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EXHIBIT 10.7
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST FILED WITH THE COMMISSION. ASTERISKS (*) IDENTIFY
WHERE SUCH CONFIDENTIAL INFORMATION HAS BEEN OMITTED. THE OMITTED PORTIONS HAVE
BEEN FILED SEPARATELY WITH THE COMMISSION.
FIRST QUADRANT U.K., L.P.
LIMITED PARTNERSHIP AGREEMENT
March 28, 1996
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FIRST QUADRANT U.K., L.P.
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 Formation of Partnership...................................................8
Section 2.2 Name of the Partnership....................................................8
Section 2.3 Purposes of the Partnership................................................8
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......................................................9
Section 2.8 Fiscal Year...............................................................10
ARTICLE III - MANAGEMENT OF THE PARTNERSHIP..................................................10
Section 3.1 Management in General.....................................................10
Section 3.2 Officers of the Partnership...............................................10
Section 3.3 Operation of the Business of the Partnership..............................11
Section 3.4 Compensation and Expenses of the Officers and Partner.....................11
Section 3.5 Other Business of the General Partner and its Affiliates..................11
Section 3.6 Limited Partners and Non Solicitation Agreements..........................12
Section 3.7 Non Solicitation and Non-Disclosure by Limited Partners and Employee
Stockholders..............................................................12
Section 3.8 Remedies Upon Breach......................................................15
Section 3.9 Repurchase Upon Termination of Employment or Bankruptcy...................15
Section 3.10 No Employment Obligation..................................................21
Section 3.11 Miscellaneous.............................................................21
Section 3.12 Exculpation; Indemnification..............................................21
ARTICLE IV - CAPITAL CONTRIBUTIONS; DISTRIBUTIONS;
CAPITAL ACCOUNTS AND ALLOCATIONS........................................................22
Section 4.1 Capital Contributions.....................................................22
Section 4.2 Capital Accounts; Allocations.............................................23
Section 4.3 Distributions.............................................................24
Section 4.4 Distributions Upon Liquidation; Establishment of a Reserve Upon
Liquidation...............................................................25
Section 4.5 Proceeds from the Sale of Securities; Insurance Proceeds; Certain
Special Allocations.......................................................26
Section 4.6 Federal Tax Allocations...................................................27
(i)
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ARTICLE V - TRANSFER OF PARTNERSHIP INTERESTS OTHER THAN
BY THE GENERAL PARTNER, ADMISSION OF ADDITIONAL
PARTNERS, REDEMPTION AND WITHDRAWAL.......................................................28
Section 5.1 Assignability of Interests..................................................28
Section 5.2 Substitute Limited Partners.................................................29
Section 5.3 Additional Requirements.....................................................30
Section 5.4 Allocation of Distributions Between Assignor and Assignee; Successor to
Capital Accounts............................................................30
Section 5.5 Redemptions and Withdrawals.................................................30
Section 5.6 Issuance of Additional Partnership Interests................................31
Section 5.7 Representation of Partners..................................................31
ARTICLE VI - TRANSFER OF PARTNERSHIP INTEREST BY THE
GENERAL PARTNER; REDEMPTION, REMOVAL
AND WITHDRAWAL............................................................................32
Section 6.1 Assignability of Interest...................................................32
Section 6.2 Resignation, Redemption, and Withdrawal.....................................32
ARTICLE VII - PUT/CALL OF PARTNERSHIP INTERESTS;
REGISTRATION RIGHTS.......................................................................33
Section 7.1 Mandatory Puts..............................................................33
Section 7.2 Election Rights of Limited Partners to Receive AMG Stock....................36
Section 7.3 General Partner Call Option.................................................36
Section 7.4 AMG Call Option.............................................................37
ARTICLE VIII - DISSOLUTION AND TERMINATION.....................................................39
Section 8.1 Events of Dissolution.......................................................39
ARTICLE IX - RECORDS AND REPORTS...............................................................41
Section 9.1 Books and Records...........................................................41
Section 9.2 Accounting..................................................................41
Section 9.3 Financial Reports...........................................................42
Section 9.4 [Reserved]..................................................................42
Section 9.5 Tax Matters.................................................................43
ARTICLE X - MISCELLANEOUS......................................................................43
Section 10.1 Notices.....................................................................43
Section 10.2 Successors and Assigns......................................................43
Section 10.3 Amendments..................................................................43
Section 10.4 No Partition................................................................44
Section 10.5 No Waiver...................................................................44
Section 10.6 Dispute Resolution..........................................................44
(ii)
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Section 10.7 Prior Agreements Superseded.................................................44
Section 10.8 Captions....................................................................44
Section 10.9 Counterparts................................................................44
Section 10.10 Applicable Law; Jurisdiction................................................44
Section 10.11 Singular and Plural.........................................................45
Section 10.12 Creditors...................................................................45
EXHIBITS
Exhibit A(i) - Form of Non Solicitation/Non Disclosure Agreement for Employee
Stockholders employed by First Quadrant, L.P.
Exhibit A(ii) - Form of Non Solicitation/Non Disclosure Agreement for Employee
Stockholders employed by First Quadrant Limited
Exhibit B - Form of Promissory Note for Repurchases
SCHEDULES
Schedule A - Partnership Points and Capital Accounts
(iii)
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FIRST QUADRANT U.K., L.P.
LIMITED PARTNERSHIP AGREEMENT
This Limited Partnership Agreement (the "Agreement") is made and
entered into as of March 28, 1996 (the "Effective Date"), by and among First
Quadrant Corp., a New Jersey corporation (the "General Partner"), the other
partners named on Schedule A hereto (collectively, the "Limited Partners" and
individually, a "Limited Partner"). The General Partner and the Limited Partners
are sometimes herein referred to collectively as the "Partners" and individually
as a "Partner."
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which is hereby acknowledged, and in consideration of the mutual agreements
hereinafter set forth, including, but not limited to, their capital
contributions, the parties hereby agree as follows:
ARTICLE I - DEFINITIONS.
SECTION 1.1 DEFINITIONS. For purposes of this Agreement:
"Additional Limited Partner" shall have the meaning specified in
Section 5.6.
"Advisers Act" shall mean the Investment Advisers Act of 1940, as it
may be amended from time to time, and any successor to such Act.
"Affiliate" shall mean, with respect to any person or entity (herein
the "first party"), any other person or entity that directly or indirectly
controls, or is controlled by, or is under common control with, such first
party. The term "control" as used herein (including the terms "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to (a) vote 50% or more of the outstanding voting securities of
such person or entity or (b) otherwise direct the management or policies of such
person or entity by contract or otherwise.
"Agreement" shall mean this Limited Partnership Agreement, as it may
from time to time be amended, supplemented or restated.
"AMG" shall mean Affiliated Managers Group, Inc., a Delaware
corporation.
"Capital Account" shall mean the capital account maintained by the
Partnership with respect to each Partner in accordance with the capital
accounting rules described in Section 4.2 hereof.
"Capital Contribution" shall mean, as to each Partner, the amount of
money and/or the agreed fair market value of any property (net of any
liabilities encumbering such property that
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the Partnership is considered to assume or take subject to) contributed to the
capital of the Partnership by such Partner.
"Certificate of Limited Partnership" shall mean the certificate of
limited partnership for the Partnership required under the Partnership Act, as
such Certificate may be amended or restated from time to time.
"Closing" shall have the meaning set forth in the Stock Purchase
Agreement.
"Code" or "Internal Revenue Code" shall mean the United States
Internal Revenue Code of 1986, as from time to time amended, and any successor
thereto, together with all regulations promulgated thereunder.
"Effective Date" shall have the meaning specified in the preamble of
this Agreement.
"Employee Stockholder" shall mean (i) in the case of a Limited
Partner which is not an individual, that certain officer and/or employee of the
Partnership or First Quadrant Limited (or, in the case of Xxxxxx, Inc., Xxxxxx
X. Xxxxxx, Xx.) who is the owner of all the issued and outstanding capital stock
of a Limited Partner, and is listed as such on Schedule A hereto, and (ii) in
the case of a Limited Partner which is an individual, such Limited Partner.
"Encumbrances" shall have the meaning ascribed thereto in the Stock
Purchase Agreement.
"Executive Retention Options" shall mean one or more of those
Executive Retention Options in the form attached as Exhibit A to the U.S.
Partnership Agreement which was issued on the date hereof to one or more
Partners.
"Executive Retention Reserve" shall mean the ten (10) Partnership
Points as are reserved for issuance pursuant to the terms of one or more
Executive Retention Options. The ten (10) Partnership Points in the Executive
Retention Reserve shall be deemed to be outstanding Partnership Points held by
the General Partner for all purposes of this Agreement (other than the
determination of "Majority Vote" as set forth herein and for determining
"Capital Calls" as set forth in Section 4.1 hereof), except for those
Partnership Points as have been issued pursuant to the Executive Retention
Options.
"Fair Market Value" shall mean the fair market value as reasonably
determined in good faith by the Board of Directors of the General Partner.
"First Quadrant Limited" shall mean First Quadrant Limited, a United
Kingdom corporation.
"For Cause" shall mean, with respect to the termination of an
Employee Stockholder's employment, with the U.S. Partnership or First Quadrant
Limited, any of the following:
(a) The Employee Stockholder has engaged in any criminal
offense which involves a violation of federal or state securities laws or
regulations, embezzlement, fraud, wrongful taking or misappropriation of
property, theft, or any other crime involving dishonesty and (i) has been
convicted (whether or not subject to appeal) or plead nolo contendre or any
similar plea to any criminal offense in connection with or relating to such
act, or (ii) as a result of or in relation to such act, an event has occurred
which would require an affirmative answer to any of the questions in Items 11A,
B, C, D, E or F (except, with respect to question 2 in each of Items 11C, D or
E, for an immaterial violation of securities laws or regulations which results
in an affirmative answer which could not reasonably be expected to have an
adverse effect on the U.S. Partnership, First Quadrant Limited or their
respective businesses) of Part I of the Partnership's Form ADV;
(b) The General Partner with a Majority Vote (excluding,
for purposes of determining such Majority Vote, the Employee Stockholder or
Limited Partner of the Employee Stockholder which is the subject of such
termination, as if the Partnership Points held by such Limited Partner were not
outstanding) has determined that the Employee Stockholder has persistently and
willfully neglected his or her duties or failed to devote substantially all of
his or her working time, energy and skills to the faithful and diligent
performance of such duties, after the U.S. Partnership and/or First Quadrant
Limited, as applicable, has given the Employee Stockholder written notice
specifying such conduct by the Employee Stockholder and giving the Employee
Stockholder a reasonable period of time (not less than 30 days), to conform his
or her conduct to such duties; or
(c) The Employee Stockholder has engaged in Prohibited
Competition Activity or violated or breached any material provision of his or
her Non Solicitation Agreement or engaged in any of the activities prohibited by
Section 3.7 hereof or Section 3.7 of the U.S. Partnership Agreement.
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"Free Cash Flow" shall mean, for any period, the Revenues From
Operations of the Partnership for such period.
"General Partner" shall mean First Quadrant Corp., a New Jersey
corporation, and any Person who becomes a successor or additional General
Partner as provided herein.
"Governmental Authority" shall mean any foreign, federal, state or
local court, governmental authority or regulatory body.
"Immediate Family" shall mean, with respect to any person, such
person's spouse, parents, grandparents, children, grandchildren and siblings.
"Incentive Program" shall mean the First Quadrant, L.P. and First
Quadrant U.K., L.P. Incentive Program in the form attached to the U.S.
Partnership Agreement as Exhibit B.
"Incentive Reserve" shall mean the number of Partnership Points
(initially twenty-four and fourteen one-hundredths (24.14)), as are reserved for
issuance pursuant to the terms of the Incentive Program. The twenty-four and
fourteen one-hundredths (24.14) Partnership Points in the Incentive Reserve
shall be deemed to be outstanding Partnership Points held by the General Partner
for all purposes of this Agreement, except for those Partnership Points as have
vested and have been issued pursuant to the Incentive Program.
"Independent Public Accountants" shall mean any independent
certified public accountant satisfactory to the General Partner and retained by
the Partnership.
"Initial Partners" shall mean those entities which are Partners on
the Effective Date.
"Initial Partnership Points" means, with respect to a Limited
Partner, that number of Partnership Points held by such Limited Partner in the
Partnership immediately after giving effect to the Closing.
"Initial U.S. Partnership Points" means, with respect to a Limited
Partner, that number of U.S. Partnership Points held by such Limited Partner
immediately after giving effect to the Closing.
"Investment Management Services" shall mean any services which
involve (a) the management, for a fee or other remuneration, of an investment
account or fund (or portions thereof or a group of investment accounts or
funds), or (b) the giving of advice, for a fee or other remuneration, with
respect to the investment and/or reinvestment of assets or funds (or any group
of assets or funds).
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"IRS" shall mean the Internal Revenue Service of the United States
Department of the Treasury.
"Limited Partner" shall mean any person or entity who is or becomes
a Limited Partner pursuant to the terms hereof.
"Majority Vote" shall mean the affirmative approval by vote or
consent of (a) the holders of the largest number and second largest number of
Vested Partnership Points (or if more than one Person holds an equal number of
Vested Partnership Points, which number is the largest or second largest number
of Vested Partnership Points, any one of such Persons) and any one other holder
of Vested Partnership Points, or (b) the holders of eighty percent (80%) of the
Vested Partnership Points then held by all Limited Partners excluding the holder
of the largest number of Vested Partnership Points (and, if more than one Person
holds an equal number of Vested Partnership Points, which number is the largest
number of Vested Partnership Points, then the holders of a majority of the
Vested Partnership Points then held by all Limited Partners) and, in the case of
either (a) or (b), excluding the General Partner and its Affiliates. If an
affirmative or negative vote is received under clause (a) above, but the holders
of eighty percent (80%) of the Vested Partnership Points determined as set forth
in clause (b) above disagree and their aggregate vote percentage exceeds that of
the aggregate vote percentage of clause (a) above, then such vote under clause
(a) shall be disregarded, otherwise, the vote under clause (b) above shall be
disregarded. For purposes of determining a "Majority Vote," the Partnership
Points in the Executive Retention Reserve shall be deemed to be outstanding
Partnership Points held by a single Limited Partner designated by the Chief
Executive Officer or, if the Chief Executive Officer fails to so designate a
Limited Partner, the General Partner.
"Non Solicitation Agreement" shall have the meaning set forth in
Section 3.6 hereof.
"Partners" shall mean the General Partner and the Limited Partners,
unless otherwise indicated.
"Partnership" shall mean the partnership organized under this
Agreement, as the same may be amended and/or restated from time to time.
"Partnership Act" shall mean the Delaware Revised Uniform Limited
Partnership Act (6 Del. C. Section 17-101 et seq.), as it may be amended from
time to time, and any successor to such Act.
"Partnership Interests" shall mean the interests (including Capital
Accounts and Partnership Points) of the Partners in the Partnership.
"Partnership Points" shall mean as of any date, with respect to a
Partner, the number of Partnership Points of such Partner as set forth on
Schedule A hereto, as amended from time to time in accordance with its terms and
the terms hereof, and as in effect on such date.
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"Partnership Share" shall have the meaning ascribed to such term in
the Revenue Agreement.
"Permanent Incapacity" shall mean, with respect to an Employee
Stockholder, that such Employee Stockholder is totally unable, by reason of
injury, illness or other similar cause (as determined by a licensed physician,
selected by the Employee Stockholder or his or her representative and approved
by the General Partner, which approval shall not be unreasonably withheld), to
have performed his or her substantial and material duties and responsibilities
for a period of three hundred sixty-five (365) consecutive days, which injury,
illness or similar cause (as determined by such physician) would render such
Employee Stockholder incapable of operating in a similar capacity in the future.
"Person" means any individual, partnership, corporation, limited
liability company, association, trust, joint venture, unincorporated
organization or any similar entity.
"Prohibited Competition Activity" shall mean any of the following
activities:
(a) directly or indirectly, whether as owner, part owner,
partner, director, officer, trustee, employee, agent or consultant for or on
behalf of any Person, firm, corporation or other entity other than the
Partnership or any Affiliate of the Partnership, (i) diverting or taking away
any funds or investment accounts with respect to which the Partnership or any
Affiliate of the Partnership is performing investment management or advisory
services, or (ii) soliciting any person or entity for the purpose of diverting
or taking away any such funds or investment accounts; or
(b) directly or indirectly, whether as owner, part owner,
partner, director, officer, trustee, employee, agent or consultant for or on
behalf of any Person other than the Partnership or any Affiliate of the
Partnership, performing any Investment Management Services.
"Repurchase" shall mean a purchase or repurchase of Partnership
Interests made pursuant to Section 3.9(a).
"Repurchase Closing Date" shall mean the date upon which payment is
made with respect to a Repurchase, or if payment is made in more than one
installment, the date upon which the first such installment is paid.
"Repurchased Partner" shall have the meaning specified in Section
3.9(a).
"Repurchase Price" shall have the meaning specified in Section
3.9(c).
"Retirement" shall mean, with respect to an Employee Stockholder,
the termination by such Employee Stockholder of such Employee Stockholder's
employment with the Partnership and its Affiliates: (x) after the date such
Employee Stockholder shall have been continuously employed by the Partnership or
First Quadrant Limited for a period of ten (10) years
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commencing with the later of the Effective Date or the date such Employee
Stockholder commenced his or her employment with the Partnership or First
Quadrant Limited, as applicable, and (y) pursuant to a written notice given to
the Partnership not less than six (6) months prior to the date of such
termination.
"Revenues From Operations" shall mean, for any period, the gross
revenues of the Partnership (except as set forth herein), determined on an
accrual basis in accordance with generally accepted accounting principles
consistently applied; provided, however, that Revenues From Operations shall be
determined without regard to (a) proceeds during such period from the sale,
exchange or other disposition of all, or a substantial portion of, the assets of
the Partnership or First Quadrant Limited, (b) revenues from the issuance by the
Partnership of additional Partnership Points, other Partnership Interests, or
other securities issued by the Partnership, and (c) payments received pursuant
to any insurance policies other than with respect to business interruption
insurance.
"Revenue Agreement" shall mean that certain Revenue Agreement of
even date herewith by and among the Partnership, the General Partner, the
Limited Partners and First Quadrant Limited.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as it may be
amended from time to time, and any successor thereto.
"Stock Purchase Agreement" shall mean that certain Stock Purchase
Agreement dated as of January 17, 1996, by and among AMG, Talegen Holdings,
Inc., a Delaware corporation ("Talegen"), the Initial Partners which are Limited
Partners, and certain other parties as set forth therein, as the same has been
amended from time to time prior to the date hereof.
"Transfer" shall have the meaning specified in Section 5.1.
"Treasury Regulations" shall mean the income tax regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"U.K. Free Cash Flow" shall mean "Free Cash Flow" as such term is
defined herein.
"U.K. Non Solicitation Agreement" shall mean "Non Solicitation
Agreement" as such term is defined herein.
"U.K. Partnership" shall mean this Partnership.
"U.K. Partnership Agreement" shall mean this Agreement.
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"U.K. Partnership Points" shall mean "Partnership Points" as such
term is defined herein.
"U.S. Free Cash Flow" shall mean "Free Cash Flow" as such term is
defined in the U.S. Partnership Agreement.
"U.S. Non Solicitation Agreement" shall mean a "Non Solicitation
Agreement" as such term is defined in the U.S. Partnership Agreement.
"U.S. Partnership" shall mean First Quadrant, L.P., a Delaware
limited partnership.
"U.S. Partnership Agreement" shall mean the Amended and Restated
Limited Partnership Agreement of First Quadrant, L.P., a Delaware limited
partnership, dated as of the date hereof, as the same may be amended and/or
restated from time to time after the date hereof.
"U.S. Partnership Points" shall mean "Partnership Points" as such
term is defined in the U.S. Partnership Agreement.
"Vested Partnership Points" shall mean, at any time and with respect
to any Partner, the number of Partnership Points held by such Partner which have
vested at such time, as determined pursuant to an agreement between the
Partnership and such Partner in connection with the issuance of such Partnership
Points. The number of Vested Partnership Points held by each Partner and the
vesting schedule with respect to any Partnership Points which are not vested,
shall be indicated on Schedule A hereto, which Schedule shall be updated by the
General Partner as additional Partnership Points are issued and/or vest from
time to time.
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 FORMATION OF PARTNERSHIP. The parties hereby form this
Partnership under and pursuant to the Partnership Act and the terms of this
Agreement. The rights, duties, liabilities and obligations of the Partners, and
the administration and termination of this Partnership, shall be governed by the
Partnership Act, except as otherwise provided in this Agreement. The General
Partner is authorized to cause the Partnership to comply with all requirements
of the Partnership Act and to qualify the Partnership to do business as a
limited partnership in any jurisdiction where the General Partner shall deem it
necessary, appropriate or advisable from time to time. The General Partner is
authorized to file and/or record any other instrument(s) as may be required or
advisable to be filed and/or recorded by this Partnership in accordance with
applicable laws, rules and regulations.
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SECTION 2.2 NAME OF THE PARTNERSHIP. The name of the Partnership
shall be First Quadrant U.K., L.P. or such other name as the General Partner
with a Majority Vote may from time to time determine. The General Partner and/or
the Officers shall cause to be filed on behalf of the Partnership such
partnership or assumed or fictitious business name statements or certificates as
the General Partner and/or the Officers shall deem necessary, appropriate or
desirable.
SECTION 2.3 PURPOSES OF THE PARTNERSHIP. The Partnership was
organized and is continued for the following purposes:
(a) to engage in and hold interests in other Persons
(both within and outside the United States of
America) who engage in the investment advisory and
investment management businesses and any and all
activities reasonably related thereto;
(b) to make and perform all contracts and engage in all
activities and transactions and to do any and all
things necessary or advisable to carry out the
foregoing purposes; and
(c) to engage in any other act or activity which is
lawful for partnerships under the Partnership Act and
which is approved by the General Partner; provided,
however, that the General Partner will not cause a
business which is unrelated to the Partnership's
businesses to become a substantial part of the
Partnership without a prior Majority Vote.
SECTION 2.4 PLACE OF BUSINESS; REGISTERED AGENT.
(a) The principal place of business of the Partnership shall
be c/o Affiliated Managers Group, Inc., Xxx Xxxxxxxxxxxxx Xxxxx, 00xx Xxxxx,
Xxxxxx, XX 00000.
(b) The Partnership's resident agent for service of process
in Delaware is The Corporation Trust Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, and its registered office in Delaware shall be in care of such
resident agent.
(c) The General Partner may, at any time and from time to
time: (i) change the location of the Partnership's principal place of business
and establish such additional place or places of business of the Partnership as
it may determine, (ii) change the Partnership's registered office in Delaware,
and (iii) change the Partnership's resident agent for service of process in
Delaware; provided, however, that the General Partner shall promptly give each
Limited Partner notice of any such change.
SECTION 2.5 DURATION OF THE PARTNERSHIP. The Partnership term shall
continue until December 31, 2095, unless extended or terminated earlier in
accordance with the provisions hereof. The Partnership's term may be extended by
the General Partner at any time and from time to time.
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SECTION 2.6 TITLE TO PROPERTY. All property owned by the
Partnership, whether real or personal, tangible or intangible, shall be deemed
to be owned by the Partnership as an entity, and no Partner, individually, shall
have any ownership of such property.
SECTION 2.7 LIABILITY OF PARTNERS; NO DEFICIT RESTORATION
OBLIGATION.
(a) The General Partner shall have such liability for the
repayment, satisfaction and discharge of the debts, liabilities and obligations
of the Partnership as is provided by the Partnership Act for the general partner
of a limited partnership.
(b) A Limited Partner which receives the return of any part
of its Capital Contribution shall be liable to the Partnership for the amount of
its Capital Contribution so returned to the extent, and only to the extent,
provided by the Partnership Act. No Limited Partner shall otherwise be liable to
the Partnership, another Partner or any third party for the repayment,
satisfaction, or discharge of the Partnership's debts, liabilities, and
obligations or otherwise have any obligation to contribute money or any other
asset to the Partnership other than payment of such Limited Partner's Capital
Contribution, and as otherwise specifically provided in this Agreement.
(c) Except as otherwise specifically set forth in this
Section 2.7 or in Section 4.3 hereof, no Limited Partner with a deficit balance
in its Capital Account shall have any obligation to restore such deficit (or
make any contribution to the capital of the Partnership, or otherwise pay any
amount, with respect to such deficit), and such deficit shall not be considered
as a debt of such Limited Partner to the Partnership or to any other Partner for
any purpose whatsoever.
SECTION 2.8 FISCAL YEAR. The fiscal year of the Partnership shall be
the calendar year unless otherwise determined by the General Partner.
ARTICLE III - MANAGEMENT OF THE PARTNERSHIP.
SECTION 3.1 MANAGEMENT IN GENERAL
(a) Subject to the provisions of this Agreement, the
management and control of the business of the Partnership shall be vested
exclusively in the General Partner, and the General Partner shall have exclusive
power and authority, in the name of and on behalf of the Partnership, to perform
all acts and do all things which, in its sole discretion, it deems necessary or
desirable to conduct the business of the Partnership. No Partner other than the
General Partner shall have the power to sign for or bind the Partnership to any
agreement or document, but the General Partner may delegate the power to sign
for or bind the Partnership to one or more Officers of the Partnership. The
General Partner shall be authorized to act, and to execute documents and
instruments alone on all material matters affecting the Partnership's business.
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(b) The General Partner shall, subject to all applicable
provisions of this Agreement, be authorized in the name of and on behalf of the
Partnership: (i) to enter into, execute, amend, supplement, acknowledge and
deliver any and all contracts, agreements, leases or other instruments for the
operation of the Partnership's business; and (ii) in general to do all things
and execute all documents necessary or appropriate to conduct the business of
the Partnership as set forth in Section 2.3 hereof, or to protect and preserve
the Partnership's assets. The General Partner may delegate any or all of the
foregoing powers to one or more of the Officers of the Partnership.
SECTION 3.2 OFFICERS OF THE PARTNERSHIP.
(a) The Officers of the Partnership shall consist of such
officers as the General Partner may determine are necessary or appropriate.
(b) No Officer of the Partnership shall be held personally
liable, by virtue of his or her status as an Officer, for any losses, debts or
obligations of the Partnership.
(c) Officers of the Partnership shall be appointed to, and
may be removed from, their offices by the General Partner acting in its sole
discretion. Any Officer of the Partnership may resign from his or her office
upon prior written notice to the Partnership and the General Partner.
(d) The Chief Executive Officer shall initially be Xxxxxx X.
Xxxxxx and the Chief Financial Officer shall initially be Xxxx X. Xxxxxxxx.
SECTION 3.3 OPERATION OF THE BUSINESS OF THE PARTNERSHIP.
(a) Subject to recognizing that the General Partner has the
rights, duties and obligations set forth in Section 3.1 above, the Officers of
the Partnership are hereby given a non-exclusive delegation of authority from
the General Partner to manage the day-to-day operations, business and activities
of the Partnership.
(b) Without the prior written consent of the General
Partner, the Partnership shall incur no material expenses or obligations. The
Partnership shall not, without the prior written consent of the General Partner,
enter into any material contracts or other material agreements. Free Cash Flow
may be used to provide for and pay the business expenses of the Partnership or
encumber the assets of the Partnership to the extent specified in Section 3.3(c)
with respect to key-man life insurance and disability insurance, Section 3.4
with respect to certain extraordinary expenses and otherwise as agreed to in
writing by the General Partner (any such use being referred to herein as a "Free
Cash Flow Expenditure").
(c) The Partnership will maintain such key-man life
insurance and disability insurance policies on each Employee Stockholder as the
General Partner shall deem necessary or desirable, from time to time, and the
Employee Stockholders will use their reasonable best efforts to effectuate the
foregoing. The Partnership will receive the proceeds of the above
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referenced insurance policies, and the Partners agree with each other and the
Partnership that the Partnership will pay the premiums on such key-man life and
disability policies, as well as any reasonable additional insurance policies
that the General Partner deems necessary, out of Free Cash Flow.
SECTION 3.4 COMPENSATION AND EXPENSES OF THE OFFICERS AND PARTNERS.
No Officer or Partner shall be entitled to any compensation on account of its
provision of services to the Partnership hereunder. The Partnership shall,
however, pay and/or reimburse the General Partner for all reasonable travel
expenses incurred by the General Partner in accordance with Section 9.4(a) as
well as any extraordinary expenses incurred by the General Partner directly in
connection with the operation of the Partnership. Without limiting the
generality of the foregoing, the General Partner's general overhead items
(including, without limitation, salaries and rent) shall not be reimbursed by
the Partnership. Stockholders, officers, directors, partners and agents of
Partners may serve as employees of the Partnership and be compensated therefor
as determined by the General Partner.
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 and the business of Persons which
are Affiliates of the Partnership. Neither the Partnership nor any of the
Limited Partners shall have any right in or to any other such ventures by virtue
of this Agreement or the Partnership created hereby, nor shall any such activity
be deemed wrongful or improper by such Affiliates. The General Partner shall not
be obligated to present any opportunity to the Partnership even if such
opportunity is of such a character which, if presented to the Partnership, would
be suitable for the Partnership.
SECTION 3.6 LIMITED PARTNERS AND NON SOLICITATION AGREEMENTS. Each
Employee Stockholder and, to the extent applicable, its Limited Partner, have
provided pursuant to a Non Solicitation/Non Disclosure Agreement in form and
substance satisfactory to the General Partner which may be similar to Exhibit
A(i) hereto (and, in the case of an Employee Stockholder who is employed by
First Quadrant Limited, Exhibit (A)(ii) hereto) (the "Non Solicitation
Agreement") (and in the case of any Additional Limited Partner (as defined in
Section 5.6), it shall, prior to and as a condition precedent to, becoming a
Partner, provide by such an agreement satisfactory to the General Partner) with
the Partnership for the performance by such Employee Stockholder of the
obligations provided for on such Exhibit A(i) or Exhibit A(ii) (as applicable)
and such agreements do and shall, at all times, provide that the Partnership
shall be entitled to enforce the provisions of such agreements on its own behalf
and in the name of the Limited Partner (if the Limited Partner is not an
individual).
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SECTION 3.7 NON SOLICITATION AND NON-DISCLOSURE BY LIMITED PARTNERS
AND EMPLOYEE STOCKHOLDERS.
(a) Each Limited Partner and each Employee Stockholder
agrees, for the benefit of the Partnership and the other Partners, that such
Employee Stockholder shall not, while employed by the Partnership or any of its
Affiliates, engage in any Prohibited Competition Activity (provided that an
Employee Stockholder may engage in certain charitable activities which have been
approved by the General Partner, in its sole discretion, in a writing making
specific reference to this Section 3.7(a) or Section 3.7(a) of the U.S.
Partnership Agreement).
(b) Each Limited Partner and each Employee Stockholder
agrees, for the benefit of the Partnership and the other Partners, that such
Limited Partner and such Employee Stockholder shall not, during the period
beginning on the date such Limited Partner becomes a Limited Partner, and until
the date which is two (2) years after the termination of such Employee
Stockholder's employment with the Partnership and its Affiliates, without the
express written consent of the General Partner, directly or indirectly, whether
as owner, part-owner, shareholder, partner, director, officer, trustee,
employee, agent or consultant, or in any other capacity, on behalf of himself or
any firm, corporation or other business organization other than the Partnership
or First Quadrant Limited: (i) provide Investment Management Services to any
person or entity that is a client of the U.S. Partnership or First Quadrant
Limited (for this purpose, upon any termination of the Employee Stockholder's
employment for any reason, only the following shall be deemed a "client of the
U.S. Partnership or First Quadrant Limited": (i) clients of First Quadrant
Limited, the U.S. Partnership or its Affiliates (including its predecessor,
First Quadrant Corp.) at the date of such termination or at any time during the
six (6) months immediately preceding the date of termination, or (ii) up to
fifteen (15) additional persons or entities with whom the Partnership or First
Quadrant Limited was actively attempting to develop or regain an investment
advisory or investment management relationship (as evidenced by a contact other
than a mass mailing) which may include prior clients of the Partnership, First
Quadrant Limited or their Affiliates) (a "Prospect") with such Prospects to be
designated by the General Partner with the advice of the Officers; provided,
however, that this paragraph (A) shall not prohibit the Employee Stockholder
from providing Investment Management Services to any person or entity that is
not a client of the U.S. Partnership or First Quadrant Limited (including
Prospects) as contemplated herein, (B) shall not be applicable with respect to
any such client who is, as of the relevant date of termination, also a client of
the person or entity with which the Employee Stockholder is subsequently
employed or affiliated so long as the Employee Stockholder can demonstrate by
clear and convincing evidence that he or she has no direct or indirect
involvement with the management of such client's accounts or the provision of
advice or other services with respect thereto (it being understood and agreed
that mere participation in the refinement of an existing model (as opposed to
the creation or development of a new model or any other activities) used for
providing investment advice shall not be deemed to be direct or indirect
involvement with the management of any accounts which are managed utilizing such
model) and that he or she has refrained from contacting such clients directly or
indirectly, and (C) shall not be applicable to clients of the U.S. Partnership
or First Quadrant Limited who are
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also members of the Immediate Family of the Employee Stockholder; or (ii)
solicit or induce any employee of, or consultant to, First Quadrant Limited, the
U.S. Partnership or any of its Affiliates to terminate his or her relationship
therewith, hire any such employee or consultant, or former employee or work in
any enterprise involving investment advisory services with any employee or
consultant or former employee of First Quadrant Limited, the U.S. Partnership or
its Affiliates who was employed by or acted as consultant to First Quadrant
Limited, the Partnership or its Affiliates at any time during the twelve (12)
months immediately preceding the termination of the Employee Stockholder's
employment (excluding for all purposes of this sentence, secretaries and persons
holding other similar positions).
Notwithstanding the provisions of Section 3.7(a) and 3.7(b), any Employee
Stockholder may make passive investments in a competitive enterprise the shares
or other equity interests of which are publicly traded provided his holding
therein together with any holdings of his Affiliates, do not exceed 1% of the
outstanding shares of comparable interests in such entity at the time such
investments are made.
(c) Each Limited Partner and each Employee Stockholder
agrees that any and all presently existing investment advisory business of First
Quadrant Limited, the U.S. Partnership and its Affiliates (including its
predecessor, First Quadrant Corp.), and all business developed by First Quadrant
Limited, the U.S. Partnership and its Affiliates or any other employee of First
Quadrant Limited or the U.S. Partnership, including without limitation, all
investment advisory contracts, fees, commissions, compensation records, client
lists, agreements, and any other incident of any business developed by First
Quadrant Limited, the U.S. Partnership or its Affiliates or earned or carried on
by the Employee Stockholder for First Quadrant Limited, the U.S. Partnership or
its Affiliates and all trade names, service marks and logos under which First
Quadrant Limited, the U.S. Partnership or its Affiliates do business, and any
combinations or variations thereof and all related logos, are and shall be the
exclusive property of First Quadrant Limited, the U.S. Partnership or such
Affiliate, as applicable, for its or their sole use, and (where applicable)
shall be payable directly to First Quadrant Limited, the U.S. Partnership or
such Affiliate. Each Limited Partner and each Employee Stockholder acknowledges
that, in the course of performing services hereunder and otherwise, the Employee
Stockholder has had, and will from time to time have, access to confidential
records, data, client lists, trade secrets and similar confidential information
owned or used in the course of business by First Quadrant Limited, the U.S.
Partnership or its Affiliates. Each Limited Partner and each Employee
Stockholder agrees always to keep secret and not ever publish, divulge, furnish,
use or make accessible to anyone (otherwise than in the regular business of
First Quadrant Limited, the U.S. Partnership or any Affiliate thereof at the
Partnership's request) any knowledge or information of a confidential or
proprietary nature with respect to any trade secrets, proprietary plans,
clients, client requirements, service providers, business operations or
techniques of First Quadrant Limited, the U.S. Partnership or any Affiliate
thereof other than information which (a) is or becomes generally available to
the public other than as a result of disclosure by such Limited Partner or
Employee Stockholder in violation of this Agreement, or (b) is required by law
or government regulation to be disclosed to a court or government regulatory
body; provided, however, that prior to disclosing such information, the
applicable Limited Partner and Employee Stockholder shall
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give the Partnership and the General Partner notice and shall use its respective
best efforts to obtain confidential treatment therefor ("Nonconfidential
Information"); provided, that the Partnership shall reimburse such Limited
Partner or Employee Stockholder for costs incurred in excess of $1,000. At the
termination of the Employee Stockholder's services to the U.S. Partnership or
First Quadrant Limited, all data, memoranda, client lists, notes, programs and
other papers, items and tangible media, and reproductions thereof relating to
the foregoing matters in the Limited Partner's or Employee Stockholder's
possession or control, shall be returned to the Partnership or the U.S.
Partnership and remain in its possession (except where the return of such items
shall be unreasonable or impractical in relation to the importance or
confidentiality of such items).
(d) Each Limited Partner and each Employee Stockholder
acknowledges that, in the course of negotiating this Restated Partnership
Agreement, the U.K. Partnership's Limited Partnership Agreement (the "U.K.
Partnership Agreement") and the Stock Purchase Agreement, the Limited Partner
and the Employee Stockholder have had and, in the course of the operation of the
Partnership, the Limited Partner and Employee Stockholder will from time to time
have, access to confidential records, data, plans, strategies, trade secrets and
similar confidential information owned or used in the course of business by the
General Partner's parent, AMG. Each Limited Partner and each Employee
Stockholder agrees, for the benefit of the Partnership and its partners, and for
the benefit of the General Partner's parent, AMG, always to keep secret and not
ever publish, divulge, furnish, use or make accessible to anyone (otherwise than
at the General Partner's request) any knowledge or information of a confidential
or proprietary nature with respect to any records, data, plans, strategies,
business operations or techniques (including, by way of example and not of
limitation, the transaction structure utilized by AMG) of AMG, the General
Partner or the Partnership other than Nonconfidential Information. At the
termination of the Employee Stockholder's service to the Partnership and First
Quadrant Limited, all data, memoranda, documents, notes and other papers, items
and tangible media, and reproductions thereof relating to the foregoing matters
in the Limited Partner's or Employee Stockholder's possession or control shall
be returned to the General Partner and remain in its possession (except where
the return of such items shall be unreasonable or impractical in relation to the
importance or confidentiality of such items).
SECTION 3.8 REMEDIES UPON BREACH.
(a) In the event that a Limited Partner or its Employee
Stockholder (i) breaches any of the provisions of Section 3.7, (ii) breaches any
of the provisions of Section 3.7 of the U.S. Partnership Agreement, or (iii)
breaches any of the provisions of the Non Solicitation Agreement to which it or
he is a party, then such Limited Partner shall forfeit its right to receive any
payment for its Partnership Interests under Section 3.9 and, with respect to
Xxxxxx, Inc., under Section 7.1(c), and the General Partner shall have no
further obligations under any promissory note theretofore issued to such Limited
Partner (or any other Limited Partner (including upon a distribution pursuant to
Section 3.9(j)) which was a stockholder in such Limited Partner) pursuant to
Section 3.9(e) and, with respect to Xxxxxx, Inc., under Section 7.1(f).
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(b) Each Limited Partner and each Employee Stockholder
agrees that any breach of the provisions of Section 3.7 of this Agreement,
Section 3.7 of the U.S. Partnership Agreement or of the Non Solicitation
Agreement or U.S. Non Solicitation Agreement by such Limited Partner or Employee
Stockholder could cause irreparable damage to the Partnership, First Quadrant
Limited, the U.S. Partnership, the other Partners and AMG. The Partnership, any
of the Partners and AMG shall, except as provided in this Section 3.8(b) have
the right to an injunction or other equitable relief (in addition to other legal
remedies) to prevent any violation of a Limited Partner's or Employee
Stockholder's obligations hereunder or thereunder. Notwithstanding the
foregoing, none of the Partnership, any of the Partners or AMG shall have the
right to an injunction or other equitable relief to prevent a violation of
Section 3.7(b)(i) unless: (i) the party or one of the parties against which such
relief is sought is Xxxxxx X. Xxxxxx, X.X. Xxxxxx Corporation, the Chief
Executive Officer of the U.S. Partnership or an entity through which a Chief
Executive Officer of the U.S. Partnership owns an interest in the Partnership,
or (ii) one of the parties seeking to obtain an injunction or other equitable
relief to prevent a violation of Section 3.7(b)(i) has obtained a Majority Vote.
SECTION 3.9 REPURCHASE UPON TERMINATION OF EMPLOYMENT OR BANKRUPTCY.
(a) In the event that the employment by the U.S. Partnership
or First Quadrant Limited of any Employee Stockholder terminates for any reason,
then: (i) if the termination of the Employee Stockholder occurred because of the
death or Permanent Incapacity of such Employee Stockholder, the Partnership
shall purchase for cash up to the extent of the cash proceeds of any key-man
life insurance policies or disability insurance policies, as applicable,
maintained by the Partnership on the life or health of such Employee
Stockholder, and (ii) in each other such case (and, in the case of the death or
Permanent Incapacity of an Employee Stockholder, to the extent the obligation
exceeds the proceeds described in clause (i) of this Section 3.9(a)), AMG shall
purchase (each a "Repurchase") all the Partnership Interests held by the Limited
Partner (or the Limited Partner of which such employee was the Employee
Stockholder, as applicable) (as indicated on Schedule A hereto) (the
"Repurchased Partner"), in each case, pursuant to the terms of this Section 3.9.
(b) The closing of the Repurchase will take place on a date
(the "Repurchase Closing Date") which is not more than ninety (90) days after
the date on which the termination of the employment by the U.S. Partnership and
First Quadrant Limited of the relevant Employee Stockholder occurred; provided,
however, that (i) if the employment by the Partnership and First Quadrant
Limited of such Employee Stockholder is terminated because of the death or
Permanent Incapacity of such Employee Stockholder, then the Repurchase Closing
Date shall be a date set by the General Partner which is as soon as reasonably
practicable after the later of (A) ninety (90) days after the death or Permanent
Incapacity, as applicable, of such Employee Stockholder or (B) ninety (90) days
after the Partnership has received the proceeds of any key-man life insurance
policy or disability insurance policy, as applicable, maintained by the
Partnership on the life or health of such Employee Stockholder. The Partnership
shall make a claim under such key-man or disability policy within thirty (30)
days of any Officer and the General Partner becoming aware of the death or
Permanent Incapacity, as applicable, of an Employee Stockholder.
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(c) The purchase price for the Repurchase (the "Repurchase
Price") shall be determined as follows:
(i) If the Employee Stockholder's employment with the
U.S. Partnership and First Quadrant Limited is terminated
because of the death, Permanent Incapacity, Retirement or if
such Employee Stockholder was terminated by the Partnership or
First Quadrant Limited on such date other than For Cause, then
the Repurchase Price shall equal (A) ************************
*************************************************************
*************************************************************
provided, however, that in the case of a Retirement, if,
within the twelve (12) months preceding the effective date of
such Employee Stockholder's Retirement, (x) two (2) other
Employee Stockholders have terminated their employment by
Retirement, or (y) one (1) other Employee Stockholder has
terminated his employment by Retirement and the Limited
Partner owned by that Employee Stockholder (or such Limited
Partner in the case of a Limited Partner which is an
individual) held at the time of such Retirement, and the
Limited Partner owned by that Employee Stockholder (or such
Limited Partner in the case of a Limited Partner which is an
individual) who is terminating his employment by Retirement
holds, a number of Vested Partnership Points as is equal to
or greater than the Median Number of Limited Partners' Vested
Partnership Points at the time any Stockholder terminated his
or her employment by Retirement during such twelve (12) month
period, then the Repurchase Price for the Partnership Points
of the Limited Partner owned by that Employee Stockholder (or
such Limited Partner in the case of a Limited Partner which
is an individual) who is terminating his employment by
Retirement shall be determined pursuant to paragraph (ii)
below. For purposes of this Section 3.9(c)(i), the term
Median Number of Limited Partners' Vested Partnership Points
shall mean that number of Vested Partnership Points as is
equal to the median number of Vested Partnership Points then
held by the Limited Partners (e.g., if there are five Limited
Partners with 5, 2, 2, 2 and 1 Vested Partnership Points, the
"median number" of Vested Partnership Points is 2 for all
purposes hereof).
(ii) In all other cases, (including, without
limitation, the resignation of an Employee Stockholder or the
termination of such Employee Stockholder For Cause) then the
Repurchase Price shall equal (A) ****************[The
remainder of this subsection has been omitted pursuant to the
confidential treatment request referred to on the cover page
hereto. The omitted portions have been filed separately with
the Commission.]***************
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If a Repurchase Price must be determined prior to twenty-four (24)
months after the Effective Date, then the amount of the Partnership's Free Cash
Flow for the portion of the relevant twenty-four (24) month period before the
Effective Date shall be included as zero ($0.00).
Notwithstanding anything else set forth herein to the contrary, if a
Limited Partner fails to comply with the provisions of Section 3.9(j) hereof,
AMG: (i) shall have no obligation to Repurchase Partnership Points from such
Limited Partner, and (ii) may, at any time, Repurchase Partnership Points from
such Limited Partner for a Repurchase Price equal to the lesser of (x) the
amount determined under Section 3.9(c)(ii) or (y) the Capital Account of such
Repurchased Partner.
(d) The rights of AMG, the General Partner, the Partnership
and their assignees hereunder are in addition to and shall not affect any other
rights which the Partnership or its assigns may otherwise have to repurchase
Partnership Interests (including, without limitation, pursuant to any agreement
entered into by an Additional Limited Partner which provides for the vesting of
Partnership Points).
(e) On the Repurchase Closing Date, AMG or the Partnership
shall pay to the Repurchased Partner the Repurchase Price for the Partnership
Interests repurchased in the manner set forth in this Section 3.9, and upon such
payment the Repurchased Partner shall cease to hold any Partnership Interests
repurchased, and such Repurchased Partner shall be deemed to have withdrawn from
the Partnership and shall cease to be a Partner of the Partnership and shall no
longer have any rights hereunder; provided, however, that the provisions of this
Article III shall continue as set forth in Section 3.11 below. On the Repurchase
Closing Date, the Repurchased Partner, the Partnership and AMG shall execute an
agreement reasonably acceptable to the General Partner in which the Repurchased
Partner represents and warrants that it has sole record and beneficial title to
the Repurchased Interest to AMG (or its assignee), free and clear of any
Encumbrances. Payment of the Repurchase Price shall be made on the Repurchase
Closing Date as follows: (a) in the case of termination of employment because of
death (to the extent of the collected proceeds of any key-man life insurance
policies maintained by the Partnership on the life of such Employee
Stockholder), by wire-transfer of immediately available funds to an account
designated by the Repurchased
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Partner at least three (3) business days prior to the Repurchase Closing Date,
and (b) in the case of any other termination of employment (and including a
termination of employment because of death to the extent the obligation exceeds
the proceeds of any key-man life insurance policies) with a promissory note in
the form attached hereto as Exhibit B, the principal of which promissory note
would be paid in four (4) equal (except as contemplated by this Section 3.9(e)
or Section 3.9(f)) installments, the first installment would be paid (A) in the
case of a termination because of death or a termination by the U.S. Partnership
or First Quadrant Limited other than For Cause, on the Repurchase Date, and (B)
in the case of any other termination, on the later to occur of (x) the
Repurchase Date or (y) the date which is the first business day after the fifth
anniversary of the Effective Date, and the second, third and fourth installments
would be paid fourteen (14) months, twenty-six (26) months and thirty-eight (38)
months, respectively, after such date.
(f) If an Employee Stockholder's employment with the U.S.
Partnership or First Quadrant Limited is terminated because of the Retirement of
such Employee Stockholder prior to March 28, 2011, then the amounts of the
second, third and fourth installments of the promissory note set forth in
Section 3.9(e) above shall equal the lesser of (i) twenty-five percent (25%) of
the Repurchase Price (determined as set forth in Section 3.9(c) hereof) on the
Repurchase Closing Date, or (ii) twenty-five percent (25%) of the Repurchase
Price, determined as if the Repurchase Closing Date were taking place on the
second, third or fourth anniversary of the Repurchase Closing Date, respectively
(in each case, together with interest computed on the principal amount of such
promissory note (determined as set forth in this Section 3.9(f)) from the date
of issuance of such promissory note through the date of payment of such
installment as set forth on Exhibit B). At least forty-five (45) days prior to
the date an installment to which this Section 3.9(f) applies would be paid, the
General Partner shall cause the Partnership to certify to the Repurchased
Partner who is to receive such installment, in writing, a calculation setting
forth the amount of such installment based on clauses (i) and (ii) in the
preceding sentence. Each Repurchased Partner to whom this Section 3.9(f)
applies, may defer receipt of an installment on one (1) occasion, by written
notice received by the Partnership and the General Partner not less than fifteen
(15) days prior to the date an installment is due to be paid. If a Repurchased
Partner defers an installment, the due date of each remaining installment of the
promissory note issued to such Repurchased Partner pursuant to Section 3.9(e)
above shall be extended by twelve (12) months.
(g) If AMG should fail to pay an installment on a promissory
note issued to a Repurchased Partner under paragraph (e) above, within thirty
(30) business days after the date such payment is due, then the Repurchased
Partner may, after complying with the provisions of the second paragraph of this
Section 3.9(g), repurchase the Subject Partnership Points by forgiving any
remaining installments on the promissory note issued pursuant to Section 3.9(e)
above and returning such promissory note to AMG marked "canceled and paid in
full." For purposes of this Section 3.9(g), the term "Subject Partnership
Points" shall mean in the case of any failure by AMG to pay an installment on a
promissory note: (i) if only the first installment in connection with such
Repurchase has been paid, seventy-five percent (75%) of the Partnership Points
purchased from the Repurchased Partner in the Repurchase, (ii) if the first and
second installments in connection with such Repurchase have been paid, fifty
percent
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(50%) of the Partnership Points purchased from the Repurchased Partner in the
Repurchase, and (iii) if the first three installments in connection with such
Repurchase have been paid, twenty-five percent (25%) of the Partnership Points
purchased from the Repurchased Partner in the Repurchase.
In order to exercise its rights under this Section 3.9(g), a
Repurchased Partner shall be required to give not less than fifteen (15) days
prior written notice to AMG and, if such Repurchased Partner is aware that AMG
has pledged its interest in the Partnership, to the beneficiary of such pledge.
Notwithstanding the foregoing, if AMG has pledged its interest in the
Partnership, the beneficiary of such pledge may either (x) fulfill AMG's
obligation (or cause AMG to fulfill its obligation) to pay the installment on a
promissory note which gave rise to such Repurchased Partner becoming entitled to
exercise its rights under this Section 3.9(g), whereupon such failure shall be
deemed to have been cured and such Repurchased Partner shall no longer be
entitled to exercise its rights under this Section 3.9(g) unless and until AMG
shall fail to pay another installment on a promissory note held by such
Repurchased Partner, whereupon this Section 3.9(g) shall only apply with respect
to such later failure, or (y) pay all remaining amounts due to such Repurchased
Partner under such promissory note, whereupon such Repurchased Partner shall
return the promissory note marked "canceled and paid in full" and shall have no
further rights hereunder.
If a Repurchased Partner has exercised its rights under this Section
3.9(g) and repurchased any Subject Partnership Points, either AMG or the
Partnership may, at their respective options and at any time, repurchase or
redeem (as applicable) such Subject Partnership Points for a payment, in cash,
equal to the installments which were outstanding under the promissory note
issued under Section 3.9(e) and upon which AMG defaulted, at the time of such
default.
(h) AMG may, with a Majority Vote (excluding, for purposes
of determining such Majority Vote, the Limited Partner whose interest is being
repurchased), assign any or all of its rights and obligations under this Section
3.9, in one or more instances, to the General Partner or the Partnership;
provided, that the foregoing limitation shall have no effect on the
Partnership's obligation set forth in Section 3.9(a)(i) regarding the use of the
proceeds of a key-man life or disability insurance policy.
(i) In the event that a Limited Partner or Employee
Stockholder has filed a petition under the United States Bankruptcy Code, or
sixty (60) days after the filing by another person against such Limited Partner
or Employee Stockholder of a petition under the United States Bankruptcy Code
which petition is not dismissed, or if such Limited Partner has ceased to carry
on a business because of a voluntary liquidation (such date of filing, sixtieth
day or effective date of liquidation, the "Bankruptcy Event"), then the General
Partner shall purchase all the Partnership Interests held by such Limited
Partner (including the Limited Partner through which such Employee Stockholder
holds its interest in the Partnership) pursuant to the terms of this Section 3.9
as if such Limited Partner was a Repurchased Partner with the purchase price
determined pursuant to Section 3.9(c)(ii) and the date of the closing to be
determined by the General Partner in its sole discretion.
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(j) In the event that the employment by First Quadrant
Limited or the U.S. Partnership of any Employee Stockholder which is not a
Limited Partner terminates for any reason other than the death of such Employee
Stockholder, then the Limited Partner of which such Person is the Employee
Stockholder (the "Distributing Partner") shall, at the request of the General
Partner (in a writing making reference to this paragraph (j) and Section 5.1(f)
hereof), distribute up to twenty-five percent (25%) of the Partnership Points
held by such Limited Partner to the stockholders of such Limited Partner after
such Limited Partner and each such stockholder has complied with the provisions
of Section 5.1 hereof, whereupon each such stockholder shall become a
Repurchased Partner for purposes of this Section 3.9, and all the interests of
such Repurchased Partners shall be Repurchased on the same Repurchase Closing
Date determined in accordance with Section 3.9(b), and upon such payment each
such Repurchased Partner shall cease to hold any Partnership Interests, each
such Repurchased Partner shall be deemed to have withdrawn from the Partnership,
shall cease to be a Partner of the Partnership, and shall no longer have any
rights hereunder. In connection with the Repurchase from each such Repurchased
Partner, such Repurchased Partner shall execute a xxxx of sale in form and
substance reasonably satisfactory to AMG. In connection with any Repurchase
pursuant to this Section 3.9(j), and notwithstanding the provisions of Sections
3.9(e) to the contrary, the payment of the Repurchase Price to the stockholder
and the Distributing Partner shall be made as follows: the payment of the
Repurchase Price to the stockholder shall be made entirely in cash on the
Repurchase Date, the first installment of the promissory note to be issued to
the Limited Partner of which such Person is a stockholder shall be reduced by
the amount of such cash payment, and the dollar amount of such reduction shall
be added one-third (1/3) to each of the second, third and fourth installments of
the promissory note to be issued to the Limited Partner of which such Person is
or was a stockholder.
SECTION 3.10 NO EMPLOYMENT OBLIGATION. Each Limited Partner and each
Employee Stockholder acknowledges that neither this Agreement nor the provisions
of the Non Solicitation Agreement creates an obligation on the part of the U.S.
Partnership or First Quadrant Limited to continue the employment of an Employee
Stockholder with the Partnership or First Quadrant Limited.
SECTION 3.11 MISCELLANEOUS. Each Limited Partner and each Employee
Stockholder agrees that the enforcement of the provisions of Sections 3.6, 3.7,
3.8, 3.9, and 3.10 and the provisions of the Non Solicitation Agreements are
necessary to ensure the protection and continuity of the business, goodwill and
confidential business information of the U.S. Partnership, the Partnership and
First Quadrant Limited for the benefit of each of the Partners. Each Limited
Partner and each Employee Stockholder agrees that, due to the proprietary nature
of the U.S. Partnership's business and the businesses of First Quadrant Limited,
the restrictions set forth in Section 3.7 hereof and in the Non Solicitation
Agreements are reasonable as to duration and scope. Each Limited Partner and
Employee Stockholder acknowledges that the obligations and rights under Sections
3.6, 3.7, 3.8, 3.9 and 3.11 shall survive the termination of the employment of
an Employee Stockholder with the U.S. Partnership and First Quadrant Limited
and/or the withdrawal or removal of a Limited Partner from the Partnership,
regardless of the manner of such termination in accordance with the provisions
hereof and of the relevant Non Solicitation Agreement. Moreover, each Partner
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agrees that the remedies provided herein, including the waiver of a right to
receive certain payments hereunder, is reasonably related to the anticipated
loss that the Partnership and the Partners (including, without limitation, the
General Partner or AMG which would be purchasing Partnership Interests from the
Limited Partners) would suffer upon a breach of such provisions. Each Partner
confirms his understanding and agreement that the provisions of Sections 3.6,
3.7, 3.8, 3.9 and 3.11 have been adopted in conformance with Section 16602 of
the California Business and Professional Code. Except as agreed to by the
General Partner, in writing, no Employee Stockholder or Limited Partner shall
enter into any agreement or arrangement which is inconsistent with the terms and
provisions hereof.
SECTION 3.12 EXCULPATION; INDEMNIFICATION.
(a) No Partner nor any of their officers, directors,
employees, stockholders or Affiliates, nor any of the Officers (each herein
referred to as an "Indemnified Party") shall have any liability to the
Partnership or to any Partner for any loss suffered by the Partnership (a
"Partnership Loss") which arises out of any action or inaction of such
Indemnified Party in its capacity as any of the foregoing; provided, however,
that such course of conduct did not constitute fraud, gross negligence, willful
misconduct or a material breach of this Agreement, the Stock Purchase Agreement
or, in the case of each Employee Stockholder, the Non Solicitation Agreement of
such Employee Stockholder or the breach of any of the foregoing by the Limited
Partner of which he or she is an Employee Stockholder. Each such Indemnified
Party shall be indemnified to the fullest extent permitted by law by the
Partnership against any losses, judgments, liabilities, expenses and amounts
paid in settlement of any claims sustained by any of them in their capacity as
an Indemnified Party in connection with the business or operations of the
Partnership, or the exercise and performance of any Partner's or Officer's
powers or duties in accordance with the terms of this Agreement; provided the
same was not the result of fraud, gross negligence, willful misconduct, or a
material breach of this Agreement, the Stock Purchase Agreement or, in the case
of each Employee Stockholder, the Non Solicitation Agreement of such Employee
Stockholder or the breach of any of the foregoing by the Limited Partner of
which he or she is an Employee Stockholder. The indemnification authorized by
this Section 3.12 shall include the payment of reasonable attorneys' fees and
other reasonable expenses incurred in settling or defending any claims,
threatened actions or finally adjudicated legal proceedings. Prior to any final
disposition of any claim or proceeding with respect to which an Indemnified
Party may be entitled to indemnification hereunder, the Partnership shall pay to
such Indemnified Party, as the case may be, in advance of such final
disposition, an amount equal to all reasonable out-of-pocket expenses of said
Indemnified Party as incurred in defense of said claim or proceeding; provided
that such advance payments shall be made only upon the Partnership's receipt of
a written undertaking of said Indemnified Party to repay the Partnership the
amount so advanced if it shall be finally determined that said Indemnified Party
was not entitled to indemnification hereunder.
(b) The right of indemnification hereby provided shall not
be exclusive of, and shall not affect, any other rights to which an Indemnified
Party may be entitled. Nothing
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contained in this Section 3.12 shall limit any lawful rights to indemnification
existing independently of this Section 3.12.
(c) The indemnification rights provided by this Section 3.12
shall also inure to the benefit of the heirs, executors, administrators,
successors and assigns of an Indemnified Party and any officers, directors,
partners, shareholders, employees and Affiliates of such Indemnified Party (and
any former officer, director, partner, shareholder or employee of such
Indemnified Party, if the Partnership Loss was incurred while such person was an
officer, director, partner, shareholder or employee of such Indemnified Party).
The General Partner may extend the indemnification called for by Section 3.12(a)
to non-employee agents of the Partnership, the General Partner or its
Affiliates.
ARTICLE IV - CAPITAL CONTRIBUTIONS; DISTRIBUTIONS;
CAPITAL ACCOUNTS AND ALLOCATIONS
SECTION 4.1 CAPITAL CONTRIBUTIONS.
(a) Simultaneously with the effectiveness of this Agreement,
the General Partner is contributing to the Partnership certain of its assets,
properties, rights, powers and privileges and the Partners agree that such
Capital Contribution has a value of $169,468.00. Except as may be agreed to in
connection with the issuance of additional Partnership Points, as specifically
set forth herein, and as may be required under applicable law, the Partners
shall not be required to make any further contributions to the Partnership. No
Partner shall make any contribution to the Partnership without the prior consent
of the General Partner.
(b) No Partner shall have the right to withdraw any part of
the capital it (or its predecessors in interest) contributed to the Partnership
until the termination, dissolution and winding up of all the Partnership, except
as distributions pursuant to this Article IV may represent returns of capital,
in whole or in part. No Partner shall be entitled to receive any interest on any
Capital Contribution made by it (or its predecessors in interest) to the
Partnership.
SECTION 4.2 CAPITAL ACCOUNTS; ALLOCATIONS.
(a) Capital Accounts. There shall be established for each
Partner a Capital Account (a "Capital Account") which, in the case of the
General Partner, shall be in the amount set forth in Section 4.1(a) above, and
in the case of each other Partner, shall initially be equal to the Capital
Contribution of such Partner as set forth on Schedule A hereto.
(b) Adjustments to Capital Accounts. The Capital Account of
each Partner shall be adjusted in the following manner. Each Capital Account
shall be increased by such Partner's allocable share of income and gain, if any,
of the Partnership (as well as the Capital Contributions made by a Partner after
the Effective Date) and shall be decreased by such Partner's allocable share of
deductions and losses, if any, of the Partnership and by the amount
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of all distributions made to such Partner. The amount of any distribution of
assets other than cash shall be deemed to be the Fair Market Value of such
assets (net of any liabilities encumbering such property that the distributee
Partner is considered to assume or take subject to). Capital Accounts shall also
be adjusted upon the issuance of additional Partnership Interests as set forth
in Section 5.6(c) and upon the redemption of Partnership Interests.
(c) Allocation of Income and Loss. Subject to Sections
4.2(d) and 4.2(e) and Sections 4.4 and 4.5 hereof, all items of Partnership
income, deduction, gain and loss shall be allocated among the Partners' Capital
Accounts at the end of every month as follows: *** [The remainder of this
subsection has been omitted pursuant to the confidential treatment request
referenced on the cover page hereto. The omitted portion has been filed
separately with the Commission.] ***
(d) *** [This subsection has been omitted pursuant to the
confidential treatment request referenced on the cover page hereto. The omitted
portion has been filed separately with the Commission.] ***
(e) Interim Closings. In the event that during any calendar
month (or any fiscal year) there is any change of Partners or Partnership Points
(whether as a result of the admission of an Additional Limited Partner, the
redemption by the Partnership of all (or any portion of) any Limited Partner's
Partnership Points, a transfer of any Partnership Points or otherwise), the
following shall apply: (i) such transfer shall be deemed to have occurred as of
the close of business on the last day of the month in which such change
occurred, (ii) the books of account of the Partnership shall be closed effective
as of the close of business on the effective date of any such change as set
forth in clause (i) and such fiscal year shall thereupon be divided into two or
more portions, (iii) each item of income gain, loss, deduction shall be
determined (on the closing of the books basis) for the portion of such fiscal
year ending with the date on which the books of account of the Partnership are
so closed, and (iv) each such item for such portion of such fiscal year shall be
allocated (pursuant to the provisions of Section 4.2(c) hereof) to those persons
who were Partners during such portion of such fiscal year in accordance with
their respective Partnership Points during such period.
SECTION 4.3 DISTRIBUTIONS.
********** [This section (approximately 1 1/3 pages) has been
omitted pursuant to the confidential treatment request referred to on the cover
page hereto. The omitted portions have been filed separately with the
Commission.] ************
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SECTION 4.4 DISTRIBUTIONS UPON LIQUIDATION; ESTABLISHMENT OF A
RESERVE UPON LIQUIDATION. Upon the liquidation of the Partnership, after payment
(or the making of reasonable provision for the payment) of all liabilities of
the Partnership owing to creditors, the General Partner (or liquidator) shall
set up such reserves as it deems reasonably necessary for any contingent,
conditional or unmatured liabilities or other obligations of the Partnership.
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Such reserves may be paid over by the General Partner (or liquidator) to a bank
(or other third party), to be held in escrow for the purpose of paying any such
contingent, conditional or unmatured liabilities or other obligations. At the
expiration of such period(s) as the General Partner (or liquidator) may deem
advisable, such reserves, if any (and any other assets available for
distribution), or a portion thereof, shall be distributed to the Partners in
accordance with their respective Capital Accounts. If any assets of the
Partnership are to be distributed in kind in connection with such liquidation,
such assets shall be distributed on the basis of their Fair Market Value net of
any liabilities encumbering such assets and, to the greatest extent possible,
shall be distributed pro-rata in accordance with the total amounts to be
distributed to each Partner. Immediately prior to the effectiveness of any such
distribution-in-kind, each item of gain and loss that would have been recognized
by the Partnership had the property being distributed been sold at Fair Market
Value shall be determined and allocated to those persons who were Partners
immediately prior to the effectiveness of such distribution in accordance with
Section 4.2(d).
SECTION 4.5 PROCEEDS FROM THE SALE OF SECURITIES; INSURANCE
PROCEEDS; CERTAIN SPECIAL ALLOCATIONS.
(a) Capital Contributions made by any Partner after the
Effective Date, and other proceeds from the issuance of securities by the
Partnership may, in the sole discretion of the General Partner, be used for the
benefit of the Partnership (including, without limitation, the repurchase or
redemption of Partnership Interests), or, may be distributed by the Partnership,
in which case, any such proceeds shall be allocated and distributed among the
Partners in accordance with their respective Partnership Points immediately
prior to the date of such contribution; it being understood that in the case the
proceeds are a note receivable, any such distribution shall occur upon receipt
by the Partnership of any cash in respect thereof.
(b) In the event of the death of an Employee Stockholder
covered by key-man life insurance, the proceeds of such policy shall first be
used by the Partnership to fund (to the extent thereof) the Repurchase of
Partnership Interests from the Employee Stockholder or Limited Partner through
which such Employee Stockholder held his or her interest in the Partnership in
accordance with Section 3.9 hereof and, if the proceeds exceed the amounts so
required to effect such Repurchase, then the amount of such excess proceeds may,
in the sole discretion of the General Partner, be used for the benefit of the
Partnership, or, may be distributed by the Partnership, in which case, any such
proceeds shall be allocated and distributed among the Partners in accordance
with their respective Partnership Points immediately following the Repurchase of
the Partnership Interests from such Limited Partner.
(c) Items of Tax Depreciation (as such term is defined
below) on account of the property of the Partnership on the Effective Date,
shall be specially allocated among the Partners in accordance with the positive
balances in their Capital Accounts on the Effective Date. All items of Tax
Depreciation on account of property purchased out of Free Cash Flow shall be
allocated among the Partners in accordance with their respective numbers of
Partnership Points.
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(d) The items of income, deduction, gain and loss allocable
pursuant to this Partnership Agreement shall generally be determined in
accordance with the Partnership's books of account; provided, however, that in
lieu of the depreciation, amortization, and other cost recovery deductions taken
into account in keeping the Partnership's books of account, there shall be taken
into account "Tax Depreciation" as defined below. "Tax Depreciation" means, for
any allocation period, an amount equal to the depreciation, amortization, and
other cost recovery deductions allowable for Federal income tax purposes with
respect to an asset or other capitalized amount for such allocation period
(regardless of whether such depreciation, amortization, or other cost recovery
deductions arise from the common tax basis of Partnership property or the tax
basis of Partnership property attributable to a particular Partner because of a
Code Section 754 election or otherwise); provided, however, that if the book
value of an asset differs from its adjusted tax basis at the beginning of such
allocation period, Tax Depreciation for that asset shall be an amount that bears
the same ratio to such beginning book value as the Federal income tax
depreciation, amortization, or other cost recovery deduction for that asset for
such allocation period bears to such beginning adjusted tax basis; provided,
further, however, that if the adjusted tax basis of an asset at the beginning of
such allocation period is zero, Tax Depreciation for that asset shall be
determined with reference to the appropriate Federal income tax recovery period.
SECTION 4.6 FEDERAL TAX ALLOCATIONS. The General Partner shall
allocate the ordinary income and losses and capital gains and losses of the
Partnership as determined for U.S. Federal income tax purposes (and each item of
income, gain, loss, deduction or credit entering into the computation thereof),
as the case may be, among the Partners for tax purposes in a manner that, to the
greatest extent possible (i) reflects the economic arrangement of the Partners
under this Agreement (determined after taking into account the allocation
provisions of Sections 4.2, 4.4 and 4.5 hereof, and the distributions provisions
of Sections 4.3, 4.4 and 4.5 hereof) and (ii) is consistent with the principles
of Sections 704(b) and 704(c) of the Code. Pursuant to the foregoing, the
General Partner shall allocate items of income, deduction, gain and loss for tax
purposes in the same manner as, and in proportion to, the book allocations of
corresponding items made pursuant to this Partnership Agreement, except (i) as
provided below with respect to allocations required under the principles of Code
Section 704(c), and (ii) as required by Code Section 704(b) and the Treasury
Regulations thereunder ("Required Allocations"). Any Required Allocations shall
be taken into account in computing other and subsequent tax allocations so that
the amount of tax items allocated to each Partner, to the greatest extent
possible, shall be equal to the amount of tax items that would have been
allocated to each Partner in the absence of such Required Allocations. The
Partners understand and agree that, with respect to any item of property (other
than cash) contributed (or deemed to be contributed for U.S. federal income tax
purposes) by a Partner to the capital of the Partnership, the initial tax basis
of such property in the hands of the Partnership will be the same as the tax
basis of such property in the hands of such Partner at the time so contributed.
The Partners further understand and agree that the taxable income and taxable
loss of the Partnership is to be computed for Federal income tax purposes by
reference to the initial tax basis to the Partnership of any assets and
properties contributed by the Partners (and not by reference to the fair market
value of such assets and properties at the time contributed). The Partners also
understand that, pursuant to Section 704(c) of the Code, all taxable items of
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income, gain, loss and deduction with respect to such assets and properties
shall be allocated among the Partners for Federal income tax purposes so as to
take account of any difference between the initial tax basis of such assets and
properties to the Partnership and their fair market values at the time
contributed, using any method authorized by the Income Tax Regulations under
Section 704(c) and selected by the General Partner in its sole discretion,
subject to its fiduciary duties to the Partners as a whole. For purposes of
maintaining the Capital Accounts of the Partners, items of income, gain, loss
and deduction relating to any asset or property contributed to the Partnership
that are required to be allocated for tax purposes pursuant to Section 704(c) of
the Code shall not be reflected in the Capital Accounts of the Partners.
ARTICLE V - TRANSFER OF PARTNERSHIP INTERESTS OTHER THAN
BY THE GENERAL PARTNER, ADMISSION OF ADDITIONAL
PARTNERS, REDEMPTION AND WITHDRAWAL
SECTION 5.1 ASSIGNABILITY OF INTERESTS. No interest of a Limited
Partner in the Partnership may be sold, assigned, transferred, pledged,
hypothecated, gifted, exchanged, optioned or encumbered (each, a "Transfer"),
nor may any interest in any Limited Partner be Transferred, and no Transfer
shall be binding upon the Partnership or any Limited Partner unless it is
expressly permitted by this Article V and the General Partner receives an
executed copy of such assignment, which shall be in form and substance
reasonably satisfactory to the General Partner. The assignee of such interest in
the Partnership may become a substitute Limited Partner only upon the terms and
conditions set forth in Section 5.2. No Limited Partner's interest in the
Partnership or, in the case of a Limited Partner which is not an individual, the
direct and indirect interests of a beneficial owner of such Limited Partner, may
be Transferred except:
(a) to the General Partner;
(b) to AMG pursuant to the provisions of Section 3.9, 7.1 or
7.3 hereof or pursuant to the provisions of such other agreement as may be
entered into by the Partnership in connection with the issuance of Partnership
Points;
(c) upon the death of such beneficial owner, their interests
in the Partnership or in the Limited Partner may be Transferred by will or the
laws of descent and distribution;
(d) a Limited Partner (and its beneficial owners) may
Transfer interests in the Partnership or in such Limited Partner to members of
his or her Immediate Family (or trusts for their benefit and of which the
beneficial owner is the settlor and/or trustee, provided that any such trust
does not require or permit distribution of such interests); and
(e) another Limited Partner, with the prior written consent
of the General Partner, which consent may be granted or withheld by the General
Partner in its sole discretion (provided, however, unless Xxxxxxx X. Xxxx is the
President and Chief Executive Officer of
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AMG, Limited Partners may, with a Majority Vote, transfer an aggregate of up to
1.5 Partnership Points without the consent of, but with at least fifteen (15)
days prior written notice to, the General Partner (which transfer or transfers
may take place on one or more dates and subject to such terms and conditions as
may be set by a Majority Vote, subject to a maximum number of 1.5 Partnership
Points for all such transfers on all such occasions taken together); and
(f) the stockholders of such Limited Partner, with the prior
written approval of the General Partner and subject to such Limited Partner and
such stockholders making such representations and warranties regarding the
ownership of such Limited Partner and such stockholder as the General Partner
may deem necessary or appropriate.
; provided, that in the case of (c), (d) or (f) above, (i) the transferee enters
into an agreement with the Partnership agreeing to be bound by the provisions
hereof (and the transferee enters into (A) if such transferee is not already a
party to a Non Solicitation Agreement, the relevant Non Solicitation Agreement,
and (B) if the transferee is (or has an equityholder which is) an employee of
First Quadrant Limited, the Revenue Agreement) as a Limited Partner (to the
extent such Person then would hold any interest in the Partnership), and (ii)
whether or not the transferee enters into such an agreement, such Partnership
Interests, and interests in such Limited Partner, shall thereafter remain
subject to this Agreement (and, if applicable, the relevant Non Solicitation
Agreement) to the same extent they would be if held by such Limited Partner or
beneficial owner, as applicable.
For all purposes of this Partnership Agreement, any Transfers of
Partnership Interests shall be deemed to occur as of the close of business on
the last day of the calendar month in which any such Transfer would otherwise
have occurred.
SECTION 5.2 SUBSTITUTE LIMITED PARTNERS. No transferee of interests
of a Limited Partner shall become a Partner except in accordance with this
Section 5.2. The General Partner may, with a Majority Vote of the Limited
Partners, admit as a substitute Limited Partner any Person that acquires a
Partnership Interest by Transfer from another Limited Partner in accordance with
the provisions of Section 5.1. The admission of an assignee as a substitute
Limited Partner shall in all events be conditioned upon the execution of an
instrument satisfactory to the General Partner whereby such assignee becomes a
party to this Agreement as a Limited Partner. Upon the admission of a substitute
Limited Partner, the General Partner shall make the appropriate revisions to
Schedule A hereto. Notwithstanding the foregoing, upon a Transfer of Partnership
Interests to AMG in compliance with the provisions of Section 5.1(b) above, AMG
shall be admitted to the Partnership as a Limited Partner with respect to the
Partnership Interests so transferred, without the necessity for a Majority Vote.
SECTION 5.3 ADDITIONAL REQUIREMENTS. As additional conditions to the
validity of (x) any Transfer of a Limited Partner's interest in the Partnership
(or, in the case of a Limited Partner which is not an individual, the interests
of the direct and indirect beneficial owners of such Limited Partner) or (y) the
issuance of additional Partnership Interests (pursuant to
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Section 5.6 below), such Transfer or issuance shall not: (i) violate the
registration provisions of the Securities Act or the securities laws of any
applicable jurisdiction, (ii) cause the Partnership to become subject to
regulation as an "investment company" under the Investment Company Act, and the
rules and regulations of the SEC thereunder, including by resulting in there
being one hundred (100) or more beneficial holders of interests in the
Partnership, (iii) result in the termination of any contract to which the
Partnership is a party and which individually or in the aggregate are material
(it being understood and agreed that any contract pursuant to which the
Partnership provides Investment Management Services is material), or (iv) result
in the treatment of the Partnership as an association taxable as a corporation
or as a "publicly traded limited partnership" for Federal income tax purposes.
The General Partner may require reasonable evidence as to the
foregoing, including, without limitation, a favorable opinion of counsel, which
expense shall be borne by the parties to such transaction (and, to the extent
the Partnership is such a party, shall be paid from Operating Cash Flow).
As an additional condition to the validity of (x) any Transfer of a
Limited Partner's interest in the Partnership (or, in the case of a Limited
Partner which is not an individual, the interests of the direct and indirect
beneficial owners of such Limited Partner) or (y) the issuance of additional
Partnership Interests (pursuant to Section 5.6 below), an equal interest in the
U.S. Partnership must be so transferred or issued to the transferee or recipient
by the transferor or issuer.
To the fullest extent permitted by law, any Transfer that violates
the conditions of this Section 5.3 shall be null and void ab initio.
SECTION 5.4 ALLOCATION OF DISTRIBUTIONS BETWEEN ASSIGNOR AND
ASSIGNEE; SUCCESSOR TO CAPITAL ACCOUNTS. Upon the Transfer of a Partnership
Interest pursuant to this Article V, distributions pursuant to Article IV shall
be made to the Person owning the Partnership Interest at the date of
distribution, unless the assignor and assignee otherwise agree and so direct the
General Partner in a written statement signed by both. In connection with a
Transfer by a Partner of Partnership Points, the assignee shall succeed to a
pro-rata (based on the percentage of such Person's Partnership Interests
transferred) portion of the assignor's Capital Account, unless the assignor and
assignee otherwise agree and so direct the General Partner in a written
statement signed by both and consented to by the General Partner.
SECTION 5.5 REDEMPTIONS AND WITHDRAWALS. No Limited Partner shall
have the right to redeem its interest in the Partnership, in whole or in part,
or to withdraw from the Partnership, except (a) upon receipt of a Majority Vote
and with the consent of the General Partner, (b) as is expressly provided for in
Section 3.9 hereof, or (c) as is expressly provided for in Section 7.1 and 7.3
hereof. Upon the redemption or withdrawal, in whole or in part, by a Limited
Partner, the General Partner shall make the appropriate revisions to Schedule A
hereto.
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SECTION 5.6 ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS.
(a) Additional Limited Partners (the "Additional Limited
Partners" and each an "Additional Limited Partner") may be admitted to the
Partnership and such Additional Limited Partners may be issued Partnership
Points, upon receipt of a Majority Vote and the consent of the General Partner
and upon such terms and conditions as may be established by the General Partner
with a Majority Vote (including, without limitation, upon such Additional
Limited Partner's execution of an instrument satisfactory to the General Partner
whereby such Person becomes a party to this Agreement as a Limited Partner);
provided, however, that upon a transfer pursuant to Section 6.1(ii) hereof, the
General Partner may admit the transferee as an Additional Limited Partner
without a Majority Vote.
(b) Existing Limited Partners may be issued additional
Partnership Points (or other Partnership Interests) by the Partnership with the
consent of, and upon such terms and conditions as may be established by, the
General Partner with a Majority Vote (without including the Limited Partner to
be issued additional Partnership Points). Except as provided in the last
sentence of the definition of "Incentive Reserve" or "Executive Retention
Reserve," the General Partner may only be issued additional Partnership Points
(or other Partnership Interests) upon the receipt of a Majority Vote.
(c) Each time additional Partnership Interests are issued
(including, without limitation, additional Partnership Points), the Capital
Accounts of all the Partners shall be adjusted as follows: (i) the General
Partner shall determine the proceeds which would be realized if the Partnership
sold all its assets at such time for a price equal to the Fair Market Value of
such assets, and (ii) the General Partner shall allocate amounts equal to the
gain or loss which would have been realized upon such a sale to the Capital
Accounts of all the Partners immediately prior to such issuance in accordance
with Section 4.2(d) hereof.
(d) In connection with the issuance of additional
Partnership Interests, such issuances, except as set forth herein and in the
Options, are not subject to the preemptive rights of any Person.
(e) Upon the issuance of additional Partnership Interests,
the General Partner shall make the appropriate revisions to Schedule A hereto.
SECTION 5.7 REPRESENTATION OF PARTNERS. The General Partner and each
Limited Partner (including each Additional Limited Partner) hereby represents
and warrants to the Partnership and each other Partner, and acknowledges, that
(a) it has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of an investment in the
Partnership and making an informed investment decision with respect thereto, (b)
it is able to bear the economic and financial risk of an investment in the
Partnership for an indefinite period of time, (c) it is acquiring an interest in
the Partnership for investment only and not with a view to, or for resale in
connection with, any distribution to the public or public offering thereof, (d)
the equity interests in the Partnership have not been registered under the
securities laws of any jurisdiction and cannot be disposed of unless they are
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subsequently registered and/or qualified under applicable securities laws and
the provisions of this Agreement have been complied with, and (e) the execution,
delivery and performance of this Agreement by such Partner do not require it to
obtain any consent or approval that has not been obtained and do not contravene
or result in a default under any provision of any existing law or regulation
applicable to it, any provision of its charter, by-laws or other governing
documents or any agreement or instrument to which it is a party or by which it
is bound.
ARTICLE VI - TRANSFER OF PARTNERSHIP INTEREST BY THE
GENERAL PARTNER; REDEMPTION, REMOVAL
AND WITHDRAWAL
SECTION 6.1 ASSIGNABILITY OF INTEREST. Without a Majority Vote,
neither the General Partner's interest in the Partnership nor the stock of the
General Partner may be sold or transferred; provided, however, (i) it is
understood and agreed that, in connection with the operation of the business of
AMG (including, without limitation, the financing of direct or indirect
investments in additional investment management companies), the General
Partner's interest in the Partnership and the stock of the General Partner may
be pledged or encumbered pursuant to a bona fide pledge or encumbrance and under
such circumstances, lien holders shall have and be able to exercise the rights
of secured creditors with respect to such interest, (ii) the General Partner may
sell some (but not all or substantially all) of its Partnership Interests to a
person or entity who is not a Partner but who is an Officer of the Partnership
or who becomes an Officer in connection with such issuance, or an entity wholly
owned by any such person, and (iii) the General Partner may sell some (but not
all or substantially all) of its Partnership Interests to existing Limited
Partners. Notwithstanding anything else set forth herein, the General Partner
may, with a Majority Vote, sell all its interests in the Partnership in a single
transaction or a series of related transactions, and, in any such case, each of
the Limited Partners of the Partnership shall be required to sell, in the same
transaction or transactions, all their interest in the Partnership; provided,
that the price to be received by all the Partners shall be allocated among the
Partners as follows: (a) an amount equal to the sum of the positive balances, if
any, in positive Capital Accounts shall be allocated among the Partners having
such Capital Accounts in proportion to such positive balances, and (b) the
excess, if any, shall be allocated among all Partners in accordance with their
respective number of Partnership Points at the time of such sale.
SECTION 6.2 RESIGNATION, REDEMPTION, AND WITHDRAWAL. To the fullest
extent permitted by law, except as set forth in the last sentence of Section
6.1, without a prior Majority Vote, the General Partner shall not have the right
to resign or withdraw from the Partnership. Without a prior Majority Vote, the
General Partner shall have no right to have all or any portion of its interest
in the Partnership redeemed. Any resigned, withdrawn or removed General Partner
shall retain its interest in the capital of the Partnership and its other
economic rights under this Agreement.
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ARTICLE VII - PUT/CALL OF PARTNERSHIP INTERESTS;
REGISTRATION RIGHTS
SECTION 7.1 MANDATORY PUTS.
(a) Each Limited Partner may, subject to the terms and
conditions set forth in this Section 7.1, cause AMG to purchase portions of the
Partnership Interests held by such Limited Partner in the Partnership (a "Put").
(b) Each Limited Partner other than Xxxxxx, Inc. may, subject
to the terms and conditions set forth in this Partnership Agreement, cause AMG
to purchase up to twelve and one-half percent (12.5%) of the Initial Partnership
Points held by such Limited Partner, on the last business day in March (each, a
"Purchase Date") on any five (5) separate occasions (but only up to an aggregate
of fifty percent (50%) of such Limited Partner's Initial Partnership Points)
starting with the last business day in March, 2001 and ending with the last
business day in March, 2011. Notwithstanding any other provisions set forth
herein, each Limited Partner may only exercise its rights under this Section
7.1(b) if the Limited Partner simultaneously causes AMG to purchase an equal
number of U.S. Partnership Points in the U.S. Partnership pursuant to the
provisions of Section 7.1(b) of the U.S. Partnership Agreement.
(c) Xxxxxx, Inc. may, subject to the terms and conditions set
forth in this Partnership Agreement, cause AMG to purchase up to twenty percent
(20%) of the Initial Partnership Points held by Xxxxxx, Inc., on each Purchase
Date starting with the first Purchase Date in March, 2001. Notwithstanding any
other provision set forth herein, Xxxxxx, Inc. may only exercise its rights
under this Section 7.1(c) if Xxxxxx, Inc. simultaneously causes AMG to purchase
an equal number of U.S. Partnership Points in the U.S. Partnership pursuant to
the provisions of Section 7.1(c) of the U.S. Partnership Agreement.
(d) Each Limited Partner may, subject to the terms and
conditions set forth in this Partnership Agreement, cause AMG to purchase a
number of Partnership Points as is equal to up to twelve and one-half percent
(12.5%) of the positive difference, if any, between (i) the Partnership Points
issued to such Limited Partner pursuant to the Incentive Program or upon the
exercise of any options issued pursuant thereto (each such issuance or issuance
upon the exercise of an option, an "Option Exercise") and (ii) any Partnership
Points purchased from such Limited Partner pursuant to a GP Call under Section
7.3 hereof on any five (5) separate Purchase Dates (but only up to an aggregate
of a number of Partnership Points as is equal to fifty percent (50%) of the
positive difference, if any, between (x) the Partnership Points issued in such
Option Exercise and (y) any Partnership Points purchased from such Limited
Partner pursuant to a GP Call under Section 7.3 hereof) starting on the first
Purchase Date which is at least five (5) years following the date of such Option
Exercise and ending on the first Purchase Date which is at least fifteen (15)
years following the date of such Option Exercise. Notwithstanding any other
provisions set forth herein, each Limited Partner may only exercise its rights
under this Section 7.1(d) if the Limited Partner simultaneously causes AMG to
purchase an equal number of Partnership Points in the Partnership pursuant to
the
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provisions of this Section 7.1(d) and U.S. Partnership Points in the U.S.
Partnership pursuant to the provisions of Section 7.1(d) of the U.S. Partnership
Agreement.
(e) If a Limited Partner desires to exercise its rights
under Section 7.1(b), 7.1(c) or 7.1(d) above, it and its Employee Stockholder
shall give AMG, each other Employee Stockholder, the General Partner and the
Partnership irrevocable written notice (a "Put Notice") on or prior to the
preceding November 30 (the "Notice Deadline") stating that it is electing to
exercise such rights and the number of Partnership Points (the "Put Partnership
Points") to be sold in the Put and whether or to what extent such Put is a Put
of Initial Partnership Points (including, without limitation, a Put by Xxxxxx,
Inc. pursuant to Section 7.1(c) above) (the "Initial Put Partnership Points") or
Partnership Points issued pursuant to an Option Exercise (together, the "Option
Put Partnership Points"). Puts in any given calendar year for which Put Notices
are received before the Notice Deadline for that calendar year shall be done as
follows: AMG shall purchase from each Limited Partner that number of Put
Partnership Points as is equal to the sum of (i) the number of Initial Put
Partnership Points designated as such in the Put Notice, up to the maximum
number permitted by Section 7.1(b) or Section 7.1(c) above with respect to that
year and the aggregate number of Initial Partnership Points that may be Put by
the Limited Partner, and (ii) the number of Option Put Partnership Points
designated as such in the Put Notice, up to the maximum number permitted by
Section 7.1(d) above with respect to the Option Exercise and that year and the
aggregate number of Partnership Points that may be Put by the Limited Partner
with respect to the Option Exercise; provided, however, that in no event shall
the number of Partnership Points which AMG is required to purchase on any
Purchase Date pursuant to Puts under this Section 7.1 exceed Two and Four-Tenths
(2.4) Partnership Points; and, provided further, that if the number of
Partnership Points for which Put Notices are received before the Notice Deadline
for that calendar year exceeds two and four tenths (2.4) Partnership Points,
then AMG shall purchase an aggregate of Two and Four-Tenths (2.4) Partnership
Points among all Limited Partners as follows: AMG shall purchase from each
Limited Partner that number of Partnership Points as is equal to (A) Two and
Four-Tenths (2.4) Partnership Points multiplied by (B) a fraction, the numerator
of which is the number of Partnership Points set forth in such Limited Partner's
Put Notice (up to the maximum number of Partnership Points permitted by Sections
7.1(b), 7.1(c) and 7.1(d) above with respect to that Purchase Date and the
aggregate number of Initial Put Partnership Points and Option Put Partnership
Points which may be Put by that Limited Partner on that Purchase Date) and the
denominator of which is the number of Partnership Points set forth in all the
Put Notices (with respect to each such Put Notice, up to the maximum number of
Partnership Points permitted by Sections 7.1(b), 7.1(c) and 7.1(d) above with
respect to that Purchase Date) (provided, that in the case of the purchase of a
number of Partnership Points that is less than the number of Partnership Points
set forth in a Limited Partner's Put Notice, such Limited Partner may allocate
the Partnership Points to be purchased among the Initial Put Partnership Points
and Option Put Partnership Points set forth in its Put Notice).
(f) The purchase price for a Put (the "Put Price") shall be
an amount equal to (i)
******************************************************************************
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******************************************************************************
**************************************************************************** The
Put Price shall be paid by AMG (or, if AMG shall have assigned its obligation to
the Partnership pursuant to paragraph (g) below, the Partnership in such
proportions as may be determined by AMG with a Majority Vote) on the relevant
Purchase Date by certified checks to such Limited Partner, in each case, against
delivery of such documents or instruments of transfer as may reasonably be
requested by AMG or the Partnership, as applicable; provided, however, that in
the case of a Put by Xxxxxx, Inc. under this Section 7.1, if after giving effect
to the Put, Xxxxxx, Inc. would hold less than one and five-tenths (1.5)
Partnership Points, then the Put Price may, in AMG's sole discretion, be paid
with a promissory note in the form attached hereto as Exhibit C, the principal
of which promissory note would be paid in four (4) installments, the first
installment would be paid on the Purchase Date, and the second, third and fourth
installments would be paid twelve (12) months, twenty-four (24) months and
thirty-six (36) months, respectively, after such Purchase Date.
(g) No purchase by AMG pursuant to this Section 7.1 (or,
upon assignment of any of AMG's obligations to the Partnership pursuant to this
paragraph (g) hereof, redemption by the Partnership) shall occur if it would
result in AMG owning, directly or indirectly, in excess of eighty percent (80%)
of the Partnership Points outstanding after giving effect to any such saleor
redemption. If some, but not all, of the Partnership Points which Employee
Stockholders have requested be purchased can be so purchased without AMG's
ownership, directly or indirectly, exceeding eighty percent (80%) of the
outstanding Partnership Points, then AMG shall purchase, or shall assign its
obligations to the Partnership, and the Partnership shall redeem, Partnership
Points from the Limited Partners having Put Partnership Interests in proportion
to the Partnership Points then held by such Limited Partners up to the maximum
extent that would not cause AMG to own, directly or indirectly, in excess of
eighty percent (80%) of the outstanding Partnership Points (in each case,
subject to the maximum amount set forth in Section 7.1(b), 7.1(c) and 7.1(d)
hereof).
(h) AMG may, only with a Majority Vote, assign any or all of
its rights and obligations to purchase Partnership Points under this Section
7.1, in one or more instances, to the General Partner or the Partnership;
provided, however, that if AMG (with a Majority Vote) assigns any or all its
rights and obligations to purchase Partnership Points under this Section 7.1 to
the General Partner or the Partnership, then AMG shall assign the identical and
proportional rights and obligations to purchase U.S. Partnership Points under
Section 7.1 of the U.S. Partnership Agreement to the General Partner (in the
case where rights or obligations to purchase Partnership Points were assigned to
the General Partner) or the U.S. Partnership (in the case where rights or
obligations to purchase Partnership Points were assigned to the Partnership).
SECTION 7.2 ELECTION RIGHTS OF LIMITED PARTNERS TO RECEIVE AMG
STOCK.
(a) If AMG does not assign to the Partnership or the General
Partner the right or obligation pursuant to Section 7.1(h) above to purchase
Partnership Interests from a
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Limited Partner, and AMG has, at that time, completed a registration of shares
of its common stock for sale under the Securities Act (other than a registration
on Form S-8 (or its then equivalent form) or a registration affected solely to
implement an employee benefit plan, a transaction under Rule 145 or to which any
other similar rule of the SEC under the Securities Act is applicable or
registration on a form not available for registering securities for sale to the
public) (a "Public Offering"), then such Limited Partner may elect to cause AMG
to pay up to one-half of the Put Price (as such term is defined in Section
7.1(f) above) for the relevant Put in shares of AMG's Common Stock, $.01 par
value per share (the "AMG Stock").
(b) An election under this Section 7.2 must be made by the
Limited Partner at least sixty (60) days prior to the relevant Purchase Date, by
giving written notice to the Partnership and AMG of such election, which
election, once made, shall be irrevocable without the prior written consent of
AMG.
(c) The number of shares of AMG Stock to be issued upon
exercise of the Put shall be determined in accordance with the following
formula:
Number of Shares of AMG Stock = OS x F
---
1-F
where OS is the number of issued and outstanding shares of AMG Stock
immediately prior to the closing of the Put, and F is a fraction, the numerator
of which is the Put Price of a Put pursuant to Section 7.1(f) above, multiplied
by .75, and the denominator of which is an amount equal to the sum of (A)
********** of AMG's earnings before interest, amortization and taxes for the
twenty-four (24) month period ending on the last day of the calendar year prior
to the date of the closing of such Put (determined in accordance with generally
accepted accounting principles, consistently applied) plus (B) the Put Price of
a Put.
(d) If AMG completes a Public Offering, AMG shall, as soon
as reasonably practicable, provide notice thereof to each Employee Stockholder.
SECTION 7.3 GENERAL PARTNER CALL OPTION.
(a) The General Partner may, subject to the terms and
conditions set forth in this Section 7.3, purchase up to eight and twenty-four
one-hundredths (8.24) Partnership Points from the Limited Partners (the "GP
Call").
(b) The General Partner shall exercise its rights under this
Section 7.3 if ten (10) Partnership Points have been made available to the
Incentive Reserve (as such term is defined in the Incentive Program and not as
such term is defined herein) pursuant to Section 3(f) of the Incentive Program;
provided, however, that the General Partner may give the GP Call Notice (as such
term is hereinafter defined) prior to the date such a determination is made.
Simultaneously with the General Partner's exercise of its rights under this
Section 7.3, the General Partner shall exercise its rights under Section 7.3(b)
of the U.S. Partnership Agreement.
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(c) If the General Partner exercises its rights under this
Section 7.3, it shall give written notice (the "GP Call Notice") to the Chief
Executive Officer and each Limited Partner stating its exercise of such rights.
Within Five (5) days after delivery of the Call Notice, the General Partner
shall allocate the GP Call among the Limited Partners in its sole discretion and
shall so indicate the allocation in a writing delivered to the Chief Executive
Officer and the Limited Partners; and, provided further, that any allocation by
the General Partner shall only be effective if an equivalent allocation is made
pursuant to Section 7.3(c) of the U.S. Partnership Agreement. The closing of a
GP Call shall take place on a date which is fifteen (15) days after the date of
the GP Call Notice.
(d) The Purchase Price for a GP Call shall be an amount
equal to (i) Four Hundred Twenty-Eight One Thousands (.428) of First Quadrant
Limited's cumulative Revenues (as such term is defined in the Revenue Agreement)
for the period beginning on the Effective Date and ending on December 31, 2000
for each Partnership Point for which the General Partner exercises its rights
under this Section 7.3 (subject in any event, to any equitable adjustments which
the General Partner may deem necessary or appropriate (in its sole discretion)
if there is any change in the portion of Revenues which are allocated to the
Partnership under the Revenue Agreement or the allocation or distribution of
Free Cash Flow under this Agreement), minus (ii) the taxes incurred (calculated
as set forth in this clause) by the General Partner in respect of such
distributions, calculated on the assumption that such distributions are not less
than one half of the highest marginal federal, state and foreign tax rates
applicable to the General Partner are not more than the highest marginal
federal, state and foreign tax rates applicable to the General Partner (with the
taxes incurred within such range to be determined by the General Partner in its
sole discretion), plus (iii) an amount equal to each cash distribution described
in clause (i) above, net of any taxes attributable thereto (calculated as
described in clause (ii) above) multiplied by the Prime Rate established by
Chemical Bank (or any successor thereto) from time to time, as in effect on the
date of each such cash distribution.
SECTION 7.4 AMG CALL OPTION.
(a) AMG may, subject to the terms and conditions set forth
in this Section 7.4, purchase portions of the Partnership Interests held by the
Limited Partners in the Partnership (each a "Call"). Notwithstanding anything
else set forth herein to the contrary, the consent of the Chief Executive
Officer shall be required prior to any Call other than a Call of Partnership
Points held by the Chief Executive Officer or the Limited Partner of which the
Chief Executive Officer is the Employee Stockholder.
(b) AMG may purchase up to five percent (5%) of the Initial
Partnership Points of any of the Limited Partners on the last business day in
March (each a "Call Date") of each calendar year (but only up to an aggregate
of twenty-five percent (25%) of the Initial Partnership Points issued to such
Limited Partner) starting with the last business day in March of the calendar
year 2002. Notwithstanding any other provision set forth herein, AMG may only
exercise its rights under this Section 7.3(b) if it purchases an equal number
of
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Initial Partnership Points in the Partnership and Initial U.S. Partnership
Points in the U.S. Partnership.
(c) AMG may purchase a number of Partnership Points as is
equal to up to five percent (5%) of the positive difference, if any, between
(i) the Partnership Points issued in an Option Exercise and (ii) any
Partnership Points purchased from such Limited Partner pursuant to a GP Call
under Section 7.3 hereof, on a Call Date (but only up to an aggregate of a
number of Partnership Points as is equal to twenty-five percent (25%) of the
positive difference, if any, between (x) the Partnership Points issued in such
Option Exercise and (y) any Partnership Points purchased from such Limited
Partner pursuant to a GP Call under Section 7.3 hereof) starting with the first
Call Date which is at least six (6) years following the date of such Option
Exercise. Notwithstanding any other provision set forth herein, AMG may only
exercise its rights under this Section 7.4(c) if it purchases an equal number
of Partnership Points in the Partnership and U.S. Partnership Points in the
U.S. Partnership.
(d) If AMG desires to exercise its rights under Section
7.4(b) or (c) above, it shall give irrevocable written notice (a "Call Notice")
on or prior to the preceding November 30, to each Limited Partner, First
Quadrant, and the Partnership, stating its election to exercise such rights, the
Limited Partner(s) from whom it intends to purchase Partnership Points, and the
number of Partnership Points to be purchased in the Call (the "Call Partnership
Points"). The number of Partnership Points purchased from a given Limited
Partner must be equal to the number of U.S. Partnership Points being purchased
at the same time from such Limited Partner.
(e) The purchase price for Call Partnership Points purchased
from a Limited Partner in a Call (each a "Call Price") shall be an amount equal
to (i) ***********************************************************************
******************************************************************************
The Call Price shall be paid by AMG (or, if AMG shall have assigned its rights
to the Partnership pursuant to paragraph (f) below, the Partnership in such
proportions as may be determined by AMG with a Majority Vote) on the relevant
Call Date by certified checks, against delivery of such documents or
instruments of transfer as may reasonably be requested by AMG and the
Partnership, as applicable.
(f) AMG may, with a Majority Vote, assign any or all of its
rights and obligations to purchase Partnership Points under this Section 7.4, in
one or more instances, to the General Partner or the Partnership; provided,
however, that if AMG (with a Majority Vote) assigns any or all its rights and
obligations to purchase Partnership Points under this
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Section 7.3 to the General Partner or the Partnership, then AMG shall assign the
identical and proportional rights and obligations to purchase U.S. Partnership
Points under this Section 7.3 of the U.S. Partnership Agreement to First
Quadrant (in the case where rights or obligations to purchase Partnership Points
were assigned to First Quadrant) or the U.S. Partnership (in the case where
rights or obligations to purchase Partnership Points were assigned to the
Partnership).
ARTICLE VIII - DISSOLUTION AND TERMINATION.
SECTION 8.1 EVENTS OF DISSOLUTION.
(a) The Partnership shall be dissolved and its affairs wound
up:
(i) on a date designated in writing by the
General Partner;
(ii) upon the occurrence of an event of
withdrawal (as defined in the Partnership
Act) with respect to the General Partner;
(iii) upon the sale or other disposition of all
(or a substantial portion of) the
Partnership's assets;
(iv) upon the effective date of the resignation
or withdrawal of the General Partner
pursuant to Section 6.2 hereof;
(v) upon a Repurchase Closing Date;
(vi) in any event, at midnight on December 31,
2095 unless the Partnership's term is
extended pursuant to Section 2.5 hereof; or
(vii) upon the entry of a decree of judicial
dissolution under Section 17-802 of the
Partnership Act.
(b) Dissolution of the Partnership shall be effective at the
close of business on the day on which the event occurs giving rise to the
dissolution, whereupon the Partnership shall be wound up and liquidated in an
orderly manner, as soon as reasonably practicable, but the Partnership shall not
terminate until the assets of the Partnership shall have been distributed as
provided herein. Notwithstanding the dissolution of the Partnership, prior to
the termination of the Partnership, as aforesaid, the business of the
Partnership and the affairs of the Partners, as such, shall continue to be
governed by this Agreement. The General Partner or, if there be none, a
liquidator approved by a Majority Vote, shall liquidate the assets of the
Partnership and apply and distribute the proceeds thereof as contemplated by
Section 4.4 hereof.
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(c) Upon an event described in Section 8.1(a)(ii) or
8.1(a)(v) that would otherwise result in a dissolution of the Partnership, the
Partnership shall not be dissolved if, with thirty (30) days after the event
described in either of such Sections, the holders of more than fifty percent
(50%) of the Partnership Points then outstanding (including the General Partner
and including as outstanding Partnership Points held by the General Partner any
Partnership Points in the Executive Retention Reserve or Incentive Reserve) (or
such greater percentage in interest as may be required under applicable law) in
writing agree to continue the business of the Partnership and to the selection,
effective as of the date of such event, of a successor general partner (which,
to the extent permitted by applicable law, may be the General Partner). In such
event, the Partnership shall continue until dissolved in accordance with this
Section 8.
(d) Within one hundred and eighty (180) days following an
event described in Section 8.1(a)(v) that results in the dissolution of the
Partnership, the General Partner and the holders of more than fifty percent
(50%) of the Partnership Points then outstanding (including the General Partner)
(or such greater percentage of holders of Partnership Interests as may then be
required under applicable law) may elect in writing to reconstitute and continue
the business of the Partnership by forming a new limited partnership on the same
terms and provisions as are set forth in this Agreement. If such an election is
timely made, all the Limited Partners of the Partnership shall continue as
limited partners of the reconstituted partnership and the General Partner of the
Partnership shall continue as general partner of the reconstituted partnership.
Upon any such election by the holders of more than fifty percent (50%) of the
Partnership Points then outstanding (or such greater percentage of holders of
Partnership Interests as may then be required under applicable law), all holders
of Partnership Interests shall be bound thereby and shall be deemed to have
approved thereof. Upon any such election by the holders of more than fifty
percent (50%) of the Partnership Points then outstanding (or such greater
percentage of holders of Partnership Interests as may then be required under
applicable law), all necessary steps shall be taken to cancel this Agreement and
the Certificate of Limited Partnership of the Partnership and to enter into a
new partnership agreement (which is identical to this Agreement) and certificate
of limited partnership of the reconstituted partnership, and the General Partner
may for this purpose and all purposes stated in such agreement or certificate,
exercise the power of attorney granted pursuant to Section 8.1(e) below.
(e) Each Limited Partner and each Employee Stockholder and
each other Person who accepts Partnership Interests constitutes and appoints
each of the General Partner (and any successor thereof by merger, transfer,
election or otherwise), and each of the General Partner's authorized officers
and attorneys-in-fact, with full power of substitution, as its, his or her true
and lawful agents and attorneys-in-fact, with full power and authority in its,
his or her name, place and xxxxx to: execute, swear to, acknowledge, deliver,
file and record in the appropriate public offices all certificates and other
instruments including, at the option of the General Partner, this Agreement and
the Certificate of Limited Partnership and all amendments and restatements
thereof or any of the foregoing relating to the continuation of the Partnership
as contemplated by paragraph (c) above or the reconstituted partnership, as
contemplated by paragraph (d) above, that the General Partner deems appropriate
or necessary to exercise any
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powers of the General Partner or to carry out the purposes of this Agreement and
to form, qualify, or continue the existence or qualification of the Partnership
or the reconstituted partnership, as contemplated by paragraph (c) or paragraph
(d) above, as a limited partnership in the State of Delaware and under the
Delaware Act and in all jurisdictions in which the Partnership may or may wish
to conduct business or own property.
The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive, and shall not be
affected by, the subsequent death, incompetence, dissolution, disability,
incapacity, bankruptcy or termination of any grantor and the transfer of all or
any portion of his Partnership Interest and shall extend to such Person's heirs,
successors and assigns. Each Person who accepts Partnership Interests is deemed
to consent to be bound by any representations made by the General Partner or the
authorized officers and attorneys-in-fact thereof, acting in good faith pursuant
to such power of attorney. Each Person who accepts Partnership Interests is
deemed to consent to and waive any and all defenses that may be available to
contest, negate or disaffirm any action of the General Partner or the authorized
officers and attorneys-in-fact thereof, taken in good faith under such power of
attorney. Each Limited Partner shall execute and deliver to the General Partner
within fifteen (15) days after receipt of the General Partner's request
therefor, such further designations, powers of attorney and other instruments as
the General Partner deems necessary to effectuate this Section 8.1(e).
ARTICLE IX - RECORDS AND REPORTS
SECTION 9.1 BOOKS AND RECORDS. The Officers of the Partnership and
the General Partner shall cause the Partnership to keep complete and accurate
books of account with respect to the operations of the Partnership, prepared in
accordance with generally accepted accounting principles, using the accrual
method of accounting, consistently applied. Such books shall reflect that the
interests in the Partnership have not been registered under the Securities Act,
and that the interests may not be sold or transferred without registration under
the Securities Act or exemption therefrom and without compliance with Article V
or Article VI of this Agreement. Such books shall be maintained at the principal
office of the Partnership in Pasadena, California or at such other place as the
General Partner shall determine.
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 the
General Partner and AMG each of the following:
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(a) Within twenty-five (25) days after the end of each month
and each fiscal quarter, an unaudited financial report of Partnership, which
report shall be prepared in accordance with generally accepted accounting
principles using the accrual method of accounting, consistently applied (except
that the financial report may (i) be subject to normal year-end audit
adjustments which are neither individually nor in the aggregate material and
(ii) not contain all notes thereto which may be required in accordance with
generally accepted accounting principles) and shall be certified by the most
senior financial officer of the Partnership to have been so prepared, and which
shall include the following:
(i) Statements of operations, changes in partners'
capital and cash flows for such month or quarter, together
with a cumulative income statement from the first day of the
then-current fiscal year to the last day of such month or
quarter;
(ii) a balance sheet as of the last day of such month
or quarter; and
(iii) with respect to the quarterly financial report,
a detailed computation of Partnership Share and Free Cash Flow
for such quarter.
(b) Within sixty (60) days after the end of each fiscal year
of the Partnership, audited financial statements of the Partnership, which shall
include statements of operations, changes in partners' capital and cash flows
for such year and a balance sheet as of the last day thereof, each prepared in
accordance with generally accepted accounting principles, using the accrual
method of accounting, consistently applied, certified by Independent Public
Accountants satisfactory to the General Partner.
(c) As promptly as is reasonably possible following request
by the General Partner from time to time, such operations and/or performance
data as may be requested, in each case certified by the most senior financial
officer of the Partnership if such a certification is requested by the General
Partner.
(d) Any other financial or other information available to
the Officers as the General Partner shall have reasonably requested on a timely
basis.
SECTION 9.4 [RESERVED].
SECTION 9.5 TAX MATTERS.
(a) The General Partner shall cause to be prepared and filed
on or before the due date (or any extension thereof) Federal, state, local and
foreign tax or information returns required to be filed by the Partnership. The
General Partner, to the extent that Partnership
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funds are available, shall cause the Partnership to pay any taxes payable by 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.
ARTICLE X - MISCELLANEOUS.
SECTION 10.1 NOTICES. All notices, requests, elections, consents or
demands permitted or required to be made under this Agreement shall be in
writing, signed by the Partner or Partners giving such notice, request,
election, consent or demand and shall be delivered personally or by confirmed
facsimile, or sent by registered or certified mail, or by commercial courier to
the other Partners, at their addresses set forth on the signature pages hereof
or on Schedule A hereto, or at such other addresses as may be supplied by
written notice given in conformity with the terms of this Section 10.1. The date
of any such personal or facsimile delivery or the date of delivery by an
overnight courier or the date five (5) days after the date of mailing by
registered or certified mail, as the case may be, shall be the date of such
notice.
SECTION 10.2 SUCCESSORS AND ASSIGNS. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon and shall inure
to the benefit of the Partners, their respective successors,
successors-in-title, heirs and assigns, and each and every
successors-in-interest to any Partners, whether such successor acquires such
interest by way of gift, purchase, foreclosure or by any other method, and each
shall hold such interest subject to all of the terms and provisions of this
Agreement.
SECTION 10.3 AMENDMENTS. No amendments may be made to this Agreement
without the prior written consent of (i) the General Partner and (ii) a Majority
Vote of the Limited Partners and, with respect to Section 3.9 hereof, AMG;
provided, however, that the General Partner shall make such amendments and
additions to Schedule A hereto as are required by the provisions hereof; and,
provided further, that the General Partner may amend this Agreement to correct
any printing, stenographic or clerical errors or omissions. Except as otherwise
provided for herein, no amendment may be made to this Agreement which materially
and adversely affects a Limited Partner in a manner different from all the other
Limited Partners, without the prior written consent of the Limited Partner which
would be so affected.
SECTION 10.4 NO PARTITION. No Partner nor any successors-in-interest
to any Partner, shall have the right while this Agreement remains in effect to
have the property of the Partnership partitioned, or to file a complaint or
institute any proceeding at law or in equity to have the property of the
Partnership partitioned, and each Partner, on behalf of himself, his
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successors, representatives, heirs and assigns, hereby waives any such right. It
is the intent of the Partners that during the term of this Agreement, the rights
of the Partners and their successors-in-interest, as among themselves, shall be
governed by the terms of this Agreement, and that the right of any Partner or
successors-in-interest to assign, transfer, sell or otherwise dispose of his
interest in the Partnership shall be subject to the limitations and restrictions
of this Agreement.
SECTION 10.5 NO WAIVER. The failure of any Partner to insist upon
strict performance of a covenant hereunder or of any obligation hereunder,
irrespective of the length of time for which such failure continues, shall not
be a waiver of such Partner's right to demand strict compliance in the future.
No consent or waiver, express or implied, to or of any breach or default in the
performance of any obligation hereunder, shall constitute a consent or waiver to
or of any other breach or default in the performance of the same or any other
obligation hereunder.
SECTION 10.6 DISPUTE RESOLUTION. All disputes arising in connection
with this Agreement shall be resolved by binding arbitration in accordance with
the applicable rules of the American Arbitration Association. The arbitration
shall be held in Delaware before a single arbitrator selected in accordance with
Section 12 of the American Arbitration Association Commercial Arbitration Rules
who shall have substantial business experience in the investment advisory
industry, and shall otherwise be conducted in accordance with the American
Arbitration Association Commercial Arbitration Rules.
SECTION 10.7 PRIOR AGREEMENTS SUPERSEDED. This Agreement, (including
without limitation, the schedules and exhibits hereto), supersedes the prior
understandings and agreements among the parties with respect to the subject
matter hereof.
SECTION 10.8 CAPTIONS. Titles or captions of Articles or Sections
contained in this Agreement are inserted as a matter of convenience and for
reference, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
SECTION 10.9 COUNTERPARTS. This Agreement may be executed in a
number of counterparts, all of which together shall for all purposes constitute
one Agreement, binding on all the Partners notwithstanding that all Partners
have not signed the same counterpart.
SECTION 10.10 APPLICABLE LAW; JURISDICTION. This Agreement and the
rights and obligations of the parties hereunder shall be governed by and
interpreted, construed and enforced in accordance with the laws of the State of
Delaware, without applying the choice of law provisions thereof.
SECTION 10.11 SINGULAR AND PLURAL. All terms herein using the
singular shall include the plural; all terms using the plural shall include the
singular; in each case, the term shall be as appropriate to the context of each
sentence.
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48
SECTION 10.12 CREDITORS. None of the provisions of this Agreement
shall be for the benefit of or enforceable by any creditor of (i) any Partner,
(ii) any Employee Stockholder or (iii) the Partnership, other than a Partner who
is also a creditor of the Partnership.
[INTENTIONALLY LEFT BLANK]
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49
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
FIRST QUADRANT CORP. 000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
By:/s/ Xxxxxxx X. Xxxx
-------------------------
Xxxxxxx X. Xxxx
President
LIMITED PARTNERS
Name and Signature Address
X.X. XXXXXX CORPORATION 000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
By:/s/ Xxxxxx X. Xxxxxx
-------------------------
Xxxxxx X. Xxxxxx
President
CULONBOIS CORPORATION 000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
By:/s/ Xxxxxx X. Xxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxx
President
LUCK MONSTER CORPORATION 000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
By:/s/ Xxxxxxxxxxx X. Luck
-------------------------
Xxxxxxxxxxx X. Luck
President
50
AYPWIP CORPORATION 000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
By:/s/ Xxxxx X. Xxxxxxxxx
--------------------------
Xxxxx X. Xxxxxxxxx
President
X.X. XXXXXXX CORPORATION 000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
By:/s/ R. Xxx Xxxxxxx
--------------------------
R. Xxx Xxxxxxx
President
X.X. XXXXXX RUHESTANDS 00 Xxxxxxxxx
XXXXXXXXXXX Xxxxxxxxx, XX 00000
By:/s/ Xxxxxxx X. Xxxxxx
--------------------------
Xxxxxxx X. Xxxxxx
President
XXXXXX, INC. X.X. Xxx 000
Xxxxxxxxxx Xxxx
Xx. Xxxxxx, XX 00000
By:/s/ Xxxxxx X. Xxxxxx, Xx.
--------------------------
Xxxxxx X. Xxxxxx, Xx.
President
XXXXXXX A.R. GOODSALL 00 Xxx Xxxx Xxxx
Xxxxxx X0X 0XX
Xxxxxx Xxxxxxx
/s/ Xxxxxxx A.R. Goodsall
-----------------------------
XXXXXX X. XXXXX 00 Xxx Xxxx Xxxx
Xxxxxx X0X 0XX
Xxxxxx Xxxxxxx
/s/ Xxxxxx X. Xxxxx
-----------------------------
51
ACKNOWLEDGMENT
For good and valuable consideration, the receipt of which is hereby
acknowledged, each of the undersigned hereby acknowledges the provisions of this
Agreement, agrees that he constitutes an Employee Stockholder hereunder and
agrees to fulfill all of the rights and duties of an Employee Stockholder
hereunder.
/s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxxxxxxxx X. Luck
-------------------------------
Xxxxxxxxxxx X. Luck
/s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxx
/s/ R. Xxx Xxxxxxx
-------------------------------
R. Xxx Xxxxxxx
/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx, Xx.
-------------------------------
Xxxxxx X. Xxxxxx, Xx.
The undersigned is executing this Agreement solely to acknowledge
and agree to be bound by the provisions of Section 3.9, the relevant provisions
of Article VII, and Section 10.6 hereof.
AFFILIATED MANAGERS GROUP, INC. Address
Two International Place
By:/s/ Xxxxxxx X. Xxxx 23rd Floor
--------------------------------- Xxxxxx, XX 00000
Name: Xxxxxxx X. Xxxx
Title: President and
Chief Executive Officer
