Had business partner that started a company without my knowledge that directly competes with our customers. He then ordered $80K of equipment through the company and used it in his new business competing against our customers. He changed shipping documents and had the equipment imported under his new company name and did not disclose this fact. We removed him from the business through the Involuntary Withdrawal clause.
I have emails that prove he started this new business and emails where he is using the equipment in his new business that was consigned to the company intended to be sold to our customers.
I also have documentation that he changed shipping documents for $50K of equipment to his new company name and is using the equipment in the new business without paying for it or returning it.
Does he have any recourse for being removed from the company?
Involuntary Withdrawal: Events leading to the involuntary withdrawal of a Member (the "Dissociated Member") from the Company will include but not be limited to: XXXXX XXXXX a Member; Member mental incapacity; Member disability preventing reasonable participation in the Company; Member incompetence; breach of fiduciary duties by a Member; criminal conviction of a Member; Operation of Law against a Member or a legal judgment against a Member that can reasonably be expected to bring the business or societal reputation of the Company into disrepute. Expulsion of a Member can also occur on application by the Company or another Member, where it has been judicially determined that the Member: has engaged in wrongful conduct that adversely and materially affected the Company's business; has willfully or persistently committed a material breach of the Operating Agreement or of a duty owed to the Company or to the other Members; or has engaged in conduct relating to the Company's business that makes it not reasonably practicable to carry on the business with the Member. The withdrawal of such Member will have no effect upon the continuance of the Company business. If the remaining Members elect to purchase the interest of the withdrawing Member, the remaining Members will serve written notice of such election, including the purchase price and method and schedule of payment for the withdrawing Member's interest, upon the withdrawing Member, their executor, administrator, trustee, committee or analogous fiduciary within a reasonable period after acquiring knowledge of the change in circumstance to the affected Member.
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