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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Employment Law
Satisfied Customers: 41221
Experience:  I provide employment and discrimination law advice in my own practice.
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Employment Law Question: BACKGROUND QUESTIONS: 1) Based upon

Customer Question

Employment Law Question: BACKGROUND QUESTIONS: 1) Based upon facts below, is this a viable case? 2) If so, strong, moderate or weak? 3) Can COO sue Company A for 2013 thru today for 20% ownership? 4) Can he sue Company A for being forced to sign away ownership
as a result of severe duress and threats? BACKGROUND CFO hired by company A, in 2007. Salary $250K, plus bonus 2007 Capital structure: Founder 52%, CEO 48% 2007 Revenue: $3M 2012 Revenue: $20M plus 80M backlog CEO’s 2012 “Plan”: Get rid of Founder, so CEO
gains control of Company A How transaction flows: CEO tells CFO, if he can create a NewCO for Founder, in exchange CFO will receive 20% equity. CEO transfers $10M in contracts to NewCO to get founder started. 2012 New Capital Structure CEO 60% Founder: 20%
CFO 20% DOCUMENTATION SUPPORTING TRANSACTION: Written agreement by o/s counsel reflecting new cap structure, All parties sign, CFO’s 20% participation in profits is accrued on audited financial statements MASSIVE GROWTH, DUE TO CFO’S BUSINESS MODEL FOR COMPANY
2013 Revenue: $50M, backlog $75M 2014 CEO FREAKS OUT AT THE AMOUNT OF EQUITY HE GAVE AWAY 2014 CEO “promotes” CFO to COO, he does not want CFO controlling books, CEO hires in house litigator, First mission for litigator: Force COO to sign document that equity
has been converted to an annual bonus, if COO does not sign, he will be immediately terminated. COO has disabled wife, and 1 special needs daughter……CANNOT GO WITHOUT INCOME Signs under SEVERE DISTRESS, COO signs document in 2014 2014 Company A forms strategic
partnership, companies each exchange equity table, Company reports: CEO 60% COO20% Founder 20% Audited financials reflect accrued 2012 equity on 2013, 2014 and Q1 and Q2 2015 financial statements. PARTIES THAT BELIEVE COO IS EQUITY MEMBER Strategic partner
Federal government (compliance forms that must be filed annually) O/S Law Firm Employees of Company A
Submitted: 1 year ago.
Category: Employment Law
Expert:  Dimitry K., Esq. replied 1 year ago.
Thank you for your question. Please permit me to assist you with your concerns.
My apologies but I am having a hard time reading your facts. Please stop me if I misunderstood--again, it may be a formatting issue, but it is hard for me to follow the facts. A party was brought on board with specific terms, then after a point those terms were changed and the party claims that the signature was under duress of termination. Is that a fair limited summary? As far as duress and threats, what were the threats, specifically that if he won't sign, the company will terminate, or was it anything else?
Customer: replied 1 year ago.
Coo was hired and given 20% of equity. He was provided a legal document documenting his ownership. The auditors accrued the entry on boots. 2 years later ceo forced coo to sign a document giving back equity. He was threatened that if he did not sign the document he would be fired. The coo has a disabled wire and special needs kis. He had no choice but to sign he could not go with his salary.. He was not fired he was promoted. The ceo tells everyone he is an owner, ( coo has very good reputation). He is representing to their new strategic partner he is owner....it's crazy, however in reality the ceo does not want to give up the equity now. Coo is leveraged to hilt with medical bills and had always counted on the money. He want to know if he can sue
Expert:  Dimitry K., Esq. replied 1 year ago.

Hi,

If he wasn't fired but was promoted, there is arguably no injury. As such I am not seeing a basis for a strong suit here. For this to be 'duress', the threat has to be somehow illegal or invalid--and telling someone who is 'at will' that if he won't sign a document for a change of employment that he may be terminated is not really duress as how the law would see it. Therefore there is a very low chance of success especially since by signing the agreement the party actually benefited and grew within the organization.

Sincerely,

Dimitry, Esq.

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