PARTNERSHIP AGREEMENT OF
THIS PARTNERSHIP AGREEMENT (hereinafter “Agreement”), is made effective as of December 12, 2006, by and between ______________________________________________
______________________________________________________________________________ (the “Partners”).
FORMATION, NAME, PRINCIPAL OFFICE, TERM, RECORDS
1.1 Formation of Partnership. The parties hereto hereby form, pursuant to the Texas Business Organizations Code (hereinafter, as from time to time amended, referred to as the “Code”), a General Partnership, which organization is hereinafter referred to as the “Partnership.” The rights, duties, status and liabilities of the Partners shall, except as hereinafter expressly stated to the contrary, be as provided for in the Code.
1.2 Partnership Name. The business of the Partnership shall be conducted under the name of ___________________________________ or such other name as the Partners may select from time to time. As necessary, the Partners shall promptly execute, file, record and/or publish with the proper offices an assumed name certificate.
1.3 Principal Office. The principal place of business of the Partnership shall be at ___________________________________________________________, but substitute or additional places of business may be established at such other locations as may, from time to time, be determined by the Partners.
1.4 Term of Partnership. The Partnership shall become effective upon the execution of this Agreement and shall remain effective until the Partnership is dissolved pursuant to the Code.
1.3 Records. The Partnership shall keep complete and accurate records of Partnership transactions. All records of the Partnership will be maintained at the principal office. Any Partner shall have the right at any time to inspect and copy the records of the Partnership.
Whenever used in this Agreement, the terms set forth below shall be defined as follows:
2.9 “Partner” or “Partners” shall mean all Persons designated as a Partner on Exhibit “A” and any successor Partners pursuant to the terms of this Agreement.
2.11 “Partnership Property” shall mean that property, real, personal, or mixed, tangible or intangible, or an interest in that property, which is contributed to or acquired by the Partnership.
3.1 Purposes of the Partnership. The purposes of the Partnership shall be (a) to own, hold, sell, develop, lease, dispose of, exchange, convert, manage, exercise voting rights with respect to, and otherwise exercise all of the rights, duties and obligations of an owner of the Partnership Property; (b) to reinvest, in any manner and in any real or personal property which the Partners deem appropriate, all proceeds derived from the Partnership Property; (c) to invest the Partnership Property in any manner deemed reasonable by the Partners, in any real or personal property; and (d) to conduct any other business or make any investment which a partnership may make without violating the Code or any other applicable law. Without limiting the generality of the foregoing, the purposes of the Partnership shall specifically include _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.
5.1 Profits and Losses. Profits or Losses for any fiscal year shall be allocated among the Partners in proportion to their ownership interests in the Partnership, unless a different allocation is agreed to in writing by all of the Partners.
5.2 Fiscal Year and Annual Accounting. The Partnership fiscal year shall be the calendar year. The Partnership books shall be kept on the cash receipts and disbursements method of accounting or in accordance with generally accepted accounting principles, at the discretion of the Partners. The Partnership shall furnish to the Partners, on a quarterly basis, accounting reports reflecting Partnership income and expenses. In addition, the Partnership shall provide the Partners with the full annual Partnership tax return for the preceding year in a timely manner to comply with all Code reporting deadlines.
6.3 Tax Distributions. If for any Partnership Year, the Partnership reports taxable income (including gains from the disposition of Partnership Assets), the Partners shall cause the Partnership to distribute Distributable Cash in amounts sufficient to pay the federal income tax liability of each Partner associated with the Partnership’s taxable income. Such distribution shall be made to the Partners in proportion to the taxable income allocated to them in accordance with the provisions of this Agreement and shall be in an amount equal to the taxable income so allocated multiplied by the maximum rate of federal income tax imposed upon individuals under the Code at the time such allocation is made.
POWERS, RIGHTS AND DUTIES OF PARTNERS
7.1 Time Devoted to Partnership Business. The Partners shall not be required to devote full time to the affairs of the Partnership, but shall diligently and faithfully devote whatever time, effort, and skill may be necessary for the conduct of the Partnership’s business, and shall perform all of the duties of a Partner which are provided for in this Agreement and the Code.
7.2 Management. At any time, 80% of the then outstanding ownership interest of the Partners may appoint a Partner as Managing Partner. The Managing Partner shall serve until the designation is revoked, until such Managing Partner is removed by vote of 51% of the then outstanding ownership interest of the Partners, or until the Managing Partner ceases to serve for any other reason. If a Managing Partner is designated, the Managing Partner is authorized and directed to manage and control the assets and the business of the Partnership. The Managing Partner may exercise all of the powers which could be exercised by majority-in-interest of the Partners, subject to the limitations described in sections 7.4 and 7.5 of this Agreement. It is understood and agreed that the Managing Partner shall consult and confer with the Partners before taking any steps resulting in any substantial change in the operation or policies of the Partnership affairs, or the sale of any portion of the Partnership assets other than in the usual course of business, or in any manner which affects the Partnership business in a manner judged unusual by the Partners in the ordinary operation of the Partnership business. If a Managing Partner is serving as such, any reference to “Partner” or “Partners” in this Agreement shall also include “Managing Partner” if applicable.
7.3 Authority of Partners. Subject to the limitations of this Agreement, and to the duties, obligations and limitations imposed upon the Partners at law, the Partners shall manage the day-to-day operations of the Partnership. The Partners shall have the authority to take any action which the Partners believe in good faith to be in furtherance of the Partnership business and purposes and to exercise all rights and powers generally conferred by law in connection therewith. No Person dealing with the Partnership shall be required to inquire into, or obtain any consents or other documentation as to the authority of the Partners to take any such action or to exercise any such rights or powers. Specifically:
(a) The Partners shall have the right, power and authority on behalf of the Partnership:
(1) To receive and hold all Partnership Property in the name of the Partnership;
(2) To obtain and maintain such insurance as is deemed to be desirable and appropriate by the Partners;
(3) To open, maintain, and close bank accounts, brokerage accounts and checking accounts in the name of the Partnership, to designate and change signatories on such accounts, and to draw checks and other orders for the payment of monies;
(4) To engage accountants, attorneys and any and all other agents and assistants, both professional and non-professional, which may include the Partners, and to compensate them reasonably for services rendered;
(5) To collect all sums due to the Partnership;
(6) To prepare and file all tax returns of the Partnership and to make all elections for the Partnership thereunder;
(7) To the extent that funds of the Partnership are available therefor, to pay as they become due all debts and obligations of the Partnership;
(8) To vote and exercise all other rights available to the holder of any securities included in the Partnership Property; and
(9) To take any and all other action, including legal action, that the Partners deem necessary, appropriate or advisable in furtherance of the Partnership’s business and purposes.
(b) The Partners shall have the sole authority to manage, deal with, negotiate and contract with respect to, and convey the Partnership Property on behalf of the Partnership.
(c) The Partners shall act in good faith in the performance of the Partners’ obligations hereunder but shall have no liability or obligation to any other Partner or the Partnership for any decision made or action taken in connection with the discharge of the Partners’ duties hereunder if such decision or action is made or taken in good faith and in the exercise of due care in connection with the Partnership business.
(d) The Partners shall have the power to designate, from time to time, a depository of Partnership funds, and to draw upon the same for Partnership purposes.
(e) Any person dealing with the Partnership or the Partners may rely on a certificate signed by the Partners concerning:
(1) The identity of the Partners;
(2) The existence or nonexistence of any fact or facts that constitute conditions precedent to acts by the Partners or in any other manner germane to the business and affairs of the Partnership;
(3) The person or persons who are authorized to execute and deliver any instrument or document of the Partnership; or
(4) Any act or failure to act by the Partnership or concerning any other matter whatsoever involving the Partnership or any Partner.
7.4 Requirement of Unanimous Consent. The Partners shall not have the authority to enter into any of the following transactions without the unanimous consent of all the Partners:
(a) Terminate, liquidate and wind up the Partnership, except as otherwise provided in this Agreement;
(b) Admit additional or substitute Partners, except as otherwise provided in this Agreement;
(c) Do any act that would make it impossible to carry on the purposes of the Partnership and business of the Partnership;
(d) Engage in any business activity other than that which is consistent with the purposes of the Partnership;
(e) Amend this Agreement, except as otherwise provided in this Agreement.
7.5 Restrictions on Partners. The Partners will not have the authority to enter into any of the following transactions without the consent of 80% of the outstanding ownership interest of the Partners:
(a) Prior to the actual termination of the Partnership, sell substantially all of the Partnership Property in liquidation or cessation of business;
(b) Compromise any claim or dispute having an amount or value in issue in excess of 50% of the total value of the Partnership Property;
(c) Sell, assign, lease, exchange, convert or otherwise transfer or dispose of all or part of the Partnership Property;
(d) Mortgage, pledge, grant a security interest in, or incur, renew, or refinance any indebtedness of the Partnership;
(e) Confess a judgment against the Partnership;
(f) Do any act in violation of this Agreement; and
(g) Make, execute or deliver any assignments for the benefit of creditors.
7.6 Dissolution or Bankruptcy of a Partner. On the dissolution or bankruptcy of a Partner, such Partner and his, her or its successors shall thereafter have the status of a Transferee and shall receive distributions to which such Transferee is entitled.
7.7 Indemnification of the Partners. The Partners shall be jointly and severally indemnified and held harmless by the Partnership and by each other to the extent of each Partner’s individual ownership in the Partnership from and against any and all claims, demands, liabilities, costs, damages and causes of action of any nature whatsoever, arising out of or incidental to the management of the Partnership affairs or to any Persons acting as an employee while in the course of managing the Partnership affairs; provided, however, that no Partner shall be entitled to indemnification hereunder where the claim at issue is based upon any of the following:
(a) A matter entirely unrelated to such Partner’s management of the Partnership affairs.
(b) The proven gross negligence, misconduct, fraud or bad faith of such Partner.
(c) The proven breach by such Partner of any provisions of this Agreement.
The indemnification rights herein contained shall be cumulative of, and in addition to, any and all other rights, remedies, and resources to which the Partners, shall be entitled, whether pursuant to some other provisions of this Agreement, at law or in equity.
MANAGEMENT FEES AND OTHER EXPENSES
8.1 Salary, Fees and Draws. Except as provided in this Article or by unanimous agreement of the Partners, no Partner shall receive any salary, fee, or draw for services rendered to or on behalf of the Partnership.
8.2 Expenses. In connection with the operation of the Partnership, the Partners shall be reimbursed for any direct expenses reasonably incurred in connection with the Partnership’s business; provided, however, that no such expense shall be incurred other than at a price which reflects a competitive market rate for such expense; and provided further, that no contract or arrangement entered into by a Partner on behalf of the Partnership with such Partner or an Affiliate shall be on terms less advantageous to the Partnership than that generally available from an unaffiliated third party. Without limiting the foregoing, the Partners may charge to the Partnership and pay or recover out of Partnership funds, as and when available, the following: all fees that may be required by applicable state or local authorities relating to the formation and operation of the Partnership or in compliance with the terms of this Agreement, including but not limited to, all filing fees for assumed name certificates, all reasonable expenses incurred by the Partners in connection with the organization and formation of the Partnership, all reasonable expenses incurred by the Partners to acquire, preserve, protect, or perfect the title to the Partnership Property or to operate and maintain such property, including, but not limited to, travel expenses, attorneys’ fees, accountants’ fees and court costs incurred in connection with such matters and any sums owed by the Partnership pursuant to any contract entered by the Partners pursuant to their authority under this Agreement; the cost of public liability insurance carried in connection with the business of the Partnership; taxes on property of the Partnership; principal and interest, and any other amounts whatsoever owing on any indebtedness of the Partnership, or any part hereof, or any instruments securing any of same, together with any expenses incurred in connection with renewing or rearranging such or any other indebtedness incurred for the benefit of the Partnership deemed necessary by the Partners; and normal closing costs reasonably incurred in the event of the lease, sale or other disposition of the Partnership Property.
TERMINATION AND WINDING UP PARTNERSHIP BUSINESS
10.1 Winding Up and Termination of Partnership. The Partnership shall continue after the occurrence of an event requiring winding up until the winding up of its business is completed, at which time the Partnership shall be terminated.
10.2 Conduct of Winding Up.
(a) The following Persons are authorized to wind up the business of the Partnership:
(1) First, the Partners who have not withdrawn may wind up the Partnership’s business;
(2) Second, the legal representative of the last surviving Partner may wind up the Partnership’s business; or
(3) any Person appointed by a court to carry out the winding up.
(b) To the extent appropriate for winding up, as soon as reasonably practicable, and in the name of and for and on behalf of the Partnership, a Person winding up the Partnership’s business may:
(1) prosecute and defend civil, criminal, or administrative suits;
(2) settle and close the Partnership’s business;
(3) dispose of and convey Partnership Property;
(4) satisfy or provide for the satisfaction of the Partnership’s liabilities;
(5) distribute to the Partners any remaining Partnership Property; and
(6) perform any other necessary act.
(c) A Person winding up the Partnership’s business may continue the business of the Partnership in whole or in part, including delaying the disposition of Partnership Property, but only for the limited period necessary to avoid unreasonable loss of the Partnership Property or business.
10.3 Partner’s Liability to Partnership For Incurring Inappropriate Liability After Occurrence of Event Requiring Winding Up. A Partner who, with notice that an event requiring a winding up has occurred, incurs a Partnership liability under section 10.04(b) by an act that is not appropriate for winding up the Partnership business shall be liable to the Partnership for a loss caused to the Partnership arising from that liability.
10.4 Partner’s Power to Bind Partnership After Occurrence of Event Requiring Winding Up. After the occurrence of an event requiring winding up, the Partnership shall be bound by a Partner’s act that:
(a) is appropriate for winding up the Partnership business; or
(b) would otherwise bind the Partnership before the occurrence of the event requiring winding up, if the other party to the transaction does not have notice that an event requiring winding up has occurred.
10.5 Rules for Distribution on Winding Up.
(a) In winding up the Partnership business, the Partnership Property, including the contributions of the Partners required by this section 10.5, shall be applied to discharge its obligations to creditors, including, to the extent permitted by other applicable law, Partners who are creditors other than in their capacities as Partners. Any surplus must be applied to pay in cash the net amount distributable to Partners in accordance with their right to distributions under subsection 10.5(b).
(b) Each Partner shall be entitled to a settlement of all Partnership accounts on winding up the Partnership business. In settling accounts among the Partners, the Partnership interest of a withdrawn Partner that has not been redeemed under Chapter 152, Subchapter H of the Code shall be credited with a share of any profits for the period after the Partner’s withdrawal but shall be charged with a share of losses for that period only to the extent of profits credited for that period, and the profits and losses that result from the liquidation of the Partnership Property shall be credited and charged to the Partners’ capital accounts. The Partnership shall make a distribution to each Partner in an amount equal to that Partner’s positive balance in the Partner’s capital account. Except as provided by section 152.304(b) or 152.801 of the Code, each Partner shall contribute to the Partnership an amount equal to that Partner’s negative balance in the Partner’s capital account.
(c) Except as provided by section 152.304(b) or 152.801 of the Code, to the extent not taken into account in settling the accounts among Partners under subsection 10.5(b) above:
(1) each Partner must contribute, in the proportion in which the Partner shares Partnership losses, the amount necessary to satisfy Partnership obligations, excluding liabilities that creditors have agreed may be satisfied only with Partnership Property without recourse to individual Partners;
(2) if a Partner fails to contribute, the other Partners shall contribute, in the proportions in which the Partners share Partnership losses, the additional amount necessary to satisfy the Partnership obligations; and
(3) a Partner or Partner’s legal representative may enforce or recover from the other Partners, or from the estate of a deceased Partner, contributions the Partner or estate makes to the extent the amount contributed exceeds that Partner’s or the estate’s share of the Partnership obligations.
(d) The estate of a deceased Partner shall be liable for the Partner’s obligation to contribute to the Partnership.
(e) The Partnership, an assignee for the benefit of creditors of the Partnership or a Partner, or a person appointed by a court to represent creditors of the Partnership or a Partner may enforce the obligation of a Partner or the estate of a deceased Partner to contribute to the Partnership.
11.1 Notices. Any notices required hereunder shall be sent to the Partners by personal service or by certified or registered mail, return receipt requested, at the address set forth for such parties, respectively, on Exhibit “A” of this Agreement. By giving to the Partnership and each Partner written notice thereof, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America. No transferee of any interest of any Partner shall be entitled to receive a notice independent of the notice sent to the Partner making such transfer.
11.2 Additional Instruments. Each Partner hereby agrees to execute all such agreements, certificates, tax statements, tax returns and other documents as may be required by law to effectuate the provisions contained herein.
11.6 Amendment. This Agreement may be amended or modified at any time only if all Partners agree to such amendment or modification in writing.
11.8 Meetings of the Partners. Meetings of the Partners may be called upon the written request of 51% of the then outstanding ownership interests of the Partners. Notice of any such meeting shall be given to all Partners not less than seven (7) business days nor more than thirty (30) business days prior to the date of such meeting and shall state the nature of any business to be transacted thereof. Partners may vote in person or by proxy at such meeting. Whenever the vote or consent of Partners is permitted or required under this Agreement, such vote or consent may be given at a meeting of Partners. Except as otherwise expressly provided in this Agreement, the vote of a majority in interest (at least 51% of the then outstanding ownership interest) of the Partners shall control. For the purpose of determining the Partners entitled to vote on, or to vote at, any meeting of the Partners or any adjournment thereof, the Partners requesting such meeting may fix, in advance, a date as the record date for any such determination. Such date shall not be more than thirty (30) business days nor less than ten (10) business days before any such meeting. Each Partner may authorize any Person or Persons to act for it by proxy on all matters in which a Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by the Partner or his, her or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable by the Partner executing it. Each meeting of the Partners shall be conducted by the Partners or such other Person as the Partners may appoint pursuant to such rules for the conduct of the meeting as the Partners or such other Person deem appropriate.
11.10 Counterparts. This Agreement may be signed in a number of counterparts, each of which shall be an original for all purposes, but all of which taken together shall constitute only one agreement. The production of any executed counterpart of this Agreement shall be sufficient for all purposes without producing or accounting for the other counterparts hereof.
11.16 Entire Agreement. The Agreements and representations in this Partnership Agreement contain all of the Agreements and representations of the parties hereto, and it is expressly provided that the Partners shall not be liable for any claim that may hereafter be made alleging any verbal agreement by and between the Parties hereto and the Partners, or any Partner’s agents, employees or associates.
THE Headings. The heading of each of the articles and sections of this Agreement are inserted for convenience only and shall not be considered in construing the terms of this Agreement.
EXECUTED in multiple counterparts, by the Partners on the date indicated opposite their respective signatures below, all effective on the date aforementioned.
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PARTNERSHIP AGREEMENT OF
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