As filed with the Securities and Exchange Commission on August 3, 1999
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
ALLIANCE CAPITAL MANAGEMENT L.P. II
(Exact name of registrant as specified in its constituent documents)
Delaware 6282 13-4064930
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
1345 Avenue of the Americas
New York, New York 10105
(212) 969-1000
(Address and telephone number of registrant's principal executive offices)
Dave H. Williams
Alliance Capital Management Corporation
1345 Avenue of the Americas
New York, New York 10105
(212) 969-1000
(Name, address and telephone number of agent for service)
-----------------------
Copies to:
Phillip R. Mills, Esq. David R. Brewer, Jr., Esq.
Davis Polk & Wardwell Alliance Capital Management L.P.
450 Lexington Avenue 1345 Avenue of the Americas
New York, New York 10017 New York, New York 10105
(212) 450-4000 (212) 969-1000
-----------------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
-----------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
-----------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Per Aggregate Offering Amount of
Securities to be Registered Registered(1) Unit Price(2) Registration Fee(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units of limited partnership interest of Alliance
Capital Management L.P. II..................... 36,577,922 units N/A $1,117,912,741 $310,780
===================================================================================================================================
(1) The maximum number of Alliance Capital Management L.P. II units to be
offered to Alliance Capital Management L.P. unitholders in the exchange.
(2) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(f)(1) and Rule 457(c) of the Securities Act. Based
upon the market value of the Alliance Capital Management L.P. units to be
received by Alliance Capital Management L.P. in the exchange as
established by the average of the high and low sales prices of the
Alliance Capital Management L.P. units on July 27, 1999 on the
consolidated tape, which was $30.5625.
(3) This fee has been calculated pursuant to Section 6(b) of the Securities
Act, as 0.0278 of one percent of $1,117,912,741. Pursuant to Rule 457(b),
the required fee of $310,780 is reduced by the fee of $91,790 previously
paid at the time of the filing of preliminary proxy materials in
connection with this transaction on April 22, 1999. The balance of the
fee payable with this filing is therefore $218,990.
</TABLE>
-----------------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
===============================================================================
<PAGE>
EXPLANATORY NOTE
This registration statement contains two forms of prospectus: (1) a proxy
statement/prospectus relating to a special meeting of unitholders of Alliance
Capital Management L.P. and (2) an exchange offer prospectus relating to an
offer to exchange Alliance Capital Management L.P. units for Alliance Capital
Management L.P. II units. The proxy statement/prospectus follows immediately
after the notice to unitholders, which follows immediately after this
explanatory note. Pages of the exchange offer prospectus that differ from pages
of the proxy statement/prospectus (except as described in the next sentence)
follow immediately after the proxy statement/prospectus. The pagination of the
proxy statement/prospectus and the exchange offer prospectus will differ, and
in some cases the phrase "proxy statement/prospectus" appearing in the proxy
statement/prospectus appears in the exchange offer prospectus as "exchange
offer prospectus" or "prospectus." The exchange offer prospectus will also
contain all pages of the proxy statement/prospectus other than: the cover page
and pages 87 to 90 and 101.
<PAGE>
[PRELIMINARY DRAFT DATED AUGUST 3, 1999, SUBJECT TO COMPLETION]
Alliance Capital Management L.P. II Prospectus
Proxy Statement for Alliance Capital Management L.P. Special Meeting
YOUR VOTE IS VERY IMPORTANT
Alliance Capital Management L.P. ("Alliance Holding") proposes to reorganize by
transferring its business to Alliance Capital Management L.P. II ("Alliance
Capital") in exchange for all Alliance Capital units. If Alliance Holding
unitholders approve of this reorganization, we will offer all our unitholders
the opportunity to exchange Alliance Holding units for Alliance Capital units,
on a one-for-one basis. The exchange offer will be made pursuant to a separate
prospectus, which we will mail to you separately. The reorganization will not
adversely affect any existing rights or benefits of unitholders who elect to
continue to hold Alliance Holding units.
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.
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.
In general, the reorganization will not be a taxable event either for
unitholders who elect to exchange Alliance Holding units for Alliance Capital
units or for unitholders who retain their Alliance Holding units.
We are asking Alliance Holding's public unitholders, at a special meeting of
unitholders, to vote to approve the reorganization. We cannot accomplish the
reorganization without this approval.
This prospectus provides you with detailed information about the reorganization
and the exchange offer. We encourage you to read this entire prospectus
carefully. In addition, you may obtain information about Alliance Holding from
documents that we have filed with the SEC.
We believe that the reorganization is in the best interests of Alliance Holding
and its investors. I and the other members of the Board of Directors have voted
unanimously to approve the reorganization, and we urge you to vote in favor of
the reorganization, whether or not you are interested in participating in the
exchange offer when it is made.
/s/ Dave H. Williams
- ---------------------------------------
DAVE H. WILLIAMS
Chairman of the Board
Alliance Capital Management Corporation
Carefully consider the risks associated with the reorganization and the
exchange offer. See "Risk Factors" beginning on page 12.
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
regulators has approved either the proposals described in this proxy
statement/prospectus or the Alliance Capital units or determined if this proxy
statement/prospectus is accurate or complete. Any representation to the contrary
is a criminal offense.
- --------------------------------------------------------------------------------
Proxy statement/prospectus dated August o, 1999,
and first mailed to unitholders on or about August 6, 1999.
<PAGE>
ALLIANCE CAPITAL MANAGEMENT L.P.
NOTICE OF SPECIAL MEETING OF UNITHOLDERS
Time: 9:00 a.m., New York City time
Date: September 22, 1999
Place: Alliance Capital Management L.P.
1345 Avenue of the Americas
41st Floor
New York, New York 10105
Purpose:
o Vote on the proposed reorganization of Alliance Capital Management
L.P., including separate votes on:
(1) the transfer by Alliance Capital Management L.P. of its business
to Alliance Capital Management L.P. II pursuant to the agreement
and plan of reorganization, and
(2) the amendment of the Alliance Capital Management L.P. partnership
agreement to facilitate and implement the reorganization, to
maintain the existing rights and benefits of Alliance Capital
Management L.P. unitholders following the reorganization and to
modify or eliminate provisions that are inoperative or are no
longer relevant or that require technical revisions.
o Conduct other business if properly raised.
In voting on the reorganization, you will be asked to vote separately on
each of the transfer and the amendment of the partnership agreement. Each step
is conditioned on the other, so that you must approve both steps to accomplish
the reorganization.
We invite unitholders to attend the special meeting in person.
Your vote is very important. Whether or not you expect to attend, in order
to ensure that your interests are represented, please:
o sign, date and mail promptly the enclosed voting instruction form in
the enclosed envelope, OR
o call the toll-free telephone number listed on the voting instruction
form, OR
o use the Internet to vote by following the instructions included with
the enclosed voting instruction form.
If you have any questions or need assistance in completing your voting
instructions, please contact Georgeson & Company Inc., the firm assisting us
with the solicitation of voting instructions, at 1-800-223- 2064.
By Order of the General Partner
/s/ David R. Brewer, Jr.
---------------------------------------
DAVID R. BREWER, JR.
Senior Vice President,
General Counsel and Secretary
Alliance Capital Management Corporation
New York, New York
August 6, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
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
Recommendation to Unitholders..............................................3
Required Vote..............................................................3
Other Aspects of the Reorganization and
Exchange Offer..........................................................3
Exchange Offer Considerations..............................................5
Risk Factors...............................................................5
Factors Upon Which the
Reorganization Depends..................................................5
Material Federal Income Tax
Consequences............................................................6
Opinion of Financial Adviser...............................................6
Accounting Treatment.......................................................6
Benefits to Equitable Life from the
Reorganization..........................................................6
No Appraisal Rights........................................................7
ORGANIZATIONAL CHARTS.........................................................8
SUMMARY CONSOLIDATED HISTORICAL
FINANCIAL DATA.............................................................9
SUMMARY CONSOLIDATED PRO FORMA
FINANCIAL DATA............................................................10
RISK FACTORS.................................................................12
Risks Relating to the Reorganization......................................12
Risks Relating to Exchanging
or Retaining Units.....................................................13
CAUTIONARY STATEMENT
CONCERNING FORWARD-LOOKING
STATEMENTS................................................................15
THE REORGANIZATION AND THE EXCHANGE
OFFER.....................................................................16
General...................................................................16
Background of the Reorganization and the
Exchange Offer.........................................................17
Reasons for the Reorganization and
the Exchange Offer.....................................................19
Factors Considered by, and
Recommendation of, the General Partner.................................19
Alliance Holding Public Float After the
Exchange...............................................................22
Transaction Expenses......................................................24
Employee Matters..........................................................25
Material Federal Income Tax Consequences..................................25
Regulatory Matters........................................................30
Accounting Treatment......................................................30
No Appraisal Rights.......................................................30
SELECTED FINANCIAL DATA......................................................32
CAPITALIZATION...............................................................35
PRO FORMA CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)....................................................36
Pro Forma Condensed Statement of
Financial Condition of Alliance Holding
(Unaudited)............................................................38
Pro Forma Condensed Statements of
Income of Alliance Holding (Unaudited).................................39
Pro Forma Condensed Consolidated
Statement of Financial Condition of
Alliance Capital (Unaudited)...........................................42
Pro Forma Condensed Consolidated
Statements of Income of Alliance Capital
(Unaudited)............................................................43
Notes to Unaudited Pro Forma Condensed
Financial Statements...................................................46
OPINION OF FINANCIAL ADVISER.................................................47
INTERESTS OF CERTAIN PERSONS
IN THE REORGANIZATION.....................................................53
Equitable Life............................................................53
Executive Officers........................................................53
THE REORGANIZATION DOCUMENTS.................................................54
The Exchange Agreement....................................................54
The Agreement and Plan of Reorganization..................................54
The Indemnification and Reimbursement
Agreement..............................................................56
ii
<PAGE>
Page
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DESCRIPTION OF ALLIANCE CAPITAL
UNITS.....................................................................59
General...................................................................59
Restrictions on Transfers of the Alliance Capital
Units..................................................................59
COMPARISON OF UNITHOLDER RIGHTS..............................................61
Form of Organization......................................................61
Business..................................................................61
Voting Rights.............................................................61
Distributions.............................................................63
Taxation..................................................................63
Management................................................................64
Potential Dilution........................................................64
Meetings..................................................................65
Conversion/Exchange Rights................................................65
Right to Purchase Units...................................................65
Liquidation Rights........................................................66
Right to Compel Dissolution...............................................66
Limited Liability.........................................................67
Liquidity and Marketability...............................................67
Continuity of Existence...................................................68
Financial Reporting.......................................................68
Certain Legal Rights......................................................68
Right to List Holders; Inspection of Books
and Records............................................................69
Subordination.............................................................69
THE PARTNERSHIP AGREEMENTS...................................................70
The Amended Alliance Holding Partnership
Agreement..............................................................70
The Alliance Capital Partnership Agreement................................83
THE SPECIAL MEETING..........................................................87
Matters Relating to the Meeting...........................................87
Vote Required to Approve the Proposals....................................88
Voting Instructions.......................................................88
Other Business; Adjournments..............................................89
Solicitation of Voting Instruction Forms..................................89
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS......................................................91
The Amended Equitable Life Investment
Advisory and Management Agreement......................................91
The Amended Equitable Life Accounting,
Valuation, Reporting and Treasury Services
Agreement..............................................................92
Intercompany Relationships................................................92
Security Ownership as of the Record Date..................................93
LEGAL MATTERS...............................................................100
EXPERTS.....................................................................100
WHERE YOU CAN FIND MORE
INFORMATION..............................................................101
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
iii
<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 propose 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."
If the reorganization is approved, we will offer 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,
1
<PAGE>
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 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.
If the reorganization is approved, we will conduct the exchange offer pursuant
to a separate prospectus that we will send to you. At that time we will ask you
to decide whether to participate in the exchange offer. The exchange offer
prospectus will contain instructions for exchanging your unit certificates.
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
2
<PAGE>
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."
Recommendation to Unitholders
Alliance Capital Management Corporation, our general partner, believes that the
reorganization is fair to, and in the best interests of, Alliance Holding
unitholders. Therefore, whether or not you are interested in participating in
the exchange offer when it is made, the general partner recommends that you vote
"FOR" (1) the transfer of Alliance Holding's business to Alliance Capital and
(2) the adoption of provisions that facilitate and implement the reorganization
and that maintain the existing rights and benefits of Alliance Holding
unitholders following the reorganization and the modification or elimination of
provisions that are inoperative or are no longer relevant or that require
technical revisions.
Required Vote
Under our partnership agreement, the affirmative vote of all Alliance Holding
unitholders, other than those described below, holding more than 50% of the
units held by all such unitholders is necessary to approve the reorganization.
For this purpose, the Alliance Holding unitholders eligible to vote include all
holders other than (1) our and our general partner's directors, officers and
employees and members of their families and (2) our general partner and entities
affiliated with it (including Equitable Life).
In voting on the reorganization, you will be asked to vote separately on each of
the transfer and the amendment of the partnership agreement. Each step is
conditioned on the other, so that you must approve both steps to accomplish the
reorganization.
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, 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 abandoned after
3
<PAGE>
the special meeting of unitholders. If the reorganization is abandoned before
the special meeting of unitholders, Equitable Life will not make any such
payments.
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
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 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 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
4
<PAGE>
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
If the reorganization is approved, we will make the exchange offer pursuant to a
separate prospectus, which we will mail to you at a later time. In considering
whether or not to participate in the exchange offer at that time, 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. 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 evaluating the reorganization and 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:
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 approval by Alliance Holding unitholders of both (1) the transfer of
Alliance Holding's business to Alliance Capital in exchange for all of the
Alliance Capital units pursuant to the agreement and plan of reorganization
and (2) the amendment of the Alliance Holding partnership agreement;
o receipt of regulatory approvals and consents from clients and other third
parties; and
5
<PAGE>
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 if you approve 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 how any unitholder should vote with respect to the
reorganization or whether any unitholder should participate in the exchange
offer.
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
6
<PAGE>
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."
7
<PAGE>
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]
Description of Graphic: Currently, Equitable Life holds a 56.0% limited
partnership interest in Alliance Holding. The public holds a 35.7% limited
partnership interest in Alliance Holding and the management and employees of
Alliance Holding hold a 7.3% limited partnership interest in Alliance Holding.
Alliance Capital Management Corporation, the general partner and a wholly-owned
subsidiary of Equitable Life, holds a 1% general partnership interest in
Alliance Holding.
Structure After the Reorganization and the Exchange Offer:
[Graphic Omitted]
Description of Graphic: After the reorganization and the exchange offer,
assuming none of the public accepts the exchange offer, Equitable Life will
hold an approximately 54.0% limited partnership interest in Alliance Capital
and an approximately 5.3% limited partnership interest in Alliance Holding.
Alliance Capital Management Corporation, the general partner, will hold a 1%
general partnership interest in Alliance Capital and a 0.2% general partnership
interest in Alliance Holding. The public and the management and employees will
hold a 94.5% limited partnership interest in Alliance Holding. The percentages
of limited partnership interests that Alliance Holding and the exchange offer
participants will hold in Alliance Capital will be determined after the
exchange offer and the private exchange by Equitable Life and its affiliates.
* These percentages will be determined after the 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.
8
<PAGE>
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA
We have set forth below selected summary consolidated historical financial
data of Alliance Holding for the three months ended March 31, 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 March 31, 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 Three Months Ended For the Year Ended
March 31, December 31,
-------------------------- -----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- -------- --------
(unaudited) (in thousands, except for per unit data)
Income statement data:
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.......................... $419,743 $316,017 $1,324,056 $975,336 $788,517 $639,255 $600,952
Income before income taxes........ 115,355 82,124 348,712 147,762 207,590 167,011 141,806
Net income........................ 98,054 68,984 292,916 128,956 193,346 155,387 133,489
Net income before reduction in
recorded value of intangible
assets.......................... 98,054 68,984 292,916 249,856 193,346 155,387 133,489
Net income per unit:
Basic net income per unit......... $0.57 $0.40 $1.71 $0.76 $1.15 $0.95 $0.86
Diluted net income per unit....... $0.55 $0.39 $1.66 $0.74 $1.13 $0.94 $0.85
Diluted net income per unit
before reduction in recorded
value of intangible assets...... $0.55 $0.39 $1.66 $1.44 $1.13 $0.94 $0.85
Basic weighted average units
outstanding..................... 170,561 169,301 169,933 168,448 166,382 161,538 153,381
Diluted weighted average units
outstanding..................... 175,591 174,511 175,143 171,876 168,968 163,116 155,882
Cash distributions per unit........ $0.54 $0.38 $1.62 $1.40 $1.095 $0.91 $0.82
December 31,
March 31, -----------------------------------------------------
1999 1998 1997 1996 1995 1994
--------- -------- -------- -------- -------- --------
Balance sheet data:
Total assets...................... $1,442,703 $1,132,592 $784,460 $725,897 $575,058 $518,369
Debt and long-term obligations(1). 354,072 238,089 130,429 52,629 30,839 29,021
Partners' capital................. 458,949 430,273 398,051 476,020 406,709 381,329
Assets under management (in
millions)(2)...................... $301,353 $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>
9
<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 three months ended March
31, 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 March 31, 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 March 31, 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 Three Months For the Year
Ended March 31, Ended
-------------------- December 31,
1999 1998 1998
------ ------ -------------
<S> <C> <C> <C>
Income statement data:
Revenues............................................. $419,743 $316,017 $1,324,056
Income before income taxes........................... 115,355 82,124 348,712
Net income........................................... 98,054 68,984 292,916
Net income per unit:
Basic net income per unit............................ $0.57 $0.40 $1.71
Diluted net income per unit.......................... $0.55 $0.39 $1.66
Basic weighted average units outstanding............. 170,561 169,301 169,933
Diluted weighted average units outstanding........... 175,591 174,511 175,143
Cash distributions per unit............................. $0.54 $0.38 $1.62
March 31, 1999
--------------
Balance sheet data:
Total assets......................................... $1,442,703
Debt and long-term obligations....................... 354,072
Partner's capital.................................... 458,949
</TABLE>
10
<PAGE>
<TABLE>
Pro Forma Alliance Capital
---------------------------------------
For the Three Months For the Year
Ended March 31, Ended
-------------------- December 31,
1999 1998 1998
------ ------ -------------
(in thousands, except for per unit data)
<S> <C> <C> <C>
Income statement data:
Revenues............................................. $419,743 $316,017 $1,324,056
Income before income taxes........................... 115,355 82,124 348,712
Net income........................................... 108,129 76,963 323,516
Net income per unit:
Basic net income per unit............................ $0.63 $0.45 $1.88
Diluted net income per unit.......................... $0.61 $0.44 $1.83
Basic weighted average units outstanding............. 170,561 169,301 169,933
Diluted weighted average units outstanding........... 175,591 174,511 175,143
Cash distributions per unit............................. $0.60 $0.43 $1.80
March 31, 1999
--------------
Balance sheet data:
Total assets......................................... $1,432,628
Debt and long-term obligations....................... 354,072
Partner's capital.................................... 458,949
Pro Forma Alliance Holding
---------------------------------------
For the Three Months For the Year
Ended March 31, Ended
-------------------- December 31,
1999 1998 1998
------ ------ -------------
(in thousands, except for per unit data)
<S> <C> <C> <C>
Income statement data:
Equity in earnings of Alliance Capital............... $40,592 $28,733 $120,970
Revenues............................................. 40,592 28,733 120,970
Income before income taxes........................... 40,592 28,733 120,970
Net income........................................... 36,810 25,754 109,528
Net income per unit:
Basic net income per unit............................ $0.57 $0.40 $1.71
Diluted net income per unit.......................... $0.55 $0.39 $1.66
Basic weighted average units outstanding............. 64,668 63,843 64,183
Diluted weighted average units outstanding........... 69,698 69,053 69,393
Cash distributions per unit............................. $0.54 $0.38 $1.62
March 31, 1999
--------------
Balance sheet data:
Investment in Alliance Capital....................... $172,566
Total assets......................................... 182,641
Debt and long-term obligations....................... --
Partner's capital.................................... 172,566
</TABLE>
11
<PAGE>
RISK FACTORS
In addition to other information set forth in this prospectus, you should
carefully consider the risk factors set forth below before voting on the
reorganization and before electing to retain your units or to exchange them for
Alliance Capital units in the exchange offer.
Risks Relating to the Reorganization
A vote in favor of the reorganization may affect your right to challenge it
later in court.
If you give 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.
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.
12
<PAGE>
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
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
13
<PAGE>
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.
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 will offer 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.
14
<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.
15
<PAGE>
THE REORGANIZATION AND THE EXCHANGE OFFER
General
At the special meeting, Alliance Holding unitholders will be asked to
approve:
(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.
These steps are more fully described under "The Reorganization Documents
- -- The Agreement and Plan of Reorganization" and "The Partnership Agreements --
The Amended Alliance Holding Partnership Agreement." In voting on the
reorganization, you will be asked to vote separately on each of the transfer and
the amended partnership agreement. Each step is conditioned on the other, so
that you must approve both steps to accomplish the reorganization.
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.
If the reorganization is approved, Alliance Holding will offer 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.
The exchange offer will be conducted pursuant to a separate prospectus,
which we will send to you later. Should you decide to participate in the
exchange offer, instructions for doing so will be included in the prospectus.
You should not send any unit certificates with your voting instruction form.
16
<PAGE>
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. 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.
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<PAGE>
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 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.
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<PAGE>
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."
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
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<PAGE>
amendment of the Alliance Holding partnership agreement, whether or
not Alliance Holding unitholders are interested in participating in
the exchange offer when it is made.
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.
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 is
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
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<PAGE>
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
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;
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(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.
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.
<TABLE>
Number of public units tendered*
-------------------------------------------------------
More than
None 10 million 18.7 million 18.7 million
------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
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.
</TABLE>
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
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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.
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
<TABLE>
Units
Accepted Pro Rata
Units for Reduction Reduction of
Tendered Exchange of Units Units
(in millions) (in millions) (in millions) Tendered
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
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
</TABLE>
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<PAGE>
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 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 abandoned after the special meeting of unitholders. If
the reorganization is abandoned before the special meeting of unitholders,
Equitable Life is not obligated to make any such payments. 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.
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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.
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.
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<PAGE>
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 the 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.
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.
26
<PAGE>
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 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
27
<PAGE>
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 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."
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<PAGE>
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 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
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<PAGE>
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.
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 object 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
will have no appraisal, dissenter or similar rights under applicable law. That
is, such Alliance Holding unitholders will not have the right, instead of
consenting to the reorganization, to seek judicial determination of the
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<PAGE>
"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 give 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.
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<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 three months ended March 31, 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 March 31, 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 Three Months For the Year Ended
Ended March 31, December 31,
---------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------ ------ ------ ------ ------ ------ ------
(unaudited) (in thousands, except for per unit data)
Income statement data:
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................ $419,743 $316,017 $1,324,056 $975,336 $788,517 $639,255 $600,952
Income before income taxes.......... 115,355 82,124 348,712 147,762 207,590 167,011 141,806
Net income.......................... 98,054 68,984 292,916 128,956 193,346 155,387 133,489
Net income before reduction in
recorded value of intangible
assets........................... 98,054 68,984 292,916 249,856 193,346 155,387 133,489
Net income per unit:
Basic net income per unit........... $0.57 $0.40 $1.71 $0.76 $1.15 $0.95 $0.86
Diluted net income per unit......... $0.55 $0.39 $1.66 $0.74 $1.13 $0.94 $0.85
Diluted net income per unit
before reduction in recorded
value of intangible assets....... $0.55 $0.39 $1.66 $1.44 $1.13 $0.94 $0.85
Basic weighted average units
outstanding...................... 170,561 169,301 169,933 168,448 166,382 161,538 153,381
Diluted weighted average units
outstanding...................... 175,591 174,511 175,143 171,876 168,968 163,116 155,882
Cash distributions per unit............ $0.54 $0.38 $1.62 $1.40 $1.095 $0.91 $0.82
December 31,
March 31, ----------------------------------------------------------
1999 1998 1997 1996 1995 1994
--------- ------ ------ ------ ------ ------
Balance sheet data:
Total assets........................ $1,442,703 $1,132,592 $784,460 $725,897 $575,058 $518,369
Debt and long-term obligations(1)... 354,072 238,089 130,429 52,629 30,839 29,021
Partners' capital................... 458,949 430,273 398,051 476,020 406,709 381,329
Assets under management (in
millions)(2)........................ $301,353 $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>
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<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 three months ended March 31, 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 March 31, 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
March 31, 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 Three Months For the Year
Ended March 31, Ended
--------------------- December 31,
1999 1998 1998
------ ------ ------------
(in thousands, except for per unit data)
Income statement data:
<S> <C> <C> <C>
Revenues......................................... $419,743 $316,017 $1,324,056
Income before income taxes....................... 115,355 82,124 348,712
Net income....................................... 98,054 68,984 292,916
Net income per unit:
Basic net income per unit........................ $0.57 $0.40 $1.71
Diluted net income per unit...................... $0.55 $0.39 $1.66
Basic weighted average units outstanding......... 170,561 169,301 169,933
Diluted weighted average units outstanding....... 175,591 174,511 175,143
Cash distributions per unit....................... $0.54 $0.38 $1.62
March 31, 1999
--------------
Balance sheet data:
Total assets..................................... $1,442,703
Debt and long-term obligations................... 354,072
Partners' capital................................ 458,949
</TABLE>
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<PAGE>
<TABLE>
Pro Forma Alliance Capital
-----------------------------------------
For the Three Months For the Year
Ended March 31, Ended
--------------------- December 31,
1999 1998 1998
------ ------ ------------
(in thousands, except for per unit data)
<S> <C> <C> <C>
Income statement data:
Revenues......................................... $419,743 $316,017 $1,324,056
Income before income taxes....................... 115,355 82,124 348,712
Net income....................................... 108,129 76,963 323,516
Net income per unit:
Basic net income per unit........................ $0.63 $0.45 $1.88
Diluted net income per unit...................... $0.61 $0.44 $1.83
Basic weighted average units outstanding......... 170,561 169,301 169,933
Diluted weighted average units outstanding....... 175,591 174,511 175,143
Cash distributions per unit....................... $0.60 $0.43 $1.80
March 31, 1999
--------------
Balance sheet data:
Total assets..................................... $1,432,628
Debt and long-term obligations................... 354,072
Partners' capital................................ 458,949
Pro Forma Alliance Holding
-----------------------------------------
For the Three Months For the Year
Ended March 31, Ended
--------------------- December 31,
1999 1998 1998
------ ------ ------------
(in thousands, except for per unit data)
<S> <C> <C> <C>
Income statement data:
Equity in earnings of Alliance Capital........... $40,592 $28,733 $120,970
Revenues......................................... 40,592 28,733 120,970
Income before income taxes....................... 40,592 28,733 120,970
Net income....................................... 36,810 25,754 109,528
Net income per unit:
Basic net income per unit........................ $0.57 $0.40 $1.71
Diluted net income per unit...................... $0.55 $0.39 $1.66
Basic weighted average units outstanding......... 64,668 63,843 64,183
Diluted weighted average units outstanding....... 69,698 69,053 69,393
Cash distributions per unit....................... $0.54 $0.38 $1.62
March 31, 1999
--------------
Balance sheet data:
Investment in Alliance Capital................... $172,566
Total assets..................................... 182,641
Debt and long-term obligations................... --
Partners' capital................................ 172,566
</TABLE>
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<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 March 31, 1999. The pro forma
presentations reflect the effects of the reorganization and the exchange offer
as if both were completed on March 31, 1999. The pro forma adjustments and
related assumptions are described under "Pro Forma Condensed Financial
Statements (Unaudited)."
<TABLE>
Historical Pro Forma Pro Forma
Alliance Holding Alliance Capital Alliance Holding
---------------- ---------------- ----------------
(in thousands)
<S> <C> <C> <C>
Noncurrent liabilities:
Noncurrent portion of employee compensation and
benefits......................................... $61,552 $61,552 $--
Noncurrent portion of debt......................... -- -- --
------- ------- -------
Total noncurrent liabilities....................... 61,552 61,552 --
Partners' capital................................... 458,949 458,949 172,566
------- ------- -------
Total capitalization............................... $520,501 $520,501 $172,566
======= ======= =======
</TABLE>
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<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 March 31, 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 March
31, 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 will be able to
exchange their units for Alliance Capital units on a one-for-one basis.
Equitable Life and its affiliates, which at March 31, 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 37.98% limited partnership interest in Alliance Capital at
March 31, 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 abandoned after the special meeting of unitholders. If the
reorganization is abandoned before the special meeting of unitholders, Equitable
Life is not obligated to make any such payments. Any such payment has not been
reflected in the unaudited pro forma condensed financial statements because of
its
36
<PAGE>
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 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.
37
<PAGE>
Alliance Holding
Unaudited Pro Forma Condensed Statement of Financial Condition
March 31, 1999
(in thousands, except per unit amounts)
<TABLE>
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.............. $115,797 $(105,722) $10,075
Receivable from brokers and
dealers for sale of shares of
Alliance mutual funds................ 215,411 (215,411)
Fees receivable........................ 191,267 (191,267)
Investments, available-for-sale........ 194,298 (194,298)
Investment in Alliance Capital......... 458,949 $(286,383) 172,566
Furniture, equipment and leasehold
improvements, net.................... 107,381 (107,381)
Intangible assets, net................. 101,180 (101,180)
Deferred sales commissions, net........ 450,407 (450,407)
Other assets........................... 66,962 (66,962)
--------- -------- -------- -------
Total assets......................... $1,442,703 $(973,679) $(286,383) $182,641
========= ======== ======== =======
Liabilities:
Payable to Alliance mutual funds
for share purchases.................. $301,518 $(301,518)
Accounts payable and accrued
expenses............................. 230,703 (220,628) $10,075
Accrued compensation and benefits...... 157,522 (157,522)
Debt................................... 292,520 (292,520)
Minority interests in consolidated
subsidiaries......................... 1,491 (1,491)
--------- -------- -------- -------
Total liabilities.................... 983,754 (973,679) $0 10,075
--------- -------- -------- -------
Partners' capital...................... 458,949 0 (286,383) 172,566
--------- -------- -------- -------
Total liabilities and partners' capital. $1,442,703 $(973,679) $(286,383) $182,641
========= ======== ======== =======
Book value per unit outstanding......... $2.66 $2.68 $2.66
========= ======== =======
Units outstanding....................... 170,685 (105,859) 64,827
========= ======== =======
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
38
<PAGE>
Alliance Holding
Unaudited Pro Forma Condensed Statement of Income
For the Three Months Ended March 31, 1999
(in thousands, except per unit amounts)
<TABLE>
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........................ $305,418 $(305,418)
Distribution revenues.................. 93,612 (93,612)
Shareholder servicing fees............. 13,297 (13,297)
Equity in earnings of Alliance
Capital.............................. $40,592 (a) $40,592
Other revenues......................... 7,416 (7,416)
--------- -------- -------- -------
419,743 (419,743) 40,592 40,592
--------- -------- -------- -------
Expenses:
Employee compensation and
benefits............................. 118,279 (118,279)
Promotion and servicing:
Distribution plan payments
to financial intermediaries........ 77,825 (77,825)
Amortization of deferred
sales commissions.................. 34,681 (34,681)
Other................................ 26,803 (26,803)
General and administrative............. 42,336 (42,336)
Amortization of intangible assets...... 3,501 (3,501)
Interest............................... 963 (963)
--------- -------- -------- -------
304,388 (304,388) 0 0
--------- -------- -------- -------
Income before income taxes.............. 115,355 (115,355) 40,592 40,592
State, local and foreign income
taxes................................ 6,345 (6,345)
Federal income taxes................... 10,956 (10,956) 3,782 (b) 3,782
--------- -------- -------- -------
17,301 (17,301) 3,782 3,782
--------- -------- -------- -------
Net income.............................. $98,054 $(98,054) $36,810 $36,810
========= ======== ======== =======
Basic net income per unit............... $0.57 $0.57
========= =======
Diluted net income per unit............. $0.55 $0.55
========= =======
Basic weighted average units
outstanding............................. 170,561 64,668
========= =======
Diluted weighted average units
outstanding............................. 175,591 69,698
========= =======
Distributions........................... $93,316 $35,219
========= =======
Distributions per unit.................. $0.54 $0.54
========= =======
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
39
<PAGE>
Alliance Holding
Unaudited Pro Forma Condensed Statement of Income
For the Three Months Ended March 31, 1998
(in thousands, except per unit amounts)
<TABLE>
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........................ $235,461 $(235,461)
Distribution revenues.................. 66,181 (66,181)
Shareholder servicing fees............. 8,488 (8,488)
Equity in earnings of Alliance
Capital.............................. $28,733 (a) $28,733
Other revenues......................... 5,887 (5,887)
--------- -------- -------- -------
316,017 (316,017) 28,733 28,733
--------- -------- -------- -------
Expenses:
Employee compensation and
benefits............................. 87,827 (87,827)
Promotion and servicing:
Distribution plan payments
to financial intermediaries........ 56,918 (56,918)
Amortization of deferred
sales commissions.................. 22,847 (22,847)
Other................................ 21,314 (21,314)
General and administrative............. 42,139 (42,139)
Amortization of intangible assets...... 1,967 (1,967)
Interest............................... 861 (861)
--------- -------- -------- -------
233,893 (233,893) 0 0
--------- -------- -------- -------
Income before income taxes.............. 82,124 (82,124) 28,733 28,733
State, local and foreign income
taxes................................ 3,707 (3,707)
Federal income taxes................... 9,433 (9,433) 2,979 (b) 2,979
--------- -------- -------- -------
13,140 (13,140) 2,979 2,979
--------- -------- -------- -------
Net income.............................. $68,984 $(68,984) $25,754 $25,754
========= ======== ======== =======
Basic net income per unit............... $0.40 $0.40
========= =======
Diluted net income per unit............. $0.39 $0.39
========= =======
Basic weighted average units
outstanding............................. 169,301 63,843
========= =======
Diluted weighted average units
outstanding............................. 174,511 69,053
========= =======
Distributions........................... $65,094 $24,395
========= =======
Distributions per unit.................. $0.38 $0.38
========= =======
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
40
<PAGE>
Alliance Holding
Unaudited Pro Forma Condensed Statement of Income
For the Year Ended December 31, 1998
(in thousands, except per unit amounts)
<TABLE>
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
========= =======
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
41
<PAGE>
Alliance Capital
Unaudited Pro Forma Condensed Statement of Financial Condition
March 31, 1999
(in thousands, except per unit amounts)
<TABLE>
Transfer of
Historical Business to Pro Forma
Alliance Capital Alliance Capital Alliance Capital
(Note 1) (Note 2) (Note 3)
---------------- ---------------- ----------------
Assets:
<S> <C> <C> <C>
Cash and cash equivalents................. $105,722 $105,722
Receivable from brokers and dealers
for sale of shares of Alliance mutual
funds.................................. 215,411 215,411
Fees receivable........................... 191,267 191,267
Investments, available-for-sale........... 194,298 194,298
Furniture, equipment and leasehold
improvements, net...................... 107,381 107,381
Intangible assets, net.................... 101,180 101,180
Deferred sales commissions, net........... 450,407 450,407
Other assets.............................. 66,962 66,962
---- --------- ---------
Total assets........................... $0 $1,432,628 $1,432,628
==== ========= =========
Liabilities:
Payable to Alliance mutual funds for
share purchases........................ $301,518 $301,518
Accounts payable and accrued expenses..... 220,628 220,628
Accrued compensation and benefits......... 157,522 157,522
Debt...................................... 292,520 292,520
Minority interests in consolidated
subsidiaries........................... 1,491 1,491
---- --------- ---------
Total liabilities...................... 0 973,679 973,679
---- --------- ---------
Partners' capital......................... 0 458,949 458,949
---- --------- ---------
Total liabilities and partners' capital...... $0 $1,432,628 $1,432,628
==== ========= =========
Book value per unit outstanding.............. $0.00 $2.66 $2.66
==== ========= =========
Units outstanding............................ 0 170,685 170,685
==== ========= =========
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
42
<PAGE>
Alliance Capital
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Three Months Ended March 31, 1999
(in thousands, except per unit amounts)
<TABLE>
Pro Forma
Historical Adjustments Pro Forma
Alliance Holding (Note 4) Alliance Capital
---------------- ----------- ----------------
<S> <C> <C> <C>
Revenues:
Investment advisory and services fees...................... $305,418 $305,418
Distribution revenues...................................... 93,612 93,612
Shareholder servicing fees................................. 13,297 13,297
Other revenues............................................. 7,416 7,416
------- ------ -------
419,743 $0 419,743
------- ------ -------
Expenses:
Employee compensation and benefits......................... 118,279 118,279
Promotion and servicing:
Distribution plan payments to financial intermediaries... 77,825 77,825
Amortization of deferred sales commissions............... 34,681 34,681
Other.................................................... 26,803 26,803
General and administrative................................. 42,336 42,336
Amortization of intangible assets.......................... 3,501 3,501
Interest................................................... 963 963
------- ------ -------
304,388 0 304,388
------- ------ -------
Income before income taxes.................................. 115,355 115,355
State, local and foreign income taxes...................... 6,345 6,345
Federal income taxes....................................... 10,956 (10,075) 881
------- ------ -------
17,301 (10,075) 7,226
------- ------ -------
Net income.................................................. $98,054 $10,075 $108,129
======= ====== =======
Basic net income per unit................................... $0.57 $0.63
======= =======
Diluted net income per unit................................. $0.55 $0.61
======= =======
Basic weighted average units outstanding.................... 170,561 170,561
======= =======
Diluted weighted average units outstanding.................. 175,591 175,591
======= =======
Distributions............................................... $93,316 $103,391
======= =======
Distributions per unit...................................... $0.54 $0.60
======= =======
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
43
<PAGE>
Alliance Capital
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Three Months Ended March 31, 1998
(in thousands, except per unit amounts)
<TABLE>
Pro Forma
Historical Adjustments Pro Forma
Alliance Holding (Note 4) Alliance Capital
---------------- ----------- ----------------
<S> <C> <C> <C>
Revenues:
Investment advisory and services fees...................... $235,461 $235,461
Distribution revenues...................................... 66,181 66,181
Shareholder servicing fees................................. 8,488 8,488
Other revenues............................................. 5,887 5,887
------- ------ -------
316,017 $0 316,017
------- ------ -------
Expenses:
Employee compensation and benefits......................... 87,827 87,827
Promotion and servicing:
Distribution plan payments to financial intermediaries... 56,918 56,918
Amortization of deferred sales commissions............... 22,847 22,847
Other.................................................... 21,314 21,314
General and administrative................................. 42,139 42,139
Amortization of intangible assets.......................... 1,967 1,967
Interest................................................... 881 881
------- ------ -------
233,893 0 233,893
------- ------ -------
Income before income taxes.................................. 82,124 0 82,124
State, local and foreign income taxes...................... 3,707 3,707
Federal income taxes....................................... 9,433 (7,979) 1,454
------- ------ -------
13,140 (7,979) 5,161
------- ------ -------
Net income.................................................. $68,984 $7,979 $76,963
======= ====== =======
Basic net income per unit................................... $0.40 $0.45
======= =======
Diluted net income per unit................................. $0.39 $0.44
======= =======
Basic weighted average units outstanding.................... 169,301 169,301
======= =======
Diluted weighted average units outstanding.................. 174,511 174,511
======= =======
Distributions............................................... $65,094 $72,803
======= =======
Distributions per unit...................................... $0.38 $0.43
======= =======
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
44
<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>
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
========= =========
See Notes to Unaudited Pro Forma Condensed Financial Statements
</TABLE>
45
<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 March 31, 1999,
approximately 37.98% of the outstanding Alliance Capital units,
representing $172,566,000 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
37.92%, 37.71% and 37.77% for the three months ended March 31,
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.
46
<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
47
<PAGE>
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 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 vote 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";
48
<PAGE>
o Equitable Life's existing fee schedule per category for specified
asset classes will stay in effect through 2003;
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 no payment if the reorganization is 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
---------------------------
Average 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.
49
<PAGE>
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
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.
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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.
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
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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.
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."
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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.
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.
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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 approval by Alliance Holding's unitholders of both (1) the transfer of
Alliance Holding's business to Alliance Capital in exchange for all
Alliance Capital units pursuant to the agreement and plan of
reorganization and (2) the amendment of the Alliance Holding
partnership agreement;
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;
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 if Alliance Holding unitholders approve 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,
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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.
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 abandoned after the special meeting of unitholders. If
the reorganization is abandoned before the special meeting of unitholders,
Equitable Life is not obligated to make any such payments.
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 this prospectus and the 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.
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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 to be offered in the exchange offer will
be 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,
pursuant to the exchange offer, holders of Alliance Holding units will have the
option of exchanging 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
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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
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,
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(6) reconstitution,
(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.
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Only the general partner may propose amendments to the Alliance Holding
partnership agreement.
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.
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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."
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
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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.
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
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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.
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.
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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.
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
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(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.
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
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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 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;
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(4) its corporate governance and existence; and
(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
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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.
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:
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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.
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.
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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;
(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,
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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 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,
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(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.
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
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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.
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
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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 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.
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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.
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.
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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.
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;
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(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 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 purpose
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
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(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 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;
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(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:
(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.
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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 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.
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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
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:
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(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."
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 SPECIAL MEETING
On behalf of Alliance Holding, the general partner is using this proxy
statement/prospectus to solicit voting instructions from Alliance Holding
unitholders for use at the Alliance Holding special meeting. We are first
mailing this proxy statement/prospectus and accompanying form of voting
instruction form to Alliance Holding unitholders on or about August 6, 1999.
Matters Relating to the Meeting
<TABLE>
<S> <C>
..................................................................................................................
Time and Place: September 22, 1999
9:00 a.m., New York City time
Alliance Capital Management L.P.
1345 Avenue of the Americas
41st floor
New York, New York 10105
..................................................................................................................
Purpose of Meeting is to Vote (1) The transfer by Alliance Holding of its business to Alliance Capital
Upon the Following Items: pursuant to the agreement and plan of reorganization, described
under "The Reorganization Documents -- The Agreement and Plan
of Reorganization" on page 53;
(2) The amendment of the Alliance Holding partnership agreement,
described under "Comparison of Unitholder Rights" on page 59 and
"The Partnership Agreements -- The Amended Alliance Holding
Partnership Agreement" on page 68; and
(3) Such other matters as may properly come before the meeting,
including the approval of any adjournment of the meeting.
..................................................................................................................
Record Date: The record date for units entitled to vote is August 2, 1999.
..................................................................................................................
Outstanding Units as of Record As of the close of business on the record date, there were 171,191,403
Date: units outstanding.
..................................................................................................................
Quorum Requirement: A quorum is necessary to hold a valid meeting. A quorum will be met if
Alliance ALP, Inc. (the entity that holds, in name only, the limited
partnership interests underlying all units) has received voting
instructions for more than 50% of the Alliance Holding units held by all
holders other than those described below.
..................................................................................................................
Presence of Accountants at the Representatives of KPMG LLP are expected to be present at the
Meeting: meeting. These representatives will have the opportunity to make a
statement if they desire to do so and are expected to be available to
respond to appropriate questions.
..................................................................................................................
</TABLE>
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Vote Required to Approve the Proposals
<TABLE>
<S> <C>
.......................................................................................................
Proposal Vote Necessary
1. Approval of transfer pursuant o Affirmative vote of all Alliance Holding unitholders other
to agreement and plan of than those described below holding more than 50% of the
reorganization: units held by such holders.
2. Approval of amended Alliance o Affirmative vote of all Alliance Holding unitholders other
Holding partnership than those described below holding more than 50% of the
agreement: units held by such holders, and
o Affirmative vote of Alliance Holding unitholders holding
more than 50% of all units.
.......................................................................................................
</TABLE>
Alliance Holding Unitholders Eligible to Vote. The Alliance Holding
unitholders eligible to vote include all holders other than (1) directors,
officers and employees of Alliance Holding or its general partner and the
following members of their families who share the same household with such
persons: children, stepchildren, grandchildren, parents, stepparents,
grandparents, spouses, siblings, mothers-in-law, fathers-in-law, sons-in-law,
daughters-in-law, brothers-in-law, sisters-in-law, including adoptive
relationships; and (2) Alliance Holding's general partner and entities
affiliated with it (including Equitable Life).
As of June 30, 1999 Equitable Life and its affiliates held approximately
57% of the outstanding Alliance Holding units, and Equitable Life has advised us
that it intends to vote, and to cause its affiliates to vote, for the amendment
of the partnership agreement. Therefore, for the amendment of the partnership
agreement, the affirmative vote of unitholders holding more than 50% of all
units is assured.
In addition, both proposals require the approval of the general partner of
Alliance Holding, which has already been obtained.
We cannot complete the reorganization, which consists of both proposals
described above, unless it is approved by the necessary votes. Each proposal is
conditioned on the other, so that both steps must be approved to accomplish the
reorganization.
Voting Instructions
You may vote in person at the special meeting or by submitting your voting
instructions as directed in your voting instruction form. To be effective, your
voting instructions must be submitted to Alliance ALP, Inc. (the entity that
holds, in name only, the limited partnership interests underlying all units) on
or before the special meeting date.
You are entitled to direct the vote of one limited partnership interest in
Alliance Holding for every unit you hold. If your voting instruction form is
signed and returned without indicating instructions for one or both proposals,
your units will be voted FOR approval of that proposal or those proposals. If
your voting instruction form is signed and returned and indicates instructions
to abstain with respect to one or both proposals, this will have the effect of a
vote AGAINST approval of that proposal or those proposals. If you do not submit
a voting instruction form to Alliance ALP, Inc., your units will not be deemed
represented at the special meeting for purposes of determining whether a quorum
is present, and your units will not be voted for approval of the reorganization.
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How to Vote:
................................................................................
By Telephone*: Call 1-877-PRX-VOTE (1-877-779-8683) toll-free and follow
the instructions. You will need to give the personal
identification number contained on your voting instruction
form.
................................................................................
By Internet*: Go to www.eproxyvote.com/ac and follow the instructions.
You will need to give the personal identification number
contained on your voting instruction form.
................................................................................
In Writing: Complete, sign, date and return your voting instruction form
in the enclosed envelope
................................................................................
- ------------
* If you hold shares through a broker or other custodian, please check
the voting form used by that firm to see if it offers telephone or
internet voting.
Revoking Your Voting Instructions
You may revoke your voting instructions before the vote at the special
meeting by:
o submitting new voting instructions with a later date, including
voting instructions given by telephone or Internet, to Alliance
ALP, Inc. and the general partner,
o notifying Alliance ALP, Inc. and the secretary of the general
partner in writing before the meeting that you have revoked your
voting instructions, or
o attending the special meeting and delivering another voting
instruction form to Alliance ALP, Inc. in person. Attendance at
the special meeting will not by itself constitute a revocation of
voting instructions.
All written notices of revocation and other communications with respect to
revocation of voting instructions should be addressed to Alliance ALP, Inc. and
the secretary of the general partner, c/o Georgeson & Company Inc., Wall Street
Plaza, New York, NY 10005, toll-free telephone number: 1-877-PRX-VOTE
(1-877-779-8683).
Other Business; Adjournments
We know of no other matters to be acted on at the special meeting.
However, if any other matters are properly brought before the special meeting,
Alliance ALP, Inc. or its substitutes will vote the voting instructions in
accordance with its judgment with respect to such matters, unless you withhold
authority to do so in your voting instructions.
Adjournments may be made for the purpose of, among other things,
solicitations of additional voting instructions. If your voting instruction form
is signed and returned and indicates instructions to vote AGAINST one or both
proposals, your units will be voted AGAINST any adjournments. Otherwise, your
units will be voted FOR any adjournments.
Solicitation of Voting Instruction Forms
This solicitation is being made by the general partner on behalf of
Alliance Holding. In addition to this mailing, officers, employees or
representatives of the general partner may solicit voting instruction forms
personally, electronically or by telephone. Officers, employees or
representatives of the general partner may also
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meet with brokers, research analysts and other members of the investment
community and may arrange meetings with unitholders to discuss the special
meeting and the reorganization. Officers and employees of the general partner
who engage in solicitation efforts or who participate in such meetings and
contacts will do so without additional compensation.
The general partner has also retained Georgeson & Company Inc. as
information agent to help with the solicitation. In connection with this
engagement, the information agent will receive a fee of $10,000, plus reasonable
out-of-pocket expenses, which Equitable Life has agreed to pay or reimburse, or
cause to be paid or reimbursed. See "The Reorganization and the Exchange
Offer--Transaction Expenses." None of the compensation paid to the information
agent will be contingent on the outcome of the solicitation efforts or the
result of the solicitation with respect to the reorganization or based on the
number of affirmative votes received.
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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
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(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.
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
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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 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.
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 The Equitable Companies Incorporated 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. Equitable Life
has filed an application with the SEC for approval to transfer to investment
portfolios in 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 The Equitable
Companies Incorporated 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, The
Equitable Companies Incorporated 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.
Security Ownership as of the Record Date
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 The Equitable Companies
Incorporated ("ECI"), 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.
93
<PAGE>
Amount and Nature of
Beneficial
Name and Address of Ownership Reported on Percent
Beneficial Owner Schedule 13D of Class
- ------------------- --------------------- --------
AXA(1)(2)(3)(4)
9 place Vendome
75001 Paris
France 96,647,111 56.7%
ECI(4)
1290 Avenue of the Americas
New York, NY 10104 96,647,111 56.7%
- --------------------
(1) Based on information provided by ECI, at March 1, 1999, AXA and certain of
its subsidiaries beneficially owned approximately 58.4% of ECI's
outstanding common stock. For insurance regulatory purposes the shares of
capital stock of ECI 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 ECI 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 all shares of the capital
stock of ECI 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.
94
<PAGE>
(4) By reason of their relationship, AXA, the Voting Trustees, the Mutuelles
AXA, Finaxa, ECI, 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.
95
<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:
<TABLE>
Number of Units and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ ----------------------------- ----------
<S> <C> <C>
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, ECI and/or Equitable Life.
Messrs. Williams, Brydon, de Castries, Dolan, Duverne, Hatt, Hegarty,
Miller, Noris and Tulin are directors and/or officers of AXA, ECI 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.
</TABLE>
96
<PAGE>
The following tables set forth, as of March 1, 1999, the beneficial
ownership of the common stock of ECI, 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:
ECI Common Stock
<TABLE>
Number of Shares and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ ------------------------------ ----------
<S> <C> <C>
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.
</TABLE>
97
<PAGE>
(8) Represents 142,745 shares subject to options held by Mr. Miller, which
options Mr. Miller has the right to exercise within 60 days.
(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
<TABLE>
Number of Shares and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ ------------------------------ ----------
<S> <C> <C>
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 113,181 *
of the general partner as a group (20 persons)(9)..
- ------------
* 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.
</TABLE>
98
<PAGE>
(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.
(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
<TABLE>
Number of Shares and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ ------------------------------ ----------
<S> <C> <C>
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 115,000 *
of the general partner as a group (20 persons)(2)..
- ------------
* 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.
</TABLE>
99
<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.
100
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Alliance Holding files annual, quarterly and special reports and other
information with the SEC. You may read and copy any reports, statements or other
information we file at the SEC's public reference rooms at 450 Fifth Street,
N.W., Washington, D.C. 20549 or in New York, New York and Chicago, Illinois.
Please call the SEC at 1- 800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at "http://www.sec.gov."
Alliance Capital filed a registration statement on Form S-4 to register
with the SEC the units of limited partnership interest of Alliance Capital to be
issued to Alliance Holding's unitholders in the exchange offer. This proxy
statement/prospectus is a part of that registration statement and constitutes a
prospectus of Alliance Capital in addition to being a proxy statement of
Alliance Holding for the special meeting. As allowed by SEC rules, this proxy
statement/prospectus does not contain all the information you can find in the
registration statement or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" information into this
proxy statement/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 proxy statement/prospectus, except for
any information superseded by information in this proxy statement/prospectus.
This proxy statement/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
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 proxy statement/prospectus and the date of
the special meeting.
Documents incorporated by reference are available from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this proxy statement/prospectus. Please direct your oral or written
requests to:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
(800) 223-2064
If you would like to request documents, please do so no later than
September 15, 1999 in order to receive them before the special meeting.
You should rely only on the information contained or incorporated by
reference in this proxy statement/ prospectus to vote on the reorganization. We
have not authorized anyone to provide you with information that is different
from what is contained in this proxy statement/prospectus. This proxy
statement/prospectus is dated August 3, 1999. You should not assume that the
information contained in the proxy statement/prospectus is accurate as of any
date other than such date, and neither the mailing of this proxy
statement/prospectus to Alliance Holding unitholders nor the issuance of
Alliance Capital units in the exchange offer shall create any implication to the
contrary.
101
<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.
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"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
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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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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.
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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.
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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.
- ----
C-56
<PAGE>
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 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.
D-1
<PAGE>
Alliance Capital Management Corporation
August 3, 1999
Page Two
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
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
D-2
<PAGE>
Alliance Capital Management Corporation
August 3, 1999
Page Three
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.
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-3
<PAGE>
[alternate page for exchange offer prospectus]
EXCHANGE OFFER PROSPECTUS Offer to Exchange up to o of
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 5:00 P.M., New York City time
On o, 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 12.
- -------------------------------------------------------------------------------
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 o, 1999.
<PAGE>
[alternate page for exchange offer prospectus]
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.
<TABLE>
<S> <C>
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
Current Report on Form 8-K Dated April 8, 1999
</TABLE>
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 information agent:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
(800) 223-2064
If you would like to request documents, please do so no later than o,
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 o, 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.
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<PAGE>
[alternate page for exchange offer prospectus]
THE EXCHANGE OFFER
General
Alliance Capital Management L.P. ("Alliance Holding") offers each
unitholder of Alliance Holding the opportunity to exchange each Alliance
Holding unit for one unit of limited partnership interest in Alliance Capital
Management L.P. II ("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 5:00 p.m. New York City time, on o, 1999.
Alliance Holding's general partner may shorten or extend the exchange offer
deadline.
If the general partner of Alliance Holding designates a date other than
o, 1999 as the exchange offer deadline, the general partner will notify
unitholders of that other date by issuing a press release. If that date is
earlier than o, 1999, that earlier date will be at least five business days
following the date of the notice to unitholders and be at least 20 business
days following the date of the initial mailing of this prospectus to
unitholders. If that date is later than o, 1999, notice of that later date
shall be given to unitholders at least five business days prior to o, 1999.
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<PAGE>
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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.
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 between the date of the special meeting and 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.
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<PAGE>
[alternate page for exchange offer prospectus]
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 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.
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<PAGE>
[alternate page for exchange offer prospectus]
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 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 5:00 P.M. on o, 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
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<PAGE>
[alternate page for exchange offer prospectus]
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;
(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
Alt-7
<PAGE>
[alternate page for exchange offer prospectus]
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
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 abandoned after the special
meeting of unitholders.
Alt-8
<PAGE>
[alternate page for exchange offer prospectus]
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 & Company 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.
The information agent for the exchange offer is:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
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
<TABLE>
<S> <C> <C>
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>
By Facsimile For Notices of
Guaranteed Delivery Only:
For Eligible Institutions:
(201) 222-4720/4721
For Facsimile Confirmation Only:
(201) 222-4707
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
Alt-9
<PAGE>
[alternate page for exchange offer prospectus]
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.
Alt-10
<PAGE>
[alternate page for exchange offer prospectus]
TABLE OF CONTENTS
Page
-----
WHERE YOU CAN FIND MORE
INFORMATION............................................................Alt-2
THE EXCHANGE OFFER........................................................Alt-3
General................................................................Alt-3
Exchange Offer Deadline................................................Alt-3
Exchange Offer Forms...................................................Alt-4
How to Tender..........................................................Alt-4
Proper Execution and Delivery of
Letter of Transmittal...............................................Alt-5
Guaranteed Delivery Procedures.........................................Alt-6
Book-Entry Transfer....................................................Alt-6
Revocation of Election to Participate
in the Exchange Offer...............................................Alt-6
Cap on Tenders; Pro Ration.............................................Alt-7
Lost, Stolen, Destroyed or Mutilated
Certificates........................................................Alt-7
Elections by Nominees..................................................Alt-7
Distribution of Alliance Capital Units.................................Alt-8
Issuance of Certificates in Another Name...............................Alt-8
Expenses...............................................................Alt-8
The Exchange Agent and the
Information Agent...................................................Alt-9
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
Recommendation to Unitholders..............................................3
Required Vote..............................................................3
Other Aspects of the Reorganization and
Exchange Offer..........................................................3
Exchange Offer Considerations..............................................5
Risk Factors...............................................................5
Factors Upon Which the
Reorganization Depends..................................................5
Material Federal Income Tax
Consequences............................................................6
Opinion of Financial Adviser...............................................6
Accounting Treatment.......................................................6
Benefits to Equitable Life from the
Reorganization..........................................................6
No Appraisal Rights........................................................7
ORGANIZATIONAL CHARTS.........................................................8
SUMMARY CONSOLIDATED HISTORICAL
FINANCIAL DATA.............................................................9
SUMMARY CONSOLIDATED PRO FORMA
FINANCIAL DATA............................................................10
RISK FACTORS.................................................................12
Risks Relating to the Reorganization......................................12
Risks Relating to Exchanging
or Retaining Units.....................................................13
CAUTIONARY STATEMENT
CONCERNING FORWARD-LOOKING
STATEMENTS................................................................15
THE REORGANIZATION AND THE EXCHANGE
OFFER.....................................................................16
General...................................................................16
Background of the Reorganization and the
Exchange Offer.........................................................17
Reasons for the Reorganization and
the Exchange Offer.....................................................19
Factors Considered by, and
Recommendation of, the General Partner.................................19
Alliance Holding Public Float After the
Exchange...............................................................22
Transaction Expenses......................................................24
Employee Matters..........................................................25
Material Federal Income Tax Consequences..................................25
Regulatory Matters........................................................30
Accounting Treatment......................................................30
No Appraisal Rights.......................................................30
SELECTED FINANCIAL DATA......................................................32
CAPITALIZATION...............................................................35
PRO FORMA CONDENSED FINANCIAL
STATEMENTS (UNAUDITED).......................................................36
Pro Forma Condensed Statement of
Financial Condition of Alliance Holding
(Unaudited)............................................................38
Alt-11
<PAGE>
[alternate page for exchange offer prospectus]
Page
----
Pro Forma Condensed Statements of
Income of Alliance Holding (Unaudited).................................39
Pro Forma Condensed Consolidated
Statement of Financial Condition of
Alliance Capital (Unaudited)...........................................42
Pro Forma Condensed Consolidated
Statements of Income of Alliance Capital
(Unaudited)............................................................43
Notes to Unaudited Pro Forma Condensed
Financial Statements...................................................46
OPINION OF FINANCIAL ADVISER.................................................47
INTERESTS OF CERTAIN PERSONS
IN THE REORGANIZATION.....................................................53
Equitable Life............................................................53
Executive Officers........................................................53
THE REORGANIZATION DOCUMENTS.................................................54
The Exchange Agreement....................................................54
The Agreement and Plan of Reorganization..................................54
The Indemnification and Reimbursement
Agreement..............................................................56
DESCRIPTION OF ALLIANCE CAPITAL
UNITS.....................................................................59
General...................................................................59
Restrictions on Transfers of the
Alliance Capital Units.................................................59
COMPARISON OF UNITHOLDER RIGHTS..............................................61
Form of Organization......................................................61
Business..................................................................61
Voting Rights.............................................................61
Distributions.............................................................63
Taxation..................................................................63
Management................................................................64
Potential Dilution........................................................64
Meetings..................................................................65
Conversion/Exchange Rights................................................65
Right to Purchase Units...................................................65
Liquidation Rights........................................................66
Right to Compel Dissolution...............................................66
Limited Liability.........................................................67
Liquidity and Marketability...............................................67
Continuity of Existence...................................................68
Financial Reporting.......................................................68
Certain Legal Rights......................................................68
Right to List Holders; Inspection of Books
and Records............................................................69
Subordination.............................................................69
THE PARTNERSHIP AGREEMENTS...................................................70
The Amended Alliance Holding Partnership
Agreement..............................................................70
The Alliance Capital Partnership Agreement................................83
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS......................................................91
The Amended Equitable Life Investment
Advisory and Management Agreement......................................91
The Amended Equitable Life Accounting,
Valuation, Reporting and Treasury Services
Agreement..............................................................92
Intercompany Relations....................................................92
Security Ownership as of the Record Date..................................93
LEGAL MATTERS...............................................................100
EXPERTS.....................................................................100
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
Alt-12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 17-108 of the Delaware Revised Uniform Limited Partnership Act
permits a limited partnership to indemnify and hold harmless any partner or
other person from and against any and all claims and demands whatsoever, subject
to such standards and restrictions, if any, as set forth in its partnership
agreement. Section 6.09 of the form of Alliance Capital Management L.P. II
("Alliance Capital") partnership agreement, which is filed as Annex C to the
Proxy Statement/Prospectus contained in this Registration Statement, sets forth
the indemnification provisions. Alliance Capital will grant broad rights of
indemnification to its officers and employees and to officers of Alliance
Capital Management Corporation, Alliance Capital's general partner. The
foregoing indemnification provisions are not exclusive, and the partnership
agreement authorizes Alliance Capital to enter into additional indemnification
arrangements. Alliance Capital will obtain directors' and officers' liability
insurance.
Alliance Capital has entered into an indemnification and reimbursement
agreement, which is filed as Exhibit 10.2 to this Registration Statement, with
The Equitable Life Assurance Society of the United States ("Equitable Life") and
Alliance Capital Management L.P. ("Alliance Holding"). Pursuant to this
agreement, Equitable Life has agreed to indemnify Alliance Capital's directors
and officers, among others, against certain losses or expenses incurred in
connection with or arising out of the transfer by Alliance Holding of its
business to Alliance Capital and the amendment of the Alliance Holding
partnership agreement.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits (see index to exhibits at E-1)
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), such reoffering prospectus will contain
the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the
applicable form.
(5) That every prospectus (i) that is filed pursuant to paragraph (4)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933 and is used in connection
with an offering of securities subject to Rule 415, will be filed as a
part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(6) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(7) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of
responding to the request.
(8) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement
when it became effective.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of New York,
State of New York, on the 3rd day of August, 1999.
Alliance Capital Management L.P. II
- --------------------------------------------
(Registrant)
By: Alliance Capital Management Corporation
Its General Partner
By: /s/ Dave H. Williams
----------------------------------
Name: Dave H. Williams
Title: Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons and in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Dave H. Williams Chairman of the Board August 3, 1999
- --------------------------------- and Director
(Dave H. Williams)
* Director August 3, 1999
- ---------------------------------
(Luis Javier Bastida)
* Director August 3, 1999
- ---------------------------------
(Donald H. Brydon)
/s/ Bruce W. Calvert Director August 3, 1999
- ---------------------------------
(Bruce W. Calvert)
/s/ John D. Carifa Director August 3, 1999
- ---------------------------------
(John D. Carifa)
* Director August 3, 1999
- ---------------------------------
(Henri de Castries)
* Director August 3, 1999
- ---------------------------------
(Kevin C. Dolan)
* Director August 3, 1999
- ---------------------------------
(Denis Duverne)
* Director August 3, 1999
- ---------------------------------
(Alfred Harrison)
II-3
<PAGE>
Signature Title Date
--------- ----- ----
* Director August 3, 1999
- ---------------------------------
(Herve Hatt)
* Director August 3, 1999
- ---------------------------------
(Michael Hegarty)
* Director August 3, 1999
- ---------------------------------
(Benjamin D. Holloway)
* Director August 3, 1999
- ---------------------------------
(Edward D. Miller)
* Director August 3, 1999
- ---------------------------------
(Peter D. Noris)
* Director August 3, 1999
- ---------------------------------
(Frank Savage)
* Director August 3, 1999
- ---------------------------------
(Stanley B. Tulin)
* Director August 3, 1999
- ---------------------------------
(Reba W. Williams)
* Director August 3, 1999
- ---------------------------------
(Robert B. Zoellick)
/s/ Robert H. Joseph, Jr. Senior Vice President and August 3, 1999
- --------------------------------- Chief Financial Officer
(Robert H. Joseph, Jr.)
/s/ Gerald J. Friscia Senior Vice President August 3, 1999
- --------------------------------- and Controller
(Gerald J. Friscia)
/s/ David R. Brewer, Jr. August 3, 1999
- ---------------------------------
(David R. Brewer, Jr.)
Attorney-in-Fact
* An asterisk denotes execution by David R. Brewer, Jr., as Attorney-in-Fact.
II-4
<PAGE>
EXHIBIT INDEX
Exhibit
No.
-------
2.1 - Form of Agreement and Plan of Reorganization among Alliance
Capital Management L.P., Alliance Capital Management L.P. II,
Alliance Capital Management Corporation and The Equitable Life
Assurance Society of the United States (included as Annex A to
the Proxy Statement/Prospectus contained in this Registration
Statement).
3.1 - Certificate of Limited Partnership of the Registrant.
3.2 - Agreement of Limited Partnership of the Registrant.
3.3 - Form of Amended and Restated Agreement of Limited Partnership
of Alliance Capital Management L.P. (included as Annex B to the
Proxy Statement/Prospectus contained in this Registration
Statement).
3.4 - Form of Amended and Restated Agreement of Limited Partnership
of the Registrant (included as Annex C to the Proxy
Statement/Prospectus contained in this Registration Statement).
5.1 - Opinion of Davis Polk & Wardwell as to the legality of the
securities registered hereunder.
8.1 - Opinion of Davis Polk & Wardwell addressing the federal income
tax consequences of the reorganization and the exchange offer.
10.1 - Exchange Agreement dated April 8, 1999 among Alliance Capital
Management L.P., Alliance Capital Management L.P. II and The
Equitable Life Assurance Society of the United States.
10.2 - Indemnification and Reimbursement Agreement dated April 8, 1999
among Alliance Capital Management L.P., Alliance Capital
Management L.P. II and The Equitable Life Assurance Society of
the United States.
10.3 - Form of Amended and Restated Investment Advisory and Management
Agreement among Alliance Holding Management L.P., Alliance
Corporate Finance Group Incorporated and The Equitable Life
Assurance Society of the United States.
10.4 - Form of Amended and Restated Accounting, Valuation, Reporting
and Treasury Services Agreement between Alliance Capital
Management L.P. and The Equitable Life Assurance Society of the
United States.
10.5 - Unit Option Plan Agreement dated December 10, 1998 with Bruce
W. Calvert (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Calvert, who, after the Reorganization, will
become an employee of the Registrant).(1)
10.6 - Unit Option Plan Agreement dated December 10, 1998 with John D.
Carifa (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Carifa, who, after the Reorganization, will
become an employee of the Registrant).(1)
10.7 - Unit Option Plan Agreement dated December 10, 1998 with David
R. Brewer, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Brewer, who, after the Reorganization, will
become an employee of the Registrant).(1)
10.8 - Unit Option Plan Agreement dated December 10, 1998 with Robert
H. Joseph, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Joseph, who, after the Reorganization, will
become an employee of the Registrant).(1)
II-E-1
<PAGE>
Exhibit
No.
-------
10.9 - Revolving Credit Agreement dated as of July 20, 1998 among
Alliance Capital Management L.P., as Borrower, and the lending
institutions listed on Schedule 1 thereto, collectively as
Banks, and NationsBank, N.A., The Chase Manhattan Bank, and the
Bank of New York, individually as Co-Agents, NationsBank, N.A.,
as Administrative Agent, The Chase Manhattan Bank, as
Syndication Agent, and The Bank of New York, as Documentation
Agent (will be an agreement of the Registrant after the
Reorganization).(1)
10.10 - Unit Option Plan Agreement dated December 16, 1997 with David
R. Brewer, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Brewer, who, after the Reorganization, will
become an employee of the Registrant).(2)
10.11 - Unit Option Plan Agreement dated December 16, 1997 with Robert
H. Joseph, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Joseph, who, after the Reorganization, will
become an employee of the Registrant).(2)
10.12 - Amended and Restated Commercial Paper Dealer Agreement dated
December 19, 1997 among Alliance Capital Management L.P.,
Goldman, Sachs & Co. and NationsBank Montgomery Securities,
Inc. (will be an agreement of the Registrant after the
Reorganization).(2)
10.13 - 1997 Long Term Incentive Plan (after the Reorganization, will
remain a plan of Alliance Capital Management L.P. but will
relate to options issued to employees of the Registrant).(3)
10.14 - Unit Option Plan Agreement dated December 16, 1996 with David
R. Brewer, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Brewer, who, after the Reorganization, will
become an employee of the Registrant).(4)
10.15 - Unit Option Plan Agreement dated December 16, 1996 with Robert
H. Joseph, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Joseph, who, after the Reorganization, will
become an employee of the Registrant).(4)
10.16 - Unit Option Plan Agreement dated April 25, 1995 with Bruce W.
Calvert (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Calvert, who, after the Reorganization, will
become an employee of the Registrant).(5)
10.17 - Unit Option Plan Agreement dated July 24, 1995 with Bruce W.
Calvert (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Calvert, who, after the Reorganization, will
become an employee of the Registrant).(5)
10.18 - Unit Option Plan Agreement dated April 25, 1995 with John D.
Carifa (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Carifa, who, after the Reorganization, will
become an employee of the Registrant).(5)
10.19 - Unit Option Plan Agreement dated July 24, 1995 with John D.
Carifa (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Carifa, who, after the Reorganization, will
become an employee of the Registrant).(5)
10.20 - Unit Option Plan Agreement dated April 25, 1995 with David R.
Brewer, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Brewer, who, after the Reorganization, will
become an employee of the Registrant).(5)
10.21 - Unit Option Plan Agreement dated December 5, 1995 with David R.
Brewer, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Brewer, who, after the Reorganization, will
become an employee of the Registrant).(5)
II-E-2
<PAGE>
Exhibit
No.
-------
10.22 - Unit Option Plan Agreement dated April 25, 1995 with Robert H.
Joseph, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Joseph, who, after the Reorganization, will
become an employee of the Registrant).(5)
10.23 - Unit Option Plan Agreement dated December 5, 1995 with Robert
H. Joseph, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Joseph, who, after the Reorganization, will
become an employee of the Registrant).(5)
10.24 - Alliance Partners Compensation Plan (will relate to the
Registrant after the Reorganization).(5)
10.25 - Unit Option Plan Agreement dated May 10, 1994 with Bruce W.
Calvert (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Calvert, who, after the Reorganization, will
become an employee of the Registrant).(6)
10.26 - Unit Option Plan Agreement dated May 10, 1994 with John D.
Carifa (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Carifa, who, after the Reorganization, will
become an employee of the Registrant).(6)
10.27 - Unit Option Plan Agreement dated May 10, 1994 with David R.
Brewer, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Brewer, who, after the Reorganization, will
become an employee of the Registrant).(6)
10.28 - Unit Option Plan Agreement dated May 10, 1994 with Robert H.
Joseph, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Joseph, who, after the Reorganization, will
become an employee of the Registrant).(6)
10.29 - Convertible Note Purchase Agreement dated August 11, 1994
between Alliance Capital Management L.P. and Banco Bilbao
Vizcaya, S.A.(will be an agreement of the Registrant after the
Reorganization).(7)
10.30 - Alliance Capital Management L.P. 1993 Unit Option Plan (after
the Reorganization, will remain a plan of Alliance Capital
Management L.P. but will relate to options issued to employees
of the Registrant).(8)
10.31 - Alliance Capital Management L.P. Unit Bonus Plan (after the
Reorganization, will remain a plan of Alliance Capital
Management L.P. but will relate to options issued to employees
of the Registrant).(8)
10.32 - Alliance Capital Management L.P. Century Club Plan (after the
Reorganization, will remain a plan of Alliance Capital
Management L.P. but will relate to options issued to employees
of the Registrant).(8)
10.33 - Unit Option Plan Agreement dated October 10, 1992 with David R.
Brewer, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Brewer, who, after the Reorganization, will
become an employee of the Registrant).(9)
10.34 - Unit Option Plan Agreement dated October 10, 1992 with Robert
H. Joseph, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Joseph, who, after the Reorganization, will
become an employee of the Registrant).(9)
10.35 - Alliance Capital Accumulation Plan (will relate to the
Registrant after the Reorganization).(9)
II-E-3
<PAGE>
Exhibit
No.
-------
10.36 - Unit Option Plan Agreement dated August 8, 1991 with David R.
Brewer, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Brewer, who, after the Reorganization, will
become an employee of the Registrant).(10)
10.37 - Unit Option Plan Agreement dated August 8, 1991 with Robert H.
Joseph, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Joseph, who, after the Reorganization, will
become an employee of the Registrant).(10)
10.38 - Transfer Agreement dated December 12, 1991 between Alliance
Capital Management Corporation and Alliance GP Incorporated
(will relate to the Registrant after the Reorganization).(10)
10.39 - Unit Option Plan Agreement dated May 16, 1990 with David R.
Brewer, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Brewer, who, after the Reorganization, will
become an employee of the Registrant).(11)
10.40 - Unit Option Plan Agreement dated May 16, 1990 with Robert H.
Joseph, Jr. (after the Reorganization, will remain a plan of
Alliance Capital Management L.P. but will relate to options
issued to Mr. Joseph, who, after the Reorganization, will
become an employee of the Registrant).(11)
10.41 - Alliance Capital Accumulation Plan (will relate to the
Registrant after the Reorganization).(13)
10.42 - Alliance Partners Plan (will relate to the Registrant after the
Reorganization).(13)
10.43 - Revolving Credit Agreement dated as of July 21, 1999 among
Alliance Capital Management L.P., as Borrower, and the lending
institutions listed on Schedule 1 thereto, collectively as
Banks, and Fleet National Bank, as Administrative Agent, The
First National Bank of Chicago, as Syndication Agent, and
Banque Nationale de Paris, as Documentation Agent.
11.1 - Computation of Pro Forma Earnings per Share for the year ended
December 31, 1998 and for the quarters ended March 31, 1999 and
1998.
21.1 - Subsidiaries of the Registrant (after the Reorganization).(1)
23.1 - Consent of Davis Polk & Wardwell (included in Exhibits 5.1
and 8.1).
23.2 - Consent of KPMG LLP.
23.3 - Consent of Goldman, Sachs & Co.
24.1 - Power of Attorney.
27.1 - Financial Data Schedule (after the Reorganization).
99.1 - Form of Alliance Capital Management L.P. Proxy Card.
99.2 - Form of Alliance Capital Management L.P. voting instructions to
unitholders who hold units through brokers.
99.3 - Form of Letter of Transmittal.
99.4 - Form of Notice of Guaranteed Delivery.
99.5 - Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees dated o, 1999.
II-E-4
<PAGE>
Exhibit
No.
-------
99.6 - Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees dated o,
1999.
99.7 - Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
- --------------------
(1) Filed as an exhibit to Alliance Capital Management L.P.'s Form 10-K for
the fiscal year ended December 31, 1998 filed March 30, 1999 and
incorporated herein by reference.
(2) Filed as an exhibit to Alliance Capital Management L.P.'s Form 10-K for
the fiscal year ended December 31, 1997 filed March 30, 1998 and
incorporated herein by reference.
(3) Filed as an exhibit to Alliance Capital Management L.P.'s Proxy Statement
on Schedule 14A filed December 4, 1997 and incorporated herein by
reference.
(4) Filed as an exhibit to Alliance Capital Management L.P.'s Form 10-K for
the fiscal year ended December 31, 1996 filed March 27, 1997 and
incorporated herein by reference.
(5) Filed as an exhibit to Alliance Capital Management L.P.'s Form 10-K for
the fiscal year ended December 31, 1995 filed April 1, 1996 and
incorporated herein by reference.
(6) Filed as an exhibit to Alliance Capital Management L.P.'s Form 10-K for
the fiscal year ended December 31, 1994 filed March 30, 1995 and
incorporated herein by reference.
(7) Filed as an exhibit to Alliance Capital Management L.P.'s Form 8-K dated
August 12, 1994 and incorporated herein by reference.
(8) Filed as an exhibit to Alliance Capital Management L.P.'s Form S-8 filed
July 12, 1993 and incorporated herein by reference.
(9) Filed as an exhibit to Alliance Capital Management L.P.'s Form 10-K for
the fiscal year ended December 31, 1992 filed March 25, 1993 and
incorporated herein by reference.
(10) Filed as an exhibit to Alliance Capital Management L.P.'s Form 10-K for
the fiscal year ended December 31, 1991 filed March 27, 1992 and
incorporated herein by reference.
(11) Filed as an exhibit to Alliance Capital Management L.P.'s Form 10-K for
the fiscal year ended December 31, 1990 filed March 28, 1991 and
incorporated herein by reference.
(12) Filed as an exhibit to Alliance Capital Management L.P.'s Form 10-K for
the fiscal year ended December 31, 1989 filed April 2, 1990 and
incorporated herein by reference.
(13) Filed as an exhibit to Alliance Capital Management L.P.'s Form 10-K for
the fiscal year ended December 31, 1988 filed March 31, 1989 and
incorporated herein by reference.
II-E-5
EXHIBIT 3.1
CERTIFICATE OF LIMITED PARTNERSHIP
OF
ALLIANCE CAPITAL MANAGEMENT L.P. II
This Certificate of Limited Partnership of Alliance Capital
Management L.P. II (the "Partnership"), dated as of April 6, 1999, is being
duly executed and filed by Alliance Capital Management Corporation, as general
partner, to form a limited partnership under the Delaware Revised Uniform
Limited Partnership Act (6 Del. C. ss.17-101, et seq.).
1. Name. The name of the limited partnership formed hereby is
Alliance Capital Management L.P. II.
2. Registered Office. The address of the registered office of the
Partnership in the State of Delaware is 1013 Centre Road, City of Wilmington,
County of New Castle, Delaware 19805.
3. Registered Agent. The name and address of the registered agent
for service of process on the Partnership in the State of Delaware is The
Corporation Service Company, 1013 Centre Road, City of Wilmington, Count of
New Castle, Delaware 19805.
4. General Partners. The name and business address of the sole
general partner is as follows:
Alliance Capital Management Corporation
1345 Avenue of the Americas
32nd Floor
New York, NY 10105
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Limited Partnership as of the date first above written.
ALLIANCE CAPITAL MANAGEMENT
CORPORATION
as General Partner
By: /s/ David R. Brewer, Jr.
------------------------------------
Name: David R. Brewer, Jr.
Title: Senior Vice President,
General Counsel and Secretary
EXHIBIT 3.2
AGREEMENT OF LIMITED PARTNERSHIP
OF
ALLIANCE CAPITAL MANAGEMENT L.P. II
This Agreement of Limited Partnership of Alliance Capital Management
L.P. II (the "Agreement"), dated as of July 7, 1999, is entered into by and
between Alliance Capital Management Corporation, a Delaware corporation, as
the general partner (the "General Partner"), and Alliance Capital Management
L.P., a Delaware limited partnership, as a limited partner (the "Initial
Limited Partner").
WHEREAS, the General Partner and the Initial Limited Partner desire
to form and establish Alliance Capital Management L.P. II pursuant to the
terms of this Agreement and the filing of a Certificate of Limited Partnership
with the Secretary of State of Delaware in accordance with the Delaware
Revised Uniform Limited Partnership Act (6 Del.C. ss.17-101, et seq.), as
amended from time to time (the "Act").
In consideration of the mutual covenants, conditions and agreements
herein contained, the parties hereby agree as follows:
1. Name. The name of the limited partnership is Alliance Capital
Management L.P. II (the "Partnership").
2. Purpose. The purpose and nature of the business to be conducted
and promoted by the Partnership shall be to engage in any lawful act or
activity for which limited partnerships may be formed under the Act and to
engage in any and all activities necessary or incidental to the foregoing.
3. Registered Office. The registered office of the Partnership in the
State of Delaware is c/o The Corporation Service Company, 1013 Centre Road,
City of Wilmington, County of New Castle, Delaware 19805.
4. Registered Agent. The name and address of the registered agent for
service of process on the Partnership in the State of Delaware is The
Corporation Service Company, 1013 Centre Road, City of Wilmington, County of
New Castle, Delaware 19805.
<PAGE>
5. Partners. The names and the business addresses of the General
Partner and the Initial Limited Partner are as follows:
General Partner:
Alliance Capital Management Corporation
1345 Avenue of the Americas
New York, NY 10105
Initial Limited Partner:
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, NY 10105
6. Powers. The powers of the General Partner include all powers,
statutory and otherwise, possessed by general partners under the laws of the
State of Delaware.
7. Capital Contributions. The partners of the Partnership have
contributed the following amounts, in cash, and no other property, to the
Partnership.
General Partner:
Alliance Capital Management Corporation $50
Initial Limited Partner:
Alliance Capital Management L.P. $50
8. Additional Contributions. No partner of the Partnership is
required to make any additional capital contribution to the Partnership.
9. Allocation of Profits and Losses. The Partnership's profits and
losses shall be allocated in proportion to the capital contributions of the
partners of the Partnership.
10. Distributions. Distributions shall be made to the partners of the
Partnership at the times and in the aggregate amounts determined by the
General Partner. Such distributions shall be allocated among the partners of
the Partnership in the same proportion as their then capital account balances.
11. Liability of Limited Partners. The Initial Limited Partner and
any additional or substitute limited partners shall not have any liability for
the obligations or liabilities of the Partnership except to the extent
provided in the Act.
2
<PAGE>
12. Governing Law. This Agreement shall be governed by, and
construed under, the laws of the State of Delaware, all rights and remedies
being governed by said laws.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned, intending to be legally
bound hereby, have duly executed this Agreement of Limited Partnership as of
the 7th day of July, 1999.
ALLIANCE CAPITAL MANAGEMENT
CORPORATION
By: /s/David R. Brewer, Jr.
-----------------------------------
Name: David R. Brewer, Jr.
Title: Senior Vice President,
General Counsel and Secretary
ALLIANCE CAPITAL MANAGEMENT
L.P.
By: Alliance Capital Management
Corporation, General Partner
By: /s/David R. Brewer, Jr.
-----------------------------------
Name: David R. Brewer, Jr.
Title: Senior Vice President,
General Counsel and Secretary
4
EXHIBIT 5.1
[Davis Polk & Wardwell Letterhead]
August 2, 1999
Alliance Capital Management L.P. II
1345 Avenue of the Americas
New York, New York 10105
Ladies and Gentlemen:
We have acted as counsel to Alliance Capital Management L.P. II
("Alliance Capital"), a Delaware limited partnership, in connection with its
Registration Statement on Form S-4 (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"). The Registration Statement relates
to the registration by Alliance Capital of units (the "Units") representing
limited partnership interests in Alliance Capital to be offered by Alliance
Capital Management L.P. ("Alliance Holding") in an exchange offer for units of
Alliance Holding following the issuance of all such Units to Alliance Holding in
connection with the transfer by Alliance Holding of its business to Alliance
Capital pursuant to the terms of the Agreement and Plan of Reorganization to be
entered into among Alliance Holding, Alliance Capital, Alliance Capital
Management Corporation and The Equitable Life Assurance Society of the United
States, substantially in the form of Annex A to the Proxy Statement/Prospectus
constituting a part of the Registration Statement (the "Agreement and Plan of
Reorganization").
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates and
other instruments, and have conducted such other investigations of fact and law,
as we have deemed necessary or advisable for the purposes of this opinion.
In rendering this opinion we have assumed that prior to the issuance of
any of the Units (i) the Registration Statement will have become effective under
the Securities Act and (ii) the unitholders of Alliance Holding will have
approved and adopted (x) the transfer by Alliance Holding of its business to
Alliance Capital pursuant to the Agreement and Plan of Reorganization and (y)
the amendments to Alliance Capital's partnership agreement set forth in the
Amended Alliance Holding Partnership Agreement attached as Annex B to the Proxy
Statement/Prospectus constituting a part of the Registration Statement.
On the basis of the foregoing, we are of the opinion that the Units
have been duly authorized and the Units, when issued and delivered in accordance
with the terms and conditions of the Agreement and Plan of Reorganization, will
be validly issued.
<PAGE>
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal securities
laws of the United States of America and the Revised Uniform Partnership Act of
the State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In addition, we consent to the reference to us under the
caption "Legal Matters" in the Proxy Statement/Prospectus constituting a part of
the Registration Statement. In giving this consent, we do not admit that we are
in the category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Davis Polk & Wardwell
2
EXHIBIT 8.1
[Davis Polk & Wardwell Letterhead]
August 2, 1999
Alliance Capital Management L.P. II
1345 Avenue of the Americas
New York, NY 10105
Ladies and Gentlemen:
We have acted as counsel to Alliance Capital Management L.P. II ("Alliance
Capital"), a Delaware limited partnership, in connection with its Registration
Statement on Form S-4 (the "Registration Statement") filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended. The
Registration Statement relates to the registration by Alliance Capital of
limited partnership interests in Alliance Capital to be offered by Alliance
Capital Management L.P. ("Alliance Holding") in an exchange offer for units
representing the beneficial ownership of Alliance Holding limited partnership
interests ("Units"). The exchange offer will follow the issuance of all such
Alliance Capital limited partnership interests to Alliance Holding in
consideration of the transfer of Alliance Holding's business to Alliance
Capital. In rendering the opinion set forth below, we have examined such
documents as we have considered necessary and appropriate and we have relied on
the factual representations made to us by Alliance Holding in a letter dated as
of August 2, 1999.
The section of the Registration Statement entitled "Material Federal
Income Tax Consequences" represents our opinion as to the material United States
federal income tax consequences of the proposed reorganization of Alliance
Holding to holders of Units, of an exchange of Units for a limited partnership
interest in Alliance Capital, and of the ownership of Units and of limited
partnership interests in Alliance Capital after the reorganization.
We are members of the Bar of the State of New York. This opinion is based
upon, and limited to, federal laws of the United States of America as contained
in the Internal Revenue Code of 1986, as amended, Treasury regulations,
administrative decisions and court decisions as in effect on the date hereof.
We hereby consent to the inclusion of this opinion in the Proxy
Statement/Prospectus constituting a part of the Registration Statement, and to
the filing of this opinion as an exhibit to the Registration Statement. In
addition, we consent to the reference to us under the caption "Summary--Material
Federal Income Tax Consequences" and "The Reorganization and the Exchange
Offer--Material Federal Income Tax Consequences" in the Proxy
Statement/Prospectus. In giving this consent, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Davis Polk & Wardwell
EXHIBIT 10.1
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is dated as of April 8,
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"), and The Equitable Life
Assurance Society of the United States, a New York stock life insurance
corporation ("Equitable Life").
WHEREAS, Alliance Holding proposes to reorganize its business, such
reorganization (the "Reorganization") to involve, among other things: (i) the
transfer or assignment (the "Transfer") by Alliance Holding of 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 units of
limited partnership interest in Alliance Capital ("Alliance Capital Units")
and a general partnership interest in Alliance Capital and the assumption by
Alliance Capital of all or substantially all of the liabilities of Alliance
Holding and (ii) the offer by Alliance Holding to exchange on a one-for-one
basis outstanding Alliance Holding units for Alliance Capital Units (the
"Exchange Offer"), subject to terms and conditions to be agreed upon among the
parties, pursuant to an exchange offer registered with the Securities and
Exchange Commission; and
WHEREAS, Equitable Life and its affiliates own approximately 57% of
the outstanding Alliance Holding units.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereby agree as follows:
1. Agreement to Exchange. Immediately after the consummation of
the Exchange Offer, Equitable Life agrees to exchange, and to cause its
affiliates who hold Alliance Holding units to exchange, substantially all of
such Alliance Holding units for Alliance Capital Units held by Alliance
Holding, subject to the same terms and conditions as the Exchange Offer (the
"Private Exchange").
2. Conditions to Obligations. The obligations of Equitable Life to
consummate the Private Exchange shall be subject to the fulfillment of the
following conditions: (a) the conditions to the closing of the transactions
contemplated by the draft Agreement and Plan of Reorganization (in
substantially the form distributed to the directors of Alliance Holding in
connection with their
<PAGE>
April 8, 1999 special meeting (the "Special Meeting")) shall have been
satisfied; and (b) the Transfer and the Exchange Offer shall have been
consummated on substantially the terms described in the draft Proxy
Statement/S-4 Registration Statement distributed to the directors of Alliance
Holding in connection with the Special Meeting, with any additions, deletions
or amendments thereto as may be approved by Equitable Life.
3. Termination. This Agreement may be terminated at any time (a)
by the written agreement of the parties hereto; (b) by any of Alliance
Holding, Alliance Capital or Equitable Life if any condition specified in
Section 2 shall not have been satisfied or waived prior to December 31, 1999;
or (c) by Equitable Life if the Reorganization is abandoned.
4. Miscellaneous.
a. 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.
b. This Agreement may be amended only with the prior written
consent of each party hereto.
c. 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.
d. This Agreement shall be superceded (without further action by
the parties hereto) by the Agreement and Plan of Reorganization upon execution
thereof by Equitable Life, Alliance Holding, Alliance Capital and Alliance
Capital Management Corporation.
2
<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: /s/ Robert H. Joseph, Jr.
---------------------------------------
Name: Robert H. Joseph, Jr.
Title: Senior Vice President and
Chief Financial Officer
ALLIANCE CAPITAL MANAGEMENT L.P. II
By: Alliance Capital Management Corporation
its general partner
By: /s/ Robert H. Joseph, Jr.
---------------------------------------
Name: Robert H. Joseph, Jr.
Title: Senior Vice President and
Chief Financial Officer
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: /s/ Stanley B. Tulin
---------------------------------------
Name: Stanley B. Tulin
Title: Vice Chairman and
Chief Financial Officer
3
EXHIBIT 10.2
INDEMNIFICATION AND REIMBURSEMENT AGREEMENT
AGREEMENT dated as of April 8, 1999 among Alliance Capital Management
L.P., a Delaware limited partnership ("Alliance Holding"), Alliance Capital
Management L.P. II, a Delaware limited partnership ("Alliance Capital"), and
The Equitable Life Assurance Society of the United States, a New York stock
life insurance corporation ("Equitable Life").
W I T N E S S E T H :
WHEREAS, Equitable Life, Alliance Holding and Alliance Capital have
agreed that, subject to terms and conditions to be agreed among them, Alliance
Holding will transfer its business to Alliance Capital in exchange for (i)
100% of the units of limited partnership interest in Alliance Capital and (ii)
a general partnership interest representing a one percent economic interest in
Alliance Capital (the "Transfer");
WHEREAS, in connection with the Transfer, Equitable Life and Alliance
Holding have agreed that, subject to terms and conditions to be agreed among
them, Alliance Holding will offer to all of its Unitholders (as defined
below), pursuant to a registered exchange offer (the "Exchange Offer"), a one
time election to exchange their Units (as defined below) in Alliance Holding
for units of limited partnership interest in Alliance Capital on a one-for-one
basis;
WHEREAS, Equitable Life owns, directly or indirectly, approximately
57% of the Units in Alliance Holding, and intends to exchange substantially
all of such Units for units of limited partnership interest in Alliance
Capital;
WHEREAS, as consideration for the agreement of Alliance Holding and
Alliance Capital to implement the Transfer and the Exchange Offer (subject to,
among other things, the approval of a majority of Alliance Holding's public
Unitholders (as defined below)), Equitable Life has agreed to indemnify and
reimburse, or to cause to be indemnified and reimbursed, Alliance Holding,
Alliance Capital and certain of their affiliates for certain costs and
expenses associated therewith, under the terms and conditions of this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements herein contained, and for other good and valuable
consideration, the adequacy of which is acknowledged, the parties hereto agree
as follows:
<PAGE>
SECTION 1. Definitions. The following terms, as used herein, have the
following meanings:
"ACMC" means Alliance Capital Management Corporation, the general
partner of Alliance Holding and Alliance Capital.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person; provided that for purposes of this Agreement none of Alliance
Holding, Alliance Capital, or ACMC or any Person employed by Alliance Holding,
Alliance Capital or ACMC shall be considered an Affiliate of Equitable Life.
For purposes of this definition, the term "control" as used with respect to
any Person, shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities, by contract or otherwise.
"Alliance Capital Partnership Agreement" means the Amended and
Restated Agreement of Limited Partnership of Alliance Capital to be entered
into in connection with the Reorganization, as it may be amended, supplemented
or restated from time to time.
"Alliance Holding Partnership Agreement" means the Amended and
Restated Agreement of Limited Partnership of Alliance Holding to be entered
into in connection with the Reorganization, as it may be amended, supplemented
or restated from time to time.
"Alliance Indemnitees" has the meaning set forth in Section 3 of this
Agreement.
"Effective Time" means the effective time of the closing under the
Agreement and Plan of Reorganization to be entered into by ACMC, Alliance
Holding, Alliance Capital and Equitable Life and which will provide for the
Transfer.
"Exchange Offer" has the meaning set forth in the recitals to this
Agreement.
"Internal Costs" has the meaning set forth in Section 2 of this
Agreement.
"Losses" has the meaning set forth in Section 3 of this Agreement.
"Person" means any individual, corporation, association, partnership,
joint venture, trust, estate or other entity or organization.
2
<PAGE>
"Reorganization" means the Transfer, the Exchange Offer, the adoption
of the Alliance Holding Partnership Agreement and all other transactions or
actions contemplated by the Agreement and Plan of Reorganization to be entered
into by ACMC, Alliance Holding, Alliance Capital and Equitable Life.
"Reorganization Costs" has the meaning set forth in Section 2 of this
Agreement.
"Reorganization Filings" means, collectively, (i) the Proxy
Statement/Prospectus to be filed by Alliance Holding and Alliance Capital,
(ii) the Registration Statement on Form S-4 to be filed by Alliance Capital,
(iii) the Exchange Offer/Prospectus to be filed by Alliance Holding and
Alliance Capital and (iv) the Schedule 13E-4 filing to be made by Alliance
Holding and Alliance Capital, each in connection with the Reorganization.
"Specified Proceeding" has the meaning set forth in Section 3 of this
Agreement.
"Tax Loss" has the meaning set forth in Section 3 of this Agreement.
"Unit" shall have the meaning assigned to such term in the Alliance
Holding Partnership Agreement.
"Unitholder" shall have the meaning assigned to such term in the
Alliance Holding Partnership Agreement.
SECTION 2. Payment of Transaction Costs. (a) Except as otherwise set
forth in this Agreement, Equitable Life hereby agrees to pay or reimburse, or
to cause to be paid or reimbursed, Alliance Holding, Alliance Capital or ACMC
for all out-of-pocket costs and expenses incurred on or after June 15, 1998 by
Alliance Holding, Alliance Capital or ACMC (without duplication) in connection
with the consideration and implementation of the Reorganization (the
"Reorganization Costs"), including, without limitation, all costs and expenses
incurred on or after June 15, 1998 and paid to third parties (i) in connection
with or relating to the formation or capitalization of Alliance Capital, (ii)
in connection with or relating to the preparation and negotiation of any
documents relating to the Reorganization, (iii) in connection with or relating
to holding a special meeting of Unitholders and obtaining Unitholder approval
of the Transfer and the Alliance Holding Partnership Agreement, (iv) in
connection with or relating to obtaining Alliance Holding client and other
consents to the Transfer, (v) in connection with or relating to the making and
consummation of the Exchange Offer, and (vi) in connection with or relating to
the retention of financial, legal, accounting and other advisors of Alliance
Holding, Alliance Capital or ACMC in
3
<PAGE>
connection with the Reorganization. The parties agree that Equitable Life's
obligations under this Section 2 shall be effective without regard to whether
(i) the Reorganization Costs were incurred prior to the date hereof, (ii) the
Reorganization Costs were incurred during the preparation and implementation
of, or after consummation of, the Reorganization, or (iii) the Reorganization
is in fact consummated or abandoned. ACMC, Alliance Capital or Alliance
Holding, as the case may be, shall from time to time provide to Equitable Life
copies of receipts or other evidence of the incurrence of Reorganization
Costs. Equitable Life shall pay or reimburse, or cause to be paid or
reimbursed, ACMC, Alliance Capital or Alliance Holding, as the case may be,
for such Reorganization Costs within 60 days after the receipt of such
receipts or other evidence of incurrence of such Reorganization Costs.
(b) Equitable Life shall make or cause to be made a payment of
$3,000,000 to Alliance Capital in respect of costs and expenses incurred on or
after June 15, 1998, including salaries and overhead, the use of the
facilities and general operating expenses of Alliance Holding, Alliance
Capital and ACMC and the work of the officers and employees of Alliance
Holding, Alliance Capital and ACMC in connection with the consideration and
implementation of the Reorganization ("Internal Costs"). Notwithstanding
Subsection 2(a) hereof, Equitable Life's obligation to pay or reimburse, or
cause to be paid or reimbursed, Alliance Holding, Alliance Capital or ACMC for
any Internal Costs shall be limited to the obligation set forth in this
Subsection 2(b). Equitable Life shall make or cause to be made such payment to
Alliance Capital immediately following the Effective Time by wire transfer in
immediately available funds; provided that, if the Reorganization is
abandoned, Equitable Life (i) shall not be obligated to make or cause to be
made any payment in respect of Internal Costs if the decision to abandon is
made prior to the occurrence of the special meeting of Unitholders in
connection with the Reorganization and (ii) shall be obligated to make or
cause to be made a payment of only $1,500,000 in respect of Internal Costs if
the decision to abandon is made after the date of the special meeting of
Unitholders in connection with the Reorganization (which payment shall be made
to Alliance Holding by wire transfer in immediately available funds promptly
after the decision to abandon is made).
(c) Notwithstanding anything in this Agreement to the contrary,
Equitable Life shall not be obligated to indemnify, reimburse or pay, or cause
to be indemnified, reimbursed or paid under this Section 2, any cost and
expenses, including Reorganization Costs, (i) resulting from any actual or
potential loss of clients or potential clients (including any revenues derived
or expected to be derived therefrom) or (ii) attributable to any incremental
costs and expenses of maintaining and operating both Alliance Holding and
Alliance Capital over the costs of maintaining and operating Alliance Holding.
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SECTION 3. Indemnification Against Transaction Risks. (a) Except as
set forth in Subsection 3 (b) below, Equitable Life hereby: (i) indemnifies,
on an after-tax basis, each of Alliance Holding, Alliance Capital, ACMC and
their respective subsidiaries and the directors, officers and employees of
Alliance Holding, Alliance Capital, ACMC or such subsidiaries (the "Alliance
Indemnitees") against and agrees to hold each of them harmless from any and
all damage, loss, liability and expense (including without limitation,
reasonable expenses of investigation and reasonable attorneys' fees and
expenses) ("Losses") incurred or suffered by any Alliance Indemnitee, directly
or indirectly, in connection with any claim, action, suit, proceeding or
hearing in connection with or arising out of the Reorganization conducted,
brought, instituted, threatened or asserted by any Person in which an Alliance
Indemnitee may be involved, or threatened to be involved, as a party or
otherwise (a "Specified Proceeding"); and (ii) indemnifies, on an after-tax
basis, Alliance Holding against and agrees to hold it harmless from (A) any
federal tax imposed under Section 7704(g) of the Internal Revenue Code of
1986, as amended, or any successor provision thereof (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 amendment) payable by Alliance Holding in respect of Equitable
Life's share (or any of its Affiliate's share) of Alliance Capital's income
that is subjected to tax under such provision, (B) any increase in the
aggregate amount of federal, state or local income or alternative minimum tax
payable (x) by Alliance Holding and (y) by Alliance Capital in respect of
income allocable to Alliance Holding in the event that either Alliance Holding
or Alliance Capital (or both) is (or are) treated as a corporation under
current tax law either as a result of the Reorganization or as a result of
transfers of interests in Alliance Capital (provided that no modification,
restructuring or reorganization of Alliance Holding or Alliance Capital, or
both, effected pursuant to Section 2.05 of the Alliance Holding Partnership
Agreement or Section 2.05 of the Alliance Capital Partnership Agreement, or
any successor provision of either such provision, shall relieve Equitable Life
of any liability under clause (ii) of this Subsection 3(a)) and (C) any
interest, penalties or additions to tax, and any liabilities, costs, expenses
(including, without limitation, reasonable expenses of investigation and
reasonable 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) or (B) (the sum of (A),
(B) and (C) being referred to herein as a "Tax Loss"), provided that Equitable
Life shall have no obligation to indemnify Alliance Holding for any Tax Loss
to the extent that Alliance Capital has reimbursed Alliance Holding for such
Tax Loss. Equitable Life agrees that the right to indemnification against
Losses conferred under clause (i) of this subsection 3(a) shall (I) be
effective without regard to whether (x) such Losses were incurred or suffered
prior to the date hereof (except that Equitable Life shall have no obligation
to indemnify any Alliance Indemnitee for Losses incurred or suffered
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prior to June 15, 1998), (y) such Losses were incurred or suffered during the
preparation and implementation of, or after consummation of, the
Reorganization, and (z) the Reorganization is in fact consummated or
abandoned, and (II) include the right to be reimbursed for any expenses
incurred in connection with any Specified Proceeding in advance of its final
disposition.
(b) Notwithstanding any other provision of this Agreement, Equitable
Life shall not indemnify or contribute to (i) any Alliance Indemnitee for any
taxes arising from any future legislative or regulatory changes (other than as
contemplated by clause (ii)(A) of Subsection 3(a) above) or (ii) any Alliance
Indemnitee for any Losses to the extent caused by any untrue statement of a
material fact contained in any Reorganization Filing or by any omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading which statement or omission is
contained in or omitted from public filings of Alliance Holding with the
Securities and Exchange Commission incorporated by reference in such
Reorganization Filing (other than, with respect to any such filing, in
statements provided to Alliance Holding for inclusion therein by Equitable
Life or its Affiliates or omissions in such material made by Equitable Life or
its Affiliates).
SECTION 4. Procedures for Specified Proceedings. (a) Alliance Holding
and Alliance Capital agree to give prompt written notice to Equitable Life if
any Specified Proceeding is conducted, brought, threatened or asserted by any
Person, and promptly to provide Equitable Life such information with respect
thereto as Equitable Life may reasonably request. Failure to provide notice
shall not affect Equitable Life's obligations hereunder except to the extent
Equitable Life is materially and adversely affected thereby.
(b) Except as otherwise set forth in this Section 4, Equitable Life
shall have the right, at Equitable Life's expense, to participate in and
control the defense of any Specified Proceeding and, in connection therewith,
to retain counsel reasonably satisfactory to Alliance Holding and Alliance
Capital to represent the Alliance Indemnitees involved in such Specified
Proceeding. If Equitable Life does assume such defense, it shall indemnify and
hold harmless each Alliance Indemnitee from any and all Losses arising out of
any settlement or judgment of such Specified Proceeding and may not claim that
it does not have any indemnification obligation with respect thereto; provided
that Equitable Life may disclaim such indemnification obligation if (i)
promptly after Equitable Life becomes aware or should have become aware of
facts and circumstances forming a basis for a claim that Equitable Life does
not have an indemnification obligation, but in no event later than eighteen
months after assuming such defense, Equitable Life notifies such Alliance
Indemnitee in writing that it disclaims such indemnification obligation, and
(ii) the defense of the claim against such Alliance
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Indemnitee is not materially adversely impacted by such disclaimer of
indemnification obligation. For purposes of the foregoing sentence, a change
in counsel shall not be deemed to materially adversely impact any Alliance
Indemnitee. Equitable Life shall keep each such Alliance Indemnitee advised of
the status of such Specified Proceeding and the defense thereof and shall
consider in good faith recommendations made by such Alliance Indemnitee with
respect thereto.
(c) Equitable Life shall not be entitled to assume or maintain
control of the defense of any Specified Proceeding and shall pay, to the
extent otherwise provided by this Agreement, the reasonable fees and expenses
of counsel retained by the Alliance Indemnitee (which counsel shall be
reasonably satisfactory to Equitable Life) (i) to the extent that the
Specified Proceeding relates to or arises in connection with any criminal
proceeding, action, indictment, allegation or investigation, (ii) to the
extent that the Specified Proceeding seeks an injunction or equitable relief
against the Alliance Indemnitee Party or (iii) if Equitable Life has failed or
is failing to prosecute or defend diligently the Specified Proceeding.
(d) In any Specified Proceeding, any Alliance Indemnitee shall have
the right to retain its own counsel at its own expense; provided that the
reasonable fees and expenses of such Alliance Indemnitee's counsel shall be at
the expense of Equitable Life, to the extent otherwise provided by this
Agreement, if (i) Equitable Life and such Alliance Indemnitee shall have
mutually agreed to the retention of such counsel, (ii) such fees and expenses
were incurred by the Alliance Indemnitee after the date that Equitable Life
receives written notice of such Specified Proceeding pursuant to Subsection
4(a) and prior to the date Equitable Life assumes control of the defense of
such Special Proceeding, (iii) Equitable Life has failed, within a reasonable
time after having been notified of the existence of a Specified Proceeding, to
assume the defense of such Specified Proceeding, or (iv) the named parties to
any such Specified Proceeding (including any impleaded parties) include both
Equitable Life (or any Affiliate of Equitable Life) and such Alliance
Indemnitee and representation of both parties by the same counsel would be
inappropriate due to a conflict of interest between them.
(e) Equitable Life shall not be liable for any settlement of any
Specified Proceeding effected without its written consent (which consent shall
not be unreasonably withheld or delayed), but if settled with such consent or
if there be a final judgment for the plaintiff, Equitable Life agrees to
indemnify each Alliance Indemnitee from and against all Losses by reason of
such settlement or judgment, to the extent otherwise provided by this
Agreement. Equitable Life shall not effect any settlement of any pending or
threatened Specified Proceeding in respect of which any Alliance Indemnitee is
seeking indemnification hereunder without the prior written consent of each
such Alliance Indemnitee (which consent shall not be
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unreasonably withheld or delayed by any such Alliance Indemnitee), unless such
settlement includes a full and final release of such Alliance Indemnitee from
all liability and claims that are the subject matter of such Specified
Proceeding and does not impose injunctive or other equitable relief against
such Alliance Indemnitee.
(f) The parties shall cooperate, and cause their respective
Affiliates to cooperate, in the defense or prosecution of any Specified
Proceeding and shall promptly furnish or cause to be furnished such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials or appeals, as may be reasonably requested in connection
therewith; provided that neither Equitable Life nor any Alliance Indemnitee
shall be required to waive any privilege in connection therewith.
SECTION 5. Procedures for Tax Losses. (a) Alliance Holding agrees to
give prompt notice to Equitable Life of any Tax Loss or the assertion of any
claim, or the commencement of any suit, action or proceeding in respect of
which Alliance Holding believes it may seek indemnity under clause (ii) of
Subsection 3(a) hereof, and agrees to give Equitable Life such information
with respect thereto as Equitable Life may reasonably request. Failure to
provide notice shall not affect Equitable Life's obligations hereunder except
to the extent Equitable Life is materially and adversely affected thereby.
(b) Equitable Life may, at its own expense, participate in and, upon
notice to Alliance Holding, assume the defense of, any such suit, action or
proceeding, including any tax audit; provided that (i) Equitable Life's
counsel is reasonably satisfactory to Alliance Holding, (ii) Equitable Life
shall thereafter consult with Alliance Holding upon Alliance Holding's
reasonable request for such consultation from time to time with respect to
such suit, action or proceeding, (iii) Equitable Life shall not agree to any
settlement with respect to any tax without the consent of Alliance Holding
(which consent shall not be unreasonably withheld or delayed), provided that
if Alliance Holding does not consent to any settlement of a claim or claims
that give rise to any Tax Loss and such settlement does not involve the
settlement of any claim or claims that do not give rise to any Tax Loss,
Equitable Life's liability under this Agreement with respect to such claim or
claims shall be limited to the liability that Equitable Life would have
incurred under this Agreement had such suit, action or proceeding been
terminated or settled on the proposed terms, and (iv) Equitable Life shall not
be entitled to assume or maintain control of any such defense and shall pay
the reasonable fees and expenses of counsel retained by Alliance Holding, to
the extent otherwise provided by this Agreement, if Equitable Life has failed
or is failing to prosecute or defend diligently the defense of such action.
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(c) If Equitable Life assumes any such defense, (i) Alliance Holding
shall have the right (but not the duty) to participate in such defense and to
employ counsel, at its own expense, separate from the counsel employed by
Equitable Life; provided that the reasonable fees and expenses of Alliance
Holding's counsel shall be at the expense of Equitable Life if (x) Equitable
Life and Alliance Holding shall have mutually agreed to the retention of such
counsel and (y) such fees and expenses were incurred by Alliance Holding after
the date that Equitable Life receives written notice of such Specified
Proceeding pursuant to Subsection 4(a) and prior to the date Equitable Life
assumes control of such defense, and (ii) Equitable Life shall not assert that
the Tax Loss, or any portion thereof, with respect to which Alliance Holding
seeks indemnification is not within the ambit of Section 3 hereof. If
Equitable Life does not elect to assume any such defense, Alliance Holding
shall not agree to any settlement without the prior written consent of
Equitable Life (which consent shall not be unreasonably withheld or delayed).
(d) The parties shall cooperate, and cause their respective
Affiliates to cooperate, in the defense or prosecution of any such action and
shall promptly furnish or cause to be furnished such records, information and
testimony, and attend such conferences, discovery proceedings, hearings,
trials or appeals, as may be reasonably requested in connection therewith;
provided that neither Equitable Life nor Alliance Holding shall be required to
waive any privilege in connection therewith.
SECTION 6. Contribution. To the extent the indemnification provided
for in clause (i) of Subsection 3(a) is unavailable to an Alliance Indemnitee
or insufficient in respect of any Losses referred to therein, then Equitable
Life, in lieu of indemnifying such Alliance Indemnitee thereunder, shall
contribute to the amount paid or payable by such Alliance Indemnitee as a
result of such Losses (i) in such proportion as is appropriate to reflect the
relative benefits received by Equitable Life on the one hand and the Alliance
Indemnitee on the other hand from the Reorganization or (ii) if the allocation
provided by clause (i) hereof is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) hereof but also the relative fault of Equitable Life
on the one hand and of the Alliance Indemnitee on the other hand in connection
with the statements or omissions that resulted in such Losses, as well as any
other relevant equitable considerations.
SECTION 7. Representations and Warranties of Alliance Holding and
Alliance Capital. Each of Alliance Holding and Alliance Capital represents and
warrants to Equitable Life that:
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(a) Partnership Existence; Authorization. Such Person is a limited
partnership duly organized, validly existing and in good standing under the
laws of Delaware. The execution, delivery and performance by such Person of
this Agreement and the consummation of the transactions contemplated hereby
are within such Person's partnership powers and have been duly authorized by
all necessary partnership action. The execution, delivery and performance by
such Person of this Agreement and the consummation of the transactions
contemplated hereby require no action by or in respect of, or filing with, any
governmental body, agency or official. This Agreement constitutes a valid and
binding agreement of Alliance Holding and Alliance Capital.
(b) Noncontravention. The execution, delivery and performance by
such Person of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene or conflict with its
limited partnership agreement or (ii) violate any applicable law, rule,
regulation, judgment, injunction, order or decree binding upon or applicable
to it.
SECTION 8. Representations and Warranties of Equitable Life.
Equitable Life represents and warrants to Alliance Holding and Alliance
Capital that:
(a) Corporate Existence; Authorization. Equitable Life is a
corporation duly incorporated, validly existing and in good standing under the
laws of New York. The execution, delivery and performance by Equitable Life of
this Agreement and the consummation of the transactions contemplated hereby
are within the corporate powers of Equitable Life and have been duly
authorized by all necessary corporate action on the part of Equitable Life.
The execution, delivery and performance by Equitable Life of this Agreement
and the consummation of the transactions contemplated hereby require no
material action by or in respect of, or material filing with, any governmental
body, agency or official. This Agreement constitutes a valid and binding
agreement of Equitable Life.
(b) Noncontravention. The execution, delivery and performance by
Equitable Life of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene or conflict with the
certificate of incorporation or bylaws of Equitable Life or (ii) violate any
applicable material law, rule, regulation, judgment, injunction, order or
decree applicable to Equitable Life.
SECTION 9. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given, if to Alliance Holding or to Alliance Capital, to: Alliance
Capital Management L.P. or Alliance Capital Management L.P. II, as the case
may be, c/o Alliance Capital Management Corporation, 1345 Avenue of the
Americas, New
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York, New York 10105, Attn: General Counsel, Fax: (212) 969-1334, with a copy
to Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017,
Attn: Phillip R. Mills, Fax: (212) 450-4800; and if to Equitable Life, to: The
Equitable Life Assurance Society of the United States, 1290 Avenue of the
Americas, New York, New York 10104, Attn: General Counsel, Fax: (212) 707-
1935, with a copy to: Proskauer Rose LLP, 1585 Broadway, New York, New York
10036-8299, Attn: Allan R. Williams, Fax: (212) 969-2900. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been
received until the next succeeding business day in the place of receipt.
SECTION 10. Amendments and Waivers. Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in
writing and is signed, in the case of an amendment, by each party to this
Agreement, or in the case of a waiver, by the party against whom the waiver is
to be effective; provided that any amendment that would materially affect the
rights and obligations of the parties hereto shall require the unanimous
approval of the board of directors of ACMC. No failure or delay by any party
in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 11. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SECTION 12. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York, without regard to
the conflicts of law rules of such state.
SECTION 13. Jurisdiction. Except as otherwise expressly provided in
this Agreement, the parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or
in connection with, this Agreement or the transactions contemplated hereby may
be brought in the United States District Court for the Southern District of
New York or any other New York State court sitting in New York City, and each
of the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have
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to the laying of the venue of any such suit, action or proceeding in any such
court or that any such suit, action or proceeding which is brought in any such
court has been brought in an inconvenient forum. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 9 shall be deemed effective service of process on such party.
SECTION 14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 15. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
SECTION 16. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral
and written, among the parties with respect to the subject matter of this
Agreement.
SECTION 17. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
ALLIANCE CAPITAL MANAGEMENT
L.P.
By: ALLIANCE CAPITAL MANAGEMENT
CORPORATION, its general partner
By: /s/ John D. Carifa
-----------------------------------
Name: John D. Carifa
Title: President
ALLIANCE CAPITAL MANAGEMENT
L.P. II
By: ALLIANCE CAPITAL MANAGEMENT
CORPORATION, its general partner
By: /s/ John D. Carifa
-----------------------------------
Name: John D. Carifa
Title: President
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: /s/ Stanley B. Tulin
-----------------------------------
Name: Stanley B. Tulin
Title: Vice Chairman and
Chief Financial Officer
EXHIBIT 10.3
FORM OF AMENDED AND RESTATED
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
[DRAFT OF AUGUST 2, 1999]
<PAGE>
AMENDED AND RESTATED
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
THIS AGREEMENT, dated as of January 1, 1999 (this "Agreement"), is made
by and between Alliance Capital Management L.P. (together with any affiliated
successor to its business, "Alliance"), Alliance Corporate Finance Group
Incorporated ("Corporate Finance"), an indirect wholly owned subsidiary of
Alliance, and The Equitable Life Assurance Society of the United States
("Client").
WITNESSETH:
WHEREAS, Client desires to avail itself of the experience, analysis and
advice of Alliance and Corporate Finance and to have them provide the services
hereinafter set forth upon the terms and conditions contained in this Agreement;
WHEREAS, Client is an investment manager as that term is used in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), for the
various pension plans which participate in certain separate accounts of Client
and, in meeting its responsibilities as investment manager to such accounts,
Client desires to avail itself of the experience, advice, assistance and
facilities of Alliance and Corporate Finance and to have them undertake the
duties and responsibilities set forth in this Agreement upon the following terms
and conditions;
WHEREAS, Alliance and Corporate Finance are willing to perform such
services and undertake such duties and responsibilities upon such terms and
conditions;
WHEREAS, Alliance, Corporate Finance and Client previously entered into
an Investment Advisory and Management Agreement, dated as of July 22, 1993, as
amended (the "Initial Advisory Agreement"), and a related Accounting, Valuation,
Reporting and Treasury Services Agreement, dated as of July 22, 1993, as amended
(the "Initial Accounting Agreement"); and
WHEREAS, Alliance, Corporate Finance and Client desire to amend the
Initial Advisory Agreement and the Initial Accounting Agreement with respect to
the General Accounts (as hereinafter defined) but not with respect to any of the
Separate Accounts (as hereinafter defined) as of the date hereof and thereafter
to continue the arrangements and understandings set forth in such agreements, as
amended;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereby amend and restate the Initial
Advisory Agreement as follows:
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SECTION 1. Investment Advisory Services. As referred to in this
Agreement, the term "Adviser" refers to each of Alliance and Corporate Finance.
On and after the date hereof, Adviser will act as investment adviser with
respect to those certain assets which Client designates Adviser to manage and
which are held in (i) segments of its general account and its Separate Accounts
43, 46 and 48 that are evidenced by securities or interests in joint ventures
other than asset classes or portfolios listed in Schedule 1 attached to and made
a part of this Agreement (the "General Accounts") and (ii) Separate Accounts
other than Separate Accounts 43, 46 and 48 and the separate accounts described
in Schedule 2 attached to and made a part of this Agreement (the included
Separate Accounts being referred to herein as the "Separate Accounts") (the
General Accounts and the Separate Accounts being collectively referred to as the
"Accounts"). Alliance and Client have agreed to a list specifying the asset
categories in the General Accounts and the Separate Accounts with respect to
which any of Alliance or Corporate Finance may provide advisory services in
accordance with the terms of this Agreement. As regards such asset categories
and Separate Accounts and such services, and related matters including
recommendations and communications hereunder, references to Adviser shall be to
the company so specified.
In deciding on the manner in which to recommend the assets be invested,
Adviser will act in accordance with the investment policy statements or other
similar guidelines which are furnished in writing by Client (the "Investment
Guidelines"). Adviser will make recommendations with respect to the investment
of the Accounts. Recommendations will be communicated to an appropriate
investment officer of Client and Client will make investment decisions which
will be communicated in writing or orally (in which case, they shall be promptly
confirmed in writing) to Adviser.
Where Client has instructed Adviser that it wishes to vote the proxies
for any shares of stock or other voting securities held in the Accounts, Adviser
may make recommendations to Client on the voting of such proxies.
Adviser shall use its best efforts to ensure that recommendations made
pursuant to this Agreement comply with all applicable provisions of the New York
Insurance Law of which it has been advised by Client or of which it is otherwise
aware; provided, however, that ultimate responsibility for compliance shall
remain with Client.
Nothing herein shall be deemed to preclude Client from arranging to
receive investment advisory services from other investment advisers respecting
any Client assets, including any assets in the Accounts.
SECTION 2. Investment Management Services. Adviser is hereby granted
the following power and authority with respect to the Accounts:
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Adviser is authorized to place orders for the execution of securities
transactions for the Accounts as may be recommended to and accepted by Client
with or through such brokers, dealers or issuers as Adviser may select in
accordance with Section 5 below. Adviser recognizes that it will be a fiduciary
under ERISA with respect to the Separate Accounts. Subject to those obligations
and its policy to allocate investment opportunities among clients and among the
Accounts over a period of time on a fair and equitable basis, transactions in
securities may be effected on behalf of clients of Adviser other than Client
from whom Adviser has discretionary trading or investment authority prior to the
time that recommendations for transactions in the same securities may be
communicated to Client (or executed by or on behalf of Client), and at different
prices.
Securities held in the Accounts may be loaned by Adviser to appropriate
institutions in accordance with the prior written consent of Client as set forth
in this Section 2.
In connection with its management authority over the assets of the
Accounts, Adviser will vote the proxies for all shares of stock or other voting
securities held in the Accounts, unless otherwise instructed in writing by
Client as set forth in Section 1.
Adviser shall use its best efforts to ensure that investments undertaken
pursuant to this Agreement comply with all applicable provisions of the New York
Insurance Law of which it has been advised by Client or of which it is otherwise
aware; provided, however, that ultimate responsibility for compliance shall
remain with Client.
SECTION 3. Custody and Reports to Client Records. Client will either
maintain custody itself or establish and maintain for the term of this Agreement
a custody account or accounts with The Chase Manhattan Bank, N.A. or with
another New York bank or banks mutually satisfactory to Client and Adviser (the
"Custodian") for all assets of the Accounts. All such assets shall be and remain
the property of and shall remain under the ultimate control of Client. Client
will itself and will cause the Custodian to inform Adviser promptly of all
assets placed in the Accounts and will establish reporting and accounting
arrangements such that Adviser will be fully informed at all times as to the
assets in the Accounts. Adviser shall be fully protected and indemnified by
Client in relying on such reporting and accounting arrangements. Adviser will
furnish to Client such reports as Client and Adviser may agree to in writing
from time to time. Adviser shall meet with designated representatives of Client
once each calendar quarter to review the investment performance of the Accounts
and such other matters as Client may reasonably request.
Client shall have the right to review the books, records and accounts of
Adviser relating to the assets from time to time in the Accounts upon giving
reasonable notice of
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its intent to conduct such a review. In the event of such review, Adviser shall
give to Client reasonable cooperation and access to all books, records and
accounts necessary to such review. Each party shall be and remain sole owner of
its own records, including but not limited to business and corporate records,
regardless of the use or possession by either party of the other party's
records. All records relating to the Accounts (or copies thereof) shall be
turned over to Client, or as it may direct, upon termination of this Agreement.
SECTION 4. Fee for Services. Client will pay Adviser fees for services
performed by Adviser under this Agreement in accordance with Appendix I and
Appendix II annexed to and made a part of this Agreement. The fees may be as
mutually adjusted by Client and Adviser; provided, however, that the fees for
investments receiving performance fee treatment shall continue unchanged so long
as such investments are subject to this Agreement; and provided, further, that
prior to December 31, 2003, there shall be no change in the asset-based annual
fee rates set forth in Appendix I in respect of the following General Account
asset classes: Core Public Bonds, Core Private Placements, Public High Yield
Bonds, Emerging Markets and Limited Partnerships/Enhanced Return Funds other
than those assets in such classes specifically agreed to by Client or Adviser
(together the "General Account Classes").
The total annual fees paid to Adviser pursuant to this Section 4 for
services in respect of assets in the General Account Classes plus the total
annual fees paid to Adviser with respect to the corresponding general account
asset classes managed by Adviser pursuant to the Investment Advisory Agreement,
dated as of July 22, 1993, between the Adviser and The Equitable of Colorado,
Inc., as amended, plus the annual asset-based consulting fees set forth in
Appendix I with respect to services for the DLJ Bridge facility, the DLJ Senior
Debt facility, and the alternative investments recommended by Gregoire Advisory
Services, Inc. or any successor thereto for each calendar year beginning January
1, 1999, to and including the year beginning January 1, 2003, shall not be less
than $38 million (the "Fixed General Account Aggregate Fee Amount"), provided
that for each year the Fixed General Account Aggregate Fee Amount shall be
decreased in an amount which shall be equal to the reduction in the aggregate
amount of fees actually earned in respect of any of the General Account Classes
for the relevant year, as calculated in accordance with Appendix I, to the
extent such reduction in fees is due to:
the disposition, by sale or reinsurance, by Client of a book of
insurance, such that Client ceases to own some or all of the assets in a General
Account Class;
the net reduction in General Account assets resulting from the
movement of policyholder assets from the General Accounts to separate accounts
with respect to which Adviser provides advisory services;
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the investment by Client of General Account Class assets in any of
the investment vehicles as are agreed to by Client and Adviser and listed on
Schedule 3 hereto, as such schedule is amended from time to time, net of amounts
of uninvested capital returned from such investment vehicles; or
any reduction in value of assets in General Account Classes
resulting from the writing down to fair value of the original cost of any
security held in a General Account pursuant to FASB 115 (accounting for certain
investments in debt and equity securities).
Solely in the case of an event described in (c) above, the asset-based
consulting fee rate specified in Appendix I shall not be included in the fee
rate used to calculate the applicable reduction amount.
SECTION 5. Brokerage. Adviser, in its sole discretion, will seek to
obtain the best prices and execution for all orders placed for the Accounts,
considering all circumstances. Adviser may, in the allocation of business,
consider the statistical data, research and other services furnished to Adviser
by brokers and dealers which, to the extent permitted by ERISA only in the case
of the Separate Accounts, may include affiliates of Client without having to
demonstrate that such services are of a direct benefit to the Accounts. Such
services may be used by Adviser in connection with its other advisory activities
or investment operations. The costs of using such brokers and dealers may be
somewhat higher than the costs of brokers or dealers who do not provide such
services. Transactions for the Accounts may be executed as part of concurrent
authorizations to purchase or sell the same security for other accounts served
by Adviser. When these concurrent transactions occur, Adviser's objective will
be to allocate the executions so as not to discriminate among accounts. From
time to time certain affiliates of Adviser which are broker-dealers may effect
transactions on behalf of the Separate Accounts but only if Adviser complies
with the provisions of Prohibited Transaction Exemption 86- 128 issued by the
U.S. Department of Labor under ERISA or any amendment or successor to such
Exemption. Client acknowledges that from time to time certain affiliates of
Adviser which are members of a national securities exchange may effect
transactions on behalf of the Accounts on such exchange pursuant to Section
11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder. Such
affiliates may receive compensation in connection with such transaction. Client
consents to such affiliates retaining such compensation pursuant to Section
11(a) of the Securities Exchange Act and Rule 11a2-2(T) thereunder.
SECTION 6. Representations, Warranties and Responsibilities of Adviser.
Adviser represents and warrants that each of Alliance, Corporate Finance and any
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subadviser appointed pursuant to Section 16 is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"). If either of Alliance or Corporate Finance should, at any time, cease to
be so registered, such entity will promptly notify Client. Adviser makes no
representation or warranty as to the investment performance or profitability of
the Accounts.
SECTION 7. Client Representations and Warranties. Client represents and
warrants that this Agreement has been duly authorized by all necessary action,
corporate and other, that it constitutes the legal, valid and binding obligation
of Client, and that the terms of this Agreement do not conflict with any
material obligation by which it is bound, whether arising by contract, operation
of law or otherwise.
SECTION 8. Other Activities of Adviser. It is understood that Adviser
and any of its affiliates may engage in any other business and furnish
investment management and advisory services to others who may have investment
policies similar to those followed by Adviser with respect to the Accounts.
Adviser will be free, in its discretion, to make recommendations to others, or
effect transactions on behalf of itself or for others which may be the same as
or different from those effected on behalf of the Accounts. Subject in the case
of the Separate Accounts to the requirements of ERISA, (i) nothing contained in
this Agreement shall prevent Adviser or any of its affiliates, acting either as
principal or agent on behalf of others, from buying or selling, or from
recommending to or directing any other account to buy or sell, at any time,
securities of the same kind or class directed by Adviser to be purchased or sold
for the Accounts; and (ii) it is understood that Adviser, its affiliates, and
any officer, director, stockholder, employee or any member of their families may
have an interest in a particular transaction or in securities of the same kind
or class as those whose purchase or sale Adviser may recommend or effect on
behalf of the Accounts.
Subject in the case of the Separate Accounts to its obligations as a
fiduciary under ERISA, Adviser shall not be obligated to utilize for the
Accounts any particular investment opportunity which comes to it. Unless Adviser
determines in its sole discretion that it may appropriately do so, Adviser may
refrain from purchasing on behalf of the Accounts or rendering any advice or
services concerning securities of (i) companies of which Adviser, its
affiliates, or any of its or their officers, directors, or employees are
directors or officers, (ii) companies for which Adviser or its affiliates act as
financial adviser or underwriter, or (iii) companies about which Adviser or any
of its affiliates have information which Adviser deems confidential or
non-public.
SECTION 9. Liabilities of Adviser. Adviser shall discharge its duties
with respect to the Separate Accounts hereunder solely in the interest of the
participants in the plans participating in the Accounts and their beneficiaries
with the care, skill, prudence, and
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diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. To the extent permitted by
law including in the case of the Separate Accounts the applicable provisions of
ERISA, Adviser, its affiliates, directors, officers, or employees will not be
liable for any action, omission, information or recommendation in connection
with this Agreement or investment of the Accounts, except in the case of their
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties and obligations hereunder.
SECTION 10. Assignment. No assignment, within the meaning of such term
under the Advisers Act and the rules thereunder, of this Agreement shall be made
by Adviser or Client. Alliance agrees to notify Client of any changes in the
membership of the general partner or partners of the Alliance within a
reasonable time after such change.
SECTION 11. Termination of Agreement. This Agreement will continue
through December 31, 1999. After such date this Agreement shall be effective for
successive 12- month periods unless either Client or Alliance notifies the other
in writing not later than the first day of any such 12-month period that this
Agreement shall not be renewed at the end of such period. Nonrenewal of this
Agreement by Client shall constitute a termination of this Agreement, which
termination may either be for Cause (as defined below) or not for Cause.
Notwithstanding the foregoing, after the end of the initial 12- month period,
Client may terminate this Agreement upon 90 days written notice to Alliance and
Alliance may terminate this Agreement upon 120 days written notice to Client,
and Client may terminate this Agreement at any time for Cause (as defined
below). Pursuant to various agreements with Client and its life insurance
subsidiary, The Equitable of Colorado, Inc., Alliance and Corporate Finance are
providing investment advisory services and Alliance is providing accounting,
valuation, reporting and treasury services to Client and such subsidiaries.
Client and Adviser agree that it would not be appropriate for Client or Adviser
to be able to terminate this Agreement without terminating concurrently all such
agreements. Therefore, Client and Adviser agree that a notice of termination
under this Agreement shall be deemed to be a notice of termination under each
such other agreement effective on the termination of this Agreement and that
neither Client nor Adviser shall give a termination or nonrenewal notice under
any other such agreement between Client and Adviser other than a deemed notice
of termination as a result of the giving of a notice of termination under this
Agreement. Upon termination of this Agreement, Adviser will furnish to Client a
report containing, among other things, a statement of investments of the
Accounts as of the date of termination and Client will pay to Adviser all fees
accrued and unpaid to the date of termination in accordance with Appendix I.
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If Client or Alliance gives notice of termination of this Agreement,
Client and Adviser will take all necessary steps, including, without limitation,
Adviser providing Client with access to and the opportunity to consult with
Adviser's employees, in order to facilitate a smooth transition of the records
and responsibilities so as to avoid a disruption of services to Client. Any such
transition shall begin on the giving of such termination notice, and the parties
shall use their best efforts to complete such transition by the termination
date. If such transition is not completed by the termination date and if Adviser
continues to provide services or undertake duties and responsibilities under
this Agreement, this Agreement, including without limitation the fee provisions,
shall be deemed to continue in effect with respect to the services so provided
or duties and responsibilities so undertaken.
Client anticipates that if notice of termination of this Agreement is
given, Client for itself and its subsidiaries and its and their servicers may
wish to purchase at fair value from Adviser a perpetual, royalty-free
non-exclusive license or licenses to all or part of the application, operating
and reporting software and systems used by Adviser in the performance of its
accounting, valuation, reporting and treasury services for Client and its life
insurance subsidiaries under this Agreement and the other agreements referred to
above. If notice of termination of this Agreement is given and if Client wishes
to pur chase such a license or licenses, it shall give notice in writing to
Adviser promptly after the giving of the termination notice, and Adviser agrees
to negotiate in good faith with Client the terms and conditions of such a
license or licenses. Any such license or licenses would be subject to obtaining
required approvals, if any, from third parties and to the payment of any
licensing fees to third parties.
Notwithstanding anything to the contrary herein contained, if this
Agreement is terminated when any outstanding investment is receiving D-Fund,
Side-by-Side or other performance fee treatment as provided in Appendix I, then
as to any such investment Adviser shall continue to provide investment advice to
Client and continue to receive D-Fund, Side-by-Side or other performance fee
payments, as the case may be, until such investment is disposed of by Client to
an unrelated third-party purchaser.
If Adviser terminates this Agreement for any reason, then Adviser shall
not be entitled, with respect to any period after the effective date of
termination, to any fees of any kind, including, without limitation, any fees
contemplated by Section 4. Notwithstanding anything to the contrary herein
contained, Adviser may terminate this Agreement if Client fails to pay any fees
due and owing under this Agreement and such failure remains uncured for a period
of 90 days after receipt by Client of written notice of such breach during which
period Client and Adviser shall work together to resolve any disagreement
concerning the calculation of such fees; provided, however, that if the
disagreement concerns fees for investments receiving performance fee treatment
as
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provided in Appendix I, and Client has paid the undisputed amount of all such
fees for investments receiving such treatment as to which there is no
disagreement, termination pursuant to this provision by reason thereof shall not
become effective until completion of any arbitration under Section 14 of this
Agreement with respect to the calculation of such fees unless otherwise provided
in the arbitration proceedings, and provided further that if Client has paid to
Adviser for any year the Fixed General Account Aggregate Fee Amount, as
adjusted, pursuant to the second paragraph of Section 4, then failure by Client
to pay any amount of fees in excess of such Fixed General Account Aggregate Fee
Amount, as adjusted, after the notice and cure provisions specified above have
been fulfilled, shall entitle the Adviser to terminate this Agreement, except
that such a termination shall be deemed to be a termination by Client for Cause.
For purposes of this Agreement, "Cause" shall mean willful misfeasance,
gross negligence or reckless disregard of the duties and obligations hereunder
on the part of Alliance or Corporate Finance, the material breach by Adviser of
any provision hereof, any determination by the U.S. Securities and Exchange
Commission (the "SEC"), other regulatory body or court of competent jurisdiction
materially barring or restricting Alliance and Corporate Finance, taken as a
whole, from acting as an investment adviser, or the imposition by the SEC, other
regulatory body or court of competent jurisdiction of material limitations on
the ability of Alliance and Corporate Finance, taken as a whole, to provide
services under this Agreement.
SECTION 12. Change or Modification of Agreement. This Agreement may not
be amended, changed or modified except by an instrument in writing signed by
Client and Alliance. Any such amendment, change or modification shall comply
with all applicable requirements of the New York Insurance Law.
SECTION 13. Entire Agreement Severability. This Agreement constitutes
the entire understanding and agreement between Client and Adviser relating to
the services provided for in this Agreement and supersedes all other prior
agreements and under standings, whether written or oral, between Client and
Adviser concerning this subject matter. If any term or provision of this
Agreement shall be held to be invalid or unenforceable it shall not render
invalid or unenforceable the remaining terms or provisions of this Agreement or
affect the validity or enforceability of any of the terms or provisions of this
Agreement.
SECTION 14. Arbitration. Should an irreconcilable difference of opinion
between Adviser and Client arise as to the interpretation of any matter
respecting this Agreement, it is hereby mutually agreed that such differences
shall be submitted to arbitration as the sole remedy available to both parties.
Such arbitration shall be in accordance with the rules of the American
Arbitration Association, the arbitrators shall have extensive
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experience in the insurance and/or investment advisory industries, and the
arbitration shall take place in New York, New York.
SECTION 15. Directions to Adviser and Notices. All Investment Guidelines
or general directions by Client to Adviser shall be in writing signed by the
chief investment officer of Client or his or her designee. Adviser may accept
the same as conclusive evidence of the truth and accuracy of the statements
therein contained and shall be fully protected and indemnified by Client in
relying thereon. Any Investment Guideline, direction, notice, report, or other
communication required or permitted to be furnished or given hereunder will be
furnished or given in writing and received by Client or Adviser, as the case may
be, at the following addresses:
If to Client:
The Equitable Life Assurance Society of the United States
1290 Avenue of the Americas
New York, New York 10104
addressed to the attention of the person or persons designated by Client to
receive the direction, notice, report or other communication or, in the absence
of such designation, the Secretary.
If to Alliance:
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
If to Corporate Finance:
Alliance Corporate Finance Group Incorporated
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
SECTION 16. Subadvisers. Adviser may contract with one or more direct or
indirect subsidiaries of Alliance or Albion Alliance LLC for the performance of
its obligations hereunder as an entirety or with respect to specified asset
classes or portfolios; provided, however, that the terms and conditions of such
contracts shall not be inconsistent herewith and that Adviser shall not be
relieved of its duties and obligations to Client hereunder. Adviser shall be
solely liable for all fees owed by it under any such contract, irrespective of
whether Adviser's compensation pursuant hereto is sufficient to pay such fees.
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SECTION 17. Governing Law. The provisions of this Agreement will be
construed and interpreted in accordance with the laws of the State of New York
as at the time in effect, without giving effect to the conflicts of laws
principles thereof.
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IN WITNESS WHEREOF, Adviser and Client have caused this Agreement to be
executed by their representatives as of the date and year first written above.
ALLIANCE CAPITAL MANAGEMENT L.P., or
any affiliated successor to its business
By: ALLIANCE CAPITAL MANAGEMENT
CORPORATION, its General Partner
By:
--------------------------------------
Name:
Title:
ALLIANCE CORPORATE FINANCE GROUP
INCORPORATED
By:
--------------------------------------
Name:
Title:
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
By:
--------------------------------------
Name:
Title:
<PAGE>
Schedule 1 to Amended and Restated Investment Advisory and
Management Agreement, dated as of January 1, 1999, between
Alliance Capital Management L.P., Alliance Corporate Finance
Group Incorporated and The Equitable Life Assurance Society of
the United States.
Excluded Asset Classes and Investment Products
The asset classes and investment products set forth below held or to be
held in Client's General Account are not included in the Accounts for which
Adviser is to act as investment adviser under the Amended and Restated
Investment Advisory and Management Agreement, dated as of January 1, 1999 (the
"Agreement"), notwithstanding that they are evidenced by securities or interests
in joint ventures. These excluded asset classes and investment products are not
subject to any provisions of the Agreement, including, without limitation,
Section 4 thereof.
Real Estate Assets
- Mortgage loans
- Real estate joint ventures
- Specific real-estate related securities designated by Client
- Real estate owned by Client
Assets Managed by Client's Treasurer
- Short-term investments designated by Client
Assets Managed by Client's Corporate Operations
- Securities issued by Client's affiliates, including any intercompany
notes evidencing borrowings
- Investments made pursuant to funds and programs managed or advised by
DLJ
Other Assets
- Equitable Deal Flow Fund L.P.
- Securities issued by collateralized bond obligation vehicles for
which Adviser or its affiliates act as investment adviser
- Investments made pursuant to the Community Investment Program
- Derivative Transactions with respect to assets that are in the
Accounts
S-1-1
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- Limited Partnership/Enhanced Return Funds listed below
- Equitable Diversified Holdings I
- Equitable Diversified Holdings II
- Albion Alliance Mezzanine Fund, L.P.
- The Czech Direct Equity Fund I, L.P.
- The Mercosul Equity Fund, L.P.
- Alliance Capital Funding, LLC
- Alliance Investment Opportunity Fund (U.S.), LLP
- Alliance Alpha I Partners, L.P.*
- Alliance Scan East Fund, L.P.*
- APA Excelsior III, L.P.*
- The US Promotional Fund, L.L.C.*
- Alliance Collateralized Holdings Series 1997-1: Class C Notes
- Alliance Investments, Limited: Class D Notes
- Alliance Holdings International II, Ltd.: Subordinated Notes
* Excluded as regards Investment Management and Performance-Based Fees but not
as regards Asset-Based Consulting Fees
S-1-2
<PAGE>
Schedule 2 to Amended and Restated Investment Advisory and
Management Agreement, dated as of January 1, 1999, between
Alliance Capital Management L.P., Alliance Corporate Finance
Group Incorporated and The Equitable Life Assurance Society of
the United States.
Excluded Separate Accounts
The Separate Accounts of Client described below are not included in the
Accounts for which Adviser is to act as investment adviser under this Agreement.
Pooled Separate Accounts and Single Client Separate Accounts for
which Client as investment manager has designated or hereafter
designates Lend Lease Real Estate Investments, Inc. as its investment
adviser.
Pooled Separate Accounts Nos. 20 (Quantitative International
Portfolio), 21 (The Pacific Basin Portfolio) and 22 (Fundamental
International Portfolio) for which Client as investment manager has
designated third parties as its investment advisers.
Pooled Separate Accounts and Single Client Separate Accounts for
which Client as investment manager has designated or hereafter
designates third parties as its investment advisers with respect to
such accounts.
S-2-1
<PAGE>
Schedule 3 to Amended and Restated Investment Advisory and
Management Agreement, dated as of January 1, 1999, between
Alliance Capital Management L.P., Alliance Corporate Finance
Group Incorporated and The Equitable Life Assurance Society of
the United States.
Investment of General Account Classes in Investment Vehicles
This Schedule 3 is to be amended from time to time pursuant to Section
4(c) of the Agreement
S-3-1
<PAGE>
Appendix I to Amended and Restated Investment Advisory and
Management Agreement, dated as of January 1, 1999, between
Alliance Capital Management L.P., Alliance Corporate Finance
Group Incorporated and The Equitable Life Assurance Society of
the United States.
Fees for Services
Adviser will receive from Client fees according to this Appendix.
Asset-based fees are based on the carrying value determined in accordance with
generally accepted accounting principles ("GAAP") of assets held pursuant to
this Agreement or, in the case of derivatives of assets not otherwise in the
Accounts on the related notional values, as of the beginning of the billing
period; except that (i) all fixed maturities are to be valued at amortized cost
determined in accordance with GAAP and (ii) asset-based fees for Side-by-Side
Investments are based on the Book Value (under Statutory Accounting) of such
investments. Asset-based fees will be billed quarterly at 1/4 the annual rate
stated on the attached schedule. Performance fees will be calculated and billed
as provided herein. All such bills shall be due and payable within 30 days of
the date of the respective invoice.
Overdue bills will accrue interest on the unpaid balance at a
compounded interest rate which is the equivalent of the prime rate announced
from time to time by The Chase Manhattan Bank, N.A. if not paid by the due date.
Such interest shall not accrue on any billed amounts which are the subject of a
good faith dispute the parties agree to use their best efforts to resolve.
Fees applicable to periods shorter than a calendar month or, in the
case of those billed quarterly, a calendar quarter due to circumstances such as
either the effective date of this Agreement or termination of this Agreement
will be prorated either from the effective date or to the termination date,
whichever is appropriate, and will be based on the value of investments held
under this Agreement as of either the end of the short period or the termination
date, whichever is appropriate.
In computing the market value of any investment held under this
Agreement, each security listed on a national securities exchange shall be
valued at the last quoted sale price on the valuation date on the principal
exchange on which such security is traded, if such is available; however, if no
such price shall be available and in the case of any other security or asset
such securities or assets shall be valued in a manner determined in good faith
by Adviser to reflect its fair market value.
A-I-1
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Fee computations at the end of each relevant period shall be adjusted
to correct for any accounting errors or omissions made during that or any prior
period and not otherwise corrected and adjusted for in a prior fee computation.
A. Schedule of Asset-Based Fees
Asset Class Annual Fee
- ----------- ----------
Core Public Bonds 8 Basis Points
Publicly Traded Securities and Preferred Stock
(including securities received in exchange for Rule 144A
securities) and the cash and cash-equivalent proceeds
thereof not withdrawn by Client
Core Private Placements 16.5 Basis Points
Privately Placed Securities and Preferred Stock
Common Stock 20 Basis Points
Convertible Bonds 35 Basis Points
Limited Partnerships/Enhanced Return Funds 30 Basis Points
Enhanced Private Placements 35 Basis Points
Direct enhanced return investments designated as such
by Client after January 1, 1995
Investments prior to January 1, 1995 in bank
participations and assignments and in privately
placed NAIC Grade 3 securities
Public High Yield Bond Portfolio
This portfolio is comprised of assets and investments 45 Basis Points for
designated by Client as part of this portfolio, first $500 million,
primarily investments in publicly traded below 40 Basis Points for
investment grade securities and secondarily in excess
privately placed below investment grade securities,
of the non-cash proceeds from the disposition of any
of such securities such as convertible and equity
securities, and of cash proceeds thereof not
withdrawn by Client. The investments made for this
portfolio shall not be subject to any other asset-
based fees contained in this Agreement.
A-I-2
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Emerging Markets 50 Basis Points
Sovereign and Corporate Emerging Market Debt
B. Derivatives Fees
Derivatives Transactions with respect to 8 Basis Points per
assets not otherwise in the Accounts annum for the first
year and 2 Basis
Points per annum for
each succeeding year
C. Asset-Based Consulting Fees
Consulting for portfolio strategies and on tax and 2 Basis Points per
regulatory issues, working with Client on cash flow annum on the total
management, and reviewing with and reporting to Client value of assets
except more frequently than monthly swaps using the asset
bases used for each
fee category
D. Special Portfolios
A-I-3
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1. Side-by-Side Investments
Investments, together with any investments received as a result of
restructuring of such investments, designated for purposes of the Equitable
Capital Agreement (as defined below) as Side-by-Side Investments ("Side-by-Side
Investments") shall accrue a fee for the life of such investments comprised of
an Asset-Based Fee and a Performance-Based Fee, each described below. The total
of the pro rata interests of each investment segment of Client in Side-by-Side
Investments made in any calendar year and any investments received as a result
of restructuring such investments, is herein denominated a "Side-by- Side
Calendar Year Portfolio." The Side-by-Side Calendar Year Portfolios shall be
considered as discrete pools for the purposes of the Asset-Based Fee and
Performance- Based Fee calculations stated below. Such fee calculations shall
not be applicable to any other such pool or any other investments nor shall any
other fees provided in this Agreement, other than Service Based Fees, be
applicable to the Side-by-Side Calendar Year Portfolios.
A-I-4
<PAGE>
Transaction Fees. Client will be paid its pro rata share of 80% of any
transaction or other third party fees paid to Adviser in connection with
Side-by-Side Investments.
Adviser will retain 20% of such fees.
Asset-Based Fee. Each Side-by-Side Calendar Year Portfolio shall incur
an Asset-Based Fee at an annual rate of 10 Basis Points of the Book Value (under
Statutory Accounting) of the Side-by-Side Investments (payable quarterly, as
provided above), provided that:
a) Write-downs reflecting a significant deterioration in
creditworthiness as reflected on the statutory accounting
records of Client will be reflected in the valuation.
b) Written down instruments, including those written down before
the date of this agreement, may be subsequently written up as
reflected on the statutory accounting records of Client by an
amount not to exceed the amount of the original write-downs.
Performance-Based Fee. The Performance-Based Fee shall be computed and
paid at the end of each calendar year and shall not be computed on a cumulative
basis. It will be computed separately on each Side-by-Side Calendar Year
Portfolio as follows:
1. The "Portfolio Gain (Loss)" and the "Hurdle Amount" will be
calculated as defined below.
2. If the Portfolio Gain (Loss) minus the Hurdle Amount minus any
"Performance Credits" (as defined below) is positive it will be
termed the "Net Performance Gain." If the Portfolio Gain (Loss)
minus the Hurdle Amount minus any "Performance Credits" is
negative, it will be termed the "Net Performance Loss."
3. If a "Net Performance Gain" occurs, the Performance-Based Fee will
be equal to 20% of the Net Performance Gain.
4. If a "Net Performance Loss" occurs, no Performance-Based Fee will
be earned on the this Side-by-Side Calendar Year Portfolio for the
current calendar year. Instead, the Net Performance Loss will be
applied to future Performance-Based Fee calculations in the same
Side-by-Side Calendar Year Portfolio as follows:
A-I-5
<PAGE>
a) A "Performance Credit" will be computed equal to one seventh
of the "Net Performance Loss."
b) This "Performance Credit" will be subtracted from the annual
calculation of Net Performance Gain (Loss) (as described in
#2 above) in the same Side-by-Side Calendar Year Portfolio in
which the Performance Credit was generated (as described in
#2 above) in each of the next seven years or until all
securities in the same Side-by-Side Calendar Year Portfolio
are liquidated, whichever occurs first.
Performance Credits shall be deemed to include outstanding performance
credits, if any, for purposes of performance fee calculations under the
investment advisory and management agreement between Client and Equitable
Capital Management Corporation (the "Equitable Capital Agreement") which this
agreement replaces.
For Side-by-Side Calendar Year Portfolios established through 1989, a
Net Performance Gain can occur (and a Performance-Based Fee would be earned) in
the event of a Portfolio Loss if the Hurdle Amount is negative by an amount
greater than the Portfolio Loss and any applicable Performance Credits are less
than the amount of such difference.
Portfolio Gain (Loss) means for each Side-by-Side Calendar Year
Portfolio during the computation period, the sum of any realized gains, earned
or accrued interest and dividends, interest accrued on original issue discount
instruments, any write-ups as provided in b) of the definition of "Asset-Based
Fee" above minus any realized losses and any write-downs as provided in a) of
such definition.
For Side-by-Side Calendar Year Portfolios established through 1989, the
term "Hurdle Amount" means the sum of interest earned or accrued and any deemed
realized gains minus any deemed realized losses during each computation period
on the Client's pro rata share of a notional portfolio of U.S. Treasury
securities ("Treasury Securities") selected by Adviser from those currently
issued at the time a Side-by-Side Investment is committed with maturity and
payment characteristics most closely matching each Side- by-Side Investment and
in equivalent amount. The initial notional portfolio shall be carried over from
the Equitable Capital Agreement. With respect to equity investments, the
notional investments will be seven-year zero coupon Treasury Securities of
equivalent amount. If at the end of such seven year period, such equity
investment is still held in the Side-by-Side Calendar Year Portfolio, the
hypothetical proceeds of the maturing zero coupon Treasury Security will be
deemed reinvested in another seven-year zero coupon Treasury Security currently
issued at such time. If and when a security is written down or sold from the
Side-by-Side Calendar Year Portfolio, the corresponding notional Treasury
A-I-6
<PAGE>
Security or Securities shall be deemed to have been sold at its market value at
such time. The Hurdle Amount may be positive or negative.
For Side-by-Side Calendar Year Portfolios established in 1990 and years
following, the term "Hurdle Amount" means the interest that would have been
earned or accrued during the computation period on seven-year Treasury
Securities selected by Adviser from those currently issued at the time each
investment for the Side-by-Side Calendar Year Portfolio is committed in an
equivalent amount. Such interest is deemed to be earned as long as the
corresponding actual investment is held in the Side-by-Side Calendar Year
Portfolio.
A separate Hurdle Amount will be computed for each Side-by-Side
Calendar Year Portfolio.
Notwithstanding anything to the contrary in this Section D.2.
Side-by-Side Investments, if (i) a Side-by-Side Calendar Year Portfolio
established through 1989 (the "Portfolio") has a Net Performance Gain for a
calendar year or has a Net Performance Loss for such year but would have a Net
Performance Gain for such year after giving effect to this paragraph, (ii) a
debt security (including for this purpose a redeemable preferred stock treated
as debt under generally accepted account principles ("GAAP")) (the "Debt
Security") was sold from the Portfolio during such year, (iii) a deemed gain was
realized on the deemed sale of the notional Treasury Security or Securities
corresponding to the Debt Security, (iv) such deemed gain exceeded the gain, if
any, on the sale of the Debt Security (such excess being referred to herein as
the "Notional Performance Loss"), and (v) gains in excess of the Notional
Performance Loss are reasonably expected by the Adviser in its sole discretion
to be realized by the Portfolio on future sales of equity securities (common
stock, warrants and preferred stock not treated as debt under GAAP) then
included in the Portfolio and part of or derived from the investment which
included the Debt Security sold (the "Equity Securities") in calendar years in
which the Portfolio has Net Performance Gains, then the Notional Performance
Loss will be excluded in computing the Net Performance Gain (Loss) for such
Portfolio for such calendar year and subtracted only in computing Net
Performance Gain (Loss) in one or more future calendar years. The Notional
Performance Loss so deferred will be subtracted in computing the annual Net
Performance Gain (Loss) for the Portfolio in the future calendar year or years
in which the Portfolio disposes of the Equity Securities. The percentage of the
deferred Notional Performance Loss to be subtracted in any such calendar year
will be equal to the percentage of the Equity Securities disposed of in such
year; provided that if the Equity Securities are written down to zero in such
calendar year 100% of the remaining deferred Notional Performance Loss will be
subtracted in such calendar year. If the Equity Securities are comprised of more
than one type of security, the percentage disposed of in any calendar year will
be determined by converting at the
A-I-7
<PAGE>
applicable time or times the types of securities other than common stock into an
equivalent number of shares of common stock.
2. Mezzanine Private Placement Portfolio
Client will, from time to time, designate assets as part of the
Mezzanine Private Placement Portfolio (the "Mezzanine Portfolio"). Investments
made in any calendar year as part of the Mezzanine Portfolio, together with any
investments derived therefrom, (a "Mezzanine Calendar Year Portfolio") shall be
considered as one discrete pool for the purposes of the Mezzanine Portfolio
Asset-Based Fee, the Mezzanine Portfolio Net Income Performance-Based Fee and
the Mezzanine Portfolio Net Gain Performance- Based Fee, each described below.
Notwithstanding the foregoing, the 1995 Mezzanine Calendar Year Portfolio shall
include certain investments designated by Client that were made in 1994. Such
Mezzanine Portfolio fees shall not affect any other investments. The investments
made for the Mezzanine Portfolio shall not be subject to any other asset-based
or performance-based fees contained in this Agreement notwithstanding the
applicability of such fees to the same or similar type investments as those made
for the Mezzanine Portfolio. The Performance-Based Fees cannot be negative.
Mezzanine Portfolio Asset-Based Fee. The Mezzanine Portfolio will incur
an Asset-Based Fee for the life of such investments of 35 Basis Points per annum
on the value of the Mezzanine Portfolio determined in the manner set forth in
the first paragraph of this Appendix I.
Mezzanine Portfolio Net Income Performance-Based Fee. The Mezzanine
Portfolio will incur a Net Income Performance-Based Fee for the life of such
investments. For each calendar year, the Net Income Performance-Based Fee for
any Mezzanine Calendar Year Portfolio shall be 20% of the excess, if any, of the
Net Income of such Portfolio over the Notional Income of such Portfolio.
Income for any period means the sum of accrued interest income
adjusted for amortization of premium and accrual of discount,
dividend income, and transaction and other third party fees earned
during the period in accordance with generally accepted accounting
principles.
Notional Income for any period means the interest that would have
been earned during the period in accordance with generally accepted
accounting principles on a notional portfolio of U.S. Treasury
securities if the yield on such securities were the Yield on such
securities plus 200 basis points. The notional portfolio shall
include for each investment in a Mezzanine Calendar Year Portfolio a
seven-year Treasury security selected by Adviser from those currently
issued at
A-I-8
<PAGE>
the time such investment is committed in an initial equivalent amount
and having payment characteristics most closely matching at such time
an equivalent investment by Client in Treasury securities in
accordance with the Investment Guidelines. If an investment in the
Mezzanine Calendar Year Portfolio, and any securities derived from
such investment,
(i) is paid or sold in whole or in part or written down to
zero, the matching Treasury security or a proportionate part thereof,
as the case may be, shall be removed from the notional portfolio, or
(ii) is written down but not to zero, the matching Treasury
security shall not be deemed to be written down but shall be deemed
to continue to be outstanding without reduction in principal amount
because of such writedown and to have the same maturity and payment
characteristics.
If the Treasury security matching an investment in a Mezzanine Calendar
Year Portfolio matures before such investment is paid or sold in its entirety,
such Treasury security shall be replaced by a new seven-year Treasury security
selected by Adviser in an initial amount equivalent to and having payment
characteristics most closely matching the Treasury security being replaced.
Yield for any Treasury security included in the notional portfolio
means the yield on such security at the time the related investment is committed
for inclusion in a Mezzanine Calendar Year Portfolio or, if the Treasury
security replaces a Treasury security included in the notional portfolio, at the
time the Treasury security being replaced matures.
The Net Income Performance-Based Fee for each calendar year shall be
calculated at the end of each calendar quarter based on results through that
quarter and billed quarterly. If the cumulative annual fee for a Mezzanine
Calendar Year Portfolio at the end of any quarter after the first is less than
the fees paid for the prior quarters in such year, Client may offset the excess
paid against any other fees otherwise payable to Adviser whether or not in
connection with such Portfolio.
Net Gain Performance-Based Fee. The Mezzanine Portfolio shall incur a
Net Gain Performance-Based Fee for the life of such investments. For each
calendar year, the Net Gain Performance-Based Fee for any Mezzanine Calendar
Year Portfolio shall be 10% of (i) the Cumulative Net Gains, if any, of such
Portfolio as of the end of such year in excess of the Asset Incentive Reserve
for such Portfolio as of the end of such year, minus (ii) that part, if any, of
such Cumulative Net Gains with respect to which Net Gain Performance-Based Fees
were incurred by such Portfolio for prior years.
A-I-9
<PAGE>
Cumulative Net Gains (Losses) of a Mezzanine Calendar Year Portfolio
means realized gains on cash sales of investments net of realized
losses and writedowns determined in accordance with generally
accepted accounting principles on a cumulative basis from the
inception of the Portfolio, except that any losses realized on cash
sales of bonds not initiated by Adviser's recommendation will be
excluded.
Asset Incentive Reserve for a Mezzanine Calendar Year Portfolio means
a reserve for future Cumulative Net Losses, if any, to which
Cumulative Net Gains (Losses) of such Portfolio shall be credited or
charged, as the case may be, subject to a maximum equal at the end of
any calendar year to a percentage of the value of such Portfolio as
of the end of such year determined in the manner set forth in the
first paragraph of this Appendix I which percentage shall be 10%
until the value of such Portfolio is less than 50% of its value as of
the end of the calendar year in which it was established (e.g.,
December 31, 1995 for the 1995 Mezzanine Calendar Year Portfolio)
determined in such manner and thereafter shall be 20%. If a Mezzanine
Calendar Year Portfolio has Cumulative Net Losses at the time all of
the investments and any securities derived from such investments, in
such Portfolio have been paid, sold or written off in their entirety,
such Cumulative Net Losses shall be charged in chronological order
against Asset Incentive Reserves established for other Mezzanine
Calendar Year Portfolios.
E. Schedule for Service-Based Fees
Services Annual Fee
- -------- ----------
Non-Equitable legal and Costs incurred will be passed
consulting services required for through directly to the
private placement workouts Client*
(Client to be notified of these costs
as they are incurred)
- ------------
* At the request of Client, Adviser will (i) review with Client specified
legal bills (both non-Equitable and Law Department) to assist Client in
determining the appropriateness of those bills, and (ii) together with
representatives of outside counsel or the Law Department assist Client in
estimating future legal expenses to be incurred in connection with specified
transactions.
A-I-10
<PAGE>
Equitable Law Department Costs incurred will be passed
services for insurance company through directly to the Client.
regulation compliance and review
DLJ Bridge Fund Services for 2 Basis Points per annum on
administration and tracking, the total value of assets in the
prepare statutory reports and fund determined in the
handle the settlement of all bridge manner set forth in the first
transactions paragraph of this Appendix I,
billable and payable in the
same manner as asset-based
fees
A-I-11
<PAGE>
Appendix II to Amended and Restated Investment Advisory and
Management Agreement, dated as of January 1, 1999, between
Alliance Capital Management L.P., Alliance Corporate Finance
Group Incorporated and The Equitable Life Assurance Society of
the United States.
Fees due to Adviser for
Managing Separate Accounts for Client
Adviser will receive from Client fees according to this schedule.
Unless otherwise indicated, fees are based on the market value of assets held
pursuant to this Agreement as of the end of the calendar month and are
calculated at 1/12 of the annual rates stated in this schedule. Such fees are
billed monthly by Adviser within 30 days of the end of the month. All such bills
shall be due and payable within 30 days of the date of the respective invoice.
Overdue bills will accrue interest on the unpaid balance at a
compounded interest rate which is the equivalent of the prime rate announced
from time to time by The Chase Manhattan Bank, N.A. if not paid by the due date.
Such interest shall not accrue on any billed amounts which are the subject of a
good faith dispute the parties agree to use their best efforts to resolve.
Fees applicable to periods shorter than a calendar month due to
circumstances such as either the effective date of this Agreement or termination
of this Agreement will be prorated either from the effective date or to the
termination date, whichever is appropriate, and will be based on the value of
investments held under this Agreement as of either the end of the short period
or the termination date, whichever is appropriate.
In computing the market value of any investment held under this
Agreement, each security listed on a national securities exchange shall be
valued at the last quoted sale price on the valuation date on the principal
exchange on which such security is traded, if such is available; however, if no
such price shall be available and in the case of any other security or asset
such securities or assets shall be valued in a manner determined in good faith
by Adviser to reflect its fair market value.
Fee computations at the end of each relevant period shall be adjusted
to correct for any accounting errors or omissions made during that or any prior
period and not otherwise corrected and adjusted for in a prior fee computation.
A-II-1
<PAGE>
The Adviser is due a fee for managing the Separate Accounts for which
Adviser acts as investment adviser under this Agreement which is equal to 100%
of the fees payable to Client by participants in such Separate Accounts pursuant
to their contracts with Client, subject to the following exceptions:
1. Retirement Investment Account and EQUI-PEN-PLUS products
The fee for assets invested in Pooled Separate Accounts 3 (Aggressive
Stock), 4 (Growth Stock), 10 (Strategic Balanced) and 13 (Intermediate Duration
Bond) by Client with respect to its Retirement Investment and EQUI-PEN-PLUS
products shall be calculated by applying the following rate schedule to the
combined market value of all assets so invested.
Rate Schedule
First $2,000,000/85 basis points
Next 3,000,000/60 basis points
Next 5,000,000/40 basis points
Next 15,000,000/30 basis points
Next 75,000,000/25 basis points
Over 100,000,000/20 basis points
A 15 Basis Point surcharge shall be applied to assets invested in
Separate Account 3.
2. Association Plans
(a) For each Single Client Separate Account for an Association Plan client,
whether established before or after the date of this Agreement, the fee
shall be negotiated by Client and Adviser.
(b) The fee for assets invested in Pooled Separate Accounts 3 (Aggressive
Stock), 4 (Growth Stock) and 10 (Strategic Balanced) made by Client with
respect to its Association Plans shall be calculated by applying the
rate
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<PAGE>
schedule set forth in Paragraph 1 above to the combined market value of
all assets so invested on the prior month end.
3. International Fund
The fee otherwise payable with respect to Separate Account 24
(International) shall be reduced by the fees payable to third parties acting as
investment advisers with respect to Separate Accounts 20 (Quantitative
International Portfolio), 21 (The Pacific Basin Portfolio) and 22 (Fundamental
International Portfolio).
4. Short Term Fund (Lend Lease)
That portion of the assets in the Pooled Separate Accounts and Single
Client Separate Accounts as to which Lend Lease Real Estate Investments, Inc.
("Lend Lease") has been designated by Client as its investment adviser that
consists of cash or cash equivalents is invested in Separate Account 2A as to
which Adviser is the investment adviser and provides securities accounting
services under this Agreement. The fee payable to Adviser with respect to
Separate Account 2A shall be calculated on average daily net asset value at the
annual rate of 8.5 Basis Points up to $200 million and of 5 Basis Points on the
excess over $200 million and shall be billed to Lend Lease and paid by it out of
the advisory fees Lend Lease receives from Client with respect to the Separate
Accounts managed by it.
6. Annuity Separate Accounts
For purposes of this Agreement, Annuity Separate Accounts include
assets invested in Single Client Separate Accounts 137 (Equitable Retirement),
146F (Colgate Palmolive), 148 (New Yorker Magazine), 159 (Foster Wheeler), 185
(Equitable Retirement) and 192 (Major League Baseball) and assets invested by
Client in Pooled Separate Accounts pursuant to contracts with Client established
to support annuity commitments made by the contractholders. On the date of this
Agreement, Client has such contracts with Ethyl, Batus, Benjamin Moore, Quaker
State and Rockefeller Group. The fees for assets invested in Annuity Separate
Accounts shall be calculated in the same manner as the fees for such assets
payable to Equitable Capital Investment Corporation ("ECMC") were calculated
under the investment advisory
A-II-3
<PAGE>
agreement dated January 2, 1987 between Client and ECMC as amended by letter
agreements dated July 6, 1988 and July 1, 1991 that this Agreement replaces and
as modified with respect to Single Client Separate Account 146F (Colgate
Palmolive) as described in a memorandum dated March 6, 1992 from ECMC to Client.
A-II-4
EXHIBIT 10.4
FORM OF AMENDED AND RESTATED ACCOUNTING, VALUATION, REPORTING AND
TREASURY SERVICES AGREEMENT
[DRAFT OF AUGUST 2, 1999]
1
<PAGE>
As of January 1, 1999
The Equitable Life Assurance Society of the United States
1290 Avenue of the Americas
New York, NY 10104
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
Dear Sir or Madam:
Alliance Capital Management L.P. (together with any affiliated successor to its
business, "Servicer") and The Equitable Life Assurance Society of the United
States ("Client") hereby confirm our mutual agreement as set forth below.
Client desires to avail itself of Servicer's experience, assistance and
facilities with respect to certain accounting, valuation and reporting and
treasury services set forth on Schedules A through E, annexed to and made part
of this Agreement, to be provided for Client's General Account and certain of
its Separate Accounts specified in such schedules. Servicer is willing to
perform such services upon the terms and conditions set forth below.
1. Client agrees to pay Servicer's fees (the "Fees") for providing
the services set forth on Schedules A through E. During the initial 12-month
period of this Agreement, as amended and restated, the annual Fees for the
services set forth on Schedules A through D will be as set forth below and the
annual Fee for the services set forth on Schedule E will be determined in
accordance with the fee rate section of Schedule E.
Schedule A For these services provided for the assets in the General
Account and Separate Accounts 43, 46 and 48 (the "Primary Assets"),
$4,146,000. Client agrees to pay bank custody fees.
Schedule B For these services provided for (i) Association Plan assets as
to which neither Servicer nor a subsidiary of Servicer provides investment
advisory services (the "Unmanaged Association Plan Assets") and (ii)
Annuity Separate Account assets as to which neither Servicer nor its
subsidiary provides investment advisory services, $15,000 for Mellon Bank
Account 157, $20,000 each for British American Account 176A and Ethyl
Corp. Account 177A, and $30,000 for each other Association Plan account or
Annuity Separate Account with another investment adviser. Client also
agrees to pay with respect to these assets outside audit fees and bank
custody fees (unless the contract with Client's client provides that such
charges shall be borne by such client).
Schedule C For these services provided for Association Plan assets in
Pooled Separate Accounts as to which Servicer or its subsidiary provides
investment advisory services, $15,000 for each Association Plan account.
2
<PAGE>
Schedule D For these services provided for assets in (i) the investment
divisions of Separate Account A and of Separate Account 301 which invest
in the corresponding portfolios of The Hudson River Trust and (ii)
Equipension Q and G which participate in Pooled Separate Accounts 4 and 5
as to which Servicer or its subsidiary provide investment advisory
services, $164,000.
Schedule E For these treasury services provided for the Primary Assets
and the Unmanaged Association Plan Assets, the fee determined by applying
the fee rate schedule of Schedule E separately to the Primary Assets
allocated to each segment of Client's General Account as to which Servicer
or its subsidiary provides investment advisory services, to the invested
assets in Client's General Account as to which Client's Treasurer provides
investment advisory services, and to the Unmanaged Association Plan
Assets.
The Fees for each successive 12-month period in which this Agreement, as amended
and restated, is in effect will be adjusted as mutually agreed by Client and
Servicer. It is understood that the Fees are based upon certain assumptions
relating to the number of accounts, transactions and assets. It is agreed that
if the nature of these services change at any time during any 12-month period,
otherwise than solely as a result of an increase in asset base, then Servicer
shall receive from Client an increase for providing services under this
Agreement for such period. All adjustments to the Fees in subsequent periods or
for changes in the nature of the services during any period shall be based on
either (i) fees being charged by Servicer to other clients for similar services,
or (ii) if Servicer is not providing similar services to other clients, then on
Servicer's costs (direct and indirect) and expenses incurred in furnishing
services pursuant to this Agreement. In determining such costs and expenses,
specific identification or estimates based on time, company assets, square
footage or other mutually agreeable methods providing for a fair and reasonable
allocation of costs may be used, provided such method is in conformity with
generally accepted accounting principles and with the requirements of Section
1505(a) of the New York Insurance Law and New York Insurance Department
Regulation No. 33.
2. The monthly amount due is calculated at 1/12 of that 12-month
period's annual amount due on the Fees and shall be billed within 15 days of the
end of the preceding calendar month. Each bill shall be due and payable on the
thirtieth day after the end of the preceding calendar month and will accrue
interest on the unpaid balance from the due date at a compounded interest rate
which is the equivalent of the prime rate announced from time to time by The
Chase Manhattan Bank, N.A. if not paid by the due date. If the initial period is
shorter than a calendar month, the amounts due for such period are the monthly
payments prorated to the end of the calendar month. The amounts due for periods
shorter than a calendar month due to termination of this Agreement are the
monthly amounts prorated to the termination date. Such amounts are due and
payable upon termination of this Agreement.
3. Client shall have the right to conduct a review of the books,
records and accounts of Servicer relating to provision of services hereunder
upon giving reasonable notice of its intent to conduct such a review. In the
event of such review, Servicer shall give to Client reasonable cooperation and
access to all books, records and accounts necessary to the review.
4. Each party shall be and remain sole owner of its records,
including but not limited to business and corporate records, regardless of the
use or possession by either party of the other party's records in connection
with the services provided under this Agreement. Upon termination of this
3
<PAGE>
Agreement, Servicer shall deliver to Client, or as Client may direct, all of
Client's records held by it in the course of providing services under this
Agreement.
5. Should an irreconcilable difference of opinion between Servicer
and Client arise as to the interpretation of any matter respecting this
Agreement, it is hereby mutually agreed that such differences shall be submitted
to arbitration as the sole remedy available to both parties. Such arbitration
shall be in accordance with the rules of the American Arbitration Association,
the arbitrators shall have extensive experience in the insurance and/or
investment advisory industries, and the arbitration shall take place in New
York, New York.
6. No assignment of this Agreement shall be made by either party,
except that the Servicer may assign this Agreement to an affiliated successor to
its business.
7. Servicer may contract with one or more of its wholly owned
subsidiaries for the performance of its obligations hereunder, provided that the
terms and conditions of such contracts shall not be inconsistent herewith and
that Servicer shall not be relieved of its duties and obligations to Client
hereunder. Servicer shall be solely liable for all fees owed by it under any
such contract, irrespective of whether Servicer's compensation pursuant hereto
is sufficient to pay such fees.
8. This Agreement will continue through December 31, 1999. After such
date this Agreement shall be effective for successive 12-month periods unless
either Client or Servicer notifies the other in writing not later than the first
day of the then current 12-month period that this Agreement shall not be renewed
at the end of such period. Notwithstanding the foregoing, after the end of the
initial 12-month period, Client may terminate this Agreement upon 90 days
written notice to Servicer and Servicer may terminate this Agreement upon 120
days written notice to Client. Pursuant to various agreements with Client and
its life insurance subsidiary, The Equitable of Colorado, Inc., Servicer and
Alliance Corporate Finance Group Incorporated, an indirect wholly owned
subsidiary of Servicer, are providing investment advisory services and Servicer
is providing accounting, valuation, reporting and treasury services to Client
and such subsidiaries. Client and Adviser agree that it would not be appropriate
for Client or Adviser to be able to terminate this Agreement without terminating
concurrently all such agreements. Therefore, Client and Servicer agree that
neither Client nor Servicer shall give a notice of termination or notice of
nonrenewal under this Agreement other than a deemed termination notice as a
result of the giving of a notice of termination or notice of nonrenewal under
the Amended and Restated Investment Advisory and Management Agreement, dated as
of January 1, 1999, between Servicer and Alliance Corporate Finance Group
Incorporated, as adviser, and Client (the "Investment Advisory and Management
Agreement") or a termination notice pursuant to the third paragraph of this
section 8. Upon termination of this Agreement Client will pay to Servicer all
fees accrued and unpaid to the date of termination.
If Client or Servicer gives notice of termination of this Agreement,
Client and Servicer will take all necessary steps, including, without
limitation, Servicer providing Client with access to and the opportunity to
consult with Servicer's employees, in order to facilitate a smooth transition of
the records and responsibilities so as to avoid a disruption of services to
Client. Any such transition shall begin on the giving of such termination
notice, and the parties shall use their best efforts to complete such transition
by the termination date. If such transition is not completed by the termination
date and if
4
<PAGE>
Servicer continues to provide services or undertake duties and
responsibilities under this Agreement, this Agreement, including without
limitation the fee provisions, shall be deemed to continue in effect with
respect to the services so provided or duties and responsibilities so
undertaken.
If this Agreement is deemed to be terminated as a result of a
termination notice by Servicer under the Investment Advisory and Management
Agreement, then Servicer shall not be entitled with respect to any period after
the effective date of termination, to any fees of any kind other than any fees
contemplated by the following paragraph, including, without limitation, any fees
contemplated by Section 1. Notwithstanding anything to the contrary herein
contained, Servicer may terminate this Agreement if Client fails to pay any fees
due and owing under this Agreement and such failure remains uncured for a period
of 90 days after receipt by Client of written notice of such breach during which
period Client and Servicer shall work together to resolve any disagreement
concerning the calculation of such fees, provided that termination pursuant to
this provision shall not become effective until completion of any arbitration
under Section 5 of this Agreement with respect to the calculation of such fees
unless otherwise provided in the arbitration proceedings.
If this Agreement is deemed to be terminated or not renewed (i) by
Client as a result of a termination by Client of the Investment Advisory and
Management Agreement other than for Cause (as defined in the Investment Advisory
and Management Agreement) prior to December 31, 2003, or (ii) by Servicer
pursuant to the second full sentence of the fifth paragraph of Section 11 of the
Investment Advisory and Management Agreement, other than a termination which is
a termination by Client for Cause under such agreement, prior to December 31,
2003, then Client agrees, in recognition of Servicer's willingness to provide
such services until December 31, 2003, that it will pay Servicer a one-time fee,
depending on the date of termination set forth below, for the transfer of books
and records and such systems as are agreed by Client and Servicer, for the
opportunity to consult with Servicer's employees and for the facilitation by
Servicer of the transfer of responsibilities hereunder by Servicer to Client or
such other person as may be designated by Client:
Date of Termination Fee
------------------- ---
Prior to 12/31/99 $80,000,000
1/1/00 to 12/31/00 $60,000,000
1/1/01 to 12/31/01 $40,000,000
1/1/02 to 12/31/02 $20,000,000
1/1/03 to 12/31/03 $10,000,000
9. This Agreement shall not be amended, changed or modified except by
an instrument in writing signed by Client and Servicer. Any such amendment,
change or modification shall comply with all applicable requirements of the New
York Insurance Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of New York.
If you agree to the foregoing, kindly sign the enclosed copy of this letter of
agreement and return the copy so signed.
ALLIANCE CAPITAL MANAGEMENT L.P., or ANY
AFFILIATED SUCCESSOR TO ITS BUSINESS
5
<PAGE>
By ALLIANCE CAPITAL MANAGEMENT
CORPORATION,
its General Partner
By:
-----------------------------------
Name:
Title:
Accepted as of the date first
above written
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By:
-----------------------------------
Name:
Title:
6
<PAGE>
SCHEDULE A
SERVICES PROVIDED FOR THE ASSETS IN THE GENERAL ACCOUNT AND SEPARATE
ACCOUNTS 43, 46 & 48
STATUTORY, GAAP AND OTHER REPORTS AND JOURNAL ENTRIES PREPARED FOR THE
CONTROLLER'S DEPARTMENT
REPORTS, JOURNAL ENTRIES, ETC. FREQUENCY
- ------------------------------ ---------
Journal entries to record all transactions and activity Monthly
related to said assets, purchases, sales, amortization of
premiums, accrual of discounts, profits and losses, equity
trading portfolios, equity in subsidiaries (including ERAC),
bonds held for sale, short-term reclassification for cash
equivalents, joint ventures (equity basis earnings, capital
contributions/distributions, unrealized foreign exchange
gain/loss, Deal Flow Fund) open block/closed block
calculations, , etc.
Turn around documents - securities suspense Monthly
Securities suspense memorandum Monthly
Collected income on bonds & stocks Monthly
Asset valuation reserve ("AVR") and income maintenance reserve Quarterly
("IMR") aggregate and by segments (detail schedules by
maturity and by IY)
Joint venture AVR report and Deal Flow Fund look through Quarterly
Joint venture AVR look through for all JVs Annually
Securities carried in foreign currency and sales Monthly
Federal Reserve Form S foreign securities Monthly
Accrual Journals Monthly
- - Interest due & accrued on bonds
- - Dividends due and accrued on preferred & common stocks
- - Commitment fees due & accrued
- - Excess of admitted over book value stocks and bonds
- - Accrued interest on borrowed funds
- - Accrued income on joint ventures
- - Interest due & accrued on rate swaps
- - Security lending activity
- - GAAP Valuation Reserve
- - GAAP Permanent Impairment
- - Unrealized activity for Held for Sale accounts Quarterly
Securities acquired - Schedule I to New York State Quarterly
Securities disposed - Schedule VI to New York State Quarterly
S-A-1
<PAGE>
Comparative statement of book, admitted and GAAP value of bonds Monthly
- - U.S. Department of Commerce filings, including, but not Quarterly
limited to BE-1X, BE-2X and BE-8X
- - U.S. Treasury Department Filing (EC-3) Quarterly
- - Derivatives Reporting Quarterly
(or more
frequently
as may be
required
by law or
regulation)
Comparative statement of book, admitted and GAAP value of Monthly
common and preferred stocks
FASB 133 Reporting as required
by FASB
guidelines
Admitted and GAAP asset value of stocks and bonds owned by class Monthly
Client Report (asset and income ledger information) Monthly
Billing Report (assets under management) Monthly
Exhibit 4 - gains/losses Monthly
Letters of credit memo Monthly
Non-accrued interest report Quarterly
Bonds on deposit with public authorities Quarterly
Foreign assets & liabilities statement Annually
Investment in British Columbia & New Brunswick Annually
PGAAP Quarterly
Equitable FAP reporting Quarterly
10K - 10Q Quarterly
Statutory Codification Ad Hoc
Annual statement requirements by State (e.g., South Dakota, Annually
Alaska, Mississippi, Louisiana, etc.)
Hawaii investment form Annually
Investments in Mexico form Annually
Canadian journal entries Monthly
Canadian annual statement Annually
Interest accrued on borrowed money (L/T and S/T) Quarterly
Regulation 130 Quarterly
S-A-2
<PAGE>
10-Q and 10K reconciliations and footnotes (bonds, stocks, joint Quarterly
ventures, etc.) and supporting documentation as required
ACMC vs. Gemini reconciliations Quarterly
Security lending reports Monthly
IUS reports, agendas and minutes (including valuation allowance Monthly
and permanent impairments by security)
Custody reconciliation Monthly
Inventory of amounts due (payable/receivable) for completed Monthly
purchases/sales
Investment data to support cash flow statements Quarterly
Investment data to support GAAP and FAP footnote or Quarterly
Management's Discussion and Analysis and Business Section
disclosures (e.g., SFAS133 disclosures on derivatives, fair
market values, commitments, JVs > 10% and > $10 million
market risks, etc.)
Joint venture investment limitation report Semi-annually
Foreign limitation report Semi-annually
NAIC valuation and compliance Quarterly
Beneficial Ownership Systems review Quarterly
ACLI Reporting (general account/separate account) Annually
All Statutory Reporting relating to all SecuritySeparate Accounts Monthly,
Quarterly,
Annually
IYAM REPORTS PREPARED FOR THE CONTROLLER'S DEPARTMENT
-----------------------------------------------------
REPORTS FREQUENCY
- ------- ---------
Cash Income Monthly
- - Bonds & Stocks
Earned Income Monthly
- - Bonds & Stocks
- - Joint Ventures
Net realized gains/losses Monthly
- - Bonds & Stocks
- - U.S. Government
Book value owned Monthly
- - Bonds & Stocks
- - Joint Ventures
- - U.S. Government
S-A-3
<PAGE>
Admitted value Monthly
- - Bonds & Stocks
- - U.S. Government
Earned Income Monthly
- - Exempt Bonds
Short-term bonds excluded from IMR Quarterly
Rollover memos Annually
Securities payable in Canadian currency Quarterly
Accrued interest and dividends Monthly
S-A-4
<PAGE>
ANNUAL STATEMENT
SCHEDULES PREPARED FOR THE CONTROLLER'S DEPARTMENT
Special deposit schedule (quarterly)
<TABLE>
<S> <C> <C>
Schedule BA - Part 1 - Other Long-Term Invested Assets At Year End
(annually) - Part 2 - Other Long-Term Invested Assets Acquired During Year
- Part 3 - Other Long-Term Invested Assets Disposed Of During Year
Schedule C - Long-Term Collateral Loans
Schedule D - Summary By Country (including verification between years)
(annually)
Form for calculating AVR/IMR (annually & quarterly)
Schedule D - Part 1A - Maturity Distribution Of Bonds Owned At Year End
(aggregate and - Part 1 - All Long-Term Bonds Owned At Year End
by segment) - Part 2 - Section 1 - Preferred Stocks Owned At Year End
(quarterly - Part 2 - Section 2 - Common Stocks Owned At Year End
and annually) - Part 3 - Bonds & Stocks Acquired During Year
- Part 4 - Bonds & Stocks Disposed Of During Year
- Part 5 - Bonds & Stocks Acquired & Fully Disposed During Year
- Footnotes - Interrogatories
Schedule DA - Part 1 - All Short-Term Investments Owned At Year End
(quarterly) - Part 2 - Verification Of Short-Term Investments Between Years
Schedule DB - Part A - Options Owned, Acquired & Terminated During Year
(quarterly and - Part B - Options Written, In-Force & Terminated During Year
annually) - Part C - Futures Open, Opened & Terminated During Year
Schedule DM - Fair Value of Bonds And Preferred Stocks
(annually)
Schedule E - List Bank Accounts And Balances
(annually)
Schedule LS - List of Securities On Loan At Year End
(annually)
Schedule RR - Book Value Of Securities Subject To Reverse Repo Agreements
(annually)
</TABLE>
S-A-5
<PAGE>
REPORTS PREPARED FOR THE TAX OFFICE
INCOME TAX MEMORANDA
I. FEDERAL
CODE NO. MEMORANDUM TITLE FREQUENCY
- ------- ---------------- ---------
1.010 Tax-exempt interest Annually
1.022A Taxable accrual of discount - GNMA/FHLMC Quarterly
1.022B Original issue discount - acquired w/o coupons Quarterly
1.022C Original issue discount - acquired w/ warrants Quarterly
1.022D Accrued market discount on disposition of bonds Quarterly
issued after 7/18/84 pursuant to a tax-exempt
reorganization
1.022E Accrued market discount on disposition of bonds Quarterly
issued after 7/18/84
1.022F Taxable income (loss from hedging transactions) Quarterly
1.110 Non-taxable dividend received Quarterly
3.50 Adjusted tax basis of securities Annually
8.03 & 8.04 Gains and losses on sales or exchanges - bonds Quarterly
& stocks (summary)
8.03 & 8.04 Gains and losses on sales or exchanges - bonds Quarterly
& stocks (detail)
Maturing discount for next five years
Accrual of discount for next five years Annually
Tax basis of stocks and bonds Annually
Copy of form 1065, Schedule K-1 for all Annually
partnerships
Partial dividends received in each of general Quarterly
account and all separate accounts eligible for
the dividends received deduction
II. STATE
Foreign investments for general account and separate Quarterly
accounts classified by book value for each country
- income received
- income accrued and collected
- amortization of premium discount
- foreign taxes withheld
- Foreign tax credit pass through
S-A-6
<PAGE>
Detailed Canadian Reports for general and separate Quarterly
accounts
AUDIT COORDINATION ACTIVITIES
Explain process and controls, and provide supporting information on all GAAP and
STAT accounting and reporting activities to Internal Auditors, External Auditors
and State Examiners.
REPORTS & INFORMATION PROVIDED TO OCIO
REPORTS/INFORMATION FREQUENCY
- ------------------- ---------
Prepare and present GAAP and statutory 5-year investment plan Annually
Prepare and present GAAP and statutory forecast of investment Quarterly
results (total earnings; investment income; realized gains
(losses); unrealized gains (losses); total assets)
Prepare GAAP and statutory Flash Report of actual quarter-to-date Monthly
and remaining quarter estimate of investment results; analyze
results and explain variances
Prepare tables and text, and coordinate outside auditor review of Quarterly/
Quarterly and Annual Financial Supplement GAAP reports sorted by: Annually
- - Total, investment grade & non-Investment grade by NAIC
& Moodys
- - Total, continuing (open & closed block), discontinued
by amortized cost and fair market value
Prepare derivatives reports required by Operational Plan Monthly,
Quarterly,
Annually
Report titles:
- - Investment Results by Asset Category
- - Summary of Fixed Maturities
- - Fixed Maturities Change in Assets
- - Fixed Maturities Investment Results
- - Fixed Maturities Valuation Allowances
- - Fixed Maturities Problem, Potential Problem and Restructured
- - Fixed Maturities Ratings Summary
- - Fixed Maturities Portfolio Credit Quality (Total, Public, Private)
- - Fixed Maturities Portfolio Credit Quality (by asset category)
- - Fixed Maturities Average Life
- - Fixed Maturities by Industry
- - Fixed Maturities Ten Largest Holdings
- - Fixed Maturities Number of Different Issuers
- - Fixed Maturities Callable Corporates By Year of First Call
- - Ten Largest Equity Interests Investment Results
- - Ten Largest Equity in Limited Partnership Interests, Capital
Contributions and Distributions Since Inception
S-A-7
<PAGE>
REPORTS/INFORMATION FREQUENCY
- ------------------- ---------
Prepare tables and text and coordinate outside auditor review of Quarterly/
10-Q and 10-K GAAP Reports sorted by: Annually
- - Total, investment grade & non-Investment grade by NAIC &
Moodys
- - Total, continuing (open & closed block), discontinued by
amortized cost and fair market value
Report Titles:
- - Fixed Maturities by Credit Quality
- - Fixed Maturities by Problems Restructured, Potential
Problems & Potential Restructured
- - Fixed Maturities Held for Sale
- - Fixed Maturities and Equity Interests (by asset category)
In addition, provide various information used in tables and
text of the MD & A section of 10-Q and 10-K reports including:
- - Investment grade/below investment grade largest holdings
- - Public and private fallen angels
- - Aaa rated NAIC 1 & 2
- - One to ten year treasury holdings
- - Bank participations
- - Industries by NAIC (IG & BIG)
- - Non cash income
- - Realized loss by industry
- - Analysis of sales activity
- - Turnover in Locom/Non Locom accounts
- - Foregone interest on restructured loans
- - Non accrued interest & principal
- - Reconciliation of problems/restructures/potential problems
Provide data and verify Investment Income Survey of statutory Quarterly
assets, earnings & yield by asset category and portfolio
Prepare Stock Sale Activity Reports Weekly
Prepare Investment Activity Reports for Equitable board meetings Monthly &
Quarterly
Respond to ad hoc information requests such as: Daily
- - Risk Based Capital Reports on largest fixed maturities and
Partnerships by company
- - Analysis of quarter-to-quarter changes in investment yield
- - Sale strategy for stock holdings
- - Analysis of Moodys vs. S & P rating information
- - Change in assets for equity interests (for Tableau de Bord)
S-A-8
<PAGE>
Business Plans 1991 - 1995
- - Total holdings (General & Separate Accounts) in certain
stocks
- - Special mid-month reports of realized and unrealized gains
- - Reconciliation of Moody's and NAIC investment vs.
non-Investment grade ratings
- - Special analysis of gains and losses for continuing business
- - Special statutory reports for presentations to rating
agencies
- - Special reports for presentations to AXA
- - Asset reports sorted by NAIC rating, asset type, and segment
- - Reporting for private high yield CBO
Provide downloads of assets and earnings information Monthly
REPORTS & INFORMATION PREPARED ON SHORT-TERM INVESTMENTS
FOR THE CORPORATE TREASURER'S DEPARTMENT
REPORTS/INFORMATION FREQUENCY
- ------------------- ---------
Investment Activities Reports - Acquisitions, repayments and sales Monthly
Data by Segment - Book value, earned income Quarterly
Provide access and maintenance to investment management system
used for short-term securities management Daily
Provide Corporate Controllers, Office of the Chief Investment
Officer and Pension Operations all statutory and GAAP reports
required for the short term portfolio managed by Corporate
Treasurers Varies
S-A-9
<PAGE>
SCHEDULE B
SERVICES PROVIDED FOR NON-MANAGED ASSOCIATION PLAN
ACCOUNTS AND ANNUITY SEPARATE ACCOUNTS
FUNCTIONS PERFORMED FREQUENCY
- ------------------- ---------
Maintain client transactions for contributions and withdrawals Daily
Verify client net assets to underlying investment portfolio Daily
Calculate unit values Daily
Maintain investment portfolio based on trades reported by outside Daily
manager
Maintain and update trial balance, general ledger, cash receipts and Daily
disbursements journal for daily transactions
Provide cash flow and cash balance to outside manager Daily
Reconcile bank accounts Daily
Assure timely settlement of trades executed by outside manager Daily
Issue fund report to clients Monthly
Provide statements of account activity and month end holdings Monthly
to outside manager
Reconcile holdings to custodian bank records Monthly
Satisfy statutory accounting requirements for Separate Accounts Monthly/
(e.g., Month End Trial Balances, Investment Activity, Schedule D) Quarterly
Provide financial statements for inclusion in reports for clients Semi-annually/
Annually
Provide support to external auditors for audited accounts Annually
S-B-1
<PAGE>
SCHEDULE C
SERVICE PROVIDED FOR ASSOCIATION PLAN
ACCOUNTS IN MANAGED SEPARATE ACCOUNTS
FUNCTIONS PERFORMED FREQUENCY
- ------------------- ---------
Provide financial statements for inclusion in
reports for clients Semi-annually/Annually
Prepare financial information for prospectus
and SAI including contract level per share financial Annually
information
Provide support to external auditors for audited accounts Annually
Provide financial information for periodic SEC Varies
registrations (i.e., additional units)
S-C-1
<PAGE>
SCHEDULE D
SERVICES PROVIDED FOR THE FOLLOWING SEPARATE ACCOUNTS:
SEPARATE ACCOUNT A (5 DIVISIONS)
SEPARATE ACCOUNT 301 (7 DIVISIONS)
SEPARATE ACCOUNT 4 (EQUIPENSION Q AND G)
SEPARATE ACCOUNT 5 (EQUIPENSION Q AND G)
FUNCTIONS PERFORMED FREQUENCY
- ------------------- ---------
Record contributions/withdrawals Daily
Process cash receipts/disbursements Daily
Purchase/sale of units in corresponding Separate Account or
Hudson River Trust Daily
Calculate insurance related expenses at contract level Daily
Determine net assets at contract level Daily
Value Equitable surplus retained in Separate Accounts Daily
Calculate unit values at contract level Daily
Transmit unit value to appropriate data center Daily
Perform bank reconciliations Daily
Issue confirmations of client transactions processed Daily
Separate Account trial balance Monthly
Cash-in-transit journal entries Monthly
Investment activity reconciliation reports Monthly
Surplus values retained in Separate Accounts Quarterly
Investment Committee Report Quarterly
Semi-annual financial statements Semi-annual
Schedule D, DA & DB Quarterly/Annually
Annual prospectus and SAI Annually
Form N-SAR Annually
Audited financial statements and per share data Annually
Contract reserves/surplus values Annually
Breakage gains and losses by contract Annually
Computations - Reserve for minimum death benefits Annually
- - Annuitant Mortality Fluctuation Fund
Investment control totals Annually
S-D-1
<PAGE>
SCHEDULE E
TREASURY SERVICES PERFORMED
Treasury Services
Confirmation Services - Includes obtaining trade confirmations, either by
mail or through automated interfaces; trade comparison function between
broker's confirmations and company records, reconciliation of trade
discrepancies and correction activity.
Settlement Services - Includes preparation and transmission of letters of
instruction to custodial agents; monitoring actual trade settlements;
investigation of and corrective action of failed trades.
Custody Services - Includes; processing corporate actions, e.g., tender
offers, stock dividends and splits, redemptions and other securities
related transactions.
Collection Services - Includes collection for principal, interest and
dividend payments; analysis, follow-up and reconciliation of overdue
payments and payment discrepancies.
Monitoring Services - Reconciliation of asset reports from custodial agents
with company records, identification and correction of out-of-balance
conditions, providing custody reports to various interested parties.
Fee Schedule
Long-Term Investments
---------------------
Month-End Book Value Treasury Service Fee (Basis Points)
-------------------- -----------------------------------
Up to $10,000,000,000 1.00
$10,000,000,001 to $20,000,000,000 .75
$20,000,000,001 to $30,000,000,000 .50
Over $30,000,000,000 .40
Short-Term Investments
----------------------
Month-End Book Value Treasury Service Fee (Basis Points)
-------------------- -----------------------------------
Up to $500,000,000 1.00
$500,000,001 to $1,000,000,000 .75
$1,000,000,001 to $1,500,000,000 .65
$1,500,000,001 to $2,000,000,000 .50
Over $2,000,000,000 .40
Securities lending - Fee is 35% of investment income
------------------
S-E-1
EXHIBIT 10.43
REVOLVING CREDIT
AGREEMENT
Dated as of July 21, 1999
Among
ALLIANCE CAPITAL MANAGEMENT L. P.,
as Borrower
FLEET NATIONAL BANK,
as Administrative Agent,
THE FIRST NATIONAL BANK OF CHICAGO,
as Syndication Agent,
BANQUE NATIONALE DE PARIS,
as Documentation Agent
and
THE BANKS WHOSE NAMES APPEAR
ON THE SIGNATURE PAGES HEREOF
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
Page
----
1.0. DEFINITIONS AND RULES OF INTERPRETATION. 1
1.1 Definitions..............................................................1
1.2 Rules of Interpretation.................................................15
2.0. THE REVOLVING CREDIT FACILITY. 16
2.1 Commitment to Lend......................................................16
2.2 Facility Fee............................................................17
2.3 Utilization Fee.........................................................17
2.4 Reduction of Total Commitment...........................................18
2.5 The Notes...............................................................18
2.6 Interest on Revolving Credit Loans......................................19
2.6.1 Interest Rates...............................................19
2.6.2. Interest Payment Dates.......................................19
2.7 Requests for Revolving Credit Loans.....................................19
2.8 Conversion Options......................................................19
2.8.1 Conversion to Eurodollar Rate Loan...........................19
2.8.2 Continuation of Type of Revolving Credit Loan................20
2.8.3 Eurodollar Rate Loans........................................20
2.8.4 Conversion Requests..........................................21
2.9 Funds for Revolving Credit Loans........................................21
2.9.1 Funding Procedures...........................................21
2.9.2 Advances by Administrative Agent.............................21
2.10 Limit on Number of Eurodollar Rate Loans................................22
2.11 Competitive Bid Rate Loans..............................................22
2.11.1 Competitive Bid Rate Option..................................22
2.11.2 Competitive Bid Rate Quote Request...........................22
2.11.3 Invitation for Competitive Bid Request Quotes................23
2.11.4 Submission and Contents of Competitive Bid Rate Quotes.......23
2.11.5 Notice to the Borrower.......................................24
2.11.6 Acceptance and Notice by the Borrower........................25
2.11.7 Allocation by the Administrative Agent; Notice to Banks of
Acceptance of Offers...................................25
2.11.8 Funding of Competitive Bid Rate Loans........................26
2.11.9 Maturity of Competitive Bid Rate Loans; Prepayment...........26
2.11.10 Interest on Competitive Bid Rate Loans.......................27
2.11.11 Competitive Bid Rate Notes...................................27
<PAGE>
3.0. REPAYMENT OF LOANS. 27
3.1 Maturity................................................................27
--------
3.2 Mandatory Repayments of Revolving Credit Loans..........................27
3.2.1 Loans in Excess of Commitment................................27
3.2.2 Change of Control............................................27
3.3 Optional Repayments of Revolving Credit Loans...........................29
4. 0 CERTAIN GENERAL PROVISIONS 29
4.1 Application of Payments.................................................29
4.2 Funds for Payments......................................................29
4.2.1 Payments to Administrative Agent.............................29
4.2.2 No Offset, Etc...............................................30
4.2.3 Fees Non-Refundable..........................................30
4.3 Computations............................................................30
4.4 Inability to Determine Eurodollar Rate..................................31
4.5 Illegality..............................................................31
4.6 Additional Costs, Etc...................................................32
4.7 Capital Adequacy........................................................33
4.8 Certificate.............................................................34
4.9 Indemnity...............................................................34
4.10 Interest After Default..................................................35
5.0. REPRESENTATIONS AND WARRANTIES. 35
5.1 Corporate Authority.....................................................35
5.1.1 Incorporation; Good Standing.................................35
5.1.2 Authorization................................................35
5.1.3 Enforceability...............................................36
5.1.4 Equity Securities............................................36
5.2 Governmental Approvals..................................................36
5.3 Liens; Leases...........................................................36
5.4 Financial Statements....................................................36
5.5 No Material Changes, Etc................................................37
5.6 Permits.................................................................37
5.7 Litigation..............................................................37
5.8 Material Contracts......................................................38
5.9 Compliance with Other Instruments, Laws, Etc............................38
5.10 Tax Status..............................................................38
5.11 No Event of Default.....................................................38
5.12 Holding Company and Investment Company Acts.............................38
5.13 Insurance...............................................................39
5.14 Certain Transactions....................................................39
5.15 Employee Benefit Plans..................................................39
<PAGE>
5.16 Regulations U and X.....................................................40
5.17 Environmental Compliance................................................40
5.18 Subsidiaries, Etc.......................................................41
5.19 Funded Debt.............................................................42
5.20 General.................................................................42
6.0 AFFIRMATIVE COVENANTS OF THE BORROWER. 42
6.1 Punctual Payment........................................................42
6.2 Maintenance of Office...................................................42
6.3 Records and Accounts....................................................42
6.4 Financial Statements, Certificates, and Information.....................42
6.5 Notices.................................................................45
6.5.1 Defaults.....................................................45
6.5.2 Environmental Events.........................................45
6.5.3 Notice of Proceedings and Judgments..........................45
6.5.4 Notice of Change of Control..................................46
6.6 Existence; Business; Properties.........................................46
6.6.1 Legal Existence..............................................46
6.6.2 Conduct of Business..........................................47
6.6.3 Maintenance of Properties....................................47
6.6.4 Status Under Securities Laws.................................47
6.7 Insurance...............................................................47
6.8 Taxes...................................................................47
6.9 Inspection of Properties and Books, Etc.................................48
6.9.1 General......................................................48
6.9.2 Communication with Accountants...............................48
6.10 Compliance with Government Mandates, Contracts, and Permits.............48
6.11 Use of Proceeds.........................................................49
6.12 Restricted Subsidiaries.................................................49
6.13 Certain Changes in Accounting Principles................................49
7.0 CERTAIN NEGATIVE COVENANTS OF THE BORROWER. 50
7.1 Disposition of Assets...................................................50
7.2 Mergers and Reorganizations.............................................51
7.3 Acquisitions............................................................55
7.4 Restrictions on Liens...................................................56
7.5 Guaranties..............................................................57
7.6 Restrictions on Investments.............................................58
7.7 Restrictions on Funded Debt.............................................59
7.8 Distributions...........................................................59
7.9 Transactions with Affiliates............................................60
7.10 Fiscal Year.............................................................60
7.11 Compliance with Environmental Laws......................................60
<PAGE>
7.12 Employee Benefit Plans..................................................60
7.13 Amendments to Certain Documents.........................................61
8.0 FINANCIAL COVENANTS OF THE BORROWER. 61
8.1 Ratio of Consolidated Adjusted Funded Debt to Consolidated
Adjusted Cash Flow....................................................61
8.2 Minimum Net Worth.......................................................62
8.3 Miscellaneous...........................................................62
9.0 CLOSING CONDITIONS. 63
9.1 Financial Statements and Material Changes...............................63
9.2 Loan Documents..........................................................63
9.3 Certified Copies of Charter Documents...................................63
9.4 Partnership and Corporate Action........................................63
9.5 Consents................................................................64
9.6 Opinions of Counsel.....................................................64
9.7 Proceedings.............................................................64
9.8 Incumbency Certificate..................................................64
9.9 Fees....................................................................64
9.10 Representations and Warranties True; No Defaults........................64
9.11 Year 2000 Letter........................................................65
10.0 CONDITIONS TO ALL BORROWINGS. 65
10.1 No Default..............................................................65
10.2 Representations True....................................................65
10.3 Loan Request............................................................65
10.4 Payment of Fees.........................................................65
10.5 No Legal Impediment.....................................................66
11.0 EVENTS OF DEFAULT; ACCELERATION; ETC. 66
11.1 Events of Default and Acceleration......................................66
11.2 Termination of Commitments..............................................69
11.3 Remedies................................................................69
11.4 Application of Monies...................................................70
12.0 SETOFF. 70
13.0 THE ADMINISTRATIVE AGENT. 71
13.1 Authorization...........................................................71
13.2 Employees and Agents....................................................71
13.3 No Liability............................................................72
<PAGE>
13.4 No Representations......................................................72
13.5 Payments................................................................72
13.5.1 Payments to Administrative Agent.............................72
13.5.2 Distribution by Administrative Agent.........................73
13.5.3 Delinquent Banks.............................................73
13.6 Holders of Notes........................................................73
13.7 Indemnity...............................................................74
13.8 Administrative Agent, Syndication Agent and Documentation Agent
as Banks..............................................................74
13.9 Resignation.............................................................74
13.10 Notification of Defaults and Events of Default..........................75
13.11 Notification of Certain Events..........................................75
13.12 Duties in the Case of Enforcement.......................................75
13.13 Syndication Agent and Documentation Agent...............................75
14. 0 EXPENSES. 76
15.0 INDEMNIFICATION. 76
16. 0 SURVIVAL OF COVENANTS, ETC. 77
17.0 ASSIGNMENT AND PARTICIPATION. 78
17.1 Conditions to Assignment by Banks.......................................78
17.2 Certain Representations and Warranties; Limitations; Covenants..........78
17.3 Register................................................................79
17.4 New Notes...............................................................79
17.5 Participations..........................................................80
17.6 Disclosure..............................................................80
17.7 Assignee or Participant Affiliated with the Borrower....................80
17.8 Miscellaneous Assignment Provisions.....................................81
17.9 Assignment by Borrower..................................................81
18. NOTICES, ETC. 81
19. GOVERNING LAW. 82
20. HEADINGS. 82
21. COUNTERPARTS. 82
<PAGE>
22. ENTIRE AGREEMENT, ETC. 83
23. WAIVER OF JURY TRIAL. 83
24. CONSENTS, AMENDMENTS, WAIVERS, ETCS
25. SEVERABILITY 84
</TABLE>
Schedules
Schedule 1 - Banks and Commitments
Schedule 5.2 - Governmental Approvals
Schedule 5.18 - Subsidiaries
Schedule 5.19 - Funded Debt
Schedule 7.4 - Certain Permitted Liens
Schedule 7.6 - Certain Investments
Exhibits
Exhibit A-1 - Form of Assumption Agreement
Exhibit A-2 - Form of Assumption, Release and Consent Agreement
Exhibit B - Form of Note
Exhibit C - Form of Loan Request
Exhibit D - Form of Confirmation of Loan Request
Exhibit E - Form of Conversion Request
Exhibit F - Form of Confirmation of Conversion Request
Exhibit G - Form of Competitive Bid Rate Quote Request
Exhibit H - Form of Invitation for Competitive Bid Rate Quotes
Exhibit I - Form of Competitive Bid Rate Quote
Exhibit J - Form of Competitive Bid Rate Note
Exhibit K - Form of Compliance Certificate
Exhibit L - Form of Assignment and Acceptance
Exhibit M - Opinion Letter
vi
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of July 21, 1999 (this
"Credit Agreement"), by and among ALLIANCE CAPITAL MANAGEMENT L.P., a Delaware
limited partnership (together with its permitted successors, the "Borrower"),
and the lending institutions listed on Schedule 1 (collectively, together with
their Eligible Assignees (as defined below), the "Banks"), and FLEET NATIONAL
BANK, as administrative agent for itself and the other Banks (as defined
below) (in such capacity, together with its successors in such capacity, the
"Administrative Agent"), THE FIRST NATIONAL BANK OF CHICAGO, as syndication
agent (in such capacity, the "Syndication Agent"), and BANQUE NATIONALE DE
PARIS, as documentation agent (in such capacity, the "Documentation Agent");
W I T N E S S E T
H:
WHEREAS, the Borrower desires to obtain from the Banks a revolving
credit facility as described in this Credit Agreement to refinance certain
outstanding obligations, for working capital and for other purposes as
provided below;
WHEREAS, the Banks are willing to provide such credit facility to the
Borrower upon the terms and conditions set forth in this Credit Agreement; and
WHEREAS, the Administrative Agent is willing to act as administrative
agent for itself and the other Banks in connection with such credit facility
as provided in this Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth hereinbelow, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties hereto do hereby agree as follows:
1.0. DEFINITIONS AND RULES OF INTERPRETATION.
1.1 Definitions.
The following terms shall have the meanings set forth in this Section
1.1 or elsewhere in the provisions of this Credit Agreement referred to below:
Absolute Rate Loan. A Loan made by a Bank pursuant to an Absolute Rate
Auction.
Absolute Rate Auction. A solicitation of Competitive Bid Rate Quotes
setting forth Competitive Bid Absolute Rates pursuant to Section 2.11 hereof.
Acquisition. As defined in Section 7.3.
Administrative Agent. Fleet, acting as administrative agent for
itself and the other Banks.
<PAGE>
Administrative Agent's Head Office. The Administrative Agent's head
office located at 777 Main Street, Hartford, Connecticut 06115, or at such
other location as the Administrative Agent may designate in a written notice
to the other parties hereto from time to time.
Affiliate. As defined under Rule 144 (a) under the Securities Act of
1933, as amended, but not including any Restricted Subsidiary or any
investment fund which is managed or advised by the Borrower.
Alliance Distributors. Alliance Fund Distributors, Inc., a Delaware
corporation.
Alternative Base Rate. For any day, the higher of (a) the Prime Rate
for such day and (b) one-half of one percent (0.50%) above the Federal Funds
Effective Rate for such day. Changes in the Alternative Base Rate due to a
change in the Prime Rate or the Federal Funds Effective Rate shall become
effective automatically on the effective date of such change, without notice
to any party.
Alternative Base Rate Loans. Loans bearing interest calculated by
reference to the Alternative Base Rate.
Assignment and Acceptance. As defined in Section 17.1.
Assumption Agreement. An Assumption Agreement in the form of Exhibit
A-1 or Exhibit A-2 with appropriate completions and insertions and with such
non-substantive changes as may be required to reflect the specific nature of
the transaction giving rise to the execution and delivery of such Assumption
Agreement.
AXA Group. AXA, a societe anonyme organized under the laws of France,
and its Subsidiaries.
Banks. Fleet and the other lending institutions listed on Schedule
1 hereto and any other Person who becomes an assignee of any
rights and obligations of a Bank pursuant to Section 17.1.
Borrower. As defined in the preamble hereto.
Borrower Partnership Agreement. The Agreement of Limited Partnership
of the Borrower (As Amended and Restated), dated as of November 19, 1987,
among the General Partner, Karen H. Bechtel, as organizational limited
partner, and those other Persons who became partners of the Borrower as
provided therein, as such agreement has been amended and exists at the date of
this Credit Agreement and may be amended or modified from time to time in
compliance with the provisions of this Credit Agreement or replaced with the
charter documents of the Successor Entity (as defined in Section 7.2(d)) in
compliance with the provisions of Section 7.2(d) hereof.
2
<PAGE>
Business. With respect to any Person, the assets, properties,
business, operations and condition (financial and otherwise) of
such Person.
Business Day. Any day on which banking institutions in Hartford,
Connecticut, Boston, Massachusetts, and New York, New York, are open for the
transaction of banking business and, in the case of Eurodollar Rate Loans or
Competitive Bid Eurodollar Loans, also a day which is a Eurodollar Business
Day.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as Permits, deferred
sales commissions and good will); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with GAAP.
Capital Expenditures. Amounts paid or indebtedness incurred by the
Borrower or any of its Consolidated Subsidiaries in connection with the
purchase or lease by the Borrower or any of such Subsidiaries of Capital
Assets that would be required to be capitalized and shown on the balance sheet
of such Person in accordance with GAAP.
Capitalized Leases. Leases under which the Borrower or any of its
Consolidated Subsidiaries is the lessee or obligor, the discounted future
rental payment obligations under which are required to be capitalized on the
balance sheet of the lessee or obligor in accordance with GAAP.
CERCLA. As defined in Section 5.17.
Change of Control. Each and every (a) issue, sale, or other
disposition of Voting Equity Securities of the Borrower that results in any
Person or group of Persons acting in concert (other than any of The Equitable
Companies Incorporated and its Subsidiaries, and any member of the AXA Group)
beneficially owning or controlling, directly or indirectly, more than eighty
percent (80%) (by number of votes) of the Voting Equity Securities of the
Borrower or (b) issue, sale, or other disposition of Voting Equity Securities
of the General Partner which results in any Person or group of Persons acting
in concert (other than any of The Equitable Companies Incorporated and its
Subsidiaries, and any member of the AXA Group) beneficially owning or
controlling, directly or indirectly, more than fifty percent (50%) (by number
of votes) of the Voting Equity Securities of the General Partner.
Change of Control Date. Any date upon which a Change of Control
occurs.
Closing Date. The date, not later than July 30, 1999, on which
each of the conditions set forth in Section 9 is satisfied or waived.
Code. The Internal Revenue Code of 1986, as amended.
Commitment. With respect to each Bank, the amount set forth on
Schedule 1 hereto as the amount of such Bank's obligation to make Loans to the
Borrower, as the same may be
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<PAGE>
reduced from time to time; or if such Commitment is terminated pursuant to the
provisions hereof, zero.
Commitment Percentage. With respect to each Bank, such Bank's
percentage of the aggregate Commitments of all of the Banks.
Competitive Bid Absolute Rate. As defined in Section 2.11.4 hereof.
Competitive Bid Rate Activation Date. As defined in Section 2.11.2
hereof with respect to any proposed Competitive Bid Rate Loan.
Competitive Bid Rate Loan. A Competitive Bid Eurodollar Loan or an
Absolute Rate Loan.
Competitive Bid Eurodollar Loan. A Loan made by a Bank pursuant to a
Eurodollar Auction.
Competitive Bid Rate Margin. As defined in Section 2.11.4 hereof.
Competitive Bid Rate Maximum Amount. The discretionary option of the
Banks to loan, in their sole discretion, the sum, in the aggregate, of up to
$200,000,000 to the Borrower pursuant to the terms hereof.
Competitive Bid Rate Notes. Those certain promissory notes of the
Borrower, each substantially in the form of Exhibit J attached hereto, to the
order of each of the Banks evidencing the obligations of the Borrower to repay
the Competitive Bid Rate Loans made to it by such Bank hereunder, any other
promissory notes issued in connection with Competitive Bid Rate Loans, if any,
made or to be made hereunder, and any extension, renewals or amendments to, or
any replacements of, any of the foregoing.
Competitive Bid Rate Quote. An offer by any Bank to make one or more
Competitive Bid Rate Loans in accordance with Section 2.11.2 hereof.
Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower and
the Consolidated Subsidiaries, consolidated in accordance with GAAP.
Consolidated Adjusted Cash Flow. As defined in Section 8.1.
Consolidated Adjusted Funded Debt. As defined in Section 8.1.
Consolidated Net Income (or Loss). The consolidated net income (or
loss) of the Borrower, determined in accordance with GAAP, but excluding in
any event:
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(a) to the extent provided by Section 7.8, any portion of the net
earnings of any Restricted Subsidiary that, by virtue of a restriction or Lien
binding on such Restricted Subsidiary under a Contract or Government Mandate,
is unavailable for payment of dividends to the Borrower or any other
Restricted Subsidiary;
(b) earnings resulting from any reappraisal, revaluation, or write-up
of assets; and
(c) any reversal of any contingency reserve, except to the extent
that such provision for such contingency reserve shall have been made from
income arising during the period subsequent to December 31, 1998 through the
end of the period for which Consolidated Net Income (or Loss) is then being
determined, taken as one accounting period.
Consolidated Net Worth. The excess of Consolidated Total Assets over
Consolidated Total Liabilities, less, to the extent otherwise includable in
the computations of Consolidated Net Worth, any subscriptions receivable with
respect to Equity Securities of the Borrower or its Consolidated Subsidiaries
(with such adjustments as may be appropriate so as not to double count
intercompany items).
Consolidated Subsidiaries. At any point in time, the Subsidiaries of
the Borrower that are consolidated with the Borrower for financial reporting
purposes with respect to the fiscal period of the Borrower in which such point
in time occurs.
Consolidated Total Assets. All assets of the Borrower determined on a
consolidated basis in accordance with GAAP.
Consolidated Total Liabilities. All liabilities of the Borrower
determined on a consolidated basis in accordance with GAAP.
Contracts. Contracts, agreements, mortgages, leases, bonds,
promissory notes, debentures, guaranties, Capitalized Leases, indentures,
pledges, powers of attorney, proxies, trusts, franchises, or other instruments
or obligations.
Conversion Request. A notice given by the Borrower to the
Administrative Agent of the Borrower's election to convert or continue
a Loan in accordance with Section 2.8.
Credit Agreement. This Revolving Credit Agreement, including the
Schedules and Exhibits hereto, as amended, restated, amended and restated,
supplemented, or otherwise modified and in effect from time to time.
Cursitor Acquisition Agreement. That certain Transaction Agreement
dated as of December 28, 1995 among the Borrower, the shareholders of record
of Cursitor Holdings Limited, Cursitor Holdings, L.P. and the additional
parties thereto, as amended as of January 1, 1997.
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<PAGE>
Cursitor Alliance. Cursitor Alliance, L.L.C., a Delaware limited
liability company.
Cursitor Member Agreement. That certain Cursitor Alliance LLC Amended
and Restated Limited Liability Company Agreement dated as of February 29,
1996, among the Borrower, Alliance Capital Management Corporation of Delaware
and Cursitor Holdings, L.P., which agreement shall be substantially in the
form of the draft attached as an exhibit to the Cursitor Acquisition
Agreement, as amended as of April 28, 1997.
Default. As defined in Section 11.
Distribution. With respect to any Entity, the declaration or payment
(without duplication) of any dividend or distribution on or in respect of any
Equity Securities of such Entity, other than dividends payable solely in
Equity Securities of such Entity that are not required to be classified as
liabilities on the balance sheet of such Entity under GAAP; the purchase,
redemption, or other retirement of any Equity Securities of such Entity,
directly or indirectly through a Subsidiary of such Entity or otherwise; or
the return of capital by such Entity to the holders of its Equity Securities
as such.
Documentation Agent. Banque Nationale de Paris, acting as
documentation agent.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office of such
Bank, if any, located within the United States that will be making or
maintaining Alternative Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to be made,
and the date on which any Revolving Credit Loan is converted or continued in
accordance with Section 2.8.
EBITDA. The Consolidated Net Income (or Loss) for any period, plus
provision for any income taxes, interest (whether paid or accrued, but without
duplication of interest accrued for previous periods), depreciation, or
amortization for such period, in each case to the extent deducted in
determining such Consolidated Net Income (or Loss).
Eligible Assignee. Any of (a) a commercial bank or finance company
organized under the laws of the United States, any State thereof, or the
District of Columbia, and having total assets in excess of One Billion Dollars
($1,000,000,000); (b) a commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such country, and
having total assets in excess of One Billion Dollars ($1,000,000,000),
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; and (c) the central bank of any country which is a member of the
OECD.
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<PAGE>
Employee Benefit Plan. Any employee benefit plan within the meaning
of section 3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate, other than a Multiemployer Plan.
Entity. Any corporation, partnership, trust, unincorporated
association, joint venture, limited liability company, or other legal
or business entity.
Environmental Laws. As defined in Section 5.17(a).
Equity Securities. With respect to any Entity, all equity securities
of such Entity, including any (a) common or preferred stock, (b) limited or
general partnership interests, (c) limited liability company member interests,
(d) options, warrants, or other rights to purchase or acquire any equity
security, or (e) securities convertible into any equity security.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published
interpretations thereunder.
ERISA Affiliate. Any Person that is treated as a single employer
together with the Borrower under ss.414 of the Code.
ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of section 4043 of ERISA and the
regulations promulgated thereunder as to which the requirement of notice has
not been waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Rate Loan or Competitive Bid Eurodollar Loan, the maximum rate (expressed as a
decimal) at which any Bank subject thereto would be required to maintain
reserves under Regulation D of the Board of Governors of the Federal Reserve
System (or any successor or similar regulations relating to such reserve
requirements) against "Eurocurrency Liabilities" (as that term is used in
Regulation D), if such liabilities were outstanding. The Eurocurrency Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in the Eurocurrency Reserve Rate.
Eurodollar Auction. A solicitation of Competitive Bid Rate Quotes
setting forth Competitive Bid Rate Margins based on the Eurodollar Rate
pursuant to Section 2.11 hereof.
Eurodollar Business Day. Any day on which commercial banks are open
for international business (including dealings in Dollar deposits) in London
or such other eurodollar interbank market as may be selected by the
Administrative Agent in its sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office of such
Bank, if any, that shall be making or maintaining Eurodollar Rate Loans or, in
such Bank's discretion, Competitive Bid Eurodollar Loans.
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<PAGE>
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Rate Loan or Competitive Bid Eurodollar Loan, the rate of interest equal to
(a) the rate per annum (rounded upwards to the nearest 1/100th of one percent)
at which the Administrative Agent's Eurodollar Lending Office is offered
Dollar deposits at or about 11:00 a.m. (London time) on the date two (2)
Eurodollar Business Days prior to the beginning of such Interest Period in the
New York interbank eurodollar market for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of the Eurodollar Rate Loan or Competitive Bid
Eurodollar Loan to which such Interest Period applies, divided by (b) a number
equal to 1.00 minus the Eurocurrency Reserve Rate.
Eurodollar Rate Applicable Margin. An annual percentage rate
determined by the Administrative Agent, as of any date of determination, in
accordance with the Borrower's S&P Rating and Moody's Rating in effect as of
any date of determination as follows:
- -------------------------------------------------------------------------------
Borrower's Eurodollar Rate
S&P Rating/Moody's Rating: at least Applicable Margin
- -------------------------------------------------------------------------------
A-1+ and P-1 0.170%
- -------------------------------------------------------------------------------
A-1 and P-1 0.210%
- -------------------------------------------------------------------------------
A-1 and P-2 or A-2 and P-1 0.225%
- -------------------------------------------------------------------------------
A-2 and P-2 0.350%
- -------------------------------------------------------------------------------
Notwithstanding the foregoing, if (a) the Borrower's S&P Rating at
any time declines below A-2, or (b) the Borrower's Moody's Rating at any time
declines below P-2, or (c) the Borrower loses both its Moody's Rating and its
S&P Rating at any time, the Eurodollar Rate Applicable Margin shall be 0.550%,
in any such case subject, as applicable, to the provisions of Section 4.10
hereof. If, subsequent to any such rating decline or loss of such ratings, as
the case may be, the applicable rating is upgraded to a rating at least equal
to A-2 and P-2 (as applicable) or the Borrower is able to again obtain ratings
of at least A-2 and P-2, as the case may be, the above table shall, from and
after the date of such occurrence (until such time, if any, that the
Borrower's S&P Rating or Moody's Rating again declines below A-2 or P-2,
respectively, or the Borrower again loses such ratings), govern the Eurodollar
Rate Applicable Margin.
Eurodollar Rate Loans. Loans bearing interest calculated by reference
to the Eurodollar Rate.
Event of Default. As defined in Section 11.
Existing Credit Agreement. See Section 5.16.
Federal Funds Effective Rate. For any day, the rate per annum equal
to the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve
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<PAGE>
System arranged by federal funds brokers, as published for such day (or if
such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three funds brokers of
recognized standing selected by the Administrative Agent.
Fleet. Fleet National Bank, a national banking association.
Fully Effective. With respect to any Contract, that (a) such Contract
is the legal, valid, and binding obligation of the Borrower or its Subsidiary,
as the case may be, enforceable against such party according to its terms, and
(b) if such Contract exists on or before the date of this Credit Agreement,
such Contract shall remain in full force and effect notwithstanding the
execution and delivery of the Loan Documents and the consummation of the
transactions contemplated by the Loan Documents.
Funded Debt. With respect to the Borrower or any Consolidated
Subsidiary, (a) all indebtedness for money borrowed of such Person, (b) every
obligation of such Person in respect of Capitalized Leases, (c) all
reimbursement obligations of such Person with respect to letters of credit,
bankers' acceptances, or similar facilities issued for the account of such
Person, (d) Indebtedness that constitutes Funded Debt as provided in Section
7.1(d), and (e) all guarantees, endorsements, acceptances, and other
contingent obligations of such Person, whether direct or indirect, in respect
of indebtedness for borrowed money of others, including any obligation to
supply funds to or in any manner to invest in, directly or indirectly, the
debtor, to purchase indebtedness for borrowed money, or to assure the owner of
indebtedness for borrowed money against loss, through an agreement to purchase
goods, supplies, or services for the purpose of enabling the debtor to make
payment of the indebtedness held by such owner or otherwise, provided,
however, that each guaranty of Indebtedness of, keepwell obligation for, or
obligation to make funds available for, any Consolidated Subsidiary that acts
as general partner of one or more partnerships sponsored or established by the
Borrower or any of its Subsidiaries shall constitute Funded Debt from and
after such time as such guaranty, keepwell, or other obligation is no longer
contingent, whereupon such guaranty, keepwell, or other obligation will
constitute Funded Debt in an amount equal to the liability of such Person in
respect of such guaranty, keepwell, or other obligation to the extent such
guaranty, keepwell or other obligation is non-contingent.
General Partner. (a) Alliance Capital Management Corporation, a
Delaware corporation, in its capacity as general partner of the Borrower and
(b) any other Persons who satisfy the requirements for admitting general
partners without causing a Default or an Event of Default as set forth in
Section 11.1(n) and who are so admitted, each in its capacity as a general
partner of the Borrower, and their respective successors.
GAAP. Subject to Section 6.13, (a) when used in Section 8, whether
directly or indirectly through reference to a capitalized term used therein,
means (i) principles that are consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, in
effect for the fiscal year ended on December 31, 1998, and (ii) to
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<PAGE>
the extent consistent with such principles, the accounting practices of the
Borrower reflected in its consolidated financial statements for the year ended
on December 31, 1998, and (b) when used in general, other than as provided
above, means principles that are (i) consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, as in effect from time to time and (ii) consistently applied
with past financial statements of the Borrower adopting the same principles,
provided that in each case referred to in this definition of "GAAP" a
certified public accountant would, insofar as the use of such accounting
principles is pertinent, be in a position to deliver an unqualified opinion
(other than a qualification regarding changes in GAAP) as to financial
statements in which such principles have been properly applied.
Government Authority. The United States of America or any state,
district, territory, or possession thereof, any local government within the
United States of America or any of its territories and possessions, any
foreign government having appropriate jurisdiction or any province, territory,
or possession thereof, or any court, tribunal, administrative or regulatory
agency, taxing or revenue authority, central bank or banking regulatory
agency, commission, or body of any of the foregoing.
Government Mandate. With respect to (a) any Person, any statute, law,
rule, regulation, code, or ordinance duly adopted by any Government Authority,
any treaty or compact between two (2) or more Government Authorities, and any
judgment, order, decree, ruling, finding, determination, or injunction of any
Government Authority, in each such case that is, pursuant to appropriate
jurisdiction, legally binding on such Person, any of its Subsidiaries or any
of their respective properties, and (b) the Administrative Agent or any Bank,
in addition to subsection (a) hereof, any policy, guideline, directive, or
standard duly adopted by any Government Authority with respect to the
regulation of banks, monetary policy, lending, investments, or other financial
matters.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by the Borrower or
any ERISA Affiliate the benefits of which are guaranteed on termination in
full or in part by the PBGC pursuant to Title IV of ERISA, other than a
- -Multiemployer Plan.
Hazardous Substances. As defined in Section 5.17(b).
Indebtedness All obligations, contingent and otherwise, that in
accordance with GAAP should be classified upon the obligor's balance sheet as
liabilities, or to which reference should be made by footnotes thereto in
accordance with GAAP, including: (a) all debt and similar monetary
obligations, whether direct or indirect; (b) all liabilities secured by any
Lien existing on property owned or acquired subject thereto, whether or not
the liability secured thereby shall have been assumed; (c) all obligations in
respect of hedging contracts, including, without limitation, interest rate and
currency swaps, caps, collars and other financial derivative products; and (d)
all guarantees, endorsements, and other contingent obligations whether direct
or indirect in respect of indebtedness of others, including any obligation to
supply funds to or in any manner to invest in, directly or indirectly, the
debtor, to purchase indebtedness, or to assure the owner of
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indebtedness against loss, through an agreement to purchase goods, supplies,
or services for the purpose of enabling the debtor to make payment of the
indebtedness held by such owner or otherwise, and the obligations to reimburse
the issuer in respect of any letters of credit.
Interest Payment Date. (a) As to any Alternative Base Rate Loan, the
last day of each calendar quarter during all or a portion of which such
Alternative Base Rate Loan is outstanding and the maturity of such Alternative
Base Rate Loan; and (b) as to any Eurodollar Rate Loan or Competitive Bid Rate
Loan, the last day of each Interest Period with respect to such Eurodollar
Rate Loan or Competitive Bid Rate Loan, the maturity of such Eurodollar Rate
Loan or Competitive Bid Rate Loan, and, if the Interest Period of such
Eurodollar Rate Loan is longer than three (3) months, the date that is three
(3) months from the first day of such Interest Period and the last day of each
successive three (3) month period during such Interest Period.
Interest Period. (a) With respect to any Eurodollar Rate Loan, (i)
initially, the period commencing on the Drawdown Date of such Loan and ending
on the last day of, as selected by the Borrower in a Loan Request, one (1),
two (2), three (3), or six (6) months or, if available in readily
ascertainable markets, nine (9), or twelve (12) months; and (ii) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Loan and ending on the last day of one of the periods set
forth above, as selected by the Borrower in a Conversion Request; and (b) with
respect to any Competitive Bid Rate Loan, the period commencing on the
Drawdown Date of such Loan and ending, as selected by the Borrower in a
Competitive Bid Rate Quote Request, on any day from and including seven (7)
days to and including one hundred eighty (180) days thereafter; provided that
all of the foregoing provisions relating to Interest Periods are subject to
the following:
(i) if any Interest Period for a Eurodollar Rate Loan or a
Competitive Bid Eurodollar Loan would otherwise end on a day that is not a
Eurodollar Business Day, that Interest Period shall be extended to the next
succeeding Eurodollar Business Day unless the result of such extension would
be to carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the immediately preceding Eurodollar
Business Day;
(ii) if any Interest Period for a Eurodollar Rate Loan or a
Competitive Bid Eurodollar Loan that begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Eurodollar Business Day of a calendar month; and
(iii) any Interest Period commencing prior to the Maturity
Date that would otherwise extend beyond the Maturity Date shall end on the
Maturity Date.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of Equity Securities or Funded
Debt of, or for loans, advances, or capital contributions, or in respect of
any guaranties (or other commitments as described under Indebtedness) of, any
Person. In determining the aggregate amount of Investments outstanding at any
particular time: (a) the amount of any Investment represented by a guaranty
shall be taken
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at not less than the principal amount of the obligations guaranteed and still
outstanding and the amount of Indebtedness represented by a keepwell
obligation shall be taken at not less than the maximum amount of the keepwell
obligation, as the case may be; (b) there shall be deducted in respect of each
such Investment any amount received as a return of capital; (c) there shall
not be deducted in respect of any Investment any amounts received as earnings
on such Investment, whether as dividends, interest, or otherwise; and (d)
there shall not be added to or deducted from the aggregate amount of
Investments any increase or decrease in the value thereof. For purposes of
determining the amount of Investments by the Borrower and the Consolidated
Subsidiaries outstanding at any time, investments (defined as aforesaid) by an
Unrestricted Subsidiary in an Entity that is not a Subsidiary of the Borrower
shall not be counted as Investments hereunder to the extent that they do not
exceed the aggregate amount of Investments by the Borrower and the
Consolidated Subsidiaries in such Unrestricted Subsidiary.
Lien. Any lien, mortgage, security interest, pledge, charge,
beneficial or equitable interest or right, hypothecation, collateral
assignment, easement, or other encumbrance.
Loan Documents. This Credit Agreement, the Notes, any Assumption
Agreements and any instrument or document designated by the parties thereto
as a "Loan Document" for purposes hereof.
Loan Request. As defined in Section 2.7.
Loans. The Revolving Credit Loans and the Competitive Bid Rate Loans.
Majority Banks. The Banks whose aggregate Commitments constitute at
least sixty-six and two thirds percent (66-2/3%) of the Total Commitment.
Material Effect. A material adverse effect on (a) the ability of the
Borrower or any Other Obligor to enter into and to perform and observe its
Obligations under the Loan Documents, or (b) the Business of the Borrower and
its Consolidated Subsidiaries taken as a whole.
Material Subsidiary. Any Subsidiary of the Borrower, any Other
Obligor, or Alliance Distributors that, singly or together with any other such
Subsidiaries then subject to one or more of the conditions described in
Section 11.1(h), Section 11.1(i), or Section 11.1(m), either (a) at the date
of determination owns Significant Assets, or (b) has total assets as of the
date of determination equal to not less than five percent (5%) of the
Consolidated Total Assets of the Borrower as set forth in the consolidated
balance sheet of the Borrower included in the most recent available annual or
quarterly report of the Borrower.
Maturity Date. July 21, 2002.
Moody's Rating. With respect to any Entity which is the issuer or
obligor with respect to commercial paper, the rating assigned to such entity
by Moody's Investors Service, Inc. from time to time in effect.
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Multiemployer Plan. Any multiemployer plan within the meaning of
ssection 3(37) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate.
1940 Act. The Investment Company Act of 1940, as amended.
Notes. The Notes of the Borrower to the Banks in respect of the
Borrower's Obligations under this Credit Agreement of even date herewith, and
including Competitive Bid Rate Notes, substantially in the form of Exhibit B
and Exhibit J, respectively, as amended, modified and renewed from time to
time.
Obligations. All indebtedness, obligations, and liabilities of any of
the Borrower, its Subsidiaries, and Other Obligors to any of the Banks and the
Administrative Agent, individually or collectively, existing on the date of
this Credit Agreement or arising thereafter, direct or indirect, joint or
several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising or incurred under this Credit
Agreement or any of the other Loan Documents or in respect of any of the Loans
made, or any of the Notes, or other instruments at any time evidencing any
thereof.
Other Obligor. As defined in the Assumption Agreements.
PBGC. The Pension Benefit Guaranty Corporation created by section
4002 of ERISA and any successor entity or entities having similar
responsibilities.
Permits. Permits, licenses, franchises, patents, copyrights,
trademarks, trade names, approvals, clearances, and applications for or rights
in respect of the foregoing of any Government Authority.
Permitted Acquisitions. Acquisitions permitted under clauses (a)
through (f) of Section 7.3.
Permitted Liens. Liens permitted by Section 7.4.
Person. Any individual, Entity, or Government Authority.
Prime Rate. The variable per annum rate of interest so designated
from time to time by Fleet as its prime rate, which rate is a reference rate
and does not necessarily represent the lowest or best rate being charged by
Fleet to its customers.
Proceedings. Any (a) actions at law, (b) suits in equity, (c)
bankruptcy, insolvency, receivership, dissolution, or reorganization cases or
proceedings, (d) administrative or regulatory hearings or other proceedings,
(e) arbitration and mediation proceedings, (f) criminal prosecutions, (g)
judgment levies, foreclosure proceedings, pre-judgment security procedures, or
other enforcement actions, and (h) other litigation, actions, suits, and
proceedings conducted by, before, or on behalf of any Government Authority.
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Real Estate. All real property at any time owned or leased (as lessee
or sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Note, or the continuation of such
grid, or any other similar record, including computer records, maintained by
any Bank with respect to any Loan referred to in such Note.
Reorganization and Reorganize. As defined in Section 7.2.
Restricted Subsidiary. Each (a) Subsidiary of the Borrower designated
as a "Restricted Subsidiary" on Schedule 5.18 (and by such designation the
Borrower represents and warrants to the Administrative Agent and the Banks
that such Subsidiary meets the qualifications of a Restricted Subsidiary as
specified in this definition), and (b) other Subsidiary of the Borrower that
the principal financial or accounting officer or treasurer of the Borrower may
after the date of this Credit Agreement certify to the Administrative Agent
and the Banks meets the qualifications of a Restricted Subsidiary as specified
in this definition (and at the time of any such certification the Borrower
shall provide the Administrative Agent and the Banks with a current list of
all Restricted Subsidiaries). The qualifications of a Restricted Subsidiary
are as follows: (a) at least fifty-one percent (51%) of the issued and
outstanding Equity Securities of a Restricted Subsidiary shall be owned of
record and beneficially by the Borrower or one or more other Restricted
Subsidiaries free of Liens other than Permitted Liens, and (b) no Restricted
Subsidiary shall be a general partner of any partnership, be a party to any
joint venture in respect of which liability is not limited to the amount of
such Restricted Subsidiary's capital contribution or other equity investment,
or have any contingent obligations established by Contract in respect of
Funded Debt that are not by their terms limited to a specific dollar amount;
provided, however, that, notwithstanding the foregoing, a Restricted
Subsidiary may be a general partner in a partnership which is wholly owned by
the Borrower or one or more other Restricted Subsidiaries.
Revolving Credit Loans. Revolving credit loans made or to be made by
the Banks to the Borrower pursuant to Section 2, but not including Competitive
Bid Rate Loans.
Significant Assets. At the date of any sale, transfer, assignment, or
other disposition of assets of the Borrower or any of its Subsidiaries (or as
of the date of any Default or Event of Default), assets of the Borrower or any
of its Subsidiaries (including Equity Securities of Subsidiaries of the
Borrower) which generated thirty-three and one-third percent (33 1/3%) or more
of the consolidated revenues of the Borrower during the four (4) fiscal
quarters of the Borrower most recently ended (the "Measuring Period"),
provided that assets of the Borrower or any of its Subsidiaries (including
Equity Securities of Subsidiaries of the Borrower) which do not meet the
definition of Significant Assets in the first part of this sentence shall
nonetheless be deemed to be Significant Assets if such assets generated
revenues for the Measuring Period that if subtracted from the consolidated
revenues of the Borrower for the Measuring Period would result in consolidated
revenues of the Borrower for the Measuring Period of less than $400,000,000.
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S&P Rating. With respect to any Entity which is the issuer or obligor
with respect to commercial paper, the rating assigned to such entity by
Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies,
Inc., from time to time in effect.
Subsidiary. Any Entity of which the designated parent shall at any
time own directly or indirectly through a Subsidiary or Subsidiaries at least
a majority (by number of votes) of the outstanding Voting Equity Securities.
Syndication Agent. The First National Bank of Chicago, acting as
syndication agent.
Total Commitment. The sum of the Commitments of the Banks, as in
effect from time to time. As of the Closing Date the Total Commitment is
$200,000,000.
12b-1 Fees. All or any portion of (a) the compensation or fees paid,
payable, or expected to be payable to the Borrower or any of its Subsidiaries
for acting as the distributor of securities as permitted under Rule 12b-l
under the 1940 Act, (b) the contingent deferred sales charges or redemption
fees paid, payable, or expected to be paid to the Borrower or any of its
Subsidiaries, and (c) any right, title, or interest in or to any such
compensation or fees.
Type. As to any Loan, its nature as an Alternative Base Rate Loan,
an Absolute Rate Loan, a Eurodollar Rate Loan or a Competitive Bid Eurodollar
Loan, as the case may be.
Unrestricted Subsidiary. A Subsidiary that is not a Restricted
Subsidiary.
Voting Equity Securities. Equity Securities of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the Entity that issued such Equity
Securities.
1.2 Rules of Interpretation.
(a) A reference to any Contract or other document shall
include such Contract or other document as amended, modified, or supplemented
from time to time in accordance with its terms and the terms of this Credit
Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any Government Mandate includes any
amendment or modification to such Government Mandate or any successor
Government Mandate.
(d) A reference to any Person includes its permitted
successors and permitted assigns. Without limiting the generality of the
foregoing, a reference to any Bank shall include any Person that succeeds
generally to its assets and liabilities.
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(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by GAAP.
(f) The words "include, "includes," and "including" are not
limiting.
(g) All terms not specifically defined herein or by GAAP,
which terms are defined in the Uniform Commercial Code as in effect in The
State of New York, have the meanings assigned to them therein.
(h) Reference to a particular "section, Section, Schedule, or
Exhibit refers to that Section, Schedule, or Exhibit of this Credit Agreement
unless otherwise indicated.
(i) The words "herein", "hereof", and "hereunder" and words
of like import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
2.0. THE REVOLVING CREDIT FACILITY.
2.1 Commitment to Lend.
(a) Subject to the terms and conditions set forth in Section
10 hereof, each of the Banks severally shall lend to the Borrower, and the
Borrower may borrow, repay, and reborrow from time to time between the Closing
Date and the Maturity Date upon notice by the Borrower to the Administrative
Agent given in accordance with Section 2.7, such sums as are requested by the
Borrower up to a maximum aggregate principal amount outstanding (after giving
effect to all amounts requested) at any one time equal to such Bank's
Commitment, provided that the sum of (A) the outstanding amount of the
Revolving Credit Loans (after giving effect to all amounts requested) plus (B)
the outstanding amount of Competitive Bid Rate Loans shall not at any time
exceed the Total Commitment. The Revolving Credit Loans shall be made pro rata
in accordance with each Bank's Commitment Percentage; provided that the
failure of any Bank to lend in accordance with this Credit Agreement shall not
release any other Bank or the Administrative Agent from their obligations
hereunder, nor shall any Bank have any responsibility or liability in respect
of a failure of any other Bank to lend in accordance with this Credit
Agreement. Each request for a Revolving Credit Loan and each borrowing
hereunder shall constitute a representation and warranty by the Borrower that
the conditions set forth in Section 10 have been satisfied on the date of such
request.
(b) In the event that, at any time when the conditions
precedent for any Loan have been satisfied, a Bank or the Administrative
Agent, as the case may be, fails or refuses to fund its portion of such Loan,
then, until such time as such Bank or the Administrative Agent, as the case
may be, has funded its portion of such Loan, or all of the other Banks and/or
the Administrative Agent, as the case may be, have received payment in full of
the principal and interest due in respect of such Loan, such non-funding Bank
or Administrative Agent, as the case may be, shall not have the right to
receive payment of any principal, interest or fees from the Borrower in
respect of its Loans.
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2.2 Facility Fee.
The Borrower shall pay to the Administrative Agent for the accounts
of the Banks in accordance with their respective Commitment Percentages a
facility fee on the daily average amount of the Total Commitment as of the
most recently completed calendar quarter calculated at the rate per annum, on
the basis of a 360-day year for the actual number of days elapsed, as
determined in accordance with the chart below with respect to the Borrower's
commercial paper rating as of the last Business Day of each calendar quarter.
Notwithstanding the provisions of Section 2.11.1 hereof, for purposes of this
Section 2.2, the Total Commitment shall not be reduced by the amount of
Competitive Bid Rate Loans outstanding. The facility fee shall be payable
quarterly in arrears on the first Business Day of each calendar quarter for
the immediately preceding calendar quarter commencing on the first such date
following the date hereof, with a final payment on the Maturity Date or any
earlier date on which the Total Commitment shall terminate. In no case shall
any portion of the facility fee be refundable.
The facility fee shall be calculated based upon the Borrower's S&P
Rating and Moody's Rating in effect as of any date of determination as
follows:
- -------------------------------------------------------------------------------
Borrower's
S&P Rating/Moody's Rating: at least Facility Fee
- -------------------------------------------------------------------------------
A-1+ and P-1 0.080%
- -------------------------------------------------------------------------------
A-1 and P-1 0.090%
- -------------------------------------------------------------------------------
A-1 and P-2 or A-2 and P-1 0.125%
- -------------------------------------------------------------------------------
A-2 and P-2 0.150%
- -------------------------------------------------------------------------------
Notwithstanding the foregoing, if (a) the Borrower's S&P Rating at
any time declines below A-2, or (b) the Borrower's Moody's Rating at any time
declines below P-2, or (c) the Borrower loses both its Moody's Rating and its
S&P Rating at any time, the facility fee shall be 0.200%. If, subsequent to
any such rating decline or loss of such ratings, as the case may be, the
applicable rating is upgraded to a rating at least equal to A-2 and P-2 (as
applicable) or the Borrower is able to again obtain ratings of at least A-2
and P-2, as the case may be, the above table shall, from and after the date of
such occurrence (until such time, if any, that the Borrower's S&P Rating or
Moody's Rating again declines below A-2 or P-2, respectively, or the Borrower
again loses such ratings), govern the facility fee.
2.3 Utilization Fee.
For any calendar quarter in which the average aggregate daily
outstanding balance of the Loans exceeds 33 1/3% of the daily average amount
of the Total Commitment for such quarter, the Borrower shall pay to the
Administrative Agent for the accounts of the Banks in accordance
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with their respective Commitment Percentages, a utilization fee calculated at
a rate per annum equal to 0.10% of the average aggregate outstanding amount of
the Loans during such calendar quarter, provided that for any calendar quarter
in which the average aggregate daily outstanding balance of the Loans exceeds
66 2/3% of the daily average amount of the Total Commitment for such quarter,
such utilization fee for any such calendar quarter shall be increased to 0.20%
of the average aggregate outstanding amount of the Loans during such calendar
quarter. The utilization fee shall be payable on the earlier of five (5)
Business Days after the end of any calendar quarter in which such fee shall be
due and owing in accordance with this Section 2.3 or the Maturity Date or any
earlier date on which the Total Commitment shall terminate. In no case shall
any portion of the utilization fee be refundable.
2.4 Reduction of Total Commitment.
The Borrower shall have the right at any time and from time to time
upon three (3) Business Days' prior written notice to the Administrative Agent
to reduce by at least $1,000,000 or integral multiples of $1,000,000 in excess
thereof, or to terminate entirely, the unborrowed portion of the Total
Commitment, whereupon the Commitments of the Banks shall be reduced pro rata
in accordance with their respective Commitment Percentages of the amount
specified in such notice or, as the case may be, terminated. Promptly after
receiving any notice of the Borrower delivered pursuant to this Section 2.4,
the Administrative Agent will notify the Banks of the substance thereof. Upon
the effective date of any such reduction or termination, the Borrower shall
pay to the Administrative Agent for the respective accounts of the Banks the
full amount of any facility fee then accrued on the amount of the reduction.
No reduction or termination of the Commitments may be reinstated.
2.5 The Notes.
The Revolving Credit Loans shall be evidenced by separate promissory
notes of the Borrower in substantially the form of Exhibit B hereto (each a
"Note"), dated as of the Closing Date and completed with appropriate
insertions. One Note shall be payable to the order of each Bank in a principal
amount equal to such Bank's Commitment or, if less, the outstanding amount of
all Revolving Credit Loans made by such Bank, plus interest accrued thereon,
as set forth below. The Borrower irrevocably authorizes each Bank to make or
cause to be made, at or about the time of the Drawdown Date of any Revolving
Credit Loan or at the time of receipt of any payment of principal on such
Bank's Note, an appropriate notation on such Bank's Record reflecting the
making of such Revolving Credit Loan or (as the case may be) the receipt of
such payment. The outstanding amount of the Revolving Credit Loans set forth
on such Bank's Record shall be prima facie evidence of the principal amount
thereof owing and unpaid to such Bank, but the failure to record, or any error
in so recording, any such amount on such Bank's Record shall not limit or
otherwise affect the obligations of the Borrower hereunder or under any Note
to make payments of principal of or interest on any Note when due.
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2.6 Interest on Revolving Credit Loans.
2.6.1 Interest Rates.
Except as otherwise provided in Section 4.10, Revolving
Credit Loans shall bear interest as follows:
(a) Each Alternative Base Rate Loan shall bear interest at
an annual rate equal to the Alternative Base Rate as in effect from time to
time while such Alternative Base Rate Loan is outstanding.
(b) Each Eurodollar Rate Loan shall bear interest for each
Interest Period at an annual rate equal to the sum of the Eurodollar Rate for
such Interest Period plus the Eurodollar Rate Applicable Margin in effect from
time to time during such Interest Period.
2.6.2. Interest Payment Dates.
The Borrower shall pay all accrued interest on each
Revolving Credit Loan in arrears on each Interest Payment Date with respect
thereto.
2.7 Requests for Revolving Credit Loans.
The Borrower shall give to the Administrative Agent written notice in
the form of Exhibit C hereto (or telephonic notice confirmed in a writing in
the form of Exhibit D hereto) of each Revolving Credit Loan requested
hereunder (a "Loan Request") no later than (a) 11:00 a.m. (Hartford,
Connecticut time) on the proposed Drawdown Date of any Alternative Base Rate
Loan and (b) two (2) Eurodollar Business Days prior to the proposed Drawdown
Date of any Eurodollar Rate Loan. Each such notice shall specify (i) the
principal amount of the Revolving Credit Loan requested, (ii) the proposed
Drawdown Date of such Revolving Credit Loan, (iii) the Type of such Revolving
Credit Loan, and (iv) the Interest Period for such Loan if such Loan is a
Eurodollar Rate Loan. Promptly upon receipt of any such Loan Request, the
Administrative Agent shall notify each of the Banks thereof. Each Loan Request
shall be irrevocable and binding on the Borrower and shall obligate the
Borrower to accept the Revolving Credit Loan requested from the Banks on the
proposed Drawdown Date. Each Loan Request shall be in a minimum aggregate
amount of $1,000,000 or in an integral multiple of $1,000,000 in excess
thereof.
2.8 Conversion Options.
2.8.1 Conversion to Eurodollar Rate Loan.
The Borrower may elect from time to time, subject to Section
2.10, to convert any outstanding Alternative Base Rate Loan to a Eurodollar
Rate Loan, provided that (a) the Borrower shall give the Administrative Agent
at least two (2) Eurodollar Business Days' prior written notice of such
election; and (b) no Alternative Base Rate Loan may be converted into a
Eurodollar Rate Loan when any Default or Event of Default has occurred and is
continuing.
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Each notice of election of such conversion, and each acceptance by the
Borrower of such conversion, shall be deemed to be a representation and
warranty by the Borrower that no Default or Event of Default has occurred and
is continuing. The Administrative Agent shall notify the Banks promptly of any
such notice. On the date on which such conversion is being made, each Bank
shall take such action as is necessary to transfer its Commitment Percentage
of such Loans to its Eurodollar Lending Office. All or any part of outstanding
Alternative Base Rate Loans may be converted into a Eurodollar Rate Loan as
provided herein, provided that any partial conversion shall be in an aggregate
principal amount of $1,000,000 or an integral multiple of $1,000,000 in excess
thereof.
2.8.2 Continuation of Type of Revolving Credit Loan.
(a) All Alternative Base Rate Loans shall continue as
Alternative Base Rate Loans until converted into Eurodollar Rate Loans as
provided in Section 2.8.1.
(b) Any Eurodollar Rate Loan may, subject to Section 2.10,
be continued, in whole or in part, as a Eurodollar Rate Loan upon the
expiration of the Interest Period with respect thereto, provided that (i) the
Borrower shall give the Administrative Agent at least two (2) Eurodollar
Business Days' prior written notice of such election; (ii) no Eurodollar Rate
Loan may be continued as such when any Default or Event of Default has
occurred and is continuing, but shall be automatically converted to an
Alternative Base Rate Loan on the last day of the first Interest Period
relating thereto ending during the continuance of any Default or Event of
Default; and (iii) any partial continuation of a Eurodollar Rate Loan shall be
in an aggregate principal amount of $1,000,000 or an integral multiple of
$1,000,000 in excess thereof. Each notice of election of such continuance of a
Eurodollar Rate Loan, and each acceptance by the Borrower of such continuance,
shall be deemed to be a representation and warranty by the Borrower that no
Default or Event of Default has occurred and is continuing.
(c) If the Borrower shall fail to give any notice of
continuation of a Eurodollar Rate Loan as provided under this Section 2.8.2,
the Borrower shall be deemed to have requested a conversion of the affected
Eurodollar Rate Loan to an Alternative Base Rate Loan on the last day of the
then current Interest Period with respect thereto.
(d) The Administrative Agent shall notify the Banks promptly
when any such continuation or conversion contemplated by this Section 2.8.2 is
scheduled to occur. On the date on which any such continuation or conversion
is to occur, each Bank shall take such action as is necessary to transfer its
Commitment Percentage of such Loans to its Domestic Lending Office or its
Eurodollar Lending Office as appropriate.
2.8.3 Eurodollar Rate Loans.
Any conversion to or from Eurodollar Rate Loans shall be in
such amounts and be made pursuant to such elections so that, after giving
effect thereto, the aggregate principal amount of all Eurodollar Rate Loans
having the same Interest Period shall not be less than $1,000,000 or an
integral multiple of $1,000,000 in excess thereof.
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<PAGE>
2.8.4 Conversion Requests.
All notices of the conversion or continuation of a Loan
provided for in this Section 2.8 shall be in writing in the form of Exhibit E
hereto (or shall be given by telephone and confirmed by a writing in the form
of Exhibit F hereto). Each such notice shall specify (a) the principal amount
and Type of the Loan subject thereto, (b) the date on which the current
Interest Period of such Loan ends if such Loan is a Eurodollar Rate Loan, and
(c) the new Interest Period for such Loan if such Loan is a Eurodollar Rate
Loan. Promptly upon receipt of any such notice, the Administrative Agent shall
notify each of the Banks thereof. Each such notice shall be irrevocable and
binding on the Borrower.
2.9 Funds for Revolving Credit Loans.
2.9.1 Funding Procedures.
Not later than 1:00 p.m. (Hartford, Connecticut time) on the
proposed Drawdown Date of any Revolving Credit Loans or the Drawdown Date of
any Revolving Credit Loans under Section 2.7, each of the Banks will make
available to the Administrative Agent, at the Administrative Agent's Head
Office, in immediately available funds, the amount of such Bank's Commitment
Percentage of the amount of the requested Revolving Credit Loans. Upon receipt
from each Bank of such amount, and upon receipt of the documents required by
Section 10 and the satisfaction of the other conditions set forth therein, to
the extent applicable, the Administrative Agent will make available to the
Borrower the aggregate amount of such Revolving Credit Loans made available to
the Administrative Agent by the Banks. The failure or refusal of any Bank to
make available to the Administrative Agent at the aforesaid time and place on
any Drawdown Date the amount of its Commitment Percentage of the requested
Revolving Credit Loans shall not relieve any other Bank from its several
obligation hereunder to make available to the Administrative Agent the amount
of such other Bank's Commitment Percentage of any requested Revolving Credit
Loans, but no other Bank shall be liable in respect of the failure of such
Bank to make available such amount.
2.9.2 Advances by Administrative Agent.
The Administrative Agent may, unless notified to the
contrary by any Bank prior to a Drawdown Date, assume that such Bank has made
available to the Administrative Agent on such Drawdown Date the amount of such
Bank's Commitment Percentage of the Revolving Credit Loans to be made on such
Drawdown Date, and the Administrative Agent may (but it shall not be required
to), in reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes available to the Administrative Agent
such amount on a date after such Drawdown Date, such Bank shall pay to the
Administrative Agent on demand an amount equal to the weighted average
interest rate paid by the Administrative Agent for federal funds acquired by
the Administrative Agent during each day included in such period, times the
amount of such Bank's Commitment Percentage of such Revolving Credit Loans
calculated on the basis of a 360-day year for the actual number of days
elapsed. A statement of
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<PAGE>
the Administrative Agent submitted to such Bank with respect to any amounts
owing under this paragraph shall be prima facie evidence of the amount due and
owing to the Administrative Agent by such Bank. If the amount of such Bank's
Commitment Percentage of such Revolving Credit Loans is not made available to
the Administrative Agent by such Bank within three (3) Business Days following
such Drawdown Date, the Administrative Agent shall be entitled to recover such
amount from the Borrower within one (1) Business Day after demand therefor,
with interest thereon at the rate per annum applicable to the Revolving Credit
Loans made on such Drawdown Date.
2.10 Limit on Number of Eurodollar Rate Loans.
At no time shall there be outstanding Eurodollar Rate Loans having
more than twenty-five (25) different Interest Periods.
2.11 Competitive Bid Rate Loans.
2.11.1 Competitive Bid Rate Option.
The Borrower may from time to time, as set forth in this
Section, solicit offers from the Banks to make Competitive Bid Rate Loans to
the Borrower. At no time may the aggregate amount of Competitive Bid Rate
Loans outstanding hereunder exceed the Competitive Bid Rate Maximum Amount.
The Banks may, but shall have no obligation to, make such offers and the
Borrower may, but shall have no obligation to, accept any such offers. While
any Competitive Bid Rate Loans are outstanding, the Total Commitment shall be
reduced by an amount equal to the aggregate amount of Competitive Bid Rate
Loans outstanding and each Bank's Commitment shall be so reduced pro rata in
accordance with each Bank's Commitment Percentage. Except as provided in the
immediately preceding sentence, no Bank's obligation to fund its pro rata
portion of Loans other than Competitive Bid Rate Loans shall be reduced or
otherwise affected by virtue of such Bank's making Competitive Bid Rate Loans
hereunder.
2.11.2 Competitive Bid Rate Quote Request.
When the Borrower wishes to solicit offers to make
Competitive Bid Rate Loans, it shall transmit to the Administrative Agent, by
telephone, confirmed promptly by a telecopy, a competitive bid rate quote
request substantially in the form of Exhibit G (a "Competitive Bid Rate Quote
Request") hereto prior to 2:00 p.m. (Hartford, Connecticut time) on (x) the
fourth (4th) Business Day prior to the date of the Loan proposed therein, in
the case of a Eurodollar Auction, or (y) the Business Day next preceding the
date of the Loan proposed therein, in the case of an Absolute Rate Auction
((x) or (y) constituting the "Competitive Bid Rate Activation Date" for such
Loan), which Competitive Bid Rate Quote Request shall certify that no Default
then exists or would be caused by the funding of the proposed Competitive Bid
Rate Loan or Loans, and shall specify:
(a) the proposed date of the Competitive Bid Rate Loan,
which must be a Business Day;
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(b) the aggregate amount of such Competitive Bid Rate
Loan, which shall be $10,000,000 or a larger multiple of $1,000,000;
(c) the duration of the Interest Period applicable
thereto, which shall be from and including seven (7) to and including one
hundred eighty (180) days; and
(d) whether the Competitive Bid Rate Quotes requested are to
set forth a Competitive Bid Rate Margin or a Competitive Bid Absolute Rate, or
both.
The Borrower may request offers to make Competitive Bid Rate Loans for only
one (1) Interest Period in a single Competitive Bid Rate Quote Request. Upon
each submission of a Competitive Bid Rate Quote Request in excess of the first
three (3) such Competitive Bid Rate Quote Requests during any month, the
Borrower shall pay a fee of $500 to the Administrative Agent.
2.11.3 Invitation for Competitive Bid Request Quotes.
Promptly upon receipt of a Competitive Bid Rate Quote
Request, the Administrative Agent shall send to the Banks, by telecopy, not
later than 4:00 p.m. (Hartford, Connecticut time) on the date such Competitive
Bid Rate Quote Request is received by the Administrative Agent, an invitation
for Competitive Bid Rate Quotes substantially in the form of Exhibit H
attached hereto, which shall constitute an invitation by the Borrower to each
Bank to submit Competitive Bid Rate Quotes to the Administrative Agent for
consideration by the Borrower in accordance with this Section.
2.11.4 Submission and Contents of Competitive Bid Rate
Quotes.
(a) Each Bank may, but shall not have any obligation to,
submit a Competitive Bid Rate Quote containing one or more offers to make
Competitive Bid Rate Loans in response to any invitation for Competitive Bid
Rate Quotes. Each Competitive Bid Rate Quote must comply with the requirements
of this Section 2.11 and must be submitted to the Administrative Agent by
telecopy not later than (x) 1:00 p.m. (Hartford, Connecticut time) on the
third (3rd) Business Day prior to the proposed date of the Competitive Bid
Rate Loan, in the case of a Eurodollar Auction, or (y) 10:30 a.m. (Hartford,
Connecticut time) on the proposed date of the Competitive Bid Rate Loan, in
the case of an Absolute Rate Auction; provided, however, that Competitive Bid
Rate Quotes submitted by the Administrative Agent (or any affiliate of the
Administrative Agent) in the capacity of Bank may be submitted, and may only
be submitted, if the Administrative Agent or such affiliate notifies the
Borrower of the terms of the offer or offers contained therein no later than
(x) 12:00 noon (Hartford, Connecticut time) on the third (3rd) Business Day
prior to the proposed date of the Competitive Bid Rate Loan, in the case of
Eurodollar Auction, or (y) 10:00 a.m. (Hartford, Connecticut time) on the
proposed date of the Competitive Bid Rate Loan, in the case of an Absolute
Rate Auction. Subject to Sections 4, 10 and 11 hereof, any Competitive Bid
Rate Quote so made shall be irrevocable except with the written consent of the
Administrative Agent given pursuant to the written instructions of the
Borrower.
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(b) Each Competitive Bid Rate Quote shall be in
substantially the form of Exhibit I attached hereto and shall specify:
(i) the proposed date of the Competitive Bid Rate
Loan (which shall correspond to the date of the Competitive Bid Rate
Loan proposed by the Borrower);
(ii) the principal amount of the Competitive Bid
Rate Loan for which each such offer is being made, which principal
amount (x) must be $10,000,000 or a larger multiple of $1,000,000 and
(y) may not exceed the principal amount of the Competitive Bid Rate
Loans for which offers were requested;
(iii) in the case of a Eurodollar Auction, the
margin above or below the Eurodollar Rate (the "Competitive Bid Rate
Margin") offered for each such Competitive Bid Rate Loan, expressed
as a percentage to be added to or subtracted from such Eurodollar
Rate and rounded upward to the nearest one-hundredth of one percent
(1/100%);
(iv) in the case of an Absolute Rate Auction, the
fixed rate of interest per annum (the "Competitive Bid Absolute
Rate") offered for each such Competitive Bid Rate Loan; and
(v) the identity of the quoting Bank.
(c) Any Competitive Bid Rate Quote may be disregarded if it:
(i) is not substantially in conformity with Exhibit
I attached hereto or does not specify all of the information required
by Section 2.11.4(b);
(ii) contains qualifying, conditional or similar
language;
(iii) proposes terms other than or in addition to
those set forth in the applicable Competitive Bid Rate Quote Request;
or
(iv) is submitted to the Administrative Agent after
the time set forth in Section 2.11.4(a).
2.11.5 Notice to the Borrower.
The Administrative Agent shall promptly notify the Borrower
by telephone not later than (x) 1:30 p.m. (Hartford, Connecticut time) on the
third (3rd) Business Day prior to the proposed date of the Competitive Bid
Rate Loan, in the case of a Eurodollar Auction, or (y) 11:00 a.m. (Hartford,
Connecticut time) on the proposed date of the Competitive Bid Rate Loan, in
the case of an Absolute Rate Auction, confirmed promptly by telecopy, of the
terms of any Competitive Bid Rate Quote submitted by a Bank, specifying
whether it meets the requirements
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of Section 2.11.4 hereof. The Administrative Agent shall promptly notify the
Borrower by telephone, confirmed promptly by telecopy, of the terms of any
Competitive Bid Rate Quote in conformity with Section 2.11.4 that amends,
modifies or is otherwise inconsistent with a previous Competitive Bid Rate
Quote submitted by such Bank and previously transmitted to the Borrower. A
subsequent Competitive Bid Rate Quote may only be submitted prior to
acceptance by the Borrower of another quote under Section 2.11.6 hereof and
may serve only to correct a manifest error in a former Competitive Bid Rate
Quote. The Administrative Agent's notice to the Borrower shall specify (a) the
aggregate principal amount of Competitive Bid Rate Loans for which offers have
been received for each Interest Period specified in the related Competitive
Bid Rate Quote Request and (b) the respective principal amounts and
Competitive Bid Rate Margins or Competitive Bid Absolute Rates, as the case
may be, so offered.
2.11.6 Acceptance and Notice by the Borrower.
Not later than (i) 11:00 a.m. (Hartford, Connecticut time)
on the second (2nd) Business Day prior to the proposed date of the Competitive
Bid Rate Loan, in the case of a Eurodollar Auction, or (ii) 11:30 a.m.
(Hartford, Connecticut time) on the proposed date of the Competitive Bid Rate
Loan, in the case of an Absolute Rate Auction, the Borrower shall notify by
telephone, confirmed promptly by telecopy, the Administrative Agent of its
acceptance or non-acceptance of the offers extended to it pursuant to Section
2.11.5. In the case of acceptance, such notice shall be in the form of a Loan
Request and shall specify the aggregate principal amount of offers for each
Interest Period that are accepted and the Competitive Bid Rate Margin or
Competitive Bid Absolute Rate applicable thereto. The Borrower may accept any
Competitive Bid Rate Quote provided that:
(i) the aggregate principal amount of each
Competitive Bid Rate Loan may not exceed the applicable amount set
forth in the related Competitive Bid Rate Quote Request;
(ii) the principal amount of each Competitive Bid
Rate Loan must be $10,000,000 or a larger multiple of $1,000,000;
(iii) acceptance of offers may only be made on the
basis of ascending Competitive Bid Rate Margins or Competitive Bid
Absolute Rates, as the case may be, for a given Interest Period and
amount; and
(iv) notwithstanding clause (iii) above, the
Borrower need not accept any offer that is described in Section
2.11.4(c) or that otherwise fails to comply with the requirements of
this Credit Agreement.
2.11.7 Allocation by the Administrative Agent; Notice to
Banks of Acceptance of Offers.
If offers to make Competitive Bid Rate Loans are made by two
or more Banks with the same Competitive Bid Rate Margins or Competitive Bid
Absolute Rates, as the case
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may be, for an aggregate principal amount greater than the amount in respect
of which such offers are accepted by the Borrower for the related Interest
Period, the principal amount of Competitive Bid Rate Loans in respect of which
such offers are accepted shall be allocated by the Administrative Agent among
such Banks as nearly as possible (in multiples of not less than $100,000, and
otherwise as the Administrative Agent may deem appropriate) in proportion to
the aggregate principal amounts of such offers. The Administrative Agent shall
promptly notify each Bank whose Competitive Bid Rate Quote or any portion
thereof was accepted by the Borrower and shall specify to such Bank the amount
of any Competitive Bid Rate Loan or its portion of any Competitive Bid Rate
Loan, as applicable, to be made available by such Bank in accordance with
Section 2.11.8 hereof, and the Competitive Bid Rate Margin or Competitive Bid
Absolute Rate applicable thereto. Determinations by the Administrative Agent
of the amounts of the Competitive Bid Rate Loans shall be conclusive and
binding, absent obvious error.
2.11.8 Funding of Competitive Bid Rate Loans.
Not later than 1:00 p.m. (Hartford, Connecticut time) on the
date specified in the applicable Competitive Bid Rate Quote Request, each Bank
whose Competitive Bid Rate Quote Request was accepted (in whole or in part)
shall make available its share of such Competitive Bid Rate Loan (as specified
by the Administrative Agent pursuant to Section 2.11.7 hereof), in immediately
available funds, to the Administrative Agent. Unless the Administrative Agent
determines that any applicable condition specified in Section 10 or this
Section 2.11 has not been satisfied, the Administrative Agent will make the
funds so received from the Banks available to the Borrower prior to 2:00 p.m.
(Hartford, Connecticut time) on the date of such Competitive Bid Rate Loan.
2.11.9 Maturity of Competitive Bid Rate Loans; Prepayment.
Each Competitive Bid Rate Loan shall mature, and the
principal amount thereof shall be due and payable on the last day of the
Interest Period applicable to such Loan, but in no event later than the
Maturity Date. The Borrower shall have the right to prepay any Competitive Bid
Rate Loan at any time in amounts of $1,000,000 or a larger multiple thereof;
provided, however, that prepayments of Competitive Bid Eurodollar Loans shall
be subject to Section 4.9 hereof. The Borrower shall give the Administrative
Agent, no later than 10:00 a.m., Hartford, Connecticut time, at least one (1)
Business Day's prior written notice, of any proposed repayment pursuant to
this Section 2.11.9 of Competitive Bid Rate Loans subject to a Competitive Bid
Absolute Rate, and two (2) Eurodollar Business Days' notice of any proposed
repayment pursuant to this Section 2.11.9 of Competitive Bid Rate Loans
subject to a Competitive Bid Rate Margin, in each case, specifying the
proposed date of payment of such Competitive Bid Rate Loan and the principal
amount to be paid. Each such partial repayment of the Competitive Bid Rate
Loan shall be in an amount of $1,000,000 or an integral multiple of $1,000,000
in excess thereof and shall be accompanied by the payment of accrued interest
on the principal repaid to the date of payment.
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2.11.10 Interest on Competitive Bid Rate Loans.
Each Competitive Bid Rate Loan subject to a Competitive Bid
Rate Margin shall bear interest on the outstanding principal amount thereof,
for the Interest Period applicable thereto, at a rate per annum equal to the
sum of the Eurodollar Rate, plus the Competitive Bid Rate Margin quoted by the
Bank or Banks making such Loan in accordance with this Section. Each
Competitive Bid Rate Loan subject to a Competitive Bid Absolute Rate shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a fixed rate per annum equal to the Competitive
Bid Absolute Rate quoted by the Bank or Banks making such Loan in accordance
with this Section. Interest on Competitive Bid Rate Loans shall be payable on
the Interest Payment Date applicable to such Loan. Interest on Competitive Bid
Rate Loans then outstanding shall also be due and payable on the Maturity
Date.
2.11.11 Competitive Bid Rate Notes.
The Borrower's obligation to pay the principal of, and
interest on the Competitive Bid Rate Loans made to the Borrower by the Banks
shall be evidenced by the Competitive Bid Rate Notes, each substantially in
the form of Exhibit J hereto.
3.0. REPAYMENT OF LOANS.
3.1 Maturity.
The Borrower shall pay on the Maturity Date, and there shall become
absolutely due and payable on the Maturity Date, all of the Loans outstanding
on such date, together with any and all accrued and unpaid interest thereon.
The Commitment shall terminate on the Maturity Date.
3.2 Mandatory Repayments of Revolving Credit Loans.
3.2.1 Loans in Excess of Commitment.
If at any time the sum of the outstanding amount of the
Loans exceeds the Total Commitment, then the Borrower shall immediately pay
the amount of such excess to the Administrative Agent for application first,
to the Competitive Bid Rate Loans; and second, to the Revolving Credit Loans.
Each prepayment of Loans shall be allocated among the Banks (and, in the case
of Banks making Competitive Bid Rate Loans, among such Banks), in proportion,
as nearly as practicable, to the respective unpaid principal amount of each
Bank's Note, with adjustments to the extent practicable to equalize any prior
payments or repayments not exactly in proportion.
3.2.2 Change of Control.
Upon the occurrence of a Change of Control or impending
Change of Control:
(a) the Borrower shall notify the Administrative Agent and
each Bank of such Change of Control or impending Change of Control as provided
in Section 6.5.4;
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(b) the Commitments (but not the right of the Borrower to
convert and continue Types of Revolving Credit Loans under Section 2.8) shall
be suspended for the period from the date of such notice (or any Change of
Control Notice given by the Administrative Agent or a Bank as provided in
Section 6.5.4) through the later to occur of (i) the Change of Control Date or
(ii) the date forty (40) days after the date of such notice from the Borrower
(the "Suspension Period") and the Banks shall have no obligation to make Loans
to the Borrower;
(c) each Bank shall have the right within fifteen (15) days
after the date of such Bank's receipt of a Change of Control Notice under
clause (a) above to demand payment in full of its pro rata share of the
outstanding principal of all Loans, all accrued and unpaid interest thereon,
and any other amounts owing under the Loan Documents, as more particularly
described in clause (e) below;
(d) in the event that any Bank shall have made a demand
under clause (c) above the Borrower shall promptly, but in no event later than
five (5) Business Days after such demand, deliver notice to each Bank (which
notice shall identify the Bank making such demand) and, notwithstanding the
provisions of clause (c) above, the right of each Bank to demand repayment
shall remain in effect through the fifteenth (15th) day next succeeding
receipt by such Bank of any notice required to be given pursuant to this
clause (d), provided that the provisions of this clause (d) shall only apply
with respect to demands given by Banks prior to the expiration of the period
specified in clause (c); and
(e) in the event any Bank makes a demand under clause (c) or
clause (d) above, the Borrower shall on the last day of the Suspension Period
pay to the Administrative Agent for the credit of such Bank its pro rata share
of the outstanding principal of all Revolving Credit Loans (and, in the case
of a Bank that has made Competitive Bid Rate Loans, all Competitive Bid Rate
Loans ), all accrued and unpaid interest thereon, and any other amounts owing
under the Loan Documents, (provided that (i) any Bank may require the Borrower
to postpone prepayment of a Eurodollar Rate Loan or Competitive Bid Eurodollar
Loan until the last day of the Interest Period with respect to such Eurodollar
Rate Loan or Competitive Bid Eurodollar Loan, and (ii) if any Bank elects to
require prepayment of a Eurodollar Rate Loan or Competitive Bid Eurodollar
Loan that has an Interest Period ending less than sixty (60) days after the
date of such demand on a date that is not the last day of the Interest Period
for such Eurodollar Rate Loan or Competitive Bid Eurodollar Loan, such Bank
shall not be entitled to receive any amounts payable under Section 4.9 in
respect of the prepayment of such Eurodollar Rate Loan or Competitive Bid
Eurodollar Loan).
Upon any demand for payment by any Bank under this Section 3.2.2, the
Commitment hereunder provided by such Bank shall terminate, and such Bank
shall be relieved of all further obligations to make Loans to the Borrower. At
the end of the Suspension Period referred to above, the Commitments shall be
restored from all Banks that have not made a demand for payment under this
Section 3.2.2, and this Credit Agreement and the other Loan Documents shall
remain in full force and effect among the Borrower, such Banks and the
Administrative Agent,
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with such changes as may be necessary to reflect the termination of the credit
provided by the Banks that made a demand for payment under this Section 3.2.2.
3.3 Optional Repayments of Revolving Credit Loans.
The Borrower shall have the right, at its election, to repay the
outstanding amount of the Revolving Credit Loans, as a whole or in part, at
any time without penalty or premium, provided that any full or partial
repayment of the outstanding amount of any Eurodollar Rate Loans pursuant to
this Section 3.3 made on a date other than the last day of the Interest Period
relating thereto shall be subject to customary breakage charges as provided in
Section 4.9. The Borrower shall give the Administrative Agent, no later than
10:00 a.m., Hartford, Connecticut time, at least one (1) Business Day's prior
written notice, of any proposed repayment pursuant to this Section 3.3 of
Alternative Base Rate Loans, and two (2) Eurodollar Business Days' notice of
any proposed repayment pursuant to this Section 3.3 of Eurodollar Rate Loans,
in each case, specifying the proposed date of payment of Revolving Credit
Loans and the principal amount to be paid. Each such partial repayment of the
Revolving Credit Loans shall be in an amount of $1,000,000 or an integral
multiple of $1,000,000 in excess thereof, shall be accompanied by the payment
of accrued interest on the principal repaid to the date of payment, and shall
be applied, in the absence of instruction by the Borrower, first to the
principal of Alternative Base Rate Loans and then to the principal of
Eurodollar Rate Loans (in inverse order of the last days of their respective
Interest Periods). Each partial repayment shall be allocated among the Banks,
in proportion, as nearly as practicable, to the respective unpaid principal
amount of each Bank's Revolving Credit Loans, with adjustments to the extent
practicable to equalize any prior repayments not exactly in proportion. Any
amounts repaid under this Section 3.3 may be reborrowed prior to the Maturity
Date as provided in Section 2.7, subject to the conditions of Section 10.
4. 0 CERTAIN GENERAL PROVISIONS
4.1 Application of Payments.
Except as otherwise provided in this Credit Agreement, all payments
in respect of any Loan shall be applied first to accrued and unpaid interest
on such Loan and second to the outstanding principal of such Loan.
4.2 Funds for Payments.
4.2.1 Payments to Administrative Agent.
All payments of principal, interest, commitment fees and any
other amounts due hereunder or under any of the other Loan Documents shall be
made to the Administrative Agent, for the respective accounts of the Banks and
the Administrative Agent, at the Administrative Agent's Head Office, as the
case may be, or at such other location that the Administrative Agent may from
time to time designate, in each case in immediately available funds or
directly from the proceeds of Loans.
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4.2.2 No Offset, Etc.
All payments by the Borrower hereunder and under any of the
other Loan Documents shall be made without setoff or counterclaim and free and
clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions, or
conditions of any nature now or hereafter imposed or levied by any Government
Authority unless the Borrower is compelled by Government Mandate to make such
deduction or withholding. If any such obligation is imposed upon the Borrower
with respect to any amount payable by it hereunder or under any of the other
Loan Documents (other than with respect to taxes on the income or profits of
any Bank or the Administrative Agent), the Borrower will pay to the
Administrative Agent, for the account of the Banks or (as the case may be) the
Administrative Agent, on the date on which such amount is due and payable
hereunder or under such other Loan Document, such additional amount in Dollars
as shall be necessary to enable the Banks or the Administrative Agent to
receive the same net amount which the Banks or the Administrative Agent would
have received on such due date had no such obligation been imposed upon the
Borrower. The Borrower will deliver promptly to the Administrative Agent
certificates or other valid vouchers for all taxes or other charges deducted
from or paid with respect to payments made by the Borrower hereunder or under
such other Loan Document. If a refund is received (either in cash or by means
of a credit against future tax obligations) by the Administrative Agent or any
Bank in respect of an amount previously paid by the Borrower pursuant to the
immediately preceding sentence, such refund shall be promptly paid over to the
Borrower.
4.2.3 Fees Non-Refundable.
Except as expressly set forth herein, all fees payable
hereunder are non-refundable, provided that (a) if any of the Banks is finally
adjudicated or is found in final arbitration proceedings to have been grossly
negligent or to have committed willful misconduct with respect to the
transactions contemplated hereby, then no facility fee shall be payable to
such Bank after the date of such final adjudication or arbitration (and such
Bank shall refund any facility fee paid to it and attributable to the period
from and after the date on which such grossly negligent conduct or willful
misconduct occurred), and (b) if the Administrative Agent is finally
adjudicated or is found in final arbitration proceedings to have been grossly
negligent or to have committed willful misconduct with respect to the
transactions contemplated hereby, then no administrative agent's fee will be
due and payable after the date of such final adjudication or arbitration. If
the Administrative Agent is so finally found to have been grossly negligent or
to have committed willful misconduct, the amount of any administrative agent's
fee paid or prepaid by the Borrower and attributable to the period from and
after the date on which such grossly negligent conduct or willful misconduct
occurred shall be refunded.
4.3 Computations.
All computations of interest with respect to Alternative Base Rate
Loans (including, without limitation, interest computations with respect to
any Absolute Rate Loan) shall be based
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on a year of 365 or 366 (as the case may be) days and paid for the actual
number of days elapsed. All computations of interest with respect to
Eurodollar Rate Loans or Competitive Bid Eurodollar Loans shall be based on a
year of 360 days and paid for the actual number of days elapsed. Except as
otherwise provided in the definition of the term "Interest Period" with
respect to Eurodollar Rate Loans or Competitive Bid Eurodollar Loans, whenever
a payment hereunder or under any of the other Loan Documents becomes due on a
day that is not a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and interest shall accrue during
such extension.
4.4 Inability to Determine Eurodollar Rate.
In the event, prior to the commencement of any Interest Period
relating to any Eurodollar Rate Loan or Competitive Bid Eurodollar Loan, the
Administrative Agent shall determine that adequate and reasonable methods do
not exist for ascertaining the Eurodollar Rate that would otherwise determine
the rate of interest to be applicable to any Eurodollar Rate Loan or
Competitive Bid Eurodollar Loan during any Interest Period, the Administrative
Agent shall forthwith give notice of such determination (which shall be
conclusive and binding on the Borrower and the Banks) to the Borrower and the
Banks. In such event (a) any Loan Request or Conversion Request with respect
to Eurodollar Rate Loans or Competitive Bid Eurodollar Loans shall be
automatically withdrawn and shall be deemed a request for Alternative Base
Rate Loans, (b) each Eurodollar Rate Loans or Competitive Bid Eurodollar Loans
will automatically, on the last day of the then current Interest Period
relating thereto, become an Alternative Base Rate Loan, and (c) the
obligations of the Banks to make Eurodollar Rate Loans or Competitive Bid
Eurodollar Loans shall be suspended until the Administrative Agent determines
that the circumstances giving rise to such suspension no longer exist,
whereupon the Administrative Agent shall so notify the Borrower and the Banks.
4.5 Illegality.
Notwithstanding any other provisions herein, if any present or future
Government Mandate shall make it unlawful for any Bank to make or maintain
Eurodollar Rate Loans or Competitive Bid Eurodollar Loans, such Bank shall
forthwith give notice of such circumstances to the Borrower and the other
Banks and thereupon (a) the commitment of such Bank to make Eurodollar Rate
Loans or Competitive Bid Eurodollar Loans or convert Alternative Base Rate
Loans to Eurodollar Rate Loans or Competitive Bid Eurodollar Loans shall
forthwith be suspended, and (b) such Bank's Loans then outstanding as
Eurodollar Rate Loans or Competitive Bid Eurodollar Loans, if any, shall be
converted automatically to Alternative Base Rate Loans on the last day of each
then existing Interest Period applicable to such Eurodollar Rate Loans or
Competitive Bid Eurodollar Loans or within such earlier period after the
occurrence of such circumstances as may be required by Government Mandate. The
Borrower shall promptly pay the Administrative Agent for the account of such
Bank, upon demand by such Bank, any additional amounts necessary to compensate
such Bank for any costs incurred by such Bank in making any conversion in
accordance with this Section 4.5 other than on the last day of an Interest
Period, including any interest or fees payable by such Bank to lenders of
funds obtained
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by it in order to make or maintain its Eurodollar Rate Loans or Competitive
Bid Eurodollar Loans hereunder.
4.6 Additional Costs, Etc.
If any present or future applicable Government Mandate (whether or
not having the force of law), shall:
(a) subject any Bank or the Administrative Agent to any tax,
levy, impost, duty, charge, fee, deduction, or withholding of any nature with
respect to this Credit Agreement, the other Loan Documents, such Bank's
Commitment, or the Loans (other than taxes based upon or measured by the
income or profits of such Bank or the Administrative Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Loans or any other amounts payable to any
Bank or the Administrative Agent under this Credit Agreement or the other Loan
Documents, or
(c) impose, increase, or render applicable (other than to
the extent specifically provided for elsewhere in this Credit Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy, or other
similar requirements (whether or not having the force of law) against assets
held by, or deposits in or for the account of, or loans by, or commitments of
an office of any Bank, or
(d) impose on any Bank or the Administrative Agent any other
conditions or requirements with respect to this Credit Agreement, the other
Loan Documents, the Loans, such Bank's Commitment, or any class of loans or
commitments of which any of the Loans or such Bank's Commitment forms a part,
and the result of any of the foregoing is:
(i) to increase by an amount deemed by such Bank to
be material the cost to any Bank of making, funding, issuing,
renewing, extending, or maintaining any of the Loans or such Bank's
Commitment, or
(ii) to reduce, by an amount deemed by such Bank or
the Administrative Agent, as the case may be, to be material, the
amount of principal, interest, or other amount payable to such Bank
or the Administrative Agent hereunder on account of such Bank's
Commitment or any of the Loans, or
(iii) to require such Bank or the Administrative
Agent to make any payment that, but for such conditions or
requirements described in clauses (a) through (d), would not be
payable hereunder, or forego any interest or other sum that, but for
such conditions or requirements described in clauses (a) through (d),
would be payable to such Bank or the Administrative Agent hereunder,
in any case the amount of which payment or foregone interest or other
sum is deemed by such Bank or the Administrative Agent, as the case
may be, to be material and is calculated by reference to the gross
amount of any
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sum receivable or deemed received by such Bank or the Administrative
Agent from the Borrower hereunder, then, and in each such case, (aa)
the Borrower will, upon demand made by such Bank or (as the case may
be) the Administrative Agent at any time and from time to time (such
demand to be made in any case not later than the first to occur of
(I) the date one year after such event described in clause (i), (ii),
or (iii) giving rise to such demand, and (II) the date ninety (90)
days after both the payment in full of all outstanding Loans and the
termination of the Commitments) and as often as the occasion therefor
may arise, pay to such Bank or the Administrative Agent such
additional amounts as will be sufficient to compensate such Bank or
the Administrative Agent for such additional cost, reduction,
payment, foregone interest or other sum, (bb) the Borrower shall be
entitled, upon notice to the Administrative Agent and each Bank given
within ninety (90) days of any demand by a Bank under clause (aa), to
repay in cash in full all, but not less than all, of the Loans of
such Bank, together with all accrued and unpaid interest on such
Loans and any other amounts owing to such Bank under the Loan
Documents and terminate (in full and not in part) such Bank's
Commitment, and, (cc) in the event the Borrower elects to repay the
Loans of any Bank under clause (bb), each other Bank shall be
entitled, by notice to the Administrative Agent and the Borrower
given within thirty (30) days after receipt of the notice referred to
in clause (bb), to require the Borrower to repay in cash in full,
within thirty (30) days of such notice under this clause (cc), all,
but not less than all, of the Loans of such other Bank, together with
all accrued and unpaid interest thereon and any other amounts owing
to such other Bank under the Loan Documents. Subject to the terms
specified above in this Section 4.6, the obligations of the Borrower
under this Section 4.6 shall survive repayment of the Loans and
termination of the Commitments.
4.7 Capital Adequacy.
If after the date hereof any Bank or the Administrative Agent
determines that (a) the adoption of or change in any Government Mandate
(whether or not having the force of law) regarding capital requirements for
banks or bank holding companies or any change in the interpretation or
application thereof by any Government Authority with appropriate jurisdiction,
or (b) compliance by such Bank or the Administrative Agent, or any corporation
controlling such Bank or the Administrative Agent, with any Government Mandate
(whether or not having the force of law) has the effect of reducing the return
on such Bank's or the Administrative Agent's commitment with respect to any
Loans to a level below that which such Bank or the Administrative Agent could
have achieved but for such adoption, change, or compliance (taking into
consideration such Bank's or the Administrative Agent's then existing policies
with respect to capital adequacy and assuming full utilization of such
Entity's capital) by any amount reasonably deemed by such Bank or (as the case
may be) the Administrative Agent to be material, then such Bank or the
Administrative Agent may notify the Borrower of such fact. To the extent that
the amount of such reduction in the return on capital is not reflected in the
Alternative Base Rate, (aa) the Borrower shall pay such Bank or (as the case
may be) the Administrative Agent for the amount of such reduction in the
return on capital as and when such reduction is determined upon presentation
by such Bank or (as the case may be) the Administrative Agent of a certificate
in accordance with Section 4.8 hereof (but in any case not
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later than the first to occur of (I) the date one year after such adoption,
change, or compliance causing such reduction, and (II) as to adoptions of or
changes in Government Mandates occurring prior to the repayment of the Loans
and the termination of the Commitment the date ninety (90) days after both the
payment in full of all outstanding Loans and termination of the Commitments),
(bb) the Borrower shall be entitled, upon notice to the Administrative Agent
and each Bank given within ninety (90) days of any notice by such Bank under
the next preceding sentence, to repay in cash in full all, but not less than
all, of the Loans of such Bank, together with all accrued and unpaid interest
on such Loans and any other amounts owing to such Bank under the Loan
Documents and terminate (in full and not in part) such Bank's Commitment, and,
(cc) in the event the Borrower elects to repay the Loans of any Bank under
clause (bb), each other Bank shall be entitled, by notice to the
Administrative Agent and the Borrower given within thirty (30) days after
receipt of the notice referred to in clause (bb), to require the Borrower to
repay in cash in full, within thirty (30) days of the notice under this clause
(cc), all, but not less than all, of the Loans of such other Bank, together
with all accrued and unpaid interest on such Loans and any other amounts owing
to such other Bank under the Loan Documents. Each Bank shall allocate such
cost increases among its customers in good faith and on an equitable basis.
Subject to the terms specified above in this Section 4.7, the obligations of
the Borrower under this Section 4.7 shall survive repayment of the Loans and
termination of the Commitments.
4.8 Certificate.
A certificate setting forth any additional amounts payable pursuant
to Section 4.6 or Section 4.7 and a brief explanation of such amounts which
are due and in reasonable detail the basis of the calculation and allocation
thereof, submitted by any Bank or the Administrative Agent to the Borrower,
shall be conclusive evidence, absent manifest error, that such amounts are due
and owing.
4.9 Indemnity.
The Borrower shall indemnify and hold harmless each Bank from and
against any loss, cost, or expense (excluding loss of anticipated profits)
that such Bank may sustain or incur as a consequence of (a) default by the
Borrower in payment of the principal amount of or any interest on any
Eurodollar Rate Loans or Competitive Bid Eurodollar Loans as and when due and
payable, including any such loss or expense arising from interest or fees
payable by such Bank to lenders of funds obtained by it in order to maintain
its Eurodollar Rate Loans or Competitive Bid Eurodollar Loans, (b) default by
the Borrower in making a borrowing or conversion after the Borrower has given
(or is deemed to have given) a Loan Request or a Conversion Request; or (c)
except as otherwise expressly provided in Section 3.2.2, the making of any
payment of a Eurodollar Rate Loan or Competitive Bid Eurodollar Loan or the
making of any conversion of any such Loan to an Alternative Base Rate Loan on
a day that is not the last day of the applicable Interest Period with respect
thereto, including interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain any such Loans. The obligations of the
Borrower under this Section 4.9 shall survive repayment of the Loans and
termination of the Commitments.
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4.10 Interest After Default.
All amounts outstanding under the Loan Documents that are not paid
when due, including all overdue principal and (to the extent permitted by
applicable Government Mandate) interest and all other overdue amounts (after
giving effect to any applicable grace period), shall to the extent permitted
by applicable Government Mandate bear interest until such amount shall be paid
in full (after as well as before judgment) at a rate per annum equal to two
percent (2%) above the interest rate otherwise applicable to such amounts. Any
interest accruing under this section on overdue principal or interest shall be
due and payable upon demand.
5.0. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks and the
Administrative Agent as follows:
5.1 Corporate Authority.
5.1.1 Incorporation; Good Standing.
Each of the Borrower, its Subsidiaries, and the General
Partner (a) is a corporation, limited partnership or general partnership, as
the case may be, duly organized, validly existing, and in good standing under
the laws of its state of organization, (b) has all requisite corporate or
partnership power to own its material property and conduct its material
business as now conducted and as presently contemplated, and (c) is in good
standing as a foreign corporation, limited partnership or general partnership,
as the case may be, and is duly authorized to do business in each jurisdiction
where it owns or leases properties or conducts any business so as to require
such qualification except where a failure to be so qualified would not be
likely to have a Material Effect.
5.1.2 Authorization.
The execution, delivery, and performance of this Credit
Agreement and the other Loan Documents to which the Borrower, any of its
Subsidiaries, or the General Partner is or is to become a party and the
transactions contemplated hereby and thereby (a) are within the corporate or
partnership power of each such Entity, (b) have been duly authorized by all
necessary corporate or partnership proceedings on behalf of each such Entity,
(c) do not conflict with or result in any breach or contravention of any
Government Mandate to which any such Entity is subject, (d) do not conflict
with or violate any provision of the corporate charter or bylaws, or the
limited partnership certificate or agreement, or its governing documents in
the case of any general partnership, as the case may be, of any such Entity,
and (e) do not violate, conflict with, constitute a default or event of
default under, or result in any rights to accelerate or modify any obligations
under any Contract to which any such Entity is party or subject, or to which
any of its respective assets are subject, except, as to the foregoing clauses
(c) and (e) only, where the same would not be likely to have a Material
Effect.
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5.1.3 Enforceability.
The execution and delivery of this Credit Agreement and the
other Loan Documents to which the Borrower, any of its Subsidiaries, or the
General Partner is or is to become a party will result in valid and legally
binding obligations of such Person enforceable against it in accordance with
the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium, or other laws relating to or affecting generally the enforcement
of creditors' rights and by general principles of equity, regardless of
whether enforcement is sought in a Proceeding in equity or at law.
5.1.4 Equity Securities.
The General Partner is the only general partner of the
Borrower. All of the outstanding Equity Securities of the Borrower are validly
issued, fully paid, and non-assessable.
5.2 Governmental Approvals.
The execution, delivery, and performance by the Borrower, its
Subsidiaries, and the General Partner of this Credit Agreement and the other
Loan Documents to which the Borrower, any of its Subsidiaries, or the General
Partner is or is to become a party and the transactions contemplated hereby
and thereby do not require the approval or consent of, or filing with, any
Government Authority other than those already obtained and set forth on
Schedule 5.2.
5.3 Liens; Leases.
The assets reflected in the consolidated balance sheet of the
Borrower dated as of December 31, 1998 and delivered to the Administrative
Agent and the Banks under Section 5.4 are subject to no Liens except Permitted
Liens. Each of the Borrower and its Subsidiaries enjoys quiet possession under
all leases relating to Real Estate or personal property to which it is party
as a lessee, and each such lease is Fully Effective.
5.4 Financial Statements.
There has been furnished to the Administrative Agent and each of the
Banks (a) a consolidated balance sheet of the Borrower as at December 31,
1998, and a consolidated statement of income and cash flow of the Borrower for
the fiscal year then ended, certified by the Borrower's independent certified
public accountants, and (b) unaudited interim condensed consolidated balance
sheets of the Borrower and the Consolidated Subsidiaries as at March 31, 1999,
and interim condensed consolidated statements of income and of cash flow of
the Borrower and the Consolidated Subsidiaries for the respective fiscal
periods then ended and as set forth in the Borrower's Quarterly Report on Form
10-Q for such fiscal quarter. With respect to the financial statement prepared
in accordance with clause (a) above, such balance sheet and statement of
income have been prepared in accordance with GAAP and present fairly in all
material respects the financial position of the Borrower and the Consolidated
Subsidiaries as at the close of business on the respective dates thereof and
the results of operations of the Borrower
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and the Consolidated Subsidiaries for the fiscal periods then ended; or, in
the case of the financial statements referred to in clause (b), have been
prepared in accordance with Rule 10-01 of Regulation S-X of the Securities and
Exchange Commission, and contain all adjustments necessary for a fair
presentation of (A) the results of operations of the Borrower for the periods
covered thereby, (B) the financial position of the Borrower at the date
thereof, and (C) the cash flows of the Borrower for periods covered thereby
(subject to year-end adjustments). There are no contingent liabilities of the
Borrower or the Consolidated Subsidiaries as of such dates involving material
amounts, known to the executive management of the Borrower that (aa) should
have been disclosed in said balance sheets or the related notes thereto in
accordance with GAAP and the rules and regulations of the Securities and
Exchange Commission, and (bb) were not so disclosed.
5.5 No Material Changes, Etc.
No change in the Business of the Borrower and its Consolidated
Subsidiaries, taken as a whole, has occurred since March 31, 1999 that has
resulted in a Material Effect.
5.6 Permits.
The Borrower and its Subsidiaries have all Permits necessary or
appropriate for them to conduct their Business, except where the failure to
have such Permits would not be likely to have a Material Effect. All of such
Permits are in full force and effect. Without limiting the foregoing, the
Borrower is duly registered as an "investment adviser" under the Investment
Advisers Act of 1940 and under the applicable laws of each state in which such
registration is required in connection with the investment advisory business
of the Borrower and in which the failure to obtain such registration would be
likely to have a Material Effect; Alliance Distributors is duly registered as
a "broker/dealer" under the Securities Exchange Act of 1934 and under the
securities or blue sky laws of each state in which such registration is
required in connection with the business conducted by Alliance Distributors
and where a failure to obtain such registration would be likely to have a
Material Effect, and is a member in good standing of the National Association
of Securities Dealers, Inc.; no Proceeding is pending or threatened with
respect to the suspension, revocation, or termination of any such registration
or membership, and the termination or withdrawal of any such registration or
membership is not contemplated by the Borrower or Alliance Distributors,
except, only with respect to registrations by the Borrower and Alliance
Distributors required under state law, as would not be likely to have a
Material Effect.
5.7 Litigation.
There is no Proceeding of any kind pending or threatened, in writing,
against the Borrower, any of its Subsidiaries, or the General Partner that
questions the validity of this Credit Agreement or any of the other Loan
Documents, or any action taken or to be taken pursuant hereto or thereto.
There is no Proceeding of any kind pending or threatened, in writing, against
the Borrower, any of its Subsidiaries, or the General Partner that is
reasonably likely to, either in any case or in the aggregate, impair or
prevent the Borrower's performance and observance of its obligations under
this Credit Agreement or the other Loan Documents.
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5.8 Material Contracts.
Except as would not be likely to have a Material Effect, each
Contract to which any of the Borrower and its Subsidiaries is party or
subject, or by which any of their respective assets are bound (including
investment advisory contracts and investment company distribution plans) (a)
is Fully Effective, (b) is not subject to any default or event of default with
respect to the Borrower, any of its Subsidiaries or, to the best knowledge of
the executive management of the Borrower, any other party, (c) is not subject
to any notice of termination given or received by the Borrower or any of its
Subsidiaries, and (d) is, to the best knowledge of the executive management of
the Borrower, the legal, valid, and binding obligation of each party thereto
other than the Borrower and its Subsidiaries enforceable against such parties
according to its terms.
5.9 Compliance with Other Instruments, Laws, Etc.
None of the Borrower, its Subsidiaries, and the General Partner is,
in any respect material to the Borrower and its Consolidated Subsidiaries
taken as a whole, in violation of or default under (a) any provision of its
certificate of incorporation or by-laws, or its certificate of limited
partnership or agreement of limited partnership, or its governing documents in
the case of any general partnership, as the case may be, (b) any Contract to
which it is or may be subject or by which it or any of its properties are or
may be bound, or (c) any Government Mandate, including Government Mandates
relating to occupational safety and employment matters.
5.10 Tax Status.
The Borrower and its Subsidiaries (a) have made or filed all federal
and state income and all other tax returns, reports, and declarations required
by any Government Authority to which any of them is subject, except where the
failure to make or file the same would not be likely to have a Material
Effect, (b) have paid all taxes and other governmental assessments and charges
due, except those being contested in good faith and by appropriate Proceedings
or those where a failure to pay is not reasonably likely to have a Material
Effect, and (c) have set aside on their books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which
such returns, reports, or declarations apply. There are no unpaid taxes in any
material amount claimed to be due from the Borrower or any of its Subsidiaries
by any Government Authority, and the executive management of the Borrower
knows of no basis for any such claim.
5.11 No Event of Default.
No Default or Event of Default has occurred and is continuing.
5.12 Holding Company and Investment Company Acts.
Neither the Borrower nor any of its Subsidiaries is a "holding
company", or a "subsidiary company" of a "holding company", as such terms are
defined in the Public Utility Holding
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Company Act of 1935. Neither the Borrower nor any of its Subsidiaries
(excluding investment companies in which the Borrower or a Consolidated
Subsidiary has made "seed money" investments permitted by Section 7.6(b)) is
an "investment company", as such term is defined in the 1940 Act.
5.13 Insurance.
The Borrower and its Subsidiaries maintain insurance with financially
sound and reputable insurers in such coverage amounts, against such risks,
with such deductibles and upon such other terms, or are self-insured in
respect of such risks (with appropriate reserves to the extent required by
GAAP), as is reasonable and customary for firms engaged in businesses similar
to those of the Borrower and its Subsidiaries. All policies of insurance
maintained by the Borrower or its Subsidiaries are Fully Effective. All
premiums due on such policies have been paid or accrued on the books of the
Borrower or its Subsidiaries, as appropriate.
5.14 Certain Transactions.
Except in connection with transactions occurring in the ordinary
course of business, and, taking into account the totality of the relationships
involved, with respect to transactions occurring on fair and reasonable terms
no less favorable to the Borrower and its Consolidated Subsidiaries taken as a
whole than would be obtained in comparable arms' length transactions with
Persons that are not Affiliates of the Borrower or its Subsidiaries, none of
the officers, directors, partners, or employees of the Borrower or any of its
Subsidiaries, or, to the knowledge of the executive management of the
Borrower, any Entity (other than a Subsidiary) in which any such officer,
director, partner, or employee has a substantial interest or is an officer,
director, trustee, or partner, is at present a party to any transaction with
the Borrower or any of its Subsidiaries (other than for or in connection with
services as officers, directors, partners, or employees, as the case may be),
including any Contract providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director, partner, employee,
or Entity.
5.15 Employee Benefit Plans.
Each contribution required to be made to a Guaranteed Pension Plan,
whether required to be made to avoid the incurrence of an accumulated funding
deficiency, the notice or lien provisions of section 302(f) of ERISA, or
otherwise, has been timely made. No waiver of an accumulated funding
deficiency or extension of amortization periods has been received with respect
to any Guaranteed Pension Plan. No liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been incurred by the
Borrower or any ERISA Affiliate with respect to any Guaranteed Pension Plan
and there has not been any ERISA Reportable Event, or any other event or
condition which presents a material risk of termination of any Guaranteed
Pension Plan by the PBGC. Based on the latest valuation of each Guaranteed
Pension Plan (which in each case occurred within fifteen (15) months of the
date of the representation), and on the actuarial methods and assumptions
employed for that valuation, the aggregate benefit liabilities of all such
Guaranteed Pension Plans within the meaning of section 4001 of
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ERISA did not exceed the aggregate value of the assets of all such Guaranteed
Pension Plans by more than $20,000,000, disregarding for this purpose the
benefit liabilities and assets of any Guaranteed Pension Plan with assets in
excess of benefit liabilities.
5.16 Regulations U and X.
The proceeds of the Loans shall be used by the Borrower (i) to
refinance advances outstanding under that certain Revolving Credit Agreement,
dated as of July 20, 1998, among the Borrower, NationsBank, N.A., individually
and as agent, The Chase Manhattan Bank, individually and as agent, The Bank of
New York, individually and as agent, and the lenders named therein, as
amended, restated, amended and restated, supplemented or otherwise modified
from time to time (the "Existing Credit Agreement"), (ii) to finance the
payment by the Borrower of certain commissions to brokers in connection with
the sale of "B" shares of investment companies and mutual funds managed or
advised by the Borrower or one of its Subsidiaries, (iii) for general
partnership purposes and working capital purposes, including, without
limitation, acquisitions and (iv) Capital Expenditures. No portion of any Loan
is to be used for the purpose of purchasing or carrying any "margin security"
or "margin stock" as such terms are used in Regulations U and X of the Board
of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224. The
Borrower is not engaged in the business of extending credit for the purpose of
purchasing or carrying any "margin security" or "margin stock." At no time
would more than 25% of the value of the assets of the Borrower or of the
Borrower and its Consolidated Subsidiaries that are subject to any
"arrangement" (as such term is used in section 221.2(g) of such Regulation U)
hereunder be represented by any "margin security" or "margin stock."
5.17 Environmental Compliance.
To the best of the Borrower's knowledge:
(a) none of the Borrower, its Subsidiaries, the General
Partner, and any operator of the Real Estate or any operations thereon is in
violation, or alleged violation, of any Government Mandate or Permit
pertaining to environmental, safety or public health matters, including the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal
Clean Water Act, the Federal Clean Air Act, and the Toxic Substances Control
Act (including RCRA, CERCLA and SARA, collectively, the "Environmental Laws"),
which violation would be likely to have a material adverse effect on the
environment or a Material Effect;
(b) neither the Borrower nor any of its Subsidiaries has
received notice from any third party, including any Government Authority, (i)
that any one of them has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R. Part 300
Appendix B (1986); (ii) that any hazardous waste, as defined by 42 U.S.C.
section 9601(5), any hazardous substances as defined by 42 U.S.C. section
9601(14), any pollutant or contaminant as
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defined by 42 U.S.C. section 9601(33) and any toxic substances, oil, hazardous
materials, or other chemicals or substances regulated by any Environmental
Laws ("Hazardous Substances") that any one of them has generated, transported,
or disposed of has been found at any site at which a Government Authority or
other third party has conducted, or has ordered that other parties conduct, a
remedial investigation, removal, or other response action pursuant to any
Environmental Law; or (iii) that it is or shall be a named party to any
Proceeding (in each case, contingent or otherwise) arising out of any third
party's incurrence of costs, expenses, losses, or damages of any kind
whatsoever in connection with the release of Hazardous Substances;
(c) no portion of the Real Estate has been used for the
handling, processing, storage, or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws;
(d) no underground tank or other underground storage
receptacle for Hazardous Substances is located on any portion of the Real
Estate;
(e) in the course of any activities conducted by any of the
Borrower, its Subsidiaries, the General Partner, and operators of any Real
Estate, no Hazardous Substances have been generated or are being used on the
Real Estate except in accordance with applicable Environmental Laws;
(f) there have been no releases (i.e. any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing, or dumping) or threatened
releases of Hazardous Substances on, upon, into, or from the Real Estate that
would have a material adverse effect on the value of the Real Estate or the
environment;
(g) there have been no releases of Hazardous Substances on,
upon, from, or into any real property in the vicinity of any of the Real
Estate that (i) may have come to be located on the Real Estate through soil or
groundwater contamination, and, (ii) if so located, would have a material
adverse effect on the value of the Real Estate or the environment; and
(h) any Hazardous Substances that have been generated by any
of the Borrower and its Subsidiaries, or on the Real Estate by any other
Person, have been transported offsite only by carriers having an
identification number issued by the EPA, treated or disposed of only by
treatment or disposal facilities maintaining valid Permits as required under
applicable Environmental Laws, which transporters and facilities have been and
are, to the best of the Borrower's knowledge, operating in compliance with
such Permits and applicable Environmental Laws.
5.18 Subsidiaries, Etc.
Schedule 5.18 sets forth a list of (a) each Subsidiary of the
Borrower (in which each Restricted Subsidiary at the date hereof is
specifically identified as such), (b) the percentage of authorized and
outstanding Equity Securities of each class of each Subsidiary of the Borrower
owned, directly or indirectly, by the Borrower, and (c) any partnership or
joint venture in which
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the Borrower or any of its Subsidiaries is engaged with any other Person.
Those Equity Securities of each Subsidiary of the Borrower which are owned
directly or indirectly by the Borrower are validly issued, fully paid, and
non-assessable.
5.19 Funded Debt.
Schedule 5.19 sets forth as of the end of the calendar month
immediately preceding the Closing Date all outstanding Funded Debt of the
Borrower and its Subsidiaries.
5.20 General.
The Borrower's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, and Quarterly Reports on Form 10-Q referred to in Section
5.4(a) conform in all material respects to the requirements of the Securities
Exchange Act of 1934, as amended, and to all applicable rules and regulations
of the Securities and Exchange Commission, and (b) as amended by interim
filings, do not contain an untrue statement of any material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading.
6.0 AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:
6.1 Punctual Payment.
The Borrower will duly and punctually pay or cause to be paid the
principal and interest on the Loans, the facility fee, the utilization fee,
and all other amounts provided for in this Credit Agreement and the other Loan
Documents to which the Borrower is party, all in accordance with the terms of
this Credit Agreement and such other Loan Documents.
6.2 Maintenance of Office.
The Borrower will maintain its chief executive office in New York,
New York, or at such other place in the United States of America as the
Borrower shall designate upon prior written notice to the Administrative
Agent, where notices, presentations, and demands to or upon the Borrower in
respect of the Loan Documents may be given or made.
6.3 Records and Accounts.
The Borrower will, and will cause each of its Subsidiaries to, keep
complete and accurate records and books of account.
6.4 Financial Statements, Certificates, and Information.
The Borrower will deliver to each of the Banks:
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(a) as soon as practicable, but in any event not later
than ninety-five (95) days after the end of each fiscal year of the Borrower:
(i) the consolidated balance sheet of the Borrower
as at the end of such fiscal year;
(ii) the consolidating balance sheet of the Borrower
as at the end of such fiscal year;
(iii) the consolidated statement of income and
consolidated statement of cash flows of the Borrower for such fiscal
year; and
(iv) the consolidating statement of income and
consolidating statement of cash flows of the Borrower for such fiscal
year.
Each of the balance sheets and statements delivered under this Section 6.4(a)
shall (i) set forth in comparative form the figures for the previous fiscal
year; (ii) be in reasonable detail and prepared in accordance with GAAP based
on the records and books of account maintained as provided in Section 6.3;
(iii) as to items (i) and (iii) above, be accompanied by a certification by
the principal financial or accounting officer of the Borrower that the
information contained in such financial statements presents fairly in all
material respects the financial position of the Borrower and the Consolidated
Subsidiaries on the date thereof and results of operations and cash flows of
the Borrower and the Consolidated Subsidiaries for the periods covered
thereby; and (iv) as to items (i) and (iii) above, be certified, without
limitation as to scope, by KPMG Peat Marwick LLP or another firm of
independent certified public accountants reasonably satisfactory to the
Administrative Agent, and shall be accompanied by a written statement from
such accountants to the effect that in connection with their audit of such
financial statements nothing has come to their attention that caused them to
believe that the Borrower has failed to comply with the terms, covenants,
provisions or conditions of Section 6.3, Section 7, and Section 8 of this
Credit Agreement as to accounting matters (provided that such accountants may
also state that the audit was not directed primarily toward obtaining
knowledge of such noncompliance), or, if such accountants shall have obtained
knowledge of any such noncompliance, they shall disclose in such statement any
such noncompliance; provided that such accountants shall not be liable to the
Banks for failure to obtain knowledge of any such noncompliance;
(b) as soon as practicable, but in any event not later than
fifty (50) days after the end of the first three fiscal quarters of each
fiscal year of the Borrower, (i) the unaudited interim condensed consolidated
balance sheet of the Borrower as at the end of such fiscal quarter, and (ii)
the unaudited interim condensed consolidated statement of income and unaudited
interim condensed consolidated statement of cash flow of the Borrower for such
fiscal quarter and for the portion of the Borrower's fiscal year then elapsed,
all in reasonable detail and prepared in accordance with Rule 10-01 of
Regulation S-X of the Securities and Exchange Commission, together with a
certification by the principal financial or accounting officer of the Borrower
that, in the opinion of management of the Borrower, all adjustments necessary
for a fair presentation
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of (A) the results of operations of the Borrower for the periods covered
thereby, (B) the financial position of the Borrower at the date thereof, and
(C) the cash flows of the Borrower for periods covered thereby have been made
(subject to year-end adjustments);
(c) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement certified
by the principal financial officer, treasurer or general counsel of the
Borrower in substantially the form of Exhibit K hereto and setting forth in
reasonable detail computations evidencing compliance with the covenants
contained in Section 8 and (if applicable) reconciliations to reflect changes
in GAAP since December 31, 1998;
(d) promptly after the filing or mailing thereof, copies of
all material filed with the Securities and Exchange Commission or sent to the
holders of the Equity Securities of the Borrower; and
(e) from time to time such other financial data and
information (including accountants' management letters) as the Administrative
Agent (having been requested to do so by any Bank) may reasonably request;
provided, however, that each of the Administrative Agent and the Banks agrees
that with respect to any data and information obtained by it as a result of
any request pursuant to this clause (e) (and with respect to any other data
and information that is by the terms of this Credit Agreement to be held
subject to this Section 6.4(e)), to the extent that such data and information
has not theretofore otherwise been disclosed in such a manner as to render
such data and information no longer confidential, each of the Administrative
Agent and the Banks will use its reasonable efforts (consistent with its
established procedures) to reasonably maintain (and cause its employees and
officers to maintain) the confidential nature of the data and information
therein contained; provided, however, that anything herein contained to the
contrary notwithstanding, each of the Administrative Agent and the Banks may,
to the extent necessary, disclose or disseminate such data and information to:
(i) its employees, Affiliates, directors, agents, attorneys, accountants,
auditors, and other professional advisers who would ordinarily have access to
such data and information in the normal course of the performance of their
duties in accordance with the Administrative Agent's or such Bank's customary
procedures relating to confidential information; (ii) such third parties as it
may, in its discretion, deem reasonably necessary or desirable (A) in
connection with or in response to any Government Mandate or request of any
Government Authority, or (B) in connection with any Proceeding pending (or on
its face purported to be pending) before any Government Authority (including
Proceedings involving the Borrower); (iii) any prospective purchaser,
participant or investment banker in connection with the resale or proposed
resale of any portion of the Loans, or of a participation therein, who shall
agree in writing to accept such information subject to the provisions of this
clause (e); (iv) any Person holding the Equity Securities or Funded Debt of
the Administrative Agent or such Bank who, subject to the provisions of this
clause (e), shall have requested to inspect such information; and (v) any
Entity utilizing such information to rate or classify the Equity Securities or
Funded Debt of the Administrative Agent or such Bank or to report to the
public concerning the industry of which the Administrative Agent or such Bank
is a part; provided, however, that none of the Administrative Agent and the
Banks shall be liable to the Borrower or any other Person for damages arising
hereunder from the disclosure of non-
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public information despite its reasonable efforts in accordance with the
provisions of this clause (e) or from a failure by any other party to perform
and observe its covenants in this clause (e).
6.5 Notices.
6.5.1 Defaults.
The Borrower will promptly after the executive management of
the Borrower (which for purposes of this covenant shall mean the chairman of
the board, president, principal financial officer, treasurer or general
counsel of the Borrower) becomes aware thereof (and in any case within three
(3) Business Days after the executive management becomes aware thereof) notify
the Administrative Agent and each of the Banks in writing of the occurrence of
any Default or Event of Default. If any Person shall give any notice in
writing of a claimed default (whether or not constituting an Event of Default)
under the Loan Documents or any other Contract relating to Funded Debt equal
to or in excess of $50,000,000 to which or with respect to which the Borrower
or any of its Subsidiaries is a party or obligor (including, without
limitation, under the Existing Credit Agreement), whether as principal,
guarantor, surety, or otherwise, the Borrower shall forthwith give written
notice thereof to the Administrative Agent and each of the Banks, describing
the notice or action and the nature of the claimed default.
6.5.2 Environmental Events.
The Borrower will promptly give notice to the Administrative
Agent and each of the Banks (a) of any violation of any Environmental Law that
the Borrower or any of its Subsidiaries reports in writing, or that is
reportable by any such Person in writing (or for which any written report
supplemental to any oral report is made) to any Government Authority, and (b)
upon becoming aware thereof, of any Proceeding, including a notice from any
Government Authority of potential environmental liability, that has the
potential, in the Borrower's reasonable judgment, to have a Material Effect.
6.5.3 Notice of Proceedings and Judgments.
The Borrower will give notice to the Administrative Agent
and each of the Banks in writing within ten (10) Business Days of the
executive management of the Borrower (as defined in Section 6.5.1) becoming
aware of any Proceedings pending affecting the Borrower or any of its
Subsidiaries or to which the Borrower or any of its Subsidiaries is or becomes
a party that could reasonably be expected by the Borrower to have a Material
Effect (or of any material adverse change in any such Proceedings of which the
Borrower has previously given notice). Any such notice will state the nature
and status of such Proceedings. The Borrower will give notice to the
Administrative Agent and each of the Banks, in writing, in form and detail
satisfactory to the Administrative Agent, within ten (10) Business Days of any
settlement or any judgment, final or otherwise, against the Borrower or any of
its Subsidiaries where the amount payable by the Borrower or any of its
Subsidiaries, after giving effect to insurance, is in excess of the lesser of
$30,000,000 or 10% of Consolidated Net Worth as at the end of the most recent
fiscal quarter.
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6.5.4 Notice of Change of Control.
In the event the Borrower obtains knowledge of a Change of
Control or an impending Change of Control, the Borrower will promptly give
written notice (a "Borrower Control Change Notice") of such fact to the
Administrative Agent and the Banks at least forty (40) days prior to the
proposed Change of Control Date; provided, however, that in no event shall
such a Borrower Control Change Notice be delivered to the Administrative Agent
and the Banks more than three (3) Business Days after the Change of Control
Date. Without limiting the foregoing, upon obtaining actual knowledge of any
Change of Control or impending Change of Control, any of the Administrative
Agent and the Banks may (but in no case shall any of them be obligated to)
deliver written notice to the Borrower of such event, indicating that such
event requires the Borrower to prepay the Loans pursuant to Section 3.2.2 (and
in any such notice a Bank may make demand for payment of its Loans under
Section 3.2.2). Promptly upon receipt of such notice, but in no event later
than five (5) Business Days after actual receipt thereof, the Borrower will
give written notice (such notice, together with a Borrower Control Change
Notice, a "Control Change Notice") of such fact to the Administrative Agent
and the Banks (including the Bank that has so notified the Borrower). Any
Control Change Notice shall (a) describe the principal facts and circumstances
of such Change of Control known to the Borrower in reasonable detail
(including the Change of Control Date or, if the Borrower does not have
knowledge of the Change of Control Date, the Borrower's best estimate of such
Change of Control Date), (b) make reference to Section 3.2.2 and the rights of
the Banks to require the Borrower to prepay the Loans on the terms and
conditions provided for therein, and (c) state that each Bank may make a
demand for payment of its Loans by providing written notice to the Borrower
within fifteen (15) days after the effective date of such Control Change
Notice. In the event the Borrower shall not have designated the Change of
Control Date in its Control Change Notice, the Borrower shall keep the
Administrative Agent and the Banks informed as to any changes in the estimated
Change of Control Date and shall provide written notice to the Administrative
Agent and the Banks specifying the Change of Control Date promptly upon
obtaining knowledge thereof.
6.6 Existence; Business; Properties.
6.6.1 Legal Existence.
The Borrower will, and will cause each of its Consolidated
Subsidiaries to, do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights and franchises as a
limited partnership, general partnership or corporation, as the case may be,
except, with respect to rights and franchises, where the failure to preserve
and keep in full force and effect such rights and franchises would not be
likely to have a Material Effect, provided, however, this section shall not
prohibit any merger, consolidation, or reorganization of the Borrower or any
of its Subsidiaries permitted pursuant to Section 7.2.
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6.6.2 Conduct of Business.
Except as otherwise disclosed to the Administrative Agent
and the Banks in the Borrower's Form 8-Ks for the period prior to the Closing
Date, the Borrower will, and will cause each of its Consolidated Subsidiaries
to, engage in a diversified investment management business.
6.6.3 Maintenance of Properties.
The Borrower will, and will cause each of its Consolidated
Subsidiaries to, cause its properties used or useful in the conduct of its
business and which are material to the Business of the Borrower and its
Consolidated Subsidiaries taken as a whole to be maintained and kept in good
condition, repair, and working order and supplied with all necessary
equipment, ordinary wear and tear excepted; provided that nothing in this
Section 6.6.3 shall prevent the Borrower or any of its Consolidated
Subsidiaries from discontinuing the operation and maintenance of any
properties if such discontinuance (i) is, in the judgment of the Borrower or
such Subsidiary, desirable in the conduct of its business, and (ii) does not
have a Material Effect.
6.6.4 Status Under Securities Laws.
The Borrower shall maintain its status as a registered
"investment adviser", under (a) the Investment Advisers Act of 1940 and (b)
under the laws of each state in which such registration is required in
connection with the investment advisory business of the Borrower and, as to
(b) only, where a failure to obtain such registration would be likely to have
a Material Effect. The Borrower shall cause Alliance Distributors to maintain
its status as a registered "broker/dealer" under the Securities Exchange Act
of 1934 and under the laws of each state in which such registration is
required in connection with the business of Alliance Distributors and where a
failure to obtain such registration would be likely to have a Material Effect,
and to maintain its membership in the National Association of Securities
Dealers, Inc.
6.7 Insurance.
The Borrower will, and will cause each of its Consolidated
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies, in such amounts, containing such terms, in such forms, and
for such periods, or shall be self-insured in respect of such risks (with
appropriate reserves to the extent required by GAAP), as shall be customary in
the industry for companies engaged in similar activities in similar geographic
areas.
6.8 Taxes.
The Borrower will, and will cause each of its Consolidated
Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments, and other
governmental charges imposed upon it or its real property, sales, and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for
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labor, materials, or supplies that if unpaid (a) might by law become a Lien
upon any of its property and (b) would be reasonably likely to result in a
Material Effect; provided that any such tax, assessment, charge, levy, or
claim need not be paid if the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if the Borrower or such
Subsidiary shall have set aside on its books, if and to the extent permitted
by GAAP, adequate accruals with respect thereto.
6.9 Inspection of Properties and Books, Etc.
6.9.1 General.
The Borrower shall, and shall cause each of its Subsidiaries
to, permit the Banks, through the Administrative Agent or any of the Banks'
other designated representatives, to visit and inspect any of the properties
of the Borrower or any of its Subsidiaries, to examine the books of account of
the Borrower and its Subsidiaries (and to make copies thereof and extracts
therefrom), and to discuss the affairs, finances, and accounts of the Borrower
and its Subsidiaries with, and to be advised as to the same by, its and their
officers, all at such reasonable times and intervals as the Administrative
Agent or any Bank may request. The costs incurred by the Administrative Agent
and the Banks in connection with any such inspection shall be borne by the
Banks making or requesting the inspection (or, if the Administrative Agent
makes an inspection on its own initiative after notice to the Banks, by the
Banks jointly, on a pro rata basis according to their outstanding Loans or, if
no Loans are outstanding, their respective Commitments), except as otherwise
provided by Section 14(f). Any data and information that is obtained by the
Administrative Agent or any Bank pursuant to this Section 6.9.1 shall be held
subject to Section 6.4(e).
6.9.2 Communication with Accountants.
The Borrower authorizes the Administrative Agent and, if
accompanied by the Administrative Agent, the Banks to communicate directly
with the Borrower's independent certified public accountants and authorizes
such accountants to disclose to the Administrative Agent and the Banks any and
all financial statements and other supporting financial documents and
schedules, including copies of any management letter with respect to the
Business of the Borrower or any of its Subsidiaries. The Borrower shall be
entitled to reasonable prior notice of any such meeting with its independent
certified public accountants and shall have the opportunity to have its
representatives present at any such meeting. At the request of the
Administrative Agent, the Borrower shall deliver a letter addressed to such
accountants instructing them to comply with the provisions of this Section
6.9.2. Any data and information that is obtained by the Administrative Agent
or any Bank pursuant to this Section 6.9.2 shall be held subject to Section
6.4(e).
6.10 Compliance with Government Mandates, Contracts, and Permits.
The Borrower will and will cause each of its Consolidated
Subsidiaries to, comply (if and to the extent that a failure to comply would
be likely to have a Material Effect) with (a) all applicable Government
Mandates wherever the business of the Borrower or
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any such Subsidiary is conducted, including all Environmental Laws and all
Government Mandates relating to occupational safety and employment matters;
(b) the provisions of the certificate of incorporation and by-laws, or the
agreement of limited partnership and certificate of limited partnership, or
its governing documents in the case of any general partnership, as the case
may be, of the Borrower and such Subsidiary; (c) all Contracts to which the
Borrower or any such Subsidiary is party, by which the Borrower or any such
Subsidiary is or may be bound, or to which any of their respective properties
are or may be subject; and (d) the terms and conditions of any Permit used in
the Business of the Borrower or any such Subsidiary. If any Permit shall
become necessary or required in order that the Borrower may fulfill any of its
obligations hereunder or under any of the other Loan Documents to which the
Borrower is a party, the Borrower will immediately take or cause its
Subsidiaries to take all reasonable steps within the power of the Borrower and
its Subsidiaries to obtain and maintain in full force and effect such Permit
and furnish the Administrative Agent and the Banks with evidence thereof.
6.11 Use of Proceeds.
The Borrower will use the proceeds of the Loans solely as provided in
Section 5.16.
6.12 Restricted Subsidiaries.
The Borrower shall cause each Restricted Subsidiary to continue at
all times to satisfy the qualifications of a Restricted Subsidiary as set
forth in the definition of "Restricted Subsidiary" in Section 1.1.
6.13 Certain Changes in Accounting Principles.
In the event of a change after the date of this Credit Agreement in
(a) GAAP (as in effect from time to time, rather than as defined in Section
1.1) or (b) any regulation issued by the Securities and Exchange Commission
(either such event being referred to herein as an "Accounting Change"), that
results in a material change in the calculations as to compliance with any
financial covenant contained in Section 8 or in the calculation of any item to
be taken into account in the calculations as to compliance with any such
covenant (the "Affected Computation") in such a manner and to such an extent
that, in the good faith judgment of the Chief Financial Officer of the
Borrower or the Majority Banks, as evidenced by notice from such Majority
Banks to the Borrower and the Administrative Agent (the "Accounting Notice"),
the application of the Accounting Change to the Affected Computation would no
longer reflect the intention of the parties to this Credit Agreement, then and
in any such event:
(a) the Borrower shall, promptly after either a
determination by its Chief Financial Officer as provided above or receipt of
an Accounting Notice, give written notice thereof to the Administrative Agent
and each Bank, which notice shall be accompanied by a copy of any Accounting
Notice and a certificate of the Chief Financial Officer of the Borrower:
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(i) describing the Accounting Change in question
and the particular covenant or covenants that will be affected by
such Accounting Change;
(ii) setting forth in reasonable detail (including
detailed calculations) the manner and extent to which the covenant or
covenants listed in such certificate are affected by such Accounting
Change; and
(iii) setting forth in reasonable detail (including
detailed calculations) the information required in order to establish
that the Borrower would be in compliance with the requirements of the
covenant or covenants listed in such certificate if such Accounting
Change was not effective (or, if the Borrower would not be so in
compliance, setting forth in reasonable detail calculations of the
extent of such non-compliance);
(b) the Borrower and the Banks will enter into good faith
negotiations with each other for an equitable amendment of such covenant or
covenants, and the definition of GAAP set forth in Section 1.1, pursuant to
Section 24 so as to place the parties, insofar as possible, in the same
relative position as if such Accounting Change had not occurred;
(c) for the period from the date on which such Accounting
Change becomes effective (the "Effective Date") to the effective date of an
amendment to this Credit Agreement pursuant to Section 24, the Borrower shall
be deemed to be in compliance with the covenant or covenants listed in such
certificate if and so long as (but only if and so long as) the Borrower would
be in compliance with such covenant or covenants if such Accounting Change had
not occurred; and
(d) if no amendment to this Credit Agreement has become
effective within ninety (90) days after the Effective Date of such Accounting
Change, then all accounting computations required to be made for purposes of
this Credit Agreement thereafter shall be made in accordance with GAAP as in
effect immediately prior to such Effective Date.
7.0 CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:
7.1 Disposition of Assets.
The Borrower will not, and will not cause, permit, or suffer any of
its Consolidated Subsidiaries to, in any single transaction or in multiple
transactions within any fiscal year of the Borrower, sell, transfer, assign,
or otherwise dispose of all of the business or assets of the Borrower and its
Consolidated Subsidiaries, any Significant Assets, or any 12b-1 Fees, or enter
into any Contract for any such sale, transfer, assignment, or disposition,
provided, however:
(a) Subsidiaries of the Borrower may sell, transfer, assign,
or dispose of assets (including 12b-1 Fees) to the Borrower;
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(b) Subsidiaries of the Borrower may sell, transfer, assign,
or dispose of assets (including 12b-1 Fees) to any Restricted Subsidiary;
(c) the Borrower may sell, transfer, assign, or dispose of
assets (including 12b-1 Fees) to any Restricted Subsidiary, provided such
Restricted Subsidiary shall have prior to the effective date of such sale,
transfer, assignment, or disposition executed and delivered to the
Administrative Agent an Assumption Agreement (and all of the conditions set
forth in such Assumption Agreement shall have been satisfied and such
Assumption Agreement (A) shall not be subject to any default or event of
default with respect to any party, (B) shall not be subject to any notice of
termination given or received by the Borrower or any of its Subsidiaries, and
(C) shall be the legal, valid, and binding obligation of each party thereto
enforceable against such party according to its terms);
(d) the Borrower and any Subsidiary of the Borrower may
sell, transfer or assign, or dispose of 12b-1 Fees to Persons other than the
Borrower and Restricted Subsidiaries. Any Indebtedness in respect of
obligations of the Borrower and its Subsidiaries arising out of such
transactions shall constitute "Funded Debt"; and
(e) the sale, transfer, assignment or other disposition of
all or substantially all of the business or assets of the Borrower and its
Consolidated Subsidiaries in connection with a transaction permitted under
Section 7.2 shall not be subject to the provisions of this Section 7.1.
This covenant is not intended to restrict the conversion of a
short-term investment of the Borrower into cash or into another investment
which remains an asset of the Borrower.
7.2 Mergers and Reorganizations.
The Borrower will not, and will not cause, permit, or suffer any of
its Consolidated Subsidiaries to, become a party to any merger, consolidation,
or reorganization (any such transaction, a "Reorganization" and the term
"Reorganize" shall have a correlative meaning) or enter into any Contract
providing for any Reorganization, provided, however:
(a) the Borrower may Reorganize solely with any Restricted
Subsidiary, and any Restricted Subsidiary may Reorganize solely with the
Borrower or any other Restricted Subsidiary, provided (i) if the Borrower is
party to such Reorganization, it is the sole surviving Entity, and (ii) if a
Restricted Subsidiary that has previously executed and delivered to the
Administrative Agent an Assumption Agreement is party to such Reorganization,
each Entity (other than the Borrower or a Restricted Subsidiary that has
previously executed and delivered to the Administrative Agent an Assumption
Agreement) surviving such Reorganization shall execute and deliver to the
Administrative Agent an Assumption Agreement (and all of the conditions set
forth in such Assumption Agreement shall have been satisfied and such
Assumption Agreement (x) shall not be subject to any default or event of
default with respect to any party, (y) shall not be subject to any notice of
termination given or received by the Borrower
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or any of its Subsidiaries, and (z) shall be the legal, valid, and binding
obligation of each party thereto enforceable against such party according to
its terms);
(b) the Borrower may Reorganize with other Entities in
connection with any Permitted Acquisition, provided (i) the Borrower is the
sole surviving Entity of such Reorganization; (ii) no Default or Event of
Default, or breach by the Borrower of any of its covenants in the Loan
Documents, shall have occurred and be continuing at the time of such
Reorganization; (iii) no Default or Event of Default, or breach by the
Borrower of any of its covenants in the Loan Documents, shall occur as a
result of, or after giving effect to, such Reorganization; and (iv) such
Reorganization does not result in a Change of Control;
(c) the Borrower may Reorganize with any other Entity
(including Reorganizations in connection with a conversion of the Borrower to
corporate form and other transactions permitted under Section 2.6 of the
Borrower Partnership Agreement), provided:
(i) no Default or Event of Default shall have
occurred and be continuing at the time of such Reorganization;
(ii) no Default or Event of Default shall occur as
a result of, or after giving effect to, such Reorganization;
(iii) each surviving Entity (other than the
Borrower if it survives), and each Person that in connection with
such Reorganization acquires or succeeds to any of the business or
assets of the Borrower shall, as a condition of the effectiveness of
such Reorganization, execute and deliver to the Administrative Agent
an Assumption Agreement in the form of Exhibit A-1 to this Credit
Agreement (and all of the conditions set forth in such Assumption
Agreement shall have been satisfied and such Assumption Agreement (A)
shall not be subject to any default or event of default with respect
to any party, (B) shall not be subject to any notice of termination
given or received by the Borrower or any of its Subsidiaries, and (C)
shall be the legal, valid, and binding obligation of each party
thereto enforceable against such party according to its terms).
Notwithstanding the foregoing, Persons that in connection with such
Reorganization in the aggregate acquire or succeed to assets
generating less than twenty percent (20%) of the consolidated
revenues of the Borrower and the Consolidated Subsidiaries during the
four (4) fiscal quarters of the Borrower most recently ended shall
not be required to enter into an Assumption Agreement as provided
above in this clause (iii) in connection with such Reorganization so
long as each surviving Entity (other than the Borrower if it
survives) and Persons that in connection with such Reorganization in
the aggregate acquire or succeed to assets generating not less than
$400,000,000 of consolidated revenues of the Borrower and the
Consolidated Subsidiaries during the four (4) fiscal quarters of the
Borrower most recently ended shall, as a condition to the
effectiveness of such Reorganization, execute and deliver to the
Administrative Agent an Assumption Agreement and the other conditions
specified above with respect to such Assumption Agreement shall be
satisfied;
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(iv) such Reorganization does not result in a Change
of Control;
(v) after giving effect to such Reorganization,
investment management contracts, together with agreements associated
with distribution revenues and shareholder servicing fees, with
respect to at least seventy-five percent (75%) of the consolidated
revenues, less "other revenues" (as such term is used in the
Borrower's consolidated statements of income as filed with the
Securities and Exchange Commission), of the Borrower and its
Consolidated Subsidiaries during the four (4) fiscal quarters most
recently ended prior to such Reorganization (A) shall remain in full
force and effect, and (B) shall, if held by the Borrower or one or
more of its Consolidated Subsidiaries prior to such Reorganization,
be held by the Borrower or one or more of its Consolidated
Subsidiaries or shall have been duly assigned to or otherwise held by
Persons executing and delivering to the Administrative Agent
Assumption Agreements pursuant to clause (iii) above or one or more
of any such Person's Consolidated Subsidiaries;
(vi) any diminution in the aggregate net worth of
the Borrower (if it survives) and any Persons executing and
delivering to the Administrative Agent Assumption Agreements pursuant
to clause (iii) above and the consolidated Subsidiaries of each
thereof (after elimination of intercompany items and without double
counting), when compared with the Consolidated Net Worth of the
Borrower as of the date of the most recently completed fiscal quarter
immediately prior to such Reorganization, is not more than twenty
percent (20%) of such Consolidated Net Worth; and
(vii) that the Borrower has given the
Administrative Agent and the Banks written notice of such
Reorganization at least ten (10) business days prior to such
Reorganization, which notice shall include current revised
projections with respect to the Borrower and its Subsidiaries
reflecting such Reorganization; and
(d) the Borrower may Reorganize with an Entity (the
"Successor Entity") through the transfer by the Borrower of substantially all
of the business and assets of the Borrower and its Consolidated Subsidiaries
to the Successor Entity and its Consolidated Subsidiaries, substantially as
contemplated by the Borrower's Current Report on Form 8-K dated April 8, 1999,
which Successor Entity shall succeed to all of the rights and obligations of
the Borrower under this Credit Agreement and any other Loan Documents, and the
Borrower shall be released from all such obligations, upon satisfaction of the
conditions set forth below, provided:
(i) no Default or Event of Default shall have
occurred and be continuing at the time of such Reorganization;
(ii) no Default or Event of Default shall occur as
a result of, or after giving effect to, such Reorganization;
(iii) the Successor Entity shall, as a condition of
the effectiveness of its assumption of the rights and obligations of
the Borrower hereunder and under any other
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Loan Documents and of the release of the Borrower from its
obligations hereunder and under any other Loan Documents, execute and
deliver to the Administrative Agent an Assumption Agreement
substantially in the form of Exhibit A-2 to this Credit Agreement
(and all of the conditions set forth in such Assumption Agreement
shall have been satisfied and such Assumption Agreement (A) shall not
be subject to any default or event of default with respect to any
party, (B) shall not be subject to any notice of termination given or
received by the Borrower or any of its Subsidiaries, and (C) shall be
the legal, valid, and binding obligation of each party thereto
enforceable against such party according to its terms);
(iv) such Reorganization does not result in a
Change of Control;
(v) after giving effect to such Reorganization,
investment management contracts, together with agreements associated
with distribution revenues and shareholder servicing fees, with
respect to at least seventy-five percent (75%) of the consolidated
revenues, less "other revenues" (as such term is used in the
Borrower's consolidated statements of income as filed with the
Securities and Exchange Commission), of the Borrower and its
Consolidated Subsidiaries during the four (4) fiscal quarters most
recently ended prior to such Reorganization (A) shall remain in full
force and effect, and (B) shall have been duly assigned to or
otherwise held by the Successor Entity executing and delivering to
the Administrative Agent the Assumption Agreement pursuant to clause
(iii) above or one or more of its Consolidated Subsidiaries;
(vi) any diminution in the aggregate net worth of
the Successor Entity executing and delivering to the Administrative
Agent the Assumption Agreement pursuant to clause (iii) above and the
Consolidated Subsidiaries thereof (after elimination of intercompany
items and without double counting), when compared with the
Consolidated Net Worth of the Borrower as of the date of the most
recently completed fiscal quarter immediately prior to such
Reorganization, is not more than twenty (20%) of such Consolidated
Net Worth; and
(vii) that the Borrower has given the
Administrative Agent and the Banks written notice of such
Reorganization at least ten (10) business days prior to such
Reorganization.
The Banks hereby consent to the Reorganization permitted in
this Section 7.2 (d) and the related assignment, assumption and
release of the Borrower's obligations under this Credit Agreement and
any other Loan Documents, subject solely to the execution and
delivery of the Assumption Agreement substantially in the form of
Exhibit A-2 to this Credit Agreement and satisfaction of the
conditions set forth therein and above, without any action required
on the part of the Banks.
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7.3 Acquisitions.
The Borrower will not, and will not cause, permit, or suffer any of
its Subsidiaries to, become a party to, contract for, or effect any purchase,
exchange, or acquisition of Equity Securities or assets (any such transaction,
an "Acquisition"), other than an Acquisition of assets that do not constitute
all or a material part of a business, provided, however, the Borrower or any
of its Subsidiaries may become a party to, contract for, or effect an
Acquisition if each of the following conditions are satisfied:
(a) no Default or Event of Default, or breach by the
Borrower of any of its covenants in the Loan Documents, shall have occurred
and be continuing at the time of such Acquisition;
(b) no Default or Event of Default, or breach by the
Borrower of any of its covenants in the Loan Documents, shall occur as a
result of, or after giving effect to, such Acquisition;
(c) such Acquisition relates solely to (i) Equity Securities
in another Person engaged primarily in, or assets of another Person used
primarily for, a diversified investment management business, (ii) goods or
services that will be used in the business of the Borrower or any of its
Subsidiaries, or (iii) additional Equity Securities issued by an Entity, the
Equity Securities of which have previously been purchased by the Borrower or
one of its Subsidiaries under this Section 7.3;
(d) if such Acquisition relates to Equity Securities of
another Entity, after giving effect to such Acquisition, at least a majority
of the Equity Securities, and at least a majority of the Voting Equity
Securities, of such Entity are held directly by the Borrower or indirectly by
the Borrower through one or more Restricted Subsidiaries (but not through any
Subsidiary that is not a Restricted Subsidiary);
(e) any Entity that issued Equity Securities purchased in
such Acquisition and any Entity through which the Borrower effected an
Acquisition of Equity Securities or assets, becomes, upon the consummation of
the Acquisition, a Consolidated Subsidiary subject to the terms and conditions
of this Credit Agreement; and
(f) except as permitted by Section 7.6, any Entity that
issued Equity Securities purchased in such Acquisition and any Entity through
which the Borrower effected an Acquisition of Equity Securities or assets is
not upon consummation of such Acquisition (and the Borrower will not
thereafter cause, permit, or suffer any such Entity to become) a general
partner in any partnership, a party to a joint venture, or subject to any
contingent obligations established by Contract that are not by their terms
limited to a specific dollar amount; provided, however, that any such Entity
may be a general partner in a partnership which is wholly owned by the
Borrower or its Restricted Subsidiaries.
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7.4 Restrictions on Liens.
The Borrower will not, and will not cause, permit, or suffer any of
its Consolidated Subsidiaries to, (a) create or incur, or cause, permit, or
suffer to be created or incurred or to exist, any Lien upon any of its
property or assets of any character whether now owned or hereafter acquired,
or upon the income or profits therefrom; (b) transfer any of such property or
assets or the income or profits therefrom for the purpose of subjecting the
same to the payment of Indebtedness or performance of any other obligation in
priority to payment of its general creditors; (c) acquire, or agree or have an
option to acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device, or arrangement; (d)
suffer to exist any Indebtedness or claim or demand for a period of time such
that the same by Government Mandate or upon bankruptcy or insolvency, or
otherwise, would be given any priority whatsoever over its general creditors;
or (e) assign, pledge, or otherwise transfer any accounts, contract rights,
general intangibles, chattel paper, or instruments, with or without recourse,
other than a transfer or assignment in connection with a sale permitted under
Section 7.1 or Reorganization permitted under Section 7.2 or an Investment
permitted under Section 7.6; provided that the Borrower and any Subsidiary of
the Borrower may create or incur, or cause, permit, or suffer to be created or
incurred or to exist:
(i) Liens imposed by Government Mandate to secure
taxes, assessments, and other government charges in respect of
obligations not overdue;
(ii) statutory Liens of carriers, warehousemen,
mechanics, suppliers, laborers, and materialmen, and other like
Liens, in each case in respect of obligations not overdue;
(iii) pledges or deposits made in connection with,
or to secure payment of, workers' compensation, unemployment
insurance, old age pensions, or other social security obligations;
(iv) Liens on Real Estate consisting of easements,
rights of way, zoning restrictions, restrictions on the use of real
property, defects and irregularities in the title thereto, and other
minor Liens, provided, (A) none of such Liens in the reasonable
opinion of the Borrower interferes materially with the use of the
affected property in the ordinary conduct of the business of the
Borrower and its Subsidiaries, and (B) such Liens individually or in
the aggregate do not have a Material Effect;
(v) the rights and interests of landlords and
lessors under leases of Real Estate leased by the Borrower or one of
its Subsidiaries, as lessee;
(vi) Liens outstanding on the Closing Date and set
forth on Schedule 7.4;
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(vii) Liens in favor of either the Borrower or a
Restricted Subsidiary on all or part of the assets of any Subsidiary
of the Borrower securing Indebtedness owing by such Subsidiary to the
Borrower or such Restricted Subsidiary, as the case may be;
(viii) Liens on interests of the Borrower or its
Subsidiaries in partnerships or joint ventures consisting of binding
rights of first refusal, rights of first offer, take-me-along rights,
third-party offer provisions, buy-sell provisions, other transfer
restrictions and conditions relating to such partnership or joint
venture interests, and Liens granted to other participants in such
partnership or joint venture as security for the performance by the
Borrower or its Subsidiaries of their obligations in respect of such
partnership or joint venture;
(ix) UCC notice filings in connection with
non-recourse sales of 12b-1 Fees (other than sales constituting a
collateral security device); and
(x) Liens (in addition to those specified in
clauses (i) through (ix) above) securing Indebtedness (other
than the Indebtedness arising in connection with the Existing Credit
Agreement) in an aggregate amount for the Borrower and all of its Consolidated
Subsidiaries taken together not in excess of $80,000,000 outstanding at any
point in time (but excluding from the amount of any such Indebtedness that
portion which is fully covered by insurance and as to which the insurance
company has acknowledged to the Administrative Agent its coverage obligation
in writing).
7.5 Guaranties.
The Borrower shall not, and shall not cause, permit, or suffer any of
its Consolidated Subsidiaries to, either (a) guaranty, endorse, accept, act as
surety for, or otherwise become liable in respect of, Indebtedness of (or
undertake to maintain working capital or other balance sheet condition of, or
otherwise to advance or make funds available for the purchase of Indebtedness
of) other Persons unless such obligation of the Borrower or its Subsidiary is
expressly limited by the instrument establishing the same to a specified
amount, or (b) voluntarily incur, create, assume, or otherwise become liable
for any contingent obligations that are not by their terms limited to a
specific dollar amount. This Section 7.5 shall not apply to (i) contingent
obligations of a Subsidiary of the Borrower that is not a Restricted
Subsidiary in its capacity as general partner of a partnership, or contingent
obligations of a Restricted Subsidiary in its capacity as a general partner of
a partnership which is wholly owned by the Borrower or its Restricted
Subsidiaries, or (ii) guaranties by the Borrower or any Consolidated
Subsidiary of obligations of Restricted Subsidiaries (other than obligations
in respect of Funded Debt) incurred in the ordinary course of business
(including, without limitation, guaranties incurred to comply with conditions
and requirements imposed by any applicable law, rule or regulation or
otherwise customary and appropriate to operate an investment management
business in any jurisdiction outside of the United States).
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7.6 Restrictions on Investments.
The Borrower will not, and will not cause, permit, or suffer any of
its Consolidated Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except:
(a) 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 Borrower or one of its Subsidiaries serves as investment
manager or adviser;
(b) Investments consisting of seed money contributions to
open-end and closed-end investment companies for which the Borrower or one of
its Subsidiaries serves as investment manager or adviser, provided in each
case the amount of such Investment will not exceed the minimum seed money
contribution required by the 1940 Act or other applicable law, regulation, or
custom (provided that when seed money contributions are made pursuant to
"custom", in no event shall the amount contributed to any single investment
company exceed $3,000,000);
(c) Investments existing as of the end of the calendar month
immediately preceding the Closing Date and set forth on Schedule 7.6;
(d) Investments made by the Borrower or any Restricted
Subsidiary in the Borrower or any Restricted Subsidiary;
(e) Investments made after the Closing Date in Consolidated
Subsidiaries that act as general partner of one or more partnerships in an
aggregate amount not to exceed $20,000,000 at any point in time;
(f) Investments consisting of inter-company advances made in
the ordinary course of business by the Borrower or any Subsidiary to any
Consolidated Subsidiary, provided each such advance is settled within
ninety-two (92) days after it is made (for purposes of this provision,
settlement shall mean repayment of an advance in full in cash and without
renewal of such advance, and without a substitute advance from the Borrower or
another Subsidiary, for at least twenty-four (24) hours after such cash
payment);
(g) Investments in connection with a Reorganization
permitted under Section 7.2 hereof; and
(h) Investments (in addition to those specified in clauses
(a) through (g) above) in an aggregate amount for the Borrower and all of its
Subsidiaries taken together not in excess of $150,000,000 outstanding at any
time.
Notwithstanding any provisions to the contrary in the definition of
"Investments" in Section 1.1, the Dollar amount of any Investment for purposes
of clauses (e) and (g) above shall
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be reduced by the amount of any dividend, interest, or other return in respect
of such Investment that is actually received in cash by the Borrower or a
Restricted Subsidiary.
7.7 Restrictions on Funded Debt.
The Borrower will not cause, permit, or suffer any of the
Consolidated Subsidiaries to, create, incur, assume, guarantee, or be or
remain liable, contingently or otherwise, with respect to any Funded Debt,
provided, however, that (a) this covenant shall not apply to Funded Debt owing
solely to the Borrower or another Consolidated Subsidiary of the Borrower, and
(b) Consolidated Subsidiaries of the Borrower other than Alliance Capital
Management Corporation of Delaware and Alliance Distributors may, subject to
the other terms and conditions of the Loan Documents, create, incur, assume,
guarantee, or be or remain liable with respect to Funded Debt in an aggregate
principal amount (for all such Subsidiaries) that does not exceed fifteen
percent (15%) of the Borrower's Consolidated Net Worth, at any time during any
calendar year, as set forth in the most recently delivered annual or quarterly
report of the Borrower and (c) in addition to any Funded Debt which may be
incurred by Cursitor Alliance pursuant to clause (b) of this Section 7.7,
Cursitor Alliance may incur $5,375,000 of Funded Debt pursuant to Section
2.6(c) of the Cursitor Acquisition Agreement. Such $5,375,000 of Funded Debt
incurred by Cursitor Alliance pursuant to Section 2.6(c) of the Cursitor
Acquisition Agreement shall in no event be included in the calculation set
forth in clause (b) above.
7.8 Distributions.
The Borrower shall not cause, permit, or suffer any restriction or
Lien on the ability of any Consolidated Subsidiary to (a) pay, directly or
indirectly, any Distributions to the Borrower or any other Subsidiary of the
Borrower, (b) make any payments, directly or indirectly, in respect of any
Indebtedness or other obligation owed to the Borrower or any of its
Subsidiaries, (c) make loans or advances to the Borrower or any other
Subsidiary of the Borrower, or (d) sell, transfer, assign, or otherwise
dispose of any property or assets to the Borrower or any other Subsidiary of
the Borrower, except, in each such case, restrictions or Liens (aa) that exist
under or by reason of applicable Government Mandates, including any net
capital rules, (bb) that are imposed only, as to Indebtedness of the Borrower
or any Consolidated Subsidiary incurred prior to the date hereof, upon a
failure to pay when due any of such Indebtedness, or, as to Indebtedness of
the Borrower or any Consolidated Subsidiary incurred on or after the date
hereof, upon an acceleration of such Indebtedness or a failure to pay the full
amount of such Indebtedness at maturity, or (cc) that arise by reason of the
maintenance by any Subsidiary that is not a Restricted Subsidiary of a level
of net worth for the purpose of ensuring that limited partnerships for which
it serves as general partner will be treated as partnerships for federal
income tax purposes. Notwithstanding the foregoing, (i) any portion of net
earnings of any Restricted Subsidiary that is unavailable for payment of
dividends to the Borrower or any other Restricted Subsidiary by reason of a
restriction or Lien permitted under any of clauses (aa), (bb), and (cc) shall
be excluded from the calculation of Consolidated Net Income (or Loss), (ii)
Cursitor Alliance's agreement set forth in Section 12.02 of the Cursitor
Member Agreement, which prohibits the dissolution of Cursitor Alliance except
upon the unanimous vote of the Members (as defined in the Cursitor Member
Agreement) or such other events described in Section 12.02 of the Cursitor
Member Agreement,
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is not prohibited under this Credit Agreement, and (iii) Cursitor Alliance's
agreement set forth in Section 5.01(a) of the Cursitor Member Agreement as in
effect on the date of this Credit Agreement, which relates to certain
potential priority payments to Cursitor Holdings, L.P. (and to other Persons
which are not Restricted Subsidiaries which become Members (as defined in the
Cursitor Member Agreement) after the date of the Cursitor Member Agreement),
is not prohibited under this Credit Agreement.
7.9 Transactions with Affiliates.
The Borrower will not, and will not cause, permit, or suffer any of
its Subsidiaries to, directly or indirectly, enter into any Contract or other
transaction with any Affiliate of the Borrower or any of its Subsidiaries that
is material to the Borrower and the Consolidated Subsidiaries taken as a
whole, unless either: (a) such Contract or transaction relates solely to
compensation arrangements with directors, officers, or employees of the
Borrower, the General Partner, or the Consolidated Subsidiaries, or (b) such
transaction is in the ordinary course of business and is, taking into account
the totality of the relationships involved, on fair and reasonable terms no
less favorable to the Borrower and the Consolidated Subsidiaries taken as a
whole than would be obtained in comparable arm's length transactions with
Persons that are not Affiliates of the Borrower or its Subsidiaries.
7.10 Fiscal Year.
The Borrower shall not change its fiscal year unless the parties to
the Loan Documents shall first enter into amendments to the Loan Documents
such that the rights of the parties to the Loan Documents will not be affected
by the change in the fiscal year of the Borrower, and the parties shall enter
into such amendments as may be required in connection with a change of the
Borrower's fiscal year.
7.11 Compliance with Environmental Laws.
The Borrower will not, and will not cause, permit, or suffer any of
its Subsidiaries to, (a) use any of the Real Estate or any portion thereof for
the handling, processing, storage, or disposal of Hazardous Substances, (b)
cause, permit, or suffer to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous
Substances, (c) generate any Hazardous Substances on any of the Real Estate,
(d) conduct any activity at any Real Estate or use any Real Estate in any
manner so as to cause a release (i.e., releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing, or dumping) or threatened release of Hazardous Substances on, upon,
or into the Real Estate, or (e) otherwise conduct any activity at any Real
Estate or use any Real Estate in any manner that would violate any
Environmental Law or bring such Real Estate in violation of any Environmental
Law, in each case, so as would be likely to have a Material Effect.
7.12 Employee Benefit Plans.
The Borrower will not, and will not cause, permit, or suffer any
ERISA Affiliate to:
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(a) engage in any "prohibited transaction" within the
meaning of section 406 of ERISA or section 4975 of the Code that could result
in a material liability for the Borrower and its Consolidated Subsidiaries
taken as a whole;
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in section 302 of
ERISA, whether or not such deficiency is or may be waived;
(c) fail to contribute to any Guaranteed Pension Plan to an
extent that, or terminate any Guaranteed Pension Plan in a manner that, could
result in the imposition of a Lien on the assets of the Borrower or any of its
Subsidiaries pursuant to section 302(f) or section 4068 of ERISA; or
(d) permit or take any action that would result in the
aggregate benefit liabilities (within the meaning of section 4001 of ERISA) of
all Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans by more than $20,000,000, disregarding for this purpose the benefit
liabilities and assets of any such Plan with assets in excess of benefit
liabilities.
7.13 Amendments to Certain Documents.
The Borrower shall not, without the prior written consent of the
Administrative Agent in each instance, permit or suffer any material
amendments, modifications, supplements, or restatements of its certificate of
limited partnership or the Borrower Partnership Agreement (or, following any
conversion of the Borrower to a corporation, its certificate of incorporation
or by-laws) that (i) relate to the determination of Available Cash Flow or
Operating Cash Flow under the Borrower Partnership Agreement, or (ii) could
reasonably be expected to materially adversely affect the ability of the
Borrower to perform and observe its obligations under the Loan Documents or
the legal rights and remedies of the Banks and the Administrative Agent under
any of the Loan Documents.
8.0 FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:
8.1 Ratio of Consolidated Adjusted Funded Debt to Consolidated
Adjusted Cash Flow.
(a) The Borrower will not at any time permit the ratio of
(i) the aggregate principal amount of Consolidated Adjusted Funded Debt at
such time to (ii) Consolidated Adjusted Cash Flow for the period of four (4)
consecutive fiscal quarters then (or most recently) ended to exceed 3.00 to
1.00.
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(b) Consolidated Adjusted Funded Debt shall mean at any time
the sum of:
(i) the aggregate outstanding principal amount of
Funded Debt of the Borrower and the Consolidated Subsidiaries
(whether owed by more than one of them jointly or by any of them
singly) at such time determined on a consolidated basis in accordance
with GAAP; and
(ii) without duplication, the aggregate outstanding
principal amount of Funded Debt owed by the Borrower and the
Consolidated Subsidiaries (whether owed by more than one of them
jointly or by any of them singly) at such time to any Consolidated
Subsidiary that is not a Restricted Subsidiary.
(c) Consolidated Adjusted Cash Flow shall mean, with respect
to any fiscal period, the difference of:
(i) the sum of (A) EBITDA of the Borrower and the
Consolidated Subsidiaries for such fiscal period, plus (B) non-cash
charges of the Borrower and the Consolidated Subsidiaries (other than
charges for depreciation and amortization) for such fiscal period to
the extent deducted in determining Consolidated Net Income (or Loss)
for such period; minus
(ii) brokerage commissions paid in connection with
sales of "B" shares of investment companies and mutual funds managed
or advised by the Borrower or one of its Subsidiaries (net of
contingent deferred sales charges received in conjunction with
redemptions of such "B" shares).
8.2 Minimum Net Worth.
As of the last day of each calendar quarter, the Borrower shall not
permit its Consolidated Net Worth to be less than $330,000,000.
8.3 Miscellaneous.
(a) All capitalized terms that are used in this Section 8
without definition in this Credit Agreement shall refer to the corresponding
items in the financial statements of the Borrower (as such items were
determined for purposes of the financial statements referred to in this
Section 8.3).
(b) For purposes of this Section 8, demand obligations shall
be deemed to be due and payable during any fiscal year during which such
obligations are outstanding.
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9.0 CLOSING CONDITIONS.
The obligations of the Banks to enter into this Credit Agreement
shall be subject to the satisfaction of the following conditions precedent at
or before the Closing Date:
9.1 Financial Statements and Material Changes.
The Banks shall be reasonably satisfied that (a) the financial
statements of the Borrower and the Consolidated Subsidiaries referred to in
Section 5.4 fairly present in all material respects the business and financial
condition and the results of operations of the Borrower and the Consolidated
Subsidiaries as of the dates and for the periods to which such financial
statements relate, and (b) there shall have been no material adverse change in
the Business of the Borrower and the Consolidated Subsidiaries taken as a
whole since the dates of such financial statements.
9.2 Loan Documents.
Each of the Loan Documents shall have been duly executed and
delivered by the respective parties thereto and shall be in full force and
effect. Each Bank and the Administrative Agent shall have received a fully
executed copy of each such document.
9.3 Certified Copies of Charter Documents.
Each of the Banks and the Administrative Agent shall have received
from the Borrower and the General Partner (a) a copy of its certificate of
incorporation, certificate of limited partnership, or other charter document
duly certified as of a recent date by the Secretary of State of Delaware, (b)
a copy, certified by a duly authorized officer of such Entity to be true and
complete on the Closing Date, of its by-laws, agreement of limited
partnership, or equivalent document as in effect on such date, and (c) a
certificate of the Secretary of State of Delaware as to the due organization,
legal existence, and good standing of such Entity. The certificate of
incorporation and by-laws or partnership agreement and certificate of limited
partnership, as the case may be, of the Borrower, each of its Subsidiaries,
and the General Partner shall be in all respects satisfactory in form and
substance to the Banks and the Administrative Agent.
9.4 Partnership and Corporate Action.
All partnership action necessary for the valid execution, delivery,
and performance by the Borrower of this Credit Agreement and the other Loan
Documents to which it is or is to become a party, and all corporate action
necessary for the General Partner to cause the Borrower to execute, deliver,
and perform this Credit Agreement and the other Loan Documents to which the
Borrower is or is to become a party, shall have been duly and effectively
taken, evidence thereof reasonably satisfactory to the Banks and the
Administrative Agent shall have been provided to each of the Banks, and such
action shall be in full force and effect at the Closing Date.
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9.5 Consents.
Each party hereto shall have duly obtained all consents and approvals
of Government Authorities and other third parties, and shall have effected all
notices, filings, and registrations with Government Authorities and other
third parties, as may be required in connection with the execution, delivery,
performance, and observance of the Loan Documents; all of such consents,
approvals, notices, filings, and registrations shall be in full force and
effect; and the Banks and the Administrative Agent shall have each received
evidence thereof satisfactory to them.
9.6 Opinions of Counsel.
Each of the Banks and the Administrative Agent shall have received a
favorable opinion addressed to the Banks and the Administrative Agent, dated
as of the Closing Date, from Brown & Wood LLP, counsel to the Borrower, in the
form of Exhibit M attached hereto.
9.7 Proceedings.
There shall be no Proceedings pending or threatened the result of
which is reasonably likely to impair or prevent the Borrower's performance and
observance of its obligations under this Credit Agreement and the other Loan
Documents.
9.8 Incumbency Certificate.
Each of the Banks and the Administrative Agent shall have received
from the Borrower an incumbency certificate, dated as of the Closing Date,
signed by a duly authorized officer of the Borrower and giving the name and
bearing a specimen signature of each individual who shall be authorized: (a)
to sign, in the name and on behalf of the Borrower, each of the Loan Documents
to which the Borrower is or is to become a party; (b) to make Loan Requests
and Conversion Requests; and (c) to give notices and to take other action on
behalf of the Borrower under the Loan Documents.
9.9 Fees.
The Borrower shall have paid to the Administrative Agent for the
accounts of the Banks all fees then payable.
9.10 Representations and Warranties True; No Defaults.
The Administrative Agent and the Banks shall have received a
certificate of an officer of the General Partner, in form and substance
satisfactory to the Administrative Agent and the Banks, to the effect that (i)
each of the representations and warranties set forth herein and each of the
other Loan Documents is true and correct in all material respects on and as of
the Closing Date, and (ii) no material defaults exist under any material
contract or agreement of the Borrower, including, without limitation, this
Credit Agreement and the other Loan Documents.
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9.11 Year 2000 Letter.
Each of the Banks and the Administrative Agent shall have received a
written summary from the Borrower concerning Borrower's approach in dealing
with the "Year 2000" problem as it relates to functions and systems involving
dates.
10.0 CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, including the
Revolving Credit Loans and the Competitive Bid Rate Loans, whether on or after
the Closing Date, shall also be subject to the satisfaction of the conditions
precedent set forth below. Each of the submission of a Loan Request or a
Competitive Bid Rate Quote Request by the Borrower and the acceptance by the
Borrower of any Loan shall constitute a representation and warranty by the
Borrower that the conditions set forth below have been satisfied.
10.1 No Default.
No Default or Event of Default shall have occurred and be continuing.
10.2 Representations True.
Each of the representations and warranties of the Borrower and its
Subsidiaries contained in this Credit Agreement (other than the Borrower's
representation and warranty set forth in Section 5.5), the other Loan
Documents, or in any document or instrument delivered pursuant to or in
connection with this Credit Agreement shall be true and correct in all
material respects as of the time of the making of such Loan, with the same
effect as if made at and as of that time (except (a) to the extent that such
representations and warranties expressly relate to a prior date, in which case
they shall be true and correct in all material respects as of such earlier
date, and (b) to the extent of changes resulting from transactions
contemplated or permitted by this Credit Agreement and the other Loan
Documents and changes occurring in the ordinary course of business that singly
or in the aggregate are not materially adverse to the Borrower and its
Consolidated Subsidiaries taken as a whole).
10.3 Loan Request.
In the case of a Revolving Credit Loan, the Administrative Agent
shall have received a Loan Request as provided in Section 2.7. In the case of
a Competitive Bid Rate Loan, the Administrative Agent shall have received from
the Borrower its acceptance of the offers extended to the Borrower pursuant to
Section 2.11.6.
10.4 Payment of Fees.
Without limiting any other condition, the Borrower shall have paid to
the Administrative Agent, for the account of the Banks and the Administrative
Agent as appropriate, all fees and other amounts due and payable under the
Loan Documents at or prior to the time of the making of such Loan.
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10.5 No Legal Impediment.
No change shall have occurred in any Government Mandate that in the
reasonable opinion of any Bank would make it illegal for such Bank to make
such Loan (it being understood that this section shall be a condition only for
the Bank or Banks affected by such Government Mandate).
11.0 EVENTS OF DEFAULT; ACCELERATION; ETC.
11.1 Events of Default and Acceleration.
If any of the following events ("Events of Default" or, if the giving
of notice or the lapse of time or both is required, then, prior to such notice
or lapse of time, "Defaults") shall occur:
(a) the Borrower or any Other Obligor shall fail to pay any
principal of the Loans when the same shall become due and payable, whether at
the stated date of maturity or any accelerated date of maturity or at any
other date fixed for payment;
(b) the Borrower or any Other Obligor shall fail to pay any
interest on the Loans when the same shall become due and payable, whether at
the stated date of maturity or any accelerated date of maturity or at any
other date fixed for payment, and such failure shall continue for five (5)
days after written notice of such failure has been given to the Borrower (or
if the Borrower no longer exists, such other Obligor) by the Administrative
Agent;
(c) the Borrower or any Other Obligor shall fail to perform
or observe any of its covenants contained in Sections 6.5.1, 6.6.1, 7.1, 7.2,
7.3, 7.4(x), 7.13, 8, or, if such failure relates to a Lien securing Funded
Debt, 7.4;
(d) the Borrower, any Other Obligor, or any of their
respective Subsidiaries shall fail to perform or observe any term, covenant,
or agreement contained herein or in any of the other Loan Documents (other
than those specified elsewhere in this Section 11) for thirty (30) days after
written notice of such failure has been given to the Borrower (or if the
Borrower no longer exists, such Other Obligor) by the Administrative Agent,
provided, that a failure to perform or observe the terms, covenants and
agreements set forth in Section 6.4 or Section 6.5.3 that continues for more
than ten (10) days (regardless of whether notice of such failure is given to
the Borrower) shall constitute an Event of Default hereunder;
(e) any representation or warranty of the Borrower, any
Other Obligor, or any of their respective Subsidiaries in this Credit
Agreement, any of the other Loan Documents, or in any other document or
instrument delivered pursuant to or in connection with this Credit Agreement
shall prove to have been incorrect in any material respect upon the date when
made or deemed to have been made or repeated;
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(f) failure to make a payment of principal or interest, or a
default, event of default, or other event permitting (with or without the
passage of time or the giving of notice) acceleration or exercise of remedies
shall occur with respect to any (i) Indebtedness for money borrowed,
including, without limitation, Indebtedness under the Existing Credit
Agreement, (ii) Indebtedness in respect of the deferred purchase price of
goods or services, or (iii) Capitalized Lease, of the Borrower, any Other
Obligor, or any of their respective Subsidiaries, having a principal amount
(or, in the case of a Capitalized Lease, scheduled rental payments with a
discounted present value from the last day of the initial term to the date of
determination as determined in accordance with generally accepted accounting
principles) (A) in any one case, of $50,000,000 or more, or (B) in the
aggregate, of $150,000,000 or more, and such failure to make a payment of
principal or interest, or a default, event of default, or other event shall
continue for such period of time as would entitle the holder of such
Indebtedness or Capitalized Lease (with or without notice) to accelerate such
Indebtedness or terminate such Capitalized Lease;
(g) any of the Loan Documents shall be cancelled,
terminated, revoked, or rescinded otherwise than in accordance with the terms
thereof or with the express prior written agreement, consent, or approval of
the Banks, or any Proceeding to cancel, revoke, or rescind any of the Loan
Documents shall be commenced by or on behalf of the Borrower, any Other
Obligor, or any of their respective Subsidiaries party thereto, or any
Government Authority of competent jurisdiction shall make a determination
that, or issue a Government Mandate to the effect that, any material provision
of one or more of the Loan Documents is illegal, invalid, or unenforceable in
accordance with the terms thereof;
(h) the Borrower, any Other Obligor, Alliance Distributors,
the General Partner, or any Material Subsidiary shall make an assignment for
the benefit of creditors, or admit in writing its inability to pay or
generally fail to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator, or receiver of the Borrower, any Other Obligor, Alliance
Distributors, the General Partner or any Material Subsidiary or of any
substantial part of the assets of the Borrower, any Other Obligor, Alliance
Distributors, the General Partner, or any Material Subsidiary, or shall
commence any Proceeding relating to the Borrower, any Other Obligor, Alliance
Distributors, the General Partner, or any Material Subsidiary under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution, liquidation, or similar law of any jurisdiction, now or hereafter
in effect, or shall take any action to authorize or in furtherance of any of
the foregoing, or if any such petition or application shall be filed or any
such Proceeding shall be commenced against the Borrower, any Other Obligor,
Alliance Distributors, the General Partner, or any Material Subsidiary and any
of such parties shall indicate its approval thereof, consent thereto, or
acquiescence therein;
(i) either (i) an involuntary Proceeding relating to the
Borrower, any Other Obligor, Alliance Distributors, the General Partner, or
any Material Subsidiary under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, liquidation, or similar law of
any jurisdiction, now or hereafter in effect is commenced and not dismissed or
vacated within sixty (60) days following entry thereof, or (ii) a decree or
order is entered appointing any trustee, custodian, liquidator, or receiver
described in (h) or adjudicating
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the Borrower, any Other Obligor, Alliance Distributors, the General Partner,
or any Material Subsidiary bankrupt or insolvent, or approving a petition in
any such Proceeding, or a decree or order for relief is entered in respect of
the Borrower, any Other Obligor, Alliance Distributors, the General Partner,
or any Material Subsidiary in an involuntary Proceeding under federal
bankruptcy laws as now or hereafter constituted;
(j) there shall remain in force, undischarged, unsatisfied,
and unstayed, for more than forty-five (45) days, any final judgment or order
against the Borrower, any Other Obligor, or any of their respective
Subsidiaries, that, with any other such outstanding final judgments or orders,
undischarged, against the Borrower, any Other Obligors, and their respective
Subsidiaries taken together exceeds in the aggregate $20,000,000;
(k) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Banks shall have
determined in their reasonable discretion that such event reasonably could be
expected to result in liability of the Borrower, any Other Obligor, or any of
their respective Subsidiaries to the PBGC or such Guaranteed Pension Plan in
an aggregate amount exceeding $20,000,000 and such event in the circumstances
occurring reasonably could constitute grounds for the termination of such
Guaranteed Pension Plan by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer such Guaranteed
Pension Plan; or a trustee shall have been appointed by the United States
District Court to administer such Guaranteed Pension Plan; or the PBGC shall
have instituted proceedings to terminate such Guaranteed Pension Plan;
(l) any of the following: (i) the Borrower or (if required
to be so registered) any Other Obligor shall fail to be duly registered as an
"investment adviser" under the Investment Advisers Act of 1940; or (ii)
Alliance Distributors shall cease to be duly registered as a "broker/dealer"
under the Securities Exchange Act of 1934 or shall cease to be a member in
good standing of the National Association of Securities Dealers, Inc.;
(m) the Borrower, any Other Obligor, Alliance Distributors,
the General Partner, or any Material Subsidiary shall either (i) be indicted
for a federal or state crime and, in connection with such indictment,
Government Authorities shall seek to seize or attach, or seek a civil
forfeiture of, property of the Borrower, any Other Obligor, Alliance
Distributors, the General Partner, or one or more of such Material Subsidiary
having a fair market value in excess of $20,000,000, or (ii) be found guilty
of, or shall plead guilty, no contest, or nolo contendere to, any federal or
state crime, a punishment for which could include a fine, penalty, or
forfeiture of any assets of the Borrower, such Other Obligor, Alliance
Distributors, the General Partner, or such Material Subsidiary having in any
such case a fair market value in excess of $20,000,000; or
(n) Alliance Capital Management Corporation shall cease to
be the sole general partner of the Borrower, and such circumstance shall
continue for thirty (30) days after written notice of such circumstance has
been given to the Borrower (or, if the Borrower no longer exists, any Other
Obligor), provided, that the admission of additional Persons as (a) general
partner of the Borrower shall not constitute an Event of Default if, prior to
the admission
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of any such general partner, the Borrower delivers to the Banks (i) the
documentation with respect to such general partner that would be required
under Section 9.3 if such Person were a General Partner on the Closing Date,
(ii) an incumbency certificate for such general partner as required for the
Borrower pursuant to Section 9.8, and (c) an opinion from counsel reasonably
acceptable to the Banks, in form and substance reasonably satisfactory to the
Banks, as to such general partner's power and authority to act on behalf of
the Borrower as a general partner of the Borrower, and provided, further, that
a Reorganization of the Borrower pursuant to Section 7.2(c) as permitted under
Section 2.6 of the Borrower Partnership Agreement shall not constitute a
Default or an Event of Default under this clause(n);
then, and in any such event, so long as the same may be
continuing, the Administrative Agent, upon the request of the Majority Banks,
shall by notice in writing to the Borrower declare all amounts owing with
respect to this Credit Agreement, the Notes, and the other Loan Documents to
be, and they shall thereupon forthwith become, immediately due and payable
without presentment, demand, protest, or other notice of any kind, all of
which are hereby expressly waived by the Borrower; provided that in the event
of any Event of Default specified in Section 11.1(h) or Section 11.1(i), all
such amounts shall become immediately due and payable automatically and
without any requirement of notice from the Administrative Agent or any Bank;
and provided, further, that any such declaration may be rescinded by the
Majority Banks after the Events of Default leading to such declaration are
cured or waived.
11.2 Termination of Commitments.
If any one or more of the Events of Default specified in Section
11.1(h) or Section 11.1(i) shall occur, any unused portion of the Total
Commitment hereunder shall forthwith terminate and each of the Banks shall be
relieved of all obligations to make Loans to the Borrower. If any other Event
of Default shall have occurred and be continuing, or if on any Drawdown Date
the conditions precedent to the making of the Loans to be made on such
Drawdown Date are not satisfied, the Administrative Agent may with the consent
of the Majority Banks and, upon the request of the Majority Banks, shall, by
notice to the Borrower, terminate the unused portion of the Total Commitment
hereunder, and upon such notice being given such unused portion of the Total
Commitment hereunder shall terminate immediately and each of the Banks shall
be relieved of all further obligations to make Loans. If any such notice is
given to the Borrower, the Administrative Agent will forthwith furnish a copy
thereof to each of the Banks. No termination of the Total Commitment hereunder
shall relieve the Borrower of any of the Obligations or any of its existing
obligations to any of the Banks arising under other agreements or instruments.
11.3 Remedies.
(a) In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Administrative Agent
shall have accelerated the maturity of the Loans pursuant to Section 11.1,
each Bank, if owed any amount with respect to the Loans, may with the consent
of the Majority Banks but not otherwise, proceed to protect and enforce its
rights by any appropriate Proceeding, whether for the specific performance of
any covenant or agreement contained in this Credit Agreement and the other
Loan Documents or any instrument
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pursuant to which the Obligations to such Bank are evidenced, including as
permitted by applicable Government Mandate the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank.
(b) No remedy herein conferred upon any Bank or the
Administrative Agent or the holder of any Note is intended to be exclusive of
any other remedy, and each and every remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or now or hereafter existing
at law or in equity or by any Government Mandate.
11.4 Application of Monies.
In the event that, during the continuance of any Default or Event of
Default, the Administrative Agent or any Bank, as the case may be, receives
any monies in connection with the enforcement of rights under the Loan
Documents, such monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Administrative Agent for or in respect of all costs,
expenses, disbursements, and losses that shall have been incurred or sustained
by the Administrative Agent in connection with the collection of such monies
by the Administrative Agent, for the exercise, protection, or enforcement by
the Administrative Agent of all or any of the rights, remedies, powers, and
privileges of the Administrative Agent under this Credit Agreement or any of
the other Loan Documents, or in support of any provision of adequate indemnity
to the Administrative Agent against any taxes or Liens that by Government
Mandate shall have, or may have, priority over the rights of the
Administrative Agent to such monies;
(b) Second, to all other Obligations in such order or
preference as the Majority Banks may determine; provided, however, that
distributions among Obligations owing to the Banks and the Administrative
Agent with respect to each type of Obligation such as interest, principal,
fees, and expenses, shall be made among the Banks and the Administrative Agent
pro rata according to the respective amounts thereof; and provided, further,
that the Administrative Agent may in its discretion make proper allowance to
take into account any Obligations not then due and payable; and
(c) Third, the excess, if any, shall be returned to the
Borrower or to such other Persons as are entitled thereto.
12.0 SETOFF.
Regardless of the adequacy of any collateral, during the continuance
of any Event of Default, any deposits or other sums credited by or due from
any of the Banks to the Borrower and any securities or other property of the
Borrower in the possession of such Bank may be applied to or set off by such
Bank against the payment of Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now
existing or
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hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced
by the Notes held by such Bank, such amount shall be applied ratably to such
other Indebtedness and to the Indebtedness evidenced by all such Notes held by
such Bank, and (b) if such Bank shall receive from the Borrower, whether by
voluntary payment, exercise of the right of setoff, counterclaim, cross
action, enforcement of the claim evidenced by the Notes held by such Bank by
Proceedings against the Borrower, by proof thereof in bankruptcy,
reorganization, liquidation, receivership, or similar Proceedings, or
otherwise, and shall retain and apply to the payment of the Notes held by such
Bank, any amount in excess of its ratable portion of the payments received by
all of the Banks with respect to the Notes held by all of the Banks (exclusive
of payments to be made for the account of less than all of the Banks as
provided in Sections 3.2.2, 4.8, and 4.9), such Bank will make such
disposition and arrangements with the other Banks with respect to such excess,
either by way of distribution, pro tanto assignment of claims, subrogation or
otherwise as shall result in each Bank receiving in respect of the Notes held
by it its proportionate payment as contemplated by this Credit Agreement;
provided that if all or any part of such excess payment is thereafter
recovered from such Bank, such disposition and arrangements shall be rescinded
and the amount restored to the extent of such recovery, but without interest.
13.0 THE ADMINISTRATIVE AGENT.
13.1 Authorization.
Each of the Banks hereby appoints Fleet to act as Administrative
Agent and hereby irrevocably authorizes the Administrative Agent to take such
action on behalf of each of the Banks and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related documents
delegated to the Administrative Agent, together with such powers as are
reasonably incident thereto, provided that no duties or responsibilities not
expressly assumed herein or therein shall be implied to have been assumed by
the Administrative Agent. The relationship between the Administrative Agent
and the Banks is and shall be that of agent and principal only, and nothing
contained in this Credit Agreement or any of the other Loan Documents shall be
construed to constitute the Administrative Agent as a trustee for any Bank.
13.2 Employees and Agents.
The Administrative Agent may exercise its powers and execute its
duties by or through employees or agents and shall be entitled to take, and to
rely on, advice of legal counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents.
The Administrative Agent may utilize the services of such Persons as the
Administrative Agent in its sole discretion may reasonably determine.
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13.3 No Liability.
Neither the Administrative Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of
any oversight or error of judgment whatsoever, except that the Administrative
Agent or such other Person, as the case may be, may be liable for losses due
to its willful misconduct or gross negligence.
13.4 No Representations.
The Administrative Agent shall not be responsible to the Banks or any
other Person for the due execution or validity or enforceability of this
Credit Agreement, the Notes, any of the other Loan Documents or any instrument
at any time constituting, or intended to constitute, collateral security for
the Notes, or for the sufficiency or value of any such collateral security or
for the validity, enforceability, or collectability of any such amounts owing
with respect to the Notes, or for any recitals or statements, warranties, or
representations made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf of the
Borrower, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants, or agreements herein or
in any instrument at any time constituting, or intended to constitute,
collateral security for the Notes or to inspect any of the properties, books,
or records of the Borrower or any of its Subsidiaries. The Administrative
Agent shall not be bound to ascertain whether any notice, consent, waiver, or
request delivered to it by the Borrower or any holder of any of the Notes
shall have been duly authorized or is true, accurate, and complete. The
Administrative Agent has not made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability to the Banks,
with respect to the credit worthiness or financial conditions of the Borrower
or any of its Subsidiaries. Each Bank acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Bank, and
based upon such information and documents as it has deemed appropriate, made
its own credit analysis and decision to enter into this Credit Agreement. Each
Bank also acknowledges that it will, independently and without reliance upon
the Administrative Agent or any other Bank and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Credit Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.
13.5 Payments.
13.5.1 Payments to Administrative Agent.
A payment by the Borrower to the Administrative Agent
hereunder or under any of the other Loan Documents for the account of any Bank
shall constitute a payment to such Bank. The Administrative Agent shall
promptly distribute to each Bank such Bank's pro rata
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share of payments received by the Administrative Agent for the account of the
Banks except as otherwise expressly provided herein or in any of the other
Loan Documents.
13.5.2 Distribution by Administrative Agent.
If in the reasonable opinion of the Administrative Agent the
distribution of any amount received by it in such capacity hereunder, under
the Notes, or under any of the other Loan Documents might involve it in
liability, it may refrain from making distribution until its right to make the
same shall have been adjudicated by a court of competent jurisdiction. If any
Government Authority shall adjudge that any amount received and distributed by
the Administrative Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Administrative
Agent its proportionate share of the amount so adjudged to be repaid or shall
pay over the same in such manner and to such Persons as shall be determined by
such Government Authority.
13.5.3 Delinquent Banks.
Notwithstanding anything to the contrary contained in this
Credit Agreement or any of the other Loan Documents, any Bank that fails (a)
to make available to the Administrative Agent its pro rata share of any Loan,
or (b) to comply with the provisions of Section 12 with respect to making
dispositions and arrangements with the other Banks, where such Bank's share of
any payment received, whether by setoff or otherwise, is in excess of its pro
rata share of such payments due and payable to all of the Banks, in each case
as, when, and to the full extent required by the provisions of this Credit
Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall be
deemed a Delinquent Bank until such time as such delinquency is satisfied. A
Delinquent Bank shall be deemed to have assigned any and all payments due to
it from the Borrower, whether on account of outstanding Loans, interest, fees,
or otherwise, to the remaining nondelinquent Banks for application to, and
reduction of, their respective pro rata shares of all outstanding Loans. The
Delinquent Bank hereby authorizes the Administrative Agent to distribute such
payments to the nondelinquent Banks in proportion to their respective pro rata
shares of all outstanding Loans. A Delinquent Bank shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of the
assigned payments to all outstanding Loans of the non-delinquent Banks, the
Banks' respective pro rata shares of all outstanding Loans have returned to
those in effect immediately prior to such delinquency and without giving
effect to the nonpayment causing such delinquency.
13.6 Holders of Notes.
Subject to Section 17, the Administrative Agent may deem and treat
the payee of any Note as the absolute owner thereof for all purposes hereof
until it shall have been furnished in writing with a different name by such
payee or by a subsequent holder, assignee, or transferee.
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13.7 Indemnity.
The Banks ratably shall indemnify and hold harmless the
Administrative Agent and any of its directors, officers, employees or agents,
on demand, from and against any and all Proceedings (whether groundless or
otherwise), taxes, obligations, losses, damages, penalties, judgments, costs,
expenses (including any expenses for which the Administrative Agent has not
been reimbursed by the Borrower as required by Section 14), and liabilities of
every nature and character whatsoever that may be imposed on, incurred by or
asserted against the Administrative Agent in its capacity as such in any way
arising out of or related to this Credit Agreement, the Notes, any of the
other Loan Documents, or the transactions contemplated or evidenced hereby or
thereby, or any action taken or omitted to be taken by the Administrative
Agent hereunder or thereunder, except to the extent that any of the same are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have been directly caused by the Administrative Agent's willful
misconduct or gross negligence.
13.8 Administrative Agent, Syndication Agent and Documentation
Agent as Banks.
In its individual capacity, Fleet, The First National Bank of Chicago
and Banque Nationale de Paris shall have the same obligations and the same
rights, powers, and privileges in respect to its Commitment and the Loans made
by it, and as the holder of any of the Notes, as it would have were it not
also the Administrative Agent, Syndication Agent and Documentation Agent,
respectively.
13.9 Resignation.
The Administrative Agent may resign at any time by giving sixty (60)
days' prior written notice thereof to the Banks and the Borrower. Upon any
such resignation, the Majority Banks shall have the right to appoint a
successor Administrative Agent. Unless an Event of Default shall have occurred
and be continuing, such successor Administrative Agent shall be reasonably
acceptable to the Borrower. If no successor Administrative Agent shall have
been so appointed by the Majority Banks and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent's
giving of notice of resignation, then the retiring Administrative Agent may,
on behalf of the Banks, appoint a successor, which shall be a financial
institution having a rating of not less than A or its equivalent by Standard &
Poor's Ratings Services. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor, such successor shall thereupon
succeed to and become vested with all the rights, powers, privileges, and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Administrative Agent.
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13.10 Notification of Defaults and Events of Default.
Upon learning of the existence of a Default or an Event of Default, a
Bank shall promptly notify the Administrative Agent thereof. Upon receipt of
any notice under this Section 13.11, the Administrative Agent shall promptly
notify the other Banks of the existence of such Default or Event of Default.
13.11 Notification of Certain Events.
(a) Unless otherwise provided by the Borrower in its notice to the
Administrative Agent and the Banks of its Reorganization as permitted under
Section 7.2(d) hereof, the Administrative Agent will notify the Banks of the
effective date of such Reorganization.
(b) The Administrative Agent will notify the Banks of any consent
it grants to the Borrower under Section 7.13 hereof.
13.12 Duties in the Case of Enforcement.
In case one of more Events of Default shall have occurred and be
continuing, and whether or not acceleration of the Obligations shall have
occurred, the Administrative Agent shall, if (a) so requested by the Majority
Banks and (b) the Banks have provided to the Administrative Agent such
additional indemnities and assurances against expenses and liabilities as the
Administrative Agent may reasonably request, proceed to enforce the provisions
of the Loan Documents and exercise all or any such other legal, equitable, and
other rights or remedies as it may have under the Loan Documents. The Majority
Banks may direct the Administrative Agent in writing as to the method and the
extent of any such action, the Banks hereby agreeing to indemnify and hold the
Administrative Agent harmless from all liabilities incurred in respect of all
actions taken or omitted in accordance with such directions, provided that the
Administrative Agent need not comply with any such direction to the extent
that the Administrative Agent reasonably believes the Administrative Agent's
compliance with such direction will expose the Administrative Agent to
personal liability or will be unlawful or commercially unreasonable in any
applicable jurisdiction.
13.13 Syndication Agent and Documentation Agent.
Neither the Syndication Agent nor the Documentation Agent shall have
any right, power, obligation, liability, responsibility or duty under this
Credit Agreement other than those applicable to all Banks as such. Without
limiting the foregoing, neither the Syndication Agent nor the Documentation
Agent shall have or be deemed to have a fiduciary relationship with any Bank.
Each Bank hereby makes the same acknowledgments with respect to the
Syndication Agent and the Documentation Agent as it makes with respect to the
Administrative Agent in Section 13.7.
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14. 0 EXPENSES.
The Borrower shall upon demand either, as the Banks or the
Administrative Agent may require and regardless of whether any Loans are made
hereunder, pay in the first instance or reimburse the Banks and the
Administrative Agent (to the extent that payments for the following items are
not made under the other provisions hereof) for (a) the reasonable
out-of-pocket costs of producing and reproducing this Credit Agreement, the
other Loan Documents, and the other agreements and instruments mentioned
herein, (b) reasonable out-of-pocket expenses incurred in connection with the
syndication of this facility, (c) any taxes (including any interest and
penalties in respect thereto) payable by the Administrative Agent or any of
the Banks (other than taxes based upon the Administrative Agent's or any
Bank's income or profits) on or with respect to the transactions contemplated
by this Credit Agreement, (d) the reasonable fees, expenses, and disbursements
of the Administrative Agent's special counsel incurred in connection with the
preparation, administration, or interpretation of the Loan Documents, the
other instruments mentioned herein, and the term sheet for the transactions
contemplated by this Credit Agreement, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, provided
that the Borrower shall not be responsible to pay more than the amount of the
fees of the Administrative Agent's special counsel specified in that certain
Fee Letter, dated May 28, 1999, between the Administrative Agent and the
Borrower in connection with their preparation and initial closing of this
Credit Agreement and the other Loan Documents initially contemplated
hereunder, (e) the reasonable fees, expenses, and disbursements-of the
Administrative Agent incurred by the Administrative Agent in connection with
the preparation, administration, or interpretation of the Loan Documents and
other instruments mentioned herein, (f) all reasonable out-of-pocket expenses
(including reasonable attorneys' fees and costs, which attorneys may be
employees of any Bank or the Administrative Agent, and reasonable consulting,
accounting, appraisal, investment banking, and similar professional fees and
charges) incurred by any Bank or the Administrative Agent in connection with
(i) the enforcement of or preservation of rights under any of the Loan
Documents against the Borrower or any of its Subsidiaries or the
administration thereof after the occurrence of a Default or Event of Default
and (ii) any Proceeding or dispute whether arising hereunder or otherwise, in
any way related to any Bank's or the Administrative Agent's relationship with
the Borrower or any of its Subsidiaries. The Borrower shall not be responsible
under clause (f) above for the fees and costs of more than one law firm in any
one jurisdiction with respect to any one Proceeding or set of related
Proceedings for the Administrative Agent and the Banks, unless any of the
Administrative Agent and the Banks shall have reasonably concluded that there
are legal defenses available to it that are different from or additional to
those available to the Borrower or there are other circumstances that in the
reasonable judgment of the Administrative Agent and the Banks make separate
counsel advisable. The covenants of this Section 14 shall survive payment or
satisfaction of all other Obligations.
15.0 INDEMNIFICATION.
The Borrower shall, regardless of whether any Loans are made
hereunder, indemnify and hold harmless the Administrative Agent and the Banks,
together with their respective shareholders, directors, agents, officers,
Subsidiaries, and Affiliates, from and against any and all
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damages, losses, settlement payments, obligations, liabilities, claims, causes
of action, and Proceedings, and reasonable costs and expenses in connection
therewith, incurred, suffered, sustained, or required to be paid by an
indemnified party by reason of or resulting, directly or indirectly, from the
transactions contemplated by the Loan Documents, including (a) any actual or
proposed use by the Borrower or any of its Subsidiaries of the proceeds of any
of the Loans, (b) the Borrower or any of its Subsidiaries entering into or
performing this Credit Agreement or any of the other Loan Documents, or (c)
with respect to the Borrower and its Subsidiaries and their respective
properties and assets, the violation of any Environmental Law, the presence,
disposal, escape, seepage, leakage, spillage, discharge, emission, release, or
threatened release of any Hazardous Substances or any Proceeding brought or
threatened with respect to any Hazardous Substances (including claims with
respect to wrongful death, personal injury, or damage to property), in each
case including the reasonable fees and disbursements of legal counsel and
reasonable allocated costs of internal legal counsel incurred in connection
with any such Proceeding, provided, however, the Borrower shall not be
obligated to indemnify any party for any damages, losses, settlement payments,
obligations, liabilities, claims, causes of action, Proceedings, costs, and
expenses that were caused directly by (i) the gross negligence or willful
misconduct of the indemnified party or (ii) any breach by any Bank of its
obligation to fund a Revolving Credit Loan pursuant to this Credit Agreement,
provided that the Borrower is not then in Default. In Proceedings, or the
preparation therefor, the indemnified parties shall be entitled to select
their legal counsel and, in addition to the foregoing indemnity, the Borrower
shall, promptly upon demand, pay in the first instance, or reimburse the
indemnified parties for, the reasonable fees and expenses of such legal
counsel. The Borrower shall not be responsible under this section for the fees
and costs of more than one law firm in any one jurisdiction for the Borrower
and the indemnified parties with respect to any one Proceeding or set of
related Proceedings, unless any indemnified party shall have reasonably
concluded that there are legal defenses available to it that are different
from or additional to those available to the Borrower or there are other
circumstances that in the reasonable judgment of the indemnified parties make
separate counsel advisable. If, and to the extent that the obligations of the
Borrower under this Section 15 are unenforceable for any reason, the Borrower
shall make the maximum contribution to the payment in satisfaction of such
obligations that is permissible under applicable law. The covenants contained
in this Section 15 shall survive payment or satisfaction in full of all other
Obligations.
16. 0 SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations, and warranties made
herein, in the Notes, in any of the other Loan Documents, or in any documents
or other papers delivered by or on behalf of the Borrower or any of its
Subsidiaries pursuant hereto shall be deemed to have been relied upon by the
Banks and the Administrative Agent, notwithstanding any investigation
heretofore or hereafter made by any of them, and shall survive the making by
the Banks of the Loans, as herein contemplated, and shall continue in full
force and effect so long as any amount due under this Credit Agreement or the
Notes or any of the other Loan Documents remains outstanding or any Bank has
any obligation to make any Loans, and for such further time as may be
otherwise expressly specified in this Credit Agreement. All statements
contained in any certificate or other paper delivered to any Bank or the
Administrative Agent at any time by or on behalf of the
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Borrower or any of its Subsidiaries pursuant hereto or in connection with the
transactions contemplated hereby shall constitute representations and
warranties by the Borrower or such Subsidiary hereunder.
17.0 ASSIGNMENT AND PARTICIPATION.
17.1 Conditions to Assignment by Banks.
Except as provided herein, each Bank may assign to one or more
Eligible Assignees all or a portion of its interests, rights, and obligations
under this Credit Agreement (including all or a portion of its Commitment
Percentage and Commitment and the same portion of the Loans at the time owing
to it) and the Notes held by it; provided that (a) each of the Administrative
Agent and, so long as no Event of Default has occurred and is continuing, the
Borrower shall have given its prior written consent to such assignment, which
consent will not be unreasonably withheld or delayed, (b) each such assignment
shall be of a constant, and not a varying, percentage of all the assigning
Bank's rights and obligations under this Credit Agreement, (c) each assignment
of less than all of the assigning Bank's rights and obligations under this
Credit Agreement, shall be in an amount equal to $10,000,000 or in integral
multiples of $1,000,000 in excess thereof, and (d) the parties to such
assignment shall execute and deliver to the Administrative Agent, for
recording in the Register (as hereinafter defined), an Assignment and
Acceptance, substantially in the form of Exhibit L hereto (an "Assignment and
Acceptance"), together with any Notes subject to such assignment. Upon such
execution, delivery, acceptance, and recording, from and after the effective
date specified in each Assignment and Acceptance, which effective date shall
be at least five (5) Business Days after the execution thereof, (i) the
assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a Bank
hereunder, and (ii) the assigning Bank shall, to the extent provided in such
assignment and upon payment to the Administrative Agent of the registration
fee referred to in Section 17.3, be released from its obligations under this
Credit Agreement.
17.2 Certain Representations and Warranties; Limitations;
Covenants.
By executing and delivering an Assignment and Acceptance, the parties
to the assignment thereunder confirm to and agree with each other and the
other parties hereto as follows: (a) other than the representation and
warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, the assigning Bank makes
no representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties, or representations
made in or in connection with this Credit Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency, or value of this
Credit Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto; (b) the assigning Bank makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower and its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the performance or
observance by the Borrower and its Subsidiaries or any other Person primarily
or secondarily liable in respect of any of the Obligations or any of their
obligations under this
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Credit Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (c) such assignee confirms that
it has received a copy of this Credit Agreement, together with copies of the
most recent financial statements referred to in Section 5.4 and Section 6.4
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (d) such assignee will, independently and without reliance upon
the assigning Bank, the Administrative Agent, or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Credit Agreement; (e) such assignee represents and warrants that it is an
Eligible Assignee; (f) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to
exercise such powers under this Credit Agreement and the other Loan Documents
as are delegated to the Administrative Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto; (g) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Credit Agreement are required to be
performed by it as a Bank; and (h) such assignee represents and warrants that
it is legally authorized to enter into such Assignment and Acceptance.
17.3 Register.
The Administrative Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans owing to the
Banks from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, the Administrative Agent, and
the Banks may treat each Person whose name is recorded in the Register as a
Bank hereunder for all purposes of this Credit Agreement. The Register shall
be available for inspection by the Borrower and the Banks at any reasonable
time and from time to time upon reasonable prior notice. Upon each such
recordation, the assigning Bank agrees to pay to the Administrative Agent a
registration fee in the sum of $3,500.
17.4 New Notes.
Upon its receipt of an Assignment and Acceptance executed by the
parties to such assignment, together with each Note subject to such
assignment, the Administrative Agent shall (a) record the information
contained therein in the Register, and (b) give prompt notice thereof to the
Borrower and the Banks (other than the assigning Bank). Within five (5)
Business Days after receipt of such notice, the Borrower, at its own expense,
shall execute and deliver to the Administrative Agent, in exchange for each
surrendered Note, a new Note to the order of such Eligible Assignee in an
amount equal to the amount assumed by such Eligible Assignee pursuant to such
Assignment and Acceptance and, if the assigning Bank has retained some portion
of its obligations hereunder, a new Note to the order of the assigning Bank in
an amount equal to the amount retained by it hereunder. Such new Notes shall
provide that they are replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such Assignment and
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Acceptance and shall otherwise be in substantially the form of the assigned
Notes. The surrendered Notes shall be cancelled and returned to the Borrower.
17.5 Participations.
Each Bank may sell participations to one or more banks or other
entities in all or a portion of such Bank's rights and obligations under this
Credit Agreement and the other Loan Documents; provided that (a) any such sale
or participation shall not affect the rights and duties of the selling Bank
hereunder to the Borrower, (b) the only rights granted to the participant
pursuant to such participation arrangements with respect to waivers,
amendments, or modifications of the Loan Documents shall be the rights to
approve waivers, amendments or modifications that require the unanimous
consent of the Banks pursuant to Section 24 and (c) such participation shall
be in a minimum amount of $1,000,000 or in integral multiples of $1,000,000 in
excess thereof. Each Bank shall, promptly upon request of the Borrower in each
instance, disclose to the Borrower the parties to which such Bank has granted
participations under this section unless such Bank is subject to a contractual
restriction not to do so.
17.6 Disclosure.
Any Bank may disclose information obtained by such Bank pursuant to
this Credit Agreement to assignees or participants and potential assignees or
participants hereunder subject to Section 6.4(e).
17.7 Assignee or Participant Affiliated with the Borrower.
If any assignee Bank is an Affiliate of the Borrower, then any such
assignee Bank shall have no right to vote as a Bank hereunder or under any of
the other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Administrative Agent
pursuant to Section 11, and the determination of the Majority Banks shall for
all purposes of this Credit Agreement and the other Loan Documents be made
without regard to such assignee Bank's interest in any of the Loans. If any
Bank sells a participating interest in any of the Loans to a participant, and
such participant is the Borrower or an Affiliate of the Borrower, then such
transferor Bank shall promptly notify the Administrative Agent of the sale of
such participation. A transferor Bank shall have no right to vote as a Bank
hereunder or under any of the other Loan Documents for purposes of granting
consents or waivers or for purposes of agreeing to amendments or modifications
to any of the Loan Documents or for purposes of making requests to the
Administrative Agent pursuant to Section 11 to the extent that such
participation is beneficially owned by the Borrower or any Affiliate of the
Borrower, and the determination of the Majority Banks shall for all purposes
of this Credit Agreement and the other Loan Documents be made without regard
to the interest of such transferor Bank in the Loans to the extent of such
participation.
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17.8 Miscellaneous Assignment Provisions.
Any assigning Bank shall retain its rights to be indemnified pursuant
to Sections 4.6, 4.7, 4.9, 14, and 15 with respect to any claims or actions
arising prior to the date of the assignment. If any assignee Bank is not
incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its account, deliver to
the Borrower and the Administrative Agent certification as to its exemption
from deduction or withholding of any United States federal income taxes.
Anything contained in this Section 17 to the contrary notwithstanding, any
Bank may at any time pledge all or any portion of its interest and rights
under this Credit Agreement (including all or any portion of its Notes) to any
of the twelve Federal Reserve Banks organized under section 4 of the Federal
Reserve Act, 12 U.S.C. section 341. No such pledge or the enforcement thereof
shall release the pledgor Bank from its obligations hereunder or under any of
the other Loan Documents.
17.9 Assignment by Borrower.
Except in connection with a Reorganization permitted under Section
7.2, the Borrower shall not assign or transfer any of its rights or
obligations under any of the Loan Documents without the prior written consent
of each of the Banks.
18. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes shall be in writing and shall be delivered in
hand, mailed by United States registered or certified first class mail,
postage prepaid, sent by overnight courier, or sent by telegraph, telecopy,
telefax or telex and confirmed by delivery via courier or postal service,
addressed as follows:
(a) if to the Borrower, at 1345 Avenue of the Americas, New
York, New York 10105 (Telecopy Number (212) 969-6260), Attention: Treasurer,
with a copy sent via the same means to General Counsel of the Borrower at 1345
Avenue of the Americas, New York, New York 10105 (Telecopy Number (212)
969-1334), or at such other address for notice as any of such Persons shall
last have furnished in writing to the Person giving the notice;
(b) if to Fleet, whether individually or as Administrative
Agent, at 777 Main Street, 25th Floor, CT/MO/0250, Hartford, Connecticut
06115, (Telecopy Number (860) 986-1264), Attention: Elizabeth B. Shelley, Vice
President, Ref: Alliance Capital Management L.P., with a copy sent via the
same means to Robinson & Cole LLP, 280 Trumbull Street, Hartford, Connecticut
06103 (Telecopy Number: (860) 275-8299), Attention: Michael F. Maglio, Esq.,
or such other address for notice as such Person shall last have furnished in
writing to the Person giving the notice;
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(c) if to any Bank, at such Bank's address set forth on
Schedule 1 hereto, or such other address for notice as such Bank shall have
last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier
or telecopy to a responsible officer of the party to which it is directed, at
the time of the receipt thereof by such officer or the sending of such
telecopy, or when delivery (if other than by telecopy) is duly attempted and
refused, and (ii) if sent by registered or certified first-class mail, postage
prepaid, on the third Business Day following the mailing thereof.
19. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE ADMINISTRATIVE AGENT,
THE BANKS AND THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS
SPECIFIED IN SECTION 18. EACH OF THE ADMINISTRATIVE AGENT, THE BANKS AND THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
20. HEADINGS.
The captions in this Credit Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
21. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, and all of which
together shall constitute one instrument. In proving this Credit Agreement it
shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought.
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22. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except
as provided in Section 24.
23. WAIVER OF JURY TRIAL.
EACH OF THE ADMINISTRATIVE AGENT, THE BANKS AND THE BORROWER HEREBY
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY PROCEEDING ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS CREDIT AGREEMENT, THE NOTES, OR ANY OF THE
OTHER LOAN DOCUMENTS, AND RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR
THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW,
EACH OF THE ADMINISTRATIVE AGENT, THE BANKS AND THE BORROWER HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY PROCEEDING REFERRED TO IN THE
PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES
OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWER (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY BANK OR THE
ADMINISTRATIVE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH BANK
OR THE ADMINISTRATIVE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT EACH OF THE
ADMINISTRATIVE AGENT AND THE BANKS HAS BEEN INDUCED TO ENTER INTO THIS CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER
THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
24. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Credit Agreement, any
term of this Credit Agreement, the other Loan Documents, or any other
instrument related hereto or mentioned herein may be amended with, but only
with, the written consent of the Borrower and the Majority Banks. Any consent
or approval required or permitted by this Credit Agreement to be given by the
Banks may be given, any acceleration of amounts owing under the Loan Documents
may be rescinded, and the performance or observance by the Borrower of any
terms of this Credit Agreement, the other Loan Documents, or any other
instrument related hereto or mentioned herein or the continuance of any
Default or Event of Default may be waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with, the
written consent of the Majority Banks. Notwithstanding the foregoing, the rate
of interest on the Notes (other than interest accruing pursuant to Section
4.10 following the effective date of any waiver by the Majority Banks of the
Default or Event of Default relating thereto), the term of the Notes, the
definition of Maturity Date, the amount of the Commitments of the Banks, and
the amount of facility fees hereunder may not be changed without the written
consent of the Borrower and the
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written consent of Banks holding one hundred percent (100%) of the outstanding
principal amount of the Notes (or, if no Notes are outstanding, Commitments
representing one hundred percent (100%) of the Total Commitment); neither this
Section 24 nor the definition of Majority Banks may be amended without the
written consent of all of the Banks; and the amount of the Administrative
Agent's fee and Section 13 may not be amended without the written consent of
the Administrative Agent. No waiver shall extend to or affect any obligation
not expressly waived or impair any right consequent thereon. No course of
dealing or delay or omission on the part of any Bank in exercising any right
shall operate as a waiver thereof or otherwise be prejudicial thereto. No
notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances. Neither the
Administrative Agent nor any Bank has any fiduciary relationship with or
fiduciary duty to the Borrower arising out of or in connection with this
Credit Agreement or any of the other Loan Documents, and the relationship
between the Administrative Agent and the Banks, on the one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor.
25. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or
in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction,
and shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Credit Agreement in any
jurisdiction.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
BORROWER: ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its General Partner
By: /s/ Anne S. Brennan
------------------------------------------
Name: Anne S. Brennan
Title: SVP and Treasurer
ADMINISTRATIVE AGENT: FLEET NATIONAL BANK
By: /s/ Elizabeth B. Shelley
------------------------------------------
Name: Elizabeth B. Shelley
Title: Vice President
SYNDICATION AGENT: THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Francois Van Reepinghen
------------------------------------------
Name: Francois Van Reepinghen
Title: Senior Vice President
DOCUMENTATION AGENT: BANQUE NATIONALE DE PARIS
By: /s/ Marquerite L. Lebon
------------------------------------------
Name: Marquerite L. Lebon
Title: Assistant Vice President
By: /s/ Laurent Vanderzyppe
------------------------------------------
Name: Laurent Vanderzyppe
Title: Vice President
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BANKS: FLEET NATIONAL BANK
By: /s/ Elizabeth B. Shelley
------------------------------------------
Name: Elizabeth B. Shelley
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Francois Van Reepinghen
------------------------------------------
Name: Francois Van Reepinghen
Title: Senior Vice President
BANQUE NATIONALE DE PARIS
By: /s/ Marquerite L. Lebon
------------------------------------------
Name: Marquerite L. Lebon
Title: Assistant Vice President
By: /s/ Laurent Vanderzyppe
------------------------------------------
Name: Laurent Vanderzyppe
Title: Vice President
UBS AG STAMFORD BRANCH
By: /s/ Gregory Rave
------------------------------------------
Name Gregory Rave
Title: Director
By: /s/ Paula Mueller
------------------------------------------
Name: Paula Mueller
Title: Director
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CREDIT SUISSE FIRST BOSTON
By: /s/ Robert N. Finney
------------------------------------------
Name: Robert N. Finney
Title: Managing Director
By: /s/ Andrea E. Shkane
------------------------------------------
Name: Andrea E. Shkane
Title: Vice President
SOCIETE GENERALE, NEW YORK BRANCH
By: /s/ Dabney Giles Treacy
------------------------------------------
Name: Dabney Giles Treacy
Title: Vice President
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Exhibit A-1 to the
Credit Agreement
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT, dated as of _______________, 199_/200_
(this "Assumption Agreement"), among , __________________, a
[corporation/partnership/limited liability company] (the "Company"), and Fleet
National Bank, individually and as administrative agent (the "Administrative
Agent") for the Banks listed on Schedule 1 of the Credit Agreement referred to
below [**Adjust description of parties as appropriate to reflect the
requirements of Alternatives 2 and 3 in Section 2**];
W I T N E S S E T H:
WHEREAS, Alliance Capital Management L.P., a Delaware limited
partnership (the "Borrower"), the Banks, The First National Bank of Chicago,
individually and as syndication agent, Banque Nationale de Paris, individually
and as documentation agent, and the Administrative Agent have entered into
that certain Revolving Credit Agreement dated as of __________ __, 1999 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement");
WHEREAS, Section 7 of the Credit Agreement contemplates certain
circumstances in which the obligations of the Borrower under the Credit
Agreement will be assumed, on a joint and several basis with the Borrower, by
one or more corporations that are successors to the Borrower or transferees of
certain portions of the business or assets of the Borrower;
WHEREAS, [**describe circumstances giving rise to the execution of
this Agreement**] (the "Transaction"); and
WHEREAS, Section [**7.1(c), or 7.2(a), or 7.2(c)(iii)**] of the
Credit Agreement requires that, as a condition precedent of the Transaction,
the Company execute and deliver this Agreement in order to (a) become jointly
and severally liable, with the Borrower and any other corporations that have
entered into, or will in the future enter into, Assumption Agreements (any
such corporations, the "Other Obligors"), for all the obligations of the
Borrower under the Credit Agreement and the other Loan Documents and (b) agree
to be bound by all of the covenants and agreements set forth therein;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth hereinbelow, and other good and valuable
consideration, the Company, the Banks, and the Administrative Agent hereby
agree as follows:
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<PAGE>
Section I Assumption.
10. The Company hereby assumes, jointly and severally with the
Borrower and the Other Obligors, all of the duties, liabilities and
obligations of the Borrower under the Credit Agreement, and the Company shall
be bound by, and shall perform and observe the terms and conditions of the
Credit Agreement as if it had originally executed the Credit Agreement as the
Borrower. Without limiting the generality of the foregoing, the Company,
jointly and severally with the Borrower and the Other Obligors, shall pay to
the order of the Banks or the Administrative Agent, as appropriate, all
principal, interest, and other amounts that are due and payable from time to
time under the Credit Agreement. The closing of the Transaction shall be the
sole condition precedent to the effectiveness of this assumption by the
Company. Notwithstanding the foregoing, the Company shall comply with Section
6.6.4 of the Credit Agreement only to the extent required by Government
Mandate.
11. [**Insert one of the three following alternatives, as
appropriate.**]
First Alternative
[**To be inserted for (a) transfers of assets to Restricted Subsidiaries under
Credit Agreement Section 7.1(c) provided the Borrower will survive the
transfer and (b) Reorganizations between Restricted Subsidiaries under Credit
Agreement Section 7.2(a).**]
The rights of the Borrower under the Credit Agreement, including, without
limitation, the right to request borrowings and determine the interest rates
applicable to Loans, shall continue to be exercised exclusively by the
Borrower.
Second Alternative
[**To be inserted for Reorganizations under Credit Agreement Section 7.2(c) in
which all of the business and assets of the Borrower remaining after any other
transfers to Other Obligors or others are transferred to the Company and the
Borrower does not survive, provided that, upon completion of such
Reorganization, investment management contracts, together with agreements
associated with distribution revenues and shareholder servicing fees, with
respect to at least seventy-five percent (75%) of the consolidated revenues,
less "other revenues" (as such term is used in the Borrower's consolidated
statements of income as filed with the Securities and Exchange Commission), of
the Borrower and its Consolidated Subsidiaries during the four (4) fiscal
quarters most recently ended prior to such Reorganization will, if held by the
Borrower and/or one or more of its Consolidated Subsidiaries prior to such
Reorganization, be held by the Company and/or one or more of its Consolidated
Subsidiaries. For this alternative, the Banks, the Borrower, and any other
obligors must join this Agreement.**]
Upon the effectiveness of the Transaction, the Company shall assume the rights
of the Borrower under the Credit Agreement and shall be entitled to exercise
the same subject to the terms and conditions of the Credit Agreement. Without
limiting any provisions hereof or of any other Loan Document, each Other
Obligor acknowledges that its liability under the Assumption Agreement
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<PAGE>
to which it is party shall extend to all amounts owing under the Credit
Agreement by virtue of the Company's exercise of the rights assumed by it
hereunder.
Third Alternative
[**To be inserted in all cases other than those to which either the First
Alternative or the Second Alternative applies. For this alternative, the
Borrower and any Other Obligor must join this Agreement.**]
Upon the effectiveness of the Transaction, (a) the Commitment shall terminate
and the Banks shall be relieved of all obligations to make Loans under the
Credit Agreement, and (b) subject to clause (a) [**insert name of party to
exercise remaining rights of Borrower**] shall assume the rights of the
Borrower under the Credit Agreement and shall be entitled to exercise the same
subject to the terms and conditions of the Credit Agreement. Without limiting
any provisions hereof or of any other Loan Document, the Company and each
Other Obligor acknowledges that its liability under the Assumption Agreement
to which it is party shall extend to all amounts owing under the Credit
Agreement by virtue of the [**insert name of party to exercise remaining
rights of Borrower**]'s exercise of the rights assumed by it hereunder.
12. [**This section may be deleted if the Company is the sole obligor
in respect of the Credit Agreement.**] The obligations of the Company under
this Agreement shall be primary, absolute and unconditional (except for the
condition specified in the last sentence of paragraph 1 of this Section I),
and, without limiting the generality of the foregoing, shall not be released,
discharged, modified or otherwise affected by:
(i) any additional borrowings under the Credit Agreement,
regardless of whether the Company shall have approved any of such
borrowings or been given notice thereof;
(ii) any extension, renewal, settlement, compromise, waiver
or release in respect of the obligations of the Borrower or any Other
Obligor under any Loan Document;
(iii) any change in the legal existence, structure or
ownership of the Borrower or any Other Obligor or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the
Borrower or any Other Obligor;
(iv) the existence of any claim, set-off or other rights
that the Company may have at any time against the Administrative
Agent, any of the Banks or any other Person, whether in connection
herewith or any unrelated transaction, provided that nothing herein
shall prevent the assertion of such claim by separate suit or
compulsory counterclaim;
(v) any act, omission to act or delay of any kind by the
Borrower, the Administrative Agent, any Bank or any other Person; or
A1-3
<PAGE>
(vi) any other event or circumstance whatsoever that might,
but for this paragraph 3, constitute a legal or equitable discharge
of the Borrower's or any Other Obligor's obligations hereunder.
13. [**This section may be deleted if the Company is to be the sole
obligor in respect of the Credit Agreement.**] The Company's obligations
hereunder shall remain in full force and effect until the principal of and
interest on the Notes, and all other amounts payable by the Borrower and any
Other Obligors under the Credit Agreement and the other Loan Documents, shall
have been paid in full. If at any time any payment under any of the Notes or
the Credit Agreement is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy or reorganization of the Borrower or any Other
Obligor, or otherwise, the Company's obligations hereunder with respect to
such payment shall be reinstated as though such payment had been due but not
made at the time of such rescission, restoration or return.
14. [**This section may be deleted if the Company is to be the sole
obligor in respect of the Credit Agreement.**] The Company shall not exercise
against the Borrower or any Other Obligor any rights or remedies in respect of
payments under this Agreement, whether for contribution, by way of subrogation
or otherwise, until after the full and final payment of all Obligations.
Section II. Definitions.
For the purposes of this Agreement, each capitalized term used herein
and not otherwise defined herein has the meaning assigned to that term under
the Credit Agreement.
Section III. Certain Documents.
The Company shall, as a condition precedent to the Transaction,
furnish to the Administrative Agent and each Bank the following documents,
each of which shall be reasonably satisfactory to the Administrative Agent and
each of the Banks in form and substance:
15. (a) A copy of the Company's certificate of incorporation,
certificate of limited partnership or certificate of organization or other
articles of organization duly certified as of a recent date by the secretary
of state or other appropriate official of the jurisdiction in which the
Company is organized, (b) a copy, certified by a duly authorized officer of
the Company to be true and complete on the date of this Agreement, of its
by-laws as in effect on such date, and (c) a certificate of the secretary of
state or other appropriate official of the jurisdiction in which the Company
is organized, dated as of a recent date, as to the due incorporation, legal
existence and good standing of the Company.
16. A certificate of the Company, the Borrower, and any Other
Obligors dated as of the effective date of the Transaction certifying, jointly
and severally, that (a) no Default or Event of Default has occurred or is
continuing or will exist immediately after giving effect to the Transaction,
(b) if the Transaction is subject to Section 7.2(c)(vi) of the Credit
Agreement, any diminution in the aggregate net worth of the Borrower (if it
survives the Transaction), the
A1-4
<PAGE>
Company, any other Obligors, and their respective consolidated Subsidiaries
(after adjustment of such aggregate net worth to eliminate intercompany items
and without double counting), when compared with the Consolidated Net Worth of
the Borrower as of the date of the most recently completed fiscal quarter
immediately prior to such Reorganization, is not more than twenty percent
(20%) of such Consolidated Net Worth, and (c) the Transaction otherwise
satisfies the conditions of the Credit Agreement applicable thereto.
17. A certificate from the Company with respect to the incumbency and
signature of each of its officers (a) who is authorized to sign this Agreement
and any other document executed in connection herewith on its behalf and (b)
who will, until replaced by another officer or officers duly authorized for
that purpose, act as its representative for the purposes of signing documents
and giving notices and other communications in connection with the Credit
Agreement and any documents executed in connection therewith and the
transactions contemplated hereby and thereby. The Administrative Agent and the
Banks may conclusively rely on such certificate until the Administrative Agent
receives a notice in writing from the Company providing the names and
signatures of replacement officers.
18. An opinion of Brown & Wood LLP, or other counsel to the Company
reasonably satisfactory to the Administrative Agent and the Banks, that
relates to (a) the Company, (b) this Agreement, (c) any other Loan Documents
to which the Company is party, and (d) any other Loan Documents to which the
Company is required to become a party in order to satisfy the applicable
conditions of the Credit Agreement giving rise to the execution and delivery
of this Agreement (the Loan Documents referred to in clauses (c) and (d), the
"Required Loan Documents") .
Section IV. Representations and Warranties
In order to induce the Administrative Agent to enter into this
Agreement, the Company represents and warrants to the Administrative Agent and
the Banks that:
19. The Company is duly organized, validly existing and in good
standing as a [corporation/limited partnership/limited liability company]
organized under the laws of the State of _______________, and has the
[corporate/partnership/limited liability company] power and authority to (a)
execute and deliver this Agreement and any Required Loan Documents and (b)
perform its obligations under, and comply with the requirements of, this
Agreement and any Required Loan Documents. The Company is duly qualified or
authorized to conduct business in all jurisdictions other than the
jurisdiction in which it is organized in which it owns or leases property, or
conducts any business so as to require such qualification, except where the
failure to be so qualified would not have a Material Effect.
20. All [corporate/partnership/limited liability company] action
necessary for the valid execution, delivery and performance by the Company of
this Agreement and any Required Loan Documents, has been duly and effectively
taken and is in full force and effect at the date of this Agreement. Each of
this Agreement and any Required Loan Documents has been duly executed and
delivered by the Company. This Agreement and such Required Loan Documents
A1-5
<PAGE>
constitute the Company's legal, valid and binding obligations, enforceable
against the Company in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency, moratorium and other similar laws
affecting creditors' rights generally and by general principles of equity,
regardless of whether enforcement is sought in a proceeding in equity or at
law.
21. The Company has duly obtained all consents and approvals of
Government Authorities and has duly effected all notices, filings and
registrations with Government Authorities, as may be required in connection
with the execution, delivery, performance and observance of this Agreement and
any Required Loan Documents, and such consents, approvals, notices, filings
and registrations are in full force and effect at the date of this Agreement.
Except as would not have a Material Effect, the Company has duly obtained all
consents and approvals of third parties other than Government Authorities, and
has duly effected all notices to such third parties, as may be required in
connection with the execution, delivery, performance and observance of this
Agreement and any Required Loan Documents, and such consents, approvals, and
notices are in full force and effect at the date of this Agreement.
22. The execution and delivery by the Company of this Agreement and
any Required Loan Documents to be entered into by the Company concurrently
with this Agreement, and the performance and observance by the Company of this
Agreement and such Required Loan Documents will not contravene, or result in a
default or event of default under, (a) the Company's certificate of
incorporation, certificate of limited partnership or certificate of
organization (or other articles of organization) or by-laws, partnership
agreement or operating agreement, (b) any Contract to which the Company is
party or to which any of its assets are subject (except as will not be likely
to have a Material Effect), or (c) any Government Mandate applicable to the
Company or its assets.
23. The Company is in full compliance with the terms and conditions
of the Credit Agreement, and will be in full compliance with all such terms
and conditions upon the effectiveness of the Transaction.
Section V. Expenses.
The Company shall, jointly and severally with the Borrower, upon
demand, pay in the first instance, or reimburse the Administrative Agent for,
all reasonable out-of-pocket expenses of the Administrative Agent (including
the reasonable fees and disbursements of counsel to the Administrative Agent)
incurred in connection with the preparation, execution and delivery of this
Agreement and all transfer, stamp, documentary or other similar taxes, in
respect of this Agreement or any other document or instrument referred to
herein. The Administrative Agent shall deliver to the Company, to support such
expenses, true copies of unpaid invoices, receipted bills, and such other
supporting information as the Company may reasonably request. The provisions
of this Section V shall survive the termination of the Credit Agreement.
A1-6
<PAGE>
Section VI. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS
OR CHOICE OF LAW). EACH PARTY HERETO AGREES THAT ANY SUIT FOR THE ENFORCEMENT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS
SPECIFIED IN SECTION 18 OF THE CREDIT AGREEMENT. EACH PARTY HERETO HEREBY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
COURT.
Section VII. Counterparts; Binding Effect.
This Agreement may be executed in any number of counterparts, all of
which when taken together shall constitute but one and the same instrument.
This Agreement is binding upon the parties hereto and their respective
successors and assigns, and is intended to benefit and to be enforceable by
the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as a sealed instrument as of the day and year first above
written.
[**THE COMPANY**]
By:_____________________________________
Authorized Signatory
FLEET NATIONAL BANK
individually and as Administrative Agent
By:_____________________________________
Authorized Signatory
A1-7
<PAGE>
[**OTHER BANKS AND CO-AGENTS**]
[**only required for
Alternative in Section 2**]
By:_____________________________________
Authorized Signatory
[**Insert signatures for the
Borrower and Other Obligors as
required for the Second and Third
Alternatives in Section 2**]
A1-8
<PAGE>
Exhibit A-2 to the
Credit Agreement
ASSUMPTION, RELEASE AND CONSENT AGREEMENT
THIS ASSUMPTION, RELEASE AND CONSENT AGREEMENT, dated as of ___, 1999
(this "Agreement"), among Alliance Capital Management L.P., a Delaware limited
partnership (together with its successors, "Alliance Holding"), Alliance
Capital Management L.P. II, a Delaware limited partnership established on
April 6, 1999 (together with its permitted successors, "Alliance Capital"),
and Fleet National Bank, individually and as administrative agent (the
"Administrative Agent") for the Banks listed on Schedule 1 to the Credit
Agreement (as defined hereinafter) (the "Banks");
W I T N E S S E T H:
WHEREAS, Alliance Holding, the Banks, The First National Bank of
Chicago, individually and as Syndication Agent, Banque Nationale de Paris,
individually and as Documentation Agent, and the Administrative Agent have
entered into that certain Revolving Credit Agreement dated as of July ____,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"); and
WHEREAS, Alliance Holding may assign and transfer its rights and
obligations under the Loan Documents in a transaction permitted under Section
7.2 (d) of the Credit Agreement without the consent of the Banks; and
WHEREAS, on a date to be specified by Alliance Holding, Alliance
Holding will transfer substantially all of its business and assets to Alliance
Capital in accordance with the reorganization contemplated by the agreement
and plan of reorganization [to be] entered into among Alliance Holding,
Alliance Capital, Alliance Capital Management Corporation (the "General
Partner") and The Equitable Life Assurance Society of the United States (the
"Transaction"); and
WHEREAS, the parties hereto wish to provide for the assignment by
Alliance Holding to Alliance Capital of all of its rights and obligations
under the Loan Documents as hereinbelow provided;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth hereinbelow, and other good and valuable
consideration, the parties hereto hereby agree as follows:
Assumption, Release and Consent.
Alliance Holding hereby assigns, and Alliance Capital hereby assumes,
all of the duties, liabilities and obligations of Alliance Holding under the
Credit Agreement and any other Loan
A2-1
<PAGE>
Documents, and Alliance Capital shall be bound by, and shall perform and
observe the terms and conditions of the Credit Agreement and any other Loan
Documents as if it had originally executed the Loan Documents as the Borrower
(as defined in the Credit Agreement, as further modified herein). Without
limiting the generality of the foregoing, Alliance Capital shall pay to the
order of the Banks or the Administrative Agent, as appropriate, all principal,
interest, and other amounts that are due and payable from time to time under
the Credit Agreement. The closing of the Transaction shall be the sole
condition precedent to the effectiveness of the assignment by Alliance Holding
and assumption by Alliance Capital contemplated by this Agreement.
Upon the effectiveness of the Transaction, Alliance Capital shall
assume the rights of Alliance Holding under the Credit Agreement and any other
Loan Documents and shall be entitled to exercise the same subject to the terms
and conditions of the Credit Agreement and any other Loan Documents.
Immediately upon the effectiveness of the Transaction, the
Administrative Agent, on behalf of itself and each of the Banks, the
Syndication Agent and the Documentation Agent, hereby releases Alliance
Holding from its duties, obligations and liabilities under the Credit
Agreement and any other Loan Documents, and hereby consents to the assumption
set forth in this Section I.
Definitions.
For the purposes of this Agreement, each capitalized term used herein
and not otherwise defined herein has the meaning assigned to that term under
the Credit Agreement.
For the purposes of the Credit Agreement as amended hereby and any
other Loan Documents, as of and from the effectiveness of the Transaction,
"Borrower Partnership Agreement" shall mean the Agreement of Limited
Partnership of Alliance Capital, dated as of April 6, 1999, by and among the
General Partner and those other Persons who became partners of Alliance
Capital as provided therein, as such agreement has been amended and exists at
the date of this Agreement and may be amended or modified from time to time in
compliance with the provisions of the Credit Agreement (the "Alliance Capital
Partnership Agreement"); provided, however, that the references to "Section
2.6 of the Borrower Partnership Agreement" contained in Sections 7.2(c) and
11.1(n) of the Credit Agreement shall be deemed to mean Section 2.05 of the
Alliance Capital Partnership Agreement.
For the purposes of the Credit Agreement as amended hereby and any
other Loan Documents, as of and from the effectiveness of the Transaction,
"Borrower" shall mean Alliance Capital and its permitted successors for all
purposes under the Credit Agreement and any other Loan Documents, and as to
all periods or dates preceding but excluding such date shall mean Alliance
Holding, except as set forth elsewhere herein, and except further that for
purposes of Section 6.4(d) of the Credit Agreement, from and after such date,
if any, as Alliance Capital ceases to be subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended, Alliance Capital will
deliver to each of the Banks copies of all material filed with the Securities
and Exchange Commission by Alliance Holding.
A2-2
<PAGE>
Certain Documents.
Alliance Capital shall, as a condition precedent to the effectiveness
of this Agreement, furnish to the Administrative Agent and each Bank the
following documents, each of which shall be reasonably satisfactory to the
Administrative Agent and each of the Banks in form and substance:
(a) A copy of Alliance Capital's and the General Partner's
certificate of incorporation, certificate of limited partnership or
certificate of organization or other articles of organization duly certified
as of a recent date by the Secretary of State of Delaware, (b) a copy,
certified by a duly authorized officer of such Entity to be true and complete
on the date of this Agreement, of its agreement of limited partnership or
by-laws, as the case may be, as in effect on such date, and (c) a certificate
of the Secretary of State of Delaware, dated as of a recent date, as to the
due organization, legal existence and good standing of such Entity.
A certificate of Alliance Capital dated as of the effective date of
the Transaction certifying that (a) no Default or Event of Default has
occurred or is continuing or will exist immediately after giving effect to the
Transaction and (b) the Transaction otherwise satisfies the conditions of the
Credit Agreement applicable thereto.
A certificate from the General Partner of Alliance Capital with
respect to the incumbency and signature of each of its officers (a) who is
authorized to sign this Agreement and any other document executed in
connection herewith on its behalf and (b) who will, until replaced by another
officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with the Credit Agreement and any documents
executed in connection therewith and the transactions contemplated hereby and
thereby. The Administrative Agent and the Banks may conclusively rely on such
certificate until the Administrative Agent receives a notice in writing from
the General Partner of Alliance Capital providing the names and signatures of
replacement officers.
An opinion of Brown & Wood LLP that relates to (a) Alliance Capital
and the General Partner, (b) this Agreement, (c) any other Loan Documents to
which Alliance Capital is party, and (d) any other Loan Documents to which
Alliance Capital is required to become a party in order to satisfy the
applicable conditions of the Credit Agreement giving rise to the execution and
delivery of this Agreement (the Loan Documents referred to in clauses (c) and
(d), the "Required Loan Documents").
True and correct copies of the documents relating to the Transaction
and filed with the Securities and Exchange Commission, including, without
limitation, the agreement and plan of reorganization.
Replacement Notes duly executed by Alliance Capital (such new Notes,
"Replacement Notes") in favor of the Banks in exchange for the Notes of
Alliance Holding then held by the Banks (the "Old Notes"). Each Replacement
Note shall be identical in all respects to the corresponding Old Note or Old
Notes, as the case may be, except that the obligor on such Replacement Notes
shall be Alliance Capital instead of Alliance Holding.
A2-3
<PAGE>
Representations and Warranties.
Alliance Capital represents and warrants to the Administrative Agent
and the Banks that:
Alliance Capital and the General Partner are duly organized, validly
existing and in good standing as a limited partnership or a corporation, as
the case may be, organized under the laws of the State of Delaware, and have
the partnership or corporate power and authority, as the case may be, to (a)
execute and deliver this Agreement and any Required Loan Documents and (b)
perform their obligations under, and comply with the requirements of, this
Agreement and any Required Loan Documents. Alliance Capital and the General
Partner are duly qualified or authorized to conduct business in all
jurisdictions other than the jurisdiction in which they are organized in which
they own or lease property, or conduct any business so as to require such
qualification, except where the failure to be so qualified would not be likely
to have a Material Effect.
All partnership and corporate action necessary for the valid
execution, delivery and performance by Alliance Capital or the General
Partner, as the case may be, of this Agreement and any Required Loan
Documents, has been duly and effectively taken and is in full force and effect
at the date of this Agreement. Each of this Agreement and any Required Loan
Documents has been duly executed and delivered by Alliance Capital. This
Agreement and such Required Loan Documents constitute Alliance Capital's
legal, valid and binding obligations, enforceable against Alliance Capital in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium and other similar laws affecting creditors'
rights generally and by general principles of equity, regardless of whether
enforcement is sought in a proceeding in equity or at law.
Except as would not have a Material Effect, Alliance Capital has duly
obtained all consents and approvals of Government Authorities and has duly
effected all notices, filings and registrations with Government Authorities,
as may be required in connection with the execution, delivery, performance and
observance of this Agreement and any Required Loan Documents, and such
consents, approvals, notices, filings and registrations are in full force and
effect at the date of this Agreement. Except as would not have a Material
Effect, Alliance Capital has duly obtained all consents and approvals of third
parties other than Government Authorities, and has duly effected all notices
to such third parties, as may be required in connection with the execution,
delivery, performance and observance of this Agreement and any Required Loan
Documents, and such consents, approvals, and notices are in full force and
effect at the date of this Agreement.
The execution and delivery by Alliance Capital of this Agreement and
any Required Loan Documents to be entered into by Alliance Capital
concurrently with this Agreement, and the performance and observance by
Alliance Capital of this Agreement and such Required Loan Documents will not
contravene, or result in a default or event of default under, (a) Alliance
Capital's certificate of limited partnership or partnership agreement, (b) any
Contract to which Alliance Capital is party or to which any of its assets are
subject (except as will not be likely to have a Material Effect), or (c) any
Government Mandate applicable to Alliance Capital or its
A2-4
<PAGE>
assets (except as will not be likely to have a Material Effect).
Alliance Holding is in full compliance with the terms and conditions
of the Credit Agreement, and Alliance Capital will be in full compliance with
all such terms and conditions, as amended hereby, upon the effectiveness of
the Transaction.
Expenses.
Alliance Capital shall, upon demand, pay in the first instance, or
reimburse the Administrative Agent for, all reasonable out-of-pocket expenses
of the Administrative Agent (including the reasonable fees and disbursements
of outside counsel to the Administrative Agent) incurred in connection with
the preparation, execution and delivery of this Agreement and all transfer,
stamp, documentary or other similar taxes, in respect of this Agreement or any
other document or instrument referred to herein. The Administrative Agent
shall deliver to Alliance Capital, to support such expenses, true copies of
unpaid invoices, receipted bills, and such other supporting information as
Alliance Capital may reasonably request. The provisions of this Section V
shall survive the termination of the Credit Agreement.
Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS
OR CHOICE OF LAW). EACH PARTY HERETO AGREES THAT ANY SUIT FOR THE ENFORCEMENT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS
SPECIFIED [IN SECTION 18 OF THE CREDIT AGREEMENT]. EACH PARTY HERETO HEREBY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
COURT.
Counterparts; Binding Effect.
This Agreement may be executed in any number of counterparts, all of
which when taken together shall constitute but one and the same instrument.
This Agreement is binding upon the parties hereto and their respective
successors and assigns, and is intended to benefit and to be enforceable by
the parties hereto and their respective successors and assigns, including in
each case the Banks, the Syndication Agent and the Documentation Agent, on
whose behalf the Administrative Agent is executing and delivering this
Agreement.
Except as expressly amended, modified or supplemented hereby, the
provisions of the Credit Agreement and the other Loan Documents are and shall
remain in full force and effect.
A2-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as a sealed instrument as of the day and year 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:
FLEET NATIONAL BANK,
individually and as Administrative Agent on
behalf of the Syndication Agent, the
Documentation Agent and each of the Banks
By: __________________________________________
Name
Title:
A2-6
<PAGE>
Exhibit B to the
Credit Agreement
REVOLVING CREDIT NOTE
$______________________ __________ ___, 1999
FOR VALUE RECEIVED, the undersigned ALLIANCE CAPITAL MANAGEMENT L.P.,
a Delaware limited partnership (the "Borrower"), hereby promises to pay to the
order of ____________________ (the "Bank") at the Administrative Agent's Head
Office as such term is defined in the Revolving Credit Agreement dated as of
__________ ___, 1999 (as amended and in effect from time to time, the "Credit
Agreement"), among the Borrower, Fleet National Bank, individually and as
administrative agent, The First National Bank of Chicago, individually and as
syndication agent, Banque Nationale de Paris, individually and as
documentation agent, and the Banks listed on Schedule 1 thereto:
(a) the principal amount of _________________ AND NO/100
DOLLARS ($____________) or, if less, the aggregate unpaid principal
amount of Revolving Credit Loans advanced by the Bank to the Borrower
pursuant to the Credit Agreement; and
(b) interest from the date hereof on the principal balance
from time to time outstanding through and including the respective
maturity dates of the Loans evidenced hereby at the times and rates
specified in, and in all cases in accordance with the terms of, the
Credit Agreement.
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Credit Agreement. The Bank is
entitled to the benefit of the Credit Agreement and the other Loan Documents,
and may enforce the agreements of the Borrower contained therein, and the Bank
may exercise the respective remedies provided for thereby or otherwise
available in respect thereof, all in accordance with the respective terms
thereof. All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the time of the Drawdown Date of any Revolving Credit Loan,
or at the time of receipt of any payment of principal on this Note, an
appropriate notation on the appropriate grid attached to this Note, or the
making of such Revolving Credit Loan or receipt of such payment. The
outstanding amount of the Revolving Credit Loans set forth on the grids
attached to this Note, or the continuation of such grids, or any other similar
record, including computer records, maintained by the Bank with respect to any
Loans shall be prima facie evidence of the principal amount thereof owing and
unpaid to the Bank, but the failure to record, or any error in so recording,
any such amount on any such grid, continuation, or other record shall not
limit or otherwise affect the obligation of the Borrower hereunder or under
the Credit Agreement to make payments of principal of and interest on this
Note when due.
B-1
<PAGE>
The Borrower has the right in certain circumstances and the
obligation under certain other circumstances to prepay the whole or part of
the principal of this Note on the terms and conditions specified in the Credit
Agreement.
If any one or more Events of Default shall occur and be continuing,
the entire unpaid principal amount of this Note and all of the unpaid interest
accrued thereon may become or be declared due and payable in the manner and
with the effect provided in the Credit Agreement.
No delay or omission on the part of the Bank in exercising any right
hereunder shall operate as a waiver of such right or of any other rights of
the Bank, nor shall any delay, omission or waiver on any one occasion be
deemed a bar or waiver of the same or any other right on any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE
BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN
AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS
SPECIFIED IN SECTION 18 OF THE CREDIT AGREEMENT. THE BORROWER HEREBY WAIVES
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT
OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
IN WITNESS WHEREOF, the undersigned has duly executed this Note as of
the day and year first above written.
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its General Partner
By:__________________________________
Name: _________________________
Title:_________________________
<PAGE>
GRID FOR REVOLVING CREDIT LOANS
- ----------- ------------ -------------- ------------ -------------
Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made by:
- ----------- ------------ -------------- ------------- -------------
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
--
- ---/---/-- $------------ $------------ $------------ -------------
-- -- -- --
B-3
<PAGE>
Exhibit C to the
Credit Agreement
ALLIANCE CAPITAL MANAGEMENT L.P.
_______________ ___, 199__/200_
Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: ______________________
Re: Loan Request under the Revolving Credit Agreement dated as
of _________ __, 1999.
Ladies and Gentlemen:
Please refer to that certain Revolving Credit Agreement dated as of
___________ __, 1999 (the "Credit Agreement") among Alliance Capital
Management L.P., a Delaware limited partnership, Fleet National Bank,
individually and as administrative agent, The First National Bank of Chicago,
individually and as syndication agent, Banque Nationale de Paris, individually
and as documentation agent, and the Banks referred to therein. Capitalized
terms defined in the Credit Agreement and used in this letter without
definition shall have for purposes of this letter the meanings assigned to
them in the Credit Agreement.
Pursuant to Section 2.7 of the Credit Agreement, we hereby request
that a Revolving Credit Loan consisting of [**an Alternative Base Rate Loan in
the principal amount of $____________, and/or a Eurodollar Rate Loan in the
principal amount of $_____________ with an Interest Period of
______________**] be made on _____________ ___, 199__/200__. We understand
that this request is irrevocable and binding on us and obligates us to accept
the requested Loan on such date.
We hereby certify that (a) the aggregate outstanding principal amount
of the Revolving Credit Loans on today's date is $____________, (b) the
aggregate principal amount of the Revolving Credit Loans to be outstanding on
the Drawdown Date for the Revolving Credit Loan requested hereby (assuming
disbursement of such Loan and all other Loans requested under outstanding Loan
Requests) will be $__________, (c) we will use the proceeds of the requested
Revolving Credit Loan in accordance with the provisions of the Credit
Agreement, (d) no Default or Event of Default has occurred and is continuing
and (e) all conditions precedent to the Loan requested hereby set forth in
Section 10 of the Credit Agreement have been duly satisfied or waived.
C-1
<PAGE>
Very truly yours,
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its General Partner
By:__________________________________
Name:_____________________________
Title:____________________________
<PAGE>
Exhibit D to the
Credit Agreement
ALLIANCE CAPITAL MANAGEMENT L.P.
______________ ____, [19___/200__]
Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention:
Re: Confirmation of Loan Request under the Revolving
Credit Agreement dated as of __________ __, 1999
Ladies and Gentlemen:
Please refer to that certain Revolving Credit Agreement dated as of
___________ __, 1999 (the "Credit Agreement") among Alliance Capital
Management L.P., Fleet National Bank, individually and as administrative
agent, The First National Bank of Chicago, individually and as syndication
agent, Banque Nationale de Paris, individually and as documentation agent, and
the Banks referred to therein. Capitalized terms defined in the Credit
Agreement and used in this letter without definition shall have, for purposes
of this letter, the meanings assigned to them in the Credit Agreement.
Pursuant to Section 2.7 of the Credit Agreement, we hereby confirm
that a telephonic request for a Revolving Credit Loan consisting of [**an
Alternative Base Rate Loan in the principal amount of $__________, and/or a
Eurodollar Rate Loan in the principal amount of $___________ with an Interest
Period of ________________**] to be made on ____________, ____ [199__/200__]
was made by us on _____________,[199__/200__]. We understand that this request
was irrevocable and binding on us and obligated us to accept the requested
Revolving Credit Loan on such date.
We hereby certify that (a) the aggregate outstanding principal amount
of the Revolving Credit Loans on the date of the request was $___________ (b)
the aggregate principal amount of the Revolving Credit Loans to be outstanding
on the Drawdown Date for the Revolving Credit Loan requested as described
above (assuming disbursement of such Loan and all other Loans requested under
outstanding Loan Requests) will be $___________, (c) we will use the proceeds
of the requested Revolving Credit Loan in accordance with the provisions of
the Credit Agreement, (d) no Default or Event of Default has occurred and is
continuing and (e) all
D-1
<PAGE>
conditions precedent to the Loan requested as described above that are set
forth in Section 10 of the Credit Agreement have been duly satisfied or
waived.
Very truly yours,
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its General Partner
By:__________________________________
Name:_____________________________
Title:____________________________
D-2
<PAGE>
Exhibit E to the
Credit Agreement
ALLIANCE CAPITAL MANAGEMENT L.P.
_______________ ____,[199__/200__]
Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention:_______________________
Re: Conversion Request under the Revolving Credit Agreement dated as
of _________ __, 1999
Ladies and Gentlemen:
Please refer to that certain Revolving Credit Agreement dated as of
________ __, 1999 (the "Credit Agreement") among Alliance Capital Management
L.P., Fleet National Bank, individually and as administrative agent, The First
National Bank of Chicago, individually and as syndication agent, Banque
Nationale de Paris, individually and as documentation agent, and the Banks
referred to therein. Capitalized terms defined in the Credit Agreement and
used in this letter without definition shall have for purposes of this letter
the meanings assigned to them in the Credit Agreement.
Pursuant to Section 2.8.4 of the Credit Agreement, we hereby request
that the Revolving Credit Loan consisting of [**an Alternative Base Rate Loan
in the principal amount of $_____________, and/or a Eurodollar Rate Loan in
the principal amount of $_____________, with an Interest Period of
______________ ending on _____________ ____, [199__/200__**] currently in
effect be converted to [**an Alternative Base Rate Loan in principal amount of
$____________, or a Eurodollar Rate Loan in principal amount of $____________
with an Interest Period of _____________ **] on ______________
___,[199__/200__]. We understand that this request is irrevocable and binding
on us.
We hereby certify that (a) the aggregate outstanding principal amount
of the Revolving Credit Loans on today's date is $___________, (b) upon giving
effect to the request set forth in this letter (and any other outstanding
conversion requests under the Credit Agreement) there will be outstanding
Eurodollar Rate Loans having ______ different Interest Periods, (c) if this
letter requests conversion of an Alternative Base Rate Loan to a Eurodollar
Rate Loan or continuation of a Eurodollar Rate Loan as such, that no Default
or Event of Default has occurred and is
E-1
<PAGE>
continuing and (d) the requests set forth in this letter are made in
accordance with the terms and conditions of the Credit Agreement.
Very truly yours,
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its General Partner
By:__________________________________
Name:_____________________________
Title:____________________________
E-2
<PAGE>
Exhibit F to the
Credit Agreement
ALLIANCE CAPITAL MANAGEMENT L.P.
_______________ _____,[199__/200__]
Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention:_______________________
Re: Confirmation of Conversion Request under the
Revolving Credit Agreement dated as of _________ __, 1999
Ladies and Gentlemen:
Please refer to that certain Revolving Credit Agreement dated as of
_________ __, 1999 (the "Credit Agreement") among Alliance Capital Management
L.P., Fleet National Bank, individually and as administrative agent, The First
National Bank of Chicago, individually and as syndication agent, Banque
Nationale de Paris, individually and as the documentation agent, and the Banks
referred to therein. Capitalized terms defined in the Credit Agreement and
used in this letter without definition shall have for purposes of this letter
the meanings assigned to them in the Credit Agreement.
Pursuant to Section 2.8.4 of the Credit Agreement, we hereby confirm
our telephonic request that the Revolving Credit Loan consisting of [**an
Alternative Base Rate Loan in the principal amount of $__________, and/or a
Eurodollar Rate Loan in the principal amount of $__________ with an Interest
Period of ______________ ending on _______________199__/200__**] in effect at
the time of such request be converted to [**an Alternative Base Rate Loan in
principal amount of $___________ or a Eurodollar Rate Loan in principal amount
of $__________, with an Interest Period of ____________**] on ___________,
[199__/200__]. We understand that this request was irrevocable and binding on
us.
We hereby certify that (a) the aggregate outstanding principal amount
of the Revolving Credit Loans on today's date is $____________, (b) upon
giving effect to the request confirmed in this letter (and any other
outstanding conversion requests under the Credit Agreement) there will be
outstanding Eurodollar Rate Loans having __________ different Interest
Periods, (c) if this letter confirms a request for conversion of an
Alternative Base Rate Eurodollar Rate Loan or continuation of a Eurodollar
Rate Loan as such, that no Default or Event of Default has occurred
F-1
<PAGE>
and is continuing and (d) the requests confirmed in this letter were made in
accordance with the terms and conditions of the Credit Agreement.
Very truly yours,
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its General Partner
By:__________________________________
Name:_____________________________
Title:____________________________
F-2
<PAGE>
Exhibit G to the
Credit Agreement
[Date]
TO: Fleet National Bank (the "Administrative Agent")
FROM: Alliance Capital Management L.P. (the "Borrower")
RE: Revolving Credit Agreement (the "Credit Agreement") dated as
of __________ __, 1999 among Alliance Capital Management
L.P., Fleet National Bank, individually and as
administrative agent, The First National Bank of Chicago,
individually and as syndication agent, Banque Nationale de
Paris, individually and as documentation agent, and the
Banks referred to therein.
We hereby confirm that a telephonic request for Competitive Bid
Rate Quotes for the following proposed Competitive Bid Rate Loan(s):
Proposed Date of Borrowing:_____________________________________________
Principal Amount*/ Interest Period**/
------------------ ------------------
$
was made by us at _________ on __________, 199__/200__ pursuant to Section 2.11
of the Credit Agreement.
Such Competitive Bid Rate Quotes should offer a Competitive Bid
[Rate Margin/Absolute Rate] [or both].
We hereby certify that (a) the aggregate outstanding principal
amount of the Loans on today's date is $____________, (b) the aggregate
principal amount of the Loans to be outstanding on the Drawdown Date for the
Competitive Bid Rate Loan requested hereby (assuming disbursement of such Loan
and all other Loans requested under outstanding Loan Requests) will be
$__________, (c) we will use the proceeds of the requested Competitive Bid
Rate Loan in accordance with the provisions of the Credit Agreement, (d) no
Default or Event of Default has occurred and is continuing or would be caused
by the funding of the proposed Competitive Bid Rate Loan and (e) all
conditions precedent to the Loan requested hereby set forth in Section 10 of
the Credit Agreement have been duly satisfied or waived.
Capitalized terms used herein have the meanings assigned to them
in the Credit Agreement.
ALLIANCE CAPITAL MANAGEMENT L.P.
By:__________________________________
Alliance Capital Management
Corporation, its General Partner
By:______________________________
Name:_______________________
Title:________________________
- --------
*/ Amount must be $10,000,000 or a larger multiple of $1,000,000.
**/ From and including seven (7) days to and including one hundred
eighty (180) days. The Borrower may request offers to make
Competitive Bid Rate Loans for not more than one (1) Interest
Period in a single Competitive Bid Rate Quote Request.
G-1
<PAGE>
Exhibit H to the
Credit Agreement
[Date]
TO: [Names of Lenders]
RE: Invitation for Competitive Bid Rate Quotes to Alliance Capital
Management, L.P. (the "Borrower")
Pursuant to Section 2.11 of the Revolving Credit Agreement (the
"Credit Agreement") dated as of _________ __, 1999 among Alliance Capital
Management, L.P., Fleet National Bank, individually and as administrative
agent, The First National Bank of Chicago, individually and as syndication
agent, Banque Nationale de Paris, individually and as documentation agent, and
the Banks referred to therein. We are pleased on behalf of the Borrower to
invite you to submit Competitive Bid Rate Quotes to the Borrower for the
following proposed Competitive Bid Rate Loans(s):
Proposed Date of Borrowing:__________________________
Principal Amount Interest Period
---------------- ---------------
$
Such Competitive Bid Rate Quotes should offer a Competitive Bid [Rate
Margin/Absolute Rate].
Please respond to this invitation by no later than [1:00 P.M.*/]
[10:30 A.M.**/] (Hartford, Connecticut) on [date***/].
Capitalized terms used herein shall have the meanings assigned
thereto in the Credit Agreement.
FLEET NATIONAL BANK
By:_________________________________
Authorized Officer
- --------
*/ For Eurodollar Auctions.
**/ For Absolute Rate Auctions.
***/ Third (3rd) Business Day prior to proposed date of Competitive Bid Rate
Loan if Eurodollar Auction; proposed date of Competitive Bid Rate Loan if
Absolute Rate Auction.
H-1
<PAGE>
Exhibit I to the
Credit Agreement
Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: _____________________________
Re: Competitive Bid Rate quote[s] to Alliance Capital Management L.P. (the
"Borrower")
In response to your invitation on behalf of the Borrower dated
_____________________, we hereby make the following competitive Bid Rate
Quote[s] on the following terms:
26. Quoting Lender:_____________________________________________.
27. Person to contact at Quoting Lender:_____________________________.
28. Proposed Date of Loan:______________________________________*
29. We hereby offer to make Competitive Bid Rate Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following [rates/margins].**
Capitalized terms used herein are used as defined in the Revolving
Credit Agreement ("Credit Agreement") dated as of ___________ __, 1999 among
Alliance Capital Management L.P., Fleet National Bank, individually and as
administrative agent, The First National Bank of Chicago, individually and as
syndication agent, Banque Nationale de Paris, individually and as
documentation agent, and the Banks referred therein.
- ------------------
* As specified in the related Invitation.
** For a Eurodollar Auction, the margin above or below the Eurodollar Rate.
I-1
<PAGE>
Exhibit J to the
Credit Agreement
COMPETITIVE BID RATE NOTE
_________ __, 1999
FOR VALUE RECEIVED, the undersigned ALLIANCE CAPITAL MANAGEMENT L.P.,
a Delaware limited partnership (the "Borrower"), hereby promises to pay to the
order of ____________________ (the "Bank") at the Administrative Agent's Head
Office as such term is defined in the Revolving Credit Agreement dated as of
__________ __, 1999 (as amended and in effect from time to time, the "Credit
Agreement"), among the Borrower, Fleet National Bank, individually and as
administrative agent, The First National Bank of Chicago, individually and as
syndication agent, Banque Nationale de Paris, individually and as
documentation agent, and the Banks listed on Schedule 1 thereto:
(a) the principal amount of ________________________________
AND NO/100 DOLLARS ($______________) or, if less, the aggregate
unpaid principal amount of Competitive Bid Rate Loans advanced by the
Bank to the Borrower pursuant to the Credit Agreement; and
(b) interest from the date hereof on the principal balance
from time to time outstanding through and including the respective
maturity dates of the Competitive Bid Rate Loans evidenced hereby at
the times and rates specified in, and in all cases in accordance with
the terms of, the Credit Agreement.
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Credit Agreement. The Bank is
entitled to the benefit of the Credit Agreement and the other Loan Documents,
and may enforce the agreements of the Borrower contained therein, and the Bank
may exercise the respective remedies provided for thereby or otherwise
available in respect thereof, all in accordance with the respective terms
thereof. All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the time of the Drawdown Date of any Competitive Bid Rate
Loan, or at the time of receipt of any payment of principal on this Note, an
appropriate notation on the appropriate grid attached to this Note, or the
making of such Competitive Bid Rate Loan or receipt of such payment. The
outstanding amount of the Competitive Bid Rate Loans set forth on the grids
attached to this Note, or the continuation of such grids, or any other similar
record, including computer records, maintained by the Bank with respect to any
Loans shall be prima facie evidence of the principal amount thereof owing and
unpaid to the Bank, but the failure to record, or any error in so recording,
any such amount on any such grid, continuation, or other record shall not
limit or otherwise affect the obligation of the Borrower hereunder or under
the Credit Agreement to make payments of principal of and interest on this
Note when due.
J-1
<PAGE>
The Borrower has the right in certain circumstances and the
obligation under certain other circumstances to prepay the whole or part of
the principal of this Note on the terms and conditions specified in the Credit
Agreement.
If any one or more Events of Default shall occur and be continuing,
the entire unpaid principal amount of this Note and all of the unpaid interest
accrued thereon may become or be declared due and payable in the manner and
with the effect provided in the Credit Agreement.
No delay or omission on the part of the Bank in exercising any right
hereunder shall operate as a waiver of such right or of any other rights of
the Bank, nor shall any delay, omission or waiver on any one occasion be
deemed a bar or waiver of the same or any other right on any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE
BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN
AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS
SPECIFIED IN SECTION 18 OF THE CREDIT AGREEMENT. THE BORROWER HEREBY WAIVES
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT
OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
IN WITNESS WHEREOF, the undersigned has duly executed this Note as of
the day and year first above written.
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its General Partner
By:__________________________________
Name:_____________________________
Title:____________________________
J-2
<PAGE>
GRID FOR COMPETITIVE BID RATE LOANS
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------- -------------------- -------------------- -------------------- -------------
Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made by:
- ----------------------- -------------------- -------------------- -------------------- --------------
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ ----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ ----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
---/---/-- $------------ $------------ $------------ -----------
-- -- -- --
</TABLE>
J-3
<PAGE>
Exhibit K to
Credit Agreement
[ALLIANCE CAPITAL MANAGEMENT L.P. LETTERHEAD]
Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: _______________________
Each-of the Banks as defined in the
Credit Agreement referred to below
Attention:
Re: Compliance Certificate under Revolving Credit Agreement dated
as of __________ __, 1999
Ladies and Gentlemen:
Please refer to that certain Revolving Credit Agreement dated as of
__________ __, 1999 (the "Credit Agreement") among Alliance Capital Management
L.P., Fleet National Bank, individually and as administrative agent, The First
National Bank of Chicago, individually and as syndication agent, Banque
Nationale de Paris, individually and as documentation agent, and the Banks
referred to therein. Capitalized terms defined in the Credit Agreement and
used in this certificate without definition shall have for purposes of this
certificate the meanings assigned to them in the Credit Agreement.
This is a certificate delivered pursuant to Section 6.4(c) of the
Credit Agreement with respect to compliance with the financial covenants as
set forth in Section 8 of the Credit Agreement. This certificate has been duly
executed by the principal financial officer, treasurer or general counsel of
the Borrower.
30. No Default. To the best of the knowledge and belief of the
undersigned, no Default or Event of Default has occurred and is continuing
under the Credit Agreement. Attached hereto as Appendix I are all relevant
calculations setting forth the Borrower's compliance with Section 8 of the
Credit Agreement as at the end of or, if required, during the [**annual or
quarterly**] period covered by the financial statements delivered herewith,
together with the reconciliation's to reflect changes, if any, in GAAP since
December 31, 1998.
31. Financial Statements. Together with this Certificate, the
Borrower is delivering to the Administrative Agent the financial statements
required pursuant to Section 6.4 of the Credit Agreement. [Also delivered
herewith is a reconciliation of the covenant calculations and the
K-1
<PAGE>
financial
statements of the Borrower to the extent they differ as the result of changes
in GAAP since December 31, 1998.]
IN WITNESS WHEREOF, the undersigned has signed this certificate as an
instrument under seal on this _____ day of ________________, 199__.
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its General Partner
By:____________________________________
Name:
Title:
K-2
<PAGE>
Exhibit L to
Credit Agreement
ASSIGNMENT AND ACCEPTANCE
Dated as of _________________, 19__/20__
Reference is made to the Revolving Credit Agreement dated as of
_________ __, 1999 (as from time to time amended and in effect, the "Credit
Agreement"), by and among Alliance Capital Management L.P., a Delaware limited
partnership (the "Borrower"), Fleet National Bank, individually and as
administrative agent, The First National Bank of Chicago, individually and as
syndication agent, Banque Nationale de Paris, individually and as
documentation agent, and the Banks referred to therein. Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such
terms in the Credit Agreement.
________________________ (the "Assignor") and __________ the
("Assignee") hereby agree as follows:
32. Subject to the terms and conditions of this Assignment and
Acceptance and the applicable terms and provisions of the Credit Agreement,
including Section 17 thereof, the Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes without recourse to
the Assignor, a $_______________ interest in and to the rights, benefits,
indemnities, and obligations of the Assignor under the Credit Agreement equal
to ______________%, in respect of the Total Commitment immediately prior to
the Effective Date (as hereinafter defined).
33. The Assignor (a) represents and warrants that (i) it is legally
authorized to enter into this Assignment and Acceptance, (ii) as of the date
hereof, its Commitment is $__________, its Commitment Percentage is ________%,
and the aggregate outstanding principal balance of its Loans equals
$__________ (in each case after giving effect to the assignment contemplated
hereby but without giving effect to any contemplated assignments which have
not yet become effective), and (iii) immediately after giving effect to all
assignments which have not yet become effective, the Assignor's Commitment
Percentage will be sufficient to give effect to this Assignment and
Acceptance, (b) makes no representation or warranty, express or implied, and
assumes no responsibility with respect to any statements, warranties, or
representations made in or in connection with the Credit Agreement or any of
the other Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency, or value of the Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant thereto or
the attachment, perfection, or priority of any Lien, other than that it is the
legal and beneficial owner of the interest being assigned by it hereunder free
and clear of any Lien; (c) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower, any
other obligor, or any other Person primarily or secondarily liable in respect
of any of the Obligations, or the performance or observance by the Borrower,
any other obligor, or any other Person primarily or secondarily liable in
respect of any of the Obligations of any of its obligations under the Credit
Agreement or any of the other Loan
L-1
<PAGE>
Documents or any other instrument or
document delivered or executed pursuant thereto; and (d) attaches hereto the
Notes delivered to it under the Credit Agreement.
The Assignor requests that the Borrower exchange the Assignor's Notes
for new Notes payable to the Assignor and the Assignee as follows:
Amount of
Notes Payable to Competitive Bid
the Order of: Amount of Note Rate Note
Assignor $_____________ $_____________
Assignor $_____________ $_____________
34. The Assignee (a) represents and warrants that (i) it is duly and
legally authorized to enter into this Assignment and Acceptance, (ii) the
execution, delivery, and performance of this Assignment and Acceptance do not
conflict with any Government Mandate, the charter or by-laws of the Assignee,
or any Contract binding on the Assignee, (iii) all acts, conditions, and
things required to be done and performed and to have occurred prior to the
execution, delivery, and performance of this Assignment and Acceptance, and to
render the same the legal, valid, and binding obligation of the Assignee,
enforceable against it in accordance with its terms, have been done and
performed and have occurred in due and strict compliance with all applicable
Government Mandates; (b) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 6.4 (a) and (b) thereof and such other documents
and information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Assignment and Acceptance; (c) agrees that it
will, independently and without reliance upon the Assignor, the Administrative
Agent, or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Credit Agreement; (d) represents and
warrants that it is an Eligible Assignee; (e) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to
exercise such powers under the Credit Agreement and the other Loan Documents
as are delegated to the Administrative Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; and (f) agrees that it
will perform in accordance with their terms all the obligations which by the
terms of the Credit Agreement are required to be performed by it as a Bank.
35. The effective date for this Assignment and Acceptance shall be
_________, 19__ (the "Effective Date"). Following the execution of this
Assignment and Acceptance and if required, the consent of the Borrower hereto,
each party hereto shall deliver its duly executed counterpart hereof to the
Administrative Agent for acceptance by the Administrative Agent and recording
in the Register by the Administrative Agent. Schedule 1 to the Credit
Agreement shall thereupon be replaced as of the Effective Date by the Schedule
1 annexed hereto.
36. Upon such acceptance and recording, from and after the Effective
Date, (a) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Bank thereunder, and (b) the Assignor shall,
L-2
<PAGE>
with respect to that portion of its interest under the Credit Agreement
assigned hereunder, relinquish its rights and be released from its obligations
under the Credit Agreement; provided, however, that the Assignor shall retain
its rights to be indemnified pursuant to Sections 4.6, 4.7, 4.9, 14 and 15 of
the Credit Agreement with respect to any claims or Proceedings arising prior
to the Effective Date (and without limiting any other rights of Assignee,
Assignee shall also be entitled to indemnity thereunder for such Proceedings).
37. Upon such acceptance of this Assignment and Acceptance by the
Administrative Agent and such recording, from and after the Effective Date,
the Administrative Agent shall make all payments in respect of the rights and
interests assigned hereby (including payments of principal, interest, fees,
and other amounts) to the Assignee. The Assignor and the Assignee shall make
any appropriate adjustments in payments for periods prior to the Effective
Date by the Administrative Agent or with respect to the making of this
assignment directly between themselves.
38. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE EFFECT AS A
SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO CONFLICT OF LAWS).
39. This Assignment and Acceptance may be executed in any number of
counterparts which shall together constitute but one and the same agreement.
L-3
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
[THE ASSIGNOR]
By:__________________________________
Title:___________________________
[THE ASSIGNEE]
By:__________________________________
Title____________________________
CONSENTED TO:
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its General Partner
By_____________________________________
Title:____________________________
FLEET NATIONAL BANK
as Administrative Agent
By_____________________________________
Title:____________________________
L-4
<PAGE>
Exhibit M to
Credit Agreement
July 21, 1999
Addressed to Each of the Parties
Listed on the Attached Schedule 1
Re: $200,000,000 Revolving Credit Agreement, dated as of July 21, 1999,
by and among Alliance Capital Management L.P., each of the Banks
which are parties thereto, Fleet National Bank, as Administrative Agent,
The First National Bank of Chicago, as Syndication Agent, and Banque
Nationale de Paris, as Documentation Agent
Ladies and Gentlemen:
We are acting as counsel for Alliance Capital Management L.P. a
Delaware limited partnership (the "Partnership"), in connection with the
Revolving Credit Agreement, dated as of July 21, 1999 (the "Agreement"),
entered into by and among the Partnership, each of the Banks which are parties
thereto, Fleet National Bank, as Administrative Agent, The First National Bank
of Chicago, as Syndication Agent, and Banque Nationale de Paris, as
Documentation Agent. This opinion is being delivered pursuant to Section 9.6
of the Agreement.
Except as otherwise herein defined, each of the terms used in this
opinion which is defined in the Agreement is used herein as defined therein.
As counsel to the Partnership, we have examined and relied, as to
factual matters (but not as to any question of law), upon originals, or copies
certified to our satisfaction, of such records, documents, certificates of the
Partnership and of public officials and other instruments, and made such other
inquiries, as, in our judgment, are necessary or appropriate to enable us to
render the opinion expressed below. We have assumed the genuineness of all
signatures and the conformity to originals of all certified copies. We have
relied on the representations and warranties set forth in the Agreement as to
factual matters (but not as to any question of law). We have also assumed that
the information contained in certificates of public officials which we have
relied upon to render the opinions expressed below, and which certificates are
dated a date reasonably near the date hereof, is still true and accurate as of
the date hereof. We have further assumed, with your permission, that each
party to the Agreement, other than the Partnership and Alliance Capital
Management Corporation, the general partner of the Partnership (the "General
Partner"), is duly organized and validly existing, has full power and
authority to enter into and perform its obligations under the Agreement, and
has duly authorized, executed and delivered the Agreement, which Agreement
constitutes each such party's legal, valid and binding contract and agreement.
Based on the foregoing, we are of the opinion that:
(i) The Partnership is a limited partnership, duly formed
and validly existing under the laws of the State of Delaware, has the
power and authority and is duly authorized to enter into and perform
the Agreement and to issue the Notes thereunder, and is duly
qualified and is in good standing as a foreign partnership in the
State of New York.
(ii) The General Partner is a corporation duly
M-1
<PAGE>
organized, validly existing and in good standing under the laws of
the State of Delaware, has corporate power and authority and is duly
authorized to act as general partner of the Partnership and to
execute and deliver the Agreement and the Notes on behalf of the
Partnership, and is duly qualified and in good standing as a foreign
corporation in the State of New York.
(iii) The Agreement has been duly authorized, executed and
delivered by the Partnership and constitutes the legal, valid and
binding contract and agreement of the Partnership enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance,
fraudulent transfer and similar laws affecting creditors' rights
generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in
equity or at law).
(iv) The Notes issued on the date hereof have been duly
authorized, executed and delivered by the Partnership and constitute,
and any Note issued hereafter to an assignee pursuant to Section 17
of the Agreement (assuming due execution and delivery of the Note
issued to the assignee, a legal, valid, binding and enforceable
assignment, compliance with all of the provisions of the Agreement
and no change in applicable law or circumstances, including, without
limitation, no change in the status of the assignee being in all
relevant respects the same as the status of the Banks which are
originally parties to the Agreement), will constitute, the legal,
valid and binding obligations of the Partnership enforceable in
accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance,
fraudulent transfer and other similar laws affecting creditors'
rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a
proceeding in equity or at law).
(v) No approval or consent on the part of, or filing with, any
Federal or Delaware or New York State governmental body is necessary
in connection with the execution, delivery and performance of the
Agreement or the Notes (it being understood that no opinion is
expressed with respect to compliance with any Federal or State
securities laws).
(vi) The execution, delivery and performance by the Partnership
of the Agreement and the Notes do not conflict with or result in any
breach of any of the provisions of, or constitute a default under,
(a) the Agreement of Limited Partnership (as Amended and Restated),
as amended through the date hereof, or the Certificate of Limited
Partnership of the Partnership, (b) the Certificate of Incorporation
or By-laws of the General Partner, (c) to our knowledge, without
having undertaken any investigation for purposes of this opinion, any
other agreement to which the Partnership is a party, except where the
conflict, breach or default would not be likely to have a
M-2
<PAGE>
Material Effect, or (d) any Federal or Delaware or New York State law
or regulation applicable to the Partnership, the General Partner or
their respective property.
( vii) The Partnership is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended. Alliance Fund
Distributors, Inc. is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, and is a member of the
National Association of Securities Dealers, Inc. The Partnership is
not a "holding company" or a "subsidiary company" of a "holding
company" as those terms are defined in the Public Utility Holding
Company Act of 1935, as amended. The Partnership is not an
"investment company", as that term is defined in the Investment
Company Act of 1940, as amended.
(viii) There is no proceeding pending or (without our having
undertaken any investigation for purposes of this opinion), to our
knowledge, threatened against the Partnership or the General Partner
that questions the validity of (a) the Agreement or the Notes, or (b)
any Permits of the Partnership or its Subsidiaries or any 12b-1 Fee
plan or arrangement which is likely to have a Material Effect.
We are members of the bar of the State of New York. This opinion is
limited to the laws of the State of New York, the Delaware Revised Uniform
Limited Partnership Act, the General Corporation Law of the State of Delaware
and the Federal laws of the United States of America.
This opinion is given only as of its date, and we have no obligation
to notify you of the effect of any change in law or circumstances which may
occur after the date hereof.
This opinion is addressed to you in connection with the closing under
the Agreement and may not be relied upon by you for any other purpose or
furnished to or relied upon by any other person for any purpose (other than
being (i) furnished to your regulators, auditors and legal counsel in
connection with the closing under the Agreement and (ii) furnished to and
relied upon by a subsequent assignee of the Agreement and a Note solely for
the purpose of such assignment, and subject in any case to the immediately
preceding paragraph and to the parenthetical assumptions in the paragraph
numbered 4 above) without our prior written consent.
Very truly yours,
M-3
<PAGE>
SCHEDULE 1
Fleet National Bank
777 Main Street, 25th Floor
CT-MO-0250
Hartford, Connecticut 06115
Attn: Elizabeth B. Shelley
Facsimile Number: (860) 986-1264
The First National Bank of Chicago
153 West 51st Street
6th Floor
New York, NY 10019
Attn: Nicole Holzapfel
Facsimile Number: (212) 373-1393
Banque Nationale de Paris
499 Park Avenue
New York, NY 10022
Attn: Laurent Vanderzyppe
Facsimile Number: (212) 415-9706
UBS AG Stamford Branch
677 Washington Boulevard, 6th Floor
Stamford, CT 06912
Attn: Ernst Schirmer
Facsimile Number: (203) 719-3888
Societe Generale, New York Branch
1221 Avenue of the Americas, 7th Floor
New York, NY 10020
Attn: Dabney Treacy
Facsimile Number: (212) 278-7569
Credit Suisse First Boston
Eleven Madison Avenue
New York, NY 10010-3629
Attn. Andrea Shkane
Facsimile Number: (212) 325-8320
M-4
EXHIBIT 11.1
COMPUTATION OF PRO FORMA EARNINGS PER SHARE
Alliance Capital
Computation of Net Income Per Unit
(Unaudited)
<TABLE>
<CAPTION>
For the Year
For the Three Months Ended Ended
March 31, December 31,
-------------------------- ------------
1999 1998 1998
--------- --------- ------------
(Dollars in thousands,
except per unit amounts)
<S> <C> <C> <C>
Basic weighted average units outstanding........$ 108,129 $ 76,963 $ 323,516
Basic weighted average units outstanding........ 170,561 169,301 169,933
Dilutive effect of employee unit options........ 5,030 5,210 5,210
------- ------- -------
Diluted weighted average units outstanding...... 175,591 174,511 175,143
======= ======= =======
Net income per Unit :
Basic.......................................... $ 0.63 $ 0.45 $ 1.88
======= ======= =======
Diluted........................................ $ 0.61 $ 0.44 $ 1.83
======= ======= =======
</TABLE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Alliance Capital Management Corporation:
We consent to the use of our report dated February 1, 1999 relating to the
consolidated financial statements of Alliance Capital Management L.P. and
subsidiaries as of December 31, 1998 and 1997 incorporated herein by reference
and to the use of our report dated July 7, 1999 relating to the statement of
financial condition of Alliance Capital Management L.P. II as of July 7, 1999
included herein and to the reference to our firm under the heading "Experts" in
this Registration Statement.
New York, New York
August 2, 1999
/s/ KPMG LLP
EXHIBIT 23.3
PERSONAL AND CONFIDENTIAL
August 3, 1999
Board of Directors
Alliance Capital Management Corporation
1345 Avenue of the Americas
New York, NY 10105
Re: Registration Statement of Alliance Capital Management L.P. II Relating to
the Reorganization and Exchange Offer
Ladies and Gentlemen:
Reference is made to our opinion letter dated August 3, 1999 with respect 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 in Alliance Capital Management L.P. II ("Alliance Capital") for each
Alliance Holding Unit pursuant to the exchange offer to be commenced by
Alliance Holding, 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 (the "Reorganization Plan").
The foregoing opinion letter is provided for the information and assistance of
the Board of Directors of Alliance Capital Management Corporation in connection
with its consideration of the transaction contemplated by the Reorganization
Plan and is not to be used, circulated, quoted or otherwise referred to for any
other purpose, nor is it to be filed with, included in or referred to in whole
or in part in any registration statement, proxy statement or any other
document, except in accordance with our prior written consent. We understand
that Alliance Capital Management Corporation has determined to include our
opinion in the Registration Statement on Form S-4, including the Proxy
Statement/Prospectus relating to the Special Meeting of Limited Partners and
Unitholders to be held in connection with the reorganization of Alliance
Holding (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.
In that regard, we hereby consent to the reference to our opinion under the
captions "Summary -- Opinion of Financial Advisor"; "The Reorganization and the
Exchange Offer -- Background of the Reorganization and the Exchange Offer";
"The Reorganization and the Exchange Offer -- Factors Considered by, and
Recommendation of, the General Partner"; "The Reorganization and the Exchange
Offer -- Alliance Holding Public Float After the Exchange"; and "Opinion of
Financial Advisor" and to the inclusion of our opinion in the Proxy
Statement/Prospectus and the Exchange Offer Prospectus included in the above
mentioned Registration Statement. In giving such consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933 or the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
EXHIBIT 24.1
ALLIANCE CAPITAL MANAGEMENT L.P. II
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Dave H. Williams, John D. Carifa and David R. Brewer, and each of them, with
full power to act without the other, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her own name, place and stead, in
any and all capacities, to sign a Registration Statement on Form S-4 relating to
the registration of the registrant's units representing limited partnership
interests of the registrant to be offered by Alliance Capital Management L.P.
("Alliance Holding") in exchange for units of Alliance Holding following the
issuance of all the units representing limited partnership interests of the
registrant to Alliance Holding in connection with the transfer by Alliance
Holding of its business to the registrant and any and all amendments (including
post-effective amendments and other amendments thereto) to such Registration
Statement and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing as he or she could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their or his or her substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Signature Title Date
--------- ----- ----
/s/ Dave H. Williams Chairman of the Board July 4, 1999
- ---------------------------- and Director
(Dave H. Williams)
/s/ Luis Javier Bastida Director July 21, 1999
- ----------------------------
(Luis Javier Bastida)
/s/ Donald H. Brydon Director July 6, 1999
- ----------------------------
(Donald H. Brydon)
/s/ Bruce W. Calvert Director July 4, 1999
- ----------------------------
(Bruce W. Calvert)
/s/ John D. Carifa Director July 4, 1999
- ----------------------------
(John D. Carifa)
/s/ Henri de Castries Director July 7, 1999
- ----------------------------
(Henri de Castries)
/s/ Kevin C. Dolan Director July 6, 1999
- ----------------------------
(Kevin C. Dolan)
/s/ Denis Duverne Director July 5, 1999
- ----------------------------
(Denis Duverne)
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Alfred Harrison Director July 5, 1999
- ----------------------------
(Alfred Harrison)
/s/ Herve Hatt Director July 6, 1999
- ----------------------------
(Herve Hatt)
/s/ Michael Hegarty Director July 6, 1999
- ----------------------------
(Michael Hegarty)
/s/ Benjamin D. Holloway Director July 6, 1999
- ----------------------------
(Benjamin D. Holloway)
/s/ Edward D. Miller Director July 12, 1999
- ----------------------------
(Edward D. Miller)
/s/ Peter D. Noris Director July 6, 1999
- ----------------------------
(Peter D. Noris)
/s/ Frank Savage Director July 6, 1999
- ----------------------------
(Frank Savage)
/s/ Stanley B. Tulin Director July 12, 1999
- ----------------------------
(Stanley B. Tulin)
/s/ Reba W. Williams Director July 21, 1999
- ----------------------------
(Reba W. Williams)
/s/ Robert B. Zoellick Director July 9, 1999
- ----------------------------
(Robert B. Zoellick)
/s/ Robert H. Joseph, Jr. Senior Vice President and July 8, 1999
- ---------------------------- Chief Financial Officer
(Robert H. Joseph, Jr.)
/s/ Gerard J. Friscia Senior Vice President July 19, 1999
- ---------------------------- and Controller
(Gerard J. Friscia)
2
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 105,722
<SECURITIES> 194,298
<RECEIVABLES> 406,678
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 706,698
<PP&E> 107,381
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,432,628
<CURRENT-LIABILITIES> 973,679
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 458,949
<TOTAL-LIABILITY-AND-EQUITY> 1,432,628
<SALES> 419,743
<TOTAL-REVENUES> 419,743
<CGS> 0
<TOTAL-COSTS> 299,924
<OTHER-EXPENSES> 3,501
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 963
<INCOME-PRETAX> 115,355
<INCOME-TAX> 7,226
<INCOME-CONTINUING> 108,129
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,129
<EPS-BASIC> 0.63
<EPS-DILUTED> 0.61
</TABLE>
EXHIBIT 99.1
Please mark your
[X] votes as in this XXXX
example
<TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSALS 1 AND 2.
- ------------------------------------------------------------------------------------------------------------------------------------
Unless otherwise specified in the squares provided, the undersigned's vote will be cast FOR Items 1 and 2 below.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Proposal to approve the FOR AGAINST ABSTAIN 2. Proposal to approve the amendments to FOR AGAINST ABSTAIN
transfer by Alliance Capital [ ] [ ] [ ] Alliance Capital Management L.P.'s [ ] [ ] [ ]
Management L.P. of its partnership agreement to facilitate and
business to Alliance Capital implement the reorganization, to
Management L.P. II pursuant to maintain the existing rights and benefits
the agreement and plan of of Alliance Capital Management L.P.
reorganization. unitholders following the
reorganization and to modify or
eliminate provisions that are
- -------------------------------------------------------------- inoperative or are no longer relevant or
that require technical revisions, in
substantially the form of the Amended
Alliance Holding Partnership
Agreement attached to the Proxy
Statement/Prospectus as Annex B.
3. To transact such other business as may
properly come before the meeting.
---------------------------------------------------------------------
Please mark, date and sign as your name appears on your unit
certificate and return in the enclosed envelope. If acting as
executor, administrator, trustee, guardian, etc., you should so
indicate when signing. If the signer is a corporation, please
sign the full corporate name, by duly authorized officer. If
units are held jointly, each unitholder named should sign.
The undersigned hereby acknowledges receipt of a copy of the
accompanying notice of meeting and proxy statement/prospectus
and hereby revokes any proxy or proxies heretofore given.
------------------------------------------------------------------
------------------------------------------------------------------
SIGNATURE(S) DATE
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
VOTING INSTRUCTIONS FOR AFFILIATED UNITHOLDERS
We are not soliciting the voting instructions of the following unitholders for
Item 1 below: unitholders who are (1) directors, officers or employees of
Alliance Capital Management L.P. or its general partner and the following
members of their families who share the same household with such persons:
children, stepchildren, grandchildren, parents, stepparents, grandparents,
spouses, siblings, mothers-in-law, fathers-in-law, sons-in-law,
daughters-in-law, brothers-in-law, sisters-in-
law, including adoptive relationships; or (2) Alliance Capital Management
L.P.'s general partner and entities affiliated with it.
IF YOU ARE A UNITHOLDER DESCRIBED ABOVE, YOU SHOULD VOTE ON ITEM 2 ONLY. ANY
VOTE BY YOU ON ITEM 1 WILL NOT BE TABULATED.
VOTING INSTRUCTIONS FOR ALL UNITHOLDERS
Alliance Capital Management L.P. encourages all unitholders to vote. We now
provide three convenient methods for voting.
o VOTING INSTRUCTION FORM: Complete, sign, date, and return this voting
instruction form in the enclosed postage-paid envelope, or
o TELEPHONE: Call 1-877-PRX-VOTE (1-877-779-8683), 7 days a week, 24 hours a
day, or
o INTERNET: Log on to the Web site http://www.eproxyvote.com/ac
If you choose to vote by telephone or Internet, you will be given instructions
and asked to enter the voter control number on this voting instruction form.
Choosing either of these options eliminates the need to return your voting
instruction form.
<PAGE>
ALLIANCE CAPITAL MANAGEMENT L.P.
Instructions of Unitholder of
Alliance Capital Management L.P. in connection with
the Special Meeting of Unitholders
to be held on September 22, 1999
THESE VOTING INSTRUCTIONS ARE
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE GENERAL PARTNER OF THE PARTNERSHIP
The undersigned hereby instructs Alliance ALP, Inc., the assignor
limited partner (the "Assignor Limited Partner"), of Alliance Capital
Management L.P. (the "Partnership"), to vote the limited partnership interests
underlying all of the units registered in the name of the undersigned at the
special meeting of unitholders to be held at 9:00 a.m., New York City time, on
September 22, 1999, at the Partnership's offices, 41st Floor, at 1345 Avenue
of the Americas, New York, New York 10105, and at all adjournments or
postponements thereof. The undersigned acknowledges receipt of the notice of
the special meeting and the accompanying proxy statement/prospectus and hereby
instructs the Assignor Limited Partner to vote as indicated hereon.
IF THIS VOTING INSTRUCTION FORM EXECUTED BY THE REGISTERED OWNER
IDENTIFIED BELOW IS NOT RECEIVED BY THE ASSIGNOR LIMITED PARTNER, AND SUCH
OWNER DOES NOT VOTE BY TELEPHONE OR INTERNET AS DESCRIBED BELOW, THE LIMITED
PARTNERSHIP INTERESTS UNDERLYING THE UNITS HELD BY SUCH OWNER WILL NOT BE
DEEMED REPRESENTED AT THE SPECIAL MEETING FOR PURPOSES OF DETERMINING WHETHER
A QUORUM IS PRESENT AND WILL NOT BE VOTED AT THE SPECIAL MEETING.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
EXHIBIT 99.2
<TABLE>
WAIT!
There's an easier way to vote your Alliance Capital Management L.P. units!
24 Hours a Day - 7 Days a Week
IMPORTANT-BEFORE VOTING PLEASE NOTE THE FOLLOWING: We are not soliciting the voting instructions of the following unitholders for
Item I: unitholders who are (1) directors, officers or employees of Alliance Capital Management L.P. or its general partner and the
following members of their families who share the same household with such persons: children, stepchildren, grandchildren, parents,
stepparents, grandparents, spouses, siblings, mothers-in-law, fathers-in-law, sons-in-law, daughters-in-law, brothers-in-law,
sisters-in-law, including adoptive relationships or (2) Alliance Capital Management L.P.'s general partner and entities affiliated
with it.
<S> <C> <C>
Vote by Telephone Vote by Internet
It's fast, convenient and your vote is immediately It's fast, convenient and your vote is immediately
confirmed and posted. confirmed and posted. In addition, you can elect to
receive all future materials by Internet.
Using a touch-tone telephone, call the toll-free Go to website:
number which appears on the top left corner WWW.PROXYVOTE.COM
Just follow these four easy steps: Just follow these four easy steps:
- ------------------------------------------------------------- ----------------------------------------------------------
1. Read the accompanying Alliance Capital Management 1. Read the accompanying Alliance Capital Management
L.P. Proxy Statement and Voting Instruction Form. L.P. Proxy Statement and Voting Instruction Form.
2. Call the toll-free number located on the top left corner 2. Go to the website WWW.PROXYVOTE.COM.
of your Voting Instruction Form.
3. Enter your 12-digit Control Number located on your 3. Enter your 12-digit Control Number located on your
Voting Instruction Form. Voting Instruction Form.
4. Follow the simple recorded instructions. 4. Follow the simple instructions.
- ------------------------------------------------------------- ----------------------------------------------------------
Your vote is important! Your vote is important!
Call 24 hours a day Go to WWW.PROXYVOTE.COM
24 hours a day
If you vote by telephone or Internet, do not return your Voting Instruction Form.
Thank you for your vote!
</TABLE>
<TABLE>
EXHIBIT 99.3
FORM OF LETTER OF TRANSMITTAL
LETTER OF TRANSMITTAL
To Exchange up to o Units of Limited Partnership Interest
of
ALLIANCE CAPITAL MANAGEMENT L.P.
For Units of Limited Partnership Interest of Alliance Capital Management L.P. II
Pursuant to the Exchange Offer Prospectus Dated o, 1999
THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON o, 1999, UNLESS THE OFFER IS EXTENDED
(SUCH DATE AND TIME, AS THEY MAY BE EXTENDED, THE "EXPIRATION DATE").
To: First Chicago Trust Company of New York, Exchange Agent
<S> <C> <C>
By Mail: By Federal Express or 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 Actions
Jersey City, NJ 07303-2569 8th Floor 100 William Street, Galleria
New York, NY 10005 New York, NY 10038
By Facsimile For Notices of Guaranteed Delivery Only:
For Eligible Institutions:
(201) 222-4720/4721
For Facsimile Confirmation Only:
(201) 222-4707
</TABLE>
Delivery of this instrument to an address other than as set forth above
will not constitute a valid delivery.
This Letter of Transmittal is to be used if certificates are to be
forwarded herewith or if delivery of Alliance Capital Units (as defined below)
is to be made by book-entry transfer to the Depositary's account at The
Depository Trust Company ("DTC"), which is referred to herein as the
"Book-Entry Transfer Facility", pursuant to the procedures set forth in "The
Exchange Offer -- Book-Entry Transfer" of the Exchange Offer Prospectus.
Unitholders who cannot deliver their Alliance Holding Units and all other
documents required hereby to the Depositary by the Expiration Date must tender
their Alliance Holding Units pursuant to the guaranteed delivery procedure set
forth in "The Exchange Offer -- Guaranteed Delivery Procedures" of the
Exchange Offer Prospectus. See Instruction 2.
<TABLE>
DESCRIPTION OF ALLIANCE HOLDING UNITS TENDERED
- ------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) Alliance Holding Units Tendered
(Please fill in, if blank) (Attach additional list if necessary)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Certificate Total Number of Units Number of
Number(s)* Represented by Units
Total Units Certificate(s)* Tendered**
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
Total Units
- -------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Unitholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Alliance Holding Units represented by any certificates
delivered to the Depositary are being tendered. See Instruction 4.
</TABLE>
<PAGE>
(BOX BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
|_| CHECK HERE IF TENDERED ALLIANCE HOLDING UNITS ARE BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Tendering Unitholder(s)________________________________________
Date of Execution of Notice of Guaranteed Delivery________________________
Name of Institution that Guaranteed Delivery______________________________
If delivery is by book-entry transfer:
DTC Account No.______________________________________________________
VOI Ticket No._______________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby acknowledges receipt of the Exchange Offer
Prospectus dated o, 1999 (the "Exchange Offer Prospectus") of Alliance Capital
Management L.P., a Delaware limited partnership ("Alliance Holding"), and this
Letter of Transmittal, which together constitute Alliance Holding's offer (the
"Exchange Offer") to exchange up to o units, each unit representing an
assignment of a beneficial interest in a corresponding limited partnership
interest in Alliance Holding (each, an "Alliance Holding Unit"), for units
representing limited partnership interests in Alliance Capital Management L.P.
II ("Alliance Capital") (each, an "Alliance Capital Unit").
The undersigned hereby tenders the Alliance Holding Units described in
the box above, upon the terms and subject to the conditions described in the
Exchange Offer Prospectus and this Letter of Transmittal. Alliance Holding
reserves the right to transfer or assign, in whole or from time to time in
part, to one or more of its affiliates the right to purchase Alliance Holding
Units tendered pursuant to the Exchange Offer.
Subject to and effective upon acceptance for exchange of the Alliance
Holding Units tendered herewith for an equal number of Alliance Capital Units,
the undersigned hereby exchanges, assigns and transfers to or upon the order
of Alliance Holding all right, title and interest in and to all the Alliance
Holding Units that are being tendered hereby and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Alliance Holding Units, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(a) deliver certificates representing such Alliance Holding Units, or transfer
ownership of such Alliance Holding Units on the account books maintained by
the Book-Entry Transfer Facility, in any such case, with all accompanying
evidences of transfer and authenticity, to or upon the order of Alliance
Holding, (b) present such Alliance Holding Units for transfer on the books of
Alliance Holding and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Alliance Holding Units, all in
accordance with the terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the Alliance
Holding Units tendered hereby and that when the same are accepted for exchange
for an equal number of Alliance Capital Units by Alliance Holding, Alliance
Holding will acquire good and unencumbered title thereto, free and clear of
all liens, restrictions, charges and encumbrances and not subject to any
adverse claims. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or Alliance Holding to be
necessary or desirable to complete the exchange, assignment and transfer of
the Alliance Holding Units tendered hereby.
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and any obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Except as stated
in the Exchange Offer, this tender is irrevocable.
The undersigned understands that tenders of Alliance Holding Units
pursuant to any one of the procedures described in "The Exchange Offer" of the
Exchange Offer Prospectus and in the instructions hereto will constitute an
agreement between the undersigned and Alliance Holding upon the terms and
subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions", please
return any certificates representing Alliance Holding Units not tendered or
not accepted for exchange in the name(s) of the undersigned (and, in the case
of Alliance Holding Units tendered by book-entry transfer, by credit to the
account at the Book-Entry Transfer Facility
3
<PAGE>
designated above). Similarly, unless otherwise indicated under "Special
Delivery Instructions", please mail any certificates representing Alliance
Holding Units not tendered or not accepted for exchange (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature(s). In the event that both "Special Issuance
Instructions" and "Special Delivery Instructions" are completed, please return
any certificates for Alliance Holding Units not tendered or not accepted for
exchange in the name(s) of, and mail any certificates to, the person(s) so
indicated. The undersigned recognizes that Alliance Holding has no obligation,
pursuant to the "Special Issuance Instructions", to transfer any certificates
representing Alliance Holding Units from the name of the registered holder(s)
thereof if Alliance Holding does not accept for exchange any of the Alliance
Holding Units so tendered.
4
<PAGE>
<TABLE>
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- --------------------------------------------------------- -------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 5, 6 and 7) (See Instructions 5 and 7)
To be completed ONLY if the certificates for To be completed ONLY if the certificates for
Alliance Holding Units not tendered or not accepted for Alliance Holding Units not tendered or not accepted for
exchange are to be issued in the name of someone other exchange are to be mailed to someone other than the
than the undersigned. undersigned or to the undersigned at an address other
than that shown below the undersigned's signature(s).
Issue certificates to: Mail certificates to:
Name(s).................................................. Name...................................................
(Please Print) (Please Print)
..................................................
Address.................................................. Address................................................
......................................................... .......................................................
(Zip Code) (Zip Code)
.........................................................
.........................................................
(Taxpayer Identification No.)
(Also Complete Substitute Form W-9 on Page 7)
- --------------------------------------------------------- -------------------------------------------------------
</TABLE>
5
<PAGE>
- -------------------------------------------------------------------------------
SIGN HERE
(Please complete Substitute Form W-9 on page 7)
....................................................................
....................................................................
Signature(s) of Owners
Name(s).............................................................
....................................................................
(Please Print)
Capacity (full title)...............................................
Address.............................................................
....................................................................
(Include Zip Code)
arrow Daytime arrow
Area Code and Telephone Number......................................
Dated...............................................................
(Must be signed by registered holder(s) exactly as name(s) appear(s)
on certificate(s) representing Alliance Holding Units or on a
security position listing or by person(s) authorized to become
registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other
person acting in a fiduciary or representative capacity, please set
forth full title and see Instruction 5.)
Guarantee of Signature(s), if required
(See Instructions 1 and 5)
Name of Firm........................................................
Authorized Signature................................................
Dated...............................................................
....................................................................
- -------------------------------------------------------------------------------
6
<PAGE>
Payer's Name: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE Part II For Payees Exempt
FORM W-9 Part I Taxpayer Identification No. -- For All Accounts From Backup With-
....................................................................... holding (see enclosed
Department of the Treasury Enter your taxpayer identification -------------------------- Guidelines)
Internal Revenue Service number in the appropriate box. For
most individuals and sole proprietors, --------------------------
this is your Social Security Number. Social Security Number
For other entities, it is your Employer
Identification Number. If you do not have OR
Payer's Request for a number, see "How to Obtain a TIN" in the
Taxpayer Identification enclosed Guidelines Note: If the account --------------------------
No. is in more than one name, see the chart
on page 2 of the enclosed Guidelines to --------------------------
determine what number to enter. Employee Identification
Number
- -----------------------------------------------------------------------------------------------------------------------------------
Certification -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me)
and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a taxpayer identification number within (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a number;
(2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, or (b) I have not been notified
by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and
(3) Any information provided on this form is true, correct and complete.
- -----------------------------------------------------------------------------------------------------------------------------------
SIGNATURE___________________________________________________________ DATE_________________________________________________ , 1999
- -----------------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY SUBJECT YOU TO BACKUP WITHHOLDING. PLEASE REVIEW ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
</TABLE>
7
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm that is
a member of a registered national securities exchange or the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office, branch or agency in the United States (an "Eligible
Institution"). Signatures on this Letter of Transmittal need not be guaranteed
if (a) this Letter of Transmittal is signed by the registered holder(s) of the
Alliance Holding Units (which term, for purposes of this document, shall
include any participant in the Book-Entry Transfer Facility whose name appears
on a security position listing as the owner of Alliance Holding Units)
tendered herewith and such holder(s) have not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on this
Letter of Transmittal or (b) such Alliance Holding Units are tendered for the
account of an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Alliance Holding Units. This
Letter of Transmittal is to be used either if certificates are to be forwarded
herewith or if delivery of Alliance Holding Units is to be made by book-entry
transfer pursuant to the procedures set forth in "The Exchange Offer --
Book-Entry Transfer" of the Exchange Offer Prospectus. Certificates for all
physically delivered Alliance Holding Units or a confirmation of a book-entry
transfer of all Alliance Holding Units delivered electronically into the
Depositary's account at the Book-Entry Transfer Facility, as well as a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the front page of this Letter of Transmittal by the Expiration Date.
Alliance Holding Unitholders who cannot deliver their certificates
representing Alliance Holding Units and all other required documents to the
Depositary by the Expiration Date must tender their Alliance Holding Units
pursuant to the guaranteed delivery procedure set forth in "The Exchange Offer
- -- Guaranteed Delivery Procedures" of the Exchange Offer Prospectus. Pursuant
to such procedure: (a) such tender must be made by or through an Eligible
Institution, (b) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by Alliance Holding must be
received by the Depositary by the Expiration Date and (c) the certificates for
all physically delivered Alliance Holding Units, or a confirmation of a
book-entry transfer of all Alliance Holding Units delivered electronically
into the Depositary's account at the Book-Entry Transfer Facility, as well as
a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) and any other documents required by this Letter of
Transmittal, must be received by the Depositary within five New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in "The Exchange Offer -- Guaranteed Delivery
Procedures".
The method of delivery of certificates representing Alliance Holding
units, letters of transmittal and all other required documents is at the
election and risk of the holder of Alliance Holding Units (the "Alliance
Holding Unitholder"). It is recommended that such Alliance Holding Unitholder
use an overnight or hand-delivery service. If delivery is by mail, however,
registered mail, properly insured, with return receipt requested is
recommended. In all cases, sufficient time should be allowed to assure timely
delivery.
No alternative, conditional or contingent tenders will be accepted, and
no fractional Alliance Holding Units will be accepted for exchange. By
executing this Letter of Transmittal (or a manually signed facsimile thereof),
the tendering Unitholder waives any right to receive any notice of the
acceptance for exchange of the Alliance Holding Units.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Alliance Holding Units should be
listed on a separate schedule attached hereto.
4. Partial Tenders (not applicable to Unitholders who tender by
book-entry transfer.) If fewer than all the Alliance Holding Units represented
by any certificate delivered to the Depositary are to be tendered, fill in the
number of Alliance Holding Units that are to be tendered in the box entitled
"Number of Units Tendered". If such Alliance
8
<PAGE>
Holding Units are accepted for exchange, a new certificate for the remainder
of the Alliance Holding Units represented by the old certificate will be sent
to the person(s) signing this Letter of Transmittal, unless otherwise provided
in the appropriate box on this Letter of Transmittal, as promptly as
practicable following the expiration or termination of the Exchange Offer. All
Alliance Holding Units represented by certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Powers of Attorney and
Endorsements. If this Letter of Transmittal is signed by the registered
holder(s) of the Alliance Holding Units tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of the certificates without
alteration, enlargement or any change whatsoever.
If any of the Alliance Holding Units tendered hereby are held of record
by two or more persons, all such persons must sign this Letter of Transmittal.
If any of the Alliance Holding Units tendered hereby are registered in
different names on different certificates, it will be necessary to complete,
sign and submit as many separate Letters of Transmittal as there are different
registrations of certificates.
If this Letter of Transmittal is signed by the registered holder(s) of
the Alliance Holding Units tendered hereby, no endorsements of certificates
are required unless Alliance Holding Units not tendered or not accepted for
exchange are to be returned, in the name of any person other than the
registered holder(s). Signatures on any such certificates must be guaranteed
by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Alliance Capital Units tendered hereby,
certificates must be endorsed or accompanied by an appropriate power of
attorney, in either case, signed exactly as the name(s) of the registered
holder(s) appear(s) on the certificates representing such Alliance Holding
Units. Signature(s) on any such certificates or powers of attorney must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or power of attorney is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Alliance Holding of the authority of such
person so to act must be submitted.
6. Transfer Taxes. Alliance Holding will pay all transfer taxes, if
any, applicable to the transfer and exchange of any Alliance Holding Unit to
it or its order pursuant to the Exchange Offer. If, however, Alliance Holding
Units not tendered or not accepted for exchange are to be returned, in the
name of any person other than the registered holder(s), the amount of any
transfer taxes (whether imposed on the registered holder(s), such other person
or otherwise) payable on account of the transfer to such person will be
payable by such registered holder(s). If satisfactory evidence of the payment
of such taxes, or exemption therefrom, is not submitted with this Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
registered holder(s).
7. Special Issuance and Delivery Instructions. If any Alliance Holding
Units not tendered or not accepted for exchange are to be returned, in the
name of a person other than the person(s) signing this Letter of Transmittal
or if any certificates representing Alliance Holding Units not tendered or not
accepted for exchange are to be mailed to someone other than the person(s)
signing this Letter of Transmittal or to the person(s) signing this Letter of
Transmittal at an address other than that shown above, the appropriate boxes
on this Letter of Transmittal should be completed. Any such Alliance Holding
Units not accepted for exchange will be returned by crediting the account at
the Book-Entry Transfer Facility.
8. Cap on Tenders; Pro Ration. To preserve Alliance Holding's listing
on the New York Stock Exchange, Alliance Holding will not accept Alliance
Holding Units tendered that, if exchanged, would cause Alliance Holding Units
to be held by fewer than 1,200 public unitholders. Further, in order to
maintain an adequate public float in the
(
9
<PAGE>
trading market for Alliance Holding Units, Alliance Holding will not accept
Alliance Holding Units tendered that, if exchanged, would cause fewer than 40
million units to be held by public unitholders immediately following the
exchange. "Public unitholders" excludes The Equitable Life Assurance Society
of the United States, 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.
9. Federal Income Tax Withholding. Federal income tax law requires that
the registered holder(s) of any Alliance Holding Units that are accepted for
exchange must provide the Exchange Agent with such holder's correct taxpayer
identification number and certify that such holder is not subject to backup
withholding by completing the Substitute Form W-9 set forth above. In general,
if an Alliance Holding Unitholder is an individual, the taxpayer
identification number is the social security number of such individual. If the
Exchange Agent is not provided with the correct taxpayer identification
number, the Alliance Holding Unitholder may be subject to a $50 penalty
imposed by the IRS and may be subject to backup withholding. Certain
Unitholders (including, among others, all corporations and certain foreign
individuals) are not subject to these backup withholding and reporting
requirements. In order to satisfy the Exchange Agent that a foreign individual
qualifies as an exempt recipient, such Unitholder must submit a statement,
signed under penalties of perjury, attesting to that individual's exempt
status. Such statements can be obtained from the Exchange Agent. For further
information concerning backup withholding and instructions for completing the
Substitute Form W-9 (including how to obtain a taxpayer identification number
if you do not have one and how to complete the Substitute Form W-9 if Alliance
Holding Units are held in more than one name), consult the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Alliance Holding Units to be deemed invalidly tendered, but may subject the
tendering Alliance Holding Unitholder to backup withholding. Backup
withholding is not an additional federal income tax. Rather, the federal
income tax liability of a person subject to backup withholding will be reduced
by the amount of tax withheld. If withholding results in an overpayment of
taxes, a refund may be obtained.
Alliance Holding reserves the right in its sole discretion to take
whatever steps are necessary to comply with its obligation regarding backup
withholding.
10. Requests for Assistance or Additional Copies. Requests for assistance
or additional copies of the Exchange Offer Prospectus and this Letter of
Transmittal may be obtained from the Information Agent at its address or
telephone number set forth below.
The Information Agent for the Exchange Offer is:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
10
EXHIBIT 99.4
FORM OF NOTICE OF GUARANTEED DELIVERY
NOTICE OF GUARANTEED DELIVERY
To Exchange up to o Units of Limited Partnership Interest
of
ALLIANCE CAPITAL MANAGEMENT L.P.
For Units of Limited Partnership Interest of Alliance Capital Management L.P. II
Pursuant to the Exchange Offer Prospectus Dated o, 1999
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON o, 1999, UNLESS THE OFFER IS EXTENDED
(SUCH DATE AND TIME, AS THEY MAY BE EXTENDED, THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
This form, or a form substantially equivalent to this form, must be used
to accept the Exchange Offer (as defined below) if certificates for Alliance
Holding Units (as defined below) and all other documents required by the Letter
of Transmittal cannot be delivered to the Depositary by the expiration of the
Exchange Offer. Such form may be delivered by hand, facsimile transmission or
mail to the Depositary. See "The Exchange Offer -- Guaranteed Delivery
Procedures".
To: First Chicago Trust Company of New York, Depositary
<TABLE>
<S> <C> <C>
By Mail: By Federal Express or 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 Actions
Jersey City, NJ 07303-2569 8th Floor 100 William Street, Galleria
New York, NY 10005 New York, NY 10038
By Facsimile:
For Eligible Institutions:
(201) 222-4720/4721
For Facsimile Confirmation Only:
(201) 222-4707
</TABLE>
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Alliance Capital Management L.P.
("Alliance Holding"), upon the terms and subject to the conditions set forth in
the Exchange Offer Prospectus dated o, 1999 and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, _________ units each representing an assignment of a
beneficial interest in a corresponding limited partnership interest in Alliance
Holding (each, an "Alliance Holding Unit") for an equal number of units
representing limited partnership interests in Alliance Capital Management L.P.
II, pursuant to the guaranteed delivery procedure set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures".
Number of Alliance Holding Units Tendered for Exchange: _______________________
<TABLE>
Certificate Nos. (if available) SIGN HERE
<S> <C>
- ------------------------------------------- -------------------------------------------
- ------------------------------------------- -------------------------------------------
(Signature(s)
If Alliance Holding Units will be tendered
by book-entry transfer:
Name of Tendering
Institution:
----------------------------- -------------------------------------------
(Name(s) (Please Print)
Account No. at
-----------------------------
The Depository Trust Company -------------------------------------------
(Address)
-------------------------------------------
(Zip Code)
-------------------------------------------
(Daytime Area Code and Telephone No.)
</TABLE>
2
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm that is a member of a registered national securities
exchange or the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office, branch or agency in the
United States, guarantees (a) that the above named person(s) "own(s)" the
Alliance Holding Units tendered hereby within the meaning of Rule 10b-4 under
the Securities Exchange Act of 1934, as amended, (b) that such tender of
Alliance Holding Units complies with Rule 10b-4 and (c) to deliver to the
Depositary the Alliance Holding Units tendered hereby, together with a properly
completed and duly executed Letter(s) of Transmittal (or facsimile(s) thereof)
and any other required documents, all within five New York Stock Exchange, Inc.
trading days of the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates representing Alliance Holding Units to the Depositary within the
time period shown herein. Failure to do so could result in a financial loss to
such Eligible Institution.
- --------------------------------------- --------------------------------------
Name of Firm Title
- --------------------------------------- --------------------------------------
Authorized Signature Address Zip Code
Name:
--------------------------------- --------------------------------------
Please Type or Print Daytime Area Code and Telephone No.
DO NOT SEND CERTIFICATES REPRESENTING ALLIANCE HOLDING UNITS WITH THIS FORM.
YOUR CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL.
3
EXHIBIT 99.5
FORM OF LETTER TO BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES
Offer To Exchange up to o Units of Limited Partnership Interest
of
ALLIANCE CAPITAL MANAGEMENT L.P.
For Units of Limited Partnership Interest of Alliance Capital Management L.P. II
Pursuant to the Exchange Offer Prospectus Dated o, 1999
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON o, 1999, UNLESS THE OFFER IS EXTENDED
(SUCH DATE AND TIME, AS THEY MAY BE EXTENDED, THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
o, 1999
To Brokers, Dealers, Commercial
Banks, Trust Companies and
Other Nominees:
We have been appointed by Alliance Capital Management L.P., a Delaware
limited partnership ("Alliance Holding"), to act as Information Agent in
connection with Alliance Holding's offer to exchange up to o units, each unit
representing an assignment of a beneficial interest in a corresponding limited
partnership interest in Alliance Holding (each, an "Alliance Holding Unit"),
for units representing limited partnership interests in Alliance Capital
Management L.P. II (each, an "Alliance Capital Unit") upon the terms and
subject to the conditions set forth in Alliance Holding's Exchange Offer
Prospectus dated o, 1999 and the related Letter of Transmittal (which together
constitute the "Exchange Offer"). To preserve Alliance Holding's listing on the
New York Stock Exchange, Alliance Holding will not accept Alliance Holding
Units tendered that, if exchanged, would cause Alliance Holding 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 Alliance Holding Units tendered that, if
exchanged, would cause fewer than 40 million units to be held by public
unitholders immediately following the exchange. "Public unitholders" excludes
The Equitable Life Assurance Society of the United States, 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.
For your information and for forwarding to your clients for whom you hold
Alliance Holding Units registered in your name or in the name of your nominee,
we are enclosing the following documents:
1. Exchange Offer Prospectus dated o, 1999;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 providing information relating to backup federal
income tax withholding;
<PAGE>
3. Notice of Guaranteed Delivery to be used to accept the Exchange Offer
if the Alliance Holding Units and all other required documents cannot be
delivered to the Depositary by the Expiration Date;
4. A form of letter that may be sent to your clients for whose accounts
you hold Alliance Holding Units registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer; and
5. Return envelope addressed to First Chicago Trust Company of New York,
the Depositary, for your use only.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
Alliance Holding will not pay any fees or commissions to any broker or
dealer or other person (other than of the Exchange Agent as described in the
Exchange Offer Prospectus) for soliciting tenders of Alliance Holding Units
pursuant to the Exchange Offer. Alliance Holding will, however, upon request,
reimburse brokers, dealers, commercial banks and trust companies for reasonable
and necessary costs and expenses incurred by them in forwarding materials to
their customers. Alliance Holding will pay all transfer taxes applicable to its
exchange of Alliance Holding Units for Alliance Capital Units pursuant to the
Exchange Offer, subject to Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer should be
addressed to, and additional copies of the enclosed materials may be obtained
from, us at the address or telephone numbers set forth below.
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
Very truly yours,
Georgeson & Company Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF ALLIANCE HOLDING, GEORGESON & COMPANY INC. OR FIRST CHICAGO TRUST
COMPANY OF NEW YORK, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT
OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE EXCHANGE
OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED
THEREIN.
2
EXHIBIT 99.6
FORM OF LETTER TO CLIENTS
Offer To Exchange up to o Units of Limited Partnership Interest
of
ALLIANCE CAPITAL MANAGEMENT L.P.
For Units of Limited Partnership Interest of
Alliance Capital Management L.P. II
Pursuant to the Exchange Offer Prospectus Dated o, 1999
- -------------------------------------------------------------------------------
THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON o, 1999, UNLESS THE OFFER IS EXTENDED
(SUCH DATE AND TIME, AS THEY MAY BE EXTENDED, THE "EXPIRATION DATE").
- -------------------------------------------------------------------------------
o, 1999
To Our Clients:
Enclosed for your consideration are the Exchange Offer Prospectus dated
o, 1999 and the related Letter of Transmittal (which together constitute the
"Exchange Offer") in connection with the offer by Alliance Capital Management
L.P. ("Alliance Holding") to exchange up to o units, each unit representing an
assignment of a beneficial interest in limited partnership interests in
Alliance Holding (each, an "Alliance Holding Unit"), for units representing
limited partnership interests in Alliance Capital Management L.P. II (each, an
"Alliance Capital Unit"). To preserve Alliance Holding's listing on the New
York Stock Exchange, Alliance Holding will not accept Alliance Holding Units
tendered that, if exchanged, would cause Alliance Holding 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 Alliance Holding Units tendered that, if exchanged,
would cause fewer than 40 million units to be held by public unitholders
immediately following the exchange. "Public unitholders" excludes The
Equitable Life Assurance Society of the United States, 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.
We are the holder of record of Alliance Holding Units held for your
account. A tender of such Alliance Holding Units can be made only by us as the
holder of record and pursuant to your instructions. The Letter of Transmittal
is furnished to you for your information only and cannot be used by you to
tender Alliance Holding Units held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Alliance Holding Units held by us for your account, upon the terms and
subject to the conditions set forth in the Exchange Offer Prospectus and the
Letter of Transmittal.
Your attention is invited to the following:
1. You may exchange each Alliance Holding Unit for one Alliance Capital
Unit, subject to the cap on tenders described above.
2. The Exchange Offer, the proration period and withdrawal rights
expire at 5:00 P.M., New York City time, on o, 1999, unless the Exchange Offer
is extended.
<PAGE>
3. The Exchange Offer is not conditioned upon any minimum number of
Alliance Holding Units being tendered for exchange.
4. Any transfer taxes applicable to the exchange of Alliance Holding
Units for Alliance Capital Units pursuant to the Exchange Offer will be paid
by Alliance Holding, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
If you wish to have us exchange any or all of your Alliance Holding Units
for Alliance Capital Units, please so instruct us by completing, executing,
detaching and returning to us the instruction form on the detachable part
hereof. An envelope to return your instructions to us is enclosed. If you
authorize the exchange of your Alliance Holding Units, all such Alliance
Holding Units will be tendered for exchange unless otherwise specified on the
detachable part hereof. Your instructions should be forwarded to us in ample
time to permit us to submit a tender on your behalf for exchange by the
expiration of the Exchange Offer.
The Exchange Offer is not being made to, nor will tenders for exchange be
accepted from or on behalf of, holders of Alliance Holding Units in any
jurisdiction in which the making of the Exchange Offer or acceptance thereof
would not be in compliance with the laws of such jurisdiction. In those
jurisdictions the laws of which require that the Exchange Offer be made by a
licensed broker or dealer, the Exchange Offer shall be deemed to be made on
behalf of Alliance Holding by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
2
<PAGE>
Instructions with Respect to the
Offer to Exchange up to o Units of Limited Partnership Interest
of
ALLIANCE CAPITAL MANAGEMENT L.P.
For Units of Limited Partnership Interest of
Alliance Capital Management L.P. II
Pursuant to the Exchange Offer Prospectus Dated o, 1999
The undersigned acknowledge(s) receipt of your letter and the enclosed
Exchange Offer Prospectus dated o, 1999, and the related Letter of Transmittal
(which together constitute the "Exchange Offer"), in connection with the offer
by Alliance Capital Management L.P. ("Alliance Holding") to exchange up to o
units, each unit representing an assignment of a beneficial interest in a
corresponding limited partnership interest in Alliance Holding (each, an
"Alliance Holding Unit"), for units representing limited partnership interests
in Alliance Capital Management L.P. II (each, an "Alliance Capital Unit").
The undersigned acknowledges that to preserve Alliance Holding's listing
on the New York Stock Exchange, Alliance Holding will not accept Alliance
Holding Units tendered that, if exchanged, would cause Alliance Holding Units
to be held by fewer than 1,200 public unitholders, and that to maintain an
adequate public float in the trading market for Alliance Holding Units,
Alliance Holding will not accept Alliance Holding Units tendered that, if
exchanged, would cause fewer than 40 million units to be held by public
unitholders immediately following the exchange. "Public unitholders" excludes
The Equitable Life Assurance Society of the United States, 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.
[] By checking this box, all Alliance Holding Units held by us for your
account, including fractional Alliance Holding Units, will be
tendered for exchange for an equal number of Alliance Capital Units.
If fewer than all Alliance Holding Units are to be tendered for
exchange, please check the box and indicate below the aggregate
number of Alliance Holding Units to be tendered by us.
______________________ Alliance Holding Units
_____________
* Unless otherwise indicated, it will be assumed that all Alliance Holding
Units held by us for your account are to be tendered for exchange.
SIGN HERE
______________________________________ ___________________________________
______________________________________ ___________________________________
Signature(s)
Dated_________________________________ ___________________________________
Please print name(s) and
addresses here
Account Number________________________ Tax Identification Number___________
3
EXHIBIT 99.7
FORM OF GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- --------------------------------------------------------------------
For this type of account: Give the TAXPAYER
IDENTIFICATION
number of--
- --------------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, the first
individual on the
account(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for incompetent
a designated ward, minor, person(3)
or incompetent person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- --------------------------------------------------------------------
For this type of account: Give the TAXPAYER
IDENTIFICATION
number of--
- --------------------------------------------------------------------
9. A valid trust, estate, or The Legal entity (Do
pension trust not furnish the
identifying number of
the personal
representative or trustee
unless the legal entity
itself is not designated
in the account title.) (5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the
business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district, or prison) that
receives agricultural
program payments
- ------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You
may use either your Social Security Number or Employer Identification
Number.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), or Form W-7 (for U.S. resident
aliens), Application for International Taxpayer Identification Number, at the
local office or Website of the Social Security Administration or the Internal
Revenue Service and apply for a number.
Payees Exempt from Backup Withholding
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except those identified in item (9). For broker
transactions, payees listed in items (1) through (13) and a person registered
under the Investment Advisors Act of 1940 who regularly acts as a broker are
exempt. Payments subject to reporting under Sections 6041 and 6041A of the
Internal Revenue Code (the "Code") are generally exempt from backup
withholding only if made to payees described in items (1) through (7), except
a corporation that provides medical and health care services or bills and
collects payments for such services is not exempt from backup withholding or
information reporting. Only payees described in items (2) through (6) are
exempt from backup withholding for barter exchange transactions, patronage
dividends, and payments by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under Section 501(a) of the Code, an IRA,
or a custodial account under Section 403(b)(7) of the Code if the account
satisfies the requirements of Section 401(f)(2).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all items during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under Section 584(a) of the Code.
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporation
Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under Section 664 of the Code or described in
Section 4947 of the Code.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under U.C. Section
1441.
o Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
o Payments of tax-exempt interest (including exempt- interest dividends
under U.C. Section 852).
o Payments described in U.C. Section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under U.C. Section 1451.
o Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under U.C. Sections 6041,
6041A(a), 6045, and 6050A.
Privacy Act Notice.--Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers
to payers who must report the payments to the IRS. The IRS uses the numbers
for identification purposes. Payers must be given the numbers whether or not
recipients are required to file a tax return. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--
Willfully falsifying certifications or affirmations may subject you to
criminal penalties including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
