Partnership Agreements

Below is merely a sample.  Let me draft a partnership agreement that protects your interests.

Partnership Agreement

This Partnership Agreement (the “Agreement”) is made as of _______________, ___________, by and between _______________________________________ and _______________________________________ (each a “Partner,” collectively referred to as the “Partners”).

 

WHEREAS the parties wish to enter into a partnership with one another and formalize such partnership with a written agreement setting out its terms and conditions;

 

NOW THEREFORE, in consideration for the promises set forth in this Agreement, the Parties agree as follows:

 

1.  Name and Business: The parties hereby form a partnership under the name of  ____________________________________________________________ (the “Partnership”).  The Partnership’s business is to ______________________

_____________________________________________________________

(provide short description) and to engage in any other business that the Partners may determine from time to time in accordance with this Agreement.

 

2.  Principal Place of Business: The principal place of business of the Partnership shall be ______________________________________________

_______________________________________________________________ and may be changed from time to time by agreement of the Partners.

 

3.  Term: The term of the Partnership will begin on _____________________, _________________ and will continue until terminated as provided in this Agreement.

 

4.  Capital Contribution: On or before ___________________ (provide date), each Partner shall contribute the capital described next to his/her name below (the “Initial Contributions”).

 

 

PARTNER	INITIAL CAPITAL CONTRIBUTION
	$
	$
	$
	$

 

 

 

5.  Capital Accounts: The Partnership will establish and maintain individual capital accounts for each Partner which will consist of: 1) the Partner’s Initial Contribution, 2) any additional capital contributed by the Partner to the Partnership, 3) the Partner’s share of the Partnership’s profits as decreased by his/her share of the Partnership’s loses and distributions (the “Capital Accounts”).  No Partner shall be allowed to withdraw from his/her Capital Account without the written consent of all of the other Partners.

 

6.  Profits and Losses: the profits and losses of the Partnership and all income, loss, deductions, costs or credit shall be shared by the Partners in the following proportions (“Partnership Interest”):

 

PARTNER	PARTNERSHIP INTEREST
	%
	%
	%
	%
TOTAL	100%

 

7.  Distributions: the Partnership will only make distributions in accordance with this Agreement and if all the Partners agree to such a distribution.

 

8.  Checks: Checks in the name of the Partnership may/must (circle one) be signed by: (name the Partners)___________________________

____________________________________________________________.

 

9.  Accounting: Accurate and complete books of account shall be kept by the Partners and entries promptly made of all of the transactions of the Partnership.  Such 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.

 

10.  Management

A. Operations: Except as all of the Partners may otherwise agree in writing, the Partners shall have equal rights in the management of the business in the ordinary course of business.

 

B.  Prohibited Acts: Without the consent and agreement of Partners having an aggregate Partnership Interest of not less than ________%, no Partner shall:

 

A. Hire or discharge any employee for the Partnership’s business;

B. Enter into any agreement or series of agreements on behalf of the Partnership with an aggregate value greater than $___________________;

C.  Purchase any property or goods on behalf of the Partnership with an aggregate value greater than $_________________;

D. Borrow money or otherwise contract any debt on behalf of the Partnership which would require additional capital or further borrowing;

E. Forgive any debt on behalf of the Partnership;

F. Pledge the credit of the Partnership except for minor transactions in the ordinary course of business with an aggregate value of less than $_________________________;

G. Confess judgment against the Partnership;

H. Sign a security agreement or mortgage on behalf of the Partnership; or

I. Sign a lease on behalf of the Partnership.

 

 

11.  Salaries: Each Partner will receive the salary in the amount appearing next to his name.

 

PARTNER	SALARY
	$
	$
	$
	$

(If no Partner is to receive a salary, write “none” in the box above.)

 

12. Transfer of Partnership Interests and Rights: No Partner shall sell, assign, encumber, mortgage, transfer or otherwise dispose of his Partnership Interest, in whole or in part, unless: i) the remaining Partners all agree to such a disposition of Partnership Interest and ii) the proposed transferee agrees to be bound by all provisions of this Agreement and to become a Partner as described herein.

 

13.  Termination of Partnership:

A.  Unanimous Agreement. The Partnership will terminate at any time upon unanimous agreement of the Partners. Upon the decision to terminate, the Partners will promptly 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 6.

 

B.  Withdrawal. If one Partner notifies the other Partners of his intention to withdraw, the remaining Partners must within thirty (30) days: i) unanimously agree to buyout the withdrawing Partner’s Partnership Interest and continue the Partnership or ii) terminate the Partnership.

 

C. Partner Death. In the event any Partner dies or is declared incompetent by a court of competent jurisdiction, the remaining Partners must within thirty (30) days: i) unanimously agree to buyout the deceased or incompetent Partner’s Partnership Interest and continue the Partnership or ii) terminate the Partnership.

 

14.  Buyout: If the remaining Partners decide to buyout a withdrawing, deceased or incompetent Partner’s Partnership Interest as described in Section 13B and 13C above, within thirty (30) days after the decision for such a buyout, the remaining Partners will pay the withdrawing Partner or his/her estate the following:

 

(check the applicable box denoting the appropriate buyout mechanism)

 

[_] the balance of the withdrawing or deceased Partner’s Capital Account reflecting all losses or gains at the time of the withdrawal, death or declared incompetentcy.

 

[_] the fair market value of the withdrawing or deceased Partner’s capital account as determined by an appraiser selected by the Partnership.

 

[_] other: _________________________________________________________

________________________________________________________________________________________________________________________________

 

15.  Name: If one of the Partners withdraws, dies or is declared incompetent, as discussed in Section 13 above, the Partnership name shall remain the property of the remaining Partners.

 

16.  Binding Effect: The covenants and conditions contained in the Agreement shall apply to and bind the Partners and their heirs, legal representatives, successors and permitted assigns.

 

17.  Cumulative Rights: The Partners’ rights under this Agreement are cumulative, and shall not be construed as exclusive of each other unless otherwise required by law.

 

18.  Waiver: The failure of the Partners to enforce any provisions of this Agreement shall not be deemed a waiver or limitation of the Partners’ right to subsequently enforce and compel strict compliance with every provision of this Agreement.

19.  Severability: If any part or parts of this Agreement shall be held unenforceable for any reason, the remainder of this Agreement shall continue in full force and effect. If any provision of this Agreement is deemed invalid or unenforceable by any court of competent jurisdiction, and if limiting such provision would make the provision valid, then such provision shall be deemed to be construed as so limited.

 

20.  Entire Agreement: This Agreement constitutes the entire agreement between the Partners and supersedes any prior understanding or representation of any kind preceding the date of this Agreement. There are no other promises, conditions, understandings or other agreements, whether oral or written, relating to the subject matter of this Agreement.

21.  Amendment:  This Agreement may be modified in writing and must be signed by all Partners.  Such amendment shall be have the same force and effect as if it had been originally included in this Agreement.

 

22.  Notice: Any notice required or otherwise given pursuant to this Agreement shall be in writing and mailed certified return receipt requested, postage prepaid, or delivered by overnight delivery service, addressed as follows:

 

Any Partner may change his/her address from time to time by providing notice as set forth above.

 

23.  Governing Law:  This Agreement shall be governed by and construed in accordance with the laws of the State of