FORT LEE, N.J. – The three founders of electric motorcycle manufacturer Mission Motorcycles are embroiled in a legal dispute in which one of them has been terminated from the company and the other two are seeking to enforce a stock restriction agreement.
Co-founder and former chief strategy officer Vincent Ip reportedly was forced out Nov. 22 after co-founders Mark Seeger, who is also president and CEO, and Andrew Ng accused him of unprofessional behavior, including threatening fellow executives.
The remaining co-founders have asked a court to enforce a stock restriction agreement, which Ip claims is fraudulent.
Ip’s attorney, Lisa C. Solbakken, said Ip’s termination and the lawsuit are an attempt by one of the other co-founders to take control of the company.
“The complaint mischaracterizes Mr. Ip’s position,” she said. “We look forward to filing our counterclaims, which will include fraud, breach of contract and other claims.”
The three entered identical agreements when the company was founded, according to a federal lawsuit. Each invested $30,000 in exchange for 300,000 shares of stock. When the company was ramping up production in the summer 2013, it was decided that to attract more investment capital, Mission would impose the stock restriction agreements on the top executives.
Each of the co-founders signed identical agreements Sept. 4, agreeing to put $70,000 each into the company. Those agreements gave the company the right to buy back stock from any employee if the employee was terminated from the company for any reason.
The agreement set the repurchase price for stock and the intervals at which the stock vested, making some shares ineligible for repurchase. The specific terms are subject to confidentiality agreements.
“This feature was designed to incentivize the founders to remain with the company on a long-term basis, which would provide investors with an assurance that the company would have some stability over the critical startup phase, a key concern among investors in startup technology companies,” according to the lawsuit.
Things went wrong after the agreements were signed, according to court papers. “During the summer and fall of 2013, defendant Ip’s job performance became increasingly unsatisfactory, and at the same time Ip became increasingly hostile to and unprofessional with his co-workers, including Seeger…and Jeremy Cleland, the company’s vice president of sales and marketing.
“Among other things, defendant Ip threatened Seeger with physical violence in the workplace; he made disparaging and inappropriate personal and professional remarks about other executives and employees to potential customers, investors, contractors and other business partners; he sought to undermine the company’s management; he made various threats against the business; he was unable or unwilling to interact appropriately in business and professional situations, damaging the company’s reputation and standing with potential investors and other business partners; he failed to contribute to, understand, or appreciate the company’s technology and its products, such that he was unable to contribute to the business and its strategic goals; he failed to assist with and/or fulfill the financing commitments he had made to the company; and he engaged in other acts of unprofessional behavior,” the remaining founders allege.
Solbakken said Ip was not told of any complaints about his behavior when he was terminated.
Before Ip’s termination, 25,000 of his shares had vested. Mission tried to negotiate to buy back the remaining 275,000 shares, but Ip allegedly declared the restriction agreement invalid and refused to sell back his shares. He refused a check that was sent to him Dec. 19, according to the lawsuit.
Mission has asked a federal court to rule that the stock restriction agreement is valid and order the repurchase to go through, claiming that the cloud of the dispute hanging over it is hindering its ability to get more investment funding.
Read the full complaint here.