Limited Partnership Agreement - State of South Dakota

LIMITED PARTNERSHIP AGREEMENT

OF

[________________________________]

A SOUTH DAKOTA LIMITED PARTNERSHIP

Effective Date: [__/__/____]

RECITALS

THIS LIMITED PARTNERSHIP AGREEMENT (this "Agreement") is entered into and made effective as of [__/__/____] (the "Effective Date"), by and among:

GENERAL PARTNER(S):

[________________________________] (the "General Partner"), with a principal address at [________________________________], [________________________________], South Dakota [____]

LIMITED PARTNER(S):

[________________________________] (the "Limited Partner"), with a principal address at [________________________________], [________________________________], South Dakota [____]

(The General Partner and Limited Partner(s) are collectively referred to herein as the "Partners" and individually as a "Partner.")

WITNESSETH:

WHEREAS, the Partners desire to form a limited partnership under the laws of the State of South Dakota, pursuant to the South Dakota Uniform Limited Partnership Act, SDCL Chapter 48-7 (the "Act"); and

WHEREAS, a Certificate of Limited Partnership has been or will be filed with the South Dakota Secretary of State in accordance with SDCL § 48-7-201; and

WHEREAS, the Partners desire to establish the terms and conditions governing the formation, operation, management, and dissolution of the Partnership and to set forth their respective rights, obligations, and duties;

NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Partners 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 South Dakota Uniform Limited Partnership Act, SDCL Chapter 48-7, as amended from time to time.

(b) "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.

(c) "Agreement" means this Limited Partnership Agreement, as amended, modified, supplemented, or restated from time to time.

(d) "Bankruptcy" means, with respect to any Person, (i) the filing of a voluntary petition in bankruptcy; (ii) the commencement of an involuntary proceeding not dismissed within ninety (90) days; (iii) an assignment for the benefit of creditors; or (iv) the appointment of a receiver, trustee, or liquidator for such Person or a substantial portion of its assets.

(e) "Capital Account" means the account maintained for each Partner in accordance with Section 6.4 and Treasury Regulation § 1.704-1(b)(2)(iv).

(f) "Capital Contribution" means the total amount of cash and the fair market value of any property contributed to the Partnership by a Partner (net of liabilities assumed or to which the property is subject), as contemplated by SDCL § 48-7-501.

(g) "Certificate" means the Certificate of Limited Partnership of the Partnership filed with the South Dakota Secretary of State pursuant to SDCL § 48-7-201, as amended or restated.

(h) "Code" means the Internal Revenue Code of 1986, as amended, and any successor statute.

(i) "Distributable Cash" means the gross cash receipts of the Partnership less the portion used to pay or establish reserves for Partnership expenses, debt service, capital improvements, replacements, and contingencies, all as determined by the General Partner in its reasonable business judgment.

(j) "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 the Code.

(k) "General Partner" means any Person admitted to the Partnership as a general partner in accordance with the Act and this Agreement, named in the Certificate as required by SDCL § 48-7-201.

(l) "Interest" or "Partnership Interest" means the entire ownership interest of a Partner in the Partnership, including the right to distributions, allocations, information, and participation in management (if applicable).

(m) "Limited Partner" means any Person admitted to the Partnership as a limited partner in accordance with SDCL § 48-7-301 and this Agreement.

(n) "Majority in Interest" means Partners (other than the General Partner in its capacity as General Partner) holding more than fifty percent (50%) of the aggregate Percentage Interests.

(o) "Net Profits" and "Net Losses" mean the income, gain, loss, deductions, and credits of the Partnership as determined for federal income tax purposes, with adjustments required by this Agreement.

(p) "Percentage Interest" means the percentage set forth opposite each Partner's name on Exhibit A, as adjusted from time to time.

(q) "Person" means any individual, partnership, limited partnership, limited liability company, corporation, trust, estate, association, joint venture, governmental authority, or other entity.

(r) "Partnership" means the limited partnership formed under this Agreement and the Act.

(s) "Transfer" means any sale, assignment, transfer, conveyance, gift, exchange, pledge, hypothecation, encumbrance, or other disposition, whether voluntary or involuntary, by operation of law or otherwise.

(t) "Treasury Regulations" means the income tax regulations promulgated under the Code, as amended from time to time.

ARTICLE II — FORMATION AND ORGANIZATION

Section 2.1 Formation. The Partners hereby form a limited partnership under and pursuant to the Act. A Certificate of Limited Partnership shall be filed (or has been filed) with the South Dakota Secretary of State in accordance with SDCL § 48-7-201. The General Partner is authorized to execute, deliver, and file any amendments to the Certificate and any other documents required under the Act for the formation, operation, and maintenance of the Partnership.

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

[________________________________], Limited Partnership

The name must contain the words "limited partnership" without abbreviation, as required by SDCL § 48-7-102. The name shall not contain the name of a limited partner unless it is also the name of a general partner or the corporate name of a corporate general partner.

Section 2.3 Registered Office and Agent. The Partnership shall continuously maintain a registered office and registered agent in the State of South Dakota, as required by SDCL § 48-7-104.

The initial registered agent shall be: [________________________________]

The initial registered office shall be at:
[________________________________]
[________________________________], South Dakota [____]

The General Partner may change the registered agent or office by filing appropriate notice with the Secretary of State.

Section 2.4 Principal Office. The principal office of the Partnership shall be at:

[________________________________]
[________________________________], South Dakota [____]

The General Partner may change the principal office and shall notify all Partners within fifteen (15) days.

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, and to exercise all powers granted to limited partnerships under the Act and the laws of the State of South Dakota.

Section 2.6 Term. The Partnership shall commence upon the filing of the Certificate and shall continue until dissolved in accordance with Article XIV or as otherwise provided by the Act.

☐ The Partnership shall have perpetual duration.
☐ The Partnership shall have a term expiring on [__/__/____].
☐ The Partnership shall exist for a term of [____] years from the Effective Date.

Section 2.7 Qualification in Other Jurisdictions. The General Partner is authorized to qualify the Partnership to conduct business in any other jurisdiction as may be necessary or desirable.

Section 2.8 Title to Property. All Partnership property shall be owned by the Partnership as an entity. No Partner shall have individual ownership of Partnership property.

Section 2.9 South Dakota Tax Advantages. The Partners acknowledge that the State of South Dakota imposes no state individual income tax, no state corporate income tax, and no state partnership income tax. The Partnership shall not be required to file a state partnership income tax return in South Dakota. Partners who are residents of other states may have state tax obligations in their states of residence. The General Partner shall not be responsible for the filing of individual state tax returns of the Partners, but shall provide such information as Partners may reasonably require to satisfy their individual tax obligations.

ARTICLE III — PARTNERS

Section 3.1 General Partner. The name, address, and initial Capital Contribution of the General Partner are:

Section 3.2 Limited Partners. The names, addresses, and initial Capital Contributions of the Limited Partners are:

Section 3.3 Partner Schedule. The complete schedule of Partners is set forth on Exhibit A, which shall be updated by the General Partner to reflect any changes.

ARTICLE IV — MANAGEMENT AND OPERATIONS

Section 4.1 Management by General Partner. The business and affairs of the Partnership shall be managed exclusively by the General Partner, who shall have full, complete, and exclusive power and authority to manage, control, and operate the Partnership business and affairs, subject only to limitations expressly set forth in this Agreement.

Section 4.2 Powers of the General Partner. The General Partner shall have the power and authority, on behalf of the Partnership, to:

(a) Acquire, hold, manage, improve, develop, lease, sell, convey, mortgage, encumber, and deal with real and personal property;

(b) Enter into, execute, deliver, and perform contracts, agreements, leases, and instruments;

(c) Borrow money, issue evidences of indebtedness, and grant security interests in Partnership assets;

(d) Open and maintain bank and investment accounts;

(e) Employ, engage, retain, compensate, and terminate employees, agents, contractors, and professionals;

(f) Commence, prosecute, defend, settle, and compromise legal proceedings;

(g) Make distributions to Partners;

(h) Pay expenses and costs of the Partnership;

(i) Obtain and maintain insurance;

(j) Prepare and file tax returns and other required filings;

(k) Execute and deliver documents on behalf of the Partnership; and

(l) Take all other customary or reasonably related actions.

Section 4.3 Actions Requiring Consent of Limited Partners. The following actions require the prior written consent of a Majority in Interest of the Limited Partners:

(a) Sale, exchange, lease, mortgage, or disposition of all or substantially all Partnership assets;

(b) Merger, consolidation, or conversion of the Partnership;

(c) Admission of a new General Partner;

(d) Amendment to this Agreement materially and adversely affecting Limited Partner rights;

(e) Any single transaction or related series exceeding $[________________________________];

(f) Filing a voluntary bankruptcy petition or assignment for creditors' benefit;

(g) Transactions between the Partnership and the General Partner or Affiliates, unless on arm's-length terms;

(h) Issuance of additional Partnership Interests; and

(i) Voluntary dissolution, except as provided in Article XIV.

Section 4.4 Duties of General Partner. The General Partner shall:

(a) Devote such time and attention to Partnership business as is reasonably necessary;

(b) Maintain books and records in accordance with Article XV;

(c) File the Certificate and amendments with the South Dakota Secretary of State;

(d) File all required documents with the State of South Dakota;

(e) Prepare and file all federal and applicable state tax returns;

(f) Maintain appropriate insurance; and

(g) Provide reports and information to Limited Partners as required.

Section 4.5 Compensation of General Partner. The General Partner shall be entitled to:

(a) A management fee of $[________________________________] per [month/quarter/year]; and

(b) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with Partnership business.

Such amounts shall be treated as guaranteed payments under Code § 707(c).

Section 4.6 Other Activities. The General Partner and its Affiliates may engage in other business activities without presenting opportunities to the Partnership. The doctrine of corporate opportunity shall not apply.

Section 4.7 Delegation. The General Partner may delegate powers and duties but shall remain responsible for performance.

Section 4.8 Standard of Care. The General Partner shall perform its duties in good faith, with the care an ordinarily prudent person in a like position would exercise, and in a manner reasonably believed to be in the Partnership's best interests.

ARTICLE V — RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 5.1 No Management Participation. Except as expressly provided, no Limited Partner shall participate in management or control of Partnership business. No Limited Partner shall have the power to bind the Partnership.

Section 5.2 Limited Liability. Pursuant to SDCL § 48-7-303, a limited partner is not liable for the obligations of the Partnership unless, in addition to exercising rights as a limited partner, the limited partner participates in the control of the business. If a limited partner participates in control, such partner is liable only to persons who transact business with the Partnership reasonably believing that the limited partner is a general partner. A Limited Partner's exercise of rights under this Agreement shall not constitute participation in control.

Section 5.3 Safe Harbor Activities. Without limiting Section 5.2, a limited partner does not participate in control by:

(a) Being a contractor for, agent of, or employee of the Partnership or the General Partner;

(b) Consulting with and advising the General Partner regarding Partnership business;

(c) Acting as surety for the Partnership or guaranteeing obligations;

(d) Bringing a derivative action on behalf of the Partnership;

(e) Requesting or attending meetings of Partners;

(f) Voting on matters described in the partnership agreement; or

(g) Winding up the Partnership.

Section 5.4 Voting Rights. Each Limited Partner shall vote on matters requiring Limited Partner consent, in proportion to Percentage Interests.

Section 5.5 Right to Information. Each Limited Partner is entitled to:

(a) Inspect and copy Partnership records at the principal office during regular business hours, in accordance with SDCL § 48-7-105;

(b) Receive Partnership tax returns within ninety (90) days after each Fiscal Year;

(c) Receive an annual financial report within one hundred twenty (120) days after each Fiscal Year;

(d) Receive a Schedule K-1 within the time required by law; and

(e) Obtain such other information concerning Partnership affairs as is just and reasonable.

Section 5.6 No Withdrawal. No Limited Partner may withdraw from the Partnership prior to dissolution, except as provided in Article XI.

ARTICLE VI — CAPITAL CONTRIBUTIONS

Section 6.1 Initial Capital Contributions. Each Partner shall make the initial Capital Contribution set forth on Exhibit A on or before [__/__/____].

Section 6.2 Additional Capital Contributions.

(a) Select one:

☐ No additional Capital Contributions required.
☐ Additional Capital Contributions may be required as set forth below.

(b) If additional contributions are permitted, the General Partner may request contributions in proportion to Percentage Interests upon not less than thirty (30) days' prior written notice.

(c) Pursuant to SDCL § 48-7-502, a Partner's obligation to make a contribution is not excused by death, disability, or other inability to perform. If a Partner defaults:

(i) The General Partner may pursue legal remedies;

(ii) Other Partners may contribute the defaulting Partner's share with corresponding adjustments;

(iii) The unpaid amount may be treated as a loan at [____]% per annum interest; or

(iv) The defaulting Partner's Percentage Interest may be proportionally reduced.

Section 6.3 No Interest. No Partner shall receive interest on Capital Contributions except as expressly provided.

Section 6.4 Capital Accounts. A separate Capital Account shall be maintained for each Partner under Treasury Regulation § 1.704-1(b)(2)(iv). Each Capital Account shall be:

(a) Increased by: (i) cash contributed; (ii) the fair market value of property contributed (net of liabilities); and (iii) allocations of Net Profits and items of income or gain;

(b) Decreased by: (i) cash distributed; (ii) the fair market value of property distributed (net of liabilities); (iii) allocations of Net Losses and items of deduction or loss; and (iv) expenditures under Code § 705(a)(2)(B).

Section 6.5 Return of Capital. No Partner may demand return of Capital Contributions except upon dissolution or as expressly provided.

Section 6.6 Form of Contribution. Pursuant to SDCL § 48-7-501, a contribution may be in cash, property, services rendered, a promissory note, or other obligation to contribute cash, property, or perform services. Non-cash contributions shall be valued by agreement or independent appraisal.

ARTICLE VII — ALLOCATIONS OF PROFITS AND LOSSES

Section 7.1 Allocation of Net Profits. After giving effect to special allocations, Net Profits shall be allocated in proportion to Percentage Interests.

Section 7.2 Allocation of Net Losses. After giving effect to special allocations, Net Losses shall be allocated in proportion to Percentage Interests; provided that no Net Losses shall be allocated to a Limited Partner to the extent it would create or increase a deficit Capital Account balance beyond any amount the Limited Partner is obligated or deemed obligated to restore under Treasury Regulation §§ 1.704-2(g)(1) and 1.704-2(i)(5). Excess losses shall be allocated to the General Partner.

Section 7.3 Special Allocations. The following special allocations shall be made:

(a) Minimum Gain Chargeback. In accordance with Treasury Regulation § 1.704-2(f).

(b) Partner Nonrecourse Debt Minimum Gain Chargeback. In accordance with Treasury Regulation § 1.704-2(i)(4).

(c) Qualified Income Offset. In accordance with Treasury Regulation § 1.704-1(b)(2)(ii)(d).

(d) Nonrecourse Deductions. Allocated in proportion to Percentage Interests.

(e) Partner Nonrecourse Deductions. Allocated to the Partner bearing the economic risk of loss.

Section 7.4 Curative Allocations. The General Partner may make offsetting allocations so that net allocations approximate what would have occurred absent the Regulatory Allocations.

Section 7.5 Tax Allocations. For tax purposes, each item shall be allocated consistently with its "book" correlative, except as required by Code § 704(c) and Treasury Regulation § 1.704-1(b)(4)(i).

Section 7.6 Allocation Period. If a Percentage Interest changes during a Fiscal Year, allocations shall be made using any permissible method under Code § 706(d).

Section 7.7 Statutory Default. Pursuant to SDCL § 48-7-601, the profits and losses of the Partnership shall be allocated among the Partners as provided in this partnership agreement. To the extent this Agreement does not address a particular allocation, the Act's default rules shall apply.

ARTICLE VIII — DISTRIBUTIONS

Section 8.1 Distributions. The General Partner shall determine the amount and timing of distributions. Distributions shall be made in proportion to Percentage Interests unless otherwise provided.

Section 8.2 Frequency of Distributions. Distributions shall be made:

☐ Monthly, within [____] days after month-end.
☐ Quarterly, within [____] days after quarter-end.
☐ Annually, within [____] days after each Fiscal Year.
☐ At such times as the General Partner determines.

Section 8.3 Tax Distributions. Notwithstanding that South Dakota imposes no state income tax, Partners may reside in states that do impose income tax on their share of Partnership income. Within ninety (90) days after the close of each Fiscal Year, the Partnership shall distribute to each Partner an amount sufficient to cover such Partner's estimated federal income tax liability attributable to the Partnership's taxable income, calculated at the highest applicable marginal rate. Tax Distributions are advances against future distributions.

Section 8.4 Limitations on Distributions. No distribution shall be made if, after giving effect thereto:

(a) The Partnership would be unable to pay its debts as they become due; or

(b) The Partnership's total assets would be less than the sum of its total liabilities.

Section 8.5 Distributions in Kind. No Partner may demand in-kind distributions except with the General Partner's consent. In-kind distributions shall be valued at fair market value.

Section 8.6 Withholding. The Partnership may withhold from distributions amounts required by federal or applicable state tax law. Withheld amounts shall be treated as distributed to the applicable Partner.

ARTICLE IX — TRANSFER OF PARTNERSHIP INTERESTS

Section 9.1 Nature of Partnership Interest. A Partnership Interest is personal property. A Partner has no interest in specific Partnership property.

Section 9.2 Restrictions on Transfer. No Partner may Transfer any Partnership Interest except in compliance with this Article IX and applicable law. Any Transfer in violation of this Article shall be void.

Section 9.3 Transfers by Limited Partners. Pursuant to SDCL § 48-7-702, a Partnership Interest is assignable in whole or in part. A Limited Partner may Transfer all or any portion of such Interest only if:

(a) The transferring Partner provides at least thirty (30) days' prior written notice to the General Partner;

(b) The General Partner consents in writing (consent not to be unreasonably withheld);

(c) The transferee executes a written instrument agreeing to be bound by this Agreement;

(d) The Transfer would not cause treatment as a publicly traded partnership under Code § 7704;

(e) The Transfer would not violate applicable securities laws;

(f) The Transfer would not cause a Partnership termination under applicable tax law; and

(g) The transferring Partner pays all reasonable Partnership expenses.

Section 9.4 Rights of Assignee. Pursuant to SDCL § 48-7-702, an assignment of a Partnership Interest does not dissolve the Partnership or entitle the assignee to become a Partner or exercise any Partner rights. An assignee is entitled only to receive the distributions and allocations to which the assigning Partner would be entitled.

Section 9.5 Right of First Refusal. Before Transfer to a third party (other than a Permitted Transfer):

(a) The transferring Partner shall deliver an Offer Notice with the Interest, proposed transferee, and material terms;

(b) The Partnership shall have thirty (30) days to purchase;

(c) If the Partnership declines, the remaining Partners shall have thirty (30) additional days to purchase pro rata; and

(d) If neither exercises, the Transfer may proceed within ninety (90) days on terms no more favorable to the transferee.

Section 9.6 Transfers by General Partner. The General Partner may not Transfer its Interest without prior written consent of a Majority in Interest of the Limited Partners.

Section 9.7 Permitted Transfers. The following Transfers are permitted without General Partner consent, subject to Sections 9.3(c) through (f):

(a) Transfers to a revocable trust for estate planning where the Partner is trustee;

(b) Transfers to a Partner's spouse, children, grandchildren, or siblings, or trusts for their benefit;

(c) Transfers by an entity Partner to an Affiliate; and

(d) Transfers by operation of law upon death or incapacity.

Section 9.8 Admission of Assignee as Substituted Partner. An assignee may become a substituted Partner only if (i) the General Partner consents and (ii) the assignee complies with Article X. Until admitted, the assignee has only the rights described in Section 9.4.

ARTICLE X — ADMISSION OF NEW PARTNERS

Section 10.1 Admission of New Limited Partners. Pursuant to SDCL § 48-7-301, a person becomes a limited partner (a) at the time the Partnership is formed, or (b) at a later time specified in the partnership agreement. New Limited Partners may be admitted with the consent of the General Partner.

Section 10.2 Admission of New General Partner. Pursuant to SDCL § 48-7-401, additional general partners may be admitted as provided in the partnership agreement or, if silent, with the written consent of all Partners. Under this Agreement, admission requires consent of a Majority in Interest of the Limited Partners.

Section 10.3 Conditions to Admission. Each new Partner shall:

(a) Execute this Agreement or an instrument of adherence;

(b) Make the required Capital Contribution;

(c) Provide requested representations and warranties; and

(d) Pay all Partnership expenses in connection with the admission.

Section 10.4 Amendment of Certificate. Upon admission of a new General Partner, the General Partner shall file an amendment to the Certificate with the South Dakota Secretary of State in accordance with SDCL § 48-7-202.

ARTICLE XI — WITHDRAWAL AND DISSOCIATION

Section 11.1 Withdrawal of Limited Partner. A Limited Partner may withdraw from the Partnership at the time or upon the happening of events specified in this Agreement. If this Agreement does not specify, a Limited Partner may withdraw upon not less than six (6) months' prior written notice.

Under this Agreement, a Limited Partner may withdraw:

☐ Upon [____] days' prior written notice to the General Partner.
☐ Only upon the consent of the General Partner.
☐ Only upon dissolution of the Partnership.

Upon withdrawal, the withdrawing Limited Partner shall receive the fair value of such Partner's Interest as of the date of withdrawal, payable within [____] days or in [____] equal installments over [____] months.

Section 11.2 Withdrawal of General Partner. The General Partner may withdraw upon at least ninety (90) days' prior written notice to all Partners. Withdrawal in contravention of this Agreement may give rise to liability for damages.

Section 11.3 Events Causing Cessation of General Partner. A General Partner ceases to be a general partner upon the occurrence of events set forth in SDCL § 48-7-402, including:

(a) Voluntary withdrawal;

(b) Removal as provided in the partnership agreement;

(c) Bankruptcy;

(d) Assignment for the benefit of creditors;

(e) Appointment of a receiver or trustee;

(f) Death or judicial determination of incapacity (if a natural person);

(g) Dissolution or termination (if an entity); or

(h) Unless otherwise provided, removal by the unanimous vote of the Limited Partners.

Section 11.4 Continuation After Withdrawal of General Partner. Upon withdrawal of the General Partner, the Partnership shall not be dissolved if:

(a) The certificate permits continuation with consent of the remaining Partners; and

(b) A successor General Partner is admitted within ninety (90) days.

Section 11.5 Buyout Upon Withdrawal. A withdrawing Partner shall receive the fair market value of such Partner's Interest, determined as of the date of withdrawal, payable within [____] days or in agreed-upon installments.

ARTICLE XII — INDEMNIFICATION AND LIABILITY

Section 12.1 Indemnification. The Partnership shall indemnify the General Partner and its officers, directors, managers, members, employees, agents, and Affiliates (each, an "Indemnified Person") from all claims, demands, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising from the management or operation of the Partnership, to the fullest extent permitted by the Act; provided that no Indemnified Person shall be indemnified for:

(a) Fraud, willful misconduct, or gross negligence;

(b) Breach of fiduciary duty involving intentional misconduct or knowing violation of law; or

(c) Transactions yielding improper personal benefit.

Section 12.2 Advancement of Expenses. The Partnership shall advance reasonable expenses upon receipt of an undertaking to repay if indemnification is ultimately not warranted.

Section 12.3 Limitation of General Partner Liability. The General Partner shall not be liable for Losses arising from good-faith acts or omissions, except for fraud, willful misconduct, gross negligence, or knowing violation of law.

Section 12.4 Limitation of Limited Partner Liability. Pursuant to SDCL § 48-7-303, a Limited Partner's liability is limited to the Partner's Capital Contribution and any additional amounts agreed to be contributed, unless the Limited Partner participates in control of the business beyond the safe harbor activities set forth in the Act.

Section 12.5 Insurance. The General Partner may obtain insurance on behalf of Indemnified Persons.

ARTICLE XIII — TAX MATTERS

Section 13.1 Tax Classification. The Partners intend the Partnership to be classified as a partnership for federal income tax purposes. No election to be classified as a corporation shall be made without all Partners' written consent.

Section 13.2 Partnership Representative. The General Partner (or its designee) shall serve as "partnership representative" under Code § 6223 with all powers, including:

(a) Binding the Partnership and Partners in federal tax matters;

(b) Negotiating and settling with the IRS;

(c) Extending the statute of limitations;

(d) Filing administrative adjustment requests; and

(e) Making the push-out election under Code § 6226.

Section 13.3 Tax Returns. The General Partner shall prepare and timely file all required federal tax returns and furnish each Partner a Schedule K-1 within the required time. As South Dakota imposes no state income tax, no state partnership income tax return is required for South Dakota. However, the General Partner shall file any returns required in states where the Partnership conducts business or where Partners reside, as applicable.

Section 13.4 Tax Elections. The General Partner may make tax elections on behalf of the Partnership, including elections under Code §§ 754, 709, and 48; provided that a Section 754 election requires consent of a Majority in Interest of the Limited Partners.

Section 13.5 South Dakota Tax Matters. The Partners acknowledge that South Dakota imposes:

(a) No state individual income tax;

(b) No state corporate income tax;

(c) No state partnership income tax;

(d) No state capital gains tax; and

(e) No state inheritance or estate tax (as of the date of this Agreement).

The Partnership is not required to file a state income tax return in South Dakota. Partners who are residents of other states are solely responsible for complying with their state tax obligations. The General Partner shall provide each Partner with sufficient information to prepare individual state tax returns, including a breakdown of income, gain, loss, deductions, and credits by state, if applicable.

ARTICLE XIV — DISSOLUTION AND WINDING UP

Section 14.1 Nonjudicial Dissolution. Pursuant to SDCL § 48-7-801, the Partnership shall be dissolved upon:

(a) An event specified in the Certificate or this Agreement;

(b) Written consent of all Partners;

(c) The withdrawal of a General Partner unless: (i) there is at least one remaining General Partner, or (ii) within ninety (90) days, all remaining Partners agree in writing to continue the Partnership and appoint a successor General Partner; or

(d) Entry of a decree of judicial dissolution under SDCL § 48-7-802.

Section 14.2 Judicial Dissolution. Pursuant to SDCL § 48-7-802, a court may decree dissolution upon application by or for a partner whenever it is not reasonably practicable to carry on the business in conformity with the partnership agreement.

Section 14.3 Winding Up. Upon dissolution, the General Partner (or a liquidating trustee) shall wind up Partnership affairs in accordance with SDCL § 48-7-803. The Liquidator shall:

(a) Collect debts owed to the Partnership;

(b) Liquidate assets in an orderly manner;

(c) Discharge or provide for all liabilities; and

(d) Distribute remaining assets per Section 14.4.

Section 14.4 Distribution of Assets. Pursuant to SDCL § 48-7-804, upon winding up, assets shall be distributed:

(a) First, to creditors, including Partner creditors, in satisfaction of liabilities (excluding distributions to Partners);

(b) Second, except as provided in the partnership agreement, to Partners and former Partners in satisfaction of distributions owed;

(c) Third, to Partners first for the return of Capital Contributions, and then in proportion to their share of distributions.

If this Agreement modifies the statutory defaults:

(i) First, to Partners in proportion to positive Capital Account balances; and

(ii) Second, to Partners in proportion to Percentage Interests.

Section 14.5 Certificate of Cancellation. Upon completion of winding up, the Liquidator shall file a Certificate of Cancellation with the South Dakota Secretary of State in accordance with SDCL § 48-7-203.

Section 14.6 Reasonable Time for Winding Up. A reasonable time shall be allowed for orderly winding up to minimize losses.

Section 14.7 Deficit Capital Account Balance. No Limited Partner shall be required to restore a deficit Capital Account balance. The General Partner shall restore any deficit within ninety (90) days after dissolution or by the end of the taxable year, whichever is later.

ARTICLE XV — BOOKS, RECORDS, AND ACCOUNTING

Section 15.1 Books and Records. The General Partner shall maintain at the Partnership's principal office, as required by SDCL § 48-7-105:

(a) A current list of each Partner's name and address;

(b) A copy of the Certificate and all amendments;

(c) This Agreement and all amendments;

(d) Federal income tax returns for the three (3) most recent taxable years;

(e) Financial statements for the three (3) most recent Fiscal Years;

(f) Capital Account records;

(g) Minutes of Partner meetings; and

(h) Written consents of Partners.

Section 15.2 Method of Accounting. Books shall be kept on the:

☐ Cash basis method of accounting
☐ Accrual basis method of accounting

as consistently applied.

Section 15.3 Financial Reports. The General Partner shall provide:

(a) Annual report within ninety (90) days after each Fiscal Year;

(b) Quarterly report within forty-five (45) days after each quarter; and

(c) Other reports as reasonably requested.

Section 15.4 Audit. Financial statements shall be:

☐ Audited annually by an independent CPA firm.
☐ Reviewed annually by an independent CPA firm.
☐ Compiled annually by an independent CPA firm.
☐ Not subject to audit, review, or compilation.

Section 15.5 Bank Accounts. Partnership funds shall be deposited in accounts at institutions selected by the General Partner.

ARTICLE XVI — DISPUTE RESOLUTION

Section 16.1 Negotiation. Partners shall first attempt good-faith negotiation. Written notice of a dispute triggers a twenty (20) day meeting period.

Section 16.2 Mediation. If negotiation fails within thirty (30) days, any Partner may submit the dispute to mediation under AAA rules in [________________________________], South Dakota. Costs shall be shared equally.

Section 16.3 Arbitration. If mediation fails within sixty (60) days, any Partner may submit the dispute to binding arbitration under AAA rules in [________________________________], South Dakota, before a single arbitrator (or three if the amount exceeds $[________________________________]).

(a) South Dakota law shall apply.

(b) The decision shall be final and binding, enforceable in any court, including the Circuit Court of [________________________________] County, South Dakota, or the Circuit Court of the Second Judicial Circuit (Minnehaha County).

(c) The prevailing party shall recover reasonable attorneys' fees and costs.

Section 16.4 Provisional Remedies. Nothing herein prevents seeking equitable or provisional remedies from any South Dakota court.

ARTICLE XVII — AMENDMENTS

Section 17.1 Amendments Generally. This Agreement may be amended only by written instrument executed by the General Partner and a Majority in Interest of the Limited Partners.

Section 17.2 Amendments by General Partner. The General Partner may amend without Limited Partner consent to:

(a) Reflect Partner admissions, substitutions, or withdrawals;

(b) Reflect Capital Contribution or Percentage Interest changes;

(c) Comply with the Act or applicable law;

(d) Cure ambiguities or inconsistencies; or

(e) Update Exhibit A.

Section 17.3 Unanimous Consent Required. The following amendments require all Partners' written consent:

(a) Reduction of any Partner's Percentage Interest or distributions;

(b) Increase of any Partner's Capital Contribution obligation;

(c) Modification of this Section 17.3; or

(d) Any amendment adversely affecting limited liability protections.

ARTICLE XVIII — GENERAL PROVISIONS

Section 18.1 Governing Law. This Agreement shall be governed by the laws of the State of South Dakota, including the Uniform Limited Partnership Act, SDCL Chapter 48-7, without regard to conflict of laws principles.

Section 18.2 Jurisdiction and Venue. Each Partner submits to the exclusive jurisdiction of the courts of South Dakota, including the Circuit Court of [________________________________] County, and the United States District Court for the District of South Dakota.

Section 18.3 Notices. All notices shall be in writing and deemed given:

(a) Upon personal delivery;

(b) One (1) business day after overnight courier deposit;

(c) Three (3) business days after certified mail, return receipt requested; or

(d) Upon confirmed electronic mail (with follow-up within two (2) business days).

Notices shall be addressed to Partners at addresses on Exhibit A.

Section 18.4 Entire Agreement. This Agreement and all exhibits constitute the entire agreement and supersede all prior agreements and understandings.

Section 18.5 Severability. If any provision is invalid, the remaining provisions continue in effect.

Section 18.6 Waiver. No waiver is effective unless written and signed. No delay constitutes a waiver.

Section 18.7 Binding Effect. This Agreement binds and benefits Partners, their heirs, executors, administrators, successors, and permitted assigns.

Section 18.8 Counterparts. This Agreement may be executed in counterparts. Electronic signatures are deemed originals.

Section 18.9 Headings. Headings are for convenience only.

Section 18.10 Construction. This Agreement is construed as jointly drafted.

Section 18.11 Confidentiality. Partners shall maintain the confidentiality of nonpublic Partnership information.

Section 18.12 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTNER IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT.

Section 18.13 Third-Party Beneficiaries. Except for Indemnified Persons, this Agreement confers no rights on third parties.

Section 18.14 Creditors. No provision benefits or is enforceable by any creditor.

Section 18.15 Further Assurances. Each Partner shall execute further documents as may be reasonably necessary.

ARTICLE XIX — SIGNATURE PAGE

IN WITNESS WHEREOF, the Partners have executed this Agreement as of the Effective Date.

GENERAL PARTNER:

[________________________________]

By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

Address:
[________________________________]
[________________________________], South Dakota [____]

LIMITED PARTNER(S):

[________________________________]

By: [________________________________]
Name: [________________________________]
Title: [________________________________] (if applicable)
Date: [__/__/____]

Address:
[________________________________]
[________________________________], South Dakota [____]

[________________________________]

By: [________________________________]
Name: [________________________________]
Title: [________________________________] (if applicable)
Date: [__/__/____]

Address:
[________________________________]
[________________________________], South Dakota [____]

[________________________________]

By: [________________________________]
Name: [________________________________]
Title: [________________________________] (if applicable)
Date: [__/__/____]

Address:
[________________________________]
[________________________________], South Dakota [____]

NOTARY ACKNOWLEDGMENT — STATE OF SOUTH DAKOTA

STATE OF SOUTH DAKOTA
COUNTY OF [________________________________]

On this [____] day of [________________________________], 20[____], before me, the undersigned notary public, 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.

Notary Public: [________________________________]
My Commission Expires: [__/__/____]

[NOTARIAL SEAL]

(Notary acknowledgment must comply with SDCL Chapter 18-1, Notaries Public)

EXHIBIT A — PARTNER SCHEDULE AND CAPITAL CONTRIBUTIONS

Total Capital Contributions: $[________________________________]
Total Percentage Interests: 100%

EXHIBIT B — CERTIFICATE OF LIMITED PARTNERSHIP REFERENCE

The Certificate of Limited Partnership was filed (or is to be filed) with:

South Dakota Secretary of State
500 East Capitol Avenue
Pierre, SD 57501

Filing Date: [__/__/____]
Entity Number: [________________________________]
Filing Fee: $125.00

The Certificate of Limited Partnership contains the following information as required by SDCL § 48-7-201:

1. The name of the limited partnership: [________________________________], Limited Partnership
2. The address of the office and the name and address of the agent for service of process (as required by SDCL § 48-7-104)
3. The name and the business address of each general partner
4. The latest date upon which the limited partnership is to dissolve (if applicable)
5. Any other matters the general partners determine to include

Annual Report: The Partnership must comply with all annual filing requirements as prescribed by the South Dakota Secretary of State.

EXHIBIT C — DESCRIPTION OF PARTNERSHIP BUSINESS

The Partnership has been formed for the purpose of engaging in the following business activities:

[________________________________]
[________________________________]
[________________________________]
[________________________________]
[________________________________]

EXHIBIT D — FORM OF ASSIGNMENT OF PARTNERSHIP INTEREST

ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST

FOR VALUE RECEIVED, the undersigned ("Assignor") assigns, transfers, and conveys to [________________________________] ("Assignee") a [____]% Partnership Interest in [________________________________], Limited Partnership, a South Dakota limited partnership (the "Partnership"), subject to the Limited Partnership Agreement dated [__/__/____] (the "Agreement").

The Assignor represents and warrants:

1. The Assignor is the lawful owner of the Interest;
2. The Interest is free of all liens, claims, and encumbrances;
3. This assignment complies with all transfer restrictions in the Agreement; and
4. All necessary consents have been obtained.

Pursuant to SDCL § 48-7-702, the Assignee acknowledges that this assignment does not entitle the Assignee to become a Partner unless admitted under Article X.

ASSIGNOR:
Name: [________________________________]
Signature: [________________________________]
Date: [__/__/____]

ASSIGNEE:
Name: [________________________________]
Signature: [________________________________]
Date: [__/__/____]

ACKNOWLEDGED AND CONSENTED TO BY GENERAL PARTNER:
Name: [________________________________]
Title: [________________________________]
Signature: [________________________________]
Date: [__/__/____]

SOURCES AND REFERENCES

• South Dakota Uniform Limited Partnership Act, SDCL Chapter 48-7: sdlegislature.gov
• South Dakota Secretary of State, Business Services: sdsos.gov
• Certificate of Limited Partnership Form: SD Secretary of State
• South Dakota Secretary of State Filing Fees: sdsos.gov
• Internal Revenue Code, 26 U.S.C. — Partnership Provisions
• South Dakota Notaries Public Act, SDCL Chapter 18-1