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Sweat Equity Contract
"I need a Sweat Equity Contract for my UK-based tech startup to bring on a senior developer who will work 3 days per week in exchange for 5% equity, with a one-year vesting period starting March 2025."
1. Parties: Identifies the company and the individual providing sweat equity
2. Background: Context of the agreement and relationship between parties
3. Definitions: Key terms used throughout the agreement
4. Services: Details of work/services to be provided by the individual
5. Equity Grant: Terms of share allocation and vesting schedule
6. Valuation: Method of valuing services and shares
7. Term and Termination: Duration of the agreement and termination provisions
8. Representations and Warranties: Standard representations from both parties
9. Confidentiality: Protection of confidential information
10. General Provisions: Standard boilerplate clauses including governing law, notices, and entire agreement
1. Non-Competition: Restrictions on competing activities during and after the agreement term
2. Intellectual Property: Assignment and protection of IP rights created during the service period
3. Good/Bad Leaver Provisions: Specific provisions detailing consequences of different types of termination
4. Tax Provisions: Specific arrangements regarding tax treatment of the equity grant
5. Board Participation: Rights and obligations regarding participation in company governance
1. Schedule 1 - Service Description: Detailed scope of services to be provided by the individual
2. Schedule 2 - Vesting Schedule: Detailed timeline and milestones for share vesting
3. Schedule 3 - Share Rights: Detailed description of share class rights and restrictions
4. Schedule 4 - Company Valuation: Current company valuation methodology and figures
5. Schedule 5 - Shareholders' Agreement Deed of Adherence: Form of deed binding the individual to existing shareholders' agreement
Authors
Board
Business Day
Company
Completion
Confidential Information
Effective Date
Equity Interest
Fair Market Value
Good Leaver
Bad Leaver
Intellectual Property Rights
Ordinary Shares
Parties
Services
Service Period
Share Capital
Shareholders' Agreement
Shares
Sweat Equity
Term
Termination Date
Vesting Date
Vesting Period
Vesting Schedule
Warranties
Work Product
Equity Grant
Vesting
Share Valuation
Conditions Precedent
Representations and Warranties
Confidentiality
Intellectual Property Rights
Non-Competition
Non-Solicitation
Good/Bad Leaver Provisions
Share Transfer Restrictions
Tag-Along Rights
Drag-Along Rights
Board Representation
Information Rights
Service Provider Obligations
Company Obligations
Term and Termination
Tax Matters
Dispute Resolution
Governing Law
Assignment
Entire Agreement
Severability
Notices
Force Majeure
Amendments
Waiver
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