The Advisory Shares Agreement is a crucial document for companies seeking to attract and retain high-caliber advisors by offering equity compensation instead of or in addition to cash remuneration. This agreement type is particularly common among growth-stage companies in Germany who want to leverage external expertise while preserving cash resources. The document must comply with German corporate and securities laws, including specific requirements under the Aktiengesetz or GmbH-Gesetz depending on the company structure. It typically includes detailed provisions on share vesting, service expectations, confidentiality obligations, and intellectual property rights. The Advisory Shares Agreement is especially relevant for startups and scale-ups looking to build strong advisory relationships while aligning advisors' interests with the company's long-term success through equity participation.
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1. Parties: Identification of the Company and the Advisor, including full legal names and addresses
2. Background: Context of the agreement, including the company's desire to engage the advisor and the advisor's qualifications
3. Definitions: Key terms used throughout the agreement, including 'Advisory Shares', 'Services', 'Vesting Period', etc.
4. Appointment and Scope: Formal appointment of the advisor and detailed description of advisory services to be provided
5. Share Grant: Details of the advisory shares being granted, including number, class, and nominal value
6. Vesting Provisions: Vesting schedule, conditions, and mechanisms for the advisory shares
7. Advisor's Obligations: Specific duties, time commitment, reporting requirements, and standard of service
8. Company's Obligations: Company's commitments, including information provision and support for the advisor
9. Confidentiality: Provisions regarding confidential information and trade secrets
10. Intellectual Property: Ownership and transfer of IP rights related to the advisory services
11. Term and Termination: Duration of the agreement and circumstances for termination
12. Consequences of Termination: Effects on unvested shares and post-termination obligations
13. Tax Matters: Tax implications and responsibilities related to the share grant
14. Governing Law and Jurisdiction: Specification of German law application and jurisdiction for disputes
1. Non-Competition: Restrictions on advisor's involvement with competing businesses, include when advisor has access to sensitive competitive information
2. Share Transfer Restrictions: Additional limitations on transfer of advisory shares, useful for closely-held companies
3. Tag-Along Rights: Rights to participate in sale of shares by major shareholders, relevant for potential exit scenarios
4. Drag-Along Rights: Company's right to force advisor to sell shares, important for future M&A scenarios
5. Board Observer Rights: Rights to attend board meetings, include when advisor provides strategic guidance at board level
6. Alternative Dispute Resolution: Mediation or arbitration procedures, useful for maintaining confidentiality
7. Insurance: Requirements for professional liability insurance, relevant for high-risk advisory roles
1. Schedule 1 - Services Description: Detailed outline of advisory services, deliverables, and performance metrics
2. Schedule 2 - Share Vesting Schedule: Detailed timetable and conditions for share vesting
3. Schedule 3 - Company Information: Key company details, capitalization table, and share class rights
4. Schedule 4 - Share Transfer Form: Standard form for transferring shares under German law
5. Schedule 5 - Confidentiality Agreement: Detailed confidentiality terms and protected information definition
6. Appendix A - Shareholders' Agreement: Copy or relevant excerpts of existing shareholders' agreement
7. Appendix B - Articles of Association: Relevant provisions from company's articles affecting advisory shares
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