It is well documented that customers and software development teams need to share and refine understanding of the requirements throughout the software development lifecycle. The development of this shared understand- ing is complex and error-prone however. Techniques and tools to support the development of a shared understanding of requirements (SUR) should be based on a clear conceptualization of the phenomenon, with a basis on relevant theory and analysis of observed practice. This study contributes to this with a detailed conceptualization of SUR development as sequence of group-level state transi- tions based on specializing the Team Mental Model construct. Furthermore it proposes a novel group-level cognitive model as the main result of an analysis of data collected from the observation of an Agile software development team over a period of several months. The initial high-level application of the model shows it has promise for providing new insights into supporting SUR development.