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Irwin Law
Irwin Law, Attorney
Category: Business Law
Satisfied Customers: 7355
Experience:  30+ yrs. representing small business, real estate, probate
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A majority equity founder offered two other founders

Customer Question

A majority equity founder offered two other founders (engineer and PM) a specific equity amount via email, but now that the product is made the founder wants to fire them for no purpose.
All the proof I (Project Manager) have from the agreement was a formal email from the founder outlining terms and the equity splits. The agreement was verbal afterwards but it was exactly what was stated on the email.
Unfortunately, the main founder has refused to formalize anything further and probably will just screw us over. Do we have any legal protections? By the way the equity was 15% with a semester based 5 year cliff. 10% of that vested upon successful prototype completion.
Submitted: 1 year ago.
Category: Business Law
Customer: replied 1 year ago.
There is no current legal structure. There are only email agreements between main founder and cofounders.The cofounder does offer to pay $4500 per month to each, and he has made payments which would just confirm the validity of the agreement.Please see attached email.
Customer: replied 1 year ago.
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Expert:  Irwin Law replied 1 year ago.

Do we have any legal protections?

Of course you do. Everyone has legal protections. What you describe and the UT mail shows a situation that is much more complex that simply filing incorporation documents with the State of Texas. However, until (all three of you consult with attorneys and who can understand the total business operation, you will not be able to reduce that written memo to a legal agreement. For now, it appears that you are being paid for specific services rendered, and equity participation has only been suggested for future consideration. There is only a vague outline of an intention to form a business organization together with equity sharing. There is very little that could form the basis of a lawsuit claiming equity participation in whatever venture it is that you are now working together. The founder has laid out certain options. You will have to consult local business attorneys to see if there are others that you might pursue at this point.

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Expert:  Irwin Law replied 1 year ago.

HELLO AGAIN. I hope that my Answer has been helpful. If you need more information, please send me a Reply. If not, I hope that you will enter a positive rating for my Answer so that I can receive credit for assisting you. Thanks again for using JUST ANSWER.

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