Draft Management Rollover Agreement

---
name: draft-management-rollover-agreement
task_id: corporate-ma/draft-management-rollover-agreement
description: Guides drafting of a management rollover agreement and companion issues memo, requiring resolution of tax-treatment bifurcation, acceleration-trigger conflicts, call price discrepancies, restrictive-covenant enforceability, distribution-priority conflicts, and spousal-consent requirements in jurisdictions where marital property rules may affect equity interests.
activates_for: [planner, solver, checker]
---

# Skill: Draft Management Rollover Agreement

## 1. Subject-matter triage (only if applicable)

- Treat the management rollover agreement as the primary deliverable and the issues memorandum as secondary analysis.
- Before drafting the memo, ensure the agreement draft is complete enough to stand on its own and contains operative clauses, exhibits, and placeholders for unresolved items.
- Identify whether the source set contains one or multiple management participants, one or multiple equity classes, and one or multiple governing jurisdictions; analyze each separately rather than assuming a single representative case.
- If marital-property exposure is implicated, isolate the affected signer(s) and require a consent path for each relevant spouse or domestic partner as appropriate to the governing jurisdiction.

## 2. Failure modes the skill is correcting

- Collapsing rollover equity and compensatory equity into one bucket, which obscures tax treatment and economic intent.
- Leaving acceleration language inconsistent across transaction documents, especially where one document implies single-trigger vesting and another requires a termination-based second trigger.
- Using inconsistent call-price mechanics for bad-actor departures, which makes the economic consequence of termination unclear.
- Drafting restrictive covenants without matching the governing-law and enforceability framework to the scope and duration chosen.
- Ignoring a distribution hierarchy elsewhere in the capital structure, which can make a purported pari passu grant internally inconsistent.
- Omitting spousal consent where marital-property rules may give a non-employee spouse an interest that is not automatically bound by the management member’s restrictions.
- Writing the memo as a narrative summary instead of a decision-oriented conflict matrix that identifies each issue, the chosen resolution, and remaining open items.

## 3. Legal frameworks / domain conventions that apply

- Rollover mechanics should distinguish existing equity exchanged at closing from any new incentive equity granted in connection with the deal.
- Tax-treatment bifurcation should preserve the intended treatment of each equity category; do not use blended language that could be read to convert a rollover into compensation or vice versa.
- The rollover amount must track the agreed economic hypothetical in the source materials and be stated consistently across recitals, definitions, and operative provisions.
- Vesting may be time-based, performance-based, or hybrid; the agreement should specify the applicable schedule, forfeiture mechanics, and any service-based conditions.
- Acceleration language must be harmonized across the agreement and related transaction documents, with the applicable protection period stated clearly if acceleration depends on post-change-of-control termination.
- Call-right pricing must be internally consistent for each termination category, especially for Cause, disability, death, voluntary departure, and termination without cause.
- Restrictive covenants should be drafted with attention to governing law, duration, geography, scope of activity, and any severability or modification provision recognized in the applicable jurisdiction.
- Distribution and liquidation concepts must be reconciled with the capital structure documents; a nominal pari passu grant may still sit behind a preferred return or other priority economics.
- Transfer restrictions, repurchase rights, and lock-up terms should align so the management holder cannot circumvent the agreed exit mechanics.
- Spousal consent is a customary risk-control device where marital-property rules could affect transferability or enforcement of the equity interest; the consent should acknowledge the restrictions, vesting conditions, and call/repurchase rights.
- Use recognized transactional authorities and document-construction principles for the relevant jurisdiction when stating legal effects; do not assert enforceability without tying it to the governing-law framework or an applicable statutory or common-law rule.

## 4. Analytical scaffolds

### Management rollover agreement drafting flow

1. **Identify the equity buckets**
   - Separate rollover equity from any new compensatory grant.
   - State whether each bucket is subject to the same or different vesting, transfer, forfeiture, and tax treatment.

2. **State the closing exchange mechanics**
   - Describe what is contributed, what is issued, and when the exchange occurs.
   - Align definitions, recitals, and operative provisions so the rollover mechanics do not conflict.

3. **Lock the economics**
   - Use the source documents’ agreed hypothetical or formula for the rollover amount.
   - Reconcile call rights, repurchase rights, and any termination-based pricing by category.

4. **Align incentive terms**
   - Draft vesting and acceleration with a single coherent standard.
   - If source documents conflict, either resolve the conflict expressly or flag the item in the memo for client instruction.

5. **Test restrictive covenants**
   - Confirm scope, duration, geography, and activity restrictions are drafted to the intended level of restraint.
   - Include any severability, reformation, or blue-pencil language only if compatible with governing law and client preference.

6. **Check distribution hierarchy**
   - Compare the rollover equity’s participation language to any preferred-return, liquidation-preference, or priority distribution provisions in the organizational documents.
   - Resolve any mismatch in the agreement or flag it as an open item.

7. **Address family-law exposure**
   - If the management holder is in a jurisdiction where marital property may attach, include a spouse consent or exhibit placeholder as a condition to effectiveness or closing.

### Issues memorandum analysis flow

- Identify each conflict, inconsistency, or open drafting point.
- State the document sources that create the conflict.
- State the resolution adopted in the draft, or identify the issue as reserved for client decision.
- Explain the practical consequence if unresolved: economics, tax treatment, enforceability, closing certainty, or post-closing administration.
- Use a clear issue-by-issue format rather than a prose summary.

### Review checklist for the draft

- Rollover equity and new grant are separately described.
- Tax treatment is not collapsed into a single formulation.
- Vesting, acceleration, and termination-based pricing are internally consistent.
- Restrictive covenants are calibrated to the stated jurisdiction and business scope.
- Distribution priority is checked against the governing equity documents.
- Spousal consent is included where prudent.
- Any unresolved source-document conflict is flagged in the memo, not silently ignored.

## 5. Vertical / structural / temporal relationships (only if applicable)

- Distinguish closing-time actions from post-closing obligations.
- Separate one-time exchange mechanics from continuing service, vesting, and restriction obligations.
- Reconcile the management holder’s rights against the company’s repurchase or call rights and against any investor or senior-equity priority.
- If multiple jurisdictions appear in the source set, tie each covenant or consent requirement to the specific governing-law environment that controls that provision.
- If a condition to effectiveness depends on delivery of a spouse consent, treat it as a closing gate rather than a post-closing cleanup item.

## 6. Output structure conventions

- Produce a substantively complete management rollover agreement draft, not a term sheet or annotated summary.
- Produce a separate issues memorandum that is decision-oriented and concise.
- The agreement should include the operative provisions, defined terms, and any necessary exhibits or placeholders for unresolved items.
- The memo should list each identified conflict, the resolution adopted or proposed, and the remaining open items requiring instruction.
- Include a spousal-consent exhibit or exhibit placeholder if the source materials indicate marital-property risk.
- Use conventional M&A drafting architecture: recitals, definitions, operative covenants, restrictive covenants, transfer and repurchase mechanics, vesting/forfeiture, miscellaneous provisions, and exhibits.
- Before finalizing, confirm that the agreement file is the primary drafted instrument and that the memo follows as a secondary advisory deliverable.