Some recent threads got me to thinking on this one and although I do not like to air dirty laundry in public, I really value the opinions on this board and I am not mentioning any names.
I entered into a services contract with a start up last July as their VP Finance. The CEO and I agreed to ammend the agreement verbally and then confirmed the points via e-mail (i have his confirmation on e-mail saying this is what we agreed to). Part of the agreement was that I would defer fees (highly discounted already) into a convertible promissory note. The note was never signed after repeated requests. So last Thursday (21st) I gave a 30 day notice since I am going to work full time at a new opportunity. I mentioned we need to address the note, which he already said he would take care of that Tuesday (19th). Shit it has been four months and I am getting tired of asking. He e-mails me about a meeting we need to have on the phone with a venture capitalist (pledge fund) that is helping in fundraising efforts. I e-mail back and ask about the note and say no meetings until the note is signed. On Friday I see him after dropping off some checks and mention the meeting time is probably ok and he says he’ll sign the note that day. I get back from a race on Saturday and ask about the status of the note. No word. On Monday still no word - I am at another client and do not call into the meeting. He does not call me either - we never really communicated as to who would call who. I get an e-mail that evening asking what happened. I reply with no more work until the note is signed. He explodes and says to return everything and wants the portion of money from the 15th to the 30th back! Uh he still owes me over $5K is he kidding? I call to try to straighten this out. He picks up the phone and says “this is bull shit.” I try to calm him down, but he was being a complete ass. Then he starts saying how I have not been putting in enough time - I am floored. Our agreement was for “not more than half time” and he never once communicated that. I think he made that up on the fly as his only defense. I was not keeping detailed records of time but some weeks were more and some were less. If I were to document everything I did over the last four months it would be a long list. I do not think he realizes how much time some of this detailed stuff takes - uh like faxing his f…n power cord to him when he forgot it! I keep every single e-mail so bring it on.
I feel that work stop was the only play as it appears that he really had no intention of signing the note if I were leaving. Our agreement only says that I give up equity rights if I were to leave before June 30.
I sent a note to the other LLC members (and copied the CEO) saying that I was believed in the venture, was disappointed in the CEO (LLC manager) and they should know that this is a breach of contract by either not paying me or not signing the note and I was left no choice. The other owner with an equal share as the CEO was shocked and commented how I did a great job. They are all out of town now at HSN so we’ll see what happens when they come back.
So the question is what would you have done in this situation?
There is some work that needs to be done on the finacial side and could not be completed until I received information from a vendor - and that was yesterday! My position is that I am not lifting another finger until I get paid - not sure I want a note now. Maybe he’ll calm down and we can come to a peaceful resolution.
Any attorneys out there? Can they force me to complete any work? Forgot to ask my guy about that.
I’ve returned eall corporate records except for the files I created and have been pointing vendors back to the CEO for financial issues. I’ll send the files on a disc registered mail today.
I’ve already contacted a family friend who is a trusted attorney and the arbitration called for in the agreement is not worth it, so it looks like a write off and time to put positive energy into my next venture.
I think you did the right thing, however as with any verbal contract - words are about worthless in court. You are wise to not name people or companies - slander is a bitch and is not an idea written in stone either. What to me is odd is how often I see this type of crap happen.
thanks record - I edited the post - the verbal points were confirmed in writing (e-mail). This is the first for me all my other clients have been great.
let this be a big lesson to you. never ever under any circumstance agree upon anything verbally–especially when it is about you getting payment. do not ever do it. repeat, don’t do it.
you are lucky that it is not more than 5K. you could be out 15 or 20!
at this point you have to weigh out what it would cost you to fight this and what it would cost you to walk away. do not allow your emtions get involved in determining this, because emotions are not money. if it costs you 7K to fight it, then don’t do it. if it cost you alot of time to fight it, plus 2K, then is it worth it? i doubt it.
lessons have big pricetags–but battles can cost even more.
in addition, fighting this could turn into an f’ing mess. it will drag you down emotionally and take up alot of time. time is money. to make money you need to be in a good emotional state of mind. so, my advice is walk away, learn your lessons to be learned and don’t ever get into this situation again. sure you might like to get this guy on principles–but that is a trap and it’s not worth playing that card, it could cost you more latr.
so if it were me I would cut my losses upfront and don’t invest anymore in this. walk away. sever the relationship and move on. the loss of 5K could easily turn into 20K or more in consideration of time, money in attornies fees, emotional drain, and time out to deal with the bullshit situation.
now lick your wounds and go home. to be a good business person, you gotta know when to fold 'em. kittycat
First, I would have done the same thing by pulling the plug on the deal, you had to force his hand. I don’t see how they can force you to do anything so at the worst you are out the cash.
Why not go around the CEO and work with the other owner? If you present your documentation and a summary of the work you have done and the hours required he may be able to get this hammered out. I would work toward getting them to pay you out and either committing to a new contract or walking away from them.
Thanks KK - yes much better than being out more $$. You are right - fighting it is a waste of money as a mediator may not necessarily assign a prevailing party therefore I would be stuck with mediator/arbritrotor fees. The stock the note could convert into is likely to be worth zero, but I did have a good feeling about the venture. If it were 50k or 100k then I would fight (I hate laying down!!!). I’m actually starting a full time position soon and going back to corporate, so this is definitely a write off. The real disappointing thing is that the guy lives 1/2 block away on the same circle and I put in a lot of effort on this venture that he is not even recognizing.
FYI if you did not see my edit - We did have a written agreement just the note was not finalized. I was also getting paid in advance on the latest work since the agreement change, so I am not a complete dumb ass
If my e-mail to the other partners does not generate anything - what are your thoughts on just sending it to collections (if they would take it)?
Return all corporate documents in you possession ASAP and wash your hands of the whole thing and move on. They can’t force you to perform any work, the best they could do is extract money already paid but that isn’t very likely based on what you have said.
Getting everything in writing up front is always the way to go but even then it’s mostly as a vaccination against foolishness and it’s still generally better to walk away if a disagreement goes past being a civil business negotiation. It just costs too much to make going to court worthwhile in most cases, plus suing former employers or business associates tends to be the kiss of death, scarlet letter and a big 666 on your forehead regardless of the merits of the case.
One big payoff is more likely to go bad. Try several smaller payoffs, every time the deadline approaches he’ll want to pay you so that he can get more work out of you.
Throwing down the ultimatum makes it a pissing match. One that he almost can’t lose b/c you’re leaving anyway.
Try bringing in the partners before giving the ultimatum. Let them work on the issue when things are still friendly.
If the person you are dealing with is willing to work from verbal agreements, even if there is an email trail, then something is likely wrong. If they are willing to work from verbal agreements then they don’t have enough business experience or they are the type who is going to take advantage of the situation. If you start with a verbal, then make it clear that you will be following up in a written, formal agreement within days, not weeks or months.
re-read what you wrote. you had a written agreement, but the note was not finalized.
stop.
pick yourself up, and put yourself back together.
lick your wounds.
agree with yourself to move on.
never look back.
no collections, no trying to work it out with other partners. the guy doesn’t recognize your work, and he won’t sign off on the note. so, it is a worthless venture for you. any more time, thoughts, etc spent on this adds more to the loss. does it suck? sure! but the more you try to swing this your way the more frustration you’ll experience.
now, do what i say. lick your wounds, right now, and go home!
The stock the note could convert into is likely to be worth zero
do not allow yourself to get tripped up over the little bullshit. to be a good business person, rise above, and move on. you’ve got to see beyond a note that ultimately WILL BE WORTHLESS.
any more time, thoughts, etc spent on this adds more to the loss. Good advice thanks - returned everything and spending my extra time on a new proposal for someone’s business plan and a client that pays me well! The full time gig I was offered is a sweet deal, so all thoughts moving forward are positive.
lives 1/2 block away
Sounds like it is time to TP him and take some Round Up to his lawn!!! BWAAAAAAA HAAAAAA HAAAAAAAA!!! }}}cough - ghasp - gag{{{{{ er HAAAAAAAA HAAAAAAAAAA…
