PARTNERSHIP AGREEMENT
This Partnership Agreement (the “Agreement”) is made effective as of ______________, 2o2o (the “Effective Date”) by and between David Rudy Russel Dvorak and Kim Marie Dvorak of California (the “Operating Partner”) and Eric G. Huff of San Bernardino CA (the “Silent Partner”), collectively known as the “Partners”
WHEREAS, the Partners desire to enter into a business partnership.
WHEREAS, the Silent Partner(s) showed an interest in joining the business venture silently and the Operating Partner(s) has accepted the partnership proposal:
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and conditions contained in this Agreement, the Partners to this Agreement agree to the following:
- PARTNERSHIP BUSINESS
The Silent Partner will invest cash at escrow and at all times that will be used to purchase and renovate the property. The property is located at 2006 N. Bush Street Santa Ana 92706 and it costs $ 1,025,000. RD & KD Properties LLC will be the owner. The business will be conducted in compliance with all applicable California laws.
- TERM
The Partnership shall commence on the purchase date and shall continue thereafter until lawfully terminated.
- CONTRIBUTIONS
The Partner(s) will make an initial contribution to the Partnership as follows:
- The Silent Partner will invest a sum of $ 175 k for the purchase and start of rehab, he will wire to escrow prior to close of escrow.
- Experienced Hard Money lender will contribute around $ 850 k to complete the purchase. The Hard Money Lender will provide $ 167 k rehab money using construction draw program, complete renovation and re-tenant with a goal of 6 to 9 months of purchase; this constitutes a stabilized property ready for refinance into a new conventional mortgage in the 3.5% to 4.5% range with refinance to attempt to some original cash/investment back.
- Center Street Lending will contribute up to $ 167,000 to complete the necessary renovations. The $ 167 k will be supplied as work is completed on a construction draw approach. The $ 167 k will be used to renovate the property at 8.5% interest only, 1.5 points, 1 year term, no prepayment penalty.
- ADDITIONAL CONTRIBUTIONS
In increments of $ 6,000, the Operating manager and the silent partner will contribute in a cash call situation in equal amounts to retain their current equity.
In the event, either partner cannot or will not contribute, the other partner may contribute or for every $ 6000 in excess of other partner contribution, that contributing partner will acquire an equity raise of 1%.
- DUTIES OF THE OPERATING PARTNER
The Operating Partner shall be responsible for the complete management, control, and policies related to the business’s operation and conduct, including all personnel, purchasing, sales, and contractual matters. The Operating partner will try refinance with a goal of having that completed from 5 months to 1 year after the purchase.
- DUTIES OF THE SILENT PARTNER
The Partners agree that the Silent Partner shall be “silent” in the Partnership. The Silent Partner shall not participate in or interfere in the Partnership operation and is not restricted from engaging in any other business or entering into any other partnerships.
The Silent Partner shall not be personally liable for any debts or other obligations of the Partnership.
- PROFITS AND LOSSES
Equity will be split on the following basis: RD & KD Properties LLC will get 70% while Eric Huff will get 30%. In addition, Eric Huff will get 30% cash flow monthly.
- LIMITED LIABILITY
Subject only to the provisions of the Uniform Limited Partnership Act applicable to the State, no Silent Partner shall have a personal liability of any kind for any debts, liabilities, or other obligations of the Partnership.
- BUY OUT
Either party may initiate, at any term during the Term or at any stage during the renovation and development of the property, discussions to buy out the other party’s interest, or to sell its own interest, to the other, or to sell both parties’ interests to a Third party. In the event either party initiates such discussions, both parties will negotiate such a buyout or sale, as the case may be, in good faith; provided, however, that neither party will be obligated to sell or buy any such interest.
- SETTLING DISPUTES
All partners enter into mediation before filing suit against any other Partner or the Silent Partnership for any dispute arising from this Agreement or Silent Partnership. Partners agree to attend one session of mediation before filing suit. If any Partner does not attend mediation or the dispute is not settled after one mediation session, the Partners are free to file suit. Any lawsuits will be under the jurisdiction of the state of California.
- DEATH OF A PARTNER
Death of a Silent Partner shall immediately authorize an accounting on the death of Silent Partner and a valuation of Silent Partner’s proportional share shall be made as soon as reasonable. The valuation shall be determined by an appraisal of Silent Partner’s share, excluding Silent Partner’s share of goodwill. In the event both Operating Partners die, Silent Partner shall immediately dissolve the Partnership and wind up operations. The proportionate share of the Partnership owed to the Operating Partner shall be paid to the Operating Partner’s estate.
In case of death of either Operating partner, the surviving operating partner will take up the role of Operating partner so that the project can continue to meet its set objectives.
- DISSOLUTION, TERMINATION, AND WINDING UP
The partnership shall be dissolved, either on the death of Partner or the bankruptcy of the Partnership, or the Partnership shall terminate at the Partnership term’s expiration. Within 30 days after a determination to dissolve or terminate is made, a procedure to wind up the partnership business shall be implemented, and winding up shall be completed within a reasonable time.
- ENTIRE AGREEMENT
Except as otherwise expressly provided in this Agreement, this Agreement contains the Partners’ entire agreement with respect to the terms and conditions of the Silent Partnership. It supersedes all prior agreements, certificates, and understandings, oral or otherwise, among Partners with respect to these matters.
- WAIVERS
Except as otherwise expressly provided in this Agreement, no purported waiver by any Partner of any breach by another Partner of any of his or her obligations, agreements, or covenants shall be effective unless made in writing subscribed by the Partner or Partners sought to be bound. No failure to pursue or elect any remedy with respect to any default under or breach of any provision of this Agreement shall be deemed to be a waiver of any subsequent default or breach of or any election of remedies available, nor shall the acceptance or receipt by any Partner of any money or other consideration due him under this Agreement, with or without knowledge of any breach under this Agreement, constitute a waiver of any provision of this Agreement concerning that or any other breach.
- SEVERABILITY
Each provision of this Agreement shall be considered to be severable. If for any reason, any provision or any part of a provision is determined to be invalid and contrary to any existing or future applicable law, the invalidity shall not impair the operation or affect those portions of this Agreement that are valid. Still, this Agreement shall be construed and enforced in all respects as if the invalid or enforceable provision or provisions had been omitted.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by all Partners in the manner prescribed by law as the Effective Date.
Signed this __________ day of ________________, 2020
Signature: _______________________
Name: ______________________
Operating Partner
Signature: __________________
Name: _________________________
Silent Partner
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