Hawaii Limited Partnership Agreement

LIMITED PARTNERSHIP AGREEMENT

OF

[________________________________]

A HAWAII LIMITED PARTNERSHIP

Date of Agreement: [__/__/____]

Effective Date: [__/__/____]

THIS LIMITED PARTNERSHIP AGREEMENT (this "Agreement") is entered into as of the Effective Date set forth above, by and among the parties identified herein as General Partner(s) and Limited Partner(s), and is governed by the Hawaii Uniform Limited Partnership Act, Hawaii Revised Statutes ("HRS") Chapter 425E, as amended from time to time (the "Act").

RECITALS

WHEREAS, the parties hereto desire to form a limited partnership (the "Partnership") under the laws of the State of Hawaii pursuant to the Hawaii Uniform Limited Partnership Act, HRS Chapter 425E;

WHEREAS, a Certificate of Limited Partnership shall be executed and delivered to the Director of the Department of Commerce and Consumer Affairs ("DCCA"), Business Registration Division ("BREG"), for filing in accordance with HRS § 425E-201;

WHEREAS, each General Partner shall have unlimited joint and several liability for all obligations of the Partnership pursuant to HRS § 425E-404, and each Limited Partner's liability shall be limited as provided by the Act;

WHEREAS, the parties desire to set forth their respective rights, duties, obligations, and liabilities as partners of the Partnership, and the terms and conditions governing the activities, management, and dissolution of the Partnership;

WHEREAS, this Agreement is entered into with the understanding that Hawaii's unique geographic, cultural, and economic characteristics may affect the conduct of the Partnership's business;

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I: DEFINITIONS

Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

(a) "Act" means the Hawaii Uniform Limited Partnership Act, HRS Chapter 425E, as amended from time to time.

(b) "Adjusted Capital Account" means, with respect to any Partner, such Partner's Capital Account balance as of the end of the relevant fiscal year or other period, after giving effect to the following adjustments: (i) credit to such Capital Account any amounts that such Partner is obligated to restore or is deemed obligated to restore under Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (ii) debit to such Capital Account the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6).

(c) "Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" means the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

(d) "Agreement" means this Limited Partnership Agreement, as amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof.

(e) "Assignee" means a transferee of a Transferable Interest who has not been admitted as a Partner.

(f) "Business Day" means any day other than a Saturday, Sunday, or state or federal holiday observed in the State of Hawaii.

(g) "Capital Account" means the capital account maintained for each Partner in accordance with Section 4.4 of this Agreement and applicable Treasury Regulations.

(h) "Capital Contribution" means any contribution of cash, property, services rendered, a promissory note, or other obligation to contribute cash or property, or a contract for services to be performed, that a Person makes or is obligated to make to the Partnership as a partner, as reflected in the Partnership records.

(i) "Certificate" means the Certificate of Limited Partnership filed with the DCCA pursuant to HRS § 425E-201, as amended from time to time.

(j) "Code" means the Internal Revenue Code of 1986, as amended.

(k) "DCCA" means the Hawaii Department of Commerce and Consumer Affairs.

(l) "Dissociation" means the dissociation of a Person as a Partner, as described in HRS § 425E-601 (for general partners) or HRS § 425E-601.5 (for limited partners).

(m) "Distributable Cash" means, as of the date of determination, the amount of cash on hand or in accounts of the Partnership that the General Partner, in the General Partner's reasonable discretion, determines is available for distribution to the Partners after payment or adequate provision for (i) all current operating expenses, (ii) all outstanding debts and liabilities, (iii) such reserves as the General Partner deems reasonably necessary for contingencies, working capital, capital improvements, or other proper Partnership purposes.

(n) "Economic Interest" means a Partner's or Assignee's share of the Partnership's Profits, Losses, and distributions of the Partnership's assets pursuant to this Agreement and the Act, but shall not include any right to participate in the management or activities of the Partnership.

(o) "Fiscal Year" means the fiscal year of the Partnership as determined under Section 9.1.

(p) "General Partner" means any Person named as a general partner in Schedule A attached hereto, and any Person admitted as a general partner of the Partnership in accordance with this Agreement, in such Person's capacity as a general partner of the Partnership.

(q) "Limited Partner" means any Person named as a limited partner in Schedule A attached hereto, and any Person admitted as a limited partner of the Partnership in accordance with this Agreement, in such Person's capacity as a limited partner of the Partnership.

(r) "Majority in Interest" means Partners holding, in the aggregate, more than fifty percent (50%) of the total Partnership Interests entitled to vote on the matter in question.

(s) "Net Profits" and "Net Losses" mean, for each Fiscal Year or other applicable period, an amount equal to the Partnership's taxable income or loss for such year or period, determined in accordance with Section 703(a) of the Code, with certain adjustments as provided in Section 4.1.

(t) "Partner" means any General Partner or Limited Partner.

(u) "Partnership" means the limited partnership formed pursuant to this Agreement and the Act.

(v) "Partnership Interest" means a Partner's entire interest in the Partnership, including such Partner's Transferable Interest, right to vote, and all other rights and obligations under this Agreement and the Act.

(w) "Percentage Interest" means, with respect to any Partner, the percentage set forth opposite such Partner's name on Schedule A, as adjusted from time to time in accordance with this Agreement.

(x) "Person" means any individual, partnership, limited liability company, corporation, trust, estate, association, or other entity, as defined in HRS § 425E-102.

(y) "Principal Office" means the office of the Partnership designated as such pursuant to Section 2.3.

(z) "Transfer" means any sale, assignment, transfer, exchange, mortgage, pledge, hypothecation, encumbrance, or other disposition, whether direct or indirect, voluntary or involuntary, by operation of law or otherwise.

(aa) "Transferable Interest" means a partner's share of the distributions of the Partnership, as described in HRS § 425E-701.

(bb) "Treasury Regulations" means the regulations promulgated by the United States Department of the Treasury under the Code, as amended from time to time.

ARTICLE II: FORMATION AND ORGANIZATION

Section 2.1 Formation. The Partnership is hereby formed as a Hawaii limited partnership pursuant to the provisions of the Act. The General Partner shall execute and deliver a Certificate of Limited Partnership to the Director of the DCCA for filing in accordance with HRS § 425E-201. The Certificate shall state:

(a) The name of the limited partnership, which must contain the words "limited partnership" or the abbreviation "L.P." or "LP" as required by HRS § 425E-108;

(b) The complete mailing address of the Partnership's initial principal office, and if the street address differs from the mailing address, the street address;

(c) The name and complete street and mailing address of the Partnership's initial agent for service of process in Hawaii, as required by HRS § 425E-114;

(d) The name and complete street and mailing address of each general partner; and

(e) Whether the limited partnership is a limited liability limited partnership.

Section 2.2 Name. The name of the Partnership shall be:

[________________________________], LP

The General Partner may change the name of the Partnership at any time upon written notice to all Partners, provided that such name complies with the requirements of HRS § 425E-108. The Partnership name must contain the words "limited partnership" or the abbreviation "L.P." or "LP" and must be distinguishable upon the records of the DCCA from any other entity name registered or reserved in Hawaii.

Section 2.3 Principal Office. The principal office of the Partnership shall be located at:

[________________________________]
[________________________________]
[________________________________], Hawaii [____]

The General Partner may change the principal office at any time upon written notice to all Partners.

Section 2.4 Agent for Service of Process. The Partnership's agent for service of process in the State of Hawaii shall be:

Name: [________________________________]

Address: [________________________________]
[________________________________]
[________________________________], Hawaii [____]

The agent for service of process must be either (a) an individual who resides in Hawaii and whose business office is identical with the Partnership's designated office, or (b) a domestic or foreign corporation, limited liability company, or limited partnership authorized to transact business in Hawaii, as provided in HRS § 425E-114. The General Partner may change the agent for service of process from time to time in accordance with HRS § 425E-115.

Section 2.5 Purpose. The purpose of the Partnership shall be to:

[________________________________]
[________________________________]
[________________________________]

and to engage in any and all lawful activities incidental or related thereto as the General Partner may determine from time to time; provided, however, that the Partnership shall not engage in any activity that would cause the Partnership to be treated as an association taxable as a corporation for federal income tax purposes unless the General Partner obtains the prior written consent of a Majority in Interest of the Limited Partners.

Section 2.6 Term. The Partnership shall commence on the date the Certificate is filed with the DCCA (or such later date as specified in the Certificate) and shall continue in existence until dissolved in accordance with Article VIII of this Agreement and the Act.

Section 2.7 Filings and Compliance.

(a) The General Partner shall cause to be filed and published all certificates, notices, statements, and other instruments required by law for the formation and operation of the Partnership in the State of Hawaii and in any other jurisdictions in which the Partnership conducts business.

(b) The General Partner shall ensure timely filing of the annual report required by HRS § 425E-210 with the DCCA by December 31 of each year, together with the annual filing fee as prescribed by the DCCA (currently $15.00).

(c) The General Partner shall comply with the Hawaii Uniform Information Reporting provisions of HRS § 425E-210 and shall report any changes to the Partnership's information as required by the DCCA.

Section 2.8 Limited Liability Limited Partnership Election. The Partnership:

☐ Elects to be a limited liability limited partnership ("LLLP") in accordance with HRS § 425E-406, by including a statement to that effect in the Certificate. If the LLLP election is made, the name shall contain the words "limited liability limited partnership" or the abbreviation "L.L.L.P." or "LLLP."

☐ Does not elect to be a limited liability limited partnership.

If the LLLP election is made, the general partner obligations set forth in HRS § 425E-404 regarding joint and several liability for partnership obligations shall be modified in accordance with HRS § 425E-406, and a general partner shall not be personally liable, directly or indirectly, including by way of indemnification, contribution, assessment, or otherwise, for an obligation of the limited liability limited partnership solely by reason of being or acting as a general partner.

Section 2.9 Title to Partnership Property. All property owned by the Partnership, whether real or personal, tangible or intangible, shall be owned by the Partnership as an entity and no Partner shall have any individual ownership interest in any Partnership property. Title to any Partnership property may be held in the name of the Partnership or in such other name or names as the General Partner shall determine. A Partner's interest in the Partnership is personal property, regardless of the nature of the Partnership's property.

Section 2.10 No State Law Partnership. The Partners intend that the Partnership shall be treated as a partnership for federal and state income tax purposes and not as an association taxable as a corporation. No Partner shall take any action inconsistent with the express intent of the parties hereto.

ARTICLE III: CAPITAL CONTRIBUTIONS

Section 3.1 Initial Capital Contributions. Each Partner shall contribute to the capital of the Partnership the Capital Contribution set forth opposite such Partner's name on Schedule A attached hereto. Initial Capital Contributions shall be made in the following manner:

(a) Cash Contributions. Cash contributions shall be made by wire transfer of immediately available funds to the Partnership's designated bank account, or by certified or cashier's check, no later than [____] Business Days after the Effective Date of this Agreement.

(b) Property Contributions. Property contributions shall be valued at their agreed fair market value as of the date of contribution, as determined by agreement of the contributing Partner and the General Partner, or, if they are unable to agree, by an independent appraiser selected by the General Partner. The cost of such appraisal shall be borne by the Partnership. Contributions of property shall comply with HRS § 425E-501.

(c) Service Contributions. A Partner may contribute services to the Partnership, including the performance of services in the future. The nature, scope, and agreed value of such services shall be set forth on Schedule A.

(d) Promissory Notes. A Partner may contribute a promissory note or other obligation to make a future payment. A Partner's obligation to contribute money or other property or to perform services is not excused by the Partner's death, disability, or other inability to perform personally. If a Partner does not fulfill an obligation to make a contribution other than money, the Partner is obligated, at the option of the Partnership, to contribute money equal to the value of that portion of the contribution that has not been made, as provided in HRS § 425E-502.

Section 3.2 Additional Capital Contributions.

(a) No Partner shall be required to make additional Capital Contributions to the Partnership beyond such Partner's initial Capital Contribution as set forth on Schedule A, except as follows:

☐ Additional contributions may be required upon the affirmative vote of the General Partner and a Majority in Interest of the Limited Partners.

☐ Additional contributions may be required at the sole discretion of the General Partner, provided that no individual Limited Partner shall be required to contribute more than $[________________________________] in any twelve (12) month period.

☐ No additional contributions shall be required under any circumstances.

(b) Any call for additional Capital Contributions shall be made by written notice to all Partners at least [____] days prior to the date such contributions are due. Each Partner's share of any additional Capital Contribution shall be proportionate to such Partner's Percentage Interest unless otherwise agreed in writing by all Partners.

(c) If any Partner fails to make any required additional Capital Contribution within [____] days after the date such contribution is due, the General Partner may, in the General Partner's sole discretion, pursue one or more of the following remedies:

(i) Treat the defaulting Partner's Percentage Interest as diluted proportionally;

(ii) Permit the non-defaulting Partners to contribute the defaulting Partner's share on a pro rata basis and adjust Percentage Interests accordingly;

(iii) Charge interest on the unpaid amount at the rate of [____]% per annum from the due date until paid; or

(iv) Exercise any other remedies available under this Agreement, the Act, or applicable law.

Section 3.3 Capital Accounts. A separate Capital Account shall be established and maintained for each Partner in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv). Each Partner's Capital Account shall be:

(a) Increased by (i) the amount of any cash contributed by such Partner to the Partnership, (ii) the fair market value of any property contributed by such Partner to the Partnership (net of liabilities assumed by the Partnership or to which such property is subject), and (iii) such Partner's share of Net Profits and any items of income or gain specially allocated to such Partner; and

(b) Decreased by (i) the amount of any cash distributed to such Partner by the Partnership, (ii) the fair market value of any property distributed to such Partner by the Partnership (net of liabilities assumed by such Partner or to which such property is subject), and (iii) such Partner's share of Net Losses and any items of deduction or loss specially allocated to such Partner.

Section 3.4 No Interest on Capital. No Partner shall be entitled to receive interest on such Partner's Capital Contributions or Capital Account balance, except as otherwise specifically provided in this Agreement.

Section 3.5 Return of Capital. Except as otherwise provided herein or required by law, no Partner shall have the right to demand or receive the return of all or any portion of such Partner's Capital Contributions. A Partner's return of Capital Contribution shall occur only in accordance with the distribution provisions of this Agreement.

Section 3.6 Loans by Partners. Any Partner may, with the prior written consent of the General Partner, make loans to the Partnership. Any such loan shall bear interest at a rate agreed upon by the lending Partner and the General Partner and shall be evidenced by a written promissory note. No loan by a Partner shall constitute a Capital Contribution or entitle the lending Partner to any increase in such Partner's Percentage Interest.

ARTICLE IV: ALLOCATIONS AND DISTRIBUTIONS

Section 4.1 Allocation of Net Profits and Net Losses.

(a) Net Profits. Except as otherwise provided in this Article IV, Net Profits for each Fiscal Year (or other applicable period) shall be allocated among the Partners in the following order of priority:

(i) First, to the Partners in proportion to and to the extent of their respective shares of Net Losses previously allocated pursuant to Section 4.1(b) that have not been offset by prior allocations of Net Profits under this Section 4.1(a)(i);

(ii) Second, to the Partners in accordance with their respective Percentage Interests.

(b) Net Losses. Except as otherwise provided in this Article IV, Net Losses for each Fiscal Year (or other applicable period) shall be allocated among the Partners in the following order of priority:

(i) First, to the Partners in proportion to and to the extent of their respective positive Capital Account balances;

(ii) Second, to the General Partner.

Section 4.2 Special Allocations.

(a) Minimum Gain Chargeback. Notwithstanding any provision of this Agreement to the contrary, if there is a net decrease in Partnership minimum gain (as defined in Treasury Regulation Section 1.704-2(b)(2)) during any Fiscal Year, each Partner shall be allocated items of income and gain for such year (and, if necessary, for subsequent years) in an amount equal to such Partner's share of the net decrease in Partnership minimum gain, determined in accordance with Treasury Regulation Section 1.704-2(g).

(b) Partner Minimum Gain Chargeback. Notwithstanding any provision of this Agreement to the contrary (except Section 4.2(a)), if there is a net decrease in partner nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-2(i)(2)) attributable to a partner nonrecourse debt during any Fiscal Year, each Partner who has a share of such partner nonrecourse debt minimum gain shall be allocated items of income and gain for such year (and, if necessary, for subsequent years) in an amount equal to such Partner's share of the net decrease in partner nonrecourse debt minimum gain, determined in accordance with Treasury Regulation Section 1.704-2(i)(4).

(c) Qualified Income Offset. If any Partner unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, any deficit balance in such Partner's Adjusted Capital Account as quickly as possible.

(d) Nonrecourse Deductions. Nonrecourse deductions (as defined in Treasury Regulation Section 1.704-2(b)(1)) for any Fiscal Year shall be allocated among the Partners in accordance with their respective Percentage Interests.

(e) Partner Nonrecourse Deductions. Partner nonrecourse deductions (as defined in Treasury Regulation Section 1.704-2(i)(1)) for any Fiscal Year shall be allocated to the Partner who bears the economic risk of loss for the partner nonrecourse debt to which such deductions are attributable, in accordance with Treasury Regulation Section 1.704-2(i)(1).

(f) Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or Section 743(b) of the Code is required to be taken into account in determining Capital Accounts pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), the amount of such adjustment shall be treated as an item of gain or loss, as the case may be, and shall be specially allocated among the Partners in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Treasury Regulation section.

Section 4.3 Tax Allocations. For federal, state, and local income tax purposes, items of income, gain, loss, deduction, and credit shall be allocated among the Partners in the same manner as their corresponding "book" items are allocated under Sections 4.1 and 4.2, except as otherwise required by Section 704(c) of the Code and the Treasury Regulations thereunder.

Section 4.4 Distributions.

(a) Timing and Amount. Distributions of Distributable Cash shall be made at such times and in such amounts as the General Partner shall determine in the General Partner's reasonable discretion; provided, however, that distributions shall be made at least [________________________________] (e.g., quarterly, annually, or as specified).

(b) Distribution Waterfall. Distributions of Distributable Cash shall be made in the following order of priority:

(i) First, to all Partners in proportion to their respective Percentage Interests until each Partner has received cumulative distributions equal to such Partner's total Capital Contributions (the "Return of Capital");

(ii) Second, to all Partners in proportion to their respective Percentage Interests until each Partner has received a cumulative preferred return equal to [____]% per annum on unreturned Capital Contributions (the "Preferred Return");

(iii) Third, to the General Partner as an incentive allocation equal to [____]% of all remaining Distributable Cash (the "Carried Interest" or "Promote");

(iv) Fourth, the balance to all Partners in accordance with their respective Percentage Interests.

(c) Tax Distributions. Notwithstanding the foregoing, the General Partner shall use commercially reasonable efforts to cause the Partnership to distribute to each Partner, at least fifteen (15) days prior to each estimated tax payment due date, an amount sufficient to enable each Partner to satisfy such Partner's federal and Hawaii state income tax obligations arising from such Partner's allocable share of Partnership income (the "Tax Distribution"). For purposes of calculating Tax Distributions, the applicable tax rate shall be the highest combined marginal federal and Hawaii state income tax rate applicable to individuals for such period. Hawaii's individual income tax rates are among the highest in the nation, and Partners should plan accordingly.

(d) Limitations on Distributions. No distribution shall be made if, after giving effect to such distribution, the Partnership would be unable to pay its debts as they become due in the usual course of the Partnership's activities, as set forth in HRS § 425E-508.

(e) Withholding. The General Partner is authorized to withhold from distributions to any Partner amounts required to be withheld under federal, state, or local tax laws, including Hawaii income tax withholding for nonresident Partners. Amounts so withheld shall be treated as distributions to such Partner.

(f) Distributions in Kind. The General Partner may, in the General Partner's sole discretion, make distributions of Partnership property in kind. Any distribution in kind shall be valued at fair market value as of the date of distribution, and any gain or loss attributable to such property shall be allocated to the Partners as if the property had been sold at such fair market value.

ARTICLE V: MANAGEMENT AND OPERATIONS

Section 5.1 General Partner Authority. Each General Partner is an agent of the Partnership for the purposes of its activities. An act of a General Partner, including the signing of a document in the Partnership's name, for apparently carrying on in the ordinary course the Partnership's activities or activities of the kind carried on by the Partnership shall bind the Partnership, unless the General Partner did not have authority to act for the Partnership in the particular matter and the Person with whom the General Partner was dealing had notice of the restriction on the General Partner's authority, as provided in HRS § 425E-402. Without limiting the generality of the foregoing, the General Partner shall have the power and authority to:

(a) Acquire, hold, manage, improve, operate, sell, exchange, lease, mortgage, pledge, encumber, or otherwise deal with real and personal property, including real property situated in the State of Hawaii;

(b) Borrow money and, in connection therewith, execute and deliver promissory notes, mortgages, security agreements, and other instruments;

(c) Enter into, perform, and carry out contracts of any kind necessary or incidental to the Partnership's activities;

(d) Hire, supervise, and discharge employees, agents, contractors, and consultants;

(e) Open, maintain, and close bank accounts, investment accounts, and other financial accounts at institutions in Hawaii or elsewhere;

(f) File tax returns and make tax elections on behalf of the Partnership;

(g) Commence, defend, settle, or compromise lawsuits and other legal proceedings in any court of the State of Hawaii, any federal court in Hawaii, or any other jurisdiction;

(h) Purchase insurance for the Partnership, its assets, and its Partners, officers, and employees;

(i) Establish reserves for working capital, capital expenditures, debt service, taxes, insurance, and other Partnership obligations;

(j) Execute and file all documents, certificates, and instruments required by law or necessary for the operation of the Partnership, including the annual report required by HRS § 425E-210;

(k) Obtain and maintain all licenses, permits, and approvals required for the Partnership's activities under Hawaii law, including any required county permits;

(l) Comply with all applicable environmental laws and regulations, including Chapter 343, HRS (Environmental Impact Statements); and

(m) Do and perform all other acts as may be necessary or appropriate to the conduct of the Partnership's activities.

Section 5.2 Limitations on General Partner Authority. Notwithstanding Section 5.1, the General Partner shall not, without the prior written consent of a Majority in Interest of the Limited Partners, take any of the following actions:

(a) Sell, exchange, lease, or otherwise dispose of all or substantially all of the assets of the Partnership in a single transaction or series of related transactions;

(b) Merge or consolidate the Partnership with any other entity;

(c) Admit additional General Partners to the Partnership;

(d) Amend or modify this Agreement, except as provided in Section 11.1;

(e) Cause the Partnership to file a voluntary petition in bankruptcy or make a general assignment for the benefit of creditors;

(f) Incur indebtedness on behalf of the Partnership in excess of $[________________________________] in the aggregate at any time outstanding, except in the ordinary course of the Partnership's activities;

(g) Enter into any transaction with the General Partner or any Affiliate of the General Partner, except on terms no less favorable to the Partnership than those that could be obtained from an unrelated third party in an arm's-length transaction;

(h) Confess a judgment against the Partnership;

(i) Possess or transfer Partnership property for other than a Partnership purpose;

(j) Acquire or dispose of any interest in real property located in the State of Hawaii with a value exceeding $[________________________________] without providing at least [____] days' prior written notice to the Limited Partners; or

(k) Perform any act that would subject any Limited Partner to liability as a general partner in any jurisdiction or that would cause the Partnership to lose its status as a limited partnership.

Section 5.3 Duties of the General Partner.

(a) Fiduciary Duties. The General Partner owes to the Partnership and the other Partners the duties of loyalty and care as set forth in HRS § 425E-408.

(b) Duty of Loyalty. The duty of loyalty of the General Partner includes the duties to: (i) account to the Partnership and hold as trustee for it any property, profit, or benefit derived by the General Partner in the conduct or winding up of the Partnership's activities or derived from a use by the General Partner of Partnership property, including the appropriation of a Partnership opportunity; (ii) refrain from dealing with the Partnership in the conduct or winding up of the Partnership's activities as or on behalf of a party having an interest adverse to the Partnership; and (iii) refrain from competing with the Partnership in the conduct of the Partnership's activities before the dissolution of the Partnership.

(c) Duty of Care. The duty of care of the General Partner in the conduct and winding up of the Partnership's activities is to refrain from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law, as set forth in HRS § 425E-408(c).

(d) Good Faith and Fair Dealing. The General Partner shall discharge the duties to the Partnership and the other Partners under this Agreement and the Act and exercise any rights consistently with the obligation of good faith and fair dealing, as set forth in HRS § 425E-408(d).

(e) Permitted Self-Interest. A General Partner does not violate a duty or obligation under this Agreement merely because the General Partner's conduct furthers the General Partner's own interest. A General Partner may lend money to, borrow money from, and transact other business with the Partnership, subject to the limitations of this Agreement and applicable law.

Section 5.4 Compensation of General Partner. The General Partner shall be entitled to receive the following compensation for services rendered to the Partnership:

(a) An annual management fee equal to [____]% of [________________________________] (e.g., gross revenues, total assets, committed capital), payable [________________________________] (e.g., monthly, quarterly);

(b) Reimbursement for all reasonable out-of-pocket expenses incurred by the General Partner in connection with the management and operation of the Partnership's activities; and

(c) Such additional compensation as may be approved by a Majority in Interest of the Limited Partners.

Section 5.5 Limited Partner Rights and Limitations.

(a) No Management Rights. A Limited Partner shall not have the right to participate in the management or conduct of the Partnership's activities except as provided in this Agreement and the Act. A Limited Partner's right to participate in the Partnership's activities shall be limited to those rights specified in HRS § 425E-302.

(b) No Liability for LP Participation. Under HRS § 425E-303, a Limited Partner shall not be liable for an obligation of the Partnership even if the Limited Partner participates in the management and control of the Partnership's activities. This is a significant protection afforded by the Hawaii Uniform Limited Partnership Act.

(c) Limited Partner Voting Rights. The Limited Partners shall have the right to vote on the following matters:

(i) Dissolution of the Partnership, as provided in HRS § 425E-801;

(ii) Removal of the General Partner;

(iii) Admission of a new General Partner;

(iv) Amendment of this Agreement;

(v) Sale of all or substantially all Partnership assets outside the ordinary course of the Partnership's activities;

(vi) Merger, conversion, or domestication of the Partnership;

(vii) Any matter on which the Act requires or permits Limited Partner approval; and

(viii) Any other matter submitted to the Limited Partners for a vote by the General Partner.

(d) Limited Duties of Limited Partners. In accordance with HRS § 425E-305, a Limited Partner shall not have any fiduciary duty to the Partnership or to any other Partner solely by reason of being a Limited Partner. A Limited Partner shall discharge the duties to the Partnership and the other Partners and exercise any rights consistently with the obligation of good faith and fair dealing.

(e) Right to Information. Each Limited Partner shall have the right to obtain from the Partnership and the General Partner the information and records described in HRS § 425E-304, including, upon reasonable demand and at the Limited Partner's expense: (i) true and full information regarding the status of the Partnership's activities and financial condition; (ii) promptly after becoming available, a copy of the Partnership's federal, state, and local income tax returns for each year; and (iii) other information regarding the Partnership's activities and affairs as is just and reasonable.

Section 5.6 Meetings.

(a) Annual Meeting. The General Partner shall call an annual meeting of the Partners to be held at such time and place in the State of Hawaii (or such other location as the General Partner determines) as the General Partner shall designate. Written notice of each annual meeting shall be given to all Partners not less than [____] nor more than [____] days prior to the date of such meeting.

(b) Special Meetings. Special meetings of the Partners may be called by the General Partner or by Limited Partners holding in the aggregate not less than [____]% of the total Percentage Interests of all Limited Partners. Written notice of each special meeting shall state the purpose thereof and shall be given to all Partners not less than [____] nor more than [____] days prior to the date of such meeting.

(c) Virtual Meetings. Given the geographic dispersion of the Hawaiian Islands and the potential for Partners to be located on different islands or outside the State, meetings may be conducted by telephone conference, video conference, or other electronic communication technology that allows all participating Partners to hear each other simultaneously during the meeting.

(d) Quorum. The presence, in person, by proxy, or by remote communication, of the General Partner and Limited Partners holding in the aggregate not less than [____]% of the total Percentage Interests of all Limited Partners shall constitute a quorum.

(e) Voting. Except as otherwise specifically provided in this Agreement, all matters submitted to a vote of the Partners shall be decided by the affirmative vote of a Majority in Interest of the Partners voting on such matter. Each Partner shall be entitled to cast votes proportionate to such Partner's Percentage Interest.

(f) Action Without a Meeting. Any action required or permitted to be taken at a meeting of the Partners may be taken without a meeting if a written consent setting forth the action so taken is signed by Partners having not less than the minimum number of votes that would be necessary to authorize such action at a meeting at which all Partners were present and voted.

(g) Proxies. Any Partner may authorize another Person to act for such Partner by proxy with respect to any vote, consent, or approval. Such proxy must be in writing, signed by the granting Partner, and delivered to the General Partner prior to any meeting or action.

Section 5.7 Officers. The General Partner may appoint officers of the Partnership, including a president, one or more vice presidents, a secretary, a treasurer, and such other officers as the General Partner deems appropriate. Such officers shall have such titles, duties, and authority as the General Partner shall determine. Officers shall serve at the pleasure of the General Partner and may be removed at any time, with or without cause, by the General Partner.

Section 5.8 Partnership Expenses. The Partnership shall bear and pay all costs and expenses of its activities, including but not limited to: (a) organizational expenses; (b) operating expenses; (c) legal, accounting, and professional fees; (d) insurance premiums; (e) taxes and governmental fees, including the annual report filing fee payable to the DCCA; (f) debt service; (g) any general excise tax imposed under HRS Chapter 237; and (h) expenses of winding up and liquidation.

Section 5.9 Hawaii General Excise Tax. The parties acknowledge that Hawaii imposes a general excise tax ("GET") under HRS Chapter 237 on various business activities. The General Partner shall ensure that the Partnership complies with all GET obligations, including obtaining a GET license and timely filing GET returns. The Partnership's GET obligations shall be treated as Partnership expenses.

ARTICLE VI: TRANSFER OF PARTNERSHIP INTERESTS

Section 6.1 General Restrictions on Transfer. No Partner shall Transfer all or any portion of such Partner's Partnership Interest except in compliance with the provisions of this Article VI and applicable securities laws. Any attempted Transfer in violation of this Article VI shall be null, void, and of no force or effect, and the Partnership shall not recognize or give effect to any such Transfer on its books and records. A transfer of a Transferable Interest is governed by HRS § 425E-702.

Section 6.2 Conditions to Transfer. No Transfer of a Partnership Interest shall be permitted unless each of the following conditions is satisfied:

(a) The General Partner has given prior written consent to such Transfer, which consent may be withheld in the General Partner's sole and absolute discretion with respect to transfers by Limited Partners;

(b) The transferee has executed and delivered to the General Partner a written agreement to be bound by all the terms and conditions of this Agreement;

(c) The transferor and/or transferee shall have paid all costs and expenses (including reasonable attorneys' fees) incurred by the Partnership in connection with such Transfer;

(d) The Transfer will not result in the Partnership being treated as a "publicly traded partnership" within the meaning of Section 7704 of the Code;

(e) The Transfer will not cause a termination of the Partnership under Section 708 of the Code (or any successor provision);

(f) An opinion of counsel satisfactory to the General Partner has been rendered to the effect that such Transfer is exempt from registration under applicable federal and state securities laws, including Hawaii's Uniform Securities Act (HRS Chapter 485A); and

(g) The Transfer complies with HRS § 425E-702 and other applicable provisions of the Act.

Section 6.3 Right of First Refusal.

(a) Before any Partner (the "Offering Partner") may Transfer all or any portion of such Partner's Partnership Interest to a third party (other than a Permitted Transfer under Section 6.4), the Offering Partner shall first offer such Partnership Interest to the other Partners (the "Non-Offering Partners") on the same terms and conditions as the proposed Transfer.

(b) The Offering Partner shall give written notice (the "Offer Notice") to the Partnership and to each Non-Offering Partner, setting forth: (i) the identity of the proposed transferee; (ii) the Partnership Interest proposed to be transferred; (iii) the purchase price and other material terms and conditions of the proposed Transfer; and (iv) a copy of any written offer or agreement from the proposed transferee.

(c) Each Non-Offering Partner shall have [____] days from receipt of the Offer Notice to elect to purchase all or a pro rata portion of the offered Partnership Interest on the same terms and conditions set forth in the Offer Notice, by giving written notice of such election to the Offering Partner.

(d) If the Non-Offering Partners do not collectively elect to purchase all of the offered Partnership Interest within such [____]-day period, the Offering Partner may Transfer the offered Partnership Interest to the proposed transferee identified in the Offer Notice on the same or more favorable terms and conditions as set forth therein, provided that such Transfer is consummated within [____] days after the expiration of the right of first refusal period.

Section 6.4 Permitted Transfers. Notwithstanding the restrictions in Sections 6.1 through 6.3, the following Transfers shall be deemed "Permitted Transfers" and shall not be subject to the right of first refusal in Section 6.3, provided that the conditions in Section 6.2(b) through (g) are satisfied:

(a) A Transfer by any Partner to such Partner's spouse, children, grandchildren, parents, or siblings, or to a trust for the benefit of any such family members;

(b) A Transfer by any Partner to an entity wholly owned by such Partner or such Partner's family members described in subsection (a);

(c) A Transfer by a corporate or entity Partner to a successor entity in connection with a merger, reorganization, or consolidation; and

(d) A Transfer by a Partner to such Partner's estate, executor, administrator, or personal representative upon the death or incapacity of such Partner.

Section 6.5 Admission of Transferees as Limited Partners. A transferee of a Transferable Interest may be admitted as a Limited Partner only upon compliance with HRS § 425E-704 and the following:

(a) The General Partner consents in writing to the admission of the transferee as a Limited Partner;

(b) The transferee executes a written instrument accepting and adopting all terms and conditions of this Agreement; and

(c) The transferee pays or reimburses the Partnership for all reasonable costs and expenses incurred in connection with such admission.

Section 6.6 Rights of Transferees. A transferee of a Transferable Interest who has not been admitted as a Limited Partner shall have only the rights of a transferee under HRS § 425E-702, including the right to receive distributions to which the transferor would otherwise be entitled and, upon dissolution, the net amount that the transferor would have received upon winding up. The transferee shall have no right to vote, consent, or otherwise participate in the management of the Partnership's activities.

Section 6.7 Transfer of General Partner Interest. The General Partner may not Transfer all or any portion of its interest as General Partner without the prior written consent of all Limited Partners.

ARTICLE VII: WITHDRAWAL AND DISSOCIATION

Section 7.1 Dissociation of General Partner. A Person is dissociated as a General Partner of the Partnership upon the occurrence of any of the events specified in HRS § 425E-603, including but not limited to:

(a) The Partnership's having notice of the General Partner's express will to withdraw as a General Partner, upon not less than [____] days' prior written notice to all Limited Partners;

(b) An event agreed to in this Agreement as causing the Person's dissociation as a General Partner;

(c) The General Partner's expulsion pursuant to this Agreement or by unanimous consent of the other Partners;

(d) The General Partner's expulsion by judicial order;

(e) The General Partner's becoming a debtor in bankruptcy;

(f) The appointment of a trustee, receiver, or liquidator for the General Partner;

(g) In the case of a General Partner that is an individual, the General Partner's death, incapacity, or incompetency; or

(h) In the case of a General Partner that is an entity, the dissolution, termination, or revocation of the entity's charter.

Section 7.2 Consequences of Dissociation of General Partner.

(a) If a General Partner dissociates and at the time of dissociation the Partnership has at least one other General Partner, the Partnership shall continue, and the dissociated General Partner shall have the rights and obligations set forth in HRS § 425E-605.

(b) A Person dissociated as a General Partner shall have no further right to participate in the management or conduct of the Partnership's activities.

(c) A General Partner who wrongfully dissociates (i.e., in violation of the express provisions of this Agreement) shall be liable to the Partnership and the other Partners for damages caused by such wrongful dissociation.

Section 7.3 Removal of General Partner. The General Partner may be removed as General Partner upon the affirmative vote of Limited Partners holding not less than [____]% of the total Percentage Interests of all Limited Partners, but only for "Cause," which shall mean:

(a) A material breach of this Agreement that remains uncured for [____] days after written notice thereof;

(b) Fraud, willful misconduct, or gross negligence in the management of the Partnership's activities;

(c) A material violation of fiduciary duties under HRS § 425E-408;

(d) The filing by or against the General Partner of a petition in bankruptcy or the making of a general assignment for the benefit of creditors;

(e) A material violation of applicable law that adversely affects the Partnership; or

(f) The General Partner's incapacity (if an individual) or dissolution (if an entity).

Section 7.4 Dissociation of Limited Partner. A Person is dissociated as a Limited Partner of the Partnership upon the occurrence of any of the events specified in HRS § 425E-601.5, including but not limited to:

(a) The Partnership's having notice of the Limited Partner's express will to withdraw as a Limited Partner upon not less than [____] days' prior written notice;

(b) An event agreed to in this Agreement as causing the Person's dissociation as a Limited Partner;

(c) The Limited Partner's expulsion pursuant to this Agreement;

(d) The Limited Partner's expulsion by judicial order;

(e) The Limited Partner's becoming a debtor in bankruptcy; or

(f) In the case of a Limited Partner that is an individual, the Limited Partner's death.

Section 7.5 Distribution Upon Dissociation. Upon the dissociation of any Partner in accordance with this Article VII, such Partner (or such Partner's estate or legal representative) shall be entitled to receive, within a reasonable time, the amount to which such Partner would be entitled upon a liquidation of the Partnership based on the fair market value of Partnership assets as of the date of dissociation, less any damages owed by such Partner to the Partnership. Payment may be made in installments over a period not to exceed [____] months at the discretion of the General Partner, with interest on the unpaid balance at the rate of [____]% per annum.

ARTICLE VIII: DISSOLUTION AND WINDING UP

Section 8.1 Events of Dissolution. The Partnership shall be dissolved, and its activities shall be wound up, only upon the first to occur of the following events, pursuant to HRS § 425E-801 (Nonjudicial Dissolution):

(a) The happening of an event specified in this Agreement;

(b) The written consent of all General Partners and of Limited Partners owning a majority of the rights to receive distributions as Limited Partners at the time the consent is to be effective;

(c) After the dissociation of a Person as a General Partner:

(i) If the Partnership has at least one remaining General Partner, the consent to dissolve the Partnership given within ninety (90) days after the dissociation by Partners owning a majority of the rights to receive distributions as Partners at the time the consent is to be effective; or

(ii) If the Partnership does not have a remaining General Partner, the passage of ninety (90) days after the dissociation, unless before the end of such period:

(A) Consent to continue the Partnership and admit at least one General Partner is given by Limited Partners owning a majority of the rights to receive distributions as Limited Partners at the time the consent is to be effective; and

(B) At least one General Partner is admitted; or

(d) The entry of a decree of judicial dissolution under HRS § 425E-802.

Section 8.2 Judicial Dissolution. On application by a Partner, the Circuit Court of the [________________________________] Circuit, State of Hawaii, may order dissolution of the Partnership if it is not reasonably practicable to carry on the activities of the Partnership in conformity with this Agreement, as provided in HRS § 425E-802.

Section 8.3 Winding Up.

(a) Upon dissolution, the Partnership's activities shall be wound up. The General Partner (or, if no General Partner remains, such Person as is selected by the Limited Partners owning a majority of rights to receive distributions) shall wind up the Partnership's affairs (the "Liquidating Agent").

(b) A Person winding up the activities of the Partnership may, pursuant to HRS § 425E-803:

(i) Preserve the Partnership's activities and property as a going concern for a reasonable time;

(ii) Prosecute and defend actions and proceedings, whether civil, criminal, or administrative;

(iii) Settle and close the Partnership's activities;

(iv) Dispose of and transfer the Partnership's property;

(v) Discharge or make provision for the Partnership's liabilities;

(vi) Distribute the Partnership's remaining property; and

(vii) Perform any other acts necessary or appropriate to the winding up.

(c) A Partner who has not wrongfully dissolved the Partnership may participate in winding up the Partnership's activities.

(d) The Liquidating Agent shall use reasonable efforts to liquidate the Partnership's assets and wind up its affairs in an orderly manner within a reasonable period of time.

Section 8.4 Distribution Upon Liquidation. Upon the winding up of the Partnership, the assets of the Partnership (or the proceeds thereof) shall be applied and distributed in the following order of priority, in accordance with HRS § 425E-804:

(a) First, to the payment and discharge of all debts and liabilities of the Partnership to creditors, including Partners who are creditors (other than for distributions), in the order of priority as provided by law;

(b) Second, to the establishment of any reserves that the Liquidating Agent deems reasonably necessary for any contingent or unforeseen liabilities or obligations of the Partnership, which reserves shall be held in escrow for such period as the Liquidating Agent deems advisable;

(c) Third, except as otherwise provided in this Agreement, to Partners and former Partners in satisfaction of liabilities for distributions owed under HRS § 425E-508; and

(d) Fourth, to Partners first for the return of their Capital Contributions and secondly in accordance with their respective Percentage Interests.

Section 8.5 Statement of Dissolution and Termination. Upon dissolution of the Partnership, the General Partner (or the Liquidating Agent) shall file a statement of dissolution with the DCCA in accordance with HRS § 425E-203. Upon completion of winding up, the Liquidating Agent shall file a statement of termination with the DCCA in accordance with HRS § 425E-203.

Section 8.6 No Obligation to Restore Deficit. Except as required by law or as otherwise provided herein:

(a) No Limited Partner shall be obligated to restore a deficit balance in such Limited Partner's Capital Account.

(b) The General Partner shall be obligated to restore any deficit balance in the General Partner's Capital Account within [____] days following the date of liquidation of the Partnership, or such later date as may be required by the Treasury Regulations.

ARTICLE IX: BOOKS, RECORDS, AND ACCOUNTING

Section 9.1 Fiscal Year. The Fiscal Year of the Partnership shall be:

☐ The calendar year (January 1 through December 31)

☐ A fiscal year ending on [________________________________]

Section 9.2 Books and Records. The General Partner shall maintain full and accurate books and records of the Partnership at the Partnership's principal office or at such other location as the General Partner designates, which shall be accessible to the Partners. The books and records shall include:

(a) A current list of the full name and last known business, residence, or mailing address of each Partner;

(b) A copy of the Certificate and all amendments thereto, together with copies of any powers of attorney under which the Certificate was executed;

(c) Copies of the Partnership's federal, state, and local income tax returns and reports for the three (3) most recent Fiscal Years;

(d) Copies of this Agreement, including all amendments hereto, and any former partnership agreements;

(e) Copies of the Partnership's financial statements for the three (3) most recent Fiscal Years;

(f) An accounting of each Partner's Capital Contributions, Capital Account balance, and share of Profits, Losses, and distributions; and

(g) Such other records and information as required by HRS § 425E-111.

Section 9.3 Inspection Rights. Each Partner and each Partner's authorized agent or attorney shall have the right to inspect and copy, at such Partner's expense, during ordinary business hours, any of the Partnership's books and records described in Section 9.2, subject to reasonable requirements as the General Partner may establish. This right is subject to the provisions of HRS § 425E-304.

Section 9.4 Accounting Method. The books and records of the Partnership shall be maintained on the:

☐ Cash basis of accounting

☐ Accrual basis of accounting

☐ Other: [________________________________]

in accordance with generally accepted accounting principles ("GAAP") consistently applied, or such other method as the General Partner shall determine in consultation with the Partnership's accountants.

Section 9.5 Financial Reports. The General Partner shall cause to be delivered to each Partner:

(a) Within [____] days after the end of each Fiscal Year, an annual financial report containing a balance sheet, income statement, statement of cash flows, and statement of changes in Partners' capital;

(b) Within [____] days after the end of each calendar quarter, a quarterly financial summary; and

(c) Such other financial reports and information as any Partner may reasonably request from time to time.

Section 9.6 Tax Returns and Reports.

(a) The General Partner shall cause the Partnership's federal, state, and local income tax returns to be prepared and timely filed for each Fiscal Year, including the Hawaii Partnership Return of Income (Form N-20). The General Partner shall provide each Partner with a completed federal Schedule K-1 (IRS Form 1065) and a Hawaii Schedule K-1 (Form N-20) on or before [________________________________] (e.g., the statutory deadline, currently March 15 or as extended).

(b) The General Partner is hereby designated as the "Tax Matters Partner" (for taxable years to which Section 6231(a)(7) of the Code applies) and as the "Partnership Representative" (for taxable years subject to the centralized partnership audit procedures of Sections 6221-6241 of the Code). The Partnership Representative shall have the authority to take all actions on behalf of the Partnership with respect to any federal or state tax audit or proceeding.

(c) The General Partner shall make or revoke, on behalf of the Partnership, any tax elections permitted by the Code, the Treasury Regulations, or applicable Hawaii state tax law.

Section 9.7 Bank Accounts. All funds of the Partnership shall be deposited in one or more accounts at such banks, trust companies, or other depositories as the General Partner shall determine. Withdrawals from such accounts shall be made upon such signature or signatures as the General Partner shall designate.

ARTICLE X: INDEMNIFICATION AND LIABILITY

Section 10.1 Indemnification.

(a) The Partnership shall indemnify, defend, and hold harmless the General Partner and the General Partner's officers, directors, members, managers, partners, shareholders, employees, agents, and Affiliates (collectively, "Indemnified Persons") from and against any and all claims, demands, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and court costs) arising out of or related to the management of the Partnership's activities or the conduct of the Partnership's business, to the fullest extent permitted by the Act; provided, however, that no Indemnified Person shall be indemnified for:

(i) Acts or omissions constituting grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law, as described in HRS § 425E-408(c);

(ii) Any transaction in which such Indemnified Person received a personal benefit in violation or breach of the duty of loyalty under HRS § 425E-408(b); or

(iii) Any act or omission for which such Indemnified Person is not entitled to indemnification under the Act.

(b) Any indemnification under this Section 10.1 shall be paid from the assets of the Partnership only, and no Partner shall have any personal liability for such indemnification.

(c) Expenses incurred by an Indemnified Person in defending any proceeding shall be advanced by the Partnership prior to the final disposition of such proceeding upon receipt of an undertaking by the Indemnified Person to repay such amounts if it shall ultimately be determined that such Person is not entitled to be indemnified under this Section 10.1.

Section 10.2 Limitation of Liability.

(a) General Partner. Except for grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law (as described in HRS § 425E-408(c)), the General Partner shall not be liable to the Partnership or to any Partner for any act or omission taken in good faith and in a manner the General Partner reasonably believed to be in or not opposed to the best interests of the Partnership.

(b) Limited Partners. A Limited Partner shall not be liable for an obligation of the Partnership, even if the Limited Partner participates in the management and control of the Partnership's activities, as provided in HRS § 425E-303. This represents a significant departure from earlier versions of limited partnership law and provides full limited liability protection to Limited Partners in Hawaii.

Section 10.3 Insurance. The General Partner may cause the Partnership to purchase and maintain insurance on behalf of the Partnership, the General Partner, and any officer, employee, or agent of the Partnership against any liability asserted against such Person and incurred by such Person in any such capacity, or arising out of such Person's status as such.

ARTICLE XI: MISCELLANEOUS

Section 11.1 Amendments. This Agreement may be amended or modified only by a written instrument executed by the General Partner and a Majority in Interest of the Limited Partners; provided, however, that no amendment shall:

(a) Increase any Partner's Capital Contribution obligation without the written consent of such Partner;

(b) Reduce any Partner's Percentage Interest or right to distributions without the written consent of such Partner;

(c) Alter the distribution priorities set forth in Sections 4.4 or 8.4 without the written consent of each Partner adversely affected thereby;

(d) Convert a Limited Partner's interest to a General Partner's interest without the written consent of such Limited Partner; or

(e) Amend this Section 11.1 without the unanimous written consent of all Partners.

The General Partner may, without the consent of the Limited Partners, amend this Agreement and the Certificate to: (i) reflect the admission, substitution, or dissociation of Partners in accordance with this Agreement; (ii) cure ambiguities or correct errors; (iii) satisfy any requirements of the Internal Revenue Service, DCCA, or any applicable governmental authority; or (iv) make changes that do not adversely affect the Limited Partners.

Section 11.2 Notices. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed duly given when:

(a) Delivered personally;

(b) Sent by certified or registered mail, return receipt requested, postage prepaid;

(c) Sent by overnight courier service; or

(d) Transmitted by electronic mail, with confirmation of receipt;

addressed to each Partner at the address set forth on Schedule A or at such other address as such Partner may designate by written notice to the other Partners. Given Hawaii's geographic position and inter-island mail delivery considerations, Partners are encouraged to provide electronic mail addresses for prompt receipt of notices. Notices shall be deemed received: (i) upon delivery, if delivered personally; (ii) five (5) Business Days after mailing, if sent by certified or registered mail; (iii) two (2) Business Days after deposit, if sent by overnight courier; or (iv) upon transmission, if sent by electronic mail with confirmation of receipt.

Section 11.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Hawaii, including the Hawaii Uniform Limited Partnership Act, HRS Chapter 425E, without giving effect to the principles of conflicts of laws thereof.

Section 11.4 Jurisdiction and Venue. Any action, suit, or proceeding arising out of or related to this Agreement shall be brought exclusively in the courts of the State of Hawaii or the United States District Court for the District of Hawaii. Each Partner hereby consents to the personal jurisdiction of such courts and waives any objection to venue therein.

Section 11.5 Dispute Resolution.

(a) Mediation. Prior to commencing any litigation or arbitration, the parties shall attempt to resolve any dispute arising under this Agreement through good faith mediation. Either party may initiate mediation by delivering written notice to the other party or parties. Mediation shall be conducted in [________________________________] (city), Hawaii, before a mediator mutually agreed upon by the parties, or, failing agreement, appointed by the Mediation Center of the Pacific, Inc., or the American Arbitration Association.

(b) Arbitration (if elected).

☐ The parties agree to submit any dispute not resolved through mediation to binding arbitration in accordance with the rules of the American Arbitration Association or the Dispute Prevention & Resolution, Inc. (Hawaii). Arbitration shall be conducted in [________________________________] (city), Hawaii. The arbitrator's decision shall be final, binding, and enforceable in any court of competent jurisdiction.

☐ The parties do not elect arbitration. Any dispute not resolved through mediation shall be resolved by litigation in courts of competent jurisdiction.

Section 11.6 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTNER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 11.7 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is held invalid or unenforceable by any court of competent jurisdiction, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby, and to this end, the provisions of this Agreement are declared to be severable.

Section 11.8 Entire Agreement. This Agreement (including all Schedules and Exhibits attached hereto) constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, and discussions, whether oral or written, with respect to such subject matter.

Section 11.9 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures delivered by facsimile or electronic transmission (including PDF) shall be valid and binding.

Section 11.10 Waiver. No failure or delay by any party in exercising any right, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.

Section 11.11 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, and permitted assigns.

Section 11.12 Construction. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the interpretation of any provision of this Agreement. Unless the context otherwise requires, the singular includes the plural and vice versa, and words of any gender include all genders.

Section 11.13 Confidentiality. Each Partner agrees to keep confidential and not to disclose to any third party any proprietary or confidential information concerning the Partnership's activities, operations, or financial affairs, except: (a) as required by law or legal process; (b) to such Partner's legal, financial, and tax advisors; (c) in connection with a permitted Transfer of a Partnership Interest; or (d) as consented to in writing by the General Partner.

Section 11.14 Power of Attorney. Each Limited Partner hereby irrevocably constitutes and appoints the General Partner as such Limited Partner's true and lawful attorney-in-fact, with full power and authority in such Limited Partner's name, place, and stead, to execute, acknowledge, file, and record the following documents:

(a) This Agreement and any amendments hereto;

(b) The Certificate and any amendments thereto, including statements of dissolution and termination;

(c) Any certificate or document required to qualify or continue the Partnership as a limited partnership in Hawaii or any other jurisdiction;

(d) Any other instrument that may be required to be filed or recorded by the Partnership under the Act or applicable law.

This power of attorney is coupled with an interest and shall survive the death, disability, incompetency, or dissolution of any Limited Partner and shall survive the Transfer of all or any portion of a Limited Partner's Partnership Interest.

SIGNATURE PAGE

IN WITNESS WHEREOF, the parties hereto have executed this Limited Partnership Agreement as of the date first set forth above.

GENERAL PARTNER(S):

[________________________________]

By: [________________________________]

Name: [________________________________]

Title: [________________________________]

Date: [__/__/____]

Address: [________________________________]

[________________________________] (Additional General Partner, if applicable)

By: [________________________________]

Name: [________________________________]

Title: [________________________________]

Date: [__/__/____]

Address: [________________________________]

LIMITED PARTNER(S):

[________________________________]

Signature: [________________________________]

Name: [________________________________]

Date: [__/__/____]

Address: [________________________________]

[________________________________]

Signature: [________________________________]

Name: [________________________________]

Date: [__/__/____]

Address: [________________________________]

[________________________________]

Signature: [________________________________]

Name: [________________________________]

Date: [__/__/____]

Address: [________________________________]

(Attach additional signature pages as needed for additional Limited Partners.)

SCHEDULE A: PARTNERS AND CAPITAL CONTRIBUTIONS

SCHEDULE B: INITIAL ALLOCATIONS AND DISTRIBUTION PERCENTAGES

SCHEDULE C: DESCRIPTION OF PARTNERSHIP ACTIVITIES

Business Purpose: [________________________________]

Description of Activities: [________________________________]

Target Markets/Industries: [________________________________]

Geographic Scope: [________________________________]

HAWAII-SPECIFIC COMPLIANCE NOTES

1. Certificate of Limited Partnership Filing

A Certificate of Limited Partnership must be filed with the Hawaii Department of Commerce and Consumer Affairs (DCCA), Business Registration Division (BREG), pursuant to HRS § 425E-201. The Certificate must include: (a) the name of the limited partnership; (b) the mailing address and, if different, street address of the principal office; (c) the name and address of the agent for service of process; (d) the name and address of each general partner; and (e) whether the limited partnership is an LLLP.

Filing Address:
Department of Commerce and Consumer Affairs
Business Registration Division
335 Merchant Street, Room 201
Honolulu, Hawaii 96813

Online Filing: Filings may also be submitted electronically through Hawaii Business Express (https://hbe.ehawaii.gov).

Filing Fee: $25.00 (not refundable); expedited service: additional $25.00.

2. Annual Report Requirements

All limited partnerships must file an annual report with the DCCA by December 31 of each year, pursuant to HRS § 425E-210. The annual report must include: (a) the name of the limited partnership and the state in which it was formed; (b) the street and mailing address of the principal office; (c) the name and address of the agent for service of process; and (d) the name and address of each general partner. The annual filing fee is $15.00. A late filing penalty of $10.00 per year applies.

3. Name Requirements

Under HRS § 425E-108, the name of a limited partnership must contain the words "limited partnership" or the abbreviation "L.P." or "LP." An LLLP must contain "limited liability limited partnership" or "L.L.L.P." or "LLLP." The name must be distinguishable upon the DCCA records from any other entity name on file.

4. Agent for Service of Process

Under HRS § 425E-114, a limited partnership must maintain an agent for service of process in Hawaii. The agent must be either an individual residing in Hawaii or a domestic or foreign entity authorized to transact business in Hawaii. If the Partnership fails to maintain an agent, the Director of the DCCA serves as the agent for service of process.

5. Full Limited Partner Liability Protection

One of the most significant features of Hawaii's ULPA (2001-based) is that HRS § 425E-303 provides that a limited partner is not liable for an obligation of the limited partnership, even if the limited partner participates in the management and control of the limited partnership. This eliminates the "control rule" that existed under earlier versions of the law. This is a broader liability protection than provided in many other states.

6. General Partner Fiduciary Duties

Under HRS § 425E-408, the only fiduciary duties that a general partner owes to the limited partnership and the other partners are the duty of loyalty and the duty of care. These duties may be modified by the partnership agreement, but the agreement may not: (a) eliminate the obligation of good faith and fair dealing; (b) unreasonably reduce the duty of care; (c) eliminate or reduce the duty of loyalty, though the agreement may identify certain types or categories of activities that do not violate the duty of loyalty if not manifestly unreasonable.

7. Limited Liability Limited Partnership (LLLP) Option

Under HRS § 425E-406, a limited partnership may elect to be a limited liability limited partnership by including a statement to that effect in its Certificate. In an LLLP, a general partner is not personally liable for partnership obligations solely by reason of being a general partner. This provides an additional layer of liability protection for general partners similar to that enjoyed by members of an LLC.

8. Hawaii General Excise Tax

Hawaii imposes a general excise tax ("GET") under HRS Chapter 237 on gross income from business activities conducted in Hawaii. The GET applies to virtually all business activities, including rental income, services, and sales. The current GET rates are 4% for most activities (4.5% in the City & County of Honolulu with the county surcharge). The Partnership must obtain a GET license and file periodic GET returns.

9. Hawaii Income Tax

Hawaii does not impose a separate entity-level income tax on partnerships. Instead, partnership income flows through to the individual partners, who report their distributive shares on their Hawaii individual income tax returns (Form N-11 for residents, Form N-15 for nonresidents). However, the Partnership must file an annual Hawaii Partnership Return of Income (Form N-20). Hawaii's individual income tax rates range up to 11%, among the highest in the nation.

10. Conversion and Merger

Under HRS § 425E-1101 et seq., a limited partnership may convert to or from other entity types and may merge with other entities, subject to the requisite approvals and filings with the DCCA.

11. Foreign Limited Partnership Registration

If the Partnership conducts activities outside Hawaii, it may need to register as a foreign limited partnership in those jurisdictions. Conversely, foreign limited partnerships conducting activities in Hawaii must register with the DCCA under HRS § 425E-901 et seq.

12. Real Property Considerations

If the Partnership acquires or holds real property in Hawaii, it should be aware of several Hawaii-specific considerations, including: (a) conveyance tax under HRS Chapter 247; (b) real property tax imposed by the county (Honolulu, Maui, Hawaii, or Kauai); (c) land use classification and zoning requirements; and (d) potential applicability of the Hawaii Land Use Law (HRS Chapter 205).

SOURCES AND REFERENCES

• Hawaii Uniform Limited Partnership Act: HRS Chapter 425E
• Hawaii DCCA Business Registration Division: https://cca.hawaii.gov/breg/
• Hawaii DCCA Limited Partnership Fees: https://cca.hawaii.gov/breg/registration/dlp/fees/
• Hawaii Business Express (Online Filing): https://hbe.ehawaii.gov
• Hawaii Revised Statutes (Official): https://www.capitol.hawaii.gov/hrscurrent/vol08_Ch0401-0429/HRS0425E/HRS_0425E-.htm
• HRS § 425E-201 (Certificate of Limited Partnership): https://law.justia.com/codes/hawaii/title-23/chapter-425e/section-425e-201/
• HRS § 425E-408 (General Standards of GP Conduct): https://law.justia.com/codes/hawaii/title-23/chapter-425e/section-425e-408/
• HRS § 425E-301 (Limited Partner): https://law.justia.com/codes/hawaii/title-23/chapter-425e/section-425e-301/
• HRS § 425E-801 (Nonjudicial Dissolution): https://law.justia.com/codes/hawaii/title-23/chapter-425e/section-425e-801/
• Hawaii LP Filing Instructions (Form LP-1): https://files.hawaii.gov/dcca/breg/registration/forms/lp-1-instr.pdf
• Internal Revenue Code, Subchapter K (Partnership Taxation): 26 U.S.C. §§ 701-777
• Treasury Regulations under Section 704(b): 26 C.F.R. § 1.704-1(b)

This template is provided for informational purposes only and does not constitute legal advice. It must be reviewed and customized by a qualified attorney licensed in Hawaii before use. Laws change frequently, and this document may not reflect the most current statutory requirements. Do not execute this agreement without professional legal counsel.