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A sample equity agreement for founders. I make no claims about the usefulness or legal strength of this document!
This Equity Sharing Agreement (henceforth, the Agreement) is entered into as of the date set forth below by and betweenFounder 1andFounder 2(collectively, the Founders).
Any of the following events will invalidate the current agreement and require a new agreement to whichbothFounders must consent:
Agreement can also be terminated my mutual consent of the Founders.
The Founders hereby agree to divide shares ofCompanyas follows, resulting in a total current valuation of $Valuation:
Founder 1:Founder 1s Stockshares @ $Founder 1s Investment
Founder 2:Founder 2s Stockshares @ $Founder 2s Investment
We also hereby commit that if the Foundersbothagree that the business requires capital infusions of up to acumulativetotal of $Bootstrap Funds, they will contributeequally(50/50), not on the basis of current personal ownership stake; without prejudice to the balance of equity between the Founders.
Capital infusions will be composed of capitalcallsandcontributions, as follows:
A capital call is a cash expenditure that is mutually agreed upon prior to and paid by both Founders, per the terms above. Typically, capital calls will be higher cost expenses. In the event that a capital call is made on the $Bootstrap Fundsamount noted above, each of us will have 10 calendar days to transfer the cash directly toCompany.
In the event that one of the Founders is unable to meet the capital call, theotherFounder will have the right to meet the capital call on their behalf, thereby purchasing equity on the basis agreed upon above. Additionally, if one party only meets a portion of the capital call, the other party will be allowed to purchase their equity on the basis agreed upon above. [For example:
2.At any time within the 10 calendar day deadline window, the deadline can be extended multiple times and/or indefinitely if both founders agree.
3.Founder A is unable to meet their $2,500 share of call within 10 calendar days, and no deadline extension has been agreed upon
4.Founder B has option to contribute all $5,000, thereby purchasing 2,500 shares from Founder A. Founder B also has the option to extend the capital call deadline entirely at his discretion (e.g. multiple extensions can be made unilaterally).
6.If Founder A is unable to meet their share and Founder B is unwilling to cover thefulloutstanding amount, no equity transaction will be mandated ]]
Unlike capital calls, capital contributions will typically be smaller expenses. Each Founder may make additional capital contributions on an on-going basis individually. These capital contributions will be recorded and zeroed out on a regular basis, at the partners discretion. [For example, if Founder A has spent $45.00 on business expenses and Founder B has spent 200.00 on business expenses, Founder A will pay Founder B $77.50 ($122.50 owed – $45.00 paid = $77.50). The Founders have zeroed out existing expenses to create a starting point for this system beginning on 2/1/2011, after which all expenses will be split 50/50, unless other specified.]
In the event of a capital call, a personal transfer between the partners must be made to zero out any imbalance in the capital contribution ledger.
Vesting will occur based on the following schedule:
Until and throughStart Date, neither Founders shares will vest
On and not beforeCliff Date 25% of each Founders shares will vest
On and not before the 1st of every month thereafter,1/36thof the remaining75%will vest
Thus, onEnd Date, each Founder will be 100% vested
If both Founders are still fully involved with the business and a liquidity event (i.e. sale to a third party, an initial public offering, or other liquidity event) occurs, 100% vesting will occur immediately.
Neither Founder will consult for, be employed by, or offer any aid to any direct competitor ofCompanywithout the other partners explicit consent.
In the event that a partner dies or is otherwise legally incapacitated, the equity stake (and all rights associated thereof) of the deceased/incapacitated partner shall transfer to his estate/beneficiary immediately.
Suggest changesby making a copy of this document.Learn more.
Founders Agreement Template – With VestingbyA Docracy User
Founders Agreement Template – With Vestingbysaket porwal
Founders Agreement Template – With Vesting (Simplified)byRandy Wang
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