Limited Partnership Agreement (LPA)
Drafts a formal "Amended and Restated Agreement of Limited Partnership" governing the GP/LP relationship across a fund's full lifecycle.
Prerequisites
Gather before drafting — prompt the user for any missing items:
- Fund name, jurisdiction, target size, investment strategy
- Management fee rate/basis, carry %, preferred return %, waterfall type (deal-by-deal vs. whole-fund)
- Key persons triggering key person provisions
- Term sheet or PPM (if available)
- Side letter commitments, co-investment arrangements
- Governing law (state RULPA)
Quick Start
Draft with table of contents and consistent defined-term capitalization. Follow this article structure:
| Art. |
Subject |
Key Contents |
| I |
Formation & Purpose |
Statutory authority, registered agent, purpose clause, investment thesis limitations |
| II |
Definitions |
Capitalized terms, alphabetical |
| III |
Term |
Initial term from final closing, investment period (~5 yrs), extension mechanism (2 x 1-yr, LPAC/LP approval) |
| IV |
Capital Commitments |
Subscription Agreements, pro rata capital calls, 10-30 day notice, default remedies |
| V |
Allocations & Distributions |
IRC 704(b) allocations, four-tier waterfall, tax distributions |
| VI |
Management & Governance |
GP authority, key person provisions, management fee, fee offsets, LPAC |
| VII |
GP Obligations & LP Protections |
Clawback, LP liability cap, fiduciary standards |
| VIII |
Transfer Restrictions |
Consent, permitted transfers (affiliates, estate vehicles), transferee conditions |
| IX |
Tax Provisions |
Pass-through status, K-1 delivery, 754 election, BBA audit regime, withholding |
| X |
Dissolution & Liquidation |
Triggering events, wind-up, final accounting, 90-day LP objection period |
| XI |
General Provisions |
Amendments, notices, confidentiality, governing law, severability |
Core Economic Terms
Distribution Waterfall
Tier 1 — Return of Capital: 100% to LPs until distributions = contributed capital
Tier 2 — Preferred Return: 100% to LPs until [8]% IRR (specify compounding)
Tier 3 — GP Catch-Up: 100% to GP until GP has [carry %] of Tiers 2+3
Tier 4 — Carried Interest Split: [80]% LPs / [20]% GP
- Specify deal-by-deal (add interim clawback + escrow) or whole-fund
- Address distribution timing (mandatory vs. discretionary) and reserve authority
Management Fee
Investment Period: [2]% x commitments, quarterly in advance
Post-Investment: [2]% x [cost basis / FMV] of remaining investments
Adjustments: prorate for final closing; suspend during key person event
Fee Offset: [50-100]% of transaction/monitoring/directors' fees
Default Remedies
Include: default interest, pro rata commitment reduction, capital forfeiture, forced sale at discount to FMV, cure period with notice requirements.
Clawback
- GP returns excess carry so LPs receive capital + preferred return first
- Calculate on after-tax basis (gross-up for taxes on returned carry)
- Secure with escrow holdback (institutional) or personal guaranty with net worth covenant (emerging managers)
LPAC Checklist
Tax and Regulatory
| Item |
Detail |
| Classification |
Partnership pass-through |
| K-1 delivery |
March 15 (calendar-year) |
| 754 election |
GP discretion |
| BBA audit |
Designate partnership rep; push-out election rights |
| Investor quals |
Accredited (Reg D) and/or qualified purchaser (ICA 3(c)(7)) |
| AML/KYC |
BSA/CIP compliance, beneficial ownership verification |
| Withholding |
GP authorized; charge to partner's account |
Pitfalls and Checks
- Cite specific RULPA — e.g., Delaware RULPA, 6 Del. C. 17-101 et seq. [VERIFY for chosen jurisdiction]
- Cross-references — verify all internal section references before finalizing
- ILPA compliance — flag deviations from ILPA Principles v3.0 as non-standard
- Side letters — note where MFN provisions override base LPA terms
- ERISA — if benefit plan investors possible, include compliance provisions and 25% threshold analysis
- Securities law — include unregistered securities legends referencing Securities Act 4(a)(2) and Reg D
- Ask, don't assume — prompt user for unspecified investment period, preferred return, carry %, or waterfall structure
- No tax advice — include disclaimer that LPs should consult their own tax advisors
1---2name: lpa-agreement3description: Drafts institutional-quality Limited Partnership Agreements for PE/VC fund formation. Covers GP/LP terms, capital commitments, distribution waterfall, carried interest, LPAC governance, clawback, and tax provisions. Use when drafting LPA, fund formation agreement, limited partnership terms, or PE/VC fund documents.4---56# Limited Partnership Agreement (LPA)78Drafts a formal "Amended and Restated Agreement of Limited Partnership" governing the GP/LP relationship across a fund's full lifecycle.910## Prerequisites1112Gather before drafting — prompt the user for any missing items:1314- Fund name, jurisdiction, target size, investment strategy15- Management fee rate/basis, carry %, preferred return %, waterfall type (deal-by-deal vs. whole-fund)16- Key persons triggering key person provisions17- Term sheet or PPM (if available)18- Side letter commitments, co-investment arrangements19- Governing law (state RULPA)2021## Quick Start2223Draft with table of contents and consistent defined-term capitalization. Follow this article structure:2425| Art. | Subject | Key Contents |26|------|---------|-------------|27| I | Formation & Purpose | Statutory authority, registered agent, purpose clause, investment thesis limitations |28| II | Definitions | Capitalized terms, alphabetical |29| III | Term | Initial term from final closing, investment period (~5 yrs), extension mechanism (2 x 1-yr, LPAC/LP approval) |30| IV | Capital Commitments | Subscription Agreements, pro rata capital calls, 10-30 day notice, default remedies |31| V | Allocations & Distributions | IRC 704(b) allocations, four-tier waterfall, tax distributions |32| VI | Management & Governance | GP authority, key person provisions, management fee, fee offsets, LPAC |33| VII | GP Obligations & LP Protections | Clawback, LP liability cap, fiduciary standards |34| VIII | Transfer Restrictions | Consent, permitted transfers (affiliates, estate vehicles), transferee conditions |35| IX | Tax Provisions | Pass-through status, K-1 delivery, 754 election, BBA audit regime, withholding |36| X | Dissolution & Liquidation | Triggering events, wind-up, final accounting, 90-day LP objection period |37| XI | General Provisions | Amendments, notices, confidentiality, governing law, severability |3839## Core Economic Terms4041### Distribution Waterfall4243```44Tier 1 — Return of Capital: 100% to LPs until distributions = contributed capital45Tier 2 — Preferred Return: 100% to LPs until [8]% IRR (specify compounding)46Tier 3 — GP Catch-Up: 100% to GP until GP has [carry %] of Tiers 2+347Tier 4 — Carried Interest Split: [80]% LPs / [20]% GP48```4950- Specify deal-by-deal (add interim clawback + escrow) or whole-fund51- Address distribution timing (mandatory vs. discretionary) and reserve authority5253### Management Fee5455```56Investment Period: [2]% x commitments, quarterly in advance57Post-Investment: [2]% x [cost basis / FMV] of remaining investments58Adjustments: prorate for final closing; suspend during key person event59Fee Offset: [50-100]% of transaction/monitoring/directors' fees60```6162### Default Remedies6364Include: default interest, pro rata commitment reduction, capital forfeiture, forced sale at discount to FMV, cure period with notice requirements.6566### Clawback6768- GP returns excess carry so LPs receive capital + preferred return first69- Calculate on after-tax basis (gross-up for taxes on returned carry)70- Secure with escrow holdback (institutional) or personal guaranty with net worth covenant (emerging managers)7172## LPAC Checklist7374- [ ] Composition: [3-7] reps elected by majority of commitments75- [ ] Term, removal, replacement procedures76- [ ] Meeting frequency (minimum quarterly)77- [ ] Advisory-only except where consent required78- [ ] Consent matters: GP co-investments, affiliate/related-party transactions, material amendments, valuation changes, auditor removal, term extensions7980## Tax and Regulatory8182| Item | Detail |83|------|--------|84| Classification | Partnership pass-through |85| K-1 delivery | March 15 (calendar-year) |86| 754 election | GP discretion |87| BBA audit | Designate partnership rep; push-out election rights |88| Investor quals | Accredited (Reg D) and/or qualified purchaser (ICA 3(c)(7)) |89| AML/KYC | BSA/CIP compliance, beneficial ownership verification |90| Withholding | GP authorized; charge to partner's account |9192## Pitfalls and Checks93941. **Cite specific RULPA** — e.g., Delaware RULPA, 6 Del. C. 17-101 et seq. [VERIFY for chosen jurisdiction]952. **Cross-references** — verify all internal section references before finalizing963. **ILPA compliance** — flag deviations from ILPA Principles v3.0 as non-standard974. **Side letters** — note where MFN provisions override base LPA terms985. **ERISA** — if benefit plan investors possible, include compliance provisions and 25% threshold analysis996. **Securities law** — include unregistered securities legends referencing Securities Act 4(a)(2) and Reg D1007. **Ask, don't assume** — prompt user for unspecified investment period, preferred return, carry %, or waterfall structure1018. **No tax advice** — include disclaimer that LPs should consult their own tax advisors
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