Hello:
I have been invited to join a newly formed Delaware Corp. [like: ABC Inc.], as a co-founder but I have issues with certain clauses in the BOD agreement that all founders have to sign to get on board.
The main issue is with the allocation and release of the shares [restricted securities] that they are offering me. It is stated to be allocated but release happens @ 25% each year for 4 years - this is the vesting period mentioned in the BOD.
The other issue is the "Termination" clause which states "with or without cause".
The last one is share dilution whch is to be totally on the decision of the board.
Querry 1: Is it legally enforceable, if I were to have a separate letter [on Corp letterhead and stamped/dated/signed] from the current CEO of the corp. that states certain clauses in a different manner? For example, is it legally tenable if this letter states my shares will get released @ end of 1 year instead of vesting for 4 years? Is this kind of separate document has any legal standing and will it be honored later if the CEO is no more the CEO later on?
Querry 2: In that same letter, can the "Termination" clause be touched upon and this mentioned - "If terminated with or without cause, then total shares are to be released summarily without any further question or any reference to any other agreements in force before or after this signed letter's date"?
Querry 3: Is it possible to have an option of NOT participating in the share dilution [share splitting] process by stating that I have the right but not the obligation to offer my shares whrn a VC comes on board?
Query 4: Am I correct in understanding that during a share dilution process, the owner gets paid an amount equal to the value of that portion of his shares that are diluted. For example: say there are 3 founders sharing @ 30:30:40 of ABC Inc. Now when a VC comes on board for 50% of ABC Inc. shares then ech founder's stake becomes 50% of current percentage and each of their halves go to the VC for a total of 50%. So the asset distribution now becomes: 15:15:20:50. So am I right in assuming that if the VC brings in $1 million, then that amount goes to the founders as $300k : $300k : $400k ?
Query 5: What is the best possible way to execute these points in my favor so that it is watertight and legally binding on the corp? Plz note that the original BOD stays the same and that is why I want a separate document that will be enforceable on top of that BOD.
Thanks for any help you can provide - g
I have been invited to join a newly formed Delaware Corp. [like: ABC Inc.], as a co-founder but I have issues with certain clauses in the BOD agreement that all founders have to sign to get on board.
The main issue is with the allocation and release of the shares [restricted securities] that they are offering me. It is stated to be allocated but release happens @ 25% each year for 4 years - this is the vesting period mentioned in the BOD.
The other issue is the "Termination" clause which states "with or without cause".
The last one is share dilution whch is to be totally on the decision of the board.
Querry 1: Is it legally enforceable, if I were to have a separate letter [on Corp letterhead and stamped/dated/signed] from the current CEO of the corp. that states certain clauses in a different manner? For example, is it legally tenable if this letter states my shares will get released @ end of 1 year instead of vesting for 4 years? Is this kind of separate document has any legal standing and will it be honored later if the CEO is no more the CEO later on?
Querry 2: In that same letter, can the "Termination" clause be touched upon and this mentioned - "If terminated with or without cause, then total shares are to be released summarily without any further question or any reference to any other agreements in force before or after this signed letter's date"?
Querry 3: Is it possible to have an option of NOT participating in the share dilution [share splitting] process by stating that I have the right but not the obligation to offer my shares whrn a VC comes on board?
Query 4: Am I correct in understanding that during a share dilution process, the owner gets paid an amount equal to the value of that portion of his shares that are diluted. For example: say there are 3 founders sharing @ 30:30:40 of ABC Inc. Now when a VC comes on board for 50% of ABC Inc. shares then ech founder's stake becomes 50% of current percentage and each of their halves go to the VC for a total of 50%. So the asset distribution now becomes: 15:15:20:50. So am I right in assuming that if the VC brings in $1 million, then that amount goes to the founders as $300k : $300k : $400k ?
Query 5: What is the best possible way to execute these points in my favor so that it is watertight and legally binding on the corp? Plz note that the original BOD stays the same and that is why I want a separate document that will be enforceable on top of that BOD.
Thanks for any help you can provide - g
