Exhibit 10.1
EASY GARDENER PRODUCTS, LTD.
(A Texas Limited Partnership)
LIMITED PARTNERSHIP AGREEMENT
THESE PARTNERSHIP INTERESTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR
PURSUANT TO THE PROVISIONS OF ANY STATE SECURITIES ACT
CERTAIN RESTRICTIONS ON TRANSFERS OF INTERESTS
ARE SET FORTH HEREIN
TABLE OF CONTENTS
EASY GARDENER PRODUCTS, LTD.
LIMITED PARTNERSHIP AGREEMENT
This Limited Partnership Agreement of EASY GARDENER PRODUCTS, LTD.
dated effective as of the ____ day of __________, 2002, is made and entered into
by and among EG Product Management, L.L.C., a Texas limited liability company,
as General Partner and EG, L.L.C., a Nevada limited liability company, as
Limited Partner.
WHEREAS, the parties hereto desire to enter into this Limited
Partnership Agreement and to form a limited partnership under the laws of the
State of Texas.
NOW, THEREFORE, in consideration of the mutual promises made herein,
the parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1
Definitions
The definitions used in this Agreement shall, unless the context
otherwise requires, have the meanings specified in this Article 1.
1. "Act" means the Texas Revised Limited Partnership Act, as amended
from time to time.
2. "Additional Capital Contribution" means, as to any Partner, any
amount contributed, required to be contributed or deemed to be contributed to
the capital of the Partnership by the Partner pursuant to Section 3.2.
3. "Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(a) Credit to such Capital Account any amounts which such
Partner is deemed to be obligated to restore pursuant to Treasury
Regulations Section 1.704- 1(b)(2)(ii)(c), 1.704-2(g)(1) and
1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account Deficit" is
intended to comply with the provisions of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and 1.704-2, and shall be interpreted consistently
therewith.
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4. "Agreement" means this Limited Partnership Agreement of EASY
GARDENER PRODUCTS, LTD.
5. "Available Funds" means Partnership cash on hand, as of the date of
the computation, including (without limitation) cash derived from Capital
Contributions of the Partners made pursuant to the terms of this Agreement and
all Partnership operating income.
6. "Book Value" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except (a) the initial Book Value of any
asset contributed by a Partner to the Partnership shall be the fair market value
of such asset, as determined by the General Partner; (b) the Book Value of all
Partnership assets shall be adjusted in the event of a revaluation as provided
in Section 3.6(d); (c) the Book Value of any Partnership asset distributed to
any Partner shall be the fair market value of such asset on the date of
distribution as determined by the General Partner; and (d) such Book Value shall
be adjusted by the Depreciation taken into account with respect to such asset
for purposes of computing Profits and Losses.
7. "Capital Account" means with respect to any Partner, the account
maintained for such Partner in a manner which the General Partner determines is
in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv).
8. "Capital Contributions" means the total of all capital contributions
of the Partners pursuant to Sections 3.1 and 3.2, including, but not limited to,
the Initial Capital Contribution and the Additional Capital Contributions.
9. "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
10. "Depreciation" means, for each Fiscal Year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Book Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such year or other period (as a result of
property contributions or adjustments to such values), Depreciation shall be
adjusted as necessary so as to be an amount which bears the same ratio to such
beginning Book Value as the federal income tax depreciation, amortization, or
other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization, or other cost recovery deduction for such year or
other period is zero, Depreciation for such year or other period shall be
determined with reference to such beginning Book Value using any reasonable
method selected by the General Partner.
11. "Distributable Cash Flow" means cash available to the Partnership
from any source (other than proceeds of liquidation) after (i) paying the
ordinary and necessary expenses of the Partnership, (ii) paying any debts or
liabilities of the Partnership to the extent required under any agreement with
any lender or creditor (other than a Partner) and (iii) establishing
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reserves to meet current or reasonably expected obligations of the Partnership
to the extent that the General Partner shall determine such reserves to be
necessary or advisable.
12. "Fiscal Year" means the fiscal year of the Partnership as
established in Section 8.2 hereof.
13. "General Partner" means EG Product Management, L.L.C., a Texas
limited liability company, or any successor in such capacity.
14. "Initial Capital Contribution" means, as to any Partner, any amount
contributed or required to be contributed to the capital of the Partnership by a
Partner pursuant to Section 3.1.
15. "Limited Partner" or "Limited Partners" means EG, L.L.C., a
Nevada limited liability company, or any successor or successors to all or part
of any such interest, or any additional limited partner of the Partnership, each
in the capacity as a limited partner of the Partnership.
16. "Majority in Interest" means with respect to any referenced group
of Partners, a combination of any such Partners who, in the aggregate, own more
than fifty percent (50%) of the aggregate of the Sharing Ratios of such
Partners.
17. "Minimum Gain" means, with respect to all nonrecourse liabilities
of the Partnership, the minimum amount of gain that would be realized by the
Partnership if the Partnership disposed of the Partnership property subject to
such liability in full satisfaction thereof computed in accordance with Treasury
Regulations Section 1.704-2(d).
18. "Minimum Gain Share" means, for each Partner, such Partner's share
of Minimum Gain for the Fiscal Year (after taking into account any decrease in
Minimum Gain for such year), such share to be determined under Treasury
Regulations Section 1.704-2(g).
19. "Nonrecourse Deductions" means, for each Fiscal Year or other
period, an amount of Partnership deductions that are characterized as
"nonrecourse deductions" under Treasury Regulations Section 1.704-2(c).
20. "Officer" means any person appointed by the General Partner to
serve as an officer of the Partnership in accordance with Article 7.
21. "Partner" means the General Partner or one of the Limited Partners,
and "Partners" means such partners collectively.
22. "Partner Nonrecourse Debt" means any nonrecourse debt (as defined
in Treasury Regulations Section 1.704-2(b)(4)) of the Partnership for which any
Partner bears the economic risk of loss, in accordance with Treasury Regulations
Sections 1.704-2(b)(4) and 1.752-2.
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23. "Partner Nonrecourse Debt Minimum Gain" means, for each Partner,
the amount of Minimum Gain for the Fiscal Year or other period attributable to
such Partner's Partner Nonrecourse Debt, determined in accordance with Treasury
Regulations Section 1.704-2(i)(3).
24. "Partner Nonrecourse Deductions" means any Losses or other losses
or deductions of the Partnership that must be allocated to a Partner who bears
the economic risk of loss for the partner nonrecourse liability to which the
Losses or other losses or other deductions relate, determined in accordance with
Treasury Regulations Section 1.704-2(i)(1).
25. "Partnership" means the Texas limited partnership formed pursuant
to this Agreement.
26. "Partnership Interest" means, with respect to any Partner, all of
such Partner's ownership interest as a limited partner or general partner in the
Partnership.
27. "Profits" and "Losses" means, for each Fiscal Year or other period,
an amount equal to the Partnership's taxable income or loss for such year or
period, determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(a) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Profits or
Losses pursuant to this definition shall be added to such taxable
income or loss;
(b) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing
Profits or Losses pursuant to this definition, shall be subtracted from
such taxable income or loss;
(c) Gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Book Value of
the property disposed of, notwithstanding that the adjusted tax basis
of such property differs from such Book Value;
(d) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation for such Fiscal
Year or other period, computed in accordance with the definition of
"Depreciation" herein; and
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(e) Notwithstanding any other provision of this definition,
any items which are specifically allocated pursuant to Section 5.2(c)
shall not be taken into account in computing Profits and Losses.
28. "Sharing Ratio" means the percentage of ownership interest of a
Partner in the Partnership at any particular time.
29. "Treasury Regulations" means the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
ARTICLE 2
Organization
Section 2.1. Formation
The parties hereto hereby form a Texas limited partnership under and
pursuant to the provisions of the Act.
Section 2.2. Name, Place of Business and Office
(a) The Partnership shall be conducted under the name and style of
EASY GARDENER PRODUCTS, LTD., although such business may be conducted under
any other name to the extent required by local law. The Partnership shall
maintain its principal office at the following address: 0000 Xxxxxxxx Xxxxxx,
Xxxx, Xxxxx 00000. The General Partner may at any time change the location of
the Partnership's office and may establish additional offices, if it deems it
advisable. The General Partner shall promptly give the Partners written notice
of any change in location of the principal office of the Partnership.
(b) Xxxxxx Xxxxx shall serve as agent for service of process on the
Partnership. The General Partner shall timely record an appropriate certificate
of limited partnership in the proper records in the State of Texas and shall
take such steps as are necessary to qualify the Partnership to conduct business
in other states, as required by local law.
Section 2.3. Purposes and Character of Business; Power
(a) The purposes and character of the business of the Partnership are
to transact any or all lawful business for which a partnership may be organized
under the Act, including but not limited to:
(1) to acquire, own, maintain, develop, operate, sell, or
dispose of lawn and garden products manufacturing and distribution
business;
(2) to own and operate any kind of business;
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(3) to obtain financing for the operations of the
Partnership's business or for the acquisition of real or personal
property in accordance with the terms of this Agreement;
(4) to sell, exchange, lease, sublease, exchange, transfer or
otherwise dispose of all or any portion of any real personal property;
(5) to hold, manage and operate all or any portion of the
business assets;
(6) to form subsidiary corporations, partnerships, joint
ventures or limited liability companies in connection with any of the
foregoing activities; and
(7) to do any and all things necessary or desirable to carry
out the foregoing activities and any other activity contemplated by
this Agreement.
(b) The Partnership shall have any and all powers which are necessary
or desirable to carry out the purposes and business of the Partnership. The
Partnership shall carry out the foregoing activities pursuant to the
arrangements set forth in this Agreement. The Partnership shall not engage in
any other business or activity.
Section 2.4. Term
The Partnership term shall commence on the effective date of this
Agreement and shall continue in full force and effect until December 31, 2052,
unless dissolved earlier pursuant to the provisions hereof.
ARTICLE 3
Partnership Capital
Section 3.1. Initial Capital Contributions of the Partners
Each of the Partners shall contribute cash or other property to the
Partnership in the amount set forth as the Initial Capital Contribution of such
Partner on Schedule 1 attached hereto and hereby made a part hereof. Such cash
and property shall be the Initial Capital Contributions of the Partners to the
Partnership.
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Section 3.2. Additional Capital Contributions of the Partners
(a) If the General Partner reasonably determines that Available Funds
are insufficient to satisfy projected needs of the Partnership, then in addition
to the Initial Capital Contribution of the Partners required to be made pursuant
to Section 3.1, the General Partner may require that the Partners make one or
more additional capital contributions to the Partnership. Each Partner shall
make an Additional Capital Contribution to the Partnership within ten (10) days
following receipt of the demand therefor by the General Partner, pro rata in
accordance with their respective Sharing Ratios.
(b) If any Partner makes a payment directly to a creditor or another
Partner in satisfaction of any indebtedness of the Partnership or any indemnity,
guaranty or contribution obligation of such partner in respect of Partnership
indebtedness, or if any collateral interest granted by such Partner to such
creditor or other Partner to secure any such indebtedness shall be foreclosed
and the proceeds of such foreclosure shall be applied to reduce or satisfy such
indebtedness and any foreclosure-related expenses, such Partner shall be deemed
to have made a permitted Additional Capital Contribution equal to such amount
and shall receive a credit to its Capital Account in the amount thereof.
Section 3.3. Partnership Capital
(a) Except as may be otherwise specifically provided in this Agreement,
no Partner shall be paid interest on any Capital Contribution to the
Partnership.
(b) No Partner shall have the right to withdraw all or any part of its
Capital Contribution or to receive any return on any portion of its Capital
Contribution, except as may be otherwise specifically provided in this
Agreement.
(c) Under circumstances involving a return of any Capital Contribution,
no Partner shall have the right to receive property other than cash.
Section 3.4. Liability of Partners
(a) No Limited Partner shall be liable for the debts, liabilities,
contracts or any other obligation of the Partnership, except to the extent
expressly provided herein or in the Act. No Partner shall be liable for the
debts or liabilities of any other Partner.
(b) No Partner shall be required to contribute to the capital of, or
loan, the Partnership any funds other than as expressly required in this
Agreement.
(c) The General Partner shall not be liable for the return of all or
any portion of the Capital Contributions of any Partner.
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Section 3.5. Loans by Partners
Subject to obtaining any approvals required under this Agreement for
the Partnership to borrow funds, any Partner may (but shall not be obligated to)
at any time, upon obtaining the consent of the General Partner and a Majority in
Interest of the Limited Partners, loan money to the Partnership to finance
Partnership operations, to pay the debts and obligations of the Partnership, or
for any other Partnership purpose. If any Partner lends funds to the
Partnership, such Partner shall be entitled to receive interest on such loan at
an interest rate to be agreed upon by such Partner and each of the Partners.
Section 3.6. Capital Accounts
(a) A Capital Account shall be established and maintained for each
Partner.
(b) A Partner's Capital Account shall be credited with (i) the amount
of cash and the initial Book Value of any property contributed by such Partner
to the Partnership, (ii) such Partner's allocable share of Profits, income and
gain and (iii) the amount of any Partnership liabilities that are expressly
assumed by such Partner or that are secured by any Partnership property
distributed to such Partner.
(c) A Partner's Capital Account shall be debited with (i) the amount of
cash and the Book Value of any Partnership property distributed to such Partner
pursuant to any provision of this Agreement, (ii) such Partner's allocable share
of Losses, deductions and other losses and (iii) the amount of any liabilities
of such Partner that are expressly assumed by the Partnership or that are
secured by any property contributed by such Partner to the Partnership.
(d) Upon the occurrence of certain events (as described in Treasury
Regulations Sections 1.704-1(b)(2)(iv)(f), 1.704-1(b)(4) and 1.704-2), the
Partners may agree to increase or decrease the Capital Accounts of the Partners
to reflect a revaluation of Partnership property on the Partnership's books.
(e) The Capital Account of each Partner shall be determined after
giving effect to all transactions which have been effected prior to the time
when such determination is made giving rise to the allocation of Profits and
Losses and to all contributions and distributions theretofore made. Any person
who acquires a Partnership Interest directly from a Partner, or whose
Partnership Interest shall be increased by means of a transfer to it of all or
part of the interest of another Partner, shall have a Capital Account which
includes the Capital Account balance of the Partnership Interest so acquired or
transferred.
(f) In the event that any Partner makes a loan to the Partnership, such
loan shall not be considered a contribution to the capital of the Partnership
and shall not increase the Capital Account of the lending Partner. Repayment of
such loans shall not be deemed withdrawals from the capital of the Partnership.
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(g) Any fees, salary or similar compensation payable to a Partner
pursuant to this Agreement shall be deemed a guaranteed payment for federal
income tax purposes and not a distribution to such Partner for such purposes.
Such payments to a Partner shall not reduce the Capital Account of such Partner,
except to the extent of its distributive share of any Partnership Losses or
other downward capital adjustment resulting from such payment.
(h) From time to time the General Partner may make such modifications
to the manner in which the Capital Accounts are computed to comply with Treasury
Regulations Sections 1.704-1(b) and 1.704-2 provided that such modification is
not likely to have a material effect on the amounts distributable to any Partner
pursuant to this Agreement.
(i) The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted
and applied in a manner consistent with such Treasury Regulations.
(j) The General Partner shall be obligated to restore a deficit balance
in its Capital Account upon dissolution of the Partnership or upon liquidation
of its interest in the Partnership, whichever is earlier. No Limited Partner
shall be obligated to restore a deficit balance in its Capital Account.
Section 3.7. Sharing Ratios
The initial Sharing Ratio of each Partner is set forth opposite its
respective name on Schedule 1, attached hereto and hereby made a part hereof.
Section 3.8. No Right to Priority of Retur of Capital
Except as otherwise expressly provided herein, no Partner shall have
any priority over any other Partner as to the return of its contributions to
capital or as to compensation by way of income.
ARTICLE 4
Rights, Powers and Duties of the General Partner n
Section 4.1. Management and Control of the Partnership
The General Partner shall have all the rights, powers and obligations
of a general partner of a limited partnership under the Act. Except as otherwise
provided in Section 4.3, the General Partner shall have the right and obligation
to manage and control the business and affairs of the Partnership and to make
the following decisions on behalf of the Partnership:
(a) to own, manage, operate, sell, exchange, lease or otherwise
transfer the assets of the Partnership, whether or not in the ordinary course of
business;
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(b) to borrow money on behalf of the Partnership and to renew, extend,
modify, rearrange, increase or refinance Partnership borrowings from time to
time;
(c) to mortgage, pledge, assign, encumber or grant security interests
in Partnership assets, revenues and/or income;
(d) to institute, prosecute, defend and settle any legal, arbitration
or administrative actions or proceedings on behalf of or against the
Partnership;
(e) to acquire, lease, develop, hold, sell or improve any real or
personal property or any interest therein;
(f) to hire and terminate employees of the Partnership and engage the
services of attorneys, consultants, accountants and other independent
contractors;
(g) to appoint, elect, remove and supervise the activities of the
Officers of the Partnership and to designate appropriate compensation to be paid
to each such Officer during his or her term, of office;
(h) to collect all payments due and owing to the Partnership;
(i) to pay all expenses, debts and obligations of the Partnership, at
such time or times and from any source of funds of the Partnership as the
General Partner deems necessary or desirable;
(j) to execute and deliver such documents on behalf of the Partnership
as the General Partner may deem necessary or desirable for the Partnership's
purposes and business;
(k) to perform, or cause to be performed, all the Partnership's
obligations under any agreement (including without limitation any loan
documents) to which the Partnership or any nominee of the Partnership is a
party, except to the extent such obligations may be inconsistent with other
obligations of the General Partner under this Agreement;
(l) to obtain and maintain any and all types of insurance coverage on
the assets and business of the Partnership and to protect the General Partner
against liability from third parties in such amounts as the General Partner may
deem necessary or desirable;
(m) to pay all taxes, assessments, and other impositions applicable to
Partnership assets and undertake when appropriate any action or proceeding
seeking to reduce such taxes, assessments or other impositions;
(n) to determine the timing and amount of any distributions to the
Partners, except as otherwise provided for in this Agreement;
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(o) to open and maintain bank accounts for the deposit of Partnership
funds, with withdrawals to be made upon such signature or signatures as the
General Partner may designate;
(p) to make such elections as are necessary or desirable pursuant to
the Code;
(q) to act as "tax matters partner" for the Partnership in accordance
with the applicable provisions of the Code;
(r) to cause the management, operation and sale of the assets of the
Partnership, and all other Partnership activities, to be performed in accordance
with applicable laws; and
(s) to perform any and all acts, except as otherwise set forth in
Section 4.3, reasonably deemed by the General Partner as necessary or desirable
to conduct the business and affairs of the Partnership.
Section 4.2. Authority of the General Partner
Any person dealing with the Partnership or the General Partner may rely
upon a certificate signed by the General Partner, thereunto duly authorized,
concerning:
(a) the identity of the General Partner or any other Partner;
(b) the existence or nonexistence of any fact or facts that constitute
conditions precedent to acts by the General Partner or in any other manner
germane to the affairs of the Partnership;
(c) the person or persons who are authorized to execute and deliver any
instrument or document of the Partnership; or
(d) any act or failure to act by the Partnership or concerning any
other matter whatsoever involving the Partnership, or any Partner as it regards
Partnership business.
Section 4.3. Restrictions on the Authority of the General Partner
Notwithstanding anything to the contrary contained in Section 4.1,
without the consent of a Majority in Interest of the Limited Partners, the
General Partner shall not have the power or authority:
(a) to dissolve and wind up the Partnership;
(b) to admit one or more additional or substituted Partners;
(c) to do any act in contravention of this Agreement; or
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(d) to do any act that would make it impossible to carry out the
purposes and business of the Partnership, as set forth in Section 2.3.
Notwithstanding anything to the contrary contained herein, the General
Partner shall be prohibited from taking any action which would cause a third
party reasonably to believe that any Limited Partner is a general partner of the
Partnership.
Section 4.4. Reimbursement of Expenses and Compensatio of the General
Partner
(a) The General Partner may be paid compensation for its services
rendered in managing the business and affairs of the Partnership in an amount
agreed upon by the General Partner and a Majority in Interest of the Limited
Partners.
(b) Each Partner shall be entitled to reimbursement by the Partnership
from time to time for all reasonable out-of-pocket expenses which are incurred
by such Partner in connection with the business and affairs of the Partnership.
Section 4.5. Devotion of Time
The General Partner shall devote such time, services and efforts as may
be reasonably necessary for the proper furtherance, management, operation,
maintenance and care of the Partnership business and properties. The General
Partner shall not be required to devote its entire time to the business of the
Partnership.
Section 4.6. Indemnification of the General Partner an Officers
(a) To the fullest extent allowed by the Act and other applicable law,
as amended from time to time, the Partnership shall advance expenses to and
indemnify the General Partner and Officers.
(b) The scope of the indemnification provided in this Section shall not
be greater than that permitted pursuant to the provisions of Article 11 of the
Act, and such provisions of the Act are incorporated herein in their entirety.
The satisfaction of any indemnification under this Section shall be from and
limited to Partnership assets, including insurance proceeds, if any, and no
Limited Partner shall have any personal liability on account thereof.
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Section 4.7. Management by Limited Partners
The Limited Partners shall not participate in the management or
business of the Partnership, use its name in the Partnership's business or
perform any actions prohibited to limited partners under the laws of the State
of Texas or the laws of any other jurisdiction where the Partnership is
qualified to conduct business. The Limited Partners shall not have the power to
represent, act for, sign for or bind the General Partner or the Partnership.
Each Limited Partner hereby consents to the exercise by the General Partner of
the powers and authority conferred on the General Partner by this Agreement.
Section 4.8. Rights of Competition
Each Partner, in its individual capacity or otherwise, and their
respective principals and affiliates, shall be free to engage in conduct or
participate in any business or activity whatsoever without any accountability,
liability, or obligation whatsoever to the Partnership or to any other Partner.
Any competing business or activity of a Partner may be undertaken with or
without notice to or participation therein by any other Partner. Each Partner
and the Partnership hereby waive any right or claim it may have against each
other Partner with respect to any competing business or activity or the income
or profits therefrom.
Section 4.9. Transactions with Related Parties
The General Partner may agree, contract or arrange with itself or any
of its Affiliates in the name and on behalf of the Partnership, for the
performance of services for the Partnership, and the payment of compensation
therefor, in carrying out the business of the Partnership as if such parties
were independent contractors, provided that the compensation for such services
shall be (a) at rates comparable to the charges made to third parties for
rendering comparable services in the geographical area where such services are
performed and (b) paid only for actual services rendered to the Partnership.
ARTICLE 5
Distributions and Allocations
Section 5.1. Distributions
Distributions shall be made to the Partners, pro rata, at such times as
the General Partner shall determine, in accordance with such Partners'
respective Sharing Ratios, determined as of the date of distribution.
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Section 5.2. Allocations of Profits and Losses
(a) Profits. Except as provided in Sections 5.2(c) and 5.2(d), Profits
for any Fiscal Year will be allocated in the following order:
(1) First, to each Partner until the cumulative Profits
allocated to such Partner under this Section 5.2(a)(1) equals the
cumulative Losses allocated to such Partner under Section 5.2(b)(2) for
all prior periods; and
(2) The balance, if any, to the Partners in proportion to
their respective Sharing Ratios.
(b) Losses. Except as provided in Section 5.2(c) and 5.2(d), Losses for
any Fiscal Year will be allocated in the following order:
(1) First, to each Partner until the cumulative Losses
allocated to such Partner under this Section 5.2(b)(1) equals the
cumulative Profits allocated to such Partner under Section 5.2(a)(2)
for all prior periods; and
(2) The balance, if any, to the Partners in proportion to
their respective Sharing Ratios.
(c) Special Allocations. Except as otherwise provided in this
Agreement, the following special allocations will be made in the following order
and priority:
(1) Partnership Minimum Gain Chargeback. Notwithstanding any
other provision of this Section, if there is a net decrease in
Partnership Minimum Gain during any taxable year or other period for
which allocations are made, the Partners will be specially allocated
items of Partnership income and gain for that period (and, if
necessary, subsequent periods). The amount allocated to each Partner
under this Section 5.2(c)(1) shall be an amount equal to such Partner's
share of the net decrease in Partnership Minimum Gain during such year
or other period determined in accordance with Treasury Regulations
Section 1.704-2(g)(2). This Section 5.2(c)(1) is intended to comply
with the partnership minimum gain chargeback requirements of the
Treasury Regulations and the exceptions thereto and will be interpreted
consistently therewith.
(2) Partner Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any other provision of this Section (other than Section
5.2(c)(1) which shall be applied first), if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain during any taxable year or other
period for which allocations are made, any Partner with a share of such
Partner Nonrecourse Debt Minimum Gain attributable to such Partner
Nonrecourse Debt (determined under Treasury Regulations Section 1.704-
(2)(i)(5)) as of the beginning of the year shall be specially allocated
items of Partnership
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income and gain for that period (and, if necessary, subsequent periods)
in proportion to the portion of such Partner's share of the net
decrease in the Partner Nonrecourse Debt Minimum Gain with respect to
such Partner Nonrecourse Debt that is allocable to the disposition of
Partnership property subject to such Partner Nonrecourse Debt. The
items to be so allocated shall be determined in accordance with
Regulations Section 1.704-2(g). This Section is intended to comply with
the partner nonrecourse debt minimum gain chargeback requirements of
the Treasury Regulations and the exceptions thereto and shall be
interpreted consistently therewith.
(3) Qualified Income Offset. A Partner who unexpectedly
receives any adjustment, allocation or distribution described in
Treasury Regulations Sections 1.704- 1(b)(2)(ii)(d)(4), (5) or (6) will
be specially allocated items of Partnership income and gain in an
amount and manner sufficient to eliminate, to the extent required by
the Treasury Regulations, the Adjusted Capital Account Deficit of the
Partner as quickly as possible.
(4) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable year or other period for which allocations are made will be
allocated among the Partners in proportion to their respective Sharing
Ratios in the Partnership.
(5) Partner Nonrecourse Deductions. Notwithstanding anything
to the contrary in this Agreement, any Partner Nonrecourse Deductions
for any taxable year or other period for which allocations are made
will be allocated to the Partner who bears the economic risk of loss
with respect to the Partner Nonrecourse Debt to which the Partner
Nonrecourse Deductions are attributable in accordance with Treasury
Regulations Section 1.704-2(i).
(6) Code Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset under Code Sections
734(b) or 743(b) is required to be taken into account in determining
Capital Accounts under Treasury Regulations Section
1.704-1(b)(2)(iv)(m), the amount of the adjustment to the Capital
Accounts will be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
the basis), and the gain or loss will be specially allocated to the
Partners in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted under Treasury Regulations Section
1.704- 1(b)(2)(iv)(m).
(7) Depreciation Recapture. In the event there is any
recapture of Depreciation or investment tax credit, the allocation of
gain or income attributable to such recapture shall be shared by the
Partners in the same proportion as the deduction for such Depreciation
or investment tax credit was shared.
15
(8) Reallocation. To the extent Losses allocated to a Partner
would cause the Partner to have an Adjusted Capital Account Deficit at
the end of any Fiscal Year, the Losses will be reallocated to the
General Partner. If the General Partner receives an allocation of
Losses otherwise allocable to a Limited Partner in accordance with this
Section, the General Partner shall be allocated Profits in subsequent
Fiscal Years necessary to reverse the effect of such allocation of
Losses. Such allocation of Profits (if any) shall be made before any
allocations under Section 5.2(a) but after any other allocations under
Section 5.2(c).
(9) Interest in Partnership. Notwithstanding any other
provision of this Agreement, no allocation of Profit or Loss or item of
Profit or Loss will be made to a Partner if the allocation would not
have "economic effect" under Treasury Regulations Section
1.704-1(b)(2)(ii) or otherwise would not be in accordance with the
Partner's interest in the Partnership within the meaning of Treasury
Regulations Section 1.704- 1(b)(3) or 1.704-1(b)(4)(iv). The General
Partner will have the authority to reallocate any item in accordance
with this Section 5.2(c)(9).
(d) Curative Allocations. The allocations set forth in Sections
5.2(c)(1) through (9) (the "Regulatory Allocations") are intended to comply with
certain requirements of Treasury Regulations Section 1.704-1(b) and 1.704-2. The
Regulatory Allocations may not be consistent with the manner in which the
Partners intend to divide Partnership distributions. Accordingly, the General
Partner is authorized to further allocate Profits, Losses, and other items among
the Partners so as to prevent the Regulatory Allocations from distorting the
manner in which Partnership distributions would be divided among the Partners
under Sections 5.1 and 8.2 but for application of the Regulatory Allocations. In
general, the reallocation will be accomplished by specially allocating other
Profits, Losses and items of income, gain, loss and deduction, to the extent
they exist, among the Partners so that the net amount of the Regulatory
Allocations and the special allocations to each Partner is zero. The General
Partner will have discretion to accomplish this result in any reasonable manner
that is consistent with Code Section 704 and the related Treasury Regulations.
(e) Tax Allocations--Code Section 704(c). In accordance with Code
Section 704(c) and the related Treasury Regulations, income, gain, loss and
deduction with respect to any property contributed to the capital of the
Partnership, solely for tax purposes, will be allocated among the Partners so as
to take account of any variation between the adjusted basis to the Partnership
of the property for federal income tax purposes and the initial Book Value. If
the Book Value of any Partnership asset is adjusted, subsequent allocations of
income, gain, loss and deduction with respect to that asset will take account of
any variation between the adjusted basis of the asset for federal income tax
purposes and its Book Value in the same manner as under Code Section 704(c) and
the related Treasury Regulations. Any elections or other decisions relating to
allocations under this Section 5.2(e) will be made in any manner that the
General Partner determines reasonably reflects the purpose and intention of this
Agreement. Allocations under this Section are solely for purposes of federal,
state and local taxes and will not affect, or
16
in any way be taken into account in computing, any Partner's Capital Account or
share of Profits, Losses or other items or distributions under any provision of
this Agreement.
(f) Other Allocation Rules. The following rules will apply to the
calculation and allocation of Profits, Losses and other items:
(1) Except as otherwise provided in the Agreement, all
Profits, Losses and other items allocated to the Partners will be
allocated among them in proportion to their Sharing Ratios.
(2) For purposes of determining the Profits, Losses or any
other item allocable to any period, Profits, Losses and other items
will be determined on a daily, monthly or other basis, as determined by
the General Partner using any permissible method under Code Section 706
and the related Treasury Regulations.
(3) Except as otherwise provided in this Agreement, all items
of Partnership income, gain, loss, deduction, credit and other
allocations not provided for in this Agreement will be divided among
the Partners in the same proportions as they share Profits and Losses.
(g) Partner Acknowledgment. The Partners agree to be bound by the
provisions of this Section in reporting their shares of Partnership income and
loss for income tax purposes.
Section 5.3. Compliance with Code
The foregoing provisions of this Article relating to the allocation of
Profits, Losses and other items for federal income tax purposes are intended to
comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
Notwithstanding anything to the contrary, nothing in this Article shall apply if
it lacks "economic effect."
Section 5.4. Allocations upon Transfer of Partnership Interest
Profits or Losses attributable to any Partnership Interest which has
been transferred during any Partnership Fiscal Year shall be allocated between
the transferor and the transferee as follows:
(a) For the days in such Fiscal Year prior to and including the date of
the transfer, to the transferor.
(b) For the days in such Fiscal Year subsequent to the date of the
transfer, to the transferee.
17
ARTICLE 6
Transferability of Partner's Interest
Section 6.1. Restrictions on Transfer of Interest of a Partner
(a) Except as permitted by this Article 6, no Partner shall withdraw or
retire from the Partnership, substitute any person in its stead or sell,
exchange, transfer, give, assign, pledge, hypothecate, mortgage or dispose of
all or any portion of its Partnership Interest. Any such prohibited withdrawal,
sale, exchange, transfer, gift, assignment, pledge, hypothecation, mortgage or
disposition shall be void.
(b) Notwithstanding anything to the contrary contained herein, unless
all of the Partners shall consent, no Partner may sell, transfer or assign all
or any portion of its Partnership Interest if such sale, transfer or assignment:
(1) when added to the total of all other sales, transfers or
assignments of Partnership Interests within the preceding twelve (12)
months, would result in the Partnership being considered to have
terminated within the meaning of Code Section 708;
(2) would otherwise cause the Partnership to lose its status
as a partnership for federal income tax purposes; or
(3) would violate any federal securities laws or any
applicable state securities laws (including suitability standards).
Section 6.2. Assignees
(a) The Partnership shall not recognize for any purpose any purported
sale, assignment or transfer of all or any fraction of the interest of a Partner
unless the provisions of this Article 6 have been satisfied, all costs of such
assignment have been paid by the assigning Partner, such sale, assignment or
transfer is exempt from registration under the Securities Act of 1933, as
amended, applicable Texas securities laws, and the securities act of any other
state and there is delivered to the General Partner, if requested by the General
Partner, an opinion of counsel reasonably satisfactory to the General Partner
with respect thereto, and there is filed with the Partnership a written and
dated notification of such sale, assignment or transfer, in form satisfactory to
the General Partner, executed by both the seller, assignor or transferor and the
purchaser, assignee or transferee and such notification (1) contains the
acceptance by the purchaser, assignee or transferee of and agreement to be bound
by all the terms and provisions of this Agreement and (2) represents that such
sale, assignment or transfer was made in accordance with all applicable
securities laws and regulations (including suitability standards). Any sale,
assignment or transfer shall be recognized by the Partnership as effective on
the date of such notification if the date of such notification is within fifteen
(15) days of the date on which such
18
notification is filed with the Partnership, and otherwise shall be recognized as
effective on the date such notification is filed with the Partnership.
(b) Any Partner who assigns all its interest in the Partnership shall
cease to be a Partner, except that, unless and until a substituted Partner has
been admitted into the Partnership, such assigning Partner shall retain the
statutory rights of the assignor of a partner's interest under the Act.
(c) A person who is the assignee of all or any fraction of the interest
of a Partner, but does not become a substituted Partner, and desires to make a
further assignment of such interest, shall be subject to all the provisions of
this Article to the same extent and in the same manner as any Partner desiring
to make an assignment of its interest.
Section 6.3. Substituted Partners
(a) No Partner shall have the right to substitute in its place a
purchaser, assignee, transferee, donee, heir, legatee or other recipient of all
or any portion of the Partnership Interest of such Partner. Any such purchaser,
assignee, transferee, donee, legatee, distributee or other recipient of an
interest shall be admitted to the Partnership as a substituted Partner only with
the consent of each of the Partners, which consent may be granted or withheld by
any Partner in it sole discretion.
(b) No person shall become a substituted Partner until such person has
satisfied the requirements of this Article 6; provided, however, that for the
purpose of allocating Profits, Losses and other items and distributing cash
available for distribution, a person shall be treated as having become, and as
appearing in the records of the Partnership as, a Partner, as the case may be,
on such date as the sale, assignment or transfer to such person was recognized
by the Partnership pursuant to Section 6.3.
ARTICLE 7
Officers
Section 7.1. Number
The principal Officers of the Partnership shall consist of any or all
of the following: the President and Chief Executive Officer, Treasurer, one or
more Vice Presidents and the Secretary, and such other Officers and agents as
may be deemed necessary and elected or appointed by the General Partner, at such
time and in such manner and for such terms as the General Partner may prescribe.
Any two or more offices may be held by the same person.
19
Section 7.2. General Duties
All Officers and agents of the Partnership, as between themselves and
the Partnership, shall have such authority, perform such duties and manage the
Partnership as may be provided in this Agreement or as may be determined by the
General Partner not inconsistent with this Agreement.
Section 7.3. Election, Term of Office and Qualifications
The Officers shall be chosen by the General Partner. Each Officer shall
hold office until a successor is chosen and qualified or until the death,
resignation, or removal of such Officer.
Section 7.4. Removal
Any Officer or agent appointed by the General Partner may be removed
(with or without cause) by the General Partner whenever in its sole judgment the
best interests of the Partnership will be served by such removal.
Section 7.5. Resignation
Any Officer may resign at any time by giving written notice to the
General Partner, the President and Chief Executive Officer, the President or the
Secretary. Such resignation shall take effect at the time specified in the
notice, and, unless otherwise specified in the notice, the acceptance of such
resignation shall not be necessary to make it effective. Such resignation shall
be without prejudice to the contract rights, if any, of the Partnership.
Section 7.6. Vacancies
Any vacancy in any office because of death, resignation, removal or any
other cause shall be filled for the unexpired portion of the term in the manner
prescribed in this Agreement for election or appointment to such office.
Section 7.7. The President and Chief Executive Officer
The President and Chief Executive Officer shall have active, executive
management of the business and operations of the Partnership, subject, however,
to the control of the General Partner. The President and Chief Executive Officer
shall, in general, perform all duties incident to the offices of President and
Chief Executive Officer and such other duties as from time to time may be
assigned by the General Partner.
20
Section 7.8. The Vice Presidents
Each Vice President shall have such powers and perform such duties as
the General Partner may from time to time prescribe or as the President and
Chief Executive Officer may from time to time delegate to such officer. At the
request of the President and Chief Executive Officer, any Vice President may
temporarily act in place of the President. In the case of the death, absence, or
inability to act of the President, the General Partner may designate any Vice
President to perform the duties of the President. The General Partner may
appoint different types of vice presidents with different day-to-day management
responsibility over the operations of the Partnership, including but not limited
to the power to employ persons to accomplish the purposes of the Partnership.
Section 7.9. The Secretary
The Secretary shall keep or cause to be kept in books provided for that
purpose, minutes of the meetings of the Partners; shall see that all notices are
duly given in accordance with the provisions of this Agreement and as required
by law; shall be custodian of the records and, in general, shall perform all
duties incident to the office of the secretary and such other duties as may from
time to time be assigned by the General Partner or the President and Chief
Executive Officer.
Section 7.10. The Treasurer
The Treasurer shall be the principal financial officer of the
Partnership; shall have charge and custody of and be responsible for all funds
of the Partnership and deposit all such funds in the name of the Partnership in
such banks, trust companies or other depositories as shall be selected by the
General Partner; shall receive and give receipts for moneys due and payable to
the Partnership from any source; and, in general, shall perform all the duties
incident to the office of treasurer and such other duties as from time to time
may be assigned by the General Partner, the President and Chief Executive
officer. The Treasurer shall render to the President and Chief Executive Officer
and the General Partner, whenever the same shall be required, an account of all
transactions accomplished as Treasurer and of the financial condition of the
Company. The Treasurer shall, if required to do so by the General Partner, give
the Partnership a bond in such amount and with such surety or sureties as may be
ordered by the General Partner, for the faithful performance of the duties of
office and for the restoration to the Partnership, in the case of death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind belonging to the Partnership which are
held or controlled by the Treasurer.
Section 7.11. Indemnification
The Officers shall be indemnified by the Partnership to the extent and
in the manner described in Section 4.6.
21
ARTICLE 8
Books and Records; Accounting; Reporting; Tax Elections; Etc.
Section 8.1. Books and Records
The books and records of the Partnership shall be maintained by the
General Partner or the Secretary at the principal office of the Partnership and
shall be available for examination at such office by any Partner or its duly
authorized representatives during regular business hours. Any Partner, at its
own expense, may cause an audit of the books and records of the Partnership
during regular business hours and shall furnish a written report thereof to the
other Partners.
Section 8.2. Accounting Basis for Tax Reporting Purposes; Fiscal Year
The books and records of the Partnership shall be kept on such method
of reporting for tax and financial reporting purposes as the General Partner
shall select. The Fiscal Year of the Partnership shall be the calendar year.
Section 8.3. Reports
Within seventy-five (75) days after the end of each Fiscal Year, the
General Partner shall cause the Partnership to send to each Partner a copy of
each federal income tax return of the Partnership for the Fiscal Year that
ended, together with such other tax information as shall be necessary for the
preparation by each Partner of its federal and state income tax return.
ARTICLE 9
Dissolution, Liquidation and Termination of the Partnership
Section 9.1. Events Causing Dissolution
(a) The Partnership shall be dissolved upon the happening of any of the
following events:
(1) the expiration of its term;
(2) the entry of a final judgment, order or decree of a court
of competent jurisdiction adjudicating the Partnership or the General
Partner to be bankrupt, and the expiration without appeal of the
period, if any, allowed by applicable law in which to appeal therefrom;
22
(3) the sale, condemnation or other disposition of all or
substantially all of the Property;
(4) the election to dissolve the Partnership by all of the
Partners; or
(5) the entry of a decree of judicial dissolution under the
Act.
(b) Dissolution of the Partnership shall be effective as of the day on
which the event occurs giving rise to the dissolution, but the Partnership shall
not terminate until there has been a winding up of the Partnership's business
and affairs, and the assets of the Partnership have been distributed as provided
in Section 9.2.
(c) Notwithstanding anything in Section 9.1(a), if a dissolution of the
Partnership would otherwise occur due to the occurrence of an event of
dissolution under Section 9.1(a)(2), the Partnership may be reconstituted if
either (i) there remains at least one General Partner and such remaining General
Partner or General Partners elect to continue the business of the Partnership or
(ii) within ninety (90) days of such event of dissolution all remaining Partners
agree in writing to continue the business of the Partnership and, to the extent
they desire, or if there is no remaining General Partner, the Limited Partners
agree to the appointment, effective as of the date of such event of dissolution
of one or more new General Partners.
Section 9.2. Liquidation; Sale of Substantially all of the Assets
(a) Upon dissolution of the Partnership, the General Partner may cause
any part or all of the Partnership assets to be sold in such manner as the
General Partner shall reasonably determine in an effort to obtain the best
prices for such assets (provided, however, that the General Partner may
distribute Partnership assets in kind to the Partners to the extent
practicable). During the liquidation period, the General Partner shall have the
right to continue to operate and otherwise to deal with Partnership property to
the same extent the General Partner has such right prior to dissolution of the
Partnership. In the event that the sole remaining General Partner has dissolved,
withdrawn or becomes bankrupt or legally incapacitated, the Limited Partner may,
within 30 days after any such occurrence, appoint a person to perform the
functions of the General Partner in liquidating the assets of the Partnership
and winding up its affairs.
(b) In settling accounts after dissolution, the assets of the
Partnership shall be paid or distributed in the following order:
(1) to third party creditors, in the order of priority as
provided by law;
(2) then, to the Partners for any unreimbursed costs and
expenses owing to the Partners pursuant to this Agreement;
23
(3) then, to the repayment of any loans, with interest, made
by any Partner to the Partnership, and if more than one Partner has any
outstanding loans owing from the Partnership, such repayment shall be
made, pro rata, in accordance with the total amount outstanding to each
Partner;
(4) then, an amount equal to the then remaining positive
balances in the Capital Accounts of the Partners shall be distributed
to the Partners in proportion to the amount of such balances; and
(5) then, any remainder shall be distributed to the Partners,
pro rata, in accordance with their respective Sharing Ratios.
Section 9.3. Distributions in Kind
If any assets of the Partnership are distributed in kind pursuant to
this Agreement, such assets shall be distributed to the Partners entitled
thereto as tenants-in-common in the same proportions as the Partners would have
been entitled to cash distributions if such property had been sold for cash at
its fair market value and the net proceeds thereof distributed to the Partners.
In the event that distributions in kind are made to the Partners upon
dissolution and liquidation of the Partnership, the Capital Account balances of
such Partners shall be adjusted to reflect the Partners' allocable share of gain
or loss which would have resulted if the distributed property had been sold at
its fair market value.
ARTICLE 10
Power of Attorney
Section 10.1. Appointment of the General Partner as Attorney-in-Fact
(a) Each Limited Partner, by its execution of this Agreement,
irrevocably constitutes and appoints the General Partner, its true and lawful
agent and attorney-in-fact with full power and authority in its name, place and
stead to execute, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents, instruments and conveyances that may
be necessary or appropriate to carry out the provisions or purposes of this
Agreement, including without limitation:
(1) all certificates and other instruments, including, but not
limited to, counterparts of this Agreement, and any amendment thereof
that the General Partner deems appropriate to qualify or continue the
Partnership as a partnership or a partnership in which the Limited
Partner will have limited liability comparable to that provided by the
Act, in the jurisdictions in which the Partnership may conduct
business;
24
(2) any amendment, supplement or restatement of this Agreement
approved by the Partners in accordance with Section 11.12;
(3) any amendment to this Agreement to reflect the withdrawal,
addition or substitution of a Partner other than the General Partner
pursuant to this Agreement;
(4) all instruments that the General Partner deems appropriate
to reflect a change or modification of the Partnership in accordance
with the terms of this Agreement; and
(5) all conveyances and other instruments that the General
Partner deems appropriate to reflect the dissolution and termination of
the Partnership.
(b) The appointment of the General Partner by the Limited Partners as
agent and attorney-in-fact shall be deemed irrevocable and to be a power coupled
with an interest and shall survive the legal incapacity of any person hereby
giving such power and the transfer or assignment of all or any part of the
Partnership Interest of such person; provided, however, that in the event of the
transfer by a Limited Partner of all its interest, the foregoing power of
attorney shall survive such transfer only until such time as the transferee
shall have been admitted to the Partnership as a limited partner, and all
required documents and instruments shall have been duly executed, filed and
recorded to effect such substitution.
ARTICLE 11
Miscellaneous Provisions
Section 11.1. Address for Notices
All notices, demands, consents and reports provided for in this
Agreement shall be in writing and shall be given to the parties at the addresses
set forth herein or at such other addresses as the Partner may hereafter specify
in writing. Such notices may be delivered by hand or by telex, telegram or
telecopy, or may be mailed, postage prepaid, by certified or registered mail, by
a deposit in a depository for the receipt of mail regularly maintained by the
United States Postal Service. All notices which are hand delivered or delivered
by telex, telegram or telecopy shall be deemed given on the date of delivery.
All notices which are mailed in the manner provided above shall be deemed given
three (3) days after being mailed.
Section 11.2. Additional Documents and Acts
In connection with this Agreement, as well as all transactions
contemplated by this Agreement, the Partners agree to execute such additional
documents and papers, and to perform and do such additional acts as may be
necessary and proper to effectuate and carry out all of the provisions of this
Agreement.
25
Section 11.3. Assumed Name
The Partners shall execute and file all assumed name certificates
required by applicable law.
Section 11.4. Qualification in Foreign Jurisdictions
The Partners shall take such steps as are necessary or desirable to
allow the Partnership to conduct business in any jurisdiction where the
Partnership desires to conduct business.
Section 11.5. Applicable Law
This Agreement and the rights of the Partners shall be governed by and
construed in accordance with the laws of the State of Texas, without giving
effect to conflict of law principles. With respect to all matters not expressly
provided for in this Agreement, the Act and other applicable partnership laws of
the State of Texas shall apply and control. In the event that any provision in
this Agreement conflicts with the Act, such provision in this Agreement shall
control and govern to the extent permitted by applicable law.
Section 11.6. Waiver of Action for Partition by Partners
Each Partner irrevocably waives during the term of the Partnership any
right which it may have to maintain any action for partition with respect to any
asset of the Partnership.
Section 11.7. Creditors Not Benefitted
Nothing in this Agreement is intended to nor shall it benefit any
creditor of the Partnership. No creditor of the Partnership will be entitled to
require the General Partner to solicit or accept any loan or Additional Capital
Contribution for the Partnership or to enforce any right which the Partnership
or any Partner may have against a Partner, whether arising under this Agreement
or otherwise.
Section 11.8. Numbers and Gender
Where the context so indicates, the masculine shall include feminine
and neuter, and the neuter shall include the masculine and feminine, the
singular shall include the plural and any reference to a "person" shall mean a
natural person or a corporation, association, partnership, joint venture,
estate, trust or any other entity.
26
Section 11.9. Binding Effect
Except as herein otherwise provided to the contrary, this Agreement
shall be binding upon and inure to the benefit of the Partners, their
distributees, heirs, legal representatives, executors, administrators,
successors and assigns.
Section 11.10. Entire Agreement
This Agreement constitutes all of the understandings and agreements of
whatsoever kind and nature existing between the Partners with respect to the
subject matter contained herein and supersedes all prior agreements and
undertakings with respect thereto.
Section 11.11. Place of Performance
The obligations of the parties hereto are performable in McLennan
County, Texas.
Section 11.12. Amendment
Except as otherwise expressly set forth in this Agreement, this
Agreement may be amended, supplemented or restated only by a written agreement
executed by each of the Partners; provided, however, that the General Partner
may amend the Agreement to reflect the admission of new Limited Partners
pursuant to Section 6.3 without the consent of any other Partner.
Section 11.13. Severability
If any term or provision of this Agreement or the application thereof
to any person or circumstances shall, to any extent, be deemed invalid or
unenforceable, the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and shall be valid and
enforced to the fullest extent permitted by applicable law.
Section 11.14. Sections
Unless the context requires otherwise, all references in this Agreement
to Sections or Articles shall be deemed to mean and refer to Sections or
Articles of this Agreement.
Section 11.15. Captions
The titles and captions contained herein are for convenience only and
shall not be deemed part of the context of this Agreement.
27
Section 11.16. No Waiver
No waiver, express or implied, by any Partner of any breach or default
by any other Partner in the performance by the other Partner of its obligations
hereunder shall be deemed or construed to be a waiver of any other breach or
default under this Agreement. Failure on the part of any Partner to complain of
any act or omission of any other Partner, or to declare such other Partner in
default irrespective of how long such failure continues, shall not constitute a
waiver hereunder. No notice to or demand on a defaulting Partner shall entitle
such defaulting Partner to any other or further notice or demand in similar or
other circumstances.
Section 11.17. Additional Remedies
Unless the context requires otherwise, the rights and remedies of the
Partners hereunder shall not be mutually exclusive so that the exercise of one
or more of the provisions hereof shall not preclude the exercise of any other
provision hereof.
Section 11.18. U.S. Dollars
All references in this Agreement to dollar amounts shall refer to
United States currency.
Section 11.19. Approvals
Except where otherwise indicated, all approval, consent and other
similar rights of the General Partner or of the Limited Partners pursuant to
this Agreement may be exercised by such parties, and such approvals and consents
may be granted or denied by such parties, in their sole and absolute discretion.
Section 11.20. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original and shall be binding upon the Partner who executed the
same, but all of such counterparts shall constitute one and the same agreement.
28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GENERAL PARTNER:
---------------
EG Product Management, L.L.C.,
a Texas limited liability company
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx, Manager
By: /s/ Xxxxxxx Xxxx
-----------------------------------------
Xxxxxxx Xxxx, Manager
LIMITED PARTNER:
---------------
EG, L.L.C.,
a Nevada limited liability company
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx
President
29
EASY GARDENER PRODUCTS, LTD.
SCHEDULE 1
Names, Addresses, Capital Contributions and Sharing Ratios of the Partners
Name and Address Initial Capital Sharing
of General Partner Contributions Ratios
------------------ ------------- ------
EG Product Management, L.L.C. $_______ 1%
0000 Xxxxxxxx Xxxxxx
Xxxx, Xxxxx 00000
Name and Address
of Limited Partner
------------------
EG, L.L.C. $_______ 99%
0000 Xxxxxxxx Xxxxxx
Xxxx, Xxxxx 00000
TOTAL
100.00%
======
30
