My partner and I, want to bring a CTO on board since we don't have technical background. We already started with our start-up and agreed with the CTO on equity basis, what contract to use?


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My partner and I, want to bring a CTO on board since we don't have technical background. We already started with our start-up and agreed with the CTO on equity basis (no investment from his end), what contract to use?

CTO Contract Agreements Partnership Business Law

asked Aug 13 '17 at 14:25
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Zeid A
1 point

2 Answers


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I would suggest an Employment Agreement -- they're not a founder but your first employee.

I won't suggest a particular template, as IANAL, but that's how I would approach this problem.

answered Sep 5 '17 at 22:41
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Dan Moore
11 points

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If the company has a low, or no market value, you will likely use a Restricted Stock Purchase Agreement. This will grant stock to the new CTO which will become unrestricted as it vests. In the US, the RSPA will allow the CTO to take advantage of an 83(b) election in which they will pay a small amount of tax on the award, based on the low FMV of the business, and pay preferential capital gains tax rates in the future when a liquidity event occurs.

http://www.docracy.com/7764/restricted-stock-purchase-agreement

answered Sep 24 '17 at 16:20
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Esquire
1 point

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CTO Contract Agreements Partnership Business Law