REIMBURSEMENT AGREEMENT
Reimbursement Agreement, dated as of August 16, 1999, between Alliance Capital
Management L.P., a Delaware limited partnership (the "Company"), and The
Equitable Life Assurance Society of the United States, a New York stock life
insurance corporation (together with its successors and assignees, "Equitable").
In consideration of Equitable entering into one or more standby letter of credit
applications and/or agreements (each, an "Application") pursuant to which one or
more banks (each, a "Bank") shall issue irrevocable standby letters of credit
(each, a "Letter of Credit") in favor of one or more funds of which the Company
is the investment adviser (each such fund, a "Beneficiary") in an aggregate face
amount of up to $570,000,000, the Company and Equitable hereby agree as follows:
1. Payments: The Company agrees to reimburse Equitable for each payment made
by Equitable to a Bank in reimbursement of any drawing made under a Letter
of Credit, together with interest on such amount until payment in full
hereunder. Subject to Section 10 hereof, each such reimbursement obligation
of the Company, together with accrued interest thereon, shall become due
and payable on the 90th day after the date of the applicable drawing under
such Letter of Credit (such 90th day, the "Maturity Date"); provided that
the Company may prepay any such reimbursement obligation, together with
accrued interest thereon, in cash at any time. On any Maturity Date, so
long as the Company complies with the immediately succeeding sentence, the
Company may, and if not repaid in cash on or prior to the applicable
Maturity Date the Company shall, on such Maturity Date (but not prior to
such date) and in lieu of all or any portion of reimbursement payments in
cash required hereby, make such reimbursement payment to Equitable by (i)
issuing to Equitable (or its permitted designee) limited partnership units
of the Company having an aggregate Fair Market Value on such Maturity Date
equal to such reimbursement amount and (ii) paying, in cash, all accrued
and unpaid interest on such reimbursement amount to such Maturity Date. The
Company covenants and agrees that (i) any limited partnership units to be
issued in lieu of cash payments shall be duly authorized and validly issued
in accordance with the requirements of the Company's partnership agreement
at the time of issuance, shall be fully paid and non-assessable (or the
equivalent thereof for Delaware limited partnerships) and shall be
delivered to Equitable free of any adverse claim and that it shall deliver
to Equitable prior to such issuance one or more certificates or opinions of
counsel, in form and substance reasonably satisfactory to Equitable, to
such effect, (ii) concurrently with any such issuance, it shall deliver to
Equitable a certificate or certificates evidencing such limited partnership
units and (iii) prior to each Maturity Date on which limited partnership
units are issued to Equitable hereunder, the Company shall have obtained
all consents and approvals necessary (including without limitation any
unitholder approvals required pursuant to the rules of the New York Stock
Exchange) in order to issue and deliver such limited partnership units to
Equitable on such Maturity Date (and Equitable agrees to vote, and to cause
its subsidiaries to vote, in favor of any such unitholder resolution of the
Company required by the rules of the New York Stock Exchange). For purposes
hereof, "Fair Market Value" of a limited partnership unit of the Company as
of any date, including any Maturity Date, shall mean a price per limited
partnership unit of the Company equal to the "Unit Price" on such date as
defined in Article 1 of the Company's limited partnership agreement as in
effect on the date hereof.
2. Fees: The Company will pay Equitable a per annum fee of 0.15% on the daily
average of the amount available for drawing under each Letter of Credit,
calculated based on a 360 day year, in each case for the actual number of
days occurring in the period for which such fee is payable, payable
quarterly in arrears on the last day of each March, June, September and
December, and on the expiration or termination date of such Letter of
Credit.
3. Interest on Payments: The Company will pay Equitable interest on each
reimbursement amount outstanding under Section 1 above, from the date
Equitable reimburses the applicable Bank to the date such payment becomes
due hereunder, at a rate per annum equal to the cost to Equitable of
obtaining such funds as of the date of such reimbursement by Equitable for
a 90-day period as determined by Equitable in good faith (the "Cost of
Funds Rate"). Such interest shall be payable on the date of any prepayment
of such reimbursement amount (to the extent accrued on such prepaid
amount), if the applicable Maturity Date is extended beyond 90 days,
quarterly on the last day of each quarter from the date such interest first
accrued, and at maturity. Notwithstanding the foregoing, the Company shall
pay Equitable, on demand, interest on any amount which remains outstanding
after the same becomes due and owing hereunder at a rate equal to the Cost
of Funds Rate plus 2.00% per annum. Interest will be calculated based on
the actual days outstanding and a 360 day year.
4. Costs and Expenses; Indemnity: (a) The Company will absolutely, irrevocably
and unconditionally indemnify and hold Equitable harmless against all
costs, expense, claims and losses suffered or incurred by Equitable
howsoever arising from or in connection with the preparation, negotiation,
execution and delivery, performance or enforcement of this Agreement, each
Application, each Letter of Credit, any syndication of any Letter of
Credit, any other agreement (relating to a Letter of Credit or an
Application) of Equitable with or for the benefit of a Bank, or otherwise
arising from or in connection with the transactions contemplated hereby or
thereby, including without limitation the reasonable fees and expenses of
counsel to Equitable.
(b)(i) In addition to the obligations of the Company pursuant to Section 1
above, the Company agrees to reimburse Equitable, on demand, for each
payment made by Equitable under or pursuant to any Application, any
syndication of any Letter of Credit or any other agreement (relating to a
Letter of Credit or an Application) of Equitable with or for the benefit of
a Bank (in any case, other than to reimburse the applicable Bank for draws
under a Letter of Credit but including any interest accrued and payable
with respect to such draws), including without limitation, any and all
fees, commissions, administrative charges, indemnification payments,
increased costs and reserve charges payable to a Bank.
(b) (ii) The Company shall, subject to the limitation set forth below in
this paragraph, promptly pay to Equitable from time to time as specified by
Equitable, such amounts as Equitable determines in its reasonable judgment
are necessary to compensate it for costs, to the extent such costs are
attributable to this Agreement or its issuing or having outstanding an
Application resulting from the application of any law or regulation
applicable to
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Equitable, regarding any reserve, assessment, capitalization or similar
requirement relating to contingent obligations or reimbursement agreements
with respect to letters of credit, provided that such costs are incurred by
Equitable as a result of a change in applicable law after the date hereof.
The Company acknowledges that there may be various methods of allocating
such reserves, assessments, capitalization or similar costs referred to
above and agrees that the allocations by Equitable, for purposes of
determining such costs, shall be conclusive and binding upon the Company,
provided that such allocations are made in good faith by a reasonable
method, Equitable provides the Company with a certification in reasonable
detail of the method used for such allocation, and notifies the Company
promptly of any change in the law imposing such additional costs.
(c) In the event that the Company's obligations under this Section 4 at any
time exceed, in the aggregate, $20,000,000, the Company shall have the
option, subject to the covenants and agreements of the Company contained in
the penultimate sentence of Section 1 hereof, to pay such excess amount to
Equitable when due in additional limited partnership units having an
aggregate Fair Market Value on such due date equal to such excess amount
then due and owing.
(d) The provisions of this Section 4 shall survive any payment of the
Company's obligations and liabilities hereunder and any termination of this
Agreement.
5. Method of Payments. Except as otherwise expressly provided in Sections 1
and 4(c) hereof (as limited by the immediately succeeding sentence), the
Company agrees to pay all payments, fees and charges when due pursuant to
the terms of this Agreement in United States dollars by wire transfer of
immediately available funds to the account designated in writing by
Equitable from time to time. In the event that the Company fails to issue
any limited partnership units on any Maturity Date in accordance with
Section 1 hereof or on the date such obligations become due in accordance
with Section 4(c) hereof for any reason whatsoever (other than by reason of
any action or inaction by Equitable in violation of this Agreement) and, in
any case, such failure continues for a period of ten business days, then
notwithstanding provisions of Section 1 or Section 4(c) to the contrary,
the Company's right to pay such amounts in limited partnership units shall
terminate and such amounts shall only be payable in cash as provided in the
first sentence of this Section 5.
6. Liability of Equitable: As long as its actions do not constitute gross
negligence or wilful misconduct, Equitable shall not be responsible for
verifying the existence of any act, condition or statement made by any Bank
or any Beneficiary in relation to any drawing or presentment under any
Letter of Credit or demands made under any Application, for the validity or
genuineness of certificates or other documents delivered under or in
connection with any Letter of Credit or any Application, even if such
certificates or other documents should in fact prove to be invalid,
fraudulent or forged, for any breach of contract between any Bank, any
Beneficiary and the Company, or for any other consequences beyond
Equitable's control, so long as Equitable acts in good faith and in
accordance with applicable law. In furtherance of and not in limitation of
the foregoing, the Company agrees that any action, inaction or omission
taken or suffered by Equitable in good faith without gross negligence or
wilful misconduct, and in accordance with applicable law in connection with
an Application, a Letter of Credit, any syndication of any Letter of Credit
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or any other agreement (relating to a Letter of Credit or an Application)
of Equitable with or for the benefit of a Bank, or related drafts or
documents, shall be binding on the Company.
7. Obligation Absolute: Subject to Equitable's compliance with the terms of
this Agreement, the Company's obligation to make each payment under this
Agreement shall be absolute and unconditional and shall not be subject to
any defense or be affected by any right of set off, counterclaim or
recoupment which the Company may now or hereafter have against any Bank,
any Beneficiary, Equitable or any other person for any reason whatsoever.
8. Representations and Warranties: The Company represents and warrants to
Equitable that (a) it is a limited partnership duly organized, validly
existing, and in good standing under the laws of the State of Delaware, (b)
the execution, delivery and performance of this Agreement are within its
powers, that all necessary actions, other than any unitholder approvals
required pursuant to the rules of the New York Stock Exchange, have been
taken or obtained, and that no governmental approval is required, (c)
entering into and performing its obligations under this Agreement do not
contravene (i) its limited partnership certificate or agreement, or other
organizational documents or (ii) any law or any contractual restriction
binding on or affecting it or its property, other than any such
contraventions of any contractual restrictions that would not, individually
or in the aggregate, have a material adverse effect on the financial
condition or business of the Company and its subsidiaries taken as a whole,
on the ability of the Company to fulfill its obligations hereunder or on
the rights of Equitable hereunder (or as a holder of the limited
partnership units issued in connection herewith) and (d) this Agreement is
a legal, valid and binding obligation enforceable against it in accordance
with its terms except as enforceability may be limited by laws affecting
creditors rights generally and by general principles of equity.
9. Covenants: So long as any Letter of Credit remains outstanding, any
obligation of Equitable under any Application or any other agreement
(relating to a Letter of Credit or an Application) of Equitable with or for
the benefit of a Bank remains outstanding, or any amount owing to Equitable
hereunder remains outstanding, the Company agrees that it will, unless
Equitable consents in writing, continue to preserve, renew and keep in full
force and effect its existence and its rights, privileges and franchises
necessary or desirable in the normal conduct of its business except as may
be contemplated by the Reorganization (as defined in Section 16 hereof).
10. Events of Default: If any of the following events (an "Event of Default")
shall have occurred and be continuing, unless waived in writing by
Equitable pursuant to the terms hereof:
(a) Any representation or warranty made by the Company in this Agreement or
in any certificate, financial or other statement furnished by the Company
pursuant to this Agreement shall prove to have been untrue or incomplete in
any material respect when made; or
(b) The Company shall fail to pay when due any amount specified in Section
1 of this Agreement and such failure shall remain unremedied for three
business days after written notice thereof shall have been given by
Equitable to the Company, or the Company shall
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fail to pay when due any other amount specified in this Agreement and any
such failure shall remain unremedied for ten business days after written
notice thereof shall have been given by Equitable to the Company; or
(c) The Company shall fail to perform or observe any other term, covenant
or provision under this Agreement, and any such failure shall remain
unremedied for fifteen business days after written notice thereof shall
have been given by Equitable to the Company; or
(d) Any material provision of this Agreement shall at any time and for any
reason cease to be valid and binding on the Company, or shall be declared
to be null and void, or the validity or enforceability thereof shall be
contested by the Company or any governmental agency or authority or the
Company shall, prior to the satisfaction of the Company's obligations
hereunder, deny that it has any or further liability or obligation under
this Agreement; or
(e) The Company or Alliance Capital Management Corporation (the "General
Partner") shall (i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of itself or all or a
substantial amount of its property, (ii) fail to pay its debts when they
become due, (iii) make a general assignment for the benefit of creditors,
(iv) be adjudicated bankrupt or insolvent, or (v) commence a voluntary case
under the federal bankruptcy laws of the United States of America or file a
voluntary petition or answer seeking reorganization or an arrangement with
creditors under an insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding, or partnership or corporate action
shall be taken by it for the purpose of effecting any of the foregoing; or
(f) If without the application, approval or consent of the Company or the
General Partner a proceeding shall be instituted in any court of competent
jurisdiction under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors seeking in respect of the Company or
the General Partner an order of relief or an adjudication in bankruptcy,
reorganization, dissolution, winding-up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or the like of the Company or
the General Partner or of all or any substantial part of the assets of the
Company or the General Partner or other like relief in respect thereof
under any bankruptcy or insolvency law, and, if such proceeding is being
contested by the Company and the General Partner in good faith, the same
shall (i) result in the entry of an order of relief or any such
adjudication or appointment or (ii) continue undismissed, or pending and
unstayed, for any period of 60 consecutive days; or
(g) The Company shall default in the performance or observance of any
provision, covenant or restriction contained in any agreement with respect
to indebtedness for borrowed money in excess of $150,000,000 beyond
applicable days of grace and the effect of such default is to cause the
acceleration of maturity of such indebtedness; or
(h) A judgment or order for the payment of money in excess of $150,000,000
shall be rendered against the Company (or for which the Company becomes
liable or otherwise responsible to reimburse) and such judgment or order
shall continue unsatisfied and the
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execution of enforcement thereof shall no longer be effectively stayed for
a period of ten days; or
(i) any of the following: (i) the Company (if required to be so registered)
shall fail to be duly registered as an "investment adviser" under the
Investment Advisers Act of 1940 or (ii) Alliance Fund Distributors, Inc.
("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.; or
(j) the Company, Alliance Distributors, or the General Partner, or any
material subsidiary of any of the foregoing companies, 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 Company, Alliance Distributors, the
General Partner, or any 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 Company, Alliance Distributors, the General
Partner, or any such material subsidiary, having in any such case a fair
market value in excess of $20,000,000;
then, in any such event, Equitable may by written notice to the Company
declare all reimbursement amounts then outstanding under Section 1 hereof,
all interest thereon and all other amounts payable under this Agreement to
be forthwith due and payable, whereupon such reimbursement amounts, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Company; provided,
however, that in the event of an actual or deemed entry of an order for
relief with respect to the Company or the General Partner under the Federal
Bankruptcy Code or other applicable bankruptcy or insolvency law, all such
reimbursement amounts, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived
by the Company.
11. Notices: Notices and demands under this Agreement shall be in writing and
will be sufficient if delivered by hand, by United States registered or
certified mail or by facsimile receipt of which is confirmed by telephone.
Notices and demands shall be effective when received and shall be addressed
if to the Company to:
Alliance Capital Management L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx.
Senior Vice President and
Chief Financial Officer
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
and
Attn: Xxxxx X. Xxxxxx, Xx.
Senior Vice President and General Counsel
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Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
if to Equitable to: The Equitable Life Assurance Society
of the United States
1290 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx
Vice Chairman and Chief Financial Officer
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
12. No Waivers, Remedies: This Agreement may not be amended, waived or modified
except in writing duly signed by Equitable and the Company. Equitable may
elect in its sole discretion not to consent to the renewal of a Letter of
Credit for additional periods or to any other amendment to an Application
or a Letter of Credit; provided that, so long as no Event of Default then
exists, Equitable shall not enter into any written amendment to an
Application or Letter of Credit without the prior written consent of the
Company, which consent shall not be unreasonably withheld. This Agreement
and the terms, covenants and conditions hereof shall be binding upon and
inure to the benefit of Equitable and the Company and their respective
successors and permitted assigns. Equitable may assign (or participate) any
and all of its rights and interests herein (i) to an affiliated entity
without notice to or the consent of the Company and (ii) to a
non-affiliated entity only with the prior written consent of the Company,
such consent not to be unreasonably withheld. No failure on Equitable's
part to exercise, and no delay on Equitable's part in exercising, any
rights, powers or remedies hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such rights, powers or remedies
by Equitable preclude any other or further exercising thereof or the
exercise of any other right, power or remedy. All remedies hereunder are
cumulative and not exclusive of any other remedies provided by law.
13. Severability: Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent required by law without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction.
14. Jurisdiction/Waiver of Jury Trial: (a) Any legal action or proceeding
against the Company or Equitable with respect to this Agreement, any
Application, any Letter of Credit or any of the agreements, documents or
instruments delivered in connection herewith or therewith may be brought in
the courts of the State of New York or of the United States of America for
the Southern District of New York as the party commencing such action or
proceeding may elect. By execution and delivery hereof, each party accepts
and consents to, for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Nothing herein
shall limit the right of the Company or Equitable to bring proceedings
against the other party in the courts of any other jurisdiction.
(b) The Company and Equitable knowingly, voluntarily and intentionally waive
any and all rights the Company or Equitable, as the case may be, may have
to a trial by jury in respect of any litigation between the parties hereto
based on, or arising out of, under or in
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connection with, this Agreement, any Application, any Letter of Credit or
any other documents and instruments executed in connection herewith.
15. Construction and Interpretation: This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. The
headings of the Sections of this Agreement are for convenience only and
shall not by themselves determine the interpretation of this Agreement.
16. Company Assignment: In the event the reorganization contemplated by the
registration statement on Form S-4, including the proxy
statement/prospectus, as filed by Alliance Capital Management X.X. XX, a
Delaware limited partnership ("Alliance II"), with the Securities and
Exchange Commission on August 3, 1999 (the "Reorganization") is
consummated, the Company shall assign, and Alliance II shall assume, all of
the rights, liabilities and obligations of the Company hereunder pursuant
to a written assignment agreement in form and substance satisfactory to
Equitable, whereupon (i) each reference herein to "the Company" shall be
deemed a reference to Alliance II and each reference herein to "limited
partnership unit" shall be deemed a reference to a limited partnership
interest of Alliance II, including without limitation in Sections 1 and
4(c) hereof; provided that, "Fair Market Value" of a limited partnership
interest of Alliance II as of any date thereafter, including any Maturity
Date, shall mean a price per limited partnership interest of Alliance II
equal to the "LP Interest Price" on such date as defined in Article 1 of
Alliance II's limited partnership agreement as in effect on the date of the
foregoing assignment and assumption and (ii) the assignor, Alliance Capital
Management L.P., shall be released from all liabilities and obligations
hereunder. Except as expressly provided in the preceding sentence, the
Company may not assign or delegate any of its rights or obligations
hereunder without the prior written consent of Equitable.
17. Entire Agreement/Counterparts: This Agreement on and as of the date hereof
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and all prior or contemporaneous understandings or
agreements, whether written or oral, between the parties hereto with
respect to such subject matter are hereby superseded in their entireties.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date set forth above by the undersigned
thereunto authorized.
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management Corporation,
its general partner
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice Chairman and
Chief Financial Officer
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