I bought into my local crossfit gym back in december, (in…
Hi I bought into my local...
HiSubmitted: 2 years ago.Category: UK Law
I bought into my local crossfit gym back in december, (in the UK) with the following agreement / contract signed by both myself and Katie, the lady I was buying 33% of the shares and ownership off of. At the same time I paid the £7,000 in cash.
Katie needed this £7k to help fund the 55% stake that she was buying off of 2 other part owners, (Martin and Marie).
All the ownership has now transferred from Martin and Marie to Katie but before getting me put on the paperwork as a 33% owner / director and shareholder, Katie has said that she has decided that she wants to be the sole owner which was her original intention and only approached me to support as she needed the money to buy the others out and that she never really wanted to share the ownership with anyone else.
She initially asked if I eanted to pay £3-4k upfront for lifetime family membership. I said, no but that I would be prepared to become a part owner for £7k, which we both agreed on, (see agreement below).
I have said to Katie that I'm sorry but that I want to stixk to what we've agreed and she hit the roof, saying that because of experiences when she was younger and issues with the last 2 part owners, she needs to be a 100% owner and not have to share the decisions etc with anyone. I've said,"look I've fot a full time job elsewhere so I'm happy as per our agreement for you to make all the day to day operational decisions and only consult on big decisions such as moving location, borrowing dunds etc". She's still not happy, not because it's me but because she just feels she needs to be in control for once in her life". Binsread she is asking if I would be prepared to be a Preference Sharholder of 33% of the shares or Ordinary Shareholder, where I'd get fixed dividends" and where I'd still have the family membership etc," but where I just not be a director / paet owner.
I get on with Katie ans we've never falleb out. I find her approach unfair and a bit irrational and personally I'm proud to be a part owner etc but the most important issue for me is to a( protect my £7k investment, b) get a monthly income from this moving forward, eg starting in say 2yts time once the 50 strong membership has increased to 100+.
Please could you let me know your thoughts on this in terms of the best option(s) for me.
Formal Agreement - Crossfit Lutterworth Ltd
This is a formal agreement between Katie Dunk of***** Lutterworth, LE17 4DA (Katie) and Lorenzo Guarrasi of 2 Johnnie Johnson Drive Lutterworth, LE17 4GN (Lorenzo) in relation to Crossfit Lutterworth Ltd, (CFL).
The terms of the agreement are as follows:
1) Katie has agreed to sell Lorenzo 33% of the shares and an equivalent % of the ownership of Crossfit Lutterworth Ltd for the sum of £7,000 on or before 18th December 2015 ie as soon as Katie has acquired 100% of the share & ownership of CFL, with the purchase of a 55% share from Marie Collis, (ie 45%) and Martin Leeland, (ie 10%).
2) Katie will arrange for all legal documentation to be completed, to reflect the change in ownership of CFL, including but not exclusively changes with Companies House, HMRC etc.
3) Lorenzo has agreed to make his £7,000 payment for the 33% stake in CFL up front to Katie on or before 12th December, in order to help Katie fund the purchase of the 55% share from Miss Collis and Mr Leeland.
4) Katie has agreed to a non dilution agreement, ie where she will not take any action to dilute the share holding and value of shares prior to Lorenzo taking this 33% stake in CFL.
5) Katie has also agreed for the following points to be included in a shareholder agreement between the shareholders and directors, (ie Katie, 66.6% and Lorenzo, 33.3%), which will be in place on or before 18th December 2015:
a. As a shareholder, Lorenzo will receive free full family membership at CFL for up to 4 people at any one time.
b. Lorenzo will be able to purchase any items CFL sell, (eg clothes, supplements, food etc) at cost price.
c. Every effort will be made to bring CFL into a sound financial position within 3 years, whereby it will then look to pay suitable dividends to it’s shareholders and / or director’s remuneration on a regular / on going basis, ie where a minimum of 75% of it’s post tax profits will be paid as a dividend or directors remuneration, unless Katie and Lorenzo agree otherwise.
d. Every effort will be made to minimise CFL’s debt and liabilities to ensure its long term survival and success.
e. The aim will be to pay the Head Coach and Coaching staff salaries moving forward, which will be in line with the market value for Crossfit Coaches in the area, also taking into account the cost of CFL membership in comparison to other local Crossfit Gym / Boxes.
f. All directors of CFL will need to be in full agreement on the following before they could take place:
i. Any salary, bonus, dividends, director’s remuneration or other incentive payments for employees or directors are either initially made or changes to this payments are made.
ii. CFL’s loans / debt / borrowings being increased.
iii. Any substantial business contracts are entered into.
iiii. Any CFL legal proceedings are entered into.
v. Any payments or outgoings exceeding £1k are made.
vi. The sale of additional shares or any changes to the structure of the CFL.
g. If Katie decides to sell any of her shares, Lorenzo will get first refusal in terms of deciding whether to buy them all or a chosen percentage of them at the market rate determined by an independent expert at that time, or an agreed rate between Lorenzo and Katie, as well as first refusal to find an alternative buyer.
h. If Lorenzo decides to sell any of his shares, Katie will get first refusal in terms of deciding whether to buy them all or a chosen percentage of them at the market rate determined by an independent expert, at that time, or an agreed rate between Katie and Lorenzo, as well as first refusal to find an alternative buyer.
i. Katie will make all day to day decisions regarding the running of CFL but will keep Lorenzo fully informed about any changes as a matter of courtesy.
j. Lorenzo and Katie will have full visibility of CFL’s finances at all times, including visibility of it’s bank account(s) balance, any loans / debt, P&L accounts etc.
k. Lorenzo will be able to attend any internally run courses by CFL free of charge.
l. Katie will do Lorenzo’s Individual Crossfit Programming for up to 10 hours a week and provide 1-2-1 coaching for up to 3 sessions a week, at least until the end of 2016.
m. Lorenzo will have the option to become a Crossfit Coach and work at CFL once he’s successfully completed his Crossfit Level 1 Course.
n. Whilst they are shareholders and directors of CFL, neither Katie or Lorenzo will ever be able to be voted off the board of directors eg by an “ordinary resolution” etc, regardless of the size of their shareholding etc and regardless of what other directors there may be on the board at any given time.
o. No director should enter into competition with CFL, eg with any other business interests.
I hereby sign to confirm that I fully agree with all of the above…
I hereby sign to confirm that I have witnessed both of the above parties sign and date this agreement and that I have witnessed Lorenzo pay £7,000 in cash to Katie for his 33% share and equivalent % ownership of CFL.
Full Name: Signature:Date: