1. Revenue share is more risky for company than profit share, but i understand profit can be easily manipulated. Is there anything i should be aware of with this type of arrangement (RS)?
2. Percentage-wise, are there any guidelines? Any experience in capping payments?
For #1 - Find something you are comfortable with. Seems like you have a good employee, they should work with you to find something where everyone is happy. You could also do profit share of specific accounts they 'manage'. Less risk on your part, but if they are truly a 'COO', would that be too low for them?
For #2 - I hate the idea of capping because it always de-incentivizes full growth. Start low and if crucial milestones are hit, give up more of the share (profit/revenue or whatever you decide in your first question). This way, their mind is always on growth vs. a 'cap'.