SENATE BILL No. 9

      An Act enacting the uniform partnership act; amending K.S.A. 17-2708, 56-1a604 and
      60-2313 and K.S.A. 1997 Supp. 17-5903, 47-816 and 58-3062 and repealing the existing
      sections; also repealing K.S.A. 56-301 through 56-344, 56-346 and 56-347 and K.S.A.
      1997 Supp. 56-345.

Be it enacted by the Legislature of the State of Kansas:

    New Section 1. (UPA 101). In this act:

    (a) ``Business'' includes every trade, occupation, and profession.

    (b) ``Debtor in bankruptcy'' means a person who is the subject of:

    (1) An order for relief under title 11 of the United States code or a
comparable order under a successor statute of general application; or

    (2) a comparable order under federal, state, or foreign law governing
insolvency.

    (c) ``Distribution'' means a transfer of money or other property from
a partnership to a partner in the partner's capacity as a partner or to the
partner's transferee.

    (d) ``Foreign limited liability partnership'' means a partnership that:

    (1) Is formed under laws other than the laws of this state; and

    (2) has the status of a limited liability partnership under those laws.

    (e) ``Limited liability partnership'' means a partnership that has filed
a statement of qualification under section 53 and does not have a similar
statement in effect in any other jurisdiction.

    (f) ``Partnership'' means an association of two or more persons to
carry on as co-owners a business for profit formed under section 9, pred-
ecessor law, or comparable law of another jurisdiction.

    (g) ``Partnership agreement'' means the agreement, whether written,
oral, or implied, among the partners concerning the partnership, includ-
ing amendments to the partnership agreement.

    (h) ``Partnership at will'' means a partnership in which the partners
have not agreed to remain partners until the expiration of a definite term
or the completion of a particular undertaking.

    (i) ``Partnership interest'' or ``partner's interest in the partnership''
means all of a partner's interests in the partnership, including the part-
ner's transferable interest and all management and other rights.

    (j) ``Person'' means an individual, corporation, business trust, estate,
trust, partnership, association, joint venture, government, governmental
subdivision, agency, or instrumentality, or any other legal or commercial
entity.

    (k) ``Property'' means all property, real, personal, or mixed, tangible
or intangible, or any interest therein.

    (l) ``State'' means a state of the United States, the District of Colum-
bia, the commonwealth of Puerto Rico, or any territory or insular pos-
session subject to the jurisdiction of the United States.

    (m) ``Statement'' means a statement of partnership authority under
section 14, a statement of denial under section 15, a statement of disso-
ciation under section 36, a statement of dissolution under section 42, a
statement of merger under section 51, a statement of qualification under
section 53, a statement of foreign qualification under section 59 or an
amendment or cancellation of any of the foregoing.

    (n) ``Transfer'' includes an assignment, conveyance, lease, mortgage,
deed, and encumbrance.

    New Sec. 2. (UPA 102). (a) A person knows a fact if the person has
actual knowledge of it.

    (b) A person has notice of a fact if the person:

    (1) Knows of it;

    (2) has received a notification of it; or

    (3) has reason to know it exists from all of the facts known to the
person at the time in question.

    (c) A person notifies or gives a notification to another by taking steps
reasonably required to inform the other person in ordinary course,
whether or not the other person learns of it.

    (d) A person receives a notification when the notification:

    (1) Comes to the person's attention; or

    (2) is duly delivered at the person's place of business or at any other
place held out by the person as a place for receiving communications.

    (e) Except as otherwise provided in subsection (f), a person other
than an individual knows, has notice, or receives a notification of a fact
for purposes of a particular transaction when the individual conducting
the transaction knows, has notice, or receives a notification of the fact, or
in any event when the fact would have been brought to the individual's
attention if the person had exercised reasonable diligence. The person
exercises reasonable diligence if it maintains reasonable routines for com-
municating significant information to the individual conducting the trans-
action and there is reasonable compliance with the routines. Reasonable
diligence does not require an individual acting for the person to com-
municate information unless the communication is part of the individual's
regular duties or the individual has reason to know of the transaction and
that the transaction would be materially affected by the information.

    (f) A partner's knowledge, notice, or receipt of a notification of a fact
relating to the partnership is effective immediately as knowledge by, no-
tice to, or receipt of a notification by the partnership, except in the case
of a fraud on the partnership committed by or with the consent of that
partner.

    New Sec. 3. (UPA 103). (a) Except as otherwise provided in sub-
section (b), relations among the partners and between the partners and
the partnership are governed by the partnership agreement. To the extent
the partnership agreement does not otherwise provide, this act governs
relations among the partners and between the partners and the partner-
ship.

    (b) The partnership agreement may not:

    (1) Vary the rights and duties under section 5 except to eliminate the
duty to provide copies of statements to all of the partners;

    (2) unreasonably restrict the right of access to books and records un-
der subsection (b) of section 22;

    (3) eliminate the duty of loyalty under subsection (b) of section 23 or
subsection (b)(3) section of 32, but:

    (i) The partnership agreement may identify specific types or cate-
gories of activities that do not violate the duty of loyalty, if not manifestly
unreasonable; or

    (ii) all of the partners or a number or percentage specified in the
partnership agreement may authorize or ratify, after full disclosure of all
material facts, a specific act or transaction that otherwise would violate
the duty of loyalty;

    (4) unreasonably reduce the duty of care under subsection (c) of sec-
tion 23 or subsection (b)(3) of section 32;

    (5) eliminate the obligation of good faith and fair dealing under sub-
section (d) of section 23, but the partnership agreement may prescribe
the standards by which the performance of the obligation is to be meas-
ured, if the standards are not manifestly unreasonable;

    (6) vary the power to dissociate as a partner under subsection (a) of
section 31, except to require the notice under subsection (a) of section
30 to be in writing;

    (7) vary the right of a court to expel a partner in the events specified
in subsection (e) of section 30;

    (8) vary the requirement to wind up the partnership business in cases
specified in subsection (d), (e) or (f) of section 38;

    (9) vary the law applicable to a limited liability partnership under
subsection (b) of section 6; or

    (10) restrict rights of third parties under this act.

    New Sec. 4. (UPA 104). (a) Unless displaced by particular provi-
sions of this act, the principles of law and equity supplement this act.

    (b) If an obligation to pay interest arises under this act and the rate
is not specified, the rate is that specified in applicable statute.

    New Sec. 5. (UPA 105). (a) A statement may be filed in the office
of the secretary of state. A certified copy of a statement that is filed in an
office in another state may be filed in the office of the secretary of state.
Either filing has the effect provided in this act with respect to partnership
property located in or transactions that occur in this state.

    (b) A certified copy of a statement that has been filed in the office
of the secretary of state and recorded in the office for recording transfers
of real property has the effect provided for recorded statements in this
act. A recorded statement that is not a certified copy of a statement filed
in the office of the secretary of state does not have the effect provided
for recorded statements in this act.

    (c) A statement filed by a partnership must be executed by at least
two partners. Other statements must be executed by a partner or other
person authorized by this act. An individual who executes a statement as,
or on behalf of, a partner or other person named as a partner in a state-
ment shall personally declare under penalty of perjury that the contents
of the statement are accurate.

    (d) A person authorized by this act to file a statement may amend or
cancel the statement by filing an amendment or cancellation that names
the partnership, identifies the statement, and states the substance of the
amendment or cancellation.

    (e) A person who files a statement pursuant to this section shall
promptly send a copy of the statement to every nonfiling partner and to
any other person named as a partner in the statement. Failure to send a
copy of a statement to a partner or other person does not limit the ef-
fectiveness of the statement as to a person not a partner.

    (f) The secretary of state may collect a fee for filing or providing a
certified copy of a statement. The officer responsible for recording trans-
fers of real property may collect a fee for recording a statement.

    (g) The secretary of state shall set by rules and regulations any fees
provided by this act.

    New Sec. 6. (UPA 106). (a) Except as otherwise provided in sub-
section (b), the law of the jurisdiction in which a partnership has its prin-
cipal office governs relations among the partners and between the part-
ners and the partnership.

    (b) The law of this state governs relations among the partners and
between the partners and the partnership and the liability of partners for
an obligation of a limited liability partnership.

    New Sec. 7. (UPA 107). A partnership governed by this act is sub-
ject to any amendment to or repeal of this act.

    New Sec. 8. (UPA 201). (a) A partnership is an entity distinct from
its partners.

    (b) A limited liability partnership continues to be the same entity that
existed before the filing of a statement of qualification under section 53.

    New Sec. 9. (UPA 202). (a) Except as otherwise provided in sub-
section (b), the association of two or more persons to carry on as co-
owners a business for profit forms a partnership, whether or not the
persons intend to form a partnership.

    (b) An association formed under a statute other than this act, a pred-
ecessor statute, or a comparable statute of another jurisdiction is not a
partnership under this act.

    (c) In determining whether a partnership is formed, the following
rules apply:

    (1) Joint tenancy, tenancy in common, tenancy by the entireties, joint
property, common property, or part ownership does not by itself establish
a partnership, even if the co-owners share profits made by the use of the
property.

    (2) The sharing of gross returns does not by itself establish a part-
nership, even if the persons sharing them have a joint or common right
or interest in property from which the returns are derived.

    (3) A person who receives a share of the profits of a business is pre-
sumed to be a partner in the business, unless the profits were received
in payment:

    (i) Of a debt by installments or otherwise;

    (ii) for services as an independent contractor or of wages or other
compensation to an employee;

    (iii) of rent;

    (iv) of an annuity or other retirement or health benefit to a benefi-
ciary, representative, or designee of a deceased or retired partner;

    (v) of interest or other charge on a loan, even if the amount of pay-
ment varies with the profits of the business, including a direct or indirect
present or future ownership of the collateral, or rights to income, pro-
ceeds, or increase in value derived from the collateral; or

    (vi) for the sale of the goodwill of a business or other property by
installments or otherwise.

    New Sec. 10. (UPA 203). Property acquired by a partnership is
property of the partnership and not of the partners individually.

    New Sec. 11. (UPA 204). (a) Property is partnership property if
acquired in the name of:

    (1) The partnership; or

    (2) one or more partners with an indication in the instrument trans-
ferring title to the property of the person's capacity as a partner or of the
existence of a partnership but without an indication of the name of the
partnership.

    (b) Property is acquired in the name of the partnership by a transfer
to:

    (1) The partnership in its name; or

    (2) one or more partners in their capacity as partners in the partner-
ship, if the name of the partnership is indicated in the instrument trans-
ferring title to the property.

    (c) Property is presumed to be partnership property if purchased with
partnership assets, even if not acquired in the name of the partnership
or of one or more partners with an indication in the instrument transfer-
ring title to the property of the person's capacity as a partner or of the
existence of a partnership.

    (d) Property acquired in the name of one or more of the partners,
without an indication in the instrument transferring title to the property
of the person's capacity as a partner or of the existence of a partnership
and without use of partnership assets, is presumed to be separate prop-
erty, even if used for partnership purposes.

    New Sec. 12. (UPA 301). Subject to the effect of a statement of
partnership authority under section 14:

    (a) Each partner is an agent of the partnership for the purpose of its
business. An act of a partner, including the execution of an instrument in
the partnership name, for apparently carrying on in the ordinary course
the partnership business or business of the kind carried on by the part-
nership binds the partnership, unless the partner had no authority to act
for the partnership in the particular matter and the person with whom
the partner was dealing knew or had received a notification that the part-
ner lacked authority.

    (b) An act of a partner which is not apparently for carrying on in the
ordinary course the partnership business or business of the kind carried
on by the partnership binds the partnership only if the act was authorized
by the other partners.

    New Sec. 13. (UPA 302). (a) Partnership property may be trans-
ferred as follows:

    (1) Subject to the effect of a statement of partnership authority under
section 14, partnership property held in the name of the partnership may
be transferred by an instrument of transfer executed by a partner in the
partnership name.

    (2) Partnership property held in the name of one or more partners
with an indication in the instrument transferring the property to them of
their capacity as partners or of the existence of a partnership, but without
an indication of the name of the partnership, may be transferred by an
instrument of transfer executed by the persons in whose name the prop-
erty is held.

    (3) Partnership property held in the name of one or more persons
other than the partnership, without an indication in the instrument trans-
ferring the property to them of their capacity as partners or of the exis-
tence of a partnership, may be transferred by an instrument of transfer
executed by the persons in whose name the property is held.

    (b) A partnership may recover partnership property from a transferee
only if it proves that execution of the instrument of initial transfer did not
bind the partnership under section 12 and:

    (1) As to a subsequent transferee who gave value for property trans-
ferred under subsection (a)(1) and (2), proves that the subsequent trans-
feree knew or had received a notification that the person who executed
the instrument of initial transfer lacked authority to bind the partnership;
or

    (2) as to a transferee who gave value for property transferred under
subsection (a)(3), proves that the transferee knew or had received a no-
tification that the property was partnership property and that the person
who executed the instrument of initial transfer lacked authority to bind
the partnership.

    (c) A partnership may not recover partnership property from a sub-
sequent transferee if the partnership would not have been entitled to
recover the property, under subsection (b), from any earlier transferee of
the property.

    (d) If a person holds all of the partners' interests in the partnership,
all of the partnership property vests in that person. The person may ex-
ecute a document in the name of the partnership to evidence vesting of
the property in that person and may file or record the document.

    New Sec. 14. (UPA 303). (a) A partnership may file a statement of
partnership authority, which:

    (1) Must include:

    (i) The name of the partnership;

    (ii) the street address of its principal office and of one office in this
state, if there is one;

    (iii) the names and mailing addresses of all of the partners or of an
agent appointed and maintained by the partnership for the purpose of
subsection (b); and

    (iv) the names of the partners authorized to execute an instrument
transferring real property held in the name of the partnership; and

    (2) may state the authority, or limitations on the authority, of some
or all of the partners to enter into other transactions on behalf of the
partnership and any other matter.

    (b) If a statement of partnership authority names an agent, the agent
shall maintain a list of the names and mailing addresses of all of the
partners and make it available to any person on request for good cause
shown.

    (c) If a filed statement of partnership authority is executed pursuant
to subsection (c) of section 5 and states the name of the partnership but
does not contain all of the other information required by subsection (a),
the statement nevertheless operates with respect to a person not a partner
as provided in subsections (d) and (e).

    (d) Except as otherwise provided in subsection (g), a filed statement
of partnership authority supplements the authority of a partner to enter
into transactions on behalf of the partnership as follows:

    (1) Except for transfers of real property, a grant of authority con-
tained in a filed statement of partnership authority is conclusive in favor
of a person who gives value without knowledge to the contrary, so long
as and to the extent that a limitation on that authority is not then contained
in another filed statement. A filed cancellation of a limitation on authority
revives the previous grant of authority.

    (2) A grant of authority to transfer real property held in the name of
the partnership contained in a certified copy of a filed statement of part-
nership authority recorded in the office for recording transfers of that
real property is conclusive in favor of a person who gives value without
knowledge to the contrary, so long as and to the extent that a certified
copy of a filed statement containing a limitation on that authority is not
then of record in the office for recording transfers of that real property.
The recording in the office for recording transfers of that real property
of a certified copy of a filed cancellation of a limitation on authority revives
the previous grant of authority.

    (e) A person not a partner is deemed to know of a limitation on the
authority of a partner to transfer real property held in the name of the
partnership if a certified copy of the filed statement containing the limi-
tation on authority is of record in the office for recording transfers of that
real property.

    (f) Except as otherwise provided in subsections (d) and (e) and sec-
tions 36 and 42, a person not a partner is not deemed to know of a
limitation on the authority of a partner merely because the limitation is
contained in a filed statement.

    (g) Unless earlier canceled, a filed statement of partnership authority
is canceled by operation of law five years after the date on which the
statement, or the most recent amendment, was filed with the secretary
of state.

    New Sec. 15. (UPA 304). A partner or other person named as a
partner in a filed statement of partnership authority or in a list maintained
by an agent pursuant to subsection (b) of section 14 may file a statement
of denial stating the name of the partnership and the fact that is being
denied, which may include denial of a person's authority or status as a
partner. A statement of denial is a limitation on authority as provided in
subsections (d) and (e) of section 14.

    New Sec. 16. (UPA 305). (a) A partnership is liable for loss or in-
jury caused to a person, or for a penalty incurred, as a result of a wrongful
act or omission, or other actionable conduct, of a partner acting in the
ordinary course of business of the partnership or with authority of the
partnership.

    (b) If, in the course of the partnership's business or while acting with
authority of the partnership, a partner receives or causes the partnership
to receive money or property of a person not a partner, and the money
or property is misapplied by a partner, the partnership is liable for the
loss.

    New Sec. 17. (UPA 306). (a) Except as otherwise provided in sub-
sections (b) and (c), all partners are liable jointly and severally for all
obligations of the partnership unless otherwise agreed by the claimant or
provided by law.

    (b) A person admitted as a partner into an existing partnership is not
personally liable for any partnership obligation incurred before the per-
son's admission as a partner.

    (c) An obligation of a partnership incurred while the partnership is a
limited liability partnership, whether arising in contract, tort, or other-
wise, is solely the obligation of the partnership. A partner is not personally
liable, directly or indirectly, by way of contribution or otherwise, for such
a partnership obligation solely by reason of being or so acting as a partner.
This subsection applies notwithstanding anything inconsistent in the part-
nership agreement that existed immediately before the vote required to
become a limited liability partnership under subsection (b) of section 53.

    New Sec. 18. (UPA 307). (a) A partnership may sue and be sued
in the name of the partnership.

    (b) An action may be brought against the partnership and, to the
extent not inconsistent with section 17 and amendments thereto, any or
all of the partners in the same action or in separate actions.

    (c) A judgment against a partnership is not by itself a judgment
against a partner. A judgment against a partnership may not be satisfied
from a partner's assets unless there is also a judgment against the partner.

    (d) A judgment creditor of a partner may not levy execution against
the assets of the partner to satisfy a judgment based on a claim against
the partnership unless the partner is personally liable for the claim under
section 17 and amendments thereto and:

    (1) A judgment based on the same claim has been obtained against
the partnership and a writ of execution on the judgment has been re-
turned unsatisfied in whole or in part;

    (2) the partnership is a debtor in bankruptcy;

    (3) the partner has agreed that the creditor need not exhaust part-
nership assets;

    (4) a court grants permission to the judgment creditor to levy exe-
cution against the assets of a partner based on a finding that partnership
assets subject to execution are clearly insufficient to satisfy the judgment,
that exhaustion of partnership assets is excessively burdensome, or that
the grant of permission is an appropriate exercise of the court's equitable
powers; or

    (5) liability is imposed on the partner by law or contract independent
of the existence of the partnership.

    (e) This section applies to any partnership liability or obligation re-
sulting from a representation by a partner or purported partner under
section 19.

    New Sec. 19. (UPA 308). (a) If a person, by words or conduct, pur-
ports to be a partner, or consents to being represented by another as a
partner, in a partnership or with one or more persons not partners, the
purported partner is liable to a person to whom the representation is
made, if that person, relying on the representation, enters into a trans-
action with the actual or purported partnership. If the representation,
either by the purported partner or by a person with the purported part-
ner's consent, is made in a public manner, the purported partner is liable
to a person who relies upon the purported partnership even if the pur-
ported partner is not aware of being held out as a partner to the claimant.
If partnership liability results, the purported partner is liable with respect
to that liability as if the purported partner were a partner. If no partner-
ship liability results, the purported partner is liable with respect to that
liability jointly and severally with any other person consenting to the rep-
resentation.

    (b) If a person is thus represented to be a partner in an existing
partnership, or with one or more persons not partners, the purported
partner is an agent of persons consenting to the representation to bind
them to the same extent and in the same manner as if the purported
partner were a partner, with respect to persons who enter into transac-
tions in reliance upon the representation. If all of the partners of the
existing partnership consent to the representation, a partnership act or
obligation results. If fewer than all of the partners of the existing part-
nership consent to the representation, the person acting and the partners
consenting to the representation are jointly and severally liable.

    (c) A person is not liable as a partner merely because the person is
named by another in a statement of partnership authority.

    (d) A person does not continue to be liable as a partner merely be-
cause of a failure to file a statement of dissociation or to amend a state-
ment of partnership authority to indicate the partner's dissociation from
the partnership.

    (e) Except as otherwise provided in subsections (a) and (b), persons
who are not partners as to each other are not liable as partners to other
persons.

    New Sec. 20. (UPA 401). (a) Each partner is deemed to have an
account that is:

    (1) Credited with an amount equal to the money plus the value of
any other property, net of the amount of any liabilities, the partner con-
tributes to the partnership and the partner's share of the partnership
profits; and

    (2) charged with an amount equal to the money plus the value of any
other property, net of the amount of any liabilities, distributed by the
partnership to the partner and the partner's share of the partnership
losses.

    (b)  Each partner is entitled to an equal share of the partnership
profits and is chargeable with a share of the partnership losses in pro-
portion to the partner's share of the profits.

    (c) A partnership shall reimburse a partner for payments made and
indemnify a partner for liabilities incurred by the partner in the ordinary
course of the business of the partnership or for the preservation of its
business or property.

    (d) A partnership shall reimburse a partner for an advance to the
partnership beyond the amount of capital the partner agreed to contrib-
ute.

    (e) A payment or advance made by a partner which gives rise to a
partnership obligation under subsection (c) or (d) constitutes a loan to
the partnership which accrues interest from the date of the payment or
advance.

    (f) Each partner has equal rights in the management and conduct of
the partnership business.

    (g) A partner may use or possess partnership property only on behalf
of the partnership.

    (h) A partner is not entitled to remuneration for services performed
for the partnership, except for reasonable compensation for services ren-
dered in winding up the business of the partnership.

    (i) A person may become a partner only with the consent of all of the
partners.

    (j) A difference arising as to a matter in the ordinary course of busi-
ness of a partnership may be decided by a majority of the partners. An
act outside the ordinary course of business of a partnership and an amend-
ment to the partnership agreement may be undertaken only with the
consent of all of the partners.

    (k) This section does not affect the obligations of a partnership to
other persons under section 12.

    New Sec. 21. (UPA 402). A partner has no right to receive, and
may not be required to accept, a distribution in kind.

    New Sec. 22. (UPA 403). (a) A partnership shall keep its books and
records, if any, at its principal office.

    (b) A partnership shall provide partners and their agents and attor-
neys access to its books and records. It shall provide former partners and
their agents and attorneys access to books and records pertaining to the
period during which they were partners. The right of access provides the
opportunity to inspect and copy books and records during ordinary busi-
ness hours. A partnership may impose a reasonable charge, covering the
costs of labor and material, for copies of documents furnished.

    (c) Each partner and the partnership shall furnish to a partner, and
to the legal representative of a deceased partner or partner under legal
disability:

    (1) Without demand, any information concerning the partnership's
business and affairs reasonably required for the proper exercise of the
partner's rights and duties under the partnership agreement or this act;
and

    (2) on demand, any other information concerning the partnership's
business and affairs, except to the extent the demand or the information
demanded is unreasonable or otherwise improper under the circum-
stances.

    New Sec. 23. (UPA 404). (a) The only fiduciary duties a partner
owes to the partnership and the other partners are the duty of loyalty and
the duty of care set forth in subsections (b) and (c).

    (b) A partner's duty of loyalty to the partnership and the other part-
ners is limited to the following:

    (1) To account to the partnership and hold as trustee for it any prop-
erty, profit, or benefit derived by the partner in the conduct and winding
up of the partnership business or derived from a use by the partner of
partnership property, including the appropriation of a partnership op-
portunity;

    (2) to refrain from dealing with the partnership in the conduct or
winding up of the partnership business as or on behalf of a party having
an interest adverse to the partnership; and

    (3) to refrain from competing with the partnership in the conduct of
the partnership business before the dissolution of the partnership.

    (c) A partner's duty of care to the partnership and the other partners
in the conduct and winding up of the partnership business is limited to
refraining from engaging in grossly negligent or reckless conduct, inten-
tional misconduct, or a knowing violation of law.

    (d) A partner shall discharge the duties to the partnership and the
other partners under this act or under the partnership agreement and
exercise any rights consistently with the obligation of good faith and fair
dealing.

    (e) A partner does not violate a duty or obligation under this act or
under the partnership agreement merely because the partner's conduct
furthers the partner's own interest.

    (f) A partner may lend money to and transact other business with the
partnership, and as to each loan or transaction the rights and obligations
of the partner are the same as those of a person who is not a partner,
subject to other applicable law.

    (g) This section applies to a person winding up the partnership busi-
ness as the personal or legal representative of the last surviving partner
as if the person were a partner.

    New Sec. 24. (UPA 405). (a) A partnership may maintain an action
against a partner for a breach of the partnership agreement, or for the
violation of a duty to the partnership, causing harm to the partnership.

    (b) A partner may maintain an action against the partnership or an-
other partner for legal or equitable relief, with or without an accounting
as to partnership business, to:

    (1) Enforce the partner's rights under the partnership agreement;

    (2) enforce the partner's rights under this act, including:

    (i) The partner's rights under sections 20, 22 or 23;

    (ii) the partner's right on dissociation to have the partner's interest in
the partnership purchased pursuant to section 33 or enforce any other
right under article 6 or 7; or

    (iii) the partner's right to compel a dissolution and winding up of the
partnership business under section 38 or enforce any other right under
article 8; or

    (3) enforce the rights and otherwise protect the interests of the part-
ner, including rights and interests arising independently of the partner-
ship relationship.

    (c) The accrual of, and any time limitation on, a right of action for a
remedy under this section is governed by other law. A right to an ac-
counting upon a dissolution and winding up does not revive a claim barred
by law.

    New Sec. 25. (UPA 406). (a) If a partnership for a definite term or
particular undertaking is continued, without an express agreement, after
the expiration of the term or completion of the undertaking, the rights
and duties of the partners remain the same as they were at the expiration
or completion, so far as is consistent with a partnership at will.

    (b) If the partners, or those of them who habitually acted in the busi-
ness during the term or undertaking, continue the business without any
settlement or liquidation of the partnership, they are presumed to have
agreed that the partnership will continue.

    New Sec. 26. (UPA 501). A partner is not a co-owner of partner-
ship property and has no interest in partnership property which can be
transferred, either voluntarily or involuntarily.

    New Sec. 27. (UPA 502). The only transferable interest of a part-
ner in the partnership is the partner's share of the profits and losses of
the partnership and the partner's right to receive distributions. The in-
terest is personal property.

    New Sec. 28. (UPA 503). (a) A transfer, in whole or in part, of a
partner's transferable interest in the partnership:

    (1) Is permissible;

    (2) does not by itself cause the partner's dissociation or a dissolution
and winding up of the partnership business; and

    (3) does not, as against the other partners or the partnership, entitle
the transferee, during the continuance of the partnership, to participate
in the management or conduct of the partnership business, to require
access to information concerning partnership transactions, or to inspect
or copy the partnership books or records.

    (b) A transferee of a partner's transferable interest in the partnership
has a right:

    (1) To receive, in accordance with the transfer, distributions to which
the transferor would otherwise be entitled;

    (2) to receive upon the dissolution and winding up of the partnership
business, in accordance with the transfer, the net amount otherwise dis-
tributable to the transferor; and

    (3) to seek under subsection (f) of section 38 a judicial determination
that it is equitable to wind up the partnership business.

    (c) In a dissolution and winding up, a transferee is entitled to an
account of partnership transactions only from the date of the latest ac-
count agreed to by all of the partners.

    (d) Upon transfer, the transferor retains the rights and duties of a
partner other than the interest in distributions transferred.

    (e) A partnership need not give effect to a transferee's rights under
this section until it has notice of the transfer.

    (f) A transfer of a partner's transferable interest in the partnership in
violation of a restriction on transfer contained in the partnership agree-
ment is ineffective as to a person having notice of the restriction at the
time of transfer.

    New Sec. 29. (UPA 504). (a) On application by a judgment creditor
of a partner or of a partner's transferee, a court having jurisdiction may
charge the transferable interest of the judgment debtor to satisfy the
judgment. The court may appoint a receiver of the share of the distri-
butions due or to become due to the judgment debtor in respect of the
partnership and make all other orders, directions, accounts, and inquiries
the judgment debtor might have made or which the circumstances of the
case may require.

    (b) A charging order constitutes a lien on the judgment debtor's
transferable interest in the partnership. The court may order a foreclosure
of the interest subject to the charging order at any time. The purchaser
at the foreclosure sale has the rights of a transferee.

    (c) At any time before foreclosure, an interest charged may be re-
deemed:

    (1) By the judgment debtor;

    (2) with property other than partnership property, by one or more of
the other partners; or

    (3) with partnership property, by one or more of the other partners
with the consent of all of the partners whose interests are not so charged.

    (d) This act does not deprive a partner of a right under exemption
laws with respect to the partner's interest in the partnership.

    (e) This section provides the exclusive remedy by which a judgment
creditor of a partner or partner's transferee may satisfy a judgment out
of the judgment debtor's transferable interest in the partnership.

    New Sec. 30. (UPA 601). A partner is dissociated from a partner-
ship upon the occurrence of any of the following events:

    (a) The partnership's having notice of the partner's express will to
withdraw as a partner or on a later date specified by the partner;

    (b) an event agreed to in the partnership agreement as causing the
partner's dissociation;

    (c) the partner's expulsion pursuant to the partnership agreement;

    (d) the partner's expulsion by the unanimous vote of the other part-
ners if:

    (1) It is unlawful to carry on the partnership business with that part-
ner;

    (2) there has been a transfer of all or substantially all of that partner's
transferable interest in the partnership, other than a transfer for security
purposes, or a court order charging the partner's interest, which has not
been foreclosed;

    (3) within 90 days after the partnership notifies a corporate partner
that it will be expelled because it has filed a certificate of dissolution or
the equivalent, its charter has been revoked, or its right to conduct busi-
ness has been suspended by the jurisdiction of its incorporation, there is
no revocation of the certificate of dissolution or no reinstatement of its
charter or its right to conduct business; or

    (4) a partnership that is a partner has been dissolved and its business
is being wound up;

    (e) on application by the partnership or another partner, the partner's
expulsion by judicial determination because:

    (1) The partner engaged in wrongful conduct that adversely and ma-
terially affected the partnership business;

    (2) the partner willfully or persistently committed a material breach
of the partnership agreement or of a duty owed to the partnership or the
other partners under section 23; or

    (3) the partner engaged in conduct relating to the partnership busi-
ness which makes it not reasonably practicable to carry on the business
in partnership with the partner;

    (f) the partner's:

    (1) Becoming a debtor in bankruptcy;

    (2) executing an assignment for the benefit of creditors;

    (3) seeking, consenting to, or acquiescing in the appointment of a
trustee, receiver, or liquidator of that partner or of all or substantially all
of that partner's property; or

    (4) failing, within 90 days after the appointment, to have vacated or
stayed the appointment of a trustee, receiver, or liquidator of the partner
or of all or substantially all of the partner's property obtained without the
partner's consent or acquiescence, or failing within 90 days after the ex-
piration of a stay to have the appointment vacated;

    (g) in the case of a partner who is an individual:

    (1) The partner's death;

    (2) the appointment of a guardian or general conservator for the part-
ner; or

    (3) a judicial determination that the partner has otherwise become
incapable of performing the partner's duties under the partnership agree-
ment;

    (h) in the case of a partner that is a trust or is acting as a partner by
virtue of being a trustee of a trust, distribution of the trust's entire trans-
ferable interest in the partnership, but not merely by reason of the sub-
stitution of a successor trustee;

    (i) in the case of a partner that is an estate or is acting as a partner
by virtue of being a personal representative of an estate, distribution of
the estate's entire transferable interest in the partnership, but not merely
by reason of the substitution of a successor personal representative; or

    (j) termination of a partner who is not an individual, partnership,
corporation, trust, or estate.

    New Sec. 31. (UPA 602). (a) A partner has the power to dissociate
at any time, rightfully or wrongfully, by express will pursuant to subsection
(a) of section 30.

    (b) A partner's dissociation is wrongful only if:

    (1) It is in breach of an express provision of the partnership agree-
ment; or

    (2) in the case of a partnership for a definite term or particular un-
dertaking, before the expiration of the term or the completion of the
undertaking:

    (i) The partner withdraws by express will, unless the withdrawal fol-
lows within 90 days after another partner's dissociation by death or oth-
erwise under subsection (f) through (j) of section 30 or wrongful disso-
ciation under this subsection;

    (ii) the partner is expelled by judicial determination under subsection
(e) of section 30;

    (iii) the partner is dissociated by becoming a debtor in bankruptcy;
or

    (iv) in the case of a partner who is not an individual, trust other than
a business trust, or estate, the partner is expelled or otherwise dissociated
because it willfully dissolved or terminated.

    (c) A partner who wrongfully dissociates is liable to the partnership
and to the other partners for damages caused by the dissociation. The
liability is in addition to any other obligation of the partner to the part-
nership or to the other partners.

    New Sec. 32. (UPA 603). (a) If a partner's dissociation results in a
dissolution and winding up of the partnership business, article 8 applies;
otherwise, article 7 applies.

    (b) Upon a partner's dissociation:

    (1) The partner's right to participate in the management and conduct
of the partnership business terminates, except as otherwise provided in
section 40;

    (2) the partner's duty of loyalty under subsection (b)(3) of section 23
terminates; and

    (3) the partner's duty of loyalty under subsection (b)(1) and (2) of
section 23 and duty of care under subsection (c) of section 23 continue
only with regard to matters arising and events occurring before the part-
ner's dissociation, unless the partner participates in winding up the part-
nership's business pursuant to section 40.

    New Sec. 33. (UPA 701). (a) If a partner is dissociated from a part-
nership without resulting in a dissolution and winding up of the partner-
ship business under section 38, the partnership shall cause the dissociated
partner's interest in the partnership to be purchased for a buyout price
determined pursuant to subsection (b).

    (b) The buyout price of a dissociated partner's interest is the amount
that would have been distributable to the dissociating partner under sub-
section (b) of section 44 if, on the date of dissociation, the assets of the
partnership were sold at a price equal to the greater of the liquidation
value or the value based on a sale of the entire business as a going concern
without the dissociated partner and the partnership were wound up as of
that date. Interest must be paid from the date of dissociation to the date
of payment.

    (c) Damages for wrongful dissociation under subsection (b) of section
31, and all other amounts owing, whether or not presently due, from the
dissociated partner to the partnership, must be offset against the buyout
price. Interest must be paid from the date the amount owed becomes
due to the date of payment.

    (d) A partnership shall indemnify a dissociated partner whose interest
is being purchased against all partnership liabilities, whether incurred
before or after the dissociation, except liabilities incurred by an act of the
dissociated partner under section 34.

    (e) If no agreement for the purchase of a dissociated partner's interest
is reached within 120 days after a written demand for payment, the part-
nership shall pay, or cause to be paid, in cash to the dissociated partner
the amount the partnership estimates to be the buyout price and accrued
interest, reduced by any offsets and accrued interest under subsection
(c).

    (f) If a deferred payment is authorized under subsection (h), the part-
nership may tender a written offer to pay the amount it estimates to be
the buyout price and accrued interest, reduced by any offsets under sub-
section (c), stating the time of payment, the amount and type of security
for payment, and the other terms and conditions of the obligation.

    (g) The payment or tender required by subsection (e) or (f) must be
accompanied by the following:

    (1) A statement of partnership assets and liabilities as of the date of
dissociation;

    (2) the latest available partnership balance sheet and income state-
ment, if any;

    (3) an explanation of how the estimated amount of the payment was
calculated; and

    (4) written notice that the payment is in full satisfaction of the obli-
gation to purchase unless, within 120 days after the written notice, the
dissociated partner commences an action to determine the buyout price,
any offsets under subsection (c), or other terms of the obligation to pur-
chase.

    (h) A partner who wrongfully dissociates before the expiration of a
definite term or the completion of a particular undertaking is not entitled
to payment of any portion of the buyout price until the expiration of the
term or completion of the undertaking, unless the partner establishes to
the satisfaction of the court that earlier payment will not cause undue
hardship to the business of the partnership. A deferred payment must be
adequately secured and bear interest.

    (i) A dissociated partner may maintain an action against the partner-
ship, pursuant to subsection (b)(2)(ii) of section 24, to determine the
buyout price of that partner's interest, any offsets under subsection (c),
or other terms of the obligation to purchase. The action must be com-
menced within 120 days after the partnership has tendered payment or
an offer to pay or within one year after written demand for payment if
no payment or offer to pay is tendered. The court shall determine the
buyout price of the dissociated partner's interest, any offset due under
subsection (c), and accrued interest, and enter judgment for any addi-
tional payment or refund. If deferred payment is authorized under sub-
section (h), the court shall also determine the security for payment and
other terms of the obligation to purchase. The court may assess reason-
able attorney's fees and the fees and expenses of appraisers or other ex-
perts for a party to the action, in amounts the court finds equitable, against
a party that the court finds acted arbitrarily, vexatiously, or not in good
faith. The finding may be based on the partnership's failure to tender
payment or an offer to pay or to comply with subsection (g).

    New Sec. 34. (UPA 702). (a) For two years after a partner disso-
ciates without resulting in a dissolution and winding up of the partnership
business, the partnership, including a surviving partnership under article
9, is bound by an act of the dissociated partner which would have bound
the partnership under section 12 before dissociation only if at the time
of entering into the transaction the other party:

    (1) Reasonably believed that the dissociated partner was then a part-
ner;

    (2) did not have notice of the partner's dissociation; and

    (3) is not deemed to have had knowledge under subsection (e) of
section 14 or notice under subsection (c) of section 36.

    (b) A dissociated partner is liable to the partnership for any damage
caused to the partnership arising from an obligation incurred by the dis-
sociated partner after dissociation for which the partnership is liable un-
der subsection (a).

    New Sec. 35. (UPA 703). (a) A partner's dissociation does not of
itself discharge the partner's liability for a partnership obligation incurred
before dissociation. A dissociated partner is not liable for a partnership
obligation incurred after dissociation, except as otherwise provided in
subsection (b).

    (b) A partner who dissociates without resulting in a dissolution and
winding up of the partnership business is liable as a partner to the other
party in a transaction entered into by the partnership, or a surviving part-
nership under article 9, within two years after the partner's dissociation,
only if the partner is liable for the obligation under section 17 and amend-
ments thereto and at the time of entering into the transaction the other
party:

    (1) Reasonably believed that the dissociated partner was then a part-
ner;

    (2) did not have notice of the partner's dissociation; and

    (3) is not deemed to have had knowledge under subsection (e) of
section 14 or notice under subsection (c) of section 36.

    (c) By agreement with the partnership creditor and the partners con-
tinuing the business, a dissociated partner may be released from liability
for a partnership obligation.

    (d) A dissociated partner is released from liability for a partnership
obligation if a partnership creditor, with notice of the partner's dissocia-
tion but without the partner's consent, agrees to a material alteration in
the nature or time of payment of a partnership obligation.

    New Sec. 36. (UPA 704). (a) A dissociated partner or the partner-
ship may file a statement of dissociation stating the name of the partner-
ship and that the partner is dissociated from the partnership.

    (b) A statement of dissociation is a limitation on the authority of a
dissociated partner for the purposes of subsection (d) and (e) of section
14.

    (c) For the purposes of subsection (a)(3) of section 34 and subsection
(b)(3) of section 35, a person not a partner is deemed to have notice of
the dissociation 90 days after the statement of dissociation is filed.

    New Sec. 37. (UPA 705). Continued use of a partnership name, or
a dissociated partner's name as part thereof, by partners continuing the
business does not of itself make the dissociated partner liable for an ob-
ligation of the partners or the partnership continuing the business.

    New Sec. 38. (UPA 801). A partnership is dissolved, and its busi-
ness must be wound up, only upon the occurrence of any of the following
events:

    (a) In a partnership at will, the partnership's having notice from a
partner, other than a partner who is dissociated under subsections (b)
through (j) of section 30, of that partner's express will to withdraw as a
partner, or on a later date specified by the partner;

    (b) in a partnership for a definite term or particular undertaking:

    (1) Within 90 days after a partner's dissociation by death or otherwise
under subsections (f) through (j) of section 30 or wrongful dissociation
under subsection (b) of section 31, the express will of at least 1/2 of the
remaining partners to wind up the partnership business, for which pur-
pose a partner's rightful disassociation pursuant to subsection (b)(2)(i) of
section 31 and amendments thereto constitutes the expression of that
partner's will to wind up the partnership business;

    (2) the express will of all of the partners to wind up the partnership
business; or

    (3) the expiration of the term or the completion of the undertaking;

    (c) an event agreed to in the partnership agreement resulting in the
winding up of the partnership business;

    (d) an event that makes it unlawful for all or substantially all of the
business of the partnership to be continued, but a cure of illegality within
90 days after notice to the partnership of the event is effective retroac-
tively to the date of the event for purposes of this section;

    (e) on application by a partner, a judicial determination that:

    (1) The economic purpose of the partnership is likely to be unrea-
sonably frustrated;

    (2) another partner has engaged in conduct relating to the partner-
ship business which makes it not reasonably practicable to carry on the
business in partnership with that partner; or

    (3) it is not otherwise reasonably practicable to carry on the partner-
ship business in conformity with the partnership agreement; or

    (f) on application by a transferee of a partner's transferable interest,
a judicial determination that it is equitable to wind up the partnership
business:

    (1) After the expiration of the term or completion of the undertaking,
if the partnership was for a definite term or particular undertaking at the
time of the transfer or entry of the charging order that gave rise to the
transfer; or

    (2) at any time, if the partnership was a partnership at will at the time
of the transfer or entry of the charging order that gave rise to the transfer.

    New Sec. 39. (UPA 802). (a) Subject to subsection (b), a partner-
ship continues after dissolution only for the purpose of winding up its
business. The partnership is terminated when the winding up of its busi-
ness is completed.

    (b) At any time after the dissolution of a partnership and before the
winding up of its business is completed, all of the partners, including any
dissociating partner other than a wrongfully dissociating partner, may
waive the right to have the partnership's business wound up and the
partnership terminated. In that event:

    (1) The partnership resumes carrying on its business as if dissolution
had never occurred, and any liability incurred by the partnership or a
partner after the dissolution and before the waiver is determined as if
dissolution had never occurred; and

    (2) the rights of a third party accruing under subsection (a) of section
41 or arising out of conduct in reliance on the dissolution before the third
party knew or received a notification of the waiver may not be adversely
affected.

    New Sec. 40. (UPA 803). (a) After dissolution, a partner who has
not wrongfully dissociated may participate in winding up the partnership's
business, but on application of any partner, partner's legal representative,
or transferee, the district court, for good cause shown, may order judicial
supervision of the winding up.

    (b) The legal representative of the last surviving partner may wind
up a partnership's business.

    (c) A person winding up a partnership's business may preserve the
partnership business or property as a going concern for a reasonable time,
prosecute and defend actions and proceedings, whether civil, criminal, or
administrative, settle and close the partnership's business, dispose of and
transfer the partnership's property, discharge the partnership's liabilities,
distribute the assets of the partnership pursuant to section 44, settle dis-
putes by mediation or arbitration, and perform other necessary acts.

    New Sec. 41. (UPA 804). Subject to section 42, a partnership is
bound by a partner's act after dissolution that:

    (a) Is appropriate for winding up the partnership business; or

    (b) would have bound the partnership under section 12 before dis-
solution, if the other party to the transaction did not have notice of the
dissolution.

    New Sec. 42. (UPA 805). (a) After dissolution, a partner who has
not wrongfully dissociated may file a statement of dissolution stating the
name of the partnership and that the partnership has dissolved and is
winding up its business.

    (b) A statement of dissolution cancels a filed statement of partnership
authority for the purposes of subsection (d) of section 14 and is a limi-
tation on authority for the purposes of subsection (e) of section 14.

    (c) For the purposes of sections 12 and 41, a person not a partner is
deemed to have notice of the dissolution and the limitation on the part-
ners' authority as a result of the statement of dissolution 90 days after it
is filed.

    (d) After filing and, if appropriate, recording a statement of dissolu-
tion, a dissolved partnership may file and, if appropriate, record a state-
ment of partnership authority which will operate with respect to a person
not a partner as provided in subsections (d) and (e) of section 14 in any
transaction, whether or not the transaction is appropriate for winding up
the partnership business.

    New Sec. 43. (UPA 806). (a) Except as otherwise provided in sub-
section (b) and section 17 and amendments thereto, after dissolution a
partner is liable to the other partners for the partner's share of any part-
nership liability incurred under section 41.

    (b) A partner who, with knowledge of the dissolution, incurs a part-
nership liability under subsection (b) of section 41 by an act that is not
appropriate for winding up the partnership business is liable to the part-
nership for any damage caused to the partnership arising from the liabil-
ity.

    New Sec. 44. (UPA 807). (a) In winding up a partnership's busi-
ness, the assets of the partnership, including the contributions of the
partners required by this section, must be applied to discharge its obli-
gations to creditors, including, to the extent permitted by law, partners
who are creditors. Any surplus must be applied to pay in cash the net
amount distributable to partners in accordance with their right to distri-
butions under subsection (b).

    (b) Each partner is entitled to a settlement of all partnership accounts
upon winding up the partnership business. In settling accounts among
the partners, profits and losses that result from the liquidation of the
partnership assets must be credited and charged to the partners' accounts.
The partnership shall make a distribution to a partner in an amount equal
to any excess of the credits over the charges in the partner's account. A
partner shall contribute to the partnership an amount equal to any excess
of the charges over the credits in the partner's account but excluding
from the calculation charges attributable to an obligation for which the
partner is not personally liable under section 17 and amendments thereto.

    (c) If a partner fails to contribute the full amount required under
subsection (b), all of the other partners shall contribute, in the proportions
in which those partners share partnership losses, the additional amount
necessary to satisfy the partnership obligations for which they are per-
sonally liable under section 17 and amendments thereto. A partner or
partner's legal representative may recover from the other partners any
contributions the partner makes to the extent the amount contributed
exceeds that partner's share of the partnership obligations for which the
partner is personally liable under section 17 and amendments thereto.

    (d) After the settlement of accounts, each partner shall contribute, in
the proportion in which the partner shares partnership losses, the amount
necessary to satisfy partnership obligations that were not known at the
time of the settlement and for which the partner is personally liable under
section 17 and amendments thereto.

    (e) The estate of a deceased partner is liable for the partner's obli-
gation to contribute to the partnership.

    (f) An assignee for the benefit of creditors of a partnership or a part-
ner, or a person appointed by a court to represent creditors of a partner-
ship or a partner, may enforce a partner's obligation to contribute to the
partnership.

    New Sec. 45. (UPA 901). In this article:

    (a) ``General partner'' means a partner in a partnership and a general
partner in a limited partnership.

    (b) ``Limited partner'' means a limited partner in a limited partner-
ship.

    (c) ``Limited partnership'' means a limited partnership created under
the state limited partnership act, predecessor law, or comparable law of
another jurisdiction.

    (d) ``Partner'' includes both a general partner and a limited partner.

    New Sec. 46. (UPA 902). (a) A partnership may be converted to a
limited partnership pursuant to this section.

    (b) The terms and conditions of a conversion of a partnership to a
limited partnership must be approved by all of the partners or by a num-
ber or percentage specified for conversion in the partnership agreement.

    (c) After the conversion is approved by the partners, the partnership
shall file a certificate of limited partnership in the jurisdiction in which
the limited partnership is to be formed. The certificate must include:

    (1) A statement that the partnership was converted to a limited part-
nership from a partnership;

    (2) its former name; and

    (3) a statement of the number of votes cast by the partners for and
against the conversion and, if the vote is less than unanimous, the number
or percentage required to approve the conversion under the partnership
agreement.

    (d) The conversion takes effect when the certificate of limited part-
nership is filed or at any later date specified in the certificate.

    (e) A general partner who becomes a limited partner as a result of
the conversion remains liable as a general partner for an obligation in-
curred by the partnership before the conversion takes effect and for which
the partner is personally liable under section 17 and amendments thereto.
If the other party to a transaction with the limited partnership reasonably
believes when entering the transaction that the limited partner is a gen-
eral partner, the limited partner is liable for an obligation incurred by the
limited partnership within 90 days after the conversion takes effect, pro-
vided the obligation is one for which the partner would have been per-
sonally liable under section 17 and amendments thereto if the partnership
had not been converted to a limited partnership. The limited partner's
liability for all other obligations of the limited partnership incurred after
the conversion takes effect is that of a limited partner as provided in the
revised uniform limited partnership act, K.S.A. 56-1a01 et seq. and
amendments thereto.

    New Sec. 47. (UPA 903). (a) A limited partnership may be con-
verted to a partnership pursuant to this section.

    (b) Notwithstanding a provision to the contrary in a limited partner-
ship agreement, the terms and conditions of a conversion of a limited
partnership to a partnership must be approved by all of the partners.

    (c) After the conversion is approved by the partners, the limited part-
nership shall cancel its certificate of limited partnership.

    (d) The conversion takes effect when the certificate of limited part-
nership is canceled.

    (e) A limited partner who becomes a general partner as a result of
the conversion remains liable only as a limited partner for an obligation
incurred by the limited partnership before the conversion takes effect.
Except as otherwise provided in section 17 and amendments thereto, the
partner is liable as a general partner for an obligation of the partnership
incurred after the conversion takes effect.

    New Sec. 48. (UPA 904). (a) A partnership or limited partnership
that has been converted pursuant to this article is for all purposes the
same entity that existed before the conversion.

    (b) When a conversion takes effect:

    (1) All property owned by the converting partnership or limited part-
nership remains vested in the converted entity;

    (2) all obligations of the converting partnership or limited partnership
continue as obligations of the converted entity; and

    (3) an action or proceeding pending against the converting partner-
ship or limited partnership may be continued as if the conversion had not
occurred.

    New Sec. 49. (UPA 905). (a) Pursuant to a plan of merger ap-
proved as provided in subsection (c), a partnership may be merged with
one or more partnerships or limited partnerships.

    (b) The plan of merger must set forth:

    (1) The name of each partnership or limited partnership that is a
party to the merger;

    (2) the name of the surviving entity into which the other partnerships
or limited partnerships will merge;

    (3) whether the surviving entity is a partnership or a limited partner-
ship and the status of each partner;

    (4) the terms and conditions of the merger;

    (5) the manner and basis of converting the interests of each party to
the merger into interests or obligations of the surviving entity, or into
money or other property in whole or part; and

    (6) the street address of the surviving entity's principal office.

    (c) The plan of merger must be approved:

    (1) In the case of a partnership that is a party to the merger, by all
of the partners, or a number or percentage specified for merger in the
partnership agreement; and

    (2) in the case of a limited partnership that is a party to the merger,
by the vote required for approval of a merger by the law of the state or
foreign jurisdiction in which the limited partnership is organized and, in
the absence of such a specifically applicable law, by all of the partners,
notwithstanding a provision to the contrary in the partnership agreement.

    (d) After a plan of merger is approved and before the merger takes
effect, the plan may be amended or abandoned as provided in the plan.

    (e) The merger takes effect on the later of:

    (1) The approval of the plan of merger by all parties to the merger,
as provided in subsection (c);

    (2) the filing of all documents required by law to be filed as a con-
dition to the effectiveness of the merger; or

    (3) any effective date specified in the plan of merger.

    New Sec. 50. (UPA 906). (a) When a merger takes effect:

    (1) The separate existence of every partnership or limited partnership
that is a party to the merger, other than the surviving entity, ceases;

    (2) all property owned by each of the merged partnerships or limited
partnerships vests in the surviving entity;

    (3) all obligations of every partnership or limited partnership that is
a party to the merger become the obligations of the surviving entity; and

    (4) an action or proceeding pending against a partnership or limited
partnership that is a party to the merger may be continued as if the merger
had not occurred, or the surviving entity may be substituted as a party to
the action or proceeding.

    (b) The secretary of state of this state is the agent for service of pro-
cess in an action or proceeding against a surviving foreign partnership or
limited partnership to enforce an obligation of a domestic partnership or
limited partnership that is a party to a merger. The surviving entity shall
promptly notify the secretary of state of the mailing address of its principal
office and of any change of address. Service of process shall be made in
the manner prescribed by K.S.A. 60-304 and amendments thereto.

    (c) A partner of the surviving partnership or limited partnership is
liable for:

    (1) All obligations of a party to the merger for which the partner was
personally liable before the merger;

    (2) all other obligations of the surviving entity incurred before the
merger by a party to the merger, but those obligations may be satisfied
only out of property of the entity; and

    (3) except as otherwise provided in section 17 and amendments
thereto, all obligations of the surviving entity incurred after the merger
takes effect, but those obligations may be satisfied only out of property
of the entity if the partner is a limited partner.

    (d) If the obligations incurred before the merger by a party to the
merger are not satisfied out of the property of the surviving partnership
or limited partnership, the general partners of that party immediately
before the effective date of the merger shall contribute the amount nec-
essary to satisfy that party's obligations to the surviving entity, in the
manner provided in section 44 or in the limited partnership act of the
jurisdiction in which the party was formed, as the case may be, as if the
merged party were dissolved.

    (e) A partner of a party to a merger who does not become a partner
of the surviving partnership or limited partnership is dissociated from the
entity, of which that partner was a partner, as of the date the merger takes
effect. The surviving entity shall cause the partner's interest in the entity
to be purchased under section 33 or another statute specifically applicable
to that partner's interest with respect to a merger. The surviving entity is
bound under section 34 by an act of a general partner dissociated under
this subsection, and the partner is liable under section 35 for transactions
entered into by the surviving entity after the merger takes effect.

    New Sec. 51. (UPA 907). (a) After a merger, the surviving part-
nership or limited partnership may file a statement that one or more
partnerships or limited partnerships have merged into the surviving en-
tity.

    (b) A statement of merger must contain:

    (1) The name of each partnership or limited partnership that is a
party to the merger;

    (2) the name of the surviving entity into which the other partnerships
or limited partnership were merged;

    (3) the street address of the surviving entity's principal office and of
an office in this state, if any; and

    (4) whether the surviving entity is a partnership or a limited partner-
ship.

    (c) Except as otherwise provided in subsection (d), for the purposes
of section 13, property of the surviving partnership or limited partnership
which before the merger was held in the name of another party to the
merger is property held in the name of the surviving entity upon filing a
statement of merger.

    (d) For the purposes of section 13, real property of the surviving
partnership or limited partnership which before the merger was held in
the name of another party to the merger is property held in the name of
the surviving entity upon recording a certified copy of the statement of
merger in the office for recording transfers of that real property.

    (e) A filed and, if appropriate, recorded statement of merger, exe-
cuted and declared to be accurate pursuant to subsection (c) of section
5, stating the name of a partnership or limited partnership that is a party
to the merger in whose name property was held before the merger and
the name of the surviving entity, but not containing all of the other in-
formation required by subsection (b), operates with respect to the part-
nerships or limited partnerships named to the extent provided in subsec-
tions (c) and (d).

    New Sec. 52. (UPA 908). This article is not exclusive. Partnerships
or limited partnerships may be converted or merged in any other manner
provided by law.

    New Sec. 53. (UPA 1001). (a) A partnership may become a limited
liability partnership pursuant to this section.

    (b) The terms and conditions on which a partnership becomes a lim-
ited liability partnership must be approved by the vote necessary to amend
the partnership agreement except, in the case of a partnership agreement
that expressly considers contribution obligations, the vote necessary to
amend those provisions.

    (c) After the approval required by subsection (b), a partnership may
become a limited liability partnership by filing a statement of qualifica-
tion. The statement must contain:

    (1) The name of the partnership;

    (2) the street address of the partnership's principal office and, if dif-
ferent, the street address of an office in this state, if any;

    (3) if there is no office in this state, the name and street address of
the partnership's agent for service of process who must be an individual
resident of this state or any other person authorized to do business in this
state;

    (4) a statement that the partnership elects to be a limited liability
partnership; and

    (5) a deferred effective date, if any.

    (d) The status of a partnership as a limited liability partnership is
effective on the later of the filing of the statement or a date specified in
the statement. The status remains effective, regardless of changes in the
partnership, until it is canceled pursuant to subsection (d) of section 5 or
revoked pursuant to section 55.

    (e) The status of a partnership as a limited liability partnership and
the liability of its partners is not affected by errors or later changes in the
information required to be contained in the statement of qualification
under subsection (c).

    (f) The filing of a statement of qualification establishes that a part-
nership has satisfied all conditions precedent to the qualification of the
partnership as a limited liability partnership.

    (g) An amendment or cancellation of a statement of qualification is
effective when it is filed or on a deferred effective date specified in the
amendment or cancellation.

    New Sec. 54. (UPA 1002). The name of a limited liability partnership
must end with ``registered limited liability partnership,'' ``limited liability
partnership,'' ``R.L.L.P.,'' ``L.L.P.,'' ``RLLP'' or ``LLP.''

    New Sec. 55. (a) Every limited liability partnership organized under
the laws of this state shall make an annual report in writing to the secretary
of state, stating the prescribed information concerning the limited liability
partnership at the close of business on the last day of its tax period next
preceding the date of filing. If the limited liability partnership's tax period
is other than the calendar year, it shall give notice of its different tax
period in writing to the secretary of state prior to December 31 of the
year it commences the different tax period. The annual report shall be
filed at the time prescribed by law for filing the limited liability partner-
ship's annual Kansas income tax return. If the limited liability partnership
applies for an extension of time for filing its annual income tax return
under the internal revenue code, the limited liability partnership shall
also apply, not more than 90 days after the due date of its annual report,
to the secretary of state for an extension of the time for filing its report
and an extension shall be granted for a period of time corresponding to
that granted under the internal revenue code. The application shall in-
clude a copy of the application to income tax authorities.

    (b) The annual report shall be made on a form prescribed by the
secretary of state. The report shall contain the following information:

    (1) The name of the limited liability partnership;

    (2) a reconciliation of the capital accounts for the preceding taxable
year as required to be reported on the federal partnership return of in-
come; and

    (3) a list of the partners owning at least 5% of the capital of the
partnership, with the post office address of each.

    (c) The annual report shall be signed by a partner of the limited
liability partnership and forwarded to the secretary of state. At the time
of filing the report, the limited liability partnership shall pay to the sec-
retary of state an annual franchise tax in an amount equal to $1 for each
$1,000 of the net capital accounts located in or used in this state at the
end of the preceding taxable year as required to be reported on the fed-
eral partnership return of income, except that no annual tax shall be less
than $20 or more than $2,500.

    (d) The provisions of K.S.A. 17-7509, and amendments thereto, re-
lating to penalties for failure of a corporation to file an annual report or
pay the required franchise tax, and the provisions of subsection (a) of
K.S.A. 17-7510 and amendments thereto, relating to penalties for failure
of a corporation to file an annual report or pay the required franchise tax,
shall be applicable to the statement of qualification of any limited liability
partnership which fails to file its annual report or pay the franchise tax
within 90 days of the time prescribed in this section for filing and paying
the same. Whenever the statement of qualification of a limited liability
partnership is forfeited for failure to file an annual report or to pay the
required franchise tax, the limited liability partnership may be reinstated
by filing a certificate of reinstatement, in the manner and form to be
prescribed by the secretary of state and paying to the secretary of state
all fees and taxes, including any penalties thereon, due to the state. The
fee for filing a certificate of reinstatement shall be the same as that pre-
scribed by K.S.A. 17-7506, and amendments thereto, for filing a certifi-
cate of extension, restoration, renewal or revival of a corporation's articles
of incorporation.

    New Sec. 56. (a) Every foreign limited liability partnership shall
make an annual report in writing to the secretary of state, stating the
prescribed information concerning the foreign limited liability partner-
ship at the close of business on the last day of its tax period next preceding
the date of filing. If the foreign limited liability partnership's tax period
is other than the calendar year, it shall give notice in writing of its different
tax period to the secretary of state prior to December 31 of the year it
commences the different tax period. The annual report shall be filed at
the time prescribed by law for filing the foreign limited liability partner-
ship's annual Kansas income tax return. If the foreign limited liability
partnership applies for an extension of time for filing its annual income
tax return under the internal revenue code, the foreign limited liability
partnership shall also apply, not more than 90 days after the due date of
its annual report, to the secretary of state for an extension of the time for
filing its report and an extension shall be granted for a period of time
corresponding to that granted under the internal revenue code. The ap-
plication shall include a copy of the application to income tax authorities.

    (b) The annual report shall be made on a form prescribed by the
secretary of state. The report shall contain the following information:

    (1) The name of the foreign limited liability partnership; and

    (2) a reconciliation of the capital accounts for the preceding taxable
year as required to be reported on the federal partnership return of in-
come.

    (c) The annual report shall be signed by a partner of the foreign
limited liability partnership and forwarded to the secretary of state. At
the time of filing the report, the foreign limited liability partnership shall
pay to the secretary of state an annual franchise tax in an amount equal
to $1 for each $1,000 of the net capital accounts located in or used in this
state at the end of the preceding taxable year as required to be reported
on the federal partnership return of income, except that no annual tax
shall be less than $20 or more than $2,500.

    (d) The provisions of K.S.A. 17-7509, and amendments thereto, re-
lating to penalties for failure of a corporation to file an annual report or
pay the required franchise tax, and the provisions of subsection (a) of
K.S.A. 17-7510, and amendments thereto, relating to penalties for failure
of a corporation to file an annual report or pay the required franchise tax,
shall be applicable to the statement of foreign qualification of any foreign
limited liability partnership which fails to file its annual report or pay the
franchise tax within 90 days of the time prescribed in this section for filing
and paying the same. Whenever the statement of foreign qualification of
a foreign limited liability partnership is forfeited for failure to file an
annual report or to pay the required franchise tax, the statement of foreign
qualification of the foreign limited liability partnership may be reinstated
by filing a certificate of reinstatement, in the manner and form to be
prescribed by the secretary of state and paying to the secretary of state
all fees and taxes, including any penalties thereon, due to the state. The
fee for filing a certificate of reinstatement shall be the same as that pre-
scribed by K.S.A. 17-7506, and amendments thereto, for filing a certifi-
cate of extension, restoration, renewal or revival of a corporation's articles
of incorporation.

    New Sec. 57. No limited liability partnership or foreign limited lia-
bility partnership shall be required to file its first annual report under this
act, or pay any annual franchise tax required to accompany such report,
unless such partnership has filed its statement of qualification or foreign
qualification at least six months prior to the last day of its tax period. If
any such partnership files with the secretary of state a notice of change
in its tax period and the next annual report filed by such partnership
subsequent to such notice is based on a tax period of less than 12 months,
the annual tax liability shall be determined by multiplying the annual
franchise tax liability for such year by a fraction, the numerator of which
is the number of months or any portion thereof covered by the annual
report and the denominator of which is 12, except that the tax shall not
be less than $20.

    New Sec. 58. (UPA 1101). (a) The laws under which a foreign limited
liability partnership is formed govern relations among the partners and
between the partners and the partnership and the liability of partners for
obligations of the partnership.

    (b) A foreign limited liability partnership may not be denied a state-
ment of foreign qualification by reason of any difference between the
laws under which the partnership was formed and the laws of this state.

    (c) A statement of foreign qualification does not authorize a foreign
limited liability partnership to engage in any business or exercise any
power that a partnership may not engage in or exercise in this state as a
limited liability partnership.

    New Sec. 59. (UPA 1102). (a) Before transacting business in this
state, a foreign limited liability partnership must file a statement of foreign
qualification. The statement must contain:

    (1) The name of the foreign limited liability partnership which sat-
isfies the requirements of the state or other jurisdiction under whose laws
it is formed and ends with ``registered limited liability partnership,'' ``lim-
ited liability partnership,'' ``R.L.L.P.,'' ``L.L.P.,'' ``RLLP'' or ``LLP;''

    (2) the street address of the partnership's principal office and, if dif-
ferent, the street address of an office in this state, if any;

    (3) if there is no office in this state, the name and street address of
the partnership's agent for service of process who must be an individual
resident of this state or any other person authorized to do business in this
state; and

    (4) a deferred effective date, if any.

    (b) The status of a partnership as a foreign limited liability partner-
ship is effective on the later of the filing of the statement of foreign
qualification or a date specified in the statement. The status remains
effective, regardless of changes in the partnership, until it is canceled
pursuant to subsection (d) of section 5 or revoked pursuant to section 55.

    (c) An amendment or cancellation of a statement of foreign qualifi-
cation is effective when it is filed or on a deferred effective date specified
in the amendment or cancellation.

    New Sec. 60. (UPA 1103). (a) A foreign limited liability partnership
transacting business in this state may not maintain an action or proceeding
in this state unless it has in effect a statement of foreign qualification.

    (b) The failure of a foreign limited liability partnership to have in
effect a statement of foreign qualification does not impair the validity of
a contract or act of the foreign limited liability partnership or preclude it
from defending an action or proceeding in this state.

    (c) Limitations on personal liability of partners are not waived solely
by transacting business in this state without a statement of foreign qual-
ification.

    (d) If a foreign limited liability partnership transacts business in this
state without a statement of foreign qualification, the secretary of state is
its agent for service of process with respect to claims for relief arising out
of the transaction of business in this state. Service of process shall be
made in the manner prescribed by K.S.A. 60-304 and amendments
thereto.

    New Sec. 61. (UPA 1104). (a) Activities of a foreign limited liability
partnership which do not constitute transacting business within the mean-
ing of sections 58 through 62 include:

    (1) Maintaining, defending or settling an action or proceeding;

    (2) holding meetings of its partners or carrying on any other activity
concerning its internal affairs;

    (3) maintaining bank accounts;

    (4) maintaining offices or agencies for the transfer, exchange and reg-
istration of the partnership's own securities or maintaining trustees or
depositories with respect to those securities;

    (5) selling through independent contractors;

    (6) soliciting or obtaining orders, whether by mail or through em-
ployees or agents or otherwise, if the orders require acceptance outside
this state before they become contracts;

    (7) creating or acquiring indebtedness, mortgages or security inter-
ests in real or personal property;

    (8) securing or collecting debts or foreclosing mortgages or other se-
curity interests in property securing the debts, and holding, protecting
and maintaining property so acquired;

    (9) conducting an isolated transaction that is completed within 30
days and is not one in the course of similar transactions of like nature;
and

    (10) transacting business in interstate commerce.

    (b) For purposes of sections 58 through 62, the ownership in this
state of income producing real property or tangible personal property,
other than property excluded under subsection (a), constitutes transacting
business in this state.

    (c) This section does not apply in determining the contacts or activ-
ities that may subject a foreign limited liability partnership to service of
process, taxation or regulation under any other law of this state.

    New Sec. 62. (UPA 1105). The attorney general may maintain an
action to restrain a foreign limited liability partnership from transacting
business in this state in violation of sections 58 through 62.

    New Sec. 63. A partner may not receive a distribution from a limited
liability partnership to the extent that, after giving effect to the distribu-
tion, all liabilities of the limited liability partnership, other than liabilities
to partners on account of their partnership interests, exceed the fair value
of the partnership assets.

    New Sec. 64. (a) If a partner has received the return of any part of
the partner's contribution without violation of the partnership agreement
or this act, the partner is liable to the limited liability partnership for a
period of one year thereafter for the amount of the returned contribution,
but only to the extent necessary to discharge the limited liability partner-
ship's liabilities to creditors who extended credit to the limited liability
partnership during the period the contribution was held by the partner-
ship.

    (b) If a partner has received the return of any part of the partner's
contribution in violation of the partnership agreement or this act, the
partner is liable to the limited liability partnership for a period of six years
thereafter for the amount of the contribution wrongfully returned.

    (c) A partner receives a return of the partner's contribution to the
extent that a distribution to the partner reduces the partner's share of the
fair value of the net assets of the limited liability partnership below the
value, as set forth in the records of the limited liability partnership, of the
partner's contribution which has not been distributed to the partner.

    New Sec. 65. (UPA 1201). This act shall be applied and construed
to effectuate its general purpose to make uniform the law with respect
to the subject of this act among states enacting it.

    New Sec. 66. (UPA 1202). Sections 1 through 69, and amendments
thereto may be cited as the Kansas uniform partnership act.

    New Sec. 67. (UPA 1203). If any provision of this act or its appli-
cation to any person or circumstance is held invalid, the invalidity does
not affect other provisions or applications of this act which can be given
effect without the invalid provision or application, and to this end the
provisions of this act are severable.

    New Sec. 68. (UPA 1206). (a) Before July 1, 1999, this act gov-
erns only a partnership formed:

    (1) After the effective date of this act, unless that partnership is con-
tinuing the business of a dissolved partnership under the provisions of
the prior uniform partnership act, K.S.A. 56-301 et seq. and amendments
thereto; and

    (2) before the effective date of this act, that elects, as provided by
subsection (c), to be governed by this act.

    (b) On and after July 1, 1999, this act governs all partnerships.

    (c) Before July 1, 1999, a partnership voluntarily may elect, in the
manner provided in its partnership agreement or by law for amending
the partnership agreement, to be governed by this act. The provisions of
this act relating to the liability of the partnership's partners to third parties
apply to limit those partners' liability to a third party who had done busi-
ness with the partnership within one year preceding the partnership's
election to be governed by this act, only if the third party knows or has
received a notification of the partnership's election to be governed by this
act.

    New Sec. 69. (UPA 1207). This act does not affect an action or
proceeding commenced or right accrued before this act takes effect.

    Sec. 70. K.S.A. 17-2708 is hereby amended to read as follows: 17-
2708. Except as otherwise provided, the Kansas general corporation code
contained in K.S.A. 17-6001 et seq., and amendments thereto, shall apply
to a professional corporation organized pursuant to this chapter. Any pro-
visions of the professional corporation law of Kansas shall take precedence
over any provision of the Kansas general corporation code which conflicts
with it. The provisions of the professional corporation law of Kansas shall
take precedence over any law which prohibits a corporation from ren-
dering any type of professional service. Any person authorized to form a
professional corporation under K.S.A. 17-2701 et seq. and amendments
thereto also may incorporate under the Kansas general corporation code
contained in K.S.A. 17-6001 et seq., and amendments thereto, or organize
under the Kansas limited liability company act contained in K.S.A. 17-
7601 et seq., and amendments thereto, or organize as a registered limited
liability partnership as defined in K.S.A. 56-302 section 1 and amend-
ments thereto.

    Sec. 71. K.S.A. 1997 Supp. 17-5903 is hereby amended to read as
follows: 17-5903. As used in this act:

    (a) ``Corporation'' means a domestic or foreign corporation organized
for profit or nonprofit purposes.

    (b) ``Nonprofit corporation'' means a corporation organized not for
profit and which qualifies under section 501(c)(3) of the federal internal
revenue code of 1986 as amended.

    (c) ``Limited partnership'' has the meaning provided by K.S.A. 56-
1a01, and amendments thereto.

    (d) ``Limited agricultural partnership'' means a limited partnership
founded for the purpose of farming and ownership of agricultural land in
which:

    (1) The partners do not exceed 10 in number;

    (2) the partners are all natural persons, persons acting in a fiduciary
capacity for the benefit of natural persons or nonprofit corporations, or
general partnerships other than corporate partnerships formed under the
laws of the state of Kansas; and

    (3) at least one of the general partners is a person residing on the
farm or actively engaged in the labor or management of the farming
operation. If only one partner is meeting the requirement of this provision
and such partner dies, the requirement of this provision does not apply
for the period of time that the partner's estate is being administered in
any district court in Kansas.

    (e) ``Corporate partnership'' means a partnership, as defined in
K.S.A. 56-306 section 1, and amendments thereto, which has within the
association one or more corporations or one or more limited liability com-
panies.

    (f) ``Feedlot'' means a lot, yard, corral, or other area in which livestock
fed for slaughter are confined. The term includes within its meaning
agricultural land in such acreage as is necessary for the operation of the
feedlot.

    (g) ``Agricultural land'' means land suitable for use in farming.

    (h) ``Farming'' means the cultivation of land for the production of
agricultural crops, the raising of poultry, the production of eggs, the pro-
duction of milk, the production of fruit or other horticultural crops, graz-
ing or the production of livestock. Farming does not include the produc-
tion of timber, forest products, nursery products or sod, and farming does
not include a contract to provide spraying, harvesting or other farm serv-
ices.

    (i) ``Fiduciary capacity'' means an undertaking to act as executor, ad-
ministrator, guardian, conservator, trustee for a family trust, authorized
trust or testamentary trust or receiver or trustee in bankruptcy.

    (j) ``Family farm corporation'' means a corporation:

    (1) Founded for the purpose of farming and the ownership of agri-
cultural land in which the majority of the voting stock is held by and the
majority of the stockholders are persons related to each other, all of whom
have a common ancestor within the third degree of relationship, by blood
or by adoption, or the spouses or the stepchildren of any such persons,
or persons acting in a fiduciary capacity for persons so related;

    (2) all of its stockholders are natural persons or persons acting in a
fiduciary capacity for the benefit of natural persons; and

    (3) at least one of the stockholders is a person residing on the farm
or actively engaged in the labor or management of the farming operation.
A stockholder who is an officer of any corporation referred to in this
subsection and who is one of the related stockholders holding a majority
of the voting stock shall be deemed to be actively engaged in the man-
agement of the farming corporation. If only one stockholder is meeting
the requirement of this provision and such stockholder dies, the require-
ment of this provision does not apply for the period of time that the
stockholder's estate is being administered in any district court in Kansas.

    (k) ``Authorized farm corporation'' means a Kansas corporation, other
than a family farm corporation, all of the incorporators of which are Kan-
sas residents, family farm corporations or family farm limited liability
agricultural companies or any combination thereof, and which is founded
for the purpose of farming and the ownership of agricultural land in
which:

    (1) The stockholders do not exceed 15 in number; and

    (2) the stockholders are all natural persons, family farm corporations,
family farm limited liability agricultural companies or persons acting in a
fiduciary capacity for the benefit of natural persons, family farm corpo-
rations, family farm limited liability agricultural companies or nonprofit
corporations; and

    (3) if all of the stockholders are natural persons, at least one stock-
holder must be a person residing on the farm or actively engaged in labor
or management of the farming operation. If only one stockholder is meet-
ing the requirement of this provision and such stockholder dies, the re-
quirement of this provision does not apply for the period of time that the
stockholder's estate is being administered in any district court in Kansas.

    (l) ``Trust'' means a fiduciary relationship with respect to property,
subjecting the person by whom the property is held to equitable duties
to deal with the property for the benefit of another person, which arises
as a result of a manifestation of an intention to create it. A trust includes
a legal entity holding property as trustee, agent, escrow agent, attorney-
in-fact and in any similar capacity.

    (m) ``Family trust'' means a trust in which:

    (1) A majority of the equitable interest in the trust is held by and the
majority of the beneficiaries are persons related to each other, all of whom
have a common ancestor within the third degree of relationship, by blood
or by adoption, or the spouses or stepchildren of any such persons, or
persons acting in a fiduciary capacity for persons so related; and

    (2) all the beneficiaries are natural persons, are persons acting in a
fiduciary capacity, other than as trustee for a trust, or are nonprofit cor-
porations.

    (n) ``Authorized trust'' means a trust other than a family trust in
which:

    (1) The beneficiaries do not exceed 15 in number;

    (2) the beneficiaries are all natural persons, are persons acting in a
fiduciary capacity, other than as trustee for a trust, or are nonprofit cor-
porations; and

    (3) the gross income thereof is not exempt from taxation under the
laws of either the United States or the state of Kansas.

    For the purposes of this definition, if one of the beneficiaries dies, and
more than one person succeeds, by bequest, to the deceased beneficiary's
interest in the trust, all of such persons, collectively, shall be deemed to
be one beneficiary, and a husband and wife, and their estates, collectively,
shall be deemed to be one beneficiary.

    (o) ``Testamentary trust'' means a trust created by devising or be-
queathing property in trust in a will as such terms are used in the Kansas
probate code.

    (p) ``Poultry confinement facility'' means the structures and related
equipment used for housing, breeding, laying of eggs or feeding of poultry
in a restricted environment. The term includes within its meaning only
such agricultural land as is necessary for proper disposal of liquid and
solid wastes and for isolation of the facility to reasonably protect the con-
fined poultry from exposure to disease. As used in this subsection, ``poul-
try'' means chickens, turkeys, ducks, geese or other fowl.

    (q) ``Rabbit confinement facility'' means the structures and related
equipment used for housing, breeding, raising, feeding or processing of
rabbits in a restricted environment. The term includes within its meaning
only such agricultural land as is necessary for proper disposal of liquid
and solid wastes and for isolation of the facility to reasonably protect the
confined rabbits from exposure to disease.

    (r) ``Swine marketing pool'' means an association whose membership
includes three or more business entities or individuals formed for the sale
of hogs to buyers but shall not include any trust, corporation, limited
partnership or corporate partnership, or limited liability company other
than a family farm corporation, authorized farm corporation, limited lia-
bility agricultural company, limited agricultural partnership, family trust,
authorized trust or testamentary trust.

    (s) ``Swine production facility'' means the land, structures and related
equipment owned or leased by a corporation or limited liability company
and used for housing, breeding, farrowing or feeding of swine. The term
includes within its meaning only such agricultural land as is necessary for
proper disposal of liquid and solid wastes in environmentally sound
amounts for crop production and to avoid nitrate buildup and for isolation
of the facility to reasonably protect the confined animals from exposure
to disease.

    (t) ``Limited liability company'' has the meaning provided by K.S.A.
17-7602, and amendments thereto.

    (u) ``Limited liability agricultural company'' means a limited liability
company founded for the purpose of farming and ownership of agricul-
tural land in which:

    (1) The members do not exceed 10 in number; and

    (2) the members are all natural persons, family farm corporations,
family farm limited liability agriculture companies, persons acting in a
fiduciary capacity for the benefit of natural persons, family farm corpo-
rations, family farm limited liability agricultural companies or nonprofit
corporations, or general partnerships other than corporate partnerships
formed under the laws of the state of Kansas; and

    (3) if all of the members are natural persons, at least one member
must be a person residing on the farm or actively engaged in labor or
management of the farming operation. If only one member is meeting
the requirement of this provision and such member dies, the requirement
of this provision does not apply for the period of time that the member's
estate is being administered in any district court in Kansas.

    (v) ``Dairy production facility'' means the land, structures and related
equipment used for housing, breeding, raising, feeding or milking dairy
cows. The term includes within its meaning only such agricultural land
as is necessary for proper disposal of liquid and solid wastes and for iso-
lation of the facility to reasonably protect the confined cows from expo-
sure to disease.

    (w) ``Family farm limited liability agricultural company'' means a lim-
ited liability company founded for the purpose of farming and ownership
of agricultural land in which:

    (1) The majority of the members are persons related to each other,
all of whom have a common ancestor within the third degree of relation-
ship, by blood or by adoption, or the spouses or the stepchildren of any
such persons, or persons acting in a fiduciary capacity for persons so
related;

    (2) the members are natural persons or persons acting in a fiduciary
capacity for the benefit of natural persons; and

    (3) at least one of the members is a person residing on the farm or
actively engaged in the labor or management of the farming operation.
If only one member is meeting the requirement of this provision and
such member dies, the requirement of this provision does not apply for
the period of time that the member's estate is being administered in any
district court in Kansas.

    (x) ``Hydroponics'' means the growing of vegetables, flowers, herbs,
or plants used for medicinal purposes, in a growing medium other than
soil.

    Sec. 72. K.S.A. 1997 Supp. 47-816 is hereby amended to read as
follows: 47-816. As used in the Kansas veterinary practice act:

    (a) ``Animal'' means any mammalian animal other than human and
any fowl, bird, amphibian, fish or reptile, wild or domestic, living or dead.

    (b) ``Board'' means the state board of veterinary examiners.

    (c) ``Clock hour of continuing education courses'' means 60 minutes
of actual attendance at a continuing education course approved by the
board.

    (d) ``Direct supervision'' means the supervising licensed veterinarian
is on the premises in an animal hospital setting or in the same general
area in a range setting, the supervisor is quickly and easily available and
that the animal has been examined by a veterinarian at such time as good
veterinary medical practice requires, consistent with the particular dele-
gated animal health care task.

    (e) ``Licensed veterinarian'' means a veterinarian who is validly and
currently licensed to practice veterinary medicine in this state.

    (f) ``Indirect supervision'' means that the supervising licensed veter-
inarian is not on the premises, but has given either written or oral instruc-
tions for treatment of the animal patient, the animal has been examined
by a veterinarian at such times as good veterinary medical practice re-
quires, consistent with the particular delegated animal health care task
and the animal is not anesthetized as defined in rules and regulations.

    (g) ``Practice of veterinary medicine'' means any of the following:

    (1) To diagnose, treat, correct, change, relieve, or prevent animal
disease, deformity, defect, injury or other physical or mental condition;
including the prescription or administration of any drug, medicine, bio-
logic, apparatus, application, anesthesia or other therapeutic or diagnostic
substance or technique on any animal including but not limited to acu-
puncture, surgical or dental operations, animal psychology, animal chi-
ropractic, theriogenology, surgery, including cosmetic surgery, any man-
ual, mechanical, biological or chemical procedure for testing for
pregnancy or for correcting sterility or infertility or to render service or
recommendations with regard to any of the above and all other branches
of veterinary medicine.

    (2) To represent, directly or indirectly, publicly or privately, an ability
and willingness to do any act described in paragraph (1).

    (3) To use any title, words, abbreviation or letters in a manner or
under circumstances which induce the belief that the person using them
is qualified to do any act described in paragraph (1). Such use shall be
prima facie evidence of the intention to represent oneself as engaged in
the practice of veterinary medicine.

    (4) To collect blood or other samples for the purpose of diagnosing
disease or conditions. This shall not apply to unlicensed personnel em-
ployed by the United States department of agriculture, the Kansas animal
health department or the state board of agriculture who are engaged in
such personnel's official duties.

    (5) To apply principles of environmental sanitation, food inspection,
environmental pollution control, animal nutrition, zoonotic disease con-
trol and disaster medicine in the promotion and protection of public
health in the performance of any veterinary service or procedure.

    (h) ``School of veterinary medicine'' means any veterinary college or
division of a university or college that offers the degree of doctor of vet-
erinary medicine or its equivalent, which conforms to the standards re-
quired for accreditation by the American veterinary medical association
and which is recognized and approved by the board.

    (i) ``Veterinarian'' means a person who has received a doctor of vet-
erinary medicine degree or the equivalent from a school of veterinary
medicine.

    (j) ``Veterinary medical specialist'' means a person who has completed
advanced training in such person's specialty area and is a diplomat of such
specialty.

    (k) ``Veterinary premises'' means any premises or facility where the
practice of veterinary medicine occurs, including but not limited to, a
mobile clinic, outpatient clinic, satellite clinic or veterinary hospital or
clinic, but shall not include the premises of a veterinary client, research
facility or any premises wherein the practice of veterinary medicine oc-
curs no more than three times per year as a public service outreach of a
registered veterinary premises.

    (l) ``Graduate veterinary technician'' means a person who has grad-
uated from an American veterinary medical association accredited school
approved by the board, or other board-approved school for the training
of veterinary technicians.

    (m) ``Registered veterinary technician'' means a person who is a grad-
uate veterinary technician or any other person who has passed the ex-
aminations required by the board for registration and is registered by the
board.

    (n) ``Veterinary-client-patient relationship'' means:

    (1) The veterinarian has assumed the responsibility for making med-
ical judgments regarding the health of the animal or animals and the need
for medical treatment, and the client, owner or other caretaker has agreed
to follow the instruction of the veterinarian;

    (2) there is sufficient knowledge of the animal or animals by the vet-
erinarian to initiate at least a general or preliminary diagnosis of the med-
ical condition of the animal or animals. This means that the veterinarian
has recently seen or is personally acquainted with the keeping and care
of the animal or animals by virtue of an examination of the animal or
animals, or by medically appropriate and timely visits to the premises
where the animal or animals are kept, or both; and

    (3) the practicing veterinarian is readily available for followup in case
of adverse reactions or failure of the regimen of therapy.

    (o) ``ECFVG certificate'' means a certificate issued by the American
veterinary medical association education commission for foreign veteri-
nary graduates, indicating that the holder has demonstrated knowledge
and skill equivalent to that possessed by a graduate of an accredited or
approved college of veterinary medicine.

    (p) ``Veterinary prescription drugs'' means such prescription items as
defined by subsection (c) of 21 U.S.C. Sec. 353.

    (q) ``Veterinary corporation'' means a professional corporation of li-
censed veterinarians incorporated under the professional corporation act
of Kansas, cited at K.S.A. 17-2706 et seq., and amendments thereto.

    (r) ``Veterinary partnership'' means a partnership pursuant to the
Kansas uniform partnership act, cited at K.S.A. 56-301 section 1 et seq.,
and amendments thereto, formed by licensed veterinarians engaged in
the practice of veterinary medicine.

    Sec. 73. K.S.A. 56-1a604 is hereby amended to read as follows: 56-
1a604. In any case not provided for in the Kansas revised limited part-
nership act, the provisions of the Kansas uniform partnership act (K.S.A.
56-301 section 1 et seq., and amendments thereto) shall govern.

    Sec. 74. K.S.A. 1997 Supp. 58-3062 is hereby amended to read as
follows: 58-3062. (a) No licensee, whether acting as an agent or a prin-
cipal, shall:

    (1) Intentionally use advertising that is misleading or inaccurate in
any material particular or that in any way misrepresents any property,
terms, values, policies or services of the business conducted, or uses the
trade name, collective membership mark, service mark or logo of any
organization owning such name, mark or logo without being authorized
to do so.

    (2) Fail to account for and remit any money which comes into the
licensee's possession and which belongs to others.

    (3) Misappropriate moneys required to be deposited in a trust ac-
count pursuant to K.S.A. 58-3061 and amendments thereto, convert such
moneys to the licensee's personal use or commingle the money or other
property of the licensee's principals with the licensee's own money or
property, except that nothing herein shall prohibit a broker from having
funds in an amount not to exceed $100 in the broker's trust account to
pay expenses for the use and maintenance of such account.

    (4) Accept, give or charge any rebate or undisclosed commission.

    (5) Pay a referral fee to a person who is properly licensed as a broker
or salesperson in another jurisdiction or who holds a corporate real estate
license in another jurisdiction if the licensee knows that the payment of
the referral fee will result in the payment of a rebate by the out-of-state
licensee.

    (6) Represent or attempt to represent a broker without the broker's
express knowledge and consent.

    (7) Guarantee or authorize any person to guarantee future profits that
may result from the resale of real property.

    (8) Place a sign on any property offering it for sale or lease without
the written consent of the owner or the owner's authorized agent.

    (9) Offer real estate for sale or lease without the knowledge and con-
sent of the owner or the owner's authorized agent or on terms other than
those authorized by the owner or the owner's authorized agent.

    (10) Induce any party to break any contract of sale or lease.

    (11) Offer or give prizes, gifts or gratuities which are contingent upon
an agency agreement or the sale, purchase or lease of real estate.

    (12) Fail to see that financial obligations and commitments between
the parties to an agreement to sell, exchange or lease real estate are in
writing, expressing the exact agreement of the parties or to provide, within
a reasonable time, copies thereof to all parties involved.

    (13) Procure a signature to a purchase contract which has no definite
purchase price, method of payment, description of property or method
of determining the closing date.

    (14) Engage in fraud or make any substantial misrepresentation.

    (15) Represent to any lender, guaranteeing agency or any other in-
terested party, either verbally or through the preparation of false docu-
ments, an amount in excess of the true and actual sale price of the real
estate or terms differing from those actually agreed upon.

    (16) Fail to make known to any purchaser or lessee any interest the
licensee has in the real estate the licensee is selling or leasing or to make
known to any seller or lessor any interest the licensee will have in the real
estate the licensee is purchasing or leasing.

    (17) Fail to inform both the buyer, at the time an offer is made, and
the seller, at the time an offer is presented, that certain closing costs must
be paid and the approximate amount of such costs.

    (18) Fail without just cause to surrender any document or instrument
to the rightful owner.

    (19) Accept anything other than cash as earnest money unless that
fact is communicated to the owner prior to the owner's acceptance of the
offer to purchase, and such fact is shown in the purchase agreement.

    (20) Fail to deposit any check or cash received as an earnest money
deposit or as a deposit on the purchase of a lot within five business days
after the purchase agreement or lot reservation agreement is signed by
all parties, unless otherwise specifically provided by written agreement of
all parties to the purchase agreement or lot reservation agreement, in
which case the licensee shall deposit the check or cash received on the
date provided by such written agreement.

    (21) Fail in response to a request by the commission or the director
to produce any document, book or record in the licensee's possession or
under the licensee's control that concerns, directly or indirectly, any real
estate transaction or the licensee's real estate business.

    (22) Refuse to appear or testify under oath at any hearing held by
the commission.

    (23) Demonstrate incompetency to act as a broker, associate broker
or salesperson.

    (24) Knowingly receive or accept, directly or indirectly, any rebate,
reduction or abatement of any charge, or any special favor or advantage
or any monetary consideration or inducement, involving the issuance of
a title insurance policy or contract concerning which the licensee is di-
rectly or indirectly connected, from a title insurance company or title
insurance agent, or any officer, employee, attorney, agent or solicitor
thereof.

    (25) Engage in the purchase of one-, two-, three- or four-family
dwellings, including condominiums and cooperatives, or the acquisition
of any right, title or interest therein, including any equity or redemption
interests, if:

    (A) (i) At the time of such purchase, the dwellings are subject to a
right of redemption pursuant to foreclosure of a mortgage on such dwell-
ings; (ii) the licensee fails to give written notice of the purchase, within
20 days thereafter, to the mortgage holder or judgment creditor who held
such mortgage; and (iii) the licensee, unless otherwise required by law or
court order, fails to apply any rent proceeds from the dwellings to the
judgment lien arising from the foreclosure of such mortgage, as payments
become due under the loan, regardless of whether the licensee is obli-
gated to do so;

    (B) (i) the dwellings are subject to a loan which is secured by a mort-
gage and which is in default at the time of such purchase or in default
within one year after such purchase; (ii) the licensee fails to give written
notice of the purchase, within 20 days thereafter, to the mortgage holder;
and (iii) the licensee, unless otherwise required by law or court order,
fails to apply any rent proceeds from the dwellings to the mortgage as the
payments come due, regardless of whether the licensee is obligated on
the loan; or

    (C) the licensee fails to notify, at the time of rental, any person rent-
ing any such dwelling of the extent and nature of the licensee's interest
in such dwelling and the probable time until possession will be taken by
the mortgage holder or judgment creditor.

    (26) Commit forgery or, unless authorized to do so by a duly executed
power of attorney, sign or initial any contractual agreement on behalf of
another person in a real estate transaction.

    (b) No salesperson or associate broker shall:

    (1) Except as provided in paragraph (A) or (B), accept a commission
or other valuable consideration from anyone other than the broker by
whom the licensee is employed or with whom the licensee is associated
as an independent contractor.

    (A) A salesperson or associate broker may accept a commission or
other valuable consideration from a licensee who employs the salesperson
or associate broker as a personal assistant provided that: (i) the licensee
and the salesperson or associate broker who is employed as a personal
assistant are licensed under the supervision of the same broker, and (ii)
the supervising broker agrees in writing that the personal assistant may
be paid by the licensee.

    (B) If a salesperson or associate broker has (i) organized as a profes-
sional corporation pursuant to K.S.A. 17-2706 et seq., and amendments
thereto, (ii) incorporated under the Kansas general corporation code con-
tained in K.S.A. 17-6001 et seq., and amendments thereto, (iii) organized
under the Kansas limited liability company act contained in K.S.A. 17-
7601 et seq., and amendments thereto, or (iv) has organized as a registered
limited liability partnership as defined in K.S.A. 56-302 section 1 and
amendments thereto, the commission or other valuable consideration
may be paid by the licensee's broker to such professional corporation,
corporation, limited liability company or limited liability partnership. This
provision shall not alter any other provisions of this act.

    (2) Fail to place, as soon after receipt as practicable, any deposit
money or other funds entrusted to the salesperson or associate broker in
the custody of the broker whom the salesperson or associate broker rep-
resents.

    (c) No broker shall:

    (1) Pay a commission or compensation to any person for performing
the services of an associate broker or salesperson unless such person is
licensed under this act and employed by or associated with the broker.

    (2) Fail to deliver to the seller in every real estate transaction, at the
time the transaction is closed, a complete, detailed closing statement
showing all of the receipts and disbursements handled by the broker for
the seller, or fail to deliver to the buyer a complete statement showing
all money received in the transaction from such buyer and how and for
what the same was disbursed, or fail to retain true copies of such state-
ments in the broker's files, except that the furnishing of such statements
to the seller and buyer by an escrow agent shall relieve the broker's re-
sponsibility to the seller and the buyer.

    (3) Fail to properly supervise the activities of an associated or em-
ployed salesperson or associate broker.

    (4) Lend the broker's license to a salesperson, or permit a salesperson
to operate as a broker.

    (5) Fail to provide to the principal a written report every 30 days,
along with a final report, itemizing disbursements made by the broker
from advance listing fees.

    (d) (1) If a purchase agreement provides that the earnest money be
held by an escrow agent other than a real estate broker, no listing broker
shall:

    (A) Fail to deliver the purchase agreement and earnest money de-
posit to the escrow agent named in the purchase agreement within five
business days after the purchase agreement is signed by all parties unless
otherwise specifically provided by written agreement of all parties to the
purchase agreement, in which case the broker shall deliver the purchase
agreement and earnest money deposit to the escrow agent named in the
purchase agreement on the date provided by such written agreement; or

    (B) fail to obtain and keep in the transaction file a receipt from the
escrow agent showing date of delivery of the purchase agreement and
earnest money deposit.

    (2) If a purchase agreement provides that the earnest money be held
by an escrow agent other than a real estate broker and the property was
not listed with a broker, no broker for the buyer shall:

    (A) Fail to deliver the purchase agreement and earnest money de-
posit to the escrow agent named in the purchase agreement within five
business days after the purchase agreement is signed by all parties unless
otherwise specifically provided by written agreement of all parties to the
purchase agreement, in which case the broker shall deliver the purchase
agreement and earnest money deposit to the escrow agent named in the
purchase agreement on the date provided by such written agreement; or

    (B) fail to obtain and keep in the transaction file a receipt from the
escrow agent showing date of delivery of the purchase agreement and
earnest money deposit.

    (3) If a purchase agreement provides that the earnest money be held
by an escrow agent other than a real estate broker and neither the seller
nor buyer is represented by a broker, no transaction broker shall:

    (A) Fail to deliver the purchase agreement and earnest money de-
posit to the escrow agent named in the purchase agreement within five
business days after the purchase agreement is signed by all parties unless
otherwise specifically provided by written agreement of all parties to the
purchase agreement, in which case the broker shall deliver the purchase
agreement and earnest money deposit to the escrow agent named in the
purchase agreement on the date provided by such written agreement; or

    (B) fail to obtain and keep in the transaction file a receipt from the
escrow agent showing date of delivery of the purchase agreement and
earnest money deposit.

    The commission may adopt rules and regulations to require that such
purchase agreement which provides that the earnest money be held by
an escrow agent other than a real estate broker include: (1) notification
of whether or not the escrow agent named in the purchase agreement
maintains a surety bond, and (2) notification that statutes governing the
disbursement of earnest money held in trust accounts of real estate bro-
kers do not apply to earnest money deposited with the escrow agent
named in the purchase agreement.

    (e) Nothing in this section shall be construed to grant any person a
private right of action for damages or to eliminate any right of action
pursuant to other statutes or common law.

    Sec. 75. K.S.A. 60-2313 is hereby amended to read as follows: 60-
2313. (a) Except to the extent otherwise provided by law, every person
residing in this state shall have exempt from seizure and sale upon any
attachment, execution or other process issued from any court in this state:

    (1) Any pension, annuity, retirement, disability, death or other ben-
efit exempt from process pursuant to K.S.A. 12-111a, 12-5005, 13-1246a,
13-14,102, 13-14a10, 14-10a10, 20-2618, 72-1768, 72-5526, 74-4923,
74-4978g, 74-49,105 or 74-49,106, and amendments thereto.

    (2) Any public assistance benefits exempt pursuant to K.S.A. 39-717
and amendments thereto.

    (3) Any workers' compensation exempt from process pursuant to
K.S.A. 44-514 and amendments thereto.

    (4) Any unemployment benefits exempt from process pursuant to
K.S.A. 44-718 and amendments thereto.

    (5) Any partnership property exempt from process pursuant to K.S.A.
56-325 and amendments thereto.

    (6) Any crime victims compensation award exempt from process pur-
suant to K.S.A. 74-7313 and amendments thereto.

    (7) (6) Any liquor license, club license or cereal malt beverage whole-
saler's or distributor's license exempt from process pursuant to K.S.A. 41-
326, 41-2629 or 41-2714, and amendments thereto.

    (8) (7) Any interest in any policy of insurance or beneficiary certifi-
cates upon a person's life exempt from process pursuant to K.S.A. 40-414
and amendments thereto.

    (9) (8) Any fraternal benefit society benefit, charity, relief or aid ex-
empt from process pursuant to K.S.A. 40-711 and amendments thereto.

    (10) (9) Any trust funds held in a cemetery merchandise trust and
exempt from process pursuant to K.S.A. 16-328 and amendments thereto.

    (11) 10) Any funds held in an account or trust established pursuant
to a prearranged funeral agreement, plan or contract and exempt from
process pursuant to K.S.A. 16-310 and amendments thereto.

    (b) This section shall be part of and supplemental to article 23 of
chapter 60 of the Kansas Statutes Annotated.

    Sec. 76. On and after July 1, 1999, K.S.A. 17-2708, 56-1a604, 56-301
through 56-344, 56-346, 56-347 and 60-2313 and K.S.A. 1997 Supp. 17-
5903, 47-816, 56-345 and 58-3062 are hereby repealed.

    Sec. 77. This act shall take effect and be in force from and after
January 1, 1999, and its publication in the statute book.

I hereby certifiy that the above Bill originated in the
Senate, and passed that body

__________________________________

Senate adopted
Conference Committe Report __________________________________

__________________________________

President of the Senate.

__________________________________

Secretary of the Senate.

Passed the House
as amended __________________________

House adopted
Conference Committee Report __________________________

__________________________________

Speaker of the House.

__________________________________

Chief Clerk of the House.

Approved __________________________

__________________________________

Governor.