A call to bored (board?) lawyers. What follows is my self-authored agreement that will govern the sale of my interest in a company to my partner.
Notes:
• Yes, I am going to fax it to my attorney in the morning (he said, “Just write something up and I’ll take a look at it.”) I just thought you pros might get some giggles out of an amateur whereas-slinger (I’ve got a very sharp heretofore stashed in my boot);
• This is a friendly transaction between myself and a long time partner who can do better with the company on her own, and with whom I still co-own a company worth more;
• The total monies involved could buy an allright car, but not a really groovy one.
THIS AGREEMENT, dated June 29, 2001, by and between ADATACOMPANY, INC. (hereinafter “ADC”), MY DEAR PARTNER (“MDP”) and BEATLEMON (“BEATLE”), describes the process by which BEATLE will receive the compensation that will result in his relinquishing ownership in ADC to MDP.
Total shareholder’s equity in ADC as of 12/31/2000 stands at *XX,XXX*. BEATLE owns 50% of the stock in the company, thus his share of equity is XX,XXX. The agreed upon price for MDP’s purchase of all of BEATLE’s shares of stock in ADC is *XX,XXX*. And it is agreed that BEATLE shall receive payments totalling XX,XXX as fees paid to an independent contractor. In sum, BEATLE is to receive an aggregate total of $XX,XXX for relinquishing any and all ownership in and employment by ADC.
As of 12/31/2000, BEATLE owes ADC *XX,XXX*. BEATLE will repay that amount to ADC and ADC will then commence payments to BEATLE, as sales revenues accrue and allow, until the aggregate total of such payments equals XX,XXX.
As of June 30th, 2001, this AGREEMENT will be in effect and will result in the transfer of all of BEATLE’s shares of stock to MDP and his resignation as both an officer in the company as well as a member of the Board of Directors. BEATLE will henceforth assume no responsibility or liability for the actions of ADC. ADC assumes responsibility for making the requisite filings of notice of such changes with any and all concerned government entities. BEATLE’s relationship with ADC with regard to business operations and responsibilities of ADC will be the same as that of the general public, the payment of amounts detailed above notwithstanding.
BEATLE will retain a lien on the stock relinquished by this agreement until such time as the payments to BEATLE by ADC total $XX,XXX. Said lien will be automatically released at that point. ADC agrees that ADC will, whether sales revenues have allowed or not, make the sum total of payments to BEATLE called for by this AGREEMENT on or before December 31, 2002.
Please indicate your AGREEMENT TO and ACCEPTANCE OF the terms described above by signing below.
So, where’d I shoot myself in the foot?