AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ALLIANCE CAPITAL MANAGEMENT HOLDING L.P.Limited Partnership Agreement |
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AND RESTATED This Amended and Restated Agreement of Limited Partnership of Alliance Capital Management Holding L.P. (this "Agreement"), a Delaware limited partnership formerly known as Alliance Capital Management L.P. (the "Partnership"), dated as of October 29, 1999, is entered into by and among Alliance Capital Management Corporation, a Delaware corporation, together with all other Partners of the Partnership as of the date hereof, and additional Persons who become Partners of the Partnership, as hereinafter provided. The parties hereto agree to continue the Partnership as a limited partnership under the Delaware Act and this Agreement. WHEREAS, the Partnership was originally formed and established as a publicly-traded partnership governed by an Agreement of Limited Partnership dated as of November 19, 1987, as amended from time to time prior to the date hereof (the "Original Agreement of Limited Partnership"); WHEREAS, at a Special Meeting of Unitholders held on September 22, 1999, the Limited Partners and Unitholders approved the restructuring of the Partnership pursuant to which, among other things, the Partnership will (i) transfer or assign all or substantially all of its assets to Alliance Capital in exchange for 100% of the Alliance Capital LP Units and the Alliance Capital GP Interest and the assumption by Alliance Capital of all or substantially all of the liabilities of the Partnership and (ii) offer to exchange outstanding Units for an equal number of Alliance Capital LP Units held by the Partnership (the "Reorganization"); WHEREAS, in connection with the Reorganization, the parties hereto wish to amend and restate in its entirety the Original Agreement of Limited Partnership, effective as of the Effective Time; and WHEREAS, at the Special Meeting, the Limited Partners and Unitholders approved the amendment and restatement of the Original Agreement of Limited Partnership in connection with the Reorganization substantially in the form hereof. In consideration of the mutual covenants, conditions and agreements herein contained, the parties hereto hereby agree as follows: 1 Unless the context otherwise specifies or requires, the terms defined in this Article I shall, for the purposes of this Agreement, have the meanings herein specified. " ACMC " shall mean Alliance Capital Management Corporation, a Delaware corporation. " Additional Limited Partner " shall mean a Person admitted to the Partnership as a limited partner pursuant to Section 4.02 or Section 12.04(b) and who is shown as such on the books and records of the Partnership. " Adjusted Property " shall mean property the Carrying Value of which has been adjusted pursuant to Section 4.10. " Adverse Partnership Tax Consequence " shall mean the Partnership, Alliance Capital or both (a) being treated for federal income tax purposes as an association taxable as a corporation, (b) being subject to federal income tax as a corporation or (c) otherwise becoming subject to federal taxation on its net income generally. " Adverse Tax Determination " shall mean a determination by the General Partner, on the basis of an Opinion of Outside Counsel, that an Adverse Partnership Tax Consequence has occurred. The General Partner may determine that an Adverse Tax Determination shall be deemed to have been made for purposes of any provision of this Agreement as of a date prior to the actual date of determination, but not earlier than the beginning of the first taxable period to which the Adverse Partnership Tax Consequence relates. However, no such determination shall affect the rights of any Unitholder or Partner to distributions actually received prior to the time such determination was actually made. " Affiliate " shall mean any Person directly or indirectly controlling, controlled by or under common control with the Person in question; however, none of the Partnership, Alliance Capital, any Person controlled by the Partnership or Alliance Capital or any Person employed by the Partnership or Alliance Capital or such a controlled Person shall be considered an Affiliate of the General Partner. As used in this definition, the term " control " means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. " Affiliated Holders " has the meaning specified in Section 16.01(a). " Agreement " shall mean this Amended and Restated Agreement of Limited Partnership, as it may be amended, supplemented or restated from time to time. 2 " Alliance Capital " shall mean Alliance Capital Management L.P., a Delaware limited partnership whose name was changed from Alliance Capital Management L.P. II in connection with the Reorganization. " Alliance Capital Contribution " shall mean the contribution by the Partnership of all of its assets (other than the Holdback Interests) to Alliance Capital in exchange for 100% of the Alliance Capital LP Units and the Alliance Capital GP Interest and the assumption by Alliance Capital of all or substantially all of the liabilities of the Partnership, pursuant to the Reorganization Agreement. " Alliance Capital GP Interest " shall mean a general partner interest in Alliance Capital representing a 1% economic interest in Alliance Capital. " Alliance Capital LP Unit " shall mean a unit representing a percentage interest in the aggregate partnership interests of the limited partners of Alliance Capital equal to, at any time, one divided by the total number of units of limited partner interests in Alliance Capital outstanding at that time. " Alliance Capital Majority Outside Approval " shall mean as of any Record Date, written consent or affirmative vote of limited partners (other than the general partner of Alliance Capital and its Corporate Affiliates and, if applicable, Persons holding Alliance Capital LP Units ineligible to vote pursuant to the following sentence) who are limited partners of Alliance Capital with respect to more than 50% of the issued and outstanding Alliance Capital LP Units held by such Persons (including, for purposes of determining the Alliance Capital LP Units held by such Persons, the number of Alliance Capital LP Units held by the Partnership multiplied by a fraction, the numerator of which is the number of issued and outstanding Limited Partnership Interests held by Limited Partners (other than the general partner of Alliance Capital and its Corporate Affiliates and, if applicable, Persons ineligible to vote pursuant to the following sentence) and the denominator of which is the number of issued and outstanding Partnership Interests). If Alliance Capital Majority Outside Approval is being sought in connection with a transaction described in Section 6.12 of the Alliance Capital Partnership Agreement, the Alliance Capital LP Units of any employee of Alliance Capital, the Partnership, any Persons controlled by Alliance Capital or the Partnership, or the general partner of Alliance Capital who will be employed by or have any direct or indirect equity interest in any Person acquiring assets of Alliance Capital (in connection with a transaction described in Section 6.12 of the Alliance Capital Partnership Agreement) shall be ineligible to vote with respect to such Alliance Capital Majority Outside Approval. Each Alliance Capital LP Unit shall be entitled to one vote for this purpose. Consent with respect to the Alliance Capital LP Units held by the Partnership (in its capacity as a limited partner of Alliance Capital) shall be given, and such Alliance Capital LP Units shall be voted, by the Partnership in accordance with Section 17.04(b). For purposes of this definition, an Alliance Capital LP Unit held by an employee or held for the benefit of an employee, or by or for the benefit of a member of the family of an employee, shall be treated as if owned by that employee. A determination by the general partner of Alliance Capital that Alliance Capital LP Units are held by or for the benefit of an employee or a 3 member of the family of an employee and that such employee is ineligible to vote with respect to a particular matter by reason of this definition shall be binding and conclusive; in making such a determination, the general partner of Alliance Capital may rely on information known to it and need not make a special investigation. " Alliance Capital Partnership Agreement " shall mean the Amended and Restated Agreement of Limited Partnership of Alliance Capital, as it may be amended, supplemented or restated from time to time. " Appraiser " shall mean a Person (who may not be the General Partner, a Corporate Affiliate thereof or any employee of the Partnership, the General Partner or a Corporate Affiliate thereof) having experience in the valuation of financial services businesses selected and retained by the General Partner on behalf of and for the account of the Partnership. " Assignee Interest " shall mean the interest in one of the Limited Partnership Interests transferred and assigned by the Assignor Limited Partner to the Unitholders pursuant to Section 11.02. Each Assignee Interest is represented by one Unit. " Assignment Determination " shall mean an Opinion of Outside Counsel to the effect that with respect to a proposed transaction, (i) advisory contracts of the Partnership and Alliance Capital which contributed more than 10% of the Partnership's and Alliance Capital's aggregate consolidated revenues derived from investment management services during the four most recently completed fiscal quarters would not be automatically terminated or breached by reason of a change of control resulting from such proposed transaction, or (ii) requisite consents to avoid such termination or breach have been obtained. " Assignor Limited Partner " shall mean Alliance ALP, Inc., a Delaware corporation, the Person which is the Record Holder of all the Limited Partnership Interests outstanding on the date hereof and which has and will transfer and assign to the Unitholders Assignee Interests in such Limited Partnership Interests as set forth in Section 11.02, or any Person designated by the General Partner pursuant to Section 11.05(b) to serve as substituted Assignor Limited Partner hereunder. " Available Cash Flow " shall mean for any period cash received by the Partnership, inclusive of the cash distributions paid by Alliance Capital, minus such amounts as the General Partner determines, in its sole discretion, should be retained by the Partnership for use in its business (or the businesses of Persons controlled by the Partnership) and not distributed, including, but not limited to, amounts retained by the Partnership for or in anticipation of expenses, taxes, working capital requirements or reserves. The determination of Available Cash Flow for any period by the General Partner shall, absent manifest error, be binding and conclusive. As used in this definition, "control" has the meaning given to that term in the definition of Affiliates. 4 " Book-Tax Disparities " shall mean the differences between a Person's Capital Account balance, as maintained pursuant to Article 4, and such balance had the Capital Account been maintained strictly in accordance with federal income tax accounting principles (such disparities reflecting, among other items, the differences between the Carrying Value of either Contributed Property or Adjusted Property, as adjusted from time to time, and the adjusted basis thereof for federal income tax purposes). " Capital Account " shall mean a capital account established and maintained pursuant to Article 4. " Carrying Value " shall mean (i) with respect to Contributed Property, the Net Value of such property reduced (but not below zero) by all amortization, depreciation and cost recovery deductions charged to the Capital Accounts pursuant to Section 4.09 with respect to such property, and (ii) with respect to any other property, the adjusted basis of such property for federal income tax purposes, as of the time of determination. The Carrying Value of any property shall be adjusted from time to time in accordance with Section 4.10, and to reflect changes, additions or other adjustments to the Carrying Value for dispositions, acquisitions or improvements of Partnership Assets, as deemed appropriate by the General Partner, using such reasonable methods as it in its sole discretion deems appropriate. " Certificate " shall mean a certificate issued by the Partnership, in such form as may be deemed appropriate by the General Partner from time to time, evidencing ownership of one or more Limited Partnership Interests, and which shall initially be substantially in the form of Exhibit B to this Agreement. " Certificate of Limited Partnership " shall mean the Certificate of Limited Partnership, and any and all amendments thereto and restatements thereof, filed on behalf of the Partnership as required under the Delaware Act. " Code " shall mean the Internal Revenue Code of 1986, as it may be amended from time to time, and any successor to such statute. " Commission " shall mean the Securities and Exchange Commission. " Contributed Property " shall mean any Contribution other than cash. " Contribution " shall mean any cash, cash equivalents or other property, or any other form of contribution (other than services) permitted by the Delaware Act, contributed to the Partnership pursuant to this Agreement (or deemed contributed for federal income tax purposes) by or on behalf of any Person. " Corporate Affiliate " shall mean each Person, other than a natural person, that is an Affiliate of the specified Person. 5 " Delaware Act " shall mean the Delaware Revised Uniform Limited Partnership Act (6 Del. C. §§17-101, et seq .), as it may be amended from time to time, and any successor to such act. " Demand " has the meaning specified in Section 6.11(a). " Departing Partner " shall mean the Person, as of the effective date of any withdrawal or removal of the General Partner pursuant to Section 14.01, who has as of such date so withdrawn or been removed. " Distribution " shall mean any cash, cash equivalents or other property distributed by the Partnership pursuant to this Agreement (or deemed distributed for federal income tax purposes) to any Person. " ECMC " shall mean Equitable Capital Management Corporation, a Delaware corporation. " ECMC Transfer Agreement " shall mean the Transfer Agreement dated as of February 23, 1993, among the Partnership, ECMC and Equitable Investment Corporation, as the same may be amended, supplemented or restated from time to time. " Effective Time " shall mean the effective time of the Reorganization pursuant to the Reorganization Agreement. " ELAS " means The Equitable Life Assurance Society of the United States. " Exchange " shall mean the exchange by the Partnership of the Units held by any Unitholder upon the request of such holder for an equal number of Alliance Capital LP Units held by the Partnership, pursuant to the Reorganization Agreement. " General Partner " shall mean ACMC in its capacity as general partner of the Partnership, or any successor or additional general partner of the Partnership admitted pursuant to Section 13.02. " General Partnership Interests " shall mean the Partnership Interests of the General Partner in its capacity as such. " Guaranty Agreement " shall mean the Guaranty Agreement dated as of April 21, 1988 among Equitable Investment Corporation, a New York corporation, ACMC and the Partnership as the same may be amended, supplemented or restated from time to time. " Holdback Interests " has the meaning specified in the Reorganization Agreement. 6 " Indemnification and Reimbursement Agreement " shall mean the Indemnification and Reimbursement Agreement, dated as of April 8, 1999, among ELAS, the Partnership and Alliance Capital, as the same may be amended, supplemented or restated from time to time. " Indemnified Person " has the meaning specified in Section 6.09. " Indemnitee " shall mean a Person who is or was the General Partner, any Person who is or was a Departing Partner, any Person who is or was an Affiliate of the General Partner or any Departing Partner, any Person who is or was an officer, director, employee, partner, agent or trustee of the Partnership, General Partner or any Departing Partner or any such Affiliate, or any Person who is or was serving at the request of the General Partner or any Departing Partner or any such Affiliate as a director, officer, employee, partner, agent or trustee of another Person in connection with the business or affairs of the Partnership. " Limited Liability Determination " shall mean an Opinion of Outside Counsel to the effect that, as a result of the proposed transaction, Limited Partners and Unitholders do not lose their limited liability pursuant to Delaware law or this Agreement. " Limited Partner " shall mean the Assignor Limited Partner and any other Person who is admitted as a limited partner in accordance with this Agreement and is shown as a limited partner on the books and records of the Partnership. " Limited Partnership Interests " shall mean the Partnership Interests of the Limited Partners. The provisions hereof and of the definition of Percentage Interest are subject to adjustment by the General Partner in connection with, or as a consequence of, the issuance of any Limited Partnership Interests, Units or other securities of the Partnership under Section 4.02 having special designations or preferences or other special rights or duties. Subject to the establishment of special classes or groups of Limited Partners or Limited Partnership Interests, Units or other securities of the Partnership pursuant to Section 4.02, all Limited Partnership Interests shall be considered to constitute a single class under the Delaware Act and all Limited Partners shall vote as a single class in accordance with the terms of this Agreement. " Liquidating Trustee " shall mean either (i) the General Partner or (ii) if dissolution of the Partnership was caused by an event described in Sections 15.01(a)(i), 15.01(a)(ii) or 15.01(a)(v), the Person or committee appointed pursuant to Section 15.02. " Majority Approval " shall mean, as of any Record Date, (a) the written consent of Limited Partners who are Limited Partners with respect to more than 50% of the issued and outstanding Limited Partnership Interests or (b) the affirmative vote of Limited Partners who are Limited Partners with respect to more than 50% of the Limited Partnership Interests of those Limited Partners voting with respect to the matter at a meeting at which a quorum is present. If a Majority Approval is being 7 sought with respect to a transaction described in Section 6.13 (other than a transaction pursuant to Section 2.05), the Limited Partnership Interests of any employee of the Partnership, Alliance Capital, any Person controlled by the Partnership or Alliance Capital, or the General Partner who will be employed by or have any direct or indirect equity interest in any Person acquiring Partnership Assets shall be ineligible to vote with respect to such Majority Approval and shall not be counted for purposes of determining the issued and outstanding Limited Partnership Interests. Each Limited Partnership Interest shall be entitled to one vote for this purpose. Consent with respect to the Limited Partnership Interests held by the Assignor Limited Partner shall be given, and such Limited Partnership Interest shall be voted, by the Assignor Limited Partner in accordance with Section 17.04. For purposes of this definition, a Limited Partnership Interest represented by a Unit held by an employee or held (or represented by a Unit held) for the benefit of an employee, or by or for the benefit of a member of the family of an employee, shall be treated as if owned by that employee. A determination by the General Partner that Limited Partnership Interests are held by or for the benefit of an employee or a member of the family of an employee and that such employee is ineligible to vote with respect to a particular matter by reason of this definition shall be binding and conclusive; in making such a determination, the General Partner may rely on information known to it and need not make a special investigation. " Majority Outside Approval " shall mean as of any Record Date, written consent or affirmative vote of Limited Partners (other than the General Partner, its Corporate Affiliates and, if applicable, Persons holding Limited Partnership Interests ineligible to vote pursuant to the following sentence) who are Limited Partners with respect to more than 50% of the issued and outstanding Limited Partnership Interests held by such Persons. If Majority Outside Approval is being sought in connection with a transaction described in Section 6.13, the Limited Partnership Interests of any employee of the Partnership, Alliance Capital, any Person controlled by the Partnership or Alliance Capital, or the General Partner who will be employed by or have any direct or indirect equity interest in any Person acquiring Partnership Assets (in connection with a transaction described in Section 6.13) shall be ineligible to vote with respect to such Majority Outside Approval. Each Limited Partnership Interest shall be entitled to one vote for this purpose. Consent with respect to the Limited Partnership Interests held by the Assignor Limited Partner shall be given, and such Limited Partnership Interest shall be voted, by the Assignor Limited Partner in accordance with Section 17.04. For purposes of this definition, a Limited Partnership Interest represented by a Unit held by an employee or held (or represented by a Unit held) for the benefit of an employee, or by or for the benefit of a member of the family of an employee, shall be treated as if owned by that employee. A determination by the General Partner that Limited Partnership Interests are held by or for the benefit of an employee or a member of the family of an employee and that such employee is ineligible to vote with respect to a particular matter by reason of this definition shall be binding and conclusive; in making such a determination, the General Partner may rely on information known to it and need not make a special investigation. " Market Value " on any day shall mean the average of the last reported sales price per Unit or, in the event that no such reported sale takes place on any such day, the average of the last reported bid 8 and ask prices per Unit, on the New York Stock Exchange (or any alternate national securities market on which Units are traded) for the five trading days immediately prior to such day. " NASDAQ " shall mean the National Association of Securities Dealers Automated Quotations System. " National Securities Exchange " shall mean an exchange registered with the Commission under Section 6(a) of the Securities Exchange Act including, but not limited to, the New York Stock Exchange, Inc. " Net Income " and " Net Loss " shall mean an amount equal to the Partnership's taxable income or taxable loss as determined for federal income tax purposes for a relevant period, adjusted as provided herein. Net Income and Net Loss shall be determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), and adjusted as provided in Section 4.10. There shall be excluded from Net Income and Net Loss (a) any item of income, deduction, gain or loss resulting from a transaction the proceeds of which are distributed pursuant to Section 5.02 and (b) any item of income, deduction, gain or loss specially allocated pursuant to Section 5.05. " Net Value " shall mean in the case of any Contribution of assets, the fair market value of such assets reduced by the amount of any indebtedness either assumed by the Partnership upon such Contribution or to which such assets are subject when contributed, in each case as such fair market value shall be determined by the General Partner using such reasonable methods of valuation as it in its sole discretion deems appropriate, unless such assets are to be contributed by either the General Partner or any of its Affiliates and are other than cash or cash equivalents, in which case the fair market value shall be determined by an Appraiser. " Opinion of Counsel " shall mean a written opinion of counsel (who may be regular counsel to the Partnership, the General Partner or any Affiliate thereof) selected by the General Partner. " Opinion of Outside Counsel " shall mean a written opinion of counsel (who may be regular counsel to the Partnership, the General Partner or any Affiliate thereof, but who may not be an employee of the Partnership, the General Partner or any Affiliate thereof) selected by the General Partner. " Original Agreement of Limited Partnership " has the meaning specified in the Recitals. " Other General Partner " has the meaning specified in Section 12.02(c). " Partner " shall mean any General Partner or Limited Partner. 9 " Partnership " has the meaning specified in the Recitals. " Partnership's Accountants " shall mean such nationally recognized firm of independent public accountants, as is selected, from time to time, by the General Partner. " Partnership Assets " shall mean all property, whether tangible or intangible and whether real, personal or mixed, at any time owned by the Partnership. " Partnership Interest " shall mean, as to any Partner, all of the interests of that Partner in the Partnership, including, but not limited to, such Partner's (i) right to a distributive share of income and losses of the Partnership, (ii) right to a distributive share of the Partnership Assets, (iii) right, if the General Partner, to participate in the management of the affairs of the Partnership, and (iv) right to vote on certain matters as set forth herein. Each Partnership Interest of the Partners in the Partnership shall be denominated as a unit, each unit representing a pro rata percentage interest in the aggregate Partnership Interests of the Partners. Each such unit shall be referred to herein as a Limited Partnership Interest or General Partnership Interest, as the case may be, and all references in this Agreement to numbers of General Partnership Interests shall be deemed to refer to the specified number of such units of the Partnership Interests of the General Partner and all references in this Agreement to numbers of Limited Partnership Interests shall be deemed to refer to the specified number of such units of the Partnership Interests of the Limited Partners. " Pass-through Matter " has the meaning specified in Section 17.04(b). " Percentage Interest " shall mean, subject to such adjustments as the General Partner may determine in connection with the issuance of Limited Partnership Interests pursuant to Section 4.02, as to each Unitholder and Partner (other than the Assignor Limited Partner), a fraction, expressed as a percentage, the numerator of which is equal to the number of Units and Partnership Interests held by such Unitholder or Partner (other than the Assignor Limited Partner) at any time and the denominator of which is equal to the aggregate number of Units and Partnership Interests held by all of the Unitholders and Partners (other than the Assignor Limited Partner) at such time. " Person " shall mean any individual, corporation, association, partnership, joint venture, trust, estate or other entity or organization. " Proxy Statement " shall mean the proxy statement of the Partnership dated August , 1999 distributed in connection with the Special Meeting of Unitholders held September 22, 1999. " Purchase Date " shall mean the date determined by the General Partner as the date for purchase of all issued and outstanding Units or Limited Partnership Interests (other than Units or Limited Partnership Interests owned by the General Partner and its Corporate Affiliates) pursuant to, and as specified in, the " Notice of Election to Purchase " delivered pursuant to Article 16. 10 " Purchase Funds " shall mean an amount in cash equal to the aggregate Purchase Price of all Units or Limited Partnership Interests subject to purchase on the Purchase Date in accordance with Article 16. " Purchase Price " shall mean, as to any class or series, an amount per Unit or Limited Partnership Interest equal to the greater of (i) the highest cash price paid by the General Partner or any of its Affiliates for any Unit or Limited Partnership Interest of such class or series purchased during the 90 days immediately prior to the date on which the notice described in Article 16 is first mailed, if any such purchase occurred during such period, or (ii) (a) if the Units or Limited Partnership Interests of such class or series are listed or admitted to trading on one or more National Securities Exchanges, the arithmetic mean of the last reported sales prices per Unit or per Limited Partnership Interest of such class or series regular way or, in case no such reported sale has taken place on any such date, the arithmetic mean of the last reported bid and asked prices per Unit or per Limited Partnership Interest of such class or series regular way for such date, in either case on the principal National Securities Exchange on which the Units or Limited Partnership Interests of such class or series are listed or admitted to trading, for the 30 trading days immediately preceding the date of the mailing of such notice; (b) if the Units or Limited Partnership Interests of such class or series are not listed or admitted to trading on a National Securities Exchange but are quoted through NASDAQ, the arithmetic mean of the last reported sales prices per Unit or per Limited Partnership Interest of such class or series regular way or, in case no such reported sale has taken place on any such day or the last reported sales price is not then quoted, the arithmetic mean of the last reported bid and asked prices per Unit or per Limited Partnership Interest of such class or series regular way for such day quoted through NASDAQ, for the 30 trading days immediately preceding the date of the mailing of such notice; or (c) if the Units or Limited Partnership Interests of such class or series are not listed for trading on a National Securities Exchange and are not quoted through NASDAQ, an amount equal to the fair market value of a Unit or Limited Partnership Interest of such class or series, as of the date of the mailing of such notice, as determined by an Appraiser. " Recapture Income " shall mean any gain recognized by the Partnership (but computed without regard to any adjustment required by Section 734 or 743 of the Code) upon the disposition of any Partnership Asset that does not constitute capital gain for federal income tax purposes because such gain represents the recapture of deductions previously taken with respect to such Partnership Asset. " Record Date " shall mean the date established by the General Partner for determining (i) the identity of Limited Partners entitled to notice of or to vote at any meeting of Limited Partners or entitled to exercise rights in respect of any other lawful action of Limited Partners, (ii) the identity of the Unitholders entitled (A) to notice of any meeting of Limited Partners, or of any matter upon which the General Partner seeks the consent of the Limited Partners, (B) to give written instructions with respect to the giving of consent or the voting of the Limited Partnership Interests underlying their Units in accordance with the provisions hereof or (C) to exercise rights in respect of any other lawful action of 11 the Unitholders, or (iii) the identity of the Partners and Unitholders entitled to receive any report pursuant to the provisions hereof or any distribution pursuant to Article 5 or Article 15. " Record Holder(s) " shall mean, as applied to the Limited Partners, the Persons shown as Limited Partners on the books and records of the Partnership or the Transfer Agent as of the close of business on a particular day; and as applied to a Unitholder, the Person shown as the owner of such Unit on the books and records of the Partnership or Transfer Agent as of the close of business on a particular day. " Reorganization " has the meaning specified in the Recitals. " Reorganization Agreement " shall mean the Agreement and Plan of Reorganization, dated as of August 20, 1999, among the Partnership, Alliance Capital, ACMC and ELAS, as the same may be amended, supplemented or restated from time to time. " Securities Act " shall mean the Securities Act of 1933, as it may be amended from time to time, and any successor to such statute. " Securities Exchange Act " shall mean the Securities Exchange Act of 1934, as it may be amended from time to time, and any successor to such statute. " Substituted Limited Partner " shall mean a Person who is admitted as a Limited Partner in the Partnership pursuant to this Agreement in place of, and with all the rights of, a Limited Partner pursuant to Section 13.01, and who is shown as a limited partner on the books and records of the Partnership. " Tax Determination " shall mean an Opinion of Outside Counsel (containing such conditions, limitations and qualifications as are acceptable to the General Partner in its sole discretion) to the effect that, as a result of the proposed transaction, neither the Partnership nor Alliance Capital will suffer an Adverse Partnership Tax Consequence. Notwithstanding any provision of this Agreement to the contrary, a Tax Determination shall not be required in connection with or as a condition to any action at any time after (x) the General Partner has taken any action pursuant to clause (y) of the first sentence of Section 2.05 or (y) an Adverse Tax Determination. " Transfer Agent " shall mean any bank, trust company or other Person (including the General Partner or any of its Affiliates) appointed by the Partnership to act as transfer agent or registrar for the Units and, if the General Partner so determines, for the Limited Partnership Interests. " Transfer Agreement " shall mean the Transfer Agreement, dated as of November 19, 1987, between the Partnership and ACMC, wherein, subject to certain conditions, ACMC will contribute to the Partnership certain of its assets and the Partnership will assume certain of its liabilities and related obligations, as the same may be amended, supplemented or restated from time to time. 12 " Unit " shall mean a unit representing an Assignee Interest in a corresponding Limited Partnership Interest held by the Assignor Limited Partner, which Assignee Interest has been assigned to a Unitholder by the Assignor Limited Partner pursuant to Section 11.02. Unless the context otherwise requires, the term " Unit " as used in this Agreement includes restricted Units, Units outstanding as of the date of this Agreement and Units hereafter issued in accordance with the provisions of this Agreement. " Unit Certificate " shall mean a certificate issued by the Partnership evidencing ownership of one or more Units, such certificate to be in such form or forms as may be adopted by the General Partner in its sole discretion, and which shall initially be substantially in the form of Exhibit A to this Agreement. " Unitholder " shall mean any Person who is the Record Holder of one or more Units. " Unit Price " shall mean, as to any class or series, an amount per Unit or Limited Partnership Interest as of any date of determination, equal to (i) if the Units or Limited Partnership Interests of such class or series are listed or admitted to trading on one or more National Securities Exchanges, the arithmetic mean of the last reported sales prices per Unit or per Limited Partnership Interest of such class or series regular way or, in case no such reported sale has taken place on any such date, the arithmetic mean of the last reported bid and asked prices per Unit or per Limited Partnership Interest of such class or series regular way for such date, in either case on the principal National Securities Exchange on which the Units or Limited Partnership Interests of such class or series are listed or admitted to trading, for the 30 trading days immediately preceding such date of determination, (ii) if the Units or Limited Partnership Interests of such class or series are not listed or admitted to trading on a National Securities Exchange but are quoted through NASDAQ, the arithmetic mean of the last reported sales prices per Unit or per Limited Partnership Interest of such class or series regular way or, in case no such reported sale has taken place on any such day or the last reported sales price is not then quoted, the arithmetic mean of the last reported bid and asked prices per Unit or per Limited Partnership Interest of such class or series regular way on such day, quoted through NASDAQ, for the 30 trading days immediately preceding such date of determination or (iii) if the Units of such class or series are not listed or admitted to trading on a National Securities Exchange and are not quoted through NASDAQ, an amount equal to the fair market value of a Unit of such class or series, as of such date of determination, as determined by an Appraiser. " Unrealized Gain " shall mean, as of any date of determination, the excess, if any, of the fair market value of property (as determined under Section 4.10(c) or 4.10(d) as of such date of determination) over the Carrying Value of such property as of such date of determination (prior to any adjustment to be made pursuant to Section 4.10(c) or 4.10(d) as of such date). " Unrealized Loss " shall mean, as of any date of determination, the excess, if any, of the Carrying Value of property as of such date of determination (prior to any adjustment to be made 13 pursuant to Section 4.10(c) or 4.10(d) as of such date) over the fair market value of such property (as determined under Section 4.10(c) or 4.10(d) as of such date of determination). SECTION 2.01. Formation; Partnership Name. (a) The Partnership was formed as a Delaware limited partnership pursuant to the Original Agreement of Limited Partnership and the filing of the Certificate of Limited Partnership in the Office of the Secretary of State of the State of Delaware. In connection with the Reorganization, the Partnership is being continued as a Delaware limited partnership pursuant to the terms of this Agreement. (b) "Alliance Capital Management Holding L.P." shall be the name of the Partnership. The business of the Partnership shall be conducted under such name or such other name as the General Partner may from time to time in its sole discretion determine. " Limited Partnership " or " Ltd. " or " L.P. " (or similar words or letters) shall be included in the Partnership's name where necessary or appropriate to maintain the limited liability of the Limited Partners and Unitholders or otherwise for the purpose of complying with the laws of any jurisdiction that so requires or as the General Partner may deem appropriate. (b) The name of the registered agent for service of process on the Partnership in the State of Delaware is The Corporation Trust Company. The address of the registered agent and the address of the registered office of the Partnership in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. 14
15 Partnership Interests or other securities or otherwise restructure or reorganize the Partnership so that the General Partner and its Corporate Affiliates will own a sufficient percentage (but no more) of the Units, Limited Partnership Interests or other securities so as to allow the Partnership or the New Entity to be included for federal tax purposes in the affiliated group of which the General Partner is a member; Units, Limited Partnership Interests or securities may be acquired by the General Partner pursuant to this sentence only for the fair market value thereof as determined by an Appraiser. In connection with any transaction described in clause (y) of the first sentence of this Section, the business of the Partnership may be continued by the New Entity or otherwise and if the Partnership has been restructured or reorganized as a New Entity and the Units, Limited Partnership Interests and General Partnership Interest are converted into equity securities of the New Entity, the Partnership Interests shall be converted into equity of the New Entity in the manner determined by the General Partner in its sole discretion and without the approval of the Unitholders or Limited Partners, subject to clause (y) above. Notwithstanding the foregoing, no such modification, restructuring or reorganization shall take place unless the Partnership shall have received an Opinion of Outside Counsel to the effect that the liability of the holders of the Units or the equity interests in the New Entity into which the Units are converted pursuant to the law of the jurisdiction of the New Entity or Entities for the debts and obligations of the New Entity or Entities shall not, unless such Unitholders or Limited Partners or holders of such equity interests take part in the control of the business of the New Entity or Entities, exceed that which otherwise had been applicable to the holders of the Units as Unitholders or to the Limited Partners of the Partnership. SECTION 3.01. Purpose. The purpose and nature of the business to be conducted and promoted by the Partnership shall be (a) to hold Alliance Capital LP Units and (b) to engage in any other lawful activities (including any activity contemplated to be undertaken by the Partnership pursuant to the Alliance Capital Partnership Agreement) for which limited partnerships may be organized under the Delaware Act. 16
(a) To borrow money and issue evidences of indebtedness, to refinance such indebtedness, to secure the same by mortgages, deeds of trust, security interest, pledges or other liens on all or any part of the Partnership Assets, to enter into contracts of guaranty or suretyship, and to confess and authorize confession of judgment in connection with the foregoing or otherwise; (b) To secure, maintain and pay for insurance against liability or other loss with respect to the activities and assets of the Partnership (including, but not limited to, insurance against liabilities under Section 6.09); (c) To employ or retain such Persons as may be necessary or appropriate for the conduct of the Partnership's business, including permanent, temporary or part-time employees and attorneys, accountants, agents, consultants and contractors, and to have employees and agents who may be designated as officers with titles including, but not limited to, " chairman ," " vice chairman ," " president ," " executive vice president ," " senior vice president ," " vice president ," " assistant vice president ," " treasurer ," " controller ," " secretary ," " assistant secretary ," and " assistant treasurer " and who in such capacity may act for and on behalf of the Partnership, as and to the extent authorized by the General Partner, including, but not limited to, the following: (i) represent the Partnership in its dealings with third parties, and execute any kind of document or contract on behalf of the Partnership; (ii) approve the sale, exchange, lease, sublease, mortgage, assignment or other transfer or acquisition of, or granting or acquiring of a security interest in, any asset or assets of the Partnership; or (iii) propose, approve or disapprove of, and take, action for and on behalf of the Partnership with respect to the operations of the Partnership; (d) To acquire, own, hold a leasehold interest in, maintain, use, lease, sublease, manage, operate, sell, exchange, transfer or otherwise deal in assets (including the Holdback Interests) and property as may be necessary, convenient or beneficial for the Partnership; (e) To incur expenses and to enter into, guarantee, perform and carry out contracts or commitments of any kind, to assume obligations, and to execute, deliver, acknowledge and file documents in furtherance of the purposes and business of the Partnership; 17 (f) To pay, collect, compromise, arbitrate, litigate or otherwise adjust, contest or settle any and all claims or demands of or against the Partnership; (g) To invest in interest-bearing and non-interest-bearing accounts and short-term investments of any kind and nature whatsoever, including, but not limited to, obligations of federal, state and local governments and their agencies, mutual funds (including money market funds), mortgage-backed securities, commercial paper, repurchase agreements, time deposits, certificates of deposit of commercial banks, savings banks or savings and loan associations and equity or debt securities of any type; (h) To transfer assets to joint ventures, other partnerships, corporations or other business entities in which the Partnership is or thereby becomes a participant upon such terms, and subject to such conditions consistent with applicable law, as the General Partner deems appropriate; and (i) To engage in any kind of activity and to enter into and perform obligations of any kind with the General Partner or Affiliates of the General Partner or otherwise, necessary to or in connection with, or incidental to, the accomplishment of the purposes and business of the Partnership, so long as said activities and obligations may be lawfully engaged in or performed by a limited partnership under the Delaware Act. SECTION 4.01. General Partner; Limited Partners; Assignor Limited Partner. (a) The General Partner has from time to time made, and will make, the Contributions required of ACMC by Section 2.4 of the Transfer Agreement. However, the General Partner shall not be obligated to make Contributions pursuant to this Section 4.01(a) to the extent that, after giving effect to such Contributions, the investment value of the Partnership would exceed the limitation contained in Section 1705 of the New York Insurance Law (if then applicable) or the investment in the Partnership would violate any other restriction on investments of insurance companies and their subsidiaries that may be applicable at the time. In the event that any Contribution otherwise required to be made under this Section 4.01(a) is not so made in full when due by reason of the preceding sentence, any Contribution not so made shall be made as soon as such limitation and any such restriction would not be exceeded thereby, together with interest thereon from the date when such Contribution was due to the date such Contribution was made at the prime commercial rate per annum of The Chase Manhattan Bank from time to time in effect. The General Partner and its Affiliates shall have the right to conduct their respective businesses and affairs in their sole discretion without regard to the General Partner's obligations, or any limitation or restriction referred to, in this Section 4.01(a). The General Partner's obligation to make Contributions pursuant to this Section 4.01(a) is subject to termination as provided in the Transfer Agreement and in the Guaranty Agreement. The General Partner shall not be entitled to 18 an additional Partnership Interest or Units by reason of the Contributions called for by this Section 4.01(a). (b) (i) Limited Partners, including the Assignor Limited Partner (for the account of Unitholders), have made Contributions to the capital of the Partnership, (ii) Limited Partners have been admitted as such and (iii) Limited Partnership Interests, Units and other securities of the Partnership have been issued, all in accordance with the terms of the Original Agreement of Limited Partnership and the supplemental terms of written agreements for additional issuances of securities (including benefit plans adopted by the Partnership), and as reflected on the records of the Partnership (including those maintained by the Transfer Agent). (c) The General Partner will make, or cause one or more of its Corporate Affiliates to make, payments to the Partnership in an amount equal to the Reorganization Costs (as such term is defined in the Indemnification and Reimbursement Agreement), without duplication as to any amounts paid pursuant to the Alliance Capital Partnership Agreement, in accordance with the Indemnification and Reimbursement Agreement. The General Partner shall not be entitled to receive any additional Partnership Interests or Units in exchange for such payments. 19 directed to do all things it deems to be necessary or advisable in connection with any such future issuance, including, but not limited to, compliance with any statute, rule, regulation or guideline of any federal, state or other governmental agency or any National Securities Exchange on which the Units or other such security is listed for trading. The Partnership may assume liabilities and hypothecate its property in connection with any such issuance. (b) Units and Limited Partnership Interests to be issued by the Partnership pursuant to Section 4.02(a) shall be issuable from time to time in one or more classes or series, at such price, and with such designations, preferences and relative participating, optional or other special rights, powers and duties, including rights, powers and duties senior to existing classes or series of Units and Limited Partnership Interests, all as shall be fixed by the General Partner in the exercise of its sole discretion, including, but not limited to: (i) the allocation, for federal income and other tax purposes, to such class or series of Units and Limited Partnership Interests of items of Partnership income, gain, loss, deduction and credit; (ii) the rights of such class or series of Units and Limited Partnership Interests to share in Partnership distributions; (iii) the rights of such class or series of Units and Limited Partnership Interests upon dissolution and liquidation of the Partnership; (iv) whether such class or series of Units and Limited Partnership Interests is redeemable by the Partnership and, if so, the price at which, and the terms and conditions on which, such class or series of Units and Limited Partnership Interests may be redeemed by the Partnership; (v) whether such class or series of Units and Limited Partnership Interests is issued with the privilege of conversion and, if so, the rate at and the terms and conditions upon which such class or series of Units and Limited Partnership Interests may be converted into any other class or series of Units and/or Limited Partnership Interests; (vi) the terms and conditions of the issuance of such class or series of Units and Limited Partnership Interests, and all other matters relating to the assignment thereof; and (vii) the rights of such class or series of Units and Limited Partnership Interests to vote on matters relating to the Partnership and this Agreement. (c) Notwithstanding the other provisions of this Section 4.02 or Section 4.04, except as provided in Section 2.05, the Partnership will not issue any Units or Limited Partnership Interests or classes or series thereof or any other type of security unless: (i) the Partnership receives an Assignment Determination, Limited Liability Determination and a Tax Determination with respect to such issuance; (ii) such issuance occurs pursuant to the employee benefit plans sponsored by the General Partner, the Partnership, Alliance Capital or any Persons controlled by the Partnership or Alliance Capital in accordance with Section 6.16 and such issuance is of Units or Limited Partnership Interests having identical rights and preferences to the Units and Limited Partnership Interests outstanding as of the date hereof and the employees, management and directors of the General Partner, Alliance Capital, the Partnership and their respective subsidiaries, as a group, will not as a result of such issuance or any transaction contemplated in connection with such issuance, hold, vote or control 25% or more of the Units and Limited Partnership Interests then outstanding; or 20 (iii) such issuance occurs pursuant to exchanges of Alliance Capital LP Units for Units in accordance with Section 6.17. (d) Upon the issuance pursuant to this Section 4.02 of any class or series of Units or Limited Partnership Interests, or any other securities, the General Partner (pursuant to the General Partner's powers of attorney from the Limited Partners and Unitholders), without the approval at the time of any Partner or Unitholder (each Person accepting Units being deemed to approve of such amendment), may amend any provision of this Agreement, and execute, swear to, acknowledge, deliver, file and record, if required, an amended Certificate of Limited Partnership and whatever other documents may be required in connection therewith, as shall be necessary or desirable to reflect the authorization and issuance of such class or series of Units or Limited Partnership Interests or other securities and the relative rights and preferences of such class or series of Units or Limited Partnership Interests or other securities. (e) The General Partner or any Affiliate of the General Partner may, but shall not be obligated to, make Contributions to the Partnership in exchange for Units or Limited Partnership Interests, provided that the number of Units or Limited Partnership Interests issued in exchange for any such Contribution shall not exceed the Net Value of the Contribution divided by the Unit Price of a Unit or Limited Partnership Interest, as the case may be, of such class and series; and provided further, however, that the foregoing proviso in this Section 4.02(e) shall not apply to the transactions set forth in the ECMC Transfer Agreement. The General Partner shall hold such Units as a Unitholder of the Partnership and shall hold Limited Partnership Interests as a Limited Partner of the Partnership, as the case may be. (b) Whenever such a distribution, subdivision or combination is declared, the General Partner shall select a Record Date (which shall not be prior to the date of the declaration) as of which 21 the distribution, subdivision or combination shall be effective and shall notify each Unitholder or Limited Partner of the distribution, subdivision or combination. (c) Promptly following such distribution, subdivision or combination, the General Partner may cause the Partnership to issue to the Unitholders or Limited Partners as of such Record Date new Unit Certificates or Certificates representing the new number of Units or Limited Partnership Interests, or adopt such other procedures as it may deem appropriate to reflect such distribution, subdivision or combination; provided , however , that in the case of any such distribution, subdivision or combination resulting in a smaller total number of Units or Limited Partnership Interests outstanding, the General Partner may require, as a condition to the delivery of such new Unit Certificate or Certificate, the surrender of any Unit Certificate or Certificate representing the Units or Limited Partnership Interests prior to such declaration. (d) The General Partner shall give notice to Unitholders and Partners of any distribution, subdivision or combination pursuant to this Section 4.04 at least 10 days prior to the effective date thereof. 22 Capital Account of such Partner or Unitholder nor entitle such Partner or Unitholder to any increase in its Percentage Interest. The amount of any such advance shall be a debt of the Partnership to such Partner or Unitholder and shall be payable or collectible only out of the Partnership Assets in accordance with the terms and conditions upon which such advance is made. No interest shall be paid by the Partnership on Contributions or on the amount of any Capital Account. 23 (i) In accordance with the requirements of Section 704(b) and Section 704(c) of the Code and Treasury Regulation Section 1.704-1(b)(2)(iv)(d), any deductions for depreciation, cost recovery or amortization attributable to Contributed Property shall be determined as if the adjusted basis of such property on the date it was acquired or deemed to be acquired by the Partnership was equal to the Net Value of such property. Upon an adjustment pursuant to Section 4.10(c) to the Carrying Value of any Partnership Asset subject to depreciation, cost recovery or amortization, any further deductions for such depreciation, cost recovery or amortization attributable to such Partnership Asset shall be determined as if the adjusted basis of such Partnership Asset was equal to the Carrying Value of such property immediately following such adjustment. (ii) Any income, gain or loss attributable to the taxable disposition of any property shall be determined by the Partnership as if the adjusted basis of such property as of such date of disposition was equal in amount to the Partnership's Carrying Value with respect to such property as of such date. (iii) The amounts of any adjustments to the basis (or Carrying Values) of Partnership Assets made pursuant to Section 743 of the Code shall not be reflected in Capital Accounts, but the amounts of any adjustments to the basis (or Carrying Values) of Partnership Assets made pursuant to Section 734 of the Code as a result of the Distribution of property by the Partnership to a Partner shall (i) be reflected in the Capital Account of the Person receiving such Distribution in the case of a Distribution in liquidation of such Person's interest in the Partnership and (ii) otherwise be reflected in Capital Accounts in the manner in which the unrealized income and gain that is displaced by such adjustments would have been shared had the property been sold at its Carrying Value immediately prior to such adjustments. (iv) The computation of all items of income, gain, loss and deduction shall be made, as to those items described in Section 705(a)(1)(B) or Section 705(a)(2)(B) of the Code, without regard to the fact that such items are not includible in gross income or are neither currently deductible nor capitalizable for federal income tax purposes. For this purpose, amounts paid or incurred to organize the Partnership or to promote the sale of interests in the Partnership that are neither deductible nor amortizable under Section 709 of the Code, and deductions for any losses incurred in connection with the sale or exchange of Partnership Assets disallowed pursuant to Section 267(a)(1) or Section 707(b) of the Code, shall be treated as expenditures described in Section 705(a)(2)(B) of the Code. (b) In the case of the transfer of a Unit (the term Unit for purposes of this Section 4.10(b) shall include a Limited Partnership Interest received in exchange for such Unit) or the General 24 Partnership Interest, the transferee of such Unit or the General Partnership Interest shall succeed to a Capital Account relating to the Unit or General Partnership Interest transferred and the Capital Account of the transferor shall be adjusted to reflect the Capital Account of the transferee. (c) To the extent that the General Partner in its sole discretion deems it appropriate (A) immediately prior to an issuance of additional Units or Limited Partnership Interests for Contributions pursuant to Section 4.02, or (B) to reflect the sale, exchange or other disposition of all or substantially all of the Partnership Assets during any fiscal year in which such a sale, exchange or other disposition occurs, the Capital Accounts of all Partners and Unitholders and the Carrying Values of all Partnership Assets may be adjusted in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f) (consistent with the provisions hereof) upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to each Partnership Asset as if such Unrealized Gain or Unrealized Loss had been recognized upon an actual sale of each such Partnership Asset at such time and had been allocated to the Partners and Unitholders pursuant to Sections 5.04 and 5.05. Such Unrealized Gain or Unrealized Loss shall be determined by the General Partner using such reasonable methods of valuation as it in its sole discretion deems appropriate. (d) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv) (e), immediately prior to the Distribution of any Partnership Asset in kind, the Capital Accounts of all Partners and Unitholders and the Carrying Values of all such Partnership Assets shall be adjusted (consistent with the provisions hereof) upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to each such Partnership Asset as if such Unrealized Gain or Unrealized Loss had been recognized upon an actual sale of each such Partnership Asset immediately prior to such distribution and had been allocated to the Partners and Unitholders, at such time, pursuant to Sections 5.04 and 5.05. Such Unrealized Gain or Unrealized Loss shall be determined by the General Partner in its sole discretion and such determination shall be binding and conclusive upon the Partnership, Partners and Unitholders. SECTION 5.01. Pass Through Cash Distributions. The General Partner shall distribute in cash the Partnership's Available Cash Flow as promptly as practicable after receipt of any cash distributions paid by Alliance Capital. Such distributions shall be made among the Partners (other than the Assignor Limited Partner) and Unitholders who were Record Holders on such Record Date as shall be selected by the General Partner in its sole discretion, pro rata in accordance with their Percentage Interests. 25 determine, among the Unitholders and Partners (other than the Assignor Limited Partner), pro rata in accordance with their Percentage Interests. (b) The General Partner shall specify a Record Date for any Distribution, and any cash or property distributed shall be distributed to the Partners and Unitholders who were Record Holders on the books of the Partnership as of the Record Date, in accordance with this Article 5. The Record Date for any Distribution to be made pursuant to Section 5.02 shall be (i) in the case of a Distribution that is attributable to the proceeds from the sale or other disposition by the Partnership of Partnership Assets other than in the ordinary course of its business, the date of such sale or other disposition and (ii) in the case of any other Distribution, such Record Date as selected by the General Partner in its sole discretion. (c) Any amount of taxes withheld pursuant to Section 9.05, and any amount of taxes, interest or penalties paid by the Partnership to any governmental entity, with respect to amounts allocated or distributable to a Person shall be deemed to be a Distribution or payment to such Person and shall reduce the amount otherwise distributable to such Person pursuant to this Article 5. (d) No Distribution (other than a Distribution pursuant to Article 15) with respect to all or any portion of a calendar year shall be made to a Person (other than the General Partner) if, after giving effect to expected allocations of Net Income or Net Loss for such calendar year, the Distribution would create or increase a deficit in such Person's Capital Account in excess of such Person's share of the Partnership's " Minimum Gain " as defined in Treasury Regulation Section 1.704-2(b)(2). (e) Whenever any Distribution is to be made with respect to Limited Partnership Interests held by the Assignor Limited Partner, such Distribution shall be made to the Unitholders of record on the Record Date for such Distribution and not to the Assignor Limited Partner. (f) The requirement of the General Partner or the Partnership to make any and all Distributions provided for in this Agreement shall be subject to the limitations contained in the Delaware Act and no Distribution shall be made in violation of the provisions thereof or hereof. 26 Partnership with respect to a fiscal year of the Partnership shall be allocated to each month in such fiscal year on a pro rata basis. (a) Net Income of the Partnership shall be allocated among the Unitholders and Partners (other than the Assignor Limited Partner), pro rata in accordance with their Percentage Interests. (b) Net Loss of the Partnership shall be allocated (i) first, to the Unitholders, the General Partner and Limited Partners (other than the Assignor Limited Partner) having positive Capital Account balances so as to cause their respective Capital Account balances to be in (or, if not possible, closer to) the same proportion to each other as their respective Percentage Interests and then in accordance with their respective Percentage Interests until all such positive balances have been eliminated; and (ii) the balance, if any, to the General Partner in respect of its General Partnership Interest. Section 5.04(a) notwithstanding, to the extent subsequent Net Income of the Partnership does not exceed Net Loss allocated pursuant to this Section 5.04(b), such Net Income shall be allocated (A) first, to the General Partner in respect of its General Partnership Interest until such allocated Net Income equals Net Loss allocated to the General Partner pursuant to Section 5.04(b)(ii); and (B) the balance, if any, to the General Partner, Unitholders and Limited Partners (other than the Assignor Limited Partner) in the same proportions and amounts as Net Loss was allocated pursuant to Section 5.04(b)(i). For purposes of this Section 5.04(b), the determination of Capital Account balances shall be made after giving effect to all Distributions made with respect to calendar quarters before the month in question pursuant to Article 5. (c) All items of income, gain, loss and deduction resulting from any transaction the proceeds of which are distributed to the Partners and Unitholders pursuant to Section 5.02 shall be allocated among the Unitholders and Partners (other than the Assignor Limited Partner), pro rata in accordance with their Percentage Interests. (a) If there is a net decrease in "partnership minimum gain" (within the meaning of Treasury Regulation Section 1.704-2(b)(2)) during a fiscal year, all Persons with a deficit balance in their Capital Accounts at the end of such year shall be allocated, before any other allocations of Partnership items for such fiscal year, items of income and gain for such year (and if necessary, subsequent years), in the amount and in the proportions necessary to eliminate such deficits as quickly as possible. This Section 5.05(a) is intended to comply with the requirements of Treasury Regulation Section 1.704-2(f), and is to be interpreted to comply with the requirements of such regulation. (b) If any Person unexpectedly receives any adjustments, allocations or Distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of income and gain (consisting of a pro rata portion of each item of Partnership 27 income, including gross income, and gain) shall be specially allocated to such Person in an amount and manner sufficient to eliminate a deficit in its Capital Account created by such adjustments, allocations or Distributions as quickly as possible. This Section 5.05(b) is intended to constitute a "qualified income offset" within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3). Any special allocations of items of income or gain pursuant to this Section 5.05(b) shall be taken into account in computing subsequent allocations of Net Income or Net Loss so that the net amounts of any items so allocated shall, to the extent possible, be equal to the net amounts that would have been allocated to each such Person if such unexpected adjustments, allocations or Distributions had not occurred. (c) Section 5.04(a) notwithstanding, in the event of a sale or transfer of a Unit or Limited Partnership Interest by the General Partner or any of its Corporate Affiliates (other than to the General Partner or a Corporate Affiliate of the General Partner or in a transaction in which the General Partner and its Corporate Affiliates transfer their entire interest in the Partnership) the General Partner may, in its sole discretion, allocate gross income to the General Partner or such Corporate Affiliate, as the case may be, to the extent required to make the Capital Account of the General Partner or such Corporate Affiliate immediately prior to such sale or transfer equal to the product of (I) the aggregate Percentage Interest of the General Partner or such Corporate Affiliate, (II) the quotient obtained by dividing the aggregate amount of Units and Limited Partnership Interests outstanding by a fraction, the numerator of which is the aggregate Percentage Interest of all Unitholders and Limited Partners (other than the Assignor Limited Partner) and the denominator of which is 100 and (III) an amount equal to the Capital Account of a Unit. (d) Any net gains realized by the Partnership upon the dissolution of the Partnership shall be credited to the Capital Accounts of the Partners (other than the Assignor Limited Partner) and Unitholders (after crediting or charging thereto the appropriate portion of Net Income and Net Loss and after giving effect to all amounts distributed or to be distributed to such Partners and Unitholders with respect to all calendar quarters of the Partnership prior to the quarter in which the dissolution of the Partnership occurs) in the following priority: (i) First, to those Partners and Unitholders whose Capital Accounts have negative balances, in proportion to such negative balances, until such negative balances have been eliminated; (ii) Next, to the Partners and Unitholders in a manner so as to cause such Partners' and Unitholders' respective Capital Account balances to be in the same proportion to each other as their respective Percentage Interests; and (iii) The balance, if any, among the Unitholders and Partners, pro rata in accordance with their Percentage Interests. 28 (e) In the event any net gains realized by the Partnership upon the dissolution of the Partnership are insufficient to cause the Partners' and Unitholders' respective Capital Account balances to be in the ratios of their respective Percentage Interests, then, Section 5.04(a) notwithstanding, gross income shall be allocated to those Partners and Unitholders whose Capital Accounts have balances (after giving effect to the allocations provided in Section 5.05(d)), that are less than the amount required to make all Partners' and Unitholders' Capital Account balances be in the ratio of their respective Percentage Interests until all Partners' and Unitholders' Capital Account balances are in such ratios; provided , however , that an allocation shall not be made pursuant to this Section 5.05(e) to the extent such allocation would cause or increase a negative balance in any other Partner's or Unitholder's Capital Account. (f) (i) If any Partner or Unitholder makes a payment to the Partnership to pay an expense or cover a loss of the Partnership, or pays an expense of the Partnership, including, without limitation, any organizational expenses incurred in connection with the Reorganization and any costs incurred under the Indemnification and Reimbursement Agreement, and the result is that the Partnership is required to recognize income or is entitled to a loss or deduction with respect to such amount so contributed or paid, then such income, loss or deduction shall be specially allocated to such Partner or Unitholder. (ii) Any amounts received by the Partnership either from a trust established or letter of credit furnished pursuant to Section 4 of the Guaranty Agreement shall be considered a Contribution by ACMC if it is the General Partner or a Unitholder (or, if ACMC is not the General Partner or a Unitholder, any Corporate Affiliate that is the General Partner or a Unitholder) made to pay the expense of the Partnership to which the amounts received by the Partnership relate. (g) In the event that the Internal Revenue Service is successful in asserting an adjustment to the taxable income of a Partner or Unitholder and, as a result of any such adjustment, the Partnership is entitled to a deduction for federal income tax purposes with respect to any portion of such adjustment, such deduction shall be allocated to such Partner or Unitholder. (h) The General Partner may, in its sole discretion and without the approval of any Unitholder or other Partner, make special allocations of Net Income or Net Loss or items thereof (including, but not limited to, gross income) to the extent necessary to make the Capital Account balances of the Partners and Unitholders be in the ratios of their Percentage Interests. In addition to the other special allocations that the General Partner may make under this Section 5.05, the General Partner may, in its sole discretion and without the approval of any Unitholder or other Partner, make special allocations of Net Income or Net Loss (or items thereof) and adopt such other methods and procedures in order to preserve or achieve uniformity of Units, but only if such allocations and methods and procedures would not have a material adverse effect on the Unitholders holding Units and if they are consistent with the principles of Section 704 of the Code. 29 (i) In the event that the Internal Revenue Service is successful in asserting an adjustment to the allocations of Net Income or Net Loss provided for in Sections 5.04 and 5.05 for federal income tax purposes, such adjustment shall not have any effect on Capital Accounts or on the Distributions made or to be made pursuant to the provisions of this Agreement, unless the General Partner determines that giving effect to such adjustment would make the Partners' and Unitholders' Capital Account balances be in the proportion of the Percentage Interests. (j) For purposes of charging and crediting Capital Accounts, the holder of a restricted Unit (which for purposes of this Section 5.05(j) shall include any Limited Partnership Interest received in exchange for a restricted Unit) shall not be treated as a Unitholder or Limited Partner during the period commencing on the date such holder acquires such restricted Unit and ending on the date such restricted Unit vests, unless such holder makes a timely election under Section 83(b) of the Code with respect to the transfer of such restricted Unit to such holder. During such period, all Distributions made with respect to such restricted Unit pursuant to this Agreement shall be treated as not made in respect of a partnership interest but shall be paid by the Partnership to such holder as compensation. (b) In the case of Contributed Property, items of income, gain, loss or deduction attributable to such Contributed Property shall be allocated among the Partners (other than the Assignor Limited Partner) and Unitholders in a manner that takes into account the variation between the adjusted basis to the Partnership of such Contributed Property and the Net Value of such Contributed Property at the time of contribution, as required by Section 704(c) of the Code, to the extent such allocation reduces Book-Tax Disparities. The General Partner shall have the sole discretion to make additional allocations of income, gain, loss or deduction in order to eliminate such Book-Tax Disparities as quickly as possible, provided such allocations are consistent with the principles of Section 704(c) of the Code. The General Partner shall have the sole discretion to choose any method of allocations permissible under Treasury Regulation Section 1.704-3 to reduce or eliminate Book-Tax Disparities. (c) In the case of Adjusted Property, items of income, gain, loss or deduction attributable thereto shall (A) first, be allocated among the Partners (other than the Assignor Limited Partner) and Unitholders in a manner consistent with the principles of Section 704(c) of the Code to take into account the Unrealized Gain or Unrealized Loss attributable to such property and the allocation thereof pursuant to Section 4.10(c) to the extent such allocation reduces Book-Tax Disparities, and (B) second, in the event such property was originally Contributed Property, be allocated among the Partners (other than the Assignor Limited Partner) and Unitholders in a manner consistent with 30 subsection 5.06(b) above. The General Partner shall have the sole discretion to make additional allocations of income, gain, loss or deduction in order to eliminate such Book-Tax Disparities as quickly as possible, provided such allocations are consistent with the principles of Section 704(c) of the Code. The General Partner shall have the sole discretion to choose any method of allocations permissible under Treasury Regulation Section 1.704-3 to reduce or eliminate Book-Tax Disparities. (d) To the extent of any Recapture Income resulting from the sale or other taxable disposition of a Partnership Asset, the amount of any gain from such disposition allocated to (or recognized by) a Partner (other than the Assignor Limited Partner) or Unitholder, for federal income tax purposes pursuant to the above provisions shall be deemed to be Recapture Income to the extent such Partner or Unitholder has been allocated or has claimed any deduction directly or indirectly giving rise to the treatment of such gain as Recapture Income. (e) All items of income, gain, loss, deduction and credit recognized by the Partnership for federal income tax purposes and allocated to the Partners (other than the Assignor Limited Partner) and Unitholders in accordance with the provisions hereof shall be determined without regard to any adjustment made pursuant to Section 743 of the Code; provided , however , that such allocations, once made, shall be adjusted as necessary or appropriate to take into account those adjustments permitted by Section 743 of the Code and any adjustments made pursuant to Section 743 of the Code shall be allocated to the extent permitted under and in accordance with the rule of Treasury Regulation Section 1.704-1(b)(2)(iv)(m). (f) The General Partner may, in its sole discretion and without the approval of any Unitholder or other Partner, make special allocations of Net Income or Net Loss or items thereof (including, but not limited to, gross income) (i) to the extent necessary to make the Capital Account balances of the Partners and Unitholders be in the ratios of their Percentage Interests or (ii) that are consistent with the principles of Section 704 of the Code and Section 5.04 and to amend the provisions of this Agreement as appropriate to reflect the proposal or promulgation of Treasury Regulations under Subchapter K of the Code. The General Partner may adopt and employ such methods and procedures for (A) the maintenance of book and tax capital accounts, (B) the determination and allocation of adjustments under Sections 704(c), 734 and 743 of the Code, (C) the determination and allocation of Net Income, Net Loss, Depreciation, taxable income, taxable loss and items thereof under this Agreement and pursuant to the Code, (D) the determination of the identities and tax classification of Unitholders and Partners, (E) the provision of tax information and reports to Partners and Unitholders, (F) the adoption of reasonable conventions and methods for the valuation of assets and the determination of tax basis, (G) the allocation of asset values and tax basis, (H) conventions for the determination of cost recovery, depreciation and amortization deductions and the maintenance of inventories, (I) the recognition of the transfer of Units and Limited Partnership Interests, and (J) compliance with other tax-related requirements, including, but not limited to, the use of computer software and filing and reporting procedures similar to those employed by other publicly-traded partnerships, as it determines in its sole discretion are necessary and appropriate to execute the 31 provisions of this Agreement, comply with federal and state tax laws, and to achieve uniformity of Units and Limited Partnership Interests. The General Partner shall be indemnified and held harmless by the Partnership for any expenses, penalties or other liabilities arising as a result of decisions made in good faith on any of the matters referred to in the preceding sentence. If the General Partner determines, based upon advice of counsel, that no reasonable allowable convention or other method is available to preserve the uniformity of Units or Limited Partnership Interests or the General Partner in its discretion so elects, Units and Limited Partnership Interests may be separately identified as distinct classes to reflect differences in tax consequences. (g) For federal income tax purposes, the holder of a restricted Unit (which, for purposes of this Section 5.06(g), shall include any Limited Partnership Interest received in exchange for a restricted Unit) shall not be treated as a Unitholder or Limited Partner during the period commencing on the date such holder acquires such restricted Unit and ending on the date such restricted Unit vests, unless such holder makes a timely electi |
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