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EXHIBIT 10.8
SKYLINE ASSET MANAGEMENT, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
AUGUST 31, 1995
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SKYLINE ASSET MANAGEMENT, 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..........................................................8
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................................................................9
Section 2.7 Liability of Partners; No Deficit Restoration Obligation........................10
Section 2.8 Exculpation of Liability........................................................10
Section 2.9 Indemnification.................................................................10
Section 2.10 Fiscal Year.....................................................................11
ARTICLE III - MANAGEMENT OF THE PARTNERSHIP........................................................11
Section 3.1 Management in General...........................................................11
Section 3.2 Officers of the Partnership and Mandatory Retirement............................12
Section 3.3 Operation of the Business of the Partnership....................................13
Section 3.4 Compensation and Expenses of the Partner........................................15
Section 3.5 Other Business of the General Partner and its Affiliates........................15
Section 3.6 Non Solicitation and Non Disclosure by Limited Partners and Employee
Stockholders....................................................................15
Section 3.7 Remedies Upon Breach............................................................17
Section 3.8 Repurchase Upon Termination of Employment.......................................17
Section 3.9 Puts............................................................................20
Section 3.10 Exchange Rights of Limited Partners of the Partnership..........................22
Section 3.11 No Employment Obligation........................................................22
Section 3.12 Miscellaneous...................................................................22
ARTICLE IV - REGISTRATION RIGHTS...................................................................23
Section 4.1. Piggy-back Registrations........................................................23
Section 4.2. Registrable Securities..........................................................23
Section 4.3. Further Obligations of AMG......................................................23
Section 4.4. Registration Expenses...........................................................24
Section 4.5. Indemnification; Contribution...................................................24
Section 4.6. Limitations.....................................................................25
Section 4.7. Limitation of Registration Rights...............................................26
(i)
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ARTICLE V - CAPITAL CONTRIBUTIONS; DISTRIBUTIONS CAPITAL ACCOUNTS AND ALLO............................27
Section 5.1 Capital Contributions..............................................................27
Section 5.2 Capital Accounts; Allocations......................................................27
Section 5.3 Distributions......................................................................29
Section 5.4 Distributions Upon Liquidation; Establishment of a Reserve Upon
Liquidation........................................................................31
Section 5.5 Proceeds from the Sale of Securities; Insurance Proceeds; Certain Special
Allocations........................................................................31
Section 5.6 Federal Tax Allocations............................................................32
ARTICLE VI - TRANSFER OF PARTNERSHIP INTERESTS BY
LIMITED PARTNERS, ADMISSION OF ADDITIONAL PARTNERS,
REDEMPTION AND WITHDRAWAL........................................................................32
Section 6.1 Assignability of Interests.........................................................32
Section 6.2 Substitute Limited Partners........................................................34
Section 6.3 Allocation of Distributions Between Assignor and Assignee..........................34
Section 6.4 Redemptions and Withdrawals........................................................34
Section 6.5 Issuance of Additional Limited Partnership Interests; No Preemptive Rights.........35
Section 6.6 Representation of Partners.........................................................36
ARTICLE VII - TRANSFER OF PARTNERSHIP INTEREST BY GENERAL
PARTNER; REDEMPTION, REMOVAL AND WITHDRAWAL......................................................36
Section 7.1 Assignability of Interest..........................................................36
Section 7.2 Resignation, Redemption, and Withdrawal............................................37
ARTICLE VIII - DISSOLUTION AND TERMINATION............................................................37
Section 8.1 Events of Dissolution..............................................................37
ARTICLE IX - RECORDS AND REPORTS......................................................................38
Section 9.1 Books and Records..................................................................38
Section 9.2 Accounting.........................................................................38
Section 9.3 Financial Reports..................................................................39
Section 9.4 Budget Meetings....................................................................40
Section 9.5 Tax Matters........................................................................40
ARTICLE X - MISCELLANEOUS.............................................................................41
Section 10.1 Notices............................................................................41
Section 10.2 Successors and Assigns.............................................................41
Section 10.3 Amendments.........................................................................41
(ii)
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Section 10.4 No Partition.......................................................................41
Section 10.5 No Waiver..........................................................................41
Section 10.6 Prior Agreements Superseded........................................................42
Section 10.7 Captions...........................................................................42
Section 10.8 Counterparts.......................................................................42
Section 10.9 Applicable Law.....................................................................42
Section 10.10 Singular and Plural................................................................42
Section 10.11 Creditors..........................................................................42
SCHEDULES AND EXHIBITS
Exhibit A Partners and Partnership Points
Exhibit B Form of Non Solicitation Agreement
Schedule 5.1(a) Assets contributed by Mesirow Asset Management, Inc.
(iii)
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SKYLINE ASSET MANAGEMENT, L.P.
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
This Amended and Restated Limited Partnership Agreement (the
"Agreement") is made and entered into as of ___________, 1995 (the "Effective
Date"), by and among Affiliated Managers Group, Inc., a Delaware corporation
("AMG"), as general partner, and the limited partners named on Exhibit A hereto.
AMG and any Person who succeeds AMG as general partner of the partnership is
sometimes referred to herein as the "General 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 Limited
Partnership Agreement of Skyline Asset Management, L.P. entered into as of June
6, 1995 by and among the Initial Limited Partners and Mesirow Asset Management,
Inc.
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 6.5.
"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 twenty-five percent (25%) 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.
Notwithstanding the foregoing, no Limited Partner or Employee Stockholder shall
be an Affiliate of the Partnership for purposes of this Agreement.
"Agreement" shall mean this Amended and Restated Limited Partnership
Agreement, as it may from time to time be amended, supplemented or restated.
"AMG Stock" shall have the meaning specified in Section 3.10(a).
"Annual Put Limit" shall have the meaning specified in Section
3.9(b)(A).
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"Asset Transfers" shall have the meaning specified in the
Partnership Interest Purchase Agreement.
"Average Free Cash Flow" shall mean fifty percent (50%) of the
Partnership's Free Cash Flow (net of Free Cash Flow Expenditures) for the
twenty-four (24) month period ending on a date specified as the ending date for
the calculation of Average Free Cash Flow; provided, however, that if any
portion of such twenty-four (24) month period would precede the effective date
of the Asset Transfers, then "Average Free Cash Flow" shall mean fifty percent
(50%) of (a) the Partnership's Free Cash Flow for the period from the effective
date of the Asset Transfers to the last day of such twenty-four (24) month
period, plus (b) forty-eight percent (48%) of the revenues of the Institutional
Business from investment management and advisory fees (determined on an accrual
basis in accordance with generally accepted accounting principles, consistently
applied) from the start of such twenty-four (24) month period to the effective
date of the Asset Transfers.
"Bankruptcy Event" shall have the meaning specified in Section 3.8
hereof.
"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 5.2 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.
"Carry-Over Put Limit" shall have the meaning specified in Section
3.9(b)(B) hereof.
"CEO" shall have the meaning specified in Section 3.2(a) hereof.
"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.
"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 that certain Officer and/or
employee of the Partnership who is the owner of the issued and outstanding
capital stock of a Limited Partner, and listed as such on Exhibit A hereto;
provided, however, that if a Limited Partner is a natural person, the term
Employee Stockholder shall refer to such natural person.
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"Exercise Period" shall mean, with respect to any fiscal year, the
period of thirty (30) calendar days following the last day on which the
Partnership distributes to its Partners (promptly after receipt thereof from the
Independent Public Accountants) the audited financial statements of the
Partnership for such fiscal year; provided however that if AMG has completed a
Registration and is subject to the reporting requirements of either Section 13
or Section 15(d) of the Exchange Act of 1934, as amended, the period shall
instead be the period of thirty (30) calendar days following the date on which
the audited financial statements of AMG for such fiscal year are filed with the
Securities and Exchange Commission pursuant to such reporting requirements.
"Fair Market Value" shall mean the fair market value as reasonably
determined in good faith by the Board of Directors of the General Partner.
"For Cause" shall mean, with respect to the termination of an
Employee Stockholder, any of the following:
(a) the Employee Stockholder either has committed an act of
embezzlement or misappropriation against the Partnership or has (i) been
convicted by a court of competent jurisdiction, (ii) pleaded nolo contendere or
(iii) entered into a settlement with, or consented to the issuance of an order
to be issued by, any Governmental Authority, which settlement or order involves
any penalty, fine, admission of guilt or liability or other sanction, and
which, in the case of (i), (ii) or (iii), occurs in connection with any
proceeding involving (A) a violation of federal or state securities laws or (B)
a theft or other crime involving dishonesty;
(b) the Employee Stockholder has persistently and willfully neglected
his duties or has failed to spend sufficient amounts of his working time,
energy and skills so as to perform diligently and faithfully his
responsibilities and duties to the Partnership, after the Partnership 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 thirty (30) days), to conform his conduct to such duties; or
(c) The Employee Stockholder has engaged in Prohibited Competition
Activity or violated or breached any material provision of his Non-Solicitation
Agreement or engaged in any of the activities prohibited by Section 3.6 hereof,
other than an isolated, insubstantial and inadvertent action which the Employee
Stockholder does not take in bad faith and does remedy promptly (and, in any
event, in not more than thirty (30) days) after receipt of notice of such
action given by the Partnership.
"Free Cash Flow" shall mean, for any period, forty-eight percent
(48%) of the Revenues From Operations of the Partnership for such period,
provided that if the compensation arrangements with respect to Skyline Fund, a
registered investment company for which the Partnership serves as investment
adviser are changed to reduce the expenses of the Fund borne by the Partnership,
then the percentage of Revenues from Operations that constitutes Free Cash Flow
shall be increased so that after such became expenses, the net result for the
Parties is unchanged.
"Free Cash Flow Expenditures" shall have the meaning specified in
Section 3.3(c).
"General Partner" shall have the meaning specified in the preamble
of this Agreement.
"Good Reason" with respect to any Employee Stockholder shall mean
any action by the General Partner that results in a breach by the Partnership or
the General Partner (x) of Section 2.4(c)(i) (change in principal office of the
Partnership), Section 2.9 (indemnification) or Section 7.1(a)(iv) (certain
transfers to Affiliates of the General Partner), (y) of the obligation to obtain
a Majority Vote under any of the following Sections: 2.3(c), 2.7(c), 3.1(a)
(only with respect to the last full sentence thereof), 5.3(b), 6.5(a), 6.5(b),
6.5(d), 7.1(a), 7.1(c), 7.2, 8.1(a)(i) or 10.3, or (z) of the obligation under
either of the last two sentences of Section 10.3 to obtain the consent of the
Limited Partner controlled by such Employee Stockholder; provided, however, that
if (a) such breach is not the result of bad faith of the General Partner, (b)
the General Partner in good faith investigates and, to the extent necessary to
satisfy the provisions of clause (c) of this definition, remedies such breach
reasonably promptly after receipt of notice of such breach given by such
Employee Stockholder, and (c) either (i) such breach (after the effects of any
remedy in accordance with the foregoing clause (b)) does not have a material
adverse effect on the Employee Stockholder or the Partnership, or (ii) a
Majority Vote (or, if applicable, consent of such Limited
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Partner) is obtained where such breach resulted from the failure to obtain such
vote or consent, then such breach shall not constitute Good Reason hereunder.
"Governmental Authority" shall mean any foreign, federal, state or
local court, governmental authority, agency or regulatory body.
"Holders" shall have the meaning specified in Section 4.1.
"Immediate Family" shall mean the spouse, parents, grandparents,
children and siblings of an individual.
"Independent Public Accountants" shall mean any independent
certified public accountant satisfactory to the General Partner and retained by
the Partnership.
"Initial Limited Partners" shall mean those Persons who are Limited
Partners on the Effective Date.
"Institutional Business" shall have the meaning specified in Section
2.6 of the Partnership Interest Purchase Agreement.
"Investment Company Act" shall mean the Investment Company Act of
1940, as it may be amended from time to time, and any successor to such Act.
"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 who is or becomes a Limited
Partner pursuant to the terms hereof.
"Majority Vote" shall mean the affirmative approval by vote or
written consent of Limited Partners holding a majority of the outstanding Vested
Partnership Points then held by all Limited Partners (other than the General
Partner and its Affiliates).
"Mandatory Retirement" shall mean, with respect to an Employee
Stockholder, when that Employee Stockholder reaches age sixty-five (65);
provided, however, that with the consent of the General Partner and a Majority
Vote, Mandatory Retirement may be extended up to age sixty-eight (68) with
respect to any particular Employee Stockholder.
"NASD" shall have the meaning specified in Section 4.4.
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"Non Solicitation Agreement" shall mean a Non Solicitation/Non
Disclosure Agreement in form of Exhibit B hereto or in such other form and
substance as is satisfactory to the General Partner.
"Operating Cash Flow" shall mean, for any period, an amount equal to
the difference 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 all the Partners in the Partnership.
"Partnership Interest Purchase Agreement" shall mean that certain
Partnership Interest Purchase Agreement dated as of June 6, 1995, by and among
the General Partner, the Partnership, Mesirow Asset Management, Inc., Mesirow
Financial Holdings, Inc., certain managers of Mesirow Asset Management, Inc. and
certain manager-owned corporations, as the same has been amended from time to
time prior to the date hereof.
"Partnership Points" shall mean as of any date, with respect to a
Partner, the aggregate number of Partnership Points (representing the right to
receive certain distributions after the Effective Date) of such Partner
(including both Vested Partnership Points and unvested Partnership Points) as
set forth on Exhibit A hereto, as amended from time to time in accordance with
its terms and the terms hereof, and as in effect on such date.
"Percentage Exchanged" shall have the meaning specified in Section
3.10(a).
"Permanent Incapacity" shall mean, with respect to an Employee
Stockholder, (a) the inability of the Employee Stockholder, by reason of injury,
illness or other similar cause, to have performed his duties and
responsibilities, for a continuous period of one hundred eighty (180) days (as
determined by a licensed physician agreed upon for the purpose by the General
Partner and such Employee Stockholder or his representative, or failing
selection of such physician within ten (10) days of a written request thereof by
either party to the other, then designated by an independent representative of
the American Medical Association) or (b) the incompetence, metal incapacity or
insanity of such Person (as determined by a licensed physician agreed upon for
the purpose by the General Partner and such Employee Stockholder or his
representative, or failing selection of such physician within ten (10) days of a
written request thereof by either party to the other, then designated by an
independent representative of the American Medical Association).
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If an Employee Stockholder's employment with the Partnership is terminated
because of the Permanent Incapacity of such Employee Stockholder, the date of
such termination shall be deemed to be the later of (x) the date such Permanent
Incapacity is finally determined, or (y) the date such Employee Stockholder's
employment with the Partnership is terminated.
"Person" shall mean any individual, partnership (general or
limited), corporation, limited liability company, limited liability partnership,
association, trust, joint venture, unincorporated organization, and any
government, governmental department or agency or political subdivision thereof.
"Predecessor Agreement" shall mean that certain Limited Partnership
Agreement of Skyline Asset Management, L.P. entered into on June 6, 1995 by and
among the Initial Limited Partners and Mesirow Asset Management, Inc., pursuant
to which this Partnership was formed, which partnership agreement is being
amended and restated by this Agreement.
"Prohibited Competitive Activity" shall mean any of the following
activities:
(a) directly or indirectly, whether as owner, part owner,
shareholder, 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 an Affiliate of the Partnership, (i) providing Investment
Management Services with respect to any funds or investments with respect to
which the Partnership is performing Investment Management Services, or (ii)
soliciting any person or entity for the purpose of causing any funds or
investments with respect to which the Partnership provides Investment Management
Services to be withdrawn from such management; or
(b) directly or indirectly, whether as owner, part owner,
shareholder, 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 an Affiliate of the Partnership, performing any Investment
Management Services.
"Purchase Date" shall have the meaning specified in Section 3.9(d).
"Put" shall have the meaning specified in Section 3.9(a).
"Put Price" shall have the meaning specified in Section 3.9(e).
"Registrable Securities" shall have the meaning specified in Section
4.2.
"Registration" shall have the meaning specified in Section 3.10(a).
"Registration Expenses" shall have the meaning specified in Section
4.4.
"Repurchase" shall mean a purchase or repurchase of Partnership
Interests made pursuant to Section 3.8(a).
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"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
3.8(a).
"Repurchase Price" shall have the meaning specified in Section
3.8(c).
"Retirement" shall mean, with respect to an Employee Stockholder,
the permanent cessation of such Employee Stockholder's active employment
performing Investment Management Services, after the earlier of (a) the date
such Employee Stockholder shall reach fifty-five (55) years of age, and (b) the
date such Employee Stockholder shall have been continuously employed, counting
both employment with the Partnership and prior employment by Mesirow Asset
Management, Inc., an Illinois corporation, for a period of twenty (20) years;
provided, however, that such retirement shall in no event be before the twelfth
anniversary of the Effective Date.
"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) revenues 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, and (c) payments
received pursuant to any insurance policies.
"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 to such Act.
"Selling Partner" shall have the meaning specified in Section
3.9(a).
"Suspension Period" shall have the meaning specified in Section
4.6(c).
"Transfer" shall have the meaning specified in Section 6.1.
"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).
"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 in accordance with the provisions of the
Agreement, including Exhibit A hereto, or which were fully vested when issued.
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
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on Exhibit A hereto, which Exhibit shall be updated by the General Partner as
additional Partnership Points are issued and/or vest from time to time in
accordance with the Agreement, including without limitation Exhibit A hereto.
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 shall cause
the Partnership to comply with all requirements of the Partnership Act and to
qualify to do business as a limited partnership in any jurisdiction where the
General Partner shall deem it necessary, appropriate or desirable.
SECTION 2.2 NAME OF THE PARTNERSHIP. The name of the Partnership
shall be "Skyline Asset Management, L.P." or such other name as the General
Partner may from time to time determine. The General Partner shall cause to be
filed on behalf of the Partnership such partnership or assumed or fictitious
name certificates as the General Partner 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 business of providing Investment
Management Services 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 organized under the Partnership Act and which is approved by
the General Partner and by a Majority Vote.
SECTION 2.4 PLACE OF BUSINESS; REGISTERED AGENT.
(a) The principal place of business of the Partnership shall
be 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000.
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(b) The Partnership's resident agent for service of process
in Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 0000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, 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 Chicago, Illinois, then such action may not be taken without
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 after any
such change give each Limited Partner notice of 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 or in respect of the Partnership, other than payment of such Limited
Partner's Capital Contribution and as otherwise specifically provided in this
Agreement.
(c) 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; provided, however, that such Limited Partner will be
required to eliminate such deficit to the extent that all or any part of any
such deficit is attributable to the allocation to such
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Limited Partner of any extraordinary cost or expense incurred by the Partnership
(as determined by the General Partner) with the concurrence of a Majority Vote.
SECTION 2.8 EXCULPATION OF LIABILITY. Neither the General Partner
nor any Limited Partner nor their respective agents or officers shall be liable
to the Partnership or the Partners except for material breaches of this
Agreement, gross negligence, willful malfeasance, fraud, and actions not taken
in good faith in the reasonable belief that such Person is acting in the best
interests of the Partnership.
SECTION 2.9 INDEMNIFICATION.
(a) The Partnership shall indemnify the Partners and their
agents and officers and agents and Officers of the Partnership, including any
such agents or officers who serve at the request of the Partnership as either
directors, officers or trustees of another organization in which the Partnership
has any interest as a security holder, creditor or otherwise (each an
"Indemnified Person") against all liabilities, losses and expenses, including,
but not limited to, amounts paid in satisfaction of judgments, in compromise
settlements, and fines, penalties and counsel fees, reasonably incurred in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Indemnified Person may be or may have been
involved as a party or otherwise or with which it or they may be or may have
been threatened, while in office or thereafter by reason of being or having been
such Indemnified Person or acting on behalf of the Partnership, including,
without limitation, acting as a partner or shareholder of another organization
in which the Partnership has any interest, or serving or having served at the
request of the Partnership as such director, officer or trustee; provided,
however, that indemnification shall not be paid hereunder with respect to any
matter as to which such Indemnified Person shall have been finally adjudicated
in any such action, suit or other proceeding, or otherwise by a court of
competent jurisdiction, to have committed an action of gross negligence, willful
malfeasance, or fraud in the conduct of its or their office or actions not taken
in good faith in the reasonable belief that such Indemnified Person is acting in
the best interests of the Partnership.
(b) Expenses, including reasonable fees and disbursements of
counsel, so incurred by the Indemnified Person shall be paid by the Partnership
in advance of the final disposition of any such action, suit or proceeding on
the condition that the amounts so paid shall be repaid to the Partnership if it
is ultimately determined that indemnification of such expenses is not authorized
hereunder. The Partnership may, if it deems appropriate, require any person for
whom such expenses are paid in advance of final disposition to deliver adequate
security to the Partnership for his obligation to repay such indemnification.
(c) The right of indemnification hereby provided shall not
be exclusive of or affect any other rights to which the Indemnified Person may
be entitled. Nothing contained in this Section 2.9 shall limit any lawful rights
to indemnification existing independently of this Section. The right of
indemnification provided by this Section 2.9 shall not be construed to increase
the liability of the Limited Partners as set forth in Section 2.7.
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(d) The provisions of this Section 2.9 are intended for the
benefit of and shall be enforceable by the respective Indemnified Persons.
SECTION 2.10 FISCAL YEAR. The fiscal year of the Partnership shall
be the twelve-month period ending on December 31 unless otherwise determined by
the General Partner.
ARTICLE III - MANAGEMENT OF THE PARTNERSHIP.
SECTION 3.1 MANAGEMENT IN GENERAL
(a) The management and control of the business of the
Partnership shall be vested in the General Partner. Except to the extent
otherwise provided in Section 3.3 hereof (recognizing expressly that the General
Partner has delegated only specific responsibilities pursuant to Sections
3.3(a), 3.3(b) and 3.3(c) hereof, and acknowledging that the General Partner
will have all such rights, duties, obligations and liabilities under Delaware
law as derive from being the general partner of a Delaware limited partnership,
and under the provisions of this Agreement), the General Partner, acting alone
with no other approval or authorization of the Partners (except to the extent
that any specific provision of this Agreement requires a Majority Vote), shall
have the 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, including,
without limitation, (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. Notwithstanding any other provision of
law or of this Agreement, the General Partner shall not, without a Majority
Vote, cause the Partnership to:
(i) sell, lease, exchange, transfer or otherwise
dispose of all or substantially all of the Partnership's
assets in a single transaction or series of related
transactions;
(ii) pledge all or substantially all of the
Partnership's assets (provided, however, that nothing herein
shall limit the General Partner's right to pledge or otherwise
encumber any Partnership Interests it holds);
(iii) guarantee the debts or obligations of any other
entity;
(iv) directly or indirectly, merge, consolidate or
engage in any similar reorganization;
(v) amend or modify or repeal any provision of the
Certificate of Limited Partnership;
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(vi) purchase, lease, exchange or otherwise acquire
assets (including securities), directly or indirectly, in a
single transaction or series of released transactions having a
value in excess of $100,000;
(vii) incur indebtedness for borrowed money in excess
of $250,000; or
(viii) enter into any transaction with a Partner or
any Affiliate of a Partner.
(b) The Limited Partners, as such, shall not participate in
the control of the business of the Partnership within the meaning of Section
17-303(a) of the Partnership Act. Notwithstanding the foregoing, a Limited
Partner may consult with and advise the General Partner with respect to any
matter, including the business of the Partnership, and do all other acts
contemplated by Section 17-303(b) of the Partnership Act. An Employee
Stockholder may serve as an employee of the Partnership, and, as an employee may
be given the generic name "Officer."
SECTION 3.2 OFFICERS OF THE PARTNERSHIP AND MANDATORY RETIREMENT.
(a) The Officers of the Partnership shall consist of a
President/Chief Executive Officer (the "CEO"), who may be appointed and removed
only by the General Partner, and such other subordinate officers as the General
Partner and the CEO, acting jointly, may determine are necessary or appropriate.
Xxxxxxx X. Xxxxxx is hereby appointed as the CEO of the Partnership.
(b) No employee or Officer of the Partnership shall be held
personally liable, by virtue of his status as an employee or Officer, for any
losses, debts or obligations of the Partnership.
(c) When an Employee Stockholder reaches Mandatory
Retirement, his employment by the Partnership shall terminate.
SECTION 3.3 OPERATION OF THE BUSINESS OF THE PARTNERSHIP.
(a) The General Partner hereby delegates to the Officers of
the Partnership authority to manage the day-to-day operations and activities of
the Partnership with respect to the provision of Investment Management Services
and the general administration of the Partnership, including the power, in the
name and on behalf of the Partnership, to:
(i) determine the use of the Operating Cash Flow as
set forth in Section 3.3(c) below;
(ii) execute such documents and do such acts as are
necessary to register or qualify the Partnership or any fund
for which it provides Investment Management Services, or the
offering of interests in such a fund, under applicable Federal
and state securities laws;
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(iii) open, maintain and close bank accounts and draw
checks or other orders for the payment of monies;
(iv) enter into contracts and other agreements with
respect to the provision of Investment Management Services and
execute other instruments, documents or reports on behalf of
the Partnership in connection therewith;
(v) 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
(vi) act for and on behalf of the Partnership in all
matters incidental to the foregoing;
provided, however, that without the prior written consent of the General Partner
(which consent expressly references this Section of this Agreement), the
Officers shall not cause the Partnership (x) to incur expenses or obligations
(including, without limitation, salaries and bonuses) that exceed its ability to
pay or provide for them out of its Operating Cash Flow on a current basis or (y)
to enter into any contract or agreement which, at the time entered into, can
reasonably be foreseen (including taking into account current, long-term,
contingent and all other obligations of the Partnership at such time) to render
it impossible for the Partnership, in any future period, to operate in the
ordinary course, consistent with past practice, with its aggregate expenses
funded entirely out of Operating Cash Flow.
(b) Subject to the limitations set forth in the proviso set
forth in the last clause of Section 3.3(a) above, in addition to general
authority as an Officer as described in Section 3.3(a) above and the authority
with respect to Operating Cash Flow as described in Section 3.3(c) below, the
CEO shall have the specific authority necessary to:
(i) make all decisions relating to the hiring and
termination of any employees (including Officers) or personnel
of, and consultants to, the Partnership;
(ii) make all decisions regarding the determination
and negotiation of the compensation and benefits arrangements
of all consultants, employees, Officers and personnel
(including the CEO) of the Partnership, including the
determination as to (A) base salary and bonuses of such
consultants, employees, Officers and personnel (including the
CEO), and (B) the terms of employee benefit plans or similar
arrangements to be established or maintained by the
Partnership, provided that in making all decisions, the CEO
will give fair and reasonable consideration to such
individual's responsibilities and position with the
Partnership as well as his or her overall contribution to the
business and financial results of the Partnership;
(iii) make all decisions relating to the overall
portfolio management and marketing strategy relating to the
investment advisory and investment management business and
activities of the Partnership; and
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(iv) arrange for the audit of the Partnership and
distribution of reports with respect thereto and of financial
statements to the Partners.
(c) 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 CEO of the Partnership. In
furtherance and not in limitation of the foregoing, it is expressly agreed that
the Operating Cash Flow of the Partnership for any period shall be used as
determined by the CEO of the Partnership in his sole discretion to provide for
compensation and benefits to employees of the Partnership, including the
Officers of the Partnership. Free Cash Flow may be used to provide for and pay
the business expenses and expenditures of the Partnership to the extent
specified in Section 3.3(d) with respect to key-man insurance and in Section
9.5(c) with respect to unincorporated business taxes 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").
(d) 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 business (including, without limitation, errors and omissions
liability insurance), the premiums on which will be paid out of Operating Cash
Flow. The Partnership will also maintain such key-man life insurance policies on
each Employee Stockholder as the General Partner may deem necessary or
desirable, from time to time. The Partnership will receive the proceeds of these
key-man policies, and the Partners agree with each other and the Partnership
that the Partnership will pay the premiums on any such key-man policies out of
Free Cash Flow.
SECTION 3.4 COMPENSATION AND EXPENSES OF THE PARTNERS. Stockholders,
officers, directors, partners and agents of Partners (including, without
limitation, any Employee Stockholder) may serve as employees and/or Officers of
the Partnership and be compensated therefor as determined pursuant to Section
3.3(c). The Partnership shall pay and/or reimburse the General Partner out of
Operating Cash Flow for all reasonable expenses incurred by the General Partner
in connection with the operation of the Partnership; provided, however, that the
General Partner's regular overhead expenses shall not be reimbursed by the
Partnership.
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 the General Partner or 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.
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SECTION 3.6 NON SOLICITATION AND NON DISCLOSURE BY LIMITED PARTNERS
AND EMPLOYEE STOCKHOLDERS.
(a) As a condition to the admission of each Limited Partner
to the Partnership, each such Limited Partner and each Employee Stockholder
thereof has executed and delivered a Non Solicitation Agreement. In furtherance
of the purposes thereof, each Limited Partner and each Employee Stockholder
agrees, for the benefit of the Partnership and each other Partner, to observe
the provisions of this Section 3.6. This provisions of this Section 3.6 shall
not be deemed to limit any of the rights of the Partnership under the applicable
Non Solicitation Agreement. The provisions of this Section 3.6 shall not prevent
any Employee Stockholder from (i) making passive investments in a competitive
enterprise the shares of which are publicly traded provided his holdings
therein, together with any holdings of his Affiliates and his Immediate Family,
do not exceed five percent (5%) of the outstanding shares or comparable
interests in such entity, or (ii) providing Investment Management Services to
members of his Immediate Family.
(b) Each Limited Partner and each Employee Stockholder
agrees, for the benefit of the Partnership and each other Partner, not to engage
in any Prohibited Competitive Activity while employed by the Partnership or any
of its Affiliates.
(c) In furtherance and not in limitation of the provisions
of Section 3.6(b), each Limited Partner and each Employee Stockholder agrees,
for the benefit of the Partnership and each other Partner, that such Limited
Partner or Employee Stockholder shall not, without the express written consent
of the General Partner, 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 (or, such shorter period as may be determined
pursuant to Section 3.6(e)): (A) engage in any Prohibited Competitive Activity
of the type described in clause (a) of the definition thereof (provided that,
except as described in clause (B) hereof, during such period the Employee
Stockholder may engage in activity of the type described in clause (b) of the
definition of Prohibited Competitive Activity); (B) with respect to any person
or entity that is a client of the Partnership (for this purpose, any clients of
the Partnership at the date of termination of the Employee Stockholder's
employment or at any time during the six (6) months immediately preceding the
date of termination shall be deemed a "client of the Partnership") or any person
or entity with whom the Partnership was actively attempting to develop an
investment advisory or investment management relationship at any time during the
six (6) months immediately preceding the date of termination, engage in any
Prohibited Competitive Activity of the type described in clause (b) of the
definition thereof; or (C) solicit or induce any employee or former employee of
the Partnership or any of its Affiliates to terminate his relationship
therewith, or hire any such employee who was employed by the Partnership or its
Affiliates at any time during the six (6) months immediately preceding the
termination of the Employee Stockholder's employment.
(d) Each Limited Partner and each Employee Stockholder
agrees that any and all presently existing investment advisory business of the
Partnership and its Affiliates and the Institutional Business and all business
developed by the Partnership and its Affiliates, or any other employee of the
Partnership, including without limitation, all investment advisory contracts,
fees,
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commissions, compensation records, client lists, agreements, and any other
incident of any business developed by the Partnership or earned or carried on by
the Employee Stockholder for the Partnership 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 and all trade names, trademarks and service marks under which the
Partnership does business, and any combinations or variations thereof and all
related logos, are and shall be the exclusive property of the Partnership. 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 (i)
in the regular business of the Partnership or any Affiliate thereof at the
Partnership's request or (ii) upon notice to the Partnership, as otherwise
required under applicable securities laws in the opinion of counsel to the
Partnership (which counsel shall be experienced in securities laws) or pursuant
to a deposition, interrogatory, subpoena, civil investigation demand or similar
process) 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. At the termination of the Employee
Stockholder's services to the Partnership, all data, memoranda, client lists,
notes, programs and other papers, items and tangible media, and reproductions
thereof relating to the foregoing matters in the possession or control of the
Employer Stockholder (or any Limited Partner in which he holds an interest)
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).
(e) In the event that an Employee Stockholder and the
General Partner are in good faith disputing whether the termination of the
Employee Stockholder by the Partnership, with the consent of the General
Partner, is For Cause, then the term of the obligation of the applicable Limited
Partner and such Employee Stockholder under Section 3.6(c) shall be reduced so
that such term expires on the date that is the earliest of (i) one year after
such termination, (ii) the date on which a court of competent jurisdiction has
rendered a final determination that such termination is not For Cause hereunder,
or (iii) a date mutually agreed upon by the Employee Stockholder and the General
Partner.
(f) Unless Section 3.6(e) is applicable, in the event that
the employment of an Employee Stockholder with the Partnership is terminated by
the Partnership, with the consent of the General Partner, for no reason or for
any reason other than For Cause, then such Employee Stockholder and the Limited
Partner controlled by such Employee Stockholder shall have no obligation
pursuant to Section 3.6(c) after such termination.
SECTION 3.7 REMEDIES UPON BREACH. Each Limited Partner and each
Employee Stockholder agrees that any breach of the provisions of Section 3.6 or
of the Non Solicitation Agreement by such Limited Partner or Employee
Stockholder could cause irreparable damage to the Partnership and the other
Partners. The Partnership and any of the Partners shall have the
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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.
SECTION 3.8 REPURCHASE UPON TERMINATION OF EMPLOYMENT.
(a) (i) In the event that the employment by the Partnership
of any Employee Stockholder terminates for any reason, the General Partner shall
purchase all the Vested Partnership Interests held by the Limited Partner of
which such employee was the Employee Stockholder pursuant to the terms of this
Section 3.8 and (ii) in the event that a Limited Partner has filed a petition
under the United States Bankruptcy Code, or sixty (60) days after the filing by
another person against such Limited Partner 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 Vested
Partnership Interests held by such Limited Partner pursuant to the terms of this
Section 3.8 (a Limited Partner under either (i) or (ii), the "Repurchased
Partner"); provided, however, that if the termination of the Employee
Stockholder pursuant to (i) above occurs because of the death of such Employee
Stockholder, the Partnership shall first apply the proceeds of any key-man life
insurance policies maintained by the Partnership on the life of such Employee
Stockholder to effect such Repurchase and the General Partner shall purchase any
remaining portion of such Partnership Interest. If a Repurchased Partner holds
any Partnership Points that, upon either (x) the termination of employment with
the Partnership of the Employee Stockholder that controls such Repurchased
Partner or (y) a Bankruptcy Event, have not become Vested Partnership Points
hereunder, then such unvested Partnership Points shall terminate, with no
further liability or obligation of the Partnership with respect thereto
(provided however that certain terminated Partnership Points may be reissued in
accordance with the provisions of Exhibit A and, to the extent applicable,
Section 6.5(e)).
(b) Payment with respect to a Repurchase shall be made in
cash in a single installment on a date specified by the General Partner not more
than ninety (90) days after the termination of employment of the relevant
Employee Stockholder or the Bankruptcy Event, as applicable; provided, however,
that (i) if such Employee Stockholder's employment with the Partnership is
terminated because of the death of such Employee Stockholder, then, at the
election of the General Partner, the Repurchase Closing Date may be a later date
that is as soon as reasonably practicable after the Partnership has received the
proceeds of any key-man life insurance policy maintained by the Partnership on
the life of such Employee Stockholder, and (ii) if an Employee Stockholder's
employment with the Partnership is terminated because of such Employee
Stockholder's Permanent Incapacity, then the Repurchase Price shall be paid in
three (3) equal installments as follows: (A) the first such installment shall be
paid on the later of the date such Employee Stockholder's Permanent Incapacity
is finally determined or the date such Employee Stockholder's employment with
the Partnership is terminated, (B) the second installment shall be paid one (1)
calendar year after such date, and (C) the third installment shall be paid two
(2) calendar years after such date.
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(c) The purchase price for the Repurchase (the "Repurchase
Price") shall be calculated as of the date of termination of the Employee
Stockholder's employment with the Partnership in accordance with the following
provisions:
(i) If the Employee Stockholder's employment with the
Partnership is terminated because of the death, Permanent Incapacity or
Retirement of such Employee Stockholder, or if such Employee
Stockholder is terminated by the Partnership other than For Cause or if
the Employee Stockholder terminates his employment with the Partnership
for Good Reason, then the Repurchase Price shall be the sum of (A) a
fraction whose numerator is the number of Vested Partnership Points
held by the Limited Partner of which such terminated employee was the
Employee Stockholder and whose denominator is the total Vested
Partnership Points outstanding multiplied by five and five-tenths (5.5)
times Average Free Cash Flow for the twenty-four (24) months period
ending on the last day of the calendar month which is two (2) calendar
months prior to the date of calculation, plus (B) any positive Capital
Account balance of such Limited Partner resulting from contributions to
capital, retained earnings or similar events, but excluding any
positive Capital Account balance resulting from an interim closing as
described in Section 5.2(h) or similar book-up event. In the event that
any Limited Partner has received payment of the Repurchase Price in
connection with the Permanent Incapacity of its Employee Stockholder
and such Employee Stockholder resumes his active employment performing
Investment Management Services at a subsequent date, then such Limited
Partner and its Employee Stockholder, jointly and severally, shall be
liable for the return of an amount equal to the difference between the
Repurchase Price actually paid and the amount that would have been paid
in accordance with paragraph (iv) below.
(ii) If the Employee Stockholder is terminated For Cause, then
the Repurchase Price shall be the lesser of (A) the aggregate balance
of the Capital Account of the Limited Partner of which such employee
was the Employee Stockholder on the date of termination of the Employee
Stockholder's employment with the Partnership For Cause or (B) the
amount determined pursuant to paragraph (iv) below.
(iii) If the Limited Partner has experienced a Bankruptcy
Event, then the Repurchase Price shall be the lesser of (A) the
aggregate balance of such Limited Partner's Capital Account on the date
of the Bankruptcy Event or (B) the amount determined pursuant to
paragraph (iv) below.
(iv) In all other cases (including, without limitation, the
resignation of an Employee Stockholder other than for Good Reason), the
Repurchase Price shall be the sum of (A) a fraction whose numerator is
the number of Vested Partnership Points held by the Limited Partner of
which such terminated employee was the Employee Stockholder and whose
denominator is the total Vested Partnership Points outstanding
multiplied by five and five-tenths (5.5) times Average Free Cash Flow
for the twenty-four (24) months period ending on the last day of the
calendar month which is two (2) calendar months prior to the date of
calculation, plus (B) any positive Capital Account balance of such
Limited Partner resulting from contributions to capital, retained
earnings or similar events, but excluding any positive Capital Account
balance resulting from an interim closing as described in Section
5.2(h) or similar book-up event.
(d) The rights of the General Partner, the Partnership and
their assigns hereunder are in addition to and shall not affect any other rights
which the General Partner, the Partnership or their assigns may have to
repurchase Partnership Interests (including, without limitation, pursuant to any
Vesting Agreement).
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(e) As of the Repurchase Closing Date, the Limited Partner
shall cease to hold any Partnership Interests, shall no longer have any rights
with respect to the Partnership Interests previously held, and such Limited
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.
(f) The General Partner may, with a Majority Vote, assign
any or all the General Partner's rights and obligations under this Section 3.8,
in one or more instances, to the Partnership; provided, however, that no
approval of Limited Partners shall be needed in connection with a Repurchase
using the proceeds of a key-man life insurance policy in accordance with Section
3.8(a).
(g) Each Partner hereby agrees for the benefit of each other
Partner and the Partnership that when the Employee Stockholder of such Partner,
if any, reaches Mandatory Retirement the General Partner shall purchase all
Partnership Interests held by the Limited Partner of which such employee was the
Employee Stockholder, pursuant to the provisions of this Section 3.8 as if such
Employee Stockholder had elected Retirement regardless of whether such Employee
Stockholder's employment is actually terminated.
SECTION 3.9 PUTS.
(a) Each Initial Limited Partner (a "Selling Partner") may,
subject to the terms and conditions set forth in this Section 3.9, cause the
General Partner to purchase portions of the vested Partnership Interests held by
such Limited Partner (each, a "Put").
(b) On any five (5) separate annual occasions starting with
the Exercise Period for the fiscal year ending December 31, 2000 and continuing
in each subsequent annual Exercise Period, through and including the Exercise
Period for the fiscal year ending December 31, 2009, each Selling Partner may
cause the General Partner to purchase, and the General Partner agrees to buy,
all or any portion of the Partnership Interests then held by such Selling
Partner that are Vested Partnership Points as of December 31 of the fiscal year
preceding the applicable Exercise Period; provided, however, that the amount
subject to repurchase upon the first such occasion shall not exceed the sum of
(A) one-fith (1/5) of the aggregate Vested Partnership Points held by such
Selling Partner (and a proportionate share of such Partner's Capital Account)
on the Effective Date plus the aggregate Vested Partnership Points (and a
proportionate share of such Partner's Capital Account) issued to such Limited
Partner after the Effective Date pursuant to Section 6.5(e) (the "Annual Put
Limit") plus (B) three-twentieths (3/20) of the aggregate Vested Partnership
Points held by such Selling Partner (and a proportionate share of such
Partner's Capital Account) on the Effective Date plus the aggregate Vested
Partnership Points (and a proportionate share of such Partner's Capital
Account) issued to such Limited Partner after the Effective Date pursuant to
Section 6.5(e) (the "Carry-Over Put Limit"). If the Selling Partner makes a Put
of less than the total Carry-Over Put Limit that he is permitted to Put on any
occasion, then the remainder of that Carry-Over Put Limit may be carried
forward and Put at any subsequent occasion under this Section 3.9(b) or under
Section 3.9(c), provided that the amount subject to repurchase on any Put after
the first Put shall not exceed the sum of (X) the Annual Put
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Limit, plus (Y) any portion of the Carry-Over Put Limit that has not previously
been Put by such Partner.
(c) On any five (5) separate annual occasions starting
with the Exercise Period for the fiscal year ending December 31, 2010 and
continuing in each subsequent annual Exercise Period, through and including the
Exercise Period for the fiscal year ending December 31, 2020, each Selling
Partner may cause the General Partner to purchase and the General Partner
agrees to buy, all or any portion of the Partnership Interests then held by
such Selling Partner (and a proportionate share of such Partner's Capital
Account) that are Vested Partnership Points as of December 31 of the fiscal
year preceding the applicable Exercise Period; provided, however, that the
amount subject to repurchase upon any such occasion shall not exceed the
greater of (i) the Annual Put Limit or (ii) one-fifth (1/5) of the Partnership
Points held by such Selling Partner (and a proportionate share of such
Partner's Capital Account) on December 31, 2010 plus the aggregate Vested
Partnership Points (and a proportionate share of such Partner's Capital
Account) issued to such Limited Partner after the Effective Date pursuant to
Section 6.5(e).
(d) If a Selling Partner elects to cause the General Partner
to purchase Partnership Interests pursuant to paragraph (b) or (c) above, during
the Exercise Period such Selling Partner and its Employee Stockholder shall
provide the Partnership and the General Partner with a written notice to the
effect that it is electing to exercise the Put and stating the number of
Partnership Points included in the Partnership Interest to be sold in the Put.
Each Put shall close on the first business day which is at least sixty (60) days
after the receipt of the Partnership's audited financial statements for the
applicable fiscal year or such earlier closing date as is agreed to in writing
by the General Partner (each, a "Purchase Date").
(e) The purchase price for a Put (the "Put Price") shall be
(i) the product of (A) a fraction, the numerator of which is the number of
Partnership Points included in the Partnership Interest to be purchased on the
Purchase Date, and the denominator of which is the aggregate number of Vested
Partnership Points outstanding, times five and five-tenths (5.5) times Average
Free Cash Flow for the twenty-four (24) month period ending on the last day of
the most recently completed fiscal year, plus a fraction of any Positive Capital
Account of such Limited Partner (to the extent that such positive balance
results from contributions to capital, retained earnings or similar events, but
excluding any positive Capital Account balance resulting from an interim Closing
as described in Section 5.2(h) or similar book-up event), the numerator of which
is the number of Partnership Points included in the Partnership Interest to be
purchased on the Purchase Date, and the denominator of which is the aggregate
number of Vested Partnership Points held by such Selling Partner. The Put Price
shall be paid by the General Partner on the Purchase Date by certified check to
the Selling Partner, against delivery of such documents or instruments of
transfer as may reasonably be requested by the General Partner.
(f) The General Partner may, with a Majority Vote, assign
any or all the General Partner's rights and obligations under this Section 3.9,
in one or more instances, to the Partnership.
(g) As of any Purchase Date, the Limited Partner shall cease
to hold the Partnership Interests to be purchased on the Purchase Date pursuant
to the Put and shall no longer have any rights with respect to such Partnership
Interests previously held.
(h) In the event that any Additional Limited Partner is
admitted to the Partnership under the circumstances contemplated by Section
6.5(e), each such Additional Limited Partner may be granted the right, by the
CEO in his sole discretion, to Put his vested Partnership Interests subject to
the terms and conditions set forth in this Section 3.9; provided, however, that
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(i) the five separate annual occasions on which such Additional Limited
Partner may cause Partnership Interests to be purchased in accordance with
Section 3.9(b) shall start with the Exercise Period for the fiscal year (ending
December 31) during which occurs the fifth anniversary of the admission of such
Limited Partner to the Partnership and shall continue in each subsequent annual
Exercise Period through (and including) the Exercise Period for the fiscal year
(ending December 31) during which occurs the fourteenth anniversary of the
admission of such Limited Partner to the Partnership; and (ii) the five
separate annual occasions on which such Additional Limited Partner may cause
Partnership Interests to be purchased in accordance with Section 3.9(c) shall
start with the Exercise Period for the fiscal year (ending December 31) during
which occurs the fifteenth anniversary of the admission of such Limited Partner
to the Partnership and shall continue in each subsequent annual Exercise Period
through (and including) the Exercise Period for the fiscal year (ending
December 31) during which occurs the twenty-fifth anniversary of the admission
of such Limited Partner to the Partnership.
SECTION 3.10 EXCHANGE RIGHTS OF LIMITED PARTNERS OF THE PARTNERSHIP.
(a) If (i) AMG, as General Partner, has the obligation to
purchase Partnership Interests pursuant to Section 3.9 from a Selling Partner
which is an Initial Limited Partner, and (ii) AMG has completed a registration
of shares of its common stock ("AMG Stock") for sale under the Securities Act
(other than a registration on Form S-8 (or its then equivalent form) or a
registration effected solely to implement an employee benefit plan or
registration on a form not available for registering securities for sale to the
public) (a "Registration"), then such Selling Partner may elect to cause AMG to
pay up to one-half of the Put Price in shares of AMG Stock. The percentage of
the Put Price paid in shares of AMG Stock is referred to as the "Percentage
Exchanged."
(b) An election under this Section 3.10 must be made by the
Selling Partner in the written notice contemplated by Section 3.9(d), which
election, once made, shall be irrevocable without the prior written consent of
AMG.
(c) The number of shares of AMG Stock which may be exchanged
shall be equal to the number of shares of AMG Stock that represents a percentage
interest in AMG's earnings (after giving effect to such issuance or exchange)
before depreciation, amortization and taxes that is equal to (i) the Put Price,
multiplied by the product of (A) the Percentage Exchanged times (B) seventy-five
one-hundredths (.75), divided by (ii) an amount equal to the sum of (A) fifty
percent (50%) of five and five-tenths (5.5) times AMG's earnings before
depreciation, amortization and taxes for the twenty-four (24) month period
ending on the last day of the most recently completed fiscal year (determined in
accordance with generally accepted accounting principles, consistently applied)
plus (B) the product of the Put Price times the Percentage Exchanged.
(d) If AMG completes a Registration, AMG shall, as soon as
reasonably practicable, provide notice thereof to each Limited Partner.
SECTION 3.11 NO EMPLOYMENT OBLIGATION. Each Limited Partner and each
Employee Stockholder acknowledges that neither this Agreement nor the provisions
of the Non Solicitation
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Agreement create an obligation on the part of the Partnership to continue the
employment of an Employee Stockholder with the Partnership.
SECTION 3.12 MISCELLANEOUS. Each Limited Partner and each Employee
Stockholder agrees that the enforcement of the provisions of Sections 3.6, 3.7,
3.8 and 3.11, and the provisions of the Non Solicitation Agreements is necessary
to ensure the protection and continuity of the business of the Partnership for
the benefit of each of the Partners. Each Limited Partner and each Employee
Stockholder agrees that, due to the proprietary nature of the Company's
business, the restrictions set forth in Section 3.6 hereof and in the Non
Solicitation Agreements are reasonable as to duration and scope. Each Limited
Partner and each Employee Stockholder acknowledges that the obligations and
rights under this Article III shall survive the termination of the employment of
an Employee Stockholder with the Partnership 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.
ARTICLE IV - REGISTRATION RIGHTS.
SECTION 4.1. PIGGY-BACK REGISTRATIONS. If at any time or times
following the completion of its initial public offering, AMG shall determine to
complete a Registration (which, as defined in Section 3.10(a), excludes a
registration on Form S-8 (or its then equivalent form) or a registration
effected solely to implement an employee benefit plan or registration 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 (and in no event less
than twelve (12) days prior to the filing of a registration statement with the
SEC with respect to such Registration) give written notice thereof to the
Selling Partners which are holders of Registrable Securities (as hereinafter
defined) then outstanding (the "Holders"), and, subject to the terms and
conditions of this Article IV, will use all commercially reasonable efforts to
effect the Registration under the Securities Act of all Registrable Securities
which the Holders request in a writing delivered to AMG within ten (10) days
after the notice given by AMG. AMG shall have the right to postpone or withdraw
any Registration without any obligation to any Holder.
SECTION 4.2. REGISTRABLE SECURITIES. For the purposes of this
Article IV, the term "Registrable Securities" shall mean any AMG Stock held by a
Selling Partner which was acquired by such Selling Partner pursuant to the terms
of Section 3.10(a), 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.
SECTION 4.3. FURTHER OBLIGATIONS OF AMG. Whenever under the
preceding sections of this Article IV AMG is required hereunder to register
Registrable Securities, AMG agrees that it shall also do the following:
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(a) use all 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;
(b) use all 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 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.
(c) 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;
and
(d) use all commercially reasonable efforts to register
or qualify its Registrable Securities covered by said registration
statement under the securities or "blue-sky" laws of such
jurisdictions as any selling Holder may reasonably request, provided
that AMG shall not be required to register in any jurisdiction which
requires it to qualify to do business (unless it is otherwise so
qualified) or subject itself to general service of process (unless
it is otherwise so subject).
SECTION 4.4. REGISTRATION EXPENSES. Reasonable expenses incident to
AMG's performance of or compliance with this Article IV, 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 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, or any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities) (all such included expenses being herein
called "Registration Expenses") will be borne by AMG.
SECTION 4.5. INDEMNIFICATION; CONTRIBUTION.
(a) Indemnification. Incident to any registration statement
referred to in this Article IV, 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
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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 in writing 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 in writing 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.
(b) Contribution. If the indemnification provided for in
this Section 4.5 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, 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 4.5(b) 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 4.5(b), 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 4.5, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Sections 4.5(a) without regard to
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the relative fault of said indemnifying party or indemnified party or any other
equitable consideration provided for in this Section 4.5(b).
SECTION 4.6. 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
included in such Registration to comply with such limitation is
imposed pro rata (based on the relative number of securities sought
to be included in such Registration) with respect to all securities
the holders of which have a contractual, incidental right
("piggy-back right") to include such securities in the Registration
and as to which registration has been requested pursuant to such
right (it being understood that such limitation may be imposed as to
all securities the holders of which have a piggy-back right prior to
the imposition of any limitation on securities the holders of which
have a right to cause the Company to effect a Registration ("demand
right")).
(b) If requested in writing by the managing
underwriter(s), if any, of any underwritten public offering of AMG
Stock, each Limited Partner and Employee Stockholder 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.
(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
Limited Partner and Employee Stockholder agrees not to effect any
sales of AMG Stock after they have received notice from the Company
to suspend sales as a result of the commencement any Suspension
Period (as defined below). Each Limited Partner and Employee
Stockholder may recommence effecting sales of AMG Stock following
further notice to such effect from the Company, which notice shall
be given by the Company not later than five (5) business days after
the conclusion of any such Suspension Period. 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 Limited Partners or Management Employees of the
Partnership and by limited partners and employee stockholders of
other partnerships of which AMG is the general partner generally
(without prejudice to any particular Limited Partner or Management
Employee), 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, as to which AMG has a bona fide business
purpose for preserving confidentiality or which renders the AMG
unable to comply with applicable legal requirements.
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SECTION 4.7. LIMITATION OF REGISTRATION RIGHTS. Notwithstanding the
foregoing, AMG shall not be required to effect a Registration of Registrable
Securities under this Article IV if, in the opinion of counsel for AMG, which
counsel and opinion shall be reasonably acceptable to the Holders of a majority
of the Registrable Securities, such Holders of Registrable Securities may then
sell all Registrable Securities proposed to be sold without registration under
the Securities Act.
ARTICLE V - CAPITAL CONTRIBUTIONS; DISTRIBUTIONS
CAPITAL ACCOUNTS AND ALLOCATIONS
SECTION 5.1 CAPITAL CONTRIBUTIONS.
(a) Prior to the effectiveness of this Agreement, Mesirow
Asset Management, Inc., an Illinois corporation, contributed to the Partnership
certain of its assets, as set forth on Schedule 5.1(a). Schedule 5.1(a) also
sets forth (i) the tax basis of Mesirow Asset Management, Inc. in each such
asset, (ii) the tax basis of the Partnership in each asset held as of the
Effective Date, and (iii) the amount which each of the Partners acknowledge and
agree is the fair market value of each such asset. 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.
(b) No Partner shall have the right to withdraw any part of
the capital it contributed to the Partnership until the termination, dissolution
and winding up of the Partnership, except as distributions pursuant to this
Article V may represent returns of capital, in whole or in part. No Partner
shall be entitled to receive any interest on any Capital Contribution to the
Partnership.
SECTION 5.2 CAPITAL ACCOUNTS; ALLOCATIONS.
(a) Establishment of Capital Accounts. There shall be
established for each Partner a Capital Account which initially shall be in an
amount equal to the Fair Market Value of the Capital Contribution of such
Partner.
(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 of the
Partnership and shall be decreased by such Partner's allocable share of 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. Capital Accounts shall also
be adjusted upon the issuance of additional Partnership Interests as set forth
in Section 6.5(c).
(c) Allocation of Income and Gain. Subject to Section 5.2(e)
and Sections 5.4 and 5.5 hereof, all items of Partnership income and gain 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, the numerator of which is the
number of Partnership Points held by the General Partner for
such month, and the denominator of which is the total number
of Vested Partnership Points outstanding for such month;
(ii) second, the General Partner shall be
allocated items of income and gain until the General Partner
has been allocated cumulative income and gain equal to the
cumulative amount of losses and deductions allocated to the
General Partner under Section 5.2(d)(iii);
(iii) third, items of income and gain shall
be allocated among all Limited Partners in accordance with
(and in proportion to) each Limited Partner's respective
number of Vested Partnership Points for such month, until the
aggregate amount of such items allocated to the Partners
pursuant to Section 5.2(c)(i) and this Section 5.2(c)(iii) for
such month equals the aggregate amount of Free Cash Flow for
such month; and
(iv) fourth, all remaining items of
Partnership income and gain for such month shall be allocated
among the Limited Partners in proportion to each Limited
Partner's respective number of Vested Partnership Points for
such month.
(d) ALLOCATION OF LOSSES AND DEDUCTIONS. Subject to
Section 5.2(f) and Sections 5.4 and 5.5, all items of Partnership loss and
deduction shall be allocated among the Partners' Capital Accounts at the end of
every month as follows:
(i) first, all deductions for such month with
respect to the amortization or depreciation of property
contributed to the Partnership by a Partner shall be allocated
to the contributing Partner;
(ii) second, all items of Partnership deduction and
loss for such month (other than items allocated under Section
5.2(d)(i)) shall be allocated among the Limited Partners in
proportion to each Limited Partner's respective number of
Vested Partnership Points for such month, PROVIDED, that the
total amount of items of deduction and loss allocated to the
Limited Partners for such month under this Section 5.2(d)(ii)
shall not exceed the sum of (x) the total amount of the items
of income and gain allocated to the Limited Partners for such
month under Sections 5.2(c)(iii) and 5.2(c)(iv), and (y) the
items of income and gain allocated to the Limited Partners for
the prior months during such fiscal year under Section
5.2(c)(iii) and Section 5.2(c)(iv), less the items of
deduction and loss allocated to the Limited Partners for such
prior months under this Section 5.2(d)(ii); and
(iii) thereafter, all items of loss and deduction
not allocated to the Partners under Sections 5.2(d)(i) and
5.2(d)(ii) shall be allocated to the General Partner.
(e) ALLOCATION OF GAIN FROM THE SALE OF ASSETS. All
items of Partnership gain from any sale, exchange or disposition of all, or
substantially all, of the assets of the Partnership shall be allocated among the
Partners as follows:
(i) first, gain shall be allocated to the Partners
who have been allocated items of deduction and loss under
Section 5.2(d)(i) until the amount of gain allocated to such
Partners under this Section 5.2(e)(i) is equal to the amount
of loss previously allocated to such Partners under section
5.2(d)(i);
(ii) second, gain shall be allocated to the Limited
Partners (in proportion to their Vested Partnership Points)
until the ratio of the Capital Accounts of the Limited
Partners to the Capital Accounts of the General Partner is
equal to the ratio of the Vested Partnership Points of the
Limited Partners to the Vested Partnership Points of the
General Partner; and
(iii) thereafter, gain shall be allocated to the
Partners in accordance with their Vested Partnership Points.
(f) ALLOCATION OF LOSS FROM THE SALE OF ASSETS. All
items of loss from any sale, exchange or other disposition of all, or
substantially all, of the assets of the Partnership shall be allocated to the
Partners in proportion to the positive balances in their respective Capital
Accounts as of the date of such transaction.
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(g) Dispute Resolution. Any dispute or disagreement among the
Partners with respect to determination of Capital Account balances or otherwise
with respect to the manner or method of accounting by the Partnership may be
submitted by any Partner to, and resolved by, the Independent Public
Accountants, whose determinations as so made shall be conclusive and binding
upon the Partners.
(h) Interim Closing. 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 any Partnership Points, a transfer of any Partnership Points
or otherwise, but not as a result of vesting in accordance with the provisions
of Exhibit A of Partnership Points issued upon execution of the agreement or in
accordance with Section 6.5(e), the following shall apply: (i) the books of
account of the Partnership shall be closed effective as of the close of business
on the date of any such change and such month (or fiscal year) shall thereupon
be divided into two or more portions, (ii) each item of income, gain, loss and
deduction shall be determined (on the closing of the books basis) for the
portion of such month (or fiscal year) ending with the date on which the books
of account of the Partnership are so closed, and (iii) each such item for such
portion of such month (or fiscal year)
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shall be allocated to those persons who were Partners during such portion of
such month (or fiscal year) in accordance with the provisions of Section 5.2(c)
hereof.
SECTION 5.3 DISTRIBUTIONS.
(a) Subject to Section 5.3(b) hereof, from and after the date
hereof, within thirty (30) days after the end of each fiscal quarter, the
General Partner shall, based on the unaudited financial statements for such
fiscal quarter prepared in accordance with Section 9.3 hereof (after approval
thereof by the General Partner), cause the Partnership (X) to distribute to the
General Partner the amount of income and gain allocated to the General Partner
for such fiscal quarter pursuant to Section 5.2(c)(i) and (ii), minus any losses
and deductions allocated to the General Partner under Section 5.2(d)(iii), and
(Y) to distribute to the Limited Partners the amount of any income and gain
allocated to the Limited Partners under Section 5.2(c)(iii), minus any losses
and deductions allocated to the Limited Partners under Section 5.2(d)(ii).
Within ninety-five (95) days 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 (i) the remaining amounts, if any, for the preceding
fiscal year not previously distributed, in accordance with the foregoing clauses
(X) and (Y) of this Section 5.3(a) and (ii) the amount of any income and gain
allocated to the Limited Partners under Section 5.2(c)(iv). In the event that,
in connection with the preparation of audited financial statements or otherwise
it shall be determined that any prior distributions were not made in the proper
amounts, the General Partner shall be authorized to increase or decrease one or
more subsequent distributions in such manner and to such extent as it shall deem
necessary or appropriate.
(b) The General Partner may, from time to time and with a
Majority Vote, reserve and refrain from making a distribution that is otherwise
required under Section 5.3(a) for Partnership purposes, including, without
limitation, to increase the net worth of the Partnership.
(c) Except as otherwise set forth herein, all other amounts or
proceeds available for distribution, if any, shall be distributed to the
Partners at such time as may be determined by the General Partner in its sole
discretion provided that any such distribution shall be made among the Partners
(i) 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 (ii)
thereafter among all Partners in accordance with their respective number of
Vested Partnership Points at the time of such distribution.
(d) Notwithstanding any other provision herein to the
contrary, if any Limited Partner has received a distribution under Section
5.3(a) during a fiscal year and, based on the audited financial statements
prepared in accordance with Section 9.3 hereof, there are at the end of such
fiscal year any unrecovered excess deductions, such that the General Partner
will be entitled to an allocation pursuant to Section 5.2(c)(ii) at the time of
the next allocation of gross income of the Partnership, then the Limited
Partners shall promptly (and in any event within ninety-five (95) days after the
end of such fiscal year of the Partnership) contribute to the Partnership in
accordance with (and in proportion to) the aggregate amount of distributions
received by such Limited Partner under Section 5.3(a) with respect to such
fiscal year, cash in the aggregate amount of such unrecovered excess deductions.
The obligation of each Limited Partner to make contributions to the Partnership
pursuant to this Section 5.3(d) with respect to any fiscal year shall be limited
to the aggregate amount of distributions received by such Limited Partner under
Section 5.3(a) with respect to such fiscal year.
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SECTION 5.4 DISTRIBUTIONS UPON LIQUIDATION; ESTABLISHMENT OF A RESERVE
UPON LIQUIDATION.
(a) Upon the liquidation of the Partnership, after payment of all
liabilities of the Partnership owing to creditors, the General Partner shall set
up such reserves as it deems reasonably necessary for any future liabilities or
obligations of the Partnership including, without limitation, any specified or
unspecified contingent liabilities. Such reserves may be paid over by the
General Partner to a bank (or other third party), to be held in escrow for the
purpose of paying any such future liabilities or obligations. At the expiration
of such period(s) as the General Partner may deem advisable in its sole
discretion, any remaining reserves and any other assets available for
distribution (or a portion thereof specified by the General Partner) shall be
distributed to the Partners in accordance with Section 5.3(c) hereof.
(b) The General Partner may elect to make any distributions pursuant
to this Section 5.4 through in-kind distributions of Partnership property. The
decisions of the General Partner with respect to in-kind payments, including
decisions with respect to selection and apportionment, shall be conclusive and
binding upon all Partners; provided, however, that all in-kind distributions of
Partnership property shall be made on the basis of the Fair Market Value of such
property, net of any liabilities encumbering such property. 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 Sections 5.2(e) and 5.2(f) hereof.
SECTION 5.5 PROCEEDS FROM THE SALE OF SECURITIES; INSURANCE PROCEEDS;
CERTAIN SPECIAL ALLOCATIONS.
(a) Capital Contributions made by any Partner after the date hereof,
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 Vested Partnership Points immediately prior to
the date of such contribution.
(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 Repurchase the Partnership Interests from the Limited Partner
through which such Employee Stockholder held his interest in the Partnership in
accordance with Section 3.8 hereof. If the proceeds of any such
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insurance exceed the amounts so required to effect such redemption, then such
excess proceeds 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 held by other Limited Partners), 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
Vested Partnership Points immediately following the Repurchase of the
Partnership Interests from such Limited Partner.
SECTION 5.6 FEDERAL TAX ALLOCATIONS. The General Partner shall, in its
sole discretion, 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 of Section 5.2 hereof and the distributions
provisions of Section 5.3 and 5.4 hereof) and (ii) is consistent with the
principles of Sections 704(b) and 704(c) of the Code. The Partners understand
and agree that, with respect to any item of property (other than cash)
contributed 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 Federal regulations
under Section 704(c) of the Internal Revenue Code, and selected by the General
Partner in its sole discretion. 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
pursuant to Section 704(c) of the Code shall not be reflected in the Capital
Accounts of the Partners. Without limiting the generality of the foregoing, all
deductions with respect to the amortization or depreciation of property
contributed to the Partnership by a Partner shall be allocated to the
contributing Partner for U.S. Federal income tax purposes.
ARTICLE VI - TRANSFER OF PARTNERSHIP INTERESTS BY
LIMITED PARTNERS, ADMISSION OF ADDITIONAL PARTNERS,
REDEMPTION AND WITHDRAWAL
SECTION 6.1 ASSIGNABILITY OF INTERESTS.
(a) Except with the written consent of the General Partner, which
the General Partner may withhold in its sole discretion, or in accordance with
Section 6.1(b) or 6.1(c), no
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Limited Partner shall sell, assign, transfer, pledge, hypothecate, gift,
exchange, option or encumber, or otherwise dispose of (any such disposition
being referred to herein as a "Transfer"), or offer to Transfer, all or any
portion of such Partner's Partnership Interest or in the case of a Limited
Partner that is not an individual, any direct or indirect beneficial ownership
in such Limited Partner (whether voluntarily or involuntarily) to any Person
other than the General Partner or the Partnership.
(b) In the event that any Employee Stockholder or Limited Partner,
as applicable, shall die or shall be declared incompetent or insane or shall be
adjudicated a bankrupt, the legal representative of such Employee Stockholder or
Limited Partner shall, upon written notice to the General Partner of the
occurrence of any such event, become an assignee of such Employee Stockholder's
interest in the Limited Partner or of such Limited Partner's Partnership
Interests, subject to all of the terms of this Agreement as then in effect,
provided that (i) such legal representative shall not be permitted to exercise
any rights as a Partner or become a Substitute Limited Partner unless and until
such representative is admitted as a Substitute Limited Partner in accordance
with the provisions of Section 6.2 and (ii) the provisions of Section 3.8 shall
be applied to effect a Repurchase either of the Partnership Interest so
Transferred or of the Partnership Interest held by the Limited Partner the
beneficial interests in which have been so Transferred.
(c) A Limited Partner may, upon prior written notice to the General
Partner, transfer a portion (but not all) of its Partnership Interest to its
Employee Stockholder or to one or more trusts of which its Employee Stockholder
is the sole trustee, with sole power and authority to direct the disposition of,
and voting with respect to, the assets thereof, and of which the sole
beneficiaries are such Employee Stockholder and/or his lineal descendants,
provided that such Transfer shall satisfy the conditions set forth in Section
6.2(b), and provided, further, that the recipient of such Transfer, if a trust,
shall agree not to permit the Transfer of interests therein or the addition of
beneficiaries thereto without prior written notice to the General Partner and
satisfaction of the conditions set forth in Section 6.2(b).
(d) Any Transfer by any Limited Partner of any interest in the
Partnership or a Limited Partner thereof in contravention of this Agreement
shall be void ab initio and ineffectual and shall not bind or be recognized by
the General Partner, the Partnership or any other party. No purported assignee
pursuant to such a Transfer shall have any right to any profits, losses or
distributions of the Partnership.
(e) Any Limited Partner who shall Transfer all of such Limited
Partner's Partnership Interest shall cease to be a Partner of the Partnership
and shall no longer have any rights or privileges of a Partner except that,
unless and until the recipient of the Transfer of such Limited Partner is
admitted as a Substitute Limited Partner in accordance with the provisions of
Section 6.2, said transferring Limited Partner shall retain the statutory rights
and obligations of a transferring partner under applicable law.
(f) Any Person who acquires in any manner whatsoever any Partnership
Interest, irrespective of whether such Person has accepted and adopted in
writing the terms and
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provisions of this Agreement, shall be deemed by the acceptance of the benefits
of the acquisition thereof to have agreed to be subject to and bound by all the
terms and conditions of this Agreement that any predecessor in such Partnership
Interest of such Person was subject to or by which such predecessor was bound to
the same extent as such predecessor was bound as if there had been no such
Transfer.
SECTION 6.2 SUBSTITUTE LIMITED PARTNERS.
(a) No recipient of a Transfer of limited partner interests in the
Partnership shall become a Limited Partner except in accordance with this
Section 6.2. The General Partner may, with a Majority Vote, 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 6.1.
(b) As additional conditions to the validity of 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), regardless of whether the recipient
of a Transfer becomes a Limited Partner, such Transfer 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 Securities and Exchange Commission thereunder or to
fail to satisfy an exemption from registration thereunder, including by causing
there to be more than one hundred (100) beneficial owners of interest in the
Partnership as determined in accordance with Section 3(c)(1) of the Investment
Company Act, (iii) result in the termination of any contract(s) 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 or advisory 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.
(c) Upon the admission of a substitute Limited Partner, the General
Partner shall make the appropriate revisions to Exhibit A hereto.
SECTION 6.3 ALLOCATION OF DISTRIBUTIONS BETWEEN ASSIGNOR AND ASSIGNEE.
Upon the assignment of a Partnership Interest pursuant to this Article VI,
distributions pursuant to Article V 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.
SECTION 6.4 REDEMPTIONS AND WITHDRAWALS. Except as expressly provided in
Article III, 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 upon receipt of a Majority Vote and with the
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consent of the General Partner. Upon the redemption or withdrawal, in whole or
in part, by a Limited Partner, the General Partner shall make the appropriate
revisions to Exhibit A hereto.
SECTION 6.5 ISSUANCE OF ADDITIONAL LIMITED PARTNERSHIP INTERESTS; NO
PREEMPTIVE RIGHTS.
(a) Additional Limited Partners (the "Additional Partners" and each
an "Additional Partner") may be admitted to the Partnership and be issued
Partnership Interests under the circumstances contemplated by Section 6.2,
Section 6.5(d) and Sections 6.5(e). Under other circumstances, Additional
Limited Partners may be admitted to the Partnership and such Additional Partners
may be issued Partnership Interests, 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 in its sole discretion. As a condition to
admission to the Partnership, each Additional Limited Partner (and any Employee
Stockholder thereof) shall first execute and deliver (i) an instrument
satisfactory to the General Partner whereby such Additional Limited Partner
becomes a party to this Agreement as a Limited Partner and (ii) a Non
Solicitation Agreement. Upon the admission of any Additional Limited Partner,
the General Partner shall make the appropriate revisions to Exhibit A hereto.
(b) Existing Limited Partners may be issued additional Partnership
Interests by the Partnership either (i) upon receipt of a Majority Vote (without
including the Limited Partner to be issued additional Partnership Points) with
the consent of, and upon such terms and conditions as may be established by, the
General Partner in its sole discretion or (ii) in accordance with Section 6.5(d)
or Section 6.5(e).
(c) Each time additional Partnership Interests are issued (other
than in accordance with Section 6.5(e)), prior to such issuance, 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 Value, 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 in accordance with Sections 5.2(e) and (f) hereof; provided, however,
that the vesting of previously granted Partnership Points shall not constitute
the issuance of additional Partnership Interests for purposes of this Section
6.5(c). Capital Accounts for Partners receiving additional Partnership Interests
shall be increased by, and Capital Accounts for new Partners shall be
established in, an amount equal to the fair market value (as determined by the
General Partner) of such Partner's contributions to the capital of the
Partnership, if any, in consideration of the issuance of such Partnership
Interests.
(d) The General Partner, with a Majority Vote, shall have the right
to cause the Partnership to issue or sell (i) additional interests in the
Partnership (including other classes or series of interests having different
rights), (ii) obligations, evidences of indebtedness or other securities
convertible or exchangeable into interests in the Partnership and (iii)
warrants, options or other rights to purchase or otherwise acquire interests in
the Partnership; provided, however, that no Majority Vote shall be required for
(i) the issuance of Partnership Points pursuant to
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Section 6.5(e) hereof and (ii) the issuance of interests in the Partnership
pursuant to (A) obligations, evidences of indebtedness or other securities
convertible or exchangeable into interests in the Partnership previously issued
in accordance with this Section 6.5(d) or (B) warrants, options or other rights
to purchase or otherwise acquire interests in the Partnership previously issued
in accordance with this Section 6.5(d). No Partner shall have any pre-emptive
rights in any of the foregoing.
(e) Existing Limited Partners may be issued additional Partnership
Points and Additional Limited Partners may be admitted to the Partnership and
issued Partnership Points by the CEO acting on behalf of the Partnership in his
sole discretion subject only to the provisions set forth on Exhibit A and to the
following conditions: (i) the maximum number of Partnership Points issuable
pursuant to this Section 6.5(e) is nine (9) (provided that if any of such nine
(9) Partnership Points terminate unvested, they may be reissued in accordance
with the provisions of this Section 6.5(e) and Exhibit A); (ii) Partnership
Points shall not be issued or vested in an initial increment of less than
one-half of one Partnership Point; and (iii) without the consent of the General
Partner, no Partnership Points may be issued pursuant to this Section 6.5(e) to
the CEO, any member of the Immediate Family of the CEO or any Affiliate of the
CEO or his Immediate Family.
SECTION 6.6 REPRESENTATION OF PARTNERS. Each Partner (including each
Additional 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
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 VII - TRANSFER OF PARTNERSHIP INTEREST BY GENERAL
PARTNER; REDEMPTION, REMOVAL AND WITHDRAWAL
SECTION 7.1 ASSIGNABILITY OF INTEREST.
(a) Without a Majority Vote, the General Partner's interest in the
Partnership may not be Transferred; provided, however, that subject to the
provision of Section 7.1(b), (i) the General Partner's interest in the
Partnership may be pledged or encumbered in connection with the operation of the
business of AMG (including, without limitation, the financing of the
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acquisition of additional investment management companies) and that under such
circumstances, lien holders shall have the rights of secured creditors with
respect to such interest; (ii) the General Partner may Transfer a portion of its
Partnership Interest to a person or entity which is not a Partner but which is
either an officer or employee of the Partnership or which becomes an officer or
employee in connection with such issuance, or an entity wholly owned by any such
person; (iii) the General Partner may Transfer a portion of its Partnership
Interest to existing Limited Partners; and (iv) the General Partner may Transfer
all but not less than all of its Partnership Interest in a single transaction or
series of related transactions to a Person or Persons that are Affiliates of the
General Partner, provided that such Person or Persons shall have net worth that
is sufficient to enable it to satisfy the obligations of the General Partner
hereunder.
(b) As a condition to certain Transfers described in Section 7.1(a),
(i) upon any Transfer contemplated by the foregoing clauses (ii) and (iii), the
Partnership Interest subject to the Transfer shall be a limited partnership
interest in the hands of the transferee and the transferee shall have the rights
and obligations of a Limited Partner hereunder; and (ii) each Person who
acquires a Partnership Interest as a result of a Transfer pursuant to Section
7.1(a)(iv) shall execute a counterpart of this Agreement and agree to be bound
as the General Partner hereunder and the General Partner shall thereupon be
permitted to withdraw from the Partnership.
(c) Notwithstanding anything else set forth herein, the General
Partner may, with a Majority Vote, sell all of its interests and all other
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 may be required to sell, in the same transaction or transactions,
all of their interests in the Partnership, provided, that if the Limited
Partners are required to sell their interests pursuant to this Section 7.1(c),
each Limited Partner shall be entitled to receive the value of its Partnership
Interests determined by multiplying the amount to be paid for the interests of
all of the Partners by the fraction the numerator of which is the number of
Vested Partnership Points held by such Limited Partner and the denominator of
which is the aggregate number of Vested Partnership Points outstanding.
SECTION 7.2 RESIGNATION, REDEMPTION, AND WITHDRAWAL. Except as described
in Section 7.1(a)(iv), without a Majority Vote, the General Partner shall not
have the right (a) to resign or withdraw from the Partnership or (b) to have all
or any portion of its interest in the Partnership redeemed. Any resigned,
withdrawn or removed General Partner shall, unless otherwise agreed with its
successor, retain its interest in the capital of the Partnership and its other
economic rights under this Agreement.
ARTICLE VIII - DISSOLUTION AND TERMINATION.
SECTION 8.1 EVENTS OF DISSOLUTION.
(a) The Partnership shall only be dissolved:
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(i) on a date designated in writing by the General
Partner and approved by Majority Vote;
(ii) upon bankruptcy of, or 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 7.2 hereof;
(v) upon the entry of a decree of judicial dissolution
under Section 17-802 of the Partnership Act; or
(vi) in any event, at midnight on December 31, 2095
unless the Partnership's term is extended pursuant to Section 2.5
hereof.
(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 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 shall liquidate the assets of the Partnership and apply and
distribute the proceeds thereof in accordance with Section 5.4 hereof. If the
General Partner is unwilling or unable to carry out the duties contemplated by
this Article VIII, another Person shall be designated to perform such duties by
a Majority Vote. Under such circumstances references to the General Partner in
Section 5.4 and in this Article VIII shall be deemed to refer to the Person so
designated.
ARTICLE IX - RECORDS AND REPORTS
SECTION 9.1 BOOKS AND RECORDS. The General Partner (or, at the direction
of the General Partner, the Officers of the Partnership) shall 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 VI or Article VII of this Agreement. Such books shall be
maintained at the principal office of the Partnership, or at such other place as
the General Partner shall determine with the approval of a Majority Vote. All
Partners, and their duly authorized representatives, shall at all reasonable
times have access to such books.
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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. The Partnership shall furnish to each
Partner each of the following, which shall be prepared and distributed or caused
to be prepared and distributed by the Officers of the Partnership:
(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 Partnership's chief
executive officer or the most senior financial officer of the Partnership
involved in the preparation of such report, 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 each 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.
(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 required 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.
(e) Any other financial or other information available to the
Officers as the General Partner shall have reasonably requested on a timely
basis.
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SECTION 9.4 BUDGET MEETINGS.
(a) The Partnership shall hold regular quarterly budget meetings
within ten (10) days after the distribution of each operating budget required by
Section 9.3(c) hereof. Each budget meeting shall be attended (either in person
or by telephone) by the Partnership's chief executive officer, most senior
financial officer, such representative or representatives of the General Partner
as the General Partner may designate from time to time, and such other persons
as the General Partner or the Partnership's chief executive officer may deem
necessary or appropriate. The Partnership and the CEO shall give each such
Person notice of the time and place of each budget meeting at least five (5)
days prior to the occurrence thereof. The Partnership will reimburse the
reasonable travel expenses of any representative of the General Partner who
attends each budget meeting.
(b) At each budget meeting, the most senior financial officer of the
Partnership shall make a presentation, comparing the budget for the most
recently completed calendar quarter which was presented at the previous budget
meeting with the Partnership's results for the most recently completed calendar
quarter and explaining the preparation of the most recently distributed budgets
pursuant to Section 9.3(a) hereof. Each of the attendees (whether in person or
by telephone) at such meeting shall have the right to submit proposals and
suggestions regarding the operations of 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 and local 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);
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.
(c) The Partnership will pay out of its Free Cash Flow the amounts
of any unincorporated business tax attributable to the Partnership.
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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 sent by
registered or certified mail, or by overnight courier to the other Partners, at
their addresses set forth on the signature pages hereof or on Exhibit 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
delivery or the date of delivery by an overnight courier or of the 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 written consent of (a) the General Partner and (b) a Majority Vote
of the Limited Partners; provided, however, that the General Partner shall make
such amendments and additions to Exhibit 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 written
consent of the Limited Partner which would be so affected. Notwithstanding
anything contained herein to the contrary, no amendment may be made to reduce
the Partnership Points of any Partner without the written consent of such
Partner.
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 Transfer his Partnership Interest 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 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.
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SECTION 10.6 PRIOR AGREEMENTS SUPERSEDED. This Agreement, (including
without limitation, the schedules and exhibits hereto), supersedes the
Predecessor Agreement and all other prior understandings and agreements among
the parties with respect to the subject matter hereof.
SECTION 10.7 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 10.8 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 10.9 APPLICABLE LAW. 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 10.10 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 10.11 CREDITORS. None of the provisions of this Agreement shall be
for the benefit of or enforceable by any creditor of (a) any Partner, (b) any
Employee Stockholder or (c) 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 Limited Partners have
executed and delivered this Limited Partnership Agreement as of the day and year
first above written.
GENERAL PARTNER
Name and Signature Address
AFFILIATED MANAGERS GROUP, INC. Affiliated Managers Group, Inc.
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
By:/s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President
LIMITED PARTNERS
Name and Signature Address
WMD CORP. 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
By:/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx, President
KSK CORP. 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
By:/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx, President
GXL CORP. 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
By:/s/ Xxxxxxxx X. Xxxx
-------------------------------
Xxxxxxxx X. Xxxx, President
MXM CORP. 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
By:/s/ Xxxxxxx Xxxxxxx
-------------------------------
Xxxxxxx Xxxxxxx, President
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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.
Name and Signature Employee Stockholder of:
/s/ Xxxxxxx X. Xxxxxx WMD Corp.
----------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx KSK Corp.
----------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxxx X. Xxxx GXL Corp.
----------------------------------
Xxxxxxxx X. Xxxx
/s/ Xxxxxxx Xxxxxxx MXM Corp.
----------------------------------
Xxxxxxx Xxxxxxx
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EXHIBIT A
ATTACHED TO AND MADE A PART OF
THE AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF
SKYLINE ASSET MANAGEMENT, L.P.
PARTNERSHIP
POINTS
-----------
Vested Partnership Points Issued to General Partner:
Affiliated Managers Group, Inc. 55
Vested Partnership Points Issued to Limited Partners:
WMD Corp 22
KSK Corp. 4
GXL Corp. 3
MXM Corp. 1
---
Total Limited Partners 30
TOTAL VESTED 85
Unvested Partnership Points:
KSK Corp. 4 (a)
GXL Corp. 2 (b)
Reserved - Hurdle Points 4 (c)
Reserved - Discretionary Points 5 (d)
---
TOTAL UNVESTED 15
TOTAL 100
---------------- ===
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(a) MID-CAP POINTS: These four (4) Partnership Points (the "Mid-Cap
Points") are unvested Partnership Points issued to KSK Corp. as of the Effective
Date. The Mid-Cap Points shall vest and become Vested Partnership Points as
follows:
(i) If the Revenues From Operations of the Partnership
attributable to providing Investment Management Services in accordance
with the Partnership's Midcapitalization Value Equity Management
strategy ("New Mid-Cap Revenues") annualized based on the assets under
management as of the last business day of any month (each, a "Vesting
Test Date") exceed the Revenues From Operations of the Partnership
attributable to providing Investment Management Services in accordance
with the Partnership's Midcapitalization Value Equity Management
strategy annualized based on the assets under management as of the
Effective Date (the "Mid-Cap Base") by at least $750,000 (for any
reason including contributions to new or existing accounts, increases
in fees payable to the Partnership or appreciation in the value of the
assets of the accounts), then one (1) Partnership Point shall vest and
become a Vested Partnership Point as of such Vesting Test Date.
(ii) If the New Mid-Cap Revenues annualized based on the assets
under management as of any Vesting Test Date exceed the Mid-Cap Base
by at least $1,500,000 (for any reason including contributions to new
or existing accounts, increases in fees payable to the Partnership or
appreciation in the value of the assets of the accounts), then one (1)
Partnership Point (in addition to the Point described in the preceding
paragraph) shall vest and become a Vested Partnership Point as of such
Vesting Test Date.
(iii) If the New Mid-Cap Revenues annualized based on the assets
under management as of any Vesting Test Date exceed the Mid-Cap Base
by at least $2,250,000 (for any reason including contributions to new
or existing accounts, increases in fees payable to the Partnership or
appreciation in the value of the assets of the accounts), then one (1)
Partnership Point (in addition to the Points described in the
preceding paragraphs) shall vest and become a Vested Partnership Point
as of such Vesting Test Date.
(iv) If the New Mid-Cap Revenues annualized based on the assets
under management as of any Vesting Test Date exceed the Mid-Cap Base
by at least $3,000,000 (for any reason including contributions to new
or existing accounts, increases in fees payable to the Partnership or
appreciation in the value of the assets of the accounts), then one (1)
Partnership Point (in addition to the Points described in the
preceding paragraphs) shall vest and become a Vested Partnership Point
as of such Vesting Test Date.
(v) If any Mid-Cap Point has failed to vest in accordance with
the foregoing paragraphs by the sixth anniversary of the Effective
Date, such Partnership Point shall terminate unvested.
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(vi) Any Mid-Cap Points that terminate unvested in accordance
with the preceding paragraph or in accordance with Section 3.8(a) may
be reissued only by mutual consent of the CEO and the General Partner.
(b) MARKETING POINTS: These two (2) Partnership Points (the "Marketing
Points") are unvested Partnership Points issued to GXL Corp. as of the Effective
Date. The Marketing Points shall vest and become Vested Partnership Points as
follows:
(i) If the Revenues From Operations of the Partnership
attributable to providing Investment Management Services for assets
under management that have come under management by the Partnership
since the Effective Date by reason of additional contributions by
existing clients or from new clients (without regard to any
appreciation or depreciation of assets under management and without
regard to assets withdrawn from management since the Effective Date)
annualized based on such assets as of a Vesting Test Date ("New
Marketing Revenues") are equal to at least $375,000, then one-half of
one (0.5) Partnership Point shall vest and become one-half of one
(0.5) Vested Partnership Point as of such Vesting Test Date.
(ii) If the New Marketing Revenues annualized based on such
assets as of any Vesting Test Date are equal to at least $750,000,
then one-half of one (.50) Partnership Point (in addition to the
fraction of a Point described in the preceding paragraph) shall vest
and become one-half of one (0.5) Vested Partnership Point as of such
Vesting Test Date.
(iii) If the New Marketing Revenues annualized based on such
assets as of any Vesting Test Date are equal to at least $1,125,000,
then one-half of one (.50) Partnership Point (in addition to the Point
described in the preceding paragraphs) shall vest and become a
one-half of one (0.5) Vested Partnership Point as of such Vesting Test
Date.
(iv) If the New Marketing Revenues annualized based on such
assets as of any Vesting Test Date are equal to at least $1,500,000,
then one-half of one (.50) Partnership Point (in addition to the one
and one-half (1.5) Points described in the preceding paragraphs) shall
vest and become one-half of one (0.5) Vested Partnership Point as of
such Vesting Test Date.
(v) If any Marketing Point has failed to vest in accordance with
the foregoing paragraphs by the sixth anniversary of the Effective
Date, such Partnership Point shall terminate unvested.
(vi) Any Marketing Points that terminate unvested in accordance
with the preceding paragraph or in accordance with Section 3.8(a) may
be reissued only by mutual consent of the CEO and the General Partner.
(c) HURDLE POINTS: These four (4) Partnership Points (the "Hurdle Points")
are not issued
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as of the Effective Date, but are reserved for issuance as follows:
(i) Subject to the provisions of Section 6.5(e), the CEO in his
discretion may issue all or any portion of the Hurdle Points at any
time, and from time to time, to any one or more persons who are, or
have agreed to become, employed by the Partnership (or are controlled
by persons who are so employed or have so agreed).
(ii) In his discretion, the CEO may elect, prior to the issuance
of any particular portion(s) of the Hurdle Points to any person
("Undesignated Hurdle Points"), to assign incentive goals with respect
to all or any portion of such Undesignated Hurdle Points, which
incentive goals may be reviewed by the CEO annually for the purposes
of making adjustments thereto. If such incentive goals are satisfied
while the Undesignated Hurdle Points are held in reserve, then
following such satisfaction, the Undesignated Hurdle Points may be
issued by the CEO in his discretion as if they were, and they shall
thereupon be deemed to be, Discretionary Points governed by paragraph
(d) hereof. Prior to such satisfaction, the CEO in his discretion may
issue all or any portion of the Undesignated Hurdle Points at any
time, and from time to time, to any one or more persons pursuant to
paragraphs (c)(i), (c)(iii) and (c)(iv).
(iii) Subject to the provisions of Section 6.5(e), the CEO shall,
at the time of issuance of any Hurdle Points, establish the terms and
conditions of such Hurdle Points, including the terms and conditions
upon which such Hurdle Points shall become Vested Partnership Points.
The terms and conditions pursuant to which Hurdle Points shall become
Vested Partnership Points shall be determined in the discretion of the
CEO for the purposes of providing performance incentives to the
persons receiving such Hurdle Points (or persons by whom they are
controlled), and may be reviewed by the CEO annually for the purposes
of making adjustments thereto.
(iv) Except as described in paragraph (ii) above with respect to
Hurdle Points that have been deemed Discretionary Points, the Hurdle
Points shall be unvested when issued. Any Hurdle Points (or fractions
thereof) that terminate unvested in accordance with Section 3.8(a) or
otherwise fail to become Vested Partnership Points and terminate in
accordance with their terms may be reissued by the CEO in his sole
discretion, PROVIDED that such Hurdle Points shall remain Hurdle
Points hereunder and shall remain subject to the provisions of Section
6.5(e) and this paragraph (c).
(d) DISCRETIONARY POINTS: These five (5) Partnership Points, plus any
Hurdle Points that are deemed Discretionary Points in accordance with paragraph
(c)(ii) above (the "Discretionary Points") are not issued as of the Effective
Date, but are reserved for issuance as follows:
(i) Subject to the provisions of Section 6.5(e), the CEO in his
discretion may issue all or any portion of the Discretionary Points at
any time, and from time to time to one or more persons who are, or
have agreed to become, employed by the
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Partnership (or are controlled by persons who are so employed or have
so agreed).
(ii) At the time of issuance, the Discretionary Points may be
unvested Partnership Points or Vested Partnership Points, as
determined by the CEO in his discretion. Subject to the provisions of
Section 6.5(e), the CEO may establish the terms and conditions of the
Discretionary Points, including without limitation the terms and
conditions upon which any unvested Discretionary Points may become
Vested Partnership Points.
(iii) Any Discretionary Points (or fractions thereof) that
terminate unvested in accordance with Section 3.8(a) or otherwise fail
to become Vested Partnership Points and terminate in accordance with
their terms may be reissued by the CEO in his sole discretion,
PROVIDED that such Discretionary Points shall remain Discretionary
Points hereunder and shall remain subject to the provisions of Section
6.5(e) and this paragraph (d).
