A
Auto1
Guest
- Jurisdiction
- Florida
Dear Team,
Thank you so much for this Q&A forum. Here is the setup. Three partners own a startup business. These three partners jointly own the IP away from their startup (not assigned to startup):
Scenario: They sign a written agreement with a purported finance fund-raising expert. The agreement is written on the letterhead of the expert, signed by startup founders, and stipulates the following: upon execution of this deal, the company will issue XX% of shares to expert. If the Expert does not raise $10 Million of funding within 12 months, the Expert returns all shares to the Startup.
After 24 months the Expert has not produced any fund-raising deal with terms and conditions that the founders can accept. The founders discover that false pretense and bad advice has been given by the Expert. The founders want to terminate the Expert.
Although the original letter has expired, no funds were ever delivered to the Startup, and no shares were ever issued to the Expert; during period of good-faith there exists some written trail of naming the Expert as a minor shareholder of the company. Secondarily, the Founders discover that misleading statements about SEC rules have been made (this was verified by an SEC agent). Further they discover the Expert is also trying to get the IP assigned to the Startup before he will present a deal to the founders.
Here is the Question: Can the Founders simply say "your services are no longer required" and be gone with the Expert, because the Expert never delivered any funds and the original letter has expired? Or, does the period of good-faith effort and statements indicating the Expert was a minor shareholder warrant any consideration?
I think the letter expiration and lack of fund raising exonerates the founders and allows for termination. Please let me know your thoughts. Auto1
Thank you so much for this Q&A forum. Here is the setup. Three partners own a startup business. These three partners jointly own the IP away from their startup (not assigned to startup):
Scenario: They sign a written agreement with a purported finance fund-raising expert. The agreement is written on the letterhead of the expert, signed by startup founders, and stipulates the following: upon execution of this deal, the company will issue XX% of shares to expert. If the Expert does not raise $10 Million of funding within 12 months, the Expert returns all shares to the Startup.
After 24 months the Expert has not produced any fund-raising deal with terms and conditions that the founders can accept. The founders discover that false pretense and bad advice has been given by the Expert. The founders want to terminate the Expert.
Although the original letter has expired, no funds were ever delivered to the Startup, and no shares were ever issued to the Expert; during period of good-faith there exists some written trail of naming the Expert as a minor shareholder of the company. Secondarily, the Founders discover that misleading statements about SEC rules have been made (this was verified by an SEC agent). Further they discover the Expert is also trying to get the IP assigned to the Startup before he will present a deal to the founders.
Here is the Question: Can the Founders simply say "your services are no longer required" and be gone with the Expert, because the Expert never delivered any funds and the original letter has expired? Or, does the period of good-faith effort and statements indicating the Expert was a minor shareholder warrant any consideration?
I think the letter expiration and lack of fund raising exonerates the founders and allows for termination. Please let me know your thoughts. Auto1
