The Sweat Equity Agreement is a crucial document used when companies, particularly startups and growth-stage businesses in Belgium, wish to compensate individuals for their services with equity instead of cash. This arrangement is common in scenarios where companies want to preserve capital while attracting talented individuals who can contribute significantly to the company's growth. The document must comply with Belgian corporate law, particularly the Companies and Associations Code, as well as relevant tax and labor regulations. It typically includes detailed provisions about the services to be rendered, equity allocation, vesting schedules, valuation methodologies, and various rights and obligations of both parties. The agreement is particularly relevant in the Belgian startup ecosystem, where it needs to address specific local legal requirements while providing flexibility for international business practices.
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1. Parties: Identification of the company and the service provider, including full legal names, addresses, and registration details
2. Background: Context of the agreement, including the company's business, the service provider's expertise, and the mutual desire to enter into a sweat equity arrangement
3. Definitions: Key terms used throughout the agreement, including 'Services', 'Shares', 'Vesting Period', and other relevant terminology
4. Services: Detailed description of the services to be provided, including scope, quality standards, and delivery timeline
5. Equity Compensation: Details of the equity to be issued, including number of shares, class of shares, and percentage of ownership
6. Vesting Schedule: Timeline and conditions for the vesting of shares, including any cliff period and vesting milestones
7. Valuation: Agreed value of services and corresponding equity, including methodology for valuation
8. Rights and Obligations: Respective duties and rights of both parties, including reporting requirements and performance standards
9. Tax and Social Security: Treatment of tax and social security obligations for both parties
10. Representations and Warranties: Standard declarations by both parties regarding capacity, authority, and compliance
11. Confidentiality: Protection of company and service provider confidential information
12. Term and Termination: Duration of the agreement and circumstances for early termination
13. General Provisions: Standard clauses including governing law, jurisdiction, entire agreement, and amendments
1. Non-Competition: Restrictions on competing activities, used when the service provider will have access to sensitive business information
2. Intellectual Property Rights: Specific provisions for IP creation and assignment, required when services involve creative or technical work
3. Board Participation: Rights and conditions for board membership, included when service provider is to take a management role
4. Tag-Along Rights: Co-sale rights in case of majority shareholder exit, relevant for significant equity stakes
5. Drag-Along Rights: Obligation to join in sale of company, included for minority shareholder management
6. Good Leaver/Bad Leaver: Different treatment of equity based on circumstances of departure
7. Share Transfer Restrictions: Limitations on transfer of acquired shares, important for maintaining company control
1. Schedule 1: Service Description: Detailed scope of services, deliverables, and timeline
2. Schedule 2: Vesting Schedule: Detailed breakdown of vesting timeline, milestones, and conditions
3. Schedule 3: Share Certificate: Template or copy of share certificate to be issued
4. Schedule 4: Company Valuation: Details of company valuation methodology and calculations
5. Schedule 5: Shareholders' Agreement: Key terms from existing shareholders' agreement that apply to new shareholder
6. Appendix A: Board Resolution: Copy of board resolution approving the sweat equity arrangement
7. Appendix B: Performance Metrics: Specific KPIs or performance criteria linked to vesting
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