[{"data":1,"prerenderedAt":524},["ShallowReactive",2],{"document-recapitalization-agreement-D13032":3},{"document":4,"label":23,"preview":11,"thumb":24,"description":5,"descriptionCustom":6,"apiDescription":5,"pages":8,"extension":10,"parents":25,"breadcrumb":29,"related":37,"customDescModule":175,"customdescription":6,"mdFm":176,"mdProseHtml":523},{"description":5,"descriptionCustom":6,"label":7,"pages":8,"size":9,"extension":10,"preview":11,"thumb":12,"svgFrame":13,"seoMetadata":14,"parents":16,"keywords":15},"RECAPITALIZATION AGREEMENT This Recapitalization Agreement (the \"Agreement\") is effective [DATE], BETWEEN: [FIRST PARTY NAME] (the \"Company\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [NAME OF THE RECEIVING PARTY] (the \"Shareholders\"), a party with their main address located at OR a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: CAPITALIZATION The Company represents and warrants to the Shareholders that the capitalization of the Company immediately prior to the Closing (as hereinafter defined) is as set forth on Exhibit D hereto. The Company represents and warrants to the Shareholders that the capitalization of the Company immediately after the Closing shall be as set forth on Exhibit E hereto. RECAPITALIZATION The Company and the Shareholders, as applicable, hereby agree to take all of the following actions in connection with the Recapitalization, subject to the terms and conditions of this Agreement and in reliance on the representations and warranties set forth in this Agreement. Unless otherwise stated in this Section 2 or Section 3, the Recapitalization Documents (as hereinafter defined) will all be deemed to have been executed simultaneously at the Closing, and all of the transactions contemplated by the Recapitalization Documents shall be deemed to have happened simultaneously at the Closing. Amended and Restated Articles of Incorporation: Each Shareholder and the Company hereby agree that it is in the best interest of the Company to amend and restate the Company's Articles of Incorporation, and each Shareholder will take all actions, whether in his or its capacity as a Shareholder, officer or director of the Company, necessary to adopt, prior to the Closing, amended and restated Articles of Incorporation, substantially in the form attached hereto as Exhibit F (the \"Amended and Restated Articles of Incorporation\"). Exchange of Class A Common Stock: At the Closing, [NAME OF PARTY] shall transfer to the Company good and valid title to all of the shares of Class A Common Stock held by each of them, and the Company shall issue shares of the New Series A Preferred to each of them at the Closing such that when added to the shares of New Series A Preferred issued to them pursuant to Section 2.1.3(a), they shall hold, immediately after the Closing, the number of shares of New Series A Preferred in the amount set forth opposite each of their names on Exhibit E hereto. Exchange of Preferred Stock: At the Closing, each Preferred Holder shall transfer to the Company good and valid title to all of the shares of Preferred Stock held by such Preferred Holder, and the Company shall issue shares of Class A Common Stock or New Series A Preferred to such Preferred Holder at the Closing such that immediately after the Closing, such Preferred Holder holds the number of shares of Class A Common Stock or New Series A Preferred in the amount set forth opposite such Preferred Holder's name on Exhibit E hereto. At the Closing, each [NAME OF PARTY] shall transfer to the Company good and valid title to all of the shares of Series C Preferred and Series C-1 Preferred Stock held by it, and the Company shall (A) issue to [NAME OF PARTY] Common Shares and the Company's Common Shares, respectively, and (B) pay to [NAME OF PARTY] Cash Amount and the Company's Cash Amount, respectively. Stock Purchase Agreement: At the Closing, the Company and Parties shall (i) execute and deliver the Stock Purchase Agreement, providing for the Share Purchase and (ii) subject to the terms of the Stock Purchase Agreement, including the conditions precedent to the obligations of the Parties thereto, take all actions necessary to effect the Share Purchase as contemplated by the Stock Purchase Agreement (except those actions that cannot by their terms be satisfied prior to the Share Purchase). Exchange of Warrants: At the Closing, each Warrant shall transfer to the Company good and valid title to all of the Warrants held by such Warrant Holder, and the Company shall issue shares of Class A Common Stock or New Series A Preferred to such Warrant Holder at the Closing such that when added to the shares of Class A Common Stock or New Series A Preferred issued to them pursuant to Section 2.3 (a), immediately after the Closing, the Warrant Holder holds the number of shares of Class A Common Stock or New Series A Preferred in the amount set forth opposite such Warrant Holder's name on Exhibit E hereto. Recapitalization Documents: This Agreement, the Amended and Restated Articles of Incorporation, the Stock Purchase Agreement, the Restated Shareholders Agreement and the Restated Registration Agreement are collectively referred to herein as the \"Recapitalization Documents.\" Reconstitution of the Board: At the Closing, the Board shall be reconstituted, so that the Board shall consist of the following individuals: [NAME OF PARTIES] as provided in the Restated Shareholders Agreement. Post-Closing Adjustment: The Parties hereto have agreed to the consideration to be received by each Preferred Holder in exchange for the Preferred Stock and Class A Common Stock held by such holders immediately prior to the effectiveness hereof based upon an assumed price per share of Class A Common Stock on a fully-diluted as if converted basis of [PRICE PER SHARE] per share (the \"Assumed Price Per Share\"). In order to maintain the agreed percentage ownership of the Company's equity, the Company shall issue additional shares of Class A Common Stock and/or Series A Preferred Stock to the extent necessary and in the manner described below upon the occurrence of a Tax Valuation Event (as defined herein). The number of additional shares of Class A Common Stock and/or Series A Preferred Stock, as applicable, to be issued to each Shareholder entitled to receive such additional shares of Class A Common Stock and/or Series A Preferred Stock, as applicable, shall be the number of shares of Class A Common Stock or Series A Preferred Stock, as applicable, that when added to the number of shares of Class A Common Stock or Series A Preferred Stock, as applicable, held by such Shareholder on the date hereof as set forth in Exhibit G, shall result in such Shareholder holding the number of shares of Class A Common Stock or Series A Preferred Stock, as applicable, set forth opposite such Shareholder's name in the shaded column on the attached as Exhibit H which contains the appropriate Revised Price Per Share (as defined below) resulting from the Tax Valuation Event. In order to determine the Revised Price Per Share, the Assumed Price Per Share shall be adjusted by subtracting from such Assumed Price Per Share an amount equal to the product of (x) ______multiplied by (y) the difference between (i) the number of years greater than ten (10) that the Internal Revenue Service successfully determines (whether through adjudication or settlement with the Company) to be the correct amortizable life of the Company's subscriber accounts and (ii) ten (10) (such resulting price per share, the \"Revised Price Per Share\"). In no event whatsoever will the Revised Price per Share be less than [AMOUNT] per share. 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NOW, THEREFORE, in consideration of the mutual promises of the parties hereto, and intending to be legally bound, the parties hereby agree as follows: Definitions and organisation of the company \"Offering Shareholder\" means any Shareholder, or his personal representatives, heirs, administrators, and executors, as the case may be, who pursuant to this Agreement must or does offer all or any of his Shares to the Company or the Continuing Shareholders. \"Continuing Shareholders\" means all Shareholders other than an Offering Shareholder. \"Shares\" means shares of Common Stock of the Company now or hereafter owned by any Shareholder. \"Buyer\" means the Company or those Continuing Shareholders who purchase an Offering Shareholder's Shares pursuant to this Agreement. \"Management Shareholder\" means First Shareholder, Second Shareholder and Third Shareholder. ORGANISATION OF THE COMPANY The affairs of the Company will be managed by a board of [NUMBER] directors unless changed by a unanimous Directors' Resolution. The present directors of the Company are [DIRECTORS' NAMES]. It is agreed that [SHAREHOLDERS' NAMES] shall each be entitled to elect one director to the board of directors of the Company so long as each is a Shareholder. Two (2) directors shall constitute a quorum for the transaction of any business at any meeting of the board of directors. At all meetings of the board of directors, every motion to be carried must receive a majority of the votes cast, subject to the provisions of subparagraphs 2.4 and 2.5. Unless otherwise agreed, board meetings will be held at the head office of the Company. In the event that a nominee to the Board of one of the Shareholders shall fail to vote and act as a director to carry out the provisions of this agreement, then the shareholders agree to exercise their right as shareholders of the Company and in accordance with the Articles of the Company to remove such nominee from the Board and to elect in the place or stead thereof such individual who will use his/her best efforts to carry out the provisions of this agreement but only in the event that the Shareholder whose nominee has been removed fails to appoint a successor within a period of fourteen days from the date such nominee has been removed. The election, appointment and determination of officers and the auditors and advisors of the Company, the defining of their duties and functions and the salaries and remuneration to be paid to them will be a function of the board of directors. Until changed by the board of directors, the Officers of the Company and their annual salaries shall be: Office Held: Director: [NAME] [SALARY] Secretary: [NAME] [SALARY] All direct out-of-pocket expenses will be reimbursed provided these falls within guidelines set out by the Board of Directors from time to time. Until otherwise agreed, each officer of the Company will commit to spending his/her full time on the affairs of the Company. Until changed by the board of directors, the auditors and advisors of the Company shall be: Auditor: Legal Advisors: There shall be kept, in such bank or banks (including trust companies) as may be determined by the board of directors, bank accounts of the Company in which shall be deposited all monies received by the Company in the course of carrying on business from time to time. All payments on account of the Company shall be made by cheques drawn on the bank account and all cheques, drafts or other instruments drawn and made for the purposes of the business of the Company shall be executed by such directors, officers or employees as may from time to time be authorized so to do by the board of directors. Subject to paragraph 2.6, all decisions relating to the management and control of the business of the Company shall be determined by the board of directors of the Company, provided always that the following matters shall be determined by a Special Directors' Resolution: any capital expenditures greater than xxxx; any lease commitments greater than xxxx; the acquisition of any business interests by the Company; the elections of officers of the Company; the payment of any cash dividends or stock dividends to Shareholders of the Company; the issuance of any debt obligations of the Company; the disposal of the whole or any part of the business, undertaking, or assets of the Company outside the normal course of business of the Company the transfer of any shares of the Company; changes or variations in the objects or powers of the Company; the liquidation or winding up of the Company; the approval of any contracts or transactions outside the normal course of business; the execution of any contract involving a consideration greater than xxxx within the normal course of business; the lending of money by the Company; the guarantee by the Company of the debts or obligations of any other person, firm or body corporate; any non-budgeted expenditures greater than xxxx; business plan and/or budgets. The following decisions shall be determined by a Unanimous Directors' Resolution: alterations, variations or changes to the authorized or issued capital of the Company; the salaries and bonuses of officers and directors of the Company; the issue, redemption or purchase of any Shares; and changes in the number of directors of the Company The Shareholders may pledge any of their Shares as security for any borrowings by them provided the pledgee executes an agreement, in writing, providing that the pledgee shall be subject to all of the terms of this Agreement. The board of directors shall meet at least four times during each fiscal year of the Company. Any director can call a meeting provided 10 days notice is given. Notice may be waived. During the first year from the date of this agreement, the board of directors shall meet on a monthly basis. Directors may elect to attend a board meeting by telephone conference call. Each Shareholder shall, for so long as s/he is the owner of shares of the Company devote such of his/her business, time and energy as may be reasonably required to carry on the business of the Company and the Shareholder shall use his/her best efforts, skill and abilities to promote the interests of the Company. Each Shareholder agrees that he/she will not engage, without the consent of the other Shareholders, in a business which is directly competitive to that of the Company. Purchase for Investment","Shareholders Agreement","16","https://templates.business-in-a-box.com/imgs/1000px/shareholders-agreement-D1016.png","https://templates.business-in-a-box.com/imgs/250px/1016.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#1016.xml",{"title":94,"description":6},"shareholders agreement",[96,98],{"label":32,"url":97},"business-legal-agreements",{"label":99,"url":100},"Incorporation Agreements","incorporation-agreement","/template/shareholders-agreement-D1016",{"description":103,"descriptionCustom":6,"label":104,"pages":105,"size":106,"extension":10,"preview":107,"thumb":108,"svgFrame":109,"seoMetadata":110,"parents":111,"keywords":117,"url":118},"SHARE PURCHASE AGREEMENT This Share Purchase Agreement (the \"Agreement\") is effective [DATE], BETWEEN: [FIRST PARTY NAME] (the \"Company\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [SECOND PARTY NAME] (the \"Testamentary Executor / Seller\"), an individual with his/her main address located at: [COMPLETE ADDRESS] AND: [THIRD PARTY NAME] (the \"Purchaser\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS the Seller is the owner of [NUMBER] common shares in the capital stock of the Corporation (the \"Shares\"); WHEREAS the [COMPANY NAME] hereto have determined that the fair market value of the Shares is [AMOUNT]; WHEREAS the Corporation desires to purchase for cancellation and the Seller desires to sell the Shares; WHEREAS there are no reasonable grounds to believe that: (a) the Corporation is, or would after the payment of the purchase price be, unable to pay its liabilities as they become due, or (b) the realizable value of the Corporation's assets would after said payment be less than the aggregate of its liabilities and the amounts required for payment on a redemption or in a liquidation of all shares the holders of which have the right to be paid prior to the holders of the Shares; WHEREAS the aforesaid purchase will result in a deemed dividend of [AMOUNT] for the purposes of the [COUNTRY] Income Tax [ACT/LAW/RULE]; NOW THEREFORE, IT IS AGREED AS FOLLOWS: SHARES PURCHASED AND PURCHASE PRICE Subject to the terms and conditions set forth in this Agreement, the Corporation hereby purchases for cancellation the Shares from the Seller, hereto present and accepting, and the Seller delivers to the Corporation certificates representing the Shares. The aggregate purchase price for the Shares is [AMOUNT] (the \"Purchase Price\") which the parties consider to be the fair market value of the Shares, payable as set forth in Article [NUMBER] hereof. PAYMENT OF THE PURCHASE PRICE Upon filing by the Corporation of the election as set forth in Article [NUMBER] hereof, the Corporation will issue to the Seller a certificate representing [NUMBER] common shares of the Corporation (the \"Common Shares\") and a promissory note in the amount of [AMOUNT] (the \"Promissory Note\") in full payment of the Purchase Price. The parties hereto determine that the Common Shares and the Promissory Note have a fair market value of and are, in all circumstances of the transaction, the fair equivalent of a consideration payable in cash equal to the fair market value of the Shares. SELLER'S REPRESENTATIONS AND WARRANTIES The Seller represents and warrants to the Corporation that: the Shares are owned by the Seller by good and marketable title; the Seller is a resident of [COUNTRY] for the purposes of the Tax [ACT/LAW/RULE]; ELECTIONS","Share Purchase Agreement Deemed Dividend","4",56,"https://templates.business-in-a-box.com/imgs/1000px/share-purchase-agreement_deemed-dividend-D342.png","https://templates.business-in-a-box.com/imgs/250px/342.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#342.xml",{"title":6,"description":6},[112,114],{"label":18,"url":113},"finance-accounting",{"label":115,"url":116},"Buy & Sell Shares","buy-sell-shares","share purchase agreement deemed dividend","/template/share-purchase-agreement-deemed-dividend-D342",{"description":120,"descriptionCustom":6,"label":121,"pages":122,"size":123,"extension":10,"preview":124,"thumb":125,"svgFrame":126,"seoMetadata":127,"parents":128,"keywords":131,"url":132},"CONVERTIBLE NOTE AGREEMENT This Convertible Note Agreement (\"Agreement\") is made and effective the [DATE], BETWEEN: [YOUR COMPANY NAME] (the \"Company\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [NOTE HOLDERS NAME] (the \"Note Holders\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS, Note Holders are willing to lend Company the aggregate sum of [AMOUNT] be evidenced by [%] Convertible Promissory Notes. In consideration of the mutual covenants and conditions herein contained, the parties hereby agree, represent and warrant as follows: Issue of Notes The Company will authorize the issue of its [%] Convertible notes (hereinafter called \"Notes\") in the aggregate principal amount of [amOUNT] to be dated [date] to mature on [date] to bear interest on the unpaid principal thereof at the rate of [%] per annum until maturity, payable on the [day] of [month] in each year, commencing on [date], [year], and after maturity at the rate of [%] per annum until paid, and to be substantially in the form of Exhibit A attached hereto. For the purposes of calculating interest for any period for which the interest shall be payable, such interest shall be calculated on the basis of a [number] day month and a [number] day year. The Company will promptly and punctually pay to Note Holders or their nominee the interest on any of the Notes held by Note Holders without presentment of the Notes. In the event that Note Holders shall sell or transfer any of the Notes, they shall notify the Company of the name and address of the transferee. In the event the Company defaults on any installment of interest or principal, then any Holder of these Notes may, at his option, without notice, declare the entire principal and the interest accrued thereon immediately due and payable and may proceed to enforce the collection thereof. All the Notes shall contain a confession of judgment provision. The Company will also authorize the issue of [number] shares of its common stock (hereinafter called \"The Stock\") and will authorize the issuance of and reserve for such purchase such a number of additional shares of common stock (hereinafter called the \"Conversion Stock\") as may from time to time be the maximum number required for issuance upon conversion of the Notes pursuant to the conversion privileges hereinafter stated. Sale and Purchase of Notes and Stock The Company will sell the Notes to the purchasers listed on Exhibit A, each of whom agrees to purchase the principal amount of the Notes set opposite their names, subject to the terms and conditions hereof and in reliance upon the representations and warranties of the Company contained herein, at the purchase price of [%] of the principal amount. Representations and Warranties by the Company Company is a corporation duly organized and existing in good standing under the laws of the State of [state/province] has the corporate power to own its own property and to carry on in the business as it is now being conducted. Company has on its corporate records the names of the following individuals who each own [number] shares of common stock which constitute all the issue and outstanding capital stock of the Company as of this date. The Company has furnished to the Note Holders an Offering Circular which is attached hereto as Exhibit B. The financial statements contained therein are true and correct and have been prepared in accordance with generally accepted accounting principles consistently followed throughout the period indicated. There is no action or proceeding pending or, to the knowledge of the Company, threatened against the Company before any court or administrative agency, the determination of which might result in any material adverse change in the business of the Company. The Company has title to the respective properties and assets including the properties and assets reflected on the financial statement for the year ending [date] and which assets and properties are subject to no liens, mortgages, encumbrances or charges except a security interest to [specify]. The Company is not a party to any contract or agreement or subject to any restriction which materially and adversely affects its business, property or assets, or financial condition, and neither the execution nor delivery of this Agreement, nor the confirmation of the transactions contemplated herein, nor the fulfillment of the terms hereof, nor the compliance with the terms and provisions hereof and of the Notes, will conflict with or result in the breach of the terms, conditions or provisions or constitute a default, under the Articles of Incorporation or Code of Regulations of the Company or of any Agreement or instrument to which the Company is now a party. The Company has not declared, set aside, paid or made any dividend or other distributions with respect to its capital stock and has not made or caused to be made directly or indirectly, any payment or other distribution of any nature whatsoever to any of the holders of its capital stock except for regular salary payments for services rendered and the reimbursement of business expenses. All of the equipment and automobiles of the Company are in good condition and repair. There are no outstanding options or rights to purchase shares of the Company and no outstanding securities with the right of conversion into shares of the Company. The Company owns or possesses adequate licenses or other rights to use, all patents, trademarks, trade names, trade secrets, and copyrights used in its business. No one has asserted to the Company that its operations infringe on the patents, trademarks, trade secrets or other rights utilized in the operation of its business. Neither the Company nor any agent or employee acting in its behalf has offered the Notes or the Stock or any portion thereof for sale to or solicited in any offer to buy the same or any thereof from any person or persons other than the purchasers listed in the attached Exhibit A and [NUMBER] other persons, and neither the Company nor any agent or employee acting in its behalf will sell or offer for sale the Notes or Stock or any portion thereof to or solicit any offer to buy the Notes or the Stock from any person or persons so as to bring the issuance or sale thereof within the provisions of Section [NUMBER] of the [ACT]. Representations and Warranties by the Note Holders The Note Holders represent and warrant that: The Note Holders are subscribing for the Notes and Stock for investment purposes and not with the view to or for sale in connection with any distribution thereof and that they have no present intent to sell, give or otherwise transfer the Notes or Stock. The Note Holders state that they are and residents of the State of [state/province]. The Note Holders understand that this is a highly speculative investment in a Company which is insolvent both from a legal and an equity standpoint. Individuals represent and warrant that they have a net worth in excess of [amount] exclusive of their residences and that they are sophisticated investors who are knowledgeable about the [specify] business. Note Holders state that they will be active in the affairs of the business of the Company. Prepayment of the Notes Company shall have the right to make prepayments on principal of the Notes at any time on [number] days written notice. Such prepayment shall be accompanied by a payment of all accrued interest to date. There shall be no premium for the amount so prepaid. Conversion","Convertible Note Agreement","6",64,"https://templates.business-in-a-box.com/imgs/1000px/convertible-note-agreement-D870.png","https://templates.business-in-a-box.com/imgs/250px/870.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#870.xml",{"title":6,"description":6},[129,130],{"label":32,"url":97},{"label":32,"url":97},"convertible note agreement","/template/convertible-note-agreement-D870",{"description":134,"descriptionCustom":6,"label":135,"pages":136,"size":9,"extension":10,"preview":137,"thumb":138,"svgFrame":139,"seoMetadata":140,"parents":142,"keywords":141,"url":145},"SUBSCRIPTION AGREEMENT This Stock Subscription Agreement (the \"Agreement\") is made and effective [DATE] BETWEEN: [INSERT COMPANY NAME], a [INSERT STATE OF INCORPORATION], corporation [the \"COMPANY\"]. AND: The undersigned a [INSERT STATE OF INCORPORATION], corporation [the \"INVESTOR\"]. SUBSCRIPTION. Subject to the terms and conditions hereof, the Investor hereby subscribes to purchase that number of shares of common stock, par value [$____] per share, of the Company (the \"Common Stock\") set forth on the signature page of this Agreement at a purchase price of $____ per share (\"Purchase Price\"). Payment for the Common Stock shall be made in cash or by certified bank or cashier's check payable in immediately available funds in the amount of the Purchase Price made payable to the order of the Company and such payment shall be delivered on or prior to the execution and delivery of this Agreement. TERMS OF SUBSCRIPTION The Investor acknowledges and agrees that this Agreement is made subject to the following terms and conditions: The Investor hereby intends that his signature hereon shall constitute a subscription to the Company for the number of shares of Common Stock specified on the signature page of this Agreement. This subscription for the purchase of Common Stock is subject to acceptance by the Company and does not, prior to acceptance, bind the Company to sell the shares of Common Stock to the Investor. The Company shall have the right to accept or reject this subscription, in whole or in part, in its sole and absolute discretion for any reason. This subscription is and shall be irrevocable unless and until (i) this subscription is for any reason rejected, or (ii) this Agreement is terminated. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF INVESTOR The Investor hereby represents, warrants, and covenants to the Company that: The Investor acknowledges that the Investor has been advised and understands that the Common Stock to be acquired pursuant to this Agreement have not been registered under the Securities Act of 1933, as amended (the \"Securities Act\"), or registered or qualified under the securities laws of any other jurisdiction and are being sold in reliance upon an exemption from registration under such laws. Accordingly, the Investor understands that the Investor may not sell, pledge, hypothecate, dispose of, or otherwise transfer (a \"Transfer\") the Common Stock unless such shares are subsequently registered and qualified under such laws or, in the opinion of counsel reasonably satisfactory to the Company, an exemption from such registration and qualification is available. The Investor further understands that (i) the Stockholders' Agreement, dated ____, 20___, by and among the Company and the shareholders identified therein (the \"Stockholders s Agreement\") contains certain restrictions on any Transfer of the Common Stock, and (ii) any Transfer that is permitted under the Stockholders Agreement must satisfy certain legal, procedural and other requirements. The Investor is the sole and true party in interest, and is acquiring the Common Stock solely for his or her own account, not as a nominee, agent, or representative for any person, for investment purposes only, and not with an intent or a view to the sale or distribution of any part thereof within the meaning of Section 2(a)(11) of the Securities Act. By executing this Agreement, the Investor further represents that he or she does not have any present intent of making a Transfer of, granting a participation in, or otherwise distributing the Common Stock in a manner contrary to the Securities Act or the securities laws of any other applicable jurisdictions, nor does the Investor have any contract, undertaking, agreement, or arrangement with any person to Transfer, grant any participation in, or otherwise distribute any of the Common Stock to such person. The Investor does not presently have any reason to anticipate any change in circumstances or other particular occasion or event which would cause the Investor to need to sell the Common Stock, except in compliance with the terms of this Agreement, the Stockholders Agreement, and the securities laws of all applicable jurisdictions. The Investor understands and acknowledges that only the Company can register the Common Stock under applicable securities laws; the Company does not intend to register the Common Stock under the Securities Act or the securities laws of any other jurisdiction; no public market for the Common Stock is expected to develop; and, as a result, an investment in the Common Stock may not be liquid and the Investor must bear the economic risk of the investment indefinitely. In this regard, the Investor further represents that the Investor has adequate means of providing for the Investor's current needs and possible personal contingencies; the Investor can afford to bear the economic risk of holding the Common Stock for an indefinite period of time; and the Investor has no need for liquidity in the Investor's investment in the Common Stock. The Investor has the net worth sufficient to bear the risks of and to sustain a complete loss of the Investor's entire investment in the Company. The Investor hereby agrees that it will not, directly or indirectly, offer to Transfer or to Transfer any shares of Common Stock (or solicit any offers to buy, purchase, or otherwise acquire or take a pledge of any shares of Common Stock), except in compliance with this Agreement and the Securities Act, the securities laws of all other applicable jurisdictions, and the rules and regulations promulgated thereunder. The Investor recognizes that in the future the Company may not satisfy the requirements which would permit the undersigned to sell the Common Stock pursuant to Rule 144 promulgated under the Securities Act. The Investor further acknowledges that it has, alone or together with its purchaser representative (\"Purchaser Representative\"), sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of the prospective investment in the Common Stock. The Investor recognizes that an investment in the Common Stock and in the Company involves certain risks, and the Investor has taken full cognizance of, understands, and is willing to bear the risks related to the purchase of the Common Stock [including, without limitation, those risk factors set forth in Attachment A to this Agreement, which Attachment A is incorporated herein by reference]. The Investor is aware and understands that no federal or state agency has made any finding or determination as to the fairness of this offering nor has made any recommendation or endorsement of the Common Stock. The Investor represents and confirms that the address set forth on the signature page is the Investor's true and correct residence, and that the Investor has no present intention of becoming a resident of any other state or jurisdiction. The social security number set forth on the signature page hereof is the Investor's true and correct social security number. The Investor confirms that prior to the sale of the Common Stock to the Investor pursuant to this Agreement, the Investor and the Investor's Purchaser Representative, if any: (i) has been given access to all material books and records of the Company and all material contracts and documents relating to the sale of the Common Stock pursuant to this Agreement; (ii) has been granted the opportunity to ask questions of, and receive answers from, representatives of the Company concerning the Company and the terms and conditions of the sale of the Common Stock by the Company; and (iii) has been given the opportunity to obtain any additional information which the Investor or the Investor's Purchaser Representative, if any, deems necessary to verify the accuracy of the information supplied to them","Subscription Agreement","9","https://templates.business-in-a-box.com/imgs/1000px/subscription-agreement-D12537.png","https://templates.business-in-a-box.com/imgs/250px/12537.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#12537.xml",{"title":141,"description":6},"subscription agreement",[143,144],{"label":18,"url":113},{"label":115,"url":116},"/template/subscription-agreement-D12537",{"description":147,"descriptionCustom":6,"label":148,"pages":149,"size":150,"extension":10,"preview":151,"thumb":152,"svgFrame":153,"seoMetadata":154,"parents":155,"keywords":159,"url":160},"TERM SHEET Issue: [Venture Capital FIRM] (\"VC\") and/or any member of its corporate group (\"the VC Group\") will purchase up to [AMOUNT] Series A Convertible Preferred Stock (\"Series A\") newly issued by [YOUR COMPANY NAME] (the \"Company\") at a price per share of [PRICE] (the \"Purchase Price\"). In addition, other investors shall purchase at least [AMOUNT] but not more than [AMOUNT] of newly issued Series A at the Purchase Price. The shares of Series A will be convertible at any time at the option of the holder into common shares of the Company (\"Common Stock\") on a one-for-one basis, adjusted for future share splits. The Purchase Price equates to a pre-money valuation of [VALUATION]. The calculation is based on [NUMBER] fully diluted shares of Common Stock. If the number of shares issued, or stock awards/options authorized increases before the closing the price per share for Series A Convertible Preferred Stock shall be reduced so that the pre-money valuation is unchanged. The Series A Convertible Preferred Stock shall be referred to herein as the \"Preferred Stock.\" Dividend: The Preferred Stock is entitled to an annual [AMOUNT] per share dividend, payable when and if declared by the Board of Directors, but prior to any payment on Common Stock; dividends are not cumulative. Liquidation Preference: The Series A will have a liquidation preference so that proceeds on a merger, sale or liquidation (including non-cumulative dividends) will first be paid to the Series A and will include a [%] per annum compounding guaranteed return calculated on the total amount invested. Upon completion of an additional round of funding of at least [AMOUNT] the compounding guaranteed return feature will expire. The liquidation preference will cease to operate if the proceeds due to Series A, on a merger, sale or liquidation on an as-converted basis, exceed the proceeds that would be due under the liquidation preference. Use of Proceeds: The funds raised by Series A will be used principally for general working capital purposes. Voting Rights: The holders of the Series A shall have the right to vote with the Common Stock on an as-if-converted basis. Redemption: If not previously converted, the Series A is to be redeemed in three equal successive annual installments beginning [DATE]. Redemption will be at the purchase price plus a [%] per annum cumulative guaranteed return. Pre-emptive Rights: Holders of the Preferred Stock will be granted rights to participate in future equity financings of the Company based upon their pro-rata, as-if-converted, ownership of the Company. Automatic Conversion: The Preferred Stock shall be automatically converted into Common Stock at the then applicable conversion rate (1:1 assuming no share splits) in the event of an underwritten public offering of shares of the Company at a total offering of not less than [AMOUNT] and at a per share public offering price of not less than three times the Series A purchase price per share, adjusted for splits. Anti-Dilution: Series A shall have weighted average anti-dilution, based on a weighted average formula to be agreed, for all securities purchased as part of this transaction (excluding shares, options and warrants issued for management incentive and small issues for strategic purposes of under [NUMBER] shares). Management Options: Simultaneously with this transaction, one million new shares shall expand the Company's management incentive stock option pool - bringing the total number of shares issued and stock incentives (awards and options) authorized to [NUMBER OF SHARES]. Rights of First Offer; Tag-Along: The Company and the Investors will have a right of first refusal with respect to any employee's shares proposed to be resold. Alternatively, the Investors will have the right to participate in the sale of any such shares to a third party (co-sale rights), which rights will terminate upon a public offering. Information Rights: Monthly actual vs. plan and prior year. Annual budget [NUMBER] days before beginning of fiscal year","Term Sheet","3",42,"https://templates.business-in-a-box.com/imgs/1000px/term-sheet-D473.png","https://templates.business-in-a-box.com/imgs/250px/473.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#473.xml",{"title":6,"description":6},[156,157],{"label":18,"url":113},{"label":21,"url":158},"raising-capital","term sheet","/template/term-sheet-D473",{"description":162,"descriptionCustom":6,"label":163,"pages":149,"size":9,"extension":10,"preview":164,"thumb":165,"svgFrame":166,"seoMetadata":167,"parents":169,"keywords":168,"url":174},"NON-DISCLOSURE AGREEMENT (NDA) This Non-Disclosure Agreement (the \"Agreement\") is made and effective [DATE], BETWEEN: [YOUR COMPANY NAME] (the \"Disclosing Party\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [RECEIVING PARTY NAME] (the \"Receiving Party\"), an individual with his main address located at OR a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS, Receiving Party has been or will be engaged in the performance of work on [DESCRIBE]; and in connection therewith will be given access to certain confidential and proprietary information; and WHEREAS, Receiving Party and Disclosing Party wish to evidence by this Agreement the manner in which said confidential and proprietary material will be treated. NOW, THEREFORE, it is agreed as follows: NON-DISCLOSURE OF CONFIDENTIAL INFORMATION Both Parties understand and agree that each Party may have access to the confidential information of the other party. For the purposes of this Agreement, \"Confidential Information\" means proprietary and confidential information about the Disclosing Party's (or it's suppliers') business or activities. Such information includes all business, financial, technical, and other information marked or designated by such Party as \"confidential\" or \"proprietary.\" Confidential Information also includes information which, by the nature of the circumstances surrounding the disclosure, ought in good faith to be treated as confidential. For the purposes of this Agreement, Confidential Information does not include: Information that is currently in the public domain or that enters the public domain after the signing of this Agreement. Information a Party lawfully receives from a third Party without restriction on disclosure and without breach of a non-disclosure obligation. Information that the Receiving Party knew prior to receiving any Confidential Information from the Disclosing Party. Information that the Receiving Party independently develops without reliance on any Confidential Information from the Disclosing Party. Each Party agrees that it will not disclose to any third Party or use any Confidential Information disclosed to it by the other Party except when expressly permitted in writing by the other Party. Each Party also agrees that it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the other Party in its possession or control. TERM The term of this Agreement is [number] of [years/months] from the date of execution by both Parties. TITLE The Receiving Party agrees that all Confidential Information furnished by the Disclosing Party shall remain the sole property of the Disclosing Party. DISCLAIMER","Non Disclosure Agreement Nda","https://templates.business-in-a-box.com/imgs/1000px/non-disclosure-agreement-nda-D12692.png","https://templates.business-in-a-box.com/imgs/250px/12692.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#12692.xml",{"title":168,"description":6},"non disclosure agreement nda",[170,171],{"label":32,"url":97},{"label":172,"url":173},"Confidentiality Agreements","confidentiality-agreement","/template/non-disclosure-agreement-nda-D12692",false,{"seo":177,"reviewer":189,"legal_disclaimer":193,"quick_facts":194,"at_a_glance":196,"personas":200,"variants":225,"glossary":251,"clauses":288,"how_to_fill":339,"common_mistakes":380,"faqs":405,"industries":433,"comparisons":450,"diy_vs_lawyer":464,"jurisdictions":477,"related_template_ids_curated":498,"schema":510,"classification":511},{"meta_title":178,"meta_description":179,"primary_keyword":180,"secondary_keywords":181},"Recapitalization Agreement Template | BIB","Free recapitalization agreement template for restructuring company equity or debt.","recapitalization agreement template",[15,182,183,184,185,186,187,188],"recap agreement template","equity recapitalization agreement","debt recapitalization template","company recapitalization document","recapitalization agreement word","recapitalization agreement free download","business recapitalization template",{"name":190,"credential":191,"reviewed_date":192},"Bruno Goulet","CEO, Business in a Box","2026-05-02",true,{"difficulty":195,"legal_review_recommended":193,"signature_required":193,"notarization_required":175},"advanced",{"what_it_is":197,"when_you_need_it":198,"whats_inside":199},"A Recapitalization Agreement is a legally binding contract that restructures a company's existing capital structure — altering the mix of equity, debt, and hybrid instruments — among shareholders, lenders, and the company itself. This free Word download gives you a professionally drafted starting point you can edit online and export as PDF, covering share reclassification, debt conversion, new security issuances, and updated governance terms in a single enforceable document.\n","Use it when a company is converting debt to equity, bringing in a new investor class, preparing for a buyout or ownership transition, or restructuring its balance sheet to meet lender covenants or investor requirements. It is also commonly used ahead of an M&A transaction or succession event where the existing capital structure must be cleaned up.\n","Parties and recitals, description of the existing capital structure, terms of the new capital arrangement, share reclassification or exchange mechanics, debt conversion or payoff provisions, representations and warranties, conditions precedent to closing, governance changes, and post-closing covenants.\n",[201,205,209,213,217,221],{"title":202,"use_case":203,"icon_asset_id":204},"Private equity sponsors","Restructuring a portfolio company's debt and equity ahead of a platform acquisition","persona-private-equity",{"title":206,"use_case":207,"icon_asset_id":208},"Startup founders","Converting convertible notes or SAFEs into a new preferred equity class at a priced round","persona-startup-founder",{"title":210,"use_case":211,"icon_asset_id":212},"Business owners planning a succession","Reclassifying common shares into voting and non-voting classes to transfer economic interest","persona-small-business-owner",{"title":214,"use_case":215,"icon_asset_id":216},"Corporate attorneys","Documenting and formalizing board-approved capital restructuring for a client entity","persona-corporate-attorney",{"title":218,"use_case":219,"icon_asset_id":220},"CFOs and finance directors","Refinancing existing debt instruments and issuing new senior or subordinated notes","persona-cfo",{"title":222,"use_case":223,"icon_asset_id":224},"M&A advisors","Cleaning up a target company's cap table prior to a sale or merger transaction","persona-ma-advisor",[226,230,233,236,240,243,247],{"situation":227,"recommended_template":228,"slug":229},"Converting outstanding convertible debt into preferred equity at a priced round","Recapitalization Agreement (Debt-to-Equity)","recapitalization-agreement-D13032",{"situation":231,"recommended_template":232,"slug":229},"Reclassifying common shares into voting and non-voting classes for succession","Recapitalization Agreement (Share Reclassification)",{"situation":234,"recommended_template":235,"slug":229},"Leveraged recapitalization where new debt is issued to fund a shareholder distribution","Recapitalization Agreement (Leveraged)",{"situation":237,"recommended_template":238,"slug":239},"Equity recapitalization as part of a management buyout","Management Buyout Agreement","buyout-agreement-D12612",{"situation":241,"recommended_template":88,"slug":242},"Full capital restructuring combined with a new investor subscription","shareholders-agreement-D1016",{"situation":244,"recommended_template":245,"slug":246},"Restructuring following financial distress or a workout arrangement","Debt Restructuring Agreement","secured-lumpsum-promissory-note-agreement-D13041",{"situation":248,"recommended_template":249,"slug":250},"Recapitalizing a corporation ahead of a share exchange or merger","Share Exchange Agreement","exchange-of-shares-agreement-D330",[252,255,258,261,264,267,270,273,276,279,282,285],{"term":253,"definition":254},"Recapitalization","A corporate restructuring that changes the composition of a company's capital structure by altering the proportion of equity, debt, or hybrid securities.",{"term":256,"definition":257},"Capital Structure","The mix of debt, equity, and hybrid instruments a company uses to finance its assets and operations.",{"term":259,"definition":260},"Share Reclassification","The conversion of existing shares from one class to another — for example, converting common shares into voting and non-voting classes.",{"term":262,"definition":263},"Debt-to-Equity Conversion","The cancellation of outstanding debt obligations in exchange for newly issued equity shares, reducing liabilities and increasing equity on the balance sheet.",{"term":265,"definition":266},"Leveraged Recapitalization","A restructuring in which a company takes on significant new debt to fund a special dividend or share buyback, increasing financial leverage.",{"term":268,"definition":269},"Conditions Precedent","Specific requirements that must be satisfied before the recapitalization transaction can legally close — such as regulatory approvals, shareholder consent, or lender sign-off.",{"term":271,"definition":272},"Cap Table","A spreadsheet or schedule listing all equity owners, their share classes, ownership percentages, and the effect of any new issuances or conversions.",{"term":274,"definition":275},"Pro Rata Rights","The right of existing shareholders to participate in future financing rounds in proportion to their current ownership percentage, preserving their stake against dilution.",{"term":277,"definition":278},"Representations and Warranties","Factual statements made by each party about the current state of the company — financial condition, capitalization, legal compliance — that, if false, create indemnification liability.",{"term":280,"definition":281},"Closing Mechanics","The specific steps, deliverables, and signatures required on or before the closing date for the recapitalization to become legally effective.",{"term":283,"definition":284},"Anti-Dilution Protection","A provision that adjusts the conversion price of preferred shares or warrants downward if the company later issues shares at a lower valuation, protecting earlier investors.",{"term":286,"definition":287},"Indemnification","A contractual obligation by one party to compensate another for losses, liabilities, or damages arising from a breach of representations, warranties, or covenants.",[289,294,299,304,309,314,319,324,329,334],{"name":290,"plain_english":291,"sample_language":292,"common_mistake":293},"Parties and recitals","Identifies the company, all participating shareholders, and any lenders or new investors involved. The recitals provide the background — why the recapitalization is happening and what the parties intend to accomplish.","This Recapitalization Agreement ('Agreement') is entered into as of [DATE] by and among [COMPANY NAME], a [STATE/PROVINCE] [ENTITY TYPE] ('Company'), the shareholders listed on Schedule A ('Existing Shareholders'), and [NEW INVESTOR NAME] ('New Investor').","Listing shareholders by name only instead of their legal entity or full legal name. If a shareholder is a trust, LLC, or holding company, using a personal name creates ambiguity about who is actually bound.",{"name":295,"plain_english":296,"sample_language":297,"common_mistake":298},"Description of existing capital structure","Sets out the company's capitalization immediately before the transaction — authorized and issued share classes, outstanding debt instruments, warrants, options, and convertible securities.","Immediately prior to the Closing, the Company's capitalization consists of [X] issued and outstanding Common Shares, [X] Series A Preferred Shares, and a convertible note in the principal amount of $[AMOUNT] held by [LENDER NAME], as set out in Schedule B.","Failing to include all outstanding convertible instruments — SAFEs, warrants, and option pools — in the pre-closing cap table. An incomplete baseline makes the post-closing cap table unenforceable and creates disputes about dilution.",{"name":300,"plain_english":301,"sample_language":302,"common_mistake":303},"Terms of the new capital arrangement","Defines the post-recapitalization capital structure — new share classes being created, new debt being issued, conversion ratios, and the resulting ownership percentages for each party.","Upon Closing, the Company shall (a) create a new class of [CLASS NAME] Shares with the rights set out in the Amended Articles attached as Schedule C; (b) issue [X] [CLASS NAME] Shares to [PARTY] at a price of $[PRICE] per share; and (c) cancel the outstanding convertible note in exchange for [X] Common Shares at a conversion price of $[PRICE].","Stating conversion ratios as percentages rather than a fixed price per share. Percentage-based conversions become ambiguous once any further issuances or option exercises occur post-closing.",{"name":305,"plain_english":306,"sample_language":307,"common_mistake":308},"Share reclassification or exchange mechanics","Details the technical steps for reclassifying, converting, or exchanging existing shares — including the surrender of old share certificates, the cancellation of existing classes, and the issuance of new certificates or book entries.","Each issued and outstanding Common Share held by an Existing Shareholder shall automatically be reclassified into [X] Class A Voting Shares and [X] Class B Non-Voting Shares, effective as of the Closing, without any further act or formality by the holder.","Relying on 'automatic' reclassification language without confirming the corporate statute in the applicable jurisdiction allows automatic share conversions without a shareholder vote. Some statutes require unanimous consent or a court order.",{"name":310,"plain_english":311,"sample_language":312,"common_mistake":313},"Debt conversion or payoff provisions","Specifies whether existing debt is being converted to equity, repaid in cash, or refinanced — and the exact mechanics, including interest treatment, accrued fees, and release of security.","The outstanding principal of $[AMOUNT] and accrued interest of $[AMOUNT] under the Loan Agreement dated [DATE] shall be fully satisfied by the issuance of [X] Common Shares to [LENDER NAME] at the Conversion Price. Upon such issuance, [LENDER NAME] shall deliver a full release of all security interests.","Converting only the principal balance and leaving accrued interest outstanding. The lender retains a live debt claim for unpaid interest unless the clause expressly addresses it.",{"name":315,"plain_english":316,"sample_language":317,"common_mistake":318},"Representations and warranties","Each party confirms that they have authority to enter the agreement, the company's capitalization is as described, there are no undisclosed liabilities or encumbrances on the shares, and applicable consents have been obtained.","The Company represents and warrants to each Shareholder that: (a) it is duly incorporated and in good standing; (b) the capitalization set out in Schedule B is accurate and complete as of the date hereof; (c) no consent or approval not already obtained is required to consummate the transactions contemplated herein.","Including no bring-down provision — meaning representations are only true as of signing, not as of closing. If the closing occurs weeks later and the cap table changes, the representations are stale and provide no protection.",{"name":320,"plain_english":321,"sample_language":322,"common_mistake":323},"Conditions precedent to closing","Lists the specific actions and approvals that must be completed before the recapitalization becomes effective — such as board and shareholder resolutions, amended articles filed with the registrar, regulatory clearances, and lender consents.","The obligations of the parties to consummate the Closing are subject to satisfaction of the following conditions: (a) receipt of all required board and shareholder approvals; (b) filing and acceptance of the Amended Articles by [REGISTRAR]; (c) receipt of written consent from [SENIOR LENDER] to the transactions contemplated herein.","No longstop date on conditions precedent. Without a date by which all conditions must be satisfied, any party can hold the transaction open indefinitely by delaying their required deliverable.",{"name":325,"plain_english":326,"sample_language":327,"common_mistake":328},"Governance changes and amended articles","Documents changes to the company's constitutional documents resulting from the recapitalization — new share class rights, changes to the board composition, voting thresholds, drag-along and tag-along rights, and any new investor protective provisions.","At Closing, the Company shall adopt the Amended and Restated Articles attached as Schedule C, which shall, among other things: (a) create the [CLASS NAME] Shares with the rights and restrictions set out therein; (b) grant [NEW INVESTOR] the right to appoint one director to the Board; (c) require approval of [X]% of [CLASS NAME] Shareholders for the matters listed in Schedule D.","Describing governance changes in the body of the agreement instead of attaching fully drafted amended articles. If the articles are not attached, the governance terms are aspirational rather than legally constituted.",{"name":330,"plain_english":331,"sample_language":332,"common_mistake":333},"Post-closing covenants","Obligations each party agrees to fulfill after closing — such as updating the share register, filing required regulatory notices, issuing new share certificates, and maintaining the agreed capital structure.","Following the Closing, the Company shall: (a) update the Register of Shareholders to reflect the post-closing capitalization within [5] business days; (b) file any required notice with [REGULATORY BODY] within [30] days; (c) issue new share certificates or book-entry confirmations to each holder within [10] business days.","No deadline on post-closing administrative steps. Without a specified timeframe, updating the share register or filing required notices gets deferred indefinitely, creating cap table discrepancies and regulatory exposure.",{"name":335,"plain_english":336,"sample_language":337,"common_mistake":338},"Governing law, dispute resolution, and entire agreement","Specifies which jurisdiction's law governs the agreement, how disputes are resolved (arbitration or courts), and confirms that this document supersedes all prior negotiations and side agreements.","This Agreement shall be governed by and construed in accordance with the laws of [STATE/PROVINCE/COUNTRY]. Any dispute shall be resolved by binding arbitration in [CITY] under the rules of [AAA / JAMS / applicable arbitral body]. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof.","Choosing a governing law with no connection to where the company is incorporated or operates. Several jurisdictions will apply local corporate law regardless of the governing-law clause, making a mismatched choice confusing rather than protective.",[340,345,350,355,360,365,370,375],{"step":341,"title":342,"description":343,"tip":344},1,"Identify all parties and confirm their legal names","List the company's full registered legal name, all existing shareholders (by legal entity or full personal name), participating lenders, and any new investors. Attach a Schedule A with each party's details.","Pull legal names from the corporate registry and share register — not from business cards or email signatures — to avoid enforcement gaps.",{"step":346,"title":347,"description":348,"tip":349},2,"Document the pre-closing capital structure in Schedule B","List every authorized and issued share class, outstanding convertible notes, SAFEs, warrants, and option pools with their principal amounts, conversion prices, and holders.","Have your corporate counsel or capitalization tracking software (e.g., Carta) generate a certified cap table snapshot dated as of the agreement date.",{"step":351,"title":352,"description":353,"tip":354},3,"Define the new capital arrangement in precise numbers","Enter conversion prices per share (not percentages), new share class names and quantities, and cash amounts for any debt repayment. Attach the amended articles as Schedule C before execution.","Express all conversion ratios as a fixed dollar price per share so the formula is unambiguous after any subsequent option exercises.",{"step":356,"title":357,"description":358,"tip":359},4,"Draft and attach the amended articles","Prepare fully drafted amended and restated articles of incorporation reflecting the new share classes, voting rights, and investor protections. Attach them as Schedule C to the agreement — do not merely describe the changes in the body.","File a draft with your corporate registrar before the closing date to confirm the filing will be accepted and no additional information is required.",{"step":361,"title":362,"description":363,"tip":364},5,"List all conditions precedent with a longstop date","Identify every consent, approval, and filing required before closing can occur. Set a specific longstop date — typically 30 to 90 days from signing — by which all conditions must be satisfied or the agreement terminates.","Assign responsibility for each condition to a named party with a corresponding deadline to avoid last-minute ambiguity.",{"step":366,"title":367,"description":368,"tip":369},6,"Include bring-down representations at closing","Add language confirming that all representations and warranties are true as of the closing date, not just the signing date. This protects all parties if the company's condition changes between execution and closing.","For transactions with a gap between signing and closing exceeding two weeks, add a covenant requiring the company to notify parties of any material change.",{"step":371,"title":372,"description":373,"tip":374},7,"Specify post-closing administrative obligations and deadlines","Set exact business-day deadlines for updating the share register, issuing new certificates, filing regulatory notices, and delivering closing deliverables to each party.","Assign a single named individual — typically the corporate secretary or legal counsel — responsible for each post-closing deliverable.",{"step":376,"title":377,"description":378,"tip":379},8,"Execute before the effective date and retain fully executed copies","Obtain signatures from all parties — company, all shareholders, lenders, and new investors — on or before the closing date. Store fully executed copies alongside the updated share register and amended articles.","Use a structured closing checklist to confirm every signature page and schedule is attached before declaring the transaction closed.",[381,385,389,393,397,401],{"mistake":382,"why_it_matters":383,"fix":384},"Incomplete pre-closing cap table","If outstanding SAFEs, warrants, or option pools are omitted from the baseline cap table, the post-closing ownership percentages are wrong. This creates immediate disputes among shareholders and can unwind the transaction.","Generate a certified cap table from your corporate records showing every issued security, convertible instrument, and reserved equity pool before drafting the agreement.",{"mistake":386,"why_it_matters":387,"fix":388},"No longstop date on conditions precedent","Without a deadline, a single party can stall the transaction indefinitely by delaying a required consent or filing, leaving all other parties in limbo with no contractual remedy.","Insert a longstop date — typically 60 to 90 days from signing — after which either party may terminate if conditions remain unsatisfied.",{"mistake":390,"why_it_matters":391,"fix":392},"Attaching unsigned or draft amended articles","If the amended articles attached as a schedule are not in final executed form, the new share class rights and governance provisions have no legal effect even after closing.","Confirm the amended articles are in their final filing-ready form before execution, and attach only the version that will be filed with the corporate registrar.",{"mistake":394,"why_it_matters":395,"fix":396},"Omitting accrued interest from debt conversion mechanics","Converting only the principal balance while leaving accrued interest outstanding means the lender retains a live unsecured debt claim post-closing, which can complicate future financing or an exit.","State explicitly whether accrued and unpaid interest is (a) converted to equity at the same conversion price, (b) paid in cash at closing, or (c) forgiven — and include a full release of the debt obligation.",{"mistake":398,"why_it_matters":399,"fix":400},"Using percentage-based conversion ratios instead of a fixed price per share","A conversion ratio stated as a percentage of post-closing equity shifts with every subsequent option exercise or share issuance, making the actual share count impossible to determine with certainty.","Express all conversions as a fixed dollar price per share so the number of shares issued is calculable from a static formula regardless of subsequent changes.",{"mistake":402,"why_it_matters":403,"fix":404},"Signing without all required shareholder and lender consents","Most corporate statutes and existing shareholder agreements require approval from existing shareholders and secured lenders before a recapitalization can be effected. Proceeding without consent exposes the company to derivative litigation and can void the transaction.","Map all required consents before drafting — check the company's existing shareholders agreement, loan covenants, and applicable corporate statute — and obtain written approvals before or simultaneously with execution.",[406,409,412,415,418,421,424,427,430],{"question":407,"answer":408},"What is a recapitalization agreement?","A recapitalization agreement is a legally binding contract that restructures a company's existing capital structure by changing the mix of equity, debt, and hybrid instruments. It formally documents the terms under which shares are reclassified or exchanged, debt is converted to equity or repaid, new investors subscribe for securities, and governance arrangements are updated. It is executed by the company, its shareholders, and any participating lenders or new investors as part of a single coordinated closing.\n",{"question":410,"answer":411},"When is a recapitalization agreement used?","A recapitalization agreement is used whenever a company restructures its balance sheet in a material way — converting convertible notes or SAFEs to equity at a priced round, reclassifying shares for succession or estate planning, issuing new debt to fund a special dividend in a leveraged recap, or cleaning up a cap table ahead of a sale or merger. It is also common when a company needs to satisfy lender covenants, bring in a new strategic investor class, or resolve shareholder disputes through a negotiated restructuring.\n",{"question":413,"answer":414},"What is the difference between a recapitalization and a restructuring?","Recapitalization specifically refers to changing the composition of a company's capital structure — equity, debt, and hybrid instruments — while the underlying business continues operating. Restructuring is a broader term that can include operational changes, workforce reductions, asset sales, and business unit reorganizations, in addition to capital changes. All recapitalizations involve a form of restructuring, but not all restructurings involve a recapitalization.\n",{"question":416,"answer":417},"Do all shareholders need to sign a recapitalization agreement?","In most cases, yes — or at minimum, the required approval threshold under the existing shareholders agreement and applicable corporate statute must be met. Most agreements require consent from all affected shareholders, particularly when existing share rights are being altered. Secured lenders whose collateral is being affected must also consent. Proceeding without required consents exposes the company to litigation and may void the transaction.\n",{"question":419,"answer":420},"What is the difference between a leveraged recapitalization and an equity recapitalization?","In a leveraged recapitalization, the company takes on new debt to fund a cash distribution to shareholders — increasing financial leverage while returning capital. In an equity recapitalization, the company issues new equity or reclassifies existing shares to change ownership structure without necessarily taking on new debt. Both use a recapitalization agreement, but the terms, conditions, and lender involvement differ significantly.\n",{"question":422,"answer":423},"Is a recapitalization agreement required to be notarized?","Notarization is not typically required for a recapitalization agreement in most common-law jurisdictions — the US, Canada, and the UK. The agreement is generally enforceable when signed by authorized representatives of all parties. However, the amended articles of incorporation filed with the corporate registrar may require notarization or certification depending on the jurisdiction, and some lenders may require notarized signature blocks on their consents.\n",{"question":425,"answer":426},"How long does it take to close a recapitalization?","Simple recapitalizations — such as converting a single convertible note at a priced round — can close in one to two weeks once all parties agree on terms. Complex transactions involving multiple share classes, lender consents, regulatory filings, and amended articles typically take four to twelve weeks from term sheet to closing. The most common delay is obtaining lender consent and having amended articles accepted by the corporate registrar.\n",{"question":428,"answer":429},"Does a recapitalization trigger tax consequences for shareholders?","It can. In the US, a recapitalization may qualify as a tax-free reorganization under Section 368(a)(1)(E) of the Internal Revenue Code if it meets specific requirements — generally, if it involves only stock-for-stock exchanges within the same corporation. Cash boot payments or debt-for-equity conversions can trigger taxable events. In Canada and the UK, similar tax-neutral treatment is available under specific provisions, but each shareholder's situation differs. Consider consulting a tax advisor before executing any recapitalization.\n",{"question":431,"answer":432},"Can a recapitalization agreement be used to prepare a company for sale?","Yes — a pre-sale recapitalization is one of the most common uses of this document. M&A advisors and corporate attorneys use it to convert outstanding convertible instruments, eliminate secondary share classes with complex rights, reclassify shares to simplify the cap table, and ensure all shareholders hold the same class of common shares ahead of a sale. A clean cap table typically accelerates due diligence and reduces friction in buyer negotiations.\n",[434,438,442,446],{"industry":435,"icon_asset_id":436,"specifics":437},"Technology / SaaS","industry-saas","Converting SAFE notes and convertible bridge debt to preferred equity at a Series A or B priced round, creating new preferred share classes with liquidation preferences and anti-dilution protections.",{"industry":439,"icon_asset_id":440,"specifics":441},"Private Equity and Venture Capital","industry-private-equity","Leveraged recapitalizations to return capital to LPs, management buyout recaps, and portfolio company balance sheet restructurings ahead of a secondary sale or IPO.",{"industry":443,"icon_asset_id":444,"specifics":445},"Family Business and Succession","industry-family-business","Reclassifying common shares into voting and non-voting classes to separate economic ownership from control, facilitating ownership transfer to next-generation family members while the founder retains decision-making authority.",{"industry":447,"icon_asset_id":448,"specifics":449},"Financial Services","industry-fintech","Bank and credit union recapitalizations following regulatory capital requirement changes, issuance of Tier 1 or Tier 2 capital instruments, and structured debt-to-equity conversions under regulatory workout arrangements.",[451,454,458,461],{"vs":88,"vs_template_id":452,"summary":453},"shareholders-agreement-D216","A shareholders agreement governs the ongoing relationship among existing shareholders — voting rights, transfer restrictions, and dispute resolution — without necessarily changing the capital structure. A recapitalization agreement specifically restructures the composition of equity and debt at a single point in time. The two are complementary: a recapitalization often requires an amendment to the existing shareholders agreement and a new one may be executed concurrently.",{"vs":455,"vs_template_id":456,"summary":457},"Share Purchase Agreement","share-purchase-agreement-D225","A share purchase agreement documents the sale of existing shares from one holder to another, transferring ownership without altering the company's capital structure. A recapitalization agreement creates or cancels securities and changes the overall capital structure of the company itself. In an acquisition, both may be used — a recapitalization to clean up the cap table followed by a share purchase agreement for the actual sale.",{"vs":121,"vs_template_id":459,"summary":460},"convertible-note-agreement-D13025","A convertible note agreement establishes the terms of a loan that will convert to equity at a future event. A recapitalization agreement is the document executed at that future event — it carries out the conversion, formally cancels the note, and issues the new equity. The convertible note creates the obligation; the recapitalization agreement executes it.",{"vs":135,"vs_template_id":462,"summary":463},"subscription-agreement-D13026","A subscription agreement documents a new investor's purchase of freshly issued shares in the company — it adds capital without necessarily restructuring existing securities. A recapitalization agreement restructures the existing capital stack, which may include a new subscription as one component. A standalone subscription is simpler; a recapitalization is appropriate when the existing capital structure must be altered as a condition of the new investment.",{"use_template":465,"template_plus_review":469,"custom_drafted":473},{"best_for":466,"cost":467,"time":468},"Simple single-class share reclassifications or straightforward convertible note conversions with one or two consenting shareholders","Free","1–3 days",{"best_for":470,"cost":471,"time":472},"Multi-shareholder recapitalizations, leveraged recaps, or transactions involving new investor classes and amended articles","$1,000–$3,000 for corporate counsel review","1–2 weeks",{"best_for":474,"cost":475,"time":476},"Complex multi-tier capital restructurings, regulated industries, cross-border transactions, or any recapitalization preceding a significant M&A or IPO event","$5,000–$25,000+","4–12 weeks",[478,483,488,493],{"code":479,"name":480,"flag_asset_id":481,"note":482},"us","United States","flag-us","US recapitalizations are primarily governed by state corporate law — Delaware General Corporation Law is the most commonly used framework given the prevalence of Delaware-incorporated entities. A stock-for-stock recapitalization may qualify as a tax-free reorganization under IRC Section 368(a)(1)(E), but cash boot or debt components can trigger gain recognition. The FTC and DOJ may require HSR Act filings if transaction thresholds are met. Securities law implications under the Securities Act of 1933 should be reviewed when issuing new securities.",{"code":484,"name":485,"flag_asset_id":486,"note":487},"ca","Canada","flag-ca","Canadian recapitalizations are governed by federal or provincial corporate statutes — the Canada Business Corporations Act (CBCA) or provincial equivalents such as the Ontario Business Corporations Act (OBCA). Share reclassifications typically require a special resolution approved by two-thirds of voting shareholders, plus class vote approval where existing class rights are altered. Tax-neutral treatment may be available under Section 86 of the Income Tax Act for share-for-share exchanges. Quebec entities subject to the Civil Code may face additional formalities.",{"code":489,"name":490,"flag_asset_id":491,"note":492},"uk","United Kingdom","flag-uk","UK recapitalizations are governed by the Companies Act 2006. A reduction of share capital requires either a special resolution supported by a solvency statement from directors or a court order. New share issuances require disapplication of statutory pre-emption rights under Section 561 unless shareholders pass a special resolution to waive them. Stamp Duty at 0.5% applies to share transfers but not to new share issuances. FCA rules apply to any public company recapitalization.",{"code":494,"name":495,"flag_asset_id":496,"note":497},"eu","European Union","flag-eu","EU recapitalizations are primarily governed by member state company law, with significant variation between jurisdictions. The EU Capital Directive provides a floor for shareholder protection in public companies, requiring general meeting approval for capital increases or reductions. In Germany, a capital reduction by share exchange requires notarial deed and court registration. In France, share reclassifications require an extraordinary general meeting. Cross-border mergers or restructurings involving EU subsidiaries may trigger the EU Cross-Border Conversions Directive requirements.",[242,499,500,501,502,503,504,505,506,507,508,509],"share-purchase-agreement-deemed-dividend-D342","convertible-note-agreement-D870","subscription-agreement-D12537","term-sheet-D473","non-disclosure-agreement-nda-D12692","letter-of-intent_acquisition-of-business-D5197","board-resolution-approving-unanimous-shareholders-agreement-D5153","certificate-of-corporate-resolution-D3","stock-option-plan-D13284","asset-purchase-agreement-D928","employment-agreement-executive-D543",{"emit_how_to":193,"emit_defined_term":193},{"primary_folder":97,"secondary_folder":512,"document_type":513,"industry":514,"business_stage":515,"tags":516,"confidence":522},"equity-and-mergers","agreement","general","transition",[517,518,519,520,521],"recapitalization","equity-restructuring","capital-structure","shareholder-agreement","corporate-reorganization",0.92,"\u003Ch2>What is a Recapitalization Agreement?\u003C/h2>\n\u003Cp>A \u003Cstrong>Recapitalization Agreement\u003C/strong> is a legally binding contract that formally restructures a company's capital structure — altering the combination of equity, debt, and hybrid securities among the company, its shareholders, and its lenders. It governs the mechanics of share reclassifications, debt-to-equity conversions, new security issuances, and the governance changes that accompany them, creating an enforceable record of every party's rights and obligations before and after the transaction closes. Unlike a routine share transfer, a recapitalization changes the fundamental architecture of the company's balance sheet, which is why it requires documented consent from all materially affected parties and coordinated amendments to the company's constitutional documents.\u003C/p>\n\u003Ch2>Why You Need This Document\u003C/h2>\n\u003Cp>Without a properly executed recapitalization agreement, a restructured cap table is legally incomplete — existing shareholders may challenge new share classes, lenders may assert that their security interests were never properly released, and the corporate registrar may reject amended articles that lack a supporting authorization document. The practical consequences include unenforceable governance provisions, unresolved debt claims surviving the transaction, and costly litigation among shareholders who disagree on the post-closing ownership percentages. Tax authorities in the US and Canada require specific documentation to support tax-neutral treatment of stock-for-stock exchanges; without it, shareholders may face unexpected gain recognition. This template gives you a professionally structured starting point that addresses every material element — parties, pre-closing cap table, conversion mechanics, conditions precedent, representations, and post-closing obligations — so that a single signed document creates a clean, defensible record of the entire restructuring.\u003C/p>\n",1778696281555]