Re:Former employee sues startup for financials in order to v...
by JumpCrisscross on Friday August 19, 2016 @08:09PM
(#12324379)
> Once the employees exercise and receive stock, they still may be asked to waive info rights contractually as a condition of receiving the stock if that was part of the option agreement
Section 220 rights are statutory. You cannot waive them. If you own stock in a Delaware company, you are entitled to inspection rights.
Re:Former employee sues startup for financials in order to v...
by zekevermillion on Friday August 19, 2016 @10:23PM
(#12324807)
Yes you can. See Korum v. Webasto, 769 A.2d 113 (2000). Such a waiver is a standard part of many forms such as those used by Orrick and Clerky, and I use it myself. Just has to be "expressed clearly".
Re:Former employee sues startup for financials in order to v...
by Animats on Saturday August 20, 2016 @03:38AM
(#12325615)
Korum was a director of the company.[1] A director has duties to the company that an ordinary shareholder does not.
It's hard to see how a NDA could survive sale of the stock. If an employee sells some of their shares to another party, that party gets the right to examine the books, but isn't subject to the NDA.
[1] http://files.ali-cle.org/thumbs/datastorage/lacidoirep/artic...
Re:Former employee sues startup for financials in order to v...
by zekevermillion on Saturday August 20, 2016 @07:58AM
(#12326169)
Korum is cited by a line of cases in DE for the proposition that info rights are waivable as long as the waiver is expressed clearly. There may be an easier case to parse for people who are not used to analyzing caselaw, but there you go.
Re:Former employee sues startup for financials in order to v...
by gresrun on Friday August 19, 2016 @08:04PM
(#12324364)
Why shall they remain nameless? I, for one, am interested in hearing who has historically screwed over employees like this.
Re:Former employee sues startup for financials in order to v...
by zekevermillion on Friday August 19, 2016 @10:26PM
(#12324821)
Because I have professional duties that prevent me from discussing specific matters! I have to wait a couple years and then complain in as general and non-attributed a manner as possible.
I have personally found it very frustrating to deal with venture-backed startups on behalf of departing employees. Typically the employees have to decide whether to exercise option grants within 90 days of termination, and the strike price might be a meaningful amount to someone who has just lost a job (whether voluntarily or not). Both for economic as well as tax reasons, we need insight into the value of the underlying stock. But companies are quite tight-lipped about it, and their lawyers often stonewall. They may also try to impose new contractual requirements on exercise that were not agreed to in the original option grant! I view this as the height of bad faith vis-a-vis former employees. But appears to be standard operating procedure for certain companies and law firms, who shall remain nameless...