Limited Partnership Agreement (Kentucky)

LIMITED PARTNERSHIP AGREEMENT

COMMONWEALTH OF KENTUCKY

THIS LIMITED PARTNERSHIP AGREEMENT (this "Agreement") is entered into and made effective as of [__/__/____] (the "Effective Date"), by and among the undersigned parties, pursuant to the provisions of the Kentucky Uniform Limited Partnership Act (2006), KRS Chapter 362, Subchapter 2, as amended from time to time.

TABLE OF CONTENTS

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

ARTICLE 1: DEFINITIONS

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

1.1 "Act" means the Kentucky Uniform Limited Partnership Act (2006), KRS Chapter 362, Subchapter 2, as amended from time to time. The Act became effective on July 12, 2006, and is based on the Uniform Limited Partnership Act (2001).

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

1.3 "Agreement" means this Limited Partnership Agreement, including all exhibits and schedules attached hereto, as amended from time to time in accordance with Section 16.5.

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

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

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

1.7 "Certificate" means the Certificate of Limited Partnership filed with the Kentucky Secretary of State pursuant to KRS 362.2-201 on Form KNP and any amendments or restatements thereto filed pursuant to KRS 362.2-202.

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

1.9 "Commonwealth" means the Commonwealth of Kentucky.

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

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

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

1.13 "General Partner" means any Person designated as a general partner of the Partnership in the Certificate and admitted as a general partner pursuant to this Agreement and KRS 362.2-401, in such Person's capacity as a general partner.

1.14 "Limited Partner" means any Person admitted as a limited partner of the Partnership pursuant to this Agreement and KRS 362.2-301, in such Person's capacity as a limited partner.

1.15 "LLET" means the Kentucky Limited Liability Entity Tax imposed by KRS 141.0401, which applies to limited partnerships doing business in Kentucky.

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

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

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

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

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

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

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

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

1.24 "Transferable Interest" means a Partner's right to receive distributions from the Partnership, as defined in KRS 362.2-701.

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

ARTICLE 2: FORMATION OF LIMITED PARTNERSHIP

2.1 Formation. The Partners hereby form a limited partnership under the name set forth in Section 2.2 pursuant to the provisions of the Act. The General Partner shall file or cause to be filed the Certificate with the Kentucky Secretary of State in accordance with KRS 362.2-201. A limited partnership is formed at the time of the filing of the initial Certificate by the Secretary of State, provided there has been substantial compliance with KRS 362.2-201(b).

2.2 Name. The name of the Partnership shall be:

[________________________________], L.P.

The name of the Partnership shall comply with KRS 362.2-108, which requires that the name of a limited partnership contain the words "limited partnership" or the abbreviation "LP" or "L.P." and shall be distinguishable on the records of the Secretary of State from any other name on file.

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

[________________________________]
[________________________________]
[________________________________]

The principal office need not be located in Kentucky. The General Partner may change the principal office upon written notice to all Partners.

2.4 Designated Office and Agent for Service of Process. Pursuant to KRS 362.2-114, the Partnership shall continuously maintain in Kentucky:

(a) A designated office, which need not be a place of its activity in the Commonwealth:

Designated Office Address: [________________________________]
City, State, ZIP: [________________________________], Kentucky [____]

(b) An agent for service of process:

Agent Name: [________________________________]
Agent Address: [________________________________]

The agent must be an individual who resides in Kentucky and whose office is the designated office, or an entity authorized to transact business in Kentucky whose office is the designated office. The General Partner may change the designated office or agent by filing with the Secretary of State pursuant to KRS 362.2-115.

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

Kentucky Secretary of State
700 Capital Avenue, Suite 152
Frankfort, Kentucky 40601
Phone: (502) 564-3490
Online Filing: https://web.sos.ky.gov/ftsearch/
Website: www.sos.ky.gov

Filing Form: KNP — Certificate of Limited Partnership
Filing Fee: $40.00 per KRS 362.2-122

Pursuant to KRS 362.2-201(b), the Certificate shall be in the form prescribed by the Secretary of State and shall set forth:

• (a) The name of the limited partnership, which must comply with KRS 362.2-108;
• (b) The street and mailing addresses of the designated office and the name and street and mailing addresses of the agent for service of process;
• (c) The name and the street and mailing addresses of each general partner;
• (d) Whether the limited partnership is a limited liability limited partnership; and
• (e) Any additional information required by the Secretary of State.

The Certificate shall be signed by all general partners listed in the Certificate and by the registered agent.

2.6 Amendments to Certificate. The General Partner shall file amendments or restatements of the Certificate with the Kentucky Secretary of State as required by KRS 362.2-202 whenever there is:

• (a) A change in the name of the Partnership;
• (b) A change in the street or mailing address of the designated office;
• (c) A change in the name, street address, or mailing address of the agent for service of process;
• (d) The admission or dissociation of a General Partner;
• (e) A conversion to or from a limited liability limited partnership; or
• (f) Any other change in information required in the Certificate.

2.7 Annual Reports. The Partnership shall file annual reports with the Kentucky Secretary of State as required by applicable law to maintain good standing. The General Partner shall ensure timely filing with all required fees.

2.8 Kentucky Limited Liability Entity Tax (LLET). The Partnership is subject to the Kentucky Limited Liability Entity Tax under KRS 141.0401. The LLET is based on Kentucky gross receipts or Kentucky gross profits, with a minimum tax of $175 per year for entities with Kentucky gross receipts or gross profits of $3 million or less. The General Partner shall ensure timely filing and payment of the LLET.

ARTICLE 3: PURPOSE AND POWERS

3.1 Purpose. The purpose of the Partnership is to:

[________________________________]
[________________________________]
[________________________________]

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

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

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

ARTICLE 4: TERM AND DURATION

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

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

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

☐ Upon the occurrence of: [________________________________]

Note: Under the Kentucky Uniform Limited Partnership Act (2006), unlike the prior Kentucky limited partnership act, a limited partnership is not required to state a dissolution date in the Certificate. However, the Partners may specify a term or dissolution event in this Agreement.

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

ARTICLE 5: CAPITAL CONTRIBUTIONS

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

5.2 Additional Capital Contributions.

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

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

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

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

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

• (a) Advance the defaulting Partner's share as a loan bearing interest at the rate of [____]% per annum (not to exceed the maximum rate permitted by Kentucky law — the legal rate of interest in Kentucky is 8% per annum per KRS 360.010 unless a different rate is agreed upon in writing);
• (b) Dilute the defaulting Partner's Percentage Interest proportionally based on actual contributions;
• (c) Treat the default as an offer by the defaulting Partner to sell its Partnership Interest at a price determined pursuant to Section 11.4; or
• (d) Pursue any other remedies available at law or in equity.

5.4 Form of Contribution. Capital Contributions may be made in cash, tangible or intangible property, services rendered, promissory notes, or other obligations to contribute cash, property, or services, as permitted by KRS 362.2-501.

5.5 No Interest on Capital. No Partner shall be entitled to receive interest on any Capital Contribution unless otherwise unanimously agreed upon in writing.

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

5.7 Liability for Contribution. Pursuant to KRS 362.2-502, a Partner's obligation to make a Capital Contribution is not excused by the Partner's death, disability, or other inability to perform personally. If a Partner does not make a required Capital Contribution, the Partner or the Partner's estate is obligated, at the option of the Partnership, to contribute money equal to the value of the stated contribution.

ARTICLE 6: CAPITAL ACCOUNTS

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

(a) Credited with:

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

(b) Debited with:

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

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

6.3 Compliance with Treasury Regulations. The provisions of this Article 6 are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied consistently therewith.

ARTICLE 7: ALLOCATIONS OF PROFITS AND LOSSES

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

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

7.3 Special Allocations.

(a) Qualified Income Offset. If any Partner unexpectedly receives an adjustment, allocation, or distribution described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit of such Partner as quickly as possible.

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

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

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

(e) Partner Nonrecourse Deductions. Partner nonrecourse deductions for any Fiscal Year shall be allocated to the Partner who bears the economic risk of loss for the partner nonrecourse liability to which such deductions are attributable.

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

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

7.6 Curative Allocations. The regulatory allocations set forth in Section 7.3 are intended to comply with Treasury Regulations. To the extent possible, all regulatory allocations shall be offset with special allocations of other items of Partnership income, gain, deduction, or loss so that the net amount of allocations to each Partner equals the amount that would have been allocated without regard to the regulatory allocations.

ARTICLE 8: DISTRIBUTIONS

8.1 Distributions Before Dissolution. Pursuant to KRS 362.2-503, a limited partnership may make a distribution before its dissolution and winding up. Subject to Section 8.3, Distributable Cash shall be distributed to the Partners at such times and in such amounts as the General Partner shall determine in its reasonable discretion, in proportion to their respective Percentage Interests.

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

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

8.3 Limitations on Distributions. Pursuant to KRS 362.2-504, a limited partnership may not make a distribution if, after the distribution:

• (a) The limited partnership would not be able to pay its debts as they become due in the ordinary course of the limited partnership's activities; or
• (b) The limited partnership's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the limited partnership were to be dissolved, wound up, and terminated at the time of the distribution, to satisfy the preferential rights upon dissolution, winding up, and termination of partners whose preferential rights are superior to those of persons receiving the distribution.

8.4 Tax Distributions. Notwithstanding Section 8.1, the General Partner shall use reasonable efforts to distribute to each Partner, no later than April 1 of each year, an amount sufficient to cover the estimated federal and Kentucky state income tax liability of such Partner arising from allocations of Partnership income for the preceding Fiscal Year.

8.5 Distributions in Kind. The General Partner may make distributions in kind at the fair market value of the distributed property as determined by the General Partner in good faith. No Partner may demand a distribution in kind.

8.6 Withholding. The Partnership shall be entitled to withhold from distributions to any Partner any amounts required to be withheld under federal, Kentucky (KRS Chapter 141 — Income Taxes), or local tax laws. Any amounts so withheld shall be treated as having been distributed to such Partner for all purposes of this Agreement.

ARTICLE 9: MANAGEMENT AND OPERATIONS

9.1 General Partner Authority. Pursuant to KRS 362.2-406, each General Partner has equal rights in the management and conduct of the Partnership's activities. The General Partner shall have full, exclusive, and complete authority, power, and discretion to manage, control, administer, and operate the business and affairs of the Partnership, subject to the limitations set forth in Section 9.2.

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

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

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

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

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

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

(f) Confess a judgment against the Partnership;

(g) Amend this Agreement;

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

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

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

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

(l) Guarantee the obligations of any third party;

(m) Pledge or encumber Partnership assets to secure obligations other than Partnership obligations; or

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

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

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

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

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

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

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

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

ARTICLE 10: RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

10.1 No Right to Bind Partnership. Pursuant to KRS 362.2-302, a Limited Partner does not have the right or the power to act for or bind the Partnership solely by reason of being a Limited Partner.

10.2 No Personal Liability. Pursuant to KRS 362.2-303, a Limited Partner is not personally liable, directly or indirectly, by way of contribution or otherwise, for a debt, obligation, or liability of the Partnership solely by reason of being or acting as a Limited Partner. This provision applies even if the Limited Partner participates in the management and control of the Partnership. This is a significant change from the prior Kentucky limited partnership law, which imposed the "control rule."

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

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

10.4 Meetings.

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

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

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

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

10.5 Information Rights. Pursuant to KRS 362.2-304, each Limited Partner has the right, upon reasonable demand stating the purpose, to obtain from the Partnership:

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

The Partnership may impose a reasonable charge for the cost of providing information.

10.6 Derivative Actions. A Limited Partner may bring a derivative action in the right of the Partnership pursuant to KRS 362.2-1001 through 362.2-1005.

10.7 Direct Actions. A Limited Partner may maintain a direct action against the Partnership or another Partner pursuant to KRS 362.2-901.

ARTICLE 11: TRANSFER OF PARTNERSHIP INTERESTS

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

11.2 Transferable Interest. Pursuant to KRS 362.2-701, the only interest of a partner that is transferable is the partner's Transferable Interest. A Transferable Interest is a right to receive distributions from the Partnership. A Transferable Interest is personal property.

11.3 Transfer of Transferable Interest. Pursuant to KRS 362.2-702:

• (a) A Transfer of a Partner's Transferable Interest does not entitle the transferee to participate in the management or conduct of the Partnership's activities or to become or exercise any rights of a Partner;
• (b) A Transfer only entitles the transferee to receive, in accordance with the Transfer, distributions to which the transferor would otherwise be entitled;
• (c) A Transfer does not, by itself, cause the Partner's dissociation or a dissolution and winding up of the Partnership.

11.4 Right of First Refusal.

(a) Before any Transfer (other than a Permitted Transfer under Section 11.6), the transferring Partner (the "Offering Partner") shall provide at least thirty (30) days' prior written notice (the "Offer Notice") to the General Partner and all other Partners, specifying the price, terms, conditions, and identity of the proposed transferee.

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

(c) If the remaining Partners do not collectively elect to purchase all of the offered interest, the Partnership shall have an additional fifteen (15) days to elect to purchase any unsubscribed portion.

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

11.5 Valuation. If the Partners cannot agree on the fair market value of a Partnership Interest, the value shall be determined by a qualified independent appraiser mutually agreed upon by the parties. If the parties cannot agree on an appraiser within fifteen (15) days, each party shall select an appraiser, and the two appraisers shall select a third, whose determination shall be final and binding.

11.6 Permitted Transfers. The following Transfers shall not require compliance with Section 11.4 (Right of First Refusal) but shall otherwise comply with this Article 11:

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

11.7 Conditions for Admission of Transferee as Partner. A transferee of a Transferable Interest may be admitted as a Partner only with the consent of:

• (a) All Partners (if the transfer is from a Limited Partner); or
• (b) All Partners (if the transfer is from a General Partner);
  unless this Agreement provides otherwise. The transferee must also execute a written instrument agreeing to be bound by this Agreement and pay all reasonable expenses of the Partnership in connection with the admission.

11.8 Effect of Transfer. Until a transferee is admitted as a Partner, the transferee shall be an Assignee and shall only be entitled to receive distributions and allocations attributable to the Transferred interest, pursuant to KRS 362.2-702.

ARTICLE 12: WITHDRAWAL AND DISSOCIATION

12.1 Dissociation of Limited Partner. Pursuant to KRS 362.2-601, a person is dissociated as a Limited Partner upon the occurrence of any of the following:

• (a) The Partnership's receipt of notice of the person's express will to withdraw as a Limited Partner on a future date at least ninety (90) days after the date of the notice (or such shorter period as provided in this Agreement);
• (b) The occurrence of an event agreed to in this Agreement as causing the person's dissociation;
• (c) The person's expulsion as a Limited Partner pursuant to this Agreement;
• (d) The person's expulsion by unanimous vote of the other Partners;
• (e) The person's expulsion by judicial order under KRS 362.2-602;
• (f) The person becoming a debtor in bankruptcy;
• (g) In the case of an individual, the person's death;
• (h) Other events specified in the Act.

12.2 Dissociation of General Partner. Pursuant to KRS 362.2-603, a person is dissociated as a 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 as a General Partner on a future date at least ninety (90) days after the date of the notice (or such shorter period as provided in this Agreement);
• (b) The occurrence of an event agreed to in this Agreement as causing the person's dissociation;
• (c) The person's removal as General Partner in accordance with this Agreement;
• (d) The person's expulsion by judicial order under KRS 362.2-604;
• (e) The person becoming a debtor in bankruptcy;
• (f) In the case of an individual, the person's death, appointment of a guardian, or judicial determination of incompetency;
• (g) In the case of an entity, dissolution, termination, or revocation of charter; or
• (h) Other events specified in the Act.

12.3 Effect of Dissociation — Limited Partner. Upon dissociation, a dissociated Limited Partner's right to participate in the management and conduct of the Partnership's activities terminates. The dissociated Limited Partner's interest becomes a mere Transferable Interest.

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

• (a) The dissociated General Partner's right to participate in the management and conduct of the Partnership's activities terminates;
• (b) The General Partner's duties of loyalty and care continue only with regard to matters arising before the dissociation;
• (c) The dissociated General Partner's interest becomes a Transferable Interest held by an Assignee.

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

12.5 Wrongful Dissociation. A Partner who dissociates in breach of an express provision of this Agreement is liable to the Partnership and the other Partners for damages caused by the wrongful dissociation, in addition to any other consequences under the Act.

ARTICLE 13: DISSOLUTION AND WINDING UP

13.1 Events of Dissolution. Pursuant to KRS 362.2-801, the Partnership shall be dissolved upon the first to occur of the following:

(a) The happening of an event specified in this Agreement;

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

(c) After the dissociation of a person as a General Partner:

• (i) If the Partnership has at least one remaining General Partner, the consent to dissolve the limited partnership given within ninety (90) days after the dissociation by Partners owning a majority of the rights to receive distributions at the time of the consent; or
• (ii) If the Partnership does not have a remaining General Partner, the passage of ninety (90) days after the dissociation, unless before the end of that period Partners owning a majority of the rights to receive distributions consent to continue the activities of the Partnership and admit at least one General Partner;

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

(e) Entry of a judicial decree of dissolution under KRS 362.2-802; or

(f) Administrative dissolution by the Secretary of State.

13.2 Winding Up. Upon dissolution, the General Partner (or, if there is no General Partner, a person approved by Partners owning a majority of the rights to receive distributions) shall wind up the Partnership's affairs pursuant to KRS 362.2-803. During winding up:

• (a) The Partnership continues solely for the purpose of winding up;
• (b) The person winding up may take all actions reasonably necessary, including preserving the Partnership's business or property as a going concern, collecting debts, selling assets, and discharging obligations;
• (c) A claim against the Partnership may be disposed of by notification pursuant to KRS 362.2-812;
• (d) The person winding up shall provide a final accounting to all Partners.

13.3 Distribution Upon Winding Up. Pursuant to KRS 362.2-807, upon completion of winding up, the assets of the Partnership shall be distributed in the following order:

(a) First, to creditors of the Partnership, including Partners who are creditors, in satisfaction of liabilities of the Partnership (other than obligations to Partners for distributions under KRS 362.2-503 and 362.2-504);

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

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

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

13.4 Statement of Termination. Upon completion of winding up, the General Partner (or person winding up) shall file a Statement of Termination with the Kentucky Secretary of State pursuant to KRS 362.2-203.

13.5 Disposition of Known Claims. Pursuant to KRS 362.2-812, a limited partnership may dispose of known claims against it by following the notification procedures set forth therein, including giving notice to claimants of the dissolution and the deadline for presenting claims.

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

ARTICLE 14: BOOKS, RECORDS, AND TAX MATTERS

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

• (a) A current list of the full name and last known mailing address of each Partner;
• (b) A copy of the Certificate and all amendments thereto;
• (c) Copies of this Agreement and all amendments thereto;
• (d) Copies of the Partnership's three (3) most recent federal, state, and local income tax returns;
• (e) Copies of any financial statements for the three (3) most recent Fiscal Years;
• (f) Books and records sufficient to record the Partnership's business, affairs, and financial condition;
• (g) A record of Capital Contributions made by each Partner;
• (h) Records of meetings and consent actions; and
• (i) Copies of any powers of attorney under which any certificate or other document has been executed.

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

14.3 Kentucky Income Tax. The Partnership shall comply with KRS Chapter 141 (Income Tax) and file all required Kentucky partnership returns (Form 765). The General Partner shall ensure that all required withholding payments are made on behalf of nonresident partners pursuant to KRS 141.206.

14.4 Kentucky Limited Liability Entity Tax. The General Partner shall ensure timely filing and payment of the Kentucky LLET pursuant to KRS 141.0401. The LLET is imposed on every limited partnership doing business in Kentucky. The LLET rate and applicable minimum tax thresholds are as specified in the applicable statute.

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

• (a) Have the authority to make all elections, take all actions, and represent the Partnership in all tax matters;
• (b) Provide prompt notice to all Partners of any tax proceeding or audit;
• (c) Not settle or compromise any material tax matter without the consent of a Majority in Interest of the Limited Partners.

14.6 Tax Elections. The General Partner shall have the authority to make all tax elections on behalf of the Partnership, including elections under Code Sections 754 and 6226 and any other elections deemed appropriate.

14.7 Fiscal Year. The Fiscal Year of the Partnership shall be the calendar year, unless otherwise required by the Code.

14.8 Banking. All funds of the Partnership shall be deposited in accounts in the name of the Partnership at financial institutions selected by the General Partner. Withdrawals shall require the signature of the General Partner or authorized persons.

ARTICLE 15: INDEMNIFICATION AND LIABILITY

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

• (a) Acts or omissions constituting fraud, willful misconduct, or gross negligence;
• (b) Material breach of this Agreement; or
• (c) Improper personal benefit.

15.2 Advancement of Expenses. The Partnership shall advance expenses incurred by an Indemnified Party in defending any claim for which indemnification may be sought, upon receipt of an undertaking to repay such amount if indemnification is ultimately not warranted.

15.3 No Personal Liability of Limited Partners. Pursuant to KRS 362.2-303, a Limited Partner is not personally liable, directly or indirectly, by way of contribution or otherwise, for a debt, obligation, or liability of the Partnership solely by reason of being or acting as a Limited Partner. Under the Act (ULPA 2001 as adopted in Kentucky), this protection is absolute and applies regardless of whether the Limited Partner participates in the management and control of the Partnership. The "control rule" of prior Kentucky law no longer applies.

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

15.5 Insurance. The General Partner may cause the Partnership to purchase and maintain insurance on behalf of the Indemnified Parties against any liability that may be asserted against them in connection with the Partnership's activities.

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

ARTICLE 16: GENERAL PROVISIONS

16.1 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Kentucky, including the Kentucky Uniform Limited Partnership Act (2006) (KRS Chapter 362, Subchapter 2), without regard to conflict of laws principles.

16.2 Dispute Resolution.

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

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

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

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

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

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

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

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

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

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

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

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

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

16.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Electronic signatures shall have the same force and effect as original signatures pursuant to the Kentucky Uniform Electronic Transactions Act (KRS 369.101 et seq.).

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

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

16.13 Construction. This Agreement shall not be construed more strictly against any Partner. Whenever the context requires, the gender of all words includes the masculine, feminine, and neuter, and the singular includes the plural and vice versa.

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

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

• Kentucky Secretary of State annual reporting requirements;
• Kentucky Income Tax (KRS Chapter 141);
• Kentucky Limited Liability Entity Tax (KRS 141.0401);
• Kentucky withholding requirements for nonresident partners (KRS 141.206);
• Kentucky workers' compensation and employment laws, if applicable;
• Local business license and occupational tax requirements;
• Kentucky Uniform Electronic Transactions Act (KRS 369.101 et seq.).

SIGNATURES

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

GENERAL PARTNER(S):

General Partner:

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

LIMITED PARTNER(S):

Limited Partner 1:

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

Limited Partner 2:

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

Limited Partner 3:

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

NOTARY ACKNOWLEDGMENT

COMMONWEALTH OF KENTUCKY
COUNTY OF [________________________________]

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

[________________________________]

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

WITNESS my hand and official seal.

Signature: [________________________________]
Printed Name of Notary: [________________________________]
My Commission Expires: [__/__/____]
Notary Public, Commonwealth of Kentucky
Notary ID: [________________________________]

[NOTARY SEAL]

EXHIBIT A: PARTNER SCHEDULE

Total Percentage Interests: 100%

SOURCES AND REFERENCES

1. Kentucky Uniform Limited Partnership Act (2006) — KRS Chapter 362, Subchapter 2
   - Full text: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=39036

2. Kentucky Secretary of State — Business Filings
   - Certificate of Limited Partnership (Form KNP): https://www.sos.ky.gov/bus/Forms/Pages/default.aspx
   - Fee Schedule: https://www.sos.ky.gov/bus/business-filings/Pages/Fees.aspx
   - Filing Fee: $40.00
   - Phone: (502) 564-3490
   - Address: 700 Capital Avenue, Suite 152, Frankfort, KY 40601

3. Kentucky Limited Liability Entity Tax (LLET)
   - KRS 141.0401
   - Minimum tax: $175 for entities with $3 million or less in Kentucky gross receipts or gross profits

4. Kentucky Income Tax
   - KRS Chapter 141
   - Partnership Return: Form 765
   - Nonresident Withholding: KRS 141.206

5. Kentucky Interest Rate
   - KRS 360.010 — Legal rate of interest (8% per annum)

6. Kentucky Uniform Electronic Transactions Act
   - KRS 369.101 et seq.

7. Prior Kentucky LP Law Reference
   - The Kentucky Uniform Limited Partnership Act (2006) replaced the prior Kentucky Revised Uniform Limited Partnership Act (KRS 362.401 et seq.)
   - Key change: Eliminated the "control rule" — limited partners no longer risk liability by participating in management

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

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

10. Academic Reference
    - "The Uniform Limited Partnership Act (2001) Comes to Kentucky: An Owner's Manual" — Stoll Keenon Ogden
    - https://www.skofirm.com/wp-content/uploads/2016/07/uniform-limited-partnership-act-2001-comes-kentucky-owners-manual-4590.pdf

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

Prepared for use on ezel.ai — Legal Template Repository