Founder Stock Purchase Agreement

Founder Stock Purchase Agreement

Date: [__/__/____]
Company: [________________________________], a [________________________________] corporation (the "Company")
Founder: [________________________________] ("Founder")

Grant Summary

Recitals

WHEREAS, the Company was incorporated on [__/__/____] and Founder is a co-founder and [Chief Executive Officer / Chief Technology Officer / Other: ____] of the Company who has contributed intellectual property, know-how, and/or services as consideration for the Shares;

WHEREAS, the Company and Founder desire to formalize the issuance of Founder's equity stake, subject to vesting and repurchase provisions designed to incentivize continued contributions and protect the Company's ownership structure;

WHEREAS, Founder has been advised to consult with personal legal and tax counsel and understands the importance of filing a timely Section 83(b) election;

WHEREAS, this Agreement is entered into in connection with [the Company's formation / a contemporaneous IP assignment / the Company's initial capitalization];

NOW, THEREFORE, in consideration of the mutual covenants herein and other good and valuable consideration, the parties agree as follows:

Article 1 – Purchase and Sale of Shares

1.1 Purchase

Subject to the terms hereof, the Company hereby sells and issues to Founder, and Founder hereby purchases from the Company, the number of shares of Common Stock set forth in the Grant Summary above (the "Shares") at the purchase price per share specified above, for an aggregate purchase price of $[________________________________] (the "Purchase Price").

1.2 Consideration

The Purchase Price shall be paid as follows:

☐ Cash: By cash, check, or wire transfer delivered to the Company on or before the Closing Date.

☐ Services: The Company acknowledges receipt of services rendered and know-how contributed by Founder prior to the date of this Agreement with an agreed value of $[________________________________], constituting adequate consideration under DGCL § 152. No further cash payment is required.

☐ IP Assignment: Pursuant to the Proprietary Information and Inventions Assignment Agreement ("PIIA") executed contemporaneously herewith, Founder assigns to the Company all intellectual property and related rights, which the parties value at $[________________________________] for purposes of this Agreement.

☐ Combination: Cash of $[________________________________] plus services/IP valued at $[________________________________].

1.3 Closing

The Closing shall take place on [__/__/____] at the principal offices of the Company. At Closing:
(a) The Company shall update its stock records to reflect the issuance of the Shares;
(b) If certificated, the Company shall deliver to Founder a stock certificate for the Shares, bearing the legends described in Article 7;
(c) Founder shall execute and deliver to the Company an Assignment Separate from Certificate (Exhibit C) executed in blank; and
(d) Founder shall execute the PIIA (if not previously executed).

1.4 Founder's Percentage Interest

Immediately after the Closing, and before giving effect to any subsequent financings or issuances, Founder's ownership percentage of the Company will be approximately [____]% of the total issued and outstanding shares of Common Stock.

Article 2 – Vesting and Repurchase Right

2.1 Vesting Schedule

The Shares shall be subject to vesting as follows (the "Reverse Vesting Schedule"):

Standard 4-Year / 1-Year Cliff:

Upon the Full Vest Date, all Shares shall be "Vested Shares" and the Company's Repurchase Option shall terminate with respect to such shares.

2.2 Company Repurchase Option

Upon Founder's Termination of Service (as defined in Section 2.3) for any reason, the Company (or its assignee) shall have the option (but not the obligation) to repurchase any Unvested Shares (defined as shares that have not yet become Vested Shares as of the date of such termination) at the Repurchase Price.

"Repurchase Price" means the lesser of (i) the original per-share purchase price paid by Founder ($[________________________________] per share) and (ii) the Fair Market Value per share as of the date of the Termination of Service.

Note for Early-Stage Companies: Repurchase at original cost (e.g., $0.001 per share) is the market standard for founders at formation, when shares are purchased at nominal value. This approach minimizes the cost to the Company of enforcing its repurchase right.

2.3 Termination of Service

"Termination of Service" means cessation of Founder's service to the Company as an employee, officer, director, or consultant, for any reason, including death, disability, voluntary resignation, or termination (with or without Cause).

2.4 Exercise of Repurchase Option

The Company shall exercise the Repurchase Option by delivering written notice to Founder within 90 calendar days after the Termination of Service date (subject to DGCL § 160 limitations). The closing of the repurchase shall occur within 30 days after the Company's exercise notice.

2.5 Acceleration of Vesting

☐ No acceleration provision.

☐ Single-Trigger Acceleration: [____]% of then-unvested Shares vest immediately upon a Change of Control.

☐ Double-Trigger Acceleration: [____]% of then-unvested Shares vest if Founder is terminated without Cause or resigns for Good Reason within [12] months following a Change of Control.

"Change of Control" means (a) a merger or consolidation after which pre-transaction stockholders hold less than 50% of the combined voting power; (b) a sale of all or substantially all of the Company's assets; or (c) an acquisition by any person or group of 50% or more of the Company's voting power.

"Cause" means (a) conviction of a felony or crime of moral turpitude; (b) willful misconduct materially harmful to the Company; (c) material breach of this Agreement, the PIIA, or Company policies not cured within 30 days of notice; or (d) material violation of applicable law in connection with Founder's duties.

"Good Reason" means: (a) material reduction in compensation; (b) material diminution of title, authority, or responsibilities; (c) relocation of principal place of work by more than 50 miles; or (d) material breach of employment agreement by the Company, in each case not cured within 30 days of Founder's written notice.

2.6 Prior Vesting Credit

☐ Not applicable. Vesting commences on the Vesting Commencement Date with no prior credit.

☐ Prior service credit. Founder is credited with [____] months of prior service as of the Vesting Commencement Date. Accordingly, as of the Vesting Commencement Date, [________________________________] Shares are deemed to be Vested Shares.

Article 3 – Intellectual Property Assignment

3.1 IP Assignment Requirement

As a condition of receiving the Shares, Founder shall execute and deliver to the Company the Company's standard Proprietary Information and Inventions Assignment Agreement ("PIIA") [or Intellectual Property Assignment Agreement ("IPAA")], the form of which is attached as Exhibit B. If Founder has already executed the PIIA, this Agreement incorporates it by reference.

3.2 IP Assignment Scope

Pursuant to the PIIA, Founder assigns to the Company all right, title, and interest in and to all intellectual property, inventions, discoveries, developments, know-how, trade secrets, software, designs, and other works of authorship created, conceived, or reduced to practice by Founder:

(a) In connection with or relating to the Company's current or anticipated business;
(b) Using the Company's resources, equipment, facilities, or confidential information; or
(c) During the period of Founder's employment or service relationship with the Company.

3.3 Technology Schedule

The parties acknowledge that Founder has contributed the following specific intellectual property and technology to the Company, which is the subject of the IP Assignment:

3.4 Prior IP Carve-Out

The PIIA shall not apply to inventions developed entirely on Founder's own time and using Founder's own resources, without using Company resources or confidential information, and that do not relate to the Company's current or anticipated business, as set forth in the schedule of prior inventions attached to the PIIA.

Article 4 – Transfer Restrictions

4.1 General Restriction

Founder shall not sell, assign, transfer, pledge, hypothecate, gift, or otherwise dispose of any Unvested Shares, or any interest therein, without the prior written consent of the Company's Board. Any purported transfer in violation of this restriction shall be null and void.

4.2 Company Right of First Refusal

Before Founder may transfer any Vested Shares to a third party, Founder shall offer the Company (and, if applicable, other holders under any separate ROFR agreement) the right to purchase such shares in accordance with the Company's Right of First Refusal Agreement.

4.3 Permitted Transfers

Notwithstanding Section 4.1, Founder may transfer Shares (including Unvested Shares) without Board approval in the following circumstances, provided the transferee agrees in writing to be bound by this Agreement:
(a) Transfers to a revocable trust for estate planning purposes, of which Founder is the primary beneficiary and trustee;
(b) Transfers to a wholly owned entity controlled by Founder for estate planning purposes;
(c) Transfers upon Founder's death by will or laws of intestacy; or
(d) Transfers approved in writing by the Company's Board.

Article 5 – Section 83(b) Election – CRITICAL ACTION REQUIRED

5.1 Importance of 83(b) Election

WARNING: THE FOLLOWING REQUIRES IMMEDIATE ACTION. THE DEADLINE IS 30 CALENDAR DAYS AFTER THE PURCHASE DATE ([__/__/____]).

Under Section 83 of the Internal Revenue Code, because the Shares are subject to a vesting schedule (substantial risk of forfeiture), Founder would ordinarily be required to recognize ordinary income at each vesting date equal to the then-Fair Market Value of the vesting shares, less the purchase price paid. For founders of early-stage companies whose shares may appreciate significantly in value, this can result in substantial tax liability over time.

By filing a timely Section 83(b) election, Founder elects to recognize income (if any) at the time of purchase based on the current Fair Market Value, which for early-stage companies is often equal or close to the purchase price, resulting in little or no taxable income at the time of the election.

If Founder fails to file the 83(b) election within 30 days, Founder will be taxed on the fair market value of shares at each future vesting date at ordinary income tax rates. This election cannot be made retroactively.

5.2 Filing Instructions

Step 1: Complete IRS Form 15620 (available at IRS.gov; e-filing available as of June 2025). Include:

• Founder's name, address, and Social Security Number / Taxpayer ID Number
• Description of property: "[____] shares of Common Stock of [Company Name] purchased on [Purchase Date]"
• Date of transfer: [__/__/____]
• Taxable year for which election is made: 20[____]
• Nature of restriction: Shares subject to Company repurchase at cost upon termination of service, vesting over [____] years
• Fair market value per share at purchase (without regard to restrictions): $[____]
• Amount paid per share: $[____]
• Amount to be included in gross income: $[____] per share (FMV minus purchase price)

Step 2: File with the IRS Service Center where Founder files federal income taxes, by certified U.S. mail, return receipt requested (or e-file at IRS.gov), postmarked no later than [__/__/____] (30 days after the Purchase Date).

Step 3: Provide a copy to the Company at: [________________________________]

Step 4: Attach a copy to Founder's federal income tax return for the taxable year of the purchase.

Step 5: Retain a copy and the certified mail receipt permanently.

83(b) Election Deadline: [__/__/____] (30 days after [__/__/____])

Article 6 – Securities Law Representations

6.1 Founder Representations

Founder represents and warrants:

(a) Investment Intent: Founder is acquiring the Shares for investment, for Founder's own account, not with a view to distribution.
(b) Restricted Securities: Founder understands that the Shares are "restricted securities" and may not be resold without registration or an available exemption (typically, SEC Rule 144 after a 1-year holding period for non-reporting companies).
(c) Sophistication: Founder has sufficient experience in financial and business matters to evaluate the risks of this investment.
(d) Accredited Investor Status: ☐ Founder is an "accredited investor" as defined in Rule 501(a) of Regulation D. ☐ Founder is not an accredited investor.
(e) No General Solicitation: Founder has not been solicited through any public advertisement or general solicitation.
(f) Legal Authority: Founder has full legal capacity to enter into this Agreement.
(g) No Conflicts: This Agreement does not violate any other agreement to which Founder is a party, including any non-competition, non-solicitation, or invention assignment agreement with a prior employer.

Article 7 – Legends and Stop-Transfer Instructions

7.1 Restrictive Legends

Stock certificates (if issued) or book-entry records shall bear legends substantially as follows:

Securities Act Legend:

"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS REGISTERED THEREUNDER OR PURSUANT TO AN APPLICABLE EXEMPTION THEREFROM."

Vesting/Repurchase Legend:

"THE SHARES REPRESENTED HEREBY ARE SUBJECT TO VESTING AND A REPURCHASE OPTION IN FAVOR OF THE COMPANY PURSUANT TO A FOUNDER STOCK PURCHASE AGREEMENT DATED [__/__/____], COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY."

ROFR Legend (if applicable):

"THE SHARES REPRESENTED HEREBY ARE SUBJECT TO A RIGHT OF FIRST REFUSAL IN FAVOR OF THE COMPANY AS SET FORTH IN AN AGREEMENT ON FILE AT THE COMPANY'S PRINCIPAL OFFICE."

7.2 Stop-Transfer Instructions

The Company shall issue stop-transfer instructions and maintain appropriate notations in its stock records to prevent transfers in violation of this Agreement.

Article 8 – CFIUS Considerations (Foreign Founders)

☐ Not applicable. Founder is a U.S. citizen or permanent resident and this section does not apply.

☐ Applicable. Founder is a foreign national. The parties acknowledge:

(a) Under the Defense Production Act (50 U.S.C. § 4565) and implementing CFIUS regulations (31 C.F.R. Part 800), certain investments by foreign nationals in U.S. businesses may be subject to review by the Committee on Foreign Investment in the United States ("CFIUS"), particularly in industries related to critical technology, critical infrastructure, or sensitive personal data.

(b) Foreign Founders of companies in CFIUS-sensitive industries should consult with national security counsel regarding:
(i) Whether any mandatory or voluntary CFIUS filing may be required;
(ii) Whether Founder's role and equity stake may trigger CFIUS jurisdiction;
(iii) Appropriate corporate governance and information access restrictions; and
(iv) Mitigation agreements or national interest agreements (NIAs) that may be required.

(c) Founder represents that Founder is a national of [________________________________] and is not a national of a country listed on the CFIUS "covered countries" list (currently including China, Russia, Iran, and North Korea) that would create material CFIUS risk. (Consult current regulations as the list is updated.)

Article 9 – Closing Conditions Checklist

The Closing is conditioned upon completion of the following:

Article 10 – Miscellaneous

10.1 Governing Law. This Agreement is governed by the laws of the State of [________________________________].

10.2 Entire Agreement. This Agreement, the PIIA, and related exhibits constitute the entire agreement regarding the subject matter hereof.

10.3 Amendments. Amendments require written consent of both parties.

10.4 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts; electronic signatures are valid.

10.5 Severability. If any provision is held invalid, the remainder continues in effect.

Signatures

COMPANY:

[________________________________]

By: __________________________________
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

FOUNDER:

__________________________________
[________________________________] (Print Name)
Date: [__/__/____]
Address: [________________________________]
Social Security Number / TIN: [________________________________] (retained in corporate records; not distributed)

Exhibits

• Exhibit A: Payment / Consideration Schedule
• Exhibit B: Proprietary Information and Inventions Assignment Agreement (PIIA)
• Exhibit C: Assignment Separate from Certificate (executed in blank)
• Exhibit D: Spousal / Domestic Partner Consent (if applicable)
• Exhibit E: IRS Form 15620 and Section 83(b) Election Filing Instructions

Practitioner Notes:
- Founders who miss the 83(b) election deadline have very limited options. There is no exception, extension, or late filing procedure. The IRS has consistently held that the deadline is absolute. Filing the 83(b) election for founder stock is arguably the most important single tax action for an early-stage founder.
- Purchase price: Common founder stock purchase prices range from $0.0001 to $0.01 per share for early-stage companies. The purchase price should reflect a defensible determination of Fair Market Value as of the date of purchase; however, for most companies at formation, FMV is very low. A 409A valuation is typically not required for founder stock grants but may be advisable in certain circumstances.
- CFIUS: The 2020 FIRRMA expansion significantly broadened CFIUS jurisdiction. Companies in TID US businesses (technology, infrastructure, data) may face mandatory CFIUS filing requirements for certain investments by foreign nationals. Consult CFIUS counsel early in the founding process if any founder or significant investor is a foreign national from a "covered country."
- Co-founder dynamics: Consider whether all co-founders should enter into a separate Co-Founder Agreement addressing equity splits, roles, decision-making, and what happens if a co-founder departs early.