if she files for divorce first will she be able to take our kids out of state even though I live in Michigan

It depends on many things, but she will have to get the Court's permission to take them out of state, and you should have an opportunity to be heard on the subject. If she is and has been the primary caregiver for the children, and she has a good reason to move to Tennessee (better job or family help with the children) that you cannot provide, the court may very well let her go. Line up your arguments and get a good lawyer. Filing first is a bit of an advantage, but should not be determinative in the long run. However, if you know a divorce is coming, why wait for her? Good Luck.