'Rights of Founders in Escrow Shares' clause defines the entitlements and limitations of company founders regarding shares that are held in escrow, typically as part of a vesting or lock-up arrangement. This clause outlines what actions founders can or cannot take with these shares while they remain in escrow, such as restrictions on selling, transferring, or voting the shares until certain conditions are met, like the passage of time or achievement of performance milestones. Its core practical function is to protect the interests of the company and its investors by ensuring founders remain committed to the business and cannot immediately liquidate or otherwise dispose of their shares, thereby aligning long-term incentives.