Agreements between the owners of a business regulate the owners’ relationship. It is important to begin a business venture with a clear understanding of each ones’ responsibilities, duties and commitments. When a business needs to be divided, when a business fails, or when an owner wants to quit, it becomes very difficult to address just how to go about splitting or selling the business. These times are often very emotional and therefore it is the best practice to determine how you will handle these issue when the parties are not emotional. Such as, if an owner wants to quit, the other owner will buy them out. If the owners do not agree to such a provision, when one owner wants to quit, it often leads to a very long litigation, with both parties loosing.
When we draft business owner agreements we try to address the most common issues business owners might have, such as:
- What happens if a partner wants to quit?
- How do I get my investment out?
- Who determines when money is taken out of the company?
- Who is allowed to manage the company?
- If my ex-spouse wants my interest in the company in the divorce, how do we handle that?
- What happens if I die or become disabled?
- Can I buy out my partner(s)? Can they buy me out?
- Can I sell my interest to a third party? Do you have to approve of it?
To help you with your research here are some tips:
Limited Liability Companies use “Operating Agreements” to contract between owners and the company to as to the management, equity transfer restrictions, and other issues that owners want to address.
Corporations use a combination of By-laws and a contract called a Shareholders’, sometimes a Stockholders’ Agreement to answer those questions that are not resolved by the By-laws. By-laws usually deal with management and voting whereas the Shareholders’ Agreement will address other issues.
Other types of agreements you might encounter on google should you care to learn are Buy-Sell Agreements, Rights of First Refusal Agreements, Non-Compete Agreements, and Equity Incentive Plans.
Nearly everything you read about corporations can be adapted for an LLC, but that’s the key, it must be adapted. You should not use a document intended for a corporation with an LLC because many of the terms and clauses will be not applicable.
Contact BACC today to discuss your legal needs. We’ve got your BACC.
In Tampa, Florida and the United States long gone are the days when a hand shake sufficed. While some businesses are still trustworthy, its best to get your understanding in writing. You can’t only protect your customers, you must learn to protect yourself. That is why Frank N. Lago, Esq. and BACC helps its clients with a variety of contracts, preferably at the transactions beginning.
Employment/Consultant/Independent Contract Agreements. This are primarily used to detail three things: i) when and how payments are made, ii) what work is to be delivered/completed, iii) when is it delivered to the client and iv) what non-competition restrictions are being placed on the employee. Non-compete provisions, non-solicitation provisions, non-circumvention processions, etc. These three points, if not delineated in an agreement of some sort, will always rear their ugly heads when you least expect it and can wreak havoc on a business. Time and time again BACC has seen clients, customers, mailing list, intellectual property, and trade secrets stolen from a business by one of their former, trusted employees and/or consultants. Its important to protect the company from such infringement and the best way is to use some sort of agreement between the employer and the employee/consultant.
Employee Handbooks are large contracts between the business and its employees. It helps setout the standard of conduct and culture of a company, as well as providing a defense against discrimination claims. Handbooks are also helpful when you need to terminate an employee whom has violated a written policy, therefore preventing claims for wrongful termination.
Non-competition Agreements are useful with employees. The business is going to invest its time and energy into an employee and in order to avoid having that skill walk out the door, it is legal to put reasonable parameters around where that individual may work. In the state of Florida, it is usually agreeable to have a non-compete for two years within a limited geographic location.
BACC has drafted a multitude of other contracts, as well as Recruiting/Staffing Agreements, Service Agreements, model releases, interview releases, non-disclosure agreements, etc.
Contact Frank N. Lago, Esq. at BACC today to discuss your legal needs. We’ve got your BACC.