Hello HN
Based out of India, we have a security product for web apps. We've been in talks with an experienced US sales executive for several weeks in helping us take the distribution to next level and he seems to have been super interested. Recently, he has come up with a partnership proposal in which he wants us to transfer IP rights of the product (without any money paid) to a California general partnership entity in which his LLC company will have 51% interest and a managing partner status. The product will be further exclusively licensed to his LLC company for sale.
His argument is that without major US ownership, no fortune1000 companies and federal government will buy a security product in large quantities (say $100k or more)
The original partnership agreement requires us to grant irrevocable, exclusive, royalty free unrestricted worldwide rights to sell/modify/reproduce/rewrite etc. the product and its source code as capital contribution, while from him, the contributions are sales, marketing, accounting, strategy etc.
The voluntary withdrawal requires a very large notice period and upon withdrawal, the IP rights of our product will still be there with the partnership. Events resulting in the involuntary withdrawal of a Partner from the Partnership includes death of a Partner; Partner mental incapacity; Partner disability preventing reasonable participation in the Partnership; Partner incompetence; breach of fiduciary duties by a Partner; criminal conviction of a Partner; Expulsion of a Partner; Operation of Law against a Partner; or any act or omission of a Partner that can reasonably be expected to bring the business or societal reputation of the Partnership into disrepute.There are several other conditions including authority to bind partnership into contracts remains with him, equal distribution of profits/losses as per ownership interest (accounting done by his firm), etc.(to be continued in comment)