# Awake Venture Memorandum of Understanding

# MEMORANDUM OF UNDERSTANDING

**Venture:** [REQUIRED: VENTURE NAME] (the “Venture”)<br>
**Partners:** [REQUIRED: PARTNER 1 FULL LEGAL NAME]; [REQUIRED: PARTNER 2 FULL LEGAL NAME][OPTIONAL: ; [REQUIRED: PARTNER 3 FULL LEGAL NAME]] (each a “Partner”)<br>
**Effective date:** [REQUIRED: EFFECTIVE DATE] · **Outside date for definitive agreements:** [REQUIRED: OUTSIDE DATE]

**1. Intent.** The Partners intend to build [REQUIRED: ONE SENTENCE — WHAT THE VENTURE MAKES, FOR WHOM, AND THE PROBLEM IT SOLVES]. This memorandum records what they have agreed in principle so that definitive agreements can be drafted from it.

**2. Structure.** The Venture will operate through [REQUIRED: ENTITY NAME], a [REQUIRED: ENTITY TYPE AND JURISDICTION — e.g., Delaware corporation; California limited liability company] to be formed by [REQUIRED: FORMATION DATE]. Each Partner will hold their interest [SELECT ONE: directly / through a founders' holding vehicle]. Initial capital: [REQUIRED: AMOUNT AND WHO CONTRIBUTES IT, OR “NONE”]. [COUNSEL: confirm entity type and jurisdiction against tax treatment, equity-compensation plans, and investor expectations before formation.]

**3. Equity.** Founding equity, fully diluted, before outside investment:

| Partner | Founding equity | Consideration | Vesting | Cliff |
| --- | --- | --- | --- | --- |
| [REQUIRED: NAME] | [REQUIRED: %] | [SELECT ONE: cash / services / intellectual property / combination] | [REQUIRED: e.g., 4 years, monthly] | [REQUIRED: e.g., 12 months] |
| [REQUIRED: NAME] | [REQUIRED: %] | [SELECT ONE: cash / services / intellectual property / combination] | [REQUIRED: e.g., 4 years, monthly] | [REQUIRED: e.g., 12 months] |
| Reserved option pool | [REQUIRED: %] | — | — | — |

Vesting commences [REQUIRED: VESTING START DATE]. Acceleration: [SELECT ONE: none / single-trigger on change of control / double-trigger on change of control and involuntary termination]. Dilution from future financings is borne pro rata by all Partners unless they unanimously agree otherwise. [COUNSEL: equity issued for services or subject to vesting carries tax and filing consequences, including time-sensitive elections.]

**4. Other compensation.** Beyond equity, the Partners intend:

| Item | Terms |
| --- | --- |
| Salary | [REQUIRED: e.g., none until [milestone]; then [amount] per Partner] |
| Deferred or accrued compensation | [REQUIRED: amount, trigger for payment, and whether it converts to equity, OR “none”] |
| Expense reimbursement | [REQUIRED: what is reimbursable and any approval threshold] |
| Profit distributions | [REQUIRED: policy and who approves, OR “none until the Partners agree otherwise”] |
| Other | [OPTIONAL: benefits, advisory fees, contractor rates; OTHERWISE DELETE] |

**5. Roles and responsibilities.** Each Partner is individually accountable for their column and holds day-to-day authority within it:

| Partner | Title | Accountable for | Time commitment |
| --- | --- | --- | --- |
| [REQUIRED: NAME] | [REQUIRED: TITLE] | [REQUIRED: THE 3–5 OUTCOMES THIS PARTNER OWNS] | [REQUIRED: e.g., full-time from [date] / 20 hrs per week] |
| [REQUIRED: NAME] | [REQUIRED: TITLE] | [REQUIRED: THE 3–5 OUTCOMES THIS PARTNER OWNS] | [REQUIRED: e.g., full-time from [date] / 20 hrs per week] |

Decisions outside a Partner's own column require [SELECT ONE: unanimous / [REQUIRED: THRESHOLD]%] written approval, including: spending above [REQUIRED: AMOUNT]; hiring; raising capital or incurring debt; issuing equity; changing the business or this memorandum; entering any contract above [REQUIRED: AMOUNT]; and selling the Venture. Deadlock: [REQUIRED: e.g., escalate to a named neutral adviser within 15 days].

**6. Intellectual property.** All work created for the Venture is intended to belong to the entity, and each Partner will sign an invention-assignment and confidentiality agreement at formation. Background intellectual property each Partner brings: [REQUIRED: LIST, OR “NONE”], which remains that Partner's and is licensed to the Venture [SELECT ONE: perpetually and royalty-free / on terms to be agreed in the definitive agreements].

**7. Exit intent.** The Partners record the following shared intention and will build toward it:

| Item | Intent |
| --- | --- |
| Preferred outcome | [SELECT ONE: strategic acquisition / initial public offering / independent cash-flow business paying distributions / buyout of one or more Partners / no predetermined outcome] |
| Target window | [REQUIRED: e.g., 5–7 years from the effective date] |
| Target valuation or return | [REQUIRED: e.g., not below [amount] enterprise value, OR “no target set”] |
| When a process starts | [REQUIRED: the trigger — e.g., inbound offer above target, or a Partner vote at any time after [date]] |
| Approval to accept an offer | [SELECT ONE: unanimous / [REQUIRED: THRESHOLD]% of Partner equity] |
| Drag-along and tag-along | Definitive agreements are intended to include drag-along rights on an approved sale and tag-along rights protecting every Partner on a transfer by another. |
| If no exit by the target window | The Partners will meet within [REQUIRED: DAYS] days and [SELECT ONE: extend the window / start a buy-sell at independently determined fair market value / wind the Venture down]. |
| Individual side deals | No Partner will negotiate or accept a purchase of their own interest, or a role offer conditioned on transferring it, without first disclosing it to the other Partners and offering them [SELECT ONE: a right of first refusal / the right to participate pro rata]. |

**8. Definitive agreements.** The Partners intend to sign, by the outside date above: entity formation documents; a founders' or operating agreement; equity purchase documents with the vesting in Clause 3; invention-assignment and confidentiality agreements; and [OPTIONAL: ADDITIONAL DOCUMENTS; OTHERWISE DELETE]. If those are not signed by the outside date, this memorandum expires unless the Partners extend it in writing.

**9. Binding effect.** **Clauses 1 through 8 record intent only and are not legally binding.** No Partner may sue on them, and no obligation to form the Venture, contribute capital, transfer property, or issue equity arises until definitive agreements are signed. **The following are intended to be legally binding and to survive expiry or termination:**

**9.1 Confidentiality.** Each Partner will keep the other Partners' non-public information, and the existence and contents of this memorandum, confidential for [REQUIRED: PERIOD] and use it only to evaluate and pursue the Venture.
**9.2 Exclusivity.** Until the outside date, no Partner will pursue, fund, or join a venture that competes with the Venture as described in Clause 1[OPTIONAL: , except: [REQUIRED: CARVE-OUTS]]. [COUNSEL: review scope, duration, and enforceability under the governing law, including limits on restraints of trade.]
**9.3 Costs.** Each Partner bears their own costs, including legal fees, unless otherwise agreed in writing.
**9.4 No partnership or employment.** Nothing here creates a partnership, joint venture, agency, fiduciary, or employment relationship between the Partners, or authority to bind another Partner.
**9.5 Governing law and disputes.** This memorandum is governed by the laws of [REQUIRED: JURISDICTION]. Disputes will be resolved by [SELECT ONE: good-faith negotiation, then mediation, then the courts of [REQUIRED: VENUE] / good-faith negotiation, then binding arbitration seated in [REQUIRED: SEAT] under [REQUIRED: RULES]].
**9.6 Whole understanding.** This is the Partners' entire understanding on its subject matter, replaces prior discussions, and may be changed only in writing signed by every Partner.

**10. Signed.**

| Partner | Signature | Date |
| --- | --- | --- |
| [REQUIRED: NAME] | | |
| [REQUIRED: NAME] | | |