Limited Partnership Agreement (Illinois)

LIMITED PARTNERSHIP AGREEMENT

STATE OF ILLINOIS

THIS LIMITED PARTNERSHIP AGREEMENT (this "Agreement") is entered into and made effective as of [__/__/____] (the "Effective Date"), by and among the undersigned parties, pursuant to the provisions of the Illinois Uniform Limited Partnership Act (2001), 805 ILCS 215/, as amended from time to time.

TABLE OF CONTENTS

1. Definitions
2. Formation of Limited Partnership
3. Purpose and Powers
4. Term and Duration
5. Capital Contributions
6. Capital Accounts
7. Allocations of Profits and Losses
8. Distributions
9. Management and Operations
10. Rights and Obligations of Limited Partners
11. Transfer of Partnership Interests
12. Withdrawal and Dissociation
13. Dissolution and Winding Up
14. Books, Records, and Tax Matters
15. Indemnification and Liability
16. General Provisions
17. Signature Blocks
18. Exhibit A — Partner Schedule

ARTICLE 1: DEFINITIONS

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

1.1 "Act" means the Illinois Uniform Limited Partnership Act (2001), 805 ILCS 215/, as amended from time to time.

1.2 "Affiliate" means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Person.

1.3 "Agreement" means this Limited Partnership Agreement, including all exhibits and schedules attached hereto, as amended from time to time in accordance with Section 16.4.

1.4 "Assignee" means a Person who has acquired a Transferable Interest in the Partnership but who has not been admitted as a Partner.

1.5 "Capital Account" means the individual capital account maintained for each Partner in accordance with Section 6.1 of this Agreement and Treasury Regulations Section 1.704-1(b)(2)(iv).

1.6 "Capital Contribution" means the total amount of cash, property, services, or promissory notes contributed or agreed to be contributed by a Partner to the Partnership, as set forth in Exhibit A and as may be subsequently amended.

1.7 "Certificate" means the Certificate of Limited Partnership filed with the Illinois Secretary of State pursuant to 805 ILCS 215/201 on Form LP 201 and any amendments thereto filed pursuant to 805 ILCS 215/202.

1.8 "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor federal tax statute.

1.9 "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise.

1.10 "Distributable Cash" means the cash of the Partnership available for distribution to Partners as determined by the General Partner in its reasonable discretion, after establishing reasonable reserves for Partnership obligations, working capital, contingencies, and anticipated expenses.

1.11 "Fiscal Year" means the fiscal year of the Partnership, which shall be the calendar year unless otherwise determined by the General Partner in compliance with Code Section 706.

1.12 "General Partner" means any Person designated as a general partner of the Partnership in the Certificate and admitted as a general partner pursuant to this Agreement and 805 ILCS 215/401, in such Person's capacity as a general partner.

1.13 "Limited Partner" means any Person admitted as a limited partner of the Partnership pursuant to this Agreement and 805 ILCS 215/301, in such Person's capacity as a limited partner.

1.14 "Majority in Interest" means Partners holding more than fifty percent (50%) of the aggregate Percentage Interests then held by all Partners (or, if specified, all Partners of a particular class).

1.15 "Net Profits" and "Net Losses" mean, for each Fiscal Year or other period, the taxable income or loss of the Partnership for such period as determined for federal income tax purposes, with such adjustments as are required by Treasury Regulations Section 1.704-1(b)(2)(iv).

1.16 "Partner" means any General Partner or Limited Partner.

1.17 "Partnership" means the limited partnership formed under this Agreement and the Act.

1.18 "Partnership Interest" means a Partner's entire interest in the Partnership, including the Partner's Transferable Interest, and all management and other rights appurtenant thereto.

1.19 "Percentage Interest" means, with respect to each Partner, the percentage set forth opposite such Partner's name in Exhibit A, as may be adjusted from time to time in accordance with this Agreement.

1.20 "Person" means an individual, corporation, limited liability company, partnership, joint venture, trust, estate, association, or any other legal entity.

1.21 "Transfer" means any sale, assignment, pledge, hypothecation, encumbrance, gift, or other disposition, whether voluntary or involuntary, by operation of law or otherwise.

1.22 "Transferable Interest" means a Partner's right to receive distributions from the Partnership as defined in 805 ILCS 215/701.

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

ARTICLE 2: FORMATION OF LIMITED PARTNERSHIP

2.1 Formation. The Partners hereby form a limited partnership under the name set forth in Section 2.2 pursuant to the provisions of the Act. The General Partner shall file or cause to be filed the Certificate with the Illinois Secretary of State in accordance with 805 ILCS 215/201. A limited partnership is formed at the time of the filing of the initial Certificate of Limited Partnership by the Secretary of State.

2.2 Name. The name of the Partnership shall be:

[________________________________], L.P.

The name of the Partnership shall comply with 805 ILCS 215/108, which requires that the name of a limited partnership contain the words "limited partnership" or the abbreviation "L.P." or "LP" and shall be distinguishable on the records of the Secretary of State from every other name of an existing entity.

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

[________________________________]
[________________________________]
[________________________________]

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

2.4 Registered Agent and Office. Pursuant to 805 ILCS 215/114, the Partnership's registered agent and registered office in the State of Illinois shall be:

Registered Agent: [________________________________]
Street Address: [________________________________]
City, State, ZIP: [________________________________], Illinois [____]

The registered office must be located in Illinois. The General Partner may change the registered agent or registered office in compliance with 805 ILCS 215/115.

2.5 Certificate of Limited Partnership. The Certificate shall be filed with the Illinois Secretary of State at:

Illinois Secretary of State
Business Services Department
501 S. Second Street, Suite 328
Springfield, Illinois 62756
Phone: (217) 782-6961
Website: www.ilsos.gov

Filing Form: LP 201 — Certificate of Limited Partnership
Filing Fee: $150.00 (checks payable to "Illinois Secretary of State" — cash NOT accepted)

The Certificate shall be signed by all General Partners listed therein and shall contain the information required by 805 ILCS 215/201, including:

• (a) The name of the limited partnership;
• (b) The street and mailing addresses of the principal office and the registered office;
• (c) The name and street address of the registered agent;
• (d) The name and business address of each General Partner;
• (e) Whether the limited partnership is a limited liability limited partnership;
• (f) Any additional information the General Partners determine to include.

2.6 Amendments to Certificate. The General Partner shall file amendments to the Certificate on Form LP 202 as required by 805 ILCS 215/202 whenever there is:

• (a) A change in the name of the Partnership;
• (b) A change in the address of the principal office or registered office;
• (c) The admission, withdrawal, or removal of a General Partner;
• (d) A conversion to or from a limited liability limited partnership; or
• (e) Any other change in information required in the Certificate.

2.7 Annual Reports. The Partnership shall file annual reports with the Illinois Secretary of State as required to maintain good standing. Annual reports are due on the anniversary of the filing date, and the General Partner shall ensure timely filing with all required fees.

2.8 Assumed Name. If the Partnership operates under a name other than the name set forth in the Certificate, the General Partner shall file an assumed business name registration with the appropriate county clerk in each county where the Partnership operates, in compliance with Illinois law.

ARTICLE 3: PURPOSE AND POWERS

3.1 Purpose. The purpose of the Partnership is to:

[________________________________]
[________________________________]
[________________________________]

and to engage in any and all lawful activities incidental or related thereto for which limited partnerships may be organized under the Act.

3.2 Powers. The Partnership shall have all powers necessary, suitable, or convenient to accomplish its purposes, including without limitation the power to:

• (a) Acquire, hold, own, operate, lease, mortgage, sell, exchange, and dispose of real and personal property;
• (b) Borrow money and issue evidences of indebtedness, and secure any such indebtedness by mortgage, pledge, or other encumbrance;
• (c) Enter into contracts and agreements of every kind;
• (d) Sue and be sued, complain, and defend;
• (e) Employ agents, employees, and independent contractors;
• (f) Open and maintain bank accounts and invest Partnership funds;
• (g) Qualify to do business in other states and jurisdictions; and
• (h) Take any and all other actions necessary or incidental to the foregoing.

ARTICLE 4: TERM AND DURATION

4.1 Term. The Partnership shall commence on the date the Certificate is filed with the Illinois Secretary of State and shall continue until:

☐ Perpetual — the Partnership shall have perpetual existence unless dissolved in accordance with Article 13.

☐ Fixed Term — the Partnership shall continue until [__/__/____], unless earlier dissolved in accordance with Article 13.

☐ Upon the occurrence of: [________________________________]

4.2 Continuation. The Partnership shall not be dissolved by the admission, withdrawal, or dissociation of any Partner except as expressly provided in Article 13.

ARTICLE 5: CAPITAL CONTRIBUTIONS

5.1 Initial Capital Contributions. Each Partner shall make initial Capital Contributions to the Partnership in the amounts, forms, and on the dates set forth in Exhibit A. The initial Capital Contributions are as follows:

5.2 Additional Capital Contributions.

(a) No Partner shall be required to make additional Capital Contributions to the Partnership beyond the amounts set forth in Exhibit A without the unanimous written consent of all Partners, except as otherwise provided herein.

(b) The General Partner may issue capital calls requesting additional Capital Contributions from the Partners by providing at least thirty (30) days' written notice specifying the amount, purpose, and due date of the requested contribution. Additional contributions require the approval of a Majority in Interest of the Limited Partners.

(c) If approved, each Partner shall contribute its pro rata share of the additional contribution based on its Percentage Interest.

(d) A Partner who fails to make a required additional Capital Contribution within the time specified shall be a "Defaulting Partner," and the non-defaulting Partners shall have the remedies set forth in Section 5.3.

5.3 Default in Additional Contributions. If a Partner defaults in making a required additional Capital Contribution, the non-defaulting Partners may, at their election:

• (a) Advance the defaulting Partner's share as a loan bearing interest at the rate of [____]% per annum (not to exceed the maximum rate permitted under Illinois law);
• (b) Dilute the defaulting Partner's Percentage Interest proportionally;
• (c) Treat the default as an offer by the defaulting Partner to sell its Partnership Interest at a price determined pursuant to Section 11.4; or
• (d) Pursue any other remedies available at law or in equity.

5.4 Form of Contribution. Capital Contributions may be made in cash, tangible or intangible property, services rendered, promissory notes, or other obligations to contribute cash, property, or services, as permitted by 805 ILCS 215/501.

5.5 No Interest on Capital. No Partner shall be entitled to receive interest on any Capital Contribution.

5.6 Return of Capital Contributions. Except as otherwise provided in this Agreement or required by the Act, no Partner shall have the right to demand or receive the return of all or any part of such Partner's Capital Contribution.

5.7 Liability for Contribution. A Partner's obligation to make a Capital Contribution is not excused by the Partner's death, disability, or other inability to perform personally, in accordance with 805 ILCS 215/502. A creditor of a limited partnership who extends credit or otherwise acts in reliance on an obligation to make a contribution, without notice of any amendment to or cancellation of the obligation, may enforce the original obligation.

ARTICLE 6: CAPITAL ACCOUNTS

6.1 Maintenance of Capital Accounts. A separate Capital Account shall be maintained for each Partner in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv). Each Partner's Capital Account shall be:

(a) Credited with:

• (i) The amount of cash contributed by such Partner;
• (ii) The fair market value of property contributed by such Partner (net of liabilities secured by such property that the Partnership is considered to assume or take subject to);
• (iii) The amount of Net Profits and other items of income or gain allocated to such Partner; and
• (iv) Any other amounts required by applicable Treasury Regulations.

(b) Debited with:

• (i) The amount of cash distributed to such Partner;
• (ii) The fair market value of property distributed to such Partner (net of liabilities secured by such property that the Partner is considered to assume or take subject to);
• (iii) The amount of Net Losses and other items of deduction or loss allocated to such Partner; and
• (iv) Any other amounts required by applicable Treasury Regulations.

6.2 Transfer of Capital Account. Upon the Transfer of a Partnership Interest, the Capital Account of the transferring Partner attributable to the transferred interest shall carry over to the transferee in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(l).

6.3 Compliance with Treasury Regulations. The provisions of this Article 6 and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied consistently therewith. The General Partner shall make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership's balance sheet, in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(q).

ARTICLE 7: ALLOCATIONS OF PROFITS AND LOSSES

7.1 Allocation of Net Profits. Net Profits for each Fiscal Year shall be allocated among the Partners in proportion to their respective Percentage Interests, unless otherwise required by the Code or this Agreement.

7.2 Allocation of Net Losses. Net Losses for each Fiscal Year shall be allocated among the Partners in proportion to their respective Percentage Interests; provided, however, that no allocation of Net Losses shall be made to any Partner to the extent such allocation would create or increase a deficit balance in such Partner's Capital Account in excess of the amount such Partner is obligated or deemed obligated to restore under Treasury Regulations Section 1.704-1(b)(2)(ii)(c).

7.3 Special Allocations.

(a) Qualified Income Offset. If any Partner unexpectedly receives an adjustment, allocation, or distribution described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of Partnership 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, the Adjusted Capital Account Deficit of such Partner as quickly as possible.

(b) Minimum Gain Chargeback. Notwithstanding any other provision of this Article 7, if there is a net decrease in Partnership minimum gain during any Fiscal Year, each Partner shall be allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in the manner and to the extent required by Treasury Regulations Sections 1.704-2(f) and 1.704-2(j)(2)(i).

(c) Partner Nonrecourse Debt Minimum Gain Chargeback. Notwithstanding any other provision of this Article 7 (other than Section 7.3(b)), if there is a net decrease in Partner nonrecourse debt minimum gain during any Fiscal Year, each Partner who has a share of such Partner nonrecourse debt minimum gain shall be allocated items of Partnership income and gain for such year in the manner and amounts required by Treasury Regulations Section 1.704-2(i)(4).

(d) Nonrecourse Deductions. Nonrecourse deductions for any Fiscal Year shall be allocated to the Partners in proportion to their respective Percentage Interests.

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

7.4 Tax Allocations Under Section 704(c). In accordance with Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the Partnership shall, solely for tax purposes, be allocated among the Partners so as to take into account any variation between the adjusted basis of such property to the Partnership for federal income tax purposes and the initial fair market value of such property.

7.5 Allocations Upon Transfer. If a Partnership Interest is Transferred during any Fiscal Year, the Net Profits and Net Losses attributable to such interest for such year shall be allocated between the transferor and transferee using any method permitted under Code Section 706, as determined by the General Partner in its discretion.

7.6 Curative Allocations. The allocations set forth in Section 7.3 (the "Regulatory Allocations") are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Partners that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of Partnership income, gain, deduction, or loss pursuant to this Section 7.6.

ARTICLE 8: DISTRIBUTIONS

8.1 Distributions of Distributable Cash. Subject to Section 8.3, Distributable Cash shall be distributed to the Partners at such times and in such amounts as the General Partner shall determine in its reasonable discretion, in proportion to their respective Percentage Interests.

8.2 Timing of Distributions. The General Partner shall use reasonable efforts to cause distributions to be made at least:

☐ Quarterly — within forty-five (45) days after the end of each calendar quarter
☐ Semi-annually — within sixty (60) days after the end of each semi-annual period
☐ Annually — within ninety (90) days after the end of each Fiscal Year
☐ Other: [________________________________]

8.3 Limitations on Distributions. No distribution shall be made if, after giving effect to the distribution:

• (a) The Partnership would not be able to pay its debts as they become due in the ordinary course of business; or
• (b) The Partnership's total assets would be less than the sum of its total liabilities plus the amount that would be needed to satisfy the preferential rights of Partners whose preferential rights are superior to those of Partners receiving the distribution.

8.4 Tax Distributions. Notwithstanding Section 8.1, the General Partner shall use reasonable efforts to distribute to each Partner, no later than April 1 of each year, an amount equal to the estimated federal and state income tax liability of such Partner arising from allocations of Partnership income for the preceding Fiscal Year, calculated using the highest marginal individual income tax rate applicable in Illinois.

8.5 Distributions in Kind. The General Partner may make distributions in kind at the fair market value of the distributed property as determined by the General Partner in good faith. No Partner may demand a distribution in kind. Any in-kind distribution shall be treated as a distribution of cash equal to the fair market value of the property distributed.

8.6 Withholding. The Partnership shall be entitled to withhold from distributions to any Partner any amounts required to be withheld under federal, state (including the Illinois Income Tax Act, 35 ILCS 5/), or local tax laws. Any amounts so withheld shall be treated as having been distributed to such Partner for all purposes of this Agreement.

ARTICLE 9: MANAGEMENT AND OPERATIONS

9.1 General Partner Authority. Pursuant to 805 ILCS 215/406, the General Partner shall have full, exclusive, and complete authority, power, and discretion to manage, control, administer, and operate the business and affairs of the Partnership and to make all decisions regarding the business of the Partnership, subject to the limitations set forth in Section 9.2. Each General Partner has equal rights in the management and conduct of the Partnership's activities.

9.2 Limitations on General Partner Authority. Notwithstanding Section 9.1, the General Partner shall not take any of the following actions without the prior written consent of a Majority in Interest of the Limited Partners (unless a higher percentage is specified):

(a) Sell, exchange, or otherwise dispose of all or substantially all of the Partnership's assets outside the ordinary course of business;

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

(c) Convert the Partnership to another form of entity;

(d) Incur indebtedness in excess of $[________________] individually or $[________________] in the aggregate in any Fiscal Year;

(e) Enter into any transaction with the General Partner or any Affiliate of the General Partner involving consideration in excess of $[________________];

(f) Make any single capital expenditure in excess of $[________________];

(g) Confess a judgment against the Partnership;

(h) Amend this Agreement;

(i) Admit additional General Partners or Limited Partners (except as provided in Article 11);

(j) File a voluntary petition for bankruptcy, make an assignment for the benefit of creditors, or consent to the appointment of a receiver;

(k) Change the nature or scope of the Partnership's business;

(l) Commingle Partnership funds with those of any other Person;

(m) Guarantee the obligations of any third party; or

(n) Take any action that would make it impossible to carry on the ordinary business of the Partnership.

9.3 Standard of Care. The General Partner shall discharge its duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the General Partner reasonably believes to be in the best interests of the Partnership. The General Partner's duty of loyalty and duty of care are as set forth in the Act.

9.4 Compensation of General Partner. The General Partner shall be entitled to receive compensation for services rendered to the Partnership as follows:

☐ Management Fee: $[________________] per [month/quarter/year]
☐ Percentage of Gross Revenues: [____]%
☐ Percentage of Net Profits: [____]%
☐ Other: [________________________________]
☐ No compensation (distributions only)

In addition, the General Partner shall be reimbursed for all reasonable out-of-pocket expenses incurred in connection with the Partnership's business upon presentation of appropriate documentation.

9.5 Officers. The General Partner may appoint officers of the Partnership, including but not limited to a President, Vice President, Secretary, Treasurer, and Chief Financial Officer, and may delegate such authority to such officers as the General Partner deems appropriate. Any officer may be removed by the General Partner at any time, with or without cause.

9.6 Bank Accounts. All Partnership funds shall be deposited in one or more accounts maintained in the Partnership's name at financial institutions selected by the General Partner. Withdrawals from such accounts shall be made only by persons authorized by the General Partner.

9.7 Conflicts of Interest. The General Partner and its Affiliates may engage in business activities outside the Partnership, including activities that may compete with the Partnership, unless otherwise agreed in writing by the Partners. The General Partner shall disclose to the Limited Partners any material conflict of interest with respect to any Partnership transaction.

ARTICLE 10: RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

10.1 No Management Rights. In accordance with 805 ILCS 215/302, a Limited Partner does not have the right or power to act for or bind the Partnership solely by reason of being a Limited Partner.

10.2 No Personal Liability. Pursuant to 805 ILCS 215/303, a Limited Partner is not personally liable, directly or indirectly, by way of contribution or otherwise, for a debt, obligation, or liability of the Partnership solely by reason of being or acting as a Limited Partner. This applies even if the Limited Partner participates in the management and control of the Partnership. This provision supersedes the "control rule" of prior Illinois law.

10.3 Voting Rights. The Limited Partners shall have the right to vote on the following matters:

• (a) Amendment of this Agreement;
• (b) Dissolution of the Partnership;
• (c) Admission of additional General Partners;
• (d) Removal of the General Partner;
• (e) Sale or disposition of all or substantially all Partnership assets;
• (f) Merger, conversion, or consolidation of the Partnership;
• (g) Any other matters requiring Limited Partner consent under this Agreement or the Act.

10.4 Meetings.

(a) The General Partner may call meetings of the Partners at any time. The General Partner shall call a meeting upon the written request of Limited Partners holding at least twenty percent (20%) of the aggregate Percentage Interests held by all Limited Partners.

(b) Written notice of any meeting shall be given to all Partners at least fifteen (15) days and not more than sixty (60) days before the meeting date, and shall specify the date, time, place, and purposes of the meeting.

(c) A quorum for any meeting shall consist of Partners (present in person or by proxy) holding a majority of the aggregate Percentage Interests.

(d) Any action required or permitted to be taken at a meeting may be taken without a meeting if the written consent of Partners holding the requisite Percentage Interests is obtained and delivered to the General Partner.

10.5 Information Rights. In accordance with 805 ILCS 215/304, each Limited Partner has the right, upon reasonable demand stating the purpose, to obtain from the Partnership:

• (a) A copy of this Agreement and all amendments;
• (b) A copy of the Certificate and all amendments;
• (c) Copies of the Partnership's federal, state, and local income tax returns for the three (3) most recent Fiscal Years;
• (d) Copies of any financial statements maintained by the Partnership for the three (3) most recent Fiscal Years;
• (e) A current list of the names and last known addresses of all Partners;
• (f) Information regarding the Partnership's business, financial condition, and other circumstances reasonably required for the proper exercise of the Limited Partner's rights.

10.6 Derivative Actions. A Limited Partner may bring a derivative action in the right of the Partnership pursuant to 805 ILCS 215/1001 through 215/1005.

10.7 Direct Actions. A Limited Partner may maintain a direct action against the Partnership or another Partner pursuant to 805 ILCS 215/901.

ARTICLE 11: TRANSFER OF PARTNERSHIP INTERESTS

11.1 Restrictions on Transfer. No Partner shall Transfer all or any portion of its Partnership Interest except in compliance with this Article 11. Any attempted Transfer in violation of this Article 11 shall be void and of no effect.

11.2 Conditions for Transfer. A Transfer of a Partnership Interest shall be permitted only if:

• (a) The transferring Partner provides at least thirty (30) days' prior written notice to the General Partner and all other Partners;
• (b) The Transfer complies with applicable federal and state securities laws, including the Illinois Securities Law of 1953 (815 ILCS 5/);
• (c) The Transfer would not cause a termination of the Partnership under Code Section 708;
• (d) The transferee executes a written instrument agreeing to be bound by this Agreement;
• (e) The Transfer satisfies the right of first refusal provisions of Section 11.3;
• (f) The General Partner consents in writing (which consent shall not be unreasonably withheld); and
• (g) The transferring Partner pays all reasonable expenses incurred by the Partnership in connection with the Transfer.

11.3 Right of First Refusal.

(a) Before any Transfer (other than a Permitted Transfer under Section 11.5), the transferring Partner (the "Offering Partner") shall first offer the Partnership Interest to the remaining Partners by delivering a written notice (the "Offer Notice") specifying the price, terms, conditions, and identity of the proposed transferee.

(b) Each remaining Partner shall have the right, exercisable within thirty (30) days after receipt of the Offer Notice, to purchase all or a portion of the offered Partnership Interest in proportion to such Partner's Percentage Interest (relative to the total Percentage Interests of all Partners other than the Offering Partner).

(c) If the remaining Partners do not collectively elect to purchase all of the offered Partnership Interest within such thirty (30) day period, the Partnership shall have an additional fifteen (15) days to elect to purchase any unsubscribed portion.

(d) If neither the Partners nor the Partnership elects to purchase all of the offered interest, the Offering Partner may Transfer the offered interest to the proposed transferee on terms no more favorable to the transferee than those specified in the Offer Notice, provided such Transfer is completed within one hundred twenty (120) days after the expiration of all right of first refusal periods.

11.4 Valuation. If the Partners cannot agree on the fair market value of a Partnership Interest for purposes of this Article 11, the value shall be determined by a qualified independent appraiser mutually agreed upon by the parties. If the parties cannot agree on an appraiser within fifteen (15) days, each party shall select an appraiser, and the two appraisers shall select a third appraiser. The determination of the third appraiser shall be final and binding, and the costs of the appraisal shall be borne equally by the parties.

11.5 Permitted Transfers. The following Transfers shall not require compliance with Section 11.3 (Right of First Refusal) but shall otherwise comply with this Article 11:

• (a) Transfers to a Partner's spouse, domestic partner, children, grandchildren, or trusts established for their benefit;
• (b) Transfers between entities under common Control with the transferring Partner;
• (c) Transfers by operation of law upon the death of a Partner to such Partner's estate or heirs;
• (d) Transfers to a revocable living trust of which the transferring Partner is the settlor and beneficiary.

11.6 Admission of Transferee as Partner. A transferee of a Partnership Interest shall be admitted as a substitute Partner only with the written consent of the General Partner and upon:

• (a) Execution of a written instrument agreeing to be bound by this Agreement;
• (b) Payment of all reasonable costs and expenses of the Partnership in connection with the admission; and
• (c) Compliance with the Act and this Agreement.

11.7 Effect of Transfer. Until a transferee is admitted as a Partner, the transferee shall be an Assignee and shall only be entitled to receive distributions and allocations of income, gain, loss, deduction, and credit attributable to the Transferred interest, pursuant to 805 ILCS 215/701 through 215/703.

ARTICLE 12: WITHDRAWAL AND DISSOCIATION

12.1 Dissociation of Limited Partner. A person is dissociated as a Limited Partner upon the occurrence of any event described in 805 ILCS 215/601, including:

• (a) The Partnership's receipt of notice of the person's express will to withdraw as a Limited Partner on a future date at least six (6) months after the date of the notice (or such shorter period as provided in this Agreement);
• (b) The occurrence of an event agreed to in this Agreement as causing the person's dissociation;
• (c) The person's expulsion as a Limited Partner pursuant to this Agreement or by judicial order under 805 ILCS 215/602;
• (d) The person becoming a debtor in bankruptcy; or
• (e) Other events specified in the Act.

12.2 Dissociation of General Partner. A person is dissociated as a General Partner upon the occurrence of any event described in 805 ILCS 215/603, including:

• (a) The Partnership's receipt of notice of the person's express will to withdraw as a General Partner on a future date at least ninety (90) days after the date of the notice (or such shorter period as provided in this Agreement);
• (b) The occurrence of an event agreed to in this Agreement as causing the person's dissociation;
• (c) Removal of the General Partner by the unanimous consent of the other Partners;
• (d) The person's expulsion by judicial order;
• (e) The person becoming a debtor in bankruptcy; or
• (f) Other events specified in the Act.

12.3 Effect of Dissociation — Limited Partner. Upon dissociation, a dissociated Limited Partner's right to participate in the management and conduct of the Partnership's activities terminates. The dissociated Limited Partner's Transferable Interest shall be treated as if the Limited Partner were an Assignee.

12.4 Effect of Dissociation — General Partner. Upon dissociation of a General Partner:

• (a) The dissociated General Partner's right to participate in the management and conduct of the Partnership's activities terminates;
• (b) The dissociated General Partner's duty of loyalty and duty of care continue only with regard to matters arising and events occurring before the person's dissociation;
• (c) If the Partnership continues, the dissociated General Partner's interest shall be treated as a Transferable Interest held by an Assignee.

If no General Partner remains, the Partnership shall be dissolved unless, within ninety (90) days after the dissociation, Partners owning a majority of the rights to receive distributions consent in writing to continue the business of the Partnership and to the appointment of a successor General Partner.

12.5 Wrongful Dissociation. A Partner's dissociation is wrongful if it is in breach of an express provision of this Agreement or, in the case of a General Partner, the person withdraws before the expiration of the term specified in Section 4.1. A Partner who wrongfully dissociates shall be liable to the Partnership and the other Partners for damages caused by the wrongful dissociation.

ARTICLE 13: DISSOLUTION AND WINDING UP

13.1 Events of Dissolution. The Partnership shall be dissolved upon the first to occur of the following events, pursuant to 805 ILCS 215/801:

(a) The occurrence of an event or circumstance that this Agreement states causes dissolution, including expiration of the term specified in Section 4.1;

(b) The consent of all General Partners and of Limited Partners owning a majority of the rights to receive distributions held by Limited Partners at the time of the consent;

(c) The dissociation of a person as a General Partner, unless:

• (i) There is at least one remaining General Partner and this Agreement permits the business to continue with that General Partner; or
• (ii) Within ninety (90) days after the dissociation, Partners owning a majority of the rights to receive distributions consent to continue the Partnership and admit at least one General Partner;

(d) The passage of ninety (90) consecutive days during which the Partnership has no Limited Partners;

(e) Entry of a judicial decree of dissolution under 805 ILCS 215/802; or

(f) Administrative dissolution by the Secretary of State.

13.2 Winding Up. Upon dissolution, the General Partner (or, if there is no General Partner, a person appointed by a majority of the Limited Partners) shall wind up the Partnership's affairs pursuant to 805 ILCS 215/803. During winding up:

• (a) The Partnership shall continue solely for the purpose of winding up its business;
• (b) The General Partner may take any action appropriate to wind up the Partnership's business, including preserving the Partnership's business or property as a going concern, collecting debts, selling assets, and discharging obligations;
• (c) The General Partner shall provide a final accounting to all Partners;
• (d) The General Partner shall cause the Partnership's tax returns to be prepared and filed.

13.3 Distribution Upon Liquidation. Upon completion of winding up, the assets of the Partnership shall be distributed in the following order of priority:

(a) First, to creditors of the Partnership, including Partners who are creditors (to the extent otherwise permitted by law), in satisfaction of the liabilities of the Partnership (other than liabilities for distributions to Partners);

(b) Second, to Partners and former Partners in satisfaction of their claims for unpaid distributions previously declared;

(c) Third, to Partners for the return of their Capital Contributions; and

(d) Fourth, the balance, if any, to Partners in proportion to their respective Percentage Interests.

If the Partnership's assets are insufficient to satisfy all claims, claims shall be paid in the order of priority set forth above, and claims within each tier shall be paid pro rata.

13.4 Statement of Termination. Upon completion of winding up, the General Partner shall file a Statement of Termination with the Illinois Secretary of State pursuant to 805 ILCS 215/203.

13.5 Deficit Capital Account. No Limited Partner shall be required to pay to the Partnership or to any creditor of the Partnership any deficit balance in such Limited Partner's Capital Account. The General Partner shall be required to contribute to the Partnership any deficit balance in the General Partner's Capital Account within ninety (90) days after the date of dissolution.

ARTICLE 14: BOOKS, RECORDS, AND TAX MATTERS

14.1 Books and Records. The Partnership shall maintain at its principal office, or make available within a reasonable time after a request, the following books and records:

• (a) A current list of the full name and last known mailing address of each Partner;
• (b) Copies of the Certificate and all amendments thereto;
• (c) Copies of this Agreement and all amendments thereto;
• (d) Copies of all federal, state, and local income tax returns and reports for the three (3) most recent Fiscal Years;
• (e) Copies of any financial statements of the Partnership for the three (3) most recent Fiscal Years;
• (f) Books and records sufficient to record the Partnership's business, affairs, and financial condition;
• (g) A record of the Capital Contributions made by each Partner; and
• (h) Minutes of all meetings of Partners and records of all actions taken by consent.

14.2 Tax Returns. The General Partner shall cause the Partnership's federal and Illinois income tax returns to be prepared and filed in a timely manner. The General Partner shall furnish each Partner with a Schedule K-1 (or successor form) within seventy-five (75) days after the end of each Fiscal Year.

14.3 Illinois Income Tax. The Partnership shall comply with the Illinois Income Tax Act (35 ILCS 5/) and file all required Illinois partnership returns. The General Partner shall ensure that all required withholding and estimated tax payments are made on behalf of any Partners who are nonresidents of Illinois.

14.4 Tax Matters Partner / Partnership Representative. The General Partner shall serve as the "Tax Matters Partner" under Code Section 6231 (for tax years to which that provision applies) and as the "Partnership Representative" under Code Section 6223 (for tax years beginning after December 31, 2017). The Partnership Representative shall:

• (a) Have the authority to make all elections, take all actions, and represent the Partnership in connection with all tax audits, examinations, and proceedings;
• (b) Provide prompt notice to all Partners of any tax proceeding or audit;
• (c) Not settle or compromise any tax matter without the consent of a Majority in Interest of the Limited Partners, unless the settlement or compromise has no material adverse effect on any Limited Partner.

14.5 Tax Elections. The General Partner shall have the authority to make all tax elections on behalf of the Partnership, including:

• (a) Elections under Code Section 754 to adjust the basis of Partnership property;
• (b) Elections regarding depreciation methods, recovery periods, and conventions;
• (c) The election to be classified as a partnership for federal income tax purposes;
• (d) The election under Code Section 6226 to push out imputed underpayments to the Partners; and
• (e) Any other election the General Partner deems appropriate.

14.6 Fiscal Year. The Fiscal Year of the Partnership shall be the calendar year, unless otherwise required by the Code or determined by the General Partner.

14.7 Banking. All funds of the Partnership shall be deposited in accounts in the name of the Partnership at such banks, trust companies, or other financial institutions as the General Partner shall determine. All withdrawals from Partnership accounts shall require the signature of the General Partner or such other persons as the General Partner may authorize in writing.

14.8 Accounting Method. The Partnership shall maintain its books and records using the [cash / accrual] method of accounting, in accordance with generally accepted accounting principles (GAAP) or such other method of accounting as the General Partner shall determine, consistently applied.

ARTICLE 15: INDEMNIFICATION AND LIABILITY

15.1 Indemnification of General Partner. The Partnership shall indemnify, defend, and hold harmless the General Partner and its respective Affiliates, officers, directors, members, managers, employees, agents, and representatives (collectively, the "Indemnified Parties") from and against any and all claims, demands, liabilities, costs, damages, judgments, settlements, and expenses (including reasonable attorneys' fees and court costs) arising out of or related to the management of the Partnership, the General Partner's status as a general partner, or the General Partner's actions taken on behalf of the Partnership in good faith; provided, however, that no indemnification shall be provided for:

• (a) Acts or omissions constituting fraud, willful misconduct, or gross negligence;
• (b) Acts or omissions constituting a material breach of this Agreement; or
• (c) Any transaction from which the Indemnified Party derived an improper personal benefit.

15.2 Advancement of Expenses. The Partnership shall advance expenses incurred by an Indemnified Party in defending any claim, demand, action, suit, or proceeding for which indemnification may be sought under Section 15.1, upon receipt of an undertaking by or on behalf of the Indemnified Party to repay such amount if it shall ultimately be determined that the Indemnified Party is not entitled to be indemnified.

15.3 Limitation of Liability of Limited Partners. Pursuant to 805 ILCS 215/303, a Limited Partner shall not be personally liable for the debts, obligations, or liabilities of the Partnership solely by reason of being a Limited Partner. This protection applies regardless of whether the Limited Partner participates in the management and control of the Partnership.

15.4 Limitation of Liability of General Partner. The General Partner shall not be liable to the Partnership or any Partner for any act or omission taken in good faith and in a manner reasonably believed to be in the best interests of the Partnership, unless such act or omission constitutes fraud, willful misconduct, or gross negligence.

15.5 Insurance. The General Partner may cause the Partnership to purchase and maintain insurance on behalf of the Indemnified Parties against any liability that may be asserted against or incurred by any Indemnified Party in connection with the Partnership's activities, whether or not the Partnership would have the power to indemnify such Indemnified Party against such liability.

15.6 Survival. The indemnification provisions of this Article 15 shall survive the dissolution, winding up, and termination of the Partnership and the withdrawal, removal, or dissociation of any Partner.

ARTICLE 16: GENERAL PROVISIONS

16.1 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Illinois, including the Illinois Uniform Limited Partnership Act (2001) (805 ILCS 215/), without regard to conflict of laws principles.

16.2 Dispute Resolution.

(a) Mediation. Any dispute arising out of or relating to this Agreement shall first be submitted to mediation in [________________________________], Illinois, in accordance with the mediation rules of the American Arbitration Association or another mutually agreed upon mediation service.

(b) Arbitration. If mediation is unsuccessful within sixty (60) days, any unresolved dispute shall be submitted to binding arbitration in [________________________________], Illinois, in accordance with the Commercial Arbitration Rules of the American Arbitration Association. The arbitration shall be conducted by a single arbitrator with expertise in partnership law. The arbitrator's decision shall be final and binding and may be entered as a judgment in any court of competent jurisdiction.

☐ Alternative: Litigation. All disputes shall be resolved exclusively in the state or federal courts located in [________________________________] County, Illinois, and each Partner irrevocably consents to the personal jurisdiction of such courts and waives any objection to venue.

16.3 Jury Waiver. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTNER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

16.4 Notices. All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed duly given:

• (a) When delivered personally;
• (b) One (1) business day after deposit with a nationally recognized overnight courier service;
• (c) Three (3) business days after deposit in the United States mail, first-class, postage prepaid, certified or registered mail, return receipt requested; or
• (d) Upon transmission by email with confirmed receipt by the recipient.

All notices shall be addressed to the Partner at the address set forth in Exhibit A or at such other address as such Partner may designate by written notice to all other Partners and the General Partner.

16.5 Amendment. This Agreement may be amended only by a written instrument signed by the General Partner and a Majority in Interest of the Limited Partners. Notwithstanding the foregoing, no amendment may, without the consent of an affected Partner:

• (a) Modify the Limited Partner's obligation to make Capital Contributions;
• (b) Alter the interest of the Partner in profits, losses, or distributions;
• (c) Reduce the Partner's voting rights; or
• (d) Amend this Section 16.5.

16.6 Entire Agreement. This Agreement, including all exhibits and schedules attached hereto, constitutes the entire agreement among the Partners with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, and discussions, whether oral or written.

16.7 Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be reformed to the minimum extent necessary to make it enforceable, and the validity, legality, and enforceability of the remaining provisions shall not be affected or impaired.

16.8 Waiver. No waiver of any provision of this Agreement shall be effective unless in writing and signed by the waiving Partner. No waiver of any breach or default shall be deemed a waiver of any subsequent breach or default of the same or a different provision.

16.9 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Partners and their respective heirs, executors, administrators, personal representatives, successors, and permitted assigns.

16.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Electronic signatures, including signatures transmitted by PDF, facsimile, or other electronic means, shall have the same force and effect as original signatures.

16.11 Creditors. None of the provisions of this Agreement shall be for the benefit of, or enforceable by, any creditor of the Partnership or any creditor of any Partner.

16.12 Headings. The section headings in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

16.13 Construction. This Agreement shall not be construed more strictly against any Partner solely by reason of the fact that it may have been prepared primarily by counsel for such Partner. Whenever the context requires, the gender of all words used in this Agreement includes the masculine, feminine, and neuter, and the singular includes the plural and vice versa.

16.14 Attorneys' Fees. In any action to enforce or interpret this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees, costs, and expenses from the non-prevailing party.

16.15 Jurisdiction-Specific Compliance. The Partners acknowledge that the Partnership must comply with all applicable Illinois laws and regulations, including but not limited to:

• Illinois Department of Revenue registration and tax obligations;
• Illinois Income Tax Act (35 ILCS 5/);
• Illinois Withholding Income Tax Act (35 ILCS 5/701 et seq.) for nonresident partners;
• Illinois Securities Law of 1953 (815 ILCS 5/) for partnership interest offerings;
• Illinois workers' compensation and employment laws, if applicable;
• Local business license and registration requirements.

SIGNATURES

IN WITNESS WHEREOF, the undersigned Partners have executed this Limited Partnership Agreement as of the Effective Date first written above.

GENERAL PARTNER(S):

General Partner:

Signature: [________________________________]
Printed Name: [________________________________]
Title (if entity): [________________________________]
Address: [________________________________]
Date: [__/__/____]

LIMITED PARTNER(S):

Limited Partner 1:

Signature: [________________________________]
Printed Name: [________________________________]
Title (if entity): [________________________________]
Address: [________________________________]
Date: [__/__/____]

Limited Partner 2:

Signature: [________________________________]
Printed Name: [________________________________]
Title (if entity): [________________________________]
Address: [________________________________]
Date: [__/__/____]

Limited Partner 3:

Signature: [________________________________]
Printed Name: [________________________________]
Title (if entity): [________________________________]
Address: [________________________________]
Date: [__/__/____]

NOTARY ACKNOWLEDGMENT

STATE OF ILLINOIS
COUNTY OF [________________________________]

On this [____] day of [________________], [____], before me, the undersigned notary public in and for said County and State, personally appeared:

[________________________________]

known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument, the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

Signature: [________________________________]
Printed Name of Notary: [________________________________]
My Commission Expires: [__/__/____]
Notary Public, State of Illinois
Acting in [________________________________] County

[NOTARY SEAL]

EXHIBIT A: PARTNER SCHEDULE

Total Percentage Interests: 100%

SOURCES AND REFERENCES

1. Illinois Uniform Limited Partnership Act (2001) — 805 ILCS 215/
   - Full text: https://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2625&ChapterID=65&SeqStart=2300000&SeqEnd=3400000

2. Illinois Secretary of State — Business Services
   - Limited Partnership Forms and Publications: https://www.ilsos.gov/publications/business-services/lp.html
   - Form LP 201 (Certificate of Limited Partnership): https://www.ilsos.gov/publications/pdf_publications/lp201.pdf
   - Filing Fee: $150.00

3. Illinois Secretary of State — Business Services Department
   - Address: 501 S. Second Street, Suite 328, Springfield, IL 62756
   - Phone: (217) 782-6961
   - Website: www.ilsos.gov

4. Illinois Income Tax Act — 35 ILCS 5/
   - Partnership tax obligations and withholding requirements

5. Illinois Securities Law of 1953 — 815 ILCS 5/
   - Applicable to offerings of partnership interests

6. IRS Partnership Tax Resources
   - 26 U.S.C. § 704 — Partner's Distributive Share
   - 26 U.S.C. § 706 — Taxable Years of Partner and Partnership
   - 26 U.S.C. § 708 — Continuation of Partnership
   - 26 U.S.C. § 754 — Manner of Electing Optional Adjustment to Basis of Partnership Property
   - Treasury Regulations § 1.704-1(b) — Partners' Distributive Shares
   - Treasury Regulations § 1.704-2 — Allocations Attributable to Nonrecourse Liabilities

7. Uniform Limited Partnership Act (2001) — Uniform Law Commission
   - https://www.uniformlaws.org/committees/community-home?CommunityKey=066b18d7-468c-4e80-b078-8cf739bc8a11

This document is provided for informational purposes only and does not constitute legal advice. It should be reviewed and customized by a qualified attorney licensed in Illinois before use. Laws change frequently, and this document may not reflect the most current statutory requirements.

Prepared for use on ezel.ai — Legal Template Repository