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Restrictive Covenant

In the context of stock plans, this is a provision in a grant agreement that makes your equity award contingent on your refraining from a specified action. This type of provision may involve, for example:

  • confidentiality about company secrets
  • nonsolicitation of employees after you leave the company
  • noncompete forfeiture clauses

At the website of the SEC, you can see an example of a stock grant agreement that includes a restrictive covenant (see Section 2.2). For details about these provisions in grant agreements, see the related article on this website.

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