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TexLaw
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For ZDNlaw only. Hi, as we discussed previously, Id like

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For ZDNlaw only.
Hi, as we discussed previously, I'd like to send you a partnership agreement for your review. Please let me know how I can send the document to you and how long it'll take to provide comments. Thanks.
Submitted: 1 year ago.
Category: Business Law
Expert:  Fran-mod replied 1 year ago.
I have let ZDN know about your question. He will see my message when he next checks his email.

Thanks for your patience.
Expert:  TexLaw replied 1 year ago.
Hi,

Please send it as a pdf attachment toXXX@XXXXXX.XXX

Attn: ZDNlaw
Re: http://www.justanswer.com/business-law/7ttyz-zdnlaw-only-hi-discussed-previously-i-d.html

Let me know when you send it.

Thanks,
ZDN
Customer: replied 1 year ago.

I sent the document to you. Please let me know if you didn't receive it or have any questions. Thanks.

Expert:  TexLaw replied 1 year ago.
I've received the document.

My first comment is that you need to remove every reference to "partnership." While an LLC is similar to a partnership, you are not actually a partner when you have an LLC. You are a member. These terms have different legal meanings. A partner has many more rights than a member of an LLC. You do not want to grant her the rights of a partner, nor should you necessarily want the responsibilities of being a partner. Regardless, if you want those rights, you would want to form a Limited Partnership, not an LLC.

So, take out "Partnership" and replace it with "Company". Take out "Partner" and replace with "Member".

"1" Needs to read: Nature of Business. The Members listed above hereby agree that the Company shall conduct business for the following purpose....


"9" needs to state a geographical limitation. What kind of business will you be running and where will your clients be in relation to where you office is?
Customer: replied 1 year ago.

Thank you. I will make these changes. Do you have additional comments?Did I cover all the important aspects of the agreements? Is there any language that may need tweeking because it's not clear or inaccurate?

Customer: replied 1 year ago.

for #9, it's an online beauty store so didn't think geographic location would apply. We'll have two offices, mine in CT and hers in NJ.

Expert:  TexLaw replied 1 year ago.
So, are you saying that you sell everywhere in the US?

Who are your competitors?

Are you selling to individual users or are you selling to other businesses?

You understand that you will not be able to simply fire her once you make her a member?
Customer: replied 1 year ago.

correct


there are two types of competitors: direct ones are for the most part small businesses that specilize in organic skincare (what we would do) and large mainstream skincare companies.


We'll be selling to individuals as a start and perhaps to spas and salons later.


I understand that I won't be able to fire her. However, would I be able to buy her share of the company if she agrees (I tried to include that language in the agreement under Withdrawal)?

Expert:  TexLaw replied 1 year ago.
I think you also need to add the following language:

In case a member withdraws or the membership is otherwise terminated pursuant to this agreement, the leaving member agrees that it will not, either directly or indirectly, for a period of 2 years solicit any existing or previous customer of the Company in connection with any business in competition with the Company.

You should have a clearer statement regarding withdrawal in Section 8. Something like: "If a member withdraws or the membership is otherwise terminated under this agreement, that leaving members membership interest shall be purchased by the remaining member as agreed herein."

The clause that states "In the event a Partner does not fulfill her obligation to the Partnership as set forth in Clause 3 above and/or violates the Agreement signed herein, another Partner may request in writing a withdrawal of that Partner from the Partnership."

has no effect. What are you intending it to mean?
Customer: replied 1 year ago.

the intent is if our partnership doesn't work out I can ask her to leave and sell her share back to me. This is the intent of this language but not sure if there is another way to say this.

Expert:  TexLaw replied 1 year ago.
The way you would do this is have a periodic option to purchase her membership interest. So, something to the effect of:

At the end of each quarter of the fiscal year, the member with the controlling interest has the option to purchase the minority member's interest. The controlling member shall provide 30 days written notice of its intent to exercise this option. The controlling member's notice shall contain an offering price for the minority member's interest. Within 15 days of the written notice, the minority member must either submit a counter-demand with a different price or may agree to the price offered by the controlling member. If the member's cannot agree on the purchase price of the minority member's interest, the member's must submit to a third party valuation of the minority member's interest. The minority member shall be bound by the third-party valuation. Within 10 days of the third-party valuation, the controlling member must either accept the valuation or must reject the valuation. If the valuation is rejected by the controlling member, the controlling member's option to purchase is extinguished until the next fiscal quarter, unless otherwise agreed by the parties.
Customer: replied 1 year ago.

great. I will include this language. Thanks. Do you see any other issues/concerns in the agreement? Does the rest look ok?

Expert:  TexLaw replied 1 year ago.
Otherwise looks ok.
TexLaw, Attorney
Category: Business Law
Satisfied Customers: 4213
Experience: Internationational Commercial Attorney
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