Texas partnership agreement template

Texas Partnership Agreement

This Texas Partnership Agreement is made and entered into as of this [Date], by and among the following individuals, each residing at the address set forth opposite their name:

• [Partner 1 Name], residing at [Partner 1 Address], Contact: [Partner 1 Contact Information]
• [Partner 2 Name], residing at [Partner 2 Address], Contact: [Partner 2 Contact Information]
• [Partner 3 Name], residing at [Partner 3 Address], Contact: [Partner 3 Contact Information]

(Collectively, the “Partners”). The Partners desire to form a partnership for the purposes set forth below and agree to be bound by the terms and conditions of this Agreement.

1. Formation of Partnership

• The Partners hereby form a partnership under the laws of the State of Texas.
• The name of the partnership shall be [Partnership Name].
• The principal place of business of the Partnership shall be located at [Partnership Address].

2. Type of Partnership

• Option A: General Partnership
• Option B: Limited Partnership. If selected, the Partnership shall comply with all applicable requirements of the Texas Business Organizations Code (BOC).
  • [Name of General Partner] shall serve as the general partner.
• Option C: Limited Liability Partnership (LLP). If selected, the Partnership shall comply with all applicable requirements of the Texas Business Organizations Code (BOC), including filing a registration statement with the Texas Secretary of State.

3. Purpose and Scope of Business

• The purpose of the Partnership is to engage in the business of [Description of Business]. The scope of the business shall include all activities reasonably related or incidental to the foregoing.
• The Partnership is authorized to engage in any lawful business activity in the State of Texas.

4. Effective Date and Duration

• Option A: Effective Date: This Agreement shall become effective as of [Effective Date].
• Option B: Effective Date: Upon the filing of a statement of qualification as a limited liability partnership with the Texas Secretary of State.
• Option A: Duration: The Partnership shall continue for an indefinite term.
• Option B: Duration: The Partnership shall continue for a fixed term of [Number] years, commencing on the Effective Date, unless earlier terminated as provided herein.
  • Renewal: Upon expiration of the fixed term, the Partnership may be renewed upon the written agreement of all Partners.

5. Capital Contributions

• Each Partner shall contribute to the capital of the Partnership the following:
  • [Partner 1 Name]: [Amount or Description of Contribution]
  • [Partner 2 Name]: [Amount or Description of Contribution]
  • [Partner 3 Name]: [Amount or Description of Contribution]
• Option A: Cash Contributions
  • All cash contributions shall be made by [Date].
• Option B: Non-Cash Contributions
  • Any non-cash contribution shall be valued at its fair market value as of the date of contribution, as determined by [Method of Valuation].
• Option C: Additional Contributions
  • No Partner shall be required to make additional capital contributions unless otherwise agreed in writing by all Partners.
  • If additional contributions are required, each Partner shall contribute in proportion to their percentage of ownership interest.
• Capital Accounts: A separate capital account shall be maintained for each Partner.

6. Ownership Interest, Profits and Losses

• Each Partner's percentage of ownership interest in the Partnership is as follows:
  • [Partner 1 Name]: [Percentage]%
  • [Partner 2 Name]: [Percentage]%
  • [Partner 3 Name]: [Percentage]%
• Option A: Profits and losses shall be allocated among the Partners in proportion to their respective percentage of ownership interests.
• Option B: Profits and losses shall be allocated as agreed upon in writing by all partners.
• Option C: Profits and losses shall be allocated in proportion to their capital contributions.
• Distributions: Distributions of Partnership profits shall be made to the Partners [Frequency, e.g., quarterly, annually].
• Reserve Funds: The Partnership may establish reasonable reserve funds for working capital, contingencies, and other purposes as determined by the managing partner(s).

7. Management and Decision Making

• Option A: Management by All Partners: All Partners shall participate in the management and control of the Partnership.
  • Each Partner shall have equal voting rights.
  • Decisions shall be made by a [Majority/Supermajority] vote of the Partners.
• Option B: Appointment of Managing Partner(s): The Partners hereby appoint [Name(s)] as the managing partner(s) of the Partnership.
  • The managing partner(s) shall have the authority to make day-to-day decisions on behalf of the Partnership.
  • Specific limitations on the authority of the managing partner(s): [List Limitations].
• Meetings: Meetings of the Partners shall be held [Frequency].
  • Quorum: A quorum shall consist of [Number or Percentage] of the Partners.
• Dispute Resolution: Any disputes among the Partners regarding management decisions shall be resolved by [Method of Dispute Resolution, e.g., mediation, arbitration].

8. Transfer of Partnership Interests

• No Partner may sell, assign, transfer, or otherwise dispose of their interest in the Partnership without the prior written consent of all other Partners.
• Option A: Right of First Refusal: The other Partners shall have a right of first refusal to purchase the interest of any Partner desiring to transfer their interest.
  • The purchase price shall be determined by [Method of Valuation].
• Option B: Buyout Rights: Upon the withdrawal or retirement of a Partner, the remaining Partners shall have the right to purchase the withdrawing Partner's interest.
• Admission of New Partners: New partners may be admitted to the Partnership upon the written consent of all existing Partners.
  • The terms and conditions of admission shall be determined by the existing Partners.
• Expulsion of a Partner: A Partner may be expelled from the Partnership for cause, as determined by a [Majority/Supermajority] vote of the other Partners.
  • Cause shall include [Definition of Cause].

9. Duties and Standard of Care

• Fiduciary Duties: Each Partner owes a fiduciary duty of loyalty and care to the Partnership and the other Partners. These duties are those imposed by Texas law.
• Option A: Outside Business Activities: Partners may engage in outside business activities that do not directly compete with the Partnership's business.
• Option B: Outside Business Activities: Partners may not engage in any outside business activities without the prior written consent of all other Partners.
• Conflicts of Interest: Partners shall disclose any potential conflicts of interest to the other Partners.
• Standard of Care: Each Partner shall exercise reasonable care and diligence in the conduct of the Partnership's business.
• Limitation on Fiduciary Duties: To the extent permitted by the Texas Business Organizations Code, the Partners may modify or limit the fiduciary duties owed to the Partnership and each other by express agreement in this document. [Specific limitations or modifications].

10. Partner Compensation

• Option A: Distributions: Partners shall receive distributions of Partnership profits as set forth in Section 6.
• Option B: Guaranteed Payments: Partners shall receive guaranteed payments in the amount of [Amount] per [Time Period].
  • Guaranteed payments shall be treated as an expense of the Partnership.
• Reimbursement of Expenses: Partners shall be reimbursed for reasonable expenses incurred in connection with the Partnership's business.
• Special Compensation: [Description of any special compensation arrangements].

11. Tax Matters

• Allocation of Tax Liabilities: Taxable income and losses of the Partnership shall be allocated among the Partners in the same proportion as profits and losses are allocated under Section 6.
• Fiscal Year: The fiscal year of the Partnership shall be [Fiscal Year].
• Tax Matters Partner/Partnership Representative: [Name] is hereby designated as the Tax Matters Partner/Partnership Representative for the Partnership.
  • This individual will fulfill the obligations as required under the Internal Revenue Code.
• Cooperation in Tax Filings: The Partners shall cooperate in the preparation and filing of all required tax returns.
• Texas Franchise Tax: The Partnership will comply with all applicable Texas franchise tax requirements.

12. Dispute Resolution

• Option A: Negotiation: The Partners shall attempt to resolve any disputes through good faith negotiation.
• Option B: Mediation: If negotiation fails, the Partners shall submit the dispute to mediation.
  • The mediation shall be conducted in [City, State].
• Option C: Arbitration: If mediation fails, the Partners shall submit the dispute to binding arbitration.
  • The arbitration shall be conducted in accordance with the rules of the American Arbitration Association.
  • The arbitration shall be conducted in [City, State].
• Option D: Litigation: Any disputes not resolved through negotiation, mediation, or arbitration shall be resolved in the courts of the State of Texas.
  • Venue: Exclusive venue for any litigation shall be in [County, Texas].
• Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of Texas.
• Attorney Fees: The prevailing party in any dispute shall be entitled to recover their reasonable attorney fees and costs.

13. Dissolution and Winding-Up

• Events of Dissolution: The Partnership shall dissolve upon the occurrence of any of the following events:
  • The death, bankruptcy, or withdrawal of a Partner.
  • The agreement of all Partners.
  • The sale of substantially all of the Partnership's assets.
  • Other Contingencies: [List other contingencies].
• Procedure for Dissolution: Upon dissolution, the Partners shall wind up the affairs of the Partnership in accordance with the Texas Business Organizations Code.
• Priority of Claims: The assets of the Partnership shall be distributed in the following order of priority:
  • To creditors of the Partnership.
  • To Partners in repayment of loans made to the Partnership.
  • To Partners in repayment of capital contributions.
  • To Partners in proportion to their percentage of ownership interests.
• Liquidation: The assets of the Partnership shall be liquidated in a commercially reasonable manner.

14. Indemnification and Liability

• Indemnification: The Partnership shall indemnify and hold harmless each Partner from and against any and all losses, damages, liabilities, costs, and expenses (including attorney fees) arising out of or in connection with the Partnership's business.
• Liability: No Partner shall be liable to the other Partners for any act or omission taken in good faith and in the best interests of the Partnership.
• Insurance: The Partnership shall maintain adequate insurance coverage to protect its assets and business.
• Limitation of Liability: To the fullest extent permitted by law, a partner will not be liable to the partnership or the other partners for monetary damages for a breach of the partner's duties, including fiduciary duties, to the partnership. [Specify any further limitations or qualifications, consistent with Texas law].

15. Confidential Information

• Definition of Confidential Information: Confidential Information shall include any information relating to the Partnership's business, finances, customers, or employees that is not publicly available.
• Protection of Confidential Information: Each Partner shall maintain the confidentiality of the Partnership's Confidential Information.
• Assignment of Intellectual Property: Any intellectual property created by a Partner in connection with the Partnership's business shall be owned by the Partnership.
• Publicity Restrictions: No Partner shall make any public statements about the Partnership without the prior written consent of all other Partners.

16. Texas-Specific Provisions

• Compliance with Texas Business Organizations Code: This Agreement is intended to comply with the Texas Business Organizations Code (BOC).
• Registered Agent/Texas Business Address: The Registered Agent and Texas business address of the partnership shall be: [Registered Agent Name], [Registered Agent Address]. (If applicable).
• Texas Courts Exclusive Venue: Any lawsuit brought to enforce any term of this agreement, or for the breach of any term of this agreement, shall be brought and maintained exclusively in a court of competent jurisdiction in [County], Texas. (Optional venue clause).
• Optional Limitation of Fiduciary Duties: To the extent allowed by the Texas Business Organizations Code, the parties agree to the following limitations on fiduciary duties: [Specific limitations].
• Texas Events of Withdrawal: In addition to standard events of withdrawal, a partner's withdrawal can be triggered by judicial determination as specified under Texas law.

17. General Provisions

• Amendment: This Agreement may be amended only by a written instrument signed by all Partners.
• Notices: All notices and communications under this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally, sent by certified mail, or sent by email to the addresses set forth in this Agreement.
• Severability: If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall remain in full force and effect.
• Entire Agreement: This Agreement constitutes the entire agreement among the Partners with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral.
• Waiver: No waiver of any provision of this Agreement shall be effective unless in writing and signed by the party against whom the waiver is sought to be enforced.
• Force Majeure: No Partner shall be liable for any failure to perform their obligations under this Agreement to the extent that such failure is caused by a force majeure event.
• Execution in Counterparts: This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Texas Partnership Agreement as of the date first written above.

[Partner 1 Name]

[Partner 2 Name]

[Partner 3 Name]