zlacker

> What's the consideration for this contract?

Consideration is almost meaningless as an obstacle here. They can give the other party a peppercorn, and that would be enough to count as consideration.

https://en.wikipedia.org/wiki/Peppercorn_(law)

There might be other legal challenges here, but 'consideration' is unlikely to be one of them. Unless OpenAI has idiots for lawyers.

>>eru+(OP)
Right, but the employee would be able to refuse the consideration, and thus the contract, and the state of affairs wouldn't change. They would be free to say whatever they wanted.

>>verve_+E4
Maybe. But whether the employee can refuse the gag has nothing to do at all with the legal doctrine that requires consideration.

>>eru+(OP)
Ok but peppercorn or not, what’s the consideration?

>>static+W8
"I'll pay you a dollar to shut up"

"Deal"

>>verve_+E4
If they refuse the contract then they lose out on their options vesting. Basically, OpenAI's contracts work like this:

Employment Contract the First:

We are paying you (WAGE) for your labor. In addition you also will be paid (OPTIONS) that, after a vesting period, will pay you a lot of money. If you terminate this employment your options are null and void unless you sign Employment Contract the Second.

Employment Contract the Second:

You agree to shut the fuck up about everything you saw at OpenAI until the end of time and we agree to pay out your options.

Both of these have consideration and as far as I'm aware there's nothing in contract law that requires contracts to be completely self-contained and immutable. If two parties agree to change the deal, then the deal can change. The problem is that OpenAI's agreements are specifically designed to put one counterparty at a disadvantage so that they have to sign the second agreement later.

There is an escape valve in contract law for "nobody would sign this" kinds of clauses, but I'm not sure how you'd use it. The legal term of art that you would allege is that the second contract is "unconscionable". But the standard of what counts as unconscionable in contract law is extremely high, because otherwise people would wriggle out of contracts the moment that what seemed like favorable terms turned unfavorable. Contract law doesn't care if the deal is fair (that's the FTC's job), it cares about whether or not the deal was agreed to.

>>kmeist+yf
> There is an escape valve in contract law for "nobody would sign this" kinds of clauses

Who would sign a contract to willfully give away their options?

>>static+W8
Getting a certain amount (according to their vesting schedule) of stock options, which are worth a substantial amount of money and thus clearly is "good and valuable consideration".

>>godels+yi
The same sort of person who would sign a contract agreeing that in order to take advantage of their options, they need to sign a contract with unclear terms at some point in the future if they leave the company.

Bear in mind there are actually three options, one is signing the second contract, one is not signing, and the other is remaining an employee.

>>Peteri+hl
The original stock and vesting agreement that was part of their original compensation probably says that you have to be currently employed by OpenAI for the vesting schedule to apply. So in that case the consideration of this new agreement is that they get to keep their vesting schedule running even though they are no longer employees.

>>kmeist+yf
If say that you were working at Reddit for quite a number of years and all your original options had vested and you had exercised them, then since Reddit went public you would now easily be able to sell your stocks, or keep them if you want. So then you wouldn’t need to sign the second contract. Unless of course you had gotten new options that hadn’t vested yet.

>>hmotte+lr
but can they simply leave with the already vested options/stock? are there clawback provisions in the initial contract?

>>kmeist+yf
is it even a valid contract clause to tie the value of something to a future completely unknown agreement? (or yes, it's valid, and it means that savvy folks should treat it as zero.)

(though most likely the NDA and everything is there from day 1 and there's no second contract, no?)

>>hmotte+lr
That's the case in many common/similar agreements, but the OpenAI agreement is different because it's specifically clawing back already vested equity. In this case, I think the consideration would be the company allowing transfer of the shares / allowing participation in buyback events. Otherwise until the company goes public there's no way for the employees to cash out without consent of the company.

>>hmotte+Zr
My understanding is as soon as you exercise your options you own them, and the company can’t take them from you.

Can anyone confirm this?

>>kmeist+yf
Btw, do you have any idea whey they even bother with the second contract? Couldn't they just write the same stuff into the first contract in the first place?

>>p1esk+7r1
With private stocks, they can put further restrictions on what you can do with your stocks.

>>pas+Lt
> is it even a valid contract clause to tie the value of something to a future completely unknown agreement?

I don't know about this specific case, but many contracts have these kinds of provisions. Eg it's standard in an employment contract to say that you'll follow the directions of your bosses, even though you don't know those directions, yet.

>>eru+M32
Sure, but in the event of liquidity, can they refuse to pay me the value of my shares? For any reason?

>>p1esk+n52
If they have even moderately clever lawyers and accountants, yes.

See eg https://en.wikipedia.org/wiki/Shareholder_rights_plan also known as a 'Poison Pill' to give you inspiration for one example.

>>eru+H32
Because people might actually object to it if it was in the first contract.