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Services For Equity Agreement for Germany

Services For Equity Agreement Template for Germany

A Services for Equity Agreement under German law (Dienstleistungen-gegen-Beteiligung-Vertrag) is a legal contract where services are provided to a company in exchange for equity ownership rather than monetary compensation. This agreement is governed by German corporate and commercial law, particularly the German Civil Code (BGB) and either the Stock Corporation Act (AktG) or Limited Liability Companies Act (GmbH-Gesetz), depending on the company structure. The document outlines the nature of services, equity compensation terms, vesting conditions, and includes necessary provisions for compliance with German corporate, tax, and securities regulations.

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What is a Services For Equity Agreement?

The Services For Equity Agreement is primarily utilized in scenarios where companies, particularly startups and growth-stage businesses in Germany, seek to obtain professional services while conserving cash resources. This document type is structured to comply with German corporate and commercial law requirements, including the specific provisions of the German Civil Code (BGB), Stock Corporation Act (AktG), and Limited Liability Companies Act (GmbH-Gesetz). It details the service scope, equity compensation structure, vesting schedules, and performance metrics, while addressing tax implications and corporate governance requirements. The agreement is particularly relevant in situations where service providers see long-term value in the company's growth potential and are willing to accept equity as compensation for their services.

What sections should be included in a Services For Equity Agreement?

1. Parties: Identification of the service provider and the company, including full legal names, registration details, and addresses

2. Background: Context of the agreement, relationship between parties, and general purpose of the arrangement

3. Definitions: Key terms used throughout the agreement, including technical terms, 'Services', 'Shares', 'Vesting Period', etc.

4. Services: Detailed description of services to be provided, including scope, deliverables, and quality standards

5. Equity Compensation: Details of equity grant, including number of shares, type of shares, and percentage of ownership

6. Vesting Schedule: Terms of share vesting, including timing, milestones, and conditions

7. Service Provider's Obligations: Key responsibilities, commitment levels, reporting requirements, and quality standards

8. Company's Obligations: Company's responsibilities, including support, resources, and information provision

9. Term and Termination: Duration of the agreement and circumstances under which it can be terminated

10. Representations and Warranties: Standard declarations by both parties regarding capacity, authority, and compliance

11. Confidentiality: Protection of confidential information and trade secrets

12. Intellectual Property Rights: Ownership and transfer of IP created during service provision

13. Tax Matters: Tax responsibilities and obligations of both parties

14. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction for disputes

15. General Provisions: Standard boilerplate clauses including notices, amendments, and severability

What sections are optional to include in a Services For Equity Agreement?

1. Non-Competition: Restrictions on competing activities, used when service provider might have access to sensitive business information

2. Non-Solicitation: Restrictions on soliciting employees or clients, used for service providers with significant client contact

3. Share Transfer Restrictions: Additional restrictions on transfer of vested shares, used for maintaining company control

4. Drag-Along/Tag-Along Rights: Rights in case of company sale, used for larger equity grants

5. Board Observer Rights: Rights to attend board meetings, used for significant equity positions

6. Alternative Dispute Resolution: Mediation or arbitration provisions, used for high-value agreements

7. Data Protection: GDPR compliance provisions, used when personal data processing is involved

8. Insurance: Requirements for professional liability insurance, used for high-risk services

What schedules should be included in a Services For Equity Agreement?

1. Schedule 1: Services Description: Detailed specification of services to be provided

2. Schedule 2: Vesting Schedule: Detailed breakdown of vesting timeline and milestones

3. Schedule 3: Share Capital Structure: Current and post-investment cap table

4. Schedule 4: Company Information: Key company information including articles of association and shareholder agreement

5. Schedule 5: Service Level Agreement: Specific performance metrics and standards

6. Appendix A: Share Certificate Template: Template for share certificates to be issued

7. Appendix B: Required Corporate Resolutions: Ƶ for necessary corporate approvals

8. Appendix C: Tax Elections: Required tax forms and elections

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Germany

Publisher

Ƶ

Document Type

Equity Agreement

Cost

Free to use

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