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EXHIBIT 10.4
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST FILED WITH THE COMMISSION. ASTERISKS (*) IDENTIFY WHERE SUCH
CONFIDENTIAL INFORMATION HAS BEEN OMITTED. THE OMITTED PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION.
FIRST QUADRANT, L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
March 28, 1996
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FIRST QUADRANT, L.P.
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS.......................................................................................... 1
Section 1.1 Definitions........................................................................... 1
ARTICLE II - ORGANIZATION AND GENERAL PROVISIONS................................................................. 8
Section 2.1 Continuation of Partnership........................................................... 8
Section 2.2 Name of the Partnership............................................................... 9
Section 2.3 Purposes of the Partnership........................................................... 9
Section 2.4 Place of Business; Registered Agent................................................... 9
Section 2.5 Duration of the Partnership........................................................... 9
Section 2.6 Title to Property..................................................................... 10
Section 2.7 Liability of Partners................................................................. 10
Section 2.8 Fiscal Year........................................................................... 10
ARTICLE III - MANAGEMENT OF THE PARTNERSHIP...................................................................... 10
Section 3.1 Management in General................................................................. 10
Section 3.2 Officers of the Partnership........................................................... 11
Section 3.3 Operation of the Business of the Partnership.......................................... 11
Section 3.4 Compensation and Expenses of the Partner.............................................. 13
Section 3.5 Other Business of the General Partner and its Affiliates.............................. 13
Section 3.6 Limited Partners and Non Solicitation Agreements...................................... 14
Section 3.7 Non Solicitation and Non-Disclosure by Limited Partners and Employee
Stockholders.......................................................................... 14
Section 3.8 Remedies Upon Breach.................................................................. 17
Section 3.9 Repurchase Upon Termination of Employment or Bankruptcy............................... 17
Section 3.10 No Employment Obligation.............................................................. 23
Section 3.11 Miscellaneous......................................................................... 23
Section 3.12 Exculpation; Indemnification.......................................................... 24
ARTICLE IV - CAPITAL CONTRIBUTIONS; DISTRIBUTIONS;
CAPITAL ACCOUNTS AND ALLOCATIONS........................................................................ 25
Section 4.1 Capital Contributions................................................................. 25
Section 4.2 Capital Accounts; Allocations......................................................... 28
Section 4.3 Distributions......................................................................... 29
Section 4.4 Distributions Upon Liquidation; Establishment of a Reserve Upon
Liquidation.................................................................................... 31
Section 4.5 Proceeds from the Sale of Securities; Insurance Proceeds; Certain
Special Allocations............................................................................ 32
(i)
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Section 4.6 Federal Tax Allocations............................................................... 33
ARTICLE V - TRANSFER OF PARTNERSHIP INTERESTS OTHER THAN
BY THE GENERAL PARTNER, ADMISSION OF ADDITIONAL
PARTNERS, REDEMPTION AND WITHDRAWAL..................................................................... 34
Section 5.1 Assignability of Interests............................................................ 34
Section 5.2 Substitute Limited Partners........................................................... 35
Section 5.3 Additional Requirements............................................................... 35
Section 5.4 Allocation of Distributions Between Assignor and Assignee; Successor to
Capital Accounts............................................................................... 36
Section 5.5 Redemptions and Withdrawals........................................................... 36
Section 5.6 Issuance of Additional Partnership Interests.......................................... 36
Section 5.7 Representation of Partners............................................................ 37
ARTICLE VI - TRANSFER OF PARTNERSHIP INTEREST BY THE
GENERAL PARTNER; REDEMPTION, REMOVAL
AND WITHDRAWAL.......................................................................................... 38
Section 6.1 Assignability of Interest............................................................. 38
Section 6.2 Resignation, Redemption, and Withdrawal............................................... 38
ARTICLE VII - PUT/CALL OF PARTNERSHIP INTERESTS;
REGISTRATION RIGHTS..................................................................................... 39
Section 7.1 Mandatory Puts........................................................................ 39
Section 7.2 Election Rights of Limited Partners to Receive AMG Stock.............................. 42
Section 7.3 General Partner Call Option........................................................... 42
Section 7.4 AMG Call Option....................................................................... 43
Section 7.5 Registration Rights................................................................... 45
Section 7.6 Limitations........................................................................... 48
Section 7.7 Limitation of Registration Rights..................................................... 48
ARTICLE VIII - DISSOLUTION AND TERMINATION....................................................................... 49
Section 8.1 Events of Dissolution................................................................. 49
ARTICLE IX - RECORDS AND REPORTS................................................................................. 51
Section 9.1 Books and Records..................................................................... 51
Section 9.2 Accounting............................................................................ 51
Section 9.3 Financial Reports..................................................................... 51
Section 9.4 Meetings.............................................................................. 52
Section 9.5 Tax Matters........................................................................... 53
ARTICLE X - MISCELLANEOUS........................................................................................ 53
Section 10.1 Notices............................................................................... 53
Section 10.2 Successors and Assigns................................................................ 53
(ii)
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Section 10.3 Amendments............................................................................ 54
Section 10.4 No Partition.......................................................................... 54
Section 10.5 No Waiver............................................................................. 54
Section 10.6 Dispute Resolution.................................................................... 54
Section 10.7 Prior Agreements Superseded........................................................... 54
Section 10.8 Captions.............................................................................. 55
Section 10.9 Counterparts.......................................................................... 55
Section 10.10 Applicable Law; Jurisdiction.......................................................... 55
Section 10.11 Singular and Plural................................................................... 55
Section 10.12 Creditors............................................................................. 55
EXHIBITS
Exhibit A - Form of Executive Retention Option
Exhibit B - Incentive Program
Exhibit C(i) - Form of Non Solicitation/Non Disclosure Agreement
for Employee Stockholders employed by First Quadrant, L.P.
Exhibit C(ii) - Form of Non Solicitation/Non Disclosure Agreement for Employee
Stockholders employed by First Quadrant Limited
Exhibit D - Form of Promissory Note for Repurchases
Exhibit E - Form of Promissory Note for Funds Call
SCHEDULES
Schedule A - Partnership Points and Capital Accounts
Schedule 3.3(b) - Incentive Compensation Plan Payments
(iii)
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FIRST QUADRANT, L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
This Amended and Restated Limited Partnership Agreement (the
"Agreement") is made and entered into as of March 28, 1996 (the "Effective
Date"), by and among First Quadrant Corp., a New Jersey corporation (the
"General Partner"), the other partners named on Schedule A hereto (collectively,
the "Limited Partners" and individually, a "Limited Partner"). The General
Partner and the Limited Partners are sometimes herein referred to collectively
as the "Partners" and individually as a "Partner."
This Agreement amends and completely restates that certain Amended and
Restated Limited Partnership Agreement of First Quadrant, L.P. entered into as
of March 25, 1996, by and among the General Partner and the Limited Partners.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which is hereby acknowledged, and in consideration of the mutual agreements
hereinafter set forth, including, but not limited to, their capital
contributions, the parties hereby agree as follows:
ARTICLE I - DEFINITIONS.
SECTION 1.1 DEFINITIONS. For purposes of this Agreement:
"Additional Limited Partner" shall have the meaning specified in
Section 5.6.
"Advisers Act" shall mean the Investment Advisers Act of 1940, as it
may be amended from time to time, and any successor to such Act.
"Affiliate" shall mean, with respect to any person or entity (herein
the "first party"), any other person or entity that directly or indirectly
controls, or is controlled by, or is under common control with, such first
party. The term "control" as used herein (including the terms "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to (a) vote 50% or more of the outstanding voting securities of
such person or entity or (b) otherwise direct the management or policies of such
person or entity by contract or otherwise.
"Agreement" shall mean this Amended and Restated Limited Partnership
Agreement, as it may from time to time be amended, supplemented or restated.
"AMG" shall mean Affiliated Managers Group, Inc., a Delaware
corporation.
"Asset Transfer" shall have the meaning ascribed thereto in the Stock
Purchase Agreement.
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"Capital Account" shall mean the capital account maintained by the
Partnership with respect to each Partner in accordance with the capital
accounting rules described in Section 4.2 hereof.
"Capital Contribution" shall mean, as to each Partner, the amount of
money and/or the agreed fair market value of any property (net of any
liabilities encumbering such property that the Partnership is considered to
assume or take subject to) contributed to the capital of the Partnership by such
Partner.
"Certificate of Limited Partnership" shall mean the certificate of
limited partnership for the Partnership required under the Partnership Act, as
such Certificate may be amended or restated from time to time.
"Closing" shall have the meaning set forth in the Stock Purchase
Agreement.
"Code" or "Internal Revenue Code" shall mean the United States Internal
Revenue Code of 1986, as from time to time amended, and any successor thereto,
together with all regulations promulgated thereunder.
"Effective Date" shall have the meaning specified in the preamble of
this Agreement.
"Employee Stockholder" shall mean (i) in the case of a Limited Partner
which is not an individual, that certain officer and/or employee of the
Partnership or First Quadrant Limited (or, in the case of Xxxxxx, Inc., Xxxxxx
X. Xxxxxx, Xx.) who is the owner of all the issued and outstanding capital stock
of a Limited Partner, and is listed as such on Schedule A hereto and, (ii) in
the case of a Limited Partner which is an individual, such Limited Partner.
"Encumbrances" shall have the meaning ascribed thereto in the Stock
Purchase Agreement.
"Executive Retention Options" shall mean one or more of those Executive
Retention Options in the form attached hereto as Exhibit A which was issued on
the date hereof to one or more Partners.
"Executive Retention Reserve" shall mean the ten (10) Partnership
Points as are reserved for issuance pursuant to the terms of one or more
Executive Retention Options. The ten (10) Partnership Points in the Executive
Retention Reserve shall be deemed to be outstanding Partnership Points held by
the General Partner for all purposes of this Agreement (other than the
determination of "Majority Vote" as set forth herein and for determining
"Capital Calls" as set forth in Section 4.1 hereof), except for those
Partnership Points as have been issued pursuant to the Executive Retention
Options.
"Fair Market Value" shall mean the fair market value as reasonably
determined in good faith by the Board of Directors of the General Partner.
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"First Quadrant Limited" shall mean First Quadrant Limited, a United
Kingdom corporation.
"First Quadrant Limited's Share" shall mean the FQ Limited Share as
such term is defined in the Revenue Agreement.
"First Quadrant Limited's Revenues" shall mean Revenues, as such term
is defined in the Revenue Agreement.
"For Cause" shall mean, with respect to the termination of an Employee
Stockholder's employment, with the Partnership or First Quadrant Limited, any of
the following:
(a) The Employee Stockholder has engaged in any criminal offense
which involves a violation of federal or state securities laws or regulations,
embezzlement, fraud, wrongful taking or misappropriation of property, theft, or
any other crime involving dishonesty and (i) has been convicted (whether or not
subject to appeal) or plead nolo contendere or any similar plea to any criminal
offense in connection with or relating to such act, or (ii) as a result of or
in relation to such act, an event has occurred which would require an
affirmative answer to any of the questions in Items 11A, B, C, D, E or F
(except, with respect to question 2 in each of Items 11C, D or E, for an
immaterial violation of securities laws or regulations which results in an
affirmative answer which could not reasonably be expected to have an adverse
effect on the Partnership, First Quadrant Limited or their respective
businesses) of Part I of the Partnership's Form ADV;
(b) The General Partner with a Majority Vote (excluding, for purposes
of determining such Majority Vote, the Employee Stockholder or Limited Partner
of the Employee Stockholder which is the subject of such termination, as if the
Partnership Points held by such Limited Partner were not outstanding) has
determined that the Employee Stockholder has persistently and willfully
neglected his or her duties or failed to devote substantially all of his or her
working time, energy and skills to the faithful and diligent performance of
such duties, after the Partnership and/or First Quadrant Limited, as
applicable, has given the Employee Stockholder written notice specifying such
conduct by the Employee Stockholder and giving the Employee Stockholder a
reasonable period of time (not less than 30 days), to conform his or her conduct
to such duties; or
(c) The Employee Stockholder has engaged in Prohibited Competition
Activity or violated or breached any material provision of his or her Non
Solicitation Agreement or engaged in any of the activities prohibited by
Section 3.7 hereof or Section 3.7 of the U.K. Partnership Agreement.
"Free Cash Flow" shall mean, for any period, the sum of (a) thirty
percent (30%) of the Revenues From Operations of the Partnership for such
period, and (b) the amount (measured in U.S. dollars as reasonably determined by
the General Partner) by which thirty percent (30%) of First Quadrant Limited's
Revenues for such period exceeds the dividends paid by First Quadrant Limited to
the U.K. Partnership during such period.
"Free Cash Flow Expenditures" shall have the meaning specified in
Section 3.3(b).
"General Partner" shall mean First Quadrant Corp., a New Jersey
corporation, and any Person who becomes a successor or additional General
Partner as provided herein.
"General Partner Preference Amount" shall mean $274,755.
"Governmental Authority" shall mean any foreign, federal, state or
local court, governmental authority or regulatory body.
"Immediate Family" shall mean, with respect to any person, such
person's spouse, parents, grandparents, children, grandchildren and siblings.
"Incentive Program" shall mean the First Quadrant, L.P. and First
Quadrant U.K., L.P. Incentive Program in the form attached hereto as Exhibit B.
"Incentive Reserve" shall mean the number of Partnership Points
(initially twenty-four and fourteen one-hundredths (24.14)), as are reserved for
issuance pursuant to the terms of the Incentive Program. The twenty-four and
fourteen one-hundredths (24.14) Partnership Points in the Incentive Reserve
shall be deemed to be outstanding Partnership Points held by the General Partner
for all purposes of this Agreement, except for those Partnership Points as have
vested and have been issued pursuant to the Incentive Program.
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"Independent Public Accountants" shall mean any independent certified
public accountant satisfactory to the General Partner and retained by the
Partnership.
"Intercompany Services Agreement" shall mean that certain Intercompany
Services Agreement by and between the Partnership and First Quadrant Limited
which is dated as of the date hereof, as the same may be amended and/or restated
from time to time.
"Initial Partners" shall mean those entities which are Partners on the
Effective Date.
"Initial Partnership Points" means, with respect to a Limited Partner,
that number of Partnership Points held by such Limited Partner in the
Partnership immediately after giving effect to the Closing.
"Initial U.K. Partnership Points" means, with respect to a Limited
Partner, that number of U.K. Partnership Points held by such Limited Partner
immediately after giving effect to the Closing.
"Investment Management Services" shall mean any services which involve
(a) the management, for a fee or other remuneration, of an investment account or
fund (or portions thereof or a group of investment accounts or funds), or (b)
the giving of advice, for a fee or other remuneration, with respect to the
investment and/or reinvestment of assets or funds (or any group of assets or
funds).
"IRS" shall mean the Internal Revenue Service of the United States
Department of the Treasury.
"Limited Partner" shall mean any person or entity who is or becomes a
Limited Partner pursuant to the terms hereof.
"Majority Vote" shall mean the affirmative approval by vote or consent
of (a) the holders of the largest number and second largest number of Vested
Partnership Points (or if more than one Person holds an equal number of Vested
Partnership Points, which number is the largest or second largest number of
Vested Partnership Points, any one of such Persons) and any one other holder of
Vested Partnership Points, or (b) the holders of eighty percent (80%) of the
Vested Partnership Points then held by all Limited Partners excluding the holder
of the largest number of Vested Partnership Points (and, if more than one Person
holds an equal number of Vested Partnership Points, which number is the largest
number of Vested Partnership Points, then the holders of a majority of the
Vested Partnership Points then held by all Limited Partners) and, in the case of
either (a) or (b), excluding the General Partner and its Affiliates. If an
affirmative or negative vote is received under clause (a) above, but the holders
of eighty percent (80%) of the Vested Partnership Points determined as set forth
in clause (b) above disagree and their aggregate vote percentage exceeds that of
the aggregate vote percentage of clause (a) above, then such vote under clause
(a) shall be disregarded, otherwise, the vote under clause (b) above shall be
disregarded. For purposes of determining a "Majority
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Vote," the Partnership Points in the Executive Retention Reserve shall be deemed
to be outstanding Partnership Points held by a single Limited Partner designated
by the Chief Executive Officer or, if the Chief Executive Officer fails to so
designate a Limited Partner, the General Partner.
"Non Solicitation Agreement" shall have the meaning set forth in
Section 3.6 hereof.
"Operating Cash Flow" shall mean, for any period, an amount equal to
the positive difference, if any, between Revenues From Operations of the
Partnership for such period and Free Cash Flow for such period.
"Partners" shall mean the General Partner and the Limited Partners,
unless otherwise indicated.
"Partnership" shall mean the partnership organized under the
Predecessor Agreement and continued under this Agreement, as the same may be
amended and/or restated from time to time.
"Partnership Act" shall mean the Delaware Revised Uniform Limited
Partnership Act (6 Del. C. Section 17-101 et seq.), as it may be amended from
time to time, and any successor to such Act.
"Partnership Interests" shall mean the interests (including Capital
Accounts and Partnership Points) of the Partners in the Partnership.
"Partnership Points" shall mean as of any date, with respect to a
Partner, the number of Partnership Points of such Partner as set forth on
Schedule A hereto, as amended from time to time in accordance with its terms and
the terms hereof, and as in effect on such date.
"Permanent Incapacity" shall mean, with respect to an Employee
Stockholder, that such Employee Stockholder is totally unable, by reason of
injury, illness or other similar cause (as determined by a licensed physician,
selected by the Employee Stockholder or his or her representative and approved
by the General Partner, which approval shall not be unreasonably withheld), to
have performed his or her substantial and material duties and responsibilities
for a period of three hundred sixty-five (365) consecutive days, which injury,
illness or similar cause (as determined by such physician) would render such
Employee Stockholder incapable of operating in a similar capacity in the future.
"Person" means any individual, partnership, corporation, limited
liability company, association, trust, joint venture, unincorporated
organization or any similar entity.
"Predecessor Agreement" shall mean that certain Limited Partnership
Agreement of First Quadrant, L.P. entered into on December 15, 1995, as amended
and restated by that certain Amended and Restated Limited Partnership Agreement
of First Quadrant, L.P. dated March 25, 1996 by and among the General Partner
and the Limited Partners, pursuant to
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which this Partnership was continued, which partnership agreement is being
amended and restated by this Agreement.
"Prohibited Competition Activity" shall mean any of the following
activities:
(a) directly or indirectly, whether as owner, part owner,
partner, director, officer, trustee, employee, agent or consultant for or on
behalf of any Person, firm, corporation or other entity other than the
Partnership or any Affiliate of the Partnership, (i) diverting or taking away
any funds or investment accounts with respect to which the Partnership or any
Affiliate of the Partnership is performing investment management or advisory
services, or (ii) soliciting any person or entity for the purpose of diverting
or taking away any such funds or investment accounts; or
(b) directly or indirectly, whether as owner, part owner,
partner, director, officer, trustee, employee, agent or consultant for or on
behalf of any Person other than the Partnership or any Affiliate of the
Partnership, performing any Investment Management Services.
"Repurchase" shall mean a purchase or repurchase of Partnership
Interests made pursuant to Section 3.9(a).
"Repurchase Closing Date" shall mean the date upon which payment is
made with respect to a Repurchase, or if payment is made in more than one
installment, the date upon which the first such installment is paid.
"Repurchased Partner" shall have the meaning specified in Section
3.9(a).
"Repurchase Price" shall have the meaning specified in Section 3.9(c).
"Retirement" shall mean, with respect to an Employee Stockholder, the
termination by such Employee Stockholder of such Employee Stockholder's
employment with the Partnership and its Affiliates: (x) after the date such
Employee Stockholder shall have been continuously employed by the Partnership or
First Quadrant Limited for a period of ten (10) years commencing with the later
of the Effective Date or the date such Employee Stockholder commenced his or
her employment with the Partnership or First Quadrant Limited, as applicable,
and (y) pursuant to a written notice given to the Partnership not less than six
(6) months prior to the date of such termination.
"Revenues From Operations" shall mean, for any period, the gross
revenues of the Partnership (except as set forth herein), determined on an
accrual basis in accordance with generally accepted accounting principles
consistently applied; provided, however, that Revenues From Operations shall be
determined without regard to (a) proceeds during such period from the sale,
exchange or other disposition of all, or a substantial portion of, the assets of
the Partnership, (b) revenues from the issuance by the Partnership of additional
Partnership Points, other Partnership Interests, or other securities issued by
the Partnership, and (c)
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payments received pursuant to any insurance policies other than with respect to
business interruption insurance.
"Revenue Agreement" shall mean that certain Revenue Agreement dated as
of March 28, 1996, by and among First Quadrant Limited, the U.K. Partnership and
the partners of the U.K. Partnership.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as it may be
amended from time to time, and any successor thereto.
"Stock Purchase Agreement" shall mean that certain Stock Purchase
Agreement dated as of January 17, 1996, by and among AMG, Talegen Holdings,
Inc., a Delaware corporation ("Talegen"), the Partnership, the Initial Partners
which are Limited Partners, and certain other parties as set forth therein, as
the same has been amended from time to time prior to the date hereof.
"Transfer" shall have the meaning specified in Section 5.1.
"Treasury Regulations" shall mean the income tax regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"U.K. Free Cash Flow" shall have the meaning ascribed to such term in
the U.K. Partnership Agreement.
"U.K. Non Solicitation Agreement" shall have the meaning ascribed to
such term in the U.K. Partnership Agreement.
"U.K. Partnership" shall mean First Quadrant U.K., L.P., a Delaware
limited partnership.
"U.K. Partnership Agreement" shall have the meaning specified in
Section 3.7(d).
"U.K. Partnership Points" has the meaning ascribed to such term in the
U.K. Partnership Agreement.
"Vested Partnership Points" shall mean, at any time and with respect to
any Partner, the number of Partnership Points held by such Partner which have
vested at such time, as determined pursuant to an agreement between the
Partnership and such Partner in connection with the issuance of such Partnership
Points. The number of Vested Partnership Points held by each Partner and the
vesting schedule with respect to any Partnership Points which are not vested,
shall be indicated on Schedule A hereto, which Schedule shall be updated by the
General Partner as additional Partnership Points are issued and/or vest from
time to time.
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In addition to the foregoing, other capitalized terms used in this
Agreement shall have the meaning ascribed thereto in the text of this Agreement.
ARTICLE II - ORGANIZATION AND GENERAL PROVISIONS.
SECTION 2.1 CONTINUATION OF PARTNERSHIP. The parties hereby continue
the partnership formed under the Predecessor Agreement, under and pursuant to
the Partnership Act and the terms of this Agreement. The rights, duties,
liabilities and obligations of the Partners, and the administration and
termination of this Partnership, shall be governed by the Partnership Act,
except as otherwise provided in this Agreement. The General Partner is
authorized to cause the Partnership to comply with all requirements of the
Partnership Act and to qualify the Partnership to do business as a limited
partnership in any jurisdiction where the General Partner shall deem it
necessary, appropriate or advisable from time to time. The General Partner is
authorized to file and/or record any other instrument(s) as may be required or
advisable to be filed and/or recorded by this Partnership in accordance with
applicable laws, rules and regulations.
SECTION 2.2 NAME OF THE PARTNERSHIP. The name of the Partnership shall
be First Quadrant, L.P. or such other name as the General Partner with a
Majority Vote may from time to time determine. The General Partner and the
Officers shall cause to be filed on behalf of the Partnership such partnership
or assumed or fictitious business name statements or certificates as the General
Partner or such Officers shall deem necessary, appropriate or desirable.
SECTION 2.3 PURPOSES OF THE PARTNERSHIP. The Partnership was organized
and is continued for the following purposes:
(a) to engage in the investment advisory and investment
management businesses and any and all activities
reasonably related thereto;
(b) to make and perform all contracts and engage in all
activities and transactions and to do any and all
things necessary or advisable to carry out the
foregoing purposes; and
(c) to engage in any other act or activity which is
lawful for partnerships under the Partnership Act and
which is approved by the General Partner; provided,
however, that the General Partner will not cause a
business which is unrelated to the Partnership's
businesses to become a substantial part of the
Partnership without a prior Majority Vote.
SECTION 2.4 PLACE OF BUSINESS; REGISTERED AGENT.
(a) The principal place of business of the Partnership shall
be 000 Xxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000.
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(b) The Partnership's resident agent for service of process in
Delaware is The Corporation Trust Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, and its registered office in Delaware shall be in care of such
resident agent.
(c) The General Partner may, at any time and from time to
time: (i) change the location of the Partnership's principal place of business
and establish such additional place or places of business of the Partnership as
it may determine; provided, that if the principal place of business is to be
located outside of Pasadena, California, such action must be approved by a
Majority Vote, (ii) change the Partnership's registered office in Delaware, and
(iii) change the Partnership's resident agent for service of process in
Delaware; provided, however, that the General Partner shall promptly give each
Limited Partner notice of any such change.
SECTION 2.5 DURATION OF THE PARTNERSHIP. The Partnership term shall
continue until December 31, 2095, unless extended or terminated earlier in
accordance with the provisions hereof. The Partnership's term may be extended by
the General Partner at any time and from time to time.
SECTION 2.6 TITLE TO PROPERTY. All property owned by the Partnership,
whether real or personal, tangible or intangible, shall be deemed to be owned by
the Partnership as an entity, and no Partner, individually, shall have any
ownership of such property.
SECTION 2.7 LIABILITY OF PARTNERS; NO DEFICIT RESTORATION OBLIGATION.
(a) The General Partner shall have such liability for the
repayment, satisfaction and discharge of the debts, liabilities and obligations
of the Partnership as is provided by the Partnership Act for the general partner
of a limited partnership.
(b) A Limited Partner which receives the return of any part of
its Capital Contribution shall be liable to the Partnership for the amount of
its Capital Contribution so returned to the extent, and only to the extent,
provided by the Partnership Act. No Limited Partner shall otherwise be liable to
the Partnership, another Partner or any third party for the repayment,
satisfaction, or discharge of the Partnership's debts, liabilities, and
obligations or otherwise have any obligation to contribute money or any other
asset to the Partnership other than payment of such Limited Partner's Capital
Contribution, and as otherwise specifically provided in this Agreement.
(c) Except as otherwise specifically set forth in this Section
2.7 or in Section 4.3 hereof, no Limited Partner with a deficit balance in its
Capital Account shall have any obligation to restore such deficit (or make any
contribution to the capital of the Partnership, or otherwise pay any amount,
with respect to such deficit), and such deficit shall not be considered as a
debt of such Limited Partner to the Partnership or to any other Partner for any
purpose whatsoever.
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SECTION 2.8 FISCAL YEAR. The fiscal year of the Partnership shall be
the calendar year unless otherwise determined by the General Partner.
ARTICLE III - MANAGEMENT OF THE PARTNERSHIP.
SECTION 3.1 MANAGEMENT IN GENERAL
(a) Subject to the provisions of this Agreement, the
management and control of the business of the Partnership shall be vested
exclusively in the General Partner, and the General Partner shall have exclusive
power and authority, in the name of and on behalf of the Partnership, to perform
all acts and do all things which, in its sole discretion, it deems necessary or
desirable to conduct the business of the Partnership; provided, however, that
the General Partner shall not have the power to execute, or cause the execution
of, transactions in, or exercise any powers or privileges with respect to,
securities and other instruments in accounts of clients of the Partnership. No
Partner other than the General Partner shall have the power to sign for or bind
the Partnership to any agreement or document, but the General Partner may
delegate the power to sign for or bind the Partnership to one or more Officers
of the Partnership. Subject to the provisions of this Agreement, the General
Partner shall be authorized to act, and to execute documents and instruments
alone on all material matters affecting the Partnership's business; provided,
however, that the General Partner shall not cause the Partnership to borrow
substantial funds or to guarantee the repayment of such borrowings, in each
case, to the extent such borrowing or guarantee is to be repaid out of Operating
Cash Flow.
(b) The General Partner shall, subject to all applicable
provisions of this Agreement, be authorized in the name of and on behalf of the
Partnership: (i) to enter into, execute, amend, supplement, acknowledge and
deliver any and all contracts, agreements, leases or other instruments for the
operation of the Partnership's business; and (ii) in general to do all things
and execute all documents necessary or appropriate to conduct the business of
the Partnership as set forth in Section 2.3 hereof, or to protect and preserve
the Partnership's assets. The General Partner may delegate any or all of the
foregoing powers to one or more of the Officers of the Partnership.
SECTION 3.2 OFFICERS OF THE PARTNERSHIP.
(a) The officers of the Partnership (the "Officers") shall
consist of a President/Chief Executive Officer and such other subordinate
officers as the Chief Executive Officer or the General Partner may, after
consulting with the other, determine are necessary or appropriate. The Officers
of the Partnership may only include persons who take an active role in the
day-to-day operations of the Partnership.
(b) No Officer of the Partnership shall be held personally
liable, by virtue of his or her status as an Officer, for any losses, debts or
obligations of the Partnership.
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(c) The Chief Executive Officer may be removed from and
appointed to, his or her office by the General Partner acting in its sole
discretion. Officers of the Partnership other than the Chief Executive Officer
shall be appointed to, and may be removed from, their offices by the Chief
Executive Officer or by the General Partner acting in its sole discretion;
provided, however, that if such an Officer of the Partnership who has not been
terminated For Cause is removed by the General Partner without either (i) the
consent of the Chief Executive Officer or (ii) a Majority Vote, then the Chief
Executive Officer may treat such appointment or removal as a termination of the
Chief Executive Officer's employment other than For Cause. Any Officer of the
Partnership may resign from his or her office upon prior written notice to the
Partnership and the General Partner.
(d) The Chief Executive Officer shall initially be Xxxxxx X.
Xxxxxx.
SECTION 3.3 OPERATION OF THE BUSINESS OF THE PARTNERSHIP.
(a) Subject to recognizing that the General Partner has the
rights, duties and obligations set forth in Section 3.1 above, the Officers of
the Partnership are hereby given a non-exclusive delegation of authority from
the General Partner to manage the day-to-day operations, business and activities
of the Partnership; including, without limitation, the power, in the name of and
on behalf of the Partnership, to:
(i) determine the use of the Operating Cash Flow as set
forth in Section 3.3(b) below;
(ii) execute such documents and do such acts as are
necessary to register (or provide or qualify for exemptions
from any such registrations) or qualify the Partnership under
applicable Federal and state securities laws;
(iii) execute, or cause the execution of, transactions
in, and hold and exercise all rights, powers and privileges
with respect to, securities and other instruments on behalf of
clients of the Partnership; and
(iv) act for and on behalf of the Partnership in all
matters incidental to the foregoing.
(b) The Operating Cash Flow of the Partnership for any period
shall be used by the Partnership to provide for and pay its business expenses
and expenditures as determined by the Officers of the Partnership or by a
Majority Vote; including, without limitation, compensation and benefits to its
employees, including the Officers of the Partnership. Without the prior written
consent of the General Partner, the Partnership shall incur no expenses or
obligations that exceed its ability to pay or provide for them out of its
Operating Cash Flow on a current or previously reserved basis, except as
otherwise expressly provided in the following sentence. The Partnership shall
only make payments of compensation (including bonuses) to its employees
(including any Officers of the Partnership) out of the balance of its Operating
Cash Flow remaining after the payment (or reservation for payment) of all the
other business
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expenses and expenditures (including, without limitation, any payments required
under the Intercompany Services Agreement) for the applicable period; provided,
however, that the Partnership may make certain payments pursuant to the First
Quadrant Corp. Incentive Compensation Plan (as amended and restated as of
January 1, 1990, as further amended by Amendment Number 1 dated as of March 28,
1996, and as further amended and restated as of March 28, 1996 (the "ICP")), in
accordance with the provisions attached hereto as Schedule 3.3(b) and the
certificates thereunder previously provided to the General Partner, but without
any interest or other fees accruing on any unpaid portion thereof. Any excess
Operating Cash Flow remaining for any fiscal year following the payment (or
reservation for payment) of all business expenses and expenditures may be used
by the Partnership in such fiscal year and/or in future fiscal years in
accordance with the preceding sentence. The Partnership shall not, without the
prior written consent of the General Partner, enter into any contracts or other
agreements which could reasonably be foreseen to conflict with the provisions of
this Section 3.3(b), to have a material adverse impact on the Operating Cash
Flow of the Partnership in future periods or to encumber the assets of the
Partnership. Free Cash Flow may be used to provide for and pay the business
expenses of the Partnership to the extent specified in Section 3.3(c) with
respect to key-man life insurance and disability insurance as well as directors
and officers liability insurance for the benefit of the directors and officers
of the General Partner, Section 3.4 with respect to certain extraordinary
expenses and otherwise as agreed to in writing by the General Partner and the
Limited Partners by a Majority Vote (any such use being referred to herein as a
"Free Cash Flow Expenditure").
(c) The Partnership will maintain, in full force and effect,
such insurance as is customarily maintained by companies of similar size in the
same or similar businesses (including, without limitation, errors and omissions
liability insurance), the premiums on which will be paid out of Operating Cash
Flow. The Partnership will maintain such key-man life insurance and disability
insurance policies on each Employee Stockholder as the General Partner shall
deem necessary or desirable, from time to time, and the Employee Stockholders
will use their reasonable best efforts to effectuate the foregoing. The
Partnership will receive the proceeds of the above referenced insurance
policies, and the Partners agree with each other and the Partnership that the
Partnership will pay the premiums on such key-man life and disability policies,
as well as any reasonable additional insurance policies that the General Partner
deems necessary, out of Free Cash Flow. Without limiting the generality of the
foregoing, the Partnership will pay the premiums on reasonable directors and
officers liability insurance for the benefit of the directors and officers of
the General Partner that the General Partner deems necessary, out of Free Cash
Flow.
SECTION 3.4 COMPENSATION AND EXPENSES OF THE PARTNERS. No Partner shall
be entitled to any compensation on account of its provision of services to the
Partnership hereunder. The Partnership shall, however, pay and/or reimburse the
General Partner for all reasonable travel expenses incurred by the General
Partner in accordance with Section 9.4(a) as well as any extraordinary expenses
incurred by the General Partner directly in connection with the operation of the
Partnership. With respect to any reimbursement of the General Partner in respect
of extraordinary expenses incurred by the General Partner, the first $25,000 of
such expenses incurred in any calendar year shall be treated as paid from
Operating Cash
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Flow, and any amounts thereafter shall be treated as Free Cash Flow Expenditures
unless such extraordinary expenses are incurred by the General Partner (i) as a
direct result of fraud, intentional misconduct or gross negligence of the
Officers or Limited Partners or (ii) relating to a compliance audit or AIMR
audit or other similar occurrence resulting from a reasonable concern of the
General Partner, the cause or causes of which could be expected to result in a
material adverse effect on the Partnership or its business or prospects, in
which case such expenses shall also be treated as paid from Operating Cash Flow.
Without limiting the generality of the foregoing, the General Partner's general
overhead items (including, without limitation, salaries and rent) shall not be
reimbursed by the Partnership. Stockholders, officers, directors, partners and
agents of Partners may serve as employees of the Partnership and be compensated
therefor as determined by the Officers pursuant to Section 3.3(b).
SECTION 3.5 OTHER BUSINESS OF THE GENERAL PARTNER AND ITS AFFILIATES.
The General Partner and its Affiliates may engage, independently or with others,
in other business ventures of every nature and description, including the
acquisition, creation, financing, trading in, and operation and disposition of
interests in investment managers and other businesses that may be competitive
with the Partnership's business. Neither the Partnership nor any of the Limited
Partners shall have any right in or to any other such ventures by virtue of this
Agreement or the Partnership created hereby, nor shall any such activity be
deemed wrongful or improper by such Affiliates. The General Partner shall not be
obligated to present any opportunity to the Partnership even if such opportunity
is of such a character which, if presented to the Partnership, would be suitable
for the Partnership.
SECTION 3.6 LIMITED PARTNERS AND NON SOLICITATION AGREEMENTS. Each
Employee Stockholder and, to the extent applicable, its Limited Partner, have
provided pursuant to a Non Solicitation/Non Disclosure Agreement in form and
substance substantially similar to Exhibit C(i) hereto (and, in the case of an
Employee Stockholder who is employed by First Quadrant Limited, Exhibit C(ii)
hereto) (the "Non Solicitation Agreement") (and in the case of any Additional
Limited Partner (as defined in Section 5.6), it shall, prior to and as a
condition precedent to, becoming a Partner, provide by such an agreement
satisfactory to the General Partner) with the Partnership for the performance by
such Employee Stockholder of the obligations provided for on such Exhibit C(i)
or Exhibit C(ii) (as applicable) and such agreements do and shall, at all times,
provide that the Partnership shall be entitled to enforce the provisions of such
agreements on its own behalf and in the name of the Limited Partner (if the
Limited Partner is not an individual).
SECTION 3.7 NON SOLICITATION AND NON-DISCLOSURE BY LIMITED PARTNERS
AND EMPLOYEE STOCKHOLDERS.
(a) Each Limited Partner and each Employee Stockholder agrees,
for the benefit of the Partnership and the other Partners, that such Employee
Stockholder shall not, while employed by the Partnership or any of its
Affiliates, engage in any Prohibited Competition Activity (provided that an
Employee Stockholder may engage in certain charitable activities which have been
approved by the General Partner, in its sole discretion, in a writing making
specific reference to this Section 3.7(a)).
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(b) Each Limited Partner and each Employee Stockholder agrees,
for the benefit of the Partnership and the other Partners, that such Limited
Partner and such Employee Stockholder shall not, during the period beginning on
the date such Limited Partner becomes a Limited Partner, and until the date
which is two (2) years after the termination of such Employee Stockholder's
employment with the Partnership and its Affiliates, without the express written
consent of the General Partner, directly or indirectly, whether as owner,
part-owner, shareholder, partner, director, officer, trustee, employee, agent or
consultant, or in any other capacity, on behalf of himself or any firm,
corporation or other business organization other than the Partnership or First
Quadrant Limited: (i) provide Investment Management Services to any person or
entity that is a client of the Partnership or First Quadrant Limited (for this
purpose, upon any termination of the Employee Stockholder's employment for any
reason, only the following shall be deemed a "client of the Partnership or First
Quadrant Limited" (i) clients of the Partnership and its Affiliates (including
its predecessor, First Quadrant Corp.) at the date of such termination or at any
time during the six (6) months immediately preceding the date of termination, or
(ii) up to fifteen (15) additional persons or entities with whom the Partnership
or First Quadrant Limited was actively attempting to develop an investment
advisory or investment management relationship (as evidenced by a contact other
than a mass mailing (which may include prior clients of the Partnership or its
Affiliates) (a "Prospect") with such Prospects to be designated by the General
Partner with the advice of the Officers; provided, however, that this paragraph
(A) shall not prohibit the Employee Stockholder from providing Investment
Management Services to any person or entity that is not a client of the
Partnership or First Quadrant Limited (including Prospects) as contemplated
herein, (B) shall not be applicable with respect to any such client who is, as
of the relevant date of termination, also a client of the person or entity with
which the Employee Stockholder is subsequently employed or affiliated so long as
the Employee Stockholder can demonstrate by clear and convincing evidence that
he or she has no direct or indirect involvement with the management of such
client's accounts or the provision of advice or other services with respect
thereto (it being understood and agreed that mere participation in the
refinement of an existing model (as opposed to the creation or development of a
new model or any other activities) used for providing investment advice shall
not be deemed to be direct or indirect involvement with the management of any
accounts which are managed utilizing such model) and that he or she has
refrained from contacting such clients directly or indirectly, and (C) shall not
be applicable to clients of the Partnership or First Quadrant Limited who are
also members of the Immediate Family of the Employee Stockholder; or (ii)
solicit or induce any employee of, or consultant to, First Quadrant Limited, the
Partnership or any of its Affiliates to terminate his or her relationship
therewith, hire any such employee or consultant, or former employee or work in
any enterprise involving investment advisory services with any employee or
consultant or former employee of First Quadrant Limited, the Partnership or its
Affiliates who was employed by or acted as consultant to the Partnership or its
Affiliates at any time during the twelve (12) months immediately preceding the
termination of the Employee Stockholder's employment (excluding for all purposes
of this sentence, secretaries and persons holding other similar positions).
Notwithstanding the provisions of Section 3.7(a) and 3.7(b), any Employee
Stockholder may make passive investments in a competitive enterprise the shares
or other equity interests of
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which are publicly traded provided his holding therein together with any
holdings of his Affiliates, do not exceed 1% of the outstanding shares of
comparable interests in such entity at the time such investments are made.
(c) Each Limited Partner and each Employee Stockholder agrees
that any and all presently existing investment advisory business of the
Partnership and its Affiliates (including its predecessor, First Quadrant
Corp.), and all business developed by the Partnership and its Affiliates or any
other employee of First Quadrant Limited or the Partnership, including without
limitation, all investment advisory contracts, fees, commissions, compensation
records, client lists, agreements, and any other incident of any business
developed by the Partnership or its Affiliates or earned or carried on by the
Employee Stockholder for the Partnership or its Affiliates and all trade names,
service marks and logos under which the Partnership or its Affiliates do
business, and any combinations or variations thereof and all related logos, are
and shall be the exclusive property of the Partnership or such Affiliate, as
applicable, for its or their sole use, and (where applicable) shall be payable
directly to the Partnership or such Affiliate. Each Limited Partner and each
Employee Stockholder acknowledges that, in the course of performing services
hereunder and otherwise, the Employee Stockholder has had, and will from time to
time have, access to confidential records, data, client lists, trade secrets and
similar confidential information owned or used in the course of business by the
Partnership or its Affiliates. Each Limited Partner and each Employee
Stockholder agrees always to keep secret and not ever publish, divulge, furnish,
use or make accessible to anyone (otherwise than in the regular business of the
Partnership or any Affiliate thereof at the Partnership's request) any knowledge
or information of a confidential or proprietary nature with respect to any trade
secrets, proprietary plans, clients, client requirements, service providers,
business operations or techniques of the Partnership or any Affiliate thereof
other than information which (a) is or becomes generally available to the public
other than as a result of disclosure by such Limited Partner or Employee
Stockholder in violation of this Agreement, or (b) is required by law or
government regulation to be disclosed to a court or government regulatory body;
provided, however, that prior to disclosing such information, the applicable
Limited Partner and Employee Stockholder shall give the Partnership and the
General Partner notice and shall use its respective best efforts to obtain
confidential treatment therefor ("Nonconfidential Information"); provided, that
the Partnership shall reimburse such Limited Partner or Employee Stockholder for
costs incurred in excess of $1,000. At the termination of the Employee
Stockholder's services to the Partnership or First Quadrant Limited, all data,
memoranda, client lists, notes, programs and other papers, items and tangible
media, and reproductions thereof relating to the foregoing matters in the
Limited Partner's or Employee Stockholder's possession or control, shall be
returned to the Partnership and remain in its possession (except where the
return of such items shall be unreasonable or impractical in relation to the
importance or confidentiality of such items).
(d) Each Limited Partner and each Employee Stockholder
acknowledges that, in the course of negotiating this Restated Partnership
Agreement, the U.K. Partnership's Limited Partnership Agreement (the "U.K.
Partnership Agreement") and the Stock Purchase Agreement, the Limited Partner
and the Employee Stockholder have had and, in the course of the operation of the
Partnership, the Limited Partner and Employee Stockholder will from time
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to time have, access to confidential records, data, plans, strategies, trade
secrets and similar confidential information owned or used in the course of
business by the General Partner's parent, AMG. Each Limited Partner and each
Employee Stockholder agrees, for the benefit of the Partnership and its
partners, and for the benefit of the General Partner's parent, AMG, always to
keep secret and not ever publish, divulge, furnish, use or make accessible to
anyone (otherwise than at the General Partner's request) any knowledge or
information of a confidential or proprietary nature with respect to any records,
data, plans, strategies, business operations or techniques (including, by way of
example and not of limitation, the transaction structure utilized by AMG) of
AMG, the General Partner or the Partnership other than Nonconfidential
Information. At the termination of the Employee Stockholder's service to the
Partnership and First Quadrant Limited, all data, memoranda, documents, notes
and other papers, items and tangible media, and reproductions thereof relating
to the foregoing matters in the Limited Partner's or Employee Stockholder's
possession or control shall be returned to the General Partner and remain in its
possession (except where the return of such items shall be unreasonable or
impractical in relation to the importance or confidentiality of such items).
SECTION 3.8 REMEDIES UPON BREACH.
(a) In the event that a Limited Partner or its Employee
Stockholder (i) breaches any of the provisions of Section 3.7, (ii) breaches any
of the provisions of Section 3.7 of the U.K. Partnership Agreement, or (iii)
breaches any of the provisions of the Non Solicitation Agreement to which it or
he is a party, then such Limited Partner shall forfeit its right to receive any
payment for its Partnership Interests under Section 3.9 and, with respect to
Xxxxxx, Inc., under Section 7.1(c), and the General Partner shall have no
further obligations under any promissory note theretofore issued to such Limited
Partner (or any other Limited Partner (including upon a distribution pursuant to
Section 3.9(j)) which was or is a stockholder in such Limited Partner) pursuant
to Section 3.9(e) and, with respect to Xxxxxx, Inc., under Section 7.1(f).
(b) Each Limited Partner and each Employee Stockholder agrees
that any breach of the provisions of Section 3.7 of this Agreement, Section 3.7
of the U.K. Partnership Agreement or of the Non Solicitation Agreement or U.K.
Non Solicitation Agreement by such Limited Partner or Employee Stockholder could
cause irreparable damage to the Partnership, First Quadrant Limited, the U.K.
Partnership, the other Partners and AMG. The Partnership, any of the Partners
and AMG shall, except as provided in this Section 3.8(b), have the right to an
injunction or other equitable relief (in addition to other legal remedies) to
prevent any violation of a Limited Partner's or Employee Stockholder's
obligations hereunder or thereunder. Notwithstanding the foregoing, none of the
Partnership, any of the Partners or AMG shall have the right to an injunction or
other equitable relief to prevent a violation of Section 3.7(b)(i) unless: (i)
the party or one of the parties against which such relief is sought is Xxxxxx X.
Xxxxxx, X.X. Xxxxxx Corporation, a Chief Executive Officer of the Partnership or
an entity through which a Chief Executive Officer of the Partnership owns an
interest in the Partnership, or (ii) one of the parties seeking to obtain an
injunction or other equitable relief to prevent such violation of Section
3.7(b)(i) has obtained a Majority Vote.
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SECTION 3.9 REPURCHASE UPON TERMINATION OF EMPLOYMENT OR BANKRUPTCY.
(a) In the event that the employment by the Partnership or
First Quadrant Limited of any Employee Stockholder terminates for any reason,
then: (i) if the termination of the Employee Stockholder occurred because of the
death or Permanent Incapacity of such Employee Stockholder, the Partnership
shall purchase for cash up to the extent of the cash proceeds of any key-man
life insurance policies or disability insurance policies, as applicable,
maintained by the Partnership on the life or health of such Employee
Stockholder, and (ii) in each other such case (and, in the case of the death or
Permanent Incapacity of an Employee Stockholder, to the extent the obligation
exceeds the proceeds described in clause (i) of this Section 3.9(a)), AMG shall
purchase (each a "Repurchase") all the Partnership Interests held by the Limited
Partner (or the Limited Partner of which such employee was the Employee
Stockholder, as applicable) (as indicated on Schedule A hereto) (the
"Repurchased Partner"), in each case, pursuant to the terms of this Section 3.9.
(b) The closing of the Repurchase will take place on a date
(the "Repurchase Closing Date") which is not more than ninety (90) days after
the date on which the termination of the employment by the Partnership and First
Quadrant Limited of the relevant Employee Stockholder occurred; provided,
however, that (i) if the employment by the Partnership and First Quadrant
Limited of such Employee Stockholder is terminated because of the death or
Permanent Incapacity of such Employee Stockholder, then the Repurchase Closing
Date shall be a date set by the General Partner which is as soon as reasonably
practicable after the later of (A) ninety (90) days after the death or Permanent
Incapacity, as applicable, of such Employee Stockholder or (B) ninety (90) days
after the Partnership has received the proceeds of any key-man life insurance
policy or disability insurance policy, as applicable, maintained by the
Partnership on the life or health of such Employee Stockholder. The Partnership
shall make a claim under such key-man or disability policy within thirty (30)
days of any Officer and the General Partner becoming aware of the death or
Permanent Incapacity, as applicable, of an Employee Stockholder.
(c) The purchase price for the Repurchase (the "Repurchase
Price") shall be determined as follows:
(i) If the Employee Stockholder's employment with the
Partnership and First Quadrant Limited is terminated because
of the death, Permanent Incapacity, Retirement or if such
Employee Stockholder was terminated by the Partnership or
First Quadrant Limited on such date other than For Cause, then
the Repurchase Price shall equal (A) six (6) times fifty
percent (50%) of the Partnership's Free Cash Flow for the
twenty-four (24) months ending on the last day of the calendar
month in which the termination of such Employee Stockholder's
employment occurs, multiplied by (B) a fraction, the numerator
of which is the number of Partnership Points being purchased
in the Repurchase, and the denominator of which is the number
of Partnership Points outstanding on the date of the closing
of the Repurchase (before giving effect to any issuances or
redemptions of Partnership Points on such date);
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;provided, however, that in the case of a Retirement, if,
within the twelve (12) months preceding the effective date of
such Employee Stockholder's Retirement, (x) two (2) other
Employee Stockholders have terminated their employment by
Retirement, or (y) one (1) other Employee Stockholder has
terminated his employment by Retirement and the Limited
Partner owned by that Employee Stockholder (or such Limited
Partner in the case of a Limited Partner which is an
individual) held at the time of such Retirement, and the
Limited Partner owned by that Employee Stockholder (or such
Limited Partner in the case of a Limited Partner which is an
individual) who is terminating his employment by Retirement
holds, a number of Vested Partnership Points as is equal to or
greater than the Median Number of Limited Partners' Vested
Partnership Points at the time any Employee Stockholder
terminated his or her employment by Retirement during such
twelve (12) month period, then the Repurchase Price for the
Partnership Points of the Limited Partner owned by that
Employee Stockholder (or such Limited Partner in the case of a
Limited Partner which is an individual) who is terminating his
employment by Retirement shall be determined pursuant to
paragraph (ii) below. For purposes of this Section 3.9(c)(i),
the term Median Number of Limited Partners' Vested Partnership
Points shall mean that number of Vested Partnership Points as
is equal to the median number of Vested Partnership Points
then held by the Limited Partners (e.g., if there are five
Limited Partners with 5, 2, 2, 2 and 1 Vested Partnership
Points, the "median number" of Vested Partnership Points is 2
for all purposes hereof).
(ii) In all other cases, (including, without
limitation, the resignation of an Employee Stockholder or the
termination of such Employee Stockholder For Cause) then the
Repurchase Price shall equal (A) three (3) times fifty percent
(50%) of the Partnership's Free Cash Flow for the twenty-four
(24) months ending on the last day of the calendar month in
which the termination of such Employee Stockholder's
employment occurs, multiplied by (B) a fraction, the numerator
of which is the number of Partnership Points being purchased
in the Repurchase, and the denominator of which is the number
of Partnership Points outstanding as of the date of the
closing of the Repurchase (before giving effect to any
issuances or redemptions of Partnership Points on such date);
provided, however, that for any such Repurchase within the
first five (5) years after the Effective Date, the Repurchase
Price shall equal the Capital Account which the Repurchased
Partner would have if the Partnership had sold all its assets
for a price equal to three (3) times fifty percent (50%) of
the Partnership's Free Cash Flow for the twenty-four (24)
months ending on the last day of the calendar month which is
two (2) calendar months prior to the date of the closing of
such Repurchase, and the gain or loss therefrom allocated in
accordance with Section 4.2(d) hereof.
If a Repurchase Price must be determined prior to twenty-four (24)
months after the Effective Date, then the amount of the Partnership's Free Cash
Flow for the portion of the
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relevant twenty-four (24) month period before the Effective Date shall be
calculated on a pro-forma basis such that the Free Cash Flow of the Partnership
shall be deemed to be equal to xxxxx percent (30%) of the Revenues From
Operations of the General Partner attributable to the assets transferred to the
Partnership pursuant to the Asset Transfer.
Notwithstanding anything else set forth herein to the contrary, if a
Limited Partner fails to comply with the provisions of Section 3.9(j) hereof,
AMG: (i) shall have no obligation to Repurchase Partnership Points from such
Limited Partner, and (ii) may, at any time, Repurchase Partnership Points from
such Limited Partner for a Repurchase Price equal to the lesser of (x) the
amount determined under Section 3.9(c)(ii) or (y) the Capital Account of such
Repurchased Partner.
(d) The rights of AMG, the General Partner, the Partnership
and their assignees hereunder are in addition to and shall not affect any other
rights which the Partnership or its assigns may otherwise have to repurchase
Partnership Interests (including, without limitation, pursuant to any agreement
entered into by an Additional Limited Partner which provides for the vesting of
Partnership Points).
(e) On the Repurchase Closing Date, AMG or the Partnership
shall pay to the Repurchased Partner the Repurchase Price for the Partnership
Interests repurchased in the manner set forth in this Section 3.9, and upon such
payment the Repurchased Partner shall cease to hold any Partnership Interests
repurchased, and such Repurchased Partner shall be deemed to have withdrawn from
the Partnership and shall cease to be a Partner of the Partnership and shall no
longer have any rights hereunder; provided, however, that the provisions of this
Article III shall continue as set forth in Section 3.11 below. On the Repurchase
Closing Date, the Repurchased Partner, the Partnership and AMG shall execute an
agreement reasonably acceptable to the General Partner in which the Repurchased
Partner represents and warrants that it has sole record and beneficial title to
the Repurchased Interest to AMG (or its assignee), free and clear of any
Encumbrances. Payment of the Repurchase Price shall be made on the Repurchase
Closing Date as follows: (a) in the case of termination of employment because of
death (to the extent of the collected proceeds of any key-man life insurance
policies maintained by the Partnership on the life of such Employee
Stockholder), by wire-transfer of immediately available funds to an account
designated by the Repurchased Partner at least three (3) business days prior to
the Repurchase Closing Date, and (b) in the case of any other termination of
employment (and including a termination of employment because of death to the
extent the obligation exceeds the proceeds of any key-man life insurance
policies) with a promissory note in the form attached hereto as Exhibit D, the
principal of which promissory note would be paid in four (4) equal (except as
contemplated by this Section 3.9(e) or Section 3.9(f)) installments, the first
installment would be paid (A) in the case of a termination because of death or a
termination by the Partnership or First Quadrant Limited other than For Cause,
on the Repurchase Date and (B) in the case of any other termination, on the
later to occur of (x) the Repurchase Date or (y) the date which is the first
business day after the fifth anniversary of the Effective Date, and the second,
third and fourth installments would be paid fourteen (14) months, twenty-six
(26) months and thirty-eight (38) months, respectively, after such date.
Notwithstanding the foregoing, if the Repurchased
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Partner is also a Defaulting Partner (as such term is defined in Section 4.1(g)
hereof), then any payments to the Repurchased Partner shall be reduced as
follows: (A) in the case of termination of employment because of death, the
amount of any payment to be made by the Partnership to the Repurchased Partner
shall be reduced by the amount which the Repurchased Partner owes as a
Defaulting Partner pursuant to Section 4.1(g), including interest thereon (in
the manner provided by Section 4.1(g)) through the Repurchase Date and (B) in
the case of any other termination of employment (including a termination of
employment because of death to the extent the obligation exceeds the proceeds of
any key-man life insurance policies): (x) to the extent the Partnership was
assigned the obligation to purchase Partnership Interests, any payment to be
made by the Partnership to the Repurchased Partner shall be reduced by the
amount which the Repurchased Partner owes as a Defaulting Partner pursuant to
Section 4.1(g), including interest thereon (in the manner provided by Section
4.1(g)) through the Repurchase Date; and (y) to the extent the obligations are
obligations of AMG or the General Partner, the payments to be made to the
Repurchased Partner shall be reduced by the amount which the Repurchased Partner
owes as a Defaulting Partner pursuant to Section 4.1(g) including interest
thereon (in the manner provided by Section 4.1(g)) through the Repurchase Date,
with such reduction being applied to the payments of principal or installments
provided by this Section 3.9(e) in the order in which the obligations to make
payments arise (i.e., such reduction shall be applied to the first payment of
principal or installment and, if such reduction exceeds the amount of the first
payment of principal or installment, it shall then be applied to the second
payment of principal or installment), and such payments shall be made, instead,
to the Partnership at the times called for by this Section 3.9(e), and
appropriate modifications shall be made to the promissory note (if any) to be
issued to the Repurchased Partner.
(f) If an Employee Stockholder's employment with the
Partnership or First Quadrant Limited is terminated because of the Retirement of
such Employee Stockholder prior to March 28, 2011, then the amounts of the
second, third and fourth installments of the promissory note set forth in
Section 3.9(e) above shall equal the lesser of (i) twenty-five percent (25%) of
the Repurchase Price (determined as set forth in Section 3.9(c) hereof) on the
Repurchase Closing Date, or (ii) twenty-five percent (25%) of the Repurchase
Price, determined as if the Repurchase Closing Date were taking place on the
second, third or fourth anniversary of the Repurchase Closing Date, respectively
(in each case, together with interest computed on the principal amount of such
promissory note (determined as set forth in this Section 3.9(f)) from the date
of issuance of such promissory note through the date of payment of such
installment as set forth on Exhibit D). At least forty-five (45) days prior to
the date an installment to which this Section 3.9(f) applies would be paid, the
General Partner shall cause the Partnership to certify to the Repurchased
Partner who is to receive such installment, in writing, a calculation setting
forth the amount of such installment based on clauses (i) and (ii) in the
preceding sentence. Each Repurchased Partner to whom this Section 3.9(f)
applies, may defer receipt of an installment on one (1) occasion, by written
notice received by the Partnership and the General Partner not less than fifteen
(15) days prior to the date an installment is due to be paid. If a Repurchased
Partner defers an installment, the due date of each remaining installment of the
promissory note issued to such Repurchased Partner pursuant to Section 3.9(e)
above shall be extended by twelve (12) months.
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(g) If AMG should fail to pay an installment on a promissory
note issued to a Repurchased Partner under paragraph (e) above, within thirty
(30) business days after the date such payment is due, then the Repurchased
Partner may, after complying with the provisions of the second paragraph of this
Section 3.9(g), repurchase the Subject Partnership Points by forgiving any
remaining installments on the promissory note issued pursuant to Section 3.9(e)
above and returning such promissory note to AMG marked "canceled and paid in
full." For purposes of this Section 3.9(g), the term "Subject Partnership
Points" shall mean in the case of any failure by AMG to pay an installment on a
promissory note: (i) if only the first installment in connection with such
Repurchase has been paid, seventy-five percent (75%) of the Partnership Points
purchased from the Repurchased Partner in the Repurchase, (ii) if the first and
second installments in connection with such Repurchase have been paid, fifty
percent (50%) of the Partnership Points purchased from the Repurchased Partner
in the Repurchase, and (iii) if the first three installments in connection with
such Repurchase have been paid, twenty-five percent (25%) of the Partnership
Points purchased from the Repurchased Partner in the Repurchase.
In order to exercise its rights under this Section 3.9(g), a
Repurchased Partner shall be required to give not less than fifteen (15) days
prior written notice to AMG and, if such Repurchased Partner is aware that AMG
has pledged its interest in the Partnership, to the beneficiary of such pledge.
Notwithstanding the foregoing, if AMG has pledged its interest in the
Partnership, the beneficiary of such pledge may either (x) fulfill AMG's
obligation (or cause AMG to fulfill its obligation) to pay the installment on a
promissory note which gave rise to such Repurchased Partner becoming entitled to
exercise its rights under this Section 3.9(g), whereupon such failure shall be
deemed to have been cured and such Repurchased Partner shall no longer be
entitled to exercise its rights under this Section 3.9(g) unless and until AMG
shall fail to pay another installment on a promissory note held by such
Repurchased Partner whereupon this Section 3.9(g) shall only apply with respect
to such later failure, or (y) pay all remaining amounts due to such Repurchased
Partner under such promissory note, whereupon such Repurchased Partner shall
return the promissory note marked "canceled and paid in full" and shall have no
further rights hereunder.
If a Repurchased Partner has exercised its rights under this Section
3.9(g) and repurchased any Subject Partnership Points, either AMG or the
Partnership may, at their respective options and at any time, repurchase or
redeem (as applicable) such Subject Partnership Points for a payment, in cash,
equal to the installments which were outstanding under the promissory note
issued under Section 3.9(e) and upon which AMG defaulted, at the time of such
default.
(h) AMG may, with a Majority Vote (excluding, for purposes of
determining such Majority Vote, the Limited Partner whose interest is being
repurchased), assign any or all of its rights and obligations under this Section
3.9, in one or more instances, to the General Partner or the Partnership;
provided, that the foregoing limitation shall have no effect on the
Partnership's obligation set forth in Section 3.9(a)(i) regarding the use of the
proceeds of a key-man life or disability insurance policy.
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(i) In the event that a Limited Partner or Employee
Stockholder has filed a petition under the United States Bankruptcy Code, or
sixty (60) days after the filing by another person against such Limited Partner
or Employee Stockholder of a petition under the United States Bankruptcy Code
which petition is not dismissed, or if such Limited Partner has ceased to carry
on a business because of a voluntary liquidation (such date of filing, sixtieth
day or effective date of liquidation, the "Bankruptcy Event"), the General
Partner shall purchase all the Partnership Interests held by such Limited
Partner (including the Limited Partner through which such Employee Stockholder
holds his or her interest in the Partnership) pursuant to the terms of this
Section 3.9 as if such Limited Partner was a Repurchased Partner with the
purchase price determined pursuant to Section 3.9(c)(ii) and the date of the
closing to be determined by the General Partner in its sole discretion.
(j) In the event that the employment by the Partnership or
First Quadrant Limited of any Employee Stockholder which is not a Limited
Partner terminates for any reason other than the death of such Employee
Stockholder, then the Limited Partner of which such Person is the Employee
Stockholder (the "Distributing Partner") shall, at the request of the General
Partner (in a writing making reference to this paragraph (j) and Section 5.1(f)
hereof), distribute up to twenty-five percent (25%) of the Partnership Points
held by such Limited Partner to the stockholder of such Limited Partner after
such Limited Partner and each such stockholder has complied with the provisions
of Section 5.1 hereof, whereupon each such stockholder shall become a
Repurchased Partner for purposes of this Section 3.9, and all the interests of
such Repurchased Partners shall be Repurchased on the same Repurchase Closing
Date determined in accordance with Section 3.9(b) and upon such payment each
such Repurchased Partner shall cease to hold any Partnership Interests, each
such Repurchased Partner shall be deemed to have withdrawn from the Partnership,
shall cease to be a Partner of the Partnership, and shall no longer have any
rights hereunder. In connection with the Repurchase from each such Repurchased
Partner, such Repurchased Partner shall execute a xxxx of sale in form and
substance reasonably satisfactory to AMG. In connection with any Repurchase
pursuant to this Section 3.9(j), and notwithstanding the provisions of Section
3.9(e) to the contrary, the payment of the Repurchase Price to the stockholder
and the Distributing Partner shall be made as follows: the payment of the
Repurchase Price to the stockholder shall be made entirely in cash on the
Repurchase Date, the first installment of the promissory note to be issued to
the Limited Partner of which such Person is a stockholder shall be reduced by
the amount of such cash payment, and the dollar amount of such reduction shall
be added one-third (1/3) to each of the second, third and fourth installments of
the promissory note to be issued to the Limited Partner of which such Person is
or was a stockholder.
SECTION 3.10 NO EMPLOYMENT OBLIGATION. Each Limited Partner and each
Employee Stockholder acknowledges that neither this Agreement nor the provisions
of the Non Solicitation Agreement creates an obligation on the part of the
Partnership or First Quadrant Limited to continue the employment of an Employee
Stockholder with the Partnership or First Quadrant Limited.
SECTION 3.11 MISCELLANEOUS. Each Limited Partner and each Employee
Stockholder agrees that the enforcement of the provisions of Sections 3.6, 3.7,
3.8, 3.9, and 3.10 and the
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provisions of the Non Solicitation Agreements are necessary to ensure the
protection and continuity of the business, goodwill and confidential business
information of the Partnership and First Quadrant Limited for the benefit of
each of the Partners. Each Limited Partner and each Employee Stockholder agrees
that, due to the proprietary nature of the Partnership's business and the
businesses of First Quadrant Limited, the restrictions set forth in Section 3.7
hereof and in the Non Solicitation Agreements are reasonable as to duration and
scope. Each Limited Partner and Employee Stockholder acknowledges that the
obligations and rights under Sections 3.6, 3.7, 3.8, 3.9 and 3.11 shall survive
the termination of the employment of an Employee Stockholder with the
Partnership and First Quadrant Limited and/or the withdrawal or removal of a
Limited Partner from the Partnership, regardless of the manner of such
termination in accordance with the provisions hereof and of the relevant Non
Solicitation Agreement. Moreover, each Partner agrees that the remedies provided
herein, including the waiver of a right to receive certain payments hereunder,
is reasonably related to the anticipated loss that the Partnership and the
Partners (including, without limitation, the General Partner or AMG which would
be purchasing Partnership Interests from the Limited Partners) would suffer upon
a breach of such provisions. Each Partner confirms his understanding and
agreement that the provisions of Sections 3.6, 3.7, 3.8, 3.9 and 3.11 have been
adopted in conformance with Section 16602 of the California Business and
Professional Code. Except as agreed to by the General Partner, in writing, no
Employee Stockholder or Limited Partner shall enter into any agreement or
arrangement which is inconsistent with the terms and provisions hereof.
SECTION 3.12 EXCULPATION; INDEMNIFICATION.
(a) No Partner nor any of their officers, directors,
employees, stockholders or Affiliates, nor any of the Officers (each herein
referred to as an "Indemnified Party") shall have any liability to the
Partnership or to any Partner for any loss suffered by the Partnership (a
"Partnership Loss") which arises out of any action or inaction of such
Indemnified Party in its capacity as any of the foregoing; provided, however,
that such course of conduct did not constitute fraud, gross negligence, willful
misconduct or a material breach of this Agreement, the Stock Purchase Agreement
or, in the case of each Employee Stockholder, the Non Solicitation Agreement of
such Employee Stockholder or the breach of any of the foregoing by the Limited
Partner of which he or she is an Employee Stockholder. Each such Indemnified
Party shall be indemnified to the fullest extent permitted by law by the
Partnership against any losses, judgments, liabilities, expenses and amounts
paid in settlement of any claims sustained by any of them in their capacity as
an Indemnified Party in connection with the business or operations of the
Partnership, or the exercise and performance of any Partner's or Officer's
powers or duties in accordance with the terms of this Agreement; provided the
same was not the result of fraud, gross negligence, willful misconduct, or a
material breach of this Agreement, the Stock Purchase Agreement or, in the case
of each Employee Stockholder, the Non Solicitation Agreement of such Employee
Stockholder or the breach of any of the foregoing by the Limited Partner of
which he or she is an Employee Stockholder. The indemnification authorized by
this Section 3.12 shall include the payment of reasonable attorneys' fees and
other reasonable expenses incurred in settling or defending any claims,
threatened actions or finally adjudicated legal proceedings. Prior to any final
disposition of
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any claim or proceeding with respect to which an Indemnified Party may be
entitled to indemnification hereunder, the Partnership shall pay to such
Indemnified Party, as the case may be, in advance of such final disposition, an
amount equal to all reasonable out-of-pocket expenses of said Indemnified Party
as incurred in defense of said claim or proceeding; provided that such advance
payments shall be made only upon the Partnership's receipt of a written
undertaking of said Indemnified Party to repay the Partnership the amount so
advanced if it shall be finally determined that said Indemnified Party was not
entitled to indemnification hereunder.
(b) The right of indemnification hereby provided shall not be
exclusive of, and shall not affect, any other rights to which an Indemnified
Party may be entitled. Nothing contained in this Section 3.12 shall limit any
lawful rights to indemnification existing independently of this Section 3.12.
(c) The indemnification rights provided by this Section 3.12
shall also inure to the benefit of the heirs, executors, administrators,
successors and assigns of an Indemnified Party and any officers, directors,
partners, shareholders, employees and Affiliates of such Indemnified Party (and
any former officer, director, partner, shareholder or employee of such
Indemnified Party, if the Partnership Loss was incurred while such person was an
officer, director, partner, shareholder or employee of such Indemnified Party).
The General Partner may extend the indemnification called for by Section 3.12(a)
to non-employee agents of the Partnership, the General Partner or its
Affiliates.
ARTICLE IV - CAPITAL CONTRIBUTIONS; DISTRIBUTIONS;
CAPITAL ACCOUNTS AND ALLOCATIONS
SECTION 4.1 CAPITAL CONTRIBUTIONS.
(a) Prior to the effectiveness of this Agreement, the General
Partner contributed to the Partnership certain of its assets, properties,
rights, powers, privileges and business, and the Partners agree that such
Capital Contribution has a value of $**confidential treatment requested**.
Except as may be agreed to in connection with the issuance of additional
Partnership Points, as specifically set forth herein, and as may be required
under applicable law, the Partners shall not be required to make any further
contributions to the Partnership. No Partner shall make any contribution to the
Partnership without the prior consent of the General Partner.
(b) No Partner shall have the right to withdraw any part of
the capital it (or its predecessors in interest) contributed to the Partnership
until the termination, dissolution and winding up of all the Partnership, except
as distributions pursuant to this Article IV may represent returns of capital,
in whole or in part; provided, however, to the extent of any payment made by the
General Partner or any Affiliate thereof other than the Partnership pursuant to
Section 2.2(d) of the Stock Purchase Agreement, the General Partner may withdraw
capital it has contributed to the Partnership. No Partner shall be entitled to
receive
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any interest on any Capital Contribution made by it (or its predecessors in
interest) to the Partnership.
(c) If, at any time, the General Partner determines that the
Partnership requires additional capital, the General Partner may cause the
Partnership to make a "Funds Call;" provided, however, that the Partnership
shall make no Funds Call without a Majority Vote at any time when the aggregate
amount of Funds Calls funded by the General Partner (and, if it is then a
Limited Partner, AMG) exceeds $1,000,000 (net of any principal repayments of the
loans made in Loan Calls (as hereinafter defined)). A call made pursuant to this
Section 4.1(c) may, in the General Partner's sole discretion, be either a
requirement that each of the Partners contributes additional capital to the
Partnership (a "Capital Call") or a requirement that each of the Partners loan
funds to the Partnership (a "Loan Call"). Any Capital Call or Loan Call must be
made to all Partners pro-rata in proportion to the number of Partnership Points
held by such Partners (provided, however, that for purposes of this Section 4.1,
all the Partnership Points in the Executive Retention Reserve shall be deemed to
be outstanding Partnership Points held by the Chief Executive Officer or, if he
or she is not a Limited Partner but holds his or her interest in the Partnership
through a Limited Partner, by such Limited Partner); provided, however, that the
aggregate maximum amount of Capital Calls and Loan Calls funded by the General
Partner (and if it is then a Limited Partner, AMG) shall not exceed $1,000,000
(net of any principal repayments of the loans made in Loan Calls). If the
aggregate amount of Capital Calls and Loan Calls funded by the General Partner
(and if it is then a Limited Partner, AMG) equals $1,000,000 (net of any
principal repayments of the loans made in Loan Calls), then any additional
Capital Calls and Loan Calls shall be made pro-rata among all Partners other
than the General Partner (and if it is then a Limited Partner, AMG).
(d) The General Partner shall cause the Partnership to deliver
notices setting forth the type of Funds Call ("Call Notices") to the General
Partner and Limited Partners in accordance with Section 10.1 below not less than
twenty (20) days in advance of the date on which the General Partner determines
the payment in response to such notice is due (the "Due Date"). All Capital
Calls and Loan Calls shall be paid on their Due Date.
(e) All payments of the Partners hereunder in respect of a
Capital Call or a Loan Call shall be made to the Partnership by transfer by wire
or otherwise of federal funds or other immediately available funds (or by such
other means as the Partnership may designate) by such time as the Partnership
shall designate in the applicable Call Notice on the relevant Due Date to the
Receipts Account (as hereinafter defined). If the Funds Call is a Loan Call, the
Partnership shall issue, upon receipt of funds, a promissory note to each such
Partner in an original principal amount equal to the amount paid by such
Partner, with such promissory note to be in the form attached hereto as Exhibit
E.
(f) Each Call Notice shall specify:
(i) the scheduled Due Date;
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(ii) the aggregate amount of payments to be made
on the Due Date by all Partners;
(iii) the required payment to be made by the
Partner to which the Call Notice is delivered;
(iv) the account to which such payment shall be
paid; and
(v) whether such call is a Loan Call or a
Capital Call (provided, however, that the General Partner may
cause the Partnership to change a Loan Call to a Capital Call
and a Capital Call to a Loan Call, with one (1) days prior
written notice to the Partners; provided, further, that the
General Partner may not cause the Partnership to change a Loan
Call to a Capital Call or a Capital Call to a Loan Call
without a Majority Vote at any time when the aggregate amount
of Capital Calls and Loan Calls funded by the General Partner
(and if it is then a Limited Partner, AMG) exceeds $1,000,000
(net of any principal payments of the loans made in Loan
Calls)), and a description of the use of proceeds of such
Funds Call.
(g) If a Partner fails to fund a Loan Call or a Capital
Call as required under this Section 4.1 on the Due Date then the Partnership
shall notify such Partner of such failure within two (2) days after such payment
is due (which notice may be by telephone followed by confirmation by telecopy
(receipt confirmed), overnight carrier or registered or certified mail),
provided that the failure to give such notice shall not affect in any way the
liability of such Partner to make such payment or subject the Partnership or the
General Partner to any liability hereunder or otherwise. A Partner which fails
to make such payment prior to the expiration of seven (7) days after such notice
(the "Date of Default") shall be a "Defaulting Partner," and the following
provisions (the "Default Provisions") shall apply: The obligation of a
Defaulting Partner shall bear interest at the rate of twenty percent (20%) per
annum, which interest shall compound quarterly and bear interest at the rate of
twenty percent (20%) per annum. Any distributions or other payments by the
Partnership to which the Defaulting Partner would otherwise be entitled pursuant
to the provisions of Section 4.3 hereof or otherwise (including, without
limitation, pursuant to Sections 4.4 and 4.5 hereof) shall be forfeited by such
Limited Partner to the extent of the debt of such Defaulting Partner and applied
by the Partnership to the debt of the Defaulting Partner hereunder but for all
purposes of this Partnership Agreement other than this Section 4.1 and Section
4.3, shall be treated as having been distributed to the Defaulting Partner. In
addition, any discretionary bonus or other discretionary payment (as opposed to
regular salary) to which the Employee Stockholder of such Defaulting Partner
would otherwise be entitled pursuant to the provisions of Section 3.3(b) or
otherwise, shall be forfeited by such Employee Stockholder to the extent of the
debt of such Defaulting Partner and applied by the Partnership to the debt of
the Defaulting Partner hereunder.
Any Defaulting Partner shall also pay, on demand, all costs, including
court costs and reasonable attorneys' fees, paid or incurred by the Partnership
in collecting a Funds Call from a Defaulting Partner. If the Defaulting Partner
fails to make such payments immediately after
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the demand for payment thereof, then the Default Provisions set forth above
shall apply to such amounts.
The provisions of this Section 4.1(g) are hereby expressly limited so
that in no contingency or event whatsoever shall the amount paid or agreed to be
paid to the Partnership exceed the maximum amount of interest permitted by law,
and in the event any interest hereunder were to exceed the maximum amount of
interest permitted by law, such excess interest shall be deemed a mistake and
shall either be reduced immediately and automatically to the maximum amount
permitted by law or, if required to comply with applicable law, be canceled
automatically and, if theretofore paid, be credited on the principal amount of
the obligation of the Defaulting Partner under the Funds Calls outstanding and,
to the extent such a credit is insufficient, be refunded.
SECTION 4.2 CAPITAL ACCOUNTS; ALLOCATIONS.
(a) Capital Accounts. There shall be established for each
Partner a Capital Account (a "Capital Account") which, in the case of the
General Partner, shall be in the amount set forth in Section 4.1(a) above, and
in the case of each other Partner, shall initially be equal to the Capital
Contribution of such Partner as set forth on Schedule A hereto.
(b) Adjustments to Capital Accounts. The Capital Account of
each Partner shall be adjusted in the following manner. Each Capital Account
shall be increased by such Partner's allocable share of income and gain, if any,
of the Partnership (as well as the Capital Contributions made by a Partner after
the Effective Date) and shall be decreased by such Partner's allocable share of
deductions and losses, if any, of the Partnership and by the amount of all
distributions made to such Partner. The amount of any distribution of assets
other than cash shall be deemed to be the Fair Market Value of such assets (net
of any liabilities encumbering such property that the distributee Partner is
considered to assume or take subject to). Capital Accounts shall also be
adjusted upon the issuance of additional Partnership Interests as set forth in
Section 5.6(c) and upon the redemption of Partnership Interests.
(c) Allocation of Income and Loss. Subject to Sections 4.2(d)
and 4.2(e) and Sections 4.4 and 4.5 hereof, all items of Partnership income,
deduction, gain and loss shall be allocated among the Partners' Capital
Accounts at the end of every month as follows:
(i) first, items of income and gain shall be
allocated to the General Partner in an amount equal to the
Free Cash Flow (net of Free Cash Flow Expenditures) for such
month multiplied by a fraction, (x) the numerator of which is
the sum of the number of Partnership Points held by the
General Partner on the first day of such month (including the
number of Partnership Points in the Incentive Reserve and
Executive Retention Reserve on the first day of such month)
and (y) the denominator of which is the sum of the number of
Partnership Points outstanding on the first day of such month;
(ii) second, items of income and gain (if any) shall
be allocated to the General Partner until the cumulative
allocations to the General Partner for such month and prior
periods after the Effective Date pursuant to this Section
4.2(c)(ii) equal the General Partner Preference Amount and
after which no further allocations of income and gain shall be
allocated to the General Partner under this Section 4.2
(c)(ii).
(iii) third, items of income and gain (if any) shall
be allocated among all Limited Partners in accordance with
(and in proportion to) each Limited Partner's respective
number of Partnership Points on the first day of such month,
until the aggregate amount of such items allocated to the
Partners pursuant to Section 4.2(c)(i), Section 4.2(c)(ii) and
this Section 4.2(c)(iii) for such month equals the aggregate
amount of the Free Cash Flow (net of Free Cash Flow
Expenditures) for such month; and
(iv) fourth, all remaining items of Partnership
income and gain and all items of deduction and loss (after
giving effect to the allocations under Sections 4.2(c)(i),
4.2(c)(ii) and 4.2(c)(iii) hereof) for such month shall be
allocated among the Limited Partners in accordance with (and
in proportion to) each Limited Partner's respective number of
Partnership Points on the first day of such month.
(d) Sale of Assets. All items of Partnership gain or loss from
any sale, exchange or other disposition of all, or a substantial portion of, the
assets of the Partnership shall be allocated among all Partners in accordance
with (and in proportion to) their respective number of Partnership Points as of
the date of such transaction.
(e) Interim Closings. In the event that during any calendar
month (or any fiscal year) there is any change of Partners or Partnership Points
(whether as a result of the admission of an Additional Limited Partner, the
redemption by the Partnership of all (or any portion of) any Limited Partner's
Partnership Points, a transfer of any Partnership Points or otherwise), the
following shall apply: (i) such transfer shall be deemed to have occurred as of
the close of business on the last day of the month in which such change
occurred, (ii) the books
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of account of the Partnership shall be closed effective as of the close of
business on the effective date of any such change as set forth in clause (i) and
such fiscal year shall thereupon be divided into two or more portions, (iii)
each item of income gain, loss, deduction shall be determined (on the closing of
the books basis) for the portion of such fiscal year ending with the date on
which the books of account of the Partnership are so closed, and (iv) each such
item for such portion of such fiscal year shall be allocated (pursuant to the
provisions of Section 4.2(c) hereof) to those persons who were Partners during
such portion of such fiscal year in accordance with their respective Partnership
Points during such period.
SECTION 4.3 DISTRIBUTIONS.
(a) Subject to Section 4.4 hereof, from and after the date
hereof, within thirty (30) days after the end of each calendar quarter, the
General Partner shall, to the extent cash is available therefor, and based on
the unaudited financial statements for such calendar quarter prepared in
accordance with Section 9.3 hereof (after approval thereof by the General
Partner), cause the Partnership to (i) distribute to the General Partner an
amount equal to the portion of the Free Cash Flow allocated to the General
Partner pursuant to Section 4.2(c)(i) or Section 4.2(c)(ii) for such calendar
quarter and of any previous quarter to the extent not then distributed (less the
General Partner's pro-rata portion of any reservation from Free Cash Flow
pursuant to the last sentence of this Section 4.3(a)), and then (ii) distribute
to the Limited Partners (and each Person who was a Limited Partner for any
calendar month of the previous calendar quarter) an amount equal to the portion
of the Free Cash Flow allocated to such Limited Partners (and each Person who
was a Limited Partner for any calendar month of the previous calendar quarter)
pursuant to Section 4.2(c)(iii) for such calendar quarter and any previous
calendar quarter to the extent not then distributed (less each such Person's
pro-rata portion of any reservation from Free Cash Flow pursuant to the last
sentence of this Section 4.3(a)), in accordance with (and in proportion to)
their respective number of Partnership Points for such preceding calendar
quarter, in each case, if and to the extent each such Partner (and each Person
who was a Limited Partner for any calendar month of the previous calendar
quarter) has a positive balance in its Capital Account. After the end of each
fiscal year of the Partnership, the General Partner shall, based on the audited
financial statements prepared in accordance with Section 9.3 hereof, cause the
Partnership to make a distribution of the remaining Free Cash Flow, if any, for
the preceding fiscal year which was allocated pursuant to Sections 4.2(c)(i),
4.2(c)(ii) and 4.2(c)(iii) but not previously distributed, in accordance with
the foregoing clauses (i), (ii) and (iii) whenever, and to the extent, cash is
available therefor. The General Partner may, from time to time, reserve and not
distribute portions of Free Cash Flow for Partnership purposes; including,
without limitation, to increase the net worth of the Partnership, to make
capital expenditures or to create a reserve for anticipated repurchases of
Partnership Interests. Any such reservation would be made from all Partners
pro-rata in proportion to Partnership Points, and in no event would it exceed
fifty percent (50%) of the Free Cash Flow distributable to the Partners for such
period. Such funds shall be maintained in the Receipts Account (as defined
below) pending expenditure thereof. In the event any such reservation is made,
the Repurchase Price for purposes of Section 3.9 hereof shall be increased by an
amount equal to the increase in such Repurchased Partner's Capital Account
resulting from such reserve, but only to the extent of such Repurchased
Partner's pro-rata share (measured by multiplying such reserves by a fraction,
the numerator of which is the number of Partnership Points being purchased and
the denominator of which is the number of Partnership Points outstanding at such
time before giving effect to any issuances or redemptions on such date) of the
reserves held in the Receipts Account at the time such Repurchase Price is
required to be paid to the Repurchased Partner.
(b) To give effect to the foregoing, the Partnership shall
have two (2) bank accounts. The first account (the "Receipts Account") shall
have as its authorized signatures such representatives of the General Partner as
the General Partner shall deem appropriate or desirable. All the Partnership's
receipts shall be paid into the Receipts Account; provided, however, that on a
weekly basis, the General Partner shall forward the revenues of the Partnership
with respect to the accruals for a given month from this account to the second
account (described below) until the revenues so forwarded equal the Operating
Cash Flow of the Partnership for such month (and previous months to the extent
not so forwarded or used to pay expenses of the Partnership which are other than
Free Cash Flow Expenditures) and, thereafter, revenues with respect to that
month shall be retained in the Receipts Account pending distribution or such
other use thereof as may be permitted under this Agreement. The General Partner
shall use the Receipts Account to make all distributions of Free Cash Flow
pursuant to Section 4.3(a) above and, to fund all Free Cash Flow Expenditures.
The General Partner shall, however, not forward but shall retain in the Receipts
Account the amount which gives rise to the right to make distributions pursuant
to Section 4.3(c) hereof (including, without limitation, resulting from sales of
assets, insurance proceeds and the issuance of additional partnership
interests). The second account shall have as its authorized signatures such
Officers of the Partnership as may be agreed by a Majority Vote, and one (1)
designee of the General Partner. This second account shall be used by the
Officers to make all operating expense payments (including payments of salaries
and bonuses) out of Operating Cash Flow.
Within thirty (30) days after the end of each calendar month, based on
the unaudited financial statements for such calendar month prepared in
accordance with Section 9.3 hereof, and within ninety-five (95) days after the
end of each fiscal year of the Partnership, based on the audited financial
statements prepared in accordance with Section 9.3 hereof, the General Partner
shall cause such transfers between the accounts to be made as may be necessary
to reconcile the accounts with the amounts of revenue designated as Operating
Cash Flow and Free Cash Flow.
(c) Except as otherwise set forth herein, all other amounts or
proceeds available for distribution, if any, shall (except as otherwise provided
for herein) be distributed to the Partners at such time as may be determined by
the General Partner; provided that any such distribution shall be made among the
Partners (i) pro-rata to Partners which have made Capital Contributions pursuant
to Capital Calls, in proportion to the unreturned Capital Contributions of such
Partners made pursuant to such Capital Calls, (ii) then in accordance with the
positive balances (if any) in their respective Capital Accounts (as determined
immediately prior to such distribution) until all such positive Capital Account
balances have been reduced to zero, and (iii) thereafter among all Partners in
accordance with their respective number of Partnership Points at the time of
such distribution (provided, however, that if a Partner makes a Capital
Contribution other than pursuant to a Capital Call after the Effective Date, the
General Partner may cause the Partnership to make a priority return of such
Capital Contribution).
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SECTION 4.4 DISTRIBUTIONS UPON LIQUIDATION; ESTABLISHMENT OF A RESERVE
UPON LIQUIDATION. Upon the liquidation of the Partnership, after payment (or the
making of reasonable provision for the payment) of all liabilities of the
Partnership owing to creditors, the General Partner (or liquidator) shall set up
such reserves as it deems reasonably necessary for any contingent, conditional
or unmatured liabilities or other obligations of the Partnership. Such reserves
may be paid over by the General Partner (or liquidator) to a bank (or other
third party), to be held in escrow for the purpose of paying any such
contingent, conditional or unmatured liabilities or other obligations. At the
expiration of such period(s) as the General Partner (or liquidator) may deem
advisable, such reserves, if any (and any other assets available for
distribution), or a portion thereof, shall be distributed to the Partners in
accordance with their respective Capital Accounts. If any assets of the
Partnership are to be distributed in kind in connection with such liquidation,
such assets shall be distributed on the basis of their Fair Market Value net of
any liabilities encumbering such assets and, to the greatest extent possible,
shall be distributed pro-rata in accordance with the total amounts to be
distributed to each Partner. Immediately prior to the effectiveness of any such
distribution-in-kind, each item of gain and loss that would have been recognized
by the Partnership had the property being distributed been sold at Fair Market
Value shall be determined and allocated to those persons who were Partners
immediately prior to the effectiveness of such distribution in accordance with
Section 4.2(d).
SECTION 4.5 PROCEEDS FROM THE SALE OF SECURITIES; INSURANCE PROCEEDS;
CERTAIN SPECIAL ALLOCATIONS.
(a) Capital Contributions made by any Partner after the
Effective Date (other than Capital Contributions made pursuant to Section 4.1(c)
hereof, which shall be used solely for the purpose or purposes set forth in the
Call Notice), and other proceeds from the issuance of securities by the
Partnership may, in the sole discretion of the General Partner, be used for the
benefit of the Partnership (including, without limitation, the repurchase or
redemption of Partnership Interests), or, may be distributed by the Partnership,
in which case, any such proceeds shall be allocated and distributed among the
Partners in accordance with their respective Partnership Points immediately
prior to the date of such contribution; it being understood that in the case the
proceeds are a note receivable, any such distribution shall occur upon receipt
by the Partnership of any cash in respect thereof.
(b) In the event of the death of an Employee Stockholder
covered by key-man life insurance, the proceeds of such policy shall first be
used by the Partnership to fund (to the extent thereof) the Repurchase of
Partnership Interests from the Employee Stockholder or Limited Partner through
which such Employee Stockholder held his or her interest in the Partnership in
accordance with Section 3.9 hereof and, if the proceeds exceed the amounts so
required to effect such Repurchase, then the amount of such excess proceeds may,
in the sole discretion of the General Partner, be used for the benefit of the
Partnership,
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or, may be distributed by the Partnership, in which case, any such proceeds
shall be allocated and distributed among the Partners in accordance with their
respective Partnership Points immediately following the Repurchase of the
Partnership Interests from such Limited Partner.
(c) Items of Tax Depreciation (as such term is defined below)
on account of the property of the Partnership on the Effective Date, shall be
specially allocated among the Partners in accordance with the positive balances
in their Capital Accounts on the Effective Date. All items of Tax Depreciation
on account of property purchased out of Operating Cash Flow shall be allocated
as set forth in Section 4.2(c)(iv) and all items of Tax Depreciation on account
of property purchased out of Free Cash Flow shall be allocated among the
Partners in accordance with their respective numbers of Partnership Points.
(d) The items of income, deduction, gain and loss allocable
pursuant to this Partnership Agreement shall generally be determined in
accordance with the Partnership's books of account; provided, however, that in
lieu of the depreciation, amortization, and other cost recovery deductions taken
into account in keeping the Partnership's books of account, there shall be taken
into account "Tax Depreciation" as defined below. "Tax Depreciation" means, for
any allocation period, an amount equal to the depreciation, amortization, and
other cost recovery deductions allowable for Federal income tax purposes with
respect to an asset or other capitalized amount for such allocation period
(regardless of whether such depreciation, amortization, or other cost recovery
deductions arise from the common tax basis of Partnership property or the tax
basis of Partnership property attributable to a particular Partner because of a
Code Section 754 election or otherwise); provided, however, that if the book
value of an asset differs from its adjusted tax basis at the beginning of such
allocation period, Tax Depreciation for that asset shall be an amount that bears
the same ratio to such beginning book value as the Federal income tax
depreciation, amortization, or other cost recovery deduction for that asset for
such allocation period bears to such beginning adjusted tax basis; provided,
further, however, that if the adjusted tax basis of an asset at the beginning of
such allocation period is zero, Tax Depreciation for that asset shall be
determined with reference to the appropriate Federal income tax recovery period.
(e) Items of deduction on account of payments made under the ICP shall
be specially allocated to the General Partner; provided, however, that if a
Limited Partner contributes capital pursuant to a Capital Call in order to fund
payments made under the ICP, items of deduction with respect to such payment
(i.e. payments made under the ICP funded by a Capital Call) shall be specially
allocated pro-rata among the General Partner and the Limited Partners who
contributed capital in such Capital Call, in proportion to such capital
contributions.
SECTION 4.6 FEDERAL TAX ALLOCATIONS. The General Partner shall allocate
the ordinary income and losses and capital gains and losses of the Partnership
as determined for U.S. Federal income tax purposes (and each item of income,
gain, loss, deduction or credit entering into the computation thereof), as the
case may be, among the Partners for tax purposes in a manner that, to the
greatest extent possible (i) reflects the economic arrangement of the Partners
under this Agreement (determined after taking into account the allocation
provisions
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of Sections 4.2, 4.4 and 4.5 hereof, and the distributions provisions of
Sections 4.3, 4.4 and 4.5 hereof) and (ii) is consistent with the principles of
Sections 704(b) and 704(c) of the Code. Pursuant to the foregoing, the General
Partner shall allocate items of income, deduction, gain and loss for tax
purposes in the same manner as, and in proportion to, the book allocations of
corresponding items made pursuant to this Partnership Agreement, except (i) as
provided below with respect to allocations required under the principles of Code
Section 704(c), and (ii) as required by Code Section 704(b) and the Treasury
Regulations thereunder ("Required Allocations"). Any Required Allocations shall
be taken into account in computing other and subsequent tax allocations so that
the amount of tax items allocated to each Partner, to the greatest extent
possible, shall be equal to the amount of tax items that would have been
allocated to each Partner in the absence of such Required Allocations. The
Partners understand and agree that, with respect to any item of property (other
than cash) contributed (or deemed to be contributed for U.S. federal income tax
purposes) by a Partner to the capital of the Partnership, the initial tax basis
of such property in the hands of the Partnership will be the same as the tax
basis of such property in the hands of such Partner at the time so contributed.
The Partners further understand and agree that the taxable income and taxable
loss of the Partnership is to be computed for Federal income tax purposes by
reference to the initial tax basis to the Partnership of any assets and
properties contributed by the Partners (and not by reference to the fair market
value of such assets and properties at the time contributed). The Partners also
understand that, pursuant to Section 704(c) of the Code, all taxable items of
income, gain, loss and deduction with respect to such assets and properties
shall be allocated among the Partners for Federal income tax purposes so as to
take account of any difference between the initial tax basis of such assets and
properties to the Partnership and their fair market values at the time
contributed, using any method authorized by the Income Tax Regulations under
Section 704(c) and selected by the General Partner in its sole discretion,
subject to its fiduciary duties to the Partners as a whole. For purposes of
maintaining the Capital Accounts of the Partners, items of income, gain, loss
and deduction relating to any asset or property contributed to the Partnership
that are required to be allocated for tax purposes pursuant to Section 704(c) of
the Code shall not be reflected in the Capital Accounts of the Partners.
ARTICLE V - TRANSFER OF PARTNERSHIP INTERESTS OTHER THAN
BY THE GENERAL PARTNER, ADMISSION OF ADDITIONAL
PARTNERS, REDEMPTION AND WITHDRAWAL
SECTION 5.1 ASSIGNABILITY OF INTERESTS. No interest of a Limited
Partner in the Partnership may be sold, assigned, transferred, pledged,
hypothecated, gifted, exchanged, optioned or encumbered (each, a "Transfer"),
nor may any interest in any Limited Partner be Transferred, and no Transfer
shall be binding upon the Partnership or any Limited Partner unless it is
expressly permitted by this Article V and the General Partner receives an
executed copy of such assignment, which shall be in form and substance
reasonably satisfactory to the General Partner. The assignee of such interest in
the Partnership may become a substitute Limited Partner only upon the terms and
conditions set forth in Section 5.2. No Limited Partner's interest in the
Partnership or, in the case of a Limited Partner which is not an
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individual, the direct and indirect interests of a beneficial owner of such
Limited Partner, may be Transferred except:
(a) to the General Partner;
(b) to AMG pursuant to the provisions of Section 3.9, 7.1 or
7.3 hereof or pursuant to the provisions of such other agreement as may be
entered into by the Partnership in connection with the issuance of Partnership
Points;
(c) upon the death of such beneficial owner, their interests
in the Partnership or in the Limited Partner may be Transferred by will or the
laws of descent and distribution;
(d) a Limited Partner (and its beneficial owners) may Transfer
interests in the Partnership or in such Limited Partner to members of his or her
Immediate Family (or trusts for their benefit and of which the beneficial owner
is the settlor and/or trustee, provided that any such trust does not require or
permit distribution of such interests); and
(e) another Limited Partner, with the prior written consent of
the General Partner, which consent may be granted or withheld by the General
Partner in its sole discretion (provided, however, unless Xxxxxxx X. Xxxx is the
President and Chief Executive Officer of AMG, Limited Partners may, with a
Majority Vote, transfer an aggregate of up to 1.5 Partnership Points without the
consent of, but with at least fifteen (15) days prior written notice to, the
General Partner (which transfer or transfers may take place on one or more dates
and subject to such terms and conditions as may be set by a Majority Vote,
subject to a maximum number of 1.5 Partnership Points for all such transfers on
all such occasions taken together); and
(f) the stockholders of such Limited Partner, with the prior
written approval of the General Partner and subject to such Limited Partner and
such stockholders making such representations and warranties regarding the
ownership of such Limited Partner and such stockholder as the General Partner
may deem necessary or appropriate.
; provided, that in the case of (c), (d) or (f) above, (i) the transferee enters
into an agreement with the Partnership agreeing to be bound by the provisions
hereof (and the transferee enters into (A) if such transferee is not already a
party to a Non Solicitation Agreement, the relevant Non Solicitation Agreement
and (B) if the transferee is (or has an equityholder which is) an employee of
First Quadrant Limited, the Revenue Agreement) as a Limited Partner (to the
extent such Person then would hold any interest in the Partnership), and (ii)
whether or not the transferee enters into such an agreement, such Partnership
Interests, and interests in such Limited Partner, shall thereafter remain
subject to this Agreement (and, if applicable, the relevant Non Solicitation
Agreement) to the same extent they would be if held by such Limited Partner or
beneficial owner, as applicable.
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For all purposes of this Partnership Agreement, any Transfers of
Partnership Interests shall be deemed to occur as of the close of business on
the last day of the calendar month in which any such Transfer would otherwise
have occurred.
SECTION 5.2 SUBSTITUTE LIMITED PARTNERS. No transferee of interests of
a Limited Partner shall become a Partner except in accordance with this Section
5.2. The General Partner may, with a Majority Vote of the Limited Partners,
admit as a substitute Limited Partner any Person that acquires a Partnership
Interest by Transfer from another Limited Partner in accordance with the
provisions of Section 5.1. The admission of an assignee as a substitute Limited
Partner shall in all events be conditioned upon the execution of an instrument
satisfactory to the General Partner whereby such assignee becomes a party to
this Agreement as a Limited Partner. Upon the admission of a substitute Limited
Partner, the General Partner shall make the appropriate revisions to Schedule A
hereto. Notwithstanding the foregoing, upon a Transfer of Partnership Interests
to AMG in compliance with the provisions of Section 5.1(b) above, AMG shall be
admitted to the Partnership as a Limited Partner with respect to the Partnership
Interests so transferred, without the necessity for a Majority Vote.
SECTION 5.3 ADDITIONAL REQUIREMENTS. As additional conditions to the
validity of (x) any Transfer of a Limited Partner's interest in the Partnership
(or, in the case of a Limited Partner which is not an individual, the interests
of the direct and indirect beneficial owners of such Limited Partner) or (y) the
issuance of additional Partnership Interests (pursuant to Section 5.6 below),
such Transfer or issuance shall not: (i) violate the registration provisions of
the Securities Act or the securities laws of any applicable jurisdiction, (ii)
cause the Partnership to become subject to regulation as an "investment company"
under the Investment Company Act, and the rules and regulations of the SEC
thereunder, including by resulting in there being one hundred (100) or more
beneficial holders of interests in the Partnership, (iii) result in the
termination of any contract to which the Partnership is a party and which
individually or in the aggregate are material (it being understood and agreed
that any contract pursuant to which the Partnership provides Investment
Management Services is material), or (iv) result in the treatment of the
Partnership as an association taxable as a corporation or as a "publicly traded
limited partnership" for Federal income tax purposes.
The General Partner may require reasonable evidence as to the
foregoing, including, without limitation, a favorable opinion of counsel, which
expense shall be borne by the parties to such transaction (and to the extent the
Partnership is such a party, shall be paid from Operating Cash Flow).
As an additional condition to the validity of (x) any Transfer of a
Limited Partner's interest in the Partnership (or, in the case of a Limited
Partner which is not an individual, the interests of the direct and indirect
beneficial owners of such Limited Partner) or (y) the issuance of additional
Partnership Interests (pursuant to Section 5.6 below), an equal interest in the
U.K. Partnership must be so transferred or issued to the transferee or recipient
by the transferor or issuer.
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To the fullest extent permitted by law, any Transfer that violates the
conditions of this Section 5.3 shall be null and void ab initio.
SECTION 5.4 ALLOCATION OF DISTRIBUTIONS BETWEEN ASSIGNOR AND ASSIGNEE;
SUCCESSOR TO CAPITAL ACCOUNTS. Upon the Transfer of a Partnership Interest
pursuant to this Article V, distributions pursuant to Article IV shall be made
to the Person owning the Partnership Interest at the date of distribution,
unless the assignor and assignee otherwise agree and so direct the General
Partner in a written statement signed by both. In connection with a Transfer by
a Partner of Partnership Points, the assignee shall succeed to a pro-rata (based
on the percentage of such Person's Partnership Interests transferred) portion of
the assignor's Capital Account, unless the assignor and assignee otherwise agree
and so direct the General Partner in a written statement signed by both and
consented to by the General Partner.
SECTION 5.5 REDEMPTIONS AND WITHDRAWALS. No Limited Partner shall have
the right to redeem its interest in the Partnership, in whole or in part, or to
withdraw from the Partnership, except (a) upon receipt of a Majority Vote and
with the consent of the General Partner, (b) as is expressly provided for in
Section 3.9 hereof or (c) as is expressly provided for in Section 7.1 and 7.3
hereof. Upon the redemption or withdrawal, in whole or in part, by a Limited
Partner, the General Partner shall make the appropriate revisions to Schedule A
hereto.
SECTION 5.6 ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS.
(a) Additional Limited Partners (the "Additional Limited
Partners" and each an "Additional Limited Partner") may be admitted to the
Partnership and such Additional Limited Partners may be issued Partnership
Points, upon receipt of a Majority Vote and the consent of the General Partner
and upon such terms and conditions as may be established by the General Partner
with a Majority Vote (including, without limitation, upon such Additional
Limited Partner's execution of an instrument satisfactory to the General Partner
whereby such Person becomes a party to this Agreement as a Limited Partner);
provided, however, that upon a transfer pursuant to Section 6.1(ii) hereof, the
General Partner may admit the transferee as an Additional Limited Partner
without a Majority Vote.
(b) Existing Limited Partners may be issued additional
Partnership Points (or other Partnership Interests) by the Partnership with the
consent of, and upon such terms and conditions as may be established by, the
General Partner with a Majority Vote (without including the Limited Partner to
be issued additional Partnership Points). Except as provided in the last
sentence of the definition of "Incentive Reserve" or "Executive Retention
Reserve," the General Partner may only be issued additional Partnership Points
(or other Partnership Interests) upon the receipt of a Majority Vote.
(c) Each time additional Partnership Interests are issued
(including, without limitation, additional Partnership Points), the Capital
Accounts of all the Partners shall be adjusted as follows: (i) the General
Partner shall determine the proceeds which would be realized if the Partnership
sold all its assets at such time for a price equal to the Fair Market
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Value of such assets, and (ii) the General Partner shall allocate amounts equal
to the gain or loss which would have been realized upon such a sale to the
Capital Accounts of all the Partners immediately prior to such issuance in
accordance with Section 4.2(d) hereof.
(d) In connection with the issuance of additional Partnership
Interests, such issuances, except as set forth herein and in the Options, are
not subject to the preemptive rights of any Person.
(e) Upon the issuance of additional Partnership Interests, the
General Partner shall make the appropriate revisions to Schedule A hereto.
SECTION 5.7 REPRESENTATION OF PARTNERS. The General Partner and each
Limited Partner (including each Additional Limited Partner) hereby represents
and warrants to the Partnership and each other Partner, and acknowledges, that
(a) it has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of an investment in the
Partnership and making an informed investment decision with respect thereto, (b)
it is able to bear the economic and financial risk of an investment in the
Partnership for an indefinite period of time, (c) it is acquiring an interest in
the Partnership for investment only and not with a view to, or for resale in
connection with, any distribution to the public or public offering thereof, (d)
the equity interests in the Partnership have not been registered under the
securities laws of any jurisdiction and cannot be disposed of unless they are
subsequently registered and/or qualified under applicable securities laws and
the provisions of this Agreement have been complied with, and (e) the execution,
delivery and performance of this Agreement by such Partner do not require it to
obtain any consent or approval that has not been obtained and do not contravene
or result in a default under any provision of any existing law or regulation
applicable to it, any provision of its charter, by-laws or other governing
documents or any agreement or instrument to which it is a party or by which it
is bound.
ARTICLE VI - TRANSFER OF PARTNERSHIP INTEREST BY THE
GENERAL PARTNER; REDEMPTION, REMOVAL
AND WITHDRAWAL
SECTION 6.1 ASSIGNABILITY OF INTEREST. Without a Majority Vote,
neither the General Partner's interest in the Partnership nor the stock of the
General Partner may be sold or transferred; provided, however, (i) it is
understood and agreed that, in connection with the operation of the business of
AMG (including, without limitation, the financing of direct or indirect
investments in additional investment management companies), the General
Partner's interest in the Partnership and the stock of the General Partner may
be pledged or encumbered pursuant to a bona fide pledge or encumbrance and under
such circumstances, lien holders shall have and be able to exercise the rights
of secured creditors with respect to such interest, (ii) the General Partner may
sell some (but not all or substantially all) of its Partnership Interests to a
person or entity who is not a Partner but who is an Officer of the Partnership
or who becomes an Officer in connection with such issuance, or an entity wholly
owned by any such person, and (iii) the General Partner may sell some (but not
all or substantially all) of its
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Partnership Interests to existing Limited Partners. Notwithstanding anything
else set forth herein, the General Partner may, with a Majority Vote, sell all
its interests in the Partnership in a single transaction or a series of related
transactions, and, in any such case, each of the Limited Partners of the
Partnership shall be required to sell, in the same transaction or transactions,
all their interest in the Partnership; provided, that the price to be received
by all the Partners shall be allocated among the Partners as follows: (a) an
amount equal to the sum of the positive balances, if any, in positive Capital
Accounts shall be allocated among the Partners having such Capital Accounts in
proportion to such positive balances, and (b) the excess, if any, shall be
allocated among all Partners in accordance with their respective number of
Partnership Points at the time of such sale.
SECTION 6.2 RESIGNATION, REDEMPTION, AND WITHDRAWAL. To the fullest
extent permitted by law, except as set forth in the last sentence of Section
6.1, without a prior Majority Vote, the General Partner shall not have the right
to resign or withdraw from the Partnership. Without a prior Majority Vote, the
General Partner shall have no right to have all or any portion of its interest
in the Partnership redeemed. Any resigned, withdrawn or removed General Partner
shall retain its interest in the capital of the Partnership and its other
economic rights under this Agreement.
ARTICLE VII - PUT/CALL OF PARTNERSHIP INTERESTS;
REGISTRATION RIGHTS
SECTION 7.1 MANDATORY PUTS.
(a) Each Limited Partner may, subject to the terms and
conditions set forth in this Section 7.1, cause AMG to purchase portions of the
Partnership Interests held by such Limited Partner in the Partnership (a "Put").
(b) Each Limited Partner other than Xxxxxx, Inc. may, subject
to the terms and conditions set forth in this Partnership Agreement, cause AMG
to purchase up to twelve and one-half percent (12.5%) of the Initial Partnership
Points held by such Limited Partner, on the last business day in March (each, a
"Purchase Date") on any five (5) separate occasions (but only up to an aggregate
of fifty percent (50%) of such Limited Partner's Initial Partnership Points)
starting with the last business day in March, 2001 and ending with the last
business day in March, 2011. Notwithstanding any other provisions set forth
herein, each Limited Partner may only exercise its rights under this Section
7.1(b) if the Limited Partner simultaneously causes AMG to purchase an equal
number of U.K. Partnership Points in the U.K. Partnership pursuant to the
provisions of Section 7.1(b) of the U.K. Partnership Agreement.
(c) Xxxxxx, Inc. may, subject to the terms and conditions set
forth in this Partnership Agreement, cause AMG to purchase up to twenty percent
(20%) of the Initial Partnership Points held by Xxxxxx, Inc., on each Purchase
Date starting with the first Purchase Date in March, 2001. Notwithstanding any
other provision set forth herein, Xxxxxx, Inc. may
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only exercise its rights under this Section 7.1(c) if Xxxxxx, Inc.
simultaneously causes AMG to purchase an equal number of U.K. Partnership Points
in the U.K. Partnership pursuant to the provisions of Section 7.1(c) of the U.K.
Partnership Agreement.
(d) Each Limited Partner may, subject to the terms and
conditions set forth in this Partnership Agreement, cause AMG to purchase a
number of Partnership Points as is equal to up to twelve and one-half percent
(12.5%) of the positive difference, if any, between (i) the Partnership Points
issued to such Limited Partner pursuant to the Incentive Program or upon the
exercise of any options issued pursuant thereto (each such issuance or issuance
upon the exercise of an option, an "Option Exercise") and (ii) any Partnership
Points purchased from such Limited Partner pursuant to a GP Call under Section
7.3 hereof on any five (5) separate Purchase Dates (but only up to an aggregate
of a number of Partnership Points as is equal to fifty percent (50%) of the
positive difference, if any, between (x) the Partnership Points issued in such
Option Exercise and (y) any Partnership Points purchased from such Limited
Partner pursuant to a GP Call under Section 7.3 hereof) starting on the first
Purchase Date which is at least five (5) years following the date of such
Option Exercise and ending on the first Purchase Date which is at least fifteen
(15) years following the date of such Option Exercise. Notwithstanding any
other provisions set forth herein, each Limited Partner may only exercise its
rights under this Section 7.1(d) if the Limited Partner simultaneously causes
AMG to purchase an equal number of Partnership Points in the Partnership
pursuant to the provisions of this Section 7.1(d) and U.K. Partnership Points
in the U.K. Partnership pursuant to the provisions of Section 7.1(d) of the
U.K. Partnership Agreement.
(e) If a Limited Partner desires to exercise its rights under
Section 7.1(b), 7.1(c) or 7.1(d) above, it and its Employee Stockholder shall
give AMG, each other Employee Stockholder, the General Partner and the
Partnership irrevocable written notice (a "Put Notice") on or prior to the
preceding November 30 (the "Notice Deadline") stating that it is electing to
exercise such rights and the number of Partnership Points (the "Put Partnership
Points") to be sold in the Put and whether or to what extent such Put is a Put
of Initial Partnership Points (including, without limitation, a Put by Xxxxxx,
Inc. pursuant to Section 7.1(c) above) (the "Initial Put Partnership Points") or
Partnership Points issued pursuant to an Option Exercise (together, the "Option
Put Partnership Points"). Puts in any given calendar year for which Put Notices
are received before the Notice Deadline for that calendar year shall be done as
follows: AMG shall purchase from each Limited Partner that number of Put
Partnership Points as is equal to the sum of (i) the number of Initial Put
Partnership Points designated as such in the Put Notice, up to the maximum
number permitted by Section 7.1(b) or Section 7.1(c) above with respect to that
year and the aggregate number of Initial Partnership Points that may be Put by
the Limited Partner, and (ii) the number of Option Put Partnership Points
designated as such in the Put Notice, up to the maximum number permitted by
Section 7.1(d) above with respect to the Option Exercise and that year and the
aggregate number of Partnership Points that may be Put by the Limited Partner
with respect to the Option Exercise; provided, however, that in no event shall
the number of Partnership Points which AMG is required to purchase on any
Purchase Date pursuant to Puts under this Section 7.1 exceed Two and Four-Tenths
(2.4) Partnership Points; and, provided further, that if the number of
Partnership Points for which Put Notices are received before the Notice Deadline
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for that calendar year exceeds two and four tenths (2.4) Partnership Points,
then AMG shall purchase an aggregate of Two and Four-Tenths (2.4) Partnership
Points among all Limited Partners as follows: AMG shall purchase from each
Limited Partner that number of Partnership Points as is equal to (A) Two and
Four-Tenths (2.4) Partnership Points multiplied by (B) a fraction, the numerator
of which is the number of Partnership Points set forth in such Limited Partner's
Put Notice (up to the maximum number of Partnership Points permitted by Sections
7.1(b), 7.1(c) and 7.1(d) above with respect to that Purchase Date and the
aggregate number of Initial Put Partnership Points and Option Put Partnership
Points which may be Put by that Limited Partner on that Purchase Date) and the
denominator of which is the number of Partnership Points set forth in all the
Put Notices (with respect to each such Put Notice, up to the maximum number of
Partnership Points permitted by Sections 7.1(b), 7.1(c) and 7.1(d) above with
respect to that Purchase Date) (provided, that in the case of the purchase of a
number of Partnership Points that is less than the number of Partnership Points
set forth in a Limited Partner's Put Notice, such Limited Partner may allocate
the Partnership Points to be purchased among the Initial Put Partnership Points
and Option Put Partnership Points set forth in its Put Notice).
(f) The purchase price for a Put (the "Put Price") shall be an
amount equal to (i) six (6) times fifty percent (50%) of the Partnership's Free
Cash Flow for the twenty-four (24) months ending on the last day of the calendar
year prior to the date of the closing of such Put (determined by reference to
the most recent financial statements supplied to AMG pursuant to Section 9.3)
multiplied by (ii) a fraction, the numerator of which is the number of
Partnership Points to be purchased from such Limited Partner on the Purchase
Date and the denominator of which is the number of Partnership Points
outstanding on the Purchase Date (including as outstanding Partnership Points,
all the Partnership Points in the Executive Retention Reserve and the Incentive
Reserve) before giving effect to any Puts or any issuances or redemptions of
Partnership Points on such date. The Put Price shall be paid by AMG (or, if AMG
shall have assigned its obligation to the Partnership pursuant to paragraph (g)
below, the Partnership in such proportions as may be determined by AMG with a
Majority Vote) on the relevant Purchase Date by certified checks to such Limited
Partner, in each case, against delivery of such documents or instruments of
transfer as may reasonably be requested by AMG or the Partnership, as
applicable; provided, however, that in the case of a Put by Xxxxxx, Inc. under
this Section 7.1, if after giving effect to the Put, Xxxxxx, Inc. would hold
less than one and five-tenths (1.5) Partnership Points, then the Put Price may,
in AMG's sole discretion, be paid with a promissory note in the form attached
hereto as Exhibit C, the principal of which promissory note would be paid in
four (4) installments, the first installment would be paid on the Purchase Date,
and the second, third and fourth installments would be paid twelve (12) months,
twenty-four (24) months and thirty-six (36) months, respectively, after such
Purchase Date, provided, that if Xxxxxx, Inc. is also a Defaulting Partner, the
amount of any payment shall be reduced in the manner set forth in the last
sentence of Section 3.9(e) hereof.
(g) No purchase by AMG pursuant to this Section 7.1 (or, upon
assignment of any of AMG's obligations to the Partnership pursuant to this
paragraph (g) hereof, redemption by the Partnership) shall occur if it would
result in AMG owning, directly or indirectly, in excess of eighty percent (80%)
of the Partnership Points outstanding after giving effect to any such sale or
redemption. If some, but not all, of the Partnership Points which Employee
Stockholders have requested be purchased can be so purchased without AMG's
ownership, directly or indirectly, exceeding eighty percent (80%) of the
outstanding Partnership Points, then AMG shall purchase, or shall assign its
obligations to the
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Partnership, and the Partnership shall redeem, Partnership Points from the
Limited Partners having Put Partnership Interests in proportion to the
Partnership Points then held by such Limited Partners up to the maximum extent
that would not cause AMG to own, directly or indirectly, in excess of eighty
percent (80%) of the outstanding Partnership Points (in each case, subject to
the maximum amount set forth in Section 7.1(b), 7.1(c) and 7.1(d) hereof).
(h) AMG may, only with a Majority Vote, assign any or all of
its rights and obligations to purchase Partnership Points under this Section
7.1, in one or more instances, to the General Partner or the Partnership;
provided, however, that if AMG (with a Majority Vote) assigns any or all its
rights and obligations to purchase Partnership Points under this Section 7.1 to
the General Partner or the Partnership, then AMG shall assign the identical and
proportional rights and obligations to purchase U.K. Partnership Points under
Section 7.1 of the U.K. Partnership Agreement to the General Partner (in the
case where rights or obligations to purchase Partnership Points were assigned to
the General Partner) or the U.K. Partnership (in the case where rights or
obligations to purchase Partnership Points were assigned to the Partnership).
SECTION 7.2 ELECTION RIGHTS OF LIMITED PARTNERS TO RECEIVE AMG STOCK.
(a) If AMG does not assign to the Partnership or the General
Partner the right or obligation pursuant to Section 7.1(h) above to purchase
Partnership Interests from a Limited Partner, and AMG has, at that time,
completed a registration of shares of its common stock for sale under the
Securities Act (other than a registration on Form S-8 (or its then equivalent
form) or a registration affected solely to implement an employee benefit plan, a
transaction under Rule 145 or to which any other similar rule of the SEC under
the Securities Act is applicable or registration on a form not available for
registering securities for sale to the public) (a "Public Offering"), then such
Limited Partner may elect to cause AMG to pay up to one-half of the Put Price
(as such term is defined in Section 7.1(f) above) for the relevant Put in shares
of AMG's Common Stock, $.01 par value per share (the "AMG Stock").
(b) An election under this Section 7.2 must be made by the
Limited Partner at least sixty (60) days prior to the relevant Purchase Date, by
giving written notice to the Partnership and AMG of such election, which
election, once made, shall be irrevocable without the prior written consent of
AMG.
(c) The number of shares of AMG Stock to be issued upon
exercise of the Put shall be determined in accordance with the following
formula:
Number of Shares of AMG Stock = OS x F
---
1-F
where OS is the number of issued and outstanding shares of AMG Stock immediately
prior to the closing of the Put, and F is a fraction, the numerator of which is
the Put Price of a Put pursuant to Section 7.1(f) above, multiplied by
.75, and the denominator of which is
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an amount equal to the sum of (A) six (6) times fifty percent (50%) of AMG's
earnings before interest, amortization and taxes for the twenty-four (24) month
period ending on the last day of the calendar year prior to the date of the
closing of such Put (determined in accordance with generally accepted accounting
principles, consistently applied) plus (B) the Put Price of a Put.
(d) If AMG completes a Public Offering, AMG shall, as soon as
reasonably practicable, provide notice thereof to each Employee Stockholder.
SECTION 7.3 GENERAL PARTNER CALL OPTION.
(a) The General Partner may, subject to the terms and
conditions set forth in this Section 7.3, purchase eight and twenty-four one
hundredths (8.24) Partnership Points from the Limited Partners (the "GP Call").
(b) The General Partner shall exercise its rights under this
Section 7.3 if ten (10) Partnership Points have been made available to the
Incentive Reserve (as such term is defined in the Incentive Program and not as
such term is defined herein) pursuant to Section 3(f) of the Incentive Program;
provided, however, that the General Partner may give the GP Call Notice (as such
term is hereinafter defined) prior to the date such a determination is made.
Simultaneously with the General Partner's exercise of its rights under this
Section 7.3, the General Partner shall exercise its rights under Section 7.3(b)
of the U.K. Partnership Agreement.
(c) If the General Partner exercises its rights under this
Section 7.3, it shall give written notice (the "GP Call Notice") to the Chief
Executive Officer and each Limited Partner stating its exercise of such rights.
Within Five (5) days after delivery of the Call Notice, the General Partner
shall allocate the GP Call among the Limited Partners in its sole discretion and
shall so indicate the allocation in a writing delivered to the Chief Executive
Officer and the Limited Partners; and, provided further, that any allocation by
the General Partner shall only be effective if an equivalent allocation is made
pursuant to Section 7.3(c) of the U.K. Partnership Agreement. The closing of a
GP Call shall take place on a date which is fifteen (15) days after the date of
the GP Call Notice.
(d) The Purchase Price for a GP Call shall be an amount equal
to (i) Four Hundred and Twenty-Eight One Thousandths (.428) of the Partnership's
cumulative Revenues from Operations for the Period beginning on the Effective
Date and ending on December 31, 2000, for each Partnership Point for which the
General Partner exercises its rights under this Section 7.3 (subject, in any
event, to any equitable adjustments which the General Partner may deem necessary
or appropriate (in its sole discretion) if there is any change in the portion of
Revenues From Operations which is Free Cash Flow or in the allocation of Free
Cash Flow under this Agreement), minus (ii) the taxes incurred (calculated as
set forth in this clause) by the General Partner in respect of such
distributions, calculated on the assumption that such distributions are not less
than one-half of the highest marginal federal, state and foreign tax rates
applicable to the General Partner and not more than the highest marginal
federal, state and foreign tax rates applicable to the General Partner (with the
taxes incurred within such
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range to be determined by the General Partner in its sole discretion), plus
(iii) an amount equal to each cash distribution described in clause (i) above,
net of any taxes attributable thereto (calculated as described in clause (ii)
above) multiplied by the Prime Rate established by Chemical Bank (or any
successor thereto) from time to time, as in effect on the date of each such cash
distribution.
SECTION 7.4 AMG CALL OPTION.
(a) AMG may, subject to the terms and conditions set forth in
this Section 7.4, purchase portions of the Partnership Interests held by the
Limited Partners in the Partnership (each a "Call"). Notwithstanding anything
else set forth herein to the contrary, the consent of the Chief Executive
Officer shall be required prior to any Call other than a Call of Partnership
Points held by the Chief Executive Officer or the Limited Partner of which the
Chief Executive Officer is the Employee Stockholder.
(b) AMG may purchase up to five percent (5%) of the Initial
Partnership Points of any of the Limited Partners on the last business day in
March (each a "Call Date") of each calendar year (but only up to an aggregate
of twenty-five percent (25%) of the Initial Partnership Points issued to such
Limited Partner) starting with the last business day in March of the calendar
year 2002. Notwithstanding any other provision set forth herein, AMG may only
exercise its rights under this Section 7.3(b) if it purchases an equal number
of Initial Partnership Points in the Partnership and Initial U.K. Partnership
Points in the U.K. Partnership.
(c) AMG may purchase a number of Partnership Points as is
equal to up to five percent (5%) of the positive difference, if any, between
(i) the Partnership Points issued in an Option Exercise and (ii) any
Partnership Points purchased from such Limited Partner pursuant to a GP Call
under Section 7.3 hereof, on a Call Date (but only up to an aggregate of a
number of Partnership Points as is equal to twenty-five percent (25%) of the
positive difference, if any, between (x) the Partnership Points issued in such
Option Exercise and (y) any Partnership Points purchased from such Limited
Partner pursuant to a GP Call under Section 7.3 hereof) starting with the first
Call Date which is at least six (6) years following the date of such Option
Exercise. Notwithstanding any other provision set forth herein, AMG may only
exercise its rights under this Section 7.4(c) if it purchases an equal number
of Partnership Points in the Partnership and U.K. Partnership Points in the
U.K. Partnership.
(d) If AMG desires to exercise its rights under Section 7.4(b)
or (c) above, it shall give irrevocable written notice (a "Call Notice") on or
prior to the preceding November 30, to each Limited Partner, First Quadrant, and
the Partnership, stating its election to exercise such rights, the Limited
Partner(s) from whom it intends to purchase Partnership Points, and the number
of Partnership Points to be purchased in the Call (the "Call Partnership
Points"). The number of Partnership Points purchased from a given Limited
Partner must be equal to the number of U.K. Partnership Points being purchased
at the same time from such Limited Partner.
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(e) The purchase price for Call Partnership Points purchased
from a Limited Partner in a Call (each a "Call Price") shall be an amount equal
to (i) six (6) times fifty percent (50%) of the Partnership's Free Cash Flow for
the twenty-four (24) months ending on the last day of the month prior to the
Call Date (determined by reference to the most recent financial statements
supplied to AMG pursuant to Section 9.3 hereof) multiplied by (ii) a fraction,
the numerator of which is the sum of the number of Partnership Points to be
purchased from such Limited Partner and the denominator of which is the number
of Partnership Points outstanding on the Call Date (including as outstanding
Partnership Points, all the Partnership Points in the Executive Retention
Reserve and in the Incentive Reserve, before giving effect to any issuances or
redemptions of Partnership Points on such date.) The Call Price shall be paid by
AMG (or, if AMG shall have assigned its rights to the Partnership pursuant to
paragraph (f) below, the Partnership in such proportions as may be determined by
AMG with a Majority Vote) on the relevant Call Date by certified checks, against
delivery of such documents or instruments of transfer as may reasonably be
requested by AMG and the Partnership, as applicable.
(f) AMG may, with a Majority Vote, assign any or all of its
rights and obligations to purchase Partnership Points under this Section 7.4, in
one or more instances, to the General Partner or the Partnership; provided,
however, that if AMG (with a Majority Vote) assigns any or all its rights and
obligations to purchase Partnership Points under this Section 7.3 to the General
Partner or the Partnership, then AMG shall assign the identical and proportional
rights and obligations to purchase U.K. Partnership Points under this Section
7.3 of the U.K. Partnership Agreement to First Quadrant (in the case where
rights or obligations to purchase Partnership Points were assigned to First
Quadrant) or the U.K. Partnership (in the case where rights or obligations to
purchase Partnership Points were assigned to the Partnership).
SECTION 7.5 REGISTRATION RIGHTS.
(a) Piggy-back Registrations. If at any time or times
following the completion of its initial public offering, AMG shall determine to
file a registration statement ("Registration Statement") (which excludes a
registration on Form S-8 (or its then equivalent form) or a registration
statement filed solely to implement an employee benefit plan, a transaction
under Rule 145 or to which any other similar rule of the SEC under the
Securities Act is applicable or registration statement on a form not available
for registering securities for sale to the public) other than on Form S-4 (or
its then equivalent form) and other than with respect to securities to be issued
solely in connection with any acquisition of any securities or assets of any
entity or business, then AMG will promptly give written notice thereof to the
Limited Partners which are holders of Registrable Securities (as hereinafter
defined) then outstanding (the "Holders"), and, subject to the terms and
conditions of this Section 7.4, will use all commercially reasonable efforts to
effect the registration under the Securities Act (a "Registration") of all
Registrable Securities which the Holders request in a writing delivered to AMG
within thirty (30) days after the notice given by AMG. AMG shall have the right
to postpone or withdraw any Registration without any obligation to any Holder.
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(b) Registrable Securities. For the purposes of this
Section 7.5, the term "Registrable Securities" shall mean any AMG Stock held by
a Limited Partner which was acquired by such Limited Partner pursuant to the
terms of Section 7.2 or Section 7.2 of the U.K. Partnership Agreement, and any
equity securities issued or issuable with respect to such AMG Stock by way of a
stock dividend or stock split or in connection with a combination of shares.
(c) Further Obligations of AMG. Whenever under the
preceding provisions of this Section 7.5, AMG is required hereunder to register
Registrable Securities, AMG agrees that it shall also do the following:
(i) use commercially reasonable efforts to
prepare diligently for filing with the SEC a Registration Statement and
such amendments and supplements to such Registration Statement and the
prospectus used in connection therewith as may be necessary for the
duration of such Registration;
(ii) use commercially reasonable efforts to
maintain the effectiveness of any Registration Statement pursuant to
which any of the Registrable Securities are being sold on a delayed or
continuous basis under Rule 415 (or any successor or similar rule)
under the Securities Act (other than a registration statement in
connection with an underwritten offering) until the earlier of (i) the
completion of the distribution of all Registrable Securities offered
pursuant thereto or (ii) ninety (90) days after the effective date of
such Registration Statement, provided that if a Suspension Period (as
defined below) has occurred during the pendency of a Registration, AMG
shall in good faith use reasonable efforts to extend the effectiveness
of such Registration so that there are ninety (90) days during which
such Registration is effective and a Suspension Period is not in
effect;
(iii) furnish to each selling Holder such copies
of each preliminary and final prospectus and such other documents as
such Holder may reasonably request to facilitate the public offering of
its Registrable Securities in accordance with customary practices;
(iv) file all reports required to be filed by it
under the Exchange Act, and the rules and regulations promulgated by
the SEC thereunder, during the period the Registration Statement is
required to remain effective hereunder; and
(v) use commercially reasonable efforts to cause
the Registrable Securities to be listed on such securities exchange or
quoted on such automated quotation system on which AMG's common shares
are then listed or quoted.
(d) Registration Expenses. All reasonable expenses
incident to AMG's performance of or compliance with this Section 7.5, including
SEC and securities exchange or National Association of Securities Dealers, Inc.
("NASD") registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, fees and
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disbursements of counsel for AMG and its independent certified public
accountants incurred in connection with each registration hereunder (but not
including any fees or disbursements of counsel for the Holders (which shall be
borne by the Holders), or any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities (which shall be borne by each
applicable Holder) (all such included expenses being herein called "Registration
Expenses"), will be borne by AMG; provided, however, that if AMG is not selling
in such offering, then each Holder shall bear a portion of such expenses equal
to such expenses multiplied by a fraction, the numerator of which is the number
of shares sold by such Holder and the denominator of which is the total number
of shares sold in the offering.
(e) Indemnification; Contribution.
(i) Indemnification. Incident to any registration
statement referred to in this Section 7.5(e), and subject to applicable
law, AMG will indemnify each underwriter, each Holder of Registrable
Securities so registered, and each person controlling any of them
("Controlling Person") against all claims, losses, damages and
liabilities, including legal and other expenses reasonably incurred in
investigating or defending against the same, arising out of any untrue
statement of a material fact contained therein, or any omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arising out
of any violation by AMG of the Securities Act, any other federal
securities laws, any state securities or "blue-sky" laws or any rule or
regulation thereunder in connection with such registration, except
insofar as the same may have been caused by an untrue statement or
omission based upon information furnished to AMG by or on behalf of
such underwriter, Holder or Controlling Person expressly for use
therein, and with respect to such untrue statement or omission in the
information furnished to AMG by or on behalf of such underwriter,
Holder or Controlling Person, such underwriter, Holder or Controlling
Person so providing such information to AMG (or on whose behalf such
information was so provided) will indemnify AMG, its directors and
officers, and the other underwriters, Holders and Controlling Persons
against any losses, claims, damages, expenses or liabilities to which
any of them may become subject to the same extent.
(ii) Contribution. If the indemnification provided
for in this Section 7.5(e) from the indemnifying party is unavailable
to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the
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, liabilities or
expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact, has been made by, or relates to
information supplied by,
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such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party
as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any reasonable legal or
other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7.5(e) 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.
Notwithstanding the provisions of this Section 7.5(e)(ii), no Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such Holder were offered to the
public exceeds the amount of any damages which such Holder has otherwise been
required to pay by reason of such untrue statement or 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.
If indemnification is available under this Section 7.5(e), the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 7.5(e)(i) without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 7.5(e)(ii).
SECTION 7.6 LIMITATIONS. Notwithstanding anything herein to the
contrary, the parties agree as follows:
(a) In the event that in connection with an underwritten
public offering, the managing underwriter(s) shall in good faith impose a
limitation on the number of securities which may be included in such
Registration for marketing purposes, AMG shall not be required to register
Registrable Securities in excess of such limitation, provided that the reduction
in the number of securities which may be included in such Registration to comply
with such limitation is imposed pro rata (based either on relative number of
securities held or relative number of securities sought to be included in such
Registration) with respect to the Holders and all managers of companies
providing Investment Management Services in which AMG may invest after the date
hereof and which have so-called incidental or piggyback registration rights (it
being understood that such limitation may be imposed as to all holders of such
securities and the Holders prior to the imposition of any limitation on other
holders of AMG securities).
(b) If requested in writing by the managing underwriter(s), if
any, of any underwritten public offering of AMG Stock, each Limited Partner
agrees not to offer, sell, contract to sell or otherwise dispose of any shares
of AMG Stock except as part of such underwritten public offering within thirty
(30) days before or one hundred and eighty (180) days after the effective date
of the registration statement filed with respect to said offering.
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(c) Following the effectiveness of a Registration
(including, without limitation a Registration for sale on a delayed or
continuous basis under Rule 415 under the Securities Act), each Holder agrees
not to effect any sales of AMG Stock after they have received notice from AMG to
suspend sales as a result of the commencement any Suspension Period. Each Holder
may recommence effecting sales of AMG Stock following further notice to such
effect from AMG. For purposes hereof, a "Suspension Period" shall mean the
pendency or occurrence of an event that would make it impractical or inadvisable
(i) to cause a Registration Statement to remain in effect or (ii) to permit the
sale of AMG Stock by Holders, and shall include, without limitation, pending
negotiations relating to, or consummation of, a transaction or the pendency or
occurrence of any other event that would require additional disclosure of
material information by AMG in a registration statement.
SECTION 7.7 LIMITATION OF REGISTRATION RIGHTS. Notwithstanding
the foregoing, AMG shall not be required to effect a Registration of Registrable
Securities under this Agreement if, in the opinion of counsel for AMG, the
Holders of Registrable Securities may then sell the Registrable Securities
proposed to be sold without registration under the Securities Act.
ARTICLE VIII - DISSOLUTION AND TERMINATION.
SECTION 8.1 EVENTS OF DISSOLUTION.
(a) The Partnership shall be dissolved and its affairs
wound up:
(i) on a date designated in writing by the
General Partner;
(ii) upon the occurrence of an event of
withdrawal (as defined in the Partnership
Act) with respect to the General Partner;
(iii) upon the sale or other disposition of all
(or a substantial portion of) the
Partnership's assets;
(iv) upon the effective date of the resignation
or withdrawal of the General Partner
pursuant to Section 6.2 hereof;
(v) upon a Repurchase Closing Date;
(vi) in any event, at midnight on December 31,
2095 unless the Partnership's term is
extended pursuant to Section 2.5 hereof; or
(vii) upon the entry of a decree of judicial
dissolution under Section 17-802 of the
Partnership Act.
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(b) Dissolution of the Partnership shall be effective at the
close of business on the day on which the event occurs giving rise to the
dissolution, whereupon the Partnership shall be wound up and liquidated in an
orderly manner, as soon as reasonably practicable, but the Partnership shall not
terminate until the assets of the Partnership shall have been distributed as
provided herein. Notwithstanding the dissolution of the Partnership, prior to
the termination of the Partnership, as aforesaid, the business of the
Partnership and the affairs of the Partners, as such, shall continue to be
governed by this Agreement. The General Partner or, if there be none, a
liquidator approved by a Majority Vote, shall liquidate the assets of the
Partnership and apply and distribute the proceeds thereof as contemplated by
Section 4.4 hereof.
(c) Upon an event described in Section 8.1(a)(ii) or 8.1(a)(v)
that would otherwise result in a dissolution of the Partnership, the Partnership
shall not be dissolved if, with thirty (30) days after the event described in
either of such Sections, the holders of more than fifty percent (50%) of the
Partnership Points then outstanding (including the General Partner and including
as outstanding Partnership Points held by the General Partner any Partnership
Points in the Executive Retention Reserve or Incentive Reserve) (or such greater
percentage in interest as may be required under applicable law) in writing agree
to continue the business of the Partnership and to the selection, effective as
of the date of such event, of a successor general partner (which, to the extent
permitted by applicable law, may be the General Partner). In such event, the
Partnership shall continue until dissolved in accordance with this Section 8.
(d) Within one hundred and eighty (180) days following an
event described in Section 8.1(a)(v) that results in the dissolution of the
Partnership, the General Partner and the holders of more than fifty percent
(50%) of the Partnership Points then outstanding (including the General Partner)
(or such greater percentage of holders of Partnership Interests as may then be
required under applicable law) may elect in writing to reconstitute and continue
the business of the Partnership by forming a new limited partnership on the same
terms and provisions as are set forth in this Agreement. If such an election is
timely made, all the Limited Partners of the Partnership shall continue as
limited partners of the reconstituted partnership and the General Partner of the
Partnership shall continue as general partner of the reconstituted partnership.
Upon any such election by the holders of more than fifty percent (50%) of the
Partnership Points then outstanding (or such greater percentage of holders of
Partnership Interests as may then be required under applicable law), all holders
of Partnership Interests shall be bound thereby and shall be deemed to have
approved thereof. Upon any such election by the holders of more than fifty
percent (50%) of the Partnership Points then outstanding (or such greater
percentage of holders of Partnership Interests as may then be required under
applicable law), all necessary steps shall be taken to cancel this Agreement and
the Certificate of Limited Partnership of the Partnership and to enter into a
new partnership agreement (which is identical to this Agreement) and certificate
of limited partnership of the reconstituted partnership, and the General Partner
may for this purpose and all purposes stated in such agreement or certificate,
exercise the power of attorney granted pursuant to Section 8.1(d) below.
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(e) Each Limited Partner and each Employee Stockholder and
each other Person who accepts Partnership Interests constitutes and appoints
each of the General Partner (and any successor thereof by merger, transfer,
election or otherwise), and each of the General Partner's authorized officers
and attorneys-in-fact, with full power of substitution, as its, his or her true
and lawful agents and attorneys-in-fact, with full power and authority in its,
his or her name, place and xxxxx to: execute, swear to, acknowledge, deliver,
file and record in the appropriate public offices all certificates and other
instruments including, at the option of the General Partner, this Agreement and
the Certificate of Limited Partnership and all amendments and restatements
thereof or any of the foregoing relating to the continuation of the Partnership
as contemplated by paragraph (c) above or the reconstituted partnership, as
contemplated by paragraph (d) above, that the General Partner deems appropriate
or necessary to exercise any powers of the General Partner or to carry out the
purposes of this Agreement and to form, qualify, or continue the existence or
qualification of the Partnership or the reconstituted partnership, as
contemplated by paragraph (c) or paragraph (d) above, as a limited partnership
in the State of Delaware and under the Delaware Act and in all jurisdictions in
which the Partnership may or may wish to conduct business or own property.
The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive, and shall not be
affected by, the subsequent death, incompetence, dissolution, disability,
incapacity, bankruptcy or termination of any grantor and the transfer of all or
any portion of his Partnership Interest and shall extend to such Person's heirs,
successors and assigns. Each Person who accepts Partnership Interests is deemed
to consent to be bound by any representations made by the General Partner or the
authorized officers and attorneys-in-fact thereof, acting in good faith pursuant
to such power of attorney. Each Person who accepts Partnership Interests is
deemed to consent to and waive any and all defenses that may be available to
contest, negate or disaffirm any action of the General Partner or the authorized
officers and attorneys-in-fact thereof, taken in good faith under such power of
attorney. Each Limited Partner shall execute and deliver to the General Partner
within fifteen (15) days after receipt of the General Partner's request
therefor, such further designations, powers of attorney and other instruments as
the General Partner deems necessary to effectuate this Section 8.1(e).
ARTICLE IX - RECORDS AND REPORTS
SECTION 9.1 BOOKS AND RECORDS. The Officers of the Partnership and the
General Partner shall cause the Partnership to keep complete and accurate books
of account with respect to the operations of the Partnership, prepared in
accordance with generally accepted accounting principles, using the accrual
method of accounting, consistently applied. Such books shall reflect that the
interests in the Partnership have not been registered under the Securities Act,
and that the interests may not be sold or transferred without registration under
the Securities Act or exemption therefrom and without compliance with Article V
or Article VI of this Agreement. Such books shall be maintained at the principal
office of the Partnership in Pasadena, California or at such other place as the
General Partner shall determine.
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SECTION 9.2 ACCOUNTING. The Partnership's books of account shall be
kept on the accrual method of accounting, or on such other method of accounting
as the General Partner may from time to time determine, with the advice of the
Independent Public Accountants, and shall be closed and balanced at the end of
each Partnership fiscal year. The taxable year of the Partnership shall be the
twelve months ending December 31 or such other taxable year as the General
Partner may designate, with the written advice of the Independent Public
Accountants.
SECTION 9.3 FINANCIAL REPORTS. Each Limited Partner whose Employee
Stockholder is an Officer of the Partnership, agrees on its behalf and on behalf
of such Employee Stockholder, and each Employee Stockholders agree to cause the
Partnership to furnish to the General Partner each of the following:
(a) Within twenty-five (25) days after the end of each
month and each fiscal quarter, an unaudited financial report of Partnership,
which report shall be prepared in accordance with generally accepted accounting
principles using the accrual method of accounting, consistently applied (except
that the financial report may (i) be subject to normal year-end audit
adjustments which are neither individually nor in the aggregate material and
(ii) not contain all notes thereto which may be required in accordance with
generally accepted accounting principles) and shall be certified by the most
senior financial officer of the Partnership to have been so prepared, and which
shall include the following:
(i) Statements of operations, changes in
partners' capital and cash flows for such month or quarter, together
with a cumulative income statement from the first day of the
then-current fiscal year to the last day of such month or quarter;
(ii) a balance sheet as of the last day of such
month or quarter; and
(iii) with respect to the quarterly financial
report, a detailed computation of Free Cash Flow for such quarter.
(b) Within sixty (60) days after the end of each fiscal
year of the Partnership, audited financial statements of the Partnership, which
shall include statements of operations, changes in partners' capital and cash
flows for such year and a balance sheet as of the last day thereof, each
prepared in accordance with generally accepted accounting principles, using the
accrual method of accounting, consistently applied, certified by Independent
Public Accountants satisfactory to the General Partner.
(c) Within twenty-five (25) days after the end of each
calendar quarter, the Partnership's operating budget for each of the next four
(4) fiscal quarters, in such form and containing such estimates as may be
requested by the General Partner from time to time, certified by the most senior
financial officer of the Partnership.
(d) Copies of all financial statements, reports, notices,
press releases and other documents released to the public.
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(e) As promptly as is reasonably possible following request by
the General Partner from time to time, such operations and/or performance data
as may be requested, in each case certified by the most senior financial officer
of the Partnership if such a certification is requested by the General Partner.
(f) Any other financial or other information available to the
Officers as the General Partner shall have reasonably requested on a timely
basis.
SECTION 9.4 MEETINGS.
(a) The Partnership and its Officers shall hold such regular
meetings at the Partnership's principal place of business with representatives
of the General Partner as may be reasonably requested by the General Partner
from time to time. These meetings shall be attended (either in person or by
telephone) by such of the Officers and other employees of the Partnership as may
be requested by the General Partner or any of the Officers. The Partnership will
reimburse the reasonable travel expenses of any representative of the General
Partner who attends each such meeting.
(b) At each meeting, the Officers of the Partnership shall
make such presentations regarding the Partnership and its performance,
operations and/or budgets as may be reasonably requested by the General Partner,
and each of the attendees (whether in person or by telephone) at such meeting
shall have the right to submit proposals and suggestions regarding the
Partnership, and the attendees at the meeting shall discuss and consider such
proposals and suggestions.
SECTION 9.5 TAX MATTERS.
(a) The General Partner shall cause to be prepared and filed
on or before the due date (or any extension thereof) Federal, state, local and
foreign tax or information returns required to be filed by the Partnership. The
General Partner, to the extent that Partnership funds are available, shall cause
the Partnership to pay any taxes payable by the Partnership (it being understood
that the expenses of preparation and filing of such tax returns, and the amounts
of such taxes, are to be treated as Operating Expenses of the Partnership to be
paid from Operating Cash Flow); provided that the General Partner shall not be
required to cause the Partnership to pay any tax so long as the General Partner
or the Partnership is in good faith and by appropriate legal proceedings
contesting the validity, applicability or amount thereof and such contest does
not materially endanger any right or interest of the Partnership and adequate
reserves therefor have been set aside by the Partnership.
(b) The General Partner shall be the tax matters partner for
the Partnership pursuant to Sections 6221 through 6233 of the Code.
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ARTICLE X - MISCELLANEOUS.
SECTION 10.1 NOTICES. All notices, requests, elections, consents or
demands permitted or required to be made under this Agreement shall be in
writing, signed by the Partner or Partners giving such notice, request,
election, consent or demand and shall be delivered personally or by confirmed
facsimile, or sent by registered or certified mail, or by commercial courier to
the other Partners, at their addresses set forth on the signature pages hereof
or on Schedule A hereto, or at such other addresses as may be supplied by
written notice given in conformity with the terms of this Section 10.1. The date
of any such personal or facsimile delivery or the date of delivery by an
overnight courier or the date five (5) days after the date of mailing by
registered or certified mail, as the case may be, shall be the date of such
notice.
SECTION 10.2 SUCCESSORS AND ASSIGNS. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon and shall inure
to the benefit of the Partners, their respective successors,
successors-in-title, heirs and assigns, and each and every
successors-in-interest to any Partners, whether such successor acquires such
interest by way of gift, purchase, foreclosure or by any other method, and each
shall hold such interest subject to all of the terms and provisions of this
Agreement.
SECTION 10.3 AMENDMENTS. No amendments may be made to this Agreement
without the prior written consent of (i) the General Partner and (ii) a Majority
Vote of the Limited Partners and, with respect to Section 3.9 hereof, AMG;
provided, however, that the General Partner shall make such amendments and
additions to Schedule A hereto as are required by the provisions hereof; and,
provided further, that the General Partner may amend this Agreement to correct
any printing, stenographic or clerical errors or omissions. Except as otherwise
provided for herein, no amendment may be made to this Agreement which materially
and adversely affects a Limited Partner in a manner different from all the other
Limited Partners, without the prior written consent of the Limited Partner which
would be so affected.
SECTION 10.4 NO PARTITION. No Partner nor any successors-in-interest to
any Partner, shall have the right while this Agreement remains in effect to have
the property of the Partnership partitioned, or to file a complaint or institute
any proceeding at law or in equity to have the property of the Partnership
partitioned, and each Partner, on behalf of himself, his successors,
representatives, heirs and assigns, hereby waives any such right. It is the
intent of the Partners that during the term of this Agreement, the rights of the
Partners and their successors-in-interest, as among themselves, shall be
governed by the terms of this Agreement, and that the right of any Partner or
successors-in-interest to assign, transfer, sell or otherwise dispose of his
interest in the Partnership shall be subject to the limitations and restrictions
of this Agreement.
SECTION 10.5 NO WAIVER. The failure of any Partner to insist upon
strict performance of a covenant hereunder or of any obligation hereunder,
irrespective of the length of time for which such failure continues, shall not
be a waiver of such Partner's right to demand strict compliance in the future.
No consent or waiver, express or implied, to or of any
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breach or default in the performance of any obligation hereunder, shall
constitute a consent or waiver to or of any other breach or default in the
performance of the same or any other obligation hereunder.
SECTION 10.6 DISPUTE RESOLUTION. All disputes arising in connection
with this Agreement shall be resolved by binding arbitration in accordance with
the applicable rules of the American Arbitration Association. The arbitration
shall be held in Delaware before a single arbitrator selected in accordance with
Section 12 of the American Arbitration Association Commercial Arbitration Rules
who shall have substantial business experience in the investment advisory
industry, and shall otherwise be conducted in accordance with the American
Arbitration Association Commercial Arbitration Rules.
SECTION 10.7 PRIOR AGREEMENTS SUPERSEDED. This Agreement, (including
without limitation, the schedules and exhibits hereto), supersedes the prior
understandings and agreements among the parties with respect to the subject
matter hereof.
SECTION 10.8 CAPTIONS. Titles or captions of Articles or Sections
contained in this Agreement are inserted as a matter of convenience and for
reference, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
SECTION 10.9 COUNTERPARTS. This Agreement may be executed in a number
of counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the Partners notwithstanding that all Partners have
not signed the same counterpart.
SECTION 10.10 APPLICABLE LAW; JURISDICTION. This Agreement and the
rights and obligations of the parties hereunder shall be governed by and
interpreted, construed and enforced in accordance with the laws of the State of
Delaware, without applying the choice of law provisions thereof.
SECTION 10.11 SINGULAR AND PLURAL. All terms herein using the singular
shall include the plural; all terms using the plural shall include the singular;
in each case, the term shall be as appropriate to the context of each sentence.
SECTION 10.12 CREDITORS. None of the provisions of this Agreement shall
be for the benefit of or enforceable by any creditor of (i) any Partner, (ii)
any Employee Stockholder or (iii) the Partnership, other than a Partner who is
also a creditor of the Partnership.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF the General Partner and the Initial Limited Partners
have executed and delivered this Amended and Restated Limited Partnership
Agreement as of the day and year first above written.
GENERAL PARTNER
Name and Signature Address
FIRST QUADRANT CORP. 000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
By:/s/ Xxxxxxx X. Xxxx
---------------------------
Xxxxxxx X. Xxxx
President
LIMITED PARTNERS
Name and Signature Address
X.X. XXXXXX CORPORATION 000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
By:/s/ Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx
President
CULONBOIS CORPORATION 000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
By:/s/ Xxxxxx X. Xxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxx
President
LUCK MONSTER CORPORATION 000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
By:/s/ Xxxxxxxxxxx X. Luck
---------------------------
Xxxxxxxxxxx X. Luck
President
58
AYPWIP CORPORATION 000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
By:/s/ Xxxxx X. Xxxxxxxxx
---------------------------
Xxxxx X. Xxxxxxxxx
President
X.X. XXXXXXX CORPORATION 000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
By:/s/ R. Xxx Xxxxxxx
---------------------------
R. Xxx Xxxxxxx
President
X.X. XXXXXX RUHESTANDS 00 Xxxxxxxxx
XXXXXXXXXXX Xxxxxxxxx, XX 00000
By:/s/ Xxxxxxx X. Xxxxxx
---------------------------
Xxxxxxx X. Xxxxxx
President
XXXXXX, INC. X.X. Xxx 000
Xxxxxxxxxx Xxxx
Xx. Xxxxxx, XX 00000
By:/s/ Xxxxxx X. Xxxxxx, Xx.
---------------------------
Xxxxxx X. Xxxxxx, Xx.
President
XXXXXXX A.R. GOODSALL 00 Xxx Xxxx Xxxx
Xxxxxx X0X 0XX
Xxxxxx Xxxxxxx
/s/ Xxxxxxx A.R. Goodsall
---------------------------
XXXXXX X. XXXXX 00 Xxx Xxxx Xxxx
Xxxxxx X0X 0XX
Xxxxxx Xxxxxxx
/s/ Xxxxxx X. Xxxxx
---------------------------
59
ACKNOWLEDGMENT
For good and valuable consideration, the receipt of which is hereby
acknowledged, each of the undersigned hereby acknowledges the provisions of this
Agreement, agrees that he constitutes an Employee Stockholder hereunder and
agrees to fulfill all of the rights and duties of an Employee Stockholder
hereunder.
/s/ Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxxxxxxxx X. Luck
---------------------------
Xxxxxxxxxxx X. Luck
/s/ Xxxxx X. Xxxxxxxxx
---------------------------
Xxxxx X. Xxxxxxxxx
/s/ R. Xxx Xxxxxxx
---------------------------
R. Xxx Xxxxxxx
/s/ Xxxxxxx X. Xxxxxx
---------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx, Xx.
---------------------------
Xxxxxx X. Xxxxxx, Xx.
The undersigned is executing this Agreement solely to acknowledge and
agree to be bound by the provisions of Section 3.9, the relevant provisions of
Article VII, and Section 10.6 hereof.
AFFILIATED MANAGERS GROUP, INC. Address
Two International Place
By:/s/ Xxxxxxx X. Xxxx 23rd Floor
---------------------------
Name: Xxxxxxx X. Xxxx Xxxxxx, XX 00000
Title: President and
Chief Executive Officer
60
SCHEDULE A
ATTACHED TO AND MADE A PART OF
THE AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF
FIRST QUADRANT, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
INITIAL
PARTNER/ PARTNERSHIP CAPITAL
REGISTERED OWNER POINTS ACCOUNT
---------------- ----------- -------
First Quadrant Corp. 47.62 $ **confidential
treatment
requested**
X.X. Xxxxxx Corporation 2.94
Xxxxxxx A.R. Goodsall 2.94 $ 0.00
AYPWIP Corporation 2.94 $ 0.00
Xxxxxx, Inc. 2.94 $ 0.00
X. X. Xxxxxx Ruhestands Corporation 2.94 $ 0.00
X. X. Xxxxxxx Corporation 1.18 $ 0.00
Culonbois Corporation 1.18 $ 0.00
Xxxxxx X. Xxxxx .59 $ 0.00
Luck Monster Corporation .59 $ 0.00
Issued and Vested 65.86
Incentive Reserve* 24.14
Executive Retention Reserve** 10.00
------
Total 100.00 **confidential
treatment
requested**
* Deemed to be outstanding Partnership Points held by First Quadrant
Corp. for all purposes of this Agreement.
** Deemed to be outstanding Partnership Points held by First Quadrant
Corp. for all purposes of this Agreement other than the determination
of Majority Vote and for determining payment of Capital Calls as set
forth in Section 4.1 hereof.
