Startup Equity Split Agreement Template - Co-Founders

# Startup Equity Split Agreement Template - Co-Founders **Prepared by:** [COMPANY NAME] **Effective Date:** [DATE] **Document Version:** 1.0 **Classification:** CONFIDENTIAL / INTERNAL USE ONLY --- ## Table of Contents - 1.0 Purpose and Scope - 2.0 Definitions and Interpretive Provisions - 3.0 Founding Team Structure and Initial Equity Allocation - 4.0 Vesting Schedules and Acceleration Provisions - 5.0 Roles, Responsibilities, and Contribution Framework - 6.0 Equity Adjustments, Dilution, and Future Issuances - 7.0 Transfer Restrictions, Right of First Refusal, and Co-Sale Rights - 8.0 Separation, Termination, and Buyback Provisions - 9.0 Dispute Resolution and Governing Law - 10.0 Representations, Warranties, and Acknowledgments - 11.0 Miscellaneous Provisions - 12.0 Appendices - 13.0 Document Control - Legal Disclaimer --- ## 1.0 Purpose and Scope ### 1.1 Purpose This Startup Equity Split Agreement ("Agreement") is entered into as of [DATE] ("Effective Date") by and among the co-founders identified in Schedule A of Appendix I (collectively, the "Co-Founders" and individually, a "Co-Founder") of [COMPANY NAME], a [STATE] [corporation/limited liability company] (the "Company"). The purpose of this Agreement is to establish a formal, binding framework governing the allocation of equity interests among the Co-Founders, the conditions under which such equity interests vest, the rights and obligations attendant to such interests, and the mechanisms by which equity interests may be adjusted, transferred, or reclaimed in accordance with the terms herein. This Agreement is intended to serve as the foundational governance document for the Co-Founder relationship with respect to equity matters and shall be read in conjunction with the Company's Certificate of Incorporation or Articles of Organization, Bylaws or Operating Agreement, any applicable Stockholders' Agreement or Operating Agreement, and any employment or consulting agreements entered into between the Company and its Co-Founders. In the event of any conflict between this Agreement and such ancillary documents, the terms of this Agreement shall control with respect to inter-Co-Founder equity matters unless expressly superseded by a subsequently executed instrument that specifically references and modifies this Agreement. ### 1.2 Scope of Application This Agreement applies to all persons identified as Co-Founders in Schedule A and to any individuals subsequently admitted as Co-Founders by unanimous written consent of the then-existing Co-Founders, subject to the amendment procedures set forth in Section 11.4. This Agreement does not govern the equity rights of employees, advisors, or independent contractors who receive equity through the Company's equity incentive plan, which is separately governed by the [COMPANY NAME] [Year] Equity Incentive Plan (the "Plan"), as amended from time to time. ### 1.3 Regulatory and Legal Framework This Agreement is structured in compliance with applicable provisions of the [STATE] General Corporation Law (or equivalent statute for LLCs), the Internal Revenue Code of 1986, as amended ("Code"), including but not limited to Sections 83, 409A, and 1202 thereof, the Securities Act of 1933, as amended (the "Securities Act"), and applicable regulations promulgated thereunder by the Securities and Exchange Commission ("SEC"). Co-Founders are strongly encouraged to consult with qualified legal and tax counsel before executing this Agreement, as the equity interests described herein may have significant federal, state, and local tax consequences, including potential ordinary income recognition events and alternative minimum tax implications. See Section 10.3 for representations regarding independent legal advice. ### 1.4 Organizational Formalities This Agreement shall become effective upon the execution by all Co-Founders identified in Schedule A and shall be attached as an exhibit to the Company's founding documents maintained in the Company's corporate minute book. The Company's Board of Directors or Managing Members, as applicable, shall ratify this Agreement by board resolution or written consent within thirty (30) days of the Effective Date. Failure to obtain such ratification shall not, in and of itself, render this Agreement void or unenforceable as between the Co-Founders, but shall obligate the Co-Founders to take all commercially reasonable steps to obtain such ratification promptly. --- ## 2.0 Definitions and Interpretive Provisions ### 2.1 Defined Terms For purposes of this Agreement, the following terms shall have the meanings ascribed to them below: **"Acceleration Event"** means any event triggering accelerated vesting of Unvested Shares as described in Section 4.4, including Single-Trigger and Double-Trigger events as defined therein. **"Board"** means the Board of Directors of the Company if organized as a corporation, or the Board of Managers or equivalent governing body if organized as a limited liability company. **"Cause"** means, with respect to a Co-Founder's separation from the Company: (i) commission of any felony or crime involving moral turpitude; (ii) material breach of any duty of loyalty or fiduciary obligation owed to the Company; (iii) gross negligence or willful misconduct in the performance of duties that materially harms the Company; (iv) material breach of this Agreement, any employment agreement, or any confidentiality, non-solicitation, or non-competition agreement, which breach is not cured within thirty (30) days of written notice specifying the nature of such breach; (v) unauthorized use, misappropriation, or disclosure of the Company's Confidential Information or trade secrets; or (vi) any act of fraud, embezzlement, or dishonesty involving the Company's assets or business. **"Cliff Period"** means the initial period during which no Shares vest, as specified in Section 4.2. **"Company Valuation"** means the fair market value of the entire Company as determined by the Board in good faith, or, in the event of a dispute, by an independent third-party appraiser selected pursuant to Section 9.3. **"Confidential Information"** has the meaning ascribed to it in any Confidentiality Agreement executed between the Co-Founder and the Company, or, in the absence thereof, means any non-public information relating to the Company's business, technology, customers, finances, strategies, or operations. **"Covered Shares"** means all shares of Common Stock, units, or other equity interests in the Company issued or issuable to a Co-Founder pursuant to this Agreement or otherwise, including shares underlying any outstanding options or warrants held by such Co-Founder. **"Drag-Along Right"** means the right of a specified majority of Co-Founders to compel all other Co-Founders to approve and participate in a Sale of the Company on terms approved by such majority, subject to the protections set forth in Section 7.5. **"Equity Incentive Pool"** means the pool of shares or units reserved for issuance to employees, advisors, and consultants pursuant to the Plan, as described in Section 6.3. **"Founders' Shares"** or **"Shares"** means the shares of Common Stock or membership units of the Company issued to each Co-Founder as set forth in Schedule A. **"Good Reason"** means, with respect to a Co-Founder's voluntary resignation: (i) a material reduction in such Co-Founder's title, authority, or responsibilities without written consent; (ii) a reduction in agreed compensation of more than fifteen percent (15%) without written consent; (iii) a material relocation of the Co-Founder's principal place of work beyond fifty (50) miles without written consent; or (iv) a material breach by the Company of this Agreement or any employment agreement, which breach remains uncured for thirty (30) days following written notice. **"Involuntary Termination"** means termination of a Co-Founder's active service to the Company without Cause or resigna