Founder Stock Repurchase Agreement Review Checklist

Confirm the agreement identifies the company, the founder, the shares being repurchased, and the governing RSPA or other stock restriction agreement under which the repurchase right arises. The DGCL supplies the corporation's power to acquire its own shares A.1, but the exercise window, price formula, and vested/unvested treatment live in the RSPA — the agreement references those terms rather than restating them, so an agreement that never names the governing instrument leaves the repurchase right's source unresolvable.

Check that the agreement recites the founder's service-termination date and that the company exercised its repurchase right within the RSPA's exercise window. The window is contractual, not statutory — commonly 60, 90, or 120 days from termination — and missing it can forfeit the repurchase right entirely, so the recital is the document's own evidence that the closing it effects was timely. Where the separation is a negotiated buyback rather than a window exercise, the recital should say so instead.

Confirm the agreement states the per-share and aggregate repurchase price and the form of consideration. Even a nominal original-price repurchase of unvested shares involves real consideration that must actually move — the payment is what closes the transfer and what the proof-of-payment record in the minute book later evidences — and a stated price the company never pays leaves the founder's title argument alive.

Confirm the agreement is consistent with the capital-impairment limit: a corporation may not purchase its own shares for cash or other property when its capital is impaired or when the purchase would cause an impairment B.1. For unvested shares bought back at their nominal original price this is rarely a live constraint; for a cash buyback of vested shares it can be, and directors are jointly and severally liable for a wilful or negligent violation for up to six years B.2 — which is why the template carries an express no-impairment representation for counsel to verify rather than assume. “Purchase or redeem its own shares of capital stock for cash or other property when the capital of the corporation is impaired or when such purchase or redemption would cause any impairment of the capital of the corporation”

Confirm the agreement provides the transfer and records mechanics of the closing: the founder's transfer of title free and clear, cancellation or possession of the certificates (or the book-entry adjustment for uncertificated shares), and the update of the stock ledger and capitalization records. Shares are personal property transferable on the corporation's books B.3, and because repurchased shares are not automatically retired B.4, the records direction must track the board's § 243 disposition election — retirement or treasury — rather than make that election itself. “The shares of stock in every corporation shall be deemed personal property and transferable as provided in Article 8 of subtitle I of Title 6.”

Where the agreement includes a mutual release, check that the separation is actually a negotiated buyback rather than a bare exercise of an existing repurchase right, and that the release carries standard carve-outs for vested rights, indemnification and advancement, D&O coverage, and rights as a continuing equity holder. The release is contractual private ordering riding on the repurchase — the DGCL supplies only the underlying power to acquire the shares C.1 — and a broad release shifts the matter from records hygiene toward negotiated settlement, so it is out of place in a routine unvested-share repurchase under a strong RSPA.

Where a release is included, confirm each releasor releases only claims it holds in its own right — the releasing party (with its successors and assigns) on the giving side, and a defined set of released parties on the receiving side. A release drafted to have non-parties give up their claims purports to do something the signatories cannot deliver. Two statute-specific traps need counsel's attention before signing: a founder age 40 or over releasing federal age-discrimination claims needs the OWBPA's knowing-and-voluntary mechanics (including the 21-day review and 7-day revocation periods), and a release governed by or enforced under California law does not reach unknown claims without an express Civil Code § 1542 waiver.

Check that the founder's surviving confidentiality and invention-assignment obligations (CIIAA/PIIA) are not discharged by any release the agreement contains. Those covenants are private ordering that ordinarily survives termination on their own terms, and the pack's companion IP-and-confidentiality confirmation documents that survival — but a mutual release whose scope is drafted loosely can sweep them in, so confirm the release scope or its carve-outs leaves the continuing obligations intact.