This agreement establishes a limited partnership, a form of partnership established under state law, between one general partner and two limited partners. In limited partnerships, general partners have unlimited liability and are responsible for managing the partnership's business. Limited partners have the right to share in the profits of the limited partnership and they have limited liability, to the extent of their capital contribution to the partnership, but they do not take part in managing the partnership. This document sets forth the terms and conditions of the limited partnership and can be customized to fit the needs of the drafting parties.
This agreement establishes a limited partnership, a form of partnership established under state law, between one general partner and two limited partners. In limited partnerships, general partners have unlimited liability and are responsible for managing the partnership's business. Limited partners have the right to share in the profits of the limited partnership and they have limited liability, to the extent of their capital contribution to the partnership, but they do not take part in managing the partnership. This document sets forth the terms and conditions of the limited partnership and can be customized to fit the needs of the drafting parties. Agreement to Form a Limited Partnership Agreement made on (date), between (Name of General Partner), of (street address, city, state, zip code), hereinafter called General Partner, and (Name of Limited Partner Alpha), of (street address, city, state, zip code), hereinafter called Alpha, and (Name of Limited Partner Beta), of (street address, city, state, zip code), hereinafter called Beta. Whereas, General Partner desires to start a business of (describe business); and Whereas, General Partner needs financial backing for his proposed business; and Whereas, Alpha and Beta desire to invest in the business of General Partner, and to limit their liabilities in the business to the amount of their investment; Now, therefore, for and in consideration of the mutual covenants contained in this Agreement, and other good and valuable consideration, the parties agree as follows: 1. Formation of Limited Partnership The General Partner and the Limited Partners (Alpha and Beta) shall create a Limited Partnership on or before (date), pursuant to the provisions of the (name of state) Uniform Limited Partnership Act, and they shall execute a Certificate of Limited Partnership in the form attached as Exhibit A and made a part hereof by reference. They shall also perform all acts necessary to perform as a Limited Partnership in the state of (name of state). 2. Purpose and Duration The purposes and duration of the Partnership shall be to (describe in detail). 3. Contribution Alpha and Beta shall each pay to the General Partner the sum of $___________ as the initial capital contribution of each Limited Partner, 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 Alpha and Beta 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. Each such Limited Partner shall 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 General Partner. Business expenses that are to be deducted under (i), above, from the gross income, shall be the same as constitute allowable business expense deductions under federal income tax laws. © Copyright 2012 Docstoc Inc. registered document proprietary, copy not 2 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 the Limited Partners within (number) after the end of the calendar year. 6. Additional Limited Partners General Partner shall have the right to take in (number) of additional Limited Partners and to allow each additional Limited Partner to purchase a ______% interest in the Limited Partnership for $____________ cash. 7. Liability of Limited Partners Limited Partners shall not be liable on any contracts made by the General Partner in the operation of the business, and shall not be liable for damages for which General Partner shall become legally liable as arising out of the operation of the business. The 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 prospective General Partner. 8. Death of Limited Partner A. 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. B. 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. C. The value of goodwill shall be determined as follows: (describe method for determining value of goodwill). The above option given to General Partner may only be exercised for a period of (number) months after the death of a Limited Partner, by giving notice of the election to exercise the option to the personal representative of the deceased Limited Partner before the expiration of the (number)-month period. The personal representative shall be entitled to profits accrued to within (number) days of the payment of the purchase price for the Limited Partner's interest, and the payment shall be made within (number) months from the date of the death of the Limited Partner. 9. Books © Copyright 2012 Docstoc Inc. registered document proprietary, copy not 3 General Partner shall at all times keep accurate and complete books of account of the Partnership business, to which books prospective Limited Partners shall at all times have free and ready access. 10. Management General Partner shall have the sole and exclusive management and control of the conduct of the business, and shall at all times devote best efforts to the conduct of the Partnership business. 11. Severability The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision. 12. No Waiver The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. 13. Governing Law This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of (name of state). 14. Notices Unless provided herein to the contrary, any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement. 15. Attorney’s Fees In the event that any lawsuit is filed in relation to this Agreement, the unsuccessful party in the action shall pay to the successful party, in addition to all the sums that either party may be called on to pay, a reasonable sum for the successful party's attorney fees. 16. Mandatory Arbitration Notwithstanding the foregoing, and anything herein to the contrary, any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect. © Copyright 2012 Docstoc Inc. registered document proprietary, copy not 4 17. Entire Agreement This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement. 18. Modification of Agreement Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party. 19. Assignment of Rights The rights of each party under this Agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party. 20. Counterparts This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument. WITNESS our signatures as of the day and date first above stated. ________________________ _________________________ (Signature of Limited Partner) (Signature of Limited Partner) (Printed Name of Limited Partner) (Printed Name of Limited Partner) _____________________________ (Signature of General Partner) (Printed Name of General Partner) © Copyright 2012 Docstoc Inc. registered document proprietary, copy not 5
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