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The Partnership Agreement is a legally binding document that establishes a partnership between Party 1, Party 2, and Party 3. The agreement outlines the purpose of the partnership, the roles and responsibilities of each party, and the management of the partnership. It also includes provisions for the capital contributions, profits and losses, and decision-making processes within the partnership.
The agreement begins with an interpretation section, which defines key terms used throughout the document. It clarifies the meaning of terms such as accounting period, affiliate, accounts, auditors, budget, business day, business plan, director, effective date, executive manager, partners, partnership board, partnership interest, percentage share, and capital account.
The agreement then proceeds to outline the commencement of the agreement, stating that it is effective from the effective date and will continue until terminated in accordance with the terms of the agreement.
Next, the document describes the business of the partnership, stating that it will be conducted in the best interests of the partnership on sound commercial profit-making principles. The partners are required to use all reasonable endeavors to implement the business plan and ensure its prompt and effective implementation.
The agreement also specifies the name of the partnership and the capital contributions of each partner. It states that each partner will make an initial contribution to the capital of the partnership, and their capital accounts will be credited accordingly. The percentage shares of the partners are determined based on their capital accounts.
Further finance provisions are included in the agreement, stating that each partner is obligated to contribute its percentage share of all funding required by the budget or as agreed by the partnership board. The partners may also agree on additional funding requirements, and all sums contributed will be credited to the relevant partner's capital account.
The agreement addresses the allocation of profits and losses, stating that they will be determined from the partnership's accounts and allocated to the partners in proportion to their percentage shares. Any surplus cash available to the partnership will be distributed to the partners based on their respective percentage shares.
The partnership board is responsible for the overall supervision of the business and has the authority to act on behalf of the partnership. It is composed of non-executive directors appointed by each partner. The chairperson and chief executive are also appointed by the partners.
The agreement outlines the procedures for partnership board meetings, including the quorum, notice requirements, and voting procedures. It also specifies certain reserved matters that require unanimity of the partners.
The executive management of the partnership is delegated to the chief executive, who is responsible for day-to-day operations. The chief executive is assisted by other executive managers, whose appointment and terms of reference are subject to the partnership board's approval.
The agreement addresses the ownership of partnership property, stating that it is beneficially owned by the partners in proportion to their percentage shares. Any property held by a partner on behalf of the partnership is held on trust for the partnership.
Undertakings by the partners are included in the agreement, stating that they shall not engage in any competing business during the term of the agreement. They are also obligated to promote the best interests of the partnership and act in good faith towards each other.
The agreement provides for the reimbursement of expenses incurred by the partners in the performance of their obligations. It also includes provisions for the preparation of accounts, budgets, and management reports.
Indemnities are included in the agreement, stating that each partner shall indemnify the other partner against any losses, damages, or liabilities arising from a breach of the agreement or any unauthorized actions.
The agreement addresses default and termination, stating that a partner may serve a notice requiring the defaulting partner to sell its partnership interest. The price of the partnership interest will be negotiated between the partners or determined by an independent firm of chartered accountants. The agreement also includes provisions for the assignment of partnership interests.
Confidentiality and announcements provisions are included, stating that the partners shall keep confidential all commercial and technical information and shall not make any announcements without the prior written approval of both partners.
The agreement includes provisions for notices, governing law, dispute resolution, counterparts, and no rights for third parties. It is signed by the duly authorized representatives of the parties as witnesses.
To use the Partnership Agreement, follow these steps:
1. Review the agreement: Familiarize yourself with the content and structure of the agreement.
2. Customize the agreement: Fill in the relevant information, such as the names and addresses of the parties, the name of the partnership, and the capital contributions of each partner.
3. Seek legal advice: Consult with a lawyer to ensure that the agreement complies with applicable laws and meets the specific needs of the partnership.
4. Sign the agreement: Have the agreement signed by the duly authorized representatives of the parties, as witnesses.
5. Keep a copy: Make sure to keep a copy of the signed agreement for your records.
6. Adhere to the terms: Follow the provisions of the agreement, including the obligations, decision-making processes, and allocation of profits and losses.
7. Review and update: Periodically review the agreement to ensure that it remains relevant and reflects any changes in the partnership.
Note: This guidance is for informational purposes only and should not be considered legal advice. It is recommended to consult with a lawyer for specific legal guidance related to the Partnership Agreement.