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Partnership Agreement to Dissolve on Death or Insolvency

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A partnership agreement sets forth the terms and conditions that govern the relationship between business partners and their obligations to the partnership. As drafted, this partnership agreement places restrictions on the acts of each partner and also sets a process for disagreement whereby a partner may offer to buy the partnership interests of another partner. The agreement provides that the partnership will dissolve upon the death or insolvency of one of the partners. This long-form template contains standard provisions common to partnership agreements but can be customized to ensure that the understandings of the parties are properly set forth.

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									A partnership agreement sets forth the terms and conditions that govern the relationship
between business partners and their obligations to the partnership. As drafted, this
partnership agreement places restrictions on the acts of each partner and also sets a
process for disagreement whereby a partner may offer to buy the partnership interests
of another partner. The agreement provides that the partnership will dissolve upon the
death or insolvency of one of the partners. This long-form template contains standard
provisions common to partnership agreements but can be customized to ensure that the
understandings of the parties are properly set forth.
    PARTNERSHIP AGREEMENT TO DISSOLVE ON
            DEATH OR INSOLVENCY
             THIS MEMORANDUM OF AGREEMENT made this _____ day
of __________, 201_____.

B E T W E E N:


                            _____________________[NAME OF 1st
PARTNER], of the City of _____________,
                            in the State of _______________________,

                               (hereinafter referred to as “Partner 1”)



                                                          - and -

                            _____________________[NAME OF 2nd
PARTNER], of the City of ____________,
                            in the State of ________________________,

                               (hereinafter referred to as “Partner 2”)



1.00           RECITALS

               WHEREAS:

1.01           The parties wish to enter into a partnership agreement with respect
to a business enterprise to be carried on by them to be known as
"________________________"; [PROVIDE NAME OF PARTNERSHIP]

1.02           The Business shall be comprised of consulting services in the
following areas:

               (a)                                          ;
               (b)                                          ; and
               (c)                                          ;


1.03           The parties wish to provide for the ongoing operations of their
Partnership and for the termination thereof;

               NOW THEREFORE THIS AGREEMENT WITNESSES that in
consideration of the mutual covenants and agreements herein contained and subject

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to the terms and conditions hereinafter set out the parties hereto agree as follows:

2.00           INTERPRETATION

2.01            In this Agreement, unless otherwise noted, the following terms shall
be interpreted in accordance with the following definitions:

               (a)   "Agreement" means this Agreement and any Agreements
                     supplementary or ancillary hereto and the expressions "article"
                     followed by a number means and refers to the specified article
                     of this Agreement in its entirety;
               (b)   "Business" means the business carried on by the Partnership;
               (c)   "Parties" means the parties being signatories to this
                     Agreement;
               (d)   "Partners" means the members of the Partnership, from time-
                     to-time, including the parties hereto and any new Partners that
                     may be admitted to the Partnership;
               (e)   "Partnership" means the Partnership hereby constituted.

2.02          A person shall cease to be a Partner for the purposes of this
Agreement at such time as that person ceases to hold an interest in the Partnership.

3.00           PARTNERSHIP INTEREST AND DUTIES

3.01           The Partnership established hereunder shall commence as of the date
hereof, and shall continue until terminated by the Partners in the manner hereinafter
set out.

3.02           The affairs of the Partnership shall be managed by both Partners
together and all matters of policy in connection with the Business shall, subject to
anything hereinafter set out, required the unanimous agreement of the Partners.

3.03             Each of the Parties hereto shall be and remain during the life of the
Partnership an equal Partner with the other. The net profits of the Business shall
belong to the Partners hereto and equal shares and the losses of the Business shall
be paid by the Partners hereto in equal shares. For the purposes of this Agreement,
"net profits of the Business" shall be determined on a accrual basis; that is, by
deducting from receipts and accounts billed (whether or not paid) in the period for
which net profits of the Business are being determined all expenses payable
(whether or not paid), but in calculating the net profits of the Business there shall
not be deducted any amount in respect of income taxes of the Partners.

3.04             Subject to anything contained herein to the contrary, upon the
termination of the Partnership the assets of the Business shall be realized and
applied first in the payment of the debts and liabilities of the Business, second in
the repayment of any loans of the Partners to the Business and any surplus shall be
divided equally between the Partners. Notwithstanding the above, the assets of the
Business may be sold to a corporation controlled by the Partners which, as part of
the consideration for the transaction assumes the liabilities of the Business, in

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which case the foregoing provisions in this article shall not apply.

3.05            The Partners shall respectively undertake and perform such duties
and functions as may be agreed upon by the Partners from time-o-time.
Notwithstanding the foregoing, it is hereby acknowledged and agreed that Partner 2
shall contribute to the Business his whole time, labour and attention but that Partner
1 shall contribute to the Business only such time, labour and attention as may be
required to fulfill the duties by him to be performed.

3.06           No Partners shall be liable to account to the other for any income
earned outside of the Business with the exception of income arising from a
competing Business operated by the Partners or any one of them from undisclosed
transactions involving use of the Partnership name, property or Business
connections and in the event that either or both of the Partners carries on any such
competing Business or enters into any transaction of a same or similar nature to the
Business, such Partner shall be deemed to carry on such business or transaction on
account of the Partnership and shall account to the Partnership for any and all
proceeds received therefrom, whether directly or indirectly. It is expressly agreed
and understood that the foregoing provisions shall not apply in any manner or to
any extent to any business or employment with which Partner 1 is presently
connected or employed.


4.00           PROHIBITED ACTS
4.01           All contracts, Agreements and obligations necessary and incidental
to the normal scope of the Business shall be authorized and entered into by both of
the Partners together. Each Partner agrees with the other that he will do no act and
enter no contract on behalf of the Partnership that lies outside of the normal scope
of the Business, without the prior consent in writing of the other Partner, nor will
he do any act or enter into any contract individually where he is prohibited from so
doing by this Agreement.

4.02           No Partner shall, without the consent in writing of the other, do any
of the following things, namely:

               (a)   loan money or give credit for any goods belonging to the
                     Partnership;
               (b)   release or compound any debt owing to or claimed by the
                     Partnership;
               (c)   alone make, sign, or endorse any bill of exchange, promissory
                     note or cheque or contract any debt or liability in the
                     Partnership's name, save and except for cheques in an amount
                     less than ____________________ ($_____________) Dollars;
               (d)   give any bond, or become security for any person, do, or
                     knowingly permit to be done, anything whereby the capital or
                     property of the Partnership may be seized, attached, or taken
                     in execution;
               (e)   contract on behalf of the Partnership, except in the Partnership
                     name;

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               (f)    alone buy, order or contract for any goods or article exceeding
                      the value of ___________ ($_______) Dollars;
               (g)    buy, order or contract for any article, or enter into any contract
                      or number of contracts in the Partnership's name, the
                      fulfilment of which would necessitate further capital or further
                      borrowing;
               (h)    lend any money to, or give credit to, or have any dealings on
                      behalf of the Partnership with any person whom the other
                      Partner shall have forbidden him to trust or deal with;
               (i)    make, draw, accept, sign, or endorse any bill of exchange,
                      draft, promissory note, or contract any debt on account of or in
                      the name of the Partnership, or in any manner pledge the
                      credit of the Partnership, except in the usual and regular
                      course of business;
               (j)    communicate to any person any confidential information
                      which he or she acquired in connection with the Business.

4.03            Neither Party hereto shall transfer or assign, nor purport to transfer
or assign his interest in the Partnership to any other person without the unanimous
consent in writing of the parties hereto.

4.04             In the event that any Partner engages in any act prohibited by this
Agreement, or by law, such Partner shall be solely responsible for any losses
resulting to the Partnership or to the remaining Partner, and shall forthwith
indemnify and save harmless the remaining Partner for any loss in value of the
Partnership interest or for any monies paid by the remaining Partner on account of
any liability incurred by the remaining Partner or the Partnership as a result of such
prohibited or illegal act.

5.00           CONTRIBUTIONS

5.01            Each of the Parties hereto shall contribute an equal amount to the
capital of the Partnership. The Parties shall each contribute, as initial capital of the
Partnership, the sum of ____________________ ($________) Dollars.

5.02             Contributions to the capital of the Partnership shall be in the form of
cash, to be deposited in the bank account of the Partnership, or property. In the
event that either Party wishes to contribute capital to the Partnership in the form of
property, the value to be assigned to any such property shall be as determined by
the Parties hereto and the Party so contributing property to the capital of the
Partnership shall be credited with the value of the property so agreed upon and
shall do all acts and execute all documents of title as shall be necessary to transfer
legal title to such property into the name of the Partnership.

5.03            No contributions to the capital of the Partnership by any Partner
shall bear interest in his favour.

5.04            Except as may be specifically provided in this Agreement, neither
Partner shall be entitled to a return of the capital so contributed by him.

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5.05         The Partners shall contribute equally any additional capital they
deem necessary for the crrying on of the Business.

5.06            If either Partner shall at any time, with the consent of the other
Partner, advance any capital to the Partnership in an amount in excess of the
amounts so contributed by the other Partner, or if he shall leave any part of his
profits in the Business, the said capital or profits shall be a debt due to him from the
Partnership and the Partnership shall forthwith execute and deliver to him a
promissory note in the amount of such debt and which promissory note shall be
payable on demand and shall bear interest at the rate of ______ (___%) percent per
annum below the prime rate of interest charged from time-to-time by the
_______________ [NAME OF BANK USED BY THE PARTNERSHIP] Bank
to its most creditworthy customers at that time.

5.07             It is hereby understood and agreed that the initial capital
contribution of ________________ ($________) Dollars made to the Partnership
by Partner 2 is not due to be contributed to the Partnership's bank account prior to
_______________, 201____. Notwithstanding anything contained in this
Agreement to the contrary, if Partner 2's capital contribution has not been made by
__________________, 201___, and no extensions of time have been granted
therefore by Partner 1, the Partnership hereby created shall be terminated and the
Parties respective interests shall be determined as hereinafter set out. All assets of
the Partnership shall be liquidated as of the date of termination and out of the
proceeds Partner 1 shall be repaid his initial capital contribution. Any excess of
proceeds beyond that required to pay Partner 1's initial capital contribution shall be
shared equally by the Parties. Any shortfall between the proceeds from the assets
and the amount owing to Partner 1 as a repayment of his initial capital contribution
shall be deemed to be a debt of the Partnership and added to the outstanding
liabilities of the Partnership. The outstanding liabilities of the Partnership shall be
paid in equal shares by the Parties.

6.00           BANKING

6.01           The Partnership's bank shall be such bank and such branch of such
bank as shall be agreed upon by the Partners from time to time. All monies
received from time to time on account of the Business shall be paid immediately
into the Partnership's bank for the time being in the same drafts, cheques, bills or
cash in which they are received and all disbursements on the Partnership's account
shall be made by cheque on such bank.

6.02           Both Partners together shall draw all cheques in the face amount of
_______________ ($______) Dollars or greater in the Partnership's name and may
sign, endorse and accept in the Partnership's name all bills, notes, cheques, drafts or
other instruments for the purpose of the Business.




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6.03            Unless the Partners otherwise agree, and except as so otherwise
provided in this Agreement, all contracts and commitments of the Partnership shall
be signed, accepted or executed by both Partners and the signatures of both
Partners shall be required to bind the Partnership to provide goods or services or
both.

6.04           Each Partner shall at all times duly and punctually pay and discharge
his separate debts and obligations from time-to-time and each shall keep the
Partnership property and the other Partner and his heirs, executors, administrators,
successors and assigns free from all actions, proceedings, costs, and claims and
demands in respect thereof.

6.05            Each Partner shall disclose forthwith upon it being made known to
him or her any source of potential liability against the Partnership arising from any
matter in his control or from any of his or her actions or activities.

6.06            Proper books of accounts shall be kept of all transactions of the
Business and at the end of each fiscal period or so soon thereafter as is possible,
statements shall be made showing the income and expenses, the profits and losses,
the assets and liabilities and the value of the Partners' interest for the fiscal period
just completed.

6.07           If required by either Partner in any year, the said books of account
shall be audited by a public accountant at the Partnership's expense.

6.08           All books and documents connected with the Business or the
Partnership shall be made available at all times to each Partner or to his authorized
agent.

7.00            PARTNERS' REMUNERATION

7.01           Notwithstanding any generally accepted principles of accounting
which might provide otherwise, both Partners shall be entitled to remuneration
from the Business and the Partnership by means of salary and a share of profits in
the manner and amount as is hereinafter set out and, for the purposes of this
Agreement, the type of remuneration to which either Partner is entitled shall be
designated as hereinafter set out.




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7.02            It is hereby acknowledged and agreed by the parties that the
projected net income for the Business, (being the total of all fees actually billed
during the period less the total of all expenses incurred by the business for the
purpose of earning its income and not charged or chargeable to its clients for the
same period) for the first year of the operation of the Business (Year 1) is
_______________________ ($__________) Dollars. Partner 2's projected salary
remuneration for Year 1, based upon the Business actually earning a net income of
at least _________________ ($__________) Dollars, is the sum of
________________________ ($_________) Dollars.
7.03            Partner 2 may draw as against his salary entitlement during Year 1,
the amount of _________________ ($_________) Dollars per month. In addition,
Partner 2 shall be remunerated in the amount of ___________________
($_______) Dollars per month during Year 1 as a fixed amount in respect to travel
and other business expenses incurred by him.

7.04             If, at the end of Year 1, and following the preparation of the
financial statement for the Business for Year 1, the actual net income of the
Business for Year 1 equals or exceeds the projected net income as set out in
paragraph 7.02 hereof, then Partner 2 shall be entitled to receive at that time as the
remainder of his salary remuneration for Year 1 the amount of _______________
($________________) Dollars, such payment to be made out of Partnership funds,
when available. If the actual net income of the Business for Year 1 is less than the
projected net income as set out in paragraph 7.02 hereof, Partner 2 shall not be
entitled to receive any further salary remuneration in respect of Year 1 in excess of
the amounts received by him pursuant to paragraph 7.03 hereof. In each year
thereafter, so long as the net income of the Business for the previous year equals or
exceeds the projected net income for such year as predetermined by the parties,
Partner 2's salary entitlement shall be increased by an amount equal to the greater
of : 1) _________ (___%) per cent of his salary for the previous year; and, 2) the
percentage increase in the seasonally adjusted Consumer Price Index for the
previous twelve months, of his salary for the previous year, and the amount of his
monthly draw as against such salary shall once again be determined by the parties
at the beginning of such year. Partner 2's fixed expense remuneration shall be
increased yearly in the same percentage as his salary is increased for such year.

7.05           Partner 1 hereby agrees not to take as a draw against his salary
entitlement any amount prior to the completion of Year 1.

7.06           Partner 1 shall be entitled to receive as salary at the end of Year 1
and at the end of each succeeding year an amount to be determined on the basis of
the Partners' Hourly Rate and the hours worked during such year by Partner 1.




© Copyright 2011 Docstoc Inc.                                                            8
7.07            The "Partners' Hourly Rate" for any particular year shall be equal to
Partner 2's total annual salary entitlement for that year divided by the number of
hours worked during that year by Partner 2. For the purposes of this Agreement,
the total number of hours worked in Year 1 by Partner 2 shall be deemed to be
____________________ (_____) hours, (being __________ (___) hours per week
multiplied by ______________ (___) weeks).

7.08            Partner 1 shall at all times keep weekly time sheets recording the
number of hours worked each week by Partner 1 on behalf of the Business. All
records as so prepared by Partner 1 shall be taken to be correct unless challenged
by Partner 2 within a reasonable time following their preparation. The salary
entitlement of Partner 1 for each year shall be equal to the total number of hours
worked by Partner 1 with respect to the Business during each such year multiplied
by the Partners' Hourly Rate as finally determined for that year. Partner 1 shall be
entitled to receive payment in respect of his salary entitlement from the Partnership
funds out of available Partnership cash at the end of each year of the operation of
the Business.

7.09            The net profits of the Business, (from which shall have been
deducted salary entitlement of each Partner), shall be divided equally between the
Partners. Notwithstanding the foregoing, the Partners hereby agree that fifty (50%)
per cent of their respective entitlement to the net profits of the Business shall not be
drawn out of the Partnership funds but shall be deemed to have been contributed
back to the Partnership as additional capital of the Partnership, until agreed
otherwise. {Instruction: A partnership may decide to use a percentage other
than 50%.}

8.00            DISAGREEMENT

8.01            At any time hereafter and from time to time during the currency of
this Agreement, any Partner (hereinafter in this Article sometimes referred to as the
"Offeror"), shall have the right to deliver a notice in writing to the other Partner
(hereinafter in this Article sometimes referred to as the "Offeree"), which notice to
be effective shall be signed by the Offeror and shall contain the following:

   (a)          A price at which the Offeror wishes to purchase the interest of the
                Offeree; and
   (b)          An offer to purchase all but not less than all of the interest in the
                Partnership owned by the Offeree.

8.02            Upon receipt of such notice the Offeree, within thirty (30) days
thereof, shall be entitled to accept, in writing, the offer contained in the notice.




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8.03            In the event that the Offeree shall accept the offer of the Offeror,
then the Offeree shall sell and the Offeror shall purchase all of the interest in the
Partnership owned by the Offeree at the price set out in the offer contained in the
notice and the transaction shall be closed within thirty (30) days from the date of
acceptance.

8.04            In the event that the Offeree does not accept the offer of the Offeror
within the said thirty (30) day period, then the Offeror shall be deemed to have
made an offer to the Offeree to sell all of the interest in the Partnership owned by
the Offeror at the said price contained in the offer and the Offeree shall be deemed
to have accepted the said offer of the Offeror, and thereupon the Offeree shall
purchase and the Offeror shall sell all of the interest in the Partnership owned by
the Offeror at the said price and the transaction shall be closed within thirty (30)
days after the expiration of the initial thirty (30) day period.

8.05            On the date set for closing, the selling Partner shall transfer and
assign all right, title and interest in and to the Partnership owned by him to the
purchasing Partner and shall deliver to the purchasing Partner all documents that
may be reasonably necessary to complete the transaction and the purchase price
shall be paid to the selling Partner by certified cheque. All amounts owing by the
selling Partner to the purchasing Partner and all amounts owing to the selling
Partner by the purchasing Partner shall be paid at the time of the closing and at the
time of closing the selling Partner shall be released from any and all guarantees,
agreements, and obligations given by him or incurred in the course of the business
of the Partnership, the obtaining of which releases shall be the responsibility of the
purchasing Partner.

8.06            The Partners agree that upon payment in full of the purchase price
by certified cheque, all benefits, rights or causes of action enuring to or to be borne
by the selling Partner shall be extinguished and the Partners each specifically agree
that the payment of such purchase price shall be in lieu of any and all entitlement
the selling Partner may have to severance, payment in lieu of notice and any and all
further rights or claims from the purchasing Partner or the Partnership save and
except for any benefits or pension plan payments established by the Partnership for
the express purpose of providing additional benefits to a selling Partner in these
circumstances.

9.00           NON-COMPETITION




© Copyright 2011 Docstoc Inc.                                                             10
9.01            The Partners covenant and agree with each other that any Partner
who, for any reason whatsoever, shall cease to be a Partner, shall not, without the
other Partner's written consent, within the State of _________________, for a
period of ________________ (__) years from the time he ceased to be a Partner,
directly or indirectly, either as principal or agent or otherwise, compete with the
Business by carrying out or being engaged in or concerned with or interested in,
including without limiting the generality of the foregoing, as employee,
shareholder, partner, part-owner, parent, subsidiary, affiliate, promoter or in any
other way, the operation of any business the same as or similar to the Business;
During the said ____________ (___) year period, the Partner who has ceased to be
a Partner shall not deal with any of the Business' customers in competition to the
Business nor shall he solicit or permit solicitation of any business from any such
customers, nor shall he divulge or permit to be divulged the names, addresses or
any information about any such customers. {Instruction: Many states will not
enforce a non-compete clause that covers an entire state. A smaller geographic
area (e.g. within 25 miles of the principal place of business) may be more
reasonable in many situations. If so, such a clause should be substituted in, in
exchange for the above clause.}

10.00 TERMINATION

10.01 Subject to any other provision of this Agreement, the Partnership shall be
terminated upon the happening of any of the following events:

       (a)     upon the death of either of the Partners;
       (b)     upon the sale of all of the assets and undertaking of the Business by
               the Partners; or
       (c)     upon the bankruptcy or insolvency of either of the Partners.


11.00 ARBITRATION

11.01 In the event that any disagreement arises between the Partners with
reference to this Agreement or to any matter arising hereunder and upon which they
cannot agree, then every such disagreement shall be referred to arbitration pursuant
to the laws of the governing jurisdiction, as amended from time-to-time and in
accordance with the provisions of the following paragraphs.

11.02 The reference to arbitration shall be to one arbitrator unless the Parties
cannot agree on one, in which case, it shall be to three arbitrators, one of whom
shall be chosen by each of the Partners and the third by the two arbitrators so
chosen; and, if three arbitrators, the third arbitrator so chosen shall be the
chairman;

11.03 If three arbitrators, the award may be made by the majority of the
arbitrators;



© Copyright 2011 Docstoc Inc.                                                          11
11.04 If the arbitrators have allowed the time or extended time for making an
award, to expire without making an award or if the chairman shall have delivered to
the parties to the arbitration a notice in writing stating that the arbitrators cannot
agree, any party to the arbitration may apply to the Courts of the applicable
jurisdiction to appoint an umpire who shall have the like power to act in the
reference and to make an award as if he had been duly appointed by all the parties
to the submission and by the consent of all the parties who originally appointed
arbitrators thereto;

11.05 If an umpire is so appointed, such umpire shall make his award within one
(1) month after the original or extended time appointed for making the award of the
arbitrators has expired or on or before any later date to which the parties to the
reference by any writing signed by them from time to time enlarge the time for
making the award, or if the parties have not agreed, then within such time as the
Court or Judge appointing such arbitrator may deem proper.

11.06 There shall be an appeal from the award of the arbitrators in accordance
with the provisions of the laws of the governing jurisdiction.




12.00 NOTICES

12.01 All notices, demands, requests, consents, and approvals which may or are
required to be given or made pursuant to any provision of this Agreement shall be
given or made in writing and shall be served personally or mailed by prepaid and
registered mail, in the case of:

       a)      Partner 1, addressed to:
                                      ; and

       (b)     Partner 2, addressed to:
                                      .

or to such other address as either Partner may from time to time advise the other by
notice in writing. The date of receipt of any such notice, demand or request shall
be deemed to be the date of delivery of such notice, demand or request if served
personally, or if mailed, the third day of business following the date of such
mailing.


13.00 SEVERABILITY OF PROVISIONS, AGREEMENT FULL AND
BINDING




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13.01 The invalidity or unenforceability of any provision of this Agreement or any
covenant herein contained on the part of any Partner shall not affect the validity or
enforceability of any other provision or covenant herein any invalid provision will
be severable.

13.02 The Partners each warrant that there are no representations, collateral
agreements or conditions affecting the matters contained in this Agreement other
than as expressed herein and this Agreement may be amended only by a further
instrument in writing executed by each of them.

13.03 This Agreement shall be binding not only on the Partners but also on their
heirs, executors, administrators, successors and assigns to execute any other
instruments which may be necessary or proper to carry out the purpose and intent
of this Agreement.


14.00 PROPER LAW, HEADINGS, GENDER AND NUMBER

14.01 The law governing the interpretation and implementation of this Agreement
is the law prevailing from time-to time in-the State of _____________________.

14.02 The Partners acknowledge that the headings and marginal notes hereto have
been inserted for convenience only and shall have no effect whatsoever on the
meaning, interpretation or construction of any of the provisions herein contained.




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14.03 This Agreement shall be read with all changes or gender and number as
may be required by the context.


       IN WITNESS WHEREOF the Partners have hereto respectively set their
hands and seals.


SIGNED, SEALED AND DELIVERED                      )
  in the presence of                              )
                                                  )
                                                  )

Witness:                                          )     Partner 1
                                                  )
                                                  )

Witness:                                          )     Partner 2




© Copyright 2011 Docstoc Inc.                                                 14

								
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