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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
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