Silent Partner Agreement

SILENT PARTNER AGREEMENT

This Silent Partner Agreement (the “Agreement”) is effective [DATE],

BETWEEN: [GENERAL PARTNER NAME], (the “General Partner”), an individual with their main address located at OR a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at:

[COMPLETE ADDRESS]

AND: [SILENT PARTNER NAME], (the “Silent Partner”) an individual with their main address located at OR a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at:

[COMPLETE ADDRESS]

Collectively referred to as “Parties” or “Partners” and individually referred to as their respective names.

WHEREAS, the Silent Partner has shown an interest in joining the business venture silently and the General Partner has accepted this partnership proposal;

WHEREAS, the Partners desire to enter into this Silent Partner Agreement as the most advantageous business form for their mutual purposes;

WHEREAS, this Agreement sets forth in the terms and conditions as to how they shall be the Partners.

WHEREAS, the Partners hereto agree to form a partnership (the “Partnership”) under the laws of the [State/Province] of [STATE/PROVINCE].

NOW, THEREFORE THE PARTIES AGREE AS FOLLOWS:

NAME OF THE PARTNERSHIP

The business partnership will be known as [PARTNERSHIP NAME] (the “Partnership”). However, the business of the Partnership may be conducted, in compliance with all applicable laws, under any other name determined to be appropriate or advisable by the General Partner(s). The Partnership’s primary place of business will be [ADDRESS].

PURPOSE

Subject to the limitations set forth in this

greement, the purpose of the

artnership is to engage in the business of [PURPOSE OF BUSINESS]

FORMATION

AND TERM

By this Agreement

the Partners enter into a general Partnership in accordance with the laws of

[

STATE/PROVINCE

]

. The rights and obligations of the Partners shall be as stated in the Partnership Act of

[

STATE/PROVINCE

]

except as otherwise provided herein.

The Partnership shall commence on the Effective Date and shall continue thereafter until lawfully terminated.

INTERESTS IN CONTRIBUTION

No Partner’s contribution to the capital of the Partnership shall bear interest in his or her favor. All interest earned on any contribution shall be payable in its entirety to the Partnership capital account.

OWNERSHIP INTEREST IN THE PARTNERSHIP

General Partner:

[

SPECIFY

PERCENTAGE]

Silent Partner: [SPECIFY PERCENTAGE] %

The Partners’ authority will be defined by the following unless otherwise stated in the Agreement:

All decisions for contract or otherwise will be made based on a majority vote of percent of ownership among General Partners. Each Partner will have the authority based on their percent ownership outlined above in the Agreement.

CONTRIBUTION

The Silent Partner shall contribute [

SPECIFY

AMOUNT] to the Partnership via [

SPECIFY

MODE AND TIME].

DUTIES OF

GENERAL

PARTNER

The

General

Partner shall:

Provide

eadership;

Build an effective management team;

Manage the finances of the

artnership;

Recruit and retain staff

;

Ensure the firm deals effectively with risk management;

Deal with

artner issues;

Participate in the decision making on insurance and benefits;

Take an active role in people development;

Provide strategic planning and vision;

Be a catalyst for growth and expansion

DUTIES OF THE SILENT PARTNER

The Partners agree that the Silent Partner shall be “silent” in the Partnership. The Silent Partner(s) shall not participate in or interfere in the operation of the Partnership and are not restricted from engaging in any other business or from

entering

any other partnerships.

The Silent Partner(s) shall not be personally liable for any debts or other obligations of the Partnership.

The Silent Partner shall treat confidentially the existence and the contents of the

ilent

artner’s interests in accordance with the confidentiality regulations

PROFIT AND LOSS

All Partners, including the Silent Partner, shall share all items of income, gain, loss, deduction, or credit equally. Profits and losses shall be computed in accordance with generally accepted accounting principles, consistently applied.

LIMIT

ATION OF LIABILITY OF SILENT PARTNER

The

Silent Partner shall have the personal liability of any kind for any debts, liabilities, or other obligations of the Partnership.

PARTNER ACCOUNTS

A fixed capital account, a current account, a profit reserve account and a profit netting account shall be kept for the Silent Partner

The

ilent

artner’s contributions are fixed contributions which are entered in the fixed capital

account,

and which constitute the capital interests of the Silent Partner.

Withdrawable profit claims, withdrawals, interest on such account and other payment transactions between the Silent Partner

and the

General Partner

will be entered in the current accounts. The balances on the current accounts are liabilities and/or claims of the Silent Partner and of the

General Partner

. The accounts shall bear interest at a rate of

[PERCENTAGE]

% per annum calculated on an equated basis.

Non-withdrawable profit claims will be entered in the profit reserve accounts. The accounts shall bear interest at a rate

of [PERCENTAGE]

% per annum calculated on an equated basis. These accounts do not constitute liabilities of the

General Partner

. However, in the event of liquidation of the

General Partner

, they vest a claim for preferential payment and may be transferred only together with the

ilent

artner’s interest.

FISCAL YEAR

The fiscal year of the Agreement shall end on the [DAY] day of [MONTH] each year.

SALARIES

As compensation for his or her services in and to the Partnership business,

the Silent Partner

shall be entitled to such salaries as shall be determined unanimously by the Partners, keeping in mind the designation and responsibility of each Partner

AUDIT

Any of the Partners shall have the right to request an audit of the Partnership books. The cost of the audit shall be borne by the Partnership. The audit shall be performed by an accounting firm acceptable to all the Partners. Not more than one (1) audit shall be required by any or all of the Partners for any fiscal year.

ANNUAL REPORT

As soon as practicable after the close of each fiscal year, the

General Partner

shall furnish to

the

Silent Partner,

an annual report showing a full and complete account of the condition of the

Partnership

. This report shall consist of a

t least the following documents: A statement of all information as shall be necessary for the preparation of

the

Partners’ income or other tax returns

and

any

additional information that the

Silent Partner

may require.

TRANSFER OF PARTNERSHIP INTEREST

The

Partners shall not in any way voluntarily alienate their interest in the Agreement or its assets without the unanimous consent of the other Partner and without exercising the Rights of First Re

fusal

of the present Agreement. Any such prohibited transfer, if attempted, shall be void and without force or effect

RIGHT OF FIRST REFUSAL

If, at any time during the term of this Agreement, any Partner shall, in response to a bona fide offer to purchase all or part of its interest in the Partnership firm from a third party, desire to sell or otherwise dispose of such interest, it shall notify the other Partners in writing of the party to whom it desires to sell such interest and the price at which and the terms upon which it desires to sell the same, and the other Partners shall, within 30 days of receipt of the notice, notify the Selling Partner in writing whether it wishes to purchase such interest at the price and on the terms set forth in the notice. If the other Partner elects to purchase such interest, the Selling Partner shall be bound to convey, assign, or otherwise transfer such interest to the Interested Partner promptly thereafter at such price and on such terms. If the Interested Partner elects not to purchase such interest or fails to give notice of its intention within the 30-day period, the Selling Partner shall be free to convey, assign, or otherwise transfer such interest to the third party at a price not less than stated in the notice or on terms more favorable than those stated in the notice. Any conveyance by the Selling Partner to a third party shall be subject to the terms of this Agreement. If the Selling Partner shall not have so disposed of such interest to said third party within 90 days after receipt of notice that the Interested Partner elects not to exercise its right of first refusal or after expiration of that party's 30-day period within which to give notice, the provisions of this section shall again apply to the disposition by the Selling Partner of any such interest.

PROPRIETARY RIGHTS

The Partners hereby acknowledge and agree that the Property, including, without limitation, the Existing Contracts and all copyrights, trade secrets, know-how, patents, trademarks and all other intellectual property rights embodied therein (collectively, the "P

roprietary

ights

"), is and at all times shall be the property of the Partnership. The Partnership shall have the right to use and exploit the Proprietary Rights in all manner and media whatsoever, including, without limitation, as computer software, as laser discs, as CD-ROMs, in print form, in electronic media, in audio books and as consumer and other products.

The Partners hereby agree that, except as expressly permitted in this Agreement, they shall not at any time use, copy, disclose to any third party, license, transfer or otherwise exploit the Proprietary Rights in any manner whatsoever without the express written consent of all of the Partners, which consent may be withheld for any or no reason. Furthermore, the Partners hereby agree that they shall, at all times, maintain the confidentiality of the Proprietary Rights and the fact that Partnership is pursuing development of the Proprietary Rights, except as necessary to conduct the

usiness.

The Partners hereby agree that all copyrightable material generated or developed by the Partners or the Partnership in connection with the Proprietary Rights or otherwise pursuant to this Agreement are "works made for hire" and that such material shall, at all times, be the property of the Partnership

provided, however, that the

General

Partner may make individual exceptions to this policy in accordance with past practice. To the extent that any such copyrightable material may not, under applicable law, be considered "works made for hire," the Partners hereby assign, transfer and convey to the Partnership the ownership of all copyrights in such materials to the extent held by the Partners, without the necessity of further consideration, and the Partnership shall be entitled to obtain and hold in its own name all copyrights with respect to such materials. Furthermore, the Partners hereby transfer, convey, grant, assign and relinquish exclusively to the Partnership whatever right, title and interest in and to the Proprietary Rights that the Partners may have under any and all patent, copyright, trademark and trade secret laws, in perpetuity or for the longest period otherwise permitted by applicable law.

TITLE TO PARTNERSHIP PROPERTY

Title to all Partnership Property shall remain in the name of the Partnership. No Partner or group of Partners shall have any ownership interest in such Partnership Property in whole or in part.

DUTIES

No Partner shall engage in any business, venture or transaction, whether directly or indirectly, that might be competitive with the business of the Partnership or that would be in direct conflict of interest to the Partnership. Any potential conflicts of interest shall be deemed an Involuntary Withdrawal of the offending Partner and may be treated accordingly by the other Partner. A withdrawing Partner shall not carry on a similar business to the business of the Partnership within any established or contemplated market regions of the Partnership for a period of at least [

NUMBER OF

YEARS] years after the date of withdrawal.

No Partner shall do any act in contravention of this Agreement.

No Partner shall permit, intentionally or unintentionally, the assignment of express, implied or apparent authority to a third party that is not a Partner in the Partnership.

No Partner shall do any act that would make it impossible to carry on the ordinary business of the Partnership.

No Partner shall confess a judgment against the Partnership.

No Partner shall have the right or authority to bind or obligate the Partnership to any extent with regard to any matter outside the intended purpose of the Partnership.

Any violation of the above Forbidden Acts shall be deemed an Involuntary Withdrawal of the offending Partner and may be treated accordingly by the other Partner.

INDEMNIFICATION

All

artners shall be indemnified and held harmless by the Partnership from and against any and all claims of any nature, whatsoever, arising out of a Partner's participation in Partnership affairs. A Partner shall not be entitled to indemnification under this section for liability arising out of gross negligence or willful misconduct of the Partner or the breach by the Partner of any provisions of this Agreement.

LIABILITY

A Partner shall not be liable to the Partnership, or to any other Partner, for any mistake or error in judgment or for any act or omission done in good faith and believed to be within the scope of authority conferred or implied by this Agreement.

HEADINGS

Headings are inserted for the convenience of the Partners only and are not to be considered while interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine gender include the feminine gender and vice versa. Words in the neuter gender include the masculine gender and the feminine gender and vice versa.

SEVERABILITY

If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the Partners

’

intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable

and the remainder of the provisions of this Agreement shall in no way be affected, impaired or invalidated as a result.

MODIFICATIONS

Any modifications to the present Agreement shall be made after the written approval of all the Partners of the Partnership firm.

NOTICES

Any notices or delivery required here shall be deemed completed when hand-delivered, delivered by agent, or seven (7) days after being placed in the post, postage prepaid, to the Partners at the addresses contained in this Agreement or as the

arties may later designate in writing at the address provided by the Partners.

SUCCESSORS

This

greement shall be binding on and inure to the benefit of the respective successors, assigns, and personal representatives of the

arties, except to the extent of any contrary provision in this

greement.

GOVERNING LAW AND JURISDICTION

This

greement shall be construed and enforced in accordance with the laws of

[STATE/PROVINCE].

The Partners submit to the jurisdiction of the courts of

[STATE/PROVINCE]

for the enforcement of this Agreement or any arbitration award or decision arising from this Agreement

MEDIATION AND ARBITRATION

In the event a dispute arises out of or in connection with this Agreement, the Partners shall attempt to resolve the dispute through friendly consultation.

If the dispute is not resolved within a period of [

NUMBER OF

DAYS] days

then any or all outstanding issues may be submitted to mediation in accordance with any statutory rules of mediation. If mediation is not successful in resolving the entire dispute or is unavailable, any outstanding issues shall be submitted to final and binding arbitration in accordance with the laws of

[STATE/PROVINCE]

The arbitrator's award shall be final, and judgment may be entered upon it by any court having jurisdiction within

[STATE/PROVINCE].

TERMINATION

Either Partner shall have the right to terminate this

greement prior to the expiration of the term, provided written notice of intention to terminate is given to the other Partner at least 30 days prior.

ENTIRE AGREEMENT

This Agreement contains the entire

greement between the Partners. All negotiations and understandings have been included in this Agreement. Statements or representations which may have been made by any Partner to this Agreement in the negotiation stages of this Agreement may in some way be inconsistent with this final written Agreement. All such statements are declared to be of no value in this Agreement. Only the written terms of this Agreement shall bind the Partners.

BINDING EFFECT

This Agreement and the terms and conditions contained in this Agreement apply to and are binding upon the Partner's successors, assigns, executors, administrators, beneficiaries, and representatives.

IN WITNESS WHEREOF, the Parties have executed this Agreement on [DATE].

SIGNED, SEALED AND DELIVERED ON BEHALF OF SILENT PARTNER

Print Name and Title: _______________________________

Authorized Signature: _______________________________

Date: _____________________________________

SIGNED, SEALED AND DELIVERED ON BEHALF OF GENERAL PARTNER

Print Name and Title: _______________________________

Authorized Signature: ________________________________

Date: ______________________________________

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