Limited Partnership Agreement - State of Tennessee

LIMITED PARTNERSHIP AGREEMENT

OF

[________________________________]

A TENNESSEE 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 [________________________________], [________________________________], Tennessee [____]

LIMITED PARTNER(S):

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

(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 Tennessee, pursuant to the Tennessee Uniform Limited Partnership Act of 2017, Tenn. Code Ann. § 61-3-101 et seq. (the "Act"); and

WHEREAS, a Certificate of Limited Partnership has been or will be filed with the Tennessee Secretary of State, Division of Business and Charitable Organizations, in accordance with Tenn. Code Ann. § 61-3-201; and

WHEREAS, the Partners desire to set forth their respective rights, duties, obligations, and liabilities with respect to the Partnership and to provide for the governance, management, and operation thereof;

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 Tennessee Uniform Limited Partnership Act of 2017, Tenn. Code Ann. § 61-3-101 et seq., 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. The term "control" means the possession, direct or indirect, 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.

(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 under the federal Bankruptcy Code; (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, with respect to each Partner, the total amount of cash and the fair market value of any property contributed to the Partnership (net of liabilities assumed or to which the property is subject), as contemplated by Tenn. Code Ann. § 61-3-501.

(g) "Certificate" means the Certificate of Limited Partnership of the Partnership filed with the Tennessee Secretary of State pursuant to Tenn. Code Ann. § 61-3-201, as amended or restated from time to time.

(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, 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, as named in the Certificate pursuant to Tenn. Code Ann. § 61-3-201.

(l) "Interest" or "Partnership Interest" means the entire ownership interest of a Partner in the Partnership, including the Partner's rights to distributions, allocations, information, and participation in management (if applicable), together with the obligations of such Partner under this Agreement and the Act.

(m) "Limited Partner" means any Person admitted to the Partnership as a limited partner in accordance with Tenn. Code Ann. § 61-3-301 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) "Transferable Interest" means a Partner's right to receive distributions from the Partnership, as distinct from the Partner's management and governance rights, as provided in Tenn. Code Ann. § 61-3-701.

(u) "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 the Act. A Certificate of Limited Partnership shall be filed (or has been filed) with the Tennessee Secretary of State, Division of Business and Charitable Organizations, using Form SS-4471, in accordance with Tenn. Code Ann. § 61-3-201. The General Partner is authorized to execute, deliver, and file any amendments to the Certificate and any other documents required for the formation, operation, and maintenance of the Partnership under the Act.

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

[________________________________], LP

The name must contain the phrase "limited partnership" or the abbreviation "LP" or "L.P." as required by Tenn. Code Ann. § 61-3-108. The name must be distinguishable from the name of any other entity on file with the Tennessee Secretary of State. The name shall not contain the name of a limited partner unless it is also the name of a general partner.

Section 2.3 Registered Agent and Office. The Partnership shall continuously maintain a registered agent and registered office in the State of Tennessee, as required by Tenn. Code Ann. § 61-3-114.

The initial registered agent shall be: [________________________________]

The initial registered office shall be at:
[________________________________]
[________________________________], Tennessee [____]
County of [________________________________]

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

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

[________________________________]
[________________________________], Tennessee [____]

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 Tenn. Code Ann. § 61-3-103 and the Act.

Section 2.6 Term. Pursuant to Tenn. Code Ann. § 61-3-103, the Partnership shall have perpetual duration unless a definite term is specified. The Partnership shall commence on the date the Certificate is filed and shall continue until dissolved in accordance with Article XIV.

☐ 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 do business in any other state or jurisdiction as necessary or desirable.

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

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. The General Partner shall update Exhibit A to reflect any changes.

ARTICLE IV — MANAGEMENT AND OPERATIONS

Section 4.1 Management by General Partner. Pursuant to Tenn. Code Ann. § 61-3-406, the management and conduct of the Partnership business shall be vested exclusively in the General Partner, who shall have full, complete, and exclusive power and authority to manage, control, and operate the Partnership, 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 liens on Partnership assets;

(d) Open and maintain bank and investment accounts;

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

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

(g) Make distributions to Partners in accordance with this Agreement;

(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 and instruments on behalf of the Partnership;

(l) Qualify the Partnership to do business in other jurisdictions; and

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

Section 4.3 Actions Requiring Consent of Limited Partners. Notwithstanding the General Partner's broad authority, the following actions require 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, conversion, or domestication 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 Tennessee Secretary of State;

(d) File all required annual reports with the Tennessee Secretary of State;

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

(f) Maintain appropriate insurance; and

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

Section 4.5 Standard of Care. Pursuant to Tenn. Code Ann. § 61-3-408, the General Partner owes the Partnership and other Partners duties of loyalty and care. The duty of care is limited to refraining from engaging in grossly negligent or reckless conduct, willful or intentional misconduct, or a knowing violation of law. The partnership agreement may alter or eliminate aspects of the duty of loyalty to the extent permitted by the Act, and the General Partner may lend money to, borrow money from, or transact other business with the Partnership subject to applicable law.

Section 4.6 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.

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

Section 4.7 Other Activities. Pursuant to the Act, the General Partner and Affiliates may engage in other business activities. To the extent permitted by the Act and this Agreement, the General Partner shall not be required to present business opportunities to the Partnership.

Section 4.8 Delegation. The General Partner may delegate powers and duties but shall remain responsible for delegated duties.

ARTICLE V — RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 5.1 No Management Participation. Pursuant to Tenn. Code Ann. § 61-3-302, a Limited Partner does not have the right or the power, in the capacity of a limited partner, to act for or bind the Partnership. No Limited Partner shall participate in management or control of Partnership business except as expressly provided in this Agreement.

Section 5.2 Limited Liability. Under the Act, a Limited Partner is not personally liable, whether by contribution or otherwise, for an obligation of the Partnership solely by reason of being or acting as a limited partner, even if the Limited Partner participates in the management and control of the Partnership. This is a significant protection under the Tennessee Uniform Limited Partnership Act of 2017, which eliminated the "control rule" that existed under the prior Revised Uniform Limited Partnership Act (Chapter 2).

Section 5.3 Voting Rights. Each Limited Partner shall vote on matters requiring Limited Partner consent, in proportion to Percentage Interests.

Section 5.4 Right to Information. Pursuant to Tenn. Code Ann. § 61-3-304, each Limited Partner is entitled to:

(a) Inspect and copy Partnership records during regular business hours at the principal office upon reasonable request;

(b) Obtain from the Partnership information concerning the Partnership's activities, financial condition, and other circumstances, to the extent the information is material to the limited partner's interest;

(c) Receive a copy of Partnership tax returns within ninety (90) days after each Fiscal Year;

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

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

(f) Such other information concerning Partnership affairs as is just and reasonable.

Section 5.5 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 follows.

(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 Tenn. Code Ann. § 61-3-502, a Partner's obligation to make a contribution is not excused by the Partner's death, disability, dissolution, or other inability to perform personally. If a Partner defaults on a required contribution:

(i) The General Partner may pursue remedies at law or equity;

(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; 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 Tenn. Code Ann. § 61-3-501, a contribution may consist of property transferred to, services performed for, or another benefit provided to the Partnership, or an agreement to transfer property, perform services, or provide another benefit to the Partnership. 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 obligation or deemed obligation 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 Sharing of Distributions Under the Act. Pursuant to Tenn. Code Ann. § 61-3-503, a distribution by a limited partnership before its dissolution and winding up must be shared among the partners as provided in the partnership agreement. If the partnership agreement does not provide, distributions must be made on the basis of the value, as stated in the required information, of the contributions made and not returned by each partner.

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. 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 and state 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. Pursuant to Tenn. Code Ann. § 61-3-508, no distribution shall be made if, after giving effect thereto:

(a) The Partnership would be unable 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 needed to satisfy any preferential rights of Partners superior to those of the Partner receiving the distribution.

Section 8.5 Liability for Wrongful Distributions. Pursuant to Tenn. Code Ann. § 61-3-509, if a distribution is made in violation of the Act, a Partner who knew at the time of the distribution that the distribution violated the Act is personally liable to the Partnership for the amount of the distribution that exceeds the amount that could have been distributed without the violation.

Section 8.6 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 8.7 Withholding. The Partnership may withhold amounts required by federal, state, or local tax law. Withheld amounts shall be treated as distributed to the applicable Partner.

ARTICLE IX — TRANSFER OF PARTNERSHIP INTERESTS

Section 9.1 Transferable Interest. Pursuant to Tenn. Code Ann. § 61-3-701, the only interest of a partner that is transferable is the partner's transferable interest. A transferable interest is a right to receive distributions, whether or not the Partner continues to be a Partner or the Partnership continues to exist. A transfer of a transferable interest does not entitle the transferee to participate in management or access information.

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. A Limited Partner may Transfer all or any portion of such Limited Partner's Transferable 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 result in a Partnership termination under applicable tax law; and

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

Section 9.4 Rights of Transferee. Pursuant to Tenn. Code Ann. § 61-3-702, a transferee has the right to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled. A transferee does not become a partner solely by virtue of a transfer. Until admitted as a Partner, the transferee has no right to participate in management or access Partnership information.

Section 9.5 Right of First Refusal. Before any Limited Partner may 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 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 Transferee as Partner. Pursuant to Tenn. Code Ann. § 61-3-702, a transferee may become a Partner only if the General Partner consents. Until admitted, the transferee has only transferee rights under the Act.

ARTICLE X — ADMISSION OF NEW PARTNERS

Section 10.1 Admission of New Limited Partners. Pursuant to Tenn. Code Ann. § 61-3-301, a person may become a limited partner (a) as provided in the partnership agreement, or (b) with the consent of all partners. Under this Agreement, new Limited Partners may be admitted with the consent of the General Partner.

Section 10.2 Admission of New General Partner. Pursuant to Tenn. Code Ann. § 61-3-401, a person may become a general partner (a) as provided in the partnership agreement, or (b) with the consent of all partners. Under this Agreement, admission of a new General Partner 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 of 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 Tennessee Secretary of State in accordance with Tenn. Code Ann. § 61-3-202.

ARTICLE XI — WITHDRAWAL AND DISSOCIATION

Section 11.1 Dissociation of Limited Partner. A person is dissociated as a Limited Partner upon the occurrence of any event specified in Tenn. Code Ann. § 61-3-601, including:

(a) The Partnership's receipt of notice of the person's express will to withdraw as a limited partner on a future date specified in the notice;

(b) An event agreed to in the partnership agreement as causing dissociation;

(c) Expulsion pursuant to the partnership agreement;

(d) Expulsion by unanimous consent of the other Partners if it is unlawful to carry on the business with such person, or if substantially all of the person's transferable interest has been transferred;

(e) Expulsion by judicial order;

(f) Death (if a natural person);

(g) Appointment of a guardian or conservator;

(h) The entry of an order of relief against such person under the Bankruptcy Code; or

(i) Dissolution or termination (if an entity).

Upon dissociation, the dissociated Limited Partner is entitled to receive the fair market value of such Partner's Interest, payable within [____] days or in [____] equal installments over [____] months, at the General Partner's election.

Section 11.2 Dissociation of General Partner. Pursuant to Tenn. Code Ann. § 61-3-603, a person is dissociated as General Partner upon the occurrence of any of the following:

(a) The Partnership's receipt of notice of the person's express will to withdraw;

(b) An event agreed to in this Agreement;

(c) Expulsion pursuant to this Agreement;

(d) Removal by unanimous consent of all other Partners if: (i) it is unlawful to carry on business with such person, (ii) the person's entire transferable interest has been transferred (except for a transfer for security), (iii) the person is an entity and the partnership has received notice of dissolution or termination, or (iv) the person is an entity and the entity's charter has been revoked;

(e) Expulsion by judicial order;

(f) Death or appointment of a guardian or conservator (if a natural person);

(g) Entry of an order of relief under the Bankruptcy Code;

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

(i) Other events as specified in the Act.

Section 11.3 Effect of Dissociation of General Partner. Pursuant to Tenn. Code Ann. § 61-3-604, upon dissociation of the General Partner, the Partnership is not dissolved if:

(a) Within ninety (90) days after the dissociation, Partners owning a majority of the rights to receive distributions as partners consent to continue the business; and

(b) A successor General Partner is admitted within a reasonable time.

The dissociated General Partner's duty of loyalty and care continue only with regard to matters arising and events occurring before the dissociation.

Section 11.4 Buyout Upon Dissociation. A dissociated Partner shall receive the fair market value of such Partner's Interest, determined as of the date of dissociation, payable within [____] days or in installments as agreed. Interest shall accrue on any unpaid balance at [____]% per annum.

ARTICLE XII — INDEMNIFICATION AND LIABILITY

Section 12.1 Indemnification. The Partnership shall indemnify, defend, and hold harmless 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, operation, or business 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. This standard is consistent with Tenn. Code Ann. § 61-3-408.

Section 12.4 Limitation of Limited Partner Liability. Under the Tennessee Uniform Limited Partnership Act of 2017, a Limited Partner is not personally liable for any obligation of the Partnership solely by reason of being or acting as a Limited Partner, even if the Limited Partner participates in the management and control of the Partnership. This protection, codified in the Act, is broader than the protection under the prior Chapter 2, which imposed the "control rule."

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 for corporate treatment 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 and state tax returns and furnish each Partner a Schedule K-1 within the required time. The Partnership shall file all required Tennessee tax returns, including:

(a) Tennessee Franchise and Excise Tax Return (FAE170 or successor form) with the Tennessee Department of Revenue. Tennessee imposes a franchise tax (based on net worth or book value of real and tangible personal property in Tennessee, whichever is greater, at a rate determined by law) and an excise tax on net earnings;

(b) Any informational returns required by the Tennessee Department of Revenue; and

(c) Any returns required in other states where the Partnership conducts business.

Section 13.4 Tax Elections. The General Partner may make tax elections, including 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 Tennessee Tax Matters. The Partners acknowledge:

(a) Tennessee imposes a franchise tax on limited partnerships doing business in the state, based on the greater of the Partnership's net worth or the book value of real and tangible personal property owned or used in Tennessee;

(b) Tennessee imposes an excise tax on net earnings attributable to Tennessee business activities;

(c) The Hall Income Tax on investment income was repealed effective January 1, 2021, and no longer applies to Partners;

(d) Tennessee imposes a sales and use tax on tangible personal property and certain services, which must be collected and remitted if applicable to Partnership business activities;

(e) The General Partner shall ensure compliance with all Tennessee tax obligations, including registration for Tennessee tax accounts with the Tennessee Department of Revenue, and timely filing and payment of all applicable taxes.

ARTICLE XIV — DISSOLUTION AND WINDING UP

Section 14.1 Events Causing Dissolution. Pursuant to Tenn. Code Ann. § 61-3-801, the Partnership shall be dissolved upon the earliest occurrence of:

(a) The happening of an event specified in the partnership agreement;

(b) The consent of all Partners;

(c) After the dissociation of a person as a General Partner: (i) if the Partnership has at least one remaining General Partner, the consent within ninety (90) days of the dissociation of Partners owning a majority of the rights to receive distributions as Partners (including General Partners), to dissolve the Partnership; or (ii) if there is no remaining General Partner, the passage of ninety (90) days after the dissociation unless before the end of the period Partners owning a majority of rights to receive distributions consent to continue and admit a successor General Partner;

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

(e) On application by a Partner, the entry by a court of competent jurisdiction of an order dissolving the Partnership on the grounds that conducting all the Partnership's activities and affairs is not reasonably practicable in accordance with the partnership agreement; or

(f) Administrative dissolution by the Tennessee Secretary of State.

Section 14.2 Winding Up. Upon dissolution, the General Partner (or a liquidating trustee) shall wind up Partnership affairs in accordance with Tenn. Code Ann. § 61-3-802. 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 14.3.

Section 14.3 Distribution of Assets. After paying or providing for all debts and obligations, remaining assets shall be distributed:

(a) First, to Partners in proportion to positive Capital Account balances after all final allocations; and

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

Section 14.4 Statement of Dissolution and Termination. Upon dissolution, the Liquidator shall file a statement of dissolution with the Tennessee Secretary of State. Upon completion of winding up, the Liquidator shall file a statement of termination.

Section 14.5 Reasonable Time for Winding Up. A reasonable time shall be allowed for orderly winding up.

Section 14.6 Deficit Capital Account Balance. No Limited Partner shall be required to restore a deficit Capital Account. 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 Tenn. Code Ann. § 61-3-111:

(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 and state 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. Mediation shall be conducted in [________________________________], Tennessee. 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 [________________________________], Tennessee, before a single arbitrator (or three if the amount exceeds $[________________________________]).

(a) Tennessee law shall apply.

(b) The decision shall be final and binding, enforceable in any court, including the Chancery Court of [________________________________] County, Tennessee, or the Circuit Court of [________________________________] County, Tennessee.

(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 Tennessee court, including the Chancery Court or Circuit Court of [________________________________] County.

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 Tennessee, including the Tennessee Uniform Limited Partnership Act of 2017, Tenn. Code Ann. § 61-3-101 et seq., without regard to conflict of laws principles.

Section 18.2 Jurisdiction and Venue. Each Partner submits to the exclusive jurisdiction of the courts of Tennessee, including the Chancery Court and Circuit Court of [________________________________] County, and the United States District Court for the [Eastern/Middle/Western] District of Tennessee.

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 the addresses on Exhibit A.

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

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, 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:
[________________________________]
[________________________________], Tennessee [____]

LIMITED PARTNER(S):

[________________________________]

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

Address:
[________________________________]
[________________________________], Tennessee [____]

[________________________________]

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

Address:
[________________________________]
[________________________________], Tennessee [____]

[________________________________]

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

Address:
[________________________________]
[________________________________], Tennessee [____]

NOTARY ACKNOWLEDGMENT — STATE OF TENNESSEE

STATE OF TENNESSEE
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 the Tennessee Uniform Law on Notarial Acts, Tenn. Code Ann. § 66-22-101 et seq.)

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:

Tennessee Secretary of State
Division of Business and Charitable Organizations
312 Rosa L. Parks Avenue, 6th Floor
Nashville, TN 37243

Filing Date: [__/__/____]
Control Number: [________________________________]
Filing Fee: $100.00 (payable by check, cashier's check, or money order; cash accepted for walk-in filings only)
Form: SS-4471 (Certificate of Limited Partnership — Domestic)

The Certificate of Limited Partnership contains the following information as required by Tenn. Code Ann. § 61-3-201:

1. The name of the limited partnership: [________________________________], LP
2. The street address and zip code of the initial registered office, the county, and the name of the initial registered agent
3. The street address and zip code of the principal office
4. The name and street address of each general partner
5. Whether the limited partnership is a limited liability limited partnership
6. Any additional information the partners determine to include

Annual Report: The Partnership must file annual reports with the Tennessee Secretary of State as required by law. The annual report filing fee is set by the 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 TRANSFERABLE INTEREST

ASSIGNMENT OF TRANSFERABLE INTEREST IN LIMITED PARTNERSHIP

FOR VALUE RECEIVED, the undersigned ("Assignor") assigns, transfers, and conveys to [________________________________] ("Assignee") a [____]% Transferable Interest in [________________________________], LP, a Tennessee 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 Transferable Interest;
2. The Transferable 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 Tenn. Code Ann. § 61-3-702, the Assignee acknowledges that this assignment does not entitle the Assignee to become a Partner unless admitted under Article X of the Agreement. The Assignee's rights are limited to receiving distributions to which the Assignor would otherwise be entitled.

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

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

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

SOURCES AND REFERENCES

• Tennessee Uniform Limited Partnership Act of 2017, Tenn. Code Ann. Title 61, Chapter 3: law.justia.com
• Tennessee Secretary of State, Division of Business and Charitable Organizations: sos.tn.gov
• Certificate of Limited Partnership Form (SS-4471): TN Secretary of State
• Tennessee Department of Revenue (Franchise & Excise Tax): www.tn.gov/revenue
• Internal Revenue Code, 26 U.S.C. — Partnership Provisions
• Tennessee Uniform Law on Notarial Acts, Tenn. Code Ann. § 66-22-101 et seq.