A Vested Share Repurchase Right enables the Company to repurchase vested shares held by former service providers on or following their termination of service to the Company. The price for such repurchased shares can be equal to the original purchase price for such shares (which is often very low) or the fair market value of such shares at the time of repurchase, or the lesser of the two. The right can be triggered by the occurrence of specified events, such as a termination for “cause,” a breach of restrictive covenants (e.g., non-competition or non-solicitation), and often in the case of private equity-backed companies, merely the end of continued employment.
Glossary