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Definition of Restricted Stock Purchase Agreement

A Restricted Stock Purchase Agreement (RSPA) is a contract used by startups to sell shares to founders, advisors, and other early stage employees. When shares are sold to founders initially, this agreement may also be called a Founder Stock Purchase Agreement. Some of the common restrictions often found in these agreements are below.

  1. Vesting: Usually restricted stock grants are subject to a vesting schedule by which the shares vest over time. The most common vesting schedule is 4 years with a 1-year cliff.
  2. Repurchase Option: Unvested shares will be subject to the company's repurchase option if the owner leaves the company, usually at cost or another nominal amount. Sometimes the company will also have a repurchase option on vested shares (known as a clawback) but this is less common.
  3. Transfer Restrictions: The agreement will usually prohibit the transfer of the restricted stock, subject to certain narrow exceptions.