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Restricted Stock Agreement
Define terms for issuing restricted stock and protect both company and shareholder with this Restricted Stock Agreement Template.
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Restricted Stock Agreement Template
This Restricted Stock Agreement (“Agreement”) is entered into on [Date], by and between:
Company: [Company Name], a [State/Country] corporation
Address: [Company Address]
Recipient: [Full Legal Name]
Address: [Recipient Address]
Collectively referred to as the “Parties.”
1. Grant of Shares
The Company hereby grants the Recipient [Number] shares of its common stock, subject to the terms and restrictions of this Agreement.
2. Purchase Price
The Recipient shall purchase the shares at a price of $[Amount] per share, for a total purchase price of $[Total Amount]. Payment shall be made in [Cash/Services/Other consideration].
3. Vesting Schedule
Shares will vest according to the following schedule: [Specify vesting timeline, e.g., 25% after one year, monthly thereafter].
In the event of termination of the Recipient’s relationship with the Company, unvested shares will be forfeited or repurchased by the Company at the original purchase price.
4. Transfer Restrictions
The Recipient may not sell, transfer, pledge, or otherwise dispose of shares except in accordance with this Agreement and applicable securities laws.
Any unauthorized transfer will be void and unenforceable.
5. Company’s Repurchase Rights
The Company retains the right to repurchase unvested shares if the Recipient’s employment or engagement terminates.
The repurchase price shall be equal to the original purchase price paid by the Recipient.
6. Tax Considerations
The Recipient acknowledges understanding the tax implications of this grant.
The Recipient is responsible for filing an IRS Section 83(b) election, if applicable, within 30 days of the grant date.
7. Rights as a Shareholder
The Recipient shall have all rights of a shareholder with respect to vested shares, including voting and dividend rights, subject to the restrictions herein.
8. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of [State/Country].
9. Entire Agreement
This Agreement constitutes the entire understanding between the Parties and supersedes all prior discussions regarding the restricted stock grant.
10. Signatures
Company Representative: ____________________________ Date: _________
Name/Title: _________________________________________
Recipient: ____________________________ Date: _________
Name: ______________________________________________
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Restricted Stock Agreement
RESTRICTED STOCK AGREEMENT FAQ
What is a Restricted Stock Agreement?
A Restricted Stock Agreement is a contract between a company and a recipient granting shares of company stock that are subject to certain restrictions, such as vesting schedules or performance milestones.
Why is a Restricted Stock Agreement important?
It protects the company by preventing immediate sale or transfer of shares and incentivizes employees, founders, or investors to remain committed to the company's growth. It also ensures compliance with securities laws.
When should you use a Restricted Stock Agreement?
Use it when issuing shares to employees, executives, founders, or early-stage investors where the company wants to impose vesting, performance, or transfer restrictions.
What should a Restricted Stock Agreement include?
It should specify the number of shares, purchase price, vesting schedule, transfer restrictions, rights to repurchase unvested shares, tax considerations, and governing law.
How does vesting work in a Restricted Stock Agreement?
Vesting can be time-based (e.g., four years with a one-year cliff) or performance-based, and unvested shares typically revert back to the company if the recipient leaves before full vesting.
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