Restricted Stock Agreement Template: Vesting and Rights

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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