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This document is a short form co-founder agreement intended for use by the founders of a new startup who wish to provide for some level of claw-back of a co-founder’s initial shareholding if he or she ceases to work for the company (whether as an employee or contractor).

This type of arrangement is referred to in the startup and venture capital world as “founder vesting”. Founder vesting is common with Silicon Valley startups, and is becoming more popular in New Zealand as co-founders are increasingly meeting through incubators or accelerator programmes rather than through longstanding business, professional or social relationships.

In this document, the company’s right to purchase shares is limited to a situation where the co-founder ceases to work for the company, i.e. there is no expected contribution from the co-founder. If you would like the company to be able to repurchase shares for a failure by the co-founder to contribute to the company, use our co-founder agreement – long form.

The approach taken in this document is to provide for progressive vesting of a co-founder’s shares over a set period (e.g. 36 months).  If the co-founder leaves the company during that period, the company has the option to repurchase unvested shares for the price originally paid by the co-founder for those shares (which will usually be nil, if the shares were issued on incorporation of the company).

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