Business Resources / Partnerships
General Partnership Agreement
THIS AGREEMENT (Agreement) made this [date], between and among [name], having an address of [address] (Partner A), [name], having an address of [address] (Partner B), [name], having an address of [address] (Partner C), [name], having an address of [address] (Partner D), and [name], having an address of [address] (Partner E);
W I T N E S S E T H :
WHEREAS, Partner A, Partner B, Partner C, Partner D, and Partner E (collectively, the Partners and each, individually, a Partner) have formed a general partnership and are desirous of executing a partnership agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, and for the mutual covenants and conditions herein contained, the parties hereto agree as follows:
1. Commencement. The Partners shall remain partners in the business solely of owning, operating, developing, selling, leasing and/or sub-leasing the premises described in Schedule A, hereto attached and made a part hereof (Property), said business to continue from and after the execution of this Agreement until terminated as hereinafter provided.
2. Name. The name of the partnership shall be [Name of Partnership] (Partnership), and shall have its principal place of business at [address], unless and until changed at a Meeting (as hereinafter defined).
3. Accounts.
a. Capital Accounts. An individual capital account shall be maintained for each Partner. The capital interest of each Partner shall consist of his original contribution of capital, increased by (1) additional capital contributions, (2) any credit balances transferred from his drawing account to his capital account, and (3) such Partner's share of Partnership profits, if credited to the Capital Account of the Partners, and decreased by (a) distributions in reduction of Partnership capital and (b) his share of Partnership losses, if charged to the capital account of the Partners.
b. Ratios of Partner's Capital Accounts. The capital accounts of the Partners shall equal their respective interests in the Partnership.
4. Original Capital Contributions and Percentage Interest. a. The Partners have contributed the capital set forth below to the Partnership as their original capital contributions, and the Partners' initial percentage interest in the Partnership is as follows:
Profits and Losses Contribution
Partner A ...... percent (....%) ....... dollars ($....)
Partner B ...... percent (....%) ....... dollars ($....)
Partner C ...... percent (....%) ....... dollars ($....)
Partner D ...... percent (....%) ....... dollars ($....)
Partner E ...... percent (....%) ....... dollars ($....)
Totals 100% ....... dollars ($....)
b. No interest shall be paid to any Partner on the initial capital contributions to the Partnership or on any subsequent additional capital contributions.
c. The Partners shall devote such time to the business of the Partnership as each, in his discretion, shall determine.
d. Additional Capital Contributions.
i. Additional Capital Contributions. The Partners covenant and agree to make additional capital contributions in cash or by good check payable to the Partnership, at any time or from time to time, within [number] days following the Partnership's sending notice to all the Partners stating that ...... percent (.......%) in interest of the Partners have voted to require such additional capital contributions. In the event that a Partner's additional capital contribution shall exceed ..... dollars ($......), such Partner shall have [number] days from the date of the Partnership's notice to make such additional capital contribution, provided, however, that such extension does not permit an event of default to continue with regard to any transaction for which such additional contributions are to be used. Such notice shall specify in reasonable detail the reasons for the Partnership's need for the additional capital contributions and the uses to which such capital contributions are intended to be put. Any such additional capital contributions shall be proportionate to the respective percentage interest of the Partners in the Partnership as set forth in Section 4(a) above.
ii. Failure to Make Additional Capital Contributions. The failure of any Partner to timely make any additional capital contribution required under the terms of Section 4(d)(i) of this Agreement when due shall not obligate any other Partner to make such contribution. Notwithstanding the above, the non-defaulting Partner(s) may contribute amounts equaling the assessment in default by the defaulting Partner (i) in the proportion of their respective percentage interests in the Partnership prior to the notice for additional capital contributions and if any non-defaulting Partner elects not to contribute his pro-rata share of the amount equaling the assessment in default by the defaulting Partner, or to contribute only a part thereof, the remaining non-defaulting Partners may contribute such amount, or (ii) in any other proportions as they may agree, and the existing capital account of the non-defaulting Partner(s) as set forth in Section 4(a) hereof shall be increased by an amount equal to the additional capital contributed by the non-defaulting Partner(s) on behalf of the defaulting Partner, and the percentage interest of the defaulting Partner(s) shall be decreased in proportion that the defaulting Partner's capital account bear to the Capital Accounts of all Partners as increased by the above additional Capital Contribution.
iii. Discontinuance of Distributions on Default. In the event that a Partner fails to make any additional capital contribution for which he is obligated, ..... percent (...%) in interest of the remaining Partners may (i) enforce such obligations in such manner as may be permitted by law, and / or (ii) discontinue any and all distributions of Partnership cash and / or capital to such defaulting Partner until such default has been cured. At the option of a majority in interest of the remaining Partners, any such distributions may be applied in whole or in part against the amounts due to or from such defaulting Partner.
iv. Interest on Payments in Default. In the event of any failure to make any additional capital contributions hereunder by any Partner within the time hereinbefore provided, the unpaid amount of such additional capital contribution shall hereafter bear interest at a rate per annum at three (3) percentage points over the prime rate (as hereinafter defined). In the event of any action brought by the Partnership against any Partner to collect any such additional capital contribution, the Partnership shall also be entitled to collect from such Partner the costs of collection, including reasonable attorney fees.
v. Time is of the essence in this Agreement and all of its provisions.
5. Definitions. For the purposes of this Agreement, the terms "Net Income," "Net Losses" and "Available Cash," shall have the following meanings:
a. "Net Income" and "Net Losses" shall mean the income or losses of the Partnership from the ownership, construction, operation and management of the Property as reported for federal income tax purposes. Net Income or Net Losses shall not include any gain or loss realized by the Partnership on account of the capital transactions described in Paragraph 8 hereof, but shall include all costs, if any, incurred by the Partnership in respect of the construction, operation, and management of the Property, such as real estate taxes, interest, financing fees and management fees.
b. "Available Cash" for any fiscal year of the Partnership shall mean, at the time of determination, cash, demand deposits and short-term marketable securities, reduced by such amounts as the Managing Partners shall deem reasonable in order to provide for any anticipated or contingent expenditures or liabilities of the Partnership, including, without limitation, reserves for replacements and capital improvements.
6. Allocation of Net Income and Net Losses. Net Income and Net Losses in respect of each fiscal year of the Partnership shall be credited or charged, as the case may be, to the Partners in proportion to their percentage interest in the Partnership as set forth in Paragraph 4 hereof.
7. Distribution of Available Cash. Available Cash shall be distributed to the Partners in proportion to their respective percentage interests in the Partnership as of the date of distribution, at such times as are determined by a majority in interest of the Partners, except as otherwise provided in this Agreement.
8. Distribution of Net Proceeds of Capital Transactions.
a. Any net insurance proceeds, and any net proceeds of condemnation, sales of easements, rights of way or similar interests in the Property, sales of all or any portion of the Property or interests therein, and any other similar items which in accordance with generally accepted accounting principles are attributable to capital, including the net proceeds of any mortgage refinancing, shall be distributed as follows and in the following order of priority:
i. First, to the creditors of the Partnership in payment of the unpaid liabilities of the Partnership to the extent required under agreements with such creditors;
ii. Then, to the setting up of any reserves which the Managing Partners may deem reasonably necessary for any anticipated, contingent or unforeseen liabilities or obligations of the Partnership arising out of, or in connection with, the conduct of the Partnership's business.
iii. Then, to the Partners in return of their net unreturned capital contributions;
iv. Then, to the Partners in proportion to their respective percentage interests in the Partnership.
b. In the event that the Partnership shall realize gains or losses for federal income tax purposes on account of the transactions or events contemplated by this Paragraph 8, the amount of such gains or losses shall be allocated in the same manner as set forth in Paragraph 8(a)(iv).
9. Records. The Partnership shall record all receipts and disbursements, income and expenses in proper books of account, which books of account shall be kept and maintained by the Managing Partners, as that term is hereinafter defined, at the principal place of business of the Partnership. All Partners shall have free and ready access at all times to examine and copy from said books of account.
10. Meetings.
a. An annual meeting of the Partners (Annual Meeting) shall be held in each calendar year beginning in 19.., during the last week of [month], at such date and place as is designated by the Managing Partners by notice in writing to the Partners at least [number] days in advance. Any [number] of the Partners may call such Annual Meeting upon [number] days' notice in the event that the Managing Partners fail to do so.
b. A meeting of the Partnership may be held at any time on notice to all Partners (Meeting), and at any Meeting so called or at any Annual Meeting, where at least sixty-five percent (65%) in interest of the Partners in the Partnership is represented, any action taken thereat by at least sixty-five percent (65%) in interest of the Partners shall be binding upon all the Partners under this Agreement, except that any amendment to this Partnership Agreement providing for the admission of new Partners, a material change in the rights, duties, or obligations of the Partners, or the use of the Property for other than Partnership purposes must be ratified by a unanimous vote of all the Partners.
11. Management, Duties and Restrictions.
a. There shall be two managing partners of the Partnership (Managing Partners) which shall include those individuals listed as Managing Partner I and Managing Partner II on Schedule B attached hereto and made a part hereof. The Managing Partners, acting only in concert and not individually, shall have full charge of the day-to-day management of the Partnership in all respects together with such other rights, obligations and duties as are specified herein. Each Managing Partner shall serve in such capacity, subject to the terms of this Agreement, until such time as he is replaced by vote of ....... percent (...%) in interest of the Partners, or he resigns, dies or becomes totally and permanently disabled.
b. The Managing Partners shall have full charge of the day-to-day business of the Partnership including, but not limited to, full power to sell and convey any personal property owned by the Partnership not exceeding ........ dollars ($......) in value on such terms as they may deem reasonable; to hire and oversee superintendents, management agents and other required personnel; to pay bills for ordinary expenses; and to perform all other necessary business in connection with the management of the Partnership and the Property. The Managing Partners shall also render reports to the Partners with respect to each calendar year within ninety (90) days after the end of each such calendar year concerning the income, expense and operation of the Property, or in lieu thereof may furnish the Partners with a copy of the Partnership's federal income tax return for each year, shall establish and maintain the books of the Partnership, shall provide for the preparation of the Partnership's annual financial statements and tax returns in the manner provided herein, and shall take such other actions as may be necessary or desirable in connection with the proper management of the Partnership. Except with the requisite authority of the Partnership as otherwise expressly provided herein, neither the Managing Partners nor any other Partner shall, without written consent of a majority in interest of the Partners (i) enter into any material contracts on behalf of the Partnership, which shall mean contracts for goods and/or services which individually or in the aggregate, in the case of a series of contracts with a particular person or entity, exceed ..... dollars ($.....), (ii) borrow or loan money, or make, execute, deliver or endorse, any commercial paper, (iii) purchase, sell, lease or mortgage any Partnership real estate (including the Property) or any interest therein, or enter into any contract for any such purpose, or (iv) make or incur any expenditure on behalf of the Partnership in excess of ..... dollars ($.....) other than in the ordinary course of the Partnership's business.
c. All checks drawn on the Partnership checking accounts must be signed or endorsed by either Partner A or Partner B. It is understood and acknowledged that, due to bank requirements and policies, the signature cards for the Partnership checking account may not reflect the necessary signatures exactly as provided herein.
d. No Partner shall receive any salary or other compensation for services rendered to the Partnership as a Managing Partner or otherwise.
e. The Managing Partners, acting jointly, are hereby authorized to execute, for and on behalf of the Partnership, any deeds or other documents required or reasonably necessary to evidence or consummate any transaction which has been authorized or approved as provided for herein which shall bind the other Partners as if executed by them. No sale of an interest in Partnership property shall be made to any Partner, individually, or to any entity controlling, controlled by, or in direct or indirect common control with a Partner, or to any entity or business venture in which any Partner has a financial or other interest, other than at its fair market value, as the same shall be determined by two independent appraisers or agreed to by sixty-five percent (65%) in interest of the Partners. In addition, neither a Partner nor any such entity or business venture shall be compensated for services rendered to the Partnership by them other than at the fair value thereof.
f. Without limiting the rights of the Partners otherwise provided at law or in equity, any Managing Partner may be removed as a Managing Partner, with or without cause, at any time by a vote of ...... percent (...%) in interest of the remaining Partners (provided, however, that no such removal shall be effective until any Partnership lender has given its written consent thereto, if required by the terms of such loan). Upon any vacancy in the position of Managing Partner caused by any removal of a Managing Partner, or upon the death, disability, withdrawal or resignation of a Managing Partner or other similar event, the vote of ...... percent (...%) in interest of the Partners shall be required to elect a successor to such Managing Partner. Any successor Managing Partner so elected shall be empowered to carry out the duties of any such former Managing Partner and no material action regarding the Partnership shall be taken during any vacancy in the Managing Partners.
g. The Partnership shall at all times maintain fire, extended coverage and liability insurance for the Property in coverages and with such companies as are approved by a majority in interest of the Partners.
h. The Partnership shall indemnify and hold harmless the Managing Partners and their heirs, executors and administrators, from any claim, loss, damage, liability, action, cost or expense (including reasonable attorney fees) arising out of any act or failure to act by them (including any act or failure to act as "tax matters partner"), if such act or failure to act is in good faith, within the scope of this Agreement and is not attributable to gross negligence, willful misconduct or fraud, or arising out of any obligation assumed or performed on behalf of the Partnership, performed by them in good faith and within the scope of this Agreement.
12. Value of Property. The fair and reasonable value of the Property shall be set forth in the Certificate of Agreed Realty Value in the form annexed hereto as Schedule C (Realty Market Value). The Partners, at a Meeting to be held, by a vote of ..... percent (...%) of the Partners within [number] days of the date hereof, shall determine the Realty Market Value and execute a Certificate of Agreed Realty Market Value. Thereafter, the Partners, at any meeting, may, in their discretion, by a vote of ....... percent (...%) of the Partners in interest, determine the Realty Market Value of the Property. Failing such redetermination for a period in excess of [number] years from the date of the last Certificate of Agreed Realty Market Value, the Realty Market Value shall be determined as follows: within [number] days of the date of death, disability or other event requiring determination of the Realty Market Value, the estate of the deceased Partner or the Selling Partner as the case may be, shall choose one appraiser and the remaining Partners shall choose a second appraiser. The said appraisers shall determine the Realty Market Value. In the event that the said appraisers shall fail within sixty (60) days of their appointment to determine the Realty Market Value, a third appraiser shall be appointed by the said two appraisers within [number] days after the expiration of the aforesaid sixty (60)-day period and a majority of the three appraisers shall determine the Realty Market Value within [number] days after the appointment of the third appraiser.
13. Transfer of Interest.
a. Restriction on Transfer. Except as is otherwise expressly provided herein, no Partner shall voluntarily or involuntarily sell, transfer, mortgage, assign or otherwise encumber his interest in the Partnership without the written consent of seventy-five percent (75%) in interest of the remaining Partners, nor shall any Partner cause or allow his interest in the Partnership or its property to be liened, attached or otherwise encumbered.
b. Right of First Refusal. If any Partner desiring to dispose of all but not less than all of his interest in the Partnership shall receive a bona fide offer in writing from a financially capable purchaser to purchase such interest and shall be desirous of accepting such offer, such Partner (Selling Partner) shall offer to the other Partners the privilege of purchasing pro-rata his entire interest in the Partnership at the same price and on the same terms as such bona fide offer. The Selling Partner shall give written notice to the remaining Partners of his intention to make such transfer stating the name and address of the proposed transferee and the price to be paid therefor and the terms of payment. In such event, the remaining Partners shall have the option, exercisable upon written notice to the Selling Partner within [number] days after receipt of the Selling Partner's notice, to purchase pro-rata all or a portion of the Selling Partner's entire interest in the Partnership at the bona fide price offered by the proposed transferee. In the event that any remaining Partner does not elect to purchase his proportionate share, he shall at least [number] days prior to the expiration of the initial [number]-day period, give written notice of his intention not to purchase his portion of the Selling Partner's interest to the other remaining Partners and the other remaining Partners shall have the pro-rata option, exercisable by written notice to the Selling Partner within [number]-day period immediately following such initial [number]-day period, to purchase that portion of the Selling Partner's interest which such remaining Partner did not elect to purchase. In the event that the remaining Partners elect to purchase the Selling Partner's entire interest pursuant to this Paragraph, the terms of sale shall be the same as those bona fide terms offered by the proposed transferee. In the event that the remaining Partners do not elect to purchase the Selling Partner's entire interest, the Selling Partner may make the proposed transfer of his entire interest in the Partnership to the proposed transferee within the [number]-day period following the expiration of the aforesaid option period(s), but if such transfer is not consummated within such [number]-day period, the terms and conditions of this Agreement shall continue to apply to the Selling Partner's interest. Subject to the foregoing, failure to elect to purchase the Selling Partner's interest as hereinbefore provided shall operate as an approval of the sale of such entire interest in the Partnership by the Selling Partner to said bona fide purchaser in accordance with the terms of such bona fide offer, provided, however, that any such transferee shall become a party to this Agreement with respect to such interest by executing a duplicate of this Agreement and agreeing to be bound by the terms hereof.
14. Bankruptcy or Insolvency.
a. In the event of the bankruptcy, insolvency, attachment of any interest in the Partnership or assignment for the benefit of creditors of any Partner, or any other involuntary transfer of the interest in the Partnership of any Partner (Affected Partner), the Affected Partner or his trustee, committee, or other legal representative or involuntary transferee (Representative) shall offer to sell to the remaining Partners the Affected Partner's entire interest in the Partnership upon the terms and conditions as hereinafter stated. The purchase price of the Affected Partner's interest in the Partnership, in the event that the parties fail to agree on a price, shall be an amount calculated by multiplying the Affected Partner's Partnership interest percentage by an amount determined by adding the cash basis book value of the assets of the Partnership (excluding goodwill and the Property) to ......... percent (...%) of the Realty Market Value and subtracting all the liabilities of the Partnership including any mortgages; all such calculations are to be made by the Partnership's accountant.
b. The Affected Partner or the Representative shall make such offer to the remaining Partners in writing by certified mail, return receipt requested, within [number] days of the involuntary transfer and said offer shall require acceptance by the remaining Partners in writing by certified mail, return receipt requested, within [number] days after receipt of the offer from the Affected Partner or his Representative. In the event that any of the remaining Partners does not elect to purchase his proportionate share of the Affected Partner's interest, he shall, at least [number] days prior to the expiration of the initial [number]-day period, give written notice of his intention not to purchase his portion of the Affected Partner's interest to the other remaining Partners and the other remaining Partners shall have the pro-rata option, exercisable by written notice to the Affected Partner or the Representative, to purchase that portion of the Affected Partner's interest which such remaining Partner did not elect to purchase prior to the expiration of the [number]-day period. Should the remaining Partners elect to purchase the Affected Partner's entire interest in the Partnership, the assignment of such interest shall be made to the purchasing Partners within [number] days after acceptance of such offer and the purchase price shall, at the option of the purchasing Partners, be paid, either in cash at the time of such assignment, or ........ percent (...%) upon such assignment and the balance within [number] years in equal quarterly installments, together with interest at the Prime Rate in effect at the time of the involuntary transfer. The balance of the purchase price due from the surviving Partners shall be evidenced by a Promissory Note (as hereinafter defined), which shall be secured by a security interest granted by the surviving Partners in the Affected Partner's interest, which has been transferred to the surviving Partners pursuant to this Section 14(b), but has not been paid for by the surviving Partners. The interest subject to the Affected Partner's security interest will be held in escrow by the attorney for the Representative. Failure to elect to purchase the entire interest offered as hereinbefore provided shall operate as approval and agreement to the assignment of the interest of the Affected Partner in the Partnership without restriction, provided, however, that any such transferee shall become a party to the Agreement with respect to such interest by executing a duplicate of this Agreement.
15. Life Insurance Trust.
a. In the event the Partnership decides that life insurance should be purchased on the life of any Partner, the Partners hereby agree to form a trust (Trust) in the form annexed hereto as Schedule ......... (see Form 2.03) for the purpose of purchasing, maintaining, and distributing proceeds of such life insurance policies (Policy or Policies) on the lives of any Partners that the Partnership shall choose to insure in its sole discretion.
b. The Partners agree to cause the Trust to acquire the Policies on the lives of the Partners (Insured Partners) as requested by the Partnership. The Partnership shall pay all premiums for the Policies.
16. Trust to Maintain Policies. The Trust shall be the sole owner of the Policies issued to it and shall be solely authorized to exercise all rights under the Policies.
17. Death of an Uninsured Partner.
a. Upon the death of any Partner (Deceased Partner) who is not covered by a Policy, the estate of the Deceased Partner shall be required to sell to the surviving Partners all, but not less than all, of the Deceased Partner's interest in the Partnership, and the surviving Partners shall be required to purchase, pro rata based on their percentage ownership in the Partnership (without regard to the Partnership interest owned by the Deceased Partner), the entire interest of such Deceased Partner. The purchase price of such Deceased Partner's interest in the Partnership, shall be a price (Enhanced Termination Value) calculated by adding the cash basis book value of the assets of the Partnership (excluding goodwill and the Property) and the Realty Market Value and subtracting all the liabilities of the Partnership, and then multiplying that amount by the Deceased Partner's percentage ownership in the Partnership; all such calculations are to be made by the Partnership's accountant.
b. The assignment of the Deceased Partner's interest in the Partnership shall be made to the surviving Partners within the latter of (i) [number] days after the appointment of an executor or administrator of the Deceased Partner's estate or (ii) [number] days after the determination of the Realty Market Value. The purchase price shall, at the option of the surviving Partners, be paid either in cash at the time of assignment of such Partnership interest or ........ percent (...%) upon such transfer and the balance within [number] years in equal quarterly installments, together with interest at the Prime Rate in effect at the time of the closing. The balance of the purchase price due from the Surviving Partners shall be represented by a Promissory Note (as herein defined) which shall be secured by a mortgage on the Property.
18. Death of an Insured Stockholder.
a. Upon the death of any Insured Partner (Deceased Insured Partner) the estate of the Deceased Insured Partner shall be required to sell to the Trust all, but not less than all, of the Deceased Insured Partner's entire interest in the Partnership and the Trust shall be required to purchase the entire interest of such Deceased Insured Partner. The purchase price of such Deceased Insured Partner's interest in the Partnership shall be the Enhanced Termination Value; such calculations to be made by the Partnership's accountant.
b. The estate shall transfer the Deceased Insured Partner's Partnership interest in the Partnership to the Trust within the later of (i) [number] days after appointment of the executor or administrator of the Deceased Insured Partner's estate, (ii) [number] days after the determination of the Realty Market Value pursuant to Secti |
