COMPENSATION
TO PARTNERS UPON
LIQUIDATION
OF CORPORATION
AGREEMENT
made ________________________ (Month & Day), ________ (Year), among the
following persons: _______________________________________
_______________________________________
_______________________________________
1.
Name and business. The parties hereby form a partnership under
the name of _________________________ to engage in the business heretofore
conducted by ____________________________, a ______________________ (State)
corporation in liquidation, and in such other businesses as the parties may
agree upon. The office of the partnership shall be located in
_________________________________________________
2. Term. The partnership shall begin on ________________________ (Month
& Day), ________ (Year), and shall continue until ________________________
(Month & Day), ________ (Year), and thereafter from year to year until
terminated as herein provided.
3.
Capital. The capital of
the partnership shall consist of all the assets, subject to all the
liabilities, of _______________________________________, to be transferred to
the partnership on ________________________ (Month & Day), ________ (Year),
as set forth in a balance sheet to be made as of the close of business on
________________________ (Month & Day), ________ (Year) and to be attached
hereto as Exhibit A. The initial
capital accounts of the partners shall be equivalent to the following interests
in the capital of the partnership:
___________________________________ ________ percent.
___________________________________ ________ percent.
___________________________________ ________ percent.
Each
partners capital account shall be determined and maintained throughout the term
of the partnership in accordance with the requirements of Section 704(b) of the
Internal Revenue Code of 1986, or its counterpart in any subsequently enacted
Internal Revenue Code (the Code), and any of the Treasury Regulations (the
Regulations) promulgated from time to time thereunder.
4.
Profit and loss. The net profits of the partnership shall be
divided and the net losses of the partnership shall be borne in the following
proportions:
___________________________________ ________ percent.
___________________________________ ________ percent.
___________________________________ ________ percent.
5.
No interest. The additional share of profits shall inure
to any partner by reason of his capital account being proportionately in excess
of the capital accounts of the others, except as provided in paragraph
_________.
6.
The profits and losses. The Profits and loss of the partnership
shall be determined in the manner in which the partnership reports its income
and expenses for federal income tax return purposes.
7.
Salaries and drawings. Each of the managing partners shall receive
$_________ per ______ as compensation for his services to the partnership. All salaries and commissions shall be
deducted from the net profits of the partnership, as an expense thereof, in
determining the partners distributive shares of the net profits. If during any year the salaries and
commissions paid shall exceed the net profits of the partnership, computed
without the deduction of such salaries and commissions, the excess shall be
treated as a loss of the partnership to be borne by the partners in the
proportions stated in paragraph 4. In
addition to the salaries herein before provided, and unless modified with the
consent of all the partners, each partner shall have a drawing account as
follows:
___________________________________ $___________ quarterly.
___________________________________ $___________ quarterly.
___________________________________ $___________ quarterly.
Any
amounts so withdrawn shall be charged against the respective partners
distributive share of the profits of the partnership business. Each partner shall have the right, at the
end of any accounting year, to withdraw the balance of his share of the
partnership profits for that year or any prior year. The share of partnership profits not withdrawn by any partner
shall be added to his capital account.
Notwithstanding the foregoing, no amount shall be withdrawn by any
partner if such drawing will impair his original capital account.
8.
Interest. Each partner shall be paid interest at the
rate of _____ percent per annum on the average balance in his capital account
during the immediately preceding accounting year, such payments to be made in
equal quarterly installments during the year, and to be charged as expenses of
the partnership business.
9.
Management, duties, and restrictions. The managing partners are as follows:
1.
__________________________________________________ (Name and Address)
2.
__________________________________________________ (Name and Address)
3.
__________________________________________________ (Name and Address)
10.
The responsibilities of each of the managing partners are as follows:
1.
_______________________________________________________________________
2. _______________________________________________________________________
3.
_______________________________________________________________________
No
partner shall, without the consent of the other partners, endorse any note, or
act as an accommodation party, or otherwise become surety for any person. Any managing partner shall have the right to
draw checks upon any bank account of the partnership, and to make, deliver, and
accept commercial paper in connection with the business of the partnership.
Except with the consent of all of the managing partners, no partner shall on
behalf of the partnership borrow or lend money, or make, deliver, or accept any
extraordinary commercial paper, or execute any mortgage, security agreement,
bond, or lease, or purchase or contract to purchase, or sell or contract to
sell any property for or of the partnership, other than the type of property
bought and sold in the regular course of its business. No partner shall, except with the consent of
the other partners, assign, mortgage, grant a security interest in, or sell his
share in the partnership or in its capital assets or property, or enter into
any agreement as a result of which any person shall become interested with him
in the partnership.
11.
Banking. All funds of the partnership are to be
deposited in its name in such checking account or accounts as shall be
designated by the managing partners.
12.
Books. The partnership books shall be maintained at
the principal office of the partnership, and each partner shall at all times
have access thereto. The books shall be
kept on a cash basis for a fiscal year commencing ________________________
(Month & Day), ________ (Year) and ending ________________________ (Month
& Day), ________ (Year) and shall be closed and balanced at the end of each
fiscal year. An audit shall be made as
of the closing date.
13.
Retirement. Any partner shall have the right to retire
from the partnership at the end of any fiscal year. Written notice of intention to retire shall be served upon the
other partners at the office of the partnership at least three months before
the end of the fiscal year. The
retirement of any partner shall have no effect upon the continuance of the
partnership business. The remaining
partners shall have the right either to purchase the retiring partners entire
interest in the partnership or to terminate and liquidate the partnership
business. If the remaining partners
elect to purchase the interest of the retiring partner, they shall serve notice
in writing of such election upon the retiring partner at the office of the
partnership within _______________ month(s) after receipt of his notice of
intention to retire. If a remaining
partner shall not elect to participate in the purchase of the retiring partners
interest, he shall serve written notice of his intention not to participate
upon the other partners at the office of the partnership within ___________
month(s) after the service of the voluntarily retiring partners notice of
intention to retire. Such non
participation notice shall be deemed to be an irrevocable notice of intention
to retire by the non-electing partner and a tender by him to the other partners
of his entire partnership interest which shall be subject to purchase by the
other partners upon the same terms and conditions applicable to the interest of
the partner giving voluntary notice of intention to retire.
(A) If the remaining partners elect to purchase
a retiring partners interest in the partnership, the percentages of purchase of
the retiring partners interest, the purchase price, and the method of payment
shall be the same as stated in paragraph 11 with reference to the purchase of a
decedents interest in the partnership.
(B) If the remaining partners do not elect to
purchase a retiring partners interest in the partnership, the managing partners
shall proceed with reasonable promptness to liquidate the business of the
partnership. The procedure as to
liquidation and distribution of the assets of the partnership business shall be
the same as stated in paragraph 11 with reference to termination in the event
of a partners death.
14.
Death. Upon the death of any partner, the surviving
partners shall have the right either to purchase the decedents entire interest
in the partnership or to terminate and liquidate the partnership business. If the surviving partners elect to purchase
the decedents interest, they shall serve notice in writing of such election,
within _______ month(s) after the death of the decedent, upon the executor or
administrator of the decedent, or, if at the time of such election no legal
representative has been appointed, upon any one of the known legal heirs of the
decedent at the last known address of such heir. If a surviving partner shall not elect to participate in the
purchase of the decedents interest, he/she shall serve written notice of his
intention not to participate upon the other surviving partners at the office of
the partnership within ______ month(s) after the death of the decedent. Such non participation notice shall be
deemed to be an irrevocable notice of intention to retire by the non electing
partner and a tender by him to the other partners of his entire partnership
interest which shall be subject to purchase by the other partners upon the same
terms and conditions applicable to the interest of the deceased partner.
(A) If the surviving partners elect to purchase
the decedents interest in the partnership, the purchase price shall be equal to
the decedents capital account as shown on the partnership books, increased by
his share of partnership profits or decreased by his share of partnership
losses (plus interest on capital in accordance with the provisions of paragraph
6) for the period from the beginning of the accounting year in which his death
occurred until the date of his/her death, and decreased by withdrawals during
such period. No allowance shall be made
for goodwill, trade name, patents, or other intangible assets, except as those
assets have been reflected on the partnership books immediately prior to the
decedents death. Each of the surviving
partners shall have the right to purchase a portion of the decedents
partnership interest in the proportion which his interest in the profits of the
partnership bears to the interest of the other surviving partners in the
profits of the partnership. The
purchase price shall be paid with interest at the rate of _______ percent per
annum in four semiannual installments beginning six months after the date of
death of the decedent. In the event of
the purchase of the interest of the decedent, the continuing partnership shall
have the right to use the firm name of the partnership.
(B) If the surviving partners do not elect to
purchase the decedents interest in the partnership, the surviving managing partners
shall proceed with reasonable promptness to liquidate the business of the
partnership. The surviving partners and
the estate of the deceased partner shall share in the profits and losses of the
business during the period of liquidation in the same proportions in which they
shared such profits and losses prior to the death of the decedent, except that
the decedents estate shall not be liable for losses in excess of the decedents
interest in the partnership at the time of his death; so long as any surviving
partner shall devote his full time to the liquidation of the partnership
business, he shall receive a salary at the same rate as he received immediately
prior to the decedents death. The proceeds of such liquidation shall be applied
in the following order of priority:
(I) To the payment of any debts and liabilities
of the partnership. (II) To the setting
up of any reserve which the partners shall reasonably deem necessary to provide
for any contingent or unforeseen liabilities or obligations of the
partnership. At the expiration of such
period of time as the partners shall deem advisable, the balance of such
reserve remaining after the payment of such contingency shall be distributed in
the manner hereinafter set forth (III) thereafter, the balance of the proceeds,
if any, shall be distributed in accordance with the positive capital account
balances of the partners, as determined after taking into account all capital
account adjustments for the partnership taxable year during which such
liquidation occurs, and shall be made by the end of such taxable year (or, if
later, within ninety (90) days after the date of such liquidation). For purposes of this subparagraph, a
liquidation of the partnership shall mean a liquidation as set forth in Section
1.704-1(b)(2)(II)(g) of the Regulations.
If,
following the liquidation of a partners interest in the partnership (within the
meaning of Treasury Regulations Section 1.704-1(b)(2)(II)(g) a partner has a
deficit balance in his capital account (as determined after taking into account
all adjustments to said capital account, including the adjustments for the year
during which such liquidation occurs), such partner shall be unconditionally
obligated to pay the amount of such deficit balance to the partnership by the
end of such taxable year (or, if later, within ____________ days after the date
of such liquidation), which amount shall be applied and distributed in
accordance with the provisions of this paragraph.
In
witness whereof the parties have signed this Agreement.
____________________________ ______________
Signature
Date
____________________________ ______________
Signature
Date
