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Restricted Share Purchase Agreement Template for United States

A Restricted Share Purchase Agreement is a legal document used in the United States that governs the sale and purchase of restricted company shares, typically subject to vesting conditions and transfer limitations. The agreement complies with U.S. federal securities laws, particularly Rule 144, and relevant state corporate laws. It outlines purchase terms, vesting schedules, transfer restrictions, and rights and obligations of both the issuing company and purchaser, often used in employee compensation or early-stage investment contexts.

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What is a Restricted Share Purchase Agreement?

The Restricted Share Purchase Agreement is commonly used when companies want to issue shares while maintaining control over ownership and creating retention incentives. This document, governed by U.S. securities laws, establishes terms for restricted share purchases, including vesting schedules, transfer limitations, and repurchase rights. It's particularly valuable for startups and established companies offering equity compensation to employees or dealing with early-stage investors. The agreement must comply with SEC regulations, state corporate laws, and often includes tax considerations under IRC Section 83.

What sections should be included in a Restricted Share Purchase Agreement?

1. Parties: Identifies the company issuing shares and the purchaser(s)

2. Background/Recitals: Sets forth the context and purpose of the agreement

3. Definitions: Defines key terms used throughout the agreement

4. Purchase and Sale of Shares: Details the number of shares, purchase price, and payment terms

5. Restrictions on Transfer: Specifies transfer limitations and holding period requirements

6. Vesting Provisions: Details vesting schedule and conditions

7. Representations and Warranties: Statements of fact from both parties regarding their capacity and authority

8. General Provisions: Standard legal provisions including governing law, notices, amendments

What sections are optional to include in a Restricted Share Purchase Agreement?

1. Right of First Refusal: Company's right to purchase shares before third-party sale (used when company wants to control share ownership)

2. Tag-Along Rights: Right to join in sale of shares to third party (used to protect minority shareholders)

3. Drag-Along Rights: Right to force minority shareholders to join in sale (used when majority shareholders want exit flexibility)

4. Registration Rights: Rights regarding registration of shares for public sale (used when future public offering is contemplated)

5. Employee Provisions: Special terms for employee shareholders (used when shares are part of employee compensation)

What schedules should be included in a Restricted Share Purchase Agreement?

1. Schedule A - Share Details: Detailed information about shares being purchased including class, number, and price

2. Schedule B - Vesting Schedule: Detailed vesting timeline and conditions

3. Schedule C - Company Information: Key company information including capitalization table

4. Exhibit A - Stock Power: Form for transfer of shares back to company if required

5. Exhibit B - Section 83(b) Election Form: Tax election form template for restricted shares

6. Exhibit C - Spousal Consent: Consent form for spouse of purchaser if required by state law

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

United States

Publisher

Ƶ

Cost

Free to use

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