A limited partnership is a modified partnership. It is half corporation and half partnership. This kind of partnership is a creature of State statutes. Many States have either adopted the Uniform Limited Partnership Act (ULPA) or the Revised Uniform Limited Partnership Act (RULPA). In a limited partnership, certain members contribute capital, but do not have liability for the debts of the partnership beyond the amount of their investment. These members are known as limited partners. The partners who manage the business and who are personally liable for the debts of the business are the general partners. A limited partnership can have one or more general partners and one or more limited partners. Under the ULPA, a limited partnership has to be created by executing a certificate which sets forth the name and business address of each partner, states which partners are general partners and which are limited partners, and states certain details about the partnership and the relative rights of the partners. This, of course, is not true in a general partnership. A general partnership is governed by a partnership agreement which is private and which may be oral or written. The Revised Uniform Limited Partnership Act is somewhat less restrictive as to what needs to be disclosed in this certificate. For example, the names of the limited partners are not required. The general partners manage the business of the partnership and are personally liable for its debts. Limited partners have the right to share in the profits of the business and, if the partner�ship is dissolved, will be entitled to a percentage of the assets of the partnership. A limited partner may lose his limited liability status if he participates in the control of the business.
Agreement to Form Limited Partnership Agreement made on this (date), between (Name of Prospective General Partner), of (street address, city, state, zip code), hereinafter referred to as PGP, and (Name of Limited Partner Alpha), of (street address, city, state, zip code), hereinafter sometimes referred to as LPA, (name of Limited Partner Beta), of (street address, city, state, zip code), hereinafter sometimes referred to as LPB, and Name of Limited Partner Zeta, of (street address, city, state, zip code), hereinafter referred to as LPZ. Whereas, PGP desires to commence a business of (description of business); and Whereas, PGP requires financial backing for his proposed business enterprise; and Whereas, LPA, LPB and LPZ all desire to invest in the business enterprise, and to limit their liabilities in the business to the amount of their investment; Now, therefore, for and in consideration of the matters described above, and of the mutual benefits and obligations set forth in this Agreement, the parties agree as follows: 1. Formation. Prospective partners shall create a Limited Partnership on or before (date), pursuant to the provisions of (citation of statute), and they shall execute a Certificate of Limited Partnership in the form attached as Exhibit A. They shall also perform all acts necessary to perform as a Limited Partnership. 2. Purpose and Duration. The purposes and duration of the Partnership shall be as provided in the attached Exhibit B. 3. Contribution. Prospective Limited Partners shall each pay to PGP $___________ in cash, in exchange for each having a _____% interest in the Limited Partnership. These contributions shall not be payable until after the business has been in operation for a period of (number) months. 4. Share of Business. Prospective Limited Partners shall each receive a present ____% interest in the business from the commencement of operation and continuously until the Limited Partnership shall be dissolved in accordance with this Agreement. Prospective Limited Partners shall each be entitled to ______% of the net profits of the business. The term net profits means the gross profits from the business less (i) ordinary and necessary business expenses paid in the conduct of the business; and (ii) a reasonable salary not to exceed $ _____________ per year for the personal services contributed by PGP. Business expenses that are to be deducted under (i), above, from the gross income, are the same as constitute allowable business expense deductions under federal income tax laws. 5. Profits and Losses. Profits referred to in the Section 4 shall be computed at the end of each calendar year, and the shares to which Prospective Limited Partners shall be entitled shall be paid to Prospective Limited Partners within (number) days after the end of the calendar year. 6. Additional Limited Partners. PGP shall have the right to take in (Number) of additional Prospective Limited Partners and to allow each additional Prospective Limited Partner to purchase a _______% interest in the Limited Partnership for $_____________. 7. Incorporation of Business. PGP shall have the right to incorporate the business, if, in his opinion, it is deemed advisable. If the business should be incorporated, then each Prospective Limited Partner shall receive a percentage of the corporate stock equal to that Partner's percentage interest in the net profits of the Partnership at the time it is incorporated. 8. Liability of Limited Partners. Prospective Limited Partners shall not be liable on any contracts made by PGP in the operation of the business, and shall not be liable for damages for which PGP shall become legally liable as arising out of the operation of the business. Prospective Limited Partners shall only be liable for losses suffered by the Limited Partnership in an amount equal to their contribution to the Partnership. All losses sustained in excess of that amount shall be the separate liability of PGP. 9. Death of Limited Partner. The death of a Limited Partner during the term of the Partnership shall not operate to terminate this Agreement. In the event of the death of a Limited Partner during the term of this Agreement, General Partner shall have an option to purchase the interest of the deceased Limited Partner for ______% of the value of the Partnership business. The value of the Partnership business shall include (i) book value of the Partnership assets; (ii) accrued and undistributed profits; (iii) goodwill; and (iv) the market value of the Partnership business as a going business. The value of goodwill shall be determined as follows: (description of method). The above option given to General Partner may only be exercised for a
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