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Sweat Equity Operating Agreement
"I need a Sweat Equity Operating Agreement for my UK-based software startup to bring on a senior developer who will work 3 days per week in exchange for 5% equity, with a one-year cliff and monthly vesting over three years starting March 2025."
1. Parties: Identification and details of all contracting parties
2. Background: Context of the agreement and relationship between parties
3. Definitions: Key terms used throughout the agreement
4. Sweat Equity Terms: Core terms of the equity arrangement including work requirements and equity allocation
5. Vesting Schedule: Timeline and conditions for equity vesting
6. Valuation Mechanism: Method for valuing the equity stakes
7. Exit Provisions: Terms governing departure scenarios
1. Non-Compete Provisions: Restrictions on competitive activities - include when protecting company interests is crucial
2. Intellectual Property Rights: IP ownership and transfer provisions - include when work involves creation of IP
3. Tag-Along Rights: Rights to join in sale of shares - include when minority shareholder protection is needed
1. Schedule 1: Services Description: Detailed description of services to be provided
2. Schedule 2: Vesting Schedule: Detailed breakdown of vesting timeline and conditions
3. Schedule 3: Share Rights: Detailed description of share class rights and restrictions
4. Appendix A: Valuation Methodology: Detailed explanation of how equity will be valued
Authors
Business Day
Board
Company
Completion
Confidential Information
Directors
Effective Date
Equity Interest
Fair Market Value
Fully Diluted Share Capital
Group
Intellectual Property Rights
Material Breach
Milestone(s)
Ordinary Shares
Party/Parties
Services
Service Provider
Share Rights
Shareholders' Agreement
Sweat Equity
Termination Date
Trigger Event
Valuation
Vesting Date
Vesting Period
Vesting Schedule
Vested Shares
Unvested Shares
Working Hours
Conditions Precedent
Services Obligations
Equity Grant
Vesting
Valuation
Share Rights
Representations and Warranties
Service Provider Commitments
Company Commitments
Confidentiality
Intellectual Property
Non-Competition
Non-Solicitation
Transfer Restrictions
Tag-Along Rights
Drag-Along Rights
First Refusal Rights
Board Matters
Information Rights
Termination
Exit Provisions
Good Leaver/Bad Leaver
Death and Incapacity
Dispute Resolution
Force Majeure
Assignment
Notices
Entire Agreement
Severability
Variation
Waiver
Costs
Governing Law
Jurisdiction
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