================================================================================
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXXXXXX PARTNERSHIP, L.P.
Dated as of June 16, 1995
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TABLE OF CONTENTS
Page
1. ORGANIZATION........................................................1
1.1. Formation of Limited Partnership...........................1
1.2. Name.......................................................1
1.3. Purpose....................................................1
1.4. Places of Business.........................................1
1.5. Registered Office and Agent in Delaware....................2
1.6. Fiscal Year................................................2
1.7. Powers.....................................................2
2. PARTNERS............................................................2
2.1. General and Limited Partners...............................2
2.2. Liability of General Partners..............................2
2.3. Limited Liability of Limited Partners......................3
2.4. No Obligation to Replenish Negative Capital Account........3
2.5. Partnership Property; Partnership Interests................3
3. CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS, ALLOCATIONS................3
3.1. Capital Contributions......................................3
3.2. Capital Accounts...........................................4
3.3. Allocations to Capital Accounts............................4
3.4. Tax Allocations............................................5
3.5. Special Allocations........................................5
4. DISTRIBUTIONS.......................................................7
4.1. No Right to Withdraw.......................................7
4.2. Liquidating Distributions..................................7
4.3. Ordinary Distributions.....................................7
4.4. Distributions in Kind......................................7
4.5. Restrictions on Distributions..............................8
4.6. Emergency Distributions....................................8
4.7. Special Distribution Rights................................8
4.8. Withdrawal Right...........................................8
5. MANAGEMENT..........................................................8
5.1. Management by General Partners.............................9
5.2. Third Party Reliance.......................................9
5.3. Other Activities of Partners...............................9
5.4. Certificates and Fictitious Name Filings...................9
5.5. Expenses..................................................10
5.6. Substitute General Partners...............................10
5.7. Voting; Proxies...........................................10
5.8. Meetings..................................................11
5.9. Sale of' Scotts Preferred Stock...........................11
6. BOOKS OF ACCOUNT, RECORDS AND REPORTS..............................11
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6.1. Maintenance of Books and Records, Etc.....................11
6.2. Federal, State and Local Income Tax Information...........12
6.3. Permitted Advisors........................................12
6.4. Shareholders Representative...............................12
6.5. Shareholder Designees.....................................12
6.6. Notice of Certain Business Activities.....................12
7. TRANSFER OF PARTNERSHIP INTERESTS; SUBSTITUTE AND ADDITIONAL
LIMITED PARTNERS...................................................12
7.1. General...................................................13
7.2. Effect of Retirement, Withdrawal, Bankruptcy,
Dissolution, Death, Etc. of Limited Partner...............13
7.3. Substitute Limited Partners...............................14
8. INDEMNIFICATION OF GENERAL PARTNERS................................14
8.1. In General................................................14
8.2. Not Liable for Return of Capital..........................15
9. DURATION AND TERMINATION OF THE PARTNERSHIP........................15
9.1. Term......................................................15
9.2. Winding-Up................................................16
9.3. Distributions in Cash or in Kind..........................16
9.4. Time for Liquidation......................................17
9.5. Termination...............................................17
10. RETIREMENT, ETC. OF GENERAL PARTNERS...............................17
10.1. Effect of Retirement, Withdrawal, Bankruptcy,
Death, Etc. of the General Partners.......................17
10.2. Resignation, Etc. of the General Partners.................17
11. AMENDMENTS.........................................................17
11.1. Consent to Amendments.....................................18
11.2. Amendments by General Partners............................18
12. DEFINITIONS; ACCOUNTING TERMS......................................18
12.1. Definitions...............................................18
12.2. Accounting Terms and Determinations.......................22
13. MISCELLANEOUS......................................................22
13.1. Waiver of Partition.......................................22
13.2. Entire Agreement..........................................22
13.3. Choice of Law.............................................22
13.4. Successors and Assigns....................................22
13.5. Interpretation............................................22
13.6. Captions..................................................22
13.7. Severability..............................................22
13.8. Counterparts..............................................22
13.9. Additional Documents......................................23
13.10. Non-Waiver................................................23
13.11. Manner of Consent.........................................23
13.12. Notices...................................................23
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13.13. Grant of Power of Attorney................................24
13.14. Irrevocable and Coupled with an Interest;
Copies to Be Transmitted..................................24
13.15. Survival of Power of Attorney.............................24
13.16. Limitation of Power of Attorney...........................24
13.17. Voting Rights.............................................25
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THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF XXXXXXXX
PARTNERSHIP, L.P. (the "Partnership") is made as of the 16th day of June, 1995,
by and among the persons listed on Schedule A hereto.
WHEREAS, on May 1, 1995, the Partnership was formed pursuant to the
Agreement of Limited Partnership of Xxxxxxxx Partnership, L.P. dated as of May
1, 1995 (the "Original Partnership Agreement"); and
WHEREAS, on May 19, 1995, certain persons were admitted as Limited
Partners of the Partnership in accordance with Article 7 of the Original
Partnership Agreement; and
WHEREAS, the parties hereto wish to amend and restate the Original
Partnership Agreement to admit Community Funds, Inc. (the "Charity") as a
Limited Partner.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the parties hereto agree as follows:
(Certain capitalized terms used in this Agreement are defined in
section 12; references to a "Schedule" are, unless otherwise specified, to a
Schedule attached to this Agreement and references to a "section" are, unless
otherwise specified, to a section of this Agreement.)
1. ORGANIZATION.
1.1. Formation of Limited Partnership. The Partnership is a limited
partnership formed pursuant to the provisions of the Delaware Revised Uniform
Limited Partnership Act (6 Del. Code Xxx. title 6 xx.xx. 17-101 et seq., as
amended, the "Delaware Act") and in accordance with the further terms and
provisions hereof.
1.2. Name. The name of the Partnership shall be "Xxxxxxxx Partnership,
L.P." or such other name or names as may be selected by the General Partners
from time to time with written notice given to the Limited Partners of such
change, and its business shall be carried on in such name with such variations
and changes as the General Partners deem necessary to comply with requirements
of the jurisdictions in which the Partnership's operations are conducted.
1.3. Purpose. The Partnership is organized for the object and purpose
of engaging in any lawful act or activity which a limited partnership may engage
in under Delaware law, including, but not limited to, holding the Miracle-Gro
Securities prior to the closing under the Merger Agreement, and thereafter
holding the Scotts Securities, and holding cash and other securities.
1.4. Places of Business. The Partnership shall have its principal place
of business at such place or places as the General Partners may, from time to
time, select. The Partnership may from time to time have such additional place
or places of business within or without the State of Delaware as may be
designated by the General Partners.
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1.5. Registered Office and Agent in Delaware. The address of the
Partnership's registered office in the State of Delaware is 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, County of New Castle. The name of its registered
agent at that address is The Corporation Trust Company.
1.6. Fiscal Year. The fiscal year of the Partnership shall end on the
31st day of December in each year.
1.7. Powers. Subject to the provisions of sections 5.1, 11.1 and 11.2,
the Partnership, and the General Partners acting on behalf of the Partnership,
shall be empowered to do or cause to be done, or not to do, any and all acts
deemed by the General Partners in their sole discretion to be necessary or
appropriate in furtherance of the purposes of the Partnership.
2. PARTNERS.
2.1. General and Limited Partners. The Partnership shall consist of the
General Partners and the Limited Partners listed in Schedule A, and such
substituted or additional Partners as shall be admitted to the Partnership
pursuant to sections 7 and 10 (collectively, the "Partners").
2.2. Liability of General Partners. Neither the General Partners nor
any of their Affiliates, as well as any officer, director, stockholder, partner,
employee, agent or assign of the General Partners or any of their Affiliates
(collectively, the "Related Persons") shall be liable, responsible or
accountable, whether directly or indirectly, in contract or tort or otherwise,
to the Partnership or to any Partner (or any Affiliate thereof) for any Damages
asserted against or suffered or incurred by the Partnership or any Partner (or
any of their respective Affiliates) arising out of, relating to or in connection
with any act or failure to act pursuant to this Agreement or otherwise with
respect to the management or conduct of the business and affairs of the
Partnership or any of its Affiliates including, without limitation, all (i)
activities in the conduct of the Partnership's business, and (ii) activities in
the conduct of other business engaged in by it (or by them) which might involve
a conflict of interest vis-a-vis the Partnership or any Partner (or any of their
respective Affiliates) or in which any Related Person realizes a profit or has
an interest, except, in each case, Damages resulting from the acts or omissions
of such Related Person which (x) were taken or omitted in bad faith, (y)
constituted intentional misconduct or (z) constituted a knowing violation of
law, and which in any such case have not been authorized or ratified by the
Limited Partners; provided that no action or failure to act on the part of any
broker or other agent of either the Partnership or the General Partners shall be
deemed to be an action or failure to act, or result in liability on the part, of
the General Partners or of any other Person whose liabilities are governed by
this section 2.2. For purposes of this Agreement, no action or failure to act on
the part of any Related Person in connection with the management or conduct of
the business and affairs of such Related Person or any other Related Person and
other activities of such Related Person which involve a conflict of interest
with the Partnership or any Partner (or any of their respective Affiliates) or
in which such Related Person realizes a profit or has an interest shall
constitute, per se, bad faith, intentional misconduct or a
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knowing violation of law. Any Related Person may consult with counsel,
accountants and other professional advisors in respect of the affairs of the
Partnership and each Related Person shall be deemed not to have acted in bad
faith or to have engaged in intentional misconduct with respect to any action or
failure to act, and shall be fully protected and justified in so acting or
failing to act, if such action or failure to act is in accordance with the
advice or opinion of such counsel, accountants or other professional advisors,
except for actions or failures to act by such Related Person which constitute a
knowing violation of law which in any such case has not been authorized or
ratified by the Limited Partners.
2.3. Limited Liability of Limited Partners. Except as provided in
section 2.4, the liability of each Limited Partner is limited to its obligation
to make Capital Contributions pursuant to section 3, which obligations are
enforceable only by the Partnership and the General Partners but not by
creditors of the Partnership, and nothing elsewhere set forth in this Agreement
or in any other document, and nothing arising from any other transaction
whatsoever between or among any or all of the Partners or the Partnership, shall
have the effect of removing, diminishing or otherwise affecting such limitation.
2.4. No Obligation to Replenish Negative Capital Account. No Partner
shall have any obligation at any time to contribute any funds for the purpose of
replenishing any negative balance in its Capital Account, except to the extent
and under the circumstances set forth in Section 17-607 of the Delaware Act or
as otherwise required by applicable law, it being expressly understood by each
Partner that (a) any such contribution shall first be made from and to the
extent of available Partnership assets, if any, and (b) any Partner's obligation
to contribute amounts to the Partnership pursuant to such section of the
Delaware Act or as otherwise required by applicable law shall not constitute a
Partnership asset.
2.5. Partnership Property; Partnership Interests. No real or other
property of the Partnership shall be deemed to be owned by any Partner
individually, but shall be owned by and title shall be vested solely in the
Partnership. The interests of the Partners in the Partnership shall constitute
personal property.
3. CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS, ALLOCATIONS.
3.1. Capital Contributions. Concurrently with the formation of the
Partnership, the partners as of such date contributed Securities to the capital
of the Partnership, as set forth more fully in Schedule A hereto (the "Initial
Capital Contribution"). Concurrently with the execution of this Amended and
Restated Partnership Agreement, the Charity is contributing to the capital of
the Partnership the Securities set forth on Schedule A. From and after the date
hereof, each Partner may from time to time make additional capital contributions
(such additional contributions, together with the Initial Capital Contribution,
are referred to collectively as the "Capital Contributions") to the capital of
the Partnership, to the extent approved by the General Partners. Capital
Contributions consisting of property other than cash shall be deemed made in an
amount equal to the Fair Market Value of such property on the date of
contribution. Any
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additional Capital Contributions shall be made in such manner as may be
specified by the General Partners.
3.2. Capital Accounts. (a) A capital account (the "Capital Account")
shall be established and maintained for each Partner as set forth more fully in
Schedule B hereto. Each Partner's Capital Account shall be credited with the
Capital Contributions made to the Partnership by such Partner, and such
Partner's allocable share of the Partnership's Income, and shall be debited with
distributions made by the Partnership to such Partner of cash or, subject to
section 4.4, other property, and such Partner's allocable share of the
Partnership's Expenses.
(b) Interests in the Partnership shall be denominated Class A, B, C, D,
E, F and G limited partnership interests and Class A, B, C, D, E and F general
partnership interests. The partnership interests, other than the Class G, shall
be identical in all respects (other than the distinction between general and
limited partnership interests and other than the identity of the initial
holders).
(c) Interests in the Partnership shall be denominated in units
representing equal apportionments of such partnership interests.
(d) Notwithstanding anything in this Agreement to the contrary, the
General Partners, taken together, shall at all times maintain aggregate minimum
Capital Account balances that, in the aggregate, are equal to the lesser of (i)
1% of the total positive Capital Account balances of all Partners of the
Partnership or (ii) $500,000. In the event that the Limited Partners make
Capital Contributions (other than initial Capital Contributions) pursuant to the
terms of this Agreement, or the General Partners' Capital Account balances are
otherwise reduced below the amount specified in the immediately preceding
sentence, the General Partners shall contribute immediately pro rata to the
Partnership, capital equal to the lesser of (i) 1.01% of such Capital
Contributions of such Limited Partners and (ii) such amount (including zero)
that causes the aggregate of the General Partners Capital Account balances to
equal the amount specified in the immediately preceding sentence.
3.3. Allocations to Capital Accounts. (a) Income, if any, of the
Partnership for each fiscal period specified in section 3.3(c) shall be
allocated as of the end of such fiscal period as follows:
(i) all Income realized by the Partnership in respect of the
Scotts Securities shall be allocated as follows: (x) (i) until date on which
20th quarterly distribution on Scotts Preferred Stock is scheduled to be made,
75% of all dividend income realized by the Partnership in respect of the Scotts
Securities shall be allocated to the Class G limited partnership interest, and
the remainder of such dividend income shall be allocated to the other Partners
in proportion to their respective Net Adjusted Capital, provided however, that
if any dividend payment scheduled to be made on the Scotts Securities during
such period is not made, the Class G limited partnership interest shall be
allocated 75% of the amount received by the Partnership in respect of such
dividend, whether payment is made as a dividend, in connection with the
4
conversion or redemption of the Scotts Preferred Stock or otherwise, at such
time as such amount may be received by the Partnership; and (ii) after such
date, 4.5% of all dividend income realized by the Partnership in respect of the
Scotts Securities shall be allocated to the Class G limited partnership
interest, and the remainder of such income shall be allocated to the other
Partners, in proportion to their respective Net Adjusted Capital and (y) all
other income or gain realized by the Partnership in respect of the Scotts
Securities (exclusive solely of income referred to in the preceding clause (x))
shall be allocated 4.5% to the Class G limited partnership interest, and the
remainder to the other Partners in proportion to their respective Net Adjusted
Capital; and
(ii) all other Income realized by the Partnership shall be
allocated to the Partners not holding the Class G limited partnership interests,
in proportion to their respective Residual Balances.
(b) Expenses of the Partnership for each fiscal period specified
in subsection 3.3(c) shall be allocated as of the end of such fiscal period as
follows: (i) to the Capital Accounts of each Partner in proportion to that
Partner's allocable share of the Income to which such Expenses related allocated
to the Partners in that fiscal period pursuant to Section 3.3(a) of this
Agreement, until such Capital Account balances are reduced to zero, and (ii)
thereafter, to the General Partners in proportion to their respective number of
General Partner Units.
(c) In each fiscal year of the Partnership, Income and Expenses shall
shall be allocated as of the last day of the fiscal year; provided that in the
event that an Extraordinary Distribution occurs during the fiscal year, Income
and Expenses shall be allocated (i) for the period commencing on the later of
(x) the first day of the fiscal year and (y) the date of the most recent prior
Extraordinary Distribution in such fiscal year, and ending on the date
immediately preceding such Extraordinary Distribution and (ii) as of the last
day of the fiscal year for the period commencing on the date of the most recent
Extraordinary Distribution in such fiscal year and ending on such last day.
(d) Notwithstanding anything in this Agreement to the contrary, the
General Partners, taken together, shall at all times be allocated at least 1% of
all items of income, gain, loss, deduction or credit realized by the
Partnership.
3.4. Tax Allocations. Except as otherwise provided in section 3.5, items of
income, gain, loss, deduction and credit realized by the Partnership shall, for
each fiscal period, be allocated, for federal, state and local income tax
purposes, among the Partners in the same manner as the Income or Expenses of
which such items are components were allocated pursuant to section 3.3, subject,
however, to any adjustment required to comply with Treasury Regulations Section
1.704-1(b). The Partners hereby agree to be bound by the provisions of this
section 3.4 in reporting their respective shares of items of Partnership income,
gain, loss, deduction and credit.
3.5. Special Allocations. (a) Any other provision set forth in this section
3 to the contrary notwithstanding, no item of deduction or loss shall be
allocated to a Partner to the extent
5
that such allocation would cause a negative balance in such Partner's Capital
Accounts (after taking into account the adjustments, allocations and
distributions described in Treasury Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6)) that exceeds the amount that such Partner
would be required to restore to the Partnership. In the event that some but not
all of the Partners would have such excess Capital Account deficits as a
consequence of such an allocation of loss or deduction, the limitation set forth
in this section 3.5(a) shall be applied on a Partner by Partner basis so as to
allocate the maximum permissible deduction or loss to each Partner under Section
1.704-1(b)(2)(ii)(d) of the Treasury Regulations.
(b) In the event any Partner unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6), items of Partnership income and gain shall
be specially allocated to such Partner in an amount and manner sufficient to
eliminate as quickly as possible any deficit balance in its Capital Account
created by such adjustments, allocations or distributions in excess of that
permitted under section 3.5(a). Any special allocations of items of income or
gain pursuant to this section 3.5(b) shall be taken into account in computing
subsequent allocations pursuant to section 3.5 so that the net amount of any
items so allocated and all other items allocated to each Partner pursuant to
section 3.5 shall, to the extent possible, be equal to the net amount that would
have been allocated to each such Partner pursuant to the provisions of section
3.5 if such unexpected adjustments, allocations or distributions had not
occurred.
(c) In the event the Partnership incurs any nonrecourse liabilities,
income and gain shall be allocated in accordance with the "minimum gain
chargeback" provisions of Treasury Regulations Section 1.704-2.
(d) The Capital Accounts of the Partners may be adjusted in accordance
with Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect the Fair
Market Value of Partnership property whenever a new Partner or an existing
Partner makes a new or additional Capital Contribution to the Partnership in
exchange for an interest therein, an interest in the Partnership is relinquished
to the Partnership, upon any termination of the Partnership within the meaning
of Section 708 of the Code, and when the Partnership is liquidated pursuant to
section 9, and may be adjusted in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(e) in the case of a distribution pursuant to section 4 or 9 of
any property (other than cash).
(e) Income, gains, losses and deductions with respect to any property
contributed to the capital of the Partnership shall, solely for income tax
purposes, be allocated between the Partners so as to take account of any
variation between the adjusted basis of the property to the Partnership for
federal income tax purposes and its fair market value at the time of
contribution in accordance with Code Section 704(c) and the Treasury Regulations
thereunder as amended from time to time.
(f) Any Substitute Limited Partner admitted to the Partnership upon an
assignment of a Partnership interest pursuant to the terms of sections 7.3 and
7.4 of this Agreement, shall be
6
assigned the Capital Account (or relevant portion thereof) of the transferor
Partner from whom such interest was transferred for all purposes of this
Agreement.
4. DISTRIBUTIONS.
4.1. No Right to Withdraw. No Partner shall have the right to withdraw
or demand distributions of any amount in its Capital Account, except as
expressly provided in this section 4.
4.2. Liquidating Distributions. Subject to the provisions of section
4.5, distributions made in connection with the termination and dissolution of
the Partnership shall be made in accordance with section 9.2.
4.3. Ordinary Distributions. Subject to the provisions of section 4.5,
and after provision for such needs as the General Partners, in their sole
discretion, shall deem appropriate, distributions shall be made as follows:
(a) The General Partners shall cause the Partnership to distribute (i)
first, to the Partner holding the Class G limited partnership interest, an
amount equal to the excess of the Income that was allocated to such Partner
pursuant to section 3.3(a) over the Expenses of the Partnership that were
allocated to such Partner pursuant to section 3.3(b), and (ii) second, to all
other Partners, an amount in cash as is necessary to discharge the "hypothetical
tax liability" attributable to the allocation of taxable income to such Partners
pursuant to Sections 3.3, 3.4 and 3.5 of this Agreement. For purposes of this
Agreement, the "hypothetical tax liability" of all Partners shall be equal to
the highest of the effective tax rates then applicable to any of the Partners
for federal, state, local and foreign tax purposes (taking into account, for
federal income tax purposes, the deductibility of state and local taxes).
(b) The General Partners may cause the Partnership to make
distributions (other than distributions upon liquidation) of the net funds
remaining after the payment of, or provision for payment of, current obligations
and operating expenses of the Partnership to the Partners, except to the Partner
holding Class G limited partnership interests, which shall only be entitled to
distributions pursuant to Section 4.3(a) hereof. Any Partner may, at its option
by notice to the General Partners, elect to forego all or any portion of any
distribution provided by this section 4.3, in which case such portion shall be
deemed to be an additional Capital Contribution as of the first day of the first
fiscal period following receipt of such distribution.
4.4. Distributions in Kind. Subject to the provisions of section 4.5,
in the event that at any time or from time to time the General Partners, in
their sole discretion, shall determine to make a distribution of property other
than cash, such property shall be deemed to be sold for its Fair Market Value
(net of any liabilities secured by such distributed property that the recipient
Partners are considered to assume or take subject to under Section 752 of the
Code), and any gain or loss associated with such deemed sale shall be included
in determining Income or Expenses for the applicable fiscal period specified in
section 3.3(c). Any such distributions shall be made after giving effect to the
allocations required by section 3.3, adjustments to Capital Accounts in
7
respect of distributions of such property shall reflect such Fair Market Value
and all such distributions shall be made in the same respective proportions as
distributions would at the time be made pursuant to sections 4.3 or 9.2(c).
4.5. Restrictions on Distributions. The foregoing provisions of this
section 4 to the contrary notwithstanding, no distribution shall be made (a) if
such distribution would violate any contract or agreement to which the
Partnership is then a party or any law or rule, regulation, order or directive
of any Governmental Authority then applicable to the Partnership, (b) to the
extent that the General Partners, in their sole discretion, determine that any
amount otherwise distributable should be retained by the Partnership to pay, or
to establish a reserve for the payment of, any liability or obligation of the
Partnership, whether liquidated, fixed, contingent or otherwise, (c) to the
extent that the General Partners, in their sole discretion, determine that the
cash available to the Partnership is insufficient to permit such distribution or
(d) if such distribution is contrary to the provisions of sections 4.6.
4.6. Emergency Distributions. The provisions of this Agreement to the
contrary notwithstanding, if a General Partner experiences personal hardship,
and is able to so demonstrate to the satisfaction of four of the other five
General Partners, the Partnership may sell Partnership assets and allocate all
income or loss associated with such sale to such Partner and distribute all the
cash generated by such sale to such Partner (thereby reducing such Partner's
Capital Account), provided that after giving effect to such sale the current
market value of all assets of the Partnership, net of all liabilities, and
exclusive of Securities representing 35% of the then outstanding voting power of
Scotts, equals or exceeds $30 million.
4.7. Special Distribution Rights. Upon an initial General Partner
reaching the age of 65 years, such General Partner shall have the right to a
special distribution of $1 million in cash. Upon an initial General Partner
reaching the age of 70 years, such Partner shall have the right to a special
distribution of $2 million in cash. The Partnership shall take such actions as
the General Partners deem necessary or desirable to fund such distributions,
provided that any such actions or distributions shall be subject to the
provisions of section 4.5 hereof. Such distribution shall first reduce the
Capital Account of any Limited Partner interest held by such General Partner(but
not below zero), and then reduce such Partner's General Partner Capital Account,
provided that a distribution shall not be made to the extent that it would
result in such Partner having a negative Capital Account in respect of any
General Partner or Limited Partner interest.
4.8. Withdrawal Right. Subject to the provisions of section 4.5 hereof,
the Class G limited partnership interests shall be entitled to a one-time right
of redemption exercisable during the 26th year of the Partnership. Upon the
exercise of such withdrawal right, the Partnership shall pay the Partner holding
the Class G interests an amount equal to the Capital Account balance of such
Partner less any expenses incurred by the Partnership by reason of the exercise
of such withdrawal right. Thereafter, the Class G interests shall be terminated.
5. MANAGEMENT.
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5.1. Management by General Partners. The Partnership shall be managed
exclusively by the General Partners. No Limited Partner, in its capacity as a
Limited Partner, shall take part in the control of the business of the
Partnership, nor shall any Limited Partner, in its capacity as a Limited
Partner, have any right or authority to act for or bind the Partnership. The
General Partners shall cause the Partnership to retain such professionals and
other advisors as the General Partners deem necessary and proper, including
hiring an accountant to maintain the books and take the other actions
contemplated by Article VI hereof.
5.2. Third Party Reliance. Third parties dealing with the Partnership
are entitled to rely conclusively upon the authority of the General Partners as
set forth in this Agreement.
5.3. Other Activities of Partners. (a) Any Partner may engage
independently or with others in other business ventures of every nature and
description. Neither the Partnership nor any other Partners shall have any
rights or obligations in and to such independent ventures or the income or
profits derived therefrom.
(b) Nothing contained in this Agreement shall be deemed to prohibit or
restrict any Related Person from engaging in or pursuing, directly or
indirectly, any interest in other business ventures of any kind, nature or
description, independently or with others, whether such ventures are competitive
with the business of the Partnership or otherwise, including, without
limitation, purchasing, selling or holding Securities for the account of any
other Person or enterprise or for its or his own account, regardless of whether
or not any such Securities are also purchased, sold or held for the account of
the Partnership, provided that the Partners (other than the holder of the Class
G limited partnership interest) may not buy, sell, or otherwise engage in any
transactions involving Securities of Scotts for their personal accounts, (i)
without the consent of the General Partners, such consent not to be unreasonably
withheld and (ii) except that the Partners who are employees or directors of
Scotts may receive options to purchase Securities of Scotts, may hold such
options and may exercise such options and hold or sell the stock issued in
respect of such exercises, subject, in each case, to applicable securities laws
and consultation with counsel to the Partnership (at the expense of the
Partnership) so that the Partnership and the Partners are not deemed in
violation of securities laws. The Partners acknowledge that any non-public
information they receive regarding Scotts is confidential and shall not disclose
such information to any third parties. Each Partner shall vote all Scotts
Securities held by such Partner as directed by the General Partners.
5.4. Certificates and Fictitious Name Filings. The General Partners are
hereby authorized to exercise, acknowledge, file and cause to be published, as
appropriate, a certificate of limited partnership pursuant to the Delaware Act
and to execute or cause to be executed all other instruments, certificates,
notices and documents, and to do or cause to be done all such filing, recording,
publishing and other acts as may be deemed by the General Partners in their sole
discretion to be necessary or appropriate from time to time to comply with all
applicable requirements for the formation or operation or, when appropriate,
termination of a limited partnership in the State of Delaware and all other
jurisdictions where the Partnership does or shall desire to conduct its
business.
9
5.5. Expenses. The Partnership shall pay all expenses relating to its
existence, administration and business, including, without limitation (a) any
expenses incurred in connection with the organization of the Partnership, (b)
all ordinary out-of-pocket costs relating to the investigation or development of
Partnership investment opportunities, whether or not any such investment is
made, (c) all ordinary day-to-day expenses of the General Partners including
attorneys' fees, auditors' fees, other professional fees, and the compensation
and personnel expenses of its employees, (d) ordinary administrative expenses of
the Partnership, including, without limitation, attorneys' fees, auditors' fees,
other professional fees and the costs and expenses of meetings and reports held
or prepared and provided pursuant to section 6, (e) all extraordinary expenses,
including, without limitation, expenses arising from or relating to litigation,
investigations, proceedings, judgments, settlements, the indemnities provided
for in section 8, governmental or regulatory inquiries, or public relations
undertakings, and (f) expenses incurred in connection with Partnership
investments that are properly treated as capital items.
5.6. Substitute General Partners. Any General Partner may designate a
substitute General Partner who is related to such General Partner by blood or
marriage (including Xxxxxxx Xxxxxxxxx so long as the status of his current
relationship with Xxxxx Xxxxxxxx remains unchanged). In addition, in the case of
extreme hardship, death or disability of a General Partner, a majority in
interest of the class of general and limited partnership interests formerly
represented by such General Partner shall be entitled to designate a substitute
General Partner, provided that if such designee is not related by blood or
marriage to an initial General Partner, such designee must be reasonably
acceptable to the remaining five General Partners. If a .General Partner is
reasonably unable to attend a partnership meeting, such General Partner may be
represented (including the right to vote on behalf of such General Partner) by a
member of such General Partner's immediate family or by another General Partner.
5.7. Voting; Proxies. (a) Each General Partner shall be entitled to a
number of votes on all partnership matters equal to the number of limited and
general partnership units held by such General Partner and the members of its
Family Unit. The total number of such votes is referred to as the "Total Voting
Power." All matters subject to the vote, consent or ratification of the General
Partners shall require approval of four-sixths of the Total Voting Power, unless
otherwise provided. The following actions shall require the approval of
five-sixths of the Total Voting Power:
(i) Sales of Scotts Securities that would result in the
Partnership holding less than 35t of the then outstanding voting power in Scotts
plus other assets (which may include Scotts Securities) having an additional $30
million in Fair Market Value;
(ii) Transfers of Partnership interests except as provided in
section 7.1(a), below;
(iii) The amendment of this Agreement;
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(iv) The termination of this Agreement except as provided in
section 9.1(b), below;
(v) Amendments, consents or waivers under the Merger Agreement;
and
(vi) Investments of the Partnership's cash in any investment
other than those authorized to be made by the Managing General Partner of the
Xxxxxxxx Family Fund without the consent of the other partners therein.
(b) No Partner may grant an irrevocable proxy with respect to its
Partnership interests.
5.8. Meetings. The General Partners shall meet at least once in every
year, and such meeting shall be held on the date and in the place of The Scotts'
Annual Meeting of Shareholders, unless the General Partners shall otherwise
agree. Meetings of General Partners may also be held if so called by any two
General Partners on at least ten days notice to the other General Partners.
5.9. Sale of Scotts Preferred Stock. If the Partnership shall, from
time to time, sell a number of shares of Scotts Preferred Stock equal to up to
25% of the Scotts Preferred Stock held on the date hereof prior to the date on
which the 20th quarterly distribution on such stock is scheduled to be made, the
percentage specified in section 3.3(i)(x)(i) hereof shall be increased so that
the amount which would have been allocated to such holder under such section
shall remain constant. The Partnership shall not sell more than 25% of such
stock prior to the date on which the 20th quarterly distribution on such stock
is scheduled to be made unless (i) it shall provide other means of assuring such
holder of such allocation or (ii) the Charity shall provide its consent.
6. BOOKS OF ACCOUNT, RECORDS AND REPORTS.
6.1. Maintenance of Books and Records, Etc. The Partnership shall
maintain books and records on the basis utilized in preparing the Partnership's
federal income tax return, incorporating the accrual or cash method of
accounting, as the General Partners may in their sole discretion determine to be
in the best interest of the Partnership, and such other records as may be
required in connection with the preparation and filing of the Partnership's
federal and state income tax returns or other tax returns or reports, including,
without limitation, the records reflecting the Capital Accounts and allocations
thereto specified in section 3. All such books and records shall at all times be
made available at the principal office of the Partnership and shall be open to
the reasonable inspection and examination of the Partners or their duly
authorized representatives during normal business hours upon three Business
Days' prior written notice. The Partnership shall promptly furnish a list of
names and addresses of all Partners to any Partner who requests such a list in
writing for any proper purpose. The General Partners shall be entitled to make
any elections for tax purposes, including the election under Section 754 of the
Code, as
11
the General Partners may in their sole discretion determine to be in the best
interest of the Partnership. The General Partners shall duly prepare (or cause
to be prepared) and distribute to the Partners quarterly reports as to the
Partnership's financial condition and results of operation.
6.2. Federal, State and Local Income Tax Information. The General
Partners shall duly and promptly prepare (or cause to be prepared) and
distribute to the Partners, a Form K-1 and such Partnership tax information as
the General Partners reasonably believe shall be necessary for the preparation
by such Person of his federal, state and local income tax returns. Such
information shall include a statement showing such Person's share of
distributions, income, gain, loss, deductions and credits and other relevant
fiscal items of the Partnership for such fiscal year.
6.3. Permitted Advisors. Each General Partner may bring one financial,
legal or other advisor to Partnership meetings, subject to such reasonable
limitations as the General Partners may from time to time agree.
6.4. Shareholders Representative. For so long as the Merger Agreement
requires or permits the Shareholders (as such term is defined therein) to
designate a Shareholders Representative (as such term is defined therein), such
Shareholders Representative shall be selected by the General Partners (by at
least four-sixths of Total Voting Power) and shall be subject to removal by the
General Partners (by at least four-sixths of Total Voting Power). It shall be
the duty of the Shareholders Representative to communicate faithfully and
accurately the decisions and instructions of the Partnership to Scotts and to
consult regularly with the General Partners on all matters relating to Scotts
which require the Shareholders Representative to communicate with Scotts on
behalf of the Partnership. No General Partner who is not also the Shareholders
Representative shall communicate to Scotts officially on behalf of the
Partnership.
6.5. Shareholder Designees. For so long as the Merger Agreement permits
the Shareholders to designate one or more Persons to serve as members of the
Board of Directors of Scotts, such Shareholder Designees (as such term is
defined in the Merger Agreement) shall be selected by the General Partners (by
at least four-sixths of Total Voting Power). The Shareholder Designees shall
regularly consult with the General Partners on all matters concerning the
business, operations and financial results and condition of Scotts and shall in
particular make themselves available for discussion and questions concerning
such matters at the time of the Scotts Annual Meeting of Shareholders).
6.6. Notice of Certain Business Activities. The General Partners shall
use all reasonable efforts to give notice to the holder of the Class G limited
partnership interest before the Partnership shall engage in any of the
activities listed on Schedule C hereto which would give rise to unrelated
business income tax.
7. TRANSFER OF PARTNERSHIP INTERESTS; SUBSTITUTE AND ADDITIONAL
LIMITED PARTNERS.
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7.1. General. (a) Each Partner may transfer up to 79% of such Partner's
limited partnership interests to Permitted Transferees without consent of the
General Partners, provided, however, that in the first two fiscal years such
transfers shall not exceed 23% of such Partner's Partnership interests, and
further provided that, in the opinion of counsel for the Partnership, no adverse
federal, state or local tax consequences for the Partnership or the other
Partners would result from such transfer. Permitted Transferees shall mean
persons who are spouses (including Xxxxxxx Xxxxxxxxx so long as the status of
his current relationship with Xxxxx Xxxxxxxx remains unchanged) and lineal
descendants of General Partners at the time of transfer, and trusts for the
benefit of foregoing spouses and descendants and charities which qualify under
ss. 501(c)(3) of the Code. If more than one-half of any class of partnership
interests shall be transferred to a charity, the entire class shall become
non-voting, the General Partner representing such class shall cease to be a
General Partner (and shall instead become a limited partner), and this Agreement
shall be appropriately modified. All transferees shall agree to be bound by this
Agreement. For purposes of this section 7.1 "transfer" shall include pledges,
hypothecations, loans and other transfers of any interests in Partnership
interests.
(b) No Partner may otherwise sell, transfer, assign or otherwise
dispose of or encumber (each, an "Assignment") all or any part of such Partner's
interest in the Partnership (whether voluntarily, involuntarily or by operation
of law) to any Person (each an "Assignee") without the prior written consent of
the General Partners, the granting or denial of which shall be in the sole and
absolute discretion of the General Partners. Each Limited Partner and each
Assignee hereby agrees that it will not effect any Assignment of all or any
part of its interest in the Partnership (whether voluntarily, involuntarily or
by operation of law) in any manner contrary to the terms of this Agreement or
that violates or causes the Partnership or the General Partners to violate the
Securities Act, the Securities Exchange Act, the Investment Company Act, or the
laws, rules, regulations, orders and other directives of any Governmental
Authority.
(c) In the event of an Assignment of a limited partnership interest,
the various items of Partnership income, gain, deduction, loss, credit and
allowance shall be allocated between the transferor and the transferee in the
ratio of the number of days in the fiscal year in which such Assignment occurred
before and after the Assignment.
7.2. Effect of Retirement, Withdrawal, Bankruptcy, Dissolution, Death,
Etc. of Limited Partner. The retirement, withdrawal, bankruptcy, dissolution,
death, incapacity or adjudication of incompetency of a Limited Partner shall not
dissolve the Partnership, and the Partnership shall continue in a reconstituted
form if necessary, without any action on the part of the remaining Partners. The
trustee, executor, administrator, committee or guardian of the Limited Partner
or of the Limited Partner's estate, as the case may be, shall have all the
rights of the Limited Partner for the purpose of settling or managing the estate
and such power as the bankrupt, deceased or incompetent Limited Partner
possessed to assign all or part of the Limited Partner's interest in the
Partnership; provided that any such trustee, executor, administrator, committee
or guardian shall become a Substitute Limited Partner only upon compliance with
the provisions of section 7.3.
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7.3. Substitute Limited Partners. No Assignee of all or any part of an
interest of a Limited Partner in the Partnership shall be admitted to the
Partnership as a substitute Limited Partner (a "Substitute Limited Partner")
unless and until (a) the General Partners have consented in writing to such
admission (the granting or denial of which shall be in the sole and absolute
discretion of the General Partners), except as otherwise provided in Section
7.1(a), (b) the Assignee has executed a counterpart of this Agreement (as then
modified or amended from time to time) and such other instruments as the General
Partners may reasonably deem necessary to confirm the undertaking of the
assignee to be bound by all the terms and provisions of this Agreement and (c)
the Assignee has undertaken in writing to pay all expenses incurred by the
Partnership in connection with such assignment and substitution. Unless and
until an Assignee of a Partnership interest becomes a Substitute Limited
Partner, such Assignee shall not be entitled to exercise any vote or consent
with respect to such Partnership interest.
8. INDEMNIFICATION OF GENERAL PARTNERS.
8.1. In General. (a) The Partnership shall, to the maximum extent
permitted by applicable law, indemnify and hold harmless the General Partners,
their Affiliates, partners, employees, agents and assigns of any of the General
Partners or any of their Affiliates (the "Indemnitees"), and the Partnership and
each Limited Partner shall release each Indemnitee, to the fullest extent
permitted by law, from and against any and all Damages, including, without
limitation, Damages incurred in investigating, preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from any
of the foregoing by or before any court or governmental, administrative or other
regulatory agency, body or commission, whether pending or threatened, whether or
not an Indemnitee is or may be a party thereto, which, in the judgment of the
General Partners, arise out of, relate to or are in connection with the
management or conduct of the business or affairs of the General Partners, the
Partnership, or any of their respective Affiliates (including, without
limitation, actions taken or not taken by any Indemnitee) except for any such
Damages that are found by a court of competent jurisdiction to have resulted
primarily from the bad faith, intentional misconduct or knowing violation of law
of the Person seeking indemnification which in any such case has not been
authorized or ratified by the Limited Partners; provided that no action or
failure to act on the part of any broker or other agent of the Partnership or
the General Partners shall be deemed to be an action or a failure to act, or
result in liability on the part of, any indemnitee. Such attorneys' fees and
expenses shall be paid by the Partnership as they are incurred upon receipt, in
each case, of an undertaking by or on behalf of the Indemnitee to repay such
amounts if it is ultimately determined that such Indemnitee is not entitled to
indemnification with respect thereto.
(b) The termination of any proceeding by settlement shall not be deemed
to create a presumption that the Indemnitee acted in a manner which constituted
bad faith, intentional misconduct or a knowing violation of law. The
indemnification provisions of this section 8.1 may be asserted and enforced by,
and shall be for the benefit of, each Indemnitee, and each Indemnitee is hereby
specifically empowered to assert and enforce such right. The right of any
Indemnitee to the indemnification provided herein shall be cumulative of, and in
addition to, any and all rights to which such Indemnitee may otherwise be
entitled by contract or as a matter of law or equity and shall extend to his or
its heirs, successors, assigns and legal representatives.
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(c) All judgments against an Indemnitee wherein the General Partners
are entitled to indemnification, must first be satisfied from Partnership assets
before the General Partners are responsible for these obligations.
(d) To the extent that insurance from third parties has been obtained
and is available in respect of any item which an Indemnitee may recover under
these indemnification provisions, the General Partners shall use their best
efforts to have such items paid out of the proceeds of such insurance rather
than having the Partnership make any payments pursuant to the indemnification
obligations contained herein; provided that if such proceeds are not readily
available, the General Partners may in their sole discretion cause the
Partnership to pay such items, in which event the Partnership will be entitled
to reimbursement therefor out of the proceeds of such insurance when and if
obtained and, in any event, the Partnership shall pay all costs associated with
obtaining reimbursement from such proceeds of insurance. The General Partners
may (but shall not be obligated to) obtain or cause the Partnership to obtain,
at the expense of the Partnership, insurance against any items whether or not
the Partnership would, pursuant to this section 8.1, be required to indemnify
any Indemnitee in respect thereof.
(e) If for any reason the indemnity provided for in sections 8.1(a)-(d)
and to which an Indemnitee is otherwise entitled is unavailable to such
Indemnitee in respect of any Damages, then the Partnership, in lieu of
indemnifying such Indemnitee, shall contribute to the amount paid or payable by
such Indemnitee as a result of such Damages in the proportion the total capital
of the Partnership (exclusive of the balance in the Indemnitee's Capital Account
(which, for purposes of this section 8.1(e) in the case of an Indemnitee which
is not a General Partner, shall mean the General Partners' Capital Accounts if
the Indemnitee is an Affiliate thereof)) bears to the total capital of the
Partnership (including the balance in the Indemnitee's Capital Account), which
contribution shall be treated as an expense of the Partnership.
(f) Any provision of this Agreement to the contrary notwithstanding,
the provisions of this section 8.1 shall survive the termination of this
Agreement and the dissolution of the Partnership.
8.2. Not Liable for Return of Capital. Neither the General Partners nor
any Affiliate, partner, employee or agent of the General Partners or of any such
Person shall be personally liable for the return of the Capital Contributions of
any Limited Partner or any portion thereof or interest thereon, and such return
shall be made solely from available Partnership assets, if any.
9. DURATION AND TERMINATION OF THE PARTNERSHIP.
9.1. Term. The existence of the Partnership shall commence on the date
of the filing of a certificate of limited partnership pursuant to this Agreement
and the Delaware Act (the "Filing Date") and shall continue until the first to
occur of the following events (an "Event of Termination"):
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(a) the failure to continue the business of the Partnership as provided
in section 10.1 following a Disabling Event in respect of the General Partners;
or
(b) a determination by five of the six General Partners in their sole
discretion to terminate the Partnership for any reason, provided that during the
period of sixty days beginning eight months preceding and ending six months
preceding (the "Notice Period") the twenty-year anniversary of the Filing Date
and during the Notice Period preceding every ten-year anniversary of the Filing
Date thereafter, four of the six General Partners may determine to terminate the
Partnership, in which case the Event of Termination shall occur on the
respective anniversary of the Filing Date which follows such Notice Period.
9.2. Winding-Up. Upon the occurrence of an Event of Termination, the
Partnership shall be dissolved and wound up. In connection with the dissolution
and winding-up of the Partnership, the General Partners or, if there are no
General Partners, a liquidator or other representative (a "Representative")
appointed by the Limited Partners shall proceed with the sale or liquidation of
all of the assets of the Partnership (including the conversion to cash or cash
equivalents of its notes or accounts receivable) in a manner reasonably
calculated to maximize value and shall apply and distribute the proceeds of such
sale or liquidation in the following order of priority, unless otherwise
required by mandatory provisions of applicable law:
(a) first, to pay (or to make provision for the payment of) all
creditors of the Partnership (including Partners who are creditors of the
Partnership) and the expenses of liquidation, in the order of priority provided
by law or otherwise, in satisfaction of all debts, liabilities or obligations of
the Partnership due such creditors and of such expenses of liquidation;
(b) second, to the establishment of any reserve which the General
Partners or the Representative, as the case may be, may deem reasonably
necessary for any contingent or unforeseen liabilities or obligations of the
Partnership (such reserve may be paid over by the General Partners or the
Representative to an escrow agent acceptable to the General Partners or the
Representative, to be held for disbursement in payment of any of the
aforementioned liabilities and, at the expiration of such period as shall be
deemed advisable by the General Partners or the Representative for distribution
of the balance, in the manner hereinafter provided in this section 9.2); and
(c) third, after the payment (or the provision for payment) of all
debts, liabilities and obligations of the Partnership in accordance with clauses
(a) and (b) above, to the Partners or their legal representatives in proportion
to their respective Capital Account balances as adjusted pursuant to section 3
for all Partnership operations up to and including such liquidation.
9.3. Distributions in Cash or in Kind. Upon dissolution, the General
Partners or the Representative, as the case may be, may at their or its
discretion, as the case may be, (a) liquidate all or a portion of the
Partnership assets and apply the proceeds of such liquidation in the manner set
forth in section 9.2 or (b) hire independent appraisers to appraise the value of
16
Partnership assets not sold or otherwise disposed of (the cost of such appraisal
to be considered a debt of the Partnership) or determine the Fair Market Value
of such assets, and allocate any unrealized gain or loss determined by such
valuation to the Partner's respective Capital Accounts as though the properties
in question had been sold on the date of distribution and, after giving effect
to any such adjustment, distribute said assets in the manner set forth in
section 9.2; provided that the General Partners or Representative shall in good
faith attempt to liquidate sufficient Partnership assets to satisfy in cash the
debts and liabilities described in section 9.2.
9.4. Time for Liquidation. A reasonable amount of time shall be allowed
for the orderly liquidation of the assets of the Partnership and the discharge
of liabilities to creditors so as to enable the General Partners or
Representative to minimize the losses attendant upon such liquidation.
9.5. Termination. Upon compliance with the foregoing distribution plan,
the Partnership shall cease to be such, and the General Partners or
Representative shall execute, acknowledge and cause to be filed with the
Secretary of State of the State of Delaware a certificate of termination of the
Partnership pursuant to the power of attorney contained in section 13.
10. RETIREMENT, ETC. OF GENERAL PARTNERS.
10.1. Effect of Retirement, Withdrawal, Bankruptcy, Death, Etc. of the
General Partners. In the event of the retirement, Prohibited Withdrawal,
bankruptcy, death, dissolution, liquidation or adjudication of incompetency
(which term shall include, but not be limited to, insanity) (a "Disabling
Event") of any General Partner, the Partnership shall not be dissolved and wound
up as provided in section 9.2 unless within 90 days 100% of the remaining
General Partners consent in writing to the dissolution and winding up of the
operations of the Partnership.
10.2. Resignation, Etc. of the General Partners. The General Partners
shall not resign or withdraw from the Partnership or dispose of their interests
as General Partners (except as provided in Section 5.6 hereof) without (i) the
approval or written consent of the remaining General Partners and (ii) providing
one or more successor General Partners (each, a "Successor General Partners")
which may be a remaining Partner to whom the resigning General Partners shall
assign their entire interest as a General Partners in the Partnership (a
withdrawal from the Partnership which is effected in compliance with all of the
provisions of this section 10.2 is referred to herein as a "Permitted
Withdrawal"). In the event any one or more Successor General Partners are
admitted to the Partnership upon a Permitted Withdrawal, such Successor General
Partners shall succeed to the interest of the withdrawing General Partners in
the profits, losses and distributions of the Partnership, and shall exercise the
rights and powers and undertake the obligations and liabilities of the General
Partners hereunder. Such admission to the Partnership shall be effected by the
approval or written consent of the remaining Partners subject, however, to the
provisions of section 5.6.
11. AMENDMENTS.
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11.1. Consent to Amendments. This Agreement may be modified or amended
only with the written consent of the General Partners, subject to Article V
hereof.
11.2. Amendments by General Partners. Subject to Article V hereof, the
General Partners shall have the authority to amend or modify this Agreement to
the full extent permitted by law without any vote or other action by the other
Partners, provided however, that any amendment hereto which would amend the
Class G limited partner's right to allocations and distributions in accordance
with Articles III and IV hereof or which would change the status of the Class G
limited partnership interest to general partnership interest, shall require the
consent of a majority in interest of the Class G limited partnership interest.
12. DEFINITIONS; ACCOUNTING TERMS.
12.1. Definitions.
As used herein the following terms shall have the following respective
meanings:
Affiliate -- with reference to any Person, any trust for the benefit of
such Person or, in the case of any trust, a beneficiary of such trust, a spouse
of such Person, any relative (by blood, adoption or marriage) of such Person
within the third degree, any director, general partner, officer or employee of
such Person, any other Person of which such Person is a member, director,
officer or employee, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such Person and
any director, general partner, officer, employee, agent or legal representative
of any of the foregoing.
Assignee -- as defined in section 7.1.
Assignment -- as defined in section 7.1.
Board -- the board of directors of the named corporation.
Business Day -- any day excluding a Saturday, a Sunday and any other
day on which banks are required or authorized to close in New York, New York.
Capital Account -- as defined in section 3.2.
Capital Contribution -- as defined in section 3.1.
Charity -- Community Funds, Inc., a New York not-for-profit
corporation.
Code -- the Internal Revenue Code of 1986, as the same may be amended
hereafter from time to time.
Damages -- any and all damages, disbursements, suits, claims,
liabilities, obligations, judgments, fines, penalties, charges, amounts paid in
settlement, expenses, costs and
18
expenses (including, without limitation, attorneys' fees and expenses)and
interest on any of the foregoing.
Delaware Act -- as defined in section 1.1.
Disabling Event -- as defined in section 10.1.
Event of Termination -- as defined in section 9.1.
Expenses -- with respect to any period, all expenses and losses of the
Partnership without regard to whether or not such items are deductible in
computing the Partnership's income for federal income tax purposes.
Notwithstanding anything to the contrary contained in this definition, losses
resulting from the disposition of or distribution to a Partner of any
Partnership asset shall be computed by reference to the book value of such
asset, notwithstanding that the adjusted tax basis of such asset differs from
its book value.
Extraordinary Distribution -- any distribution made pursuant to either
section 4.6 or section 4.7 of this Agreement.
Fair Market Value -- (a) as to any Securities which are listed or
admitted to trading on any national exchange or quoted in the over-the-counter
market on any date, the amount equal to (i) the last sale price of such
Securities, regular way, on such date or, if no such sale takes place on such
date, the average of the closing bid and asked prices thereof on such date, in
each case as officially reported on the principal national securities exchange
on which such Securities are then listed or admitted to trading, or (ii) if such
Securities are not then listed or admitted to trading on any national securities
exchange but are designated as a national market system security by the NASD,
the last trading price of such Securities on such date, or (iii) if there shall
have been no trading on such date or if such Securities are not so designated,
the average of the closing bid and asked prices of such Securities on such date
as shown by the NASD automated quotation system, and (b) as to any other
property on any date, the fair market value of such property on such date as
determined in good faith by the General Partners.
Family Unit -- the spouse (including Xxxxxxx Xxxxxxxxx, so long as the
status of his current relationship with Xxxxx Xxxxxxxx remains unchanged) and
lineal descendants of a General Partner, and the spouses of such lineal
descendants.
General Partners -- as defined in the introduction to this Agreement,
or any successor or successors thereof pursuant to the terms of this Agreement.
Governmental Authority -- any nation or government, any state or other
political subdivision thereof and any other Person exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
Income -- with respect to any period, the taxable income or gain of the
Partnership for such period increased by the amount of all income of the
Partnership that is exempt from
19
federal income tax. Notwithstanding anything to the contrary contained in this
definition, income or gain resulting from the disposition of or distribution to
a Partner of any Partnership asset shall be computed by reference to the book
value of such asset, notwithstanding that the adjusted tax basis of such asset
differs from its book value.
Indemnitees -- as defined in section 8.1(a).
Investment Company Act -- the Investment Company Act of 1940, as the
same may be amended hereafter from time to time.
Limited Partners -- as defined in the introduction to this Agreement.
NASD -- The National Association of Securities Dealers, Inc.
Net Adjusted Capital -- with respect to each Partner, the initial
Capital Contribution made by that Partner, as set forth in Schedule B, minus the
excess, if any, of (i) Extraordinary Distributions made to such Partner pursuant
to section 4.6 or 4.7 of this Agreement, over (ii) the sum of (x) such Partner's
Residual Balance and (y) any gain or loss that would have been realized by the
Partnership if it had sold an amount of Scotts Securities the value of which
equaled the excess of the Extraordinary Distributions made to the Partner over
that Partner's Residual Balance. For purposes of this definition, in the event
of an Extraordinary Distribution, a Partner's Net Adjusted Capital will be
calculated immediately prior to any decrease in that Partner's Residual Balance
that results from such Extraordinary Distribution.
Partners -- as defined in section 2.1.
Partnership -- as defined in the introduction to this Agreement.
Partnership Expenses -- all expenses payable by the Partnership
pursuant to section 5.5.
Permitted Withdrawal -- as defined in section 10.2.
Person -- an individual, partnership, limited liability company,
corporation, trust or unincorporated organization, and a government or agency or
political subdivision thereof.
Prohibited Withdrawal -- a voluntary withdrawal by a General Partner
which is not a Permitted Withdrawal.
Related Person -- as defined in section 2.2.
Representative -- as defined in section 9.2.
Residual Balance -- with respect to each Partner, the positive excess,
if any, of (x) cumulative Income previously allocated to that Partner pursuant
to section 3.3(a) of this
20
Agreement, over (y) the sum of (i) cumulative Expenses previously allocated to
such Partner pursuant to Section 3.3(b) of this Agreement and (ii) cumulative
distributions previously made to such Partner pursuant to sections 4.3, 4.4, 4.6
and 4.7 of this Agreement.
Scotts -- The Scotts Company, an Ohio corporation.
Scotts Preferred Stock -- the Class A Convertible Preferred Stock of
Scotts.
Scotts-Securities -- the Securities of Scotts issued to the Partnership
or any of the Partners pursuant to the Amended and Restated Agreement and Plan
of Merger, dated as of May 19, 1995, among Xxxxx'x Miracle-Gro Products, Inc.,
certain of its affiliates, the Partnership, the General Partners, the Charity
and the other parties thereto.
Securities -- any (a) privately or publicly issued capital stock,
bonds, notes, debentures, commercial paper, bank acceptances, trade acceptances,
trust receipts and other obligations, chooses in action, partnership interests,
instruments or evidences of indebtedness commonly referred to as securities,
warrants, options, including puts and calls or any combination thereof and the
writing of such options, and (b) commodities and commodity futures contracts or
options, foreign exchange and foreign exchange futures contracts or options,
other futures contracts or options of any kind whatsoever, including any such
contract relating to a financial or other index of any kind, rights with respect
to any of the foregoing, and any other arrangements for investment or financial
instruments that may from time to time be available to the public or to any
individual.
Securities Act -- the Securities Act of 1933, as the same may be
amended hereafter from time to time.
Securities Exchange Act -- the Securities Exchange Act of 1934, as the
same may be amended from time to time hereafter.
Shareholder Designees -- the individuals selected by the General
Partners in accordance with this Agreement to serve as directors of Scotts.
Shareholders Representative -- the individual identified in the Merger
Agreement as the Shareholders Representative, representing the Partnership and
Xxxx Xxxxxx, and the successor to such individual designated by the General
Partners in accordance with this Agreement.
Substitute Limited Partner -- a Limited Partner who is admitted as a
Substitute Limited Partner in accordance with the provisions of section 7.3.
Successor General Partners -- as defined in section 10.2.
Treasury Regulations -- the Income Tax Regulations promulgated under
the Code, as the same may be amended hereafter from time to time.
21
12.2. Accounting Terms and Determinations. All accounting terms used in
this Agreement and not otherwise defined shall have the meaning accorded to them
in accordance with generally accepted accounting principles ("GAAP") and, except
as expressly provided herein, all accounting determinations shall be made in
accordance with GAAP, consistently applied.
13. MISCELLANEOUS.
13.1. Waiver of Partition. Each of the Partners hereby irrevocably
waives any and all rights that such Partner may have to maintain any action for
partition of any of the Partnership's property.
13.2. Entire Agreement. This Agreement and the agreements and documents
expressly referred to herein constitute the entire agreement among the parties
with respect to the subject matter hereof. They supersede any prior agreement or
understanding among such parties.
13.3. Choice of Law. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE WITHOUT REGARD TO THE PRINCIPLES GOVERNING CONFLICTS OF
LAWS.
13.4. Successors and Assigns. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, heirs, administrators, executors,
successors and assigns.
13.5. Interpretation. Wherever from the context it appears appropriate,
each term stated in either the singular or the plural shall include the singular
and the plural, and pronouns stated in the masculine, the feminine or neuter
gender shall include the masculine, the feminine and the neuter.
13.6. Captions. Captions contained in this Agreement are inserted only
as a matter of convenience and in no way define, limit or extend the scope or
intent of this Agreement or any provision hereof.
13.7. Severability. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.
13.8. Counterparts. This Agreement may be executed in one or more
counterparts, which may include facsimile counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
instrument. It shall not be necessary for all Partners to execute the same
counterpart hereof.
22
13.9. Additional Documents. Subject to the provisions of this
Agreement, each party hereto agrees to execute, with acknowledgment or
affidavit, if required, any and all documents and writings which may be
necessary or expedient in connection with the creation of the Partnership and
the achievement of its purposes, specifically including (a) any amendments to
this Agreement and such certificates and other documents as the General Partners
deem necessary or appropriate to form, qualify or continue the Partnership as a
limited partnership (or a partnership in which the Limited Partners have limited
liability) in all jurisdictions in which the Partnership conducts or plans to
conduct business and (b) all such agreements, certificates, tax statements, tax
returns and other documents as may be required of the Partnership or its
Partners by the laws of the United States of America, the State of Delaware or
any other jurisdiction in which the Partnership conducts or plans to conduct
business, or any political subdivision or agency thereof.
13.10. Non-Waiver. No provision of this Agreement shall be deemed to
have been waived unless such waiver is contained in a written notice given to
the party claiming such waiver has occurred; provided that no such waiver shall
be deemed to be a waiver of any other or further obligation or liability of the
party or parties in whose favor the waiver was given.
13.11. Manner of Consent. Any consent required by this Agreement may be
given as follows:
(a) by a written consent given by the consenting Partner at or
prior to the taking of the action for which the consent is solicited; provided
that such consent shall not have been nullified by either (i) notification to
the General Partners by the consenting Partner at or prior to the time of, or
the negative vote by such consenting Partner at, any meeting held to consider
the taking of such action or (ii) notification to the General Partners by the
consenting Partner prior to the taking of any action which is not subject to
approval at such meetings; or
(b) by the affirmative vote by the consenting Partner to the
taking of the action for which the consent is solicited at any meeting duly
called and held to consider the taking of such action.
13.12. Notices. Unless otherwise specified in this Agreement all
notices and demands under this Agreement must be in writing and are effective
upon receipt thereof. For purposes of notice, the addresses of the Limited
Partners and the General Partners shall be as set forth on Schedule A attached
to this Agreement and the address of the Partnership shall be as set forth in
section 1.4. Any Partner or its assignee may designate a different address to
which notices or demands shall thereafter be directed and such designation shall
be made by written notice given in the manner hereinabove required and, in the
case of a Limited Partner or its assignee, directed to the Partnership at its
offices as hereinabove set forth. Notices to any assignee of a Limited Partner
shall be given to such Limited Partner unless such assignee has designated a
different address therefor by written notice given in the manner hereinabove
required.
23
13.13. Grant of Power of Attorney. Each Limited Partner hereby
irrevocably constitutes and appoints the General Partners as its true and lawful
attorneys and agents, in its name, place and stead to make, execute, acknowledge
and, if necessary, file and record:
(a) Any certificates or other instruments or amendments thereof
which the Partnership may be required to file under the Delaware Act or any
other laws of the State of Delaware or pursuant to the requirements of any
Governmental Authority having jurisdiction over the Partnership or which the
General Partners shall deem it advisable to file, including, without limitation,
this Agreement, any amended Agreement and a certificate of termination as
provided in section 9.5.
(b) Any certificate or other instruments (including counterparts
of this Agreement with such changes as may be required by the law of other
jurisdictions) and all amendments thereto which the General Partners deem
appropriate or necessary to qualify, or continue the qualification of, the
Partnership as a limited partnership (or a partnership in which the Limited
Partners have limited liability) and to preserve the limited liability status of
the Partnership in the jurisdictions in which the Partnership may acquire
investment interests.
(c) Any certificates or other instruments which may be required
in order to effectuate any change in the membership of the Partnership or to
effectuate the dissolution and termination of the Partnership pursuant to
section 9.
(d) Any amendments to any certificates or to this Agreement
necessary to reflect any other changes made pursuant to the exercise of the
powers of attorney contained in this section or pursuant to section 13.9.
13.14. Irrevocable and Coupled with an Interest; Copies to Be
Transmitted. The powers of attorney granted under section 13.13 shall be deemed
irrevocable and to be coupled with an interest. A copy of each document executed
by the General Partners pursuant to the powers of attorney granted in section
13.13 shall be transmitted to each Limited Partner promptly after the date of
the execution of any such document.
13.15. Survival of Power of Attorney. The powers of attorney granted in
section 13.13 shall survive delivery of an Assignment by any Limited Partner of
the whole or any part of such Partner's Partnership interest; provided that if
such Assignment was of all of such Limited Partner's Partnership interest and
the substitution of the assignee as a Limited Partner has been consented to by
the General Partners, the foregoing powers of attorney shall survive the
delivery of such Assignment for the purpose of enabling the General Partners to
execute, acknowledge and file any and all certificates and other instruments
necessary to effectuate the substitution of the assignee as a Substitute Limited
Partner. Such powers of attorney shall survive the death, incapacity,
dissolution or termination of a Limited Partner and shall extend to such Limited
Partner's successors and assigns.
13.16. Limitation of Power of Attorney. Except as expressly set forth
in section 11.2, the powers of attorney granted under section 13.13 cannot be
utilized by the General
24
Partners for the purpose of increasing or extending any financial obligation or
liability of a Limited Partner or altering the method of division of profits and
losses or the method of distributions in connection with the investment of a
Limited Partner without the written consent of such Limited Partner.
13.17. Voting Rights. The Limited Partners shall be permitted to
exercise any of the voting rights which may be prescribed from time to time in
this Agreement unless, prior to the exercise by the Limited Partners of any
specified voting right or rights, the Partnership shall have obtained (and
furnished a copy thereof to each Limited Partner) an opinion of counsel for the
Partnership acceptable to the Limited Partners to the effect that the exercise
of such specified right or rights will adversely affect the limited liability of
the Limited Partners.
25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
multiple counterparts as of the day and in the year first above written, each of
which counterparts, when taken together, shall constitute one and the same
instrument.
/s/ Xxxxx Xxxxxxxx
--------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxxxxx Xxxxxxxx Xxxxxxxxxxx
--------------------------------------
Xxxxxxxxx Xxxxxxxx Xxxxxxxxxxx
/s/ Xxxx Xxxxxxxx
--------------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx
--------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx
--------------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx
--------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxxxxx Xxxxxxxx Xxxxxxxxxxx
--------------------------------------
Xxxxxxxxx Xxxxxxxx Xxxxxxxxxxx as
Custodian for Xxxxxxxxx Xxxxxxxx
/s/ Xxxxxxxxx Xxxxxxxx Xxxxxxxxxxx
--------------------------------------
Xxxxxxxxx Xxxxxxxx Xxxxxxxxxxx as
Custodian for Xxxxxxxxxxx Xxxxxxxx
/s/ Xxxxxxxxx Xxxxxxxx Xxxxxxxxxxx
--------------------------------------
Xxxxxxxxx Xxxxxxxx Xxxxxxxxxxx as
Custodian for Xxxxxxxx Xxxxxxxx
26
COMMUNITY FUNDS, INC.
/s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: Secretary and General Counsel
27
THE LIMITED PARTNERSHIP INTERESTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED UNLESS THE SAME HAVE BEEN INCLUDED IN AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE GENERAL PARTNERS HAS BEEN RENDERED TO THE PARTNERSHIP THAT AN EXEMPTION FROM
REGISTRATION UNDER FEDERAL AND STATE SECURITIES LAWS IS AVAILABLE. IN ADDITION,
TRANSFER OR OTHER DISPOSITION OF LIMITED PARTNERSHIP INTERESTS IS RESTRICTED AS
PROVIDED IN THE LIMITED PARTNERSHIP AGREEMENT.
28
Schedule A
Partner Contribution
-------------------------------- ---------------------------------------------------------------------------
Name Xxxxxxx
Xxxxx Xxxxx Xxxx 0000.000 Xxxxx'x 293.300 Miracle- 1628.430 Miracle-Xxx
Xxxxxxxx Port Washington, Miracle-Gro Gro Lawn Products Products Limited
NY 11050 Products Inc. Inc. Shares Shares
Shares
Xxxxxxxxx 000 Xxxxxx Xxx. 3536.052 Xxxxx'x 293.300 Miracle- 1628.430 Miracle-Xxx
Xxxxxxxx Upper Montclair, Miracle-Gro Gro Lawn Products Products Limited
Xxxxxxxxxxx XX 00000 Products Inc. Inc. Shares Shares
Shares
Xxxx 1750 Marlborough 3536.052 Xxxxx'x 293.300 Miracle- 1628.430 Miracle-Xxx
Xxxxxxxx Drive Miracle-Gro Gro Lawn Products Products Limited
Xxxxxxx, XX 00000 Products Inc. Inc. Shares Shares
Shares
Xxxxx 2702 Avenham 3536.052 Xxxxx'x 293.300 Miracle- 1628.430 Miracle-Xxx
Xxxxxxxx Ave. S.W. Miracle-Gro Gro Lawn Products Products Limited
Roanoke, VA Products Inc. Inc. Shares Shares
24014 Shares
Xxxxxx 0000 X. Xxxxxx 3536.052 Xxxxx'x 293.300 Miracle- 1628.430 Miracle-Xxx
Xxxxxxxx Way Miracle-Gro Gro Lawn Products Products Limited
Mercer Island, WA Products Inc. Inc. Shares Shares
98040 Shares
Xxxxx 0000 0xx Xxxxxx 3536.052 Xxxxx'x 293.300 Miracle- 1628.430 Miracle-Xxx
Xxxxxxxx Xxxxxxx, XX 00000 Miracle-Gro Gro Lawn Products Products Limited
Products Inc. Inc. Shares Shares
Shares
Community Two Park Avenue 17,186 Scotts 977,786 Scotts
Funds, Inc. New York, NY Convertible Series A Warrants,
10016 Preferred Shares 977,786 Scotts
Series B Warrants,
977,786 Scotts
Series C Warrants
Allocation
------------------------------------------------------------------------------------------------------------------
General Limited
Interest Partnership Partnership
Name Class Units Units Total
------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxxx A 17 1375 1392
Xxxxxxxxx Xxxxxxxx Xxxxxxxxxxx B 17 1375 1392
Xxxx Xxxxxxxx C 17 1375 1392
Xxxxx Xxxxxxxx D 17 1375 1392
Xxxxxx Xxxxxxxx E 17 1375 1392
Xxxxx Xxxxxxxx F 17 1375 1392
Commnity Funds, Inc. G -- 1,000 1,000
29
Schedule B
--------------------------------------------------------------------------------
Partners Capital Capital Account Partnership
Contribution Book Units
--------------------------------------------------------------------------------
Xxxxx Xxxxxxxx $31,225,000 $29,995,000 17 A General,
1323 A Limited
Xxxxxxxxx Xxxxxxxx
Xxxxxxxxxxx $31,225,000 $31,225,000 17 B General
1375 B Limited
Xxxx Xxxxxxxx $31,225,000 $31,225,000 17 C General
1375 C Limited
Xxxxx Xxxxxxxx $31,225,000 $31,225,000 17 D General
1375 D Limited
Xxxxxx Xxxxxxxx $31,225,000 $31,225,000 17 E General
1375 E Limited
Xxxxx Xxxxxxxx $31,225,000 $31,225,000 17 F General
1375 F Limited
Xxxxxxxxx Xxxxxxxx -- $410,000 17- 1/3 A Limited
Xxxxxxxxxxx Xxxxxxxx -- $410,000 00- 0/0 X Xxxxxxx
Xxxxxxxx Xxxxxxxx -- $410,000 17- 1/3 A Limited
Community Funds, Inc $47,000,000 $47,000,000 1000 G Limited
30
