<PAGE>
DRAFT-MARCH 25, 1996
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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-9818
------------------------
ALLIANCE CAPITAL
MANAGEMENT L.P.
(Exact name of REGISTRANT AS SPECIFIED in its charter)
Delaware 13-3434400
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1345 Avenue of the Americas 10105
New York, N.Y. (Zip Code)
(Address of principal executive offices)
Registrant's telephone NUMBER, INCLUDING AREA CODE (212) 969-1000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
TITLE OF CLASS WHICH REGISTERED
-------------- -------------------------
Units representing assignments of beneficial limited New York Stock Exchange
ownership of partnership interests
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X]
The aggregate market value of the Units representing assignments of
beneficial ownership of limited partnership interests held by non-affiliates of
the registrant as of March 1, 1996 (based on the closing price on the New York
Stock Exchange on that date) was approximately $788,038,500.
The number of Units representing assignments of beneficial ownership of
limited partnership interests outstanding as of March 1, 1996 was 82,872,866
Units.
DOCUMENTS INCORPORATED BY REFERENCE
Certain pages of the Alliance Capital Management L.P. 1995 Annual Report to
Unitholders are incorporated by reference in Part II of this Form 10-K.
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<PAGE>
GLOSSARY OF CERTAIN DEFINED TERMS
"Partnership" refers to Alliance Capital Management L.P., a Delaware
limited partnership, and its subsidiaries and, where appropriate, to its
predecessor ACMC and its subsidiaries.
"ACMC" refers to ACMC, Inc., a wholly-owned subsidiary of Equitable.
"Alliance" refers to Alliance Capital Management Corporation, a wholly-
owned subsidiary of Equitable, and, where appropriate, to ACMC, its predecessor.
"AXA" refers to AXA, a societe anonyme organized under the laws of France.
"ECI" refers to The Equitable Companies Incorporated.
"ECMC" refers to Equitable Capital Management Corporation, a wholly-owned
subsidiary of Equitable.
"Equitable" refers to The Equitable Life Assurance Society of the United
States, a wholly-owned subsidiary of ECI, and its subsidiaries other than the
Partnership and its subsidiaries.
"General Partner" refers to Alliance in its capacity as general partner of
the Partnership, and, where appropriate, to ACMC, its predecessor, in its
capacity as general partner of the Partnership.
"Units" refer to units representing assignments of beneficial ownership of
limited partnership interests in the Partnership.
PART I
ITEM 1. BUSINESS
GENERAL
The Partnership was formed in 1987 to succeed to the business of ACMC which
began providing investment management services in 1971. On April 21, 1988 the
business and substantially all of the operating assets of ACMC were conveyed to
the Partnership in exchange for a 1% general partnership interest in the
Partnership and approximately 55% of the outstanding Units. In December 1991
ACMC transferred its 1% general partnership interest in the Partnership to
Alliance.
<PAGE>
2
As of March 1, 1996 ECI and Equitable were the beneficial owners of
47,984,227 Units or approximately 57.6% of the issued and outstanding Units
including 446,439 Units issuable upon conversion of the Class A Limited
Partnership Interest issued to ECMC in 1993 when the business and substantially
all of the assets of ECMC were transferred to the Partnership. The Class A
Limited Partnership Interest is convertible into additional Units valued at up
to $17.4 million under a formula based on contingent incentive fees received by
the Partnership prior to April 1, 1998.
On February 29, 1996 the Partnership acquired the business of Cursitor-
Eaton Asset Management Company and Cursitor Holdings Limited (collectively,
"Cursitor") in exchange for 1,764,115 Units, $84.9 million in cash, notes in the
aggregate principal amount of $21.5 million which are payable ratably over the
next four years and substantial additional consideration which will be
determined at a later date.
Cursitor, an international investment management firm with offices in
London, Paris and Boston, manages approximately $10 billion in assets for both
U.S. and non-U.S. institutions, mainly pension plans. Cursitor's investment
style is global asset allocation: investing client funds in stocks or bonds of
the world's principal capital markets. A new subsidiary of the Partnership,
Cursitor Alliance LLC ("Cursitor Alliance"), was formed to combine Cursitor's
global asset allocation services with the Partnership's international and global
equity management, which is characterized by a stock selection philosophy, and
with the Partnership's Dimensional Trust Management Limited subsidiary, a
manager of global small-capitalization index funds. Senior management of
Cursitor owns a minority equity interest in Cursitor Alliance.
As of March 1, 1996 AXA and its subsidiaries owned 63.9% of the issued and
outstanding shares of the capital stock of ECI. ECI is a public company with
shares traded on the New York Stock Exchange, Inc. ("NYSE"). ECI owns all of
the shares of Equitable.
AXA, a French company, is the holding company for an international group of
insurance and related financial service companies. AXA's insurance operations
include activities in life insurance, property and casualty insurance and
reinsurance. The insurance operations are diverse geographically, with
activities in more than 20 countries, including France, the United States,
Australia, the United Kingdom, Canada and other countries, principally in Europe
and the Asia Pacific area. AXA is also engaged in asset management, investment
banking, securities trading, brokerage, real estate and other financial services
activities in the United States, Europe and the Asia Pacific area.
Based on information provided by AXA, on March 1, 1996, 42.1% of the issued
ordinary shares (representing 53.4% of the voting power) of AXA were owned by
Midi Participations, a French holding company ("Midi").
<PAGE>
3
The shares of Midi were, in turn, owned 61.4% (representing 62.5% of the voting
power) by Finaxa, another French holding company, and 38.6% (representing 37.5%
of the voting power) by subsidiaries of Assicurazioni Generali S.p.A., an
Italian corporation ("Generali") (one of which, Belgica Insurance Holding S.A.,
a Belgian corporation, owned 30.8%, representing 33.1% of the voting power). As
of March 1, 1996, 61.1% of the voting shares (representing 73.4% of the voting
power) of Finaxa were owned by five French mutual insurance companies (the
"Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle, owned 34.7% of
the voting shares representing 40.4% of the voting power) and 25.5% of the
voting shares of Finaxa (representing 16% of the voting power) were owned by
Banque Paribas, a French bank ("Paribas"). Including the ordinary shares owned
by Midi, on March 1, 1996, the Mutuelles AXA directly or indirectly controlled
51% of the issued ordinary shares (representing 64.7% of the voting power) of
AXA. Acting as a group, the Mutuelles AXA control AXA, Midi and Finaxa.
The Mutuelles AXA, Finaxa and Generali have agreed to engage in two
transactions affecting the capital structure of AXA. The transactions consist
of (i) the merger of Midi into AXA, which is expected to occur on May 9, 1996,
in which the shareholders of Midi will receive a number of ordinary shares of
AXA equal to the number of shares presently owned by Midi, and (ii) the
simultaneous exchange of part of the shares received by subsidiaries of Generali
in such merger for all the capital stock held by certain subsidiaries of AXA in
a holding company controlled by Generali.
After completion of the above transactions (and assuming no conversions or
exercises of outstanding convertible securities or options), approximately 30%
of the issued ordinary shares (representing between approximately 39% and 41% of
the voting power) of AXA will be owned by Finaxa and approximately 11% of the
issued ordinary shares (representing between approximately 14% and 16% of the
voting power) of AXA will be owned by subsidiaries of Generali. Including the
ordinary shares owned by Finaxa, the Mutuelles AXA will directly and indirectly
control approximately 35% of the issued ordinary shares (representing between
approximately 46% and 48% of the voting power) of AXA. In addition, after
giving effect to such transactions, certain subsidiaries of AXA will own
approximately 5% of the issued ordinary shares of AXA which are not entitled to
be voted. The above transactions will not affect the capital structure of
Finaxa. Acting as a group the Mutuelles AXA will continue to control AXA and
Finaxa.
The Partnership, one of the nation's largest investment advisers, provides
diversified investment management services both to institutional clients and,
through various investment vehicles, to individual investors.
The Partnership's institutional account management business consists
primarily of the active management of equity and fixed income accounts.
<PAGE>
4
The Partnership's institutional clients include corporate and public employee
pension funds, the general and separate accounts of Equitable and its insurance
company subsidiaries, endowment funds, and other domestic and foreign
institutions. The Partnership's individual investor services, which developed
as a diversification of its institutional investment management business,
consist of the management, distribution and servicing of mutual funds and cash
management products, including money market funds and deposit accounts.
The following tables provide a summary of assets under management and
associated revenues of the Partnership:
ASSETS UNDER MANAGEMENT
(in millions)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------------------------------
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Institutional Account
Management (1) . . . . . . . . . . $ 70,308 $ 69,354 $ 76,615 $ 81,183 $ 97,541
Individual Investor Services:
Alliance Mutual Funds . . . . . . . 16,143 15,588 22,045 20,583 23,196
The Hudson River Trust . . . . . . 4,824 5,484 7,171 8,360 11,964
Cash Management Services (2) 6,681 7,095 8,148 9,153 13,820
------- ------- ------- ------- --------
Total . . . . . . . . . . . . . . . . $ 97,956 $ 97,521 $113,979 $119,279 $146,521
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
REVENUES
(in thousands)
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1991 1992 1993 1994 1995
Institutional Account
Management (1). . . . . . . . . . . $182,078 $178,289 $190,921 $212,306 $231,924
Individual Investor Services:
Alliance Mutual Funds . . . . . . . 158,562 196,964 221,005 291,975 278,328
The Hudson River Trust (3). . . . . 10,874 13,941 18,090 22,045 29,119
Cash Management Services (2) 54,856 58,379 64,464 69,514 91,135
Other 6,230 5,698 5,037 5,112 8,749
-------- -------- -------- -------- --------
Total. . . . . . . . . . . . . . . . . $412,600 $453,271 $499,517 $600,952 $639,255
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
(1) Includes the general and separate accounts of Equitable and its insurance
company subsidiaries.
(2) Includes money market deposit accounts brokered by the Partnership for
which no investment management services are performed.
(3) Net of certain fees paid to Equitable for services rendered by Equitable in
marketing the variable annuity insurance and variable life products for
which The Hudson River Trust is the funding vehicle.
<PAGE>
5
INSTITUTIONAL ACCOUNT MANAGEMENT
As of December 31, 1993, 1994 and 1995 institutional accounts (other than
investment companies and deposit accounts) represented approximately 67%, 68%
and 67%, respectively, of total assets under management by the Partnership. The
fees earned from the management of those accounts represented approximately 38%,
35% and 36% of the Partnership's revenues for 1993, 1994 and 1995,
respectively.
INSTITUTIONAL ACCOUNT ASSETS UNDER MANAGEMENT
(in millions)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------------------------
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Equity & Balanced:
Domestic . . . . . . . . . . . . . . $ 27,826 $ 27,292 $ 29,664 $ 30,256 $ 42,517
International & Global . . . . . . . 2,315 2,313 2,913 3,828 3,932
Fixed Income:
Domestic . . . . . . . . . . . . . . 27,806 26,419 28,596 31,623 32,741
International & Global . . . . . . . 1,086 2,344 2,252 2,602 1,891
Passive:
Domestic . . . . . . . . . . . . . . 9,735 9,688 11,240 9,645 12,787
International & Global . . . . . . . 1,376 1,116 1,760 3,028 3,484
Other . . . . . . . . . . . . . . . . 164 182 190 201 189
-------- -------- -------- --------- ---------
Total . . . . . . . . . . . . . . . . $ 70,308 $ 69,354 $ 76,615 $ 81,183 $ 97,541
-------- -------- -------- -------- ---------
-------- -------- -------- -------- ---------
</TABLE>
REVENUES FROM INSTITUTIONAL ACCOUNT MANAGEMENT
(in thousands)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Investment Services:
Equity & Balanced:
Domestic . . . . . . . . . . . . . . $ 77,215 $ 87,875 $ 94,976 $107,048 $131,086
International & Global . . . . . . . 6,571 6,945 7,166 10,867 10,373
Fixed Income:
Domestic . . . . . . . . . . . . . . 81,600 64,277 66,131 70,217 67,102
International & Global . . . . . . . 1,688 3,902 4,895 5,180 3,784
Passive:
Domestic . . . . . . . . . . . . . . 4,692 4,342 6,220 6,016 5,919
International & Global. . . . . . . . 1,725 2,292 2,790 4,052 3,870
Other . . . . . . . . . . . . . . . . 1,483 1,553 1,543 1,597 1,716
-------- -------- -------- -------- --------
174,974 171,186 183,721 204,977 223,850
Service and Other Fees . . . . . . . . 7,104 7,103 7,200 7,329 8,074
-------- -------- -------- -------- --------
Total . . . . . . . . . . . . . . . . $182,078 $178,289 $190,921 $212,306 $231,924
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
<PAGE>
6
INVESTMENT MANAGEMENT SERVICES
The Partnership's institutional account management business consists
primarily of the active management of equity accounts, balanced (equity and
fixed income) accounts and fixed income accounts. The Partnership also provides
active management for international (non-U.S.) and global (including U.S.)
equity, balanced and fixed income portfolios, venture capital portfolios and
investment partnership portfolios known as hedge funds. The Partnership
provides "passive" management services for equity, fixed income and
international accounts. As of December 31, 1995 the Partnership's accounts were
managed by 75 portfolio managers with an average of 16 years of experience in
the industry and 11 years of experience with the Partnership.
EQUITY AND BALANCED ACCOUNTS. The Partnership's equity and balanced
accounts contributed approximately 20%, 20% and 22% of the Partnership's total
revenues for 1993, 1994 and 1995, respectively. Assets under management
relating to active equity and balanced accounts grew from approximately $22.6
billion as of December 31, 1990 to approximately $46.4 billion as of December
31, 1995.
The Partnership has had a distinct and consistent style of equity
investing. The Partnership does not emphasize market timing as an investment
tool but instead emphasizes long-term trends and objectives, generally remaining
fully invested. The Partnership's equity strategy is to invest in the
securities of companies experiencing growing earnings momentum which are known
as growth stocks. The result of these investment characteristics is that the
Partnership's client portfolios tend to have, as compared to the average of
companies comprising the Standard & Poor's Index of 500 Stocks ("S&P 500"), a
greater market price volatility, a lower average yield and a higher average
price-earnings ratio.
The Partnership's principal method of securities evaluation is through
fundamental analysis undertaken by its internal staff of full-time research
analysts, supplemented by research undertaken by the Partnership's portfolio
managers. The Partnership holds frequent investment strategy meetings in which
senior management, portfolio managers and analysts discuss investment strategy.
The Partnership's portfolio managers construct and maintain portfolios that
adhere to each client's guidelines and conform to the Partnership's current
investment strategy.
As of December 31, 1995 the Partnership managed two hedge funds which had
approximately $237 million in assets under management. The Partnership's hedge
funds invest primarily in long positions in a limited number of fundamentally
researched, high quality growth companies. The portfolios of the hedge funds
consist of various types of securities (e.g. equities, convertible securities,
warrants, options, futures and long term equity anticipation securities (LEAPS).
The hedge funds engage
<PAGE>
7
in short sales in order to enhance overall performance. The hedge funds take
short positions, including the purchase of put options on securities, market
indices or futures. The hedge funds may employ the use of leverage through
securities exposure and borrowings.
The Partnership's balanced accounts consist of an equity component and a
fixed income component. Typically, from 50% to 75% of a balanced account is
managed in the same manner as a separate equity account, while the remaining
fixed income component is oriented toward capital preservation and income
generation.
FIXED INCOME ACCOUNTS. The Partnership's fixed income accounts contributed
approximately 14%, 13% and 11% of the Partnership's total revenues for 1993,
1994 and 1995, respectively. Assets under management relating to active fixed
income accounts increased from approximately $29.0 billion as of December 31,
1990 to approximately $34.6 billion as of December 31, 1995.
The Partnership's fixed income management services include conventional
actively managed bond portfolios in which portfolio maturity structures, market
sector concentrations and other characteristics are actively shifted in
anticipation of market changes. The fixed income services also include managing
portfolios investing in foreign government securities and other foreign debt
securities. Sector concentrations and other portfolio characteristics are
heavily committed to areas that the Partnership's portfolio managers believe
have the best investment values. The Partnership also manages portfolios that
are limited to specialized areas of the fixed income markets, such as mortgage-
backed securities and high-yield bonds.
Alliance Corporate Finance Group Incorporated ("ACFG"), a wholly-owned
subsidiary of the Partnership, manages investments in private mezzanine
financings and private investment limited partnerships. Private mezzanine
financings are investments in the subordinated debt and/or preferred stock
portions of leveraged transactions (such as leveraged buy-outs and leveraged
recapitalizations). Such investments are usually coupled with a contingent
interest component or investment in an equity participation, which provide the
potential for capital appreciation.
ACFG uses a network of investment banks, commercial banks, other financial
institutions and issuers to generate investment opportunities in the private
placement market. This network enables ACFG to seek to manage risk through high
selectivity and diversification strategies. ACFG also seeks to mitigate risk
through an ongoing program of monitoring the performance of the companies in its
portfolios. In addition, ACFG maintains a separate Investment Recovery Group
responsible for maximizing the recovery of clients' investments in troubled
companies.
<PAGE>
8
ACFG manages two private mezzanine investment funds designed for
institutional investors, with an aggregate of approximately $635 million under
management as of December 31, 1995. As of that date Equitable and its insurance
company subsidiaries had investments of approximately $150 million in these
funds.
ACFG also manages two limited partnerships regulated as business
development companies under the Investment Company Act of 1940 ("Investment
Company Act") which invest primarily in private mezzanine financings. As of
December 31, 1995 these funds had net assets of approximately $200 million.
The Partnership manages two collateralized bond obligation funds whose
pools of collateral debt securities consist primarily of privately-placed, fixed
rate corporate debt securities acquired from Equitable and its affiliates. As
of December 31, 1995 these funds had approximately $385 million under
management. As of that date ECI and its insurance company subsidiaries had
investments of approximately $292 million in these funds.
PASSIVE MANAGEMENT. The Partnership's strategy in passive portfolio
management is to provide customized portfolios to meet specialized client needs,
such as a portfolio designed to replicate an index of small-capitalization
stocks. In addition, the Partnership offers domestic and international
indexation strategies, such as portfolios designed to match the performance
characteristics of the S&P 500 and the Morgan Stanley Capital International
Indices. The Partnership also offers a variety of structured fixed income
portfolio applications, including immunization (designed to produce a compound
rate of return over a specified time, irrespective of interest rate movements),
dedication (designed to produce specific cash flows at specific times to fund
known liabilities) and indexation (designed to replicate the return of a
specified market index or benchmark). A subsidiary of the Partnership is the
manager of four passive U.K. unit trusts which invest in small capitalization
common stocks on a global basis. As of December 31, 1995 the Partnership
managed approximately $16.3 billion in passive portfolios.
OTHER SERVICES. Subsidiaries of the Partnership maintain offices in
London, England, Paris, France, Bombay, India, Istanbul, Turkey, Sao Paolo,
Brazil, and Tokyo, Japan which provide international and global investment
management, research, marketing and advisory services to institutional and other
clients and in Luxembourg, Sydney, Australia, Toronto, Canada, Singapore and
Bahrain which market investment management services.
CLIENTS
The approximately 1,002 institutional accounts (other than investment
companies) for which the Partnership acts as investment
<PAGE>
9
manager include corporate employee benefit plans, public employee retirement
systems, the general and separate accounts of Equitable and its insurance
company subsidiaries, endowment funds, foundations, foreign governments, multi-
employer pension plans and financial and other institutions. Generally, the
minimum size for a new separately managed account is $10 million.
The general and separate accounts of Equitable and its insurance company
subsidiaries, which were transferred to the Partnership in 1993 in connection
with the acquisition of the business and substantially all of the assets of
ECMC, are the Partnership's largest institutional clients. As of December 31,
1995 these accounts, excluding investments made by these accounts in The Hudson
River Trust (See "Individual Investor Services - The Hudson River Trust"),
represented approximately 19% of total assets under management by the
Partnership and approximately 9% of the Partnership's total revenues for 1995.
As of December 31, 1995 corporate employee benefit plan accounts represented
approximately 16% of total assets under management by the Partnership. Assets
under management for other tax-exempt accounts, including public employee
benefit funds organized by government agencies and municipalities, endowments,
foundations and multi-employer employee benefit plans, represented approximately
33% of total assets under management as of December 31, 1995.
The following table lists the Partnership's ten largest institutional
clients, ranked in order of size of total assets under management as of December
31, 1995. Since the Partnership's fee schedules vary based on the type of
account, the table does not reflect the ten largest revenue generating clients.
CLIENT OR SPONSORING EMPLOYER TYPE OF ACCOUNT
Equitable and its insurance . . . . . .
company subsidiaries . . . . . . . . Equity, Fixed Income,
Passive
North Carolina Retirement System . . . Passive Equity, Equity,
Global Equity
A Foreign Government Central Bank . . . Equity, Global Equity,
Fixed Income, Global
Fixed Income
State Board of Administration of Florida Equity, Fixed Income
Ford Motor Company . . . . . . . . . . Equity, Venture Capital
BellSouth Corporation . . . . . . . . . Passive Equity
Boeing Company . . . . . . . . . . . . Equity, Balanced
New York State Teachers' Retirement System Passive Equity, Equity
New York State Common Retirement System Equity
Minnesota State Board of Investment . . Equity
<PAGE>
10
These institutional clients accounted for approximately 34% of the
Partnership's total assets under management at December 31, 1995 and
approximately 14% of the Partnership's total revenues for the year ended
December 31, 1995 (42% and 18% respectively if the investments by the separate
accounts of Equitable in The Hudson River Trust were included). No single
institutional client other than Equitable and its insurance company subsidiaries
accounted for more than approximately 1% of the Partnership's total revenues
for the year ended December 31, 1995. The general and separate accounts of
Equitable and its insurance company subsidiaries accounted for approximately
19% of the Partnership's total assets under management at December 31, 1995 and
approximately 9% of the Partnership's total revenues for the year ended
December 31, 1995 (27% and 14% respectively if the investments by the separate
accounts of Equitable in The Hudson River Trust were included).
Since its inception, the Partnership has experienced periods when it gained
significant numbers of new accounts or amounts of assets under management and
periods when it lost significant accounts or assets under management. These
fluctuations result from, among other things, the relative attractiveness of the
Partnership's investment style or level of performance under prevailing market
conditions, changes in the investment patterns of clients that result in a shift
in assets under management and other circumstances such as changes in the
management or control of a client.
INVESTMENT MANAGEMENT AGREEMENTS AND FEES
The Partnership's institutional accounts are managed pursuant to a written
investment management agreement between the client and the Partnership, which
usually is terminable at any time or upon relatively short notice by either
party. In general, the Partnership's contracts may not be assigned without the
consent of the client.
In providing investment management services to institutional clients, the
Partnership is principally compensated on the basis of fees calculated as a
percentage of assets under management. Fees are generally billed quarterly and
are calculated on the value of an account at the beginning or end of a quarter
or on the average of such values during the quarter. As a result, fluctuations
in the amount or value of assets under management are reflected in revenues from
management fees within two calendar quarters.
Management fees paid on equity and balanced accounts are generally charged
in accordance with a fee schedule that ranges from 0.75% (for the first $10
million in assets) to 0.25% (for assets over $60 million) per annum of assets
under management. Fees for the management of fixed income portfolios generally
are charged in accordance with lower fee schedules, while fees for passive
equity portfolios typically are even lower. Fees for the management of hedge
funds are higher than the fees charged for equity and balanced accounts and
also provide for the payment of performance fees or carried interest to the
Partnership. With respect to approximately 5% of assets under management,
the Partnership charges performance-based fees, which consist of a relatively
low base fee plus an additional fee based on a percentage of assets if
<PAGE>
11
investment performance for the account exceeds certain benchmarks. No assurance
can be given that such fee arrangements will not become more common in the
investment management industry. Utilization of such fee arrangements by the
Partnership on a broader basis could create greater fluctuations in the
Partnership's revenues.
ACFG's fees for corporate finance activities generally involve the payment
of a base management fee ranging from 0.10% to 1.00% of assets under management
per annum. In some cases ACFG receives incentive fees generally equivalent to
20% of gains in excess of a specified hurdle rate.
In connection with the investment advisory services provided to the general
and separate accounts of Equitable and its insurance company subsidiaries the
Partnership provides ancillary accounting, valuation, reporting, treasury and
other services.
MARKETING
The Partnership's institutional products are marketed by marketing
specialists assisted by portfolio managers. These marketing specialists solicit
business on a full-time basis for the entire range of the Partnership's
institutional account management services. Marketing specialists are dedicated
to public retirement systems and multi-employer pension plans as well as the
hedge fund marketplace.
INDIVIDUAL INVESTOR SERVICES
The Partnership (i) manages and sponsors a broad range of open-end and
closed-end mutual funds other than The Hudson River Trust and markets wrap fee
accounts ("Alliance Mutual Funds"), (ii) manages The Hudson River Trust which is
the funding vehicle for variable annuity insurance and variable life insurance
products offered by Equitable and its insurance company subsidiaries, and (iii)
provides cash management services (money market funds and federally insured
deposit accounts) that are marketed to individual investors through
broker-dealers, banks, insurance companies and other financial intermediaries.
The net assets comprising the Alliance Mutual Funds, The Hudson River Trust and
money market funds and deposit accounts on December 31, 1995 amounted to
approximately $49.0 billion. The assets of the Alliance Mutual Funds, The
Hudson River Trust and the money market funds are managed by the same investment
professionals who manage the Partnership's institutional client accounts.
<PAGE>
12
REVENUES FROM INDIVIDUAL INVESTOR SERVICES
(in thousands)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1991 1992 1993 1994 1995
Alliance Mutual Funds:
<S> <C> <C> <C> <C> <C>
Investment Services . . . . . . . . . $ 83,245 $100,057 $109,692 $147,496 $147,407
Distribution Plan Fees . . . . . . . 57,125 78,455 89,253 117,509 105,405
Services and Other Fees . . . . . . . 11,894 14,149 16,901 23,491 23,779
Underwriting
Commissions . . . . . . . . . . . . 6,298 4,303 5,159 3,479 1,737
-------- -------- -------- -------- --------
158,562 196,964 221,005 291,975 278,328
-------- -------- -------- -------- --------
The Hudson River Trust:
Investment Services (1) . . . . . . . 10,714 13,814 17,148 21,655 28,680
Services and Other Fees . . . . . . . 160 127 942 390 366
Underwriting
Commissions . . . . . . . . . . . . -- -- -- -- 73
-------- -------- -------- -------- --------
10,874 13,941 18,090 22,045 29,119
-------- -------- -------- -------- --------
Cash Management Services:
Investment Services (2) . . . . . . . 35,112 36,788 40,202 42,018 56,642
Distribution Plan Fees . . . . . . . 12,888 14,530 16,007 18,104 23,328
Services and Other Fees . . . . . . . 5,932 6,721 7,890 9,383 11,165
Underwriting
Commissions . . . . . . . . . . . . 924 340 365 9 -
-------- -------- -------- -------- --------
54,856 58,379 64,464 69,514 91,135
-------- -------- -------- -------- --------
Total . . . . . . . . . . . . . . . . $224,292 $269,284 $303,559 $383,534 $398,582
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
(1) Net of certain fees paid to Equitable for services rendered by Equitable in
marketing the variable annuity insurance and variable life products for
which The Hudson River Trust is the funding vehicle.
(2) Includes fees received by the Partnership in connection with its
distribution of money market deposit accounts for which no investment
management services are provided.
ALLIANCE MUTUAL FUNDS
The Partnership has been managing mutual funds since 1971. Since then, the
Partnership has sponsored open-end load mutual funds, closed-end mutual funds
and offshore funds. On December 31, 1995 net assets in the Alliance Mutual
Funds totalled approximately $23.2 billion.
Net Assets as of
December 31, 1995
TYPE OF ALLIANCE MUTUAL FUNDS (IN MILLIONS)
Open-End Funds:
Equity and Balanced . . . . . . . . . . $ 6,916.4
Taxable Fixed Income . . . . . . . . . 6,436.3
<PAGE>
13
Tax Exempt Fixed Income . . . . . . . . 2,480.4
Offshore Funds (Open and Closed-End). . . 1,672.9
Closed-End Funds . . . . . . . . . . . . 4,073.2
Variable Product Series Funds . . . . . . 327.5
Wrap Fee Programs . . . . . . . . . . . . 1,289.1
-----------
Total . . . . . . . . . . . . . . . . . . $ 23,195.8
-----------
-----------
THE HUDSON RIVER TRUST
The Hudson River Trust is the funding vehicle for the variable annuity
insurance and variable life insurance products offered by Equitable and its
insurance company subsidiaries. On December 31, 1995 the assets of the
portfolios of The Hudson River Trust were as follows:
Net Assets as of
December 31, 1995
(IN MILLIONS)
-----------------
Common Stock Portfolio . . . . . . . . . . . . $ 4,879.7
Aggressive Stock Portfolio . . . . . . . . . . 2,700.5
Balanced Portfolio . . . . . . . . . . . . . . 1,523.2
Growth Investors Portfolio . . . . . . . . . . 896.1
Global Portfolio . . . . . . . . . . . . . . . 686.1
Money Market Portfolio . . . . . . . . . . . . 386.7
Conservative Investors Portfolio . . . . . . . 252.1
Equity Index Fund . . . . . . . . . . . . . . 165.8
Quality Bond Portfolio . . . . . . . . . . . . 157.4
High Yield Portfolio . . . . . . . . . . . . . 118.1
Growth & Income Portfolio . . . . . . . . . . 98.1
Intermediate Government Portfolio . . . . . . 71.8
International Portfolio . . . . . . . . . . . 28.7
---------
Total . . . . . . . . . . . . . . . . . . . . $ 11,964.3
----------
----------
DISTRIBUTION. The Alliance Mutual Funds are distributed to individual
investors through broker-dealers, insurance sales representatives, banks and
other financial intermediaries. Alliance Fund Distributors, Inc. ("AFD"), a
registered broker-dealer and a wholly-owned subsidiary of the Partnership,
serves as the principal underwriter and distributor of the Alliance Mutual Funds
registered under the Investment Company Act of 1940 as "open-end" investment
companies ("U.S. Funds") and serves as a placing or distribution agent for most
of the Alliance Mutual Funds which are not registered under the Investment
Company Act and which are not publicly offered to United States persons
("Offshore Funds"). 44 sales representatives devote their time exclusively to
promoting the sale of Alliance Mutual Fund shares by financial intermediaries.
<PAGE>
14
Many of the financial intermediaries that sell shares of Alliance Mutual
Funds also offer shares of funds not managed by the Partnership and frequently
offer shares of funds managed by their own affiliates.
The Partnership maintains a mutual fund distribution system (the "System")
which permits open-end Alliance Mutual Funds to offer investors the option of
purchasing shares (a) subject to a conventional front-end sales charge ("Class A
Shares"), (b) without a front-end sales charge but subject to a contingent
deferred sales charge payable by shareholders ("CDSC") and higher distribution
fees and transfer agent costs payable by the Funds ("Class B Shares") or (c)
without either a front-end sales charge or a CDSC but with higher distribution
fees payable by the Alliance Mutual Funds ("Class C Shares"). If a shareholder
purchases Class A Shares, AFD compensates the financial intermediary
distributing the Fund from a portion of the front-end sales charge paid by the
shareholder at the time of each sale. If a shareholder purchases Class B
Shares, AFD does not collect a front-end sales charge even though AFD is
obligated to compensate the financial intermediary at the time of each sale.
Payments made to financial intermediaries during 1995 in connection with the
System, net of CDSC received, totalled approximately $41.7 million. Management
of the Partnership believes AFD will recover the payments made to financial
intermediaries in respect of the Class B shares from the higher distribution
fees and CDSC it receives over periods not exceeding 5 1/2 years. If a
shareholder purchases Class C Shares, AFD does not collect a front-end sales
charge or CDSC and does not compensate the financial intermediary at the time of
sale but the entire amount of the distribution fees attributable to Class C
Shares is paid to the financial intermediary. The rules of the National
Association of Securities Dealers, Inc. effectively limit the aggregate of all
front-end, deferred and asset-based sales charges paid to AFD with respect to
any class of its shares by each open-end U.S. Fund to 6.25% of cumulative gross
sales of shares of that class, plus interest at the prime rate plus 1% per
annum.
The open-end U.S. Funds and Offshore Funds have entered into agreements
with AFD under which AFD is paid a distribution services fee. The Partnership
uses borrowings and its own resources to finance distribution of open-end
Alliance Mutual Fund shares.
The selling and distribution agreements between AFD and the financial
intermediaries that distribute Alliance Mutual Funds are terminable by either
party upon notice (generally of not more than sixty days) and do not obligate
the financial intermediary to sell any specific amount of fund shares. A small
amount of mutual fund sales is made directly by AFD, in which case AFD retains
the entire sales charge.
During 1995 the ten financial intermediaries responsible for the largest
volume of sales of Alliance Mutual Funds were responsible for 62.5% of the total
sales of Alliance Mutual Funds. Equico Securities, Inc. ("Equico"), a wholly-
owned subsidiary of Equitable that utilizes
<PAGE>
15
members of Equitable's insurance agency sales force as its registered
representatives, has entered into a selected dealer agreement with AFD and since
1986 has been responsible for a significant portion of total open-end Alliance
Mutual Fund sales (11% in 1995). Equico is under no obligation to sell a
specific amount of fund shares and also sells shares of mutual funds sponsored
by organizations unaffiliated with Equitable.
Subsidiaries of Merrill Lynch & Co., Inc. (collectively "Merrill Lynch")
were responsible for approximately 35%, 30% and 19% of Alliance Mutual Fund
sales in 1993, 1994 and 1995, respectively. Smith Barney Inc. ("Smith Barney")
was responsible for 10% of Alliance Mutual Fund sales in 1995. Neither Merrill
Lynch nor Smith Barney is under any obligation to sell a specific amount of
Alliance Mutual Fund shares and each also sells shares of mutual funds that it
sponsors and which are sponsored by unaffiliated organizations.
No dealer or agent other than Equico, Merrill Lynch and Smith Barney has in
any year since 1990 accounted for more than 10% of the sales of open-end
Alliance Mutual Funds.
Based on market data reported by the Investment Company Institute (December
1995), the Partnership's market share in the U.S. mutual fund industry is 1.13%
of total industry assets and the Partnership accounted for 1.09% of total
open-end and closed-end fund sales force-derived industry sales in the U.S.
during 1995. While the performance of the Alliance Mutual Funds is a factor in
the sale of their shares, there are other factors contributing to success in the
mutual fund management business that are not as important in the institutional
account management business. These factors include the level and quality of
shareholder services (see "Shareholder and Administration Services" below) and
the amounts and types of distribution assistance and administrative services
payments. The Partnership believes that its compensation programs with
financial intermediaries are competitive with others in the industry.
Under current interpretations of the Glass-Steagall Act and other laws and
regulations governing depository institutions, banks and certain of their
affiliates generally are permitted to act as agent for their customers in
connection with the purchase of mutual fund shares and to receive as
compensation a portion of the sales charges paid with respect to such purchases.
During 1995 banks and their affiliates accounted for approximately 8% of the
sales of shares of open-end Alliance Mutual Funds.
INVESTMENT MANAGEMENT AGREEMENTS AND FEES. Management fees from the
Alliance Mutual Funds and The Hudson River Trust vary between .20% and 1.80% per
annum of average net assets. As certain of the U.S. Funds have grown, fee
schedules have been revised to provide lower incremental fees above certain
levels. Fees paid by the U.S. Funds and The Hudson River Trust are fixed
annually by negotiation between the Partnership and the
<PAGE>
16
board of directors or trustees of each U.S. Fund and The Hudson River Trust,
including a majority of the disinterested directors or trustees. Changes in
fees must be approved by the shareholders of each U.S. Fund and The Hudson River
Trust. In general, the investment management agreements with the U.S. Funds and
The Hudson River Trust provide for termination at any time upon 60 days notice.
Under each investment management agreement with a U.S. Fund, the
Partnership provides the U.S. Fund with investment management services, office
space and order placement facilities and pays all compensation of directors or
trustees and officers of the U.S. Fund who are affiliated persons of the
Partnership. Each U.S. Fund pays all of its other expenses. If the expenses of
a U.S. Fund exceed an expense limit established under the securities laws of any
state in which shares of that U.S. Fund are qualified for sale or as prescribed
in the U.S. Fund's investment management agreement, the Partnership absorbs such
excess through a reduction in the advisory fee. Currently, the Partnership
believes that California and South Dakota are the only states to impose such a
limit. The expense ratios for the U.S. Funds during their most recent fiscal
year ranged from 1.08% to 3.25%. In connection with newly organized U.S. Funds,
the Partnership may also agree to reduce its fee or bear certain expenses to
limit a fund's expenses during an initial period of operations. The Partnership
does not expect, however, that state expense or voluntary limits, at current fee
and expense levels, will have a significant effect on the results of its
operations.
CASH MANAGEMENT SERVICES
The Partnership provides cash management services to individual investors
through a product line comprising eighteen money market fund portfolios and five
types of brokered money market deposit accounts. Net assets in these products
as of December 31, 1995 totalled approximately $13.8 billion.
Net Assets as of
December 31, 1995
(IN MILLIONS)
-----------------
Money Market Funds:
Alliance Capital Reserves (two portfolios) $ 5,326.9
Alliance Government Reserves (two portfolios) 3,378.0
Alliance Municipal Trust (seven portfolios) 2,036.1
Alliance Money Market Fund (three portfolios) 1,574.8
ACM Institutional Reserves (four portfolios) 701.3
Money Market Deposit Accounts (five products) 802.7
----------
Total . . . . . . . . . . . . . . . . . . . . . . $ 13,819.8
----------
<PAGE>
17
The Partnership also offers a managed assets program, which provides
customers of participating financial intermediaries with a Visa Card, access to
automated teller machines and check writing privileges. The program is linked
to the customer's chosen Alliance money market fund. The program serves to
enhance relationships with financial intermediaries and to attract and retain
investments in the Alliance money market funds, as well as to generate fee
income.
Under its investment management agreement with each money market fund, the
Partnership is paid an investment management fee equal to 0.50% per annum of the
fund's average net assets except for ACM Institutional Reserves which pays a fee
between 0.20% and 0.45% of its average net assets. In the case of Alliance
Capital Reserves, Alliance Money Reserves and Alliance Government Reserves, the
fee is payable at lesser rates with respect to average net assets in excess of
$1.25 billion. For distribution and account maintenance services rendered in
connection with the sale of money market deposit accounts, the Partnership
receives fees from the participating banks that are based on outstanding account
balances. Because the money market deposit account programs involve no
investment management functions to be performed by the Partnership, the
Partnership's costs of maintaining the account programs are less, on a relative
basis, than its costs of managing the money market funds.
On December 31, 1995 more than 97% of the assets invested in the
Partnership's cash management programs were attributable to regional
broker-dealers and other financial intermediaries, with the remainder coming
directly from the public. On December 31, 1995 more than 475 financial
intermediaries offered the Partnership's cash management services. The
Partnership's money market fund market share (not including deposit products),
as computed based on market data reported by the Investment Company Institute
(November 1995), has increased from 0.95% of total money market fund industry
assets at the end of 1990 to 1.74% at December 31, 1995.
The Partnership makes payments to financial intermediaries for distribution
assistance and shareholder servicing and administration. The Partnership's
money market funds pay fees to the Partnership at annual rates of up to 0.25% of
average daily net assets pursuant to "Rule 12b-1" distribution plans except for
Alliance Money Market Fund which pays a fee of up to 0.45% of its average daily
net assets. Such payments are supplemented by the Partnership in making
payments to financial intermediaries under the distribution assistance and
shareholder servicing and administration program. During 1995 such supplemental
payments totalled $35.6 million ($26.1 million in 1994). Seven employees of the
Partnership devote their time exclusively to marketing the Partnership's cash
management services.
A principal risk to the Partnership's cash management services business is
the acquisition of its participating financial intermediaries by companies that
are competitors or that plan to enter the cash manage-
<PAGE>
18
ment services business. As of December 31, 1995 the five largest participating
financial intermediaries were responsible for assets aggregating approximately
$6.8 billion, or 48.8% of the cash management services total. Donaldson, Lufkin
& Jenrette Securities Corporation ("DLJ Securities Corporation"), a subsidiary
of ECI, was one of these intermediaries and was responsible for assets
aggregating approximately $800 million or 6% of the cash management services
total.
Many of the financial intermediaries whose customers utilize the
Partnership's cash management services are broker-dealers whose customer
accounts are carried, and whose securities transactions are cleared and settled,
by the Pershing Division ("Pershing") of DLJ Securities Corporation. Pursuant
to an agreement between Pershing and the Partnership, Pershing recommends to
certain of its correspondent firms the use of the Partnership's money market
funds and other cash management products. In return, Pershing is paid a portion
of the revenues derived by the Partnership from sales through such Pershing
correspondents. During 1995 these payments to Pershing amounted to
approximately $4.3 million. As of December 31, 1995 DLJ Securities Corporation
and these Pershing correspondents were responsible for approximately 18% of the
Partnership's total cash management assets. Pershing may terminate its
agreement with the Partnership on 180 days' notice. If the agreement were
terminated, Pershing would be under no obligation to recommend or in any way
assist in the sale of the Partnership's cash management products and would be
free to recommend or assist in the sale of competitive products.
The Partnership's money market funds are investment companies registered
under the Investment Company Act and are managed under the supervision of boards
of directors or trustees, which include disinterested directors or trustees who
must approve investment management agreements and certain other matters. The
investment management agreements between the money market funds and the
Partnership provide for an expense limitation of 1% per annum or less of average
daily net assets. See "Alliance Mutual Funds - Investment Management Agreements
and Fees".
SHAREHOLDER AND ADMINISTRATION SERVICES
Alliance Fund Services, Inc. ("AFS"), a wholly-owned subsidiary of the
Partnership, provides registrar, dividend disbursing and transfer-agency related
services for each U.S. Fund and provides servicing for each U.S. Fund's
shareholder accounts. As of December 31, 1995 AFS employed 274 people. AFS
operates out of offices in Secaucus, New Jersey. Under each servicing agreement
AFS receives a monthly fee. Each servicing agreement must be approved annually
by the relevant U.S. Fund's board of directors or trustees, including a majority
of the disinterested directors or trustees, and may be terminated by either
party without penalty upon 60 days' notice.
<PAGE>
19
Most U.S. Funds and closed-end funds for which the Partnership acts as
investment manager utilize Partnership personnel to perform legal, clerical and
accounting services not required to be provided by the Partnership. Payments by
a U.S. Fund for these services must be specifically approved in advance by the
U.S. Fund's board of directors or trustees. Currently, the Partnership and AFS
are accruing revenues for providing clerical and accounting services to the U.S.
Funds and these closed-end funds at the rate of approximately $7.6 million per
year.
Alliance International Fund Services S.A. ("AIFS"), a wholly-owned
subsidiary of the Partnership, is the registrar and transfer agent of
substantially all of the Offshore Funds. As of December 31, 1995 AIFS employed
7 people. AIFS operates out of offices in Luxembourg and receives a monthly fee
for its registrar and transfer agency services. Each agreement between AIFS and
an Offshore Fund may be terminated by either party upon 60 days' notice.
The Partnership expects to continue to devote substantial resources to
shareholder servicing because of its importance in competing for assets invested
in mutual funds and cash management services.
COMPETITION
The financial services industry is highly competitive and new entrants are
continually attracted to it. No one or small number of competitors is dominant
in the industry. The Partnership is subject to substantial competition in all
aspects of its business. Pension fund, institutional and corporate assets are
managed by investment management firms, broker-dealers, banks and insurance
companies. Many of these financial institutions have substantially greater
resources than the Partnership. The Partnership competes with other providers
of institutional investment products and services primarily on the basis of the
range of investment products offered, the investment performance of such
products and the services provided to clients. Based on an annual survey
conducted by PENSIONS & INVESTMENTS, as of January 1, 1995 the Partnership was
ranked 7th out of 268 managers based on tax-exempt assets under management, 9th
out of the 25 largest managers of international index assets, 7th out of the 25
largest managers of domestic equity index funds and 13th out of the 25 largest
domestic bond index managers.
Many of the firms competing with the Partnership for institutional clients
also offer mutual fund shares and cash management services to individual
investors. Competitiveness in this area is chiefly a function of the range of
mutual funds and cash management services offered, investment performance,
quality in servicing customer accounts and the capacity to provide financial
incentives to financial intermediaries through distribution assistance and
administrative services payments funded by "Rule 12b-1" distribution plans and
the investment adviser's own resources.
<PAGE>
20
CUSTODY AND BROKERAGE
Neither the Partnership nor its subsidiaries maintains custody of client
funds or securities, which is maintained by client-designated banks, trust
companies, brokerage firms or other custodians. Custody of the assets of
Alliance Mutual Funds, The Hudson River Trust and money market funds is
maintained by custodian banks and central securities depositories.
The Partnership generally has the discretion to select the brokers or
dealers to be utilized to execute transactions for client accounts. Broker-
dealers affiliated with ECI and Equitable effect transactions for client
accounts only if the use of the broker-dealers has been specifically authorized
or directed by the client.
REGULATION
The Partnership, ACFG and Alliance are investment advisers registered under
the Investment Advisers Act of 1940. Each U.S. Fund is registered with the
Securities and Exchange Commission ("SEC") under the Investment Company Act and
the shares of most U.S. Funds are qualified for sale in all states in the United
States and the District of Columbia, except for U.S. Funds offered only to
residents of a particular state. AFS is registered with the SEC as a transfer
agent and AFD is registered with the SEC as a broker-dealer. AFD is subject to
minimum net capital requirements ($2.9 million at December 31, 1995) imposed by
the SEC on registered broker-dealers and had aggregate regulatory net capital of
$8.2 million at December 31, 1995.
The relationships of Equitable and its insurance company subsidiaries with
the Partnership are subject to applicable provisions of the New York Insurance
Law and regulations. Certain of the investment advisory agreements and
ancillary administrative service agreements between Equitable and its insurance
company subsidiaries and the Partnership are subject to disapproval by the New
York Superintendent of Insurance within a prescribed notice period. Under the
New York Insurance Law and regulations, the terms of these agreements are to be
fair and equitable, charges or fees for services performed are to be reasonable,
and certain other standards must be met. Fees must be determined either with
reference to fees charged to other clients for similar services or, in certain
cases, which include the ancillary service agreements, based on cost
reimbursement.
The Partnership's assets under management and revenues derived from the
general accounts of Equitable and its insurance company subsidiaries are
directly affected by the investment policies for the general accounts. Among
the numerous factors influencing general account investment policies are
regulatory factors, such as (i) laws and regulations that require
diversification of the investment portfolios and limit the amount of investments
in certain investment categories such as
<PAGE>
21
below investment grade fixed maturities, equity real estate and equity
interests, (ii) statutory investment valuation reserves, and (iii) risk-based
capital guidelines for life insurance companies approved by the National
Association of Insurance Commissioners. These policies have recently resulted
in the shifting of general account assets managed by the Partnership into
categories with lower management fees.
All aspects of the Partnership's business are subject to various federal
and state laws and regulations and to the laws in the foreign countries in which
the Partnership's subsidiaries conduct business. These laws and regulations are
primarily intended to benefit clients and Alliance Mutual Fund shareholders and
generally grant supervisory agencies broad administrative powers, including the
power to limit or restrict the carrying on of business for failure to comply
with such laws and regulations. In such event, the possible sanctions which may
be imposed include the suspension of individual employees, limitations on
engaging in business for specific periods, the revocation of the registration as
an investment adviser, censures and fines.
Employees
As of December 31, 1995 the Partnership and its subsidiaries employed 1,339
full-time employees, including 152 investment professionals, of whom 95 are
portfolio managers, 68 are securities analysts, and 9 are order placement
specialists. The average period of employment of these professionals with the
Partnership is approximately 9 years and their average investment experience is
approximately 14 years. The Partnership considers its employee relations to be
good.
Service Marks
The Partnership has registered a number of service marks with the U.S.
Patent and Trademark Office, including an "A" design logo and the combination of
such logo and the words "Alliance" and "Alliance Capital". Each of these
service marks was registered in 1986 and has a duration of 20 years from the
date of registration (which is automatically renewable) provided the mark
continues to be used during that time.
ITEM 2. PROPERTIES
The Partnership's principal executive offices at 1345 Avenue of the
Americas, New York, New York are occupied pursuant to a lease which extends
until 2016. The Partnership currently occupies approximately 210,779 square
feet at this location and will occupy approximately 81,600 square feet of
additional space at this location during 1996. The Partnership also occupies
approximately 79,700 square feet at 135 West 50th Street, New York, New York
under leases expiring in 1998 and 1999, respectively. The Partnership also
occupies approximately 22,800 square feet at 709 Westchester Avenue, White
Plains, New York under leases
<PAGE>
22
expiring in 1996 and 2000, respectively. The Partnership and its subsidiaries,
AFD and AFS, occupy approximately 79,000 square feet of space in Secaucus, New
Jersey pursuant to a lease which extends until 2002. The Partnership leases
substantially all of the furniture and office equipment at the New York City and
New Jersey offices.
The Partnership also leases space in California, Connecticut, Minnesota and
Ohio, and its subsidiaries lease space in Boston, Massachusetts, London,
England, Paris, France, Tokyo, Japan, Sydney, Australia, Toronto, Canada,
Luxembourg, Singapore, Bahrain, Bombay, India, Sao Paolo, Brazil, and Istanbul,
Turkey.
ITEM 3. LEGAL PROCEEDINGS
On July 25, 1995 a Consolidated and Supplemental Class Action Complaint
("Complaint") entitled IN RE ALLIANCE NORTH AMERICAN GOVERNMENT INCOME TRUST,
INC. SECURITIES LITIGATION was filed in the United States District Court for the
Southern District of New York against the Alliance North American Government
Income Trust, Inc. ("Fund"), the Partnership, Alliance, AFD, ECI, certain
officers of the Fund, certain directors of the Fund, certain officers and
certain directors of Alliance alleging violations of federal securities laws,
fraud and breach of fiduciary duty in connection with the Fund's investments in
Mexican and Argentine securities. The Complaint seeks certification of a
plaintiff class of all persons who purchased or owned Class A, B or C shares of
the Fund from March 27, 1992 through December 23, 1994. While the Complaint
seeks an unspecified amount of damages, costs, attorneys' fees and punitive
damages, it contains an allegation that the Fund's losses exceeded $750 million.
A similar complaint was filed on November 7, 1995 and was subsequently
consolidated with the Complaint.
The principal allegations of the Complaint are that the Fund purchased debt
securities issued by the Mexican and Argentine governments in amounts that were
not permitted by the Fund's investment policies and objective, and that there
was no shareholder vote to change the investment objective to permit purchases
in such amounts. The Complaint further alleges that the decline in the value of
the Mexican and Argentine securities held by the Fund caused the Fund's net
asset value to decline to the detriment of the Fund's shareholders. On
September 26, 1995 the defendants jointly filed a motion to dismiss the
Complaint. A decision in respect of this motion is pending.
The Partnership believes that the allegations in the Complaint are without
merit and intends to vigorously defend against these claims.
<PAGE>
23
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of 1995.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
MARKET FOR THE UNITS
The Units are traded on the New York Stock Exchange ("NYSE"). The high and
low sales prices on the NYSE during each quarter of the Partnership's two most
recent fiscal years were as follows:
1994 High Low
---- ---- ---
First Quarter 27 1/8 20 1/2
Second Quarter 23 1/2 17 1/4
Third Quarter 22 3/8 19 1/2
Fourth Quarter 21 1/2 16 1/2
1995
----
First Quarter 19 1/8 15 3/8
Second Quarter 20 1/8 17 1/8
Third Quarter 20 1/2 17 1/2
Fourth Quarter 23 1/4 19 1/4
On March 1, 1996 the closing price of the Units on the NYSE was $24.50. As
of March 1, 1996 there were approximately 1,611 Unitholders of record.
CASH DISTRIBUTIONS
The Partnership distributes on a quarterly basis all of its Available Cash
Flow (as defined in the Partnership Agreement). During its two most recent
fiscal years the Partnership made the following distributions of Available Cash
Flow:
<PAGE>
24
Quarter During 1994
With Respect to Which
a Cash Distribution Was Amount of Cash
Paid from Available Cash Distribution Payment
Flow for that Quarter Per Unit Date
--------------------- ------------ ------------
First Quarter $ 0.41 May 9, 1994
Second Quarter 0.41 August 8, 1994
Third Quarter 0.41 November 7, 1994
Fourth Quarter 0.41 February 28, 1995
------
$ 1.64
-------
-------
Quarter During 1995
With Respect to Which
a Cash Distribution Was Amount of Cash
Paid from Available Cash Distribution Payment
Flow for that Quarter Per Unit Date
-------------------------- --------------- -------------
First Quarter $ 0.41 May 22, 1995
Second Quarter 0.43 August 10, 1995
Third Quarter 0.48 November 13, 1995
Fourth Quarter 0.50 February 23, 1996
-----
$ 1.82
-------
-------
ITEM 6. SELECTED FINANCIAL DATA
The Selected Consolidated Financial Data which appears on page 43 of the
Alliance Capital Management L.P. 1995 Annual Report to Unitholders is
incorporated by reference in this Annual Report on Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations which appears on pages 44 through 52 of the Alliance Capital
Management L.P. 1995 Annual Report to Unitholders is incorporated by reference
in this Annual Report on Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of Alliance Capital Management L.P.
and subsidiaries and the report thereon by KPMG Peat Marwick LLP which appear on
pages 53 through 69 of the Alliance Capital Management L.P. 1995 Annual Report
to Unitholders are incorporated by reference in this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
<PAGE>
25
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
GENERAL PARTNER
The Partnership's activities are managed and controlled by Alliance as
General Partner and Unitholders do not have any rights to manage or control the
Partnership. The General Partner has agreed that it will conduct no active
business other than managing the Partnership, although it may make certain
investments for its own account.
The General Partner does not receive any compensation from the Partnership
for services rendered to the Partnership as General Partner. The General
Partner holds a 1% general partnership interest in the Partnership. As of March
1, 1996 Equitable, ACMC and ECMC, affiliates of the General Partner, held
47,984,227 Units (including 446,439 Units issuable upon conversion of the Class
A Limited Partnership Interest).
The General Partner is reimbursed by the Partnership for all expenses
incurred by it in carrying out its activities as General Partner, including
compensation paid by the General Partner to its directors and officers (to the
extent such persons are not compensated directly as employees of the
Partnership) and the cost of directors and officers liability insurance obtained
by the General Partner. The General Partner was not reimbursed for any such
expenses in 1995 except for directors' fees and directors and officers
liability insurance.
DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER
The directors and executive officers of the General Partner are as follows:
Name Age Position
---- --- --------
Dave H. Williams 63 Chairman of the Board, Chief
Executive Officer and
Director
Luis Javier Bastida 50 Director
Claude Bebear 60 Director
James M. Benson 49 Director
Bruce W. Calvert 49 Director, Vice Chairman and
Chief Investment Officer
John D. Carifa 51 Director, President and Chief
Operating Officer
Henri de Castries 41 Director
Kevin C. Dolan 43 Director
Denis Duverne 43 Director
Alfred Harrison 58 Director and Vice Chairman
Jean-Pierre Hellebuyck 48 Director
Benjamin D. Holloway 71 Director
Henri Hottinguer 61 Director
<PAGE>
26
Joseph J. Melone 64 Director
Peter D. Noris 40 Director
Frank Savage 57 Director
Jerry M. de St. Paer 54 Director
Madelon DeVoe Talley 64 Director
Reba W. Williams 59 Director
David R. Brewer, Jr. 50 Senior Vice President
and General Counsel
Robert H. Joseph, Jr. 48 Senior Vice President and
Chief Financial Officer
Mr. Williams joined Alliance in 1977 and has been the Chairman of the Board
and Chief Executive Officer since that time. He was elected a Director of
Equitable on March 21, 1991 and was elected to the ECI Board of Directors in May
of 1992. ECI is a parent of the Partnership. Mr. Williams is the husband of
Ms. Reba W. Williams, a Director of Alliance.
Mr. Bastida was elected a Director of Alliance in February 1995. He is
Chief Financial Officer and a member of the Executive Committee of Banco Bilbao
Vizcaya, S.A., ("BBV"). Mr. Bastida has been with BBV since 1976. He is also a
director of several subsidiaries of BBV.
Mr. Bebear was elected a Director of Alliance in February 1996. He has
been Chairman and Chief Executive Officer of AXA since February 1989. Mr.
Bebear has been the Chief Executive Officer of the AXA Group since 1974 and
serves as Chairman or Director of numerous subsidiaries and affiliated
companies of the AXA Group. He is also a Director of Equitable Real Estate,
Rhone-Poulenc, S.A., Schneider S.A., SOVAC and Societe Generale and serves as
a member of the Supervisory Board of Compagnie Financiere de Paribas and as a
member of the General Council of Assicurazioni Generali S.p.A. Mr. Bebear
has been a Director of ECI since May 1992 and a Director of Equitable since
July 1991. He was elected non-executive Chairman of ECI on February 14,
1996. AXA and ECI are parents of the Partnership.
Mr. Benson was elected a Director of Alliance in October 1993. He was
elected Chief Executive Officer of Equitable and Chief Operating Officer of ECI
on February 14, 1996. He has been Senior Executive Vice President of ECI and
President of Equitable since February 1994. Mr. Benson was Chief Operating
Officer of Equitable from February 1994 until February 14, 1996. He was a
Senior Executive Vice President of Equitable from April 1993 until February
1994. From January 1984 to April of 1993 he was President of the New York
office of Management Compensation Group. Mr. Benson is also a Director of ECI,
Equitable, The Equitable Variable Life Insurance Company ("EVLICO") and Health
Plans, Inc. ECI and Equitable are parents of the Partnership.
Mr. Calvert joined Alliance in 1973 as an equity portfolio manager and was
elected Vice Chairman and Chief Investment Officer on May 3, 1993. From 1986 to
1993 he was an Executive Vice President and from 1981
<PAGE>
27
to 1986 he was a Senior Vice President. He was elected a Director of Alliance
in 1992.
Mr. Carifa joined Alliance in 1971 and was elected President and Chief
Operating Officer on May 3, 1993. He was the Chief Financial Officer from 1973
until 1994. He was an Executive Vice President from 1986 to 1993 and he was a
Senior Vice President from 1980 to 1986. He was elected a Director of Alliance
in 1992.
Mr. de Castries was elected a Director of Alliance in October 1993. He has
been Executive Vice President Financial Services and Life Insurance Activities
of AXA since 1993, previously serving as General Secretary of AXA from 1991 to
1993 and Central Director of Finances from 1989 to 1991. Mr. de Castries is also
a Director or Officer of various subsidiaries of AXA and a Director of ECI,
Equitable, Donaldson Lufkin & Jenrette, Inc. ("DLJ") and Equitable Real Estate
Investment Management, Inc. ("Equitable Real Estate"). Mr. de Castries was
elected non-executive Vice Chairman of ECI on February 14, 1996. AXA, ECI and
Equitable are parents of the Partnership. DLJ and Equitable Real Estate are
subsidiaries of ECI. AXA and ECI are parents of the Partnership.
Mr. Dolan was elected a Director of Alliance in May 1995. He is Senior
Vice President of AXA. Mr. Dolan has been with AXA since 1993. From 1983 to
1993 Mr. Dolan was Deputy General Manager of BFCE. AXA is a parent of the
Partnership.
Mr. Duverne was elected a Director of Alliance in February 1996. He has
been Senior Vice President - International Life of AXA since 1995. Prior to
that Mr. Duverne was a member of the Executive Committee Operations of Banque
Colbert from 1992 to 1995. Mr. Duverne was Secretary General of Conyaguire
Financier IBI from 1991 to 1992. Mr. Duverne worked for the French Ministry of
Finance serving as Deputy Assistant Secretary for Tax Policy from 1988 to 1991
and director of the Corporate Taxes Department from 1986 to 1988. Mr. Duverne
is also a Director of Equitable Real Estate and EVLICO. AXA is a parent of the
Partnership.
Mr. Harrison joined Alliance in 1978 and was elected Vice Chairman on May
3, 1993. Mr. Harrison is in charge of the Partnership's Minneapolis office and
is a senior portfolio manager. He was an Executive Vice President from 1986 to
1993 and a Senior Vice President from 1978 to 1986. He was a Director from 1978
to 1987 and from February 23, 1988 until July 27, 1988. He was elected a
Director of Alliance in 1992.
Mr. Hellebuyck was elected a Director of Alliance in October 1992. He has
been the Chief Investment Officer of AXA since 1986. Mr. Hellebuyck is also a
Director of various subsidiaries of AXA, Europhenix
<PAGE>
28
Management Company and Societe Des Bourses Francaises. AXA is a parent of the
Partnership.
Mr. Holloway was elected a Director of Alliance in November 1987. He is a
consultant to The Continental Companies. From September 1988 until his
retirement in March 1990, Mr. Holloway was a Vice Chairman of Equitable. He
served as an Executive Vice President of Equitable from 1979 until 1988. Prior
to his retirement he served as a Director and Officer of various Equitable
subsidiaries and Mr. Holloway was also a Director of DLJ until March 1990. Mr.
Holloway is a Director of Rockefeller Center Properties, Inc. and The Duke
University Management Corporation, Chairman of The Touro National Heritage
Trust, a Regent of the Cathedral of St. John the Divine and a Trustee of Duke
University (Emeritus) and the American Academy in Rome (Emeritus).
Mr. Hottinguer was elected a Director of Alliance in October 1992. He has
been a partner of Hottinguer & Company since 1968. Mr. Hottinguer is also a
President/General Director of Banque Hottinguer and Societe Financiere pour le
Financement de Bureaux et d'Usines - Sofibus, a Vice President, General Director
and Administrator of Financiere Hottinguer, an Administrator of Investissement
Hottinguer S.A., AXA, AXA Assurances IARD, UNI Europe Assurances, ALPHA
Assurances Vie, AXA Assurances Vie, UNI EUROPE Vie, Finaxa, Lor Finance, and the
Controller of Didot Bottin, Caisee d'Escompte du Midi and Financiere Provence de
Participations - FPP. He serves as a General Director of Intercom and Sofides,
he is a Permanent Representative of La Banque Hottinguer aupres de AXIVA, AXA
aupres d'AXA Millesimes and Cie Financiere SGTE au sein de la Societe SCHNEIDER
S.A., is the Associate Gerant of Hottinguer & Cie Zurich, and is a Vice
President of Gaspee. In addition, he is the Chairman of the Board of Hottinguer
Capital Corp., a Director of the Swiss Helvetia Fund, Inc., Hottinguer U.S.,
Inc. and DLJ. Mr. Hottinguer is also the President/Counsel of AXA Belgium, the
Administrator of Hottinguer International Fund, Hottinguer International Asset
Management and Hottinguer Gestion Luxembourg and is President of EMBA N.V. AXA
is a parent of the Partnership.
Mr. Melone was elected a Director of Alliance in January 1991. Mr. Melone
was elected Chief Executive Officer of ECI on February 14, 1996. He is a
Director and President of ECI and has been Chairman of Equitable since February
1994. He was President and Chief Executive Officer of Equitable from November
1990 until February 1994. Mr. Melone was formerly Chief Operating Officer of
ECI and Chief Executive Officer of Equitable. From 1984 to 1990, he was
President of The Prudential Insurance Company of America. He is also a Director
of EVLICO, DLJ, AXA Equity & Law Life Assurance Society plc, Equitable Real
Estate, AT&T Capital Corporation and Foster Wheeler Corporation. AXA, ECI and
Equitable are parents of the Partnership.
<PAGE>
29
Mr. Noris was elected a Director of Alliance in July 1995. Since 1995 Mr.
Noris has been the Executive Vice President and Chief Investment Officer of
Equitable. Prior to that he was Vice President - Investment Strategy for
Salomon Brothers from 1992 to 1995. From 1984 to 1992 Mr. Noris was a Principal
in the Fixed Income/Equity Division of Morgan Stanley Group Inc. Mr. Noris is
also a Director of EVLICO and Equitable Real Estate. Equitable is a parent of
the Partnership.
Mr. Savage was elected a Director of Alliance in May 1993. He has been
Chairman of Alliance Capital Management International, a division of the
Partnership, since May 1994 and Chairman of ACFG, a subsidiary of the
Partnership, since July 1993. Prior to this, he was with ECMC, serving as Vice
Chairman from June 1986 to April 1992, and Chairman from April 1992 to July
1993. In addition, Mr. Savage is a Director of Lockheed Martin Corporation,
ARCO Chemical Company and Qualcomm Incorporated.
Mr. de St. Paer was elected a Director of Alliance in June 1994. He has
been Senior Executive Vice President and Chief Financial Officer of Equitable
since February 1996 and Executive Vice President and Chief Financial Officer of
ECI since May 1992 and Executive Vice President and Chief Financial Officer of
Equitable since December 1990 and April 1992, respectively. Mr. de St. Paer has
also served Equitable as Senior Vice President and Treasurer from June to
December 1990 and Vice President from March 1988 to June 1990. In addition, he
is a Director of Equitable Real Estate, DLJ, EVLICO, Nicos Seimei Hoken and
Economic Sciences Corporation, and a member of the Advisory Boards of Directors
of Peter Wodtke (UK) and (US). ECI and Equitable are parents of the
Partnership.
Ms. Talley was elected a Director of Alliance in October 1993. She was with
Melhado Flynn from January 1987 to December 1989. Ms. Talley, a former Governor
of the National Association of Securities Dealers (1993-1996), is currently a
Commissioner of the Port Authority of New York State and New Jersey. She is
also a Vice Chairman of the Board of W.P. Carey & Co. as well as a trustee of
Smith Barney-Shearson's TRAK and Equity & Income Funds. In addition she serves
as Director of Corporate Property Associates, Series 10-1 W.P. Carey Real Estate
Limited Partnerships, Biocraft Labs, Schroeders Asian Growth Fund, the New York
State Common Retirement Fund and Global Asset Management Funds, Inc.
Ms. Williams was elected a Director of Alliance in October 1993. She is
currently the Director of Special Projects of the Partnership. She serves on
the Boards of Directors of the India Liberalisation Fund, The Spain Fund, The
Austria Fund, The Southern Africa Fund and The Turkish Growth Fund. Ms.
Williams is the wife of Mr. Dave H. Williams, Chairman of the Board, Chief
Executive Officer and a Director of Alliance.
Mr. Brewer joined Alliance in 1987 and has been Senior Vice President and
General Counsel since 1991. From 1987 until 1990 Mr. Brewer was Vice President
and Assistant General Counsel of Alliance.
<PAGE>
30
Mr. Joseph joined Alliance in 1984 and has been Senior Vice President and
Chief Financial Officer since December 1994. He was Senior Vice President and
Controller from 1989 until January 1994 and Senior Vice President-Finance from
January 1994 until December 1994. From 1986 until 1989 Mr. Joseph was Vice
President and Controller of Alliance and from 1984 to 1986 Mr. Joseph was a Vice
President and the Controller of AFS, a subsidiary of the Partnership.
Certain executive officers of Alliance are also directors or trustees and
officers of various Alliance Mutual Funds and The Hudson River Trust and are
directors and officers of certain of the Partnership's subsidiaries.
All directors of the General Partner hold office until the next annual
meeting of the stockholder of the General Partner and until their successors are
elected and qualified. All officers of the General Partner serve at the
discretion of the General Partner's Board of Directors.
The General Partner has an Audit Committee composed of its independent
directors Mr. Holloway and Ms. Talley. The Audit Committee reports to the Board
of Directors with respect to the selection and terms of engagement of the
Partnership's independent auditors and reviews various matters relating to the
Partnership's accounting and auditing policies and procedures. The Audit
Committee held four meetings in 1995.
The General Partner has a Board Compensation Committee composed of Messrs.
Williams, Holloway and Melone. The Board Compensation Committee is responsible
for compensation and compensation related matters, including, but not limited
to, responsibility and authority for determining bonuses, contributions and
awards under most employee incentive plans or arrangements, amending or
terminating such plans or arrangements or any welfare benefit plan or
arrangement or adopting any new incentive, fringe benefit or welfare benefit
plan or arrangement. The Unit Option and Unit Bonus Committee, consisting of
Messrs. Holloway and Melone, is responsible for granting options and awards
under the 1993 Unit Option Plan and the Unit Bonus Plan. The Board Compensation
Committee and Unit Option and Unit Bonus Committee consult with a Management
Compensation Committee consisting of Messrs. Williams, Calvert, Carifa and
Harrison with respect to matters within their authority. The Century Club Plan
Committee, consisting of Messrs. Carifa and Michael J. Laughlin, Executive Vice
President of the General Partner and Chairman of the Board of AFD, is
responsible for granting awards under the Partnership's Century Club Plan.
The General Partner pays directors who are not employees of the
Partnership, Equitable or any affiliate of Equitable an annual retainer of
$18,000 plus $1,000 per meeting attended of the Board of Directors and $500 per
meeting of a committee of the Board of Directors not held in
<PAGE>
31
conjunction with a Board of Directors meeting. The Partnership reimburses
Messrs. Bastida, Bebear, de Castries, Dolan, Duverne, Hellebuyck, Holloway and
Hottinguer and Ms. Talley for certain expenses incurred in attending Board of
Directors' meetings. Other directors are not entitled to any additional
compensation from the General Partner for their services as directors. The
Board of Directors meets quarterly.
Section 16(a) of the Securities Exchange Act of 1934 requires the General
Partner's directors and executive officers, and persons who own more than 10% of
the Units, to file with the SEC and NYSE initial reports of ownership and
reports of changes in ownership of Units. To the best of the Partnership's
knowledge, during the year ended December 31, 1995 all Section 16(a) filing
requirements applicable to its executive officers, directors and 10% beneficial
owners were complied with.
ITEM 11. EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth all plan and non-plan
compensation awarded to, earned by or paid to the Chairman of the Board and each
of the four most highly compensated executive officers of the General Partner at
the end of 1995 ("Named Executive Officers"):
<PAGE>
32
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------
Annual Compensation Awards Payouts
--------------------------------- ---------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Other
Name Annual Restricted All Other
and Compen- Stock LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary ($) Bonus ($) ($) (1) ($) (#Units) ($) (2) ($) (3)
- -------- ---- ---------- ---------- ------- -------- -------- ------ -------
Dave H. Williams 1995 $ 225,000 $ 1,000,000 $ 62,595 $0 0 $ 0 $ 213,689
Chairman & Chief Executive Officer 1994 225,000 1,500,000 170,352 0 0 0 68,322
1993 225,000 1,600,000 143,698 0 0 130,660 8,038,154
John D. Carifa 1995 200,000 1,000,000 74,822 0 175,000 0 135,191
President & Chief Operating Officer 1994 200,000 1,500,000 75,927 0 200,000 76,250 4,043,576
1993 200,000 1,600,000 ------ 0 0 325,457 3,789,774
Alfred Harrison 1995 200,000 1,162,750 ------ 0 0 0 209,739
Vice Chairman 1994 200,000 1,500,000 51,853 0 0 0 59,510
1993 200,000 1,600,000 ------ 0 0 130,660 8,030,333
Bruce W. Calvert 1995 200,000 1,000,000 ------ 0 150,000 0 138,048
Vice Chairman & 1994 200,000 1,500,000 ------ 0 200,000 76,149 4,038,491
Chief Investment Officer 1993 200,000 1,600,000 ------ 0 0 325,026 3,785,251
Robert H. Joseph, Jr. 1995 150,000 312,500 ------ 0 30,000 0 24,066
Senior Vice President 1994 147,461 290,000 682,195 0 20,000 0 23,685
& Chief Financial Officer 1993 129,673 243,000 ------ 0 0 0 21,016
</TABLE>
(1) Perquisites and personal benefits are not included in column (e) if the
aggregate amount did not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus reported in columns (c) and (d). Column (e) for 1995
includes for (i) Mr. Carifa, among other perquisites and personal benefits,
$22,319 representing interest rate subsidies equal to 3% per annum of the
outstanding balances of personal loans obtained by Mr. Carifa from commercial
banks the proceeds of which were used to pay withholding tax liabilities related
to the vesting of Units acquired in 1988, and (ii) Messrs. Williams and Carifa,
among other perquisites and personal benefits, $50,100 and $33,400,
respectively, for personal tax services.
Column (e) for 1994 includes for (i) Messrs. Williams, Carifa and
Harrison, among other perquisites and personal benefits, $122,943, $19,282
and $38,188, respectively, representing interest rate subsidies equal to 3%
per annum of the outstanding balances of personal loans obtained by Messrs.
Williams, Carifa and Harrison from commercial banks the proceeds of which
were used to pay withholding tax liabilities related to the vesting of Units
acquired in 1988, and (ii) Mr. Joseph, among other perquisites and personal
benefits, $677,563, representing the dollar value of the difference between
the exercise price and the fair market value of Units acquired as a result of
the exercise of options granted under the Partnership's Unit Option Plan.
Column (e) for 1993 includes for Mr. Williams, among other perquisites and
personal benefits, $110,170 representing an interest rate subsidy equal to 3%
per annum of the outstanding balances of personal loans obtained by Mr. Williams
from a commercial bank the proceeds of which were used to pay withholding tax
liabilities related to the vesting of Units acquired in 1988.
(2) Column (h) includes cash distributions paid in 1993 and 1994 from Available
Cash Flow of the Partnership on unvested Units acquired in 1988 and payments in
cash of all or a portion of account balances under the Partners Plan, as
provided by the terms of that plan (See "Employee Benefit Plans - Partners
Plan"), including earnings included in column (i).
(3) Column (i) does not include any amounts in respect of the Alliance Partners
Compensation Plan since none of the awards have vested and no earnings have been
credited in respect of the awards (See "Employee Benefit Plans - Alliance
Partners Compensation Plan"). Column (i) includes the following compensation
amounts for 1995 (See "Employee Benefit Plans - Partners Plan, Capital
Accumulation Plan, Profit Sharing Plan and Unit Acquisitions"):
<TABLE>
<CAPTION>
Vesting of Awards
Earnings Accrued and Accrued Earnings Profit Sharing Term Life
On Partners Plan Under Capital Plan Insurance
Balances Accumulation Plan Contribution Premiums Total
------------------ -------------------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C>
Dave H. Williams $ 14,086 $ 177,760 $ 15,525 $ 6,318 $ 213,689
John D. Carifa 5,507 104,592 22,500 2,592 135,191
Alfred Harrison 5,992 177,197 22,500 4,050 209,739
Bruce W. Calvert 4,859 109,123 22,500 1,566 138,048
Robert H. Joseph, Jr. 0 0 22,500 1,566 24,066
</TABLE>
OPTION GRANTS IN 1995
The table below shows information regarding grants of options made to the
Named Executive Officers under the Partnership's Unit Option Plan and 1993 Unit
Option Plan during 1995. The amounts shown for each of the Named Executive
Officers as potential realizable values are based on assumed annualized rates of
appreciation of five percent and ten percent over the full ten-year term of the
options, which would result in Unit prices of approximately $37.70 and $59.89,
respectively. The amounts shown as potential realizable values for all
Unitholders represent the corresponding increases in the market value of
81,059,751 outstanding Units held by all Unitholders as of December 31, 1995,
which would total approximately $1.2 billion and $3.0 billion, respectively. No
gain to the optionees is possible without an increase in Unit price which will
benefit all Unitholders proportionately. These potential realizable values are
based solely on assumed rates of appreciation required by applicable SEC
regulations. Actual gains, if any, on option exercises and Unitholdings are
dependent on the future performance of the Partnership's Units. There can be no
assurance that the potential realizable values shown in this table will be
achieved.
<PAGE>
33
Option Grants In 1995
<TABLE>
<CAPTION>
Potential Realizable Value at Assumed
Annual Rates of Unit Price
Individual Grants (1) Appreciation for Option Term
----------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise
Granted Fiscal Year Price Expiration 5% 10%
Name (#) (2) ($/Unit) Date ($) ($)
---- ---------- ------------ -------- ---------- --- ----
<S> <C> <C> <C> <C> <C> <C>
Dave H. Williams 0 N/A N/A N/A N/A N/A
John D. Carifa 175,000 9.69 (3) (3) 1,414,000 4,630,000
Alfred Harrison 0 N/A N/A N/A N/A N/A
Bruce W. Calvert 150,000 8.30 (4) (4) 1,203,000 3,953,000
Robert H. Joseph, Jr. 30,000 1.66 (5) (5) 301,000 886,000
</TABLE>
(1) Options on Units are awarded at the fair market value of Units at the date
of award and become exercisable in 20% increments commencing one year from
such date if the optionee has not died or terminated employment. Such
options lapse at the earliest of ten years after award, three months after
the optionee's normal termination of employment or disability, six months
after the optionee's death, or at the time of the optionee's termination of
employment otherwise than normally.
(2) 1,805,500 Units were subject to outstanding option grants.
(3) 150,000 options with an exercise price of $19.375 per Unit expire on April
25, 2005 and 25,000 options with an exercise price of $17.75 per Unit
expire on July 24, 2005.
(4) 125,000 options with an exercise price of $19.375 per Unit expire on April
25, 2005 and 25,000 options with an exercise price of $17.75 per Unit
expire on July 24, 2005.
(5) 20,000 options with an exercise price of $19.375 per Unit expire on April
25, 2005 and 10,000 options with an exercise price of $22.25 per Unit
expire on December 5, 2005.
AGGREGATED OPTION EXERCISES IN 1995 AND 1995 YEAR-END OPTION VALUES
The following table summarizes for each of the Named Executive Officers the
number of options exercised during 1995, the aggregate dollar value realized
upon exercise, the total number of Units subject to unexercised options held at
December 31, 1995, and the aggregate dollar value of in-the-money, unexercised
options held at December 31, 1995. Value realized upon exercise is the
difference between the fair market value of the underlying Units on the exercise
date and the exercise price of the option. Value of unexercised, in-the-money
options at fiscal year-end is the difference between its exercise price and the
fair market value of the underlying Units on December 31, 1995, which was
$23.125 per Unit. These values, have not been, and may never be, realized. The
<PAGE>
34
underlying options have not been, and may never be, exercised; and actual gains,
if any, on exercise will depend on the value of the Partnership's Units on the
date of exercise. There can be no assurance that these values will be realized.
Unexercisable options are those which have been held for less than one year.
Aggregated Option Exercises In 1995
and December 31, 1995 Option Values
<TABLE>
<CAPTION>
Number of Units Value of Unexercised,
Underlying Unexercised In-the-Money Options
Options at December 31, 1995 at December 31, 1995 ($) (1)
---------------------------- ----------------------------
Options Value
Exercised Realized
Name (# Units) ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dave H. Williams 0 N/A 0 0 0 0
John D. Carifa 0 N/A 40,000 335,000 130,000 1,216,875
Alfred Harrison 0 N/A 0 0 0 0
Bruce W. Calvert 0 N/A 40,000 310,000 130,000 1,123,125
Robert H. Joseph, Jr. 0 N/A 22,000 53,000 227,504 194,125
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In-the-Money Options are those where the fair market value of the
underlying Units exceeds the exercise price of the option. The Named
Executive Officers hold no other options in respect of the Units.
COMPENSATION AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
In connection with the transfer of ACMC's business to the Partnership on
April 21, 1988 Messrs. Carifa and Calvert entered into employment agreements
with the Partnership. Each of these agreements provides for a base salary and
bonus eligibility. The agreements with Messrs. Carifa and Calvert expire on
December 31, 1996. Each agreement provides that the employee will not engage in
competitive practices with the Partnership, Alliance or its affiliates for the
term of the agreement unless his employment is terminated by the Partnership
other than for cause (as defined below), in which case the nature of the
non-compete obligation is significantly relaxed and the term is shortened to the
lesser of six months or the remaining employment term. Each of the agreements
also restricts the disclosure of confidential information and extends broad
indemnification rights, including all of the rights of an "indemnified person"
under the Partnership Agreement.
The employment agreements provide that the Partnership may terminate
employment for any reason, provided that if employment is terminated by the
Partnership without cause (as defined), the employee will be entitled to receive
his base salary under the agreement for the remaining term thereof and the
benefits otherwise provided under the employee benefit plans in which he
participates. If employment is terminated by the Partnership for cause or by
reason of an employee's death or disability (based on a finding by the Board of
Directors of the General Partner that
<PAGE>
35
the employee is physically or mentally incapacitated and has been unable for a
period of six months to perform his duties by reason of that incapacity), the
employee will not be entitled to receive any further salary beyond that payable
for services to the date of termination. Cause is defined to include an
employee's continuing willful failure to perform his duties, his gross
negligence or malfeasance in the performance of his duties, his breach of a
confidentiality or non-compete obligation, his commission of a felony, and
various acts on the employee's part by reason of which the Board of Directors of
the General Partner determines that the employee's continued employment would be
seriously detrimental to the Partnership. Messrs. Carifa and Calvert may
terminate their respective employment agreements if their duties, status or
title are changed to a lesser level or rank than that in effect on February 9,
1995. In such event, the terminating employee is treated as if the Partnership
had terminated his employment other than for cause.
The employment agreements provide for discretionary bonus eligibility.
Bonus amounts are fixed by the Board Compensation Committee after receiving
recommendations from the Management Compensation Committee. The aggregate amount
available for bonuses and contributions and awards under various employee plans
to all employees is based on the annual adjusted consolidated net operating
earnings of the Partnership.
In connection with Equitable's 1985 acquisition of DLJ, the former parent
of ACMC, ACMC entered into employment agreements with Messrs. Williams,
Harrison, Carifa and Calvert. Each agreement provided for deferred compensation
payable in stated monthly amounts for ten years commencing at age 65, or earlier
in a reduced amount in the event of disability or death, if the individual
involved so elects. The right to receive such deferred compensation is vested.
Assuming payments commence at age 65, the annual amount of deferred compensation
payable for ten years to Messrs. Williams, Harrison, Carifa and Calvert is
$378,900, $328,332, $522,036 and $434,612, respectively. While the Partnership
assumed responsibility for payment of these deferred compensation obligations,
ACMC and Alliance are required, subject to certain limitations, to make capital
contributions to the Partnership in an amount equal to the payments, and ACMC is
also obligated to the employees for the payments. ACMC's obligations to make
capital contributions to the Partnership are guaranteed, subject to certain
limitations, by Equitable Investment Corporation ("EIC"), a wholly-owned
subsidiary of Equitable, the parent of Alliance.
EMPLOYEE BENEFIT PLANS
UNIT OPTION PLAN. Pursuant to the Partnership's Unit Option Plan key
employees of the Partnership and its subsidiaries, other than Messrs. Williams,
Harrison, Carifa and Calvert, may be granted options to purchase up to 4,923,076
Units. Options may be granted only to employees who the Board Compensation
Committee of the General Partner, which administers the Plan, after obtaining
recommendations from the Management
<PAGE>
36
Compensation Committee, determines materially contribute, or are expected to
materially contribute, to the growth and profitability of the Partnership's
business. The number of options to be granted to any employee is to be
determined in the discretion of the Board Compensation Committee. Options may be
granted with terms of up to ten years, and an employee's right to exercise each
option will vest at a rate no faster than 20% per year commencing on the first
anniversary of the date of grant. Each option will have an exercise price no
less than the fair market value of the Units subject to option at the time the
option is granted, payable in cash. Generally, options may only be exercisable
while the optionee is employed by the Partnership. Options may not be granted
under the Unit Option Plan after ten years from its adoption. See "Option Grants
in 1995" and "Aggregated Option Exercises in 1995 and 1995 Year-End Option
Values."
1993 UNIT OPTION PLAN. Pursuant to the Partnership's 1993 Unit Option Plan
key employees of the Partnership and its subsidiaries may be granted options to
purchase Units. The aggregate number of Units that may be the subject of options
granted or awarded under the 1993 Unit Option Plan, the Unit Bonus Plan and the
Century Club Plan may not exceed 3,200,000 Units ("Overall Limitation"). In
addition the maximum aggregate number of Units that may be the subject of
options granted or awarded under the 1993 Unit Option Plan, the Unit Bonus Plan
and the Century Club Plan in any of the years ended July 22, 1994, 1995, 1996
and 1997 may not exceed 800,000 Units ("Annual Limitation"). The maximum number
of Units that may otherwise be the subject of options granted under the 1993
Unit Option Plan will be increased by the number of Units tendered to the
Partnership by employees in payment of either the exercise price or withholding
tax liabilities. Options may be granted only to employees who the Unit Option
and Unit Bonus Committee of the General Partner, consisting of Messrs. Melone
and Holloway, which administers the Plan, after obtaining recommendations from
the Management Compensation Committee, determines materially contribute, or are
expected to materially contribute, to the growth and profitability of the
Partnership's business. Options may be granted with terms of up to ten years,
and an employee's right to exercise each option will vest at a rate no faster
than 20% per year commencing on the first anniversary of the date of grant. Each
option will have an exercise price no less than the fair market value of the
Units subject to the option at the time the option is granted, payable in cash.
Generally, options may only be exercisable while the optionee is employed by the
Partnership or one of its subsidiaries. Options may not be granted under the
1993 Unit Option Plan after ten years from its adoption. See "Option Grants in
1995" and "Aggregated Option Exercises in 1995 and 1995 Year-End Option Values."
PROFIT SHARING PLAN. The Partnership maintains a qualified defined
contribution profit sharing plan covering most employees of the Partnership who
have attained age 21 and completed one year of service. Annual contributions are
determined by the Board of Directors in its sole discretion and are allocated
among participants who are employed by a
<PAGE>
37
participating employer on the last business day of the calendar year involved by
crediting each participant with the same proportion of the contribution as the
participant's base compensation bears to the total base compensation of all
participants. The plan provides for a 401(k) salary reduction election under
which the Partnership may match a participant's election to reduce up to 5% of
base salary. A participant's interest in the plan is 100% vested after the
participant has completed three years of service although account balances
deriving from salary reductions are 100% vested at all times. The Partnership's
contributions under the plan for a given year may not exceed 15% of the
aggregate compensation paid to all participants for that year. Contributions to
a participant's plan account (including contributions made by a participant) for
a particular year may not exceed 25% of the participant's compensation for that
year or $30,000, whichever is less. The amount of the benefits ultimately
distributed to an employee is dependent on the investment performance of the
employee's account under the plan. Distribution of vested account balances under
the plan is made upon termination of employment either in a lump sum or in
installments for a specific period of years. If a participant dies prior to
termination of his employment, the entire value of his account is paid to the
participant's beneficiary. For 1995 vested contributions to the plan for the
accounts of Messrs. Williams, Harrison, Carifa, Calvert and Joseph were $15,525,
$22,500, $22,500, $22,500 and $22,500, respectively. These amounts are included
in column (i) of the Summary Compensation Table.
RETIREMENT PLAN. The Partnership maintains a qualified, non-contributory,
defined benefit retirement plan covering most employees of the Partnership who
have completed one year of service and attained age 21. Employer contributions
are determined by application of actuarial methods and assumptions to reflect
the cost of benefits under the plan. Each participant's benefits are determined
under a formula which takes into account years of credited service, the
participant's average compensation over prescribed periods and Social Security
covered compensation. The maximum annual benefit payable under the plan may not
exceed the lesser of $100,000 or 100% of a participant's average aggregate
compensation for the three consecutive years in which he received the highest
aggregate compensation from the Partnership or such lower limit as may be
imposed by the Internal Revenue Code on certain participants by reason of their
coverage under another qualified plan maintained by the Partnership. A
participant is fully vested after the completion of five years of service. The
plan generally provides for payments to or on behalf of each vested employee
upon such employee's retirement at the normal retirement age provided under the
plan or later, although provision is made for payment of early retirement
benefits on an actuarially reduced basis. Normal retirement age under the plan
is 65. Death benefits are payable to the surviving spouse of an employee who
dies with a vested benefit under the plan.
<PAGE>
38
The table below sets forth with respect to the retirement plan the
estimated annual straight life annuity benefits payable upon retirement at
normal retirement age for employees with the remuneration and years of service
indicated.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS
--------------------------------------------------------------------------
Average Final YEARS OF SERVICE AT RETIREMENT
Compensation --------------------------------------------------------------------------
15 20 25 30 35 40 45
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$100,000 $19,811 $26,415 $ 33,019 $ 39,623 $ 46,226 $ 51,226 $ 56,226
150,000 31,061 41,415 51,769 62,123 72,476 79,976 87,476
200,000 42,311 56,415 70,519 84,623 98,726 100,000 100,000
250,000 53,561 71,415 89,269 100,000 100,000 100,000 100,000
300,000 64,811 86,415 100,000 100,000 100,000 100,000 100,000
</TABLE>
Assuming they are employed by the Partnership until age 65, the credited
years of service under the plan for Messrs. Williams, Harrison, Carifa, Calvert
and Joseph would be 20, 24, 40, 38 and 28, respectively. Compensation on which
plan benefits are based includes only base compensation and not bonuses,
incentive compensation, profit-sharing plan contributions or deferred
compensation. The compensation for calculation of plan benefits for each of
these five individuals for 1995 is $150,000.
UNIT BONUS PLAN. Pursuant to the Partnership's Unit Bonus Plan the Unit
Option and Unit Bonus Committee may award Units to key employees of the
Partnership and its subsidiaries. The aggregate number of Units that may be the
subject of awards or grants under the Unit Bonus Plan, the 1993 Unit Option Plan
and the Century Club Plan may not exceed the Overall Limitation and the maximum
aggregate number of Units that may be the subject of awards or grants under the
Unit Bonus Plan, the 1993 Unit Option Plan and the Century Club Plan in any of
the years ended July 22, 1994, 1995, 1996 and 1997 may not exceed the Annual
Limitation. The number of Units that may otherwise be awarded under the Unit
Bonus Plan will increase by the number of Units tendered to the Partnership in
payment of withholding tax liabilities in respect of Unit Bonus Plan awards.
Units awarded under the Unit Bonus Plan may be vested or unvested (i.e., subject
to forfeiture) at the time of award. Unvested Units will vest or become
nonforfeitable in accordance with the conditions specified by the Board
Compensation Committee at the time of award.
None of the Named Executive Officers has been awarded Units under the Unit
Bonus Plan.
CENTURY CLUB PLAN. Pursuant to the Partnership's Century Club Plan up to
200,000 Units may be awarded to employees of AFD or another subsidiary of the
Partnership who attain certain sales targets or sales
<PAGE>
39
criteria determined by the Century Club Committee. The maximum aggregate number
of Units that may be awarded under the Century Club Plan, the 1993 Unit Option
Plan and the Unit Bonus Plan may not exceed the Overall Limitation and the
maximum aggregate number of Units that may be awarded under the Century Club
Plan, the 1993 Unit Option Plan and the Unit Bonus Plan in any of the years
ended July 22, 1994, 1995, 1996 and 1997 may not exceed that Annual Limitation.
Units awarded under the Century Club Plan may be vested or unvested (i.e.,
subject to the forfeiture) at the time of award. Unvested Units will vest or
become nonforfeitable in accordance with the conditions specified by the Century
Club Committee at the time of award.
None of the Named Executive Officers is eligible to receive an award under
the Century Club Plan.
ALLIANCE PARTNERS COMPENSATION PLAN. During 1995 the Partnership
established a nonqualified, unfunded deferred compensation program known as the
Alliance Partners Compensation Plan ("APCP") under which certain eligible
employees are granted awards by the Management Compensation Committee. The
awards consist of cash amounts which are generally credited with earnings based
on the Partnership's earnings growth rate. APCP is administered by the
Management Compensation Committee which determines the recipients of awards and
the amount of awards. The Board of Directors of the General Partner may
terminate APCP at any time without cause in which case the Partnership's
liability would be limited to the payment of vested awards. All awards granted
in 1995 vest over three years and all awards granted in subsequent years vest
over eight years to the extent the grantee remains employed by the Partnership
during such three or eight year periods. Payment of vested benefits generally
will be made in cash over a five year period commencing at retirement. The
amount awarded in 1995 under APCP was $7,925,000 and for 1996, 1997 and
subsequent years the Partnership may award 4%, 4.5% and 5%, respectively, of
operating revenues less operating expenses under APCP. Messrs. Williams,
Harrison, Carifa, Calvert and Joseph were granted awards of $500,000, $500,000,
$1,000,000, $1,000,000 and $100,000, respectively, under APCP for 1995. These
amounts are not included in column (i) of the Summary Compensation Table since
none of the awards have vested and no earnings have been credited in respect of
the awards.
PARTNERS PLAN. Since 1983 a nonqualified, unfunded deferred
compensation program known as the Partners Plan has been maintained under which
certain key employees received incentive awards pursuant to a formula set each
year by the Management Compensation Committee. No awards have been or will be
made under the Partners Plan for any year after 1987. All awards are fully
vested. Unless accelerated, award account balances generally are distributed
upon resignation, retirement, disability or death. The Board of Directors of the
General Partner has the right to accelerate vesting and make distributions of up
to 90% of a participant's
<PAGE>
40
account balance if the key employee agrees to extend the term of his employment
for a period of at least one year. Until distributed, the awards are credited
with interest based on prevailing market rates plus, for the years prior to
1989, a premium if the Partnership's earnings growth rate exceeded certain
levels. Interest credited during 1995 for the accounts of Messrs. Williams,
Harrison, Carifa and Calvert was $14,086, $5,992, $5,507, and $4,859,
respectively. These amounts are included in column (i) of the Summary
Compensation Table. No amounts were distributed under the Partners Plan for any
of the Named Executive Officers in 1995.
CAPITAL ACCUMULATION PLAN. Since 1985 a nonqualified, unfunded deferred
compensation program known as the Capital Accumulation Plan has been maintained
to provide retirement benefits for key employees and their beneficiaries which
supplement their benefits under the Retirement Plan described above. Under this
plan, at the end of 1985, 1986 and 1987, awards were made for each participant,
selected on the basis of performance by the Management Compensation Committee,
equal to a percentage of the participant's base salary and the participant's
discretionary bonus for the year. The amount awarded was credited to the
participant's account on the Partnership's books to which interest is thereafter
credited, until distributed or forfeited, based on prevailing market rates. A
participant's account balance vests based on the participant's years in the plan
with no vesting for zero to four years of participation, 30% vesting after five
to seven years with gradually increased vesting thereafter ranging to 87% after
35 years of participation and 100% vesting at age 65 or death. Upon termination
of employment other than by reason of permanent disability or death, the
participant's vested account balance is to be paid out in ten equal annual
installments. In the event of permanent disability, the participant is to
receive the higher of the vested balance at the time of disability or 50% of the
total balance at the time of disability, in either case payable in ten equal
annual installments. In the event of death, the participant's beneficiary is to
receive the higher of (i) the participant's account balance paid in ten equal
annual installments together with interest or (ii) annually 50% of the
participant's total cash compensation for the year prior to the year of the
participant's death payable until the participant would have attained age 65,
but in no event for less than ten years.
While the Partnership is responsible for the payment of all obligations
under the plan, ACMC and Alliance are required, subject to certain limitations,
to make capital contributions to the Partnership in an amount equal to the
payments. ACMC's obligations are guaranteed, subject to certain limitations, by
EIC. No additional awards will be made under this plan, but employees will
continue to vest in their existing account balances and to be credited with
interest at prevailing market rates on balances. A participant's total cash
compensation for 1987 increased by 5% per year, compounded annually, will be
considered his total cash compensation for purposes of determining the amount of
any death benefits
<PAGE>
41
payable in respect of the participant. The Board of Directors of the General
Partner intends to cancel this plan if tax legislation is enacted which
adversely affects certain benefits derived by ACMC from insurance on the lives
of certain of the Partnership's employees purchased in connection with the plan.
If the plan is cancelled, the Board of Directors of the General Partner may, at
its option, either pay each participant his then vested account balance or
continue to maintain the account balances for vesting and distribution as
described above as if the plan had not terminated, provided that in such event
no death benefit based on a participant's total cash compensation will be paid.
The plan account balances which became vested during 1995 for the accounts of
Messrs. Williams, Harrison, Carifa and Calvert were $177,760, $177,197, $104,592
and $109,123, respectively. These amounts are included in column (i) of the
Summary Compensation Table.
DEFERRAL PLAN. Under this plan, certain employees of the Partnership may
elect to defer for at least one year the receipt of base or bonus compensation
otherwise payable in a given year to January 31 of the year selected. Interest
is credited at prevailing market rates on the amounts deferred under this plan
until paid. In certain cases, 10% of a deferred amount is subject to forfeiture
if the employee's employment terminates prior to the January 31 payment date for
any reason other than death or disability. There was no compensation deferred
from 1995 to a subsequent year for the Named Executive Officers. During 1995
there were no payments of previously deferred compensation to or interest
credited on amounts deferred by any of the Named Executive Officers.
DLJ PLANS. Prior to Equitable's 1985 acquisition of DLJ, certain employees
of the Partnership participated in various DLJ employee benefit plans and
arrangements. Since the acquisition, no employer contributions or awards have
been made, nor in the future are any employer contributions or awards to be
made, under these plans or arrangements for any employee of the Partnership. No
deferral of compensation earned by any such employee for services rendered since
the acquisition has been permitted under any such plan or arrangement. The
Partnership has no liability for and will not bear the cost of any benefits
under these plans and arrangements.
In 1983 DLJ adopted an Executive Supplemental Retirement Program under
which certain employees of the Partnership deferred a portion of their 1983
compensation in return for which DLJ agreed to pay each of them a specified
annual retirement benefit for 15 years beginning at age 65. Benefits are based
upon the participant's age and the amount deferred and are calculated to yield
an approximate 12.5% annual compound return. In the event of the participant's
disability or death, an equal or lesser amount is to be paid to the participant
or his beneficiary. After age 55, participants the sum of whose age and years of
service equals 80 may elect to have their benefits begin in an actuarially
reduced amount before age 65. DLJ has funded its obligation under the Program
through the purchase of life insurance policies. The following
<PAGE>
42
table shows as to the Named Executive Officers who are participants in the Plan
the estimated annual retirement benefit payable at age 65. Each of these
individuals is fully vested in the applicable benefit.
Estimated Annual
Name Retirement Benefit
---- ------------------
Dave H. Williams $ 41,825
Alfred Harrison 50,246
John D. Carifa 114,597
Bruce W. Calvert 145,036
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL SECURITY HOLDERS
The Partnership has no information that any person beneficially owns more
than 5% of the outstanding Units except (i) Equitable, ACMC and ECMC, wholly-
owned subsidiaries of ECI, and (ii) as reported on Schedule 13D dated September
16, 1994, 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.
Name and Address of Amount and Nature of Beneficial Percent of
Beneficial Owner Ownership Reported on Schedule Class
- ---------------- ------------------------------ -----
AXA (1)(2)(3) 47,984,227 (4) 57.6%
23 Avenue Matignon,
75008 Paris,
France
ECI (3) 47,984,227 (4) 57.6%
787 Seventh Avenue
New York, New York 10019
(1) 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 which has an initial term of 10 years ("Voting Trust") commencing May 12,
1992. The Voting Trustees, who must be members of AXA's Conseil d'Administration
(the body analogous to a U.S. corporation's board of directors), are Claude
Bebear, Patrice Garnier and Henri de Clermont-Tonnerre. 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
<PAGE>
43
not exercise control over ECI or certain of its insurance subsidiaries. See
"Item 1. Business-General".
(2) 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 each of Finaxa and Midi, prior to its merger into AXA, may be
deemed to be beneficial owners of all Units beneficially owned by AXA and its
subsidiaries. By reason of the fact that the Voting Trustees are members of
AXA's Conseil d'Administration and 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. By reason of their relationship with AXA, the Mutuelles AXA as a group
and each of Finaxa and, prior to its merger into AXA, Midi 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, Midi, Finaxa and the Voting Trustees is 23 Avenue
Matignon, Paris, France. The addresses of the Mutuelles AXA are as follows:
The address of each of AXA Assurances I.A.R.D. Mutuelle and AXA Assurances
Vie Mutuelle is 21/25 Rue de Chateaudun, 75009 Paris, France; the address of
each of Alpha Assurances Vie Mutuelle and Alpha Assurances I.A.R.D. Mutuelle
is Tour Franklin 100-101 Terrasse Boildieu, Paris La Defense, France; and the
address of Uni Europe Assurance Mutuelle is 24 Rue Drouot, Paris, France.
See "Item 1. Business-General".
(3) By reason of their relationship, AXA, the Voting Trustees, ECI, Equitable,
ACMC, ECMC, the Mutuelles AXA, Finaxa and, prior to its merger into AXA, Midi
may be deemed to share the power to vote or to direct the vote or to dispose or
direct the disposition of the 47,984,227 Units. See "Item 1. Business -
General".
(4) Includes 446,439 Units which are issuable upon conversion of the Class A
Limited Partnership Interest held by ECMC.
MANAGEMENT
The following table shows, as of March 1, 1996, the beneficial ownership of
Units by each director and each Named Executive Officer of the General Partner
who owns more than 1% of the outstanding Units and by all directors and
executive officers of the General Partner as a group:
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
---------------- -------------------- -----
Dave H. Williams (1) 1,244,456 1.5%
John D. Carifa (2) 877,568 1.1%
All Directors and
Executive Officers 3,454,742 4.2%
<PAGE>
44
of the General Partner as a Group(3)
(1) Includes 80,000 Units owned by Reba W. Williams.
(2) Includes 70,000 Units which may be acquired within 60 days under the
Partnership's 1993 Unit Option Plan.
(3) Includes 219,000 Units which may be acquired within 60 days under the
Partnership's Unit Option Plan and 1993 Unit Option Plan.
The Partnership has no information that any director of the General
Partner, any Named Executive Officer or the directors and executive officers
of the General Partner as a group beneficially own any class of equity
securities of any of the Partnership's parents or subsidiaries other than
directors' qualifying shares except that (i) Mr. Williams beneficially owns
40,000 shares of the common stock of ECI, all of which are subject to
unexercised options held by Mr. Williams, (ii) Mr. Bebear beneficially owns
1,201,399 AXA shares, 1,201,366 of which are subject to unexercised options,
435,839 Finaxa shares, which includes 414,708 Shares owned by Clauvalor, a
French company controlled by Mr. Bebear, and 21,125 of which are subject to
unexercised options, 1,000 DLJ shares, (iii) Mr. Benson beneficially owns
110,703 shares of the common stock of ECI, 100,000 shares of which are
subject to unexercised options held by Mr. Benson, 1,024 DLJ shares, (iv) Mr.
Calvert beneficially owns 20,000 shares of the common stock of ECI, all of
which are subject to unexercised options held by Mr. Calvert, (v) Mr. Carifa
beneficially owns 20,000 shares of the common stock of ECI, all of which are
subject to unexercised options held by Mr. Carifa, (vi) Mr. de Castries
beneficially owns 70,812 AXA shares, all of which are subject to unexercised
options, 32,500 Finaxa shares, all of which are subject to unexercised
options, 1,000 DLJ shares, (vii) Mr. Dolan beneficially owns 3,218 AXA
shares, all of which are subject to unexercised options held by Mr. Dolan,
(viii) Mr. de St. Paer beneficially owns 50,000 shares of the common stock of
ECI, all of which are subject to unexercised options, 300 DLJ shares, (ix)
Mr. Hellebuyck beneficially owns 19,130 shares of AXA, 12,230 shares of which
are subject to unexercised options and 1,275 shares of which are issuable
upon conversion of convertible bonds held by Mr. Hellebuyck, (x) Mr.
Hottinguer beneficially owns 12,908 shares of AXA, 400 shares of AXA are
issuable upon conversion of convertible bonds held by Mr. Hottinguer, and
10,420 shares of Finaxa, 1,220 shares of Finaxa are issuable upon conversion
of convertible bonds held by Mr. Hottinguer, (xi) Mr. Melone beneficially
owns 170,183 shares of the common stock of ECI, 160,000 shares of which are
subject to unexercised options, 1,024 DLJ shares, (xii) Mr. Noris
beneficially owns 20,000 shares of the common stock of ECI, all of which are
subject to unexercised options held by Mr. Noris, and (xiii) Mr. Savage
beneficially owns 136 shares of the common stock of ECI. The information set
forth in this paragraph concerning the ownership of shares of common stock of
ECI or of AXA that are subject to options is provided for options exercisable
at March 1, 1996 or within 60 days thereof.
The General Partner makes all decisions relating to the management of the
Partnership. The General Partner has agreed that it will conduct no business
other than managing the Partnership, although it may make
<PAGE>
45
certain investments for its own account. Conflicts of interest, however, could
arise between the General Partner and the Unitholders.
Section 17-403(b) of the Delaware Revised Uniform Limited Partnership Act
(the "Delaware 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 the partnership and to the limited partners as a general partner
in a partnership without limited partners. While, under Delaware law, a general
partner of a limited partnership is liable as a fiduciary to the other partners,
the Agreement of Limited Partnership of Alliance Capital Management L.P. (As
Amended and Restated)("Partnership Agreement") sets forth a more limited
standard of liability for the General Partner. The Partnership Agreement
provides that the General Partner is not liable for monetary damages to the
Partnership for errors in judgment or for breach of fiduciary duty (including
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 the Partnership, with
reckless disregard for the best interests of the Partnership or with actual bad
faith on the part of the General Partner, or constituted actual fraud. Whenever
the Partnership Agreement provides that the General Partner is permitted or
required to make a decision (i) in its "discretion," the General Partner is
entitled to consider only such interests and factors as it desires and has no
duty or obligation to consider any interest of or other factors affecting the
Partnership or any Unitholder or (ii) 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 Partnership Agreement grants broad rights of
indemnification to the General Partner and its directors and affiliates and
authorizes the Partnership to enter into indemnification agreements with the
directors, officers, partners, employees and agents of the Partnership and its
affiliates. The Partnership has granted broad rights of indemnification to
officers of the General Partner and employees of the Partnership. In addition,
the Partnership assumed indemnification obligations previously extended by
Alliance to its directors, officers and employees. The foregoing indemnification
provisions are not exclusive, and the Partnership is authorized to enter into
additional indemnification arrangements. The Partnership has obtained directors
and officers liability insurance.
The Partnership Agreement also allows transactions between the Partnership
and the General Partner or its affiliates if the transactions are on terms
determined by the General Partner to be comparable to (or more favorable to the
Partnership than) those that would prevail with any unaffiliated party. The
Partnership Agreement provides that those transactions are deemed to meet that
standard if such transactions are approved by a majority of those directors of
the General Partner who are
<PAGE>
46
not directors, officers or employees of any affiliate of the General Partner
(other than the Partnership and its subsidiaries) or, if in the reasonable and
good faith judgment of the General Partner, the transactions are on terms
substantially comparable to (or more favorable to the Partnership than) those
that would prevail in a transaction with an unaffiliated party.
The Partnership Agreement expressly permits all affiliates of the General
Partner (including Equitable and its other subsidiaries) to compete, directly or
indirectly, with the Partnership, to engage in any business or other activity
and to exploit any opportunity, including those that may be available to the
Partnership. Equitable and certain of its subsidiaries currently compete with
the Partnership. See "Item 13. Certain Relationships and Related
Transactions-Competition." The Partnership Agreement further provides that,
except to the extent that a decision or action by the General Partner is taken
with the specific intent of providing a benefit to an affiliate of the General
Partner to the detriment of the Partnership, there is no liability or obligation
with respect to, and no challenge of, decisions or actions of the General
Partner that would otherwise be subject to claims or other challenges as
improperly benefiting affiliates of the General Partner to the detriment of the
Partnership or otherwise involving any conflict of interest or breach of a duty
of loyalty or similar fiduciary obligation.
The fiduciary obligations of general partners is a developing area of the
law and it is not clear to what extent the foregoing provisions of the
Partnership Agreement are enforceable under Delaware or federal law.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
COMPETITION
AXA, Equitable and certain of their direct and indirect subsidiaries
provide financial services, some of which are competitive with those offered by
the Partnership. The Partnership Agreement specifically allows Equitable and its
subsidiaries (other than the General Partner) to compete with the Partnership
and to exploit opportunities that may be available to the Partnership. AXA,
Equitable and certain of their subsidiaries have substantially greater
financial resources than the Partnership or the General Partner.
FINANCIAL SERVICES
The Partnership Agreement permits Equitable and its affiliates to provide
services to the Partnership on terms comparable to (or more favorable to the
Partnership than) those that would prevail in a transaction with an unaffiliated
third party. The Partnership believes that its arrangements with Equitable and
its affiliates are at least as favorable to the Partnership as could be obtained
from an unaffiliated
<PAGE>
47
third party, based on its knowledge of and inquiry with respect to comparable
arrangements with or between unaffiliated third parties.
The Partnership acts as the investment manager for the general and separate
accounts of Equitable and its insurance company subsidiaries pursuant to
investment advisory agreements. During 1995 the Partnership received
approximately $58.3 million in fees pursuant to these agreements. In connection
with the services provided under these agreements the Partnership provides
ancillary accounting, valuation, reporting, treasury and other services under
service agreements. During 1995 the Partnership received approximately $8.0
million in fees pursuant to these agreements. Equitable provides certain legal
and other services to the Partnership relating to certain insurance and other
regulatory aspects of the general and separate accounts of Equitable and its
insurance company subsidiaries. During 1995 the Partnership paid approximately
$1.4 million to Equitable for these services.
During 1995 the Partnership paid Equitable approximately $13.1 million for
certain services provided with respect to the marketing of the variable annuity
insurance and variable life insurance products for which The Hudson River Trust
is the funding vehicle.
Equitable has issued to ACMC life insurance policies on certain employees
of the Partnership, the costs of which are to be borne by ACMC without
reimbursement by the Partnership. During 1995 ACMC paid approximately $7.0
million in insurance premiums on these policies.
The Partnership and its employees are covered under various insurance
policies maintained by Equitable and its other subsidiaries. The amount of
premiums for these group policies paid by the Partnership to Equitable was
approximately $236,000 for 1995.
The Partnership provides investment management services to certain employee
benefit plans of Equitable and DLJ. Advisory fees from these accounts totalled
approximately $3.9 million for 1995 including $1.8 million from the separate
accounts of Equitable.
Equico was the Partnership's second largest distributor of U.S. Funds in
1995 for which it received sales concessions from the Partnership on sales of
$335 million. In 1995 Equico also distributed certain of the Partnership's cash
management products. Equico received distribution payments totalling $5.8
million in 1995 for these services.
DLJ Securities Corporation and Pershing distribute certain Alliance Mutual
Funds and cash management products and receive sales concessions and
distribution payments. In addition, the Partnership and Pershing have an
agreement pursuant to which Pershing recommends to certain of its correspondent
firms the use of the Partnership's cash management products for which Pershing
is allocated a portion of the revenues derived by the Partnership from sales
through the Pershing correspondents. Amounts paid
<PAGE>
48
by the Partnership to DLJ Securities Corporation, Pershing and Wood Struthers &
Winthrop Management Corp., a subsidiary of DLJ, in connection with the above
distribution services were $18.0 million in 1995. DLJ and its subsidiaries also
provide the Partnership with brokerage and various other services, including
clearing, investment banking, research, data processing and administrative
services. Brokerage, the expense of which is borne by the Partnership's clients,
aggregated approximately $48,000 million for 1995. During 1995 the Partnership
paid $600,000 to DLJ and its subsidiaries for all other services.
During 1995 the Partnership reimbursed Equitable in the amount of $3.2
million for rent and the use of certain services and facilities.
The Partnership provides investment management services to AXA Reinsurance
Company, a subsidiary of AXA pursuant to a discretionary investment advisory
agreement. AXA Reinsurance Company paid the Partnership approximately $247,000
during 1995 for such services.
OTHER TRANSACTIONS
During 1995 the Partnership paid certain legal and other expenses incurred
by Equitable and its insurance company subsidiaries relating to the general and
separate accounts of Equitable and such subsidiaries for which it has been or
will be fully reimbursed by Equitable. The largest amount of such indebtedness
outstanding during 1995 was approximately $700,000 which represents the amount
outstanding on December 31, 1995.
Equitable and its affiliates are not obligated to provide funds to the
Partnership, except for ACMC's and the General Partner's obligation to fund
certain of the Partnership's deferred compensation and employee benefit plan
obligations referred to under "Compensation Agreements with Named Executive
Officers" and "Capital Accumulation Plan". The Partnership Agreement permits
Equitable and its affiliates to lend funds to the Partnership at the lender's
cost of funds.
Reba W. Williams, the wife of Dave H. Williams, was employed by the
Partnership during 1995 and received compensation in the amount of $100,000.
The hedge funds managed by the Partnership pay a portion of the carried
interests or performance fees to certain portfolio managers, research analysts
and other investment professionals who are associated with the management of the
hedge funds. The Partnership provides investment management services to the
hedge funds and is entitled to receive between 40.5% and 73% of the carried
interests or performance fees which aggregated approximately $2.8 million for
1995. Mr. Alfred Harrison, a Director and Vice Chairman of the General Partner,
received $162,750 in 1995 in respect of his association with the hedge funds.
<PAGE>
49
ACMC and the General Partner are obligated, subject to certain limitations,
to make capital contributions to the Partnership in an amount equal to the
payments the Partnership is required to make as deferred compensation under the
employment agreements entered into in connection with Equitable's 1985
acquisition of DLJ, as well as obligations of the Partnership to various
employees and their beneficiaries under the Partnership's Capital Accumulation
Plan. In 1995 ACMC made capital contributions to the Partnership in the amount
of $781,000 in respect of these obligations. ACMC's obligations to make these
contributions are guaranteed by EIC subject to certain limitations. All tax
deductions with respect to these obligations, to the extent funded by ACMC,
Alliance or EIC, will be allocated to ACMC or Alliance.
ITEM 14.EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) The following is a list of the documents filed as a part of this Annual
Report on Form 10-K:
Reference Pages
Financial Statements In Annual Report
----------------
Consolidated Statements of Financial
Condition, December 31, 1995 and 1994 53
Consolidated Statements of Income,
Years ended December 31, 1995, 1994 and 1993 54
Consolidated Statements of Changes in
Partners' Capital, Years ended
December 31 1995, 1994 and 1993 55
Consolidated Statements of Cash Flows,
Years ended December 31, 1995, 1994, and 1993 56
Notes to Consolidated Financial Statements 57 - 68
Independent Auditors' Report 69
Schedules are omitted because they are not applicable, or the required
information is set forth in the financial statements or notes thereto.
(b) REPORTS ON FORM 8-K.
A report on Form 8-K dated October 24, 1995 was filed during the last
quarter of 1995 reporting that the Partnership had agreed in principle to
acquire the business of Cursitor-Eaton Asset Management Company and Cursitor
Holdings Limited. See "Item 1. Business - General".
<PAGE>
50
(c) EXHIBITS.
The following exhibits required to be filed by Item 601 of Regulation S-K
are filed herewith or, in the case of Exhibit 13.7, incorporated by reference
herein:
EXHIBIT DESCRIPTION
10.77 Unit Option Plan Agreement dated April 25, 1995 with Bruce
W. Calvert
10.78 Unit Option Plan Agreement dated July 24, 1995 with Bruce W.
Calvert
10.79 Unit Option Plan Agreement dated April 25, 1995 with John D.
Carifa
10.80 Unit Option Plan Agreement dated July 24, 1995 with John D.
Carifa
10.81 Unit Option Plan Agreement dated April 25, 1995 with David
R. Brewer, Jr.
10.82 Unit Option Plan Agreement dated December 5, 1995 with David
R. Brewer, Jr.
10.83 Unit Option Plan Agreement dated April 25, 1995 with Robert
H. Joseph, Jr.
10.84 Unit Option Plan Agreement dated December 5, 1995 with
Robert H. Joseph, Jr.
10.85 Transaction Agreement dated as of December 28, 1995 among
Alliance Capital Management L.P., The Shareholders of Record
of Cursitor Holdings Limited, Cursitor Holdings, L.P. and
The Persons listed on Schedule 1.2 to the Transaction
Agreement
10.86 Registration Rights Agreement dated as of February 29, 1996
between Alliance Capital Management L.P. and the Parties
listed on Schedule I to the Registration Rights Agreement
10.87 Amended and Restated Limited Liability Company Agreement of
Cursitor Alliance LLC dated as of February 29, 1996 among
Alliance Capital Management L.P., Alliance Capital
Management Corporation of Delaware and Cursitor Holdings,
L.P.
10.88 Eleventh Supplemental Agreement to lease of space at 1345
Avenue of the Americas, New York, New York
10.89 First Amendment to NationsBank Revolving Credit Agreement
made as of January 31, 1996 among Alliance Capital
Management L.P., NationsBank of Georgia, N.A. and the banks
whose names appear on the signature pages
10.90 Revolving Credit Agreement dated as of February 23, 1996
among Alliance Capital Management L.P., The First National
Bank of Boston, NationsBank, N.A. (South) and the banks
whose names appear on the signature pages
10.91 Alliance Partners Compensation Plan
<PAGE>
51
13.7 Alliance Capital Management L.P. 1995 Annual Report to
Unitholders
22.7 Subsidiaries of the Registrant
24.7 Consent of KPMG Peat Marwick LLP
25.55 Power of Attorney by Claude Bebear
25.56 Power of Attorney by Luis Javier Bastida
25.57 Power of Attorney by James M. Benson
25.58 Power of Attorney by Henri de Castries
25.59 Power of Attorney by Kevin C. Dolan
25.60 Power of Attorney by Jean-Pierre Hellebuyck
25.61 Power of Attorney by Benjamin D. Holloway
25.62 Power of Attorney by Henri Hottinguer
25.63 Power of Attorney by Denis Duverne
25.64 Power of Attorney by Joseph J. Melone
25.65 Power of Attorney by Peter D. Noris
25.66 Power of Attorney by Jerry M. de St. Paer
25.67 Power of Attorney by Madelon DeVoe Talley
<PAGE>
52
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Alliance Capital Management L.P.
By: Alliance Capital Management
Corporation, General Partner
Date: March 28, 1996 By: /s/Dave H. Williams
-----------------------------
Dave H. Williams
Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Date: March 28, 1996 /s/John D. Carifa
---------------------------------
John D. Carifa
President and Chief Operating Officer
Date: March 28, 1996 /s/Robert H. Joseph, Jr.
---------------------------------
Robert H. Joseph, Jr.
Senior Vice President and Chief
Financial Officer
<PAGE>
53
Directors
/s/Dave H. Williams *
- --------------------------------- --------------------------------
Dave H. Williams Jean-Pierre Hellebuyck
Chairman and Director Director
* *
- -------------------------------- ---------------------------------
Luis Javier Bastida Benjamin D. Holloway
Director Director
* *
- -------------------------------- ---------------------------------
Claude Bebear Henri Hottinguer
Director Director
* *
- -------------------------------- ---------------------------------
James M. Benson Joseph J. Melone
Director Director
/s/Bruce W. Calvert *
- -------------------------------- ---------------------------------
Bruce W. Calvert Peter D. Noris
Director Director
/s/John D. Carifa /s/Frank Savage
- --------------------------------- ---------------------------------
John D. Carifa Frank Savage
Director Director
* *
- --------------------------------- ---------------------------------
Henri de Castries Jerry M. de St. Paer
Director Director
* *
- --------------------------------- ---------------------------------
Kevin C. Dolan Madelon DeVoe Talley
Director Director
* /s/Reba W. Williams
- --------------------------------- ---------------------------------
Denis Duverne Reba W. Williams
Director Director
/s/Alfred Harrison *BY/s/David R. Brewer, Jr.
- --------------------------------- ---------------------------------
Alfred Harrison David R. Brewer, Jr.
Director (Attorney-in-Fact)
<PAGE>
ALLIANCE CAPITAL MANAGEMENT L.P.
UNIT OPTION PLAN AGREEMENT
AGREEMENT, dated April 25, 1995 between Alliance Capital Management L.P.
(the "Partnership") and Bruce W. Calvert (the "Employee"), an employee of the
Partnership or a subsidiary of the Partnership.
The Unit Option and Unit Bonus Committee (the "Administrator") of the Board
of Directors of Alliance Capital Management Corporation, the general partner of
the Partnership (the "Board"), pursuant to the Alliance Capital Management L.P.
1993 Unit Option Plan, a copy of which has been delivered to the Employee (the
"Plan"), granted to the Employee an option to purchase units representing
assignments of beneficial ownership of limited partnership interests in the
Partnership (the "Units") as hereinafter set forth, and authorized the execution
and delivery of this Agreement.
In accordance with that grant, and as a condition thereto, the Partnership
and the Employee agree as follows:
1. GRANT OF OPTION. Subject to and under the terms and conditions set
forth in this Agreement and the Plan, the Employee is the owner of an option
(the "Option") to purchase from the Partnership the number of Units set forth in
Section 1 of Exhibit A attached hereto at the per Unit price set forth in
Section 2 of Exhibit A.
2. TERM AND EXERCISE SCHEDULE. This Option shall not be exercisable to
any extent prior to April 25, 1996 or after April 25, 2005 (the "Expiration
Date"). Subject to the terms and conditions of this Agreement and the Plan, the
Employee shall be entitled to exercise the Option prior to the Expiration Date
and to purchase Units hereunder in accordance with the schedule set forth in
Section 3 of Exhibit A.
The right to exercise this Option shall be cumulative so that to the extent
this Option is not exercised when it becomes initially exercisable with respect
to any Units, it shall be exercisable with respect to such Units at any time
thereafter until the Expiration Date and any Units subject to this Option which
have not then been purchased may not, thereafter, be purchased hereunder. A
Unit shall be considered to have been purchased on or before the Expiration Date
if the Partnership has been given notice of the purchase pursuant to Sections 3
and 13, and the Partnership has actually received payment for the Unit on or
before the Expiration Date.
<PAGE>
-2-
3. NOTICE OF EXERCISE, PAYMENT AND CERTIFICATE. Exercise of this Option,
in whole or in part, shall be by delivery of a written notice to the Partnership
pursuant to Section 13 which specifies the number of Units being purchased and
is accompanied by payment therefor in cash. Promptly after receipt of such
notice and purchase price, the Partnership shall deliver to the person
exercising the Option a certificate for the number of Units purchased. Units to
be issued upon the exercise of this Option may be either authorized and unissued
Units or Units which have been reacquired by the Partnership.
4. TERMINATION OF EMPLOYMENT. This Option may be exercised only while
the Employee is a full-time employee of the Partnership, except as follows:
(a) DISABILITY. If the Employee's employment with the Partnership
terminates because of Disability, the Employee (or his personal
representative) shall have the right to exercise this Option, to the extent
that the Employee was entitled to do so on the date of termination of his
employment, for a period which ends not later than the earlier of (i) three
months after such termination, and (ii) the Expiration Date. "Disability"
shall mean a determination by the Administrator that the Employee is
physically or mentally incapacitated and has been unable for a period of
six consecutive months to perform the duties for which he was responsible
immediately before the onset of his incapacity. In order to assist the
Administrator in making a determination as to the Disability of the
Employee for purposes of this paragraph (a), the Employee shall, as
reasonably requested by the Administrator, (A) make himself available for
medical examinations by one or more physicians chosen by the Administrator
and approved by the Employee, whose approval shall not unreasonably be
withheld, and (B) grant the Administrator and any such physicians access to
all relevant medical information concerning him, arrange to furnish copies
of medical records to them, and use his best efforts to cause his own
physicians to be available to discuss his health with them.
(b) DEATH. If the Employee dies (i) while in the employ of the
Partnership, or (ii) within one month after termination of his employment
with the Partnership because of Disability (as determined in accordance
with paragraph (a) above), or (iii) within one month after the Partnership
terminates his employment for any reason other than for Cause (as
determined in accordance with paragraph (c) below), this Option may be
exercised, to the extent that the Employee was entitled to do so on the
date of his death, by the person or persons to whom the Option shall have
been transferred by will or by the laws of descent and distribution, for a
period which ends not later than the earlier of (A) six months from the
date of the Employee's death, and (B) the Expiration Date.
<PAGE>
-3-
(c) OTHER TERMINATION. If the Partnership terminates the Employee's
employment for any reason other than death, Disability or for Cause, the
Employee shall have the right to exercise this Option, to the extent that
he was entitled to do so on the date of the termination of his employment,
for a period which ends not later than the earlier of (i) three months
after such termination, and (ii) the Expiration Date. "Cause" shall mean
(A) the Employee's continuing willful failure to perform his duties as an
employee (other than as a result of his total or partial incapacity due to
physical or mental illness), (B) gross negligence or malfeasance in the
performance of the Employee's duties, (C) a finding by a court or other
governmental body with proper jurisdiction that an act or acts by the
Employee constitutes (1) a felony under the laws of the United States or
any state thereof (or, if the Employee's place of employment is outside of
the United States, a serious crime under the laws of the foreign
jurisdiction where he is employed, which crime if committed in the United
States would be a felony under the laws of the United States or the laws of
New York), or (2) a violation of federal or state securities law (or, if
the Employee's place of employment is outside of the United States, of
federal, state or foreign securities law) by reason of which finding of
violation described in this clause (2) the Board determines in good faith
that the continued employment of the Employee by the Partnership would be
seriously detrimental to the Partnership and its business, (D) in the
absence of such a finding by a court or other governmental body with proper
jurisdiction, such a determination in good faith by the Board by reason of
such act or acts constituting such a felony, serious crime or violation, or
(E) any breach by the Employee of any obligation of confidentiality or non-
competition to the Partnership.
For purposes of this Agreement, employment by a subsidiary of the
Partnership shall be deemed to be employment by the Partnership. A "subsidiary"
of the Partnership shall be any corporation or other entity of which the
Partnership and/or its subsidiaries (a) have sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of its
board of directors, or (b) otherwise have the power to direct or cause the
direction of its management and policies.
5. NON-TRANSFERABILITY. This Option is not transferable other than by
will or the laws of descent and distribution and, except as otherwise provided
in Section 4, during the lifetime of the Employee this Option is exercisable
only by the Employee.
<PAGE>
-4-
6. NO RIGHT TO CONTINUED EMPLOYMENT. This Option shall not confer upon
the Employee any right to continue in the employ of the Partnership or interfere
in any way with the right of the Partnership to terminate the employment of the
Employee at any time for any reason.
7. PAYMENT OF WITHHOLDING TAX. (a) In the event that the Partnership
determines that any federal, state or local tax or any other charge is required
by law to be withheld with respect to the exercise of this Option, the Employee
shall promptly pay to the Partnership or a subsidiary specified by the
Partnership, on at least seven business days' notice from the Partnership, an
amount equal to such withholding tax or charge or (b) if the Employee does not
promptly so pay the entire amount of such withholding tax or charge in
accordance with such notice, or make arrangements satisfactory to the
Partnership regarding payment thereof, the Partnership or any subsidiary of the
Partnership may withhold the remaining amount thereof from any amount due the
Employee from the Partnership or the subsidiary.
8. DILUTION AND OTHER ADJUSTMENTS. The existence of this Option shall
not impair the right of the Partnership or its partners to, among other things,
conduct, make or effect any change in the Partnership's business, any issuance
of debt obligations or other securities by the Partnership, any grant of options
with respect to an interest in the Partnership or any adjustment,
recapitalization or other change in the partnership interests of the Partnership
(including, without limitation, any distribution, subdivision, or combination of
limited partnership interests), or any incorporation of the Partnership. In the
event of such a change in the partnership interests of the Partnership, the
Board shall make such adjustments to this or Option, including the purchase
price specified in Section 1, as it deems appropriate and equitable. In the
event of incorporation of the Partnership, the Board shall make such
arrangements as it deems appropriate and equitable with respect to this Option
for the Employee to purchase stock in the resulting corporation in place of the
Units subject to this Option. Any such adjustment or arrangement may provide
for the elimination of any fractional Unit or shares of stock which might
otherwise become subject to this Option. Any decision by the Board under this
Section shall be final and binding upon the Employee.
9. RIGHTS AS AN OWNER OF A UNIT. The Employee (or a transferee of this
Option pursuant to Section 4) shall have no rights as an owner of a Unit with
respect to any Unit covered by this Option until he becomes the holder of record
of such Unit, which shall be deemed to occur at the time that notice of purchase
is given and payment in full is received by the Partnership under Section 3 and
13. By such actions, the Employee (or such transferee) shall be deemed to have
consented to, and agreed to
<PAGE>
-5-
be bound by, all other terms, conditions, rights and obligations set forth in
the then current Agreement of Limited Partnership (As Amended and Restated) of
the Partnership. Except as provided in Section 8, no adjustment shall be made
with respect to any Unit for any distribution for which the record date is prior
to the date on which the Employee becomes the holder of record of the Unit,
regardless of whether the distribution is ordinary or extraordinary, in cash,
securities or other property, or of any other rights.
10. ADMINISTRATOR. If at any time there shall be no Board Compensation
Committee of the Board, the Board shall be the Administrator.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
12. INTERPRETATION. The Employee accepts this Option subject to all the
terms and provisions of the Plan, which shall control in the event of any
conflict between any provision of the Plan and this Agreement, and accepts as
binding, conclusive and final all decisions or interpretations of the Board or
the Administrator upon any questions arising under the Plan and/or this
Agreement.
13. NOTICES. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Partnership, to the Secretary of Alliance Capital Management
Corporation at 1345 Avenue of the Americas, New York, New York 10105, or if the
Partnership should move its principal office, to such principal office, and, in
the case of the Employee, to his last permanent address as shown on the
Partnership's records, subject to the right of either party to designate some
other address at any time hereafter in a notice satisfying the requirements of
this Section.
<PAGE>
-6-
14. SECTIONS AND HEADINGS. All section references in this Agreement are
to sections hereof for convenience of reference only and are not to affect the
meaning of any provision of this Agreement.
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management
Corporation, General Partner
By /s/ Dave H. Williams
--------------------
Dave H. Williams
Chairman
/s/ Bruce W. Calvert
--------------------
Bruce W. Calvert
<PAGE>
EXHIBIT A TO UNIT OPTION PLAN AGREEMENT DATED APRIL 25, 1995
BETWEEN ALLIANCE CAPITAL MANAGEMENT L.P. AND BRUCE W. CALVERT
1. The number of Units that the Employee is entitled to purchase pursuant
to the Option granted under this Agreement is 150,000.
2. The per Unit price to purchase Units pursuant to the Option granted
under this Agreement is $19.375 per Unit.
3. Percentage of Units With Respect to
Which the Option First Becomes
Exercisable on the Date Indicated
----------------------------------
1. April 25, 1996 20%
2. April 25, 1997 20%
3. April 25, 1998 20%
4. April 25, 1999 20%
5. April 25, 2000 20%
<PAGE>
ALLIANCE CAPITAL MANAGEMENT L.P.
UNIT OPTION PLAN AGREEMENT
AGREEMENT, dated July 24, 1995 between Alliance Capital Management L.P.
(the "Partnership") and Bruce W. Calvert (the "Employee"), an employee of the
Partnership or a subsidiary of the Partnership.
The Unit Option and Unit Bonus Committee (the "Administrator") of the Board
of Directors of Alliance Capital Management Corporation, the general partner of
the Partnership (the "Board"), pursuant to the Alliance Capital Management L.P.
1993 Unit Option Plan, a copy of which has been delivered to the Employee (the
"Plan"), granted to the Employee an option to purchase units representing
assignments of beneficial ownership of limited partnership interests in the
Partnership (the "Units") as hereinafter set forth, and authorized the execution
and delivery of this Agreement.
In accordance with that grant, and as a condition thereto, the Partnership
and the Employee agree as follows:
1. GRANT OF OPTION. Subject to and under the terms and conditions set
forth in this Agreement and the Plan, the Employee is the owner of an option
(the "Option") to purchase from the Partnership the number of Units set forth in
Section 1 of Exhibit A attached hereto at the per Unit price set forth in
Section 2 of Exhibit A.
2. TERM AND EXERCISE SCHEDULE. This Option shall not be exercisable to
any extent prior to July 24, 1996 or after July 24, 2005 (the "Expiration
Date"). Subject to the terms and conditions of this Agreement and the Plan, the
Employee shall be entitled to exercise the Option prior to the Expiration Date
and to purchase Units hereunder in accordance with the schedule set forth in
Section 3 of Exhibit A.
The right to exercise this Option shall be cumulative so that to the extent
this Option is not exercised when it becomes initially exercisable with respect
to any Units, it shall be exercisable with respect to such Units at any time
thereafter until the Expiration Date and any Units subject to this Option which
have not then been purchased may not, thereafter, be purchased hereunder. A
Unit shall be considered to have been purchased on or before the Expiration Date
if the Partnership has been given notice of the purchase pursuant to Sections 3
and 13, and the Partnership has actually received payment for the Unit on or
before the Expiration Date.
<PAGE>
-2-
3. NOTICE OF EXERCISE, PAYMENT AND CERTIFICATE. Exercise of this Option,
in whole or in part, shall be by delivery of a written notice to the Partnership
pursuant to Section 13 which specifies the number of Units being purchased and
is accompanied by payment therefor in cash. Promptly after receipt of such
notice and purchase price, the Partnership shall deliver to the person
exercising the Option a certificate for the number of Units purchased. Units to
be issued upon the exercise of this Option may be either authorized and unissued
Units or Units which have been reacquired by the Partnership.
4. TERMINATION OF EMPLOYMENT. This Option may be exercised only while
the Employee is a full-time employee of the Partnership, except as follows:
(a) DISABILITY. If the Employee's employment with the Partnership
terminates because of Disability, the Employee (or his personal
representative) shall have the right to exercise this Option, to the extent
that the Employee was entitled to do so on the date of termination of his
employment, for a period which ends not later than the earlier of (i) three
months after such termination, and (ii) the Expiration Date. "Disability"
shall mean a determination by the Administrator that the Employee is
physically or mentally incapacitated and has been unable for a period of
six consecutive months to perform the duties for which he was responsible
immediately before the onset of his incapacity. In order to assist the
Administrator in making a determination as to the Disability of the
Employee for purposes of this paragraph (a), the Employee shall, as
reasonably requested by the Administrator, (A) make himself available for
medical examinations by one or more physicians chosen by the Administrator
and approved by the Employee, whose approval shall not unreasonably be
withheld, and (B) grant the Administrator and any such physicians access to
all relevant medical information concerning him, arrange to furnish copies
of medical records to them, and use his best efforts to cause his own
physicians to be available to discuss his health with them.
(b) DEATH. If the Employee dies (i) while in the employ of the
Partnership, or (ii) within one month after termination of his employment
with the Partnership because of Disability (as determined in accordance
with paragraph (a) above), or (iii) within one month after the Partnership
terminates his employment for any reason other than for Cause (as
determined in accordance with paragraph (c) below), this Option may be
exercised, to the extent that the Employee was entitled to do so on the
date of his death, by the person or persons to whom the Option shall have
been transferred by will or by the laws of descent and distribution, for a
period which ends not later than the earlier of (A) six months from the
date of the Employee's death, and (B) the Expiration Date.
<PAGE>
-3-
(c) OTHER TERMINATION. If the Partnership terminates the Employee's
employment for any reason other than death, Disability or for Cause, the
Employee shall have the right to exercise this Option, to the extent that
he was entitled to do so on the date of the termination of his employment,
for a period which ends not later than the earlier of (i) three months
after such termination, and (ii) the Expiration Date. "Cause" shall mean
(A) the Employee's continuing willful failure to perform his duties as an
employee (other than as a result of his total or partial incapacity due to
physical or mental illness), (B) gross negligence or malfeasance in the
performance of the Employee's duties, (C) a finding by a court or other
governmental body with proper jurisdiction that an act or acts by the
Employee constitutes (1) a felony under the laws of the United States or
any state thereof (or, if the Employee's place of employment is outside of
the United States, a serious crime under the laws of the foreign
jurisdiction where he is employed, which crime if committed in the United
States would be a felony under the laws of the United States or the laws of
New York), or (2) a violation of federal or state securities law (or, if
the Employee's place of employment is outside of the United States, of
federal, state or foreign securities law) by reason of which finding of
violation described in this clause (2) the Board determines in good faith
that the continued employment of the Employee by the Partnership would be
seriously detrimental to the Partnership and its business, (D) in the
absence of such a finding by a court or other governmental body with proper
jurisdiction, such a determination in good faith by the Board by reason of
such act or acts constituting such a felony, serious crime or violation, or
(E) any breach by the Employee of any obligation of confidentiality or non-
competition to the Partnership.
For purposes of this Agreement, employment by a subsidiary of the
Partnership shall be deemed to be employment by the Partnership. A "subsidiary"
of the Partnership shall be any corporation or other entity of which the
Partnership and/or its subsidiaries (a) have sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of its
board of directors, or (b) otherwise have the power to direct or cause the
direction of its management and policies.
5. NON-TRANSFERABILITY. This Option is not transferable other than by
will or the laws of descent and distribution and, except as otherwise provided
in Section 4, during the lifetime of the Employee this Option is exercisable
only by the Employee.
<PAGE>
-4-
6. NO RIGHT TO CONTINUED EMPLOYMENT. This Option shall not confer upon
the Employee any right to continue in the employ of the Partnership or interfere
in any way with the right of the Partnership to terminate the employment of the
Employee at any time for any reason.
7. PAYMENT OF WITHHOLDING TAX. (a) In the event that the Partnership
determines that any federal, state or local tax or any other charge is required
by law to be withheld with respect to the exercise of this Option, the Employee
shall promptly pay to the Partnership or a subsidiary specified by the
Partnership, on at least seven business days' notice from the Partnership, an
amount equal to such withholding tax or charge or (b) if the Employee does not
promptly so pay the entire amount of such withholding tax or charge in
accordance with such notice, or make arrangements satisfactory to the
Partnership regarding payment thereof, the Partnership or any subsidiary of the
Partnership may withhold the remaining amount thereof from any amount due the
Employee from the Partnership or the subsidiary.
8. DILUTION AND OTHER ADJUSTMENTS. The existence of this Option shall
not impair the right of the Partnership or its partners to, among other things,
conduct, make or effect any change in the Partnership's business, any issuance
of debt obligations or other securities by the Partnership, any grant of options
with respect to an interest in the Partnership or any adjustment,
recapitalization or other change in the partnership interests of the Partnership
(including, without limitation, any distribution, subdivision, or combination of
limited partnership interests), or any incorporation of the Partnership. In the
event of such a change in the partnership interests of the Partnership, the
Board shall make such adjustments to this or Option, including the purchase
price specified in Section 1, as it deems appropriate and equitable. In the
event of incorporation of the Partnership, the Board shall make such
arrangements as it deems appropriate and equitable with respect to this Option
for the Employee to purchase stock in the resulting corporation in place of the
Units subject to this Option. Any such adjustment or arrangement may provide
for the elimination of any fractional Unit or shares of stock which might
otherwise become subject to this Option. Any decision by the Board under this
Section shall be final and binding upon the Employee.
9. RIGHTS AS AN OWNER OF A UNIT. The Employee (or a transferee of this
Option pursuant to Section 4) shall have no rights as an owner of a Unit with
respect to any Unit covered by this Option until he becomes the holder of record
of such Unit, which shall be deemed to occur at the time that notice of purchase
is given and payment in full is received by the Partnership under Section 3 and
13. By such actions, the Employee (or such transferee) shall be deemed to have
consented to, and agreed to
<PAGE>
-5-
be bound by, all other terms, conditions, rights and obligations set forth in
the then current Agreement of Limited Partnership (As Amended and Restated) of
the Partnership. Except as provided in Section 8, no adjustment shall be made
with respect to any Unit for any distribution for which the record date is prior
to the date on which the Employee becomes the holder of record of the Unit,
regardless of whether the distribution is ordinary or extraordinary, in cash,
securities or other property, or of any other rights.
10. ADMINISTRATOR. If at any time there shall be no Board Compensation
Committee of the Board, the Board shall be the Administrator.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
12. INTERPRETATION. The Employee accepts this Option subject to all the
terms and provisions of the Plan, which shall control in the event of any
conflict between any provision of the Plan and this Agreement, and accepts as
binding, conclusive and final all decisions or interpretations of the Board or
the Administrator upon any questions arising under the Plan and/or this
Agreement.
13. NOTICES. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Partnership, to the Secretary of Alliance Capital Management
Corporation at 1345 Avenue of the Americas, New York, New York 10105, or if the
Partnership should move its principal office, to such principal office, and, in
the case of the Employee, to his last permanent address as shown on the
Partnership's records, subject to the right of either party to designate some
other address at any time hereafter in a notice satisfying the requirements of
this Section.
<PAGE>
-6-
14. SECTIONS AND HEADINGS. All section references in this Agreement are to
sections hereof for convenience of reference only and are not to affect the
meaning of any provision of this Agreement.
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management
Corporation, General Partner
By /s/ Dave H. Williams
--------------------
Dave H. Williams
Chairman
/s/ Bruce W. Calvert
--------------------
Bruce W. Calvert
<PAGE>
EXHIBIT A TO UNIT OPTION PLAN AGREEMENT DATED JULY 24, 1995
BETWEEN ALLIANCE CAPITAL MANAGEMENT L.P. AND BRUCE W. CALVERT
1. The number of Units that the Employee is entitled to purchase pursuant
to the Option granted under this Agreement is 25,000.
2. The per Unit price to purchase Units pursuant to the Option granted
under this Agreement is $17.75 per Unit.
3. Percentage of Units With Respect to
Which the Option First Becomes
exercisable on the date indicated
-----------------------------------
1. July 24, 1996 20%
2. July 24, 1997 20%
3. July 24, 1998 20%
4. July 24, 1999 20%
5. July 24, 2000 20%
<PAGE>
ALLIANCE CAPITAL MANAGEMENT L.P.
UNIT OPTION PLAN AGREEMENT
AGREEMENT, dated April 25, 1995 between Alliance Capital Management L.P.
(the "Partnership") and John D. Carifa (the "Employee"), an employee of the
Partnership or a subsidiary of the Partnership.
The Unit Option and Unit Bonus Committee (the "Administrator") of the Board
of Directors of Alliance Capital Management Corporation, the general partner of
the Partnership (the "Board"), pursuant to the Alliance Capital Management L.P.
1993 Unit Option Plan, a copy of which has been delivered to the Employee (the
"Plan"), granted to the Employee an option to purchase units representing
assignments of beneficial ownership of limited partnership interests in the
Partnership (the "Units") as hereinafter set forth, and authorized the execution
and delivery of this Agreement.
In accordance with that grant, and as a condition thereto, the Partnership
and the Employee agree as follows:
1. GRANT OF OPTION. Subject to and under the terms and conditions set
forth in this Agreement and the Plan, the Employee is the owner of an option
(the "Option") to purchase from the Partnership the number of Units set forth in
Section 1 of Exhibit A attached hereto at the per Unit price set forth in
Section 2 of Exhibit A.
2. TERM AND EXERCISE SCHEDULE. This Option shall not be exercisable to
any extent prior to April 25, 1996 or after April 25, 2005 (the "Expiration
Date"). Subject to the terms and conditions of this Agreement and the Plan, the
Employee shall be entitled to exercise the Option prior to the Expiration Date
and to purchase Units hereunder in accordance with the schedule set forth in
Section 3 of Exhibit A.
The right to exercise this Option shall be cumulative so that to the extent
this Option is not exercised when it becomes initially exercisable with respect
to any Units, it shall be exercisable with respect to such Units at any time
thereafter until the Expiration Date and any Units subject to this Option which
have not then been purchased may not, thereafter, be purchased hereunder. A
Unit shall be considered to have been purchased on or before the Expiration Date
if the Partnership has been given notice of the purchase pursuant to Sections 3
and 13, and the Partnership has actually received payment for the Unit on or
before the Expiration Date.
<PAGE>
-2-
3. NOTICE OF EXERCISE, PAYMENT AND CERTIFICATE. Exercise of this Option,
in whole or in part, shall be by delivery of a written notice to the Partnership
pursuant to Section 13 which specifies the number of Units being purchased and
is accompanied by payment therefor in cash. Promptly after receipt of such
notice and purchase price, the Partnership shall deliver to the person
exercising the Option a certificate for the number of Units purchased. Units to
be issued upon the exercise of this Option may be either authorized and unissued
Units or Units which have been reacquired by the Partnership.
4. TERMINATION OF EMPLOYMENT. This Option may be exercised only while
the Employee is a full-time employee of the Partnership, except as follows:
(a) DISABILITY. If the Employee's employment with the Partnership
terminates because of Disability, the Employee (or his personal
representative) shall have the right to exercise this Option, to the extent
that the Employee was entitled to do so on the date of termination of his
employment, for a period which ends not later than the earlier of (i) three
months after such termination, and (ii) the Expiration Date. "Disability"
shall mean a determination by the Administrator that the Employee is
physically or mentally incapacitated and has been unable for a period of
six consecutive months to perform the duties for which he was responsible
immediately before the onset of his incapacity. In order to assist the
Administrator in making a determination as to the Disability of the
Employee for purposes of this paragraph (a), the Employee shall, as
reasonably requested by the Administrator, (A) make himself available for
medical examinations by one or more physicians chosen by the Administrator
and approved by the Employee, whose approval shall not unreasonably be
withheld, and (B) grant the Administrator and any such physicians access to
all relevant medical information concerning him, arrange to furnish copies
of medical records to them, and use his best efforts to cause his own
physicians to be available to discuss his health with them.
(b) DEATH. If the Employee dies (i) while in the employ of the
Partnership, or (ii) within one month after termination of his employment
with the Partnership because of Disability (as determined in accordance
with paragraph (a) above), or (iii) within one month after the Partnership
terminates his employment for any reason other than for Cause (as
determined in accordance with paragraph (c) below), this Option may be
exercised, to the extent that the Employee was entitled to do so on the
date of his death, by the person or persons to whom the Option shall have
been transferred by will or by the laws of descent and distribution, for a
period which ends not later than the earlier of (A) six months from the
date of the Employee's death, and (B) the Expiration Date.
<PAGE>
-3-
(c) OTHER TERMINATION. If the Partnership terminates the Employee's
employment for any reason other than death, Disability or for Cause, the
Employee shall have the right to exercise this Option, to the extent that
he was entitled to do so on the date of the termination of his employment,
for a period which ends not later than the earlier of (i) three months
after such termination, and (ii) the Expiration Date. "Cause" shall mean
(A) the Employee's continuing willful failure to perform his duties as an
employee (other than as a result of his total or partial incapacity due to
physical or mental illness), (B) gross negligence or malfeasance in the
performance of the Employee's duties, (C) a finding by a court or other
governmental body with proper jurisdiction that an act or acts by the
Employee constitutes (1) a felony under the laws of the United States or
any state thereof (or, if the Employee's place of employment is outside of
the United States, a serious crime under the laws of the foreign
jurisdiction where he is employed, which crime if committed in the United
States would be a felony under the laws of the United States or the laws of
New York), or (2) a violation of federal or state securities law (or, if
the Employee's place of employment is outside of the United States, of
federal, state or foreign securities law) by reason of which finding of
violation described in this clause (2) the Board determines in good faith
that the continued employment of the Employee by the Partnership would be
seriously detrimental to the Partnership and its business, (D) in the
absence of such a finding by a court or other governmental body with proper
jurisdiction, such a determination in good faith by the Board by reason of
such act or acts constituting such a felony, serious crime or violation, or
(E) any breach by the Employee of any obligation of confidentiality or
non-competition to the Partnership.
For purposes of this Agreement, employment by a subsidiary of the
Partnership shall be deemed to be employment by the Partnership. A "subsidiary"
of the Partnership shall be any corporation or other entity of which the
Partnership and/or its subsidiaries (a) have sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of its
board of directors, or (b) otherwise have the power to direct or cause the
direction of its management and policies.
5. NON-TRANSFERABILITY. This Option is not transferable other than by
will or the laws of descent and distribution and, except as otherwise provided
in Section 4, during the lifetime of the Employee this Option is exercisable
only by the Employee.
<PAGE>
-4-
6. NO RIGHT TO CONTINUED EMPLOYMENT. This Option shall not confer upon
the Employee any right to continue in the employ of the Partnership or interfere
in any way with the right of the Partnership to terminate the employment of the
Employee at any time for any reason.
7. PAYMENT OF WITHHOLDING TAX. (a) In the event that the Partnership
determines that any federal, state or local tax or any other charge is required
by law to be withheld with respect to the exercise of this Option, the Employee
shall promptly pay to the Partnership or a subsidiary specified by the
Partnership, on at least seven business days' notice from the Partnership, an
amount equal to such withholding tax or charge or (b) if the Employee does not
promptly so pay the entire amount of such withholding tax or charge in
accordance with such notice, or make arrangements satisfactory to the
Partnership regarding payment thereof, the Partnership or any subsidiary of the
Partnership may withhold the remaining amount thereof from any amount due the
Employee from the Partnership or the subsidiary.
8. DILUTION AND OTHER ADJUSTMENTS. The existence of this Option shall
not impair the right of the Partnership or its partners to, among other things,
conduct, make or effect any change in the Partnership's business, any issuance
of debt obligations or other securities by the Partnership, any grant of options
with respect to an interest in the Partnership or any adjustment,
recapitalization or other change in the partnership interests of the Partnership
(including, without limitation, any distribution, subdivision, or combination of
limited partnership interests), or any incorporation of the Partnership. In the
event of such a change in the partnership interests of the Partnership, the
Board shall make such adjustments to this or Option, including the purchase
price specified in Section 1, as it deems appropriate and equitable. In the
event of incorporation of the Partnership, the Board shall make such
arrangements as it deems appropriate and equitable with respect to this Option
for the Employee to purchase stock in the resulting corporation in place of the
Units subject to this Option. Any such adjustment or arrangement may provide
for the elimination of any fractional Unit or shares of stock which might
otherwise become subject to this Option. Any decision by the Board under this
Section shall be final and binding upon the Employee.
9. RIGHTS AS AN OWNER OF A UNIT. The Employee (or a transferee of this
Option pursuant to Section 4) shall have no rights as an owner of a Unit with
respect to any Unit covered by this Option until he becomes the holder of record
of such Unit, which shall be deemed to occur at the time that notice of purchase
is given and payment in full is received by the Partnership under Section 3 and
13. By such actions, the Employee (or such transferee) shall be deemed to have
consented to, and agreed to
<PAGE>
-5-
be bound by, all other terms, conditions, rights and obligations set forth in
the then current Agreement of Limited Partnership (As Amended and Restated) of
the Partnership. Except as provided in Section 8, no adjustment shall be made
with respect to any Unit for any distribution for which the record date is prior
to the date on which the Employee becomes the holder of record of the Unit,
regardless of whether the distribution is ordinary or extraordinary, in cash,
securities or other property, or of any other rights.
10. ADMINISTRATOR. If at any time there shall be no Board Compensation
Committee of the Board, the Board shall be the Administrator.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
12. INTERPRETATION. The Employee accepts this Option subject to all the
terms and provisions of the Plan, which shall control in the event of any
conflict between any provision of the Plan and this Agreement, and accepts as
binding, conclusive and final all decisions or interpretations of the Board or
the Administrator upon any questions arising under the Plan and/or this
Agreement.
13. NOTICES. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Partnership, to the Secretary of Alliance Capital Management
Corporation at 1345 Avenue of the Americas, New York, New York 10105, or if the
Partnership should move its principal office, to such principal office, and, in
the case of the Employee, to his last permanent address as shown on the
Partnership's records, subject to the right of either party to designate some
other address at any time hereafter in a notice satisfying the requirements of
this Section.
<PAGE>
-6-
14. SECTIONS AND HEADINGS. All section references in this Agreement are
to sections hereof for convenience of reference only and are not to affect the
meaning of any provision of this Agreement.
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management
Corporation, General Partner
By /S/ Dave H. Williams
--------------------
Dave H. Williams
Chairman
/S/ John D. Carifa
------------------
John D. Carifa
4,418G
<PAGE>
EXHIBIT A TO UNIT OPTION PLAN AGREEMENT DATED APRIL 25, 1995
BETWEEN ALLIANCE CAPITAL MANAGEMENT L.P. AND John D. Carifa
1. The number of Units that the Employee is entitled to purchase pursuant
to the Option granted under this Agreement is 150,000.
2. The per Unit price to purchase Units pursuant to the Option granted
under this Agreement is $19.375 per Unit.
3. Percentage of Units With Respect to
Which the Option First Becomes
EXERCISABLE ON THE DATE INDICATED
1. April 25, 1996 20%
2. April 25, 1997 20%
3. April 25, 1998 20%
4. April 25, 1999 20%
5. April 25, 2000 20%
<PAGE>
Exhibit 10.80
ALLIANCE CAPITAL MANAGEMENT L.P.
UNIT OPTION PLAN AGREEMENT
AGREEMENT, dated July 24, 1995 between Alliance Capital Management L.P.
(the "Partnership") and John D. Carifa (the "Employee"), an employee of the
Partnership or a subsidiary of the Partnership.
The Unit Option and Unit Bonus Committee (the "Administrator") of the Board
of Directors of Alliance Capital Management Corporation, the general partner of
the Partnership (the "Board"), pursuant to the Alliance Capital Management L.P.
1993 Unit Option Plan, a copy of which has been delivered to the Employee (the
"Plan"), granted to the Employee an option to purchase units representing
assignments of beneficial ownership of limited partnership interests in the
Partnership (the "Units") as hereinafter set forth, and authorized the execution
and delivery of this Agreement.
In accordance with that grant, and as a condition thereto, the Partnership
and the Employee agree as follows:
1. GRANT OF OPTION. Subject to and under the terms and conditions set
forth in this Agreement and the Plan, the Employee is the owner of an option
(the "Option") to purchase from the Partnership the number of Units set forth in
Section 1 of Exhibit A attached hereto at the per Unit price set forth in
Section 2 of Exhibit A.
2. TERM AND EXERCISE SCHEDULE. This Option shall not be exercisable to
any extent prior to July 24, 1996 or after July 24, 2005 (the "Expiration
Date"). Subject to the terms and conditions of this Agreement and the Plan, the
Employee shall be entitled to exercise the Option prior to the Expiration Date
and to purchase Units hereunder in accordance with the schedule set forth in
Section 3 of Exhibit A.
The right to exercise this Option shall be cumulative so that to the extent
this Option is not exercised when it becomes initially exercisable with respect
to any Units, it shall be exercisable with respect to such Units at any time
thereafter until the Expiration Date and any Units subject to this Option which
have not then been purchased may not, thereafter, be purchased hereunder. A
Unit shall be considered to have been purchased on or before the Expiration Date
if the Partnership has been given notice of the purchase pursuant to Sections 3
and 13, and the Partnership has actually received payment for the Unit on or
before the Expiration Date.
<PAGE>
-2-
3. NOTICE OF EXERCISE, PAYMENT AND CERTIFICATE. Exercise of this Option,
in whole or in part, shall be by delivery of a written notice to the Partnership
pursuant to Section 13 which specifies the number of Units being purchased and
is accompanied by payment therefor in cash. Promptly after receipt of such
notice and purchase price, the Partnership shall deliver to the person
exercising the Option a certificate for the number of Units purchased. Units to
be issued upon the exercise of this Option may be either authorized and unissued
Units or Units which have been reacquired by the Partnership.
4. TERMINATION OF EMPLOYMENT. This Option may be exercised only while
the Employee is a full-time employee of the Partnership, except as follows:
(a) DISABILITY. If the Employee's employment with the Partnership
terminates because of Disability, the Employee (or his personal
representative) shall have the right to exercise this Option, to the extent
that the Employee was entitled to do so on the date of termination of his
employment, for a period which ends not later than the earlier of (i) three
months after such termination, and (ii) the Expiration Date. "Disability"
shall mean a determination by the Administrator that the Employee is
physically or mentally incapacitated and has been unable for a period of
six consecutive months to perform the duties for which he was responsible
immediately before the onset of his incapacity. In order to assist the
Administrator in making a determination as to the Disability of the
Employee for purposes of this paragraph (a), the Employee shall, as
reasonably requested by the Administrator, (A) make himself available for
medical examinations by one or more physicians chosen by the Administrator
and approved by the Employee, whose approval shall not unreasonably be
withheld, and (B) grant the Administrator and any such physicians access to
all relevant medical information concerning him, arrange to furnish copies
of medical records to them, and use his best efforts to cause his own
physicians to be available to discuss his health with them.
(b) DEATH. If the Employee dies (i) while in the employ of the
Partnership, or (ii) within one month after termination of his employment
with the Partnership because of Disability (as determined in accordance
with paragraph (a) above), or (iii) within one month after the Partnership
terminates his employment for any reason other than for Cause (as
determined in accordance with paragraph (c) below), this Option may be
exercised, to the extent that the Employee was entitled to do so on the
date of his death, by the person or persons to whom the Option shall have
been transferred by will or by the laws of descent and distribution, for a
period which ends not later than the earlier of (A) six months from the
date of the Employee's death, and (B) the Expiration Date.
<PAGE>
-3-
(c) OTHER TERMINATION. If the Partnership terminates the Employee's
employment for any reason other than death, Disability or for Cause, the
Employee shall have the right to exercise this Option, to the extent that
he was entitled to do so on the date of the termination of his employment,
for a period which ends not later than the earlier of (i) three months
after such termination, and (ii) the Expiration Date. "Cause" shall mean
(A) the Employee's continuing willful failure to perform his duties as an
employee (other than as a result of his total or partial incapacity due to
physical or mental illness), (B) gross negligence or malfeasance in the
performance of the Employee's duties, (C) a finding by a court or other
governmental body with proper jurisdiction that an act or acts by the
Employee constitutes (1) a felony under the laws of the United States or
any state thereof (or, if the Employee's place of employment is outside of
the United States, a serious crime under the laws of the foreign
jurisdiction where he is employed, which crime if committed in the United
States would be a felony under the laws of the United States or the laws of
New York), or (2) a violation of federal or state securities law (or, if
the Employee's place of employment is outside of the United States, of
federal, state or foreign securities law) by reason of which finding of
violation described in this clause (2) the Board determines in good faith
that the continued employment of the Employee by the Partnership would be
seriously detrimental to the Partnership and its business, (D) in the
absence of such a finding by a court or other governmental body with proper
jurisdiction, such a determination in good faith by the Board by reason of
such act or acts constituting such a felony, serious crime or violation, or
(E) any breach by the Employee of any obligation of confidentiality or
non-competition to the Partnership.
For purposes of this Agreement, employment by a subsidiary of the
Partnership shall be deemed to be employment by the Partnership. A "subsidiary"
of the Partnership shall be any corporation or other entity of which the
Partnership and/or its subsidiaries (a) have sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of its
board of directors, or (b) otherwise have the power to direct or cause the
direction of its management and policies.
5. NON-TRANSFERABILITY. This Option is not transferable other than by
will or the laws of descent and distribution and, except as otherwise provided
in Section 4, during the lifetime of the Employee this Option is exercisable
only by the Employee.
<PAGE>
-4-
6. NO RIGHT TO CONTINUED EMPLOYMENT. This Option shall not confer upon
the Employee any right to continue in the employ of the Partnership or interfere
in any way with the right of the Partnership to terminate the employment of the
Employee at any time for any reason.
7. PAYMENT OF WITHHOLDING TAX. (a) In the event that the Partnership
determines that any federal, state or local tax or any other charge is required
by law to be withheld with respect to the exercise of this Option, the Employee
shall promptly pay to the Partnership or a subsidiary specified by the
Partnership, on at least seven business days' notice from the Partnership, an
amount equal to such withholding tax or charge or (b) if the Employee does not
promptly so pay the entire amount of such withholding tax or charge in
accordance with such notice, or make arrangements satisfactory to the
Partnership regarding payment thereof, the Partnership or any subsidiary of the
Partnership may withhold the remaining amount thereof from any amount due the
Employee from the Partnership or the subsidiary.
8. DILUTION AND OTHER ADJUSTMENTS. The existence of this Option shall
not impair the right of the Partnership or its partners to, among other things,
conduct, make or effect any change in the Partnership's business, any issuance
of debt obligations or other securities by the Partnership, any grant of options
with respect to an interest in the Partnership or any adjustment,
recapitalization or other change in the partnership interests of the Partnership
(including, without limitation, any distribution, subdivision, or combination of
limited partnership interests), or any incorporation of the Partnership. In the
event of such a change in the partnership interests of the Partnership, the
Board shall make such adjustments to this or Option, including the purchase
price specified in Section 1, as it deems appropriate and equitable. In the
event of incorporation of the Partnership, the Board shall make such
arrangements as it deems appropriate and equitable with respect to this Option
for the Employee to purchase stock in the resulting corporation in place of the
Units subject to this Option. Any such adjustment or arrangement may provide
for the elimination of any fractional Unit or shares of stock which might
otherwise become subject to this Option. Any decision by the Board under this
Section shall be final and binding upon the Employee.
9. RIGHTS AS AN OWNER OF A UNIT. The Employee (or a transferee of this
Option pursuant to Section 4) shall have no rights as an owner of a Unit with
respect to any Unit covered by this Option until he becomes the holder of record
of such Unit, which shall be deemed to occur at the time that notice of purchase
is given and payment in full is received by the Partnership under Section 3 and
13. By such actions, the Employee (or such transferee) shall be deemed to have
consented to, and agreed to
<PAGE>
-5-
be bound by, all other terms, conditions, rights and obligations set forth in
the then current Agreement of Limited Partnership (As Amended and Restated) of
the Partnership. Except as provided in Section 8, no adjustment shall be made
with respect to any Unit for any distribution for which the record date is prior
to the date on which the Employee becomes the holder of record of the Unit,
regardless of whether the distribution is ordinary or extraordinary, in cash,
securities or other property, or of any other rights.
10. ADMINISTRATOR. If at any time there shall be no Board Compensation
Committee of the Board, the Board shall be the Administrator.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
12. INTERPRETATION. The Employee accepts this Option subject to all the
terms and provisions of the Plan, which shall control in the event of any
conflict between any provision of the Plan and this Agreement, and accepts as
binding, conclusive and final all decisions or interpretations of the Board or
the Administrator upon any questions arising under the Plan and/or this
Agreement.
13. NOTICES. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Partnership, to the Secretary of Alliance Capital Management
Corporation at 1345 Avenue of the Americas, New York, New York 10105, or if the
Partnership should move its principal office, to such principal office, and, in
the case of the Employee, to his last permanent address as shown on the
Partnership's records, subject to the right of either party to designate some
other address at any time hereafter in a notice satisfying the requirements of
this Section.
<PAGE>
-6-
14. SECTIONS AND HEADINGS. All section references in this Agreement are
to sections hereof for convenience of reference only and are not to affect the
meaning of any provision of this Agreement.
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management
Corporation, General Partner
By /S/ DAVE H. WILLIAMS
--------------------
Dave H. Williams
Chairman
/S/ JOHN D. CARIFA
------------------
John D. Carifa
4666G
<PAGE>
EXHIBIT A TO UNIT OPTION PLAN AGREEMENT DATED JULY 24, 1995
BETWEEN ALLIANCE CAPITAL MANAGEMENT L.P. AND JOHN D. CARIFA
1. The number of Units that the Employee is entitled to purchase pursuant
to the Option granted under this Agreement is 25,000.
2. The per Unit price to purchase Units pursuant to the Option granted
under this Agreement is $17.75 per Unit.
3. Percentage of Units With Respect to
Which the Option First Becomes
Exercisable on the Date Indicated
---------------------------------
1. July 24, 1996 20%
2. July 24, 1997 20%
3. July 24, 1998 20%
4. July 24, 1999 20%
5. July 24, 2000 20%
<PAGE>
ALLIANCE CAPITAL MANAGEMENT L.P.
UNIT OPTION PLAN AGREEMENT
AGREEMENT, dated April 25, 1995 between Alliance Capital Management L.P.
(the "Partnership") and David R. Brewer, Jr.(the "Employee"), an employee of the
Partnership or a subsidiary of the Partnership.
The Board Compensation Committee (the "Administrator") of the Board of
Directors of Alliance Capital Management Corporation, the general partner of the
Partnership (the "Board"), pursuant to the Alliance Capital Management L.P. Unit
Option Plan, a copy of which has been delivered to the Employee (the "Plan"),
granted to the Employee an option to purchase units representing assignments of
beneficial ownership of limited partnership interests in the Partnership (the
"Units") as hereinafter set forth, and authorized the execution and delivery of
this Agreement.
In accordance with that grant, and as a condition thereto, the Partnership
and the Employee agree as follows:
1. GRANT OF OPTION. Subject to and under the terms and conditions set
forth in this Agreement and the Plan, the Employee is the owner of an option
(the "Option") to purchase from the Partnership the number of Units set forth in
Section 1 of Exhibit A attached hereto at the per Unit price set forth in
Section 2 of Exhibit A.
2. TERM AND EXERCISE SCHEDULE. This Option shall not be exercisable to
any extent prior to April 25, 1996 or after April 25, 2005 (the "Expiration
Date"). Subject to the terms and conditions of this Agreement and the Plan, the
Employee shall be entitled to exercise the Option prior to the Expiration Date
and to purchase Units hereunder in accordance with the schedule set forth in
Section 3 of Exhibit A.
The right to exercise this Option shall be cumulative so that to the extent
this Option is not exercised when it becomes initially exercisable with respect
to any Units, it shall be exercisable with respect to such Units at any time
thereafter until the Expiration Date and any Units subject to this Option which
have not then been purchased may not, thereafter, be purchased hereunder. A
Unit shall be considered to have been purchased on or before the Expiration Date
if the Partnership has been given notice of the purchase pursuant to Sections 3
and 13, and the Partnership has actually received payment for the Unit on or
before the Expiration Date.
<PAGE>
-2-
3. NOTICE OF EXERCISE, PAYMENT AND CERTIFICATE. Exercise of this Option,
in whole or in part, shall be by delivery of a written notice to the Partnership
pursuant to Section 13 which specifies the number of Units being purchased and
is accompanied by payment therefor in cash. Promptly after receipt of such
notice and purchase price, the Partnership shall deliver to the person
exercising the Option a certificate for the number of Units purchased. Units to
be issued upon the exercise of this Option may be either authorized and unissued
Units or Units which have been reacquired by the Partnership.
4. TERMINATION OF EMPLOYMENT. This Option may be exercised only while
the Employee is a full-time employee of the Partnership, except as follows:
(a) DISABILITY. If the Employee's employment with the Partnership
terminates because of Disability, the Employee (or his personal
representative) shall have the right to exercise this Option, to the extent
that the Employee was entitled to do so on the date of termination of his
employment, for a period which ends not later than the earlier of (i) three
months after such termination, and (ii) the Expiration Date. "Disability"
shall mean a determination by the Administrator that the Employee is
physically or mentally incapacitated and has been unable for a period of
six consecutive months to perform the duties for which he was responsible
immediately before the onset of his incapacity. In order to assist the
Administrator in making a determination as to the Disability of the
Employee for purposes of this paragraph (a), the Employee shall, as
reasonably requested by the Administrator, (A) make himself available for
medical examinations by one or more physicians chosen by the Administrator
and approved by the Employee, whose approval shall not unreasonably be
withheld, and (B) grant the Administrator and any such physicians access to
all relevant medical information concerning him, arrange to furnish copies
of medical records to them, and use his best efforts to cause his own
physicians to be available to discuss his health with them.
(b) DEATH. If the Employee dies (i) while in the employ of the
Partnership, or (ii) within one month after termination of his employment
with the Partnership because of Disability (as determined in accordance
with paragraph (a) above), or (iii) within one month after the Partnership
terminates his employment for any reason other than for Cause (as
determined in accordance with paragraph (c) below), this Option may be
exercised, to the extent that the Employee was entitled to do so on the
date of his death, by the person or persons to whom the Option shall have
been transferred by will or by the laws of descent and distribution, for a
period which ends not later than the earlier of (A) six months from the
date of the Employee's death, and (B) the Expiration Date.
<PAGE>
-3-
(c) OTHER TERMINATION. If the Partnership terminates the Employee's
employment for any reason other than death, Disability or for Cause, the
Employee shall have the right to exercise this Option, to the extent that
he was entitled to do so on the date of the termination of his employment,
for a period which ends not later than the earlier of (i) three months
after such termination, and (ii) the Expiration Date. "Cause" shall mean
(A) the Employee's continuing willful failure to perform his duties as an
employee (other than as a result of his total or partial incapacity due to
physical or mental illness), (B) gross negligence or malfeasance in the
performance of the Employee's duties, (C) a finding by a court or other
governmental body with proper jurisdiction that an act or acts by the
Employee constitutes (1) a felony under the laws of the United States or
any state thereof (or, if the Employee's place of employment is outside of
the United States, a serious crime under the laws of the foreign
jurisdiction where he is employed, which crime if committed in the United
States would be a felony under the laws of the United States or the laws of
New York), or (2) a violation of federal or state securities law (or, if
the Employee's place of employment is outside of the United States, of
federal, state or foreign securities law) by reason of which finding of
violation described in this clause (2) the Board determines in good faith
that the continued employment of the Employee by the Partnership would be
seriously detrimental to the Partnership and its business, (D) in the
absence of such a finding by a court or other governmental body with proper
jurisdiction, such a determination in good faith by the Board by reason of
such act or acts constituting such a felony, serious crime or violation, or
(E) any breach by the Employee of any obligation of confidentiality or non-
competition to the Partnership.
For purposes of this Agreement, employment by a subsidiary of the
Partnership shall be deemed to be employment by the Partnership. A "subsidiary"
of the Partnership shall be any corporation or other entity of which the
Partnership and/or its subsidiaries (a) have sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of its
board of directors, or (b) otherwise have the power to direct or cause the
direction of its management and policies.
5. NON-TRANSFERABILITY. This Option is not transferable other than by
will or the laws of descent and distribution and, except as otherwise provided
in Section 4, during the lifetime of the Employee this Option is exercisable
only by the Employee.
<PAGE>
-4-
6. NO RIGHT TO CONTINUED EMPLOYMENT. This Option shall not confer upon
the Employee any right to continue in the employ of the Partnership or interfere
in any way with the right of the Partnership to terminate the employment of the
Employee at any time for any reason.
7. PAYMENT OF WITHHOLDING TAX. (a) In the event that the Partnership
determines that any federal, state or local tax or any other charge is required
by law to be withheld with respect to the exercise of this Option, the Employee
shall promptly pay to the Partnership or a subsidiary specified by the
Partnership, on at least seven business days' notice from the Partnership, an
amount equal to such withholding tax or charge or (b) if the Employee does not
promptly so pay the entire amount of such withholding tax or charge in
accordance with such notice, or make arrangements satisfactory to the
Partnership regarding payment thereof, the Partnership or any subsidiary of the
Partnership may withhold the remaining amount thereof from any amount due the
Employee from the Partnership or the subsidiary.
8. DILUTION AND OTHER ADJUSTMENTS. The existence of this Option shall
not impair the right of the Partnership or its partners to, among other things,
conduct, make or effect any change in the Partnership's business, any issuance
of debt obligations or other securities by the Partnership, any grant of options
with respect to an interest in the Partnership or any adjustment,
recapitalization or other change in the partnership interests of the Partnership
(including, without limitation, any distribution, subdivision, or combination of
limited partnership interests), or any incorporation of the Partnership. In the
event of such a change in the partnership interests of the Partnership, the
Board shall make such adjustments to this or Option, including the purchase
price specified in Section 1, as it deems appropriate and equitable. In the
event of incorporation of the Partnership, the Board shall make such
arrangements as it deems appropriate and equitable with respect to this Option
for the Employee to purchase stock in the resulting corporation in place of the
Units subject to this Option. Any such adjustment or arrangement may provide
for the elimination of any fractional Unit or shares of stock which might
otherwise become subject to this Option. Any decision by the Board under this
Section shall be final and binding upon the Employee.
9. RIGHTS AS AN OWNER OF A UNIT. The Employee (or a transferee of this
Option pursuant to Section 4) shall have no rights as an owner of a Unit with
respect to any Unit covered by this Option until he becomes the holder of record
of such Unit, which shall be deemed to occur at the time that notice of purchase
is given and payment in full is received by the Partnership under Section 3 and
13. By such actions, the Employee (or such transferee) shall be deemed to have
consented to, and agreed to
<PAGE>
-5-
be bound by, all other terms, conditions, rights and obligations set forth in
the then current Agreement of Limited Partnership (As Amended and Restated) of
the Partnership. Except as provided in Section 8, no adjustment shall be made
with respect to any Unit for any distribution for which the record date is prior
to the date on which the Employee becomes the holder of record of the Unit,
regardless of whether the distribution is ordinary or extraordinary, in cash,
securities or other property, or of any other rights.
10. ADMINISTRATOR. If at any time there shall be no Board Compensation
Committee of the Board, the Board shall be the Administrator.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
12. INTERPRETATION. The Employee accepts this Option subject to all the
terms and provisions of the Plan, which shall control in the event of any
conflict between any provision of the Plan and this Agreement, and accepts as
binding, conclusive and final all decisions or interpretations of the Board or
the Administrator upon any questions arising under the Plan and/or this
Agreement.
13. NOTICES. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Partnership, to the Secretary of Alliance Capital Management
Corporation at 1345 Avenue of the Americas, New York, New York 10105, or if the
Partnership should move its principal office, to such principal office, and, in
the case of the Employee, to his last permanent address as shown on the
Partnership's records, subject to the right of either party to designate some
other address at any time hereafter in a notice satisfying the requirements of
this Section.
<PAGE>
-6-
14. SECTIONS AND HEADINGS. All section references in this Agreement are
to sections hereof for convenience of reference only and are not to affect the
meaning of any provision of this Agreement.
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management
Corporation, General Partner
By /s/John D. Carifa
-----------------
John D. Carifa
President
/s/ David R. Brewer, Jr.
------------------------
David R. Brewer, Jr.
<PAGE>
EXHIBIT A TO UNIT OPTION PLAN AGREEMENT DATED APRIL 25, 1995
BETWEEN ALLIANCE CAPITAL MANAGEMENT L.P. AND David R. Brewer, Jr.
1. The number of Units that the Employee is entitled to purchase pursuant
to the Option granted under this Agreement is 10,000.
2. The per Unit price to purchase Units pursuant to the Option granted
under this Agreement is $19.375 per Unit.
3. Percentage of Units With Respect to
Which the Option First Becomes
EXERCISABLE ON THE DATE INDICATED
1. April 25, 1996 20%
2. April 25, 1997 20%
3. April 25, 1998 20%
4. April 25, 1999 20%
5. April 25, 2000 20%
<PAGE>
ALLIANCE CAPITAL MANAGEMENT L.P.
UNIT OPTION PLAN AGREEMENT
AGREEMENT, dated December 5, 1995 between Alliance Capital Management L.P.
(the "Partnership") and David R. Brewer, Jr.(the "Employee"), an employee of the
Partnership or a subsidiary of the Partnership.
The Unit Option and Unit Bonus Committee (the "Administrator") of the Board
of Directors of Alliance Capital Management Corporation, the general partner of
the Partnership (the "Board"), pursuant to the Alliance Capital Management L.P.
1993 Unit Option Plan, a copy of which has been delivered to the Employee (the
"Plan"), granted to the Employee an option to purchase units representing
assignments of beneficial ownership of limited partnership interests in the
Partnership (the "Units") as hereinafter set forth, and authorized the execution
and delivery of this Agreement.
In accordance with that grant, and as a condition thereto, the Partnership
and the Employee agree as follows:
1. GRANT OF OPTION. Subject to and under the terms and conditions set
forth in this Agreement and the Plan, the Employee is the owner of an option
(the "Option") to purchase from the Partnership the number of Units set forth in
Section 1 of Exhibit A attached hereto at the per Unit price set forth in
Section 2 of Exhibit A.
2. TERM AND EXERCISE SCHEDULE. This Option shall not be exercisable to
any extent prior to December 5, 1996 or after December 5, 2005 (the "Expiration
Date"). Subject to the terms and conditions of this Agreement and the Plan, the
Employee shall be entitled to exercise the Option prior to the Expiration Date
and to purchase Units hereunder in accordance with the schedule set forth in
Section 3 of Exhibit A.
The right to exercise this Option shall be cumulative so that to the extent
this Option is not exercised when it becomes initially exercisable with respect
to any Units, it shall be exercisable with respect to such Units at any time
thereafter until the Expiration Date and any Units subject to this Option which
have not then been purchased may not, thereafter, be purchased hereunder. A
Unit shall be considered to have been purchased on or before the Expiration Date
if the Partnership has been given notice of the purchase pursuant to Sections 3
and 13, and the Partnership has actually received payment for the Unit on or
before the Expiration Date.
<PAGE>
-2-
3. NOTICE OF EXERCISE, PAYMENT AND CERTIFICATE. Exercise of this Option,
in whole or in part, shall be by delivery of a written notice to the Partnership
pursuant to Section 13 which specifies the number of Units being purchased and
is accompanied by payment therefor in cash. Promptly after receipt of such
notice and purchase price, the Partnership shall deliver to the person
exercising the Option a certificate for the number of Units purchased. Units to
be issued upon the exercise of this Option may be either authorized and unissued
Units or Units which have been reacquired by the Partnership.
4. TERMINATION OF EMPLOYMENT. This Option may be exercised only while
the Employee is a full-time employee of the Partnership, except as follows:
(a) DISABILITY. If the Employee's employment with the Partnership
terminates because of Disability, the Employee (or his personal
representative) shall have the right to exercise this Option, to the extent
that the Employee was entitled to do so on the date of termination of his
employment, for a period which ends not later than the earlier of (i) three
months after such termination, and (ii) the Expiration Date. "Disability"
shall mean a determination by the Administrator that the Employee is
physically or mentally incapacitated and has been unable for a period of
six consecutive months to perform the duties for which he was responsible
immediately before the onset of his incapacity. In order to assist the
Administrator in making a determination as to the Disability of the
Employee for purposes of this paragraph (a), the Employee shall, as
reasonably requested by the Administrator, (A) make himself available for
medical examinations by one or more physicians chosen by the Administrator
and approved by the Employee, whose approval shall not unreasonably be
withheld, and (B) grant the Administrator and any such physicians access to
all relevant medical information concerning him, arrange to furnish copies
of medical records to them, and use his best efforts to cause his own
physicians to be available to discuss his health with them.
(b) DEATH. If the Employee dies (i) while in the employ of the
Partnership, or (ii) within one month after termination of his employment
with the Partnership because of Disability (as determined in accordance
with paragraph (a) above), or (iii) within one month after the Partnership
terminates his employment for any reason other than for Cause (as
determined in accordance with paragraph (c) below), this Option may be
exercised, to the extent that the Employee was entitled to do so on the
date of his death, by the person or persons to whom the Option shall have
been transferred by will or by the laws of descent and distribution, for a
period which ends not later than the earlier of (A) six months from the
date of the Employee's death, and (B) the Expiration Date.
<PAGE>
-3-
(c) OTHER TERMINATION. If the Partnership terminates the Employee's
employment for any reason other than death, Disability or for Cause, the
Employee shall have the right to exercise this Option, to the extent that
he was entitled to do so on the date of the termination of his employment,
for a period which ends not later than the earlier of (i) three months
after such termination, and (ii) the Expiration Date. "Cause" shall mean
(A) the Employee's continuing willful failure to perform his duties as an
employee (other than as a result of his total or partial incapacity due to
physical or mental illness), (B) gross negligence or malfeasance in the
performance of the Employee's duties, (C) a finding by a court or other
governmental body with proper jurisdiction that an act or acts by the
Employee constitutes (1) a felony under the laws of the United States or
any state thereof (or, if the Employee's place of employment is outside of
the United States, a serious crime under the laws of the foreign
jurisdiction where he is employed, which crime if committed in the United
States would be a felony under the laws of the United States or the laws of
New York), or (2) a violation of federal or state securities law (or, if
the Employee's place of employment is outside of the United States, of
federal, state or foreign securities law) by reason of which finding of
violation described in this clause (2) the Board determines in good faith
that the continued employment of the Employee by the Partnership would be
seriously detrimental to the Partnership and its business, (D) in the
absence of such a finding by a court or other governmental body with proper
jurisdiction, such a determination in good faith by the Board by reason of
such act or acts constituting such a felony, serious crime or violation, or
(E) any breach by the Employee of any obligation of confidentiality or non-
competition to the Partnership.
For purposes of this Agreement, employment by a subsidiary of the
Partnership shall be deemed to be employment by the Partnership. A "subsidiary"
of the Partnership shall be any corporation or other entity of which the
Partnership and/or its subsidiaries (a) have sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of its
board of directors, or (b) otherwise have the power to direct or cause the
direction of its management and policies.
5. NON-TRANSFERABILITY. This Option is not transferable other than by
will or the laws of descent and distribution and, except as otherwise provided
in Section 4, during the lifetime of the Employee this Option is exercisable
only by the Employee.
<PAGE>
-4-
6. NO RIGHT TO CONTINUED EMPLOYMENT. This Option shall not confer upon
the Employee any right to continue in the employ of the Partnership or interfere
in any way with the right of the Partnership to terminate the employment of the
Employee at any time for any reason.
7. PAYMENT OF WITHHOLDING TAX. (a) In the event that the Partnership
determines that any federal, state or local tax or any other charge is required
by law to be withheld with respect to the exercise of this Option, the Employee
shall promptly pay to the Partnership or a subsidiary specified by the
Partnership, on at least seven business days' notice from the Partnership, an
amount equal to such withholding tax or charge or (b) if the Employee does not
promptly so pay the entire amount of such withholding tax or charge in
accordance with such notice, or make arrangements satisfactory to the
Partnership regarding payment thereof, the Partnership or any subsidiary of the
Partnership may withhold the remaining amount thereof from any amount due the
Employee from the Partnership or the subsidiary.
8. DILUTION AND OTHER ADJUSTMENTS. The existence of this Option shall
not impair the right of the Partnership or its partners to, among other things,
conduct, make or effect any change in the Partnership's business, any issuance
of debt obligations or other securities by the Partnership, any grant of options
with respect to an interest in the Partnership or any adjustment,
recapitalization or other change in the partnership interests of the Partnership
(including, without limitation, any distribution, subdivision, or combination of
limited partnership interests), or any incorporation of the Partnership. In the
event of such a change in the partnership interests of the Partnership, the
Board shall make such adjustments to this or Option, including the purchase
price specified in Section 1, as it deems appropriate and equitable. In the
event of incorporation of the Partnership, the Board shall make such
arrangements as it deems appropriate and equitable with respect to this Option
for the Employee to purchase stock in the resulting corporation in place of the
Units subject to this Option. Any such adjustment or arrangement may provide
for the elimination of any fractional Unit or shares of stock which might
otherwise become subject to this Option. Any decision by the Board under this
Section shall be final and binding upon the Employee.
9. RIGHTS AS AN OWNER OF A UNIT. The Employee (or a transferee of this
Option pursuant to Section 4) shall have no rights as an owner of a Unit with
respect to any Unit covered by this Option until he becomes the holder of record
of such Unit, which shall be deemed to occur at the time that notice of purchase
is given and payment in full is received by the Partnership under Section 3 and
13. By such actions, the Employee (or such transferee) shall be deemed to have
consented to, and agreed to
<PAGE>
-5-
be bound by, all other terms, conditions, rights and obligations set forth in
the then current Agreement of Limited Partnership (As Amended and Restated) of
the Partnership. Except as provided in Section 8, no adjustment shall be made
with respect to any Unit for any distribution for which the record date is prior
to the date on which the Employee becomes the holder of record of the Unit,
regardless of whether the distribution is ordinary or extraordinary, in cash,
securities or other property, or of any other rights.
10. ADMINISTRATOR. If at any time there shall be no Board Compensation
Committee of the Board, the Board shall be the Administrator.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
12. INTERPRETATION. The Employee accepts this Option subject to all the
terms and provisions of the Plan, which shall control in the event of any
conflict between any provision of the Plan and this Agreement, and accepts as
binding, conclusive and final all decisions or interpretations of the Board or
the Administrator upon any questions arising under the Plan and/or this
Agreement.
13. NOTICES. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Partnership, to the Secretary of Alliance Capital Management
Corporation at 1345 Avenue of the Americas, New York, New York 10105, or if the
Partnership should move its principal office, to such principal office, and, in
the case of the Employee, to his last permanent address as shown on the
Partnership's records, subject to the right of either party to designate some
other address at any time hereafter in a notice satisfying the requirements of
this Section.
<PAGE>
-6-
14. SECTIONS AND HEADINGS. All section references in this Agreement are
to sections hereof for convenience of reference only and are not to affect the
meaning of any provision of this Agreement.
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management
Corporation, General Partner
By /S/ John D. Carifa
------------------
John D. Carifa
President
/S/ David R. Brewer, Jr.
------------------------
David R. Brewer, Jr.
5033G
<PAGE>
EXHIBIT A TO UNIT OPTION PLAN AGREEMENT DATED DECEMBER 5, 1995 BETWEEN
ALLIANCE CAPITAL MANAGEMENT L.P. AND DAVID R. BREWER, JR.
1. The number of Units that the Employee is entitled to purchase pursuant
to the Option granted under this Agreement is 10,000.
2. The per Unit price to purchase Units pursuant to the Option granted
under this Agreement is $22.25 per Unit.
3. Percentage of Units With Respect to
Which the Option First Becomes
EXERCISABLE ON THE DATE INDICATED
1. December 5, 1996 20%
2. December 5, 1997 20%
3. December 5, 1998 20%
4. December 5, 1999 20%
5. December 5, 2000 20%
<PAGE>
ALLIANCE CAPITAL MANAGEMENT L.P.
UNIT OPTION PLAN AGREEMENT
AGREEMENT, dated April 25, 1995 between Alliance Capital Management L.P.
(the "Partnership") and Robert H. Joseph, Jr.(the "Employee"), an employee of
the Partnership or a subsidiary of the Partnership.
The Board Compensation Committee (the "Administrator") of the Board of
Directors of Alliance Capital Management Corporation, the general partner of the
Partnership (the "Board"), pursuant to the Alliance Capital Management L.P. Unit
Option Plan, a copy of which has been delivered to the Employee (the "Plan"),
granted to the Employee an option to purchase units representing assignments of
beneficial ownership of limited partnership interests in the Partnership (the
"Units") as hereinafter set forth, and authorized the execution and delivery of
this Agreement.
In accordance with that grant, and as a condition thereto, the Partnership
and the Employee agree as follows:
1. GRANT OF OPTION. Subject to and under the terms and conditions set
forth in this Agreement and the Plan, the Employee is the owner of an option
(the "Option") to purchase from the Partnership the number of Units set forth in
Section 1 of Exhibit A attached hereto at the per Unit price set forth in
Section 2 of Exhibit A.
2. TERM AND EXERCISE SCHEDULE. This Option shall not be exercisable to
any extent prior to April 25, 1996 or after April 25, 2005 (the "Expiration
Date"). Subject to the terms and conditions of this Agreement and the Plan, the
Employee shall be entitled to exercise the Option prior to the Expiration Date
and to purchase Units hereunder in accordance with the schedule set forth in
Section 3 of Exhibit A.
The right to exercise this Option shall be cumulative so that to the extent
this Option is not exercised when it becomes initially exercisable with respect
to any Units, it shall be exercisable with respect to such Units at any time
thereafter until the Expiration Date and any Units subject to this Option which
have not then been purchased may not, thereafter, be purchased hereunder. A
Unit shall be considered to have been purchased on or before the Expiration Date
if the Partnership has been given notice of the purchase pursuant to Sections 3
and 13, and the Partnership has actually received payment for the Unit on or
before the Expiration Date.
<PAGE>
-2-
3. NOTICE OF EXERCISE, PAYMENT AND CERTIFICATE. Exercise of this Option,
in whole or in part, shall be by delivery of a written notice to the Partnership
pursuant to Section 13 which specifies the number of Units being purchased and
is accompanied by payment therefor in cash. Promptly after receipt of such
notice and purchase price, the Partnership shall deliver to the person
exercising the Option a certificate for the number of Units purchased. Units to
be issued upon the exercise of this Option may be either authorized and unissued
Units or Units which have been reacquired by the Partnership.
4. TERMINATION OF EMPLOYMENT. This Option may be exercised only while
the Employee is a full-time employee of the Partnership, except as follows:
(a) DISABILITY. If the Employee's employment with the Partnership
terminates because of Disability, the Employee (or his personal
representative) shall have the right to exercise this Option, to the extent
that the Employee was entitled to do so on the date of termination of his
employment, for a period which ends not later than the earlier of (i) three
months after such termination, and (ii) the Expiration Date. "Disability"
shall mean a determination by the Administrator that the Employee is
physically or mentally incapacitated and has been unable for a period of
six consecutive months to perform the duties for which he was responsible
immediately before the onset of his incapacity. In order to assist the
Administrator in making a determination as to the Disability of the
Employee for purposes of this paragraph (a), the Employee shall, as
reasonably requested by the Administrator, (A) make himself available for
medical examinations by one or more physicians chosen by the Administrator
and approved by the Employee, whose approval shall not unreasonably be
withheld, and (B) grant the Administrator and any such physicians access to
all relevant medical information concerning him, arrange to furnish copies
of medical records to them, and use his best efforts to cause his own
physicians to be available to discuss his health with them.
(b) DEATH. If the Employee dies (i) while in the employ of the
Partnership, or (ii) within one month after termination of his employment
with the Partnership because of Disability (as determined in accordance
with paragraph (a) above), or (iii) within one month after the Partnership
terminates his employment for any reason other than for Cause (as
determined in accordance with paragraph (c) below), this Option may be
exercised, to the extent that the Employee was entitled to do so on the
date of his death, by the person or persons to whom the Option shall have
been transferred by will or by the laws of descent and distribution, for a
period which ends not later than the earlier of (A) six months from the
date of the Employee's death, and (B) the Expiration Date.
<PAGE>
-3-
(c) OTHER TERMINATION. If the Partnership terminates the Employee's
employment for any reason other than death, Disability or for Cause, the
Employee shall have the right to exercise this Option, to the extent that
he was entitled to do so on the date of the termination of his employment,
for a period which ends not later than the earlier of (i) three months
after such termination, and (ii) the Expiration Date. "Cause" shall mean
(A) the Employee's continuing willful failure to perform his duties as an
employee (other than as a result of his total or partial incapacity due to
physical or mental illness), (B) gross negligence or malfeasance in the
performance of the Employee's duties, (C) a finding by a court or other
governmental body with proper jurisdiction that an act or acts by the
Employee constitutes (1) a felony under the laws of the United States or
any state thereof (or, if the Employee's place of employment is outside of
the United States, a serious crime under the laws of the foreign
jurisdiction where he is employed, which crime if committed in the United
States would be a felony under the laws of the United States or the laws of
New York), or (2) a violation of federal or state securities law (or, if
the Employee's place of employment is outside of the United States, of
federal, state or foreign securities law) by reason of which finding of
violation described in this clause (2) the Board determines in good faith
that the continued employment of the Employee by the Partnership would be
seriously detrimental to the Partnership and its business, (D) in the
absence of such a finding by a court or other governmental body with proper
jurisdiction, such a determination in good faith by the Board by reason of
such act or acts constituting such a felony, serious crime or violation, or
(E) any breach by the Employee of any obligation of confidentiality or
non-competition to the Partnership.
For purposes of this Agreement, employment by a subsidiary of the
Partnership shall be deemed to be employment by the Partnership. A "subsidiary"
of the Partnership shall be any corporation or other entity of which the
Partnership and/or its subsidiaries (a) have sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of its
board of directors, or (b) otherwise have the power to direct or cause the
direction of its management and policies.
5. NON-TRANSFERABILITY. This Option is not transferable other than by
will or the laws of descent and distribution and, except as otherwise provided
in Section 4, during the lifetime of the Employee this Option is exercisable
only by the Employee.
<PAGE>
-4-
6. NO RIGHT TO CONTINUED EMPLOYMENT. This Option shall not confer upon
the Employee any right to continue in the employ of the Partnership or interfere
in any way with the right of the Partnership to terminate the employment of the
Employee at any time for any reason.
7. PAYMENT OF WITHHOLDING TAX. (a) In the event that the Partnership
determines that any federal, state or local tax or any other charge is required
by law to be withheld with respect to the exercise of this Option, the Employee
shall promptly pay to the Partnership or a subsidiary specified by the
Partnership, on at least seven business days' notice from the Partnership, an
amount equal to such withholding tax or charge or (b) if the Employee does not
promptly so pay the entire amount of such withholding tax or charge in
accordance with such notice, or make arrangements satisfactory to the
Partnership regarding payment thereof, the Partnership or any subsidiary of the
Partnership may withhold the remaining amount thereof from any amount due the
Employee from the Partnership or the subsidiary.
8. DILUTION AND OTHER ADJUSTMENTS. The existence of this Option shall
not impair the right of the Partnership or its partners to, among other things,
conduct, make or effect any change in the Partnership's business, any issuance
of debt obligations or other securities by the Partnership, any grant of options
with respect to an interest in the Partnership or any adjustment,
recapitalization or other change in the partnership interests of the Partnership
(including, without limitation, any distribution, subdivision, or combination of
limited partnership interests), or any incorporation of the Partnership. In the
event of such a change in the partnership interests of the Partnership, the
Board shall make such adjustments to this or Option, including the purchase
price specified in Section 1, as it deems appropriate and equitable. In the
event of incorporation of the Partnership, the Board shall make such
arrangements as it deems appropriate and equitable with respect to this Option
for the Employee to purchase stock in the resulting corporation in place of the
Units subject to this Option. Any such adjustment or arrangement may provide
for the elimination of any fractional Unit or shares of stock which might
otherwise become subject to this Option. Any decision by the Board under this
Section shall be final and binding upon the Employee.
9. RIGHTS AS AN OWNER OF A UNIT. The Employee (or a transferee of this
Option pursuant to Section 4) shall have no rights as an owner of a Unit with
respect to any Unit covered by this Option until he becomes the holder of record
of such Unit, which shall be deemed to occur at the time that notice of purchase
is given and payment in full is received by the Partnership under Section 3 and
13. By such actions, the Employee (or such transferee) shall be deemed to have
consented to, and agreed to
<PAGE>
-5-
be bound by, all other terms, conditions, rights and obligations set forth in
the then current Agreement of Limited Partnership (As Amended and Restated) of
the Partnership. Except as provided in Section 8, no adjustment shall be made
with respect to any Unit for any distribution for which the record date is prior
to the date on which the Employee becomes the holder of record of the Unit,
regardless of whether the distribution is ordinary or extraordinary, in cash,
securities or other property, or of any other rights.
10. ADMINISTRATOR. If at any time there shall be no Board Compensation
Committee of the Board, the Board shall be the Administrator.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
12. INTERPRETATION. The Employee accepts this Option subject to all the
terms and provisions of the Plan, which shall control in the event of any
conflict between any provision of the Plan and this Agreement, and accepts as
binding, conclusive and final all decisions or interpretations of the Board or
the Administrator upon any questions arising under the Plan and/or this
Agreement.
13. NOTICES. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Partnership, to the Secretary of Alliance Capital Management
Corporation at 1345 Avenue of the Americas, New York, New York 10105, or if the
Partnership should move its principal office, to such principal office, and, in
the case of the Employee, to his last permanent address as shown on the
Partnership's records, subject to the right of either party to designate some
other address at any time hereafter in a notice satisfying the requirements of
this Section.
<PAGE>
-6-
14. SECTIONS AND HEADINGS. All section references in this Agreement are
to sections hereof for convenience of reference only and are not to affect the
meaning of any provision of this Agreement.
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management
Corporation, General Partner
By /s/John D. Carifa
-----------------
John D. Carifa
President
/s/Robert H. Joseph, Jr.
------------------------
Robert H. Joseph, Jr.
<PAGE>
EXHIBIT A TO UNIT OPTION PLAN AGREEMENT DATED APRIL 25, 1995
BETWEEN ALLIANCE CAPITAL MANAGEMENT L.P. AND Robert H. Joseph, Jr.
1. The number of Units that the Employee is entitled to purchase pursuant
to the Option granted under this Agreement is 20,000.
2. The per Unit price to purchase Units pursuant to the Option granted
under this Agreement is $19.375 per Unit.
3. Percentage of Units With Respect to
Which the Option First Becomes
Exercisable on the Date Indicated
----------------------------------
1. April 25, 1996 20%
2. April 25, 1997 20%
3. April 25, 1998 20%
4. April 25, 1999 20%
5. April 25, 2000 20%
<PAGE>
ALLIANCE CAPITAL MANAGEMENT L.P.
UNIT OPTION PLAN AGREEMENT
AGREEMENT, dated December 5, 1995 between Alliance Capital Management L.P.
(the "Partnership") Robert H. Joseph, Jr. (the "Employee"), an employee of the
Partnership or a subsidiary of the Partnership.
The Unit Option and Unit Bonus Committee (the "Administrator") of the Board
of Directors of Alliance Capital Management Corporation, the general partner of
the Partnership (the "Board"), pursuant to the Alliance Capital Management L.P.
1993 Unit Option Plan, a copy of which has been delivered to the Employee (the
"Plan"), granted to the Employee an option to purchase units representing
assignments of beneficial ownership of limited partnership interests in the
Partnership (the "Units") as hereinafter set forth, and authorized the execution
and delivery of this Agreement.
In accordance with that grant, and as a condition thereto, the Partnership
and the Employee agree as follows:
1. GRANT OF OPTION. Subject to and under the terms and conditions set
forth in this Agreement and the Plan, the Employee is the owner of an option
(the "Option") to purchase from the Partnership the number of Units set forth in
Section 1 of Exhibit A attached hereto at the per Unit price set forth in
Section 2 of Exhibit A.
2. TERM AND EXERCISE SCHEDULE. This Option shall not be exercisable to
any extent prior to December 5, 1996 or after December 5, 2005 (the "Expiration
Date"). Subject to the terms and conditions of this Agreement and the Plan, the
Employee shall be entitled to exercise the Option prior to the Expiration Date
and to purchase Units hereunder in accordance with the schedule set forth in
Section 3 of Exhibit A.
The right to exercise this Option shall be cumulative so that to the extent
this Option is not exercised when it becomes initially exercisable with respect
to any Units, it shall be exercisable with respect to such Units at any time
thereafter until the Expiration Date and any Units subject to this Option which
have not then been purchased may not, thereafter, be purchased hereunder. A
Unit shall be considered to have been purchased on or before the Expiration Date
if the Partnership has been given notice of the purchase pursuant to Sections 3
and 13, and the Partnership has actually received payment for the Unit on or
before the Expiration Date.
<PAGE>
-2-
3. NOTICE OF EXERCISE, PAYMENT AND CERTIFICATE. Exercise of this Option,
in whole or in part, shall be by delivery of a written notice to the Partnership
pursuant to Section 13 which specifies the number of Units being purchased and
is accompanied by payment therefor in cash. Promptly after receipt of such
notice and purchase price, the Partnership shall deliver to the person
exercising the Option a certificate for the number of Units purchased. Units to
be issued upon the exercise of this Option may be either authorized and unissued
Units or Units which have been reacquired by the Partnership.
4. TERMINATION OF EMPLOYMENT. This Option may be exercised only while
the Employee is a full-time employee of the Partnership, except as follows:
(a) DISABILITY. If the Employee's employment with the Partnership
terminates because of Disability, the Employee (or his personal
representative) shall have the right to exercise this Option, to the extent
that the Employee was entitled to do so on the date of termination of his
employment, for a period which ends not later than the earlier of (i) three
months after such termination, and (ii) the Expiration Date. "Disability"
shall mean a determination by the Administrator that the Employee is
physically or mentally incapacitated and has been unable for a period of
six consecutive months to perform the duties for which he was responsible
immediately before the onset of his incapacity. In order to assist the
Administrator in making a determination as to the Disability of the
Employee for purposes of this paragraph (a), the Employee shall, as
reasonably requested by the Administrator, (A) make himself available for
medical examinations by one or more physicians chosen by the Administrator
and approved by the Employee, whose approval shall not unreasonably be
withheld, and (B) grant the Administrator and any such physicians access to
all relevant medical information concerning him, arrange to furnish copies
of medical records to them, and use his best efforts to cause his own
physicians to be available to discuss his health with them.
(b) DEATH. If the Employee dies (i) while in the employ of the
Partnership, or (ii) within one month after termination of his employment
with the Partnership because of Disability (as determined in accordance
with paragraph (a) above), or (iii) within one month after the Partnership
terminates his employment for any reason other than for Cause (as
determined in accordance with paragraph (c) below), this Option may be
exercised, to the extent that the Employee was entitled to do so on the
date of his death, by the person or persons to whom the Option shall have
been transferred by will or by the laws of descent and distribution, for a
period which ends not later than the earlier of (A) six months from the
date of the Employee's death, and (B) the Expiration Date.
<PAGE>
-3-
(c) OTHER TERMINATION. If the Partnership terminates the Employee's
employment for any reason other than death, Disability or for Cause, the
Employee shall have the right to exercise this Option, to the extent that
he was entitled to do so on the date of the termination of his employment,
for a period which ends not later than the earlier of (i) three months
after such termination, and (ii) the Expiration Date. "Cause" shall mean
(A) the Employee's continuing willful failure to perform his duties as an
employee (other than as a result of his total or partial incapacity due to
physical or mental illness), (B) gross negligence or malfeasance in the
performance of the Employee's duties, (C) a finding by a court or other
governmental body with proper jurisdiction that an act or acts by the
Employee constitutes (1) a felony under the laws of the United States or
any state thereof (or, if the Employee's place of employment is outside of
the United States, a serious crime under the laws of the foreign
jurisdiction where he is employed, which crime if committed in the United
States would be a felony under the laws of the United States or the laws of
New York), or (2) a violation of federal or state securities law (or, if
the Employee's place of employment is outside of the United States, of
federal, state or foreign securities law) by reason of which finding of
violation described in this clause (2) the Board determines in good faith
that the continued employment of the Employee by the Partnership would be
seriously detrimental to the Partnership and its business, (D) in the
absence of such a finding by a court or other governmental body with proper
jurisdiction, such a determination in good faith by the Board by reason of
such act or acts constituting such a felony, serious crime or violation, or
(E) any breach by the Employee of any obligation of confidentiality or non-
competition to the Partnership.
For purposes of this Agreement, employment by a subsidiary of the
Partnership shall be deemed to be employment by the Partnership. A "subsidiary"
of the Partnership shall be any corporation or other entity of which the
Partnership and/or its subsidiaries (a) have sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of its
board of directors, or (b) otherwise have the power to direct or cause the
direction of its management and policies.
5. NON-TRANSFERABILITY. This Option is not transferable other than by
will or the laws of descent and distribution and, except as otherwise provided
in Section 4, during the lifetime of the Employee this Option is exercisable
only by the Employee.
<PAGE>
-4-
6. NO RIGHT TO CONTINUED EMPLOYMENT. This Option shall not confer upon
the Employee any right to continue in the employ of the Partnership or interfere
in any way with the right of the Partnership to terminate the employment of the
Employee at any time for any reason.
7. PAYMENT OF WITHHOLDING TAX. (a) In the event that the Partnership
determines that any federal, state or local tax or any other charge is required
by law to be withheld with respect to the exercise of this Option, the Employee
shall promptly pay to the Partnership or a subsidiary specified by the
Partnership, on at least seven business days' notice from the Partnership, an
amount equal to such withholding tax or charge or (b) if the Employee does not
promptly so pay the entire amount of such withholding tax or charge in
accordance with such notice, or make arrangements satisfactory to the
Partnership regarding payment thereof, the Partnership or any subsidiary of the
Partnership may withhold the remaining amount thereof from any amount due the
Employee from the Partnership or the subsidiary.
8. DILUTION AND OTHER ADJUSTMENTS. The existence of this Option shall
not impair the right of the Partnership or its partners to, among other things,
conduct, make or effect any change in the Partnership's business, any issuance
of debt obligations or other securities by the Partnership, any grant of options
with respect to an interest in the Partnership or any adjustment,
recapitalization or other change in the partnership interests of the Partnership
(including, without limitation, any distribution, subdivision, or combination of
limited partnership interests), or any incorporation of the Partnership. In the
event of such a change in the partnership interests of the Partnership, the
Board shall make such adjustments to this or Option, including the purchase
price specified in Section 1, as it deems appropriate and equitable. In the
event of incorporation of the Partnership, the Board shall make such
arrangements as it deems appropriate and equitable with respect to this Option
for the Employee to purchase stock in the resulting corporation in place of the
Units subject to this Option. Any such adjustment or arrangement may provide
for the elimination of any fractional Unit or shares of stock which might
otherwise become subject to this Option. Any decision by the Board under this
Section shall be final and binding upon the Employee.
9. RIGHTS AS AN OWNER OF A UNIT. The Employee (or a transferee of this
Option pursuant to Section 4) shall have no rights as an owner of a Unit with
respect to any Unit covered by this Option until he becomes the holder of record
of such Unit, which shall be deemed to occur at the time that notice of purchase
is given and payment in full is received by the Partnership under Section 3 and
13. By such actions, the Employee (or such transferee) shall be deemed to have
consented to, and agreed to
<PAGE>
-5-
be bound by, all other terms, conditions, rights and obligations set forth in
the then current Agreement of Limited Partnership (As Amended and Restated) of
the Partnership. Except as provided in Section 8, no adjustment shall be made
with respect to any Unit for any distribution for which the record date is prior
to the date on which the Employee becomes the holder of record of the Unit,
regardless of whether the distribution is ordinary or extraordinary, in cash,
securities or other property, or of any other rights.
10. ADMINISTRATOR. If at any time there shall be no Board Compensation
Committee of the Board, the Board shall be the Administrator.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
12. INTERPRETATION. The Employee accepts this Option subject to all the
terms and provisions of the Plan, which shall control in the event of any
conflict between any provision of the Plan and this Agreement, and accepts as
binding, conclusive and final all decisions or interpretations of the Board or
the Administrator upon any questions arising under the Plan and/or this
Agreement.
13. NOTICES. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Partnership, to the Secretary of Alliance Capital Management
Corporation at 1345 Avenue of the Americas, New York, New York 10105, or if the
Partnership should move its principal office, to such principal office, and, in
the case of the Employee, to his last permanent address as shown on the
Partnership's records, subject to the right of either party to designate some
other address at any time hereafter in a notice satisfying the requirements of
this Section.
<PAGE>
-6-
14. SECTIONS AND HEADINGS. All section references in this Agreement are
to sections hereof for convenience of reference only and are not to affect the
meaning of any provision of this Agreement.
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management
Corporation, General Partner
By /s/ John D. Carifa
------------------
John D. Carifa
President
/s/ Robert H. Joseph, Jr.
------------------
Robert H. Joseph, Jr.
<PAGE>
EXHIBIT A TO UNIT OPTION PLAN AGREEMENT DATED DECEMBER 5, 1995
BETWEEN ALLIANCE CAPITAL MANAGEMENT L.P. AND ROBERT H. JOSEPH,
JR.
1. The number of Units that the Employee is entitled to purchase pursuant
to the Option granted under this Agreement is 10,000.
2. The per Unit price to purchase Units pursuant to the Option granted
under this Agreement is $22.25 per Unit.
3. Percentage of Units With Respect to
Which the Option First Becomes
Exercisable on the Date Indicated
----------------------------------
1. December 5, 1996 20%
2. December 5, 1997 20%
3. December 5, 1998 20%
4. December 5, 1999 20%
5. December 5, 2000 20%
<PAGE>
TRANSACTION AGREEMENT
dated as of
December 28, 1995
among
Alliance Capital Management L.P.,
The Shareholders of Record of Cursitor Holdings Limited
Cursitor Holdings, L.P.
and
The Additional Parties Listed on Schedule 1.2 hereto
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
THE TRANSACTIONS
2.1 PURCHASE AND SALE OF SHARES . . . . . . . . . . . . . . . . . . 13
2.2 PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES;
ASSIGNMENT OF CONTRACTS AND RIGHTS. . . . . . . . . . . . . . 13
2.3 CONTRIBUTION TO NEWCO OF THE INTERNATIONAL SHARES,
THE SHARES OF LIMITED AND THE PURCHASED ASSETS INTEREST
AND TRANSFER OF EMPLOYEES; ASSUMPTION OF ASSUMED
LIABILITIES INTEREST; ASSIGNMENT OF CONTRACTS
AND RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.4 CONTRIBUTION TO NEWCO OF ASSETS OF HOLDINGS L.P.; ASSUMPTION OF
LIABILITIES; ASSIGNMENT OF CONTRACTS AND RIGHTS . . . . . . . 15
2.5 PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES;
ASSIGNMENT OF CONTRACTS AND RIGHTS. . . . . . . . . . . . . . 16
2.6 SHARE PURCHASE PRICE; ASSET PURCHASE PRICE; OTHER ASSET PURCHASE
PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.7 ALLOCATION OF ASSET PURCHASE PRICE AND OTHER ASSET PURCHASE
PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.8 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.9 SHARE PURCHASE PRICE ADJUSTMENT . . . . . . . . . . . . . . . . 21
2.10 PURCHASE PRICE ADJUSTMENT . . . . . . . . . . . . . . . . . . . 22
2.11 SELLERS' AGENT. . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ADDITIONAL PARTIES AND SELLERS
3.1 CORPORATE EXISTENCE, POWER AND AUTHORIZATION. . . . . . . . . . 26
3.2 PARTNERSHIP EXISTENCE, POWER AND AUTHORIZATION. . . . . . . . . 27
3.3 INDIVIDUAL ENFORCEABILITY; TRUST ENFORCEABILITY . . . . . . . . 28
3.4 GOVERNMENTAL AUTHORIZATION. . . . . . . . . . . . . . . . . . . 28
3.5 NON-CONTRAVENTION . . . . . . . . . . . . . . . . . . . . . . . 29
3.6 CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . 30
3.7 OWNERSHIP OF SHARES . . . . . . . . . . . . . . . . . . . . . . 32
i
<PAGE>
3.8 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 32
3.9 ABSENCE OF CERTAIN CHANGES . . . . . . . . . . . . . . . . . . 33
3.10 NO UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . . . . . 35
3.11 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . 35
3.12 MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . 35
3.13 LITIGATION/ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . 37
3.14 COMPLIANCE WITH LAWS AND COURT ORDERS; NO DEFAULTS . . . . . . 37
3.15 PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.16 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . 38
3.17 SECURITIES LAWS MATTERS. . . . . . . . . . . . . . . . . . . . 39
3.18 INSURANCE COVERAGE . . . . . . . . . . . . . . . . . . . . . . 39
3.19 LICENSES AND PERMITS . . . . . . . . . . . . . . . . . . . . . 40
3.20 FINAL PROJECTIONS. . . . . . . . . . . . . . . . . . . . . . . 40
3.21 FINDERS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . 40
3.22 REGISTRATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 40
3.23 INVESTMENT CONTRACTS . . . . . . . . . . . . . . . . . . . . . 41
3.24 REGULATORY COMPLIANCE. . . . . . . . . . . . . . . . . . . . . 42
3.25 EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3.26 ERISA CLIENTS. . . . . . . . . . . . . . . . . . . . . . . . . 44
3.27 ERISA AND EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . 45
3.28 RIGHT TO NAME. . . . . . . . . . . . . . . . . . . . . . . . . 46
3.29 DRAYCOTT . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.30 COMMODITY INTEREST CLIENTS . . . . . . . . . . . . . . . . . . 46
3.31 DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 PARTNERSHIP EXISTENCE, POWER AND AUTHORIZATION . . . . . . . . 47
4.2 CORPORATE EXISTENCE, POWER AND AUTHORIZATION . . . . . . . . . 47
4.3 GOVERNMENTAL AUTHORIZATION . . . . . . . . . . . . . . . . . . 48
4.4 NON-CONTRAVENTION. . . . . . . . . . . . . . . . . . . . . . . 48
4.5 CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . 49
4.6 OWNERSHIP OF THE INTERNATIONAL SHARES. . . . . . . . . . . . . 49
4.7 VALIDITY OF UNITS. . . . . . . . . . . . . . . . . . . . . . . 49
4.8 INTERNATIONAL OPERATIONS . . . . . . . . . . . . . . . . . . . 49
4.9 ABSENCE OF CERTAIN CHANGES . . . . . . . . . . . . . . . . . . 50
4.10 NO UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . . . . . 50
4.11 MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . 50
4.12 PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.13 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.14 SEC FILINGS. . . . . . . . . . . . . . . . . . . . . . . . . . 51
ii
<PAGE>
4.15 FINANCING. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.16 FINDERS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . 52
4.17 COMPLIANCE WITH LAWS AND COURT ORDERS; NO DEFAULTS . . . . . . 52
4.18 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . 52
4.19 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.20 LICENSES AND PERMITS . . . . . . . . . . . . . . . . . . . . . 53
4.21 REGISTRATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 53
4.22 INVESTMENT CONTRACTS . . . . . . . . . . . . . . . . . . . . . 53
4.23 REGULATORY COMPLIANCE. . . . . . . . . . . . . . . . . . . . . 54
4.24 FIRST SERVICES AGREEMENT AND SECOND SERVICES AGREEMENT . . . . 54
ARTICLE V
COVENANTS OF SELLERS
5.1 CONDUCT OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . 55
5.2 ACCESS TO INFORMATION . . . . . . . . . . . . . . . . . . . . . 56
5.3 NOTICES OF CERTAIN EVENTS . . . . . . . . . . . . . . . . . . . 56
5.4 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.5 FOREIGN INVESTMENT COMPANY REQUIREMENTS . . . . . . . . . . . . 57
5.6 SUPPLEMENTAL INFORMATION. . . . . . . . . . . . . . . . . . . . 57
5.7 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . 58
5.8 AFFILIATE ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . 59
5.9 TRANSFER OF HOLDINGS L.P. INTERESTS . . . . . . . . . . . . . . 59
5.10 REVISED ANNUAL BILLINGS . . . . . . . . . . . . . . . . . . . . 59
5.11 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 61
5.12 CERTAIN REORGANIZATIONS . . . . . . . . . . . . . . . . . . . . 61
5.13 DEFERRED SHARE OPTION . . . . . . . . . . . . . . . . . . . . . 62
5.14 PROHIBITION ON CERTAIN DISTRIBUTIONS. . . . . . . . . . . . . . 62
ARTICLE VI
COVENANTS OF BUYER
6.1 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . 62
6.2 ACCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
6.3 NOTICES OF CERTAIN EVENTS . . . . . . . . . . . . . . . . . . . 64
6.4 SECURITIES ACT (ONTARIO). . . . . . . . . . . . . . . . . . . . 64
6.5 RESTRICTIVE TRADE PRACTICES ACT . . . . . . . . . . . . . . . . 64
6.6 ALLIANCE CAPITAL MANAGEMENT (BRAZIL) LTDA . . . . . . . . . . . 64
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ARTICLE VII
COVENANTS OF BUYER AND SELLERS
7.1 BEST EFFORTS. . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.2 CERTAIN FILINGS . . . . . . . . . . . . . . . . . . . . . . . . 64
7.3 PUBLIC ANNOUNCEMENTS. . . . . . . . . . . . . . . . . . . . . . 65
7.4 SECTION 15(F) . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE VIII
TAX MATTERS
8.1 TAX DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 66
8.2 TAX REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . 67
8.3 SELLER COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 69
8.4 BUYER COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 70
8.5 TERMINATION OF EXISTING TAX SHARING AGREEMENTS. . . . . . . . . 70
8.6 OTHER TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . 70
8.7 COOPERATION ON TAX MATTERS. . . . . . . . . . . . . . . . . . . 71
8.8 TAX INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 71
8.9 ALLOCATION OF TAXES WITH RESPECT TO PURCHASED ASSETS. . . . . . 73
8.10 PURCHASE PRICE ADJUSTMENT AND INTEREST. . . . . . . . . . . . . 73
ARTICLE IX
EMPLOYEE BENEFITS
9.1 EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . 74
9.2 INCENTIVE COMPENSATION POOLS. . . . . . . . . . . . . . . . . . 74
9.3 PARTICIPATION IN OPTION PLAN. . . . . . . . . . . . . . . . . . 75
9.4 NONSOLICITATION . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE X
CONDITIONS TO CLOSING
10.1 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS . . . . . . . . 76
10.2 CONDITIONS TO OBLIGATION OF BUYER. . . . . . . . . . . . . . . 77
10.3 CONDITIONS TO OBLIGATION OF SELLER . . . . . . . . . . . . . . 79
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ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.1 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.2 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 80
11.3 PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE XII
RESTRICTIONS ON TRANSFER AND DISTRIBUTIONS
12.1 RESTRICTIONS ON TRANSFER . . . . . . . . . . . . . . . . . . . 83
12.2 RESTRICTIVE LEGEND . . . . . . . . . . . . . . . . . . . . . . 83
12.3 NOTICE OF PROPOSED TRANSFERS; RULE 144 . . . . . . . . . . . . 84
12.4 DISTRIBUTIONS WITH RESPECT TO UNITS. . . . . . . . . . . . . . 85
12.5 OTHER RESTRICTIONS ON TRANSFERS. . . . . . . . . . . . . . . . 85
ARTICLE XIII
GUARANTY
13.1 GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 85
13.2 GUARANTY UNCONDITIONAL . . . . . . . . . . . . . . . . . . . . 86
13.3 WAIVERS OF THE GUARANTOR . . . . . . . . . . . . . . . . . . . 86
13.4 DISCHARGE ONLY UPON PERFORMANCE IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . 86
13.5 SUBROGATION. . . . . . . . . . . . . . . . . . . . . . . . . . 86
ARTICLE XIV
TERMINATION
14.1 GROUNDS FOR TERMINATION. . . . . . . . . . . . . . . . . . . . 86
14.2 EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . 87
ARTICLE XV
MISCELLANEOUS
15.1 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
15.2 AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . 89
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15.3 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
15.4 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . 89
15.5 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . 89
15.6 JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . 89
15.7 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . 90
15.8 COUNTERPARTS; THIRD PARTY BENEFICIARIES. . . . . . . . . . . . 90
15.9 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 90
15.10 RESTRICTIVE TRADE PRACTICES. . . . . . . . . . . . . . . . . . 90
15.11 CAPACITY OF TRUSTEES . . . . . . . . . . . . . . . . . . . . . 90
EXHIBITS AND SCHEDULES
Exhibit A-1 First Assignment and Assumption Agreement
Exhibit A-2 Second Assignment and Assumption Agreement
Exhibit A-3 Third Assignment and Assumption Agreement
Exhibit B-1 First Services Agreement
Exhibit B-2 Second Services Agreement
Exhibit C [Intentionally left blank]
Exhibit D Employment Agreement with Eric G. Auboyneau
Exhibit E Employment Agreement with Hugh M. Eaton III
Exhibit F-1 Employment Agreement with Charles J.H. Gave
(Newco)
Exhibit F-2 Employment Agreement with Charles J.H. Gave
(Limited)
Exhibit G-1 Employment Agreement with John S. Ricciardi
(Newco)
Exhibit G-2 Employment Agreement with John S. Ricciardi
(Limited)
Exhibit H Employment Agreement with Richard I. Morris, Jr.
Exhibit I TCW Agreement and Side Letter
Exhibit J Term Sheet for Amended Holdings L.P. Partnership
Agreement
Exhibit 1 Form of LLC Agreement
Exhibit 2 Form of Note
Exhibit 3 Registration Rights Agreement
Exhibit 4 Letter regarding Nicholas D.P. Carn
Schedule 1.1 Shareholders of Cursitor Holdings Limited
Schedule 1.2 Additional Parties
Schedule 2.2(b) Assumed Liabilities
Schedule 2.3(a) Transferred Alliance Employees
Schedule 2.6(a) Allocation of Initial Share Proceeds
Schedule 2.6(b) Allocation of Initial Asset Proceeds
Schedule 2.8(l) Allocation of Note
Schedule 3.3 Trusts
Schedule 3.5 Non-Contravention
Schedule 3.6(c)(ii) Subsidiaries of Cursitor Holdings Limited
Schedule 3.7 Beneficial Owners of Cursitor Holdings Limited
Schedule 3.8 Financial Statements of Cursitor Holdings, L.P.
and Cursitor Holdings Limited
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Schedule 3.9 Absence of Certain Changes
Schedule 3.10 Additional Liabilities
Schedule 3.11 Transactions with Affiliates
Schedule 3.12 Material Contracts
Schedule 3.16 Intellectual Property
Schedule 3.17 Securities Law Matters
Schedule 3.18 Insurance Coverage
Schedule 3.19 Licenses and Permits
Schedule 3.23 Original Schedule
Schedule 3.25 Employees
Schedule 3.26(a) ERISA Client Agreements
Schedule 3.26(b) ERISA Clients
Schedule 3.27(a) Employee Benefits
Schedule 3.27(d) Medical Plans
Schedule 3.30 Commodity Interest Clients
Schedule 4.2 Subsidiaries of the Alliance Entities
Schedule 4.5 Issued and Outstanding Capital Stock of Buyer
Schedule 4.8 International Operations
Schedule 4.9 Absence of Certain Changes
Schedule 4.11 Material Contracts
Schedule 4.18 Intellectual Property
Schedule 4.20 Licenses and Permits
Schedule 4.22 Alliance International Investment Contracts
Schedule 5.4(a) Consent Procedures
Schedule 5.4(b) Conference Clients
Schedule 8.2 Tax Representations
Schedule 8.5 Tax Sharing Arrangements
Schedule 11.2 Indemnification Percentages
Schedule X Selling Groups
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TRANSACTION AGREEMENT
AGREEMENT dated as of December 28, 1995 among (i) Alliance Capital
Management L.P., a Delaware limited partnership (the "BUYER"), (ii) all of the
shareholders of record of Cursitor Holdings Limited, a company organized under
the laws of England ("LIMITED") as set forth on Schedule 1.1 hereto (each, a
"SHAREHOLDER" and collectively, the "SHAREHOLDERS"), (iii) Cursitor Holdings,
L.P. ("HOLDINGS L.P."), a Delaware limited partnership and (iv) the Persons (as
this and other capitalized terms are defined in Article I) listed on Schedule
1.2 hereto (each, an "ADDITIONAL PARTY" and collectively, the "ADDITIONAL
PARTIES"). Holdings L.P. and the Shareholders are collectively referred to
herein as the "SELLERS."
WHEREAS, Limited and Holdings L.P. themselves or through their
Subsidiaries are engaged in the business of providing investment advisory and
investment management services to a variety of institutional and individual
clients (with respect to either or both of the Companies and their respective
Subsidiaries, the "BUSINESS");
WHEREAS, on the terms and subject to the conditions set forth herein
and in the LLC Agreement, Buyer and Holdings L.P. desire to effect a series of
transactions to the effect that (i) Buyer and Alliance Delaware have formed a
limited liability company ("NEWCO"), (ii) Buyer will purchase from the
Shareholders all of the Ordinary Shares of Limited, (iii) Buyer will purchase
from Holdings L.P. certain assets of Holdings L.P. and will assume, except as
otherwise set forth herein, certain liabilities of Holdings L.P., (iv) Buyer
will contribute or cause to be contributed to Newco the certain assets
purchased from Holdings L.P. and the Shares of Limited and Newco will assume
the former liabilities of Holdings L.P. that Buyer has assumed, (v) Buyer will
contribute the International Operations to Newco through the contribution to
Newco of the International Shares, as hereinafter defined, and the entry with
Newco into the First Services Agreement, (vi) Holdings L.P. will be admitted as
a member to Newco and will contribute to Newco certain of its remaining assets
and, except as otherwise set forth herein, Newco will assume certain remaining
liabilities of Holdings L.P. and (vii) Newco will purchase the balance of
Holdings L.P.'s assets and will assume, except as otherwise set forth herein,
the balance of Holdings L.P.'s liabilities with the result, through and
following such transactions, that Newco will be owned jointly by Buyer and
Alliance Delaware (the "ALLIANCE MEMBERS"), on the one hand, and Holdings L.P.,
on the other hand, so that the net profits and losses of Newco will be
allocated approximately 93% and 7%, respectively, to the Alliance Members and
Holdings L.P.; and
WHEREAS, the Additional Parties and the Associates and Immediate
Family members of the Additional Parties are the beneficial owners of the
Shares and the Holdings L.P. Interests and it is a condition to Buyer's entry
into this Agreement that the Additional Parties, on the terms and subject to
the conditions set forth herein, guarantee the obligations hereunder of the
Sellers to the extent provided herein.
<PAGE>
NOW, THEREFORE, in consideration of the agreements, covenants,
representations and warranties set forth herein and for other good and valuable
consideration the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. (a) The following terms, as used herein, have the
following meanings:
"ACMC" means Alliance Capital Management Corporation, in its capacity
as general partner of Buyer.
"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, unless otherwise expressly provided herein, Newco
and its Subsidiaries shall not be deemed to be an Affiliate of either Buyer or
Sellers and none of GIC, EPL or FAWI shall be deemed to be an Affiliate of any
of the Companies or their Subsidiaries.
"ALLIANCE DELAWARE" means Alliance Capital Management Corporation of
Delaware.
"ALLIANCE ENTITIES" means Alliance Capital Limited, Alliance Capital
Management (Asia) Ltd., Alliance Capital Management (Turkey) Ltd., Alliance
Capital Management (Japan) Inc. and, if contributed by Buyer to Newco prior to
the Closing Date, Alliance Capital Management (Brazil) Ltda, as of the Closing
Date.
"ALLIANCE LIMITED PARTNERSHIP AGREEMENT" means the Agreement of
Limited Partnership constituting the Buyer, dated as of November 19, 1987, as
the same may be amended or restated from time to time.
"ALLIANCE INTERNATIONAL INVESTMENT CONTRACT" means each of the
investment management contracts listed in Exhibit B to the First Services
Agreement and Exhibit A to the Second Services Agreement.
"APPROVED INVESTMENT COMPANY" means any Investment Company whose
board of directors/trustees, including a majority of directors/trustees who are
not parties to the investment advisory contract of such Investment Company or
"INTERESTED PERSONS" (as such term is defined in the Investment Company Act) of
any such party (the "NON-INTERESTED DIRECTORS/TRUSTEES") and holders of a
majority of the outstanding voting securities (as such term is defined in the
Investment Company Act) of such Investment Company, has approved, in accordance
with the requirements of Section 15 of the Investment Company Act and any other
requirements applicable thereto, a new investment advisory contract upon terms
substantially the
2
<PAGE>
same as those contained in the Investment Company's agreement with the
Companies or their Subsidiary, as applicable (other than the term of the
contract).
"ASSOCIATE" shall have the meaning set forth in Rule 12b-2 under the
1934 Act.
"BALANCE SHEET" means the audited aggregated balance sheet of the
consolidated balance sheet of Limited and the consolidated balance sheet of
Holdings L.P. as of December 31, 1994.
"BALANCE SHEET DATE" means December 31, 1994.
"BASE ANNUAL BILLINGS" means, with respect to the applicable Client
or participant in a Fund, the pro forma annual billings for such Client or Fund
participant calculated by multiplying the assets under management on the last
day of the month immediately preceding the date hereof by the annual percentage
fee applicable to such Client or Fund participant under its applicable
Investment Contract; PROVIDED THAT, neither performance fees nor fees (or any
portion thereof) which ultimately inure to the benefit of a third party shall
be included in the calculation of Base Annual Billings.
"BEST EFFORTS" means all commercially reasonable efforts.
"CFTC" means the U.S. Commodity Futures Trading Commission.
"CLIENT" means, unless otherwise specified herein, any client
(including any Fund) to which either Company or any of their respective
Subsidiaries provides Investment Management Services.
"CLOSING DATE" means the date of the Closing.
"COB" means Commission des Operations de Bourse.
"COMMISSION" means the U.S. Securities and Exchange Commission.
"COMMODITY EXCHANGE ACT" means the U.S. Commodity Exchange Act and
the rules and regulation promulgated thereunder.
"COMPANIES" means Limited and Holdings L.P.
"COMPANY REPRESENTATIVE" means a company representative as such term
is defined by the IMRO Rules.
"DEFERRED SHARES" means all of the issued and outstanding deferred
shares of Limited, par value L 0.01 per share.
3
<PAGE>
"DRAYCOTT" means Draycott Partners, Ltd., a company organized under
the laws of Massachusetts.
"DRAYCOTT AGREEMENT" means the Stock Purchase Agreement dated as of
November 14, 1995 between NEIC and Limited.
"DRAYCOTT TRANSACTION" means the transaction pursuant to the Draycott
Agreement pursuant to which Limited agreed to purchase all of the issued and
outstanding shares of capital stock of Draycott from NEIC.
"EATON" means Cursitor-Eaton Asset Management Company, a New York
general partnership.
"EATON PARTNERSHIP AGREEMENT" means the Partnership Agreement of
Eaton dated as of March 27, 1986 by and between Cursitor Management Limited and
Holdings L.P. as amended by the Amendment to the Cursitor-Eaton Asset
Management Company among Cursitor Management Limited and HME Partners Inc.
dated May 31, 1989.
"EATON PARTNERSHIP INTEREST" means a general partnership interest in
Eaton.
"EMPLOYMENT AGREEMENTS" means, as to each Principal, the employment
agreements to be entered into at the Closing between such Persons and Newco
and/or its Subsidiary, as provided in Section 10.1, in substantially the form
attached hereto as Exhibits D-H.
"EPL" means Eurovest Pte Ltd., a company organized under the laws of
Singapore and a wholly owned subsidiary of the Ministry of Finance of the
Government of Singapore.
"EXEMPT INVESTMENT COMPANY" means any company that would be an
Investment Company but for the exemptions contained in Section 3(c)(1), the
final clause of Section 3(c)(3) or the third or fourth clauses of Section
3(c)(11) of the Investment Company Act, to which either Company or any of their
respective Subsidiaries provide Investment Management Services.
"FAWI" means First Associated Western Investors, Inc., a company
organized under the laws of California and an indirect wholly owned subsidiary
of GIC.
"FINANCIAL SERVICES ACT 1986" means the United Kingdom Financial
Services Act 1986.
"FIRST SERVICES AGREEMENT" means the services agreement in the form
attached as Exhibit B-1.
4
<PAGE>
"FOREIGN INVESTMENT COMPANY" means any issuer, registered under the
laws or with the appropriate securities regulatory authority in the
jurisdiction in which the issuer is domiciled (other than the United States or
the States thereof), which is or holds itself out as engaged primarily in the
business of investing, reinvesting or trading in securities and to which either
Company or any of their respective Subsidiaries provides Investment Management
Services.
"FOREIGN SECURITIES REGULATOR" means IMRO, IML, COB and the Ontario
Securities Commission.
"FRENCH MUTUAL FUNDS" means Cursitor No. 1, Cursitor No. 2 and
Cursitor Asie du Sud-Est, each of which is a mutual fund ("FOND COMMUN DE
PLACEMENT") registered in France.
"FUND" means any Investment Company, Foreign Investment Company or
Exempt Investment Company.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time.
"GIC" means Government of Singapore Investment Corporation Pte Ltd.,
a company organized under the laws of Singapore and wholly owned by the
Ministry of Finance of the government of Singapore.
"HMEIAA LP" means HME International Advisory Associates, L.P., a
Delaware limited partnership.
"HOLDINGS BALANCE SHEET" means the audited consolidated balance sheet
of Holdings L.P. as of December 31, 1994.
"HOLDINGS BASE TANGIBLE BOOK VALUE" means $2,561,000.
"HOLDINGS CLOSING DATE BALANCE SHEET" means an audited consolidated
balance sheet of the Assets and the Assumed Liabilities prepared as of the
Closing Date on a basis consistent with the principles used in the preparation
of the Holdings Balance Sheet.
"HOLDINGS CLOSING TANGIBLE BOOK VALUE" means total assets less total
liabilities, goodwill and deferred reorganizational costs as reflected on the
Holdings Closing Date Balance Sheet.
"HOLDINGS EXCESS AVAILABLE CASH" means current assets as reflected on
the Holdings Closing Date Balance Sheet less the sum of (i) current liabilities
as reflected on the Holdings Closing Date Balance Sheet, (ii) the estimated
operating expenses and cash needs of Holdings L.P. for the three months
following the Closing Date as set forth in Section 3.8(g), and (iii)
$1,733,000.
5
<PAGE>
"HOLDINGS LIMITED PARTNERSHIP AGREEMENT" means the Amended and
Restated Agreement of Limited Partnership of Holdings L.P. among HMESLP Inc.,
as general partner, and the limited partners named therein dated as of August
1, 1992, as amended by Amendment Nos. 1, 2, 3, 4 and 5 thereto, dated as of
August 1, 1992, June 30, 1993, June 1, 1994, August 5, 1994 and June 30, 1995,
respectively.
"HOLDINGS L.P. INTEREST" means a limited partnership or general
partnership interest in Holdings L.P.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended and the rules and regulations promulgated thereunder.
"IML" means Institut Monetaire Luxembourgeois.
"IMMEDIATE FAMILY" means the spouse, parents, grandparents, children
and siblings of any Person.
"IMRO" means the United Kingdom Investment Management Regulatory
Organisation Ltd.
"IMRO RULES" means the rules promulgated by IMRO as amended from time
to time.
"INTELLECTUAL PROPERTY RIGHT" means any trademark, service mark,
trade name, invention, patent, trade secret, copyright, know-how (including any
registrations or applications for registration of any of the foregoing) or any
other similar type of proprietary intellectual property right in each case
which is owned or licensed by either Company or any of their respective
Subsidiaries used or held for use in the Business, except that it does not
include software that is commercially available.
"INTERNATIONAL GAAP" means international accounting standards as
determined by the International Accounting Standards Committee, applied on a
consistent basis both as to classification of items and amounts.
"INTERNATIONAL OPERATIONS" means the operations conducted by the
Alliance Entities and the rights and obligations of Newco pursuant to the First
Services Agreement.
"INTERNATIONAL OPERATIONS MATERIAL ADVERSE EFFECT" means a material
adverse effect on the condition (financial or otherwise), business, assets, or
results of operations of the International Operations, taken as a whole, except
for any effect resulting from changes in the market values of debt or equity
securities or the relative values of currencies.
"INTERNATIONAL SHARES" means the issued and outstanding shares of
Alliance Capital Limited, Alliance Capital Management (Asia) Ltd., Alliance
Capital Management
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(Turkey) Ltd., Alliance Capital Management (Japan) Inc. and, if contributed by
Buyer to Newco prior to the Closing Date, Alliance Capital Management (Brazil)
Ltda, as of the Closing Date.
"INVESTMENT ADVISERS ACT" means the U.S. Investment Advisers Act of
1940, as amended and the rules and regulations promulgated thereunder.
"INVESTMENT COMPANY" means an investment company registered or
required to be registered under Section 8 of the Investment Company Act.
"INVESTMENT COMPANY ACT" means the U.S. Investment Company Act of
1940, as amended and the rules and regulations promulgated thereunder.
"INVESTMENT CONTRACT" means each contract or agreement in effect to
which either Company, any of their respective Subsidiaries or TCW is a party
pursuant to which either Company or any of their respective Subsidiaries
provides Investment Management Services to any Client.
"INVESTMENT MANAGEMENT SERVICES" means investment management,
investment advisory, investment sub-advisory, research, administrative or
distribution services.
"KNOWLEDGE" or "best knowledge" means, with respect to any Person,
the actual knowledge of such Person after due inquiry and the knowledge such
Person has or ought reasonably to have based on such Person's position,
responsibility and expertise with respect to the Business or other applicable
entity; provided that with respect to the "knowledge" or "best knowledge" of
any Person that is a corporate entity, partnership or trust, such definition
shall apply to any officers, managing directors, directors, group financial
controllers, partners and trustees, as applicable, in respect of such Person.
"LIEN" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset. For the purposes of this
Agreement, a Person shall be deemed to own subject to a Lien any property or
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement, beneficial interests under any trust or similar equitable
claim relating to such property or asset.
"LIMITED BALANCE SHEET" means the audited consolidated balance sheet
of Limited as of December 31, 1994.
"LIMITED BASE TANGIBLE BOOK VALUE" means $1,993,000.
"LIMITED CLOSING DATE BALANCE SHEET" means the audited consolidated
balance sheet of Limited prepared as of the Closing Date on a basis consistent
with the principles used in the preparation of the Limited Balance Sheet.
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"LIMITED CLOSING TANGIBLE BOOK VALUE" means total assets less total
liabilities, goodwill and deferred reorganizational costs as reflected on the
Limited Closing Date Balance Sheet.
"LIMITED EXCESS AVAILABLE CASH" means the sum of current assets as
reflected on the Limited Closing Date Balance Sheet and $1,733,000 less the sum
of (a) current liabilities as reflected on the Limited Closing Date Balance
Sheet and (b) the estimated operating expenses and cash needs of Limited for
the three months following the Closing Date as set forth in Section 3.8(g).
"LIMITED SUBSIDIARY" means any Subsidiary of Limited.
"LLC AGREEMENT" means the Amended and Restated Limited Liability
Company Agreement between the Buyer, Alliance Delaware and Holdings L.P.
substantially in the form attached hereto as Exhibit 1.
"LUXEMBOURG FUND" means the Cursitor Fund, a Fond Commun de
Placement.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
condition (financial or otherwise), business, assets or results of operations
of the Companies and their respective Subsidiaries, taken as a whole, except
for any effect resulting from changes in the market values of debt or equity
securities or the relative values of currencies (but not including fluctuations
in the U.S. dollar or pound sterling that affect the ratio of expenses to
revenues of the Companies or any of their Subsidiaries, taken as a whole).
"NEW CONTRACTS" means all Investment Contracts entered into by either
Company or any of their respective Subsidiaries between the date of this
Agreement and the Closing Date but shall not include any Investment Contracts
with respect to clients of Draycott transferred to the Companies in connection
with the Draycott Transaction.
"NEIC" means New England Investment Companies, L.P.
"NEW TCW AGREEMENT" means the Agreement between TCW and Eaton and the
letter between Buyer, Eaton and TCW in each case in the form attached as
Exhibit I which Agreement and letter supersede all the terms and provisions of
the Old TCW Agreement.
"1934 ACT" means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"1933 ACT" means the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"OLD TCW AGREEMENT" means the agreement dated November 5, 1986
between TCW and Eaton.
8
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"ORDINARY SHARES" means all of the issued and outstanding ordinary
shares of Limited, par value $.01 per share.
"ORGANIZATIONAL DOCUMENTS" means the articles of incorporation and
by-laws, the memorandum and articles of association, the general partnership
agreement and the certificate of general partnership, the limited partnership
agreement and the certificate of limited partnership or the trust agreement, as
the case may be, and such other similar documentation as is required under the
jurisdiction of incorporation, partnership or other form of organization, as
the case may be, of the applicable entity.
"PERSON" means an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"PRINCIPAL" means each of Eric Auboyneau, Hugh M. Eaton III, Charles
J. H. Gave, John S. Ricciardi and Richard I. Morris, Jr.
"SECOND SERVICES AGREEMENT" means the services agreement attached in
the form of Exhibit B-2.
"SELLER CORPORATION" means each of Durham Software Group Inc., EPL,
Yahtzee Limited, Whitedoors Limited, FAWI and HMESLP Inc.
"SELLERS' AGENT" means Richard I. Morris, Jr.
"SELLING GROUP" means each of the groups set forth on Schedule X.
"SHARES" means all of the Ordinary Shares and all of the Deferred
Shares.
"SPONSORED FUND" means the Luxembourg Fund, the French Mutual Funds,
the Cursitor-Eaton East Asian Equities Fund, L.P., a Delaware limited
partnership, and any other Fund which either Company or any of their respective
Subsidiaries has sponsored or organized.
"SUBSIDIARY" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person. For
purposes of this definition, Eaton shall be deemed to be a Subsidiary of
Holdings L.P.
"TCW" means Trust Company of the West, a trust company organized
under the laws of California.
"TRANSACTION DOCUMENTS" means this Agreement, the LLC Agreement, the
Employment Agreements, the First Services Agreement, the Second Services
Agreement, the Registration Rights Agreement, the First Assignment and
Assumption Agreement, the Second
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Assignment and Assumption Agreement, the Third Assignment and Assumption
Agreement, the New TCW Agreement, the Holdings Partnership Agreement as amended
in accordance with Exhibit J, the Eaton Partnership Agreement as amended as of
the Closing Date and the Note.
"TRUST" means each of Richard I. Morris, Jr. L.P. Trust, Richard I.
Morris, Jr. Charitable Unitrust and Re Trust.
"TRUSTEE" means with respect to each Trust, each of the parties
listed next to the name of such Trust on Schedule 3.3.
"UNIT" means a Unit representing an assignment of beneficial
ownership of the Buyer, as more fully described in Article I of the Alliance
Limited Partnership Agreement, or any successor security issued by the Buyer or
any successor to the Buyer.
"UNIT CERTIFICATE" means a certificate issued by the Buyer evidencing
ownership of one or more Units as more fully described in the Alliance Limited
Partnership Agreement.
"UNITHOLDER" means the holders of issued and outstanding Units.
"UNIVERSAL FUNDS" means the Universal World Asset Allocation Fund and
the Universal World Tactical Bond Fund, each of which are mutual fund trusts
established under the laws of the Province of Ontario, Canada.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
<TABLE>
<CAPTION>
TERM SECTION
<S> <C>
Accounting Referee 2.7(c)
Additional Parties Preamble
Additional Party Preamble
Affirmative Consent 5.4(a)
Alliance Entities Securities 4.5
Alliance Members Preamble
Alliance Pool 9.2(c)
Alliance SEC Filings 4.14(a)
Allocation Statement 2.7(a)
Apportioned Obligations 8.9
Asset Adjustment Amount 2.10(a)
Asset Purchase Price 2.6(b)
Assets 2.2(a)
Assumed Liabilities 2.2(b)
Assumed Liabilities Interest 2.2(b)
Business Preamble
Buyer Preamble
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
TERM SECTION
<S> <C>
Buyer Indemnitee 8.1
Capital Contribution 2.4(a)
Capital Contribution Adjustment 2.10(a)
Amount
Cecogest 3.28
Closing Article II preamble
Code 8.1
Committee 9.3
Conference Clients 5.4(b)
Contributed Assets Interest 2.4(a)
Contributed Liabilities Interest 2.4(b)
Cursitor 3.28
Cursitor Pool 9.2(b)
Damages 11.2(a)
Distribution 5.12
Eaton Securities 3.6(a)
Employee Plans 3.27(a)
Environmental Laws 3.13(b)
ERISA 3.26(a)
ERISA Client 3.26(a)
Final Annual Billings 5.10(c)
Final Determination 8.1
Final Projections 3.20
First Assignment and Assumption 2.8(f)
Agreement
First Conveyance Documents 2.8(f)
HMEP 3.2(a)
Holdings Adjustment Amount 2.10(a)
Holdings L.P. Preamble
Holdings L.P. Securities 3.6(b)
Holdings Purchase Price 2.10(a)
Indemnified Party 11.3
Indemnifying Party 11.3
Initial Asset Cash Proceeds 2.6(b)
Initial Asset Proceeds 2.6(b)
Initial Asset Unit Proceeds 2.6(b)
Initial Share Cash Proceeds 2.6(a)
Initial Share Proceeds 2.6(a)
Initial Share Unit Proceeds 2.6(a)
Intellectual Property 4.18
Limited Preamble
Limited Securities 3.6(c)
Limited Subsidiary 8.1
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
TERM SECTION
<S> <C>
Limited Subsidiary Securities 3.6(c)
Loss 8.8(a)
Negative Consent 5.4(a)
Newco Preamble
Note 2.6(c)
Notice of Objections 2.9(a)
Original Schedule 3.23(a)
Other Asset Adjustment Amount 2.10(a)
Other Asset Purchase Price 2.6(c)
Other Assumed Liabilities Interest 2.5(b)
Other Purchased Assets Interest 2.5(a)
Partnership 3.2(c)
Partnerships 3.2(c)
Permits 3.19
Pre-Closing Tax Period 8.1
Purchased Assets Interest 2.2(a)
Returns 8.2(c)
Revised Annual Billings 5.10(b)
Revised Schedule 5.10(a)
Rule 144(k) 12.3(a)
Second Assignment and 2.8(j)
Assumption Agreement
Second Conveyance Documents 2.8(j)
Sellers Preamble
Seller's Agent 2.11(a)
Seller Corporation Net Worth 5.14
Seller Obligations 13.1
Share Purchase Price 2.6(a)
Share Adjustment Amount 2.9(a)
Shareholder Preamble
Shareholders Preamble
Tax Asset 8.1
Tax Benefit 8.4(b)
Tax Indemnification Period 8.1
Tax Sharing Agreements 8.1
Taxable 8.1
Taxes 8.1
Taxing Authority 8.1
TCGA 8.2(c)
Third Assignment and Assumption 2.8(k)
Agreement
Third Conveyance Documents 2.8(k)
Threshold Amount 10.2(e)
</TABLE>
12
<PAGE>
<TABLE>
Caption>
TERM SECTION
<S> <C>
Transferred Alliance Employees 2.3(a)
U.K. Pension Plan 3.27(h)
</TABLE>
(c) Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, and all accounting determinations hereunder shall be
made, in accordance with GAAP, except with respect to financial statements for
entities organized outside the United States, in which case such financial
statements shall be consistent with generally accepted accounting principles in
the jurisdiction in which such entity is organized or, if so used,
International GAAP.
ARTICLE II
THE TRANSACTIONS
In order to effect the transactions set forth in this Article II, the
parties hereto shall take or cause to be taken the respective actions to be
taken by them or their respective Affiliates as set forth in this Article II,
subject to satisfaction or waiver of the conditions to their respective
obligations to perform under this Agreement set forth in Article X. Except as
specifically provided herein, all actions to be taken pursuant to this Article
II shall be taken by the party or parties charged effective as of the closing
(the "Closing") in the order described in Sections 2.1 through 2.5 below.
2.1 PURCHASE AND SALE OF SHARES. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees to purchase the Ordinary Shares from
the Shareholders, and the Shareholders agree to sell, transfer, convey and
deliver at Closing to Buyer the Ordinary Shares, free and clear of all Liens.
2.2 PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES;
ASSIGNMENT OF CONTRACTS AND RIGHTS. (a) Upon the terms and subject to the
conditions of this Agreement, Buyer agrees to purchase from Holdings L.P. and
Holdings L.P. agrees to sell, convey, transfer, assign and deliver to Buyer at
Closing, free and clear of all Liens, all of Holdings L.P.'s right, title and
interest in, to and under an undivided 64.32% interest in the assets,
properties and business, of every kind and description, wherever located, real,
personal or mixed, tangible or intangible, owned, held or used in the conduct
of the Business by Holdings L.P. as the same shall exist on the Closing Date,
including all assets shown on the Holdings Balance Sheet and not disposed of in
the ordinary course of business, and all assets of the Business hereafter
acquired by Holdings L.P. (but not including the Asset Purchase Price, as
herein defined) (the "ASSETS"), (such undivided 64.32% interest in the Assets
being referred to herein as the "PURCHASED ASSETS INTEREST") as the same shall
exist on the Closing Date.
(b) Except as otherwise provided herein, upon the terms and subject
to the conditions of this Agreement, Buyer agrees, effective at the time of
Closing, to assume an
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<PAGE>
undivided 64.32% interest in the liabilities of Holdings L.P. set forth on
Schedule 2.2 (b) (the "ASSUMED LIABILITIES") (such undivided 64.32% interest
being referred to herein as the "ASSUMED LIABILITIES INTEREST").
(c) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any Purchased Assets
Interest or any claim or right or any benefit arising thereunder or resulting
therefrom if an attempted assignment thereof, without the consent of a third
party thereto, would constitute a breach or other contravention thereof or in
any way adversely affect the rights of Buyer or Holdings L.P. thereunder.
Holdings L.P. and Buyer will use their best efforts (but without any payment of
money by Holdings L.P. or Buyer) to obtain the consent of the other parties to
any such Purchased Asset Interest or any claim or right or any benefit arising
thereunder for the assignment thereof to Buyer as Buyer may reasonably request.
Except with respect to the consent of Clients set forth on Schedules 5.4(a), if
a consent is not obtained, or if an attempted assignment thereof would be
ineffective or would materially adversely affect the rights of Holdings L.P.
thereunder so that Buyer would not in fact receive all such rights, Holdings
L.P. and Buyer will cooperate in a mutually agreeable arrangement under which
Buyer would obtain the benefits and assume the obligations thereunder in
accordance with this Agreement, including sub-contracting, sub-licensing, or
sub-leasing to Buyer, or under which Holdings L.P. would enforce for the
benefit of Buyer, with Buyer assuming Holdings L.P.'s obligations, any and all
rights of Holdings L.P. against a third party thereto. Holdings L.P. will
promptly pay to Buyer, when received, all monies received by Holdings L.P.
under any Purchased Asset Interest or any claim or right or any benefit arising
thereunder.
(d) The percentage interests set forth in Section 2.2(a) and 2.2(b)
are based on a value of the Units of $19.925 and such percentage interests will
be recalculated as of the Closing Date based on the closing price of the Units
on the New York Stock Exchange on the day preceding the Closing Date.
2.3 CONTRIBUTION TO NEWCO OF THE INTERNATIONAL SHARES, THE SHARES OF
LIMITED AND THE PURCHASED ASSETS INTEREST AND TRANSFER OF EMPLOYEES; ASSUMPTION
OF ASSUMED LIABILITIES INTEREST; ASSIGNMENT OF CONTRACTS AND RIGHTS. (a) Upon
the terms and subject to the conditions of this Agreement, Buyer agrees to (i)
contribute or cause to be contributed to Newco at Closing, free and clear of
all Liens, all of its right, title and interest in, to and under (x) the
Ordinary Shares, (y) the International Shares and (z) the Purchased Assets
Interest and (ii) cause Newco to offer employment to the employees listed on
Schedule 2.3(a) (other than those employees whose employment is terminated by
the Buyer or who voluntarily terminate employment between the date hereof and
the Closing Date) and those persons (x) to whom the Buyer is currently
authorized under its standard employment procedures and policies to offer
employment in respect of the International Operations and (y) whom Buyer
actually hires as of the Closing Date (the "TRANSFERRED ALLIANCE EMPLOYEES").
In exchange for such contribution and transfer of employees, and after giving
effect to Section 2.3(b), the capital accounts in Newco of Buyer and Alliance
Delaware will be credited in the amount of $159,200,000 and $1,000,000,
respectively, subject to any adjustments pursuant to Section 2.10.
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<PAGE>
(b) Except as otherwise provided herein, upon the terms and subject
to the conditions of this Agreement, Buyer agrees to cause Newco, effective at
the time of Closing, to assume the Assumed Liabilities Interest. Upon the
assumption of the Assumed Liabilities Interest by Newco, Holdings L.P. agrees
that no Person shall be entitled to assert any claim against Buyer in
connection with the Assumed Liabilities Interest and any such claims may be
asserted only against Newco.
(c) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any Purchased Asset
Interest or any claim or right or any benefit arising thereunder or resulting
therefrom if an attempted assignment thereof, without the consent of a third
party thereto, would constitute a breach or other contravention thereof or in
any way adversely affect the rights of Newco or Buyer thereunder. Buyer and
Newco will use their best efforts (but without any payment of money by Buyer or
Newco) to obtain the consent of the other parties to any such Purchased Assets
Interest or any claim or right or any benefit arising thereunder for the
assignment thereof to Newco as Newco may reasonably request. Except with
respect to the consent of Clients set forth in Schedule 5.4(a), if a consent is
not obtained, or if an attempted assignment thereof would be ineffective or
would adversely affect the rights of Buyer thereunder so that Newco would not
in fact receive all such rights, Buyer and Newco will cooperate in a mutually
agreeable arrangement under which Newco would obtain the benefits and assume
the obligations thereunder in accordance with this Agreement, including sub-
contracting, sub-licensing, or sub-leasing to Newco, or under which Buyer would
enforce for the benefit of Newco, with Newco assuming Buyer's obligations, any
and all rights of Buyer against a third party thereto. Buyer will promptly pay
to Newco when received all monies received by Buyer under any Purchased Asset
Interest or any claim or right or any benefit arising thereunder.
2.4 CONTRIBUTION TO NEWCO OF ASSETS OF HOLDINGS L.P.; ASSUMPTION OF
LIABILITIES; ASSIGNMENT OF CONTRACTS AND RIGHTS. (a) Upon the terms and
subject to the conditions of this Agreement, Holdings L.P. agrees to contribute
to Newco at Closing, free and clear of all Liens, all of Holdings L.P.'s right,
title and interest in, to and under an undivided 38.88% interest in the portion
of Assets remaining after the purchase by Buyer of the Purchased Assets
Interest pursuant to Section 2.2(a) (such undivided 38.88% interest being
referred to herein as the "CONTRIBUTED ASSETS INTEREST") as the same shall
exist on the Closing Date. In exchange for such contribution, and after giving
effect to Section 2.4(b), the capital account of Holdings L.P. in Newco shall
be credited in the amount of $13,676,000 (the "CAPITAL CONTRIBUTION").
(b) Except as otherwise provided herein, upon the terms and subject
to the conditions of this Agreement, Buyer agrees to cause Newco, effective at
the time of Closing, to assume an undivided 38.88% interest in the portion of
Assumed Liabilities remaining after the assumption of the Assumed Liabilities
Interest by Buyer pursuant to Section 2.2(b) (such undivided 38.88% interest
being referred to herein as the "CONTRIBUTED LIABILITIES INTEREST").
(c) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any Contributed Assets
Interest or any claim or right or any benefit arising thereunder or resulting
therefrom if an attempted assignment thereof,
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<PAGE>
without the consent of a third party thereto, would constitute a breach or
other contravention thereof or in any way adversely affect the rights of Newco
or Holdings L.P. thereunder. Holdings L.P. and Newco will use their best
efforts (but without any payment of money by Holdings L.P. or Newco) to obtain
the consent of the other parties to any such Contributed Assets Interest or any
claim or right or any benefit arising thereunder for the assignment thereof to
Newco as Newco may reasonably request. If such consent is not obtained, or if
an attempted assignment thereof would be ineffective or would adversely affect
the rights of Holdings L.P. thereunder so that Newco would not in fact receive
all such rights, Holdings L.P. and Newco will cooperate in a mutually agreeable
arrangement under which Newco would obtain the benefits and assume the
obligations thereunder in accordance with this Agreement, including sub-
contracting, sub-licensing, or sub-leasing to Newco, or under which Holdings
L.P. would enforce for the benefit of Newco, with Newco assuming Holding L.P.'s
obligations, any and all rights of Holdings L.P. against a third party thereto.
Holdings L.P. will promptly pay to Newco when received all monies received by
Buyer under any Contributed Assets Interest or any claim or right or any
benefit arising thereunder.
(d) The percentage interests set forth in Section 2.4(a) and 2.4(b)
are based on a value of the Units of $19.925 and such percentage interests will
be recalculated as of the Closing Date based on the closing price of the Units
on the New York Stock Exchange on the day preceding the Closing Date.
2.5 PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES;
ASSIGNMENT OF CONTRACTS AND RIGHTS. (a) Upon the terms and subject to the
conditions of this Agreement, Buyer agrees to cause Newco to purchase from
Holdings L.P. and Holdings L.P. agrees to sell, convey, transfer, assign and
deliver to Newco at Closing, free and clear of all Liens, all of Holdings
L.P.'s right, title and interest in, to and under an undivided interest in the
portion of Assets remaining after the sale of the Purchased Assets Interest
pursuant to Section 2.2(a) and the contribution to Newco of the Contributed
Assets Interest pursuant to Section 2.4(a) (such undivided interest being
referred to herein as the "OTHER PURCHASED ASSETS INTEREST") as the same shall
exist on the Closing Date.
(b) Except as otherwise provided herein, upon the terms and subject
to the conditions of this Agreement, Buyer agrees, effective at the time of
Closing, to cause Newco to assume an undivided interest in the portion of
Assumed Liabilities of Holdings L.P. remaining after the assumption of the
Assumed Liabilities Interest pursuant to Section 2.2(b) and the contribution to
Newco of the Contributed Liabilities Interest pursuant to Section 2.4(b) (the
"OTHER ASSUMED LIABILITIES INTEREST").
(c) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any Other Purchased
Assets Interest or any claim or right or any benefit arising thereunder or
resulting therefrom if an attempted assignment thereof, without the consent of
a third party thereto, would constitute a breach or other contravention thereof
or in any way adversely affect the rights of Newco or Holdings L.P. thereunder.
Holdings L.P. and Newco will use their best efforts (but without any payment of
money by Holdings L.P. or Newco) to obtain the consent of the other parties to
any such Other Purchased
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<PAGE>
Assets Interest or any claim or right or any benefit arising thereunder for the
assignment thereof to Newco as Newco may reasonably request. If such consent
is not obtained, or if an attempted assignment thereof would be ineffective or
would adversely affect the rights of Holdings L.P. thereunder so that Newco
would not in fact receive all such rights, Holdings L.P. and Newco will
cooperate in a mutually agreeable arrangement under which Newco would obtain the
benefits and assume the obligations thereunder in accordance with this
Agreement, including sub-contracting, sub-licensing, or sub-leasing to Newco, or
under which Holdings L.P. would enforce for the benefit of Newco, with Newco
assuming Holdings L.P.'s obligations, any and all rights of Holdings L.P.
against a third party thereto. Holdings L.P. will promptly pay to Newco, when
received, all monies received by Holdings L.P. under any Other Purchased Assets
Interest or any claim or right or any benefit arising thereunder. In the event
that a required consent (other than a consent pursuant to Section 5.4 hereof) is
not obtained as contemplated hereby and the failure to obtain a consent would
affect a material asset, Holdings L.P. and Newco shall, to the extent the
benefits therefrom and obligations thereunder have not been provided by
alternate arrangements satisfactory to Newco and Holdings L.P., negotiate in
good faith an adjustment in the consideration paid by Newco for the Other
Purchased Assets Interest, to the extent not otherwise adjusted pursuant to
Section 2.10.
2.6 SHARE PURCHASE PRICE; ASSET PURCHASE PRICE; OTHER ASSET PURCHASE
PRICE. (a) The purchase price for the Ordinary Shares shall be the aggregate
of (i) the cash amounts set forth next to each Shareholder's name on Schedule
2.6(a) (the "INITIAL SHARE CASH PROCEEDS"), (ii) the total number of Units set
forth next to each Shareholder's name on Schedule 2.6(a) (the "INITIAL SHARE
UNIT PROCEEDS," and together with the Initial Share Cash Proceeds, the "INITIAL
SHARE PROCEEDS"), and (iii) any adjustments pursuant to Section 2.9
(collectively, the "SHARE PURCHASE PRICE").
(b) The purchase price for the Purchased Assets Interest shall be the
aggregate of (i) $45,825,000 (the "INITIAL ASSET CASH PROCEEDS"), (ii) 882,057
Units (the "INITIAL ASSET UNIT PROCEEDS," and together with the Initial Asset
Cash Proceeds, the "INITIAL ASSET PROCEEDS"), and (iii) any adjustments to the
Asset Purchase Price pursuant to Section 2.10 (collectively, the "ASSET PURCHASE
PRICE"). Holdings L.P. hereby designates the Persons set forth on Schedule
2.6(b) as the recipients of the Initial Asset Cash Proceeds and the Initial
Asset Unit Proceeds in the amounts set forth therein. Such amounts shall be
distributed by Holdings L.P. to each such Person immediately after the Closing
in accordance with Exhibit J and Sellers and Additional Parties agree that Buyer
shall not be liable in any respect for such distributed amounts or any losses
with respect thereto.
(c) The purchase price for the Other Purchased Assets Interest shall
be (i) the aggregate of one or more notes the aggregate principal amount of
which note or notes is $21,500,000 and the form of which is attached hereto as
Exhibit 3 (the "NOTE" or "NOTES," as the case may be) and (ii) any adjustment to
the Other Asset Purchase Price pursuant to Section 2.10 (collectively, the
"OTHER ASSET PURCHASE PRICE").
2.7 ALLOCATION OF ASSET PURCHASE PRICE AND OTHER ASSET PURCHASE
PRICE. (a) (i) As soon as practicable after the Closing and in any event no
later than within 10 days of
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completion of the final calculation of the Holdings Adjustment Amount pursuant
to Section 2.10, Buyer shall deliver to Holdings L.P. a statement (the
"ALLOCATION STATEMENT"), setting forth the aggregate value of the Purchased
Assets Interest and the Other Purchased Assets Interest, which shall be used for
the allocation of the sum of the Asset Purchase Price and the Other Asset
Purchase Price (together with the Assumed Liabilities Interest and the Other
Assumed Liabilities Interest) among the components of the Purchased Assets
Interest and the Other Purchased Assets Interest.
(b) Holdings L.P. shall have a period of 30 days after the delivery
of the Allocation Statement to present in writing to Buyer notice of any
objections Holdings L.P. may have to the allocation set forth in the Allocation
Statement. Unless Holdings L.P. timely objects, the Allocation Statement shall
be binding on the parties without further adjustment.
(c) If Holdings L.P. shall raise any objections within the 30-day
period, Buyer and Holdings L.P. shall negotiate in good faith and use their best
efforts to resolve such dispute. If the parties fail to agree within seven days
after the delivery of the notice, then the disputed items shall be resolved by
KPMG Peat Marwick (New York office), or if such firm declines to act in such
capacity, by such other firm of independent internationally recognized
accountants chosen and mutually accepted by both parties (the "ACCOUNTING
REFEREE"). The Accounting Referee shall resolve the dispute within 30 days of
having the item referred to it. The costs, fees and expenses of the Accounting
Referee shall be borne equally by Holdings L.P. and Buyer.
(d) Any adjustment pursuant to Section 2.10 of this Agreement shall
be allocated in accordance with the determination mutually agreed by Holdings
L.P. and Buyer. In the event that an agreement is not reached within seven days
after the determination of Holdings Closing Tangible Book Value and Holdings
Excess Available Cash pursuant to Section 2.10, the disputed item(s) shall be
resolved pursuant to Section 2.10(c) hereof.
(e) Holdings L.P. and Buyer agree to report an allocation of the
Asset Purchase Price among the components of the Purchased Assets Interest and
an allocation of the Other Asset Purchase Price among the components of the
Other Purchased Assets Interests in a manner entirely consistent with the
Allocation Statement, (including any adjustment made pursuant to Section 2.10
hereof), and agree to act in accordance with such Allocation Statement in the
preparation of financial statements and filing of all tax returns (including,
without limitation, filing Form 8594 with its federal income tax return for the
taxable year that includes the date of the Closing) and in the course of any tax
audit, tax review or tax litigation relating thereto.
(f) Not later than 10 days prior to the filing of their respective
Form 8594 relating to this transaction, each party shall deliver to the other
party a copy of its Form 8594.
2.8 CLOSING. The Closing shall take place at the offices of Davis
Polk & Wardwell, 450 Lexington Avenue, New York, New York as soon as possible,
but in no event later than 10 business days, after satisfaction of the
conditions set forth in Article X (except for those conditions which can only be
satisfied simultaneously with Closing), or at such other time or place as Buyer
and Sellers' Agent may agree. At the Closing:
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(a) Buyer shall deliver the Initial Share Cash Proceeds by wire
transfer of immediately available funds to the Persons listed on Schedule 2.6(a)
to the accounts at the banks, designated by Sellers' Agent on behalf of each
such Person by notice to Buyer, not later than two business days prior to the
Closing Date (or if not so designated, then by certified or official bank check
payable in immediately available funds to the order of such Sellers' Agent in
such amount).
(b) The Buyer will issue to each Shareholder and deliver to Sellers'
Agent on behalf of such Shareholder Unit Certificates in respect of the number
of Units set forth next to such Shareholder's name on Schedule 2.6(a) or to such
other Person as directed in writing by such Shareholders provided such other
Person would qualify as a permitted transferee in accordance with the
restrictions on transfer set forth in Article XII hereof.
(c) Sellers' Agent shall, on behalf of the Shareholders deliver to
Buyer bearer warrants for the Ordinary Shares.
(d) Buyer shall deliver to each Persons listed on Schedule 2.6(b) the
portion of the Initial Asset Cash Proceeds set forth next to each such Person's
name in immediately available funds by wire transfer to an account designated by
Seller's Agent, by notice to Buyer, not later than two business days prior to
the Closing Date (or if not so designated, then by certified or official bank
check payable in immediately available funds to the order of such Person in such
amount), provided that no wire transfers shall be made in respect of any amount
less than $1,000,000.
(e) Buyer will issue and deliver to Holdings L.P. Unit Certificates
in respect of the Initial Asset Unit Proceeds.
(f) Holdings L.P. and Buyer shall enter into an assignment and
assumption agreement (the "FIRST ASSIGNMENT AND ASSUMPTION AGREEMENT")
substantially in the form attached hereto as Exhibit A-1, and Holdings L.P.
shall deliver to Buyer such deeds, bills of sale, endorsements, consents,
assignments and other good and sufficient instruments of conveyance and
assignment (the "FIRST CONVEYANCE DOCUMENTS") as the parties and their
respective counsel shall deem reasonably necessary or appropriate to vest in
Buyer all right, title and interest in, to and under the Purchased Assets
Interest.
(g) Buyer shall deliver to Newco certificates for the International
Shares duly endorsed or accompanied by stock powers duly endorsed in blank, with
any required transfer stamps affixed to the necessary stock transfer form so
that such form is duly stamped for any applicable stamp duty purposes.
(h) Buyer and Newco shall enter into the First Services Agreement and
the Second Services Agreement attached hereto as Exhibit B-1 and Exhibit B-2,
respectively.
(i) Buyer shall deliver to Newco bearer warrants for the Ordinary
Shares.
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(j) Buyer and Newco shall enter into an assignment and assumption
agreement (the "SECOND ASSIGNMENT AND ASSUMPTION AGREEMENT") substantially in
the form attached hereto as Exhibit A-2, and Buyer shall deliver to Newco such
deeds, bills of sale, endorsements, consents, assignments and other good and
sufficient instruments of conveyance and assignment (the "SECOND CONVEYANCE
DOCUMENTS") as the parties and their respective counsel shall deem reasonably
necessary or appropriate to vest in Newco all right, title and interest in, to
and under the Purchased Assets Interest.
(k) Holdings L.P. and Newco shall enter into an assignment and
assumption agreement in respect of the Contributed Assets Interest and the Other
Purchased Assets Interest (the "THIRD ASSIGNMENT AND ASSUMPTION AGREEMENT")
substantially in the form attached hereto as Exhibit A-3, and Holdings L.P.
shall deliver to Newco such deeds, bills of sale, endorsements, consents,
assignments and other good and sufficient instruments of conveyance and
assignment (the "THIRD CONVEYANCE DOCUMENTS") as the parties and their
respective counsel shall deem reasonably necessary or appropriate to vest in
Newco all right, title and interest in, to and under the Contributed Assets
Interest and the Other Purchased Assets Interest.
(l) Newco shall deliver the Note to the Persons listed on Schedule
2.8(l) and in the principal amount set forth next to each such Person's name.
(m) Holdings L.P. shall deliver to Buyer such certificates,
instruments and other documents as Buyer may request in order to effect the sale
and transfer of its Eaton Partnership Interest to Buyer and to admit Buyer or
any of its Subsidiaries as the general partner of Eaton and Buyer shall deliver
to Newco such certificates, instruments and other documents as Newco may request
in order to effect the same to Newco and to admit Newco as a general partner of
Eaton.
(n) Buyer, Alliance Delaware and Holdings L.P. shall execute the LLC
Agreement to amend the Existing Agreement (as defined in the LLC Agreement) and
to admit Holdings L.P. as a member of Newco, which LLC Agreement shall set forth
the respective ownership and interests of the members, and be the operating
agreement, of Newco in effect immediately after the transactions described in
Sections 2.1 through 2.5.
(o) Buyer and those Persons who receive Units pursuant to Section
2.6(a) or 2.6(b) shall enter into the Registration Rights Agreement attached as
Exhibit 3.
(p) Each of the Additional Parties who are partners of Holdings L.P.
agree to enter into an amendment to amend the Holdings L.P. Agreement to the
effect set forth in Exhibit J and to make the distributions contemplated thereby
which distributions shall be made immediately following the Closing. Sellers
agree that Buyer is in no way liable with respect to such distributions or any
losses incurred in connection therewith.
All of the actions to be taken and all of the documents to be executed
and delivered at the Closing as described herein shall be deemed to have been
taken, executed and delivered simultaneously.
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2.9 SHARE PURCHASE PRICE ADJUSTMENT. (a)(i) If Limited Closing
Tangible Book Value exceeds Limited Base Tangible Book Value, the initial Share
Purchase Price shall be increased by the amount of such excess; PROVIDED that,
if Limited Excess Available Cash is a negative amount, such increased Share
Purchase Price shall be decreased by the negative Limited Excess Available Cash
amount; and (ii) if Limited Base Tangible Book Value exceeds Limited Closing
Tangible Book Value, the initial Share Purchase Price shall be decreased by the
amount of such excess; PROVIDED that, if Limited Excess Available Cash is a
negative amount, the initial Share Purchase Price shall be decreased by the
greater of (A) the amount of such excess and (B) the negative Limited Excess
Available Cash amount (the net amount of any such adjustment to the initial
Share Purchase Price pursuant to clause (i) or (ii) being hereinafter referred
to as the "SHARE ADJUSTMENT AMOUNT"). The Share Adjustment Amount shall bear
interest at a rate of 6% per annum from and including the Closing Date to the
date of payment in respect of such Share Adjustment Amount. If the initial
Share Purchase Price shall be decreased as a result of the adjustments described
above, the Share Adjustment Amount plus interest thereon shall be paid (x) by
the Shareholders (other than EPL) to Buyer, at the option of Buyer, (i) as a
setoff to the amount otherwise owed by Newco in respect of the principal on the
Note, or (ii) in cash by wire transfer to one or more bank accounts designated
by Buyer and (y) by EPL in cash by wire transfer to one or more bank accounts
specified by Buyer. If the initial Share Purchase Price shall be increased as a
result of the adjustments described above, an amount equal to the Share
Adjustment Amount shall be paid to Shareholders in cash by Buyer by wire
transfer to one or more bank accounts designated by the Sellers' Agent on behalf
of the Shareholders. If Sellers' Agent does not deliver a written notice
setting forth all objections ("NOTICE OF OBJECTIONS") to the Limited Closing
Date Balance Sheet within the 20-day period set forth in Section 2.9(c) hereof,
the Share Adjustment Amount, calculated pursuant to the Limited Closing Date
Balance Sheet delivered pursuant to Section 2.9(b) shall be payable by Buyer or
Shareholders, as the case may be, no later than the 25th day after Shareholders
receive the Limited Closing Date Balance Sheet (or, if earlier, the fifth
business day after Sellers' Agent notifies Buyer that it will not deliver a
Notice of Objections).
(b) Within 60 days after the Closing Date, Buyer shall prepare and
deliver to Shareholders and Sellers' Agent the Limited Closing Date Balance
Sheet, together with an unqualified report thereon of the Accounting Referee,
and a certificate based on such Limited Closing Date Balance Sheet setting forth
Buyer's calculation of Limited Closing Tangible Book Value and Limited Excess
Available Cash. Shareholders agree to provide Buyer with access to the books
and records of Limited and its Subsidiaries and to assist Buyer in the
preparation of the Limited Closing Date Balance Sheet. The Limited Closing Date
Balance Sheet shall and the unqualified report thereon shall provide that the
Limited Closing Date Balance Sheet does (x) fairly present the consolidated
financial position of Limited as at the close of business on the Closing Date in
accordance with generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the Limited Balance Sheet, (y)
include line items substantially consistent with those in the Limited Balance
Sheet, and (z) be prepared in accordance with accounting policies and practices
consistent with those used in the preparation of the Limited Balance Sheet.
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(c) In the event Sellers' Agent disputes any amount reflected on the
Limited Closing Date Balance Sheet or calculation of Limited Closing Tangible
Book Value or Limited Excess Available Cash, and resolution of such disagreement
could affect the adjustment to the Share Purchase Price pursuant to subparagraph
(a) hereof, Sellers' Agent shall deliver to Buyer within 20 days immediately
following receipt by Shareholders of the Limited Closing Date Balance Sheet a
Notice of Objections. The Notice of Objections shall set forth in reasonable
detail the basis for each objection included therein. If Sellers' Agent fails
to deliver a Notice of Objections within such 20-day period, Sellers' Agent and
Shareholders shall be deemed to have accepted the Limited Closing Date Balance
Sheet. If Sellers' Agent and Buyer shall not, within the next 20 days
immediately following receipt of the Notice of Objections, resolve each such
item of disagreement, Sellers' Agent and Buyer immediately shall refer those
unresolved items in dispute for binding resolution by the Accounting Referee.
The Accounting Referee shall resolve all of the items in dispute within 30 days
after such referral, and such resolution shall be conclusive and binding on
Buyer and Shareholders; provided, however, Buyer and Shareholders shall not be
entitled to challenge or dispute, and the Accounting Referee shall have no
authority to adjust, any item of any kind on the calculation of Limited Closing
Tangible Book Value or Limited Excess Available Cash or on the Limited Closing
Date Balance Sheet not objected to by Shareholders in the Notice of Objections.
After resolving the issue in dispute, the Accounting Referee shall, subject to
the foregoing, prepare and deliver to each of the parties the conclusive Limited
Closing Date Balance Sheet and a statement of the Share Adjustment Amount and
such Share Adjustment Amount shall be payable by Buyer or Shareholders, as the
case may be, no later than the 25th day after receipt of such statement by the
respective parties. The fees and disbursements of the Accounting Referee, if
any, shall be borne (A) by Buyer if the difference between the Share Adjustment
Amount and Buyer's calculation of the Share Adjustment Amount is greater than
the difference between the Share Adjustment Amount and Shareholders' calculation
of the Share Adjustment Amount, (B) by Shareholders if the first such difference
is less than the second such difference and (C) otherwise equally by Buyer and
Shareholders.
2.10 PURCHASE PRICE ADJUSTMENT. (a)(i) If Holdings Closing Tangible
Book Value exceeds Holdings Base Tangible Book Value, the Asset Purchase Price,
the Other Asset Purchase Price and the Capital Contribution (collectively, the
"HOLDINGS PURCHASE PRICE") shall be increased by the amount of such excess;
PROVIDED that, if Holdings Excess Available Cash is a negative amount, such
increased Holdings Purchase Price shall be decreased by the negative Holdings
Excess Available Cash amount; and (ii) if Holdings Base Tangible Book Value
exceeds Holdings Closing Tangible Book Value, the initial Holdings Purchase
Price shall be decreased by the amount of such excess; PROVIDED that, if
Holdings Excess Available Cash is a negative amount, the initial Holdings
Purchase Price shall be decreased by the greater of (A) the amount of such
excess and (B) the negative Holdings Excess Available Cash amount (the net
amount of any such adjustment to the initial Holdings Purchase Price pursuant to
clause (i) or (ii) being hereinafter referred to as the "HOLDINGS ADJUSTMENT
AMOUNT"). The Holdings Adjustment Amount shall bear interest at a rate of 6%
per annum from and including the Closing Date to the date of payment in respect
of such Adjustment Amount. 64.32%, 21.81% and 13.87%, respectively, which
percentages are subject to change as provided in, and in accordance with,
Sections 2.2(d) and 2.4(d) of the Holdings Adjustment Amount shall be attributed
to the Asset
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Purchase Price, the Other Asset Purchase Price and the Capital Contribution,
respectively (each such allocated portion of the Holdings Adjustment Amount
being referred to herein as the "ASSET ADJUSTMENT AMOUNT," the "OTHER ASSET
ADJUSTMENT AMOUNT" and the "CAPITAL CONTRIBUTION ADJUSTMENT AMOUNT,"
respectively). If the initial Holdings Purchase Price shall be decreased as a
result of the adjustments in clauses (i) and (ii) above, (x) the Asset
Adjustment Amount plus interest thereon shall be paid to Buyer by Holdings L.P.
at the option of Buyer, (a) as a setoff to the amount otherwise owed by Newco in
respect of the principal on the Note, or (b) in cash by wire transfer to a bank
account designated by Buyer; and (y) the Other Asset Adjustment Amount and the
Capital Contribution Adjustment Amount plus interest thereon shall be paid to
Newco by Holdings L.P. at the option of Newco, (a) as a setoff to the amount
otherwise owed by Newco in respect of the principal on the Note or (b) in cash
by wire transfer to a bank account designated by Newco. If the initial Holdings
Purchase Price is increased as a result of the adjustments described above, (x)
an amount equal to the Asset Adjustment Amount shall be paid to Holdings L.P. in
cash by Buyer by wire transfer to a bank account or accounts designated by
Holdings L.P. and (y) an amount equal to the Other Asset Adjustment Amount and
the Capital Contribution Adjustment Amount shall be paid to Holdings L.P. in
cash by Newco by wire transfer to a bank account or accounts designated by
Holdings L.P. Notwithstanding the foregoing, not less than one-third of the
Asset Adjustment Amount, the Other Asset Adjustment Amount and the Capital
Contribution Amount payable by Holdings L.P., if any, must be paid in cash and
may not be set off against the Note. If Holdings L.P. does not deliver a Notice
of Objections to the Holdings Closing Date Balance Sheet within the 20-day
period set forth in Section 2.10(c) hereof, the respective allocations of the
Holdings Adjustment Amount, calculated pursuant to the Holdings Closing Date
Balance Sheet delivered pursuant to Section 2.10(b) shall be payable by Buyer,
Newco or Holdings L.P., as the case may be, no later than the 25th day after
Holdings L.P. receives the Closing Date Balance Sheet (or, if earlier, the fifth
business day after Holdings L.P. notifies Buyer that it will not deliver a
Notice of Objections).
(b) Within 60 days after the Closing Date, Buyer shall prepare and
deliver to Holdings L.P. the Holdings Closing Date Balance Sheet, together with
an unqualified report thereon of the Accounting Referee, and a certificate based
on such Holdings Closing Date Balance Sheet setting forth Buyer's calculation of
Holdings Closing Tangible Book Value and Holdings Excess Available Cash.
Holdings L.P. agrees to provide Buyer with access to the books and records of
Holdings L.P. and its Subsidiaries and to assist Buyer in the preparation of the
Holdings Closing Date Balance Sheet. The Holdings Closing Date Balance Sheet
shall and the unqualified report thereon shall provide that the Holdings Closing
Date Balance Sheet does, (x) fairly present the consolidated financial position
of Holdings L.P. as at the close of business on the Closing Date in accordance
with GAAP applied on a basis consistent with those used in the preparation of
the Holdings Balance Sheet, (y) include line items substantially consistent with
those in the Holdings Balance Sheet, and (z) be prepared in accordance with
accounting policies and practices consistent with those used in the preparation
of the Holdings Balance Sheet.
(c) In the event Holdings L.P. disputes any amount reflected on the
Holdings Closing Date Balance Sheet or calculation of Holdings Closing Tangible
Book Value or Holdings
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Excess Available Cash, and resolution of such disagreement could affect the
adjustment to the Asset Purchase Price, the Other Asset Purchase Price or the
Capital Contribution pursuant to subparagraph (a) hereof, Holdings L.P. shall
deliver to Buyer within 20 days immediately following receipt by Holdings L.P.
of the Holdings Closing Date Balance Sheet a Notice of Objections. The Notice
of Objections shall set forth in reasonable detail the basis for each objection
included therein. If Holdings L.P. fails to deliver a Notice of Objections
within such 20-day period, Holdings L.P. shall be deemed to have accepted the
Holdings Closing Date Balance Sheet. If Holdings L.P. and Buyer shall not,
within the next 20 days immediately following receipt of the Notice of
Objections, resolve each such item of disagreement, Holdings L.P. and Buyer
immediately shall refer those unresolved items in dispute for binding resolution
by the Accounting Referee. The Accounting Referee shall resolve all of the
items in dispute within 30 days after such referral, and such resolution shall
be conclusive and binding on Buyer and Holdings L.P.; provided, however, Buyer
and Holdings L.P. shall not be entitled to challenge or dispute, and the
Accounting Referee shall have no authority to adjust, any item of any kind in
the calculation of Holdings Closing Tangible Book Value or Holdings Excess
Available Cash or on the Holdings Closing Date Balance Sheet not objected to by
Holdings L.P. in the Notice of Objections. After resolving the issue in
dispute, the Accounting Referee shall, subject to the foregoing, prepare and
deliver to each of the parties the conclusive Holdings Closing Date Balance
Sheet and a statement of the Holdings Adjustment Amount and such Holdings
Adjustment Amount shall be payable by Buyer or Holdings L.P., as the case may
be, no later than the 25th day after receipt of such statement by the respective
parties. The fees and disbursements of the Accounting Referee, if any, shall be
borne (A) by Buyer if the difference between the Holdings Adjustment Amount and
Buyer's calculation of the Holdings Adjustment Amount is greater than the
difference between the Holdings Adjustment Amount and Holdings L.P.'s
calculation of the Holdings Adjustment Amount, (B) by Holdings L.P. if the first
such difference is less than the second such difference and (C) otherwise
equally by Buyer and Holdings L.P.
2.11 SELLERS' AGENT.
(a) In order to administer efficiently (i) the implementation of this
Agreement by the Sellers, and (ii) the waiver of any condition to the
obligations of the Sellers to consummate the transactions contemplated hereby
(provided, however that with respect to the waiver of any material condition,
the Sellers must be consulted), the Sellers hereby designate Richard I. Morris,
Jr. as their representative and agent (the "Sellers' Agent"). The Sellers'
Agent shall be a fiduciary with respect to each Seller, and shall act in the
best interests of each Seller, respectively.
(b) The Sellers hereby authorize the Sellers' Agent on their
respective behalfs (i) to take all action necessary at or prior to Closing
(including without limitation the execution and delivery of certificates and
other documents) in connection with the implementation of the Transaction
Documents on behalf of the Sellers or the waiver of any condition to the
obligations of the Sellers to consummate the transactions contemplated hereby
(provided, however that with respect to the waiver of any material condition,
the Sellers must be consulted), (ii) to give and receive all notices required to
be given at or prior to Closing under the Transaction Documents,
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and (iii) to take any and all additional action as is contemplated to be taken
by or on behalf of the Sellers by the terms of the Transaction Documents at or
prior to Closing, including without limitation, the execution and delivery of
documents to transfer the Ordinary Shares to Buyer; provided, however, that the
Sellers' Agent shall not have authority to commence legal proceedings on behalf
of the Sellers without their consent and shall have no authority to take action
outside of the United States of America.
(c) In the event that the Sellers' Agent dies, becomes legally
incapacitated or resigns from such position, Hugh M. Eaton III shall fill such
vacancy and shall be deemed to be the Sellers' Agent for all purposes of this
Agreement; however, no change in the Sellers' Agent shall be effective until
Buyer is given notice of it by the Sellers.
(d) All decisions and actions by the Sellers' Agent shall be binding
upon all of the Sellers, and no Seller shall have the right to object, dissent,
protest or otherwise contest the same.
(e) By its execution of this Agreement, each Seller agrees that:
(i) Buyer shall be able to rely conclusively on the instructions
and decisions of the Sellers' Agent as to any actions taken or
permitted to be taken by the Sellers or the Sellers' Agent pursuant to
this Section 2.11 and any actions specifically designated in this
Agreement as actions to be taken by the Seller's Agent, and, when
applicable, Buyer and Newco shall be entitled to rely without further
inquiry upon the representation of Sellers' Agent that he shall have
consulted Sellers and no party hereunder shall have any cause of
action against Buyer or Newco for any action taken by Buyer in
reliance upon the instructions or decisions of the Sellers' Agent;
(ii) all actions, decisions and instructions of the Sellers'
Agent shall be conclusive and binding upon all of the Sellers and no
Seller shall have any cause of action against the Sellers' Agent for
any action taken, decision made or instruction given by the Sellers'
Agent under this Agreement, except for fraud or willful breach of this
Agreement by the Sellers' Agent; and
(iii) the provisions of this Section 2.11 are independent and
severable, shall constitute an irrevocable power of attorney, coupled
with an interest and surviving death, granted by the Sellers to the
Sellers' Agent and shall be binding upon the executors, heirs, legal
representatives and successors of each Seller provided that in any
event the power of attorney hereby created shall be revoked
immediately following Closing (except with respect to the Sellers'
Agents duties thereafter as expressly provided hereunder) and upon any
breach of the Sellers' Agent's duties hereunder, provided Buyer may
rely upon the Sellers' Agent until it has actual knowledge of any such
breach.
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(f) Reasonable out-of-pocket costs and expenses of Sellers' Agent, if
any, shall be borne by the Sellers in proportion to the consideration they
receive under Section 2.6 of this Agreement.
(g) Where necessary to give effect to the provisions of this Section
2.11, the Sellers shall each execute a power of attorney conferring on the
Seller's Agent the power mentioned in (b) above.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ADDITIONAL PARTIES AND SELLERS
Unless otherwise expressly set forth herein, the representation and
warranties contained in this Article III are made to the Buyer as of the date
hereof and as of the Closing Date by each of the Sellers (other than EPL)
jointly and severally with each of the other Sellers and Additional Parties
(other than FAWI) in its Selling Group. None of the representations and
warranties contained in this Article III shall be made by EPL or FAWI except as
explicitly set forth in Sections 3.1(c), 3.4, 3.5(i) and 3.7.
3.1 CORPORATE EXISTENCE, POWER AND AUTHORIZATION. (a) Each of
Limited and the Limited Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all corporate powers and all licenses, authorizations,
permits, consents and approvals, governmental or otherwise, required to carry on
its business as now conducted, except where the failure to have such licenses,
authorizations, permits, consents or approvals would not, individually or in the
aggregate, have a Material Adverse Effect. Each of Limited and the Limited
Subsidiaries is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where such qualification is necessary, except
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect. The Sellers have heretofore
delivered to Buyer true and complete copies of the Organizational Documents as
currently in effect for each of Limited and the Limited Subsidiaries.
(b) The execution, delivery and performance by each of Limited and
the Limited Subsidiaries of the Transaction Documents to which each such entity
is a party are within such entity's corporate powers and have been duly
authorized by all necessary corporate action on the part of such entity. Each
Transaction Document to which Limited or the Limited Subsidiaries is a party
constitutes a valid and binding agreement of each of Limited and the Limited
Subsidiaries which is a party thereto enforceable in accordance with its terms,
except as (i) the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
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(c) Each Seller Corporation (including EPL and FAWI), jointly and
severally with each other Person in its Selling Group, makes the following
representations and warranties with respect to such Seller Corporation but not
with respect to any other Seller Corporation that is not in its Selling Group:
(i) Such Seller Corporation is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction or organization
and has all corporate powers and all licenses, authorizations, permits, consents
and approvals, governmental or otherwise, required to carry on its business as
now conducted, except where the failure to have such powers, licenses,
authorizations, permits, consents or approvals would not, individually or in the
aggregate, have a Material Adverse Effect. Such Seller Corporation is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except where failure to
do so would not have a Material Adverse Effect.
(ii) The execution, delivery and performance by such Seller
Corporation of the Transaction Documents to which it is a party are within such
entity's corporate powers and have been duly authorized by all necessary
corporate action on the part of such entity. Each Transaction Document to which
such Seller Corporation is a party constitutes a valid and binding agreement of
such Seller Corporation enforceable against it in accordance with its terms,
except as (i) the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
3.2 PARTNERSHIP EXISTENCE, POWER AND AUTHORIZATION. (a)(i) Eaton is
the only Subsidiary of Holdings L.P. and is a general partnership duly organized
and validly existing under the laws of New York pursuant to the Eaton
Partnership Agreement. Pursuant to the Assignment Agreement dated as of July
11, 1986 executed by Hugh M. Eaton III and the Acceptance dated as of July 11,
1986 executed by HME Partners, Inc. ("HMEP"), Hugh M. Eaton III assigned his
partnership interest in Eaton to HMEP and HMEP replaced Hugh M. Eaton III as a
general partner of Eaton. Pursuant to the Subscription Agreement dated as of
June 29, 1990 among HMESLP Inc., Eric Auboyneau, the predecessor in interest to
the Re Trust, Richard Morris, Jr., John Ricciardi, and HMEP International
Advisory Associates Inc. as general partners to Holdings L.P., HMEP assigned its
partnership interest in Eaton to Holdings L.P., and pursuant to the Instrument
of Assumption dated as of June 29, 1990 executed by Holdings L.P., Holdings L.P.
assumed all of the obligations of HMEP, which Instrument of Assumption was
acknowledged by HMEP before a notary.
(b) Holdings L.P. is a limited partnership duly organized, validly
existing and in good standing under the laws of Delaware.
(c) Each of Eaton and Holdings L.P. (each, a "PARTNERSHIP" and
collectively, the "PARTNERSHIPS") has all partnership powers and all licenses,
authorizations, permits, consents and approvals, governmental or otherwise,
required to carry on its business as now conducted.
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Each of the Partnerships is duly qualified to do business as a foreign
partnership and is in good standing in each jurisdiction where such
qualification is necessary. The Sellers have heretofore delivered to Buyer true
and complete copies of the Organizational Documents for each of the Partnerships
as currently in effect.
(d) The execution, delivery and performance by Holdings L.P. of the
Transaction Documents to which Holdings L.P. is a party are within its legal
powers, rights and authority and have been duly authorized by all necessary
action on the part of Holdings L.P. This Agreement constitutes, and when
executed, the Transaction Documents to which it is a party will constitute, a
valid and binding agreement of Holdings L.P. enforceable in accordance with its
terms, except as (a) the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) the availability of equitable
remedies may be limited by equitable principles of general applicability.
3.3 INDIVIDUAL ENFORCEABILITY; TRUST ENFORCEABILITY. (a) Each
individual set forth on Schedule 1.1 or Schedule 1.2, jointly and severally with
each other Person in its Selling Group, makes the following representation and
warranty with respect to such individual but not with respect to any other
individual that is not in its Selling Group. This Agreement constitutes, and
when executed, each of the Transaction Documents to which such individual is a
party, will constitute, a valid and binding agreement of such individual.
(b) The Trustees of each Trust, jointly and severally with each other
Person in that Trust's Selling Group, make the following representations and
warranties with respect to that Trust of which they are trustees but not with
respect to any other Trust:
(i) The Trust of which they are Trustees is a duly constituted trust,
created under the laws of the jurisdiction in which it is organized. Such
Trust is validly existing and the Trustees are the duly appointed trustees
thereof.
(ii) The execution, delivery and performance by the Trustees of each
such Trust of the Transaction Documents to which such Trustees are parties
are within the Trustees' powers and have been duly authorized by all
necessary action under the Organizational Document of each such Trust.
Each Transaction Document to which the Trustees of each such Trust are
parties constitutes a valid and binding agreement of such Trustees
enforceable against them in their capacity as Trustees of such Trust,
except as (i) the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
3.4 GOVERNMENTAL AUTHORIZATION. Each Seller (including EPL) jointly
and severally with each other Person in its Selling Group (including with
respect to EPL, FAWI), makes the following representations and warranties with
respect to each member of its Selling Group but not with respect to any other
Seller or Additional Party: The execution, delivery and
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performance by such Seller and such Additional Party of the Transaction
Documents to which such Seller or Additional Party is a party require no action
by or in respect of, or filing with, any governmental body, agency, or official
other than (i) compliance with the HSR Act, (ii) filing of amended Forms ADVs
under the Investment Advisers Act and of amended Forms 7-Rs and 3-Rs under the
Commodity Exchange Act reflecting the transactions contemplated by the
Transaction Documents, (iii) compliance with applicable regulations under the
Commodity Exchange Act and the National Futures Association, (iv) (a) prior
notification to IMRO and IMRO's clearance of the changes of control of Eaton and
Cursitor Management Limited and Draycott in accordance with Chapter IV of the
IMRO Rules and, if enacted as currently contemplated, Part VII of the Investment
Services Regulations 1995 if applicable and (b) lodging of particulars of the
Transaction Documents with the Director General of Fair Trading pursuant to the
Restrictive Trade Practices Act 1976, (v) (a) notification to the Ontario
Securities Commission of the change in the holders of the voting securities of
Eaton and any change in the partners, directors, officers and registered address
of Eaton within 5 days of the Closing Date as required pursuant to Section 33 of
the SECURITIES ACT (Ontario) and (b) notification at least 30 days prior to
Closing to the Director under the SECURITIES ACT (Ontario) pursuant to Section
104(1) of the regulations promulgated under such statute and confirmation that
the Director did not raise any objection to the transactions contemplated
herein; and (vi) submission to the IML of a draft notification to the
shareholders of the Luxembourg Fund.
3.5 NON-CONTRAVENTION. (i) Each Seller (including EPL) jointly and
severally with each other Person in its Selling Group (including with respect to
EPL, FAWI), makes the following representations and warranties with respect to
each member of its Selling Group but not with respect to any other Seller or
Additional Party: The execution, delivery and performance by each such Seller
and each such Additional Party of the Transaction Documents to which such Seller
or such Additional Party is a party do not and will not in any material respect
(a) violate the Organizational Documents of the Seller Corporations, the
Companies, the Trusts, or any of their respective Affiliates (other than any
Subsidiary of the Companies), (b) assuming compliance with the matters referred
to in Section 3.4 and the provision of notice as contemplated in Section 5.5(a)
and 5.5(b), violate any applicable law, rule, regulation, judgment, injunction,
order or decree, (c) require any consent or other action by any Person under,
constitute a default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of such Seller or
Additional Party or its Affiliates (other than the Companies and their
Subsidiaries) or to a loss of any benefit to which such Seller or Additional
Party or Affiliates (other than the Companies and their Subsidiaries) is
entitled under, any agreement or other instrument binding upon such Seller or
Additional Party or its Affiliates (other than the Companies and their
Subsidiaries) or any license, franchise, permit or other similar authorization
held by such Seller or Additional Party or its Affiliates (other than the
Companies and their Subsidiaries), except as set forth in Schedule 3.5 hereto or
(d) result in the creation or imposition of any Lien on any asset of such Seller
or Additional Party or its Affiliates (other than the Companies and their
Subsidiaries).
(ii) Each Seller (other than EPL), jointly and severally with each
other Person in its Selling Group (other than FAWI), makes the following
representations and warranties with respect to each member of its Selling Group
but not with respect to any other Seller or
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Additional Party: The execution, delivery and performance by such Seller or
Additional Party of the Transaction Documents to which such Seller or Additional
Party is a party do not and will not (a) violate the Organizational Documents of
any Subsidiary of the Companies, (b) except with respect to contracts or
agreements with Clients as to which consent is sought is accordance with the
procedures described in Section 5.4(a), require any consent or other action by
any Person under, constitute a default under or give rise to any right or
termination, cancellation or acceleration of any right or obligation of the
Companies or their Subsidiaries, or to a loss of any benefit to which any of the
Companies or their Subsidiaries is entitled under any agreement or other
instrument binding upon the Companies or their Subsidiaries or any license,
franchise, permit, or similar authorization held by the Companies or their
Subsidiaries; or (c) result in the creation or imposition of any Lien on any
asset of the Companies or their Subsidiaries, except to the extent such
violation, failure to obtain consent or other action, default, right, loss or
imposition of a Lien would not individually or in the aggregate have a Material
Adverse Effect.
3.6 CAPITALIZATION. Each Seller and each Additional Party (excluding
EPL and FAWI), jointly and severally with each other Seller and Additional Party
makes the following representations and warranties:
(a) The Eaton Partnership Agreement evidences all outstanding Eaton
Partnership Interests and is a valid and binding agreement of Holdings L.P. and
Cursitor Management Limited. Cursitor Management Limited and Holdings L.P. have
been duly admitted as the only general partners of Eaton and beneficially own
and hold all outstanding Eaton Partnership Interests. Except as set forth in
this Section 3.6(a), there are no outstanding (i) Eaton Partnership Interests or
other ownership interests in, or voting securities of, Eaton, (ii) securities of
Eaton convertible into or exchangeable for Eaton Partnership Interests or other
ownership interests in, or voting securities of, Eaton, or (iii) options or
other rights to acquire from Eaton, or other obligations of Eaton to issue, any
Eaton Partnership Interests, voting securities or securities convertible into or
exchangeable for Eaton Partnership Interests or voting securities of Eaton (the
items in clauses 3.6(a)(i), 3.6(a)(ii) and 3.6(a)(iii) being referred to
collectively as the "EATON SECURITIES"). There are no outstanding obligations
of any of the Sellers, the Additional Parties, the Companies, or any of their
respective Subsidiaries or Affiliates to repurchase, redeem or otherwise acquire
any Eaton Securities.
(b) The Holdings Limited Partnership Agreement evidences all
outstanding Holdings L.P. Interests and is a valid and binding agreement of the
parties thereto. Each of the parties thereto have been duly admitted as the
only partners of Holdings L.P. and beneficially own and hold all outstanding
Holdings L.P. Interests. Except as set forth in this Section 3.6(b), there are
no outstanding (i) Holdings L.P. Interests or other ownership interests in, or
voting securities of, Holdings L.P., (ii) securities of Holdings L.P.
convertible into or exchangeable for Holdings L.P. Interests or other ownership
interests in, or voting securities of, Holdings L.P., or (iii) options or other
rights to acquire from Holdings L.P., or other obligations of Holdings L.P. to
issue, any Holdings L.P. Interests, voting securities or securities convertible
or exchangeable for Holdings L.P. Interests or voting securities of Holdings
L.P. (the items in clauses 3.6(b)(i), 3.6(b)(ii) and 3.6(b)(iii) being referred
to collectively as the "HOLDINGS L.P. SECURITIES"). There are no outstanding
obligations of any of the Sellers, the Additional Parties,
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the Companies, or any of their respective Subsidiaries or Affiliates to
repurchase, redeem or otherwise acquire any Holdings L.P. Securities.
(c) (i) The authorized capital stock of Limited consists of 150,000
Deferred Shares and 150,000 Ordinary Shares. The Ordinary Shares have the
exclusive right to receive dividends and other distributions in respect of
Limited's profits and the exclusive right to vote in respect of Limited's
affairs. Upon a winding-up of Limited, the Ordinary Shares shall have priority
over the Deferred Shares in respect of Limited's assets. The only right
attaching to the Deferred Shares is a right to receive a repayment of the
nominal L0.01 of capital on each Deferred Share in a winding-up of Limited. As
of the date hereof, there were outstanding 150,000 Deferred Shares and 150,000
Ordinary Shares. All outstanding Shares have been duly authorized and validly
issued and are fully paid and non-assessable. Except as set forth in this
Section 3.6(c) or as provided in Section 5.13, there are no outstanding
(A) shares of capital stock or voting securities of Limited, (B) securities of
Limited convertible into or exchangeable for shares of capital stock or voting
securities of Limited or (C) options or other rights to acquire from Limited, or
other obligation of Limited to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of Limited (the items in clauses (A), (B) and (C) being referred to
collectively as the "LIMITED SECURITIES"). There are no outstanding obligations
of any of the Sellers, the Additional Parties, the Companies, or any of their
respective Subsidiaries or Affiliates to repurchase, redeem or otherwise acquire
any Limited Securities.
(ii) All Limited Subsidiaries and their respective jurisdictions of
incorporation are identified on Schedule 3.6(c)(ii) and all of the outstanding
capital stock of, or other voting securities or ownership interests in, each
such Subsidiary, is owned by Limited, directly or indirectly (other than
directors' qualifying shares specifically identified as such on Schedule
3.6(c)(ii)), free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities or ownership
interests). Except as set forth in Schedule 3.6(c)(ii), there are no
Subsidiaries of Limited. Except as set forth in this Section 3.6, there are no
outstanding (A) shares of capital stock or voting securities of any Limited
Subsidiary, (B) securities of any Limited Subsidiary or either Company
convertible into or exchangeable for shares of capital stock or other voting
securities or ownership interests in any Limited Subsidiary or (C) options or
any other rights to acquire from any Limited Subsidiary or either Company, or
other obligation of any Limited Subsidiary or either Company to issue, any
capital stock or other voting securities or ownership interests in, or any
securities convertible into or exchangeable for any capital stock or other
voting securities or ownership interests in, any Limited Subsidiary (the items
in clauses (A), (B) and (C) being referred to collectively as the "LIMITED
SUBSIDIARY SECURITIES"). There are no outstanding obligations of any of the
Sellers, the Additional Parties, the Companies, or any of their respective
Subsidiaries or Affiliates to repurchase, redeem or otherwise acquire any
outstanding Limited Subsidiary Securities.
(d) The indemnification percentages set forth in Schedule 11.2 next
to the name of each Selling Group equal the respective percentages of ownership
in the Companies and their Subsidiaries of the Shareholders (with respect to
Limited) and the partners of Holdings L.P.
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(with respect to Holdings L.P.) and the respective percentages of the total
consideration payable under this Agreement to each such Selling Group.
3.7 OWNERSHIP OF SHARES. Each Shareholder (including EPL), jointly
and severally with each other Person in its Selling Group (including with
respect to EPL, FAWI), makes the following representations and warranties with
respect to such Shareholder but not with respect to any other Shareholder that
is not in the Selling Group: except as listed on Schedule 3.7 hereto, such
Shareholder is the holder of record and the beneficial owner of the Ordinary
Shares and the Deferred Shares specified on Schedule 3.7 opposite such
Shareholder's name, free and clear of any Lien and any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such Shares), and will transfer and deliver or cause to be
transferred and delivered to Buyer at the Closing valid title to the Ordinary
Shares free and clear of any Lien and any such limitation or restriction.
3.8 FINANCIAL STATEMENTS. (a) The audited consolidated balance
sheets of each of the Companies as of December 31, 1993 and 1994 and the
related audited consolidated statements of income, changes in partners' capital,
in the case of Holdings L.P., and cash flows for each of the years ended
December 31, 1993 and 1994 and the unaudited consolidated balance sheet of each
of the Companies as of September 30, 1995, and the related consolidated
statements of income, changes in partner's capital, in the case of Holdings
L.P., and cash flows for the nine-month period ended September 30, 1995, all set
forth in Schedule 3.8, present fairly, in all material respects, the
consolidated financial position of each of the Companies as of the dates thereof
and their consolidated results of operations and cash flows for the periods then
ended in conformity with generally accepted accounting principles in the U.K.,
in the case of Limited, and in the U.S., in the case of Holdings L.P., in each
case applied on a consistent basis.
(b) The audited aggregated consolidated balance sheet of the
Companies as of December 31, 1994 and the related audited aggregated
consolidated statements of income for the year ended December 31, 1994 and the
unaudited aggregated consolidated balance sheet of the Companies as of September
30, 1995 and the related unaudited aggregated consolidated statements of income,
for the nine month period ended September 30, 1995, set forth in Schedule 3.8,
present fairly, in all material respects, the aggregated consolidated financial
position of the Companies as of the dates thereof and their aggregated results
of operations for the periods then ended on the basis set forth therein.
(c) The pro forma aggregated balance sheet of the Companies as of
September 30, 1995 and the pro forma aggregated consolidated statements of
income for the year ended December 31, 1994 and the nine months ended September
30, 1995, set forth in Schedule 3.8, present fairly, in all material respects,
the aggregated consolidated financial position of the Companies as of the date
thereof and their aggregated results of operations for such periods, presented
in a manner that excludes HMEIAA LP and, with respect to the aforementioned
balance sheet only, as adjusted to reflect the Draycott Transaction, and are
prepared on the basis set forth in the audited aggregated income statement and
balance sheet for the year ended December 31, 1994.
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(d) The Principals have delivered true and correct copies of the
audited balance sheets of each Sponsored Fund furnished to them by each such
Sponsored Fund as of December 31, 1994 and December 31, 1993 and the related
financial statements for the years ended December 31, 1994 and 1993 (or in the
case of a Sponsored Fund that does not have a fiscal year ending on December 31,
the last day of such Sponsored Fund's most recent comparable fiscal year), and
the unaudited balance sheet of each Sponsored Fund as of September 30, 1995 (or
in the case of a Sponsored Fund that does not have a fiscal quarter ending on
September 30, the last day of such Sponsored Fund's most recent comparable
fiscal quarter or in the case of a Sponsored Fund that does not customarily
distribute quarterly financial information, the last day of such Sponsored
Fund's most recent fiscal year) and the related unaudited financial statements
for the period then ended, and nothing has come to the attention of any Seller
or Additional Party to cause them to believe that such financial statements have
not been prepared in accordance with generally accepted accounting principles in
the jurisdiction in which each such Sponsored Fund is domiciled, consistently
applied, except as otherwise disclosed therein, and that such financial
statements do not present fairly, in all material respects, the financial
position and other financial results of each such Sponsored Fund at the dates,
and for the periods, stated therein.
(e) The Principals have delivered true and correct copies of the
unaudited balance sheets of Draycott furnished to them by Draycott as of
December 31, 1994 and as of June 30, 1995 and the related statements of income
for such periods then ended and nothing has come to the attention of any Seller
or Additional Party to cause them to believe that such financial statements have
not been prepared in accordance with GAAP (except that such financial statements
do not include any notes thereto) and that such financial statements do not
present fairly, in all material respects, the financial position and other
financial results of Draycott, at the dates, and for the periods stated therein,
except that the unaudited balance sheet as of June 30, 1995 is subject to
customary year-end adjustments.
(f) All material fees, payments or reimbursements due and owing from
and to each of the Companies and their respective Subsidiaries from and to any
and all of each of their Clients and all fees, payments or reimbursements due
and owing to each of the Companies and their respective Subsidiaries from and to
TCW are fully and accurately set forth in the financial statements referred to
in this Section 3.8. All of the accrued, unpaid investment management and
advisory fees and other receivables reflected in such financial statements
represent valid obligations owing to the Companies and their respective
Subsidiaries and except to the extent an appropriate reserve is reflected in
such financial statements, are collectible in the aggregate amounts shown
therein.
(g) $3,095,000 and $600,000 are reasonable estimates of the
consolidated operating expenses and cash needs of Limited and Holdings L.P.,
respectively, for the three months following the Closing Date.
3.9 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule 3.9,
since the Balance Sheet Date, the Business has been conducted in the ordinary
course consistent with past practices and there has not been:
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(a) any event, occurrence, development or state of circumstances or
facts which has had or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect;
(b) any amendment of (a) any material term of any outstanding
security of either Company or any of their respective Subsidiaries or (b) the
Organizational Documents of either Company or any of their respective
Subsidiaries;
(c) any incurrence, assumption or guarantee in excess of $25,000 in
the aggregate by either Company or any of their respective Subsidiaries of any
indebtedness for borrowed money;
(d) any creation or assumption by either Company, or any of their
respective Subsidiaries of any Lien on any material asset with a book value over
$25,000, other than Liens for Taxes not yet due and being contested in good
faith;
(e) any making of any loan, advance or capital contributions to or
investment in any Person in excess of $25,000 in the aggregate that is not in
the ordinary course of business;
(f) any waiver of any rights of value in excess of $50,000 in the
aggregate without adequate consideration;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of either Company or any
of their respective Subsidiaries which, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by either Company or any of their respective Subsidiaries relating
to their respective assets or Business (including the acquisition or disposition
of any assets) or any relinquishment by either Company or any of their
respective Subsidiaries of any contract or other right, in either case, material
to the Companies and the Subsidiaries, taken as a whole, other than transactions
and commitments in the ordinary course of business consistent with past
practices and those contemplated by the Transaction Documents;
(i) any change in pricing policy with respect to the provision of
services to any Client or prospective Client (including any participant or
prospective participant in any Fund);
(j) any material change in any method of accounting or accounting
practice by either Company or any of their respective Subsidiaries;
(k) any (i) employment, deferred compensation, severance, retirement
or other similar agreement entered into with any current or contemplated
director, officer or employee (whose salary exceeds $150,000 per year of either
Company or any of their respective Subsidiaries (or any amendment to any such
existing agreement), (ii) grant of any severance or
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termination pay to any director, officer or employee whose salary exceeds
$150,000 per year) of either Company or any of their respective Subsidiaries, or
(iii) change in compensation or other benefits (including compensation or other
benefits pursuant to any severance or retirement plans or policies thereof)
payable to any director, officer or employee whose salary exceeds $150,000 per
year of either Company or any of their respective Subsidiaries; or
(l) any labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of either Company or any of their respective
Subsidiaries, which employees were not subject to a collective bargaining
agreement at the Balance Sheet Date, or any lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with respect to any employees of either
Company or any of their respective Subsidiaries.
3.10 NO UNDISCLOSED LIABILITIES. There are no liabilities of either
Company or any of their Subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, other than:
(a) liabilities provided for in the Balance Sheet or disclosed in the
notes thereto;
(b) liabilities disclosed on Schedule 2.2(b) or Schedule 3.10;
(c) liabilities of Holdings L.P. that are not Assumed Liabilities;
(d) liabilities that are not material, individually or in the
aggregate, to the Companies or their respective Subsidiaries; or
(e) liabilities incurred in the ordinary course of business since the
Balance Sheet Date and which would be required to be shown (other than solely in
the notes thereto) on either the Holdings Closing Date Balance Sheet or the
Limited Closing Date Balance Sheet.
3.11 TRANSACTIONS WITH AFFILIATES. Except as listed in Schedule
3.11, since the Balance Sheet Date, there has not been any accrual of liability
by either Company or any of their respective Subsidiaries to any Seller, any
Additional Party or any of their respective Affiliates, Associates or Immediate
Family members other than compensation and benefits payable in the ordinary
course, consistent with past practice.
3.12 MATERIAL CONTRACTS. (a) Except as disclosed in Schedule 3.12,
neither Company nor any of their respective Subsidiaries is a party to or bound
by:
(i) any lease (whether of real or personal property)
providing for annual rentals of $50,000 or more;
(ii) any agreement that is not subject to cancellation by
the Companies on notice of 6 months or less that provides for either
(A) annual
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payments by either Company or any of their respective Subsidiaries of
$50,000 or more or (B) aggregate payments by either Company or any of
their respective Subsidiaries of $100,000 or more;
(iii) any agreement that is not subject to cancellation by
the Companies on notice of 6 months or less that provides for either
(A) annual payments to either Company or any of their respective
Subsidiaries of $50,000 or more or (B) aggregate payments to either
Company or any of their respective Subsidiaries of $100,000 or more;
(iv) any partnership, joint venture or other similar
agreement or arrangement;
(v) any agreement relating to the acquisition or
disposition of any business (whether by merger, sale of stock, sale of
assets or otherwise);
(vi) any agreement relating to indebtedness for borrowed
money or the deferred purchase price of property (in either case,
whether incurred, assumed, guaranteed or secured by any asset);
(vii) any material license, franchise or similar agreement;
(viii) any agency, dealer, sales representative, marketing
or other similar agreement;
(ix) any agreement that limits the freedom of any of the
Companies, their respective Subsidiaries or the Principals to compete
in any line of business or with any Person or in any area or which
would so limit the freedom of any such Company, Subsidiary or
Principal after the Closing Date;
(x) any agreement with (A) any Seller, Additional Party or
any of their respective Subsidiaries or Affiliates, (B) any Person
directly or indirectly owning, controlling or holding with power to
vote, 5% or more of the outstanding voting securities of any Seller,
Additional Party or any of their respective Subsidiaries or
Affiliates, (C) any Person 5% or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held with
power to vote by any Seller, Additional Party or any of their
respective Subsidiaries or Affiliates, (D) any director, partner,
trustee or officer of any Seller, Additional Party or any of their
respective Subsidiaries or Affiliates or any Associate or Immediate
Family member of any such director, partner, trustee or officer or (E)
any agreement with any director or partner of either Company or any of
their respective Subsidiaries or with any Associate or any Immediate
Family member of any such director, officer or partner;
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(xi) any agreement between either Company or any Subsidiary on
the one hand and any other Company or Subsidiary on the other which
requires revenues, income or any asset to be transferred between the two
contracting parties;
(xii) any other agreement, commitment, arrangement or plan
not made in the ordinary course of business that is material to the
Companies and their respective Subsidiaries, taken as a whole or;
(xiii) any guaranty of the foregoing.
(b) Each agreement, commitment, arrangement or plan disclosed in
Schedule 3.12 to this Agreement is a valid and binding agreement of either the
Companies or their respective Subsidiaries, as the case may be, and is in full
force and effect, and neither the Companies nor any of their respective
Subsidiaries are nor, to the knowledge of any Seller or Additional Party is any
other party thereto in default or breach in any material respect under the terms
of any such agreement, commitment, arrangement or plan.
3.13 LITIGATION/ENVIRONMENTAL MATTERS. (a) There is no action,
suit, claim, complaint, investigation, inquiry or proceeding pending against, or
to the knowledge of any Seller or Additional Party, threatened by any Client or
any other Person against or affecting, either Company or any of their respective
Subsidiaries, any Sponsored Fund or any of their respective properties before
any court or arbitrator or any governmental body, agency or official which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by any of the Transaction Documents and which has a
substantial likelihood of success on the merits.
(b) There are no liabilities of or relating to either Company or any
of their respective Subsidiaries, whether vested or unvested, contingent or
fixed, actual or potential, known or unknown, which (i) arise under or relate to
matters covered by Environmental Laws and (ii) have had or may be expected,
individually or in the aggregate, to have a Material Adverse Effect.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, rules, orders, codes and
governmental restrictions relating to human health or the environment or to
emissions, discharges or releases of pollutants, contaminants or hazardous or
toxic substances into the environment.
3.14 COMPLIANCE WITH LAWS AND COURT ORDERS; NO DEFAULTS. (a) None
of the Companies or any of their respective Subsidiaries is in violation of, or
has received notice of a violation of, and has not since December 31, 1992
violated, any law, rule, regulation, judgment, injunction, order or decree or
any published policy of any governmental or regulatory authority applicable to
the Shares, the Assets or the conduct of the Business, except for violations
which would not, individually or in the aggregate, have a Material Adverse
Effect.
(b) None of the Companies or any of their respective Subsidiaries is
in default under, and no condition exists that with notice or lapse of time or
both would constitute a default under, such party's Organizational Documents,
any agreement or other instrument binding upon
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either Company or any of their respective Subsidiaries or any license,
franchise, permit or similar authorization held by either Company or any of
their respective Subsidiaries, except for violations which would not,
individually or in the aggregate, have a Material Adverse Effect.
3.15 PROPERTIES. (a) Each of the Companies and their respective
Subsidiaries has good title to, or in the case of leased property has valid
leasehold interests in, all property and assets (whether real or personal,
tangible or intangible) reflected on the Balance Sheet or acquired after the
Balance Sheet Date. None of such property or assets is subject to any Liens,
except:
(i) Liens disclosed on the Balance Sheet (or the notes
thereto);
(ii) Liens for taxes not yet due or being contested in good
faith (and for which adequate accruals or reserves have been
established on the Balance Sheet); or
(iii) Liens which do not materially detract from the value or
materially interfere with any present or intended use of such property
or assets.
(b) There are no developments affecting any such property or assets
(whether real or personal) pending or, to the knowledge of any Seller or
Additional Party threatened, which might detract from the value of such property
or assets, or interfere with any present use of any such property or assets
except such developments which would not reasonably be expected to have a
Material Adverse Effect.
(c) The assets acquired by Buyer through the purchase of the Ordinary
Shares and the Purchased Assets Interest, and by Newco through the purchase of
the Other Purchased Assets Interest and the contribution by Holdings L.P. of the
Contributed Assets Interest constitute, and on the Closing Date, will
constitute, all of the assets or property used or held for use in the Business
and are adequate to conduct such Business as currently conducted.
(d) Upon consummation of the transactions contemplated hereby, Newco
will have acquired good and marketable title in and to, or a valid leasehold
interest in, the Ordinary Shares and the Purchased Assets, free and clear of all
Liens.
3.16 INTELLECTUAL PROPERTY. (a) Schedule 3.16 contains a list of
all material Intellectual Property Rights owned or licensed and used or held for
use by each of the Companies and their respective Subsidiaries, specifying as to
each, as applicable: (i) the nature of such Intellectual Property Right; (ii)
the owner of such Intellectual Property Right; (iii) the jurisdictions by or in
which any such Intellectual Property Right owned by the Company has been issued
or registered or in which an application for such issuance or registration has
been filed, including the respective registration or application numbers; and
(iv) licenses, sublicenses and other agreements as to which either Company or
any of their respective Subsidiaries is a party and pursuant to which any Person
is authorized to use such Intellectual Property Right,
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including the identity of all parties thereto, a description of the nature and
subject matter thereof, the applicable royalty and the terms thereof.
(b) (i) Since December 31, 1992, none of the Companies, their
respective Subsidiaries, Sellers or Additional Parties has been a defendant in
any action, suit, investigation or proceeding relating to, or otherwise has been
notified of, any alleged claim or infringement of any Intellectual Property
Rights, and none of the Companies has any knowledge of any material infringement
by either Company, any Seller, any Additional Party or any of their respective
Subsidiaries, and (ii) none of the Sellers and the Additional Parties have
knowledge of any continuing infringement by any other Person of any Intellectual
Property Rights. No Intellectual Property Right is subject to any outstanding
judgment, injunction, order, decree or agreement restricting the use thereof by
either Company or any of their respective Subsidiaries or restricting the
licensing thereof by either Company or any of their respective Subsidiaries to
any Person. None of the Companies or their respective Subsidiaries has entered
into any agreement to indemnify any other Person against any charge of
infringement of any Intellectual Property Right.
3.17 SECURITIES LAWS MATTERS. (a) Each Person that receives Units
pursuant to this Agreement acknowledges that the Units have not been registered
under the 1933 Act or any state securities laws, may not be transferred in the
absence of such registration or pursuant to an exemption from the registration
requirements of the 1933 Act, that the Units will be appropriately legended to
so reflect and that the offering of the Units contemplated hereby is to be
effected pursuant to an exemption from the registration requirements imposed by
such laws. In this regard, each such Person is acquiring the Units to be
acquired by it hereunder for its own account and not with a view to, or for sale
in connection with, any distribution thereof. Each such Person agrees not to
offer, sell or otherwise dispose of the Units acquired hereunder except in
compliance with the 1933 Act and applicable state securities laws. Each such
Person is an "ACCREDITED INVESTOR" (as defined in Regulation D under the 1933
Act), has sufficient knowledge and experience in financial and business matters
so as to be capable of evaluating the merits and risks of its investment in such
Units and is capable of bearing the economic risks of such investment.
(b) Each such Person (i) agrees to comply with the provisions of
applicable securities laws with respect to such Units, (ii) agrees that such
Person has no right of rescission under applicable securities laws with respect
to the Units acquired pursuant to this Agreement and (iii) confirms that each
such Seller is a resident of the jurisdiction listed in Schedule 3.17 for
purposes of applicable securities laws.
3.18 INSURANCE COVERAGE. Schedule 3.18 correctly describes and
Sellers have furnished to Buyer true and complete copies of all insurance
policies relating to the assets, business, operations, employees, officers,
directors or partners of the Companies and their respective Subsidiaries. There
is no claim by either the Company or any of their respective Subsidiaries
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds or
in respect of which such underwriters have reserved their rights. All premiums
payable under all such
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policies and any fidelity bonds relating to such assets, business operations,
employees, officers, directors or partners have been paid timely and each of the
Companies and their respective Subsidiaries have otherwise complied fully with
the terms and conditions of all such policies and bonds. Such policies of
insurance and bonds (or other policies and bonds providing substantially similar
insurance coverage) have been in effect since January 1, 1995 (or such other
date as set forth on Schedule 3.18) and remain in full force and effect. Such
policies and bonds are of the type and in amounts customarily carried by Persons
conducting businesses similar to those of the Business. None of the Sellers or
the Additional Parties know of any threatened termination of, premium increase
with respect to, or material alteration of coverage under, any of such policies
or bonds. Except as disclosed in Schedule 3.18, the Companies and their
respective Subsidiaries shall after the Closing continue to have coverage under
such policies and bonds with respect to events occurring prior to the Closing.
3.19 LICENSES AND PERMITS. Schedule 3.19 correctly describes each
material license, franchise, permit or other similar authorization affecting, or
relating in any way to, the assets or business of each of the Companies and
their respective Subsidiaries (the "PERMITS") together with the name of the
government agency or entity issuing such Permit. Except as set forth on
Schedule 3.19, such Permits are valid and in full force and effect and none of
the Permits will be terminated or impaired or become terminable, in whole or in
part, as a result of the transactions contemplated hereby.
3.20 FINAL PROJECTIONS. The financial projections identified to
Buyer as the "Final Projections" dated December 13, 1995 and addressed to the
Chief Financial Officer of the Buyer from Richard I. Morris, Jr. are made in
good faith and are based upon reasonable assumptions, and no Seller or
Additional Party is aware of any fact or set of circumstances that would lead it
to believe that such projections are incorrect or misleading in any material
respect.
3.21 FINDERS' FEES. Except for Putnam, Lovell & Thornton Inc., whose
fees will be paid at or prior to Closing, there is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of any of the Sellers, the Additional Parties, the Companies or any of
their respective Subsidiaries or Affiliates who might be entitled to any fee or
commission in connection with the transactions contemplated by any of the
Transaction Documents.
3.22 REGISTRATIONS. (a) None of the Companies or their Subsidiaries
is an Investment Company or is a "BROKER" or "DEALER" within the meaning of the
1934 Act or is a "commodity pool operator" within the meaning of the Commodity
Exchange Act. The Companies, their Subsidiaries, and each of their respective
officers, partners and employees which are or who are required to be registered
as an investment adviser, a broker/dealer, a commodity trading advisor, a
commodity pool operator, a futures commission merchant, an introducing broker, a
registered representative or associated person, a counselling officer, an
insurance agent, a sales person or in any other similar capacity with the
Commission, the CFTC, the securities commission of any state, any self-
regulatory body or any applicable Foreign Securities Regulator is duly
registered as such and such registration is in full force and effect, except
where the failure to be so registered would not, individually or in the
aggregate, have a
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Material Adverse Effect. All federal, state and U.S. registration requirements,
including filing Form ADV with the Commission, and all filings required by a
Foreign Securities Regulator, have been complied with except where the failure
to so comply or to make such filings would not have a Material Adverse Effect
and such registrations as currently filed are accurate and complete in all
material respects.
(b) Cursitor Management Limited and Eaton are members of IMRO and
have at all times, to the knowledge of Sellers and Additional Parties, complied
in all material respects with the rules and requirements of IMRO, where
applicable and have made all applications required for any consents, licenses
and authorizations required under the Financial Services Act 1986, which
consents, licenses and authorizations are in full force and effect and have been
complied with in all respects except where the failure to comply with such
rules, regulations, consents, licenses and authorizations would not have a
Material Adverse Effect.
3.23 INVESTMENT CONTRACTS. (a) Schedule 3.23(a) (the "ORIGINAL
SCHEDULE") completely and accurately sets forth, as of the date hereof, a list
of all Clients (which for purposes of this Section 3.23 includes all
participants in any Funds) whose Base Annual Billings are over $140,000
(excluding clients transferred to the Companies in connection with the Draycott
Transaction) showing for each such Client, (i) the Client's name, (ii) the
annual base percentage fee applicable to such Client or Fund participant under
its applicable Investment Contract (and any fee adjustments implemented within
the past 3 months, or proposed or contemplated to be instituted), (iii) the fair
market value of assets under management as of November 30, 1995, (iv)
identification of each such Client as one or more of the following: a
separately managed account, a separately managed sub-advisory account, an
Investment Company, an Exempt Investment Company or a Foreign Investment
Company, (v) an indication of any performance fee arrangement in place (vi) the
date of inception of the Investment Contract, (vii) the investment product and
(viii) Base Annual Billings.
(b) The Revised Schedule, as defined herein, will, as of the Closing
Date, completely and accurately, set forth the information which Sellers agree
to include therein pursuant to Section 5.10(a).
(c) (i) Each Investment Contract and any subsequent renewal thereof
has been and each New Contract, will be, duly authorized, executed and delivered
by one of the Companies or its Subsidiaries and, to the extent applicable, has
been or will be adopted in compliance with applicable law and is or will be, as
applicable, a valid and binding agreement of one of the Companies or its
Subsidiaries, enforceable in accordance with its terms (subject to bankruptcy,
insolvency, moratorium, fraudulent transfer and similar laws affecting
creditors' rights generally and to general equity principles), and (ii) to the
knowledge of the Sellers and the Additional Parties, each of the parties to such
Investment Contract is, or in the case of a New Contact, will be as of the
Closing Date, in compliance in all material respects with the terms of such
Contract, and no event has occurred or condition exists that constitutes or with
notice or the passage of time, would constitute, a default thereunder. Except
for changes in the market values of debt or equity securities or the relative
values of currencies (other than fluctuations in the U.S. dollar or pound
sterling that affect the ratio of expenses to revenues of either Company or any
of their
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Subsidiaries), no fact is known to any Additional Party or Seller that adversely
affects or would adversely affect any Investment Contract or contract referred
to in Section 3.12(a), and, except as set forth in the Revised Schedule, no
notice to terminate any such Investment Contract, including any New Contract, or
other contract has been received by either Company or any of their respective
Subsidiaries or Affiliates or, to the knowledge of the Sellers and Additional
Parties, by TCW. Except as expressly set forth on the Original Schedule, none
of the Investment Contracts or any other arrangements or understandings relating
to rendering of Investment Management Services, contains any undertaking by
either Company or any of their respective Subsidiaries or, to the knowledge of
the Sellers and Additional Parties, TCW to cap fees or to reimburse any or all
fees thereunder. To the knowledge of the Sellers and Additional Parties, true
and correct copies of each Investment Contract, including a current fee
schedule, have been made available to the Buyer and to the knowledge of the
Sellers and the Additional Parties, there are no other terms, oral or otherwise,
that modify the terms of the Investment Contracts so furnished in any way that
would materially adversely affect the value of such Contract to Buyer.
(d) Each of the Companies and their respective Subsidiaries, in
managing the account of each Client, has complied and is in compliance in all
material respects with the Client's guidelines and restrictions, including
without limitation any limitation set forth in the applicable prospectus,
offering memorandum, Investment Contract or marketing material for a Fund or
governing instruments for a Client.
(e) As of the date hereof, Base Annual Billings in respect of all
Clients equalled $31,647,047.
3.24 REGULATORY COMPLIANCE. (a) Except for the New England Zenith
Fund -- Draycott International Equity Series, the New England International
Equity Fund, and the Maxim Series Fund -- Foreign Equity Portfolio, none of the
Companies or any of their respective Subsidiaries provide Investment Management
Services to any Investment Company.
(b)(i) Each Sponsored Fund is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, has
obtained all consents, licenses and authorizations required under any applicable
legislation which consents, licenses and authorizations are in full force and
effect, are not limited in duration or subject to any conditions and have been
complied with in all material respects, and has full power, right and authority
to own its properties and to carry on its business as it is now conducted, and
is qualified to do business in each jurisdiction where it is required to be so
qualified under applicable law, except where any such failure to hold such
consents, licenses and authorizations or failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect.
(ii) The shares of each Sponsored Fund are duly and validly issued,
fully paid and nonassessable and are registered or qualified for sale in each
applicable jurisdiction except where the failure to so register or qualify would
not have a Material Adverse Effect or an exemption therefrom is in full force
and effect.
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(c)(i) To the extent required by law, the Companies and their
Subsidiaries have adopted a formal code of ethics and a written policy regarding
insider trading. To the extent required by law, such code and policy comply
with Section 17(j) of the Investment Company Act and Rule 17j-l thereunder and
Section 204A of the Investment Advisers Act, respectively. To the extent
required by law, the policies of the Companies and their Subsidiaries with
respect to avoiding conflicts of interest are as set forth in the most recent
Form ADV thereof (or incorporated by reference therein), as amended. To the
knowledge of the Companies, there have been no violations or allegations of
violations of such policies that have occurred or been made.
(ii) To the knowledge of the Sellers or Additional Parties, none of
the Companies or their Subsidiaries or, any person "ASSOCIATED" (as defined
under the Investment Advisers Act or under the Commodity Exchange Act, as
appropriate) with either of the Companies or their Subsidiaries, has been
convicted of any crime or is or has engaged in any conduct that would be a basis
for denial, suspension or revocation of registration of an investment adviser
under Section 203(e) of the Investment Advisers Act or Rule 206(4)-4(b)
thereunder, or of similar action under the Commodity Exchange Act and to the
knowledge of the Sellers and the Additional Parties, there is no proceeding or
investigation that is reasonably likely to become the basis for, any such
disqualification, denial, suspension or revocation.
(iii) To the knowledge of the Sellers and the Additional Parties,
none of the Companies or any of their respective Subsidiaries engage or have
engaged in any acts or practices or allowed to exist any state of affairs which
would, if known to IMRO, be likely to adversely affect their authorization under
the Financial Services Act 1986 except to the extent such effect would not,
individually or in the aggregate, have a Material Adverse Effect.
(iv) To the knowledge of the Sellers and the Additional Parties, none
of the Companies or any of their respective Subsidiaries has ever carried on any
business other than acting as investment advisors or managers or activities for
the purposes of or in connection with such business except to the extent the
Companies or any of their respective Subsidiaries have served as economic
consultants or investment software development consultants.
(v) To the knowledge of the Sellers and the Additional Parties, no
existing or former Company Representative of any of the Companies or their
respective Subsidiaries has been in breach of any of the rules or regulations
made by IMRO, except to the extent such breach would not, individually or in the
aggregate, have a Material Adverse Effect.
(vi) No change in the minimum capital requirements of either Company
or any of their respective Subsidiaries in each case taken on an unconsolidated
basis pursuant to Chapter V of the IMRO Rules will be required as a result of
the transactions contemplated in the Transaction Documents.
(vii) Except for the French Mutual Funds, FCP CRPN No. 1,
the Universal Funds and the Luxembourg Fund, there are no Foreign Investment
Companies.
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(d) None of the French Mutual Funds are required to notify or seek
the regulatory approval of the COB, nor are they required to notify or seek the
consent of their respective shareholders in connection with the transactions
contemplated hereby.
(e) To the knowledge of the Sellers, the boards of trustees/directors
of the New England Zenith Fund - Draycott International Equity Series, the New
England International Equity Fund and the Maxim Series Fund - Foreign Equity
Portfolios have approved and solicited their respective shareholders with regard
to the approval of new investment advisory agreements for such Clients, to be
effective on or as promptly as practicable after the later of the closing of the
Draycott Transaction and the Closing Date, pursuant to the provisions of Section
15 of the Investment Company Act, and consistent with all requirements of the
Investment Company Act applicable thereto, provided that such agreements are
substantially similar in all respects to the existing agreements other than the
term of the agreement.
3.25 EMPLOYEES. Schedule 3.25 sets forth a true and complete list of
(a) the names, titles, annual salaries and other compensation of all officers of
each Company and each of their respective Subsidiaries, all other employees,
independent contractors and consultants of the Companies and their respective
Subsidiaries, and all other persons to whom an offer of employment by either of
the Companies or their respective Subsidiaries is outstanding or has been
accepted and (b) the wage rates for non-salaried employees of the Companies and
their respective Subsidiaries (by classification). None of the Principals,
Messrs. Sorenson, Lloyd, Patel and Carn, or any such independent contractors or
consultants of any of the Companies or their respective Subsidiaries has
indicated to any of the Sellers, Additional Parties, the Companies or their
respective Subsidiaries that he intends to resign or retire as a result of the
transactions contemplated by this Agreement or otherwise within three years
after the Closing Date. Each employee, independent contractor or consultant who
requires a work permit will have such a permit in force at the Closing Date.
Except as set forth in Schedule 3.25, none of the employees of the Business are
employed solely by Holdings L.P.
3.26 ERISA CLIENTS. (a) Each account through which the Companies or
any of their respective Subsidiaries provides Investment Management Services to
any Client that is (i) an employee benefit plan, as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that
is subject to Title I of ERISA; (ii) a person acting on behalf of such a plan;
or (iii) an entity whose assets include the assets of such a plan, within the
meaning of ERISA and applicable regulations (hereinafter referred to as an
"ERISA CLIENT") have been managed by the Companies and their respective
Subsidiaries such that each of the Companies and their Subsidiaries in the
exercise of such management is in compliance in all material respects with the
applicable requirements of ERISA.
(b) Schedule 3.26(b) identifies each Client that is an ERISA Client
and lists each written or oral contract or agreement, if any, and all amendments
thereto, in effect on the date hereof, entered into by any of the Companies or
their respective Subsidiaries with respect to or on behalf of any ERISA Client,
pursuant to which any of the entities identified in Part A of Schedule 3.26(a)
(and, to the Company's knowledge, any other Affiliate of Buyer identified in
Part B of Schedule 3.26(a)) has agreed to (i) execute securities transactions;
(ii) provide any
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other goods or services; or (iii) purchase, sell, exchange or swap securities or
any other economic interest therein or derivative thereof, including but not
limited to rights to receive or obligations to pay interest or principal under
any debt obligation, or rights to receive or obligations to pay interest or
principal denominated in a particular currency.
3.27 ERISA AND EMPLOYEE BENEFITS. (a) Except with respect to any
plan sponsored or maintained by a governmental entity, Schedule 3.27(a) lists
each "EMPLOYEE BENEFIT PLAN", as such term is defined in Section 3(3) of ERISA
and each employment, severance or other similar contract, arrangement or policy
(written or oral) and each plan or arrangement (written or oral) providing for
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits or for deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation or other forms of incentive
compensation or post-retirement insurance, compensation or benefits which (i) is
maintained, administered or contributed to by any of the Companies or their
Subsidiaries and (ii) covers any employee, consultant, independent contractor or
partner of any of the Companies or their Subsidiaries (hereinafter referred to
collectively as the "EMPLOYEE PLANS"). With respect to each Employee Plan, the
Sellers have provided a true and complete copy of such plan document and such
other documents relating thereto as Buyer may reasonably request.
(b) No Employee Plan or other employee benefit plan or arrangement
formerly maintained or contributed to by any of the Companies or their
Subsidiaries is or was at any time a multiemployer plan, as defined in Section
3(37) or 4001(a)(3) of ERISA and subject to Title IV of ERISA, and no Employee
Plan or other such arrangement is or was at any time subject to Title IV of
ERISA.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. Each Employee Plan has
been maintained in substantial compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are applicable to such
Plan. To the knowledge of the Companies, there is no matter pending (other than
routine qualification determination filings) with respect to any Employee Plan
before any governmental authority.
(d) Except as disclosed on Schedule 3.27(d), with respect to the
employees, independent contractors, consultants and partners of any of the
Companies or their Subsidiaries there are no post-retirement medical or health
plans in effect, except as required by Section 4980B of the Code.
(e) There has been no amendment to, written interpretation of or
announcement (whether written or not written) by any of the Companies or their
Subsidiaries relating to, or change in employee participation or coverage under,
any Employee Plan which would increase the expense of maintaining such Employee
Plan above the level of the expense incurred in respect thereof for the most
recent fiscal year.
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(f) No employee, independent contractor, consultant or partner of any
of the Companies or their Subsidiaries will become entitled to any retirement,
severance or similar benefit or enhanced benefit solely as a result of the
transactions contemplated hereby.
(g) None of the Companies or their Subsidiaries is now or has at any
time been a party to any collective bargaining agreement or other labor union
contract applicable to any of their respective employees. No order to reinstate
or re-engage any employee of any of the Companies or their Subsidiaries has been
issued within six months of the date of this Agreement. Within a period of one
year preceding the date of this Agreement neither of the Companies nor any of
their Subsidiaries has given notice of any redundancies to the relevant
Secretary of State or started consultations with any independent trade union or
unions under the provisions of Part VI of the British Employment Protection
Consolidation Act 1978 or Regulation 10 of the Transfer of Undertakings
(Protection of Employment) Regulations 1981, and neither of the Companies nor
any of their Subsidiaries has failed to comply with any such obligation under
the said Part VI or Regulation 10.
(h) The London Partnership Employees Pension Plan (the "U.K. PENSION
PLAN") is an exempt approved scheme within the meaning of Chapter I Part XIV of
the British Income and Corporation Taxes Act 1988. Employees who participate in
the U.K. Pension Plan are contracted-out of the British State Earnings Related
Pension Scheme by reference to the U.K. Pension Plan. Sellers have provided
Buyer with all the trust deeds and rules of the U.K. Pension Plan (including any
draft amendments), all explanatory booklets and announcements relating to the
U.K. Pension Plan, and a copy of the actuary's report on the latest actuarial
valuation of the U.K. Pension Plan. The actuarial present value of the benefit
liabilities under the U.K. Pension Plan, using the actuarial assumptions and
valuation methods employed for purposes of the most recent actuarial valuation
do not exceed the assets of such Plan by more than L100,000. Sellers have
notified Buyer of the rate at which contributions to the U.K. Pension Plan are
paid and the basis upon which they are calculated, and have provided Buyer with
complete and accurate membership data with respect to the plan. All amounts due
to the U.K. Pension Plan have been paid.
3.28 RIGHT TO NAME. Each of the Companies and their respective
Subsidiaries has full right, title and interest in and to the name "CURSITOR" or
"CECOGEST" or any name using the word "CURSITOR" or "CECOGEST" therein.
3.29 DRAYCOTT. Each representation in this Article III and each
representation made in Article VIII that is made with respect to Draycott is
made only to the extent of the knowledge of the Sellers and the Additional
Parties, whether or not any such relevant representation is so qualified.
3.30 COMMODITY INTEREST CLIENTS. Schedule 3.30 lists each Client as
to whom services have been actually provided relating to (a) contracts of a sale
of a commodity for future delivery (commonly known as "futures contract"), (ii)
commodity options, (iii) options on futures contracts (as such terms are used in
the Commodity Exchange Act); specifically identifies each such Client as an
ERISA Client, an Exempt Investment Company, a Foreign Investment
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Company, and Investment Company, a natural person or otherwise appropriate; and
describes the foregoing services provided to each such Client.
3.31 DISTRIBUTIONS. Notwithstanding anything else contained herein,
except for (i) distributions of accumulated earnings through September 30, 1995,
together with a tax advance with respect to the quarter ended December 31, 1995,
all in accordance with prior practice and made on or about December 15, 1995 as
referenced in the letter dated November 30, 1995 to Buyer, (ii) dividends of
accumulated earnings paid by Limited on or about December 15, 1995, and (iii) as
of the Closing, such distributions and dividends on or about April 15, 1996 to
the extent permitted under Section 5.11, since September 30, 1995, Holdings L.P.
and Limited have not made any distributions or declared or paid dividends.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as of the date hereof and as
of the Closing Date that:
4.1 PARTNERSHIP EXISTENCE, POWER AND AUTHORIZATION. (a) Buyer is a
limited partnership duly organized under the Delaware Revised Uniform Limited
Partnership Act, as amended, validly existing and in good standing under the
laws of Delaware and has all material powers and all material governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted. Buyer has heretofore made available to Sellers
true and complete copies of the Organizational Documents as currently in effect
for Buyer.
(b) PARTNERSHIP AUTHORIZATION. The execution, delivery and
performance by Buyer of the Transaction Documents to which it is a party are
within the legal powers, rights and authority of Buyer and have been or will be
by Closing duly authorized by all necessary action on the part of ACMC and the
Buyer. This Agreement constitutes, and when executed and delivered each of the
Transaction Documents to which Buyer is a party will constitute, a valid and
binding agreement of Buyer enforceable in accordance with its terms, except as
(a) the enforceability hereof and thereof may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (b) the availability of equitable remedies may
be limited by equitable principles of general applicability.
4.2 CORPORATE EXISTENCE, POWER AND AUTHORIZATION. (a) Each of the
Alliance Entities and Alliance Delaware is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has all corporate powers and all licenses, authorizations,
permits, consents and approvals, governmental or otherwise, required to carry on
its business as now conducted, except where the failure to have such licenses,
authorizations, permits, consents or approvals would not, individually or in the
aggregate, have an International Operations Material Adverse Effect. Each of
the Alliance Entities and Alliance
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Delaware is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where such qualification is necessary except
where the failure to be so qualified would not, individually or in the
aggregate, have an International Operations Material Adverse Effect. All of the
Subsidiaries of the Alliance Entities are set forth on Schedule 4.2. Buyer has
heretofore made available to Sellers true and complete copies of the
Organizational Documents as currently in effect for each of the Alliance
Entities and Alliance Delaware.
(b) The execution, delivery and performance by Alliance Delaware of
the Transaction Documents to which it is a party are within such entity's
corporate powers and have been duly authorized by all necessary corporate action
on its part. Each Transaction Document to which Alliance Delaware is a party
constitutes a valid and binding agreement of Alliance Delaware enforceable in
accordance with its terms, except as (i) the enforceability hereof and thereof
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability.
4.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Buyer of this Agreement and the LLC Agreement requires no action
by or in respect of, or filing with, any governmental body, agency or official
other than (a) compliance with any applicable requirements of the HSR Act with
respect to each transaction; (b) compliance with any applicable requirements of
the 1934 Act; (c) compliance with blue sky or other similar state securities law
approvals in connection with the issuance of the Units, (d) filing of Form D
with the Commission in connection with the issuance of the Units; (e) any
necessary filings with the New York Stock Exchange in connection with the
issuance of the Units; (f) notification and clearance by IMRO of the changes of
control contemplated by this Agreement in accordance with Chapter IV of the IMRO
Rules and, if enacted as currently contemplated, Part VII of the Investment
Services Regulations 1995, if applicable; (g) any necessary filings with the
Securities Act (Ontario); (h) any necessary filings with The Monetary Authority
of Singapore; (i) any necessary filings with the Ministry of Finance of Japan;
(j) filing of a certificate of amendment to the Limited Liability Agreement of
Newco, dated as of October 27, 1995 and (k) any action or filing, which if not
taken or made would have an International Operations Material Adverse Effect.
4.4 NON-CONTRAVENTION. The execution, delivery and performance by
Buyer and Alliance Delaware of the Transaction Documents to which it is a party
(including without limitation in the case of Buyer, the First Services Agreement
and the Second Services Agreement) do not and at the time of the Closing will
not, (a) violate the Alliance Limited Partnership Agreement, (b) assuming
compliance with the matters referred to in Section 4.3, violate any applicable
material law, rule, regulation, judgment, injunction, order or decree (c)
constitute a default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of the Buyer or any of
its Subsidiaries or to a loss of any benefit to which any of the Buyer or its
Subsidiaries is entitled under, any agreement or other instrument binding upon
such Buyer or Subsidiary or Alliance Delaware, or any license, franchise, permit
or other similar authorization held by any such Buyer or Subsidiary or Alliance
Delaware, or (d) result in the creation or imposition of any Lien on any asset
of any of the aforementioned
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entities, except to the extent such violation, default, right, loss or
imposition of a Lien would not, individually or in the aggregate, have an
International Operations Material Adverse Effect.
4.5 CAPITALIZATION. Schedule 4.5 sets forth all of the issued and
outstanding capital stock of each of the Alliance Entities. All of the
International Shares have been duly authorized and validly issued and are fully
paid and non-assessable. Except as set forth herein and in Section 4.6, there
are no outstanding (A) shares of capital stock or voting securities of the
Alliance Entities, (B) securities of the Alliance Entities convertible into or
exchangeable for shares of capital stock or voting securities of the Alliance
Entities or (C) options or other rights to acquire from the Alliance Entities,
or other obligation of the Alliance Entities to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Alliance Entities (the items in clauses (A), (B) and
(C) being referred to collectively as the "ALLIANCE ENTITIES SECURITIES").
There are no outstanding obligations of the Buyer, or any of its Subsidiaries or
Affiliates to repurchase, redeem or otherwise acquire any Alliance Entities
Securities.
4.6 OWNERSHIP OF THE INTERNATIONAL SHARES. (a) Alliance Delaware is
the beneficial owner of the International Shares, free and clear of any Lien and
any other limitation or restriction (including any restriction on the right to
vote, sell or otherwise dispose of the International Shares), and will transfer
and deliver or cause to be transferred and delivered to Newco at the Closing
valid title to the International Shares free and clear of any Lien and any such
limitation or restriction.
(b) Upon consummation of the transactions contemplated hereby, Newco
will have acquired good and marketable title in and to the International Shares,
free and clear of all Liens and any other limitation or restriction.
4.7 VALIDITY OF UNITS. The Units to be issued to the Sellers at the
Closing have been or will be duly authorized and, when issued to the Sellers
pursuant to this Agreement, will be validly issued, free and clear of any Liens
or any other limitation or restriction other than limitations or restrictions
imposed by the Transaction Documents or the federal or state securities laws.
The Units to be issued pursuant to Section 2.8 hereof will, when issued, be duly
authorized and validly issued.
4.8 INTERNATIONAL OPERATIONS. Schedule 4.8 sets forth, (a) the
combined gross revenues of the International Operations for the nine-month
period ending September 30, 1995 and (b) in Buyer's good faith judgment, a
reasonable estimate of the combined operating expenses of the International
Operations for nine-month period ended September 30, 1995. Buyer believes that
the annualized combined gross revenues and the annualized estimated combined
operating expenses, respectively, of the International Operations for the nine-
month period ended September 30, 1995 are reasonable estimates of the expected
combined gross revenues and the expected combined operating expenses,
respectively, of the International Operations for the year ending December 31,
1996, except for any effect on such revenues and expenses that may be attributed
to the transaction disclosed in Schedule 4.9.
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4.9 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule 4.9
since December 31, 1994, the International Operations have been conducted in the
ordinary course consistent with past practices and there has not been any event,
occurrence, development or state of circumstances or facts which has had or
could reasonably be expected to have, individually or in the aggregate, an
International Operations Material Adverse Effect.
4.10 NO UNDISCLOSED LIABILITIES. There are no liabilities of any
Alliance Entity of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a liability, other than those which would not reasonably be expected
either individually or in the aggregate to have an International Operations
Material Adverse Effect.
4.11 MATERIAL CONTRACTS. (a) Expect as disclosed in Schedule 4.11
none of the Alliance Entities is a party to or bound by:
(i) any lease (whether or real or personal property) providing
for annual rentals of $50,000 or more;
(ii) except for the First Services Agreement and the investment
management contracts listed on Exhibit B thereto and the Second Services
Agreement and the investment management contracts listed on Exhibit A thereto
any agreement that will not be terminated prior to the Closing by such Alliance
entity or Buyer that provides for either (A) annual payments by any such
Alliance Entity or Buyer of $50,000 or more or (B) aggregate payments by any
such Alliance entity or Buyer of $100,000 or more, except for Alliance
International Investment Contracts;
(iii) except for the First Services Agreement and the
investment management contracts listed on Exhibit B thereto and the Second
Services Agreement and the investment management contracts listed on Exhibit A
thereto any agreement that will not be terminated prior to the Closing that
provides for either (A) annual payments to any such Alliance entity or Buyer of
$50,000 or more or (B) aggregate payments to any such Alliance Entity or Buyer
of $100,000 or more, except for Alliance International Investment Contracts;
(iv) any partnership, joint venture or other similar agreement or
arrangement;
(v) any agreement relating to the acquisition or disposition of
any business (whether by merger, sale of stock, sale of assets or otherwise);
(vi) any agreement which will be in existence after the Closing
Date relating to indebtedness for borrowed money or the deferred purchase price
of property (in either case, whether incurred, assumed, guaranteed or secured by
any asset);
(vii) any material license, franchise or similar agreement;
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(viii) any agreement that limits the freedom of any of the
Alliance Entities to compete in any line of business or with any Person or in
any area or which would so limit the freedom of any such entity after the
Closing Date;
(ix) any other agreement, commitment, arrangement or plan not
made in the ordinary course of business that is material to the International
Operations or;
(x) any guaranty of the foregoing.
(b) Each agreement, commitment, arrangement or plan disclosed in
Schedule 4.11 to this Agreement is a valid and binding agreement of either Buyer
or an Alliance Entity, as the case may be, and is in full force and effect, and
neither Buyer nor any Alliance Entity are nor, to the knowledge of Buyer or any
Alliance Entity, is any other party thereto in default or breach in any material
respect under the terms of any such agreement, arrangement or plan.
4.12 PROPERTIES. (a) Each of the Alliance Entities has good title
to, or in the case of leased property has valid leasehold interests in, all
material property and assets (whether real or personal, tangible or intangible)
used in the International Operations. None of such property or assets is
subject to any Liens, except Liens for taxes not yet due or being contested in
good faith (and for which adequate accruals or reserves have been established),
Liens which do not materially detract from the value or materially interfere
with any present or intended use of such property or assets or Liens which would
not reasonably be expected to have an International Operations Material Adverse
Effect.
(b) There are no developments affecting any such property or assets
(whether real or personal) pending or, to the knowledge of Buyer or any Alliance
Entity, threatened, which might materially detract from the value of such
property or assets, or materially interfere with any present use of any such
property or assets except to the extent such developments would not reasonably
be expected to have an International Operations Material Adverse Effect.
4.13 LITIGATION. (a) There is no action, suit, claim, or complaint,
investigation, inquiry or proceeding pending against, or to the knowledge of
Buyer threatened against or affecting, Buyer, Alliance Delaware or any Alliance
Entity before any court or arbitrator or any governmental body, agency or
official which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by the Transaction Documents.
(b) There are no liabilities of or relating to any Alliance Entity,
whether vested or unvested, contingent or fixed, actual or potential, known or
unknown, which (i) arise under or relate to matters covered by Environmental
Laws and (ii) have had or may be expected, individually or in the aggregate, to
have an International Operations Material Adverse Effect.
4.14 SEC FILINGS. (a) As used herein, the term "ALLIANCE SEC
FILINGS" means, collectively, Buyer's (w) annual report on Form 10-K for the
Buyer's fiscal year ended December 31, 1994, (x) quarterly report on Form 10-Q
for the Buyer's fiscal quarter ended September 30, 1995, (y) proxy or
information statements relating to meetings of, or actions
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taken without a meeting by, the Unitholders of the Buyer held since January 1,
1995 and (z) other reports, statements, schedules and registration statements
filed with the Securities and Exchange Commission pursuant to the 1933 Act, the
1934 Act or the Investment Advisers Act since January 1, 1994.
(b) As of its filing date, each Alliance SEC Filing filed pursuant to
the 1934 Act and the Investment Advisers Act complied as to form in all material
respects with, respectively, the 1934 Act and the Investment Advisers Act and
did not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
(c) Since January 1, 1994, Buyer has timely filed all reports and
statements required to be filed by it under the 1934 Act and the Investment
Advisers Act.
4.15 FINANCING. Buyer has, or will have prior to the Closing,
sufficient cash, available lines of credit or other sources of immediately
available funds to enable it to make payment of the Initial Asset Proceeds and
the Initial Share Proceeds and any other amounts to be paid by it hereunder.
4.16 FINDERS' FEES. Except for Goldman, Sachs & Co., whose fees will
be paid by Buyer, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
Buyer who might be entitled to any fee or commission from the Companies, Sellers
or any of their respective Subsidiaries or Affiliates upon consummation of the
transactions contemplated by the Transaction Documents.
4.17 COMPLIANCE WITH LAWS AND COURT ORDERS; NO DEFAULTS. (a) None of
Buyer or the Alliance Entities is in violation of, or has received notice of a
violation of, and has not since December 31, 1992 violated, any law, rule,
regulation, judgment, injunction, order to decree or any published policy of any
governmental or regulatory authority applicable to the International Shares, or
the conduct of the International Operations, except for violations which would
not, individually or in the aggregate, have an International Operations Material
Adverse Effect.
(b) None of Buyer or any of the Alliance Entities is in default
under, and no condition exits that with notice or lapse of time or both would
constitute a default under, such party's Organizational Documents, any agreement
or other instrument binding upon either Buyer or the Alliance Entities or any
license, franchise, permit or similar authorization held by either Buyer or the
Alliance Entities, except for violations which would not, individually or in the
aggregate, have an International Operations Material Adverse Effect.
4.18 INTELLECTUAL PROPERTY. The Buyer, through itself or its
Subsidiaries, owns or possesses, and the Alliance Entities have the right to
use, in each case free and clear of all Liens, all patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks and trade names (collectively,
"Intellectual Property")
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material to the business of the International Operations. Except as set forth
in Schedule 4.18 or except as would not reasonably be expected to have,
individually or in the aggregate, an International Operations Material Adverse
Effect, no other person is, to the Buyer's knowledge, infringing upon any of the
Intellectual Property or has notified the Buyer or any of the Subsidiaries that
it is claiming ownership of, or the right to use, any Intellectual Property.
4.19 INSURANCE. Buyer maintains insurance (including fidelity bonds)
covering the properties, operations, personnel and businesses relating to the
International Operations. Such insurance policies and bonds against losses and
risks as are adequate in accordance with customary industry practice are of the
type and in amounts customarily carried by Persons conducting businesses similar
to those of International Operations.
4.20 LICENSES AND PERMITS. Schedule 4.20 correctly describes each
material license, franchise, permit or other similar authorization affecting, or
relating in any way to, the assets or the Alliance Entities or the International
Operations (the "Permits") together with the name of the governmental agency or
entity issuing such Permit. Expect as set forth on Schedule 4.20, such Permits
are valid and in full force and effect and none of the Permits will be
terminated or impaired or become terminable, in whole or in part, as a result of
the transaction.
4.21 REGISTRATIONS. Each of the Alliance Entities is in compliance
in all material respects with the rules and requirements imposed by the
applicable regulatory bodies and have made all applications required for such
consents, licenses and authorizations required under any applicable laws, which
are in full force and effect and have been complied with except where the
failure to do so would not have an International Operations Material Adverse
Effect.
4.22 INVESTMENT CONTRACTS. (a) Each Alliance International
Investment Contract and any subsequent renewal thereof has been duly authorized,
executed and delivered by Buyer or the Alliance Entity which is a party thereto,
as the case may be, and, to the extent applicable, a valid and binding agreement
of Buyer or the Alliance Entity which is a party thereto, as the case may be,
enforceable in accordance with its terms (subject to bankruptcy, insolvency,
moratorium, fraudulent transfer and similar laws affecting creditors' rights
generally and to general equity principles), and (ii) to the knowledge of Buyer,
each of the parties to such Alliance International Investment Contract is in
compliance in all material respects with the terms of such contract, and no
event has occurred or condition exits that constitutes or with notice or the
passage of time, would constitute, a default thereunder. Except for changes in
the market values of debt or equity securities or the relative values of
currencies, no fact is known to Buyer or any Alliance Entity that adversely
affects or would adversely affect any Alliance International Investment Contract
or no notice to terminate any such Alliance International Investment Contract
has been received by either Buyer or the Alliance Entities or their Affiliates.
Except as set forth on Schedule 4.22, none of the Alliance International
Investment Contracts or any other arrangements or understandings relating to
rendering of Investment Management Services, contains any undertaking by either
Buyer or any Alliance Entity to cap fees or to reimburse any or all fees
thereunder. To the knowledge of Buyer and the Alliance Entities, true and
correct copies of each Alliance International Investment Contract, including a
current fee schedule, have been made available to the Sellers and to the
knowledge of the Buyer and the
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Alliance Entities there are no other terms, oral or otherwise, that modify the
terms of the Alliance International Investment Contracts so furnished in any way
that would materially adversely affect the value of such contract to Sellers.
(b) Each of the Alliance Entities has complied and is in compliance
in all material respects with all applicable laws and regulations and with the
client's guidelines and restrictions, including, without limitation, any
limitation set forth in the applicable prospectus, offering memorandum, Alliance
International Investment Contract or governing instruments for a client.
4.23 REGULATORY COMPLIANCE. (a) To the extent required by law,
Buyer has adopted a formal code of ethics and written policy regarding insider
trading. To the extent required by law, such code and policy comply with
Section 17(j) of the Investment Company Act and Rule 17j-l thereunder and
Section 204A of the Investment Advisers Act, respectively.
(b) To the knowledge of Buyer and Alliance Capital Limited, Alliance
Capital Limited does not engage and has not engaged in any acts or practices or
suffered to exist any state of affairs which would, if known to IMRO, be likely
to adversely affect their authorization under the Financial Services Act 1986
except to the extent such effect would not, individually or in the aggregate,
have a International Operations Material Adverse Effect.
(c) To the knowledge of Buyer and Alliance Capital Limited, no
existing or former Company Representative of Alliance Capital Limited has been
in breach of any of the rules or regulations made by IMRO, except to the extent
such breach would not, individually or in the aggregate, have an International
Operations Material Adverse Effect.
(d) No change in the minimum capital requirements of Alliance Capital
Limited taken on an unconsolidated basis pursuant to Chapter V of the IMRO Rules
will be required as a result of the transactions contemplated in the Transaction
Documents.
(e) None of the Alliance Entities (i) serves or acts as an investment
adviser (within the meaning of the 1940 Act) of a registered investment company
or (ii) serves or acts as or is required to be registered as a commodity pool
operator or a commodity trading adviser under the Commodity Exchange Act.
(f) None of Buyer or the Alliance Entities or, to the knowledge of
the Buyer and the Alliance Entities, any Transferred Alliance Employee, has been
convicted of any crime or is or has engaged in any conduct that would be a basis
for denial, suspension or revocation of registration of an investment adviser
under any applicable foreign registration, or of similar action under the
Commodity Exchange Act and to the knowledge of Buyer and the Alliance Entities
there is no basis for, or proceeding or investigation that is reasonably likely
to become the basis for, any such disqualification, denial, suspension or
revocation.
4.24 FIRST SERVICES AGREEMENT AND SECOND SERVICES AGREEMENT. The
execution, delivery and performance of the First Services Agreement and the
Second Services Agreement by Newco are within Newco's power and, as of the
Closing, will have been duly authorized by
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all necessary action. When executed and delivered, the First Services Agreement
and the Second Services Agreement will constitute valid and binding agreements
of Newco enforceable in accordance with their respective terms, except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights and
generally and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability. The execution, delivery and
performance by Newco of the First Services Agreement and the Second Services
Agreement do not and will not (i) violate the Organizational Documents of Newco,
(ii) violate any applicable law, rule, regulation, judgment, injunction, order
or decree, or (iii) require any consent, registration, approval or other action
by any Person under or in connection with, constitute a default under, or give
rise to any right of termination, cancellation or acceleration of any right or
obligation under any Alliance International Investment Contract or any agreement
or other instrument binding upon Newco, or any license, franchise, permit or
other similar authorization held by Newco as of the Closing except to the extent
such loss, violation or consent would not, individually or in the aggregate,
have an International Operations Material Adverse Effect.
ARTICLE V
COVENANTS OF SELLERS
Sellers (other than EPL, except as expressly set forth in Section 5.7)
agree that:
5.1 CONDUCT OF THE COMPANY. From the date hereof until the Closing
Date, Sellers shall cause each of the Companies and their respective
Subsidiaries to conduct the Business in the ordinary course consistent with past
practice and to use its best efforts to preserve intact its business
organizations and relationships with third parties and to keep available the
services of its present officers, directors, managing directors, group financial
controllers, and partners. Without limiting the generality of the foregoing,
from the date hereof until the Closing Date, Sellers will not permit any of the
Companies or their respective Subsidiaries to:
(a) except as provided in Sections 10.2(i) and 10.2(j)
hereof, adopt or propose any change in their respective Organizational
Documents;
(b) except as contemplated in connection with the Draycott
Transaction, merge or consolidate with any other Person or acquire a
material amount of assets of any other Person;
(c) sell, lease, license or otherwise dispose of any assets
or property except the aircraft reflected on the Holdings Balance
Sheet in the ordinary course consistent with past practice;
(d) engage in any transaction or cause any Client to engage
in any transaction that would be a violation of the Investment Company
Act, the
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Investment Advisors Act, ERISA or any similar applicable foreign law or
regulation;
(e) except as contemplated in connection with the Draycott
Transaction, enter into any type of business materially different from
the Business as of the date hereof;
(f) except as contemplated in connection with the Draycott
Transaction, (i) take or agree or commit to take any action that would
make any representation and warranty of the Sellers hereunder
inaccurate in any material respect at, or as of any time prior to, the
Closing Date or (ii) knowingly omit or agree or commit to omit to take
any action necessary to prevent any such representation or warranty
from being inaccurate in any respect at any such time; or
(g) agree or commit to do any of the foregoing.
5.2 ACCESS TO INFORMATION. From the date hereof until the Closing
Date, Sellers will (a) give, and will cause each of the Companies and their
respective Subsidiaries to give, Buyer, its counsel, financial advisors,
auditors and other authorized representatives reasonable access during regular
business hours to the offices, properties, books and records of the Companies
and their respective Subsidiaries and to the books and records of Sellers (other
than EPL) and Additional Parties (other than FAWI) relating to the Companies and
their respective Subsidiaries, (b) furnish, and will cause each of the Companies
and their respective Subsidiaries to furnish, to Buyer, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information relating to the Companies and their
respective Subsidiaries as such Persons may reasonably request and (c) instruct
the employees, counsel and financial advisors of any of such Sellers (other than
EPL), Additional Parties (other than FAWI), Companies or their respective
Subsidiaries to cooperate with Buyer in its investigation of the aforesaid
entities. No investigation by Buyer or other information received by Buyer
shall operate as a waiver or otherwise affect any representation, warranty or
agreement given or made by Sellers or Additional Parties (other than FAWI)
hereunder.
5.3 NOTICES OF CERTAIN EVENTS. Sellers shall promptly notify Buyer
of:
(a) any notice or other material communication from any
Person alleging that the consent of such Person is or may be required
in connection with the transactions contemplated by the Transaction
Documents;
(b) any notice or other material communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by the Transaction Documents; and
(c) any actions, suits, claims, investigations or
proceedings commenced or, to the knowledge of the Sellers and
Additional Parties threatened
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against, relating to or involving or otherwise affecting the Sellers,
Additional Parties (other than FAWI), Companies or their Subsidiaries that,
if pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 3.13 or that relate to the consummation
of the transactions contemplated by the Transaction Documents.
5.4 CONSENTS. (a) Pursuant to the procedures set forth in Schedule
5.4(a), as promptly as practicable after execution of this Agreement, Sellers
shall cause all Clients (including all Fund participants) and, any Clients (or
Fund participants) in respect of New Contracts to be informed of the
transactions contemplated by this Agreement. With respect to those Clients
designated to receive Letters A, B, D and E pursuant to Schedule 5.4(a), Sellers
shall request the signed written consent of those Clients to the transaction
pursuant to the procedures set forth in Schedule 5.4(a) or in such other form as
may be reasonably satisfactory to Buyer ("AFFIRMATIVE CONSENT"). Subject to
Section 10.2(e), Sellers may seek such Client's consent in the form of an
implied consent (a "NEGATIVE CONSENT") by requesting written consent as
aforesaid and informing such Client in writing of the transactions contemplated
by this Agreement at least sixty (60) days in advance of the Closing as
contemplated in Schedule 5.4(a) and the annexes thereto. The Sellers shall
(a) use reasonable efforts to keep Buyer informed of the status of obtaining
Affirmative Consents and Negative Consents and (b) deliver to Buyer prior to the
Closing copies of all executed Affirmative Consents and make available for
inspection the originals of such Affirmative Consents prior to the Closing.
(b) Sellers shall arrange meetings prior to the Closing Date between
Buyer and the Clients set forth on Schedule 5.4(b) for the purpose of discussing
such Clients' intentions with respect to the Companies in connection with the
transactions contemplated hereby (which such Clients shall be referred to herein
as the "CONFERENCE CLIENTS").
5.5 FOREIGN INVESTMENT COMPANY REQUIREMENTS. (a) (i) As required by
Section 115(5) of the regulations promulgated pursuant to the SECURITIES ACT
(Ontario) immediately after the Closing Date, the Sellers shall notify the
Trustees of the Universal Funds of the change in ownership of Eaton; and (ii) as
required by Section 115(5) of regulations promulgated pursuant to the Securities
Act (Ontario), immediately after the Closing Date, the Sellers shall notify each
client of Eaton residing or doing business in Ontario of the change in ownership
of Eaton.
(b)(i) Prior to the Closing Date, the Sellers shall inform the IML of
the transactions contemplated herein and provide the IML with a draft
publication describing the transaction; and (ii) as promptly as possible, but no
more than seven days after the Closing Date, the Sellers shall provide to the
shareholders of the Cursitor Fund, a copy of the publication referred to above.
5.6 SUPPLEMENTAL INFORMATION. Sellers will furnish to Buyer no later
than three business days prior to the Closing updated Schedule 3.18 and Schedule
3.25. Notwithstanding the delivery of such updated Schedule, nothing contained
in this Section or such Schedule shall limit Buyer's rights and remedies
hereunder or otherwise in respect of any new disclosure on such Schedule.
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5.7 CONFIDENTIALITY. (a) Prior to the Closing Date and after any
termination of this Agreement, each Seller (including EPL) and each Additional
Party (including FAWI) and each of their respective Affiliates will hold, and
will use their best efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors, agents and lenders to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning the Buyer's business furnished to the Companies, Sellers
(including EPL), Additional Parties (including FAWI) or any of their respective
Affiliates or Subsidiaries in connection with the transactions contemplated by
the Transaction Documents and provided to such Seller (including EPL) or
Additional Party (including FAWI) or their respective Affiliates, except to the
extent that such information was (i) previously known on a nonconfidential basis
by Sellers (including EPL) or Additional Parties (including FAWI) (ii) in the
public domain through no fault of Sellers (including EPL) or Additional Parties
(including FAWI) or (iii) later lawfully acquired by Sellers (including EPL) or
Additional Parties (including FAWI) from sources other than Buyer PROVIDED that
Sellers (including EPL) and Additional Parties (including FAWI) may disclose
such information to its officers, directors, employees, accountants,
consultants, advisors and agents in connection with the transactions
contemplated by the Transaction Documents so long as such Persons are (i)
informed by Sellers (including EPL) or Additional Parties (including FAWI) of
the confidential nature of such information; and (ii) are directed by Sellers
(including EPL) or Additional Parties (including FAWI) to treat such information
confidentially; and (iii) such Persons agree to be bound by this Article V of
this Agreement. The obligation of the Sellers (including EPL), Additional
Parties (including FAWI) and each of their Subsidiaries and Affiliates to hold
any such information in confidence shall be satisfied if they exercise the same
care with respect to such information as they would take to preserve the
confidentiality of their own similar information. If this Agreement is
terminated, Sellers (including EPL), Additional Parties (including FAWI) and
each of their Subsidiaries and Affiliates will, and will use their best efforts
to cause their respective officers, directors, employees, accountants, counsel,
consultants, advisors, agents and lenders to, destroy or deliver to Buyer, upon
request, all documents and other materials, and all copies thereof, obtained by
the Sellers (including EPL) and Additional Parties (including FAWI), or on their
behalf from Buyer or its Affiliates in connection with this Agreement that are
subject to such confidence.
(b) Any Person pursuant to this Agreement who becomes legally
compelled to disclose any of the documents or information referred to in Section
5.9(a) above, will provide Buyer with prompt notice prior to disclosing any such
documentation or information so that Buyer may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this
Agreement. In the event that such protective order or other remedy is not
obtained, or that Buyer does not waive compliance with the provisions of this
Agreement as to disclosure of the Information, the Sellers (including EPL),
Additional Parties (including FAWI), their Affiliates and their Subsidiaries
will furnish only the portion of such documentation or information which it is
advised by counsel is legally required and will exercise its best efforts to
obtain reliable assurance that confidential treatment will be accorded such
documentation or information.
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5.8 AFFILIATE ACCOUNTS. Except for travel expenses, accrued
compensation and other reimbursable expenses in each case incurred in the
ordinary course of business and all accounts between the Sellers, Companies,
Additional Parties and members of their Immediate Family or their Affiliates, on
the one hand, and any of the Companies and their respective Subsidiaries, on the
other hand, as of the Closing shall be settled in full in cash at or prior to
the Closing Date.
5.9 TRANSFER OF HOLDINGS L.P. INTERESTS. As long as Holdings L.P.
owns or holds an Interest (as defined in the LLC Agreement) in Newco, without
the prior written consent of Buyer, none of the Sellers or Additional Parties or
any of their respective transferees shall Transfer (as defined in the LLC
Agreement), directly or indirectly, any record or beneficial interest in their
respective Holdings L.P. Interests unless either (a) such Transfer is made to a
member of the Immediate Family of a Principal (or a trust, family limited
partnership, close corporation or similar entity the beneficiaries of which are
exclusively Principals or members of their Immediate Families) for tax or estate
planning purposes or (b) (i) such Transfer is made to an active, full-time
employee of Newco or its Subsidiaries and (ii) such Transfer would not result in
attribution of income to the recipient or compensation expense to Newco;
PROVIDED that, such Immediate Family member or employee of Newco or its
Subsidiaries, as the case may be, agrees in writing to be subject to the same
restrictions on Transfer as set forth herein.
5.10 REVISED ANNUAL BILLINGS. (a) On the Closing Date, Sellers will
deliver to Buyer a revised schedule (the "REVISED SCHEDULE") which sets forth a
list of all Clients including all participants in any Fund (except with respect
to clients of Draycott transferred to the Companies in connection with the
Draycott Transaction) showing for each such Client, as of the close of business
on the day preceding the Closing Date, (i) the items set forth in subclauses (i)
through (vii) of Section 3.23(a), (ii) Revised Annual Billings, as defined
herein and (iii) the information used in calculating Revised Annual Billings set
forth in subclauses (i) through (iv) of Section 5.10 (b).
(b) Pro forma annual billings for each Client (and Fund participant)
on the Revised Schedule shall be calculated in the same manner as Base Annual
Billings, after giving effect to the adjustments made to assets under management
pursuant to subparagraphs (i) to (iv) below and to any reductions in fees since
the date of the Original Schedule, provided that the Revised Schedule shall not
reflect fluctuations in the market value of assets under management since
November 30, 1995 (except as expressly provided in subparagraphs (ii), (iii) and
(iv) below) or increases (if any) in the fee schedule subsequent to that date
(such pro forma annual billings as shown on the Revised Schedule being referred
to herein as "REVISED ANNUAL BILLINGS"). In calculating Revised Annual Billings
in respect of any Client:
(i) All Clients other than those Clients receiving Letter C in
accordance with the procedures set forth in Schedule 5.4(a) that have
terminated their investment advisory relationship with the Companies or
their respective Subsidiaries or that have notified the Companies or their
respective Subsidiaries or Affiliates (orally or in writing) of their
intention to terminate that relationship since the date of the Original
Schedule and all Investment Companies that are not Approved Investment
Companies
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shall be so noted on the Revised Schedule and Revised Annual Billings with
respect to such Clients shall be reduced to zero.
(ii) All Clients that have engaged the Companies and their
respective Subsidiaries since the date of the Original Schedule (except for
clients transferred to the Companies as a result of the Draycott
Transaction) shall be added to the Revised Schedule with their assets under
management by the Companies or any of their respective Subsidiaries
included in the Revised Schedule at the fair market value of those assets
on the date management of those assets by the Companies or any of their
respective Subsidiaries commenced.
(iii) Clients other than those Clients receiving Letter C in
accordance with the procedures set forth in Schedule 5.4(a) that have
withdrawn assets from management by the Companies and their respective
Subsidiaries since the date of the Original Schedule shall be so noted on
the Revised Schedule and, assets under management for such Clients shall be
reduced on the Revised Schedule by the same percentage as is calculated by
dividing (x) the fair market value of the assets withdrawn as of the date
of withdrawal, by (y) the aggregate fair market value of assets managed by
the Companies or their Subsidiaries for such Client immediately prior to
the withdrawal. If, as of the Closing Date, any of the Sellers or
Additional Parties has knowledge of any prospective withdrawal of assets
under management for any Client, assets under management for such Client on
the Revised Schedule shall be reduced by the same percentage as is
calculated by dividing (A) the fair market value of the assets proposed to
be withdrawn by (B) the aggregate fair market value of assets managed by
either Company or their respective Subsidiaries for such Client as of the
business day next preceding the Closing.
(iv) Clients that have added to assets under management
since the date of the Original Schedule shall be so noted on the Revised
Schedule and, assets under management for such Clients shall be increased
from or added to, as applicable, the Original Schedule by the fair market
value of those added assets on the date the management of the added assets
by either Company or any of their respective Subsidiaries commenced.
Investment income shall not be included as an addition for this purpose.
(c) In the event of any disagreement by Buyer with any item or
calculation set forth on the Revised Schedule, Buyer shall inform the Sellers as
to the amount of Revised Annual Billings derived pursuant to Buyer's
calculation, and Buyer and Sellers will use their best efforts to resolve such
disagreement in good faith. In the event such disagreement cannot be so
resolved, subject to the definition of "FINAL ANNUAL BILLINGS" set forth below,
Revised Annual Billings will be conclusively determined on or prior to the
Closing Date by the Accounting Referee and the amount so determined will be
final and binding on all parties. The cost of the services, if any, of the
Accounting Referee in connection with such determination shall be borne (A) by
Buyer if the difference between Final Annual Billings and Buyer's calculation of
Revised Annual Billings is greater than the difference between the Final Annual
Billings and Sellers'
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calculation of the Revised Annual Billings, (B) by Sellers if the first such
difference is less than the second such difference and (C) otherwise equally by
Buyer and Sellers.
As used herein, "FINAL ANNUAL BILLINGS" means the Revised Annual
Billings (i) as shown in the Revised Schedule delivered by the Sellers pursuant
to Section 5.10(a), if Buyer is not in disagreement therewith; or (ii) if Buyer
disagrees therewith, (A) as agreed by Buyer and Sellers pursuant to this Section
5.10(c) or (B) in the absence of such agreement, as determined by the Accounting
Referee pursuant to this Section 5.10(c).
5.11 DISTRIBUTIONS. Notwithstanding anything else contained herein,
Sellers agree that, prior to the Closing, neither Holdings L.P. nor Limited will
make any dividend or other distributions, provided that if the Closing has not
occurred prior to April 15, 1996, Holdings L.P. may make distributions of
accumulated earnings through December 31, 1995, together with a tax advance with
respect to the first quarter of 1996 all in accordance with prior practice and
Limited may make a dividend of accumulated earnings through December 31, 1995.
5.12 CERTAIN REORGANIZATIONS. Notwithstanding any other provision of
this Agreement to the contrary, it is agreed and understood that Whitedoors
Limited, after the date hereof and prior to the Closing, may elect (but shall
not be required) to distribute Ordinary Shares of Limited held by Whitedoors
Limited as of the date hereof as follows: 10,570 Ordinary Shares to The Newark
Trust, a shareholder of Whitedoors Limited and 21,140 Ordinary Shares to The
Aleppo Trust, the other shareholder of Whitedoors Limited (the "Distribution"),
provided that (i) if a distribution is made to The Newark Trust, (x) The Newark
Trust shall become a party to this Agreement and each other Transaction Document
to which Whitedoors Limited is a party, as a Seller, and in connection therewith
shall execute such documentation as Buyer may reasonably determine to be
necessary or appropriate, and (y) John S. Ricciardi shall cease to be obligated
as an Additional Party with respect to any of the obligations of Whitedoors
Limited, but shall be obligated as an Additional Party with respect to the
obligations of the Newark Trust and in connection therewith shall execute such
documentation as Buyer may reasonably determine to be necessary or appropriate,
(ii) if a distribution is made to The Aleppo Trust (x) The Aleppo Trust shall
become a party to this Agreement and each other Transaction Document to which
Whitedoors Limited is a party, as a Seller, and in connection therewith shall
execute such documents as Buyer may reasonably determine to be necessary or
appropriate and (y) Charles J.H. Gave shall cease to be obligated as an
Additional Party with respect to any of the obligations of Whitedoors Limited,
but shall be obligated as an Additional Party with respect to the obligations of
The Aleppo Trust and in connection therewith shall execute such documentation as
Buyer may reasonably determine to be necessary or appropriate and (iii) the
payment of the Share Purchase Price shall be reallocated and paid as indicated
in the footnote to Schedule 2.6(a). Any changes in the representations and
warranties set forth in Article III or the Schedules in connection therewith
necessary to reflect the Distribution shall be deemed to be immaterial for all
purposes of this Agreement. Upon the assumption by The Newark Trust and/or The
Aleppo Trust, respectively, of the obligations under the Transaction Documents
of Whitedoors Limited, and the execution and delivery of documents to that
effect satisfactory to Buyer, Whitedoors Limited shall be relieved of all of its
obligations under the Transaction Documents to the extent of such assumption.
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5.13 DEFERRED SHARE OPTION. The Sellers and Additional Parties who
hold Deferred Shares as of the date hereof hereby grant an option, exercisable
on and after the Closing to sell the said Deferred Shares to Newco for L0.01 per
Deferred Share and the above mentioned Sellers and Additional Parties warrant
and undertake to Newco that they will and shall remain the owners of the said
Deferred Shares and will not (without the prior written consent of Newco)
dispose of any interest therein or create or allow to be created any encumbrance
(including any right to acquire, option, right of pre-emption or right of
conversion, mortgage, charge, pledge, lien, assignment, security interest, title
retention or any other security arrangement or arrangement of whatsoever nature)
over the said Deferred Shares or agree (whether conditionally or otherwise) to
do any of these such things, PROVIDED that after the Closing, EPL may transfer
Deferred Shares to any other Shareholder or to Newco or any of its Subsidiaries
without the consent of Newco, subject to the option granted hereunder.
5.14 PROHIBITION ON CERTAIN DISTRIBUTIONS. Whitedoors Limited and
Yahtzee Limited each hereby agree, severally and not jointly, that it will
refrain from making or paying any dividend with respect to, or repurchasing or
redeeming, any equity security thereof, unless after giving effect thereto (a)
from the date of receipt of the Share Purchase Price through June 30, 1997, such
Seller Corporation shall have at all times a Seller Corporation Net Worth (as
defined below) that is not less than the Share Purchase Price received
(including all distributions from Holdings L.P. on or after the Closing) by such
Seller Corporation, less the aggregate amount of all claims paid by such Seller
Corporation under Section 8.8 or 11.2 hereunder, and (b) from and after July 1,
1997 through the seventh anniversary of the Closing Date, such Seller
Corporation shall have at all times a Seller Corporation Net Worth that is not
less than the total of (i) 10% of the Share Purchase Price received (including
all distributions from Holdings LP on or after the Closing) by such Seller
Corporation plus (ii) the aggregate amount of such Seller Corporation's
proportionate share of all claims for Damages under Section 8.8 or 11.2(a)
hereunder that are made prior to June 30, 1997, and remain outstanding minus
(iii) 10% of the aggregate amount of all claims paid by such Seller Corporation
under Section 8.8 or 11.2 hereunder. "Seller Corporation Net Worth" shall be
the total of (x) the fair market value of all cash, marketable securities and
Units held by such Seller Corporation, less (y) all liabilities of such Seller
Corporation (other than liabilities under this Agreement), provided that for
these purposes the fair market value of each Unit shall be deemed to be $19.925.
ARTICLE VI
COVENANTS OF BUYER
Buyer agrees that:
6.1 CONFIDENTIALITY. (a) Prior to the Closing Date and after any
termination of this Agreement, Buyer and its Subsidiaries will hold, and will
use their best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
Business furnished to Buyer or its Subsidiaries in connection with the
transactions contemplated by the
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Transaction Documents, except to the extent that such information can be shown
to have been (i) previously known on a nonconfidential basis by Buyer, (ii) in
the public domain through no fault of Buyer or (iii) later lawfully acquired by
Buyer from sources other than Sellers, Additional Parties, the Companies or any
of their respective Subsidiaries; PROVIDED that Buyer may disclose such
information to its Affiliates (except that client information as to which
confidential treatment has been specifically requested by the applicable client
may not be revealed to such Affiliate except as may be required by law),
officers, directors, employees, accountants, consultants, advisors, agents and
lenders in connection with the transactions contemplated by the Transaction
Documents so long as such Persons are (i) informed by Buyer of the confidential
nature of such information; (ii) are directed by Buyer to treat such information
confidentially; and (iii) such Persons agree to be bound by this Article VI of
this Agreement. The obligation of Buyer and its Subsidiaries to hold any such
information in confidence shall be satisfied if they exercise the same care with
respect to such information as they would take to preserve the confidentiality
of their own similar information. If this Agreement is terminated, Buyer and
its Subsidiaries will, and will use their best efforts to cause their respective
Affiliates officers, directors, employees, accountants, counsel, consultants,
advisors, agents and lenders to, destroy or deliver to Sellers, upon request,
all documents and other materials, and all copies thereof, obtained by Buyer or
its Subsidiaries or on their behalf from Sellers or either Company or any of
their respective Subsidiaries in connection with this Agreement that are subject
to such confidence.
(b) Any Person pursuant to this Agreement who becomes legally
compelled to disclose any of the documents or information referred to in Section
6.1(a) above, will provide Sellers with prompt notice prior to disclosing any
such documentation or information so that Sellers may seeks a protective order
or other appropriate remedy and/or waive compliance with the provisions of this
Agreement. In the event that such protective order or other remedy is not
obtained, or that Sellers do not waive compliance with the provisions of this
Agreement as to disclosure of the Information, the Buyer and its Subsidiaries
will furnish only the portion of such documentation or information which it is
advised by counsel is legally required and will exercise its best efforts to
obtain reliable assurance that confidential treatment will be accorded such
documentation or information.
6.2 ACCESS. From the date hereof until the Closing Date, Buyer will
(a) give Sellers, its counsel, financial advisors, auditors and other authorized
representatives reasonable access during regular business hours to the offices,
properties, books and records of the Buyer relating to the International
Operations, (b) furnish to Sellers, their counsel, financial advisors, auditors
and other authorized representatives such financial and operating data and other
information relating to the International Operations as such Persons may
reasonably request and (c) instruct the employees, counsel and financial
advisors of Buyer to cooperate with Sellers in its investigation of the
aforesaid entities. No investigation by Sellers or other information received
by Sellers shall operate as a waiver or otherwise affect any representation,
warranty or agreement given or made by Buyer hereunder.
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6.3 NOTICES OF CERTAIN EVENTS. Buyer shall promptly notify Seller of:
(a) any notice or other material communication from any Person
alleging that the consent of such Person is or may be required in connection
with the transactions contemplated by the Transaction Documents;
(b) any notice or other material communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by the Transaction Documents; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or involving or
otherwise affecting the Buyer that relate to the consummation of the
transactions contemplated by the Transaction Documents.
6.4 SECURITIES ACT (ONTARIO). Buyer shall give notice at least 30
days prior to Closing to the Director under the Securities Act (Ontario)
pursuant to Section 104(1) of the regulations promulgated under such statute.
6.5 RESTRICTIVE TRADE PRACTICES ACT. Buyer shall file the
Transaction Agreement with the Director General of Fair Trading pursuant to
Restrictive Trade Practices Act 1976 on behalf of itself and the Sellers.
6.6 ALLIANCE CAPITAL MANAGEMENT (BRAZIL) LTDA. Upon receipt of all
necessary licenses, consents and regulatory filings, Buyer shall cause Alliance
Capital Management (Brazil) Ltda to become a wholly owned subsidiary of Newco.
ARTICLE VII
COVENANTS OF BUYER AND SELLERS
Buyer and Sellers agree that:
7.1 BEST EFFORTS. Subject to the terms and conditions of this
Agreement, Buyer and Sellers will use their best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the transactions
contemplated by the Transaction Documents. Sellers and Buyer agree, and
Sellers, prior to the Closing, and Buyer and Sellers, after the Closing, agree
to cause each of the Companies and their respective Subsidiaries and Affiliates,
to execute and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transactions contemplated by
the Transaction Documents.
7.2 CERTAIN FILINGS. The parties shall cooperate with one another
(a) in connection with HSR and other foreign regulatory filings, (b) in
preparing and filing all forms
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and amendments to forms, including Form ADVs, corresponding state forms and
other filings required by Foreign Securities Regulators, required under
applicable federal, state and foreign laws as a result of the consummation of
the transactions contemplated by the Transaction Documents, and in determining
whether any other action by or in respect of, or filing with, any governmental
body, agency or official, or authority is required, or whether any actions,
consents, approvals or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the transactions
contemplated by this Agreement and (c) in taking such actions or making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such actions, consents, approvals or waivers.
7.3 PUBLIC ANNOUNCEMENTS. The parties agree to consult with each
other before issuing any press release or making any public statement with
respect to the Transaction Documents or the transactions contemplated thereunder
and, except as may be required by applicable law or any listing agreement with
any national securities exchange, will not issue any such press release or make
any such public statement prior to such consultation.
7.4 SECTION 15(f). (a) The Sellers (other than EPL) and the Buyer
each agree to use its respective best efforts to assure compliance with the
conditions of Section 15(f) of the Investment Company Act as it applies to the
transactions contemplated by this Agreement. Each of the Sellers (other than
EPL) and the Buyer agree that, for a period of not less than three years after
the Closing Date, it shall use its best efforts to ensure that no more than 25%
of the members of the board of directors or trustees of any Client that is an
Investment Company shall be "INTERESTED PERSONS" (as defined in the Investment
Company Act) of the Companies, their respective Subsidiaries or the Buyer as
investment adviser to each such Client or any person that before or after the
Closing Date was or is an affiliated person of any of the foregoing within the
meaning of the Investment Company Act. Without limiting the generality of the
foregoing, the Companies, their respective Subsidiaries and the Buyer will not
take, recommend or endorse any action that would cause more than 25% of the
number of any such board to be "INTERESTED PERSONS."
(b) The Sellers (other than EPL) and the Buyer each represent and
warrant that to their knowledge there is no express or implied understanding,
arrangement or intention to impose an "UNFAIR BURDEN" within the meaning of
Section 15(f) of the Investment Company Act on any Client that is an Investment
Company as a result of the transactions contemplated hereby, and that for a
period of not less than two years after the Closing Date such entities will not
take or recommend any act that would constitute an "UNFAIR BURDEN" on any
Investment Company.
(c) EPL agrees to use its best efforts not to take any action or
permit any of its affiliates to take any action that would cause the provisions
of Section 15(f) of the Investment Company Act not to be complied with.
ARTICLE VIII
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TAX MATTERS
8.1 TAX DEFINITIONS. The following terms, as used herein, have the
following meanings:
"BUYER INDEMNITEE" means Buyer, any of its Affiliates and, effective
upon the Closing, Limited, the Limited Subsidiaries, Eaton and Newco.
"CODE" means the Internal Revenue Code of 1986, as amended.
"FINAL DETERMINATION" means (i) with respect to United States federal
Taxes, a "determination" as defined in Section 1313(a) of the Code or execution
of an Internal Revenue Service Form 870AD and, with respect to Taxes other than
United States federal Taxes, any final determination of liability in respect of
a Tax that, under applicable law, is not subject to further appeal, review or
modification through proceedings or otherwise (including the expiration of a
statute of limitations or a period for the filing of claims for refunds, amended
returns or appeals from adverse determinations) or () the payment of Tax by
Buyer, Sellers or any of the parties responsible for payment of such Tax under
applicable law, with respect to any item disallowed or adjusted by a Taxing
Authority, provided that such responsible party determines that no action should
be taken to recoup such payment and the other party agrees.
"LIMITED SUBSIDIARY" means any Subsidiary of Limited.
"PRE-CLOSING TAX PERIOD" means any Tax period (or portion thereof)
ending on or before the close of business on the Closing Date.
"TAX" and, with correlative meaning, "TAXES" and "TAXABLE" means (i)
any net income, alternative or add-on minimum tax, gross income, advance
corporation tax, precompte, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest, penalty, addition
to tax or additional amount (including, without limitation, any such amounts
that accrue in years subsequent to the one in which the related tax liability
arose) imposed by any governmental authority (domestic or foreign) responsible
for the imposition of any such tax (a "TAXING AUTHORITY"), (ii) any liability of
the relevant Person for the payment of any amounts of the type described in (i)
as a result of being a member of an affiliated, consolidated, combined or
unitary group, or being a party to any agreement or arrangement whereby
liability of the relevant Person for payment of such amounts was determined or
taken into account with reference to the liability or tax attributes of any
other person for any period during the Tax Indemnification Period and (iii)
liability of the relevant Person for the payment of any amounts as a result of
being party to any Tax Sharing Agreement or with respect to the payment of any
amounts of the type described in (i) or (ii) as a result of any express or
implied obligation to indemnify any other Person.
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"TAX ASSET" means any net operating loss; net capital loss; investment
tax credit; foreign tax credit; credits for advance corporation tax, PRECOMPTE
or other similar taxes; charitable deduction, or any other credit or tax
attribute of Eaton, Limited or any Limited Subsidiary which could reduce Taxes
(including, without limitation, deductions and credits related to alternative
minimum Taxes).
"TAX INDEMNIFICATION PERIOD" means (i) with respect to any Tax
described in clause (i) of the definition of "Tax," any Pre-Closing Tax Period
of Eaton, Limited or any Limited Subsidiary, (ii) with respect to any Tax
described in clause (ii) of the definition of "Tax", any Pre-Closing Tax Period
of Limited or any Limited Subsidiary and the Tax year of any member (other than
a Limited or a Limited Subsidiary) of a group described in such clause (ii) that
includes (but does not end on) the Closing Date, and (iii) with respect to any
Tax described in clause (iii) of the definition of "Tax", the survival period of
the obligation under the applicable contract or arrangement.
"TAX SHARING AGREEMENTS" means any Tax sharing agreements or
arrangements (whether or not written) binding Eaton, Limited or any Limited
Subsidiary (including any agreements or arrangements which afford any other
person the benefit of any Tax Asset of Eaton, Limited or any Limited Subsidiary,
afford Eaton, Limited or any Limited Subsidiary the benefit of any Tax Asset of
any other person or require or permit the transfer or assignment of income,
revenues, receipts, or gains).
8.2 TAX REPRESENTATIONS. Unless otherwise expressly set forth
herein, the representations and warranties contained in this Section 8.2 are
made to the Buyer as of the date hereof and as of the Closing Date by each of
the Sellers (other than EPL) jointly and severally with each of the other
Sellers and Additional Parties (other than FAWI) in its Selling Group.
(a) Except as disclosed on Schedule 8.2, Holdings L.P. has timely
paid all Taxes, and all interest and penalties due thereon and payable by it for
the Pre-Closing Tax Period which will have been required to be paid on or prior
to the Closing Date, the non-payment of which would result in a Lien on any
Purchased Asset Interest, Contributed Asset Interest or Other Purchased Asset
Interest, would otherwise adversely affect the Business of Holdings L.P. or
Eaton or would result in Buyer's becoming liable or responsible therefor.
(b) Holdings L.P. has established, in accordance with GAAP applied on
a basis consistent with that of preceding periods, adequate reserves for the
payment of, and will timely pay, all Tax liabilities, assessments, interest and
penalties that arise from or with respect to the Purchased Assets Interest, the
Contributed Assets Interest or the Other Purchased Assets Interest or the
operation of the Business of Holdings L.P. or Eaton and are incurred in or
attributable to the Pre-Closing Tax Period, the non-payment of which would
result in a Lien on any Purchased Asset Interest, Contributed Asset Interest or
Other Purchased Asset Interest, would otherwise adversely affect the Business of
Holdings L.P. or Eaton or would result in Buyer's becoming liable therefor.
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(c) Except as set forth in the Balance Sheet (including the notes
thereto) or on Schedule 8.2, (i) all Tax returns, statements, reports and forms
(including estimated tax or information returns and reports) required to be
filed with any Taxing Authority with respect to any Pre-Closing Tax Period by or
on behalf of Eaton, Limited or any Limited Subsidiary (collectively, the
"RETURNS") have, to the extent required to be filed on or before the date
hereof, been filed when due in accordance with all applicable laws; (ii) as of
the time of filing, the Returns correctly reflected the facts regarding the
income, business, assets, operations, activities and status of Eaton, Limited
and the Limited Subsidiaries and any other information required to be shown
therein; (iii) all Taxes shown as due and payable on the Returns that have been
filed have been timely paid, or withheld and remitted, to the appropriate Taxing
Authority; (iv) all material Taxes, if any, payable on or before the Closing
Date by or on behalf of Eaton, Limited or any Limited Subsidiary have been
timely paid, or withheld and remitted, to the appropriate Taxing Authority; (v)
the charges, accruals and reserves for Taxes with respect to Limited and the
Limited Subsidiaries for any Pre-Closing Tax Period (including any Pre-Closing
Tax Period for which no Return has yet been filed) reflected on the books of
Eaton, Limited and the Limited Subsidiaries (excluding any provision for
deferred income taxes) are adequate to cover such Taxes; (vi) all Returns filed
with respect to Tax years of Limited and the Limited Subsidiaries through the
Tax year ended December 31, 1994 have been examined and closed or are Returns
with respect to which the applicable period for assessment under applicable law,
after giving effect to extensions or waivers, has expired; (vii) all corporation
tax assessments for Limited for the Tax years to December 31, 1994 have either
been finally determined by a court or tribunal (following an appeal) or by
agreement pursuant to Section 54 Taxes Management Act 1970 (viii) neither Eaton
nor Limited nor any Limited Subsidiary is delinquent in the payment of any Tax
or has requested any extension of time within which to file any Return and, has
not yet filed such return; (ix) neither Eaton nor Limited nor any Limited
Subsidiary (or any member of any affiliated, consolidated, combined or unitary
group of which either Limited or any Limited Subsidiary is or has been a member)
has granted any extension or waiver of the statute of limitations period
applicable to any Return, which period (after giving effect to such extension or
waiver) has not yet expired; (x) there is no claim, audit, action, suit,
proceeding, or investigation now pending or threatened against or with respect
to Holdings L.P., Eaton, Limited or any Limited Subsidiary in respect of any Tax
or Tax Asset; (xi) there are no requests for rulings or determinations in
respect of any Tax or Tax Asset pending between Eaton, Limited or any Limited
Subsidiary and any Taxing Authority; (xii) no fund that Holdings L.P., Eaton,
Limited or any Limited Subsidiary has sponsored is or has at any time been
engaged in a trade or business in the United States; (xiii) neither Eaton nor
Limited nor any Limited Subsidiary owns any interest in real property in the
State of New York or in any other jurisdiction in which a Tax is imposed on the
transfer of a controlling interest in an entity that owns any interest in real
property; (xiv) none of the property owned or used by Eaton is subject to a tax
benefit transfer lease executed in accordance with Section 168(f)(8) of the
Internal Revenue Code of 1986, as amended; (xv) none of the property owned or
used by Eaton is subject to a lease, other than a "true" lease for federal
income tax purposes; (xvi) none of the property owned by Eaton is "tax-exempt
use property" within the meaning of Section 168(h) of the Code; (xvii) there are
no Liens for Taxes upon the assets of Eaton, Limited or any Limited Subsidiary
except Liens for current Taxes not yet due; (xviii) such Seller or such
Additional Party is not subject to withholding under Section 1445 of the Code
with a respect to any transaction contemplated
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hereby; (xix) neither Limited nor any Limited Subsidiary has participated in any
arrangement whereby any income, revenues, receipts, gain, loss or Tax Asset of
Limited or any Limited Subsidiary was determined or taken into account for Tax
purposes with reference to or in conjunction with any income, revenues,
receipts, gain, loss, asset, liability or Tax Asset of any other person; (xx)
neither Limited nor any Limited Subsidiary is currently under any contractual
obligation to pay any amounts of the type described in clause (ii) or (iii) of
the definition of "TAX"; (xxi) all information set forth in the notes to the
Balance Sheet relating to Tax matters is true and complete; (xxii) no claim has
been made under Section 152, 153, 154 or Section 175 Taxation of Chargeable
Gains Act 1992 ("TCGA") or any section which would affect the amount of any gain
accruing or treated as accruing on a disposal of an asset of Limited or any
Limited Subsidiary which is resident in the UK; and (xxiii) if each of the
assets (other than trading stock) or the plant and machinery taken as a whole of
Limited or any Limited Subsidiary which is resident in the UK were disposed of
for a consideration equal to the book value of that asset or, as appropriate,
plant and machinery on, or adopted for the purposes of, the Limited Closing Date
Balance Sheet, no liability to corporation tax on chargeable gains or a
balancing charge under the Capital Allowances Act 1990 not fully provided for in
the Limited Closing Date Balance Sheet would arise, provided that, for the
purpose of determining corporation tax on chargeable gains, there shall be
disregarded any relief and allowances available to the company concerned other
than amounts failing to be deducted under Section 38 TCGA.
8.3 SELLER COVENANTS. Sellers (other than EPL) agree that: (a)
without the prior written consent of Buyer, none of the Sellers (other than
EPL), the Additional Parties (other than FAWI), the Companies, the Limited
Subsidiaries or their respective Affiliates shall, to the extent it may affect
or relate to Eaton, Limited or any Limited Subsidiary, make or change any tax
election, change any annual tax accounting period, adopt or change any method of
tax accounting, file any amended Return, enter into any closing agreement,
settle any Tax claim or assessment, surrender any right to claim a Tax refund,
consent to any extension or waiver of the limitation period applicable to any
Tax claim or assessment or take or omit to take any other action, if any such
action or omission could have the effect of increasing the Tax liability or
decreasing any Tax Asset of Eaton, Limited, any Limited Subsidiary, Newco, Buyer
or any Affiliate of Buyer.
(b) All Returns not required to be filed on or before the date
hereof, but required to be filed on or before the Closing Date, (1) will be
filed when due in accordance with all applicable laws and as of the time of
filing, will correctly reflect the facts regarding the income, business, assets,
operations, activities and status of Eaton, Limited or any Limited Subsidiary
and any other information required to be shown therein.
(c) Neither Eaton nor Limited nor any Limited Subsidiary shall
reserve any amount for or make any payment of Taxes to any other person or any
Taxing Authority except for such Taxes as are due or payable or have been
properly estimated in accordance with applicable law as applied in a manner
consistent with past practice of Limited and the Limited Subsidiaries.
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8.4 BUYER COVENANTS. (a) Within 30 days after any Tax liability of
an Alliance Entity with respect to a Pre-Closing Tax Period of such Alliance
Entity has been fixed pursuant to a Final Determination, Buyer will make a
contribution to the capital of Newco of (i) an amount equal to such Tax
liability and (ii) an amount equal to any expenses (including, without
limitation, reasonable expenses of investigation and attorneys' fees and
expenses) incurred in the contest in good faith in appropriate proceedings of
the imposition, assessment or assertion of such Tax liability, PROVIDED that
Buyer shall have no obligation to make any capital contribution pursuant to this
Section 8.4 until the aggregate amount of all claims arising pursuant hereto
exceeds the aggregate reserves for Taxes provided for on the books and records
of the Alliance Entities as of the Closing Date, in which case Buyer shall be
obligated to make capital contributions hereunder for the full amount of all
claims in excess of such reserves for Taxes. If Buyer's obligation to make a
capital contribution under this Section 8.4 arises in respect of an adjustment
that makes allowable to Newco or any of its Affiliates, including any of the
Alliance Entities, any deduction, amortization, exclusion from income or other
allowance (a "TAX BENEFIT") that would not, but for such adjustment, be
allowable, then any capital contribution by Buyer to Newco shall be an amount
equal to the amount that would otherwise be due reduced by the present value of
such Tax Benefit as determined by Newco at that time.
(b) Prior to the Closing Date, Buyer shall not, without the prior
written consent of Holdings L.P., cause or permit any of the Alliance Entities,
to the extent it may affect or relate to any of the Alliance Entities, to make
or change any tax election, change any annual tax accounting period, adopt or
change any method of tax accounting, file any amended Return, enter into any
closing agreement, settle any Tax claim or assessment, surrender any right to
claim a Tax refund, consent to any extension or waiver of the limitation period
applicable to any Tax claim or assessment or take or omit to take any other
action, if any such action or omission could have the effect of increasing the
Tax liability or decreasing any Tax Asset of any of the Alliance Entities or
Newco.
(c) Prior to the Closing Date, none of the Alliance Entities shall
reserve any amount for or make any payment of Taxes to any other person or any
Taxing Authority except for such Taxes as are due or payable or have been
properly estimated in accordance with applicable law as applied in a manner
consistent with past practice of the Alliance Entities.
8.5 TERMINATION OF EXISTING TAX SHARING AGREEMENTS. Sellers (other
than EPL) agree that (i) except as set forth on Schedule 8.5, any and all
existing Tax Sharing Agreements shall be terminated as of the Closing Date; (ii)
after the Closing Date, neither Limited or any Limited Subsidiary shall have any
further rights or liabilities thereunder and (iii) Sellers shall compensate
Buyer, for and hold Eaton, Limited and any Limited Subsidiary harmless against,
any Tax imposed by a Taxing Authority as a result of such termination and, if
any such termination is not binding on any Taxing Authority, any adverse effect
which would have been avoided if such termination had been given effect by such
Taxing Authority.
8.6 OTHER TAX MATTERS. All transfer, documentary, sales, use, stamp,
registration, value added and other such Taxes and fees (including any
penalties, interest and associated legal fees) incurred in connection with this
Agreement or any of the transactions
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contemplated pursuant to this Agreement (including any real property transfer
tax and any similar Tax and also including any United Kingdom stamp duty and
stamp duty reserve tax) shall be borne equally by Sellers, on the one hand, and
Buyer, on the other, when due, and Sellers and Buyer will each at their own
expense, file all necessary Tax returns and other documentation with respect to
all such Taxes and fees, and, if required by applicable law, Sellers and Buyer
will, and will cause their respective Affiliates to, join in the execution of
any such Tax returns and other documentation.
8.7 COOPERATION ON TAX MATTERS. (a) Buyer and Sellers shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the preparation and filing of any Tax return, statement,
report or form, any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. Buyer and Sellers agree (A) to retain, and
to cause Eaton, Limited, the Limited Subsidiaries and the Alliance Entities to
retain all books and records with respect to Tax matters pertinent to Eaton,
Limited, the Limited Subsidiaries and the Alliance Entities relating to any
Pre-Closing Tax Period, and to abide by all record retention agreements entered
into with any Taxing Authority and (B) to give the other party reasonable
written notice prior to destroying or discarding any such books and records and,
if the other party so requests, either Buyer or Sellers (other than EPL), as the
case may be, shall allow the other party to take possession of such books and
records.
(b) Buyer and Sellers (other than EPL) further agree, upon request,
to use best efforts to obtain any certificate or other document from any
governmental authority or customer of Eaton, Limited, any Limited Subsidiary and
of the Alliance Entities or any other person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
8.8 TAX INDEMNIFICATION. (a) Subject to the limitations set forth in
Section 11.2(f), each Selling Group (except the FAWI/EPL Group) in the
respective percentages set forth in Schedule 11.2 next to the name of the
Selling Group hereby indemnifies (such indemnity to be joint and several as to
each member of such Selling Group) each Buyer Indemnitee against and agrees to
hold each Buyer Indemnitee harmless from (i) any Tax of, or attributable to,
Eaton, Limited or any Limited Subsidiary related to the Tax Indemnification
Period but in the case of Limited or any Limited Subsidiary, only to the extent
that such Tax does not arise as a result of any voluntary act of or directed by
Buyer, Limited or any Limited Subsidiary after the Closing Date other than in
the ordinary course of business, (ii) subject to the limitations set forth in
Section 11.2(e), any Tax of, or attributable to, Eaton, Limited or any Limited
Subsidiary resulting from a breach of the provisions of Sections 8.2 and 8.3 but
in the case of Limited or any Limited Subsidiary, only to the extent that such
Tax does not arise as a result of any voluntary act of or directed by Buyer,
Limited or any Limited Subsidiary after the Closing Date other than in the
ordinary course of business, and (iii) any liabilities, costs, expenses
reasonably incurred (including, without limitation, expenses of investigation
and attorneys' fees and
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expenses), losses, damages, assessments, settlements or judgments arising out of
or incident to the imposition, assessment or assertion of any Tax described in
(i) or (ii), including those incurred in the contest in good faith in
appropriate proceedings relating to the imposition, assessment or assertion of
any such Tax, and any liability as transferee, (the sum of (i), (ii) and (iii)
being referred to herein as a "LOSS"), PROVIDED that the members of each Selling
Group shall have no obligation to make any payment pursuant to this Section
8.8(a) until the aggregate amount of all claims arising pursuant hereto exceeds
the aggregate reserves for Taxes provided for on the books and records of Eaton,
Limited or any Limited Subsidiary as of the Closing Date, in which case the
members of each Selling Group (except the FAWI/EPL Group) shall be obligated to
make payments hereunder for the full amount of all claims in excess of such
reserves for Taxes.
(b) If the obligation of any member of any Selling Group under this
Section 8.8 arises in respect of an adjustment that makes allowable to Buyer or
any of its Affiliates, including Newco, Eaton, Limited or any Limited
Subsidiary, any Tax Benefit that would not, but for such adjustment, be
allowable, then any indemnity payment by such member hereunder shall be an
amount equal to the amount that would otherwise be due but for this Section
8.8(b), reduced by two-thirds of the present value of such Tax Benefit as
determined by Buyer at that time.
(c) For purposes of this Section, in the case of any taxes that are
imposed on a periodic basis and are payable for a Taxable period that includes
(but does not end on) the Closing Date, the portion of such tax related to the
portion of such Taxable period ending on the Closing Date shall (x) in the case
of any taxes other than taxes based upon or related to income profits, sales or
supplies, be deemed to be the amount of such tax for the entire Taxable period
multiplied by a fraction the numerator of which is the number of days in the
Taxable period ending on the Closing Date and the denominator of which is the
number of days in the entire Taxable period and (y) in the case of any tax based
upon or related to income, profits, sales or supplies be deemed equal to the
amount which would be payable if the relevant Taxable period ended on the
Closing Date. Any credits relating to a Taxable period that begins before and
ends after the Closing Date shall be taken into account as though the relevant
Taxable period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with
prior practice of Eaton, Limited and the Limited Subsidiaries.
(d) Upon payment by any Buyer Indemnitee of any Loss, the members of
the respective Selling Groups shall discharge their obligation to indemnify the
Buyer Indemnitee against such Loss by paying to Buyer an amount equal to the
amount of such Loss as determined after application of Section 8.8(b).
(e) Any claim for indemnification or payment pursuant to this Section
8.8 shall be made in accordance with the procedures set forth in Section 11.3.
(f) No investigation by Buyer or any of its Affiliates at or prior to
the Closing Date shall relieve any member of any Selling Group of any liability
hereunder.
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(g) Any claim of any Buyer Indemnitee (other than Buyer, Limited or
any Limited Subsidiary) under this Section 8.8 may be made and enforced by Buyer
on behalf of such Buyer Indemnitee. Notwithstanding the provisions of Section
8.8(a), any claim for any Loss of Limited or any Limited Subsidiary shall be
made and enforced only by Buyer.
(h) At the request of Sellers, Buyer shall ensure that Limited or any
Limited Subsidiary (i) uses (including by way of surrender from one company to
another) all Tax Assets available to it at the Closing Date (other than Tax
Assets that have been taken into account in compiling the Limited Closing Date
Balance Sheet either as assets or in the provision for Taxes or deferred taxes)
and makes all elections, except in respect of matters after the Closing Date, so
as to reduce or eliminate the Sellers' liability under this Section 8.8 and (ii)
at Sellers' expense, delivers to Sellers a certificate from its auditors for the
time being confirming that all such Tax Assets have been so used and all such
elections have been so made.
8.9 ALLOCATION OF TAXES WITH RESPECT TO PURCHASED ASSETS. All real
property taxes, personal property taxes and similar AD VALOREM obligations
levied with respect to the Purchased Assets Interest, the Contributed Assets
Interest and the Other Purchased Assets Interest for a taxable period that
includes (but does not end on) the Closing Date (collectively, the "APPORTIONED
OBLIGATIONS") shall be apportioned between Holdings L.P. and Newco in the manner
described in Section 8.8(c). Holdings L.P. shall be liable for the amount of
such taxes that is attributable to the Pre-Closing Tax Period and Newco shall be
liable for the amount of such taxes that is not attributable to the Pre-Closing
Tax Period. Within 90 days after the Closing Date, each of Holdings L.P. and
Newco shall present a statement to the other setting forth the amount of
reimbursement to which each is entitled under this Section 8.9, together with
such supporting evidence as is reasonably necessary to calculate the proration
amount. The proration amount shall be paid by the party owing it to the other
within 10 days after delivery of such statement. Thereafter, Holdings L.P.
shall notify Newco upon receipt of any bill for real or personal property taxes
relating to the Purchased Assets Interest, the Contributed Assets Interest or
the Other Purchased Assets Interest part or all of which are not attributable to
the Pre-Closing Tax Period, and shall promptly deliver such bill to Newco, which
shall pay the same to the appropriate taxing authority, PROVIDED that if such
bill covers the Pre-Closing Tax Period, Holdings L.P. shall also remit to Newco,
prior to the due date of assessment, payment for the proportionate amount of
such bill that is attributable to the Pre-Closing Tax Period. In the event that
either Holdings L.P. or Newco shall thereafter make a payment for which it is
entitled to reimbursement under this Section 8.9, the other party shall make
such reimbursement promptly, but in no event later than 30 days after the
presentation of a statement setting forth the amount of reimbursement to which
the presenting party is entitled, along with such supporting evidence as is
reasonably necessary to calculate the amount of reimbursement.
8.10 PURCHASE PRICE ADJUSTMENT AND INTEREST. Any amount paid by
Sellers or Buyer under Section 8.4, 8.6, 8.8, 8.9 or 11.2 will be treated either
as an adjustment to the Share Purchase Price, the Asset Purchase Price or the
Other Asset Purchase Price or as a contribution to the capital of Newco, as
appropriate, as well as an adjustment to Buyer's capital account in Newco unless
a Final Determination causes any such amount not to constitute an adjustment to
any such Purchase Price or a capital contribution for Federal Tax Purposes. In
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such event, Sellers or Buyer, as the case may be, shall pay an amount that
reflects the hypothetical Tax consequences of the receipt of such payment, using
the maximum statutory rate (or rates, in the case of an item that affects more
than one Tax) applicable to the recipient of such payment (or, if the recipient
of such payment is a partnership for U.S. federal income tax purposes, to the
holders of interest in the recipient of such payment) for the relevant year,
reflecting, for example, the effect of deductions available for interest paid or
accrued and for Taxes such as state and local income Taxes. Any payment
required to be made by Buyer or Sellers under Section 8.4, 8.6, 8.8, 8.9 or 11.2
that is not made when due shall bear interest at the rate per annum determined,
from time to time, under the provision of Section 6621(a)(2) of the Code for
each day until paid.
ARTICLE IX
EMPLOYEE BENEFITS
All parties (other than EPL and FAWI) agree that:
9.1 EMPLOYEE BENEFITS. (a) After the Closing Date, all employees of
Newco and its Subsidiaries who are employed in the United States, including
Transferred Alliance Employees, shall participate in the employee benefit plans
maintained by Buyer for similarly situated employees.
(b) The compensation (other than incentive compensation, described in
Section 9.2 below) and benefits to be provided to Transferred Alliance Employees
employed in the United Kingdom after the Closing Date shall generally be
maintained at a level reasonably comparable in the aggregate to those provided
to such employees by the Buyer prior to the Closing Date other than in
connection with individual performance and function reviews.
(c) For purposes of vesting and eligibility under the employee
benefit plans maintained by Newco and Buyer, after the Closing Date, employees
who participate in any such plan shall be credited with service with the
Companies and with Buyer prior to the Closing Date.
(d) Prior to the Closing Date, the Companies and Buyer shall use
their best efforts to cooperate in making any required communications with
employees of the Companies and their Subsidiaries concerning the purchases
described herein, and concerning the benefit plans and arrangements in which
such employees will participate prior to and after the Closing Date.
9.2 INCENTIVE COMPENSATION POOLS. (a) During the period commencing
on the Closing Date and ending on the fifth anniversary thereof Newco shall
establish and maintain two incentive compensation pools (the "Cursitor Pool" and
the "Alliance Pool" as each term is defined below) for the benefit of the
employees of Newco and its Subsidiaries each of which, except as otherwise
provided herein, shall be calculated in the same manner, used to fund the
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same benefit and compensation plans and have the same rules for eligibility as
the incentive compensation pool of the Buyer.
(b) Messrs. Eaton, Morris and Gave and the Management Compensation
Committee of the Buyer shall calculate and agree upon an incentive compensation
pool attributable to the former business of the Companies and their Subsidiaries
("CURSITOR POOL"). Messrs. Eaton, Morris and Gave shall, in their discretion,
allocate the Cursitor Pool among eligible employees of Newco and its
Subsidiaries providing services in respect of the former business of the
Companies and their Subsidiaries and Principals whose employment with Newco has
terminated during the stated term of their respective Employment Agreements.
For purposes of calculating the Cursitor Pool the administrative and technology
expenses of Buyer allocable to the former business of the Companies and their
Subsidiaries will be phased in and allocated to the Cursitor Pool over four
years with 25% of the amount allocated during the first 12-month period
following the Closing, 50% of the amount allocated during the second 12-month
period following the Closing, 75% of the amount allocated during the third 12-
month period following the Closing and 100% of the amount allocated during the
fourth twelve-month period following the Closing.
(c) Messrs. Eaton and Morris in consultation with and subject to the
approval of the Management Compensation Committee of the Buyer shall calculate
an incentive compensation pool attributable to the International Operations
("ALLIANCE POOL") and allocate the Alliance Pool among eligible employees of
Newco and its Subsidiaries providing services in respect of the International
Operations.
9.3 PARTICIPATION IN OPTION PLAN. After the Closing Date, key
employees of Newco and its Subsidiaries shall be considered for option grants on
the same basis as other key employees of the Buyer and its Subsidiaries, as
determined by the appropriate committee of the Board of Directors of the general
partner of the Buyer (the "COMMITTEE") based upon the recommendations of the
Management Compensation Committee of the Buyer. If the Committee grants options
to employees of Newco and its Subsidiaries prior to June 30, 1996, then such
options may be granted and allocated solely by the Committee. Commencing with
options granted at the 1996 fiscal year end, the Committee, (i) based upon the
recommendations of the Management Compensation Committee, shall determine the
number of options to be granted to Messrs. Hugh M. Eaton III and Richard I.
Morris, Jr., and the total pool of options to be granted to key employees of
Newco and its subsidiaries, and (ii) based upon the recommendations of Messrs.
Eaton and Morris in consultation with the Management Compensation Committee,
shall determine the allocation of the remaining options among the key employees
of Newco and its Subsidiaries.
9.4 NONSOLICITATION. (a) If a Principal voluntarily terminates his
employment (other than for Good Reason as defined in the Employment Agreement
with respect to such Principal) with Newco or Limited, as the case may be, prior
to the expiration of the Employment Agreement of such Principal, such Principal
shall not, on or before the fifth anniversary of the Closing Date, without the
consent of Buyer, directly or indirectly, in any capacity on behalf of himself
or any other Person with or without compensation, knowingly
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solicit, represent, or accept business from any Person who was a client or
account of Newco or its subsidiaries as of the date of such termination, or any
client or account which Newco or its subsidiaries had identified for active
solicitation as of such date. With respect to Charles J.H. Gave and Richard I.
Morris, Jr., the foregoing sentence shall be applied by adding the phrase "date
which is one year after the" immediately prior to the phrase "fifth anniversary
of the Closing Date."
(b) Through the fifth anniversary of the Closing Date, no
Principal shall "solicit employees," as defined below. For purposes of this
Section 9.4(b), to "solicit employees" shall mean, without the consent of the
members of Newco (as determined in good faith by majority vote), directly or
indirectly to hire any person who was employed by Newco, any predecessor or
successor to Newco's business or any of their affiliates or subsidiaries within
the six-month period preceding such hiring, except for any employee whose annual
rate of compensation is not in excess of $40,000. With respect to Charles J.H.
Gave and Richard I. Morris, Jr., the foregoing sentence shall be applied by
substituting the phrase "sixth anniversary of the Closing Date" for the phrase
"fifth anniversary of the Closing Date."
(c) Each Principal acknowledges that the provisions of this
Section 9.4 are reasonable and necessary for the protection of Newco and Buyer
and that Newco and Buyer will be irrevocably damaged if such covenants are not
specifically enforced. Accordingly, each Principal agrees that, in addition to
any other relief or remedies available to Newco and Buyer, Newco and Buyer shall
be entitled to seek and obtain an appropriate injunction or other equitable
remedy from a court with proper jurisdiction for the purpose of restraining the
Principal from any actual or threatened breach of such covenants, and no bond or
security will be required in connection therewith. If any provision of this
Section 9.4 is deemed invalid or unenforceable, such provision shall be deemed
modified and limited to the extent necessary to make it valid and enforceable.
The parties further acknowledge that the rights and remedies set forth in this
Section 9.4 are in addition to, and undiminished by, any rights and remedies set
forth in any Employment Agreement between any Principal and Newco.
ARTICLE X
CONDITIONS TO CLOSING
10.1 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS. The obligations
of Buyer and Sellers to consummate the Closing are subject to the satisfaction
of the following conditions:
(a) Any applicable waiting period under the HSR Act or foreign
antitrust law or regulation relating to the transactions contemplated hereby
shall have expired or been terminated.
(b) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Closing.
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(c) Buyer and Sellers shall have received duly executed copies of the
LLC Agreement, the First Services Agreement and the Second Services Agreement.
(d) Newco and each of the Principals as well as John S. Ricciardi,
Charles J.H. Gave and Limited shall have executed an Employment Agreement, each
such Principal shall be willing and able to commence employment under the terms
of such Employment Agreement and, with respect to each Principal, the
Shareholders shall have approved the severance arrangements provided for in such
Employment Agreements.
(e) Buyer shall have received and shall have provided copies to the
Sellers of an Assignment Determination, a Limited Liability Determination and a
Tax Determination as such opinions are described in the Alliance Limited
Partnership Agreement.
(f) Newco shall have been duly registered with the Commission as an
Investment Adviser under the Investment Advisers Act.
(g) Buyer and Sellers shall have received an opinion of Morris,
Nichols, Arsht & Tunnell in a form satisfactory to the Buyer and Sellers.
10.2 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the Closing is subject to the satisfaction or waiver of the following
further conditions:
(a) (i) Sellers shall have performed in all material respects all of
their obligations hereunder required to be performed by them on or prior to the
Closing Date, (ii) the representations and warranties of Sellers and Additional
Parties contained in this Agreement and in any certificate or other writing
delivered by Sellers or Additional Parties pursuant hereto shall be true at and
as of the Closing Date, as if made at and as of such date, and (iii) Buyer shall
have received a certificate signed by each of the Principals to the foregoing
effect.
(b) No court, arbitrator or governmental body, agency or official
shall have issued any order, and there shall not be any statute, rule or
regulation, restraining or prohibiting the consummation of the Closing or the
effective operation of the Business after the Closing.
(c) Buyer shall have received opinions of counsel to Sellers, dated
the Closing Date, in such forms as are reasonably satisfactory to Buyer.
(d) Sellers and Buyer shall have made all notifications and filings
and received all consents, authorizations or approvals from the governmental
agencies referred to, in the case of Sellers, in Section 3.4 and in the case of
Buyer in Section 4.3(e), (f), (g), (h) and (i), in each case in form and
substance reasonably satisfactory to Buyer, and no such notification, filing,
consent, authorization or approval shall have been revoked.
(e)(i) As of the Closing Date, Final Annual Billings in respect of
all Clients (including, without duplication, Fund participants) shall
aggregate 90% of $31,647,047 (the "THRESHOLD AMOUNT"), provided that (w)
Final Annual Billings in respect of Clients
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who are sent letters marked D pursuant to Section 5.4(a) shall not be
counted toward reaching the Threshold Amount, (x) Final Annual Billings for
Clients or Fund participants who are sent letters marked A, B, or E
pursuant to Section 5.4(a) or in respect of any Clients party to a New
Contract shall not be counted toward reaching the Threshold Amount unless
consents for such Clients or Fund participants have been delivered in the
form of Affirmative Consents directly from such Clients or Fund
participants and not revoked, (y) Final Annual Billings shall not be
counted toward reaching the Threshold Amount to the extent that, in Buyer's
reasonable good faith judgment, any Conference Clients have indicated an
intention to withdraw assets from the applicable Fund or other investment
vehicle, and (z) Final Annual Billings of Clients who are sent letters
marked C pursuant to Schedule 5.4(a) shall be counted toward the Threshold
Amount regardless of whether such Clients have delivered an Affirmative
Consent or withdrawn assets. Sellers shall deliver at Closing a
certificate to Buyer which sets forth (i) all Clients which have delivered
Affirmative Consents and (ii) all Clients which have not executed
Affirmative Consents, and whether such Clients have stated to any of the
Companies, their respective Subsidiaries, the Sellers or the Additional
Parties, either orally or in writing, their intention of remaining as
Clients, or their intention of terminating their relationship with such
entities. Such certificate shall also certify that no Clients who have
executed Affirmative Consents have revoked such Consents or disclosed to
any of the Companies or their respective Subsidiaries an intention to do so
or to withdraw (other than in accordance with normal income distributions
consistent with past practice) any portion of their assets under management
by such entities;
(ii) Affirmative or Negative Consents shall have been received
from the General Partner of the TCW Global Limited Partnership, the Trustee
of the TCW Global Investment Fund I, and the Administrative General Partner
of the Cursitor-Eaton East Asian Equities Fund, L.P.; and
(iii) Copies of all consents required to be obtained pursuant to
this Section 10.2(e) shall be delivered to Buyer, in form and substance
reasonably satisfactory to Buyer.
(f) The New TCW Agreement shall be executed and any right of first
refusal in respect of such Agreement shall be waived in a form satisfactory to
the Buyer.
(g) Buyer shall have received all documents it may reasonably request
relating to the existence of Sellers, Additional Parties, the Companies and
their respective Subsidiaries and Affiliates and the authority of Sellers and
Additional Parties for the Transaction Documents, all in form and substance
reasonably satisfactory to Buyer.
(h) The Holdings L.P. Partnership Agreement shall have been amended
to the effect set forth in the term sheet attached as Exhibit J.
(i) The Eaton Partnership Agreement shall have been amended in a form
satisfactory to Buyer.
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(j) Buyer shall have received a certification signed by Holdings L.P.
to the effect that Holdings L.P. is not a "FOREIGN PERSON" as defined in Section
1445 of the Code.
(k) Nicholas D.P. Carn shall have entered into definitive employment
arrangements with Limited substantially to the effect of the letter set forth in
Exhibit 4.
(l) Any aircraft reflected on the Balance Sheet shall have been
disposed of.
10.3 CONDITIONS TO OBLIGATION OF SELLER. The obligation of Sellers
to consummate the Closing is subject to the satisfaction of the following
further conditions:
(a) (i) Buyer shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Closing Date, (ii) the representations and warranties of Buyer contained in this
Agreement and in any certificate or other writing delivered by Buyer pursuant
hereto shall be true at and as of the Closing Date, as if made at and as of such
date, and (iii) Sellers shall have received a certificate signed by an officer
of ACMC to the foregoing effect.
(b) Sellers shall have received opinions of counsel to Buyer, dated
the Closing Date, in such forms as are reasonably satisfactory to Sellers.
(c) Buyer and Sellers shall have received all consents,
authorizations or approvals from governmental agencies referred to, in the case
of the Buyer, in Section 4.3(e), (f), (g), (h) and (i) and in the case of
Sellers, in Sections 3.4 (iv) and (v)(b), in each case in form and substance
reasonably satisfactory to Sellers, and no such consent, authorization or
approval shall have been revoked.
(d) Sellers shall have received all documents it may reasonably
request relating to the existence of Buyer and the authority of Buyer for this
Agreement, all in form and substance reasonably satisfactory to Sellers.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.1 SURVIVAL. The covenants, agreements, representations and
warranties of the parties hereto contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection herewith
shall survive until June 30, 1997; PROVIDED that (a) the covenants and
agreements contained in Sections 7.4, 9.4 and 5.14 shall survive for the period
set forth therein, (b) the covenants, agreements, representations and warranties
contained in Sections 3.27 and Article VIII shall survive until expiration of
the statute of limitations applicable to the matters covered thereby (giving
effect to any waiver, mitigation or extension thereof), if later and (c) the
covenants, agreements, representations and warranties set forth in Article II,
Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.17, 3.21, 4.1, 4.2, 4.3, 4.4, 4.5,
4.6,
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4.7, 4.16, 5.7, 5.9, 5.13, 6.1 and 7.1, Articles XI, XII, XIII and XV shall
survive indefinitely. Notwithstanding the preceding sentence, any covenant,
agreement, representation or warranty in respect of which indemnity may be
sought under this Agreement shall survive the time at which it would otherwise
terminate pursuant to the preceding sentence, if notice of the inaccuracy or
breach thereof giving rise to such right of indemnity shall have been given to
the party against whom such indemnity may be sought prior to such time.
11.2 INDEMNIFICATION. (a) Each Selling Group (except the FAWI/EPL
Group) in the respective percentages set forth in Schedule 11.2 next to the name
of such respective Selling Group, hereby indemnifies (such indemnity to be joint
and several as to each member of such Selling Group) Buyer and Newco, and,
effective at the Closing, without duplication, Limited, Eaton and their
respective Subsidiaries against, and agrees to hold them harmless from, any and
all damage, loss, liability and expense (including without limitation reasonable
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) ("DAMAGES") incurred or suffered
by Buyer, Newco, Limited, Eaton or any of their respective Subsidiaries arising
out of any misrepresentation or breach of warranty, covenant or agreement made
or to be performed by such Seller or Additional Party pursuant to this
Agreement, except that (i) with respect to any misrepresentation or breach of
warranty under Section 3.1(c), 3.3., 3.4, 3.5(i) or 3.7, each member of each
Selling Group (including the FAWI/EPL Group except as to Section 3.3), jointly
and severally with each other member of its respective Selling Group, shall be
fully liable for any Damages arising out of any such misrepresentation or breach
of warranty by any member of its Selling Group; (ii) with respect to any
misrepresentation or breach of warranty under Section 3.6, each member of each
Selling Group (excluding the FAWI/EPL Group), jointly and severally with every
other member of every other Selling Group (excluding the FAWI/EPL Group), shall
be fully liable for any Damages arising out of any such misrepresentation or
breach; (iii) with respect to any covenant or agreement of any Seller or
Additional Party (excluding EPL and FAWI) pursuant to this Agreement, each such
Seller or Additional Party (excluding EPL and FAWI), jointly and severally with
every other Seller or Additional Party and each member of its respective Selling
Group (other than any member of the FAWI/EPL Group) who is bound by such
covenant or agreement, shall be fully liable for any Damages arising out of any
breach of such covenant or agreement and (iv) with respect to any covenant or
agreement of any member of the FAWI/EPL Group pursuant to this Agreement, each
such member of the FAWI/EPL Group, jointly and severally, with every other
Seller or Additional Party (and each member of its respective Selling Group) who
is bound by such covenant or agreement, shall be fully liable for any Damages
arising out of any breach of such covenant or agreement.
(b) Buyer hereby indemnifies each Selling Group against and agrees to
hold them harmless from any and all Damages incurred or suffered by such Selling
Group arising out of any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by Buyer pursuant to this Agreement.
(c) Any amounts owed by Buyer, Newco or any of their Affiliates to
any member of any particular Selling Group or Holdings LP (or any assignee or
transferee of any of the following payment obligations) pursuant to its
obligations in respect of (i) principal or
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interest on the Notes, (ii) distributions in respect of the Units issued
hereunder or under the LLC Agreement, (iii) the Buy Out Price (as defined in the
LLC Agreement), distributions of Distributable Cash (as defined in the LLC
Agreement) or other amounts payable pursuant to the LLC Agreement, or (iv) other
payment obligations pursuant to or arising out of the Transaction Documents, may
be reduced by any amounts owed to Buyer, Newco or any of their Affiliates by any
member of such Selling Group (other than any amount owed by members of the
FAWI/EPL Group) pursuant to Section 8.8 or this Section 11.2; PROVIDED that (x)
any such reduction of the amount owed by Newco in respect of principal on the
Notes shall be applied to all outstanding Notes pro rata in accordance with the
outstanding principal amount thereof and (y) any such reduction of the amount
owed to Holdings LP shall not exceed the amount equal to the product of (A) the
aggregate percentage ownership interest of such Selling Group in Holdings L.P.
at such time and (B) such amount payable to Holdings L.P. Buyer, Newco or such
Affiliate shall be entitled to pay the amount of any such reduction to whichever
of Buyer, Newco or such Affiliate is entitled to receive the applicable
indemnity payment and such payment shall discharge the payment obligation to the
applicable member of the Selling Group (or its assignee or transferee) to the
same extent as if it had been paid to such member (or assignee or transferee).
(d) Notwithstanding any other provision of this Agreement, Buyer,
Newco and their Affiliates shall not be entitled to assert any claim for
indemnification under Section 8.8 or this Section 11.2 unless the aggregate
amount of Damages in respect of any one or more claims against any one or more
members of any Selling Group by any one or more of Buyer, Newco or their
Affiliates exceeds $1,000,000; PROVIDED that, if Buyer, Newco and their
Affiliates shall be entitled to assert such a claim, such entity shall be
entitled to the full amount of Damages with respect to such claim.
Notwithstanding any other provision of this Agreement, the members of each
Selling Group shall not be entitled to assert any claim for indemnification
under Section 8.8 or this Section 11.2 unless the aggregate amount of Damages in
respect of any one or more claims against Buyer by any one or more members of
the Selling Groups exceeds $1,000,000; PROVIDED that, if such Selling Group
members shall be entitled to assert such a claim, such entity shall be entitled
to the full amount of Damages with respect to such claim.
(e) Notwithstanding any other provision in this Agreement, if any
party has disclosed in this Agreement or on the related Schedules hereto, an
exception to the accuracy of a representation or warranty made herein by such
party, then the party entitled to the benefit of such representation or warranty
shall be deemed to have waived all rights to indemnification under Section
8.8(a)(ii) or this Section 11.2, as applicable, to the extent of such exception.
(f) Notwithstanding any other provision of this Agreement, with
respect to any indemnification obligation under Section 8.8, Section 8.10 or
this Section 11.2, (i) each Selling Group shall not be liable for any amount
greater than the amount that is equal to the total amount or value of all
consideration paid or payable pursuant to the Transaction Documents to all of
the members of such Selling Group and (ii) no Trust or Seller Corporation shall
be liable for an amount greater than the total amount or value of all
consideration paid or payable to such Trust or Seller Corporation pursuant to
the Transaction Documents (or any proceeds thereof paid or distributed, directly
or indirectly, to such Trust or Seller Corporation) and any such Trust or
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Seller Corporation shall be deemed to have fulfilled all of its obligations if
it shall have surrendered in connection therewith the Units and cash received by
it hereunder, and the proceeds of any such Units. Notwithstanding any other
provision of this Agreement, with respect to any indemnification obligation
under Section 8.8, Section 8.10 or this Section 11.2, Buyer shall not be liable
for any amount greater than the amount that is equal to two-thirds of the total
amount or value of all consideration paid or payable pursuant to the Transaction
Documents to all of the members of the Selling Groups. Notwithstanding any
other provision of this Agreement, except with respect to any claim of fraud or
wilful or reckless breach, to the extent permitted by law, the rights and
obligations of the Sellers and the Additional Parties pursuant to Section 8.8
and this Section 11.2 will be the exclusive remedy following the Closing with
respect to any breach of the representations and warranties of the Sellers and
Additional Parties in this Agreement.
11.3 PROCEDURES. Without prejudicing the rights of Buyer under any
applicable statute of limitations, Buyer shall not assert any claim, exercise
any right of offset or commence any suit, action or proceeding in respect of
Buyer's right to indemnity under this Section 11.2 or Sections 2.9, 2.10 or 8.8
without giving notice to all of the members of the applicable Selling Group of
such claim, suit, action or proceeding five business days prior to the assertion
or commencement thereof. The party seeking indemnification under Section 8.8 or
11.2 (the "INDEMNIFIED PARTY") agrees to give prompt written notice to the party
against whom indemnity is sought (the "INDEMNIFYING PARTY") of the assertion of
any claim, or the commencement of any suit, action or proceeding in respect of
which indemnity may be sought under such Section. The Indemnifying Party may,
and at the request of the Indemnified Party shall, assume the defense of any
claim brought or asserted against the Indemnified Party with respect to which
indemnity may be sought against the Indemnifying Party, provided that the
Indemnifying Party shall defend such claim in good faith and provided further
that the Indemnifying Party shall not settle any such claim without the prior
written consent of the Indemnified Party unless such settlement includes an
unconditional release of each Indemnified Party from all liability arising out
of such claim. If the Indemnifying Party assumes such defense, such
Indemnifying Party may not assert that the related Damages or Loss, or any
portion thereof, with respect to which the Indemnified Party seeks
indemnification is not within the ambit of Article VIII or Article XI, as the
case may be. The Indemnifying Party shall not be liable under Section 8.8 or
Section 11.2 for any settlement effected without its consent of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder.
Any payment pursuant to this Section 11.2 or Section 8.8 shall be made not later
than 30 days after receipt by the Indemnifying Party of written notice from the
Indemnified Party stating the nature and amount of the claim that has arisen
pursuant to this Section 11.2 or Section 8.8, as applicable.
ARTICLE XII
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RESTRICTIONS ON TRANSFER AND DISTRIBUTIONS
12.1 RESTRICTIONS ON TRANSFER. The Units delivered pursuant hereto
shall not be transferable except upon the conditions specified in this Article,
which conditions are intended to ensure compliance with the provisions of the
Securities Act in respect of the transfer of any such Units. Each Unitholder
will cause any proposed transferee of such Units held by such Unitholder, other
than a transferee who purchases pursuant to Rule 144 under the Securities Act,
as amended from time to time, to agree to take and hold such Units subject to
the provisions and upon the conditions specified in this Article.
12.2 RESTRICTIVE LEGEND. Each certificate for Units delivered
pursuant hereto issued to a Unitholder or to a subsequent transferee shall
(unless otherwise permitted by the provisions of Section 12.3) include a legend
in substantially the following form:
THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT AND THE RULES AND REGULATIONS THEREUNDER. BY ITS
ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE AGREES TO
COMPLY IN ALL RESPECTS WITH ARTICLE XII OF THE AGREEMENT
DATED AS OF DECEMBER 28, 1995 IN RELATION TO WHICH SUCH
UNITS WERE ISSUED. COPIES OF SUCH ARTICLE XII MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THIS COMPANY
AT ITS PRINCIPAL EXECUTIVE OFFICES.
FOR NEW HAMPSHIRE RESIDENTS ONLY. NEITHER THE FACT THAT A
REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS
BEEN FILED UNDER THE NEW HAMPSHIRE UNIFORM SECURITIES ACT
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY
IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE
STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE ATTORNEY
GENERAL OR THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY
DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT
MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR
TRANSACTION MEANS THAT THE ATTORNEY GENERAL
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OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR
QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,
SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE
MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF SECTION
421-B.20.
12.3 NOTICE OF PROPOSED TRANSFERS; RULE 144. (a) Each holder of
Units issued pursuant to this Agreement agrees to comply in all respects with
the provisions of this Section. Prior to any proposed sale, transfer or other
disposition of Units delivered pursuant hereto (except for transfers between
such Unitholders and other than under the circumstances described in paragraph
(b) below with respect to termination of restrictions on transfer pursuant to
Rule 144(k) under the Securities Act, as amended from time to time ("RULE
144(K)"), the affected Unitholders shall give written notice to the Buyer of
such Unitholders' intention to effect such sale, transfer or other disposition.
Each such notice shall describe the manner and circumstances of the proposed
sale, transfer or other disposition in reasonable detail, and shall be
accompanied by either (i) an opinion of counsel, and in form and substance,
reasonably acceptable to the Buyer, addressed to the Buyer, to the effect that
the proposed sale, transfer or other disposition of such Units may be effected
without registration under the Securities Act, or (ii) a "NO ACTION" letter, in
form and substance reasonably acceptable to the Buyer, from the Commission to
the effect that such sale, transfer or other disposition of such Units without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such Units
shall be entitled to transfer such Units in accordance with the terms of the
notice delivered by the Unitholders of the Buyer; PROVIDED, HOWEVER, that no
such notice or opinion of counsel shall be required for a transfer by will or
intestate succession from any Unitholder to his or her spouse or family members,
if the transferee agrees in writing to be subject to the terms hereof to the
same extent if such transferee were an original Unitholder hereunder. The
provisions of this Section 12.3(a) shall not be applicable to a bona fide pledge
of Units to any bank, registered broker/dealer or other financial institution.
(b) Notwithstanding the foregoing, no opinion of counsel shall be
required for (i) any sale, transfer or other disposition of such Units or the
removal of the above legend from the certificates therefor or (ii) the removal
of the above legend based upon the termination of restrictions on sales of such
stock pursuant to Rule 144(k), if the Unitholder holding such Units shall
deliver to the Buyer in its stead a certificate stating that such shares are (x)
eligible for sale pursuant to Rule 144, as amended from time to time and that
such sale will be made in accordance with such Rule, or (y) eligible for
termination of restrictions on sale pursuant to Rule 144(k), as amended from
time to time, under the Securities Act and representing and warranting to the
Buyer that such shares are so eligible in accordance with such Rule, in each
case together with a summary of the bases for such statements, unless within
fifteen days after receipt of such a certificate the Buyer shall reasonably
determine in good faith that an opinion of counsel is required to ensure
compliance with the Securities Act and shall so notify such Unitholder.
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12.4 DISTRIBUTIONS WITH RESPECT TO UNITS. The holders of the Units
issued pursuant to this Agreement on the record date for the regular quarterly
distribution by Buyer of Available Cash Flow (as defined in the Alliance Limited
Partnership Agreement) relating to the quarter during which such Units are
issued and delivered to the relevant Sellers, shall be entitled to receive a pro
rata portion of such distribution with respect to each such Unit equal to the
amount of Available Cash Flow distributed per Unit multiplied by a fraction, the
numerator of which is the number of days remaining in the quarter on and
including the Closing Date, and the denominator of which is the total number of
days in such quarter; PROVIDED that the relevant Sellers shall not have any
right to receive any distribution of Available Cash Flow with respect to any of
such Units in respect of any calendar quarter prior to which such Units were
issued and delivered to the relevant Sellers.
12.5 OTHER RESTRICTIONS ON TRANSFERS. Without the prior written
consent of Buyer, none of the Sellers or Additional Parties shall transfer,
directly or indirectly, any of the Units issued to such Seller or Additional
Party unless (a) such transfer is made pursuant to an effective registration
statement (b) such transfer is made to a member of the Immediate Family of a
Principal (or a trust, family limited partnership, close corporation or similar
entity the beneficiaries of which are exclusively Principals or members of their
Immediate Families) for tax or estate planning purposes or (c) (i) such transfer
is made to an active, full-time employee of Newco or its Subsidiaries and (ii)
such transfer would not result in attribution of income to the recipient or
compensation expense to Newco; PROVIDED that, such Immediate Family member or
employee of Newco or its Subsidiaries, as the case may be, agrees in writing to
be subject to the same restrictions on transfer as set forth herein and to
Buyer's right to set-off amounts owed to Buyer by any of the Sellers or
Additional Parties pursuant to Sections 2.9, 2.10, 8.8 or 11.2 of this
Agreement.
ARTICLE XIII
GUARANTY
13.1 GUARANTIES. (a) Each Additional Party (other than FAWI)
severally and jointly with each other Additional Party (whether or not in its
Selling Group (other than the FAWI/EPL Group)) hereby irrevocably and
unconditionally guarantees to Buyer, Newco and their Affiliates the prompt and
full discharge by each Seller of all of such Seller's covenants, agreements,
obligations and liabilities under Article II of this Agreement when and as the
same shall become due and payable with respect to such Seller in accordance with
the terms hereof (with respect to each Seller, the "SELLER OBLIGATIONS"). Each
Additional Party acknowledges and agrees that, with respect to all Seller
Obligations to pay money, such guaranty shall be a guaranty of payment and
performance and not of collection, and if a Seller shall default in the due and
punctual performance of any Seller Obligation, including the full and timely
payment of any amount due and payable pursuant to any Seller Obligation, such
Additional Party will forthwith perform or cause to be performed such Seller
Obligation and will forthwith make full payment of any amount due with respect
thereto at its sole cost and expense.
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13.2 GUARANTY UNCONDITIONAL. The liabilities and obligations of any
Additional Party pursuant to this Article XIII are unconditional and absolute
and, without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by any change in the corporate existence,
structure or ownership of any of the Sellers or the Additional Parties or any
insolvency, bankruptcy, reorganization or other similar proceeding affecting any
of them or their respective assets or any other act, omission to act, delay of
any kind by any party hereto or any other Person, or any other circumstance
whatsoever that might, but for the provisions of this Section, constitute a
legal or equitable discharge of the obligations of the Additional Parties
hereunder.
13.3 WAIVERS OF THE GUARANTOR. Each Additional Party hereby waives
any right, whether legal or equitable, statutory or non-statutory, to require
Buyer to proceed against or take any action against or pursue any remedy with
respect to any Seller, or to any other Person or make presentment or demand for
performance or give any notice of nonperformance before Buyer may enforce its
rights under this Article XIII against such Additional Party.
13.4 DISCHARGE ONLY UPON PERFORMANCE IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES. Each Additional Party's obligations under this Article
XIII shall remain in full force and effect until the Seller Obligations shall
have been performed in full. If at any time any performance by any Person of
any Seller Obligation in respect of any Seller is rescinded or must be otherwise
restored or returned, whether upon the insolvency, bankruptcy or reorganization
of Buyer or otherwise, the Additional Party's obligations hereunder with respect
to such Seller Obligation shall be reinstated at such time as though such Seller
Obligation had become due and had not been performed.
13.5 SUBROGATION. Upon performance by any Additional Party of any
Seller Obligation in accordance with Article XIII, such Additional Party shall
be subrogated to the rights of Buyer against such Seller with respect to such
Seller Obligation; PROVIDED that none of the Additional Parties shall enforce
any Seller Obligation by way of subrogation against any Seller, while any Seller
Obligation is due and unperformed by such Seller.
ARTICLE XIV
TERMINATION
14.1 GROUNDS FOR TERMINATION. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual written agreement of Sellers and Buyer;
(b) by all of the Sellers or Buyer if the Closing shall not
have been consummated on or before June 30, 1996;
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(c) by any of the Sellers or Buyer if there shall be any
law or regulation that makes consummation of the transactions
contemplated hereby illegal or otherwise prohibited or if consummation
of the transactions contemplated hereby would violate any
nonappealable final order, decree or judgment of any court or
governmental body having competent jurisdiction;
The party desiring to terminate this Agreement shall give notice of
such termination to each other party.
14.2 EFFECT OF TERMINATION. If this Agreement is terminated as
permitted by Section 14.1, termination shall be without liability of either
party (or any stockholder, director, officer, employee, agent, consultant or
representative of such party) to the other party to this Agreement; PROVIDED
that if such termination shall result from the willful failure of a party to
fulfill a condition to the performance of the obligations of another party,
failure to perform a covenant of this Agreement or breach by a party hereto of
any representation or warranty or agreement contained herein, such party (and in
the case of a Seller or Additional Party, jointly and severally with all members
of its Selling Group) shall be fully liable for any and all Damages incurred or
suffered by any other party as a result of such failure or breach. The
provisions of Sections 5.7, 6.1, 8.6 and 15.3 shall survive any termination
hereof pursuant to Section 14.1.
ARTICLE XV
MISCELLANEOUS
15.1 NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and shall
be given,
if to Buyer, to:
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, NY 10105
Attention: David R. Brewer, Jr.
Fax: (212) 969-1334
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Phillip Mills, Esq.
Fax: (212) 450-4800
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if to Holdings L.P. to:
Cursitor Holdings, L.P.
38 Newbury Street
Boston, Massachusetts 02116-3210
Attention: Richard I. Morris, Jr.
with a copy to:
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109-2881
Attention: Richard E. Floor, P.C.
Fax: (617) 523-1231
if to Shareholders, to:
their respective addresses set forth on Schedule 1.1
with a copy to:
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109-2881
Attention: Richard E. Floor, P.C.
Fax: (617) 523-1231
if to Additional Parties, to:
their respective addresses set forth on Schedule 1.2
with a copy to:
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109-2881
Attention: Richard E. Floor, P.C.
Fax: (617) 523-1231
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
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shall be deemed not to have been received until the next succeeding business day
in the place of receipt.
15.2 AMENDMENTS AND WAIVERS. (a) Any provision of this Agreement
may be amended or waived prior to the Closing Date 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.
(b) 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.
15.3 EXPENSES. Except as otherwise provided in this Section, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense. To the extent the expenses of Sellers
are not paid prior to Closing, such amounts shall be accrued for in the Closing
Date Balance Sheet.
15.4 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; PROVIDED that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto except that Buyer may transfer or
assign, in whole or from time to time in part, to one or more of its Affiliates,
the right to purchase all or a portion of the Ordinary Shares or the Business of
Holdings L.P., but no such transfer or assignment will relieve Buyer of its
obligations hereunder
15.5 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.
15.6 JURISDICTION. Except as otherwise expressly provided in this
Agreement, 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 shall be brought in the United States
District Court for the Southern District of New York or, if there is no basis
for such court to exercise jurisdiction, any New York State court sitting in New
York City, and each of the parties hereby consents to the exclusive 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 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 and may be served on any of the
Sellers or Additional Parties in accordance with the terms and provisions of
Section 15.1.
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15.7 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.
15.8 COUNTERPARTS; THIRD PARTY BENEFICIARIES. 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. No provision of this Agreement is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder except the
provisions of this Agreement specifically intended for the benefit of Newco,
Limited and Eaton.
15.9 ENTIRE AGREEMENT. The Transaction Documents constitute the
entire agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement, including, without limitation, the services agreements, including,
without limitation, those listed on Schedule 3.12. No representation,
inducement, promise, understanding, condition or warranty not set forth in the
Transaction Documents has been made or relied upon by either party hereto.
15.10 RESTRICTIVE TRADE PRACTICES. Notwithstanding any other
provision of this Agreement, no provision of this Agreement which is of such a
nature as to make such Agreement liable to registration under the Restrictive
Trade Practices Act 1976 shall take effect until immediately after particulars
thereof have been duly furnished to the Director General of Fair Trading
pursuant to the said Act. For the purposes of this Clause the term "Agreement"
shall include the Transaction Agreement, the Limited Liability Company
Agreement, the First Services Agreement, the Second Services Agreement, the
Registration Rights Agreement and the Employment Agreements.
15.11 CAPACITY OF TRUSTEES. The trustees executing this Agreement
and any other Transaction Document on behalf of any Trust that is or will become
a party hereto are acting solely in their respective capacities as trustees and
not in their individual or corporate capacities. Accordingly, such trustees
shall have no individual or corporate liability to Buyer hereunder or under any
other Transaction Document and the sole recourse of Buyer shall be to the assets
of the applicable Trust or Trusts, absent fraud in the part of the trustees.
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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, as General Partner
By:/S/ DAVE H. WILLIAMS
-----------------------------------------------
Title: Chairman of the Board
CURSITOR HOLDINGS, L.P.
By HMESLP, Inc.
as General Partner
By:/S/ HUGH M. EATON III
-----------------------------------------------
Title: Chief Executive Officer
DURHAM SOFTWARE GROUP INC.
By:/S/ WILBUR P. EDWARDS, JR.
-----------------------------------------------
Title: Clerk
EUROVEST PTE LTD
By:/S/ NG KIN SZE
-----------------------------------------------
Title: Director
FIRST ASSOCIATED WESTERN INVESTORS,
INC.
By:/S/ NG KIN SZE
-----------------------------------------------
Title: Director
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WHITEDOORS LIMITED
By:/S/ R.J.S. PROSSER /S/ P.E.F. NEWBALD
-----------------------------------------------
Title: Director Director
YAHTZEE LIMITED
By:/S/ R.J.S. PROSSER /S/ P.E.F. NEWBALD
-----------------------------------------------
Title: Director Director
/S/ ERIC AUBOYNEAU
--------------------------------------------------
ERIC AUBOYNEAU
/S/ HUGH M. EATON III
--------------------------------------------------
HUGH M. EATON III
/S/ CHARLES J.H. GAVE
--------------------------------------------------
CHARLES J.H. GAVE
/S/ IAN LLOYD
--------------------------------------------------
IAN LLOYD
/S/ RICHARD I. MORRIS, JR.
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RICHARD I. MORRIS, JR.
/S/ VIPLAVA PATEL
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VIPLAVA PATEL
/S/ JOHN S. RICCIARDI
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JOHN S. RICCIARDI
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/S/ J. CHRISTIAN SORENSEN
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J. CHRISTIAN SORENSEN
HMESLP Inc.
By:/S/ HUGH M. EATON III
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Title: Chief Executive Officer
RICHARD I. MORRIS, JR. L.P. TRUST
By:/S/ PRESTON R. BLACK, M.D.
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Trustee
By:/S/ WILBUR P. EDWARDS, JR.
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Trustee
RICHARD I. MORRIS, JR. CHARITABLE
UNITRUST
By:/S/ PRESTON R. BLACK, M.D.
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Trustee
By:/S/ WILBUR P. EDWARDS, JR.
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Trustee
RE TRUST
By:/S/ P.E.F. NEWBALD
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Trustee
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REGISTRATION RIGHTS AGREEMENT
Agreement dated as of February 29, 1996 between Alliance Capital
Management L.P. ("ACM"), on the one hand, and all of the parties listed on
Schedule I hereto, on the other hand (the "Cursitor Entities").
In consideration of the mutual promises and agreements set forth
below, the Company and the Cursitor Entities agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Terms defined in the Transaction
Agreement (the "Agreement") dated as of December , 1995 among Alliance Capital
Management L.P. ("ACM"), all of the shareholders of record of Cursitor Holdings
Limited, Cursitor Holdings, L.P. and the Persons listed on Schedule 1.2 thereto
used herein are used as therein defined. In addition, the following terms, as
used herein, have the following meanings:
"Cursitor Transferee" has the meaning set forth in Section 5.2.
"Cursitor LLC Units" means the Units issued pursuant to Article IX of
the LLC Agreement.
"Cursitor Transaction Units" means the Units issued pursuant to
Section 2.6(a) and 2.6(b) of the Transaction Agreement.
"Cursitor Units" means the Cursitor Transaction Units and the Cursitor
LLC Units.
"Cursitor Unit Holder" means the person or entity to whom or to which
the Cursitor Units are initially issued pursuant to the terms of the Transaction
Agreement or the LLC Agreement, as the case may be.
"Demand Registration" has the meaning set forth in Section 2.1.
"Piggyback Registration" has the meaning set forth in Section 2.2.
"Registrable Securities" means the Cursitor Units, any Units which may
be issued or distributed in respect
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thereof by way of Unit subdivision or combination or otherwise,
recapitalization, merger, consolidation or reclassification or other
reorganization or otherwise. A Registrable Security shall cease to be a
Registrable Security when: (i) a registration statement with respect to the
sale of such security shall have become effective under the Securities Act and
such security shall have been disposed of in accordance with such registration
statement or any failure so to dispose of such security shall be attributable
only to (x) reasons solely within the control of a Cursitor Unit Holder or (y) a
failure of an Underwriter or a Cursitor Unit Holder under normal market
conditions to locate a purchaser for such security or (ii) such security shall
have been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act.
"Registration Rights" means the rights set forth in this Registration
Rights Agreement.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. DEMAND REGISTRATION. (a) After January 1, 1997, upon
proper written request of any Cursitor Unit Holder or Cursitor Transferee
(provided that any such request may not be made so as to require the filing of a
registration statement from and including November 1 through December 31 of any
given year and that any such request by a Cursitor Transferee may only be made
with the prior written approval of Holdings L.P. at any time that any of the
Cursitor Unit Holders owns any Registrable Securities), requesting that ACM
effect the registration under the Securities Act of all or part of the
Registrable Securities owned by the Cursitor Unit Holders specified in such
request and specifying the method of disposition thereof, ACM will promptly (but
in no event more than five New York Business Days after the receipt of such
request) give written notice of such requested registration to all Cursitor Unit
Holders and all Cursitor Transferees, if any, other than a requesting Cursitor
Unit Holder or Cursitor Transferee, and ACM shall file with the Commission as
promptly as practicable after sending such notice, and use its best efforts to
cause to become effective, a registration statement under the Securities Act
registering the offering and sale of:
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(i) Registrable Securities which ACM has been so requested to
register by such Cursitor Unit Holders or Cursitor Transferees, as the case
may be; and
(ii) all other Registerable Securities which ACM has been requested to
register by any other Cursitor Unit Holder or Cursitor Transferee, as the
case may be, by written request given to ACM within 10 days after the
giving of such written notice by ACM (which request shall specify the
intended method of disposition of such Registerable Securities),
all to the extent necessary to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the Registrable Securities so to be
registered (a "Demand Registration") PROVIDED that ACM shall not be obligated in
respect of any Cursitor Units (i) to file a registration statement in respect of
more than one Demand Registration in the four-year period following the first
anniversary of the Closing Date and thereafter, ACM shall not be obligated to
file any registration statements in respect of any Demand Registrations, unless
ACM shall issue any Cursitor LLC Units, in which case ACM shall not be obligated
to file a registration statement in respect of more than one additional Demand
Registration in the period following such issuance, (ii) to file a registration
statement in respect of a Demand Registration with respect to Registrable
Securities representing greater than 50% of all outstanding Cursitor Units in
the four-year period following the first anniversary of the Closing Date,
(iii) to file a registration statement in respect of a Demand Registration with
respect to Registrable Securities which, as of the date of receipt of the
written request to register, have an aggregate market value of less than
$15,000,000, (iv) to file a registration statement in respect of a Demand
Registration with respect to any Cursitor Units that are eligible for resale
pursuant to Rule 144, (v) to file a registration statement in respect of more
than one Demand Registration in any 6 month period, (vi) to maintain the
effectiveness of any registration statement in respect of a Demand Registration
for a period of more than 45 days or such shorter period as necessary to effect
the sale of the Registrable Securities pursuant to such registration statement
or to maintain the effectiveness of such registration statement during the
months of November or December of any given year, (vii) during November or
December of any given year, to file with the Securities and Exchange Commission,
maintain the effectiveness of, or offer Registrable Securities for sale pursuant
to, any registration statement in respect of a Demand Registration. For
purposes of the preceding sentence, references to "market value" of securities
that are listed for trading on the New York Stock Exchange shall be the market
value based
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on the closing price on the New York Stock Exchange on the applicable date.
(b) If the Cursitor Unit Holder or Cursitor Transferee requesting a
Demand Registration so elects (provided that such election, including the choice
of Underwriters from the list referred to below, may only be made with the prior
written approval of Holdings L.P. at any time that any Cursitor Unit Holder owns
any Registrable Securities), the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of an underwritten
offering. The requesting Cursitor Unit Holder shall select the lead and other
managing Underwriters in connection with such offering from a list of at least
seven securities dealers of national reputation prepared by ACM. If a requested
Demand Registration involves an underwritten offering and any lead Underwriter
advises ACM that, in its opinion, the number of securities requested to be
included in such registration (including securities of ACM which are not
Registrable Securities) exceeds the number which can be sold in such offering
without a significant adverse effect on the price, timing, or distribution of
the Registrable Securities offered, ACM will (subject to the last sentence of
this paragraph) include in such registration only the Registrable Securities
requested to be included in such registration. In the event that the number of
Registrable Securities requested to be included in such registration exceeds the
number which, in the opinion of any lead Underwriter, can be sold without a
significant adverse effect on the price, timing, or distribution of the
Registrable Securities offered, then ACM will include in such registration the
number of Registrable Securities which, in the opinion of such lead Underwriter,
can be sold, such number to be allocated by Holdings L.P. or, if no Cursitor
Unit Holders own any Registrable Securities, by the requesting Cursitor
Transferee, pro rata among all Cursitor Unit Holders and Cursitor Transferees
desiring to sell Registrable Securities pursuant to the Demand Registration on
the basis of the relative number of shares of Registrable Securities then held
by each such Cursitor Unit Holder or Cursitor Transferee (PROVIDED that any
allocation to any such Cursitor Unit Holder or Cursitor Transferee that exceeds
the Registrable Securities such Cursitor Unit Holder or Cursitor Transferee owns
any Registrable Securities desires to include in the registration statement
shall be reallocated among the remaining Cursitor Unit Holders and Cursitor
Transferees in like manner). In the event that the number of Registrable
Securities requested to be included in such registration is less than the number
which, in the opinion of any lead Underwriter, can be sold without a significant
adverse effect on the price, timing, or distribution of the Registrable
Securities offered, ACM may include in such registration the securities ACM or
any other
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holder of ACM's securities proposes to sell up to the number of securities that,
in the opinion of such lead Underwriter, can be sold.
(c) ACM shall be entitled to postpone for a reasonable period of time
(not to exceed ninety (90) days (a "Block Period"), which may not thereafter be
extended) the filing of any registration statement otherwise required to be
prepared and filed by it pursuant to Section 2.1(a) hereof if, at the time it
receives a request for a Demand Registration, ACM determines in good faith that
such offering would be detrimental or otherwise disadvantageous to ACM or its
Unitholders, in which case ACM shall have furnished a certificate of an
executive officer of its General Partner to that effect to Holdings L.P. (if any
Cursitor Units held by Cursitor Unit Holders are to be included in such
registration) and to all Cursitor Transferees which hold Registrable Securities
to be included in such registration. After such period of postponement ACM
shall effect such registration as promptly as practicable without further
request from the holders of Registrable Securities, unless the request for
registration has been withdrawn.
SECTION 2.2. PIGGYBACK REGISTRATION. (a) If, after the first
anniversary of the Closing Date, ACM proposes to file a registration statement
under the Securities Act with respect to an offering of Units of the same class
as the Cursitor Units for cash (other than an offering (i) relating to a
business combination that is to be filed on Form S-4 under the Securities Act
(or any successor form thereto), (ii) relating to an employee benefit plan or
(iii) pursuant to a shelf registration statement (other than a shelf
registration pursuant to the exercise of a demand registration right by a
selling Unitholder other than a Cursitor Unitholder or a Cursitor Transferee,
subject to any and all of the restrictions that apply to such selling Unitholder
in respect of such demand registration right) then ACM shall give written notice
of such proposed filing to Holdings L.P. (if any Cursitor Unit Holders own any
Registrable Securities) and to all Cursitor Transferees as soon as practicable
(but in no event less than 20 days before the anticipated filing date). ACM
shall use its best efforts to include such number of Registrable Securities in
such registration statement which ACM is requested to register by any Cursitor
Unit Holder or any Cursitor Transferee (a "Piggyback Registration"), which
request shall be made to ACM within 15 days after such Cursitor Unit Holder or
Cursitor Transferee, as the case may be, receives notice from ACM of such
proposed filing; PROVIDED, that (i) if, at any time after giving written notice
of its intention to file a registration statement and prior to the effectiveness
of such registration statement,
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ACM shall determine for any reason not to register such securities, ACM may, at
its election, give written notice of such determination to Holdings L.P. (if any
Cursitor Unit Holders own any Registrable Securities) and to all Cursitor
Transferees and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from its
obligation to pay the registration expenses referred to in Section 3.2 incurred
in connection therewith), (ii) if such registration statement relates to an
underwritten offering, all holders of Registrable Securities requesting to be
included in ACM's registration must sell their Registrable Securities to the
Underwriters selected by ACM on the same terms and conditions as apply to ACM,
with such differences, including any with respect to indemnification and
liability insurance, as may be customary or appropriate in combined primary and
secondary offerings, (iii) in the 12-month period following the first
anniversary of the Closing Date, ACM shall not be obligated to include in any
registration statement in respect of one or more Piggyback Registrations
Registrable Securities representing in the aggregate greater than 50% of all
Cursitor Units issued and outstanding as of the Closing Date and (iv) ACM shall
not be obligated to include in any registration statement in respect of a
Piggyback Registration any Cursitor Units that are eligible for resale under
Rule 144. Any Cursitor Unit Holder or Cursitor Transferee, as the case may be,
submitting a request pursuant to this Section 2.2 to include Registrable
Securities in a registration may elect, by written notice no later than seven
days prior to the anticipated effective date of the registration statement filed
in connection with such registration, not to have such Registrable Securities
registered in connection with such registration. In the event that any notice
described in the previous sentence is given to ACM, the Cursitor Unit Holders or
Cursitor Transferees giving such notice will bear all incremental costs incurred
by ACM in connection with such registration resulting from the inclusion of the
Registrable Securities that were not so registered.
(b) If a registration pursuant to this Section 2.2 involves an
underwritten offering and any lead Underwriter advises ACM in writing that, in
its opinion, the number of securities to be included in such registration
exceeds the number which can be sold in such offering without an adverse effect
on the price, timing, or distribution of such offering, then the number of
securities to be offered for the account of Cursitor Unit Holders or Cursitor
Transferees, as the case may be, shall be reduced as necessary pro rata in
proportion to the relative number of securities requested by each such holder to
be included until the number of securities to be included in such registration
no longer exceeds the number which, in the
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opinion of such lead Underwriter, can be sold in such offering.
(c) No registration effected under this Section 2.2 shall be deemed to
have been effected pursuant to Section 2.1 hereof or shall release ACM of its
obligations to effect any Demand Registration upon request under Section 2.1
hereof.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1. FILING; INFORMATION. Subject to the limitations and
restrictions set forth in Article II, whenever any Registrable Securities are
to be registered pursuant to Section 2.1 or 2.2 of these Registration Rights,
ACM will use its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto ACM will as expeditiously as reasonably possible:
(a) prepare and file with the Commission as soon as practicable but
not later than 60 days after a receipt of a request to file such
registration statement (or if later, promptly following the expiration of
any Block Period), a registration statement with respect to such
Registrable Securities on a registration form appropriate for such
registration and use its best efforts to cause such registration statement
to become effective; provided however that such period will be increased to
90 days in the event that a form other than Form S-3 (or any successor) is
applicable; PROVIDED further that before filing a registration statement or
prospectus or any amendments or supplements thereto, ACM will furnish to
any Cursitor Unit Holder requesting registration pursuant to Section 2.1 or
2.2 of these Registration Rights and the Underwriters, if any, draft copies
of all such documents proposed to be filed; if such requested registration
is pursuant to Section 2.1 of these Registration Rights, such documents
shall be so furnished a reasonable time prior to the filing thereof and
will be subject to the reasonable review of such Cursitor Unit Holders, the
Underwriters, if any, and their respective agents and representatives and
ACM will not file any such registration statement or amendment thereto or
any prospectus or any supplement thereto (including such documents
incorporated by reference) to which such Cursitor Unit Holders shall
reasonably object;
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(b) notify the Cursitor Unit Holders requesting such registration or
their United States counsel, if any, identified by written notice to ACM as
representing them in connection with such registration and (if requested)
confirm such advice in writing, as soon as practicable after notice thereof
is received by ACM (i) when the registration statement or any amendment
thereto has been filed or becomes effective, and when the prospectus has
been filed, (ii) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information, (iii) of any stop order issued or threatened by the
Commission in connection therewith, (iv) if at any time prior to the
effectiveness of the registration statement or while Registrable Securities
are being sold thereunder the representations and warranties of ACM
contemplated by Section 5.1 cease to be true and correct, and (v) of the
receipt by ACM of any notification with respect to the suspension of the
qualification of the Registrable Securities for offering or sale in any
United States jurisdiction or the initiation or threatening of any
proceeding for such purpose;
(c) prepare and file with the Commission such amendments,
post-effective amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective for a period of not less than
45 days (or such shorter period which will terminate when all Registrable
Securities covered by such registration statement have been sold or
withdrawn, but not prior to the expiration of the applicable period
referred to in Section 4(3) of the Securities Act and Rule 174 (or any
successor provision) thereunder, if applicable), cause the prospectus to
be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any successor
provision) under the Securities Act, and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in accordance
with the intended methods of disposition by ACM thereof set forth in such
registration statement;
(d) furnish to each Cursitor Unit Holder requesting such registration
and the Underwriter or Underwriters, if any, without charge, one signed
copy and such number of conformed copies of such registration statement,
each amendment and supplement thereto, the prospectus included in such
registration statement (including each preliminary prospectus) and
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any amendments or supplements thereto, any documents incorporated by
reference therein and such other documents as such Cursitor Unit Holder
or such Underwriter may reasonably request to facilitate the disposition
of the Registrable Securities (it being understood that ACM consents to
the use of the prospectus (including the preliminary prospectus) and any
amendment or supplement thereto by the Cursitor Unit Holders pursuant to
such registration statement and the Underwriter or Underwriters, if any,
in connection with the offering and sale of the Registrable Securities
covered by the prospectus or any amendment or supplement thereto);
(e) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such United
States jurisdictions as the Cursitor Unit Holders requesting such
registration reasonably request and do any and all other acts and things
that the Cursitor Unit Holders requesting such registration may reasonably
be necessary or advisable to enable the such Cursitor Unit Holders to
consummate the disposition in such jurisdictions of the Registrable
Securities (PROVIDED that ACM will not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required
to qualify but for this subparagraph, (ii) subject itself to taxation in
any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction);
(f) notify the Cursitor Unit Holders requesting such registration, at
any time when a prospectus relating to such Registrable Securities is
required to be delivered under the Securities Act, of the occurrence of any
event as a result of which the prospectus included in such registration
statement (as then in effect) contains an untrue statement of a material
fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading and, as promptly as possible thereafter, prepare and file with
the Commission a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
(g) make generally available to its security holders an earnings
statement satisfying the provisions
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of Section 11(a) of the Securities Act no later than 60 days after the end
of the 12-month period beginning with the first day of ACM's first fiscal
quarter commencing after the effective date of the registration
statement, which earnings statement shall cover said 12-month period, and
which requirement will be deemed to be satisfied if ACM timely files
complete and accurate information on Forms 10-Q, 10-K and 8-K under the
Exchange Act and otherwise complies with Rule 158 (or any successor
provision) under the Securities Act as soon as possible;
(h) use its best efforts to cause all such Registrable Securities to
be listed or admitted for trading on the principal securities exchange or
quotation system on which securities issued by ACM that are of the same
class as the Registrable Securities are then listed or admitted;
(i) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration
statement;
(j) to the extent necessary to enable the indicated Persons to comply
with their respective obligations under the Securities Act, make available
for inspection by the Cursitor Unit Holders requesting such registration
any Underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained
by any such Cursitor Unit Holders or Underwriter all financial and other
records, pertinent corporate documents and properties of ACM, and cause
ACM's officers, directors, employees and independent certified public
accountants to supply all such information reasonably requested by any such
Cursitor Unit Holders, Underwriter, attorney, accountant or agent in
connection with such registration statement;
(k) obtain a "cold comfort" letter and updates thereof from ACM's
independent public accountants in customary form and covering such matters
of the type customarily covered by "cold comfort" letters; and
(l) if Underwriters are engaged in connection with any registration
referred to in these Registration Rights, ACM shall enter into underwriting
or other agreements providing indemnification, representations, covenants,
opinions and other assurance to the Underwriters in customary form and
covering matters of the type customarily covered in such underwriting or
other agreements.
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ACM may require that each Cursitor Unit Holder or Cursitor Transferee
desiring to sell Registrable Securities pursuant to Section 2.1 or 2.2 furnish
to ACM such information regarding the distribution of such securities and such
other information relating to such Cursitor Unit Holder or Cursitor Transferee
and their ownership of Registrable Securities as ACM may from time to time
reasonably request in writing. Each such Cursitor Unit Holder shall furnish
such information to ACM and cooperate with ACM as necessary to enable ACM to
comply with the provisions of these Registration Rights.
Upon receipt of any notice from ACM of the happening of any event of
the kind described in subsection (f) of this Section 3.1, the Cursitor Unit
Holders and Cursitor Transferees selling Registrable Securities will forthwith
discontinue disposition of the Registrable Securities until receipt of the
copies of the supplemented or amended prospectus contemplated by subsection (f)
of this Section 3.1 or until the Cursitor Unit Holders and Cursitor Transferees
requesting such registration are advised in writing (the "Advice") by ACM that
the use of the prospectus may be resumed, and have received copies of any
additional or supplemental filings which are incorporated by reference in the
prospectus and, if so directed by ACM, such Cursitor Unit Holder or Cursitor
Transferee, as the case may be, will deliver to ACM all copies, other than
permanent file copies then in each such Cursitor Unit Holder's or Cursitor
Transferee's possession of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event that ACM shall give
any such notice, the period mentioned in the subsection (c) of this Section 3.1
shall be extended by the number of days during the period from and including the
date of the giving of such notice to and including the date when such Cursitor
Unit Holders and Cursitor Transferees shall have received the Advice and the
copies of the supplemented or amended prospectus contemplated by subsection (f)
of this Section 3.1.
SECTION 3.2. REGISTRATION EXPENSES. (a) All expenses incident to
ACM's performance of or compliance with these Registration Rights including,
without limitation, all Commission and securities exchange or National
Association of Securities Dealers, Inc. registration and filing fees, fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the Registrable Securities), rating agency fees, printing expenses, messenger
and delivery expenses, internal expenses (including without limitation, all
salaries and expenses of ACM's officers and employees performing legal or
accounting duties), the fees and expenses incurred in connection with
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the listing of the securities to be registered, if any, on the principal
securities exchange on which similar securities issued by ACM are then listed
and reasonable fees and disbursements of counsel for ACM and its independent
certified public accountants (including the expenses of any special audit or
"cold comfort" letters required by or incident to such performance), Securities
Act liability insurance (if ACM elects to obtain such insurance), the reasonable
fees and expenses of any special experts retained by ACM in connection with such
registration, (but not including any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities, which shall be paid by the
Cursitor Unit Holders) and any reasonable out-of-pocket expenses of the Cursitor
Unit Holders (all such expenses being herein called "Registration Expenses")
will be borne by ACM.
(b) Notwithstanding anything to the contrary in the immediately
preceding paragraph, in connection with (i) a Demand Registration pursuant to
Section 2.1 hereof or (ii) a Piggyback Registration pursuant to Section 2.2
hereof, the Cursitor Unit Holders and Cursitor Transferees whose Units are
included in any such registration shall be responsible for the fees and expenses
of their own counsel and accountants and other out-of-pocket expenses incurred
by themselves in connection with such registration.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. INDEMNIFICATION BY ACM. ACM shall indemnify and hold
harmless each Cursitor Unit Holder, its officers and directors, if any, and each
Person, if any, who controls such Cursitor Unit Holder, if any, within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages and liabilities caused
by any untrue statement or alleged untrue statement of a material fact contained
in any registration statement or prospectus relating to the Registrable
Securities (as amended or supplemented if ACM shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
furnished in writing to ACM or its attorneys, accountants or representatives by
or on behalf of such Cursitor Unit Holder expressly for use therein; PROVIDED
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that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of such Cursitor Unit Holder if a copy
of the prospectus (as amended or supplemented) was not provided to the relevant
purchasers and such prospectus would have cured the defect giving rise to such
loss, claim, damage or liability.
SECTION 4.2. INDEMNIFICATION BY CURSITOR UNIT HOLDERS. Each
Cursitor Unit Holder whose Registrable Securities are sold in any offering
pursuant to Section 2.1 or 2.2 hereof, shall severally but not jointly indemnify
and hold harmless ACM, its officers and directors, the other Cursitor Unit
Holders whose Registrable Securities are sold in such offering, their respective
officers, directors and employees and each other Person who controls ACM or such
other Cursitor Unit Holder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from ACM, but only with reference to information furnished
in writing to ACM or its attorneys, accountants or representatives by or on
behalf of such Cursitor Unit Holder expressly for use in any registration
statement or prospectus relating to the Registrable Securities, or any amendment
or supplement thereto, or any preliminary prospectus. In no event shall the
liability of any Cursitor Unit Holder hereunder be an amount greater than the
dollar amount of the proceeds received by such Cursitor Unit Holder upon the
sale of the Registrable Securities giving rise to such indemnification
obligation.
SECTION 4.3. CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2, such Person (the "Indemnified Party") shall promptly notify
the Person against whom such indemnity may be sought (the "Indemnifying Party")
in writing (PROVIDED that failure so to notify the Indemnifying Party shall not
relieve it from any liability which it may have otherwise than on account of the
indemnity provided for herein) and the Indemnifying Party, upon the request of
the Indemnified Party, shall retain counsel reasonably satisfactory to such
Indemnified Party to represent such Indemnified Party and shall pay the
reasonable fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and disbursements of such counsel shall be at the
expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the Indemnified Party and
13
<PAGE>
the Indemnifying Party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the Indemnifying Party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all such Indemnified Parties, and
that all such fees and expenses shall be reimbursed promptly after they are
incurred. In the case of any such separate firm for the Indemnified Parties,
such firm shall be designated in writing by the Indemnified Parties. The
indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment.
SECTION 4.4. CONTRIBUTION. If the indemnification provided for in
this Article IV is unavailable to an Indemnified Party in respect of any losses,
claims, damages or liabilities referred to herein, then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by ACM, Cursitor Unit Holders and the Underwriters
from the offering of the securities, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
but also the relative fault of ACM, Cursitor Unit Holders and the Underwriters
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by ACM, Cursitor Unit Holders
and the Underwriters shall be deemed to be in the same proportion as the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by each of ACM and Cursitor Unit Holders and
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the prospectus, bear
to the aggregate public offering price of the securities. The relative fault of
ACM, Cursitor Unit Holders and the Underwriters shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party and the
14
<PAGE>
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
ACM and the Cursitor Unit Holders recognize that it would not be just
and equitable if contribution pursuant to this Section 4.4 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.4, no Cursitor Unit Holder
shall be required to contribute hereunder any amount in excess of the dollar
amount by which the net proceeds (before deducting expenses) received by such
Cursitor Unit Holder upon the sale of the Registrable Securities giving rise to
such contribution obligation exceeds the amount of any damages which such
Cursitor Unit Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. (a) Any
Cursitor Unit Holder may require that any registration pursuant to Section 2.1
be an underwritten registration. In the event such registration is an
underwritten offering, ACM will enter into an underwriting agreement with the
lead Underwriter or Underwriters for such offering, which lead Underwriter or
Underwriters shall be selected in the manner set forth in Section 2.1 and which
underwriting agreement shall be in customary form as described in Section
3.1(l). Cursitor Unit Holders selling Registrable Securities in such offering
shall be party to such underwriting agreement and may require that any or all of
the representations and warranties by, and the other agreements on the part of,
ACM to and for the benefit of such Underwriters shall also be made to and for
the benefit of such Cursitor Unit Holders and that any or all of the conditions
precedent to the obligations of such Underwriters under such underwriting
15
<PAGE>
agreement be conditions precedent to the obligations of such Cursitor Unit
Holders.
(b) No Cursitor Unit Holder may participate in any underwritten
registered offering contemplated hereunder unless such Cursitor Unit Holder
(a) agrees to sell its securities on the basis provided in any underwriting
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements and these Registration Rights.
SECTION 5.2. CURSITOR TRANSFEREES. Any Person, other than Cursitor
Unit Holders, acquiring from Cursitor Unit Holders any Registrable Securities,
except for transferees acquiring Registrable Securities in an offering
registered under the Securities Act or in a sale made pursuant to Rule 144 under
the Securities Act, may elect, within 30 days of the date of the transfer to it
of such Registrable Securities, to become entitled to these Registration Rights
by sending written notification of such election to ACM (each such person, upon
such election and so long as it holds Registrable Securities, being herein
called a "Cursitor Transferee"). Each such Cursitor Transferee shall be bound
by the terms of these Registration Rights and shall hold such Registrable
Securities with all the rights conferred, and subject to all obligations and
restrictions imposed, hereby.
SECTION 5.3. RULE 144. ACM covenants that it will use its best
efforts to file any reports required to be filed by it under the Securities Act
and the Exchange Act and that it will take such further action as ACM may
reasonably request, all to the extent required from time to time to enable
Cursitor Unit Holders to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemption provided by Rule 144
(or any successor provision) under the Securities Act. Upon the request of any
Cursitor Unit Holder or any Cursitor Transferee, ACM will deliver to such
Cursitor Unit Holder or Cursitor Transferee a written statement as to whether it
has complied with such requirements.
SECTION 5.4. HOLDBACK AGREEMENTS. The Cursitor Unit Holders agree
not to, and to cause any Cursitor Transferees, not to, offer, sell, contract to
sell or otherwise dispose of any Registrable Securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
14 days prior to, and during the 180-day period beginning on, the effective date
of such registration statement other than the Registrable Securities to be sold
pursuant to such registration statement.
16
<PAGE>
SECTION 5.5. NO INCONSISTENT AGREEMENTS. ACM will not enter into any
agreement with respect to its securities which conflicts with the obligations of
ACM pursuant to these Registration Rights.
SECTION 5.6. TERM. For so long as any Cursitor Unit Holder owns any
of the Registrable Securities, the rights and obligations of such Cursitor Unit
Holder under these Registration Rights shall remain in effect.
SECTION 5.7. 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 5.8. REGULATORY FILING. Notwithstanding any other provisions
of this Agreement, no provision of this Agreement which is of such a nature as
to make the Agreement liable to registration under the U.K. Restrictive Trade
Practices Act 1976 shall take effect until immediately after particulars thereof
have been duly furnished to the Director General of Fair Trading pursuant to the
said Act. For purposes of this Section 5.8, the term "Agreement" shall include
the Transaction Agreement, the Limited Liability Company Agreement, the
Employment Agreements, the First Services Agreement and the Second Services
Agreement.
17
<PAGE>
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, as General Partner
By:/s/ David R. Brewer, Jr.
------------------------------
Title: Senior Vice President,
General Counsel and
Secretary
CURSITOR HOLDINGS, L.P.
By:/s/ Hugh Eaton
------------------------------
Title: Chief Financial Officer
DURHAM SOFTWARE GROUP INC.
By:/s/
------------------------------
Title:
THE ALEPPO TRUST
By: NSP Trustees SA and Second
Aspern Limited as Trustess
By:/s/ Peter E.F. Newbald
------------------------------
Title: Authorized Signatory
THE NEWARK TRUST
By: NSP Trustees SA and Second
Aspern Limited as Trustess
By:/s/ Peter E.F. Newbald
------------------------------
Title: Authorized Signatory
/s/ Eric Auboyneau
------------------------------
ERIC AUBOYNEAU
/s/ Hugh M. Eaton III
------------------------------
HUGH M. EATON III
18
<PAGE>
/s/ Charles J.H. Gave
------------------------------
CHARLES J.H. GAVE
/s/ John S. Ricciardi
------------------------------
JOHN S. RICCIARDI
/s/ Jens Christian Sorenson
------------------------------
JENS CHRISTIAN SORENSON
/s/ Ian Edward Lloyd
------------------------------
IAN EDWARD LLOYD
/s/ Viplava Patel
------------------------------
VIPLAVA PATEL
HMESLP, INC.
By:/s/ Hugh M. Eaton III
------------------------------
Title:
RE TRUST
By: NSP Trustees SA and Second
Aspern Limited as Trustess
By:/s/ Peter E.F. Newbald
------------------------------
Title: Authorized Signatory
RICHARD I. MORRIS, JR. L.P. TRUST
By:/s/
------------------------------
Trustee
19
<PAGE>
SCHEDULE I
CURSITOR HOLDINGS, L.P.
DURHAM SOFTWARE GROUP INC.
WHITEDOORS LIMITED
ERIC AUBOYNEAU
HUGH M. EATON III
CHARLES J.H. GAVE
JOHN S. RICCIARDI
JENS CHRISTIAN SORENSON
IAN EDWARD LLOYD
VIPLAVA PATEL
HMESLP, INC.
RE TRUST
RICHARD I. MORRIS, JR. L.P. TRUST
20
<PAGE>
THE LIMITED LIABILITY COMPANY INTERESTS EVIDENCED BY THIS AGREEMENT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF
ANY STATE OR FOREIGN JURISDICTION AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT
COMPLIANCE WITH APPLICABLE FEDERAL, STATE OR FOREIGN SECURITIES LAWS. IN
ADDITION, TRANSFER OR OTHER DISPOSITION OF THE INTERESTS IS RESTRICTED AS
PROVIDED IN THIS AGREEMENT.
CURSITOR ALLIANCE LLC
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
dated as of
February 29, 1996
among
Alliance Capital Management L.P.,
Alliance Capital Management Corporation of Delaware
and
Cursitor Holdings, L.P.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
FORMATION AND PURPOSES OF THE COMPANY
2.01. Formation of the Company . . . . . . . . . . . . . . . . . . . 8
2.02. Name of the Company. . . . . . . . . . . . . . . . . . . . . . 9
2.03. Purpose of the Company . . . . . . . . . . . . . . . . . . . . 9
2.04. Place of Business of the Company . . . . . . . . . . . . . . . 9
2.05. Registered Office and Registered Agent . . . . . . . . . . . . 9
2.06. Duration of the Company. . . . . . . . . . . . . . . . . . . . 9
2.07. Title to Company Property. . . . . . . . . . . . . . . . . . . 9
2.08. Filing of Certificates . . . . . . . . . . . . . . . . . . . . 9
2.09. Limitation on Liability. . . . . . . . . . . . . . . . . . . . 10
2.10. Qualification in Other Jurisdiction. . . . . . . . . . . . . . 10
ARTICLE III
CAPITAL CONTRIBUTIONS
3.01. Capital Contributions. . . . . . . . . . . . . . . . . . . . . 10
3.02. Capital Contributions in General . . . . . . . . . . . . . . . 10
ARTICLE IV
CAPITAL ACCOUNTS AND
ALLOCATION OF PROFITS AND LOSSES
4.01. Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . 11
4.02. Allocation of Net Income . . . . . . . . . . . . . . . . . . . 12
4.03. Allocation of Net Loss . . . . . . . . . . . . . . . . . . . . 13
4.04. Character of Allocations . . . . . . . . . . . . . . . . . . . 14
4.05. Qualified Income Offset. . . . . . . . . . . . . . . . . . . . 14
4.06. Timing of Allocations. . . . . . . . . . . . . . . . . . . . . 14
4.07. Membership Interest Transfer and Adjustment. . . . . . . . . . 14
4.08. Tax Allocations. . . . . . . . . . . . . . . . . . . . . . . . 14
i
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Page
----
ARTICLE V
DISTRIBUTIONS
5.01. Distributions. . . . . . . . . . . . . . . . . . . . . . . . . 15
5.02. Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.03. Restricted Distributions . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI
MANAGEMENT
6.01. Management by the Members. . . . . . . . . . . . . . . . . . . 17
6.02. Voting Power of Members. . . . . . . . . . . . . . . . . . . . 17
6.03. Quorum; Manner of Acting . . . . . . . . . . . . . . . . . . . 17
6.04. Unanimous Vote . . . . . . . . . . . . . . . . . . . . . . . . 18
6.05 Forum for Meetings; Composition of the
Members; Proxies; Holding of Meetings. . . . . . . . . . . . 19
6.06. Action by Written Consent. . . . . . . . . . . . . . . . . . . 20
6.07. Telephonic Meetings. . . . . . . . . . . . . . . . . . . . . . 20
6.08. Nature of Obligations Among Members. . . . . . . . . . . . . . 21
6.09. Company Minutes. . . . . . . . . . . . . . . . . . . . . . . . 21
6.10. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.11. Contracts with the Company . . . . . . . . . . . . . . . . . . 22
6.12. Compensation of the Members. . . . . . . . . . . . . . . . . . 22
6.13. Right of First Offer . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII
ACCOUNTING AND TAX MATTERS
7.01. Programs and Budgets . . . . . . . . . . . . . . . . . . . . . 22
7.02. Books of Account . . . . . . . . . . . . . . . . . . . . . . . 23
7.03. Company Documentation Requirements . . . . . . . . . . . . . . 23
7.04. Financial Statements . . . . . . . . . . . . . . . . . . . . . 23
7.05. Partnership For Tax Purposes . . . . . . . . . . . . . . . . . 24
7.06. Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.07. Inspection Rights of Members . . . . . . . . . . . . . . . . . 25
ARTICLE VIII
TRANSFERS AND RESTRICTIONS ON TRANSFER OF INTERESTS
8.01. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.02. Recognition of Transfers . . . . . . . . . . . . . . . . . . . 26
8.03. Admission of Additional Members. . . . . . . . . . . . . . . . 26
ii
<PAGE>
Page
----
ARTICLE IX
PUT/CALL OPTIONS
9.01. Put/Call Options . . . . . . . . . . . . . . . . . . . . . . . 27
9.02. Buyout Date. . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.03. Buyout Price . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.04. Method of Payment. . . . . . . . . . . . . . . . . . . . . . . 29
9.05. Status of Repurchased Membership Interes . . . . . . . . . . . 30
9.06. Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE X
LIABILITY/INDEMNIFICATION
10.01. Liability for Debts of the Company; Limited Liability . . . . 30
10.02. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.03. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XI
CONFIDENTIALITY
11.01. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE XII
TERMINATION, DISSOLUTION AND LIQUIDATION
12.01. No Dissolution. . . . . . . . . . . . . . . . . . . . . . . . 33
12.02. Liquidating Events. . . . . . . . . . . . . . . . . . . . . . 33
12.03. Notice of Dissolution . . . . . . . . . . . . . . . . . . . . 33
12.04. Winding Up. . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.05. Distribution Upon Dissolution of the Company. . . . . . . . . 34
12.06. Liquidation of Member's Interest. . . . . . . . . . . . . . . 34
12.07. Report on Liquidation . . . . . . . . . . . . . . . . . . . . 35
12.08. Other Matters . . . . . . . . . . . . . . . . . . . . . . . . 35
12.09. Termination . . . . . . . . . . . . . . . . . . . . . . . . . 35
iii
<PAGE>
Page
----
ARTICLE XIII
RESTRICTIONS ON TRANSFER AND DISTRIBUTIONS
13.01. Restrictions on Transfer. . . . . . . . . . . . . . . . . . . 35
13.02. Restrictive Legend. . . . . . . . . . . . . . . . . . . . . . 36
13.03. Notice of Proposed Transfers; Rule 144. . . . . . . . . . . . 37
13.04. Distributions with Respect to Units . . . . . . . . . . . . . 38
ARTICLE XIV
MISCELLANEOUS
14.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.02. Amendments; No Waivers. . . . . . . . . . . . . . . . . . . . 39
14.03. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.04. Successors and Assigns. . . . . . . . . . . . . . . . . . . . 39
14.05. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.06. Exhibits and Schedules. . . . . . . . . . . . . . . . . . . . 40
14.07. Partition . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.08. Consents and Additional Documents . . . . . . . . . . . . . . 40
14.09. Governing Law; Entire Agreement . . . . . . . . . . . . . . . 40
14.10. Disputes; Submission to Jurisdiction. . . . . . . . . . . . . 41
14.11. Counterparts; Effectiveness . . . . . . . . . . . . . . . . . 41
14.12. Severability. . . . . . . . . . . . . . . . . . . . . . . . . 42
14.13. Further Assurances. . . . . . . . . . . . . . . . . . . . . . 42
14.14. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 42
14.15. Restrictive Trade Practices . . . . . . . . . . . . . . . . . 42
Exhibit 5.01 FORM OF COMPLIANCE CERTIFICATE
Schedule 2.01 Members
Schedule 6.10 Initial Officers
Schedule 9.01(c) Principal
Schedule 9.03 Buyout Consideration
iv
<PAGE>
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
AGREEMENT dated as of February 29, 1996 among Alliance Capital
Management L.P., a Delaware limited partnership ("ALLIANCE"), Alliance Capital
Management Corporation of Delaware, a Delaware corporation ("ALLIANCE DELAWARE"
and, collectively, with Alliance, the "ALLIANCE MEMBERS") and Cursitor Holdings,
L.P., a Delaware limited partnership ("HOLDINGS L.P."), each in its respective
capacities as a Member (as hereinafter defined).
WITNESSETH:
WHEREAS, the Alliance Members have formed a Delaware limited liability
company (together with any successor entity, the "COMPANY") and have entered
into the Limited Liability Company Agreement (the "EXISTING AGREEMENT"), dated
as of October 27, 1995;
WHEREAS, pursuant to the terms and conditions of the Transaction
Agreement, the Members plan to contribute or sell to the Company, various
interests in stock and assets with the result that the Existing Agreement will
be replaced by this Agreement and Holdings L.P. will be admitted as a Member of
the Company;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01. DEFINITIONS. (a) Capitalized terms used but not defined herein
shall have the meanings assigned thereto in the Transaction Agreement.
(b) As used herein, the following terms have the following meanings:
"AMORTIZATION DEDUCTIONS" means the items of deduction allowed for
United States federal income tax purposes under Section 197 of the Code in
respect of the assets acquired by the Company in the transactions contemplated
by the Transaction Agreement.
"BOOK VALUE" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except that (i) the initial Book Value of
any asset contributed by a Member to the Company shall be the gross fair market
value of such asset, (ii) the Book Value of Company assets shall be
<PAGE>
adjusted, in accordance with the provisions of Regulations Section 1.704-
1(b)(2)(iv), on the occurrence of the events listed in Regulations Section
1.704-1(b)(2)(iv)(F) and to reflect adjustments to the adjusted tax basis of
Company assets under Section 732, 734 or 743 of the Code. If the Book Value of
an asset has been determined or adjusted pursuant to clause (i) or (ii) hereof,
such Book Value shall thereafter be adjusted by the depreciation, amortization
or other cost recovery deduction taken into account with respect to such asset
for purposes of making allocations pursuant to Section 4.01(c).
"CAPITAL CONTRIBUTION" means, with respect to any Member, the fair
market value of property contributed by such Member to the Company pursuant to
Article III of this Agreement (net of liabilities secured by such contributed
property that the Company is considered to assume or take subject to Section 752
of the Code) and any amount of money contributed by such Member to the Company.
"CAPITAL EXPENDITURE" means a payment for the purpose of acquiring,
constructing or maintaining fixed assets, real property or equipment that in
accordance with GAAP would be added to the fixed asset account of the Company or
any of its Subsidiaries.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time. References to specific provisions of the Code include references to
corresponding provisions of successor law.
"COVERED PERSON" means a Member, any Affiliate of any Member, any
officer, employee or director of any Member or any such Affiliate or any Officer
of the Company.
"DISTRIBUTABLE CASH" means, for each Fiscal Year, (i) all cash
revenues of the Company (not including Capital Contributions, funds received by
the Company in respect of indebtedness incurred by the Company or any payments
received by the Company pursuant to any insurance policies), less all amounts
expended by the Company (including, without limitation, for taxes and debt
service), proceeds from the sale by the Company of any capital assets to the
extent that such proceeds exceed gain recognized for United States federal
income tax purposes on such sale and such working capital or reserves or other
amounts as the Members agree by Unanimous Vote to be necessary or appropriate
for the proper operation of the Company's business or its winding up and
liquidation, provided that the Company shall have sufficient cash amounts to
fund operating expenses for three months from the date of distribution and
reserve amounts representing a reasonable estimate of future contingencies, and
(ii) with respect to each Subsidiary, the lesser of (x) all cash revenues of the
2
<PAGE>
Subsidiary (not including capital contributions to such Subsidiary, funds
received by the Subsidiary in respect of indebtedness incurred by the Subsidiary
or any payments received by the Subsidiary pursuant to any insurance policies),
less all amounts expended by the Subsidiary (including, without limitation, for
taxes and debt service), proceeds from the sale by the Subsidiary of any capital
assets to the extent that such proceeds exceed gain recognized for such sale,
such amounts as must be retained by the Subsidiary pursuant to applicable
regulatory requirements (including net capital requirements), and such working
capital or reserves or other amounts as the Members agree by Unanimous Vote to
be necessary or appropriate for the proper operation of the Subsidiary's
business or its winding up and liquidation and (y) all cash revenues of the
Subsidiary that are available for distribution pursuant to applicable law.
"FISCAL YEAR" means (i) the period commencing on the effective date of
this Agreement and ending on December 31, 1996, (ii) any subsequent twelve-
month period commencing on January 1 and ending on December 31 or (iii) any
portion of the period described in clause (ii) for which the Company is required
to allocate income, gain, loss or deduction pursuant to Article IV hereof.
"GUARANTEED AMORTIZATION AMOUNT" means (i) with respect to each Fiscal
Year ending on or before the fifth anniversary of the Closing Date, the amount
obtained by (A) dividing $227,000 by the number of days in the calendar year
with or within which such Fiscal Year ends and (B) multiplying the quotient by
the number of days in such Fiscal Year; (ii) with respect to the Fiscal Year, if
any, that includes, but does not end on, the fifth anniversary of the Closing
Date, the amount obtained by (A) dividing $227,000 by the number of days in the
calendar year with or within which such Fiscal Year ends and (B) multiplying the
quotient by the number of days from and including the first day of such Fiscal
Year to and including the day which is the fifth anniversary of the Closing
Date; and (iii) with respect to each subsequent Fiscal Year, zero.
"HOLDINGS L.P. INTEREST" means a limited partner interest or general
partner interest in Holdings L.P.
"INDEMNIFIED LOSSES" means any and all Losses incurred or suffered by
any Covered Person as a result of or arising from any suit, proceeding, action,
arbitration, investigation, or claim by, in or before any court, arbitrator,
administrative tribunal, governmental body or agency or other forum conducted,
brought or threatened by a Person other than the Company or any Covered Person;
PROVIDED that Indemnified Losses shall not include (i) any Specified Losses,
(ii) any item of loss, expense or deduction allocated
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<PAGE>
to any Member's Capital Account pursuant to the terms of this Agreement, or
(iii) any loss of profit or return on any Covered Person's direct or indirect
investment in the Company (including any diminution in the value thereof).
"INTEREST" means, with respect to any Member, such Member's ownership
interest in the Company as provided in this Agreement and the Delaware Act.
"LIABILITY" means any liability, direct or indirect, actual or
contingent, with respect to any indebtedness for borrowed money, or any
mortgage, deed of trust or pledge or other security device securing any such
liability or the refunding, refinancing, increasing, modification of the
principal amount, maturity or interest rate of any of the foregoing.
"LOSSES" means any and all losses, claims, expenses, damages, costs or
liabilities (including attorneys' fees) arising from or in connection with or
related to any Transaction Documents or the Company's business or affairs.
"MATERIAL SUBSIDIARY" means any Subsidiary the assets of which, as of
such date, exceed 20% of the consolidated assets of the Company, as reflected on
the most recent audited consolidated financial statements of the Company.
"MEMBER" means the Alliance Members and Holdings L.P. or any other
Person who, at such time, is admitted to the Company as a Member in accordance
with the terms of this Agreement.
"NET INCOME" and "NET LOSS" means, for each Fiscal Year, an amount
equal to the Company's taxable income or loss for such Fiscal Year, determined
in accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss, and adjusted in
accordance with the principles of Regulations Section 1.704-1(b)(2)(iv),
PROVIDED, HOWEVER, that any items that are specially allocated pursuant to
Section 4.05 shall not be taken into account in computing Net Profit or Net
Loss. If the Book Value of a Company asset differs from its adjusted tax basis,
the "book" value of the asset shall be substituted for its adjusted tax basis,
in accordance with the principles of Regulations Section 1.704-1(b)(2)(iv), for
purpose of computing Net Income and Net Loss. The amounts of the items of the
Company income, gain, loss or deduction available to be specially allocated
pursuant to Section 4.05 shall also be determined in accordance with the
principles of Regulations Section 1.704-1(b)(2)(iv).
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"OPERATING EXPENSES" means, for any period, the consolidated operating
expenses of the Company and its consolidated Subsidiaries, determined on an
accrual basis in accordance with GAAP consistently applied; provided, however,
Operating Expenses shall not include (i) interest expense on borrowings made by
the Company in connection with the transactions contemplated by the Transaction
Agreement, (ii) overhead allocation expense, (iii) amortization expense
(amortization of intangible assets only) and (iv) taxes owed or paid by the
Company or its Subsidiaries.
"PERCENTAGE INTEREST" means the percentage of ownership in the Company
represented by each Member's respective Interest as set forth on Schedule 2.01
as adjusted from time to time, including to reflect (i) Capital Contributions
other than those made pursuant to Section 3.01 or (ii) a purchase by Alliance of
a portion, but less than all, of Holdings L.P.'s Interest pursuant to Section
9.01(c).
"PRE-TAX OPERATING EARNINGS" means, for any period, the consolidated
Revenues from Operations of the Company and its Subsidiaries, less (i) Operating
Expenses and (ii) incentive compensation expenses calculated in accordance with
Alliance's incentive compensation plan administered by the Management
Compensation Committee or any similar successor plan as in existence from time
to time, determined on an accrual basis in accordance with GAAP consistently
applied.
"PRIORITY AMOUNT" means, (i) with respect to each Fiscal Year ending
on or before the fifth anniversary of the Closing Date, the amount obtained by
(A) dividing $1.9 million by the number of days in the calendar year with or
within which such Fiscal Year ends and (B) multiplying the quotient by the
number of days in such Fiscal Year; (ii) with respect to the Fiscal Year, if
any, that includes, but does not end on, the fifth anniversary of the Closing
Date, the amount obtained by (A) dividing $1.9 million by the number of days in
the calendar year with or within which such Fiscal year ends and (B) multiplying
the quotient by the number of days from and including the first day of such
Fiscal Year to and including the day which is the fifth anniversary of the
Closing Date; and (iii), with respect to each subsequent Fiscal Year, zero.
"REGULATIONS" means the Treasury Regulations, including temporary
Regulations, promulgated under the Code, as such regulations are in effect from
time to time. Refer ences to specific provisions of the Regulations include
refer ences to corresponding provisions of successor regulations.
"REVENUES FROM OPERATIONS" means, for any period, the consolidated
gross revenues of the Company and its Subsidiaries determined on an accrual
basis in accordance with
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GAAP consistently applied; PROVIDED, HOWEVER, the Revenues From Operations shall
not include (a) revenues from the sale, exchange or other disposition of all, or
a substantial portion of, the assets of the Company and its Subsidiaries (other
than inventory), (b) revenues of the Company and its Subsidiaries from Capital
Contributions, or the issuance of securities, (c) any payments received pursuant
to any insurance policies (other than business interruption payments or
reimbursements of amounts previously charged against revenues), (d) any payments
received by the Company pursuant to indebtedness incurred by the Company or (e)
revenues that ultimately inure to the benefit of a third party.
"SPECIAL AMORTIZATION PAYMENT" means an amount equal to 66.7% of the
amount, if any, by which the Guaranteed Amortization Amount for any Fiscal Year
exceeds the amount of Amortization Deductions allocated to Holdings L.P.
pursuant to Article IV for any Fiscal Year.
"SPECIAL CAPITAL AMOUNT" means, with respect to each Member, the
Capital Account balance of such Member, except that, for purposes of determining
the Special Capital Amount, Alliance will be treated as having made all Capital
Contributions pursuant to Section 3.01(b) on the Closing Date.
"SPECIFIED LOSSES" means, with respect to any Losses incurred by a
Covered Person, all such Losses arising from, in respect of or in connection
with any criminal conduct, intentional tortious conduct, willful misconduct,
fraud, violation of public policy, violation or contravention of United States
federal or state or foreign antitrust or competition laws or any material breach
of any of the terms of this Agreement (a "Specified Act"), in each case on the
part of such Covered Person or any of their respective employees, officers,
directors, employers, agents or authorized representatives; provided, however,
that in the event that such Losses arise from, in respect of or in connection
with any Specified Act by one or more of the partners of Holdings L.P. (directly
or indirectly through one or more trusts or other entities), the percentage of
such Losses that shall constitute "Specified Losses" shall be equal to the
aggregate of the Reference Percentage(s) with respect to such partner(s)
committing the Specified Act(s).
"TRADING DAY" means a day on which the New York Stock Exchange is open
for the transaction of business.
"TRANSACTION AGREEMENT" means the agreement dated as of December __,
1995 among Alliance, the Shareholders of record of Cursitor Holdings Limited,
Holdings L.P. and the Additional Parties listed on Schedule 1.2 thereto.
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"TRANSFER" means any direct or indirect sale, assignment, disposition,
exchange, mortgage, pledge or grant of a security interest in, foreclosure or
any other transfer of any portion of an Interest.
"UNANIMOUS VOTE" shall mean the affirmative approval by vote or
consent of all of the Members.
(c) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
---- -------
Alliance Preamble
Alliance Delaware Preamble
Alliance Members Preamble
Annual Operating Plan 7.01
Buyout Date 9.02
Buyout Price 9.03(c)
Calls 9.01(d)
Capital Account 4.01
Company Preamble
Cursitor Alliance LLC 2.02
Delaware Act 2.01
Exercise Period 9.01(b)
Existing Agreement Preamble
First Offer Business 6.13
Holdings L.P. Preamble
Information 11.01
KPMG 7.02
Liquidating Event 12.02
Liquidating Trust 12.04(b)
Liquidating Trustee 12.03
Officers 6.10
Proxy 6.05(b)
Puts 9.01(c)
Reference Percentage 9.01(c)
Rule 144(K) 13.03
Section 704(c) Property 4.08(b)
Section 9.01(b) Buyout Price 9.03(a)
Section 9.01(b) Call 9.01(b)
Section 9.01(b) Put 9.01(b)
Section 9.01(c)(i) Buyout Price 9.03(b)
Section 9.01(c)(i) Put 9.01(c)
Section 9.01(c)(ii) Buyout Price 9.03(b)
Section 9.01(c)(ii) Put 9.01(c)
Section 9.01(d) Buyout Price 9.03(c)
Section 9.01(d) Call 9.01(d)
Tax Matters Member 7.06
Tax Return 7.06
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(d) Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, and all accounting determinations hereunder shall be made,
in accordance with GAAP.
ARTICLE II
FORMATION AND PURPOSES OF THE COMPANY
2.01. FORMATION OF THE COMPANY. (a) Alliance and Alliance Delaware
have previously formed and established the Company under the Existing Agreement
and the provisions of the Delaware Limited Liability Company Act, 6 Del. C.
Sections 18-101 et. seq. (as amended, and any successor to such statute, the
"DELAWARE ACT"). Effective as of the Closing, (a) Holdings L.P. shall be
admitted as a Member of the Company and (b) the Existing Agreement shall be
amended and restated by this Agreement. Notwithstanding anything in this
Agreement to the contrary, the Alliance Members and Holdings L.P. are hereby
authorized to, and shall continue, the business of the Company without
dissolution. Effective as of the Closing, the rights and liabilities of the
Members shall be as provided in this Agreement and, except as herein otherwise
expressly provided, in the Delaware Act.
(b) The name and mailing address of, and Percentage Interest held by,
each Member shall be listed on Schedule 2.01 attached hereto. The Members shall
update Schedule 2.01 from time to time as necessary to accurately reflect the
informa tion required hereby. Any amendment or revision to Schedule 2.01 made in
accordance with this Agreement shall not be deemed an amendment to this
Agreement unless such amendment or revision is made in respect of the Members'
Percentage Interest in which case such amendment shall be made in accordance
with the provisions of Section 14.02. Any reference in this Agreement to
Schedule 2.01 shall be deemed to be a reference to Schedule 2.01 as amended and
in effect from time to time.
2.02. NAME OF THE COMPANY. The name of the Company shall be "CURSITOR
ALLIANCE LLC".
2.03. PURPOSE OF THE COMPANY. The purpose of the Company is to engage
in any lawful act or activity for which limited liability companies may be
formed under the Delaware Act and in any and all activities necessary or
incidental to the foregoing. In furtherance of its purpose, the Company shall
have and may exercise all the powers now or hereafter conferred by Delaware law
on limited liability companies formed under the Delaware Act. The Company shall
have the power to do any and all acts necessary, appropriate, proper, advisable,
incidental or convenient to or for the protection
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<PAGE>
and benefit of the Company, and shall have, without limitation, any and all of
the powers that may be exercised on behalf of the Company by the Members.
2.04. PLACE OF BUSINESS OF THE COMPANY. The principal place of
business of the Company shall be located in the United States at 38 Newbury
Street, Boston, Massachusetts 02116-3210. At any time, another place of business
may be designated as the principal place of business by the Members provided
such place of business is located in the United States.
2.05. REGISTERED OFFICE AND REGISTERED AGENT. The address of the
registered office of the Company in the State of Delaware is c/o The Corporation
Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801. The name and address of the registered agent for
service of process on the Company in the State of Delaware is The Corporation
Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801.
2.06. DURATION OF THE COMPANY. The term of the Company shall be
perpetual, except as provided in Section 12.02 of this Agreement.
2.07. TITLE TO COMPANY PROPERTY. All property of the Company, whether
real or personal, tangible or intangible, shall be deemed to be owned by the
Company as an entity, and no Member, individually, shall have any direct
ownership interest in such property.
2.08. FILING OF CERTIFICATES. Alliance is hereby designated as an
Authorized Person, within the meaning of the Delaware Act, to file and publish
all such certificates, notices, statements or other instruments required by law
for the formation and operation of a limited liability company in all
jurisdictions where the Company may elect to do business.
2.09. LIMITATION ON LIABILITY. Except as required by the Delaware Act,
the debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Member shall be obligated personally for any
such debt, obligation or liability of the Company solely by reason of being a
Member.
2.10. QUALIFICATION IN OTHER JURISDICTION. The Members may cause the
Company to be qualified, formed or registered under assumed or fictitious name
statutes or similar laws in any jurisdiction in which the Members deem it
necessary or desirable.
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ARTICLE III
CAPITAL CONTRIBUTIONS
3.01. CAPITAL CONTRIBUTIONS. (a) Pursuant to the terms of the
Transaction Agreement, effective as of the Closing Date each of Alliance,
Alliance Delaware and Holdings L.P. shall contribute certain assets to the
Company as required by such Transaction Agreement.
(b) Subject to Sections 2.9 and 2.10 and Articles VIII, XI and XIII of
the Transaction Agreement, on the anniversary of the Closing in each of the four
years following the year in which the Closing occurs, Alliance shall contribute
$5,375,000 less any amounts attributable to Alliance's right of set-
off pursuant to Section 2.9, 2.10, 8.8 or 11.2 of the Transaction Agreement, to
the Company in respect of the principal payments on the Note.
3.02. CAPITAL CONTRIBUTIONS IN GENERAL. (a) Upon making the Capital
Contributions as provided in Section 3.01, no further Capital Contributions will
be required. Unless otherwise provided in this Agreement, the Members may, but
are not obligated to, make such additional Capital Contributions in such manner
and at such times as the Members may (each in its sole discretion) determine by
Unanimous Vote.
(b) Except as otherwise expressly provided in this Agreement:
(i) No Member shall be entitled to interest, salary or drawing
with respect to its Capital Contributions to the Company or its Capital
Account (as defined herein) or for services rendered on behalf of the
Company or otherwise in its capacity as a Member, except as otherwise
contemplated by any of the Transaction Documents;
(ii) No Member shall have the right to demand or receive property
other than cash in return for its Capital Contributions;
(iii) No Member shall have any liability for the repayment of the
Capital Contributions of any other Member and shall look only to the assets
of the Company for return of its Capital Contributions; and
(iv) No Member shall demand or receive a return of its Capital
Contributions or resign from the Company without determination by Unanimous
Vote.
(c) If any Member shall advance any funds to the Company in excess of
the Capital Contribution amount (A) then required to be contributed by such
Member pursuant to
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Section 3.01 or (B) contributed by such Member pursuant to Section 3.02(a), the
amount of such advance will not increase the Capital Account of such Member,
affect the relative Percentage Interest of the Members or entitle such Member to
any increase in its share of Distributable Cash.
ARTICLE IV
CAPITAL ACCOUNTS AND
ALLOCATION OF PROFITS AND LOSSES
4.01. CAPITAL ACCOUNTS. (a) A capital account (each a "CAPITAL
ACCOUNT") shall be established and maintained for each Member in accordance with
the rules of Regulations Section 1.704-1(b)(2)(iv).
(b) The names and subject to any changes in the value of the Units at
the time of Closing and to any adjustment pursuant to Section 2.9, 2.10 or 8.10
of the Transaction Agreement, initial Capital Accounts of the Members shall be
as follows:
<TABLE>
<CAPTION>
Capital
Name Accounts
---- --------
<S> <C>
Alliance $159,200,000
Alliance Delaware $1,000,000
Holdings L.P. $13,676,000
</TABLE>
(c) If the Book Value of a Company asset differs from the adjusted
basis of such asset for United States federal income tax purposes, the Book
Value of the asset shall be substituted for its adjusted tax basis, in
accordance with the principles of Regulations Section 1.704-1(b)(2)(iv), for
purposes of computing the items of depreciation, depletion, amortization and
gain or loss with respect to such asset that are allocable pursuant to Section
4.02 and 4.03.
(d) It is intended that the Capital Accounts will be maintained at all
times in accordance with Section 704 of the Code and applicable Treasury
regulations thereunder and that the provisions of this Agreement relating to the
Capital Accounts be interpreted in a manner consistent therewith. The Tax
Matters Member shall be authorized to make appropriate amendments to the
allocations of items pursuant to Section 4.02 and Section 4.03 if necessary to
comply with Section 704 of the Code or applicable Regulations thereunder.
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<PAGE>
(e) Notwithstanding any other provision of this Agreement, any
adjustments to Capital Accounts pursuant to Sections 2.9, 2.10, 8.8 or 11.2 of
the Transaction Agreement shall not result in any change to the Members'
respective Percentage Interests.
4.02. ALLOCATION OF NET INCOME. Net Income for any Fiscal Year or
portion thereof shall be allocated among the Members in the following order and
priority:
(a) First, to the Members, PRO RATA, in proportion to their
Percentage Interests, in an amount equal to the excess, if any, of (i) the
aggregate amount of Net Losses allocated to the Members under Section
4.03(d) for all Fiscal Years over (ii) the aggregate amount of Net Income
allocated under this Section 4.02(a) and under Section 4.02(d) for all
Fiscal Years;
(b) Second, 100% to Holdings L.P. in an amount equal to the excess,
if any, of (i) the sum of (A) the aggregate amount of the distributions to
Holdings L.P. pursuant to Sections 5.01(a)(i) through (iv) for all Fiscal
Years plus (B) the aggregate amount of Net Losses allocated to Holdings
L.P. under Section 4.03(c) for all prior Fiscal Years over (ii) the
aggregate amount of Net Income allocated under this Section 4.02(b) for all
prior Fiscal Years;
(c) Third, 100% to the Alliance Members, PRO RATA, in proportion to
their Percentage Interests, in an amount equal to the excess, if any, of
(i) the sum of (A) the aggregate amount of distributions to the Alliance
Members under Section 5.01(a)(v) for all Fiscal Years plus (B) the
aggregate amount of Net Losses allocated to the Alliance Members under
Section 4.03(b) for all prior Fiscal Years over (ii) the aggregate amount
of Net Income allocated under this Section 4.02(c) for all prior Fiscal
Years; and
(d) Fourth, to the Members, PRO RATA, in proportion to their
Percentage Interests.
4.03. ALLOCATION OF NET LOSS. Net Loss for any Fiscal Year or portion
thereof shall be allocated among the Members in the following order and
priority:
(a) First, to the Members, PRO RATA, in proportion to their
Percentage Interests, in an amount equal to the excess, if any, of (i) the
aggregate amount of Net Income allocated under Section 4.02(d) for all
prior Fiscal Years over (ii) the aggregate amount of Net Losses allocated
under this Section 4.03(a) for all prior Fiscal Years;
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(b) Second, 100% to the Alliance Members, PRO RATA, in proportion to
their Percentage Interests, in an amount equal to the excess, if any, of
(i) the aggregate amount of Net Income allocated to the Alliance Members
under Section 4.02(c) over (ii) the aggregate amount of Net Losses
allocated to the Alliance Members, under this Section 4.03(b) for all prior
Fiscal Years;
(c) Third, 100% to Holdings L.P. in an amount equal to the excess, if
any, of the aggregate amount of Net Income allocated to Holdings L.P. under
Section 4.02(b) over (ii) the aggregate amount of Net Losses allocated to
Holdings L.P. under this Section 4.03(c) for all prior Fiscal Years; and
(d) Fourth, to the Members, PRO RATA, in proportion to their
Percentage Interests
4.04. CHARACTER OF ALLOCATIONS. Allocations of net income or Net Loss
pursuant to Section 4.02 or 4.03 shall be deemed to consist of a pro-rata
portion (based upon the ratio of each Member's net income or loss to the
Company's aggregate net income or loss) of each item of income, gain, deduction,
expense or loss included in the determination of such Net Income or Net Loss.
4.05. QUALIFIED INCOME OFFSET. In the event any Member unexpectedly
receives any adjustments, allocations or distributions described in Regulations
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 Company income and gain shall be specially allocated
to such Member in an amount and manner sufficient to eliminate as quickly as
possible, to the extent required by the Regulations, any deficit Capital Account
balance created for purposes of Regulations Section 1.704- 1(b)(2)(ii)(d) by
such adjustments, allocations or distributions, provided that an allocation
pursuant to this Section 4.05(a) shall be made only if and to the extent that
such Member would have a deficit Capital Account balance after all other
allocations provided for in this Article IV have been tentatively made as if
this Section 4.05 were not in the Agreement.
4.06. TIMING OF ALLOCATIONS. In the case of each Fiscal Year, the net
profits and losses of the Company shall be determined and allocated for tax
purposes as of the last day of such Fiscal Year.
4.07. MEMBERSHIP INTEREST TRANSFER AND ADJUSTMENT. In the event of a
change in any Member's Interest at any time other than at the end of a Fiscal
Year (whether by reason of a Transfer of all or any portion of an interest in
the Company, the admission of a new Member or otherwise), the profits,
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<PAGE>
gains, losses, deductions and credits of the Company for such Fiscal Year shall
be allocated between or among each person whose interest in the Company during
such taxable year is affected by such change in such manner as the Tax Matters
Member may determine to be consistent with the provisions of Section 706(d) of
the Code. Upon any Transfer of an Interest, the transferee shall be credited on
the Company's books with the portion of the balance in the transferor Member's
Capital Account which corresponds to the transferred interest.
4.08. TAX ALLOCATIONS. (a) Except as otherwise provided in this
Section 4.08, for United States federal, state and local income tax purposes,
each item of income, gain, loss, deduction and credit of the Company shall be
allocated among the Members as nearly as possible in the same manner as the
corresponding item of income, gain, loss or expense is allocated pursuant to
Section 4.02, 4.03 and 4.04.
(b) All items of income, gain, loss and deduction with respect to any
Company asset having a Book Value that differs from the adjusted basis of such
asset for federal income tax purposes shall be allocated so as to take into
account the variation between the Book Value and the adjusted tax basis of such
asset in accordance with the principles of Code Section 704(c) and the
Regulations thereunder. For purposes of allocating items of income, gain, loss
and deduction with respect to Section 704(c) property, as defined in Regulations
Section 1.704-3(a)(3)("Section 704(c) Property"), the Company shall elect the
"traditional method" of making such allocations as described in Regulations
Section 1.704-3(b) unless otherwise determined in respect of any item of Section
704(c) Property by the Members (each in its sole discretion) by Unanimous Vote.
ARTICLE V
DISTRIBUTIONS
5.01. DISTRIBUTIONS. (a) Subject to the terms of any restricted
payment covenants of any debt financing of the Company and any minimum capital
requirements under any state, federal or foreign law or regulation, and unless
the Members shall agree otherwise, the Company shall within 90 days after the
close of each Fiscal Year, make distributions to the Members of Distributable
Cash for such Fiscal Year in the following manner:
(i) First, 100% to Holdings L.P. until the amount distributed to
Holdings L.P. pursuant to this Section 5.01(a)(i) in respect of such Fiscal
Year equals the amount by which the sum of the Special Amortization
Payments for prior Fiscal Years exceeds the cumulative
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<PAGE>
distributions made pursuant to Section 5.01(a)(ii) in respect of such prior
Fiscal Years;
(ii) Second, 100% to Holdings L.P. until the amount distributed to
Holdings L.P. pursuant to this Section 5.01(a)(ii) in respect of such
Fiscal Year equals the Special Amortization Payment for such Fiscal Year;
(iii) Third, 100% to Holdings L.P. until the amount distributed to
Holdings L.P. pursuant to this Section 5.01(a)(iii) in respect of such
Fiscal Year equals the amount, if any, by which the sum of the Priority
Amounts for prior Fiscal Years exceeds the cumulative distributions made
pursuant to Section 5.01(a)(iv) in respect of such prior Fiscal Years;
(iv) Fourth, 100% to Holdings L.P. until the amount distributed to
Holdings L.P. pursuant to this Section 5.01(a)(iv) in respect of such
Fiscal Year equals the Priority Amount for such Fiscal Year;
(v) Fifth, 100% to the Alliance Members in proportion to their
respective Percentage Interests until the amount distributed to the
Alliance Members pursuant to this Section 5.01(a)(v) in respect of such
Fiscal Year equals 93% of the aggregate amount distributed to all Members
in respect of such Fiscal Year pursuant to Section 5.01(a)(iii), Section
5.01(a)(iv) and this Section 5.01(a)(v); and
(vi) Thereafter, to the Members in proportion to their respective
Percentage Interests; provided that, in the cases of (i) through (v) above,
such distributions to Holding L.P. shall be subject to receipt by Alliance
of a certificate substantially in the form set forth in Exhibit 5.01.
(b) Promptly upon learning of any requirement under any provision of
the Code or any other applicable federal, state or local law requiring the
Company to withhold any sum from a distribution, or with respect to any
allocation, to a Member or to make any payment to any federal, state or local
taxing authority in respect of such Member, the Tax Matters Member shall give
written notice to such Member of such requirement and shall cooperate with such
Member in all lawful respects, if practicable, to minimize or to eliminate any
such withholding or payment. The Tax Matters Member is authorized to withhold
from distributions, or with respect to alloca tions, to the Members and to pay
over to any federal, state, local or foreign governmental authority any amounts
which it reasonably determines may be required to be withheld pursuant to the
Code or any provisions of any other federal, state, local or foreign law. All
amounts withheld pursuant to the
15
<PAGE>
Code or any provision of any state, local or foreign tax law with respect to any
allocation or distribution to any Member shall be treated as amounts distributed
to such Member pursuant to this Article for all purposes under this Agreement;
provided that if this sentence would otherwise cause a distribution that is not
as required by Section 5.01, then at the election of the Member receiving a
distribution larger than that required by Section 5.01 either (i) such Member
shall make a Capital Contribution in cash equal to the excess of the
distribution made to such Member over the amount that would have been
distributed to such Member if the distribution had been as required by Section
5.01 or (ii) a distribution shall be made to the other Members in cash equal to
the amount necessary to make the distribution in accordance with the
requirements of Section 5.01.
5.02. DISSOLUTION. Upon dissolution and winding up of the Company, the
Company shall make distributions in accordance with Section 12.05.
5.03. RESTRICTED DISTRIBUTIONS. Notwithstanding any provision in this
Agreement to the contrary, the Company shall not make a distribution to any
Member if such distribution would violate applicable law, including, without
limitation, Section 18-607 of the Delaware Act.
ARTICLE VI
MANAGEMENT
6.01. MANAGEMENT BY THE MEMBERS. The business and affairs of the
Company shall be managed by or under the direction of the Members in accordance
with the provisions set forth below.
6.02. VOTING POWER OF MEMBERS. (a) Each Member shall be entitled to
vote on or approve or consent as to any action permitted or required to be taken
or any determination required to be made by the Company or the Members under
this Agreement or the Delaware Act. With respect to any action to be taken by
the Members or any matter submitted to the Members at any time, each Member
shall be entitled to the number of votes equal to such Member's Percentage
Interest at such time multiplied by 100.
(b) Any vote or consent of the Members under this Agreement shall be
taken in conjunction with meetings of the Members held pursuant to Section 6.05
or by written consent pursuant to Section 6.06. All management and voting power
hereunder shall be vested in and reserved to the Members as provided herein.
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6.03. QUORUM; MANNER OF ACTING. Except as otherwise provided in
Section 6.04, (a) the presence, in person or by proxy, of one or more Members
with a majority of the total number of votes of the Members shall constitute a
quorum for the transaction of business and (b) the affirmative vote of one or
more Members with a majority of the total number of votes held by the Members
present in person or by proxy at a meeting at which a quorum exists, shall
control the actions of the Members. No Member can bind the Company unless
authorized by the Members pursuant to this Agreement.
6.04. UNANIMOUS VOTE. The Company and its Subsidiaries shall not take
any of the following actions except pursuant to authorization by Unanimous Vote:
(a) except for the Note and as provided under Section 3.02(c),
incurrence by the Company or any of its Subsidiaries of any Liability, which
Liability, if combined with existing Liabilities, would result in total
Liabilities in excess of $15,000,000; PROVIDED, that the foregoing shall not
apply to (i) Liabilities of the Company to any of its Subsidiaries; (ii)
Liabilities of any Subsidiary of the Company to any other Subsidiary of the
Company; or (iii) Liabilities of any of the Company's Subsidiaries to the
Company.
(b) except pursuant to any agreement, the execution and delivery of
which is directly or indirectly a condition to Closing, any transaction by the
Company or any of its Subsidiaries with any Member or any Affiliate of a Member
that is not on an arm's length basis; PROVIDED that subject to Section 6.04(a),
if financing on commercially reasonable terms under the circumstances then
prevailing is not available on a timely basis from a third party, the Company or
any of its Subsidiaries may borrow funds from any Member or its Affiliates,
without a Unanimous Vote so long as such borrowing is on terms that are no less
favorable to the Company or such Subsidiary than the terms of any loan or
advance that any other Member or its Affiliate would then be willing to make to
the Company or such Subsidiary;
(c) making of any Capital Expenditure which would cause the
aggregate Capital Expenditures for any calendar year to exceed $3,000,000;
(d) any sale of any material portion of the assets of the Company or
any of its Subsidiaries or liquidation or dissolution of the Company or any of
its Subsidiaries;
(e) the filing of any petition by or on behalf of the Company seeking
relief under the federal bankruptcy act or similar relief under any bankruptcy,
insolvency or other similar law;
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(f) the sale or repurchase of equity in the Company or any Material
Subsidiary;
(g) entering into any new line of business (A) that does not
constitute Investment Management Services or (B) that would constitute a
"substantial new line of business" for purposes of Section 10211(c)(2)(B) of the
Revenue Act of 1987;
(h) the purchase by the Company or any of its Subsidiaries of, or
merger or consolidation of the Company with, any business that is not expected
to have an accretive effect on the Pre-Tax Operating Earnings of the Company,
after taking into account reasonable expectations regarding the operating
earnings of such business adjusted to give effect on a pro forma basis to such
purchase, merger or consolidation (including any costs related thereto) for the
four fiscal quarters immediately preceding such purchase, merger or
consolidation (other than mergers or consolidations with or between wholly owned
Subsidiaries of the Company);
(i) entering into any employment arrangement which by its terms (other
than if such terms are "at will") extends beyond the fifth anniversary of the
Closing.
(j) entering into any consulting arrangement which by its terms (other
than if such terms are "at will") extends beyond the fifth anniversary of the
Closing.
(k) approval of the Company's operating and capital expenditure
budgets;
(l) any change in the name of the Company;
(m) entering into any lease for real property which provides for
annual rental payments in excess of $500,000 or for a committed term beyond the
fifth anniversary of the Closing or modifying or extending any lease for real
property such that the aggregate remaining term of such lease would extend
beyond the fifth anniversary of the Closing or the annual rental payment in
respect thereof would be in excess of $500,000;
(n) any decision not to terminate the marketing provisions of the TCW
Agreement; and
(o) any amendment of the First Services Agreement or the Second
Services Agreement.
6.05. FORUM FOR MEETINGS; COMPOSITION OF THE MEMBERS; PROXIES; HOLDING
OF MEETINGS. (a) Each Member shall be represented at Members meetings by its
Proxy, appointed in accordance with Section 6.05(b).
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(b) Each Member shall appoint and authorize a proxy which shall be an
officer, director or employee of such Member (a "PROXY"), or successive
alternates in the event such Proxy is not in attendance at a meeting of the
Members, to act for such Member by proxy, as directed by such Member, for
purposes of casting such Member's votes, acting by consent, taking any other
actions pursuant to this Article VI and making any election or decision to be
made by such Member pursuant to this Agreement. The appointment and
authorization of a Proxy by a Member hereunder shall be revocable by such Member
at any time in its discretion; PROVIDED that any appointment or revocation of a
Proxy hereunder shall be effective upon written notice of such appointment or
revocation given to the Company and the other Members. To the fullest extent
permitted by law, a Proxy shall be deemed the agent of the Member that so
appointed such Person as Proxy, and such Proxy shall not be deemed an agent or
sub-agent of the Company or the other Members and shall have no duty (fiduciary
or otherwise) to the Company or the other Members. Each Member, by execution of
this Agreement, agrees and consents to the actions and decisions of such Proxies
within the scope of such Proxies' authority as provided herein as if such
actions or decisions had been taken or made by the Member appointing such
Proxies.
(c) In addition to the Proxy of each Member, officers, directors,
employees or other representatives (including the accountants, attorneys and/or
financial advisers) of a Member and its Affiliates will be permitted to attend
meetings of the Members as observers.
(d) The Members shall meet at such place within the United States and
time as shall be determined by the Members by majority vote. Special meetings of
the Members, to be held at the offices of the Company as above provided (or such
other place as shall be agreed by the Members by majority vote), shall be called
at the direction of any Member, and for reasonable cause shown, upon not less
than 20 calendar days' notice given by such Member.
6.06. ACTION BY WRITTEN CONSENT. Any action required or permitted to
be taken by the Members, either at a meeting or otherwise, may be taken without
a meeting if all Members are given prior notice and the writing or writings are
signed by Members having at least such number of votes as would be required to
approve such action at a meeting and filed with the minutes of proceedings of
Members.
6.07. TELEPHONIC MEETINGS. Members may participate in a meeting of
Members by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation in a meeting shall constitute presence in person
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at the meeting provided that a quorum of such Members is physically present in
the United States.
6.08. NATURE OF OBLIGATIONS AMONG MEMBERS. Except as otherwise
provided in this Agreement or by written agreement among the Members, no Member
shall have any auth ority to act for, bind or assume any obligation or responsi
bility on behalf of any other Member or the Company.
6.09. COMPANY MINUTES. The decisions and resolutions of the Members
will be reported in minutes, which will state the date, time and place of the
meeting (or the date of the written consent in lieu of a meeting), the Members
present at a meeting, the resolutions put to a vote (or the subject of a written
consent) and the results of such voting (or written consent). The minutes will
be entered in a minute book kept at the principal office of the Company and a
copy of the minutes will be provided to each Member.
6.10. OFFICERS. (a) The officers of the Company (the "OFFICERS") shall
be selected by the Members and shall consist of a Chairman and President/Chief
Executive Officer and such other officers, if any, as are contemplated herein or
as the Members may determine are necessary or appropriate. Subject to Sections
6.01 and 6.04, the day-to-day conduct and operations of the Company's business
shall generally be managed by the Officers, and the Chairman and Chief Executive
Officer shall have such powers as are usually exercised by comparably designated
officers of a Delaware corporation, including power and authority with respect
to such matters as the development, maintenance and change of investment
management policies and fee structures, the hiring, promotion, firing and
compensation of staff, management and executive personnel, new product
development, sales and marketing policies and implementation and decisions to
accept, reject, amend, maintain or terminate client relationships.
The Officers may be appointed and removed by a majority vote of the
Members with or without cause and the duties and responsibilities of the
Officers as set forth in this Section may be changed from time to time by the
Members.
(b) Any Officer may resign as an Officer at any time by delivery of
his or her written resignation to the Company. Such resignation shall be
effective upon receipt unless it is specified to be effective at some other time
or upon the happening of some other event.
(c) The initial Officers of the Company shall be those persons whose
names are initially set forth on Schedule 6.10 attached hereto.
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6.11. CONTRACTS WITH THE COMPANY. Subject to Section 6.04(b), any
Member or any Affiliate of a Member may, directly or indirectly, through one or
more corporations, partnerships or other entities in which such party has an
interest, contract with the Company for any purpose in furtherance of the
business of the Company.
6.12. COMPENSATION OF THE MEMBERS. The Members shall not receive any
compensation from the Company for services provided to the Company in their
capacity as Members.
6.13. RIGHT OF FIRST OFFER. Alliance shall not acquire the business of
or merge with any Person the business of which consists primarily of the
investment management of international and global equity securities, the
provision of research with respect to international equity securities or the
provision of global asset allocation investment management services
substantially of the same nature as those provided by Limited, Holdings L.P. and
their Subsidiaries on the Closing Date (with respect to all or the part of such
business which is described above, "First Offer Business") unless it shall first
offer the First Offer Business to the Company on the same terms and conditions
as available to Alliance for authorization pursuant to Section 6.04 of this
Agreement and shall vote in favor of the acquisition by or merger with the
Company pursuant to Section 6.04. If the acquisition or merger of the First
Offer Business is not authorized by Unanimous Vote, Alliance and its
Subsidiaries (other than the Company and its Subsidiaries) shall have the right
to acquire the business of or merge with such Person (including the First Offer
Business) without restriction or limitation.
ARTICLE VII
ACCOUNTING AND TAX MATTERS
7.01. PROGRAMS AND BUDGETS. (a) With respect to each Fiscal Year, the
Company shall, not less than 90 days prior to the date of the last regularly
scheduled meeting of the Members in such Fiscal Year, prepare and submit to each
of the Members, with respect to the Company and each of its Subsidiaries
(presented separately and on a consolidated basis), (i) an initial business
operating budget and a capital expenditure budget for the then immediately
succeeding Fiscal Year (the "ANNUAL OPERATING PLAN") and (ii) a business plan
for the then next succeeding five-year period.
(b) Not later than 30 calendar days after the close of each fiscal
quarter, the Company shall submit to each Member a comparison, for such
immediately preceding quarter and for the fiscal year-to-date, of the results of
operations
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of the Company and its Subsidiaries with the applicable fiscal year Annual
Operating Plan.
7.02. BOOKS OF ACCOUNT. At all times during the continuance of the
Company, the Company shall maintain separate books of account for the Company
that shall show a true and accurate record of all costs and expenses incurred,
all charges made, all credits made and received and all income derived in
connection with the operation of the Company in accordance with GAAP
consistently applied and, to the extent inconsistent therewith, in accordance
with this Agreement. Such books of account, together with a copy of this
Agreement and of the certificate of formation of the Company, shall at all times
be maintained at such place of business of the Company as shall have been
notified to each of the Members. The books of account and the records of the
Company shall be examined by and reported upon as of the end of each fiscal year
by KPMG Peat Marwick ("KPMG") unless and until another firm of independent
public accountants is selected by the Members by Unanimous Vote. Any Member
shall have the right to have a private audit of the Company books and records
conducted at reasonable times and after reasonable advance notice to the Company
for any purpose reasonably related to such Member's Interest in the Company, but
any such private audit shall be at the expense of the Member desiring it, and
shall not be paid for out of Company funds.
7.03. COMPANY DOCUMENTATION REQUIREMENTS. The Company shall maintain
at such place as the Members shall determine, all books and records required to
be maintained pursuant to the Investment Company Act of 1940, as amended, the
Investment Advisers Act of 1940, as amended, the 1933 Act, the 1934 Act, and any
other applicable foreign, federal or state laws, rules or regulations. All such
records shall be available for review by each Member and each Officer upon
reasonable advance notice.
7.04. FINANCIAL STATEMENTS. (a) Within 60 days after the close of each
Fiscal Year, there shall be prepared and submitted to each Member the following
financial statements, accompanied by the report thereon of the independent
accountants for the Company:
(i) audited consolidated financial statements of the Company as at the
end of such Fiscal Year; and
(ii) a statement of the Members' respective Capital Accounts and
changes therein for such Fiscal Year.
(b) Within 5 Business Days after the close of each fiscal month,
excluding the last month of each fiscal quarter, the Company will cause to be
prepared and furnished to each Member (i) unaudited monthly financial statements
and (ii) a
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report setting forth with respect to each Client, (w) any fee adjustments
implemented within the past month, (x) assets under management, (y) a
description of changes in any fee arrangements and (z) Base Annual Billings.
(c) Within 30 days after the close of each fiscal quarter, the Company
will cause to be prepared and furnished to each Member (i) unaudited quarterly
and year-to-date financial statements comparable to those referred to in Section
7.05(a)(i) and (ii) a report setting forth with respect to each Client (v) the
name of each Client, (w) any fee adjustments implemented within the past month,
or any fee adjustment or arrangements proposed or contemplated to be instituted,
(x) assets under management, (y) details of the calculations of any performance
fee accruals and billings for such quarter and (z) Base Annual Billings.
7.05. PARTNERSHIP FOR TAX PURPOSES. The Members hereby agree that the
Company shall be treated as a partnership for tax purposes under United States
federal, state and local income tax laws or other laws, and further agree not to
take any position or to make any election, in a tax return or otherwise,
inconsistent herewith. If a change in applicable law (including a revenue
ruling, revenue procedure or other administrative pronouncement) would cause the
Company not to be treated as a partnership for United States federal income tax
purposes, the Members shall endeavor in good faith to reach an agreement on
restructuring the Company so that it will be so treated (which may entail a
merger of the Company into an entity treated as a partnership for federal income
tax purposes).
7.06. TAX MATTERS. (a) The tax matters partner for purposes of Section
6231 of the Code (the "TAX MATTERS MEMBER") shall be Alliance.
(b) The Tax Matters Member shall deliver all necessary tax information
to each Member after the end of each Fiscal Year.
(c) Except as otherwise provided in Section 4.08(b), the Tax Matters
Member shall, as and when and to the extent it deems necessary or appropriate,
make such elections under the tax laws of the United States, the several states
and other relevant jurisdictions as to the treatment of items of Company income,
gain, loss, deduction and credit and as to all other relevant matters.
(d) The Tax Matters Member shall, at the expense of the Company, cause
to be prepared and filed all tax returns (including amended returns) required to
be filed by the Company. At least thirty days prior to filing any Company tax
return (including any statement, report or form and including
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estimated and information returns, each a "Tax Return"), the Tax Matters Member
shall provide a copy of such Tax Return in draft form to Holdings L.P. In the
event that Holdings L.P. disagrees with any amount or position reflected on the
Tax Return, the Members shall consult with respect to the issue and resolve it
as the Members shall mutually agree, provided that if the Members cannot reach
agreement with respect to any items within 28 days following Holdings L.P.'s
receipt of such draft Tax Return, the Tax Matters Member shall resolve such
items of disagreement. Any resolution of items of disagreement by the Tax
Matters Member shall be conclusive and binding on all Members provided that any
such resolution shall be made as a fiduciary for the interest of all Members
notwithstanding Section 10.2.
(e) The Tax Matters Member shall promptly furnish the Secretary of the
Treasury, or his delegate, the name and address of each Member and any other
required information in a manner that entitles such Member to notice with
respect to administrative proceedings involving the Company under Section
6223(a) of the Code and shall provide similar information to any foreign or
state tax authority if and to the extent required or permitted so as to provide
similar benefits to the Members under any provision of foreign or state law or
with respect to the administrative practice of any such tax authority.
7.07. INSPECTION RIGHTS OF MEMBERS. Any Member, and any accountants,
attorneys, financial advisers and other representatives of such Member, may,
from time to time at such Member's sole expense, for any reasonable purpose
visit and inspect the properties of the Company, examine (and make copies and
extracts of) the Company's books, records and documents of every kind, and
discuss the Company's affairs with its officers, employees and independent
accountants, all at such reasonable times as such Member may request on
reasonable notice.
ARTICLE VIII
TRANSFERS AND RESTRICTIONS ON TRANSFER OF INTERESTS
8.01. GENERAL. (a) Without the Unanimous Vote of the other Members
(which may be granted or withheld in such other Member's absolute discretion),
no Member may Transfer all or any part of its Interest (except that the Alliance
Members may transfer all or any part of their Interest to any wholly owned
Subsidiary of Alliance or any corporation or other entity that succeeds to the
business of Alliance and its Subsidiaries) or solicit any offers for such a
Transfer except in accordance with the Put/Call Rights described in Article IX.
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(b) Any Transfer of an Interest which is not made in compliance with
the provisions of this Agreement shall be void, and the Company shall not
recognize any such Transfer.
Notwithstanding anything else contained herein, no Transfer shall be made except
in compliance with the 1933 Act.
8.02. RECOGNITION OF TRANSFERS. (a) No transferee shall be admitted to
the Company as a Member unless the Transfer was permitted hereby. Subject to the
foregoing, each such transferee, as a condition to its admission as a Member,
shall execute and deliver to the Company such instruments (including a
counterpart of this Agreement), in form or substance satisfactory to the
Members, as the Members shall reasonably deem necessary or desirable to confirm
the agreement of such transferee to be bound by all the terms and provisions of
this Agreement (as it may be amended in connection with the admission of such
transferee as a Member). The Members agree to amend this Agreement to the extent
necessary to reflect the transfer and admission of the new Member and to
continue the Company without dissolution. Upon execution of such instruments,
the transferee shall be admit ted to the Company as a Member of the Company.
Immediately following the admission of the transferee to the Company as a Member
of the Company, any Member who has thereby transferred all of its Interest shall
cease to be a Member of the Company. The transferee, as a Member of the Company,
and any other Member are hereby authorized to, and shall, continue the business
of the Company without dissolution.
(b) Any transferee who is admitted to the Company as a Member shall
succeed to the rights and powers (including distribution preferences), and be
subject to the restrictions and liabilities, of the transferor Member to the
extent of the Interest transferred.
8.03. ADMISSION OF ADDITIONAL MEMBERS. If the Members by Unanimous
Vote authorize the issuance of Interests to a Person who is not already a
Member, any such new Member shall, as a condition to admission, execute and
acknowledge such instruments as the Members by Unanimous Vote may deem necessary
or advisable to effect the admission of such Person as a Member, including,
without limitation, the written acceptance and adoption by such Person of the
provisions of this Agreement.
ARTICLE IX
PUT/CALL OPTIONS
9.01. PUT/CALL OPTIONS. (a) Holdings L.P. may, subject to the terms
and conditions set forth in this Article IX, cause Alliance to purchase all or a
portion of the
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Interest held by Holdings L.P. and Alliance may, subject to the terms and
conditions set forth in this Article IX, cause Holdings L.P. to sell the
Interest held by Holdings L.P.
(b) On any six (6) separate annual occasions starting with the
Exercise Period for the twelve-month period ending on the fifth anniversary of
the Closing Date (i) Holdings L.P. may cause Alliance to purchase, and Alliance
in such event agrees to buy, all of the Interest then held by Holdings L.P. (the
"SECTION 9.01(B) PUT"), and (ii) Alliance may cause Holdings L.P. to sell, and
Holdings L.P. in such event agrees to sell, all of the Interest then held by
Holdings L.P. (the "SECTION 9.01(B) CALL"). "EXERCISE PERIOD" shall mean, with
respect to any such twelve-month period, the period of thirty calendar days
following the end of such twelve-month period during which time the exercising
Member shall provide written notice to the effect that it is electing to
exercise the Section 9.01(b) Put or the Section 9.01(b) Call, as the case may
be, which such notice shall include the exercising Member's calculation of the
Section 9.01(b) Buyout Price.
(c) In the event that at any time commencing with the Closing Date and
prior to the fifth anniversary of the Closing Date (i) the employment by the
Company of any Principal terminates for Good Reason or is terminated without
Cause as such terms are defined in the Employment Agreements, in each case
without the written consent of Holdings L.P., or (ii) Alliance shall breach the
First Services Agreement in any material respect and fail to cure such breach
within 30 days of receipt of written notice thereof by Holdings L.P., then
Holdings L.P. may cause Alliance to purchase, and Alliance agrees to purchase,
with respect to each Principal that terminates for Good Reason or is terminated
without Cause, that percentage of Holdings L.P.'s Interest which is set forth in
Schedule 9.01(c) next to the name of such Principal (with respect to each such
Principal, the "REFERENCE PERCENTAGE") in the case of clause (i) above, and all
of Holdings L.P.'s Interest in the case of clause (ii) above (the "SECTION
9.01(C)(I) PUT" and the "SECTION 9.01(C)(II) PUT" respectively, and together
with the Section 9.01(b) Put, the "PUTS"), and Holdings L.P. shall provide
written notice to the other Members to the effect that it is electing to
exercise the Put pursuant to this Section 9.01(c) within 30 days of the
termination for Good Reason or without Cause or the material breach of the First
Services Agreement, as the case may be; and
(d) At any time commencing on the Closing Date and prior to the fifth
anniversary of the Closing Date, Alliance may cause Holdings L.P. to sell, and
Holdings L.P. in such event agrees to sell, all of its Interest then held by
Holdings L.P. (the "SECTION 9.01(D) CALL" and each of the
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Section 9.01(b) Call and the Section 9.01(d) Call being hereinafter referred to
as a "CALL" and, together, as the "CALLS"), and Alliance shall provide written
notice to Holdings L.P. to the effect that it is electing to exercise the Call
pursuant to this Section.
9.02. BUYOUT DATE. The Section 9.01(b) Put, or the Section 9.01(b)
Call, as the case may be, shall close, subject to any applicable waiting period
in respect of any applicable regulatory requirements, on the first business day
which is at least 30 days after the receipt by Alliance, in the case of the Put,
or Holdings L.P., in the case of the Call, of the calculation by Holdings L.P.
or Alliance, as the case may be, of the Buyout Price for the applicable twelve-
month period or such earlier closing date as is agreed to in writing by Alliance
and Holdings L.P. unless the non-exercising Member shall deliver a notice of
dispute pursuant to Section 9.06 hereof in which case the Section 9.01(b) Put or
the Section 9.01(c) Call shall close on the first business day which is at least
30 days after final resolution of such dispute by the Accounting Referee.
Subject to any applicable waiting period in respect of any applicable regulatory
requirements, the Section 9.01(c)(i) Put, the Section 9.01(c)(ii) Put and
Section 9.01(d) Call shall close on such date as is agreed to in writing by
Alliance and Holdings L.P. but in no event later than 60 days after the receipt
by Holdings L.P. (in the case of the Call) or Alliance (in the case of the Put)
of written notice of such election. The date of Closing of the Puts or the Calls
is referred to herein as the "BUYOUT DATE". Each Member shall cooperate in good
faith with respect to any applicable regulatory requirements and shall use its
best efforts to make all applicable regulatory filings within 30 days after
receipt of written notice of such election.
9.03. BUYOUT PRICE.
(a) The purchase price for the Section 9.01(b) Put and the
Section 9.01(b) Call (the "SECTION 9.01(B) BUYOUT PRICE") shall be determined in
accordance with the following formula; PROVIDED, however, that in any case, the
Section 9.01(b) Buyout Price shall not be (A) less than the product of
$7,000,000 and the Aggregate Residual Reference Percentage or (B) more than the
product of $52,000,000 and the Aggregate Residual Reference Percentage:
Section 9.01(b) = PTOE x Multiple x Aggregate Residual Reference Percentage
Buyout Price
Where "PTOE" = the Pre-Tax Operating Earnings of the Company for the
twelve-month period ending on the anniversary of the Closing Date immediately
preceding the Buyout Date; "Multiple" = the multiple corresponding to such
amount of Pre- Tax Operating Earnings as set forth on Schedule 9.03 hereto;
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and "Aggregate Residual Reference Percentage" = the difference between 100% and
the sum of the Reference Percentages under all prior Section 9.01(c)(i) Puts, if
any.
(b) The purchase price for the Section 9.01(c)(i) Put (the "SECTION
9.01(C)(I) BUYOUT PRICE") and the Section 9.01(c)(ii) Put (the "SECTION
9.01(C)(II) BUYOUT PRICE") shall be determined in accordance with the following
formulas:
Section 9.01(c)(i) = $52,000,000 DIVIDED BY (1.10)n x Reference Percentage
Buyout Price
Section 9.01(c)(ii) = $52,000,000 x Aggregate Residual Reference
Buyout Price Percentage DIVIDED BY (1.10)n
Where "n" = the number of twelve-month periods (including any fraction thereof)
from the date on which the applicable Put is exercised to the fifth anniversary
of the Closing Date.
(c) The purchase price for the Section 9.01(d) Call (the "SECTION
9.01(D) BUYOUT PRICE" and together with the Section 9.01(b) Buyout Price, the
Section 9.01(c)(i) Buyout Price and the Section 9.01(c)(ii) Buyout Price, the
"BUYOUT PRICE") shall be determined in accordance with the following formula:
Section 9.01(d) = $52,000,000 x Aggregate Residual Reference
Buyout Price Percentage DIVIDED BY (1.10)n
Where n = the number of twelve-month periods (including any fraction thereof)
from the date on which the Section 9.01(d) Call is exercised to the fifth
anniversary of the Closing Date.
9.04. METHOD OF PAYMENT. The Buyout Price shall be paid in cash or
Units or any combination thereof, as determined by Alliance in its sole
discretion; PROVIDED, HOWEVER, that (i) if Alliance elects to pay all or a
portion of the Buyout Price in Units, Holdings L.P. may elect instead to receive
such payment in the form of cash and (ii) in the event that there are no Units
outstanding as of any Buyout Date, the Buyout Price shall be paid in cash. In
the event that all or any portion of the Buyout Price is paid in Units, the
number of Units paid to Holdings L.P. shall be the amount obtained by dividing
(i) the difference between (A) the Buyout Price to be paid on the applicable
Buyout Date and (B) the portion of such Buyout Price which Alliance elects to
pay in cash by (ii) the per unit price of the Units, which price shall be the
average of the daily closing price per Unit for the twenty consecutive Trading
Days immediately prior to the date on which the Put, or Call, as the case may
be, was exercised. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place
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on such day, the average of the closing bid and asked prices, regular way, in
either case, as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the NYSE. Any
cash payments of the Buyout Price shall be made by wire trans fer of immediately
available funds to an account designated in writing by Holdings L.P. at least
three business days prior to the Buyout Date.
9.05. STATUS OF REPURCHASED MEMBERSHIP INTEREST. As of any Buyout
Date, Holdings L.P. shall cease to hold the Interest or the relevant portion of
such Interest, as the case may be, to be purchased on the Buyout Date pursuant
to the Put or Call, as the case may be, and shall no longer have any rights with
respect to such Interest or portion of Interest previously held.
9.06. DISPUTE RESOLUTION. If within 30 days after the provision to
Alliance or Holdings L.P., as the case may be, of the calculation of the Section
9.01(b) Buyout Price, Alliance or Holdings L.P. does not agree on the
calculation, such Member shall give written notice of such disagreement to the
other such Member and thereafter such calculation shall be conclusively
determined by the Accounting Referee as promptly as practicable. The fees of
Accounting Referee shall be borne equally by Alliance and Holdings L.P.
ARTICLE X
LIABILITY/INDEMNIFICATION
10.01. LIABILITY FOR DEBTS OF THE COMPANY; LIMITED LIABILITY. (a)
Except as otherwise provided in the Delaware Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and no
Member shall be obligated personally for any such debt, obligation or liability
of the Company solely by reason of being a Member.
(b) Except as otherwise expressly required by law, a Member, in its
capacity as such, shall have no liability to the Company, any other Member or to
the creditors of the Company in excess of such Member's obligation to make
Capital Contributions (to the extent such Capital Contributions have not yet
been made) and other payments required to be made by such Member under this
Agreement.
10.02. EXCULPATION. (a) To the fullest extent permitted by applicable
law (including Section 18-1101(c) of the Delaware Act), no Covered Person (other
than any officer of the Company) shall have any fiduciary or similar duty, at
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law or in equity, or any liability relating thereto to the Company, or to any
Member (or Affiliate of such Member) that is not Affiliated with such Covered
Person, with respect to or in connection with the Company. In furtherance of
and without limiting the foregoing, to the fullest extent permitted by law
(including Section 18-1101(c) of the Delaware Act), except to the extent set
forth in Section 7.06(d) each Member and Affiliate of such Member hereby waives
any claim for breach of fiduciary duty against any other Member or any Affiliate
of such other Member, and the Company hereby waives any claim for breach of
fiduciary duty against any Covered Person (other than any officer of the
Company), in each case with respect to the Company.
(b) Whenever any Person is permitted or required to make a decision or
act (i) in its "sole discretion" or "discretion" or under a grant of similar
authority or latitude, such Person shall be entitled to consider only such
interests and factors as it desires, including its own interest, or (ii) in its
"good faith", such Person shall act under such standard and shall not be subject
to any other or different standard imposed by this Agreement or any other
agreement contemplated therein or by relevant provisions of law or in equity or
otherwise. The right to exculpation conferred in this Section shall be a
contractual right which is intended for the benefit of and may be enforced by
each Covered Person.
10.03. INDEMNIFICATION. The Company shall, to the fullest extent
permitted by applicable law, indemnify and hold harmless each Covered Person to
the fullest extent permitted by the laws of the State of Delaware against any
and all Indemnified Losses. The right to indemnification conferred in this
Section shall also include the right to be paid by the Company the expenses
incurred in connection with any such proceeding in advance of its final
disposition to the fullest extent authorized by the laws of the State of
Delaware for directors and officers of corporations organized under the laws of
the State of Delaware. The right to indemnification under this Article X shall
not be exclusive or affect any other right to which a Covered Person may be
entitled. The right to indemnification conferred in this Section shall be a
contractual right which is intended for the benefit of and may be enforced by
each Covered Person.
ARTICLE XI
CONFIDENTIALITY
11.01. CONFIDENTIALITY. Each Member and each of its Affiliates shall
keep confidential and not reveal, and shall cause its Subsidiaries and the
officers, directors,
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employees, agents and representatives of it and its Subsidiaries, to keep
confidential and not to reveal, to any other Person, other than to the Company
or its officers and employees, or any officer, director, employee, agent,
representative or lender of such Member (each of whom shall be subject to the
confidentiality obligations set forth herein), or to any other Member or such
other Member's Affiliates (except that Client information which is specifically
requested confidential treatment by the applicable Client may not be revealed to
such Affiliate except as may be required by law), from the date hereof through
the third anniversary of the first date on which such Member is no longer a
Member of the Company, any confidential documents, confidential information
concerning, relating to or in connection with the Company, that come to the
knowledge of such Member or its Affiliates or their respective representatives
or agents by reason of the relationship of such Member or Affiliate with the
Company ("INFORMATION"), except for such Information that (a) is generally
available to the public (other than as a result of a disclosure by such Member
or its Affiliates), (b) is available to such Person on a non-confidential basis
from a source that is not prohibited from disclosing such Information to such
Person or (c) after notice, such Person is required to disclose under any
applicable law or under subpoena or other legal process; provided that nothing
in this Section 11.01 shall preclude any Member or its Affiliates from using any
Information in any manner reasonably connected to its investment in the Company
or as contemplated by the Transaction Documents.
ARTICLE XII
TERMINATION, DISSOLUTION AND LIQUIDATION
12.01. NO DISSOLUTION. The Company shall not be dissolved by the
admission of additional Members or the withdrawal of Members in whole or in
part, except in accordance with the terms of this Agreement.
12.02. LIQUIDATING EVENTS. The Company shall dissolve and commence
winding up upon the first to occur of any of the following events (each a
"LIQUIDATING EVENT"):
(a) the resignation, expulsion, bankruptcy or dissolution of a Member
or the occurrence of any other event which terminates the continued Membership
of a Member in the Company unless the business of the Company is continued by
the consent of all remaining Members within 90 days following the occurrence of
any such event;
(b) the Unanimous Vote of the Members to dissolve, wind up and
liquidate the Company; or
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(c) the entry of a decree of judicial dissolution pursuant to Section
18-802 of the Delaware Act.
12.03. NOTICE OF DISSOLUTION. Upon the dissolution of the Company,
Alliance shall carry out the winding up of the Company (the "LIQUIDATING
TRUSTEE"), and shall promptly notify the Members of such dissolution.
12.04. WINDING UP. Upon the occurrence of a Liquidating Event, the
Company shall continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets, and satisfying or making reasonable
provision for the satisfaction of the claims of its creditors and Members, and
no Member shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Company's business and affairs,
provided that all covenants contained in this Agreement and obligations provided
for in this Agreement shall continue to be fully binding upon the Members until
such time as the assets or property or the proceeds from the sale thereof has
been distributed pursuant to this Article and the Company has terminated. The
Members shall be responsible for overseeing the winding up and dissolution of
the Company. The Members shall take full account of the Company's assets and
liabili ties, and the Company's affairs shall be wound up in an orderly manner
in accordance with the following procedures:
(a) To the extent that the Members determine that any or all of the
assets of the Company shall be sold, such assets shall be sold as promptly as
possible, but in a business-like manner so as not to involve undue sacrifice;
(b) The Liquidating Trustee shall set up such reserves as it deems
reasonably necessary for any contingent or unforeseen liabilities or obligations
of the Company (the "LIQUIDATING TRUST"). Such reserves may be paid over by the
Liquidating Trustee to a bank (or other third party), to be held in escrow for
the purpose of paying any such contingent or unforeseen liabilities or
obligations. At the expiration of such period(s) as the Liquidating Trustee may
deem advisa ble, such reserves, if any (and any other assets available for
distribution), or a portion thereof, shall be distributed to the Members in
proportion to their Percentage Interests; and
(c) The Capital Account of each Member shall be adjusted to take into
account the profit and loss resulting from the sale of the Company's assets and
all other transactions in connection with the winding up of the Company.
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12.05. DISTRIBUTION UPON DISSOLUTION OF THE COMPANY. By the end of the
Company's taxable year during which the dissolution of the Company occurs or if
later, within 90 days after the date of such dissolution, the Company's assets
or the proceeds from the sale thereof to the extent sufficient therefor shall be
applied and distributed to the maximum extent permitted by law, in the following
order:
(a) first, to the satisfaction (whether by payment or by the making of
reasonable provision for payment) of all of the Company's debts and liabilities
to creditors including contingent or unforeseen obligations or debts, but
excluding debts and liabilities to Members;
(b) second, to the satisfaction (whether by payment or by the making
of reasonable provision for the payment) of all of the Company's debts and
liabilities to Members;
(c) third, the amount necessary to satisfy the Liquidating Trust;
(d) the balance, if any, to the Members in accordance with their
Capital Accounts after giving effect to all Capital Account adjustments for all
Fiscal Years.
12.06. LIQUIDATION OF MEMBER'S INTEREST. In the event any Member's
interest in the Company is "liquidated" within the meaning of Section 1.761-1(d)
of the Regulations, liquidating distributions, if any, shall be made to such
Member in the same amounts and at such times as would have been made to such
Member, in accordance with this Section 12.06, if the Company itself were being
"liquidated". For purposes of this Section 12.06, the balance in each Member's
Capital Account shall be determined after taking into account all Capital
Account adjustments for the Fiscal Year during which the liquidation occurs
(other than liquidation distributions pursuant to Section 12.02 and this Section
12.06).
12.07. REPORT ON LIQUIDATION. Within a reasonable time following the
completion of the liquidation of the Company's properties, the Liquidating
Trustee shall supply to each of the Members financial statements which shall set
forth the assets and the liabilities of the Company as of the date of complete
liquidation, each Member's pro rata portion of distributions, and the amount
retained as reserves pursuant to Section 12.04(b).
12.08. OTHER MATTERS. (a) A Member shall look solely to the assets of
the Company for the return of its Capital
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Contributions, and if the assets remaining after the payment and discharge of
Company debts and liabilities are insufficient to provide for the return of its
Capital Contributions, a Member shall have no recourse against any other Member.
No holder of an interest in the Company shall have any right to demand or
receive property other than cash upon dissolution, winding up and termination of
the Company.
(b) Except as otherwise provided in this Agreement, no Member shall
resign from the Company prior to the dissolution and winding up of the Company
in accordance with this Agreement.
12.09. TERMINATION. The Company shall terminate when all of the assets
of the Company, after payment of or due provision for all debts, liabilities and
obligations of the Company, shall have been distributed to the Members in the
manner provided in this Article XII and the certificate of formation of the
Company shall have been canceled in the manner required by the Act.
ARTICLE XIII
RESTRICTIONS ON TRANSFER AND DISTRIBUTIONS
13.01. RESTRICTIONS ON TRANSFER. Except pursuant to the terms of this
Agreement, the Units, if any, to be issued pursuant to this Agreement shall not
be transferable except upon the conditions specified in this Article, which
conditions are intended to ensure compliance with the provisions of the
Securities Act in respect of the transfer of any such Units. Each holder of
Units issued pursuant to this Agreement will cause any proposed transferee of
such Units held by such holder, other than a transferee who purchases pursuant
to Rule 144 under the Securities Act, as amended from time to time, to agree to
take and hold such Units subject to the provisions and upon the conditions
specified in this Article.
13.02. RESTRICTIVE LEGEND. Each certificate for Units delivered
pursuant to this Agreement issued to Holdings L.P. or to a subsequent transferee
shall (unless otherwise permitted by the provisions of Section 13.03) include a
legend in substantially the following form:
THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT AND THE RULES AND REGULATIONS THEREUNDER. BY ITS
ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE AGREES TO
COMPLY IN ALL RESPECTS WITH
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ARTICLE XIII OF THE LIMITED LIABILITY COMPANY AGREEMENT
DATED AS OF [ ], 1996 IN RELATION TO WHICH SUCH UNITS
WERE ISSUED. COPIES OF SUCH ARTICLE XIII MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF THIS COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICES.
FOR NEW HAMPSHIRE RESIDENTS ONLY. NEITHER THE FACT THAT A
REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS
BEEN FILED UNDER THE NEW HAMPSHIRE UNIFORM SECURITIES ACT
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY
IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE
STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE ATTORNEY
GENERAL OR THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY
DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT
MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR
TRANSACTION MEANS THAT THE ATTORNEY GENERAL OF NEW HAMPSHIRE
HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF,
OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY,
OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE,
TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF SECTION
421-B.20.
13.03. NOTICE OF PROPOSED TRANSFERS; RULE 144. (a) Each holder of
Units issued pursuant to this Agreement agrees to comply in all respects with
the provisions of this Section. Prior to any proposed sale, transfer or other
disposition of Units delivered pursuant hereto (other than under the
circumstances described in paragraph (b) below with respect to termination of
restrictions on transfer pursuant to Rule 144(k) under the Securities Act, as
amended from time to time ("RULE 144(K)"), the affected holders of Units shall
give written notice to Alliance of such holders intention to effect such sale,
transfer or other disposition. Each such notice shall describe the manner and
circumstances of the proposed sale, transfer or other disposition in reasonable
detail, and shall be accompanied by either (i) an opinion of counsel, and in
form and substance, reasonably acceptable to Alliance, addressed to Alliance, to
the effect that the proposed sale, transfer or other disposition of such Units
may be effected without registration under the Securities Act, or (ii) a "NO
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ACTION" letter, in form and substance reasonably acceptable to Alliance, from
the Commission to the effect that such sale, transfer or other disposition of
such Units without registration will not result in a recommendation by the staff
of the commission that action be taken with respect thereto, whereupon the
holder of such Units shall be entitled to transfer such Units in accordance with
the terms of the notice delivered by Buyer; PROVIDED, HOWEVER, that no such
notice or opinion of counsel shall be required for a transfer by will or
intestate succession from such holder to his or her spouse or family members, if
the transferee agrees in writing to be subject to the terms hereof to the same
extent if such transferee were an original holder of Units hereunder. The
provisions of this Section 13.03(a) shall not be applicable to a bona fide
pledge of Units to any bank, registered broker/dealer or other financial
institution.
(b) Notwithstanding the foregoing, no opinion of counsel shall be
required for (i) any sale, transfer or other disposition of such Units or the
removal of the above legend from the certificates therefor or (ii) the removal
of the above legend based upon the termination of restrictions on sales of such
stock pursuant to Rule 144(k), if the holder of such Units shall deliver to
Alliance in its stead a certificate stating that such shares are (x) eligible
for sale pursuant to Rule 144, as amended from time to time and that such sale
will be made in accordance with such Rule, or (y) eligible for termination of
restrictions on sale pursuant to Rule 144(k), as amended from time to time,
under the Securities Act and representing and warranting to Alliance that such
units are so eligible in accordance with such Rule, in each case together with a
summary of the bases for such statements, unless within fifteen days after
receipt of such a certificate Alliance shall reasonably determine in good faith
that an opinion of counsel is required to ensure compliance with the Securities
Act and shall so notify such Unitholder.
13.04. DISTRIBUTIONS WITH RESPECT TO UNITS. The holders of the Units
issued pursuant to this Agreement on the record date for the regular quarterly
distribution by Alliance of Available Cash Flow (as defined in the Alliance
Limited Partnership Agreement) relating to the quarter during which such Units
are issued and delivered to Holdings L.P., shall be entitled to receive a pro
rata portion of such distribution with respect to each such Unit equal to the
amount of Available Cash flow distributed per Unit multiplied by a fraction, the
numerator of which is the number of days remaining in the quarter on and
including the Buy Out Date, and the denominator of which is the total number of
days in such quarter; PROVIDED that such holders shall not have any right to
receive any distribution of Available Cash Flow with respect to any of such
Units in respect of any calendar
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quarter prior to which such Units were issued and delivered to such holders.
ARTICLE XIV
MISCELLANEOUS
14.01. NOTICES. All notices, requests and other communications to any
party or to the Company shall be in writing (including telecopy or similar
writing) and shall be given,
if to any Alliance Member to:
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
Telephone: 212-969-1327
Telefax: 212-969-1334
Attention: David R. Brewer, Jr.
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attention: Phillip R. Mills
if to Holdings L.P., to:
Cursitor Holdings
38 Newbury Street
Boston, Massachusetts 02116-3210
Telephone: 617-267-8900
Attention: Richard Irving Morris, Jr.
with a copy to:
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109-2881
Attention: Richard E. Floor, P.C.
Fax: (617) 523-1231
or to such other address or telecopier number as such party or the Company may
hereafter specify for the purpose by notice to the other parties and the
Company. Each such notice, request or other communication shall be effective
when delivered at the address specified in this Section.
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14.02. AMENDMENTS; NO WAIVERS. (a) Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by all Members, or in the case of a waiver,
by the Member against whom the waiver is to be effective.
(b) 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.
14.03. EXPENSES. All costs and expenses incurred by the parties hereto
in connection with this Agreement shall be paid by the party incurring such cost
or expense.
14.04. SUCCESSORS AND ASSIGNS. This Agreement and any Interests
hereunder shall not be assignable in whole or in part (directly or indirectly)
by operation of law or otherwise, except by Unanimous Vote and except that the
Alliance Members may assign their respective Interests to any wholly owned
Subsidiary of Alliance or any corporation or other entity that succeeds to the
business of Alliance and its subsidiaries. Any assignment in violation of this
provision shall be void. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
successors and assigns. This Agreement is for the sole benefit of the parties
hereto and, except as otherwise contemplated herein, nothing herein expressed or
implied shall give or be construed to give any Person, other than the parties
hereto, any legal or equitable rights hereunder.
14.05. HEADINGS. Headings are for ease of reference only and shall not
form a part of this Agreement.
14.06. EXHIBITS AND SCHEDULES. Each of the Exhibits and Schedules
attached to this Agreement are incorporated herein by reference and expressly
made a part of this Agreement for all purposes. References to any Exhibit in
this Agreement shall be deemed to include this reference and incorporation.
14.07. PARTITION. Each Member hereby waives any and all rights which
it may have to partition or bring any action to partition Company property. No
Member shall have the right to partition any property of the Company, nor shall
a Member make application to any court or authority having jurisdiction over
such matters or commence or prosecute any action or proceeding for partition and
the sale thereof. Upon any breach of the provisions of this Section by a Member,
each
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other Member (in addition to all rights and remedies at law and in equity that
it may have) shall be entitled to a decree or order restraining and enjoining
such application, action or proceeding.
14.08. CONSENTS AND ADDITIONAL DOCUMENTS. Each party hereto agrees to
execute, with acknowledgment or affidavit, if required, any and all documents
and writings which may be necessary or expedient for the purposes of this
Company, specifically including all agreements, certificates, tax statements,
tax returns and other documents as may be required of the Company or its Members
by foreign, federal or state law or the laws of any other governmental
jurisdiction in which the Company conducts or plans to conduct business.
14.09. GOVERNING LAW; ENTIRE AGREEMENT. This Agreement shall be
construed in accordance with and governed by the law of the State of Delaware
without giving effect to the principles of conflicts of laws thereof. In
particular, it shall be construed to the maximum extent possible to comply with
all of the terms and conditions of the Delaware Act. If it shall be determined
by court order not subject to appeal or discretionary review that any provision
or wording of this Agreement shall be invalid or unenforceable under the
Delaware Act or other applicable law, such invalidity or unenforceabil ity shall
not invalidate the entire Agreement and shall be construed so as to limit any
term or provision so as to make it enforceable or valid within the requirements
of applicable law, and, in the event such term or provision cannot be so
limited, this Agreement shall be construed to omit such invalid or unenforceable
provisions.
14.10. DISPUTES; SUBMISSION TO JURISDICTION. (a) If any dispute or
controversy shall arise among the parties, or any of them, as to any matter
arising out of or in connection with this Agreement or the transactions contem
plated hereby, the parties shall attempt in good faith to resolve such
controversy by mutual agreement. If such dispute or controversy cannot be so
resolved, it shall be resolved solely by adjudication in accordance with the
provisions of Section 14.10(b).
(b) Any 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 shall be brought only in the United States
District Court for the Southern District of New York or the United States
District Court for the District of Delaware or any court of the State of
Delaware, and each of the parties hereto hereby consents to the jurisdiction of
such courts (and of the appropriate appellate courts therefrom in any such
Proceeding) and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the
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laying of the venue of any such Proceeding in any such court or that any such
Proceeding which is brought in any such court has been brought in an
inconvenient forum. Without limiting the foregoing and subject to applicable
law, each party agrees that service of process on such party as provided in
Section 14.01 shall be deemed effective service of process on such party.
Nothing herein shall affect the right of any party to serve legal process in any
other manner permitted by law or at equity. WITH RESPECT TO ANY SUCH PROCEEDING
IN ANY SUCH COURT, EACH OF THE PARTIES IRREVOCABLY WAIVES AND RELEASES TO THE
OTHER ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A TRIAL BY
JURY IN ANY SUCH PROCEEDING.
14.11. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be deemed an original. This
Agreement shall become effective when each party shall have received a
counterpart hereof signed by each of the other parties.
14.12. SEVERABILITY. If any provision of this Agreement or the
application thereof to any Person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other Persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
14.13. FURTHER ASSURANCES. The Members will execute and deliver such
further instruments and do such further acts and things as may be required to
carry out the intent and purpose of this Agreement.
14.14. ENTIRE AGREEMENT. This Agreement, the other Transaction
Documents, including any exhibits or schedules hereto or thereto, or any other
instruments, agreements or documents referenced herein or therein, constitute
the entire agreement among the parties hereto and thereto with respect to the
subject matter hereof and thereof, and supersede all other prior agreements or
undertakings with respect thereto, both written and oral.
14.15. RESTRICTIVE TRADE PRACTICES. Notwithstanding any other
provision of this Agreement, no provision of this Agreement which is of such a
nature as to make such Agreement liable to registration under the Restrictive
Trade Practices Act 1976 shall take effect until immediately after particulars
thereof have been duly furnished to the Director General of Fair Trading
pursuant to the said Act. For the purposes of this Clause the term "Agreement"
shall include the Transaction Agreement, the Limited Liability Company
Agreement, the First Services Agreement, the Second Services Agreement, the
Registration Rights Agreement and the Employment Agreements.
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IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement or have caused this Agreement to be duly executed by their respective
authorized officers, in each case 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
------------------
John D. Carifa
President
ALLIANCE CAPITAL MANAGEMENT
CORPORATION OF DELAWARE
By:/S/ Robert H. Joseph, Jr.
-------------------------
Robert J. Joseph, Jr.
Senior Vice President and Chief Financial Officer
CURSITOR HOLDINGS, L.P.
By HMESLP, Inc.
as General Partner
By:/S/ Hugh M. Eaton III
---------------------
Hugh M. Eaton III
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ELEVENTH SUPPLEMENTAL AGREEMENT
ELEVENTH SUPPLEMENTAL AGREEMENT dated as of the 30th day of April, 1995,
between THE FISHER-SIXTH AVENUE COMPANY, a New York partnership ("Fisher") with
its office c/o Fisher Brothers at 299 Park Avenue, New York, New York 10017 and
HAWAIIAN SIXTH AVE. CORP., a New York corporation ("Hawaiian") with its office
at 1345 Avenue of the Americas, New York, New York 10105 (hereinafter Fisher and
Hawaiian are collectively called "Landlord") , and ALLIANCE CAPITAL MANAGEMENT
L.P., a Delaware limited partnership having an office at 1345 Avenue of the
Americas, New York, New York 10105 ("Tenant")
WITNESSETH:
WHEREAS:
A. Landlord and Tenant have entered into a certain lease (the
"Original Lease") dated as of July 3, 1985, as amended by that certain
Supplemental Agreement dated September 30, 1985, Second Supplemental Agreement
dated as of December 31, 1985, Third Supplemental Agreement dated as of July 29,
1987, Fourth Supplemental Agreement dated as of February, 1989, Fifth
Supplemental Agreement dated as of October 9, 1989, Sixth Supplemental Agreement
dated as of December 13, 1991, Seventh Supplemental Agreement dated as of May
27, 1993 ("Seventh Supplement), Eighth Supplemental Agreement dated as of June
1, 1994, Ninth Supplemental Agreement dated as of August 16, 1994 (the "Ninth
Supplement") and Tenth Supplemental Agreement dated as of December 31, 1994 (the
"Tenth Supplement") (such lease as the same has been or may hereafter be amended
is hereinafter called the "Lease") with respect to the entire rentable areas on
the 32nd, 33rd, 34th, 37th, 38th, 39th, 43rd, 44th, 45th and 46th
<PAGE>
floors and a portion of the 31st floor (hereinafter collectively called the
"Original Space") in the building known as 1345 Avenue of the Americas, New
York, New York 10105 (hereinafter called the "Building") , for a term
commencing and ending as set forth in the Lease.
B. The parties hereto desire to further modify the Lease and to
provide for (i) the deletion of the 46th floor from the demised premises and
(ii) certain other modifications, all as are more particularly set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. DEFINED TERMS. Except as otherwise defined herein, all terms used
in this Agreement shall have the same meanings provided in the Lease.
2. DELETION OF SPACE. (a) Subject to the provisions of this Section
2(a), effective as of the Adjustment Date (as hereinafter defined) and for the
entire remaining term of the Lease all of the rentable space on the 46th floor
of the Building (herein called the "Deleted Space") shall be deemed deleted from
the demised premises. The floor plan of the 46th floor of the Building annexed
to the Ninth Supplement as a part of Exhibit A shall be deemed deleted from the
Lease as of the Adjustment Date.
(b) In consideration for the foregoing deletion of the Deleted Space,
Tenant shall pay to Landlord $143,298.42 per month for each month during the
period commencing May 1, 1995 and ending November 30, 1995 and $143,298.42 per
month for each of the following six (6) months; April 1997, September 1997,
March 1998, March 1999, November 1998 and September 1999 and the second sentence
of Section 2(b) of the Tenth Supplement is hereby reaffirmed. Such amounts
shall be paid on the first day of, such months.
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(c) Effective as of the Adjustment Date and for the entire remaining
term of the Lease:
(i) Section 4(a)(i) of the Ninth Supplement, as modified by
the Tenth Supplement, shall be further modified by substituting the words
"FIVE MILLION SIXTY EIGHT THOUSAND SEVEN HUNDRED FORTY-EIGHT and 00/100
DOLLARS ($5,068,748) per annum ($422,395.67 per month") for the words "SIX
MILLION SEVEN HUNDRED EIGHTY-EIGHT THOUSAND THREE HUNDRED TWENTY-NINE and
00/100 DOLLARS ($6,788,329.00) per annum ($565,694.08 per month)".
(ii) Section 4(c) of the Ninth Supplement, as modified by the
Tenth Supplement, shall be further modified by reducing the Annual Credit
referred to therein as follows: the words "43-48th Floors $880,675.39"
shall be replaced by the words "43rd-45th Floors $440,337.69".
(iii) The percentage "8.593 percent (8.593%)" appearing in
subsection 4 (d) (ii) of the Ninth Supplement, as modified by the Tenth
Supplement, shall be further modified. to read "6.446 percent (6.446%)".
(iv) The percentage "9.153 percent (9.153%)" appearing in
subsection 4 (d) (iv) of the Ninth Supplement, as modified by the Tenth
Supplement, shall be further modified to read "6.865 percent (6.865%)".
(v) Section 8(a) of the Ninth Supplement, as modified by the
Tenth Supplement, shall be further modified by changing "The Percentage" in
6.04 (a) (iv) of "24.24 (24.24%) percent" to "21.92 (21.92%) percent".
3
<PAGE>
(d) Sections 13(a) through 13(c) and 13(e) of the Ninth Supplement are
hereby deemed deleted in their entirety. Section 18 of the Ninth Supplement
shall be amended by changing the number "forty-two (42)" therein to "thirty-two
(32)".
3. EFFECTIVE DATE OF AMENDMENT. This Agreement and all of the terms,
provisions and conditions hereof shall be effective as of the date (the
"Adjustment Date") on which (a) a fully executed First Amendment (the "UBS
Amendment") of those certain leases between Landlord and Union Bank of
Switzerland, New York Branch ("UBS") for the 47th through 50th floors inclusive
and certain retail space in the Building each dated December 31, 1994, which
will cover the Deleted Space, is unconditionally delivered by both Landlord and
UBS and (b) Bankers Trust Company, as trustee (the "Trustee"), has consented to
and approved of this Agreement and the UBS Amendment. Tenant may terminate this
Agreement by written notice to Landlord at any time after May 1, 1995 if the
Adjustment Date shall not have occurred, such termination to be effective the
later of the date of such notice or May 16, 1995, provided that if the
Adjustment Date occurs on or before May 15, 1995 any such written notice to
terminate this Agreement shall be deemed void and of no force and effect.
4. BROKERAGE. Tenant represents and warrants that it neither
consulted nor negotiated with any broker or finder with regard to this
Agreement, other than Byrnam Wood, Inc. and Tenant agrees to pay any commission,
fee or other sum due and payable to Byrnam Wood, Inc. Tenant agrees to
indemnify, defend and save Landlord harmless from and against any claims for
fees or commissions from anyone with whom Tenant has dealt in connection with
this Agreement other than Cushman & Wakefield (C&W), whose commission shall be
Landlord's responsibility.
4
<PAGE>
5. THIRTY FIRST FLOOR. Tenant hereby waives any right to terminate the
leasing of the Thirty First Floor Added Space as provided for in Section 2 (d)
of the Seventh Supplement. If the Deleted Space is deleted from the demised
premises, the eighteen (18) month partial abatement period referred to in
Section 2 (d) of the Seventh Supplement shall be reduced to fourteen and one-
half (1434) months and commence July 15, 1996.
6. MISCELLANEOUS.
(a) Except as modified, amended and supplemented by this
Agreement, the Lease and all covenants, agreements, terms and conditions thereof
shall continue in full force and effect and are hereby in all respects ratified
and confirmed.
(b) This Agreement shall not be binding upon Landlord and
Tenant unless and until it is signed by both parties hereto and a signed copy
thereof is delivered by Landlord to Tenant.
(c) This Agreement constitutes the entire agreement among the
parties hereto with respect to the matters stated herein and may not be amended
or modified unless such amendment or modification shall be in writing and signed
by the party against whom enforcement is sought.
(d) The terms, covenants and conditions contained in this
Agreement shall bind and inure to the benefit of the parties hereto and except
as otherwise provided in the Lease as hereby supplemented, their respective
successors and assigns.
(e) This Agreement shall be governed in all respects by the
laws of the State of New York.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
THE FISHER-SIXTH AVENUE COMPANY
By: /s/
---------------------------
By:
----------------------------
HAWAIIAN SIXTH AVENUE CORP.
By: /s/
---------------------------
By:
----------------------------
ALLIANCE CAPITAL MANAGEMENT L.P.
By: ALLIANCE CAPITAL MANAGEMENT
CORPORATION, its General Partner
By: s/ John D. Carifa
--------------------
Name: John D. Carifa
Title: President
<PAGE>
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (the "Amendment") made
as of the 31st day of January, 1996 among Alliance Capital Management L.P.,
(the "Borrower"), NationsBank of Georgia, N.A., individually and as agent (the
"Agent"), and the banks whose names appear on the signature pages hereof (the
"Banks").
W I T N E S S E T H:
WHEREAS, the Borrower, the Banks and the Agent are parties to that certain
Revolving Credit Agreement dated as of December 19, 1994 (the "Credit
Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement in order
to permit the Borrower to enter into an acquisition pursuant to 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 and the Cursitor Alliance LLC Amended and
Restated Limited Liability Company Agreement to be dated as of February 29,
1996 among the Borrower, Alliance Capital Management Corporation of Delaware
and Cursitor Holdings, L.P. and to amend certain other provisions of the Credit
Agreement, all under the terms and conditions set forth herein;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree
that all capitalized terms used herein shall have the meanings ascribed thereto
in the Credit Agreement, except as otherwise defined or limited herein, and
further agree as follows:
AMENDMENT TO SECTION 1.1. Section 1.1 is amended by (i) deleting the
existing definition of "Affiliate" and "Restricted Subsidiary" therefrom
and substituting the following definitions of such terms, and (ii) adding
the following new definitions of "Cursitor Acquisition Agreement",
"Cursitor Alliance" and "Cursitor Member Agreement:"
"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."
<PAGE>
"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."
"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 to be 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 Exhibit "M" attached
hereto."
"RESTRICTED SUBSIDIARY. Each (a) Subsidiary of the Borrower
designated as a "Restricted Subsidiary" on SCHEDULE 5.18 (and by
suchdesignation the Borrower represents and warrants to the 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 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 Agent
and the Banks with a current list of all Restricted Subsidiaries).
The qualifications of a Restricted Subsidiary are as follows: (a) all
of the issued and outstanding Equity Securities of a Restricted
Subsidiary (other than directors' qualifying shares or shares not
exceeding ten percent (10%) in the aggregate of the issued and
outstanding Equity Securities of a Restricted Subsidiary owned by
Persons other than the Borrower or another Restricted Subsidiary
pursuant to other applicable legal requirements) shall be owned of
record and beneficially by the Borrower or another Restricted
Subsidiary 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
- 2 -
<PAGE>
limited to a specific dollar amount; PROVIDED, HOWEVER, that a
Restricted Subsidiary may be a general partner in a partnership which
is wholly owned by the Borrower, Cursitor Alliance or other Restricted
Subsidiaries."
2. AMENDMENT TO ARTICLE 5. Article 5, "REPRESENTATIONS AND WARRANTIES,"
is hereby amended in its entirety to provide that any reference to the
term "limited partnership" shall be deemed to also include a general
partnership; and any requirements that a limited partnership comply
with the terms and provisions of any (i) governing documents or (ii)
applicable law shall be deemed to include a requirement that any
general partnership comply with the terms and provisions of (x) any of
such general partnership's governing documents or (y) any law
applicable to such general partnership.
3. AMENDMENT TO SECTION 5.5. Section 5.5 to the Credit Agreement is
hereby amended by deleting it in its entirety and replacing it with
the following:
"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 September 30, 1995 that has resulted in a Material
Effect."
4. AMENDMENT TO SECTION 5.16. Section 5.16 of the Credit Agreement is
hereby amended by deleting it in its entirety and replacing it with
the following:
"5.16. REGULATIONS U AND X. The proceeds of the Loans shall be
used by the Borrower (a) to support the issuance of commercial paper,
(b) for working capital and general corporate purposes and (c) to
consummate the acquisition by the Borrower of Cursitor Alliance
pursuant to the Cursitor Acquisition Agreement. 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."
5. AMENDMENT TO SECTION 5.18. Section 5.18 to the Credit Agreement is
hereby amended by deleting it in its entirety and replacing it with the
following:
"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
- 3 -
<PAGE>
specifically identified as such), (b) the number of authorized and
outstanding Equity Securities of each class of each Subsidiary of the
Borrower and the number and percentage thereof owned, directly or
indirectly, by the Borrower, and (c) any partnership or joint venture in
which the Borrower or any of its Subsidiaries is engaged with any other
Person. The Equity Securities of each Subsidiary of the Borrower, which
Equity Securities are owned directly or indirectly by the Borrower, are
validly issued, fully paid, and non-assessable."
6. AMENDMENT TO SECTION 7.3. Subsection (f) of Section 7.3 of the Credit
Agreement is hereby amended by deleting it in its entirety and replacing it
with the following:
"(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,
Cursitor Alliance or its Restricted Subsidiaries."
7. AMENDMENT TO SECTION 7.7. Section 7.7 of the Credit Agreement is
hereby amended to permit $21,500,000 of Funded Debt to be incurred by Cursitor
Alliance in addition to any Funded Debt incurred by Cursitor Alliance pursuant
to Section 7.7(b), by substituting a comma for the word "and" before item (b)
within the proviso and adding at the end of such proviso an additional item (c)
as follows:
"and (c) in addition to any Funded Debt which may be incurred by
Cursitor Alliance pursuant to Section 7.7(b), Cursitor Alliance may
incur $21,500,000 of Funded Debt pursuant to Section 2.6(c) of the
Cursitor Acquisition Agreement."
8. AMENDMENT TO SECTION 7.8. Section 7.8 of the Credit Agreement is
hereby amended by deleting it in its entirety and replacing it with the
following:
- 4 -
<PAGE>
"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), and (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, is not prohibited under this 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 the First
Amendment to this 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
- 5 -
<PAGE>
Agreement) after the date of the Cursitor Member Agreement), is not
prohibited under this Agreement."
9. AMENDMENT TO SCHEDULE 5.1.4. Schedule 5.1.4 to the Credit Agreement,
EQUITY SECURITIES, is hereby amended by deleting same in its entirety and
substituting therefor the Schedule 5.1.4 dated as of January 22, 1996 and
attached hereto.
10. AMENDMENT TO SCHEDULE 5.18. Schedule 5.18 to the Credit Agreement,
SUBSIDIARIES, is hereby amended by (i) deleting the entry for "Alliance Capital
Management (Turkey) Ltd." therefrom and substituting the following entry for
such Subsidiary, and (ii) adding after the last entry thereon the following
Subsidiaries, each of which shall be Restricted Subsidiaries:
STOCK OWNED BY
"NAME OF JURISDICTION OF COMPANY AND EACH
SUBSIDIARY INCORPORATION OTHER SUBSIDIARY
Cursitor Delaware 93%
Alliance LLC*
Cursitor United Kingdom 93%
Holdings
Limited (UK)*
Cursitor United Kingdom 93%
Management
Limited (UK)*
Cursitor- New York general 93%
Eaton Asset partnership
Management*
The London United Kingdom 93%
Partnership
Ltd. (UK)*
Cursitor Luxembourg 93%
Management
CO SA
(Luxembourg)*
Cursitor France 93%
Cecogest SA
(France)*
Cursitor France 93%
Courtage SA
(France)*
- 6 -
<PAGE>
STOCK OWNED BY
NAME OF JURISDICTION OF COMPANY AND EACH
SUBSIDIARY INCORPORATION OTHER SUBSIDIARY
Draycott Massachusetts 93%
Partners, Ltd.*
Cursitor France 93%
Gestion SA
(France)*
Alliance Delaware 93%
Capital
Management
(Asia) Ltd.*
Alliance Delaware 93%
Capital
Management
(Turkey) Ltd.*
Alliance Delaware 93%
Capital
Management
(Japan) Inc.*
Alliance Brazil 93%
Capital
Management
(Brasil) Ltda.,
(Brasil)*
Alliance United Kingdom 93%
Capital
Limited (UK)*
Dimensional United Kingdom 93%
Asset
Management
Limited (UK)*
Dimensional United Kingdom 93%"
Trust
Management
Limited (UK)*
After giving effect to the Amendment to Schedule 5.18, such Schedule 5.18 shall
read in its entirety as set forth on Schedule 5.18 dated the date of this
Amendment and attached hereto.
- 7 -
<PAGE>
11. REPRESENTATIONS AND WARRANTIES. In order to induce the Agent and
the Banks to enter into this Amendment, the Borrower hereby represents and
warrants as follows:
A. Each representation and warranty set forth in the Credit
Agreement, as amended by this Amendment, is hereby restated and affirmed as
true and correct as of the date hereof;
B. The Borrower has the partnership power and authority to enter
into this Amendment and to do all acts and things as are required or
contemplated hereunder to be done, observed and performed by it;
C. This Amendment has been duly authorized, validly executed and
delivered by authorized signatories of the Borrower, and this Amendment
constitutes the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms; and
D. The execution and delivery of this Amendment and the
Borrower's performance hereunder does not and will not require the consent or
approval of any regulatory authority or governmental authority or agency having
jurisdiction over the Borrower, nor will such execution, delivery and
performance be in contravention of or in conflict with the Borrower's
partnership agreement or the provision of any statute, judgment, order,
indenture, instrument, agreement or undertaking to which the Borrower is a
party or by which the Borrower's assets or properties are or may become bound.
12. CONDITIONS PRECEDENT. This Amendment is subject to the prior
fulfillment of each of the following conditions:
A. The Agent shall have received counterparts of this Amendment
executed by the Borrower and the Majority Banks;
B. The Agent and the Banks shall have received pro forma
consolidated financial statements of the Borrower after giving effect to the
acquisition of Cursitor Alliance and its Subsidiaries; and
C. The Agent and the Banks shall have received all such other
certificates, reports, statements, legal opinions or other documents as the
Agent or any Bank may reasonably request prior to the date of this Amendment.
13. AMENDMENT TO LOAN DOCUMENTS; AMENDMENT AS LOAN DOCUMENT. Each
Loan Document which is not otherwise amended in connection with the execution
and delivery of this Amendment is hereby amended and modified, as necessary, to
conform such document to the terms and conditions of the Credit Agreement, as
amended by this Amendment, and all references in any Loan Document to the
"Credit Agreement" shall mean the Credit
- 8 -
<PAGE>
Agreement as amended hereby. This
Amendment itself shall be deemed to be a Loan Document for all purposes under
the Credit Agreement.
14. NO OTHER AMENDMENT OR WAIVER. Except for the amendments set forth
above, the text of the Credit Agreement shall remain unchanged and in full force
and effect. The Banks and the Agent expressly reserve the right to require
strict compliance with the terms of the Credit Agreement.
15. COUNTERPARTS. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement.
16. GOVERNING LAW. This Amendment shall be deemed to be made
pursuant to the laws of the State of New York with respect to agreements made
and to be performed wholly in the State of New York and shall be construed,
interpreted, performed and enforced in accordance therewith without regard to
the principles of conflicts of laws of such state.
17. EFFECTIVE DATE. This Amendment shall be effective as of the date
first written above.
IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized officers or representatives to execute and deliver this
Amendment as of the day and year first above written.
BORROWER: ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its General Partner
By:/s/ Anne S. Drennan
-------------------------
Name:Anne S. Drennan
Title: Senior Vice President and
Treasurer
AGENT: NATIONSBANK OF GEORGIA, N.A.
By:/s/ Ira L. Moreland
-------------------------
Name: Ira L. Moreland
Title: Senior Vice President
- 9 -
<PAGE>
BANKS: NATIONSBANK OF GEORGIA, N.A.
By:/s/ Ira L. Moreland
-------------------------
Name: Ira L. Moreland
Title: Senior Vice President
THE BANK OF NEW YORK
by:/s/ Lee B. Stephens
-------------------------
Name:Lee B. Stephens
Title: Vice President
CHEMICAL BANK
by:/s/ Heather Lindstrom
-------------------------
Name:Heather Lindstrom
Title:Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
by:/s/ Lauren S. Mccoy
-------------------------
Name:Lauren S. McCoy
Title:Vice President
THE FIRST NATIONAL BANK OF BOSTON
by:/s/ Carol A. Clark
-------------------------
Name: Carol A. Clark
Title: Managing Director
THE CHASE MANHATTAN BANK, N.A.
by:/s/ Candace R. Lau-Hanson
-------------------------
Name:Candance R. Lau-Hanson
Title:Vice President
<PAGE>
REVOLVING CREDIT
AGREEMENT
Dated as of February 23, 1996
Among
ALLIANCE CAPITAL MANAGEMENT L. P.,
THE FIRST NATIONAL BANK OF BOSTON,
as Administrative Agent,
NATIONSBANK, N.A. (SOUTH)
as Syndication Agent,
THE FIRST NATIONAL BANK OF BOSTON
and
NATIONSBANK, N.A. (SOUTH)
individually and as Co-Agents,
and
THE BANKS WHOSE NAMES APPEAR
ON THE SIGNATURE PAGES HEREOF
<PAGE>
TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND RULES OF INTERPRETATION. . . . . . . . . . . . . . . . . 1
1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Rules of Interpretation. . . . . . . . . . . . . . . . . . . . .16
2. THE REVOLVING CREDIT FACILITY. . . . . . . . . . . . . . . . . . . . . .17
2.1. Commitment to Lend . . . . . . . . . . . . . . . . . . . . . . .17
2.2. Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . .18
2.3. Utilization Fee. . . . . . . . . . . . . . . . . . . . . . . . .18
2.4. Reduction of Total Commitment. . . . . . . . . . . . . . . . . .19
2.5. The Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . .19
2.6. Interest on Revolving Credit Loans . . . . . . . . . . . . . . .19
2.7. Requests for Revolving Credit Loans. . . . . . . . . . . . . . .20
2.8 Loans to Cover Reimbursement Obligations . . . . . . . . . . . .20
2.9. Conversion Options . . . . . . . . . . . . . . . . . . . . . . .21
2.10 Funds for Revolving Credit Loans22
2.11 Limit on Number of Eurodollar Rate Loans . . . . . . . . . . . .23
2.12. Swing Loans. . . . . . . . . . . . . . . . . . . . . . . . . . .23
3. REPAYMENT OF THE REVOLVING CREDIT LOANS. . . . . . . . . . . . . . . . .26
3.1. Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
3.2. Mandatory Repayments of Revolving Credit Loans . . . . . . . . .26
3.3. Optional Repayments of Revolving Credit Loans. . . . . . . . . .29
4. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . .29
4.1. Letter of Credit Commitment. . . . . . . . . . . . . . . . . . .29
4.2. Reimbursement Obligation of the Borrower . . . . . . . . . . . .30
4.3. Letter of Credit Payments. . . . . . . . . . . . . . . . . . . .31
4.4. Obligations Absolute . . . . . . . . . . . . . . . . . . . . . .32
4.5. Reliance by Issuer . . . . . . . . . . . . . . . . . . . . . . .32
4.6. Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . .33
4.7 Additional Cash Collateral Provisions. . . . . . . . . . . . . .33
5. CERTAIN GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . .34
5.1. Application of Payments. . . . . . . . . . . . . . . . . . . . .34
5.2. Funds for Payments . . . . . . . . . . . . . . . . . . . . . . .34
5.3. Computations . . . . . . . . . . . . . . . . . . . . . . . . . .35
5.4. Inability to Determine Eurodollar Rate . . . . . . . . . . . . .35
5.5. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . .36
5.6. Additional Costs, Etc. . . . . . . . . . . . . . . . . . . . . .36
5.7. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . .38
5.8. Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . .39
5.9. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . .39
5.10. Interest After Event of Default. . . . . . . . . . . . . . . . .39
6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . .40
<PAGE>
6.1. Corporate Authority. . . . . . . . . . . . . . . . . . . . . . .40
6.2. Governmental Approvals . . . . . . . . . . . . . . . . . . . . .41
6.3. Liens; Leases. . . . . . . . . . . . . . . . . . . . . . . . . .41
6.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . .41
6.5. No Material Changes, Etc.. . . . . . . . . . . . . . . . . . . .41
6.6. Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
6.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . .42
6.8. Material Contracts . . . . . . . . . . . . . . . . . . . . . . .42
6.9. Compliance with Other Instruments, Laws, Etc.. . . . . . . . . .42
6.10. Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . .43
6.11. No Event of Default. . . . . . . . . . . . . . . . . . . . . . .43
6.12. Holding Company and Investment Company Acts. . . . . . . . . . .43
6.13. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . .43
6.14. Certain Transactions . . . . . . . . . . . . . . . . . . . . . .43
6.15. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . .44
6.16. Regulations U and X. . . . . . . . . . . . . . . . . . . . . . .44
6.17. Environmental Compliance . . . . . . . . . . . . . . . . . . . .44
6.18. Subsidiaries, Etc. . . . . . . . . . . . . . . . . . . . . . . .46
6.19. Funded Debt. . . . . . . . . . . . . . . . . . . . . . . . . . .46
6.20. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
7. AFFIRMATIVE COVENANTS OF THE BORROWER. . . . . . . . . . . . . . . . . .46
7.1. Punctual Payment . . . . . . . . . . . . . . . . . . . . . . . .46
7.2. Maintenance of Office. . . . . . . . . . . . . . . . . . . . . .46
7.3. Records and Accounts . . . . . . . . . . . . . . . . . . . . . .47
7.4. Financial Statements, Certificates, and Information. . . . . . .47
7.5. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
7.6. Existence; Business; Properties. . . . . . . . . . . . . . . . .50
7.7. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . .51
7.8. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
7.9. Inspection of Properties and Books, Etc. . . . . . . . . . . . .52
7.10. Compliance with Government Mandates, Contracts,
and Permits. . . . . . . . . . . . . . . . . . . . . . . . . . .52
7.11. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . .53
7.12. Restricted Subsidiaries. . . . . . . . . . . . . . . . . . . . .53
7.13. Certain Changes in Accounting Principles.. . . . . . . . . . . .53
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER . . . . . . . . . . . . . . .54
8.1. Disposition of Assets. . . . . . . . . . . . . . . . . . . . . .54
8.2. Mergers and Reorganizations. . . . . . . . . . . . . . . . . . .55
8.3. Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . .57
8.4. Restrictions on Liens. . . . . . . . . . . . . . . . . . . . . .58
8.5. Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . .59
8.6. Restrictions on Investments. . . . . . . . . . . . . . . . . . .59
8.7. Restrictions on Funded Debt. . . . . . . . . . . . . . . . . . .60
8.8. Distributions. . . . . . . . . . . . . . . . . . . . . . . . . -61
8.9. Transactions with Affiliates . . . . . . . . . . . . . . . . . .61
8.10. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . .62
8.11. Compliance with Environmental Laws . . . . . . . . . . . . . . .62
8.12. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . .62
<PAGE>
8.13. Amendments to Certain Documents. . . . . . . . . . . . . . . . .63
9. FINANCIAL COVENANTS OF THE BORROWER. . . . . . . . . . . . . . . . . . .63
9.1. Ratio of Consolidated Adjusted Funded Debt to Consolidated
Adjusted Cash Flow . . . . . . . . . . . . . . . . . . . . .63
9.2. Minimum Net Worth. . . . . . . . . . . . . . . . . . . . . . . .64
9.3. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . .64
10. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .64
10.1. Financial Statements and Material Changes. . . . . . . . . . . .64
10.2. Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . .64
10.3. Certified Copies of Charter Documents. . . . . . . . . . . . . .65
10.4. Partnership and Corporate Action . . . . . . . . . . . . . . . .65
10.5. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
10.6. Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . . .65
10.7. Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . .65
10.8. Incumbency Certificate . . . . . . . . . . . . . . . . . . . . .65
10.9. Pending Litigation . . . . . . . . . . . . . . . . . . . . . . .66
10.10. Repayment of Existing Obligations. . . . . . . . . . . . . . . .66
10.11. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
10.12. Representations and Warranties; No Defaults. . . . . . . . . . .66
11. CONDITIONS TO ALL BORROWINGS . . . . . . . . . . . . . . . . . . . . . .66
11.1. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . .66
11.2. Representations True . . . . . . . . . . . . . . . . . . . . . .66
11.3. Loan Request or Letter of Credit Application . . . . . . . . . .67
11.4. Payment of Fees. . . . . . . . . . . . . . . . . . . . . . . . .67
11.5. No Legal Impediment. . . . . . . . . . . . . . . . . . . . . . .67
12. EVENTS OF DEFAULT; ACCELERATION; ETC.. . . . . . . . . . . . . . . . . .67
12.1. Events of Default and Acceleration . . . . . . . . . . . . . . .67
12.2. Termination of Commitments . . . . . . . . . . . . . . . . . . .70
12.3. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
12.4. Application of Monies. . . . . . . . . . . . . . . . . . . . . .71
13. SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
14. THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . . . . . .73
14.1. Authorization. . . . . . . . . . . . . . . . . . . . . . . . . .73
14.2. Employees and Agents . . . . . . . . . . . . . . . . . . . . . .73
14.3. No Liability . . . . . . . . . . . . . . . . . . . . . . . . . .73
14.4. No Representations . . . . . . . . . . . . . . . . . . . . . . .73
14.5. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
14.6. Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . .75
14.7. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . .75
14.8. Agent as Bank. . . . . . . . . . . . . . . . . . . . . . . . . .75
14.9. Resignation. . . . . . . . . . . . . . . . . . . . . . . . . . .75
14.10. Notification of Defaults and Events of Default . . . . . . . . .76
14.11. Duties in the Case of Enforcement. . . . . . . . . . . . . . . .76
<PAGE>
15. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
16. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
17. SURVIVAL OF COVENANTS, ETC.. . . . . . . . . . . . . . . . . . . . . . .78
18. ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . . .78
18.1. Conditions to Assignment by Banks. . . . . . . . . . . . . . . .78
18.2. Certain Representations and Warranties;
Limitations; Covenants . . . . . . . . . . . . . . . . . . . . .79
18.3. Register . . . . . . . . . . . . . . . . . . . . . . . . . . . .80
18.4. New Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . .80
18.5. Participations . . . . . . . . . . . . . . . . . . . . . . . . .80
18.6. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . .81
18.7. Assignee or Participant Affiliated with the Borrower . . . . . .81
18.8. Miscellaneous Assignment Provisions. . . . . . . . . . . . . . .81
18.9. Assignment by Borrower . . . . . . . . . . . . . . . . . . . . .81
19. NOTICES, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
20. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83
21. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83
22. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83
23. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . . . . . . . . . .83
24. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . .83
25. CONSENTS, AMENDMENTS, WAIVERS, ETC.. . . . . . . . . . . . . . . . . . .84
26. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
<PAGE>
SCHEDULES
Schedule 1 - Banks and Commitments
Schedule 6.2 - Governmental Approvals
Schedule 6.18 - Subsidiaries
Schedule 6.19 - Funded Debt
Schedule 8.4 - Certain Permitted Liens
Schedule 8.6 - Certain Investments
EXHIBITS
Exhibit A Form of Assumption 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 Swing Loan Advance Request
Exhibit H Form of Confirmation of Swing Loan Advance Request
Exhibit I Form of Compliance Certificate
Exhibit J Form of Assignment and Acceptance
Exhibit K Form of Swing Loan Note
Exhibit L Letter of Credit Application
Exhibit M Opinion Letter
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of February 23, 1996 (this
"Credit Agreement"), by and among ALLIANCE CAPITAL MANAGEMENT L.P., a Delaware
limited partnership (together with its permitted successors, the "Borrower"),
THE FIRST NATIONAL BANK OF BOSTON and NATIONSBANK, N.A. (SOUTH) and the other
lending institutions listed on SCHEDULE 1 (collectively, the "Banks"), THE FIRST
NATIONAL BANK OF BOSTON and NATIONSBANK, N.A. (SOUTH), as co-agents for the
Banks (as defined hereinbelow) (in such capacity, the "Co-Agents"), NATIONSBANK,
N.A. (SOUTH) as syndication agent (in such capacity, the "Syndication Agent"),
and THE FIRST NATIONAL BANK OF BOSTON, as administrative agent for the Banks (in
such capacity, the "Administrative Agent");
W I T N E S S E T H:
WHEREAS, the Borrower desires to obtain from the Banks certain credit
facilities as described in this Credit Agreement to refinance certain
outstanding obligations, to support its issuance of commercial paper, for
working capital and for other purposes as provided below;
WHEREAS, the Banks are willing to provide such credit facilities to the
Borrower upon the terms and conditions set forth in this Credit Agreement; and
WHEREAS, the Co-Agents are willing to act as co-agents, and the
Administrative Agent is willing to act as administrative agent, for the Banks in
connection with such credit facilities 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. 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:
ACQUISITION. As defined in Section 8.3.
ADMINISTRATIVE AGENT. The First National Bank of Boston, acting as
administrative agent for the Banks.
ADMINISTRATIVE AGENT'S HEAD OFFICE. The Administrative Agent's head
office located at 100 Federal Street, Boston, Massachusetts 02110, or at such
other location as the Administrative Agent may designate in a written notice to
the other parties hereto from time to time.
ADMINISTRATIVE AGENT'S OVERNIGHT INVESTMENT RATE. The annual rate of
interest in effect from time to time that is equal to the interest rate received
by the Administrative Agent from time to time with respect to funds invested in
overnight repurchase agreements.
<PAGE>
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. The higher of (a) the annual rate of interest
announced from time to time by the Administrative Agent at the Administrative
Agent's Head Office as its "base rate" and (b) one-half of one percent (0.50%)
above the Federal Funds Effective Rate. Changes in the Alternative Base Rate
shall become effective automatically 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 18.1.
ASSUMPTION AGREEMENT. An Assumption Agreement in the form of EXHIBIT A
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. The First National Bank of Boston, NationsBank, N.A. (South) 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 18.1.
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.
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 Boston,
Massachusetts and New York, New York, are open for the transaction of banking
business and, in the case of Eurodollar Rate 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.
<PAGE>
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 6.17.
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 February 29, 1996, on which each
of the conditions set forth in Section 10 is satisfied or waived.
CO-AGENTS. The First National Bank of Boston and NationsBank, N.A.
(South), acting as co-agents for the Banks.
CO-AGENT'S HEAD OFFICE. In the case of FNBB, 100 Federal Street,
Boston, Massachusetts 02110, and in the case of NationsBank, 21st Floor, 600
Peachtree Street, N.E., Atlanta, Georgia 30308, or at such other location as
either Co-Agent may designate in a written notice to the other parties hereto
from time to time.
CO-AGENT'S SPECIAL COUNSEL. Bingham, Dana & Gould or such other legal
counsel as may be approved by either of the Co-Agents.
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
and to participate in the issuance, extension, and renewal of Letters of Credit
for the account of the Borrower, as the same may be reduced from time to time;
or if such commitment is terminated pursuant to the provisions hereof, zero.
COMMITMENT PERCENTAGE. With respect to each Bank, the percentage set
forth on SCHEDULE 1 hereto as such Bank's percentage of the aggregate
Commitments of all of the Banks.
<PAGE>
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 9.1.
CONSOLIDATED ADJUSTED FUNDED DEBT. As defined in Section 9.1.
CONSOLIDATED NET INCOME (OR LOSS). The consolidated net income (or
loss) of the Borrower, determined in accordance with GAAP, but excluding in any
event:
(a) to the extent provided by Section 8.8, 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, 1994 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 2.9.
CREDIT AGREEMENT. This Revolving Credit Agreement, including the
Schedules and Exhibits hereto.
<PAGE>
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.
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 to be 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.
DEFAULT. As defined in Section 12.
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.
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 Revolving Credit 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 2.9.
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.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
Section3(2) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
<PAGE>
ENTITY. Any corporation, partnership, trust, unincorporated
association, joint venture, limited liability company, or other legal or
business entity.
ENVIRONMENTAL LAWS. As defined in Section 6.17(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) options, warrants, or other rights to purchase or
acquire any equity security, or (d) securities convertible into any equity
security.
ERISA. The Employee Retirement Income Security Act of 1974, as amended.
ERISA AFFILIATE. Any Person that is treated as a single employer
together with the Borrower under Section414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section4043 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, the maximum rate (expressed as a decimal) at which any lender 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 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.
EURODOLLAR RATE. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate of interest equal to (a) the rate per annum (rounded upwards
to the nearest 1/16th of one percent) at which the Administrative Agent's
Eurodollar Lending Office is offered Dollar deposits at or about 11:00 a.m.
(Boston, Massachusetts 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 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:
<TABLE>
<CAPTION>
BORROWER 'S
S&P RATING - EURODOLLAR RATE
<PAGE>
MOODY'S RATING APPLICABLE MARGIN
-------------- -----------------
<C> <C>
A-1+/P-10.170%
A-1/P-1 0.200%
A-1/P-2 or A-2/P-1 0.225%
Equal to or less than
A-2 or P-2, or
A-2/P-20.325%
</TABLE>
Notwithstanding the foregoing, if the Borrower loses its commercial paper rating
at any time, the Eurodollar Rate Applicable Margin shall be 0.375%, in any such
case subject, as applicable, to the provisions of Section 5.10 hereof. If,
subsequent to losing such rating, the Borrower is able to again obtain such
rating, the above table shall, from and after the date of such occurrence (until
such time, if any, that the Borrower again loses such rating), 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 12.
EXISTING CREDIT AGREEMENTS. See Section 6.16.
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 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.
FED FUNDS SWING LOANS. As defined in Section 2.12(c).
FEDERAL FUNDS RATE APPLICABLE MARGIN. An annual percentage rate equal
to 0.25%.
FNBB. The First National Bank of Boston, a national banking
association.
FNBB CREDIT AGREEMENT. See Section 6.16.
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
8.1(d), and (e) all guarantees, endorsements, acceptances, and other contingent
<PAGE>
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 12.1(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 7.13, (a) when used in Section 9, 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, 1994, and (ii) to 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, 1994, 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, any Co-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.
<PAGE>
GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of Section3(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 6.17(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 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; (b) as to any Eurodollar Rate Loan, the last day of each
Interest Period with respect to such Eurodollar Rate Loan, the maturity of such
Eurodollar 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; and (c) as to any Swing Loan, the last
day of the Interest Period specified pursuant to the Alternative Base Rate Loan
or Fed Funds Swing Loan requested by the Borrower.
INTEREST PERIOD. (a) With respect to each 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, four (4), five (5), 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; PROVIDED that
all of the foregoing provisions relating to Interest Periods are subject to the
following:
(A) if any Interest Period 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;
(B) any Interest Period 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
<PAGE>
(C) any Interest Period commencing prior to the Maturity
Date that would otherwise extend beyond the Maturity Date shall end on the
Maturity Date.
(b) With respect to each Swing Loan, the period specified by the Borrower
from one (1) to seven (7) days pursuant to the Swing Loan Request.
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 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.
JUDGMENT NOTICE. As defined in Section 3.2.3.
JUDGMENT SUSPENSION PERIOD. As defined in Section 3.2.3.
LETTER OF CREDIT. As defined in Section 4.1.1.
LETTER OF CREDIT APPLICATION. As defined in Section 4.1.1.
LETTER OF CREDIT FEE. As defined in Section 4.6.
LETTER OF CREDIT PARTICIPATION. As defined in Section 4.1.4.
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, the Letter of Credit
Applications, the Letters of Credit, 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 Swing Loans.
MAJOR JUDGMENT. Either a judgment or order in excess of an amount equal
to the lesser of $80,000,000 or twenty-five percent (25%) of Consolidated Net
Worth as at the end of the most recent
<PAGE>
fiscal quarter of the Borrower (but excluding from the amount of any such
judgment or order that portion which is fully covered by insurance and as to
which the insurance company has acknowledged to the Co-Agents its coverage
obligation in writing) which is rendered against the Borrower, any Other
Obligors or any of their respective Subsidiaries.
MAJORITY BANKS. As of any date, the Banks holding at least sixty-six
and two thirds percent (66-2/3%) of the outstanding principal amount of the
Notes on such date; and if no such principal is outstanding, the Banks whose
aggregate Commitments constitute at least sixty-six and two thirds percent
(66-2/3%) of the Total Commitment.
MANDATORY BORROWING. As defined in Section 2.12.
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
12.1(h), Section 12.1(i), or Section 12.1(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. February 22, 2001.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount from time to time
that the beneficiaries may draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
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.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of
Section3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
NATIONSBANK. NationsBank, N.A. (South), a national banking association.
NATIONSBANK CREDIT AGREEMENT. As defined in Section 6.16.
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 any Swing Loan Notes, substantially in the form of EXHIBIT B and
EXHIBIT K, as amended, modified and renewed from time to time.
<PAGE>
OBLIGATIONS. All indebtedness, obligations, and liabilities of any of
the Borrower, its Subsidiaries, and Other Obligors to any of the Banks, any
Co-Agent 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 Reimbursement Obligations incurred or any of the Notes, Letter of Credit
Applications, Letters of Credit, or other instruments at any time evidencing any
thereof.
OTHER OBLIGOR. As defined in the Assumption Agreements.
OUTSTANDING. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by Section4002
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 8.3.
PERMITTED LIENS. Liens permitted by Section 8.4.
PERSON. Any individual, Entity, or Government Authority.
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.
PUT NOTICE. As defined in Section 3.2.3.
READILY MARKETABLE SECURITIES. Equity Securities or Indebtedness for
which an established public or private trading market exists, such that they may
reasonably be expected to be liquidated within five (5) Business Days.
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.
REIMBURSEMENT OBLIGATION. The Borrower's obligation to reimburse the
Co-Agents and the Banks on account of any drawing under any Letter of Credit as
provided in Section 4.2.
REORGANIZATION AND REORGANIZE. As defined in Section 8.2.
<PAGE>
RESTRICTED SUBSIDIARY. Each (a) Subsidiary of the Borrower designated
as a "Restricted Subsidiary" on SCHEDULE 6.18 (and by such designation the
Borrower represents and warrants to the Administrative Agent, the Co-Agents 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, the Co-Agents 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 another Restricted
Subsidiary 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, Cursitor
Alliance or other Restricted Subsidiaries.
REVOLVING CREDIT LOANS. Revolving credit loans made or to be made by
the Banks to the Borrower pursuant to Section 2.
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.
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 Services 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.
SWINGLINE COMMITTED AMOUNT. As defined in Section 2.12.
SWING LOAN. Any Loans made to the Borrower by either of the Co-Agents
from time to time, in such Co-Agent's sole discretion (as exercised in
accordance with Section 2.12(e) hereof) and for such Co-Agent's account, which
Loans shall be made in accordance with Section 2.12.
<PAGE>
SWING LOAN NOTES. Those certain Swing Loan Notes of even date herewith
in the principal amount, with respect to each Co-Agent, of up to the amount of
each Co-Agent's Commitment in its individual capacity as a Bank hereunder,
issued by the Borrower to the Co-Agents, substantially in the form of EXHIBIT K,
and any amendments, replacements, extensions or renewals thereof.
SWING LOAN REQUEST. As defined in Section 2.12.
SYNDICATION AGENT. NationsBank, N.A. (South).
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 $250,000,000.
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 or a
Eurodollar Rate Loan.
UNIFORM CUSTOMS. With respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 400, or any successor version thereof
adopted by either of the Co-Agents in the ordinary course of its business as a
letter of credit issuer, upon notice to the Borrower, and in effect at the time
of issuance of such Letter of Credit.
UNITS. Units representing assignments of beneficial ownership of
limited partnership interests in the Borrower.
UNPAID REIMBURSEMENT OBLIGATION. Any Reimbursement Obligation for which
the Borrower does not reimburse the Co-Agents and the Banks on the date
specified in, and in accordance with, Section 4.2 and that is not covered by a
Loan as provided in Section 2.8.
UNRESTRICTED SUBSIDIARY. A Consolidated 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.
<PAGE>
(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.
(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. THE REVOLVING CREDIT FACILITY.
2.1. COMMITMENT TO LEND. (a) Subject to the terms and conditions
set forth in Section 11 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 MINUS (i) in the case of each of the Co-Agents acting in their
capacity as a Bank, the principal amount of any outstanding Swing Loans made by
such Co-Agent and (ii) such Bank's Commitment Percentage of the sum of the
Maximum Drawing Amount and all Unpaid Reimbursement Obligations, PROVIDED that
the sum of (A) the outstanding amount of the Revolving Credit Loans (after
giving effect to all amounts requested) PLUS (B) the principal amount of
outstanding Swing Loans PLUS (C) the Maximum Drawing Amount plus (D) all Unpaid
Reimbursement Obligations 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 11 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
<PAGE>
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.
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. 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:
<TABLE>
<CAPTION>
BORROWER'S
S&P RATING - MOODY'S RATING FACILITY FEE
---------------------------------------------------------
<S> <C>
A-1+/P-L 0.070%
A-1/P-1 0.100%
A-1/P-2 OR A-2/P-1 0.125%
EQUAL TO OR LESS THAN
A-2 OR P-2, OR 0.175%
A-2/P-2
</TABLE>
Notwithstanding the foregoing, if the Borrower loses its commercial paper rating
at any time, the facility fee shall be 0.200%. If, subsequent to losing such
rating, the Borrower is able to again obtain such rating, the above table shall,
from and after the date of such occurrence (until such time, if any, that the
Borrower again loses such rating), govern the facility fee.
2.3.
UTILIZATION FEE. For any calendar
quarter in which the sum of (i) the average aggregate daily outstanding balance
of the Loans PLUS (ii) the average aggregate Maximum Drawing Amount of all
Letters of Credit outstanding exceeds 50% 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 with their respective
Commitment Percentages, a utilization fee calculated at a rate per annum equal
to 0.0625% of the sum of (i) the average aggregate outstanding amount of the
Loans during such calendar quarter PLUS (ii) the average aggregate Maximum
Drawing Amount of all Letters of Credit outstanding during such 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
<PAGE>
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.
2.6.
INTEREST ON REVOLVING CREDIT LOANS.
2.6.1. INTEREST RATES. Except as otherwise provided in Section
5.10, 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.
<PAGE>
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. (Boston, Massachusetts 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. LOANS TO COVER REIMBURSEMENT OBLIGATIONS. Notwithstanding the
notice and minimum amount requirements set forth in Section 2.7, the Banks
shall, according to their Commitment Percentages and subject to the satisfaction
of the conditions set forth herein, make Revolving Credit Loans to the Borrower
as provided in Section 2.10.1 on the date that any draft presented under any
Letter of Credit is honored by either Co-Agent, or any date on which either
Co-Agent otherwise makes a payment with respect thereto, in an amount sufficient
to pay in full the obligations of the Borrower under Section 4.2 in respect of
the honor of such draft or the making of such payment. The Borrower hereby
requests and authorizes the Banks to make from time to time such Revolving
Credit Loans. The Borrower acknowledges and agrees that the making of such
Revolving Credit Loans shall, in each case, be subject in all respects to the
provisions of this Credit Agreement as if they were Revolving Credit Loans
covered by a Loan Request, including the limitations set forth in Section 2.1
and the requirement that the applicable provisions of Sections 10 and 11 be
satisfied. Each Co-Agent may (but shall not be required to) assume that each
Bank will make available to it on a timely basis funds for any Loan under this
Section 2.8 and each Bank shall reimburse such Co-Agent for any such amounts so
advanced on its behalf, all on the terms and conditions of Section 2.10.2.
Absent manifest error on the part of such Co-Agent or the Banks, all actions
taken by such Co-Agent or the Banks pursuant to the provisions of this Section
2.8 shall be conclusive and binding on the Borrower. Loans made pursuant to
this Section 2.8 shall be Alternative Base Rate Loans until converted in
accordance with the provisions of this Credit Agreement.
<PAGE>
2.9. CONVERSION OPTIONS.
2.9.1. CONVERSION TO EURODOLLAR RATE LOAN. The Borrower may
elect from time to time, subject to Section 2.11, 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. 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.
2.9.2. 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 2.9.1.
(b) Any Eurodollar Rate Loan may, subject to Section 2.11,
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 2.9.2, 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 2.9.2 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.
2.9.3. 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,
<PAGE>
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.
2.9.4. CONVERSION REQUESTS. All notices of the conversion or
continuation of a Loan provided for in this Section 2.9 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.
2.10. FUNDS FOR REVOLVING CREDIT LOANS.
2.10.1. FUNDING PROCEDURES. Not later than 1:00 p.m. (Boston
time) on the proposed Drawdown Date of any Revolving Credit Loans or the
Drawdown Date of any Revolving Credit Loans under Section 2.8, each of the Banks
will make available to the Administrative Agent, at its 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 11 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.
2.10.2. 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 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.
<PAGE>
2.11. 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.
2.12. SWING LOANS.
(a) Subject to the terms and conditions of Section 11
hereof, each of the Co-Agents, in its individual capacity, agrees to make
certain Revolving Credit Loans to the Borrower (each a "SWING LOAN" and,
collectively, the "SWING LOANS") from time to time from the Closing Date until
the Maturity Date for the purposes hereinafter set forth; PROVIDED, HOWEVER, (i)
the aggregate amount of Swing Loans outstanding at any time shall not exceed, in
the case of each Co-Agent, the amount of such Co-Agent's Commitment in its
individual capacity as a Bank hereunder (the "SWINGLINE COMMITTED AMOUNT"), and
(ii) the sum of Revolving Credit Loans outstanding PLUS Swing Loans outstanding,
PLUS the sum of the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations at any time shall not exceed the Total Commitment. Swing Loans
hereunder may consist of Alternative Base Rate Loans or Fed Funds Swing Loans
(or a combination thereof) as the Borrower may request, and may be repaid and
reborrowed in accordance with the provisions hereof.
(b) SWING LOAN ADVANCES.
(i) NOTICES; DISBURSEMENT. Whenever the Borrower
desires a Swing Loan advance hereunder it shall give written notice in the form
of EXHIBIT G hereto (or telephone notice confirmed in a writing in the form of
EXHIBIT H hereto) of each Swing Loan requested hereunder (a "Swing Loan
Request") to the Co-Agent from which the Borrower wishes to obtain such Swing
Loan no later than 1:00 p.m. (Boston time) on the Drawdown Date of the requested
Swing Loan advance. Each such notice shall be irrevocable and shall specify (A)
that a Swing Loan advance is requested, (B) the date of the requested Swing Loan
advance (which shall be a Business Day), (C) the aggregate principal amount of
the Swing Loan advance requested, and (D) whether the Swing Loan shall consist
of Alternative Base Rate Loans, Fed Funds Swing Loans or a combination thereof.
The Co-Agent receiving such Swing Loan Request shall initiate the transfer of
funds representing the Swing Loan advance to the Borrower by 2:00 p.m. (Boston
time) on the Business Day specified by the Borrower in the applicable Swing Loan
Request.
(ii) MINIMUM AMOUNTS. Each Swing Loan advance shall
be in a minimum principal amount of $1,000,000 and integral multiples of
$100,000, in excess thereof.
(iii) REPAYMENT OF SWING LOANS. Each Swing Loan
advance shall be due and payable on the earliest of (A) seven (7) days from the
date of advance thereof, (B) the date of the next Revolving Credit Loan, or (C)
the Maturity Date or any earlier date on which the Total Commitment is
terminated. If, and to the extent, any Swing Loan advances shall be outstanding
on the date of any Revolving Credit Loan, such Swing Loans shall first be repaid
from the proceeds of such Revolving Credit Loan prior to distribution to the
Borrower. If, and to the extent, Revolving Credit Loans are not requested prior
to the Maturity Date or any earlier date on which the Total Commitment is
terminated or the end of any such seven (7) day period from the date of any such
Swing Loan advance, the Borrower shall be deemed to have requested a Revolving
Credit Loan comprised solely of Alternative Base Rate Loans in the amount of
such Swing Loan advance then outstanding, the proceeds of which shall be used to
repay the relevant Co-Agent for such Swing Loan. In addition, the Co-Agent that
made such Swing Loan may, at any time, in its sole discretion
<PAGE>
by written notice to the Borrower, require repayment of its Swing Loans by way
of a Revolving Credit Loan, in which case the Borrower shall be deemed to have
requested a Revolving Credit Loan comprised solely of Alternative Base Rate
Loans in the amount of such Swing Loans; PROVIDED, HOWEVER, that any such demand
shall be deemed to have been given one Business Day prior to the Maturity Date
and upon the occurrence of any Event of Default described in Section 12.1(h) or
Section 12.1(i) and also upon acceleration of the Obligations hereunder, whether
on account of an Event of Default described in Section 12.1(h) or Section
12.1(i) or any other Event of Default, and upon the exercise of remedies in
accordance with the provisions of Section 12 hereof following an Event of
Default (each such Revolving Credit Loan made on account of any such deemed
request therefor as provided herein being hereinafter referred to as a
"MANDATORY BORROWING"). Each Bank hereby irrevocably agrees to make such
Revolving Credit Loans promptly upon any such request or deemed request on
account of each Mandatory Borrowing in the amount and in the manner specified in
the preceding sentence and on the same such date NOTWITHSTANDING (I) the amount
of Mandatory Borrowing may not comply with the minimum amount or advances of
Revolving Credit Loans otherwise required hereunder, (II) whether any conditions
specified in Section 11 are then satisfied, (III) whether a Default or an Event
of Default then exists, (IV) failure for any such request deemed request for
Revolving Credit Loan to be made by the time otherwise required in Section 2.7,
(V) the date of the Mandatory Borrowing, or (VI) any reduction in the Total
Commitment or termination of the Commitments relating thereto immediately prior
to such Mandatory Borrowing or contemporaneously therewith; provided, however,
that no Bank shall be required to make such Revolving Credit Loans if, at the
time that one of the Co-Agents agreed to fund any Swing Loan Request, the
Co-Agent that made such Swing Loan had actual knowledge of the existence of a
Default. In the event that any Mandatory Borrowing cannot for any reason be
made on the date otherwise required above (including, without limitation, as a
result of the commencement of a proceeding under the Bankruptcy Code with
respect to the Borrower or any other obligor hereunder), then each Bank hereby
agrees that it shall forthwith purchase (as of the date the Mandatory Borrowing
would otherwise have occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase) from the Co-Agent
that made such Swing Loan such participations in the outstanding Swing Loans as
shall be necessary to cause each such Bank to share in such Swing Loans ratably
based upon its respective Commitment (determined before giving effect to any
termination of the Commitments pursuant to Section 12.2), PROVIDED that (A) all
interest payable on the Swing Loans shall be for the account of the Co-Agent
that made such Swing Loan until the date as of which the respective
participation is purchased, and (B) at the time any purchase of participations
pursuant to this sentence is actually made, the purchasing Bank shall be
required to pay to the Co-Agent that made such Swing Loan interest on the
principal amount of participation purchased for each day from and including the
day upon which the Mandatory Borrowing would otherwise have occurred to but
excluding the date of payment for such participation, at the rate equal to, if
paid within two (2) Business Days of the date of the Mandatory Borrowing, the
Federal Funds Effective Rate, and thereafter at a rate equal to the Alternative
Base Rate.
(c) INTEREST ON SWING LOANS. Swing Loans shall bear
interest at a per annum rate equal to:
(i) BASE RATE LOANS. During such periods as a Swing
Loan shall consist of Alternative Base Rate Loans, the Alternative Base Rate;
and
<PAGE>
(ii) FED FUNDS SWING LOANS. For each day during such
period as a Swing Loan shall consist of Fed Funds Swing Loans, the Federal Funds
Effective Rate for such day PLUS the Federal Funds Rate Applicable Margin;
PROVIDED, HOWEVER, that from and after any failure to make any payment of
principal or interest in respect of any of the Loans hereunder when due (after
giving effect to any applicable grace period), whether at scheduled or
accelerated maturity or on account of any mandatory prepayment, the principal of
and, to the extent permitted by law, interest on, Swing Loans shall bear
interest, payable on demand, at a per annum rate two percent (2%) in excess of
the Alternative Base Rate. Interest on Swing Loans shall be payable in arrears
on each Interest Payment Date.
(d) SWING NOTE. The Swing Loans shall be evidenced by duly
executed promissory notes of the Borrower to each of the Co-Agents dated as of
the Closing Date in the original amount of the Swingline Committed Amount and
substantially in the form of EXHIBIT K, attached hereto (as the same may be
amended, modified, supplemented, extended, renewed or replaced from time to
time).
(e) TERMINATION OF SWING LOANS. Either of the Co-Agents
may, in its sole and absolute discretion, elect not to make Swing Loans
hereunder, PROVIDED, that any notice required pursuant to the immediately
following sentence shall have been given and the requisite notice period
specified therein shall have lapsed. Unless a Default or Event of Default then
exists, the Co-Agent making such election shall give the Borrower at least seven
(7) days prior written notice before exercising such Co-Agent's discretion
herein not to make Swing Loans.
3. REPAYMENT OF THE REVOLVING CREDIT 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, the Maximum Drawing Amount and all
Unpaid Reimbursement Obligations exceeds the Total Commitment, then the Borrower
shall immediately pay the amount of such excess to the Administrative Agent for
application FIRST, to any Unpaid Reimbursement Obligations; SECOND, to the Swing
Loans, THIRD, to the Revolving Credit Loans; and FOURTH, to provide to the
Administrative Agent cash collateral for Reimbursement Obligations as
contemplated by 4.2(b) and (c). Each payment of any Unpaid Reimbursement
Obligations or prepayment of Loans shall be allocated among the Banks (and, in
the case of Swing Loans, the Co-Agents), in proportion, as nearly as
practicable, to each Reimbursement Obligation or (as the case may be) 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:
<PAGE>
(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 7.5.4;
(b) the Commitments (but not the right of the Borrower to
convert and continue Types of Revolving Credit Loans under Section 2.9) 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 7.5.4)
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 neither the Banks nor the Co-Agents shall have any obligations 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, Unpaid Reimbursement Obligations, all accrued and unpaid
interest thereon, and any other amounts owing under the Loan Documents, as well
as payment of cash collateral for such Bank's Letter of Credit Participation, 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 is also a Co-Agent, all Swing Loans), all accrued and unpaid
interest thereon, any Unpaid Reimbursement Obligations 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 until the last day of
the Interest Period with respect to such Eurodollar Rate Loan, and (ii) if any
Bank elects to require prepayment of a Eurodollar Rate 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,
such Bank shall not be entitled to receive any amounts payable under Section 5.9
in respect of the prepayment of such Eurodollar Rate Loan) and the Borrower
shall on the last day of the Suspension Period pay to the Administrative Agent
an amount equal to such Bank's pro rata share of the then Maximum Drawing Amount
on all Letters of Credit, which amount shall be held by the Administrative
Agent as cash collateral for the benefit of such Bank for its share of all
Reimbursement Obligations. Notwithstanding the immediately preceding sentence,
so long as no Event of Default has occurred and is continuing, if at any time
(whether before or after the date at which the Borrower provides cash collateral
for any Letters of Credit) any Bank, or any other financial institution
reasonably satisfactory to the Administrative Agent which meets the requirements
of an Eligible Assignee agrees to purchase the Letter of Credit Participation of
one or more Banks that have made demand pursuant to clause (c) or clause (d)
above, and such Person has executed the documentation necessary to consummate
such purchase, the Borrower shall be relieved of the obligation to provide
<PAGE>
cash collateral with respect to Letters of Credit, but only to the extent that
such Bank or other financial institution has purchased such Letter of Credit
Participation. If the Borrower has provided such cash collateral prior to such
purchase, the Administrative Agent shall refund to the Borrower a portion of
such cash collateral equal to the amount of Letter of Credit Participation so
purchased.
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 or participate in the
risk of Letters of Credit issued, extended, or renewed after the date of such
demand. 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, the Co-Agents
and the Administrative Agent, 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.
3.2.3. MAJOR JUDGMENT. Upon the occurrence of a Major
Judgment:
(a) the Borrower shall notify the Administrative Agent and
each Bank of such Major Judgment within one (1) day following the occurrence of
such Major Judgment (a "JUDGMENT NOTICE");
(b) the Commitments and the obligations of the Co-Agents to
issue, extend or renew Letters of Credit (but not the rights of the Borrower to
convert and continue Types of Revolving Credit Loans) shall be suspended for the
period from the date of such notice through the later to occur of (i) the date
that is three (3) days following the last timely delivery to the Borrower of a
Put Notice (as defined below), or (ii) the date that is five (5) days after the
date of such notice from the Borrower (the "JUDGMENT SUSPENSION PERIOD") and
neither the Banks nor the Co-Agents shall have any obligations to make Loans to
the Borrower;
(c) each Bank shall have the right within five (5) days
after the date of such Bank's receipt of a Judgment Notice under clause (a)
above to demand payment in full of its pro rata share of the outstanding
principal of all Loans, all Unpaid Reimbursement Obligations, all accrued and
unpaid interest thereon, and any other amounts owing under the Loan Documents as
well as payment of cash collateral for such Bank's outstanding Letter of Credit
Participation, as more particularly described in clause (d) below (each a "PUT
NOTICE");
(d) in the event any Bank makes a demand under clause (c)
above, the Borrower shall on the date that is not later than three (3) days (or,
if such third day is not a business day, then the next following business day)
following receipt of such Bank's Put Notice pay to the Administrative Agent for
the credit of such Bank its pro rata share of the outstanding principal of all
Loans, any Unpaid Reimbursement Obligations, all accrued and unpaid interest
thereon, and any other amounts owing under the Loan Documents and the Borrower
shall on such date pay to the Administrative Agent an amount equal to such
Bank's pro rata share of the then Maximum Drawing Amount on all Letters of
Credit, which amount shall be held by the Administrative Agent as cash
collateral for the benefit of such Bank for its share of all Reimbursement
Obligations. Notwithstanding the immediately preceding sentence, so long as no
Event of Default has occurred and is continuing, if at any time (whether before
or after the date at which the Borrower provides
<PAGE>
cash collateral for any Letters of Credit) any Bank, or any other financial
institution reasonably satisfactory to the Administrative Agent which meets the
requirements of an Eligible Assignee agrees to purchase the Letter of Credit
Participation of one or more Banks that have made demand pursuant to clause (c)
above, and such Person has executed the documentation necessary to consummate
such purchase, the Borrower shall be relieved of the obligation to provide cash
collateral with respect to Letters of Credit, but only to the extent that such
Bank or other financial institution has purchased such Letter of Credit
Participation. If the Borrower has provided such cash collateral prior to such
purchase, the Administrative Agent shall refund to the Borrower a portion of
such cash collateral equal to the amount of Letter of Credit Participation so
purchased.
Upon any delivery of a Put Notice by any Bank under this provision, the
Commitment provided by such Bank shall terminate, and such Bank shall be
relieved of all further obligations to make Loans (including, if such Bank is
also a Co-Agent, the obligations to make Swing Loans or to issue, extend or
renew any Letters of Credit) to the Borrower or participate in the risk of
Letters of Credit issued, extended, or renewed after the date of such delivery.
At the end of the Judgment Suspension Period referred to above, the Commitments
shall be restored from all Banks that have not delivered a Put Notice to the
Borrower, and the Loan Documents shall remain in full force and effect among the
Borrower, such Banks, the Co-Agents (to the extent such Co-Agent has not
submitted a Put Notice in its capacity as a Bank) and the Administrative Agent,
with such changes as may be necessary to reflect the termination of the credit
provided by such Bank that made a demand for payment under this provision.
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 5.9. The Borrower shall give
the Administrative Agent, no later than 10:00 a.m., Boston 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 11.
<PAGE>
4. LETTERS OF CREDIT.
4.1. LETTER OF CREDIT COMMITMENTS.
4.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the
terms and conditions hereof and the execution and delivery by the Borrower of a
letter of credit application on the Co-Agents' customary form attached hereto as
EXHIBIT L, or such other form as may be reasonably acceptable to the Borrower
and the Co-Agent issuing such Letter of Credit (a "LETTER OF CREDIT
APPLICATION"), the Co- Agent receiving such Letter of Credit Application on
behalf of the Banks and in reliance upon the agreement of the Banks set forth in
Section 4.1.4 and upon the representations and warranties of the Borrower
contained herein, agrees, in its individual capacity, to issue, extend, and
renew for the account of the Borrower one or more standby letters of credit
(individually, a "LETTER OF CREDIT"), in such form as may be requested from time
to time by the Borrower and agreed to by either of the Co-Agents; PROVIDED,
HOWEVER, that, after giving effect to such request, the sum of (i) the Maximum
Drawing Amount on all Letters of Credit, (ii) all Unpaid Reimbursement
Obligations, and (iii) the amount of all Loans outstanding shall not exceed the
Total Commitment.
4.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
Application shall be completed to the reasonable satisfaction of the Borrower
and the Co-Agent to which it is delivered. In the event that any provision of
any Letter of Credit Application shall be inconsistent with any provision of
this Credit Agreement, then the provisions of this Credit Agreement shall, to
the extent of any such inconsistency, govern.
4.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit
issued, extended, or renewed hereunder shall, among other things, (a) provide
for the payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the documents
described therein, and (b) have an expiry date no later than the date which is
fourteen (14) days prior to the Maturity Date. Each Letter of Credit so issued,
extended, or renewed shall be subject to the Uniform Customs.
4.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank severally
agrees that it shall be absolutely liable, without regard to the occurrence of
any Default or Event of Default or any other condition precedent whatsoever, to
the extent of such Bank's Commitment Percentage, to reimburse the Co-Agent
issuing any Letter of Credit on demand for the amount of each draft paid by such
Co-Agent under each such Letter of Credit to the extent that such amount is not
reimbursed by the Borrower pursuant to Section 4.2 (such agreement for a Bank
being called herein the "LETTER OF CREDIT PARTICIPATION" of such Bank).
4.1.5. PARTICIPATIONS OF BANKS. Each such payment made by a
Bank shall be treated as the purchase by such Bank of a participating interest
in the Borrower's Reimbursement Obligation under Section 4.2 in an amount equal
to such payment. Each Bank shall share in accordance with its participating
interest in any interest which accrues pursuant to Section 4.2.
4.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to induce the
Co-Agents to issue, extend, and renew each Letter of Credit and the Banks to
participate therein, the Borrower hereby agrees to reimburse or pay to the
Co-Agent issuing such Letter of Credit, for the account of such
<PAGE>
Co-Agent or (as the case may be) the Banks, with respect to each Letter of
Credit issued, extended, or renewed by such Co-Agent hereunder,
(a) except as otherwise expressly provided in Section 4.2(b)
and (c), on each date that any draft presented under such Letter of Credit is
honored by either Co-Agent, or either Co-Agent otherwise makes a payment under
or pursuant to such Letter of Credit, the amount paid by such Co-Agent under or
with respect to such Letter of Credit;
(b) upon the reduction (but not termination) of the Total
Commitment to an amount less than the Maximum Drawing Amount, an amount equal to
such difference, which amount shall be held by the Administrative Agent for the
benefit of the Banks and the Co- Agents as cash collateral for all Reimbursement
Obligations, subject to the provisions of Section 3.2.2 and Section 3.2.3; and
(c) upon the termination of the Total Commitment or the
acceleration of the Reimbursement Obligations with respect to all Letters of
Credit in accordance with Section 12, an amount equal to one hundred percent
(100%) of the then Maximum Drawing Amount on all such Letters of Credit PLUS
projected Letter of Credit Fees, based upon the Borrower's then effective
commercial paper rating, which amount shall be held by the Administrative Agent
for the benefit of the Banks and the Co-Agents as cash collateral for all
Reimbursement Obligations.
Each such payment shall be made to the Administrative Agent at the
Administrative Agent's Head Office or to the relevant Co-Agent at such Co-
Agent's Head Office, as the case may be, in immediately available funds or from
the direct application of the proceeds of a Revolving Credit Loan made pursuant
to Section 2.8. To the extent not paid pursuant to Section 2.8, interest on any
and all amounts remaining unpaid by the Borrower under this Section 4.2 at any
time from the date such amounts become due and payable (whether as stated in
this Section 4.2, by acceleration, or otherwise) until payment in full (whether
before or after judgment) shall be payable to the relevant Co-Agent on demand at
the rate specified in Section 5.10 for overdue principal of the Alternate Base
Rate Loans.
4.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Co-Agent
receiving such draft or demand shall notify the Borrower and the Banks of the
date and amount of the draft presented or demand for payment and of the date and
time when it expects to pay such draft or honor such demand for payment. If the
Borrower fails to reimburse the relevant Co-Agent as provided in Section 4.2 on
or before the date that such draft is paid or other payment is made by such Co-
Agent (and the draft or other payment is not covered by a Revolving Credit Loan
as provided in Section 2.8), such Co-Agent shall promptly thereafter notify the
Banks of the amount of any such Unpaid Reimbursement Obligation. As soon as
possible following such notice, but in no event later than 3:00 p.m. (Boston
time) on the date of such notice, each Bank shall make available to such
Co-Agent, at its Head Office, in immediately available funds, such Bank's
Commitment Percentage of such Unpaid Reimbursement Obligation, together with an
amount equal to the product of (a) the average, computed for the period referred
to in clause (c) below, of the weighted average interest rate paid by such Co-
Agent for federal funds acquired by such Co-Agent during each day included in
such period, TIMES (b) the amount equal to such Bank's Commitment Percentage of
such Unpaid
<PAGE>
Reimbursement Obligation, TIMES (c) a fraction, the numerator of which is the
number of days that elapse from and including the date such Co-Agent paid the
draft presented for honor or otherwise made payment to the date on which such
Bank's Commitment Percentage of such Unpaid Reimbursement Obligation shall
become immediately available to such Co-Agent, and the denominator of which is
360. The responsibility of such Co-Agent to the Borrower and the Banks shall be
only to determine that the documents (including each draft) delivered under each
Letter of Credit in connection with such presentment shall be in conformity in
all material respects with such Letter of Credit.
4.4. OBLIGATIONS ABSOLUTE. The Borrower's obligations under this
Section 4 shall be absolute and unconditional under any and all circumstances
and irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim, or defense to
payment which the Borrower may have or have had against the Administrative
Agent, either Co-Agent, any Bank, or any beneficiary of a Letter of Credit. The
Borrower further agrees with the Administrative Agent, each Co-Agent and the
Banks that the Administrative Agent, each Co-Agent and the Banks shall not be
responsible for, and the Borrower's Reimbursement Obligations under Section 4.2
shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, fraudulent, or forged, or any
dispute between or among the Borrower, the beneficiary of any Letter of Credit,
or any financing institution or other party to which any Letter of Credit may be
transferred or any claims or defenses whatsoever of the Borrower against the
beneficiary of any Letter of Credit or any such transferee. The Administrative
Agent, each Co-Agent and the Banks shall not be liable for any error, omission,
interruption, or delay in transmission, dispatch, or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit. The
Borrower agrees that any action taken or omitted by the Administrative Agent,
any Co-Agent or any Bank under or in connection with each Letter of Credit and
the related drafts and documents, if done in good faith, shall be binding upon
the Borrower and shall not result in any liability on the part of the
Administrative Agent, any Co-Agent or any Bank to the Borrower.
4.5. RELIANCE BY ISSUER. To the extent not inconsistent with Section
4.4, each Co-Agent shall be entitled to rely, and shall be fully protected in
relying upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex, or
teletype message, statement, order, or other document believed by it to be
genuine and correct and to have been signed, sent, or made by the proper Person
and upon advice and statements of legal counsel, independent accountants, and
other experts selected by such Co-Agent. Each of the Banks hereby indemnifies
and holds each of the Co-Agents harmless from and against any and all claims,
liability, damages, costs and expenses incurred by such Co-Agent in connection
with any and all actions taken with respect to any Letter of Credit or any draft
presented pursuant to any such Letter of Credit, so long as such action is taken
in good faith. Each Co-Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Credit Agreement in accordance with a
request of the Majority Banks, and such request and any action taken or failure
to act pursuant thereto shall be binding upon the Banks and all future holders
of the Notes or of a Letter of Credit Participation.
4.6. LETTER OF CREDIT FEE. The Borrower shall, on the date of issuance
of any Letter of Credit and each anniversary thereof, pay in advance a fee (in
each case, collectively with the fee described below in this Section 4.6, a
"Letter of Credit Fee") to the Co-Agent issuing such Letter of
<PAGE>
Credit, for the account of the Banks (including FNBB and NationsBank, in their
capacity as a Bank) on a PRO RATA basis, in respect of such Letter of Credit
equal to a percentage of the Maximum Drawing Amount of such Letter of Credit
calculated based upon the Borrower's S&P Rating and Moody's Rating in effect as
of any date of determination as follows:
<TABLE>
<CAPTION>
Borrower's
S&P RATING-MOODY'S RATING LETTER OF CREDIT FEE
------------------------- --------------------
<S> <C>
A-1+/P-1 0.170%
A-1/P-1 0.200%
A-1/P-2 or A-2/P-1 0.225%
Equal to or less than 0.325%
A-2 or P-2, or A-2/P-2
</TABLE>
Notwithstanding the foregoing, if the Borrower loses its commercial paper rating
at any time, the applicable percentage for calculation of the Letter of Credit
Fee shall be 0.375%. If, subsequent to losing such rating, the Borrower is able
to again obtain such rating, the above table shall, from and after the date of
such occurrence (until such time, if any, that the Borrower again loses such
rating), govern the Letter of Credit Fee.
In addition to the foregoing fee, the Borrower shall pay in advance to the
Co-Agent issuing such Letter of Credit, at the times specified above in this
Section 4.6, for such Co-Agent's own account, an additional fee equal to
one-eighth of one percent (1/8%) per annum on the Maximum Drawing Amount of such
Letter of Credit.
In the event that any Letter of Credit shall be terminated or cancelled prior to
the anniversary of the issuance thereof, the Letter of Credit Fees for such
period shall be recalculated, and, to the extent any excess Letter of Credit
Fees were paid as a result of such termination or cancellation, the Borrower
shall receive a credit (to be applied in such manner as the Borrower and the
applicable Co-Agent may agree) in the amount of such excess.
4.7. ADDITIONAL CASH COLLATERAL PROVISIONS. A pro rata portion of
any cash collateral securing Letters of Credit not otherwise refunded or applied
in accordance with this Credit Agreement shall in any event be refunded to the
Borrower upon cancellation, or fourteen (14) days following expiration, of any
Letter of Credit secured by such cash collateral. In the event of refunding of
any cash collateral, or any portion thereof, to the Borrower as provided in or
pursuant to this Credit Agreement, the Administrative Agent shall refund to the
Borrower an amount equal to the full amount of such cash collateral provided by
the Borrower, or the applicable portion thereof, as the case may be, plus
accrued interest thereon for the period from the most recent date on which such
interest has been paid to, but not including, the date of such refund. Interest
on cash collateral shall accrue to the benefit of the Borrower, at a rate equal
to the Administrative Agent's Overnight Investment Rate, and shall be paid to
the Borrower quarterly in arrears five (5) Business Days following the end of
each calendar quarter and, in any case, on the date of refund as to any portion
of cash collateral being refunded, as set forth above.
5. CERTAIN GENERAL PROVISIONS.
<PAGE>
5.1. 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.
5.2. FUNDS FOR PAYMENTS.
5.2.1. PAYMENTS TO CO-AGENTS, ADMINISTRATIVE AGENT. All
payments of principal, interest, commitment fees, Reimbursement Obligations,
Letter of Credit Fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made to either of the Co-Agents or the
Administrative Agent, for the respective accounts of the Banks, the Co-Agents
and the Administrative Agent, at the Co-Agent's Head Office or the
Administrative Agent's Head Office, as the case may be, or at such other
location that the Co-Agents or the Administrative Agent may from time to time
designate, in each case in immediately available funds or directly from the
proceeds of Loans.
5.2.2. 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, the Co-Agents 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 Co-Agents or 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, the Co-
Agent or the Administrative Agent to receive the same net amount which the
Banks, the Co-Agent 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 either of the Co-Agents, 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.
5.2.3. 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 (ii) 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.
<PAGE>
5.3. COMPUTATIONS. All computations of interest with respect to
Alternative Base Rate Loans (including, without limitation, interest
computations with respect to Swing Loans and also including Letter of Credit
Fees) shall be based 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 Fed Fund Swing Loans shall be based on a year of 360 days and paid
for the actual number of days elapsed. All computations of interest with
respect to Eurodollar Rate 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,
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.
5.4. INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior to
the commencement of any Interest Period relating to any Eurodollar Rate 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 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 shall be automatically
withdrawn and shall be deemed a request for Alternative Base Rate Loans, (b)
each Eurodollar Rate Loan 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 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.
5.5. 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, 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 convert Alternative
Base Rate Loans to Eurodollar Rate Loans shall forthwith be suspended, and (b)
such Bank's Loans then outstanding as Eurodollar Rate 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 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 5.5 other
than on the last day of an Interest Period, including any interest or fees
payable by such Bank to lenders of funds obtained by it in order to make or
maintain its Eurodollar Rate Loans hereunder.
5.6. ADDITIONAL COSTS, ETC. If any present or future applicable
Government Mandate (whether or not having the force of law), shall:
(a) subject any Bank, either of the Co-Agents 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, and Letters of Credit, such Bank's
Commitment, or the Loans (other than taxes based upon or measured by the
income or profits of such Bank, such Co-Agent or the Administrative
Agent), or
<PAGE>
(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, either of the Co-Agents 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, either of the Co-Agents or the
Administrative Agent any other conditions or requirements with respect
to this Credit Agreement, the other Loan Documents, any Letters of
Credit, 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
any Letter of Credit, or
(ii) to reduce, by an amount deemed by such Bank, such
Co-Agent or the Administrative Agent, as the case may be, to be
material, the amount of principal, interest, or other amount payable to
such Bank, such Co-Agent or the Administrative Agent hereunder on
account of such Bank's Commitment, any Letter of Credit or any of the
Loans, or
(iii) to require such Bank, such Co-Agent 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, Reimbursement Obligation or
other sum that, but for such conditions or requirements described in
clauses (a) through (d), would be payable to such Bank, such Co-Agent or
the Administrative Agent hereunder, in any case the amount of which
payment or foregone interest, Reimbursement Obligation or other sum is
deemed by such Bank, such Co-Agent or the Administrative Agent, as the
case may be, to be material and is calculated by reference to the gross
amount of any sum receivable or deemed received by such Bank, such
Co-Agent or the Administrative Agent from the Borrower hereunder,
then, and in each such case, (aa) the Borrower will, upon demand made by such
Bank, such Co-Agent 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 Unpaid
Reimbursement Obligations, and the termination of any Letters of Credit and the
Commitments) and as often as the occasion therefor may arise, pay to such Bank,
such Co-Agent or the Administrative Agent such additional amounts as will be
sufficient to compensate such Bank, such Co-Agent or the Administrative Agent
for such additional cost, reduction, payment, foregone interest, Reimbursement
Obligation or other sum, (bb) the Borrower shall be entitled, upon notice to the
Administrative Agent, each Co-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 and
<PAGE>
Unpaid Reimbursement Obligations 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 pay to the Administrative Agent an amount equal to, but not less than such
Bank's pro rata share of the then Maximum Drawing Amount on all Letters of
Credit, which amount shall be held by the Administrative Agent as cash
collateral for the benefit of such Bank and the relevant Co-Agent for its share
of all Reimbursement Obligations, 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 and
Unpaid Reimbursement Obligations 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, and require the Borrower to pay to the Administrative Agent
an amount equal to, but not less than, such Bank's pro rata share of the then
Maximum Drawing Amount on all Letters of Credit, which amount shall be held by
the Administrative Agent as cash collateral for the benefit of such Bank and the
relevant Co-Agent for its share of all Reimbursement Obligations. Subject to
the terms specified above in this Section 5.6, the obligations of the Borrower
under this Section 5.6 shall survive repayment of the Loans and all Unpaid
Reimbursement Obligations and termination of any Letters of Credit and the
Commitments.
5.7. CAPITAL ADEQUACY. If after the date hereof any Bank, any
Co-Agent 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, such Co-Agent or the
Administrative Agent, or any corporation controlling such Bank, such Co-Agent 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, such
Co-Agent's or the Administrative Agent's commitment with respect to any Loans to
a level below that which such Bank, such Co- Agent or the Administrative Agent
could have achieved but for such adoption, change, or compliance (taking into
consideration such Bank's, such Co-Agent'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, such
Co-Agent or (as the case may be) the Administrative Agent to be material, then
such Bank, such Co-Agent 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, such Co-Agent 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, such Co-Agent or (as the
case may be) the Administrative Agent of a certificate in accordance with
Section 5.8 hereof (but in any case not 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, each Co-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
and/or such Co-Agent, together with all accrued and unpaid interest on such
Loans and any other amounts owing to such Bank and/or such Co-Agent 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 and/or
any Co-Agent under clause (bb), each other Bank and Co-Agent shall be entitled,
by notice to the Administrative Agent and the Borrower given within
<PAGE>
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 and Co-Agent, together with all accrued and unpaid interest on such
Loans and any other amounts owing to such other Bank or Co-Agent under the Loan
Documents. Each Bank and each Co-Agent 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 5.7, the obligations of the Borrower under this
Section 5.7 shall survive repayment of the Loans and termination of the
Commitments.
5.8. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to Section 5.6 or Section 5.7 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, either of the Co-Agents or the
Administrative Agent to the Borrower, shall be conclusive evidence, absent
manifest error, that such amounts are due and owing.
5.9. 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 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, (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 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 5.9 shall
survive repayment of the Loans and termination of the Commitments.
5.10. INTEREST AFTER EVENT OF DEFAULT. All amounts outstanding under
the Loan Documents that are not paid when due, including all overdue principal,
Unpaid Reimbursement Obligations 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.
<PAGE>
6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks, the Co-Agents and the
Administrative Agent as follows:
6.1. CORPORATE AUTHORITY.
6.1.1. 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.
6.1.2. 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.
6.1.3. 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.
6.1.4. 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.
6.2. 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 6.2.
<PAGE>
6.3. LIENS; LEASES. The assets reflected in the consolidated balance
sheet of the Borrower dated as of December 31, 1994 and delivered to the
Administrative Agent and the Banks under Section 6.4 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.
6.4. 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, 1994, 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, 1995, June 30, 1995, and September 30, 1995 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 Reports on Form 10-Q for
such fiscal quarters. 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 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.
6.5. NO MATERIAL CHANGES, ETC. No change in the Business of the
Borrower and its Consolidated Subsidiaries, taken as a whole, has occurred since
September 30, 1995 that has resulted in a Material Effect.
6.6. 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.
<PAGE>
6.7. 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.
6.8. 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.
6.9. 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.
6.10. 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.
6.11. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
6.12. 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 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 8.6(b)) is an
"investment company", as such term is defined in the 1940 Act.
6.13. 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
<PAGE>
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.
6.14. 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.
6.15. 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 Section302(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 Section4001 of 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.
6.16. REGULATIONS U AND X. The proceeds of the Loans shall be used by
the Borrower (i) to refinance advances outstanding under (A) that certain
Revolving Credit and Term Loan Agreement, dated as of February 22, 1994, among
the Borrower, FNBB, individually and as agent, and the lenders named therein
(the "FNBB Credit Agreement") and (B) that certain Revolving Credit Agreement,
dated as of December 19, 1994, as amended by that certain First Amendment to
Revolving Credit Agreement dated as of January 31, 1996, among the Borrower,
NationsBank, individually and as agent, and the lenders named therein (the
"NationsBank Credit Agreement," and together with the FNBB Credit Agreement, the
"Existing Credit Agreements"), (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) to support the Borrower's issuance of commercial
paper, and (iv) for general partnership purposes and working capital purposes,
including, without limitation, acquisitions. The Borrower will obtain Letters
of Credit solely for the purposes set forth in the immediately preceding clauses
(i) through (iv). No portion of any Loan is to be used, and no portion of any
Letter of Credit is to be obtained, for the purpose of purchasing or carrying
any "margin security" or
<PAGE>
"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.
6.17. 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
(hereinafter "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.
Section9601(5), any hazardous substances as defined by 42 U.S.C.
Section9601(14), any pollutant or contaminant as defined by 42 U.S.C.
Section9601(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; and
(c) (i) 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;
(ii) no underground tank or other underground storage
receptacle for Hazardous Substances is located on any portion of the
Real Estate;
(iii) 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;
(iv) 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;
(v) 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 (A) may have come to be
<PAGE>
located on the Real Estate through soil or groundwater contamination,
and, (B) if so located, would have a material adverse effect on the
value of the Real Estate or the environment; and
(vi) 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.
6.18. SUBSIDIARIES, ETC. SCHEDULE 6.18 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 number of authorized and
outstanding Equity Securities of each class of each Subsidiary of the Borrower
and the number and percentage thereof owned, directly or indirectly, by the
Borrower, and (c) any partnership or joint venture in which 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.
6.19. FUNDED DEBT. SCHEDULE 6.19 sets forth as of the Closing Date
all outstanding Funded Debt of the Borrower and its Subsidiaries.
6.20. GENERAL. The Borrower's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and Quarterly Reports on Form 10-Q referred
to in Section 6.4 (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.
7. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit, or Note is outstanding or any Bank
or Co-Agent has any obligation to make any Loans or either Co-Agent has any
obligation to issue, extend, or renew any Letters of Credit:
7.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Loans, all Reimbursement
Obligations, the Letter of Credit Fees, 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.
7.2. 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.
<PAGE>
7.3. RECORDS AND ACCOUNTS. The Borrower will, and will cause each of
its Subsidiaries to, keep complete and accurate records and books of account.
7.4. FINANCIAL STATEMENTS, CERTIFICATES, AND INFORMATION. The
Borrower will deliver to each of the Banks:
(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 7.4(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 7.3; (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 7.3, Section 8, and
Section 9 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 of (A) the results of operations of the Borrower for the
periods covered
<PAGE>
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 I hereto and setting forth in reasonable
detail computations evidencing compliance with the covenants contained in
Section 9 and (if applicable) reconciliations to reflect changes in GAAP since
December 31, 1994;
(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, the Co-Agents 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 7.4(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,
the Co-Agents 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, the Co-Agents 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, such Co-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, such Co-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, such Co-Agent or such Bank or to
report to the public concerning the industry of which the Agent or such Bank is
a part; PROVIDED, HOWEVER, that none of the Administrative Agent, the Co-Agents
and the Banks shall be liable to the Borrower or any other Person for damages
arising hereunder from the disclosure of non-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).
7.5. NOTICES.
7.5.1. 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
<PAGE>
financial officer, treasurer and 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 $20,000,000 to which or with
respect to which the Borrower or any of its Subsidiaries is a party or obligor,
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.
7.5.2. 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.
7.5.3. NOTICE OF PROCEEDINGS AND JUDGMENTS. The Borrower will
give notice to the Administrative Agent and each of the Lenders in writing
within ten (10) Business Days of the executive management of the Borrower (as
defined in Section 7.5.1) 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 Lenders, 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.
7.5.4. 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
<PAGE>
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.
7.6. EXISTENCE; BUSINESS; PROPERTIES.
7.6.1. 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 8.2.
7.6.2. 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.
7.6.3. 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 7.6.3 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.
7.6.4. 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.
7.7. 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
<PAGE>
the extent required by GAAP), as shall be customary in the industry for
companies engaged in similar activities in similar geographic areas.
7.8. 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 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.
7.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
7.9.1. 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 and Letter of
Credit Participations or, if no Loans or Letters of Credit are outstanding,
their respective Commitments), except as otherwise provided by Section 15(f).
Any data and information that is obtained by the Administrative Agent or any
Bank pursuant to this Section 7.9.1 shall be held subject to Section 7.4(e).
7.9.2. 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
7.9.2. Any data and information that is obtained by the Administrative Agent or
any Bank pursuant to this Section 7.9.2 shall be held subject to Section 7.4(e).
7.10. 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 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
<PAGE>
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.
7.11. USE OF PROCEEDS. The Borrower will use the proceeds of the
Loans solely as provided in Section 6.16. The Borrower will obtain Letters of
Credit solely for the purposes set forth in Section 6.16.
7.12. 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.
7.13. 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 9 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:
(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
<PAGE>
in Section 1.1, pursuant to Section 25 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 25, 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.
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit, or Note is outstanding or any Bank
or Co-Agent has any obligation to make any Loans or either Co-Agent has any
obligation to issue, extend, or renew any Letters of Credit:
8.1. 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;
(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); and
(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".
This covenant is not intended to restrict the conversion of a short-term
investment of the Borrower into cash of the Borrower or into another investment
which remains an asset of the Borrower.
<PAGE>
8.2. 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 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; and
(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 (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
<PAGE>
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;
(iv) such Reorganization does not result in a Change
of Control;
(v) after giving effect to such Reorganization,
investment management contracts with respect to at least seventy-five percent
(75%) of the assets under management by the Borrower and the Consolidated
Subsidiaries immediately 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 the
Consolidated Subsidiaries prior to such Reorganization, be held by the Borrower
or shall have been duly assigned to Persons executing and delivering to the
Administrative Agent Assumption Agreements or one or more of its consolidated
Subsidiaries pursuant to clause (iii) above;
(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.
8.3. 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 8.3;
<PAGE>
(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 8.6, 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, Cursitor
Alliance or its Restricted Subsidiaries.
8.4. 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 8.1 or an Investment permitted under Section 8.6;
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
<PAGE>
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 8.4;
(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 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 Co-Agents its coverage
obligation in writing).
8.5. 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 8.5 shall not apply to (a) 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, Cursitor Alliance or other Restricted
Subsidiaries, or (b) 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).
8.6. 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:
<PAGE>
(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 on the Closing Date and set forth
on SCHEDULE 8.6;
(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); and
(g) Investments (in addition to those specified in clauses
(a) through (f) above) in an aggregate amount for the Borrower and all of its
Subsidiaries taken together not in excess of $120,000,000 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 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.
8.7. 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, (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 8.7, Cursitor Alliance
<PAGE>
may incur $21,500,000 of Funded Debt pursuant to Section 2.6(c) of the Cursitor
Acquisition Agreement. Such $21,500,000 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.
8.8. 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), and (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, is not prohibited under this
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 Agreement.
8.9. 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.
8.10. 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.
<PAGE>
8.11. 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.
8.12. EMPLOYEE BENEFIT PLANS. The Borrower will not, and will not
cause, permit, or suffer any ERISA Affiliate to:
(a) engage in any "prohibited transaction" within the
meaning of Section406 of ERISA or Section4975 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 Section302 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 Section302(f) or 54068 of ERISA; or
(d) permit or take any action that would result in the
aggregate benefit liabilities (within the meaning of Section4001 of ERISA) of
all Guaranteed Pension Plans exceeding the value of the aggregate assets of such
Plans, disregarding for this purpose the benefit liabilities and assets of any
such Plan with assets in excess of benefit liabilities.
8.13. 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, the Co-Agents and the Administrative Agent under any of the Loan
Documents.
9. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan, Unpaid
Reimbursement Obligation, Letter of Credit, or Note is outstanding or any Bank
or Co-Agent has any obligation to make any Loans or either Co-Agent has any
obligation to issue, extend, or renew any Letters of Credit:
<PAGE>
9.1. 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.
(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).
9.2. 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.
9.3. MISCELLANEOUS.
(a) All capitalized terms that are used in this Section 9
without definition in this 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 9.3).
(b) For purposes of this Section 9, demand obligations shall
be deemed to be due and payable during any fiscal year during which such
obligations are outstanding.
10. CLOSING CONDITIONS.
<PAGE>
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:
10.1. 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 6.4 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.
10.2. 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, each Co-Agent and the Administrative Agent shall
have received a fully executed copy of each such document.
10.3. CERTIFIED COPIES OF CHARTER DOCUMENTS. Each of the Banks, the
Co-Agents 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, the Co-Agents and the Administrative Agent.
10.4. 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, the Co-Agents 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.
10.5. 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, the Co Agents and the Administrative Agent
shall have each received evidence thereof satisfactory to them.
10.6. OPINIONS OF COUNSEL. Each of the Banks, the Co-Agents and the
Administrative Agent shall have received a favorable opinion addressed to the
Banks, the Co-Agents and the Administrative Agent, dated as of the Closing Date,
from Brown & Wood, counsel to the Borrower, in the form of EXHIBIT M attached
hereto.
<PAGE>
10.7. 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.
10.8. INCUMBENCY CERTIFICATE. Each of the Banks, the Co-Agents 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, Conversion Requests and Swing Loan
Requests and to apply for Letters of Credit; and (c) to give notices and to take
other action on behalf of the Borrower under the Loan Documents.
10.9. PENDING LITIGATION. The Borrower shall have delivered to the
Banks a letter from counsel representing the Borrower in certain pending
litigation, describing the status of such litigation. The Borrower also shall
have provided to the Banks certain other information reasonably requested in
writing by the Banks concerning such litigation. The Borrower believes that the
allegations in such litigation described in such letter as of the date hereof
are without merit and intends to vigorously defend against the claims in such
litigation.
10.10. REPAYMENT OF EXISTING OBLIGATIONS. All amounts outstanding
under each of the Existing Credit Agreements shall have been paid in full and
the commitments under each such agreement terminated.
10.11. FEES. The Borrower shall have paid to the Administrative Agent
for the accounts of the Banks all fees then payable.
10.12. REPRESENTATIONS AND WARRANTIES TRUE; NO DEFAULTS. The
Co-Agents, 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 Co-Agent, 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.
11. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, including the Revolving
Credit Loans and the Swing Loans, and the obligations of either Co-Agent to
issue, extend or renew any Letter of Credit 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, a Swing Loan Request or
a Letter of Credit Application 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.
11.1. NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing.
11.2. 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 6.5), the other Loan Documents, or in any document or instrument
delivered pursuant
<PAGE>
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 or the issuance,
extension or renewal of such Letter of Credit, 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).
11.3 LOAN REQUEST OR LETTER OF CREDIT APPLICATION. In the case of a
Revolving Credit Loan (other than a Revolving Credit Loan made under Section
2.8), the Administrative Agent shall have received a Loan Request as provided in
Section 2.7. In the case of a Letter of Credit, either of the Co-Agents shall
have received a Letter of Credit Application as provided in Section 4.1.
11.4. PAYMENT OF FEES. Without limiting any other condition, the
Borrower shall have paid to the Administrative Agent, for the account of the
Banks, the Co-Agents 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 or the issuance, extension or renewal of such Letter
of Credit.
11.5. 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) or that in the reasonable opinion of either of the Co-Agents would make
it illegal for such Co-Agent to issue, extend or renew any Letter of Credit.
12. EVENTS OF DEFAULT; ACCELERATION; ETC.
12.1. 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 or any Reimbursement Obligation (for which a Revolving
Credit Loan is not made as provided in Section 2.8) 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 7.5.1, 7.6.1, 8.1, 8.2,
8.3, 8.4(x), 8.13, 9, or, if such failure relates to a Lien securing Funded
Debt, 8.4, or the Borrower shall fail to make timely delivery of a Judgment
Notice as required pursuant to Section 3.2.3;
<PAGE>
(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 12) 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 7.4 or Section 7.5.3 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;
(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, (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, in any such case 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) of at
least $20,000,000, 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;
<PAGE>
(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 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 of
any such general partner, the Borrower
<PAGE>
delivers to the Banks (i) the documentation with respect to such general partner
that would be required under Section 10.3 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 10.8, 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
8.2(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 and
all Reimbursement Obligations 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 12.1(h)
or Section 12.1(i), all such amounts shall become immediately due and payable
automatically and without any requirement of notice from the Administrative
Agent, any Co-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.
12.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of
Default specified in Section 12.1(h) or Section 12.1(i) shall occur, any unused
portion of the credit hereunder shall forthwith terminate and each of the Banks
shall be relieved of all obligations to make Loans to the Borrower and the
Co-Agents shall be relieved of all further obligations to issue, extend or renew
Letters of Credit. 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, or if on any date
for issuing, extending, or renewing any Letter of Credit the conditions
precedent to issuing, extending, or renewing such Letter of Credit on such 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 and the Co-Agents shall be relieved of all
further obligations to issue, extend or renew Letters of Credit. 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.
12.3. 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 12.1, each
Bank, if owed any amount with respect to the Loans or the Reimbursement
Obligations, 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 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
<PAGE>
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, any Co-Agent
or the Administrative Agent or the holder of any Note or purchaser of any Letter
of Credit Participation 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.
12.4. APPLICATION OF MONIES. In the event that, during the
continuance of any Default or Event of Default, the Administrative Agent, either
Co-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, the Co-Agents and the
Administrative Agent with respect to each type of Obligation such as interest,
principal, fees, and expenses, shall be made among the Banks, the Co-Agents 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.
13. 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
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 or constituting Reimbursement Obligations owed to
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 or
constituting Reimbursement Obligations owed to 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, or constituting Reimbursement Obligations
<PAGE>
owed to, 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, or
Reimbursement Obligations owed to, 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, and Reimbursement Obligations owed to, 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, 3.2.3, 5.8, and 5.9), 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, or Reimbursement Obligations owed 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.
14. THE ADMINISTRATIVE AGENT.
14.1. AUTHORIZATION. The Administrative Agent is authorized 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, the Letters of Credit or any of the other Loan Documents
shall be construed to constitute the Administrative Agent as a trustee for any
Bank.
14.2. 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.
14.3. 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.
14.4. NO REPRESENTATIONS. The Administrative Agent shall not be
responsible for the execution or validity or enforceability of this Credit
Agreement, the Notes, the Letters of Credit, 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 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
<PAGE>
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.
14.5. PAYMENTS.
14.5.1. 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 or Co-Agent shall constitute a payment to
such Bank or Co-Agent. The Administrative Agent shall promptly distribute to
each Bank and Co-Agent such Bank's or, as the case may be, Co-Agent, PRO RATA
share of payments received by the Administrative Agent for the account of the
Banks and the Co-Agents except as otherwise expressly provided herein or in any
of the other Loan Documents.
14.5.2. 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.
14.5.3. 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, (b) to purchase any Letter of Credit Participation as,
when, and to the full extent required by the provisions of this Credit
Agreement, or (c) to comply with the provisions of Section 13 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, Unpaid Reimbursement
Obligations, interest, fees, or otherwise, to the remaining nondelinquent Banks
for application to, and reduction of, their respective PRO RATA shares of all
outstanding Loans and Unpaid Reimbursement Obligations. 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 and Unpaid Reimbursement Obligations. 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 and Unpaid
Reimbursement Obligations of the non-delinquent Banks, the Banks' respective PRO
RATA shares of all outstanding Loans and Unpaid Reimbursement Obligations have
returned to those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency.
<PAGE>
14.6. HOLDERS OF NOTES. Subject to Section 18, the Administrative
Agent may deem and treat the payee of any Note or purchaser of any Letter of
Credit Participation 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.
14.7. INDEMNITY. The Banks ratably shall indemnify and hold harmless
the Administrative Agent from and against any and all Proceedings (whether
groundless or otherwise), losses, damages, costs, expenses (including any
expenses for which the Administrative Agent has not been reimbursed by the
Borrower as required by Section 15), and liabilities of every nature and
character 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 the Administrative Agent's actions taken hereunder or thereunder,
except to the extent that any of the same shall be directly caused by the
Administrative Agent's willful misconduct or gross negligence.
14.8. ADMINISTRATIVE AGENT AND CO-AGENTS AS BANKS. In its individual
capacity, The First National Bank of Boston and NationsBank, N.A. (South) 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 and as the purchase of any Letter of Credit Participations, as it would
have were it not also the Administrative Agent and/or a Co-Agent.
14.9. RESIGNATION. The Administrative Agent and/or either Co-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 and/or
Co-Agent, as the case may be. Unless an Event of Default shall have occurred
and be continuing, such successor Administrative Agent and/or Co-Agent shall be
reasonably acceptable to the Borrower. If no successor Administrative Agent
and/or Co-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 and/or Co-Agent's giving of notice of resignation, then
the retiring Administrative Agent and/or Co-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 and/or Co-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/or Co-Agent, and the retiring Administrative Agent
and/or Co-Agent shall be discharged from its duties and obligations hereunder.
After any retiring Administrative Agent's and/or Co-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 Agent.
14.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Upon learning of
the existence of a Default or an Event of Default, a Bank or Co-Agent shall
promptly notify the Administrative Agent thereof. Upon receipt of any notice
under this Section 14.10, the Administrative Agent shall promptly notify the
other Banks of the existence of such Default or Event of Default.
14.11. 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
<PAGE>
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 to be unlawful or commercially unreasonable in
any applicable jurisdiction.
15. EXPENSES.
The Borrower shall upon demand either, as the Banks, the Co-Agents or
the Administrative Agent may require and regardless of whether any Loans are
made hereunder, pay in the first instance or reimburse the Banks, the Co-Agents
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, either of the
Co-Agents or any of the Banks (other than taxes based upon the Agent's, either
Co-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 Co-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,
(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, either Co- Agent or the Administrative Agent, and reasonable consulting,
accounting, appraisal, investment banking, and similar professional fees and
charges) incurred by any Bank, either Co-Agent 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, either Co-Agent'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, the Co-Agents and the
Banks, unless any of the Administrative Agent, the Co-Agents 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,
the Co-Agents and the Banks make separate counsel advisable. The covenants of
this Section 15 shall survive payment or satisfaction of all other Obligations.
16. INDEMNIFICATION.
The Borrower shall, regardless of whether any Loans are made hereunder,
indemnify and hold harmless the Administrative Agent, the Co-Agents and the
Banks, together with their respective
<PAGE>
shareholders, directors, agents, officers, Subsidiaries, and Affiliates, from
and against any and all 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 or Letters of Credit, (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 16
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 16
shall survive payment or satisfaction in full of all other Obligations.
17. 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, the
Co-Agent 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 and the issuance, extension or renewal of any Letters of
Credit, as herein contemplated, and shall continue in full force and effect so
long as any Letter of Credit or 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 or either of the Co-Agents has any obligation to
issue, extend, or renew any Letter of Credit, 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, either
Co-Agent or the Administrative Agent at any time by or on behalf of the 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.
<PAGE>
18. ASSIGNMENT AND PARTICIPATION.
18.1. 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 its participating interest in the risk
relating to any Letters of Credit) 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, in the case of the Borrower, will not
be unreasonably withheld, provided that, if no Event of Default has occurred and
is continuing, no Bank may assign its rights and obligations hereunder if such
assignment would result in a reduction of or a withdrawal of the then current
rating of the commercial paper notes of the Borrower (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 J 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 18.3, be
released from its obligations under this Credit Agreement.
18.2. 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 of any of their obligations under this 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 6.4 and Section 7.4 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
<PAGE>
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; (h) such assignee represents and
warrants that it is legally authorized to enter into such Assignment and
Acceptance; and (i) such assignee acknowledges that it has made arrangements
with the assigning Bank satisfactory to such assignee with respect to its PRO
RATA share of Letter of Credit Fees in respect of outstanding Letters of Credit.
18.3. 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, and Letter of Credit Participations purchased by, 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
$3,000.
18.4. 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
Acceptance and shall otherwise be in substantially the form of the assigned
Notes. The surrendered Notes shall be cancelled and returned to the Borrower.
18.5. 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 25 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.
<PAGE>
18.6. 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 7.4(e).
18.7. 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
12, and the determination of the Majority Banks shall for all purposes of this
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 or Reimbursement Obligations 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 12 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 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.
18.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall
retain its rights to be indemnified pursuant to Sections 5.8, 5.9, 15, and 16
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 18 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
Section4 of the Federal Reserve Act, 12 U.S.C. Section341. No such pledge or
the enforcement thereof shall release the pledgor Bank from its obligations
hereunder or under any of the other Loan Documents.
18.9. ASSIGNMENT BY BORROWER. 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.
<PAGE>
19. 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 or any Letter of Credit Applications 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) 333- 1860), 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 NationsBank, whether individually or as Co-Agent,
at 21st Floor, 600 Peachtree Street, N.E., Atlanta, Georgia 30308, (Telecopy
Number (404) 607-6318), Attention: Ira L. Moreland, with a copy sent via the
same means to Co-Agent's Special Counsel at Bingham, Dana & Gould, 150 Federal
Street, Boston, Massachusetts 02110 (Telecopy Number: (617) 951-8736),
Attention Lea Anne Copenhefer, Esq., or such other address for notice as such
Person shall last have furnished in writing to the Person giving the notice;
(c) if to FNBB, whether individually, as Co-Agent or as
Administrative Agent, at 100 Federal Street, Mail Stop 01-10-08, Boston,
Massachusetts 02110 (Telecopy Number: (617) 434-1537), Attention: Carol A.
Clark, Managing Director, with a copy sent via the same means to Co-Agent's
Special Counsel at Bingham, Dana & Gould, 150 Federal Street, Boston,
Massachusetts 02110 (Telecopy Number: (617) 951-8736), Attention Lea Anne
Copenhefer, Esq., or such other address for notice as such Person shall last
have furnished in writing to the Person giving the notice; and
(d) 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.
Notwithstanding anything set forth in this Section 19, (x) the Borrower
agrees that any Judgment Notice shall only be delivered by overnight courier, or
by telecopy and confirmed by overnight courier, and (y) if any notice is being
delivered both to NationsBank and to FNBB, only one copy of such notice shall be
delivered to Co-Agent's Special Counsel.
20. 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
<PAGE>
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE
ADMINISTRATIVE AGENT, THE CO-AGENTS, 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 19. EACH OF THE ADMINISTRATIVE
AGENT, THE CO-AGENTS, 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.
21. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
22. 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.
23. 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 25.
24. WAIVER OF JURY TRIAL.
EACH OF THE ADMINISTRATIVE AGENT, THE CO-AGENTS, 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 CO-AGENTS, 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, EITHER CO-AGENT OR THE ADMINISTRATIVE AGENT HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH BANK, SUCH CO-AGENT OR THE
ADMINISTRATIVE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
<PAGE>
ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT EACH OF THE
ADMINISTRATIVE AGENT, THE CO-AGENTS 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.
25. 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 5.10 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 or Letter of Credit Fees may not be changed without the written
consent of the Borrower and the 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 25 nor the definition of Majority Banks
may be amended without the written consent of all of the Banks; and the amount
of the Agent's fee or Letter of Credit Fees and Section 14 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.
26. 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.
<PAGE>
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
<PAGE>
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, General Partner
By: /s/ Anne S. Drennan
-------------------
Name:Anne S. Drennan
Title:Senior Vice President and Treasurer
ADMINISTRATIVE THE FIRST NATIONAL BANK OF BOSTON
AGENT:
By: /s/ Carol A. Clark
------------------
Name: Carol A. Clark
Title:Managing Director
SYNDICATION NATIONSBANK, N.A. (SOUTH)
AGENT:
By/s/ James J. Killmond
---------------------
Name:James J. Killmond
Title:Officer
CO-AGENTS: THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Carol A. Clark
------------------
Name: Carol A. Clark
Title:Managing Director
NATIONSBANK, N.A. (SOUTH)
By/s/ James J. Killmond
---------------------
Name:James J. Killmond
Title:Officer
<PAGE>
BANKS: THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Carol A. Clark
------------------
Name: Carol A. Clark
Title:Managing Director
NATIONSBANK, N.A. (SOUTH)
By/s/ James J. Killmond
---------------------
Name:James J. Killmond
Title:Officer
ABN AMRO BANK N.V.
New York Branch
By: ABN AMRO North America, Inc., as Agent
By:/s/ Stella Milano
-----------------
Name:Stella Milano
Title:Vice President
By:/s/ Giovanni P. Fallone
Name:Giovani P. Fallone
Title:Vice President
THE BANK OF NEW YORK
By:/s/ Lee B. Stpehens
-------------------
Name:Lee B Stephens
Title: Vice President
CHEMICAL BANK
By: /s/ Heather Lindstrom
---------------------
Name:Heather Lindstrom
Title: Vice President
CITIBANK, N.A.
By: /s/ Yussur Abrar
----------------
Name:Yussur Abrar
Title:Vice President, Attorney in fact
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By:/s/ Lauren S. McCoy
-------------------
Name:Lauren S. McCoy
Title:Vice President
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Commitment
Bank Commitment Percentage
- --------------------------------------------------------------------
<S> <C> <C>
The First National Bank of Boston $45,000,000 18%
NationsBank, N.A. (South) $45,000,000 18%
ABN AMRO BANK N.V. $32,000,000 12.8%
500 Park Avenue - 2nd Floor
New York, NY 10022
Attn: Ms. Stella V. Milano
Telecopy: (212) 446-4335
The Bank of New York $32,000,000 12.8%
One Wall Street - 1st Floor
New York, NY 10286
Attn: Mr. Lee B. Stephens, III
Telecopy: (212) 809-9566
Chemical Bank $32,000,000 12.8%
270 Park Avenue
New York, NY 10017
Attn: Mr. Richard H. Klein
Telecopy: (212) 270-0412
Citibank, N.A. $32,000,000 12.8%
399 Park Avenue
12th Floor, Zone 11
New York, NY 10043
Attn: Ms. Yussur Abrar
Telecopy: (212) 371-6309
<PAGE>
Morgan Guaranty Trust Company of New $32,000,000 12.8%
York
60 Wall Street
New York, NY 10260
Attn: Ms. Lauren McCoy
Telecopy: (212) 648-5548
</TABLE>
<PAGE>
ALLIANCE PARTNERS COMPENSATION PLAN
1. ESTABLISHMENT OF PLAN. Alliance Capital Management L.P.
has establishedthis Alliance Partners Compensation Plan to (i) create a
compensation program to attract and retain eligible employees expected to make a
significant contribution to the future growth andsuccess of Alliance, including
its subsidiaries and (ii) foster the long-term commitment of these employees
through the accumulation of capital.
2. DEFINITIONS. Whenever used in the Plan, each of the
following terms shallhave the meaning for that term set forth below:
(a) "Account means a separate bookkeeping account established
for each Participant for each Award, with the amount of the Award
credited to the Account together with Earnings thereafter credited
thereon.
(b) "Alliance" means Alliance Capital Management L.P., a
Delaware limited partnership, and any successor to all or substantially
all of its business and assets.
(c) "Award" means the amount of the Partners Pool awarded by
the Committee to a Participant for any calendar year.
(d) "Beneficiary" means the beneficiary or beneficiaries of the
Participant involved as provided for in Section 9.
(e) "Board of Directors" means the Board of Directors of
Alliance Capital Management Corporation, any successor to it as general
partner of Alliance or any successor corporation to all or substantially
all of the business and assets of Alliance.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(g) "Committee" means the Management Compensation Committee of
Alliance.
(h) "Company" means Alliance and any corporation or other
entity of which Alliance (1) has sufficient voting power (not depending
on the happening of a contingency) to elect at least a majority of its
board of directors or other governing body, as the case may be, or (2)
otherwise has the power to direct or cause the direction of its
management and policies.
(i) "Disability" with respect to a Participant means a good
faith determination
1
<PAGE>
by the Committee that the Participant is physically or mentally
incapacitated and has been unable for a period of six consecutive months
to perform substantially all of the duties for which the Participant was
responsible immediately before the commencement of the incapacity. In
order to assist the Committee in making such a determination and as
reasonably requested by the Committee, a Participant will (1) make
himself or herself available for medical examination by one or more
physicians chosen by the Committee and approved by the Participant, whose
approval shall not unreasonably be withheld,(2) grant the Committee and
any such physicians access to all relevant medical information relating
to the Participant, (3) arrange to furnish copies of medical records to
the Committee and such physicians, and (4) use his or her best efforts to
cause the Participant's own physicians to be available to discuss the
Participant's health with the Committee and its chosen physicians.
(j) "Earnings" means an amount computed as of the end of each
calendar year equal to the product of (1) the balance of the
Participant's Account as of the effective date of the Award credited
thereto and (2) a percentage equal to the higher of (i) the "Alliance
Growth Rate" for the period from such effective date through the end of
the calendar year as of which the computation is being made (the
"Earnings Period") and (ii) the "Cumulative Compound Reference Rate" for
the Earnings Period. For purposes of the foregoing, the "Alliance Growth
Rate" means (A) 1 plus the cumulative percentage increase or decrease in
the level of Alliance's pre-tax operating earnings per Unit for each
calendar year during the Earnings Period, compounded annually, (B)
multiplied by the square of 1 plus the Reference Rate at the end of the
Earnings Period, (C) based on such product, determining the resultant
compound annual growth rate (using the number of years in the Earnings
Period plus two) and (D) on the basis of such computation, determining
the cumulative compound growth rate over the Earnings Period. Alliance's
pre-tax operating earnings per Unit shall be based on the applicable
information reflected in Alliance's consolidated financial statements for
each year during the Earnings Period, including the weighted average
number of Units outstanding during each such year as indicated in such
statements. For purposes of the foregoing, the "Cumulative Compound
Reference Rate" means (E) 1 plus the cumulative Reference Rate determined
by taking the Reference Rate at the end of each calendar year during the
Earnings Period, compounded annually, (F) multiplied by the square of 1
plus the Reference Rate at the
2
<PAGE>
end of Earnings Period, (G) based on such product, determining the
resultant compound annual rate (using the number of years in the Earnings
Period plus two) and (H) on the basis of such computation, determining
the cumulative compound rate over the Earnings Period. All computations
shall be made by the Committee and the resulting amounts rounded to the
nearest one hundredth.
(k) "Eligible Employee" means, for any calendar year, an
employee of a Company whose annual compensation from the Companies for
such year, excluding any Award, exceeds the amount prescribed by Code
section 414(q)(1)(B) as adjusted from time to time and is such that the
employee is a "highly-compensated employee" by reference to ERISA
sections 201(2), 301(a)(3) and 401(a)(1), as determined by the Committee.
(l) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time.
(m) "Final Account Balance" means the aggregate of the vested
balances of a Participant in each Account maintained for the Participant
as of the end of the calendar year immediately preceding the calendar
year in which the employment of the Participant with the Companies
terminates for any reason or, if the Participant's employment with the
Companies terminates as of a calendar year end, as of that year end.
(n) "Participant" means any Eligible Employee of any Company
who has been designated by the Committee to receive an Award for any
calendar year and who thereafter remains employed by a Company.
(o) "Partners Pool" means, for each calendar year commencing
with 1995, the sum of (1) the maximum amount first available to be
awarded under this Plan with respect to that year, (2) the aggregate
amount forfeited pursuant to Section 7 for that year, and(3) an amount
equal to the difference between the amount of the Partners Pool for the
immediately preceding calendar year (as computed pursuant to this
Subsection for that prior year) and the aggregate amount of Awards for
such year.
(p) "Plan" means the Alliance Partners Compensation Plan, as
set forth herein and as amended from time to time.
(q) "Reference Rate" for any year means the average of the
rates of interest
3
<PAGE>
on 6-month commercial paper as reflected on "Federal Reserve statistical
release" H.15 (or any successor publication thereto) as of the last day
of the calendar year for or as of which such rate is to be determined and
as of the last day of the immediately prior twelve calendar months.
(r) "Retirement" with respect to a Participant means that the
employment of the Participant with the Companies has terminated either
(1) on or after the Participant's attaining age 65, or (2) on or after
the Participant's attaining age 55 at a time when the sum of the
Participant's age and aggregate full calendar years of service with the
Companies, including service prior to April 21, 1988 with the corporation
then named Alliance Capital Management Corporation, equals or exceeds 70.
(s) "Termination of Employment" means that the Participant
involved is no longer performing services as an employee of any Company
other than pursuant to a severance or special termination arrangement.
(t) "Units" means the units representing assignments of
beneficial ownership of limited partnership interests in Alliance,
including such units issuable upon conversionof the Class A Limited
Partnership Interest in Alliance and unit equivalents.
3. ELIGIBILITY. The Committee, in its sole discretion, will
designate those Eligible Employees employed by a Company at the end of a
calendar year who are to receive Awards for that year. In making such
designation, the Committee will consider an Eligible Employee's position with a
Company, the manner in which the Eligible Employee is expected to contribute to
the future growth and success of the Company and such other criteria as it shall
deem relevant. The Committee may vary the amount of Awards to a particular
Participant from year to year and may determine that a Participant who received
an Award for a particular year is not eligible to receive any Award with respect
to any subsequent year. An Eligible Employee who is a member of the Committee
during a particular year shall be eligible to receive an Award for that year
only if the Award is approved by the majority of the other members of the
Committee.
4. GRANT OF AWARDS. Not later than thirty days after the end of each
calendar year commencing with 1995, the Committee may make Awards, effective as
of December 31 of the year to which the Award relates, in such amounts as of the
Committee determines in its sole discretion. A Participant to whom an Award is
made shall promptly thereafter be notified of the Award in writing by the
Committee. The amount of each Award made to a Participant will be
4
<PAGE>
credited to a separate Account as of the effective date of the Award. In its
sole discretion, the Committee may determine that the aggregate amount of Awards
for any year will be less than the Partners Pool for that year.
5. EARNINGS ON AN ACCOUNT. As of the end of each calendar
year following the year for which an Account is established, each Account
maintained for a Participant who was employed by the Company at the end of that
year will be credited or debited, as applicable, with
the amount, if any, necessary to reflect Earnings as of that date. As soon as
practicable after the end of each such calendar year, a statement shall be
provided to each such Participant indicating the current balance in each Account
maintained for the Participant as of the end of the calendar
year.
6. VESTING OF AMOUNTS IN A PARTICIPANT'S ACCOUNT. With respect
to each Award made for 1995, a Participant's rights and interest therein and any
Earnings thereon credited to the Participant's Account will vest at the rate of
33 1/3 percent for each full calendar year that the Participant is employed by a
Company after 1995. With respect to each Award made for a calendar year after
1995, a Participant's rights and interest therein and any Earnings thereon
credited to the Participant's Account will vest at the rate of 12 1/2 percent
for each full calendar year that the Participant is employed by a Company after
the effective date of the Award. Notwithstanding any provision of this Plan to
the contrary, a Participant's rights and interest in the balance in the
Participant's Account to the extent not then vested shall become fully vested
upon the Participant's death, Disability or Retirement.
7. FORFEITURE OF A PARTICIPANT'S ACCOUNT BALANCES. If a
Participant ceases to be employed by any of the Companies other than by reason
of the Participant's death, Disability or Retirement, the balance of any Account
maintained for a Participant on the effective date of the Participant's
Termination of Employment that is not then fully vested pursuant to Section 6
will thereupon be forfeited; provided, however, that, in its sole discretion,
the Committee may determine to accelerate the Participant's vesting in any such
Account and avoid the forfeiture of the Participant's otherwise unvested Account
balance. Any amounts forfeited pursuant to this Section 7 shall increase the
amount of the Partners Pool as provided for in Section 2(o)(3).
8. DISTRIBUTIONS OF A PARTICIPANT'S FINAL ACCOUNT BALANCES.
(a) In the event a Participant's employment with the Companies
terminates by reason of the Participant's death, the Participant's Final
Account Balance,
5
<PAGE>
plus interest as provided in Subsection (d)(i) of this Section, will be
distributed to the Participant's Beneficiary in a single-sum cash payment
within 45 days after the later of the date the Committee receives (i)
written notification in form satisfactory to it of the Participant's
death, and (ii) any tax waiver or governmental document deemed relevant
by the Committee with respect to making the payment.
(b) In the event a Participant's employment with the Companies
terminates by reason of the Participant's Disability or Retirement, the
Participant's Final Account Balance, plus interest as provided in
Subsection (d)(ii) of this Section, will be distributed to the
Participant or to the Participant's Beneficiary, as the case may be, in
cash in five equal annual installments, the first to be made on a date
within 45 days after the January 1 immediately following the effective
date of such Disability or Retirement and the others to be made within 45
days of January 1 in each of the four subsequent calendar years;
provided, however, that a payment shall be made in a single-sum in an
amount up to 50 percent of his or her Final Account Balance, plus
interest as provided in Subsection (d)(i) of this Section, if the
Participant elects to receive such a payment by written notice submitted
to the Committee at least twelve months before the effective date of the
Participant's Disability or Retirement, as the case may be. Any such
single-sum payment shall be made within 45 days after the effective date
of the Participant's Disability or Retirement, as the case may be, and
the subsequent five equal installment payments, which shall total (i) the
Final Account Balance reduced by the single-sum payment computed without
regard to Subsection (d)(i) of this Section plus (ii) interest as
provided in Subsection (d)(ii) of this Section, shall be made within 45
days of January 1 in each of the five subsequent calendar years.
(c) In the event a Participant's employment with the Companies
terminates for any reason other than the Participant's death, Disability
or Retirement, the Participant's Final Account Balance, plus interest as
provided in Subsection (d)(ii) of this Section, will be distributed to
the Participant or the Participant's Beneficiary, as the case may be, in
cash in five equal annual installments, the first to be made on a date
within 45 days after the January 1 immediately following the effective
date of the Participant's Termination of Employment and the others within
45 days of January 1 in each of the four subsequent calendar years.
6
<PAGE>
(d)(i) Each single-sum payment to be made pursuant to Subsection
(a) or (b) of this Section shall include interest on the Final Account
Balance to be paid at the Reference Rate as of the date the Final Account
Balance is to be determined.
(ii) Each installment payment to be made pursuant to Subsection
(b) or (c) of this Section shall be calculated by considering the portion
of the Participant's Final Account Balance payable in installments as an
indebtedness that accrues interest at the Reference Rate as of the date
the Final Account Balance is determined and that will be amortized by
equal payments on January 1 of the five calendar years in which the
installments payments are to be made sufficient to fully discharge the
deemed indebtedness by the final installment payment.
(e) There shall be withheld from each payment made pursuant to
the Plan any tax or other charge required to be withheld therefrom
pursuant to any federal, state or local law. A Company by whom a
Participant is employed shall also be entitled to withhold from any
compensation payable to a Participant any tax imposed by section 3101 of
the Code, or any successor provision, on any Award made to
theParticipant; provided, however, that if for any reason the Company
does not so withhold the entire amount of such tax on a timely basis, the
Participant shall be required to reimburse Alliance for the amount of the
tax not withheld promptly upon Alliance's request therefore.
9. DESIGNATION OF BENEFICIARIES. Each Participant may file
with the Committee a written designation of one or more persons, including a
trust or the Participant's estate, as the Beneficiary entitled to receive, in
the event of the Participant's death, an amount which otherwise would have been
distributable under the Plan to the Participant. A Participant may, from time
to time, revoke or change his or her Beneficiary designation by filing a new
designation with the Committee. If (i) no such Beneficiary designation is in
effect at the time of a Participant's death, (ii) no designated Beneficiary
survives the Participant, or (iii) a designation on file is not legally
effective for any reason, then the Participant's estate shall be the
Participant's Beneficiary.
10. ADMINISTRATION OF THE PLAN. The Plan is intended to be an
unfunded, non-qualified deferred compensation plan maintained primarily for a
select group of management or highly-compensated employees within the meaning of
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and shall be administered by
the Committee as such and in accordance with its terms.
7
<PAGE>
The Committee shall have the full power and authority to administer and
interpret the Plan and to take any and all actions in connection with the Plan,
including, but not limited to, the power and authority to prescribe all
applicable procedures, forms and agreements. The Committee's interpretation and
construction of the Plan, including its computation of Earnings, shall be
conclusive and binding on all persons having an interest in the Plan.
11. AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN. The
Board of Directors, and the Committee consistent with Board of Directors
authorization, reserve the right at any time, without the consent of any
Participant or Beneficiary and for any reason, to amend, suspend or terminate
the Plan in whole or in part in a manner; provided that no such amendment,
suspension or termination shall adversely affect any right of any Participant or
Beneficiary with respect to any balance in any Account prior to such amendment,
suspension or termination.
12. GENERAL PROVISIONS.
(a) Neither the establishment of the Plan nor the grant of any
Award or any action of any Company, the Board of Directors, or the
Committee pursuant to the Plan, shall be held or construed to confer upon
any Participant any legal right to be continued in the employ of any
Company. Each Company expressly reserves the right to discharge any
Participant without liability to the Participant or any Beneficiary,
except as to any rights which may expressly be conferred upon
the Participant under the Plan.
(b) The right of any Participant or Beneficiary to receive
payments under thePlan shall be an unsecured claim against the general
assets of Alliance. All distributions to be made under the Plan shall be
paid from the general funds of Alliance and no special or separate fund
shall be established and no segregation of assets shall be made to assure
payments of any such distributions. No Participant or Beneficiary shall
have any right, title or interest whatsoever in, or to, any investments
which Alliance may make to assist it in meeting its obligations under the
Plan. Nothing contained in the Plan, and no action taken pursuant to the
Plan, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between any Company and any other person.
(c) No right to receive any payment under the Plan may be
transferred or assigned, pledged or otherwise encumbered by
anyParticipant or Beneficiary other than
8
<PAGE>
by will, by the applicable laws of descent and distribution or by a court
of competent jurisdiction. Any other attempted assignment or alienation
of any payment hereunder shall be void and of no force or effect.
(d) If any provision of the Plan shall be held illegal or
invalid, the illegality or invalidity shall not affect the remaining
provisions of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included in the Plan.
(e) Any notice to be given by the Committee under the Plan to a
Participant or Beneficiary shall be in writing addressed to the
Participant or Beneficiary, as the case may be, at the last address shown
for the recipient on the records of any Company or subsequently provided
in writing to the Committee. Any notice to be given by a Participant
under the Plan shall be in writing addressed to the committee at the
address of Alliance.
(f) Section headings herein are for convenience of reference
only and shall not affect the meaning of any provision of the Plan.
(g) The provisions of the Plan shall be governed and construed
in accordance with the laws of the State of New York.
9
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, unless otherwise indicated)
<TABLE>
<CAPTION>
Alliance Capital Management L.P.(1)
- -------------------------------------------------------------------------------------------------------------
Years Ended December 31,
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues:
Investment advisory and services fees:
Alliance mutual funds $232,730 $211,169 $167,043 $149,957 $128,000
Other affiliated clients 43,978 41,805 37,212 33,180 41,268
Institutional clients 179,872 163,171 146,509 138,709 134,777
Distribution plan fees from Alliance mutual funds 128,733 135,613 105,260 92,985 70,013
Shareholder servicing and administration fees 43,383 40,593 32,932 28,099 25,090
Other revenues 10,559 8,601 10,561 10,341 13,452
- -------------------------------------------------------------------------------------------------------------
639,255 600,952 499,517 453,271 412,600
- -------------------------------------------------------------------------------------------------------------
Expenses:
Employee compensation and benefits 172,202 173,649 149,295 154,800 135,294
Promotion and servicing:
Distribution payments to financial intermediaries:
Affiliated 23,710 20,442 13,722 10,755 17,522
Unaffiliated 87,044 84,054 65,445 55,526 43,263
Amortization of deferred sales commissions 50,501 51,547 36,237 32,495 20,613
Other 39,959 42,701 30,233 28,064 22,355
General and administrative 88,889 70,731 66,023 80,087 76,663
Amortization of intangible assets 8,747 8,450 6,975 6,993 6,893
Interest 1,192 7,572 10,619 9,871 7,479
Nonrecurring transaction expenses - - 40,842 - -
- -------------------------------------------------------------------------------------------------------------
472,244 459,146 419,391 378,591 330,082
- -------------------------------------------------------------------------------------------------------------
Income before income taxes (benefit) and
cumulative effect of accounting change 167,011 141,806 80,126 74,680 82,518
Income taxes (benefit) 11,624 8,317 11,466 (100) 11,355
- -------------------------------------------------------------------------------------------------------------
Income before cumulative effect of
accounting change 155,387 133,489 68,660 74,780 71,163
Cumulative effect of change in accounting
for income taxes - - 900 - -
- -------------------------------------------------------------------------------------------------------------
Net income $155,387 $133,489 $ 69,560 $ 74,780 $ 71,163
- -------------------------------------------------------------------------------------------------------------
Net income per Unit(4) $1.89 $1.70 $0.96 $1.05 $1.01
Cash distributions per Unit(2)(4) $1.82 $1.64 $1.50 $1.285 $1.06
Weighted average Units outstanding(4) 81,558 77,941 72,085 70,244 69,622
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Balance Sheet Data at Period End:
Total assets $575,058 $518,369 $561,287 $415,851 $450,029
Debt and long-term obligations(3) 30,839 29,021 134,022 165,334 127,798
Total partners' capital 406,709 381,329 214,045 160,626 156,419
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Assets under Management at Period End
(in millions)(5) $146,521 $119,279 $113,979 $ 97,521 $ 97,956
==============================================================================================================
</TABLE>
(1) The transfer of the business of Equitable Capital Management Corporation
("ECMC") to the Partnership was completed on July 22, 1993 and was
accounted for in a manner similar to the pooling of interests method.
Accordingly, all financial data for the periods presented, except as noted,
have been restated to include the results of operations of ECMC.
(2) The Partnership is required to distribute all of its Available Cash Flow,
as defined in the Partnership Agreement, to the General Partner and
Unitholders. Cash distributions per Unit amounts above do not include
Available Cash Flow resulting from the operations of ECMC prior to July 22,
1993, the date the transfer was completed.
(3) Includes accrued expenses under employee benefit plans due after one year
and debt.
(4) Unit and per Unit amounts for all periods presented reflect a two-for-one
Unit split effective February 22, 1993.
(5) Assets under management exclude certain non-discretionary advisory
relationships. Assets under management for 1994 and prior years have been
restated.
43
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Alliance Capital Management L.P. (the "Partnership") derives substantially all
of its revenues and net income from fees for investment advisory, distribution
and other services provided to the Alliance mutual funds and from fees for
investment advisory services provided to institutional clients and The Equitable
Life Assurance Society of the United States ("ELAS"), a wholly-owned subsidiary
of The Equitable Companies Incorporated ("Equitable"), and certain other ELAS
affiliates. The Alliance mutual funds consist of a broad range of open-end load
and closed-end mutual funds ("mutual funds"), The Hudson River Trust ("HRT"),
and cash management products, including money market funds and deposit accounts.
The Partnership offers a diversified range of investment management products and
services to meet the varied needs and objectives of individual and institutional
investors.
The Partnership's investment advisory and services fees, the largest
component of the Partnership's revenues, are generally calculated as a small
percentage of the value of assets under management and vary with the type of
account managed. Fee income is, therefore, affected by changes in assets under
management, including market appreciation or depreciation, the addition of new
client accounts or client contributions of additional assets to existing
accounts, withdrawals of assets from and termination of client accounts,
purchases and redemptions of mutual fund shares, and shifts of assets between
accounts or products with different fee structures. Investment advisory
agreements for certain accounts provide for performance fees in addition to a
base fee. Performance fees are earned when investment performance exceeds a
contractually agreed upon benchmark and, accordingly, may increase the
volatility of the Partnership's revenues and earnings.
The most significant developments during 1995 were the substantial increase
in U.S. equity markets, the marked improvement in both domestic and
international fixed income markets and the increase in mutual fund sales. Assets
under management grew to $146.5 billion at December 31, 1995, an increase of
$27.2 billion or 22.8% from December 31, 1994, primarily as a result of market
appreciation and net Alliance mutual fund sales. Alliance mutual fund sales for
1995 were approximately $11.4 billion compared to sales of $10.4 billion in
1994. The increase in Alliance mutual fund sales, primarily equity mutual funds
and cash management products, combined with a decline in mutual fund redemptions
in 1995, resulted in net Alliance mutual fund sales of $4.4 billion compared to
$2.2 billion in 1994.
Acquisitions in 1994 and 1993 also contributed to the growth. During 1994,
the Partnership completed the acquisition of Shields Asset Management,
Incorporated ("Shields") and its wholly-owned subsidiary, Regent Investor
Services Incorporated ("Regent"), which increased assets under management at the
date of acquisition by $7.8 billion and significantly expanded the Partnership's
presence in the multi-employer, or Taft-Hartley, pension market and the
individual "wrap fee" business. The acquisition was accounted for under the
purchase method and the results of Shields and Regent are included in the
Partnership's consolidated financial statements from the acquisition date.
During 1993, the Partnership acquired the business and substantially all of the
assets of Equitable Capital Management Corporation ("ECMC"), an indirect
wholly-owned subsidiary of Equitable. The acquisition of ECMC increased the
Partnership's assets under management at the date of acquisition by $36.6
billion. The Partnership accounted for the acquisition in a manner similar to
the pooling of interests method and, accordingly, all financial data for periods
prior to the acquisition have been restated to include the operations of ECMC.
44
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
(Dollars & Units in millions,
except per Unit amounts) 1995 1994 % Change 1994 1993 % Change
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net income $155.4 $133.5 16.4% $133.5 $69.6 91.8%
Net income per Unit $ 1.89 $ 1.70 11.2 $ 1.70 $0.96 77.1
Weighted average number of Units
and Unit equivalents outstanding 81.6 77.9 4.7 77.9 72.1 8.0
Operating margin 26.1% 23.6% 23.6% 24.2%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Net income for 1995 increased by 16.4% from 1994 primarily due to a 9.7%
increase in investment advisory and services fees resulting from higher average
assets under management, and a modest 2.9% increase in operating expenses. The
Partnership's operating margins improved significantly from the prior year. Net
income for 1994 increased to $133.5 million compared to $69.6 million for 1993.
Net income for 1993 included nonrecurring expenses aggregating $40.8 million
related to the acquisition of ECMC and a $0.9 million tax benefit resulting from
a change in the method of accounting for income taxes. Excluding these
nonrecurring items, net income for 1994 increased $25.8 million or 23.9% from
$107.7 million for 1993.
<TABLE>
<CAPTION>
Assets Under Management ($ billions) 12/31/95 12/31/94 % Change 12/31/94 12/31/93 % Change
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alliance mutual funds:
Mutual funds $ 23.0 $ 20.6 11.7% $ 20.6 $ 22.1 (6.8)%
Cash management products 13.8 9.1 51.6 9.1 8.1 12.3
Hudson River Trust 12.0 8.4 42.9 8.4 7.2 16.7
- -------------------------------------------------------------------------------------------------------------
48.8 38.1 28.1 38.1 37.4 1.9
- -------------------------------------------------------------------------------------------------------------
Other affiliated clients 22.9 21.0 9.0 21.0 20.9 0.5
Institutional 74.8 60.2 24.3 60.2 55.7 8.1
- -------------------------------------------------------------------------------------------------------------
Total $146.5 $119.3 22.8% $119.3 $114.0 4.6%
- -------------------------------------------------------------------------------------------------------------
Average Assets Under Management ($ billions) 1995 1994 % Change 1994 1993 % Change
- -------------------------------------------------------------------------------------------------------------
Alliance mutual funds $ 44.2 $ 40.1 10.2% $ 40.1 $ 32.1 24.9%
Other affiliated clients 22.0 20.7 6.3 20.7 19.7 5.1
Institutional 66.2 59.7 10.9 59.7 53.9 10.8
- -------------------------------------------------------------------------------------------------------------
Total $132.4 $120.5 9.9% $120.5 $105.7 14.0%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Assets under management at December 31, 1995 were $146.5 billion, an
increase of $27.2 billion or 22.8% from December 31, 1994. Mutual fund assets
under management at December 31, 1995 were $48.8 billion, an increase of $10.7
billion or 28.1% from December 31, 1994, due principally to market appreciation
of $6.3 billion and net sales of cash management products and HRT shares of $4.7
billion and $1.2 billion, respectively. These increases were partially offset by
net mutual fund redemptions
45
<PAGE>
of $1.5 billion, principally net redemptions experienced by the Partnership's
fixed income mutual funds. Other affiliated assets, primarily the General
Accounts of ELAS and its insurance subsidiaries ("General Accounts"), increased
$1.9 billion from December 31, 1994 due principally to net asset additions of
$1.7 billion and market appreciation of $0.2 billion. Institutional assets under
management increased $14.6 billion principally due to market appreciation of
$15.9 billion offset partially by net institutional asset withdrawals of $1.3
billion.
Assets under management at December 31, 1994 were $119.3 billion, an
increase of $5.3 billion or 4.6% from December 31, 1993. The increase was
attributable to an increase of $7.8 billion from the acquisition of Shields and
Regent and net mutual fund sales of $2.2 billion, offset partially by market
depreciation of $4.7 billion, primarily in fixed income mutual funds. Excluding
the effects of market depreciation and the Shields and Regent acquisition, the
Partnership's institutional and other affiliated clients' assets under
management remained essentially unchanged from 1993.
Revenues
<TABLE>
<CAPTION>
($ millions) 1995 1994 % Change 1994 1993 % Change
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment advisory and services fees:
Alliance mutual funds $232.7 $211.2 10.2% $211.2 $167.0 26.5%
Other affiliated clients 44.0 41.8 5.3 41.8 37.2 12.4
Institutional clients 179.9 163.2 10.2 163.2 146.5 11.4
Distribution plan fees from
Alliance mutual funds 128.7 135.6 (5.1) 135.6 105.3 28.8
Shareholder servicing and
administration fees 43.4 40.6 6.9 40.6 32.9 23.4
Other revenues 10.6 8.6 23.3 8.6 10.6 (18.9)
- -------------------------------------------------------------------------------------------------------------
Total Revenues $639.3 $601.0 6.4% $601.0 $499.5 20.3%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Investment advisory and services fees were $456.6 million in 1995, an
increase of $40.4 million or 9.7% as compared to 1994. Investment advisory and
services fees were $416.2 million in 1994, an increase of $65.5 million or 18.7%
over 1993.
Investment advisory and services fees from Alliance mutual funds increased
by $21.5 million or 10.2% for 1995 primarily as a result of a 10.2% increase in
average assets under management. Investment advisory and services fees from
Alliance mutual funds increased by $44.2 million or 26.5% from 1993 to 1994
primarily as a result of higher average assets under management of 24.9% in
1994.
Investment advisory and services fees from other affiliated advisory
clients, primarily the General Accounts, increased for 1995 due principally to
an increase in performance fees. Other affiliated advisory fees increased in
1994 due to higher average assets under management and an increase in
performance fees.
46
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Investment advisory and services fees from new institutional accounts and
client contributions to existing accounts during the three year period were less
than fees lost due to institutional account terminations and asset withdrawals.
However, the increase in fees resulting from significant market appreciation
more than offset the reduction in fees due to net client asset withdrawals.
Investment advisory and services fees from institutional clients increased for
both 1995 and 1994, due to an increase in average assets under management of
10.9% and 10.8%, respectively. The increases in institutional assets resulted
primarily from market appreciation and the Shields and Regent acquisition in
March 1994. Performance fees earned on other affiliated and institutional
accounts aggregated $18.1 million, $18.0 million, and $16.7 million in 1995,
1994 and 1993, respectively.
The Partnership's subsidiary, Alliance Fund Distributors, Inc. ("AFD"),
acts as distributor of its sponsored mutual funds and receives distribution plan
fees from those funds in reimbursement of distribution expenses it incurs.
Distribution plan fees decreased for 1995 primarily as a result of lower average
fixed income mutual fund assets attributable to Class B and Class C Shares under
its mutual fund distribution system (the "System") (see "Capital Resources and
Liquidity"). This decrease was principally due to net redemptions of fixed
income mutual fund shares during the latter part of 1994 and early 1995.
Distribution plan fees increased in 1994 due to substantially higher average
mutual fund assets attributable to strong sales of Class B Shares through the
first quarter of 1994 and the introduction of Class C Shares during the second
quarter of 1993.
The Partnership's subsidiary, Alliance Fund Services, Inc. ("AFS"),
provides administrative and transfer agency services to its sponsored mutual
funds and money market funds. In connection with the investment advisory
services it provides to the General Accounts of ELAS and its insurance
subsidiaries, the Partnership provides ancillary regulatory accounting and
reporting services. Increases in shareholder servicing and administration fees
were principally due to increases in the number of mutual fund shareholder
accounts serviced by AFS. The number of shareholder accounts serviced increased
to approximately 2.0 million as of December 31, 1995 from 1.7 million and 1.5
million as of December 31, 1994 and 1993, respectively.
Other revenues consist primarily of interest, dividends and commissions on
the sale of Class A Shares under the System. The increase in other revenues for
1995 was due principally to the increase in interest earned on short-term
investments from higher average balances. Other revenues decreased for 1994
primarily as a result of lower commissions on sales of Class A Shares.
47
<PAGE>
Expenses
<TABLE>
<CAPTION>
($ millions) 1995 1994 % Change 1994 1993 % Change
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Employee compensation and benefits $172.2 $173.6 (0.8)% $173.6 $149.3 16.3%
Promotion and servicing 201.2 198.7 1.3 198.7 145.7 36.4
General and administrative 88.9 70.7 25.7 70.7 66.0 7.1
Interest 1.2 7.6 (84.2) 7.6 10.6 (28.3)
Amortization of intangible assets 8.7 8.5 2.4 8.5 7.0 21.4
Nonrecurring expenses 0.0 0.0 - 0.0 40.8 (100.0)
- ----------------------------------------------------------------------------------------------------------------
Total Expenses $472.2 $459.1 2.9% $459.1 $419.4 9.5%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Employee compensation and benefits, which represent approximately 37.0% of
total expenses, include salaries, commissions, fringe benefits and incentive
compensation based on profitability. Provisions for future payments to be made
under certain deferred compensation arrangements and for non-cash compensation
expense resulting from the vesting of Units issued or sold to key employees at a
discount from fair market value are also included in employee compensation and
benefits expense.
Employee compensation and benefits decreased for 1995 primarily as a result
of a reduction in the number of full-time employees. This decrease was partially
offset by related severance costs and salary increases. Employee compensation
and benefits increased for 1994 principally due to an increase in full-time
employees as a result of the Shields and Regent acquisition and the expansion of
the Partnership's mutual fund business and its fixed income and global research
capabilities. Higher incentive compensation resulting from increased operating
earnings also contributed to the increase in employee compensation and benefits.
The Partnership had 1,339 full-time employees at December 31,1995 compared to
1,461 and 1,284 at December 31, 1994 and 1993, respectively.
Promotion and servicing expenses, which represent approximately 43% of
total expenses, include payments made to financial intermediaries for
distribution of the Partnership's sponsored mutual funds and cash management
services products and amortization of deferred sales commissions paid to
financial intermediaries under the System. Also included in this expense
category are travel and entertainment, advertising, promotional materials, and
investment meetings and seminars for financial intermediaries that distribute
the Partnership's mutual fund products. Promotion and servicing expenses for
1995 increased primarily due to increased distribution plan payments resulting
from higher average cash management and equity mutual fund assets under
management. This increase was offset by reductions in other promotional
expenditures.
48
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Promotion and servicing expenses increased during 1994 attributable to
higher distribution plan payments due to higher average mutual fund asset levels
resulting from net sales of Class B and Class C Shares through the first quarter
of 1994. Amortization of deferred sales commissions increased in 1994 due to
continued sales of Class B Shares. Other promotional expenditures increased
primarily as a result of costs associated with a new mutual fund advertising
campaign and the launching of a large closed-end fund during 1994.
General and administrative expenses, which represent approximately 19% of
total expenses, are costs related to the operation of the business, including
professional fees, occupancy, communications, equipment and similar expenses.
General and administrative expenses increased for 1995 due principally to higher
legal fees attributable to pending litigation and expenses incurred in
connection with certain technology initiatives, as well as higher occupancy
costs resulting from the Partnership's expansion at its New York headquarters
and foreign offices. General and administrative expenses increased for 1994
primarily as a result of higher occupancy costs and increases in sub-advisory
and administration fees related to the Partnership's sponsored closed-end mutual
funds.
Interest expense is incurred on the Partnership's borrowings and on
deferred compensation owed to employees. Interest expense decreased for 1995 and
1994 due to lower average borrowings resulting from the repayment of the
Partnership's senior notes during August 1994.
Amortization of intangible assets is primarily attributable to the
acquisition of ACMC, Inc., the predecessor of the Partnership by ELAS during
1985 and the Shields and Regent acquisition in March 1994. Amortization of
intangibles increased due to the amortization of goodwill incurred in
connection with the acquisition of Shields and Regent.
The Partnership generally is not subject to Federal, state and local
income taxes, with the exception of the New York City unincorporated business
tax, which is currently inposed at a rate of 4%. Domestic subsidiaries of the
Partnership are subject to Federal, state and local income taxes.
Subsidiaries organized and operating outside the United States are generally
subject to taxes in the foreign jurisdictions where they are located. Current
law provides that the Partnership will be taxable as a corporation beginning in
1998. The 1995 provision for income taxes increased primarily as a result of the
increase in taxable income for the Partnership and certain of its domestic
corporate subsidiaries. The 1994 provision for income taxes decreased from 1993
since the 1993 amount includes corporate income tax expense resulting from
ECMC's operations prior to its acquisition by the Partnership at the historical
effective tax rate of approximately 46%.
49
<PAGE>
Capital Resources and Liquidity
Partners' capital was $406.7 million at December 31, 1995, an increase of $25.4
million or 6.7% from $381.3 million at December 31, 1994. Partners' capital at
December 31, 1994 increased $167.3 million or 78.2% from $214.0 million at
December 31, 1993. The significant increase in partners' capital during 1994 was
primarily attributable to the sale of newly-issued Units for $150.0 million in
cash to several institutional investors, including $50.0 million to ELAS.
Cash flow from operations, proceeds from the sale of Units and proceeds
from issuance of debt have been the Partnership's principal sources of working
capital. Cash flow from operations was the Partnership's principal source of
working capital during the year ended December 31, 1995. The Partnership's cash
and cash equivalents increased by $72.1 million. Cash inflows included $200.6
million from operations, $14.6 million from net sales of investments and $5.6
million of proceeds from exercises of Unit options. Cash outflows included
$141.3 million in distributions to Unitholders and $7.6 million in capital
expenditures.
The Partnership's mutual fund distribution system (the "System") includes
three distribution options. The System permits the Alliance mutual funds to
offer investors the option of purchasing shares (a) subject to a conventional
front-end sales charge ("Class A Shares"), (b) without a front-end sales charge
but subject to a contingent deferred sales charge payable by shareholders
("CDSC") and higher distribution fees payable by the funds ("Class B Shares"),
or (c) without either a front-end sales charge or the CDSC but with higher
distribution fees payable by the funds ("Class C Shares"). If a shareholder
purchases Class A Shares, AFD compensates the financial intermediary
distributing the fund from the front-end sales charge paid by the shareholder at
the time of each sale. If a shareholder purchases Class B Shares, AFD does not
collect a front-end sales charge even though it is obligated to compensate the
financial intermediary at the time of sale. Payments made to financial
intermediaries in connection with the sale of Class B shares under the System,
net of CDSC received, totaled approximately $41.7 million and $69.3 million
during 1995 and 1994, respectively. Management of the Partnership believes AFD
will recover the payments made to financial intermediaries from the higher
distribution fees and CDSC it receives under the Class B Shares over periods not
exceeding 5 1/2 years. If a shareholder purchases Class C Shares, AFD does not
collect a front-end sales charge or CDSC and does not compensate the financial
intermediary at the time of sale but the entire amount of the distribution fees
received by AFD applicable to Class C Shares is paid to the financial
intermediary.
50
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
On December 6, 1994, Orange County, California filed a petition in
bankruptcy under the Federal Bankruptcy Code. Due to the continuing uncertainty
regarding the financial condition of Orange County, California, the Partnership
purchased all remaining Tax and Revenue Anticipation Notes Series A issued by
Orange County, California (the "Orange County Obligations") from two of its
sponsored money market fund portfolios on July 19, 1995 for approximately $21.3
million. During the fourth quarter of 1995, the Partnership sold all of its
Orange County Obligations.
During 1994, the Partnership established a $100 million revolving credit
facility with several banks. The Partnership also authorized a $100 million
commercial paper program, and entered into a three-year $100 million revolving
credit facility with a group of commercial banks to support the program during
1994. As of December 31, 1995, the Partnership had not issued any commercial
paper and there were no amounts outstanding under the Partnership's revolving
credit facilities. During February 1996, the Partnership's existing revolving
credit facilities were terminated and replaced by a new $250 million five-year
revolving credit facility. The new revolving credit facility will be used to
provide backup liquidity for the commercial paper program and is available to
fund commission payments to financial intermediaries for the sale of Class B
Shares under the System, for acquisitions and for general working capital
purposes.
The Partnership's substantial equity base and access to public and private
debt, at competitive interest rates and other terms, should provide adequate
liquidity for its general business needs. Management of the Partnership believes
that cash flow from operations and the issuance of debt and Units will provide
the Partnership with the financial resources to take advantage of strategic
growth opportunities, to finance capital requirements for mutual fund sales and
to meet the Partnership's other capital requirements.
Commitments and Contingencies
The Partnership's capital commitments, which consist primarily of operating
leases for office space, furniture and equipment, are generally funded from
future operating cash flows.
On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
("Complaint") was filed against Alliance North American Government Income Trust,
Inc. (the "Fund"), the Partnership and certain other defendants affiliated with
the Partnership alleging violations of federal securities laws, fraud and breach
of fiduciary duty in connection with the Fund's investments in Mexican and
Argentine securities. The Complaint seeks certification of a plaintiff class of
all persons who purchased or owned Class A, B or C shares of the Fund from March
27, 1992 through December 23, 1994. A similar complaint was filed on November 7,
1995 and was subsequently consolidated with the Complaint.
The principal allegations of the Complaint are that the Fund purchased debt
securities issued by the Mexican and Argentine governments in amounts that were
not permitted by the Fund's investment policies and objective, and that there
was no shareholder vote to change the investment objective to permit purchases
in such amounts. The Complaint further alleges that the decline in the value of
the Mexican and Argentine securities held by the Fund caused the Fund's net
asset value to decline to the detriment of the Fund's shareholders. On September
26, 1995, the defendants jointly filed a motion to dismiss the Complaint. A
decision in respect of this motion is pending. The Partnership believes that the
allegations in the Complaint are without merit and intends to vigorously defend
against these claims.
51
<PAGE>
On February 29, 1996, the Partnership acquired the business of
Cursitor-Eaton Asset Management Company and Cursitor Holdings Limited
(collectively, "Cursitor") in exchange for 1,764,115 Units, $84.9 million in
cash, notes in the aggregate principal amount of $21.5 million which are payable
ratably over the next four years, and substantial additional consideration which
will be determined at a later date. The acquisition of Cursitor increased assets
under management by approximately $10 billion. The Cursitor acquisition was
financed principally from proceeds from the sale of the Partnership's short-term
investments and the issuance of the new Units.
Changes in Accounting Principles
As more fully discussed in Note 12 to the consolidated financial statements, on
January 1, 1993, the Partnership adopted Statement of Financial Accounting
Standards No. 109 (SFAS 109) "Accounting for Income Taxes." The cumulative
effect of the accounting change was a one-time deferred income tax benefit of
$0.9 million or $.01 per Unit, net of a valuation allowance of $8.1 million or
$.14 per Unit.
The Partnership adopted Statement of Financial Accounting Standards No. 115
(SFAS 115) "Accounting for Certain Investments in Debt and Equity Securities"
and Statement of Financial Accounting Standards No. 121 (SFAS 121) "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" on December 31, 1994 and 1995, respectively. The adoption of SFAS 115 and
SFAS 121 did not have a material impact on the consolidated financial
statements.
In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 123 (SFAS 123) "Accounting for
Stock-Based Compensation." The Partnership currently applies the intrinsic value
based method of accounting prescribed by Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," in accounting for its Unit
option grants. Accordingly, the Partnership has not recognized any related
compensation expense. Beginning with financial statements for 1996, the
Partnership will be required to make certain additional disclosures as if the
fair value based method of accounting defined in SFAS No. 123 had been applied
to the Partnership's Unit option grants made subsequent to 1994.
Cash Distributions
The Partnership is required to distribute all of its Available Cash Flow, as
defined in the Partnership Agreement, to the General Partner and Unitholders
(including the holder of the Class A Limited Partnership Interest based on Units
issuable upon conversion of the Class A Limited Partnership Interest). The
Partnership's Available Cash Flow and Distributions per Unit for the years ended
December 31, 1995, 1994 and 1993 was as follows:
<TABLE>
<CAPTION>
Available Cash Flow 1995 1994 1993
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Available Cash Flow (in thousands): $148,937 $127,710 $98,761
Distributions per Unit $1.82 $1.64 $1.50
- ------------------------------------------------------------------------
</TABLE>
52
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31 (in thousands)
<TABLE>
<CAPTION>
1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $124,256 $ 52,199
Fees receivable:
Alliance mutual funds 36,840 31,366
Other affiliated clients 2,006 14,238
Institutional clients 46,766 39,265
Receivable from brokers and dealers for sale of shares of Alliance mutual funds 26,651 17,984
Investments, available-for-sale 35,375 49,763
Furniture, equipment and leasehold improvements, net 44,208 43,830
Intangible assets, net 84,209 92,962
Deferred sales commissions, net 149,583 158,343
Other assets 25,164 18,419
- -----------------------------------------------------------------------------------------------------
Total assets $575,058 $518,369
- -----------------------------------------------------------------------------------------------------
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 75,584 $ 59,784
Payable to Alliance mutual funds for share purchases 45,217 32,507
Accrued expenses under employee benefit plans 44,086 40,878
Debt 3,462 3,871
- -----------------------------------------------------------------------------------------------------
Total liabilities 168,349 137,040
- -----------------------------------------------------------------------------------------------------
Commitments and contingencies
Partners' Capital:
General Partner 4,417 4,176
Limited partners; 81,159,751 and 80,554,308 Units issued and outstanding,
including Class A Limited Partnership Interest, respectively 437,283 413,454
- -----------------------------------------------------------------------------------------------------
441,700 417,630
Less:
Capital contributions receivable from General Partner 25,396 23,172
Deferred compensation expense 9,500 12,500
Unrealized loss on investments 95 629
- -----------------------------------------------------------------------------------------------------
Total partners' capital 406,709 381,329
- -----------------------------------------------------------------------------------------------------
Total liabilities and partners' capital $575,058 $518,369
- -----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
53
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31 (in thousands, except per Unit amounts)
<TABLE>
<CAPTION>
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Investment advisory and services fees:
Alliance mutual funds $232,730 $211,169 $167,043
Other affiliated clients 43,978 41,805 37,212
Institutional clients 179,872 163,171 146,509
Distribution plan fees from Alliance mutual funds 128,733 135,613 105,260
Shareholder servicing and administration fees 43,383 40,593 32,932
Other revenues 10,559 8,601 10,561
- -----------------------------------------------------------------------------------------------------
639,255 600,952 499,517
- -----------------------------------------------------------------------------------------------------
Expenses:
Employee compensation and benefits 172,202 173,649 149,295
Promotion and servicing:
Distribution plan payments to financial intermediaries:
Affiliated 23,710 20,442 13,722
Unaffiliated 87,044 84,054 65,445
Amortization of deferred sales commissions 50,501 51,547 36,237
Other 39,959 42,701 30,233
General and administrative 88,889 70,731 66,023
Amortization of intangible assets 8,747 8,450 6,975
Interest 1,192 7,572 10,619
Nonrecurring transaction expenses - - 40,842
- -----------------------------------------------------------------------------------------------------
472,244 459,146 419,391
- -----------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect
of accounting change 167,011 141,806 80,126
Income taxes 11,624 8,317 11,466
- -----------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting change 155,387 133,489 68,660
Cumulative effect of change in accounting for income taxes - - 900
- -----------------------------------------------------------------------------------------------------
Net income $155,387 $133,489 $ 69,560
- -----------------------------------------------------------------------------------------------------
Earnings per Unit:
Income before cumulative effect of accounting change $1.89 $1.70 $0.95
Cumulative effect of change in accounting for income taxes - - 0.01
- -----------------------------------------------------------------------------------------------------
Net income per Unit $1.89 $1.70 $0.96
- -----------------------------------------------------------------------------------------------------
Weighted average Units outstanding 81,558 77,941 72,085
- -----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
54
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Years Ended December 31 (in thousands)
<TABLE>
<CAPTION>
General Limited Capital Deferred Unrealized Total
Partner's Partners' Contributions Compensation Gain (Loss) on Partners'
Capital Capital Receivable Expense Investments Capital
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 $ 1,812 $ 179,398 $(19,746) $ (838) $ - $ 160,626
Net income 696 68,864 69,560
Cash distributions to partners
($1.42 per Unit) (878) (86,914) (87,792)
Amortization of deferred
compensation expense 726 726
Capital contributions from
General Partner 666 666
Compensation plan accrual 22 2,221 (2,243) -
Proceeds from sale of Units 500 49,500 50,000
Issuance of Units to employees 128 12,712 12,840
Proceeds from Unit options exercised 44 4,320 4,364
Excess of liabilities not assumed over
assets not acquired from ECMC 26 2,502 2,528
Foreign currency translation
adjustment 5 522 527
- -----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 2,355 233,125 (21,323) (112) - 214,045
Net income 1,335 132,154 133,489
Cash distributions to partners
($1.64 per Unit) (1,240) (122,745) (123,985)
Amortization of deferred
compensation expense 2,612 2,612
Capital contributions from
General Partner 695 695
Compensation plan accrual 25 2,519 (2,544) -
Proceeds from sale of Units 1,500 148,500 150,000
Issuance of Units to employees 150 14,850 (15,000) -
Proceeds from Unit options exercised 45 4,475 4,520
Unrealized loss on investments (629) (629)
Foreign currency translation
adjustment 6 576 582
- -----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 4,176 413,454 (23,172) (12,500) (629) 381,329
Net income 1,554 153,833 155,387
Cash distributions to partners
($1.73 per Unit) (1,413) (139,906) (141,319)
Amortization of deferred
compensation expense 3,000 3,000
Capital contributions from
General Partner 781 781
Compensation plan accrual 30 2,975 (3,005) -
Issuance of Units to employees 19 1,901 1,920
Proceeds from Unit options exercised 56 5,500 5,556
Unrealized gain on investments 534 534
Foreign currency translation
adjustment (5) (474) (479)
- -----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 $ 4,417 $ 437,283 $(25,396) $ (9,500) $ (95) $ 406,709
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
55
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31 (in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 155,387 $ 133,489 $ 69,560
Adjustments to reconcile net income to net cash provided
from operating activities:
Amortization and depreciation 67,350 67,690 50,503
Other, net 5,918 5,857 937
Nonrecurring transaction expenses - - 15,442
Changes in assets and liabilities:
(Increase) in fees receivable from Alliance mutual funds (5,457) (1,711) (4,069)
(Increase) decrease in fees receivable from other affiliated clients 12,232 6,796 (6,330)
(Increase) decrease in fees receivable from institutional clients (7,549) 1,212 (6,689)
(Increase) decrease in receivable from brokers and dealers for sale
of shares of Alliance mutual funds (8,667) 85,937 (78,379)
(Increase) in deferred sales commissions (41,740) (69,332) (75,300)
(Increase) in other assets (6,273) (2,841) (6,819)
Increase in accounts payable and accrued expenses 16,469 1,157 24,093
Increase (decrease) in payable to Alliance mutual funds for
share purchases 12,710 (113,177) 109,995
Increase in accrued expenses under employee benefit
plans, less deferred compensation 207 2,687 2,136
- --------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 200,587 117,764 95,080
- --------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of investments (94,547) (50,978) (57,562)
Proceeds from sale of investments 109,138 57,138 40,602
Purchase of business - (73,570) -
Additions to furniture, equipment and leasehold improvements (7,644) (21,210) (7,323)
- --------------------------------------------------------------------------------------------------------------------
Net cash provided from (used in) investing activities 6,947 (88,620) (24,283)
- --------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of debt 106 100,120 20
Repayment of debt (178) (205,234) (20,223)
Distributions to partners (141,319) (123,985) (87,792)
Proceeds from sale of Units - 150,000 51,284
Capital contributions from General Partner 781 695 666
Proceeds from Unit options exercised 5,556 4,520 4,364
- --------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (135,054) (73,884) (51,681)
- --------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents (423) 624 412
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 72,057 (44,116) 19,528
Cash and cash equivalents at beginning of the year 52,199 96,315 76,787
- --------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of the year $ 124,256 $ 52,199 $ 96,315
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
56
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
Alliance Capital Management L.P. (the "Partnership") and its consolidated
subsidiaries provide diversified investment management services to institutional
clients, The Equitable Life Assurance Society of the United States ("ELAS"), a
wholly-owned subsidiary of The Equitable Companies Incorporated ("Equitable"),
and certain of their subsidiaries and affiliates and through various investment
vehicles, to individual investors. The institutional investment management
business consists primarily of the active management of equity and fixed income
client accounts. The institutional clients include corporate and public employee
pension funds, the general and separate accounts of ELAS and its insurance
company subsidiaries, endowment funds, and other domestic and foreign
institutions. The individual investor services business, which developed as a
diversification of the institutional investment management business, consists of
the management, distribution and servicing of its sponsored mutual funds and
cash management products, including money market funds and deposit accounts
("Alliance mutual funds").
The Partnership is a registered investment adviser under the Investment
Advisers Act of 1940. Alliance Capital Management Corporation ("Alliance"), an
indirect wholly-owned subsidiary of Equitable, owns a 1% general partnership
interest in the Partnership. At December 31, 1995, Equitable was the beneficial
owner of approximately 58.7% of the units representing assignments of beneficial
ownership of limited partnership interests ("Units"), including 100,000 Units
issuable upon conversion of the Class A Limited Partnership Interest.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Partnership's consolidated financial statements have been prepared in
conformity with generally accepted accounting principles. The preparation of the
consolidated financial statements requires management of the Partnership to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses for
the reported periods. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the Partnership and its
majority-owned subsidiaries. The equity method of accounting is used for
unconsolidated subsidiaries in which the Partnership's ownership interests range
from 20 to 50 percent and the Partnership exercises significant influence over
operating and financial policies. All significant intercompany transactions and
balances among the consolidated entities have been eliminated.
Cash and Cash Equivalents
Highly liquid debt instruments with a maturity of three months or less are
considered cash equivalents. Due to the short-term maturity of these
instruments, their recorded value approximates fair value.
Investments
The Partnership's investments, principally investments in Alliance mutual funds,
are classified as available-for-sale securities and, accordingly, unrealized
gains and losses are excluded from earnings and reported as a separate component
of partners' capital. Fair values of investments in Alliance mutual funds are
based on the last reported net asset value.
57
<PAGE>
Furniture, Equipment and Leasehold Improvements
Furniture, equipment and leasehold improvements are stated at cost, less
accumulated depreciation and amortization. Depreciation is provided on a
straight line basis over the estimated useful lives of eight years for furniture
and three to six years for equipment. Leasehold improvements are amortized on a
straight line basis over the lesser of their estimated useful lives or the terms
of the related leases.
Intangible Assets
Intangible assets, consisting principally of goodwill and client files, are
being amortized on a straight line basis over estimated useful lives ranging
from twelve to forty years. The Partnership evaluates the potential impairment
of its intangible assets by comparing the undiscounted cash flows expected to be
realized from those intangible assets to their recorded values and has
determined that there is no impairment.
Deferred Sales Commissions
Sales commissions paid to financial intermediaries in connection with the sale
of shares of open-end Alliance mutual funds sold without a front-end sales
charge are capitalized and amortized over periods not exceeding five and
one-half years, the periods of time estimated by management of the Partnership
during which deferred sales commissions are expected to be recovered from
distribution plan payments received from certain Alliance mutual funds and
contingent deferred sales charges received from shareholders of those Alliance
mutual funds upon the redemption of their shares. Contingent deferred sales
charges reduce unamortized deferred sales commissions when received.
Revenue Recognition and Mutual Fund Underwriting Activities
Investment advisory and services fees are recorded as revenue as the related
services are performed and earned. Purchases and sales of shares of Alliance
mutual funds in connection with the underwriting activities of the Partnership's
subsidiaries, including related commission income, are recorded on trade date.
Receivables from brokers and dealers for sale of shares of Alliance mutual funds
are generally realized within three business days from trade date, in
conjunction with the settlement of the related payables to Alliance mutual funds
for share purchases.
Foreign Currency Translation
Net foreign currency gains and losses resulting from the translation of assets
and liabilities of foreign operations into United States dollars are accumulated
in partners' capital. Net foreign currency gains and losses for the three year
period ended December 31, 1995 were not material.
Unit and Per Unit Data
Unit and per Unit amounts reflect a two-for-one Unit split effective February
22, 1993.
Cash Distributions to Partners
The Partnership is required to distribute all of its Available Cash Flow, as
defined in its Partnership Agreement, to the General Partner and Unitholders.
Distributions do not include cash flows resulting from the operations of
Equitable Capital Management Corporation ("ECMC") prior to July 22, 1993, the
date ECMC was acquired by the Partnership.
Reclassifications
Certain amounts in the 1994 and 1993 financial statements have been reclassified
to conform with the 1995 presentation.
58
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Acquisitions
During 1996, the Partnership acquired the business of Cursitor-Eaton Asset
Management Company and Cursitor Holdings Limited (collectively, "Cursitor") for
$84.9 million in cash, 1,764,115 Units, 6% notes aggregating $21.5 million
payable ratably over four years and substantial additional consideration which
will be determined at a later date.
On March 7, 1994, the Partnership completed the acquisition of the business
and substantially all of the assets of Shields Asset Management, Incorporated
("Shields") and its wholly-owned subsidiary, Regent Investor Services
Incorporated ("Regent"), from Xerox Financial Services, Inc. for a purchase
price of approximately $74 million in cash. In addition, the Partnership issued
645,160 new Units to key employees of Shields and Regent having an aggregate
fair market value of approximately $15 million in connection with the employees
entering into long-term employment agreements. The aggregate fair market value
of the Units is being amortized as employee compensation expense ratably over
five years. The acquisition was accounted for under the purchase method and the
results of Shields and Regent are included in the Partnership's consolidated
financial statements from the acquisition date. Goodwill of $70.6 million was
recorded representing the excess of the purchase price over the estimated fair
value of the net assets of the acquired business. Pro forma financial
information for the year ended December 31, 1993 reflecting the effects of the
acquisition are not presented because they would not be materially different
from the actual results reported.
On July 22, 1993, the Partnership acquired the business and substantially
all of the assets of ECMC, an indirect wholly-owned subsidiary of Equitable, in
exchange for 11.8 million newly issued Units and a newly created Class A Limited
Partnership Interest convertible initially into 100,000 Units. Up to $25 million
in additional Units may be issued under the Class A Limited Partnership Interest
to reflect the receipt by the Partnership of certain performance fees through
March 1998. The Partnership also sold 2,380,952 newly issued Units to ACMC,
Inc., an indirect wholly-owned subsidiary of Equitable, for $50 million in cash
to provide for working capital and other needs. The acquisition was accounted
for in a manner similar to the pooling of interests method. Accordingly, all
consolidated financial information for 1993 has been restated to include the
results of operations of ECMC.
Assets and liabilities of ECMC acquired or assumed by the Partnership
aggregated (unaudited) $43,049,000 and $17,073,000, respectively. The aggregate
revenues and net loss of ECMC included in the Partnership's 1993 results of
operations are as follows (in thousands):
<TABLE>
<CAPTION>
Period From
January 1, 1993
to July 22, 1993
(unaudited)
- ------------------------------------------------------
<S> <C>
Revenues:
Partnership $201,342
ECMC 50,708
- ------------------------------------------------------
$252,050
- ------------------------------------------------------
Net income (loss):
Partnership $ 17,457
ECMC (5,064)
- ------------------------------------------------------
$ 12,393
- ------------------------------------------------------
</TABLE>
59
<PAGE>
4. Net Income Per Unit
Net income per Unit is derived by reducing net income for each period by 1% for
the general partnership interest held by the General Partner and dividing the
remaining 99% by the weighted average number of Units outstanding and Unit
equivalents and Units issuable upon conversion of the Class A Limited
Partnership Interest during each period.
5. Investments
At December 31, 1994, certain money market fund portfolios ("Portfolios")
sponsored by the Partnership owned $30.0 million principal amount of Tax and
Revenue Anticipation Notes Series A issued by Orange County, California due July
19, 1995 ("Orange County Obligations"). On December 6, 1994, Orange County filed
a petition in bankruptcy under the Federal Bankruptcy Code. Due to the
continuing uncertainty regarding the financial condition of Orange County,
California, the Partnership purchased all remaining Orange County Obligations
held by the Portfolios on July 19, 1995 for approximately $21.3 million. The
Partnership sold the Orange County Obligations during the fourth quarter of
1995.
6. Furniture, Equipment and Leasehold Improvements
Furniture, equipment and leasehold improvements are comprised of the following
(in thousands):
<TABLE>
<CAPTION>
December 31,
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Furniture and equipment $35,041 $30,262
Leasehold improvements 41,085 38,391
- --------------------------------------------------------------------------------
76,126 68,653
Less: Accumulated depreciation and amortization 31,918 24,823
- --------------------------------------------------------------------------------
Furniture, equipment and leasehold improvements, net $44,208 $43,830
- --------------------------------------------------------------------------------
</TABLE>
7. Debt
The Partnership established a $100,000,000 revolving credit facility with
several banks during 1994. The revolving credit facility converts on March 31,
1997 into a term loan repayable in quarterly installments through March 31,
1999. Outstanding borrowings generally bear interest at the Eurodollar rate plus
.875% per annum through March 31, 1997 and at the Eurodollar rate plus 1.125%
per annum after conversion through March 31, 1999. In addition, a quarterly
commitment fee of .25% per annum is paid on the average daily unused amount. At
December 31, 1995, there were no amounts outstanding under the facility.
During 1994, the Partnership also established a $100,000,000 commercial
paper program and entered into a three-year $100,000,000 revolving credit
facility with a group of commercial banks to support commercial paper to be
issued under the program and for general corporate purposes. Amounts outstanding
under the facility bear interest at an annual rate ranging from the Eurodollar
rate plus .225% to the Eurodollar rate plus .2875%. A fee of .125% per annum is
paid quarterly on the entire facility. As of December 31, 1995, the Partnership
had not issued any commercial paper and there were no amounts outstanding under
the revolving credit facility.
60
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The revolving credit facilities contain covenants which require the
Partnership to, among other things, meet certain financial ratios. The
Partnership was in compliance with the covenants at December 31, 1995.
At December 31, 1995 and 1994, debt includes promissory notes with
aggregate outstanding principal amounts of $3,324,000 and $3,658,000,
respectively, issued to certain investment partnerships for which a subsidiary
of the Partnership serves as general partner. The principal amounts of the notes
will be reduced proportionately as partners receive return of capital
distributions from the investment partnerships.
8. Commitments and Contingencies
The Partnership and its subsidiaries lease office space, furniture and office
equipment under various operating leases. The minimum commitments under the
leases at December 31, 1995 aggregated $326,585,000 and are payable as follows:
$18,589,000, $16,080,000, $16,026,000, $16,503,000 and $16,802,000 for the years
1996 through 2000, respectively, and a total of $242,585,000 for the remaining
years through 2016. Office leases contain escalation clauses that provide for
the pass through of increases in operating expenses and real estate taxes. Rent
expense for the years ended December 31, 1995, 1994 and 1993 was $23,172,000,
$18,387,000 and $19,173,00, respectively.
On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
("Complaint") was filed against Alliance North American Government Income Trust,
Inc. (the "Fund"), the Partnership and certain other defendants affiliated with
the Partnership alleging violations of federal securities laws, fraud and breach
of fiduciary duty in connection with the Fund's investments in Mexican and
Argentine securities. A similar complaint was filed on November 7, 1995 and was
subsequently consolidated with the Complaint. The Complaint, which seeks
certification of a plaintiff class of persons who purchased or owned Class A, B
or C shares of the Fund from March 27, 1992 through December 23, 1994, seeks an
unspecified amount of damages, costs, attorneys' fees and punitive damages. The
principal allegations of the Complaint are that the Fund purchased debt
securities issued by the Mexican and Argentine governments in amounts that were
not permitted by the Fund's investment objective, and that there was no
shareholder vote to change the investment objective to permit purchases in such
amounts. The Complaint further alleges that the decline in the value of the
Mexican and Argentine securities held by the Fund caused the Fund's net asset
value to decline to the detriment of the Fund's shareholders. On September 26,
1995, the defendants jointly filed a motion to dismiss the Complaint which has
not yet been decided by the Court. The Partnership believes that the allegations
in the Complaint are without merit and intends to vigorously defend against
these claims. While the ultimate results of this action cannot be determined,
management of the Partnership does not expect that this action will have a
material adverse effect on the Partnership's business.
61
<PAGE>
9. Partners' Capital
During May 1994, the Partnership issued a newly created Class B Limited
Partnership Interest to ELAS for $50 million in cash which was converted into
2,266,288 newly issued Units during November 1994. The Partnership issued
2,482,030 newly issued Units to a wholly-owned subsidiary of Oversea-Chinese
Banking Corporation Limited during July 1994 for $50 million in cash. During
August 1994, the Partnership sold for $50 million in cash a convertible note to
Banco Bilbao Vizcaya, S.A. which was subsequently converted into 2,482,030 newly
issued Units.
10. Net Capital
Alliance Fund Distributors, Inc. ("AFD"), a wholly-owned subsidiary of the
Partnership, serves as distributor and/or underwriter for certain Alliance
mutual funds. AFD is registered as a broker-dealer under the Securities Exchange
Act of 1934 and is subject to the minimum net capital requirements imposed by
the Securities and Exchange Commission. AFD's net capital at December 31, 1995
was $8,163,000, which was $5,310,000 in excess of its required net capital of
$2,853,000.
11. Employee Benefit Plans
The Partnership and its subsidiaries maintain a number of qualified and
nonqualified employee benefit and incentive compensation plans. Except as
indicated, the aggregate amount available for annual employee bonuses and
contributions to the various employee benefit plans discussed below is based on
a percentage of the consolidated operating profits of the Partnership and its
subsidiaries.
The Partnership maintains qualified profit sharing plans covering
substantially all U.S. and certain foreign employees. The amounts of the annual
contributions to the plans are determined by a committee of the Board of
Directors of the General Partner. Contributions are limited to the maximum
amount deductible for Federal income tax purposes, generally 15% of the total
annual compensation of eligible participants. Aggregate contributions for 1995,
1994 and 1993 were $7,750,000, $5,941,000 and $5,128,000, respectively.
The Partnership maintains a qualified noncontributory defined benefit
retirement plan covering substantially all U.S. employees and certain foreign
employees. Benefits are based on years of credited service, average final base
salary and primary Social Security benefits. The Partnership's funding policy is
to contribute annually an amount not to exceed the maximum amount that can be
deducted for Federal income tax purposes. Plan assets are comprised principally
of corporate equity securities, U.S. Treasury securities and shares of Alliance
mutual funds.
62
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the retirement plan's funded status and
amounts recognized in the Partnership's consolidated statements of financial
condition (in thousands):
<TABLE>
<CAPTION>
December 31,
1995 1994
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated vested benefit obligation $(11,540) $ (8,083)
- --------------------------------------------------------------------------------------------------------------------
Accumulated unvested benefit obligation $ (764) $ (413)
- --------------------------------------------------------------------------------------------------------------------
Projected benefit obligation for service rendered to date $(20,076) $(13,377)
Plan assets at fair value 18,538 14,089
- --------------------------------------------------------------------------------------------------------------------
Plan assets (less than) in excess of projected benefit obligation (1,538) 712
Unrecognized net loss (gain) from past experience different
from that assumed and effects of changes in assumptions 1,027 (41)
Prior service cost not yet recognized in net periodic pension cost (1,761) (1,875)
Unrecognized net plan assets at January 1, 1987
being recognized over 26.3 years (2,478) (2,621)
- --------------------------------------------------------------------------------------------------------------------
Accrued pension expense included in accrued
expenses under employee benefit plans $ (4,750) $ (3,825)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Net expense under the retirement plan was comprised of (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 1,621 $ 2,119 $ 1,387
Interest cost on projected benefit obligations 1,116 1,078 890
Actual return on plan assets (4,510) 1,050 (2,192)
Net amortization and deferral 2,850 (2,827) 718
- --------------------------------------------------------------------------------------------------------------------
Net pension charge $ 1,077 $ 1,420 $ 803
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Actuarial computations at December 31, 1995, 1994 and 1993 were made
utilizing the following assumptions:
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate on benefit obligations 7.50% 8.75% 7.50%
Expected long-term rate of return on plan assets 10.00% 10.00% 10.00%
Annual salary increases 5.50% 5.50% 5.50%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Variances between actuarial assumptions and actual experience are amortized
over the estimated average remaining service lives of employees in the
retirement plan.
63
<PAGE>
The Partnership maintains a nonqualified unfunded deferred compensation
plan known as the Capital Accumulation Plan and assumed obligations under
contractual unfunded deferred compensation arrangements covering certain
executives which are not funded from the incentive compensation pool. The
Capital Accumulation Plan was frozen on December 31, 1987 and no additional
awards have been made. The Board of Directors of the General Partner may
terminate the Capital Accumulation Plan at any time without cause, in which case
the Partnership's liability would be limited to benefits that have vested.
Benefits due eligible executives under the contractual unfunded deferred
compensation arrangements vested on or before December 31, 1987. Payment of
vested benefits under both the Capital Accumulation Plan and the contractual
unfunded deferred compensation arrangements will generally be made over a ten
year period commencing at retirement age. ACMC, Inc. is obligated to make
capital contributions to the Partnership in amounts equal to benefits paid under
the Capital Accumulation Plan and the contractual unfunded deferred compensation
arrangements. Amounts included in employee compensation and benefits expense for
the Capital Accumulation Plan and the contractual unfunded deferred compensation
arrangements for the years ended December 31, 1995, 1994 and 1993 were
$3,005,000, $2,544,000 and $2,243,000, respectively.
During 1995, the Partnership established an unfunded deferred compensation
plan known as the Alliance Partners Compensation Plan under which certain awards
may be granted to eligible executives. A committee comprised of certain
executive officers of the General Partner administers the Plan and determines
the aggregate amount and recipients of awards. Awards made in 1995 vest ratably
over three years. Awards made after 1995 will vest ratably over eight years.
Payment of vested benefits will generally be made over a five year period
commencing at retirement although, under certain circumstances, full or partial
lump sum payments may be made upon termination of employment. The Board of
Directors of the General Partner may terminate the Alliance Partners
Compensation Plan at any time without cause, in which case the Partnership's
liability would be limited to vested benefits. The Partnership made awards
aggregating $7,925,000 during December 1995.
During 1988, certain employees entered into employment agreements with the
Partnership and acquired from ACMC, Inc. an aggregate of 10,181,818 Units at
either 10% or 20% of the initial public offering price. Accordingly, the
Partnership recorded deferred compensation expense and a corresponding increase
in partners' capital in the amount of the aggregate discount. The Units vested
over periods of employment ranging from two to six years through April 21, 1994
and the aggregate discount was amortized as employee compensation expense
ratably over the applicable vesting periods. During 1994, certain key employees
of Shields and Regent entered into employment agreements with the Partnership
and were issued 645,160 new Units with an aggregate fair market value of
approximately $15,000,000, which is being amortized as employee compensation
expense ratably over five years. Aggregate amortization of $3,000,000,
$2,612,000 and $726,000 was recorded for the years ended December 31, 1995, 1994
and 1993, respectively.
In connection with the acquisition of ECMC during 1993, the Partnership
adopted the Retention Unit Bonus Plan under which certain officers and key
employees of ECMC, who became employees of the Partnership or its subsidiaries,
purchased an aggregate of 600,000 Units at a per Unit price approximating 10% of
each Unit's fair market value. During 1993, the Partnership recorded
nonrecurring transaction expense and a corresponding increase in partners'
capital of $11,556,000, the amount of the aggregate discount.
64
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Partnership maintains a Unit Option Plan under which options to
purchase up to 4,923,076 Units may be granted to certain key employees. A
committee of the Board of Directors of the General Partner administers the plan
and determines the grantees and the number of options to be granted. Options may
be granted for terms of up to ten years and each option must have an exercise
price of not less than the fair market value of the Units on the date of grant.
Options are exercisable at a rate of 20% of the Units subject to options on each
of the first five anniversary dates of the date of grant.
During 1993, the 1993 Unit Option Plan, the Unit Bonus Plan and the Century
Club Plan (together the "1993 Plans") were established by the Partnership.
Committees of the Board of Directors of the General Partner administer the 1993
Plans and determine the recipients of grants and awards. Under the 1993 Unit
Option Plan, options to purchase Units may be granted to key employees for terms
of up to ten years. Each option must have an exercise price of not less than the
fair market value of the Units on the date of grant. Options are exercisable at
a rate of 20% of the Units subject to options on each of the first five
anniversary dates of the date of grant. Under the Unit Bonus Plan, Units may be
awarded to key employees in lieu of all or a portion of the cash bonuses they
would otherwise receive under the Partnership's incentive compensation program.
Under the Century Club Plan, employees whose primary responsibilities are to
assist in the distribution of Alliance mutual funds are eligible to receive an
award of Units. The aggregate number of Units that can be the subject of options
granted or that can be awarded under the 1993 Plans may not exceed 3,200,000
Units. In addition, no more than 800,000 Units in the aggregate may be granted
or awarded under the 1993 Plans in any of the first four years of their
operations. As of December 31, 1995, 2,344,500 Units were subject to options
granted and 14,900 Units were subject to awards made under the 1993 Plans.
The following table summarizes the activity in options under the Unit
Option Plan and the 1993 Unit Option Plan:
<TABLE>
<CAPTION>
Units Exercise Price per Unit
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at January 1, 1993 3,506,600 $6.0625 - $16.3125
Granted 240,000 $21.25 - $21.375
Exercised (467,600) $6.0625 - $16.3125
Forfeited (45,600) $6.0625 - $15.9375
- --------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1993 3,233,400 $6.0625 - $21.375
Granted 1,213,500 $19.875 - $22.00
Exercised (484,500) $6.0625 - $15.9375
Forfeited (150,000) $7.3125 - $22.00
- --------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1994 3,812,400 $6.0625 - $21.375
Granted 1,805,500 $17.75 - $22.25
Exercised (496,100) $6.0625 - $15.9375
Forfeited (293,700) $7.3125 - $21.375
- --------------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 1995 4,828,100 $6.0625 - $22.25
- --------------------------------------------------------------------------------------------------------------------
Exercisable at December 31, 1995 1,201,600
- --------------------------------------------------------------------------------------------------------------------
Available for grant at December 31, 1995 164,876
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
65
<PAGE>
12. Income Taxes
The Partnership is a publicly traded partnership for Federal income tax purposes
and, accordingly, is not currently subject to Federal and state corporate income
taxes but is subject to the New York City unincorporated business tax ("UBT").
Current law generally provides that certain publicly traded partnerships,
including the Partnership, will be taxable as a corporation beginning in 1998.
Domestic corporate subsidiaries of the Partnership, which are subject to
Federal, state and local income taxes, file a consolidated Federal income tax
return and separate state and local income tax returns. Foreign corporate
subsidiaries are generally subject to taxes in the foreign jurisdictions where
they are located.
ECMC is included in the Federal income tax return of Equitable and, prior
to the acquisition, a Federal income tax equivalent provision or benefit was
computed on a separate return basis. In addition, ECMC filed separate state and
local income tax returns.
The Partnership adopted Statement of Financial Accounting Standards No. 109
("SFAS 109") effective January 1, 1993. Under SFAS 109, the deferred income tax
provision is determined under the liability method. The cumulative effect to
January 1, 1993 of the accounting change to SFAS 109 was a nonrecurring deferred
income tax benefit of $900,000 or $.01 per Unit, net of a valuation allowance of
$8,100,000 or $.14 per Unit. The valuation allowance was established to reduce
the recorded amount to an amount equal to the estimated income tax benefit
receivable by the Partnership based on the current UBT tax rate of 4% and
considers uncertainties surrounding the tax status of the Partnership beginning
in 1998. The resulting deferred tax asset, which is included in other assets,
results primarily from accrued deferred compensation obligations that are
deductible for tax purposes when paid.
The provisions for income taxes consist of (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Partnership $ 5,644 $5,813 $ 5,301
Corporate subsidiaries:
Federal 3,900 1,300 1,720
State, local and foreign 2,080 1,204 1,299
ECMC - - 3,146
- -----------------------------------------------------------------------------------------------------
$11,624 $8,317 $11,466
- -----------------------------------------------------------------------------------------------------
</TABLE>
The principal reasons for the difference between the Partnership's
effective tax rate and the UBT statutory tax rate of 4% are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UBT statutory rate 4.0 % 4.0% 4.0%
Corporate subsidiaries' federal and state income taxes 3.4 % 1.7% 3.6%
Miscellaneous Partnership UBT adjustments (0.4)% 0.2% 2.7%
Pre-acquisition ECMC income taxes - % -% 4.0%
- -----------------------------------------------------------------------------------------------------
7.0 % 5.9% 14.3%
- -----------------------------------------------------------------------------------------------------
</TABLE>
66
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Related Party Transactions
The Partnership and its consolidated subsidiaries provide investment management,
distribution, shareholder servicing, accounting and legal services to the
Alliance mutual funds. Substantially all of these services are provided under
contracts that set forth the services to be provided and the fees to be charged.
The contracts are subject to annual review and approval by each of the Alliance
mutual funds' boards of directors or trustees and, in certain circumstances, by
the Alliance mutual funds' shareholders.
Revenues for services provided to the Alliance mutual funds are as follows
(in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment advisory and services fees $232,730 $211,169 $167,043
Distribution plan fees 128,733 135,613 105,260
Shareholder servicing and administration fees 35,310 33,266 25,732
- -----------------------------------------------------------------------------------------------------
</TABLE>
The Partnership provides investment management and administration services
to Equitable and certain of its subsidiaries other than the Partnership
("Equitable Subsidiaries"). In addition, certain Equitable Subsidiaries
distribute Alliance mutual funds and cash management products for which they
receive commissions and distribution payments. Sales of Alliance mutual funds
through the Equitable Subsidiaries aggregated $346,717,000, $462,610,000 and
$522,440,000 for the years ended December 31, 1995, 1994 and 1993, respectively.
The Partnership and its employees are covered by various insurance policies
maintained by Equitable Subsidiaries. In addition, the Partnership pays, and
prior to the acquisition ECMC paid, fees for other services provided by
Equitable Subsidiaries. Prior to the acquisition, ECMC reimbursed certain
Equitable Subsidiaries for rent and the use of certain services and facilities.
ECMC also paid Equitable a Federal income tax equivalent. Aggregate amounts
included in the consolidated financial statements for transactions with the
Equitable Subsidiaries are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Investment advisory and services fees $43,978 $41,805 $37,212
Shareholder servicing and administration fees 7,322 7,137 6,987
- -----------------------------------------------------------------------------------------------------
Expenses:
Distribution payments to financial intermediaries 23,710 20,442 13,722
General and administrative 5,428 5,991 12,394
Income taxes - - 1,912
- -----------------------------------------------------------------------------------------------------
</TABLE>
14. Supplemental Cash Flow Information
Cash payments for interest and income taxes were as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest $ 812 $ 7,123 $10,183
Income taxes 11,125 8,803 7,538
- -----------------------------------------------------------------------------------------------------
</TABLE>
67
<PAGE>
15. Subsequent Events
On February 1, 1996, the Finance Committee of the Board of Directors of the
General Partner declared a cash distribution of $40,980,000 or $0.50 per Unit
representing the Available Cash Flow (as defined in the Partnership Agreement)
of the Partnership for the period October 1 through December 31, 1995. The
distribution was paid on February 23, 1996 to holders of record on February 15,
1996.
On February 23, 1996, the Partnership's $100 million revolving credit
facility and the $100 million commercial paper back-up revolving credit facility
were terminated and replaced by a new $250 million five-year revolving credit
facility with a group of banks. Under the new revolving credit facility, the
interest rate, at the option of the Partnership, is a floating rate generally
based upon a defined prime rate, a rate related to the London Interbank Rate
(LIBOR) or the Federal Funds rate. A facility fee is payable on the total
facility. The revolving credit facility will be used to provide back-up
liquidity for the Partnership's $100 million commercial paper program, to fund
commission payments to financial intermediaries for the sale of Class B Shares
under the System, and for general working capital purposes.
On February 29, 1996, the Partnership completed the acquisition of the
business and assets of Cursitor-Eaton Asset Management Company and Cursitor
Holdings Limited (collectively "Cursitor").
16. Quarterly Financial Data (unaudited)
(in thousands, except per Unit data)
<TABLE>
<CAPTION>
Quarter Ended 1995
December 31 September 30 June 30 March 31
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $175,785 $164,666 $153,425 $145,379
Net income 43,096 41,007 37,099 34,185
Net income per Unit .52 .50 .45 .42
Cash distributions per Unit(1) .50 .48 .43 .41
Unit prices(2):
High 23 1/4 20 1/2 20 1/8 18 3/4
Low 19 1/2 17 3/4 17 1/4 16 1/8
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended 1994
December 31 September 30 June 30 March 31
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $151,544 $151,970 $148,873 $148,565
Net income 35,109 34,685 32,271 31,424
Net income per Unit .43 .43 .42 .42
Cash distributions per Unit(1) .41 .41 .41 .41
Unit prices(2):
High 21 3/8 22 3/8 23 1/2 27 1/8
Low 16 1/2 19 1/2 17 1/4 20 1/2
- -------------------------------------------------------------------------------------------
</TABLE>
(1) Declared and paid during the following quarter.
(2) High and low sales prices as reported by the New York Stock Exchange. The
number of Unitholders of record at March 1, 1996 was approximately 1,600.
68
<PAGE>
INDEPENDENT AUDITORS' REPORT
[KPMG Peat Marwick LLP logo]
The General Partner and Unitholders
Alliance Capital Management L.P.
We have audited the accompanying consolidated statements of financial condition
of Alliance Capital Management L.P. and subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of income, changes in partners'
capital, and cash flows for the years ended December 31, 1995, 1994 and 1993.
These consolidated financial statements are the responsibility of the management
of Alliance Capital Management Corporation, General Partner. Our responsibility
is to express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Alliance
Capital Management L.P. and subsidiaries at December 31, 1995 and 1994 and the
results of their operations and their cash flows for the years ended December
31, 1995, 1994 and 1993 in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
New York, New York
February 1, 1996,
except for Notes 3 and 15 which are as of February 29, 1996
69
<PAGE>
SUBSIDIARIES OF THE REGISTRANT
Alliance Capital Management
Corporation of Delaware
(Delaware)
Alliance Capital Global
Derivatives Corporation
(Delaware)
Alliance Capital Oceanic Corporation
(Delaware)
Cursitor Alliance Management Limited
(England)
Dimensional Asset Management Limited
(England)
Dimensional Trust Management Limited
(England)
Alliance Fund Services, Inc.
(Delaware)
Alliance Fund Distributors, Inc.
(Delaware)
Alliance Capital Management (Japan) Inc.
(Delaware)
Alliance Capital (Luxembourg) S.A.
(Luxembourg)
Alliance Corporate Finance Group Incorporated
(Delaware)
Alliance Capital Management Australia Limited
(Australia)
Alliance Capital Management Canada, Inc.
(Canada)
Meiji - Alliance Capital Corporation
(Delaware)
<PAGE>
Alliance Barra Research Institute Inc.
(Delaware)
Alliance Capital Management (Asia) Ltd.
(Delaware)
Alliance International Fund Services S.A.
(Luxembourg)
Alliance Capital (Mauritius) Private Limited
(Mauritius)
Alliance Capital Asset Management
(India) Private Ltd.
(India)
Alliance Capital Management (India) Ltd.
(Delaware)
Alliance Capital Management (Turkey) Ltd.
(Delaware)
Alliance Eastern Europe Inc.
(Delaware)
Cursitor Alliance LLC
(Delaware)
Cursitor Holdings Limited
(England)
Alliance Capital Management (Brasil) Ltda.
(Brasil)
The London Partnership Ltd.
(England)
Cursitor Management Co. SA
(Luxembourg)
Cursitor Management Ltd.
(England)
Draycott Partners, Ltd.
(Massachusetts)
<PAGE>
Cursitor Cecogest SA
(France)
Cursitor Courtage SARL
(France)
Cursitor Gestion SA
(France)
Cursitor-Eaton Asset Management Company
(New York)
ACSYS Software India
Private Limited
(India)
Cecogest Limited
(England)
Cecogest International Limited
(England)
Cursitor Group Ltd.
(England)
Cursitor Hotpot Ltd.
(England)
Cursitor Cookery Ltd.
(England)
<PAGE>
The Board of Directors
Alliance Capital Management Corporation
We consent to incorporation by reference in the registration statements (No.33-
28534, 33-65932, 33-65930, 33-52387, 33-54575 and 33-54551) on Form S-8 of
Alliance Capital Management L.P. of our report dated February 1, 1996, except as
to Notes 3 and 15, which are as of February 29, 1996, relating to the
consolidated statements of financial condition of Alliance Capital Management
L.P. and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, changes in partners' capital, and cash flows
for the years ended December 31, 1995, 1994 and 1993 which report is
incorporated by reference in the December 31, 1995 annual report on Form 10-K of
Alliance Capital Management L.P.
New York, New York
March 28, 1996
3,399kv
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature appears
below hereby revokes all prior powers granted by the undersigned to the extent
inconsistent herewith and constitutes and appoints Dave H. Williams, John D.
Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/s/ Claude Bebear
-----------------
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature appears
below hereby revokes all prior powers granted by the undersigned to the extent
inconsistent herewith and constitutes and appoints Dave H. Williams, John D.
Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/S/LUIS JAVIER BASTIDA
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature appears
below hereby revokes all prior powers granted by the undersigned to the extent
inconsistent herewith and constitutes and appoints Dave H. Williams, John D.
Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/S/ James M. Benson
-------------------
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature appears
below hereby revokes all prior powers granted by the undersigned to the extent
inconsistent herewith and constitutes and appoints Dave H. Williams, John D.
Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/S/HENRI DE CASTRIES
--------------------
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature appears
below hereby revokes all prior powers granted by the undersigned to the extent
inconsistent herewith and constitutes and appoints Dave H. Williams, John D.
Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/s/Kevin C. Dolan
-----------------
5116G
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature appears
below hereby revokes all prior powers granted by the undersigned to the extent
inconsistent herewith and constitutes and appoints Dave H. Williams, John D.
Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/s/Jean-Pierre Hellebuyck
-------------------------
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature appears
below hereby revokes all prior powers granted by the undersigned to the extent
inconsistent herewith and constitutes and appoints Dave H. Williams, John D.
Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/s/Benjamin D. Holloway
-----------------------
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature
appears below hereby revokes all prior powers granted by the undersigned to the
extent inconsistent herewith and constitutes and appoints Dave H. Williams, John
D. Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/s/Henri Hottinguer
-------------------
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature appears
below hereby revokes all prior powers granted by the undersigned to the extent
inconsistent herewith and constitutes and appoints Dave H. Williams, John D.
Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/S/ Denis Duverne
-----------------
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature appears
below hereby revokes all prior powers granted by the undersigned to the extent
inconsistent herewith and constitutes and appoints Dave H. Williams, John D.
Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/S/ Joseph J. Melone
--------------------
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature appears
below hereby revokes all prior powers granted by the undersigned to the extent
inconsistent herewith and constitutes and appoints Dave H. Williams, John D.
Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/S/PETER D. NORIS
5116G
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature appears
below hereby revokes all prior powers granted by the undersigned to the extent
inconsistent herewith and constitutes and appoints Dave H. Williams, John D.
Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/s/Jerry M. de St. Paer
-----------------------
<PAGE>
POWER-OF-ATTORNEY
KNOWN TO ALL MEN BY THESE PRESENTS, that the person whose signature appears
below hereby revokes all prior powers granted by the undersigned to the extent
inconsistent herewith and constitutes and appoints Dave H. Williams, John D.
Carifa and David R. Brewer, Jr., and each of them, to act severally as
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned in any and all capacities, for the sole
purpose of signing the Alliance Capital Management L.P. Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and filing the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
Dated: February 14, 1996
/s/ Madelon Devoe Talley
------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 124,256
<SECURITIES> 35,375
<RECEIVABLES> 112,263
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 271,894
<PP&E> 44,208
<DEPRECIATION> 0
<TOTAL-ASSETS> 575,058
<CURRENT-LIABILITIES> 164,887
<BONDS> 3,462
0
0
<COMMON> 0
<OTHER-SE> 406,709
<TOTAL-LIABILITY-AND-EQUITY> 575,058
<SALES> 639,255
<TOTAL-REVENUES> 639,255
<CGS> 0
<TOTAL-COSTS> 462,305
<OTHER-EXPENSES> 8,747
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,192
<INCOME-PRETAX> 167,011
<INCOME-TAX> 11,624
<INCOME-CONTINUING> 155,387
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 155,387
<EPS-PRIMARY> 1.89
<EPS-DILUTED> 1.89
</TABLE>
