Sweat Equity Agreement Template for Saudi Arabia

This Sweat Equity Agreement template is designed for use in Saudi Arabian business contexts where companies wish to compensate individuals or service providers with ownership stakes rather than traditional monetary compensation. The document is particularly relevant for startups, growth companies, and businesses seeking to attract key talent or expertise without significant cash outlay. It includes essential provisions for compliance with Saudi Companies Law, Sharia principles, and regulatory requirements, while detailing the equity-for-service arrangement, vesting schedules, and performance metrics. The agreement typically specifies the percentage of equity offered, vesting conditions, service requirements, and various protections for both the company and the service provider. This type of agreement must be carefully structured to ensure it meets both modern business needs and local legal requirements, including proper valuation methods and clear performance criteria.

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 company status and reason for the sweat equity arrangement

3. Definitions: Key terms used throughout the agreement, including specific Saudi legal terminology

4. Services: Detailed description of the services to be provided by the service provider

5. Equity Consideration: Details of the equity to be issued, including percentage, class of shares, and valuation methodology

6. Vesting Schedule: Timeline and conditions for the vesting of equity, including milestones and performance metrics

7. Representations and Warranties: Statements of fact and guarantees from both parties, including compliance with Saudi law

8. Obligations of the Parties: Specific duties and responsibilities of both the company and service provider

9. Term and Termination: Duration of the agreement and circumstances for early termination

10. Confidentiality: Protection of company information and trade secrets

11. Non-Competition and Non-Solicitation: Restrictions on competitive activities and employee solicitation

12. Shareholder Rights: Rights associated with the equity stake, including voting and dividend rights

13. Compliance with Laws: Specific provisions ensuring compliance with Saudi law and Sharia principles

14. Dispute Resolution: Process for resolving disputes under Saudi law, including jurisdiction and applicable courts