Agreements
Petock & Petock, LLC is experienced in drafting and reviewing all types of business agreements. It is highly advisable that any agreement be reduced to writing by an experienced attorney. A written agreement ensures that both parties have taken the time to think about the deal and its consequences. In some cases reducing an agreement to writing reveals to the client flawed assumptions or overlooked issues. Further, a written agreement minimizes or even eliminates the “he said, she said” type of situation in the case of a dispute. It should also be noted that in some areas of the law oral agreements are not even effective or enforceable. The number of different types of agreements are endless, being limited only by the imaginations of the client and his or her lawyer, but the following describe some of the more common types of agreement drafted by the lawyers at Petock & Petock:
LLC Operating Agreements:
Most state statutes authorizing Limited Liability Companies provide for two basic documents with respect to LLCs: a “certificate of organization,” which is a required document publicly filed that creates the entity (similar to articles of incorporation in a corporation); and an “operating agreement.” An operating agreement is not required by law or publicly filed like the “certificate of organization” but it is highly recommended that all multiple member LLCs have a written operating agreement. The “operating agreement” is similar to corporate bylaws in that it (among other things) defines the rights and responsibilities of the members. A good operating agreement anticipates issues that might arise in the business and addresses these issues ahead of time. Without an “operating agreement,” in the face of a dispute, members are stuck with default rules that will not always be desirable or necessarily fair.
In addition, an “operating agreement” provides the documentation that lenders and others often require before doing business with an LLC or any other business entity for that matter. An “operating agreement” can also be evidence that actions taken by the business are those of the LLC and not those of the individual owner; evidence that can come in handy in the case where a claimant is asserting liability against an individual owner. Finally, the process of developing the operating agreement where a great deal of thought is put into anticipating the future can be an invaluable tool in helping to shape a sound business plan.
Petock & Petock, LLC is experienced in all business matters and is ready to help you with your business including with the drafting of an “operating agreement” for your LLC.
Partnership Agreements:
A partnership agreement defines the rights and responsibilities of the partners in the partnership and anticipates the issues that might arise in the course of operating the business. It is vitally important that the principals involved in a business concentrate their efforts on the business of business instead of on disputes that might evolve between the partners as the business grows in complexity. In the absence of a partnership agreement disputes between partners often end up in litigation which is time consuming, expensive and usually means the end of the partnership and the business. Furthermore, in the absence of an agreement the partners will be stuck with default rules defined in the Uniform Partnership Act (UPA) which are not always the rules the partners would have chosen had they had the foresight to enter a partnership agreement before the dispute arose.
Petock & Petock, LLC is experienced in all facets of partnership law and is ready to assist you with your business needs including with drafting a partnership agreement.
Shareholder Agreements:
There is no requirement that shareholders in a corporation have a shareholder agreement. In fact, the only document required to be filed with the Department of State in Pennsylvania with respect to a corporation are the Articles of Incorporation. Nevertheless, it is highly advisable that the shareholders of a corporation that has more than one shareholder enter into a shareholder agreement. There is no one form of agreement that will work for all corporations and each agreement should be carefully drafted with the unique concerns of the individual shareholders in mind. The process of drafting a shareholder agreement can be invaluable to the success of a business because it forces business owners to consider and plan ahead of time with respect to various issues that left if left unplanned can lead to dead lock, litigation or even the end of the business. Some of the issues that are commonly addressed in shareholder agreements include: ownership in the company, rights and obligations related to transferring shares and valuation of shares, officer compensation, rights and duties of shareholders, confidentiality and non-compete provisions and corporate indemnification.
The lawyers at Petock & Petock, LLC are ready to help you with all your corporate needs including assisting in drafting a shareholder agreement.
Asset and Stock Purchase Agreements:
Whether buying or selling a business it is very important that a lawyer experienced in the acquisition process be involved from the earliest stage. Petock & Petock, LLC is experienced in all aspects of the acquisition process and is ready assist in you with advising with respect to the decision to buy or sell, negotiating the deal, letters of intent, due diligence investigations, structuring the deal, consulting and employment agreements, securities aspects, transferee liability and any other issues that might be unique to the deal.
Employment Agreements:
Although not required in every situation, employers should seriously consider entering an employment agreement with a prospective employee. Employment agreements help foster a better employer-employee relationship by defining the terms and conditions of the relationship thereby creating a shared understanding between the parties. But more often than not, the value of a well-drafted employment agreement comes to light at the termination of employment.
Often employers that do not have employment contracts in place find themselves in a situation where after investing valuable resources into the training of an employee the employee desires to leave the employer before the employer has any chance to recover his or her investment. At the very least an employment contract should attempt to address this by ensuring that restrictive covenants are in place so that if an employee desires to leave the employee will not be permitted to use valuable information of the employer such as customer lists, market research and other confidential information to the employer’s disadvantage.
Further, frequently an employer desires that an employee sign an employee contract so that the employer can restrict the employee’s ability to compete with the employer in the same or similar business should the employee decide to leave the business. Covenants not to compete are means for an employer to “lock up” valuable employees. Covenants not to compete must be reasonable as to duration and scope and courts are not afraid to strike them as against public policy if not drafted properly.
A related reason that employers often want employee agreements in place is to protect their customer base and valuable employees. When an employee decides to leave a business to work at a competing business or start a competing business, it is logical for the employee to want to bring along “his” or “her” customers and “his” or “her” talented co-workers. Non-solicitation clauses can be drafted to prevent employees from leaving a business and “stealing” customers or employees. While courts are not as reluctant to uphold these clauses as they are covenants not to compete, non-solicitation clauses must be reasonable and should be drafted by an experienced attorney.
The are various other clauses that are common in employment agreements and because just about anything can be contracted for, employment agreements can be as unique as your business. Petock & Petock, LLC is ready to assist you in drafting or reviewing any agreement related to employment or your business.
Distributor Agreements:
Distributor agreements are agreements whereby a “manufacturer” appoints a distributor to purchase and sell the manufacturer’s products in some defined territory, often on an exclusive basis. These types of agreements often incorporate various other types of agreements such as trademark licenses, confidentiality agreements and covenants not to compete. From the viewpoint of the manufacturer it is usually desirable to negotiate terms requiring the distributor to make minimum purchases of the manufacturer’s products and define consequences for failure to do so. Petock & Petock, LLC is experienced at drafting and reviewing distributor agreements from both the vantage point of the manufacturer and the distributor.
Confidentiality and Non-disclosure Agreements:
When available it is always advisable that some other form of protection be procured before disclosing your confidential information to a third party such as by obtaining a filing date by the filing of a patent, copyright or trademark application. Nevertheless, a confidentiality and non-disclosure agreement provides protection by defining a party’s obligation to keep information disclosed to it confidential. Confidentiality and non-disclosure agreements vary in form from one client to the next depending on the information to be disclosed and the client’s specific needs. These agreements always carefully define the information to be kept confidential, contain non-use and non-disclosure provisions and provisions defining remedies should the agreement be breached. Further, it is not uncommon to couple confidentiality and non-competes with other forms of agreement such as non-competes and grant backs. Petock & Petock, LLC is experienced at advising clients as to the potential risks of disclosing valuable, confidential information and are ready to help you safely disclose your information.
