KRS 154.20-254: Definitions for KRS 154.20-250 to 154.20-284.

As used in KRS 154.20-250 to 154.20-284, unless the context clearly requires otherwise:

(1) "Affiliate" means any person or entity who directly or indirectly, through one (1) or

more intermediaries, controls or is controlled by or is under common control w ith

another person or entity;

(2) "Agreement" means an investment fund agreement entered into pursuant to KRS

154.20-255(5) by the authority and an investment fund manager on behalf of the

investment fund, the investment fund manager, and any investor in t he investment

fund;

(3) "Amended application" means a document submitted by an investment fund

manager, in a form acceptable to the authority and on behalf of an investment fund,

for the purpose of increasing the aggregate amount of available tax credits;

(4) "Applicant" means any person or entity who has not received approval from the

authority as an investment fund manager, but who has submitted or will submit an

application to the authority for approval as an investment fund manager;

(5) "Authority" means the Kentucky Economic Development Finance Authority or its

designee;

(6) "Cash contribution" means an investment of money by an investor in an investment

fund under the terms of KRS 154.20-250 to 154.20-284;

(7) "Committed cash contribution" means a legally binding agreement by an investor to

make a cash contribution in an amount set forth in a written agreement between an

investor and an investment fund;

(8) "Commonwealth" means the Commonwealth of Kentucky;

(9) "Credit" means a nonrefundable credit for investors against state tax liability

allocated and granted by the authority pursuant to KRS 154.20 -258 for qualified

investments made by approved investment funds;

(10) "Entity" means any corporation, limited liability company, business development

corporation, partnership, limited partnership, sole proprietorship, association, joint

stock company, receivership, trust, professional service organization, or other legal

entity through which business is conducted;

(11) "Financial institution" means "financial institution" as defined in KRS 136.500(10)

and includes savings and loan associations, savings banks, and similar institutions

subject to the taxes imposed by KRS 136.290, 136.300, or 136.310;

(12) "Insurance company" means any insurance company subject to the taxes imposed

by KRS 136.320, 136.330, or 304.3-270;

(13) "Investment fund" means any entity that is organized by an investment fund

manager in compliance with appl icable state and federal securities laws and

regulations, and is approved by the authority to make qualified investments

pursuant to KRS 154.20-256;

(14) "Investment fund manager" means any person or entity that has been approved by

the authority to manage one (1) or more investment funds authorized under the

provisions of KRS 154.20 -250 to 154.20 -284 and is in compliance with all

applicable federal and state regulations;

(15) "Investor" means any person or entity, including financial institutions and insurance

companies, that is subject to state tax liability and that makes a cash contribution or

a committed cash contribution to an investment fund in accordance with the

provisions of KRS 154.20 -250 to 154.20 -284 and has not been convicted of

violating any of Kentucky's tax laws within the past ten (10) years;

(16) "Knowledge-based" has the same meaning as in KRS 164.6011;

(17) "Nonprofit entity" means an investor that is exempt from federal income tax under

Section 501(c) of the Internal Revenue Code of 1986, as amended;

(18) "Qualified activity" has the same meaning as in KRS 154.20-230;

(19) "Qualified investment" means an investment of at least ten thousand dollars

($10,000) in a small business by an investment fund, in compliance with applicable

state and federal securities laws and regulations, seeking a financial return based

upon that consideration. In consideration for the qualified investment, the

investment fund shall receive an equity interest in the small business, such as a

general or limited part nership interest, common or preferred stock with or without

voting rights and without regard to seniority position, forms of subordinate or

convertible unsecured debt, or both, with warrants, rights, or other means of equity

conversion attached; and

(20) "Small business" means any entity which at the time a qualified investment is made

by an investment fund:

(a) 1. Has a net worth of five million dollars ($5,000,000) or less or net

income after federal income taxes for each of the two (2) preceding

fiscal years of three million dollars ($3,000,000) or less; or

2. Is a knowledge -based business, as shall be prescribed by the executive

director of the Office of Entrepreneurship and Innovation, and has a net

worth of ten million dollars ($10,000,000) or less;

(b) Is actively and principally engaged in a qualified activity within the

Commonwealth, or will be actively and principally engaged in a qualified

activity within the Commonwealth after the receipt of a qualified investment

by an investment fund;

(c) Has no more than one hundred (100) employees; and

(d) Has more than fifty percent (50%) of its assets, operations, and employees

located in Kentucky.