Sweat Equity Contract Template for Denmark

The Sweat Equity Contract serves as a crucial legal instrument in the Danish business ecosystem, particularly for startups and growing companies seeking to attract talent while preserving cash resources. This document type is designed to comply with Danish corporate law, employment regulations, and EU requirements, providing a framework for equity-based compensation in exchange for services. It is commonly used when companies need to engage experienced professionals, consultants, or service providers but prefer to offer equity instead of immediate cash compensation. The contract typically includes detailed provisions about the nature of services, equity allocation, vesting conditions, performance metrics, and protection mechanisms for both parties. It's essential for companies operating under Danish jurisdiction to ensure the agreement aligns with local tax regulations and corporate governance requirements while protecting intellectual property rights and maintaining confidentiality.

1. Parties: Identification of the service provider and the company, including full legal names, registration numbers, and addresses

2. Background: Context of the agreement, including the company's business, the service provider's expertise, and the mutual intent to enter into a sweat equity arrangement

3. Definitions: Key terms used throughout the agreement, including technical, financial, and legal terminology

4. Scope of Services: Detailed description of the work, services, or role to be performed by the service provider

5. Equity Compensation: Details of the equity stake being offered, including percentage, type of shares, and vesting schedule

6. Vesting Terms: Specific conditions and timeline for the vesting of equity, including any cliff period and vesting milestones

7. Performance Metrics: Measurable criteria for evaluating the service provider's performance and achievement of milestones

8. Duration and Time Commitment: Period of the agreement and expected time investment from the service provider

9. Representations and Warranties: Statements of fact and promises made by both parties regarding their capacity and authority

10. Confidentiality: Obligations regarding confidential information and trade secrets

11. Intellectual Property Rights: Ownership and transfer of IP created during the service period

12. Termination: Conditions and procedures for ending the agreement, including consequences for unvested equity

13. Governing Law and Jurisdiction: Specification of Danish law as governing law and jurisdiction for dispute resolution

14. General Provisions: Standard legal provisions including notices, amendments, and severability