On another side of this - I've seen places where employees were essentially locked in - unable to leave, because they couldn't sell any stock, and exercising cost too much, or, more likely, would be a taxable event (and again, they couldn't cover taxes by selling so it's a huge cash hit to buy the paper)

I get at one level a company might like this - it's a "good" way to keep people from leaving. In reality, this means you have people that really want to leave and can't - which does not make for a happy, good employee.

Let them sell at least a portion of the stock back to the company. Or sell some during a funding round, at least enough to cover their taxes so they can take their stock and go.