Free Startup Equity Distribution Agreement Template
Startup Equity Distribution Agreement
This Equity Distribution Agreement ("Agreement") is entered into as of [Month, Day, Year], by and between [Your Company Name], a [State] Corporation with its principal place of business located at [Your Company Address] ("Company"), and [Recipient Name], residing at [Address] ("Recipient").
WHEREAS, the Company wishes to grant equity to the Recipient in exchange for valuable contributions to the Company;
WHEREAS, the Recipient is willing to accept equity in the Company under the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:
1. GRANT OF EQUITY
The Company hereby agrees to grant [Number of Shares] shares of [Type of Shares, e.g., Common Stock] in the Company to the Recipient ("Equity"), subject to the terms and conditions of this Agreement.
2. VESTING SCHEDULE
The Equity granted under this Agreement shall vest over a period of [specify period, e.g., four years], with [specify, e.g., 25%] vesting after the first year (the "Cliff"), and the remaining equity vesting monthly/quarterly thereafter until fully vested.
Acceleration Provisions
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Single-Trigger Acceleration: In the event of [specify event, e.g., a change of control or sale of the company], [specify percentage, e.g., 50%] of the unvested equity shall immediately vest.
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Double-Trigger Acceleration: In the event of [specify event, e.g., a change of control or sale of the company] followed by the termination of the Recipient's employment without cause within [specify period, e.g., 12 months] following such event, all remaining unvested equity shall immediately vest.
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Discretionary Acceleration: The Board of Directors of the Company may, at its discretion, accelerate the vesting of any portion of the unvested equity under certain circumstances deemed to be in the best interest of the Company and its shareholders.
3. RESTRICTIONS ON TRANSFER
The Recipient agrees that the Equity awarded under this Agreement may not be sold, assigned, transferred, pledged, or otherwise disposed of, except as expressly permitted under the terms of this Agreement or applicable laws. The Recipient acknowledges that the Equity is subject to the Company’s bylaws, any applicable shareholders’ agreement, and any other agreements regarding the control and transfer of the Company's Equity.
Exceptions to Restrictions
Notwithstanding the above, the following exceptions shall apply to the general restriction on the transfer of Equity:
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Family Transfers: The Recipient may transfer Equity, without prior approval from the Company, to immediate family members or a trust for the benefit of immediate family members, provided that such transferees agree in writing to be bound by the terms of this Agreement and any other agreements governing the Equity. For the purposes of this Agreement, "immediate family members" shall include the Recipient's spouse, children, or any other relatives living in the Recipient's household.
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Transfer Upon Death: In the event of the Recipient's death, any vested Equity shall be transferable to the Recipient's designated beneficiaries as part of the Recipient's estate or to a trust established in the Recipient's name, subject to the terms of this Agreement and any other agreements governing the Equity. Such transfers shall be exempt from the general restrictions on transfer, provided that the executors, administrators, or trustees of the Recipient's estate or trust agree in writing to be bound by the terms of this Agreement.
Company's Right of First Refusal
Before any permitted transfer of Equity, the Company shall have a right of first refusal to purchase the Equity on the same terms and conditions offered to the proposed transferee. This right must be exercised by the Company within [specify time period, e.g., 30 days] after receiving written notice from the Recipient of the intention to transfer the Equity.
Procedure for Transfer
Any transfer of Equity under the exceptions provided in this section must comply with applicable securities laws and the Company's procedures for transfer, including but not limited to, the delivery of legal opinions or other documentation as the Company may reasonably require to confirm the legality of the transfer.
4. TERMINATION
Termination for Cause
The Company may terminate this Agreement immediately without notice if the Recipient is found to be in violation of any terms of this Agreement, engages in conduct detrimental to the interests of the Company, or is convicted of any criminal activity.
Termination without Cause
Either party may terminate this Agreement for any reason by providing [specify notice period, e.g., 30 days'] written notice to the other party. Upon termination without cause by the Company, a portion of the unvested equity [specify any additional vesting as a result of termination without cause, if applicable] may vest at the discretion of the Company.
Effect of Termination
Upon termination, the Recipient shall immediately cease to have any rights to accrue additional equity under this Agreement. Any equity vested as of the date of termination shall remain vested, and all unvested equity shall be forfeited unless otherwise provided for in this Agreement.
5. GOVERNING LAW
This Agreement and any disputes arising out of or related to this Agreement shall be governed by and construed in accordance with the laws of [specify jurisdiction, e.g., the State of California], without giving effect to any choice or conflict of law provision or rule.
Any legal suit, action, or proceeding arising out of or related to this Agreement or the transactions contemplated hereby shall be instituted exclusively in the federal courts of the United States or the courts of the State of [specify jurisdiction] in each case located in the city of [specify city] and county of [specify county], and each party irrevocably submits to the jurisdiction of such courts in any such suit, action, or proceeding.
6. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties and supersedes all prior agreements and understandings regarding the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
COMPANY:
[Your Company Name]
By:
Name: [Your Name]
Title: [Your Job Title]
Date: [Month, Day, Year]
RECIPIENT:
By:
Name: [Recipient Name]
Date: [Month, Day, Year]
