Free Co-Founder Agreement Template

CO-FOUNDER AGREEMENT

This Agreement is made on [DATE] between the founders listed in Schedule A (each a "Founder") regarding [COMPANY NAME] ("Company"), [a [STATE] corporation / LLC formed or to be formed].

1. PURPOSE. The Founders are building [DESCRIBE BUSINESS] and want to record their agreement on ownership, roles and departures. The Founders will cause the Company to adopt documents consistent with this Agreement, including founder stock purchase agreements or operating agreement provisions with vesting, and IP assignment agreements.

2. EQUITY SPLIT. Equity will be allocated as set out in Schedule A. [Reasoning, for the record: DESCRIBE, e.g., contributions of idea, capital, time commitment, role.]

3. VESTING. Each Founder's equity vests over [4] years, with [25]% vesting after [1] year of continuous service (the "cliff") and the rest vesting monthly thereafter. Unvested equity is subject to repurchase by the Company at [the original purchase price / the lower of cost and fair market value] if the Founder leaves. [Each Founder receiving restricted stock should consider filing an 83(b) election with the IRS within 30 days of issuance, with advice from a tax adviser.]

4. ACCELERATION [OPTIONAL]. [If the Company is acquired and a Founder is terminated without cause within [12] months afterward, [50/100]% of that Founder's unvested equity vests ("double-trigger acceleration").]

5. ROLES AND TIME COMMITMENT. [NAME]: [ROLE AND RESPONSIBILITIES]. [NAME]: [ROLE AND RESPONSIBILITIES]. Each Founder will work [full-time / at least [NUMBER] hours per week] on the Company from [DATE]. Outside activities that compete with or materially distract from the Company require the other Founders' consent.

6. COMPENSATION. Founders will receive no salary until [MILESTONE, e.g., the Company raises $[AMOUNT] or reaches $[AMOUNT] monthly revenue], after which salaries will be set by the board [or by unanimous Founder agreement].

7. DECISIONS. Day-to-day decisions within a Founder's role are made by that Founder. The following require approval of [all Founders / Founders holding a majority of equity]: raising capital; issuing equity; hiring or firing another Founder; taking on debt over $[AMOUNT]; selling the Company or its main assets; and changing the core business.

8. DEADLOCK. If Founders cannot agree on a matter requiring approval, they will first seek advice from [NAMED ADVISER / a mutually chosen mentor], then mediation. [If unresolved after [30] days: DESCRIBE MECHANISM, e.g., the CEO decides on operational matters, or a buy-sell process.]

9. INTELLECTUAL PROPERTY. Each Founder assigns to the Company all rights in inventions, code, designs, content and other work product created for the business, including work created before formation relating to the business, listed in Schedule B. Founders will sign formal IP assignment agreements. Each Founder keeps pre-existing materials not related to the business, listed in Schedule B.

10. CONFIDENTIALITY. Founders will keep the Company's confidential information secret during and after their involvement, subject to legally protected disclosures.

11. DEPARTURE. If a Founder leaves for any reason: (a) unvested equity is repurchased under Section 3; (b) vested equity is retained [subject to the Company's right of first refusal on transfers]; (c) the Founder will transfer any Company accounts, credentials and property; and (d) [for [12] months, the Founder will not solicit Company employees or customers]. [A Founder removed for Cause (defined as fraud, felony, material breach or willful misconduct) may have vested equity repurchased at [cost / fair market value], where permitted by law.]

12. DEATH OR DISABILITY. If a Founder dies or is disabled for more than [180] days, vesting stops and the Company may repurchase vested equity at fair market value, determined by [an independent valuation].

13. NON-BINDING UNTIL DOCUMENTED [OPTIONAL]. [The Founders intend this Agreement to be binding. Where it conflicts with later company documents signed by all Founders, the company documents control.]

14. GOVERNING LAW AND DISPUTES. This Agreement is governed by the laws of [STATE]. Disputes not resolved under Section 8 will be decided by [arbitration under [RULES] / the courts of [COUNTY, STATE]].

GENERAL PROVISIONS
(a) Notices. Notices must be in writing and sent to the addresses or emails above (or as later updated by notice). Email notice is effective when sent, unless the sender receives a delivery failure message.
(b) Entire agreement. This agreement, with any schedules and exhibits, is the entire agreement between the parties on its subject and replaces all prior discussions and agreements on that subject.
(c) Amendments and waivers. Changes must be in writing and signed by both parties. A failure or delay in enforcing any term is not a waiver of it.
(d) Severability. If any provision is found unenforceable, it will be limited to the minimum extent necessary and the rest of this agreement will remain in effect.
(e) Assignment. Neither party may assign this agreement without the other party's written consent, except to a successor in a merger or sale of substantially all of its business, on notice.
(f) Relationship. Nothing in this agreement creates a partnership, joint venture or agency relationship unless expressly stated.
(g) Counterparts and electronic signatures. This agreement may be signed in counterparts and by electronic signature, each of which is an original and together form one agreement.
(h) Independent advice. Each party has had the opportunity to review this agreement with its own legal counsel and signs it voluntarily.

SCHEDULE A: Founders and equity
| Founder | Role | Equity % | Vesting start date |
|---|---|---|---|

SCHEDULE B: Pre-formation work assigned to the Company, and excluded pre-existing materials

FOUNDER: ______________________  Date: __________
FOUNDER: ______________________  Date: __________

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This free template is provided by ClauseAudit for general informational purposes and is not legal advice. Have it reviewed before use. Replace all [BRACKETED] placeholders.