Maybe there's not really a legal way to protect any of your equity assets when they aren't worth anything. I'd imagine any future investor interest would be scared off by the disclosure that there's an uninvolved past founder with "25% equity" on the cap table. Rather than worry about potential last minute negotiations with the ex-founder after an investor expresses interest, I'd imagine the remaining partners could potentially found a new group and dissolve the current group by "selling" it and all assets to the new group for $1 and mail the ex-founder $0.25 or something.
This would likely be moderately illegal if done at a stage that the equity is demonstrably worth something (e.g. Eduardo Saverin's FB situation) but I don't think it would be much of an civil/legal issue before the startup had any demonstrable financial value. I could be wrong. And people will diverge widely on how they see the moral/ethical implications of this.
This would likely be moderately illegal if done at a stage that the equity is demonstrably worth something (e.g. Eduardo Saverin's FB situation) but I don't think it would be much of an civil/legal issue before the startup had any demonstrable financial value. I could be wrong. And people will diverge widely on how they see the moral/ethical implications of this.