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Venture capital employment agreement

I am co-founder of a mature, profitable business seeking venture capital. We are being advised by an independent Board Chair we appointed to assist in our fund raising. He suggests that we put in place employment agreements, both to protect our interests and because it will make our company more appealing to VC's. It is suggested that each of our agreements include 2 years' salary payable immediately if we are terminated. The agreements would also contain a provision, exercisable at our option, to receive a set sum for "n" shares of our stock. The pricing of those shares is fair in our opinion, and would probably result in us selling about 20% of our holdings. After such a sale, we would still collectively retain about 52% of the stock, but lose control of the board. My question is this: how should we stipulate in the agreement the guarantee of the payment of our severance, and for the stock purchase. Our concern, of course, is that the VC's fail to realize the planned objectives and leave us out in the cold.

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Attorney answers (2)

Reputation Level 9
There are many ways to do this. I am afraid your advisor has drastically oversimplified the issue. I suggest you consult an attorney for some more comprehensive advice. This sort of thing can be done by a top notch attorney for less than $5,000. That money will be very well spent and will pay you dividends later.

Reputation Level 13
Honestly, you need to hire a business attorney.

Other answers (1)

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Daryl

I posted the question, and should have been more specific. A Business Attorney has prepared the draft agreement. We want to be reasonable in how we ask that the $$ be guaranteed, and thought perhaps someone from the VC side could provide a pointer.
Thank you.

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