This Agreement of Partner Expulsion is entered into among the partners of a
partnership whereby the majority of the partners agree to expel an existing partner.
This agreement is used to set out the terms and conditions of the partner's expulsion in
the event the original partnership agreement does not provide for terms relating to the
expulsion of a partner. It contains essential information relating the purchase of the
expelled partner's interest, indemnification and a noncompetition agreement. This
document contains standard clauses as well as opportunities to customize the
agreement to fit the needs of the parties.
AGREEMENT OF PARTNER EXPULSION
THIS AGREEMENT OF PARTNER EXPULSION (the “Agreement”), is made as of
the ____ day of __________, 2_____.
B E T W E E N:
(hereinafter referred to as "Partner A")
OF THE FIRST PART,
(hereinafter referred to as "Partner B”)
OF THE SECOND PART,
(hereinafter referred to as “Partner C”)
OF THE THIRD PART
WHEREAS Partner A, Partner B and Partner C commenced doing business in a
partnership (the “Partnership”) under the business name ____________________ (the
“Business”), having its principal place of business at __________________________
[Instruction: insert street address, city, and state] pursuant to a Partnership Agreement dated the
___ day of ___________, 2____ (the “Partnership Agreement”) a copy of that agreement is
attached as Exhibit _________;
AND WHEREAS Partner A and Partner B are desirous of expelling Partner C
from the Partnership;
AND WHEREAS the Partnership Agreement fails to provide for provisions
relating to the expulsion of a partner;
AND WHEREAS Partner A and Partner B have mutually agreed to expel Partner
C from the Partnership and Partner C has agreed to be expelled from the Partnership pursuant to
the terms and conditions contained herein.
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NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of
the covenants and agreements herein contained, the parties hereto covenant and agree with each
other as follows:
The above recitals are true in all respects and form an integral part of the Agreement as if
they had been recited again herein.
2. EXPULSION OF PARTNER
A. Partner A and Partner B hereby acknowledge and agree that effective
immediately, Partner C shall cease to be a partner of the Partnership upon the
execution hereof this Agreement, after which Partner C shall:
i. Have no authority to enter any obligation on behalf of the partnership.
ii. Have no right to participate in the management and conduct of the
iii. Be relieved of the duty of loyalty and care to the Partnership and the
partners therein with respect to any matter arising after __________
[Instruction: insert his or her] expulsion.
B. Partner A and Partner B hereby mutually agree that the Partnership shall
continue in full force and effect with the expulsion of Partner C on the same terms
and conditions contained in the Partnership Agreement.
3. STATEMENT OF DISSOCIATION
The partnership shall prepare a statement of dissociation stating that Partner C is expelled
from the partnership on the expulsion date and shall file the statement in the office of the
Secretary of State [Instruction: add if appropriate, “and record a certified copy of the
statement in the county recorder’s office in each county where the Partnership owns real
property.] Immediately after filing, the partnership shall provide a copy of the statement of
dissociation certified by the Secretary of State to Partner C.
4. SALE AND RELEASE OF PARTNERSHIP INTEREST
A. Partner A, Partner B and Partner C hereby agree that Partner A and Partner B
shall purchase from Partner C his/her _______ (___%) percent of partnership interest
in the Partnership for the sum of __________ ($______) Dollars (hereinafter “the
buyout price”) and upon Partner C receiving such sum, hereby sells, transfers and
releases to Partner A and Partner B his/her partnership interest in the Partnership, all
of Partner C’s rights and interests in the assets and good will of the Business.
B. Partner C hereby releases Partner A and Partner B and their respective spouses
from any and all manner of claims and causes of action which he/she may now have
or in the future have against Partner A, Partner B or the Partnership, and their heirs,
successors or assigns in respect of the Partnership or the Business or otherwise and
shall deliver releases to Partner A and Partner B in the form attached hereto as
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Any amounts owed by Partner C to the Partnership shall be deducted from the buyout
price determined in accordance with Paragraph 4.A.
6. RELEASE OF LIABILITIES
Partner A and Partner B hereby assumes all outstanding liabilities of the Business and
agrees to indemnify and save Partner C harmless from all claims and causes of action which may
be brought against _________ [Instruction: insert him or her or it] in respect of any
outstanding liabilities of the Partnership and or Business but, only to the extent that such
liabilities and creditors have been disclosed to Partner A and Partner B prior to the execution of
this Agreement and are reflected in the financial statements and accountings of the Partnership.
The Partnership shall indemnify and hold harmless Partner C against all Partnership
liabilities whether incurred before or after the expulsion date. Indemnification shall not extend,
however, to any Partnership liability incurred after the expulsion date that results from Partner C
entering a transaction with a third party under the circumstances specified in Corporations Code
Section 16702. [Comment: this Corporations Code Section is valid only for California. If
you are using this form in any other state you should determine which statute is particular
to your state.]
8. NONCOMPETITION AGREEMENT
[Comment: this section is optional] In consideration of the payment of the buyout price,
Partner C agrees that after the expulsion date ___________ [he or she or it] shall not, either
directly or indirectly, carry on or engage in, either as owner, part-owner, manager, operator,
employee, salesman, agent, or other participant, a business similar to that carried n by the
Partnership in _________ [Instruction: specify location, e.g. Los Angeles County, CA] for so
long as the Partnership, or any person deriving title to the good will of the business from the
Partnership, carries on a like business in that county.
A. Access to Partnership Books and Records. Until payment of the buyout
price in accordance with Paragraph 4.A. is made, and thereafter for so long as is
reasonably necessary, the Partnership shall provide Partner C, or _________
[Instruction: insert his or her or its] legal representative, access to books and
records pertaining to the period during which ___________ [he or she or it] was a
partner. This right of access shall include the opportunity to inspect and copy books
and records during ordinary business hours. The partnership may impose a
reasonable charge for copies.
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B. Supporting Documents. The partnership shall furnish Partner C with the
following documents within ________ ( ) days of the date of this Agreement:
i. A statement of partnership assets and liabilities as of the date of
ii. The latest available partnership balance sheet and income statement; if
iii. An explanation of how the amount of the buyout price for Partner C’s
interest was calculated.
10. GENERAL PROVISIONS
A. Time shall be of the essence with this Agreement.
B. Schedules and other documents annexed or referred to in this Agreement are
an integral part of this Agreement.
C. Each of the parties hereto will from time to time at the other's request and
expense and without further consideration, execute and deliver such other instruments
of transfer, conveyance and assignment and take such further action as any other may
require to more effectively complete any matter provided herein.
D. This Agreement constitutes the entire agreement between the parties and
except as herein stated and in the instruments and documents to be executed and
delivered pursuant hereto, contains all of the representations and warranties of the
respective parties. There are no oral representations or warranties between the parties
of any kind.
E. This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns.
F. This Agreement shall be governed in accordance with the laws of the State of
_____________ applicable therein.
G. This Agreement may be executed in several counterparts, and in that event,
each counterpart shall be deemed to be a complete original and be enforceable
without reference to any other counterpart. All counterparts taken together shall
constitute one and the same document.
H. Any modification of this Agreement will be effective only if it is in writing
and signed by the party to be charged. This Agreement shall be read with all changes
in gender, number and grammar as may be required by context.
I. The language contained herein shall be deemed to be that approved by all
parties hereto and no rule of strict construction shall be applied against any party
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J. The parties covenant and agree that they will execute any other and further
instruments and documents that are or may become necessary or convenient to
effectuate and carry out this Agreement.
K. The headings used in this Agreement are used for administrative purposes
only and do not constitute substantive matter to be considered in construing the terms
of this Agreement.
L. Either party’s failure to enforce any provision or provisions of this Agreement
shall not in any way be construed as a waiver of any such provision or provisions as
to any future violations thereof, nor prevent that party thereafter from enforcing each
and every other provision of this Agreement. The rights granted the parties herein are
cumulative and the waiver by a party of any single remedy shall not constitute a
waiver of such party’s right to assert all other legal remedies available to him or her
under the circumstances.
M. Each provision of this Agreement is intended to be severable. If any provision
hereof is illegal or invalid, such illegality or invalidity shall not affect the validity of
the remainder hereof.
N. The representations and warranties set forth in this Agreement are continuous
and survive the payment of the buyout price.
O. Any notice required or permitted to be given hereunder shall be in writing and
shall be effectively given if (i) delivered personally, (ii) sent by prepaid courier
service or registered mail, or (iii) sent prepaid by telecopier or other similar means of
electronic communication (confirmed on the same or following day by prepaid mail)
addressed, in the case of notice to the Partner A as follows:
and in the case of the Partner B as follows:
and in the case of the Partner C as follows:
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Any notice so given shall be deemed conclusively to have been given and received when
so personally delivered or sent by telecopier or other electronic communication, or on the
second day following the sending thereof by courier, or on the sixth day following the
sending thereof by registered mail. Any party hereto or other mentioned above may
change any particulars of its address for notice by notice to the other in the manner
IN WITNESS WHEREOF this Agreement has been duly executed delivered by
the parties hereto as of the day and year first written above.
Witness: Partner A
Witness: Partner B
Witness: Partner C
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