VIEWS: 396 PAGES: 8 CATEGORY: Creating a Partnership Agreement POSTED ON: 6/4/2010
Generally, a partnership dissolves upon the death or withdrawal of a partner. By entering into this Agreement, the remaining partners have the election to buy the shares of the deceased or withdrawing partner in order for the partnership to survive. Additionally, this agreement sets forth valuation methods to determine a fair and equitable price for the partnership interest to be bought. This Agreement is ideal for small businesses operating as partnerships who want to continue business after the withdrawal of a partner.
Generally, a partnership dissolves upon the death or withdrawal of a partner. By entering into this Agreement, the remaining partners have the election to buy the shares of the deceased or withdrawing partner in order for the partnership to survive. Additionally, this agreement sets forth valuation methods to determine a fair and equitable price for the partnership interest to be bought. This Agreement is ideal for small businesses operating as partnerships who want to continue business after the withdrawal of a partner. © Copyright 2011 Docstoc Inc. registered document proprietary, copy not 1 Commercial Partnership Agreement with Right of Partners to Continue Partnership by Purchasing Interest of Withdrawing or Deceased Partner Agreement made on the (date), between (Name of Partner A) of (street address, city, state, zip code), referred to herein as Partner A, (Name of Partner B), of (street address, city, state, zip code), referred to herein as Partner B, and (Name of Partner C), of (street address, city, state, zip code), referred to herein as Partner C; Whereas, (Name of Partner A), (Name of Partner B) and (Name of Partner C) desire to join together for the pursuit of common business goals; and Whereas, said Partners desire to enter into a partnership agreement as their business form for their mutual purposes. Now, therefore, for and in consideration of the mutual covenants contained in this agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: In consideration of the matters described above, and of the mutual benefits and obligations set forth in this agreement, the parties agree as follows: 1. Name, Purpose and Domicile The name of the Partnership shall be (Name of Partnership). The Partnership shall be conducted for the purposes of (description of purpose). The principal place of business shall be at (street address, city, state, zip code), unless relocated by majority consent of the Partners. 2. Duration of Agreement The term of this Agreement shall be for (number) years, commencing on (date), and terminating on (date), unless sooner terminated by mutual consent of the parties or by operation of the provisions of this Agreement. 3. Contribution Each Partner shall contribute $___________ on or before (date) to be used by the Partnership to establish its capital position. Any additional contribution required of partners shall only be determined and established in accordance with Section 18. 4. Business Expenses The rent of the buildings where the Partnership business shall be carried on, and the cost of repairs and alterations, all rates, taxes, payments for insurance, and other expenses in respect to the buildings used by the Partnership, and the wages for all persons employed by the Partnership are all to become payable on the account of the Partnership. All losses incurred shall be paid out of the capital of the Partnership or the profits arising from the Partnership business, or, if both shall be deficient, by the partners on a pro rata basis, in proportion to their original contributions, as provided in Section 17. © Copyright 2011 Docstoc Inc. registered document proprietary, copy not 2 5. Authority No Partner shall buy any goods or articles or enter into any contract exceeding the value of $______________ without the prior consent in writing of the other Partner. If any Partner exceeds this authority, the other Partner shall have the option to take the goods or accept the contract on account of the Partnership or to let the goods remain the sole property of the Partner who shall have obligated himself or herself. 6. Separate Debts A. No Partner shall enter into any bond, or become surety or cosigner, or provide security for any person, partnership, or corporation, or knowingly condone anything by which the Partnership property may be attached or taken in execution, without the prior written consent of the other Partners. B. Each Partner shall punctually pay the Partner's separate debts and indemnify the other Partners and the capital and property of the Partnership against the Partner's separate debts and all expenses relating to such separate debts. 7. Books and Records Books of account shall be maintained by the Partners, and proper entries made in the books of all sales, purchases, receipts, payments, transactions, and property of the Partnership. The books of account and all records of the Partnership shall be retained at the principal place of business as specified in Section 1. Each Partner shall have free access at all times to all books and records maintained relative to the Partnership business. 8. Accounting The fiscal year of the Partnership shall be from January 1 to December 31 of each year. On the ___ day of (name of month), 20___, and on the ___ day of (name of month), in each succeeding year, a general accounting shall be made and taken by the Partners of all sales, purchases, receipts, payments, and transactions of the Partnership during the preceding fiscal year, and of all the capital property and current liabilities of the Partnership. The general accounting shall be written in the Partnership account books and signed in each book by each Partner immediately after it is completed. After the signature of each Partner is entered, each Partner shall keep one of the books and shall be bound by every account, except that if any manifest error is found in an account book by any Partner and shown to the other Partners within (number) months after the error shall have been noted by all of them, the error shall be rectified. 9. Division of Profits and Losses Each Partner shall be entitled to _____% of the net profits of the business, and all losses occurring in the course of the business shall be borne in the same proportion, unless the losses are occasioned by the willful neglect or default, and not the mere mistake or error, of any of the Partners, in which case the loss so incurred shall be made good by the Partner through whose neglect or default the losses shall arise. Distribution of profits shall be made on the ___ day of (name of month) each year. © Copyright 2011 Docstoc Inc. registered document proprietary, copy not 3 10. Advance Draws Each Partner shall be at liberty to draw out of the business in anticipation of the expected profits any sums that may be mutually agreed on, and the sums are to be drawn only after there has been entered in the books of the Partnership the terms of agreement, giving the date, the amount to be drawn by the respective Partners, the time at which the sums shall be drawn, and any other conditions or matters mutually agreed on. The signatures of each Partner shall be affixed on the books of the Partnership. The total sum of the advanced draw for each Partner shall be deducted from the sum that Partner is entitled to under the distribution of profits as provided for in Section 9. 11. Salary No Partner shall receive any salary from the Partnership, and the only compensation to be paid shall be as provided in Sections 9 and 10. 12. Continuation or Termination A. Election by Partners On the dissolution of the Partnership by reason of death, withdrawal, or other act of any Partner before the termination of the term specified in Paragraph 2, the remaining Partners may continue the business. If the remaining Partners so elect to continue, they shall have the right to purchase the interest of the other Partner by paying to that Partner or the legal representative of the Partner the value of the interest, in the manner set forth below: 1. Appointment of Appraisers. The Partners electing to continue the business collectively shall appoint one individual as an appraiser and the withdrawing Partner or the legal representative of the deceased or incapacitated Partner shall appoint one individual as an appraiser. The appraisers so appointed shall determine the value of the assets of the Partnership, and the Partners electing to continue the business shall pay to the withdrawing Partner or legal representative of the Partner ____% of the amount so determined. The withdrawing Partner or the legal representative shall execute such documents as may be necessary to convey the Partner's interest in the Partnership to the other Partners. 2. Additional Appraiser in Event of Disagreement. If the appraisers are unable to agree on the value of the assets of the Partnership within (number) days after their appointment, they shall select and designate one additional appraiser for this purpose whose appraisement shall be binding on all parties. If any appraiser should become unable or unwilling to serve, a substitute shall be appointed by the person originally selecting the appraiser. B. Rights and Obligations of Continuing Partners. The Partners continuing the business shall assume all of the legal © Copyright 2011 Docstoc Inc. registered document proprietary, copy not 4 obligations of the Partnership and shall indemnify the withdrawing Partner or the legal representative of a Partner against all liability on those obligations. The Partners continuing the business may continue to use the Partnership name. 13. Dissolution If all the Partners agree to dissolve the Partnership, the business shall be wound up, the debts paid, and the surplus divided among the Partners according to their respective interests. 14. Employee Management No Partner shall hire or dismiss any person in the employment of the Partnership without the consent of the other Partners, except in cases of gross misconduct by the employee. 15. Release of Debts No Partner shall compound, release, or discharge any debt that shall be due or owing to the Partnership, without receiving the full amount of the debt, unless that Partner obtains the prior written consent of the other Partners to the discharge of the indebtedness. 16. Covenant against Revealing Trade Secrets No Partner shall, during the continuance of the Partnership and for (number) years after its termination by any means, divulge to any person not a member of the firm any trade secret or special information employed in or conducive to the Partnership business and which may come to the Partner's knowledge in the course of this Partnership, without the consent in writing of the other Partners, or of the other Partners' heirs, administrators, or assigns. 17. Addition Contributions The Partners shall not have to contribute any capital to the Partnership in addition to that required under Section 3, except as follows: each Partner shall be required to contribute a proportionate share in additional contributions if (a) the fiscal year closes with an insufficiency in the capital account or profits of the Partnership to meet current expenses; or (b) the capital account falls below $__________ for a period of (number) months. 18. Severability The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision. 19. No Waiver The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the © Copyright 2011 Docstoc Inc. registered document proprietary, copy not 5 terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. 20. Governing Law This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of __________. 21. Notices Any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement. 22. Attorney’s Fees In the event that any lawsuit is filed in relation to this Agreement, the unsuccessful party in the action shall pay to the successful party, in addition to all the sums that either party may be called on to pay, a reasonable sum for the successful party's attorney fees. 23. Mandatory Arbitration Any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect. 24. Entire Agreement This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement. 25. Modification of Agreement Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party. 26. Assignment of Rights The rights of each party under this Agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party. 27. Counterparts This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument. © Copyright 2011 Docstoc Inc. registered document proprietary, copy not 6 28. In this Agreement, any reference to a party includes that party's heirs, executors, administrators, successors and assigns, singular includes plural and masculine includes feminine. WITNESS our signatures as of the day and date first above stated. ________________________ _________________________ (Printed Name of Partner A) (Printed Name of Partner B) (Signature of Partner A) (Signature of Partner B) ________________________ (Printed Name of Partner C) (Signature of Partner C) © Copyright 2011 Docstoc Inc. registered document proprietary, copy not 7
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