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);
Whereas, PGP requires financial backing for his proposed business enterprise;
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
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