Simple Harmonious Agreement for Revenue and Equity
What this document covers
The Simple Harmonious Agreement for Revenue and Equity (SHARE) is a legal document used by companies to attract investment by offering investors a combination of equity and revenue sharing. This form aids businesses, particularly those not suited for traditional venture capital, in securing funds while aligning the interests of investors and founders towards developing a sustainable, profitable operation. Unlike other investment agreements, the SHARE enables a cooperative approach to financial growth by specifying revenue percentages and various rights for both parties.
Key components of this form
- Definitions: Clarifies key terms such as Capital Stock, Change of Control, and Revenue SHARE Payments.
- Equity Conversion Events: Outlines actions during events like Equity Financing, Liquidity Events, and Dissolution Events that trigger conversion to shares or payment obligations.
- Revenue Share Structure: Details the percentage of gross revenues allocated to the investor and scheduling of quarterly payments.
- Company and Investor Representations: States the legal obligations and capacities of both parties in the agreement.
- Miscellaneous Provisions: Includes guidelines for amending the agreement, notice requirements, and governing laws.
When this form is needed
This form is ideal for startups or small businesses seeking investment without traditional venture capital backing. It is particularly useful when a company wishes to align investor returns with company revenue, making it suitable for businesses with potential but lacking the typical high-growth metrics expected by venture capitalists. Use this form when planning to engage with investors who prefer equity and revenue sharing over standard debt financing.
Who this form is for
- Startup founders looking to raise capital without taking on debt.
- Small business owners wanting to offer investors an opportunity to participate in both equity and revenue.
- Investors interested in acquiring rights to revenue shares in exchange for their investment.
- Legal professionals assisting clients in structuring financing arrangements in a clear and beneficial way.
How to prepare this document
- Identify the parties involved: Fill in the names of the company and the investor.
- Specify the effective date and purchase amount: Enter the date of agreement and the amount the investor will contribute.
- Detail the revenue share percentages: Indicate the agreed percentage of gross revenues that will be shared with the investor.
- Define key financial metrics: Outline the honeymoon period, maximum multiple, and valuation cap relevant to the agreement.
- Include signatures: Ensure both parties sign and date the document for it to be legally binding.
Is notarization required?
This form does not typically require notarization unless specified by local law. However, it is advisable to check with legal counsel regarding any specific requirements in your jurisdiction.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Typical mistakes to avoid
- Failing to clearly define the key terms can lead to misunderstandings between parties.
- Not including the investorâs percentage of revenue share, which is crucial for clarity.
- Overlooking local state laws that could void the agreement if not followed.
- Forgetting to collect necessary signatures which are essential for the agreementâs validity.
Benefits of using this form online
- Easy access: Download the SHARE agreement conveniently from US Legal Forms.
- Editable: Modify the template as needed to suit your specific requirements.
- Legally binding: Use professionally drafted legal forms that meet jurisdictional requirements.
- Time-saving: Quickly generate a required document without needing to start from scratch.
