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How to structure an equity agreement for a member of a board of directors with a 60-day trial period and 48 months of vesting for a 0.5% equity stake in the company. Such an arrangement can be complex, and it's important to consult with legal and financial professionals to ensure it's structured properly. However, I can provide you with a general outline of what such an agreement might entail:
1. Introduction and Parties: Start the agreement by identifying the company (the “Company”) and the individual joining the board of directors (the “Director”).
2. Equity Grant: Specify that the Director will receive 0.5% of the equity ownership in the Company subject to the terms and conditions outlined in the agreement.
3. Trial Period: Describe the 60-day trial period during which the Director's performance and fit with the company will be evaluated. During this period, the Director will not have any equity rights.
4. Vesting Schedule: Outline the 48-month vesting schedule, during which the Director will earn equity rights. Typically, vesting occurs monthly, with a 1/48th of the total equity grant becoming vested each month.
5. Acceleration: Consider whether there should be any acceleration provisions, such as acceleration upon a change in control of the company or if the Director's services are terminated without cause.
6. Termination: Describe the circumstances under which the Director's position on the board can be terminated, both during and after the trial period.
7. Duties and Responsibilities: Clearly define the Director's roles and responsibilities as a member of the board, as well as any additional advisory or consulting roles.
8. Compensation and Expenses: Specify any compensation for the Director, including board fees or additional consulting fees. Also, address how expenses related to board meetings or duties will be handled.
9. Confidentiality and Non-Compete: Include provisions to protect the company's confidential information and prevent the Director from engaging in activities that may be competitive with the company.
10. Dispute Resolution: Outline how disputes between the parties will be resolved, such as through arbitration or mediation.
11. Governing Law: Specify the jurisdiction and governing law that will apply to the agreement.
12. Amendments: Describe the process for amending the agreement, if necessary.
13. Entire Agreement: Include a clause stating that the agreement represents the entire understanding between the parties and supersedes any prior agreements or understandings.
14. Signatures: Have both parties sign and date the agreement.
This is a very simplified overview, and the actual agreement may require more specific clauses and legal language. It's crucial to consult with an attorney who specializes in corporate law to draft an agreement that fully protects the interests of both the company and the Director. Additionally, you may need to consider tax implications and other factors that can be complex in equity arrangements.