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Equity Split Agreement

Equity Split Agreement Template for United States

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Key Requirements PROMPT example:

Equity Split Agreement

"I need an Equity Split Agreement for my tech startup to divide ownership between three co-founders (40/30/30 split) with a 4-year vesting schedule starting January 2025, including provisions for what happens if someone leaves early."

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Document background
The Equity Split Agreement is essential when establishing or restructuring company ownership, particularly in startup environments or when bringing in new partners. This document outlines precise ownership percentages, vesting conditions, and transfer restrictions while ensuring compliance with U.S. securities laws. Common scenarios for implementing an Equity Split Agreement include company formation, adding co-founders, compensating early employees with equity, or bringing in new investors. The agreement helps prevent future disputes by clearly documenting ownership terms and conditions.
Suggested Sections

1. Parties: Identification of all parties involved in the equity split arrangement

2. Background/Recitals: Context of the agreement and reasons for the equity split

3. Definitions: Key terms used throughout the agreement

4. Equity Allocation: Specific details of how equity will be divided among parties

5. Vesting Schedule: Timeline and conditions for equity vesting

6. Transfer Restrictions: Limitations on selling or transferring equity

7. Representations and Warranties: Statements of fact by all parties

8. Governing Law: Jurisdiction and applicable laws

Optional Sections

1. Tag-Along Rights: Rights of minority shareholders to join in sale of majority shares. Include when protecting minority shareholders

2. Drag-Along Rights: Rights of majority shareholders to force minority to join in sale. Include when majority shareholders need exit flexibility

3. Right of First Refusal: Priority rights to purchase shares before third parties. Include when controlling ownership transfers is important

4. Anti-Dilution Provisions: Protection against ownership dilution. Include when future funding rounds are anticipated

Suggested Schedules

1. Schedule A - Cap Table: Detailed breakdown of ownership percentages and share numbers

2. Schedule B - Vesting Schedule: Detailed timeline of vesting milestones and conditions

3. Schedule C - Valuation Details: Company valuation methodology and results

4. Appendix A - Shareholders' Rights: Detailed description of various shareholder rights

5. Appendix B - Transfer Procedures: Detailed procedures for share transfers

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Clauses






























Industries

Federal Securities Laws: Key federal regulations including Securities Act of 1933, Securities Exchange Act of 1934, SEC regulations on stock issuance/transfer, and Rule 144 regarding stock transfer restrictions

Blue Sky Laws: State-specific securities laws covering requirements for stock issuance, state registration, and disclosure requirements

Corporate Law: Including Delaware General Corporation Law and state-specific corporation laws where the company is incorporated, plus requirements for stock certificates and documentation

Tax Laws: Internal Revenue Code provisions including Section 83 (equity compensation), Section 409A (deferred compensation), vesting schedule implications, and capital gains treatment

Employment Laws: Fair Labor Standards Act, state employment laws, and their interaction with employment agreements in equity compensation context

Intellectual Property Laws: Laws governing IP rights associated with equity ownership and assignment of inventions

Contract Law: State-specific contract formation requirements, statute of frauds, and consideration requirements for valid agreement formation

Corporate Governance: Requirements related to bylaws compliance, shareholder agreement alignment, and necessary board approvals for equity distribution

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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