Partnership agreement template

Partnership Agreement

This Partnership Agreement (the "Agreement") is entered into on 2023-10-01 (the "Effective Date") by and between:

Partner 1: Name: John Doe Address: 123 Main St SSN/EIN: 000-00-0000

Partner 2: Name: Jane Smith Address: 456 Market St SSN/EIN: 000-00-0000

1. Formation and Name

Partnership Name: My Partnership

Type: General Partnership (General Partnership / Limited Partnership / Limited Liability Partnership)

Principal Place of Business: 789 Business Rd

Purpose: To operate a retail business

Term: perpetual (perpetual / until 2030-12-31 / until dissolved)

Formation Date: 2023-10-01

State of Formation: Delaware

2. Capital Contributions

Initial Contributions:

Total Initial Capital: $20000

Contribution Deadline: All initial contributions due by 2023-10-15

Property Contributions: Property valued at valuation method (fair market value / agreed value / appraisal)

Additional Contributions:

• Required if: additional contribution trigger
• Proportional to ownership: proportional contributions
• Approval required: contribution approval (unanimous / majority)

Failure to Contribute: Partner failing to contribute faces: failure consequence (reduced ownership / buy-out / default)

Capital Accounts: Separate capital account maintained for each partner

3. Profit and Loss Distribution

Profit Distribution: profit distribution method

Distribution Percentages:

• John Doe: p1 profit percentage%
• Jane Smith: p2 profit percentage%
• partner 3 name: p3 profit percentage%

Loss Allocation: loss allocation (same as profit / different: loss percentages)

Distribution Timing: distribution frequency (quarterly / annually / as decided)

Retained Earnings: Minimum retained percentage% of profits retained for: retention purpose

Tax Allocations: Follow capital account balances and comply with IRC Section 704(b)

Draws: Partners may take draws: draw policy

• Maximum monthly draw: max monthly draw
• Approval required: draw approval

4. Management and Decision-Making

Management Structure: management structure (all partners equal / managing partner(s) / delegated authority)

Managing Partner(s): managing partners (if applicable)

Day-to-Day Decisions: daily decision authority (any partner / managing partner / majority vote)

Major Decisions Requiring Unanimous Consent:

• Admitting new partners
• Amending partnership agreement
• Selling or encumbering partnership assets over major asset threshold
• Borrowing over borrowing threshold
• Entering contracts over contract threshold
• Changing business purpose
• Dissolving partnership
• additional unanimous decisions

Majority Decisions: Decisions requiring majority percentage% vote:

• Hiring key employees
• Major expenditures over expenditure threshold
• Lease commitments
• majority vote decisions

Voting: voting method (per capita / by ownership percentage)

Meetings: meeting frequency (monthly / quarterly / as needed)

Notice: meeting notice days days notice required for meetings

5. Duties and Responsibilities

Partner Roles:

John Doe:

• Title: p1 title
• Responsibilities: p1 responsibilities
• Time commitment: p1 time commitment

Jane Smith:

• Title: p2 title
• Responsibilities: p2 responsibilities
• Time commitment: p2 time commitment

partner 3 name:

• Title: p3 title
• Responsibilities: p3 responsibilities
• Time commitment: p3 time commitment

Compensation for Services: partner compensation (draws only / salaries: salary amounts / none)

Equal Effort: Partners agree to devote effort requirement to partnership business

6. Books and Records

Accounting Method: accounting method (cash / accrual)

Fiscal Year: fiscal year end

Records Location: records location

Access: All partners have right to inspect books and records with inspection notice days days notice

Financial Statements: Prepared financial statement frequency

Tax Returns: Partnership tax return (Form 1065) filed by tax filing deadline

Accountant: accountant name (or as agreed)

Annual Audit: audit requirement (required / not required / if revenues exceed audit threshold)

7. Banking and Finances

Bank Account: Maintained at bank name

Signatories: check signing authority (any partner / two partners / managing partner)

Expenditure Limits: Individual partner may spend up to individual spending limit without approval

Credit and Loans: Borrowing requires borrowing approval (unanimous / majority) for amounts over loan threshold

8. Restrictions on Partner Authority

No partner may, without written consent of all partners:

• Bind partnership beyond ordinary course of business
• Assign partnership property
• Admit new partners
• Settle or submit partnership claim to arbitration
• Confess judgment against partnership
• additional restrictions

9. Admission of New Partners

Admission Process: Requires new partner approval (unanimous consent / new partner vote% vote)

Terms: New partner's capital contribution, ownership percentage, and rights determined by existing partners

Valuation: Partnership valued at valuation for new partners for admission purposes

10. Withdrawal, Death, or Disability

Voluntary Withdrawal: Partner may withdraw with withdrawal notice months months written notice

Buy-Out Upon Withdrawal:

• Withdrawing partner receives: withdrawal valuation (book value / fair market value / formula: valuation formula)
• Payment terms: withdrawal payment terms

Death of Partner:

• Partnership death continuation (continues / dissolves)
• Estate entitled to: estate entitlement
• Buy-out by remaining partners: death buyout terms

Disability:

• Defined as inability to perform duties for disability months months
• Disabled partner: disability treatment

Life Insurance: Partners agree to maintain life insurance: life insurance requirement

• Amount: insurance amount per partner
• Beneficiary: insurance beneficiary (partnership / cross-purchase)

Buy-Sell Agreement: buy sell attached (attached as Exhibit A / to be executed separately)

11. Non-Compete and Confidentiality

Non-Compete: During partnership and for non compete years years after departure, partners may not:

• Engage in competing business within non compete territory
• Solicit partnership clients or employees
• non compete restrictions

Confidentiality: Partners must maintain confidentiality of:

• Trade secrets
• Client information
• Financial information
• Business strategies

Duration: Confidentiality obligations survive termination indefinitely

12. Dispute Resolution

Mediation: Disputes first submitted to mediation in mediation location

Arbitration: If mediation fails, binding arbitration under arbitration rules (AAA / JAMS)

Arbitration Location: arbitration location

Costs: dispute cost allocation (shared equally / prevailing party)

Governing Law: Laws of governing state

13. Dissolution and Winding Up

Dissolution Events:

• Unanimous vote of partners
• Withdrawal/death of partner (if not continuing)
• Bankruptcy of partnership
• Illegality of business
• Expiration of term
• dissolution events

Winding Up Process:

1. Cease new business
2. Liquidate assets
3. Pay creditors
4. Distribute remaining assets per ownership percentages

Liquidation Preference: liquidation preference

Final Accounting: Within final accounting days days of dissolution

14. Indemnification

Partnership shall indemnify partners against liabilities incurred in ordinary course of business, except for:

• Willful misconduct
• Gross negligence
• Breach of agreement
• Ultra vires acts

15. Amendments

Amendment Process: Requires amendment approval (unanimous / amendment percentage% vote)

Written Requirement: All amendments must be in writing and signed

16. General Provisions

Entire Agreement: Constitutes entire understanding

Severability: Invalid provisions don't affect remainder

Waiver: Failure to enforce doesn't waive rights

Notices: In writing to addresses above; effective upon receipt

Counterparts: May be executed in counterparts

Binding Effect: Binds heirs, executors, successors, and assigns

17. Signatures

IN WITNESS WHEREOF, the partners have executed this Agreement as of the Effective Date.