PARTNERSHIP AGREEMENT ("Agreement") made and effective this
[Date], by and
between the following individuals, referred to in this Agreement as the "Partners":
The Partners wish to set forth, in a written
agreement, the terms and conditions by which they will associate themselves in
NOW, THEREFORE, in consideration of the
promises contained in this Agreement, the Partners affirm in writing their
association as a partnership in accordance with the following provisions:
1. Name and Place of Business.
The name of
the partnership shall be called [Partnership
Business Name] (the "Partnership"). Its
principal place of business shall be [City
and State of Principal Office], until changed
by agreement of the Partners, but the Partnership may own property and
transact business in any and all other places as may from time to time be
agreed upon by the Partners.
of the Partnership shall be to [Describe
Partnership's Business]. The Partnership may
also engage in any and every other kind or type of business, whether or not
pertaining to the foregoing, upon which the Partners may at any time or from
time to time agree.
The Partnership shall commence as of the date
of this Agreement and shall continue until terminated as provided herein.
4. Capital Accounts.
A. The Partners shall make an initial
investment of capital, contemporaneously with the execution of this Agreement,
Partners and Capital
[Partner Names and Capital
In addition to each Partner's share of the
profits and losses of the Partnership, as set forth in Section 5, each Partner
is entitled to an interest in the assets of the Partnership.
The amount credited to the capital account of the Partners at any time shall
be such amount as set forth in this Section 4 above, plus the Partner's share
of the net profits of the Partnership and any additional capital contributions
made by the Partner and minus the Partner's share of the losses of the
Partnership and any distributions to or withdrawals made by the Partner. For
all purposes of this Agreement, the Partnership net profits and each Partner's
capital account shall be computed in accordance with generally accepted
accounting principles, consistently applied, and each Partner's capital
account, as reflected on the Partnership federal income tax return as of the
end of any year, shall be deemed conclusively correct for all purposes, unless
an objection in writing is made by any Partner and delivered to the accountant
or accounting firm preparing the income tax return within one (1) year after
the same has been filed with the Internal Revenue Service. If an objection is
so filed, the validity of the objection shall be conclusively determined by an
independent certified public accountant or accounting firm mutually acceptable
to the Partners.
5. Profits and Losses.
modified by mutual consent of all the Partners, the profits and losses of the
Partnership and all items of income, gain, loss, deduction, or credit shall be
shared by the Partners in the following proportions:
Partner and Shares
[Partner Names and
Percent or Fractional Share of Profits or Losses]
6. Books and Records of Account.
The Partnership books and records shall be
maintained at the principal office of the Partnership and each Partner shall
have access to the books and records at all reasonable times.
7. Future Projects.
The Partners recognize that future projects for
the Partnership depend upon many factors beyond present control, but the
Partners wish to set forth in writing and to mutually acknowledge their joint
understanding, intentions, and expectations that the relationship among the
Partners will continue to flourish in future projects on similar terms and
conditions as set forth in this Agreement, but there shall be no legal
obligations among the Partners to so continue such relationship in connection
with future projects.
8. Time and Salary.
unless otherwise decided by unanimous agreement of the Partners,
Each Partner shall nonetheless be expected to devote such time and attention
to Partnership affairs as shall from time to time be determined by agreement
of the Partners. No Partner shall be entitled to any salary or to any
compensation for services rendered to the Partnership or to another Partner.
9. Transfer of Partnership Interests.
A. Restrictions on Transfer.
None of the Partners shall sell, assign,
transfer, mortgage, encumber, or otherwise dispose of the whole or part of
that Partner's interest in the Partnership, and no purchaser or other
transferee shall have any rights in the Partnership as an assignee or
otherwise with respect to all or any part of that Partnership interest
attempted to be sold, assigned, transferred, mortgaged, encumbered, or
otherwise disposed of, unless and to the extent that the remaining Partner(s)
have given consent to such sale, assignment, transfer, mortgage, or
encumbrance, but only if the transferee forthwith assumes and agrees to be
bound by the provisions of this Agreement and to become a Partner for all
purposes hereof, in which event, such transferee shall become a substituted
partner under this Agreement.
B. Transfer Does Not Dissolve Partnership.
No transfer of any interest in the Partnership,
whether or not permitted under this Agreement, shall dissolve the Partnership.
No transfer, except as permitted under Subsection 9.A. above, shall entitle
the transferee, during the continuance of the Partnership, to participate in
the management of the business or affairs of the Partnership, to require any
information or account of Partnership transactions, or to inspect the books of
account of the Partnership; but it shall merely entitle the transferee to
receive the profits to which the assigning Partner would otherwise be entitled
and, in case of dissolution of the Partnership, to receive the interest of the
assigning Partner and to require an account from the date only of the last
account agreed to by the Partners.
10. Death, Incompetency, Withdrawal, or
Neither death, incompetency, withdrawal, nor
bankruptcy of any of the Partners or of any successor in interest to any
Partner shall operate to dissolve this Partnership, but this Partnership shall
continue as set forth in Section 3, subject, however, to the following terms
A. Death or Incompetency.
In the event any Partner dies or is declared
incompetent by a court of competent jurisdiction, the successors in interest
of that Partner shall succeed to the partnership interest of that Partner and
shall have the rights, duties, privileges, disabilities, and obligations with
respect to this Partnership, the same as if the successors in interest were
parties to this Agreement, including, but not limited to, the right of the
successors to share in the profits or the burden to share in the losses of
this Partnership, in the same manner and to the same extent as the deceased or
incompetent Partner; the right of the successors in interest to continue in
this Partnership and all such further rights and duties as are set forth in
this Agreement with respect to the Partners, the same as if the words "or his
or her successors in interest" followed each reference to a Partner; provided,
however, that no successor in interest shall be obligated to devote any
service to this Partnership and, provided further, that such successors in
interest shall be treated as holding a passive, rather than active, ownership
B. Payments Upon Retirement or Withdrawal of
(1) Amount of Payments. Upon the retirement
or withdrawal of a Partner, that Partner or, in the case of death or
incompetency, that Partner's legal representative shall be entitled to receive
the amount of the Partner's capital account (as of the end of the fiscal year
of the Partnership next preceding the day on which the retirement or
withdrawal occurs) adjusted for the following:
Any additional capital contributions made by the Partner and any distributions
to or withdrawals made by the Partner during the period from the end of the
preceding fiscal year to the day on which the retirement or withdrawal occurs;
The Partner's share of profits and losses of the Partnership from the end of
the preceding fiscal year of the Partnership to the day on which the
retirement or withdrawal occurs, determined in accordance with generally
accepted accounting principles, consistently applied; and
The difference between the Partner's share of the book value of all of the
Partnership assets and the fair market value of all Partnership assets, as
determined by a fair market value appraisal of all assets. Unless the
retiring or withdrawing Partner and the Partnership can agree on one appraiser,
three (3) appraisers shall be appointed--one by the Partnership, one by the
retiring or withdrawing Partner, and one by the two appraisers thus appointed.
All appraisers shall be appointed within fifteen (15) days of the date of
retirement or withdrawal. The average of the three appraisals shall be
binding on all Partners.
(2) Time of Payments. Subject to a different
agreement among the Partners or successors thereto, the amount specified above
shall be paid in cash, in full, but without interest, no later than twelve
(12) months following the date of the retirement or withdrawal.
(3) Alternate Procedure. In lieu of purchasing
the interest of the retiring or withdrawing Partner as provided in
subparagraph (1) and (2) above, the remaining Partners may elect to dissolve,
liquidate and terminate the Partnership. Such election shall be made, if at
all, within thirty (30) days following receipt of the appraisal referred to
11. Procedure on Dissolution of Partnership.
Except as provided in Section 10.B.(3) above,
this Partnership may be dissolved only by a unanimous agreement of the
Partners. Upon dissolution, the Partners shall proceed with reasonable
promptness to liquidate the Partnership business and assets and wind-up its
business by selling all of the Partnership assets, paying all Partnership
liabilities, and by distributing the balance, if any, to the Partners in
accordance with their capital accounts, as computed after reflecting all
losses or gains from such liquidation in accordance with each Partner's share
of the net profits and losses as determined under Section 5.
12. Title to Partnership Property.
If for purposes of confidentiality, title to
Partnership property is taken in the name of a nominee or of any individual
Partner, the assets shall be considered to be owned by the Partnership and all
beneficial interests shall accrue to the Partners in the percentages set forth
in this Agreement.
All leases of Partnership assets shall be in
writing and on forms approved by all the Partners.
14. Controlling Law.
This Agreement and the rights of the Partners under this
Agreement shall be governed by the laws of
Any written notice required by this Agreement
shall be sufficient if sent to the Partner or other party to be served by
registered or certified mail, return receipt requested, addressed to the
Partner or other party at the last known home or office address, in which
event the date of the notice shall be the date of deposit in the United States
mails, postage prepaid.
This Agreement contains the entire agreement of
the Partners with respect to the Partnership and may be amended only by the
written agreement executed and delivered by all of the Partners.
17. Binding Upon Heirs.
This Agreement shall bind each of the Partners
and shall inure to the benefit of (subject to the Sections 9 and 10) and be
binding upon their respective heirs, executors, administrators, devisees,
legatees, successors and assigns.
IN WITNESS WHEREOF, the Partners have executed
this Agreement the date first above written.