I am 9 days away from completing a contract for a new start up that still has yet to raise money. At the beginning I negotiated 1% of the company, and a month into the contract he incorporated the company and we amended my contract to be 1% of the common stock he incorporated with.
This morning he told me that he was going to be diluting the stock by 100 times.
he gave me 2 options:
A. Sign another contract for at minimum 3 months, re-vesting me back up to what 1% of the shares will be, or
B. Walk away at the end of my original contract with the amount we amended my contract to, which would turn into 0.01%.
Is he legally allowed to do this and is there any other options I can take?
I am really angry that he essentially devalued my work by 99%. Should I trust him enough to sign for another contract.
I am sure that I will end up working at another start up again in the future, what can I do to protect myself from something like this happening again.
Edits Below ==========================================
So basically, because the CEO was in a rush, and failed to fully explain all the details to me, almost all the above information is either incorrect or pretty inaccurate.
He let me know a little bit about what happened, and then I mistakenly jumped to conclusions, and let my anger get the better of me, and led me to writing the above post.
I'll take this as a lesson to better everything about a situation and keep a level head