First of all, this is terribly hard to decipher with only one side of the story present (although it seems you have a presented a reasonably unbiased argument).

First of all, this is terribly hard to decipher with only one side of the story present (although it seems you have a presented a reasonably unbiased argument). But in my opinion if the idea is truly worth what you think it is I would consider a proposition to start out 50/50 and as revenue comes into the company he will have the option to buy out your equity (only up to his requested 60/40) at x number of dollars per share. This ensures for him that he will get that ownership he wants, and although you will ultimately end up with less in the end if the company is a huge success being the technical founder of any startup leaves many more doors open for your future in the end. And the possibility that it will not succeed entirely yet you would still get a (presumably) significant amount of money from the initial windfall would seem like a win/win to me. Again, that is just IMHO so take it for what its worth, but as someone who has out significant amount of time into several projects and seen some pay off both big and small that is an awful lot of time to just let it go to waste. That said, whatever you do, do NOT agree to go separate ways AND sign a NDA. The situation you are in now holds up much better in a suit than one where you sign an NDA then decide to launch any way. With one man's word against another it is hard to decipher how that lawsuit would turn out, but I am willing to bet it is significantly more likely to be better for you without that particular paper trail.