Sample Partnership Agreement−−General Partnership
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JOE AND BOB'S GREAT ADVENTURE
Upon valuable consideration and mutual promises, the persons named below as "Partners" hereby covenant
and agree to be bound to the following as their GENERAL PARTNERSHIP AGREEMENT (this
"Agreement") dated this ___ day of _________________, 2004 for JOE AND BOB'S GREAT
ADVENTURE, a general partnership governed by the laws of the State of California (hereinafter known as
ARTICLE 1. DEFINITIONS
Section 1.01. The below terms are to have the following meaning when used in this agreement:
a. "Agreement" shall mean this General Partnership Agreement, as amended from time to time.
b. "Capital Account" shall mean the account established for each Partner on the books of the
Partnership, reflecting such Partner's capital contribution, plus such Partner's share of Partnership
profits, less such Partner's share of Partnership losses, less any distributions by the Partnership to such
c. "Partners" shall initially refer to Joe and Bob . This list of persons who are Partners of this
Partnership may, in the future, be amended in accordance with the provisions of this Agreement.
d. "Partnership interest" shall mean all of a Partner's rights possessed or accruing to a Partner under
this Agreement including (but not limited to) his or her capital account, rights in the profits of the
Partnership, and voting rights but not including any rights said Partner may possess as a lender to the
Partnership under any loan agreement entered into between the Partner and the Partnership.
e. "Vote of the Partners" shall mean one based upon each partner having one vote with each vote
having equal weight. Unless stated elsewhere in the agreement, a Majority Vote of the Partners is
required for passage of any matter before the partners for consideration.
1. "Majority Vote of the Partners" shall mean a block of votes of the partners collectively
constituting more than fifty (50) percent of the eligible partner votes (whether or not said
votes are actually cast).
2. "Supermajority Vote of the Partners" shall mean a block of votes of the partners
collectively constituting more than sixty−six (66) percent of the eligible partner votes
(whether or not said votes are actually cast).
ARTICLE 2. PURPOSE / PREFATORY INFORMATION
Section 2.01. Name of Partnership. The name of the Partnership shall be JOE AND BOB'S GREAT
ADVENTURE, a partnership organized under the laws of the State of California (hereinafter known as "the
Partnership"). The Partners may agree to change the name in the future. The laws of the State of California
shall control the operation and interpretation of this agreement.
Section 2.02. Purpose of Partnership. The Partnership shall engage in the following business: Sell t−shirts at
rock concerts. The Partnership may also engage in any activities that are related, complimentary or incidental
to this business purpose.
Section 2.03. Duration. This partnership is an "at−will" partnership that does not have a definite term.
Section 2.04. Principal Place of Business. The principal place of business of the partnership shall be in a
location to be determined by a Vote of the Partners.
ARTICLE 3. THE PARTNERS
Section 3.01. The initial Partners of the Partnership and their required initial capital contributions are as
−− Partner Name −− Initial Capital Contribution
Joe $ 100
Bob $ 100
Section 3.02. Admission of new Partners. Unless prohibited elsewhere in this Agreement, additional Partners
may be admitted upon a Supermajority Vote of the Partners. Admission of new Partners shall not constitute an
event of dissolution of this partnership. Furthermore, admission of any new Partner shall be contingent upon
the prospective new Partner agreeing to, and executing, this partnership agreement (as modified at the time of
Section 3.03. Actions by the Partners; Meetings; Quorum.
a. The Partners may take any action requiring a vote of the partners through a meeting in person, by
proxy, or without a meeting by written resolution in accordance with this Section. Meetings of
Partners may be conducted in person or by telephone conference. To be effective, a partner resolution
shall require the signature and assent of the same percentage or number of Partners as that required
had the action which is the subject of the resolution been voted upon in a meeting of the Partners.
b. A voting proxy given by a Partner to another person must be in writing.
c. In no instance where action is authorized by written resolution shall it be required that a meeting of
Partners be called or prior notice of the action be given; however, upon passage, a copy of the
resolution of the Partners shall be sent promptly to all Partners and filed with the partnership records.
d. A meetings of Partners may be called by any Partner, or Partners, individually or collectively holding
a 25% or more interest in the profits of the Partnership. When a meeting of the Partners has been
called, seven (7) days advance written notice shall be given to all Partners. Notice of a meeting called
for hereunder may be made by standard U.S. mail, electronic mail, or facsimile transmission and shall
contain the time, place, and purpose of such meeting. A quorum for any action to be taken at a
meeting of Partners shall be present (in person, via telephone, or by proxy) shall be Partners
collectively holding more than 60% of the outstanding votes of the Partnership. Any Partner may
through a written instrument waive the right to receive prior notice of a meeting of the Partners as
Section 3.04. Partners who are not individuals. Each Partner who is an artificial entity or otherwise not an
individual hereby represents and warrants to the Partnership (and all other Partners) that such Partner is: (a)
duly incorporated or formed (as the case may be), (b) validly existing and in good standing under the laws of
the jurisdiction of its incorporation or formation, and (c) has full power and authority to execute this
Agreement and to perform its obligations hereunder.
Section 3.05. Access To Books and Records of the Partnership. Each partner shall have the right personally,
or through designation of an agent, to inspect and review the books and records of the partnership during
normal business hours. Upon the written demand by a Partner to inspect and review the books and records of
the partnership made to the custodian of said books and records, the partnership shall make said books and
records available for inspection and review within five (5) business days of receipt of the written demand.
Section 3.06. Nothing in this Agreement shall prevent a Partner from loaning money to the Partnership on a
promissory note or similar evidence of indebtedness for a reasonable rate of interest. Any Partner loaning
money to the Partnership shall have the same rights and risks regarding the loan as would any person or entity
making the loan who was not a member of the Partnership.
Section 3.07. Transaction of Business With Partnership. A Partner may transact other business with the
Partnership. If any Partner transacts business with the Partnership, that Partner shall have the same rights and
obligations with respect thereto as a person who is not a Partner. Any Partner who has a financial interest
involved in any transaction with the Partnership, shall disclose such financial interest to all Partners by use of
a written report given to all Partners, indicating all relevant facts of such financial interest involved. A copy of
such report shall be maintained in the Partnership records.
Section 3.08. Tax Matters Partner. Joe is hereby designated as the Partnership's "Tax Matters Partner" under
Section 6231(a)(7) of the Internal Revenue Code of 1986, as amended (the "Code"), and shall have all the
powers and responsibilities of such position as provided in the Code and the Treasury Regulations thereunder.
The Partnership may remove or replace the Tax Matters Partner by a vote of the partners.
ARTICLE 4. MANAGEMENT OF PARTNERSHIP AFFAIRS
Section 4.01. Ordinary Business Activities of the Partnership. All Partners of the Partnership shall share in
management of the Ordinary Business Activities of the Partnership; however, all activities of the Partnership
that are outside of the Ordinary Business Activities of the Partnership shall be conducted only through a Vote
of the Partners and not through the action of a single Partner acting individually. "Ordinary Business
Activities of the Partnership" shall mean the normal day−to−day business activities of the Partnership and
exclude activities involving decisions that could potentially have a substantial current or future impact upon
Partnership assets, debts, income, or expenses.
Section 4.02. Regardless of whether or not they shall be considered outside the "Ordinary Business Activities
of the Partnership", the following activities of the Partnership shall be conducted only through a Vote of the
Partners and not through the action of a single Partner acting individually:
a. The hiring or firing of Partnership employees;
b. Incurrence of any expense in excess of $1000;
c. Purchase of any asset or inventory with a value in excess of $1000;
d. Entering into any lease with annual payments in excess of $1000;
e. Entering into any loan agreement or debt to or from the Partnership in excess of $1000; and
f. Entering into any contract with a monetary value in excess of $1000.
Section 4.03. Matters Requiring Supermajority Vote of Partners. The following activities of the Partnership
shall require an affirmative Supermajority Vote of the Partners prior to being undertaken by the Partnership:
a. Entering into a new line of business;
b. The sale of substantially all of the Partnership's assets;
c. Admission of a new partner; and
d. The decision to dissolve the Partnership.
The foregoing is not to be considered an exclusive or exhaustive list of the matter requiring a Supermajority
Vote of the Partners.
Section 4.04. Reimbursement For Partnership Expenses. Each shall be entitled to reimbursement for the
reasonable and necessary expenses incurred by the Partner on behalf of the Partnership. In order to receive
reimbursement, a Partner must submit a written itemized report of all expenses for which reimbursement is
sought, submit the expense report to the other Partners, and enter the expense report with the Partnership
books and records. Reimbursement for expenses incurred by any Partner under this paragraph are
circumscribed by the provisions of Paragraph 4.02 above.
Section 4.05. Partner Draws, Cash Advances, Capital Withdrawals. Each Partner's draw, if any, upon future
Partnership profits shall be set through an affirmative Supermajority Vote of the Partners. Likewise, cash
advances, loans, or withdrawals of capital by partners shall only be accomplished through an affirmative
Supermajority Vote of the Partners.
Section 4.06. Partner Salary or other compensation for services. No Partner shall be entitled to compensation
for services he or she provides to the partnership separate and apart from said partner's share of the
partnership profits and losses as set forth in this agreement except when the compensation to the partner for
services has been set through an affirmative Supermajority Vote of the Partners.
ARTICLE 5. TRANSFERS OF INTEREST; WITHDRAWAL, DEATH, REMOVAL OF PARTNER
Section 5.01. Transfer of Partnership Interests. Partners shall be under no restriction regarding the sale,
conveyance, assigned or pledge of their partnership interests.
Section 5.02. Withdrawal Of Partner.
a. Partners shall have the unilateral right to resign or withdraw from the Partnership.
b. A Partner is required to give thirty (30) days written notice to each of the other Partner to initiate
withdrawal from the Partnership. In this notice, the withdrawing Partner shall state an effective date
for his withdrawal and said date must be at least thirty (30) days after delivery of notice to all other
Partners and be the last day of a month (i.e., the 30th or the 31st). Upon receipt of said notice, the
remaining Partners shall cause a reasonably prompt preparation of financial statements for the
Partnership as of the effective date of withdrawal for said Partner.
c. Upon withdrawal, the withdrawing Partner shall receive, in exchange for his Partnership interest, the
Withdrawal Compensation Amount to be paid within 1 year of the effective date of the Partner's
d. The "Withdrawal Compensation Amount" is defined herein as 100% of the withdrawing Partner's
e. Should the Partnership fail to perform upon its obligations under this section to make payments to a
withdrawing Partner when due, the Partnership shall, in addition to any other remedies the
withdrawing Partner may possess, be liable to the withdrawing Partner for interest upon the amount of
any deficiency at the rate of 10% per annum (compounded annually) computed from the date that said
deficient payment was due to the withdrawing Partner under this agreement.
f. Upon withdrawal, the withdrawing Partner shall have no continuing obligations to the Partnership
other than pursuant to state law, this Agreement or other applicable laws or such obligations as
expressly assumed by such Partners.
g. A withdrawing Partner shall retain the right to vote as a Partner up until the effective date of his or her
withdrawal, at which time, the withdrawing Partner's Partnership interest shall be considered
transferred back to the Partnership (or, as the case may be, the other Partners who purchased said
interest) and the person who has withdrawn shall no longer be considered a Partner.
Section 5.03. Removal Of Partner.
a. A Partner may be involuntarily removed from the Partnership only under either of the following
circumstances: (1) the Partner is required to provide services to the Partnership (as reflected in
Attachments to this agreement), said Partner has not substantially performed the promised services,
and a Supermajority vote of the Partners vote affirmatively for removal or (2) the Partner has
defaulted upon his obligations under this Agreement to make capital contributions (or loans) to the
b. In the case of a removal for failure to preform required services, 60 days prior to any vote to remove,
the other Partners shall cause a notice to be issued to the Partner in question stating that they shall
bring to a vote of the Partners a motion to remove said Partner for unsatisfactory performance of
required services and detail specific instances or tasks that were allegedly not satisfactorily
performed. The other Partners shall then give the Partner in question a good faith opportunity to cure
the deficiencies in performance of services prior to the vote for removal. The period of this good faith
opportunity to cure need not extend beyond 60 days. If the Partner in question completes this cure
within 60 days of receiving the aforementioned notice, then the motion pending before the Partners
for removal shall be withdrawn.
c. In the case of a removal for failure to make required capital contributions, 30 days prior to any vote to
remove, the other Partners shall cause a notice to be issued to the Partner in question stating that they
shall bring to a vote of the Partners a motion to remove said Partner for non−payment of required
capital contributions. The Partner in question shall then have 30 days within which to cure the default
which shall consist of making all required capital contributions plus 10% per annum interest
(compounded annually) upon the amount of any deficiency computed from the date said contribution
was due to be made to the Partnership. If the Partner in question completes this cure within 30 days of
receiving the aforementioned notice, then the motion pending before the Partners for removal shall be
withdrawn and the Partner in question shall, henceforth, be consider in good standing.
d. If, after complying with the above notice and cure provisions, an affirmative vote of Supermajority
vote of Partners is made to remove the Partner in question, then, as of that moment, this person shall
no longer be entitled to exercise any rights, powers or privileges of a Partner and his Partner Interest
shall be considered redeemed by the Partnership.
e. Upon the affirmative vote of Supermajority vote of Partners to remove a Partner, the remaining
Partners shall cause a prompt preparation of financial statements for the Partnership as of the end of
the month in which the resolution was passed by the Partners removing said Partner and this shall be
the effective date of removal for the Partner for accounting purposes only under this Agreement.
f. The removed Partner shall receive in exchange for his Partnership Interest the Removal
Compensation Amount to be paid within 1 year of the effective date of the Partner's removal.
g. The "Removal Compensation Amount" is defined herein as 100% of the removed Partner's capital
h. Should the Partnership fail to perform upon its obligations under this section to make payments to a
removed Partner when due, the Partnership shall, in addition to any other remedies may possess, be
liable to the removed Partner for interest upon the amount of any deficiency at the rate of 10% per
annum (compounded annually) computed from the date that said deficient payment was due under
Section 5.04. Admission of new Partners.
a. Admission of a new partner to the Partnership shall require an affirmative Supermajority Vote of the
b. Before any person is admitted as a partner to the Partnership, that person shall agree in writing to be
bound by all of the provisions of this Agreement, and any amendment hereof.
ARTICLE 6. CAPITALIZATION
Section 6.01. Initial Capital Contribution. The initial capital contributions of the Partners shall be as set forth
in Section 3.01 of this Agreement. Partners shall make their required initial capital contributions to the
Partnership within 30 days of the date of the execution of this Agreement. Any Partner who fails to make the
required initial capital contribution as set forth in this Section 3.01 shall indemnify the Partnership and all
other Partners for any losses or expenses (including reasonable attorneys fees) that are caused by the failure to
make the initial capital contribution as set forth herein.
Section 6.02. No interest on capital contributions. Unless otherwise provided for in this Agreement, no
Partner shall be entitled to interest upon his or her capital contributions to the partnership.
Section 6.03. Additional Capital Contributions. Additional capital contributions can only be required under
this agreement upon the unanimous vote of all Partners. "Additional Capital Contributions" are any and all
capital contributions made subsequent to (or in excess of) the "initial capital contributions".
Section 6.04. Loans by Partner to the Partnership. A Partner may loan or advance money to or for the benefit
of the Partnership when the terms of said loan have been approved by a Majority Vote of the Partners. In such
cases, a loan from a Partner to the partnership shall bear the interest rate approved by the majority vote of the
Section 6.05. Withdrawals of Capital. Except as otherwise provided in this Agreement, no Partner may
withdraw capital from the Partnership without an affirmative majority vote of the Partners.
Section 6.06. Maintenance of Capital Accounts. An individual capital account shall be maintained for each
Partner consisting of the Partner's capital contributions and (1) increased by that Partner's share of partnership
profits, (2) decreased by that Partner's share of Partnership losses, and (3) further adjusted as required or
allowed by the Internal Revenue Code (Title 26 of the United States Code) and / or all published Treasury
Regulations (Title 26 of the Code of Federal Regulations). In all cases, the capital accounts of the Partners
shall be accounted for in accordance with the Internal Revenue Code (Title 26 of the United States Code) and
or all published Treasury Regulations (Title 26 of the Code of Federal Regulations).
Section 6.07. Interest on Contributions. No interest shall be paid on the initial Capital Contribution, or on any
additional Capital Contributions, of a partner to the Partnership.
Section 6.08. Withdrawal of Capital. Except as otherwise provided in this agreement, no partner may
withdraw any portion of the capital of the Partnership.
ARTICLE 7. ALLOCATION OF PROFITS AND LOSSES
Section 7.01. Allocation of Profits and Losses. Except as may be required by the Internal Revenue Code (Title
26 of the United States Code) or the Treasury Regulations (Title 26 of the Code of Federal Regulations) or
this Partnership Agreement, net profits, net losses, and other items of income, gain, loss, deduction and credit
of the partnership shall be allocated among the Partners prorata in the following percentages which shall be
known herein as the "Partner Profit and Loss Percentages":
−− Partner Name −− Profit And Loss Percentage
a. Notwithstanding the foregoing, no item of loss or deduction of the partnership shall be allocated to a
Partner to the extent such allocation would result in a negative balance in such Partner's capital
account if other Partners then have positive balances in their capital accounts. Such loss or deduction
shall be allocated first among the Partners with positive balances in their capital accounts in
proportion to (and to the extent of) such positive balances and, thereafter (i.e., after the capital
balances of all partners has been reduced to zero), to all Partners in accordance with the Partner Profit
and Loss Percentages.
Section 7.02. Tax Allocations. In the case of any special tax allocations allowed under the Internal Revenue
Code or Treasury Regulations, the method of allocation and formula determined by the Tax Matters Partner
shall be followed so long as it complies with state law, the Internal Revenue Code, the Treasury Regulations,
and fairly treats each Partner. The method of tax allocation selected by the Tax Matters Partner shall be
presumed to be "fair to all the partners" and any Partner or other party challenging said allocation on these
grounds shall bear the burden of proof.
ARTICLE 8. DISSOLUTION OF THE PARTNERSHIP
Section 8.01. Dissolution. The Partnership shall be dissolved, and its affairs shall be wound up upon the
happening of any of the following:
a. If the existence of the Partnership is subject to a definite term pursuant to Section 2.03 of this
Agreement, then upon the expiration of the term stated in Section 2.03 hereinabove;
b. If the surviving partners do not elect to purchase the partnership interest of a deceased or withdrawing
Partner, then upon the death or withdrawal of a Partner;
c. Upon the sale or other disposition of substantially all of the operating assets of the business of the
d. Upon the removal of a partner at a time when the partnership possesses only two partners;
e. Upon the required Vote of the Partners for dissolution of the partnership as provided elsewhere in this
f. As otherwise provided pursuant to state partnership law.
Section 8.02. The person or persons responsible for winding up the affairs of the Partnership pursuant to this
section shall make a full inventory of the Partnership assets and liabilities, shall liquidate the assets of the
Partnership in a commercially reasonable manner, and shall apply and distribute the proceeds in the following
a. First, to creditors of the Partnership who are not Partners in satisfaction of liabilities of the Partnership
owing to them;
b. Second, to Partners in satisfaction of liabilities of the Partnership owing to them;
c. Third, to Partners and former Partners to the extent of their Capital Accounts; and
d. Fourth, to the Partners in same proportion and percentage as partnership profits are allocated to the
Partners according to the provisions of Section 7.01.
ARTICLE 9. MISCELLANEOUS
Section 9.01. Entire Agreement. This Agreement contains the entire understanding among the Partners and
supersedes any prior written or oral agreements between them respecting the subject matter contained herein.
There are no representations, agreements, arrangements, or understandings, oral or written, between and
among the Partners relating to the subject matter of this Agreement that are not fully expressed herein.
Section 9.02. Amendment. The provisions of this Agreement may be amended only by a unanimous Vote of
the Partners. Any amendment of this Agreement shall be in writing, dated, and executed by the consenting
Partners. If any conflict arises between the provisions of any amendment and the original Agreement as
previously amended, the most recent provisions shall control. The act of admission of a new Partner and said
Partner's execution of this Agreement shall not be considered an amendment of this Agreement.
Section 9.03. Severability. Should any part of this Agreement be deemed void, voidable, or unenforceable for
any reason, such part shall be severed from this Agreement, and the remaining portion of this Agreement shall
remain valid according to the intent of the Partners hereto.
Section 9.04. Counterparts. This Agreement may be executed in several counterparts and all counterparts so
executed constitute one agreement that is binding on all of the Parties, notwithstanding that all of the Parties
are not signatory to the original or to the same counterpart.
PARTNER CAPITAL CONTRIBUTIONS AND REQUIRED SERVICES
TABLE 1−−REQUIRED CAPITAL CONTRIBUTIONS
−− Partner Name Total Initial Capital Cash Capital Non−cash Capital
−− Contribution Contribution Contribution
Joe $ 100 $ 100 none
old telephone and copy
Bob $ 100 $ 50
TABLE 2−−REQUIRED SERVICES OF PARTNERS
−− Partner Name −− Required Service Time Description of Services
Joe Part−Time Think great thoughts
Bob Part−Time Do all the stuff that Joe doesn't
IN WITNESS WHEREOF, the undersigned Partners have duly executed this Partners Agreement as of the
date first written above:
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(Note: This page is not to be attached to your General Partnership Agreement.)
INSTRUCTIONS REGARDING EXECUTION OF YOUR
General Partnership Agreement
A. All Partners must sign the agreement; however, it is not necessary that they sign it at the same time or
even the same signature page. If Partners are located in different locations, they may sign a separate
copy of the document. Thereafter, attach all original signature pages to an original of the agreement
and provide signed copies for all Partners.
B. We recommend that you consult your tax accountant or lawyer regarding the tax implications of
conducting business as a partnership.
C. Partners are personally liable for the debts and other liabilities of the partnership. Members of a
Limited Liability Company and shareholders of a Corporation (as well as limited partners of a limited
partnership) generally are not liable for the debts or other liabilities of the business entity of which
they are a member or shareholder.
D. Although the vast majority of states to not require a partnership to register as a business entity with
them, it will be necessary to register your partnership's name as a "trade name" or "fictitious name"
with the proper state office (usually the Secretary of State).
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