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socrateaser
socrateaser, Attorney
Category: Business Law
Satisfied Customers: 37960
Experience:  Retired (mostly)
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I am the founder and CEO of an Internet start-up company we

Customer Question

I am the founder and CEO of an Internet start-up company we are launching in 3 months. I just hired a COO and he is earning sweat equity. Right now he is wanting to invest the money that our company has to pay our programmers to finish the last piece to get us launched. How do I create this employee share agreement to (I'm told) avoid getting sued like Facebook? A recommend template or clause I can add to agreement? Plus, we agreed he'll pay the programmers directly and we need this in writing on the same document, is that a problem? Thank you!
Submitted: 1 year ago.
Category: Business Law
Expert:  socrateaser replied 1 year ago.

Hello,

I'm a bit confused by your question. are you trying to write an employment contract with the COO, and a separate agreement with the programmers?

If yes, then is the software app being created by the programmers part of your core business, or is it merely the means by which your business will operate? Example: A car dealer doesn't usually write auto dealer accounting software. Whereas an accounting software company may write auto dealer accounting software.

Thanks in advance.

Customer: replied 1 year ago.
My question is just about my coo buying shares in our company. The company is paying programmers in India (contractors, not employees) to finish the code. My coo wants to pay them directly for the shares. This best for a number of reasons. But my main focus is how to create the employee puchasing stock agreement? A fellow entrepreneur keeps telling me about how Facebook was sued by one of their employees and I need to speak to an attorney to avoid it. I'm not sure how that correlates with the employee stock purchase but he said the lawyer would know.
Customer: replied 1 year ago.
I can email the doc I created, what is your email? I also attached here the one paragraph that I sent to my friend to make sure it was suitable to send to my COO.
Expert:  socrateaser replied 1 year ago.

Okay, thanks. I'm not certain that I can assist you here. Justanswer's policy is that the answers must be about "general" questions of law -- not to provide advice on a unique customer need. That's a legal service, and there are very onerous rules imposed on California lawyers by the State Bar and legislature.

What you are requesting, in my opinion, is a pretty comprehensive custom employment contract. There is an issue with paying the COO solely in shares -- you could get into a heap of trouble with the California Employment Development Department (EDD), and the Internal Revenue Service (IRS). However, I don't think it's in your interest for me to discuss the issues here in this public forum -- where the entire internet universe may be able to find our discussion.

That could put you at risk of substantial liability, and me at risk of losing my license to practice law.

Anyway, the bot***** *****ne here is that, while I'm licensed to practice law in California, and I was employed by a very well-known semiconductor corporation for 10 years, I cannot do this sort of work in this forum. I will send you an additional services offer, and we can take the matter offline into a traditional attorney-client relationship, if you choose. And, if you choose not, then I understand entirely, and I will reopen the question for others to assist (though, I suggest that you are making a pretty big error to try to get what you're looking for without hiring legal representation to prepare an employment contract).

That said, I will send the offer, now.