Vesting: Absolutely, no questions about it. Everyone should vest -- this keeps someone from getting equity and immediately quitting (for example). You'll want

Vesting: Absolutely, no questions about it. Everyone should vest -- this keeps someone from getting equity and immediately quitting (for example). You'll want to talk to a lawyer about anti-dilution provisions but I suspect that you'll want to make sure that the minority shareholder has voting rights to prevent situations like the one you describe. FWIW, this is a relatively "vanilla" type of situation. (You'll setup a new company, each of you will sign over the IP to the new product and then have equity stakes in this new entity.) Have a lawyer review all the docs before you sign them and this will be pretty straightforward -- please do yourself a favor and don't cut corners just to save a buck. :)