AMENDMENT NUMBER ONE TO THE CURSITOR
ALLIANCE LLC AGREEMENT
This Amendment (this "Amendment") is made as of April 28, 1997, by and
among (1) Alliance Capital Management L.P. ("Alliance"), (2) Alliance Capital
Management Corporation of Delaware ("Alliance Delaware"), (3) Cursitor Holdings,
L.P. ("Holdings L.P."), and (4) Cursitor Alliance LLC (the "Company"), and is
made with reference to the Amended and Restated Limited Liability Company
Agreement of Cursitor Alliance LLC dated as of February 29, 1996 (the
"Agreement") by and among Alliance, Alliance Delaware and Holdings L.P.
RECITALS
WHEREAS, the parties have agreed to transfer the International Shares from
the Company to Alliance Delaware in redemption of Alliance Delaware's interest
in the Company whereupon Alliance Delaware shall cease to be a Member and its
capital account and Percentage Interest shall be reduced to zero;
WHEREAS, pursuant to the Third Services Agreement dated as of January 1,
1997 between Alliance and the Company (the "Third Services Agreement"), Alliance
and the Company have agreed to terminate the First Services Agreement and the
Second Services Agreement and in lieu thereof Alliance will be the exclusive
provider to the Company and its subsidiaries of all of their requirements for
back-office and support services, including without limitation, accounting, tax,
trading, legal, compliance, treasury, office administration, systems, data
processing, human resources and facilities services;
WHEREAS, pursuant to the Termination and Consulting Agreement dated the
date hereof, Richard I. Morris, Jr. has voluntarily resigned as President and
Chief Executive Officer of the Company and in lieu thereof has agreed to serve
as a consultant to the Company and to provide the Company and Alliance with the
services described in that Agreement;
WHEREAS, pursuant to various Amendments to Employment Agreements executed
on the date hereof, the Company and each other Principal have agreed to amend
the related Employment Agreements;
WHEREAS, pursuant to the Cursitor Alliance Principals' and Draycott
Compensation Plans and Amendment No. 1 to the Transaction Agreement dated the
date hereof, the Company has created new incentive compensation and deferred
compensation arrangements for certain employees of the Company;
WHEREAS, the Members have agreed to restructure the put/call options in the
Agreement and to make certain other changes to the provisions of the Agreement
as more fully described herein; and
WHEREAS, the Members desire to amend the Agreement in the manner set forth
below;
NOW, THEREFORE, in consideration of the foregoing and the agreements
herein contained, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS. (a) All capitalized terms used herein,
unless otherwise defined herein, shall have the meanings given them in the
Agreement, and each reference in the Agreement to "this Agreement", "hereof",
"herein", "hereunder" or "hereby" and each other similar reference shall be
deemed to refer to the Agreement as amended hereby. All references to the
Agreement in any other agreement between or among any of the parties hereto
relating to the transactions contemplated by the Agreement shall be deemed to
refer to the Agreement as amended hereby.
(b) Section 1.01(c) is hereby amended by adding the following terms and
their corresponding section references: "Aggregate Residual Reference
Percentage, section 9.03(a)"; "Cursitor Alliance Revenues, section 9.03(a)";
"Base Price, section 9.03(a)"; "Section 9.01(c) Buyout Price, section 9.03(b)";
and "Section 9.01(c) Put, section 9.01(c)"; and by deleting the following terms
and their corresponding section references: "First Offer Business, section
6.13"; "Section 9.01(c)(i) Buyout Price, section 9.03(b)"; "Section 9.01(c)(i)
Put, section 9.01(c)"; "Section 9.01(c)(ii) Buyout Price, section 9.03(b)"; and
"Section 9.01(c)(ii) Put, section 9.01(c)".
SECTION 2. REDEMPTION OF ALLIANCE DELAWARE. (a) Subject to
satisfaction or waiver of the conditions set forth in subsection (b), as soon as
is practicable after such conditions are satisfied, the Company agrees to (i)
transfer to Alliance Delaware, free and clear of all Liens, all of its right,
title and interest in, to and under the International Shares and (ii) pay to
Alliance Delaware (or in the case of any deficit, Alliance Delaware agrees to
pay to the Company), in cash, the excess (or deficit, if applicable) of Alliance
Delaware's Capital Account (after giving effect to all allocations and
distributions through December 31, 1996) over the initial balance thereof as
adjusted pursuant to the Transaction Agreement. The date on which such transfer
occurs shall be referred to as the "Redemption Date." Alliance agrees to offer
employment on the Redemption Date to all employees of the Company and its
subsidiaries (other than those employees whose employment
2
is terminated by the Company or who voluntarily terminate employment between the
date hereof and the Redemption Date) except those employees listed on Schedule
2A hereto.
(b) The obligation of the parties to consummate the transactions
contemplated by subsection (a) is subject to the parties having made all
requisite notifications and filings and received all consents, authorizations or
approvals (or the expiration of applicable waiting periods) from the applicable
governmental body, agency or official, in each case in form and substance
reasonably satisfactory to the parties, and no such notification, filing,
consent, authorization or approval shall have been revoked including, without
limitation, (i) notification and clearance by IMRO of the changes of control in
Cursitor Alliance Management Limited (formerly known as Alliance Capital
Limited) and Dimensional Asset Management Limited contemplated by this Agreement
in accordance with Chapter IV of the IMRO Rules and Part VII of the Investment
Services Regulations 1995, if applicable; (ii) any necessary filings with The
Monetary Authority of Singapore; and (iii) any necessary filings with the
Ministry of Finance of Japan.
(c) Upon consummation of the transactions contemplated by subsection (a),
Alliance Delaware shall cease to be a member of the Company (without prejudice
to any vested rights as of such date) and its Capital Account shall be reduced
to zero. Thereafter, the definitions of "Member" and "Alliance Members" shall
not include Alliance Delaware. Notwithstanding the foregoing, the Company shall
not be dissolved by reason of the foregoing and the Other Members agree that the
business of the Company shall continue in accordance with the terms of the
Agreement as amended hereby.
SECTION 3. UNANIMOUS VOTE. The Agreement is hereby amended by deleting
Section 6.04 in its entirety.
SECTION 4. OFFICERS. Section 6.10(a) of the Agreement is hereby
amended and restated in its entirety as follows:
"6.10. OFFICERS. (a) The officers of the Company (the "OFFICERS") shall
be selected by the Members and shall consist of a Chairman, a Vice Chairman, a
Chief Executive Officer and such other officers, if any, as are contemplated
herein or as the Members may determine are necessary or appropriate. Subject to
Section 6.01 and subject to the matters which are to be the exclusive
responsibility of Alliance under the Third Services Agreement, the day-to-day
conduct, ordinary-course decisions and operations of the business of the Company
and its subsidiaries shall generally be managed by the Officers, and the
Chairman shall have such powers as are usually exercised by comparably
designated officers of a Delaware corporation, including power and authority
with respect to such matters as the development,
3
maintenance and change of investment management policies and fee structures, the
hiring, promotion, firing and compensation (excluding incentive compensation) of
staff, management and executive personnel, new product development, sales and
marketing policies and implementation and decisions to accept, reject, amend,
maintain or terminate client relationships; PROVIDED that, (i) decisions not in
the ordinary course, including without limitation matters involving incentive
compensation, non-cash benefit programs and budgets shall require the approval
of the Members; (ii) the powers and authorities listed above shall be exercised
by the Chairman and other Officers within the constraints of the then applicable
Annual Operating Plan approved by the Members; (iii) the Chairman and the other
Officers shall execute their duties and responsibilities with due regard for the
fact that the Company is a subsidiary of Alliance and accordingly all of the
Officers and employees of the Company are to report, directly or indirectly, to
senior management of Alliance and are to operate as part of the Alliance group;
and (iv) the Chairman shall report to the Chief Executive Officer of Alliance.
The Officers may be appointed and removed by a majority vote of the Members
with or without cause and the duties and responsibilities of the Officers as set
forth in this Section may be changed from time to time by the Members."
SECTION 5. RIGHT OF FIRST OFFER. The Agreement is hereby amended by
deleting Section 6.13 in its entirety.
SECTION 6. PUT/CALL OPTIONS. Section 9.01(c) of the Agreement is
hereby amended and restated in its entirety as follows:
"(c) In the event that at any time commencing with the Closing Date and
prior to the fifth anniversary of the Closing Date (i) the employment by the
Company of Mr. Hugh M. Eaton III is terminated by the Company without Cause (as
such term is defined in Mr. Eaton's Employment Agreement), as a result of action
by Alliance without the written consent of Holdings L.P., and (ii) any Principal
other than Mr. Eaton elects to terminate his employment pursuant to Section
5(e)(c) of the applicable Employment Agreement, then Holdings L.P. may cause
Alliance to purchase, and Alliance agrees to purchase (the "SECTION 9.01(c)
PUT", and together with the Section 9.01(b) Put, the "PUTS"), that percentage of
Holdings L.P.'s Interest which is set forth in Schedule 9.01(c) next to the name
of such Principal (with respect to each such Principal, the "REFERENCE
PERCENTAGE") whose employment by the Company is terminated as described above,
and Holdings L.P. shall provide written notice to the other Members to the
effect that it is electing to exercise its Section 9.01(c) Put within 30 days of
the occurrence of such event.
4
SECTION 7. BUYOUT DATE. Section 9.02 of the Agreement is hereby amended
and restated in its entirety as follows:
"9.02. BUYOUT DATE. The Section 9.01(b) Put, or the Section 9.01(b) Call,
as the case may be, shall close, subject to any applicable waiting period in
respect of any applicable regulatory requirements, on the first business day
which is at least 30 days after the receipt by Alliance, in the case of the Put,
or Holdings L.P., in the case of the Call, of the calculation by Holdings L.P.
or Alliance, as the case may be, of the Buyout Price or such earlier closing
date as is agreed to in writing by Alliance and Holdings L.P. unless the
non-exercising Member shall deliver a notice of dispute pursuant to Section 9.06
hereof in which case the Section 9.01(b) Put or the Section 9.01(b) Call shall
close on the first business day which is at least 30 days after final resolution
of such dispute by the Accounting Referee. Subject to any applicable waiting
period in respect of any applicable regulatory requirements, the Section 9.01(c)
Put and the Section 9.01(d) Call shall close on such date as is agreed to in
writing by Alliance and Holdings L.P. but in no event later than 60 days after
the receipt by Holdings L.P. (in the case of a Call) or Alliance (in the case of
a Put) of written notice of such election. The date of Closing of the Puts or
the Calls is referred to herein as the "BUYOUT DATE". Each Member shall
cooperate in good faith with respect to any applicable regulatory requirements
and shall use its best efforts to make all applicable regulatory filings within
30 days after receipt of written notice of such election.
SECTION 8. BUYOUT PRICE. Section 9.03 of the Agreement is hereby
amended and restated in its entirety as follows:
"9.03 BUYOUT PRICE. (a) The purchase price for the Section 9.01(b)
Put and the Section 9.01(b) Call (the "SECTION 9.01(b) BUYOUT PRICE") shall be
determined in accordance with the following formula:
Section 9.01(b) = Base Price x Aggregate Residual Reference Percentage
Buyout Price
"Base Price" shall equal the figure in Schedule 9.03 corresponding to the
Cursitor Alliance Revenues. "Cursitor Alliance Revenues" shall mean the sum of
(i) the aggregate revenues (excluding performance fees) of the Company with
respect to calendar year 2000 from the provision of investment advisory services
to clients of the Company (other than those clients that as of the Buyout Date
have terminated their investment advisory relationship with the Company or that
have notified the Company (orally or in writing) of their intention to terminate
that relationship) determined on an accrual basis in accordance with generally
accepted accounting principles consistent with past practices (but excluding any
such accrued revenues which are not paid prior to the date notice of exercise of
the
5
Section 9.01(b) Put or Section 9.01(b) Call is given as provided in Section
9.01(b)); and (ii) the aggregate performance fees with respect to the four
calendar years 1997, 1998, 1999 and 2000 divided by four, calculated on a cash
basis but otherwise in accordance with generally accepted accounting principles
consistent with past practices; PROVIDED that, Cursitor Alliance Revenues shall
not include fees or subadvisory fees (or any portion thereof) which ultimately
inure to the benefit of Trust Company of the West or any other third party.
"Aggregate Residual Reference Percentage" shall mean the difference between
100% and the sum of the Reference Percentages under all prior Section 9.01(c)
Puts, if any.
(b) The purchase price for a Section 9.01(c) Put (the "SECTION
9.01(c) BUYOUT PRICE") shall be determined in accordance with the following
formula:
n
Section 9.01(c) = $37,000,000 DIVIDED BY (1.10) x Reference Percentage
Buyout Price
Where "n" = the number of twelve-month periods (including any fraction
thereof) from the date on which the applicable Put is exercised to the fifth
anniversary of the Closing Date.
(c) The purchase price for the Section 9.01(d) Call (the "SECTION
9.01(d) BUYOUT PRICE" and together with the Section 9.01(b) Buyout Price and the
Section 9.01(c) Buyout Price, the "BUYOUT PRICE") shall be determined in
accordance with the following formula:
Section 9.01(d) = $37,000,000 x Aggregate Residual Reference Percentage
Buyout Price DIVIDED BY (1.10)nth power
Where "n" = the number of twelve-month periods (including any fraction
thereof) from the date on which the Section 9.01(d) Call is exercised to the
fifth anniversary of the Closing Date."
6
SECTION 9. SCHEDULE 2.10. Effective as of January 1, 1997, Schedule
2.01 of the Agreement is hereby amended and restated in its entirety as follows:
Schedule 2.01
Members
------
Percentage
Name and Address Interest
- ---------------- ----------
Alliance Capital Management L.P. 93.00
1345 Avenue of the Americas
New York, New York 10105
Telephone: 212-969-1000
Cursitor Holdings, L.P. 7.00
38 Newbury Street
Boston, Massachusetts
02116-3210 ------
TOTAL 100%
SECTION 10. SCHEDULE 6.10. Schedule 6.10 of the Agreement is hereby
amended and restated in its entirety as follows:
Schedule 6.10
Initial Officers Position
---------------- --------
Hugh M. Eaton III Chairman and Chief
Executive Officer
SECTION 11. SCHEDULE 9.01(c). Schedule 9.01(c) of the Agreement is
hereby amended and restated in its entirety as follows:
Reference
Principal Percentage
--------- ----------
Eaton 27.597
Gave 24.242
Ricciardi 24.243
Auboyneau 23.918
7
SECTION 12. SCHEDULE 9.03. Schedule 9.03 of the Agreement is hereby
amended and restated in its entirety as follows:
Schedule 9.03
BUY-OUT PRICE
Cursitor Alliance Revenues Base Price
-------------------------- ----------
$ 0 - $34,190,774 $10,000,000
34,190,775 - 35,123,199 11,000,000
35,123,200 - 36,072,424 12,000,000
36,072,425 - 37,038,599 13,000,000
37,038,600 - 38,021,874 14,000,000
38,021,875 - 39,022,399 15,000,000
39,022,400 - 40,040,324 16,000,000
40,040,325 - 41,075,799 17,000,000
41,075,800 - 42,128,994 18,000,000
42,128,995 - 43,199,999 19,000,000
43,200,000 - 44,289,024 20,000,000
44,289,025 - 45,396,199 21,000,000
45,396,200 - 46,521,674 22,000,000
46,521,675 - 47,665,599 23,000,000
47,665,600 - 48,828,124 24,000,000
48,828,125 - 50,009,399 25,000,000
50,009,400 - 51,209,574 26,000,000
51,209,575 - 52,428,799 27,000,000
52,428,800 - 53,667,224 28,000,000
53,667,225 - 54,924,999 29,000,000
54,925,000 - 56,202,274 30,000,000
56,202,275 - 57,499,199 31,000,000
57,499,200 - 58,815,924 32,000,000
58,815,925 - 60,152,599 33,000,000
60,152,600 - 61,509,374 34,000,000
61,509,375 - 62,886,399 35,000,000
62,886,400 - 64,283,824 36,000,000
64,283,825 - or greater 37,000,000
SECTION 13. GOVERNING LAW. This Amendment shall be construed in
accordance with and governed by the law of the State of Delaware without giving
effect to the principles of conflicts of laws thereof.
8
SECTION 14. COUNTERPARTS; EFFECTIVENESS. This Amendment may be signed in
any number of counterparts, each of which shall be deemed an original. This
Amendment shall become effective when each party shall have received a
counterpart thereof signed by each of the other parties.
SECTION 15. SURVIVAL OF AGREEMENT. Except as amended hereby, the terms of
the Agreement shall remain in full force and effect and the business of the
Company shall be continued.
9
IN WITNESS WHEREOF, the parties to this Amendment have caused this
Amendment to be duly executed and delivered by their duly authorized officers or
representatives as of the day and year first written above.
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management Corporation,
its General Partner
By: /s/ David R. Brewer, Jr.
------------------------------------------
Name: David R. Brewer, Jr.
Title: Senior Vice President, General
Counsel & Secretary
ALLIANCE CAPITAL MANAGEMENT
CORPORATION OF DELAWARE
By: /s/ Robert H. Joseph, Jr.
------------------------------------------
Name: Robert H. Joseph, Jr.
Title: Director
CURSITOR HOLDINGS, L.P.
By: HMESLP, Inc. as
General Partner
By: /s/ Hugh M. Eaton, III
------------------------------------------
Name: Hugh M. Eaton, III
Title: President
MANAGEMENT HOLDINGS LLC
Successor in interest to Cursitor Holdings, L.P.
By: /s/ Hugh M. Eaton, III
------------------------------------------
Manager: Hugh M. Eaton, III
CURSITOR ALLIANCE LLC
By: /s/ Richard I. Morris, Jr.
------------------------------------------
Name: Richard I. Morris, Jr.
10
Title: Vice Chairman
11
Schedule 2A
ALLIANCE CAPITAL MANAGEMENT L.P.
CURSITOR EMPLOYEES
Nicholas P. Carn
Charles Gave
John S. Ricciardi
Francois Brunault
David Cooke
Linda Fonseca
Susi Kennedy
Paritosh Patel
Onder Tanik
Louise Vandyck
Alison Whittock
Eric Auboyneau
Francoise Le Garreres
Francine Loustalan
Claude Lureau
Eric Pages
Marc De Scitivaux
Marc Barbara
Anne E. Bullinger
J. Christian Sorensen
Barbara A. Brown
Hugh M. Eaton