If you are considering starting a business with someone else, it is important to have a clear and concise equity agreement in place from the outset. An equity agreement outlines the ownership percentage each party has in the business, as well as how profits, losses, and other important business decisions will be divided.
Creating an equity agreement may seem daunting, but it doesn`t have to be. To help get you started, we`ve put together a simple equity agreement sample that you can use as a starting point.
Sample Equity Agreement
This equity agreement (the “Agreement”) is entered into as of [date] between [Party A] (“Party A”) and [Party B] (“Party B”).
1. Ownership Percentage
The ownership percentage of each party in the business shall be as follows:
– Party A: [Percentage]
– Party B: [Percentage]
2. Capital Contributions
Each party shall contribute the following amounts to the business:
– Party A: [Amount]
– Party B: [Amount]
3. Profits and Losses
The profits and losses of the business shall be divided between the parties according to their ownership percentage as outlined in section 1.
4. Decision Making
Major business decisions shall be made jointly by both parties. In the event that a decision cannot be reached, the parties shall seek mediation or arbitration.
5. Transfer of Ownership
Neither party shall transfer or sell their ownership percentage without the written consent of the other party.
6. Dissolution of the Business
In the event that the business is dissolved, any remaining assets shall be divided according to the ownership percentage of each party as outlined in section 1.
7. Governing Law
This Agreement shall be governed by and interpreted in accordance with the laws of [State/Country].
8. Entire Agreement
This Agreement constitutes the entire understanding between the parties and supersedes all prior negotiations, understandings, and agreements between the parties.
In conclusion, a clearly defined equity agreement is essential for the success of any business partnership. By using this simple equity agreement sample as a starting point, you can ensure that both parties are on the same page and that your business is set up for success.
