Rule 424(b)(3) and relating to
Registration Statement No. 333-84477.
Offer to Exchange up to 34,600,000
Units of Limited Partnership Interest of
Alliance Capital Management L.P.
For
Units of Alliance Capital Management L.P. II
---------------
Our Offer (Unless Extended)
Will Expire at 12:00 A.M., New York City time
On October 29, 1999
Alliance Capital Management L.P. ("Alliance Holding") hereby offers each
unitholder of Alliance Holding the opportunity to exchange each Alliance
Holding unit for one unit of Alliance Capital Management L.P. II ("Alliance
Capital").
Alliance Holding is making this exchange offer in connection with a
reorganization of its business in which Alliance Holding will contribute its
business to Alliance Capital in exchange for all Alliance Capital units.
The exchange offer gives Alliance Holding unitholders the choice of:
(1) Continuing to hold their Alliance Holding units. Alliance Holding units
will continue to be listed on the NYSE and be freely tradable, and
Alliance Holding will continue to be subject to the 3.5% federal tax that
is imposed on the gross business income of public partnerships; or
(2) Exchanging their Alliance Holding units for Alliance Capital units on a
one-for-one basis. Alliance Capital will not be subject to the 3.5%
federal tax. However, Alliance Capital units will not be traded on any
exchange and will be subject to significant restrictions on transfer that
are designed to prevent Alliance Capital from being classified as a
publicly-traded partnership, and taxed as a corporation, for federal tax
purposes.
If you exchange your Alliance Holding units for Alliance Capital units in the
exchange offer, you will exchange freely tradable securities for
transfer-restricted securities, but you will be entitled to distributions per
unit in a greater amount than will holders of Alliance Holding units. For
example, Alliance Holding paid total distributions of $1.62 per unit in 1998.
These distributions were paid net of the 3.5% federal tax. If the
reorganization had been completed as of January 1, 1998, we estimate that in
1998, Alliance Holding would have paid total distributions of $1.62 per unit
and Alliance Capital would have paid total distributions of $1.80 per unit.
The Equitable Life Assurance Society of the United States and its affiliates,
which as of June 30, 1999 collectively owned approximately 57% of the
outstanding Alliance Holding units, have agreed to exchange substantially all
of their Alliance Holding units for Alliance Capital units on a private basis
on the same terms and limitations as the exchange offer. All references in
this prospectus to the exchange offer include the exchange by Equitable Life
and its affiliates of their Alliance Holding units for Alliance Capital units.
Alliance Capital Management Corporation, the general partner of Alliance
Holding and Alliance Capital, cautions that unitholders who cannot or do not
wish to bear the substantial illiquidity of the Alliance Capital units may
find it advantageous not to participate in the exchange offer. You must
determine your individual liquidity requirements and preferences after
considering all relevant factors, including the information contained in the
exchange offer prospectus, your financial and tax position and the composition
of your investment portfolio.
Carefully consider the risks associated with the exchange offer. See "Risk
Factors" beginning on page 11.
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
regulators has approved the exchange offer described in this prospectus or
determined that this prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
- --------------------------------------------------------------------------------
The date of this prospectus is September 30, 1999.
<PAGE>
Where You Can Find More Information
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important business and financial
information about Alliance Holding to you by referring you to another document
filed separately with the SEC. The information incorporated by reference is
deemed to be part of this prospectus, except for any information superseded by
information in this prospectus. This prospectus incorporates by reference the
documents set forth below that we have previously filed with the SEC. These
documents contain important information about the Alliance Holding business.
Alliance Holding SEC Filings
(File No. 1-9818) Period
Annual Report on Form 10-K Fiscal Year ended December 31, 1998
Quarterly Report on Form 10-Q Fiscal Quarter ended March 31, 1999
Quarterly Report on Form 10-Q Fiscal Quarter ended June 30, 1999
Current Report on Form 8-K Dated April 8, 1999
We are also incorporating by reference additional documents that we file
with the SEC between the date of this prospectus and the date the offer to
exchange terminates.
Documents incorporated by reference are available from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this prospectus. Please direct your oral or written requests to the
to the information agent:
GRORGESON
SHAREHOLDER
COMMUNICATIONS INC.
17 State Street
New York, New York 10004
(800) 223-2064
If you would like to request documents, please do so no later than
October 22, 1999 in order to receive them before the expiration date of the
exchange offer.
You should rely only on the information contained or incorporated by
reference in this prospectus in determining whether to participate in the
exchange offer. We have not authorized anyone to provide you with information
that is different from what is contained in this prospectus. This prospectus
is dated September 30, 1999. You should not assume that the information
contained in this prospectus is accurate as of any date other than such date,
and neither the mailing of this prospectus to Alliance Holding unitholders nor
the issuance of Alliance Capital units in the exchange offer shall create any
implication to the contrary.
<PAGE>
TABLE OF CONTENTS
Page
-----
WHERE YOU CAN FIND MORE
INFORMATION.....................................................Inside Cover
SUMMARY.......................................................................1
Alliance Holding and Alliance Capital......................................1
The Alliance Business......................................................1
The Reorganization and the Exchange Offer..................................1
Reasons for the Reorganization and Exchange
Offer...................................................................2
Other Aspects of the Reorganization and
Exchange Offer..........................................................3
Exchange Offer Considerations..............................................4
Risk Factors...............................................................4
Factors Upon Which the Reorganization
Depends.................................................................5
Material Federal Income Tax Consequences...................................5
Opinion of Financial Adviser...............................................5
Accounting Treatment.......................................................6
Benefits to Equitable Life from the
Reorganization..........................................................6
No Appraisal Rights........................................................6
ORGANIZATIONAL CHARTS.........................................................7
SUMMARY CONSOLIDATED HISTORICAL
FINANCIAL DATA.............................................................8
SUMMARY CONSOLIDATED PRO FORMA
FINANCIAL DATA.............................................................9
RISK FACTORS.................................................................11
Risks Relating to the Reorganization......................................11
Risks Relating to Exchanging or Retaining
Units..................................................................12
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS................................................14
THE REORGANIZATION AND THE
EXCHANGE OFFER............................................................15
General...................................................................15
Background of the Reorganization and the
Exchange Offer.........................................................15
Reasons for the Reorganization and the
Exchange Offer.........................................................18
Factors Considered by, and Recommendation
of, the General Partner................................................18
Alliance Holding Public Float After the
Exchange...............................................................21
Transaction Expenses......................................................23
Employee Matters..........................................................23
Material Federal Income Tax Consequences..................................24
Regulatory Matters........................................................28
Accounting Treatment......................................................29
No Appraisal Rights.......................................................29
SELECTED FINANCIAL DATA......................................................30
CAPITALIZATION...............................................................33
PRO FORMA CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)....................................................34
Pro Forma Condensed Statement of Financial
Condition of Alliance Holding (Unaudited)..............................36
Pro Forma Condensed Statements of Income of
Alliance Holding (Unaudited)...........................................37
Pro Forma Condensed Consolidated
Statement of Financial Condition of
Alliance Capital (Unaudited)...........................................40
Pro Forma Condensed Consolidated
Statements of Income of Alliance Capital
(Unaudited)............................................................41
Notes to Unaudited Pro Forma Condensed
Financial Statements...................................................44
OPINION OF FINANCIAL ADVISER.................................................45
INTERESTS OF CERTAIN PERSONS IN THE
REORGANIZATION............................................................51
Equitable Life............................................................51
Executive Officers........................................................51
THE REORGANIZATION DOCUMENTS.................................................52
The Exchange Agreement....................................................52
The Agreement and Plan of Reorganization..................................52
The Indemnification and Reimbursement
Agreement..............................................................54
DESCRIPTION OF ALLIANCE CAPITAL
UNITS.....................................................................56
General...................................................................56
Restrictions on Transfers of the Alliance
Capital Units..........................................................56
COMPARISON OF UNITHOLDER RIGHTS..............................................58
Form of Organization......................................................58
Business..................................................................58
Voting Rights.............................................................58
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Page
-----
Distributions.............................................................60
Taxation..................................................................60
Management................................................................61
Potential Dilution........................................................61
Meetings..................................................................62
Conversion/Exchange Rights................................................62
Right to Purchase Units...................................................62
Liquidation Rights........................................................63
Right to Compel Dissolution...............................................63
Limited Liability.........................................................64
Liquidity and Marketability...............................................64
Continuity of Existence...................................................65
Financial Reporting.......................................................65
Certain Legal Rights......................................................65
Right to List Holders; Inspection of Books and
Records................................................................65
Subordination.............................................................66
THE PARTNERSHIP AGREEMENTS...................................................67
The Amended Alliance Holding Partnership
Agreement..............................................................67
The Alliance Capital Partnership Agreement................................80
THE EXCHANGE OFFER...........................................................84
General...................................................................84
Exchange Offer Deadline...................................................84
Exchange Offer Forms......................................................84
How to Tender.............................................................85
Proper Execution and Delivery of Letter of
Transmittal............................................................85
Guaranteed Delivery Procedures............................................86
Book-Entry Transfer.......................................................87
Revocation of Election to Participate in the
Exchange Offer.........................................................87
Cap on Tenders; Pro Ration................................................87
Lost, Stolen, Destroyed or Mutilated
Certificates...........................................................87
Elections by Nominees.....................................................88
Distribution of Alliance Capital Units....................................88
Issuance of Certificates in Another Name..................................88
Expenses..................................................................88
The Exchange Agent and the
Information Agent......................................................89
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS......................................................90
The Amended Equitable Life Investment
Advisory and Management Agreement......................................90
The Amended Equitable Life Accounting,
Valuation, Reporting and Treasury Services
Agreement..............................................................91
Intercompany Relationships................................................91
Security Ownership of Certain Beneficial
Owners and Management..................................................93
LEGAL MATTERS................................................................99
EXPERTS......................................................................99
FINANCIAL STATEMENT INDEX...................................................F-1
Annex A -- Agreement and Plan of Reorganization
Annex B -- Amended Alliance Holding Partnership Agreement
Annex C -- Alliance Capital Partnership Agreement
Annex D -- Opinion of Financial Adviser
ii
<PAGE>
SUMMARY
You should read the following summary together with the more detailed
information regarding Alliance Holding and Alliance Capital, the
reorganization and the exchange offer, and the financial statements and notes,
all of which appear elsewhere or are incorporated by reference in this
prospectus.
Alliance Holding and Alliance Capital
Alliance Capital Management L.P. ("Alliance Holding") is a publicly-traded
limited partnership. Alliance Capital Management L.P. II ("Alliance Capital")
is a private limited partnership newly formed to carry on Alliance Holding's
business after the reorganization.
Equity interests in Alliance Holding trade publicly on the NYSE in the form of
units.
Equity interests in Alliance Capital are represented by partnership interests
denominated as units that do not and will not trade publicly, and that will be
subject to significant restrictions on transfer.
The principal executive offices of both Alliance Holding and Alliance Capital
are located at 1345 Avenue of the Americas, New York, New York 10105, and the
telephone number is 212-969-1000.
The Alliance Business
The following discussion refers to the business currently conducted by
Alliance Holding, which is the business that will be conducted by Alliance
Capital after the reorganization.
We are one of the nation's largest investment advisers, providing diversified
investment management services to institutional clients and high net worth
individuals and, through various opportunities for investment, to individual
investors. As of June 30, 1999, we had total client assets under management of
approximately $321 billion. We serve our clients with a staff of more than
2,000 employees operating out of nine domestic cities and the overseas offices
of subsidiaries in London, Paris, Tokyo, Toronto, Sydney, Luxembourg,
Singapore, Bahrain, New Delhi, Mumbai, Sao Paolo, Istanbul, and Johannesburg,
among others.
Equitable Life and its affiliates own a 1% general partner interest in
Alliance Holding and approximately 57% of the outstanding Alliance Holding
units.
The Reorganization and the Exchange Offer
We plan to reorganize by transferring our business to Alliance Capital, a new
private limited partnership, in exchange for all Alliance Capital units.
Immediately following the reorganization, our business activities will consist
of holding Alliance Capital units and engaging in related activities. The
diversified investment management services business presently conducted by us
will continue to be conducted unchanged by Alliance Capital, and all of our
employees will become employees of Alliance Capital. Our general partner will
also serve as the general partner of Alliance Capital. We will change our name
to "Alliance Capital Management Holding L.P.", and Alliance Capital will
assume the name "Alliance Capital Management L.P."
The reorganization was approved at a special meeting of unitholders held on
September 22, 1999. We are now offering the opportunity to exchange Alliance
Holding units for Alliance Capital units, on a one-for-one basis, to all our
unitholders. However, in order to preserve our NYSE listing, we will not
accept units tendered that, if exchanged, would cause our units to be held by
fewer than 1,200 public unitholders. Further, in order to maintain an adequate
public float in the trading market for Alliance Holding units, we will not
accept units tendered that, if exchanged, would cause fewer than 40 million
units to be held by public unitholders immediately following the exchange.
Accordingly, if public unitholders do participate in the exchange offer, the
most the number of Alliance Holding units held by public unitholders could
decrease would be from approximately 58.7 million units as of June 30, 1999 to
40 million units, a reduction of approximately 18.7 million units, or 31.9%.
For purposes of calculating the public float, "public unitholders" excludes
Equitable Life, its affiliates, other holders of more than 2% of the currently
outstanding Alliance Holding units and our executive management. In the event
excess units are tendered, we will reject a corresponding number of units on a
pro rata basis among all tendering unitholders. We do not believe that the
potential decrease in the number of Alliance Holding units held by public
1
<PAGE>
unitholders after the exchange will materially impact the liquidity of
Alliance Holding units or that the reduction should, in and of itself,
adversely affect in any material way the trading price per Alliance Holding
unit. For a discussion of the manner in which we determined the numbers
affecting our calculation of the public float, see "The Reorganization and the
Exchange Offer -- Alliance Holding Public Float After the Exchange."
The agreement and plan of reorganization, the legal document that governs the
reorganization, is included in this prospectus as Annex A. We encourage you to
read this agreement.
The reorganization will not adversely affect any existing rights or benefits
or afford any new rights or benefits to unitholders who elect to continue to
hold their Alliance Holding units. The rights and benefits of unitholders who
exchange their Alliance Holding units for Alliance Capital units will be
different than those of Alliance Holding unitholders.
The transferability of Alliance Capital units, which will not be listed on any
exchange, will be significantly restricted. These restrictions are designed to
prevent Alliance Capital from being classified as a publicly-traded
partnership, and taxed as a corporation, for federal tax purposes. Alliance
Capital units will generally be transferable only with the written consent of
both Equitable Life and the general partner of Alliance Capital, which may be
withheld in the sole discretion of either Equitable Life or the general
partner, for any reason. See "Description of Alliance Capital
Units--Restrictions on Transfers of the Alliance Capital Units."
After the reorganization, you will continue to vote with respect to those
matters on which you currently vote.
The amended Alliance Holding partnership agreement and the Alliance Capital
partnership agreement are included in this prospectus as Annex B and Annex C.
We encourage you to read these agreements.
For a summary of the differences between Alliance Holding units before and
after the reorganization and Alliance Capital units, see "Comparison of
Unitholder Rights."
Reasons for the Reorganization and the Exchange Offer
The reorganization and the exchange offer will give Alliance Holding
unitholders the choice of:
(1) Continuing to hold their Alliance Holding units. Alliance Holding units
will continue to be listed on the NYSE and be freely tradable, and
Alliance Holding will continue to be subject to the 3.5% federal tax that
is imposed on the gross business income of public partnerships.
or
(2) Exchanging their Alliance Holding units for Alliance Capital units on a
one-for-one basis. Alliance Capital will not be subject to the 3.5%
federal tax. However, Alliance Capital units will not be traded on any
exchange and will be subject to significant restrictions on transfer that
are designed to prevent Alliance Capital from being classified as a
publicly-traded partnership, and taxed as a corporation, for federal tax
purposes.
In addition, we expect that the reorganization will give us greater
flexibility in acquiring businesses and raising capital in the future since we
will be able to offer the selling party or potential investor the choice of
whether to receive publicly-traded Alliance Holding units, tax-advantaged
Alliance Capital units, or a combination of both.
If you decline to participate in the exchange offer and continue to hold
Alliance Holding units, you will retain the benefit of continued liquidity for
your investment, and you will continue to receive the lower distributions
associated with an investment in an entity that is subject to the 3.5% federal
tax. If you participate in the exchange offer and receive Alliance Capital
units, you will gain the benefit of higher distributions, compared to
distributions you would receive if you continued to own Alliance Holding
units, but your investment will be subject to transfer restrictions that will
make it highly illiquid. See "Description of Alliance Capital Units --
Restrictions on Transfers of the Alliance Capital Units."
2
<PAGE>
Other Aspects of the Reorganization and Exchange Offer
Indemnification and Reimbursement by Equitable Life
Transaction Expenses. Equitable Life will pay or reimburse all costs and
expenses incurred by us, Alliance Capital or any of our respective
subsidiaries in connection with the reorganization, the special meeting of
unitholders held on September 22, 1999, the exchange offer and the related
transactions, except for any reduction in revenues and increase in expenses
resulting from any loss of clients.
Transaction Risks. Equitable Life will indemnify us and Alliance Capital
against any loss or expense incurred in connection with the reorganization.
Equitable Life will also:
o bear its share of any federal tax on gross business income if the tax is
imposed on all of the gross business income of Alliance Capital; and
o indemnify us if either Alliance Holding or Alliance Capital is taxed as a
corporation under current tax laws as a result of the reorganization.
Equitable Life will not indemnify against:
o losses or expenses arising from any litigation alleging that disclosure
regarding the business and operations of Alliance Capital or Alliance
Holding is inadequate in or omitted from documents we have filed with the
SEC and incorporated by reference into this prospectus; and
o taxes arising from any future change in tax laws, other than as described
above.
In addition, if the reorganization is consummated, Equitable Life will pay $3
million to Alliance Capital for our internal personnel, overhead and other
costs and expenses and those of Alliance Capital and our common general
partner relating to the consideration and implementation of the reorganization
and the exchange offer. Equitable Life will pay $1.5 million for such costs if
the reorganization is not consummated. The indemnification and reimbursement
agreement is an exhibit to the registration statement of which this prospectus
forms a part. We encourage you to read this agreement.
Investment Advisory and Management Services Provided to Equitable Life
We provide investment advisory and management services for Equitable Life for
specified asset classes.
If the reorganization occurs, the terms under which we provide these services
will become more favorable to Alliance Holding and thereby provide an
incentive to us to implement the reorganization, which in turn will benefit
Equitable Life. Among other things, following the reorganization:
o the annual fee rates payable by Equitable Life for advisory services
provided for specified asset classes, which currently may be renegotiated
each year, may not be changed prior to December 31, 2003, and
o such fees, which currently are not subject to any minimum, will not be
less than $38 million per year through December 31, 2003, subject to
specified annual reductions.
In 1998, we earned approximately $39 million in revenues for services provided
to the accounts referred to above. We also manage other assets for Equitable
Life that are not in these accounts and that are not subject to the terms
described above.
The revised Equitable Life investment advisory and management agreement,
which, after the reorganization, will be an agreement of Alliance Capital, is
an exhibit to the registration statement of which this prospectus forms a
part. The revised agreement will apply to all of 1999 and later years. We
encourage you to read this agreement.
Accounting, Valuation, Reporting and Treasury Services Provided to Equitable
Life
We provide accounting, valuation, reporting and treasury services for accounts
of Equitable Life. If Equitable Life terminates our investment advisory and
management services other than as a result of our failure or inability to
perform our obligations or if we terminate those services for non-payment of
3
<PAGE>
fees by Equitable Life, our accounting, valuation, reporting and treasury
services will also automatically terminate. The termination of these services
currently would not require the payment of any termination fee.
If the reorganization occurs, the terms under which we provide these services
will become more favorable to us and thereby provide an incentive to us to
implement the reorganization, which in turn will benefit Equitable Life.
Following the reorganization, if, prior to December 31, 2003, Equitable Life
terminates or fails to renew the investment advisory and management services
other than as a result of our failure or inability to perform our obligations,
or if we terminate those services due to the failure by Equitable Life to pay
us the $38 million in annual fees specified above, then our accounting,
valuation, reporting and treasury services will also terminate. In either such
event of termination, Equitable Life will pay Alliance Holding a one-time fee
ranging from $80 million to $10 million for termination, depending upon the
date of termination.
The revised Equitable Life accounting, valuation, reporting and treasury
services agreement, which, after the reorganization, will be an agreement of
Alliance Capital, is an exhibit to the registration statement of which this
prospectus forms a part. The revised agreement will apply to all of 1999 and
later years. We encourage you to read this agreement.
Ownership of Alliance Capital after the Exchange Offer
Equitable Life and its affiliates have agreed with us to exchange
substantially all of their Alliance Holding units for Alliance Capital units
on a private basis on the same terms and limitations as the exchange offer,
including any proportionate reduction in the number of Alliance Holding units
accepted for exchange in the event that excess units are tendered in the
exchange offer. Following the exchange offer and the private exchange by
Equitable Life and its affiliates, Equitable Life and its affiliates, other
than Alliance Holding, will own no more than approximately 55% of the Alliance
Capital units. The remaining Alliance Capital units will be owned by Alliance
Holding and any other Alliance Holding unitholders who participate in the
exchange offer. Exchange Offer Considerations
In considering whether or not to participate in the exchange offer, Alliance
Capital Management Corporation, our general partner, cautions that unitholders
who cannot or do not wish to bear the substantial illiquidity of the Alliance
Capital units may find it advantageous not to participate in the exchange
offer. You must determine your individual liquidity requirements and
preferences after considering all relevant factors, including the information
that will be contained in the exchange offer prospectus, your financial and
tax position and the composition of your investment portfolio.
Risk Factors
In deciding whether to participate in the exchange offer, you should take into
account the following risk factors, which are discussed at greater length
under "Risk Factors".
Risks Relating to the Reorganization
Risks relating to the reorganization include the following:
o The process of soliciting client consents to assign investment advisory
contracts from Alliance Holding to Alliance Capital may prompt clients to
review their relationship with us and thereby increase the likelihood of
client account losses.
o The IRS may take the position that Alliance Capital's entire gross
business income is subject to the 3.5% federal tax. If this occurs, each
exchanging unitholder, including Equitable Life, will, as it does today,
bear its allocable share of such tax as if the reorganization had not
occurred.
o Congress may pass tax legislation in the future that would result in
adverse tax consequences for partnerships such as ours.
Risks Relating to Exchanging or Retaining Units
If you elect to exchange your Alliance Holding units for Alliance Capital
units, you should consider that:
4
<PAGE>
o The Alliance Capital units will be highly illiquid and the ability of a
holder of Alliance Capital units to exchange them for Alliance Holding
units will be substantially limited.
If you elect to keep your Alliance Holding units, you should consider that:
o Alliance Holding will continue to be subject to the 3.5% federal tax at
the partnership level on its allocable share of Alliance Capital's gross
business income, while Alliance Capital will not be subject to federal
tax at the partnership level.
o We will limit the number of units we will accept in the exchange to ensure
that at least 40 million units will be held by public unitholders
immediately after the exchange. There can be no assurance that the
resulting public float will ensure the continued liquidity of the
Alliance Holding units or that any potential reduction may not adversely
affect the trading price per Alliance Holding unit.
Factors Upon Which the Reorganization Depends
The completion of the reorganization depends upon, among other things, the
following conditions:
o receipt of regulatory approvals and consents from clients and other third
parties; and
o absence of any law or court order prohibiting the reorganization or the
exchange offer.
We are working to complete the reorganization by the fourth quarter of 1999.
Even though Alliance Holding's unitholders have approved the reorganization,
our general partner may terminate the reorganization and the exchange offer at
any time prior to consummation if it determines that termination is in our
best interests and in the best interests of Alliance Holding unitholders. In
deciding to terminate the reorganization and the exchange offer, our general
partner may consider such factors as the inability to obtain material client,
government and other third party consents and approvals. Material Federal
Income Tax Consequences
Davis Polk & Wardwell, our legal counsel, has given an opinion to us regarding
the material United States federal income tax consequences of the
reorganization and exchange. The reorganization will not be a taxable event
for either Alliance Holding or Alliance Capital. In general, an exchange of
Alliance Holding units for Alliance Capital units will not be a taxable event.
If you exchange Alliance Holding units for Alliance Capital units, the tax
consequences to you of holding Alliance Capital units after the reorganization
will be identical to the tax consequences of holding Alliance Holding units
prior to the reorganization, except that Alliance Capital will not pay a 3.5%
federal tax on its gross business income. We have made an election under
Section 754 of the Internal Revenue Code, effective for our taxable years
beginning on or after January 1, 1998, to adjust the tax basis of our assets
upon the occurrence of certain events, including the transfer of Alliance
Holding units by sale or exchange. If your share of the basis of our assets
was adjusted pursuant to our Section 754 election prior to the reorganization,
the adjustment will continue to be attributed to you after the reorganization,
regardless of whether you continue to hold your Alliance Holding units or
exchange some or all of your units for Alliance Capital units.
Opinion of Financial Adviser
On April 8, 1999, Goldman, Sachs & Co. delivered its oral opinion, which was
subsequently confirmed in writing on April 23, 1999, to the board of directors
of Alliance Capital Management Corporation, our general partner, that, as of
that date and based on the March 31, 1999 draft of the agreement and plan of
reorganization, the one-to-one exchange ratio is fair from a financial point
of view to those unitholders who remain holders of Alliance Holding units
immediately following the exchange offer. Goldman Sachs subsequently confirmed
its earlier opinion by delivery of its written opinion dated August 3, 1999.
The full text of the written opinion of Goldman Sachs sets forth assumptions
made, matters considered and limitations on the review undertaken in
connection with the opinion. The opinion of Goldman Sachs does not constitute
a recommendation as to whether any unitholder should participate in the
exchange offer.
5
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The opinion of Goldman Sachs dated August 3, 1999 is included in this
prospectus as Annex D. We encourage you to read this opinion.
Accounting Treatment
The assets and liabilities of Alliance Holding will be transferred to Alliance
Capital at their recorded value on the date of transfer. Alliance Capital will
have the same tax basis in these assets as does Alliance Holding. See "The
Reorganization and Exchange Offer--Accounting Treatment."
Benefits to Equitable Life from the Reorganization
Equitable Life and its affiliates currently own approximately 57% of the
outstanding Alliance Holding units. If the reorganization is completed,
Equitable Life and its affiliates will exchange substantially all of their
units of Alliance Holding, which is subject to the 3.5% federal tax imposed on
the gross income of publicly-traded partnerships, for units of Alliance
Capital, which is not subject to that tax. As a result, Equitable Life and its
affiliates will receive a substantial economic benefit over time equal to the
tax that would otherwise be payable with respect to their units. For example,
if the reorganization and the exchange offer had occurred as of January 1,
1998, and Equitable Life and its affiliates had exchanged the maximum number
of units they expect to exchange, Equitable Life and its affiliates would have
received in 1998 distributions of $1.80 per Alliance Capital unit instead of
$1.62 per Alliance Holding unit, an increase of 18 cents per unit exchanged,
or an aggregate of approximately $17 million. As a holder of a substantial
number of Alliance Capital units, Equitable Life will be able to transfer
blocks of Alliance Capital units in accordance with IRS regulations applicable
to holders of large numbers of units.
In addition, Equitable Life, as an insurance company, is required by New York
law to value its current investment in Alliance Holding for regulatory
purposes using a market value methodology. Because the Alliance Holding units
are publicly-traded, the value of Equitable Life's investment in Alliance
Holding is continually influenced by market fluctuations. By exchanging its
Alliance Holding units for Alliance Capital units, which will not be
publicly-traded, Equitable Life will be able to adopt an alternative valuation
methodology for its investment in the reorganized Alliance entity that will
produce a more stable value. As a result, Equitable Life will be able to more
efficiently and effectively plan its activities while remaining in compliance
with regulatory requirements. See "Interests of Certain Persons in the
Reorganization."
No Appraisal Rights
Alliance Holding unitholders do not have any right to an appraisal of the
value of their units in connection with the reorganization. See "The
Reorganization and the Exchange Offer--No Appraisal Rights."
6
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ORGANIZATIONAL CHARTS
Set forth below are simplified charts showing the ownership structure of
Alliance Holding before and after completion of the reorganization and the
exchange offer.
Current Structure:
[GRAPHIC OMITTED]
Structure After the Reorganization and the Exchange Offer:
[GRAPHIC OMITTED]
* These percentages will be determined after the exchange offer and the private
exchange offer and the private exchange by Equitable Life and its affiliates.
Assuming none of the public accepts the exchange offer, Equitable Life will
hold an approximately 54.0% limited partnership interest in, and Alliance
Holding will hold an approximately 45.0% limited partnership interest in,
Alliance Capital.
** Alliance Holding is unable to predict the number of director, management and
employee unitholders who will participate in the exchange offer.
7
<PAGE>
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA
We have set forth below selected summary consolidated historical
financial data of Alliance Holding for the six months ended June 30, 1999 and
1998 and for each of the years in the five-year period ended December 31,
1998. This data should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the consolidated
financial statements of Alliance Holding set forth in its Form 10-Q for the
quarterly period ended June 30, 1999 and in its Annual Report on Form 10-K for
the year ended December 31, 1998, which is incorporated by reference into this
prospectus. Unit and per unit amounts for all periods prior to the two-for-one
unit split in 1998 have been restated. Net income per unit amounts prior to
1997 have been restated as required to comply with Statement of Financial
Accounting Standards No. 128, Earnings per Share.
<TABLE>
For the
Six Months Ended For the Year Ended
June 30, December 31,
------------------- -------------------------------------------------------
1999 1998 1998 1997 1996 1995 1995
-------- -------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(unaudited) (in thousands, except for per unit data)
Income statement data:
Revenues....................... $838,684 $648,137 $1,324,056 $975,336 $788,517 $639,255 $600,952
Income before income taxes..... 229,728 172,417 348,712 147,762 207,590 167,011 141,806
Net income..................... 195,268 144,825 292,916 128,956 193,346 155,387 133,489
Net income before reduction in
recorded value of intangible
assets...................... 195,268 144,825 292,916 249,856 193,346 155,387 133,489
Net income per unit:
Basic net income per unit...... $ 1.13 $ 0.85 $ 1.71 $ 0.76 $ 1.15 $ 0.95 $ 0.86
Diluted net income per unit.... $ 1.10 $ 0.82 $ 1.66 $ 0.74 $ 1.13 $ 0.94 $ 0.85
Diluted net income per unit
before reduction in recorded
value of intangible assets.. $ 1.10 $ 0.82 $ 1.66 $ 1.44 $ 1.13 $ 0.94 $ 0.85
Basic weighted average units
outstanding................. 170,804 169,609 169,933 168,448 166,382 161,538 153,381
Diluted weighted average units
outstanding................. 175,968 174,949 175,143 171,876 168,968 163,116 155,882
Cash distributions per unit....... $ 1.08 $ 0.80 $ 1.62 $ 1.40 $ $ .095 $ 0.91 $ 0.82
December 31,
June 30, -------------------------------------------------------
1999 1998 1997 1996 1995 1995
---------- ---------- -------- -------- -------- --------
Balance sheet data:
Total assets................... $1,456,717 $1,132,592 $784,460 $725,897 $575,058 $518,369
Debt and long-term obligations(1) 424,486 238,089 130,429 52,629 30,839 29,021
Partners' capital.............. 467,062 430,273 398,051 476,020 406,709 381,329
Assets under management (in
millions)(2)................... $ 321,006 $ 286,659 $218,654 $182,792 $146,521 $119,279
- -------------------
(1) Includes accrued compensation and benefits due after one year and debt.
(2) Excludes certain non-discretionary advisory relationships and reflects 100% of the assets managed by unconsolidated
joint venture subsidiaries and affiliates.
</TABLE>
8
<PAGE>
SUMMARY CONSOLIDATED PRO FORMA FINANCIAL DATA
We have set forth below selected summary consolidated pro forma financial
data of Alliance Capital and Alliance Holding for the six months ended June
30, 1999 and 1998 and for the year ended December 31, 1998. This pro forma
data has been derived from the unaudited consolidated pro forma condensed
financial statements of Alliance Capital and Alliance Holding and includes the
assumptions described under "Pro Forma Condensed Financial Statements
(Unaudited)". This pro forma data reflects the effects of the reorganization
and the exchange offer as if such transactions occurred on June 30, 1999 (for
balance sheet purposes) and January 1, 1998 (for income statement purposes).
This pro forma data does not purport to represent what the financial position
or results of operations of Alliance Capital and Alliance Holding would
actually have been if the reorganization and the exchange offer had occurred
on these dates, or to be indicative of the future financial position or
results of operations of Alliance Capital and Alliance Holding. You should
read this pro forma data in conjunction with the consolidated financial
statements of Alliance Holding set forth in its Form 10-Q for the quarter
ended June 30, 1999 and in its Annual Report on Form 10-K for the year ended
December 31, 1998, which is incorporated by reference into this prospectus,
and with the information under "Pro Forma Condensed Financial Statements
(Unaudited)".
<TABLE>
Historical Alliance Holding
------------------------------------------------
For the Six Months For the Year
Ended June 30, Ended
---------------------------- December 31,
1999 1998 1998
---------- -------- -------------
<S> <C> <C> <C>
(in thousands, except for per unit data)
Income statement data:
Revenues...................................... $838,684 $648,137 $1,324,056
Income before income taxes.................... 229,728 172,417 348,712
Net income.................................... 195,268 144,825 292,916
Net income per unit:
Basic net income per unit..................... $ 1.13 $ 0.85 $ 1.71
Diluted net income per unit................... $ 1.10 $ 0.82 $ 1.66
Basic weighted average units outstanding...... 170,804 169,609 169,933
Diluted weighted average units outstanding.... 175,968 174,949 175,143
Cash distributions per unit...................... $ 1.08 $ 0.80 $ 1.62
June 30,
1999
----------
Balance sheet data:
Total assets.................................. $1,456,717
Debt and long-term obligations................ 424,486
Partner's capital............................. 467,062
</TABLE>
9
<PAGE>
<TABLE>
Pro Forma Alliance Holding
------------------------------------------------
For the Six Months For the Year
Ended June 30, Ended
---------------------------- December 31,
1999 1998 1998
---------- -------- -------------
<S> <C> <C> <C>
(in thousands, except for per unit data)
Income statement data:
Revenues...................................... $838,684 $648,137 $1,324,056
Income before income taxes.................... 229,728 172,417 348,712
Net income.................................... 214,872 160,825 323,516
Net income per unit:
Basic net income per unit..................... $ 1.25 $ 0.94 $ 1.88
Diluted net income per unit................... $ 1.21 $ 0.91 $ 1.83
Basic weighted average units outstanding...... 170,804 169,609 169,933
Diluted weighted average units outstanding.... 175,968 174,949 175,143
Cash distributions per unit...................... $ 1.19 $ 0.89 $ 1.80
June 30,
1999
----------
Balance sheet data:
Total assets.................................. $1,437,113
Debt and long-term obligations................ 424,486
Partner's capital............................. 467,062
Pro Forma Alliance Holding
------------------------------------------------
For the Six Months For the Year
Ended June 30, Ended
---------------------------- December 31
1999 1998 1998
---------- -------- -------------
<S> <C> <C> <C>
(in thousands, except for per unit data)
Income statement data:
Equity in earnings of Alliance Capital........ $ 80,835 $ 60,088 $120,970
Revenues...................................... 80,835 60,088 120,970
Income before income taxes.................... 80,835 60,088 120,970
Net income.................................... 73,460 54,110 109,528
Net income per unit:
Basic net income per unit..................... $ 1.13 $ 0.85 $ 1.71
Diluted net income per unit................... $ 1.10 $ 0.82 $ 1.66
Basic weighted average units outstanding...... 64,910 64,005 64,183
Diluted weighted average units outstanding.... 70,074 69,345 69,393
Cash distributions per unit...................... $ 1.08 $ 0.80 $ 1.62
June 30,
1999
---------
Balance sheet data:
Investment in Alliance Capital................ $176,402
Total assets.................................. 196,006
Debt and long-term obligations................ --
Partner's capital............................. 176,402
</TABLE>
10
<PAGE>
RISK FACTORS
In addition to other information set forth in this prospectus, you should
carefully consider the risk factors set forth below before electing to retain
your units or to exchange them for Alliance Capital units in the exchange
offer.
Risks Relating to the Reorganization
Alliance Capital Management Corporation's duties to Alliance Holding and
its duties to Alliance Capital may conflict.
The duties of Alliance Capital Management Corporation when acting as
general partner of Alliance Holding may conflict with its duties when acting
as general partner of Alliance Capital. For example, pursuant to its
partnership agreement, Alliance Capital has agreed to reimburse Alliance
Holding from time to time for all of Alliance Holding's ongoing operating
costs and expenses, other than specified taxes, including taxes on its income.
If Alliance Capital fails to perform its obligations under this agreement, the
common general partner would be subject to a conflict in determining how and
when to enforce those obligations against Alliance Capital. This conflict of
interest is similar to the conflict currently faced by the general partner
when acting on matters concerning Equitable Life. As permitted by Delaware
law, Alliance Capital Management Corporation's fiduciary duties to Alliance
Holding, Alliance Capital and their respective unitholders are limited by the
terms of the respective partnership agreements.
The reorganization could result in the loss of some of our client
accounts.
We must obtain the consent of a substantial number of clients before
transferring their investment advisory contracts, which are terminable upon
short notice, from Alliance Holding to Alliance Capital. The process of
seeking these consents may prompt some clients to review their relationships
with Alliance Holding when they would not otherwise have reason to, which in
turn could result in some clients deciding to transfer some or all of their
business to our competitors notwithstanding the fact that the reorganization
will not result in any change in the management of client accounts.
Holders of Alliance Capital units may be adversely affected if the
economic benefit of all of Alliance Holding's assets cannot be
transferred to Alliance Capital in the reorganization.
In addition to consents from clients, we must obtain consents from
numerous other third parties in order to complete the reorganization. These
third parties include governments and regulatory authorities that have granted
licenses to Alliance Holding, as well as parties with whom Alliance Holding
has ordinary course business dealings, such as landlords and other service
providers. If we are unable to obtain a material consent, we may be required
to leave the affected asset or license at the Alliance Holding level, either
for a period of time or permanently. Where possible, Alliance Holding will
transfer the economic benefit or liability, as the case may be, of the
affected asset or license to Alliance Capital. Nevertheless, Alliance
Holding's inability to transfer the economic benefit of its assets and
licenses to Alliance Capital could adversely affect Alliance Capital's
unitholders because the distributions on their Alliance Capital units would be
smaller in proportion to the value of the economic benefit left behind at the
Alliance Holding level. In other cases, we may decide to transfer an asset or
license without receiving the required consent.
The tax benefits to Alliance Capital anticipated from the reorganization
may not be realized.
Alliance Holding will be subject to a 3.5% federal tax on its gross
income, including its distributive share of Alliance Capital's gross business
income. The IRS may assert that Alliance Capital's entire gross business
income, and not just Alliance Holding's share, is subject to the 3.5% tax. If
the IRS prevails, Equitable Life and the other partners in Alliance Capital
will bear their respective shares of any tax imposed upon the gross business
income of
11
<PAGE>
Alliance Capital, whether the entity paying the tax is Alliance Holding or
Alliance Capital. Equitable Life and the other partners in Alliance Capital
will bear their shares of this tax whether the tax is imposed at the current
rate of 3.5% or at any other rate that may be effective in the future and
whether the tax is imposed under current law or as a result of a change in
law.
Future tax law changes could increase taxes for Alliance Holding and
Alliance Capital.
Congress may enact legislation from time to time that could increase
taxes for partnerships like Alliance Holding and Alliance Capital. Equitable
Life will not indemnify Alliance Holding for the consequences of any such tax
law change.
Alliance Holding may face litigation over the proposal to reorganize that
would divert the time and attention of senior management from the
operation of its business.
Alliance Holding unitholders and other parties could challenge the
reorganization and related transactions in court. Even though Equitable Life
has agreed to indemnify Alliance Holding for out-of-pocket costs and expenses
relating to the reorganization and the exchange offer, including related legal
fees and expenses that would arise out of such a court challenge, any court
challenge would divert the time and attention of senior management which would
otherwise be devoted to the business of Alliance Capital.
Risks Relating to Exchanging or Retaining Units
If you elect to exchange your units for Alliance Capital units, you should
consider that:
You will not be able to sell or transfer Alliance Capital units readily.
If you participate in the exchange, you will own Alliance Capital units
that are subject to restrictions on transfer that will make your investment
highly illiquid. There will be no market on which Alliance Capital units will
be traded. In general, you must have the consent both of the general partner
of Alliance Capital and of Equitable Life in order to transfer an Alliance
Capital unit, and each of the general partner and Equitable Life may withhold
its consent in its sole discretion. The general partner and Equitable Life
currently intend to approve transfers only pursuant to IRS safe harbors for
avoiding publicly-traded partnership status. There is a substantial risk that
requests for transfers will be denied even if the transfers would be
permissible under the safe harbors. If you participate in the exchange, you
must have the financial ability and willingness to accept the illiquidity of
Alliance Capital units.
If a holder of Alliance Capital units wishes to exchange those units for
Alliance Holding units and has received the consent both of the general
partner of Alliance Capital and of Equitable Life, Alliance Holding may only
be able to deliver freely tradable units if at the time Alliance Holding has
an effective registration statement available. Various factors -- such as the
unavailability of updated financial statements, or the possibility that
Alliance Holding or Alliance Capital could be contemplating a material
transaction that has not yet been publicized -- may mean that no effective
registration statement would be available. If Alliance Holding is able to
deliver units otherwise than under an effective registration statement, these
units would be "restricted securities" according to Rule 144 under the
Securities Act of 1933, and would not be immediately freely tradable.
Therefore, if you participate in the exchange offer and acquire Alliance
Capital units, we cannot assure you that Alliance Holding will be able to
offer you the opportunity to exchange them for Alliance Holding units at any
time in the future. If Alliance Holding is able to offer you this opportunity,
we cannot assure you that the Alliance Holding units you receive will be
freely tradable.
12
<PAGE>
If you elect to keep your Alliance Holding units, you should consider that:
You will not benefit from the greater distributions per unit that holders
of Alliance Capital units will receive.
Distributions on the Alliance Holding units will be lower than
distributions on the Alliance Capital units because Alliance Holding will
continue to be subject to the 3.5% federal tax on its allocable share of the
gross business income of Alliance Capital.
The liquidity of Alliance Holding units may decrease depending upon the
extent that public unitholders participate in the exchange offer and
receive Alliance Capital units.
In the exchange offer, Alliance Holding is offering its unitholders the
opportunity to exchange their units for Alliance Capital units on a
one-for-one basis. Alliance Holding's public float may decrease depending upon
the extent to which public unitholders participate in the exchange offer and
receive Alliance Capital units. For purposes of calculating the public float,
"public unitholders" excludes Equitable Life, its affiliates, other holders of
more than 2% of the currently outstanding Alliance Holding units and Alliance
Holding's executive management. Exchanges by unitholders other than public
unitholders will not affect the public float. Alliance Holding will limit the
number of units it will accept in the exchange to ensure that at least 40
million units will be held by public unitholders immediately after the
exchange. Therefore, if public unitholders do participate in the exchange
offer, the most the number of units held by public unitholders could decrease
would be from 58.7 million units as of June 30, 1999 to 40 million units, a
reduction of 31.9%. This would permit public unitholders to exchange up to
18.7 million units. Based on a unit price of $325/16 as of June 30, 1999, 40
million units held by public unitholders represents a public float of
approximately $1,293 million immediately following the exchange.
There can be no assurance that the resulting public float will ensure
the continued liquidity of the Alliance Holding units or that any such
potential reduction in the public float may not adversely affect the trading
price per Alliance Holding unit.
13
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We believe that certain statements contained in this prospectus under
"Summary", and "The Reorganization and the Exchange Offer", in addition to
certain statements contained elsewhere in this prospectus or contained in
documents incorporated by reference herein, are forward-looking statements.
These forward-looking statements are subject to risks, uncertainties and other
factors that could cause actual results to differ materially from future
results expressed or implied by the forward-looking statements. The most
significant of these risks, uncertainties and other factors are discussed
under the heading "Risk Factors". Other significant risks include, but are not
limited to, the following:
o the performance of financial markets,
o the investment performance of our sponsored investment products and
separately managed accounts,
o general economic conditions,
o future acquisitions,
o competitive conditions,
o government regulations, including changes in tax rates, and
o the risks associated with year 2000 issues. The year 2000 issues
include uncertainties regarding, among other things:
o the inability to locate, correct and successfully test all
relevant computer codes,
o the continued availability of certain resources, including
personnel, and
o timely and accurate responses and corrections by third parties.
These uncertainties may result in unanticipated costs associated with
year 2000 issues and failure to meet schedules for year 2000 compliance.
We caution readers to carefully consider these risks.
14
<PAGE>
THE REORGANIZATION AND THE EXCHANGE OFFER
General
At the September 22, 1999 special meeting, Alliance Holding unitholders
approved:
(1) the transfer by Alliance Holding of its business to Alliance Capital
in exchange for all Alliance Capital units pursuant to the agreement
and plan of reorganization, and
(2) the amendment of Alliance Holding's partnership agreement to
implement the reorganization in a manner designed to ensure that the
existing rights and benefits of Alliance Holding unitholders are
maintained following the reorganization and to modify or eliminate
provisions that are inoperative or are no longer relevant or that
require technical revisions.
Immediately following the reorganization, Alliance Holding's business
activities will consist of holding Alliance Capital units and engaging in
related activities. The diversified investment management services business
presently conducted by Alliance Holding will continue to be conducted
unchanged by Alliance Capital, and all employees of Alliance Holding will
become employees of Alliance Capital. Alliance Holding's general partner will
also serve as the general partner of Alliance Capital. Alliance Holding will
change its name to "Alliance Capital Management Holding L.P.", and Alliance
Capital will assume the name "Alliance Capital Management L.P." Alliance
Capital will be subject to the reporting requirements of the Securities
Exchange Act of 1934 upon completion of the exchange offer. If, at a later
date, Alliance Capital ceases to be subject to these reporting requirements,
it will provide its unitholders with annual and quarterly reports, containing
separate financial statements for Alliance Capital, as filed by Alliance
Holding.
Alliance Holding is now offering the opportunity to exchange Alliance
Holding units for Alliance Capital units, on a one-for-one basis, to all its
unitholders. However, in order to preserve Alliance Holding's NYSE listing,
Alliance Holding will not accept units tendered that, if exchanged, would
cause Alliance Holding's units to be held by fewer than 1,200 public
unitholders. Further, in order to maintain an adequate public float in the
trading market for Alliance Holding units, Alliance Holding will not accept
units tendered that, if exchanged, would cause fewer than 40 million units to
be held by public unitholders immediately following the exchange. For purposes
of calculating public float, "public unitholders" excludes Equitable Life, its
affiliates, other holders of more than 2% of the currently outstanding
Alliance Holding units and Alliance Holding's executive management. In the
event excess units are tendered, Alliance Holding will reject a corresponding
number of units on a pro rata basis among all tendering unitholders. Equitable
Life and its affiliates have agreed with us to exchange substantially all of
their Alliance Holding units for Alliance Capital units on a private basis on
the same terms and limitations as the exchange offer, including the
proportionate reduction of units tendered in the event excess units are
tendered for exchange.
Background of the Reorganization and the Exchange Offer
Alliance Holding was formed in November 1987 to succeed to the business
of Alliance Capital Management Corporation, then a wholly-owned subsidiary of
Equitable Life. At the time of its formation, Alliance Holding was structured
as a "publicly-traded partnership", as defined in the Internal Revenue Code.
Under the Internal Revenue Code, a partnership is not itself a taxpaying
entity for federal income tax purposes. Instead, each partner is required to
take into account in computing his or her federal income tax liability such
partner's share of the income, gain, loss, deductions and credits of the
partnership. Under tax law in effect in 1987, publicly-traded partnerships
were treated like all other partnerships for federal income tax purposes.
At that time, the Internal Revenue Code also provided that Alliance
Holding and certain other publicly-traded partnerships would, as of January 1,
1998, cease to be classified as partnerships and instead become taxable as
corporations for federal income tax purposes, unless their units ceased to be
publicly-traded prior to that date.
15
<PAGE>
Unlike a partnership, a corporation is itself a taxpaying entity for federal
income tax purposes. In addition, each shareholder is subject to federal taxes
on dividends distributed by the corporation and capital gains derived from the
sale of its stock.
During the period from 1994 through the summer of 1997, the general
partner of Alliance Holding and its corporate affiliates considered several
transactions that Alliance Holding could undertake prior to January 1, 1998 to
ensure that it would not become taxable as a corporation as of such date.
Potential transactions or actions included, among others:
o halting or limiting trading in Alliance Holding units,
o delisting the Alliance Holding units from any securities exchange,
o incorporating Alliance Holding and maintaining public trading, and
o effectively converting Alliance Holding into a private limited
partnership in which a newly formed publicly-traded corporation
would have been the general partner.
Under the fourth option, we would have converted all Alliance Holding
units into shares of the new corporation, unless a unitholder expressly
elected to continue to hold interests in Alliance Holding or to receive cash
consideration for each unit held. We reviewed the implementation of this
option in detail, and in the summer of 1997, Alliance Holding issued a press
release indicating its intent to pursue this transaction.
In addition to considering and evaluating transactions of this sort,
since 1993 Alliance Holding participated in efforts to have its tax status
(that of a publicly-traded partnership which is not subject to corporate
taxation) made permanent or further extended. These efforts included
coordinating with certain other publicly-traded partnerships and engaging
advisers to assist in promoting and/or evaluating various legislative
proposals regarding publicly-traded partnerships that were considered by
Congress during this period.
On August 5, 1997, President Clinton signed into law The Taxpayer Relief
Act of 1997, which included the option for certain publicly-traded
partnerships, including Alliance Holding, to maintain partnership tax status
permanently after 1997 if they elected to pay a tax, beginning on January 1,
1998, of 3.5% on gross business income. As a result, we suspended our efforts
to convert Alliance Holding into a private partnership as described above, and
chose to maintain Alliance Holding's partnership tax status by electing to pay
the tax.
In September 1997, at Equitable Life's request, we and our advisers
conducted a preliminary analysis of possible steps that could be taken in
light of the new 3.5% federal tax on gross business income, including a
preliminary review of elements of the two-tier partnership transaction
described in this prospectus.
As part of that preliminary analysis, we reviewed the terms of other
two-tier partnership transactions. In the fall of 1997, New England Investment
Companies, L.P. (now Nvest, L.P.). and PIMCO Advisors L.P., two
publicly-traded partnerships engaged in the investment advisory business,
engaged in two-tier partnership restructurings similar to the reorganization
described in this prospectus. According to available information, New England
Investment Companies, L.P. restructured by transferring its business to a
newly formed, wholly-owned private partnership in exchange for all of the
interests in that partnership. In connection with the transfer, NEIC offered
to its eligible unitholders the opportunity to exchange their NEIC units for
units in the new partnership, on a one-for-one basis. NEIC's exchange offer
expired in December 1997, and its restructuring was thereafter completed.
PIMCO Advisors, as a result of its acquisition of Oppenheimer Capital L.P.,
was already structured as a two-tier partnership. Both OpCap, the top-tier
partnership, and PIMCO Advisors, the lower-tier partnership, were
publicly-traded. OpCap served as the general partner of PIMCO Advisors. All
assets of the business were held by PIMCO Advisors. OpCap's only business
activity was to hold its interest in PIMCO Advisors. PIMCO Advisors
restructured its business by making a registered mandatory exchange offer for
public units of PIMCO Advisors for
16
<PAGE>
OpCap units, on a one-for-one basis. Following the exchange, effective
December 1997, PIMCO Advisors became a private partnership, and its units were
delisted from the NYSE.
In June 1998, Equitable Life and its advisers conducted a study of a
two-tier partnership transaction. In connection with this study, Equitable
Life estimated the additional tax impact to Equitable Life and its affiliates
of the 3.5% federal tax would be approximately $18 million in 1998. The amount
would increase or decrease in future years in proportion to increases and
decreases in Alliance Holding's gross business income. During the following
months, Alliance Holding, Equitable Life and their advisers held numerous
meetings at which elements of the two-tier partnership transaction were
discussed, including legal, tax and structural matters, the need for
unitholder approvals, and the allocation of costs, expenses and transaction
risks between Alliance Holding and Equitable Life.
On November 19, 1998, at a regular meeting of the Equitable Life board,
Equitable Life's management made a presentation regarding a possible
reorganization of Alliance Holding and an exchange offer of Alliance Holding
units for units in a new limited partnership. The Equitable Life board
considered the impact of the 3.5% federal tax and the implications thereof for
Equitable Life and its affiliates, and the proposed terms, conditions and
timing of the reorganization and the exchange offer. The Equitable Life board
expressed its support for these transactions and authorized Equitable Life's
management to continue its efforts to develop the proposal.
On February 17, 1999, independent directors of Alliance Holding's general
partner met to review the proposed terms of the reorganization and the
exchange offer. The independent directors reviewed presentations by management
and by Alliance Holding's advisers.
On February 18, 1999, at a regular meeting of the board of directors of
Alliance Holding's general partner, the entire board reviewed the proposed
terms of the reorganization and the exchange offer. The board reviewed
presentations of management and Alliance Holding's advisers and also reviewed
financial presentations from Goldman Sachs.
On April 8, 1999, the executive committee of the Equitable Life board met
to review the terms of the proposed reorganization and exchange offer. The
executive committee approved drafts of the indemnification and reimbursement
agreement, the agreement and plan of reorganization, the amended Equitable
Life investment advisory and management agreement, and the amended Equitable
Life accounting, valuation, reporting and treasury services agreement, and
authorized the execution and delivery of these agreements in substantially the
form presented to the committee. The committee also authorized Equitable Life
to vote, and to cause its affiliates to vote, all Alliance Holding units held
by them in favor of the amendment of the Alliance Holding partnership
agreement and to exchange, and to cause its affiliates to exchange, all or
substantially all of such units for Alliance Capital units immediately
following the exchange offer.
On April 8, 1999, at a special telephonic meeting of the board of
directors of Alliance Holding's general partner, the entire board reviewed the
proposed terms of the reorganization and exchange offer. In connection with
this review, the board reviewed the opinion of Goldman Sachs as to the
fairness from a financial point of view of the exchange ratio to those
unitholders who remain holders of Alliance Holding units immediately following
the exchange offer. The board approved the reorganization, the amended
Alliance Holding partnership agreement and the exchange offer and authorized
the general partner to submit the reorganization to a vote of the public
unitholders of Alliance Holding and proceed with the reorganization and the
exchange offer.
On April 8, 1999, Alliance Holding, Alliance Capital and Equitable Life
entered into an indemnification and reimbursement agreement whereby Equitable
Life agreed to pay or reimburse all out-of-pocket expenses incurred by
Alliance Holding, Alliance Capital, their common general partner or any of
their subsidiaries on or after June 15, 1998 in connection with the
reorganization and to indemnify such parties against certain liabilities in
connection with the reorganization. See "The Reorganization Documents -- The
Indemnification and Reimbursement Agreement."
17
<PAGE>
In addition, on April 8, 1999, Alliance Holding, Alliance Capital and
Equitable Life entered into an exchange agreement. Pursuant to this agreement,
Equitable Life agreed to exchange, and to cause its affiliates that hold
Alliance Holding units to exchange, immediately after the consummation of the
exchange offer, substantially all of their Alliance Holding units for Alliance
Capital units, subject to the same terms and limitations as the exchange
offer, including any proportionate reduction of tendered units to be accepted
by Alliance Holding. See "The Reorganization Documents -- The Exchange
Agreement."
Reasons for the Reorganization and the Exchange Offer
The reorganization and the exchange offer will give Alliance Holding
unitholders the choice of:
(1) Continuing to hold their Alliance Holding units. Alliance Holding
units will continue to be listed on the NYSE and be freely tradable,
and Alliance Holding will continue to be subject to the 3.5% federal
tax that is imposed on the gross business income of public
partnerships.
or
(2) Exchanging their Alliance Holding units for Alliance Capital units
on a one-for-one basis. Alliance Capital will not be subject to the
3.5% federal tax. However, Alliance Capital units will not be traded
on any exchange and will be subject to significant restrictions on
transfer that are designed to prevent Alliance Capital from being
classified as a publicly-traded partnership, and taxed as a
corporation, for federal tax purposes.
In addition, we expect that the reorganization will give us greater
flexibility in acquiring businesses and raising capital in the future since we
will be able to offer the selling party or potential investor the choice of
whether to receive publicly-traded Alliance Holding units, tax-efficient
Alliance Capital units or a combination of both.
Factors Considered by, and Recommendation of, the General Partner
The board of Alliance Capital Management Corporation, Alliance Holding's
general partner, held a meeting on April 8, 1999. After due consideration, the
general partner:
o determined that the reorganization is fair to, and in the best
interests of, Alliance Holding unitholders, and
o determined to recommend that Alliance Holding unitholders vote "FOR"
(1) the transfer of Alliance Holding's business to Alliance Capital
pursuant to the agreement and plan of reorganization and (2) the
amendment of the Alliance Holding partnership agreement, whether or
not Alliance Holding unitholders are interested in participating in
the exchange offer.
With respect to the exchange offer, the general partner cautions that:
o unitholders who cannot or do not wish to bear the substantial
illiquidity of the Alliance Capital units may find it advantageous
not to participate in the exchange offer, and
o unitholders must determine their individual liquidity requirements
and preferences after considering all relevant factors, including
the information contained in the exchange offer prospectus, their
financial and tax positions and the composition of their investment
portfolios.
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In approving the reorganization and the exchange offer and in making
these recommendations, the general partner consulted with Alliance Holding's
management as well as its outside legal counsel and tax and financial
advisers, and considered the following material factors:
(1) the reasons described above under "Reasons for the Reorganization
and the Exchange Offer";
(2) the risks described under "Risk Factors";
(3) that all unitholders may make the choice between Alliance Holding
units and Alliance Capital units without recognizing gain or loss
for federal income tax purposes;
(4) that, to avoid costs to Alliance Holding in connection with the
reorganization, Equitable Life has agreed to pay all the
out-of-pocket costs and expenses of the reorganization and the
exchange offer and to pay (a) $3 million to Alliance Capital, if the
reorganization is consummated, for any internal personnel and
overhead costs and expenses of Alliance Holding, Alliance Capital or
their common general partner relating to the consideration and
implementation of the reorganization and the exchange offer, costs
relating to additional communications with clients and personnel
necessitated by the transaction and other miscellaneous expenses
relating to the transaction, (b) $1.5 million to Alliance Holding
for such costs if the reorganization is abandoned after the special
meeting of unitholders, or (c) nothing if the reorganization had
been abandoned before the special meeting of unitholders;
(5) that, as an incentive to Alliance Holding to implement the
reorganization, Equitable Life has agreed to amend the Equitable
Life investment advisory and management agreement and the related
accounting, valuation, reporting and treasury services agreement by
adding new provisions to (a) fix fee rates at their current levels
for specified asset classes whereas the current investment advisory
and management agreement permits the fees to be renegotiated at any
time, (b) provide for annual revenues to Alliance Capital of at
least $38 million through 2003 whereas the current investment
advisory and management agreement does not provide for any minimum
total annual fee, and (c) require Equitable Life to pay to Alliance
Capital a one-time termination fee under specified circumstances
ranging from $80 million to $10 million depending on the date of
termination whereas the current accounting, valuation, reporting and
treasury services agreement does not provide for any termination
fee, in each case subject to the limitations provided in these
agreements;
(6) that, to protect Alliance Holding against transaction risks,
Equitable Life has agreed to indemnify Alliance Holding and Alliance
Capital as follows: (a) to indemnify Alliance Holding and Alliance
Capital from all liabilities arising out of the reorganization or
any document prepared or distributed in connection therewith, other
than liabilities based upon any disclosure regarding the business
and operations of Alliance Capital or Alliance Holding that is
alleged to be inadequate in or omitted from documents Alliance
Holding has filed with the SEC and incorporated by reference into
this prospectus, and (b) to indemnify Alliance Holding or Alliance
Capital if the reorganization results in Alliance Holding's or
Alliance Capital's being taxed as a corporation under current tax
laws; and the fact that Equitable Life will bear its share of the
federal tax on gross business income, whether at the current rate of
3.5% or at any other rate that may be effective in the future, if
such tax is imposed on all of the gross business income of Alliance
Capital, either under current law or as a result of any legislative
or regulatory change, regardless of whether the tax is payable by
Alliance Capital or Alliance Holding;
(7) that any amendment to the indemnification and reimbursement
agreement that would materially affect the rights and obligations of
Equitable Life, Alliance Holding or Alliance Capital would require
the unanimous approval of the general partner's board of directors;
(8) the analyses and presentation of Goldman Sachs, and the oral opinion
rendered by Goldman Sachs on April 8, 1999 that, as of that date,
and based upon the considerations and subject to the assumptions and
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limitations set forth in its opinion, the exchange ratio pursuant to
the agreement and plan of reorganization is fair from a financial
point of view to those unitholders who remain holders of Alliance
Holding units immediately following the exchange offer;
(9) that although there will be increased costs resulting from
maintaining two partnerships in connection with the Alliance
business, the general partner does not expect such costs to be
material and that such costs will be borne by investors in both
Alliance Holding and Alliance Capital;
(10) that Alliance Capital has agreed to reimburse Alliance Holding for
all of its ongoing costs and expenses, other than specified taxes,
including taxes on its income;
(11) the general partner's expectation, after consultation with Goldman
Sachs, that the potential decrease in the number of Alliance Holding
units held by public unitholders immediately following the exchange
will not materially impact the liquidity of Alliance Holding units
and should not, in and of itself, adversely affect in any material
way the trading price per Alliance Holding unit (see "-- Alliance
Holding Public Float After the Exchange");
(12) that although the process of soliciting consents to assign
investment advisory contracts from Alliance Holding to Alliance
Capital may increase the likelihood that Alliance Holding will lose
client accounts, the advisory contracts are terminable upon short
notice and the general partner's expectation is that such losses
will not significantly exceed those that would otherwise occur if we
did not undertake the reorganization;
(13) the general partner's expectation that although the duties of
Alliance Capital Management Corporation when acting as general
partner of Alliance Holding may conflict with its duties when acting
as general partner of Alliance Capital, such conflicts are unlikely
to occur and can be resolved;
(14) the possibility that tax legislation may be enacted in the future
that would result in increased taxes for Alliance Capital and
Alliance Holding;
(15) that the consistency of the reorganization with current federal tax
law and with other similar transactions completed by other
publicly-traded partnerships makes it unlikely that the tax benefits
to Alliance Capital will not be realized;
(16) that although an inability to transfer the economic benefits of
Alliance Holding's assets and licenses to Alliance Capital could
adversely affect Alliance Capital's unitholders, the general
partner's expectation is that it will be able to arrange the
transfer of the economic benefit of substantially all of such assets
and licenses;
(17) the general partner's expectation that any litigation that may be
brought challenging the reorganization will not divert a substantial
portion of the time and attention of senior management that would
otherwise be devoted to the business of Alliance Capital; and
(18) that the partnership agreement is being amended in order to
implement the reorganization in a manner designed to ensure that the
existing rights and benefits of Alliance Holding unitholders are
maintained following the reorganization and to modify or eliminate
provisions that are inoperative or are no longer relevant or that
require technical revisions.
The general partner did not attempt to quantify, rank or otherwise assign
relative weights to specific factors described above, and individual members
of the board of the general partner may have given different weights to
different factors.
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Alliance Holding Public Float After the Exchange
Alliance Holding's public float may decrease depending upon the extent to
which public unitholders participate in the exchange offer and receive
Alliance Capital units. For purposes of calculating public float, "public
unitholders" excludes Equitable Life, its affiliates, other holders of more
than 2% of the currently outstanding Alliance Holding units and Alliance
Holding's executive management. To preserve its NYSE listing and to preserve
an adequate public float for Alliance Holding units after the reorganization,
Alliance Holding will limit the number of public units that will be accepted
in the exchange offer.
To satisfy NYSE listing requirements, we must ensure that there are not
less than 1,200 public holders of Alliance Holding units and not less than
600,000 public units of Alliance Holding outstanding after the exchange. In
calculating the number of public units, the NYSE requires us to exclude units
held by directors, officers, or their immediate family members and other
concentrated holdings of 10% or more.
To preserve liquidity in the Alliance Holding units, at least 40 million
units will be held by public unitholders immediately following the exchange,
which means that the maximum number of units of public unitholders that we
will accept in the exchange is 18.7 million. If public unitholders do
participate in the exchange offer, the most the number of units held by public
unitholders could decrease would be from 58.7 million units as of June 30,
1999 to 40 million units, a reduction of 31.9%. Assuming a per unit price of
$325/16, the price as of June 30, 1999, 40 million units held by public
unitholders represents a public float of approximately $1,293 million
immediately following the exchange. The table below shows the level to which
the public float would be reduced from its current level based on varying
levels of units tendered by public unitholders.
Number of public units tendered*
---------------------------------------
10 18.7 More than
None million million million
------- ------- ------- --------
Units held by public unitholders
(in millions)....................... 58.7 48.7 40 40
Total public float (in millions)...... $ 1,897 $ 1,574 $ 1,293 $ 1,293
- -------------------
* In calculating the public float, we have excluded units held by Equitable
Life, its affiliates, other holders of more than 2% of the currently
outstanding Alliance Holding units and Alliance Holding's executive
management.
We believe, after consultation with Goldman Sachs, that the potential
decrease in the number of Alliance Holding units held by public unitholders
immediately following the exchange will not materially impact the liquidity of
Alliance Holding units and should not, in and of itself, adversely affect in
any material way the trading price per Alliance Holding unit. In making this
determination, we reviewed analyses prepared by Goldman Sachs, which showed
that the public floats of PIMCO Advisors and Nvest, L.P., the two other
publicly traded asset management partnerships, are $1,850 million and $582
million, respectively, and that the public float of approximately $1,293
million resulting from 40 million units held by public unitholders immediately
following the exchange would be greater than the public floats of 14 of the
other 15 publicly traded partnerships reviewed. There can be no assurance that
the resulting public float will ensure the continued liquidity of the Alliance
Holding units or that any potential reduction in the public float may not
adversely affect the trading price per Alliance Holding unit.
Exchanges of units by all holders will be subject to the same pro rata
reduction mechanism applied to exchanges of units in excess of the maximum
number of units described above. However, because we do not include units held
by unitholders other than public holders in calculating the public float, the
minimum number of public units that will remain outstanding after the
reorganization will not be affected by the number of exchanges by Equitable,
its affiliates, the other holders of more than 2% of the currently outstanding
Alliance Holding units and the members of Alliance Holding's executive
management.
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As of June 30, 1999, the total number of Alliance Holding units
outstanding was approximately 171.1 million. As of that date, Equitable Life
and its affiliates, the other holders of more than 2% of the outstanding
Alliance Holding units and the members of Alliance Holding's executive
management held approximately 96.6 million (or 56.5%), 10.5 million (or 6.1%)
and 5.3 million (or 3.1%) of Alliance Holding's outstanding units,
respectively, a total of approximately 112.4 million (or 65.7%) of Alliance
Holding's outstanding units. Equitable Life and its affiliates have agreed
with Alliance Holding to exchange substantially all of their Alliance Holding
units for units of Alliance Capital; at this time we do not know whether any
other non-public holders intend to exchange their Alliance Holding units.
However, assuming for illustrative purposes that Equitable Life, its
affiliates, the other holders of more than 2% of the currently outstanding
Alliance Holding units and the members of Alliance Holding's executive
management elect to exchange all of their Alliance Holding units, the tables
below illustrate, based on different levels of public units tendered, the
impact of the pro rata reduction on all unitholders.
Scenario One: Public unitholders tender 18.7 million units for exchange
Units
Accepted Pro Rata
Units for Reduction
Tendered Exchange of Units Reduction
(in (in (in of Units
millions) millions) millions) Tendered
-------- --------- ---------- ----------
Public unitholders......... 18.7 18.7 0.0 0%
Equitable and affiliates... 96.6 96.6 0.0 0%
Other 2% holders........... 10.5 10.5 0.0 0%
Executive management....... 5.3 5.3 0.0 0%
Units held by public unitholders: 40 million
Total public float: $1,293 million
Scenario Two: Public unitholders tender more than 18.7 million units for
exchange
Public unitholders........... 22.0 18.7 3.3 15%
Equitable and affiliates..... 96.6 82.1 14.5 15%
Other 2% holders............. 10.5 8.9 1.6 15%
Executive management......... 5.3 4.5 0.8 15%
Units held by public unitholders: 40 million
Total public float: $1,293 million
In both scenario one and scenario two, 40 million units are held by
public unitholders immediately following the exchange. In all cases where
public unitholders tender in excess of the maximum of 18.7 million units, all
tendering unitholders will be subject to pro rata reductions, and in all such
cases, 40 million units held by public unitholders, or, based on a unit price
of $325/16 as of June 30, 1999, a public float of approximately $1,293
million, will remain outstanding immediately after the exchange.
The exchange will impact the total number of Alliance Holding units that
will remain outstanding as follows. If only Equitable Life and its affiliates
exchange their units for Alliance Capital units, the total number of
outstanding units will be reduced to approximately 74.5 million, a reduction
of approximately 56.5%. If, in addition to Equitable Life and its affiliates,
the other holders of more than 2% of the outstanding Alliance Holding units
and the members of Alliance Holding's executive management elect to exchange
all of their units, the total number of outstanding units will be reduced to
approximately 58.7 million units, a reduction of approximately 65.7%. If the
public unitholders also elect to exchange their units, the total number of
outstanding units will be reduced to a number ranging from approximately 40.0
million units (if public unitholders tender 18.7 million units), a reduction
of approximately 76.6%, to approximately 116.6 million units (if public
unitholders tender all 58.7
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million public units and giving effect to the pro rata reductions), a
reduction of approximately 31.9%. As noted above, however, we do not include
units held by Equitable Life and its affiliates, the other holders of more
than 2% of the outstanding Alliance Holding units and the members of Alliance
Holding's executive management in calculating the public float. We do not
believe that these units should be included in any analysis of the public
float, including the impact of the exchange on the public float, because these
holders tend to be long-term investors who do not frequently trade their
Alliance Holding units. For example, Equitable Life and its affiliates have
held their approximately 96.6 million Alliance Holding units as a long-term,
strategic investment since 1987, when Alliance Holding first sold its units to
public investors.
Transaction Expenses
The costs and expenses of the reorganization, the special meeting, the
exchange offer and the related transactions are estimated to be approximately
$8 million. Equitable Life has agreed to pay or reimburse, or cause to be paid
or reimbursed, these costs and expenses. In addition, if the reorganization is
consummated, Equitable Life has agreed to pay $3 million to Alliance Capital
for any internal personnel and overhead costs and expenses of Alliance
Holding, Alliance Capital or their common general partner relating to the
consideration and implementation of the reorganization and the exchange offer,
costs relating to additional communications with clients and personnel
necessitated by the transaction and other miscellaneous expenses relating to
the transaction. Equitable Life has agreed to pay $1.5 million to Alliance
Holding for such costs if the reorganization is not consummated. See "The
Reorganization Documents--The Indemnification Agreement."
Employee Matters
Transfer of Employees
As of the reorganization, Alliance Capital will become the employer of
all of Alliance Holding's employees, and will assume the liabilities of
Alliance Holding with respect to both current and former employees. Alliance
Holding will not directly employ any persons after the reorganization,
although certain members of Alliance Capital's administrative staff and senior
management will devote a portion of their time to performing services for
Alliance Holding.
Benefit Plans
Alliance Capital will assume sponsorship of the compensation and benefit
plans currently maintained by Alliance Holding, except for those benefit plans
that provide for the grant of options or similar awards with respect to
Alliance Holding units. See "--Options" below. We expect that Alliance Capital
will continue, at least initially, to maintain the plans now maintained by
Alliance Holding in substantially their present form. The Profit Sharing Plan
for Employees of Alliance Holding, a qualified retirement plan maintained by
Alliance Holding for its employees, presently provides that participants may
elect to have a portion of their accounts under the plan invested in Alliance
Holding units. We expect that Alliance Capital will assume sponsorship of the
Profit Sharing Plan for Employees of Alliance Holding and will continue, after
the reorganization, to permit participants to elect to have a portion of their
accounts under the plan invested in Alliance Holding units.
Options
After the reorganization, Alliance Holding will continue to sponsor its
1997 Long Term Incentive Plan, 1993 Unit Option Plan, Century Club Plan and
Unit Bonus Plan, each of which plans will be amended to provide for the grant
of awards to employees of Alliance Capital. Alliance Holding and Alliance
Capital intend to continue making grants to Alliance Capital employees under
the 1997 Long Term Incentive Plan of options as well as, potentially,
restricted units and other awards based on units of Alliance Holding.
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Diluted net income per Alliance Holding unit reflects the potential
dilution that could occur if unitholders exercised outstanding options. The
calculation of diluted net income per Alliance Holding unit is made by
including the additional allocation of Alliance Capital net income that would
be available to Alliance Holding as a result of such exercise. Proceeds from
the hypothetical exercise of such outstanding options are assumed to be used
to repurchase those units under the treasury stock method. See "--Accounting
Treatment" below.
Material Federal Income Tax Consequences
The following discussion represents the opinion of Davis Polk & Wardwell,
counsel to Alliance Holding, as to the material United States federal income
tax consequences of:
(1) the reorganization,
(2) an exchange of Alliance Holding units for Alliance Capital units,
and
(3) the ownership of Alliance Holding units and Alliance Capital units
after the reorganization.
This discussion is based on the Internal Revenue Code, Treasury
regulations, judicial decisions and administrative rulings as of the date
hereof, all of which are subject to change, including changes with retroactive
effect. The discussion addresses only beneficial owners of Alliance Holding
units or Alliance Capital units (referred to as "unitholders") who hold such
units as capital assets. It does not address any state, local or foreign tax
consequences. Neither Alliance Holding nor its general partner has requested
or will request a ruling from the IRS as to the tax consequences of the
reorganization, an exchange of Alliance Holding units for Alliance Capital
units or the ownership, after the reorganization, of Alliance Holding units or
Alliance Capital units.
Your tax treatment may vary depending on your particular tax situation.
Various unitholders, such as tax-exempt organizations or broker-dealers, may
be subject to special rules not discussed below.
You are urged to consult your own tax adviser concerning the particular
United States federal, state and local tax consequences to you, as well any
other tax consequences particular to you, of an exchange of Alliance Holding
units for Alliance Capital units, and the ownership of Alliance Capital units.
Federal Income Tax Consequences of the Reorganization
Alliance Holding's contribution of all of its assets and liabilities to
Alliance Capital in exchange for units in Alliance Capital will not be a
taxable event. Immediately after the contribution, Alliance Holding's tax
basis in its Alliance Capital units will be equal to the aggregate tax bases
of the assets it contributed to Alliance Capital, including any adjustments
that were made to the basis of the assets prior to the contribution as a
consequence of the election that Alliance Holding made under Section 754 of
the Internal Revenue Code (the "Section 754 election"). For a description of
the Section 754 election, see "--Federal Taxation of Alliance Holding and
Alliance Holding Unitholders after the Reorganization." Immediately after the
contribution, Alliance Capital's tax basis in the contributed assets will be
equal to Alliance Holding's tax basis in the assets immediately prior to the
contribution, including any adjustments that were made to the basis of the
assets prior to the contribution as a consequence of Alliance Holding's
Section 754 election.
The holding period of any portion of the Alliance Capital units that
Alliance Holding receives in exchange for a capital asset or certain
depreciable property will include Alliance Holding's holding period for the
contributed asset. The holding period of thess portion of the Alliance Capital
units that Alliance Holding receives in exchange for any other assets will
begin on the day following Alliance Holding's contribution of assets and
liabilities to Alliance Capital. Alliance Holding expects that most of its
Alliance Capital units will have a holding period of more than one year.
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Federal Income Tax Consequences of the Exchange
If you elect to exchange Alliance Holding units for units in Alliance
Capital, Alliance Holding will distribute Alliance Capital units to you in
exchange for the units that you tender. Except as discussed in the next
paragraph, you will not recognize any gain or loss for United States federal
income tax purposes as a consequence of this distribution.
Exchanges of Alliance Holding units for Alliance Capital units will
trigger a de minimis amount of gain on some assets that Alliance Holding
acquired in exchange for units in 1996 as part of its acquisition of a
majority interest in an investment advisory business. Under the Internal
Revenue Code, this gain will be attributable to the holders of the units that
Alliance issued as consideration for the assets. Alliance Holding will
allocate this de minimis amount using assumptions that it believes are
reasonable and consistent with the Code.
After the reorganization and exchange, Alliance Capital's general partner
and Equitable Life may, in their sole discretion, allow holders of Alliance
Capital units who so request to transfer their Alliance Capital units to
Alliance Holding in exchange for Alliance Holding units. Under existing IRS
authority, because Alliance Holding has agreed to issue Alliance Holding units
to any Alliance Capital holder who has received this consent to transfer,
Alliance Holding will be treated as distributing to exchanging unitholders, in
addition to units in Alliance Capital, a right to exchange Alliance Capital
units for Alliance Holding units in limited circumstances. If you exchange
Alliance Holding units for Alliance Capital units and if the right had any
value, it is possible, depending on your particular circumstances, that you
would recognize gain equal to the amount that the value of the exchange right
exceeds the tax basis of all your Alliance Holding units immediately prior to
the exchange. Given the significant restrictions on your ability to exercise
this exchange right, however, Alliance Holding believes that any such exchange
right will have virtually no value.
The tax basis of your Alliance Capital units will depend on whether you
exchange all or only a portion of your Alliance Holding units.
o Unitholders Who Exchange All Their Units. If you exchange all
of your Alliance Holding units, you will have a tax basis in
your Alliance Capital units equal to the tax basis of your
Alliance Holding units immediately prior to the exchange.
o Unitholders Who Exchange Some of Their Units. In general, if
you exchange some, but not all, of your Alliance Holding units,
you will have a tax basis in your Alliance Capital units equal
to Alliance Holding's tax basis in those units immediately
prior to the exchange. The sole exception to this rule is that
the tax basis of your Alliance Capital units may not exceed the
aggregate tax basis of all your Alliance Holding units (both
those you exchange and those you retain) immediately prior to
the exchange. The tax basis of the Alliance Holding units you
retain will be equal to the aggregate tax basis of all your
Alliance Holding units immediately prior to the exchange minus
the tax basis of the Alliance Capital units you receive in the
exchange. After the exchange, the aggregate tax basis of your
Alliance Holding units and your Alliance Capital units will be
equal to the aggregate tax basis of all your Alliance Holding
units immediately prior to the exchange.
If you exchange units that you acquired at a time when Alliance
Holding's Section 754 election was in effect, Alliance Holding
will include the entire basis adjustment attributable to those
units in the tax basis of the Alliance Capital units it
distributes to you. Conversely, if you exchange units that you
acquired prior to the effective date of Alliance Holding's
Section 754 election, Alliance Holding will not include in the
tax basis of the Alliance Capital units it distributes to you
any basis adjustment that it has made pursuant to its Section
754 election. Alliance Holding's Section 754 election was in
effect for its taxable year beginning on January 1, 1998, and
will be in effect for all its subsequent taxable years. For
example, assume that you own five Alliance Holding units with
an aggregate tax basis of $100, that you acquired your units
prior to the effective date of the Section
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754 election, and that you exchange one unit for an Alliance
Capital unit that has a basis of $5 to Alliance Holding,
without regard to any basis adjustments that Alliance Holding
has made pursuant to the Section 754 election. Your basis in
the Alliance Capital unit distributed to you will be $5 and
your basis in your remaining four Alliance Holding units will
be $95. Now assume the same facts, except that you acquired the
Alliance Holding units at a time when the Section 754 election
was in effect and that Alliance Holding made a basis adjustment
of $75 (or $15 per unit) to its assets in connection with that
acquisition. Your basis in the Alliance Capital unit
distributed to you will be $20 ($5 plus the $15 basis
adjustment attributable to the unit you exchange) and your
basis in your remaining four Alliance Holding units will be
$80.
Your holding period for the Alliance Capital units that Alliance Holding
distributes to you will be the same as Alliance Holding's holding period for
those units. As discussed above, a portion of the Alliance Capital units held
by Alliance Holding will have a holding period that reflects the holding
periods of the assets that Alliance Holding contributes to Alliance Capital,
while the remainder of the Alliance Capital units held by Alliance Holding
will have a holding period that begins on the day following the
reorganization. Each Alliance Capital unit that Alliance Holding distributes
in exchange for an Alliance Holding unit will have the same holding period
profile.
If you obtained your Alliance Holding units in exchange for a
contribution of property, other than cash, to Alliance Holding, exchanges of
Alliance Holding units for units in Alliance Capital may have different
consequences for you. If you are in this situation, you should consult your
tax adviser about the tax consequences of the exchange to you, regardless of
whether you intend to participate in the exchange.
Federal Taxation of Alliance Holding and Alliance Holding Unitholders
after the Reorganization
Alliance Holding is currently a "grandfathered" publicly-traded
partnership for federal tax purposes. Under prior tax law, the exemption from
federal income tax for grandfathered publicly-traded partnerships would have
expired on December 31, 1997. However, pursuant to a provision enacted by the
Taxpayer Relief Act of 1997, a grandfathered publicly-traded partnership may
elect to maintain its status as a partnership for federal tax purposes,
provided that it pays a tax equal to 3.5% of its gross income from the active
conduct of a trade or business. Alliance Holding has elected to retain its
partnership status and, as a consequence, Alliance Holding is subject to the
3.5% tax. Although the matter is not free from doubt because of the absence of
authority directly on point, Alliance Holding will not lose its status as a
'grandfathered' publicly traded partnership, and thus will not become subject
to federal corporate income tax, as a result of the reorganization. Moreover,
Equitable Life will indemnify Alliance Holding for corporate income tax
payable in respect of Alliance Holding's income in the unlikely event that
Alliance Holding is treated as a corporation under current law as a result of
the reorganization. After the reorganization, the 3.5% tax will be imposed on
Alliance Holding's share of Alliance Capital's gross business income.
In general, the tax consequences of holding an Alliance Holding unit
after the reorganization will be identical to the tax consequences of holding
an Alliance Holding unit prior to the reorganization. The character of each
item of Alliance Capital's income, gain, loss, deduction and credit will flow
through to Alliance Holding and, in turn, to you as a holder of Alliance
Holding units.
The Internal Revenue Code provides for adjustments to the tax basis of
partnership property upon the occurrence of certain events, including the
transfer of partnership interests by sale or exchange, provided that the
partnership has made a Section 754 election. Alliance Holding has made a
Section 754 election, effective for its taxable years beginning on and after
January 1, 1998, and Alliance Capital will make a Section 754 election
effective for its first taxable year and all subsequent taxable years.
Pursuant to Alliance Holding's Section 754 election, when a holder acquires
units, the "inside" tax basis of the portion of Alliance Holding's property
that is attributable to those units is increased or decreased to reflect the
new holder's "outside" tax basis in his units. Any basis adjustment made
pursuant to the Section 754 election affects only the relevant holder and is
not attributable to any other holder. The holder is entitled to claim
amortization and depreciation deductions with respect to any
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increase in the basis of his share of Alliance Holding's amortizable and
depreciable assets pursuant to the Section 754 election. These deductions
reduce the holder's adjusted tax basis in his units.
Basis adjustments made to Alliance Holding's assets pursuant to the
Section 754 election prior to the reorganization will be included in Alliance
Capital's tax basis in those assets after the reorganization. If you retain
Alliance Holding units, any basis adjustments that are attributable to those
units will be attributable to Alliance Holding and, through Alliance Holding,
will continue to be attributable to you. After the reorganization, sales and
exchanges of Alliance Holding units will trigger basis adjustments both to
Alliance Holding's units in Alliance Capital and to Alliance Capital's assets.
Neither Alliance Holding nor Alliance Capital will make any basis adjustments
as a consequence either of the reorganization or of exchanges of Alliance
Holding units for Alliance Capital units.
The calculations of basis adjustments under Section 754 are highly
complex and there is little legal authority dealing with their mechanics,
particularly in the context of large, publicly-held partnerships. For purposes
of determining the amount of basis adjustments pursuant to the Section 754
election, Alliance Holding and Alliance Capital may adopt conventions designed
to achieve the correct results as nearly as possible. There can be no
assurance, however, that the IRS will not challenge these conventions.
Gain or loss that you recognize on a sale of Alliance Holding units will
generally be capital gain or loss and will be long-term if your holding period
for the units was more than one year on the date of the sale. However, to the
extent that the units you sell represent "unrealized receivables" (including
rights to payment for services rendered, as well as certain other property),
you will recognize ordinary income or loss on the sale. It is possible for you
to have ordinary income in respect of "unrealized receivables" even though you
recognize an overall capital loss on a sale of units. For this purpose, the
aggregate amortization deductions you have claimed with respect to Alliance
Holding's and Alliance Capital's intangible assets will constitute "unrealized
receivables."
Federal Taxation of Alliance Capital and its Partners after the
Reorganization
Although the matter is not free from doubt because of the absence of
authority directly on point, Alliance Capital will not be subject to federal
income tax, provided that it is not a publicly traded partnership. Alliance
Capital Management Corporation, which will be the general partner of Alliance
Capital, intends to restrict transfers of Alliance Capital units, pursuant to
the Alliance Capital partnership agreement, in a manner necessary to prevent
Alliance Capital from being treated as a publicly traded partnership. See
"Description of Alliance Capital Units -- Restrictions on Transfers of
Alliance Capital Units." Moreover, Equitable Life will indemnify Alliance
Holding for corporate income tax payable in respect of Alliance Capital's
income in the unlikely event that Alliance Capital is treated as a corporation
under current law as a result of the reorganization or as a result of
transfers of interests in Alliance Capital. The taxation of partners of
Alliance Capital will generally be identical to the taxation of holders of
Alliance Holding units. However, the gross business income that Alliance
Capital allocates to Alliance Holding will be subject to a 3.5% federal tax
payable by Alliance Holding.
It is conceivable that, after the reorganization, the IRS would seek to
impose the 3.5% tax on the portion of Alliance Capital's gross business income
that is not allocated to Alliance Holding or even that the IRS would seek to
subject Alliance Capital's income to the corporate income tax. If the IRS were
to prevail, Equitable Life and the other partners in Alliance Capital will
bear, or will indemnify Alliance Holding for, their respective shares of the
tax on Alliance Capital's gross business income, whether at the current rate
of 3.5% or at any rate that may be effective in the future and whether imposed
under current law or as a result of any legislative or regulatory change, and
Equitable Life will indemnify Alliance Holding if either Alliance Holding or
Alliance Capital is taxed as a corporation under current law as a result of
the reorganization.
Basis adjustments made to Alliance Holding's assets pursuant to the
Section 754 election prior to the reorganization will be included in Alliance
Capital's tax basis in those assets after the reorganization. Any basis
adjustments that are attributable to Alliance Holding units that you exchange
for Alliance Capital units will
27
<PAGE>
continue to be attributable to you in your capacity as a unitholder of
Alliance Capital. As a result, the tax consequences of the pre-reorganization
basis adjustments will be the same for you as they would have been in the
absence of the reorganization of Alliance Holding. After the reorganization,
acquisitions of Alliance Capital units will trigger adjustments to the tax
basis of Alliance Capital's assets. Neither Alliance Holding nor Alliance
Capital will make any basis adjustments as a consequence of the reorganization
or of exchanges of Alliance Holding units for Alliance Capital units.
After the reorganization, you may, in some limited circumstances, be able
to exchange all or a portion of your units in Alliance Capital for Alliance
Holding units. See "Description of Alliance Capital Units -- Restrictions on
Transfers of Alliance Capital Units." The exchange of Alliance Capital units
for Alliance Holding units will not be a taxable event for you or for either
Alliance Holding or Alliance Capital. Immediately after any such exchange, the
aggregate tax basis of your Alliance Holding units will equal the tax basis of
the Alliance Capital units that you exchanged for Alliance Holding units plus
the tax basis of any Alliance Holding units that you were holding at the time
of the exchange. In general, your holding period for the Alliance Holding
units that you receive in exchange for units in Alliance Capital will include
your holding period for the Alliance Capital units. It is possible, however,
that the units you receive in exchange for the portion of your Alliance
Capital units that is attributable to "unrealized receivables" (including
Alliance Capital's rights to payment for services rendered, as well as certain
other property) will have a holding period beginning on the day after the
exchange. Neither Alliance Holding nor Alliance Capital will make any
adjustments to the basis of its assets pursuant to their Section 754 elections
as a consequence of an exchange of Alliance Capital units for Alliance Holding
units.
The tax consequences of a sale of Alliance Capital units will be the same
as the tax consequences of a sale of Alliance Holding units. Gain or loss that
you recognize on a sale of Alliance Capital units will generally be capital
gain or loss and will be long-term if your holding period for the units was
more than one year on the date of the sale. However, to the extent that the
Alliance Capital units you sell represent "unrealized receivables" (including
rights to payment for services rendered, as well as certain other property),
you will recognize ordinary income or loss on the sale. It is possible for you
to have ordinary income in respect of "unrealized receivables" even though you
recognize an overall capital loss on the sale of the Alliance Capital units
you claim. For this purpose, the aggregate amortization deductions you claim
with respect to intangible assets owned by Alliance Capital will constitute
"unrealized receivables."
Regulatory Matters
Alliance Holding is, and upon completion of the reorganization, Alliance
Capital will be, an investment adviser subject to extensive regulation at both
the federal and state level. As a registered investment adviser under the
Investment Advisers Act of 1940, Alliance Holding is, and Alliance Capital
will be, subject to regulations that cover various aspects of their respective
businesses.
Under the Investment Advisers Act, every investment advisory agreement
between Alliance Holding and its clients must expressly provide that such
agreement may not be assigned by Alliance Holding without the client's
consent. Under the Investment Company Act of 1940, every investment advisory
agreement between Alliance Holding and its registered investment company
clients must provide for that agreement's automatic termination upon
assignment. Pursuant to rules adopted under each of these acts, though, a
transaction is not an assignment if it does not result in a change of actual
control or management of an investment adviser. Alliance Holding believes that
the reorganization will not be an assignment for purposes of either the
Investment Advisers Act or the Investment Company Act because the
reorganization will not cause a change of control or management of an
investment adviser. Even though the reorganization will not result in an
assignment under the Investment Company Act or the Investment Advisers Act,
the reorganization may be deemed an assignment under certain client agreements
as a matter of state law. Alliance Holding will, therefore, seek the approval
of certain of its clients with respect to these agreements. Equitable Life has
agreed to reimburse Alliance Holding fully for its out-of-pocket costs and
expenses incurred in connection with this approval process.
28
<PAGE>
Accounting Treatment
Alliance Holding's assets and liabilities transferred to Alliance Capital
will be recorded by Alliance Capital at the amounts reflected in the books and
records of Alliance Holding on the date of transfer. Alliance Capital will
have the same tax basis in these assets as does Alliance Holding.
The financial statements of Alliance Holding will reflect its
proportionate share of its investment in Alliance Capital, using the equity
method of accounting, and will be recorded, initially, based on the amounts of
assets and liabilities recorded by Alliance Capital on the date of transfer.
Subsequently, Alliance Holding's investment will be increased to reflect its
proportionate share of income of Alliance Capital and will be decreased to
reflect its proportionate share of losses or distributions it receives from
Alliance Capital.
Diluted net income per Alliance Holding unit reflects the potential
dilution that could occur if unitholders exercised outstanding options. The
calculation of diluted net income per Alliance Holding unit is made by
including the additional allocation of Alliance Capital net income that would
be available to Alliance Holding as a result of such exercise. Proceeds from
the hypothetical exercise of such outstanding options are assumed to be used
to repurchase those units under the treasury stock method.
No Appraisal Rights
Alliance Holding unitholders who objected to either of (1) the transfer
of Alliance Holding's business to Alliance Capital pursuant to the agreement
and plan of reorganization or (2) the amended Alliance Holding partnership
agreement have no appraisal, dissenter or similar rights under applicable law.
That is, such Alliance Holding unitholders do not have the right to seek
judicial determination of the "fair value" of the units and to compel Alliance
Holding to purchase their units for cash in that amount. Alliance Holding will
not voluntarily give unitholders these rights. If you gave voting instructions
to vote in favor of the reorganization, a court may find that you have waived
your right to challenge the fairness of these transactions, regardless of
whether you act individually or as a member of a class of Alliance Holding's
unitholders.
29
<PAGE>
SELECTED FINANCIAL DATA
Selected Historical Consolidated Financial Data
of Alliance Holding
We have set forth below selected summary consolidated historical
financial data of Alliance Holding for the six months ended June 30, 1999 and
1998 and for each of the years in the five-year period ended December 31,
1998. This data should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the consolidated
financial statements of Alliance Holding set forth in its Form 10-Q for the
quarterly period ended June 30, 1999 and in its Annual Report on Form 10-K for
the year ended December 31, 1998, which is incorporated by reference into this
prospectus. Unit and per unit amounts for all periods prior to the two-for-one
unit split in 1998 have been restated. Net income per unit amounts prior to
1997 have been restated as required to comply with Statement of Financial
Accounting Standards No. 128, Earnings per Share.
<TABLE>
For the
Six Months Ended For the Year Ended
June 30, December 31,
------------------- -------------------------------------------------------
1999 1998 1998 1997 1996 1995 1995
-------- -------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(unaudited) (in thousands, except for per unit data)
Income statement data:
Revenues........................ $838,684 $648,137 $1,324,056 $975,336 $788,517 $639,255 $600,952
Income before income taxes...... 229,728 172,417 348,712 147,762 207,590 167,011 141,806
Net income...................... 195,268 144,825 292,916 128,956 193,346 155,387 133,489
Net income before reduction in
recorded value of intangible
assets....................... 195,268 144,825 292,916 249,856 193,346 155,387 133,489
Net income per unit:
Basic net income per unit....... $ 1.13 $ 0.85 $ 1.71 $ 0.76 $ 1.15 $ 0.95 $ 0.86
Diluted net income per unit..... $ 1.10 $ 0.82 $ 1.66 $ 0.74 $ 1.13 $ 0.94 $ 0.85
Diluted net income per unit
before reduction in recorded
value of intangible assets... $ 1.10 $ 0.82 $ 1.66 $ 1.44 $ 1.13 $ 0.94 $ 0.85
Basic weighted average units
outstanding.................. 170,804 169,609 169,933 168,448 166,382 161,538 153,381
Diluted weighted average units
outstanding.................. 175,968 174,949 175,143 171,876 168,968 163,116 155,882
Cash distributions per unit........ $ 1.08 $ 0.80 $ 1.62 $ 1.40 $ 1.095 $ 0.91 $ 0.82
</TABLE>
<TABLE>
June 30, December 31,
--------- -------------------------------------------------------
1999 1998 1997 1996 1995 1995
--------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance sheet data:
Total assets.................... $1,456,717 $1,132,592 $784,460 $725,897 $575,058 $518,369
Debt and long-term obligations(1) 424,486 238,089 130,429 52,629 30,839 29,021
Partners' capital............... 467,062 430,273 398,051 476,020 406,709 381,329
Assets under management (in
millions)(2).................... $ 321,006 $ 286,659 $218,654 $182,792 $146,521 $119,279
- -------------------
(1) Includes accrued compensation and benefits due after one year and debt.
(2) Excludes certain non-discretionary advisory relationships and reflects 100% of the assets managed by unconsolidated
joint venture subsidiaries and affiliates.
</TABLE>
30
<PAGE>
Selected Unaudited Pro Forma Financial Data
of Alliance Capital and Alliance Holding
We have set forth below selected unaudited pro forma financial data of
Alliance Capital and Alliance Holding for the six months ended June 30, 1999
and 1998 and for the year ended December 31, 1998. This pro forma data has
been derived from the unaudited pro forma condensed financial statements of
Alliance Capital and Alliance Holding and includes the assumptions described
under "Pro Forma Condensed Financial Statements (Unaudited)". This pro forma
data reflects the effects of the reorganization and the exchange offer as if
such transactions occurred on June 30, 1999 (for balance sheet purposes) and
January 1, 1998 (for income statement purposes). This pro forma data does not
purport to represent what the financial position or results of operations of
Alliance Capital and Alliance Holding would actually have been if the
reorganization and the exchange offer had occurred on these dates, or to be
indicative of the future financial position or results of operations of
Alliance Capital and Alliance Holding. You should read this pro forma data in
conjunction with the consolidated financial statements of Alliance Holding set
forth in its Form 10-Q for the quarter ended June 30, 1999 and in its Annual
Report on Form 10-K for the year ended December 31, 1998, which is
incorporated by reference into this prospectus, and with the information under
"Pro Forma Condensed Financial Statements (Unaudited)".
<TABLE>
Historical Alliance Holding
------------------------------------------------
For the Six Months For the Year
Ended June 30, Ended
---------------------------- December 3,
1999 1998 1998
---------- -------- -------------
<S> <C> <C> <C>
(in thousands, except for per unit data)
Income statement data:
Revenues...................................... $838,684 $648,137 $1,324,056
Income before income taxes.................... 229,728 172,417 348,712
Net income.................................... 195,268 144,825 292,916
Net income per unit:
Basic net income per unit..................... $ 1.13 $ 0.85 $ 1.71
Diluted net income per unit................... $ 1.10 $ 0.82 $ 1.66
Basic weighted average units outstanding...... 170,804 169,609 169,933
Diluted weighted average units outstanding.... 175,968 174,949 175,143
Cash distributions per unit...................... $ 1.08 $ 0.80 $ 1.62
June 30,
1999
----------
Balance sheet data:
Total assets.................................. $1,456,717
Debt and long-term obligations................ 424,486
Partner's capital............................. 467,062
</TABLE>
31
<PAGE>
<TABLE>
Pro Forma Alliance Holding
------------------------------------------------
For the Six Months For the Year
Ended June 30, Ended
---------------------------- December 31,
1999 1998 1998
---------- -------- -------------
<S> <C> <C> <C>
(in thousands, except for per unit data)
Income statement data:
Revenues...................................... $838,684 $648,137 $1,324,056
Income before income taxes.................... 229,728 172,417 348,712
Net income.................................... 214,872 160,825 323,516
Net income per unit:
Basic net income per unit..................... $ 1.25 $ 0.94 $ 1.88
Diluted net income per unit................... $ 1.21 $ 0.91 $ 1.83
Basic weighted average units outstanding...... 170,804 169,609 169,933
Diluted weighted average units outstanding.... 175,968 174,949 175,143
Cash distributions per unit...................... $ 1.19 $ 0.89 $ 1.80
June 30,
1999
----------
Balance sheet data:
Total assets.................................. $1,437,113
Debt and long-term obligations................ 424,486
Partner's capital............................. 467,062
Pro Forma Alliance Holding
------------------------------------------------
For the Six Months For the Year
Ended June 30, Ended
---------------------------- December 31,
1999 1998 1998
---------- -------- -------------
<S> <C> <C> <C>
(in thousands, except for per unit data)
Income statement data:
Equity in earnings of Alliance Capital........ $ 80,835 $ 60,088 $120,970
Revenues...................................... 80,835 60,088 120,970
Income before income taxes.................... 80,835 60,088 120,970
Net income.................................... 73,460 54,110 109,528
Net income per unit:
Basic net income per unit..................... $ 1.13 $ 0.85 $ 1.71
Diluted net income per unit................... $ 1.10 $ 0.82 $ 1.66
Basic weighted average units outstanding...... 64,910 64,005 64,183
Diluted weighted average units outstanding.... 70,074 69,345 69,393
Cash distributions per unit...................... $ 1.08 $ 0.80 $ 1.62
June 30,
1999
---------
Balance sheet data:
Investment in Alliance Capital................ $176,402
Total assets.................................. 196,006
Debt and long-term obligations................ --
Partner's capital............................. 176,402
</TABLE>
32
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of Alliance Holding on
a historical basis, and the capitalization of Alliance Capital and Alliance
Holding on a pro forma basis, in each case as of June 30, 1999. The pro forma
presentations reflect the effects of the reorganization and the exchange offer
as if both were completed on June 30, 1999. The pro forma adjustments and
related assumptions are described under "Pro Forma Condensed Financial
Statements (Unaudited)."
Historical Pro Forma Pro Forma
Alliance Alliance Alliance
Holding Capital Holding
---------- --------- ---------
(in thousands)
Noncurrent liabilities:
Noncurrent portion of employee
compensation and benefits....... $ 68,175 $ 68,175 $ --
Noncurrent portion of debt......... -- -- --
-------- -------- --------
Total noncurrent liabilities....... 68,175 68,175 --
Partners' capital..................... 467,602 467,602 176,402
-------- -------- --------
Total capitalization............... $535,777 $535,777 $176,402
======== ======== ========
33
<PAGE>
PRO FORMA CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
The following unaudited pro forma condensed consolidated financial
statements of Alliance Capital and Alliance Holding are derived from the
consolidated financial statements of Alliance Holding set forth in its Annual
Report on Form 10-K for the year ended December 31, 1998 and Form 10-Q for the
quarterly period ended June 30, 1999, which are incorporated by reference into
this prospectus. These pro forma financial statements reflect the effects of
the reorganization and the exchange offer as if such transactions occurred on
June 30, 1999 (for statement of financial condition purposes) and January 1,
1998 (for income statement purposes). The pro forma financial statements do
not purport to represent what the financial position or results of operations
of Alliance Capital and Alliance Holding would actually have been if the
reorganization and the exchange offer had occurred on these dates, or to be
indicative of the future financial position or results of operations of
Alliance Capital and Alliance Holding. You should read these pro forma
financial statements and notes in conjunction with Alliance Holding's
consolidated financial statements and notes.
Under the reorganization, Alliance Holding will transfer its business to
Alliance Capital, a newly formed limited partnership, in exchange for all of
the partnership interests of this new partnership. Following the
reorganization, Alliance Holding's business activities will consist of holding
Alliance Capital units and engaging in related activities. The diversified
investment management services business presently conducted by Alliance
Holding will continue to be conducted by Alliance Capital, and all employees
of Alliance Holding will become employees of Alliance Capital. Alliance
Capital will be a private partnership that is not subject to a federal tax of
3.5% on gross business income. However, Alliance Capital units will not be
traded on any exchange and will be subject to significant restrictions on
transfer that are designed to prevent Alliance Capital from being classified
as a publicly-traded partnership, and taxed as a corporation, for federal tax
purposes. Alliance Holding will remain a publicly-traded partnership, subject
to the 3.5% federal tax on its proportionate share of Alliance Capital's gross
business income.
Under the exchange offer, Alliance Holding unitholders are able to
exchange their units for Alliance Capital units on a one-for-one basis.
Equitable Life and its affiliates, which at June 30, 1999 collectively owned
approximately 57% of the outstanding Alliance Holding units, have agreed with
Alliance Holding to exchange substantially all of their Alliance Holding units
on the same terms as the exchange offer. Accordingly, the pro forma
adjustments assume that Equitable Life and its affiliates will exchange all of
their Alliance Holding units for an equivalent number of Alliance Capital
units, except for an amount equal to an approximately 2% economic interest in
Alliance Holding. Unless the context otherwise requires, all references in
this prospectus to the exchange offer include the exchange by Equitable Life
and its affiliates of their Alliance Holding units for Alliance Capital units.
Alliance Holding is unable to predict which unitholders, other than Equitable
Life and its affiliates, will participate in the exchange offer. However, for
illustrative purposes, the pro forma adjustments assume that no unitholder
will participate in the exchange offer, other than Equitable Life, its
affiliates and other unitholders who, were they to exchange all of their
Alliance Holding units for Alliance Capital units, would hold a sufficient
number of Alliance Capital units to qualify for the block transfer safe
harbors described under "Description of Alliance Capital Units -- Restrictions
on Transfers of the Alliance Capital Units". Based on these assumptions,
Alliance Holding would own an approximately 38.15% limited partnership
interest in Alliance Capital at June 30, 1999. Alliance Holding's interest in
Alliance Capital will entitle it to a share in cash distributions from, and in
the allocation of profits and losses of, Alliance Capital in proportion to
Alliance Holding's percentage ownership.
If the reorganization is consummated, Equitable Life has agreed to pay $3
million to Alliance Capital for any internal personnel and overhead costs and
expenses of Alliance Holding, Alliance Capital or their common general partner
relating to the consideration and implementation of the reorganization and the
exchange offer and other expenses relating to the transaction. Equitable Life
has agreed to pay $1.5 million to Alliance Holding for such costs if the
reorganization is not consummated. Any such payment has not been reflected in
the unaudited pro forma condensed financial statements because of its
nonrecurring nature and because it is not material. Other expenses incurred in
connection with the reorganization and the exchange offer, estimated to be
approximately $8
34
<PAGE>
million, will be borne by Equitable Life and have not been reflected in the
pro forma condensed financial statements.
In the future, Alliance Holding will incur various ongoing expenses,
which primarily will include professional, filing and registration fees.
Alliance Capital will reimburse Alliance Holding for all expenses that are
necessary or appropriate for the conduct of the business of Alliance Holding,
other than the 3.5% federal tax on gross business income and other taxes. As
these amounts are not expected to be material, they have not been reflected in
the pro forma condensed financial statements.
35
<PAGE>
Alliance Holding
Unaudited Pro Forma Condensed Statement of Financial Condition
June 30, 1999
(in thousands, except per unit amounts)
<TABLE>
<CAPTION>
Transfer Exchange of
of Business to Partnership
Historical Alliance Capital Interests Pro Forma
Alliance Holding (Note 2) (Note 3) Alliance Holding
---------------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents.............. $88,301 $(68,697) $19,604
Receivable from brokers and
dealers for sale of shares of
Alliance mutual funds................ 182,885 182,885
Fees receivable........................ 197,273 (197,273)
Investments, available-for-sale........ 183,582 (183,582)
Investment in Alliance Capital......... 467,062 $(290,660) 176,402
Furniture, equipment and leasehold
improvements, net.................... 114,422 (114,422)
Intangible assets, net................. 100,216 (100,216)
Deferred sales commissions, net........ 514,020 (514,020)
Other assets........................... 76,018 (76,018
---------- --------- --------- --------
Total assets......................... $1,456,717 $(970,051) $(290,660) $196,006
=========+ ========= ========= ========
Liabilities:
Payable to Alliance mutual funds
for share purchases.................. $238,797 $(238,797)
Accounts payable and accrued
expenses............................. 187,343 (167,739) $19,604
Accrued compensation and benefits...... 205,008 (205,008)
Debt................................... 356,311 (356,311)
Minority interests in consolidated
subsidiaries......................... 2,196 (2,196)
---------- --------- --------- --------
Total liabilities.................... 989,655 (970,051) $0 19,604
---------- --------- --------- --------
Partners' capital...................... 467,062 0 (290,660) 176,402
---------- --------- --------- --------
Total liabilities and partners' capital. $1,456,717 $(970,051) $(290,660) $196,006
========== ========= ========= ========
Book value per unit outstanding......... $2.70 $2.72 $2.70
========== ========= ========
Units outstanding....................... 171,136 (105,849) 65,287
========== ========= ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Statements
36
<PAGE>
<TABLE>
<CAPTION>
Alliance Holding
Unaudited Pro Forma Condensed Statement of Income
For the Six Months Ended June 30, 1999
(in thousands, except per unit amounts)
Transfer
of Business to Pro Forma
Historical Alliance Capital Adjustments Pro Forma
Alliance Holding (Note 2) (Note 5) Alliance Holding
---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Investment advisory and
services fees................... $596,693 $(596,693)
Distribution revenues............. 198,830 (198,830)
Shareholder servicing fees........ 28,797 (28,797)
Equity in earnings of Alliance
Capital......................... $80,835(a) $80,835
Other revenues.................... 14,364 (14,364)
-------- --------- ------- -------
838,684 (838,684) 80,835 80,835
-------- --------- ------- -------
Expenses:
Employee compensation and
benefits........................ 220,972 (220,972)
Promotion and servicing:
Distribution plan payments
to financial intermediaries... 160,744 (160,744)
Amortization of deferred
sales commissions............. 74,698 (74,698)
Other........................... 54,896 (54,896)
General and administrative........ 87,739 (87,739)
Amortization of intangible assets. 7,980 (7,980)
Interest.......................... 1,927 (1,927)
-------- --------- ------- -------
608,956 (608,956) 0 0
-------- --------- ------- -------
Income before income taxes......... 229,728 (229,728) 80,835 80,835
State, local and foreign income
taxes........................... 12,894 (12,894)
Federal income taxes.............. 21,566 (21,566) 7,375(b) 7,375
-------- --------- ------- -------
34,460 (34,460) 7,375 7,375
-------- --------- ------- -------
Net income......................... $195,268 $(195,268) $73,460 $73,460
======== ========= ======= =======
Basic net income per unit.......... $1.13 $1.13
======== =======
Diluted net income per unit........ $1.10 $1.10
======== =======
Basic weighted average units
outstanding..................... 170,804 64,910
======== =======
Diluted weighted average units
outstanding..................... 175,968 70,074
======== =======
Distributions...................... $186,696 $70,489
======== =======
Distributions per unit............. $1.08 $1.08
======== =======
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Statements
37
<PAGE>
Alliance Holding
Unaudited Pro Forma Condensed Statement of Income
For the Six Months Ended June 30, 1998
(in thousands, except per unit amounts)
<TABLE>
<CAPTION>
Transfer
of Business to Pro Forma
Historical Alliance Capital Adjustments Pro Forma
Alliance Holding (Note 2) (Note 5) Alliance Holding
---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Investment advisory and
services fees................... $473,260 $(473,260)
Distribution revenues............. 142,289 (142,289)
Shareholder servicing fees........ 19,581 (19,581)
Equity in earnings of Alliance
Capital......................... $60,088(a) $60,088
Other revenues.................... 13,007 (13,007)
-------- --------- ------- -------
648,137 (648,137) 60,088 60,088
Expenses:
Employee compensation and
benefits........................ 170,030 (170,030)
Promotion and servicing:
Distribution plan payments
to financial intermediaries... 122,854 (122,854)
Amortization of deferred
sales commissions............. 48,496 (48,496)
Other........................... 44,869 (44,869)
General and administrative........ 83,397 (83,397)
Amortization of intangible assets. 4,154 (4,154)
Interest.......................... 1,920 (1,920)
-------- --------- ------- -------
475,720 (475,720) 0 0
-------- --------- ------- -------
Income before income taxes......... 172,417 (172,417) 60,088 60,088
State, local and foreign income
taxes........................... 9,837 (9,837)
Federal income taxes.............. 17,755 (17,755) 5,978(b) 5,978
-------- --------- ------- -------
27,592 (27,592) 5,978 5,978
-------- --------- ------- -------
Net income......................... $144,825 $(144,825) $54,110 $54,110
======== ========= ======= =======
Basic net income per unit.......... $0.85 $0.85
======== =======
Diluted net income per unit........ $0.82 $0.82
======== =======
Basic weighted average units
outstanding..................... 169,609 64,005
======== =======
Diluted weighted average units
outstanding..................... 174,949 69,345
======== =======
Distributions...................... $137,294 $51,430
======== =======
Distributions per unit............. $0.80 $0.80
======== =======
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Statements
38
<PAGE>
<TABLE>
<CAPTION>
Alliance Holding
Unaudited Pro Forma Condensed Statement of Income
For the Year Ended December 31, 1998
(in thousands, except per unit amounts)
Transfer
of Business to Pro Forma
Historical Alliance Capital Adjustments Pro Forma
Alliance Holding (Note 2) (Note 5) Alliance Holding
---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Investment advisory and
services fees................... $952,992 $(952,992)
Distribution revenues............. 301,846 (301,846)
Shareholder servicing fees........ 43,475 (43,475)
Equity in earnings of Alliance
Capital......................... $120,970(a) $120,970
Other revenues.................... 25,743 (25,743)
-------- --------- ------- --------
1,324,056 (1,324,056) 120,970 120,970
-------- --------- ------- --------
Expenses:
Employee compensation and
benefits........................ 340,923 (340,923)
Promotion and servicing:
Distribution plan payments
to financial intermediaries... 261,087 (261,087)
Amortization of deferred
sales commissions............. 108,853 (108,853)
Other........................... 90,400 (90,400)
General and administrative........ 162,323 (162,323)
Amortization of intangible assets. 7,586 (7,586)
Interest.......................... 4,172 (4,172)
-------- --------- ------- --------
975,344 (975,344) 0 0
-------- --------- ------- --------
Income before income taxes......... 348,712 (348,712) 120,970 120,970
State, local and foreign income
taxes........................... 21,341 (21,341)
Federal income taxes.............. 34,455 (34,455) 11,442(b) 11,442
-------- --------- ------- --------
55,796 (55,796) 11,442 11,442
-------- --------- ------- --------
Net income......................... $292,916 $(292,916) $109,528 $109,528
======== ========
Basic net income per unit.......... $1.71 $1.71
======== ========
Diluted net income per unit........ $1.66 $1.66
======== ========
Basic weighted average units
outstanding..................... 169,933 64,183
======== ========
Diluted weighted average units
outstanding..................... 175,143 69,393
======== ========
Distributions...................... $278,414 $104,264
======== ========
Distributions per unit............. $1.62 $1.62
======== ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Statements
39
<PAGE>
<TABLE>
<CAPTION>
Alliance Capital
Unaudited Pro Forma Condensed Statement of Financial Condition
June 30, 1999
(in thousands, except per unit amounts)
Transfer of
Historical Business to Pro Forma
Alliance Capital Alliance Capital Alliance Capital
(Note 1) (Note 2) (Note 1,2)
---------------- ---------------- ---------------
<S> <C> <C> <C>
Assets:
Cash and cash equivalents................ $68,697 $68,697
Receivable from brokers and dealers
for sale of shares of Alliance mutual
funds................................. 182,885 182,885
Fees receivable.......................... 197,273 197,273
Investments, available-for-sale.......... 183,582 183,582
Furniture, equipment and leasehold
improvements, net..................... 114,422 114,422
Intangible assets, net................... 100,216 100,216
Deferred sales commissions, net.......... 514,020 514,020
Other assets............................. 76,018 76,018
----- ---------- ----------
Total assets.......................... $ 0 $1,437,113 $1,437,113
===== ========== ==========
Liabilities:
Payable to Alliance mutual funds for
share purchases....................... $238,797 $238,797
Accounts payable and accrued expenses.... 167,739 167,739
Accrued compensation and benefits........ 205,008 205,008
Debt..................................... 356,311 356,311
Minority interests in consolidated
subsidiaries.......................... 2,196 2,196
----- ---------- ----------
Total liabilities..................... 0 970,051 970,051
----- ---------- ----------
Partners' capital........................ 0 467,062 467,062
----- ---------- ----------
Total liabilities and partners' capital..... $ 0 $1,437,113 $1,437,113
===== ========== ==========
Book value per unit outstanding............. $0.00 $2.70 $2.70
===== ========== ==========
Units outstanding........................... 0 171,136 171,136
===== ========== ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Statements
40
<PAGE>
<TABLE>
<CAPTION>
Alliance Capital
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Six Months Ended June 30, 1999
(in thousands, except per unit amounts)
Pro Forma
Historical Adjustments Pro Forma
Alliance Holding (Note 4) Alliance Capital
---------------- ----------- ----------------
<S> <C> <C> <C>
Revenues:
Investment advisory and services fees......... $596,693 $596,693
Distribution revenues......................... 196,830 198,830
Shareholder servicing fees.................... 28,797 28,797
Other revenues................................ 14,364 14,364
-------- ------- --------
838,684 $ 0 838,684
-------- ------- --------
Expenses:
Employee compensation and benefits............ 220,972 220,972
Promotion and servicing:
Distribution plan payments to financial
intermediaries............................ 160,744 160,744
Amortization of deferred sales commissions.. 74,698 74,698
Other....................................... 54,896 54,896
General and administrative.................... 87,739 87,739
Amortization of intangible assets............. 7,980 7,980
Interest...................................... 1,927 1,927
-------- ------- --------
608,956 0 608,956
-------- ------- --------
Income before income taxes..................... 229,728 229,728
State, local and foreign income taxes......... 12,894 12,894
Federal income taxes.......................... 21,566 (19,604) 1,962
-------- ------- --------
34,460 (19,604) 14,856
-------- ------- --------
Net income..................................... $195,268 $19,604 $214,872
======== ======= ========
Basic net income per unit...................... $1.13 $1.25
======== ========
Diluted net income per unit.................... $1.10 $1.21
======== ========
Basic weighted average units outstanding....... 170,804 170,804
======== ========
Diluted weighted average units outstanding..... 175,968 175,968
======== ========
Distributions.................................. $186,696 $206,300
======== ========
Distributions per unit......................... $1.08 $1.19
======== ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Statements
41
<PAGE>
<TABLE>
<CAPTION>
Alliance Capital
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Six Months Ended June 30, 1998
(in thousands, except per unit amounts)
Pro Forma
Historical Adjustments Pro Forma
Alliance Holding (Note 4) Alliance Capital
---------------- ----------- ----------------
<S> <C> <C> <C>
Revenues:
Investment advisory and services fees...................... $473,260 $473,260
Distribution revenues...................................... 142,289 142,289
Shareholder servicing fees................................. 19,581 19,581
Other revenues............................................. 13,007 13,007
-------- ------- --------
648,137 $ 0 648,137
-------- ------- --------
Expenses:
Employee compensation and benefits......................... 170,030 170,030
Promotion and servicing:
Distribution plan payments to financial intermediaries... 122,854 122,854
Amortization of deferred sales commissions............... 48,496 48,496
Other.................................................... 44,869 44,869
General and administrative................................. 83,397 83,397
Amortization of intangible assets.......................... 4,154 4,154
Interest................................................... 1,920 1,920
-------- ------- --------
475,720 0 475,720
-------- ------- --------
Income before income taxes.................................. 172,417 0 172,417
State, local and foreign income taxes...................... 9,837 9,837
Federal income taxes....................................... 17,755 (16,000) 1,755
-------- ------- --------
27,592 (16,000) 11,592
-------- ------- --------
Net income.................................................. $144,825 $16,000 $160,825
======== ======= ========
Basic net income per unit................................... $0.85 $0.94
======== ========
Diluted net income per unit................................. $0.82 $0.91
======== ========
Basic weighted average units outstanding.................... 169,609 169,609
======== ========
Diluted weighted average units outstanding.................. 174,949 174,949
======== ========
Distributions............................................... $137,294 $152,738
======== ========
Distributions per unit...................................... $0.80 $0.89
======== ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Statements
42
<PAGE>
Alliance Capital
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Year Ended December 31, 1998
(in thousands, except per unit amounts)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Alliance Holding (Note 4) Alliance CapitaL
---------------- ----------- ----------------
<S> <C> <C> <C>
Revenues:
Investment advisory and services fees...................... $952,992 $952,992
Distribution revenues...................................... 301,846 301,846
Shareholder servicing fees................................. 43,475 43,475
Other revenues............................................. 25,743 25,743
--------- -------- -------
1,324,056 0 1,324,056
--------- -------- -------
Expenses:
Employee compensation and benefits......................... 340,923 340,923
Promotion and servicing:
Distribution plan payments to financial intermediaries... 261,087 261,087
Amortization of deferred sales commissions............... 108,853 108,853
Other.................................................... 90,400 90,400
General and administrative................................. 162,323 162,323
Amortization of intangible assets.......................... 7,586 7,586
Interest................................................... 4,172 4,172
--------- -------- -------
975,344 0 975,344
--------- -------- -------
Income before income taxes.................................. 348,712 348,712
State, local and foreign income taxes...................... 21,341 21,341
Federal income taxes....................................... 34,455 $(30,600) 3,855
--------- -------- -------
55,796 (30,600) 25,196
--------- -------- --------
Net income.................................................. $292,916 $30,600 $323,516
========= ========
Basic net income per unit................................... $ 1.71 $ 1.88
========= ========
Diluted net income per unit................................. $ 1.66 $ 1.83
========= ========
Basic weighted average units outstanding.................... 169,933 169,933
========= ========
Diluted weighted average units outstanding.................. 175,143 175,143
========= ========
Distributions............................................... $278,414 $309,014
========= ========
Distributions per unit...................................... $ 1.62 $ 1.80
========= ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Statements
43
<PAGE>
Notes to Unaudited Pro Forma Condensed Financial Statements
(1) To record the initial capital contribution by Alliance Holding, as
limited partner, and Alliance Capital Management Corporation, as
general partner. Each partner contributed $50 in exchange for a 50%
interest in Alliance Capital.
(2) To reflect the transfer of the business of Alliance Holding to
Alliance Capital in exchange for all of the units and the general
partnership interest in Alliance Capital. Alliance Capital will
record the transferred assets and liabilities at the amounts
reflected in Alliance Holding's books and records on the date of
transfer. Excluded from the transfer from Alliance Holding to
Alliance Capital is the liability for the 3.5% federal tax on
Alliance Holding's gross business income.
(3) To reflect the one-for-one exchange of Alliance Holding units for
Alliance Capital units. This pro forma adjustment assumes that for
the exchange offer (A) Equitable Life and its affiliates will
exchange all of their Alliance Holding units, except for the amount
of units necessary for approximately 2% of the outstanding Alliance
Holding units, for an equivalent number of Alliance Capital units
and (B) other unitholders, excluding employees, who qualify for the
block transfer regulations will exchange their Alliance Holding
units for an equivalent number of Alliance Capital units. Based on
these assumptions, Alliance Holding would own, on June 30, 1999,
approximately 38.15% of the outstanding Alliance Capital units,
representing $176,402,000 in partner's capital.
(4) To eliminate the 3.5% federal tax on gross business income since
Alliance Capital, as a private partnership, would not be subject to
such a tax.
(5) Pro forma adjustments to the Alliance Holding statement of income
consist of the following:
(a) To record Alliance Holding's share in the net income of
Alliance Capital accounted for under the equity method.
Alliance Holding's equity in earnings of Alliance Capital
equates to the pro forma net income of Alliance Capital less
the general partner's 1% interest multiplied by Alliance
Holding's ownership share of 38.00%, 37.74% and 37.77% for the
six months ended June 30, 1999 and 1998 and for the year ended
December 31, 1998, respectively.
(b) To record the 3.5% federal tax on Alliance Holding's pro rata
share of Alliance Capital's gross business income.
44
<PAGE>
OPINION OF FINANCIAL ADVISER
On April 8, 1999, Goldman Sachs delivered its oral opinion, which was
subsequently confirmed in writing on April 23, 1999, to the board of directors
of Alliance Capital Management Corporation, the general partner of Alliance
Holding, that as of the date of such opinion, the exchange ratio pursuant to
the draft dated March 31, 1999, of the agreement and plan of reorganization is
fair from a financial point of view to those unitholders who remain holders of
Alliance Holding units immediately following the exchange offer. Goldman Sachs
subsequently confirmed its earlier opinion by delivery of its written opinion
dated as of August 3, 1999.
The full text of the written opinion of Goldman Sachs dated as of August
3, 1999, which sets forth assumptions made, matters considered and limitations
on the review undertaken in connection with the opinion, is attached as Annex
D to this prospectus. Unitholders of Alliance Holding are urged to, and
should, read such opinion in its entirety.
In connection with its written opinion, Goldman Sachs reviewed, among
other things:
o the draft dated August 2, 1999 of the agreement and plan of
reorganization among Alliance Holding, Alliance Capital, their
common general partner and Equitable Life;
o the registration statement on Form S-4, including the proxy
statement/prospectus, as filed with the Securities and Exchange
Commission on August 3, 1999, relating to the special meeting of
unitholders of Alliance Holding to be held in connection with the
reorganization;
o the draft dated August 2, 1999 of the amended Alliance Holding
partnership agreement;
o the draft dated August 2, 1999 of the Alliance Capital partnership
agreement;
o the draft dated August 2, 1999 of the amended Equitable Life
investment advisory and management agreement among Alliance Holding,
Alliance Corporate Finance Group Incorporated and Equitable Life;
o the draft dated August 2, 1999 of the amended Equitable Life
accounting, valuation, reporting and treasury services agreement
between Alliance Holding and Equitable Life;
o the indemnification and reimbursement agreement among Alliance
Holding, Alliance Capital and Equitable Life dated April 8, 1999;
o annual reports to unitholders and annual reports on Form 10-K of
Alliance Holding for each of the five years ended December 31, 1998;
o interim reports to unitholders and quarterly reports on Form 10-Q
of Alliance Holding;
o other communications from Alliance Holding to its unitholders; and
o internal financial analyses and forecasts for Alliance Holding
prepared by the senior management of Alliance Holding and the
general partner.
Goldman Sachs also held discussions with members of the senior management
of Alliance Holding, the general partner and Equitable Life regarding the
rationale for the reorganization and the financial alternatives available to
the general partner and Equitable Life with respect to their ownership
interest in Alliance Holding and, as applicable, the past and current business
operations, financial condition and future prospects of Alliance Holding and
Alliance Capital. In addition, Goldman Sachs reviewed the reported price and
trading activity for the Alliance Holding units, compared financial and stock
market information for Alliance Holding with similar information for other
companies the securities of which are publicly-traded. Goldman Sachs also
reviewed the fees charged by
45
<PAGE>
other asset management firms and compared those fees with the fees charged by
Alliance Capital for the assets of Equitable Life that are under Alliance
Capital's management. Goldman Sachs also performed such other studies and
analyses as Goldman Sachs considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and has assumed such accuracy
and completeness for purposes of rendering its opinion. In that regard,
Goldman Sachs assumed with the consent of the general partner that the
forecasts for Alliance Holding prepared by the senior management of Alliance
Holding and the general partner were reasonably prepared on a basis reflecting
the best currently available estimates and judgments of Alliance Holding and
the general partner. In addition, Goldman Sachs did not make an independent
evaluation or appraisal of the assets and liabilities of Alliance Capital and
was not furnished with any such evaluation or appraisal. Goldman Sachs assumed
with the consent of the general partner, after discussions with the general
partner and the general partner's tax advisers, that the reorganization will
not result in any adverse change in the taxation of Alliance Holding or the
unitholders.
In addition, Goldman Sachs assumed that the draft agreements referred to
in its opinion will be executed and delivered in substantially the form
reviewed by Goldman Sachs and that all material governmental, regulatory or
other consents and approvals necessary for the consummation of the
reorganization will be obtained without any adverse effect on Alliance Holding
or on the contemplated benefits of the reorganization. Goldman Sachs also
assumed with the consent of the general partner that the Alliance Holding
units will continue to be listed for trading on the NYSE.
The advisory services and the opinion of Goldman Sachs are provided for
the information and assistance of the board of directors of the general
partner in connection with its consideration of the reorganization and the
exchange offer, and such opinion does not constitute a recommendation as to
how any unitholder should have voted with respect to the reorganization or
whether any unitholder should participate in the exchange offer.
Goldman Sachs notes that the general partner cautions that unitholders
who cannot or do not wish to bear the substantial illiquidity of the Alliance
Capital units may find it advantageous not to participate in the exchange
offer and that the general partner is advising unitholders that they must
determine their individual liquidity requirements and preferences after
considering all relevant factors, including the information to be contained in
the exchange offer prospectus, their financial and tax position and the
composition of their investment portfolio. Because of the individual nature of
the determination as to whether any unitholder should decide to participate in
the exchange offer, Goldman Sachs does not express any opinion with respect to
the fairness of the exchange ratio to those unitholders who elect to exchange
their Alliance Holding units for Alliance Capital units.
The following is a summary of the financial analyses used by Goldman
Sachs in connection with providing its oral opinion to the general partner's
board of directors on April 8, 1999. Goldman Sachs utilized substantially the
same type of financial analyses in connection with providing the written
opinion attached as Annex D.
Asset Management Fee Analysis. Goldman Sachs performed an asset
management fee analysis to calculate the present value of the fee arrangements
to be put in place based on the financial terms of the draft dated March 31,
1999 of the amended investment advisory agreement, the draft dated March 31,
1999 of the amended accounting, valuation, reporting and treasury services
agreement and the indemnification and reimbursement agreement, including that:
o Equitable Life will pay Alliance Capital no less than $38 million in
asset management fees per year through 2003, subject to adjustment
under the circumstances outlined in "Certain Relationships and
Related Transactions -- the Amended Equitable Life Investment
Advisory and Management Agreement
-- Fees";
o Equitable Life's existing fee schedule per category for specified
asset classes will stay in effect through 2003;
46
<PAGE>
o Equitable Life will reimburse Alliance Capital for its transaction
costs incurred in executing the reorganization, except for those (1)
resulting from any loss of clients, including in connection with the
process of soliciting client consents to the reorganization and (2)
attributable to the incremental cost and expense of maintaining and
operating both Alliance Holding and Alliance Capital over the cost
of maintaining and operating Alliance Holding;
o To cover internal costs, Equitable Life will make a lump sum payment
to Alliance Capital in the amount of $3 million if the
reorganization is consummated, or $1.5 million to Alliance Holding
if the reorganization is abandoned after the special meeting of
unitholders, or would have made no payment if the reorganization had
been abandoned before the special meeting of unitholders; and
o Equitable Life will pay Alliance Capital a one-time fee if Equitable
Life terminates its relationship with Alliance under the amended
accounting, valuation, reporting and treasury services agreement
other than for cause, as defined in the amended investment advisory
agreement, with such fee ranging from $80 million if the termination
occurs in 1999 to $10 million if the termination occurs in 2003.
Based on the terms listed above and using discount rates of 12.5% and
15.0% (representing a range of rates of return that equity market investors
seek for their investments), Goldman Sachs conducted a discounted cash flow
analysis over a five-year period by adjusting the $38 million guaranteed
annual payment from Equitable Life to Alliance Capital for the annual costs
estimated by management of Alliance Capital in order to derive the pre-tax
margin. The pre-tax margin was then adjusted for taxes using (1) an effective
tax rate of 4.44% on pre-tax income based on the New York City unincorporated
business tax, assuming certain items are not deductible for purposes of
calculating the tax, and (2) an effective tax rate of 3.5% on the portion of
Alliance Capital's gross business income allocable to Alliance Holding
pursuant to federal tax law, both as estimated by management of Alliance
Capital.
Goldman Sachs conducted two different margin analyses as described below.
In the first analysis, the margin estimates used by Goldman Sachs were
based on estimates of the average costs of Alliance Holding, including both
direct and allocated costs. The results of this analysis were as follows:
Present Value of Cash Flows
----------------------------
Average Cost Analysis 12.5% 15.0%
- ------------------------- ------ --------
Present value to public and Alliance
Holding employees (in millions)......... $16.3 $15.3
Present value per public unit............. $ 0.28 $ 0.27
In the second analysis, the margin estimates used by Goldman Sachs were
based on estimates of the marginal costs of Alliance Holding, including only
direct costs. The results of this analysis were as follows:
Present Value of Cash Flows
----------------------------
Marginal cost Analysis 12.5% 15.0%
- --------------------------- ------ --------
Present value to public and Alliance
Holding employees (in millions)......... $36.8 $34.7
Present value per public unit............. $ 0.64 $ 0.60
Based on the asset management fee analysis, Goldman Sachs concluded that
the holder of a unit who does not participate in the exchange offer should be
better off economically after the reorganization than before the
reorganization because the one-for-one exchange ratio ensures that such
unitholder will retain the same economic interest after the reorganization,
while such interest will be enhanced by the incremental benefits accruing to
Alliance Capital as a result of the minimum required fee payments.
Fee Study. Goldman Sachs conducted a fee study based on publicly
available information in which it reviewed the fees charged by a number of
asset management firms with large proportions of fixed income assets under
management. Goldman Sachs conducted the fee study to evaluate whether the
proposed fee arrangement between Equitable Life and Alliance Capital is
competitive with fees charged by other similar firms, and therefore to support
the conclusion of the asset management fee analysis that unitholders who do
not participate in the
47
<PAGE>
exchange offer should benefit economically from implementation of the minimum
required fee payments described above, assuming a one-for-one exchange ratio.
Goldman Sachs first reviewed the average fee on the general account only
charged by Nvest, L.P., Conning Corporation and Phoenix Investment Partners
Ltd. of 26.3 basis points, 12.9 basis points and 12.0 basis points,
respectively. Goldman Sachs noted that the weighted average fee charged by
Alliance Holding on the general account only was 16.0 basis points.
Goldman Sachs then reviewed the average fee on the total assets under
management charged by the following management firms:
Firm Name Source of Data
- --------- --------------
PIMCO Advisors Holdings L.P. Form 10-K dated December 31, 1997
Nvest, L.P. Form 10-K dated December 31, 1998
Conning Corporation Form 10-K dated December 31, 1998 and
Form 10-K dated December 31, 1997
Federated Investors, Inc. Form 10-K dated December 31, 1998
The John Nuveen Company Form 10-K dated December 31, 1998
Eaton Vance Corporation Form 10-K dated October 31, 1998
The results of the study were as follows:
High Fee 61.4 basis points
Mean Fee 39.5 basis points
Median Fee 36.9 basis points
Low Fee 22.6 basis points
Goldman Sachs noted that the weighted average fee charged by Alliance
Holding on the total assets under management was 37.7 basis points.
C-Corporation Analysis. Goldman Sachs performed an analysis to evaluate
the impact on unitholders if Alliance Holding were to convert to a
C-corporation, as a financial alternative to the reorganization, as compared
to the impact on unitholders resulting from the reorganization. Goldman Sachs
used management projections to illustrate the financial impact from a cash
flow perspective that would result if Alliance Holding were to convert into a
C-corporation paying an estimated federal and state corporate tax rate of 45%
instead of completing the reorganization as contemplated.
As part of the C-corporation analysis, Goldman Sachs compared various
financial data of Alliance Holding with financial data of the following
corporate asset management firms (the "Asset Management Corporations"):
Franklin Resources Inc. The John Nuveen Company
AMVESCAP PLC Eaton Vance Corporation
T. Rowe Price Associates Inc. Affiliated Managers Group Inc.
United Asset Management Corporation Phoenix Investment Partners Ltd.
Federated Investors, Inc. Conning Corporation
Waddell & Reed Financial Inc.
In the first component of its analysis, Goldman Sachs used management
projections, as well as an assumed dividend payout ratio of 17.5% calculated
by averaging the dividend payout ratios of two other asset management firms,
T. Rowe Price Associates Inc. and Franklin Resources Inc., of 24.9% and 10.1%,
respectively. The analysis demonstrated the cash flow dilution to unitholders
that would result for the year 1999 based on the difference between the
current dividends per unit and the pro forma dividends per share payable if
Alliance Holding were to become a C-corporation.
48
<PAGE>
The results of the analysis were as follows:
1999E
-------
Pro forma dividends per share.......................... $0.22
Current dividends per unit............................. $1.92
Cash flow dilution..................................... (88.3)%
In the second component of the analysis, Goldman Sachs applied median
IBES 1999 earnings per share estimates of Alliance Holding, as of March 29,
1999, to a range of price/earnings multiples in order to derive implied share
prices, as indicated below. The range of price/earnings multiples selected for
this analysis was based on the estimated 1999 price/earnings multiples for the
Asset Management Corporations ranging from 10.2x to 22.3x.
1999E Earnings Multiple 16.0x 17.0x 18.0x 19.0x 20.0x
- ----------------------- ------ ------ ------ ------ ------
Implied Share Price
Earnings per Share(a)
1999E $ 1.28 $20.48 $21.76 $23.04 $24.32 $25.60
- -------------------
(a) Assuming 45% tax rate.
The resulting implied per share prices, ranging from $20.48 to $25.60,
represented a decline in value of $5.02 per unit at the implied per share
price of $20.48 and an increase in value of $0.10 per unit at the implied per
share price of $25.60, when compared to the $25.50 market price of the
Alliance Holding units as of March 29, 1999.
In the final component of the analysis, Goldman Sachs applied an
estimated multiple of 1999 estimated dividends per share of $0.22 to the range
of implied share prices calculated above, resulting in implied dividend yields
ranging from 0.9% to 1.1%, which would represent a decline compared to
Alliance Holding's current dividend yield of 6.7%. Goldman Sachs then
presented Alliance Holding's current dividend yield of 6.7% compared to the
median and average dividend yield of the Asset Management Corporations of 1.2%
and 1.6%, respectively.
As a result of the C-corporation analysis, Goldman Sachs determined that
retaining Alliance Holding units in connection with the reorganization when
others are exchanging their Alliance Holding units at the one-for-one exchange
ratio would be more beneficial from an economic perspective to unitholders
than an alternative transaction of converting Alliance Holding to a
C-corporation with the same one-for-one exchange ratio.
Analysis of Comparable Reorganizations. Goldman Sachs analyzed two
transactions (the "Comparable Reorganizations"), one involving PIMCO Advisors
L.P. and the other involving New England Investment Companies, L.P. (now
Nvest, L.P.), that are similar to the reorganization in that some or all of
the units held by public investors in a publicly-traded master limited
partnership were exchanged into interests of a privately-held limited
partnership. The analysis conducted by Goldman Sachs indicated that both
Comparable Reorganizations were executed using a one-for-one exchange ratio,
but that neither of the Comparable Reorganizations involved an agreement
similar to the amended investment advisory agreement and that the PIMCO
Advisors L.P. reorganization involved a mandatory rather than an elective
exchange while the Nvest, L.P. reorganization allowed only accredited
investors owning a minimum number of units to participate in the exchange.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without
considering the analyses as a whole, could create an incomplete view of the
processes underlying Goldman Sachs' opinion. In arriving at its fairness
determination, Goldman Sachs considered the results of all such analyses. No
company or transaction used in the above analyses as a comparison is directly
comparable to Alliance Holding or the contemplated reorganization.
49
<PAGE>
Goldman Sachs prepared the analyses for purposes of providing its opinion
to the general partner's board of directors as to the fairness from a
financial point of view to those unitholders who remain holders of Alliance
Holding units immediately following the exchange offer. Analyses based upon
forecasts of future results are not necessarily indicative of actual future
results, which may be significantly more or less favorable than suggested by
such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of the parties
or their respective advisers, none of the general partner, Goldman Sachs or
any other person assumes responsibility if future results are materially
different from those forecast.
As described above, Goldman Sachs' opinion to the board of directors of
Alliance Capital Management Corporation, Alliance Holding's general partner,
was one of many factors taken into consideration by the board in making its
determination to approve the agreement and plan of reorganization. The
foregoing summary does not purport to be a complete description of the
analysis performed by Goldman Sachs and is qualified by reference to the
written opinion of Goldman Sachs set forth in Annex D.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with Alliance Holding and the general partner, having provided
investment banking services to Alliance Holding and the general partner from
time to time and having acted as the general partner's financial adviser in
connection with the reorganization. Goldman Sachs has also provided investment
banking and financial advisory services to Equitable Life and AXA Group, the
majority shareholder of Equitable Life ("AXA"), from time to time, including
having acted as financial adviser and lead manager in connection with
Equitable Life's demutualization and $450 million initial public offering in
1992, as a dealer manager in Equitable Life's exchange offer of $408 million
of convertible subordinated debentures and cumulative convertible preferred
stock in 1994, as lead manager for Equitable Life's placement of $600 million
of surplus notes in 1995, and as lead manager for AXA's $240 million ADR
offering in 1996. Goldman Sachs also acted as financial adviser to AXA in
connection with its merger with UAP Group in 1997, its sale of AXA Equity and
Law and AEL Investments in 1997, and its pending acquisition of Guardian Royal
Exchange plc. Goldman Sachs acted as lead manager for AXA's $240 million
common stock offering in 1996.
In addition, Goldman Sachs may provide investment banking and financial
advisory services in the future to Alliance Holding, Alliance Capital, the
general partner, Equitable Life or AXA or their respective affiliates. Goldman
Sachs provides a full range of financial advisory and securities services and,
in the course of its normal trading activities, may from time to time effect
transactions and hold securities, including derivative securities, of Alliance
Holding, Equitable Life and AXA for its own account and for the account of
customers. In the last two years, Alliance Holding has paid Goldman Sachs fees
of approximately $1.04 million in connection with services provided by Goldman
Sachs to Alliance Holding.
Pursuant to a letter agreement dated February 18, 1999, Alliance Holding
engaged Goldman Sachs to act as financial adviser to assist Alliance Holding
and Alliance Capital Management Corporation, in its capacity as general
partner of Alliance Holding, in connection with the exchange offer. Pursuant
to the terms of the letter agreement, Alliance Holding has agreed to pay
Goldman Sachs upon consummation of the exchange offer a transaction fee of
$2,500,000. Alliance Holding has agreed to reimburse Goldman Sachs for its
reasonable out-of-pocket expenses, including attorneys' fees, and to indemnify
Goldman Sachs against specified liabilities, including liabilities under the
federal securities laws.
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INTERESTS OF CERTAIN PERSONS IN THE REORGANIZATION
Equitable Life
Reduction of Tax Burden. Alliance Holding, as a publicly-traded
partnership, is subject to a 3.5% federal tax on its gross business income.
The impact of this tax to Equitable Life and its affiliates, the beneficial
owners of approximately 57% of the outstanding interests in Alliance Holding,
was approximately $18 million in 1998. The amount will increase or decrease in
future years in proportion to increases and decreases in Alliance Holding's
gross business income. By contrast, Equitable Life and its affiliates'
allocable share of the income of Alliance Capital will not be subject to the
3.5% federal tax, and Equitable Life and its affiliates will realize a benefit
over time equal to the tax otherwise payable. This income will continue to be
subject to a corporate-level tax payable by Equitable Life, but it will not be
subject to a second entity-level tax as under the current structure.
Reduction of Volatility in Value of Assets. Equitable Life is an
insurance company subject to the New York Insurance Law. In determining the
statutory value of its assets at the end of each fiscal quarter pursuant to
the New York Insurance Law, Equitable Life must value its equity investments
in subsidiary, controlled and affiliated companies. Equitable Life values its
current investment in Alliance Holding using market value methodology, thereby
introducing volatility into the statutory valuation of its assets as a result
of fluctuations in the market price of publicly-traded Alliance Holding units.
Following the exchange offer and Equitable Life's exchange of publicly-traded
Alliance Holding units for Alliance Capital units, Equitable Life expects to
determine the statutory value of its investment in Alliance Capital based upon
the market value of the Alliance Holding units at the time of the exchange,
adjusted each quarter for its pro rata interest in the net income or loss of
Alliance Capital determined in accordance with generally accepted accounting
principles, net of dividend distributions and adjustments to reflect Equitable
Life's proportionate share of capital transactions. This value will not be
affected by quarter-to-quarter fluctuations in the market price of Alliance
Holding units. The expected reduction in the volatility of the statutory value
of its investment in Alliance Capital is expected to allow Equitable Life to
more efficiently and effectively plan its activities while remaining in
compliance with regulatory requirements.
Executive Officers
Reduction of Tax Burden. As holders of Alliance Holding units, the
executive officers of Equitable Life and of Alliance Holding's general partner
may also choose to participate in the exchange offer. By doing so, such
executive officers would also realize a benefit over time equal to the amount
of the 3.5% tax otherwise payable with respect to their Alliance Holding
units. However, the executive officers will not be permitted to transfer their
Alliance Capital units without the prior written consent of both Equitable
Life and the general partner of Alliance Capital, which may be withheld in the
sole discretion of either Equitable Life or the general partner. Moreover,
Equitable Life and the general partner will impose a volume and a notice
requirement on transfers of Alliance Capital units by these executive
officers. Executive officers who are holders of substantial amounts of
Alliance Capital units might be able to transfer blocks of Alliance Capital
units without the volume and notice limitations that would apply to other
holders of Alliance Capital units, subject in all cases to the prior written
consent of both Equitable Life and the general partner of Alliance Capital.
The restrictions on transfer of Alliance Capital units will limit the
liquidity of those units.
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THE REORGANIZATION DOCUMENTS
The Exchange Agreement
Alliance Holding, Alliance Capital and Equitable Life entered into an
exchange agreement, dated as of April 8, 1999. Pursuant to this agreement,
Equitable Life agreed to exchange, and to cause its affiliates that hold
Alliance Holding units to exchange, substantially all of their Alliance
Holding units for Alliance Capital units, immediately following the exchange
offer, subject to the same terms and limitations as the exchange offer,
including any proportionate reduction in the number of Alliance Holding units
accepted for exchange in the event that excess units are tendered in the
exchange offer.
Equitable Life's obligation to consummate the exchange offer is subject
to the closing of the transactions contemplated by the agreement and plan of
reorganization, as described below under "-- The Agreement and Plan of
Reorganization," and the consummation of the reorganization on the terms
described in this prospectus. The exchange agreement will be superseded,
without any further action by Alliance Holding, Alliance Capital or Equitable
Life, upon the execution of the agreement and plan of reorganization by
Alliance Holding, Alliance Capital, their common general partner and Equitable
Life.
The Agreement and Plan of Reorganization
The agreement and plan of reorganization will govern the rights and
obligations of Alliance Capital, Alliance Holding, their common general
partner and Equitable Life in connection with the steps to be taken in the
reorganization. The following summary of the agreement and plan of
reorganization is incomplete and is qualified by reference to the full text of
the agreement and plan of reorganization, a copy of which is included in this
prospectus as Annex A.
Contribution of Assets and Issuance of Alliance Capital Interests. The
parties have agreed to take, or cause to be taken, the following steps, each
of which will be deemed to occur simultaneously at the time the exchange offer
closes:
o The general partnership interest in Alliance Holding held by the
general partner will be converted into a number of general
partnership units determined by dividing the total number of
Alliance Holding units outstanding immediately prior to the
conversion by the number 99.
o Equitable Life and/or its affiliates will contribute to the general
partner 100,000 Alliance Holding units.
o Alliance Holding will transfer and assign to Alliance Capital all or
substantially all of its assets, and Alliance Capital will assume
substantially all of Alliance Holding's liabilities.
o In exchange for the transfer of assets and assumption of liabilities
described above, Alliance Holding will receive all of the Alliance
Capital units and a 1% general partnership interest in Alliance
Capital. Specifically, Alliance Capital will issue to Alliance
Holding:
o all of the Alliance Capital units outstanding at the effective
time of the reorganization, which number will be equal to the
number of Alliance Holding units then outstanding, and
o a general partnership interest representing a 1% economic
interest in Alliance Capital.
o Alliance Holding will change its name to "Alliance Capital
Management Holding L.P." and Alliance Capital will change its name
to "Alliance Capital Management L.P."
o All employees of Alliance Holding will become employees of Alliance
Capital, and Alliance Capital will assume sponsorship of most
compensation and benefit plans maintained by Alliance Holding.
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o The parties will amend and restate the Alliance Holding partnership
agreement and the Alliance Capital partnership agreement as
described in "The Partnership Agreements."
o Equitable Life and Alliance Holding will amend and restate the
investment advisory and management agreement and the accounting,
valuation, reporting and treasury services agreement as described in
"Certain Relationships and Related Transactions."
o Alliance Holding unitholders who choose to participate in the
exchange offer will receive Alliance Capital units from Alliance
Holding in exchange for their Alliance Holding units, subject to the
limits described in "The Reorganization and Exchange Offer --
General."
Private Exchange by Equitable Life and its Affiliates. Immediately
after the exchange offer closes:
o Equitable Life and its affiliates that hold Alliance Holding units
will exchange on a private basis substantially all of their Alliance
Holding units for Alliance Capital units, on the same terms and
conditions as the exchange offer, including any proportionate
reduction of tendered units to be accepted by Alliance Holding;
o the general partner will exchange its unitized general partnership
interest in Alliance Holding for Alliance Holding's 1% general
partnership interest in Alliance Capital; and
o the general partner will exchange 100,000 Alliance Holding units for
an equal number of units of general partnership interest in Alliance
Holding pursuant to the right granted to it under the amended
Alliance Holding partnership agreement.
Certain Retained Assets. If Alliance Holding cannot transfer any
contract, permit or other asset or any claim, right or liability arising
thereunder without the prior consent or waiver of the party or parties
thereto, Alliance Holding will not be required to transfer such contracts and
other assets to Alliance Capital if it does not first obtain the necessary
consent or waiver. However, the general partner may determine in its sole
discretion to transfer any or all of such contracts or other assets despite
the lack of consent or waiver or any other impediments to transfer. Alliance
Holding has agreed to use its reasonable efforts to obtain all necessary
consents and waivers and resolve any impediments to transfer required to
transfer the remaining assets to Alliance Capital as soon as possible. During
the period that any contracts or other assets are retained by Alliance
Holding, Alliance Holding agrees, to the extent permitted by law, to provide
the benefits of such contracts and assets to Alliance Capital and Alliance
Capital agrees to perform Alliance Holding's obligations under such contracts
and assets for the benefit of the party or parties thereto.
Further Actions. The parties agree to use their reasonable efforts to
take, or cause to be taken, all actions necessary or advisable to complete the
contribution of assets by Alliance Holding to Alliance Capital and the
exchange offer, including making any necessary filings and submissions,
obtaining necessary governmental and third party consents, including the
approval of the Alliance Holding unitholders with respect to the
reorganization, the private exchange by Equitable Life and its affiliates and
the consents required under Alliance Holding's investment advisory contracts,
and providing each other with information and reasonable assistance.
Factors Upon Which the Parties' Obligations Depend. The obligations of
each party to complete the reorganization are subject to, among other things,
the satisfaction of the following conditions:
o absence of any law or court order prohibiting the reorganization or
the exchange offer;
o receipt of regulatory approvals and consents from clients and third
parties;
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o effectiveness of the registration statement for the exchange offer;
and
o receipt of certain legal opinions.
Termination. The reorganization agreement may be terminated upon the
written agreement of the parties at any time prior to the contribution of
assets to Alliance Capital, or by Alliance Capital, Alliance Holding, their
common general partner or Equitable Life if any of the conditions to the
parties' obligations described above, or contained in the agreement and plan
of reorganization, have not been met or waived prior to June 30, 2000. In
addition, even though Alliance Holding unitholders have approved the
reorganization, the general partner may terminate the reorganization and the
exchange offer at any time prior to consummation if it determines that
termination is in the best interests of Alliance Holding and its unitholders.
In deciding to terminate the reorganization and the exchange offer, the
general partner may consider such factors as the inability to obtain material
client, government and other third party consents and approvals.
The Indemnification and Reimbursement Agreement
Equitable Life, Alliance Holding and Alliance Capital have entered into
an indemnification and reimbursement agreement to avoid costs to Alliance
Holding in connection with the reorganization and to protect Alliance Holding
against transaction risks. The following summary of material provisions of the
indemnification and reimbursement agreement is incomplete and is qualified by
reference to the full text of the indemnification and reimbursement agreement,
a copy of which is an exhibit to the registration statement of which this
prospectus forms a part.
Transaction Expenses
Equitable Life has agreed to pay or reimburse all out-of-pocket costs and
expenses incurred by Alliance Holding, Alliance Capital, their common general
partner, or any of their subsidiaries on or after June 15, 1998 in connection
with or arising out of the reorganization, the special meeting, the exchange
offer and the related transactions except as specified below. These costs and
expenses include, without limitation:
o the costs and expenses of any advisers of Alliance Holding, Alliance
Capital or their common general partner in connection with the
reorganization,
o the costs and expenses incurred in connection with the special
meeting,
o the costs and expenses incurred in preparing, negotiating and
mailing the proxy statement prospectus, the exchange offer
prospectus and any other document prepared in connection with the
reorganization, the exchange offer and the transactions contemplated
thereby,
o the costs and expenses of the information agent and any proxy
solicitor employed in connection with the special meeting,
o the costs and expenses of brokerage houses and other nominees and
custodians incurred in forwarding proxy materials to beneficial
owners of units,
o the costs and expenses incurred in connection with the organization
of any party to the agreement and plan of reorganization or any
amendment of any party's constituent documents,
o all costs and expenses incurred in connection with obtaining any
necessary consents to the reorganization, and
o all costs and expenses incurred in connection with the making and
consummation of the exchange offer.
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Equitable Life will pay or reimburse, or cause to be paid or reimbursed,
these costs and expenses regardless of the outcome of the reorganization, the
exchange offer and the related transactions. In addition, if the
reorganization is consummated, Equitable Life will pay $3 million to Alliance
Capital for any internal personnel and overhead costs and expenses of Alliance
Holding, Alliance Capital or their common general partner relating to the
consideration and implementation of the reorganization and the exchange offer,
costs relating to additional communications with clients and personnel
necessitated by the transaction and other miscellaneous expenses relating to
the transaction. Equitable Life has agreed to pay $1.5 million to Alliance
Holding for such costs if the reorganization is not consummated.
Equitable Life will not indemnify, pay or reimburse Alliance Holding,
Alliance Capital or their general partner for any costs or expenses resulting
from any loss of clients, including in connection with the process of
soliciting Alliance Holding client consents to the reorganization, or
attributable to the incremental costs and expenses of maintaining and
operating both Alliance Holding and Alliance Capital over the cost of
maintaining and operating Alliance Holding.
Indemnification Against Transaction Risks
Except as set forth below, Equitable Life has agreed to indemnify
Alliance Holding, Alliance Capital, their common general partner, their
respective subsidiaries and the directors, officers and employees thereof
against any loss or expense incurred in connection with the reorganization.
Equitable Life will indemnify against these losses and expenses regardless of
the outcome of the reorganization, the exchange offer and the related
transaction.
Equitable Life will not indemnify against:
o any taxes arising from any future legislative or regulatory changes
in tax laws, other than as described below, and
o any losses or expenses arising from any litigation alleging that
disclosure regarding the business and operations of Alliance Capital
or Alliance Holding is inadequate in or omitted from documents
Alliance Holding has filed with the SEC and incorporated by
reference into the prospectus distributed in connection with the
special meeting of unitholders and this exchange offer prospectus.
Equitable Life has also agreed to:
o bear its share of any federal tax on gross business income, whether
at the current 3.5% rate or at any higher or lower rate that may be
effective in the future and whether imposed under current law or
pursuant to a legislative or regulatory change, payable by Alliance
Holding in respect of Equitable Life's share of Alliance Capital's
income that is subjected to such tax, and
o indemnify Alliance Holding if the reorganization results in Alliance
Holding's or Alliance Capital's being taxed as a corporation under
current tax laws.
Amendment of the Indemnification and Reimbursement Agreement
Any amendment to the indemnification and reimbursement agreement that
would materially affect the rights and obligations of Equitable Life, Alliance
Holding or Alliance Capital requires the unanimous approval of the general
partner's board of directors.
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DESCRIPTION OF ALLIANCE CAPITAL UNITS
The following summary of the Alliance Capital units is incomplete and is
qualified by reference to the Alliance Capital partnership agreement, a copy
of which is included in this prospectus as Annex C.
By participating in and accepting units of limited partnership interest
of Alliance Capital in the exchange offer, each unitholder will be deemed to
have consented to, and to be bound by, all of the terms, conditions, rights
and obligations set forth in the Alliance Capital partnership agreement.
General
The interests in Alliance Capital being offered in this exchange offer
are in the form of units of limited partnership interest. Immediately upon
completion of the reorganization, Alliance Holding will be the record owner of
a number of units of limited partnership interest in Alliance Capital equal to
the number of Alliance Holding units then outstanding, which will constitute
all of the units in Alliance Capital. As described elsewhere in this
prospectus, holders of Alliance Holding units are being offered the
opportunity to exchange their Alliance Holding units for Alliance Capital
units.
The percentage interest in Alliance Capital represented by a unit is
equal to the ratio that one unit bears to the total number of outstanding
units multiplied by 99%. Assuming that only Equitable Life and its affiliates
exchange their Alliance Holding units for units in Alliance Capital, Equitable
Life and its affiliates, other than Alliance Holding, will own approximately
54% of the Alliance Capital units immediately after we complete the exchange
offer. A unitholder's percentage interest in Alliance Capital will be diluted
in the event Alliance Capital issues additional Alliance Capital units or
other interests in Alliance Capital.
Among other rights, Delaware law gives limited partners the right to
maintain a derivative action, the right to exercise voting powers and the
right to inspect and copy the partnership's books and records. The Alliance
Capital partnership agreement also grants limited partners such rights.
The general partner may, without the consent of the limited partners,
amend the Alliance Capital partnership agreement to qualify the partnership as
a limited partnership or to preserve the limited liability of limited
partners.
The Alliance Capital units will not be registered under the Securities
Exchange Act of 1934.
Limited partners will not have any preemptive rights with respect to the
Alliance Capital units to be issued in the exchange offer or any additional
Alliance Capital units or other securities issued by Alliance Capital.
Restrictions on Transfers of the Alliance Capital Units
Alliance Capital units will be subject to very significant liquidity
restrictions. In general, transfers of Alliance Capital units will be allowed
only with the written consent of both Equitable Life and the general partner
of Alliance Capital. Only the written consent of Equitable Life, and not the
written consent of the general partner, is required for a "block transfer," as
described below, of units by a corporation or other business entity, provided
that the partnership has received an opinion of counsel to the effect that the
partnership will not be treated as a publicly-traded partnership for tax
purposes as a result of the transfer. Either Equitable Life or, where
applicable, the general partner may withhold its consent to a transfer in its
sole discretion, for any reason. Generally, neither Equitable Life nor the
general partner will permit any transfer that it believes would create a risk
that Alliance Capital would be treated as a corporation for tax purposes.
Alliance Capital will not recognize any transfer made without the
appropriate consents. Except in the case of transfers that have been approved
by Equitable Life and, where applicable, the general partner, Alliance Capital
will continue to treat the persons who held Alliance Capital units immediately
after the reorganization and the related unit-for-unit exchange offer as
Alliance Capital unitholders for all purposes, including for purposes of
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distributions. Neither the general partner nor Equitable Life will approve any
transfer unless the requesting unitholder certifies that he received the
relevant Alliance Capital unit either at the time of the exchange offer or in
a transfer that was approved by Equitable Life and, where applicable, the
general partner.
Equitable Life and the general partner currently intend to refuse to
consent to any transfer that is not described in the safe harbors set forth in
United States Treasury regulations. This fact does not imply, however, that
either Equitable Life or the general partner intends to permit transfers that
are described in the safe harbors or that either has adopted any guidelines
for permitting transfers. Neither Equitable Life nor, where relevant, the
general partner is required to approve any transfer, and there can be no
assurance that Equitable Life or the general partner will approve a transfer
even if the transfer would be permissible under the safe harbors. Permissible
transfers under the safe harbors may include:
(1) transfers at death;
(2) transfers between certain family members;
(3) "block transfers"; and
(4) transfers to Alliance Holding in exchange for Alliance Holding units
under the circumstances described below.
In general, a "block transfer" is the transfer within a 30 day period by
a single holder, or group of related holders, of Alliance Capital units
representing more than 2% of the outstanding Alliance Capital units. For these
purposes, units held by Equitable Life and its affiliates, other than Alliance
Holding, will not be counted as outstanding.
The safe harbor described in (4) above would permit exchanges of Alliance
Capital units for Alliance Holding units only if (a) in any year, the volume
of these exchanges represents no more than 10% of the outstanding Alliance
Capital units, with units held by Equitable Life and its affiliates, other
than Alliance Holding, not being counted as outstanding, and (b) an exchange
occurs at least 60 days after the Alliance Capital unitholder delivers an
irrevocable written notice to Alliance Capital.
If Equitable Life and, where applicable, the general partner consent to a
proposed exchange of Alliance Capital units for Alliance Holding units,
Alliance Holding may be able to deliver freely tradable units only if at the
time Alliance Holding has an effective registration statement available.
Various factors -- such as the unavailability of updated financial statements,
or the possibility that Alliance Holding or Alliance Capital could be
contemplating a material transaction that has not yet been publicized -- may
result in no effective registration statement being available. If Alliance
Holding is able to deliver units other than under an effective registration
statement, these units would be "restricted securities" according to Rule 144
under the Securities Act of 1933, and would not be freely tradable. In
general, Rule 144 requires that an owner of restricted securities hold those
securities for at least one year prior to resale, and imposes volume, notice
and manner-of-sale limitations on sales of those securities for at least one
year more. Therefore, neither Alliance Holding nor Alliance Capital can assure
you that Alliance Holding will be able to deliver Alliance Holding units in
exchange for Alliance Capital units, or that any such Alliance Holding units
would be freely tradable, even if Alliance Capital's general partner approves
such an exchange.
There is a substantial risk that requests for transfers of Alliance
Capital units will be denied. You should carefully consider the lack of
liquidity of Alliance Capital units when deciding whether to tender your
Alliance Holding units in exchange for Alliance Capital units.
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COMPARISON OF UNITHOLDER RIGHTS
Set forth below is a comparison of the material differences among the
Alliance Holding units prior to the reorganization, the Alliance Holding units
after the reorganization, and the Alliance Capital units. This summary is not
complete and is qualified in its entirety by reference to the Alliance Holding
partnership agreement, the amended Alliance Holding partnership agreement,
which is included in this prospectus as Annex B, and the Alliance Capital
partnership agreement, which is included in this prospectus as Annex C.
Form of Organization
Alliance Holding Units Prior to the Reorganization: Alliance Holding is
a limited partnership formed under the Delaware Revised Uniform Limited
Partnership Act.
Alliance Holding Units After the Reorganization: Alliance Holding will
continue to be a limited partnership under the Delaware Revised Uniform
Limited Partnership Act after the reorganization.
Alliance Capital Units: Alliance Capital is a limited partnership
formed under the Delaware Revised Uniform Limited Partnership Act.
Business
Alliance Holding Units Prior to the Reorganization: The current Alliance
Holding partnership agreement provides that the business to be conducted by
Alliance Holding is to engage in the investment management and advisory
business and to engage in any other lawful activities related thereto for
which limited partnerships may be organized under Delaware law.
Alliance Holding Units After the Reorganization: The amended Alliance
Holding partnership agreement provides that the business to be conducted by
Alliance Holding is to hold units in Alliance Capital and to engage in any
other lawful activities for which limited partnerships may be organized under
Delaware law. However, the general partner expects that Alliance Holding's
only business activities will be to hold its interest in Alliance Capital and
to engage in activities related to holding that interest.
Alliance Capital Units: The Alliance Capital partnership agreement
provides that the business to be conducted by Alliance Capital is the same as
the business to be conducted by Alliance Holding under the current Alliance
Holding partnership agreement.
Voting Rights
Alliance Holding Units Prior to the Reorganization: Under Delaware law
and/or the current Alliance Holding partnership agreement, unitholders have
voting rights with respect to:
(1) the withdrawal, removal, transfer and replacement of the general
partner,
(2) the merger or consolidation of Alliance Holding with another entity,
(3) the sale of all or substantially all of the assets owned, directly
or indirectly, by Alliance Holding,
(4) the dissolution of Alliance Holding,
(5) certain types of amendments to the Alliance Holding partnership
agreement,
(6) reconstitution,
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(7) election, compensation, and approval of a liquidating trustee,
(8) conversion or reorganization of Alliance Holding into another type
of legal entity,
(9) distributions of publicly-traded securities, other than upon
liquidation, and
(10) issuance of units which rank senior to the originally issued limited
partnership interests and units.
Each unit entitles the holder thereof to cast one vote on all matters
presented to unitholders.
Approval of any matter submitted to unitholders generally requires the
affirmative vote of unitholders holding more than 50% of the units then
outstanding, except that:
(1) any transfer by the general partner of all or substantially all of
Alliance Holding's assets where the general partner or its corporate
affiliates have any direct or indirect equity interest in the person
acquiring Alliance Holding requires a vote of more than 50% of
Alliance Holding unitholders, excluding employees of Alliance
Holding, their families, the general partner and its corporate
affiliates;
(2) withdrawal of the general partner requires the approval of the
holders of a majority of the units other than the general partner and
its corporate affiliates,
(3) removal of the general partner without cause requires the vote of 80%
of the outstanding units,
(4) except in limited circumstances, an election by the general partner
to dissolve Alliance Holding requires the approval of the holders of
a majority of the units other than the general partner and its
corporate affiliates,
(5) in certain circumstances upon which Alliance Holding would otherwise
be dissolved, a unanimous vote of the unitholders to continue the
business of the partnership is necessary to avoid dissolution,
(6) any amendment that would adversely alter the rights and preferences
of the units requires the approval of the holders of a majority of
the units other than the general partner and its corporate
affiliates,
(7) any amendment that would adversely alter the rights and preferences
of any other class or series of units must be approved by a majority
of that class, and
(8) any amendment for which Alliance Holding does not receive a
determination that as a result of such amendment:
o the unitholders would not lose their limited liability
pursuant to Delaware law or the Alliance Holding partnership
agreement,
o the partnership would not become subject to federal income tax
or otherwise incur additional tax liabilities, and
o certain advisory contracts of the partnership would not
automatically be terminated or breached
requires the approval of the holders of a majority of the units other
than the general partner and its corporate affiliates.
Only the general partner may propose amendments to the Alliance Holding
partnership agreement.
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Any action that may be taken at a meeting of unitholders of Alliance
Holding may be taken by written consent in lieu of a meeting executed by
unitholders of Alliance Holding sufficient to authorize such action at a
meeting of unitholders.
Alliance Holding Units After the Reorganization: Under Delaware law
and/or the amended Alliance Holding partnership agreement, unitholders will
have substantially the same rights with respect to Alliance Holding as they
presently have under the current Alliance Holding partnership agreement, in
part through pass-through mechanisms more fully described under "The
Partnership Agreements -- The Alliance Capital Partnership Agreement --
Meetings; Voting." However, the general partner may not be removed by the
unitholders unless it is not, or is simultaneously removed as, the general
partner of Alliance Capital. The general partner also may not withdraw unless
it is not, or simultaneously withdraws as, the general partner of Alliance
Capital. In addition, in certain circumstances upon which Alliance Holding
would otherwise be dissolved, the vote of a majority in interest of
unitholders rather than a unanimous vote to continue the business of the
partnership is necessary to avoid dissolution.
Alliance Capital Units: Under Delaware law and/or the Alliance Capital
partnership agreement, unitholders will have substantially the same voting
rights as Alliance Holding unitholders will have under the amended Alliance
Holding partnership agreement.
Distributions
Alliance Holding Units Prior to the Reorganization: Alliance Holding is
required under the current Alliance Holding partnership agreement to
distribute its operating cash flow, less such amounts that the general partner
determines should be retained by the partnership for use in its business, to
the unitholders of Alliance Holding on a quarterly basis, pro rata in
accordance with their percentage interests.
Alliance Holding Units After Reorganization: Alliance Holding is required
under the amended Alliance Holding partnership agreement to distribute the
cash distributions it receives from Alliance Capital, less such amounts as the
general partner determines should be retained by the partnership for use in
its business, as promptly as practicable after receipt of any such cash
distribution.
Alliance Capital Units: Alliance Capital is required under the Alliance
Capital partnership agreement to distribute its operating cash flow in
substantially the same manner as Alliance Holding is pursuant to the current
Alliance Holding partnership agreement.
Taxation
Alliance Holding Units Prior to the Reorganization: Under current law,
Alliance Holding is subject to a 3.5% federal tax, and possibly additional
state taxes, on its gross business income. Otherwise, Alliance Holding is not
subject to federal or state income tax. Rather, you as a unitholder include
your share of Alliance Holding's income, gain, losses, deductions and credits
in computing your taxable income, without regard to the cash distributed to
you. Generally, cash distributions are not taxable, unless distributions
exceed your basis in your units. See "Certain Federal Income Tax
Consequences."
Alliance Holding Units After the Reorganization: Alliance Holding will
continue to be treated in the same manner for tax purposes.
Alliance Capital Units: Under current law, Alliance Capital will not be
subject to the 3.5% federal tax, or any corresponding state tax, on its gross
business income. Otherwise, its tax treatment will be identical to the current
tax treatment of Alliance Holding. See "Certain Federal Income Tax
Consequences."
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Management
Alliance Holding Units Prior to the Reorganization: The business and
affairs of Alliance Holding are managed by its general partner, Alliance
Capital Management Corporation, who has the exclusive right and full authority
and responsibility to manage and operate the partnership's business. No
unitholder may take part in the management of the partnership.
The general partner may be removed without cause, as defined in the
current Alliance Holding partnership agreement, by a vote of 80% of the
outstanding units. The general partner may be removed for cause by a vote of
50% of the outstanding units, if certain conditions in the partnership
agreement are met. See "Description of the Alliance Holding Amended Limited
Partnership Agreement--Withdrawal, Removal and Transfer of General
Partnership."
Alliance Holding Units After the Reorganization: The business and affairs
of Alliance Holding will continue to be managed by its general partner,
Alliance Capital Management Corporation, who will have the same rights and
responsibilities as it does under the current Alliance Holding partnership
agreement. The general partner will also be authorized to cause Alliance
Holding to take all actions that may be necessary to maintain or alter the
one-for-one exchange ratio of Alliance Capital units for Alliance Holding
units, and vice versa, if any circumstance exists or is reasonably expected to
exist which the general partner determines would make that exchange ratio
inappropriate. Similarly, no unitholder will be able to take part in the
management of Alliance Holding.
The provisions for withdrawal by and removal of the general partner under
the amended Alliance Holding partnership agreement are the same as those under
the current Alliance Holding partnership agreement, except that under the
amended Alliance Holding partnership agreement, the general partner (1) may
withdraw as the general partner of Alliance Holding only if it is not at the
time, or simultaneously withdraws as, the general partner of Alliance Capital,
and (2) may be removed as the general partner of Alliance Holding only if it
is not at the time, or is simultaneously removed as, the general partner of
Alliance Capital.
Alliance Capital Units: The business and affairs of Alliance Capital will
be managed by its general partner, Alliance Capital Management Corporation,
who will have the same rights and responsibilities with respect to Alliance
Capital as it does in its capacity as general partner of Alliance Holding
pursuant to the Alliance Holding partnership agreement. Unitholders will not
be able to take part in the management of Alliance Capital.
The provisions for withdrawal by and removal of the general partner
pursuant to the Alliance Capital partnership agreement are the same as those
contained in the current Alliance Holding partnership agreement, except that
the general partner (1) may withdraw as the general partner of Alliance
Capital only if it is not at the time, or simultaneously withdraws as, the
general partner of Alliance Holding, and (2) may be removed as the general
partner of Alliance Capital only if it is not at the time, or is
simultaneously removed as, the general partner of Alliance Holding. In
determining the votes cast in favor of removal of the general partner,
Alliance Capital must include the Alliance Capital units voted by Alliance
Holding pursuant to certain pass-through voting provisions contained in the
amended Alliance Holding partnership agreement.
Potential Dilution
Alliance Holding Units Prior to the Reorganization: The general partner
has the authority to cause Alliance Holding to issue, generally without the
approval of the unitholders, additional classes or series of units in respect
thereof, and has discretion to determine rights, powers and duties and the
consideration in terms and conditions with respect to any such issuance.
Alliance Holding may not issue any units or any other type of security
unless it receives a determination that the existing unitholders will not lose
their limited liability, the partnership will not become subject to additional
tax liabilities and that certain advisory contracts of the partnership will
not automatically be terminated or breached.
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Alliance Holding Units After the Reorganization: The potential dilution
of a unitholder's percentage interest in Alliance Holding, and the conditions
therefor, are not modified in the amended Alliance Holding partnership
agreement.
Alliance Capital Units: The potential dilution of a unitholder's
percentage interest in Alliance Capital, and the conditions therefor, are
substantially consistent between the amended Alliance Holding partnership
agreement and the Alliance Capital partnership agreement.
Meetings
Alliance Holding Units Prior to the Reorganization: Meetings of
unitholders may be called for any purpose with respect to which the
unitholders are entitled to vote. Such meetings may be called by the general
partner or by unitholders holding at least 25% of the issued and outstanding
units.
Alliance Holding Units After the Reorganization: Meetings of unitholders
may be called for any purpose with respect to which the unitholders are
entitled to vote. Such meetings may be called by the general partner or by
unitholders holding at least 50% of the issued and outstanding Alliance
Holding units. Meetings of unitholders will also be called by the general
partner to consider and vote upon any matter which is submitted to a vote of
the holders of Alliance Capital units.
Alliance Capital Units: Meetings of unitholders may be called for any
purpose with respect to which the unitholders are entitled to vote. Such
meetings may be called by the general partner, by unitholders holding at least
25% of the issued and outstanding Alliance Capital units or at the request of
Alliance Holding, in its capacity as a limited partner of Alliance Capital,
pursuant to the request of Alliance Holding unitholders holding at least 50%
of the issued and outstanding Alliance Holding units. Alliance Holding
unitholders have the right to attend meetings of Alliance Capital unitholders.
Conversion/Exchange Rights
Alliance Holding Units Prior to the Reorganization: The units are not
convertible into any other securities.
Alliance Holding Units After the Reorganization: Following the
reorganization and the exchange offer, the Alliance Holding units will not be
convertible or exchangeable into any other securities.
Alliance Capital Units: Following the reorganization and the exchange
offer, the general partner and Equitable Life may, in their sole discretion,
allow holders of Alliance Capital units to transfer their Alliance Capital
units, subject to certain limitations, to Alliance Holding in exchange for
Alliance Holding units. Either the general partner or Equitable Life may
withhold its consent in its sole discretion and, in particular, neither will
consent to any exchange that, in its opinion, would create a risk that
Alliance Capital would be treated as a publicly-traded partnership, and taxed
as a corporation, for tax purposes. Only the written consent of Equitable
Life, and not the consent of the general partner, is required for an exchange
into Alliance Holding units of a block consisting of more than 2% of
outstanding Alliance Capital units, with units held by Equitable Life and its
affiliates, other than Alliance Holding, not being counted as outstanding,
provided that the exchanging unitholder is a corporation or other business
entity and that Alliance Capital has received an opinion of counsel to the
effect that the exchange will not cause Alliance Capital to be treated as a
publicly-traded partnership for tax purposes.
Right to Purchase Units
Alliance Holding Units Prior to the Reorganization: If fewer than 10% of
the issued and outstanding Alliance Holding units are held by persons other
than the general partner, its affiliates and officers and employees of the
general partner, Alliance Holding or persons controlled by Alliance Holding,
the general partner or its designee will have the right to purchase all of the
outstanding Alliance Holding units for a purchase price based on the recent
trading price of the units.
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Alliance Holding Units After the Reorganization: If fewer than 10% of the
issued and outstanding units of Alliance Capital are held by persons other
than the general partner, its affiliates and officers and employees of the
general partner, Alliance Holding, or Alliance Capital or persons controlled
by any of the preceding persons (including, for purposes of determining the
Alliance Capital units held by persons other than such preceding persons, the
number of Alliance Capital units held by Alliance Holding multiplied by a
fraction, the numerator of which is the number of issued and outstanding units
held by persons other than such preceding persons and the denominator of which
is the number of issued and outstanding Alliance Holding units (including
general partner units)), the general partner or its designee will have the
right to purchase all of the outstanding Alliance Holding units for a purchase
price based on the recent trading price of the units. The right to purchase
units cannot be exercised unless the general partner, Alliance Holding,
Alliance Capital or any of the general partner's affiliates simultaneously
purchases all of the Alliance Holding units and Alliance Capital units that
remain outstanding and held by persons other than the general partner and its
affiliates.
In addition, Alliance Holding will be required to purchase, at Alliance
Capital's request from time to time, outstanding Alliance Holding units using
funds provided by Alliance Capital. The number of Alliance Capital units held
by Alliance Holding as a limited partner of Alliance Capital will be reduced
to reflect the number of repurchased Alliance Holding units.
Alliance Capital Units: The rights of certain parties to purchase
Alliance Capital units, and the conditions applicable thereto, are consistent
with those under the amended Alliance Holding partnership agreement.
In addition, Alliance Capital may make a cash distribution from time to
time to Alliance Holding for the purpose of repurchasing outstanding Alliance
Holding units. The number of Alliance Capital units held by Alliance Holding
as a limited partner of Alliance Capital will be reduced to reflect the number
of repurchased Alliance Holding units.
Liquidation Rights
Alliance Holding Units Prior to the Reorganization: In the event of the
liquidation of Alliance Holding, the assets of the partnership remaining after
the satisfaction of all debts and liabilities of the partnership will be
distributed to unitholders pro rata in accordance with the positive balances
in their capital accounts. Any remaining assets will be distributed to the
unitholders in accordance with their percentage interests.
Alliance Holding Units After the Reorganization: The liquidation rights
of partners and unitholders are the same under both the existing Alliance
Holding partnership agreement and the amended Alliance Holding partnership
agreement.
Alliance Capital Units: The liquidation rights of partners and
unitholders are the same under both the current Alliance Holding partnership
agreement and the Alliance Capital partnership agreement.
Right to Compel Dissolution
Alliance Holding Units Prior to the Reorganization: Under the current
Alliance Holding partnership agreement, the general partner may dissolve
Alliance Holding if it receives the approval of the holders of a majority of
the units other than the general partner and its corporate affiliates to do
so. The general partner can compel dissolution by (1) means of a written
determination that the projected future revenues of Alliance Holding over the
next five years will not cover its projected costs and expenses in the same
period, or (2) the sale of all or substantially all of the assets of the
partnership. In most cases, the withdrawal, removal, bankruptcy or dissolution
of the general partner will also compel dissolution.
Alliance Holding Units After the Reorganization: The provisions regarding
the right to compel dissolution are substantially the same under the existing
Alliance Holding partnership agreement and under the amended Alliance Holding
partnership agreement.
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Alliance Capital Units: The provisions regarding the right to compel
dissolution are substantially the same under the current Alliance Holding
partnership agreement and under the Alliance Capital partnership agreement.
Limited Liability
Alliance Holding Units Prior to the Reorganization: Generally, under
Delaware law, a unitholder will not have personal liability for the
obligations of the partnership. However, under Delaware law, for a period of
three years from the date of any distribution, a unitholder may be required to
return to the partnership such distribution received by him if he knew that at
the time of the distribution, (1) after giving effect to the distribution,
certain liabilities of the limited partnership exceeded the fair value of the
assets of the limited partnership, or (2) in connection with a distribution
following dissolution, such distribution was made prior to the time the
partnership paid, or made reasonable provision to pay, claims against it. The
provisions of the partnership agreement regarding limited liability provide
that if any unitholder receives a distribution from Alliance Holding that is
required to be returned to, or for the account of, Alliance Holding or its
creditors, that obligation is the obligation of the unitholder who received
that distribution.
Alliance Holding Units After the Reorganization: Holders of units will
continue to have the same limited liability status, as described above, after
the reorganization.
Alliance Capital Units: Holders of Alliance Capital units will generally
have the same limited liability status as do holders of Alliance Holding
units. However, in circumstances where Alliance Capital is required to pay on
behalf of, or reimburse, Alliance Holding for certain taxes and related
expenses, Alliance Capital will withhold from distributions to its
unitholders, excluding Alliance Holding, in proportion to their respective
percentage interests in Alliance Capital, such amounts as may be required to
enable Alliance Capital to make such payment on behalf of, or reimbursement
to, Alliance Holding. If Alliance Capital is unable to withhold from its
distributions sufficient funds to make any such payment or reimbursement,
Alliance Capital unitholders, other than Alliance Holding, must make payments
to Alliance Capital, in proportion to their respective percentage interests in
Alliance Capital, in an aggregate amount equal to such shortfall. If any
Alliance Capital unitholder fails to make such a required payment, Alliance
Capital may retain amounts that would otherwise be distributed to that
unitholder.
Liquidity and Marketability
Alliance Holding Units Prior to the Reorganization: The units are
transferable, provided that no transfer will be made if it:
(1) would violate applicable federal and state securities laws or rules
and regulations of the SEC, any state securities commission or any
other governmental authority with jurisdiction over such transfer,
or
(2) would affect the partnership's existence or qualification as a
limited partnership under Delaware law.
Alliance Holding Units After the Reorganization: The units will continue
to have the same liquidity and marketability after the reorganization, subject
only to the potential decrease in liquidity to the extent that public
unitholders participate in the exchange offer, as described above in "The
Reorganization and Exchange Offer--Alliance Holding Public Float After the
Exchange."
Alliance Capital Units: There are strict restrictions on transferability
of Alliance Capital units. In general, no unitholder is permitted to transfer
or assign its units without the prior written consent of both the general
partner and Equitable Life. Only the written consent of Equitable Life, and
not written consent of the general partner, is required for a "block
transfer", as described above in "Description of Alliance Capital Units --
Restrictions on Transfers of the Alliance Capital Units," of units by a
corporation or other business entity, provided that the partnership has
received an opinion of counsel to the effect that the partnership will not be
treated as a publicly-traded partnership for tax purposes as a result of the
transfer.
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Either Equitable Life or, where applicable, the general partner may
withhold its consent to a transfer in its sole discretion and, in particular,
will refuse to consent to any exchange that, in its opinion, would create a
risk that Alliance Capital would be treated as a publicly-traded partnership,
and taxed as a corporation, for tax purposes. See "The Partnership Agreements
- -- Alliance Capital Partnership Agreement--Limitations on Transfer of
Partnership Interests" and "Description of Alliance Capital Units".
Continuity of Existence
Alliance Holding Units Prior to the Reorganization: The current Alliance
Holding partnership agreement provides for the partnership to continue in
existence until December 31, 2086, unless earlier dissolved in accordance with
the partnership agreement.
Alliance Holding Units After the Reorganization: The amended Alliance
Holding partnership agreement provides for the partnership to continue in
existence until dissolved in accordance with the partnership agreement.
Alliance Capital Units: The Alliance Capital partnership agreement
provides for the partnership to continue in existence until dissolved in
accordance with the partnership agreement.
Financial Reporting
Alliance Holding Units Prior to the Reorganization: Alliance Holding is
subject to the reporting requirements of the Securities Exchange Act of 1934
and files annual and quarterly reports thereunder.
Alliance Holding Units After the Reorganization: Alliance Holding will
continue to be subject to the reporting requirements of the Securities
Exchange Act of 1934 and will file annual and quarterly reports thereunder.
Alliance Capital Units: Alliance Capital will be subject to the reporting
requirements of the Securities Exchange Act of 1934 upon completion of the
exchange offer. If, at a later date, Alliance Capital ceases to be subject to
these reporting requirements, it will provide its unitholders with annual and
quarterly reports, containing separate financial statements for Alliance
Capital, as filed by Alliance Holding.
Certain Legal Rights
Alliance Holding Units Prior to the Reorganization: Delaware law allows a
unitholder to institute legal action on behalf of a partnership (a partnership
derivative action) to recover damages from a third party or a general partner
where the general partner has refused to institute the action or if an effort
to cause the general partner to bring the action is not likely to succeed. In
addition, a unitholder may have rights to institute legal action on behalf of
the unitholder and all other similarly situated unitholders (a class action)
to recover damages from a general partner for violations of fiduciary duties
to the unitholders. Unitholders may also have rights to bring actions in
federal courts to enforce federal rights.
Alliance Holding Units After the Reorganization: The rights described
above will continue to exist after the reorganization.
Alliance Capital Units: Alliance Capital unitholders will also possess
the rights described above.
Right to List Holders; Inspection of Books and Records
Alliance Holding Units Prior to the Reorganization: Under Delaware law
and the current Alliance Holding partnership agreement, unitholders have a
right, subject to reasonable standards as may be established by the general
partner, to obtain from the general partner, from time to time upon reasonable
demand for any purpose reasonably related to the unitholder's interest as
unitholder, certain information relating to the status of the business and
financial condition of the partnership, tax returns, governing instruments of
the partnership, a current list of the partners and unitholders of the
partnership and any other information regarding the affairs of the partnership
as is
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just and reasonable. The general partner may, however, keep confidential any
trade secrets or any other information the disclosure of which could damage
the partnership or violate any agreement or applicable law.
Alliance Holding Units After the Reorganization: Under Delaware law and
the amended Alliance Holding partnership agreement, unitholders will continue
to have the same rights as described above.
Alliance Capital Units: Under Delaware law and the Alliance Capital
partnership agreement, unitholders will have the same rights as described
above.
Subordination
Alliance Holding Units Prior to the Reorganization: Claims of
unitholders are subordinated to claims of creditors of the partnership.
Alliance Holding Units After the Reorganization: Claims of unitholders
will continue to be subordinated to claims of creditors of the partnership.
Alliance Capital Units: Claims of unitholders will be subordinated to
claims of creditors of the partnership.
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THE PARTNERSHIP AGREEMENTS
The Amended Alliance Holding Partnership Agreement
The following discussion summarizes the material terms of the amended
Alliance Holding partnership agreement. This summary is not complete and is
qualified in its entirety by reference to the amended Alliance Holding
partnership agreement included in this prospectus as Annex B.
Organization and Duration
Alliance Holding was formed as a Delaware limited partnership on November
18, 1987 and will continue in existence until dissolved pursuant to the
Alliance Holding partnership agreement. Alliance Capital Management
Corporation will continue to be the sole general partner of Alliance Holding.
Immediately following the reorganization, the exchange offer and the Equitable
Life private exchange, Equitable Life and its affiliates, other than
management and employees, will continue to own approximately 2% of the
outstanding Alliance Holding units. The remaining Alliance Holding units will
continue to be owned by management, employees and public unitholders who do
not participate in the exchange offer.
Purpose and Business
The amended purpose and nature of the business to be conducted by
Alliance Holding following the completion of the reorganization will be to
hold Alliance Capital units and to engage in any other lawful activities.
However, we expect that Alliance Holding's only business activities will be to
hold its interest in Alliance Capital and to engage in activities related to
holding that interest.
Management; The General Partner
The general partner will continue to be authorized to exercise in full
all of the powers of Alliance Holding and to perform all acts that it may deem
necessary or appropriate to the conduct of the business and affairs of
Alliance Holding or to carry out the purposes of Alliance Holding. In
addition, the general partner will be authorized to cause Alliance Holding to
take all actions that may be necessary to maintain or alter the one-for-one
exchange ratio of Alliance Capital units for Alliance Holding units, and vice
versa, if any circumstance exists or is reasonably expected to exist which the
general partner determines would make that exchange ratio inappropriate. The
general partner will also continue to have the exclusive right and full
authority and responsibility to manage, conduct, control and operate the
business of Alliance Holding and effect the purposes and provisions of the
Alliance Holding partnership agreement. No unitholder may take part in the
management of Alliance Holding.
The general partner will continue to be entitled to be reimbursed for all
direct expenses it incurs on behalf of Alliance Holding and for all
administrative and overhead expenses necessary to or appropriate for the
conduct of the business of Alliance Holding.
In addition, the general partner cannot acquire any assets or conduct any
business or activity except in connection with:
(1) the management and operations of Alliance Holding and Alliance
Capital;
(2) its performance of its obligations under the Alliance
Holding partnership agreement and the Alliance Capital
partnership agreement;
(3) the acquisition, ownership or disposition of units in Alliance
Holding and Alliance Capital;
(4) its corporate governance and existence; and
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(5) acquiring, investing in, holding, disposing of, or otherwise
dealing with the Excluded Assets, as defined in the Transfer
Agreement, dated as of November 19, 1987, between Alliance
Holding and the general partner, and other passive
investments.
Under the amended partnership agreement, the general partner has the
right freely to exchange any Alliance Holding units it holds for an equal
number of units of general partnership interest in Alliance Holding without
the approval of Alliance Holding unitholders, unless the relative rights,
powers and duties of the Alliance Holding partnership interests have been
altered so that the equivalence of the economic interests of the Alliance
Holding partnership interests has been affected.
Transactions With General Partner and Affiliates
In general, Alliance Holding may continue to enter into transactions with
the general partner and its affiliates if such transactions:
(1) are on terms reasonably and in good faith believed by the
general partner to be substantially comparable to, or more
favorable to Alliance Holding than, those that would prevail
in transactions with any unaffiliated party, or
(2) are approved by a majority of the directors of the general
partner who are not also directors, officers or employees of
affiliates of the general partner, other than Alliance
Holding and Alliance Capital.
Affiliates of the general partner, including Equitable Life and its other
subsidiaries, will continue to have the right to engage in any business or
other activity, including those in direct competition with Alliance Holding,
and to act upon any opportunity, including those that may be available to
Alliance Holding. Equitable Life and some of its subsidiaries currently
compete with Alliance Holding.
Withdrawal, Removal and Transfer of General Partner
The general partner will continue to be prohibited from withdrawing as
general partner, except in connection with a permitted transfer of its general
partnership interest as described below, without a majority vote of
unitholders, other than the general partner and its corporate affiliates, and
then only upon receipt of a determination of outside counsel that as a result
of such a withdrawal:
(1) such unitholders will not lose their limited liability,
(2) neither Alliance Holding nor Alliance Capital will become
subject to federal income tax on its net income or otherwise
incur additional tax liabilities, and
(3) certain advisory contracts of Alliance Holding and Alliance
Capital that contribute more than 10% of Alliance Holding's
and Alliance Capital's aggregate revenues from investment
management services will not automatically be terminated or
breached.
The general partner may withdraw as the general partner of Alliance
Holding only if it is not at the time, or simultaneously withdraws as, the
general partner of Alliance Capital.
The general partner will continue to be permitted to transfer its general
partnership interest in Alliance Holding to, and Equitable Life and its
affiliates will be able to transfer shares of the general partner to, any
affiliated or unaffiliated third party without any approval or obtaining an
opinion of outside counsel as described in clause (3) above. Accordingly, any
such transfer could have a material adverse effect on the business and results
of operations of Alliance Holding. In addition, special rules apply to a
transfer of a portion of the general partnership interest to a corporate
affiliate of the general partner.
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A successor general partner is required to assume the general partner's
obligations under the amended partnership agreement, including obligations to
make certain capital contributions in respect of compensation obligations.
The general partner will continue to be subject to removal without cause,
as defined in the amended partnership agreement, by a vote of unitholders
holding 80% or more of all outstanding units, and for cause by a vote of
unitholders holding more than 50% of the outstanding units, if such action for
removal provides for the election of a successor general partner and Alliance
Holding receives a determination of outside counsel that as a result of such a
withdrawal:
(1) the unitholders will not lose their limited liability,
(2) neither Alliance Holding nor Alliance Capital will become
subject to federal income tax on its net income or otherwise
incur additional tax liabilities, and
(3) certain advisory contracts of Alliance Holding and Alliance
Capital that contribute more than 10% of Alliance Holding's
and Alliance Capital's aggregate revenues from investment
management services will not automatically be terminated or
breached.
Alliance Holding unitholders, however, can exercise their right to remove
the general partner only if the general partner or one of its affiliates is
also not the general partner of Alliance Capital or is simultaneously removed
as the general partner of Alliance Capital in accordance with the terms of the
Alliance Capital partnership agreement.
Upon the withdrawal or removal of the general partner, its general
partnership interest will either be purchased by the successor general partner
for cash or converted into units based on fair market value.
Sale of Alliance Holding Assets
All of the assets of Alliance Holding will continue to be owned by
Alliance Holding as an entity. No partner or unitholder of Alliance Holding
has any ownership interest in the assets of Alliance Holding or any portion
thereof. While title to Alliance Holding assets may be held in the name of
Alliance Holding, the general partner or one or more nominees of the general
partner, all Alliance Holding assets will continue to be recorded as the
property of Alliance Holding on the books and records of Alliance Holding.
The general partner will continue to be prohibited from selling,
transferring, pledging, assigning, conveying or otherwise disposing of all or
substantially all of the assets of Alliance Holding without:
(1) the prior approval of more than 50% of the units of Alliance
Holding voting with respect to the matter at a meeting of
the unitholders at which a quorum is present, or the written
consent of holders of more than 50% of the outstanding
units, excluding in either case units owned by employees of
Alliance Holding, their families or the general partner who
will be employed by or have any direct or indirect equity
interest in any person acquiring Alliance Holding; and
(2) receipt of determination of outside counsel that as a result of
the contemplated transaction:
o the unitholders will not lose their limited liability
pursuant to either Delaware law or the amended partnership
agreement, and
o neither Alliance Holding nor Alliance Capital will
become subject to federal income tax on its net
income or otherwise incur additional tax
liabilities.
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In addition, if the general partner or any of its corporate affiliates
have any direct or indirect equity interest in any person acquiring the assets
of Alliance Holding, the prior approval of more than 50% of the outstanding
units will continue to be required to be obtained. This vote excludes units
owned by the general partner, its corporate affiliates and any employees of
Alliance Holding, their families or the general partner who will be employed
by or have any direct or indirect equity interest in any person acquiring the
assets of Alliance Holding.
Issuance of Additional Units and Other Securities
The general partner will continue to have the authority to cause Alliance
Holding to issue, generally without the approval of the unitholders,
additional units, or classes or series thereof, having any designations,
preferences and relative participation, optional or other special rights,
powers and duties, including rights, powers and duties senior to those of
existing unitholders, provided that Alliance Holding receives a determination
of outside counsel that as a result of any such issuance:
(1) the unitholders will not lose their limited liability,
(2) neither Alliance Holding nor Alliance Capital will become
subject to federal income tax on its net income or otherwise
incur additional tax liabilities, and
(3) certain advisory contracts of Alliance Holding and Alliance
Capital that contribute more than 10% of Alliance Holding's
and Alliance Capital's aggregate revenues from investment
management services will not automatically be terminated or
breached.
However, the amended partnership agreement permits the general partner to
cause Alliance Holding to issue, without obtaining such determinations of
counsel, (1) Alliance Holding units having identical rights and preferences to
existing Alliance Holding units pursuant to employee benefit plans so long as
such issuance does not result in the employees, management and directors of
the general partner, Alliance Capital and Alliance Holding holding, voting or
controlling 25% or more of the Alliance Holding units and (2) Alliance Holding
units in exchange for an equal number of Alliance Capital units at Alliance
Capital's request. The general partner must cooperate with Alliance Capital
and cause Alliance Holding to take all actions as it may deem necessary,
appropriate or advisable to effect such exchanges at Alliance Capital's
request.
The issuance of a substantial number of Alliance Holding units in
exchange for a number of Alliance Capital units may result in a change of
control for purposes of Alliance Capital's and Alliance Holding's advisory
contracts.
The rules of the New York Stock Exchange would impose a unitholder vote
requirement in some cases.
No unitholder has any preemptive rights with respect to the issuance of
additional units or any other security by Alliance Holding.
Amendment of Partnership Agreement
The general partner will continue to have the ability to, without the
consent of any unitholder, amend any provision of the amended partnership
agreement to reflect, among other things:
(1) a change in the name of, or in the location of the principal
place of business of, Alliance Holding;
(2) the admission, substitution or withdrawal of partners;
(3) a change that is necessary or advisable in the sole
discretion of the general partner to qualify Alliance
Holding as a limited partnership or a partnership in which
the unitholders have limited liability under the laws of any
state;
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(4) a change that in the sole discretion of the general partner:
o does not adversely affect the unitholders in any material
respect,
o is necessary or desirable to satisfy any governmental
requirements, conditions or guidelines,
o is required to effect the intent of the amended
partnership agreement, or
o is necessary or desirable to facilitate the trading of the
units or comply with any rule, regulation, guideline or
requirement of any national securities exchange on which
the units are or will be listed for trading.
(5) an amendment that, in the sole discretion of the general
partner, is necessary or desirable in connection with the
issuance of any class or series of units or other
securities, and the establishment of the rights and
preferences of such class or series of units or other
securities;
(6) an amendment that the general partner in its sole discretion
determines is necessary or desirable in connection with any
action taken if Alliance Holding is:
o treated for federal income tax purposes as an association
taxable as a corporation,
o subject to federal income tax as a corporation, or
o otherwise subject to federal taxation on its net income
generally;
(7) an amendment that, in the sole discretion of the general
partner, is necessary or desirable to cure defects or
ambiguities in or to correct or supplement any provision of,
the amended partnership agreement;
(8) in the event Alliance Holding is required to pay any
federal, state or local income tax on behalf of any of its
partners or unitholders, an amendment that, in the sole
discretion of the general partner, is necessary or
appropriate:
o to provide for the payment of such taxes,
o to withhold an appropriate amount from future
distributions to such partners and unitholders,
o to authorize the general partner, on behalf of
Alliance Holding, to take all necessary action to
collect such taxes from such partners or
unitholders,
o to treat such taxes as an expense of Alliance Holding, and
o to implement any other changes related to such payment of
tax on behalf of such partner or unitholder.
In addition, the amended partnership agreement allows the general
partner, without the consent of any unitholder, to amend the partnership
agreement to conform the provisions of the partnership agreement to the
Alliance Capital partnership agreement.
No amendment may be made unless it has been proposed by the general
partner. The general partner may propose any other amendment by calling a
meeting and submitting the text of the amendment in writing to all
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unitholders. Subject to the exceptions described below, a proposed amendment
will be effective upon its adoption by the general partner and the affirmative
vote of unitholders holding more than 50% of the units voting at a meeting at
which a quorum is present unless a greater percentage is required under the
amended partnership agreement or the Delaware Revised Uniform Limited
Partnership Act. If the effect of any amendment is to adversely alter the
preferences or rights of any class or series, the amended partnership
agreement requires that the approval of the holders of a majority of the
units, other than the general partner and its corporate affiliates, in such
class or series will be required to adopt such amendment, except for certain
specified exceptions. In addition, Alliance Holding may not adopt any
amendment without approval of its unitholders, other than the general partner
and its corporate affiliates, holding 50% or more of the issued and
outstanding Alliance Holding units, except for certain specified exceptions,
if it fails to receive a determination of outside counsel that as a result of
such an amendment:
(1) its unitholders will not lose their limited liability,
(2) neither Alliance Holding nor Alliance Capital will become
subject to federal income tax on its net income or otherwise
incur additional tax liabilities, and
(3) certain advisory contracts of Alliance Holding and Alliance
Capital that contribute more than 10% of Alliance Holding's
and Alliance Capital's aggregate revenues from investment
management services will not automatically be terminated or
breached.
Any amendment to a provision of the amended partnership agreement that
fixes a percentage of partners, or a class or series thereof, required to take
any action cannot be made if that amendment would have the effect of changing
that fixed percentage, unless the amendment is approved by a written approval
or an affirmative vote of the partners or unitholders of Alliance Holding, or
a class or series thereof, constituting not less than the percentage required
by the voting percentage requirement sought to be reduced.
In addition, the amended partnership agreement provides that no amendment
of provisions relating to the following will become effective without the
approval of the holders of a majority of the Alliance Capital units other than
the general partner and its corporate affiliates:
(1) the general partner's authority to complete the reorganization
and serve as a limited partner of Alliance Capital,
(2) the general partner's authority to make any tax election
permitted or required under the Code or other tax laws,
(3) the withdrawal or removal of the general partner,
(4) meetings of unitholders to vote on matters to be submitted
to a vote of the Alliance Capital unitholders and voting of
Alliance Capital units held by Alliance Holding in its
capacity as an Alliance Capital unitholder with respect to
such matters,
(5) the general partner causing Alliance Holding to request that
Alliance Capital call a meeting of the Alliance Capital
unitholders if the general partner receives a request for
such a meeting from 50% or more in interest of the Alliance
Holding unitholders, or
(6) the procedure for providing notice of a meeting of unitholders.
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Meetings; Voting
The amended partnership agreement continues to provide that there is no
obligation to hold annual or other periodic meetings of the unitholders.
Meetings may be called in the discretion of the general partner. The general
partner must call a meeting within ten days after receipt of a written request
for such a meeting signed by unitholders that hold 50% or more in interest of
Alliance Holding units. The voting rights of unitholders described in this
prospectus are granted to them under the amended Alliance Holding partnership
agreement. The assignor limited partner (the entity that holds, in name only,
the limited partnership interests underlying the units) will vote such
interests in accordance with the written instructions of unitholders. If
written instructions as to voting are not given to the assignor limited
partner, the limited partnership interests underlying the units will not be
voted. A unitholder will be entitled to instruct the assignor limited partner
to cast one vote for each unit owned.
Under certain pass-through voting provisions, described below, contained
in the amended partnership agreement, meetings must also be called by the
general partner to consider and vote upon any matter submitted to a vote of
Alliance Capital unitholders at any meeting of such unitholders or any matter
upon which such holders propose to take action by written consent without a
meeting. At such a meeting, the Alliance Capital units held by Alliance
Holding are to be voted for or against, or withheld from voting or not voted
by Alliance Holding, in its capacity as a unitholder of Alliance Capital, in
the same proportions as the Alliance Holding units are voted or withheld from
voting by the Alliance Holding unitholders. The general partner will cause
Alliance Holding to request that Alliance Capital call a meeting of the
Alliance Capital unitholders if Alliance Holding receives a request to do so
from holders of 50% or more in interest of the Alliance Holding units. The
general partner will have the right to vote at all meetings of unitholders at
which unitholders will determine how the Alliance Capital units held by
Alliance Holding will be voted as though it were a limited partner of Alliance
Holding and held limited partnership interests in Alliance Holding equivalent
in number to its general partnership interests. Alliance Holding unitholders
will be entitled to attend all meetings of Alliance Capital unitholders.
Indemnification
The amended partnership agreement continues to grant rights of
indemnification to the general partner or any general partner that has
withdrawn or been removed (a "Departing Partner"), any affiliate of the
general partner or any Departing Partner and directors of the general partner.
The term "affiliate" for purposes of the amended partnership agreement means
any person, other than Alliance Holding or persons controlled by Alliance
Holding or any person employed by Alliance Holding or such a controlled
person, directly or indirectly controlling, controlled by or under common
control with the person in question. However, none of Alliance Holding,
Alliance Capital, any person controlled by Alliance Holding or Alliance
Capital or any person employed by Alliance Holding or Alliance Capital or such
a controlled person will be considered an affiliate of the general partner.
Alliance Holding may also continue to enter into indemnification agreements on
such terms as the general partner may determine in its sole discretion, or it
may adopt policies covering any person who is or was an officer, director,
employee, partner, agent or trustee of Alliance Holding, the general partner,
any Departing Partner or any affiliate, and any person who is or was serving
at the request of the general partner or any Departing Partner or any such
affiliate as a director, officer, employee, partner, agent or trustee of
another person in connection with the business affairs of Alliance Holding
(each, together with the general partner, any Departing Partner and any
affiliate thereof, an "Indemnitee").
Indemnitees may be indemnified by Alliance Holding to the fullest extent
permitted by law against any and all losses or expenses, including reasonable
legal fees and expenses, arising from any and all claims in which any
Indemnitee may be involved, or threatened to be involved, as a party or
otherwise, by reason of its relationship with Alliance Holding as an
Indemnitee, if the Indemnitee acted in good faith and in a manner it
reasonably believed to be in or not opposed to, the best interests of Alliance
Holding and, with respect to any criminal proceeding, had no reasonable cause
to believe its conduct was unlawful. These provisions as to indemnification
are not exclusive. As a result of the broad indemnification rights discussed
above, unitholders have more limited rights against the general partner and
the Indemnitees than they would have absent these provisions.
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Alliance Holding may continue to purchase and maintain insurance on
behalf of the general partner and such other Indemnitees as the general
partner may determine against any liability that may be asserted against, or
any expense that may be incurred by, such person in connection with the
activities of Alliance Holding. Alliance Holding may purchase such insurance
even if it would have the power to indemnify such person against the liability
under the provisions of the amended partnership agreement. Alliance Holding
has purchased directors and officers insurance.
In no event may an Indemnitee subject the general partner, the
unitholders, affiliates or assignees of any of them to personal liability by
reason of these indemnification provisions. Any indemnification is to be
satisfied solely out of any insurance proceeds available therefor or the
assets of Alliance Holding.
Right to Purchase Units
The amended partnership agreement provides that, in the event that less
than 10% of the issued and outstanding Alliance Capital units are held,
directly or indirectly, by persons other than (1) the general partner, (2)
affiliates of the general partner, (3) officers and employees of the general
partner, Alliance Holding, or Alliance Capital or (4) persons controlled by
Alliance Holding or Alliance Capital (collectively, the "Affiliated Holders"),
the general partner will then have the right, which it may assign and transfer
to any of its affiliates, Alliance Capital or Alliance Holding, on a date to
be selected by the general partner on at least ten but not more than sixty
days' notice, to purchase all, but not less than all, of the Alliance Holding
units that remain outstanding and held by persons other than the general
partner and its affiliates. For the purposes of determining the Alliance
Capital units held by persons other than Affiliated Holders, such number shall
include the number of Alliance Capital units held by Alliance Holding
multiplied by a fraction, the numerator of which is the number of issued and
outstanding Alliance Holding units held by persons other than Affiliated
Holders and the denominator of which is the number of issued and outstanding
Alliance Holding units, including the general partner units. The purchase
price of each unit in the event of such purchase shall be the greater of:
(1) the highest cash price paid by the general partner or its
affiliates for any Alliance Holding unit of such class or
series purchased within the 90 days immediately prior to the
date on which Alliance Holding's transfer agent first mails to
the unitholders written notice of the general partner's
election to purchase outstanding units, or
(2) one of the following market valuations:
o if such class or series is listed or admitted to trading
on one or more national securities exchanges, the
arithmetic mean of the last reported sales prices per unit
of such class or series "regular way" or, in case no such
reported sale has taken place on any such date, the
arithmetic mean of the last reported bid and asked prices
per unit of such class or series "regular way" for such
date, in either case on the principal national securities
exchange on which the units of such class or series are
listed or admitted to trading, for the 30 trading days
immediately preceding the date of the mailing of the
notice of election to purchase,
o if the units of such class or series are not listed or
admitted to trading on a national securities exchange but
are quoted through NASDAQ, the arithmetic mean of the last
reported sales prices per unit of such class or series
"regular way" or, in case no reported sale has taken place
on any such day or the last reported sales price is not
then quoted, the arithmetic mean of the last reported bid
and asked prices per unit of such class or series "regular
way" for such day quoted through NASDAQ for the 30 trading
days immediately preceding the date of the mailing of such
notice, or
o if the units of such class or series are not listed or
admitted to trading on a national securities exchange, and
are not quoted through NASDAQ, an amount equal to the fair
market value of a unit of such class or series, as of the
date of the mailing of such notice, as determined by an
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independent appraiser having experience in the valuation
of financial services businesses selected and retained by
the general partner on behalf of and for the account of
Alliance Holding.
Under the amended partnership agreement, however, the right to purchase
Alliance Holding units described above will not be exercisable unless the
general partner, Alliance Holding, Alliance Capital or any of the general
partner's affiliates simultaneously purchases all of the Alliance Capital
units that remain outstanding and held by persons other than the general
partner and its affiliates, at the same purchase price per unit.
Distributions
Alliance Holding will make distributions of all cash received from
Alliance Capital, minus such amounts as the general partner determines, in its
sole discretion, should be retained by Alliance Holding for use in its
business, as promptly as practicable after the receipt of any such cash
distribution. The amount of these distributions will depend on the earnings of
Alliance Holding and Alliance Capital and certain decisions by the general
partner, in its sole discretion, regarding taxes, reserves and the cash needs
of Alliance Holding. Any distributions made other than as described above or
in connection with the dissolution of Alliance Holding, may be made by the
general partner in such amounts and at such times as the general partner, in
its sole discretion, may determine, among the unitholders and partners, pro
rata according to their percentage interests.
Exchange of Units and Limited Partnership Interests
A unitholder will continue to have the ability to exchange any or all of
its units for corresponding Alliance Holding limited partnership interests by:
(1) delivering to the general partner and the assignor limited
partner (the entity that holds, in name only, the limited
partnership interests underlying the units) such documents
as may be reasonably required by the general partner and the
assignor limited partner; and
(2) paying such reasonable fees and expenses as may be required
with respect thereto by the general partner.
However, the general partner, in its sole discretion, must consent to the
admission of such unitholder to Alliance Holding as a limited partner. If the
general partner does not consent, then the person who requested the exchange
will remain a unitholder.
A limited partner, other than the assignor limited partner, can exchange
any or all of its limited partnership interests for corresponding units by:
(1) delivering to the general partner and the assignor limited
partner such documents as may be reasonably required by the
general partner and the assignor limited partner; and
(2) paying such reasonable fees and expenses as may be required
with respect thereto by the general partner.
Registration Rights
The general partner and its corporate affiliates will continue to have
the right to require Alliance Holding to file a registration statement under
the Securities Act of 1933 to cover any Alliance Holding units they hold.
Following the reorganization and the Equitable Life private exchange, this
right will also be exercisable with respect to any Alliance Holding units they
may receive in exchange for an equal number of Alliance Capital units pursuant
to any exchange of Alliance Capital units for Alliance Holding units effected
from time to time at Alliance Capital's request.
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Repurchases of Units
Alliance Holding will be required to purchase, at Alliance Capital's
request from time to time, outstanding units using funds provided by Alliance
Capital. The number of Alliance Capital units held by Alliance Holding as a
limited partner of Alliance Capital will then be reduced to reflect the number
of units so repurchased.
Limited Liability
The liability of a unitholder who does not take part in the control of
the business of Alliance Holding and who acts in conformity with the
provisions of the amended partnership agreement will generally continue to be
limited under Delaware law to the amount of his capital contribution to
Alliance Holding in respect of his units plus his share of the assets and
undistributed profits of Alliance Holding. Generally, under Delaware law, a
unitholder will not have personal liability for the obligations of the
partnership. However, under Delaware law, for a period of three years from the
date of any distribution, a unitholder may be required to return to the
partnership such distribution received by him if he knew that at the time of
the distribution, (1) after giving effect to the distribution, certain
liabilities of the limited partnership exceeded the fair value of the assets
of the limited partnership, or (2) in connection with a distribution following
dissolution, such distribution was made prior to the time the partnership
paid, or made reasonable provision to pay, claims against it. The provisions
of the partnership agreement regarding limited liability provide that if any
unitholder receives a distribution from Alliance Holding that is required to
be returned to, or for the account of, Alliance Holding or its creditors, that
obligation is the obligation of the unitholder who received that distribution.
Because Alliance Holding is organized under Delaware law, and is
qualified as foreign limited partnership in several other jurisdictions, it is
believed, but cannot be determined with certainty, that the limited liability
of the unitholders of Alliance Holding will be determined by reference to
Delaware law. If the status of the unitholders were determined by reference to
the laws of a jurisdiction other than Delaware, including a jurisdiction in
which Alliance Holding has not qualified as a foreign limited partnership, and
the rights of unitholders to remove or replace the general partner or to take
other action pursuant to the amended partnership agreement constitute
participating in the "control of the partnership's business" under the laws of
that jurisdiction, then unitholders of Alliance Holding might be held
personally liable for partnership obligations to the same extent as would a
general partner. Alliance Holding will operate in such a manner as the general
partner deems reasonable and necessary or appropriate to preserve the limited
liability of unitholders.
Conflicts of Interest and General Partner Duties
Section 17-403(b) of the Delaware Revised Uniform Limited Partnership Act
states that, except as provided in the Delaware Act or the partnership
agreement, a general partner of a limited partnership has the same liabilities
to that partnership and its limited partners, or, in this case, its
unitholders, as does a general partner in a partnership without limited
partners. While, under Delaware law generally, a general partner of a limited
partnership is liable as a fiduciary to the other partners, under the
partnership agreement, the general partner of Alliance Holding is subject to a
more limited standard of liability. Under this standard, the general partner
is not liable for monetary damages to Alliance Holding for errors in judgment
or for a breach of fiduciary duty, including a breach of any duty of care or
loyalty, unless it is established that the general partner's action or failure
to act involved an act or omission undertaken with deliberate intent to cause
injury to Alliance Holding, with reckless disregard for the best interests of
Alliance Holding or with actual bad faith on the part of the general partner,
or constituted actual fraud. In making a decision in its "sole discretion" or
"discretion," the general partner is entitled to consider only those interests
and factors as it desires and has no duty or obligation to consider any
interest of or other factors affecting Alliance Holding or any unitholder. In
making a decision in its "good faith" or under another express standard, the
general partner will act under that express standard and will not be subject
to any other or different standard imposed by the partnership agreement or
applicable law. In addition, the general partner and its directors and
affiliates will continue to have broad rights of indemnification. See "--
Indemnification" above.
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The duties, including fiduciary duties, of general partners is a
developing area of the law and it is not clear to what extent the provisions
of the partnership agreement are enforceable under Delaware or federal law.
However, the Delaware courts have generally given effect to provisions in a
partnership agreement that restrict otherwise existing duties, including
fiduciary duties, and liabilities, and Section 1101(d) of the Delaware Revised
Uniform Limited Partnership Act provides that a partner's duties, including
fiduciary duties, and liabilities may be restricted by provisions in a
partnership agreement.
Unitholders should consult their own legal counsel concerning the
responsibilities of the general partner and the remedies available to
unitholders.
Books and Reports
The general partner will continue to be required to keep appropriate
books of the business of Alliance Holding at the principal office of Alliance
Holding. The books will be maintained for financial reporting purposes on an
accrual basis in accordance with generally accepted accounting principles. The
fiscal year of Alliance Holding is the same as its taxable year for federal
income tax purposes, which is currently the calendar year, but may be changed
to such other year that is permitted under the Internal Revenue Code as the
general partner in its sole discretion determines.
Each unitholder of Alliance Holding and its duly authorized
representatives will continue to have the right upon reasonable times and at
such person's own expense, but only upon his written request and for a purpose
reasonably related to such person's interest as a unitholder:
(1) to have reasonable information regarding the status of the
business and financial condition of Alliance Holding;
(2) to inspect and copy the books of Alliance Holding and other
reasonably available records concerning the operation of
Alliance Holding, including the federal, state and local
income tax returns for each year;
(3) to have on demand a current list of the full name and last
known business, residence or mailing address of each
unitholder of Alliance Holding;
(4) to have reasonable information regarding the net value of
any contribution made by any partner or unitholder of
Alliance Holding and the date on which each such person
became a partner or unitholder;
(5) to have a copy of the partnership agreement and the
certificate of limited partnership of Alliance Holding and
all amendments thereto; and
(6) to have any other information regarding the affairs of
Alliance Holding as is just and reasonable.
Despite each unitholder's rights as stated above, the general partner
will continue to have the right to keep confidential from the unitholders and
their authorized representatives, for a period of time as the general partner
deems reasonable, any information that the general partner reasonably believes
to be in the nature of trade secrets or other information the disclosure of
which the general partner in good faith believes is not in the best interests
of Alliance Holding or could damage Alliance Holding or its business or which
Alliance Holding is required by law or by agreement with any third party to
keep confidential.
The general partner will use its best efforts to furnish within 90 days
after the close of each calendar year to each unitholder of Alliance Holding
of record as of the last day of that year reports containing financial
statements of Alliance Holding and Alliance Capital for the year, including a
balance sheet and statements of income, partners' capital and cash flow. The
annual financial statements will be audited by the independent auditors of
Alliance
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Holding. The general partner will also use its best efforts to furnish within
45 days after the close of each quarter, except the last quarter of each year,
to each unitholder of Alliance Holding a quarterly report for the quarter
containing such financial and other information, which need not be audited, as
the general partner deems appropriate. These obligations may be satisfied by
the general partner through the deliverance to each unitholder of a copy of
the Form 10-K or 10-Q, containing separate financial statements of Alliance
Capital, or such other periodic reports as may be filed by Alliance Holding
pursuant to the Securities Exchange Act of 1934.
The general partner will use its best efforts to furnish to the
unitholders of Alliance Holding information reasonably required for federal,
state and local income tax reporting purposes within 90 days after the close
of each taxable year. Such information will be furnished in a summary form.
The general partner's ability to furnish such summary information to
unitholders will depend on the cooperation of unitholders in supplying certain
information to the general partner. Every unitholder, without regard to
whether he supplies such information to the general partner, will receive
information to assist him in determining his federal and state tax liability
and filing his federal and state income tax returns.
Change in the Tax Laws
If, as a result of a change in the tax laws or the occurrence of certain
other events specified in the amended partnership agreement, the general
partner reasonably believes that there is a substantial risk that, within one
year of the occurrence of such event that Alliance Holding or Alliance Capital
will be treated for federal income tax purpose as a corporation or an
association taxable as a corporation or otherwise being subject to federal
taxation on its net income generally, the general partner in its sole
discretion, without the approval of unitholders, has the right to:
(1) impose any restrictions on transfer of the units which it
believes are necessary to prevent Alliance Holding or
Alliance Capital, as the case may be, from being treated for
federal income tax purposes as a corporation or an
association taxable as a corporation or otherwise being
subject to federal taxation on its net income generally,
including making any amendments to the partnership
agreement, or
(2) restructure Alliance Holding, by the transfer of all or
substantially all of the assets of Alliance Holding to a
newly formed entity, as, or transfer all or substantially
all of the assets of Alliance Holding to, any type of legal
entity in a transaction in which:
o each outstanding unit or partnership interest of the same
class or series is treated in the same manner;
o if the partnership interests are converted into
equity securities of a new entity, the relative
fair market values of those equity securities are
in proportion to the amounts that each of the
unitholders and the general partner would have been
entitled to receive upon a liquidation of Alliance
Holding; and
o if all or substantially all of the assets of
Alliance Holding are transferred to a new entity,
Alliance Holding may retain all of the equity
interests in that entity until such time, if any,
as the general partner, without the approval of
unitholders, elects to dissolve Alliance Holding in
a liquidation of Alliance Holding pursuant to the
partnership agreement.
In connection with such a transaction:
o the general partner may issue to itself, at fair
market value determined by an independent person
having experience in the valuation of financial
services businesses, a sufficient number of units,
or it may otherwise restructure Alliance Holding so
that the general
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partner and its corporate affiliates will own a
sufficient percentage, but no more, of the units so
as to allow Alliance Holding or the new entity to
be included for federal tax purposes in the
affiliated group of which the general partner is a
member; and
o the business of Alliance Holding may be continued by the
new entity or otherwise.
However, such a restructuring cannot take place unless Alliance Holding
has received an opinion of outside counsel to the effect that the liability of
the unitholders will not be increased solely as a result of that
restructuring.
Termination, Dissolution and Liquidation
Under the amended partnership agreement, Alliance Holding will continue
in existence until terminated pursuant to the partnership agreement. Alliance
Holding will be dissolved upon:
(1) the withdrawal or removal of the general partner or the
occurrence of any other event that results in its ceasing to
be the general partner, other than by reason of certain
transfers of the general partner's assets or a withdrawal or
removal occurring upon or after approval by the unitholders
of a successor general partner;
(2) the filing of a certificate of dissolution or the revocation
of the certificate of incorporation of the general partner;
(3) a written determination by the general partner that the
projected future revenues over the next five years of
Alliance Holding are insufficient to enable payment of
projected costs and expenses for that period;
(4) an election to dissolve Alliance Holding by the general
partner that is approved by holders, excluding the general
partner and its corporate affiliates, of more than 50% of
the outstanding units;
(5) the bankruptcy of the general partner;
(6) the election of the general partner upon Alliance Holding
being subject to federal income tax as a corporation or
otherwise;
(7) the sale of all or substantially all of the assets of Alliance
Holding; or
(8) any other event requiring dissolution under Delaware law.
Alliance Holding will not be dissolved by the admission of additional
unitholders or by the admission of additional or successor general partners.
Upon an event described in clauses (1), (2) or (5) above, Alliance Holding
will not be dissolved if there is at least one remaining general partner and
that general partner carries on the business of Alliance Holding or, within 90
days after the event described in any of those clauses, a majority in interest
of the remaining partners and unitholders agree to continue the business of
Alliance Holding and to the selection, effective as of the date of such event,
of a successor general partner.
Upon dissolution of Alliance Holding, the general partner will be the
liquidating trustee. If Alliance Holding has been dissolved pursuant to (1),
(2) or (5) above, a liquidator or liquidating committee approved by a majority
of the unitholders of Alliance Holding will be the liquidating trustee. The
liquidating trustee, if other than the general partner, will be entitled to
receive that compensation for its services as may be approved by a majority of
the unitholders. The liquidating trustee will liquidate the assets of Alliance
Holding and apply and distribute the proceeds of the liquidation in the
following order of priority, unless otherwise required by mandatory provisions
of applicable law:
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(1) to creditors of Alliance Holding, including partners, in
order of priority provided by law, with the creation of a
reserve of cash or other assets of Alliance Holding for
contingent liabilities in an amount, if any, determined by
the liquidating trustee in its sole judgment to be
appropriate for such purposes;
(2) to the partners and unitholders with positive balances in
their capital accounts an amount equal to the sum of all
such positive balances, with the distributions to be made in
proportion to the positive balances of such capital
accounts; and
(3) to the partners and unitholders in accordance with their
percentage interests.
The liquidating trustee, if other than the general partner, may be
removed at any time, with or without cause, by notice of removal approved by a
majority of the unitholders.
The Alliance Capital Partnership Agreement
The material terms of the Alliance Capital partnership agreement are
substantially identical to those of the amended Alliance Holding partnership
agreement, with the exceptions summarized below. The discussion of the
Alliance Capital partnership agreement contained in this prospectus is
qualified in its entirety by reference to the Alliance Capital partnership
agreement included in this prospectus as Annex C.
Organization and Duration
Alliance Capital was formed as a Delaware limited partnership on April 6,
1999 and will continue in existence until dissolved pursuant to the Alliance
Capital partnership agreement. Alliance Capital Management Corporation is the
sole general partner of Alliance Capital. Immediately upon completion of the
reorganization, Alliance Holding will hold all of the outstanding units of
limited partnership interest and a 1% general partnership interest in Alliance
Capital. Immediately following the exchange offer and the Equitable Life
private exchange, Equitable Life and its affiliates, other than management and
employees, will own approximately 54% of the Alliance Capital units and the 1%
general partnership interest in Alliance Capital. The remaining Alliance
Capital units will be owned by Alliance Holding and by management, employees
and public unitholders of Alliance Holding who participate in the exchange
offer.
Purpose and Business
The purpose and nature of the business to be conducted by Alliance
Capital is to engage in the investment management and advisory business and to
engage in any other lawful activities.
Management; The General Partner
The general partner under the Alliance Capital partnership agreement has
substantially the same authority, powers, rights and responsibilities as the
general partner under the amended Alliance Holding partnership agreement.
Similarly, under the Alliance Capital partnership agreement, no unitholder may
take part in the management of Alliance Capital.
In addition to its ability to acquire assets or conduct any business or
activity pursuant to the amended Alliance Holding partnership agreement, the
general partner may, under the Alliance Capital partnership agreement, also
acquire assets in connection with its performance of its obligations under the
agreement and plan of reorganization.
Amendment of Partnership Agreement
The provisions relating to amendment of the Alliance Capital partnership
agreement are substantially the same as those contained in the amended
Alliance Holding partnership agreement. However, no amendment of provisions
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of the Alliance Capital partnership agreement relating to the following will
become effective without the approval of the holders of a majority of the
Alliance Capital units other than the general partner and its corporate
affiliates:
(1) reimbursement of expenses of Alliance Holding;
(2) withdrawal or removal of the general partner; or
(3) meetings of Alliance Capital unitholders for any purpose with
respect to which they are entitled to vote.
Securities Law and NYSE Related Obligations
The rules of the New York Stock Exchange do not apply to Alliance Capital
because it is a private partnership and is not listed on any exchange.
Meetings; Voting
The Alliance Capital partnership agreement provides that there is no
obligation to hold annual or other periodic meetings of the unitholders.
Meetings may be called in the discretion of the general partner. The general
partner must call a meeting within ten days after receipt of a written request
for such a meeting signed by unitholders that hold 25% or more in interest of
Alliance Capital units or signed by Alliance Holding, in its capacity as a
limited partner of Alliance Capital, pursuant to the request of Alliance
Holding unitholders holding at least 50% of the issued and outstanding
Alliance Holding units. The Alliance Capital unitholders will be entitled to
cast one vote for each unit owned.
Under certain pass-through voting provisions, described below, contained
in the Alliance Holding amended partnership agreement, designed to preserve
the rights of unitholders who do not exchange their Alliance Holding units for
Alliance Capital units following the reorganization with respect to the
Alliance business, any matter submitted to a vote of the Alliance Capital
unitholders will also be submitted by Alliance Holding, in its capacity as a
limited partner of Alliance Capital, to a vote of the Alliance Holding
unitholders. Alliance Holding will vote its Alliance Capital units with
respect to any such matter in accordance with written instructions received by
it from Alliance Holding unitholders. If written instructions are not given to
Alliance Holding by Alliance Holding unitholders, the Alliance Capital units
underlying such interests will not be voted. The Alliance Holding unitholders
will be entitled to instruct Alliance Holding to cast one vote for each unit
that he owns.
Further, with respect to matters that require the approval of a majority
of unitholders other than the general partner and its corporate affiliates,
the Alliance Capital units held by Alliance Holding will be voted for or
against that matter or will be withheld from voting by Alliance Holding, in
its capacity as a limited partner of Alliance Capital, in the same proportion
as the units held by holders, other than the general partner of Alliance
Capital and its corporate affiliates, are voted, not voted or withheld from
voting.
Distributions
Alliance Capital will make quarterly distributions of its operating cash
flow minus such amounts as the general partner determines, in its sole
discretion, should be retained by Alliance Capital for use in its business.
Operating cash flow is equal to the sum of the net cash provided from (or used
in) operating activities of Alliance Capital, proceeds from borrowings and
proceeds from sales or other dispositions of assets in the ordinary course of
business, less the sum of payments of principal on borrowings and amounts
expended on the purchase of assets in the ordinary course of business in
excess of amounts previously retained for such purpose. The amount of the
quarterly distributions will depend on the operating cash flow of Alliance
Capital and certain decisions by the general partner, in its sole discretion,
regarding taxes, reserves and the cash needs of Alliance Capital. Any special
distributions, made other than as described above or in connection with the
dissolution of Alliance Capital, may be made by the general partner in such
amounts and at such times as the general partner, in its sole discretion, may
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determine, 1% to the general partner and 99% among limited partners, pro rata
according to their percentage interests.
Reimbursement of Expenses
Alliance Capital has agreed to reimburse Alliance Holding for, or cause
Alliance Holding to be reimbursed for, all of Alliance Holding's operating and
other costs and expenses, other than taxes, including costs and expenses
associated with maintaining Alliance Holding as a public partnership, all
costs and expenses of any financial, legal, accounting or other advisers, and
all costs and expenses of any litigation or other proceeding involving
Alliance Holding. Alliance Capital will not be entitled to receive any
Alliance Holding units in exchange for these reimbursements.
Alliance Capital will not pay or reimburse:
(1) any tax imposed on Alliance Holding's share of Alliance
Capital's income;
(2) any tax, other than income tax, payable by Alliance Holding
to the extent that such tax is attributable to Alliance
Holding's partnership interest in Alliance Capital;
(3) any interest, penalties or additions to tax, and any
liabilities, costs or expenses arising out of the imposition
of any tax described in (1) and (2) above; and
(4) any costs and expenses of Alliance Holding to the extent
incurred in connection with business activities other than
the holding of its partnership interest in Alliance Capital
and activities related thereto.
In addition, Alliance Capital will not pay or reimburse the following
expenses, which will be paid or reimbursed by Equitable Life under the
indemnification and reimbursement agreement:
(5) any tax for which Equitable Life is required to indemnify
Alliance Holding pursuant to the terms of the
indemnification and reimbursement agreement;
(6) any interest, penalties or additions to tax, and any
liabilities, costs or expenses arising out of the imposition
of any tax described in (5) above; and
(7) any out-of-pocket costs and expenses incurred in connection
with the consideration and implementation of the
reorganization on or after June 15, 1998 by Alliance
Holding, Alliance Capital or their common general partner.
Transferability of Units
Generally, the Alliance Capital partnership agreement prohibits a
unitholder from transferring Alliance Capital units without the consent of
both the general partner and Equitable Life. Only the written consent of
Equitable Life, and not the written consent of the general partner, is
required for a block transfer of units by a corporation or other business
entity, provided that the partnership has received an opinion of counsel to
the effect that the partnership will not be treated as a publicly-traded
partnership for tax purposes as a result of the transfer. Either Equitable
Life or, where applicable, the general partner may withhold its consent to a
transfer in its sole discretion. Generally, neither Equitable Life nor the
general partner will permit any transfer that it believes would create a risk
that Alliance Capital would be treated as a corporation for tax purposes. See
"Description of Alliance Capital Units--Restrictions on Transfers of the
Alliance Capital Units."
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Exchange of Units
Unlike the amended Alliance Holding partnership agreement, the Alliance
Capital partnership agreement does not grant the general partner the right to
freely exchange any units held by it for general partnership interests.
Books and Reports
Alliance Capital will provide Alliance Holding such financial and other
information regarding Alliance Capital and any affiliates that it controls as
may reasonably be requested by Alliance Holding in connection with the
preparation and filing of any reports required to be filed by it under the
Securities Exchange Act of 1934, the NYSE or any comparable national
securities market on which the Alliance Holding units are listed or quoted.
Immediately following the exchange offer and the private exchange by
Equitable Life, Alliance Capital will be subject to the reporting requirements
under the Securities Exchange Act of 1934. If, at a later date, Alliance
Capital ceases to be subject to these reporting requirements, Alliance Capital
will provide its unitholders with copies of the annual and quarterly reports,
containing separate financial statements for Alliance Capital, as filed by
Alliance Holding.
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THE EXCHANGE OFFER
General
Alliance Holding is offering each of its unitholders the opportunity to
exchange each Alliance Holding unit for one unit of limited partnership
interest in Alliance Capital. Alliance Holding is making this exchange offer
in connection with a reorganization of Alliance Holding's business in which
Alliance Holding will contribute all of its business to Alliance Capital in
exchange for all Alliance Capital units. After the reorganization, Alliance
Holding will change its name to "Alliance Capital Management Holding L.P." and
Alliance Capital will assume the name "Alliance Capital Management L.P."
Each Alliance Holding unitholder will be entitled to exchange one
Alliance Holding unit for one Alliance Capital unit upon consummation of the
exchange offer by following the procedures described below. However, in order
to preserve Alliance Holding's NYSE listing, Alliance Holding will not accept
units tendered that, if exchanged, would cause Alliance Holding's units to be
held by fewer than 1,200 public unitholders. Further, in order to maintain an
adequate public float in the trading market for Alliance Holding units,
Alliance Holding will not accept units tendered that, if exchanged, would
cause fewer than 40 million units to be held by public unitholders immediately
following the exchange. For purposes of calculating the public float, "public
unitholders" excludes Equitable Life, its affiliates, other holders of more
than 2% of the currently outstanding Alliance Holding units and Alliance
Holding's executive management. In the event excess units are tendered,
Alliance Holding will reject a corresponding number of units on a pro rata
basis among all tendering unitholders.
Each Alliance Holding unitholder should carefully consider the liquidity
consequences of participating in the exchange offer. The Alliance Capital
units offered in the exchange offer will not be listed on any securities
exchange and will be subject to significant restrictions on transfer. By
contrast, the Alliance Holding units will continue to be listed on the NYSE
and be freely tradable. If you do not participate in the exchange offer, you
will continue to hold your Alliance Holding units. See "Description of
Alliance Capital Units--Restrictions on Transfers of the Alliance Capital
Units."
Each Alliance Holding unitholder should also carefully consider the tax
consequences of participating in the exchange offer. Alliance Capital units
represent interests in a private partnership that is not subject to federal
tax on its gross business income. By contrast, Alliance Holding units
represent interests in a publicly-traded partnership that is subject to a
federal tax of 3.5% on gross business income. As a consequence, distributions
on Alliance Holding units will be lower than distributions on Alliance Capital
units. See "The Reorganization and the Exchange Offer -- Material Federal
Income Tax Consequences."
Exchange Offer Deadline
The exchange offer deadline is 12:00 A.M. New York City time, on October
29, 1999. Alliance Holding's general partner may extend the exchange offer
deadline.
If the general partner of Alliance Holding designates a date later than
October 29, 1999 as the exchange offer deadline, the general partner will
notify unitholders of that later date by issuing a press release prior to 9:00
A.M., New York City time, on October 29, 1999.
Exchange Offer Forms
We have included with this prospectus a letter of transmittal that you
will need to participate in the exchange offer. The letter of transmittal
describes other documents that must accompany the letter of transmittal in
specified circumstances.
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Upon request, the information agent identified below will make letters of
transmittal available to all persons who become holders, or beneficial owners,
of Alliance Holding units through the close of business on the day prior to
the exchange offer deadline. The letters of transmittal will be accompanied by
a copy of this prospectus.
How to Tender
If you wish to participate in the exchange offer, you must deliver the
following documents to the exchange agent at the address set forth below under
"-- The Exchange Agent" on or before the exchange offer deadline:
o a properly completed letter of transmittal, AND
o any documents required by the letter of transmittal, AND
o either:
o certificates representing the Alliance Holding units that you
wish to exchange for Alliance Capital units, OR
o an appropriate guarantee of delivery of the certificates
representing such Alliance Holding units, OR
o a book-entry confirmation, as discussed below under "--
Book-Entry Transfer" verifying that you have completed the
procedure for delivery by book-entry transfer of such
Alliance Holding units on a timely basis.
The method of delivery of certificates representing Alliance Holding
units, letters of transmittal and all other required documents is at your own
election and risk. We recommend that you use an overnight or hand-delivery
service. If you choose to deliver such documents by mail, however, we
recommend that you use registered mail, properly insure such documents and
request a return receipt. In all cases, you should allow sufficient time to
assure timely delivery.
Under no circumstances should you send your letter of transmittal, other
required documents or certificates representing Alliance Holding units to
Alliance Holding. The exchange agent must receive the letter of transmittal
and other required forms by the exchange offer deadline; otherwise, the units
represented by such certificates will not be exchanged for Alliance Capital
units.
Your decision to participate in the exchange offer will be effective only
if your letter of transmittal is accompanied by your Alliance Holding unit
certificates or guarantee of delivery or if you complete the book-entry
procedures, as described below.
The general partner of Alliance Holding may establish other reasonable
procedures and make reasonable determinations, not inconsistent with the terms
of the agreement and plan of reorganization, in guiding the exchange agent in
its determinations as to the validity of letters of transmittal and other
required documents.
Proper Execution and Delivery of Letter of Transmittal
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Alliance Holding units surrendered
for exchange pursuant thereto are tendered (1) by a registered holder of
Alliance Holding units who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter of
transmittal or (2) for the account of an eligible institution, as defined
below. In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantees
must be by an eligible institution. An "eligible institution" is a firm that
is a member of a registered national securities exchange, of the NASD or of a
commercial bank or trust company having an
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office or correspondent in the United States. If Alliance Holding units are
registered in the name of a person other than the person signing the letter of
transmittal, the Alliance Holding units surrendered for exchange must be
endorsed by, or be accompanied by a written instrument or instruments of
exchange, in satisfactory form as determined by Alliance Holding in its sole
discretion, duly executed by the registered Alliance Holding unitholder with
the signature thereon guaranteed by an eligible institution.
If the letter of transmittal is signed by a person or persons other than
the registered holder or holders of Alliance Holding units, such units must be
endorsed or accompanied by appropriate powers of attorney, in either case
signed exactly as the name or names of the registered holder or holders that
appear on the certificates representing the Alliance Holding units.
If trustees, executors, administrators, guardians, attorneys-in-fact,
officers or corporations or others acting in a fiduciary or representative
capacity sign the letter of transmittal, any certificates representing
Alliance Holding units or any powers of attorney, such person should so
indicate when signing and, unless waived by Alliance Holding, such person must
submit proper evidence satisfactory to Alliance Holding of its authority to so
act.
Alliance Holding, in its sole discretion, will determine all questions as
to the validity, form, eligibility (including time of receipt) and acceptance
of Alliance Holding units tendered for exchange for Alliance Capital units.
Alliance Holding reserves the absolute right to reject any and all tenders of
any particular Alliance Holding units not properly tendered or to not accept
any particular Alliance Holding units, which acceptance might, in the judgment
of Alliance Holding or its counsel, be unlawful. Alliance Holding also
reserves the absolute right in its sole discretion to waive any defects or
irregularities or conditions of the exchange offer as to any particular
Alliance Holding units either before or after the exchange offer deadline,
including the right to waive the ineligibility of any Alliance Holding
unitholder who seeks to tender Alliance Holding units pursuant to the exchange
offer. Alliance Holding's interpretation of the terms and conditions of the
exchange offer as to any particular certificates representing Alliance Holding
units either before or after the exchange offer deadline, including the letter
of transmittal and the instructions thereto, shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with the
tender of Alliance Holding units for exchange must be cured within such
reasonable period of time as Alliance Holding will determine. Neither Alliance
Holding, the exchange agent nor any other person will be under any duty to
give notification of any defect or irregularity with respect to any tender of
Alliance Holding units for exchange, nor will any of them incur any liability
for failure to give such notification.
Guaranteed Delivery Procedures
If you wish to exchange your Alliance Holding units for Alliance Capital
units and the certificates representing the Alliance Holding units are not
immediately available, or time will not permit your certificates or other
required documents to reach the exchange agent before the exchange offer
deadline, or you cannot complete the procedure for book-entry transfer on a
timely basis, you may still exchange your Alliance Holding units if:
(1) you exchange your Alliance Holding units through an eligible
institution, as defined above,
(2) prior to the exchange offer deadline, the exchange agent receives
from such eligible institution a properly completed and duly executed notice
of guaranteed delivery, substantially in the form provided by Alliance Holding
(by facsimile transmission, mail or hand delivery), setting forth the name and
address of the Alliance Holding unitholder and the amount of Alliance Holding
units tendered, stating that the tender is being made thereby and guaranteeing
that within five NYSE trading days after the date of execution of the notice
of guaranteed delivery, the certificates representing all physically tendered
Alliance Holding units, in proper form for transfer, or a book-entry
confirmation, as the case may be, and any other documents required by the
letter of transmittal will be deposited by the eligible institution with the
exchange agent, and
(3) the certificates representing all physically tendered Alliance
Holding units, in proper form for transfer, or a book-entry confirmation, as
the case may be, a properly completed and duly executed letter of transmittal
and all
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other documents required by the letter of transmittal are received by the
exchange agent within five NYSE trading days after the date of execution of
the notice of guaranteed delivery.
Book-Entry Transfer
The exchange agent will make a request to establish an account with
respect to the Alliance Holding units at The Depository Trust Company, its
book-entry transfer facility for purposes of the exchange offer, promptly
after the date of this prospectus. Any financial institution that is a
participant in the book-entry transfer facility's systems may make book-entry
delivery of certificates representing Alliance Holding units by causing the
book-entry transfer facility to transfer such certificates into the exchange
agent's account in accordance with the book-entry transfer facility's
Automated Tender Offer Program ("ATOP") procedures for transfer. However, the
exchange agent will exchange your Alliance Holding units so tendered only
after timely confirmation of the book-entry transfer of Alliance Holding units
into the exchange agent's account and the exchange agent's timely receipt of
an agent's message and any other documents required by the letter of
transmittal. An "agent's message" is a message transmitted by the book-entry
transfer facility and received by the exchange agent and forming a part of a
book-entry confirmation. This confirmation states that the book-entry transfer
facility has received an express acknowledgment from a participating financial
institution tendering Alliance Holding units, which are the subject of the
confirmation, that (1) such participant has received and agrees to be bound by
the terms of the letter of transmittal and (2) Alliance Holding may enforce
that agreement against such participant.
Revocation of Election to Participate in the Exchange Offer
Any unitholder may revoke its election to participate in the exchange
offer and withdraw the certificates representing Alliance Holding units
deposited with the exchange agent by written notice to the exchange agent
received prior to 12:00 A.M. on October 29, 1999, the exchange offer deadline.
The written notice must include the exact name of the unitholder as it appears
on the certificates, the certificate number and the number of units
represented by each such certificate. Upon such written notice, the
certificates covered by any properly revoked letter of transmittal will be
returned to the person who submitted such letter of transmittal to the
exchange agent. The exchange agent and the general partner of Alliance Holding
will have reasonable discretion to determine when any revocation is received
and whether any such revocation has been properly made, and such determination
will be final.
Cap on Tenders; Pro Ration
In order to preserve Alliance Holding's NYSE listing, Alliance Holding
will not accept units tendered that, if exchanged, would cause Alliance
Holding's units to be held by fewer than 1,200 public unitholders. Further, in
order to maintain an adequate public float in the trading market for Alliance
Holding units, Alliance Holding will not accept units tendered that, if
exchanged, would cause fewer than 40 million units to be held by public
unitholders immediately following the exchange. For purposes of calculating
the public float, "public unitholders" excludes Equitable Life, its
affiliates, other holders of more than 2% of the currently outstanding
Alliance Holding units and Alliance Holding's executive management. In the
event excess units are tendered, Alliance Holding will reject a corresponding
number of units on a pro rata basis among all tendering unitholders.
Lost, Stolen, Destroyed or Mutilated Certificates
If a unitholder submits a letter of transmittal with respect to an
Alliance Holding unit represented by a certificate that has been lost, stolen,
destroyed or mutilated, such certificate need not accompany the letter of
transmittal; provided that the unitholder:
(1) makes proof by affidavit, in form and substance satisfactory to the
general partner of Alliance Holding, that such previously issued
certificate has been lost, destroyed or stolen;
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(2) indicates a desire to participate in the exchange offer and the
general partner of Alliance Holding has not been notified on or
prior to the exchange offer deadline that the lost, stolen,
destroyed or mutilated certificate has been acquired by a purchaser
for value in good faith and without notice of an adverse claim;
(3) delivers to the general partner of Alliance Holding a bond, in form
and substance satisfactory to the general partner, with such surety
or sureties and with fixed or open penalty, as the general partner
may direct, to indemnify the general partner against any claim that
may be made on account of the alleged loss, destruction or theft of
such certificate or any claim made by another person asserting an
interest in such units, unless waived by the general partner; and
(4) satisfies any other reasonable requirements imposed by the general
partner of Alliance Holding.
To satisfy condition (1) above, the unitholder must contact the exchange
agent to obtain the proper Affidavit of Loss and Indemnity Agreement.
The general partner of Alliance Holding may delegate to the exchange
agent the authority to make any of the preceding determinations, requests or
waivers. If any mutilated Alliance Holding unit certificate is surrendered to
the exchange agent pursuant to the exchange offer, such certificate will be
exchanged for an Alliance Capital unit certificate.
Elections by Nominees
Alliance Holding unitholders of record who are nominees may submit a
separate letter of transmittal for each beneficial owner for whom such
unitholders of record are nominees. However, upon the request of the general
partner of Alliance Holding, any such unitholder of record will be required to
certify to the general partner's satisfaction that such unitholder of record
holds such units as nominee for the beneficial owners thereof. Each beneficial
owner for whom such a letter of transmittal is so submitted will be treated as
a unitholder of record.
Distribution of Alliance Capital Units
As soon as practicable after the effective time of the reorganization
(and after surrender to the exchange agent, if not previously surrendered with
a letter of transmittal, of one or more certificates representing Alliance
Holding units for exchange), there will be distributed to each unitholder who
previously delivered Alliance Holding units to the exchange agent,
certificates representing the Alliance Capital units receivable in exchange
for such Alliance Holding units.
Issuance of Certificates in Another Name
If any Alliance Capital units are to be transferred to a person other
than the person in whose name the certificate representing the Alliance
Holding units surrendered in exchange therefor is registered, it will be a
condition of the transfer of such securities that the certificate so
surrendered be properly endorsed and otherwise in proper form for transfer.
Expenses
Pursuant to the agreement and plan of reorganization, Equitable Life will
pay or reimburse all out-of-pocket costs and expenses incurred by Alliance
Holding, Alliance Capital, their general partner, or any of their subsidiaries
in connection with the exchange offer. In addition, if the reorganization is
consummated, Equitable Life has agreed to pay $3 million to Alliance Capital
for any internal personnel and overhead costs and expenses of Alliance
Holding, Alliance Capital or their common general partner relating to the
consideration and implementation of the reorganization and the exchange offer,
costs relating to additional communications with clients and personnel
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necessitated by the transaction and other miscellaneous expenses relating to
the transaction. Equitable Life has agreed to pay $1.5 million to Alliance
Holding for such costs if the reorganization is not consummated.
The Exchange Agent and the Information Agent
First Chicago Trust Company of New York has agreed to provide services as
the exchange agent in connection with the exchange offer. You should direct
all executed letters of transmittal and other required documents to the
exchange agent at one of the addresses or facsimile numbers set forth below.
Georgeson Shareholder Communications, Inc. has agreed to provide services
as the information agent in connection with the exchange offer. You should
direct questions and requests for assistance regarding the exchange offer,
requests for additional copies of this prospectus or of the letter of
transmittal and requests for notices of guaranteed delivery to the information
agent at the address or the telephone number set forth below.
<TABLE>
The information agent for the exchange offer is:
<S> <C> <C>
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.
17 State Street
New York, New York 10004
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
The exchange agent for the exchange offer is:
First Chicago Trust Company of New York
By Federal Express or
By Mail: Other Courier: By Hand:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Corporate Actions Corporate Actions c/o Securities Transfer and
Suite 4660 Suite 4680 Reporting Services Inc.
P. O. Box 2569 14 Wall Street Attn: Corporate Services
Jersey City, New Jersey 8th Floor 100 William Street, Galleria
07303-2569 New York, New York 10005 New York, New York 10038
</TABLE>
The exchange agent has entered into an agreement with Alliance Holding
pursuant to which it has agreed, among other things, to act as agent for
purposes of mailing and receiving letters of transmittal and other required
documents and distributing Alliance Capital units to persons participating in
the exchange offer. In connection with this engagement, the exchange agent
will receive a fee of $5,000, plus reasonable out-of-pocket expenses, which
Equitable Life has agreed to pay. None of the compensation paid to the
exchange agent will be contingent on the outcome of the exchange offer.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Amended Equitable Life Investment Advisory and Management Agreement
The Equitable Life investment advisory and management agreement governs
the rights and obligations of Equitable Life, Alliance Holding and Alliance
Corporate Finance Group Incorporated (a wholly-owned subsidiary of Alliance
Holding and, together with Alliance Corporate Finance Group Incorporated and
any affiliated successor to their respective businesses, the "Adviser") in
connection with investment advisory and management services provided by the
Adviser with respect to specified classes of Equitable Life's assets. If the
reorganization is completed, this agreement will be amended and restated as of
January 1, 1999 to provide terms more favorable to Alliance Holding and
thereby to provide an incentive to Alliance Holding to implement the
reorganization, which in turn will benefit Equitable Life. The following
summary of material provisions of the amended investment advisory agreement is
incomplete and is qualified by reference to the full text of the amended
investment advisory agreement, a copy of which is an exhibit to the
registration statement of which this prospectus forms a part.
Investment Advisory and Management Services. Pursuant to the amended
investment advisory agreement, the Adviser has agreed to provide investment
advisory services to Equitable Life and to recommend investments to the
relevant accounts subject to the agreement in accordance with investment
policy statements or other guidelines provided by Equitable Life. Alliance
Holding has discretion to refrain from rendering advisory services regarding
or purchasing the securities of companies which are affiliates of Alliance
Holding or companies regarding which Alliance Holding or its affiliates may
have non-public information.
Non-exclusivity. The amended investment advisory agreement is
non-exclusive. Equitable Life may receive investment advisory services from
other advisers respecting any accounts, including those subject to the
agreement, and the Adviser may furnish such services to any other entity with
investment policies similar to those of Equitable Life and may engage in any
other business.
Representations; Obligations. The Adviser represents and warrants that it
is registered as an investment adviser pursuant to the Investment Advisers Act
of 1940 and that it will promptly notify Equitable Life if it ceases to be so
registered. The amended investment advisory agreement may not be assigned,
within the meaning of that term under the Investment Advisers Act of 1940, by
either party. The parties agree to submit any irreconcilable differences
regarding the interpretation of the amended investment advisory agreement to
arbitration.
Fees. In exchange for providing the above services, Equitable Life will
pay annual fees in accordance with fee schedules attached to the amended
investment advisory agreement. Currently, these fees may be renegotiated at
any time, but under the amended investment advisory agreement, the fees for
services provided for the asset classes named in Section 4 of the amended
investment advisory agreement may not be amended prior to December 31, 2003.
Currently, the agreement does not provide for any minimum total annual fee.
Pursuant to the amended investment advisory agreement, however, Equitable Life
will agree that the total annual fees to be paid with respect to assets in
these classes held in these accounts and in the accounts of The Equitable of
Colorado, Inc., plus asset-based consulting fees for the assets, shall not be
less than $38 million, subject to annual reductions due to:
(1) the disposition, by sale or reinsurance, of a book of insurance that
Equitable Life ceases to own;
(2) the net reduction of assets in these classes because of transfers to
other accounts with respect to which the Adviser provides advisory services;
(3) investment of assets in these classes in investment products as are
agreed to by Equitable Life and the Adviser and listed in schedule 3 of the
investment advisory agreement, net of amounts of uninvested capital returned
from such investment products; or
(4) the reduction in value of assets in these classes resulting from the
writing down to fair value of the original cost of any security pursuant to
FASB 115.
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Termination. The amended investment advisory agreement may be terminated
by Equitable Life upon 90 days written notice to the Adviser or upon the
existence of willful misfeasance, gross negligence or reckless disregard of
the duties and obligations under the agreement by the Adviser, a material
breach by the Adviser of the agreement, a determination of the SEC or other
regulatory body or court barring or materially restricting the Adviser from
acting as an investment adviser or the imposition by the SEC of material
limitations on the ability of the Adviser to provide services under the
agreement. Equitable Life may also determine not to renew the amended
investment advisory agreement at the end of each year, either with or without
a reason identified in the prior sentence. The agreement may also be
terminated by the Adviser upon 120 days' written notice to Equitable Life, or
upon such other notice required to be given if Equitable Life fails to pay any
fees due, subject to the other requirements set forth in Section 11 of the
agreement. Termination or non-renewal of the amended investment advisory
agreement by either party requires that party to simultaneously terminate the
amended accounting, valuation, reporting and treasury services agreement
between the Adviser and Equitable Life (see below). The parties agree not to
terminate the accounting, valuation, reporting and treasury services agreement
except upon termination of the amended investment advisory agreement.
The Amended Equitable Life Accounting, Valuation, Reporting and Treasury
Services Agreement
The following summary of material provisions of the amended Equitable
Life accounting, valuation, reporting and treasury services agreement is
incomplete and is qualified by reference to the full text of the amended
accounting, valuation, reporting and treasury services agreement, a copy of
which is an exhibit to the registration statement of which this prospectus
forms a part.
Pursuant to the Equitable Life accounting, valuation, reporting and
treasury services agreement dated as of July 22, 1993, the Adviser provides
the services set forth in Schedules A through E to the agreement with respect
to accounts of Equitable Life. Under the amended investment advisory
agreement, Equitable Life and the Adviser agree that it would not be
appropriate to terminate the amended investment advisory agreement without
also terminating the accounting, valuation, reporting and treasury services
agreement. Equitable Life may terminate the amended investment advisory
agreement under the circumstances described above. If Equitable Life
terminates the amended investment advisory agreement, the accounting,
valuation, reporting and treasury services agreement will automatically
terminate in accordance with its terms. If the reorganization is completed,
the accounting, valuation, reporting and treasury services agreement will be
amended and restated as of January 1, 1999 to provide terms more favorable to
Alliance Holding and thereby provide an incentive to Alliance Holding to
implement the reorganization, which in turn will benefit Equitable Life. As
amended, the agreement will provide that if, prior to December 31, 2003,
Equitable Life terminates or fails to renew the amended investment advisory
and management agreement other than for cause, as defined under that
agreement, or Alliance Holding terminates the amended investment advisory and
management agreement due to the failure by Equitable Life to pay Alliance
Holding the $38 million in annual fees specified above, then the amended
accounting, valuation, reporting and treasury services agreement will also be
deemed to be terminated and, in either such event of termination, Equitable
Life will be required to pay the Adviser a one-time fee, depending on the date
of termination, ranging from $80 million for termination during 1999 to $10
million for termination during 2003, for the facilitation of transfer of
books, records and such systems as are agreed by Equitable Life and the
Adviser, consultation with the Adviser's employees and facilitation of the
transfer of responsibilities under the agreement, whether or not transferred
to Equitable Life or another person.
Intercompany Relationships
There is, and for some time has been, strong competition among financial
services companies seeking clients for the types of products and services
offered by AXA, a French holding company for an international group of
insurance and related finance services companies, and its affiliates,
including Equitable Life, DLJ and Alliance Holding. Since the creation of
Alliance Holding in 1987, AXA, Equitable Life and its affiliates have provided
financial and asset management services that are competitive with those
offered by Alliance Holding, and the type and number of intercompany
relationships between Alliance Holding and Equitable Life and its affiliates
have changed substantially over time. Equitable Life and Alliance Holding
expect that such competition and
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intercompany relationships will continue to evolve in the future. Equitable
Life and its affiliates are not obligated to continue any of the intercompany
relationships with Alliance Holding or Alliance Capital and may generally
reduce or terminate them at any time, subject to any contractual restrictions,
including the revised termination provisions of the Equitable Life investment
advisory and management agreement and the Equitable Life accounting,
valuation, reporting and treasury services agreement.
AXA Financial, Inc. (formerly known as The Equitable Companies
Incorporated) and its subsidiaries continue to implement certain strategic
initiatives identified after a comprehensive review of organization and
strategy conducted in late 1997. Such initiatives are designed to make AXA
Financial, Inc. a premier provider of financial planning, insurance and asset
management products and services. In 1997, Equitable Life also introduced a
new multi-manager mutual fund trust known as EQ Advisers Trust for which a
subsidiary of Equitable Life acts as investment manager. The investment
manager retains recognized investment advisers for EQ Advisers Trust's
portfolios, permitting holders of certain variable insurance contracts to
invest the assets supporting their contracts in portfolios managed by various
investment advisers. This is consistent with an increasing marketplace trend
toward an "open architecture" environment for insurance and annuity products
to provide customers with choices among investment advisers. The advisers of
EQ Advisers Trust currently include, among others, major investment banking
and securities firms and investment managers. On September 14, 1999, the SEC
approved Equitable Life's application to transfer to investment portfolios in
the EQ Advisers Trust the assets of the investment portfolios in the Hudson
River Trust, another funding vehicle for individual variable products offered
by Equitable Life that is advised by Alliance Holding. Alliance Holding will
provide day to day portfolio advisory services to the successor EQ Advisers
Trust portfolios, as it currently does for Hudson River Trust portfolios.
The Alliance Holding amended partnership agreement and the Alliance
Capital partnership agreement will continue to specifically allow AXA
Financial, Inc. and its affiliates, other than the general partner, to compete
with Alliance Holding and Alliance Capital and to act upon opportunities that
may also be available to Alliance Holding and Alliance Capital. AXA, AXA
Financial, Inc. and certain of its subsidiaries, including Equitable Life and
DLJ and their respective subsidiaries, have substantially greater financial
resources than do Alliance Capital and the general partner and are not
obligated to provide funds to Alliance Capital except for the general
partner's obligation to fund certain of Alliance Capital's deferred
compensation obligations.
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Security Ownership of Certain Beneficial Owners and Management
Principal Security Holders
Alliance Holding has no information that any person beneficially owns
more than 5% of the outstanding Alliance Holding units except (1) Equitable
Life, ACMC, Inc. ("ACMC Inc."), and Equitable Capital Management Corporation
("ECMC"), each of which is a wholly-owned subsidiary of AXA Financial, Inc.
("AXF"), and (2) as reported on Amendment No. 6 to Schedule 13D dated April 8,
1999, filed with the SEC by AXA and certain of its affiliates pursuant to the
Securities Exchange Act of 1934. The following table and notes have been
prepared in reliance upon such filing for the nature of ownership and an
explanation of overlapping ownership.
Amount and Nature of
Beneficial
Name and Address of Ownership Reported on Percent
Benificial Owner Schedule 13D of Class
- ------------------- --------------------- --------
AXA(1)(2)(3)(4)
9 place Vendome
75001 Paris
France 96,647,111 56.7%
AXF(4)
1290 Avenue of the Americas
New York, NY 10104 96,647,111 56.7%
- -------------------
(1) Based on information provided by AXF, at March 1, 1999, AXA and
certain of its subsidiaries beneficially owned approximately 58.4%
of AXF's outstanding common stock. For insurance regulatory purposes
the shares of capital stock of AXF beneficially owned by AXA and its
subsidiaries have been deposited into a voting trust ("Voting
Trust") which has an initial term of 10 years commencing May 12,
1992. The trustees of the Voting Trust (the "Voting Trustees") are
Claude Bebear, Patrice Garnier and Henri de Clermont-Tonnerre, each
of whom serves on either the Executive Board (in the case of Mr.
Bebear) or Supervisory Board (in the case of Messrs. Garnier and de
Clermont-Tonnerre) of AXA. The Voting Trustees have agreed to
exercise their voting rights to protect the legitimate economic
interests of AXA, but with a view to ensuring that certain minority
shareholders of AXA do not exercise control over AXF or certain of
its insurance subsidiaries.
(2) Based on information provided by AXA, on March 1, 1999,
approximately 20.7% of the issued ordinary shares (representing
32.7% of the voting power) of AXA were owned directly and indirectly
by Finaxa, a French holding company. As of March 1, 1999, 61.7% of
the shares (representing 72.3% of the voting power) of Finaxa were
owned by four French mutual insurance companies (the "Mutuelles
AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle, owned 35.4%
of the shares, representing 41.5% of the voting power), and 22.7% of
the shares of Finaxa (representing 13.7% of the voting power) were
owned by Paribas, a French bank. Including the ordinary shares owned
by Finaxa, on March 1, 1999, the Mutuelles AXA directly or
indirectly owned approximately 23.9% of the issued ordinary shares
(representing 37.6% of the voting power) of AXA.
(3) The Voting Trustees may be deemed to be beneficial owners of all
units beneficially owned by AXA and its subsidiaries. In addition,
the Mutuelles AXA, as a group, and Finaxa may be deemed to be
beneficial owners of all units beneficially owned by AXA and its
subsidiaries. By virtue of the provisions of the Voting Trust
Agreement, AXA may be deemed to have shared voting power with
respect to the units. AXA and its subsidiaries have the power to
dispose or direct the disposition of
93
<PAGE>
all shares of the capital stock of AXF deposited in the Voting
Trust. The Mutuelles AXA, as a group, and Finaxa may be deemed to
share the power to vote or to direct the vote and to dispose or to
direct the disposition of all the units beneficially owned by AXA
and its subsidiaries. The address of each of AXA and the Voting
Trustees is 9 Place Vendome, 75001 Paris, France. The address of
Finaxa is 23 avenue Matignon, 75008 Paris, France. The addresses of
the Mutuelles AXA are as follows: The address of each of AXA
Assurances Vie Mutuelle and AXA Assurances I.A.R.D. Mutuelle is 21
rue de Chateaudun, 75009 Paris, France; the address of AXA Conseil
Vie Assurance Mutuelle is Tour Franklin, 100/101 Terrasse Boieldieu,
Cedex 11, 92042 Paris Las Defense, France; and the address of AXA
Courtage Assurance Mutuelle is 26 rue Louis-le-Grand, 75002 Paris,
France. The address of Paribas is 3 rue d'Antin, Paris, France.
(4) By reason of their relationship, AXA, the Voting Trustees, the
Mutuelles AXA, Finaxa, AXF, Equitable Life, Equitable Holdings, LLC,
Equitable Investment Corporation, ACMC Inc. and ECMC may be deemed
to share the power to vote or to direct the vote and to dispose or
direct the disposition of all or a portion of the 96,647,111 units.
94
<PAGE>
Management
The following table sets forth, as of March 1, 1999, the beneficial
ownership of units by each director and each named executive officer of the
general partner and by all directors and executive officers of the general
partner as a group:
Number of Units
and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- ----------
Dave H. Williams(1)(2)................... 1,868,912 1.1%
Luis Javier Bastida...................... 0 *
Donald H. Brydon(1)...................... 0 *
Bruce W. Calvert(1)(3)................... 1,550,000 *
John D. Carifa(1)(4)..................... 2,205,136 1.3%
Henri de Castries(1)..................... 0 *
Kevin C. Dolan(1)........................ 0 *
Denis Duverne(1)......................... 0 *
Alfred Harrison(1)....................... 730,820 *
Herve Hatt(1)............................ 0 *
Michael Hegarty(1)....................... 0 *
Benjamin D. Holloway..................... 11,600 *
Edward D. Miller(1)...................... 0 *
Peter D. Noris(1)........................ 2,000 *
Frank Savage(1).......................... 101,000 *
Stanley B. Tulin(1)...................... 0 *
Reba W. Williams(1)(5)................... 1,868,912 *
Robert B. Zoellick....................... 600 *
David R. Brewer, Jr.(1)(6)............... 253,808 *
Robert H. Joseph, Jr.(1)(7).............. 147,120 *
All directors and executive officers
of the general partner as a group
(20 persons)(8)....................... 6,870,996 4.0%
- -------------------
* Number of units listed represents less than 1% of the units outstanding.
(1) Excludes units beneficially owned by AXA, AXF and/or Equitable Life.
Messrs. Williams, Brydon, de Castries, Dolan, Duverne, Hatt, Hegarty,
Miller, Noris and Tulin are directors and/or officers of AXA, AXF and/or
Equitable Life. Messrs. Williams, Calvert, Carifa, Harrison, Savage,
Brewer, Joseph and Mrs. Reba W. Williams are directors and/or officers of
ACMC Inc..
(2) Includes 160,000 units owned by Mrs. Reba W. Williams.
(3) Includes 550,000 units which may be acquired within 60 days under
Partnership Option Plans.
(4) Includes 590,000 units which may be acquired within 60 days under
Partnership Option Plans.
(5) Includes 1,708,912 units owned by Mr. Dave H. Williams.
(6) Includes 162,808 units which may be acquired within 60 days under
Partnership Option Plans.
(7) Includes 127,120 units which may be acquired within 60 days under
Partnership Option Plans.
(8) Includes 1,429,928 units which may be acquired within 60 days under
Partnership Option Plans.
95
<PAGE>
The following tables set forth, as of March 1, 1999, the beneficial
ownership of the common stock of AXF, AXA and Finaxa by each director and each
named executive officer of the general partner and by all directors and
executive officers of the general partner as a group:
AXF Common Stock
Number of Shares
and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- ----------
Dave H. Williams(1)(2)................... 100,000 *
Luis Javier Bastida...................... 0 *
Donald H. Brydon(2)...................... 0 *
Bruce W. Calvert(3)...................... 50,000 *
John D. Carifa(4)........................ 50,000 *
Henri de Castries(2)(5).................. 13,333 *
Kevin C. Dolan(2)........................ 0 *
Denis Duverne(2)(6)...................... 10,333 *
Alfred Harrison ......................... 0 *
Herve Hatt(2)............................ 0 *
Michael Hegarty(2)(7).................... 48,228 *
Benjamin D. Holloway..................... 108 *
Edward D. Miller(2)(8)................... 142,745 *
Peter D. Noris(9)........................ 70,825 *
Frank Savage ............................ 136 *
Stanley B. Tulin(10)..................... 87,437 *
Reba W. Williams(1)...................... 100,000 *
Robert B. Zoellick....................... 0 *
David R. Brewer, Jr...................... 0 *
Robert H. Joseph, Jr..................... 0 *
All directors and executive officers
of the general partner as a group
(20 persons)(11)...................... 573,145 *
- -------------------
* Number of shares listed represents less than one percent (1%) of the
number of shares of common stock outstanding.
(1) Represents 100,000 shares subject to options held by Mr. Williams, which
options Mr. Williams has the right to exercise within 60 days.
(2) Excludes shares beneficially owned by AXA. Messrs. Williams, Brydon, de
Castries, Dolan, Duverne, Hatt, and Miller are officers of AXA.
(3) Represents 50,000 shares subject to options held by Mr. Calvert, which
options Mr. Calvert has the right to exercise within 60 days.
(4) Represents 50,000 shares subject to options held by Mr. Carifa, which
options Mr. Carifa has the right to exercise within 60 days.
(5) Represents 13,333 shares subject to options held by Mr. de Castries,
which options Mr. de Castries has the right to exercise within 60 days.
(6) Includes 8,333 shares subject to options held by Mr. Duverne, which
options Mr. Duverne has the right to exercise within 60 days.
(7) Includes 48,039 shares subject to options held by Mr. Hegarty, which
options Mr. Hegarty has the right to exercise within 60 days.
(8) Represents 142,745 shares subject to options held by Mr. Miller, which
options Mr. Miller has the right to exercise within 60 days.
96
<PAGE>
(9) Represents 70,825 shares subject to options held by Mr. Noris, which
options Mr. Noris has the right to exercise within 60 days.
(10) Includes 82,819 shares subject to options held by Mr. Tulin, which
options Mr. Tulin has the right to exercise within 60 days, and 4,000
shares owned jointly by Mr. Tulin and his spouse, Riki P. Tulin.
(11) Includes 566,094 shares subject to options, which options may be
exercised within 60 days.
AXA Common Stock
Number of Shares
and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- ----------
Dave H. Williams(1)...................... 5,000 *
Luis Javier Bastida...................... 0 *
Donald H. Brydon ........................ 0 *
Bruce W. Calvert(2)...................... 1,250 *
John D. Carifa(3)........................ 1,750 *
Henri de Castries(4)..................... 70,188 *
Kevin C. Dolan(5)........................ 19,201 *
Denis Duverne(6)......................... 11,042 *
Alfred Harrison ......................... 0 *
Herve Hatt............................... 0 *
Michael Hegarty.......................... 0 *
Benjamin D. Holloway..................... 0 *
Edward D. Miller ........................ 0 *
Peter D. Noris(7) ....................... 1,250 *
Frank Savage ............................ 0 *
Stanley B. Tulin(8) ..................... 3,500 *
Reba W. Williams(1)...................... 5,000 *
Robert B. Zoellick....................... 0 *
David R. Brewer, Jr...................... 0 *
Robert H. Joseph, Jr..................... 0 *
All directors and executive officers
of the general partner as a group
(20 persons)(9)....................... 113,181 *
- -------------------
* Number of shares listed represents less than one percent (1%) of the
outstanding AXA common stock. Holdings of AXA American Depositary Shares
are expressed as their equivalent in AXA common stock. Each AXA American
Depositary Share is equivalent to one-half of a share of AXA Common
Stock.
(1) Represents 5,000 shares subject to options held by Mr. Williams, which
options Mr. Williams has the right to exercise within 60 days.
(2) Represents 1,250 shares subject to options held by Mr. Calvert, which
options Mr. Calvert has the right to exercise within 60 days.
(3) Includes 1,250 shares subject to options held by Mr. Carifa, which
options Mr. Carifa has the right to exercise within 60 days.
(4) Includes 69,188 shares subject to options held by Mr. de Castries, which
options Mr. de Castries has the right to exercise within 60 days.
(5) Represents 19,201 shares subject to options held by Mr. Dolan, which
options Mr. Dolan has the right to exercise within 60 days.
(6) Includes 1,000 shares held jointly with Mr. Duverne's wife, 42 shares
owned by Mr. Duverne's children and 10,000 shares subject to options held
by Mr. Duverne, which options Mr. Duverne has the right to exercise
within 60 days.
97
<PAGE>
(7) Represents 1,250 shares subject to options held by Mr. Noris, which
options Mr. Noris has the right to exercise within 60 days.
(8) Includes 2,500 shares subject to options held by Mr. Tulin, which
options Mr. Tulin has the right to exercise within 60 days.
(9) Includes 109,639 total options shares subject to options, which options
may be exercised within 60 days.
Finaxa Common Stock
Number of Shares
and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- ----------
Dave H. Williams......................... 0 *
Luis Javier Bastida...................... 0 *
Donald H. Brydon ........................ 0 *
Bruce W. Calvert ........................ 0 *
John D. Carifa .......................... 0 *
Henri de Castries(1)..................... 115,000 *
Kevin C. Dolan........................... 0 *
Denis Duverne ........................... 0 *
Alfred Harrison ......................... 0 *
Herve Hatt .............................. 0 *
Michael Hegarty.......................... 0 *
Benjamin D. Holloway..................... 0 *
Edward D. Miller ........................ 0 *
Peter D. Noris........................... 0 *
Frank Savage ............................ 0 *
Stanley B. Tulin ........................ 0 *
Reba W. Williams......................... 0 *
Robert B. Zoellick....................... 0 *
David R. Brewer, Jr...................... 0 *
Robert H. Joseph, Jr..................... 0 *
All directors and executive officers
of the general partner as a group
(20 persons)(2)....................... 115,000 *
- -------------------
* Number of shares listed represents less than one percent (1%) of the
outstanding Finaxa common stock.
(1) Represents 115,000 shares subject to options held by Mr. de Castries,
which options Mr. de Castries has the right to exercise within 60 days.
(2) Represents 115,000 shares subject to options, which options may be
exercised within 60 days.
98
<PAGE>
LEGAL MATTERS
The validity of the Alliance Capital units offered in the exchange offer
will be passed upon for Alliance Capital by Davis Polk & Wardwell, New York,
New York. Davis Polk & Wardwell has represented Alliance Holding in connection
with various transactions.
EXPERTS
The consolidated financial statements of Alliance Capital Management L.P.
incorporated by reference in this proxy statement/prospectus have been audited
by KPMG LLP, independent auditors, as stated in their report appearing
therein, and are so incorporated in reliance upon the report of such firm as
experts in accounting and auditing.
The statement of financial condition of Alliance Capital Management L.P.
II included in this proxy statement/prospectus has been audited by KPMG LLP,
independent auditors, as stated in their report appearing herein, and is
included in reliance upon the report of such firm as experts in accounting and
auditing.
99
<PAGE>
ALLIANCE CAPITAL MANAGEMENT L.P. II
FINANCIAL STATEMENT INDEX
Page
----
Independent Auditors' Report......................................... F-2
Statement of Financial Condition..................................... F-3
Note to Statement of Financial Condition............................. F-4
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The General Partner and Limited Partner
Alliance Capital Management L.P. II
We have audited the statement of financial condition of Alliance Capital
Management L.P. II as of July 7, 1999. This statement of financial condition
is the responsibility of the management of Alliance Capital Management
Corporation, General Partner. Our responsibility is to express an opinion on
this statement of financial condition based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of financial condition
is free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in that statement of
financial condition. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall statement of financial condition presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of financial condition referred to above
presents fairly, in all material respects, the financial position of Alliance
Capital Management L.P. II as of July 7, 1999, in conformity with generally
accepted accounting principles.
KPMG LLP
New York, New York
July 7, 1999
F-2
<PAGE>
ALLIANCE CAPITAL MANAGEMENT L.P. II
Statement of Financial Condition
July 7, 1999
ASSETS
Cash................................................. $ 100
------
Total assets......................................... $ 100
======
PARTNERS' CAPITAL
Partners' Capital:
General partner................................... $ 50
Limited partner................................... 50
------
Total partners' capital.............................. $ 100
======
See Note to Statement of Financial Condition
F-3
<PAGE>
Alliance Capital Management L.P. II
Note to Statement of Financial Condition
Note 1. Organization
Alliance Capital Management L.P. II was formed as a Delaware limited
partnership pursuant to a Certificate of Limited Partnership, dated as of
April 6, 1999, and is governed by an Agreement of Limited Partnership, dated
as of July 7, 1999, with Alliance Capital Management L.P. as the initial
limited partner and Alliance Capital Management Corporation, an indirect
wholly-owned subsidiary of The Equitable Companies Incorporated ("Equitable")
and the general partner of Alliance Capital Management L.P., as the initial
general partner. Alliance Capital Management L.P. II was formed to carry on
Alliance Capital Management L.P.'s business after the reorganization,
described below.
Under the proposed Alliance Capital Management L.P. reorganization,
Alliance Capital Management L.P. will transfer its business to Alliance
Capital Management L.P. II in exchange for all Alliance Capital Management
L.P. II units. The Alliance Capital Management L.P. partnership agreement
requires the affirmative vote of Alliance Capital Management L.P. unitholders,
other than those described below, holding more than 50% of the units held by
all such unitholders, to approve the reorganization. For this purpose, the
Alliance Capital Management L.P. unitholders eligible to vote include all
holders other than (1) directors, officers and employees of Alliance Capital
Management L.P. or its general partner and members of their families and (2)
Alliance Capital Management L.P.'s general partner and entities affiliated
with it, including The Equitable Life Assurance Society of the United States
("Equitable Life"), a wholly-owned subsidiary of Equitable. If the
reorganization is approved, the diversified investment management services
business presently conducted by Alliance Capital Management L.P. will continue
to be conducted by Alliance Capital Management L.P. II, and all employees of
Alliance Capital Management L.P. will become employees of Alliance Capital
Management L.P. II. Alliance Capital Management L.P. will change its name to
Alliance Capital Management Holding L.P. and Alliance Capital Management L.P.
II will assume the name Alliance Capital Management L.P.
On July 7, 1999, Alliance Capital Management L.P. and Alliance Capital
Management Corporation each contributed $50 in exchange for a 50% interest in
Alliance Capital Management L.P. II. All costs and expenses associated with
the organization of Alliance Capital Management L.P. II will be paid by
Equitable Life.
F-4
<PAGE>
ANNEX A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
dated , 1999
by and among
ALLIANCE CAPITAL MANAGEMENT L.P.,
a Delaware limited partnership,
ALLIANCE CAPITAL MANAGEMENT L.P. II,
a Delaware limited partnership,
ALLIANCE CAPITAL MANAGEMENT CORPORATION,
a Delaware corporation
and
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES,
a New York stock life insurance corporation
[DRAFT OF AUGUST 2, 1999]
<PAGE>
Draft -- 8/2/99
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is dated
as of ____________, 1999 by and among Alliance Capital Management L.P., a
Delaware limited partnership ("Alliance Holding"), Alliance Capital Management
L.P. II, a Delaware limited partnership ("Alliance Capital"), Alliance Capital
Management Corporation, a Delaware corporation in its capacities as the sole
general partner of each of Alliance Holding and Alliance Capital ("ACMC"), and
The Equitable Life Assurance Society of the United States, a New York stock
life insurance corporation ("Equitable Life"). Capitalized terms have the
meanings specified in Article I.
WHEREAS, Alliance Holding is a limited partnership formed pursuant to
the Delaware Revised Uniform Limited Partnership Act (the "Delaware Act") with
Alliance Holding LP Units listed on the New York Stock Exchange;
WHEREAS, Alliance Capital is a private limited partnership recently
formed pursuant to the Delaware Act for the purpose of entering into this
Agreement and consummating the transactions contemplated hereby and continuing
the business of Alliance Holding following the Reorganization;
WHEREAS, the parties desire to effect a reorganization of Alliance
Holding, pursuant to which, among other things, Alliance Holding will (i)
transfer or assign all or substantially all of its assets to Alliance Capital
in exchange for the issuance by Alliance Capital to Alliance Holding of 100%
of the Alliance Capital LP Units and the Alliance Capital GP Interest and the
assumption by Alliance Capital of all or substantially all of the liabilities
of Alliance Holding and (ii) offer to exchange outstanding Alliance Holding LP
Units for Alliance Capital LP Units held by Alliance Holding immediately prior
to the Effective Time, on a one-for-one basis (the "Reorganization");
WHEREAS, in connection with the Reorganization, Alliance Holding,
Alliance Capital and Equitable Life have entered into an Indemnification and
Reimbursement Agreement, dated as of April 8, 1999, pursuant to which
Equitable Life has agreed to indemnify and reimburse, or cause to be
indemnified and reimbursed, Alliance Holding, Alliance Capital and certain of
their affiliates for certain costs and expenses associated with the
Reorganization, and an Exchange Agreement, dated as of April 8, 1999, pursuant
to which Equitable Life has agreed to exchange, and to cause its affiliates to
exchange, substantially all of the Alliance Holding LP Units held by them for
Alliance Capital LP Units (which Exchange Agreement shall be superceded by
this Agreement); and
WHEREAS, the parties desire to specify the steps to be taken in
connection with the Reorganization.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto, intending to be legally bound, do hereby agree
as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. Unless the context otherwise specifies or
requires, the terms defined in this Section 1.01 shall, for the purposes of
this Agreement, have the meanings herein specified. In the event of any
inconsistency between the meanings assigned to such terms in this Agreement,
the Alliance Holding Partnership Agreement and the Alliance Capital
Partnership Agreement, the meanings assigned to such terms in the Alliance
Holding Partnership Agreement and the Alliance Capital Partnership Agreement
shall control.
A-1
<PAGE>
"ACMC" has the meaning specified in the Recitals.
"Alliance Capital" has the meaning specified in the Recitals.
"Alliance Capital Certificate of Limited Partnership" has the meaning
specified in Section 2.04.
"Alliance Capital GP Interest" shall mean a partnership interest
representing a 1% economic interest in Alliance Capital.
"Alliance Capital LP Unit" shall mean a unit representing a
percentage interest in the aggregate partnership interests of the limited
partners of Alliance Capital equal to, at any time, one divided by the total
number of units of limited partner interests in Alliance Capital outstanding
at that time.
"Alliance Capital Partnership Agreement" shall mean the Agreement of
Limited Partnership of Alliance Capital Management L.P. II, dated as of July
7, 1999, as the same may be amended, supplemented or restated from time to
time.
"Alliance Holding" has the meaning specified in the Recitals.
"Alliance Holding GP Units" has the meaning specified in Section
2.01(a).
"Alliance Holding LP Unit" shall mean a unit representing an
assignment of a beneficial interest in a corresponding limited partner
interest in Alliance Holding.
"Alliance Holding Partnership Agreement" shall mean the Agreement of
Limited Partnership of Alliance Capital Management L.P., dated as of November
18, 1987, as the same may be amended, supplemented or restated from time to
time.
"Assumed Liabilities" has the meaning set forth in Section 2.01(d)(i).
"Closing" and "Closing Date" have the meanings specified in Section
2.02.
"Consent" shall mean any consent, license, permit, waiver, approval,
authorization or other action of, by or with respect to, or registration,
declaration or filing with, any court, Governmental Authority or Person.
"Delaware Act" has the meaning specified in the Recitals.
"Effective Time" has the meaning specified in Section 2.02.
"Equitable Life" has the meaning specified in the Recitals.
"Equitable Life Exchange" has the meaning specified in Section 2.03.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" has the meaning specified in Section 2.01(e).
"Governmental Approval" shall mean any Consent of, with or to any
Governmental Authority, including the expiration of any waiting or other time
period required to pass before governmental consent or acquiescence may be
assumed or relied upon.
A-2
<PAGE>
"Governmental Authority" shall mean any court or governmental
authority, department, commission, board, bureau, agency or instrumentality,
domestic or foreign, any tribunal or arbitrators of competent jurisdiction and
any self-regulatory organization.
"Holdback Interests" has the meaning specified in Section 2.01(d)(ii).
"Investment Advisory Agreement" shall mean any agreement or
arrangement for the performance of investment management or advisory services
for clients by which the relevant partnership may be bound.
"Material Contract" shall mean any contract, agreement, note,
instrument, franchise, lease, license, commitment, arrangement or
understanding, written or oral, to which the relevant partnership is a party
or by which any of its properties is bound which is material to the business
or assets of such partnership, taken as a whole.
"Person" shall mean any individual, corporation, association,
partnership, joint venture, trust, estate or other entity or organization.
"Public Unitholders" shall mean the holders of Alliance Holding LP
Units excluding Equitable Life, its affiliates, other holders of more than 2%
of the currently oustanding Alliance Holding LP Units and Alliance Holding's
executive management.
"Registration Statement" has the meaning specified in Section 7.01(b).
"Reorganization" has the meaning specified in the Recitals.
"SEC" shall mean the Securities and Exchange Commission.
"Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts and
governmental impositions or charges of any kind in the nature of (or similar
to) taxes, payable to any federal, state, provincial, local or foreign taxing
authority, including (without limitation) (i) income, franchise, profits,
gross receipts, ad valorem, net worth, value added, sales, use, service, real
or personal property, special assessments, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes and (ii) interest,
penalties, additional taxes and additions to tax imposed with respect thereto.
"Transferred Assets" has the meaning specified in Section 2.01(d)(i).
"Securities Act" shall mean the Securities Act of 1933, as amended.
ARTICLE 2
REORGANIZATION AND EXCHANGE
SECTION 2.01. Contribution of Assets, Etc. The parties hereby agree
to take, or cause to be taken, all actions necessary, proper or advisable to
consummate or make effective each of the following actions, each of which
shall be deemed to occur simultaneously at the Effective Time, subject to and
in accordance with the terms set forth in this Agreement:
(a) Conversion of Alliance Holding GP Interest into Units. The
general partner interest in Alliance Holding held by ACMC shall be converted
into a number of units ("Alliance Holding GP Units") determined in accordance
with the following formula:
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Number of Alliance total number of Alliance Holding LP Units
Holding GP Units = outstanding immediately prior to the Effective Time
---------------------------------------------------
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(b) Partnership Agreements. The parties shall amend and restate the
Alliance Holding Partnership Agreement and the Alliance Capital Partnership
Agreement in substantially the forms attached hereto as Exhibit A and Exhibit
B, respectively.
(c) Amendment of Equitable Life Investment Advisory and Services
Agreements. Equitable Life and Alliance Holding shall cause each of (i) the
Investment Advisory and Management Agreement, dated as of July 22, 1993, by
and among Alliance Holding, Alliance Corporate Finance Group Incorporated, a
wholly owned subsidiary of Alliance Holding, and Equitable Life, as amended,
and (ii) the Accounting, Valuation, Reporting and Treasury Services Agreement,
dated as of July 22, 1993, by and between Alliance Holding and Equitable Life,
to be amended and restated effective as of January 1, 1999 in substantially
the forms attached hereto as Exhibit C and Exhibit D, respectively.
(d) Contribution of Assets.
(i) Assignment. Subject to clause (ii) below, Alliance Holding
will transfer, convey, assign and deliver to Alliance Capital all
right, title and interest of Alliance Holding in and to its properties,
assets and rights of every nature, kind and description, whether
tangible or intangible (including goodwill, cash and receivables),
whether real, personal or mixed, whether accrued, contingent or
otherwise and whether now existing or hereafter acquired prior to the
Effective Time (collectively, the "Transferred Assets"). In exchange
for the contribution of the Transferred Assets, Alliance Capital will
issue to Alliance Holding (A) such number of Alliance Capital LP
Units as shall equal the number of Alliance Holding LP Units
outstanding as of the Effective Time, and (B) the Alliance Capital GP
Interest. In addition, subject to clause (ii) below, Alliance Capital
will assume and agree to pay, honor and discharge all of Alliance
Holding's liabilities of every nature, kind and description, whether
tangible or intangible, whether accrued, contingent or otherwise and
whether now existing or hereafter incurred prior to the Effective
Time, other than liabilities for Taxes for periods ending on or prior
to the Effective Time (collectively, the "Assumed Liabilities").
(ii) Nonassignability. To the extent that any contract, agreement,
permit or other asset included in the Transferred Assets, or any
claim, right, benefit, liability or obligation arising thereunder or
resulting therefrom is not capable of being transferred, conveyed,
assigned or delivered without the Consent of the other party or
parties thereto, the issuer thereof or any third Person (including a
Governmental Authority), or if the transfer, conveyance, assignment
or delivery or attempted transfer, conveyance, assignment or delivery
thereof would constitute a breach thereof or a violation of any law,
decree, order, regulation or other governmental edict, then such
contract, agreement, permit or other asset, or such claim, right,
benefit, liability or obligation (collectively, the "Holdback
Interests") shall not be transferred, conveyed, assigned or
delivered; provided, however, that ACMC may determine at any time, in
its sole discretion, that the transfer, conveyance, assignment or
delivery of certain Holdback Interests shall be effected whether or
not the applicable Consents have been obtained or notwithstanding any
impediments to transfer.
(iii) Parties To Use Reasonable Efforts. Subject to ACMC's right to
determine that Alliance Holding and Alliance Capital not seek any
Consent or resolve any impediments to transfer, Alliance Holding
shall use all reasonable efforts, and Alliance Capital shall
cooperate with Alliance Holding, to
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obtain all necessary Consents, or to resolve any impediments to
transfer referred to in Section 2.01 (d)(ii) necessary to convey to
Alliance Capital each such Holdback Interest as soon as practicable.
(iv) If Consents Cannot Be Obtained. To the extent any applicable
Consent has not been obtained or an impediment to transfer has not
been resolved by Alliance Holding as of the Effective Time and ACMC
has not determined that the transfer, conveyance, assignment or
delivery of the relevant Holdback Interests should be effected
notwithstanding the absence of such Consent or the existence of such
impediments to transfer, Alliance Holding shall, during the remaining
term of each such Holdback Interest, (1) use all reasonable efforts
to obtain any applicable Consent or resolve any impediment to
transfer with respect to such Holdback Interest; (2) enter into any
reasonable and lawful arrangement designed to provide the benefits of
such Holdback Interest to Alliance Capital so long as Alliance
Capital reasonably cooperates with Alliance Holding in such
arrangement; and (3) enforce, at the request of Alliance Capital and
at the expense and for the account of Alliance Capital, any rights of
Alliance Holding arising from such Holdback Interest against such
issuer thereof or the other party or parties thereto (including the
right to elect to terminate any such Holdback Interest in accordance
with the terms thereof upon the advice of Alliance Capital). To the
extent Alliance Capital is provided the benefits under any such
Holdback Interest, Alliance Capital shall perform for the benefit of
the issuer thereof, or the other party or parties thereto, as the
case may be, the obligations of Alliance Holding thereunder.
(e) Exchange Offer. Alliance Holding shall commence (within the
meaning of Rule 13e-4 under the Exchange Act), as promptly as reasonably
practicable after the special meeting of unitholders of Alliance Holding at
which the Reorganization is approved, an offer to exchange (the "Exchange
Offer") Alliance Holding LP Units held by any holder other than Equitable Life
and its affiliates for an equal number of Alliance Capital LP Units held by
Alliance Holding upon the written request of such holder in such form as
Alliance Holding shall prescribe. However, Alliance Holding shall not be
obligated to accept Alliance Holding LP Units tendered that, if exchanged,
would cause Alliance Holding LP Units to be held by fewer than 1,200 Public
Unitholders or would cause there to be fewer than 40 million Alliance Holding
LP Units to be held by Public Unitholders immediately following the Exchange
Offer. In the event that the number of Alliance Holding LP Units tendered or
the number of unitholders tendering would, if such tenders were accepted,
reduce the number of Public Unitholders below 1,200 or the number of such
Alliance Holding LP Units held by Public Unitholders below 40 million,
Alliance Holding will reject a sufficient number of Alliance Holding LP Units
on a pro rata basis among all tendering unitholders (and Equitable Life and
its affiliates, as contemplated by Section 2.03) in order to avoid either such
event. Alliance Holding may extend the Exchange Offer for any period required
by any rule, regulation, interpretation or position of the SEC or the staff
thereof applicable to the Exchange Offer. Subject to the terms and conditions
of the Exchange Offer, Alliance Holding shall accept for exchange and exchange
for Alliance Capital LP Units, as promptly as practicable after the expiration
of the Exchange Offer, all Alliance Holding LP Units validly tendered and not
withdrawn. ACMC, as the initial general partner of Alliance Capital, hereby
consents to the transfers of Alliance Capital LP Units contemplated by the
Exchange Offer and acknowledges that the transferees thereof shall become
limited partners of Alliance Capital at and as of the time of such transfers.
At the Effective Time, Equitable Life will, or will cause one or more of its
affiliates to, contribute 100,000 Alliance Holding LP Units to ACMC.
(f) Employee Matters. All employees of Alliance Holding will become
employees of Alliance Capital and, as part of the Assumed Liabilities,
Alliance Capital will assume the liabilities of Alliance Holding with respect
to both current and former employees. In addition, Alliance Capital will
assume sponsorship of the compensation and benefit plans maintained by
Alliance Holding, other than the 1997 Long Term Incentive Plan, 1993 Unit
Option Plan, Century Club Plan and Unit Bonus Plan, each of which will be
retained by Alliance Holding and amended to provide for the grant of awards to
employees of Alliance Capital.
(g) Name Change. Alliance Holding will change its name to "Alliance
Capital Management Holding L.P." and Alliance Capital will change its name to
"Alliance Capital Management L.P."
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SECTION 2.02. Closing. The closing of the transactions contemplated
by Section 2.01 hereof (the "Closing") shall take place at the offices of
_____________, New York, New York, at 10:00 a.m. as promptly as practicable
after the expiration of the Exchange Offer, or at such other place and time as
the parties may agree (the "Closing Date"), and shall be deemed effective for
all purposes as of _________ (the "Effective Time").
SECTION 2.03. Exchange by Equitable Life and Affiliates. (a)
Immediately after the Effective Time, Equitable Life and its affiliates who
hold Alliance Holding LP Units will exchange an aggregate of __________
Alliance Holding LP Units for Alliance Capital LP Units held by Alliance
Holding, subject to the same terms and conditions as the Exchange Offer,
including any pro rata cut back of Alliance Holding LP Units accepted in the
Exchange Offer, and ACMC will exchange all of its Alliance Holding GP Units
for the Alliance Capital GP Interest held by Alliance Holding (the "Equitable
Life Exchange"). In addition, pursuant to the right granted to it under the
Alliance Holding Partnership Agreement, as amended and restated in accordance
with Section 2.01(b), ACMC will exchange 100,000 Alliance Holding LP Units held
by it for an equal number of Alliance Holding GP Units.
SECTION 2.04. Partners of Alliance Capital; Consent to Transfers.
ACMC is the general partner of Alliance Capital and Alliance Holding is the
initial limited partner of Alliance Capital under and pursuant to the terms of
the Alliance Capital Partnership Agreement as in effect on the date hereof,
each having no current economic interest in Alliance Capital other than to the
extent of its contributed capital. ACMC, as general partner of Alliance
Capital, consents to the issuance to Alliance Holding of the Alliance Capital
LP Units and the Alliance Capital GP Interest at the Effective Time as herein
provided. Alliance Holding shall be deemed admitted as a limited partner of
Alliance Capital with respect to all such Alliance Capital LP Interests. ACMC
further consents to the transfers of Alliance Capital LP Units in connection
with the applicable exchange transactions provided for in Sections 2.01 and 2.03
and, as of the Effective Time (immediately after the Effective Time in the
case of Equitable Life and its affiliates), consents to the admission of the
transferees of Alliance Holding LP Units in such exchange transactions as
limited partners of Alliance Capital. Alliance Holding shall not be admitted
as a general or limited partner of Alliance Capital with respect to the
Alliance Capital GP Interest, but upon the effectiveness of the exchange by
ACMC of Alliance Holding GP Units for the Alliance Capital GP Interest
immediately after the Effective Time, ACMC shall be deemed to hold the
Alliance Capital GP Interest in its capacity as general partner of Alliance
Capital and such interest shall constitute a general partnership interest in
Alliance Capital.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ALLIANCE HOLDING
Alliance Holding represents and warrants to Alliance Capital, ACMC
and Equitable Life as follows:
SECTION 3.01. Organization; Authority. (a) Alliance Holding is a
limited partnership organized under the Delaware Act, validly existing and in
good standing under the laws of the State of Delaware. Alliance Holding has
the power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Alliance Holding and the
consummation of the transactions contemplated hereby have been duly authorized
by all requisite action by the general partner of Alliance Holding and by
Alliance Holding. This Agreement constitutes the valid and legally binding
obligation of Alliance Holding, enforceable against Alliance Holding in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and to general principles of equity, regardless of whether
enforcement is sought in a proceeding in equity or at law.
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(b) Alliance Holding has full power and authority and possesses all
material rights, authorizations and approvals, governmental or otherwise,
necessary to own, lease or otherwise hold its properties and assets and to
carry on its business as currently conducted. Alliance Holding is duly
qualified, licensed or registered to transact business and is in good standing
in each jurisdiction in which it owns or leases properties or in which the
failure to be so qualified would have a material adverse effect on its ability
to conduct business as currently conducted.
SECTION 3.02. Conflicts. Except as set forth in Schedule 3.02, the
execution, delivery and performance by Alliance Holding of this Agreement and
the consummation of the transactions contemplated hereby will not: (i)
conflict with or result in a breach of any provision of the Alliance Holding
Partnership Agreement, (ii) conflict with or result in a breach of or default
under any provision of any contract, agreement or investment of any kind to
which Alliance Holding is a party or by which Alliance Holding or any of its
assets or properties, including the Transferred Assets, is bound, except as
would not have a material adverse effect on Alliance Holding's business or the
Transferred Assets, taken as a whole, (iii) give rise to any right of
termination, cancellation or acceleration of any obligations or loss of any
benefit affecting, or resulting in the imposition of any liens on, the
Transferred Assets which would have a material adverse effect on Alliance
Holding's business or the Transferred Assets, taken as a whole, or (iv) result
in any conflict with applicable law, except as would not have a material
adverse effect on its ability to conduct business as currently conducted.
SECTION 3.03. Ownership of Assets. Alliance Holding has good title
to the Transferred Assets.
SECTION 3.04. Consents; Governmental Approvals. Except as disclosed
in Schedule 3.04 and for Consents in respect of contracts which are not
Material Contracts, no Consent or Governmental Approval is required to be
obtained by Alliance Holding in connection with (i) the execution and delivery
by Alliance Holding of this Agreement, (ii) the performance of its obligations
hereunder and (iii) the consummation of the transactions contemplated hereby.
SECTION 3.05. Brokers. Alliance Holding has not incurred any
liability for any fee or commission to any broker, finder, investment banker
or other intermediary in connection with the transactions contemplated by this
Agreement, other than in connection with the retention of Goldman, Sachs & Co.
as financial advisor to Alliance Holding.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ALLIANCE CAPITAL
Alliance Capital represents and warrants to Alliance Holding, ACMC
and Equitable Life as follows:
SECTION 4.01. Organization; Authority. (a) Alliance Capital is a
limited partnership organized under the Delaware Act, validly existing and in
good standing under the laws of the State of Delaware. Alliance Capital has
the power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
action by the general partner of Alliance Capital and by Alliance Capital.
This Agreement constitutes the valid and legally binding obligation of
Alliance Capital, enforceable against Alliance Capital in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally and to
general principles of equity, regardless of whether enforcement is sought in a
proceeding in equity or at law.
(b) Alliance Capital has full power and authority and possesses all
rights, licenses, authorizations and approvals, governmental or otherwise,
necessary to entitle it to own, lease or otherwise hold its properties and
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assets, and to carry on its business as currently conducted. Alliance Capital
is duly qualified, licensed or registered to transact business and is in good
standing in each jurisdiction in which it owns or leases properties or in
which the failure to be so qualified would have a material adverse effect on
its ability to conduct business as currently conducted.
SECTION 4.02. Conflicts. The execution and delivery by Alliance
Capital of this Agreement and the consummation of the transactions
contemplated hereby will not: (i) conflict with or result in any breach of any
provision of the Alliance Capital Partnership Agreement or (ii) result in any
conflict with applicable law, except as would not have a material adverse
effect on its ability to conduct business as currently conducted.
SECTION 4.03. Consents; Governmental Approvals. No Consent or
Governmental Approval is required to be obtained by Alliance Capital in
connection with (i) the execution and delivery by Alliance Capital of this
Agreement, (ii) the performance of its obligations hereunder and (iii) the
consummation of the transactions contemplated hereby, except as would not have
a material adverse effect on its ability to conduct business as currently
conducted.
SECTION 4.04. Brokers. Alliance Capital has not incurred any
liability for any fee or commission to any broker, finder, investment banker
or other intermediary in connection with the transactions contemplated by this
Agreement.
SECTION 4.05. Alliance Capital Interests. The Alliance Capital LP
Units and the Alliance Capital GP Interest to be issued to Alliance Holding at
the Closing have been duly authorized and, when issued to Alliance Holding
pursuant to this Agreement, will be validly issued. The issuance and delivery
of such Alliance Capital LP Units and the Alliance Capital GP Interest to
Alliance Holding will not conflict with or breach any term or provision of or
constitute a default under the Alliance Capital Partnership Agreement or any
applicable law, rule, regulation, judgment, order or decree of any
Governmental Authority having jurisdiction over Alliance Capital. No Consent,
Governmental Approval or other authorization is required for the valid
authorization, issuance and delivery of such Alliance Capital LP Units or
Alliance Capital GP Interest to Alliance Holding, except for such Consents,
Governmental Approvals or authorizations as shall have been obtained prior to
the Closing.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF EQUITABLE LIFE
Equitable Life represents and warrants to Alliance Holding, Alliance
Capital and ACMC as follows:
SECTION 5.01. Organization; Authority. Equitable Life is duly
organized, validly existing and in good standing under the laws of the state
of its organization. Equitable Life has the power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all requisite action by Equitable Life. This Agreement
constitutes the valid and legally binding obligation of Equitable Life,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the rights of creditors of insurance companies and creditors' rights
generally and to general principles of equity, regardless or whether
enforcement is sought in a proceeding in equity or at law.
SECTION 5.02. Conflicts. The execution and delivery by Equitable
Life of this Agreement and the consummation of the transactions contemplated
hereby will not: (i) conflict with or result in any breach of any provision of
the certificate of incorporation and bylaws (or comparable governing
documents) of Equitable Life or
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(ii) result in any conflict with applicable law, except as would not have a
material adverse effect on its ability to conduct business as currently
conducted.
SECTION 5.03. Consents; Governmental Approvals. No Consent or
Governmental Approval is required to be obtained by Equitable Life in
connection with (i) the execution and delivery by it of this Agreement, (ii)
the performance of its obligations hereunder and (iii) the consummation of the
transactions contemplated hereby, except as would not have a material adverse
effect on its ability to conduct business as currently conducted.
SECTION 5.04. Brokers. Equitable Life has not incurred any liability
for any fee or commission to any broker, finder, investment banker or other
intermediary in connection with the transactions contemplated by this
Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF ACMC
ACMC represents and warrants to Equitable Life, Alliance Holding and
Alliance Capital as follows:
SECTION 6.01. Organization; Authority. ACMC is duly organized,
validly existing and in good standing under the laws of the state of its
organization. ACMC has the power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite action by ACMC. This Agreement constitutes the
valid and legally binding obligation of ACMC, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and to general principles of equity, regardless or whether
enforcement is sought in a proceeding in equity or at law.
SECTION 6.02. Conflicts. The execution and delivery by ACMC of this
Agreement and the consummation of the transactions contemplated hereby will
not: (i) conflict with or result in any breach of any provision of the
certificate of incorporation and bylaws (or comparable governing documents) of
ACMC or (ii) result in any conflict with applicable law, except as would not
have a material adverse effect on its ability to conduct business as currently
conducted.
SECTION 6.03. Consents; Governmental Approvals. No Consent or
Governmental Approval is required to be obtained by ACMC in connection with
(i) the execution and delivery by it of this Agreement, (ii) the performance
of its obligations hereunder and (iii) the consummation of the transactions
contemplated hereby, except as would not have a material adverse effect on its
ability to conduct business as currently conducted.
SECTION 6.04. Brokers. ACMC has not incurred any liability for any
fee or commission to any broker, finder, investment banker or other
intermediary in connection with the transactions contemplated by this
Agreement.
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ARTICLE 7
COVENANTS
SECTION 7.01. Further Actions. Each of the parties agrees to use its
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation:
(a) to make, or cause to be made, all such filings and submissions
under any applicable law and give such reasonable undertakings, as may be
required to consummate the contribution of the Transferred Assets (including
the Holdback Interests), the Exchange Offer, the Equitable Life Exchange and
the other transactions contemplated hereby;
(b) to use its reasonable efforts to obtain, or cause to be
obtained, all Governmental Approvals and other Consents necessary to be
obtained in order to consummate the contribution of the Transferred Assets
(including the Holdback Interests, subject to the determination by ACMC, in
its sole discretion, that the contribution of certain Holdback Interests shall
be effected notwithstanding any impediments to transfer or in the absence of
applicable Consents), the Exchange Offer, the Equitable Life Exchange and any
related transactions, including, without limitation, the solicitation of the
approval of the unitholders of Alliance Holding with respect to the
Reorganization and the solicitation of all Consents required under Alliance
Holding's Investment Advisory Contracts (each in accordance with agreed upon
standards and procedures for obtaining such consents); and
(c) to use its reasonable efforts to take, or cause to be taken, all
other actions necessary, proper or advisable in order to fulfill its
obligations in respect of this Agreement and the transactions contemplated
hereby.
Each of the parties will coordinate and cooperate with the other
parties in exchanging such information and supplying such reasonable
assistance as may be requested by the other parties in connection with the
filings and other actions contemplated by this Section 7.01.
ARTICLE 8
CONDITIONS PRECEDENT
SECTION 8.01. Conditions to Obligations of Each Party. The obligation
of each party to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment on or prior to the Closing Date of the
following conditions:
(a) No Injunction, etc. Consummation of the transactions
contemplated by this Agreement shall not have been restrained, enjoined or
otherwise prohibited by any applicable law, including any order, injunction,
decree or judgment of any court or other Governmental Authority, and no action
or proceeding shall be pending or threatened by any Governmental Authority on
the Closing Date before any court or other Governmental Authority to restrain,
enjoin or otherwise prevent the consummation of the transactions contemplated
hereby or to recover any material damages or obtain other material relief as a
result of such transactions. There shall not have been promulgated, entered,
issued, or determined by any court or other Governmental Authority to be
applicable to this Agreement any applicable law making illegal the
consummation of the transactions contemplated hereby, and no proceeding with
respect to the application of any such applicable law shall be pending.
(b) Effectiveness of the Registration Statement. The Registration
Statement on Form S-4 filed with the SEC by Alliance Holding and Alliance
Capital relating to the special meeting of Alliance Holding unitholders to be
held to approve the Reorganization and to the Exchange Offer (including the
proxy statement and prospectus constituting a part thereof, the "Registration
Statement") shall have become and remain effective under the
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Securities Act. No stop order suspending the effectiveness of the Registration
Statement shall have been issued by the SEC and no proceedings for that
purpose and no similar proceedings in respect of the Registration Statement
shall have been initiated or threatened by the SEC.
(c) Requisite Approvals. The requisite approvals of the unitholders
of Alliance Capital with respect to the Reorganization shall have been
obtained.
(d) Opinions. The following opinions, dated as of the Effective
Time, shall have been delivered to Equitable Life, Alliance Holding and ACMC:
(i) the opinion of Morris, Nichols, Arsht & Tunnell as to limited
liability, in the form attached hereto as Exhibit E;
(ii) the opinion of Davis Polk & Wardwell as that the r
eorganization will not be an assignment of investment contracts for
purposes of the Investment Company Act of 1940 or the Investment
Advisory Act of 1940, in the form attached hereto as Exhibit F;
(iii) the opinion of Davis Polk & Wardwell as to certain tax
matters, in the form attached hereto as Exhibit G; and
(iv) the opinion of Debevoise & Plimpton as to the enforceability
of the Investment Advisory Agreement and the Services Agreement
referred to in Section 2.01(c), in the form attached hereto as
Exhibit H.
(e) Exemptive Order. Alliance Holding shall have received an
exemptive order from the Securities and Exchange Commission from Sections
3(a)(I)(c) and 7(a) of the Investment Company Act of 1940 with respect to its
interests in Alliance Capital.
ARTICLE 9
TERMINATION
SECTION 9.01. Termination. This Agreement may be terminated at any
time prior to the Closing Date (i) by the written agreement of the parties
hereto or (ii) by any of Alliance Holding, Alliance Capital, ACMC or Equitable
Life if any condition specified in Article IX shall not have been satisfied or
waived prior to June 30, 2000. In addition, notwithstanding the approval of
the Reorganization by the unitholders of Alliance Holding, ACMC may terminate
this Agreement and abandon the transactions contemplated by this Agreement,
including the Reorganization and the Exchange Offer, at any time prior to
their consummation if it determines that the consummation of such transactions
is no longer in the best interests of Alliance Holding and its unitholders.
SECTION 9.02. Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 9.01, this Agreement shall become void
and have no effect, without any liability to any Person in respect hereof or
of the transactions contemplated hereby on the part of any party hereto, or
any of its directors, officers, employees, agents, consultants,
representatives, advisers, stockholders or Affiliates, except for any
liability resulting from such party's breach of this Agreement.
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ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Remedies. Each party acknowledges that it will be
impossible to measure the damages that would be suffered by the other parties
if such party fails to comply with the covenants set forth in this Agreement
and that in the event of any such failure, the other parties will not have an
adequate remedy at law. Each party shall, therefore, be entitled in addition
to any other rights and remedies to obtain specific performance of the other
parties obligations hereunder and to obtain immediate injunctive relief
without having to post a bond. No party shall assert, as a defense to any
proceeding for such specific performance or injunctive relief, that the other
parties have an adequate remedy at law.
SECTION 10.02. Successors. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement shall not be assignable by
any party with the written consent of the other parties.
SECTION 10.03. Headings. The headings in this Agreement are inserted
for convenience of reference only and shall not be a part of or control or
affect the meaning hereof.
SECTION 10.04. Entire Agreement. This Agreement supersedes any and
all oral or written agreements heretofore made relating to the subject matter
hereof and constitutes the entire agreement of the parties relating to the
subject matter hereof.
SECTION 10.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware,
without giving effect to any conflicts or choice of law provisions that would
make applicable the substantive laws of any other jurisdiction.
SECTION 10.06. Amendments. This Agreement may be amended only with
the prior written consent of each party hereto.
SECTION 10.07. Interpretation. When a reference is made in this
Agreement to a Section or Exhibit, such reference will be to a Section of, or
an Exhibit to, this Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this Agreement, they will be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this
Agreement will refer to this Agreement as a whole and not to any particular
provision of this Agreement. The terms used in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case
of statutes) by succession of comparable successor statutes and references to
all attachments thereto and instruments incorporated therein. References to
any person are also to its permitted successors and assigns.
SECTION 10.08. Waivers. No waiver of any breach or default hereunder
shall be considered valid unless in writing and signed by the party giving
such waiver. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
subsequent, same or different breach.
SECTION 10.09. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
A-12
<PAGE>
SECTION 10.10. Severability. To the extent possible, each provision
of this Agreement shall be interpreted in a manner as to be valid, legal and
enforceable. Any determination that any provision of this Agreement or any
application thereof is invalid, illegal or unenforceable in any respect or in
any instance shall be effective only to the extent of such invalidity,
illegality or unenforceability and shall not affect the validity, legality or
enforceability of any other provision of this Agreement.
A-13
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management Corporation
its general partner
By: _________________________________________
Name:
Title:
ALLIANCE CAPITAL MANAGEMENT L.P. II
By: Alliance Capital Management Corporation
its general partner
By:__________________________________________
Name:
Title:
ALLIANCE CAPITAL MANAGEMENT CORPORATION
By: _________________________________________
Name:
Title:
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES
By: _________________________________________
Name:
Title:
A-14
<PAGE>
ANNEX B
FORM OF AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ALLIANCE CAPITAL MANAGEMENT HOLDING L.P.
[DRAFT OF AUGUST 2, 1999]
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ALLIANCE CAPITAL MANAGEMENT HOLDING L.P.
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS
ACMC.............................................................B - 1
Additional Limited Partner.......................................B - 1
Adjusted Property................................................B - 1
Adverse Partnership Tax Consequence..............................B - 2
Adverse Tax Determination........................................B - 2
Affiliate........................................................B - 2
Affiliated Holders...............................................B - 2
Agreement........................................................B - 2
Alliance Capital.................................................B - 2
Alliance Capital Contribution....................................B - 2
Alliance Capital GP Interest.....................................B - 2
Alliance Capital LP Unit.........................................B - 2
Alliance Capital Majority Outside Approval.......................B - 2
Alliance Capital Partnership Agreement...........................B - 3
Appraiser........................................................B - 3
Assignee Interest................................................B - 3
Assignment Determination.........................................B - 3
Assignor Limited Partner.........................................B - 3
Available Cash Flow..............................................B - 3
Book-Tax Disparities.............................................B - 3
Capital Account..................................................B - 4
Carrying Value...................................................B - 4
Certificate......................................................B - 4
Certificate of Limited Partnership...............................B - 4
Code.............................................................B - 4
Commission.......................................................B - 4
Contributed Property.............................................B - 4
Contribution.....................................................B - 4
Corporate Affiliate..............................................B - 4
Delaware Act.....................................................B - 4
Demand...........................................................B - 4
Departing Partner................................................B - 4
Distribution.....................................................B - 4
ECMC.............................................................B - 4
ECMC Transfer Agreement..........................................B - 4
Effective Time...................................................B - 5
ELAS.............................................................B - 5
Exchange.........................................................B - 5
General Partner..................................................B - 5
General Partnership Interest.....................................B - 5
B - i
<PAGE>
Page
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Guaranty Agreement...............................................B - 5
Holdback Interests...............................................B - 5
Indemnification and Reimbursement Agreement......................B - 5
Indemnified Person...............................................B - 5
Indemnitee.......................................................B - 5
Limited Liability Determination..................................B - 5
Limited Partner..................................................B - 5
Limited Partnership Interests....................................B - 5
Liquidating Trustee..............................................B - 6
Majority Approval................................................B - 6
Majority Outside Approval........................................B - 6
Market Value.....................................................B - 6
NASDAQ...........................................................B - 6
National Securities Exchange.....................................B - 7
Net Income" and "Net Loss........................................B - 7
Net Value........................................................B - 7
Opinion of Counsel...............................................B - 7
Opinion of Outside Counsel.......................................B - 7
Original Agreement of Limited Partnership........................B - 7
Other General Partner............................................B - 7
Partner..........................................................B - 7
Partnership......................................................B - 7
Partnership's Accountants........................................B - 7
Partnership Assets...............................................B - 7
Partnership Interest.............................................B - 7
Pass-through Matter..............................................B - 8
Percentage Interest..............................................B - 8
Person...........................................................B - 8
Proxy Statement..................................................B - 8
Purchase Date....................................................B - 8
Purchase Funds...................................................B - 8
Purchase Price...................................................B - 8
Recapture Income.................................................B - 8
Record Date......................................................B - 9
Record Holder(s).................................................B - 9
Reorganization...................................................B - 9
Reorganization Agreement.........................................B - 9
Securities Act...................................................B - 9
Securities Exchange Act..........................................B - 9
Substituted Limited Partner......................................B - 9
Tax Determination................................................B - 9
Transfer Agent...................................................B - 9
Transfer Agreement...............................................B - 9
Unit.............................................................B - 9
Unit Certificate................................................B - 10
Unitholder......................................................B - 10
Unit Price......................................................B - 10
B - ii
<PAGE>
Page
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Unrealized Gain.................................................B - 10
Unrealized Loss.................................................B - 10
ARTICLE 2
GENERAL PROVISIONS
SECTION 2.01. Formation; Partnership Name......................B - 10
SECTION 2.02. Names and Addresses of Partners..................B - 10
SECTION 2.03. Principal Office, Registered Agent and
Registered Office of the Partnership.............B - 11
SECTION 2.04. Term.............................................B - 11
SECTION 2.05. Possible Action in the Event of Adverse
Tax Developments.................................B - 11
Section 2.06. Exchange of GP and LP Interests..................B - 12
ARTICLE 3
PURPOSE
SECTION 3.01. Purpose..........................................B - 12
SECTION 3.02. Powers...........................................B - 12
ARTICLE 4
CAPITAL CONTRIBUTIONS
SECTION 4.01. General Partner; Limited Partners;
Assignor Limited Partner.........................B - 13
SECTION 4.02. Additional Issuances of Securities...............B - 14
SECTION 4.03. Record of Contributions..........................B - 16
SECTION 4.04. Splits and Combinations..........................B - 16
SECTION 4.05. No Preemptive Rights.............................B - 16
SECTION 4.06. No Fractional Units..............................B - 16
SECTION 4.07. No Withdrawal....................................B - 17
SECTION 4.08. Loans from Partners; No Interest on Capital
Account Balances.................................B - 17
SECTION 4.09. Capital Accounts.................................B - 17
SECTION 4.10. Capital Account Calculations and Adjustments.....B - 17
ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS
SECTION 5.01. Pass Through Cash Distributions..................B - 19
SECTION 5.02. Special Distributions............................B - 19
SECTION 5.03. General Rules with Respect to Distributions......B - 19
SECTION 5.04. Allocations of Net Income and Net Loss...........B - 20
SECTION 5.05. Special Provisions Governing Capital Account
Allocations......................................B - 20
SECTION 5.06. Allocations for Tax Purposes.....................B - 22
SECTION 5.07. Assignments......................................B - 24
ARTICLE 6
MANAGEMENT AND OPERATION OF BUSINESS
SECTION 6.01. Management.......................................B - 24
SECTION 6.02. Reliance by Third Parties........................B - 28
SECTION 6.03. Purchase or Sale of Units or Limited
Partnership Interests............................B - 29
SECTION 6.04. Compensation and Reimbursement of the
General Partner..................................B - 29
SECTION 6.05. Outside Activities...............................B - 29
SECTION 6.06. Partnership Funds................................B - 30
B - iii
<PAGE>
Page
----
SECTION 6.07. Loans from the General Partner and Others;
Transactions and Contracts with Affiliates.......B - 30
SECTION 6.08. Liability of the General Partner and Other
Indemnities......................................B - 31
SECTION 6.09. Indemnification..................................B - 32
SECTION 6.10. Other Matters Concerning the General Partner.....B - 33
SECTION 6.11. Registration Rights of the General
Partner and its Affiliates.......................B - 33
SECTION 6.12. Title to Partnership Assets......................B - 35
SECTION 6.13. Sale of the Partnership's Assets.................B - 35
SECTION 6.14. No New Business..................................B - 36
SECTION 6.15. Contribution of Assets to Alliance Capital.......B - 36
SECTION 6.16. Issuances of Units Pursuant to Employee
Benefit Plans....................................B - 36
SECTION 6.17. Exchanges of Alliance Capital LP Units
for Units........................................B - 37
SECTION 6.18. Repurchase of Units..............................B - 37
ARTICLE 7
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS AND UNITHOLDERS
SECTION 7.01. Limitation of Liability..........................B - 37
SECTION 7.02. Management of Business...........................B - 37
SECTION 7.03. Outside Activities...............................B - 37
SECTION 7.04. Return of Capital; Additional Capital
Contributions....................................B - 38
SECTION 7.05. Rights of Limited Partners and Unitholders
Relating to the Partnership......................B - 38
SECTION 7.06. Agreement to be Bound by Terms of
Partnership Agreement............................B - 39
ARTICLE 8
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 8.01. Records and Accounting...........................B - 39
SECTION 8.02. Fiscal Year......................................B - 39
SECTION 8.03. Reports..........................................B - 39
SECTION 8.04. Other Information................................B - 39
ARTICLE 9
TAX MATTERS
SECTION 9.01. Preparation of Tax Returns.......................B - 39
SECTION 9.02. Tax Elections....................................B - 40
SECTION 9.03. Tax Controversies................................B - 40
SECTION 9.04. Withholding......................................B - 40
SECTION 9.05. Entity-level Deficiency Collections..............B - 40
ARTICLE 10
POWER OF ATTORNEY
SECTION 10.01. Power of Attorney...............................B - 41
ARTICLE 11
ISSUANCE OF CERTIFICATES AND UNIT CERTIFICATES; ASSIGNOR LIMITED PARTNER
SECTION 11.01. Issuance of Certificates and Unit Certificates..B - 42
SECTION 11.02. Assignment of Assignor Limited Partner's
Limited Partnership Interests...................B - 42
SECTION 11.03. Lost, Stolen, Mutilated or Destroyed
Certificates or Unit Certificates...............B - 43
SECTION 11.04. Record Holder...................................B - 44
B - iv
<PAGE>
Page
----
SECTION 11.05. Representations, Warranties and Covenants
of the Assignor Limited Partner.................B - 44
ARTICLE 12
TRANSFER OF PARTNERSHIP INTERESTS AND UNITS
SECTION 12.01. Transfer........................................B - 45
SECTION 12.02. Transfer of General Partnership Interests of
the General Partner.............................B - 45
SECTION 12.03. Transfer of Limited Partnership Interests.......B - 46
SECTION 12.04. Transfer of Units...............................B - 46
SECTION 12.05. Restrictions on Transfer........................B - 46
ARTICLE 13
ADMISSION OF PARTNERS
SECTION 13.01. Admission of Substituted Limited Partners.......B - 46
SECTION 13.02. Admission of Additional and Successor
General Partner.................................B - 47
ARTICLE 14
WITHDRAWAL OR REMOVAL OF PARTNERS
SECTION 14.01. Withdrawal or Removal of the General Partner....B - 48
SECTION 14.02. Interest of Departing Partner and Successor.....B - 48
SECTION 14.03. Withdrawal of Limited Partners..................B - 49
ARTICLE 15
DISSOLUTION AND LIQUIDATION
SECTION 15.01. Dissolution.....................................B - 49
SECTION 15.02. Liquidation.....................................B - 50
SECTION 15.03. Distribution in Kind............................B - 51
SECTION 15.04. Cancellation of Certificate of
Limited Partnership.............................B - 52
SECTION 15.05. Reasonable Time for Winding Up..................B - 52
SECTION 15.06. Return of Contributions.........................B - 52
SECTION 15.07. No Obligation to Restore Deficit................B - 52
SECTION 15.08. Waiver of Partition.............................B - 52
ARTICLE 16
RIGHT TO PURCHASE UNITS
SECTION 16.01. Right to Purchase Units.........................B - 52
ARTICLE 17
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
SECTION 17.01. Amendments to be Adopted Solely by the
General Partner.................................B - 53
SECTION 17.02. Amendment Procedures............................B - 54
SECTION 17.03. Special Amendment Requirements..................B - 54
SECTION 17.04. Meetings........................................B - 55
SECTION 17.05. Notice of Meeting...............................B - 56
SECTION 17.06. Record Date.....................................B - 57
SECTION 17.07. Adjournment.....................................B - 57
SECTION 17.08. Waiver of Notice; Consent to Meeting;
Approval of Minutes.............................B - 57
SECTION 17.09. Quorum..........................................B - 57
SECTION 17.10. Conduct of Meeting..............................B - 58
SECTION 17.11. Instructions by Nominees........................B - 58
B - v
<PAGE>
Page
----
SECTION 17.12. Action Without a Meeting........................B - 58
ARTICLE 18
GENERAL PROVISIONS
SECTION 18.01. Addresses and Notices...........................B - 58
SECTION 18.02. Consent of Limited Partners and Unitholders.....B - 58
SECTION 18.03. Titles and Captions.............................B - 59
SECTION 18.04. Pronouns and Plurals............................B - 59
SECTION 18.05. Further Action..................................B - 59
SECTION 18.06. Binding Effect..................................B - 59
SECTION 18.07. Integration.....................................B - 59
SECTION 18.08. Benefits of this Agreement......................B - 59
SECTION 18.09. Waiver..........................................B - 59
SECTION 18.10. Counterparts....................................B - 59
SECTION 18.11. Applicable Law..................................B - 59
SECTION 18.12. Invalidity of Provisions........................B - 59
Form of Unit Certificate...............................................Exhibit A
Form of Limited Partnership Interests Certificate......................Exhibit B
B - vi
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ALLIANCE CAPITAL MANAGEMENT HOLDING L.P.
This Amended and Restated Agreement of Limited Partnership of
Alliance Capital Management Holding L.P. (this "Agreement"), a Delaware
limited partnership formerly known as Alliance Capital Management L.P. (the
"Partnership"), dated as of ______, 1999, is entered into by and among
Alliance Capital Management Corporation, a Delaware corporation, together with
all other Partners of the Partnership as of the date hereof, and additional
Persons who become Partners of the Partnership, as hereinafter provided. The
parties hereto agree to continue the Partnership as a limited partnership
under the Delaware Act and this Agreement.
WHEREAS, the Partnership was originally formed and established as a
publicly-traded partnership governed by an Agreement of Limited Partnership
dated as of November 19, 1987, as amended from time to time prior to the date
hereof (the "Original Agreement of Limited Partnership");
WHEREAS, at a Special Meeting of Unitholders held on September 22,
1999, the Limited Partners and Unitholders approved the restructuring of the
Partnership pursuant to which, among other things, the Partnership will (i)
transfer or assign all or substantially all of its assets to Alliance Capital
in exchange for 100% of the Alliance Capital LP Units and the Alliance Capital
GP Interest and the assumption by Alliance Capital of all or substantially all
of the liabilities of the Partnership and (ii) offer to exchange outstanding
Units for an equal number of Alliance Capital LP Units held by the Partnership
(the "Reorganization");
WHEREAS, in connection with the Reorganization, the parties hereto
wish to amend and restate in its entirety the Original Agreement of Limited
Partnership, effective as of the Effective Time; and
WHEREAS, at the Special Meeting, the Limited Partners and Unitholders
approved the amendment and restatement of the Original Agreement of Limited
Partnership in connection with the Reorganization substantially in the form
hereof.
In consideration of the mutual covenants, conditions and agreements
herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise specifies or requires, the terms defined
in this Article I shall, for the purposes of this Agreement, have the meanings
herein specified.
"ACMC" shall mean Alliance Capital Management Corporation, a Delaware
corporation.
"Additional Limited Partner" shall mean a Person admitted to the
Partnership as a limited partner pursuant to Section 4.02 or Section 12.04(b)
and who is shown as such on the books and records of the Partnership.
"Adjusted Property" shall mean property the Carrying Value of which
has been adjusted pursuant to Section 4.10.
B-1
<PAGE>
"Adverse Partnership Tax Consequence" shall mean the Partnership,
Alliance Capital or both (a) being treated for federal income tax purposes as
an association taxable as a corporation, (b) being subject to federal income
tax as a corporation or (c) otherwise becoming subject to federal taxation on
its net income generally.
"Adverse Tax Determination" shall mean a determination by the General
Partner, on the basis of an Opinion of Outside Counsel, that an Adverse
Partnership Tax Consequence has occurred. The General Partner may determine
that an Adverse Tax Determination shall be deemed to have been made for
purposes of any provision of this Agreement as of a date prior to the actual
date of determination, but not earlier than the beginning of the first taxable
period to which the Adverse Partnership Tax Consequence relates. However, no
such determination shall affect the rights of any Unitholder or Partner to
distributions actually received prior to the time such determination was
actually made.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by or under common control with the Person in question; however,
none of the Partnership, Alliance Capital, any Person controlled by the
Partnership or Alliance Capital or any Person employed by the Partnership or
Alliance Capital or such a controlled Person shall be considered an Affiliate
of the General Partner. As used in this definition, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Affiliated Holders" has the meaning specified in Section 16.01(a).
"Agreement" shall mean this Amended and Restated Agreement of Limited
Partnership, as it may be amended, supplemented or restated from time to time.
"Alliance Capital" shall mean Alliance Capital Management L.P., a
Delaware limited partnership whose name was changed from Alliance Capital
Management L.P. II in connection with the Reorganization.
"Alliance Capital Contribution" shall mean the contribution by the
Partnership of all of its assets (other than the Holdback Interests) to
Alliance Capital in exchange for 100% of the Alliance Capital LP Units and the
Alliance Capital GP Interest and the assumption by Alliance Capital of all or
substantially all of the liabilities of the Partnership, pursuant to the
Reorganization Agreement.
"Alliance Capital GP Interest" shall mean a general partner interest
in Alliance Capital representing a 1% economic interest in Alliance Capital.
"Alliance Capital LP Unit" shall mean a unit representing a
percentage interest in the aggregate partnership interests of the limited
partners of Alliance Capital equal to, at any time, one divided by the total
number of units of limited partner interests in Alliance Capital outstanding
at that time.
"Alliance Capital Majority Outside Approval" shall mean as of any
Record Date, written consent or affirmative vote of limited partners (other
than the general partner of Alliance Capital and its Corporate Affiliates and,
if applicable, Persons holding Alliance Capital LP Units ineligible to vote
pursuant to the following sentence) who are limited partners of Alliance
Capital with respect to more than 50% of the issued and outstanding Alliance
Capital LP Units held by such Persons (including, for purposes of determining
the Alliance Capital LP Units held by such Persons, the number of Alliance
Capital LP Units held by the Partnership multiplied by a fraction, the
numerator of which is the number of issued and outstanding Limited Partnership
Interests held by Limited Partners (other than the general partner of Alliance
Capital and its Corporate Affiliates and, if applicable, Persons ineligible to
vote pursuant to the following sentence) and the denominator of which is the
number of issued and outstanding Partnership Interests). If Alliance Capital
Majority Outside Approval is being sought in connection with a transaction
described in Section 6.12 of the Alliance Capital Partnership Agreement, the
Alliance Capital LP Units of any employee of Alliance Capital, the
Partnership, any Persons controlled by Alliance Capital or the Partnership,
B-2
<PAGE>
or the general partner of Alliance Capital who will be employed by or have any
direct or indirect equity interest in any Person acquiring assets of Alliance
Capital (in connection with a transaction described in Section 6.12 of the
Alliance Capital Partnership Agreement) shall be ineligible to vote with
respect to such Alliance Capital Majority Outside Approval. Each Alliance
Capital LP Unit shall be entitled to one vote for this purpose. Consent with
respect to the Alliance Capital LP Units held by the Partnership (in its
capacity as a limited partner of Alliance Capital) shall be given, and such
Alliance Capital LP Units shall be voted, by the Partnership in accordance
with Section 17.04(b). For purposes of this definition, an Alliance Capital LP
Unit held by an employee or held for the benefit of an employee, or by or for
the benefit of a member of the family of an employee, shall be treated as if
owned by that employee. A determination by the general partner of Alliance
Capital that Alliance Capital LP Units are held by or for the benefit of an
employee or a member of the family of an employee and that such employee is
ineligible to vote with respect to a particular matter by reason of this
definition shall be binding and conclusive; in making such a determination,
the general partner of Alliance Capital may rely on information known to it
and need not make a special investigation.
"Alliance Capital Partnership Agreement" shall mean the Amended and
Restated Agreement of Limited Partnership of Alliance Capital, as it may be
amended, supplemented or restated from time to time.
"Appraiser" shall mean a Person (who may not be the General Partner,
a Corporate Affiliate thereof or any employee of the Partnership, the General
Partner or a Corporate Affiliate thereof) having experience in the valuation
of financial services businesses selected and retained by the General Partner
on behalf of and for the account of the Partnership.
"Assignee Interest" shall mean the interest in one of the Limited
Partnership Interests transferred and assigned by the Assignor Limited Partner
to the Unitholders pursuant to Section 11.02. Each Assignee Interest is
represented by one Unit.
"Assignment Determination" shall mean an Opinion of Outside Counsel
to the effect that with respect to a proposed transaction, (i) advisory
contracts of the Partnership and Alliance Capital which contributed more than
10% of the Partnership's and Alliance Capital's aggregate consolidated
revenues derived from investment management services during the four most
recently completed fiscal quarters would not be automatically terminated or
breached by reason of a change of control resulting from such proposed
transaction, or (ii) requisite consents to avoid such termination or breach
have been obtained.
"Assignor Limited Partner" shall mean Alliance ALP, Inc., a Delaware
corporation, the Person which is the Record Holder of all the Limited
Partnership Interests outstanding on the date hereof and which has and will
transfer and assign to the Unitholders Assignee Interests in such Limited
Partnership Interests as set forth in Section 11.02, or any Person designated
by the General Partner pursuant to Section 11.05(b) to serve as substituted
Assignor Limited Partner hereunder.
"Available Cash Flow" shall mean for any period cash received by the
Partnership, inclusive of the cash distributions paid by Alliance Capital,
minus such amounts as the General Partner determines, in its sole discretion,
should be retained by the Partnership for use in its business (or the
businesses of Persons controlled by the Partnership) and not distributed,
including, but not limited to, amounts retained by the Partnership for or in
anticipation of expenses, taxes, working capital requirements or reserves. The
determination of Available Cash Flow for any period by the General Partner
shall, absent manifest error, be binding and conclusive. As used in this
definition, "control" has the meaning given to that term in the definition of
Affiliates.
"Book-Tax Disparities" shall mean the differences between a Person's
Capital Account balance, as maintained pursuant to Article 4, and such balance
had the Capital Account been maintained strictly in accordance with federal
income tax accounting principles (such disparities reflecting, among other
items, the differences
B-3
<PAGE>
between the Carrying Value of either Contributed Property or Adjusted
Property, as adjusted from time to time, and the adjusted basis thereof for
federal income tax purposes).
"Capital Account" shall mean a capital account established and
maintained pursuant to Article 4.
"Carrying Value" shall mean (i) with respect to Contributed Property,
the Net Value of such property reduced (but not below zero) by all
amortization, depreciation and cost recovery deductions charged to the Capital
Accounts pursuant to Section 4.09 with respect to such property, and (ii) with
respect to any other property, the adjusted basis of such property for federal
income tax purposes, as of the time of determination. The Carrying Value of
any property shall be adjusted from time to time in accordance with Section
4.10, and to reflect changes, additions or other adjustments to the Carrying
Value for dispositions, acquisitions or improvements of Partnership Assets, as
deemed appropriate by the General Partner, using such reasonable methods as it
in its sole discretion deems appropriate.
"Certificate" shall mean a certificate issued by the Partnership, in
such form as may be deemed appropriate by the General Partner from time to
time, evidencing ownership of one or more Limited Partnership Interests, and
which shall initially be substantially in the form of Exhibit B to this
Agreement.
"Certificate of Limited Partnership" shall mean the Certificate of
Limited Partnership, and any and all amendments thereto and restatements
thereof, filed on behalf of the Partnership as required under the Delaware
Act.
"Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time, and any successor to such statute.
"Commission" shall mean the Securities and Exchange Commission.
"Contributed Property" shall mean any Contribution other than cash.
"Contribution" shall mean any cash, cash equivalents or other
property, or any other form of contribution (other than services) permitted by
the Delaware Act, contributed to the Partnership pursuant to this Agreement
(or deemed contributed for federal income tax purposes) by or on behalf of any
Person.
"Corporate Affiliate" shall mean each Person, other than a natural
person, that is an Affiliate of the specified Person.
"Delaware Act" shall mean the Delaware Revised Uniform Limited
Partnership Act (6 Del. C. ss.ss.17-101, et seq.), as it may be amended from
time to time, and any successor to such act.
"Demand" has the meaning specified in Section 6.11(a).
"Departing Partner" shall mean the Person, as of the effective date
of any withdrawal or removal of the General Partner pursuant to Section 14.01,
who has as of such date so withdrawn or been removed.
"Distribution" shall mean any cash, cash equivalents or other
property distributed by the Partnership pursuant to this Agreement (or deemed
distributed for federal income tax purposes) to any Person.
"ECMC" shall mean Equitable Capital Management Corporation, a Delaware
corporation.
"ECMC Transfer Agreement" shall mean the Transfer Agreement dated as
of February 23, 1993, among the Partnership, ECMC and Equitable Investment
Corporation, as the same may be amended, supplemented or restated from time to
time.
B-4
<PAGE>
"Effective Time" shall mean the effective time of the Reorganization
pursuant to the Reorganization Agreement.
"ELAS" means The Equitable Life Assurance Society of the United States.
"Exchange" shall mean the exchange by the Partnership of the Units
held by any Unitholder upon the request of such holder for an equal number of
Alliance Capital LP Units held by the Partnership, pursuant to the
Reorganization Agreement.
"General Partner" shall mean ACMC in its capacity as general partner
of the Partnership, or any successor or additional general partner of the
Partnership admitted pursuant to Section 13.02.
"General Partnership Interests" shall mean the Partnership Interests
of the General Partner in its capacity as such.
"Guaranty Agreement" shall mean the Guaranty Agreement dated as of
April 21, 1988 among Equitable Investment Corporation, a New York corporation,
ACMC and the Partnership as the same may be amended, supplemented or restated
from time to time.
"Holdback Interests" has the meaning specified in the Reorganization
Agreement.
"Indemnification and Reimbursement Agreement" shall mean the
Indemnification and Reimbursement Agreement, dated as of April 8, 1999, among
ELAS, the Partnership and Alliance Capital, as the same may be amended,
supplemented or restated from time to time.
"Indemnified Person" has the meaning specified in Section 6.09.
"Indemnitee" shall mean a Person who is or was the General Partner,
any Person who is or was a Departing Partner, any Person who is or was an
Affiliate of the General Partner or any Departing Partner, any Person who is
or was an officer, director, employee, partner, agent or trustee of the
Partnership, General Partner or any Departing Partner or any such Affiliate,
or any Person who is or was serving at the request of the General Partner or
any Departing Partner or any such Affiliate as a director, officer, employee,
partner, agent or trustee of another Person in connection with the business or
affairs of the Partnership.
"Limited Liability Determination" shall mean an Opinion of Outside
Counsel to the effect that, as a result of the proposed transaction, Limited
Partners and Unitholders do not lose their limited liability pursuant to
Delaware law or this Agreement.
"Limited Partner" shall mean the Assignor Limited Partner and any
other Person who is admitted as a limited partner in accordance with this
Agreement and is shown as a limited partner on the books and records of the
Partnership.
"Limited Partnership Interests" shall mean the Partnership Interests
of the Limited Partners. The provisions hereof and of the definition of
Percentage Interest are subject to adjustment by the General Partner in
connection with, or as a consequence of, the issuance of any Limited
Partnership Interests, Units or other securities of the Partnership under
Section 4.02 having special designations or preferences or other special
rights or duties. Subject to the establishment of special classes or groups of
Limited Partners or Limited Partnership Interests, Units or other securities
of the Partnership pursuant to Section 4.02, all Limited Partnership Interests
shall be considered to constitute a single class under the Delaware Act and
all Limited Partners shall vote as a single class in accordance with the terms
of this Agreement.
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"Liquidating Trustee" shall mean either (i) the General Partner or
(ii) if dissolution of the Partnership was caused by an event described in
Sections 15.01(a)(i), 15.01(a)(ii) or 15.01(a)(v), the Person or committee
appointed pursuant to Section 15.02.
"Majority Approval" shall mean, as of any Record Date, (a) the
written consent of Limited Partners who are Limited Partners with respect to
more than 50% of the issued and outstanding Limited Partnership Interests or
(b) the affirmative vote of Limited Partners who are Limited Partners with
respect to more than 50% of the Limited Partnership Interests of those Limited
Partners voting with respect to the matter at a meeting at which a quorum is
present. If a Majority Approval is being sought with respect to a transaction
described in Section 6.13 (other than a transaction pursuant to Section 2.05),
the Limited Partnership Interests of any employee of the Partnership, Alliance
Capital, any Person controlled by the Partnership or Alliance Capital, or the
General Partner who will be employed by or have any direct or indirect equity
interest in any Person acquiring Partnership Assets shall be ineligible to
vote with respect to such Majority Approval and shall not be counted for
purposes of determining the issued and outstanding Limited Partnership
Interests. Each Limited Partnership Interest shall be entitled to one vote for
this purpose. Consent with respect to the Limited Partnership Interests held
by the Assignor Limited Partner shall be given, and such Limited Partnership
Interest shall be voted, by the Assignor Limited Partner in accordance with
Section 17.04. For purposes of this definition, a Limited Partnership Interest
represented by a Unit held by an employee or held (or represented by a Unit
held) for the benefit of an employee, or by or for the benefit of a member of
the family of an employee, shall be treated as if owned by that employee. A
determination by the General Partner that Limited Partnership Interests are
held by or for the benefit of an employee or a member of the family of an
employee and that such employee is ineligible to vote with respect to a
particular matter by reason of this definition shall be binding and
conclusive; in making such a determination, the General Partner may rely on
information known to it and need not make a special investigation.
"Majority Outside Approval" shall mean as of any Record Date, written
consent or affirmative vote of Limited Partners (other than the General
Partner, its Corporate Affiliates and, if applicable, Persons holding Limited
Partnership Interests ineligible to vote pursuant to the following sentence)
who are Limited Partners with respect to more than 50% of the issued and
outstanding Limited Partnership Interests held by such Persons. If Majority
Outside Approval is being sought in connection with a transaction described in
Section 6.13, the Limited Partnership Interests of any employee of the
Partnership, Alliance Capital, any Person controlled by the Partnership or
Alliance Capital, or the General Partner who will be employed by or have any
direct or indirect equity interest in any Person acquiring Partnership Assets
(in connection with a transaction described in Section 6.13) shall be
ineligible to vote with respect to such Majority Outside Approval. Each
Limited Partnership Interest shall be entitled to one vote for this purpose.
Consent with respect to the Limited Partnership Interests held by the Assignor
Limited Partner shall be given, and such Limited Partnership Interest shall be
voted, by the Assignor Limited Partner in accordance with Section 17.04. For
purposes of this definition, a Limited Partnership Interest represented by a
Unit held by an employee or held (or represented by a Unit held) for the
benefit of an employee, or by or for the benefit of a member of the family of
an employee, shall be treated as if owned by that employee. A determination by
the General Partner that Limited Partnership Interests are held by or for the
benefit of an employee or a member of the family of an employee and that such
employee is ineligible to vote with respect to a particular matter by reason
of this definition shall be binding and conclusive; in making such a
determination, the General Partner may rely on information known to it and
need not make a special investigation.
"Market Value" on any day shall mean the average of the last reported
sales price per Unit or, in the event that no such reported sale takes place
on any such day, the average of the last reported bid and ask prices per Unit,
on the New York Stock Exchange (or any alternate national securities market on
which Units are traded) for the five trading days immediately prior to such
day.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotations System
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"National Securities Exchange" shall mean an exchange registered with
the Commission under Section 6(a) of the Securities Exchange Act including,
but not limited to, the New York Stock Exchange, Inc.
"Net Income" and "Net Loss" shall mean an amount equal to the
Partnership's taxable income or taxable loss as determined for federal income
tax purposes for a relevant period, adjusted as provided herein. Net Income
and Net Loss shall be determined in accordance with Section 703(a) of the Code
(for this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Section 703(a)(1) of the Code shall be included
in taxable income or loss), and adjusted as provided in Section 4.10. There
shall be excluded from Net Income and Net Loss (a) any item of income,
deduction, gain or loss resulting from a transaction the proceeds of which are
distributed pursuant to Section 5.02 and (b) any item of income, deduction,
gain or loss specially allocated pursuant to Section 5.05.
"Net Value" shall mean in the case of any Contribution of assets, the
fair market value of such assets reduced by the amount of any indebtedness
either assumed by the Partnership upon such Contribution or to which such
assets are subject when contributed, in each case as such fair market value
shall be determined by the General Partner using such reasonable methods of
valuation as it in its sole discretion deems appropriate, unless such assets
are to be contributed by either the General Partner or any of its Affiliates
and are other than cash or cash equivalents, in which case the fair market
value shall be determined by an Appraiser.
"Opinion of Counsel" shall mean a written opinion of counsel (who may
be regular counsel to the Partnership, the General Partner or any Affiliate
thereof) selected by the General Partner.
"Opinion of Outside Counsel" shall mean a written opinion of counsel
(who may be regular counsel to the Partnership, the General Partner or any
Affiliate thereof, but who may not be an employee of the Partnership, the
General Partner or any Affiliate thereof) selected by the General Partner.
"Original Agreement of Limited Partnership" has the meaning specified
in the Recitals.
"Other General Partner" has the meaning specified in Section 12.02(c).
"Partner" shall mean any General Partner or Limited Partner.
"Partnership" has the meaning specified in the Recitals.
"Partnership's Accountants" shall mean such nationally recognized
firm of independent public accountants, as is selected, from time to time, by
the General Partner.
"Partnership Assets" shall mean all property, whether tangible or
intangible and whether real, personal or mixed, at any time owned by the
Partnership.
"Partnership Interest" shall mean, as to any Partner, all of the
interests of that Partner in the Partnership, including, but not limited to,
such Partner's (i) right to a distributive share of income and losses of the
Partnership, (ii) right to a distributive share of the Partnership Assets,
(iii) right, if the General Partner, to participate in the management of the
affairs of the Partnership, and (iv) right to vote on certain matters as set
forth herein. Each Partnership Interest of the Partners in the Partnership
shall be denominated as a unit, each unit representing a pro rata percentage
interest in the aggregate Partnership Interests of the Partners. Each such
unit shall be referred to herein as a Limited Partnership Interest or General
Partnership Interest, as the case may be, and all references in this Agreement
to numbers of General Partnership Interests shall be deemed to refer to the
specified number of such units of the Partnership Interests of the General
Partner and all references in this Agreement to numbers of Limited Partnership
Interests shall be deemed to refer to the specified number of such units of
the Partnership Interests of the Limited Partners.
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"Pass-through Matter" has the meaning specified in Section 17.04(b).
"Percentage Interest" shall mean, subject to such adjustments as the
General Partner may determine in connection with the issuance of Limited
Partnership Interests pursuant to Section 4.02, as to each Unitholder and
Partner (other than the Assignor Limited Partner), a fraction, expressed as a
percentage, the numerator of which is equal to the number of Units and
Partnership Interests held by such Unitholder or Partner (other than the
Assignor Limited Partner) at any time and the denominator of which is equal to
the aggregate number of Units and Partnership Interests held by all of the
Unitholders and Partners (other than the Assignor Limited Partner) at such
time.
"Person" shall mean any individual, corporation, association,
partnership, joint venture, trust, estate or other entity or organization.
"Proxy Statement" shall mean the proxy statement of the Partnership
dated August __, 1999 distributed in connection with the Special Meeting of
Unitholders held September 22, 1999.
"Purchase Date" shall mean the date determined by the General Partner
as the date for purchase of all issued and outstanding Units or Limited
Partnership Interests (other than Units or Limited Partnership Interests owned
by the General Partner and its Corporate Affiliates) pursuant to, and as
specified in, the "Notice of Election to Purchase" delivered pursuant to
Article 16.
"Purchase Funds" shall mean an amount in cash equal to the aggregate
Purchase Price of all Units or Limited Partnership Interests subject to
purchase on the Purchase Date in accordance with Article 16.
"Purchase Price" shall mean, as to any class or series, an amount per
Unit or Limited Partnership Interest equal to the greater of (i) the highest
cash price paid by the General Partner or any of its Affiliates for any Unit
or Limited Partnership Interest of such class or series purchased during the
90 days immediately prior to the date on which the notice described in Article
16 is first mailed, if any such purchase occurred during such period, or (ii)
(a) if the Units or Limited Partnership Interests of such class or series are
listed or admitted to trading on one or more National Securities Exchanges,
the arithmetic mean of the last reported sales prices per Unit or per Limited
Partnership Interest of such class or series regular way or, in case no such
reported sale has taken place on any such date, the arithmetic mean of the
last reported bid and asked prices per Unit or per Limited Partnership
Interest of such class or series regular way for such date, in either case on
the principal National Securities Exchange on which the Units or Limited
Partnership Interests of such class or series are listed or admitted to
trading, for the 30 trading days immediately preceding the date of the mailing
of such notice; (b) if the Units or Limited Partnership Interests of such
class or series are not listed or admitted to trading on a National Securities
Exchange but are quoted through NASDAQ, the arithmetic mean of the last
reported sales prices per Unit or per Limited Partnership Interest of such
class or series regular way or, in case no such reported sale has taken place
on any such day or the last reported sales price is not then quoted, the
arithmetic mean of the last reported bid and asked prices per Unit or per
Limited Partnership Interest of such class or series regular way for such day
quoted through NASDAQ, for the 30 trading days immediately preceding the date
of the mailing of such notice; or (c) if the Units or Limited Partnership
Interests of such class or series are not listed for trading on a National
Securities Exchange and are not quoted through NASDAQ, an amount equal to the
fair market value of a Unit or Limited Partnership Interest of such class or
series, as of the date of the mailing of such notice, as determined by an
Appraiser.
"Recapture Income" shall mean any gain recognized by the Partnership
(but computed without regard to any adjustment required by Section 734 or 743
of the Code) upon the disposition of any Partnership Asset that does not
constitute capital gain for federal income tax purposes because such gain
represents the recapture of deductions previously taken with respect to such
Partnership Asset.
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"Record Date" shall mean the date established by the General Partner
for determining (i) the identity of Limited Partners entitled to notice of or
to vote at any meeting of Limited Partners or entitled to exercise rights in
respect of any other lawful action of Limited Partners, (ii) the identity of
the Unitholders entitled (A) to notice of any meeting of Limited Partners, or
of any matter upon which the General Partner seeks the consent of the Limited
Partners, (B) to give written instructions with respect to the giving of
consent or the voting of the Limited Partnership Interests underlying their
Units in accordance with the provisions hereof or (C) to exercise rights in
respect of any other lawful action of the Unitholders, or (iii) the identity
of the Partners and Unitholders entitled to receive any report pursuant to the
provisions hereof or any distribution pursuant to Article 5 or Article 15.
"Record Holder(s)" shall mean, as applied to the Limited Partners,
the Persons shown as Limited Partners on the books and records of the
Partnership or the Transfer Agent as of the close of business on a particular
day; and as applied to a Unitholder, the Person shown as the owner of such
Unit on the books and records of the Partnership or Transfer Agent as of the
close of business on a particular day.
"Reorganization" has the meaning specified in the Recitals.
"Reorganization Agreement" shall mean the Agreement and Plan of
Reorganization, dated as of __________, 1999, among the Partnership, Alliance
Capital, ACMC and ELAS, as the same may be amended, supplemented or restated
from time to time.
"Securities Act" shall mean the Securities Act of 1933, as it may be
amended from time to time, and any successor to such statute.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as it may be amended from time to time, and any successor to such
statute.
"Substituted Limited Partner" shall mean a Person who is admitted as
a Limited Partner in the Partnership pursuant to this Agreement in place of,
and with all the rights of, a Limited Partner pursuant to Section 13.01, and
who is shown as a limited partner on the books and records of the Partnership.
"Tax Determination" shall mean an Opinion of Outside Counsel
(containing such conditions, limitations and qualifications as are acceptable
to the General Partner in its sole discretion) to the effect that, as a result
of the proposed transaction, neither the Partnership nor Alliance Capital will
suffer an Adverse Partnership Tax Consequence. Notwithstanding any provision
of this Agreement to the contrary, a Tax Determination shall not be required
in connection with or as a condition to any action at any time after (x) the
General Partner has taken any action pursuant to clause (y) of the first
sentence of Section 2.05 or (y) an Adverse Tax Determination.
"Transfer Agent" shall mean any bank, trust company or other Person
(including the General Partner or any of its Affiliates) appointed by the
Partnership to act as transfer agent or registrar for the Units and, if the
General Partner so determines, for the Limited Partnership Interests.
"Transfer Agreement" shall mean the Transfer Agreement, dated as of
November 19, 1987, between the Partnership and ACMC, wherein, subject to
certain conditions, ACMC will contribute to the Partnership certain of its
assets and the Partnership will assume certain of its liabilities and related
obligations, as the same may be amended, supplemented or restated from time to
time.
"Unit" shall mean a unit representing an Assignee Interest in a
corresponding Limited Partnership Interest held by the Assignor Limited
Partner, which Assignee Interest has been assigned to a Unitholder by the
Assignor Limited Partner pursuant to Section 11.02. Unless the context
otherwise requires, the term "Unit" as used in this Agreement includes
restricted Units, Units outstanding as of the date of this Agreement and Units
hereafter issued in accordance with the provisions of this Agreement.
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"Unit Certificate" shall mean a certificate issued by the Partnership
evidencing ownership of one or more Units, such certificate to be in such form
or forms as may be adopted by the General Partner in its sole discretion, and
which shall initially be substantially in the form of Exhibit A to this
Agreement.
"Unitholder" shall mean any Person who is the Record Holder of one or
more Units.
"Unit Price" shall mean, as to any class or series, an amount per
Unit or Limited Partnership Interest as of any date of determination, equal to
(i) if the Units or Limited Partnership Interests of such class or series are
listed or admitted to trading on one or more National Securities Exchanges,
the arithmetic mean of the last reported sales prices per Unit or per Limited
Partnership Interest of such class or series regular way or, in case no such
reported sale has taken place on any such date, the arithmetic mean of the
last reported bid and asked prices per Unit or per Limited Partnership
Interest of such class or series regular way for such date, in either case on
the principal National Securities Exchange on which the Units or Limited
Partnership Interests of such class or series are listed or admitted to
trading, for the 30 trading days immediately preceding such date of
determination, (ii) if the Units or Limited Partnership Interests of such
class or series are not listed or admitted to trading on a National Securities
Exchange but are quoted through NASDAQ, the arithmetic mean of the last
reported sales prices per Unit or per Limited Partnership Interest of such
class or series regular way or, in case no such reported sale has taken place
on any such day or the last reported sales price is not then quoted, the
arithmetic mean of the last reported bid and asked prices per Unit or per
Limited Partnership Interest of such class or series regular way on such day,
quoted through NASDAQ, for the 30 trading days immediately preceding such date
of determination or (iii) if the Units of such class or series are not listed
or admitted to trading on a National Securities Exchange and are not quoted
through NASDAQ, an amount equal to the fair market value of a Unit of such
class or series, as of such date of determination, as determined by an
Appraiser.
"Unrealized Gain" shall mean, as of any date of determination, the
excess, if any, of the fair market value of property (as determined under
Section 4.10(c) or 4.10(d) as of such date of determination) over the Carrying
Value of such property as of such date of determination (prior to any
adjustment to be made pursuant to Section 4.10(c) or 4.10(d) as of such date).
"Unrealized Loss" shall mean, as of any date of determination, the
excess, if any, of the Carrying Value of property as of such date of
determination (prior to any adjustment to be made pursuant to Section 4.10(c)
or 4.10(d) as of such date) over the fair market value of such property (as
determined under Section 4.10(c) or 4.10(d) as of such date of determination).
ARTICLE 2
GENERAL PROVISIONS
SECTION 2.01. Formation; Partnership Name. (a) The Partnership was
formed as a Delaware limited partnership pursuant to the Original Agreement of
Limited Partnership and the filing of the Certificate of Limited Partnership
in the Office of the Secretary of State of the State of Delaware. In
connection with the Reorganization, the Partnership is being continued as a
Delaware limited partnership pursuant to the terms of this Agreement.
(b) "Alliance Capital Management Holding L.P." shall be the name of
the Partnership. The business of the Partnership shall be conducted under such
name or such other name as the General Partner may from time to time in its
sole discretion determine. "Limited Partnership" or "Ltd." or "L.P." (or
similar words or letters) shall be included in the Partnership's name where
necessary or appropriate to maintain the limited liability of the Limited
Partners and Unitholders or otherwise for the purpose of complying with the
laws of any jurisdiction that so requires or as the General Partner may deem
appropriate.
SECTION 2.02. Names and Addresses of Partners. The General Partner of
the Partnership is ACMC. The business address of the General Partner is 1345
Avenue of the Americas, New York, New York 10105. The
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General Partner may change its address at any time and from time to time. The
names and business, residence or mailing addresses of the Limited Partners and
Unitholders and the date upon which each such Person became a Limited Partner
or Unitholder are as set forth from time to time in the records of the
Partnership.
SECTION 2.03. Principal Office, Registered Agent and Registered
Office of the Partnership. (a) The principal office of the Partnership shall
be located at 1345 Avenue of the Americas, New York, New York 10105. The
General Partner in its sole discretion may, at any time, and from time to
time, change the location of the Partnership's principal office within or
outside the State of Delaware and may establish such additional offices of the
Partnership within or outside the State of Delaware as it may from time to
time determine.
(b) The name of the registered agent for service of process on the
Partnership in the State of Delaware is The Corporation Trust Company. The
address of the registered agent and the address of the registered office of
the Partnership in the State of Delaware is c/o The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801.
SECTION 2.04. Term. The Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act and
shall continue in existence until dissolved and the Certificate of Limited
Partnership canceled in accordance with any provisions of this Agreement and
the Delaware Act.
SECTION 2.05. Possible Action in the Event of Adverse Tax
Developments. Notwithstanding anything to the contrary contained in this
Agreement, in the event that the General Partner reasonably believes that as a
result of (i) the enactment (or imminent enactment) of any legislation, (ii)
the publication of any temporary, proposed or final regulation by the United
States Department of the Treasury or any ruling by the Internal Revenue
Service, (iii) a judicial decision or (iv) other actions or events not caused
by the General Partner or its Corporate Affiliates for the purpose of invoking
this Section 2.05, there is a substantial risk of an Adverse Partnership Tax
Consequence occurring within one year of the actions or events described in
clauses (i) - (iv), the General Partner shall have the right, in its sole
discretion and without the approval of the Unitholders or any other Partners,
to (x) impose such restrictions on transfer of the Units or Limited
Partnership Interests as the General Partner believes may be necessary or
desirable to prevent the occurrence of the Adverse Partnership Tax
Consequence, including making any amendments to this Agreement as the General
Partner in its sole discretion may determine to be necessary or appropriate in
order to impose such restrictions or (y) modify, restructure or reorganize the
Partnership (by the transfer of all or substantially all of the assets of the
Partnership to a newly-formed corporation or entity or otherwise) as, or
transfer all or substantially all of the assets of the Partnership to, a
corporation, trust or any other type of legal entity (a "New Entity"), in the
manner determined by the General Partner in its sole discretion, in a
transaction in which (I) each outstanding Unit or Limited Partnership Interest
of the same class or series is treated in the same manner, and (II) if the
Units, Limited Partnership Interests and General Partnership Interest are
converted into equity securities of the New Entity, the relative fair market
values of the equity securities into which Units, Limited Partnership
Interests and the General Partnership Interest are converted are in proportion
to the amounts each of the Unitholders, Limited Partners and the General
Partner would have been entitled to receive upon a liquidation of the
Partnership pursuant to Section 15.02, and (III) if all or substantially all
of the assets of the Partnership are transferred to a New Entity, the
Partnership may retain all of the equity interests in the New Entity until
such time, if any, as the General Partner, in its sole discretion and without
the approval of the Unitholders or any other Partners, elects to dissolve the
Partnership, in which case the Unitholders, Limited Partners and General
Partner will receive the equity interests in the New Entity in proportion to
the amounts each of the Unitholders, Limited Partners and the General Partner
would have been entitled to receive upon a liquidation of the Partnership
pursuant to Section 15.02, except that an action described in this clause (y)
may not be taken solely on the basis of a proposed regulation described in
clause (ii) unless the proposed regulation would by its terms, upon becoming
final, apply to periods before the date it became final. Notwithstanding
anything herein to the contrary, the General Partner may without Majority
Approval effect a transaction described in clause (y) of the preceding
sentence if the New Entity is a corporation. In connection with any
transaction described in clause (y) of the first sentence of this Section, the
General Partner may issue to itself a sufficient number of Units, Limited
Partnership Interests or other
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securities or otherwise restructure or reorganize the Partnership so that the
General Partner and its Corporate Affiliates will own a sufficient percentage
(but no more) of the Units, Limited Partnership Interests or other securities
so as to allow the Partnership or the New Entity to be included for federal
tax purposes in the affiliated group of which the General Partner is a member;
Units, Limited Partnership Interests or securities may be acquired by the
General Partner pursuant to this sentence only for the fair market value
thereof as determined by an Appraiser. In connection with any transaction
described in clause (y) of the first sentence of this Section, the business of
the Partnership may be continued by the New Entity or otherwise and if the
Partnership has been restructured or reorganized as a New Entity and the
Units, Limited Partnership Interests and General Partnership Interest are
converted into equity securities of the New Entity, the Partnership Interests
shall be converted into equity of the New Entity in the manner determined by
the General Partner in its sole discretion and without the approval of the
Unitholders or Limited Partners, subject to clause (y) above. Notwithstanding
the foregoing, no such modification, restructuring or reorganization shall
take place unless the Partnership shall have received an Opinion of Outside
Counsel to the effect that the liability of the holders of the Units or the
equity interests in the New Entity into which the Units are converted pursuant
to the law of the jurisdiction of the New Entity or Entities for the debts and
obligations of the New Entity or Entities shall not, unless such Unitholders
or Limited Partners or holders of such equity interests take part in the
control of the business of the New Entity or Entities, exceed that which
otherwise had been applicable to the holders of the Units as Unitholders or to
the Limited Partners of the Partnership.
SECTION 2.06. Exchange of GP and LP Interests. The General Partner
shall have the right at any time to freely exchange any of the Units or
Limited Partnership Interests held by it for an equal number of General
Partnership Interests without the approval of any Unitholders or Limited
Partners; provided, however, that no such exchange shall be permitted without
Majority Outside Approval if the relative rights, powers and duties of the
outstanding General Partnership Interests and Limited Partnership Interests
have been altered such that the equivalence of the economic interests of the
Partnership Interests has been affected. Additional issuances of Units which
have the same dilutive or other economic impact on both the General
Partnership Interests and the Limited Partnership Interests will not be deemed
to alter the equivalence of the economic interests of the Partnership
Interests.
ARTICLE 3
PURPOSE
SECTION 3.01. Purpose. The purpose and nature of the business to be
conducted and promoted by the Partnership shall be (a) to hold Alliance
Capital LP Units and (b) to engage in any other lawful activities (including
any activity contemplated to be undertaken by the Partnership pursuant to the
Alliance Capital Partnership Agreement) for which limited partnerships may be
organized under the Delaware Act.
SECTION 3.02. Powers. The Partnership shall be empowered to do any
and all acts and things necessary, appropriate, proper, advisable or
convenient for or incidental to the furtherance and accomplishment of the
purposes and businesses described herein and for the protection and benefit of
the Partnership, including, but not limited to, the following:
(a) To borrow money and issue evidences of indebtedness, to refinance
such indebtedness, to secure the same by mortgages, deeds of trust, security
interest, pledges or other liens on all or any part of the Partnership Assets,
to enter into contracts of guaranty or suretyship, and to confess and
authorize confession of judgment in connection with the foregoing or
otherwise;
(b) To secure, maintain and pay for insurance against liability or
other loss with respect to the activities and assets of the Partnership
(including, but not limited to, insurance against liabilities under Section
6.09);
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(c) To employ or retain such Persons as may be necessary or
appropriate for the conduct of the Partnership's business, including
permanent, temporary or part-time employees and attorneys, accountants,
agents, consultants and contractors, and to have employees and agents who may
be designated as officers with titles including, but not limited to,
"chairman," "vice chairman," "president," "executive vice president," "senior
vice president," "vice president," "assistant vice president," "treasurer,"
"controller," "secretary," "assistant secretary," and "assistant treasurer"
and who in such capacity may act for and on behalf of the Partnership, as and
to the extent authorized by the General Partner, including, but not limited
to, the following:
(i) represent the Partnership in its dealings with third parties,
and execute any kind of document or contract on behalf of the
Partnership;
(ii) approve the sale, exchange, lease, sublease, mortgage,
assignment or other transfer or acquisition of, or granting or
acquiring of a security interest in, any asset or assets of the
Partnership; or
(iii) propose, approve or disapprove of, and take, action
for and on behalf of the Partnership with respect to the operations
of the Partnership;
(d) To acquire, own, hold a leasehold interest in, maintain, use,
lease, sublease, manage, operate, sell, exchange, transfer or otherwise deal
in assets (including the Holdback Interests) and property as may be necessary,
convenient or beneficial for the Partnership;
(e) To incur expenses and to enter into, guarantee, perform and carry
out contracts or commitments of any kind, to assume obligations, and to
execute, deliver, acknowledge and file documents in furtherance of the
purposes and business of the Partnership;
(f) To pay, collect, compromise, arbitrate, litigate or otherwise
adjust, contest or settle any and all claims or demands of or against the
Partnership;
(g) To invest in interest-bearing and non-interest-bearing accounts
and short-term investments of any kind and nature whatsoever, including, but
not limited to, obligations of federal, state and local governments and their
agencies, mutual funds (including money market funds), mortgage-backed
securities, commercial paper, repurchase agreements, time deposits,
certificates of deposit of commercial banks, savings banks or savings and loan
associations and equity or debt securities of any type;
(h) To transfer assets to joint ventures, other partnerships,
corporations or other business entities in which the Partnership is or thereby
becomes a participant upon such terms, and subject to such conditions
consistent with applicable law, as the General Partner deems appropriate; and
(i) To engage in any kind of activity and to enter into and perform
obligations of any kind with the General Partner or Affiliates of the General
Partner or otherwise, necessary to or in connection with, or incidental to,
the accomplishment of the purposes and business of the Partnership, so long as
said activities and obligations may be lawfully engaged in or performed by a
limited partnership under the Delaware Act.
ARTICLE 4
CAPITAL CONTRIBUTIONS
SECTION 4.01. General Partner; Limited Partners; Assignor Limited
Partner. (a) The General Partner has from time to time made, and will make,
the Contributions required of ACMC by Section 2.4 of the Transfer Agreement.
However, the General Partner shall not be obligated to make Contributions
pursuant to this Section 4.01(a) to the extent that, after giving effect to
such Contributions, the investment value of the Partnership would exceed the
limitation contained in Section 1705 of the New York Insurance Law (if then
applicable) or the
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investment in the Partnership would violate any other
restriction on investments of insurance companies and their subsidiaries that
may be applicable at the time. In the event that any Contribution otherwise
required to be made under this Section 4.01(a) is not so made in full when due
by reason of the preceding sentence, any Contribution not so made shall be
made as soon as such limitation and any such restriction would not be exceeded
thereby, together with interest thereon from the date when such Contribution
was due to the date such Contribution was made at the prime commercial rate
per annum of The Chase Manhattan Bank from time to time in effect. The General
Partner and its Affiliates shall have the right to conduct their respective
businesses and affairs in their sole discretion without regard to the General
Partner's obligations, or any limitation or restriction referred to, in this
Section 4.01(a). The General Partner's obligation to make Contributions
pursuant to this Section 4.01(a) is subject to termination as provided in the
Transfer Agreement and in the Guaranty Agreement. The General Partner shall
not be entitled to an additional Partnership Interest or Units by reason of
the Contributions called for by this Section 4.01(a).
(b) (i) Limited Partners, including the Assignor Limited Partner (for
the account of Unitholders), have made Contributions to the capital of the
Partnership, (ii) Limited Partners have been admitted as such and (iii)
Limited Partnership Interests, Units and other securities of the Partnership
have been issued, all in accordance with the terms of the Original Agreement
of Limited Partnership and the supplemental terms of written agreements for
additional issuances of securities (including benefit plans adopted by the
Partnership), and as reflected on the records of the Partnership (including
those maintained by the Transfer Agent).
(c) The General Partner will make, or cause one or more of its
Corporate Affiliates to make, payments to the Partnership in an amount equal
to the Reorganization Costs (as such term is defined in the Indemnification
and Reimbursement Agreement), without duplication as to any amounts paid
pursuant to the Alliance Capital Partnership Agreement, in accordance with the
Indemnification and Reimbursement Agreement. The General Partner shall not be
entitled to receive any additional Partnership Interests or Units in exchange
for such payments.
SECTION 4.02. Additional Issuances of Securities. (a) The General
Partner, in order to raise additional capital, to acquire assets, to redeem or
retire Partnership debt, or for any other Partnership purpose as it may
determine in good faith is in the best interests of the Partnership, is
authorized to cause the Partnership to issue Limited Partnership Interests, or
classes or series thereof (in addition to the Limited Partnership Interests,
Units and other securities of the Partnership issued prior to the date of this
Agreement as referenced in Section 4.01(b)), from time to time to Partners or
to other Persons. Alternatively, the General Partner may cause Limited
Partnership Interests, or classes or series thereof, to be issued to the
Assignor Limited Partner and cause corresponding Units to be issued to
existing or additional Unitholders. The foregoing actions may be taken, and
Persons to whom Limited Partnership Interests or Units are issued may be
admitted as, or become, Additional Limited Partners or Unitholders as the
General Partner may determine without the necessity of obtaining approval of
Partners or Unitholders. The General Partner is also authorized to cause the
issuance of other types of securities of the Partnership from time to time to
Partners or Unitholders or other Persons on terms and conditions established
in the sole discretion of the General Partner, without the necessity of
obtaining approval of Partners or Unitholders. Such securities may include,
but shall not be limited to, unsecured and secured debt obligations of the
Partnership, debt obligations of the Partnership convertible into any class or
series of Units or Limited Partnership Interests that may be issued by the
Partnership, options, rights or warrants to purchase any such class or series
of Units or Limited Partnership Interests or any combination of any of the
foregoing. There shall be no limit on the number of Units or Limited
Partnership Interests or other securities that may be so issued, and the
General Partner shall have sole discretion in determining the consideration
and terms and conditions with respect to any future issuance of Units or
Limited Partnership Interests or other securities. The General Partner shall
do all things necessary to comply with the Delaware Act and is authorized and
directed to do all things it deems to be necessary or advisable in connection
with any such future issuance, including, but not limited to, compliance with
any statute, rule, regulation or guideline of any federal, state or other
governmental agency or any National Securities Exchange on which the
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Units or other such security is listed for trading. The Partnership may assume
liabilities and hypothecate its property in connection with any such issuance.
(b) Units and Limited Partnership Interests to be issued by the
Partnership pursuant to Section 4.02(a) shall be issuable from time to time in
one or more classes or series, at such price, and with such designations,
preferences and relative participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to existing
classes or series of Units and Limited Partnership Interests, all as shall be
fixed by the General Partner in the exercise of its sole discretion,
including, but not limited to: (i) the allocation, for federal income and
other tax purposes, to such class or series of Units and Limited Partnership
Interests of items of Partnership income, gain, loss, deduction and credit;
(ii) the rights of such class or series of Units and Limited Partnership
Interests to share in Partnership distributions; (iii) the rights of such
class or series of Units and Limited Partnership Interests upon dissolution
and liquidation of the Partnership; (iv) whether such class or series of Units
and Limited Partnership Interests is redeemable by the Partnership and, if so,
the price at which, and the terms and conditions on which, such class or
series of Units and Limited Partnership Interests may be redeemed by the
Partnership; (v) whether such class or series of Units and Limited Partnership
Interests is issued with the privilege of conversion and, if so, the rate at
and the terms and conditions upon which such class or series of Units and
Limited Partnership Interests may be converted into any other class or series
of Units and/or Limited Partnership Interests; (vi) the terms and conditions
of the issuance of such class or series of Units and Limited Partnership
Interests, and all other matters relating to the assignment thereof; and (vii)
the rights of such class or series of Units and Limited Partnership Interests
to vote on matters relating to the Partnership and this Agreement.
(c) Notwithstanding the other provisions of this Section 4.02 or
Section 4.04, except as provided in Section 2.05, the Partnership will not
issue any Units or Limited Partnership Interests or classes or series thereof
or any other type of security unless:
(i) the Partnership receives an Assignment Determination,
Limited Liability Determination and a Tax Determination with respect to such
issuance;
(ii) such issuance occurs pursuant to the employee benefit
plans sponsored by the General Partner, the Partnership, Alliance Capital or
any Persons controlled by the Partnership or Alliance Capital in accordance
with Section 6.16 and such issuance is of Units or Limited Partnership
Interests having identical rights and preferences to the Units and Limited
Partnership Interests outstanding as of the date hereof and the employees,
management and directors of the General Partner, Alliance Capital, the
Partnership and their respective subsidiaries, as a group, will not as a
result of such issuance or any transaction contemplated in connection with
such issuance, hold, vote or control 25% or more of the Units and Limited
Partnership Interests then outstanding; or
(iii) such issuance occurs pursuant to exchanges of Alliance
Capital LP Units for Units in accordance with Section 6.17.
(d) Upon the issuance pursuant to this Section 4.02 of any class or
series of Units or Limited Partnership Interests, or any other securities, the
General Partner (pursuant to the General Partner's powers of attorney from the
Limited Partners and Unitholders), without the approval at the time of any
Partner or Unitholder (each Person accepting Units being deemed to approve of
such amendment), may amend any provision of this Agreement, and execute, swear
to, acknowledge, deliver, file and record, if required, an amended Certificate
of Limited Partnership and whatever other documents may be required in
connection therewith, as shall be necessary or desirable to reflect the
authorization and issuance of such class or series of Units or Limited
Partnership Interests or other securities and the relative rights and
preferences of such class or series of Units or Limited Partnership Interests
or other securities.
(e) The General Partner or any Affiliate of the General Partner
may, but shall not be obligated to, make Contributions to the Partnership in
exchange for Units or Limited Partnership Interests, provided that the
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number of Units or Limited Partnership Interests issued in exchange for any
such Contribution shall not exceed the Net Value of the Contribution divided
by the Unit Price of a Unit or Limited Partnership Interest, as the case may
be, of such class and series; and provided further, however, that the
foregoing proviso in this Section 4.02(e) shall not apply to the transactions
set forth in the ECMC Transfer Agreement. The General Partner shall hold such
Units as a Unitholder of the Partnership and shall hold Limited Partnership
Interests as a Limited Partner of the Partnership, as the case may be.
SECTION 4.03. Record of Contributions. The books and records of the
Partnership shall include true and full information regarding the amount of
cash and cash equivalents and a designation and statement of the Net Value of
any other property or other consideration contributed by each Partner or
Unitholder to the Partnership.
SECTION 4.04. Splits and Combinations. (a) The General Partner may
cause the Partnership to make a distribution in Units or Limited Partnership
Interests to all Unitholders or Limited Partners of any class or series or may
effect a subdivision or combination of Units or Limited Partnership Interests,
but in each case only on a pro rata basis so that, after such distribution,
subdivision or combination, each Unitholder or Limited Partner shall have the
same proportionate economic interest in the Partnership as before such
distribution, subdivision or combination, subject to Section 4.06, and
provided, however, that no such distribution, subdivision or combination may
be made unless a distribution, subdivision or combination at the same
proportionate rate is simultaneously made by Alliance Capital with respect to
Alliance Capital LP Units.
(b) Whenever such a distribution, subdivision or combination is
declared, the General Partner shall select a Record Date (which shall not be
prior to the date of the declaration) as of which the distribution,
subdivision or combination shall be effective and shall notify each Unitholder
or Limited Partner of the distribution, subdivision or combination.
(c) Promptly following such distribution, subdivision or combination,
the General Partner may cause the Partnership to issue to the Unitholders or
Limited Partners as of such Record Date new Unit Certificates or Certificates
representing the new number of Units or Limited Partnership Interests, or
adopt such other procedures as it may deem appropriate to reflect such
distribution, subdivision or combination; provided, however, that in the case
of any such distribution, subdivision or combination resulting in a smaller
total number of Units or Limited Partnership Interests outstanding, the
General Partner may require, as a condition to the delivery of such new Unit
Certificate or Certificate, the surrender of any Unit Certificate or
Certificate representing the Units or Limited Partnership Interests prior to
such declaration.
(d) The General Partner shall give notice to Unitholders and Partners
of any distribution, subdivision or combination pursuant to this Section 4.04
at least 10 days prior to the effective date thereof.
SECTION 4.05. No Preemptive Rights. No Person shall be granted or
have any preemptive, preferential or other similar right with respect to (i)
additional Contributions, (ii) the issuance or sale of new, unissued or
treasury Units or Limited Partnership Interests, (iii) the issuance or sale of
any obligations, evidences of indebtedness or other securities of the
Partnership, whether or not convertible into or exchangeable for, or carrying
or accompanied by any rights to receive, purchase or subscribe to, any such
new, unissued or treasury Units or Limited Partnership Interests, (iv) the
issuance of any subscription right to or right to receive, or any warrant or
option for the purchase of, any of the foregoing Units, Limited Partnership
Interests or securities, or (v) the issuance or sale of any other Units,
Limited Partnership Interests or securities that may be issued or sold by the
Partnership.
SECTION 4.06. No Fractional Units. No fractional Units or Limited
Partnership Interests shall be issued by the Partnership; instead, in the sole
discretion of the General Partner, each fractional Unit or Limited Partnership
Interest shall be rounded to the nearest whole Unit or Limited Partnership
Interest (the next higher whole Unit or Limited Partnership Interest if the
fraction is precisely 1/2) or an amount equal to the product of the Unit Price
and such fraction shall be paid in cash by the Partnership.
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SECTION 4.07. No Withdrawal. No Person shall be entitled to withdraw
any part of his Contribution or the amount of his Capital Account, or to
receive any distribution from the Partnership, except as otherwise provided in
this Agreement.
SECTION 4.08. Loans from Partners; No Interest on Capital Account
Balances. If any Partner or Unitholder shall advance funds to the Partnership
in excess of the amounts required hereunder to be contributed by it to the
capital of the Partnership, such advance shall not be considered a
Contribution and the making of such advance shall neither result in any
increase in the amount of the Capital Account of such Partner or Unitholder
nor entitle such Partner or Unitholder to any increase in its Percentage
Interest. The amount of any such advance shall be a debt of the Partnership to
such Partner or Unitholder and shall be payable or collectible only out of the
Partnership Assets in accordance with the terms and conditions upon which such
advance is made. No interest shall be paid by the Partnership on Contributions
or on the amount of any Capital Account.
SECTION 4.09. Capital Accounts. The Partnership shall maintain for
each Partner (excluding the Assignor Limited Partner) and Unitholder (which
terms for purposes of this Section 4.09, Section 4.10 and Article 5 shall
refer to the beneficial owner of an interest held by a nominee in any case in
which the nominee has furnished the identity of such owner to the Partnership
pursuant to Section 6031(c) of the Code) a separate Capital Account in
accordance with Section 704 of the Code. The Capital Account of each Partner
and Unitholder shall, as of the effective time of the Alliance Capital
Contribution, be increased or decreased, as the case may be, to reflect a
revaluation of the Carrying Values of all Partnership Assets pursuant to
Section 4.10(c) hereof (and in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f)) to reflect any Unrealized Gain or Unrealized Loss
attributable to each Partnership Asset as if such Unrealized Gain or
Unrealized Loss had been recognized upon a sale of each such Partnership Asset
at such time and had been allocated to the Partners and Unitholders pursuant
to Sections 5.04 and 5.05 hereof. The Partners and the Unitholders hereby
agree that following such revaluation and allocation, the Capital Account of
each Partner and each Unitholder shall be equal to the product of (x) such
Person's Percentage Interest and (y) the aggregate Carrying Values of all
Partnership Assets. The initial Capital Account of any Person who becomes a
Partner by making a Contribution to the Partnership shall be equal to the cash
amount or Net Value of all Contributions made by such Person to the
Partnership. Each Capital Account shall be increased by (A) the cash amount or
Net Value of all Contributions made by such Person to the Partnership pursuant
to this Agreement and (B) all items of Partnership income and gain computed in
accordance with Section 4.10(a) and allocated to such Person pursuant to
Section 5.04 and Section 5.05, and decreased by (A) the cash amount or Net
Value of all Distributions made to such Person pursuant to this Agreement and
(B) all items of Partnership deduction and loss computed in accordance with
Section 4.10(a) and allocated to such Person pursuant to Section 5.04 and
Section 5.05, and shall otherwise be maintained in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv). Provisions of this Section 4.09 shall,
to the extent not inconsistent with the terms thereof, be construed in
accordance with Treasury Regulation Section 1.704-1(b)(2)(iv). Each Person who
holds one or more Partnership Interests or Units shall have one Capital
Account reflecting all Partnership Interests or Units owned by such Person.
SECTION 4.10. Capital Account Calculations and Adjustments. (a) For
purposes of computing the amount of any item of income, gain, deduction or
loss to be reflected in the Capital Accounts, the determination, recognition
and classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including any
method of depreciation, cost recovery or amortization used for this purpose),
provided that:
(i) In accordance with the requirements of Section
704(b) and Section 704(c) of the Code and Treasury
Regulation Section 1.704-1(b)(2)(iv)(d), any deductions for
depreciation, cost recovery or amortization attributable to
Contributed Property shall be determined as if the adjusted
basis of such property on the date it was acquired or deemed
to be acquired by the Partnership was equal to the Net Value
of such property. Upon an adjustment pursuant to Section
4.10(c) to the Carrying Value of any Partnership Asset
subject to depreciation, cost recovery or
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amortization, any further deductions for such depreciation, cost
recovery or amortization attributable to such Partnership Asset shall
be determined as if the adjusted basis of such Partnership Asset was
equal to the Carrying Value of such property immediately following
such adjustment.
(ii) Any income, gain or loss attributable to the
taxable disposition of any property shall be determined by
the Partnership as if the adjusted basis of such property as
of such date of disposition was equal in amount to the
Partnership's Carrying Value with respect to such property
as of such date.
(iii) The amounts of any adjustments to the basis (or
Carrying Values) of Partnership Assets made pursuant to
Section 743 of the Code shall not be reflected in Capital
Accounts, but the amounts of any adjustments to the basis
(or Carrying Values) of Partnership Assets made pursuant to
Section 734 of the Code as a result of the Distribution of
property by the Partnership to a Partner shall (i) be
reflected in the Capital Account of the Person receiving
such Distribution in the case of a Distribution in
liquidation of such Person's interest in the Partnership and
(ii) otherwise be reflected in Capital Accounts in the
manner in which the unrealized income and gain that is displaced
by such adjustments would have been shared had the property been sold
at its Carrying Value immediately prior to such adjustments.
(iv) The computation of all items of income, gain, loss
and deduction shall be made, as to those items described in
Section 705(a)(1)(B) or Section 705(a)(2)(B) of the Code,
without regard to the fact that such items are not
includible in gross income or are neither currently
deductible nor capitalizable for federal income tax
purposes. For this purpose, amounts paid or incurred to
organize the Partnership or to promote the sale of interests
in the Partnership that are neither deductible nor
amortizable under Section 709 of the Code, and deductions
for any losses incurred in connection with the sale or
exchange of Partnership Assets disallowed pursuant to
Section 267(a)(1) or Section 707(b) of the Code, shall be
treated as expenditures described in Section 705(a)(2)(B) of
the Code.
(b) In the case of the transfer of a Unit (the term Unit for
purposes of this Section 4.10(b) shall include a Limited Partnership Interest
received in exchange for such Unit) or the General Partnership Interest, the
transferee of such Unit or the General Partnership Interest shall succeed to a
Capital Account relating to the Unit or General Partnership Interest
transferred and the Capital Account of the transferor shall be adjusted to
reflect the Capital Account of the transferee.
(c) To the extent that the General Partner in its sole discretion
deems it appropriate (A) immediately prior to an issuance of additional Units
or Limited Partnership Interests for Contributions pursuant to Section 4.02,
or (B) to reflect the sale, exchange or other disposition of all or
substantially all of the Partnership Assets during any fiscal year in which
such a sale, exchange or other disposition occurs, the Capital Accounts of all
Partners and Unitholders and the Carrying Values of all Partnership Assets may
be adjusted in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f) (consistent with the provisions hereof) upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to
each Partnership Asset as if such Unrealized Gain or Unrealized Loss had been
recognized upon an actual sale of each such Partnership Asset at such time and
had been allocated to the Partners and Unitholders pursuant to Sections 5.04
and 5.05. Such Unrealized Gain or Unrealized Loss shall be determined by the
General Partner using such reasonable methods of valuation as it in its sole
discretion deems appropriate.
(d) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv) (e), immediately prior to the Distribution of any
Partnership Asset in kind, the Capital Accounts of all Partners and
Unitholders and the Carrying Values of all such Partnership Assets shall be
adjusted (consistent with the provisions hereof) upward or downward
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to reflect any Unrealized Gain or Unrealized Loss attributable to each such
Partnership Asset as if such Unrealized Gain or Unrealized Loss had been
recognized upon an actual sale of each such Partnership Asset immediately
prior to such distribution and had been allocated to the Partners and
Unitholders, at such time, pursuant to Sections 5.04 and 5.05. Such Unrealized
Gain or Unrealized Loss shall be determined by the General Partner in its sole
discretion and such determination shall be binding and conclusive upon the
Partnership, Partners and Unitholders.
ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS
SECTION 5.01. Pass Through Cash Distributions. The General Partner
shall distribute in cash the Partnership's Available Cash Flow as promptly as
practicable after receipt of any cash distributions paid by Alliance Capital.
Such distributions shall be made among the Partners (other than the Assignor
Limited Partner) and Unitholders who were Record Holders on such Record Date
as shall be selected by the General Partner in its sole discretion, pro rata
in accordance with their Percentage Interests.
SECTION 5.02. Special Distributions. Any Distributions (other than a
Distribution made (x) from Available Cash Flow, or (y) in connection with the
dissolution of the Partnership) may be made by the General Partner in such
amounts and at such times as the General Partner, in its sole discretion, may
determine, among the Unitholders and Partners (other than the Assignor Limited
Partner), pro rata in accordance with their Percentage Interests.
SECTION 5.03. General Rules with Respect to Distributions. (a) The
General Partner is authorized to distribute property in kind only in
connection with the dissolution of the Partnership pursuant to Article 15.
(b) The General Partner shall specify a Record Date for any
Distribution, and any cash or property distributed shall be distributed to the
Partners and Unitholders who were Record Holders on the books of the
Partnership as of the Record Date, in accordance with this Article 5. The
Record Date for any Distribution to be made pursuant to Section 5.02 shall be
(i) in the case of a Distribution that is attributable to the proceeds from
the sale or other disposition by the Partnership of Partnership Assets other
than in the ordinary course of its business, the date of such sale or other
disposition and (ii) in the case of any other Distribution, such Record Date
as selected by the General Partner in its sole discretion.
(c) Any amount of taxes withheld pursuant to Section 9.05, and any
amount of taxes, interest or penalties paid by the Partnership to any
governmental entity, with respect to amounts allocated or distributable to a
Person shall be deemed to be a Distribution or payment to such Person and
shall reduce the amount otherwise distributable to such Person pursuant to
this Article 5.
(d) No Distribution (other than a Distribution pursuant to Article
15) with respect to all or any portion of a calendar year shall be made to a
Person (other than the General Partner) if, after giving effect to expected
allocations of Net Income or Net Loss for such calendar year, the Distribution
would create or increase a deficit in such Person's Capital Account in excess
of such Person's share of the Partnership's "Minimum Gain" as defined in
Treasury Regulation Section 1.704-2(b)(2).
(e) Whenever any Distribution is to be made with respect to Limited
Partnership Interests held by the Assignor Limited Partner, such Distribution
shall be made to the Unitholders of record on the Record Date for such
Distribution and not to the Assignor Limited Partner.
(f) The requirement of the General Partner or the Partnership to make
any and all Distributions provided for in this Agreement shall be subject to
the limitations contained in the Delaware Act and no Distribution shall be
made in violation of the provisions thereof or hereof.
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SECTION 5.04. Allocations of Net Income and Net Loss. For Capital
Account purposes, except as otherwise provided in Section 5.05, Net Income and
Net Loss of the Partnership shall be determined and allocated as set forth in
this Section 5.04, and allocations of Net Income and Net Loss shall be deemed
to be allocations of proportionate shares of the items of income, gain, loss
and deduction from which Net Income and Net Loss are computed. Net Income and
Net Loss of the Partnership with respect to a fiscal year of the Partnership
shall be allocated to each month in such fiscal year on a pro rata basis.
(a) Net Income of the Partnership shall be allocated among the
Unitholders and Partners (other than the Assignor Limited Partner), pro rata
in accordance with their Percentage Interests.
(b) Net Loss of the Partnership shall be allocated (i) first, to the
Unitholders, the General Partner and Limited Partners (other than the Assignor
Limited Partner) having positive Capital Account balances so as to cause their
respective Capital Account balances to be in (or, if not possible, closer to)
the same proportion to each other as their respective Percentage Interests and
then in accordance with their respective Percentage Interests until all such
positive balances have been eliminated; and (ii) the balance, if any, to the
General Partner in respect of its General Partnership Interest. Section
5.04(a) notwithstanding, to the extent subsequent Net Income of the
Partnership does not exceed Net Loss allocated pursuant to this Section
5.04(b), such Net Income shall be allocated (A) first, to the General Partner
in respect of its General Partnership Interest until such allocated Net Income
equals Net Loss allocated to the General Partner pursuant to Section
5.04(b)(ii); and (B) the balance, if any, to the General Partner, Unitholders
and Limited Partners (other than the Assignor Limited Partner) in the same
proportions and amounts as Net Loss was allocated pursuant to Section
5.04(b)(i). For purposes of this Section 5.04(b), the determination of Capital
Account balances shall be made after giving effect to all Distributions made
with respect to calendar quarters before the month in question pursuant to
Article 5.
(c) All items of income, gain, loss and deduction resulting from any
transaction the proceeds of which are distributed to the Partners and
Unitholders pursuant to Section 5.02 shall be allocated among the Unitholders
and Partners (other than the Assignor Limited Partner), pro rata in accordance
with their Percentage Interests.
SECTION 5.05. Special Provisions Governing Capital Account Allocations.
The following special provisions shall apply whether or not inconsistent with
the provisions of Section 5.04:
(a) If there is a net decrease in "partnership minimum gain" (within
the meaning of Treasury Regulation Section 1.704-2(b)(2)) during a fiscal
year, all Persons with a deficit balance in their Capital Accounts at the end
of such year shall be allocated, before any other allocations of Partnership
items for such fiscal year, items of income and gain for such year (and if
necessary, subsequent years), in the amount and in the proportions necessary
to eliminate such deficits as quickly as possible. This Section 5.05(a) is
intended to comply with the requirements of Treasury Regulation Section
1.704-2(f), and is to be interpreted to comply with the requirements of such
regulation.
(b) If any Person unexpectedly receives any adjustments, allocations
or Distributions described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6),
items of income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income, and gain) shall be specially
allocated to such Person in an amount and manner sufficient to eliminate a
deficit in its Capital Account created by such adjustments, allocations or
Distributions as quickly as possible. This Section 5.05(b) is intended to
constitute a "qualified income offset" within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(3). Any special allocations of items
of income or gain pursuant to this Section 5.05(b) shall be taken into account
in computing subsequent allocations of Net Income or Net Loss so that the net
amounts of any items so allocated shall, to the extent possible, be equal to
the net amounts that would have been allocated to each such Person if such
unexpected adjustments, allocations or Distributions had not occurred.
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(c) Section 5.04(a) notwithstanding, in the event of a sale or
transfer of a Unit or Limited Partnership Interest by the General Partner or
any of its Corporate Affiliates (other than to the General Partner or a
Corporate Affiliate of the General Partner or in a transaction in which the
General Partner and its Corporate Affiliates transfer their entire interest in
the Partnership) the General Partner may, in its sole discretion, allocate
gross income to the General Partner or such Corporate Affiliate, as the case
may be, to the extent required to make the Capital Account of the General
Partner or such Corporate Affiliate immediately prior to such sale or transfer
equal to the product of (I) the aggregate Percentage Interest of the General
Partner or such Corporate Affiliate, (II) the quotient obtained by dividing
the aggregate amount of Units and Limited Partnership Interests outstanding by
a fraction, the numerator of which is the aggregate Percentage Interest of all
Unitholders and Limited Partners (other than the Assignor Limited Partner) and
the denominator of which is 100 and (III) an amount equal to the Capital
Account of a Unit.
(d) Any net gains realized by the Partnership upon the dissolution of
the Partnership shall be credited to the Capital Accounts of the Partners
(other than the Assignor Limited Partner) and Unitholders (after crediting or
charging thereto the appropriate portion of Net Income and Net Loss and after
giving effect to all amounts distributed or to be distributed to such Partners
and Unitholders with respect to all calendar quarters of the Partnership prior
to the quarter in which the dissolution of the Partnership occurs) in the
following priority:
(i) First, to those Partners and Unitholders whose Capital
Accounts have negative balances, in proportion to such negative
balances, until such negative balances have been eliminated;
(ii) Next, to the Partners and Unitholders in a manner so as to
cause such Partners' and Unitholders' respective Capital Account
balances to be in the same proportion to each other as their
respective Percentage Interests; and
(iii) The balance, if any, among the Unitholders and Partners, pro
rata in accordance with their Percentage Interests.
(e) In the event any net gains realized by the Partnership upon the
dissolution of the Partnership are insufficient to cause the Partners' and
Unitholders' respective Capital Account balances to be in the ratios of their
respective Percentage Interests, then, Section 5.04(a) notwithstanding, gross
income shall be allocated to those Partners and Unitholders whose Capital
Accounts have balances (after giving effect to the allocations provided in
Section 5.05(d)), that are less than the amount required to make all Partners'
and Unitholders' Capital Account balances be in the ratio of their respective
Percentage Interests until all Partners' and Unitholders' Capital Account
balances are in such ratios; provided, however, that an allocation shall not
be made pursuant to this Section 5.05(e) to the extent such allocation would
cause or increase a negative balance in any other Partner's or Unitholder's
Capital Account.
(f) (i) If any Partner or Unitholder makes a payment to the
Partnership to pay an expense or cover a loss of the Partnership, or pays an
expense of the Partnership, including, without limitation, any organizational
expenses incurred in connection with the Reorganization and any costs incurred
under the Indemnification and Reimbursement Agreement, and the result is that
the Partnership is required to recognize income or is entitled to a loss or
deduction with respect to such amount so contributed or paid, then such
income, loss or deduction shall be specially allocated to such Partner or
Unitholder.
(ii) Any amounts received by the Partnership either from a
trust established or letter of credit furnished pursuant to Section 4 of the
Guaranty Agreement shall be considered a Contribution by ACMC if it is the
General Partner or a Unitholder (or, if ACMC is not the General Partner or a
Unitholder, any Corporate Affiliate that is the General Partner or a
Unitholder) made to pay the expense of the Partnership to which the amounts
received by the Partnership relate.
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(g) In the event that the Internal Revenue Service is successful in
asserting an adjustment to the taxable income of a Partner or Unitholder and,
as a result of any such adjustment, the Partnership is entitled to a deduction
for federal income tax purposes with respect to any portion of such
adjustment, such deduction shall be allocated to such Partner or Unitholder.
(h) The General Partner may, in its sole discretion and without the
approval of any Unitholder or other Partner, make special allocations of Net
Income or Net Loss or items thereof (including, but not limited to, gross
income) to the extent necessary to make the Capital Account balances of the
Partners and Unitholders be in the ratios of their Percentage Interests. In
addition to the other special allocations that the General Partner may make
under this Section 5.05, the General Partner may, in its sole discretion and
without the approval of any Unitholder or other Partner, make special
allocations of Net Income or Net Loss (or items thereof) and adopt such other
methods and procedures in order to preserve or achieve uniformity of Units,
but only if such allocations and methods and procedures would not have a
material adverse effect on the Unitholders holding Units and if they are
consistent with the principles of Section 704 of the Code.
(i) In the event that the Internal Revenue Service is successful in
asserting an adjustment to the allocations of Net Income or Net Loss provided
for in Sections 5.04 and 5.05 for federal income tax purposes, such adjustment
shall not have any effect on Capital Accounts or on the Distributions made or
to be made pursuant to the provisions of this Agreement, unless the General
Partner determines that giving effect to such adjustment would make the
Partners' and Unitholders' Capital Account balances be in the proportion of
the Percentage Interests.
(j) For purposes of charging and crediting Capital Accounts, the
holder of a restricted Unit (which for purposes of this Section 5.05(j) shall
include any Limited Partnership Interest received in exchange for a restricted
Unit) shall not be treated as a Unitholder or Limited Partner during the
period commencing on the date such holder acquires such restricted Unit and
ending on the date such restricted Unit vests, unless such holder makes a
timely election under Section 83(b) of the Code with respect to the transfer
of such restricted Unit to such holder. During such period, all Distributions
made with respect to such restricted Unit pursuant to this Agreement shall be
treated as not made in respect of a partnership interest but shall be paid by
the Partnership to such holder as compensation.
SECTION 5.06. Allocations for Tax Purposes. (a) For federal income
tax purposes, except as otherwise provided in this Section 5.06, each item of
income, gain, loss and deduction of the Partnership shall be allocated, for
each month, among the Partners (other than the Assignor Limited Partner) and
Unitholders in the same proportions as items comprising Net Income or Net
Loss, as the case may be, are allocated among the Partners (other than the
Assignor Limited Partner) and Unitholders. Credits shall be allocated as
provided in Treasury Regulation Section 1.704-1(b)(4)(ii).
(b) In the case of Contributed Property, items of income, gain, loss
or deduction attributable to such Contributed Property shall be allocated
among the Partners (other than the Assignor Limited Partner) and Unitholders
in a manner that takes into account the variation between the adjusted basis
to the Partnership of such Contributed Property and the Net Value of such
Contributed Property at the time of contribution, as required by Section
704(c) of the Code, to the extent such allocation reduces Book-Tax
Disparities. The General Partner shall have the sole discretion to make
additional allocations of income, gain, loss or deduction in order to
eliminate such Book-Tax Disparities as quickly as possible, provided such
allocations are consistent with the principles of Section 704(c) of the Code.
The General Partner shall have the sole discretion to choose any method of
allocations permissible under Treasury Regulation Section 1.704-3 to reduce or
eliminate Book-Tax Disparities.
(c) In the case of Adjusted Property, items of income, gain, loss or
deduction attributable thereto shall (A) first, be allocated among the
Partners (other than the Assignor Limited Partner) and Unitholders in a manner
consistent with the principles of Section 704(c) of the Code to take into
account the Unrealized Gain or Unrealized Loss attributable to such property
and the allocation thereof pursuant to Section 4.10(c) to the extent such
allocation reduces Book-Tax Disparities, and (B) second, in the event such
property was originally Contributed Property, be
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allocated among the Partners (other than the Assignor Limited Partner) and
Unitholders in a manner consistent with subsection 5.06(b) above. The General
Partner shall have the sole discretion to make additional allocations of
income, gain, loss or deduction in order to eliminate such Book-Tax
Disparities as quickly as possible, provided such allocations are consistent
with the principles of Section 704(c) of the Code. The General Partner shall
have the sole discretion to choose any method of allocations permissible under
Treasury Regulation Section 1.704-3 to reduce or eliminate Book-Tax
Disparities.
(d) To the extent of any Recapture Income resulting from the sale or
other taxable disposition of a Partnership Asset, the amount of any gain from
such disposition allocated to (or recognized by) a Partner (other than the
Assignor Limited Partner) or Unitholder, for federal income tax purposes
pursuant to the above provisions shall be deemed to be Recapture Income to the
extent such Partner or Unitholder has been allocated or has claimed any
deduction directly or indirectly giving rise to the treatment of such gain as
Recapture Income.
(e) All items of income, gain, loss, deduction and credit recognized
by the Partnership for federal income tax purposes and allocated to the
Partners (other than the Assignor Limited Partner) and Unitholders in
accordance with the provisions hereof shall be determined without regard to
any adjustment made pursuant to Section 743 of the Code; provided, however,
that such allocations, once made, shall be adjusted as necessary or
appropriate to take into account those adjustments permitted by Section 743 of
the Code and any adjustments made pursuant to Section 743 of the Code shall be
allocated to the extent permitted under and in accordance with the rule of
Treasury Regulation Section 1.704-1(b)(2)(iv)(m).
(f) The General Partner may, in its sole discretion and without the
approval of any Unitholder or other Partner, make special allocations of Net
Income or Net Loss or items thereof (including, but not limited to, gross
income) (i) to the extent necessary to make the Capital Account balances of
the Partners and Unitholders be in the ratios of their Percentage Interests or
(ii) that are consistent with the principles of Section 704 of the Code and
Section 5.04 and to amend the provisions of this Agreement as appropriate to
reflect the proposal or promulgation of Treasury Regulations under Subchapter
K of the Code. The General Partner may adopt and employ such methods and
procedures for (A) the maintenance of book and tax capital accounts, (B) the
determination and allocation of adjustments under Sections 704(c), 734 and 743
of the Code, (C) the determination and allocation of Net Income, Net Loss,
Depreciation, taxable income, taxable loss and items thereof under this
Agreement and pursuant to the Code, (D) the determination of the identities
and tax classification of Unitholders and Partners, (E) the provision of tax
information and reports to Partners and Unitholders, (F) the adoption of
reasonable conventions and methods for the valuation of assets and the
determination of tax basis, (G) the allocation of asset values and tax basis,
(H) conventions for the determination of cost recovery, depreciation and
amortization deductions and the maintenance of inventories, (I) the
recognition of the transfer of Units and Limited Partnership Interests, and
(J) compliance with other tax-related requirements, including, but not limited
to, the use of computer software and filing and reporting procedures similar
to those employed by other publicly-traded partnerships, as it determines in
its sole discretion are necessary and appropriate to execute the provisions of
this Agreement, comply with federal and state tax laws, and to achieve
uniformity of Units and Limited Partnership Interests. The General Partner
shall be indemnified and held harmless by the Partnership for any expenses,
penalties or other liabilities arising as a result of decisions made in good
faith on any of the matters referred to in the preceding sentence. If the
General Partner determines, based upon advice of counsel, that no reasonable
allowable convention or other method is available to preserve the uniformity
of Units or Limited Partnership Interests or the General Partner in its
discretion so elects, Units and Limited Partnership Interests may be
separately identified as distinct classes to reflect differences in tax
consequences.
(g) For federal income tax purposes, the holder of a restricted Unit
(which, for purposes of this Section 5.06(g), shall include any Limited
Partnership Interest received in exchange for a restricted Unit) shall not be
treated as a Unitholder or Limited Partner during the period commencing on the
date such holder acquires such restricted Unit and ending on the date such
restricted Unit vests, unless such holder makes a timely election under
Section 83(b) of the Code with respect to the transfer of such restricted Unit
to such holder. All Distributions made
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with respect to such restricted Unit pursuant to this Agreement during such
period shall be treated as not made in respect of a partnership interest but
shall be paid by the Partnership to such holder as compensation.
SECTION 5.07. Assignments. (a) Each item of income, gain, loss,
deduction or credit derived by the Partnership during a fiscal year shall be
determined and allocated on a monthly basis in accordance with the provisions
of this Article 5.
(b) Subject to applicable Treasury Regulations, the Partnership shall
treat Partners or Unitholders of record at the opening of business on the
first day of a calendar month as being the only Partners and Unitholders
during such month. If the General Partnership Interest or any Unit or Limited
Partnership Interest is transferred during any month, such items attributable,
under the convention set forth in the second sentence of Section 5.04, to such
Interest or Unit for such month shall be allocated to the holder of such
Interest or Unit on the first day of such month, provided, however, that (i)
any income, gain, loss, or deduction on a sale or other disposition of all or
substantially all of the Partnership Assets shall be allocated to the Partners
and Unitholders on the date of such sale or other disposition and (ii) any
income, gain, loss or deduction resulting from any transaction the proceeds of
which are distributed to the Partners and Unitholders pursuant to Section 5.02
shall be allocated to the Partners and Unitholders on the date of such
transaction. Distributions shall be made to the Partners as of the applicable
Record Date as provided in Section 5.03(b).
(c) The General Partner may revise, alter or otherwise modify such
methods of allocation (i) to the extent that it in its sole discretion
determines that the application of such methods would result in a substantial
mismatching of the allocation of Net Income or Net Loss attributable to a
period and the Distribution of cash attributable to the same period as between
the transferor and transferee of the Partnership Interest and / or Unit
transferred that could be minimized by the application of an alternative tax
allocation method, or (ii) to the extent necessary to conform the
Partnership's tax allocations to the requirements of any Treasury Regulations
or rulings of the Internal Revenue Service.
ARTICLE 6
MANAGEMENT AND OPERATION OF BUSINESS
SECTION 6.01. Management.
(a) Except as otherwise expressly provided in this Agreement:
All decisions respecting any matter set forth herein or otherwise
affecting or arising out of the conduct of the business of the Partnership
shall be made by the General Partner, and the General Partner shall have the
exclusive right and full authority and responsibility to manage, conduct,
control and operate the Partnership's business and effect the purposes and
provisions of this Agreement. The General Partner shall have full authority to
do all things on behalf of the Partnership deemed necessary or desirable by it
in the conduct of the business of the Partnership, including, but not limited
to, exercising all of the powers contained in Section 3.02 and to effectuate
the purposes specified in Section 3.01. The power and authority of the General
Partner pursuant to this Agreement shall be liberally construed to encompass
the General Partner's undertaking, on behalf of the Partnership, all acts and
activities in which a limited partnership may engage under the Delaware Act.
The power and authority of the General Partner shall include, but shall not be
limited to, the power and authority on behalf of the Partnership and at the
expense of the Partnership:
(i) To cause the Partnership to execute, deliver and
perform the Reorganization Agreement, the Indemnification
and Reimbursement Agreement and all other agreements,
documents and instruments as the General Partner may deem
necessary or appropriate to consummate the transactions
contemplated thereby;
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(ii) To cause the Partnership to take all such actions
as may be necessary or appropriate to effect the
Reorganization, including, but not limited to, consummating
the Alliance Capital Contribution and the Exchange and
serving as a limited partner of Alliance Capital;
(iii) To make all operating decisions concerning the business of
the Partnership;
(iv) To cause the Partnership to acquire, dispose of,
mortgage, pledge, encumber, hypothecate, assign in trust for
creditors, or exchange any or all assets or properties
(including the Partnership Assets), including, but not
limited to, its goodwill;
(v) To use the assets or properties of the Partnership
(including, but not limited to, cash on hand) for any
purpose, and on any terms, including, but not limited to,
the financing of Partnership operations, the lending of
funds to other Persons, the repayment of obligations of the
Partnership, the conduct of additional Partnership
operations and the purchase or acquisition of interests in
properties or other assets, including, but not limited to,
such interests in real property as may be acquired in
connection with arrangements for the use of facilities in
connection with the Partnership's operations or the
acquisition of any other assets or interests in property;
(vi) To negotiate, execute, amend and terminate, and to
cause the Partnership to perform, any contracts, conveyances
or other instruments that it considers useful or necessary
to the conduct of Partnership operations or the
implementation of its powers under this Agreement;
(vii) To select and dismiss employees and outside
attorneys, accountants, consultants and contractors and to
determine compensation and other terms of employment or
hiring;
(viii) To form any further limited or general
partnerships, joint ventures, corporations or other entities
or relationships that it deems desirable, and contribute to
such partnerships, ventures, corporations or other entities
any or all of the assets and properties of the Partnership,
and if the General Partner is a partner or participant in
any such entity or relationship to accord the General
Partner a share in the income of such entity or
relationship;
(ix) To issue additional securities or additional Units
or Limited Partnership Interests or additional classes or
series of Units or Limited Partnership Interests pursuant to
the provisions of Section 4.02, and on behalf of the
Partnership (but subject to the other provisions of this
Agreement);
(x) To purchase, sell or otherwise acquire or dispose
of Units or Limited Partnership Interests, at such times and
on such terms as it deems to be in the best interests of the
Partnership;
(xi) To maintain or cause to be maintained records of
all rights and interests acquired or disposed of by the
Partnership, all correspondence relating to the business of
the Partnership and the original records (or copies on such
media as the General Partner may deem appropriate) of all
statements, bills and other instruments furnished the
Partnership in connection with its business;
(xii) To maintain records and accounts of all operations
and expenditures, make all filings and reports required
under applicable rules and regulations of any governmental
department, bureau, or agency, any securities exchange, any
automated quotation system of a registered securities
association, and any self-regulatory body, and furnish the
Partners and
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Unitholders with all necessary United States federal, state or local
income tax reporting information or such information with respect to
any other jurisdiction;
(xiii) To purchase and maintain, at the expense of the
Partnership, liability, indemnity, and any other insurance
(including, but not limited to, errors and omissions insurance and
insurance to cover the obligations of the Partnership under Section
6.09), sufficient to protect the Partnership, the General Partner,
their respective officers, directors, employees, agents, partners and
Affiliates, or any other Person, from those liabilities and hazards
which may be insured against in the conduct of the business and in
the management of the business and affairs of the Partnership;
(xiv) To make, execute, assign, acknowledge and file on behalf of
the Partnership all documents or instruments of any kind which the
General Partner may deem necessary or appropriate in carrying out the
purposes and business of the Partnership, including but not limited
to, powers of attorney, agreements of indemnification, contracts,
deeds, options, loan obligations, mortgages, notes, documents, or
instruments of any kind or character, and amendments thereto, any of
which may contain confessions of judgment against the Partnership. No
Person dealing with the General Partner shall be required to
determine or inquire into the authority or power of the General
Partner to bind the Partnership or to execute, acknowledge or deliver
any and all documents in connection therewith;
(xv) To borrow money and to obtain credit in such amounts, on
such terms and conditions, and at such rates of interest and upon
such other terms and conditions as the General Partner deems
appropriate, from banks, other lending institutions, or any other
Person, including Alliance Capital, the Partners or Unitholders or
any of their Affiliates, for any purpose of the Partnership, and to
pledge, assign, or otherwise encumber or alienate all or any portion
of the Partnership Assets, including any income therefrom, to secure
or provide for the repayment thereof. As between any lender and the
Partnership, it shall be conclusively presumed that the proceeds of
such loans are to be and will be used for the purposes authorized
herein and that the General Partner has the full power and authority
to borrow such money and to obtain such credit;
(xvi) To assume obligations, enter into contracts, including
contracts of guaranty or suretyship, incur liabilities, lend money
and otherwise use the credit of the Partnership, to secure any of the
obligations, contracts or liabilities of the Partnership by mortgage,
pledge or other encumbrance of all or any part of the property and
income of the Partnership;
(xvii) To invest funds of the Partnership in interest-bearing and
non-interest-bearing accounts and short-term investments including,
but not limited to, obligations of federal, state and local
governments and their agencies, money market and mutual funds
(including, but not limited to, those managed by the Partnership or
Alliance Capital) and any type of debt or equity securities
(including repurchase agreements and without regard to restrictions
on maturities);
(xviii) To make any election on behalf of the Partnership as is or
may be permitted under the Code or under the taxing statutes or rules
of any state, local, foreign or other jurisdiction, and to supervise
the preparation and filing of all tax and information returns which
the Partnership may be required to file;
(xix) To employ and engage suitable agents, employees, advisers,
consultants and counsel (including any custodian, investment adviser,
accountant, attorney, corporate fiduciary, bank or other reputable
financial institution, or any other agents, employees or Persons who
may serve in such capacity for the General Partner or any Affiliate
of the General Partner) to carry out
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any activities which the General Partner is authorized or required to
carry out or conduct under this Agreement, including, but not limited
to, a Person who may be engaged to undertake some or all of the
general management, property management, financial accounting and
recordkeeping or other duties of the General Partner, to indemnify
such Persons on behalf of the Partnership against liabilities
incurred by them in acting in such capacities and to rely on the
advice given by such Persons, it being agreed and understood that the
General Partner shall not be responsible for any acts or omissions of
any such Persons and shall assume no obligations in connection
therewith other than the obligation to use due care in the selection
thereof;
(xx) To pay, extend, renew, modify, adjust, submit to
arbitration, prosecute, defend, confess or compromise, upon such
terms as it may determine and upon such evidence as it may deem
sufficient, any obligation, suit, liability, cause of action, or
claim, including taxes, either in favor of or against the
Partnership;
(xxi) To register, qualify, list or report, to cause to be
registered, qualified, listed or reported, or to cause to be
de-registered, disqualified or delisted, the Units or Limited
Partnership Interests pursuant to the Securities Act, the Securities
Exchange Act, and any other securities laws of the United States, the
securities laws of any state of the United States, the laws of any
other jurisdiction, with any National Securities Exchange or other
securities exchange, or pursuant to an automated quotation system of
a registered securities association, as the General Partner deems
appropriate;
(xxii) To qualify the Partnership to do business in any state,
territory, dependency or foreign country;
(xxiii) To distribute cash or Partnership Assets to Partners and
Unitholders in accordance with Article 5;
(xxiv) In accordance with Section 2.05, to restrict trading in
Units and Limited Partnership Interests or to reconstitute and
convert the Partnership into such entity as shall be determined in
accordance therewith;
(xxv) To take such other action with respect to the manner in
which the Units and Limited Partnership Interests are being or may be
transferred or traded as the General Partner deems necessary or
appropriate;
(xxvi) To purchase, sell or otherwise acquire or dispose of
Alliance Capital LP Units;
(xxvii) To cause the Partnership to take all such actions as may be
necessary or appropriate to maintain or alter the one-for-one
exchange ratio of Alliance Capital LP Units for Units or Limited
Partnership Interests, and vice versa, in the event that any
circumstance exists or is reasonably expected to exist which the
General Partner determines in its sole discretion would render
inappropriate the use of such exchange ratio;
(xxviii) To possess and exercise any additional rights and powers
of a general partner under the partnership laws of Delaware
(including, but not limited to, the Delaware Act) and any other
applicable laws, to the extent not inconsistent with this Agreement;
and
(xxix) In general, to exercise in full all of the powers of the
Partnership as set forth in Section 3.02 and to do any and all acts
and conduct all proceedings and execute all rights and privileges,
contracts and agreements of any kind whatsoever, although not
specifically mentioned
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in this Agreement, that the General Partner may deem necessary or
appropriate to the conduct of the business and affairs of the
Partnership or to carry out the purposes of the Partnership. The
specific expression of any power of authority of the General Partner
in this Agreement shall not in any way limit or exclude any other
power or authority which is not specifically or expressly set forth
in this Agreement.
(b) Each of the Partners and Unitholders hereby approves, ratifies
and confirms the execution, delivery and performance of the Reorganization
Agreement, the Indemnification and Reimbursement Agreement and each other
agreement, document and instrument as the General Partner may deem necessary
or appropriate to consummate the transactions contemplated thereby, and agrees
that the General Partner is authorized to execute, deliver and perform the
Reorganization Agreement, the Indemnification and Reimbursement Agreement and
such other agreements, documents and instruments and the transactions
contemplated thereby without any further act, approval or vote of Unitholders
or Partners, notwithstanding any other provision of this Agreement, the
Delaware Act or any other applicable law, rule or regulation.
(c) The General Partner shall use all reasonable efforts to cause to
be filed any certificates or filings as may be determined in its sole
discretion by the General Partner to be reasonable and necessary or
appropriate for the formation and continuation and operation of a limited
partnership (or a partnership in which the Limited Partners have limited
liability) in the State of Delaware or any other state in which the
Partnership elects to do business. To the extent that the General Partner in
its sole discretion determines such action to be reasonable and necessary or
appropriate, the General Partner thereafter (i) shall file any necessary
amendments to the Certificate of Limited Partnership, including, but not
limited to, amendments to reflect successor or additional general partners
admitted pursuant to Section 13.02 and (ii) shall otherwise do all things
(including the appointment of registered agents of the Partnership and
management of registered offices of the Partnership) requisite to the
maintenance of the Partnership as a limited partnership under the laws of the
State of Delaware or any other state in which the Partnership may elect to do
business. If permitted by applicable law, the General Partner may omit from
the Certificate of Limited Partnership and from any other certificates or
documents filed in any state in order to qualify the Partnership to do
business therein, and from all amendments thereto, the names and addresses of
the Partners (other than the General Partner) and Unitholders and information
relating to the Contributions and shares of profits and compensation of the
Partners (other than the General Partner) and Unitholders, or state such
information in the aggregate rather than with respect to each individual
Partner or Unitholder. Except as provided in Section 7.05(a), the General
Partner shall not be required, before or after filing, to deliver or mail a
copy of the Certificate of Limited Partnership or any amendment thereto to any
Unitholder or Limited Partner.
SECTION 6.02. Reliance by Third Parties. Notwithstanding any other
provisions of this Agreement to the contrary, no lender, purchaser or other
Person dealing with the Partnership shall be required to look to the
application of proceeds hereunder or to verify any representation by the
General Partner as to the extent of the interest in Partnership Assets that
the General Partner is entitled to encumber, sell or otherwise use, and any
such lender, purchaser or other Person shall be entitled to rely exclusively
on the representations of the General Partner as to its authority to enter
into such financing or sale arrangements and shall be entitled to deal with
the General Partner, without the joinder of any other Person, as if the
General Partner were the sole party in interest therein, both legally and
beneficially. To the fullest extent permitted by law, each Partner (other than
the General Partner) and Unitholder hereby waives any and all defenses or
other remedies that may be available against such lender, purchaser or other
Person to contest, negate or disaffirm any action of the General Partner in
connection with any sale or financing. In no event shall any person dealing
with the General Partner or the General Partner's representative with respect
to any business or property of the Partnership be obligated to ascertain that
the terms of this Agreement have been complied with, or be obligated to
inquire into the necessity or expedience of any act or action of the General
Partner or the General Partner's representative; and every contract,
agreement, deed, mortgage, security agreement, promissory note or other
instrument or document executed by the General Partner or the General
Partner's representative with respect to any business or property of the
Partnership shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (i) at the time of the
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execution and delivery thereof this Agreement was in full force and effect,
(ii) such instrument or document was duly executed in accordance with the
terms and provisions of this Agreement and is binding upon the Partnership,
and (iii) the General Partner or the General Partner's representative was duly
authorized and empowered to execute and deliver any and every such instrument
or document for and on behalf of the Partnership.
SECTION 6.03. Purchase or Sale of Units or Limited Partnership
Interests. The General Partner may cause the Partnership to purchase or
otherwise acquire (or may purchase or otherwise acquire on behalf of the
Partnership) Units or Limited Partnership Interests. The General Partner or
any of its Affiliates may also purchase or otherwise acquire Units or Limited
Partnership Interests for its own account and may, subject to the provisions
of Article 12, sell or otherwise dispose of such Units or Limited Partnership
Interests. Any Units or Limited Partnership Interests purchased for or on
behalf of or otherwise held by the Partnership shall not be deemed outstanding
for any purposes under this Agreement; provided that Units or Limited
Partnership Interests purchased for or on behalf of or otherwise held by a
Person in the "control" of the Partnership, as that term is defined in the
definition of an Affiliate in Article 1, for a business purpose approved by
the General Partner shall not be considered to have been purchased for or on
behalf of or otherwise held by the Partnership.
SECTION 6.04. Compensation and Reimbursement of the General Partner.
(a) The General Partner shall be reimbursed on a monthly or such other basis
as the General Partner shall determine (i) for all direct expenses it incurs
or makes on behalf of the Partnership (including amounts paid to any Person to
perform services for the Partnership) and (ii) for the General Partner's
legal, accounting, investor communications, utilities, telephone, secretarial,
travel, entertainment, bookkeeping, reporting, data processing, office rent
and other office expenses, salaries and other compensation and employee
benefits expenses, other administrative or overhead expenses and all other
expenses necessary to or appropriate for the conduct of the Partnership's
business which are incurred by the General Partner in operating the
Partnership's business (including, but not limited to, expenses allocated to
the General Partner by its Affiliates), and which are allocated to the
Partnership in addition to any reimbursement as a result of indemnification
pursuant to Section 6.09. The General Partner shall determine the fees and
expenses that are allocated to the Partnership by the General Partner in good
faith.
(b) The General Partner shall not receive any compensation from the
Partnership for services provided to the Partnership as General Partner.
SECTION 6.05. Outside Activities. (a) The General Partner shall not
acquire any assets or enter into or conduct any business or activity except in
connection with or incidental to (i) the management or operations of the
Partnership and Alliance Capital, its performance of its obligations required
or authorized by this Agreement and the Alliance Capital Partnership
Agreement, (ii) the acquisition, ownership or disposition of Units or Limited
Partnership Interests or partnership interests in Alliance Capital, (iii) its
corporate governance and existence and (iv) acquiring, investing in, holding,
disposing of or otherwise dealing with the Excluded Assets (as defined in the
Transfer Agreement) and other passive investments.
(b) Any Indemnitee, except the General Partner, may compete, directly
or indirectly, with the Partnership and may engage in any business or other
activity, whether or not for profit and whether or not competitive with or
similar to any current or anticipated business activity of the Partnership,
including, but not limited to, providing investment management and advisory
services, and no such business or activity shall in any way be restricted by,
or considered to be in conflict with, this Agreement, the partnership
relationship established hereby or any principle of law or equity relating
thereto. None of the Partnership, any Partner or any Unitholder shall have any
rights in or with respect to any such business or activity so engaged in by an
Indemnitee, and no Indemnitee shall have any obligation to offer any interest
in any such business or activity, or any opportunity relating thereto or to
the business of the Partnership, to the Partnership, any Partner or any other
Persons who may have or acquire any interest in the Units, Limited Partnership
Interests or the Partnership. No decision or action taken by any such
Indemnitee (or, to the extent such decision or action was not taken with the
specific intent of providing an improper benefit to an Indemnitee to the
detriment of the Partnership, by the General Partner) with
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respect to any such business or activity or any business or activity of the
Partnership shall be subject to review or challenge in any way or in any forum
on the basis that it improperly benefitted any such Indemnitee to the
detriment of the Partnership or otherwise involved any conflict of interest or
breach of a duty of loyalty or similar fiduciary obligation. No such
Indemnitee shall be subject to any liability or other obligation with respect
to the matters described in this Section 6.05(b). The Partnership shall not,
and each Partner and Unitholder by its acquisition of a Unit or Limited
Partnership Interest hereby agrees that it will not, assert in any manner or
in any forum any claim with respect to the matters described in this Section
6.05(b). The Partnership shall actively resist any effort to assert any such
claim on its behalf. This Section 6.05(b) is not intended to affect any rights
the Partnership may have under any contract or agreement with any of its
employees.
SECTION 6.06. Partnership Funds. The funds of the Partnership shall
be deposited in such account or accounts as are designated by the General
Partner. The Partnership shall at all times maintain books of account which
indicate the amount of funds of the Partnership on deposit in each such
account. All withdrawals from or charges against such accounts shall be made
by the General Partner by its officers or agents, or by employees or agents of
the Partnership. Funds of the Partnership may be invested as determined by the
General Partner, except in connection with acts otherwise prohibited by this
Agreement.
SECTION 6.07. Loans from the General Partner and Others; Transactions
and Contracts with Affiliates. (a) The General Partner, Alliance Capital or
any Affiliate of either of them may (but shall have no obligation to) lend to
the Partnership funds needed by the Partnership for such periods of time as
the General Partner may determine at an interest rate equal to the cost to the
General Partner, Alliance Capital or such Affiliate of obtaining such funds
from an unaffiliated third party.
(b) The Partnership will not lend any funds to the General Partner,
Alliance Capital or any Affiliate of either of them. Except as provided by
this Agreement or the Reorganization Agreement, the Partnership will not make
any investments in the General Partner or any Affiliates thereof except on
terms approved by the General Partner as being comparable to (or more
favorable to the Partnership than) those that would prevail in a transaction
with an unaffiliated party.
(c) The assumption of liabilities and/or obligations by the
Partnership pursuant to the Reorganization Agreement and each other agreement,
document and instrument as the General Partner may deem necessary or
appropriate to consummate the transactions contemplated thereby is hereby
ratified, confirmed and approved by all Partners and Unitholders.
(d) The General Partner may enter into an agreement with an Affiliate
of the General Partner to render services to the Partnership on terms approved
by the General Partner in good faith as being comparable to (or more favorable
to the Partnership than) those that would prevail in a transaction with an
unaffiliated party.
(e) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except on terms approved by the General
Partner in good faith as being comparable to (or more favorable to the
Partnership than) those that would prevail in a transaction with an
unaffiliated party; provided, however, that the requirements of this Section
6.07(e) shall be deemed to be satisfied as to any sale, transfer or conveyance
consummated by the General Partner in accordance with clause (y) of the first
sentence of Section 2.05.
(f) Neither the General Partner nor any of its Affiliates shall use
or lease any property (including, but not limited to, office equipment,
computers, vehicles, aircraft and office space) of the Partnership except on
terms approved by the General Partner in good faith as being comparable to (or
more favorable to the Partnership than) those that would prevail in a
transaction with an unaffiliated party.
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(g) Without limitation of Sections 6.07(a) through 6.07(f) above, and
notwithstanding anything to the contrary in this Agreement, any transactions
or arrangements with one or more Indemnitees described or disclosed in the
Reorganization Agreement, the Indemnification and Reimbursement Agreement and
the Proxy Statement are hereby ratified, confirmed and approved by all
Partners and Unitholders.
(h) Whenever a particular transaction or arrangement is required
under this Agreement to be "on terms approved by the General Partner as being
comparable to (or more favorable to the Partnership than) those that would
prevail in a transaction with an unaffiliated party", that requirement shall
be conclusively presumed to be satisfied as to any transaction or arrangement
that (x) is, in the reasonable and good faith judgment of the General Partner,
on terms substantially comparable to (or more favorable to the Partnership
than) those that would prevail in a transaction with an unaffiliated party or
(y) has been approved by a majority of those directors of the General Partner
who are not also directors, officers or employees of an Affiliate of the
General Partner.
(i) The General Partner or any Affiliate thereof may (but shall have
no obligation to) conduct, through such representatives as it may designate,
audits and other investigations of the Partnership and Persons controlled by
it as the General Partner may determine in its sole discretion. Except as the
General Partner or such Affiliate may expressly agree in writing with the
Partnership in a document that refers to this Section 6.07(i) and is approved
in the manner set forth in clause (y) of Section 6.07(h), (x) such audit or
investigation shall be without charge to the Partnership and Persons
controlled by it, (y) such audit or investigation shall be deemed to have been
undertaken solely for the benefit of the General Partner or such Affiliate and
neither of them shall have any obligation to divulge the results thereof to
the Partnership or any Partner or Unitholder or to take any action based
thereon and (z) no Indemnitee or other Person conducting or otherwise involved
in such audit or investigation shall have any obligation or liability to the
Partnership, the Partners or Unitholders by reason of such audit or
investigation or the manner in or care (or lack thereof) with which it is
conducted.
SECTION 6.08. Liability of the General Partner and Other Indemnities.
(a) Whenever this Agreement or any other agreement contemplated hereby
provides that the General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its "sole discretion" or "discretion" or
under a grant of similar authority or latitude, the General Partner or such
Affiliate shall be entitled to consider only such interests and factors as it
desires and shall have no duty or obligation to give any consideration to any
interest of or other factors affecting the Partnership or any Partner or
Unitholder, or (ii) in its "good faith" or under another express standard, the
General Partner or such Affiliate shall act under such express standard and
shall not be subject to any other or different standards imposed by this
Agreement, any other agreement contemplated hereby or applicable law or in
equity or otherwise.
(b) Neither the General Partner nor any other Indemnitee shall be
liable for monetary damages to the Partnership, Partners or Unitholders for
errors in judgment or for breach of fiduciary duty (including breach of any
duty of care or any duty of loyalty) unless it is established (the Person
asserting such liability having the burden of proof) that the General
Partner's or such other Indemnitee's action or failure to act involved an act
or omission undertaken with deliberate intent to cause injury to the
Partnership, constituted actual fraud by the General Partner or such
Indemnitee, or was undertaken with reckless disregard for the best interests
of the Partnership or actual bad faith on the part of the General Partner or
such Indemnitee. No Indemnitee shall have any liability to the Partnership,
Partners or Unitholders for any action permitted by Section 6.05.
(c) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to
the Partnership or to any Partner, any such Indemnified Person, including the
General Partner, acting under this Agreement shall not be liable to the
Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement. The provisions of this Agreement, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise
existing in law or in equity, are agreed by the Partners to replace such other
duties and liabilities of such Indemnified Person.
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SECTION 6.09. Indemnification. (a) To the fullest extent permitted by
law, each Indemnified Person (which for the purposes of this Section 6.09
shall mean (i) the General Partner, (ii) any Departing Partner, (iii) each
Affiliate of the General Partner or any Departing Partner, (iv) each director
of the General Partner in his capacity as such and (v) each other Indemnitee
that is designated as an Indemnified Person in an agreement or policy of the
General Partner) shall be indemnified and held harmless by the Partnership
from and against any and all losses, claims, damages, liabilities, whether
joint or several, expenses (including reasonable legal fees and expenses),
judgments, fines, settlements and other amounts arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which any Indemnified Person may be
involved, or threatened to be involved, as a party or otherwise, by reason of
(A) its present or former status as (x) the General Partner or a Departing
Partner, or an Affiliate thereof, (y) an officer, director, employee, partner,
agent or trustee of the Partnership, the General Partner or a Departing
Partner, or an Affiliate thereof, or (z) a Person serving at the request of
the Partnership in another entity in a similar capacity, or (B) any action
taken or omitted in any such capacity, if with respect to the matter at issue
the Indemnified Person acted in good faith and in a manner it reasonably
believed to be in, or not opposed to, the best interests of the Partnership
and, with respect to any criminal proceeding, had no reasonable cause to
believe its conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
the Indemnified Person acted in a manner contrary to that specified above. Any
designation of an Indemnitee as an Indemnified Person pursuant to clause (v)
of the first sentence of this Section 6.09(a) may (i) be made with respect to
an individual Indemnitee or a group of Indemnitees, (ii) be revoked or
modified by the General Partner in its discretion except to the extent, if
any, otherwise specified in the agreement or policy effecting such
designation, and (iii) be subject to such limitations and conditions as may be
specified in the agreement or policy effecting such designation.
(b) To the fullest extent permitted by law, expenses (including
reasonable legal fees) incurred by an Indemnified Person in defending any
claim, demand, action, suit or proceeding subject to this Section 6.09 shall,
from time to time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Partnership of an undertaking by or on behalf of the Indemnified Person to
repay such amount if it shall be determined that such Person is not entitled
to be indemnified as authorized in Section 6.09(a).
(c) The advancement of expenses and indemnification provided by this
Section 6.09 shall be in addition to any other rights to which an Indemnified
Person may be entitled under any agreement, pursuant to any vote of the
Unitholders or Limited Partners, as a matter of law or otherwise, as to an
action in the Indemnified Person's capacity as (i) the General Partner, a
Departing Partner or an Affiliate thereof, (ii) an officer, director,
employee, partner, agent or trustee of the General Partner, any Departing
Partner or an Affiliate thereof, or (iii) a Person serving at the request of
the Partnership in another entity in a similar capacity, shall continue as to
an Indemnified Person who has ceased to serve in such capacity and shall inure
to the benefit of the heirs, successors, assigns, executors and administrators
of such Indemnified Person.
(d) The Partnership may purchase and maintain insurance on behalf of
the General Partner and such other Indemnified Persons as the General Partner
shall determine against any liability that may be asserted against or expense
that may be incurred by such Person in connection with the Partnership's
activities, regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
(e) For purposes of this Section 6.09, the Partnership shall be
deemed to have requested an Indemnified Person to serve as fiduciary of an
employee benefit plan whenever the performance by such Indemnified Person of
its duties to the Partnership also imposes duties on it or otherwise involves
services by it to such Plan or participants or beneficiaries of such Plan;
excise taxes assessed on an Indemnified Person with respect to an employee
benefit plan pursuant to applicable law shall be deemed to be "fines" within
the meaning of Section 6.09(a); and action taken or omitted by an Indemnified
Person with respect to an employee benefit plan in the
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performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of such plan shall be deemed to
be for a purpose which is in, or not opposed to, the best interests of the
Partnership.
(f) Any indemnification hereunder shall be satisfied solely out of
any insurance obtained pursuant to Section 6.09(d) or the assets of the
Partnership. In no event may an Indemnified Person subject the Partners or
Unitholders or Affiliates or any of them to personal liability by reason of
indemnification hereunder.
(g) An Indemnified Person shall not be denied indemnification in
whole or in part under this Section 6.09 because the Indemnified Person had an
interest in the transaction with respect to which the indemnification applied
if the transaction was otherwise permitted by the terms of this Agreement.
(h) The indemnification provided in this Section 6.09 is for the
benefit of the Indemnified Persons and their respective heirs, successors,
assigns, executors and administrators and shall not be deemed to create any
right to indemnification for the benefit of any other Persons.
(i) The provisions of this Section 6.09 are not intended to be
exclusive and the General Partner may cause the Partnership to enter into an
indemnification agreement with any Indemnified Person, or to adopt policies
covering any group of Indemnified Persons on such terms as the General Partner
may determine in its sole discretion.
SECTION 6.10. Other Matters Concerning the General Partner. (a) The
General Partner may rely upon and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, bond, debenture or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The General Partner may consult with legal counsel (including,
but not limited to, counsel who may be regular counsel to, or an employee of,
the Partnership, the General Partner or any Affiliate thereof), accountants,
appraisers, management consultants, investment bankers and other consultants
and advisers selected by it and any opinion of any such Person as to matters
that the General Partner reasonably believes to be within such Person's
professional or expert competence shall be full and complete authorization and
protection in respect to any action taken or suffered or omitted by the
General Partner hereunder in good faith and in accordance with such opinion.
(c) The General Partner shall not provide any Limited Partner, in
connection with such Limited Partner's Partnership Interest, or any
Unitholder, in connection with such Unitholder's Units, with any mandatory or
discretionary right to purchase any type of security issued by the General
Partner or its Affiliates.
(d) The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney- or attorneys-in-fact. Each such
attorney shall, to the extent provided by the General Partner in the power of
attorney, have full power and authority to do and perform all and every act
and duty which is permitted or required to be done by the General Partner
hereunder.
SECTION 6.11. Registration Rights of the General Partner and its
Affiliates. (a) In the event that (i) the General Partner (in its capacity as
General Partner or as a Unitholder or Limited Partner or as Departing Partner)
or any of its Corporate Affiliates (including for purposes of this Section
6.11 Persons that were Affiliates on November 19, 1987, notwithstanding that
they may later no longer be Affiliates) holds Units, Limited Partnership
Interests or other securities of the Partnership or holds Alliance Capital LP
Units and (x) desires to sell a number of such Units, Limited
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Partnership Interests or other securities, or desires to exchange a number of
Alliance Capital LP Units for Units pursuant to Section 6.17 and to sell a
number of such Units, which together with any Units, Limited Partnership
Interests or other securities of the Partnership it desires to sell constitute
at least 5% of the aggregate number of such Units, Limited Partnership
Interests or other securities outstanding or (y) desires to sell a lesser
number of such Units, Limited Partnership Interests or other securities, or to
exchange a number of Alliance Capital LP Units for Units pursuant to Section
6.17 and to sell a lesser number of such Units, for an aggregate proposed
offering price estimated to be at least $15,000,000, (ii) Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) is not
available to enable the General Partner or such Corporate Affiliate to dispose
of the number of Units, Limited Partnership Interests or other securities it
desires to sell at the time it desires to do so, then upon the request (a
"Demand") of the General Partner or such Corporate Affiliate, the Partnership
shall file with the Commission as promptly as practicable after receiving such
Demand and use its best efforts to cause to become effective and remain
effective for a period of time sufficient for sale, a registration statement
under the Securities Act registering the offering and sale of the number of
Units, Limited Partnership Interests or other securities specified by the
General Partner or such Corporate Affiliate (which, at the option of the
General Partner or such Corporate Affiliate, may include Units owned by
directors, officers or employees of the General Partner, the Partnership or
their respective Affiliates); provided, however, that if the aggregate number
of such Units, Limited Partnership Interests or other securities held by the
General Partner and/or any of its Corporate Affiliates at the time of any
Demand constitutes less than 20% of the aggregate number of such Units,
Limited Partnership Interests or other securities outstanding, the General
Partner and its Corporate Affiliates shall allow at least twelve consecutive
months to expire from the date of any Demand that resulted in a registration
statement that became effective (and with respect to which the Partnership
satisfied its obligations under this Section 6.11) before making a subsequent
request. In connection with any registration pursuant to the preceding
sentence, the Partnership shall promptly prepare and file (x) such documents
as may be necessary to register or qualify the securities subject to such
registration under the securities laws of such states as the General Partner
or such Affiliate shall reasonably request, and (y) such documents as may be
necessary to apply for listing or to list the securities subject to such
registration on such National Securities Exchange as the General Partner or
such Affiliate shall reasonably request, and to do any and all other acts and
things that may reasonably be necessary or advisable to enable the General
Partner or such Affiliate to consummate a public sale of such Units, Limited
Partnership Interests or other securities in such states. Except as set forth
in Section 6.11(c) below, all costs and expenses of any such registration and
offering shall be paid by the General Partner or such Affiliate, without
reimbursement by the Partnership.
(b) If the Partnership shall at any time propose to file a
registration statement under the Securities Act for an offering of securities
of the Partnership for cash (other than an offering relating solely to an
employee benefit plan), the Partnership shall use its best efforts to include
in such registration statement such number or amount of the same class of
securities held by the General Partner, any of its Corporate Affiliates and
any directors, officers or employees of the General Partner, the Partnership
or their respective Affiliates as the General Partner or any of such Corporate
Affiliates shall request. If the proposed offering pursuant to this Section
6.11(b)) shall be an underwritten offering, then, in the event that the
underwriters advise the Partnership and the General Partner or such Affiliates
in writing that in its opinion the inclusion of all or some of the General
Partner's, such Affiliate's or such directors', officers' or employees'
securities of the same class would adversely and materially affect the success
of the offering, (x) the Partnership shall include in such offering only that
number or amount, if any, of such securities held by the General Partner, such
Affiliates or such directors, officers or employees which, in the opinion of
the underwriters, will not so adversely affect the offering and (y) the
General Partner will determine the number or amount of such securities held by
each of the General Partner, such Affiliates or such officers, directors or
employees which will be included in such offering. Any offering pursuant to
any registration pursuant to this Section 6.11(b) shall be on terms,
including, but not limited to, identity of the underwriters and price,
determined by the General Partner in its sole discretion, and any Corporate
Affiliate, director, officer or employee including securities pursuant to this
Section 6.11(b) shall be entitled only to sell its securities on such terms or
to elect not to include them in such registration. The General Partner, such
Affiliate or such directors, officers or employees shall bear the expense of
all underwriting discounts and commissions attributable to the securities sold
for its own account and shall reimburse the Partnership for all incremental
costs incurred by the Partnership in connection with such registration
resulting from the inclusion of securities held by the General Partner, such
Affiliate or such directors, officers or employees.
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(c) If underwriters are engaged in connection with any registration
referred to in this Section 6.11, the Partnership shall enter into an
underwriting agreement and provide indemnification, representations,
covenants, opinions, comfort letters, and other assurances to the underwriters
all in form and substance reasonably satisfactory to such underwriters.
Further, in addition to and not in limitation of the Partnership's obligation
under Section 6.09, the Partnership shall, to the fullest extent permitted by
law, indemnify and hold harmless each Person whose securities are being
registered for sale pursuant to this Section 6.11 from and against any losses,
claims, demands, actions, causes of action, assessments, damages, liabilities
(joint or several), costs, and expenses (including, but not limited to,
interest, penalties, and reasonable attorneys' fees and disbursements),
imposed upon or incurred by any such indemnified Person, directly or
indirectly, under the Securities Act or otherwise (hereinafter referred to in
this Section 6.11(c) as a "claim" and in the plural as "claims"), based upon,
arising out of, or resulting from any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which any Units, Limited Partnership Interests or other securities of the
Partnership were registered under the Securities Act or any state securities
or blue sky laws, in any preliminary prospectus (if used prior to the
effective date of such registration statement), or in any summary or final
prospectus or in any amendment or supplement thereto (if used during the
period the Partnership is required to keep the registration statement
current), or arising out of, based upon or resulting from the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements made therein not misleading;
provided, however, that the Partnership shall not be liable to the extent that
any such claim arises out of, is based upon or results from an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, such preliminary, summary or final prospectus, or
such amendment or supplement, in reliance upon and in conformity with written
information with respect to the indemnified Person furnished to the
Partnership by or on behalf of such indemnified Person specifically for use in
the preparation thereof.
(d) The provisions of Sections 6.11(a) and 6.11(b) shall continue to
be applicable with respect to any Person that ceases to be a general partner
of the Partnership (and any of such Person's Corporate Affiliates), during a
period of three years subsequent to the effective date of such cessation and
for so long thereafter as is required for such Person (or any of such Person's
Corporate Affiliates) to sell all of the Units or other securities of the
Partnership with respect to which it has requested during such three-year
period that a registration statement be filed. The provisions of Section
6.11(c) shall continue in effect thereafter.
(e) The rights of the General Partner and its Affiliates under this
Section 6.11 may be assigned by the General Partner and any of its Affiliates
to any Person acquiring Units or Limited Partnership Interests from the
General Partner or any of its Affiliates (without reduction of the rights of
the assignor), provided that such Person (if not admitted as a General
Partner) shall be required to allow at least twelve consecutive months to
expire from the date of any Demand that resulted in a registration statement
that became effective before making a subsequent Demand and shall not be
entitled to the rights of the General Partner pursuant to the penultimate
sentence of Section 6.11(b) and clause (y) of the sentence preceding that
sentence, and shall be subject to determinations made by the General Partner
pursuant to those provisions.
SECTION 6.12. Title to Partnership Assets. All Partnership Assets
shall be deemed to be owned by the Partnership as an entity, and no Partner or
Unitholder, individually or collectively, shall have any ownership interest in
such Partnership Assets or any portion thereof. Title to any or all of the
Partnership Assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine. The
General Partner hereby declares and warrants that any Partnership Assets for
which legal title is held in the name of the General Partner shall be held in
trust by the General Partner for the use and benefit of the Partnership in
accordance with the terms and provisions of this Agreement, and any applicable
deed or similar title document shall so indicate. All Partnership Assets shall
be recorded as the property of the Partnership on its books and records,
irrespective of the name in which legal title to such Partnership Assets is
held.
SECTION 6.13. Sale of the Partnership's Assets. Notwithstanding any
other provision of this Agreement, the General Partner shall not cause the
Partnership to sell, transfer, pledge, assign, convey or otherwise dispose of,
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in a single transaction or series of related transactions, all or
substantially all of the Partnership Assets (other than pursuant to Section
2.05) unless (a) (i) such sale, transfer, pledge, assignment, conveyance or
other disposition has received Majority Approval (Majority Outside Approval if
the General Partner or any of its Corporate Affiliates have any direct or
indirect equity interest in any Person acquiring Partnership Assets in such
transaction) and (ii) the Partnership shall have received a Tax Determination
and Limited Liability Determination or (b) such sale, transfer, pledge,
assignment, conveyance or other disposition is in connection with a
liquidation of the Partnership pursuant to Article 15 or Section 6.15.
SECTION 6.14. No New Business. The Partnership shall not acquire all
or substantially all of the outstanding capital stock or assets of, or enter
into any partnership or joint venture with, any Person, other than Alliance
Capital, unless (i) such acquisition, partnership or joint venture is in
accordance with Sections 3.01 and 3.02 and (ii) it receives a Tax
Determination with respect thereto. Neither the General Partner nor the
Partnership shall become the general partner of any other partnership, other
than Alliance Capital, or joint venture unless such action is permitted by
Sections 6.01(a)(viii) and 6.05(a) (in the case of the General Partner) and
the Partnership receives a Tax Determination with respect thereto.
SECTION 6.15. Contribution of Assets to Alliance Capital. Following
the consummation of the Reorganization, in the event that the Partnership
acquires any business, assets or property (other than cash and cash
equivalents required for expenses, taxes, working capital requirements or
reserves of the Partnership), the General Partner may cause the Partnership to
make a Contribution to Alliance Capital consisting of such business, assets or
property in exchange for the issuance by Alliance Capital of additional
Alliance Capital LP Units to the Partnership; provided that:
(a) if the Contribution is cash equal to the net proceeds obtained
from the sale or issuance of Units or Limited Partnership Interests, (x) the
Partnership shall receive a number of Alliance Capital LP Units equal to the
number of Units or Limited Partnership Interests so sold or issued and (y) the
Partnership shall make such Contribution as soon as practicable after the
receipt of such net proceeds;
(b) if the Contribution consists of assets obtained in exchange for
the sale or issuance of Units or Limited Partnership Interests, (x) the
Partnership shall receive a number of Alliance Capital LP Units equal to the
number of Units or Limited Partnership Interests so sold or issued and (y) the
Partnership shall make such Contribution as soon as practicable after the
receipt of such assets; and
(c) if the Contribution is other than pursuant to clauses (a) or (b)
of this proviso, or if any event occurs which the general partner of Alliance
Capital in its sole discretion determines would render inappropriate the use
of the one-for-one exchange ratio of Alliance Capital LP Units for Units or
Limited Partnership Interests, and vice versa, the number of Alliance Capital
LP Units to be received by the Partnership in exchange for such Contribution
for purposes of this Section 6.15(c) shall be determined by the general
partner of Alliance Capital in its sole discretion.
SECTION 6.16. Issuances of Units Pursuant to Employee Benefit Plans.
Upon the exercise of any awards to purchase or otherwise acquire Units or
other securities of the Partnership pursuant to any employee benefit plan
sponsored by the General Partner, the Partnership, Alliance Capital or any
Person controlled by the Partnership or Alliance Capital and/or the
entitlement of any plan participant to receive Units thereunder in accordance
with the terms of such plan, at the request of Alliance Capital: (i) the
Partnership shall issue to the plan participant Units necessary to satisfy
such award in exchange for the exercise price or other consideration (if any)
to be paid by the plan participant in respect of such award; and (ii) the
Partnership shall contribute any such exercise price or other consideration to
Alliance Capital in exchange for a number of Alliance Capital LP Units equal
to the Units issued in satisfaction of such award. Such issuances and payments
shall be deemed to occur on the date on which the award is exercised, or the
date on which the plan participant is entitled to receive Units thereunder.
The General Partner shall do all things it deems to be necessary or advisable
in connection with the issuance of any Units pursuant to this
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Section 6.16, including, but not limited to, causing such Units to be
registered or qualified pursuant to the Securities Act and the laws of any
state of the United States as the General Partner deems appropriate. If any
Units are issued by the Partnership pursuant to any such employee benefit plan
and such Units are forfeited or are otherwise returned to the Partnership,
then the Partnership will return to Alliance Capital the corresponding
Alliance Capital LP Units and Alliance Capital will pay to the Partnership the
amounts, if any, which the Partnership is required to pay to the plan
participant whose Units were forfeited or returned to the Partnership.
SECTION 6.17. Exchanges of Alliance Capital LP Units for Units. The
General Partner shall cooperate with Alliance Capital and cause the
Partnership to take all actions as it may deem necessary, appropriate or
advisable to effect exchanges from time to time of Alliance Capital LP Units
for an equal number of Units as may be requested by Alliance Capital pursuant
to the Alliance Capital Partnership Agreement; provided, however, that the
Partnership shall not be required to undertake any such exchange if the
General Partner determines, in its sole discretion, that in connection with
such exchange the Partnership would be required to disclose material
non-public information which it believes would be inadvisable to disclose.
Such actions shall include, without limitation, causing to be registered or
qualified such Units pursuant to the Securities Act and the laws of any state
of the United States as the General Partner deems appropriate.
SECTION 6.18. Repurchase of Units. At Alliance Capital's request from
time to time, the Partnership shall repurchase outstanding Units or Limited
Partnership Interests using funds provided by Alliance Capital. Upon such
repurchase, the aggregate number of Alliance Capital LP Units held by the
Partnership shall be reduced by a number equal to the aggregate number of
Units and Limited Partnership Interests so repurchased; provided that if any
event occurs which the General Partner in its sole discretion determines would
render inappropriate the use of the one-for-one exchange ratio of Alliance
Capital LP Units for Units or Limited Partnership Interests, and vice versa,
such number shall be determined by the General Partner in its sole discretion.
The Partnership shall use the funds provided by Alliance Capital pursuant to
this Section 6.18 solely for the repurchase of Units or Limited Partnership
Interests (together with any expenses incurred in connection with such
repurchases) and, to the extent that any excess funds remain following such
repurchases, the Partnership shall return such funds to Alliance Capital.
ARTICLE 7
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS AND UNITHOLDERS
SECTION 7.01. Limitation of Liability. The Unitholders and Limited
Partners shall have no liability under this Agreement except as provided in
this Agreement or by applicable law.
SECTION 7.02. Management of Business. No Limited Partner or
Unitholder in its capacity as such shall take part in the operation,
management or control of the Partnership's business, transact any business in
the Partnership's name or have the power to sign documents for or otherwise
act on behalf of or bind the Partnership. The transaction of any such business
by any such Partner or Unitholder or employee or agent of the Partnership
shall not affect, impair or eliminate the limitations on the liability of any
such Limited Partner or Unitholder under this Agreement.
SECTION 7.03. Outside Activities. The General Partner (acting through
Alliance Capital), each other Partner and each Unitholder shall have the right
to engage in the business of providing investment advisory and management
services and to engage in and possess an interest in other business ventures
of any and every type and description, independently or with others, including
business interests and activities in direct competition with the Partnership.
Neither the Partnership, any of the Partners or Unitholders nor any other
Person shall have any rights by virtue of this Agreement, or the Partnership
relationship created hereby in any such business ventures, and no Partner or
Unitholder shall have any obligation as a result thereof to offer any interest
in any such business ventures to the Partnership, any Partner, Unitholder or
any other Person. This Section 7.03 is not intended to affect any rights the
Partnership may have under any contract or agreement with any of its
employees.
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SECTION 7.04. Return of Capital; Additional Capital Contributions.
(a) No Partner or Unitholder shall be entitled to the withdrawal or
return of his Contribution (if any) or any amount of his Capital Account,
except to the extent, if any, that Distributions made pursuant to this
Agreement or upon termination of the Partnership or purchases of Units or
Limited Partnership Interests by the Partnership may be considered as such by
law, and then only to the extent provided for in this Agreement.
(b) Subject to the further provisions of this Section 7.04(b), no
Limited Partner or Unitholder shall have any personal liability whatsoever in
his capacity as a Limited Partner or Unitholder, whether to the Partnership,
to any of the Partners or Unitholders or to the creditors of the Partnership,
for the debts, liabilities, contracts or other obligations of the Partnership
or for any losses of the Partnership. Each Unit and each Limited Partnership
Interest, upon the issuance thereof, shall be fully paid and not subject to
assessment for additional Contributions. No Limited Partner or Unitholder
shall be required to lend any funds to the Partnership or, after his
Contribution has been paid, to make any further contribution to the capital of
the Partnership. Under Sections 17-607 and 17-804 of the Delaware Act, a
limited partner of a limited partnership may, under certain circumstances, be
required to return to the partnership amounts previously distributed to such
limited partner (i) if, at the time of, and after giving effect to, such
Distribution, the liabilities of the partnership, other than liabilities to
partners on account of their partnership interests, exceeded the fair value of
its assets or, (ii) in connection with a liquidating distribution after
dissolution of the partnership, such limited partner receives a Distribution
prior to the partnership paying, or making reasonable provision to pay, claims
of creditors. It is the intention and agreement of the Partners and
Unitholders that if any Unitholder or Limited Partner (other than the Assignor
Limited Partner) has received a Distribution from the Partnership that is
required to be returned to, or for the account of, the Partnership or
Partnership creditors, such obligation shall be the obligation of the
Unitholder or Limited Partner who receives such Distribution, and not the
obligation of any General Partner or the Assignor Limited Partner; provided,
however, that nothing contained in this Agreement shall be deemed to impose
upon the transferee of a Unit under Section 12.04 any obligation to return to
the Partnership or any Partnership creditor any Distribution made to a prior
holder of such Unit.
SECTION 7.05. Rights of Limited Partners and Unitholders Relating to
the Partnership. In addition to other rights provided by this Agreement or by
applicable law, the Limited Partners and Unitholders shall have the following
rights relating to the Partnership:
(a) Each Limited Partner and Unitholder, and each Limited Partner's
and Unitholder's duly authorized representatives, shall have the right upon
reasonable notice and at reasonable times and at such Limited Partner's or
Unitholder's own expense, but only upon written request and for a purpose
reasonably related to such Person's interest as a Limited Partner or
Unitholder, (i) to have reasonable information regarding the status of the
business and financial condition of the Partnership, (ii) to inspect and copy
the books of the Partnership and other reasonably available records and
information concerning the operation of the Partnership, including the
Partnership's federal, state and local income tax returns for each year, (iii)
to have on demand a current list of the full name and last known business,
residence or mailing address of each Limited Partner and Unitholder, (iv) to
have reasonable information regarding the Net Value of any Contribution made
by any Partner or Unitholder and the date on which each such Person became a
Partner or Unitholder, (v) to have a copy of this Agreement and the
Certificate of Limited Partnership and all amendments thereto, and (vi) to
have any other information regarding the affairs of the Partnership as is just
and reasonable.
(b) Anything in Section 7.05(a) to the contrary notwithstanding, the
General Partner may keep confidential from the Limited Partners and
Unitholders, and each Limited Partner's and Unitholder's duly authorized
representatives, for such period of time as the General Partner deems
reasonable, any information that the General Partner reasonably believes to be
in the nature of trade secrets or other information the disclosure of which
the General Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or its business or which the
Partnership is required by law or by agreements with third parties to keep
confidential.
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SECTION 7.06. Agreement to be Bound by Terms of Partnership
Agreement. By accepting a Unit Certificate or Certificate, and as a condition
to entitlement to any rights in or benefits with respect to the Units or
Limited Partnership Interests evidenced thereby, each Unitholder and Limited
Partner will be deemed to have agreed to comply with, and be bound by, all of
the terms, conditions, rights and obligations set forth in this Agreement,
including, but not limited to, the grant of the power of attorney set forth in
Section 10.01.
ARTICLE 8
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 8.01. Records and Accounting. The General Partner shall keep
or cause to be kept complete and accurate books and records with respect to
the Partnership's business, assets, liabilities, operations and financial
condition, which books and records shall at all times be kept at the principal
office of the Partnership. Any records maintained by the Partnership in the
regular course of its business, including the names and addresses of Partners
and Unitholders, books of account and records of Partnership proceedings, may
be kept on or be in the form of punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided that the
records so kept are convertible into clearly legible written form within a
reasonable period of time. The books of the Partnership shall be maintained,
for financial reporting purposes, on the accrual basis in accordance with
generally accepted accounting principles.
SECTION 8.02. Fiscal Year. The fiscal year of the Partnership shall
be the same as its taxable year for federal income tax purposes, which shall
be the calendar year or such other year that is permitted under the Code as
the General Partner in its sole discretion shall determine.
SECTION 8.03. Reports. (a) The General Partner shall use its best
efforts to cause to be mailed not later than 90 days after the close of each
fiscal year to each Limited Partner and Unitholder, as of the last day of that
fiscal year, reports containing financial statements of each of the
Partnership and Alliance Capital for the fiscal year, including a balance
sheet and statements of operations, partners' equity and cash flow, all of
which shall be prepared in accordance with generally accepted accounting
principles and shall be audited by the Partnership's Accountants.
(b) The General Partner shall use its best efforts to cause to be
mailed not later than 45 days after the close of each fiscal quarter, except
the last fiscal quarter of each fiscal year, to each Limited Partner and
Unitholder as of the last day of such fiscal quarter, a quarterly report for
the fiscal quarter containing such financial and other information (which need
not be audited) as the General Partner deems appropriate.
The General Partner's obligations set forth in this Section 8.03 may
be satisfied by delivering to each Limited Partner and Unitholder a copy of
the Form 10-K or 10-Q (containing separate financial statements of Alliance
Capital), as the case may be, or such other periodic reports containing
comparable financial information as may be filed by the Partnership pursuant
to the Securities Exchange Act.
SECTION 8.04. Other Information. The General Partner may release
such information concerning the operations of the Partnership to such sources
as is customary in the industry or required by law or regulation of any
regulatory body.
ARTICLE 9
TAX MATTERS
SECTION 9.01. Preparation of Tax Returns. The General Partner shall
arrange for the preparation and timely filing of all returns relating to
Partnership income, gains, losses, deductions and credits, as necessary for
federal, state and local income tax purposes, and shall use its best efforts
to cause to be mailed to the Limited Partners and Unitholders within 90 days
after the close of the taxable year the tax information reasonably required
for federal, state and local income tax reporting purposes.
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SECTION 9.02. Tax Elections. (a) The General Partner may, in its sole
discretion, make the election under Section 754 of the Code in accordance with
applicable regulations thereunder. In the event the General Partner makes such
election, the General Partner reserves the right to seek to revoke such
election upon its determination that such revocation is in the best interests
of the Unitholders and Limited Partners. For purposes of computing the
adjustments under Section 743(b) of the Code, the General Partner shall be
authorized (but not required) to adopt a convention whereby the price paid by
a transferee of Units will be deemed to be the lowest quoted trading price of
the Units on any national securities exchange on which such Units are traded
during the calendar month in which such transfer is deemed to occur pursuant
to Section 5.07(b) without regard to the actual price paid by such transferee.
(b) To the extent permissible under Section 709 of the Code, the
Partnership shall elect to deduct expenses incurred in the Reorganization,
including the expenses arising from the Alliance Capital Contribution, ratably
over a 60-month period as provided in Section 709 of the Code.
(c) Except as otherwise provided herein, the General Partner shall
determine in its sole discretion whether to make any other elections available
under the Code or under any state or local tax laws on behalf of the
Partnership.
SECTION 9.03. Tax Controversies. Subject to the provisions hereof,
the General Partner is designated as the Tax Matters Partner (as defined in
Section 6231 of the Code) and is authorized and required to represent the
Partnership (at the Partnership's expense) in connection with all examinations
of the Partnership's affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. Each Limited Partner and
Unitholder agrees to cooperate with the General Partner and to do or so
refrain from doing any or all things reasonably required by the General
Partner to conduct such proceedings.
SECTION 9.04. Withholding. Notwithstanding any other provision of
this Agreement, the General Partner is authorized to take any action that it
determines to be necessary or appropriate to cause the Partnership to comply
with any withholding and reporting obligations imposed by law, including
pursuant to Sections 1441, 1442, 1445 and 1446 of the Code.
SECTION 9.05. Entity-level Deficiency Collections. In the event the
Partnership is required by applicable law to pay any federal, state or local
income tax on behalf of any Partner or Unitholder or any former Partner or
Unitholder the General Partner shall have the authority, in its sole
discretion, and without the approval of any Partner or Unitholder, to amend
this Agreement as the General Partner determines to be necessary or
appropriate: (i) to provide for the payment of such taxes and otherwise to
enable the Partnership to comply with such law; (ii) to withhold an
appropriate amount from any Distributions to be made in the future to
Unitholders or Partners on whose behalf such taxes were paid, and to treat
such amounts as having been distributed to such Partners or Unitholders out of
Available Cash Flow; (iii) to authorize the General Partner, on behalf of the
Partnership to take all necessary or appropriate action to collect all or any
portion of such taxes from the Partners or Unitholders (whether current or
former Partners or Unitholders); (iv) to treat such taxes as an expense of the
Partnership in computing Available Cash Flow to the extent appropriate to
reflect any amounts which cannot be collected (or withheld pursuant to clause
(ii)) from current or former Partners or Unitholders and to treat any
collection thereof as an addition to Available Cash Flow; and (v) to reflect
such other changes as the General Partner determines are necessary or
appropriate to implement the foregoing. If the Partnership is required to pay
any such taxes on behalf of the General Partner or any Corporate Affiliate,
the General Partner will either pay directly to the appropriate taxing
authority or make funds available to the Partnership to pay the General
Partner's share of such taxes and will take all necessary or appropriate
action to collect from its Corporate Affiliates, or cause such Corporate
Affiliate to pay directly to the appropriate taxing authority, such Corporate
Affiliate's share of such taxes.
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ARTICLE 10
POWER OF ATTORNEY
SECTION 10.01. Power of Attorney. Each Person who accepts Units and
each Limited Partner constitutes and appoints each of the General Partner and
the Liquidating Trustee severally (and any successor to either thereof by
merger, transfer, election or otherwise), and each of the General Partner's
and the Liquidating Trustee's authorized officers and attorneys in-fact, with
full power of substitution, as his true and lawful agents and
attorneys-in-fact, with full power and authority in his name, place and stead
to:
(a) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (i) all certificates and other instruments
including, at the option of the General Partner or Liquidating Trustee, as the
case may be, this Agreement and the Certificate of Limited Partnership and all
amendments and restatements thereof, that the General Partner or Liquidating
Trustee, as the case may be, deems appropriate or necessary to carry out the
purposes of this Agreement and to form, qualify, or continue the existence or
qualification of the Partnership as a limited partnership (or a partnership in
which the Limited Partners have limited liability) in the State of Delaware
and under the Delaware Act and in all jurisdictions in which the Partnership
may or may wish to conduct business or own property; (ii) all instruments that
the General Partner or Liquidating Trustee, as the case may be, deems
appropriate or necessary to reflect any amendment, change or modification of
this Agreement in accordance with its terms; (iii) all conveyances and other
instruments or documents that the General Partner or Liquidating Trustee, as
the case may be, deems appropriate or necessary to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this Agreement
(including a certificate of cancellation); and (iv) all instruments
(including, if required by law, this Agreement and the Certificate of Limited
Partnership and amendments and restatements thereof) relating to the
admission, withdrawal or substitution of any Partner, the initial or increased
Contribution of any Partner or the determination of the rights, preferences
and privileges of any class of Limited Partnership Interests issued pursuant
to Section 4.02; and
(b) sign, execute, swear to and acknowledge all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole discretion of the General Partner or the Liquidating
Trustee, as the case may be, to make, evidence, give, confirm or ratify any
vote, consent, approval, agreement or other action that is made or given by
the Partners hereunder or is consistent with the terms of this Agreement or
appropriate or necessary, in the sole discretion of the General Partner or the
Liquidating Trustee, as the case may be, to effectuate the terms or intent of
this Agreement; provided, however, that when required by any provision of this
Agreement which establishes a percentage of the Limited Partners or
Unitholders or Limited Partners or Unitholders of any class or series required
to take any action, the General Partner or Liquidating Trustee may exercise
the power of attorney made in this Section 10.01(b) only after the necessary
vote, consent or approval by the Limited Partners or Unitholders or Limited
Partners or Unitholders of such class or series.
Nothing herein contained shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article 17
or as may be otherwise expressly provided for in this Agreement. Nothing
herein contained shall be construed as authorizing any Person acting pursuant
to this Article 10 to take any action to increase in any way the legal
liability of the Limited Partners and Unitholders beyond the liability
expressly set forth in this Agreement.
The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive, and shall not be
affected by, the subsequent death, incompetence, dissolution, disability,
incapacity, bankruptcy or termination of any grantor and the transfer of all
or any portion of his Partnership Interest or Units and shall extend to such
Person's heirs, successors and assigns. Each Person who accepts Units or
Limited Partnership Interests is deemed to consent to be bound by any
representations made by the General Partner or the Liquidating Trustee, acting
in good faith pursuant to such power of attorney. Each Person who accepts
Units or Limited Partnership Interests is deemed to consent to and waive any
and all defenses that may be available to contest, negate or disaffirm any
action of the General Partner or the Liquidating Trustee, taken in good faith
under
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such power of attorney. Each Limited Partner and Unitholder shall
execute and deliver to the General Partner or the Liquidating Trustee, within
15 days after receipt of the General Partner's or the Liquidating Trustee's
request therefor, such further designations, powers of attorney and other
instruments as the General Partner or the Liquidating Trustee deems necessary
to effectuate this Agreement and the purposes of the Partnership.
ARTICLE 11
ISSUANCE OF CERTIFICATES AND UNIT CERTIFICATES; ASSIGNOR LIMITED PARTNER
SECTION 11.01. Issuance of Certificates and Unit Certificates. Upon
the issuance of Limited Partnership Interests to Limited Partners and Units to
Unitholders, the General Partner shall cause the Partnership to issue one or
more Certificates and Unit Certificates in the names of such Limited Partners
and Unitholders, respectively. Each such Certificate or Unit Certificate shall
be denominated in terms of the number and type of Limited Partnership
Interests or Units evidenced by such Certificate or Unit Certificate. Upon the
transfer of a Limited Partnership Interest or Unit in accordance with the
terms of this Agreement, the General Partner shall cause the Partnership to
issue replacement Certificates or Unit Certificates, as the case may be, in
accordance with such procedures as the General Partner, in its sole
discretion, may establish. The General Partner may also cause the Partnership
to issue certificates evidencing General Partnership Interests, in such form
as the General Partner may approve in its sole discretion.
SECTION 11.02. Assignment of Assignor Limited Partner's Limited
Partnership Interests. (a) The Assignor Limited Partner, by the execution of
this Agreement, irrevocably transfers and assigns to the Unitholders, to the
maximum extent permitted by law, all of the Assignor Limited Partner's rights
and interests in and to the Limited Partnership Interests issued to the
Assignor Limited Partner under this Agreement. In accordance with the transfer
and assignment described in this Section 11.02(a), and subject to the
provisions and procedures set forth herein, it is the intention of the parties
hereto that Unitholders shall have the same rights and obligations that
Limited Partners have under this Agreement and under the Delaware Act, except
as provided in Section 7.04(b). The rights and interests so transferred and
assigned shall include without limitation the following:
(i) All rights to receive Distributions and allocations in
respect of the Limited Partnership Interests;
(ii) All rights to receive any proceeds of liquidation of the
Partnership;
(iii) All rights to inspect books and records and to receive
reports as provided in this Agreement;
(iv) The right to instruct the Assignor Limited Partner with
respect to the giving of consent with respect to, or the voting of,
the Limited Partnership Interests and the right to call meetings and
propose amendments to this Agreement;
(v) The right to bring derivative actions pursuant to Sections
17-1001, et seq. of the Delaware Act, and all rights to maintain
actions under Sections 17-205, 17-802 and 17-803 of the Delaware Act
(and, in the event any such action must be brought in the name of the
Assignor Limited Partner, the Assignor Limited Partner agrees to
cooperate, at the expense of the concerned Unitholders, in all
respects with the maintenance of such action); and
(vi) All rights attendant to the Limited Partnership Interests
which Limited Partners have, or may have in the future, to the extent
they may be assigned under this Agreement and under the Delaware Act.
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(b) The General Partner, the Assignor Limited Partner, the Limited
Partners and the Unitholders irrevocably consent to the foregoing transfer and
assignment by the Assignor Limited Partner to the Unitholders of the Assignor
Limited Partner's rights and interests in the Limited Partnership Interests as
described above, and acknowledge that (i) each such transfer and assignment is
effective and (ii) the Unitholders are intended to be and shall be treated as
assignees of all rights and privileges of the Assignor Limited Partner in
respect of the Limited Partnership Interests. The General Partner covenants
and agrees that, in accordance with such transfer and assignment, all the
Assignor Limited Partner's rights and privileges in respect of Limited
Partnership Interests may be exercised by the Unitholders. The General Partner
shall fulfill the same duties and obligations to Unitholders as are owed to
Limited Partners under this Agreement and applicable law.
(c) The Assignor Limited Partner shall not be liable to any
Unitholder for any action or failure to take action by it in reliance upon
advice, written notice, request or direction from a Unitholder believed by it
to be genuine and to have been signed or presented by the proper Person(s).
(d) Notwithstanding the assignment of Limited Partnership Interests
referred to in this Section 11.02 but subject to the right of a Unitholder to
become a Limited Partner in accordance with Section 12.04(b), the Assignor
Limited Partner shall retain legal title to such assigned Limited Partnership
Interests and shall be and remain a Limited Partner of the Partnership.
(e) All Distributions to be made pursuant to Article 5 and 15 with
respect to Limited Partnership Interests held by the Assignor Limited Partner
or with respect to Units, and all reports and communications to be distributed
with respect to such Limited Partnership Interests or such Units, shall be
made or distributed directly to the Unitholders of record entitled to receive
such Distributions, reports and communications and not to the Assignor Limited
Partner. Delivery of a Distribution, report or other communication to the
Assignor Limited Partner shall not relieve the Partnership or the General
Partner from responsibility and liability for delivery of such Distribution,
report or other communication to the Unitholder of record entitled to receive
such Distribution, report or communication.
SECTION 11.03. Lost, Stolen, Mutilated or Destroyed Certificates or
Unit Certificates. (a) The Partnership shall issue a new Certificate or Unit
Certificate in place of any Certificate or Unit Certificate previously issued
if the registered owner of the Certificate or Unit Certificate:
(i) makes proof by affidavit, in form and substance satisfactory
to the General Partner, that a previously issued Certificate or Unit
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate or Unit
Certificate before the Partnership has notice that the Certificate or
Unit Certificate has been acquired by a purchaser for value in good
faith and without notice of an adverse claim;
(iii) if requested by the General Partner, delivers to the
Partnership a bond, in form and substance satisfactory to the General
Partner, with such surety or sureties and with fixed or open penalty,
as the General Partner may direct, to indemnify the Partnership
against any claim that may be made on account of the alleged loss,
destruction or theft of the Certificate or Unit Certificate; and
(iv) satisfies any other reasonable requirements imposed by the
General Partner.
When a Certificate or Unit Certificate has been lost, destroyed or stolen, and
the owner fails to notify the Partnership within a reasonable time after he
has notice of it, and a transfer of the Units or Limited Partnership Interests
represented by the Certificate or Unit Certificate is registered before the
Partnership receives such
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notification, the owner shall be precluded from making any claim against the
Partnership or any Transfer Agent for such transfer or for a new Certificate
or Unit Certificate.
(b) If any mutilated Certificate or Unit Certificate is surrendered
to the Transfer Agent, the General Partner on behalf of the Partnership shall
execute and deliver in exchange therefor a new Certificate or Unit Certificate
evidencing the same number of Limited Partnership Interests or Units as did
the Certificate or Unit Certificate so surrendered.
(c) As a condition to the issuance of any new Certificate or Unit
Certificate under this Section 11.03, the General Partner may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Transfer Agent) connected therewith.
SECTION 11.04. Record Holder. The Partnership shall be entitled to
treat each Record Holder as the Limited Partner or Unitholder in fact of any
Limited Partnership Interests or Units, as the case may be, and, accordingly,
shall not be required to recognize any equitable or other claim or interest in
or with respect to such Limited Partnership Interests or Units on the part of
any other Person, regardless of whether it shall have actual or other notice
thereof, except as otherwise required by law or any applicable rule,
regulation, guideline or requirement of any stock exchange on which the
Limited Partnership Interests or Units are listed for trading.
SECTION 11.05. Representations, Warranties and Covenants of the
Assignor Limited Partner. (a) The Assignor Limited Partner represents and
warrants to, and covenants with and for the benefit of, each Unitholder who is
at any time a Unitholder hereunder that:
(i) it is duly organized and validly existing in good
standing as a corporation under the laws of the state of its
incorporation with full power and authority to act as the
Assignor Limited Partner and to enter into this Agreement
and to perform its obligations hereunder;
(ii) this Agreement has been duly and validly authorized by it
and, assuming due authorization by the other parties hereto, is a
valid and binding agreement of it enforceable in accordance with its
terms;
(iii) it will not at any time give any consent with respect to or
vote any Limited Partnership Interests with respect to which it is
the Assignor Limited Partner except in accordance with directions to
it pursuant to Section 17.04 or Section 17.12. It will give any
consent with respect to or vote all of those Limited Partnership
Interests for which it has received a direction pursuant to Article
17 in accordance with such direction and it will refrain from
consenting with respect to or voting any such Limited Partnership
Interest for which it does not hold any such direction; and
(iv) it will not at any time withdraw as Assignor Limited
Partner without the consent of the General Partner which consent
shall not be granted until such a time as a successor Assignor
Limited Partner has been admitted in its place.
(b) Upon the occurrence of any default in any representation,
warranty or covenant of the Assignor Limited Partner set forth above, the
bankruptcy (as defined in Section 15.01) of the Assignor Limited Partner or
the failure of the Assignor Limited Partner to perform any other obligation
under this Agreement in accordance with the terms hereof, the General Partner
may remove the Assignor Limited Partner and substitute in its place such other
Person as it determines in its sole discretion. Thereafter the Assignor
Limited Partner so removed shall have no right of any nature whatsoever in or
with respect to such Limited Partnership Interests. If the Assignor Limited
Partner withdraws as the Assignor Limited Partner, whether or not such
withdrawal constitutes a breach of any
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portion of this Agreement, the General Partner shall substitute in its place
as Assignor Limited Partner such Person as it determines in its sole
discretion. Upon any such removal of the Assignor Limited Partner (or the
replacement of the Assignor Limited Partner pursuant to the preceding
sentence) as the Assignor Limited Partner, the Person so selected by the
General Partner shall succeed to the legal title to the Limited Partnership
Interests previously held by the Assignor Limited Partner so removed or
replaced, without any requirement for any action by or on behalf of the
Assignor Limited Partner so removed or replaced, and thereafter such Person
shall have all of the rights and obligations of the Assignor Limited Partner
under this Agreement with respect to such Limited Partnership Interests.
ARTICLE 12
TRANSFER OF PARTNERSHIP INTERESTS AND UNITS
SECTION 12.01. Transfer. (a) The term "transfer," when used in this
Article with respect to a Partnership Interest or Unit, shall be deemed to
refer to a transaction by which the holder of a Unit or Partnership Interest
assigns such Unit or Partnership Interest evidenced thereby to another Person,
and includes a sale, assignment, gift, pledge, hypothecation, mortgage,
exchange or any other disposition, whether by merger, consolidation or
otherwise.
(b) Except as provided in Section 2.05, no Partnership Interest or
Unit shall be transferred in whole or in part, except in accordance with the
terms and conditions set forth in this Article 12. Any transfer or purported
transfer of any Partnership Interest or Unit not made in accordance with this
Article 12 or Section 2.05 shall be null and void.
SECTION 12.02. Transfer of General Partnership Interests of the
General Partner. (a) The General Partner may sell or otherwise transfer its
General Partnership Interest to any Person that is or in connection with the
sale or transfer becomes a General Partner, without any approval of the
Unitholders or Partners and without obtaining an Assignment Determination. Any
Person acquiring a General Partnership Interest as permitted by this Section
12.02 shall be entitled to be admitted as a general partner. The General
Partner may effect sales or transfers as provided by this Section without
regard to the consequences thereof to the Partnership, other Partners,
Unitholders or any other Persons. The General Partner may not sell or
otherwise transfer its General Partnership Interest except as provided in this
Section 12.02.
(b) No provision of this Agreement shall be construed to prevent (and
all Unitholders and Limited Partners hereby expressly consent to) any sale,
transfer, exchange or other disposition of any or all of the General
Partnership Interest in connection with the withdrawal of the General Partner
pursuant to Article 14.
(c) The General Partner may at any time transfer (in addition to the
transfers permitted by Section 12.02(a)) one-tenth of its General Partnership
Interest to any Corporate Affiliate of the General Partner that (x) in
connection with the transfer becomes a General Partner (the "Other General
Partner") and (y) immediately after giving effect to such transfer, has assets
net of liabilities (excluding its interest in the Partnership and any accounts
and notes receivable from or payable by it to the Partnership) with a fair
market value of not less than 10% of the aggregate amount of Contributions
made to the Partnership through the date of the transfer, if the Partnership
receives an Assignment Determination and a Tax Determination with respect
thereto. In connection with any such transfer, (i) the Other General Partner
shall be admitted as a General Partner, (ii) the transferor General Partner
shall remain a General Partner and shall not be relieved of any of its
obligations under this Agreement, (iii) the transferor General Partner shall
be the sole managing General Partner, with the exclusive power to manage the
business and affairs of the Partnership and the Other General Partner shall
not participate in, and shall have no responsibility for, the management of
the business and affairs of the Partnership and shall not be entitled to
exercise any of the powers with respect thereto granted to the General
Partner, (iv) the Other General Partner shall assume, jointly and severally
with the transferor General Partner, all of the obligations of the General
Partner under this Agreement (excluding the obligations in Section 4.01, but
including, and not limited to, Section 12.02(a)), subject to clause (ii) of
this sentence and (v) the transferor General Partner shall be entitled to make
such amendments to this agreement as may
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be necessary to reflect or in connection with the foregoing and to provide for
the allocation of a portion of the transferor General Partner's capital
account to the Other General Partner.
SECTION 12.03. Transfer of Limited Partnership Interests. Transfers
of Limited Partnership Interests shall not be permitted except upon death, by
operation of law or with the written consent of the General Partner, which
consent may be granted or withheld in the General Partner's sole discretion
and shall be subject to the provisions of Section 13.01.
SECTION 12.04. Transfer of Units. (a) The Partnership shall not
recognize a holder of Units or interests therein unless the transferee has
become a Record Holder. A transferee of a Unit shall be deemed to have (i)
agreed to comply with and be bound by this Agreement, (ii) granted the powers
of attorney provided for in this Agreement as set forth herein, and (iii) made
the waivers and given the approvals contained in this Agreement.
(b) Any Unitholder may exchange any or all of his Units for
corresponding Limited Partnership Interests by (i) delivering to the General
Partner and the Assignor Limited Partner such documents as may be reasonably
required by the General Partner and the Assignor Limited Partner and (ii)
paying such reasonable fees and expenses as may be required with respect
thereto by the General Partner; provided, however, that the holder of any such
Limited Partnership Interest received in exchange for a Unit shall not be
admitted to the Partnership as a Limited Partner unless and until the General
Partner shall have consented to such admission, which consent may be withheld
in the sole discretion of the General Partner. If the General Partner does not
so consent, the Person requesting such exchange shall remain a Unitholder. If
the General Partner does so consent to the admission of a Unitholder as a
Limited Partner, no consent of any Limited Partner or Unitholder shall be
required to effect such admission. Any holder (other than the Assignor Limited
Partner) of Limited Partnership Interests may exchange any or all of such
Limited Partnership Interests for corresponding Units by (A) delivering to the
General Partner and the Assignor Limited Partner such documents as may be
reasonably required by the General Partner and the Assignor Limited Partner
and (B) paying such reasonable fees and expenses as may be required with
respect thereto by the General Partner. Conversions of Units into Limited
Partnership Interests, and conversions of Limited Partnership Interests into
Units, if consented to by the General Partner, shall be accomplished at such
times as the General Partner shall determine, but not less frequently than
semi-annually.
SECTION 12.05. Restrictions on Transfer. Notwithstanding the other
provisions of this Article 12, no transfer of any Unit or Limited Partnership
Interest shall be made if such transfer (a) would violate the then applicable
federal and state securities laws or rules and regulations of the Commission,
any state securities commission or any other governmental authorities with
jurisdiction over such transfer; (b) would affect the Partnership's existence
or qualification as a limited partnership under the Delaware Act; or (c) would
violate any then applicable rules, regulations and requirements of any
securities exchange or automatic quotation system on or pursuant to which
Units may be traded.
ARTICLE 13
ADMISSION OF PARTNERS
SECTION 13.01. Admission of Substituted Limited Partners. (a) If a
Limited Partner dies, his executor, administrator or trustee, or, if he is
adjudicated incompetent, his committee, guardian or conservator, or, if he
becomes bankrupt, the trustee or receiver of his estate, shall have all the
rights of a Limited Partner for the purpose of settling or managing his estate
and such power as the decedent or incompetent possessed to assign all or any
part of his Limited Partnership Interests and to join with the assignee
thereof in satisfying conditions precedent to such assignee becoming a
Substituted Limited Partner. The withdrawal, death, dissolution, adjudication
of incompetence or bankruptcy of a Limited Partner shall not dissolve the
Partnership.
(b) The Partnership need not recognize for any purpose any assignment
of all or any fraction of the Limited Partnership Interests of a Limited
Partner unless there shall have been filed with the Partnership and
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recorded on the Partnership's books a duly executed and acknowledged
counterpart of the instrument making such assignment, and such instrument
evidences the written acceptance by the assignee of all of the terms and
provisions of this Agreement, represents that such assignment was made in
accordance with all applicable laws and regulations and in all other respects
is satisfactory in form and substance to the General Partner.
(c) Any Limited Partner (other than the Assignor Limited Partner) who
shall assign all his Limited Partnership Interests shall cease to be a Limited
Partner of the Partnership.
(d) An assignee of Limited Partnership Interests (other than a
Unitholder) becomes a Substituted Limited Partner only if all of the following
conditions are first satisfied:
(i) the instrument of assignment sets forth the intention of
the assignor that the assignee succeed to the assignor's Limited
Partnership Interests as a Substituted Limited Partner in his place;
(ii) the assignee shall have fulfilled the requirements of
Section 13.01(b);
(iii) the assignee shall have paid all reasonable legal fees and
filing costs incurred by the Partnership in connection with his
substitution as a Limited Partner; and
(iv) the General Partner consents to such substitution which
consent may be granted or withheld in its sole discretion.
(e) An assignee of Limited Partnership Interests (other than a
Unitholder) who does not become a Substituted Limited Partner and who desires
to make a further assignment of his Limited Partnership Interests shall be
subject to all the provisions hereof to the same extent and in the same manner
as a Limited Partner desiring to make an assignment of Limited Partnership
Interests.
SECTION 13.02. Admission of Additional and Successor General Partner.
An additional or successor general partner approved pursuant to Section 12.02,
14.01 or 15.01(b) shall be admitted to the Partnership as a General Partner
(in the place of or in addition to, as the case may be, the General Partner),
effective as of the date that an amendment to the Certificate of Limited
Partnership, adding its name and other required information, is filed pursuant
to Section 6.01(c) (which, in the event the successor or transferee General
Partner is in the place in whole of the withdrawing, removed or transferor
General Partner, shall be contemporaneous with the withdrawal of such
withdrawing, removed or transferor General Partner without dissolution of the
Partnership), and upon receipt by the withdrawing, removed or transferor
General Partner of all of the following:
(a) acceptance in form and substance satisfactory to such General
Partner of all of the terms and provisions of this Agreement;
(b) written agreement of the proposed General Partner to continue the
business of the Partnership; and
(c) such other documents or instruments as may be required in order
to effect its admission as a General Partner under this Agreement and
applicable law.
Each Limited Partner and Unitholder is deemed to approve of the admission of a
successor General Partner selected pursuant to the terms of this Agreement and
no further approval of Partners or Unitholders shall be required to effect
such admission. Any such successor or additional General Partner shall carry
on the business of the Partnership. No Person shall be admitted as a general
partner of the Partnership except as contemplated by Section 12.02, 14.01 or
15.01(b) or as otherwise expressly authorized by this Agreement.
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ARTICLE 14
WITHDRAWAL OR REMOVAL OF PARTNERS
SECTION 14.01. Withdrawal or Removal of the General Partner. (a) The
General Partner covenants and agrees that except in connection with a transfer
of its General Partnership Interest in accordance with Section 12.02, it will
not voluntarily withdraw as the General Partner unless (i) the Partnership
receives a Limited Liability Determination, a Tax Determination and an
Assignment Determination; (ii) such withdrawal receives Majority Outside
Approval; and (iii) the General Partner or one of its Affiliates is not the
general partner of Alliance Capital or simultaneously withdraws as the general
partner of Alliance Capital in accordance with the terms of the Alliance
Capital Partnership Agreement. If the General Partner gives a notice of its
intent to withdraw, it shall call and conduct a meeting of the Unitholders and
Limited Partners to obtain the requisite Majority Outside Approval and to
consider and approve a successor General Partner. If the proposed withdrawal
of the General Partner will result in the dissolution of the Partnership, such
meeting shall be held no sooner than 180 days after the date of notice and any
Unitholder or Limited Partner (other than the Assignor Limited Partner) may,
by notice to the General Partner at least 120 days prior to the date of the
meeting, propose a successor general partner. Such proposed successor general
partner shall only be included on the ballot if it has complied with all legal
requirements necessary for such inclusion. If the requisite Majority Outside
Approval is obtained, but no successor general partner is approved on the
first ballot of such meeting, a second ballot shall be held as soon as
practicable thereafter in order to consider the approval of the candidate that
received the most votes on the first ballot. If such candidate is not approved
on the second ballot, the Partnership shall be dissolved and liquidated
pursuant to Article 15 and the General Partner shall serve as Liquidating
Trustee. If a successor general partner is elected, it shall be admitted
immediately prior to the withdrawal of the General Partner and shall continue
the business and operations of the Partnership without dissolution.
(b) Except as provided below, the General Partner may be removed upon
the affirmative vote of (i) Limited Partners holding 80% or more of the issued
and outstanding Limited Partnership Interests if such removal is not for
cause, or (ii) Limited Partners holding 50% or more of the issued and
outstanding Limited Partnership Interests if such removal is for cause. As
used in this Article 14, "cause" means that a court of competent jurisdiction
has entered a final, non-appealable judgment in an action in which the General
Partner is a party, finding that any action or failure to act on the part of
the General Partner involved an act or omission undertaken with deliberate
intent to cause injury to the Partnership, constituted actual fraud or actual
bad faith on the part of the General Partner or was undertaken with reckless
disregard for the best interests of the Partnership. The right to remove the
General Partner shall not exist or be exercised unless (i) the General Partner
or one of its Affiliates is not the general partner of Alliance Capital or is
simultaneously removed as the general partner of Alliance Capital in
accordance with the terms of the Alliance Capital Partnership Agreement, (ii)
such action for removal also provides for the election of a new general
partner and (iii) the Partnership receives a Limited Liability Determination,
a Tax Determination and an Assignment Determination; any Opinions of Outside
Counsel delivered in connection with such determinations shall be opinions of
counsel selected by the successor general partner. Such removal shall be
effective immediately subsequent to the admission of the successor General
Partner pursuant to Article 13.
SECTION 14.02. Interest of Departing Partner and Successor. (a) Upon
the withdrawal or removal of the General Partner, the Departing Partner may,
at its option exercisable prior to the effective date of the departure of such
Departing Partner, transfer and sell to its successor as General Partner all
of the General Partnership Interests held or owned by the Departing Partner,
and the successor General Partner shall purchase such General Partnership
Interests, for an amount in cash equal to the fair market value of such
General Partnership Interest, the amount to be determined and payable as of
the effective date of its departure. For purposes of this Section 14.02, the
fair market value of the Departing Partner's General Partnership Interest
shall be determined by agreement between the Departing Partner and its
successor or, failing agreement within 30 days after the effective date of
such Departing Partner's departure, by an independent investment banking firm
or other independent expert selected by the Departing Partner and its
successor, which, in turn, may rely on other experts and the determination of
which shall be binding and conclusive as to such matter. If such parties
cannot agree upon one independent investment banking
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firm or other independent expert within 45 days after the effective date of
such departure, then each of the Departing Partner and its successor shall
designate an independent investment banking firm or other independent expert
and the independent investment banking firm or other independent expert
selected by each of the Departing Partner and its successor shall in turn
designate a single independent investment banking firm or other independent
expert; each such firm or expert shall determine the fair market value of the
Departing Partner's General Partnership Interest and the determination of the
firm or expert that is neither the highest nor the lowest shall control. In
making its determination, the independent investment banking firm or other
independent expert shall consider the Unit Price, the value of the Partnership
Assets, the rights and obligations of the General Partner and other factors it
may deem relevant.
(b) If the Departing Partner's General Partnership Interest is not
acquired pursuant to Section 14.02(a), the Departing Partner shall become a
Limited Partner, and its General Partnership Interest shall be converted into
Units pursuant to a valuation made by the investment banking firm or other
independent expert selected pursuant to Section 14.02(a) without any reduction
in such Partnership Interest (subject to proportionate dilution by reason of
the admission of its successor).
This Agreement shall be amended to reflect any event described in
this Article 14, and any successor General Partner covenants so to amend this
Agreement and the Certificate.
(c) If the Departing Partner's General Partnership Interest is not
acquired pursuant to Section 14.02(a), the successor to such Departing Partner
shall at the effective date of its admission to the Partnership contribute to
the capital of the Partnership cash in an amount such that its Capital
Account, after giving effect to such contribution, shall be equal to the
Market Value of not less than 1,000 Units. In such event, such successor shall
be entitled to Partnership allocations and Distributions in accordance with
its Percentage Interest.
(d) If the Partnership is indebted to the Departing Partner at the
effective date of its departure for funds advanced, properties sold or
services rendered to the Partnership by the Departing Partner, the Partnership
shall, within 60 days after the effective date of such departure, pay to the
Departing Partner the full amount of such indebtedness. The successor to the
Departing Partner shall assume all obligations theretofore incurred by the
Departing Partner as the General Partner of the Partnership, and the
Partnership and such successor shall take all such action as shall be
necessary to terminate any guarantees of the Departing Partner and any of its
Affiliates of any obligations of the Partnership. If for whatever reason the
creditors of the Partnership will not consent to such termination of
guarantees, the successor to the Departing Partner shall be required to
indemnify the Departing Partner for any liabilities and expenses incurred by
the Departing Partner on account of such guarantees pursuant to an agreement
reasonably satisfactory in form and substance to the Departing Partner.
SECTION 14.03. Withdrawal of Limited Partners. No Limited Partner
shall have any right to withdraw from the Partnership; provided, however, that
upon a transfer of a transferor Limited Partner's Limited Partnership
Interests in accordance with Article 12 and the transferee's becoming a
Limited Partner, the transferor Limited Partner shall cease to be a Limited
Partner with respect to the Limited Partnership Interests so transferred, but
until such transferee becomes a Limited Partner, the transferor shall continue
to be a Limited Partner. No Limited Partner shall be entitled to any
Distribution from the Partnership for any reason or upon any event except as
expressly set forth in Articles 5 and 15.
ARTICLE 15
DISSOLUTION AND LIQUIDATION
SECTION 15.01. Dissolution. (a) The Partnership shall not be
dissolved by the admission of Substituted Limited Partners or Additional
Limited Partners, or by the admission of substituted or additional general
partners in accordance with the terms of this Agreement. Except as provided in
Section 15.01(b), the Partnership shall be dissolved and its affairs shall be
wound up upon:
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(i) the withdrawal or removal of the General Partner or the
occurrence of any other event that results in its ceasing to be the
General Partner (other than by reason of a transfer pursuant to
Section 12.02 or a withdrawal or removal occurring upon or after
approval by the Limited Partners of a successor pursuant to Section
14.01);
(ii) the filing of a certificate of dissolution or the
revocation of the certificate of incorporation of the
General Partner;
(iii) a written determination by the General Partner (which the
General Partner shall have no obligation or duty to make) that
projected future revenues over the next five years of the Partnership
are insufficient to enable payment of the projected Partnership costs
and expenses for such period;
(iv) an election to dissolve the Partnership by the General
Partner which receives Majority Outside Approval;
(v) the bankruptcy of the General Partner;
(vi) upon the written election of the General Partner to
dissolve the Partnership pursuant to an election of the General
Partner under clause (y) of the first sentence of Section 2.05;
(vii) the sale of all or substantially all of the Partnership
Assets approved in accordance with Section 6.13(a)(i); or
(viii) any other event requiring dissolution under the Delaware
Act.
For purposes of this Section 15.01, bankruptcy of the General Partner
shall be deemed to have occurred when (A) it commences a voluntary proceeding,
or files an answer in any involuntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other
similar law now or hereafter in effect, (B) it is adjudged a bankrupt or
insolvent, or has entered against it a final and nonappealable order for
relief under any bankruptcy, insolvency or similar law now or hereafter in
effect, (C) it executes and delivers a general assignment for the benefit of
its creditors, (D) it files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against it in any
proceeding of the nature described in clause (A) above, (E) it seeks, consents
to or acquiesces in the appointment of a trustee, receiver or liquidator for
it or for all or any substantial part of its properties, or (F) (1) any
proceeding of the nature described in clause (A) above has not been dismissed
120 days after the commencement thereof, (2) the appointment without its
consent or acquiescence of a trustee, receiver or liquidator appointed
pursuant to clause (E) above has not been vacated or stayed within 90 days of
such appointment, or (3) such appointment is not vacated within 90 days after
the expiration of any such stay.
(b) Upon an event described in Section 15.01(a)(i), 15.01(a)(ii), or
15.01(a)(v), the Partnership shall not be dissolved if, within 90 days after
the event described in any of such Sections, a majority in interest of the
remaining Partners and Unitholders agree to continue the business of the
Partnership and to the selection, effective as of the date of such event, of a
successor General Partner. In such event, the Partnership shall continue until
dissolved in accordance with this Article 15, and the General Partnership
Interest of the former General Partner shall be subject to disposition in the
manner provided in Section 14.02(a).
SECTION 15.02. Liquidation. Upon dissolution of the Partnership, the
General Partner, or, in the event the General Partner has been dissolved or
removed or has withdrawn from the Partnership, or the Partnership has been
dissolved pursuant to Section 15.01(a)(i), 15.01(a)(ii) or 15.01(a)(v), a
liquidator or liquidating committee approved by a Majority Approval shall be
the Liquidating Trustee. The Liquidating Trustee (if other than the
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General Partner) shall be entitled to receive such compensation for its
services as may be approved by a Majority Approval. The Liquidating Trustee
shall agree not to resign at any time without 30 days' prior written notice
and (if other than the General Partner) may be removed at any time, with or
without cause, by notice of removal approved by a Majority Approval. Upon
dissolution, removal or resignation of the Liquidating Trustee, a successor
and substitute Liquidating Trustee (who shall have and succeed to all rights,
powers and duties of the original Liquidating Trustee) shall within 60 days
thereafter be approved by a Majority Approval. If a Liquidating Trustee is not
selected and qualified within the time periods set forth in this Section
15.02, any Limited Partner or Unitholder may apply to any court of competent
jurisdiction for the winding up of the Partnership and, if appropriate, the
appointment of a Liquidating Trustee. The right to appoint a successor or
substitute Liquidating Trustee in the manner provided herein shall be
recurring and continuing for so long as the functions and services of the
Liquidating Trustee are authorized to continue under the provisions thereof,
and every reference herein to the Liquidating Trustee shall be deemed to refer
also to any such successor or substitute liquidator appointed in the manner
herein provided. Except as expressly provided in this Article 15, the
Liquidating Trustee appointed in the manner provided herein shall have and may
exercise, without further authorization or approval of any of the parties
hereto, all of the powers conferred upon the General Partner under the terms
of this Agreement (but subject to all of the applicable limitations,
contractual and otherwise, upon the exercise of such powers), regardless of
whether the Liquidating Trustee is the General Partner, to the extent
necessary or desirable in the good faith judgment of the Liquidating Trustee
to complete the winding up and liquidation of the Partnership as provided for
herein. The Liquidating Trustee shall liquidate the assets of the Partnership,
and apply and distribute the proceeds of such liquidation in the following
order of priority, unless otherwise required by mandatory provisions of
applicable law:
(a) the payment to creditors of the Partnership, including
Partners, in order of priority provided by law, and the creation of a
reserve of cash or other assets of the Partnership for contingent
liabilities in an amount, if any, determined by the Liquidating
Trustee in its sole judgment to be appropriate for such purposes;
(b) to the Partners (other than the Assignor Limited Partner) and
Unitholders with positive balances in their Capital Accounts (after
crediting or charging thereto the appropriate portion of Net Income
and Net Loss in accordance with Article 5 and after giving effect to
all amounts distributed or to be distributed to such Partners and
Unitholders with respect to all calendar quarters of the Partnership
prior to the quarter in which the liquidation of the Partnership
occurs) an amount equal to the sum of all such positive balances,
such Distribution to be made in proportion to the positive amounts in
such Capital Accounts; and
(c) to the Partners (other than the Assignor Limited Partner) and
Unitholders in accordance with their Percentage Interests.
SECTION 15.03. Distribution in Kind. (a) Notwithstanding the
provisions of Section 15.02 which require the liquidation of the Partnership
Assets, but subject to the order of priorities set forth therein, if on
dissolution of the Partnership the Liquidating Trustee determines that an
immediate sale of part or all of the Partnership Assets would be impractical
or would cause undue loss to the Partners or is otherwise undesirable, the
Liquidating Trustee may, in its absolute discretion, defer for a reasonable
time the liquidation of any Partnership Assets except those necessary to
satisfy liabilities of the Partnership and may, in its absolute discretion,
distribute to the Partners, in lieu of cash, as tenants in common, undivided
interests in such Partnership Assets as the Liquidating Trustee deems not
suitable for liquidation. Any distributions in kind shall be subject to such
conditions relating to the disposition and management thereof as the
Liquidating Trustee deems reasonable and equitable and to any agreements
governing the operation of such Partnership Assets at such time. In lieu of
distributing any Partnership Asset (other than cash) in kind among the
Partners and Unitholders, the Liquidating Trustee, in its sole discretion, may
determine to distribute Partnership Assets (other than cash) to certain
Partners or Unitholders and solely cash to other Partners or Unitholders. The
Liquidating Trustee shall determine the fair market value of any Partnership
Assets distributed in
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kind using such reasonable method of valuation as it may adopt; if the General
Partner is the Liquidating Trustee, such fair market value shall be determined
by an Appraiser.
(b) Notwithstanding the provisions of Section 15.02 or Section
15.03(a), but subject to the order of priorities set forth in Section 15.02,
if equity interests are to be distributed to Partners and Unitholders in
connection with a dissolution of the Partnership pursuant to an election of
the General Partner under clause (y) of Section 2.05, then distributions in
kind of the equity interests shall be made pursuant to such election and the
provisions of Section 2.05 (and, without limitation, the requirements of
Section 15.03(a) relating to distributions of undivided interests to Partners
as tenants in common shall not be applicable to any such distributions).
SECTION 15.04. Cancellation of Certificate of Limited Partnership.
Upon the completion of the distribution of Partnership Assets as provided in
Sections 15.02 and 15.03, the Partnership shall be terminated, and the
Liquidating Trustee (or the General Partner or Limited Partners) shall cause
the cancellation of the Certificate of Limited Partnership and all
qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware and shall take such other
actions as may be necessary to terminate the Partnership.
SECTION 15.05. Reasonable Time for Winding Up. A reasonable time
shall be allowed for the orderly winding up of the business and affairs of the
Partnership and the liquidation of its assets pursuant to Sections 15.02 and
15.03 in order to minimize any losses otherwise attendant upon such winding
up.
SECTION 15.06. Return of Contributions. The General Partner shall not
be liable for the return of any contributions of the Limited Partner, or any
portion thereof, it being expressly understood that any such return shall be
made solely from Partnership Assets.
SECTION 15.07. No Obligation to Restore Deficit. None of the Partners
or Unitholders shall be obligated to contribute cash to the Partnership in
order to eliminate the negative balance, if any, in its Capital Account.
SECTION 15.08. Waiver of Partition. Each Partner, by requesting and
being granted admission to the Partnership, is deemed to waive until
termination of the Partnership any and all rights that he may have to maintain
an action for partition of the Partnership's Assets.
ARTICLE 16
RIGHT TO PURCHASE UNITS
SECTION 16.01. Right to Purchase Units. (a) Notwithstanding any other
provision of this Agreement, if at any time less than 10% of the issued and
outstanding Alliance Capital LP Units are held, directly or indirectly, by
Persons other than the General Partner, its Affiliates and officers and
employees of the General Partner, the Partnership or Alliance Capital or
Persons controlled by the Partnership or Alliance Capital (hereinafter
referred to as "Affiliated Holders") (including, for purposes of determining
the Alliance Capital LP Units held by Persons other than Affiliated Holders,
the number of Alliance Capital LP Units held by the Partnership multiplied by
a fraction, the numerator of which is the number of issued and outstanding
Units and Partnership Interests held by Persons other than Affiliated Holders
and the denominator of which is the number of issued and outstanding Units and
Partnership Interests), the General Partner shall then have the right, which
right it may assign and transfer to the Partnership, Alliance Capital or any
of the General Partner's Affiliates, exercisable in its sole discretion at any
time, to purchase all, but not less than all, of any such Units that remain
outstanding and held by Persons other than the General Partner and its
Affiliates, at a price per Unit equal to the Purchase Price. The right to
purchase Units pursuant to this Section 16.01 shall not be exercisable unless
the General Partner, the Partnership, Alliance Capital
or any of the General Partner's Affiliates simultaneously purchases all, but
not less than all, of the Alliance Capital LP Units that remain outstanding
and held by Persons other than the General Partner and its Affiliates, at a
price per Alliance Capital LP Unit equal to the Purchase Price. For purposes
of this Section 16.01, a Unit or Alliance Capital LP Unit held for the benefit
of an employee, or by or for the benefit of a member of the family of an
employee, shall
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be treated as if owned by that employee and the term "Unit" includes Limited
Partnership Interests (other than those held by the Assignor Limited Partner).
(b) In the event the General Partner, any Affiliate of the General
Partner, the Partnership or Alliance Capital elects to exercise such right to
purchase Units pursuant to this Article 16, the General Partner, its
Affiliate, the Partnership or Alliance Capital, as the case may be, shall
deliver to the Transfer Agent written notice of such election to purchase
(hereinafter in this Article 16 called the "Notice of Election to Purchase")
and shall cause the Transfer Agent to mail a copy of such Notice of Election
to Purchase to the Unitholders holding such Units at least 10, but not more
than 60, days prior to the Purchase Date. Such Notice of Election to Purchase
shall also be published at least twice in at least one daily newspaper of
general circulation printed in the English language and published in the
Borough of Manhattan, New York. The Notice of Election to Purchase shall
specify the Units to be purchased, the Purchase Date and the Purchase Price,
and state that the General Partner, its Affiliate, the Partnership or Alliance
Capital, as the case may be, elects to purchase such Units, upon surrender
thereof in exchange for payment, at such office or offices of the Transfer
Agent as the Transfer Agent may specify, or as may be required by any National
Securities Exchange on which such Units are listed or admitted to trading. Any
such Notice of Election to Purchase mailed to a Unitholder of such Units at
his address as reflected in the records of the Transfer Agent shall be
conclusively presumed to have been given regardless of whether the owner
receives such notice. On or prior to the Purchase Date, the General Partner,
its Affiliate, the Partnership or Alliance Capital, as the case may be, shall
deposit with the Transfer Agent cash in an amount equal to the Purchase Funds.
If the Notice of Election to Purchase shall have been duly given as aforesaid
at least 10 days prior to the Purchase Date, and if on or prior to the
Purchase Date the Purchase Funds shall have been deposited with the Transfer
Agent in trust for the benefit of the owners of Units subject to purchase as
provided in this Article 16, then from and after the Purchase Date,
notwithstanding that any Unit Certificates shall not have been surrendered for
purchase, all rights of the owners of such Units (including, but not limited
to, any rights pursuant to Articles 4, 5 and 15) shall thereupon cease, except
the right to receive the Purchase Price therefor, without interest, upon
surrender to the Transfer Agent of the Unit Certificates, and such Units shall
thereupon be deemed to have been transferred to the General Partner, its
Affiliate, the Partnership or Alliance Capital, as the case may be, on the
record books of the Transfer Agent and the Partnership, and the General
Partner or any Affiliate of the General Partner, the Partnership or Alliance
Capital, as the case may be, shall be deemed to be the owner of all such Units
from and after the Purchase Date and shall have all rights as the owner of
such Units (including, but not limited to, all rights as owner of such Units
pursuant to Articles 4, 5 and 15).
(c) At any time during one year after the Purchase Date, a holder of
an issued and outstanding Unit subject to purchase as provided in this Article
16 may surrender his Unit Certificate to the General Partner in exchange for
payment of the Purchase Price therefor, without interest thereon. If such
holder does not surrender such Unit Certificate within such one year period,
the Purchase Funds deposited with the Transfer Agent in trust for such holder
shall revert to, and shall be returned to, the General Partner, its Affiliate,
the Partnership or Alliance Capital, as the case may be, and thereafter such
holder may look only to the Person to which such funds were returned for
payment.
ARTICLE 17
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
SECTION 17.01. Amendments to be Adopted Solely by the General
Partner. The General Partner (pursuant to the General Partner's power of
attorney) without the approval at the time of any Partner, Unitholder or other
Person (each Person who accepts Units being deemed to approve of any such
amendment) may amend any provision of this Agreement or the Certificate of
Limited Partnership, and execute, swear to, acknowledge, deliver, file and
record whatever documents may be required in connection therewith, to reflect:
(a) a change in the name of the Partnership or the location of the
principal place of business of the Partnership;
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(b) the admission, substitution or withdrawal of Partners in
accordance with this Agreement;
(c) a change that the General Partner in its sole discretion
determines is necessary or advisable to qualify the Partnership as a limited
partnership or a partnership in which the Limited Partners and Unitholders
have limited liability under the laws of any state;
(d) a change that the General Partner in its sole discretion
determines (i) does not adversely affect the Unitholders in any material
respect, (ii) is necessary or desirable to satisfy any requirements,
conditions or guidelines contained in any opinion, directive, order, ruling or
regulation of any federal or state agency or contained in any federal or state
statute, (iii) is necessary or desirable to facilitate the trading of the
Units or comply with any rule, regulation, guideline or requirement of any
National Securities Exchange on which the Units are or will be listed for
trading, compliance with any of which the General Partner deems to be in the
best interests of the Partnership and the Unitholders or (iv) is required to
effect the intent of the provisions of this Agreement or otherwise
contemplated by this Agreement;
(e) an amendment that the General Partner in its sole discretion
determines is necessary or desirable in connection with the issuance of any
class or series of Units, Partnership Interests or other securities, and the
establishment of the rights and preferences of such class or series of Units,
Partnership Interests or other securities, pursuant to Section 4.02,
including, but not limited to, Section 4.02(e);
(f) an amendment that the General Partner in its sole discretion
determines is necessary or desirable in connection with any action taken
pursuant to Section 2.05;
(g) an amendment that the General Partner in its sole discretion
determines is necessary or desirable to conform the provisions of this
Agreement to the provisions of the Alliance Capital Partnership Agreement;
(h) an amendment that the General Partner in its sole discretion
determines is necessary or desirable to cure any ambiguity in this Agreement
or to correct or supplement any provision of this Agreement that may be
defective or inconsistent with any other provision of this Agreement; or
(i) an amendment pursuant to Section 9.05.
SECTION 17.02. Amendment Procedures. No amendment may be made to this
Agreement unless it has been proposed by the General Partner. Except as
provided in Sections 17.01 and 17.03, all amendments to this Agreement shall
be made in accordance with the following requirements:
(a) Any amendment to this Agreement may be proposed by the General
Partner by submitting the text of the amendment to all Limited Partners and
Unitholders in writing.
(b) If an amendment is proposed pursuant to Section 17.02(a) above,
the General Partner shall call a meeting of the Unitholders to consider and
vote on the proposed amendment unless, in the Opinion of Counsel, such
proposed amendment would be illegal under Delaware law if approved. Subject to
Section 17.03, a proposed amendment shall be effective upon approval by the
General Partner and Majority Approval unless otherwise required by law. The
General Partner shall notify all Unitholders upon final approval or
disapproval of any proposed amendment.
SECTION 17.03. Special Amendment Requirements. Notwithstanding the
provisions of Sections 17.01 and 17.02,
(a) If any amendment to this Agreement would by its terms adversely
alter the rights and preferences of any class or series with respect to
distributions or otherwise materially and adversely alter the rights and
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preferences of any class or series, other than as contemplated by Section
2.05, 4.02 or 9.05, such amendment shall become effective only upon (i)
Majority Outside Approval (in addition to approval of the General Partner), if
such class consists of the Limited Partnership Interests and Units as
constituted on the date of this Agreement (or Limited Partnership Interests or
Units subsequently issued with identical rights and preferences), or (ii) in
the case of any other class or series, approval of the holders of a majority
of the outstanding interests of such class or series. No amendment to this
Agreement with respect to which the Partnership does not receive an Assignment
Determination, Liability Determination and Tax Determination shall become
effective without Majority Outside Approval (in addition to approval of the
General Partner), unless such amendment is pursuant to Section 17.01(f) or is
in connection with the transfer of the General Partnership Interest or the
admission, substitution or withdrawal of a general partner in accordance with
this Agreement.
(b) No provision of this Agreement which establishes a percentage of
the Partners (or a class or series thereof) required to take any action shall
be amended, altered, changed, repealed or rescinded in any respect that would
have the effect of changing such percentage, unless such amendment is approved
by a written approval or an affirmative vote of Partners (or a class or series
thereof) constituting not less than the number required by the voting
requirement sought to be reduced (in addition to approval of the General
Partner).
(c) No amendment of Sections 6.01(a)(ii), 6.01(a)(xviii), 8.03,
14.01, 17.04(b), 17.04(e), 17.05 or this Section 17.03(c) shall become
effective without Alliance Capital Majority Outside Approval (in addition to
approval of the General Partner).
SECTION 17.04. Meetings. (a) Meetings of the Limited Partners and
Unitholders for any purpose with respect to which the Limited Partners are
entitled to vote may be called by the General Partner at any time (there being
no obligation to hold annual or other periodic meetings of the Limited
Partners and Unitholders) and shall be called by the General Partner within
ten days after receipt of a written request for such a meeting signed by
Limited Partners (other than the Assignor Limited Partner) and Unitholders,
considered together as a class, which hold 50% or more in interest of the
issued and outstanding Limited Partnership Interests and Units. Any such
request shall state the purpose of the proposed meeting and the matters to be
acted upon thereat. Meetings shall be held at the principal office of the
Partnership or at such other place as may be designated by the General Partner
or, if the meeting is called upon the request of Limited Partners and
Unitholders, as designated by such Limited Partners and Unitholders. In
addition, the General Partner may, but shall not be obligated to, submit any
matter upon which the Unitholders (through instructions to the Assignor
Limited Partner directing the actions of the Assignor Limited Partner with
respect to the Limited Partnership Interests underlying such Unitholders'
Units) and Limited Partners are entitled to act to the Limited Partners and
Unitholders for a vote by written consent without a meeting pursuant to
Section 17.12.
(b) Meetings of the Partners and Unitholders shall also be called
promptly by the General Partner to consider and vote upon any matter to be
submitted to a vote of the holders of Alliance Capital LP Units at any meeting
of such holders or any matter upon which such holders propose or purport to
take action by written consent without a meeting (a "Pass-through Matter").
Meetings shall be held at the principal office of the Partnership or at such
other place as may be designated by the General Partner.
The Alliance Capital LP Units held by the Partnership shall be voted
for or voted against the Pass-through Matter or withheld from voting or not
voted by the Partnership (in its capacity as a limited partner of Alliance
Capital) in the same proportions as the Partnership Interests and Units held
by Partners and Unitholders are voted, not voted or withheld from voting;
provided, however, that votes and abstentions of employees of the Partnership,
Alliance Capital, any Person controlled by the Partnership or Alliance
Capital, or the General Partner who will be employed by or have any direct or
indirect equity interest in any Person acquiring assets of Alliance Capital
shall not be considered if the Pass-through Matter relates to any transaction
described in Section 6.12 of the Alliance Capital Partnership Agreement, in
which event the number of Alliance Capital LP Units voted by the Partnership
shall be reduced proportionately.
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With respect to Pass-through Matters that require Alliance Capital
Majority Outside Approval pursuant to the Alliance Capital Partnership
Agreement, the Alliance Capital LP Units held by the Partnership shall be
voted for or voted against the Pass-through Matter or withheld from voting or
not voted by the Partnership (in its capacity as a limited partner of Alliance
Capital) in the same proportions as the Partnership Interests and Units held
by Partners and Unitholders (other than the General Partner and its Corporate
Affiliates) are voted, not voted or withheld from voting; provided, however,
that votes and abstentions of employees of the Partnership, Alliance Capital,
any Person controlled by the Partnership or Alliance Capital, or the General
Partner who will be employed by or have any direct or indirect equity interest
in any Person acquiring assets of Alliance Capital shall not be considered if
the Pass- through Matter relates to any transaction described in Section 6.12
of the Alliance Capital Partnership Agreement, in which event the number of
Alliance Capital LP Units voted by the Partnership shall be reduced
proportionately. For purposes of the two preceding sentences, a Limited
Partnership Interest represented by a Unit held by an employee or held (or
represented by a Unit held) for the benefit of an employee, or by or for the
benefit of a member of the family of an employee, shall be treated as if owned
by that employee. The General Partner shall have the right to vote with
respect to all Pass-through Matters (other than Pass-through Matters that
require Alliance Capital Majority Outside Approval) and shall be entitled to
cast one vote for each General Partnership Interest which it owns.
(c) A Limited Partner shall be entitled to cast one vote for each
Limited Partnership Interest which he owns: (i) at a meeting in person, by
written proxy or by a signed writing directing the manner in which he desires
that his vote be cast, which writing must be received by the General Partner
prior to such meeting or (ii) without a meeting, by a signed writing directing
the manner in which he desires that his vote be cast, which writing must be
received by the General Partner prior to the date upon which the votes of
Limited Partners are to be counted. Every proxy shall be revocable at the
pleasure of the Limited Partner executing it. The Assignor Limited Partner
shall vote (whether by proxy, ballot, consent or otherwise) so many of the
Limited Partnership Interests held by it in favor of and in opposition to any
matter upon which the Limited Partners are to vote in accordance with written
instructions received by it from Unitholders as of the applicable Record Date.
Other than their rights as herein provided to give written instructions to the
Assignor Limited Partner, the Unitholders shall have no other voting or
consent rights. Notwithstanding the foregoing, Unitholders of record as of the
applicable Record Date shall be entitled to all notices of, and to be present
and be heard at, all meetings of Limited Partners. The laws of the State of
Delaware pertaining to the validity and use of corporate proxies shall govern
the validity and use of proxies given by Limited Partners and the validity and
use of written instructions given to the Assignor Limited Partner by the
Unitholders. Subject to the provisions of Section 4.02 and the rights of the
holders of any securities issued pursuant thereto, the Limited Partners shall
vote as a single class with respect to all matters voted upon by the Limited
Partners.
(d) With respect to any matter upon which the Limited Partners are
requested to vote or to give their consent, for which the required vote for
approval is not otherwise specified in this Agreement, such matter shall be
considered approved upon Majority Approval.
(e) The General Partner shall cause the Partnership (in its capacity
as a limited partner of Alliance Capital) to request that Alliance Capital
call a meeting of the limited partners of Alliance Capital in accordance with
the provisions of the Alliance Capital Partnership Agreement in the event that
the General Partner receives a written request for such a meeting signed by
Limited Partners (other than the Assignor Limited Partner) and Unitholders,
considered together as a class, which hold 50% or more in interest of the
issued and outstanding Limited Partnership Interests and Units. Any such
request shall state the purpose of the proposed meeting and the matters to be
acted upon thereat. Such meeting shall be held in accordance with the
provisions of the Alliance Capital Partnership Agreement.
SECTION 17.05. Notice of Meeting. Notice of a meeting called pursuant
to Section 17.04 shall be given in writing by hand delivery, by courier
service or by mail addressed to each Limited Partner and Unitholder at the
address of the Limited Partner or Unitholder appearing on the books of the
Partnership and Transfer Agent. In the
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event of a meeting called pursuant to Section 17.04(b), such notice shall
describe the Pass-through Matter or Pass- through Matters and, if such matters
are to be submitted to a vote of the holders of Alliance Capital LP Units at a
meeting of such holders, the date, time and place of such meeting. An
affidavit or certificate of delivery or of mailing of any notice or report in
accordance with the provisions of this Article 17 executed by the General
Partner, Transfer Agent, delivery or courier service or mailing organization
shall constitute conclusive (but not exclusive) evidence of the giving of
notice. If any notice addressed to a Limited Partner or Unitholder at the
address of such Limited Partner or Unitholder appearing on the books of the
Partnership or Transfer Agent is returned to the Partnership by the United
States Postal Service marked to indicate that the United States Postal Service
is unable to deliver such notice, the notice and any subsequent notices or
reports shall be deemed to have been duly given without further mailing if
they are available for the Limited Partner or Unitholder at the principal
office of the Partnership for a period of one year from the date of the giving
of the notice to all other Limited Partners.
SECTION 17.06. Record Date. For purposes of determining the Limited
Partners and Unitholders entitled to notice or to vote at a meeting of the
Limited Partners and Unitholders or to give consents without a meeting as
provided in Section 17.12 (or to give instructions with respect thereto to the
Assignor Limited Partner), the General Partner or the Liquidating Trustee, if
any, may set a Record Date, which Record Date shall not be less than ten (10)
days nor more than 60 days prior to the date of such meeting or consent
(unless such requirement conflicts with any rule, regulation, guideline or
requirement of any securities exchange on which the Units are listed for
trading, in which case the rule, regulation, guidelines or requirements of
such securities exchange shall govern).
SECTION 17.07. Adjournment. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting and a new
Record Date need not be fixed if the time and place of such adjourned meeting
are announced at the meeting at which such adjournment is taken, unless such
adjournment shall be for more than 30 days. At the adjourned meeting, the
Partnership may transact any business that would have been permitted to be
transacted at the original meeting. If the adjournment is for more than 30
days, or if a new Record Date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given in accordance with this Article 17.
SECTION 17.08. Waiver of Notice; Consent to Meeting; Approval of
Minutes. The transactions of any meeting of Limited Partners and Unitholders
however called and noticed, and wherever held, are as valid as though they had
been approved at a meeting duly held after regular call and notice if a quorum
is present either in person or by proxy, and if, either before or after the
meeting, each of the Limited Partners entitled to vote, not present in person
or by proxy, signs a waiver of notice, or a consent to the holding of the
meeting, or an approval of the minutes thereof. All such waivers, consents and
approvals shall be filed with the Partnership records or made a part of the
minutes of such meeting. Attendance of a Limited Partner or Unitholder at a
meeting shall constitute a waiver of notice of the meeting; provided, however,
that no such waiver shall occur when the Limited Partner or Unitholder
objects, at the beginning of the meeting, to the transaction of any business
at such meeting because the meeting is not lawfully called or convened; and
provided further, that attendance at a meeting is not a waiver of any right to
object to the consideration of any matters required to be included in the
notice of the meeting, but not so included, if the objection is expressly made
at the meeting.
SECTION 17.09. Quorum. Limited Partners of record who are Limited
Partners with respect to more than 50% of the total number of all outstanding
Limited Partnership Interests of the class or series entitled to vote with
respect to the matter held by all Limited Partners of record, whether
represented in person or by proxy, shall constitute a quorum at a meeting of
Limited Partners. As to Limited Partnership Interests then held by the
Assignor Limited Partner, only Limited Partnership Interests with respect to
which the Assignor Limited Partner has received written instructions as
provided in Section 17.04(c) shall be deemed represented for purposes of
determining whether a quorum is present. The Limited Partners present at a
duly called or held meeting at which a quorum is present may continue to
transact business until adjournment of such meeting notwithstanding the
withdrawal of enough Limited Partners to leave less than a quorum, if any
action taken (other than adjournment) is approved by the requisite vote of
Limited Partners specified in this Agreement. In the absence of a quorum, any
meeting of
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Limited Partners may be adjourned from time to time by the affirmative vote of
a majority of the Limited Partnership Interests represented either in person
or by proxy at such meeting, but no other business may be transacted.
SECTION 17.10. Conduct of Meeting. The General Partner or the
Liquidating Trustee, as the case may be, shall be solely responsible for
convening, conducting and adjourning any meeting of Limited Partners,
including without limitation the determination of Persons entitled to vote at
such meeting, the existence of a quorum for such meeting, the satisfaction of
the requirements of Section 17.04 with respect to such meeting, the conduct of
voting at such meeting, the validity and effect of all instructions to the
Assignor Limited Partner as to the voting of Limited Partnership Interests
held by it, the validity and effect of all proxies represented at such meeting
and the determination of any controversies, votes or challenges arising in
connection with or during such meeting or voting. The General Partner or the
Liquidating Trustee, as the case may be, shall designate a Person to serve as
chairman of any meeting and further shall designate a Person to take the
minutes of any meeting, which Person, in either case, may be, without
limitation, a Partner or any officer, employee or agent of the General
Partner. The General Partner or the Liquidating Trustee, as the case may be,
may make all such other regulations, consistent with applicable law and this
Agreement, as it may deem advisable concerning the conduct of any meeting of
the Limited Partners, including regulations in regard to the appointment of
proxies and other evidence of the right to vote.
SECTION 17.11. Instructions by Nominees. With respect to Units that
are held for a Person's account by another Person (such as a broker, dealer,
bank, trust company or clearing corporation, or any agent of any of the
foregoing), in whose name the Unit Certificates evidencing such Units are
registered, such broker, dealer or other agent shall, in exercising any right
to give written instructions to the Assignor Limited Partner in respect of
such Units on any matter, give such instructions at the direction of the
Person on whose behalf such broker, dealer or other agent is holding such
Units, and the Partnership and the Assignor Limited Partner shall be entitled
to assume it is so acting without further inquiry.
SECTION 17.12. Action Without a Meeting. Any action that may be taken
at a meeting of the Limited Partners may be taken without a meeting if the
General Partner so agrees in writing, in its sole discretion, and a consent in
writing setting forth the action so taken is signed by Limited Partners owning
not less than the minimum number of Limited Partnership Interests that would
be necessary to authorize or take such action at a meeting at which all of the
Limited Partners were present and voted. The Assignor Limited Partner shall
sign such consent only on behalf of Unitholders with respect to which it has
received written instructions with respect thereto. Prompt notice of the
taking of action without a meeting shall be given to the Limited Partners and
Unitholders who have not consented thereto in writing. Written consents to the
taking of any action by the Limited Partners shall have no force and effect
unless and until (i) they are deposited with the Partnership in care of the
General Partner and (ii) consents sufficient to take the action proposed are
dated as of a date not more than one hundred eighty (180) days prior to the
date sufficient consents are deposited with the Partnership.
ARTICLE 18
GENERAL PROVISIONS
SECTION 18.01. Addresses and Notices. The address of each Partner and
Unitholder for all purposes shall be the address set forth on the books and
records of the Transfer Agent (or, if there is no Transfer Agent for a
particular class or series of Units, on the books and records of the
Partnership). Any notice, demand, request or report required or permitted to
be given or made to a Partner (other than the General Partner and its
Corporate Affiliates) under this Agreement shall be in writing and shall be
deemed given or made when delivered in person or when sent to such Partner or
Unitholder at such address by first class mail or by other means of written
communication.
SECTION 18.02. Consent of Limited Partners and Unitholders. By
acceptance of a Certificate or a Unit Certificate, each Limited Partner and
Unitholder expressly approves and agrees that, whenever in this Agreement it
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<PAGE>
is specified that an action may be taken upon the affirmative vote of less
than all of the Limited Partners, such action may be so taken upon the
concurrence of less than all of the Limited Partners and each present and
future Limited Partner and Unitholder shall be bound by the results of such
action.
SECTION 18.03. Titles and Captions. All article or section titles or
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or describe the
scope or intent of any provisions hereof.
SECTION 18.04. Pronouns and Plurals. Whenever the context may
require, any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns
and verbs shall include the plural and vice versa.
SECTION 18.05. Further Action. Each Partner and Unitholder shall
execute and deliver all documents, provide all information and take or refrain
from taking all actions as may be necessary or appropriate to achieve the
purpose of this Agreement.
SECTION 18.06. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the Partners and Unitholders and their heirs,
executors, administrators, successors, legal representatives and permitted
assigns.
SECTION 18.07. Integration. This Agreement constitutes the entire
agreement among the Partners and Unitholders pertaining to the subject matter
hereof and supersedes all prior agreements and understandings pertaining
thereto.
SECTION 18.08. Benefits of this Agreement. Except for the provisions
of Section 6.02, none of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the Partnership or by
any other Person not expressly granted rights herein.
SECTION 18.09. Waiver. No failure by any party hereto to insist upon
the strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute a waiver of any such breach or any other covenant, duty,
agreement or condition.
SECTION 18.10. Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one agreement binding on
all the parties hereto. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto, independently of the signature
of any other party.
SECTION 18.11. Applicable Law. Notwithstanding the place where this
Agreement may be executed by any of the parties hereto, the parties hereto
expressly agree that all of the terms and provisions hereof shall be construed
under and governed by the substantive laws of the State of Delaware, without
regard to the principles of conflict of laws.
SECTION 18.12. Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
as of the ____ day of ______________________ , 1999.
B-60
<PAGE>
Exhibit A
CERTIFICATE
FOR
UNITS
IN
ALLIANCE CAPITAL MANAGEMENT HOLDING L.P.
No. ______ ______________ Units
ALLIANCE CAPITAL MANAGEMENT HOLDING L.P. (the "Partnership"), a
Delaware limited partnership, hereby certifies that is the registered owner of
Units representing assignments of beneficial ownership of limited partner
interests in the Partnership ("Units"). The rights, preferences, and
limitations of the Units are set forth in the Amended and Restated Agreement
of Limited Partnership of the Partnership, as it may be amended, supplemented
or restated from time to time (the "Partnership Agreement"), copies of which
are on file at the General Partner's principal office at 1345 Avenue of the
Americas, New York, New York 10105. The Units represented hereby are subject
to redemption under certain circumstances as provided in the Partnership
Agreement.
This Certificate and the Units evidenced hereby are transferable,
subject to the terms of the Partnership Agreement.
This Certificate is not valid unless countersigned and registered by
the Transfer Agent and Registrar.
WITNESS, the facsimile signatures of the duly authorized officers of
Alliance Capital Management Corporation, the General Partner of the
Partnership, and of Alliance ALP, Inc., the Assignor Limited Partner of the
Partnership.
Dated:
ALLIANCE ALP, INC.,
Assignor Limited Partner ALLIANCE CAPITAL MANAGEMENT HOLDING L.P.
By: Alliance Capital Management Corporation,
General Partner
By ____________________________ By __________________________________________
Title: Title:
BY ACCEPTANCE OF THIS CERTIFICATE FOR UNITS, AND AS A CONDITION TO ENTITLEMENT
TO ANY RIGHTS IN OR BENEFITS WITH RESPECT TO THE UNITS EVIDENCED HEREBY, A
HOLDER HEREOF (INCLUDING ANY ASSIGNEE OR TRANSFEREE HEREOF) IS DEEMED TO HAVE
AGREED TO COMPLY WITH AND BE BOUND BY ALL TERMS AND CONDITIONS OF THE
PARTNERSHIP AGREEMENT.
B-A-1
<PAGE>
Exhibit B
CERTIFICATE
FOR
LIMITED PARTNERSHIP INTERESTS
IN
ALLIANCE CAPITAL MANAGEMENT HOLDING L.P.
No. ________ Limited Partnership
Interests
ALLIANCE CAPITAL MANAGEMENT HOLDING L.P. ("the Partnership"), a
Delaware limited partnership, hereby certifies that is the registered owner of
limited partner interests in the Partnership ("Limited Partnership
Interests"). The rights, preferences, and limitations of the Limited
Partnership Interests, including the right to exchange Limited Partnership
Interests for Units representing assignments of beneficial ownership of
Limited Partnership Interests upon compliance with certain conditions, are set
forth in the Amended and Restated Agreement of Limited Partnership of the
Partnership, as it may be amended, supplemented or restated from time to time
(the "Partnership Agreement"), copies of which are on file at the General
Partner's principal office at 1345 Avenue of the Americas, New York, New York
10105. THIS CERTIFICATE, AND THE LIMITED PARTNERSHIP INTERESTS REPRESENTED
HEREBY, ARE NOT TRANSFERABLE EXCEPT UPON DEATH, BY OPERATION OF LAW, OR WITH
THE WRITTEN CONSENT OF THE GENERAL PARTNER, WHICH CONSENT MAY BE GRANTED OR
WITHHELD IN THE GENERAL PARTNER'S SOLE DISCRETION. ANY TRANSFER OR PURPORTED
TRANSFER OF THIS CERTIFICATE OR THE LIMITED PARTNERSHIP INTERESTS REPRESENTED
HEREBY NOT MADE IN ACCORDANCE WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT
SHALL BE NULL AND VOID. THE LIMITED PARTNERSHIP INTERESTS REPRESENTED HEREBY
ARE ALSO SUBJECT TO REDEMPTION UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE
PARTNERSHIP AGREEMENT.
Dated: _____________,___ ALLIANCE CAPITAL MANAGEMENT HOLDING L.P.
By: Alliance Capital Management Corporation,
General Partner
By: _________________________________________
BY ACCEPTANCE OF THIS CERTIFICATE FOR LIMITED PARTNERSHIP INTERESTS, AND AS A
CONDITION TO ENTITLEMENT TO ANY RIGHTS IN OR BENEFITS WITH RESPECT TO THE
LIMITED PARTNERSHIP INTERESTS EVIDENCED HEREBY, A HOLDER HEREOF (INCLUDING ANY
ASSIGNEE OR TRANSFEREE HEREOF) IS DEEMED TO HAVE AGREED, WHETHER OR NOT SUCH
HOLDER IS ADMITTED TO THE PARTNERSHIP AS A SUBSTITUTED LIMITED PARTNER WITH
RESPECT TO THE LIMITED PARTNERSHIP INTERESTS EVIDENCED HEREBY, TO COMPLY WITH
AND BE BOUND BY ALL TERMS AND CONDITIONS OF THE PARTNERSHIP AGREEMENT.
B-B-1
<PAGE>
ANNEX C
FORM OF AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
ALLIANCE CAPITAL MANAGEMENT L.P.
[DRAFT OF AUGUST 2, 1999]
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ALLIANCE CAPITAL MANAGEMENT L.P.
TABLE OF CONTENTS
----------------------
PAGE
ARTICLE 1
DEFINITIONS
ACMC ....................................................................1
Additional Limited Partner...................................................1
Adjusted Property............................................................1
Adverse Partnership Tax Consequence..........................................1
Adverse Tax Determination..................................................C-2
Affiliate..................................................................C-2
Affiliated Holders.........................................................C-2
Agreement..................................................................C-2
Alliance Holding...........................................................C-2
Alliance Holding Contribution..............................................C-2
Alliance Holding Partnership Agreement.....................................C-2
Alliance Holding GP Unit...................................................C-2
Alliance Holding LP Unit...................................................C-2
Appraiser..................................................................C-2
Assignment Determination...................................................C-2
Available Cash Flow........................................................C-2
Book-Tax Disparities.......................................................C-3
Capital Account............................................................C-3
Carrying Value.............................................................C-3
Certificate of Limited Partnership.........................................C-3
Code ..................................................................C-3
Commission.................................................................C-3
Contributed Property.......................................................C-3
Contribution...............................................................C-3
Corporate Affiliate........................................................C-3
Delaware Act...............................................................C-3
Departing Partner..........................................................C-3
Depreciation...............................................................C-3
Distribution...............................................................C-4
Effective Time.............................................................C-4
ELAS ..................................................................C-4
Exchange ..................................................................C-4
General Partner............................................................C-4
General Partnership Interest...............................................C-4
Holdback Interests.........................................................C-4
Indemnification and Reimbursement Agreement................................C-4
Indemnified Person.........................................................C-4
Indemnitee.................................................................C-4
Limited Liability Determination............................................C-4
Limited Partner............................................................C-4
Limited Partnership Interests..............................................C-4
C-i
<PAGE>
PAGE
Liquidating Trustee.........................................................C-5
LP Certificate..............................................................C-5
LP Interest Price...........................................................C-5
Majority Approval...........................................................C-5
Majority Outside Approval...................................................C-5
National Securities Exchange................................................C-6
Net Income..................................................................C-6
Net Loss ...................................................................C-6
Net Value...................................................................C-6
New Entity..................................................................C-6
Operating Cash Flow.........................................................C-6
Opinion of Counsel..........................................................C-9
Opinion of Outside Counsel..................................................C-9
Original Agreement of Limited Partnership...................................C-9
Other General Partner.......................................................C-9
Partner ...................................................................C-9
Partnership.................................................................C-9
Partnership's Accountants...................................................C-9
Partnership Assets..........................................................C-9
Partnership Interest........................................................C-9
Percentage Interest.........................................................C-9
Person ...................................................................C-9
Purchase Date...............................................................C-9
Purchase Funds..............................................................C-9
Purchase Price..............................................................C-9
Recapture Income...........................................................C-10
Record Date................................................................C-10
Record Holder(s)...........................................................C-10
Registration Statement.....................................................C-10
Reorganization.............................................................C-10
Reorganization Agreement...................................................C-10
Securities Exchange Act....................................................C-10
Substituted Limited Partner................................................C-10
Tax Determination..........................................................C-10
Tax Payment................................................................C-11
Unrealized Gain............................................................C-11
Unrealized Loss............................................................C-11
ARTICLE 2
GENERAL PROVISIONS
SECTION 2.01. Formation; Partnership Name.................................C-11
SECTION 2.02. Names and Addresses of Partners.............................C-11
SECTION 2.03. Principal Office, Registered Agent and Registered Office
of the Partnership.....................................C-11
SECTION 2.04. Term. .....................................................C-11
SECTION 2.05. Possible Action in the Event of Adverse Tax Developments....C-12
C-ii
<PAGE>
PAGE
ARTICLE 3
PURPOSE
SECTION 3.01. Purpose. ..................................................C-13
SECTION 3.02. Powers. ...................................................C-13
ARTICLE 4
CAPITAL CONTRIBUTIONS
SECTION 4.01. General Partner, Limited Partners. ........................C-14
SECTION 4.02. Additional Issuances of Securities. .......................C-15
SECTION 4.03. Record of Contributions. ..................................C-16
SECTION 4.04. Splits and Combinations. ..................................C-16
SECTION 4.05. No Preemptive Rights. .....................................C-17
SECTION 4.06. No Fractional Interests. ..................................C-17
SECTION 4.07. No Withdrawal. ............................................C-17
SECTION 4.08. Loans from Partners; No Interest on Capital Account
Balances...............................................C-17
SECTION 4.09. Capital Accounts. .........................................C-17
SECTION 4.10. Capital Account Calculations and Adjustments. .............C-18
ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS
SECTION 5.01. Pass-Through Cash Distributions. ..........................C-19
SECTION 5.02. Special Distributions. ....................................C-19
SECTION 5.03. General Rules with Respect to Distributions. ..............C-19
SECTION 5.04. Allocations of Net Income, Net Loss and Depreciation........C-20
SECTION 5.05. Special Provisions Governing Capital Account Allocations....C-21
SECTION 5.06. Allocations for Tax Purposes. .............................C-23
SECTION 5.07. Assignments. ..............................................C-24
ARTICLE 6
MANAGEMENT AND OPERATION OF BUSINESS
SECTION 6.01. Management. .............................................C-25
SECTION 6.02. Reliance by Third Parties. ................................C-28
SECTION 6.03. Purchase or Sale of Limited Partnership Interests. ........C-29
SECTION 6.04. Compensation and Reimbursement of the General Partner. ....C-29
SECTION 6.05. Outside Activities. .......................................C-29
SECTION 6.06. Partnership Funds. ........................................C-30
SECTION 6.07. Loans by the Partnership; Transactions and Contracts
with Affiliates. .....................................C-30
SECTION 6.08. Liability of the General Partner and Other Indemnities. ...C-31
SECTION 6.09. Indemnification. ..........................................C-32
SECTION 6.10. Other Matters Concerning the General Partner. .............C-33
SECTION 6.11. Title to Partnership Assets. ..............................C-34
SECTION 6.12. Sale of the Partnership's Assets. .........................C-34
SECTION 6.13. No New Business. ..........................................C-34
SECTION 6.14. Reimbursement of Expenses of Alliance Holding. .............C-34
SECTION 6.15. Issuances of Alliance Holding LP Units Pursuant to
Employee Benefit Plans.................................C-35
Section 6.16. Repurchase of Alliance Holding LP Units.....................C-36
C-iii
<PAGE>
PAGE
ARTICLE 7
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 7.01. Limitation of Liability.....................................C-36
SECTION 7.02. Management of Business......................................C-36
SECTION 7.03. Outside Activities..........................................C-36
SECTION 7.04. Return of Capital; Additional Capital.......................C-36
SECTION 7.05. Rights of Limited Partners Relating to the Partnership......C-37
SECTION 7.06. Agreement to be Bound by Terms of Partnership Agreement.....C-37
ARTICLE 8
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 8.01. Records and Accounting. ...................................C-38
SECTION 8.02. Fiscal Year. ..............................................C-38
SECTION 8.03. Reports. ..................................................C-38
SECTION 8.04. Other Information. ........................................C-38
ARTICLE 9
TAX MATTERS
SECTION 9.01. Preparation of Tax Returns. ...............................C-39
SECTION 9.02. Tax Elections. ............................................C-39
SECTION 9.03. Tax Controversies. ........................................C-39
SECTION 9.04. Withholding. ..............................................C-39
SECTION 9.05. Entity-level Deficiency Collections. ......................C-39
ARTICLE 10
POWER OF ATTORNEY
SECTION 10.01. Power of Attorney. .......................................C-40
ARTICLE 11
ISSUANCE OF CERTIFICATES
SECTION 11.01. Issuance of Certificates. ................................C-41
SECTION 11.02. Lost, Stolen, Mutilated or Destroyed Certificates. .......C-41
SECTION 11.03. Record Holder. ...........................................C-42
ARTICLE 12
TRANSFER OF PARTNERSHIP INTERESTS
SECTION 12.01. Transfer...................................................C-42
SECTION 12.02. Avoidance of Publicly Traded Partnership Status............C-42
SECTION 12.03. Permitted Transfers of Limited Partnership Interests.......C-42
SECTION 12.04. Transfer of General Partnership Interests of the
General Partner........................................C-43
SECTION 12.05. Restrictions on Transfer...................................C-44
SECTION 12.06. Withdrawal of a Limited Partner............................C-44
C-iv
<PAGE>
PAGE
ARTICLE 13
ADMISSION OF GENERAL PARTNERS
SECTION 13.01. Admission of Additional and Successor General Partner......C-44
ARTICLE 14
WITHDRAWAL OR REMOVAL OF PARTNERS
SECTION 14.01. Withdrawal or Removal of the General Partner. ............C-45
SECTION 14.02. Interest of Departing Partner and Successor. .............C-45
SECTION 14.03. Withdrawal of Limited Partners. ..........................C-46
ARTICLE 15
DISSOLUTION AND LIQUIDATION
SECTION 15.01. Dissolution. .............................................C-47
SECTION 15.02. Liquidation. .............................................C-48
SECTION 15.03. Distribution in Kind. ....................................C-48
SECTION 15.04. Cancellation of Certificate of Limited Partnership. ......C-48
SECTION 15.05. Reasonable Time for Winding Up. ..........................C-49
SECTION 15.06. Return of Contributions. .................................C-49
SECTION 15.07. No Obligation to Restore Deficit. ........................C-49
SECTION 15.08. Waiver of Partition. .....................................C-49
ARTICLE 16
RIGHT TO PURCHASE LIMITED PARTNERSHIP INTERESTS
SECTION 16.01. Right to Purchase Limited Partnership Interests. .........C-49
ARTICLE 17
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
SECTION 17.01. Amendments to be Adopted Solely by the General Partner. ..C-51
SECTION 17.02. Amendment Procedures. ....................................C-51
SECTION 17.03. Special Amendment Requirements. ..........................C-51
SECTION 17.04. Meetings. ................................................C-52
SECTION 17.05. Notice of Meeting. .......................................C-52
SECTION 17.06. Record Date. .............................................C-53
SECTION 17.07. Adjournment. .............................................C-53
SECTION 17.08. Waiver of Notice; Consent to Meeting; Approval of
Minutes. .............................................C-53
SECTION 17.09. Quorum. ..................................................C-54
SECTION 17.10. Conduct of Meeting. ......................................C-54
SECTION 17.11. Instructions by Nominees. ................................C-54
SECTION 17.12. Action Without a Meeting. ................................C-54
C-v
<PAGE>
PAGE
ARTICLE 18
GENERAL PROVISIONS
SECTION 18.01. Addresses and Notices. ...................................C-55
SECTION 18.02. Consent of Limited Partners. .............................C-55
SECTION 18.03. Titles and Captions. .....................................C-55
SECTION 18.04. Pronouns and Plurals. ....................................C-55
SECTION 18.05. Further Action. ..........................................C-55
SECTION 18.06. Binding Effect. ..........................................C-55
SECTION 18.07. Integration. .............................................C-55
SECTION 18.08. Benefits of this Agreement. ..............................C-55
SECTION 18.09. Waiver. ..................................................C-55
SECTION 18.10. Counterparts. ............................................C-55
SECTION 18.11. Applicable Law. ..........................................C-55
SECTION 18.12. Invalidity of Provisions. ................................C-56
Form of Limited Partnership Interests Certificate.....................Exhibit A
C-vi
<PAGE>
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
ALLIANCE CAPITAL MANAGEMENT L.P.
This Amended and Restated Agreement of Limited Partnership of
Alliance Capital Management L.P. (this "Agreement"), a Delaware limited
partnership formerly known as Alliance Capital Management L.P. II (the
"Partnership"), dated as of ___________ ___, 1999, is entered into by and
among Alliance Capital Management Corporation, a Delaware corporation,
Alliance Capital Management Holding L.P., a publicly-traded Delaware limited
partnership formerly known as Alliance Capital Management L.P. ("Alliance
Holding"), together with all other Partners of the Partnership as of the date
hereof, and additional Persons who become Partners of the Partnership, as
hereinafter provided. The parties hereto agree to continue the Partnership as
a limited partnership under the Delaware Act and this Agreement.
WHEREAS, the Partnership was originally formed and established as a
limited partnership pursuant to a Certificate of Limited Partnership, dated as
of April 6, 1999, and is governed by an Agreement of Limited Partnership,
dated as of July 7, 1999 (the "Original Agreement of Limited Partnership");
WHEREAS, at a special meeting of unitholders of Alliance Holding held
on September 22, 1999, such unitholders approved the reorganization of
Alliance Holding, pursuant to which, among other things, Alliance Holding will
(i) transfer or assign all or substantially all of its assets to the
Partnership, in exchange for 100% of the Limited Partnership Interests and the
General Partnership Interest and the assumption by the Partnership of all or
substantially all of the liabilities of Alliance Holding and (ii) offer to
exchange outstanding Alliance Holding LP Units for an equal number of Limited
Partnership Interests held by Alliance Holding (the "Reorganization"); and
WHEREAS, in connection with the Reorganization, the parties hereto
wish to amend and restate the Original Agreement of Limited Partnership,
effective as of the Effective Time.
In consideration of the mutual covenants, conditions and agreements
herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise specifies or requires, the terms defined
in this Article I shall, for the purposes of this Agreement, have the meanings
herein specified.
"ACMC" shall mean Alliance Capital Management Corporation, a Delaware
corporation.
"Additional Limited Partner" shall mean a Person admitted to the
Partnership as a limited partner pursuant to Section 4.02 and who is shown as
such on the books and records of the Partnership.
"Adjusted Property" shall mean property the Carrying Value of which
has been adjusted pursuant to Section 4.10.
"Adverse Partnership Tax Consequence" shall mean the Partnership,
Alliance Holding or both (a) being treated for federal income tax purposes as
an association taxable as a corporation, (b) being subject to federal income
tax as a corporation or (c) otherwise becoming subject to federal taxation on
its net income generally.
<PAGE>
"Adverse Tax Determination" shall mean a determination by the General
Partner, on the basis of an Opinion of Outside Counsel, that an Adverse
Partnership Tax Consequence has occurred. The General Partner may determine
that an Adverse Tax Determination shall be deemed to have been made for
purposes of any provision of this Agreement as of a date prior to the actual
date of determination, but not earlier than the beginning of the first taxable
period to which the Adverse Partnership Tax Consequence relates. However, no
such determination shall affect the rights of any Partner to distributions
actually received prior to the time such determination was actually made.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by or under common control with the Person in question; however,
none of the Partnership, Alliance Holding, any Person controlled by the
Partnership or Alliance Holding or any Person employed by the Partnership or
Alliance Holding or such a controlled Person shall be considered an Affiliate
of the General Partner. As used in this definition, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Affiliated Holders" has the meaning specified in Section 16.01(a).
"Agreement" shall mean this Amended and Restated Agreement of Limited
Partnership, as it may be amended, supplemented or restated from time to time.
"Alliance Holding" shall mean Alliance Capital Management Holding
L.P., a publicly-traded Delaware limited partnership whose name was changed
from Alliance Capital Management L.P. in connection with the Reorganization.
"Alliance Holding Contribution" shall mean the contribution by
Alliance Holding of all of its assets (other than the Holdback Interests) to
the Partnership in exchange for 100% of the Limited Partnership Interests and
the General Partnership Interest and the assumption by the Partnership of all
or substantially all of the liabilities of Alliance Holding, pursuant to the
Reorganization Agreement.
"Alliance Holding Partnership Agreement" shall mean the Amended and
Restated Agreement of Limited Partnership of Alliance Holding, as it may be
amended, supplemented or restated from time to time.
"Alliance Holding GP Unit" shall mean a unit representing a general
partner interest in Alliance Holding.
"Alliance Holding LP Unit" shall mean a unit representing an
assignment of a beneficial interest in a corresponding limited partner
interest of Alliance Holding.
"Appraiser" shall mean a Person (who may not be the General Partner,
a Corporate Affiliate thereof or any employee of the Partnership, the General
Partner or a Corporate Affiliate thereof) having experience in the valuation
of financial services businesses selected and retained by the General Partner
on behalf of and for the account of the Partnership.
"Assignment Determination" shall mean an Opinion of Outside Counsel
to the effect that with respect to a proposed transaction, (i) advisory
contracts of the Partnership and Alliance Holding which contributed more than
10% of the Partnership's and Alliance Holding's aggregate consolidated
revenues derived from investment management services during the four most
recently completed fiscal quarters would not be automatically terminated or
breached by reason of a change of control resulting from such proposed
transaction, or (ii) requisite consents to avoid such termination or breach
have been obtained.
"Available Cash Flow" shall mean for any period the excess, if any,
of (x) the sum of (A) Operating Cash Flow for such period, and (B) such
portion of the amounts retained in prior periods pursuant to the following
clause
C-2
<PAGE>
(y) as the General Partner determines, in its sole discretion, should
no longer be retained by the Partnership for the purposes described in such
clause (y), over (y) such amounts as the General Partner determines, in its
sole discretion, should be retained by the Partnership for use in its business
(or the businesses of Persons controlled by the Partnership) and not
distributed, including, but not limited to, amounts retained for or in
anticipation of expenses, capital expenditures, working capital requirements
or reserves. The determination of Available Cash Flow for any period by the
General Partner shall, absent manifest error, be binding and conclusive. As
used in this definition, "control" has the meaning given to that term in the
definition of Affiliate.
"Book-Tax Disparities" shall mean the differences between a Person's
Capital Account balance, as maintained pursuant to Article 4, and such balance
had the Capital Account been maintained strictly in accordance with federal
income tax accounting principles (such disparities reflecting, among other
items, the differences between the Carrying Value of either Contributed
Property or Adjusted Property, as adjusted from time to time, and the adjusted
basis thereof for federal income tax purposes).
"Capital Account" shall mean a capital account established and
maintained pursuant to Article 4.
"Carrying Value" shall mean (i) with respect to Contributed Property,
the Net Value of such property reduced (but not below zero) by all
amortization, depreciation and cost recovery deductions charged to the Capital
Accounts pursuant to Section 4.09 with respect to such property, and (ii) with
respect to any other property, the adjusted basis of such property for federal
income tax purposes, as of the time of determination. The Carrying Value of
any property shall be adjusted from time to time in accordance with Section
4.10, and to reflect changes, additions or other adjustments to the Carrying
Value for dispositions, acquisitions or improvements of Partnership Assets, as
deemed appropriate by the General Partner, using such reasonable methods as it
in its sole discretion deems appropriate.
"Certificate of Limited Partnership" shall mean the Certificate of
Limited Partnership, and any and all amendments thereto and restatements
thereof, filed on behalf of the Partnership as required under the Delaware
Act.
"Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time, and any successor to such statute.
"Commission" shall mean the Securities and Exchange Commission.
"Contributed Property" shall mean any Contribution other than cash.
"Contribution" shall mean any cash, cash equivalents or other
property, or any other form of contribution (other than services) permitted by
the Delaware Act, contributed to the Partnership pursuant to this Agreement
(or deemed contributed for federal income tax purposes) by or on behalf of any
Person.
"Corporate Affiliate" shall mean each Person, other than a natural
person, that is an Affiliate of the specified Person.
"Delaware Act" shall mean the Delaware Revised Uniform Limited
Partnership Act (6 Del. C. ss.17-101, et seq.), as it may be amended from
time to time, and any successor to such act.
"Departing Partner" shall mean the Person, as of the effective date
of any withdrawal or removal of the General Partner pursuant to Section 14.01,
who has as of such date so withdrawn or been removed.
"Depreciation" shall mean all deductions attributable to the
depreciation, amortization or cost recovery of the cost or basis of any
Partnership Asset which has a useful life in excess of one year.
C-3
<PAGE>
"Distribution" shall mean any cash, cash equivalents or other
property distributed by the Partnership pursuant to this Agreement (or deemed
distributed for federal income tax purposes) to any Person.
"Effective Time" shall mean the effective time of the Reorganization
pursuant to the Reorganization Agreement.
"ELAS" means The Equitable Life Assurance Society of the United States.
"Exchange" shall mean the exchange by Alliance Holding of the
Alliance Holding LP Units held by any unitholder of Alliance Holding upon the
request of such holder for an equal number of Limited Partnership Interests
held by Alliance Holding, pursuant to the Reorganization Agreement.
"General Partner" shall mean ACMC in its capacity as general partner
of the Partnership, or any successor or additional general partner of the
Partnership admitted pursuant to Section 13.02.
"General Partnership Interest" shall mean the Partnership Interest of
the General Partner in its capacity as such; provided that such interest shall
constitute solely a right to a 1% Percentage Interest in Partnership profits
and losses and distributions of Partnership Assets until such time as the
General Partnership Interest is transferred to the General Partner in exchange
for its general partner interest in Alliance Holding, as referenced in Section
4.01(c).
"Holdback Interests" shall have the meaning set forth in the
Reorganization Agreement.
"Indemnification and Reimbursement Agreement" shall mean the
Indemnification and Reimbursement Agreement, dated as of April 8, 1999, among
the Partnership, Alliance Holding and ELAS, as the same may be amended,
supplemented or restated from time to time.
"Indemnified Person" has the meaning specified in Section 6.09.
"Indemnitee" shall mean a Person who is or was the General Partner,
any Person who is or was a Departing Partner, any Person who is or was an
Affiliate of the General Partner or any Departing Partner, any Person who is
or was an officer, director, employee, partner, agent or trustee of the
Partnership, General Partner or any Departing Partner or any such Affiliate,
or any Person who is or was serving at the request of the General Partner or
any Departing Partner or any such Affiliate as a director, officer, employee,
partner, agent or trustee of another Person in connection with the business or
affairs of the Partnership.
"Limited Liability Determination" shall mean an Opinion of Outside
Counsel to the effect that, as a result of the proposed transaction, Limited
Partners do not lose their limited liability pursuant to Delaware law or this
Agreement.
"Limited Partner" shall mean Alliance Holding and any other Person
who is admitted as a limited partner in accordance with this Agreement and is
shown as a limited partner on the books and records of the Partnership.
"Limited Partnership Interests" shall mean the Partnership Interests
of the Limited Partners. Each Partnership Interest of the Limited Partners in
the Partnership shall be denominated as a unit, each unit representing a pro
rata percentage interest in the aggregate Partnership Interests of the Limited
Partners. Each such unit shall be referred to herein as a Limited Partnership
Interest, and all references in this Agreement to numbers of Limited
Partnership Interests shall be deemed to refer to the specified number of such
units of the Partnership Interests of the Limited Partners. The provisions
hereof and of the definition of Percentage Interest are subject to adjustment
by the General Partner in connection with, or as a consequence of, the
issuance of any Limited Partnership Interests or other securities of the
Partnership under Section 4.02 having special designations or preferences or
other special rights or duties. Subject to the establishment of special
classes or groups of Limited Partners or Limited Partnership
C-4
<PAGE>
Interests or other securities of the Partnership pursuant to Section 4.02, all
Limited Partnership Interests shall be considered to constitute a single class
and all Limited Partners shall vote as a single class under the Delaware Act
in accordance with the terms of this Agreement.
"Liquidating Trustee" shall mean either (i) the General Partner or
(ii) if dissolution of the Partnership was caused by an event described in
Sections 15.01(a)(i), 15.01(a)(ii) or 15.01(a)(v), the Person or committee
appointed pursuant to Section 15.02.
"LP Certificate" shall mean a certificate issued by the Partnership
evidencing ownership of one or more Limited Partnership Interests, such
certificate to be in such form or forms as may be adopted by the General
Partner in its sole discretion, and which shall initially be substantially in
the form of Exhibit A to this Agreement.
"LP Interest Price" shall mean an amount per Limited Partnership
Interest as of any date of determination equal to the average of the last
reported sales price per Alliance Holding LP Unit or, in the event that no
such reported sale takes place on any such day, the average of the last
reported bid and ask prices per Alliance Holding LP Unit, on the NYSE (or any
alternate national securities market on which Alliance Holding LP Units are
traded) for the five trading days immediately prior to such day.
"Majority Approval" shall mean, as of any Record Date, (a) the
written consent of Limited Partners who are Limited Partners with respect to
more than 50% of the issued and outstanding Limited Partnership Interests or
(b) the affirmative vote of Limited Partners who are Limited Partners with
respect to more than 50% of the Limited Partnership Interests of those Limited
Partners voting with respect to the matter at a meeting at which a quorum is
present, in each case excluding, if applicable, the number of Limited
Partnership Interests held by Alliance Holding multiplied by a fraction, the
numerator of which is the number of issued and outstanding Alliance Holding LP
Units and Alliance Holding partnership interests held by persons ineligible to
vote pursuant to the following sentence and the denominator of which is the
number of issued and outstanding Alliance Holding LP Units and Alliance
Holding partnership interests. If a Majority Approval is being sought with
respect to a transaction described in Section 6.12 (other than a transaction
pursuant to Section 2.05), the Limited Partnership Interests of any employee
of the Partnership, Alliance Holding, any Person controlled by the Partnership
or Alliance Holding, or the General Partner who will be employed by or have
any direct or indirect equity interest in any Person acquiring Partnership
Assets shall be ineligible to vote with respect to such Majority Approval and
shall not be counted for purposes of determining the issued and outstanding
Limited Partnership Interests. Each Limited Partnership Interest shall be
entitled to one vote for this purpose. For purposes of this definition, a
Limited Partnership Interest held by an employee or held for the benefit of an
employee, or by or for the benefit of a member of the family of an employee,
shall be treated as if owned by that employee. A determination by the General
Partner that Limited Partnership Interests are held by or for the benefit of
an employee or a member of the family of an employee and that such employee is
ineligible to vote with respect to a particular matter by reason of this
definition shall be binding and conclusive; in making such a determination,
the General Partner may rely on information known to it and need not make a
special investigation.
"Majority Outside Approval" shall mean as of any Record Date, written
consent or affirmative vote of Limited Partners (other than the General
Partner, its Corporate Affiliates and, if applicable, Persons holding Limited
Partnership Interests ineligible to vote pursuant to the following sentence)
who are Limited Partners with respect to more than 50% of the issued and
outstanding Limited Partnership Interests held by such Persons (excluding the
number of Limited Partnership Interests held by Alliance Holding multiplied by
a fraction, the numerator of which is the number of issued and outstanding
Alliance Holding LP Units and Alliance Holding limited partnership interests
held by the General Partner and its Corporate Affiliates and, if applicable,
Persons ineligible to vote pursuant to the following sentence, and the
denominator of which is the number of issued and outstanding Alliance Holding
LP Units and Alliance Holding limited partnership interests). If Majority
Outside Approval is being sought in connection with a transaction described in
Section 6.12, the Limited Partnership Interests of any employee of the
Partnership, Alliance Holding, any Person controlled by the Partnership or
Alliance Holding, or the General
C-5
<PAGE>
Partner who will be employed by or have any direct or indirect equity interest
in any Person acquiring Partnership Assets (in connection with a transaction
described in Section 6.12) shall be ineligible to vote with respect to such
Majority Outside Approval. Each Limited Partnership Interest shall be entitled
to one vote for this purpose. For purposes of this definition, a Limited
Partnership Interest held by an employee or held for the benefit of an
employee, or by or for the benefit of a member of the family of an employee,
shall be treated as if owned by that
employee. A determination by the General Partner that Limited Partnership
Interests are held by or for the benefit of an employee or a member of the
family of an employee and that such employee is ineligible to vote with
respect to a particular matter by reason of this definition shall be binding
and conclusive; in making such a determination, the General Partner may rely
on information known to it and need not make a special investigation.
"National Securities Exchange" shall mean an exchange registered with
the Commission under Section 6(a) of the Securities Exchange Act including,
but not limited to, the New York Stock Exchange, Inc.
"Net Income" and "Net Loss" shall mean an amount equal to the
Partnership's taxable income or taxable loss as determined for federal income
tax purposes for a relevant period, adjusted as provided herein. Net Income
and Net Loss shall be determined in accordance with Section 703(a) of the Code
(for this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Section 703(a)(1) of the Code shall be included
in taxable income or loss), and adjusted as provided in Section 4.10. There
shall be excluded from Net Income and Net Loss (a) any Depreciation of the
Partnership, (b) any item of income, deduction, gain or loss resulting from a
transaction the proceeds of which are distributed pursuant to Section 5.02 and
(c) any item of income, deduction, gain or loss specially allocated pursuant
to Section 5.05.
"Net Value" shall mean in the case of any Contribution of assets, the
fair market value of such assets reduced by the amount of any indebtedness
either assumed by the Partnership upon such Contribution or to which such
assets are subject when contributed, in each case as such fair market value
shall be determined by the General Partner using such reasonable methods of
valuation as it in its sole discretion deems appropriate, unless such assets
are to be contributed by either the General Partner or any of its Affiliates
and are other than cash or cash equivalents, in which case the fair market
value shall be determined by an Appraiser.
"New Entity" has the meaning specified in Section 2.05.
"Operating Cash Flow" shall mean:
(A) For periods ending on or before December 31, 1999, the
excess, if any, of
(x) the sum of
(i) the net income (or loss as a negative amount) of the
Partnership and Persons controlled by it on a consolidated basis for
the period before extraordinary items, as determined in accordance
with generally accepted accounting principles,
(ii) depreciation or amortization of tangible and intangible
assets, losses on sales and other dispositions of assets and other
non-cash charges, to the extent any such item is included in
determining net income (or loss) for such period, all as determined
in accordance with generally accepted accounting principles,
(iii) the net increase in deferred income tax liabilities or
the net decrease in deferred income tax benefits during the period as
reflected on the Partnership's balance sheet (or if there is both
such an increase and such a decrease during the period, the sum of
the absolute amounts thereof), and
(iv) proceeds from sales or other dispositions of assets in
the ordinary course of business,
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over
(y) the sum of
(i) gains on sales and other dispositions of assets for such
period to the extent included in determining net income (or loss) for
such period,
(ii) the net decrease in deferred income tax liabilities or
the net increase in deferred income tax benefits during the period as
reflected on the Partnership's balance sheet (or if there is both
such a decrease and such an increase during the period, the sum of
the absolute amounts thereof),
(iii) payments in respect of the principal of indebtedness
(interest being deducted in the determination of net income (loss))
incurred by the Partnership to fund capital expenditures to the
extent no reserve was deducted for such capital expenditures pursuant
to the definition of Available Cash Flow, and
(iv) amounts expended for the purchase of assets in the
ordinary course of business, to the extent no amount was retained for
such expenditures pursuant to clause (y) of the definition of
Available Cash Flow.
In determining Operating Cash Flow for periods ending on or before
December 31, 1999, there shall be excluded from net income (or loss)
(i) the net income (or loss) of any entity not controlled by
the Partnership in which the Partnership or any Person controlled by
it has a joint interest with another Person, except to the extent of
the amount of dividends or other distributions in cash, cash
equivalents or other marketable securities (at the realizable value
thereof) actually paid by such entity to the Partnership or any
Person controlled by it during the period,
(ii) except to the extent includible in net income pursuant
to the foregoing clause (i), the income (or loss) of any acquired
entity prior to the date it becomes controlled by the Partnership or
is merged into or consolidated with the Partnership or any Person
controlled by the Partnership or that entity's assets are acquired by
the Partnership or any Person controlled by the Partnership, and
(iii) the income of any Person controlled by the Partnership
to the extent that the declaration or payment of dividends or similar
distributions by that Person of that income is not at the time
permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Person.
For purposes of this definition, "other non-cash charges" shall mean
amounts that have been charged to income but that have either already
been paid by, or will never result in a cash payment by, the
Partnership or Persons controlled by it (or which will be or has been
funded by a Contribution by the General Partner pursuant to Section
4.01), including, but not limited to,
(i) non-cash expenses incurred under generally accepted
accounting principles in connection with sale by ACMC of Limited
Partnership Interests and Alliance Holding LP Units to employees of
the Partnership or Persons controlled by the Partnership or the grant
of warrants or options to purchase Limited Partnership Interests and
Alliance Holdings LP Units,
(ii) amortization of debt issuance costs, and
(iii) amortization of goodwill.
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(B) For any period beginning after December 31, 1999, the excess, if
any, of
(x) the sum of
(i) the net cash provided from (or used in (expressed as a
negative amount)) operating activities of the Partnership and Persons
controlled by it on a consolidated basis for such period, as
reflected in the Partnership's consolidated statement of cash flows
for such period, determined in accordance with generally accepted
accounting principles, excluding increases or decreases in the
receivables and payables related to mutual fund sales activities for
such period,
(ii) proceeds received during such period from borrowings
and from sales and other dispositions of assets in the ordinary
course of business, and
(iii) income for such period from investments in marketable
securities, liquid investments and other financial instruments that
are acquired for investment purposes and that have a value that may
be readily established, including any such investment that may be
readily sold or otherwise liquidated in any mutual fund for which the
Partnership or any Person controlled by it serves as investment
manager or advisor, to the extent not otherwise included in (i) or
(ii) above;
over
(y) the sum of
(i) payments during such period in respect of the principal
of borrowings, and
(ii) amounts expended during such period for the purchase of
assets in the ordinary course of business in excess of any amount
retained in a prior period for such expenditures pursuant to clause
(y) of the definition of Available Cash Flow.
In determining net cash provided from (or used in) operating
activities of the Partnership and Persons controlled by it for any
period beginning after December 31, 1999 there shall be excluded from
net income (or loss)
(i) the net income (or loss) for such period of any entity
in which the Partnership has an interest which is not a controlling
interest, except to the extent of the amount of dividends or other
distributions in cash, cash equivalents or other marketable
securities (at the realizable value thereof) actually paid during
such period by such entity to the Partnership or any Person
controlled by it,
(ii) except to the extent includible in net income pursuant
to the foregoing clause (i), the income (or loss) for such period of
any acquired entity prior to the date it becomes controlled by the
Partnership or is merged into or consolidated with the Partnership or
any Person controlled by the Partnership or that entity's assets are
acquired by the Partnership or any Person controlled by the
Partnership, and
(iii) the income for such period of any Person controlled by
the Partnership to the extent that the declaration or payment of
dividends or similar distributions by that Person of that income is
not at the time permitted by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Person.
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(C) The determination of Operating Cash Flow for any period by the
General Partner shall, absent manifest error, be binding and conclusive. As
used in this definition, "control" has the meaning given to that term in the
definition of Affiliate.
"Opinion of Counsel" shall mean a written opinion of counsel (who may
be regular counsel to the Partnership, the General Partner or any Affiliate
thereof) selected by the General Partner.
"Opinion of Outside Counsel" shall mean a written opinion of counsel
(who may be regular counsel to the Partnership, the General Partner or any
Affiliate thereof, but who may not be an employee of the Partnership, the
General Partner or any Affiliate thereof) selected by the General Partner.
"Original Agreement of Limited Partnership" has the meaning specified
in the Recitals.
"Other General Partner" has the meaning specified in Section 12.04(c).
"Partner" shall mean any General Partner or Limited Partner.
"Partnership" shall mean the Delaware limited partnership existing
pursuant to this Agreement.
"Partnership's Accountants" shall mean such nationally recognized
firm of independent public accountants, as is selected, from time to time, by
the General Partner.
"Partnership Assets" shall mean all property, whether tangible or
intangible and whether real, personal or mixed, at any time owned by the
Partnership.
"Partnership Interest" shall mean, as to any Partner, all of the
interests of that Partner in the Partnership, including, but not limited to,
such Partner's (i) right to a distributive share of income and losses of the
Partnership, (ii) right to a distributive share of the Partnership Assets,
(iii) right, if the General Partner, to participate in the management of the
affairs of the Partnership, and (iv) right to vote on certain matters as set
forth herein.
"Percentage Interest" shall mean, subject to such adjustments as the
General Partner may determine in connection with the issuance of Limited
Partnership Interests pursuant to Section 4.02: (a) 1% as to the General
Partner, and (b) as to each Limited Partner, the product of (x) 99% and (y)
the quotient of (i) the number of Limited Partnership Interests held by such
Limited Partner at any time and (ii) the aggregate number of Limited
Partnership Interests held by all of the Limited Partners at such time.
"Person" shall mean any individual, corporation, association,
partnership, joint venture, trust, estate or other entity or organization.
"Purchase Date"shall mean the date determined by the General Partner
as the date for purchase of all issued and outstanding Limited Partnership
Interests (other than Limited Partnership Interests owned by the General
Partner and its Corporate Affiliates) pursuant to, and as specified in, the
"Notice of Election to Purchase" delivered pursuant to Article 16.
"Purchase Funds" shall mean an amount in cash equal to the aggregate
Purchase Price of all Limited Partnership Interests subject to purchase on the
Purchase Date in accordance with Article 16.
"Purchase Price" shall mean, as to any class or series, an amount per
Limited Partnership Interest equal to the greater of (i) the highest cash
price paid by the General Partner or any of its Affiliates for any Alliance
Holding LP Unit of such class or series purchased during the 90 days
immediately prior to the date on which the notice described in Article 16 is
first mailed, if any such purchase occurred during such period, or (ii)(a) if
the Alliance
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Holding LP Units of such class or series are listed or admitted to trading on
one or more National Securities Exchanges, the arithmetic mean of the last
reported sales prices per Alliance Holding LP Unit of such class or series
regular way or, in case no such reported sale has taken place on any such
date, the arithmetic mean of the last reported bid and asked prices per
Alliance Holding LP Unit of such class or series regular way for such date, in
either case on the principal National Securities Exchange on which the
Alliance Holding LP Units of such class or series are listed or admitted to
trading, for the 30 trading days immediately preceding the date of the mailing
of such notice; (b) if the Alliance Holding LP Units of such class or series
are not listed or admitted to trading on a National Securities Exchange but
are quoted through NASDAQ, the arithmetic mean of the last reported sales
prices per Alliance Holding LP Unit of such class or series regular way or, in
case no such reported sale has taken place on any such day or the last
reported sales price is not then quoted, the arithmetic mean of the last
reported bid and asked prices per Alliance Holding LP Unit of such class or
series regular way for such day quoted through NASDAQ, for the 30 trading days
immediately preceding the date of the mailing of such notice; or (c) if the
Alliance Holding LP Units of such class or series are not listed for trading
on a National Securities Exchange and are not quoted through NASDAQ, an amount
equal to the fair market value of an Alliance Holding LP Unit of such class or
series, as of the date of the mailing of such notice, as determined by an
Appraiser.
"Recapture Income" shall mean any gain recognized by the Partnership
(but computed without regard to any adjustment required by Section 734 or 743
of the Code) upon the disposition of any Partnership Asset that does not
constitute capital gain for federal income tax purposes because such gain
represents the recapture of deductions previously taken with respect to such
Partnership Asset.
"Record Date" shall mean the date established by the General Partner
for determining (i) the identity of Limited Partners entitled to notice of or
to vote at any meeting of Limited Partners, or any matter upon which the
General Partner seeks the consent of the Limited Partners, or entitled to
exercise rights in respect of any other lawful action of Limited Partners, or
(ii) the identity of the Partners entitled to receive any report pursuant to
the provisions hereof or any distribution pursuant to Article 5 or 15.
"Record Holder(s)" shall mean the Persons shown as Limited Partners
on the books and records of the Partnership as of the close of business on a
particular day.
"Registration Statement" shall mean the registration statement of the
Partnership, dated August __, 1999, including the proxy statement/prospectus
and the exchange offer prospectus distributed in connection with the special
meeting of unitholders of Alliance Holding held September 22, 1999 and the
exchange offer.
"Reorganization" has the meaning specified in the Recitals.
"Reorganization Agreement" shall mean the Agreement and Plan of
Reorganization dated as of __________, 1999 among the Partnership, Alliance
Holding, ACMC and ELAS, as the same may be amended, supplemented or restated
from time to time.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as it may be amended from time to time, and any successor to such
statute.
"Substituted Limited Partner" shall mean a Person who is admitted as
a Limited Partner in the Partnership pursuant to this Agreement in place of,
and with all the rights of, a Limited Partner pursuant to Section 12.03, and
who is shown as a limited partner on the books and records of the Partnership.
"Tax Determination" shall mean an Opinion of Outside Counsel
(containing such conditions, limitations and qualifications as are acceptable
to the General Partner in its sole discretion) to the effect that, as a result
of the proposed transaction, neither the Partnership nor Alliance Holding will
suffer an Adverse Partnership Tax Consequence. Notwithstanding any provision
of this Agreement to the contrary, a Tax Determination shall not be required
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in connection with or as a condition to any action at any time after (x) the
General Partner has taken any action pursuant to clause (y) of the first
sentence of Section 2.05 or (y) an Adverse Tax Determination.
"Tax Payment" has the meaning specified in Section 6.14(b).
"Unrealized Gain" shall mean, as of any date of determination, the
excess, if any, of the fair market value of property (as determined under
Section 4.10(c) or 4.10(d) as of such date of determination) over the Carrying
Value of such property as of such date of determination (prior to any
adjustment to be made pursuant to Section 4.10(c) or 4.10(d) as of such date).
"Unrealized Loss" shall mean, as of any date of determination, the
excess, if any, of the Carrying Value of property as of such date of
determination (prior to any adjustment to be made pursuant to Section 4.10(c)
or 4.10(d) as of such date) over the fair market value of such property (as
determined under Section 4.10(c) or 4.10(d) as of such date of determination).
ARTICLE 2
GENERAL PROVISIONS
SECTION 2.01. Formation; Partnership Name. (a) The Partnership was
formed as a Delaware limited partnership pursuant to the filing of the
Certificate of Limited Partnership in the Office of the Secretary of State of
the State of Delaware and was governed by the Original Agreement of Limited
Partnership. In connection with the Reorganization, the Partnership is being
continued as a Delaware limited partnership pursuant to the terms of this
Agreement.
(b) "Alliance Capital Management L.P." shall be the name of the
Partnership. The business of the Partnership shall be conducted under such
name or such other name as the General Partner may from time to time in its
sole discretion determine. "Limited Partnership" or "Ltd." or "L.P." (or
similar words or letters) shall be included in the Partnership's name where
necessary or appropriate to maintain the limited liability of the Limited
Partners or otherwise for the purpose of complying with the laws of any
jurisdiction that so requires or as the General Partner may deem appropriate.
SECTION 2.02. Names and Addresses of Partners. The general partner of
the Partnership is ACMC. The business address of the General Partner is 1345
Avenue of the Americas, New York, New York 10105. The General Partner may
change its address at any time and from time to time. The names and business,
residence or mailing addresses of the Limited Partners and the date upon which
each such Person became a Limited Partner are as set forth from time to time
in the records of the Partnership.
SECTION 2.03. Principal Office, Registered Agent and Registered
Office of the Partnership. (a) The principal office of the Partnership shall
be located at 1345 Avenue of the Americas, New York, New York 10105. The
General Partner in its sole discretion may, at any time, and from time to
time, change the location of the Partnership's principal office within or
outside the State of Delaware and may establish such additional offices of the
Partnership within or outside the State of Delaware as it may from time to
time determine.
(b) The name of the registered agent for service of process
on the Partnership in the State of Delaware is The Corporation Trust Company.
The address of the registered agent and the address of the registered office
of the Partnership in the State of Delaware is c/o The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801.
SECTION 2.04. Term. The Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act and
shall continue in existence until dissolved, and its Certificate of Limited
Partnership canceled, in accordance with any provisions of this Agreement and
the Delaware Act.
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SECTION 2.05. Possible Action in the Event of Adverse Tax
Developments. Notwithstanding anything to the contrary contained in this
Agreement, in the event that the General Partner reasonably believes that as a
result of (i) the enactment (or imminent enactment) of any legislation, (ii)
the publication of any temporary, proposed or final regulation by the United
States Department of the Treasury or any ruling by the Internal Revenue
Service, (iii) a judicial decision or (iv) other actions or events not caused
by the General Partner or its Corporate Affiliates for the purpose of invoking
this Section 2.05, there is a substantial risk of an Adverse Partnership Tax
Consequence occurring within one year of the actions or events described in
clauses (i) - (iv), the General Partner shall have the right, in its sole
discretion and without the approval of the Limited Partners or any other
Partners, to (x) impose such restrictions on transfer of the Limited
Partnership Interests as the General Partner believes may be necessary or
desirable to prevent the occurrence of the Adverse Partnership Tax
Consequence, including making any amendments to this Agreement as the General
Partner in its sole discretion may determine to be necessary or appropriate in
order to impose such restrictions or (y) modify, restructure or reorganize the
Partnership (by the transfer of all or substantially all of the assets of the
Partnership to a newly-formed corporation or entity or otherwise) as, or
transfer all or substantially all of the assets of the Partnership to, a
corporation, trust or any other type of legal entity (a "New Entity"), in the
manner determined by the General Partner in its sole discretion, in a
transaction in which (I) each outstanding Limited Partnership Interest of the
same class or series is treated in the same manner, and (II) if the Limited
Partnership Interests and General Partnership Interest are converted into
equity securities of the New Entity, the relative fair market values of the
equity securities into which Limited Partnership Interests and the General
Partnership Interest are converted are in proportion to the amounts each of
the Limited Partners and the General Partner would have been entitled to
receive upon a liquidation of the Partnership pursuant to Section 15.02, and
(III) if all or substantially all of the assets of the Partnership are
transferred to a New Entity, the Partnership may retain all of the equity
interests in the New Entity until such time, if any, as the General Partner,
in its sole discretion and without the approval of any other Partners, elects
to dissolve the Partnership, in which case the Limited Partners and General
Partner will receive the equity interests in the New Entity in proportion to
the amounts each of the Limited Partners and the General Partner would have
been entitled to receive upon a liquidation of the Partnership pursuant to
Section 15.02, except that an action described in this clause (y) may not be
taken solely on the basis of a proposed regulation described in clause (ii)
unless the proposed regulation would by its terms, upon becoming final, apply
to periods before the date it became final. Notwithstanding anything herein to
the contrary, the General Partner may without Majority Approval effect a
transaction described in clause (y) of the preceding sentence if the New
Entity is a corporation. In connection with any transaction described in
clause (y) of the first sentence of this Section, the General Partner may
issue to itself a sufficient number of Limited Partnership Interests or other
securities or otherwise restructure or reorganize the Partnership so that the
General Partner and its Corporate Affiliates will own a sufficient percentage
(but no more) of the Limited Partnership Interests or other securities so as
to allow the Partnership or the New Entity to be included for federal tax
purposes in the affiliated group of which the General Partner is a member;
Limited Partnership Interests or securities may be acquired by the General
Partner pursuant to this sentence only for the fair market value thereof as
determined by an Appraiser. In connection with any transaction described in
clause (y) of the first sentence of this Section, the business of the
Partnership may be continued by the New Entity or otherwise and if the
Partnership has been restructured or reorganized as a New Entity and the
Limited Partnership Interests and General Partnership Interest are converted
into equity securities of the New Entity, the Partnership Interests shall be
converted into equity of the New Entity in the manner determined by the
General Partner in its sole discretion and without the approval of the Limited
Partners, subject to clause (y) above. Notwithstanding the foregoing, no such
modification, restructuring or reorganization shall take place unless the
Partnership shall have received an Opinion of Outside Counsel to the effect
that the liability of the holders of the Limited Partnership Interests or the
equity interests in the New Entity into which the Limited Partnership
Interests are converted pursuant to the law of the jurisdiction of the New
Entity or Entities for the debts and obligations of the New Entity or Entities
shall not, unless such Limited Partners or holders of such equity interests
take part in the control of the business of the New Entity or Entities, exceed
that which otherwise had been applicable to the Limited Partners of the
Partnership.
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ARTICLE 3
PURPOSE
SECTION 3.01. Purpose. The purpose and nature of the business to be
conducted and promoted by the Partnership shall be (a) to engage in the
investment management and advisory business and (b) to engage in any other
lawful activities for which limited partnerships may be organized under the
Delaware Act.
SECTION 3.02. Powers. The Partnership shall be empowered to do any
and all acts and things necessary, appropriate, proper, advisable or
convenient for or incidental to the furtherance and accomplishment of the
purposes and businesses described herein and for the protection and benefit of
the Partnership, including, but not limited to, the following:
(a) To borrow money and issue evidences of indebtedness, to
refinance such indebtedness, to secure the same by mortgages, deeds of trust,
security interest, pledges or other liens on all or any part of the
Partnership Assets, to enter into contracts of guaranty or suretyship, and to
confess and authorize confession of judgment in connection with the foregoing
or otherwise;
(b) To secure, maintain and pay for insurance against
liability or other loss with respect to the activities and assets of the
Partnership (including, but not limited to, insurance against liabilities
under Section 6.09);
(c) To employ or retain such Persons as may be necessary or
appropriate for the conduct of the Partnership's business, including
permanent, temporary or part-time employees and attorneys, accountants,
agents, consultants and contractors, and to have employees and agents who may
be designated as officers with titles including, but not limited to,
"chairman," "vice chairman," "president," "executive vice president," "senior
vice president," "vice president," "assistant vice president," "treasurer,"
"controller," "secretary," "assistant secretary," and "assistant treasurer"
and who in such capacity may act for and on behalf of the Partnership, as and
to the extent authorized by the General Partner, including, but not limited
to, the following:
(i) represent the Partnership in its dealings with
third parties, and execute any kind of document or contract
on behalf of the Partnership;
(ii) approve the sale, exchange, lease, sublease,
mortgage, assignment or other transfer or acquisition of, or
granting or acquiring of a security interest in, any asset
or assets of the Partnership; or
(iii) propose, approve or disapprove of, and take,
action for and on behalf of the Partnership with respect to
the operations of the Partnership;
(d) To acquire, own, hold a leasehold interest in, maintain,
use, lease, sublease, manage, operate, sell, exchange, transfer or otherwise
deal in assets and property as may be necessary, convenient or beneficial for
the Partnership;
(e) To incur expenses and to enter into, guarantee, perform
and carry out contracts or commitments of any kind, to assume obligations, and
to execute, deliver, acknowledge and file documents in furtherance of the
purposes and business of the Partnership;
(f) To pay, collect, compromise, arbitrate, litigate or
otherwise adjust, contest or settle any and all claims or demands of or
against the Partnership;
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(g) To invest in interest-bearing and non-interest-bearing
accounts and short-term investments of any kind and nature whatsoever,
including, but not limited to, obligations of federal, state and local
governments and their agencies, mutual funds (including money market funds),
mortgage-backed securities, commercial paper, repurchase agreements, time
deposits, certificates of deposit of commercial banks, savings banks or
savings and loan associations and equity or debt securities of any type;
(h) To transfer assets to joint ventures, other
partnerships, corporations or other business entities in which the Partnership
is or thereby becomes a participant upon such terms, and subject to such
conditions consistent with applicable law, as the General Partner deems
appropriate; and
(i) To engage in any kind of activity and to enter into and
perform obligations of any kind with the General Partner or Affiliates of the
General Partner or otherwise, necessary to or in connection with, or
incidental to, the accomplishment of the purposes and business of the
Partnership, so long as said activities and obligations may be lawfully
engaged in or performed by a limited partnership under the Delaware Act.
ARTICLE 4
CAPITAL CONTRIBUTIONS
SECTION 4.01. General Partner, Limited Partners. (a) In accordance
with the terms of the Original Agreement of Limited Partnership, ACMC was
admitted as the General Partner of the Partnership and Alliance Holding was
admitted as the initial Limited Partner of the Partnership. At such time, each
of ACMC and Alliance Holding made a contribution to the capital of the
Partnership of $50 in exchange for an economic interest having a value equal
to $50 in the Partnership.
(b) At the Effective Time, pursuant to the Reorganization
Agreement and the terms hereof, (i) Alliance Holding shall contribute all of
its assets (other than the Holdback Interests) to the Partnership in exchange
for the issuance by the Partnership of all of the Limited Partnership
Interests and the General Partnership Interest to Alliance Holding, and
Alliance Holding shall be deemed admitted as a Limited Partner with respect to
all Limited Partnership Interests issued to it, (ii) the Partnership shall
assume all or substantially all of the liabilities of Alliance Holding and
(iii) the unitholders of Alliance Holding who exchange their Alliance Holding
LP Units for Limited Partnership Interests pursuant to the Exchange shall be
deemed admitted as Limited Partners in respect thereof. Alliance Holding shall
be deemed to have contributed to the Partnership, in exchange for the
above-referenced Limited Partnership Interests and the General Partnership
Interest, an amount equal to the fair market value of the assets so
transferred.
(c) Immediately after the Effective Time, pursuant to the
Reorganization Agreement and the terms hereof, (i) ELAS and its Affiliates who
hold Alliance Holding LP Units shall exchange an aggregate of _______ Alliance
Holding LP Units for an equal number of Limited Partnership Interests and
shall be deemed admitted as Limited Partners in respect of such Limited
Partnership Interests and (ii) ACMC shall exchange its general partner
interest in Alliance Holding for the General Partnership Interest and shall be
deemed to hold the General Partnership Interest in its capacity as General
Partner of the Partnership.
(d) The General Partner will make, or cause one or more of
its Corporate Affiliates to make, payments to the Partnership in an amount
equal to the Reorganization Costs (as such term is defined in the
Indemnification and Reimbursement Agreement), without duplication with respect
to any amounts paid pursuant to the Alliance Holding Partnership Agreement, in
accordance with the Indemnification and Reimbursement Agreement. The General
Partner shall not be entitled to receive any additional Partnership Interests
in exchange for such payments.
(e) Alliance Holding may, following the Effective Time, make
from time to time Contributions to the Partnership consisting of any assets or
property (other than cash and cash equivalents required
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for working capital purposes of Alliance Holding) acquired by it in accordance
with the Alliance Holding Partnership Agreement in exchange for the issuance
by the Partnership of additional Limited Partnership Interests; provided that:
(i) if the Contribution is cash equal to the net
proceeds obtained from the sale or issuance of Alliance
Holding LP Units or Alliance Holding limited partnership
interests, (x) Alliance Holding shall receive a number of
Limited Partnership Interests equal to the number of
Alliance Holding LP Units or Alliance Holding limited
partnership interests so sold or issued and (y) Alliance
Holding shall make such Contribution as soon as practicable
after the receipt of such net proceeds;
(ii) if the Contribution consists of assets
obtained in exchange for the sale or issuance of Alliance
Holding LP Units or Alliance Holding limited partnership
interests, (x) Alliance Holding shall receive a number of
Limited Partnership Interests equal to the number of
Alliance Holding LP Units or Alliance Holding limited
partnership interests so sold or issued and (y) Alliance
Holding shall make such Contribution as soon as
practicable after the receipt of such assets; and
(iii) if the Contribution is other than pursuant to
clauses (i) or (ii) of this proviso or if any event occurs
which the General Partner in its sole discretion determines
would render inappropriate the use of the one-for-one
exchange ratio of Alliance Holding LP Units or Alliance
Holding limited partnership interests for Limited
Partnership Interests and vice versa, the number of Limited
Partnership Interests to be received by Alliance Holding in
exchange for such Contribution for purposes of this Section
4.01(e) shall be determined by the General Partner in its
sole discretion.
SECTION 4.02. Additional Issuances of Securities. (a) The General
Partner, in order to raise additional capital, to acquire assets, to redeem or
retire Partnership debt, or for any other Partnership purpose as it may
determine in good faith is in the best interests of the Partnership, is
authorized to cause the Partnership to issue Limited Partnership Interests, or
classes or series thereof (in addition to the Limited Partnership Interests
issued prior to the date of this Agreement as referenced in Sections 4.01(b)
and 4.01(c)), from time to time to Partners or to other Persons. The foregoing
action may be taken, and Persons to whom Limited Partnership Interests are
issued may be admitted as, or become, Additional Limited Partners as the
General Partner may determine without the necessity of obtaining approval of
Partners. The General Partner is also authorized to cause the issuance of
other types of securities of the Partnership from time to time to Partners or
other Persons on terms and conditions established in the sole discretion of
the General Partner, without the necessity of obtaining approval of Partners.
Such securities may include, but shall not be limited to, unsecured and
secured debt obligations of the Partnership, debt obligations of the
Partnership convertible into any class or series of Limited Partnership
Interests that may be issued by the Partnership, options, rights or warrants
to purchase any such class or series of Limited Partnership Interests or any
combination of any of the foregoing. There shall be no limit on the number of
Limited Partnership Interests or other securities that may be so issued, and
the General Partner shall have sole discretion in determining the
consideration and terms and conditions with respect to any future issuance of
Limited Partnership Interests or other securities. The General Partner shall
do all things necessary to comply with the Delaware Act and is authorized and
directed to do all things it deems to be necessary or advisable in connection
with any such future issuance, including, but not limited to, compliance with
any statute, rule, regulation or guideline of any federal, state or other
governmental agency. The Partnership may assume liabilities and hypothecate
its property in connection with any such issuance.
(b) Limited Partnership Interests to be issued by the
Partnership pursuant to Section 4.02(a) shall be issuable from time to time in
one or more classes or series, at such price, and with such designations,
preferences and relative participating, optional or other special rights,
powers
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and duties, including rights, powers and duties senior to existing
classes or series of Limited Partnership Interests, all as shall be fixed by
the General Partner in the exercise of its sole discretion, including, but not
limited to: (i) the allocation, for federal income and other tax purposes, to
such class or series of Limited Partnership Interests of items of Partnership
income, gain, loss, deduction and credit; (ii) the rights of such class or
series of Limited Partnership Interests to share in Partnership distributions;
(iii) the rights of such class or series of Limited Partnership Interests upon
dissolution and liquidation of the Partnership; (iv) whether such class or
series of Limited Partnership Interests is redeemable by the Partnership and,
if so, the price at which, and the terms and conditions on which, such class
or series of Limited Partnership Interests may be redeemed by the Partnership;
(v) whether such class or series of Limited Partnership Interests is issued
with the privilege of conversion and, if so, the rate at and the terms and
conditions upon which such class or series of Limited Partnership Interests
may be converted into any other class or series of Limited Partnership
Interests; (vi) the terms and conditions of the issuance of such class or
series Limited Partnership Interests, and all other matters relating to the
assignment thereof; and (vii) the rights of such class or series of Limited
Partnership Interests to vote on matters relating to the Partnership and this
Agreement.
(c) Notwithstanding the other provisions of this Section
4.02, except as provided in Section 2.05, the Partnership will not issue any
Limited Partnership Interests or classes or series thereof or any other type
of security unless:
(i) the Partnership receives an Assignment
Determination, Limited Liability Determination and a Tax
Determination with respect to such issuance; or
(ii) such issuance occurs pursuant to the employee
benefit plans sponsored by the General Partner, the
Partnership, Alliance Holding or any Persons controlled by
the Partnership or Alliance Holding in accordance with
Section 6.15 and the corresponding issuance by Alliance
Holding is in accordance with Section 4.02(c)(ii) of the
Alliance Holding Partnership Agreement.
(d) Upon the issuance pursuant to this Section 4.02 of any
class or series of Limited Partnership Interests, or any other securities, the
General Partner (pursuant to the General Partner's powers of attorney from the
Limited Partners), without the approval at the time of any Partner (each
Person accepting Limited Partnership Interests being deemed to approve of such
amendment), may amend any provision of this Agreement, and execute, swear to,
acknowledge, deliver, file and record, if required, an amended Certificate of
Limited Partnership and whatever other documents may be required in connection
therewith, as shall be necessary or desirable to reflect the authorization and
issuance of such class or series of Limited Partnership Interests or other
securities and the relative rights and preferences of such class or series of
Limited Partnership Interests or other securities.
(e) The General Partner or any Affiliate of the General
Partner may, but shall not be obligated to, make Contributions to the
Partnership in exchange for Limited Partnership Interests, provided that the
number of Limited Partnership Interests issued in exchange for any such
Contribution shall not exceed the Net Value of the Contribution divided by the
LP Interest Price of such class and series. The General Partner shall hold
such Limited Partnership Interest in its capacity as a Limited Partner of the
Partnership.
SECTION 4.03. Record of Contributions. The books and records of the
Partnership shall include true and full information regarding the amount of
cash and cash equivalents and a designation and statement of the Net Value of
any other property or other consideration contributed by each Partner to the
Partnership.
SECTION 4.04. Splits and Combinations. (a) The General Partner may
cause the Partnership to make a distribution in Limited Partnership Interests
to all Limited Partners of any class or series or may effect a subdivision or
combination of Limited Partnership Interests, but in each case only on a pro
rata basis so that, after such distribution, subdivision or combination, each
Limited Partner shall have the same proportionate economic interest in the
Partnership as before such distribution, subdivision or combination, subject
to Section 4.06, and provided,
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however, that no such distribution, subdivision or combination may be made
unless a distribution, subdivision or combination at the same proportionate
rate is simultaneously made by Alliance Holding with respect to Alliance
Holding LP Units and Alliance Holding GP Units.
(b) Whenever such a distribution, subdivision or combination
is declared, the General Partner shall select a Record Date (which shall not
be prior to the date of the declaration) as of which the distribution,
subdivision or combination shall be effective and shall notify each Limited
Partner of the distribution, subdivision or combination.
(c) Promptly following such distribution, subdivision or
combination, the General Partner may cause the Partnership to issue to the
Limited Partners as of such Record Date new LP Certificates representing the
new number of Limited Partnership Interests, or adopt such other procedures as
it may deem appropriate to reflect such distribution, subdivision or
combination; provided, however, that in the case of any such distribution,
subdivision or combination resulting in a smaller total number of Limited
Partnership Interests outstanding, the General Partner may require, as a
condition to the delivery of such new LP Certificate, the surrender of any LP
Certificate representing the Limited Partnership Interests prior to such
declaration.
(d) The General Partner shall give notice to Partners of any
distribution, subdivision or combination pursuant to this Section 4.04 at
least 10 days prior to the effective date thereof.
SECTION 4.05. No Preemptive Rights. No Person shall be granted or
have any preemptive, preferential or other similar right with respect to (i)
additional Contributions, (ii) the issuance or sale of new, unissued or
treasury Limited Partnership Interests, (iii) the issuance or sale of any
obligations, evidences of indebtedness or other securities of the Partnership,
whether or not convertible into or exchangeable for, or carrying or
accompanied by any rights to receive, purchase or subscribe to, any such new,
unissued or treasury Limited Partnership Interests, (iv) the issuance of any
subscription right to or right to receive, or any warrant or option for the
purchase of, any of the foregoing Limited Partnership Interests or securities,
or (v) the issuance or sale of any other Limited Partnership Interests or
securities that may be issued or sold by the Partnership.
SECTION 4.06. No Fractional Interests. No fractional Limited
Partnership Interests shall be issued by the Partnership; instead, in the sole
discretion of the General Partner, each fractional Limited Partnership
Interest shall be rounded to the nearest whole Limited Partnership Interest
(the next higher whole Limited Partnership Interest if the fraction is
precisely 1/2) or an amount equal to the product of the LP Interest Price and
such fraction shall be paid in cash by the Partnership.
SECTION 4.07. No Withdrawal. No Person shall be entitled to withdraw
any part of his Contribution or the amount of his Capital Account, or to
receive any distribution from the Partnership, except as otherwise provided in
this Agreement.
SECTION 4.08. Loans from Partners; No Interest on Capital Account
Balances. If any Partner shall advance funds to the Partnership in excess of
the amounts required hereunder to be contributed by it to the capital of the
Partnership, such advance shall not be considered a Contribution and the
making of such advance shall neither result in any increase in the amount of
the Capital Account of such Partner nor entitle such Partner to any increase
in its Percentage Interest. The amount of any such advance shall be a debt of
the Partnership to such Partner and shall be payable or collectible only out
of the Partnership Assets in accordance with the terms and conditions upon
which such advance is made. No interest shall be paid by the Partnership on
Contributions or on the amount of any Capital Account.
SECTION 4.09. Capital Accounts. The Partnership shall maintain for
each Partner (which terms for purposes of this Section 4.09, Section 4.10 and
Article 5 shall refer to the beneficial owner of an interest held by a nominee
in any case in which the nominee has furnished the identity of such owner to
the Partnership pursuant to
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Section 6031(c) of the Code) a separate Capital Account in accordance with
Section 704 of the Code. The initial Capital Account of any Person who becomes
a Partner by making a Contribution to the Partnership shall be equal to the
cash amount or Net Value of all Contributions made by such Person to the
Partnership. Each Capital Account shall be increased by (A) the cash amount or
Net Value of all Contributions made by such Person to the Partnership pursuant
to this Agreement and (B) all items of Partnership income and gain computed in
accordance with Section 4.10(a) and allocated to such Person pursuant to
Section 5.04 and Section 5.05, and decreased by (A) the cash amount or Net
Value of all Distributions made to such Person pursuant to this Agreement and
(B) all items of Partnership deduction and loss computed in accordance with
Section 4.10(a) and allocated to such Person pursuant to Section 5.04 and
Section 5.05, and shall otherwise be maintained in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv). Provisions of this Section 4.09 shall,
to the extent not inconsistent with the terms thereof, be construed in
accordance with Treasury Regulation Section 1.704-1(b)(2)(iv). Each Person who
holds one or more Partnership Interests shall have one Capital Account
reflecting all Partnership Interests owned by such Person.
SECTION 4.10. Capital Account Calculations and Adjustments. (a) For
purposes of computing the amount of any item of income, gain, deduction or
loss to be reflected in the Capital Accounts, the determination, recognition
and classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including any
method of depreciation, cost recovery or amortization used for this purpose),
provided that:
(i) In accordance with the requirements of Section
704(b) and Section 704(c) of the Code and Treasury
Regulation Section 1.704-1(b)(2)(iv)(d), any deductions for
depreciation, cost recovery or amortization attributable to
Contributed Property shall be determined as if the adjusted
basis of such property on the date it was acquired or deemed
to be acquired by the Partnership was equal to the Net Value
of such property. Upon an adjustment pursuant to Section
4.10(c) to the Carrying Value of any Partnership Asset
subject to depreciation, cost recovery or amortization, any
further deductions for such depreciation, cost recovery or
amortization attributable to such Partnership Asset shall be
determined as if the adjusted basis of such Partnership
Asset was equal to the Carrying Value of such property
immediately following such adjustment.
(ii) Any income, gain or loss attributable to the
taxable disposition of any property shall be determined by
the Partnership as if the adjusted basis of such property as
of such date of disposition was equal in amount to the
Partnership's Carrying Value with respect to such property
as of such date.
(iii) The amounts of any adjustments to the basis
(or Carrying Values) of Partnership Assets made pursuant to
Section 743 of the Code shall not be reflected in Capital
Accounts, but the amounts of any adjustments to the basis
(or Carrying Values) of Partnership Assets made pursuant to
Section 734 of the Code as a result of the Distribution of
property by the Partnership to a Partner shall (i) be
reflected in the Capital Account of the Person receiving
such Distribution in the case of a Distribution in
liquidation of such Person's interest in the Partnership and
(ii) otherwise be reflected in Capital Accounts in the
manner in which the unrealized income and gain that is
displaced by such adjustments would have been shared had the
property been sold at its Carrying Value immediately prior
to such adjustments.
(iv) The computation of all items of income, gain,
loss and deduction shall be made, as to those items
described in Section 705(a)(1)(B) or Section 705(a)(2)(B) of
the Code, without regard to the fact that such items are not
includible in gross income or are neither currently
deductible nor capitalizable for federal income tax
purposes. For this purpose, amounts paid or incurred to
organize the Partnership or to promote the sale of interests
in the Partnership that are neither deductible nor
amortizable under Section 709 of the Code, and deductions
for any losses
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incurred in connection with the sale or exchange of
Partnership Assets disallowed pursuant to Section 267(a)(1)
or Section 707(b) of the Code, shall be treated as
expenditures described in Section 705(a)(2)(B) of the Code.
(b) In the case of the transfer of a Limited Partnership
Interest or the General Partnership Interest, the transferee of such Limited
Partnership Interest or the General Partnership Interest shall succeed to a
Capital Account relating to the Limited Partnership Interest or the General
Partnership Interest transferred and the Capital Account of the transferor
shall be adjusted to reflect the Capital Account of the transferee.
(c) To the extent that the General Partner in its sole
discretion deems it appropriate (A) immediately prior to an issuance of
additional Limited Partnership Interests for Contributions pursuant to Section
4.02, or (B) to reflect the sale, exchange or other disposition of all or
substantially all of the Partnership Assets during any fiscal year in which
such a sale, exchange or other disposition occurs, the Capital Accounts of all
Partners and the Carrying Values of all Partnership Assets may be adjusted in
accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f) (consistent
with the provisions hereof) upward or downward to reflect any Unrealized Gain
or Unrealized Loss attributable to each Partnership Asset as if such
Unrealized Gain or Unrealized Loss had been recognized upon an actual sale of
each such Partnership Asset at such time and had been allocated to the
Partners pursuant to Sections 5.04 and 5.05. Such Unrealized Gain or
Unrealized Loss shall be determined by the General Partner using such
reasonable methods of valuation as it in its sole discretion deems
appropriate.
(d) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(e), immediately prior to the Distribution of any Partnership
Asset in kind, the Capital Accounts of all Partners and the Carrying Values of
all such Partnership Assets shall be adjusted (consistent with the provisions
hereof) upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to each such Partnership Asset as if such Unrealized Gain or
Unrealized Loss had been recognized upon an actual sale of each such
Partnership Asset immediately prior to such distribution and had been
allocated to the Partners, at such time, pursuant to Sections 5.04 and 5.05.
Such Unrealized Gain or Unrealized Loss shall be determined by the General
Partner in its sole discretion and such determination shall be binding and
conclusive upon the Partnership and Partners.
ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS
SECTION 5.01. Pass-Through Cash Distributions. Within 75 days after
the last day of each calendar quarter of the Partnership, the General Partner
shall distribute in cash the Partnership's Available Cash Flow. Such
distributions shall be made 1% to the General Partner and 99% among the
Limited Partners who were Record Holders on such Record Date as shall be
selected by the General Partner in its sole discretion, pro rata in accordance
with their Percentage Interests.
SECTION 5.02. Special Distributions. Any Distributions (other than a
Distribution made (x) from Available Cash Flow, or (y) in connection with the
dissolution of the Partnership) may be made by the General Partner in such
amounts and at such times as the General Partner, in its sole discretion, may
determine, 1% to the General Partner and 99% among all Limited Partners, pro
rata in accordance with their Percentage Interests.
SECTION 5.03. General Rules with Respect to Distributions. (a) The
General Partner is authorized to distribute property in kind only in
connection with the dissolution of the Partnership pursuant to Article 15.
(b) The General Partner shall specify a Record Date for any
Distribution, and any cash or property distributed shall be distributed to the
Partners who were Record Holders on the books of the Partnership as of the
Record Date, in accordance with this Article 5. The Record Date for any
Distribution to be made pursuant to Section 5.02 shall be (i) in the case of a
Distribution that is attributable to the proceeds from the sale or other
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disposition by the Partnership of Partnership Assets other than in the
ordinary course of its business, the date of such sale or other disposition
and (ii) in the case of any other Distribution, such Record Date as selected
by the General Partner in its sole discretion.
(c) Any amount of taxes withheld pursuant to Section 9.04,
and any amount of taxes, interest or penalties paid by the Partnership to any
governmental entity, with respect to amounts allocated or distributable to a
Person shall be deemed to be a Distribution or payment to such Person and
shall reduce the amount otherwise distributable to such Person pursuant to
this Article 5.
(d) Any amount otherwise distributable to a Person that is
retained by the Partnership pursuant to Section 6.14(b) shall be deemed to be
distributed to such Person and to be contributed to the Partnership by such
Person immediately thereafter.
(e) No Distribution (other than a Distribution pursuant to
Article 15) with respect to all or any portion of a calendar year shall be
made to a Person (other than the General Partner) if, after giving effect to
expected allocations of Net Income, Net Loss or Depreciation for such calendar
year, the Distribution would create or increase a deficit in such Person's
Capital Account in excess of such Person's share of the Partnership's "Minimum
Gain" as defined in Treasury Regulation Section 1.704-2(b)(2).
(f) The requirement of the General Partner or the
Partnership to make any and all Distributions provided for in this Agreement
shall be subject to the limitations contained in the Delaware Act and no
Distribution shall be made in violation of the provisions thereof or hereof.
SECTION 5.04. Allocations of Net Income, Net Loss and Depreciation.
For Capital Account purposes, except as otherwise provided in Section 5.05,
Net Income, Net Loss and Depreciation of the Partnership shall be determined
and allocated as set forth in this Section 5.04, and allocations of Net Income
and Net Loss shall be deemed to be allocations of proportionate shares of the
items of income, gain, loss and deduction from which Net Income and Net Loss
are computed. Net Income, Net Loss and Depreciation of the Partnership with
respect to a fiscal year of the Partnership shall be allocated to each month
in such fiscal year on a pro rata basis.
(a) Net Income of the Partnership shall be allocated 1% to
the General Partner and 99% among the Limited Partners, pro rata in accordance
with their Percentage Interests.
(b) Depreciation of the Partnership for each month shall be
allocated as follows:
(i) First, to the General Partner and any Corporate
Affiliates (other than Alliance Holding) in accordance with
their Percentage Interests, an amount of Depreciation with
respect to the customer lists associated with the investment
management agreements originally contributed by ACMC or its
Affiliates to Alliance Holding and contributed by Alliance
Holding to the Partnership equal to the amount of
Depreciation allocated to the General Partner and such
Corporate Affiliates for federal income tax purposes
pursuant to Section 5.06(b) with respect to such month;
(ii) Next, Depreciation with respect to Partnership
Assets for which deductions for Depreciation may be claimed
for federal income tax purposes (other than the customer
lists referred to in Section 5.04(b)(i)) to the General
Partner and Limited Partners, pro rata in accordance with
their Percentage Interests;
provided, however, that Depreciation shall not be allocated to a Limited
Partner to the extent such allocation would create or increase a negative
balance in such Limited Partner's Capital Account, and any such Depreciation
not so allocated to such Limited Partner shall be allocated to the General
Partner. For purposes of this Section 5.04(b), the
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determination of Capital Account balances shall be made (i) after giving
effect to (A) all Distributions made with respect to the calendar quarters
before the month in question pursuant to Article 5 and (B) the allocation of
Net Income for the month in question, and (ii) before giving effect to the
allocation of Net Loss for the month in question.
(c) Net Loss of the Partnership shall be allocated first, to
the General Partner and Limited Partners having positive Capital Account
balances so as to cause their respective Capital Account balances to be in
(or, if not possible, closer to) the same proportion to each other as their
respective Percentage Interests and then in accordance with their respective
Percentage Interests until all such positive balances have been eliminated;
and the balance, if any, to the General Partner in respect of its General
Partnership Interest. Section 5.04(a) notwithstanding, to the extent
subsequent Net Income of the Partnership does not exceed Net Loss allocated
pursuant to this Section 5.04(c), such Net Income shall be allocated (A)
first, to the General Partner in respect of its General Partnership Interest
until such allocated Net Income equals Net Loss allocated to the General
Partner pursuant to this Section 5.04(c); and (B) the balance, if any, to the
General Partner and Limited Partners in the same proportions and amounts as
Net Loss was allocated pursuant to this Section 5.04(c). For purposes of this
Section 5.04(c), the determination of Capital Account balances shall be made
after giving effect to all Distributions made with respect to calendar
quarters before the month in question pursuant to Article 5.
(d) All items of income, gain, loss and deduction resulting
from any transaction the proceeds of which are distributed to the Partners
pursuant to Section 5.02 shall be allocated among the General Partner and the
Limited Partners, pro rata in accordance with their Percentage Interests.
SECTION 5.05. Special Provisions Governing Capital Account
Allocations. The following special provisions shall apply whether or not
inconsistent with the provisions of Section 5.04:
(a) If there is a net decrease in "partnership minimum gain"
(within the meaning of Treasury Regulation Section 1.704-2(b)(2)) during a
fiscal year, all Persons with a deficit balance in their Capital Accounts at
the end of such year shall be allocated, before any other allocations of
Partnership items for such fiscal year, items of income and gain for such year
(and if necessary, subsequent years), in the amount and in the proportions
necessary to eliminate such deficits as quickly as possible. This Section
5.05(a) is intended to comply with the requirements of Treasury Regulation
Section 1.704-2(f), and is to be interpreted to comply with the requirements
of such regulation.
(b) If any Person unexpectedly receives any adjustments,
allocations or Distributions described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6),
items of income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income, and gain) shall be specially
allocated to such Person in an amount and manner sufficient to eliminate a
deficit in its Capital Account created by such adjustments, allocations or
Distributions as quickly as possible. This Section 5.05(b) is intended to
constitute a "qualified income offset" within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(3). Any special allocations of items
of income or gain pursuant to this Section 5.05(b) shall be taken into account
in computing subsequent allocations of Net Income or Net Loss so that the net
amounts of any items so allocated shall, to the extent possible, be equal to
the net amounts that would have been allocated to each such Person if such
unexpected adjustments, allocations or Distributions had not occurred.
(c) Section 5.04(a) notwithstanding, in the event of a sale
or transfer of a Limited Partnership Interest by the General Partner or any of
its Corporate Affiliates (other than to the General Partner or a Corporate
Affiliate of the General Partner or in a transaction in which the General
Partner and its Corporate Affiliates transfer their entire interest in the
Partnership) the General Partner may, in its sole discretion, allocate gross
income to the General Partner or such Corporate Affiliate, as the case may be,
to the extent required to make the Capital Account of the General Partner or
such Corporate Affiliate immediately prior to such sale or transfer equal to
the product of (I) the aggregate Percentage Interest of the General Partner or
such Corporate Affiliate, (II)
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the quotient obtained by dividing the aggregate amount of Limited Partnership
Interests outstanding by 0.99 and (III) an amount equal to the Capital Account
of a Limited Partnership Interest.
(d) Any net gains realized by the Partnership upon the
dissolution of the Partnership shall be credited to the Capital Accounts of
the Partners (after crediting or charging thereto the appropriate portion of
Net Income, Net Loss and Depreciation and after giving effect to all amounts
distributed or to be distributed to such Partners with respect to all calendar
quarters of the Partnership prior to the quarter in which the dissolution of
the Partnership occurs) in the following priority:
(i) First, to those Partners whose Capital Accounts
have negative balances, in proportion to such negative
balances, until such negative balances have been eliminated;
(ii) Next, to the Partners in a manner so as to
cause such Partners' respective Capital Account balances to
be in the same proportion to each other as their respective
Percentage Interests; and
(iii) The balance, if any, 1% to the General
Partner and 99% among the Limited Partners, pro rata in
accordance with their Percentage Interests.
(e) In the event any net gains realized by the Partnership
upon the dissolution of the Partnership are insufficient to cause the
Partners' respective Capital Account balances to be in the ratios of their
respective Percentage Interests, then, Section 5.04(a) notwithstanding, gross
income shall be allocated to those Partners whose Capital Accounts have
balances (after giving effect to the allocations provided in Section 5.05(d)),
that are less than the amount required to make all Partners' Capital Account
balances be in the ratio of their respective Percentage Interests until all
Partners' Capital Account balances are in such ratios; provided, however, that
an allocation shall not be made pursuant to this Section 5.05(e) to the extent
such allocation would cause or increase a negative balance in any other
Partner's Capital Account.
(f) If any Partner makes a payment to the Partnership to pay
an expense or cover a loss of the Partnership, or pays an expense of the
Partnership, including, without limitation, any organizational expenses
incurred in connection with the Reorganization and any costs incurred under
the Indemnification and Reimbursement Agreement, and the result is that the
Partnership is required to recognize income or is entitled to a loss or
deduction with respect to such amount so contributed or paid, then such
income, loss or deduction shall be specially allocated to such Partner.
(g) In the event that the Internal Revenue Service is
successful in asserting an adjustment to the taxable income of a Partner and,
as a result of any such adjustment, the Partnership is entitled to a deduction
for federal income tax purposes with respect to any portion of such
adjustment, such deduction shall be allocated to such Partner.
(h) The General Partner may, in its sole discretion and
without the approval of any other Partner, make special allocations of Net
Income, Net Loss or Depreciation or items thereof (including, but not limited
to, gross income) to the extent necessary to make the Capital Account balances
of the Partners be in the ratios of their Percentage Interests. In addition to
the other special allocations that the General Partner may make under this
Section 5.05(h), the General Partner may, in its sole discretion and without
the approval of any other Partner, make special allocations of Net Income, Net
Loss or Depreciation (or items thereof) and adopt such other methods and
procedures in order to preserve or achieve uniformity of the Partnership
Interests, but only if such allocations and methods and procedures would not
have a material adverse effect on the Partners holding the Partnership
Interests and if they are consistent with the principles of Section 704 of the
Code.
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(i) In the event that the Internal Revenue Service is
successful in asserting an adjustment to the allocations of Net Income, Net
Loss or Depreciation provided for in Sections 5.04 and 5.05 for federal income
tax purposes, such adjustment shall not have any effect on Capital Accounts or
on the Distributions made or to be made pursuant to the provisions of this
Agreement, unless the General Partner determines that giving effect to such
adjustment would make the Partners' Capital Account balances be in the
proportion of the Percentage Interests.
SECTION 5.06. Allocations for Tax Purposes. (a) For federal income
tax purposes, except as otherwise provided in this Section 5.06, each item of
income, gain, loss and deduction of the Partnership shall be allocated, for
each month, among the Partners in the same proportions as items comprising Net
Income, Net Loss or Depreciation, as the case may be, are allocated among the
Partners. Credits shall be allocated as provided in Treasury Regulation
Section 1.704-1(b)(4)(ii).
(b) Depreciation of the Partnership for federal income tax
purposes for each month, with respect to the customer lists associated with
the investment management agreements contributed by ACMC or its Affiliates to
Alliance Holding and by Alliance Holding to the Partnership (but not including
any Depreciation attributable to an adjustment on the books of the Partnership
pursuant to Section 734(b) of the Code), shall be allocated to the General
Partner and any of its Corporate Affiliates which hold Limited Partnership
Interests, pro rata in accordance with their respective Percentage Interests.
(c) In the case of Contributed Property, items of income,
gain, loss or deduction attributable to such Contributed Property shall be
allocated among the Partners in a manner that takes into account the variation
between the adjusted basis to the Partnership of such Contributed Property and
the Net Value of such Contributed Property at the time of contribution, as
required by Section 704(c) of the Code, to the extent such allocation reduces
Book-Tax Disparities. The General Partner shall have the sole discretion to
make additional allocations of income, gain, loss or deduction in order to
eliminate such Book-Tax Disparities as quickly as possible, provided such
allocations are consistent with the principles of Section 704(c) of the Code.
The General Partner shall have the sole discretion to choose any method of
allocations permissible under Treasury Regulation Section 1.704-3 to reduce or
eliminate Book-Tax Disparities.
(d) In the case of Adjusted Property, items of income, gain,
loss or deduction attributable thereto shall (A) first, be allocated among the
Partners in a manner consistent with the principles of Section 704(c) of the
Code to take into account the Unrealized Gain or Unrealized Loss attributable
to such property and the allocation thereof pursuant to Section 4.10(c) to the
extent such allocation reduces Book-Tax Disparities, and (B) second, in the
event such property was originally Contributed Property, be allocated among
the Partners in a manner consistent with Section 5.06(b) above. The General
Partner shall have the sole discretion to make additional allocations of
income, gain, loss or deduction in order to eliminate such Book-Tax
Disparities as quickly as possible, provided such allocations are consistent
with the principles of Section 704(c) of the Code. The General Partner shall
have the sole discretion to choose any method of allocations permissible under
Treasury Regulation Section 1.704-3 to reduce or eliminate Book-Tax
Disparities.
(e) To the extent of any Recapture Income resulting from the
sale or other taxable disposition of a Partnership Asset, the amount of any
gain from such disposition allocated to (or recognized by) a Partner for
federal income tax purposes pursuant to the above provisions shall be deemed
to be Recapture Income to the extent such Partner has been allocated or has
claimed any deduction directly or indirectly giving rise to the treatment of
such gain as Recapture Income.
(f) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and allocated to
the Partners in accordance with the provisions hereof shall be determined
without regard to any adjustment made pursuant to Section 743 of the Code;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted by
Section 743 of the Code and any adjustments made pursuant to Section 743 of
the Code shall be
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allocated to the extent permitted under and in accordance
with the rule of Treasury Regulation Section 1.704- 1(b)(2)(iv)(m).
(g) The General Partner may, in its sole discretion and
without the approval of any other Partner, make special allocations of Net
Income, Net Loss or Depreciation or items thereof (including, but not limited
to, gross income) (i) to the extent necessary to make the Capital Account
balances of the Partners be in the ratios of their Percentage Interests or
(ii) that are consistent with the principles of Section 704 of the Code and
Section 5.04 and to amend the provisions of this Agreement as appropriate to
reflect the proposal or promulgation of Treasury Regulations under Subchapter
K of the Code. The General Partner may adopt and employ such methods and
procedures for (A) the maintenance of book and tax capital accounts, (B) the
determination and allocation of adjustments under Sections 704(c), 734 and 743
of the Code, (C) the determination and allocation of Net Income, Net Loss,
Depreciation, taxable income, taxable loss and items thereof under this
Agreement and pursuant to the Code, (D) the determination of the identities
and tax classification of Partners, (E) the provision of tax information and
reports to Partners, (F) the adoption of reasonable conventions and methods
for the valuation of assets and the determination of tax basis, (G) the
allocation of asset values and tax basis, (H) conventions for the
determination of cost recovery, depreciation and amortization deductions and
the maintenance of inventories, (I) the recognition of the transfer of Limited
Partnership Interests, and (J) compliance with other tax-related requirements,
including, but not limited to, the use of computer software and filing and
reporting procedures similar to those employed by other publicly-traded
partnerships, as it determines in its sole discretion are necessary and
appropriate to execute the provisions of this Agreement, comply with federal
and state tax laws, and to achieve uniformity of Limited Partnership
Interests. The General Partner shall be indemnified and held harmless by the
Partnership for any expenses, penalties or other liabilities arising as a
result of decisions made in good faith on any of the matters referred to in
the preceding sentence. If the General Partner determines, based upon advice
of counsel, that no reasonable allowable convention or other method is
available to preserve the uniformity of Limited Partnership Interests or the
General Partner in its discretion so elects, Limited Partnership Interests may
be separately identified as distinct classes to reflect differences in tax
consequences.
SECTION 5.07. Assignments. (a) Each item of income, gain, loss,
deduction or credit derived by the Partnership during a fiscal year shall be
determined and allocated on a monthly basis in accordance with the provisions
of this Article 5.
(b) Subject to applicable Treasury Regulations, the
Partnership shall treat Partners of record at the opening of business on the
first day of a calendar month as being the only Partners during such month. If
the General Partnership Interest or any Limited Partnership Interest is
transferred during any month, such items attributable, under the convention
set forth in the second sentence of Section 5.04, to such Partnership Interest
for such month shall be allocated to the holder of such Partnership Interest
on the first day of such month, provided, however, that (i) any income, gain,
loss, or deduction on a sale or other disposition of all or substantially all
of the Partnership Assets shall be allocated to the Partners on the date of
such sale or other disposition and (ii) any income, gain, loss or deduction
resulting from any transaction the proceeds of which are distributed to the
Partners pursuant to Section 5.02 shall be allocated to the Partners on the
date of such transaction. Distributions shall be made to the Partners as of
the applicable Record Date as provided in Section 5.03(b).
(c) The General Partner may revise, alter or otherwise
modify such methods of allocation (i) to the extent that it in its sole
discretion determines that the application of such methods would result in a
substantial mismatching of the allocation of Net Income, Net Loss or
Depreciation attributable to a period and the distribution of cash
attributable to the same period as between the transferor and transferee of
the Partnership Interest transferred that could be minimized by the
application of an alternative tax allocation method, or (ii) to the extent
necessary to conform the Partnership's tax allocations to the requirements of
any Treasury Regulations or rulings of the Internal Revenue Service.
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ARTICLE 6
MANAGEMENT AND OPERATION OF BUSINESS
SECTION 6.01. Management. (a) Except as otherwise expressly provided
in this Agreement, all decisions respecting any matter set forth herein or
otherwise affecting or arising out of the conduct of the business of the
Partnership shall be made by the General Partner, and the General Partner
shall have the exclusive right and full authority and responsibility to
manage, conduct, control and operate the Partnership's business and effect the
purposes and provisions of this Agreement. The General Partner shall have full
authority to do all things on behalf of the Partnership deemed necessary or
desirable by it in the conduct of the business of the Partnership, including,
but not limited to, exercising all of the powers contained in Section 3.02 and
to effectuate the purposes specified in Section 3.01. The power and authority
of the General Partner pursuant to this Agreement shall be liberally construed
to encompass the General Partner's undertaking, on behalf of the Partnership,
all acts and activities in which a limited partnership may engage under the
Delaware Act. The power and authority of the General Partner shall include,
but shall not be limited to, the power and authority on behalf of the
Partnership and at the expense of the Partnership:
(i) To cause the Partnership to execute, deliver
and perform the Reorganization Agreement, the
Indemnification and Reimbursement Agreement and all other
agreements, documents and instruments as the General Partner
may deem necessary or appropriate to consummate the
transactions contemplated thereby;
(ii) To cause the Partnership to take all such
actions as may be necessary or appropriate to effect the
Reorganization, including the Alliance Holding Contribution;
(iii) To make all operating decisions concerning
the business of the Partnership;
(iv) To cause the Partnership to acquire, dispose
of, mortgage, pledge, encumber, hypothecate, assign in trust
for creditors, or exchange any or all assets or properties
(including the Partnership Assets), including, but not
limited to, its goodwill;
(v) To use the assets or properties of the
Partnership (including, but not limited to, cash on hand)
for any purpose, and on any terms, including, but not
limited to, the financing of Partnership operations, the
lending of funds to other Persons, including Alliance
Holding, the repayment of obligations of the Partnership,
the conduct of additional Partnership operations and the
purchase or acquisition of interests in properties or other
assets, including, but not limited to, such interests in
real property as may be acquired in connection with
arrangements for the use of facilities in connection with
the Partnership's operations or the acquisition of any other
assets or interests in property;
(vi) To negotiate, execute, amend and terminate,
and to cause the Partnership to perform, any contracts,
conveyances or other instruments that it considers useful or
necessary to the conduct of Partnership operations or the
implementation of its powers under this Agreement;
(vii) To select and dismiss employees and outside
attorneys, accountants, consultants and contractors and to
determine compensation and other terms of employment or
hiring;
(viii) To form any further limited or general
partnerships, joint ventures, corporations or other entities
or relationships that it deems desirable, and contribute to
such partnerships, ventures, corporations or other entities
any or all of the assets and properties of the Partnership,
and if the General Partner is a partner or participant in
any such entity or relationship to accord the General
Partner a share in the income of such entity or
relationship;
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(ix) To issue additional securities or additional
Limited Partnership Interests or additional classes or
series of Limited Partnership Interests pursuant to the
provisions of Section 4.02, and on behalf of the Partnership
(but subject to the other provisions of this Agreement);
(x) To purchase, sell or otherwise acquire or
dispose of Limited Partnership Interests, at such times and
on such terms as it deems to be in the best interests of the
Partnership;
(xi) To maintain or cause to be maintained records
of all rights and interests acquired or disposed of by the
Partnership, all correspondence relating to the business of
the Partnership and the original records (or copies on such
media as the General Partner may deem appropriate) of all
statements, bills and other instruments furnished the
Partnership in connection with its business;
(xii) To maintain records and accounts of all
operations and expenditures, make all filings and reports
required under applicable rules and regulations of any
governmental department, bureau, or agency, any securities
exchange, any automated quotation system of a registered
securities association, and any self-regulatory body, and
furnish the Partners with all necessary United States
federal, state or local income tax reporting information or
such information with respect to any other jurisdiction;
(xiii) To purchase and maintain, at the expense of
the Partnership, liability, indemnity, and any other
insurance (including, but not limited to, errors and
omissions insurance and insurance to cover the obligations
of the Partnership under Section 6.09), sufficient to
protect the Partnership, the General Partner, their
respective officers, directors, employees, agents, partners
and Affiliates, or any other Person, from those liabilities
and hazards which may be insured against in the conduct of
the business and in the management of the business and
affairs of the Partnership;
(xiv) To make, execute, assign, acknowledge and
file on behalf of the Partnership all documents or
instruments of any kind which the General Partner may deem
necessary or appropriate in carrying out the purposes and
business of the Partnership, including but not limited to,
powers of attorney, agreements of indemnification,
contracts, deeds, options, loan obligations, mortgages,
notes, documents, or instruments of any kind or character,
and amendments thereto, any of which may contain confessions
of judgment against the Partnership. No Person dealing with
the General Partner shall be required to determine or
inquire into the authority or power of the General Partner
to bind the Partnership or to execute, acknowledge or
deliver any and all documents in connection therewith;
(xv) To borrow money and to obtain credit in such
amounts, on such terms and conditions, and at such rates of
interest and upon such other terms and conditions as the
General Partner deems appropriate, from banks, other lending
institutions, or any other Person, the Partners or any of
their Affiliates, for any purpose of the Partnership, and to
pledge, assign, or otherwise encumber or alienate all or any
portion of the Partnership Assets, including any income
therefrom, to secure or provide for the repayment thereof.
As between any lender and the Partnership, it shall be
conclusively presumed that the proceeds of such loans are to
be and will be used for the purposes authorized herein and
that the General Partner has the full power and authority to
borrow such money and to obtain such credit;
(xvi) To assume obligations, enter into contracts,
including contracts of guaranty or suretyship, incur
liabilities, lend money and otherwise use the credit of the
Partnership, to secure
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any of the obligations, contracts or liabilities of the
Partnership by mortgage, pledge or other encumbrance of all
or any part of the property and income of the Partnership;
(xvii) To invest funds of the Partnership in
interest-bearing and non-interest-bearing accounts and
short-term investments including, but not limited to,
obligations of federal, state and local governments and
their agencies, money market and mutual funds (including,
but not limited to, those managed by the Partnership) and
any type of debt or equity securities (including repurchase
agreements and without regard to restrictions on
maturities);
(xviii) To make any election on behalf of the
Partnership as is or may be permitted under the Code or
under the taxing statutes or rules of any state, local,
foreign or other jurisdiction, and to supervise the
preparation and filing of all tax and information returns
which the Partnership may be required to file;
(xix) To employ and engage suitable agents,
employees, advisers, consultants and counsel (including any
custodian, investment adviser, accountant, attorney,
corporate fiduciary, bank or other reputable financial
institution, or any other agents, employees or Persons who
may serve in such capacity for the General Partner or any
Affiliate of the General Partner) to carry out any
activities which the General Partner is authorized or
required to carry out or conduct under this Agreement,
including, but not limited to, a Person who may be engaged
to undertake some or all of the general management, property
management, financial accounting and recordkeeping or other
duties of the General Partner, to indemnify such Persons on
behalf of the Partnership against liabilities incurred by
them in acting in such capacities and to rely on the advice
given by such Persons, it being agreed and understood that
the General Partner shall not be responsible for any acts or
omissions of any such Persons and shall assume no
obligations in connection therewith other than the
obligation to use due care in the selection thereof;
(xx) To pay, extend, renew, modify, adjust, submit
to arbitration, prosecute, defend, confess or compromise,
upon such terms as it may determine and upon such evidence
as it may deem sufficient, any obligation, suit, liability,
cause of action, or claim, including taxes, either in favor
of or against the Partnership;
(xxi) To qualify the Partnership to do business in
any state, territory, dependency or foreign country;
(xxii) To distribute cash or Partnership Assets to
Partners in accordance with Article 5;
(xxiii) In accordance with Section 2.05, to
restrict trading in Limited Partnership Interests or to
reconstitute and convert the Partnership into such entity as
shall be determined in accordance therewith;
(xxiv) To take such other action with respect to
the manner in which the Limited Partnership Interests are
being or may be transferred or traded as the General Partner
deems necessary or appropriate;
(xxv) To take all such actions as may be necessary
or appropriate to maintain or alter the one-for-one exchange
ratio of Limited Partnership Interests for Alliance Holding
LP Units or Alliance Holding limited partnership interests,
and vice versa, in the event that any circumstance exists or
is reasonably expected to exist which the General Partner
determines in its sole discretion would render inappropriate
the use of such exchange ratio;
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(xxvi) To possess and exercise any additional
rights and powers of a general partner under the partnership
laws of Delaware (including, but not limited to, the
Delaware Act) and any other applicable laws, to the extent
not inconsistent with this Agreement; and
(xxvii) In general, to exercise in full all of the
powers of the Partnership as set forth in Section 3.02 and
to do any and all acts and conduct all proceedings and
execute all rights and privileges, contracts and agreements
of any kind whatsoever, although not specifically mentioned
in this Agreement, that the General Partner may deem
necessary or appropriate to the conduct of the business and
affairs of the Partnership or to carry out the purposes of
the Partnership. The specific expression of any power of
authority of the General Partner in this Agreement shall not
in any way limit or exclude any other power or authority
which is not specifically or expressly set forth in this
Agreement.
(b) Each of the Partners hereby approves, ratifies and
confirms the execution, delivery and performance of the Reorganization
Agreement, the Indemnification and Reimbursement Agreement and each other
agreement, document and instrument as the General Partner may deem necessary
or appropriate to consummate the transactions contemplated thereby, and agrees
that the General Partner is authorized to execute, deliver and perform the
Reorganization Agreement, the Indemnification and Reimbursement Agreement and
such other agreements, documents and instruments and the transactions
contemplated thereby without any further act, approval or vote of Partners,
notwithstanding any other provision of this Agreement, the Delaware Act or any
other applicable law, rule or regulation.
(c) The General Partner shall use all reasonable efforts to
cause to be filed any certificates or filings as may be determined in its sole
discretion by the General Partner to be reasonable and necessary or
appropriate for the formation and continuation and operation of a limited
partnership (or a partnership in which the Limited Partners have limited
liability) in the State of Delaware or any other state in which the
Partnership elects to do business. To the extent that the General Partner in
its sole discretion determines such action to be reasonable and necessary or
appropriate, the General Partner thereafter (i) shall file any necessary
amendments to the Certificate of Limited Partnership, including, but not
limited to, amendments to reflect successor or additional general partners
admitted pursuant to Section 13.02 and (ii) shall otherwise do all things
(including the appointment of registered agents of the Partnership and
management of registered offices of the Partnership) requisite to the
maintenance of the Partnership as a limited partnership under the laws of the
State of Delaware or any other state in which the Partnership may elect to do
business. If permitted by applicable law, the General Partner may omit from
the Certificate of Limited Partnership and from any other certificates or
documents filed in any state in order to qualify the Partnership to do
business therein, and from all amendments thereto, the names and addresses of
the Partners (other than the General Partner) and information relating to the
Contributions and shares of profits and compensation of the Partners (other
than the General Partner) or state such information in the aggregate rather
than with respect to each individual Partner. Except as provided in Section
7.05(a), the General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate of Limited Partnership or any
amendment thereto to any Limited Partner.
SECTION 6.02. Reliance by Third Parties. Notwithstanding any other
provisions of this Agreement to the contrary, no lender, purchaser or other
Person dealing with the Partnership shall be required to look to the
application of proceeds hereunder or to verify any representation by the
General Partner as to the extent of the interest in Partnership Assets that
the General Partner is entitled to encumber, sell or otherwise use, and any
such lender, purchaser or other Person shall be entitled to rely exclusively
on the representations of the General Partner as to its authority to enter
into such financing or sale arrangements and shall be entitled to deal with
the General Partner, without the joinder of any other Person, as if the
General Partner were the sole party in interest therein, both legally and
beneficially. To the fullest extent permitted by law, each Partner (other than
the General Partner) hereby waives any and all defenses or other remedies that
may be available against such lender, purchaser or other Person to contest,
negate or disaffirm any action of the General Partner in connection with any
sale or financing. In no
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event shall any person dealing with the General Partner or the General
Partner's representative with respect to any business or property of the
Partnership be obligated to ascertain that the terms of this Agreement have
been complied with, or be obligated to inquire into the necessity or
expedience of any act or action of the General Partner or the General
Partner's representative; and every contract, agreement, deed, mortgage,
security agreement, promissory note or other instrument or document executed
by the General Partner or the General Partner's representative with respect to
any business or property of the Partnership shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i)
at the time of the execution and delivery thereof this Agreement was in full
force and effect, (ii) such instrument or document was duly executed in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership, and (iii) the General Partner or the General Partner's
representative was duly authorized and empowered to execute and deliver any
and every such instrument or document for and on behalf of the Partnership.
SECTION 6.03. Purchase or Sale of Limited Partnership Interests. The
General Partner may cause the Partnership to purchase or otherwise acquire (or
may purchase or otherwise acquire on behalf of the Partnership) Limited
Partnership Interests. The General Partner or any of its Affiliates may also
purchase or otherwise acquire Limited Partnership Interests for its own
account and may, subject to the provisions of Article 12, sell or otherwise
dispose of such Limited Partnership Interests. Any Limited Partnership
Interests purchased for or on behalf of or otherwise held by the Partnership
shall not be deemed outstanding for any purposes under this Agreement;
provided that Limited Partnership Interests purchased for or on behalf of or
otherwise held by a Person in the "control" of the Partnership, as that term
is defined in the definition of an Affiliate in Article 1, for a business
purpose approved by the General Partner shall not be considered to have been
purchased for or on behalf of or otherwise held by the Partnership.
SECTION 6.04. Compensation and Reimbursement of the General Partner.
(a) The General Partner shall be reimbursed on a monthly or such other basis
as the General Partner shall determine (i) for all direct expenses it incurs
or makes on behalf of the Partnership (including amounts paid to any Person to
perform services for the Partnership) and (ii) for the General Partner's
legal, accounting, investor communications, utilities, telephone, secretarial,
travel, entertainment, bookkeeping, reporting, data processing, office rent
and other office expenses, salaries and other compensation and employee
benefits expenses, other administrative or overhead expenses and all other
expenses necessary to or appropriate for the conduct of the Partnership's
business which are incurred by the General Partner in operating the
Partnership's business (including, but not limited to, expenses allocated to
the General Partner by its Affiliates), and which are allocated to the
Partnership in addition to any reimbursement as a result of indemnification
pursuant to Section 6.09. The General Partner shall determine the fees and
expenses that are allocated to the Partnership by the General Partner in good
faith.
(b) The General Partner shall not receive any compensation
from the Partnership for services provided to the Partnership as General
Partner.
SECTION 6.05. Outside Activities. (a) The General Partner shall not
acquire any assets or enter into or conduct any business or activity except in
connection with or incidental to (i) the management or operations of the
Partnership and Alliance Holding, (ii) the performance of its obligations
required or authorized by this Agreement and the Alliance Holding Partnership
Agreement, (iii) the acquisition, ownership or disposition of Limited
Partnership Interests, Alliance Holding GP Units, Alliance Holding LP Units or
Alliance Holding limited partnership interests, (iv) its corporate governance
and existence and (v) acquiring, investing in, holding, disposing of or
otherwise dealing with passive investments.
(b) Any Indemnitee, except the General Partner, may compete,
directly or indirectly, with the Partnership and may engage in any business or
other activity, whether or not for profit and whether or not competitive with
or similar to any current or anticipated business activity of the Partnership,
including, but not limited to, providing investment management and advisory
services, and no such business or activity shall in any way be restricted by,
or considered to be in conflict with, this Agreement, the partnership
relationship established
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hereby or any principle of law or equity relating thereto. None of the
Partnership or any Partner shall have any rights in or with respect to any
such business or activity so engaged in by an Indemnitee, and no Indemnitee
shall have any obligation to offer any interest in any such business or
activity, or any opportunity relating thereto or to the business of the
Partnership, to the Partnership, any Partner or any other Persons who may have
or acquire any interest in the Limited Partnership Interests or the
Partnership. No decision or action taken by any such Indemnitee (or, to the
extent such decision or action was not taken with the specific intent of
providing an improper benefit to an Indemnitee to the detriment of the
Partnership, by the General Partner) with respect to any such business or
activity or any business or activity of the Partnership shall be subject to
review or challenge in any way or in any forum on the basis that it improperly
benefitted any such Indemnitee to the detriment of the Partnership or
otherwise involved any conflict of interest or breach of a duty of loyalty or
similar fiduciary obligation. No such Indemnitee shall be subject to any
liability or other obligation with respect to the matters described in this
Section 6.05(b). The Partnership shall not, and each Partner by its
acquisition of a Limited Partnership Interest hereby agrees that it will not,
assert in any manner or in any forum any claim with respect to the matters
described in this Section 6.05(b). The Partnership shall actively resist any
effort to assert any such claim on its behalf. This Section 6.05(b) is not
intended to affect any rights the Partnership may have under any contract or
agreement with any of its employees.
SECTION 6.06. Partnership Funds. The funds of the Partnership shall
be deposited in such account or accounts as are designated by the General
Partner. The Partnership shall at all times maintain books of account which
indicate the amount of funds of the Partnership on deposit in each such
account. All withdrawals from or charges against such accounts shall be made
by the General Partner by its officers or agents, or by employees or agents of
the Partnership. Funds of the Partnership may be invested as determined by the
General Partner, except in connection with acts otherwise prohibited by this
Agreement.
SECTION 6.07. Loans by the Partnership; Transactions and Contracts
with Affiliates. (a) The Partnership may (but shall have no obligation to)
lend Alliance Holding funds needed by Alliance Holding for working capital
purposes for such periods of time as the General Partner may determine at an
interest rate equal to the cost to the Partnership of obtaining such funds
from an unaffiliated third party.
(b) The Partnership will not lend any funds to the General
Partner or any of its Affiliates. Except as provided by this Agreement and the
Reorganization Agreement, the Partnership will not make any investments in the
General Partner or any Affiliates thereof except on terms approved by the
General Partner as being comparable to (or more favorable to the Partnership
than) those that would prevail in a transaction with an unaffiliated party.
(c) The assumption of liabilities and related obligations by
the Partnership pursuant to the Reorganization Agreement and each other
agreement, document and instrument as the General Partner may deem necessary
or appropriate to consummate the transactions contemplated thereby is hereby
ratified, confirmed and approved by all Partners.
(d) The General Partner may enter into an agreement with an
Affiliate of the General Partner to render services to the Partnership on
terms approved by the General Partner in good faith as being comparable to (or
more favorable to the Partnership than) those that would prevail in a
transaction with an unaffiliated party.
(e) Neither the General Partner nor any of its Affiliates
shall sell, transfer or convey any property to, or purchase any property from,
the Partnership, directly or indirectly, except on terms approved by the
General Partner in good faith as being comparable to (or more favorable to the
Partnership than) those that would prevail in a transaction with an
unaffiliated party; provided, however, that the requirements of this Section
6.07(e) shall be deemed to be satisfied as to any sale, transfer or conveyance
consummated by the General Partner in accordance with clause (y) of the first
sentence of Section 2.05.
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(f) Neither the General Partner nor any of its Affiliates
shall use or lease any property (including, but not limited to, office
equipment, computers, vehicles, aircraft and office space) of the Partnership
except on terms approved by the General Partner in good faith as being
comparable to (or more favorable to the Partnership than) those that would
prevail in a transaction with an unaffiliated party.
(g) Without limitation of Sections 6.07(a) through 6.07(f)
above, and notwithstanding anything to the contrary in this Agreement, any
transactions or arrangements with one or more Indemnitees described or
disclosed in the Reorganization Agreement and the Registration Statement are
hereby ratified, confirmed and approved by all Partners.
(h) Whenever a particular transaction or arrangement is
required under this Agreement to be "on terms approved by the General Partner
as being comparable to (or more favorable to the Partnership than) those that
would prevail in a transaction with an unaffiliated party", that requirement
shall be conclusively presumed to be satisfied as to any transaction or
arrangement that (x) is, in the reasonable and good faith judgment of the
General Partner, on terms substantially comparable to (or more favorable to
the Partnership than) those that would prevail in a transaction with an
unaffiliated party or (y) has been approved by a majority of those directors
of the General Partner who are not also directors, officers or employees of an
Affiliate of the General Partner.
(i) The General Partner or any Affiliate thereof may (but
shall have no obligation to) conduct, through such representatives as it may
designate, audits and other investigations of the Partnership and Persons
controlled by it as the General Partner may determine in its sole discretion.
Except as the General Partner or such Affiliate may expressly agree in writing
with the Partnership in a document that refers to this Section 6.07(i) and is
approved in the manner set forth in clause (y) of Section 6.07(h), (x) such
audit or investigation shall be without charge to the Partnership and Persons
controlled by it, (y) such audit or investigation shall be deemed to have been
undertaken solely for the benefit of the General Partner or such Affiliate and
neither of them shall have any obligation to divulge the results thereof to
the Partnership or any Partner or to take any action based thereon and (z) no
Indemnitee or other Person conducting or otherwise involved in such audit or
investigation shall have any obligation or liability to the Partnership or the
Partners by reason of such audit or investigation or the manner in or care (or
lack thereof) with which it is conducted.
SECTION 6.08. Liability of the General Partner and Other Indemnities.
(a) Whenever this Agreement or any other agreement contemplated hereby
provides that the General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its "sole discretion" or "discretion" or
under a grant of similar authority or latitude, the General Partner or such
Affiliate shall be entitled to consider only such interests and factors as it
desires and shall have no duty or obligation to give any consideration to any
interest of or other factors affecting the Partnership or any Partner, or (ii)
in its "good faith" or under another express standard, the General Partner or
such Affiliate shall act under such express standard and shall not be subject
to any other or different standards imposed by this Agreement, any other
agreement contemplated hereby or applicable law or in equity or otherwise.
(b) Neither the General Partner nor any other Indemnitee
shall be liable for monetary damages to the Partnership or Partners for errors
in judgment or for breach of fiduciary duty (including breach of any duty of
care or any duty of loyalty) unless it is established (the Person asserting
such liability having the burden of proof) that the General Partner's or such
other Indemnitee's action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the Partnership,
constituted actual fraud by the General Partner or such Indemnitee, or was
undertaken with reckless disregard for the best interests of the Partnership
or actual bad faith on the part of the General Partner or such Indemnitee. No
Indemnitee shall have any liability to the Partnership or Partners for any
action permitted by Section 6.05.
(c) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating
thereto to the Partnership or to any Partner, any such Indemnified Person,
including the General Partner, acting under this Agreement shall not be liable
to the Partnership or to any Partner for
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its good faith reliance on the provisions of this Agreement. The provisions of
this Agreement, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing in law or in equity, are agreed by
the Partners to replace such other duties and liabilities of such Indemnified
Person.
SECTION 6.09. Indemnification. (a) To the fullest extent permitted by
law but without duplication as to losses, claims, damages, liabilities and
expenses covered by the Indemnification and Reimbursement Agreement, with
respect to which the Partnership shall not be responsible pursuant to this
Section 6.09, each Indemnified Person (which for the purposes of this Section
6.09 shall mean (i) the General Partner, (ii) any Departing Partner, (iii)
each Affiliate of the General Partner or any Departing Partner, (iv) each
director of the General Partner in his capacity as such, (v) Alliance Holding,
(vi) each Affiliate of Alliance Holding and (vii) each other Indemnitee that
is designated as an Indemnified Person in an agreement or policy of the
General Partner) shall be indemnified and held harmless by the Partnership
from and against any and all losses, claims, damages, liabilities, whether
joint or several, expenses (including reasonable legal fees and expenses),
judgments, fines, settlements and other amounts arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which any Indemnified Person may be
involved, or threatened to be involved, as a party or otherwise, by reason of
(A) its present or former status as (x) the General Partner or a Departing
Partner, or an Affiliate thereof, (y) an officer, director, employee, partner,
agent or trustee of the Partnership, the General Partner or a Departing
Partner, or an Affiliate thereof, or (z) a Person serving at the request of
the Partnership in another entity in a similar capacity, or (B) any action
taken or omitted in any such capacity, if with respect to the matter at issue
the Indemnified Person acted in good faith and in a manner it reasonably
believed to be in, or not opposed to, the best interests of the Partnership
and, with respect to any criminal proceeding, had no reasonable cause to
believe its conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
the Indemnified Person acted in a manner contrary to that specified above. Any
designation of an Indemnitee as an Indemnified Person pursuant to clause (v)
of the first sentence of this Section 6.09(a) may (i) be made with respect to
an individual Indemnitee or a group of Indemnitees, (ii) be revoked or
modified by the General Partner in its discretion except to the extent, if
any, otherwise specified in the agreement or policy effecting such
designation, and (iii) be subject to such limitations and conditions as may be
specified in the agreement or policy effecting such designation.
(b) To the fullest extent permitted by law, expenses
(including reasonable legal fees) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding subject to this
Section 6.09 shall, from time to time, be advanced by the Partnership prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Partnership of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall be determined that such
Person is not entitled to be indemnified as authorized in Section 6.09(a).
(c) The advancement of expenses and indemnification provided
by this Section 6.09 shall be in addition to any other rights to which an
Indemnified Person may be entitled under any agreement, pursuant to any vote
of the Limited Partners, as a matter of law or otherwise, as to an action in
the Indemnified Person's capacity as (i) the General Partner, a Departing
Partner or an Affiliate thereof, (ii) an officer, director, employee, partner,
agent or trustee of the General Partner, any Departing Partner or an Affiliate
thereof, or (iii) a Person serving at the request of the Partnership in
another entity in a similar capacity, shall continue as to an Indemnified
Person who has ceased to serve in such capacity and shall inure to the benefit
of the heirs, successors, assigns, executors and administrators of such
Indemnified Person.
(d) The Partnership may purchase and maintain insurance on
behalf of the General Partner and such other Indemnified Persons as the
General Partner shall determine against any liability that may be asserted
against or expense that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
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(e) For purposes of this Section 6.09, the Partnership shall
be deemed to have requested an Indemnified Person to serve as fiduciary of an
employee benefit plan whenever the performance by such Indemnified Person of
its duties to the Partnership also imposes duties on it or otherwise involves
services by it to such Plan or participants or beneficiaries of such Plan;
excise taxes assessed on an Indemnified Person with respect to an employee
benefit plan pursuant to applicable law shall be deemed to be "fines" within
the meaning of Section 6.09(a); and action taken or omitted by an Indemnified
Person with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of such plan shall be deemed to be for a
purpose which is in, or not opposed to, the best interests of the Partnership.
(f) Any indemnification hereunder shall be satisfied solely
out of any insurance obtained pursuant to Section 6.09(d) or the assets of the
Partnership. In no event may an Indemnified Person subject the Partners or
Affiliates or any of them to personal liability by reason of indemnification
hereunder.
(g) An Indemnified Person shall not be denied
indemnification in whole or in part under this Section 6.09 because the
Indemnified Person had an interest in the transaction with respect to which
the indemnification applied if the transaction was otherwise permitted by the
terms of this Agreement.
(h) The indemnification provided in this Section 6.09 is for
the benefit of the Indemnified Persons and their respective heirs, successors,
assigns, executors and administrators and shall not be deemed to create any
right to indemnification for the benefit of any other Persons.
(i) The provisions of this Section 6.09 are not intended to
be exclusive and the General Partner may cause the Partnership to enter into
an indemnification agreement with any Indemnified Person, or to adopt policies
covering any group of Indemnified Persons on such terms as the General Partner
may determine in its sole discretion.
SECTION 6.10. Other Matters Concerning the General Partner. (a) The
General Partner may rely upon and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, bond, debenture or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The General Partner may consult with legal counsel
(including, but not limited to, counsel who may be regular counsel to, or an
employee of, the Partnership, the General Partner or any Affiliate
thereof), accountants, appraisers, management consultants, investment bankers
and other consultants and advisers selected by it and any opinion of any such
Person as to matters that the General Partner reasonably believes to be within
such Person's professional or expert competence shall be full and complete
authorization and protection in respect to any action taken or suffered or
omitted by the General Partner hereunder in good faith and in accordance with
such opinion.
(c) The General Partner shall not provide any Limited
Partner, in connection with such Limited Partner's Limited Partnership
Interest, with any mandatory or discretionary right to purchase any type of
security issued by the General Partner or its Affiliates.
(d) The General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney- or attorneys-in-fact. Each
such attorney shall, to the extent provided by the General Partner in the
power of attorney, have full power and authority to do and perform all and
every act and duty which is permitted or required to be done by the General
Partner hereunder.
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SECTION 6.11. Title to Partnership Assets. All Partnership Assets
shall be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively, shall have any ownership interest in such
Partnership Assets or any portion thereof. Title to any or all of the
Partnership Assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine. The
General Partner hereby declares and warrants that any Partnership Assets for
which legal title is held in the name of the General Partner shall be held in
trust by the General Partner for the use and benefit of the Partnership in
accordance with the terms and provisions of this Agreement, and any applicable
deed or similar title document shall so indicate. All Partnership Assets shall
be recorded as the property of the Partnership on its books and records,
irrespective of the name in which legal title to such Partnership Assets is
held.
SECTION 6.12. Sale of the Partnership's Assets. Notwithstanding any
other provision of this Agreement, the General Partner shall not cause the
Partnership to sell, transfer, pledge assign, convey or otherwise dispose of,
in a single transaction or series of related transactions, all or
substantially all of the Partnership Assets (other than pursuant to Section
2.05) unless (a) (i) such sale, transfer, pledge, assignment, conveyance or
other disposition has received Majority Approval (Majority Outside Approval if
the General Partner or any of its Corporate Affiliates have any direct or
indirect equity interest in any Person acquiring Partnership Assets in such
transaction) and (ii) the Partnership shall have received a Tax Determination
and Limited Liability Determination or (b) such sale, transfer, pledge,
assignment, conveyance or other disposition is in connection with a
liquidation of the Partnership pursuant to Article 15.
SECTION 6.13. No New Business. The Partnership shall not acquire all
or substantially all of the outstanding capital stock or assets of, or enter
into any partnership or joint venture with, any Person, other than Alliance
Holding, unless (i) such acquisition, partnership or joint venture is in
accordance with Sections 3.01 and 3.02 and (ii) it receives a Tax
Determination with respect thereto. Neither the General Partner nor the
Partnership shall become the general partner of any other partnership, other
than Alliance Holding, or joint venture unless such action is permitted by
Sections 6.01(a)(viii) and 6.05(a) (in the case of the General Partner) and
the Partnership receives a Tax Determination with respect thereto.
SECTION 6.14. Reimbursement of Expenses of Alliance Holding. (a) The
Partnership will pay on behalf of Alliance Holding, or reimburse Alliance
Holding as promptly as practicable for, all costs and expenses of any kind
whatsoever incurred by Alliance Holding, including, without limitation, all
costs and expenses associated with maintaining Alliance Holding as a public
partnership, all costs and expenses of any financial, legal, accounting or
other advisors, and all costs and expenses of any litigation or other
proceeding involving Alliance Holding (in each case, without duplication for
any such costs and expenses in connection with the Holdback Interests paid or
reimbursed pursuant to arrangements referred to in Section 2.01 (d) of the
Reorganization Agreement); provided that (i) the Partnership shall not pay or
reimburse (A) any tax imposed on Alliance Holding's share of the
Partnership's income, (B) any tax for which ELAS is required to indemnify
Alliance Holding pursuant to Section 3(a)(ii)(B) of the Indemnification and
Reimbursement Agreement, (C) any tax (other than an income tax) payable by
Alliance Holding to the extent that such tax is attributable to Alliance
Holding's partnership interest in the Partnership, (D) any interest, penalties
or additions to tax, and any liabilities, costs, expenses (including, without
limitation, reasonable expenses of investigation and attorneys' fees and
expenses), losses, damages, assessments, settlements or judgments, arising out
of or incident to the imposition, assessment or assertion of any tax described
in (A), (B) or (C), or (E) any Reorganization Costs or any Losses incurred in
connection with a Specified Proceeding (each capitalized term in this clause
(E) having the meaning set forth in the Indemnification and Reimbursement
Agreement); (ii) the Partnership shall not pay or reimburse costs and expenses
of Alliance Holding to the extent incurred in connection with business
activities other than the holding of its partnership interest in the
Partnership and activities related thereto (it being understood that making
passive investments of funds relating to the holding of its partnership
interest in the Partnership constitute such related activities; provided that
the Partnership shall not pay or reimburse any tax attributable to such
passive investments of funds, or any interest, penalties or additions to tax,
or any liabilities, costs, expenses (including, without limitation, reasonable
expenses of investigation and attorneys' fees and expenses), losses, damages,
assessments, settlements or judgments arising out of or incident to
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the imposition, assessment or assertion of any such tax); and (iii) the
Partnership shall not pay or reimburse costs and expenses of Alliance Holding
incurred in connection with the Holdback Interests to the extent Alliance
Holding realizes an economic benefit from the Holdback Interests.
(b) If ELAS or any of its Corporate Affiliates has made a
payment to, or indemnified, Alliance Holding pursuant to the Indemnification
and Reimbursement Agreement in respect of any tax for which Alliance Holding
would otherwise be entitled to reimbursement or payment under Section 6.14(a),
then the amount the Partnership is obligated to pay on behalf of, or reimburse
to, Alliance Holding on account of such tax shall be reduced by the amount
paid or indemnified by ELAS and its Corporate Affiliates.
(c) In the event that the Partnership is required to make a
payment on behalf of Alliance Holding, or to reimburse Alliance Holding,
pursuant to Section 6.14(a), for (i) any taxes and (ii) any interest,
penalties or additions to tax, and any liabilities, costs, expenses
(including, without limitation, reasonable expenses of investigation and
attorneys' fees and expenses), losses, damages, assessments, settlements or
judgments, arising out of or incident to the imposition, assessment or
assertion of any taxes (the sum of (i) and (ii) being referred to herein as a
"Tax Payment"), then the Partnership shall withhold from Distributions to be
made to Partners (other than Alliance Holding), in proportion to their
respective Percentage Interests, such amounts as may be required to enable the
Partnership to make such payment on behalf of, or reimbursement to, Alliance
Holding. If the Partnership is unable to withhold sufficient funds to make any
such payment or reimbursement, then the Partners (other than Alliance Holding)
shall make payments to the Partnership, in proportion to their respective
Percentage Interests, of an aggregate amount equal to such shortfall. The
Partnership shall not issue any Partnership Interests in respect of payments
made pursuant to this Section 6.14(b). Notwithstanding any other provision of
this Agreement, to the extent that a Partner has failed to make a payment
required by this Section 6.14(b), the Partnership is authorized to retain
amounts that would otherwise be distributed to such Person pursuant to Article
5.
To the extent that the amount of any Tax Payment that the
Partnership would otherwise have been required to make is reduced pursuant to
Section 6.14(b), there shall be a reduction of (x) the amount that the
Partnership may withhold pursuant to this Section 6.14(c) from Distributions
to be made to ELAS and (y) the payment that ELAS is required to make to the
Partnership pursuant to this Section 6.14(c). Notwithstanding anything herein
to the contrary, no Partner shall be liable (through withholding from
Distributions, payments or otherwise) to make payments or reimbursements on
account of any tax for which the Partnership is required to make a payment
pursuant to Section 6.14(a) for an aggregate amount which exceeds such
Partner's Percentage Interest of the aggregate obligation of the Partnership
under Section 6.14(a). For these purposes, payments or reimbursements by a
Partner shall include all amounts withheld from Distributions to such Partner
and all amounts paid to the Partnership or to Alliance Holding by such
Partner, whether under the terms of this Agreement, the Indemnification and
Reimbursement Agreement or otherwise. Income, deductions or losses with
respect to Tax Payments shall be specially allocated to Partners other than
Alliance Holding pursuant to Section 5.05(f). Tax Payments shall have no
effect upon Alliance Holding's Capital Account or the amount distributable to
Alliance Holding pursuant to Article 5.
SECTION 6.15. Issuances of Alliance Holding LP Units Pursuant to
Employee Benefit Plans. Upon the exercise of any awards to purchase or
otherwise acquire Alliance Holding LP Units or other securities of Alliance
Holding pursuant to any employee benefit plan sponsored by the General
Partner, the Partnership, Alliance Holding or any Person controlled by the
Partnership or Alliance Holding and/or the entitlement of any plan participant
to receive Alliance Holding LP Units thereunder in accordance with the terms
of such plan, at the request of the Partnership: (i) Alliance Holding shall
issue to the plan participant Alliance Holding LP Units necessary to satisfy
such award in exchange for the exercise price or other consideration (if any)
to be paid by the plan participant in respect of such award; and (ii) Alliance
Holding shall contribute any such exercise price or other consideration to the
Partnership in exchange for a number of Limited Partnership Interests equal to
the number of Alliance Holding LP Units issued in satisfaction of such award.
Such issuances and payments shall be deemed to occur on the date on which the
plan participant is entitled to receive Alliance Holding LP Units thereunder
without further payment. If
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any Alliance Holding LP Units are issued by Alliance Holding pursuant to any
such employee benefit plan and such Alliance Holding LP Units are forfeited or
are otherwise returned to Alliance Holding, then Alliance Holding will return
to the Partnership the corresponding Limited Partnership Interests and the
Partnership will pay to Alliance Holding the amounts, if any, which Alliance
Holding may be required to pay to the plan participant whose Alliance Holding
LP Units are forfeited or returned to Alliance Holding.
SECTION 6.16. Repurchase of Alliance Holding LP Units. Subject to
Section 17-607 of the Delaware Act, the Partnership may from time to time make
a cash distribution to Alliance Holding for the purpose of repurchasing
outstanding Alliance Holding LP Units or Alliance Holding limited partnership
interests; provided that in no event shall the aggregate number of Alliance
Holding LP Units and Alliance Holding limited partnership interests so
repurchased be greater than the number of Limited Partnership Interests then
held by Alliance Holding. Upon such repurchase, the aggregate number of
Limited Partnership Interests held by Alliance Holding shall be reduced by a
number equal to the aggregate number of Alliance Holding LP Units and Alliance
Holding limited partnership interests so repurchased. The funds provided by
the Partnership pursuant to this Section 6.16 shall be used by Alliance
Holding solely for the repurchase of Alliance Holding LP Units or Alliance
Holding limited partnership interests (together with any expenses incurred in
connection with such repurchases) and, to the extent that any excess funds
remain following such repurchases, such funds shall be returned to the
Partnership.
ARTICLE 7
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 7.01. Limitation of Liability. The Limited Partners shall
have no liability under this Agreement except as provided in this Agreement or
by applicable law.
SECTION 7.02. Management of Business. No Limited Partner in its
capacity as such shall take part in the operation, management or control of
the Partnership's business, transact any business in the Partnership's name or
have the power to sign documents for or otherwise act on behalf of or bind the
Partnership. The transaction of any such business by any such Partner or
employee or agent of the Partnership shall not affect, impair or eliminate the
limitations on the liability of any such Limited Partner under this Agreement.
SECTION 7.03. Outside Activities. Each Partner (other than the
General Partner) shall have the right to engage in the business of providing
investment advisory and management services and to engage in and possess an
interest in other business ventures of any and every type and description,
independently or with others, including business interests and activities in
direct competition with the Partnership. Neither the Partnership, any of the
Partners nor any other Person shall have any rights by virtue of this
Agreement, or the Partnership relationship created hereby in any such business
ventures, and no Partner shall have any obligation as a result thereof to
offer any interest in any such business ventures to the Partnership, any
Partner, or any other Person. This Section 7.03 is not intended to affect any
rights the Partnership may have under any contract or agreement with any of
its employees.
SECTION 7.04. Return of Capital; Additional Capital. (a) No Partner
shall be entitled to the withdrawal or return of his Contribution (if any) or
any amount of his Capital Account, except to the extent, if any, that
Distributions made pursuant to this Agreement or upon termination of the
Partnership or purchases of Limited Partnership Interests by the Partnership
may be considered as such by law, and then only to the extent provided for in
this Agreement.
(b) Subject to the further provisions of this Section
7.04(b), no Limited Partner shall have any personal liability whatsoever in
his capacity as a Limited Partner, whether to the Partnership, to any of the
Partners or to the creditors of the Partnership, for the debts, liabilities,
contracts or other obligations of the Partnership or for any losses of the
Partnership. Each Limited Partnership Interest, upon the issuance thereof,
shall
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be fully paid and not subject to assessment for additional Contributions. No
Limited Partner shall be required to lend any funds to the Partnership or,
after his Contribution has been paid, to make any further contribution to the
capital of the Partnership. Under Sections 17-607 and 17-804 of the Delaware
Act, a limited partner of a limited partnership may, under certain
circumstances, be required to return to the partnership, amounts previously
distributed to such limited partner (i) if, at the time of, and after giving
effect to, such Distribution, the liabilities of the partnership, other than
liabilities to partners on account of their partnership interests, exceeded
the fair value of its assets or, (ii) in connection with a liquidating
distribution after dissolution of the partnership, such limited partner
receives a Distribution prior to the partnership paying, or making reasonable
provision to pay, claims of creditors. It is the intention and agreement of
the Partners that if any Limited Partner has received a Distribution from the
Partnership that is required to be returned to, or for the account of, the
Partnership or Partnership creditors, such obligation shall be the obligation
of the Limited Partner who receives such Distribution, and not the obligation
of any General Partner; provided, however, that nothing contained in this
Agreement shall be deemed to impose upon the transferee of a Limited
Partnership Interest under Section 12.06 any obligation to return to the
Partnership or any Partnership creditor any Distribution made to a prior
holder of such Limited Partnership Interest.
SECTION 7.05. Rights of Limited Partners Relating to the Partnership.
In addition to other rights provided by this Agreement or by applicable law,
the Limited Partners shall have the following rights relating to the
Partnership:
(a) Each Limited Partner, and each Limited Partner's duly
authorized representatives, shall have the right upon reasonable notice and at
reasonable times and at such Limited Partner's own expense, but only upon
written request and for a purpose reasonably related to such Person's interest
as a Limited Partner, (i) to have reasonable information regarding the status
of the business and financial condition of the Partnership, (ii) to inspect
and copy the books of the Partnership and other reasonably available records
and information concerning the operation of the Partnership, including the
Partnership's federal, state and local income tax returns for each year, (iii)
to have on demand a current list of the full name and last known business,
residence or mailing address of each Limited Partner, (iv) to have reasonable
information regarding the Net Value of any Contribution made by any Partner
and the date on which each such Person became a Partner, (v) to have a copy of
this Agreement and the Certificate of Limited Partnership and all amendments
thereto, and (vi) to have any other information regarding the affairs of the
Partnership as is just and reasonable.
(b) Anything in Section 7.05(a) to the contrary
notwithstanding, the General Partner may keep confidential from the Limited
Partners, and each Limited Partner's duly authorized representatives, for such
period of time as the General Partner deems reasonable, any information that
the General Partner reasonably believes to be in the nature of trade secrets
or other information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or could damage the
Partnership or its business or which the Partnership is required by law or by
agreements with third parties to keep confidential.
SECTION 7.06. Agreement to be Bound by Terms of Partnership
Agreement. By accepting an LP Certificate, and as a condition to entitlement
to any rights in or benefits with respect to the Limited Partnership Interests
evidenced thereby, each Limited Partner will be deemed to have agreed to
comply with, and be bound by, all of the terms, conditions, rights and
obligations set forth in this Agreement, including, but not limited to, the
grant of the power of attorney set forth in Section 10.01.
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ARTICLE 8
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 8.01. Records and Accounting. The General Partner shall keep
or cause to be kept complete and accurate books and records with respect to
the Partnership's business, assets, liabilities, operations and financial
condition, which books and records shall at all times be kept at the principal
office of the Partnership. Any records maintained by the Partnership in the
regular course of its business, including the names and addresses of Partners,
books of account and records of Partnership proceedings, may be kept on or be
in the form of punch cards, magnetic tape, photographs, micrographics or any
other information storage device, provided that the records so kept are
convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial
reporting purposes, on the accrual basis in accordance with generally accepted
accounting principles.
SECTION 8.02. Fiscal Year. The fiscal year of the Partnership shall
be the same as its taxable year for federal income tax purposes, which shall
be the calendar year or such other year that is permitted under the Code as
the General Partner in its sole discretion shall determine.
SECTION 8.03. Reports. (a) The General Partner shall use its best
efforts to cause to be mailed not later than 90 days after the close of each
fiscal year to each Limited Partner, as of the last day of that fiscal year,
reports containing financial statements of the Partnership for the fiscal
year, including a balance sheet and statements of operations, partners' equity
and cash flow, all of which shall be prepared in accordance with generally
accepted accounting principles and shall be audited by the Partnership's
Accountants.
(b) The General Partner shall use its best efforts to cause
to be mailed not later than 45 days after the close of each fiscal quarter,
except the last fiscal quarter of each fiscal year, to each Limited Partner as
of the last day of such fiscal quarter, a quarterly report for the fiscal
quarter containing such financial and other information (which need not be
audited) as the General Partner deems appropriate.
The General Partner's obligations set forth in this Section
8.03 may be satisfied by delivering to each Limited Partner a copy of the Form
10-K or 10-Q, as the case may be, or such other periodic reports containing
comparable financial information as may be filed by the Partnership pursuant
to the Securities Exchange Act or, if the Partnership is no longer subject to
on-going reporting requirements under the Securities Exchange Act, a copy of
the Form 10-K or 10-Q (containing separate financial statements of the
Partnership), as the case may be, or such other periodic reports containing
comparable financial information as may be filed by Alliance Holding pursuant
to the Securities Exchange Act.
SECTION 8.04. Other Information. The General Partner may release such
information concerning the operations of the Partnership to such sources as is
customary in the industry or required by law or regulation of any regulatory
body. In addition, the Partnership shall promptly provide to Alliance Holding
such financial and other information regarding the Partnership and any
Affiliates which it controls as may be reasonably requested by Alliance
Holding in connection with the preparation and filing of any reports required
to be filed by Alliance Holding under the Securities Exchange Act, the NYSE or
any comparable national securities market on which the Alliance Holding LP
Units are listed or quoted, or otherwise.
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ARTICLE 9
TAX MATTERS
SECTION 9.01. Preparation of Tax Returns. The General Partner shall
arrange for the preparation and timely filing of all returns relating to
Partnership income, gains, losses, deductions and credits, as necessary for
federal, state and local income tax purposes, and shall use its best efforts
to cause to be mailed to the Limited Partners within 90 days after the close
of the taxable year the tax information reasonably required for federal, state
and local income tax reporting purposes.
SECTION 9.02. Tax Elections. (a) The General Partner may, in its sole
discretion, make the election under Section 754 of the Code in accordance with
applicable regulations thereunder. In the event the General Partner makes such
election, the General Partner reserves the right to seek to revoke such
election upon its determination that such revocation is in the best interests
of the Limited Partners.
(b) To the extent permissible under Section 709 of the Code,
the Partnership shall elect to deduct expenses incurred in the Reorganization
ratably over a 60-month period as provided in Section 709 of the Code.
(c) Except as otherwise provided herein, the General Partner
shall determine in its sole discretion whether to make any other elections
available under the Code or under any state or local tax laws on behalf of the
Partnership.
SECTION 9.03. Tax Controversies. Subject to the provisions hereof,
the General Partner is designated as the Tax Matters Partner (as defined in
Section 6231 of the Code) and is authorized and required to represent the
Partnership (at the Partnership's expense) in connection with all examinations
of the Partnership's affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. Each Limited Partner
agrees to cooperate with the General Partner and to do or so refrain from
doing any or all things reasonably required by the General Partner to conduct
such proceedings.
SECTION 9.04. Withholding. Notwithstanding any other provision of
this Agreement, the General Partner is authorized to take any action that it
determines to be necessary or appropriate to cause the Partnership to comply
with any withholding and reporting obligations imposed by law, including
pursuant to Sections 1441, 1442, 1445 and 1446 of the Code.
SECTION 9.05. Entity-level Deficiency Collections. In the event the
Partnership is required by applicable law to pay any federal, state or local
income tax on behalf of any Partner or any former Partner, the General Partner
shall have the authority, in its sole discretion, and without the approval of
any Partner, to amend this Agreement as the General Partner determines to be
necessary or appropriate: (i) to provide for the payment of such taxes and
otherwise to enable the Partnership to comply with such law; (ii) to withhold
an appropriate amount from any Distributions to be made in the future to
Partners on whose behalf such taxes were paid, and to treat such amounts as
having been distributed to such Partners out of Available Cash Flow; (iii) to
authorize the General Partner, on behalf of the Partnership to take all
necessary or appropriate action to collect all or any portion of such taxes
from the Partners (whether current or former Partners); (iv) to treat such
taxes as an expense of the Partnership in computing Available Cash Flow to the
extent appropriate to reflect any amounts which cannot be collected (or
withheld pursuant to clause (ii)) from current or former Partners and to treat
any collection thereof as an addition to Available Cash Flow; and (v) to
reflect such other changes as the General Partner determines are necessary or
appropriate to implement the foregoing. If the Partnership is required to pay
any such taxes on behalf of the General Partner or any Corporate Affiliate,
the General Partner will either pay directly to the appropriate taxing
authority or make funds available to the Partnership to pay the General
Partner's share of such taxes and will take
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all necessary or appropriate action to collect from its Corporate Affiliates,
or cause such Corporate Affiliate to pay directly to the appropriate taxing
authority, such Corporate Affiliate's share of such taxes.
ARTICLE 10
POWER OF ATTORNEY
SECTION 10.01. Power of Attorney. Each Limited Partner constitutes
and appoints each of the General Partner and the Liquidating Trustee severally
(and any successor to either thereof by merger, transfer, election or
otherwise), and each of the General Partner's and the Liquidating Trustee's
authorized officers and attorneys-in-fact, with full power of substitution, as
his true and lawful agents and attorneys-in-fact, with full power and
authority in his name, place and stead to:
(a) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (i) all certificates and other instruments
including, at the option of the General Partner or Liquidating Trustee, as the
case may be, this Agreement and the Certificate of Limited Partnership and all
amendments and restatements thereof, that the General Partner or Liquidating
Trustee, as the case may be, deems appropriate or necessary to carry out the
purposes of this Agreement and to form, qualify, or continue the existence or
qualification of the Partnership as a limited partnership (or a partnership in
which the Limited Partners have limited liability) in the State of Delaware
and under the Delaware Act and in all jurisdictions in which the Partnership
may or may wish to conduct business or own property; (ii) all instruments that
the General Partner or Liquidating Trustee, as the case may be, deems
appropriate or necessary to reflect any amendment, change or modification of
this Agreement in accordance with its terms; (iii) all conveyances and other
instruments or documents that the General Partner or Liquidating Trustee, as
the case may be, deems appropriate or necessary to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this Agreement
(including a certificate of cancellation); and (iv) all instruments
(including, if required by law, this Agreement and the Certificate of Limited
Partnership and amendments and restatements thereof) relating to the
admission, withdrawal or substitution of any Partner, the initial or increased
Contribution of any Partner or the determination of the rights, preferences
and privileges of any class of Limited Partnership Interests issued pursuant
to Section 4.02; and
(b) sign, execute, swear to and acknowledge all ballots,
consents, approvals, waivers, certificates and other instruments appropriate
or necessary, in the sole discretion of the General Partner or the Liquidating
Trustee, as the case may be, to make, evidence, give, confirm or ratify any
vote, consent, approval, agreement or other action that is made or given by
the Partners hereunder or is consistent with the terms of this Agreement or
appropriate or necessary, in the sole discretion of the General Partner or the
Liquidating Trustee, as the case may be, to effectuate the terms or intent of
this Agreement; provided, however, that when required by any provision of this
Agreement which establishes a percentage of the Limited Partners or Limited
Partners of any class or series required to take any action, the General
Partner or Liquidating Trustee may exercise the power of attorney made in this
Section 10.01(b) only after the necessary vote, consent or approval by the
Limited Partners or Limited Partners of such class or series.
Nothing herein contained shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article 17
or as may be otherwise expressly provided for in this Agreement. Nothing
herein contained shall be construed as authorizing any Person acting pursuant
to this Article 10 to take any action to increase in any way the legal
liability of the Limited Partners beyond the liability expressly set forth in
this Agreement.
The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive, and shall not be
affected by, the subsequent death, incompetence, dissolution, disability,
incapacity, bankruptcy or termination of any grantor and the transfer of all
or any portion of his Partnership Interest and shall extend to such Person's
heirs, successors and assigns. Each Person who accepts Limited Partnership
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Interests is deemed to consent to be bound by any representations made by the
General Partner or the Liquidating Trustee, acting in good faith pursuant to
such power of attorney. Each Person who accepts Limited Partnership Interests
is deemed to consent to and waive any and all defenses that may be available
to contest, negate or disaffirm any action of the General Partner or the
Liquidating Trustee, taken in good faith under such power of attorney. Each
Limited Partner shall execute and deliver to the General Partner or the
Liquidating Trustee, within 15 days after receipt of the General Partner's or
the Liquidating Trustee's request therefor, such further designations, powers
of attorney and other instruments as the General Partner or the Liquidating
Trustee deems necessary to effectuate this Agreement and the purposes of the
Partnership.
ARTICLE 11
ISSUANCE OF CERTIFICATES
SECTION 11.01. Issuance of Certificates. Upon the issuance of Limited
Partnership Interests to Limited Partners, the General Partner shall cause the
Partnership to issue one or more LP Certificates in the names of such Limited
Partners. Each such LP Certificate shall be denominated in terms of the number
and type of Limited Partnership Interests evidenced by such LP Certificate.
Upon the transfer of a Limited Partnership Interest in accordance with the
terms of this Agreement, the General Partner shall cause the Partnership to
issue replacement LP Certificates in accordance with such procedures as the
General Partner, in its sole discretion, may establish. The General Partner
may also cause the Partnership to issue certificates evidencing the General
Partnership Interest, in such form as the General Partner may approve in its
sole discretion.
SECTION 11.02. Lost, Stolen, Mutilated or Destroyed Certificates.
(a) The Partnership shall issue a new LP Certificate in place of any LP
Certificate previously issued if the registered owner of the LP Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory to the General Partner, that a previously issued LP
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new LP Certificate before
the Partnership has notice that the LP Certificate has been acquired
by a purchaser for value in good faith and without notice of an
adverse claim;
(iii) if requested by the General Partner, delivers to the
Partnership a bond, in form and substance satisfactory to the General
Partner, with such surety or sureties and with fixed or open penalty,
as the General Partner may direct, to indemnify the Partnership
against any claim that may be made on account of the alleged loss,
destruction or theft of the LP Certificate; and
(iv) satisfies any other reasonable requirements imposed by
the General Partner.
When an LP Certificate has been lost, destroyed or stolen, and the
owner fails to notify the Partnership within a reasonable time after he has
notice of it, and a transfer of the Limited Partnership Interests represented
by the LP Certificate is registered before the Partnership receives such
notification, the owner shall be precluded from making any claim against the
Partnership for such transfer or for a new LP Certificate.
(b) If any mutilated LP Certificate is surrendered to the
General Partner, the General Partner on behalf of the Partnership shall
execute and deliver in exchange therefor a new LP Certificate evidencing the
same number of Limited Partnership Interests as did the LP Certificate so
surrendered.
(c) As a condition to the issuance of any new LP Certificate
under this Section 11.02, the General Partner may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses connected therewith.
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SECTION 11.03. Record Holder. The Partnership shall be entitled to
treat each Record Holder as the Limited Partner in fact of any Limited
Partnership Interests and, accordingly, shall not be required to recognize any
equitable or other claim or interest in or with respect to such Limited
Partnership Interests on the part of any other Person, regardless of whether
it shall have actual or other notice thereof, except as otherwise required by
law.
ARTICLE 12
TRANSFER OF PARTNERSHIP INTERESTS
SECTION 12.01. Transfer. (a) The term "transfer," when used in this
Article with respect to a Partnership Interest, shall be deemed to refer to a
transaction by which the holder of a Partnership Interest assigns such
Partnership Interest evidenced thereby to another Person, and includes a sale,
assignment, gift, pledge, hypothecation, mortgage, exchange or any other
disposition, whether by merger, consolidation or otherwise.
(b) Except as provided in Section 2.05, no Partnership
Interest shall be transferred in whole or in part, except in accordance with the
terms and conditions set forth in this Article 12. Any transfer or purported
transfer of any Partnership Interest not made in accordance with this Article 12
or Section 2.05 shall not be recognized by the General Partner, which may refuse
to recognize the transferee as a Partner and may refuse to recognize any rights
of such transferee.
SECTION 12.02. Avoidance of Publicly Traded Partnership Status. It is
the intent of the Partners that the Partnership not be classified as a
publicly traded partnership under Section 7704 of the Code and not be required
to register any class of its securities with the Commission under the
Securities Exchange Act. The General Partner shall take such steps as it
believes, in its sole discretion, are necessary or desirable to prevent a risk
of such classification or registration requirement, including refusing to
consent to any transfer in its discretion. In particular, the General Partner
shall not permit transfers of Limited Partnership Interests that, in the
opinion of the General Partner, do not comply with the regulatory safe harbors
described in Treasury Regulations Section 1.7704-1, or any successor provision
thereof, or would obligate the Partnership to register any class of its
securities under the Securities Exchange Act. In addition, the General Partner
may in its sole discretion adopt such conventions or policies or amend this
Article 12 as it deems appropriate or necessary to comply with Code Section
7704 and the regulations promulgated thereunder.
SECTION 12.03. Permitted Transfers of Limited Partnership Interests.
(a) No transfer of any Limited Partnership Interests may be made without the
prior written consent of the General Partner, which may be withheld in the
sole discretion of the General Partner. The General Partner shall not consent
to any transfer of a Limited Partnership Interest unless the Limited Partner
requesting the transfer certifies in writing to the General Partner that such
Limited Partner received his entire Limited Partnership Interest either in the
Exchange or in a transfer that was approved by the General Partner pursuant to
this Section 12.03. The Partnership shall not recognize for any purpose any
purported transfer of any Limited Partnership Interest, and no transferee
shall become a Substitute Limited Partner, unless:
(i) the provisions of this Article 12 relating to
the transfer of Limited Partnership Interests have been
complied with;
(ii) there shall have been filed with the
Partnership and recorded on the Partnership's books a duly
executed and acknowledged counterpart of the instrument
making such transfer, and such instrument sets forth the
intention of the transferor that the transferee succeed to
all or a portion of the transferor's Limited Partnership
Interest as a Substituted Limited Partner in its place,
evidences the written acceptance by the transferee of all
the terms and provisions of this Agreement, including the
grant of the powers of attorney provided for in this
Agreement as set
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forth herein, represents that such transfer was made in
accordance with all applicable laws and regulations and in
all other respects is satisfactory in form and substance to
the General Partner;
(iii) the transferee shall have paid all reasonable
legal fees and filing costs incurred by the Partnership in
connection with the transfer; and
(iv) the books and records of the Partnership shall
have been changed to reflect the admission of the transferee
Limited Partner.
(b) Any Limited Partner who shall transfer all his Limited
Partnership Interests shall cease to be a Limited Partner of the Partnership.
(c) Notwithstanding anything in this Agreement to the
contrary, for purposes of this Article 12, no transfer will be considered
approved by the General Partner or recognized by the Partnership unless such
transfer is also approved by ELAS, which approval may be withheld in the sole
discretion of ELAS. Subject to the approval of ELAS as provided in the preceding
sentence, the General Partner shall consent to and permit transfers by Limited
Partners which are corporations or other business entities which are private
transfers pursuant to Treasury Regulation Section 1.7704-1(e)(vi) (relating to
block transfers), or pursuant to comparable provisions of any amendment to such
regulation, provided that the Partnership receives an Opinion of Outside Counsel
that the Partnership will not be classified as a publicly traded partnership
under Section 7704 of the Code as a result of such transfers.
SECTION 12.04. Transfer of General Partnership Interests of the
General Partner. (a) Subject to the provisions of Section 12.02, the General
Partner may sell or otherwise transfer its General Partnership Interest to any
Person that is or in connection with the sale or transfer becomes a General
Partner, without any approval of the Partners and without obtaining an
Assignment Determination. Any Person acquiring a General Partnership Interest
as permitted by this Section 12.04 shall be entitled to be admitted as a
general partner. Subject to the provisions of Section 12.02, the General
Partner may effect sales or transfers as provided by this Section without
regard to the consequences thereof to the Partnership, other Partners or any
other Persons. The General Partner may not sell or otherwise transfer its
General Partnership Interest except as provided in this Section 12.04.
(b) No provision of this Agreement shall be construed to
prevent (and all Limited Partners hereby expressly consent to) any sale,
transfer, exchange or other disposition of any or all of the General
Partnership Interest in connection with the withdrawal of the General Partner
pursuant to Article 14.
(c) Subject to the provisions of Section 12.02, the General
Partner may at any time transfer (in addition to the transfers permitted by
Section 12.04(a)) one-tenth of its General Partnership Interest to any
Corporate Affiliate of the General Partner that in connection with the
transfer becomes a General Partner (the "Other General Partner"), if the
Partnership receives an Assignment Determination and a Tax Determination with
respect thereto. In connection with any such transfer, (i) the Other General
Partner shall be admitted as a General Partner, (ii) the transferor General
Partner shall remain a General Partner and shall not be relieved of any of its
obligations under this Agreement, (iii) the transferor General Partner shall
be the sole managing General Partner, with the exclusive power to manage the
business and affairs of the Partnership and the Other General Partner shall
not participate in, and shall have no responsibility for, the management of
the business and affairs of the Partnership and shall not be entitled to
exercise any of the powers with respect thereto granted to the General
Partner, (iv) the Other General Partner shall assume, jointly and severally
with the transferor General Partner, all of the obligations of the General
Partner under this Agreement (including, but not limited to, Section
12.04(a)), subject to clause (ii) of this sentence and (v) the transferor
General Partner shall be entitled to make such amendments to this agreement as
may be necessary to reflect or in connection with the foregoing and to provide
for the allocation of a portion of the transferor General Partner's capital
account to the Other General Partner.
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SECTION 12.05. Restrictions on Transfer. Subject to Section 12.03, no
transfer of any Limited Partnership Interest shall be made if such transfer
(a) would jeopardize the status of the Partnership as a partnership for United
States federal income tax purposes; (b) would violate the then applicable
federal and state securities laws or rules and regulations of the Commission,
any state securities commission or any other governmental authorities with
jurisdiction over such transfer; (c) would affect the Partnership's existence
or qualification as a limited partnership under the Delaware Act; or (d) would
violate any then applicable administrative procedures and requirements as the
General Partner may adopt.
SECTION 12.06. Withdrawal of a Limited Partner. A Limited Partner
may not withdraw from the Partnership prior to its dissolution unless it sells
or otherwise transfers its Limited Partnership Interests to any Person that
is, or in connection with the sale or transfer becomes, a Limited Partner in
accordance with the provisions of Article 12. If an individual Limited Partner
dies, his executor, administrator or trustee, or, if he is adjudicated
incompetent, his committee, guardian or conservator, or, if he becomes
bankrupt, his trustee or the receiver of his estate, shall have all the rights
of a Limited Partner for purposes of settling or managing his estate and such
power as the decedent, incompetent or bankrupt possessed to assign all or any
part of his Limited Partnership Interests and to join with the assignee
thereof in satisfying the conditions precedent to such assignee's becoming a
Substituted Limited Partner. The withdrawal, death, dissolution, adjudication
of incompetence or bankruptcy of a Limited Partner shall not dissolve the
Partnership.
ARTICLE 13
ADMISSION OF GENERAL PARTNERS
SECTION 13.01. Admission of Additional and Successor General Partner.
An additional or successor general partner approved pursuant to Section 12.04,
14.01 or 15.01(b) shall be admitted to the Partnership as a General Partner
(in the place of or in addition to, as the case may be, the General Partner),
effective as of the date that an amendment to the Certificate of Limited
Partnership, adding its name and other required information, is filed pursuant
to Section 6.01(c) (which, in the event the successor or transferee General
Partner is in the place in whole of the withdrawing, removed or transferor
General Partner, shall be contemporaneous with the withdrawal of such
withdrawing, removed or transferor General Partner without dissolution of the
Partnership), and upon receipt by the withdrawing, removed or transferor
General Partner of all of the following:
(a) acceptance in form and substance satisfactory to such
General Partner of all of the terms and provisions of this Agreement;
(b) written agreement of the proposed General Partner to
continue the business of the Partnership; and
(c) such other documents or instruments as may be required
in order to effect its admission as a General Partner under this Agreement and
applicable law. Each Limited Partner is deemed to approve of the admission of
a successor General Partner selected pursuant to the terms of this Agreement
and no further approval of Partners shall be required to effect such
admission. Any such successor or additional General Partner shall carry on the
business of the Partnership. No Person shall be admitted as a general partner
of the Partnership except as contemplated by Section 12.04, 14.01 or 15.01(b)
or as otherwise expressly authorized by this Agreement.
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ARTICLE 14
WITHDRAWAL OR REMOVAL OF PARTNERS
SECTION 14.01. Withdrawal or Removal of the General Partner. (a) The
General Partner covenants and agrees that except in connection with a transfer
of its General Partnership Interest in accordance with Section 12.04, it will
not voluntarily withdraw as the General Partner unless (i) the Partnership
receives a Limited Liability Determination, a Tax Determination and an
Assignment Determination; (ii) such withdrawal receives Majority Outside
Approval; and (iii) the General Partner or one of its Affiliates is not the
general partner of Alliance Holding or simultaneously withdraws as the general
partner of Alliance Holding in accordance with the terms of the Alliance
Holding Partnership Agreement. If the General Partner gives a notice of its
intent to withdraw, it shall call and conduct a meeting of the Limited
Partners to obtain the requisite Majority Outside Approval and to consider and
approve a successor General Partner. If the proposed withdrawal of the General
Partner will result in the dissolution of the Partnership, such meeting shall
be held no sooner than 180 days after the date of notice and any Limited
Partner may, by notice to the General Partner at least 120 days prior to the
date of the meeting, propose a successor general partner. Such proposed
successor general partner shall only be included on the ballot if it has
complied with all legal requirements necessary for such inclusion. If the
requisite Majority Outside Approval is obtained, but no successor general
partner is approved on the first ballot of such meeting, a second ballot shall
be held as soon as practicable thereafter in order to consider the approval of
the candidate that received the most votes on the first ballot. If such
candidate is not approved on the second ballot, the Partnership shall be
dissolved and liquidated pursuant to Article 15 and the General Partner shall
serve as Liquidating Trustee. If a successor general partner is elected, it
shall be admitted immediately prior to the withdrawal of the General Partner
and shall continue the business and operations of the Partnership without
dissolution.
(b) Except as provided below, the General Partner may be removed upon
the affirmative vote of (i) Limited Partners holding 80% or more of the issued
and outstanding Limited Partnership Interests if such removal is not for
cause, or (ii) Limited Partners holding 50% or more of the issued and
outstanding Limited Partnership Interests if such removal is for cause. The
limited partners and unitholders of Alliance Holding shall be entitled to vote
upon such removal (through instructions to Alliance Holding, in its capacity
as a Limited Partner of the Partnership, directing the actions of Alliance
Holding with respect to voting the Limited Partnership Interest held by
Alliance Holding) in accordance with Section 17.04(b) of the Alliance Holding
Partnership Agreement. As used in this Article 14, "cause" means that a court
of competent jurisdiction has entered a final, non-appealable judgment in an
action in which the General Partner is a party, finding that any action or
failure to act on the part of the General Partner involved an act or omission
undertaken with deliberate intent to cause injury to the Partnership,
constituted actual fraud or actual bad faith on the part of the General
Partner or was undertaken with reckless disregard for the best interests of
the Partnership. The right to remove the General Partner shall not exist or be
exercised unless (i) the General Partner or one of its Affiliates is not the
general partner of Alliance Holding or is simultaneously removed as the
general partner of Alliance Holding in accordance with the terms of the
Alliance Holding Partnership Agreement; (ii) such action for removal also
provides for the election of a new general partner and (iii) the Partnership
receives a Limited Liability Determination, a Tax Determination and an
Assignment Determination; any Opinions of Outside Counsel delivered in
connection with such determinations shall be opinions of counsel selected by
the successor general partner. Such removal shall be effective immediately
subsequent to the admission of the successor General Partner pursuant to
Article 13.
SECTION 14.02. Interest of Departing Partner and Successor. (a) Upon
the withdrawal or removal of the General Partner, the Departing Partner may,
at its option exercisable prior to the effective date of the departure of such
Departing Partner, transfer and sell to its successor as General Partner all
of the General Partnership Interest held or owned by the Departing Partner,
and the successor General Partner shall purchase such General Partnership
Interest for an amount in cash equal to the fair market value of such General
Partnership Interest, the amount to be determined and payable as of the
effective date of its departure. For purposes of this Section 14.02, the fair
market value of the Departing Partner's General Partnership Interest shall be
determined by agreement between the Departing Partner and its successor or,
failing agreement within 30 days after the effective date of such Departing
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Partner's departure, by an independent investment banking firm or other
independent expert selected by the Departing Partner and its successor, which,
in turn, may rely on other experts and the determination of which shall be
binding and conclusive as to such matter. If such parties cannot agree upon
one independent investment banking firm or other independent expert within 45
days after the effective date of such departure, then each of the Departing
Partner and its successor shall designate an independent investment banking
firm or other independent expert and the independent investment banking firm
or other independent expert selected by each of the Departing Partner and its
successor shall in turn designate a single independent investment banking firm
or other independent expert; each such firm or expert shall determine the fair
market value of the Departing Partner's General Partnership Interest and the
determination of the firm or expert that is neither the highest nor the lowest
shall control. In making its determination, the independent investment banking
firm or other independent expert shall consider the LP Interest Price, the
value of the Partnership Assets, the rights and obligations of the General
Partner and other factors it may deem relevant.
(b) If the Departing Partner's General Partnership Interest is not
acquired pursuant to Section 14.02(a), the Departing Partner shall become a
Limited Partner, and its General Partnership Interest shall be converted into
Limited Partnership Interests pursuant to a valuation made by the investment
banking firm or other independent expert selected pursuant to Section 14.02(a)
without any reduction in such Partnership Interest (subject to proportionate
dilution by reason of the admission of its successor).
This Agreement shall be amended to reflect any event described in
this Article 14, and any successor General Partner covenants so to amend this
Agreement and the Certificate.
(c) If the Departing Partner's General Partnership Interest is not
acquired pursuant to Section 14.02(a), the successor to such Departing Partner
shall at the effective date of its admission to the Partnership contribute to
the capital of the Partnership cash in an amount such that its Capital
Account, after giving effect to such contribution, shall be equal to that
percentage of the Capital Accounts of all Partners that is equal to its
Percentage Interest as a General Partner, which shall be 1%. In such event
such successor shall be entitled to such Percentage Interest, as the case may
be, of all Partnership allocations and Distributions.
(d) If the Partnership is indebted to the Departing Partner at the
effective date of its departure for funds advanced, properties sold or
services rendered to the Partnership by the Departing Partner, the Partnership
shall, within 60 days after the effective date of such departure, pay to the
Departing Partner the full amount of such indebtedness. The successor to the
Departing Partner shall assume all obligations theretofore incurred by the
Departing Partner as the General Partner of the Partnership, and the
Partnership and such successor shall take all such action as shall be
necessary to terminate any guarantees of the Departing Partner and any of its
Affiliates of any obligations of the Partnership. If for whatever reason the
creditors of the Partnership will not consent to such termination of
guarantees, the successor to the Departing Partner shall be required to
indemnify the Departing Partner for any liabilities and expenses incurred by
the Departing Partner on account of such guarantees pursuant to an agreement
reasonably satisfactory in form and substance to the Departing Partner.
SECTION 14.03. Withdrawal of Limited Partners. No Limited Partner
shall have any right to withdraw from the Partnership; provided, however, that
upon a transfer of a transferor Limited Partner's Limited Partnership
Interests in accordance with Article 12 and the transferee's becoming a
Limited Partner, the transferor Limited Partner shall cease to be a Limited
Partner with respect to the Limited Partnership Interests so transferred, but
until such transferee becomes a Limited Partner, the transferor shall continue
to be a Limited Partner. No Limited Partner shall be entitled to any
Distribution from the Partnership for any reason or upon any event except as
expressly set forth in Articles 5 and 15.
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ARTICLE 15
DISSOLUTION AND LIQUIDATION
SECTION 15.01. Dissolution. (a) The Partnership shall not be
dissolved by the admission of Substituted Limited Partners or Additional
Limited Partners, or by the admission of substituted or additional general
partners in accordance with the terms of this Agreement. Except as provided in
Section 15.01(b), the Partnership shall be dissolved and its affairs shall be
wound up upon:
(i) the withdrawal or removal of the General Partner or the
occurrence of any other event that results in its ceasing to be the
General Partner (other than by reason of a transfer pursuant to
Section 12.04 or a withdrawal or removal occurring upon or after
approval by the Limited Partners of a successor pursuant to Section
14.01);
(ii) the filing of a certificate of dissolution or the
revocation of the certificate of incorporation of the General
Partner;
(iii) a written determination by the General Partner (which
the General Partner shall have no obligation or duty to make) that
projected future revenues over the next five years of the Partnership
are insufficient to enable payment of the projected Partnership costs
and expenses for such period;
(iv) an election to dissolve the Partnership by the General
Partner which receives Majority Outside Approval;
(v) the bankruptcy of the General Partner;
(vi) upon the written election of the General Partner to
dissolve the Partnership pursuant to an election of the General
Partner under clause (y) of the first sentence of Section 2.05;
(vii) the sale of all or substantially all of the
Partnership Assets approved in accordance with Section 6.12(a)(i); or
(viii) any other event requiring dissolution under the
Delaware Act.
For purposes of this Section 15.01, bankruptcy of the General Partner shall be
deemed to have occurred when (A) it commences a voluntary proceeding, or files
an answer in any involuntary proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect, (B) it is adjudged a bankrupt or insolvent, or has
entered against it a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect, (C) it
executes and delivers a general assignment for the benefit of its creditors,
(D) it files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against it in any proceeding of the
nature described in clause (A) above, (E) it seeks, consents to or acquiesces
in the appointment of a trustee, receiver or liquidator for it or for all or
any substantial part of its properties, or (F) (1) any proceeding of the
nature described in clause (A) above has not been dismissed 120 days after the
commencement thereof, (2) the appointment without its consent or acquiescence
of a trustee, receiver or liquidator appointed pursuant to clause (E) above
has not been vacated or stayed within 90 days of such appointment, or (3) such
appointment is not vacated within 90 days after the expiration of any such
stay.
(b) Upon an event described in Section 15.01(a)(i), 15.01(a)(ii), or
15.01(a)(v), the Partnership shall not be dissolved if, within 90 days after
the event described in any of such Sections, a majority in interest of the
remaining Partners agree to continue the business of the Partnership and to
the selection, effective as of the date of such event, of a successor General
Partner. In such event, the Partnership shall continue until dissolved in
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accordance with this Article 15, and the General Partnership Interest of the
former General Partner shall be subject to disposition in the manner provided
in Section 14.02(a).
SECTION 15.02. Liquidation. Upon dissolution of the Partnership, the
General Partner, or, in the event the General Partner has been dissolved or
removed or has withdrawn from the Partnership, or the Partnership has been
dissolved pursuant to Section 15.01(a)(i), 15.01(a)(ii) or 15.01(a)(v), a
liquidator or liquidating committee approved by a Majority Approval shall be
the Liquidating Trustee. The Liquidating Trustee (if other than the General
Partner) shall be entitled to receive such compensation for its services as
may be approved by a Majority Approval. The Liquidating Trustee shall agree
not to resign at any time without 30 days' prior written notice and (if other
than the General Partner) may be removed at any time, with or without cause,
by notice of removal approved by a Majority Approval. Upon dissolution,
removal or resignation of the Liquidating Trustee, a successor and substitute
Liquidating Trustee (who shall have and succeed to all rights, powers and
duties of the original Liquidating Trustee) shall within 60 days thereafter be
approved by a Majority Approval. If a Liquidating Trustee is not selected and
qualified within the time periods set forth in this Section 15.02, any Limited
Partner may apply to any court of competent jurisdiction for the winding up of
the Partnership and, if appropriate, the appointment of a Liquidating Trustee.
The right to appoint a successor or substitute Liquidating Trustee in the
manner provided herein shall be recurring and continuing for so long as the
functions and services of the Liquidating Trustee are authorized to continue
under the provisions thereof, and every reference herein to the Liquidating
Trustee shall be deemed to refer also to any such successor or substitute
liquidator appointed in the manner herein provided. Except as expressly
provided in this Article 15, the Liquidating Trustee appointed in the manner
provided herein shall have and may exercise, without further authorization or
approval of any of the parties hereto, all of the powers conferred upon the
General Partner under the terms of this Agreement (but subject to all of the
applicable limitations, contractual and otherwise, upon the exercise of such
powers), regardless of whether the Liquidating Trustee is the General Partner,
to the extent necessary or desirable in the good faith judgment of the
Liquidating Trustee to complete the winding up and liquidation of the
Partnership as provided for herein. The Liquidating Trustee shall liquidate
the assets of the Partnership, and apply and distribute the proceeds of such
liquidation in the following order of priority, unless otherwise required by
mandatory provisions of applicable law:
(a) the payment to creditors of the Partnership, including
Partners, in order of priority provided by law, and the creation of a
reserve of cash or other assets of the Partnership for contingent
liabilities in an amount, if any, determined by the Liquidating
Trustee in its sole judgment to be appropriate for such purposes;
(b) to the Partners with positive balances in their Capital
Accounts (after crediting or charging thereto the appropriate portion
of Net Income, Net Loss and Depreciation in accordance with Article 5
and after giving effect to all amounts distributed or to be
distributed to such Partners with respect to all calendar quarters of
the Partnership prior to the quarter in which the liquidation of the
Partnership occurs) an amount equal to the sum of all such positive
balances, such Distribution to be made in proportion to the positive
amounts in such Capital Accounts; and
(c) to the Partners in accordance with their Percentage
Interests.
SECTION 15.03. Distribution in Kind. (a) Notwithstanding the
provisions of Section 15.02 which require the liquidation of the Partnership
Assets, but subject to the order of priorities set forth therein, if on
dissolution of the Partnership the Liquidating Trustee determines that an
immediate sale of part or all of the Partnership Assets would be impractical
or would cause undue loss to the Partners or is otherwise undesirable, the
Liquidating Trustee may, in its absolute discretion, defer for a reasonable
time the liquidation of any Partnership Assets except those necessary to
satisfy liabilities of the Partnership and may, in its absolute discretion,
distribute to the Partners, in lieu of cash, as tenants in common, undivided
interests in such Partnership Assets as the Liquidating Trustee deems not
suitable for liquidation. Any distributions in kind shall be subject to such
conditions relating to the disposition and management thereof as the
Liquidating Trustee deems reasonable and equitable and to any agreements
governing
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the operation of such Partnership Assets at such time. In lieu of distributing
any Partnership Asset (other than cash) in kind among the Partners the
Liquidating Trustee, in its sole discretion, may determine to distribute
Partnership Assets (other than cash) to certain Partners and solely cash to
other Partners. The Liquidating Trustee shall determine the fair market value
of any Partnership Assets distributed in kind using such reasonable method of
valuation as it may adopt; if the General Partner is the Liquidating Trustee,
such fair market value shall be determined by an Appraiser.
(b) Notwithstanding the provisions of Section 15.02 or Section
15.03(a), but subject to the order of priorities set forth in Section 15.02,
if equity interests are to be distributed to Partners in connection with a
dissolution of the Partnership pursuant to an election of the General Partner
under clause (y) of Section 2.05, then distributions in kind of the equity
interests shall be made pursuant to such election and the provisions of
Section 2.05 (and, without limitation, the requirements of Section 15.03(a)
relating to distributions of undivided interests to Partners as tenants in
common shall not be applicable to any such distributions).
SECTION 15.04. Cancellation of Certificate of Limited Partnership.
Upon the completion of the distribution of Partnership Assets as provided in
Sections 15.02 and 15.03, the Partnership shall be terminated, and the
Liquidating Trustee (or the General Partner or Limited Partners) shall cause
the cancellation of the Certificate of Limited Partnership and all
qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware and shall take such other
actions as may be necessary to terminate the Partnership.
SECTION 15.05. Reasonable Time for Winding Up. A reasonable time
shall be allowed for the orderly winding up of the business and affairs of the
Partnership and the liquidation of its assets pursuant to Sections 15.02 and
15.03 in order to minimize any losses otherwise attendant upon such winding
up.
SECTION 15.06. Return of Contributions. The General Partner shall not
be liable for the return of any Contributions of the Limited Partners, or any
portion thereof, it being expressly understood that any such return shall be
made solely from Partnership Assets.
SECTION 15.07. No Obligation to Restore Deficit. None of the Partners
shall be obligated to contribute cash to the Partnership in order to eliminate
the negative balance, if any, in its Capital Account.
SECTION 15.08. Waiver of Partition. Each Partner, by requesting and
being granted admission to the Partnership, is deemed to waive until
termination of the Partnership any and all rights that he may have to maintain
an action for partition of the Partnership's Assets.
ARTICLE 16
RIGHT TO PURCHASE LIMITED PARTNERSHIP INTERESTS
SECTION 16.01. Right to Purchase Limited Partnership Interests. (a)
Notwithstanding any other provision of this Agreement, if at any time less
than 10% of the issued and outstanding Limited Partnership Interests are held,
directly or indirectly, by Persons other than the General Partner, its
Affiliates and officers and employees of the General Partner, the Partnership
or Alliance Holding or Persons controlled by the Partnership or Alliance
Holding (hereinafter referred to as "Affiliated Holders") (including, for
purposes of determining the Limited Partnership Interests held by Persons
other than Affiliated Holders, the number of Limited Partnership Interests
held by Alliance Holding multiplied by a fraction, the numerator of which is
the number of issued and outstanding Alliance Holding LP Units held by Persons
other than Affiliated Holders and the denominator of which is the number of
issued and outstanding Alliance Holding LP Units), the General Partner shall
then have the right, which right it may assign and transfer to the
Partnership, Alliance Holding or any of the General Partner's Affiliates,
exercisable in its sole discretion at any time, to purchase all, but not less
than all, of any such Limited Partnership Interests that remain outstanding
and held by Persons other than the General Partner and its Affiliates, at a
price per Limited Partnership
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Interest equal to the Purchase Price. The right to purchase Limited
Partnership Interests pursuant to this Section 16.01 shall not be exercisable
unless the General Partner, the Partnership, Alliance Holding or any of the
General Partner's Affiliates simultaneously purchases all, but not less than
all, of the Alliance Holding LP Units that remain outstanding and held by
Persons other than the General Partner and its Affiliates, at a price per
Alliance Holding LP Unit equal to the Purchase Price. For purposes of this
Section 16.01, a Limited Partnership Interest held for the benefit of an
employee, or by or for the benefit of a member of the family of an employee,
shall be treated as if owned by that employee.
(b) In the event the General Partner, any Affiliate of the General
Partner, the Partnership or Alliance Holding elects to exercise such right to
purchase Limited Partnership Interests pursuant to this Article 16, the
General Partner, its Affiliate, the Partnership or Alliance Holding, as the
case may be, shall deliver to the General Partner written notice of such
election to purchase (hereinafter in this Article 16 called the "Notice of
Election to Purchase") and shall mail a copy of such Notice of Election to
Purchase to the Limited Partners holding such Limited Partnership Interests at
least 10, but not more than 60, days prior to the Purchase Date. Such Notice
of Election to Purchase shall also be published at least twice in at least one
daily newspaper of general circulation printed in the English language and
published in the Borough of Manhattan, New York. The Notice of Election to
Purchase shall specify the Limited Partnership Interests to be purchased, the
Purchase Date and the Purchase Price, and state that the General Partner, its
Affiliate, the Partnership or Alliance Holding, as the case may be, elects to
purchase such Limited Partnership Interests, upon surrender thereof in
exchange for payment, at such office or offices of the General Partner as the
General Partner may specify. Any such Notice of Election to Purchase mailed to
a Limited Partner of such Limited Partnership Interests at his address as
reflected in the records of the Partnership shall be conclusively presumed to
have been given regardless of whether the owner receives such notice. On or
prior to the Purchase Date, the General Partner, its Affiliate, the
Partnership or Alliance Holding, as the case may be, shall deposit with the
Partnership cash in an amount equal to the Purchase Funds. If the Notice of
Election to Purchase shall have been duly given as aforesaid at least 10 days
prior to the Purchase Date, and if on or prior to the Purchase Date the
Purchase Funds shall have been deposited with the Partnership in trust for the
benefit of the owners of Limited Partnership Interests subject to purchase as
provided in this Article 16, then from and after the Purchase Date,
notwithstanding that any LP Certificates shall not have been surrendered for
purchase, all rights of the owners of such Limited Partnership Interests
(including, but not limited to, any rights pursuant to Articles 4, 5 and 15)
shall thereupon cease, except the right to receive the Purchase Price
therefor, without interest, upon surrender to the General Partner of the LP
Certificates, and such Limited Partnership Interests shall thereupon be deemed
to have been transferred to the General Partner, its Affiliate, the
Partnership or Alliance Holding, as the case may be, on the record books of
the Partnership, and the General Partner or any Affiliate of the General
Partner, the Partnership or Alliance Holding, as the case may be, shall be
deemed to be the owner of all such Limited Partnership Interests from and
after the Purchase Date and shall have all rights as the owner of such Limited
Partnership Interests (including, but not limited to, all rights as owner of
such Limited Partnership Interests pursuant to Articles 4, 5 and 15).
(c) At any time during one year after the Purchase Date, a holder of an
issued and outstanding Limited Partnership Interests subject to purchase as
provided in this Article 16 may surrender his LP Certificate to the General
Partner in exchange for payment of the Purchase Price therefor, without interest
thereon. If such holder does not surrender such LP Certificate within such one
year period, the Purchase Funds deposited with the Partnership in trust for such
holder shall revert to, and shall be returned to, the General Partner, its
Affiliate, the Partnership or Alliance Holding, as the case may be, and
thereafter such holder may look only to the Person to which such funds were
returned for payment.
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ARTICLE 17
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
SECTION 17.01. Amendments to be Adopted Solely by the General
Partner. The General Partner (pursuant to the General Partner's power of
attorney) without the approval at the time of any Partner or other Person
(each Person who accepts Limited Partnership Interests being deemed to approve
of any such amendment) may amend any provision of this Agreement or the
Certificate of Limited Partnership, and execute, swear to, acknowledge,
deliver, file and record whatever documents may be required in connection
therewith, to reflect:
(a) a change in the name of the Partnership or the location of the
principal place of business of the Partnership;
(b) the admission, substitution or withdrawal of Partners in
accordance with this Agreement;
(c) a change that the General Partner in its sole discretion
determines is necessary or advisable to qualify the Partnership as a limited
partnership or a partnership in which the Limited Partners have limited
liability under the laws of any state;
(d) a change that the General Partner in its sole discretion
determines (i) does not adversely affect the Limited Partners in any material
respect, (ii) is necessary or desirable to satisfy any requirements,
conditions or guidelines contained in any opinion, directive, order, ruling or
regulation of any federal or state agency or contained in any federal or state
statute or (iii) is required to effect the intent of the provisions of this
Agreement or otherwise contemplated by this Agreement;
(e) an amendment that the General Partner in its sole discretion
determines is necessary or desirable in connection with the issuance of any
class or series of Partnership Interests or other securities, and the
establishment of the rights and preferences of such class or series of
Partnership Interests or other securities, pursuant to Section 4.02,
including, but not limited to, Section 4.02(e);
(f) an amendment that the General Partner in its sole discretion
determines is necessary or desirable in connection with any action taken
pursuant to Section 2.05;
(g) an amendment that the General Partner in its sole discretion
determines is necessary or desirable to conform the provisions of this
Agreement to the provisions of the Alliance Holding Partnership Agreement;
(h) an amendment that the General Partner in its sole discretion
determines is necessary or desirable to cure any ambiguity in this Agreement
or to correct or supplement any provision of this Agreement that may be
defective or inconsistent with any other provision of this Agreement;
(i) an amendment pursuant to Section 9.05.
SECTION 17.02. Amendment Procedures. No amendment may be made to this
Agreement unless it has been proposed by the General Partner. Except as
provided in Sections 17.01 and 17.03, all amendments to this Agreement shall
be made in accordance with the following requirements:
(a) Any amendment to this Agreement may be proposed by the General
Partner by submitting the text of the amendment to all Limited Partners in
writing.
(b) If an amendment is proposed pursuant to subsection 17.02(a)
above, the General Partner shall call a meeting of the Limited Partners to
consider and vote on the proposed amendment unless, in the Opinion of Counsel,
such proposed amendment would be illegal under Delaware law if approved.
Subject to Section 17.03, a
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proposed amendment shall be effective upon approval by the General Partner and
Majority Approval unless otherwise required by law. The General Partner shall
notify all Limited Partners upon final approval or disapproval of any proposed
amendment.
SECTION 17.03. Special Amendment Requirements. Notwithstanding the
provisions of Sections 17.01 and 17.02,
(a) If any amendment to this Agreement would by its terms adversely
alter the rights and preferences of any class or series with respect to
distributions or otherwise materially and adversely alter the rights and
preferences of any class or series, other than as contemplated by Section
2.05, 4.02 or 9.05, such amendment shall become effective only upon (i)
Majority Outside Approval (in addition to approval of the General Partner), if
such class consists of the Limited Partnership Interests as constituted on the
date of this Agreement (or Limited Partnership Interests subsequently issued
with identical rights and preferences), or (ii) in the case of any other class
or series, approval of the holders of a majority of the outstanding interests
of such class or series. No amendment to this Agreement with respect to which
the Partnership does not receive an Assignment Determination, Liability
Determination and Tax Determination shall become effective without Majority
Outside Approval (in addition to approval of the General Partner), unless such
amendment is pursuant to Section 17.01(f) or is in connection with the
transfer of the General Partnership Interest or the admission, substitution or
withdrawal of a general partner in accordance with this Agreement.
(b) No provision of this Agreement which establishes a percentage of
the Partners (or a class or series thereof) required to take any action shall
be amended, altered, changed, repealed or rescinded in any respect that would
have the effect of changing such percentage, unless such amendment is approved
by a written approval or an affirmative vote of Partners (or a class or series
thereof) constituting not less than the number required by the voting
requirement sought to be reduced (in addition to approval of the General
Partner).
(c) No amendment of Sections 6.14, 14.01 or 17.04 or this Section
17.03(c) shall become effective without Majority Outside Approval (in addition
to approval of the General Partner).
SECTION 17.04. Meetings. (a) Meetings of the Limited Partners for any
purpose with respect to which the Limited Partners are entitled to vote may be
called by the General Partner at any time (there being no obligation to hold
annual or other periodic meetings of the Limited Partners) and shall be called
by the General Partner within ten days after receipt of a written request for
such a meeting signed by Limited Partners which hold 25% or more in interest
of the Limited Partnership Interests or a written request submitted by
Alliance Holding in accordance with Section 17.04(e) of the Alliance Holding
Partnership Agreement. Any such request shall state the purpose of the
proposed meeting and the matters to be acted upon thereat. Meetings shall be
held at the principal office of the Partnership or at such other place as may
be designated by the General Partner or, if the meeting is called upon the
request of Limited Partners, as designated by such Limited Partners. In
addition, the General Partner may, but shall not be obligated to, submit any
matter upon which the Limited Partners are entitled to act to the Limited
Partners for a vote by written consent without a meeting pursuant to Section
17.12. Holders of Alliance Holding LP Units and Alliance Holding limited
partnership interests shall be entitled to attend all meetings of the Limited
Partners.
(b) A Limited Partner shall be entitled to cast one vote for each
Limited Partnership Interest which he owns: (i) at a meeting in person, by
written proxy or by a signed writing directing the manner in which he desires
that his vote be cast, which writing must be received by the General Partner
prior to such meeting or (ii) without a meeting, by a signed writing directing
the manner in which he desires that his vote be cast, which writing must be
received by the General Partner prior to the date upon which the votes of
Limited Partners are to be counted. Every proxy shall be revocable at the
pleasure of the Limited Partner executing it. Alliance Holding (in its
capacity as a Limited Partner of the Partnership) shall vote (whether by
proxy, ballot, consent or otherwise) so many of the Limited Partnership
Interests held by it in favor of, in opposition to, or shall abstain with
respect to any matter upon which the Limited Partners are to vote in
accordance with the written instructions or proxies received by it from the
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partners and unitholders of Alliance Holding as provided in Section 17.04(b)
of the Alliance Holding Partnership Agreement as of the applicable record
date. Other than their rights as herein provided to give written instructions
to Alliance Holding, the Alliance Holding unitholders and partners shall have
no other voting or consent rights with respect to the Partnership. The laws of
the State of Delaware pertaining to the validity and use of corporate proxies
shall govern the validity and use of proxies given by Limited Partners.
Subject to the provisions of Section 4.02 and the rights of the holders of any
securities issued pursuant thereto, the Limited Partners shall vote as a
single class with respect to all matters voted upon by the Limited Partners.
(c) With respect to any matter upon which the Limited Partners are
requested to vote or to give their consent, for which the required vote for
approval is not otherwise specified in this Agreement, such matter shall be
considered approved upon Majority Approval.
SECTION 17.05. Notice of Meeting. Notice of a meeting called pursuant
to Section 17.04 shall be given in writing by hand delivery, by courier
service or by mail addressed to each Limited Partner at the address of the
Limited Partner appearing on the books of the Partnership. An affidavit or
certificate of delivery or of mailing of any notice or report in accordance
with the provisions of this Article 17 executed by the General Partner,
delivery or courier service or mailing organization shall constitute
conclusive (but not exclusive) evidence of the giving of notice. If any notice
addressed to a Limited Partner at the address of such Limited Partner
appearing on the books of the Partnership is returned to the Partnership by
the United States Postal Service marked to indicate that the United States
Postal Service is unable to deliver such notice, the notice and any subsequent
notices or reports shall be deemed to have been duly given without further
mailing if they are available for the Limited Partner at the principal office
of the Partnership for a period of one year from the date of the giving of the
notice to all other Limited Partners.
SECTION 17.06. Record Date. For purposes of determining the Limited
Partners entitled to notice or to vote at a meeting of the Limited Partners or
to give consents without a meeting as provided in Section 17.12, the General
Partner or the Liquidating Trustee, if any, may set a Record Date, which
Record Date shall not be less than ten (10) days nor more than 60 days prior
to the date of such meeting or consent.
SECTION 17.07. Adjournment. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting and a new
Record Date need not be fixed if the time and place of such adjourned meeting
are announced at the meeting at which such adjournment is taken, unless such
adjournment shall be for more than 30 days. At the adjourned meeting, the
Partnership may transact any business that would have been permitted to be
transacted at the original meeting. If the adjournment is for more than 30
days, or if a new Record Date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given in accordance with this Article 17.
SECTION 17.08. Waiver of Notice; Consent to Meeting; Approval of
Minutes. The transactions of any meeting of Limited Partners however called
and noticed, and wherever held, are as valid as though they had been approved
at a meeting duly held after regular call and notice if a quorum is present
either in person or by proxy, and if, either before or after the meeting, each
of the Limited Partners entitled to vote, not present in person or by proxy,
signs a waiver of notice, or a consent to the holding of the meeting, or an
approval of the minutes thereof. All such waivers, consents and approvals
shall be filed with the Partnership records or made a part of the minutes of
such meeting. Attendance of a Limited Partner at a meeting shall constitute a
waiver of notice of the meeting; provided, however, that no such waiver shall
occur when the Limited Partner objects, at the beginning of the meeting, to
the transaction of any business at such meeting because the meeting is not
lawfully called or convened; and provided further, that attendance at a
meeting is not a waiver of any right to object to the consideration of any
matters required to be included in the notice of the meeting, but not so
included, if the objection is expressly made at the meeting.
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SECTION 17.09. Quorum. Limited Partners of record who are Limited
Partners with respect to more than 50% of the total number of all outstanding
Limited Partnership Interests of the class or series entitled to vote with
respect to the matter held by all Limited Partners of record, whether
represented in person or by proxy, shall constitute a quorum at a meeting of
Limited Partners. As to the Limited Partnership Interests then held by
Alliance Holding (in its capacity as a Limited Partner of the Partnership),
only Limited Partnership Interests with respect to which Alliance Holding has
received written instructions or proxies as provided in Section 17.04(b) of
the Alliance Holding Partnership Agreement shall be deemed represented for
purposes of determining whether a quorum is present. The Limited Partners
present at a duly called or held meeting at which a quorum is present may
continue to transact business until adjournment of such meeting
notwithstanding the withdrawal of enough Limited Partners to leave less than a
quorum, if any action taken (other than adjournment) is approved by the
requisite vote of Limited Partners specified in this Agreement. In the absence
of a quorum, any meeting of Limited Partners may be adjourned from time to
time by the affirmative vote of a majority of the Limited Partnership
Interests represented either in person or by proxy at such meeting, but no
other business may be transacted.
SECTION 17.10. Conduct of Meeting. The General Partner or the
Liquidating Trustee, as the case may be, shall be solely responsible for
convening, conducting and adjourning any meeting of Limited Partners,
including without limitation the determination of Persons entitled to vote at
such meeting, the existence of a quorum for such meeting, the satisfaction of
the requirements of Section 17.04 with respect to such meeting, the conduct of
voting at such meeting, the validity and effect of all instructions or proxies
to Alliance Holding, in its capacity as a Limited Partner of the Partnership,
as to the voting of Limited Partnership Interests held by it, the validity and
effect of all proxies represented at such meeting and the determination of any
controversies, votes or challenges arising in connection with or during such
meeting or voting. The General Partner or the Liquidating Trustee, as the case
may be, shall designate a Person to serve as chairman of any meeting and
further shall designate a Person to take the minutes of any meeting, which
Person, in either case, may be, without limitation, a Partner or any officer,
employee or agent of the General Partner. The General Partner or the
Liquidating Trustee, as the case may be, may make all such other regulations,
consistent with applicable law and this Agreement, as it may deem advisable
concerning the conduct of any meeting of the Limited Partners, including
regulations in regard to the appointment of proxies and other evidence of the
right to vote.
SECTION 17.11. Instructions by Nominees. With respect to Limited
Partnership Interests that are held for a Person's account by another Person
(such as a broker, dealer, bank, trust company or clearing corporation, or any
agent of any of the foregoing), in whose name the LP Certificates evidencing
such Limited Partnership Interests are registered, such broker, dealer or
other agent shall vote such Limited Partnership Interests at the direction of
the Person on whose behalf such broker, dealer or other agent is holding such
Limited Partnership Interests, and the Partnership shall be entitled to assume
it is so acting without further inquiry. With respect to Alliance Holding LP
Units that are held for a Person's account by another Person (such as a
broker, dealer, bank, trust company or clearing corporation, or any agent of
any of the foregoing), in whose name the certificates evidencing such Alliance
Holding LP Units are registered, such broker, dealer or other agent shall, in
exercising any right to give written instructions or proxies to Alliance
Holding (in its capacity as a Limited Partner of the Partnership) as provided
in Section 17.04(b) of the Alliance Holding Partnership Agreement, give such
instructions or proxies at the direction of the Person on whose behalf such
broker, dealer or other agent is holding such Alliance Holding LP Units, and
the Partnership and Alliance Holding shall be entitled to assume it is so
acting without further inquiry.
SECTION 17.12. Action Without a Meeting. Any action that may be taken
at a meeting of the Limited Partners may be taken without a meeting if the
General Partner so agrees in writing, in its sole discretion, and a consent in
writing setting forth the action so taken is signed by Limited Partners owning
not less than the minimum number of Limited Partnership Interests that would
be necessary to authorize or take such action at a meeting at which all of the
Limited Partners were present and voted. Alliance Holding (in its capacity as
a Limited Partner of the Partnership) shall sign such consent only on behalf
of those unitholders of Alliance Holding with respect to whom it has received
written instructions or proxies with respect thereto as provided in Section
17.04(b) of the Alliance Holding Partnership Agreement. Prompt notice of the
taking of action without a meeting shall be given to
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the Limited Partners who have not consented thereto in writing. Written
consents to the taking of any action by the Limited Partners shall have no
force and effect unless and until (i) they are deposited with the Partnership
in care of the General Partner and (ii) consents sufficient to take the action
proposed are dated as of a date not more than one hundred eighty (180) days
prior to the date sufficient consents are deposited with the Partnership.
ARTICLE 18
GENERAL PROVISIONS
SECTION 18.01. Addresses and Notices. The address of each Partner for
all purposes shall be the address set forth on the books and records of the
Partnership. Any notice, demand, request or report required or permitted to be
given or made to a Partner (other than the General Partner and its Corporate
Affiliates) under this Agreement shall be in writing and shall be deemed given
or made when delivered in person or when sent to such Partner at such address
by first class mail or by other means of written communication.
SECTION 18.02. Consent of Limited Partners. By acceptance of a LP
Certificate, each Limited Partner expressly approves and agrees that, whenever
in this Agreement it is specified that an action may be taken upon the
affirmative vote of less than all of the Limited Partners, such action may be
so taken upon the concurrence of less than all of the Limited Partners and
each present and future Limited Partner shall be bound by the results of such
action.
SECTION 18.03. Titles and Captions. All article or section titles or
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or describe the
scope or intent of any provisions hereof.
SECTION 18.04. Pronouns and Plurals. Whenever the context may
require, any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns
and verbs shall include the plural and vice versa.
SECTION 18.05. Further Action. Each Partner shall execute and deliver
all documents, provide all information and take or refrain from taking all
actions as may be necessary or appropriate to achieve the purpose of this
Agreement.
SECTION 18.06. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the Partners and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
SECTION 18.07. Integration. This Agreement constitutes the entire
agreement among the Partners pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
SECTION 18.08. Benefits of this Agreement. Except for the provisions
of Section 6.02, none of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the Partnership or by
any other Person not expressly granted rights herein.
SECTION 18.09. Waiver. No failure by any party hereto to insist upon
the strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute a waiver of any such breach or any other covenant, duty,
agreement or condition.
SECTION 18.10. Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one agreement binding on
all the parties hereto. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto, independently of the signature
of any other party.
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SECTION 18.11. Applicable Law. Notwithstanding the place where this
Agreement may be executed by any of the parties hereto, the parties hereto
expressly agree that all of the terms and provisions hereof shall be construed
under and governed by the substantive laws of the State of Delaware, without
regard to the principles of conflict of laws.
SECTION 18.12. Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
as of the _____ day of _________________ ___, 1999.
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Exhibit A
CERTIFICATE
FOR
LIMITED PARTNERSHIP INTERESTS
IN
ALLIANCE CAPITAL MANAGEMENT L.P.
No. ______ ______________ Limited Partnership
Interests
ALLIANCE CAPITAL MANAGEMENT L.P. (the "Partnership"), a Delaware
limited partnership, hereby certifies that is the registered owner of units of
limited partner interest in the Partnership ("Limited Partnership Interests").
The rights, preferences, and limitations of the Limited Partnership Interests
are set forth in the Amended and Restated Agreement of Limited Partnership of
the Partnership, as it may be amended, supplemented or restated from time to
time (the "Partnership Agreement"), copies of which are on file at the General
Partner's principal office at 1345 Avenue of the Americas, New York, New York
10105.
THIS CERTIFICATE, AND THE LIMITED PARTNERSHIP INTERESTS REPRESENTED
HEREBY, ARE NOT TRANSFERABLE EXCEPT UPON DEATH, BY OPERATION OF LAW, OR WITH
THE WRITTEN CONSENT OF THE GENERAL PARTNER, WHICH CONSENT MAY BE GRANTED OR
WITHHELD IN THE GENERAL PARTNER'S SOLE DISCRETION. ANY TRANSFER OR PURPORTED
TRANSFER OF THIS CERTIFICATE OR THE LIMITED PARTNERSHIP INTERESTS REPRESENTED
HEREBY NOT MADE IN ACCORDANCE WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT
SHALL BE NULL AND VOID. THE LIMITED PARTNERSHIP INTERESTS REPRESENTED HEREBY
ARE ALSO SUBJECT TO REDEMPTION UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE
PARTNERSHIP AGREEMENT.
C-A-1
<PAGE>
WITNESS, the facsimile signature of the duly authorized officer of
Alliance Capital Management Corporation, the General Partner of the
Partnership.
Dated:
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management Corporation,
General Partner
By ________________________________________
Title:
BY ACCEPTANCE OF THIS CERTIFICATE FOR LIMITED PARTNERSHIP INTERESTS, AND AS A
CONDITION TO ENTITLEMENT TO ANY RIGHTS IN OR BENEFITS WITH RESPECT TO THE
LIMITED PARTNERSHIP INTERESTS EVIDENCED HEREBY, A HOLDER HEREOF (INCLUDING ANY
ASSIGNEE OR TRANSFEREE HEREOF) IS DEEMED TO HAVE AGREED TO COMPLY WITH AND BE
BOUND BY ALL TERMS AND CONDITIONS OF THE PARTNERSHIP AGREEMENT.
C-A-2
<PAGE>
ANNEX D
PERSONAL AND CONFIDENTIAL
August 3, 1999
Board of Directors
Alliance Capital Management Corporation
1345 Avenue of the Americas
New York, NY 10105
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to those holders of the outstanding limited partnership units (the
"Alliance Holding Units") of Alliance Capital Management L.P. ("Alliance
Holding") who remain holders of the Alliance Holding Units immediately
following the offer to exchange one limited partnership interest (the "Alliance
Capital Units") in Alliance Capital Management L.P. II ("Alliance Capital") for
each Alliance Holding Unit (the "Exchange Ratio") pursuant to the exchange
offer to be commenced by Alliance Holding (the "Exchange Offer"), as
contemplated by the draft dated August 2, 1999 of the Agreement and Plan of
Reorganization among Alliance Holding, Alliance Capital, Alliance Capital
Management Corporation and The Equitable Life Assurance Society of the United
States ("ELAS") (the "Reorganization Plan"). We understand that Alliance
Capital will be a private limited partnership while Alliance Holding will
continue to be a publicly traded limited partnership following the Exchange
Offer. Pursuant to the Reorganization Plan, holders of Alliance Holding Units
("Unitholders") can elect to retain their Alliance Holding Units or exchange
them for Alliance Capital Units, which will be subject to the transfer
restrictions described in the Proxy Statement/Prospectus (as defined below)
relating to the reorganization of Alliance Holding contemplated by the
Reorganization Plan (the "Reorganization"). We understand that ELAS, the
majority Unitholder, has agreed to exchange, and to cause its affiliates to
exchange, substantially all of their Alliance Holding Units for Alliance
Capital Units. Alliance Capital Management Corporation, the general partner of
Alliance Holding (the "General Partner") and an indirect wholly-owned
subsidiary of The Equitable Companies Incorporated, the sole shareholder of
ELAS ("Equitable"), will also be the general partner of Alliance Capital.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with Alliance Holding and the General Partner having provided
investment banking services to Alliance Holding and the General
D-1
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Alliance Capital Management Corporation
August 3, 1999
Page Two
Partner from time to time and having acted as the General Partner's financial
advisor in connection with the Reorganization. We have also provided investment
banking and financial advisory services to ELAS, Equitable and AXA, the
majority shareholder of Equitable ("AXA"), from time to time, including having
acted as financial advisor and lead manager in connection with ELAS's
demutualization and $450 million initial public offering in July 1992, as a
dealer manager in Equitable's exchange offer of $408 million of convertible
subordinated debentures and cumulative convertible preferred stock in November
1994, as lead manager for ELAS's placement of $600 million of surplus notes in
December 1995, and as lead manager for AXA's $240 million common stock offering
in June 1996 and having acted as financial advisor to AXA in connection with
its merger with UAP Group in January 1997, its sale of AXA Equity and Law and
AEL Investments in September 1997, and its pending acquisition of Guardian
Royal Exchange plc. In addition, we may provide investment banking and
financial advisory services in the future to Alliance Holding, Alliance
Capital, the General Partner, Equitable or AXA or their respective affiliates.
Goldman Sachs provides a full range of financial advisory and securities
services and, in the course of its normal trading activities, may from time to
time effect transactions and hold securities, including derivative securities,
of Alliance Holding, Equitable and AXA for its own account and for the account
of customers.
In connection with this opinion, we have reviewed, among other things, the
draft dated August 2, 1999 of the Reorganization Plan; the Registration
Statement on Form S-4, including the Proxy Statement/Prospectus relating to the
Special Meeting of Limited Partners and Unitholders of Alliance Holding to be
held in connection with the Reorganization (the "Proxy Statement/Prospectus")
and the Exchange Offer Prospectus relating to Alliance Holding's offer to
exchange Alliance Holding Units for Alliance Capital Units on a one-for-one
basis (the "Exchange Offer Prospectus"), as filed with the Securities and
Exchange Commission on August 3, 1999; the draft dated August 2, 1999 of the
Amended and Restated Agreement of Limited Partnership of Alliance Capital
Management L.P.; the draft dated August 2, 1999 of the Amended and Restated
Agreement of Limited Partnership of Alliance Capital Management Holding L.P.;
the draft dated August 2, 1999 of the Amended and Restated Investment Advisory
and Management Agreement among Alliance Holding, Alliance Corporate Finance
Group Incorporated and ELAS; the draft dated August 2, 1999 of the Amended and
Restated Accounting, Valuation, Reporting and Treasury Services Agreement for
the General Account and Certain Separate Accounts of The Equitable Life
Assurance Society of the United States between Alliance Holding and ELAS; the
Indemnification and Reimbursement Agreement, dated as of April 8, 1999, among
Alliance Holding, Alliance Capital and ELAS; the Exchange Agreement, dated as
of April 8, 1999, among Alliance Holding, Alliance Capital and ELAS; Annual
Reports to Unitholders and Annual Reports on Form 10-K of Alliance Holding for
each of the five years ended December 31, 1998; certain interim reports to
Unitholders and Quarterly Reports on Form 10-Q of Alliance Holding; certain
other communications from Alliance Holding to its Unitholders; and certain
internal financial analyses and forecasts for Alliance Holding prepared by the
senior management of Alliance Holding and the General Partner. We also have
held discussions with members of the senior management of Alliance Holding and
the General Partner and Equitable regarding the rationale for the
D-2
<PAGE>
Alliance Capital Management Corporation
August 3, 1999
Page Three
Reorganization and the financial alternatives available to the General Partner
and Equitable with respect to their ownership interest in Alliance Holding,
and, as applicable, the past and current business operations, financial
condition and future prospects of Alliance Holding and Alliance Capital. In
addition, we have reviewed the reported price and trading activity for the
Alliance Holding Units, compared certain financial and stock market information
for Alliance Holding with similar information for certain other companies the
securities of which are publicly traded. We also reviewed the fees charged by
certain other asset management firms and compared those fees with the fees
charged by Alliance Holding for the assets of ELAS that are under management of
Alliance Holding. We also performed such other studies and analyses as we
considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. In that regard, we have
assumed with your consent that the forecasts for Alliance Holding prepared by
the senior management of Alliance Holding and the General Partner have been
reasonably prepared on a basis reflecting the best currently available
estimates and judgments of Alliance Holding and the General Partner. In
addition, we have not made an independent evaluation or appraisal of the assets
and liabilities of Alliance Holding and we have not been furnished with any
such evaluation or appraisal. We have assumed with your consent, after
discussions with you and tax advisors consulted by you, that the Reorganization
will not result in any adverse change in the taxation of Alliance Holding or
the Unitholders. We have also assumed that the draft agreements referred to
herein will be executed and delivered in substantially the same form received
by us and that all material governmental, regulatory or other consents and
approvals necessary for the consummation of the Reorganization will be obtained
without any adverse effect on Alliance Holding or on the contemplated benefits
of the Reorganization. We have also assumed with your consent that the Alliance
Holding Units will continue to be listed for trading on the New York Stock
Exchange. Our advisory services and the opinion expressed herein are provided
for the information and assistance of the Board of Directors of the General
Partner in connection with its consideration of the Reorganization and the
Exchange Offer, and such opinion does not constitute a recommendation as to how
any Unitholder should vote with respect to the Reorganization or whether any
Unitholder should participate in the Exchange Offer.
We note that the General Partner cautions that Unitholders who cannot or do not
wish to bear the substantial illiquidity of the Alliance Capital Units may find
it advantageous not to participate in the Exchange Offer and that the General
Partner will advise Unitholders that they must determine their individual
liquidity requirements and preferences after considering all relevant factors,
including the information to be contained in the Exchange Offer Prospectus,
their financial and tax position and the composition of their investment
portfolio. Because of the individual nature of the determination as to whether
any Unitholder should decide to participate in the Exchange Offer, we do not
express any opinion with respect to the fairness of the Exchange Ratio to those
Unitholders who elect to exchange their Alliance Holding Units for Alliance
Capital Units.
D-3
<PAGE>
Alliance Capital Management Corporation
August 3, 1999
Page Four
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the Exchange
Ratio pursuant to the Reorganization Plan is fair from a financial point of
view to those Unitholders who remain holders of Alliance Holding Units
immediately following the Exchange Offer.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
D-4
<PAGE>
First Chicago Trust Company of New York has agreed to provide services as
the exchange agent in connection with the exchange offer. You should direct
all executed letters of transmittal and other required documents to the
exchange agent at one of the addresses or facsimile numbers set forth below.
Georgeson Shareholder Communications, Inc. has agreed to provide services
as the information agent in connection with the exchange offer. You should
direct questions and requests for assistance regarding the exchange offer,
requests for additional copies of this prospectus or of the letter of
transmittal and requests for notices of guaranteed delivery to the information
agent at the address or the telephone number set forth below.
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<S> <C> <C>
The information agent for the exchange offer is:
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.
17 State Street
New York, New York 10004
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
The exchange agent for the exchange offer is:
First Chicago Trust Company of New York
By Federal Express or
By Mail: Other Courier: By Hand:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Corporate Actions Corporate Actions c/o Securities Transfer and
Suite 4660 Suite 4680 Reporting Services Inc.
P. O. Box 2569 14 Wall Street Attn: Corporate Services
Jersey City, New Jersey 8th Floor 100 William Street, Galleria
07303-2569 New York, New York 10005 New York, New York 10038
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