UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
x
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ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the Fiscal Year Ended December 31,
2008
OR
¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the transition period
from to
Commission file number
001-09818
A
lliance
B
ernstein
H
olding
l
.p
.
(Exact name of registrant as specified
in its charter)
Delaware
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13-3434400
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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1345
Avenue of the Americas, New York, N.Y.
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10105
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s telephone number,
including area code:
(212)
969-1000
Securities registered pursuant to
Section 12(b) of the Act:
Title
of Class
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Name
of each exchange on which registered
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units
representing assignments of beneficial ownership of limited partnership
interests
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New
York Stock
Exchange
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Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes
x
No
¨
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes
¨
No
x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes
x
No
¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of
the Act. (Check one):
Large
accelerated filer
x
Accelerated
filer
¨
Non-accelerated
filer
¨
Smaller
reporting company
¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes
¨
No
x
The
aggregate market value of the units representing assignments of beneficial
ownership of limited partnership interests held by non-affiliates computed by
reference to the price at which such units were last sold on the New York Stock
Exchange as of June 30, 2008 was approximately $4.544 million.
The
number of units representing assignments of beneficial ownership of limited
partnership interests outstanding as of February 2, 2009 was 91,910,013. (This
figure includes 100,000 units of general partnership interest having economic
interests equivalent to the economic interests of the units representing
assignments of beneficial ownership of limited partnership
interests.)
DOCUMENTS
INCORPORATED BY REFERENCE
This Form
10-K does not incorporate any document by reference.
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ii
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Part
I
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Item
1.
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1
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1
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2
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5
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5
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6
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6
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7
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15
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15
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15
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16
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17
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17
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19
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19
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Item
1A.
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20
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Item
1B.
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26
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Item
2.
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27
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Item
3.
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28
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Item
4.
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29
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Part
II
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Item
5.
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30
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Item
6.
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32
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32
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33
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Item
7.
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34
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34
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35
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37
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Item
7A.
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51
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51
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51
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Item
8.
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53
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53
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64
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Item
9.
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97
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Item
9A.
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98
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Item
9B.
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99
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Part
III
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Item
10.
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100
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Item
11.
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108
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Item
12.
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122
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Item
13.
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126
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Item
14.
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129
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Part
IV
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Item
15.
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130
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132
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“AllianceBernstein”
–
AllianceBernstein L.P. (Delaware limited partnership formerly known as Alliance
Capital Management L.P.,
“Alliance Capital”
), the
operating partnership, and its subsidiaries and, where appropriate, its
predecessors, Holding and ACMC, Inc. and their respective
subsidiaries.
“AllianceBernstein
Investments”
– AllianceBernstein Investments, Inc. (Delaware
corporation), a wholly-owned subsidiary of AllianceBernstein that services
retail clients and distributes company-sponsored mutual funds.
“AllianceBernstein Partnership
Agreement”
– the Amended and Restated Agreement of Limited Partnership of
AllianceBernstein, dated as of October 29, 1999 and as amended February 24,
2006.
“AllianceBernstein Units”
–
units of limited partnership interest in AllianceBernstein.
“AUM”
– assets under
management for clients.
“AXA”
– AXA (
société anonyme
organized
under the laws of France), the holding company for an international group of
insurance and related financial services companies engaged in the financial
protection and wealth management businesses.
“AXA Equitable”
– AXA
Equitable Life Insurance Company (New York stock life insurance company), an
indirect wholly-owned subsidiary of AXA Financial, and its subsidiaries other
than AllianceBernstein and its subsidiaries.
“AXA Financial”
– AXA
Financial, Inc. (Delaware corporation), a wholly-owned subsidiary of
AXA.
“Bernstein GWM”
– Bernstein
Global Wealth Management, a unit of AllianceBernstein that services private
clients.
“Bernstein Transaction”
– on
October 2, 2000, AllianceBernstein’s acquisition of the business and assets of
SCB Inc., formerly known as Sanford C. Bernstein Inc. (“Bernstein”), and
assumption of the liabilities of the Bernstein business.
“Exchange Act”
– the
Securities Exchange Act of 1934, as amended.
“ERISA”
– the Employee
Retirement Income Security Act of 1974, as amended.
“General Partner”
–
AllianceBernstein Corporation (Delaware corporation), the general partner of
AllianceBernstein and Holding and a wholly-owned subsidiary of AXA Equitable,
and, where appropriate, ACMC, Inc., its predecessor.
“Holding”
– AllianceBernstein
Holding L.P. (Delaware limited partnership).
“Holding Partnership
Agreement”
– the Amended and Restated Agreement of Limited Partnership of
Holding, dated as of October 29, 1999 and as amended February 24,
2006.
“Holding Units”
– units
representing assignments of beneficial ownership of limited partnership
interests in Holding.
“Investment Advisers Act”
–
the Investment Advisers Act of 1940, as amended.
“Investment Company Act”
– the
Investment Company Act of 1940, as amended.
“NYSE”
– the New York Stock
Exchange, Inc.
“Partnerships”
–
AllianceBernstein and Holding together.
“SCB”
– SCB LLC and SCBL
together.
“SCB LLC”
– Sanford C.
Bernstein & Co., LLC (Delaware limited liability company), a wholly-owned
subsidiary of AllianceBernstein that provides institutional research services in
the United States.
“SCBL”
– Sanford C. Bernstein
Limited (U.K. company), a wholly-owned subsidiary of AllianceBernstein that
provides institutional research services primarily in Europe.
“SEC”
– the United States
Securities and Exchange Commission.
“Securities Act”
– the
Securities Act of 1933, as amended.
The words
“we” and “our” in this Form 10-K refer collectively to Holding and
AllianceBernstein, or to their officers and employees. Similarly, the words
“company” and “firm” refer to both Holding and AllianceBernstein. Where the
context requires distinguishing between Holding and AllianceBernstein, we
identify which of them is being discussed. Cross-references are in
italics.
We use
“global” in this Form 10-K to refer to all nations, including the United States;
we use “international” or “non-U.S.” to refer to nations other than the United
States.
We use
“emerging markets” in this Form 10-K to refer to countries considered to be
developing countries by the international financial community and countries
included in the MSCI emerging markets index. As of February 2, 2009, examples of
such countries are Argentina, Brazil, Chile, Columbia, Czech Republic, Egypt,
Hungary, India, Indonesia, Israel, Jordan, Malaysia, Mexico, Pakistan, the
People’s Republic of China, Peru, the Philippines, Poland, Russia, South Africa,
South Korea, Taiwan, Thailand and Turkey.
We use
the term “hedge funds” in this Form 10-K to refer to private investment
partnerships we sponsor that invest in various alternative strategies such as
leverage, short selling of securities and utilizing forward contracts, currency
options and other derivatives.
2008
Overview
The
collapse of the U.S. sub-prime mortgage market in the second half of 2007
triggered in 2008 dramatic capital market losses and financial sector
dislocation that led to the loss of tens of trillions of dollars of wealth and
severely impaired the business dynamics of our industry and our firm. Equity
returns across the capital markets were sharply negative in 2008, declining 20%
or more in the fourth quarter. The S&P 500, down 22.6% for the
fourth quarter and 38.5% for the year (excluding reinvested dividends), posted
its worst quarter since the fourth quarter of 1987 and its worst year since
1931. There was little discrimination across styles or geographies in
2008, as the Russell 1000 Value and Russell 1000 Growth indices declined 36.8%
and 38.4% for the year, respectively, and global equities declined more than 40%
for the year. 2008 was the worst year for the MSCI EAFE Index (down
43.4%) since its inception in 1969, while the MSCI World and MSCI Emerging
Markets indices fell 40.7% and 53.3%, respectively.
Within
the capital markets, we have recently seen some signs of improving credit
conditions, as stronger corporate credits have been able to access capital
markets, credit spreads have tightened slightly, and liquidity has improved in
some areas. At the same time, however, economic conditions continue
to deteriorate; housing, credit, employment, GDP levels and retail sales all
continue to show significant weakness. Furthermore, the balance sheets of the
world’s largest banks continue to be under acute financial stress and lending
activities remain sporadic.
Governments
and central banks around the globe are focused on creating demand for goods and
services and stimulating credit. Historically, when governmental
stimulus efforts take hold they produce increased lending
activity. Of course, the timing of any recovery will depend
significantly on when and how government stimulus funds are spent.
At
AllianceBernstein, the financial crisis had a significant adverse effect on our
business in 2008. Our assets under management have declined 42.3% from $800.4
billion at December 31, 2007 to $462.0 billion at December 31,
2008. This decline in assets under management, as well as market
losses on our deferred compensation plan-related investments, were the primary
factors producing a 22.3% decline in net revenues and a 33.4% decline in net
income during 2008. Our unit price declined 72.4%, from $75.25 at the
end of 2007 to $20.79 at the end of 2008.
Change
in Leadership
On
December 19, 2008, the Board of Directors (“Board”) of the General Partner named
Peter S. Kraus Chairman of the Board of the General Partner and Chief Executive
Officer (“CEO”) of the General Partner, AllianceBernstein and
Holding. Mr. Kraus replaced Lewis A. Sanders, former Chairman of the
Board of the General Partner and CEO of the General Partner, AllianceBernstein
and Holding, who announced his retirement on December 19, 2008.
For
additional information about Mr. Kraus,
see “Directors and Executive
Officers” in Item 10 and “Compensation Discussion and Analysis (“CD&A”)” in
Item 11
.
Clients
AllianceBernstein
provides research, diversified investment management and related services
globally to a broad range of clients, including:
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•
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institutional
clients, including unaffiliated corporate and public employee pension
funds, endowment funds, domestic and foreign institutions and governments,
and various affiliates;
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•
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private
clients, including high-net-worth individuals, trusts and estates,
charitable foundations, partnerships, private and family corporations, and
other entities; and
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•
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institutional
investors seeking independent research and related
services.
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We also
provide distribution, shareholder servicing, and administrative services to our
sponsored mutual funds.
Our
primary objective is to have more investment knowledge and to use it better than
our competitors to help our clients achieve their investment goals and financial
peace of mind.
Research
Our
high-quality, in-depth, fundamental research is the foundation of our business.
We believe that our global team of research professionals gives us a competitive
advantage in achieving investment success for our clients.
Our
research disciplines include fundamental research, quantitative research,
economic research, and currency forecasting capabilities. In addition, we have
created several specialized research units, including one unit that examines
global strategic changes that can affect multiple industries and geographies,
and another dedicated to identifying potentially successful innovations within
early-stage companies.
Products
and Services
We offer
a broad range of investment products and services to our clients:
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•
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To
our institutional clients, we offer separately managed accounts,
sub-advisory relationships, structured products, collective investment
trusts, mutual funds, hedge funds and other investment vehicles
(“Institutional Investment
Services”);
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•
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To
our retail clients, we offer retail mutual funds sponsored by
AllianceBernstein, our subsidiaries and our affiliated joint venture
companies, sub-advisory relationships with mutual funds sponsored by third
parties, separately managed account programs sponsored by various
financial intermediaries worldwide (“Separately Managed Account Programs”)
and other investment vehicles (collectively, “Retail
Services”);
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•
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To
our private clients, we offer diversified investment management services
through separately managed accounts, hedge funds, mutual funds and other
investment vehicles (“Private Client Services”);
and
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•
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To
institutional investors, we offer independent research, portfolio strategy
and brokerage-related services (“Institutional Research
Services”).
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These
services are provided by a group of investment professionals with significant
expertise in their respective disciplines (
see “Employees” in this Item
1
). Our buy-side research analysts, who are located around the world,
support our portfolio managers. Together, they oversee a number of different
types of investment services within various vehicles (
discussed above
) and
strategies (
discussed
below
). Our sell-side research analysts provide the foundation for our
Institutional Research Services.
Our
services include:
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Value
equities, generally targeting stocks that are out of favor and that may
trade at bargain prices;
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Growth
equities, generally targeting stocks with under-appreciated growth
potential;
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Fixed
income securities, including both taxable and tax-exempt
securities;
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Blend
strategies, combining style-pure investment components with systematic
rebalancing;
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Passive
management, including both index and enhanced index
strategies;
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Alternative
investments, such as hedge funds, currency management strategies and
venture capital; and
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Asset
allocation services, by which we offer specifically-tailored investment
solutions for our clients (e.g., customized target-date fund retirement
services for institutional defined contribution plan
clients).
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We manage
these services using various investment disciplines, including market
capitalization (e.g., large-, mid- and small-cap equities), term (e.g., long-,
intermediate- and short-duration debt securities), and geographic location
(e.g., U.S., international, global and emerging markets), as well as local and
regional disciplines in major markets around the world.
Blend
strategies are a key component of our product line. As of December 31, 2008,
blend AUM was $85 billion (representing 18% of our company-wide AUM), a decrease
of 52% from $175 billion as of December 31, 2007 and 37% from $134 billion as of
December 31, 2006.
We market
and distribute alternative investment products (which include hedge funds,
venture capital and currency management strategies) globally to high-net-worth
clients and, more recently, to institutional investors. Alternative product AUM
totaled $6.6 billion as of December 31, 2008, $3.3 billion of which was private
client AUM (primarily hedge funds) and $3.3 billion of which was institutional
AUM (primarily currency services). Our hedge fund AUM constitutes only a small
portion of our company-wide AUM, but can have a disproportionately large effect
on our revenues because of the performance-based fees we may be eligible to
earn. For additional information about these fees,
see “Revenues” in this Item 1, “Risk
Factors” in Item 1A,
and
“Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in Item
7
.
Sub-advisory
client mandates span our investment strategies, including growth, value, fixed
income and blend. We serve as sub-adviser for retail mutual funds, insurance
products, retirement platforms and institutional investment
products.
In
addition, in August 2008, we created a new initiative called
AllianceBernstein Defined Contribution Investments (“ABDC”) focused on
expanding our firm’s capabilities in the defined contribution (“DC”) market.
ABDC seeks to provide the most effective DC investment solutions in the industry
as measured by product features, reliability, cost and flexibility to meet
specialized client needs by integrating research and investment design, product
strategy, strategic partnerships (
e.g.,
record-keeper
partnerships and operations collaboration), and client implementation and
service. As of December 31, 2008, our DC assets under management,
which are spread across our three distribution channels, totaled $18.2 billion
and our pipeline of won but unfunded DC mandates was $3.5 billion.
Global
Reach
We serve
clients in major global markets through operations in 47 cities in 25 countries.
Our client base includes investors throughout the Americas, Europe, Asia, Africa
and Australia. We utilize an integrated global investment platform that provides
our clients with access to local (country-specific), international, and global
research and investment strategies.
Assets
under management by client domicile and investment service as of December 31,
2008, 2007 and 2006 were as follows:
By
Client Domicile ($ in billions):
By
Investment Service ($ in billions):
Our
international client base decreased by 43% during 2008 and increased 23% during
2007. Our global and international AUM decreased by 47% during 2008
and increased 27% during 2007. In addition, approximately 76%, 80% and 76% of
our gross asset inflows (sales / new accounts) during 2008, 2007 and 2006,
respectively, were invested in global and international investment services. The
shift in AUM mix towards U.S. assets and away from Global / International
assets, which is the opposite of the trend we had been experiencing in the last
few years, is due to investment performance and
currency fluctuations.
Revenues
We earn
revenues primarily by charging fees for managing the investment assets of, and
providing research to, our clients.
We
generally calculate investment advisory fees as a percentage of the value of AUM
at a specific point in time or as a percentage of the value of average AUM for
the applicable billing period, with these fees varying by type of investment
service, size of account, and total amount of assets we manage for a particular
client. Accordingly, fee income generally increases or decreases as AUM
increases or decreases. Increases in AUM generally result from market
appreciation, positive investment performance for clients, or net asset inflows
from new and existing clients. Similarly, decreases in AUM generally result from
market depreciation, negative investment performance for clients, or net asset
outflows due to client redemptions, account terminations, or asset
withdrawals.
We are
eligible to earn performance-based fees on hedge fund services, as well as some
long-only services for our institutional clients. In these situations, we charge
a base advisory fee and are eligible to earn an additional performance-based fee
or incentive allocation that is calculated as either a percentage of absolute
investment results or a percentage of investment results in excess of a stated
benchmark over a specified period of time. In addition, some performance-based
fees include a high-watermark provision, which generally provides that if a
client account underperforms relative to its performance target (whether
absolute or relative to a specified benchmark), it must gain back such
underperformance before we can collect future performance-based fees. Therefore,
if we underperform our performance target for a particular period, we will not
earn a performance-based fee for that period and, for accounts with a
high-watermark provision, we will impair our ability to earn future
performance-based fees. If the percentage of our AUM subject to
performance-based fees grows, seasonality and volatility of revenue and earnings
are likely to become more significant. Our performance-based fees in 2008 were
$13.4 million, in 2007 were $81.2 million and in 2006 were $235.7 million. For
additional information about performance-based fees,
see “Risk Factors” in Item 1A
and
“Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in
Item 7
.
We
sometimes experience periods when the number of new accounts or the amount of
AUM increases or decreases significantly. These shifts result from wide-ranging
factors, including conditions of financial markets, our investment performance
for clients and changes in our clients’ investment preferences.
We earn
revenues from clients to whom we provide fundamental research and
brokerage-related services generally in the form of transaction fees calculated
as either “cents per share” or a percentage of the value of the securities
traded for these clients.
Our
revenues may fluctuate for a number of reasons;
see “Risk Factors” in Item 1A
and
“Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in
Item 7
.
Employees
During
the fourth quarter of 2008, we reduced headcount and announced our intention to
reduce capital outlays in 2009 in order to lower our expense base in light of
declines in assets under management and net revenues. As a result of this
workforce reduction, headcount was 4,997 as of December 31, 2008, compared to a
high of 5,660 (reflecting an 11.7% reduction) as of September 30, 2008, and
5,580 (reflecting a 10.4% reduction) as of December 31, 2007.
Our
firm’s 4,997 full-time employees, who are located in 25 countries, include 325
research analysts, 171 portfolio managers, 44 traders and 31 professionals with
other investment-related responsibilities. We have employed these professionals
for an average period of approximately eight years, and their average investment
experience is approximately 16 years. We consider our employee relations to be
good.
We serve
our institutional clients primarily through AllianceBernstein Institutional
Investments (“Institutional Investments”), a unit of AllianceBernstein, and
through other units in our international subsidiaries and one of our joint
ventures (institutional relationships of less than $25 million are generally
serviced by Bernstein GWM, our Private Client channel,
discussed below
).
Institutional Investment Services include actively managed equity accounts
(including growth, value, and blend accounts), fixed income accounts, and
balanced accounts (which combine equity and fixed income), as well as passive
management of index and enhanced index accounts. These services are provided
through separately managed accounts, sub-advisory relationships, structured
products, collective investment trusts, mutual funds, and other investment
vehicles. As of December 31, 2008, institutional AUM was $291 billion, or 63% of
our company-wide AUM. For more information concerning institutional AUM,
revenues and fees,
see “Assets
Under Management, Revenues and Fees” in this Item 1
.
Our
institutional client base includes unaffiliated corporate and public employee
pension funds, endowment funds, domestic and foreign institutions and
governments, and certain of our affiliates (AXA and its subsidiaries), as well
as certain sub-advisory relationships with unaffiliated sponsors of various
other investment products. We manage approximately 2,329 mandates for these
clients, which are located in 46 countries. As of December 31, 2008, we managed
employee benefit plan assets for
49 of the Fortune 100
companies, and we managed public pension fund assets for 38
states and /or
municipalities in those states.
As of
December 31, 2008, our institutional AUM invested in global and international
investment services was $180 billion, or 62% of institutional AUM, as compared
to $341 billion, or 67% of institutional AUM, as of December 31, 2007 and $270
billion, or 59% of institutional AUM, as of December 31, 2006. As of December
31, 2008, the AUM we invested for clients domiciled outside the United States
was $152 billion, or 52% of institutional AUM, as compared to $269 billion, or
53% of institutional AUM, as of December 31, 2007 and $214 billion, or 47% of
institutional AUM, as of December 31, 2006.
We
provide investment management and related services to a wide variety of
individual retail investors, both in the U.S. and internationally, through
retail mutual funds sponsored by our company, our subsidiaries and affiliated
joint venture companies; mutual fund sub-advisory relationships; Separately
Managed Account Programs; and other investment vehicles (“Retail Products and
Services”). As of December 31, 2008, retail AUM was $102 billion, or 22% of our
company-wide AUM. For more information concerning retail AUM, revenues and fees,
see “Assets Under Management,
Revenues and Fees” in this Item 1
.
Our
Retail Products and Services are designed to provide disciplined, research-based
investments that contribute to a well-diversified investment portfolio. We
distribute these products and services through financial intermediaries,
including broker-dealers, insurance sales representatives, banks, registered
investment advisers, and financial planners.
As of
December 31, 2008, our retail AUM invested in global and international
investment services was $61 billion, or 60% of retail AUM, as compared to $110
billion, or 60% of retail AUM, as of December 31, 2007 and $86 billion, or 52%
of retail AUM, as of December 31, 2006. As of December 31, 2008, the AUM we
invested for clients domiciled outside the U.S. was $25 billion, or 24% of
retail AUM, as compared to $44 billion, or 24% of retail AUM, as of December 31,
2007 and $40 billion, or 24% of retail AUM, as of December 31,
2006.
Our
Retail Products and Services include open-end and closed-end funds that are
either (i) registered as investment companies under the Investment Company Act
(“U.S. Funds”), or (ii) not registered under the Investment Company Act and
generally not offered to United States persons (“Non-U.S. Funds” and
collectively with the U.S. Funds, “AllianceBernstein Funds”). They provide a
broad range of investment options, including local and global growth equities,
value equities, blend strategies and fixed income securities. They also include
Separately Managed Account Programs, which are sponsored by financial
intermediaries and generally charge an all-inclusive fee covering investment
management, trade execution, asset allocation, and custodial and administrative
services. We also provide distribution, shareholder servicing, and
administrative services for our Retail Products and Services.
Our U.S.
Funds, which include retail funds, our variable products series fund (a
component of an insurance product) and the Sanford C. Bernstein Funds
(principally Private Client Services products), currently offer 106 different
portfolios to U.S. investors. As of December 31, 2008, retail U.S. Funds AUM was
approximately $39 billion, or 38% of total retail AUM. Because of the way they
are marketed and serviced, we report substantially all of the AUM in the Sanford
C. Bernstein Funds (“SCB Funds”), which totaled $21 billion as of December 31,
2008, as private client AUM.
Our
Non-U.S. Funds are distributed internationally by local financial intermediaries
to non-U.S. investors by means of distribution agreements in most major
international markets. As of December 31, 2008, these funds consisted
of 67 different portfolios and AUM in these funds was $11 billion. We
also offer local-market funds that we distribute in Japan through financial
intermediaries. As of December 31, 2008, retail AUM in these funds
was $2 billion.
AllianceBernstein
Investments serves as the principal underwriter and distributor of the U.S.
Funds. AllianceBernstein Investments employs approximately 130 sales
representatives who devote their time exclusively to promoting the sale of U.S.
Funds and certain other Retail Products and Services by financial
intermediaries.
AllianceBernstein
(Luxembourg) S.A. (“AllianceBernstein Luxembourg”), a Luxembourg management
company and one of our wholly-owned subsidiaries, generally serves as the
placing or distribution agent for the Non-U.S. Funds. AllianceBernstein
Luxembourg employs approximately 66 sales representatives who devote their time
exclusively to promoting the sale of Non-U.S. Funds and other Retail Products
and Services by financial intermediaries.
Bernstein
GWM combines the former private client services group of Bernstein, which has
served private clients for more than 40 years, and the former private client
group of Alliance Capital. As of December 31, 2008, private client AUM was $69
billion, or 15% of our company-wide AUM. For more information concerning private
client AUM, revenues and fees,
see “Assets Under Management,
Revenues and Fees” in this Item 1
.
Through
Bernstein GWM, we provide Private Client Services to high-net-worth individuals,
trusts and estates, charitable foundations, partnerships, private and family
corporations, and other entities by means of separately managed accounts, hedge
funds, mutual funds and other investment vehicles. We target investors with
financial assets of $1 million or more, although we have a minimum opening
account size of $500,000.
Our
Private Client Services are built on a sales effort that involves
299 financial advisors.
These advisors do not manage money, but work with private clients and their tax,
legal, and other advisors to assist clients in determining a suitable mix of
U.S. and non-U.S. equity securities and fixed income investments. The
diversified portfolio created for each client is intended to maximize after-tax
investment returns, in light of the client’s individual investment goals, income
requirements, risk tolerance, tax situation, and other relevant factors. In
creating these portfolios, we utilize all of our resources, including research
reports, investment planning services, and our Wealth Management Group, which
has in-depth knowledge of trust, estate and tax planning
strategies.
Our financial advisors are based
in
18 cities in the U.S.: New York City,
Atlanta, Boston, Chicago, Cleveland, Dallas, Denver, Houston, Los Angeles,
Miami, Minneapolis, Philadelphia, San Diego, San Francisco, Seattle, Tampa,
Washington, D.C. and West Palm Beach. We also have financial advisors based in
London, England. As part of our reduction in force (for additional information,
see
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in Item 7
), we
reduced our financial advisor staff by 9% in 2008. However, we kept
both the best and highest potential professionals that service our private
clients and we intend to begin hiring new financial advisors in
2009.
As of
December 31, 2008, our private client AUM invested in global and international
investment services was $18 billion, or 26% of private client AUM, as compared
to $38 billion, or 35% of private client AUM, as of December 31, 2007 and $29
billion, or 30% of private client AUM, as of December 31, 2006.
Institutional
Research Services (“IRS”) consist of fundamental research, quantitative services
and brokerage-related services provided to institutional investors such as
pension fund, hedge fund and mutual fund managers, and other institutional
investors. Brokerage-related services are provided by SCB LLC in the United
States and SCBL primarily in Europe. For more information concerning the
revenues we derive from IRS,
see “Assets Under Management,
Revenues and Fees” in this Item 1
.
SCB
provides fundamental company and industry research along with disciplined
research into securities valuation and factors affecting stock-price movements.
Our analysts are consistently among the highest ranked research analysts in
industry surveys conducted by third-party organizations.
Assets
Under Management,
Revenues and Fees
The
following tables summarize our AUM and revenues by distribution
channel:
Assets Under
Management
(1)
|
|
December
31,
|
|
|
%
Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional
Investment Services
|
|
$
|
291,361
|
|
|
$
|
508,081
|
|
|
$
|
455,095
|
|
|
|
(42.7
|
)%
|
|
|
11.6
|
%
|
Retail
Services
|
|
|
101,643
|
|
|
|
183,165
|
|
|
|
166,928
|
|
|
|
(44.5
|
)
|
|
|
9.7
|
|
Private
Client Services
|
|
|
68,947
|
|
|
|
109,144
|
|
|
|
94,898
|
|
|
|
(36.8
|
)
|
|
|
15.0
|
|
Total
|
|
$
|
461,951
|
|
|
$
|
800,390
|
|
|
$
|
716,921
|
|
|
|
(42.3
|
)
|
|
|
11.6
|
|
|
Excludes
certain non-discretionary client
relationships.
|
Revenues
|
|
Years Ended December
31,
|
|
|
% Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional
Investment Services
|
|
$
|
1,240,636
|
|
|
$
|
1,481,885
|
|
|
$
|
1,221,780
|
|
|
|
(16.3
|
)%
|
|
|
21.3
|
%
|
Retail
Services
|
|
|
1,227,538
|
|
|
|
1,521,201
|
|
|
|
1,303,849
|
|
|
|
(19.3
|
)
|
|
|
16.7
|
|
Private
Client Services
|
|
|
849,830
|
|
|
|
960,669
|
|
|
|
882,881
|
|
|
|
(11.5
|
)
|
|
|
8.8
|
|
Institutional
Research Services
|
|
|
471,716
|
|
|
|
423,553
|
|
|
|
375,075
|
|
|
|
11.4
|
|
|
|
12.9
|
|
Other
(1)
|
|
|
(239,037
|
)
|
|
|
332,441
|
|
|
|
354,655
|
|
|
|
n/m
|
|
|
|
(6.3
|
)
|
Total
Revenues
|
|
|
3,550,683
|
|
|
|
4,719,749
|
|
|
|
4,138,240
|
|
|
|
(24.8
|
)
|
|
|
14.1
|
|
Less:
Interest Expense
|
|
|
36,524
|
|
|
|
194,432
|
|
|
|
187,833
|
|
|
|
(81.2
|
)
|
|
|
3.5
|
|
Net
Revenues
|
|
$
|
3,514,159
|
|
|
$
|
4,525,317
|
|
|
$
|
3,950,407
|
|
|
|
(22.3
|
)
|
|
|
14.6
|
|
|
Other
revenues primarily consist of dividend and interest income, investment
gains (losses) and shareholder servicing fees. For additional information,
see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
in Item 7
.
|
AXA and
its subsidiaries, whose AUM consists primarily of fixed income investments,
together constitute our largest client. Our affiliates represented approximately
20%, 15% and 17% of our company-wide AUM as of December 31, 2008, 2007 and 2006,
respectively. We also earned approximately 5% of our company-wide net revenues
from our affiliates for each of 2008, 2007 and 2006. We manage this AUM as part
of our Institutional Investment Services and our Retail Services.
Institutional
Investment Services
The
following tables summarize our Institutional Investment Services AUM and
revenues:
Institutional
Investment Services Assets Under Management
(1)
(by
Investment Service)
|
|
December
31,
|
|
|
% Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
22,598
|
|
|
$
|
49,235
|
|
|
$
|
55,562
|
|
|
|
(54.1
|
)%
|
|
|
(11.4
|
)%
|
Global
and International
|
|
|
84,787
|
|
|
|
192,472
|
|
|
|
158,572
|
|
|
|
(55.9
|
)
|
|
|
21.4
|
|
|
|
|
107,385
|
|
|
|
241,707
|
|
|
|
214,134
|
|
|
|
(55.6
|
)
|
|
|
12.9
|
|
Growth
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
16,075
|
|
|
|
31,908
|
|
|
|
36,668
|
|
|
|
(49.6
|
)
|
|
|
(13.0
|
)
|
Global
and International
|
|
|
38,034
|
|
|
|
88,691
|
|
|
|
66,242
|
|
|
|
(57.1
|
)
|
|
|
33.9
|
|
|
|
|
54,109
|
|
|
|
120,599
|
|
|
|
102,910
|
|
|
|
(55.1
|
)
|
|
|
17.2
|
|
Fixed
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
66,151
|
|
|
|
73,240
|
|
|
|
73,414
|
|
|
|
(9.7
|
)
|
|
|
(0.2
|
)
|
Global
and International
|
|
|
51,043
|
|
|
|
53,978
|
|
|
|
39,166
|
|
|
|
(5.4
|
)
|
|
|
37.8
|
|
|
|
|
117,194
|
|
|
|
127,218
|
|
|
|
112,580
|
|
|
|
(7.9
|
)
|
|
|
13.0
|
|
Other
(2)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
6,617
|
|
|
|
12,426
|
|
|
|
19,942
|
|
|
|
(46.7
|
)
|
|
|
(37.7
|
)
|
Global
and International
|
|
|
6,056
|
|
|
|
6,131
|
|
|
|
5,529
|
|
|
|
(1.2
|
)
|
|
|
10.9
|
|
|
|
|
12,673
|
|
|
|
18,557
|
|
|
|
25,471
|
|
|
|
(31.7
|
)
|
|
|
(27.1
|
)
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
111,441
|
|
|
|
166,809
|
|
|
|
185,586
|
|
|
|
(33.2
|
)
|
|
|
(10.1
|
)
|
Global
and International
|
|
|
179,920
|
|
|
|
341,272
|
|
|
|
269,509
|
|
|
|
(47.3
|
)
|
|
|
26.6
|
|
Total
|
|
$
|
291,361
|
|
|
$
|
508,081
|
|
|
$
|
455,095
|
|
|
|
(42.7
|
)
|
|
|
11.6
|
|
|
Excludes
certain non-discretionary client
relationships.
|
|
Includes
index, structured and asset allocation
services.
|
Revenues
from Institutional Investment Services
(by
Investment Service)
|
|
Years Ended
December 31,
|
|
|
%
Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Investment
Advisory and Services Fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
108,921
|
|
|
$
|
153,747
|
|
|
$
|
154,163
|
|
|
|
(29.2
|
)%
|
|
|
(0.3
|
)%
|
Global
and International
|
|
|
607,431
|
|
|
|
747,957
|
|
|
|
570,185
|
|
|
|
(18.8
|
)
|
|
|
31.2
|
|
|
|
|
716,352
|
|
|
|
901,704
|
|
|
|
724,348
|
|
|
|
(20.6
|
)
|
|
|
24.5
|
|
Growth
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
70,119
|
|
|
|
108,691
|
|
|
|
122,132
|
|
|
|
(35.5
|
)
|
|
|
(11.0
|
)
|
Global
and International
|
|
|
276,676
|
|
|
|
311,727
|
|
|
|
226,293
|
|
|
|
(11.2
|
)
|
|
|
37.8
|
|
|
|
|
346,795
|
|
|
|
420,418
|
|
|
|
348,425
|
|
|
|
(17.5
|
)
|
|
|
20.7
|
|
Fixed
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
85,333
|
|
|
|
91,144
|
|
|
|
97,452
|
|
|
|
(6.4
|
)
|
|
|
(6.5
|
)
|
Global
and International
|
|
|
78,197
|
|
|
|
54,021
|
|
|
|
38,825
|
|
|
|
44.8
|
|
|
|
39.1
|
|
|
|
|
163,530
|
|
|
|
145,165
|
|
|
|
136,277
|
|
|
|
12.7
|
|
|
|
6.5
|
|
Other
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
2,883
|
|
|
|
4,441
|
|
|
|
4,993
|
|
|
|
(35.1
|
)
|
|
|
(11.1
|
)
|
Global
and International
|
|
|
11,076
|
|
|
|
9,865
|
|
|
|
7,177
|
|
|
|
12.3
|
|
|
|
37.5
|
|
|
|
|
13,959
|
|
|
|
14,306
|
|
|
|
12,170
|
|
|
|
(2.4
|
)
|
|
|
17.6
|
|
Total
Investment Advisory and Services Fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
267,256
|
|
|
|
358,023
|
|
|
|
378,740
|
|
|
|
(25.4
|
)
|
|
|
(5.5
|
)
|
Global
and International
|
|
|
973,380
|
|
|
|
1,123,570
|
|
|
|
842,480
|
|
|
|
(13.4
|
)
|
|
|
33.4
|
|
|
|
|
1,240,636
|
|
|
|
1,481,593
|
|
|
|
1,221,220
|
|
|
|
(16.3
|
)
|
|
|
21.3
|
|
Distribution
Revenues
|
|
|
—
|
|
|
|
292
|
|
|
|
560
|
|
|
|
(100.0
|
)
|
|
|
(47.9
|
)
|
Total
|
|
$
|
1,240,636
|
|
|
$
|
1,481,885
|
|
|
$
|
1,221,780
|
|
|
|
(16.3
|
)
|
|
|
21.3
|
|
|
Includes
index, structured and asset allocation
services.
|
As of
December 31, 2008, 2007 and 2006, Institutional Investment Services represented
approximately 63% of our company-wide AUM. The fees we earned from these
services represented approximately 35%, 33% and 31% of our company-wide net
revenues for 2008, 2007 and 2006, respectively.
We manage
assets for AXA and its subsidiaries, which together constitute our largest
institutional client. These assets accounted for approximately 16%, 16% and 17%
of our total institutional AUM as of December 31, 2008, 2007 and 2006,
respectively, and approximately 8%, 7% and 7% of our total institutional
revenues for 2008, 2007 and 2006, respectively.
The
institutional AUM we manage for our affiliates, along with our nine other
largest institutional accounts, accounts for approximately 36% of our total
institutional AUM as of December 31, 2008 and approximately 16% of our total
institutional revenues for the year ended December 31, 2008. No single
institutional client other than AXA and its subsidiaries accounted for more than
approximately 1% of our company-wide net revenues for the year ended December
31, 2008.
We manage
the assets of our institutional clients through written investment management
agreements or other arrangements, all of which are generally terminable at any
time or upon relatively short notice by either party. In general, our written
investment management agreements may not be assigned without client
consent.
We are
compensated principally on the basis of investment advisory fees calculated as a
percentage of assets under management. The percentage we charge varies with the
type of investment service, the size of the account, and the total amount of
assets we manage for a particular client.
We are
eligible to earn performance-based fees on approximately 14% of institutional
assets under management, which are primarily invested in long-only equity and
fixed income services rather than hedge funds. Performance-based fees provide
for a relatively low asset-based fee plus an additional fee based on investment
performance. For additional information about performance-based fees,
see “General—Revenues” in this Item
1
and “
Risk
Factors
”
in
Item 1A
.
Retail
Services
The
following tables summarize our Retail Services AUM and revenues:
Retail
Services Assets Under Management
(by
Investment Service)
|
|
December
31,
|
|
|
%
Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
Value
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
12,086
|
|
|
$
|
33,488
|
|
|
$
|
35,749
|
|
|
|
(63.9
|
)%
|
|
|
(6.3
|
)%
|
Global
and International
|
|
|
28,053
|
|
|
|
56,560
|
|
|
|
38,797
|
|
|
|
(50.4
|
)
|
|
|
45.8
|
|
|
|
|
40,139
|
|
|
|
90,048
|
|
|
|
74,546
|
|
|
|
(55.4
|
)
|
|
|
20.8
|
|
Growth
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
8,494
|
|
|
|
24,637
|
|
|
|
28,587
|
|
|
|
(65.5
|
)
|
|
|
(13.8
|
)
|
Global
and International
|
|
|
11,544
|
|
|
|
23,530
|
|
|
|
19,937
|
|
|
|
(50.9
|
)
|
|
|
18.0
|
|
|
|
|
20,038
|
|
|
|
48,167
|
|
|
|
48,524
|
|
|
|
(58.4
|
)
|
|
|
(0.7
|
)
|
Fixed
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
9,857
|
|
|
|
10,627
|
|
|
|
11,420
|
|
|
|
(7.2
|
)
|
|
|
(6.9
|
)
|
Global
and International
|
|
|
20,178
|
|
|
|
29,855
|
|
|
|
27,614
|
|
|
|
(32.4
|
)
|
|
|
8.1
|
|
|
|
|
30,035
|
|
|
|
40,482
|
|
|
|
39,034
|
|
|
|
(25.8
|
)
|
|
|
3.7
|
|
Other
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
9,851
|
|
|
|
4,468
|
|
|
|
4,824
|
|
|
|
120.5
|
|
|
|
(7.4
|
)
|
Global
and International
|
|
|
1,580
|
|
|
|
—
|
|
|
|
—
|
|
|
|
n/m
|
|
|
|
—
|
|
|
|
|
11,431
|
|
|
|
4,468
|
|
|
|
4,824
|
|
|
|
155.8
|
|
|
|
(7.4
|
)
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
40,288
|
|
|
|
73,220
|
|
|
|
80,580
|
|
|
|
(45.0
|
)
|
|
|
(9.1
|
)
|
Global
and International
|
|
|
61,355
|
|
|
|
109,945
|
|
|
|
86,348
|
|
|
|
(44.2
|
)
|
|
|
27.3
|
|
Total
|
|
$
|
101,643
|
|
|
$
|
183,165
|
|
|
$
|
166,928
|
|
|
|
(44.5
|
)
|
|
|
9.7
|
|
|
Includes
index, structured and asset allocation
services.
|
Revenues
from Retail Services
(by
Investment Service)
|
|
Years Ended
December 31,
|
|
|
%
Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
Advisory and Services Fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
88,394
|
|
|
$
|
129,125
|
|
|
$
|
123,355
|
|
|
|
(31.5
|
)%
|
|
|
4.7
|
%
|
Global
and International
|
|
|
216,561
|
|
|
|
262,369
|
|
|
|
133,314
|
|
|
|
(17.5
|
)
|
|
|
96.8
|
|
|
|
|
304,955
|
|
|
|
391,494
|
|
|
|
256,669
|
|
|
|
(22.1
|
)
|
|
|
52.5
|
|
Growth
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
84,651
|
|
|
|
119,880
|
|
|
|
143,344
|
|
|
|
(29.4
|
)
|
|
|
(16.4
|
)
|
Global
and International
|
|
|
130,247
|
|
|
|
168,817
|
|
|
|
152,883
|
|
|
|
(22.8
|
)
|
|
|
10.4
|
|
|
|
|
214,898
|
|
|
|
288,697
|
|
|
|
296,227
|
|
|
|
(25.6
|
)
|
|
|
(2.5
|
)
|
Fixed
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
30,888
|
|
|
|
39,644
|
|
|
|
43,705
|
|
|
|
(22.1
|
)
|
|
|
(9.3
|
)
|
Global
and International
|
|
|
195,373
|
|
|
|
224,335
|
|
|
|
186,196
|
|
|
|
(12.9
|
)
|
|
|
20.5
|
|
|
|
|
226,261
|
|
|
|
263,979
|
|
|
|
229,901
|
|
|
|
(14.3
|
)
|
|
|
14.8
|
|
Other
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
3,702
|
|
|
|
1,868
|
|
|
|
1,673
|
|
|
|
98.2
|
|
|
|
11.7
|
|
Global
and International
|
|
|
1,297
|
|
|
|
—
|
|
|
|
3,363
|
|
|
|
n/m
|
|
|
|
(100.0
|
)
|
|
|
|
4,999
|
|
|
|
1,868
|
|
|
|
5,036
|
|
|
|
167.6
|
|
|
|
(62.9
|
)
|
Total
Investment Advisory and Services Fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
207,635
|
|
|
|
290,517
|
|
|
|
312,077
|
|
|
|
(28.5
|
)
|
|
|
(6.9
|
)
|
Global
and International
|
|
|
543,478
|
|
|
|
655,521
|
|
|
|
475,756
|
|
|
|
(17.1
|
)
|
|
|
37.8
|
|
|
|
|
751,113
|
|
|
|
946,038
|
|
|
|
787,833
|
|
|
|
(20.6
|
)
|
|
|
20.1
|
|
Distribution
Revenues
(2)
|
|
|
376,372
|
|
|
|
471,031
|
|
|
|
418,780
|
|
|
|
(20.1
|
)
|
|
|
12.5
|
|
Shareholder
Servicing Fees
(2)
|
|
|
100,053
|
|
|
|
104,132
|
|
|
|
97,236
|
|
|
|
(3.9
|
)
|
|
|
7.1
|
|
Total
|
|
$
|
1,227,538
|
|
|
$
|
1,521,201
|
|
|
$
|
1,303,849
|
|
|
|
(19.3
|
)
|
|
|
16.7
|
|
|
Includes
index, structured and asset allocation
services.
|
|
For
a description of distribution revenues and shareholder servicing fees,
see
below
.
|
Investment
advisory fees and distribution fees for our Retail Products and Services are
generally charged as a percentage of average daily AUM. In the past, as certain
of the U.S. Funds grew, we revised our fee schedules to provide lower
incremental fees above certain asset levels. Fees paid by the U.S. Funds, EQ
Advisors Trust (“EQAT”), AXA Enterprise Multimanager Funds Trust (“AXA
Enterprise Trust”) and AXA Premier VIP Trust are reflected in the applicable
investment management agreement, which generally must be approved annually by
the boards of directors or trustees of those funds, including by a majority of
the independent directors or trustees. Increases in these fees must be approved
by fund shareholders; decreases need not be, including any decreases implemented
by a fund’s directors or trustees. In general, each investment management
agreement with the AllianceBernstein Funds, EQAT, AXA Enterprise Trust and AXA
Premier VIP Trust provides for termination by either party
at any time upon 60
days’ notice.
Fees paid
by Non-U.S. Funds are reflected in investment management agreements that
continue until they are terminated. Increases in these fees must generally be
approved by the relevant regulatory authority depending on the domicile and
structure of the fund, and Non-U.S. Fund shareholders must be given advance
notice of any fee increases.
Revenues
from Retail Services represented approximately 35%, 34% and 33% of our
company-wide net revenues for the years ended December 31, 2008, 2007 and 2006,
respectively.
Our
Retail Products and Services include open-end mutual funds designed to fund
benefits under variable annuity contracts and variable life insurance policies
offered by life insurance companies (“Variable Product Series Fund”). We manage
the AllianceBernstein Variable Products Series Fund, Inc., which serves as the
investment vehicle for insurance products offered by unaffiliated insurance
companies, and we sub-advise variable product mutual funds sponsored by
affiliates. As of December 31, 2008, we managed or sub-advised approximately $28
billion of Variable Product Series Fund AUM.
The
mutual funds we sub-advise for AXA and its subsidiaries together constitute our
largest retail client. They accounted for approximately 21%, 22% and 24% of our
total retail AUM as of December 31, 2008, 2007 and 2006, respectively, and
approximately 7% of our total retail revenues for each of 2008, 2007 and
2006.
Our
mutual fund distribution system (the “System”) includes a multi-class share
structure that permits open-end AllianceBernstein Funds to offer investors
various options for the purchase of mutual fund shares, including both front-end
load shares and back-end load shares. For front-end load shares,
AllianceBernstein Investments generally pays sales commissions to financial
intermediaries distributing the funds from the front-end sales charge it
receives from investors at the time of the sale. For back-end load shares,
AllianceBernstein Investments pays sales commissions to financial intermediaries
at the time of sale and also receives higher ongoing distribution services fees
from the mutual funds. In addition, investors who redeem back-end load shares
before the expiration of the minimum holding period (which ranges from one year
to four years) pay a contingent deferred sales charge (“CDSC”) to
AllianceBernstein Investments. We expect to recover sales commissions for
back-end load shares over periods not exceeding five and one-half years through
receipt of a CDSC and/or the higher ongoing distribution services fees we
receive from holders of back-end load shares. Payments of sales commissions made
to financial intermediaries in connection with the sale of back-end load shares
under the System, net of CDSC received of $33.7 million, $31.1 million and $23.7
million, totaled approximately $9.1 million, $84.1 million and $98.7 million
during 2008, 2007 and 2006, respectively. Effective January 31, 2009,
back-end load shares are no longer offered to new investors in U.S.
Funds.
The rules
of the Financial Industry Regulatory Authority, Inc. (“FINRA”), the successor to
the National Association of Securities Dealers, Inc., effectively cap the
aggregate sales charges that may be received from each U.S. Fund by
AllianceBernstein Investments. The cap is 6.25% of cumulative gross sales (plus
interest at the prime rate plus 1% per annum) in each share class of the
open-end U.S. Funds.
Most
open-end U.S. Funds have adopted a plan under Rule 12b-1 of the Investment
Company Act that allows the fund to pay, out of assets of the fund, distribution
and service fees for the distribution and sale of its shares (“Rule 12b-1
Fees”). The open-end AllianceBernstein Funds have entered into agreements with
AllianceBernstein Investments under which they pay a distribution services fee
to AllianceBernstein Investments. AllianceBernstein Investments has entered into
selling and distribution agreements pursuant to which it pays sales commissions
to the financial intermediaries that distribute our open-end U.S. Funds. These
agreements are terminable by either party upon notice (generally 30 days) and do
not obligate the financial intermediary to sell any specific amount of fund
shares.
In
addition to Rule 12b-1 Fees, AllianceBernstein Investments, at its own expense,
currently provides additional payments under distribution services and
educational support agreements to firms that sell shares of our funds, a
practice sometimes referred to as revenue sharing. Although the amount of
payments made to each qualifying firm in any given year may vary, the total
amount paid to a financial intermediary in connection with the sale of shares of
U.S. Funds will generally not exceed the sum of (i) 0.25% of the current year’s
fund sales by that firm, and (ii) 0.10% of average daily net assets attributable
to that firm over the course of the year. These sums may result from a financial
intermediary including our funds on its list of preferred funds or may be
otherwise associated with the financial intermediary’s marketing and other
support activities, such as client education meetings and training efforts
relating to our funds.
Financial
intermediaries and record keepers that provide accounting or record-keeping
services with respect to their customers’ investments in AllianceBernstein Funds
may receive specified payments from these funds or from affiliates of
AllianceBernstein, including AllianceBernstein Investor Services, Inc. (one of
our wholly-owned subsidiaries, “AllianceBernstein Investor Services”) and
AllianceBernstein Investments.
During
2008, the 10 financial intermediaries responsible for the largest volume of
sales of open-end AllianceBernstein Funds were responsible for 43% of such
sales. AXA Advisors, LLC (“AXA Advisors”), a wholly-owned subsidiary of AXA
Financial that utilizes members of AXA Equitable’s insurance sales force as its
registered representatives, was responsible for approximately 4%, 2% and 2% of
total sales of shares of open-end AllianceBernstein Funds in 2008, 2007 and
2006, respectively. AXA Advisors is under no obligation to sell a specific
amount of AllianceBernstein Fund shares and also sells shares of mutual funds
sponsored by other affiliates and unaffiliated organizations.
Merrill
Lynch & Co., Inc. (and its subsidiaries, “Merrill Lynch”), which has been
acquired by Bank of America Corporation, was responsible for approximately 8%,
7% and 6% of open-end AllianceBernstein Fund sales in 2008, 2007 and 2006,
respectively. Citigroup Inc. (and its subsidiaries, “Citigroup”) was responsible
for approximately 7%, 7% and 5% of open-end AllianceBernstein Fund sales in
2008, 2007 and 2006, respectively. Neither Merrill Lynch nor Citigroup is under
any obligation to sell a specific amount of AllianceBernstein Fund shares and
each also sells shares of mutual funds that it sponsors and that are sponsored
by unaffiliated organizations.
No dealer
or agent has in any of the last three years accounted for more than 10% of total
sales of shares of our open-end AllianceBernstein Funds.
Based on
industry sales data reported by the Investment Company Institute, our market
share in the U.S. mutual fund industry is 1.2% of total industry assets and we
accounted for 0.1% of total open-end industry sales (and 0.3% of non-proprietary
manager sales) in the U.S. during 2008. The investment performance of the U.S.
Funds is an important factor in the sale of their shares, but there are also
other factors, including the level and quality of shareholder services (
see below
) and the amounts
and types of distribution assistance and administrative services payments made
to financial intermediaries. We believe that our compensation programs with
financial intermediaries are competitive with others in the
industry.
Each of
the U.S. Funds appointed an independent compliance officer reporting to the
board of directors of each U.S. Fund. The expense of this officer and his staff
is borne by AllianceBernstein.
AllianceBernstein
Investor Services provides transfer agency and related services for each
open-end U.S. Fund and provides shareholder servicing for each open-end U.S.
Fund’s shareholder accounts (approximately 4.0 million accounts in total).
(Transfer agency and related services are provided to the SCB Funds primarily by
Boston Financial Data Services.) AllianceBernstein Investor Services operates in
San Antonio, Texas and it receives a monthly fee under each of its servicing
agreements with the open-end U.S. Funds based on the number and type of
shareholder accounts serviced. Each servicing agreement must be approved
annually by the relevant open-end U.S. Fund’s board of directors or trustees,
including a majority of the independent directors or trustees, and may be
terminated by either party without penalty upon 60 days’ notice.
AllianceBernstein
Funds utilize our personnel to perform most legal, clerical and accounting
services. Payments to us by the U.S. Funds and certain Non-U.S. Funds for these
services must be specifically approved in advance by each fund’s board of
directors or trustees. Currently, AllianceBernstein Investor Services records
revenues for providing these services to the AllianceBernstein Funds at the rate
of approximately $7 million per year.
A unit of
AllianceBernstein Luxembourg (“ABIS Lux”) is the transfer agent for
substantially all of the Non-U.S. Funds. ABIS Lux, which bases its operations in
Luxembourg and is supported by operations in Singapore, Hong Kong and the United
States, receives a monthly fee for its transfer agency services and a
transaction-based fee under various services agreements with the Non-U.S. Funds
for which it provides these services. Each agreement may be terminated by either
party upon 60 days’ notice.
Private Client Services
The
following tables summarize Private Client Services AUM and
revenues:
Private
Client Services Assets Under Management
(by
Investment Service)
|
|
December
31,
|
|
|
%
Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
Value
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
13,254
|
|
|
$
|
25,259
|
|
|
$
|
27,703
|
|
|
|
(47.5
|
)%
|
|
|
(8.8
|
)%
|
Global
and International
|
|
|
11,627
|
|
|
|
25,497
|
|
|
|
19,091
|
|
|
|
(54.4
|
)
|
|
|
33.6
|
|
|
|
|
24,881
|
|
|
|
50,756
|
|
|
|
46,794
|
|
|
|
(51.0
|
)
|
|
|
8.5
|
|
Growth
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
8,425
|
|
|
|
16,004
|
|
|
|
13,237
|
|
|
|
(47.4
|
)
|
|
|
20.9
|
|
Global
and International
|
|
|
5,709
|
|
|
|
12,175
|
|
|
|
9,418
|
|
|
|
(53.1
|
)
|
|
|
29.3
|
|
|
|
|
14,134
|
|
|
|
28,179
|
|
|
|
22,655
|
|
|
|
(49.8
|
)
|
|
|
24.4
|
|
Fixed
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
29,287
|
|
|
|
29,498
|
|
|
|
25,032
|
|
|
|
(0.7
|
)
|
|
|
17.8
|
|
Global
and International
|
|
|
606
|
|
|
|
676
|
|
|
|
328
|
|
|
|
(10.4
|
)
|
|
|
106.1
|
|
|
|
|
29,893
|
|
|
|
30,174
|
|
|
|
25,360
|
|
|
|
(0.9
|
)
|
|
|
19.0
|
|
Other
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
21
|
|
|
|
25
|
|
|
|
80
|
|
|
|
(16.0
|
)
|
|
|
(68.8
|
)
|
Global
and International
|
|
|
18
|
|
|
|
10
|
|
|
|
9
|
|
|
|
80.0
|
|
|
|
11.1
|
|
|
|
|
39
|
|
|
|
35
|
|
|
|
89
|
|
|
|
11.4
|
|
|
|
(60.7
|
)
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
50,987
|
|
|
|
70,786
|
|
|
|
66,052
|
|
|
|
(28.0
|
)
|
|
|
7.2
|
|
Global
and International
|
|
|
17,960
|
|
|
|
38,358
|
|
|
|
28,846
|
|
|
|
(53.2
|
)
|
|
|
33.0
|
|
Total
|
|
$
|
68,947
|
|
|
$
|
109,144
|
|
|
$
|
94,898
|
|
|
|
(36.8
|
)
|
|
|
15.0
|
|
|
Includes
index, structured and asset allocation
services.
|
Revenues
from Private Client Services
(by
Investment Service)
|
|
Years Ended
December 31,
|
|
|
%
Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Investment
Advisory and Services Fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
270,346
|
|
|
$
|
322,366
|
|
|
$
|
293,281
|
|
|
|
(16.1
|
)%
|
|
|
9.9
|
%
|
Global
and International
|
|
|
181,665
|
|
|
|
233,964
|
|
|
|
260,529
|
|
|
|
(22.4
|
)
|
|
|
(10.2
|
)
|
|
|
|
452,011
|
|
|
|
556,330
|
|
|
|
553,810
|
|
|
|
(18.8
|
)
|
|
|
0.5
|
|
Growth
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
162,770
|
|
|
|
164,547
|
|
|
|
134,070
|
|
|
|
(1.1
|
)
|
|
|
22.7
|
|
Global
and International
|
|
|
98,409
|
|
|
|
113,379
|
|
|
|
83,615
|
|
|
|
(13.2
|
)
|
|
|
35.6
|
|
|
|
|
261,179
|
|
|
|
277,926
|
|
|
|
217,685
|
|
|
|
(6.0
|
)
|
|
|
27.7
|
|
Fixed
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
132,195
|
|
|
|
121,872
|
|
|
|
108,418
|
|
|
|
8.5
|
|
|
|
12.4
|
|
Global
and International
|
|
|
2,334
|
|
|
|
2,315
|
|
|
|
1,188
|
|
|
|
0.8
|
|
|
|
94.9
|
|
|
|
|
134,529
|
|
|
|
124,187
|
|
|
|
109,606
|
|
|
|
8.3
|
|
|
|
13.3
|
|
Other
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
15
|
|
|
|
23
|
|
|
|
75
|
|
|
|
(34.8
|
)
|
|
|
(69.3
|
)
|
Global
and International
|
|
|
43
|
|
|
|
91
|
|
|
|
—
|
|
|
|
(52.7
|
)
|
|
|
—
|
|
|
|
|
58
|
|
|
|
114
|
|
|
|
75
|
|
|
|
(49.1
|
)
|
|
|
52.0
|
|
Total
Investment Advisory and Services Fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
565,326
|
|
|
|
608,808
|
|
|
|
535,844
|
|
|
|
(7.1
|
)
|
|
|
13.6
|
|
Global
and International
|
|
|
282,451
|
|
|
|
349,749
|
|
|
|
345,332
|
|
|
|
(19.2
|
)
|
|
|
1.3
|
|
|
|
|
847,777
|
|
|
|
958,557
|
|
|
|
881,176
|
|
|
|
(11.6
|
)
|
|
|
8.8
|
|
Distribution
Revenues
|
|
|
2,053
|
|
|
|
2,112
|
|
|
|
1,705
|
|
|
|
(2.8
|
)
|
|
|
23.9
|
|
Total
|
|
$
|
849,830
|
|
|
$
|
960,669
|
|
|
$
|
882,881
|
|
|
|
(11.5
|
)
|
|
|
8.8
|
|
|
Includes
index, structured and asset allocation
services.
|
Private
client accounts are managed pursuant to a written investment advisory agreement
generally among the client, AllianceBernstein and SCB LLC (sometimes between the
client and AllianceBernstein Limited, a wholly-owned subsidiary of ours
organized in the U.K.), which usually is terminable at any time or upon
relatively short notice by any party. In general, these contracts may not be
assigned without the consent of the client. We are compensated under these
contracts by fees calculated as a percentage of AUM at a specific point in time
or as a percentage of the value of average assets under management for the
applicable billing period, with these fees varying based on the type of
portfolio and the size of the account. The aggregate fees we charge for managing
hedge funds may be higher than the fees we charge for managing other assets in
private client accounts because hedge fund fees provide for performance-based
fees, incentive allocations, or carried interests in addition to asset-based
fees. We are eligible to earn performance-based fees on approximately 5% of
private client AUM, substantially all of which is held in hedge
funds.
Revenues
from Private Client Services represented approximately 24%, 21% and 22% of our
company-wide net revenues for the years ended December 31, 2008, 2007 and 2006,
respectively.
Institutional
Research Services
The
following table summarizes Institutional Research Services
revenues:
Revenues
from Institutional Research Services
|
|
Years Ended
December 31,
|
|
|
%
Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Transaction
Execution and Research:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCB
LLC
|
|
$
|
372,067
|
|
|
$
|
317,892
|
|
|
$
|
303,204
|
|
|
|
17.0
|
%
|
|
|
4.8
|
%
|
SCBL
|
|
|
99,649
|
|
|
|
105,661
|
|
|
|
71,871
|
|
|
|
(5.7
|
)
|
|
|
47.0
|
|
Total
|
|
$
|
471,716
|
|
|
$
|
423,553
|
|
|
$
|
375,075
|
|
|
|
11.4
|
|
|
|
12.9
|
|
We earn
revenues for providing investment research to, and executing brokerage
transactions for, institutional clients. These clients compensate us principally
by directing SCB to execute brokerage transactions, for which we earn
transaction charges. These services accounted for approximately 13%, 9% and 9%
of our company-wide net revenues for the years ended December 31, 2008, 2007 and
2006, respectively.
Fee rates
charged for brokerage transactions have declined significantly in recent years,
but increases in transaction volume in both the U.S. and Europe have more than
offset these decreases. For additional information,
see “Risk Factors” in Item 1A and
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in Item 7
.
Custody
SCB LLC
acts as custodian for the majority of
AllianceBernstein’s
private client AUM and some of AllianceBernstein’s institutional AUM. Other
custodial arrangements are maintained by client-designated banks, trust
companies, brokerage firms or other custodians.
Brokerage
We
generally have the discretion to select the broker-dealers that execute
securities transactions for client accounts. When selecting brokers, we are
required to obtain “best execution”. Although there is no single statutory
definition, SEC releases and other legal guidelines make clear that the duty to
obtain best execution requires us to seek “the most advantageous terms
reasonably available under the circumstances for a customer’s account”. In
addition to commission rate, we take into account such factors as current market
conditions, the broker’s financial strength, and the ability and willingness of
the broker to commit capital by taking positions in order to execute
transactions.
While we
select brokers primarily on the basis of their execution capabilities, we may
also take into consideration the quality and amount of research services a
broker provides to us for the benefit of our clients. These research services,
which are paid for with client commissions and which we purchase to augment our
own research capabilities, are governed by Section 28(e) of the Exchange Act. We
use broker-dealers that provide these services in consideration for commissions
paid for the execution of client trades, subject at all times to our duty to
seek best execution, and with respect to which we reasonably conclude, in good
faith, that the value of the execution and other services we receive from the
broker-dealer is reasonable in relation to the amount of commissions paid. The
commissions charged by these full-service brokers are generally higher than
those charged by electronic trading networks and other “low-touch” trading
venues.
We
regularly execute transactions for our private clients through SCB LLC or SCBL,
our affiliated broker-dealers, because these clients have generally subscribed
to an all-inclusive package of services that includes brokerage, custody and
investment advice. We sometimes execute institutional client transactions
through SCB LLC or SCBL. We do so only when our clients have consented to our
use of affiliated broker-dealers or we are otherwise permitted to do so, and
only when we can execute these transactions in accordance with applicable law
(
i.e.
, our obligation
to obtain best execution).
We may
use third-party brokers to effect client transactions that sell shares of
AllianceBernstein Funds or third party funds we sub-advise; however, we prohibit
our investment professionals who place trades from considering these other
relationships or the sale of fund shares as a factor when selecting brokers to
effect transactions.
Our
Brokerage Allocation Committee has principal oversight responsibility for
evaluating equity-related brokerage matters, including how to use research
services we receive in a manner that is in the best interests of our clients and
consistent with current regulatory requirements.
In
connection with our name changes to AllianceBernstein L.P. and AllianceBernstein
Holding L.P. in February 2006, we registered a number of service marks with the
U.S. Patent and Trademark Office and various foreign trademark offices,
including an “AB” design logo and the combination of such logo with the mark
“AllianceBernstein”.
In
connection with the Bernstein Transaction, we acquired all of the rights and
title in, and to, the Bernstein service marks, including the mark
“Bernstein”.
We
maintain a robust fiduciary culture and, as a fiduciary, we place the interests
of our clients first and foremost. We are committed to the fair and equitable
treatment of all our clients, and to compliance
with all applicable
rules and regulations and internal policies to which our business is subject. We
pursue these goals through education of our employees to promote awareness of
our fiduciary obligations, incentives that align employees’ interests with those
of our clients, and a range of measures, including active monitoring, to ensure
regulatory compliance. Specific steps we have taken in the past to help us
achieve these goals include:
|
•
|
revising
our code of ethics to better align the interests of our employees with
those of our clients;
|
|
•
|
forming
two committees composed primarily of executive management to oversee and
resolve code of ethics and compliance-related
issues;
|
|
•
|
creating
an ombudsman office, where employees and others can voice concerns on a
confidential basis;
|
|
•
|
initiating
firm-wide compliance and ethics training programs;
and
|
|
•
|
appointing
a Conflicts Officer and establishing a Conflicts Committee to identify and
manage conflicts of interest.
|
We
implemented these measures, in part, pursuant to the Order of the Commission
(“SEC Order”) dated December 18, 2003 (amended and restated January 15, 2004)
and the New York State Attorney General’s Assurance of Discontinuance dated
September 1, 2004 (“NYAG AoD” and, together with the SEC Order, “Orders”), which
related to trading practices in the shares of certain of our sponsored mutual
funds. In addition, the Orders required:
|
•
|
establishing
a $250 million restitution fund to compensate fund shareholders for the
adverse effects of market timing (“Restitution
Fund”);
|
|
•
|
reducing
by 20% (on a weighted average basis) the advisory fees on U.S. long-term
open-end retail mutual funds by reducing our advisory fee rates (we are
required to maintain these reduced fee rates for at least the five-year
period that commenced January 1, 2004; we have not sought to increase our
advisory fees -- an increase would generally require the approval of the
boards of directors and shareholders of our U.S. Funds -- and we do not
intend to do so); and
|
|
•
|
agreeing
to have an independent third party perform a comprehensive compliance
review biannually.
|
We
believe that our remedial actions provide reasonable assurance that the
deficiencies in our internal controls related to market timing will not occur
again.
With the
approval of the independent directors of the U.S. Fund Boards and the staff of
the SEC, we retained an Independent Distribution Consultant (“IDC”) to develop a
plan for the distribution of the Restitution Fund. The IDC’s calculations
confirmed that our initial contribution to the Restitution Fund was sufficient
to compensate for the harm to mutual fund shareholders from market timing
activities. On May 15, 2008, the SEC approved the IDC’s plan to
distribute the Restitution Fund to appropriate mutual fund
shareholders. The IDC began distributing payments from the
Restitution Fund in February 2009.
Virtually
all aspects of our business are subject to federal and state laws and
regulations, rules of securities regulators and exchanges, and laws in the
foreign countries in which our subsidiaries conduct business.
AllianceBernstein,
Holding, the General Partner, SCB LLC, AllianceBernstein Global Derivatives
Corporation (a wholly-owned subsidiary of AllianceBernstein, “Global
Derivatives”) and Alliance Corporate Finance Group Incorporated (a wholly-owned
subsidiary of AllianceBernstein) are investment advisers registered under the
Investment Advisers Act. SCB LLC and Global Derivatives are also registered with
the Commodity Futures Trading Commission as commodity pool
operators.
Each U.S.
Fund is registered with the SEC under the Investment Company Act and the shares
of most U.S. Funds are qualified for sale in all states in the United States and
the District of Columbia, except for U.S. Funds offered only to residents of a
particular state. AllianceBernstein Investor Services is registered with the SEC
as a transfer agent.
SCB LLC
and AllianceBernstein Investments are registered with the SEC as broker-dealers,
and both are members of FINRA. SCB LLC is also a member of the NYSE and all
other principal U.S. exchanges. SCBL is a broker regulated by the Financial
Services Authority of the United Kingdom (“FSA”) and is a member of the London
Stock Exchange.
AllianceBernstein
Trust Company, LLC (“ABTC”), a wholly-owned subsidiary of AllianceBernstein, is
a non-depository trust company chartered under New Hampshire law as a limited
liability company. ABTC is authorized to act as trustee, executor, transfer
agent, assignee, receiver, custodian, investment adviser, and in any other
capacity authorized for a trust company under New Hampshire law. As a
state-chartered trust company exercising fiduciary powers, ABTC must comply with
New Hampshire laws applicable to trust company operations (such as New Hampshire
Revised Statutes Annotated Part 392), certain federal laws (such as ERISA and
sections of the Bank Secrecy Act), and New Hampshire banking laws. The primary
fiduciary activities of ABTC consist of serving as trustee to a series of
collective investment funds, the investors of which currently are defined
benefit and defined contribution retirement plans.
Many of
our subsidiaries around the world are subject to minimum net capital
requirements by the local laws and regulations to which they are subject. As of
December 31, 2008, each of our subsidiaries subject to a minimum net capital
requirement satisfied the applicable requirement.
Holding
Units are listed on the NYSE and trade publicly under the ticker symbol “AB”. As
an NYSE listed company, Holding is subject to applicable regulations promulgated
by the NYSE.
Our
relationships with AXA and its subsidiaries are subject to applicable provisions
of the insurance laws and regulations of New York and other states. Under such
laws and regulations, the terms of certain investment advisory and other
agreements we enter into with AXA or its subsidiaries are required to be fair
and equitable, charges or fees for services performed must be reasonable, and,
in some cases, are subject to regulatory approval.
All
aspects of our business are subject to various federal and state laws and
regulations, rules of various securities regulators and exchanges, and laws in
the foreign countries in which our subsidiaries and joint ventures conduct
business. These laws and regulations are primarily intended to benefit clients
and fund shareholders and generally grant supervisory agencies broad
administrative powers, including the power to limit or restrict the carrying on
of business for failure to comply with such laws and regulations. In such event,
the possible sanctions that may be imposed include the suspension of individual
employees, limitations on engaging in business for specific periods, the
revocation of the registration as an investment adviser or broker-dealer,
censures and fines.
Some of
our subsidiaries are subject to the oversight of regulatory authorities in
Europe, including the FSA in the U.K., and in Asia, including the Financial
Services Agency in Japan, the Securities and Futures Commission in Hong Kong and
the Monetary Authority of Singapore. While the requirements of these foreign
regulators are often comparable to the requirements of the SEC and other U.S.
regulators, they are sometimes more restrictive and may cause us to incur
substantial expenditures of time and money in our efforts to
comply.
Holding,
having elected under Section 7704(g) of the Internal Revenue Code of 1986, as
amended (“Code”), to be subject to a 3.5% federal tax on partnership gross
income from the active conduct of a trade or business, is a “grandfathered”
publicly-traded partnership for federal income tax purposes. Holding is also
subject to the 4.0% New York City unincorporated business tax (“UBT”), net of
credits for UBT paid by AllianceBernstein. In order to preserve Holding’s status
as a “grandfathered” publicly-traded partnership for federal income tax
purposes, management ensures that Holding does not directly or indirectly
(through AllianceBernstein) enter into a substantial new line of business. A
“new line of business” would be any business that is not closely related to
AllianceBernstein’s historical business of providing research and diversified
investment management and related services to its clients. A new line of
business is “substantial” when a partnership derives more than 15% of its gross
income from, or uses more than 15% (by value) of its total assets in, the new
line of business.
AllianceBernstein
is a private partnership for federal income tax purposes and, accordingly, is
not subject to federal and state corporate income taxes. However,
AllianceBernstein is subject to the 4.0% UBT. Domestic corporate subsidiaries of
AllianceBernstein, which are subject to federal, state and local income taxes,
are generally included in the filing of a consolidated federal income tax return
with separate state and local income tax returns being filed. Foreign corporate
subsidiaries are generally subject to taxes at higher rates in the foreign
jurisdictions where they are located so, as our business increasingly operates
in countries other than the U.S., our effective tax rate continues to
increase.
For
additional information,
see
“Risk Factors” in Item 1A
.
We have
been in the investment research and management business for more than 35 years.
Alliance Capital was founded in 1971 when the investment management department
of Donaldson, Lufkin & Jenrette, Inc. (since November 2000, a part of Credit
Suisse Group) merged with the investment advisory business of Moody’s Investor
Services, Inc. Bernstein was founded in 1967.
In April
1988, Holding “went public” as a master limited partnership. Holding Units,
which trade under the ticker symbol “AB”, have been listed on the NYSE since
that time.
In
October 1999, Holding reorganized by transferring its business and assets to
AllianceBernstein, a newly-formed operating partnership, in exchange for all of
the AllianceBernstein Units (“Reorganization”). Since the date of the
Reorganization, AllianceBernstein has conducted the business formerly conducted
by Holding and Holding’s activities have consisted of owning AllianceBernstein
Units and engaging in related activities. As stated above, Holding Units trade
publicly; AllianceBernstein Units do not trade publicly and are subject to
significant restrictions on transfer. The General Partner is the general partner
of both AllianceBernstein and Holding.
In
October 2000, our two legacy firms, Alliance Capital and Bernstein, combined,
bringing together Alliance Capital’s expertise in growth equity and corporate
fixed income investing, and its family of retail mutual funds, with Bernstein’s
expertise in value equity and tax-exempt fixed income management, and its
private client and institutional research services businesses. For additional
details about our business combination,
see “Principal Security Holders” in
Item 12
.
As of
December 31, 2008, the condensed ownership structure of AllianceBernstein was as
follows (for a more complete description of our ownership structure,
see “Principal Security Holders” in
Item 12
):
|
Direct
and indirect ownership including unallocated Holding Units held in a trust
for our deferred compensation
plans.
|
As of
December 31, 2008, AXA, through certain of its subsidiaries (
see “Principal Security Holders” in
Item 12
), beneficially owned approximately 62.0% of the issued and
outstanding AllianceBernstein Units (including those held indirectly through its
ownership of approximately 1.6% of the issued and outstanding Holding
Units).
The
General Partner, an indirect wholly-owned subsidiary of AXA, owns 100,000
general partnership units in Holding and a 1% general partnership interest in
AllianceBernstein. Including the general partnership interests in Holding and
AllianceBernstein and its equity interest in Holding, AXA, through certain of
its subsidiaries, had an approximate 62.4% economic interest in
AllianceBernstein as of December 31, 2008.
On
January 6, 2009, SCB Partners, Inc. sold to AXA America Holdings, Inc. (“AXA
America Holdings”), a wholly-owned subsidiary of AXA, its remaining 8,160,000
AllianceBernstein Units pursuant to an agreement (
see Note 5 to the first table in
“Principal Security Holders” in Item 12
) entered into in connection with
the Bernstein Transaction. The beneficial ownership of AllianceBernstein Units
discussed in the table and paragraphs above do not reflect this
sale. As a result of the sale, AXA’s ownership of AllianceBernstein
Units increased from 60.8% to 63.9% while SCB Partners’ ownership decreased from
3.1% to zero. Including the general partnership interests in Holding and
AllianceBernstein and its equity interest in Holding, AXA, through certain of
its subsidiaries, had an approximate 65.4% economic interest in
AllianceBernstein immediately following the sale. For additional beneficial
ownership information reflecting the sale,
see “Principal Security Holders” in
Item 12
.
AXA and
its subsidiaries own all of the issued and outstanding shares of the common
stock of AXA Financial. AXA Financial owns all of the issued and outstanding
shares of AXA Equitable.
See
“Principal Security Holders” in Item 12
.
AXA, a
société anonyme
organized under the laws of France, is the holding company for an international
group of insurance and related financial services companies engaged in the
financial protection and wealth management businesses. AXA’s operations are
diverse geographically, with major operations in Western Europe, North America
and the Asia/Pacific regions and, to a lesser extent, in other regions including
the Middle East and Africa. AXA has five operating business segments: life and
savings, property and casualty, international insurance, asset management and
other financial services.
Competition
The
financial services industry is intensely competitive and new entrants are
continually attracted to it. No single or small group of competitors is dominant
in the industry.
We
compete in all aspects of our business with numerous investment management
firms, mutual fund sponsors, brokerage and investment banking firms, insurance
companies, banks, savings and loan associations, and other financial
institutions that often provide investment products that have similar features
and objectives as those we offer. Our competitors offer a wide range of
financial services to the same customers that we seek to serve. Some of our
competitors are larger, have a broader range of product choices and investment
capabilities, conduct business in more markets, and have substantially greater
resources than we do. These factors may place us at a competitive disadvantage,
and we can give no assurance that our strategies and efforts to maintain and
enhance our current client relationships, and create new ones, will be
successful. Furthermore, our poor relative investment performance during 2008,
and what may be diminished confidence in our services on the part of clients and
consultants alike, may make it more difficult for us to compete
effectively.
AXA and
its subsidiaries provide financial services, some of which are competitive with
those offered by AllianceBernstein. The AllianceBernstein Partnership Agreement
specifically allows AXA Financial and its subsidiaries (other than the General
Partner) to compete with AllianceBernstein and to exploit opportunities that may
be available to AllianceBernstein. AXA, AXA Financial, AXA Equitable and certain
of their respective subsidiaries have substantially greater financial resources
than we do and are not obligated to provide resources to us.
To grow
our business, we must be able to compete effectively for assets under
management. Key competitive factors include:
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our
investment performance for clients;
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our
commitment to place the interests of our clients
first;
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the
quality of our research;
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our
ability to attract, retain, and motivate highly skilled, and often highly
specialized, personnel;
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the
array of investment products we
offer;
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our
operational effectiveness;
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our
ability to further develop and market our brand;
and
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Increased
competition could reduce the demand for our products and services, and that
could have a material adverse effect on our revenues, financial condition,
results of operations and business prospects.
Competition
is an important risk that our business faces and should be considered along with
the other risk factors we discuss
in Item 1A
below
.
AllianceBernstein
and Holding file or furnish annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and other reports required to comply with
federal securities laws. The public may read and copy any materials filed with
the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC
20549, on official business days during the hours of 10:00 a.m. to 3:00 p.m. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site
(
http://www.sec.gov
)
that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC.
AllianceBernstein
and Holding maintain an Internet site (
http://www.alliancebernstein.com
).
The portion of the site at “Investor & Media Relations” and “Reports &
SEC Filings” links to both companies’ annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange
Act. These reports are available through the site free of charge as soon as
reasonably practicable after such material is filed with, or furnished to, the
SEC.
Please
read this section along with the description of our business
in Item 1
, the competition
section just above, and AllianceBernstein’s financial information
contained in Items 6, 7 and
8
. The majority of the risk factors discussed below directly affect
AllianceBernstein. These risk factors also affect Holding because Holding’s
principal source of income and cash flow is attributable to its investment in
AllianceBernstein.
See also
“Cautions Regarding Forward-Looking Statements” in Item 7
.
Changes
in financial market levels have a direct and significant impact on our assets
under management; a significant reduction in assets under management has a
material adverse effect on our revenues, financial condition, results of
operations and business prospects.
Performance
of financial markets (both domestic and international), global economic
conditions, industry trends, interest rates, inflation rates, tax regulation
changes and other factors that are difficult to predict affect the mix, market
value and level of assets under management. Investment advisory and services
fees, the largest component of revenues, are generally calculated as a
percentage of the value of assets under management and vary with the type of
account managed. Accordingly, fee income generally increases or decreases as
assets under management increase or decrease and is affected by market
appreciation or depreciation, inflow of new client assets (including purchases
of mutual fund shares) and outflow of client assets (including redemption of
mutual fund shares). In addition, changing market conditions and investment
trends, particularly with respect to retirement savings, may reduce interest in
certain of our investment products and may result in a reduction in assets under
management. In addition, a shift from equity products towards fixed income
products and passive products may result in a related decline in revenues and
income because we generally earn higher revenues from assets invested in our
equity services than in our fixed income services or passive
services. The global economic turmoil during the second half of 2008
has caused some investors to shift their focus from equities to fixed income,
passive and money market products (some of which we do not offer), and this
trend may continue or accelerate.
Significant
weakness and volatility in global credit markets, particularly the rapid
deterioration of the mortgage markets in the United States and Europe, during
the second half of 2007 and early in 2008 was followed by global economic
turmoil during the second half of 2008. These conditions have had a significant
adverse affect on our 2008 results of operations. Specifically, they adversely
affected absolute and relative performance for clients in nearly all of our
investment services. As a result, our AUM, revenues and earnings per
unit were down 42.3%, 22.3% and 33.3%, respectively, as compared to year-end
2007 totals and the amount of performance-based fees we earned in 2008 were down
83.4% (for additional information about our firm’s financial and operating
results,
see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in
Item 7
). The weakness in global financial markets has
continued thus far in 2009 and our AUM declined by $33 billion during January
2009. Our 2009 results of operations will continue to be adversely affected
should this trend continue.
Our 2008
results included two quarters during which AUM and revenues were substantially
higher than they are now. If our current level of AUM continues or
declines for most or all of 2009, our revenues and earnings will be
substantially lower in 2009 than they were in 2008.
Prolonged weakness in asset values
may result in impairment of goodwill, intangible assets and the deferred sales
commission asset.
To the
extent that securities valuations remain depressed for prolonged periods of
time and market conditions stagnate or worsen as a result of the global
financial crisis (factors that are beyond our control), our AUM, revenues,
profitability and unit price may be adversely affected. As a result, subsequent
impairment tests may be based on different assumptions and future cash flow
projections which may result in an impairment of goodwill, intangible assets and
the deferred sales commission asset. The occurrence of an impairment
would require a material charge to our earnings. For additional
information about our impairment testing,
see Item 7
.
Our
business is dependent on investment advisory, selling and distribution
agreements that are subject to termination or non-renewal on short
notice.
We derive
most of our revenues pursuant to written investment management agreements (or
other arrangements) with institutional investors, mutual funds, and private
clients, and selling and distribution agreements between AllianceBernstein
Investments and financial intermediaries that distribute AllianceBernstein
Funds. Generally, the investment management agreements (and other arrangements)
are terminable at any time or upon relatively short notice by either party. The
selling and distribution agreements are terminable by either party upon notice
(generally 30 days) and do not obligate the financial intermediary to sell any
specific amount of fund shares. In addition, investors in AllianceBernstein
Funds can redeem their investments without notice. Any termination of, or
failure to renew, a significant number of these agreements, or a significant
increase in redemption rates, could have a material adverse effect on our
revenues, financial condition, results of operations and business
prospects.
Our
ability to establish new client relationships and maintain existing ones is
partly dependent on our relationships with various financial intermediaries and
consultants that are not obligated to continue to work with us.
Our
ability to market our Retail Products and Services, sub-advisory services, and
certain other investment services is partly dependent on our access to
securities firms, brokers, banks and other intermediaries. These intermediaries
generally offer their clients investment products in addition to, and in
competition with, our products. In addition, certain institutional investors
rely on consultants to advise them on the choice of investment adviser, and our
Institutional Investment Services are not always considered among the best
choices by consultants. Also, our Private Client Services group relies on
referrals from financial planners, registered investment advisers and other
professionals. We cannot be certain that we will continue to have access to, or
receive referrals from, these third parties. Loss of such access or referrals
could have a material adverse effect on our revenues, financial condition,
results of operations and business prospects. For example, one or
more investment consultants could advise their clients to move their assets away
from us to other investment advisers, which could result in significant net
outflows. Also, the consolidation among financial intermediaries,
which occurred over the last several months and is likely to continue, will
reduce the number of intermediaries available to distribute our retail products
and is likely to increase the cost of doing business with them as consolidation
reduces competition.
Our
aggressive expense reduction initiatives could adversely affect our ability to
conduct our business.
During
the fourth quarter of 2008, we reduced headcount and announced our intention to
reduce capital outlays in 2009 in order to lower our expense base in light
of substantial declines in AUM and net revenues. Additionally, in
2008 we reduced substantially year-end cash bonuses and deferred compensation
awards and imposed a salary freeze for 2009. These expense reduction
measures and any additional measures we may take in view of continuing adverse
economic conditions could have a significant effect on our ability to conduct
our business and service our clients. We also may be unable to retain
key personnel, the loss of whom could further damage our
business.
We
may be unable to continue to attract and retain key personnel.
Our
business depends on our ability to attract, retain, and motivate highly skilled,
and often highly specialized, technical, managerial, and executive personnel;
there is no assurance that we will be able to do so. This may be
particularly difficult in the months ahead as our firm continues to aggressively
manage expenses.
The
market for qualified research analysts, portfolio managers, financial advisers,
traders and other professionals is extremely competitive and is characterized by
frequent movement of these investment professionals among different firms.
Portfolio managers and financial advisers often maintain strong, personal
relationships with their clients so their departure could cause us to lose
client accounts, which could have a material adverse effect on our revenues,
financial condition, results of operations and business prospects.
Investment
performance consistently below client expectations could lead to loss of clients
and a decline in revenues.
Our
ability to achieve investment returns for clients that meet or exceed investment
returns for comparable asset classes and competing investment services is a key
consideration when clients decide to keep their assets with us or invest
additional assets, as well as a prospective client’s decision to invest with us.
Our inability to meet or exceed relevant investment benchmarks could result in
clients withdrawing assets and in prospective clients choosing to invest with
competitors. This could also result in lower investment management fees,
including minimal or no performance-based fees, which could result in a decline
in our revenues.
Throughout
2008, we underperformed benchmarks, in some cases by substantial amounts, in
virtually all of our services, particularly in the fourth quarter. In
so doing, we failed to meet client expectations, which contributed to net
outflows across each of our three distribution channels in 2008, with net
outflows accelerating in the fourth quarter. Net outflows continued to
accelerate in January 2009. If we cannot improve our investment
performance, it is likely that our net outflows will continue, which could have
a significantly adverse effect on our revenues, financial condition, results of
operations and business prospects.
We
may enter into more performance-based fee arrangements with our clients in the
future, which could cause greater fluctuations in our revenues.
We
sometimes charge our clients performance-based fees. In these situations, we
charge a base advisory fee and are eligible to earn an additional
performance-based fee or incentive allocation that is calculated as either a
percentage of absolute investment results or a percentage of investment results
in excess of a stated benchmark over a specified period of time. In addition,
some performance-based fees include a high-watermark provision, which generally
provides that if a client account underperforms relative to its performance
target (whether absolute or relative to a specified benchmark), it must gain
back such underperformance before we can collect future performance-based fees.
Therefore, if we underperform our performance target for a particular period, we
will not earn a performance-based fee for that period and, for accounts with a
high-watermark provision, our ability to earn future performance-based fees will
be impaired. We are eligible to earn performance-based fees on approximately 14%
of the assets we manage for institutional clients and approximately 5% of the
assets we manage for private clients (in total, approximately 10% of our
company-wide AUM). If the percentage of our AUM subject to performance-based
fees grows, seasonality and volatility of revenue and earnings are likely to
become more significant. Approximately 80% of our hedge fund AUM is subject to
high-watermarks, and we ended the fourth quarter of 2008 with approximately 67%
of this hedge fund AUM below high-watermarks by 10% or more. This will make it
very difficult for us to earn performance-based fees in most of our hedge funds
in 2009.
Our
performance-based fees were $13.4 million in 2008, $81.2 million in 2007 and
$235.7 million in 2006.
The
individuals, counterparties or issuers on which we rely in the course of
performing services for our clients may be unable or unwilling to honor their
contractual obligations to us.
We rely
on various third party vendors to fulfill their obligations to us, whether
specified by contract, course of dealing or otherwise. Disruptions in
the financial markets and other economic challenges, like those presented by the
ongoing global financial crisis, may cause these vendors to experience
significant cash flow problems or even render them insolvent, which could expose
us to significant costs and reduce our net income. For example,
insurance companies may be unable to pay claims they are otherwise contractually
obligated to pay, which could result in our having to suffer losses that
typically would be covered by insurance.
Unpredictable
events, including natural disaster, technology failure, and terrorist attack,
could adversely affect our ability to conduct business.
War,
terrorist attack, power failure, natural disaster, and rapid spread of serious
disease could interrupt our operations by:
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causing
disruptions in U.S. or global economic conditions, thus decreasing
investor confidence and making investment products generally less
attractive;
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inflicting
loss of life;
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triggering
massive technology failures or delays;
and
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requiring
substantial capital expenditures and operating expenses to remediate
damage and restore operations.
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Our
operations require experienced, professional staff. Loss of a substantial number
of such persons or an inability to provide properly equipped places for them to
work may, by disrupting our operations, adversely affect our revenues, financial
condition, results of operations and business prospects.
We
depend on various systems and technologies for our business to function properly
and to safeguard confidential information.
We
utilize software and related technologies throughout our business, including
both proprietary systems and those provided by outside vendors. Although we have
established and tested business continuity plans, we may experience systems
delays and interruptions and it is not possible to predict with certainty all of
the adverse effects that could result from our failure, or the failure of a
third party, to efficiently address these problems. These adverse effects could
include the inability to perform critical business functions or failure to
comply with financial reporting and other regulatory requirements, which could
lead to loss of client confidence, harm to our reputation, exposure to
disciplinary action and liability to our clients. Accordingly, potential system
failures and the cost necessary to correct those failures could have a material
adverse effect on our revenues, financial condition, results of operations and
business prospects.
In
addition, we could be subject to losses if we fail to properly safeguard
sensitive and confidential information. As part of our normal operations, we
maintain and transmit confidential information about our clients as well as
proprietary information relating to our business operations. Our systems could
be damaged by unauthorized users or corrupted by computer viruses or other
malicious software code, or authorized persons could inadvertently or
intentionally release confidential or proprietary information. Such disclosure
could, among other things, allow competitors access to our proprietary business
information and require significant time and expense to investigate and
remediate the breach.
Our
own operational failures or those of third parties we rely on, including
failures arising out of human error, could disrupt our business, damage our
reputation and reduce our revenues.
Weaknesses
or failures in our internal processes or systems could lead to disruption of our
operations, liability to clients, exposure to disciplinary action or harm to our
reputation. Our business is highly dependent on our ability to process, on a
daily basis, large numbers of transactions, many of which are highly complex,
across numerous and diverse markets. These transactions generally must adhere to
investment guidelines, as well as stringent legal and regulatory
standards.
Despite
the contingency plans and facilities we have in place, our ability to conduct
business may be adversely affected by a disruption in the infrastructure that
supports our operations and the communities in which they are located. This may
include a disruption involving electrical, communications, transportation or
other services used by AllianceBernstein or third parties with which we conduct
business. If a disruption occurs in one location and our employees in that
location are unable to occupy our offices or communicate with or travel to other
locations, our ability to conduct business with and on behalf of our clients may
suffer, and we may not be able to successfully implement contingency plans that
depend on communication or travel.
Our
obligations to clients require us to exercise skill, care and prudence in
performing our services. Despite our employees being highly trained and skilled,
the large number of transactions we process makes it highly likely that errors
will occasionally occur. Should we make a mistake in performing our services
that costs us or our clients money, we have a duty to act promptly to put the
clients in the position they would have been in had we not made the error. The
occurrence of mistakes, particularly significant ones, can have a material
adverse effect on our reputation, revenues, financial condition, results of
operations and business prospects.
We
may not accurately value the securities we hold on behalf of our discretionary
clients or our company investments.
In
accordance with applicable regulatory requirements, our obligations under
investment management agreements with our clients, and, if the client is a U.S.
Fund, the approval and direction of the U.S. Fund’s board of directors or
trustees, we employ procedures for the pricing and valuation of securities and
other positions held in client accounts or for company investments. We have
established a Valuation Committee, composed of senior officers and employees,
which oversees pricing controls and valuation processes. Where market quotations
for a security are not readily available, the Valuation Committee determines a
fair value for the security.
Extraordinary
volatility in financial markets, significant liquidity constraints or our not
adequately accounting for one or more factors when fair valuing a security based
on information with limited market observability could result in our failing to
properly value securities we hold for our clients or investments accounted for
on our balance sheet. Improper valuation would likely result in our basing fee
calculations on inaccurate AUM figures, our striking incorrect net asset values
for company-sponsored mutual funds, or, in the case of company investments, our
inaccurately calculating and reporting our financial condition and operating
results. Although the overall percentage of our AUM that we fair value based on
information with limited market observability is not significant, inaccurate
fair value determinations can harm our clients and create regulatory
issues.
In 2008,
the unprecedented illiquidity experienced in parts of the fixed income markets
made it more difficult to fair value sub-prime mortgage-related assets such as
collateralized debt obligations and mortgage-backed securities. This
difficulty was accompanied by significant write downs of these, and like,
financial instruments under the fair value measurement requirements of Financial
Accounting Standards Board (“FASB”) Statement No. 157, “
Fair Value
Measurements”
. These factors increase the risk that our fair
value determinations may not reflect the true value of the securities being
valued.
Our
business is based on the trust and confidence of our clients; any damage to that
trust and confidence can cause assets under management to decline.
We are
dedicated to earning and maintaining the trust and confidence of our clients;
the good reputation created thereby is essential to our business. Damage to our
reputation could substantially impair our ability to maintain or grow our
business.
Our
substantial underperformance in virtually all of our investment services during
2008, which resulted in large part from our financial sector investments held
during the fourth quarter of 2008, may have hurt our reputation among many
clients, prospects and consultants. We are focused on improving
investment performance and, in so doing, rebuilding our
reputation. Failure in this endeavor could have a material adverse
effect on our revenues, financial condition, results of operations and business
prospects.
We
may not always successfully manage actual and potential conflicts of interest
that arise in our business.
Our
reputation is one of our most important assets. As our business and client base
expand, we increasingly must manage actual and potential conflicts of interest,
including situations where our services to a particular client conflict, or are
perceived to conflict, with the interests of another client, as well as
situations where certain of our employees have access to material non-public
information that may not be shared with all employees of our firm. Failure to
adequately address potential conflicts of interest could adversely affect our
revenues, financial condition, results of operations and business
prospects.
We have
procedures and controls that are designed to address and manage conflicts of
interest, including those designed to prevent the improper sharing of
information. However, appropriately managing conflicts of interest is complex
and difficult, and our reputation could be damaged and the willingness of
clients to enter into transactions in which such a conflict might arise may be
affected if we fail, or appear to fail, to deal appropriately with conflicts of
interest. In addition, potential or perceived conflicts could give rise to
litigation or regulatory enforcement actions.
Rates
we charge for brokerage transactions have declined significantly in recent
years, and we expect those declines to continue. In addition, recent
capital markets and economic turmoil may reduce market
volumes. Combined, these two factors could adversely impact SCB’s
revenue.
Electronic,
or “low-touch”, trading approaches represent a growing percentage of buy-side
trading activity and produce transaction fees for execution-only services that
are a small fraction of traditional full service fee rates. As a
result, blended pricing for the industry and SCB has declined in recent
years. In addition, fee rates charged by SCB and other brokers for
traditional brokerage services have also historically experienced price
pressure, and we expect these trends to continue. While increases in transaction
volume have in the past more than offset decreases in rates, this may not
continue. Recent economic and market turmoil has severely impacted
much of SCB's client base, which in the near-term may adversely affect
transaction volume generally.
The
costs of insurance are substantial and may increase.
Our
insurance expenses are significant and can fluctuate significantly from year to
year. They increased in 2008, and additional increases in the future are
possible. In addition, certain insurance coverage may not be available or may
only be available at prohibitive costs. As we renew our insurance policies, we
may be subject to additional costs resulting from rising premiums, the
assumption of higher deductibles and/or co-insurance liability and, to the
extent certain U.S. Funds purchase separate directors and officers/errors and
omissions liability coverage, an increased risk of insurance companies disputing
responsibility for joint claims. Higher insurance costs and incurred deductibles
reduce our net income.
Our
business is subject to pervasive global regulation, the compliance with which
could involve substantial expenditures of time and money, and the violation of
which could result in material adverse consequences.
Virtually
all aspects of our business are subject to federal and state laws and
regulations, rules of securities regulators and exchanges, and laws in the
foreign countries in which our subsidiaries conduct business. If we violate
these laws or regulations, we could be subject to civil liability, criminal
liability or sanction, including revocation of our and our subsidiaries’
registrations as investment advisers or broker-dealers, revocation of the
licenses of our employees, censures, fines, or temporary suspension or permanent
bar from conducting business. A regulatory proceeding, even if it does not
result in a finding of wrongdoing or sanction, could require substantial
expenditures of time and money. Any such liability or sanction could have a
material adverse effect on our revenues, financial condition, results of
operations, and business prospects. These laws and regulations generally grant
supervisory agencies and bodies broad administrative powers, including, in some
cases, the power to limit or restrict doing business for failure to comply with
such laws and regulations. Moreover, regulators in non-U.S. jurisdictions could
change their policies or laws in a manner that might restrict or otherwise
impede our ability to market, distribute, or register investment products in
their respective markets. These local requirements could increase the expenses
we incur in a specific jurisdiction without any corresponding increase in
revenues from operating in the jurisdiction.
Due to
the extensive laws and regulations to which we are subject, we devote
substantial time and effort to legal and regulatory compliance issues. In
addition, the regulatory environment in which we operate changes frequently and
regulations have increased significantly in recent years. We may be adversely
affected as a result of new or revised legislation or regulations or by changes
in the interpretation or enforcement of existing laws and
regulations.
The
financial services industry is intensely competitive.
We
compete on the basis of a number of factors, including our array of investment
services, our investment performance for our clients, innovation, reputation and
price. By having a global presence, we may face competitors with more experience
and more established relationships with clients, regulators and industry
participants in the relevant market, which could adversely affect our ability to
expand. Furthermore, our poor investment performance during 2008, and what may
be diminished confidence in our services on the part of clients and consultants
alike, may make it more difficult for us to compete effectively.
We
are involved in various legal proceedings and regulatory matters and may be
involved in such proceedings in the future, any one or combination of which
could have a material adverse effect on our financial condition, results of
operations and business prospects.
We are
involved in various matters, including regulatory inquiries, administrative
proceedings and litigation, some of which allege substantial damages, and we may
be involved in additional matters in the future. Litigation is subject to
significant uncertainties, particularly when plaintiffs allege substantial or
indeterminate damages, or when the litigation is highly complex or broad in
scope. We have described pending material legal proceedings
in Item
3
.
Structure-related
Risks
The
partnership structure of Holding and AllianceBernstein limits unitholders’
abilities to influence the management and operation of AllianceBernstein’s
business and is highly likely to prevent a change in control of Holding and
AllianceBernstein.
The
General Partner, as general partner of both Holding and AllianceBernstein,
generally has the exclusive right and full authority and responsibility to
manage, conduct, control and operate their respective businesses, except as
otherwise expressly stated in their respective Amended and Restated Agreements
of Limited Partnership. Holding and AllianceBernstein unitholders have more
limited voting rights on matters affecting AllianceBernstein than do holders of
common stock in a corporation. Both Amended and Restated Agreements of Limited
Partnership provide that unitholders do not have any right to vote for directors
of the General Partner and that unitholders can only vote on certain
extraordinary matters (including removal of the General Partner under certain
extraordinary circumstances). Additionally, the AllianceBernstein Partnership
Agreement includes significant restrictions on transfers of AllianceBernstein
Units and provisions that have the practical effect of preventing the removal of
the General Partner, which are highly likely to prevent a change in control of
AllianceBernstein’s management.
AllianceBernstein
Units are illiquid.
There is
no public trading market for AllianceBernstein Units and AllianceBernstein does
not anticipate that a public trading market will ever develop. The
AllianceBernstein Partnership Agreement restricts our ability to participate in
a public trading market or anything substantially equivalent to one by providing
that any transfer which may cause AllianceBernstein to be classified as a
“publicly traded partnership” as defined in Section 7704 of the Code shall be
deemed void and shall not be recognized by AllianceBernstein. In addition,
AllianceBernstein Units are subject to significant restrictions on transfer; all
transfers of AllianceBernstein Units are subject to the written consent of AXA
Equitable and the General Partner pursuant to the AllianceBernstein Partnership
Agreement. Generally, neither AXA Equitable nor the General Partner will permit
any transfer that it believes would create a risk that AllianceBernstein would
be treated as a corporation for tax purposes. AXA Equitable and the General
Partner have implemented a transfer policy that requires a seller to locate a
purchaser, and imposes annual volume restrictions on transfers. You may request
a copy of the transfer program from our corporate secretary (
corporate.secretary@alliancebernstein.com
).
Also, we have filed the transfer program as Exhibit 10.10 to this Form
10-K.
Changes
in the partnership structure of Holding and AllianceBernstein and/or changes in
the tax law governing partnerships would have significant tax
ramifications.
Holding,
having elected under Section 7704(g) of the Code, to be subject to a 3.5%
federal tax on partnership gross income from the active conduct of a trade or
business, is a “grandfathered” publicly-traded partnership (“PTP”) for federal
income tax purposes. Holding is also subject to the 4.0% UBT, net of credits for
UBT paid by AllianceBernstein. In order to preserve Holding’s status as a
“grandfathered” publicly-traded partnership for federal income tax purposes,
management ensures that Holding does not directly or indirectly (through
AllianceBernstein) enter into a substantial new line of business. A “new line of
business” would be any business that is not closely related to
AllianceBernstein’s historical business of providing research and diversified
investment management and related services to its clients. A new line of
business is “substantial” when a partnership derives more than 15% (by value) of
its gross income from, or uses more than 15% of its total assets in, the new
line of business.
AllianceBernstein
is a private partnership for federal income tax purposes and, accordingly, is
not subject to federal and state corporate income taxes. However,
AllianceBernstein is subject to the 4.0% UBT. Domestic corporate subsidiaries of
AllianceBernstein, which are subject to federal, state and local income taxes,
are generally included in the filing of a consolidated federal income tax return
with separate state and local income tax returns being filed. Foreign corporate
subsidiaries are generally subject to taxes at higher rates in the foreign
jurisdiction where they are located. As our business increasingly operates in
countries other than the U.S., our effective tax rate continues to increase
because our international subsidiaries are subject to corporate level taxes in
the jurisdictions where they are located.
In order
to preserve AllianceBernstein’s status as a private partnership for federal
income tax purposes, AllianceBernstein Units must not be considered publicly
traded. The AllianceBernstein Partnership Agreement provides that all transfers
of AllianceBernstein Units must be approved by AXA Equitable and the General
Partner; AXA Equitable and the General Partner approve only those transfers
permitted pursuant to one or more of the safe harbors contained in relevant
treasury regulations. If such units were considered readily tradable,
AllianceBernstein would be subject to federal and state corporate income tax on
its net income. Furthermore, as noted above, should AllianceBernstein enter into
a substantial new line of business, Holding, by virtue of its ownership of
AllianceBernstein, would lose its status as a grandfathered publicly-traded
partnership and would become subject to corporate income tax as set forth
above.
In 2007,
Congress proposed tax legislation that would cause certain PTPs to be taxed as
corporations, thus subjecting their income to a higher level of income tax.
Holding is a PTP that derives its income from asset manager or investment
management services through its ownership interest in AllianceBernstein.
However, the legislation, in the form proposed, would not affect Holding’s tax
status. In addition, we have received consistent indications from a number of
individuals involved in the legislative process that Holding’s tax status is not
the focus of the proposed legislation, and that they do not expect to change
that approach. However, we cannot predict whether, or in what form, the proposed
tax legislation will pass, and are unable to determine what effect any new
legislation might have on us. If Holding were to lose its federal tax status as
a grandfathered PTP, it would be subject to corporate income tax, which would
reduce materially its net income and quarterly distributions to Holding
Unitholders.
In its
current form, the proposed legislation would not affect AllianceBernstein
because it is a private partnership.
|
Unresolved
Staff Comments
|
Neither
AllianceBernstein nor Holding has unresolved comments from the staff of the SEC
to report.
Our
principal executive offices at 1345 Avenue of the Americas, New York, New York
are occupied pursuant to a lease which extends until 2029. We currently occupy
approximately 882,770 square feet of space at this location. We also occupy
approximately 312,301 square feet of space at 135 West 50th Street, New York,
New York under a lease expiring in 2029 and approximately 263,083 square feet of
space at One North Lexington, White Plains, New York under a lease expiring in
2031. AllianceBernstein Investments and AllianceBernstein Investor Services
occupy approximately 92,067 square feet of space in San Antonio, Texas under a
lease expiring in 2029. We also lease space in 18 other cities in the United
States.
Our
subsidiaries and joint venture companies lease space in 27 cities outside the
United States, the most significant of which are in London, England under leases
expiring between 2010 and 2022, and in Tokyo, Japan under leases expiring in
2009 and 2018.
With
respect to all significant litigation matters, we consider the likelihood of a
negative outcome. If we determine the likelihood of a negative outcome is
probable, and the amount of the loss can be reasonably estimated, we record an
estimated loss for the expected outcome of the litigation as required by
Statement of Financial Accounting Standards No. 5, “
Accounting for
Contingencies
”, and FASB Interpretation No. 14, “
Reasonable Estimation of the Amount
of a Loss—an interpretation of FASB Statement No. 5
”. If the likelihood
of a negative outcome is reasonably possible and we are able to determine an
estimate of the possible loss or range of loss, we disclose that fact together
with the estimate of the possible loss or range of loss. However, it is
difficult to predict the outcome or estimate a possible loss or range of loss
because litigation is subject to significant uncertainties, particularly when
plaintiffs allege substantial or indeterminate damages, or when the litigation
is highly complex or broad in scope.
We have
previously reported the filing of a purported class action complaint entitled
Hindo, et al. v.
AllianceBernstein Growth & Income Fund, et al.
and our involvement in
various other market timing-related matters. There have been no significant
developments in these matters since we filed our Form 10-Q for the quarter ended
September 30, 2008, in which these matters are more completely described. These
matters are also described
in
Note 7 to Holding’s financial statements in Item 8.
We are
involved in various other matters, including regulatory inquiries,
administrative proceedings and litigation, some of which allege substantial
damages. While any inquiry, proceeding or litigation has the element of
uncertainty, management believes that the outcome of any one of the other
regulatory inquiries, administrative proceedings, lawsuits or claims that is
pending or threatened, or all of them combined, will not have a material adverse
effect on our financial condition, results of operations or business
prospects.
|
Submission
of Matters to a Vote of Security
Holders
|
Neither
AllianceBernstein nor Holding submitted a matter to a vote of security holders
during the fourth quarter of 2008.
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
Market
for Holding Units and AllianceBernstein Units; Cash Distributions
Holding
Units are listed on the NYSE and trade publicly under the ticker symbol
“AB”.
There is
no established public trading market for AllianceBernstein Units, which are
subject to significant restrictions on transfer. In general, transfers of
AllianceBernstein Units will be allowed only with the written consent of both
AXA Equitable and the General Partner. Generally, neither AXA Equitable nor the
General Partner will permit any transfer that it believes would create a risk
that AllianceBernstein would be treated as a corporation for tax purposes. AXA
Equitable and the General Partner have implemented a transfer policy, a copy of
which you may request from our corporate secretary (
corporate.secretary@alliancebernstein.com
).
Also, we have filed the transfer program as Exhibit 10.10 to this Form
10-K.
Each of
Holding and AllianceBernstein distributes on a quarterly basis all of its
Available Cash Flow, as defined in the Holding Partnership Agreement and the
AllianceBernstein Partnership Agreement, to its unitholders and the General
Partner. For additional information concerning distribution of Available Cash
Flow by Holding,
see Note 2 to
Holding’s financial statements in Item 8
. For additional information
concerning distribution of Available Cash Flow by AllianceBernstein,
see Note 2 to AllianceBernstein’s
consolidated financial statements in Item 8
.
Holding’s
principal source of income and cash flow is attributable to its limited
partnership interests in AllianceBernstein.
The
tables set forth below provide the distributions of Available Cash Flow made by
AllianceBernstein and Holding during 2008 and 2007 and the high and low sale
prices of Holding Units reflected on the NYSE composite transaction tape during
2008 and 2007:
|
|
Quarters Ended
2008
|
|
|
Total
|
|
|
|
December
31
|
|
|
September
30
|
|
|
June
30
|
|
|
March
31
|
|
|
|
|
Cash
distributions per AllianceBernstein Unit
(1)
|
|
$
|
0.37
|
|
|
$
|
0.70
|
|
|
$
|
1.06
|
|
|
$
|
0.94
|
|
|
$
|
3.07
|
|
Cash
distributions per Holding Unit
(1)
|
|
$
|
0.29
|
|
|
$
|
0.60
|
|
|
$
|
0.96
|
|
|
$
|
0.83
|
|
|
$
|
2.68
|
|
Holding
Unit prices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
$
|
38.90
|
|
|
$
|
57.11
|
|
|
$
|
67.75
|
|
|
$
|
78.00
|
|
|
|
|
|
Low
|
|
$
|
11.49
|
|
|
$
|
32.00
|
|
|
$
|
54.50
|
|
|
$
|
53.63
|
|
|
|
|
|
|
|
Quarters Ended
2007
(2)
|
|
|
Total
|
|
|
|
December
31
|
|
|
September
30
|
|
|
June
30
|
|
|
March
31
|
|
|
|
|
|
Cash
distributions per AllianceBernstein Unit
(1)
|
|
$
|
1.17
|
|
|
$
|
1.32
|
|
|
$
|
1.27
|
|
|
$
|
1.01
|
|
|
$
|
4.77
|
|
Cash
distributions per Holding Unit
(1)
|
|
$
|
1.06
|
|
|
$
|
1.20
|
|
|
$
|
1.16
|
|
|
$
|
0.91
|
|
|
$
|
4.33
|
|
Holding
Unit prices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
$
|
92.87
|
|
|
$
|
91.66
|
|
|
$
|
94.94
|
|
|
$
|
94.40
|
|
|
|
|
|
Low
|
|
$
|
71.31
|
|
|
$
|
72.33
|
|
|
$
|
82.90
|
|
|
$
|
79.06
|
|
|
|
|
|
|
Declared
and paid during the following
quarter.
|
|
The
low trading price during the quarters ended September 30, 2007 and June
30, 2007, and the high trading price during the quarter ended March 31,
2007, have been updated to reflect the prices on the NYSE composite
transaction tape.
|
On
February 2, 2009, the closing price of a Holding Unit on the NYSE was $16.68 per
Unit and there were approximately 1,149 Holding Unitholders of record for
approximately 87,000 beneficial owners. On February 2, 2009, there were
approximately 498 AllianceBernstein Unitholders of record, and we do not believe
there are substantial additional beneficial owners.
Recent
Sales of Unregistered Securities; Use of Proceeds from Registered
Securities
AllianceBernstein
did not engage in any unregistered sales of its securities during the last three
years.
Purchases
of Equity Securities by the Issuer and Affiliated Purchasers
The
following table provides information relating to any Holding Units bought by us
or one of our affiliates in the fourth quarter of the fiscal year covered by
this report:
Issuer
Purchases of Equity Securities
|
|
(a)
Total
Number
of
Holding Units
Purchased
|
|
|
(b)
Average
Price
Paid
Per
Holding
Unit,
net of
Commissions
|
|
|
(c)
Total
Number of
Holding
Units
Purchased
as
Part
of Publicly
Announced
Plans
or
Programs
|
|
|
(d)
Maximum
Number
(or
Approximate
Dollar
Value) of
Holding
Units that
May
Yet Be
Purchased
Under
the
Plans or
Programs
|
|
Period
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/08-10/31/08
(1)
|
|
|
3,100
|
|
|
$
|
34.70
|
|
|
|
—
|
|
|
|
—
|
|
11/1/08-11/30/08
(2)
|
|
|
900
|
|
|
|
20.13
|
|
|
|
—
|
|
|
|
—
|
|
12/1/08-12/31/08
(3)(4)
|
|
|
11,115
|
|
|
|
16.00
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
15,115
|
|
|
$
|
20.08
|
|
|
|
—
|
|
|
|
—
|
|
|
On
October 2, 2008, we purchased these Holding Units from employees to allow
them to fulfill statutory withholding tax requirements at the time of
distribution of deferred compensation
awards.
|
|
On
each of November 4, 2008 and November 26, 2008, we purchased 217 Holding
Units and 683 Holding Units, respectively, from employees to allow them to
fulfill statutory withholding tax requirements at the time of distribution
of equity compensation awards.
|
|
On
December 1, 2008, we purchased these Holding Units from employees to allow
them to fulfill statutory withholding tax requirements at the time of
distribution of deferred compensation
awards.
|
|
On
December 17, 2008, ECMC, LLC (“ECMC”), a wholly-owned subsidiary of AXA
Equitable, transferred 722,178 Holding Units to AXA
Equitable. We have not reflected this transaction in the table
because no “purchase” took place.
|
Neither
AllianceBernstein nor any of our affiliates purchased AllianceBernstein Units
during the fourth quarter of the fiscal year covered by this
report. However, during December 2008, the following inter-company
transfers took place among AXA Financial and certain of its
subsidiaries:
|
|
On
December 17, 2008, AXA Financial transferred 40,861,854 AllianceBernstein
Units to AXA Financial Services, LLC, a wholly-owned subsidiary of AXA
Financial, which in turn transferred them to AXA Financial (Bermuda) Ltd.
(“AXF Bermuda”), also a wholly-owned subsidiary of AXA
Financial.
|
|
|
On
December 17, 2008, ECMC transferred 40,880,637 AllianceBernstein Units to
Equitable Holdings LLC, a wholly-owned subsidiary of AXA Equitable, which
in turn transferred them to AXA
Equitable.
|
|
|
On
December 30, 2008, AXA Equitable transferred an aggregate of 20,164,587
AllianceBernstein Units, consisting of: the transfer of 2,452,450
AllianceBernstein Units to MONY Life Insurance Company (“MONY”), a
wholly-owned subsidiary of AXA Financial; the transfer of 1,362,472
AllianceBernstein Units to MONY Life Insurance Company of America, a
wholly-owned subsidiary of MONY; and 16,349,665 AllianceBernstein Units to
AXF Bermuda.
|
ALLIANCEBERNSTEIN
HOLDING L.P.
Selected
Financial Data
|
|
Years Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(in
thousands, except per unit amounts)
|
|
INCOME
STATEMENT DATA:
|
|
|
|
Equity
in earnings of AllianceBernstein
|
|
$
|
278,636
|
|
|
$
|
415,256
|
|
|
$
|
359,469
|
|
|
$
|
275,054
|
|
|
$
|
219,971
|
|
Income
taxes
|
|
|
33,910
|
|
|
|
39,104
|
|
|
|
34,473
|
|
|
|
26,990
|
|
|
|
24,798
|
|
Net
income
|
|
$
|
244,726
|
|
|
$
|
376,152
|
|
|
$
|
324,996
|
|
|
$
|
248,064
|
|
|
$
|
195,173
|
|
Basic
net income per unit
|
|
$
|
2.79
|
|
|
$
|
4.35
|
|
|
$
|
3.85
|
|
|
$
|
3.04
|
|
|
$
|
2.45
|
|
Diluted
net income per unit
|
|
$
|
2.79
|
|
|
$
|
4.32
|
|
|
$
|
3.82
|
|
|
$
|
3.02
|
|
|
$
|
2.43
|
|
CASH
DISTRIBUTIONS PER UNIT
(1)
|
|
$
|
2.68
|
|
|
$
|
4.33
|
|
|
$
|
4.02
|
|
|
$
|
3.00
|
|
|
$
|
2.01
|
|
BALANCE
SHEET DATA AT PERIOD END:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
1,601,442
|
|
|
$
|
1,575,234
|
|
|
$
|
1,568,034
|
|
|
$
|
1,377,054
|
|
|
$
|
1,303,446
|
|
Partners’
capital
|
|
$
|
1,596,155
|
|
|
$
|
1,567,460
|
|
|
$
|
1,559,188
|
|
|
$
|
1,368,846
|
|
|
$
|
1,295,670
|
|
(1)
|
Holding
is required to distribute all of its Available Cash Flow, as defined in
the Holding Partnership Agreement, to its
unitholders.
|
Selected
Consolidated Financial Data
|
|
Years Ended December 31,
|
|
|
|
2008
|
|
|
2007
(1)
|
|
|
2006
(1)
|
|
|
2005
(1)
|
|
|
2004
(1)
|
|
|
|
(in
thousands, except per unit amounts and unless otherwise
indicated)
|
|
INCOME
STATEMENT DATA:
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
advisory and services fees
|
|
$
|
2,839,526
|
|
|
$
|
3,386,188
|
|
|
$
|
2,890,229
|
|
|
$
|
2,259,392
|
|
|
$
|
1,996,819
|
|
Distribution
revenues
|
|
|
378,425
|
|
|
|
473,435
|
|
|
|
421,045
|
|
|
|
397,800
|
|
|
|
447,283
|
|
Institutional
research services
(2)
|
|
|
471,716
|
|
|
|
423,553
|
|
|
|
375,075
|
|
|
|
352,757
|
|
|
|
420,141
|
|
Dividend
and interest income
|
|
|
91,752
|
|
|
|
284,014
|
|
|
|
266,520
|
|
|
|
152,781
|
|
|
|
72,743
|
|
Investment
gains (losses)
|
|
|
(349,172
|
)
|
|
|
29,690
|
|
|
|
62,200
|
|
|
|
29,070
|
|
|
|
14,842
|
|
Other
revenues
|
|
|
118,436
|
|
|
|
122,869
|
|
|
|
123,171
|
|
|
|
116,788
|
|
|
|
136,401
|
|
Total
revenues
|
|
|
3,550,683
|
|
|
|
4,719,749
|
|
|
|
4,138,240
|
|
|
|
3,308,588
|
|
|
|
3,088,229
|
|
Less:
interest expense
|
|
|
36,524
|
|
|
|
194,432
|
|
|
|
187,833
|
|
|
|
95,863
|
|
|
|
32,796
|
|
Net
revenues
|
|
|
3,514,159
|
|
|
|
4,525,317
|
|
|
|
3,950,407
|
|
|
|
3,212,725
|
|
|
|
3,055,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
compensation and benefits
|
|
|
1,454,691
|
|
|
|
1,833,796
|
|
|
|
1,547,627
|
|
|
|
1,262,198
|
|
|
|
1,085,163
|
|
Promotion
and servicing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
plan payments
|
|
|
274,359
|
|
|
|
335,132
|
|
|
|
292,886
|
|
|
|
291,953
|
|
|
|
374,184
|
|
Amortization
of deferred sales commissions
|
|
|
79,111
|
|
|
|
95,481
|
|
|
|
100,370
|
|
|
|
131,979
|
|
|
|
177,356
|
|
Other
|
|
|
207,506
|
|
|
|
252,468
|
|
|
|
218,944
|
|
|
|
198,004
|
|
|
|
202,327
|
|
General
and administrative
|
|
|
539,198
|
|
|
|
574,506
|
|
|
|
574,904
|
|
|
|
378,856
|
|
|
|
410,240
|
|
Interest
on borrowings
|
|
|
13,077
|
|
|
|
23,970
|
|
|
|
23,124
|
|
|
|
25,109
|
|
|
|
24,232
|
|
Amortization
of intangible assets
|
|
|
20,716
|
|
|
|
20,716
|
|
|
|
20,710
|
|
|
|
20,700
|
|
|
|
20,700
|
|
Total
expenses
|
|
|
2,588,658
|
|
|
|
3,136,069
|
|
|
|
2,778,565
|
|
|
|
2,308,799
|
|
|
|
2,294,202
|
|
Operating
income
|
|
|
925,501
|
|
|
|
1,389,248
|
|
|
|
1,171,842
|
|
|
|
903,926
|
|
|
|
761,231
|
|
Non-operating
income
|
|
|
18,728
|
|
|
|
15,756
|
|
|
|
20,196
|
|
|
|
34,446
|
|
|
|
—
|
|
Income
before income taxes and non-controlling interest in earnings of
consolidated entities
|
|
|
944,229
|
|
|
|
1,405,004
|
|
|
|
1,192,038
|
|
|
|
938,372
|
|
|
|
761,231
|
|
Income
taxes
|
|
|
95,803
|
|
|
|
127,845
|
|
|
|
75,045
|
|
|
|
64,571
|
|
|
|
39,932
|
|
Non-controlling
interest in earnings of consolidated entities, net of tax
|
|
|
9,186
|
|
|
|
16,715
|
|
|
|
8,392
|
|
|
|
5,483
|
|
|
|
16,149
|
|
Net
income
|
|
$
|
839,240
|
|
|
$
|
1,260,444
|
|
|
$
|
1,108,601
|
|
|
$
|
868,318
|
|
|
$
|
705,150
|
|
Basic
net income per unit
|
|
$
|
3.18
|
|
|
$
|
4.80
|
|
|
$
|
4.26
|
|
|
$
|
3.37
|
|
|
$
|
2.76
|
|
Diluted
net income per unit
|
|
$
|
3.18
|
|
|
$
|
4.77
|
|
|
$
|
4.22
|
|
|
$
|
3.35
|
|
|
$
|
2.74
|
|
Operating
margin
(3)
|
|
|
26.1
|
%
|
|
|
30.3
|
%
|
|
|
29.5
|
%
|
|
|
28.0
|
%
|
|
|
24.4
|
%
|
CASH
DISTRIBUTIONS PER UNIT
(4)
|
|
$
|
3.07
|
|
|
$
|
4.77
|
|
|
$
|
4.42
|
|
|
$
|
3.33
|
|
|
$
|
2.40
|
|
BALANCE
SHEET DATA AT PERIOD END:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
8,503,459
|
|
|
$
|
9,368,754
|
|
|
$
|
10,601,105
|
|
|
$
|
9,490,480
|
|
|
$
|
8,779,330
|
|
Debt
|
|
$
|
284,779
|
|
|
$
|
533,872
|
|
|
$
|
334,901
|
|
|
$
|
407,291
|
|
|
$
|
407,517
|
|
Partners’
capital
|
|
$
|
4,317,659
|
|
|
$
|
4,541,226
|
|
|
$
|
4,570,997
|
|
|
$
|
4,302,674
|
|
|
$
|
4,183,698
|
|
ASSETS
UNDER MANAGEMENT AT PERIOD END (in millions)
|
|
$
|
461,951
|
|
|
$
|
800,390
|
|
|
$
|
716,921
|
|
|
$
|
578,552
|
|
|
$
|
538,764
|
|
(1)
|
Certain
prior-year amounts have been reclassified to conform to our 2008
presentation.
See Note 2
to
AllianceBernstein’s
consolidated financial statements in Item 8
for a discussion of
reclassifications.
|
(2)
|
Includes
revenues of $0.3 million, $0.5 million, $1.8 million, $31.5 million and
$116.5 million from brokerage transactions executed on behalf of
AllianceBernstein (acting on behalf of certain of its U.S. asset
management clients that have authorized AllianceBernstein to use SCB for
trade execution) in 2008, 2007, 2006, 2005 and 2004,
respectively. The significant decrease beginning in 2005 is
primarily due to our elimination of transaction charges for most private
clients.
|
(3)
|
Operating
income less non-controlling interest in earnings of consolidated entities
as a percentage of net
revenue.
|
(4)
|
AllianceBernstein
is required to distribute all of its Available Cash Flow, as defined in
the AllianceBernstein Partnership Agreement, to its unitholders and the
General Partner.
|
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
Executive
Overview
Capital
markets plummeted during the fourth quarter of 2008, following what had already
been a tumultuous year for the global economy, producing sharply negative
investment returns for our clients. Both our absolute and relative investment
performance were poor. Equity returns across capital markets were negative in
2008 across styles, geographies, and capitalizations, as global equities
declined more than 40% for the year. Furthermore, we underperformed benchmarks,
in some cases by substantial amounts, in virtually all of our services,
particularly in the fourth quarter, reflecting our investments in non-U.S.
markets and sectors with exposure to credit risks. In many cases, this
performance adversely affected our long-term track records.
For 2008,
our total assets under management (“AUM”) fell $338.4 billion, or 42.3%, driven
by market depreciation of $294.2 billion and net outflows of $44.2
billion. With AUM at $462.0 billion as of December 31, 2008, we were
at our lowest level since the third quarter of 2003. The decline
occurred mostly in our Institutional Investment Services and Retail Services and
was overwhelmingly due to market depreciation in both value and growth equity
services. Net outflows accelerated in the fourth quarter to $23.2
billion, comprising more than half of the year’s total net outflows. In January
2009, net outflows, which continued to accelerate, and negative investment
performance combined to further reduce AUM to $429.1 billion, our lowest level
since the second quarter of 2003.
Institutional
Investment Services AUM declined during 2008 by $216.7 billion, or 42.7%, with
market depreciation of $191.7 billion and net outflows of $14.4 billion. Tepid
new account sales could not keep pace with the funding of previously awarded
mandates, which caused our pipeline of won but unfunded client mandates to fall
by approximately 43% to $8 billion compared to $14 billion at the end of the
third quarter of 2008. Currently we are managing over $18 billion of
defined contribution AUM, $12 billion of which is in Institutional Investment
Services. Although this is a relatively small part of our business, we consider
the growth of this AUM from less than $1 billion in 2006 to be quite
promising. We have only recently begun discussions with our largest
current and prospective clients about our new flexible Customized Retirement
Strategies platform, which defined contribution plan sponsors can use to create
tailored target date portfolios for their participants. We anticipate
that this part of our business will continue to expand, generating meaningful
incremental asset growth and further strengthening our relationships with some
of our largest and most important clients.
Our
Retail Services AUM declined during 2008 by $81.6 billion, or 44.5%, led by
market depreciation of $67.1 billion and net outflows of $25.1
billion. Nearly three-quarters of the year’s net outflows occurred in
the second half of 2008. To date, there has been little impact within Retail
Services from consolidations among major distributors and it is too early to
assess the opportunities and risks that these transactions present for
us. With that in mind, our Retail Services mandate is to continue our
strategy of aligning research and knowledge with the advice-delivery platforms
of financial institution distributors to improve investment outcomes for the
individual investors that we jointly serve.
Private
Client Services AUM fell during 2008 by $40.1 billion, or 36.8%, primarily as a
result of market depreciation of $35.4 billion. We continue to add new accounts,
albeit at a slower rate, and, despite one of the most turbulent investment
climates in history, our closed account rate for the year was 5.6% versus a
historical rate of 4.3%. This compares quite favorably to our highest closed
account rate of 17.7% in 2000. Although gross cash flow, which represents new
assets from new and existing clients, was down from recent years, it remained at
over $13 billion for the year. We believe this reflects the continued
appeal of our Private Client value proposition. Lastly, although we downsized
our staff levels in 2008, we did so while retaining the best and the highest
potential professionals that service our private clients.
The
events of 2008 not only greatly reduced our total AUM, but materially changed
its composition. We began with three-quarters of our AUM in equities and
one-quarter in fixed income. We ended the year closer to a 60/40
split in favor of equities. To a lesser degree, but not
inconsequential, our mix of U.S. versus global and international services
shifted by five percentage points away from global and
international. These trends have exacerbated the impact of lower AUM
on our revenues as our average fee realization rate decreased from 0.44% as of
December 31, 2007 to 0.42% by the end of 2008. Furthermore, our 2008
results included two quarters during which AUM and revenues were substantially
higher than they are now. If our current level of AUM continues or
declines for most or all of 2009, our revenues and earnings will be
substantially lower in 2009 than they were in 2008.
Institutional
Research Services provided a bright spot in 2008. Its revenues were up 11.4% in
2008 to $471.7 million, with robust growth in the U.S. offsetting a modest
decline in Europe. Revenues in the fourth quarter of 2008 were flat
year-over-year, however, and were down 5.4% sequentially, decelerating in the
latter half of the quarter as market volumes declined
significantly.
Our full
year revenues were down over $1 billion, or 22.3%, led by a $546.7 million, or
16.1%, decline in investment advisory and services fees. The revenue
decline was exacerbated by losses of $325 million on investments related to
employee deferred compensation and lower distribution revenues. Full
year operating expenses declined $547.4 million, or 17.5%, primarily the result
of lower incentive compensation and distribution expenses, the latter driven by
lower assets under management. Accordingly, 2008 diluted net income
per Holding Unit fell to $2.79, or 35.4%, compared to $4.32 for
2007. As we anticipated, our workforce reduction efforts were nearly
complete by the end of 2008. We ended the year with 4,997 employees,
which is 10.4% less than at the beginning of 2008, and down 11.7% versus the
peak at the end of the third quarter of 2008. This workforce
reduction will generate annual savings in excess of $70 million, mostly from
lower salaries and fringe benefits. In view of the continuing adverse economic
and capital markets conditions, we are considering additional expense reduction
measures.
Some
areas we specifically addressed in 2008 and on which we will continue to focus
in 2009 as a result of the global financial crisis are
(1)
:
|
Client
satisfaction – Our ability to understand and articulate what has happened,
to describe the lessons learned and the enhancements we have put in place,
and to communicate substantial opportunities we perceive, are all critical
to retaining client confidence in our ability to recover lost
performance.
|
|
Investment
performance – We underperformed benchmarks, in some cases by substantial
amounts, in virtually all of our services. We owe our clients
and unitholders much better performance and we will strive to provide
it.
|
|
Operational
cost savings – We reduced headcount from 5,580 at December 31, 2007 to
4,997 at December 31, 2008 and imposed a salary freeze for 2009 as part of
our initiative to lower operating costs. We are seeking
additional operational cost savings to counteract potential continuing
declines in revenues.
|
|
Capital
spending – Capital spending projects are being prioritized by business
need, with lower priority projects being delayed or
canceled.
|
|
Liquidity
– We currently have sufficient liquidity and financial flexibility (
i.e
., practically no
troubled investments or derivatives on our balance sheet, $4.3 billion of
partners’ capital, a $1.0 billion committed credit facility, only $0.3
billion of debt, and strong credit ratings). However,
additional sources of liquidity are being explored in the case of further
significant deterioration of capital and credit
markets.
|
|
Asset
impairment – We are more frequently monitoring the possibility that the
goodwill, intangible assets or deferred sales commissions recorded on our
balance sheet could become impaired, or that our debt covenants may not be
met, if financial conditions continue to deteriorate and AUM and
corresponding revenues continue to
decline.
|
|
Counterparty
risk – We are mindful of the possibility that counterparties in our
financial transactions, or suppliers of some of our services, will be
unable to perform as a result of their own deteriorating financial
conditions.
|
Our
balance sheet is strong, our intellectual capital is intact, and our expenses
and capital outlays are being aggressively managed while we continue to invest
in our most important strategic initiatives. Our task remains what it
has been throughout our history – apply deep and objective research as we assess
securities for our clients’ portfolios in the pursuit of long-term investing
success. We are confident about three important traits that
differentiate our firm: our financial strength and flexibility; the consistency
and caliber of our leadership team; and our research driven
culture. It is these core characteristics that we believe give us a
competitive edge to grow our business. Although we have confidence
that our core characteristics will lead to improved investment performance and
benefits for our clients, employees and unitholders alike, real challenges to
the global economy remain that will impact the re-emergence of investor
confidence and eventual recovery. Yet the deep fear that has overtaken investors
has also resulted in potentially historic investment opportunities across the
capital markets. We are evaluating today’s extreme dislocations,
attempting to have sufficient exposure to securities that are well-positioned to
outperform as markets anticipate the eventual resolution of this crisis and the
inevitable, though perhaps not imminent, improvement in the global
economy.
(1)
|
Many
of these items are discussed in greater detail later in this Item 7
(including “
Cautions
Regarding Forward-Looking Statements”
), “
Risk Factors”
(
see Item 1A
) or other
sections of this Form 10-K.
|
Holding’s
principal source of income and cash flow is attributable to its investment in
AllianceBernstein limited partnership interests. The Holding financial
statements and notes and management’s discussion and analysis of financial
condition and results of operations (“MD&A”) should be read in conjunction
with those of AllianceBernstein.
Results
of Operations
|
|
Years
Ended December 31,
|
|
|
%
Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
(in
thousands, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AllianceBernstein
net income
|
|
$
|
839,240
|
|
|
$
|
1,260,444
|
|
|
$
|
1,108,601
|
|
|
|
(33.4
|
)%
|
|
|
13.7
|
%
|
Weighted
average equity ownership interest
|
|
|
33.2
|
%
|
|
|
32.9
|
%
|
|
|
32.4
|
%
|
|
|
|
|
|
|
|
|
Equity
in earnings of AllianceBernstein
|
|
$
|
278,636
|
|
|
$
|
415,256
|
|
|
$
|
359,469
|
|
|
|
(32.9
|
)
|
|
|
15.5
|
|
Net
income of Holding
|
|
$
|
244,726
|
|
|
$
|
376,152
|
|
|
$
|
324,996
|
|
|
|
(34.9
|
)
|
|
|
15.7
|
|
Diluted
net income per Holding Unit
|
|
$
|
2.79
|
|
|
$
|
4.32
|
|
|
$
|
3.82
|
|
|
|
(35.4
|
)
|
|
|
13.1
|
|
Distribution
per Holding Unit
|
|
$
|
2.68
|
|
|
$
|
4.33
|
|
|
$
|
4.02
|
|
|
|
(38.1
|
)
|
|
|
7.7
|
|
In 2008,
net income and diluted net income per unit decreased from 2007 due to lower
equity in earnings of AllianceBernstein. In 2007, net income and diluted net
income per unit increased from the prior year due to higher equity in earnings
of AllianceBernstein.
Claims
Processing Contingency
During
the fourth quarter of 2006, AllianceBernstein recorded a $56.0 million pre-tax
charge ($54.5 million, net of related income tax benefit, or $0.21 per unit) for
the estimated cost of reimbursing certain clients for losses arising out of an
error AllianceBernstein made in processing claims for class action
settlement proceeds on behalf of these clients, which include some
AllianceBernstein-sponsored mutual funds. During the third quarter of 2008,
AllianceBernstein recorded approximately $35.3 million in insurance
recoveries relating to this error. AllianceBernstein’s and Holding’s fourth
quarter 2006 cash distributions were based on net income as calculated prior to
AllianceBernstein recording the charge. Accordingly, the insurance
recoveries ($0.13 per unit) were not included in AllianceBernstein’s or
Holding’s cash distribution to unitholders for the third quarter of 2008. As of
December 31, 2008, AllianceBernstein had $7.8 million remaining in accrued
liabilities related to the $56.0 million pre-tax charge, some of which
AllianceBernstein hopes to recover for its clients in future periods from
related class action settlement funds, the amount of which is not
known. To the extent AllianceBernstein is unable to recover amounts
its clients would have received were it not for the claims processing error,
AllianceBernstein will reimburse these clients for the unrecovered
amount.
Expense
Reduction
During
the fourth quarter of 2008, AllianceBernstein reduced headcount and announced
its intention to reduce capital outlays in 2009 in order to lower its expense
base in light of declines in assets under management and net revenues. As a
result of the workforce reduction, headcount was 4,997 as of December 31, 2008,
compared to a high of 5,660 (reflecting an 11.7% reduction) as of September 30,
2008, and 5,580 (reflecting a 10.4% reduction) as of December 31, 2007.
AllianceBernstein recorded a pre-tax charge to earnings of $42.7 million in the
fourth quarter of 2008 for severance and severance-related items. This workforce
reduction is expected to generate annual savings in excess of $70 million,
primarily from lower salaries and fringe benefits. AllianceBernstein’s capital
expenditures were reduced by approximately 50% below its original 2008 capital
spending plan and its 2009 capital spending plan includes an approximate 10%
reduction from 2008 expenditure levels. In view of the continuing adverse
economic and market conditions, AllianceBernstein is considering additional
expense reduction measures.
Proposed
Tax Legislation
See
“Risk Factors” in Item 1A.
Capital
Resources and Liquidity
The
following table identifies selected items relating to capital resources and
liquidity:
|
|
Years
Ended December 31,
|
|
|
%
Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners’
capital, as of December 31
|
|
$
|
1,596.2
|
|
|
$
|
1,567.5
|
|
|
$
|
1,559.2
|
|
|
|
1.8
|
%
|
|
|
0.5
|
%
|
Distributions
received from AllianceBernstein
|
|
|
338.4
|
|
|
|
449.3
|
|
|
|
332.0
|
|
|
|
(24.7
|
)
|
|
|
35.3
|
|
Distributions
paid to unitholders
|
|
|
(301.4
|
)
|
|
|
(408.7
|
)
|
|
|
(298.5
|
)
|
|
|
(26.3
|
)
|
|
|
36.9
|
|
Proceeds
from exercise of compensatory options to buy Holding Units
|
|
|
13.5
|
|
|
|
50.1
|
|
|
|
100.5
|
|
|
|
(73.0
|
)
|
|
|
(50.2
|
)
|
Investment
in AllianceBernstein with proceeds from exercise of compensatory options
to buy Holding Units
|
|
|
(13.5
|
)
|
|
|
(50.1
|
)
|
|
|
(100.5
|
)
|
|
|
(73.0
|
)
|
|
|
(50.2
|
)
|
Purchases
of Holding Units by AllianceBernstein to fund deferred compensation plans,
net
|
|
|
(21.0
|
)
|
|
|
(50.9
|
)
|
|
|
(22.3
|
)
|
|
|
(58.8
|
)
|
|
|
127.6
|
|
Issuance
of Holding Units to fund CEO’s Restricted Units award
(1)
|
|
|
52.3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100.0
|
|
|
|
—
|
|
Issuance
of Holding Units in exchange for cash awards made by AllianceBernstein
under the Partners Compensation Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
47.2
|
|
|
|
—
|
|
|
|
(100.0
|
)
|
Awards
of Holding Units made by AllianceBernstein under deferred compensation
plans, net of forfeitures
|
|
|
63.9
|
|
|
|
34.8
|
|
|
|
35.3
|
|
|
|
83.7
|
|
|
|
(1.5
|
)
|
Available
Cash Flow
|
|
|
235.1
|
|
|
|
374.3
|
|
|
|
340.3
|
|
|
|
(37.2
|
)
|
|
|
10.0
|
|
(1)
|
See Note 16 to
AllianceBernstein’s consolidated financial statements in Item
8
.
|
Cash and
cash equivalents were zero as of December 31, 2008, 2007 and 2006. Cash inflows
from AllianceBernstein distributions received were offset by cash distributions
paid to unitholders and income taxes paid. Holding is required to distribute all
of its Available Cash Flow, as defined in the Holding Partnership Agreement, to
its unitholders (including the General Partner). Management believes that the
cash flow realized from its investment in AllianceBernstein will provide Holding
with the resources to meet its financial obligations.
See
“
Statements of Changes in Partners’
Capital and Comprehensive Income” and “Statements of Cash Flows” in Holding’s
financial statements in Item 8.
Commitments
and Contingencies
See
Note 7 to Holding
’
s financial
statements in Item 8.
Assets
Under Management
Assets
under management by distribution channel were as follows:
|
As of December 31,
|
|
|
% Change
|
|
|
2008
|
|
2007
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
(in
billions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional
Investments
|
|
$
|
291.4
|
|
|
$
|
508.1
|
|
|
$
|
455.1
|
|
|
|
(42.7
|
)%
|
|
|
11.6
|
%
|
Retail
|
|
|
101.6
|
|
|
|
183.2
|
|
|
|
166.9
|
|
|
|
(44.5
|
)
|
|
|
9.7
|
|
Private
Client
|
|
|
69.0
|
|
|
|
109.1
|
|
|
|
94.9
|
|
|
|
(36.8
|
)
|
|
|
15.0
|
|
Total
|
|
$
|
462.0
|
|
|
$
|
800.4
|
|
|
$
|
716.9
|
|
|
|
(42.3
|
)
|
|
|
11.6
|
|
Assets
under management by investment service were as follows:
|
|
As of December 31,
|
|
|
% Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
(in
billions)
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
$
|
47.9
|
|
|
$
|
108.0
|
|
|
$
|
119.0
|
|
|
|
(55.6
|
)%
|
|
|
(9.3
|
)%
|
Global &
international
|
|
|
124.5
|
|
|
|
274.5
|
|
|
|
216.5
|
|
|
|
(54.7
|
)
|
|
|
26.8
|
|
|
|
|
172.4
|
|
|
|
382.5
|
|
|
|
335.5
|
|
|
|
(54.9
|
)
|
|
|
14.0
|
|
Growth:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
33.0
|
|
|
|
72.5
|
|
|
|
78.5
|
|
|
|
(54.5
|
)
|
|
|
(7.6
|
)
|
Global &
international
|
|
|
55.3
|
|
|
|
124.4
|
|
|
|
95.6
|
|
|
|
(55.6
|
)
|
|
|
30.1
|
|
|
|
|
88.3
|
|
|
|
196.9
|
|
|
|
174.1
|
|
|
|
(55.2
|
)
|
|
|
13.1
|
|
Total
Equity
|
|
|
260.7
|
|
|
|
579.4
|
|
|
|
509.6
|
|
|
|
(55.0
|
)
|
|
|
13.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
105.3
|
|
|
|
113.4
|
|
|
|
109.9
|
|
|
|
(7.1
|
)
|
|
|
3.2
|
|
Global &
international
|
|
|
71.8
|
|
|
|
84.5
|
|
|
|
67.1
|
|
|
|
(15.0
|
)
|
|
|
25.9
|
|
|
|
|
177.1
|
|
|
|
197.9
|
|
|
|
177.0
|
|
|
|
(10.5
|
)
|
|
|
11.8
|
|
Other
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
16.5
|
|
|
|
16.9
|
|
|
|
24.8
|
|
|
|
(2.5
|
)
|
|
|
(31.9
|
)
|
Global &
international
|
|
|
7.7
|
|
|
|
6.2
|
|
|
|
5.5
|
|
|
|
24.6
|
|
|
|
10.9
|
|
|
|
|
24.2
|
|
|
|
23.1
|
|
|
|
30.3
|
|
|
|
4.7
|
|
|
|
(24.1
|
)
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
202.7
|
|
|
|
310.8
|
|
|
|
332.2
|
|
|
|
(34.8
|
)
|
|
|
(6.4
|
)
|
Global &
international
|
|
|
259.3
|
|
|
|
489.6
|
|
|
|
384.7
|
|
|
|
(47.0
|
)
|
|
|
27.3
|
|
Total
|
|
$
|
462.0
|
|
|
$
|
800.4
|
|
|
$
|
716.9
|
|
|
|
(42.3
|
)
|
|
|
11.6
|
|
(1)
|
Includes
index, structured and asset allocation
services.
|
Changes
in assets under management during 2008 were as follows:
|
|
Distribution Channel
|
|
|
Investment Service
|
|
|
|
Institutional
Investments
|
|
|
Retail
|
|
|
Private
Client
|
|
|
Total
|
|
|
Value
Equity
|
|
|
Growth
Equity
|
|
|
Fixed
Income
|
|
|
Other
(1)
|
|
|
Total
|
|
|
|
(in
billions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2007
|
|
$
|
508.1
|
|
|
$
|
183.2
|
|
|
$
|
109.1
|
|
|
$
|
800.4
|
|
|
$
|
382.5
|
|
|
$
|
196.9
|
|
|
$
|
197.9
|
|
|
$
|
23.1
|
|
|
$
|
800.4
|
|
Long-term
flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales/new
accounts
|
|
|
38.5
|
|
|
|
23.3
|
|
|
|
11.0
|
|
|
|
72.8
|
|
|
|
30.9
|
|
|
|
16.3
|
|
|
|
21.8
|
|
|
|
3.8
|
|
|
|
72.8
|
|
Redemptions/terminations
|
|
|
(34.9
|
)
|
|
|
(39.8
|
)
|
|
|
(8.3
|
)
|
|
|
(83.0
|
)
|
|
|
(41.1
|
)
|
|
|
(23.0
|
)
|
|
|
(18.6
|
)
|
|
|
(0.3
|
)
|
|
|
(83.0
|
)
|
Cash
flow/unreinvested dividends
|
|
|
(18.0
|
)
|
|
|
(8.6
|
)
|
|
|
(7.4
|
)
|
|
|
(34.0
|
)
|
|
|
(19.1
|
)
|
|
|
(11.5
|
)
|
|
|
(10.6
|
)
|
|
|
7.2
|
|
|
|
(34.0
|
)
|
Net
long-term (outflows) inflows
|
|
|
(14.4
|
)
|
|
|
(25.1
|
)
|
|
|
(4.7
|
)
|
|
|
(44.2
|
)
|
|
|
(29.3
|
)
|
|
|
(18.2
|
)
|
|
|
(7.4
|
)
|
|
|
10.7
|
|
|
|
(44.2
|
)
|
Transfers
|
|
|
(10.6
|
)
|
|
|
10.6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Market
depreciation
|
|
|
(191.7
|
)
|
|
|
(67.1
|
)
|
|
|
(35.4
|
)
|
|
|
(294.2
|
)
|
|
|
(180.8
|
)
|
|
|
(90.4
|
)
|
|
|
(13.4
|
)
|
|
|
(9.6
|
)
|
|
|
(294.2
|
)
|
Net
change
|
|
|
(216.7
|
)
|
|
|
(81.6
|
)
|
|
|
(40.1
|
)
|
|
|
(338.4
|
)
|
|
|
(210.1
|
)
|
|
|
(108.6
|
)
|
|
|
(20.8
|
)
|
|
|
1.1
|
|
|
|
(338.4
|
)
|
Balance
as of December 31, 2008
|
|
$
|
291.4
|
|
|
$
|
101.6
|
|
|
$
|
69.0
|
|
|
$
|
462.0
|
|
|
$
|
172.4
|
|
|
$
|
88.3
|
|
|
$
|
177.1
|
|
|
$
|
24.2
|
|
|
$
|
462.0
|
|
(1)
|
Includes
index, structured and asset allocation
services.
|
Changes
in assets under management during 2007 were as follows:
|
|
Distribution Channel
|
|
|
Investment Service
|
|
|
|
Institutional
Investments
|
|
|
Retail
|
|
|
Private
Client
|
|
|
Total
|
|
|
Value
Equity
|
|
|
Growth
Equity
|
|
|
Fixed
Income
|
|
|
Other
(1)
|
|
|
Total
|
|
|
|
(in
billions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2006
|
|
$
|
455.1
|
|
|
$
|
166.9
|
|
|
$
|
94.9
|
|
|
$
|
716.9
|
|
|
$
|
335.5
|
|
|
$
|
174.1
|
|
|
$
|
177.0
|
|
|
$
|
30.3
|
|
|
$
|
716.9
|
|
Long-term
flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales/new
accounts
|
|
|
70.8
|
|
|
|
46.2
|
|
|
|
18.3
|
|
|
|
135.3
|
|
|
|
71.4
|
|
|
|
30.0
|
|
|
|
32.9
|
|
|
|
1.0
|
|
|
|
135.3
|
|
Redemptions/terminations
|
|
|
(33.2
|
)
|
|
|
(37.0
|
)
|
|
|
(4.5
|
)
|
|
|
(74.7
|
)
|
|
|
(25.3
|
)
|
|
|
(25.0
|
)
|
|
|
(16.0
|
)
|
|
|
(8.4
|
)
|
|
|
(74.7
|
)
|
Cash
flow/unreinvested dividends
|
|
|
(19.9
|
)
|
|
|
(3.3
|
)
|
|
|
(5.2
|
)
|
|
|
(28.4
|
)
|
|
|
(14.0
|
)
|
|
|
(7.9
|
)
|
|
|
(4.8
|
)
|
|
|
(1.7
|
)
|
|
|
(28.4
|
)
|
Net
long-term inflows (outflows)
|
|
|
17.7
|
|
|
|
5.9
|
|
|
|
8.6
|
|
|
|
32.2
|
|
|
|
32.1
|
|
|
|
(2.9
|
)
|
|
|
12.1
|
|
|
|
(9.1
|
)
|
|
|
32.2
|
|
Transfers
|
|
|
(0.2
|
)
|
|
|
(0.5
|
)
|
|
|
0.7
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Market
appreciation
|
|
|
35.5
|
|
|
|
10.9
|
|
|
|
4.9
|
|
|
|
51.3
|
|
|
|
14.9
|
|
|
|
25.7
|
|
|
|
8.8
|
|
|
|
1.9
|
|
|
|
51.3
|
|
Net
change
|
|
|
53.0
|
|
|
|
16.3
|
|
|
|
14.2
|
|
|
|
83.5
|
|
|
|
47.0
|
|
|
|
22.8
|
|
|
|
20.9
|
|
|
|
(7.2
|
)
|
|
|
83.5
|
|
Balance
as of December 31, 2007
|
|
$
|
508.1
|
|
|
$
|
183.2
|
|
|
$
|
109.1
|
|
|
$
|
800.4
|
|
|
$
|
382.5
|
|
|
$
|
196.9
|
|
|
$
|
197.9
|
|
|
$
|
23.1
|
|
|
$
|
800.4
|
|
(1)
|
Includes
index, structured and asset allocation
services.
|
Average
assets under management by distribution channel and investment service were as
follows:
|
Years Ended December 31,
|
|
|
% Change
|
|
|
2008
|
|
2007
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
(in
billions)
|
|
|
|
|
|
|
|
|
|
Distribution
Channel:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional
Investments
|
|
$
|
426.5
|
|
|
$
|
491.1
|
|
|
$
|
405.6
|
|
|
|
(13.1
|
)%
|
|
|
21.1
|
%
|
Retail
|
|
|
145.4
|
|
|
|
180.5
|
|
|
|
150.8
|
|
|
|
(19.4
|
)
|
|
|
19.7
|
|
Private
Client
|
|
|
93.2
|
|
|
|
104.8
|
|
|
|
84.6
|
|
|
|
(11.1
|
)
|
|
|
23.8
|
|
Total
|
|
$
|
665.1
|
|
|
$
|
776.4
|
|
|
$
|
641.0
|
|
|
|
(14.3
|
)
|
|
|
21.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
Service:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
Equity
|
|
$
|
297.9
|
|
|
$
|
373.3
|
|
|
$
|
281.1
|
|
|
|
(20.2
|
)%
|
|
|
32.8
|
%
|
Growth
Equity
|
|
|
152.6
|
|
|
|
186.0
|
|
|
|
160.2
|
|
|
|
(17.9
|
)
|
|
|
16.1
|
|
Fixed
Income
|
|
|
193.2
|
|
|
|
188.3
|
|
|
|
169.2
|
|
|
|
2.6
|
|
|
|
11.3
|
|
Other
(1)
|
|
|
21.4
|
|
|
|
28.8
|
|
|
|
30.5
|
|
|
|
(25.6
|
)
|
|
|
(5.8
|
)
|
Total
|
|
$
|
665.1
|
|
|
$
|
776.4
|
|
|
$
|
641.0
|
|
|
|
(14.3
|
)
|
|
|
21.1
|
|
(1)
|
Includes
index, structured and asset allocation
services.
|
Consolidated
Results of Operations
|
|
Years
Ended December 31,
|
|
|
%
Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
(in
millions, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
|
$
|
3,514.2
|
|
|
$
|
4,525.3
|
|
|
$
|
3,950.4
|
|
|
|
(22.3
|
)%
|
|
|
14.6
|
%
|
Expenses
|
|
|
2,588.7
|
|
|
|
3,136.1
|
|
|
|
2,778.6
|
|
|
|
(17.5
|
)
|
|
|
12.9
|
|
Operating
income
|
|
|
925.5
|
|
|
|
1,389.2
|
|
|
|
1,171.8
|
|
|
|
(33.4
|
)
|
|
|
18.6
|
|
Non-operating
income
|
|
|
18.7
|
|
|
|
15.8
|
|
|
|
20.2
|
|
|
|
18.9
|
|
|
|
(22.0
|
)
|
Income
before income taxes and non-controlling interest in earnings of
consolidated entities
|
|
|
944.2
|
|
|
|
1,405.0
|
|
|
|
1,192.0
|
|
|
|
(32.8
|
)
|
|
|
17.9
|
|
Income
taxes
|
|
|
95.8
|
|
|
|
127.9
|
|
|
|
75.0
|
|
|
|
(25.1
|
)
|
|
|
70.4
|
|
Non-controlling
interest in earnings of consolidated entities, net of tax
|
|
|
9.2
|
|
|
|
16.7
|
|
|
|
8.4
|
|
|
|
(45.0
|
)
|
|
|
99.2
|
|
Net
income
|
|
$
|
839.2
|
|
|
$
|
1,260.4
|
|
|
$
|
1,108.6
|
|
|
|
(33.4
|
)
|
|
|
13.7
|
|
Diluted
net income per unit
|
|
$
|
3.18
|
|
|
$
|
4.77
|
|
|
$
|
4.22
|
|
|
|
(33.3
|
)
|
|
|
13.0
|
|
Distributions
per unit
|
|
$
|
3.07
|
|
|
$
|
4.77
|
|
|
$
|
4.42
|
|
|
|
(35.6
|
)
|
|
|
7.9
|
|
Operating
margin
(1)
|
|
|
26.1
|
%
|
|
|
30.3
|
%
|
|
|
29.5
|
%
|
|
|
|
|
|
|
|
|
(1)
|
Operating income less
non-controlling interest in earnings of consolidated entities as a
percentage of net revenues.
|
In 2008,
net income declined $421.2 million, or 33.4%, to $839.2 million, and net income
per unit decreased $1.59, or 33.3%, to $3.18. The decrease was due primarily to
lower investment advisory and services fees revenues resulting from lower assets
under management and significant mark-to-market losses on investments related to
deferred compensation plan obligations, partially offset by lower employee
compensation and benefits expenses.
In 2007,
net income increased $151.8 million, or 13.7%, to $1,260.4 million, and net
income per unit increased $0.55, or 13.0%, to $4.77. The increase was due
primarily to higher investment advisory and services fees revenues resulting
from higher assets under management, partially offset by higher employee
compensation and benefits expenses. Our operating margin expanded 0.8% to 30.3%
in 2007, benefiting from the increase in our fee revenues and the moderation of
our growth in expenses.
Claims
Processing Contingency
During
the fourth quarter of 2006, we recorded in general and administrative expenses a
$56.0 million pre-tax charge ($54.5 million, net of related income tax benefit,
or $0.21 per unit) for the estimated cost of reimbursing certain clients for
losses arising out of an error we made in processing claims for class
action settlement proceeds on behalf of these clients, which include some
AllianceBernstein-sponsored mutual funds. During the third quarter of 2008, we
recorded as a reduction of general and administrative expenses approximately
$35.3 million in insurance recoveries relating to this error. Our fourth
quarter 2006 cash distributions were based on net income as calculated prior to
recording the charge. Accordingly, the insurance recoveries ($0.13 per
unit) were not included in our cash distribution to unitholders for the
third quarter of 2008. As of December 31, 2008, we had $7.8 million
remaining in accrued liabilities related to the $56.0 million pre-tax charge,
some of which we hope to recover for our clients in future periods from related
class action settlement funds, the amount of which is unknown. To the extent we
are unable to recover amounts our clients would have received were it not for
the claims processing error, we will reimburse these clients for the unrecovered
amount.
Expense
Reduction
During
the fourth quarter of 2008, we reduced headcount and announced our intention to
reduce capital outlays in 2009 in order to lower our expense base in light of
declines in assets under management and net revenues. As a result of this
workforce reduction, headcount was 4,997 as of December 31, 2008, compared to a
high of 5,660 (reflecting an 11.7% reduction) as of September 30, 2008, and
5,580 (reflecting a 10.4% reduction) as of December 31, 2007. We recorded a
pre-tax charge to earnings of $42.7 million in the fourth quarter of 2008 for
severance and severance-related items. This workforce reduction is expected to
generate annual savings in excess of $70 million, primarily from salaries and
fringe benefits. Our capital expenditures were reduced by approximately 50%
below our original 2008 capital spending plan and our 2009 capital spending plan
includes an approximate 10% reduction from 2008 expenditure levels. In view of
the continuing adverse economic and market conditions, we are considering
additional expense reduction measures.
Impairment
Analysis
As of
December 31, 2008, management tested goodwill, intangible assets, and the
deferred sales commission asset for impairment and determined that these assets
were not impaired.
See
“Critical Accounting Estimates” in this Item 7
for a discussion of our
impairment testing methodology.
To the
extent that securities valuations remain depressed for prolonged periods of time
and market conditions stagnate or worsen as a result of the global financial
crisis, our assets under management, revenues, profitability, and unit price may
be adversely affected. As a result, subsequent impairment tests may be based
upon different assumptions and future cash flow projections which may result in
an impairment of goodwill, intangible assets and the deferred sales commission
asset. In the current environment, we anticipate testing these assets for
impairment (typically tested annually) on a more frequent basis.
Net
Revenues
The
following table summarizes the components of net revenues:
|
|
Years Ended December 31,
|
|
|
%
Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
Investment
advisory and services fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
fees
|
|
$
|
1,229.1
|
|
|
$
|
1,416.0
|
|
|
$
|
1,108.2
|
|
|
|
(13.2
|
)%
|
|
|
27.8
|
%
|
Performance-based
fees
|
|
|
11.5
|
|
|
|
65.6
|
|
|
|
113.0
|
|
|
|
(82.4
|
)
|
|
|
(42.0
|
)
|
|
|
|
1,240.6
|
|
|
|
1,481.6
|
|
|
|
1,221.2
|
|
|
|
(16.3
|
)
|
|
|
21.3
|
|
Retail:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
fees
|
|
|
751.0
|
|
|
|
946.0
|
|
|
|
787.5
|
|
|
|
(20.6
|
)
|
|
|
20.1
|
|
Performance-based
fees
|
|
|
0.1
|
|
|
|
—
|
|
|
|
0.3
|
|
|
|
n/m
|
|
|
|
(96.0
|
)
|
|
|
|
751.1
|
|
|
|
946.0
|
|
|
|
787.8
|
|
|
|
(20.6
|
)
|
|
|
20.1
|
|
Private
Client:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
fees
|
|
|
846.0
|
|
|
|
943.0
|
|
|
|
758.8
|
|
|
|
(10.3
|
)
|
|
|
24.3
|
|
Performance-based
fees
|
|
|
1.8
|
|
|
|
15.6
|
|
|
|
122.4
|
|
|
|
(88.3
|
)
|
|
|
(87.3
|
)
|
|
|
|
847.8
|
|
|
|
958.6
|
|
|
|
881.2
|
|
|
|
(11.6
|
)
|
|
|
8.8
|
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
fees
|
|
|
2,826.1
|
|
|
|
3,305.0
|
|
|
|
2,654.5
|
|
|
|
(14.5
|
)
|
|
|
24.5
|
|
Performance-based
fees
|
|
|
13.4
|
|
|
|
81.2
|
|
|
|
235.7
|
|
|
|
(83.4
|
)
|
|
|
(65.6
|
)
|
|
|
|
2,839.5
|
|
|
|
3,386.2
|
|
|
|
2,890.2
|
|
|
|
(16.1
|
)
|
|
|
17.2
|
|
Distribution
revenues
|
|
|
378.4
|
|
|
|
473.4
|
|
|
|
421.0
|
|
|
|
(20.1
|
)
|
|
|
12.4
|
|
Institutional
research services
|
|
|
471.7
|
|
|
|
423.5
|
|
|
|
375.1
|
|
|
|
11.4
|
|
|
|
12.9
|
|
Dividend
and interest income
|
|
|
91.8
|
|
|
|
284.0
|
|
|
|
266.5
|
|
|
|
(67.7
|
)
|
|
|
6.6
|
|
Investment
gains (losses)
|
|
|
(349.2
|
)
|
|
|
29.7
|
|
|
|
62.2
|
|
|
|
n/m
|
|
|
|
(52.3
|
)
|
Other
revenues
|
|
|
118.5
|
|
|
|
122.9
|
|
|
|
123.2
|
|
|
|
(3.6
|
)
|
|
|
(0.2
|
)
|
Total
revenues
|
|
|
3,550.7
|
|
|
|
4,719.7
|
|
|
|
4,138.2
|
|
|
|
(24.8
|
)
|
|
|
14.1
|
|
Less:
Interest expense
|
|
|
36.5
|
|
|
|
194.4
|
|
|
|
187.8
|
|
|
|
(81.2
|
)
|
|
|
3.5
|
|
Net
revenues
|
|
$
|
3,514.2
|
|
|
$
|
4,525.3
|
|
|
$
|
3,950.4
|
|
|
|
(22.3
|
)
|
|
|
14.6
|
|
Investment Advisory and Services
Fees
Investment
advisory and services fees, the largest component of our revenues, consist
primarily of base fees. These fees are generally calculated as a percentage of
the value of assets under management as of a specified date, or as a percentage
of the value of average assets under management for the applicable billing
period, and vary with the type of investment service, the size of account, and
the total amount of assets we manage for a particular client. Accordingly, fee
income generally increases or decreases as average assets under management
increase or decrease and is therefore affected by market appreciation or
depreciation, the addition of new client accounts or client contributions of
additional assets to existing accounts, withdrawals of assets from and
termination of client accounts, purchases and redemptions of mutual fund shares,
and shifts of assets between accounts or products with different fee
structures.
We
calculate AUM using our standard fair valuation methodologies, including market
based valuation methods and fair valuation methods. Market based valuation
methods include: last sale/settle prices from an exchange for
actively traded listed equities, options and futures; evaluated bid prices
from standard pricing vendors for fixed income, asset-backed or mortgage-backed
issues; mid prices from standard pricing vendors and brokers for credit default
swaps; and quoted bids or spreads from pricing vendors and brokers for other
derivative products. Fair valuation methods include discounted cash
flow models, evaluation of assets vs. liabilities or any other methodology
that is validated and approved by our Valuation Committee (“Committee”). Fair
valuation methods are used only where AUM cannot be valued using market based
valuation methods, such as in the case of private equity or illiquid securities.
Fair valued investments typically make up less than 1% of our total
AUM. Recent market volatility has not had a significant effect on our
ability to acquire market data and, accordingly, our ability to use market based
valuation methods.
The
Committee, which is composed of senior officers and employees and is chaired by
our Chief Risk Officer, is responsible for overseeing the pricing and valuation
of all investments held in client portfolios. The Committee has
adopted a Statement of Pricing Policies describing principles and policies that
apply to pricing and valuing investments held in client
portfolios. We have also established a Pricing Group, which reports
to the Committee. The Committee has delegated to the Pricing Group
responsibility for monitoring the pricing process for all investments held
in client portfolios.
We
sometimes charge our clients performance-based fees. In these situations, we
charge a base advisory fee and are eligible to earn an additional
performance-based fee or incentive allocation that is calculated as either a
percentage of absolute investment results or a percentage of investment results
in excess of a stated benchmark over a specified period of time. In addition,
some performance-based fees include a high-watermark provision, which generally
provides that if a client account underperforms relative to its performance
target (whether absolute or relative to a specified benchmark), it must gain
back such underperformance before we can collect future performance-based fees.
Therefore, if we underperform our performance target for a particular period, we
will not earn a performance-based fee for that period and, for accounts with a
high-watermark provision, our ability to earn future performance-based fees will
be impaired. We are eligible to earn performance-based fees on approximately 14%
of the assets we manage for institutional clients and approximately 5% of the
assets we manage for private clients (in total, approximately 10% of our
company-wide AUM). If the percentage of our AUM subject to performance-based
fees grows, seasonality and volatility of revenue and earnings are likely to
become more significant. Approximately 80% of our hedge fund AUM is subject to
high-watermarks, and we ended 2008 with approximately 67% of this hedge fund AUM
below high-watermarks by 10% or more. This will make it very
difficult for us to earn performance-based fees in most of our hedge funds in
2009.
Our
investment advisory and services fees decreased 16.1% in 2008, primarily due to
a decrease of 14.3% in average assets under management. For 2007,
investment advisory and services fees increased 17.2%, primarily due to a 21.1%
increase in average assets under management.
Institutional
investment advisory and services fees decreased 16.3% in 2008 as a result of a
decrease in average assets under management of 13.1%, and a decrease in
performance-based fees of $54.1 million. Institutional investment advisory
and services fees increased 21.3% in 2007 as a result of an increase in average
assets under management of 21.1%, and a more favorable fee mix, partially offset
by a decrease in performance-based fees of $47.4 million. The favorable fee mix
reflected increases in average assets under management in our global and
international services of 40.4%, where base fee rates are generally higher than
for domestic services.
Retail
investment advisory and services fees decreased 20.6% in 2008 due primarily to a
decrease of 19.4% in average assets under management. For 2007, these fees
increased 20.1% due primarily to an increase of 19.7% in average assets under
management.
Private
Client investment advisory and services fees decreased 11.6% in 2008 as a result
of lower base fees from a 7.4% decrease in billable assets under management and
the impact of a change in product mix. Private Client investment advisory and
services fees increased 8.8% in 2007 as a result of higher base fees from a
15.0% increase in assets under management partially offset by a $106.8 million,
or 87.3%, decrease in performance-based fees, earned largely from our hedge
funds.
Distribution Revenues
AllianceBernstein Investments and
AllianceBernstein (Luxembourg) S.A. (each a wholly-owned subsidiary of
AllianceBernstein) act as distributor and/or placing agent of company-sponsored
mutual funds and receive distribution services fees from certain of those funds
as partial reimbursement of the distribution expenses they incur. Distribution
revenues decreased 20.1% in 2008, principally due to lower average mutual fund
assets under management. The decline in revenues and assets under management was
approximately an even split between U.S. and non-U.S.
services. Distribution revenues increased 12.4% in 2007, principally
due to higher average mutual fund assets under management.
Institutional Research Services
Institutional
Research Services revenue consists principally of brokerage transaction charges
received for providing equity research and brokerage-related services to
institutional investors. Revenues from Institutional Research Services increased
11.4% for 2008 due to significantly higher revenues from U.S. operations offset
by a decline in Europe. Revenues from Institutional Research Services increased
12.9% for 2007 due to higher revenues from both European and U.S.
operations.
Dividend and Interest Income and Interest
Expense
Dividend
and interest income consists of investment income, interest earned on U.S.
Treasury Bills, and interest earned on collateral given for securities borrowed
from brokers and dealers. Interest expense includes interest accrued on cash
balances in customers’ brokerage accounts and on collateral received for
securities loaned. Dividend and interest, net of interest expense,
decreased $34.3 million, or 38.3%, in 2008. The decrease was due primarily to
lower dividends from our deferred compensation-related investments as well as
lower interest earned on our stock borrow and loan activity resulting from the
outsourcing of our hedge fund prime brokerage operations in the fourth quarter
of 2007. Dividend and interest, net of interest expense, increased $10.9 million
in 2007. The increase was due primarily to increased brokerage interest due to
higher Treasury Bill balances and higher dividends from our deferred
compensation-related investments.
Investment Gains (Losses)
Investment
gains (losses), consists primarily of realized and unrealized investment gains
or losses on trading investments related to deferred compensation plan
obligations and investments made in our consolidated venture capital fund,
realized gains or losses on the sale of available-for-sale investments, and
equity in earnings of investments in limited partnership hedge funds that we
sponsor and manage. Investment gains (losses) decreased $378.9
million in 2008, due primarily to significant realized and unrealized losses on
investments related to deferred compensation plan obligations in 2008 of $325.0
million as compared to gains in 2007 of $4.8 million, as well as realized and
unrealized losses on the sales of other investments. Investment gains (losses)
decreased $32.5 million in 2007, due primarily to lower mark-to-market gains on
investments related to deferred compensation plan obligations in 2007 as
compared to 2006 and equity losses in 2007 versus gains in 2006 from our
investment in hedge funds, partially offset by mark-to-market gains on
investments in our consolidated venture capital fund.
Other Revenues, Net
Other
revenues consist of fees earned for transfer agency services provided to
company-sponsored mutual funds, fees earned for administration and recordkeeping
services provided to company-sponsored mutual funds and the general accounts of
AXA and its subsidiaries, and other miscellaneous revenues. Other revenues
decreased 3.6% in 2008, due primarily to lower shareholder servicing fees as a
result of fewer accounts. Other revenues were essentially flat in 2007 as
compared to 2006.
Expenses
The
following table summarizes the components of expenses:
|
Years Ended December 31,
|
|
|
% Change
|
|
|
2008
|
|
2007
|
|
2006
|
|
|
|
2008-07
|
|
|
|
2007-06
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and
benefits
|
|
$
|
1,454.7
|
|
|
$
|
1,833.8
|
|
|
$
|
1,547.6
|
|
|
|
(20.7
|
)%
|
|
|
18.5
|
%
|
Promotion and
servicing
|
|
|
561.0
|
|
|
|
683.1
|
|
|
|
612.2
|
|
|
|
(17.9
|
)
|
|
|
11.6
|
|
General and
administrative
|
|
|
539.2
|
|
|
|
574.5
|
|
|
|
574.9
|
|
|
|
(6.1
|
)
|
|
|
(0.1
|
)
|
Interest
|
|
|
13.1
|
|
|
|
24.0
|
|
|
|
23.2
|
|
|
|
(45.4
|
)
|
|
|
3.7
|
|
Amortization of intangible
assets
|
|
|
20.7
|
|
|
|
20.7
|
|
|
|
20.7
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
2,588.7
|
|
|
$
|
3,136.1
|
|
|
$
|
2,778.6
|
|
|
|
(17.5
|
)
|
|
|
12.9
|
|
Employee Compensation and Benefits
We had
4,997 full-time employees as of December 31, 2008 compared to 5,580 in 2007
and 4,914 in 2006. Employee compensation and benefits, which represented
approximately 56%, 58% and 56% of total expenses in 2008, 2007 and 2006,
respectively, include base compensation (including severance), cash and deferred
incentive compensation, commissions, fringe benefits, and other employment costs
(including recruitment, training, temporary help and meals).
In 2008,
base compensation, fringe benefits and other employment costs increased $69.9
million, or 10.8%, primarily as a result of higher salaries from higher
headcount throughout most of the year and $42.7 million in severance and
severance-related items due to the workforce reduction, partially offset by
lower recruitment costs and lower payroll taxes as a result of lower incentive
compensation. Incentive compensation decreased $370.6 million, or 50.2%,
primarily as a result of lower annual bonus payments and lower deferred
compensation expense resulting from mark-to-market losses on related
investments. Commission expense decreased $78.4 million, or 17.4%, reflecting
lower sales volumes across our Institutional Investments, Retail and Private
Client distribution channels.
In 2007,
base compensation, fringe benefits and other employment costs increased $105.8
million, or 19.6%, primarily as a result of increased headcount, annual merit
increases, and higher fringe benefits reflecting increased compensation levels.
Incentive compensation increased $97.5 million, or 15.2%, primarily as a result
of the increase in full-time employees, higher annual bonus payments and higher
deferred compensation expense. Commission expense increased $82.9 million, or
22.6%, reflecting higher sales volumes across all distribution
channels.
Promotion and Servicing
Promotion
and servicing expenses, which represented approximately 22% of total expenses in
2008, 2007 and 2006, include distribution plan payments to financial
intermediaries for distribution of company-sponsored mutual funds, and
amortization of deferred sales commissions paid to financial intermediaries for
the sale of back-end load shares of company-sponsored mutual funds.
See “Capital Resources and
Liquidity” in this Item 7 and Note 11 to AllianceBernstein’s consolidated
financial statements in Item 8
for further discussion of deferred sales
commissions. Also included in this expense category are costs related to travel
and entertainment, advertising, promotional materials, and investment meetings
and seminars for financial intermediaries that distribute our mutual fund
products.
Promotion
and servicing expenses decreased 17.9% in 2008 and increased 11.6% in 2007. The
decrease in 2008 was primarily due to lower distribution plan payments
(resulting from lower average Retail Services assets under management), lower
amortization of deferred sales commissions, and lower travel and entertainment
expenses. The increase in 2007 was primarily due to higher distribution
payments, travel and entertainment, and transfer fees.
General and Administrative
General
and administrative expenses, which represented approximately 21%, 18% and 21% of
total expenses in 2008, 2007 and 2006, respectively, are costs related to
operations, including technology, professional fees, occupancy, communications
and similar expenses. General and administrative expenses decreased $35.3
million, or 6.1% in 2008, and were essentially flat in 2007 compared to
2006.
The
decrease in 2008 reflects insurance recoveries of approximately $35.3 million
relating to a class action claims processing error (
see Note 7
), lower client
transaction errors, and incremental foreign exchange gains, partially offset by
higher occupancy costs. Higher occupancy and technology costs in 2007 were
offset by a $56.0 million charge recorded in 2006 for the estimated cost of
reimbursing certain clients for losses arising out of an error made in
processing claims for class action settlement proceeds on behalf of these
clients and lower legal costs.
Interest on Borrowings
Interest
on our borrowings for 2008 decreased $10.9 million, or 45.4%, the result of
lower average interest rates. Interest on our borrowings for 2007 increased $0.9
million, or 3.7%, reflecting higher short-term borrowing levels partly offset by
lower interest rates.
Non-operating Income
Non-operating
income consists of contingent purchase price payments earned from the
disposition in 2005 of our cash management services. Non-operating income for
2008 increased $2.9 million, or 18.9% due to higher contingent purchase price
payments earned in 2008. Non-operating income for 2007 decreased $4.4 million,
or 22.0%. The 2007 decrease reflects the recognition of a $7.5 million gain
during the second quarter of 2006 resulting from the expiration of a “clawback”
provision related to the disposition of our cash management services, partly
offset by lower contingent purchase price payments earned in 2007.
Income Taxes
AllianceBernstein,
a private limited partnership, is not subject to federal or state corporate
income taxes. However, we are subject to the New York City unincorporated
business tax. Our domestic corporate subsidiaries are subject to federal, state
and local income taxes, and are generally included in the filing of a
consolidated federal income tax return. Separate state and local income tax
returns are filed. Foreign corporate subsidiaries are generally subject to taxes
in the foreign jurisdictions where they are located.
The
decrease in taxes on income in 2008 reflects lower earnings and the recognition
of $12.9 million of net unrecognized tax benefits during the fourth quarter of
2008 due primarily to certain tax audits being settled. The increase in taxes on
income in 2007 reflects increased earnings and a higher effective tax rate
reflecting higher earnings of our foreign subsidiaries (primarily in the U.K.
and Japan) where tax rates are generally higher.
Non-Controlling Interest in Earnings of Consolidated
Entities
Our
non-controlling interests in consolidated entities consist of 90% limited
partner interests in our consolidated venture capital fund (of which 10% is
owned by AXA and its subsidiaries and 80% is owned by an unaffiliated client)
and 50% interests in consolidated joint ventures in Australia and New Zealand
(of which 50% is owned by AXA and its subsidiaries). Non-controlling interest in
earnings of consolidated entities for 2008 decreased $7.5 million, primarily as
a result of lower net unrealized gains on investments in our consolidated
venture capital fund. Non-controlling interest in earnings of consolidated
entities for 2007 increased $8.3 million, primarily as a result of higher net
unrealized gains on investments in our consolidated venture capital
fund.
Capital
Resources and Liquidity
The
following table identifies selected items relating to capital resources and
liquidity:
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
2008
- 07
|
|
|
|
2007
- 06
|
|
|
|
(in
millions, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
As
of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners’
capital
|
|
$
|
4,317.7
|
|
|
$
|
4,541.2
|
|
|
$
|
4,571.0
|
|
|
|
(4.9
|
)
|
|
|
(0.7
|
)%
|
Cash
and cash equivalents
|
|
|
552.6
|
|
|
|
576.4
|
|
|
|
546.8
|
|
|
|
(4.1
|
)
|
|
|
5.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the years ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flow from operations
|
|
|
1,380.8
|
|
|
|
1,291.4
|
|
|
|
1,103.9
|
|
|
|
6.9
|
|
|
|
17.0
|
|
Proceeds
from sales (purchases) of investments, net
|
|
|
21.0
|
|
|
|
26.5
|
|
|
|
(42.0
|
)
|
|
|
(20.6
|
)
|
|
|
n/m
|
|
Capital
expenditures
|
|
|
(75.2
|
)
|
|
|
(137.5
|
)
|
|
|
(97.1
|
)
|
|
|
(45.3
|
)
|
|
|
41.7
|
|
Distributions
paid to General Partners and unitholders
|
|
|
(1,019.7
|
)
|
|
|
(1,364.6
|
)
|
|
|
(1,025.5
|
)
|
|
|
(25.3
|
)
|
|
|
33.1
|
|
Purchases
of Holding Units to fund deferred compensation plans, net
|
|
|
(2.4
|
)
|
|
|
(50.9
|
)
|
|
|
(22.3
|
)
|
|
|
(95.4
|
)
|
|
|
127.6
|
|
Additional
investment by Holding through issuance of Holding Units in exchange for
cash awards made under the Partners Compensation Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
47.2
|
|
|
|
—
|
|
|
|
(100.0
|
)
|
Additional
investment by Holding with proceeds from exercise of compensatory options
to buy Holding Units
|
|
|
13.5
|
|
|
|
50.1
|
|
|
|
100.5
|
|
|
|
(73.0
|
)
|
|
|
(50.2
|
)
|
(Repayment)
issuance of commercial paper, net
|
|
|
(260.1
|
)
|
|
|
175.8
|
|
|
|
328.1
|
|
|
|
n/m
|
|
|
|
(46.4
|
)
|
Repayment
of long-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
(408.1
|
)
|
|
|
—
|
|
|
|
(100.0
|
)
|
Available
Cash Flow
|
|
|
810.2
|
|
|
|
1,253.2
|
|
|
|
1,153.4
|
|
|
|
(35.3
|
)
|
|
|
8.7
|
|
Cash and
cash equivalents decreased $23.8 million in 2008 and increased $29.6 million in
2007. Cash inflows are primarily provided by operations, proceeds from sales of
investments, and additional investments by Holding relating to equity-based
transactions. Significant cash outflows include cash distributions paid to the
General Partner and unitholders, capital expenditures, net repayment of
commercial paper, purchases of investments and purchases of Holding Units to
fund deferred compensation plans.
Contingent Deferred Sales Charge
Our
mutual fund distribution system (the “System”) includes a multi-class share
structure that permits our open-end mutual funds to offer investors various
options for the purchase of mutual fund shares, including both front-end load
shares and back-end load shares. For open-end U.S. Fund front-end load shares,
AllianceBernstein Investments pays sales commissions to financial intermediaries
distributing the funds from the front-end sales charge it receives from
investors at the time of sale. For back-end load shares, AllianceBernstein
Investments pays sales commissions to the financial intermediaries at the time
of sale and also receives higher ongoing distribution services fees from the
mutual funds. In addition, investors who redeem before the expiration of the
minimum holding period (which ranges from one year to four years) pay a
contingent deferred sales charge (“CDSC”) to AllianceBernstein Investments. We
expect to recover deferred sales commissions over periods not exceeding five and
one-half years. Payments of sales commissions made to financial intermediaries
in connection with the sale of back-end load shares under the System, net of
CDSC received of $33.7 million, $31.1 million and $23.7 million, totaled
approximately $9.1 million, $84.1 million and $98.7 million during 2008, 2007
and 2006, respectively. Effective January 31, 2009, back-end load shares are no
longer offered to new investors in U.S. Funds.
Debt and Credit Facilities
Total
credit available, debt outstanding, and weighted average interest rates as of
December 31, 2008 and 2007 were as follows:
|
December 31,
|
|
|
2008
|
|
2007
|
|
|
Credit
Available
|
|
Debt
Outstanding
|
|
Interest
Rate
|
|
Credit
Available
|
|
Debt
Outstanding
|
|
Interest
Rate
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving
credit facility
(1)
|
|
$
|
715.2
|
|
|
$
|
—
|
|
|
|
—
|
%
|
|
$
|
466.1
|
|
|
$
|
—
|
|
|
|
—
|
%
|
Commercial
paper
(1)(2)
|
|
|
284.8
|
|
|
|
284.8
|
|
|
|
1.8
|
|
|
|
533.9
|
|
|
|
533.9
|
|
|
|
4.3
|
|
Total
revolving credit facility
(1)
|
|
|
1,000.0
|
|
|
|
284.8
|
|
|
|
1.8
|
|
|
|
1,000.0
|
|
|
|
533.9
|
|
|
|
4.3
|
|
Revolving
credit facility – SCB LLC
|
|
|
950.0
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unsecured
bank loan
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
1,950.0
|
|
|
$
|
284.8
|
|
|
|
1.8
|
|
|
$
|
1,000.0
|
|
|
$
|
533.9
|
|
|
|
4.3
|
|
(1)
|
Our
$1.0 billion revolving credit facility supports our commercial paper
program; amounts borrowed under the commercial paper program reduce
amounts available for direct borrowing under the revolving credit facility
on a dollar-for-dollar basis.
|
(2)
|
Commercial
paper outstanding is short-term in nature, and as such, book value
approximates fair value.
|
(3)
|
As
of December 31, 2008, SCB LLC maintained five separate uncommitted credit
facilities with various banks totaling $775
million.
|
We have a
$1.0 billion five-year revolving credit facility with a group of commercial
banks and other lenders which expires in 2011. The revolving credit facility is
intended to provide back-up liquidity for our $1.0 billion commercial paper
program, although we borrow directly under the facility from time to time. Our
interest rate, at our option, is a floating rate generally based upon a defined
prime rate, a rate related to the London Interbank Offered Rate (“LIBOR”) or the
Federal Funds rate. The revolving credit facility contains covenants which,
among other things, require us to meet certain financial ratios. We were in
compliance with the covenants as of December 31, 2008.
In
January 2008, SCB LLC entered into a $950 million three-year revolving credit
facility with a group of commercial banks to fund its obligations resulting from
engaging in certain securities trading and custody activities for private
clients. Under the revolving credit facility, the interest rate, at the option
of SCB LLC, is a floating rate generally based upon a defined prime rate, a rate
related to LIBOR or the Federal Funds rate.
Our solid
financial foundation and access to public and private debt, at competitive
terms, should provide adequate liquidity for our general business needs.
Management believes that cash flow from operations and the issuance of debt and
AllianceBernstein Units or Holding Units will provide us with the resources
necessary to meet our financial obligations.
Off-Balance
Sheet Arrangements and Aggregate Contractual Obligations
We have
no off-balance sheet arrangements other than the guarantees and contractual
obligations that are discussed below.
Guarantees
In
February 2002, AllianceBernstein signed a $125 million agreement with
a commercial bank, under which we guaranteed certain obligations in the ordinary
course of business of SCBL. In the event SCBL is unable to meet its obligations
in full when due, AllianceBernstein will pay the obligations within three days
of being notified of SCBL’s failure to pay. This agreement is continuous and
remains in effect until payment in full of any such obligation has been made by
SCBL. During 2008, we were not required to perform under the agreement and as of
December 31, 2008 had no liability in connection with the
agreement.
In
January 2008, AllianceBernstein and AXA executed guarantees in regard to the
$950 million SCB LLC facility. In the event SCB LLC is unable to meet its
obligations, AllianceBernstein or AXA will pay the obligations when due or on
demand. AllianceBernstein will reimburse AXA to the extent AXA must pay on its
guarantee. This agreement is continuous and remains in effect until the later of
payment in full of any obligation under the credit facility has been made or the
maturity date.
Aggregate Contractual Obligations
The
following table summarizes our contractual obligations as of December 31,
2008:
|
Contractual Obligations
|
|
|
Total
|
|
Less than
1
Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than 5
Years
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
paper
|
|
$
|
284.8
|
|
|
$
|
284.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating
leases, net of sublease commitments
|
|
|
2,422.9
|
|
|
|
124.2
|
|
|
|
259.0
|
|
|
|
266.7
|
|
|
|
1,773.0
|
|
Accrued
compensation and benefits
|
|
|
321.2
|
|
|
|
211.4
|
|
|
|
57.3
|
|
|
|
25.7
|
|
|
|
26.8
|
|
Unrecognized
tax benefits
|
|
|
9.7
|
|
|
|
3.6
|
|
|
|
—
|
|
|
|
6.1
|
|
|
|
—
|
|
Total
|
|
$
|
3,038.6
|
|
|
$
|
624.0
|
|
|
$
|
316.3
|
|
|
$
|
298.5
|
|
|
$
|
1,799.8
|
|
Accrued
compensation and benefits amounts above exclude our accrued pension obligation.
Any amounts reflected on the consolidated balance sheet as payables (to
broker-dealers, brokerage clients and company-sponsored mutual funds) and
accounts payable and accrued expenses are excluded from the table
above.
Certain
of our deferred compensation plans permit participants to elect to have their
deferred compensation awards invested notionally in Holding Units and in
company-sponsored investment services. Since January 1, 2009, we have made
purchases of mutual funds and hedge funds totaling $196 million and allocated
Holding Units with an aggregate value of approximately $27 million within our
deferred compensation trust to fund our future obligations resulting from
participant elections with respect to 2008 awards. We also issued 1,587,114 new
units.
We expect
to make contributions to our qualified profit sharing plan of approximately
$25 million in each of the next four years and to contribute an estimated
$22 million to our qualified, noncontributory, defined benefit plan during
2009.
Acquisitions
See Note 21 to AllianceBernstein’s
consolidated financial statements in Item 8
for a discussion of our
acquisition in 2006.
Contingencies
See Note 11 to AllianceBernstein’s
consolidated financial statements in Item 8
for a discussion of our
mutual fund distribution system and related deferred sales commission asset and
certain legal proceedings to which we are a party.
Critical
Accounting Estimates
The
preparation of the consolidated financial statements and notes to consolidated
financial statements requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and
expenses.
Management
believes that the critical accounting policies and estimates discussed below
involve significant management judgment due to the sensitivity of the methods
and assumptions used.
Deferred Sales Commission Asset
Management
tests the deferred sales commission asset for impairment quarterly by comparing
undiscounted future cash flows to the recorded value, net of accumulated
amortization. Significant assumptions utilized to estimate the company’s future
average assets under management and undiscounted future cash flows from back-end
load shares are updated quarterly and include expected future market levels and
redemption rates. Market assumptions are selected using a long-term view of
expected average market returns based on historical returns of broad market
indices. As of December 31, 2008, management used average market return
assumptions of 5% for fixed income securities and 8% for equities to estimate
annual market returns. Higher actual average market returns would increase
undiscounted future cash flows, while lower actual average market returns would
decrease undiscounted future cash flows. Future redemption rate assumptions,
determined by reference to actual redemption experience over the five-year,
three-year, one-year and current periods ended December 31, 2008, and
calculated as a percentage of our average assets under management represented by
back-end load shares, ranged from 22% to 32% for U.S. fund shares and 28% to 72%
for non-U.S. fund shares. An increase in the actual rate of redemptions would
decrease undiscounted future cash flows, while a decrease in the actual rate of
redemptions would increase undiscounted future cash flows. Estimates of
undiscounted future cash flows and the remaining life of the deferred sales
commission asset are made from these assumptions and the aggregate undiscounted
future cash flows are compared to the recorded value of the deferred sales
commission asset. As of December 31, 2008, management determined that the
deferred sales commission asset was not impaired. However, if higher redemption
rates continue in 2009, this asset may become impaired. If management determines
in the future that the deferred sales commission asset is not recoverable, an
impairment condition would exist and a loss would be measured as the amount by
which the recorded amount of the asset exceeds its estimated fair value.
Estimated fair value is determined using management’s best estimate of future
cash flows discounted to a present value amount. Any impairment could reduce
materially the recorded amount of the deferred sales commission asset with a
corresponding charge to our earnings.
Goodwill
In
accordance with Statement of Financial Accounting Standards No. 142 (“SFAS No.
142”), “
Goodwill and Other
Intangible Assets
”, we test our single reporting unit annually, as of
September 30, for impairment. The carrying value of goodwill is also reviewed if
facts and circumstances, such as significant declines in assets under
management, revenues, earnings or our Holding Unit price, occur, suggesting
possible impairment. As of September 30, 2008, the impairment test
indicated that goodwill was not impaired. Due to the significant declines in our
assets under management and operating results in 2008 as a result of the global
financial crisis, we also tested goodwill for impairment as of December 31,
2008, and determined that goodwill was not impaired.
The
analysis is a two-step process. The first step involves determining whether the
estimated fair value of AllianceBernstein, the reporting unit, exceeds its book
value. If the fair value of the company exceeds its book value, goodwill is not
impaired. However, if the book value exceeds the fair value of the
company, goodwill may be impaired and additional analysis is
required. The second step compares the fair value of the company to
the aggregated fair values of its individual assets and liabilities to calculate
the amount of impairment, if any.
In the
first step of the process, there are several methods of estimating
AllianceBernstein’s fair value, which include valuation techniques such as
discounted expected cash flows and market valuation (private partnership units
outstanding multiplied by Holding Unit price). Developing estimated fair value
using a discounted cash flow valuation technique consists of applying business
growth rate assumptions over the estimated life of the goodwill asset and then
discounting the resulting expected cash flows to arrive at a present value
amount that approximates fair value. In our test as of December 31, 2008, our
discounted expected cash flow model used management’s current business plan,
which factored in current market conditions and all material events that have
impacted, or that we believed at the time could potentially impact, future
discounted expected cash flows for the first four years and a 7.4% compounded
annual growth rate thereafter. Management used AllianceBernstein’s weighted
average cost of capital of 13.4% as its discount rate. Our market valuation as
of December 31, 2008 was higher than our book value, but the amount of excess
has decreased significantly.
To the
extent that securities valuations remain depressed for prolonged periods of time
and market conditions stagnate or worsen as a result of the global financial
crisis, our assets under management, revenues, profitability and unit price
would likely be adversely affected. As a result, subsequent
impairment tests may be based upon different assumptions and future cash flow
projections, which may result in an impairment of this asset. Any impairment
could reduce materially the recorded amount of goodwill with a corresponding
charge to our earnings.
Intangible Assets
Management
tests intangible assets for impairment quarterly. A present value technique is
applied to expected cash flows to estimate the fair value of intangible assets.
Estimated fair value is then compared to the recorded book value to determine
whether impairment is indicated. The key assumptions used in the estimates
include attrition factors of customer accounts, asset growth rates, direct
expenses and fee rates included in management’s current business plan and our
weighted average cost of capital of 13.4% for the discount rate. In determining
these estimates, we choose assumptions based on actual historical trends that
may or may not occur in the future. Management has determined that intangible
assets were not impaired as of December 31, 2008.
To the
extent that securities valuations remain depressed for prolonged periods of time
and market conditions stagnate or worsen as a result of the global financial
crisis, our assets under management and revenues from these investment
management contracts would likely be adversely affected. As a result,
certain triggering events, including impairment of our goodwill, may occur
requiring more frequent testing for impairment of intangibles. Such tests may be
based upon different assumptions, which could result in an impairment of this
asset. Any impairment could reduce materially the recorded amount of intangible
assets with a corresponding charge to our earnings.
Retirement Plan
We
maintain a qualified, noncontributory, defined benefit retirement plan covering
current and former employees who were employed by the company in the United
States prior to October 2, 2000. The amounts recognized in the consolidated
financial statements related to the retirement plan are determined from
actuarial valuations. Inherent in these valuations are assumptions including
expected return on plan assets, discount rates at which liabilities could be
settled, rates of annual salary increases, and mortality rates. The assumptions
are reviewed annually and may be updated to reflect the current environment. A
summary of the key economic assumptions are
described in Note 14 to
AllianceBernstein’s consolidated financial statements in Item 8
. In
accordance with U.S. generally accepted accounting principles, actual results
that differ from those assumed are accumulated and amortized over future periods
and, therefore, affect expense recognized and liabilities recorded in future
periods.
In
developing the expected long-term rate of return on plan assets of 8.0%, we
considered the historical returns and future expectations for returns for each
asset category, as well as the target asset allocation of the portfolio. The
expected long-term rate of return on assets is based on weighted average
expected returns for each asset class. We assumed a target allocation weighting
of 50% to 70% for equity securities, 20% to 40% for debt securities, and 0% to
10% for real estate investment trusts. Exposure of the total portfolio to cash
equivalents on average should not exceed 5% of the portfolio’s value on a market
value basis. The plan seeks to provide a rate of return that exceeds applicable
benchmarks over rolling five-year periods. The benchmark for the plan’s large
cap domestic equity investment strategy is the S&P 500 Index; the small cap
domestic equity investment strategy is measured against the Russell 2000 Index;
the international equity investment strategy is measured against the MSCI EAFE
Index; and the fixed income investment strategy is measured against the Barclays
Aggregate Bond Index. The actual rate of return on plan assets was (45.8)%, 4.1%
and 9.0% in 2008, 2007 and 2006, respectively. A 25 basis point adjustment, up
or down, in the expected long-term rate of return on plan assets would have
decreased or increased the 2008 net pension income of $0.7 million by
approximately $0.1 million.
The
objective of our discount rate assumption was to reflect the rate at which
our pension obligations could be effectively settled. In making this
determination, we took into account the timing and amount of benefits that would
be available under the plan’s lump sum option. To that effect, our methodology
for selecting the discount rate as of December 31, 2008 was to match the
plan’s cash flows to that of a yield curve that provides the equivalent yields
on zero-coupon corporate bonds for each maturity. Benefit cash flows due in a
particular year can be “settled” theoretically by “investing” them in the
zero-coupon bond that matures in the same year. The discount rate is the single
rate that produces the same present value of cash flows. The selection of the
6.20% discount rate as of December 31, 2008 represents the approximate
mid-point (to the nearest five basis points) of the single rates determined
under two independently constructed yield curves. One yield curve, prepared by
Mercer Human Resources, produced a rate of 6.24%; the other, prepared by
Citigroup, produced a rate of 6.18%. The discount rate as of December 31,
2007 was 6.55%, which was used in developing the 2008 net pension charge. A
lower discount rate increases pension expense and the present value of benefit
obligations. A 25 basis point adjustment, up or down, in the discount rate
(along with a corresponding adjustment in the assumed lump sum interest rate)
would have decreased or increased the 2008 net pension income of $0.7 million by
approximately $0.1 million.
Loss Contingencies
Management
continuously reviews with legal counsel the status of regulatory matters and
pending or threatened litigation. We evaluate the likelihood that a loss
contingency exists in accordance with Statement of Financial Accounting
Standards No. 5,
“Accounting for
Contingencies
”, which requires a loss contingency to be recorded if it is
probable and reasonably estimable as of the date of the financial statements.
See Note 11 to
AllianceBernstein’s consolidated financial statements in Item
8
.
Accounting
Pronouncements
See Note 22 to AllianceBernstein’s
consolidated financial statements in Item 8
.
Cautions
Regarding Forward-Looking Statements
Certain
statements provided by management in this report are “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements are subject to risks,
uncertainties, and other factors that could cause actual results to differ
materially from future results expressed or implied by such forward-looking
statements. The most significant of these factors include, but are not limited
to, the following: the performance of financial markets, the investment
performance of sponsored investment products and separately managed accounts,
general economic conditions, industry trends, future acquisitions, competitive
conditions and government regulations, including changes in tax regulations and
rates and the manner in which the earnings of publicly traded partnerships are
taxed. We caution readers to carefully consider such factors. Further, such
forward-looking statements speak only as of the date on which such statements
are made; we undertake no obligation to update any forward-looking statements to
reflect events or circumstances after the date of such statements. For further
information regarding these forward-looking statements and the factors that
could cause actual results to differ,
see “Risk Factors” in
Item
1A
. Any or all of the
forward-looking statements that we make in this Form 10-K, other documents
we file with or furnish to the SEC, and any other public statements we issue,
may turn out to be wrong. It is important to remember that other factors besides
those listed in “Risk Factors” and those listed below could also adversely
affect our revenues, financial condition, results of operations and business
prospects.
The
forward-looking statements referred to in the preceding paragraph include
statements regarding:
|
|
Our backlog of new
institutional mandates not yet funded
: Before they are funded,
institutional mandates do not represent legally binding commitments to
fund and, accordingly, the possibility exists that not all mandates will
be funded in the amounts and at the times we currently
anticipate.
|
|
|
Our anticipation that
our DC business will continue to expand
: The actual performance of
the capital markets and other factors beyond our control will affect our
asset flows and investment success for clients, as will our ability to
improve the poor relative investment performance we experienced in
2008.
|
|
|
Our expectation that
we will recover a portion of the $7.8 million remaining in accrued
liabilities related to the claims processing error-related charge
:
Our ability to recover more of this cost depends on the availability of
funds from the related class-action settlement funds, the amount of which
is not known.
|
|
|
The possibility that
prolonged weakness in asset values may result in impairment of goodwill,
intangible assets and the deferred sales commission asset
: To the
extent that securities valuations remain depressed for prolonged periods
of time and market conditions stagnate or worsen as a result of the global
financial crisis (factors that are beyond our control), our assets under
management, revenues, profitability and unit price may be adversely
affected. As a result, subsequent impairment tests may be based upon
different assumptions and future cash flow projections which may result in
an impairment of goodwill, intangible assets and the deferred sales
commission asset.
|
|
|
The cash flow Holding
realizes from its investment in AllianceBernstein providing Holding with
the resources necessary to meet its financial obligations
:
Holding’s cash flow is dependent on the quarterly cash distributions it
receives from AllianceBernstein. Accordingly, Holding’s ability to meet
its financial obligations is dependent on AllianceBernstein’s cash flow
from its operations, which is subject to the performance of the capital
markets and other factors beyond our
control.
|
|
|
Our
solid financial foundation and access to public and private debt providing
adequate liquidity for our general business needs
: Our solid financial foundation
is dependent on our cash flow from operations, which is subject to the
performance of the capital markets and other factors beyond our control.
Our access to public and private debt, as well as the market for debt or
equity we may choose to issue, may be limited by adverse market
conditions, our profitability and changes in government regulations,
including tax rates and interest
rates.
|
|
|
The outcome of
litigation
: Litigation is inherently unpredictable, and excessive
damage awards do occur. Though we have stated that we do not expect
certain legal proceedings to have a material adverse effect on our results
of operations or financial condition, any settlement or judgment with
respect to a legal proceeding could be significant and could have a
material adverse effect on our results of operations or financial
condition.
|
Item
7A.
Quantitative and Qualitative
Disclosures about Market Risk
Holding
Market
Risk, Risk Management and Derivative Financial Instruments
Holding’s
sole investment is AllianceBernstein Units. Holding did not own, nor was it a
party, to any derivative financial instruments during the years ended December
31, 2008, 2007 and 2006.
AllianceBernstein
Market
Risk, Risk Management and Derivative Financial Instruments
AllianceBernstein’s
investments consist of trading and available-for-sale investments, and other
investments. Trading and available-for-sale investments, include United States
Treasury Bills and equity and fixed income mutual funds investments. Trading
investments are purchased for short-term investment, principally to fund
liabilities related to deferred compensation plans. Although available-for-sale
investments are purchased for long-term investment, the portfolio strategy
considers them available-for-sale from time to time due to changes in market
interest rates, equity prices and other relevant factors. Other investments
include investments in hedge funds sponsored by AllianceBernstein and other
private investment vehicles.
Trading
and Non-Trading Market Risk Sensitive Instruments
Investments with Interest Rate Risk—Fair
Value
The table
below provides our potential exposure with respect to our fixed income
investments, measured in terms of fair value, to an immediate 100 basis point
increase in interest rates at all maturities from the levels prevailing as of
December 31, 2008 and 2007. Such a fluctuation in interest rates is a
hypothetical rate scenario used to calibrate potential risk and does not
represent our view of future market changes. While these fair value measurements
provide a representation of interest rate sensitivity of our investments in
fixed income mutual funds and fixed income hedge funds, they are based on our
exposures at a particular point in time and may not be representative of future
market results. These exposures will change as a result of ongoing changes in
investments in response to our assessment of changing market conditions and
available investment opportunities:
|
As of December 31,
|
|
|
2008
|
|
2007
|
|
|
Fair
Value
|
|
Effect of
+100
Basis Point
Change
|
|
Fair
Value
|
|
Effect of +100
Basis Point
Change
|
|
|
(in thousands)
|
|
Fixed
Income Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading
|
|
$
|
76,153
|
|
|
$
|
(3,099
|
)
|
|
$
|
106,152
|
|
|
$
|
(5,117
|
)
|
Available-for-sale and other
investments
|
|
|
160
|
|
|
|
(7
|
)
|
|
|
28,368
|
|
|
|
(1,367
|
)
|
Investments with Equity Price Risk—Fair
Value
Our
investments also include investments in equity mutual funds and equity hedge
funds. The following table provides our potential exposure with respect to our
equity investments, measured in terms of fair value, to an immediate 10% drop in
equity prices from those prevailing as of December 31, 2008 and 2007. A 10%
decrease in equity prices is a hypothetical scenario used to calibrate potential
risk and does not represent our view of future market changes. While these fair
value measurements provide a representation of equity price sensitivity of our
investments in equity mutual funds and equity hedge funds, they are based on our
exposures at a particular point in time and may not be representative of future
market results. These exposures will change as a result of ongoing portfolio
activities in response to our assessment of changing market conditions and
available investment opportunities:
|
As of December 31,
|
|
|
2008
|
|
2007
|
|
|
Fair
Value
|
|
Effect of
-10%
Equity Price
Change
|
|
Fair
Value
|
|
Effect of
-10%
Equity Price
Change
|
|
|
(in thousands)
|
|
Equity
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading
|
|
$
|
246,394
|
|
|
$
|
(24,639
|
)
|
|
$
|
466,085
|
|
|
$
|
(46,609
|
)
|
Available-for-sale and other
investments
|
|
|
255,136
|
|
|
|
(25,514
|
)
|
|
|
314,476
|
|
|
|
(31,448
|
)
|
Item
8.
Financial Statements
and Supplementary Data
ALLIANCEBERNSTEIN
HOLDING L.P.
Statements
of Financial Condition
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(in
thousands, except unit amounts)
|
|
ASSETS
|
|
|
|
|
|
|
Investment
in AllianceBernstein
|
|
$
|
1,600,045
|
|
|
$
|
1,574,512
|
|
Other
assets
|
|
|
1,397
|
|
|
|
722
|
|
Total
assets
|
|
$
|
1,601,442
|
|
|
$
|
1,575,234
|
|
LIABILITIES
AND PARTNERS’ CAPITAL
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Payable
to AllianceBernstein
|
|
$
|
4,825
|
|
|
$
|
7,460
|
|
Other
liabilities
|
|
|
462
|
|
|
|
314
|
|
Total
liabilities
|
|
|
5,287
|
|
|
|
7,774
|
|
Commitments
and contingencies (
See
Note 7
)
|
|
|
|
|
|
|
|
|
Partners’
capital:
|
|
|
|
|
|
|
|
|
General
Partner: 100,000 general partnership units issued and
outstanding
|
|
|
1,633
|
|
|
|
1,698
|
|
Limited
partners: 90,223,767 and 86,848,149 limited partnership units issued and
outstanding
|
|
|
1,618,985
|
|
|
|
1,548,212
|
|
Accumulated
other comprehensive income (loss)
|
|
|
(24,463
|
)
|
|
|
17,550
|
|
Total
partners’ capital
|
|
|
1,596,155
|
|
|
|
1,567,460
|
|
Total
liabilities and partners’ capital
|
|
$
|
1,601,442
|
|
|
$
|
1,575,234
|
|
See Accompanying Notes to Financial
Statements.
ALLIANCEBERNSTEIN
HOLDING L.P.
Statements
of Income
|
|
Years
Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(in
thousands, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in earnings of AllianceBernstein
|
|
$
|
278,636
|
|
|
$
|
415,256
|
|
|
$
|
359,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
|
33,910
|
|
|
|
39,104
|
|
|
|
34,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
244,726
|
|
|
$
|
376,152
|
|
|
$
|
324,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.79
|
|
|
$
|
4.35
|
|
|
$
|
3.85
|
|
Diluted
|
|
$
|
2.79
|
|
|
$
|
4.32
|
|
|
$
|
3.82
|
|
See
Accompanying Notes to Financial Statements.
ALLIANCEBERNSTEIN
HOLDING L.P.
Statements
of Changes in Partners’ Capital and Comprehensive Income
|
|
General
Partner’s
Capital
|
|
|
Limited
Partners’
Capital
|
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
|
Total
Partners’
Capital
|
|
|
|
(in
thousands, except per unit amounts)
|
|
Balance
as of December 31, 2005
|
|
$
|
1,711
|
|
|
$
|
1,359,472
|
|
|
$
|
7,663
|
|
|
$
|
1,368,846
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
384
|
|
|
|
324,612
|
|
|
|
—
|
|
|
|
324,996
|
|
Other
comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gain (loss) on investments
|
|
|
—
|
|
|
|
—
|
|
|
|
1,735
|
|
|
|
1,735
|
|
Foreign
currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
3,718
|
|
|
|
3,718
|
|
Comprehensive
income
|
|
|
384
|
|
|
|
324,612
|
|
|
|
5,453
|
|
|
|
330,449
|
|
Adjustment
to initially apply FASB Statement No. 158, net
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,265
|
)
|
|
|
(2,265
|
)
|
Cash
distributions to unitholders ($3.56 per unit)
|
|
|
(356
|
)
|
|
|
(298,094
|
)
|
|
|
—
|
|
|
|
(298,450
|
)
|
Purchases
of Holding Units by AllianceBernstein to fund deferred compensation plans,
net
|
|
|
—
|
|
|
|
(22,345
|
)
|
|
|
—
|
|
|
|
(22,345
|
)
|
Issuance
of Holding Units in exchange for cash awards made by AllianceBernstein
under the Partners Compensation Plan
|
|
|
—
|
|
|
|
47,161
|
|
|
|
—
|
|
|
|
47,161
|
|
Awards
of Holding Units made by AllianceBernstein under deferred compensation
plans, net of forfeitures
|
|
|
—
|
|
|
|
35,323
|
|
|
|
—
|
|
|
|
35,323
|
|
Proceeds
from exercise of compensatory options to buy Holding Units
|
|
|
—
|
|
|
|
100,469
|
|
|
|
—
|
|
|
|
100,469
|
|
Balance
as of December 31, 2006
|
|
|
1,739
|
|
|
|
1,546,598
|
|
|
|
10,851
|
|
|
|
1,559,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
434
|
|
|
|
375,718
|
|
|
|
—
|
|
|
|
376,152
|
|
Other
comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gain (loss) on investments
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,897
|
)
|
|
|
(2,897
|
)
|
Foreign
currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
6,309
|
|
|
|
6,309
|
|
Changes
in retirement plan related items
|
|
|
—
|
|
|
|
—
|
|
|
|
3,287
|
|
|
|
3,287
|
|
Comprehensive
income
|
|
|
434
|
|
|
|
375,718
|
|
|
|
6,699
|
|
|
|
382,851
|
|
Cash
distributions to unitholders ($4.75 per unit)
|
|
|
(475
|
)
|
|
|
(408,248
|
)
|
|
|
—
|
|
|
|
(408,723
|
)
|
Purchases
of Holding Units by AllianceBernstein to fund deferred compensation plans,
net
|
|
|
—
|
|
|
|
(50,853
|
)
|
|
|
—
|
|
|
|
(50,853
|
)
|
Awards
of Holding Units made by AllianceBernstein under deferred compensation
plans, net of forfeitures
|
|
|
—
|
|
|
|
34,801
|
|
|
|
—
|
|
|
|
34,801
|
|
Impact
of initial adoption of FIN 48
|
|
|
—
|
|
|
|
145
|
|
|
|
—
|
|
|
|
145
|
|
Proceeds
from exercise of compensatory options to buy Holding Units
|
|
|
—
|
|
|
|
50,051
|
|
|
|
—
|
|
|
|
50,051
|
|
Balance
as of December 31, 2007
|
|
|
1,698
|
|
|
|
1,548,212
|
|
|
|
17,550
|
|
|
|
1,567,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
280
|
|
|
|
244,446
|
|
|
|
—
|
|
|
|
244,726
|
|
Other
comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gain (loss) on investments
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,188
|
)
|
|
|
(1,188
|
)
|
Foreign
currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
(32,464
|
)
|
|
|
(32,464
|
)
|
Changes
in retirement plan related items
|
|
|
—
|
|
|
|
—
|
|
|
|
(8,361
|
)
|
|
|
(8,361
|
)
|
Comprehensive
income (loss)
|
|
|
280
|
|
|
|
244,446
|
|
|
|
(42,013
|
)
|
|
|
202,713
|
|
Cash
distributions to unitholders ($3.45 per unit)
|
|
|
(345
|
)
|
|
|
(301,031
|
)
|
|
|
—
|
|
|
|
(301,376
|
)
|
Purchases
of Holding Units by AllianceBernstein to fund deferred compensation plans,
net
|
|
|
—
|
|
|
|
(2,358
|
)
|
|
|
—
|
|
|
|
(2,358
|
)
|
Issuance
of Holding Units to fund CEO’s Restricted Units award
|
|
|
—
|
|
|
|
52,264
|
|
|
|
—
|
|
|
|
52,264
|
|
Awards
of Holding Units made by AllianceBernstein under deferred compensation
plans, net of forfeitures
|
|
|
—
|
|
|
|
63,927
|
|
|
|
—
|
|
|
|
63,927
|
|
Proceeds
from exercise of compensatory options to buy Holding Units
|
|
|
—
|
|
|
|
13,525
|
|
|
|
—
|
|
|
|
13,525
|
|
Balance
as of December 31, 2008
|
|
$
|
1,633
|
|
|
$
|
1,618,985
|
|
|
$
|
(24,463
|
)
|
|
$
|
1,596,155
|
|
See
Accompanying Notes to Financial Statements.
ALLIANCEBERNSTEIN
HOLDING L.P.
Statements
of Cash Flows
|
|
Years
Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(in
thousands)
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
244,726
|
|
|
$
|
376,152
|
|
|
$
|
324,996
|
|
Adjustments
to reconcile net income to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in earnings of AllianceBernstein
|
|
|
(278,636
|
)
|
|
|
(415,256
|
)
|
|
|
(359,469
|
)
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase)
decrease in other assets
|
|
|
(675
|
)
|
|
|
(421
|
)
|
|
|
161
|
|
(Decrease)
increase in payable to AllianceBernstein
|
|
|
(2,635
|
)
|
|
|
311
|
|
|
|
(48
|
)
|
Increase
(decrease) in other liabilities
|
|
|
148
|
|
|
|
(1,383
|
)
|
|
|
686
|
|
Net
cash used in operating activities
|
|
|
(37,072
|
)
|
|
|
(40,597
|
)
|
|
|
(33,674
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
in AllianceBernstein with proceeds from exercise of compensatory options
to buy Holding Units
|
|
|
(13,525
|
)
|
|
|
(50,051
|
)
|
|
|
(100,469
|
)
|
Cash
distributions received from AllianceBernstein
|
|
|
338,448
|
|
|
|
449,320
|
|
|
|
332,035
|
|
Net
cash provided by investing activities
|
|
|
324,923
|
|
|
|
399,269
|
|
|
|
231,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
distributions to unitholders
|
|
|
(301,376
|
)
|
|
|
(408,723
|
)
|
|
|
(298,450
|
)
|
Proceeds
from exercise of compensatory options to buy Holding Units
|
|
|
13,525
|
|
|
|
50,051
|
|
|
|
100,469
|
|
Net
cash used in financing activities
|
|
|
(287,851
|
)
|
|
|
(358,672
|
)
|
|
|
(197,981
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in cash and cash equivalents
|
|
|
—
|
|
|
|
—
|
|
|
|
(89
|
)
|
Cash
and cash equivalents as of beginning of the year
|
|
|
—
|
|
|
|
—
|
|
|
|
89
|
|
Cash
and cash equivalents as of end of the year
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
$
|
34,410
|
|
|
$
|
41,422
|
|
|
$
|
33,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in accumulated other comprehensive income
|
|
|
(42,013
|
)
|
|
|
6,699
|
|
|
|
3,188
|
|
Issuance
of Holding Units to fund deferred compensation plans and CEO’s Restricted
Units award
|
|
|
70,868
|
|
|
|
—
|
|
|
|
—
|
|
Issuance
of Holding Units in exchange for cash awards made by AllianceBernstein
under the Partners Compensation Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
47,161
|
|
Awards
of Holding Units made by AllianceBernstein under deferred compensation
plans, net of forfeitures
|
|
|
63,927
|
|
|
|
34,801
|
|
|
|
35,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
of Holding Units by AllianceBernstein to fund deferred compensation plans,
net
|
|
|
(20,962
|
)
|
|
|
(50,853
|
)
|
|
|
(22,345
|
)
|
See Accompanying Notes to Financial
Statements.
ALLIANCEBERNSTEIN
HOLDING L.P.
Notes
to Financial Statements
The
words “we” and “our” refer collectively to AllianceBernstein Holding L.P.
(“Holding”) and AllianceBernstein L.P. and its subsidiaries
(“AllianceBernstein”), or to their officers and employees. Similarly,
the word “company” refers to both Holding and AllianceBernstein. Where the
context requires distinguishing between Holding and AllianceBernstein, we
identify which of them is being discussed. Cross-references are in
italics.
1.
|
Business
Description and Organization
|
Holding’s
principal source of income and cash flow is attributable to its investment in
AllianceBernstein limited partnership interests.
AllianceBernstein
provides research, diversified investment management and related services
globally to a broad range of clients. Its principal services
include:
|
|
Institutional Investment Services
–
servicing its institutional clients, including
unaffiliated corporate and public employee pension funds, endowment funds,
domestic and foreign institutions and governments, and affiliates such as
AXA and certain of its insurance company subsidiaries, by means of
separately managed accounts, sub-advisory relationships, structured
products, collective investment trusts, mutual funds, hedge funds and
other investment vehicles.
|
|
|
Retail Services
–
servicing its individual clients, primarily by
means of retail mutual funds sponsored by AllianceBernstein or an
affiliated company, sub-advisory relationships in respect of mutual funds
sponsored by third parties, separately managed account programs sponsored
by financial intermediaries worldwide and other investment
vehicles.
|
|
|
Private Client Services
–
servicing its private clients, including
high-net-worth individuals, trusts and estates, charitable foundations,
partnerships, private and family corporations, and other entities, by
means of separately managed accounts, hedge funds, mutual funds and other
investment vehicles.
|
|
|
Institutional Research Services
–
servicing its institutional clients seeking
independent research, portfolio strategy and brokerage-related
services.
|
AllianceBernstein
also provides distribution, shareholder servicing and administrative services to
the mutual funds it sponsors.
AllianceBernstein
provides a broad range of services with expertise in:
|
|
Value equities, generally
targeting stocks that are out of favor and that
may trade at bargain prices;
|
|
|
Growth equities, generally
targeting stocks with under-appreciated growth
potential;
|
|
|
Fixed income securities, including both taxable
and tax-exempt securities;
|
|
|
Blend strategies, combining style-pure investment
components with systematic
rebalancing;
|
|
|
Passive management, including both index and
enhanced index strategies;
|
|
|
Alternative investments, such as hedge funds,
currency management strategies and venture capital;
and
|
|
|
Asset
allocation services, by which AllianceBernstein offers
specifically-tailored investment solutions for its clients (e.g.,
customized target date fund retirement services for institutional defined
contribution plan clients).
|
AllianceBernstein
manages these services using various investment disciplines, including market
capitalization (e.g., large-, mid- and small-cap equities), term (e.g., long-,
intermediate- and short-duration debt securities), and geographic location
(e.g., U.S., international, global and emerging markets), as well as local and
regional disciplines in major markets around the world.
AllianceBernstein’s
independent research is the foundation of its business. AllianceBernstein’s
research disciplines include fundamental research, quantitative research,
economic research and currency forecasting capabilities. In addition,
AllianceBernstein has created several specialized research units, including one
unit that examines global strategic changes that can affect multiple industries
and geographies, and another dedicated to identifying potentially successful
innovations within private early-stage and later-stage high potential growth
companies.
As of
December 31, 2008, AXA, a
société anonyme
organized
under the laws of France and the holding company for an international group of
insurance and related financial services companies, AXA Financial, Inc. (an
indirect wholly-owned subsidiary of AXA, “AXA Financial”), AXA Equitable Life
Insurance Company (a wholly-owned subsidiary of AXA Financial, “AXA Equitable”),
and certain subsidiaries of AXA Financial, collectively referred to as “AXA and
its subsidiaries”, owned approximately 1.6% of the issued and outstanding units
representing assignments of beneficial ownership of limited partnership
interests in Holding (“Holding Units”).
As of
December 31, 2008, the ownership structure of AllianceBernstein, expressed as a
percentage of general and limited partnership interests, was as
follows:
AXA
and its subsidiaries
|
|
|
61.8
|
%
|
Holding
|
|
|
33.9
|
|
SCB
Partners Inc. (a wholly-owned subsidiary of SCB Inc., formerly known as
Sanford C. Bernstein Inc.)
|
|
|
3.1
|
|
Unaffiliated
holders
|
|
|
1.2
|
|
|
|
|
100.0
|
%
|
AllianceBernstein
Corporation (an indirect wholly-owned subsidiary of AXA, “General Partner”) is
the general partner of both Holding and AllianceBernstein. AllianceBernstein
Corporation owns 100,000 general partnership units in Holding and a 1% general
partnership interest in AllianceBernstein. As of December 31, 2008, AXA and its
subsidiaries were the beneficial owners of approximately 62.0% of the units of
limited partnership interest in AllianceBernstein (“AllianceBernstein Units”).
This percentage includes AllianceBernstein Units that AXA and its subsidiaries
hold indirectly through its ownership of approximately 1.6% of Holding Units
that are issued and outstanding. Including both the general partnership and
limited partnership interests in Holding and AllianceBernstein, AXA and its
subsidiaries had an approximate 62.4% economic interest in AllianceBernstein as
of December 31, 2008.
On
January 6, 2009, AXA America Holdings, Inc., a wholly-owned subsidiary of AXA,
purchased the remaining 8,160,000 units held by SCB Partners, Inc.
2.
|
Summary
of Significant Accounting Policies
|
The
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of the
financial statements requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those
estimates.
Holding’s
financial statements and notes should be read in conjunction with the
consolidated financial statements and notes of AllianceBernstein.
AllianceBernstein’s consolidated financial statements and notes and management’s
discussion and analysis of financial condition and results of operations are
included in Holding’s Form 10-K.
Investment
in AllianceBernstein
Holding
records its investment in AllianceBernstein using the equity method of
accounting. Holding’s investment is increased to reflect its proportionate share
of income of AllianceBernstein and decreased to reflect its proportionate share
of losses of AllianceBernstein and cash distributions made by AllianceBernstein
to its unitholders. In addition, Holding’s investment is adjusted to reflect
certain capital transactions of AllianceBernstein.
Cash
Distributions
Holding
is required to distribute all of its Available Cash Flow, as defined in the
Amended and Restated Agreement of Limited Partnership of Holding (“Holding
Partnership Agreement”), to its unitholders
pro rata
in accordance with
their percentage interests in Holding. Available Cash Flow is defined as the
cash distributions Holding receives from AllianceBernstein minus such amounts as
the General Partner determines, in its sole discretion, should be retained by
Holding for use in its business.
On
January 21, 2009, the General Partner declared a distribution of $26.2 million,
or $0.29 per unit, representing Available Cash Flow for the three months ended
December 31, 2008. Each general partnership unit in Holding is entitled to
receive distributions equal to those received by each Holding Unit. The
distribution was paid on February 12, 2009 to holders of record at the close of
business on February 2, 2009.
During
the third quarter of 2008, AllianceBernstein recorded approximately $35.3
million in insurance recoveries relating to payments made for a class action
claims processing error for which it recorded a charge of $56.0 million in the
fourth quarter of 2006 (
see
Note 7
). AllianceBernstein’s and Holding’s fourth quarter 2006 cash
distributions were based on net income as calculated prior to AllianceBernstein
recording the charge. Accordingly, the insurance recoveries ($0.13
per unit) were not included in AllianceBernstein’s or Holding’s cash
distribution to unitholders for the third quarter of 2008.
Compensatory
Option Plans
AllianceBernstein
maintains certain compensation plans under which options to buy Holding Units
have been, or may be, granted to employees of AllianceBernstein and independent
directors of the General Partner.
In accordance with
Statement of Financial Accounting Standards No.
123 (revised 2004), (“SFAS
No.
123-R”), “
Share
Based Payment
”, AllianceBernstein
recognizes compensation expense related to grants of compensatory options in its
financial statements. Under the fair value method, compensatory expense is
measured at the grant date based on the estimated fair value of the award
(determined using the Black-Scholes option valuation model) and is recognized
ratably over the vesting period.
Holding exchanges the proceeds from
exercises of Holding Unit options for AllianceBernstein Units and thereby
increases its investment in AllianceBernstein. As of December 31, 2008, there
were 6,685,808 options for Holding Units outstanding, of which 3,277,879 were
exercisable.
Basic net
income per unit is derived by dividing net income by the basic weighted average
number of units outstanding for each year. Diluted net income per unit is
derived by adjusting net income for the assumed dilutive effect of compensatory
options (“Net income—diluted”) and dividing by the diluted weighted average
number of units outstanding for each year.
|
|
Years
Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(in
thousands, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Net
income—basic
|
|
$
|
244,726
|
|
|
$
|
376,152
|
|
|
$
|
324,996
|
|
Additional
allocation of equity in earnings of AllianceBernstein resulting from
assumed dilutive effect of compensatory options
|
|
|
1,133
|
|
|
|
5,146
|
|
|
|
5,430
|
|
Net
income—diluted
|
|
$
|
245,859
|
|
|
$
|
381,298
|
|
|
$
|
330,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average units outstanding—basic
|
|
|
87,571
|
|
|
|
86,460
|
|
|
|
84,325
|
|
Dilutive
effect of compensatory options
|
|
|
531
|
|
|
|
1,807
|
|
|
|
2,243
|
|
Weighted
average units outstanding—diluted
|
|
|
88,102
|
|
|
|
88,267
|
|
|
|
86,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
net income per unit
|
|
$
|
2.79
|
|
|
$
|
4.35
|
|
|
$
|
3.85
|
|
Diluted
net income per unit
|
|
$
|
2.79
|
|
|
$
|
4.32
|
|
|
$
|
3.82
|
|
As of
December 31, 2008 and 2007, we excluded, respectively, 5,050,605 and 1,678,985
out-of-the-money options (
i.e.
, options with an
exercise price greater than the weighted average closing price of a unit for the
relevant period) from the diluted net income per unit computation due to their
anti-dilutive effect. As of December 31, 2006, there were no out-of-the-money
options.
4.
|
Investment
in AllianceBernstein
|
Holding’s
investment in AllianceBernstein for the years ended December 31, 2008 and 2007
were as follows:
|
|
2008
|
|
|
2007
|
|
|
(in
thousands)
|
|
|
|
|
|
Investment
in AllianceBernstein as of January 1,
|
|
$
|
1,574,512
|
|
|
$
|
1,567,733
|
|
Equity
in earnings of AllianceBernstein
|
|
|
278,636
|
|
|
|
415,256
|
|
Additional
investments with proceeds from exercises of compensatory options to buy
Holding Units
|
|
|
13,525
|
|
|
|
50,051
|
|
Changes
in accumulated other comprehensive income
|
|
|
(42,013
|
)
|
|
|
6,699
|
|
Cash
distributions received from AllianceBernstein
|
|
|
(338,448
|
)
|
|
|
(449,320
|
)
|
Purchases
of Holding Units by AllianceBernstein to fund deferred compensation plans,
net
|
|
|
(2,358
|
)
|
|
|
(50,853
|
)
|
Issuance
of Holding Units to fund CEO’s Restricted Units awards
|
|
|
52,264
|
|
|
|
—
|
|
Impact
of initial adoption of FIN 48
|
|
|
—
|
|
|
|
145
|
|
Awards
of Holding Units made by AllianceBernstein under deferred compensation
plans, net of forfeitures
|
|
|
63,927
|
|
|
|
34,801
|
|
Investment
in AllianceBernstein as of December 31,
|
|
$
|
1,600,045
|
|
|
$
|
1,574,512
|
|
The
following table summarizes the activity in units:
Outstanding
as of December 31, 2006
|
|
|
85,668,171
|
|
Options
exercised
|
|
|
1,234,917
|
|
Units
awarded
|
|
|
46,777
|
|
Units
forfeited
|
|
|
(1,716
|
)
|
Outstanding
as of December 31, 2007
|
|
|
86,948,149
|
|
Options
exercised
|
|
|
315,467
|
|
Issuance
of units
|
|
|
3,015,396
|
|
Units
awarded
|
|
|
48,365
|
|
Units
forfeited
|
|
|
(3,610
|
)
|
Outstanding
as of December 31, 2008
|
|
|
90,323,767
|
|
Units
awarded and units forfeited pertain to restricted unit awards made to
independent members of the Board of Directors and to Century Club Plan unit
awards to AllianceBernstein employees whose primary responsibilities are to
assist in the distribution of company-sponsored mutual funds and who meet
certain sales targets. Issuance of units pertains to Holding Units issued by
AllianceBernstein to fund deferred compensation plan elections by participants
and the CEO’s Restricted Units award.
Holding
is a publicly traded partnership for federal tax purposes and, accordingly, is
not subject to federal or state corporate income taxes. However, Holding is
subject to the 4.0% New York City unincorporated business tax (“UBT”), net of
credits for UBT paid by AllianceBernstein, and to a 3.5% federal tax on
partnership gross income from the active conduct of a trade or business.
Holding’s partnership gross income is derived from its interest in
AllianceBernstein.
The
principal reasons for the difference between Holding’s effective tax rates and
the UBT statutory tax rate of 4.0% are as follows:
|
|
Years
Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UBT
statutory rate
|
|
$
|
11,145
|
|
|
|
4.0
|
%
|
|
$
|
16,610
|
|
|
|
4.0
|
%
|
|
$
|
14,379
|
|
|
|
4.0
|
%
|
Federal
tax on partnership gross business income
|
|
|
33,910
|
|
|
|
12.2
|
|
|
|
39,104
|
|
|
|
9.4
|
|
|
|
34,473
|
|
|
|
9.6
|
|
Credit
for UBT paid by AllianceBernstein
|
|
|
(11,145
|
)
|
|
|
(4.0
|
)
|
|
|
(16,610
|
)
|
|
|
(4.0
|
)
|
|
|
(14,379
|
)
|
|
|
(4.0
|
)
|
Income
tax expense (all currently payable) and effective tax rate
|
|
$
|
33,910
|
|
|
|
12.2
|
|
|
$
|
39,104
|
|
|
|
9.4
|
|
|
$
|
34,473
|
|
|
|
9.6
|
|
In order
to preserve Holding’s status as a “grandfathered” publicly-traded partnership
for federal income tax purposes, management ensures that Holding does not
directly or indirectly (through AllianceBernstein) enter into a substantial new
line of business. If Holding were to lose its status as a grandfathered publicly
traded partnership, it would be subject to corporate income tax, which would
reduce materially Holding’s net income and its quarterly distributions to
Holding unitholders. For additional information regarding Holding’s tax status,
see “Business - Taxes” in Item
1 and “Risk Factors” in Item 1A
.
Effective
January 1, 2007, we adopted the provisions of Financial Accounting Standards
Board (“FASB”) Interpretation No. 48 (“FIN 48”), “
Accounting for Uncertainty in Income
Taxes
-
an
interpretation of FASB Statement No. 109
”. FIN 48 requires that the
effects of a tax position be recognized in the financial statements only if, as
of the reporting date, it is “more likely than not” to be sustained based solely
on its technical merits. In making this assessment, a company must assume
that the taxing authority will examine the tax position and have full knowledge
of all relevant information.
We did
not recognize a liability for unrecognized tax benefits under FIN 48 as of
January 1, 2007, and there is no such liability as of December 31,
2008. Likewise, our financial statements did not reflect a liability for
tax positions prior to the application of FIN 48. A liability for unrecognized
tax benefits, if required, would be recorded in income tax expense and affect
the company’s effective tax rate.
We are no
longer subject to federal, state and local income tax examinations by tax
authorities for all years prior to 2004. Currently, there are no examinations in
progress and to date we have not been notified of any future examinations by
applicable taxing authorities.
7.
|
Commitments
and Contingencies
|
Legal and
regulatory matters described below pertain to AllianceBernstein and are included
here due to their potential significance to Holding’s investment in
AllianceBernstein.
Legal
Proceedings
With
respect to all significant litigation matters, we consider the likelihood of a
negative outcome. If we determine the likelihood of a negative outcome is
probable, and the amount of the loss can be reasonably estimated, we record an
estimated loss for the expected outcome of the litigation as required by
Statement of Financial Accounting Standards No. 5, “
Accounting for
Contingencies
”, and FASB Interpretation No. 14, “
Reasonable Estimation of the Amount
of a Loss – an interpretation of FASB Statement No. 5
”. If the
likelihood of a negative outcome is reasonably possible and we are able to
determine an estimate of the possible loss or range of loss, we disclose that
fact together with the estimate of the possible loss or range of loss. However,
it is difficult to predict the outcome or estimate a possible loss or range of
loss because litigation is subject to inherent uncertainties, particularly when
plaintiffs allege substantial or indeterminate damages, or when the litigation
is highly complex or broad in scope.
On
October 2, 2003, a purported class action complaint entitled
Hindo, et al. v. AllianceBernstein
Growth
& Income Fund, et al.
(“Hindo Complaint”) was filed against, among others, AllianceBernstein, Holding,
and the General Partner. The Hindo Complaint alleges that certain defendants
failed to disclose that they improperly allowed certain hedge funds and other
unidentified parties to engage in “late trading” and “market timing” of certain
of our U.S. mutual fund securities, violating various securities
laws.
Following
October 2, 2003, additional lawsuits making factual allegations generally
similar to those in the Hindo Complaint were filed in various federal and state
courts against AllianceBernstein and certain other defendants. On
September 29, 2004, plaintiffs filed consolidated amended complaints with
respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Holding; and claims
brought under the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) by participants in the Profit Sharing Plan for Employees of
AllianceBernstein.
On
April 21, 2006, AllianceBernstein and attorneys for the plaintiffs in the
mutual fund shareholder claims, mutual fund derivative claims, and ERISA claims
entered into a confidential memorandum of understanding containing their
agreement to settle these claims. The agreement will be documented by a
stipulation of settlement and will be submitted for court approval at a later
date. The settlement amount ($30 million), which we previously accrued and
disclosed, has been disbursed. The derivative claims brought on behalf of
Holding, in which plaintiffs seek an unspecified amount of damages, remain
pending.
We intend
to vigorously defend against the lawsuit involving derivative claims brought on
behalf of Holding. At the present time, we are unable to predict the outcome or
estimate a possible loss or range of loss in respect of this matter because of
the inherent uncertainty regarding the outcome of complex litigation, and the
fact that the plaintiffs did not specify an amount of damages sought in their
complaint.
We are
involved in various other matters, including regulatory inquiries,
administrative proceedings and litigation, some of which allege substantial
damages. While any inquiry, proceeding or litigation has the element of
uncertainty, management believes that the outcome of any one of the other
regulatory inquiries, administrative proceedings, lawsuits or claims that is
pending or threatened, or all of them combined, will not have a material adverse
effect on our results of operations or financial condition.
Claims
Processing Contingency
During
the fourth quarter of 2006, AllianceBernstein recorded a $56.0 million pre-tax
charge ($54.5 million, net of related income tax benefit) for the estimated cost
of reimbursing certain clients for losses arising out of an error
AllianceBernstein made in processing claims for class action settlement
proceeds on behalf of these clients, which include some
AllianceBernstein-sponsored mutual funds. During the third quarter of 2008,
AllianceBernstein recorded approximately $35.3 million in insurance
recoveries relating to this error. AllianceBernstein’s and Holding’s fourth
quarter 2006 cash distributions were based on net income as calculated prior to
AllianceBernstein recording the charge. Accordingly, the insurance
recoveries ($0.13 per unit) were not included in AllianceBernstein’s or
Holding’s cash distribution to unitholders for the third quarter of 2008. As of
December 31, 2008, AllianceBernstein had $7.8 million remaining in accrued
liabilities related to the $56.0 million pre-tax charge, some of which
AllianceBernstein hopes to recover for its clients in future periods from
related class action settlement funds, the amount of which is not
known. To the extent AllianceBernstein is unable to recover amounts
its clients would have received were it not for the claims processing error,
AllianceBernstein will reimburse these clients for the unrecovered
amount.
8.
|
Quarterly
Financial Data (Unaudited)
|
|
|
Quarters
Ended 2008
|
|
|
|
December
31
|
|
|
September
30
|
|
|
June
30
|
|
|
March
31
|
|
|
|
(in
thousands, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in earnings of AllianceBernstein
|
|
$
|
30,661
|
|
|
$
|
72,936
|
|
|
$
|
93,042
|
|
|
$
|
81,997
|
|
Net
income
|
|
$
|
24,018
|
|
|
$
|
64,361
|
|
|
$
|
83,911
|
|
|
$
|
72,436
|
|
Basic
net income per unit
(1)
|
|
$
|
0.27
|
|
|
$
|
0.73
|
|
|
$
|
0.96
|
|
|
$
|
0.83
|
|
Diluted
net income per unit
(1)
|
|
$
|
0.27
|
|
|
$
|
0.73
|
|
|
$
|
0.96
|
|
|
$
|
0.83
|
|
Cash
distributions per unit
(2) (3)
(4)
|
|
$
|
0.29
|
|
|
$
|
0.60
|
|
|
$
|
0.96
|
|
|
$
|
0.83
|
|
|
|
Quarters
Ended 2007
|
|
|
|
December
31
|
|
|
September
30
|
|
|
June
30
|
|
|
March
31
|
|
|
|
(in
thousands, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in earnings of AllianceBernstein
|
|
$
|
102,299
|
|
|
$
|
114,856
|
|
|
$
|
110,267
|
|
|
$
|
87,834
|
|
Net
income
|
|
$
|
92,152
|
|
|
$
|
104,828
|
|
|
$
|
100,647
|
|
|
$
|
78,525
|
|
Basic
net income per unit
(1)
|
|
$
|
1.06
|
|
|
$
|
1.21
|
|
|
$
|
1.17
|
|
|
$
|
0.91
|
|
Diluted
net income per unit
(1)
|
|
$
|
1.06
|
|
|
$
|
1.20
|
|
|
$
|
1.16
|
|
|
$
|
0.91
|
|
Cash
distributions per unit
(2)
|
|
$
|
1.06
|
|
|
$
|
1.20
|
|
|
$
|
1.16
|
|
|
$
|
0.91
|
|
(1)
|
Basic
and diluted net income per unit are computed independently for each of the
periods presented. Accordingly, the sum of the quarterly net
income per unit amounts may not agree to the total for the
year.
|
(2)
|
Declared
and paid during the following
quarter.
|
(3)
|
During
the fourth quarter of 2006, AllianceBernstein recorded a $56.0 million
pre-tax charge ($54.5 million, net of related income tax benefit) for the
estimated cost of reimbursing certain clients for losses arising out of an
error AllianceBernstein made in processing claims for class action
settlement proceeds on behalf of these clients, which include some
AllianceBernstein-sponsored mutual funds. During the third quarter of
2008, AllianceBernstein recorded approximately $35.3 million in insurance
recoveries relating to this error. AllianceBernstein’s and
Holding’s fourth quarter 2006 cash distributions were based on net income
as calculated prior to AllianceBernstein recording the charge.
Accordingly, the related insurance recoveries ($0.13 per unit) were not
included in AllianceBernstein’s or Holding’s cash distribution to
unitholders for the third quarter of
2008.
|
(4)
|
During
the fourth quarter of 2008, AllianceBernstein recorded an additional $5.1
million ($0.02 per unit) provision for income taxes subsequent to the
declaration of the fourth quarter 2008 cash distribution of $0.29 per
unit. As a result, the cash distribution per unit in the fourth quarter of
2008 is $0.02 higher than diluted net income per
unit.
|
Report
of Independent Registered Public Accounting Firm
To the
General Partner and Unitholders
AllianceBernstein
Holding L.P.:
In our
opinion, the accompanying statements of financial condition and the related
statements of income, changes in partners' capital and comprehensive income and
cash flows present fairly, in all material respects, the financial position of
AllianceBernstein Holding L.P. (“AllianceBernstein Holding”) at December 31,
2008 and 2007, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2008 in conformity with
accounting principles generally accepted in the United States of America. Also
in our opinion, AllianceBernstein Holding maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2008,
based on criteria established in
Internal Control - Integrated
Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). AllianceBernstein Holding's management is
responsible for these financial statements, for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in
Management's Report on Internal
Control over Financial Reporting
appearing under Item 9A. Our
responsibility is to express opinions on these financial statements and on
AllianceBernstein Holding’s internal control over financial reporting based on
our integrated audits. We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement and whether effective internal control over financial
reporting was maintained in all material respects. Our audits of the financial
statements included examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our opinions.
A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial
statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers
LLP
New York,
New York
February
20, 2009
AND
SUBSIDIARIES
Consolidated
Statements of Financial Condition
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(in
thousands, except unit amounts)
|
|
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
552,577
|
|
|
$
|
576,416
|
|
Cash
and securities segregated, at market (cost $2,568,339 and $2,366,925
)
|
|
|
2,572,569
|
|
|
|
2,370,019
|
|
Receivables,
net:
|
|
|
|
|
|
|
|
|
Brokers
and dealers
|
|
|
251,644
|
|
|
|
493,873
|
|
Brokerage
clients
|
|
|
398,979
|
|
|
|
410,074
|
|
Fees,
net
|
|
|
377,167
|
|
|
|
729,636
|
|
Investments:
|
|
|
|
|
|
|
|
|
Deferred
compensation related
|
|
|
305,809
|
|
|
|
547,473
|
|
Other
|
|
|
272,034
|
|
|
|
367,608
|
|
Furniture,
equipment and leasehold improvements, net
|
|
|
365,804
|
|
|
|
367,279
|
|
Goodwill,
net
|
|
|
2,893,029
|
|
|
|
2,893,029
|
|
Intangible
assets, net
|
|
|
243,493
|
|
|
|
264,209
|
|
Deferred
sales commissions, net
|
|
|
113,541
|
|
|
|
183,571
|
|
Other
assets
|
|
|
156,813
|
|
|
|
165,567
|
|
Total
assets
|
|
$
|
8,503,459
|
|
|
$
|
9,368,754
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND PARTNERS’ CAPITAL
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Payables:
|
|
|
|
|
|
|
|
|
Brokers
and dealers
|
|
$
|
110,655
|
|
|
$
|
161,387
|
|
Brokerage
clients
|
|
|
2,755,104
|
|
|
|
2,728,271
|
|
AllianceBernstein
mutual funds
|
|
|
195,617
|
|
|
|
408,185
|
|
Accounts
payable and accrued expenses
|
|
|
310,392
|
|
|
|
389,300
|
|
Accrued
compensation and benefits
|
|
|
360,086
|
|
|
|
458,861
|
|
Debt
|
|
|
284,779
|
|
|
|
533,872
|
|
Non-controlling
interest in consolidated entities
|
|
|
169,167
|
|
|
|
147,652
|
|
Total
liabilities
|
|
|
4,185,800
|
|
|
|
4,827,528
|
|
Commitments
and contingencies
(See
Note 11
)
|
|
|
|
|
|
|
|
|
Partners’
capital:
|
|
|
|
|
|
|
|
|
General
Partner
|
|
|
45,010
|
|
|
|
45,932
|
|
Limited
partners: 263,717,610 and 260,341,992 units issued and
outstanding
|
|
|
4,485,564
|
|
|
|
4,526,126
|
|
|
|
|
4,530,574
|
|
|
|
4,572,058
|
|
Capital
contributions receivable from General Partner
|
|
|
(23,168
|
)
|
|
|
(26,436
|
)
|
Deferred
compensation expense
|
|
|
(117,600
|
)
|
|
|
(57,501
|
)
|
Accumulated
other comprehensive income (loss)
|
|
|
(72,147
|
)
|
|
|
53,105
|
|
Total
partners’ capital
|
|
|
4,317,659
|
|
|
|
4,541,226
|
|
Total
liabilities and partners’ capital
|
|
$
|
8,503,459
|
|
|
$
|
9,368,754
|
|
See Accompanying Notes to Consolidated Financial
Statements.
ALLIANCEBERNSTEIN
L.P.
AND
SUBSIDIARIES
Consolidated
Statements of Income
|
|
Years Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(in
thousands, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Investment
advisory and services fees
|
|
$
|
2,839,526
|
|
|
$
|
3,386,188
|
|
|
$
|
2,890,229
|
|
Distribution
revenues
|
|
|
378,425
|
|
|
|
473,435
|
|
|
|
421,045
|
|
Institutional
research services
|
|
|
471,716
|
|
|
|
423,553
|
|
|
|
375,075
|
|
Dividend
and interest income
|
|
|
91,752
|
|
|
|
284,014
|
|
|
|
266,520
|
|
Investment
gains (losses)
|
|
|
(349,172
|
)
|
|
|
29,690
|
|
|
|
62,200
|
|
Other
revenues
|
|
|
118,436
|
|
|
|
122,869
|
|
|
|
123,171
|
|
Total
revenues
|
|
|
3,550,683
|
|
|
|
4,719,749
|
|
|
|
4,138,240
|
|
Less:
Interest expense
|
|
|
36,524
|
|
|
|
194,432
|
|
|
|
187,833
|
|
Net
revenues
|
|
|
3,514,159
|
|
|
|
4,525,317
|
|
|
|
3,950,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
compensation and benefits
|
|
|
1,454,691
|
|
|
|
1,833,796
|
|
|
|
1,547,627
|
|
Promotion
and servicing:
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
plan payments
|
|
|
274,359
|
|
|
|
335,132
|
|
|
|
292,886
|
|
Amortization
of deferred sales commissions
|
|
|
79,111
|
|
|
|
95,481
|
|
|
|
100,370
|
|
Other
|
|
|
207,506
|
|
|
|
252,468
|
|
|
|
218,944
|
|
General
and administrative
|
|
|
539,198
|
|
|
|
574,506
|
|
|
|
574,904
|
|
Interest
on borrowings
|
|
|
13,077
|
|
|
|
23,970
|
|
|
|
23,124
|
|
Amortization
of intangible assets
|
|
|
20,716
|
|
|
|
20,716
|
|
|
|
20,710
|
|
Total
Expenses
|
|
|
2,588,658
|
|
|
|
3,136,069
|
|
|
|
2,778,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
925,501
|
|
|
|
1,389,248
|
|
|
|
1,171,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating
income
|
|
|
18,728
|
|
|
|
15,756
|
|
|
|
20,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes and non-controlling interest in earnings of
consolidated entities
|
|
|
944,229
|
|
|
|
1,405,004
|
|
|
|
1,192,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
|
95,803
|
|
|
|
127,845
|
|
|
|
75,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interest in earnings of consolidated entities, net of tax
|
|
|
9,186
|
|
|
|
16,715
|
|
|
|
8,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
839,240
|
|
|
$
|
1,260,444
|
|
|
$
|
1,108,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
3.18
|
|
|
$
|
4.80
|
|
|
$
|
4.26
|
|
Diluted
|
|
$
|
3.18
|
|
|
$
|
4.77
|
|
|
$
|
4.22
|
|
See Accompanying Notes to Consolidated Financial
Statements.
ALLIANCEBERNSTEIN
L.P.
AND
SUBSIDIARIES
Consolidated
Statements of Changes in Partners’ Capital and Comprehensive Income
|
|
General
Partner’s
Capital
|
|
|
Limited
Partners’
Capital
|
|
|
Capital
Contributions
Receivable
|
|
|
Deferred
Compensation
Expense
|
|
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
|
|
Total
Partners’
Capital
|
|
|
|
(in
thousands, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2005
|
|
$
|
44,065
|
|
|
$
|
4,334,207
|
|
|
$
|
(31,775
|
)
|
|
$
|
(67,895
|
)
|
|
$
|
24,072
|
|
|
$
|
4,302,674
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
11,086
|
|
|
|
1,097,515
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,108,601
|
|
Other
comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gain (loss) on investments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,198
|
|
|
|
5,198
|
|
Foreign
currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,821
|
|
|
|
10,821
|
|
Comprehensive
income
|
|
|
11,086
|
|
|
|
1,097,515
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,019
|
|
|
|
1,124,620
|
|
Adjustment
to initially apply FASB Statement No. 158, net
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(6,924
|
)
|
|
|
(6,924
|
)
|
Cash
distributions to General Partner and unitholders ($3.94 per
unit)
|
|
|
(10,255
|
)
|
|
|
(1,015,206
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,025,461
|
)
|
Capital
contributions from General Partner
|
|
|
—
|
|
|
|
—
|
|
|
|
4,303
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,303
|
|
Purchases
of Holding Units to fund deferred compensation plans, net
|
|
|
23
|
|
|
|
16,734
|
|
|
|
—
|
|
|
|
(39,102
|
)
|
|
|
—
|
|
|
|
(22,345
|
)
|
Additional
investment by Holding through issuance of Holding Units in exchange for
cash awards made under the Partners Compensation Plan
|
|
|
471
|
|
|
|
46,690
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
47,161
|
|
Compensatory
Holding Unit options expense
|
|
|
—
|
|
|
|
2,699
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,699
|
|
Amortization
of deferred compensation awards
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
43,801
|
|
|
|
—
|
|
|
|
43,801
|
|
Compensation
plan accrual
|
|
|
21
|
|
|
|
2,097
|
|
|
|
(2,118
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Additional
investment by Holding with proceeds from exercise of compensatory options
to buy Holding Units
|
|
|
1,005
|
|
|
|
99,464
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,469
|
|
Balance
as of December 31, 2006
|
|
|
46,416
|
|
|
|
4,584,200
|
|
|
|
(29,590
|
)
|
|
|
(63,196
|
)
|
|
|
33,167
|
|
|
|
4,570,997
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
12,605
|
|
|
|
1,247,839
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,260,444
|
|
Other
comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gain (loss) on investments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(8,859
|
)
|
|
|
(8,859
|
)
|
Foreign
currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,757
|
|
|
|
18,757
|
|
Changes
in retirement plan related items
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,040
|
|
|
|
10,040
|
|
Comprehensive
income
|
|
|
12,605
|
|
|
|
1,247,839
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,938
|
|
|
|
1,280,382
|
|
Cash
distributions to General Partner and unitholders ($5.20 per
unit)
|
|
|
(13,646
|
)
|
|
|
(1,350,965
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,364,611
|
)
|
Capital
contributions from General Partner
|
|
|
—
|
|
|
|
—
|
|
|
|
4,854
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,854
|
|
Purchases
of Holding Units to fund deferred compensation plans, net
|
|
|
35
|
|
|
|
(12,566
|
)
|
|
|
—
|
|
|
|
(38,322
|
)
|
|
|
—
|
|
|
|
(50,853
|
)
|
Compensatory
Holding Unit options expense
|
|
|
—
|
|
|
|
5,947
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,947
|
|
Amortization
of deferred compensation awards
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
44,017
|
|
|
|
—
|
|
|
|
44,017
|
|
Compensation
plan accrual
|
|
|
17
|
|
|
|
1,683
|
|
|
|
(1,700
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Impact
of initial adoption of FIN 48
|
|
|
4
|
|
|
|
438
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
442
|
|
Additional
investment by Holding with proceeds from exercise of compensatory options
to buy Holding Units
|
|
|
501
|
|
|
|
49,550
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,051
|
|
Balance
as of December 31, 2007
|
|
|
45,932
|
|
|
|
4,526,126
|
|
|
|
(26,436
|
)
|
|
|
(57,501
|
)
|
|
|
53,105
|
|
|
|
4,541,226
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
8,392
|
|
|
|
830,848
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
839,240
|
|
Other
comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gain (loss) on investments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,511
|
)
|
|
|
(3,511
|
)
|
Foreign
currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(96,978
|
)
|
|
|
(96,978
|
)
|
Changes
in retirement plan related items
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(24,763
|
)
|
|
|
(24,763
|
)
|
Comprehensive
income (loss)
|
|
|
8,392
|
|
|
|
830,848
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(125,252
|
)
|
|
|
713,988
|
|
Cash
distributions to General Partner and unitholders ($3.87 per
unit)
|
|
|
(10,197
|
)
|
|
|
(1,009,482
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,019,679
|
)
|
Capital
contributions from General Partner
|
|
|
—
|
|
|
|
—
|
|
|
|
4,927
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,927
|
|
Purchases
of Holding Units to fund deferred compensation plans, net
|
|
|
209
|
|
|
|
63,609
|
|
|
|
—
|
|
|
|
(66,176
|
)
|
|
|
—
|
|
|
|
(2,358
|
)
|
Additional
investment by Holding through issuance of Holding Units to fund CEO’s
Restricted Unit award
|
|
|
523
|
|
|
|
51,741
|
|
|
|
—
|
|
|
|
(52,264
|
)
|
|
|
—
|
|
|
|
—
|
|
Compensatory
Holding Unit options expense
|
|
|
—
|
|
|
|
7,737
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,737
|
|
Amortization
of deferred compensation awards
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
58,341
|
|
|
|
—
|
|
|
|
58,341
|
|
Compensation
plan accrual
|
|
|
17
|
|
|
|
1,642
|
|
|
|
(1,659
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Additional
investment by Holding with proceeds from exercise of compensatory options
to buy Holding Units
|
|
|
135
|
|
|
|
13,390
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,525
|
|
ACM
New Alliance Liquidation
|
|
|
(1
|
)
|
|
|
(47
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(48
|
)
|
Balance
as of December 31, 2008
|
|
$
|
45,010
|
|
|
$
|
4,485,564
|
|
|
$
|
(23,168
|
)
|
|
$
|
(117,600
|
)
|
|
$
|
(72,147
|
)
|
|
$
|
4,317,659
|
|
See Accompanying Notes to Consolidated Financial
Statements.
ALLIANCEBERNSTEIN
L.P.
AND
SUBSIDIARIES
Consolidated
Statements of Cash Flows
|
|
Years Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(in
thousands)
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
839,240
|
|
|
$
|
1,260,444
|
|
|
$
|
1,108,601
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of deferred sales commissions
|
|
|
79,111
|
|
|
|
95,481
|
|
|
|
100,370
|
|
Amortization
of non-cash deferred compensation
|
|
|
66,078
|
|
|
|
49,815
|
|
|
|
46,500
|
|
Depreciation
and other amortization
|
|
|
97,746
|
|
|
|
102,394
|
|
|
|
72,445
|
|
Unrealized
losses (gains) on deferred compensation related
investments
|
|
|
254,686
|
|
|
|
21,701
|
|
|
|
(29,483
|
)
|
Other,
net
|
|
|
22,268
|
|
|
|
9,783
|
|
|
|
9,585
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase)
in segregated cash and securities
|
|
|
(132,792
|
)
|
|
|
(360,181
|
)
|
|
|
(245,077
|
)
|
Decrease
(increase) in receivable from brokers and dealers
|
|
|
119,423
|
|
|
|
1,955,260
|
|
|
|
(324,640
|
)
|
(Increase)
decrease in receivable from brokerage clients
|
|
|
(118,633
|
)
|
|
|
77,052
|
|
|
|
(31,974
|
)
|
Decrease
(increase) in fees receivable, net
|
|
|
331,126
|
|
|
|
(161,174
|
)
|
|
|
(135,821
|
)
|
(Increase)
in investments
|
|
|
(34,189
|
)
|
|
|
(211,909
|
)
|
|
|
(240,438
|
)
|
(Increase)
in deferred sales commissions
|
|
|
(9,081
|
)
|
|
|
(84,101
|
)
|
|
|
(98,679
|
)
|
Decrease
(increase) in other assets
|
|
|
6,223
|
|
|
|
(14,648
|
)
|
|
|
(9,638
|
)
|
Increase
(decrease) in payable to brokers and dealers
|
|
|
77,844
|
|
|
|
(500,869
|
)
|
|
|
(422,492
|
)
|
Increase
(decrease) in payable to brokerage clients
|
|
|
139,382
|
|
|
|
(1,266,050
|
)
|
|
|
1,035,367
|
|
(Decrease)
increase in payable to AllianceBernstein mutual funds
|
|
|
(212,568
|
)
|
|
|
141,336
|
|
|
|
126,236
|
|
(Decrease)
increase in accounts payable and accrued expenses
|
|
|
(50,740
|
)
|
|
|
25,370
|
|
|
|
41,290
|
|
(Decrease)
increase in accrued compensation and benefits
|
|
|
(110,346
|
)
|
|
|
75,477
|
|
|
|
69,330
|
|
Increase
in non-controlling interests in consolidated entities
|
|
|
16,
070
|
|
|
|
76,249
|
|
|
|
32,454
|
|
Net
cash provided by operating activities
|
|
|
1,380,848
|
|
|
|
1,291,430
|
|
|
|
1,103,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
of investments
|
|
|
(22,221
|
)
|
|
|
(25,932
|
)
|
|
|
(54,803
|
)
|
Proceeds
from sales of investments
|
|
|
43,229
|
|
|
|
52,393
|
|
|
|
12,812
|
|
Additions
to furniture, equipment and leasehold improvements
|
|
|
(75,208
|
)
|
|
|
(137,547
|
)
|
|
|
(97,073
|
)
|
Purchase
of business, net of cash acquired
|
|
|
—
|
|
|
|
—
|
|
|
|
(16,086
|
)
|
Net
cash used in investing activities
|
|
|
(54,200
|
)
|
|
|
(111,086
|
)
|
|
|
(155,150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Repayment)
issuance of commercial paper, net
|
|
|
(260,146
|
)
|
|
|
175,750
|
|
|
|
328,119
|
|
Repayment
of long-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
(408,149
|
)
|
(Decrease)
increase in overdrafts payable
|
|
|
(11,524
|
)
|
|
|
23,321
|
|
|
|
(1,575
|
)
|
Cash
distributions to General Partner and unitholders
|
|
|
(1,019,679
|
)
|
|
|
(1,364,611
|
)
|
|
|
(1,025,461
|
)
|
Capital
contributions from General Partner
|
|
|
4,927
|
|
|
|
4,854
|
|
|
|
4,303
|
|
Additional
investment by Holding with proceeds from exercise of compensatory options
to buy Holding Units
|
|
|
13,525
|
|
|
|
50,051
|
|
|
|
100,469
|
|
Purchases
of Holding Units to fund deferred compensation plans, net
|
|
|
(2,358
|
)
|
|
|
(50,853
|
)
|
|
|
(22,345
|
)
|
Net
cash used in financing activities
|
|
|
(1,275,255
|
)
|
|
|
(1,161,488
|
)
|
|
|
(1,024,639
|
)
|
Effect
of exchange rate changes on cash and cash equivalents
|
|
|
(75,232
|
)
|
|
|
10,783
|
|
|
|
12,414
|
|
Net
(decrease) increase in cash and cash equivalents
|
|
|
(23,839
|
)
|
|
|
29,639
|
|
|
|
(63,439
|
)
|
Cash
and cash equivalents as of beginning of the period
|
|
|
576,416
|
|
|
|
546,777
|
|
|
|
610,216
|
|
Cash
and cash equivalents as of end of the period
|
|
$
|
552,577
|
|
|
$
|
576,416
|
|
|
$
|
546,777
|
|
Cash
paid:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
47,933
|
|
|
$
|
218,398
|
|
|
$
|
229,009
|
|
Income
taxes
|
|
|
132,491
|
|
|
|
87,329
|
|
|
|
59,704
|
|
Non-cash
financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
investment by Holding through issuance of Holding Units to fund CEO’s
Restricted Units award
|
|
|
52,264
|
|
|
|
—
|
|
|
|
—
|
|
Additional
investment by Holding through issuance of Holding Units in exchange for
cash awards made under the Partners Compensation Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
47,161
|
|
See Accompanying Notes to Consolidated Financial
Statements.
ALLIANCEBERNSTEIN
L.P.
AND
SUBSIDIARIES
Notes
to Consolidated Financial Statements
The
words “we” and “our” refer collectively to AllianceBernstein Holding L.P.
(“Holding”) and AllianceBernstein L.P. and its subsidiaries
(“AllianceBernstein”), or to their officers and employees. Similarly, the word
“company” refers to both Holding and AllianceBernstein. Where the context
requires distinguishing between Holding and AllianceBernstein, we identify which
of them is being discussed. Cross-references are in italics.
1.
|
Business Description and
Organization
|
AllianceBernstein
provides research, diversified investment management and related services
globally to a broad range of clients. Our principal services
include:
|
|
Institutional
Investment Services - servicing our institutional clients, including
unaffiliated corporate and public employee pension funds, endowment funds,
domestic and foreign institutions and governments, and affiliates such as
AXA and certain of its insurance company subsidiaries, by means of
separately managed accounts, sub-advisory relationships, structured
products, collective investment trusts, mutual funds, hedge funds and
other investment vehicles.
|
|
|
Retail
Services - servicing our individual clients, primarily by means of retail
mutual funds sponsored by AllianceBernstein or an affiliated company,
sub-advisory relationships in respect of mutual funds sponsored by third
parties, separately managed account programs sponsored by financial
intermediaries worldwide and other investment
vehicles.
|
|
|
Private
Client Services - servicing our private clients, including high-net-worth
individuals, trusts and estates, charitable foundations, partnerships,
private and family corporations, and other entities, by means of
separately managed accounts, hedge funds, mutual funds and other
investment vehicles.
|
|
|
Institutional
Research Services - servicing our institutional clients seeking
independent research, portfolio strategy and brokerage-related
services.
|
We also
provide distribution, shareholder servicing and administrative services to the
mutual funds we sponsor.
We
provide a broad range of services with expertise in:
|
|
Value
equities, generally targeting stocks that are out of favor and that
may trade at bargain prices;
|
|
|
Growth
equities, generally targeting stocks with under-appreciated growth
potential;
|
|
|
Fixed
income securities, including both taxable and tax-exempt
securities;
|
|
|
Blend
strategies, combining style-pure investment components with systematic
rebalancing;
|
|
|
Passive
management, including both index and enhanced index
strategies;
|
|
|
Alternative
investments, such as hedge funds, currency management strategies and
venture capital; and
|
|
|
Asset
allocation, by which we offer specifically-tailored investment solutions
for our clients (e.g., customized target date fund retirement services for
institutional defined contribution plan
clients).
|
We manage
these services using various investment disciplines, including market
capitalization (e.g., large-, mid- and small-cap equities), term (e.g., long-,
intermediate- and short-duration debt securities), and geographic location
(e.g., U.S., international, global and emerging markets), as well as local and
regional disciplines in major markets around the world.
Our
independent research is the foundation of our business. Our research disciplines
include fundamental research, quantitative research, economic research and
currency forecasting capabilities. In addition, we have created several
specialized research units, including one unit that examines global strategic
changes that can affect multiple industries and geographies, and another
dedicated to identifying potentially successful innovations within private
early-stage and later-stage high potential growth companies.
As of
December 31, 2008, AXA, a
société anonyme
organized
under the laws of France and the holding company for an international group of
insurance and related financial services companies, AXA Financial, Inc. (an
indirect wholly-owned subsidiary of AXA, “AXA Financial”), AXA Equitable Life
Insurance Company (a wholly-owned subsidiary of AXA Financial, “AXA Equitable”),
and certain subsidiaries of AXA Financial, collectively referred to as “AXA and
its subsidiaries”, owned approximately 1.6% of the issued and outstanding units
representing assignments of beneficial ownership of limited partnership
interests in Holding (“Holding Units”).
As of
December 31, 2008, the ownership structure of AllianceBernstein, expressed
as a percentage of general and limited partnership interests, was as
follows:
AXA
and its subsidiaries
|
|
|
61.8
|
%
|
Holding
|
|
|
33.9
|
|
SCB
Partners Inc. (a wholly-owned subsidiary of SCB Inc.; formerly known as
Sanford C. Bernstein Inc.)
|
|
|
3.1
|
|
Unaffiliated
holders
|
|
|
1.2
|
|
|
|
|
100.0
|
%
|
AllianceBernstein
Corporation (an indirect wholly-owned subsidiary of AXA, “General Partner”) is
the general partner of both Holding and AllianceBernstein. AllianceBernstein
Corporation owns 100,000 general partnership units in Holding and a 1% general
partnership interest in AllianceBernstein. As of December 31, 2008, AXA and its
subsidiaries were the beneficial owners of approximately 62.0% of the units of
limited partnership interest in AllianceBernstein (“AllianceBernstein Units”).
This percentage includes AllianceBernstein Units that AXA and its subsidiaries
hold indirectly through its ownership of approximately 1.6% of Holding Units
that are issued and outstanding. Including both the general partnership and
limited partnership interests in Holding and AllianceBernstein, AXA and its
subsidiaries had an approximate 62.4% economic interest in AllianceBernstein as
of December 31, 2008.
On
January 6, 2009, AXA America Holdings, Inc., a wholly-owned subsidiary of AXA,
purchased the remaining 8,160,000 units held by SCB Partners, Inc.
2.
|
Summary
of Significant Accounting Policies
|
The
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of the consolidated financial statements requires management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.
Principles
of Consolidation
The
consolidated financial statements include AllianceBernstein and its
majority-owned and/or controlled subsidiaries. All significant inter-company
transactions and balances among the consolidated entities have been
eliminated.
Variable
Interest Entities
In
accordance with Financial Accounting Standards Board (“FASB”) Interpretation
No. 46 (revised December 2003) (“FIN 46-R”), “
Consolidation of Variable Interest
Entities
”, management reviews quarterly its management agreements and its
investments in, and other financial arrangements with, certain entities that
hold client assets under management to determine the entities that the company
is required to consolidate under FIN 46-R. These entities include certain mutual
fund products, hedge funds, structured products, group trusts, collective
investment trusts and limited partnerships.
We earn
investment management fees on client assets under management of these entities,
but we derive no other benefit from these assets and cannot use them in our
operations.
As of
December 31, 2008, we have significant variable interests in certain structured
products and hedge funds with approximately $61.0 million in client assets under
management. However, these variable interest entities do not require
consolidation because management has determined that we are not the primary
beneficiary of the expected losses or expected residual returns of these
entities. Our maximum exposure to loss in these entities is limited to our
investment of $0.1 million in these entities.
Cash
and Cash Equivalents
Cash and
cash equivalents include cash on hand, demand deposits, money market accounts,
overnight commercial paper and highly liquid investments with actual maturities
of three months or less. Due to the short-term nature of these instruments, the
recorded value has been determined to approximate fair value.
Fees
Receivable, Net
Fees
receivable are shown net of allowances. An allowance for doubtful accounts
related to investment advisory and services fees is determined through an
analysis of the aging of receivables, assessments of collectibility based on
historical trends and other qualitative and quantitative factors, including the
following: our relationship with the client, the financial health (or ability to
pay) of the client, current economic conditions, and whether the account is
closed or active.
Collateralized
Securities Transactions
Customers’
securities transactions are recorded on a settlement date basis, with related
commission income and expenses reported on a trade date basis. Receivables from
and payables to customers include amounts due on cash and margin transactions.
Securities owned by customers are held as collateral for receivables; collateral
is not reflected in the consolidated financial statements. Principal securities
transactions and related expenses are recorded on a trade date
basis.
Sanford
C. Bernstein & Co., LLC (“SCB LLC”) and Sanford C. Bernstein Limited
(“SCBL”), both wholly-owned subsidiaries, account for transfers of financial
assets in accordance with Statement of Financial Accounting Standards
No. 140, “
Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities
”. Securities borrowed and securities loaned are recorded at
the amount of cash collateral advanced or received in connection with the
transaction and are included in receivables from and payables to brokers and
dealers in the consolidated statements of financial condition. Securities
borrowed transactions require SCB LLC and SCBL to deposit cash collateral with
the lender. With respect to securities loaned, SCB LLC and SCBL receive cash
collateral from the borrower. The initial collateral advanced or received
approximates or is greater than the fair value of securities borrowed or loaned.
SCB LLC and SCBL monitor the fair value of the securities borrowed and loaned on
a daily basis and request additional collateral or return excess collateral, as
appropriate. Income or expense is recognized over the life of the
transactions.
Investments
include United States Treasury Bills, unconsolidated mutual funds and limited
partnership hedge funds we sponsor and manage, and investments held by a
consolidated venture capital fund of which we are the general partner and hold a
10% partnership interest.
Investments
in United States Treasury Bills, mutual funds, and other equity and fixed income
securities are classified as either trading or available-for-sale securities, in
accordance with Statement of Financial Accounting Standards No. 115 (“SFAS No.
115”), “
Accounting for Certain
Investments in Debt and Equity Securities
”. Trading investments are
stated at fair value, based on quoted market prices, with unrealized gains and
losses reported in net income. Available-for-sale investments are stated at fair
value, based on quoted market prices, with unrealized gains and losses reported
as a separate component of accumulated other comprehensive income in partners’
capital. Realized gains and losses on the sale of investments are included in
income in the current period. Average cost is used to determine the realized
gain or loss on investments sold.
We use
the equity method of accounting for investments in limited partnership hedge
funds in accordance with EITF D-46, “
Accounting for Limited Partnership
Investments
”. The equity in earnings of our limited partnership hedge
fund investments are included in investments gains and losses on the
consolidated statements of income.
The
investments held by our consolidated venture capital fund are primarily
privately held and are initially valued at cost. These investments are adjusted
to fair value when changes in the underlying fair values are readily
ascertainable, generally reflecting the occurrence of “significant developments”
(
i.e.
, business,
economic, or market events that may affect a company in which an investment has
been made). Adjustments to fair value are recorded as unrealized gains and
losses in investment gains and losses on the consolidated statements of income.
There is one private equity investment which represents an approximate 12%
ownership of a company that we own directly, outside of our consolidated venture
capital fund. This investment is accounted for using the cost
method.
We
adopted Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”),
“
Fair Value
Measurements
”, on January 1, 2008. SFAS No. 157 defines fair value,
establishes a framework for measuring fair value, establishes a fair value
hierarchy based on the quality of inputs used to measure fair value, and expands
disclosure requirements for fair value measurements (
see Note 7
).
Furniture,
Equipment and Leasehold Improvements, Net
Furniture,
equipment and leasehold improvements are stated at cost, less accumulated
depreciation and amortization. Depreciation is recognized on a straight-line
basis over the estimated useful lives of eight years for furniture and three to
six years for equipment and software. Leasehold improvements are amortized on a
straight-line basis over the lesser of their estimated useful lives or the terms
of the related leases.
Goodwill,
Net
On
October 2, 2000, AllianceBernstein acquired the business and assets of SCB
Inc., an investment research and management company formerly known as Sanford C.
Bernstein Inc. (“Bernstein”), and assumed the liabilities of Bernstein
(“Bernstein Transaction”). The purchase price consisted of a cash payment of
approximately $1.5 billion and 40.8 million newly-issued AllianceBernstein
Units. The Bernstein Transaction was accounted for under the purchase method and
the cost of the acquisition was allocated on the basis of the estimated fair
value of the assets acquired and the liabilities assumed. The excess of the
purchase price over the fair value of identifiable assets acquired resulted in
the recognition of goodwill of approximately $3.0 billion.
In
accordance with Statement of Financial Accounting Standards No. 142 (“SFAS No.
142”), “
Goodwill and Other
Intangible Assets
”, we test our single reporting unit annually, as of
September 30, for impairment. The carrying value of goodwill is also reviewed if
facts and circumstances, such as significant declines in assets under
management, revenues, earnings or our Holding Unit price, occur, suggesting
possible impairment. As of September 30, 2008, the impairment test
indicated that goodwill was not impaired. Due to the significant declines in our
assets under management and operating results in 2008 as a result of the global
financial crisis, we also tested goodwill for impairment as of December 31,
2008, and determined that goodwill was not impaired.
The
analysis is a two-step process. The first step involves determining whether the
estimated fair value of AllianceBernstein, the reporting unit, exceeds its book
value. If the fair value of the company exceeds its book value, goodwill is not
impaired. However, if the book value exceeds the fair value of the
company, goodwill may be impaired and additional analysis is
required. The second step compares the fair value of the company to
the aggregated fair values of its individual assets and liabilities to calculate
the amount of impairment, if any.
In the
first step of the process, there are several methods of estimating
AllianceBernstein’s fair value, which include valuation techniques such as
discounted expected cash flows and market valuation (private partnership units
outstanding multiplied by Holding Unit price). Developing estimated fair value
using a discounted cash flow valuation technique consists of applying business
growth rate assumptions over the estimated life of the goodwill asset and then
discounting the resulting expected cash flows to arrive at a present value
amount that approximates fair value. In our test as of December 31, 2008, our
discounted expected cash flow model used management’s current business plan,
which factored in current market conditions and all material events that have
impacted, or that we believed at the time could potentially impact, future
discounted expected cash flows for the first four years and a 7.4% compounded
annual growth rate thereafter. Management used AllianceBernstein’s weighted
average cost of capital of 13.4% as its discount rate. Our market valuation as
of December 31, 2008 was higher than our book value, but the amount of excess
has decreased significantly.
To the
extent that securities valuations remain depressed for prolonged periods of time
and market conditions stagnate or worsen as a result of the global financial
crisis, our assets under management, revenues, profitability and unit price
would likely be adversely affected. As a result, subsequent
impairment tests may be based upon different assumptions and future cash flow
projections, which may result in an impairment of this asset. Any impairment
could reduce materially the recorded amount of goodwill with a corresponding
charge to our earnings.
Intangible
Assets, Net
Intangible
assets consist primarily of costs assigned to acquired investment management
contracts of SCB Inc., less accumulated amortization. Intangible assets are
recognized at fair value and are amortized on a straight-line basis over their
estimated useful life of approximately 20 years. The gross carrying amount of
intangible assets totaled $414.3 million as of December 31, 2008 and 2007,
and accumulated amortization was $170.8 million as of December 31, 2008 and
$150.1 million as of December 31, 2007, resulting in the net carrying
amount of intangible assets subject to amortization of $243.5 million as of
December 31, 2008 and $264.2 million as of December 31, 2007. Amortization
expense was $20.7 million for each of the years ended December 31,
2008, 2007 and 2006, and estimated amortization expense for each of the next
five years is approximately $20.7 million.
Management
tests intangible assets for impairment quarterly. A present value technique is
applied to expected cash flows to estimate the fair value of intangible assets.
Estimated fair value is then compared to the recorded book value to determine
whether impairment is indicated. The key assumptions used in the estimates
include attrition factors of customer accounts, asset growth rates, direct
expenses and fee rates included in management’s current business plan and our
weighted average cost of capital of 13.4% for the discount rate. In determining
these estimates, we choose assumptions based on actual historical trends that
may or may not occur in the future. Management has determined that intangible
assets were not impaired as of December 31, 2008.
To the
extent that securities valuations remain depressed for prolonged periods of time
and market conditions stagnate or worsen as a result of the global financial
crisis, our assets under management and revenues from these investment
management contracts would likely be adversely affected. As a result,
certain triggering events, including impairment of our goodwill, may occur
requiring more frequent testing for impairment of intangibles. Such tests may be
based upon different assumptions, which could result in an impairment of this
asset. Any impairment could reduce materially the recorded amount of intangible
assets with a corresponding charge to our earnings.
Deferred
Sales Commissions, Net
We pay
commissions to financial intermediaries in connection with the sale of shares of
open-end company-sponsored mutual funds sold without a front-end sales charge
(“back-end load shares”). These commissions are capitalized as deferred sales
commissions and amortized over periods not exceeding five and one-half years for
U.S. fund shares and four years for non-U.S. fund shares, the periods of time
during which deferred sales commissions are generally recovered. We recover
these commissions from distribution services fees received from those funds and
from contingent deferred sales commissions (“CDSC”) received from shareholders
of those funds upon the redemption of their shares. CDSC cash recoveries are
recorded as reductions of unamortized deferred sales commissions when received.
Management tests the deferred sales commission asset for recoverability
quarterly and determined that the balance as of December 31, 2008 was not
impaired.
Loss
Contingencies
With
respect to all significant litigation matters, we consider the likelihood of a
negative outcome. If we determine the likelihood of a negative outcome is
probable, and the amount of the loss can be reasonably estimated, we record an
estimated loss for the expected outcome of the litigation as required by
Statement of Financial Accounting Standards No. 5, “
Accounting for
Contingencies
”, and FASB Interpretation No. 14, “
Reasonable Estimation of the Amount
of a Loss - an interpretation of FASB Statement No.
5
”. If the likelihood of a
negative outcome is reasonably possible and we are able to determine an estimate
of the possible loss or range of loss, we disclose that fact together with the
estimate of the possible loss or range of loss. However, it is difficult to
predict the outcome or estimate a possible loss or range of loss because
litigation is subject to inherent uncertainties, particularly when plaintiffs
allege substantial or indeterminate damages, or when the litigation is highly
complex or broad in scope.
Investment
advisory and services base fees, generally calculated as a percentage of assets
under management, are recorded as revenue as the related services are performed.
Certain investment advisory contracts, including those with hedge funds, provide
for a performance-based fee, in addition to or in lieu of a base fee, which is
calculated as either a percentage of absolute investment results or a percentage
of investment results in excess or shortfall compared to a stated benchmark over
a specified period of time. Performance-based fees are recorded as a component
of revenue at the end of each contract’s measurement period.
We
calculate AUM using our standard fair valuation methodologies, including market
based valuation methods and fair valuation methods. Market based valuation
methods include: last sale/settle prices from an exchange for
actively traded listed equities, options and futures; evaluated bid prices from
standard pricing vendors for fixed income, asset-backed or mortgage-backed
issues; mid prices from standard pricing vendors and brokers for credit default
swaps; and quoted bids or spreads from pricing vendors and brokers for other
derivative products. Fair valuation methods include discounted cash
flow models, evaluation of assets vs. liabilities or any other methodology that
is validated and approved by our Valuation Committee (“Committee”). Fair
valuation methods are used only where AUM cannot be valued using market based
valuation methods, such as in the case of private equity or illiquid securities.
Fair valued investments typically make up less than 1% of our total
AUM. Recent market volatility has not had a significant effect on our
ability to acquire market data and, accordingly, our ability to use market based
valuation methods.
The
Committee, which is composed of senior officers and employees and is chaired by
our Chief Risk Officer, is responsible for overseeing the pricing and valuation
of all investments held in client portfolios. The Committee has
adopted a Statement of Pricing Policies describing principles and policies that
apply to pricing and valuing investments held in client
portfolios. We have also established a Pricing Group, which reports
to the Committee. The Committee has delegated to the Pricing Group
responsibility for monitoring the pricing process for all investments held in
client portfolios.
Institutional research services revenue
consists of brokerage transaction charges received by SCB LLC and SCBL, each a
wholly-owned subsidiary of AllianceBernstein, for independent research and
brokerage-related services provided to institutional investors. Brokerage
transaction charges earned and related expenses are recorded on a trade-date
basis. Distribution revenues, shareholder servicing fees, and dividend and
interest income are accrued as earned.
Mutual
Fund Underwriting Activities
Purchases
and sales of shares of company-sponsored mutual funds in connection with the
underwriting activities of our subsidiaries, including related commission
income, are recorded on trade date. Receivables from brokers and dealers for
sale of shares of company-sponsored mutual funds are generally realized within
three business days from trade date, in conjunction with the settlement of the
related payables to company-sponsored mutual funds for share purchases.
Distribution plan and other promotion and servicing payments are recognized as
an expense when incurred.
Deferred
Compensation Plans
We
maintain several unfunded, non-qualified deferred compensation plans under which
annual awards to employees are generally made in the fourth quarter.
Participants allocate their awards: (i) among notional investments in Holding
Units, certain of the investment services we provide to our clients, and a money
market fund, or (ii) in options to acquire Holding Units. We typically purchase
the investments that are notionally elected by the participants and hold such
investments in a consolidated rabbi trust. Vesting periods for annual awards
range from four years to immediate, depending on the terms of the individual
award, the age of the participant, or, as was the case of our former Chairman
and CEO, the terms of his employment agreement. Upon vesting, awards are
distributed to participants unless they have made a voluntary long-term election
to defer receipt. Quarterly cash distributions on unvested Holding Units for
which a long-term deferral election has not been made are paid currently to
participants. Quarterly cash distributions on notional investments in Holding
Units and income credited on notional investments in our investment services or
the money market fund for which a long-term deferral election has been made are
reinvested and distributed as elected by participants.
Compensation
expense for awards under the plans, including changes in participant account
balances resulting from gains and losses on notional investments (other than in
Holding Units and options to acquire Holding Units), is recognized on a
straight-line basis over the applicable vesting periods. Mark-to-market gains or
losses on investments held in the consolidated rabbi trust (other than in
Holding Units and options to acquire Holding Units) are recognized currently as
investment gains (losses) in the consolidated statements of income. In addition,
our equity in the earnings of investments in limited partnership hedge funds is
recognized currently as investment gains (losses) in the consolidated statements
of income.
Compensatory
Unit Awards and Option Plans
In
accordance with Statement of Financial Accounting Standards No. 123
(revised 2004) (“SFAS No. 123-R”), “
Share Based Payment
”, we
recognize compensation expense related to grants of unit awards and options in
the financial statements. Under the fair value method, compensatory expense is
measured at the grant date based on the estimated fair value of the award and is
recognized over the vesting period. Fair value of unit awards is the grant date
unit price; fair value of options is determined using the Black-Scholes option
valuation model. New Holding Units are issued upon exercise of options to buy
Holding Units.
Foreign
Currency Translation
Assets
and liabilities of foreign subsidiaries are translated into United States
dollars (“US$”) at exchange rates in effect at the balance sheet dates, and
related revenues and expenses are translated into US$ at average exchange
rates in effect during each period. Net foreign currency gains and losses
resulting from the translation of assets and liabilities of foreign operations
into US$ are reported as a separate component of accumulated other comprehensive
income in the consolidated statements of changes in partners’ capital and
comprehensive income. Net realized foreign currency transaction gains (losses)
were $20.1 million, $7.1 million and $(0.2) million for 2008, 2007 and 2006,
respectively.
Cash
Distributions
AllianceBernstein
is required to distribute all of its Available Cash Flow, as defined in the
Amended and Restated Agreement of Limited Partnership of AllianceBernstein
(“AllianceBernstein Partnership Agreement”), to its unitholders and to the
General Partner. Available Cash Flow can be summarized as the cash flow received
by AllianceBernstein from operations minus such amounts as the General Partner
determines, in its sole discretion, should be retained by AllianceBernstein for
use in its business.
The
General Partner computes cash flow received from operations by determining the
sum of:
|
|
net
cash provided by operating activities of
AllianceBernstein,
|
|
|
proceeds
from borrowings and from sales or other dispositions of assets in the
ordinary course of business, and
|
|
|
income
from investments in marketable securities, liquid investments and other
financial instruments that are acquired for investment purposes and that
have a value that may be readily
established,
|
and then
subtracting from this amount the sum of:
|
|
payments
in respect of the principal of borrowings, and
|
|
|
|
|
|
amounts
expended for the purchase of assets in the ordinary course of
business.
|
On
January 21, 2009, the General Partner declared a distribution of $98.6
million, or $0.37 per AllianceBernstein Unit, representing a distribution of
Available Cash Flow for the three months ended December 31,
2008. The General Partner, as a result of its 1% general partnership
interest, is entitled to receive 1% of each distribution. The distribution was
paid on February 12, 2009 to holders of record as of February 2,
2009.
During
the third quarter of 2008, we recorded approximately $35.3 million in
insurance recoveries relating to payments made for a class action claims
processing error for which we recorded a charge of $56.0 million in the fourth
quarter of 2006 (
see Note
11
). Our fourth quarter 2006 cash distribution was based on net income as
calculated prior to recording the charge. Accordingly, the insurance recoveries
($0.13 per unit) were not included in our cash distribution to unitholders
for the third quarter of 2008.
We report
all changes in comprehensive income in the consolidated statements of changes in
partners’ capital and comprehensive income. Comprehensive income includes net
income, as well as unrealized gains and losses on investments classified as
available-for-sale, foreign currency translation adjustments, and unrecognized
actuarial net losses, prior service cost and transition assets, all net of
tax.
Reclassifications
Certain
prior period amounts have been reclassified to conform to the current year
presentation. These include: (i) amounts from other investments to investments
in the consolidated statements of financial condition and cash flows, (ii)
non-controlling interest in earnings of consolidated entities, previously
included within general and administrative expenses, currently shown separately,
and (iii) unrealized losses (gains) on deferred compensation related
investments, previously included within other, net in the consolidated
statements of cash flows, currently shown separately.
3.
|
Cash and Securities Segregated
Under Federal Regulations and Other
Requirements
|
As of
December 31, 2008 and 2007, $2.5 billion and $2.2 billion, respectively, of
United States Treasury Bills were segregated in a special reserve bank custody
account for the exclusive benefit of brokerage customers of SCB LLC under
Rule 15c3-3 of the Securities Exchange Act of 1934, as amended (“Exchange
Act”).
AllianceBernstein
Investments, Inc. (“AllianceBernstein Investments”), a wholly-owned subsidiary
of AllianceBernstein and the distributor of company-sponsored mutual funds,
maintains several special bank accounts for the exclusive benefit of customers.
As of December 31, 2008 and 2007, $47.9 million and $133.2 million,
respectively, were segregated in these bank accounts.
Basic net
income per unit is derived by reducing net income for the 1% general partnership
interest and dividing the remaining 99% by the basic weighted average number of
units outstanding for each year. Diluted net income per unit is derived by
reducing net income for the 1% general partnership interest and dividing
the remaining 99% by the total of the basic weighted average number of
units outstanding and the dilutive unit equivalents resulting from outstanding
compensatory options to buy Holding Units as follows:
|
|
Years Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(in thousands, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
839,240
|
|
|
$
|
1,260,444
|
|
|
$
|
1,108,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average units outstanding—basic
|
|
|
260,965
|
|
|
|
259,854
|
|
|
|
257,719
|
|
Dilutive
effect of compensatory options to buy Holding Units
|
|
|
531
|
|
|
|
1,807
|
|
|
|
2,243
|
|
Weighted
average units outstanding—diluted
|
|
|
261,496
|
|
|
|
261,661
|
|
|
|
259,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
net income per unit
|
|
$
|
3.18
|
|
|
$
|
4.80
|
|
|
$
|
4.26
|
|
Diluted
net income per unit
|
|
$
|
3.18
|
|
|
$
|
4.77
|
|
|
$
|
4.22
|
|
As of
December 31, 2008 and 2007, we excluded, respectively, 5,050,605 and 1,678,985
out-of-the-money options (
i.e.
, options with an
exercise price greater than the weighted average closing price of a unit for the
relevant period) from the diluted net income per unit computation due to their
anti-dilutive effect. As of December 31, 2006, there were no out-of-the-money
options.
Fees
receivable, net consists of:
|
December 31,
|
|
|
2008
|
|
2007
|
|
|
(in
thousands)
|
|
|
|
|
|
|
AllianceBernstein
mutual funds
|
|
$
|
89,530
|
|
|
$
|
173,746
|
|
Unaffiliated
clients (net of allowance of $1,488 in 2008 and $1,792 in
2007)
|
|
|
280,288
|
|
|
|
545,787
|
|
Affiliated
clients
|
|
|
7,349
|
|
|
|
10,103
|
|
Total
fees receivables, net
|
|
$
|
377,167
|
|
|
$
|
729,636
|
|
During
the fourth quarter of 2007, we outsourced our hedge fund related prime brokerage
operations, resulting in the elimination of a substantial portion of our
securities borrowing and securities lending activity. As a result, minimal
amounts of collateral for securities borrowed or loaned are included in
receivables from brokers and dealers or payables to brokers and dealers on the
consolidated statements of financial condition.
Investments
consist of:
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2008
|
|
|
December
31, 2007
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
Available-for-sale
|
|
$
|
7,566
|
|
|
$
|
48,038
|
|
Trading:
|
|
|
|
|
|
|
|
|
Deferred
compensation related
|
|
|
238,136
|
|
|
|
417,906
|
|
United
States Treasury Bills
|
|
|
52,694
|
|
|
|
89,328
|
|
Other
|
|
|
31,717
|
|
|
|
65,003
|
|
Investments
in limited partnership hedge funds:
|
|
|
|
|
|
|
|
|
Deferred
compensation related
|
|
|
67,673
|
|
|
|
129,567
|
|
Other
|
|
|
2,191
|
|
|
|
27,111
|
|
Private
equity investments
|
|
|
176,823
|
|
|
|
135,601
|
|
Other
investments
|
|
|
1,043
|
|
|
|
2,527
|
|
Total
investments
|
|
$
|
577,843
|
|
|
$
|
915,081
|
|
Total
investments related to deferred compensation obligations of $305.8 million and
$547.5 million as of December 31, 2008 and 2007, respectively, consist of
company-sponsored mutual funds and limited partnership hedge funds. We typically
purchase the investments that are notionally elected by deferred compensation
plan participants and maintain them in a consolidated rabbi trust. The
investments held in the rabbi trust are held for the benefit of the participants
in our deferred compensation plans, but they are subject to the claims of the
general creditors of AllianceBernstein.
The
underlying investments of the hedge funds in which we invest include long and
short positions in equity securities, fixed income securities (including various
agency and non-agency asset-based securities), currencies, commodities, and
derivatives (including various swaps and forward contracts). Such investments
are valued at quoted market prices or, where quoted market prices are not
available, are fair valued based on the pricing policies and procedures of the
underlying funds.
We
purchase United States Treasury Bills for transfer into a special reserve bank
custody account for the exclusive benefit of brokerage customers of SCB LLC when
required by Rule 15c3-3 of the Exchange Act (
see Note 3
).
The
following is a summary of the cost and fair value of available-for-sale and
trading investments held as of December 31, 2008 and 2007:
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
|
(in thousands)
|
|
December 31,
2008:
|
|
|
|
|
|
|
|
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
investments
|
|
$
|
11,822
|
|
|
$
|
264
|
|
|
$
|
(4,680
|
)
|
|
$
|
7,406
|
|
Fixed income
investments
|
|
|
235
|
|
|
|
4
|
|
|
|
(79
|
)
|
|
|
160
|
|
|
|
$
|
12,057
|
|
|
$
|
268
|
|
|
$
|
(4,759
|
)
|
|
$
|
7,566
|
|
Trading:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
investments
|
|
$
|
434,909
|
|
|
$
|
67
|
|
|
$
|
(188,582
|
)
|
|
$
|
246,394
|
|
Fixed income
investments
|
|
|
79,594
|
|
|
|
65
|
|
|
|
(3,506
|
)
|
|
|
76,153
|
|
|
|
$
|
514,503
|
|
|
$
|
132
|
|
|
$
|
(192,088
|
)
|
|
$
|
322,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
investments
|
|
$
|
27,492
|
|
|
$
|
697
|
|
|
$
|
(8,519
|
)
|
|
$
|
19,670
|
|
Fixed income
investments
|
|
|
29,337
|
|
|
|
275
|
|
|
|
(1,244
|
)
|
|
|
28,368
|
|
|
|
$
|
56,829
|
|
|
$
|
972
|
|
|
$
|
(9,763
|
)
|
|
$
|
48,038
|
|
Trading:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
investments
|
|
$
|
481,989
|
|
|
$
|
7,845
|
|
|
$
|
(23,749
|
)
|
|
$
|
466,085
|
|
Fixed income
investments
|
|
|
105,331
|
|
|
|
910
|
|
|
|
(89
|
)
|
|
|
106,152
|
|
|
|
$
|
587,320
|
|
|
$
|
8,755
|
|
|
$
|
(23,838
|
)
|
|
$
|
572,237
|
|
Proceeds
from sales of available-for-sale investments were approximately $42.0 million,
$52.4 million and $12.8 million in 2008, 2007 and 2006, respectively. Realized
gains from our sales of available-for-sale investments were zero, $8.5 million
and $1.0 million in 2008, 2007 and 2006, respectively. Realized losses from our
sales of available-for-sale investments were $6.4 million in 2008, and zero in
2007 and 2006. We assess valuation declines to determine the extent to which
such declines are fundamental to the underlying investment or attributable to
temporary market-related factors. Based on our assessment, we do not believe the
declines are other than temporary as of December 31, 2008.
We
adopted SFAS No. 157 on January 1, 2008 for financial assets and financial
liabilities. SFAS No. 157 defines fair value, establishes a framework for
measuring fair value, establishes a fair value hierarchy based on the quality of
inputs used to measure fair value, and expands disclosure requirements for fair
value measurements. Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability (
i.e.
, the “exit price”) in an
orderly transaction between market participants at the measurement date. The
three broad levels of fair value hierarchy established by SFAS No. 157 are as
follows:
|
|
Level
1 – Quoted prices in active markets are available for identical assets or
liabilities as of the reported
date.
|
|
|
Level
2 – Quoted prices in markets that are not active or other pricing inputs
that are either directly or indirectly observable as of the reported
date.
|
|
|
Level
3 – Prices or valuation techniques that are both significant to the fair
value measurement and unobservable as of the reported date. These
financial instruments do not have two-way markets and are measured using
management’s best estimate of fair value, where the inputs into the
determination of fair value require significant management judgment or
estimation.
|
FASB
Staff Position No. 157-2 (“FSP No. 157-2”) deferred the effective date of SFAS
No. 157 for nonfinancial assets and nonfinancial liabilities to fiscal years
beginning after November 15, 2008 and interim periods within those fiscal years.
FSP No. 157-2 is not expected to have a material impact on our consolidated
financial statements.
Assets
Measured at Fair Value
The
following table summarizes the valuation of our financial instruments by SFAS
No. 157 pricing observability levels as of December 31, 2008:
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
equivalents
|
|
$
|
184,404
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
184,404
|
|
Securities
segregated
|
|
|
—
|
|
|
|
2,524,698
|
|
|
|
—
|
|
|
|
2,524,698
|
|
Receivables
from brokers and dealers
|
|
|
(46
|
)
|
|
|
680
|
|
|
|
—
|
|
|
|
634
|
|
Investments
– available-for-sale
|
|
|
7,566
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,566
|
|
Investments
– trading
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual
fund investments
|
|
|
237,529
|
|
|
|
—
|
|
|
|
—
|
|
|
|
237,529
|
|
Equity
and fixed income securities
|
|
|
25,027
|
|
|
|
6,874
|
|
|
|
423
|
|
|
|
32,324
|
|
U.S.
Treasury bills
|
|
|
—
|
|
|
|
52,694
|
|
|
|
—
|
|
|
|
52,694
|
|
Investments
– private equity
|
|
|
4,694
|
|
|
|
—
|
|
|
|
162,129
|
|
|
|
166,823
|
|
Total
assets measured at fair value
|
|
$
|
459,174
|
|
|
$
|
2,584,946
|
|
|
$
|
162,552
|
|
|
$
|
3,206,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables
to brokers and dealers
|
|
$
|
167
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
167
|
|
Total
liabilities measured at fair value
|
|
$
|
167
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
167
|
|
Following
is a description of the fair value methodologies used for instruments measured
at fair value, as well as the general classification of such instruments
pursuant to the valuation hierarchy:
|
|
Cash
equivalents
: We invest excess cash in various money market funds
that are valued based on quoted prices in active markets; as such, these
are included in Level 1 of the valuation
hierarchy.
|
|
|
Securities
segregated
: United States Treasury Bills segregated in a special
reserve bank custody account as required by Rule 15c3-3 of the Exchange
Act. As these securities are valued based on quoted yields in secondary
markets, we have included them in Level 2 of the valuation
hierarchy.
|
|
|
Receivables from
brokers and dealers
: We hold several exchange traded futures and
currency forward contracts with counterparties that are included in Level
1 and Level 2, respectively, of the valuation
hierarchy.
|
|
|
Investments –
available-for-sale and trading
: Our available-for-sale investments
consist principally of company-sponsored mutual funds with exchange listed
net asset values, and our trading investments consist principally of
company-sponsored mutual funds with exchange listed net asset values,
various separately managed portfolios consisting primarily of equity
securities with quoted prices in active markets, and United States
Treasury Bills. As such, these investments are included in Level 1 or
Level 2 of the valuation hierarchy. Trading investments also include a
separately managed portfolio of fixed income securities that are included
in Level 2 or Level 3 of the valuation
hierarchy.
|
|
|
Investments – private
equity
: The valuation of non-public private equity investments held
by a consolidated venture capital fund requires significant management
judgment due to the absence of quoted market prices, inherent lack of
liquidity, and the long-term nature of such investments. Private equity
investments are valued initially at cost. The carrying values of private
equity investments are adjusted either up or down from the transaction
price to reflect expected exit values as evidenced by financing and sale
transactions with third parties, or when determination of a valuation
adjustment is confirmed through ongoing review in accordance with our
valuation policies and procedures. A variety of factors are reviewed and
monitored to assess positive and negative changes in valuation including,
but not limited to, current operating performance and future expectations
of investee companies, industry valuations of comparable public companies,
changes in market outlook, and the third party financing environment over
time. In determining valuation adjustments resulting from the investment
review process, particular emphasis is placed on current company
performance and market conditions. Non-public equity investments are
included in Level 3 of the valuation hierarchy because they trade
infrequently and, therefore, the fair value is unobservable.
Publicly-traded equity investments are included in Level 1 of the
valuation hierarchy.
|
|
|
Payables to brokers
and dealers
: Securities sold, but not yet purchased, are included
in Level 1 of the valuation
hierarchy.
|
The
following table summarizes the change in balance sheet carrying value associated
with Level 3 financial instruments carried at fair value during 2008 (in
thousands):
|
|
Twelve
Months Ended December 31, 2008
|
|
|
|
|
|
Balance
as of beginning of period
|
|
$
|
125,020
|
|
Purchases
(sales), net
|
|
|
31,070
|
|
Realized
gains (losses), net
|
|
|
9
|
|
Unrealized
gains (losses), net
|
|
|
6,453
|
|
Balance
as of December 31,
2008
|
|
$
|
162,552
|
|
Realized
and unrealized gains and losses on Level 3 financial instruments are recorded in
investment gains and losses on the condensed consolidated statements of
income.
8.
|
Furniture, Equipment and
Leasehold Improvements, Net
|
Furniture,
equipment and leasehold improvements, net consist of:
|
December 31,
|
|
|
2008
|
|
2007
|
|
|
(in thousands)
|
|
|
|
|
|
|
Furniture and
equipment
|
|
$
|
522,913
|
|
|
$
|
495,669
|
|
Leasehold
improvements
|
|
|
322,803
|
|
|
|
306,908
|
|
|
|
|
845,716
|
|
|
|
802,577
|
|
Less: Accumulated depreciation
and amortization
|
|
|
(479,912
|
)
|
|
|
(435,298
|
)
|
Furniture, equipment and
leasehold improvements, net
|
|
$
|
365,804
|
|
|
$
|
367,279
|
|
Depreciation
and amortization expense on furniture, equipment and leasehold improvements were
$65.6 million, $58.4 million and $43.8 million for the years ended December 31,
2008, 2007 and 2006, respectively.
9.
|
Deferred Sales Commissions,
Net
|
The
components of deferred sales commissions, net for the years ended
December 31, 2008 and 2007 were as follows:
|
December 31,
(1)
|
|
|
2008
|
|
2007
|
|
|
(in thousands)
|
|
|
|
|
|
|
Carrying amount of deferred sales
commissions
|
|
$
|
521,334
|
|
|
$
|
478,504
|
|
Less:
Accumulated
amortization
|
|
|
(294,775
|
)
|
|
|
(215,664
|
)
|
Cumulative CDSC
received
|
|
|
(113,018
|
)
|
|
|
(79,269
|
)
|
Deferred sales commissions,
net
|
|
$
|
113,541
|
|
|
$
|
183,571
|
|
(1)
|
Excludes
amounts related to fully amortized deferred sales
commissions.
|
Amortization
expense was $79.1 million, $95.5 million and $100.4 million for the years ended
December 31, 2008, 2007 and 2006, respectively. Estimated future
amortization expense related to the December 31, 2008 net asset
balance, assuming no additional CDSC is received in future periods, is as
follows (in thousands):
2009
|
|
$
|
51,155
|
|
2010
|
|
|
32,421
|
|
2011
|
|
|
18,873
|
|
2012
|
|
|
8,175
|
|
2013
|
|
|
2,652
|
|
2014
|
|
|
265
|
|
|
|
$
|
113,541
|
|
Total
credit available, debt outstanding, and weighted average interest rates as of
December 31, 2008 and 2007 were as follows:
|
December 31,
|
|
|
2008
|
|
2007
|
|
|
Available
Credit
|
|
Debt
Outstanding
|
|
Interest
Rate
|
|
Available
Credit
|
|
Debt
Outstanding
|
|
Interest
Rate
|
|
|
(in millions)
|
|
|
|
|
Revolving
credit facility
(1)
|
|
$
|
715.2
|
|
|
$
|
—
|
|
|
|
—
|
%
|
|
$
|
466.1
|
|
|
$
|
—
|
|
|
|
—
|
%
|
Commercial
paper
(1)(2)
|
|
|
284.8
|
|
|
|
284.8
|
|
|
|
1.8
|
|
|
|
533.9
|
|
|
|
533.9
|
|
|
|
4.3
|
|
Total
revolving credit facility
(1)
|
|
|
1,000.0
|
|
|
|
284.8
|
|
|
|
1.8
|
|
|
|
1,000.0
|
|
|
|
533.9
|
|
|
|
4.3
|
|
Revolving
credit facility – SCB LLC
|
|
|
950.0
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Unsecured
bank loan
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
1,950.0
|
|
|
$
|
284.8
|
|
|
|
1.8
|
|
|
$
|
1,000.0
|
|
|
$
|
533.9
|
|
|
|
4.3
|
|
(1)
|
Our
$1.0 billion revolving credit facility supports our commercial paper
program; amounts borrowed under the commercial paper program reduce
amounts available for direct borrowing under the revolving credit facility
on a dollar-for-dollar basis.
|
(2)
|
Commercial
paper outstanding is short-term in nature, and as such, book value
approximates fair value.
|
(3)
|
As
of December 31, 2008, SCB LLC maintained five separate uncommitted credit
facilities with various banks totaling $775
million.
|
We have a
$1.0 billion five-year revolving credit facility with a group of commercial
banks and other lenders which expires in 2011. The revolving credit facility is
intended to provide back-up liquidity for our $1.0 billion commercial paper
program, although we borrow directly under the facility from time to time. Our
interest rate, at our option, is a floating rate generally based upon a defined
prime rate, a rate related to the London Interbank Offered Rate (LIBOR) or the
Federal Funds rate. The revolving credit facility contains covenants which,
among other things, require us to meet certain financial ratios. We were in
compliance with the covenants as of December 31, 2008.
In
January 2008, SCB LLC entered into a $950 million three-year revolving credit
facility with a group of commercial banks to fund its obligations resulting from
engaging in certain securities trading and custody activities for private
clients. Under the revolving credit facility, the interest rate, at the option
of SCB LLC, is a floating rate generally based upon a defined prime rate, a rate
related to LIBOR or the Federal Funds rate.
In
January 2008, AllianceBernstein and AXA executed guarantees in regard to the
$950 million SCB LLC facility. In the event SCB LLC is unable to meet its
obligations, AllianceBernstein or AXA will pay the obligations when due or on
demand. AllianceBernstein will reimburse AXA to the extent AXA must pay on its
guarantee. This guarantee is continuous and remains in effect until the later of
payment in full of any obligation under the credit facility has been made or the
maturity date.
Our
substantial capital base and access to public and private debt, at competitive
terms, should provide adequate liquidity for our general business needs.
Management believes that cash flow from operations and the issuance of debt and
AllianceBernstein Units or Holding Units will provide us with the resources
necessary to meet our financial obligations.
11.
Commitments and
Contingencies
We lease
office space, furniture and office equipment under various operating leases. The
future minimum payments under non-cancelable leases, sublease commitments and
related payments we are obligated to make, net of sublease commitments of third
party lessees to make payments to us, as of December 31, 2008 are as
follows:
|
|
Payments
|
|
|
Sublease
Receipts
|
|
|
Net
Payments
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
$
|
127.3
|
|
|
$
|
3.1
|
|
|
$
|
124.2
|
|
2010
|
|
|
131.8
|
|
|
|
3.1
|
|
|
|
128.7
|
|
2011
|
|
|
133.0
|
|
|
|
2.7
|
|
|
|
130.3
|
|
2012
|
|
|
136.3
|
|
|
|
3.0
|
|
|
|
133.3
|
|
2013
|
|
|
136.4
|
|
|
|
3.0
|
|
|
|
133.4
|
|
2014 and
thereafter
|
|
|
1,783.6
|
|
|
|
10.6
|
|
|
|
1,773.0
|
|
Total future minimum
payments
|
|
$
|
2,448.4
|
|
|
$
|
25.5
|
|
|
$
|
2,422.9
|
|
Office
leases contain escalation clauses that provide for the pass through of increases
in operating expenses and real estate taxes. Rent expense, which is amortized on
a straight-line basis over the life of the lease, was $125.7 million, $106.8
million and $99.7 million, respectively, for the years ended December 31,
2008, 2007 and 2006, respectively, net of sublease income of $3.3 million, $3.4
million and $3.7 million for the years ended December 31, 2008, 2007 and
2006, respectively.
Deferred
Sales Commission Asset
Payments
of sales commissions made by AllianceBernstein Investments to financial
intermediaries in connection with the sale of back-end load shares under our
mutual fund distribution system (the “System”) are capitalized as deferred sales
commissions (“deferred sales commission asset”) and amortized over periods not
exceeding five and one-half years for U.S. fund shares and four years for
non-U.S. fund shares, the periods of time during which the deferred sales
commission asset is expected to be recovered. CDSC cash recoveries are recorded
as reductions of unamortized deferred sales commissions when received. The
amount recorded for the net deferred sales commission asset was $113.5 million
and $183.6 million as of December 31, 2008 and 2007, respectively. Payments
of sales commissions made by AllianceBernstein Investments to financial
intermediaries in connection with the sale of back-end load shares under the
System, net of CDSC received of $33.7 million, $31.1 million and $23.7 million,
totaled approximately $9.1 million, $84.1 million and $98.7 million during 2008,
2007 and 2006, respectively. Effective January 31, 2009, back-end load shares
are no longer offered to new investors in U.S. funds.
Management
tests the deferred sales commission asset for impairment quarterly by comparing
undiscounted future cash flows to the recorded value, net of accumulated
amortization. Significant assumptions utilized to estimate the company’s future
average assets under management and undiscounted future cash flows from back-end
load shares are updated quarterly and include expected future market levels and
redemption rates. Market assumptions are selected using a long-term view of
expected average market returns based on historical returns of broad market
indices. As of December 31, 2008, management used average market return
assumptions of 5% for fixed income securities and 8% for equities to estimate
annual market returns. Higher actual average market returns would increase
undiscounted future cash flows, while lower actual average market returns would
decrease undiscounted future cash flows. Future redemption rate assumptions
range from 22% to 32% for U.S. fund shares and 28% to 72% for non-U.S. fund
shares, determined by reference to actual redemption experience over the
five-year, three-year, one-year and current quarterly periods ended
December 31, 2008, calculated as a percentage of our average assets under
management represented by back-end load shares. An increase in the actual rate
of redemptions would decrease undiscounted future cash flows, while a decrease
in the actual rate of redemptions would increase undiscounted future cash flows.
These assumptions are reviewed and updated quarterly. Estimates of undiscounted
future cash flows and the remaining life of the deferred sales commission asset
are made from these assumptions and the aggregate undiscounted future cash flows
are compared to the recorded value of the deferred sales commission asset. As of
December 31, 2008, management determined that the deferred sales commission
asset was not impaired. However, if higher redemption rates continue in 2009,
this asset may become impaired. If management determines in the future that the
deferred sales commission asset is not recoverable, an impairment condition
would exist and a loss would be measured as the amount by which the recorded
amount of the asset exceeds its estimated fair value. Estimated fair value is
determined using management’s best estimate of future cash flows discounted to a
present value amount.
During
2008, U.S. equity markets decreased by approximately 37.0% as measured by the
change in the Standard & Poor’s 500 Stock Index and U.S. fixed income
markets increased by approximately 5.2% as measured by the change in the
Barclays Aggregate Bond Index. The redemption rate for domestic back-end load
shares was 25.0% in 2008. Non-U.S. capital markets decreases ranged from 40.7%
to 53.3% as measured by the MSCI World, Emerging Market and EAFE Indices. The
redemption rate for non-U.S. back-end load shares was 42.3% in 2008. Declines in
financial markets or higher redemption levels, or both, as compared to the
assumptions used to estimate undiscounted future cash flows, as described above,
could result in the impairment of the deferred sales commission asset. Due to
the volatility of the capital markets and changes in redemption rates,
management is unable to predict whether or when a future impairment of the
deferred sales commission asset might occur. Any impairment would reduce
materially the recorded amount of the deferred sales commission asset with a
corresponding charge to earnings.
Legal
Proceedings
On
October 2, 2003, a purported class action complaint entitled
Hindo, et al. v. AllianceBernstein
Growth
& Income Fund, et al.
(“Hindo Complaint”) was filed against, among others, AllianceBernstein, Holding,
and the General Partner. The Hindo Complaint alleges that certain defendants
failed to disclose that they improperly allowed certain hedge funds and other
unidentified parties to engage in “late trading” and “market timing” of certain
of our U.S. mutual fund securities, violating various securities
laws.
Following
October 2, 2003, additional lawsuits making factual allegations generally
similar to those in the Hindo Complaint were filed in various federal and state
courts against AllianceBernstein and certain other defendants. On
September 29, 2004, plaintiffs filed consolidated amended complaints with
respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Holding; and claims
brought under the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) by participants in the Profit Sharing Plan for Employees of
AllianceBernstein.
On
April 21, 2006, AllianceBernstein and attorneys for the plaintiffs in the
mutual fund shareholder claims, mutual fund derivative claims, and ERISA claims
entered into a confidential memorandum of understanding containing their
agreement to settle these claims. The agreement will be documented by a
stipulation of settlement and will be submitted for court approval at a later
date. The settlement amount ($30 million), which we previously accrued and
disclosed, has been disbursed. The derivative claims brought on behalf of
Holding, in which plaintiffs seek an unspecified amount of damages, remain
pending.
We intend
to vigorously defend against the lawsuit involving derivative claims brought on
behalf of Holding. At the present time, we are unable to predict the outcome or
estimate a possible loss or range of loss in respect of this matter because of
the inherent uncertainty regarding the outcome of complex litigation, and the
fact that the plaintiffs did not specify an amount of damages sought in their
complaint.
We are
involved in various other matters, including regulatory inquiries,
administrative proceedings and litigation, some of which allege significant
damages. While any inquiry, proceeding or litigation has the element of
uncertainty, management believes that the outcome of any one of the other
regulatory inquiries, administrative proceedings, lawsuits or claims that is
pending or threatened, or all of them combined, will not have a material adverse
effect on our results of operations or financial condition.
Claims
Processing Contingency
During
the fourth quarter of 2006, we recorded in general and administrative expenses a
$56.0 million pre-tax charge ($54.5 million, net of related income tax benefit,
or $0.21 per unit) for the estimated cost of reimbursing certain clients for
losses arising out of an error we made in processing claims for class
action settlement proceeds on behalf of these clients, which include some
AllianceBernstein-sponsored mutual funds. During the third quarter of 2008, we
recorded as a reduction of general and administrative expenses approximately
$35.3 million in insurance recoveries relating to this error. Our fourth
quarter 2006 cash distribution was based on net income as calculated prior to
recording the charge. Accordingly, the insurance recoveries ($0.13 per
unit) are not included in our cash distribution to unitholders for the
third quarter of 2008. As of December 31, 2008, we had $7.8 million remaining in
accrued liabilities related to the $56.0 million pre-tax charge, some of which
we hope to recover for our clients in future periods from related class action
settlement funds, the amount of which is not known. To the extent we
are unable to recover amounts our clients would have received were it not for
the claims processing error, we will reimburse these clients for the unrecovered
amount.
12.
Net Capital
SCB LLC,
a broker-dealer and a member organization of the New York Stock Exchange
(“NYSE”), is subject to the Uniform Net Capital Rule 15c3-1 of the Exchange
Act. SCB LLC computes its net capital under the alternative method permitted by
the rule, which requires that minimum net capital, as defined, equal the greater
of $1 million, or two percent of aggregate debit items arising from
customer transactions, as defined. As of December 31, 2008, SCB LLC had net
capital of $175.1 million, which was $167.3 million in excess of the
minimum net capital requirement of $7.8 million. Advances, dividend
payments and other equity withdrawals by SCB LLC are restricted by the
regulations of the U.S. Securities and Exchange Commission (“SEC”), the
Financial Industry Regulatory Authority, Inc., and other securities agencies. As
of December 31, 2008, $19.6 million was not available for payment of
cash dividends and advances.
SCBL is a
member of the London Stock Exchange. As of December 31, 2008, SCBL was
subject to financial resources requirements of $12.3 million imposed by the
Financial Services Authority of the United Kingdom and had aggregate regulatory
financial resources of $37.3 million, an excess of $25.0 million.
AllianceBernstein
Investments serves as distributor and/or underwriter for certain
company-sponsored mutual funds. AllianceBernstein Investments is registered as a
broker-dealer under the Exchange Act and is subject to the minimum net capital
requirements imposed by the SEC. AllianceBernstein Investments’ net capital as
of December 31, 2008 was $85.4 million, which was $78.7 million in
excess of its required net capital of $6.7 million.
Many of
our subsidiaries around the world are subject to minimum net capital
requirements by the local laws and regulations to which they are subject. As of
December 31, 2008, each of our subsidiaries subject to a minimum net capital
requirement satisfied the applicable requirement.
In the
normal course of business, brokerage activities involve the execution,
settlement, and financing of various customer securities trades, which may
expose SCB LLC and SCBL to off-balance sheet risk by requiring SCB LLC and SCBL
to purchase or sell securities at prevailing market prices in the event the
customer is unable to fulfill its contracted obligations.
SCB LLC’s
customer securities activities are transacted on either a cash or margin basis.
In margin transactions, SCB LLC extends credit to the customer, subject to
various regulatory and internal margin requirements. These transactions are
collateralized by cash or securities in the customer’s account. In connection
with these activities, SCB LLC may execute and clear customer transactions
involving the sale of securities not yet purchased. SCB LLC seeks to control the
risks associated with margin transactions by requiring customers to maintain
collateral in compliance with the aforementioned regulatory and internal
guidelines. SCB LLC monitors required margin levels daily and, pursuant to such
guidelines, requires customers to deposit additional collateral, or reduce
positions, when necessary. A majority of SCB LLC’s customer margin accounts are
managed on a discretionary basis whereby AllianceBernstein maintains control
over the investment activity in the accounts. For these discretionary accounts,
SCB LLC’s margin deficiency exposure is minimized through maintaining a
diversified portfolio of securities in the accounts and by virtue of
AllianceBernstein’s discretionary authority and SCB LLC’s role as
custodian.
SCB LLC
may enter into forward foreign currency contracts on behalf of accounts for
which SCB LLC acts as custodian. SCB LLC minimizes credit risk associated with
these contracts by monitoring these positions on a daily basis, as well as by
virtue of AllianceBernstein’s discretionary authority and SCB LLC’s role as
custodian.
In
accordance with industry practice, SCB LLC and SCBL record customer transactions
on a settlement date basis, which is generally three business days after trade
date. SCB LLC and SCBL are exposed to risk of loss on these transactions in the
event of the customer’s or broker’s inability to meet the terms of their
contracts, in which case SCB LLC and SCBL may have to purchase or sell financial
instruments at prevailing market prices. The risks assumed by SCB LLC and SCBL
in connection with these transactions are not expected to have a material effect
upon AllianceBernstein’s, SCB LLC’s, or SCBL’s financial condition or results of
operations.
Other
Counterparties
SCB LLC
and SCBL are engaged in various brokerage activities in which counterparties
primarily include broker-dealers, banks and other financial institutions. In the
event counterparties do not fulfill their obligations, SCB LLC and SCBL may be
exposed to risk. The risk of default depends on the creditworthiness of the
counterparty or issuer of the instrument. It is SCB LLC’s and SCBL’s policy to
review, as necessary, the credit standing of each counterparty.
In
connection with SCB LLC’s security borrowing and lending arrangements, SCB LLC
enters into collateralized agreements which may result in credit exposure in the
event the counterparty to a transaction is unable to fulfill its contractual
obligations. Security borrowing arrangements require SCB LLC to deposit cash
collateral with the lender. With respect to security lending arrangements, SCB
LLC receives collateral in the form of cash in amounts generally in excess of
the market value of the securities loaned. SCB LLC minimizes credit risk
associated with these activities by establishing credit limits for each broker
and monitoring these limits on a daily basis. Additionally, security borrowing
and lending collateral is marked to market on a daily basis, and additional
collateral is deposited by or returned to SCB LLC as necessary. During the
fourth quarter of 2007, SCB LLC outsourced its hedge fund related prime
brokerage operations, resulting in the elimination of a substantial portion of
its security borrowing and security lending activity.
14.
Qualified Employee Benefit
Plans
We
maintain a qualified profit sharing plan (the “Profit Sharing Plan”) covering
U.S. employees and certain foreign employees. Employer contributions are
discretionary and generally limited to the maximum amount deductible for federal
income tax purposes. Aggregate contributions for 2008, 2007 and 2006 were $24.5
million, $29.4 million and $25.3 million, respectively.
We
maintain several defined contribution plans for foreign employees in the United
Kingdom, Australia, New Zealand, Japan and other foreign
entities. Employer contributions are generally consistent with
regulatory requirements and tax limits. Defined contribution expense
for foreign entities was $10.6 million, $8.3 million and $5.9 million in 2008,
2007 and 2006, respectively.
We
maintain a qualified, noncontributory, defined benefit retirement plan
(“Retirement Plan”) covering current and former employees who were employed by
AllianceBernstein in the United States prior to October 2, 2000. Benefits
are based on years of credited service, average final base salary (as defined),
and primary Social Security benefits. As of December 31, 2008, the Retirement
Plan was changed to provide that the participants will not accrue any additional
benefits (
i.e.
, service
and compensation after December 31, 2008 will not be taken into account in
determining the participants’ retirement benefit). Our policy is to satisfy our
funding obligation for each year in an amount not less than the minimum required
by ERISA and not greater than the maximum amount we can deduct for federal
income tax purposes.
The
Retirement Plan’s projected benefit obligation, fair value of plan assets, and
funded status (amounts recognized in the consolidated statements of financial
condition) were as follows:
|
|
Years Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(in thousands)
|
|
Change
in projected benefit obligation:
|
|
|
|
|
|
|
Projected
benefit obligation at beginning of year
|
|
$
|
76,731
|
|
|
$
|
84,683
|
|
Service
cost
|
|
|
2,995
|
|
|
|
3,446
|
|
Interest
cost
|
|
|
4,996
|
|
|
|
4,769
|
|
Actuarial
losses (gains)
|
|
|
3,891
|
|
|
|
(8,280
|
)
|
Plan
amendment
|
|
|
—
|
|
|
|
(4,365
|
)
|
Plan
curtailment
|
|
|
(13,133
|
)
|
|
|
—
|
|
Benefits
paid
|
|
|
(3,250
|
)
|
|
|
(3,522
|
)
|
Projected
benefit obligation at end of year
|
|
|
72,230
|
|
|
|
76,731
|
|
Change
in plan assets:
|
|
|
|
|
|
|
|
|
Plan
assets at fair value at beginning of year
|
|
|
56,786
|
|
|
|
53,315
|
|
Actual
return on plan assets
|
|
|
(25,770
|
)
|
|
|
2,193
|
|
Employer
contribution
|
|
|
5,617
|
|
|
|
4,800
|
|
Benefits
paid
|
|
|
(3,250
|
)
|
|
|
(3,522
|
)
|
Plan
assets at fair value at end of year
|
|
|
33,383
|
|
|
|
56,786
|
|
Funded
status
|
|
$
|
(38,847
|
)
|
|
$
|
(19,945
|
)
|
The
change made effective December 31, 2008 regarding the elimination of accruing
for participants future services and compensation increases, considered a plan
curtailment, resulted in a decrease in our projected obligation of $13.1
million. This decrease in our projected obligation was offset against
existing deferred losses in accumulated other comprehensive income
(loss). In addition, as a result of all future service being
eliminated, we accelerated recognition of the existing prior service credit of
$3.5 million in the fourth quarter of 2008.
As a
result of the Pension Protection Act of 2006 (“PPA”), we changed our basis for
lump sums effective January 1, 2008. The change in the lump sum
basis, considered a plan amendment, resulted in a decrease in our projected
obligation of $4.4 million as of December 31, 2007.
The
amounts recognized in other comprehensive income (loss), net of taxes, during
2008 and 2007 were as follows:
|
|
2008
|
|
|
2007
|
|
|
|
(in
thousands)
|
|
Unrecognized
net (loss) gain from experience different from that assumed and effects of
changes and assumptions
|
|
$
|
(20,811
|
)
|
|
$
|
5,992
|
|
Unrecognized
prior service (credit) cost
|
|
|
(3,844
|
)
|
|
|
4,187
|
|
Unrecognized
net plan assets as of January 1, 1987 being recognized over 26.3
years
|
|
|
(108
|
)
|
|
|
(139
|
)
|
Other
comprehensive income (loss)
|
|
$
|
(24,763
|
)
|
|
$
|
10,040
|
|
The
amounts included in accumulated other comprehensive income (loss), net of taxes,
as of December 31, 2008 and 2007 were as follows:
|
|
2008
|
|
|
2007
|
|
|
|
(in
thousands)
|
|
Unrecognized
net loss from experience different from that assumed and effects of
changes and assumptions
|
|
$
|
(22,249
|
)
|
|
$
|
(1,438
|
)
|
Unrecognized
prior service credit
|
|
|
—
|
|
|
|
3,844
|
|
Unrecognized
net plan assets as of January 1, 1987 being recognized over 26.3
years
|
|
|
602
|
|
|
|
710
|
|
Accumulated
other comprehensive income (loss)
|
|
$
|
(21,647
|
)
|
|
$
|
3,116
|
|
The
estimated initial plan assets and amortization of loss for the Retirement Plan
that will be amortized from accumulated other comprehensive income over the next
year is $143,000 and $1.4 million, respectively.
The
accumulated benefit obligation for the plan was $72.2 million and $65.0 million
as of December 31, 2008 and 2007, respectively. We currently estimate we
will contribute $22 million to the Retirement Plan during 2009. Contribution
estimates, which are subject to change, are based on regulatory requirements,
future market conditions and assumptions used for actuarial computations of the
Retirement Plan’s obligations and assets. Management, at the present time, is
unable to determine the amount, if any, of additional future contributions that
may be required.
Actuarial
computations used to determine benefit obligations as of December 31, 2008
and 2007 (measurement dates) were made utilizing the following weighted-average
assumptions:
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
Discount
rate on benefit obligations
|
|
|
6.20
|
%
|
|
|
6.55
|
%
|
Annual
salary increases
|
|
|
3.11
|
%
|
|
|
3.14
|
%
|
The
following benefit payments, which reflect expected future service, are expected
to be paid as follows (in thousands):
2009
|
|
$
|
2,534
|
|
2010
|
|
|
3,122
|
|
2011
|
|
|
3,287
|
|
2012
|
|
|
4,129
|
|
2013
|
|
|
3,112
|
|
2014-2018
|
|
|
20,832
|
|
Net
expense under the Retirement Plan consisted of:
|
|
Years Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$
|
2,995
|
|
|
$
|
3,447
|
|
|
$
|
4,048
|
|
Interest
cost on projected benefit obligations
|
|
|
4,996
|
|
|
|
4,769
|
|
|
|
4,578
|
|
Expected
return on plan assets
|
|
|
(4,590
|
)
|
|
|
(4,310
|
)
|
|
|
(3,800
|
)
|
Amortization
of prior service credit
|
|
|
(431
|
)
|
|
|
(59
|
)
|
|
|
(59
|
)
|
Amortization
of transition asset
|
|
|
(143
|
)
|
|
|
(143
|
)
|
|
|
(143
|
)
|
Curtailment
gain recognized
|
|
|
(3,510
|
)
|
|
|
—
|
|
|
|
—
|
|
Amortization
of loss
|
|
|
—
|
|
|
|
—
|
|
|
|
280
|
|
Net
pension (benefit) charge
|
|
$
|
(683
|
)
|
|
$
|
3,704
|
|
|
$
|
4,904
|
|
Actuarial
computations used to determine net periodic costs were made utilizing the
following weighted-average assumptions:
|
Years Ended December 31,
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Discount
rate on benefit obligations
|
|
|
6.55
|
%
|
|
|
5.90
|
%
|
|
|
5.65
|
%
|
Expected
long-term rate of return on plan assets
|
|
|
8.00
|
%
|
|
|
8.00
|
%
|
|
|
8.00
|
%
|
Annual
salary increases
|
|
|
3.14
|
%
|
|
|
3.14
|
%
|
|
|
3.50
|
%
|
The
Retirement Plan’s asset allocation percentages consisted of:
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Equity
securities
|
|
|
56
|
%
|
|
|
69
|
%
|
Debt
securities
|
|
|
30
|
|
|
|
21
|
|
Real
estate
|
|
|
14
|
|
|
|
10
|
|
|
|
|
100
|
%
|
|
|
100
|
%
|
In
developing the expected long-term rate of return on plan assets of 8.0%,
management considered the historical returns and future expectations for returns
for each asset category, as well as the target asset allocation of the
portfolio. The expected long-term rate of return on assets is based on weighted
average expected returns for each asset class. We assumed a target allocation
weighting of 50% to 70% for equity securities, 20% to 40% for debt securities,
and 0% to 10% for real estate investment trusts. Exposure of the total portfolio
to cash equivalents on average should not exceed 5% of the portfolio’s value on
a market value basis. The plan seeks to provide a rate of return that exceeds
applicable benchmarks over rolling five-year periods. The benchmark for the
plan’s large cap domestic equity investment strategy is the S&P 500 Index;
the small cap domestic equity investment strategy is measured against the
Russell 2000 Index; the international equity investment strategy is measured
against the MSCI EAFE Index; and the fixed income investment strategy is
measured against the Barclays Aggregate Bond Index.
We
provide postretirement medical benefits which allow retirees between the ages of
55 and 65 meeting certain service requirements, at their election, to continue
to participate in our group medical program by paying 100% of the applicable
group premium. Retirees older than 65 may also continue to
participate in our group medical program, but are required to pay the full
expected cost of benefits. To the extent that retirees’ medical costs exceed
premiums paid, we incur the cost of providing a postretirement medical
benefit. During 2008, our net periodic benefit cost was $0.5 million,
and our aggregate benefit obligation as of December 31, 2008 is
$4.0
million.
15.
|
Deferred Compensation
Plans
|
We
maintain an unfunded, non-qualified deferred compensation plan known as the
Capital Accumulation Plan and also have assumed obligations under contractual
unfunded deferred compensation arrangements covering certain executives
(“Contractual Arrangements”). The Capital Accumulation Plan was frozen on
December 31, 1987 and no additional awards have been made. The Board of
Directors of the General Partner (“Board”) may terminate the Capital
Accumulation Plan at any time without cause, in which case our liability would
be limited to benefits that have vested. Payment of vested benefits under both
the Capital Accumulation Plan and the Contractual Arrangements will generally be
made over a ten-year period commencing at retirement age. The General Partner is
obligated to make capital contributions to AllianceBernstein in amounts equal to
benefits paid under the Capital Accumulation Plan and the Contractual
Arrangements. Amounts included in employee compensation and benefits expense for
the Capital Accumulation Plan and the Contractual Arrangements for the years
ended December 31, 2008, 2007 and 2006 were $1.7 million, $1.7 million and
$2.1 million, respectively.
In
connection with the Bernstein Transaction, we adopted an unfunded, non-qualified
deferred compensation plan, known as the SCB Deferred Compensation Award Plan
(“SCB Plan”), under which we agreed to invest $96 million per annum for
three years to fund notional investments in Holding Units or a company-sponsored
money market fund, to be awarded for the benefit of certain individuals who were
stockholders or principals of Bernstein or who were hired to replace them. The
awards vest ratably over three years and are amortized as employee compensation
expense over the vesting period. Awards are payable to participants when fully
vested, but participants may elect to defer receipt of vested awards to future
dates. The amounts charged to employee compensation and benefits expense for the
years ended December 31, 2008, 2007 and 2006 were $0.2 million, $0.6
million and $3.6 million, respectively.
We
maintain an unfunded, non-qualified deferred compensation plan known as the
Amended and Restated AllianceBernstein Partners Compensation Plan (the “Partners
Plan”) under which annual awards may be granted to eligible
employees.
|
|
Awards
made in 1995 vested ratably over three years; awards made from 1996
through 1998 generally vested ratably over eight
years.
|
|
o
|
Until
distributed, liability for the 1995 through 1998 awards increased or
decreased through December 31, 2005 based on our earnings growth
rate.
|
|
o
|
Prior
to January 1, 2006, payment of vested 1995 through 1998 benefits was
generally made in cash over a five-year period commencing at retirement or
termination of employment although, under certain circumstances, partial
lump sum payments were made.
|
|
o
|
Effective
January 1, 2006, participant accounts were converted to notional
investments in Holding Units or a money market fund, or a combination of
both, at the election of the participant, in lieu of being subject to the
earnings-based calculation. Each participant elected a distribution date,
which could be no earlier than January 2007. Holding issued 834,864
Holding Units in January 2006 in connection with this conversion, with a
market value on that date of approximately $47.2
million.
|
|
|
Awards
made for 1999 and 2000 are notionally invested in Holding
Units.
|
|
o
|
A
subsidiary of AllianceBernstein purchases Holding Units to fund the
related benefits.
|
|
o
|
The
vesting periods for 1999 and 2000 awards range from eight years to
immediate depending on the age of the
participant.
|
|
|
For
2001, participants were required to allocate at least 50% of their awards
to notional investments in Holding Units and could allocate the remainder
to notional investments in certain of our investment
services.
|
|
|
For
2002 awards, participants elected to allocate their awards in a
combination of notional investments in Holding Units and notional
investments in certain of our investment
services.
|
|
|
Beginning
with 2003 awards, participants may elect to allocate their awards in a
combination of notional investments in Holding Units (up to 50%) and
notional investments in certain of our investment
services.
|
|
|
Beginning
with 2006 awards, selected senior officers may elect to allocate up to a
specified portion of their awards to investments in options to buy Holding
Units (“Special Option Program”); the firm matches this allocation on a
two-for-one basis (for additional information about the Special Option
Program,
see Note
16
).
|
|
|
Beginning
with 2008 awards, executive committee members and those senior officers
previously participating in the Special Option Program may allocate up to
half of their awards to investments in options to buy Holding Units (
see
Note
16
).
|
Beginning
with 2001 awards, vesting periods range from four years to immediate depending
on the age of the participant. Upon vesting, awards are distributed to
participants unless a voluntary election to defer receipt has been made.
Quarterly cash distributions on unvested Holding Units for which a deferral
election has not been made are paid currently to participants. Quarterly cash
distributions on vested and unvested Holding Units for which a deferral election
has been made and income earned on notional investments in company-sponsored
mutual funds are reinvested and distributed as elected by
participants.
The
Partners Plan may be terminated at any time without cause, in which case our
liability would be limited to vested benefits. We made awards in 2008, 2007 and
2006 aggregating $236.0 million, $314.6 million and $228.7 million,
respectively. In January 2009, $22.9 million of the 2008 award was allocated to
options to buy Holding Units (
see Note 16
). The 2007 and
2006 awards are net of $9.9 million and $9.8 million, respectively, allocated to
the December 2007 and January 2007 Special Option Program’s awards. The amounts
charged to employee compensation and benefits expense for the years ended
December 31, 2008, 2007 and 2006 were $59.9 million, $227.2 million and
$191.9 million, respectively.
During
2003, we established the AllianceBernstein Commission Substitution Plan
(“Commission Substitution”), an unfunded, non-qualified incentive plan.
Employees whose principal duties are to sell or market the products or services
of AllianceBernstein and whose compensation is entirely or mostly
commission-based are eligible for an award under this plan. Participants
designate the percentage of their awards to be allocated to notional investments
in Holding Units or notional investments in certain of our investment services.
Awards vest ratably over a three-year period and are amortized as employee
compensation expense. The Commission Substitution plan was terminated in 2007
and no awards have been made since 2006. We made awards totaling $40.1 million
in 2006. The amounts charged to employee compensation and benefits expense for
the years ended December 31, 2008, 2007 and 2006 were $21.7 million, $31.9
million and $27.0 million, respectively.
Effective
August 1, 2005, we established the AllianceBernstein Financial Advisor Wealth
Accumulation Plan (“Wealth Accumulation Plan”), an unfunded, non-qualified
deferred compensation plan. The Wealth Accumulation Plan was established in
order to create a compensation program to attract and retain eligible employees
expected to make significant contributions to the future growth and success of
Bernstein Global Wealth Management, a unit of AllianceBernstein. Participants
designate the percentage of their awards to be notionally invested in Holding
Units or certain of our investment services. No more than 50% of the award may
be notionally invested in Holding Units. All awards vest annually on a
pro rata
basis over the term
of the award. We made awards totaling $15.2 million in 2008, $23.5 million in
2007 and $14.5 million in 2006. The amounts charged to employee compensation and
benefits expense for the years ended December 31, 2008, 2007 and 2006 were $8.7
million, $8.0 million and $4.2 million, respectively.
Effective
December 19, 2008, Mr. Sanders, Chairman and CEO, retired from the Company. In
accordance with the terms of the employment agreement between Mr. Sanders and
AllianceBernstein dated October 26, 2006 (and the terms of Mr. Sanders’s prior
employment agreement), Mr. Sanders was entitled to receive a deferred
compensation award of not less than 1% of AllianceBernstein’s consolidated
operating income before incentive compensation for each calendar year during the
employment term, beginning with 2004. The 2006 award of $19.0 million vested 65%
in December 2007 and 35% in December 2008. The 2007 award of $21.5 million
vested 75% in December 2008 and was to vest 25% in December 2009, which was
accelerated into 2008 upon his retirement. Mr. Sanders received his 2008 award
of approximately $12.8 million pursuant to his employment agreement, which
vested fully in 2008 based on his retirement. The amounts charged to employee
compensation and benefits expense for the years ended December 31, 2008, 2007
and 2006 were $40.9 million, $19.7 million and $15.0 million, respectively. At
year-end 2007, Mr. Sanders was required to allocate his 2007 award in a manner
that would result in his aggregate deferred balance as of December 31, 2007
being 50% invested in Holding Units and 50% in investment services offered to
clients by AllianceBernstein.
16.
|
Compensatory
Unit Awards and Option Plans
|
In 1993,
we established the 1993 Unit Option Plan (“1993 Plan”), under which options to
buy Holding Units were granted to key employees and independent directors of the
General Partner for terms of up to 10 years. Each option has an exercise price
of not less than the fair market value of Holding Units on the date of grant.
Options are exercisable at a rate of 20% of the Holding Units subject to such
options on each of the first five anniversary dates of the date of grant. No
options or other awards have been granted under the 1993 Plan since it
expired in 2003.
In 1997,
we established the 1997 Long Term Incentive Plan (“1997 Plan”), under which
options to buy Holding Units, restricted Holding Units and phantom restricted
Holding Units, performance awards, and other Holding Unit-based awards may be
granted to key employees and independent directors of the General Partner for
terms established at the time of grant (generally 10 years). Options granted to
employees are generally exercisable at a rate of 20% of the Holding Units
subject to such options on each of the first five anniversary dates of the date
of grant (except for certain options awarded under the Special Option Program,
which are described below); options granted to independent directors are
generally exercisable at a rate of 33.3% of the Holding Units subject to such
options on each of the first three anniversary dates of the date of grant.
Restricted Holding Units (“Restricted Units”) awarded to independent directors
of the General Partner vest on the third anniversary of the grant date or
immediately upon a director’s resignation. Restricted Units awarded
to the CEO vest 20% on each of the first five anniversary dates of the grant
date. The aggregate number of Holding Units that can be the subject of options
granted or that can be awarded under the 1997 Plan may not exceed 41,000,000
Holding Units. As of December 31, 2008, options to buy 14,213,209 Holding Units,
net of forfeitures, had been granted and 4,140,449 Holding Units, net of
forfeitures, were subject to other unit awards made under the 1997 Plan (
as described below
). Holding
Unit-based awards (including options) in respect of 22,646,342 Holding Units
were available for grant as of December 31, 2008.
On
January 26, 2007, the Compensation Committee of the Board approved the Special
Option Program, under which selected senior officers voluntarily allocate a
specified portion of their Partners Plan award to options to buy Holding Units
and the company matches this allocation on a two-for-one basis. Also on January
26, 2007, and pursuant to the Special Option Program, the Compensation Committee
granted two separate awards of options to buy Holding Units to 67 participants.
The exercise price for both awards is $90.65, the closing price of Holding Units
on the grant date. The first grant, with a fair value of $17.69 per option,
awarded options to buy 555,985 Holding Units, vesting in equal increments on
each of the first five anniversaries of the grant date and expiring in 10 years.
The second grant, with a fair value of $17.67 per option, awarded options to buy
1,113,220 Holding Units, vesting in equal annual increments on each of the sixth
through tenth anniversaries of the grant date and expiring in 11
years.
On
December 7, 2007, the Compensation Committee granted two separate awards of
options to buy Holding Units to 68 participants under the Special Option
Program. The exercise price for both awards is $80.46, the closing price of
Holding Units on the grant date. The first grant, with a fair value of $13.30
per option, awarded options to buy 740,633 Holding Units, vesting in equal
increments on each of the first five anniversaries of the grant date and
expiring in 10 years. The second grant, with a fair value of $15.28 per option,
awarded options to buy 1,289,321 Holding Units, vesting in equal annual
increments on each of the sixth through tenth anniversaries of the grant date
and expiring in 11 years.
On
January 23, 2009, the Compensation Committee granted an award of options to buy
6,534,182 Holding Units to 67 employees, consisting of certain Executive
Committee members and senior officers previously participating in the Special
Option Program. The exercise price is $17.05, the closing price of
Holding Units on the grant date, and the fair value is $3.51 per
option.
Options
to buy Holding Units were granted as follows: 13,825 options were granted during
2008; 3,708,939 options were granted during 2007; and 9,712 options were granted
during 2006. The weighted average fair value of options to buy Holding Units
granted during 2008, 2007 and 2006 was $10.85, $15.96 and $12.35, respectively,
on the date of grant, determined using the Black-Scholes option valuation model
with the following assumptions:
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free
interest rate
|
|
|
3.2
|
%
|
|
|
3.5
– 4.9
|
%
|
|
|
4.9
|
%
|
Expected
cash distribution yield
|
|
|
5.4
|
%
|
|
|
5.6
– 5.7
|
%
|
|
|
6.0
|
%
|
Historical
volatility factor
|
|
|
29.3
|
%
|
|
|
27.7
– 30.8
|
%
|
|
|
31.0
|
%
|
Expected
term
|
|
6.0
years
|
|
|
6.0
– 9.5 years
|
|
|
6.5
years
|
|
Due to a
lack of sufficient historical data, we have chosen to use, in accordance with
SEC Staff Accounting Bulletin No. 110, the simplified method to calculate the
expected term of options.
The following table summarizes the
activity in options under our various option plans:
|
|
Holding
Units
|
|
|
Weighted
Average
Exercise
Price Per Holding Unit
|
|
|
Weighted
Average
Remaining
Contractual Term
|
|
|
Aggregate
Intrinsic Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
as of December 31, 2007
|
|
|
7,273,621
|
|
|
$
|
64.20
|
|
|
|
6.9
|
|
|
|
|
Granted
|
|
|
13,825
|
|
|
|
64.24
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(315,467
|
)
|
|
|
41.98
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(123,071
|
)
|
|
|
67.67
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(163,100
|
)
|
|
|
26.31
|
|
|
|
|
|
|
|
|
Outstanding
as of December 31, 2008
|
|
|
6,685,808
|
|
|
|
66.11
|
|
|
|
6.3
|
|
|
$
|
—
|
|
Exercisable
as of December 31, 2008
|
|
|
3,277,879
|
|
|
|
46.69
|
|
|
|
3.2
|
|
|
|
—
|
|
Expected
to vest as of December 31, 2008
|
|
|
3,239,112
|
|
|
|
84.78
|
|
|
|
9.2
|
|
|
|
—
|
|
The
aggregate intrinsic value as of December 31, 2008 on options outstanding,
exercisable and expected to vest is negative, therefore is presented as zero in
the table above. The total intrinsic value of options exercised during 2008,
2007 and 2006 was $6.3 million, $58.8 million and $79.0 million,
respectively.
Under the
fair value method, compensation expense is measured at the grant date based on
the estimated fair value of the options awarded (determined using the
Black-Scholes option valuation model) and is recognized over the vesting period.
We recorded compensation expense relating to the option plans of $7.7 million,
$5.9 million and $2.7 million, respectively, for the years ended December 31,
2008, 2007 and 2006. As of December 31, 2008, there was $46.1 million of
compensation cost related to unvested share-based compensation arrangements
granted under the option plans not yet recognized. That cost is expected to be
recognized over a weighted average period of 7.0 years.
Other
Unit Awards
Restricted
Units
In 2008,
2007 and 2006, Restricted Units were awarded to the independent directors of the
General Partner. The Restricted Units give the directors, in most instances, all
the rights of other Holding unitholders subject to such restrictions on transfer
as the Board may impose. We awarded 2,335, 1,705 and 1,848 Restricted Units in
2008, 2007 and 2006, respectively, with grant date fair values of $64.24, $87.98
and $65.02 per Holding Unit, respectively. All of the Restricted Units vest on
the third anniversary of grant date or immediately upon a director’s
resignation. We fully expensed these awards on the grant date. As of
December 31, 2008, 5,888 Restricted Units, net of distributions made upon
retirement of two directors, were outstanding. We recorded compensation expense
of $150,000, $178,000 and $164,000 in 2008, 2007 and 2006, respectively, related
to Restricted Units.
In
accordance with the terms of the employment agreement between Mr. Kraus,
Chairman and CEO, the General Partner, Holding and AllianceBernstein dated
December 19, 2008, Mr. Kraus was granted 2,722,052 Restricted Units with a grant
date fair value of $19.20. Mr. Kraus’s Restricted Units will vest ratably on
each of the first five anniversaries of the grant date.
The
following table summarizes the activity of unvested Restricted Units during
2008:
|
|
Holding
Units
|
|
|
Weighted Average
Grant
Date Fair Value
|
|
|
|
|
|
|
|
|
Unvested
as of January 1, 2008
|
|
|
4,875
|
|
|
$
|
67.74
|
|
Granted
|
|
|
2,724,387
|
|
|
|
19.24
|
|
Vested
|
|
|
(1,322
|
)
|
|
|
45.45
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
Unvested
as of December 31, 2008
|
|
|
2,727,940
|
|
|
|
19.31
|
|
The total
fair value of units that vested during 2008 was $87,000. No units vested during
2007 or 2006.
Century Club
Plan
In 1993,
we established the Century Club Plan, under which employees of AllianceBernstein
whose primary responsibilities are to assist in the distribution of
company-sponsored mutual funds and who meet certain sales targets, are eligible
to receive an award of Holding Units. Awards vest ratably over three years and
are amortized as employee compensation expense. We awarded 46,030, 45,072 and
36,020 Holding Units in 2008, 2007 and 2006, respectively, with grant date fair
values of $62.05, $82.37 and $63.82 per Holding Unit, respectively.
The
following table summarizes the activity of unvested Century Club units during
2008:
|
|
Holding
Units
|
|
|
Weighted Average
Grant
Date Fair Value
|
|
|
|
|
|
|
|
|
Unvested
as of January 1, 2008
|
|
|
73,990
|
|
|
$
|
72.63
|
|
Granted
|
|
|
46,030
|
|
|
|
62.05
|
|
Vested
|
|
|
(37,504
|
)
|
|
|
67.35
|
|
Forfeited
|
|
|
(3,610
|
)
|
|
|
69.23
|
|
Unvested
as of December 31, 2008
|
|
|
78,906
|
|
|
|
70.77
|
|
The total
fair value of units that vested during 2008, 2007 and 2006 was $2.2 million,
$2.5 million and $1.7 million, respectively.
We
recorded compensation expense relating to the Century Club Plan of $2.8 million,
$2.3 million and $1.5 million, respectively, for the years ended December 31,
2008, 2007 and 2006. As of December 31, 2008, there was $3.3 million of
compensation cost related to unvested share-based compensation arrangements
granted under the Century Club Plan not yet recognized. That cost is expected to
be recognized over a weighted average period of 1.6 years.
Awards
under the Century Club Plan and those of Restricted Units reduce the number of
options to acquire Holding Units available for grant under the 1997 Plan and
forfeitures under the Century Club Plan and those of Restricted Units increase
them.
The
following table summarizes the activity in units:
Outstanding
as of December 31, 2006
|
|
|
259,062,014
|
|
Options
to buy Holding Units exercised
|
|
|
1,234,917
|
|
Holding
Units awarded
|
|
|
46,777
|
|
Holding
Units forfeited
|
|
|
(1,716
|
)
|
Outstanding
as of December 31, 2007
|
|
|
260,341,992
|
|
Options
to buy Holding Units exercised
|
|
|
315,467
|
|
Issuance
of Holding Units
|
|
|
3,015,396
|
|
Holding
Units awarded
|
|
|
48,365
|
|
Holding
Units forfeited
|
|
|
(3,610
|
)
|
Outstanding
as of December 31, 2008
|
|
|
263,717,610
|
|
Holding
Units awarded and Holding Units forfeited pertain to restricted Holding Unit
awards to independent members of the Board of Directors and Century Club Plan
Holding unit awards to company-sponsored mutual fund sales personnel,
see Note
16
. Issuance of Holding Units pertains to Holding Units we
issued to fund deferred compensation plan elections by participants and the
CEO’s Restricted Units award,
see
Note 16
.
AllianceBernstein
is a private partnership for federal income tax purposes and, accordingly, is
not subject to federal and state corporate income taxes. However,
AllianceBernstein is subject to a 4.0% New York City unincorporated business tax
(“UBT”). Domestic corporate subsidiaries of AllianceBernstein, which are subject
to federal, state and local income taxes, are generally included in the filing
of a consolidated federal income tax return with separate state and local income
tax returns being filed. Foreign corporate subsidiaries are generally subject to
taxes in the foreign jurisdictions where they are located.
In order
to preserve AllianceBernstein’s status as a private partnership for federal
income tax purposes, AllianceBernstein Units must not be considered publicly
traded. The AllianceBernstein Partnership Agreement provides that all transfers
of AllianceBernstein Units must be approved by AXA Equitable and the General
Partner; AXA Equitable and the General Partner approve only those transfers
permitted pursuant to one or more of the safe harbors contained in relevant
treasury regulations. If such units were considered readily tradable,
AllianceBernstein’s net income would be subject to federal and state corporate
income tax. Furthermore, should AllianceBernstein enter into a substantial new
line of business, Holding, by virtue of its ownership of AllianceBernstein,
would lose its status as a “grandfathered” publicly traded partnership and would
become subject to corporate income tax which would reduce materially Holding’s
net income and its quarterly distributions to Holding unitholders.
Earnings
before income taxes and income tax expense consist of:
|
|
Years Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
before income taxes:
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$
|
669,205
|
|
|
$
|
1,113,185
|
|
|
$
|
1,058,545
|
|
Foreign
|
|
|
275,024
|
|
|
|
291,819
|
|
|
|
133,493
|
|
Total
|
|
$
|
944,229
|
|
|
$
|
1,405,004
|
|
|
$
|
1,192,038
|
|
Income
tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Partnership
UBT
|
|
$
|
9,945
|
|
|
$
|
30,219
|
|
|
$
|
23,696
|
|
Corporate
subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
13,713
|
|
|
|
6,852
|
|
|
|
4,901
|
|
State
and local
|
|
|
1,762
|
|
|
|
2,733
|
|
|
|
374
|
|
Foreign
|
|
|
78,367
|
|
|
|
87,494
|
|
|
|
41,061
|
|
Current
tax expense
|
|
|
103,787
|
|
|
|
127,298
|
|
|
|
70,032
|
|
Deferred
tax (benefit) expense
|
|
|
(7,984
|
)
|
|
|
547
|
|
|
|
5,013
|
|
Income
tax expense
|
|
$
|
95,803
|
|
|
$
|
127,845
|
|
|
$
|
75,045
|
|
The
principal reasons for the difference between the effective tax rates and the UBT
statutory tax rate of 4.0% are as follows:
|
Years Ended December 31,
|
|
|
2008
|
|
2007
|
|
2006
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UBT
statutory rate
|
|
$
|
37,769
|
|
|
|
4.0
|
%
|
|
$
|
55,532
|
|
|
|
4.0
|
%
|
|
$
|
47,346
|
|
|
|
4.0
|
%
|
Corporate
subsidiaries’ federal, state, local, and foreign income
taxes
|
|
|
77,732
|
|
|
|
8.2
|
|
|
|
83,195
|
|
|
|
5.9
|
|
|
|
40,708
|
|
|
|
3.4
|
|
Effect
of FIN 48 adjustments, miscellaneous taxes, and other
|
|
|
(11,929
|
)
|
|
|
(1.3
|
)
|
|
|
2,684
|
|
|
|
0.2
|
|
|
|
282
|
|
|
|
—
|
|
Income
not taxable resulting from use of UBT business apportionment factors
and other non deductible items
|
|
|
(7,769
|
)
|
|
|
(0.8
|
)
|
|
|
(13,566
|
)
|
|
|
(1.0
|
)
|
|
|
(13,291
|
)
|
|
|
(1.1
|
)
|
Income
tax expense and effective tax rate
|
|
$
|
95,803
|
|
|
|
10.1
|
|
|
$
|
127,845
|
|
|
|
9.1
|
|
|
$
|
75,045
|
|
|
|
6.3
|
|
Effective
January 1, 2007, we adopted the provisions of FASB Interpretation No. 48 (“FIN
48”), “
Accounting for
Uncertainty in Income Taxes
-
an interpretation of FASB Statement
No. 109
”. FIN 48 requires that the effects of a tax position be
recognized in the financial statements only if, as of the reporting date, it is
“more likely than not” to be sustained based solely on its technical
merits. In making this assessment, a company must assume that the taxing
authority will examine the tax position and have full knowledge of all relevant
information. As a result of adopting FIN 48, we recognized a $442,000
decrease in the liability for unrecognized tax benefits, which was accounted for
as a cumulative-effect adjustment to the January 1, 2007 balance of partners’
capital. The adjustment reflects the difference between the net amount of
liabilities recognized in our consolidated statement of financial position prior
to the application of FIN 48 and the net amount of liabilities recognized as a
result of applying the provisions of FIN 48.
A
reconciliation of the beginning and ending amount of unrecognized tax benefits
is as follows:
|
|
Twelve
Months
Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(in
thousands)
|
|
Balance
as of beginning of period
|
|
$
|
19,016
|
|
|
$
|
17,862
|
|
Additions
for prior year tax positions
|
|
|
324
|
|
|
|
2,000
|
|
Reductions
for prior year tax positions
|
|
|
(603
|
)
|
|
|
(1,452
|
)
|
Additions
for current year tax positions
|
|
|
1,649
|
|
|
|
3,317
|
|
Reductions
for current year tax positions
|
|
|
(715
|
)
|
|
|
(303
|
)
|
Reductions
related to settlements with tax authorities/closed years
|
|
|
(10,866
|
)
|
|
|
(2,408
|
)
|
Balance
as of end of period
|
|
$
|
8,805
|
|
|
$
|
19,016
|
|
During
2008 and 2007, unrecognized tax benefits with respect to certain tax positions
taken in the prior years have been adjusted resulting in a net decrease to the
reserve totaling $0.3 million and net increase to the reserve totaling $0.5
million, respectively. As described below, settlements with taxing authorities
resulted in a $10.9 million and $2.4 million reduction, not including interest,
to the reserve, in 2008 and 2007, respectively. The amount of unrecognized tax
benefits as of December 31, 2008 and 2007, when recognized, is recorded as a
reduction to income tax expense and affect the company’s effective tax
rate.
Interest
and penalties, if any, relating to tax positions are recorded in income tax
expense on the consolidated statements of income. The total amount of accrued
interest recorded on the consolidated statement of financial condition as of
January 1, 2007, the date of adoption of FIN 48, was $1.7 million. As of
December 31, 2008 and 2007, the amounts are $0.9 million and $2.2 million,
respectively. There were no accrued penalties as of December 31, 2008 and
2007.
The
company is generally no longer subject to U.S federal, or state and local income
tax examinations by tax authorities for any year prior to 2005 except as noted
below. The Internal Revenue Service (“IRS”) completed an examination of our
domestic corporate subsidiaries’ federal tax returns for 2003 and 2004 in the
third quarter of 2007. This examination was settled resulting in a tax payment
to the U.S. Treasury in the amount of $0.4 million and a reduction to the
reserve for unrecorded tax benefits in the amount of $2.2 million. The IRS is
currently examining our domestic corporate subsidiaries' federal tax returns for
the years 2005 and 2006. These examinations are in exploratory stages and we do
not believe an increase for unrecognized tax benefits is necessary. In addition,
various state and local examinations of AllianceBernstein’s corporate subsidiary
tax returns for years 2001 through 2007 are now in progress. These
examinations are in various stages of completion and the reserve for
unrecognized tax benefits was adjusted as noted above.
During
December 2008, the examinations of AllianceBernstein’s New York City Partnership
tax returns for the years 2003 through 2005 were formerly settled. As a
result, we recognized approximately $12.1 million of net unrecognized tax
benefits, including accrued interest, during the fourth quarter of
2008.
The
Canadian Revenue Agency has commenced an examination of AllianceBernstein's
Canadian subsidiary tax returns for the years 2005-2006. The examination is in
the preliminary stage and we do not believe an increase for unrecognized tax
benefits is necessary. Currently, there are no other income tax examinations at
our significant non-U.S. subsidiaries. Years that remain open and may be subject
to examination vary under local law, and range from one to seven
years.
Adjustment
to the reserve could occur in light of changing facts and circumstances with
respect to aforementioned on-going examinations.
Subject
to the results of the examinations for the tax years 2001-2007, under our
existing policy for determining whether a tax position is effectively settled
for purposes of recognizing previously unrecognized tax benefits, there is the
possibility that recognition of unrecognized tax benefits of approximately $3.6
million including accrued interest could occur over the next twelve
months.
Under
Statement of Financial Accounting Standards No. 109 (“SFAS No. 109”), “
Accounting for Income Taxes
”,
deferred income taxes reflect the net tax effect of temporary difference between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. The tax effect of significant
items comprising the net deferred tax (liability) asset is as
follows:
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(in thousands)
|
|
Deferred
tax asset:
|
|
|
|
|
|
|
Differences
between book and tax basis:
|
|
|
|
|
|
|
Deferred
compensation plans
|
|
$
|
14,704
|
|
|
$
|
10,252
|
|
Intangible
assets
|
|
|
280
|
|
|
|
401
|
|
Charge
for mutual fund matters, legal proceedings, and claims processing
contingency
|
|
|
4,179
|
|
|
|
4,179
|
|
Other,
primarily revenues taxed upon receipt and accrued expenses deductible when
paid
|
|
|
4,955
|
|
|
|
3,909
|
|
Deferred
tax asset
|
|
|
24,118
|
|
|
|
18,741
|
|
Deferred
tax liability:
|
|
|
|
|
|
|
|
|
Differences
between book and tax basis:
|
|
|
|
|
|
|
|
|
Furniture,
equipment and leasehold improvements
|
|
|
341
|
|
|
|
301
|
|
Investment
partnerships
|
|
|
112
|
|
|
|
1,634
|
|
Intangible
assets
|
|
|
17,075
|
|
|
|
14,889
|
|
Translation
adjustment
|
|
|
2,700
|
|
|
|
5,694
|
|
Other,
primarily undistributed earnings of certain foreign
subsidiaries
|
|
|
2,597
|
|
|
|
2,359
|
|
|
|
|
22,825
|
|
|
|
24,877
|
|
Net
deferred tax asset (liability)
|
|
$
|
1,293
|
|
|
$
|
(6,136
|
)
|
The
deferred tax asset is included in other assets. Management has determined that
realization of the deferred tax asset is more likely than not based on
anticipated future taxable income.
The
company provides income taxes on the undistributed earnings of non-U.S.
corporate subsidiaries except to the extent that such earnings are permanently
invested outside the United States. As of December 31, 2008, $484.7 million
of accumulated undistributed earnings of non-U.S. corporate subsidiaries were
permanently invested. At existing applicable income tax rates, additional taxes
of approximately $24.5 million would need to be provided if such earnings were
remitted.
19.
|
Business
Segment Information
|
We
adopted Statement of Financial Accounting Standards No. 131
(“SFAS No. 131”), “
Disclosures about Segments of an
Enterprise and Related
Information
”, in 1999.
SFAS No. 131 establishes standards for reporting information about
operating segments in annual and interim financial statements. It also
establishes standards for disclosures about products and services, geographic
areas and major customers. Generally, financial information is required to be
reported consistent with the basis used by management to allocate resources and
assess performance.
Management
has assessed the requirements of SFAS No. 131 and determined that,
because we utilize a consolidated approach to assess performance and allocate
resources, we have only one operating segment. Enterprise-wide disclosures as
of, and for the years ended, December 31, 2008, 2007 and 2006 were as
follows:
Services
Net
revenues derived from our various research, investment management and related
services were as follows:
|
|
Years Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Institutional
Investments
|
|
$
|
1,241
|
|
|
$
|
1,482
|
|
|
$
|
1,222
|
|
Retail
|
|
|
1,227
|
|
|
|
1,521
|
|
|
|
1,304
|
|
Private
Client
|
|
|
850
|
|
|
|
961
|
|
|
|
883
|
|
Institutional
Research Services
|
|
|
472
|
|
|
|
424
|
|
|
|
375
|
|
Other
|
|
|
(239
|
)
|
|
|
332
|
|
|
|
354
|
|
Total
revenues
|
|
|
3,551
|
|
|
|
4,720
|
|
|
|
4,138
|
|
Less:
Interest expense
|
|
|
37
|
|
|
|
195
|
|
|
|
188
|
|
Net
revenues
|
|
$
|
3,514
|
|
|
$
|
4,525
|
|
|
$
|
3,950
|
|
Net
revenues and long-lived assets, related to our U.S. and international
operations, as of and for the years ended December 31, were:
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(in millions)
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$
|
2,258
|
|
|
$
|
3,013
|
|
|
$
|
2,733
|
|
International
|
|
|
1,256
|
|
|
|
1,512
|
|
|
|
1,217
|
|
Total
|
|
$
|
3,514
|
|
|
$
|
4,525
|
|
|
$
|
3,950
|
|
Long-lived
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$
|
3,576
|
|
|
$
|
3,656
|
|
|
$
|
3,619
|
|
International
|
|
|
40
|
|
|
|
52
|
|
|
|
42
|
|
Total
|
|
$
|
3,616
|
|
|
$
|
3,708
|
|
|
$
|
3,661
|
|
Company-sponsored
mutual funds are distributed to individual investors through broker-dealers,
insurance sales representatives, banks, registered investment advisers,
financial planners and other financial intermediaries. AXA Advisors, LLC (“AXA
Advisors”), a wholly-owned subsidiary of AXA Financial that uses members of the
AXA Equitable insurance agency sales force as its registered representatives,
has entered into a selected dealer agreement with AllianceBernstein Investments
and has been responsible for 4%, 2% and 2% of our open-end mutual fund sales in
2008, 2007 and 2006, respectively. Subsidiaries of Merrill Lynch &
Co., Inc. (“Merrill Lynch”) were responsible for approximately 8%, 7% and
6% of our open-end mutual fund sales in 2008, 2007 and 2006, respectively.
Citigroup, Inc. and its subsidiaries (“Citigroup”), was responsible for
approximately 7%, 7% and 5% of our open-end mutual fund sales in 2008, 2007 and
2006, respectively. AXA Advisors, Merrill Lynch and Citigroup are under no
obligation to sell a specific amount of shares of company-sponsored mutual
funds, and each also sells shares of mutual funds that it sponsors and that are
sponsored by unaffiliated organizations (in the case of Merrill Lynch and
Citigroup).
AXA and
the general and separate accounts of AXA Equitable (including investments by the
separate accounts of AXA Equitable in the funding vehicle EQ Advisors Trust)
accounted for approximately 5% of total revenues for each of the years ended
December 31, 2008, 2007 and 2006. No single institutional client other than
AXA and its subsidiaries accounted for more than 1% of total revenues for the
years ended December 31, 2008, 2007 and 2006, respectively.
20.
|
Related Party
Transactions
|
Mutual
Funds
Investment
management, distribution, shareholder and administrative, and brokerage services
are provided to individual investors by means of retail mutual funds sponsored
by our company, our subsidiaries and our affiliated joint venture companies.
Substantially all of these services are provided under contracts that set forth
the services to be provided and the fees to be charged. The contracts are
subject to annual review and approval by each of the mutual funds’ boards of
directors or trustees and, in certain circumstances, by the mutual funds’
shareholders. Revenues for services provided or related to the mutual funds are
as follows:
|
Years Ended December 31,
|
|
|
2008
|
|
2007
|
|
2006
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
Investment
advisory and services fees
|
|
$
|
870,524
|
|
|
$
|
1,027,636
|
|
|
$
|
840,994
|
|
Distribution
revenues
|
|
|
378,425
|
|
|
|
473,435
|
|
|
|
421,045
|
|
Shareholder
servicing fees
|
|
|
99,028
|
|
|
|
103,604
|
|
|
|
97,236
|
|
Other
revenues
|
|
|
6,868
|
|
|
|
6,502
|
|
|
|
6,917
|
|
Institutional
research services
|
|
|
1,233
|
|
|
|
1,583
|
|
|
|
1,902
|
|
AXA
and its Subsidiaries
We
provide investment management and certain administration services to AXA and its
subsidiaries. In addition, AXA and its subsidiaries distribute company-sponsored
mutual funds, for which they receive commissions and distribution payments.
Sales of company-sponsored mutual funds through AXA and its subsidiaries,
excluding cash management products, aggregated approximately $0.7 billion, $0.5
billion and $0.5 billion for the years ended December 31, 2008, 2007 and 2006,
respectively. Also, we are covered by various insurance policies maintained by
AXA subsidiaries and we pay fees for technology and other services provided by
AXA and its subsidiaries that are included in General and Administrative
expenses. Aggregate amounts included in the consolidated financial statements
for transactions with AXA and its subsidiaries are as follows:
|
|
Years Ended December 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Investment
advisory and services fees
|
|
$
|
180,689
|
|
|
$
|
208,786
|
|
|
$
|
184,122
|
|
Institutional
research services
|
|
|
225
|
|
|
|
606
|
|
|
|
657
|
|
Other
revenues
|
|
|
697
|
|
|
|
824
|
|
|
|
736
|
|
|
|
$
|
181,611
|
|
|
$
|
210,216
|
|
|
$
|
185,515
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions
and distribution payments to financial intermediaries
|
|
$
|
9,408
|
|
|
$
|
7,178
|
|
|
$
|
5,708
|
|
Other
promotion and servicing
|
|
|
703
|
|
|
|
1,409
|
|
|
|
936
|
|
General
and administrative
|
|
|
13,843
|
|
|
|
10,219
|
|
|
|
9,533
|
|
|
|
$
|
23,954
|
|
|
$
|
18,806
|
|
|
$
|
16,177
|
|
Balance
Sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional
investment advisory and services fees receivable
|
|
$
|
7,349
|
|
|
$
|
10,103
|
|
|
$
|
7,330
|
|
Other
due to AXA and its subsidiaries
|
|
|
(1,278
|
)
|
|
|
(506
|
)
|
|
|
(965
|
)
|
|
|
$
|
6,071
|
|
|
$
|
9,597
|
|
|
$
|
6,365
|
|
AllianceBernstein
and AXA Asia Pacific Holdings Limited (“AXA Asia Pacific”) maintain two
investment management companies and we include their financial results in our
consolidated results of operations. Investment advisory and services fees earned
by these companies were approximately $68.3 million, $77.6 million and $61.1
million, for the years ended December 31, 2008, 2007 and 2006, respectively, of
which approximately $19.6 million, $22.9 million and $21.3 million,
respectively, were from AXA affiliates and are included in the table above.
Minority interest recorded for these companies was $9.7 million, $11.1 million
and $8.8 million, for the years ended December 31, 2008, 2007 and 2006,
respectively.
During
the fourth quarter of 2006, AllianceBernstein Venture Fund I, L.P. was
established as an investment vehicle to achieve long-term capital appreciation
through equity and equity-related investments, acquired in private transactions,
in early stage growth companies. One of our subsidiaries is the general partner
of the fund and, as a result, the fund is included in our consolidated financial
statements, with approximately $167 million, $136 million and $34 million of
investments on the consolidated statement of financial condition as of December
31, 2008, 2007 and 2006, respectively. AXA Equitable holds a 10% limited
partnership interest in this fund.
Other
Related Parties
The
consolidated statements of financial condition include a net receivable from
Holding and a net receivable or payable to our unconsolidated joint ventures as
a result of cash transactions for fees and expense reimbursements. The net
balances included in the consolidated statements of financial condition as of
December 31, 2008, 2007 and 2006 are as follows:
|
December 31,
|
|
|
2008
|
|
2007
|
|
2006
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
Due from Holding,
net
|
|
$
|
4,825
|
|
|
$
|
7,460
|
|
|
$
|
7,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from unconsolidated joint
ventures, net
|
|
$
|
—
|
|
|
$
|
255
|
|
|
$
|
376
|
|
21.
Acquisition
On May 2,
2006, we acquired for $16.1 million in cash the 50% interest in our Hong Kong
joint venture (including its wholly-owned Taiwanese subsidiary) that had been
owned by our joint venture partner. The effect of this acquisition was not
material to our consolidated financial condition, results of operations or cash
flows.
22.
Accounting
Pronouncements
In
December 2007, the FASB issued Statement No. 160 (“SFAS No. 160”), “
Noncontrolling Interests in
Consolidated Financial Statements, an Amendment of ARB No.
51
”. SFAS No. 160 amends ARB No. 51 to establish accounting
and reporting standards for noncontrolling interests in subsidiaries and for the
deconsolidation of subsidiaries. It clarifies that a noncontrolling
interest in a subsidiary is an ownership interest that should be reported as
equity in the consolidated financial statements. The provisions of
SFAS No. 160 are effective for fiscal years beginning on or after December 15,
2008, and interim periods within those fiscal years. SFAS is
effective January 1, 2009 and is to be applied retroactively. SFAS
No. 160 is not expected to have a material impact on our consolidated financial
statements.
In
February 2008, the FASB issued Staff Position No. 157-2 (“FSP No. 157-2”). FSP
No. 157-2 delays the effective date of SFAS No. 157, for nonfinancial assets and
nonfinancial liabilities, except for items disclosed at fair value in the
financial statements on a recurring basis, until fiscal years beginning after
November 15, 2008. FSP No.157-2 is not expected to have a material impact on our
consolidated financial statements.
In
December 2008, the FASB issued Staff Position No. 132(R)-1 (“FSP No. 132(R)-1”),
which requires companies to disclose information about fair value measurements
of retirement plan assets that would be similar to the disclosures about fair
value measurements required by SFAS No. 157. The provisions of FSP No. 132(R)-1
are effective for fiscal years ending after December 15, 2009. FSP
No. 132(R)-1 is not expected to have a material impact on our consolidated
financial statements.
23.
Quarterly Financial Data
(Unaudited)
|
|
Quarters Ended 2008
|
|
|
|
December 31
|
|
|
September 30
|
|
|
June 30
|
|
|
March 31
|
|
|
|
(in thousands, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
|
$
|
580,522
|
|
|
$
|
840,991
|
|
|
$
|
1,063,624
|
|
|
$
|
1,029,022
|
|
Net
income
|
|
$
|
91,979
|
|
|
$
|
219,529
|
|
|
$
|
280,289
|
|
|
$
|
247,443
|
|
Basic
net income per unit
(1)
|
|
$
|
0.35
|
|
|
$
|
0.83
|
|
|
$
|
1.06
|
|
|
$
|
0.94
|
|
Diluted
net income per unit
(1)
|
|
$
|
0.35
|
|
|
$
|
0.83
|
|
|
$
|
1.06
|
|
|
$
|
0.94
|
|
Cash
distributions per unit
(2) (3)
(4)
|
|
$
|
0.37
|
|
|
$
|
0.70
|
|
|
$
|
1.06
|
|
|
$
|
0.94
|
|
|
|
Quarters Ended 2007
|
|
|
|
December 31
|
|
|
September 30
|
|
|
June 30
|
|
|
March 31
|
|
|
|
(in thousands, except per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
|
$
|
1,169,386
|
|
|
$
|
1,152,822
|
|
|
$
|
1,158,773
|
|
|
$
|
1,044,336
|
|
Net
income
|
|
$
|
309,732
|
|
|
$
|
348,082
|
|
|
$
|
334,929
|
|
|
$
|
267,701
|
|
Basic
net income per unit
(1)
|
|
$
|
1.18
|
|
|
$
|
1.33
|
|
|
$
|
1.28
|
|
|
$
|
1.02
|
|
Diluted
net income per unit
(1)
|
|
$
|
1.17
|
|
|
$
|
1.32
|
|
|
$
|
1.27
|
|
|
$
|
1.01
|
|
Cash
distributions per unit
(2)
|
|
$
|
1.17
|
|
|
$
|
1.32
|
|
|
$
|
1.27
|
|
|
$
|
1.01
|
|
(1)
|
Basic and diluted net income per
unit are computed independently for each of the periods presented.
Accordingly, the sum of the quarterly net income per unit amounts may not
agree to the total for the
year.
|
(2)
|
Declared
and paid during the following
quarter.
|
(3)
|
During
the fourth quarter of 2006, we recorded a $56.0 million pre-tax charge
($54.5 million, net of related income tax benefit) for the estimated cost
of reimbursing certain clients for losses arising out of an error we made
in processing claims for class action settlement proceeds on behalf
of these clients, which include some AllianceBernstein-sponsored mutual
funds. During the third quarter of 2008, we recorded approximately
$35.3 million in insurance recoveries relating to this error.
AllianceBernstein’s and Holding’s fourth quarter 2006 cash distributions
were based on net income as calculated prior to AllianceBernstein
recording the charge. Accordingly, the related insurance recoveries
($0.13 per unit) were not included in AllianceBernstein’s or
Holding’s cash distribution to unitholders for the third quarter of
2008.
|
(4)
|
During
the fourth quarter of 2008, we recorded an additional $5.1 million ($0.02
per unit) provision for income taxes subsequent to the declaration of the
fourth quarter 2008 cash distribution of $0.37 per unit. As a result, the
cash distribution per unit in the fourth quarter of 2008 is $0.02 higher
than diluted net income per unit.
|
Report
of Independent Registered Public Accounting Firm
To
the General Partner and
Unitholders
AllianceBernstein
L.P.:
In our
opinion, the accompanying consolidated statements of financial condition and the
related consolidated statements of income, changes in partners' capital and
comprehensive income and cash flows present fairly, in all material respects,
the financial position of AllianceBernstein L.P. and its subsidiaries
(“AllianceBernstein”) at December 31, 2008 and 2007, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2008 in conformity with accounting principles generally accepted in
the United States of America. Also in our opinion, AllianceBernstein maintained,
in all material respects, effective internal control over financial reporting as
of December 31, 2008, based on criteria established in
Internal Control - Integrated
Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). AllianceBernstein's management is responsible for
these financial statements, for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in
Management's Report on Internal
Control over Financial Reporting
appearing under Item 9A. Our
responsibility is to express opinions on these financial statements and on
AllianceBernstein's internal control over financial reporting based on our
integrated audits. We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the financial statements
included examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other procedures as
we considered necessary in the circumstances. We believe that our audits provide
a reasonable basis for our opinions.
A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial
statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/
s/ PricewaterhouseCoopers
LLP
New York,
New York
February
20, 2009
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
Neither
AllianceBernstein nor Holding had any changes in or disagreements with
accountants in respect of accounting or financial disclosure.
Disclosure
Controls and Procedures
Each of
Holding and AllianceBernstein maintains a system of disclosure controls and
procedures that is designed to ensure information required to be disclosed in
our reports under the Exchange Act is (i) recorded, processed, summarized and
reported in a timely manner, and (ii) accumulated and communicated to
management, including the Chief Executive Officer and the Chief Financial
Officer, to permit timely decisions regarding our disclosure.
As of the
end of the period covered by this report, management carried out an evaluation,
under the supervision and with the participation of the Chief Executive Officer
and the Chief Financial Officer, of the effectiveness of the design and
operation of disclosure controls and procedures. Based on this evaluation, the
Chief Executive Officer and the Chief Financial Officer concluded that the
disclosure controls and procedures are effective.
Management’s
Report on Internal Control over Financial Reporting
Management
acknowledges its responsibility for establishing and maintaining adequate
internal control over financial reporting for each of Holding and
AllianceBernstein.
Internal
control over financial reporting is a process designed by, or under the
supervision of, a company’s principal executive officer and principal financial
officers, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with U.S. generally accepted accounting principles (“GAAP”) and
includes those policies and procedures that:
|
•
|
Pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the
company;
|
|
•
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that
receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company;
and
|
|
•
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company’s assets that
could have a material effect on the financial
statements.
|
All
internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those internal control systems determined to be
effective can provide only reasonable assurance with respect to the reliability
of financial statement preparation and presentation. Because of these inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness of internal
control to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management
assessed the effectiveness of each of Holding’s and AllianceBernstein’s internal
control over financial reporting as of December 31, 2008. In making its
assessment, management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission in
Internal Control-Integrated
Framework
(“COSO criteria”).
Based on
its assessment, management concluded that, as of December 31, 2008, each of
Holding and AllianceBernstein maintained effective internal control over
financial reporting based on the COSO criteria.
PricewaterhouseCoopers
LLP, the independent registered public accounting firm that audited the 2008
financial statements included in this Form 10-K, has issued an attestation
report on the effectiveness of each of Holding’s and AllianceBernstein’s
internal control over financial reporting as of December 31, 2008. These reports
can be found
in Item
8
.
Changes
in Internal Control Over Financial Reporting
No change
in our internal control over financial reporting occurred during the fourth
quarter of 2008 that materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
Both
AllianceBernstein and Holding reported all information required to be disclosed
on Form 8-K during the fourth quarter of 2008.
PART III
|
Directors,
Executive Officers and Corporate
Governance
|
General
Partner
The
Partnerships’ activities are managed and controlled by the General Partner; the
Board of Directors of the General Partner (“Board”) acts as the Board of each of
the Partnerships. The General Partner has agreed that it will conduct no active
business other than managing the Partnerships, although it may make certain
investments for its own account. Neither AllianceBernstein Unitholders nor
Holding Unitholders have any rights to manage or control the Partnerships, or to
elect directors of the General Partner. The General Partner is an indirect,
wholly-owned subsidiary of AXA.
The
General Partner does not receive any compensation from AllianceBernstein or
Holding for services rendered to them as their general partner. The General
Partner holds a 1% general partnership interest in AllianceBernstein and 100,000
units of general partnership interest in Holding. Each general partnership unit
in Holding is entitled to receive distributions equal to those received by each
limited partnership unit.
The
General Partner is entitled to reimbursement by AllianceBernstein for any
expenses it incurs in carrying out its activities as general partner of the
Partnerships, including compensation paid by the General Partner to its
directors and officers (to the extent such persons are not compensated directly
by AllianceBernstein).
Directors
and Executive Officers
As of
February 20, 2009, the directors and executive officers of the General Partner
were as follows (officers of the General Partner serve as equivalent officers of
AllianceBernstein and Holding):
Name
|
Age
|
Position
|
Peter
S. Kraus
|
56
|
Chairman
of the Board and Chief Executive Officer
|
Lewis
A. Sanders*
|
62
|
Former
Chairman of the Board and Chief Executive Officer
|
Dominique
Carrel-Billiard
|
42
|
Director
|
Henri
de Castries
|
54
|
Director
|
Christopher
M. Condron
|
61
|
Director
|
Denis
Duverne
|
55
|
Director
|
Richard
S. Dziadzio
|
45
|
Director
|
Deborah
S. Hechinger
|
58
|
Director
|
Weston
M. Hicks
|
52
|
Director
|
Nick
Lane
|
35
|
Director
|
Gerald
M. Lieberman
|
62
|
Director,
President and Chief Operating Officer
|
Lorie
A. Slutsky
|
56
|
Director
|
A.W.
(Pete) Smith, Jr.
|
65
|
Director
|
Peter
J. Tobin
|
64
|
Director
|
Lawrence
H. Cohen
|
47
|
Executive
Vice President
|
Laurence
E. Cranch
|
62
|
Executive
Vice President, General Counsel and Corporate Secretary
|
Edward
J. Farrell
|
48
|
Senior
Vice President and Controller
|
Sharon
E. Fay
|
48
|
Executive
Vice President
|
Marilyn
G. Fedak
|
62
|
Vice
Chair of Investment Services
|
James
A. Gingrich
|
50
|
Executive
Vice President
|
Mark
R. Gordon
|
55
|
Executive
Vice President
|
Thomas
S. Hexner
|
52
|
Executive
Vice President
|
Robert
H. Joseph, Jr.
|
61
|
Senior
Vice President and Chief Financial Officer
|
Robert
M. Keith
|
48
|
Executive
Vice President
|
Mark
R. Manley
|
46
|
Senior
Vice President, Deputy General Counsel and Chief Compliance
Officer
|
Lori
A. Massad
|
44
|
Executive
Vice President and Chief Talent Officer – Talent Development and Human
Resources
|
Seth
J. Masters
|
49
|
Executive
Vice President
|
Douglas
J. Peebles
|
43
|
Executive
Vice President
|
Jeffrey
S. Phlegar
|
42
|
Executive
Vice President
|
James
G. Reilly
|
47
|
Executive
Vice President
|
Lisa
A. Shalett
|
45
|
Executive
Vice President
|
David
A. Steyn
|
49
|
Executive
Vice President
|
Richard
G. Taggart
|
47
|
Executive
Vice President and Head of Global Operations
|
Gregory
J. Tencza
|
42
|
Executive
Vice President
|
Christopher
M. Toub
|
49
|
Executive
Vice President
|
* Mr.
Sanders retired as Chairman of the Board and Chief Executive Officer on December
19, 2008.
Biographies
Mr. Kraus
was elected Chairman of the Board of the General Partner and Chief Executive
Officer of the General Partner, AllianceBernstein and Holding on December 19,
2008. Mr. Kraus has in-depth experience in the financial markets, including
investment banking, asset management and private wealth
management. Most recently, he served as an executive vice president,
the head of global strategy and a member of the Management Committee of Merrill
Lynch & Co. Inc. (“Merrill”), from September 2008 through December
2008. Prior to joining Merrill, Mr. Kraus spent 22 years with Goldman
Sachs Group Inc. (“Goldman”), where he most recently served as co-head of the
Investment Management Division and a member of the Management Committee, as well
as head of firm-wide strategy and chairman of the Strategy
Committee. Mr. Kraus also served as co-head of the Financial
Institutions Group. He was named a partner at Goldman in 1994 and
managing director in 1996. Mr. Kraus was named a Director of AXA
Financial, AXA Equitable, MONY Life Insurance Company (a wholly-owned subsidiary
of AXA Financial, “MONY”) and MONY Life Insurance Company of America (a
wholly-owned subsidiary of MONY) on February 12, 2009. He is also Chairman of
the Investment Committee of Trinity College, Chairman of the Board of Overseers
of CalArts, Co-Chair of the Friends of the Carnegie International, a member of
the board of Keewaydin Camp and a member of the board of Young Audiences, Inc.,
a non-profit organization that works with educational systems, the arts
community and private and pubic sectors to provide arts education to
children.
Mr.
Sanders retired as Chairman of the Board of the General Partner and Chief
Executive Officer of the General Partner, AllianceBernstein and Holding on
December 19, 2008. He was elected Chairman of the Board effective January 1,
2005 and Chief Executive Officer effective July 1, 2003. Before taking on these
roles, he had served as Vice Chairman and Chief Investment Officer since the
Bernstein Transaction in 2000. Prior to the Bernstein Transaction, Mr. Sanders
had served as Chairman and Chief Executive Officer of Bernstein since 1992; he
began his career with Bernstein in 1968 as a research analyst. Mr. Sanders is
the Chairman and Chief Executive Officer of SCB Inc.
Mr.
Carrel-Billiard was elected a Director of the General Partner in July 2004. He
has been Chief Executive Officer of AXA Investment Managers S.A. (“AXA IM”), a
subsidiary of AXA, since June 13, 2006 and was named to the AXA Group Executive
Committee on January 1, 2009. Mr. Carrel-Billiard joined AXA on June 1, 2004 as
the Senior Vice President-Business Support and Development in charge of AXA
Financial, asset management and reinsurance. Prior to joining AXA, Mr.
Carrel-Billiard was a Partner of McKinsey & Company where he specialized in
the financial services industry. During the 12 years he spent at McKinsey, Mr.
Carrel-Billiard worked on a broad array of topics (including insurance, asset
gathering and management, and corporate and investment banking) for the top
management of international banks, insurance companies, including AXA, and other
financial services groups.
Mr. de
Castries was elected a Director of the General Partner in October 1993. Since
May 3, 2000, he has been Chairman of the Management Board of AXA (“AXA Group
Management Board”). Prior thereto, he served AXA in various capacities,
including Vice Chairman of the AXA Group Management Board; Senior Executive Vice
President-Financial Services and Life Insurance Activities in the United States,
Germany, the United Kingdom and Benelux from 1996 to 2000; Executive Vice
President-Financial Services and Life Insurance Activities from 1993 to 1996;
General Secretary from 1991 to 1993; and Central Director of Finances from 1989
to 1991. He is also a director or officer of AXA Financial, AXA Equitable and
various other subsidiaries and affiliates of the AXA Group. Mr. de Castries was
elected Vice Chairman of AXA Financial on February 14, 1996 and was elected
Chairman of AXA Financial, effective April 1, 1998.
Mr.
Condron was elected a Director of the General Partner in May 2001. He has been
Director, President and Chief Executive Officer of AXA Financial since May 2001.
He is Chairman of the Board, Chief Executive Officer and President of AXA
Equitable and a member of the AXA Group Management Board. In addition, Mr.
Condron is Chairman of the Board, President and Chief Executive Officer of MONY
Life Insurance Company, which AXA Financial acquired in July 2004. Prior to
joining AXA Financial, Mr. Condron served as both President and Chief Operating
Officer of Mellon Financial Corporation (“Mellon”), from 1999, and as Chairman
and Chief Executive Officer of The Dreyfus Corporation, a subsidiary of Mellon,
from 1995. Mr. Condron is a member of the Board of Directors of KBW, Inc., a
full-service investment bank and broker-dealer. He also serves as Chairman of
KBW’s compensation committee and as a member of its audit committee and its
corporate governance and nominating committee. Mr. Condron is also a member of
the Board of Directors of The American Council of Life Insurers and the Chairman
of the Financial Services Round Table.
Mr.
Duverne was elected a Director of the General Partner in February 1996. He has
been Chief Financial Officer of AXA since May 2003 and a member of the AXA Group
Management Board since February 2003. From January 2000 to May 2003, Mr. Duverne
served as Group Executive Vice President-Finance, Control and Strategy. Mr.
Duverne joined AXA as Senior Vice President in 1995. He is a Director of AXA
Financial, AXA Equitable, and various other subsidiaries and affiliates of the
AXA Group.
Mr.
Dziadzio was re-elected a Director of the General Partner in May 2007. (He had
previously served on the Board from February 2001 to May 2004.) He is Executive
Vice President and Chief Financial Officer of AXA Financial. He joined the AXA
Group in 1994 as a senior analyst in the corporate finance department, working
primarily on mergers and acquisitions. In 1997, he was promoted to corporate
finance officer, handling corporate finance activities for the group in
insurance and asset management in the U.S. and U.K. In 1998, Mr. Dziadzio became
head of finance and administration for AXA Real Estate Investment Managers, a
subsidiary of AXA. From February 2001 to June 2004, he was responsible for
business support and development for AXA Financial, AllianceBernstein, and AXA
IM. Mr. Dziadzio joined AXA Financial in July 2004, and was elected Executive
Vice President of AXA Equitable in September 2004. He became Executive Vice
President and Deputy Chief Financial Officer of AXA Financial and AXA Equitable
in September 2005.
Ms.
Hechinger was elected a Director of the General Partner in May 2007. Currently
an independent consultant on non-profit governance, she was President and Chief
Executive Officer of BoardSource, a leading governance resource for non-profit
organizations, from 2003 to 2007. From 2004 to 2007, Ms. Hechinger also served
as co-convener of the Governance and Fiduciary Responsibilities work group, one
of the five groups established by the Panel on the Nonprofit Sector to make
recommendations to Congress on ways to improve the governance and accountability
of non-profit organizations. She also served on the Advisory Board for the
Center for Effective Philanthropy and was a Member of the Ethics and
Accountability Committee at Independent Sector. Prior to joining BoardSource,
Ms. Hechinger was the Executive Vice President of the World Wildlife Fund, a
large, global conservation organization, where she oversaw all fundraising,
communication and operations activities. She has also served as Deputy
Comptroller and Director of the Securities and Corporate Practices Division at
the Office of the Comptroller of the Currency and has held senior executive
positions in the Division of Enforcement at the SEC.
Mr. Hicks
was elected a Director of the General Partner in July 2005. He has been a
Director and the President and chief executive officer of Alleghany Corporation
(“Alleghany”), an insurance and diversified financial services holding company,
since December 2004 and was Executive Vice President of Alleghany from October
2002 until December 2004. From March 2001 through October 2002, Mr. Hicks was
Executive Vice President and Chief Financial Officer of The Chubb
Corporation.
Mr. Lane
was elected a Director of the General Partner in July 2008. He is
currently the head of AXA Group strategy and he is the Business Support
Development representative for AXA Equitable, AXA IM and AllianceBernstein.
Previously, Mr. Lane served as Vice Chairman of AXA Advisors LLC and AXA Network
LLC where he was charged with overseeing the Retail Broker Dealer and Network
Business as well as its enterprise operations and supervision
systems. Prior to joining AXA Equitable, Mr. Lane worked for McKinsey
& Co, a strategic consulting firm, where he was a leader in their sales and
marketing practice. His previous experiences also include serving as
an infantry officer in the United States Marine Corps and working on the floor
of the NYSE. AXA IM, AXA Advisors and AXA Network are subsidiaries of
AXA.
Mr.
Lieberman was elected a Director of the General Partner and the Chief Operating
Officer of AllianceBernstein in November 2003 and was elected President of
AllianceBernstein in November 2004, when he was also elected a member of the AXA
Group Executive Committee. Mr. Lieberman joined AllianceBernstein in October
2000 and served as Executive Vice President—Finance and Operations of
AllianceBernstein from November 2000 to November 2003. Prior to the Bernstein
Transaction, Mr. Lieberman served as a Senior Vice President, Finance and
Administration of Bernstein, which he joined in 1998, and was a member of
Bernstein’s Board of Directors. Mr. Lieberman is a Director of SCB
Inc.
Ms.
Slutsky was elected a Director of the General Partner in July 2002. Since
January 1990, she has been President and Chief Executive Officer of The New York
Community Trust, a $2 billion community foundation which annually grants more
than $150 million. Ms. Slutsky has been a Director of AXA Financial, AXA
Equitable, and certain other subsidiaries of AXA Financial since September
2006.
Mr. Smith
was elected a Director of the General Partner in July 2005. The former CEO of
Watson Wyatt Worldwide, he was also President of the Private Sector Council, a
non-profit public service organization dedicated to improving the efficiency of
the federal government, from September 2000 until May 2005. Mr. Smith has been
President of Smith Consulting since June 2005.
Mr. Tobin
was elected a Director of the General Partner in May 2000. From September 2003
to June 2005, he was Special Assistant to the President of St. John’s
University. Prior thereto, Mr. Tobin served as Dean of the Tobin College of
Business of St. John’s University from August 1998 to September 2003. As Dean,
Mr. Tobin was the chief executive and academic leader of the College of
Business. Mr. Tobin was Chief Financial Officer at The Chase Manhattan
Corporation from 1996 to 1997. Prior thereto, he was Chief Financial Officer of
Chemical Bank (which merged with Chase in 1996) from 1991 to 1996 and Chief
Financial Officer of Manufacturers Hanover Trust (which merged with Chemical in
1991) from 1985 to 1991. Mr. Tobin is on the Boards of Directors of The H.W.
Wilson Co. and CIT Group Inc. He has been a Director of AXA Financial and AXA
Equitable since March 1999.
Mr. Cohen
joined our firm in 2004 and has been Executive Vice President and Chief
Technology Officer since that time. In this role, he is responsible for
technology strategy, application development, and infrastructure services
throughout AllianceBernstein. Prior to joining AllianceBernstein, Mr. Cohen held
executive IT positions at UBS, Goldman Sachs, Morgan Stanley and Fidelity
Investments.
Mr.
Cranch joined our firm in 2004 and has been Executive Vice President and General
Counsel since that time. He became Corporate Secretary in May 2008. Prior to
joining AllianceBernstein, Mr. Cranch was a partner of Clifford Chance, an
international law firm. Mr. Cranch joined Clifford Chance in 2000 when Rogers
& Wells, a New York law firm of which he was Managing Partner, merged with
Clifford Chance.
Mr.
Farrell joined our firm in 2003 and has been Senior Vice President and
Controller since that time. He also serves as the Chief Financial Officer of SCB
LLC. From 1994 through 2003, Mr. Farrell worked at Nomura Securities
International, where he was a Managing Director and a member of the senior
management committee. He also held various financial positions including
Controller and Chief Financial Officer.
Ms. Fay,
a CFA charter holder, joined our firm in 1990 as a research analyst,
subsequently launching Canadian Value, Bernstein’s first single-market service
focused outside the U.S. An Executive Vice President of
AllianceBernstein since 2003, she was named Head of Bernstein Value Equities in
January 2009 to oversee the portfolio management and research activities
relating to all value investment portfolios, while continuing to chair the
Global Value Investment Policy Group as Chief Investment Officer-Global Value
Equities. From 2003 to 2008, Ms. Fay served as CIO-Global Value
Equities, overseeing the portfolio management and research activities relating
to cross-border and non-U.S. value investment portfolios. From 1999 to 2006, she
was CIO-European and U.K. Value Equities, serving as Co-CIO from 2003 to 2006
after being named CIO-Global Value Equities in 2003. Between 1997 and
1999, Ms. Fay was CIO-Canadian Value Equities. Prior to that, she had been a
senior portfolio manager of International Value Equities since
1995.
Ms.
Fedak, a CFA charter holder, joined our firm in 1984 as a senior portfolio
manager and has been Vice Chair of Investment Services at AllianceBernstein
since January 2009. She was an Executive Vice President from 2000 through 2008.
Before becoming Vice Chair, Ms. Fedak served as Head of Global Value Equities.
From 1993 through 2003, she was Chief Investment Officer for U.S. Value
Equities. In 2003, she named a Co-CIO and in January 2009 she relinquished her
role as Co-CIO, although she remains a member of our U.S. Equity investment
policy group. Ms. Fedak is the President of Sanford C. Bernstein Fund, Inc. and
a Director of SCB Inc.
Mr.
Gingrich joined our firm in 1999 as a senior research analyst on the sell-side.
He became an Executive Vice President of AllianceBernstein and the Chairman and
Chief Executive Officer of SCB LLC in February 2007. Prior to becoming Chairman
and CEO of SCB LLC, Mr. Gingrich served as Global Director of Research. Mr.
Gingrich was elected a Senior Vice President of AllianceBernstein in
2002.
Mr.
Gordon, a CFA charter holder, joined our firm in 1983 and currently serves as
Director of Global Quantitative Research of AllianceBernstein, co-head of
Alternative Investments, and Chief Investment Officer for the Global Diversified
Funds. He was elected an Executive Vice President of AllianceBernstein in
February 2004. Mr. Gordon previously served as Bernstein’s Head of Risk
Management, Director of Product Development, and Director of Quantitative
Research.
Mr.
Hexner joined our firm in 1986 as a financial advisor. An Executive Vice
President of AllianceBernstein since 2000, he is Head of Bernstein GWM and
oversees the firm’s private client business worldwide. Mr. Hexner has been
responsible for the firm’s private client business since 1996. He was named
President of Bernstein Investment Research and Management, a unit of
AllianceBernstein, in 2000, and Head of Bernstein GWM in 2006 in recognition of
the global expansion of the private client business. Mr. Hexner is a Director of
SCB Inc.
Mr.
Joseph joined our firm in 1984 and held various financial positions until his
election as Senior Vice President and Chief Financial Officer in 1994. Before
joining AllianceBernstein, Mr. Joseph was a Senior Audit Manager with Price
Waterhouse for 13 years.
Mr. Keith
joined our firm in 1996, holding client-facing roles within Bernstein’s
institutional investment management arm until 1998. He currently
serves as Executive Vice President of AllianceBernstein and Head of
AllianceBernstein Investments, roles he has held since June 2008. He is also
President of the U.S. Funds (except for the SCB Funds). From December
2006 to June 2008, he served as executive managing director within
AllianceBernstein Investments with responsibility for client service and sales.
From May 2006 to November 2006, he served as executive managing director within
Bernstein GWM and had responsibility for all aspects of the North American
private client business. From October 2002 to May 2006, Mr. Keith occupied
senior roles in Institutional Investments, first as head of U.S. client service
and sales and then as head of global client service and sales. From late 1998 to
September 2002, he was a managing director within the firm’s private client
business.
Mr.
Manley joined our firm in 1984 and currently serves as Senior Vice President,
Deputy General Counsel and Chief Compliance Officer. Mr. Manley served as Acting
General Counsel from July 2003 through July 2004 and has served as the firm’s
Chief Compliance Officer since 1988. From February 1998 through June 2003, Mr.
Manley was Senior Vice President and Assistant General Counsel. From February
1992 through February 1998, he was Vice President and Counsel.
Ms.
Massad joined our firm in 2006 as Senior Vice President and Chief Talent
Officer. In February 2009, she was elected Executive Vice President
and Chief Talent Officer – Talent Development and Human
Resources. Prior to joining our firm, Ms. Massad served as Chief
Talent Officer and Chief Operating Officer at Marakon Associates, a strategy
consulting firm from 2004 to 2006. Before Marakon, Ms. Massad was a
founding member of two start-ups: Spencer Stuart Talent Network (in
2001) and EmployeeMatters, a human resources outsourcing firm (in
2000). She spent the previous eight years at The Boston Consulting
Group, where she became a senior manager on the consulting staff and leader of
the firm’s recruiting, training and development programs. While with
The Boston Consulting Group, Ms. Massad was also an adjunct professor at New
York University’s Leonard Stern School of Business.
Mr.
Masters joined our firm in 1991 as a research analyst covering banks, insurance
companies, and other financial firms. Since June 2008, he has served as Chief
Investment Officer of ABDC, our firm’s team responsible for focusing on the
needs of DC clients, including investment design and management. In
February 2009, Mr. Masters took on the additional roles of heading the
AllianceBernstein Blend Strategies team and serving as Chief Investment Officer
for Style Blend, roles he previously held from 2002 through May 2008. Mr.
Masters was named Executive Vice President of AllianceBernstein in 2004 and
Senior Vice President in 2000. Between 1994 and 2002, Mr. Masters was Chief
Investment Officer of Emerging Markets Value Equities, a service he took the
lead in designing.
Mr.
Peebles joined our firm in 1987 and has been the Chief Investment Officer of
AllianceBernstein Fixed Income since August 2008. In this role, Mr.
Peebles supervises all of the fixed income portfolio management and research
teams globally. In addition, he is Chairman of our Interest Rates and Currencies
Research Review team, our team responsible for setting interest-rate and
currency policy for all fixed income portfolios, and he has been an Executive
Vice President of AllianceBernstein since 2004. Mr. Peebles has held several
leadership positions within the fixed income team, having served as Director of
Global Fixed Income from 1997 to 2004 and Co-Chief Investment Officer of
AllianceBernstein Fixed Income and Co-Chairman of the Fixed Income Investment
Strategy Committee from 2004 to August 2008.
Mr.
Phlegar joined our firm in 1993 and has been an Executive Vice President of
AllianceBernstein since 2004. He leads the development and management of new
specialized fixed income services and participates in the management of our All
Asset Deep Value service, which he helped develop and launch. Mr. Phlegar
previously served as Co-Chief Investment Officer of AllianceBernstein Fixed
Income and Co-Chairman of the Fixed Income Investment Strategy Committee from
2004 to August 2008. In these prior roles, Mr. Phlegar oversaw the portfolio
managers and research analysts responsible for Fixed Income AUM across
AllianceBernstein’s three distribution channels, Institutional Investments,
Retail, and Private Client, worldwide. He served as a Senior Vice President in
U.S. Investment Grade Fixed Income from 1998 until 2004. Prior to joining
AllianceBernstein, Mr. Phlegar managed high grade securities for regulated
insurance entities at Equitable Capital Management Corporation, which
AllianceBernstein acquired in 1993.
Mr.
Reilly joined our firm in 1985 as a Vice President and quantitative and
fundamental research analyst covering airlines and railroads, and is currently
the U.S. Large Cap Growth team leader. He has been an Executive Vice President
since 1999 and a portfolio manager with AllianceBernstein’s large cap growth
team since 1988. Mr. Reilly was a Senior Vice President of AllianceBernstein
from 1993 until 1999.
Ms.
Shalett joined our firm in 1995 and has been Executive Vice President of
AllianceBernstein since November 2002. In February 2007, she joined the
management team of Alliance Growth Equities as the Global Research Director and
was named Global Head of Growth Equities in January 2008. For the four years
prior, Ms. Shalett was Chair and Chief Executive Officer of SCB LLC, the firm’s
institutional research brokerage business. Previously, Ms. Shalett served as
Director of Global Research for the sell-side and served as a senior research
analyst covering capital goods and diversified industrials.
Mr. Steyn
joined our firm in 1999, having been the founding co-Chief Executive Officer of
Bernstein’s London office, and has been Executive Vice President and Global Head
of Distribution since April 2007. In this role, the Heads of AllianceBernstein’s
three distribution channels – Institutional Investments, Retail and Private
Client – report to him. Prior to serving in this role, Mr. Steyn had been
Executive Vice President and Head of Institutional Investments since November
2003.
Mr.
Taggart joined our firm in February 2008 as Senior Vice President and Head of
Global Operations. Since January 2009, he has served as Executive
Vice President and Head of Global Operations, which includes investment
management operations, retail operations, fund administration and broker-dealer
operations. Prior to joining the firm, Mr. Taggart spent the majority
of his career at Morgan Stanley (from 2004 to 2008 and 1990 to 1998), where he
was responsible for a variety of operations functions including Transformation
Services, Global Institutional Equity Operations, Morgan Stanley Trust Company
Operations and Morgan Stanley Capital International. From 2002 to
2004, he was a principal in two start-up firms in technology and business
process outsourcing, and from 1998 to 2001 he was Senior Vice President, Global
Business Architecture at JPMorgan Chase, Global Investment
Services. Mr. Taggart was a Vice President, Research Operations at
Greenwich Associates from 1988 to 1990.
Mr.
Tencza joined our firm in 1997 as Director of Consultant Relations for
Institutions and has been Executive Vice President and Head of Institutional
Investments since May 2007, overseeing AllianceBernstein’s institutional
business worldwide. From May 2006 until assuming his most recent post, he was
senior managing director and Head of Global Sales and Client Service.
Previously, Mr. Tencza was Head of Institutional Global Business Development and
Consultant Relations, after having served as product manager for Global Value
Equities between 2000 and 2002.
Mr. Toub
joined our firm in 1992 as a portfolio manager with the Disciplined Growth
group. He has been an Executive Vice President of AllianceBernstein since 1999
and Head of Global/International Growth Equities since 1998. Mr. Toub became
Chief Executive Officer of AllianceBernstein Limited, a London-based
wholly-owned subsidiary of AllianceBernstein, in April 2005. He served as
Director of Research—Global Growth Equities from 1998 through 2000.
Corporate
Governance
Board
of Directors
The Board
holds regular quarterly meetings, generally in February, May, July or August,
and November of each year, and holds special meetings or takes action by
unanimous written consent as circumstances warrant. The Board has standing
Executive, Audit, Corporate Governance, and Compensation Committees, each of
which is described in further detail below. Of the directors, only Mr.
Carrel-Billiard attended fewer than 75% of the aggregate of all Board and
committee meetings which he was entitled to attend in 2008.
Committees
of the Board
The
Executive Committee of the Board (“Executive Committee”) is composed of Ms.
Slutsky and Messrs. Condron, Duverne, Kraus (Chair), Lieberman and Tobin. The
Executive Committee exercises all of the powers and authority of the Board (with
limited exceptions) when the Board is not in session, or when it is impractical
to assemble the Board. The Executive Committee held four meetings in
2008.
The
Corporate Governance Committee of the Board (“Governance Committee”) is composed
of Mr. Condron, Ms. Hechinger, Mr. Kraus, and Ms. Slutsky (Chair). The
Governance Committee assists the Board in (i) identifying and evaluating
qualified individuals to become Board members; (ii) determining the composition
of the Board and its committees; (iii) developing and monitoring a process to
assess Board effectiveness; (iv) developing and implementing our corporate
governance guidelines; and (v) reviewing our policies and programs that relate
to matters of corporate responsibility of the General Partner and the
Partnerships. The Governance Committee held two meetings in 2008.
The Audit
Committee of the Board (“Audit Committee”) is composed of Messrs. Hicks, Smith
and Tobin (Chair). The primary purposes of the Audit Committee are to: (i)
assist the Board in its oversight of (1) the integrity of the financial
statements of the Partnerships, (2) the Partnerships’ status and system of
compliance with legal and regulatory requirements and business conduct, (3) the
independent registered public accounting firm’s qualification and independence,
and (4) the performance of the Partnerships’ internal audit function; and (ii)
oversee the appointment, retention, compensation, evaluation, and termination of
the Partnerships’ independent registered public accounting firm. Consistent with
this function, the Audit Committee encourages continuous improvement of, and
fosters adherence to, the Partnerships’ policies, procedures, and practices at
all levels. With respect to these matters, the Audit Committee provides an open
avenue of communication among the independent registered public accounting firm,
senior management, the Internal Audit Department, and the Board. The Audit
Committee held eight meetings in 2008.
The
functions of each of the committees discussed above are more fully described in
the respective committee’s charter, each of which is available on our Internet
site (
http://www.alliancebernstein.com).
The
Compensation Committee of the Board (“Compensation Committee”) is composed of
Mr. Condron (Chair), Mr. Kraus, Ms. Slutsky and Mr. Smith. For additional
information about the Compensation Committee,
see “Executive
Compensation—Compensation Discussion & Analysis” in Item
11.
In 2003,
the Board appointed a Special Committee, now consisting of Ms. Slutsky and Mr.
Tobin (Chair), to oversee a number of matters relating to investigations by the
NYAG, the SEC, and other regulators. The Special Committee remains responsible
for overseeing the handling of a related unitholder derivative suit and the
distribution of the Restitution Fund (for additional information,
see “Business—Regulation” in Item
1
). The members of the Special Committee do not receive any additional
compensation for their service on the Special Committee, apart from the ordinary
meeting fees
described in
“Executive Compensation—Director Compensation” in Item 11
. The Special
Committee did not meet during 2008.
Audit
Committee Financial Experts
In
January 2008 and January 2009, the Governance Committee, after reviewing
materials prepared by management, recommended that the Board determine that each
of Weston M. Hicks and Peter J. Tobin is an “audit committee financial expert”
within the meaning of Item 401(h) of Regulation S-K. The Board so determined at
its regular meeting in each of February 2008 and February 2009. The Board also
determined at these meetings that each member of the Audit Committee (Messrs.
Hicks, Smith and Tobin) is financially literate and possesses accounting or
related financial management expertise, as contemplated by Section 303A.07(a) of
the NYSE Listed Company Manual.
Independence
of Certain Directors
In
January 2008, the Governance Committee, after reviewing materials prepared by
management, recommended that the Board determine that each of Ms. Hechinger, Mr.
Hicks, Ms. Slutsky, Mr. Smith and Mr. Tobin is “independent” within the meaning
of Section 303A.02 of the NYSE Listed Company Manual. The Board considered
immaterial relationships of Ms. Hechinger (relating to her service as an
executive officer of BoardSource concurrently with Ms. Slutsky serving as that
company’s Chairperson), Mr. Hicks (relating to Alleghany Corporation being a
client of SCB LLC and Mr. Hicks having been employed by Bernstein from 1991 to
1999) and Ms. Slutsky (relating to contributions that were previously made by
AllianceBernstein to The New York Community Trust, of which she is President and
Chief Executive Officer) and then determined, at its February 2008 regular
meeting, that each of Ms. Hechinger, Mr. Hicks, Ms. Slutsky, Mr. Smith and Mr.
Tobin is independent within the meaning of the relevant rules.
In
January 2009, the Governance Committee, after reviewing materials prepared by
management, recommended that the Board determine that each of Ms. Hechinger, Mr.
Hicks, Ms. Slutsky, Mr. Smith and Mr. Tobin is “independent” within the meaning
of Section 303A.02 of the NYSE Listed Company Manual. The Board considered
immaterial relationships of Ms. Hechinger (relating to her service as an
executive officer of BoardSource concurrently with Ms. Slutsky serving as that
company’s Chairperson), Mr. Hicks (relating to Alleghany Corporation being a
client of SCB LLC and Mr. Hicks having been employed by Bernstein from 1991 to
1999) and Ms. Slutsky (relating to contributions that used to be made by
AllianceBernstein to The New York Community Trust, of which she is President and
Chief Executive Officer) and then determined, at its February 2009 regular
meeting, that each of Ms. Hechinger, Mr. Hicks, Ms. Slutsky, Mr. Smith and Mr.
Tobin is independent within the meaning of the relevant rules.
Code
of Ethics and Related Policies
All of
our directors, officers and employees are subject to our Code of Business
Conduct and Ethics. The code is intended to comply with Section 303A.10 of the
NYSE Listed Company Manual, Rule 204A-1 under the Investment Advisers Act and
Rule 17j-1 under the Investment Company Act and with recommendations issued by
the Investment Company Institute regarding, among other things, practices and
standards with respect to securities transactions of investment professionals.
The Code of Business Conduct and Ethics establishes certain guiding principles
for all of our employees, including sensitivity to our fiduciary obligations and
ensuring that we meet those obligations. Our Code of Business Conduct and Ethics
may be found in the “Corporate Governance” portion of our Internet site (
http://www.alliancebernstein.com
).
We have
adopted a Code of Ethics for the Chief Executive Officer and Senior Financial
Officers, which is intended to comply with Section 406 of the Sarbanes-Oxley Act
of 2002 (“Item 406 Code”). The Item 406 Code was adopted on October 28, 2004 by
the Executive Committee. We intend to satisfy the disclosure requirements under
Item 5.05 of Form 8-K regarding certain amendments to, or waivers from,
provisions of the Item 406 Code that apply to the Chief Executive Officer, Chief
Financial Officer and Controller by posting such information on our Internet
site (
http://www.alliancebernstein.com
).
To date, there have been no such amendments or waivers.
NYSE
Governance Matters
Section
303A.00 of the NYSE Listed Company Manual exempts limited partnerships from
compliance with the following sections of the Manual: Section 303A.01 (board
must have a majority of independent directors), 303A.04 (corporate governance
committee must have only independent directors as its members), and 303A.05
(compensation committee must have only independent directors as its members).
Holding is a limited partnership (as is AllianceBernstein). In addition, because
the General Partner is a wholly-owned subsidiary of AXA, and the General Partner
controls Holding (and AllianceBernstein), we believe we would also qualify for
the “controlled company” exemption. Notwithstanding the foregoing, the Board has
adopted a Corporate Governance Committee Charter that complies with Section
303A.04 and a Compensation Committee Charter that complies with Section 303A.05.
However, not all members of these committees are independent.
Our
Corporate Governance Guidelines (“Guidelines”) promote the effective functioning
of the Board and its committees, promote the interests of the Partnerships’
respective unitholders, with appropriate regard to the Board’s duties to the
sole stockholder of the General Partner, and set forth a common set of
expectations as to how the Board, its various committees, individual directors,
and management, should perform their functions. The Guidelines may be found in
the “Corporate Governance” portion of our Internet site (
http://www.alliancebernstein.com
).
The
Corporate Governance Committee is responsible for considering any request for a
waiver under the Code of Business Conduct and Ethics, the Item 406 Code, the AXA
Group Compliance and Ethics Guide, and the AXA Financial Policy Statement on
Ethics from any director or executive officer of the General Partner. Any such
waiver that has been granted would be set forth in the “Corporate Governance”
portion of our Internet site (
http://www.alliancebernstein.com
).
Peter J.
Tobin has been chosen to preside at all executive sessions of non-management and
independent directors. Interested parties wishing to communicate directly with
Mr. Tobin may send an e-mail, with “confidential” in the subject line, to
corporate.secretary@alliancebernstein.com
.
Upon receipt, our Corporate Secretary will promptly forward all such e-mails to
Mr. Tobin. Interested parties may also address mail to Mr. Tobin in care of
Corporate Secretary, AllianceBernstein Corporation, 1345 Avenue of the Americas,
New York, NY 10105, and the Corporate Secretary will promptly forward such mail
to Mr. Tobin. We have posted this information in the “Corporate Governance”
portion of our Internet site (
http://www.alliancebernstein.com
).
Our
Internet site (
http://www.alliancebernstein.com
),
under the heading “Contact our Directors”, provides an e-mail address for any
interested party, including unitholders, to communicate with the Board of
Directors. Our Corporate Secretary reviews e-mails sent to that address and has
some discretion in determining how or whether to respond, and in determining to
whom such e-mails should be forwarded. In our experience, substantially all of
the e-mails received are ordinary client requests for administrative assistance
that are best addressed by management or solicitations of various
kinds.
The 2008
Certification by our Chief Executive Officer under NYSE Listed Company Manual
Section 303A.12(a) was submitted to the NYSE on March 24, 2008.
Certifications
by our Chief Executive Officer and Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 have been furnished as exhibits to this
Form 10-K.
Holding
Unitholders and AllianceBernstein Unitholders may request a copy of any
committee charter, the Guidelines, the Code of Business Conduct and Ethics, and
the Item 406 Code by contacting our Corporate Secretary (
corporate.secretary@alliancebernstein.com
).
The charters and memberships of the Executive, Audit, Corporate Governance and
Compensation Committees may be found in the “Corporate Governance” portion of
our Internet site (
http://www.alliancebernstein.com
).
Management
Committees
The
Management Executive Committee is composed of Messrs. Cohen, Cranch, Gingrich,
Gordon, Hexner, Keith, Kraus, Lieberman, Manley, Masters, Peebles, Phlegar,
Reilly, Steyn, Taggart, Tencza and Toub, and Mses. Fay, Fedak, Massad and
Shalett, who together are the group of key executives responsible for managing
AllianceBernstein, enacting strategic initiatives, and allocating resources to
our company’s various departments. Mr. Kraus serves
ex-officio
as Chairman of the
Management Executive Committee. The Management Executive Committee meets on a
regular basis and at such other times as circumstances warrant.
The Code
of Ethics Oversight Committee (“Ethics Committee”), composed of each member of
the Management Executive Committee and certain other senior executives, oversees
all matters relating to issues arising under the AllianceBernstein Code of
Business Conduct and Ethics. The Ethics Committee, which was created pursuant to
the SEC Order (
see
“Business—Regulation” in Item 1
), meets on a quarterly basis and at such
other times as circumstances warrant. The Ethics Committee and its subcommittee,
the Personal Trading Subcommittee, have oversight of personal trading by our
employees.
The
Internal Compliance Controls Committee (“Compliance Committee”), also composed
of each member of the Management Executive Committee and certain other senior
executives, reviews compliance issues throughout our company, endeavors to
develop solutions to those issues as they may arise from time to time, and
oversees implementation of those solutions. The Compliance Committee, which was
created pursuant to the SEC Order (
see “Business—Regulation” in Item
1
), meets on a quarterly basis and at such other times as circumstances
warrant.
Section 16(a) Beneficial
Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires directors of the General Partner and
executive officers of the Partnerships, and persons who own more than 10% of the
Holding Units or AllianceBernstein Units, to file with the SEC initial reports
of ownership and reports of changes in ownership of Holding Units or
AllianceBernstein Units. To the best of management’s knowledge, during 2008: (i)
all Section 16(a) filing requirements relating to Holding were complied
with
;
and (ii) all
Section 16(a) filing requirements relating to AllianceBernstein were complied
with. Our Section 16 filings can be found under “Investor & Media Relations”
/ “Reports & SEC Filings” on our Internet site (
http://www.alliancebernstein.com
).
Compensation
Discussion and Analysis (“CD&A”)
Overview
of Compensation Philosophy and Program
The
intellectual capital of our employees is collectively the most important asset
of our firm. We invest in people—we hire qualified people, train them, encourage
them to give their best thinking to the firm and our clients, and compensate
them in a manner designed to motivate and retain them. As a result, the costs of
employee compensation and benefits are significant, comprising approximately 56%
of our operating expenses and representing approximately 41% of our net revenues
for 2008. These percentages are not unusual for companies in the financial
services industry. The magnitude of this expense requires that it be monitored
by management, and overseen by the Board, with the particular attention of the
Compensation Committee.
We
believe that the quality, skill, and dedication of our executive officers are
critical to enhancing the long-term value of our company. Our key compensation
goals are to attract and retain highly-qualified executive talent, provide
rewards for the past year’s performance, provide incentives for future
performance, and align our executives’ long-term interests with those of our
clients and Unitholders. We believe that success in achieving good results for
the firm, and for our Unitholders, flows from achieving investment success for
our clients. Accordingly, our deferred incentive compensation program is
designed to encourage our executives to allocate their annual awards on a
notional basis to the investment products we offer to our clients, in addition
to notional investments in Holding Units and, in certain cases (
see below
), investments in
options to buy Holding Units.
We
utilize a variety of compensation elements to achieve the goals described above,
including base salary, annual cash bonuses, a deferred compensation plan (the
Amended and Restated AllianceBernstein Partners Compensation Plan, “Partners
Plan”), a defined contribution plan, and Holding Unit options, all of which are
discussed in more detail
below
.
Although
estimates are developed for budgeting and strategic planning purposes, we do not
set firm-wide financial performance targets (such as net income per unit, market
capitalization, operating margin or organic growth) and, therefore, management
compensation is not correlated with meeting any such specific targets. Some of
our salespeople have compensation incentives based on sales levels.
While our
compensation philosophy has not changed, our compensation decisions in 2008
reflect the adverse impact that volatile market conditions throughout the year
had on our firm’s financial and operating results. Specifically, in
2008, our AUM, revenues, and earnings per unit were down 42.3%, 22.3% and 33.3%,
respectively, as compared to 2007 totals (for additional information about our
firm’s financial and operating results,
see “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in Item
7
). As a result, we have imposed a firm-wide salary freeze for
2009 and 2008 year-end cash bonuses and deferred compensation awards to senior
management declined significantly compared to the prior
year. Incentive compensation paid in 2008 to our named executive
officers (excluding Mr. Kraus, our Chief Executive Officer (“CEO”) since
December 19, 2008 and Mr. Sanders, our former CEO, who retired on December 19,
2008) decreased 68%, as compared to 2007.
Overview
of 2008 Incentive Compensation Program
Our 2008
incentive compensation, generally consisting of annual cash bonuses and deferred
compensation awards, is intended to reward our officers for their performance
and encourage them to remain with the firm. Annual cash bonuses generally
reflect individual performance and the financial performance of the firm and
provide a shorter-term incentive to remain through year-end because such bonuses
are typically paid during the last week of the year. Deferred compensation
awards provide future earnings potential and encourage longer-term retention
because such awards vest over time and are subject to forfeiture; recipients are
therefore encouraged to remain with the firm.
The
aggregate amount of incentive compensation – that is, the amount available to
pay annual cash bonuses and make deferred compensation awards to all employees
(other than Mr. Sanders, our former CEO, and Mr. Kraus, our current CEO) – is
determined on a discretionary basis and is primarily a function of our firm’s
financial performance. This amount is determined for any year in
part guided by formulas, approved by the Compensation Committee, which take
into account the firm’s annual consolidated operating income (excluding
institutional research services) and its annual institutional research services
revenues. The separate formulas used to calculate guidelines for awards
of total cash bonuses and total deferred compensation awards available for
all of our employees (except Messrs. Kraus and Sanders) for 2008 are set forth
below (in thousands):
|
|
Cash
Bonus Amounts
|
|
|
Deferred
Compensation
Amounts
|
|
|
Total
|
|
Consolidated
Operating Income
|
|
$
|
887,564
|
|
|
$
|
887,564
|
|
|
|
|
|
Add: total
incentive compensation expense
|
|
|
351,730
|
|
|
|
351,730
|
|
|
|
|
|
Add: amortization
of intangibles
|
|
|
20,716
|
|
|
|
20,716
|
|
|
|
|
|
Add: non-operating
income
|
|
|
17,916
|
|
|
|
17,916
|
|
|
|
|
|
Operating
Income Before Incentive Compensation
|
|
|
1,277,926
|
|
|
|
1,277,926
|
|
|
|
|
|
Less: brokerage
operating income
|
|
|
175,893
|
|
|
|
175,893
|
|
|
|
|
|
Total
asset management operating income
|
|
$
|
1,102,033
|
|
|
$
|
1,102,033
|
|
|
|
|
|
Calculated
Cash @ 22.2% & Deferred @ 14.8%
|
|
$
|
244,651
|
|
|
$
|
163,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage
Business Revenues
|
|
$
|
492,968
|
|
|
$
|
492,968
|
|
|
|
|
|
Calculated
Cash @ 16.56% & Deferred @ 6.44%
|
|
$
|
81,636
|
|
|
$
|
31,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
calculated incentive compensation available
|
|
$
|
326,287
|
|
|
$
|
194,848
|
|
|
|
|
|
Less: qualified
plans contributions
|
|
|
32,500
|
|
|
|
—
|
|
|
|
|
|
Total
incentive compensation available
|
|
$
|
293,787
|
|
|
$
|
194,848
|
|
|
$
|
488,635
|
|
Total
incentive compensation awarded to employees
|
|
$
|
209,790
|
|
|
$
|
210,857
|
|
|
$
|
420,647
|
|
Because
incentive compensation decisions are made prior to the end of the calendar year,
the calculations used provide guidance for available amounts of cash
bonuses and deferred compensation awards are based on estimates made by
management of AllianceBernstein’s operating income and other items considered
for the full year. The amounts of the total incentive compensation
available listed above were approved by the Compensation Committee on December
5, 2008.
These
calculations are used by management as guidelines and together comprise only one
of the several factors considered by management when determining appropriate
levels of compensation (
please
see
“
Factors Considered
when Determining Executive Officer Compensation” below
for a discussion
of the other factors). Management, with the approval of the
Compensation Committee, has the discretion to exceed these available guideline
amounts if it determines that additional bonus compensation is
appropriate.
In 2008,
the calculations described above resulted in significantly lower guideline
amounts than in 2007, and total incentive compensation in 2008 was lower than in
the prior year, primarily due to the adverse impact that volatile global market
conditions throughout 2008 had on our firm’s overall financial results and our
resulting headcount reduction (for information about the headcount
reduction,
see “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in Item
7
). In 2008, management, with approval of the Compensation
Committee, granted cash bonuses that, in the aggregate, were significantly less
than the 2008 guideline amounts established for cash bonuses and granted
deferred compensation awards that, in the aggregate, were slightly higher than
the 2008 guideline amounts established for these awards. Aggregate
incentive compensation awards (
i.e.
, total cash bonuses and
deferred compensation awards) in 2008 were less than the established guideline
amounts.
We have
identified a select group of senior officers to whom we wish to provide
additional financial incentives to remain with AllianceBernstein because
executive management believes they constitute the next generation of firm
leadership or because they have made exceptional individual contributions to the
firm. Accordingly, in January 2007, the Compensation Committee approved the
Special Option Program (“Special Option Program”). The Special Option Program
permits selected senior officers to voluntarily allocate up to a specified
portion of their annual deferred compensation award to options to buy Holding
Units (“Allocated Award Options”); the firm matches this allocation on a
two-for-one basis (“Match Options”). Members of the Management Executive
Committee generally did not receive awards under the Special Option
Program.
Options
granted on January 26, 2007 pursuant to the Special Option Program represent the
first Holding Unit options granted to employees as part of their year-end
compensation packages since December 2002. Independent directors receive annual
grants of Holding Unit options and Restricted Units (for additional information
about these awards,
see
“Director Compensation” below
).
The firm
did not make awards under the Special Option Program in 2008 due to the decline
in the firm’s overall financial results. However, previous recipients of Special
Option Program awards and members of the Management Executive Committee were
permitted to allocate up to 50% of their 2008 deferred compensation award under
the Partners Plan to Holding Unit options or to receive Holding Unit options in
lieu of up to 50% of their 2008 Partners Plan awards.
Overview
of our Current Chief Executive Officer’s Compensation
On
December 19, 2008, Peter S. Kraus, the General Partner, AllianceBernstein and
Holding entered into an agreement (“Kraus Employment Agreement”) pursuant to
which Mr. Kraus serves as Chairman of the Board of the General Partner and CEO
of the General Partner, AllianceBernstein and Holding until January 2, 2014
(“Employment Term”) unless the Kraus Employment Agreement is terminated in
accordance with its terms.
In
connection with the commencement of Mr. Kraus’s employment, on December 19,
2008, he was granted 2,722,052 restricted Holding Units. Subject to
accelerated vesting clauses in the Kraus Employment Agreement (immediate vesting
upon AXA ceasing to control the management of AllianceBernstein’s business or
Holding ceasing to be publicly traded and certain qualifying terminations of
employment, including termination of Mr. Kraus’s employment (i) by
AllianceBernstein without cause, (ii) by Mr. Kraus for good reason (“good
reason” generally means actions taken by AllianceBernstein resulting in a
material negative change in Mr. Kraus’s employment relationship, including
assignment to Mr. Kraus of duties materially inconsistent with his position or a
requirement that Mr. Kraus report to an officer or employee of AllianceBernstein
instead of reporting directly to the Board), and (iii) due to death or
disability), Mr. Kraus’s restricted Holding Units will vest ratably on each of
the first five anniversaries of December 19, 2008, commencing December 19, 2009,
provided, with respect to each installment, Mr. Kraus continues to be employed
by AllianceBernstein on the vesting date. Mr. Kraus will be paid the
cash distributions payable with respect to his unvested restricted Holding Units
and a dollar amount equal to the cash distributions payable with respect to the
number of any Holding Units that are withheld by AllianceBernstein to cover Mr.
Kraus’s withholding tax obligations as the Holding Units vest. These
cash distributions will be paid at the time distributions are made to Holding
Unitholders generally, provided that no payments to Mr. Kraus will be required
with respect to any cash distribution with a record date following the earlier
of (i) the termination of Mr. Kraus’s employment for any reason, and (ii)
December 19, 2013.
Mr. Kraus
will be paid an annual base salary of $275,000 and will be entitled to receive a
2009 cash bonus of $6 million.
During
the Employment Term, AllianceBernstein has no commitment to pay any cash bonuses
to Mr. Kraus beyond the $6 million in 2009 (with any additional bonuses being
entirely in the discretion of the Board) or to make any additional equity based
awards to him. Consequently, for years after 2009 during the
Employment Term, the totality of Mr. Kraus’s compensation (other than his fixed
salary) will be dependent on the level of cash distributions on the restricted
Holding Units granted to him and the evolution of the trading price of Holding
Units, thereby directly aligning Mr. Kraus’s interests with those of other
holders of Holding Units.
Mr. Kraus
is also entitled to receive perquisites and benefits generally on the same terms
as his predecessor. However, unlike his predecessor, Mr. Kraus is
entitled to full tax gross-ups by AllianceBernstein with respect to personal air
travel on company aircraft, personal use of a company car and driver, any
continued medical coverage due to termination by death or disability, and any
payments for COBRA coverage due to termination of employment by
AllianceBernstein without cause or by Mr. Kraus for good reason.
Factors
Considered when Determining Executive Officer Compensation
Decisions
about executive officer compensation are based primarily on our assessment of
each executive’s leadership, operational performance, and potential to enhance
investment returns and service for our clients, all of which contribute to
long-term Unitholder value. We do not utilize quantitative formulas when
determining each named executive officer’s compensation, but rather rely on our
judgment about each executive’s performance and whether each particular payment
or award provides an appropriate reward for the current year’s
performance. We begin this process by calculating the total incentive
compensation amounts available for a particular year (
as more fully explained above
in “Overview of 2008 Incentive
Compensation Program”
). We then consider a number of key factors for each
of the named executive officers (other than Mr. Sanders, our former CEO, who,
pursuant to his retirement agreement, received a compensation award equivalent
to approximately 1% of AllianceBernstein’s consolidated operating income before
incentive compensation (the same amount specified in his employment agreement),
and Mr. Kraus, our current CEO, whose compensation
is described above in “Overview of
our Current Chief Executive Officer’s Compensation”
). These
factors include: total compensation paid to the named executive officer in the
previous year; the increase or decrease in the current year’s total incentive
compensation amounts available; the named executive officer’s performance
compared to individual business and operational goals established at the
beginning of the year; the nature, scope and level of responsibilities of the
named executive officer; the contribution to our overall financial results; and
the contribution of the executive’s business unit to the company’s fiduciary
culture in which clients’ interests are paramount.
We also
use data provided by McLagan Partners (“McLagan”) to benchmark the total
compensation paid to each of our named executive officers. This process, which
is conducted by the Chief Executive Officer and the President, results in
specific incentive compensation recommendations by them to the Compensation
Committee supported by the factors considered. The Compensation
Committee then makes the final incentive compensation decisions.
The Compensation Committee
did not analyze quantifiable goals relating to the firm’s business units in
determining the cash bonus of each of the named executive officers (other than
Mr. Sanders, whose compensation was determined as described in the preceding
paragraph, and Mr. Kraus, whose compensation has not yet been part of our
year-end process and
is
described above in “Overview of our Current Chief Executive Officer’s
Compensation”
).
Business
and operational goals established for our former chief executive officer, our
chief financial officer, and our other three most highly compensated executive
officers (and, together with Mr. Kraus, the “named executive officers”) in 2008
are as follows:
|
|
Mr.
Sanders’s business and operational goals for 2008 were established by the
terms of the October 2006 employment agreement, as amended, between
himself and our company (“Sanders Employment Agreement”). The
Sanders Employment Agreement provided that he was entitled to receive a
deferred compensation award of not less than 1% of AllianceBernstein’s
consolidated operating income before incentive compensation (as defined
with respect to the calculations of the annual incentive compensation
guideline amounts). Thus, the only goal that was established to
determine Mr. Sanders’s compensation was the goal of maximizing
AllianceBernstein’s consolidated operating income for the year, a goal
which is measured objectively. Mr. Sanders retired as Chairman
of the Board of the General Partner and CEO of the General Partner,
AllianceBernstein and Holding effective December 19, 2008. For
information regarding Mr. Sanders’s retirement agreement and additional
information regarding the Sanders Employment Agreement,
see “Former CEO Arrangements”
and “Other Information regarding Compensation of Named Executive Officers”
below.
|
|
|
For
Mr. Lieberman, the main elements of business and operational goals that
were established to determine his incentive compensation included making
additional progress towards achieving operational excellence, especially
by ensuring our firm’s reduced workforce does not compromise intellectual
rigor, client service or key initiatives, and by working closely with the
CEOs of our firm’s global subsidiaries and the leadership of our firm’s
Institutional Investments and Private Client distribution channels to
further enhance corporate governance; people leadership, including support
of our firm’s corporate culture and our employees’ morale through
exceptionally difficult market conditions; supporting global client
service, both to existing clients and prospects; and continuing to lower
the risk of errors.
|
|
|
For
Ms. Fedak, the main elements of her business and operational goals
included: efforts to improve the alpha generating potential of our U.S.
Value services, including enhancements for our U.S. Diversified Value
services and reconfiguration of our U.S. Equity Investment Policy Group;
leading our U.S. Value client service efforts; operational excellence, in
particular by focusing on leadership of a new, firm-wide portfolio
management group; continuing to drive our Global Equity buy-side trading
to our best-in-class vision; and focusing, in her role as the head of our
Talent Development efforts, on implementing managerial excellence
practices so as to foster employee
engagement.
|
|
|
For
Ms. Fay, the main elements of her business and operational goals included
achieving: investment leadership, by improving our quantitative and
fundamental research inputs, further integrating the U.S. team into our
global platform and overseeing the evolution of our currency management
capabilities; people leadership, by focusing Bernstein Value’s senior team
on the most critical tasks (
e.g.
, portfolio risk
control/management, research prioritization and dimensioning the return
opportunities within the equity markets) and by leading the firm’s
thinking on innovation in conjunction with the newly appointed product
champions; client leadership, by engaging clients and consultants to share
our insights and build confidence; and business leadership, by ensuring
that the firm’s cost-cutting initiatives did not impair our ability to
perform for clients or retain our most talented
staff.
|
|
|
For
Mr. Joseph, the main elements of his business and operational goals
included achieving: people leadership, including establishment of a
“center of excellence” culture throughout finance by setting goals and
identifying a successor CFO; operational excellence, including performing
a comprehensive risk assessment and remediation of all U.S. finance
activities and further improving the system of internal control over
financial reporting; working with information technology to complete a
number of significant financial and control systems including a headcount
reporting and control application, “purchase-through-payment” (a
procurement work flow application), and client billing and sales force
commissions applications in the Private Client distribution channel;
implementation of enhanced financial forecasting and budgeting
applications capabilities; and determining a deferred compensation funding
/ hedging strategy.
|
Consistent
with the management approach taken by AllianceBernstein for its executive
officers generally, the 2008 goals of our named executive officers (other than
Mr. Sanders and Mr. Kraus, whose compensation has not yet been part of our 2008
year-end process and
is
described above in “Overview of our Current Chief Executive Officer’s
Compensation
”
) did not
include specific revenue or profit targets. By their nature, the
business and operational goals for each of these other named executive officers
are difficult to measure quantitatively and thus management uses discretion to
determine whether those goals and objectives have been met. In the
case of each of these four named executive officers, management determined that
the main elements of the established business and operational goals had been met
in 2008.
In
addition to considering the extent to which our named executive officers met
their business and operational goals, we consider each executive’s current
salary, and prior-year cash bonus and deferred compensation awards, the
appropriate balance between incentives for long-term and short-term performance,
and the compensation paid to the executive’s peers within the
company. In general, we believe that key employees should be
well-compensated, but that significant portions of compensation should be
deferred and earned for service in future periods, which provides an incentive
for key employees to remain with the firm.
Furthermore,
in October of each year, McLagan provides us with comparative compensation
benchmarking data, which summarizes compensation levels for the prior year at
selected asset management companies comparable to ours. This data
provides ranges of compensation levels for executive positions at these
companies similar to those held by our named executive officers, including
salary, total cash compensation and total compensation. The
comparable companies are selected in order to provide appropriate comparables
for the size and business mix of AllianceBernstein, the roles played by the
named executive officers and, in the case of Messrs. Sanders and Lieberman, to
reflect the fact that AllianceBernstein is a publicly-traded
entity.
The
McLagan data is another factor we use to determine executive compensation and to
provide a basis for concluding that the compensation levels for our named
executive officers are within the ranges of compensation paid by comparable
companies in our industry. Our Chief Executive Officer and
President, and the Compensation Committee, retain discretion as to how to
utilize the McLagan benchmarking data. The data is not used in a
formulaic or mechanical way to determine named executive officer compensation
levels. The Compensation Committee considered the McLagan data
in concluding that the compensation levels paid in 2008 to our named executive
officers were appropriate and reasonable.
In 2008,
the McLagan data we used to benchmark the compensation of our named executive
officers (excluding Mr. Kraus) was based on compensation comparisons from the
following selected asset management companies: Barclays Global
Investors, BlackRock Financial Management, The Capital Group Companies, Deutsche
Asset Management, Fidelity Investments, Franklin Templeton Investments, Goldman
Sachs Asset Management, Legg Mason, MFS Investment Management, Morgan Stanley
Investment Management, Oppenheimer Funds, PIMCO Advisors, T. Rowe Price
Associates, The Vanguard Group and Wellington Management
Company. Total compensation paid to our named executive officers
(excluding Mr. Kraus) fell within the ranges of total compensation paid to
executives in similar positions by the companies included in the McLagan data.
Additionally, the Board, when it reviewed and approved the Kraus Employment
Agreement on December 19, 2008, considered McLagan data indicating that Mr.
Kraus’s compensation arrangement was fully competitive and appropriate given our
size, scope, and complexity and Mr. Kraus’s experience, credentials and proven
track record.
Compensation
Elements for Executive Officers
Below we
describe the major elements of our executive compensation.
1.
Base
Salary
. Base salaries make up a small portion of executive officers’
total compensation and are maintained at low levels relative to salaries of
executives at peer firms; except for the CEO and amounts reflecting foreign
exchange rates related to service in non-U.S. locations, no executive officers
at the firm were paid a base salary greater than $200,000. Within the relatively
narrow range of base salaries paid to executive officers, we consider individual
experience, responsibilities and tenure with the firm. The salaries we paid
during 2008 to our named executive officers are shown in column (c) of the
Summary Compensation Table.
2.
Cash
Bonus
. We pay annual cash bonuses in late December to reward individual
performance for the year. These bonuses are based on management’s evaluation
(subject to the Compensation Committee’s review and approval) of each
executive’s performance during the year, and the performance of the executive’s
business unit or function, compared to business and operational goals
established at the beginning of the year, and in the context of the firm’s
overall financial performance. The cash bonuses we awarded in 2008 to our named
executive officers are shown in column (d) of the Summary Compensation
Table.
3.
Deferred
Compensation
. We grant annual deferred compensation awards in late
December to supplement cash bonuses and to encourage retention of our executive
officers.
The
Partners Plan is an unfunded, non-qualified deferred compensation plan under
which deferred awards may be granted to eligible employees. Since 2001,
participants have been permitted to allocate their Partners Plan awards to a
combination of notional investments in certain of our investment services
offered to clients and notional investments in Holding Units. Since 2003, no
more than 50% of an annual award may be allocated to Holding Units. As described
above and in Section 4 below, we have created a Special Option Program which
permits a select group of senior officers to allocate up to 50% of their
Partners Plan award to options to buy Holding Units. The 2008 deferred
compensation awards granted to our named executive officers are shown in column
(i) of the Summary Compensation Table and column (c) of the Non-Qualified
Deferred Compensation Table.
Deferred
compensation is awarded as part of total incentive compensation based on a
customized set of goals for each executive officer. The relative
level of cash bonus compared to deferred compensation is generally based on the
total compensation level of the executive officer. As a result, had
Mr. Sanders not retired, all of his 2008 incentive compensation would have been
paid in the form of a deferred award. The relative amounts of cash
bonus compared to deferred compensation awarded to Mr. Lieberman, Ms. Fedak, and
Ms. Fay (who were all compensated in the aggregate at approximately the same
level) were substantially lower than the level of cash bonus compared to
deferred compensation paid to Mr. Joseph.
For
deferred awards made during or before 2007, we typically purchased the
investments that are notionally elected by plan participants and held these
investments in a consolidated rabbi trust. Effective January 1, 2009,
investments we make in our investment services offered to clients are held in a
custodial account, while we continue to hold investments in Holding Units in the
rabbi trust. These investments are subject to the general creditors
of AllianceBernstein.
The value
used for Holding Units to effect a participant’s allocation to Holding Units
(excluding Holding Unit options) is the closing price as reported for NYSE
composite transactions on a day shortly following the release of fourth quarter
earnings. If the rabbi trust does not hold a sufficient number of Holding Units
to fulfill the aggregate amount of participant allocations, Holding issues the
needed amount of new Holding Units under an existing equity compensation plan,
effective as of this same day.
Since
2001, vesting periods for Partners Plan awards have ranged from four years to
immediate, depending on the age of the participant; all awards vest fully if a
participant remains in our employ through December 1 in the year during which he
or she turns 65. Withdrawals prior to vesting are not permitted. Upon
vesting, awards are distributed to participants unless the participant has, in
advance, voluntarily elected to defer receipt to future periods. Quarterly cash
distributions on unvested Holding Units for which a deferral election has not
been made are paid currently to participants. Earnings credited on investment
services are reinvested and distributed pro rata as awards
vest. Quarterly cash distributions on vested and unvested Holding
Units for which a voluntary deferral election has been made, and earnings
credited on investment services, are reinvested and distributed as elected by
participants. These are shown as “earnings” in column (d) of the Non-Qualified
Deferred Compensation Table.
4.
Special Option
Program
. As discussed above, in January 2007 the Compensation Committee
approved the Special Option Program, which provides for a select group of senior
officers recommended by management and approved by the Compensation Committee to
allocate a portion of their Partners Plan awards to options to buy Holding
Units, and to receive a two-for-one match of such allocated
amount. Awards were not made under the Special Option Program in
2008. However, previous recipients of Special Option Program awards
and members of the Management Executive Committee, were permitted to allocate up
to 50% of their 2008 deferred compensation award under the Partners Plan to
Holding Unit options or to receive Holding Unit options in lieu of all or a
portion of their 2008 Partners Plan awards.
The value
allocated to each option granted under the Special Option Program equals the
Black-Scholes value of the option calculated on the option grant date. The
exercise price for each option is equal to the price of a Holding Unit as
reported for NYSE composite transactions at the close of trading on the option
grant date. The option grant date is the date of the meeting of the Compensation
Committee at which it approved the granting of the options. Allocated Award
Options have a 10-year term and vest in equal annual increments on each of the
first five anniversaries of the grant date; Match Options have an 11-year term
and vest in equal annual increments on each of the sixth through tenth
anniversaries of the grant date.
5.
Defined
Contribution Plan
. Employees of AllianceBernstein L.P. are eligible to
participate in the Profit Sharing Plan for Employees of AllianceBernstein L.P.
(as amended and restated as of January 1, 2008, “Profit Sharing Plan”), a
tax-qualified retirement plan. The Compensation Committee determines the amount
of company contributions (both the level of annual matching by the firm of an
employee’s pre-tax salary deferral contributions and the annual company profit
sharing contribution). For 2008, we matched employee deferral contributions on a
one-to-one basis up to five percent of eligible compensation; profit sharing
contributions were an additional three percent of eligible
compensation. Company contributions to the Profit Sharing Plan on
behalf of the named executive officers are shown in column (i) of the Summary
Compensation Table.
6.
CEO
Arrangements
.
See
“
Overview of our Current Chief
Executive Officer’s Compensation
”
in this Item 11
.
7.
Former CEO
Arrangements
. On December 19, 2008, Lewis A. Sanders, former Chairman of
the Board of the General Partner and Chief Executive Officer of the General
Partner, AllianceBernstein and Holding, announced his retirement. Mr.
Sanders resigned from these positions as of December 19, 2008 and as an employee
of AllianceBernstein as of December 31, 2008.
Mr.
Sanders and AllianceBernstein entered into an agreement setting forth the terms
of Mr. Sanders’s retirement (“Sanders Retirement Agreement”). Mr.
Sanders will receive, in connection with his retirement and in recognition of 40
years of service to AllianceBernstein and one of its legacy firms (Bernstein),
and as provided in Section 6(a) of the Sanders Employment Agreement, a payment
of $12,750,000, together with all unvested deferred compensation awards
previously made to him. Mr. Sanders will also receive, until December 31, 2011,
a number of continuing benefits from AllianceBernstein as described in the
Sanders Retirement Agreement.
Prior to
his retirement, Mr. Sanders, our former chief executive officer, was compensated
in accordance with the Sanders Employment Agreement, described below under
“Other Information regarding
Compensation of Named Executive Officers”
. The terms of the Sanders
Employment Agreement reflected the policy and decision of the Compensation
Committee that all of Mr. Sanders’s compensation, other than his base salary and
perquisites, should be deferred and that the amount of his deferred compensation
should be directly related to AllianceBernstein’s “consolidated operating income
before incentive compensation” for the applicable calendar
year. Accordingly, the Sanders Employment Agreement was amended in
2007 to require that half of his unvested deferred compensation balance be
allocated to Holding Units and that half of his future awards be allocated to
Holding Units. In each case, it was agreed that the other half must
be allocated to investment services offered to clients by AllianceBernstein. For
additional information regarding the Sanders Employment Agreement,
see “Other Information regarding
Compensation of Named Executive Officers” below.
(For
a description of consolidated operating income before incentive
compensation,
see “Overview of
2008 Incentive Compensation Program” in this Item 11
.)
Compensation
Committee
The
Compensation Committee consists of Mr. Condron, Mr. Kraus, Ms. Slutsky and Mr.
Smith. As discussed elsewhere (
see “Directors, Executive Officers
and Corporate Governance—NYSE Governance Matters” in Item 10
), because it
is a limited partnership, Holding is exempt from NYSE rules that require public
companies to have a compensation committee made up solely of independent
directors. AXA owns, indirectly, an approximate 65.1% economic interest in
AllianceBernstein (as of February 2, 2009), and compensation expense is a
significant component of our financial results. For these reasons, Mr. Condron,
President and Chief Executive Officer of AXA Financial, serves as chairman of
the Compensation Committee and any action taken by the Compensation Committee
requires the affirmative vote or consent of an executive officer of one or more
of our parent companies. (Presently, Mr. Condron is the only member
of the Compensation Committee who is also an executive officer of one or more of
our parent companies.)
The
Compensation Committee has general oversight of compensation and
compensation-related matters, including, but not limited to: (i) determining
cash bonuses; (ii) determining contributions and awards under incentive plans or
other compensation arrangements (whether qualified or non-qualified) for
employees of AllianceBernstein and its subsidiaries, and amending or terminating
such plans or arrangements or any welfare benefit plan or arrangement or making
recommendations to the Board with respect to adopting any new incentive
compensation plan, including equity-based plans; (iii) reviewing and approving
corporate goals and objectives relevant to the compensation of our chief
executive officer, evaluating his performance in light of those goals and
objectives, and determining and approving his compensation level based on this
evaluation (our Chief Executive Officer recuses himself from voting on his own
compensation); and (iv) reviewing the CD&A, and recommending to the Board
its inclusion in the Partnerships’ Forms 10-K. In December 2007, the
Compensation Committee delegated responsibility for managing AllianceBernstein’s
non-qualified plans to the Omnibus Committee for Non-Qualified Plans (“Omnibus
Committee”), consisting of five members who are senior officers of
AllianceBernstein. The Compensation Committee held four meetings in
2008. The Omnibus Committee held two meetings in 2008.
The
Compensation Committee’s year-end process has generally focused on the cash
bonus and deferred awards granted to senior management, including awards to Mr.
Sanders under the Sanders Employment Agreement. Mr. Sanders played an active
role in the work of the Compensation Committee, and we anticipate Mr. Kraus
playing a similarly active role. Our Chief Executive Officer and Mr. Lieberman,
working with other members of senior management, provide recommendations for
individual employee awards to the Compensation Committee for their
consideration.
In 2008,
Compensation Committee members engaged in a number of discussions (including a
Special Meeting of the Compensation Committee on October 16, 2008) with Messrs.
Sanders and Lieberman regarding the appropriate levels of incentive compensation
to be awarded to employees, taking into consideration the effect of
deteriorating market conditions and asset outflows on the firm’s assets under
management, earnings and unit price. The resulting compensation recommendations
were then reviewed by the full Board at a Special Meeting convened for that
purpose.
The
Compensation Committee held its regularly-scheduled meeting regarding year-end
compensation on December 5, 2008, at which it discussed Messrs. Sanders’s and
Lieberman’s final recommendations and information from McLagan concerning
expected levels of 2008 incentive compensation versus 2007 compensation levels
at several firms comparable to AllianceBernstein. The Compensation Committee
then approved Messrs. Sanders’s and Lieberman’s final recommendations, which
were revised to reflect comments from members of the Compensation Committee and
the Board. As noted above
in
this Item 11
, management retains McLagan to assist in providing industry
benchmarking data to the Compensation Committee. The Compensation Committee has
not retained its own consultants.
The
Compensation Committee’s functions are more fully described in the committee’s
charter, which is available online at our Internet site (
http://www.alliancebernstein.com
)
.
Other
Compensation-Related Matters
AllianceBernstein
and Holding are, respectively, private and public limited partnerships, and are
subject to taxes other than federal and state corporate income tax. (
See “Business—Taxes” in Item
1
.) Accordingly, Section 162(m) of the Code, which limits tax deductions
relating to executive compensation otherwise available to entities taxed as
corporations, is not applicable to either AllianceBernstein or
Holding.
We have
amended our qualified and non-qualified plans to the extent necessary to comply
with the requirements of Section 409A of the Code.
All
compensation awards that involve the issuance of Holding Units are made under
the 1997 Long Term Incentive Plan, as amended and restated November 28, 2007
(“1997 Plan”), which Holding Unitholders initially approved in 1997. Holding
Unitholders approved amendments to the 1997 Plan (increasing the number of
Holding Units that may be issued thereunder, and extending its life) in 2000. No
more than 41 million Holding Units may be awarded under the 1997 Plan through
July 26, 2010. As of December 31, 2008, 22,646,342 Holding Units were available
for future awards under the 1997 Plan.
Compensation
Committee Interlocks and Insider Participation
Mr.
Condron is the Chairman of the Board, President and Chief Executive Officer of
AXA Equitable, the sole stockholder of the General Partner. As of December 31,
2008, AXA Equitable and its affiliates owned an aggregate 62.4% economic
interest in AllianceBernstein. Mr. Kraus is Chief Executive Officer of the
General Partner, and, accordingly, also serves in that capacity for
AllianceBernstein and Holding. No executive officer of AllianceBernstein served
as a member of a compensation committee or a director of another entity, an
executive officer of which served as a member of AllianceBernstein’s
Compensation Committee or Board.
Compensation
Committee Report
The
members of the Compensation Committee reviewed and discussed with management the
Compensation Discussion and Analysis set forth above and, based on such review
and discussion, recommended its inclusion in this Form 10-K.
Christopher
M. Condron (Chair)
|
Peter
S. Kraus
|
Lorie
A. Slutsky
|
A.W.
(Pete) Smith, Jr.
|
Summary
Compensation Table
The
following table summarizes the total compensation of our named executive
officers as of the end of 2008, 2007 and 2006:
Name
and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
Peter
S. Kraus
(1)(2)
|
|
2008
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Chairman
and
Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lewis
A. Sanders
(1)
Chairman
and
Chief
Executive Officer
|
|
2008
2007
2006
|
|
|
|
275,002
275,002
275,002
|
|
|
|
—
—
—
|
|
|
|
—
—
—
|
|
|
|
—
—
—
|
|
|
|
—
—
—
|
|
|
|
—
—
—
|
|
|
|
13,278,571
21,893,098
19,501,985
|
|
|
|
13,553,573
22,168,100
19,776,987
|
|
Gerald
M. Lieberman
President
and
Chief
Operating Officer
|
|
2008
2007
2006
|
|
|
|
200,000
200,000
200,000
|
|
|
|
1,000,000
4,050,000
4,050,000
|
|
|
|
—
—
—
|
|
|
|
—
42,908
61,192
|
|
|
|
—
—
—
|
|
|
|
—
—
—
|
|
|
|
2,867,920
7,568,795
6,224,070
|
|
|
|
4,067,920
11,861,703
10,535,262
|
|
Marilyn
G. Fedak
Vice
Chair of Investment Services
|
|
2008
2007
2006
|
|
|
|
170,000
160,000
140,769
|
|
|
|
1,000,000
4,000,000
4,000,000
|
|
|
|
—
—
—
|
|
|
|
—
—
—
|
|
|
|
—
—
—
|
|
|
|
—
—
—
|
|
|
|
2,361,356
7,356,000
6,123,707
|
|
|
|
3,531,356
11,516,000
10,264,476
|
|
Sharon
E. Fay
Executive
Vice
President
|
|
2008
2007
2006
|
|
|
|
170,000
160,000
150,000
|
|
|
|
1,000,000
3,900,000
3,900,000
|
|
|
|
—
—
—
|
|
|
|
—
—
—
|
|
|
|
—
—
—
|
|
|
|
—
—
—
|
|
|
|
2,581,523
8,370,008
7,284,717
|
|
|
|
3,751,523
12,430,008
11,334,717
|
|
Robert
H. Joseph, Jr.
Senior
Vice President
and
Chief Financial Officer
|
|
2008
2007
2006
|
|
|
|
195,000
185,000
175,000
|
|
|
|
400,000
1,050,000
1,050,000
|
|
|
|
—
—
—
|
|
|
|
—
16,091
22,947
|
|
|
|
—
—
—
|
|
|
|
63,612
18,664
31,041
|
|
|
|
692,285
1,088,406
868,726
|
|
|
|
1,350,897
2,358,161
2,147,714
|
|
(1)
|
Mr.
Sanders served as Chief Executive Officer of the General Partner,
AllianceBernstein and Holding through December 19, 2008. Mr.
Kraus succeeded Mr. Sanders in this capacity effective December 19, 2008
and received no compensation in
2008.
|
(2)
|
Mr.
Kraus did not receive any compensation in 2008. His compensation structure
is set forth in his Employment Agreement, the terms of which are
described above in “Overview
of Current Chief Executive Officer’s Compensation” and described below in
“Grant of Plan-based Awards” and “Other Information regarding Compensation
of Named Executive
Officers”
.
|
Each
named executive officer received a base salary for 2008, 2007 and 2006 and,
except for Messrs. Kraus and Sanders, an annual cash bonus at year-end. These
amounts are reflected in columns (c) and (d), respectively. For information
about how salary and bonus relate to total compensation,
see “Compensation Elements for
Executive Officers” in this Item 11
.
The level
of Mr. Lieberman’s compensation reflects his role as the President and Chief
Operating Officer of our firm. In this role, he is responsible
for the operations of the firm and their impact on its
profitability. Mr. Lieberman’s compensation reflects this high-level
contribution and the broad responsibilities of his position.
Ms. Fedak
and Ms. Fay are jointly responsible for AllianceBernstein’s value equity
investment services. Their level of compensation reflects the fact
that, during 2008, value equity investment services accounted for a
disproportionately large percentage of AllianceBernstein’s consolidated
operating income. This reflects the relative amount of our assets
under management invested in value equity services, the rate of growth in those
services and the relative profitability of those services to the
firm.
Mr.
Joseph’s compensation reflects his role as the Chief Financial Officer of
AllianceBernstein and the contribution he makes in ensuring that our business
and operations are adequately funded and accurately reflected in our financial
records and reports and that adequate internal controls over financial reporting
are in place and operating effectively.
Column
(f) reflects AllianceBernstein’s amortization expense in respect of the vesting
of prior years’ option grants based on the value of those grants on the grant
date. For additional information,
see Note 16 to AllianceBernstein’s
consolidated financial statements in Item 8
.
Column
(h) reflects the change in pension value for Mr. Joseph, the only named
executive officer who participates in the Amended and Restated Retirement Plan
for Employees of AllianceBernstein L.P. (“Retirement Plan”). Benefits
under the Retirement Plan ceased accruing as of December 31,
2008. For additional information about the Retirement Plan,
see Note 14 to AllianceBernstein’s
consolidated financial statements in Item 8
.
Column
(i) reflects awards under the Partners Plan, Mr. Sanders’s deferred awards under
the Sanders Employment Agreement and the Sanders Retirement Agreement, and other
items. We report Partners Plan awards and Mr. Sanders’s award under column (i)
because of their nature. They are designed to provide incentives to recipients,
but they cannot be categorized as having been granted under an “incentive plan”
under relevant SEC rules because there are no specific performance measures that
must be met before a participant may receive his or her award. Also, as noted
above, any allocation of awards by recipients to equity of the firm is
voluntary; we do not unilaterally make awards of Holding Units to the named
executive officers. In addition, awards under the Partners Plan are not
accounted for under SFAS No. 123-R.
During
2008, we owned fractional interests in two aircraft with an aggregate operating
cost of $3,753,743 (including $1,245,243 in maintenance fees, $1,849,713 in
usage fees and $658,787 of amortization based on the original cost of our
fractional interests, less estimated residual value). The unamortized
value of the fractional interests as of December 31, 2008 was
$6,952,808.
Our
interests in aircraft facilitate business travel of members of our management
executive committee. In 2008, we permitted our former Chief Executive Officer,
our President and our Vice Chair of Investment Services to use the aircraft for
personal travel. Overall, personal travel constituted approximately 27.2% of our
actual use of the aircraft in 2008.
Our
methodology for determining the reported value of personal use of aircraft
includes fees paid to the managers of the aircraft (fees take into account the
aircraft type and weight, number of miles flown, flight time, number of
passengers, and a variable fee), but excludes our fixed costs (amortization of
original cost less estimated residual value and monthly maintenance fees). We
included such amounts in column (i).
We use
the Standard Industry Fare Level (“SIFL”) methodology to calculate the amount to
include in the taxable income of executives for the personal use of
company-owned aircraft. Using this methodology, which was approved by our
Compensation Committee, limits our ability to deduct the full cost of personal
use of company-owned aircraft by our executive officers. Taxable income for the
twelve months ended October 31, 2008 for personal use imputed to Mr. Sanders is
$41,760, to Mr. Lieberman is $22,642 and to Ms. Fedak is $2,294. Ms. Fay and Mr.
Joseph did not make personal use of company-owned aircraft during those 12
months, so no income was imputed to them.
Column
(i) also includes the aggregate incremental cost to our company of certain other
expenses and perquisites, including leased cars, drivers, contributions to the
Profit Sharing Plan, life insurance premiums, disability pay, non-U.S. living
expenses, tax equalization payments, business club dues and parking, as
applicable.
For 2008,
column (i) includes:
for Mr.
Sanders, $12,750,000 representing the contractual payment due per the Sanders
Retirement Agreement, $328,860 for personal use of aircraft, $180,123 for
personal use of a car (including lease costs ($25,725), driver compensation
($113,161) and other car-related costs ($41,237) such as parking, gas, tolls,
and repairs and maintenance), an $18,400 contribution to the Profit Sharing Plan
and $1,188 of life insurance premiums.
for Mr.
Lieberman, $2,600,000 for his 2008 Partners Plan award, $100,099 for personal
use of aircraft, $151,821 for personal use of a car (including lease costs
($30,721), driver compensation ($95,795) and other car-related costs ($25,305)
such as parking, gas, tolls, and repairs and maintenance) and a $16,000
contribution to the Profit Sharing Plan.
for Ms.
Fedak, $2,330,000 for her 2008 Partners Plan award, $17,756 for personal use of
aircraft and a $13,600 contribution to the Profit Sharing Plan.
for Ms.
Fay, $2,330,000 for her 2008 Partners Plan award, a $13,600 contribution to the
Profit Sharing Plan, $5,500 for tax preparation and $216 of life insurance
premiums. Column (i) for Ms. Fay also includes payments and reimbursements under
AllianceBernstein’s expatriate assignment policy (“Expatriate Policy”), which
applies to all employees on a temporary overseas assignment and is designed to
eliminate any financial gain or loss to the employee from his or her assignment.
Payments and reimbursements for 2008 to Ms. Fay include tax equalization of
approximately $232,207.
for Mr.
Joseph, $650,000 for his 2008 Partners Plan award, $12,618 for personal use of a
car (including lease costs ($6,000) and other car-related costs ($6,618) such as
parking, gas, tolls, and repairs and maintenance), $6,741 in business club dues,
a $15,600 contribution to the Profit Sharing Plan and $7,326 of life insurance
premiums.
Grants
of Plan-based Awards in 2008
The
following table describes each grant of an award made to a named executive
officer during 2008 under the 1997 Plan, an equity compensation
plan:
|
|
|
|
|
Estimated
future payouts under non-equity incentive plan awards
|
|
|
Estimated
future payouts under equity incentive plan awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
date
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
All
other stock awards: Number of shares of stock or units
(#)
|
|
|
All
other option awards: Number of securities underlying options
(#)
|
|
|
Exercise
or base price of option awards
($/Sh)
|
|
|
Grant
date fair value of stock and option awards
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
S. Kraus
(1)
|
|
|
12.19.08
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,722,052
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
52,263,398
|
|
Lewis
A. Sanders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Gerald
M. Lieberman
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Marilyn
G. Fedak
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Sharon
E. Fay
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Robert
H. Joseph, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
(1)
|
In
connection with the commencement of Mr. Kraus’s employment, on December
19, 2008, he was granted 2,722,052 restricted Holding Units. Subject to
accelerated vesting clauses in the Kraus Employment Agreement (immediate
vesting upon AXA ceasing to control the management of AllianceBernstein’s
business or Holding ceasing to be publicly traded and certain qualifying
terminations of employment, including termination of Mr. Kraus’s
employment (i) by AllianceBernstein without cause, (ii) by Mr. Kraus for
good reason (“good reason” generally means actions taken by
AllianceBernstein resulting in a material negative change in Mr. Kraus’s
employment relationship, including assignment to Mr. Kraus of duties
materially inconsistent with his position or a requirement that Mr. Kraus
report to an officer or employee of AllianceBernstein instead of reporting
directly to the Board), and (iii) due to death or disability), Mr. Kraus’s
restricted Holding Units will vest ratably on each of the first five
anniversaries of December 19, 2008, commencing December 19, 2009,
provided, with respect to each installment, Mr. Kraus continues to be
employed by AllianceBernstein on the vesting date. Aside from
Mr. Kraus’s continued employment, there are no conditions that must be
satisfied for Mr. Kraus’s restricted Holding Units to vest. For
additional information,
see “Overview of our Current
Chief Executive Officer’s Compensation” above and “Other Information
regarding Compensation of Named Executive Officers” below in this Item
11
.
|
Outstanding
Equity Awards at 2008 Fiscal Year-End
The
following table describes any outstanding equity awards as of December 31, 2008
of our named executive officers, if any:
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
S. Kraus
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,722,052
|
|
|
|
56,591,461
|
|
|
|
—
|
|
|
|
—
|
|
Lewis
A. Sanders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Gerald
M. Lieberman
|
|
|
40,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33.18
|
|
|
12/06/12
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
40,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50.25
|
|
|
12/07/11
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Marilyn
G. Fedak
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Sharon
E. Fay
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Robert
H. Joseph, Jr.
|
|
|
15,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33.18
|
|
|
12/06/12
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
15,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50.25
|
|
|
12/07/11
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
15,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
53.75
|
|
|
12/11/10
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48.50
|
|
|
06/20/10
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
15,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
30.25
|
|
|
12/06/09
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Of the
named executive officers, only Mr. Kraus has been awarded Holding Units and only
Messrs. Lieberman and Joseph have been granted options to buy Holding
Units.
Option
Exercises and Stock Vested in 2008
None of
our named executive officers exercised options or had portions of Holding Unit
awards vest during 2008. Accordingly, we have omitted the table.
Pension
Benefits for 2008
The
following table describes the accumulated benefit under our company pension plan
belonging to each of our named executive officers as of December 31, 2008, if
any:
Name
|
|
Plan
Name
|
|
|
Number
of Years
Credited
Service
(#)
|
|
|
Present
Value of
Accumulated
Benefit
($)
|
|
|
Payments
During
Last
Fiscal Year
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
S. Kraus
|
|
|
n/a
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Lewis
A. Sanders
|
|
|
n/a
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Gerald
M. Lieberman
|
|
|
n/a
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Marilyn
G. Fedak
|
|
|
n/a
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Sharon
E. Fay
|
|
|
n/a
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Robert
H. Joseph, Jr.
|
|
Retirement
Plan
|
|
|
|
24
|
|
|
|
490,142
|
|
|
|
—
|
|
Of the
named executive officers, only Mr. Joseph participates in the Retirement Plan.
The Board has determined that no new benefits shall be accrued under the
Retirement Plan, effective as of the close of business on December 31,
2008.
The
Retirement Plan is a qualified, noncontributory, defined benefit retirement plan
covering current and former employees who were employed in the United States
prior to October 2, 2000. Each participant’s benefits are determined under a
formula which takes into account years of credited service through December 31,
2008, the participant’s average compensation over prescribed periods and Social
Security covered compensation. The maximum annual benefit payable under the
Retirement Plan may not exceed the lesser of $100,000 or 100% of a participant’s
average aggregate compensation for the three consecutive years in which he or
she received the highest aggregate compensation from us or such lower limit as
may be imposed by the Code on certain participants by reason of their coverage
under another qualified retirement plan we maintain. A participant is fully
vested after the completion of five years of service. The Retirement Plan
generally provides for payments to, or on behalf of, each vested employee upon
such employee’s retirement at the normal retirement age provided under the plan
or later, although provision is made for payment of early retirement benefits on
an actuarially reduced basis. Normal retirement age under the plan is 65. Death
benefits are payable to the surviving spouse of an employee who dies with a
vested benefit under the Retirement Plan. For additional information regarding
interest rates and actuarial assumptions,
see Note 14 to
AllianceBernstein’s consolidated
financial statements in Item 8.
Non-Qualified
Deferred Compensation for 2008
The
following table describes our named executive officers’ non-qualified deferred
compensation contributions, earnings and distributions during 2008 and their
non-qualified deferred compensation plan balances as of December 31,
2008:
Name
|
|
Executive
Contributions
in
Last FY
($)
|
|
|
Registrant
Contributions
in
Last FY
($)
|
|
|
Aggregate
Earnings
in
Last FY
($)
|
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
|
Aggregate
Balance
at
Last
FYE
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
S. Kraus
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Lewis
A. Sanders
|
|
|
—
|
|
|
|
—
|
|
|
|
(19,041,629
|
)
|
|
|
(18,900,720
|
)
|
|
|
6,191,559
|
|
Gerald
M. Lieberman
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners
Plan
|
|
|
—
|
|
|
|
2,600,000
|
|
|
|
(7,337,717
|
)
|
|
|
(4,769,864
|
)
|
|
|
7,122,670
|
|
SCB
Deferred Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
92,556
|
|
|
|
(1,625,658
|
)
|
|
|
3,330,517
|
|
Total
|
|
|
—
|
|
|
|
2,600,000
|
|
|
|
(7,245,161
|
)
|
|
|
(6,395,522
|
)
|
|
|
10,453,187
|
|
Marilyn
G. Fedak
|
|
|
—
|
|
|
|
2,330,000
|
|
|
|
(13,916,457
|
)
|
|
|
—
|
|
|
|
17,751,603
|
|
Sharon
E. Fay
|
|
|
—
|
|
|
|
2,330,000
|
|
|
|
(4,294,902
|
)
|
|
|
(3,822,901
|
)
|
|
|
8,591,119
|
|
Robert
H. Joseph, Jr.
|
|
|
—
|
|
|
|
650,000
|
|
|
|
(4,622,265
|
)
|
|
|
(814,455
|
)
|
|
|
4,228,795
|
|
For Mr.
Sanders, the amounts shown reflect his awards under the Sanders Retirement
Agreement and the Sanders Employment Agreement. For Mr. Lieberman, the amounts
shown reflect the aggregate of his interest in both the SCB Deferred
Compensation Award Plan (“SCB Deferred Plan”), under which awards were last
permitted to be made in 2003, and the Partners Plan. For Ms. Fedak, Ms. Fay and
Mr. Joseph, amounts shown reflect their respective interests in the Partners
Plan. For additional information about the SCB Deferred Plan, the Partners Plan,
the Sanders Retirement Agreement and the Sanders Employment Agreement,
see Note 15 to AllianceBernstein’s
consolidated financial statements in Item 8
. Amounts in column (c) are
also included in column (i) of the Summary Compensation Table. For individuals
with notional investments in Holding Units, amounts of distributions on such
Holding Units are reflected as earnings in column (d) and, to the extent
distributed to the named executive officer, reflected as distributions in column
(e). Column (f) includes the value of all notional investments as of the close
of business on December 31, 2008. As of that date, Mr. Sanders notionally held
66,024 Holding Units relating to awards under the Sanders Retirement Agreement,
Mr. Lieberman notionally held 41,357 Holding Units in the Partners Plan, Ms. Fay
notionally held 8,443 Holding Units in the Partners Plan and Mr. Joseph
notionally held 59,661 Holding Units in the Partners Plan. For Mr. Sanders, the
amount shown in column (f) includes $4,115,577 paid to him in February 2009 and
approximately $2,075,982 that will be paid to him within 30 days of June 30,
2009 (the value of the latter payment will depend on the market value of Mr.
Sanders’s investments on June 30, 2009).
Other
Information regarding Compensation of Named Executive Officers
In
connection with the commencement of Mr. Kraus’s employment, on December 19,
2008, he was granted 2,722,052 restricted Holding Units. The Kraus Employment
Agreement stipulates that the unvested portion of Mr. Kraus’s restricted Holding
Units shall immediately vest upon a change in control of the company (as “change
in control” is defined in the Kraus Employment Agreement). During Mr.
Kraus’s Employment Term, AllianceBernstein has no commitment to pay any cash
bonuses to Mr. Kraus beyond the $6 million in 2009 (with any additional bonuses
being entirely in the discretion of the Board) or to make any additional equity
based awards to him. Consequently, for years after 2009 during the
Employment Term, the totality of Mr. Kraus’s compensation (other than his fixed
salary) will be dependent on the level of cash distributions on the restricted
Holding Units granted to him and the evolution of the trading price of Holding
Units, thereby directly aligning Mr. Kraus’s interests with those of other
holders of Holding Units. For additional information about Mr. Kraus’s
compensation,
see “Overview of
our Current Chief Executive Officer’s Compensation” in this Item
11
.
There are
no other amounts payable to the named executive officers upon a change in
control of the company.
On
October 26, 2006, Lewis A. Sanders and AllianceBernstein entered into the
Sanders Employment Agreement, pursuant to which Mr. Sanders was to serve as
Chairman of the General Partner and Chief Executive Officer of the General
Partner, AllianceBernstein and Holding through December 31, 2011 (“Sanders
Employment Term”), but the Sanders Employment Agreement was terminated in
accordance with its terms when Mr. Sanders retired on December 19, 2008. Mr.
Sanders was paid a minimum base salary of $275,000 per year during the Sanders
Employment Term and, for calendar year 2006 and each subsequent calendar year
during the Sanders Employment Term, was entitled to receive a deferred
compensation award of not less than one percent (1%) of AllianceBernstein’s
consolidated operating income before incentive compensation (as defined with
respect to the calculation of the aggregate amount of incentive compensation)
for such calendar year. Under the Sanders Employment Agreement, Mr. Sanders’s
deferred compensation was paid to him as the deferred compensation vests and he
was not entitled to make any withdrawals prior to vesting. Mr.
Sanders was entitled to perquisites on the same terms as other senior executives
through the Sanders Employment Term, including personal use of aircraft and a
car and driver (generally, our President is the only other officer entitled to
personal use of aircraft and a car and driver). The terms of the Sanders
Employment Agreement reflected the policy and decision of the Compensation
Committee that all of Mr. Sanders’s compensation, other than his $275,000 base
salary and perquisites, should be deferred and that the amount of his deferred
compensation should be directly related to AllianceBernstein’s “consolidated
operating income before incentive compensation” for the applicable calendar
year. The deferral of such awards, and the notional investments
available for such awards, were designed to serve the same retention incentive
as the deferral of Partners Plan awards.
Mr.
Sanders is entitled to receive payments upon termination of his employment
pursuant to the Sanders Retirement Agreement. He is entitled to (i) his annual
base salary for 2008, (ii) the deferred compensation award
described above
($12,750,000)
calculated as of his retirement date as an employee of the General Partner,
Holding and AllianceBernstein (December 31, 2008), (iii) all unvested deferred
compensation awards (approximately $2,075,982) and (iv) health and welfare
benefits for Mr. Sanders, his spouse and his dependents through December 31,
2011. Compensation under (ii) and (iii) will result in a payment to Mr. Sanders
of approximately $14.8 million within 30 days of June 30, 2009.
Director
Compensation in 2008
The
following table describes how we compensated our independent directors during
2008:
Name
|
|
Fees
Earned
or
Paid
in
Cash
($)
|
|
|
Stock
Awards
(1)
($)
|
|
|
Option
Awards
(2)
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deborah
S. Hechinger
|
|
|
53,500
|
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
113,500
|
|
Weston
M. Hicks
|
|
|
59,500
|
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
119,500
|
|
Lorie
A. Slutsky
|
|
|
71,500
|
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
131,500
|
|
A.W.
(Pete) Smith, Jr.
|
|
|
68,500
|
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
128,500
|
|
Peter
J. Tobin
|
|
|
88,000
|
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
148,000
|
|
(1)
As of
December 31, 2008, our independent directors had outstanding Holding Unit awards
in the following amounts: Ms. Hechinger owned 808 Holding Units, Mr.
Hicks owed 1,270 Holding Units, Ms. Slutsky owned 1,931 Holding Units, Mr. Smith
owned 1,270 Holding Units and Mr. Tobin owned 1,931 Holding
Units.
(2)
As of
December 31, 2008, our independent directors had outstanding option awards in
the following amounts: Ms. Hechinger owned options to buy 4,721 Holding Units,
Mr. Hicks owned options to buy 7,149 Holding Units, Ms. Slutsky owned options to
buy 36,300 Holding Units, Mr. Smith owned options to buy 7,149 Holding Units and
Mr. Tobin owned options to buy 51,550 Holding Units.
The
General Partner only pays fees, and makes equity awards to, directors who are
not employed by our company or by any of our affiliates. Such fees and awards
consist of:
|
•
|
an
annual retainer of $40,000 (paid quarterly after any quarter during which
a director serves on the Board);
|
|
•
|
a
fee of $1,500 for participating in a meeting of the Board, or any duly
constituted committee of the Board, whether he or she participates in
person or by telephone;
|
|
•
|
an
annual retainer of $15,000 for acting as Chair of the Audit
Committee;
|
|
•
|
an
annual retainer of $7,500 for acting as Chair of the Corporate Governance
Committee; and
|
|
•
|
an
annual equity-based grant under the 1997 Plan consisting
of:
|
|
•
|
restricted
Holding Units having a value of $30,000 based on the closing price of
Holding Units on the NYSE as of the grant date;
and
|
|
•
|
options
to buy Holding Units with a value of $30,000 calculated using the
Black-Scholes method.
|
On May
13, 2008, at a regularly scheduled meeting of the Board, 467 restricted Holding
Units and options to buy 2,765 Holding Units at $64.24 per Unit were granted to
each of Ms. Hechinger, Mr. Hicks, Ms. Slutsky, Mr. Smith, and Mr. Tobin. Such
grants have generally been made at the May meeting of the Board. The date of the
meeting was set at a Board meeting in 2007. The exercise price of the options
was the closing price on the NYSE on the grant date. For information about how
the Black-Scholes value was calculated,
see Note 16 to AllianceBernstein’s
consolidated financial statements in Item 8
. Options granted to
independent directors vest ratably over three years. Restricted Holding Units
granted to independent directors vest after three years. In order to avoid any
perception that our directors’ independence might be impaired, these options and
restricted Holding Units are not forfeitable. Vesting of options continues
following a director’s resignation from the Board. Restricted Holding Units vest
and are distributed as soon as administratively feasible following an
independent director’s resignation from the Board.
The
General Partner may reimburse any director for reasonable expenses incurred in
participating in Board meetings. Holding and AllianceBernstein, in turn,
reimburse the General Partner for expenses incurred by the General Partner on
their behalf, including amounts in respect of directors’ fees and expenses.
These reimbursements are subject to any relevant provisions of the Holding
Partnership Agreement and AllianceBernstein Partnership Agreement.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
Securities
Authorized for Issuance under Equity Compensation Plans
The
following table summarizes the Holding Units to be issued pursuant to our equity
compensation plans as of December 31, 2008:
Equity
Compensation Plan Information
(1)
Plan
Category
|
|
Number
of
securities
to be
issued
upon
exercise
of
outstanding
options,
warrants
and
rights
|
|
|
Weighted
average
exercise
price of
outstanding
options,
warrants
and
rights
|
|
|
Number
of
securities
remaining
available
for future
issuance
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity
compensation plans approved by security holders
|
|
|
6,685,808
|
|
|
$
|
66.11
|
|
|
|
22,646,342
|
|
Equity
compensation plans not approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,685,808
|
|
|
$
|
66.11
|
|
|
|
22,646,342
|
|
|
The
figures in this table do not include cash awards under certain of
AllianceBernstein’s deferred compensation plans pursuant to which
employees (including those employees who qualify as “named executive
officers”;
see Item
11
) may choose to notionally invest a portion of such awards in
Holding Units. AllianceBernstein satisfies its obligations under these
plans by purchasing Holding Units or issuing new Holding Units under the
Amended and Restated 1997 Long Term Incentive Plan, as amended through
November 28, 2007 (“1997 Plan”). For additional information concerning our
deferred compensation plans,
see Note 15 to
AllianceBernstein’s consolidated financial statements in Item
8
.
|
There are
no AllianceBernstein Units to be issued pursuant to an equity compensation
plan.
For
information about our equity compensation plans (1993 Unit Option Plan, 1997
Plan, Century Club Plan),
see
Note 16 to AllianceBernstein’s consolidated financial statements in Item
8.
Principal
Security Holders
As of
February 2, 2009, we had no information that any person beneficially owned more
than 5% of the outstanding Holding Units.
As of
February 2, 2009, we had no information that any person beneficially owned more
than 5% of the outstanding AllianceBernstein Units except AXA and certain of its
wholly-owned subsidiaries as reported on Schedule 13D/A and Forms 4 filed with
the SEC on January 8, 2009 pursuant to the Exchange Act.
The table
below and the notes following it have been prepared in reliance upon such
filings for the nature of ownership and an explanation of overlapping
ownership.
Name
and Address of Beneficial Owner
|
|
|
|
Amount
and Nature of Beneficial
Ownership
Reported on Schedule
|
|
|
Percent of
Class
|
|
AXA
(1)(2)(3)(4)(5)(6)
|
|
25 avenue Matignon
75008
Paris,
France
|
|
|
170,121,745
|
|
|
|
64.1
|
%
|
|
Based
on information provided by AXA Financial, on December 31, 2008, AXA and
certain of its subsidiaries beneficially owned all of AXA Financial’s
outstanding common stock. For insurance regulatory purposes the shares of
common stock of AXA Financial beneficially owned by AXA and its
subsidiaries have been deposited into a voting trust (“Voting Trust”), the
term of which has been extended until May 12, 2012. The trustees of the
Voting Trust (the “Voting Trustees”) are Henri de Castries, Denis Duverne
and Christopher M. Condron, each of whom serves on the Management Board of
AXA. The Voting Trustees have agreed to exercise their voting rights to
protect the legitimate economic interests of AXA, but with a view to
ensuring that certain minority shareholders of AXA do not exercise control
over AXA Financial or certain of its insurance
subsidiaries.
|
|
Based
on information provided by AXA, as of December 31, 2008, 14.29% of the
issued ordinary shares (representing 23.29% of the voting power) of AXA
were owned directly and indirectly by two French mutual insurance
companies (the “Mutuelles AXA”).
|
|
The
Voting Trustees and the Mutuelles AXA, as a group, may be deemed to be
beneficial owners of all AllianceBernstein Units beneficially owned by AXA
and its subsidiaries. By virtue of the provisions of the Voting Trust
Agreement, AXA may be deemed to have shared voting power with respect to
the AllianceBernstein Units. AXA and its subsidiaries have the power to
dispose or direct the disposition of all shares of the capital stock of
AXA Financial deposited in the Voting Trust. The Mutuelles AXA, as a
group, may be deemed to share the power to vote or to direct the vote and
to dispose or to direct the disposition of all the AllianceBernstein Units
beneficially owned by AXA and its subsidiaries. The address of each of AXA
and the Voting Trustees is 25 avenue Matignon, 75008 Paris, France. The
address of the Mutuelles AXA is 26, rue Drouot, 75009 Paris,
France.
|
|
By
reason of their relationships, AXA, the Voting Trustees, the Mutuelles
AXA, AXA America Holdings, Inc. (a wholly-owned subsidiary of AXA), AXA
Financial, AXA Equitable, AXA Financial (Bermuda) Ltd. (a wholly-owned
subsidiary of AXA Financial), ACMC Inc. (a wholly-owned subsidiary of AXA
Financial), MONY Life Insurance Company (a wholly-owned subsidiary of AXA
Financial) and MONY Life Insurance Company of America (a wholly-owned
subsidiary of MONY Life Insurance Company) may be deemed to share the
power to vote or to direct the vote and to dispose or direct the
disposition of all or a portion of the 170,121,745 AllianceBernstein
Units.
|
|
In
connection with the Bernstein Transaction, SCB Inc., AllianceBernstein and
AXA Financial entered into a purchase agreement under which SCB Inc. had
the right to sell or assign up to 2,800,000 AllianceBernstein Units issued
in connection with the Bernstein Transaction at any time. SCB Inc. had the
right to sell (“Put”) to AXA Financial (or its designee) up to 8,160,000
AllianceBernstein Units issued in connection with the Bernstein
Transaction each year less any AllianceBernstein Units SCB Inc. may have
otherwise sold or assigned that year. Generally, SCB Inc. could have
exercised its Put rights only once per year and SCB Inc. could not have
delivered an exercise notice regarding its Put rights until at least nine
months after it delivered its immediately preceding exercise notice. On
each of November 25, 2002, March 5, 2004, December 21, 2004, February 23,
2007 and January 6, 2009, AXA America Holdings, AXA Financial or certain
of AXA Financial’s wholly-owned subsidiaries purchased 8,160,000
AllianceBernstein Units from SCB Partners Inc., a wholly-owned subsidiary
of SCB Inc., pursuant to exercises of the Put rights by SCB
Inc. SCB does not have any Put rights remaining after its sale
on January 6, 2009. The Put rights would have expired on
October 2, 2010.
|
|
The
beneficial ownership figures in the table reflect the January 6, 2009
sale.
|
As of
February 2, 2009, Holding was the record owner of 91,910,013, or 34.6%, of the
issued and outstanding AllianceBernstein Units.
Management
The
following table sets forth, as of February 2, 2009, the beneficial ownership of
Holding Units by each director and named executive officer of the General
Partner and by all directors and executive officers as a group:
Name
of Beneficial Owner
|
|
Number
of Holding
Units
and Nature of
Beneficial
Ownership
|
|
|
Percent of
Class
|
|
Peter
S. Kraus
(1)(2)
|
|
|
2,722,052
|
|
|
|
3.0
|
%
|
Lewis
A. Sanders
(3)
|
|
|
66,024
|
|
|
|
*
|
|
Dominique
Carrel-Billiard
(1)
|
|
|
—
|
|
|
|
*
|
|
Henri
de Castries
(1)
|
|
|
2,000
|
|
|
|
*
|
|
Christopher
M. Condron
(1)
|
|
|
30,000
|
|
|
|
*
|
|
Denis
Duverne
(1)
|
|
|
2,000
|
|
|
|
*
|
|
Richard
S. Dziadzio
(1)
|
|
|
—
|
|
|
|
*
|
|
Deborah
S. Hechinger
(4)
|
|
|
1,460
|
|
|
|
*
|
|
Weston
M. Hicks
(5)
|
|
|
8,540
|
|
|
|
*
|
|
Nick
Lane
(1)
|
|
|
—
|
|
|
|
*
|
|
Gerald
M. Lieberman
(1)(6)
|
|
|
218,744
|
|
|
|
*
|
|
Lorie
A. Slutsky
(1)(7)
|
|
|
32,762
|
|
|
|
*
|
|
A.W.
(Pete) Smith, Jr.
(8)
|
|
|
5,059
|
|
|
|
*
|
|
Peter
J. Tobin
(1)(9)
|
|
|
46,602
|
|
|
|
*
|
|
Marilyn
G. Fedak
(1)
|
|
|
—
|
|
|
|
*
|
|
Sharon
E. Fay
(1)(10)
|
|
|
28,003
|
|
|
|
*
|
|
Robert
H. Joseph, Jr.
(1)(11)
|
|
|
210,282
|
|
|
|
*
|
|
All
directors and executive officers of the General Partner as a group (34
persons)
(12)(13)
|
|
|
5,471,959
|
|
|
|
6.0
|
%
|
*
|
Number
of Holding Units listed represents less than 1% of the Units
outstanding.
|
|
Excludes
Holding Units beneficially owned by AXA and its subsidiaries. Ms. Slutsky
and Messrs. Kraus, Carrel-Billiard, de Castries, Condron, Duverne,
Dziadzio, Lane, Lieberman, and Tobin are directors and/or officers of AXA,
AXA Financial, and/or AXA Equitable. Mses. Fedak and Fay, and Messrs.
Kraus, Lieberman and Joseph, are directors and/or officers of the General
Partner.
|
|
In
connection with the commencement of Mr. Kraus’s employment, on December
19, 2008, he was granted 2,722,052 restricted Holding Units. Subject to
accelerated vesting clauses in the Kraus Employment Agreement (
e.g.
, immediate vesting
upon AXA ceasing to control the management of AllianceBernstein’s business
or Holding ceasing to be publicly traded and certain qualifying
terminations of employment), Mr. Kraus’s restricted Holding Units will
vest ratably on each of the first five anniversaries of December 19, 2008,
commencing December 19, 2009, provided, with respect to each installment,
Mr. Kraus continues to be employed by AllianceBernstein on the vesting
date.
|
|
Mr.
Sanders retired as Chairman of the Board of the General Partner and CEO of
the General Partner, AllianceBernstein and Holding on December 19,
2008.
|
|
Includes
652 Holding Units Ms. Hechinger can acquire within 60 under the 1997
Plan.
|
|
Includes
2,270 Holding Units Mr. Hicks can acquire within 60 days under the 1997
Plan.
|
|
Includes
80,000 Holding Units Mr. Lieberman can acquire within 60 days under the
1997 Plan.
|
|
Includes
29,421 Holding Units Ms. Slutsky can acquire within 60 days under the 1997
Plan.
|
|
Includes
2,270 Holding Units Mr. Smith can acquire within 60 days under the 1997
Plan.
|
|
Includes
44,671 Holding Units Mr. Tobin can acquire within 60 days under the 1997
Plan.
|
|
Includes
8,444 Holding Units to which Ms. Fay has allocated portions of previous
awards under deferred compensation
plans.
|
(11)
|
Includes
110,000 Holding Units Mr. Joseph can acquire within 60 days under
AllianceBernstein option plans and 69,192 Holding Units to which he has
allocated portions of previous awards under deferred compensation
plans.
|
|
Includes
635,864 Holding Units the directors and executive officers as a group can
acquire within 60 days under AllianceBernstein option
plans.
|
|
Includes
3,224,443 Holding Units to which executive officers as a group have
allocated their awards under deferred compensation
plans.
|
As of
February 2, 2009, our directors and executive officers did not beneficially own
any AllianceBernstein Units.
The
following table sets forth, as of February 2, 2009, the beneficial ownership of
the common stock of AXA by each director and named executive officer of the
General Partner and by all directors and executive officers as a
group:
AXA
Common Stock
(1)
Name
of Beneficial Owner
|
|
Number
of Shares
and
Nature of
Beneficial
Ownership
|
|
|
Percent of
Class
|
|
Peter
S. Kraus
|
|
|
—
|
|
|
|
*
|
|
Lewis
A. Sanders
(2)
|
|
|
—
|
|
|
|
*
|
|
Dominique
Carrel-Billiard
(3)
|
|
|
75,032
|
|
|
|
*
|
|
Henri
de Castries
(4)
|
|
|
6,482,448
|
|
|
|
*
|
|
Christopher
M. Condron
(5)
|
|
|
3,107,653
|
|
|
|
*
|
|
Denis
Duverne
(6)
|
|
|
2,210,303
|
|
|
|
*
|
|
Richard
S. Dziadzio
(7)
|
|
|
183,536
|
|
|
|
*
|
|
Deborah
S. Hechinger
|
|
|
—
|
|
|
|
*
|
|
Weston
M. Hicks
|
|
|
—
|
|
|
|
*
|
|
Nick
Lane
(8)
|
|
|
3,490
|
|
|
|
*
|
|
Gerald
M. Lieberman
|
|
|
—
|
|
|
|
*
|
|
Lorie
A. Slutsky
(9)
|
|
|
1,196
|
|
|
|
*
|
|
A.W.
(Pete) Smith, Jr.
|
|
|
—
|
|
|
|
*
|
|
Peter
J. Tobin
(10)
|
|
|
17,774
|
|
|
|
*
|
|
Marilyn
G. Fedak
|
|
|
—
|
|
|
|
*
|
|
Sharon
E. Fay
|
|
|
—
|
|
|
|
*
|
|
Robert
H. Joseph, Jr.
|
|
|
—
|
|
|
|
*
|
|
All
directors and executive officers of the General Partner as a group (34
persons)
(11)
|
|
|
12,081,432
|
|
|
|
*
|
|
*
|
Number
of shares listed represents less than 1% of the outstanding AXA common
stock.
|
(1)
|
Holdings
of AXA American Depositary Shares (“ADS”) are expressed as their
equivalent in AXA common stock. Each AXA ADS represents the right to
receive one AXA ordinary share.
|
(2)
|
Mr.
Sanders retired as Chairman of the Board of the General Partner and CEO of
the General Partner, AllianceBernstein and Holding on December 19,
2008.
|
(3)
|
Includes
56,500 shares Mr. Carrel-Billiard can acquire within 60 days under option
plans.
|
(4)
|
Includes
4,980,866 shares Mr. de Castries can acquire within 60 days under option
plans. Also includes 84,000 unvested AXA performance shares, which are
paid out when vested based on the price of AXA at that
time.
|
(5)
|
Includes
880,497 shares and 1,507,909 ADSs Mr. Condron can acquire within 60 days
under option plans. Also includes 149,482 unvested performance units,
which are paid out when vested based on the price of ADSs at that time;
payout will be 70% in cash and 30% in
ADSs.
|
(6)
|
Includes
1,450,392 shares Mr. Duverne can acquire within 60 days under option
plans. Also includes 99,183 unvested AXA performance shares,
which are paid out when vested based on the price of AXA at that
time.
|
(7)
|
Includes
157,618 shares Mr. Dziadzio can acquire within 60 days under option plans.
Also includes 19,029 unvested performance units, which are paid out when
vested based on the price of ADSs at that time; payout will be 70% in cash
and 30% in ADSs.
|
(8)
|
Includes
3,021 ADSs Mr. Lane can acquire within 60 days under options
plans.
|
(9)
|
Includes
294 ADSs Ms. Slutsky can acquire within 60 days under option
plans.
|
(10)
|
Includes
4,420 ADSs Mr. Tobin can acquire within 60 days under option
plans.
|
(11)
|
Includes
7,525,873 shares and 1,515,644 ADSs the directors and executive officers
as a group can acquire within 60 days under option
plans.
|
Partnership
Matters
The
General Partner makes all decisions relating to the management of
AllianceBernstein and Holding. The General Partner has agreed that it will
conduct no business other than managing AllianceBernstein and Holding, although
it may make certain investments for its own account. Conflicts of interest,
however, could arise between AllianceBernstein and Holding, the General Partner
and the Unitholders
of both
Partnerships.
Section
17-403(b) of the Delaware Revised Uniform Limited Partnership Act (“Delaware
Act”) states in substance that, except as provided in the Delaware Act or the
applicable partnership agreement, a general partner of a limited partnership has
the liabilities of a general partner in a general partnership governed by the
Delaware Uniform Partnership Law (as in effect on July 11, 1999) to the
partnership and to the other partners. Accordingly, while under Delaware law a
general partner of a limited partnership is liable as a fiduciary to the other
partners, those fiduciary obligations may be altered by the terms of the
applicable partnership agreement. The AllianceBernstein Partnership Agreement
and Holding Partnership Agreement both set forth limitations on the duties and
liabilities of the General Partner. Each partnership agreement provides that the
General Partner is not liable for monetary damages for errors in judgment or for
breach of fiduciary duty (including breach of any duty of care or loyalty)
unless it is established (the person asserting such liability having the burden
of proof) that the General Partner’s action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury, with reckless
disregard for the best interests of the Partnerships or with actual bad faith on
the part of the General Partner, or constituted actual fraud. Whenever the
AllianceBernstein Partnership Agreement and the Holding Partnership Agreement
provide that the General Partner is permitted or required to make a decision (i)
in its “discretion” or under a grant of similar authority or latitude, the
General Partner is entitled to consider only such interests and factors as it
desires and has no duty or obligation to consider any interest of or other
factors affecting the Partnerships or any Unitholder of AllianceBernstein or
Holding or (ii) in its “good faith” or under another express standard, the
General Partner will act under that express standard and will not be subject to
any other or different standard imposed by the AllianceBernstein Partnership
Agreement and the Holding Partnership Agreement or applicable law or in equity
or otherwise. The partnership agreements further provide that to the extent
that, at law or in equity, the General Partner has duties (including fiduciary
duties) and liabilities relating thereto to either Partnership or any partner,
the General Partner acting under the AllianceBernstein Partnership Agreement or
the Holding Partnership Agreement, as applicable, will not be liable to the
Partnerships or any partner for its good faith reliance on the provisions of the
partnership agreement.
In
addition, the AllianceBernstein Partnership Agreement and the Holding
Partnership Agreement grant broad rights of indemnification to the General
Partner and its directors and affiliates and authorize AllianceBernstein and
Holding to enter into indemnification agreements with the directors, officers,
partners, employees and agents of AllianceBernstein and its affiliates and
Holding and its affiliates. The Partnerships have granted broad rights of
indemnification to officers and employees of AllianceBernstein and Holding. The
foregoing indemnification provisions are not exclusive, and the Partnerships are
authorized to enter into additional indemnification arrangements.
AllianceBernstein and Holding have obtained directors and officers/errors and
omissions liability insurance.
The
AllianceBernstein Partnership Agreement and the Holding Partnership Agreement
also allow transactions between AllianceBernstein and Holding and the General
Partner or its affiliates if the transactions are on terms determined by the
General Partner to be comparable to (or more favorable to AllianceBernstein or
Holding than) those that would prevail with an unaffiliated party. The
partnership agreements provide that those transactions are deemed to meet that
standard if such transactions are approved by a majority of those directors of
the General Partner who are not directors, officers or employees of any
affiliate of the General Partner (other than AllianceBernstein and its
subsidiaries or Holding) or, if in the reasonable and good faith judgment of the
General Partner, the transactions are on terms substantially comparable to (or
more favorable to AllianceBernstein or Holding than) those that would prevail in
a transaction with an unaffiliated party.
The
AllianceBernstein Partnership Agreement and the Holding Partnership Agreement
expressly permit all affiliates of the General Partner (including AXA Equitable
and its other subsidiaries) to compete, directly or indirectly, with
AllianceBernstein and Holding, to engage in any business or other activity and
to exploit any opportunity, including those that may be available to
AllianceBernstein and Holding. AXA, AXA Financial, AXA Equitable and certain of
their subsidiaries currently compete with AllianceBernstein. (
See “Business—Competition” in Item
1
.) The partnership agreements further provide that, except to the extent
that a decision or action by the General Partner is taken with the specific
intent of providing an improper benefit to an affiliate of the General Partner
to the detriment of AllianceBernstein or Holding, there is no liability or
obligation with respect to, and no challenge of, decisions or actions of the
General Partner that would otherwise be subject to claims or other challenges as
improperly benefiting affiliates of the General Partner to the detriment of the
Partnerships or otherwise involving any conflict of interest or breach of a duty
of loyalty or similar fiduciary obligation.
Section
17-1101(c) of the Delaware Act provides that it is the policy of the Delaware
Act to give maximum effect to the principle of freedom of contract and to the
enforceability of partnership agreements. Further, Section 17-1101(d) of the
Delaware Act provides in part that to the extent that, at law or in equity, a
partner has duties (including fiduciary duties) to a limited partnership or to
another partner, those duties may be expanded, restricted, or eliminated by
provisions in a partnership agreement (provided that a partnership agreement may
not eliminate the implied contractual covenant of good faith and fair dealing).
In addition, Section 17-1101(f) of the Delaware Act provides that a partnership
agreement may limit or eliminate any or all liability of a partner to a limited
partnership or another partner for breach of contract or breach of duties
(including fiduciary duties); provided, however, that a partnership agreement
may not limit or eliminate liability for any act or omission that constitutes a
bad faith violation of the implied contractual covenant of good faith and fair
dealing. Decisions of the Delaware courts have recognized the right of parties,
under the above provisions of the Delaware Act, to alter by the terms of a
partnership agreement otherwise applicable fiduciary duties and liability for
breach of duties. However, the Delaware Courts have required that a partnership
agreement make clear the intent of the parties to displace otherwise applicable
fiduciary duties (the otherwise applicable fiduciary duties often being referred
to as “default” fiduciary duties). Judicial inquiry into whether a partnership
agreement is sufficiently clear to displace default fiduciary duties is
necessarily fact driven and is made on a case by case basis. Accordingly, the
effectiveness of displacing default fiduciary obligations and liabilities of
general partners continues to be a developing area of the law and it is not
certain to what extent the foregoing provisions of the AllianceBernstein
Partnership Agreement and the Holding Partnership Agreement are enforceable
under Delaware law.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
Policies
and Procedures Regarding Transactions with Related Persons
Each of
the Holding Partnership Agreement and the AllianceBernstein Partnership
Agreement expressly permits AXA and its affiliates, which includes AXA Equitable
and its affiliates (collectively, “AXA Affiliates”), to provide services to
AllianceBernstein and Holding if the terms of the transaction are approved by
the General Partner in good faith as being comparable to (or more favorable to
each such partnership than) those that would prevail in a transaction with an
unaffiliated party. This requirement is conclusively presumed to be satisfied as
to any transaction or arrangement that (x) in the reasonable and good faith
judgment of the General Partner, meets that unaffiliated party standard, or (y)
has been approved by a majority of those directors of the General Partner who
are not also directors, officers or employees of an Affiliate of the General
Partner.
In
practice, our management pricing committees review investment advisory
agreements with AXA Affiliates, which is the manner in which the General Partner
reaches a judgment regarding the appropriateness of the fees. Other transactions
with AXA Affiliates are submitted to the Audit Committee for their review and
approval; the unanimous consent of the Audit Committee constitutes the consent
of three of five independent directors on the Board. We are not aware of any
transaction during 2008 between our company and any related person with respect
to which these procedures were not followed.
We do not
have written policies regarding the employment of immediate family members of
any of our related persons. Compensation and benefits for all of our employees,
including employees who are immediate family members of any of our related
persons, is established in accordance with our employment and compensation
practices applicable to employees with equivalent qualifications and
responsibilities who hold similar positions.
Financial
Arrangements with AXA Affiliates
The
General Partner has, in its reasonable and good faith judgment (based on its
knowledge of, and inquiry with respect to, comparable arrangements with or
between unaffiliated parties), approved the following arrangements with AXA
Equitable and its affiliates as being comparable to, or more favorable to
AllianceBernstein than, those that would prevail in a transaction with an
unaffiliated party.
The
following tables summarize transactions between AllianceBernstein and related
persons during 2008. The first table summarizes services we provide to related
persons, and the second table summarizes services our related persons provide to
us:
Parties
(1)
|
General
Description of Relationship
(2)
|
|
Amounts
Received or
Accrued for in
2008
|
|
EQAT,
AXA Enterprise Trust and
AXA
Premier VIP Trust
|
We
serve as sub-adviser to these open-end mutual funds, each of which is
sponsored by a subsidiary of AXA Financial.
|
|
$
|
63,567,000
|
|
AXA
Asia Pacific
(2)(3)
|
|
|
$
|
45,814,000
|
|
AXA
Equitable
(3)
|
We
provide investment management services and ancillary accounting,
valuation, reporting, treasury and other services to the general and
separate accounts of AXA Equitable and its insurance company
subsidiaries.
|
|
$
|
32,463,000
(of which $547,417 relates
to
the ancillary services)
|
|
AXA
Group Life Insurance
(2)(3)
|
|
|
$
|
10,361,000
|
|
MONY
Life Insurance Company and its subsidiaries
(3)(4)
|
We
provide investment management services and ancillary accounting
services.
|
|
$
|
8,963,000
(of which $150,000 relates
to
the ancillary services)
|
|
AXA
Sun Life
(2)(3)
|
|
|
$
|
5,885,000
|
|
AXA
U.K. Group Pension Scheme
(2)
|
|
|
$
|
2,549,000
|
|
AXA
France
(2)(3)
|
|
|
$
|
2,326,000
|
|
AXA
Winterthur
(2)(3)
|
|
|
$
|
2,267,000
|
|
AXA
Rosenberg Investment Management
Asia
Pacific
(2)(3)
|
|
|
$
|
2,138,000
|
|
AXA
(Canada)
(2)(3)
|
|
|
$
|
1,614,000
|
|
AXA
Corporate Solutions
(2)(3)
|
|
|
$
|
1,024,000
|
|
AXA
Germany
(2)(3)
|
|
|
$
|
890,000
|
|
AXA
Bermuda
(2)(3)
|
|
|
$
|
494,000
|
|
AXA
Belgium
(2)(3)
|
|
|
$
|
419,000
|
|
AXA
Foundation, Inc., a subsidiary of AXA Financial
(2)
|
|
|
$
|
222,000
|
|
AXA
Reinsurance Company
(2)(3)
|
|
|
$
|
176,000
|
|
AXA
Investment Managers Limited
(2)(3)
|
|
|
$
|
164,000
|
|
AXA
General Insurance Hong Kong Ltd.
(2)(3)
|
|
|
$
|
153,000
|
|
Other
AXA subsidiaries
(2)
|
|
|
$
|
122,000
|
|
|
AllianceBernstein
is a party to each transaction.
|
|
We
provide investment management services unless otherwise
indicated.
|
|
This
entity is a subsidiary of AXA. AXA is an indirect parent of
AllianceBernstein.
|
|
Subsidiaries
include MONY Life Insurance Company of America and U.S. Financial Life
Insurance Company.
|
Parties
(1)(2)
|
|
General
Description of Relationship
|
|
Amounts
Paid or
Accrued for in
2008
|
|
AXA
Advisors
|
|
AXA
Advisors distributes certain of our Retail Products and provides Private
Client referrals.
|
|
$
|
9,408,000
|
|
AXA
Equitable
|
|
AXA
Equitable provides certain data processing services and related
functions.
|
|
$
|
4,055,000
|
|
AXA
Business Services
|
|
AXA
Business Services provides data processing services and support for
certain investment operations functions.
|
|
$
|
3,654,000
|
|
AXA
Equitable
|
|
We
are covered by various insurance policies maintained by AXA
Equitable.
|
|
$
|
3,126,000
|
|
AXA
Technology Services India Pvt. Ltd.
|
|
AXA
Technology Services India Pvt. Ltd. provides certain data processing
services and functions.
|
|
$
|
1,755,000
|
|
GIE
Informatique AXA (“GIE”)
|
|
GIE
provides cooperative technology development and procurement services to us
and to various other subsidiaries of AXA.
|
|
$
|
1,053,000
|
|
AXA
Advisors
|
|
AXA
Advisors sells shares of our mutual funds under Distribution Services and
Educational Support agreements.
|
|
$
|
703,000
|
|
AXA Group
Solutions Pvt. Ltd.
|
|
AXA
Group Solution Pvt. Ltd provides maintenance and development support for
applications.
|
|
$
|
200,000
|
|
|
AllianceBernstein
is a party to each transaction.
|
|
Each
entity is a subsidiary of AXA. AXA is an indirect parent of
AllianceBernstein.
|
Additional
Transactions with Related Persons
On
January 25, 2008, a three-year $950 million Revolving Credit Agreement (“SCB
Credit Agreement”) was entered into among SCB LLC, as Borrower,
AllianceBernstein, as U.S. Guarantor, and a group of commercial banks. As U.S.
Guarantor under the SCB Credit Agreement, AllianceBernstein has agreed to
guarantee the obligations of SCB LLC. AXA has guaranteed the obligations of SCB
LLC under the SCB Credit Agreement. AllianceBernstein will reimburse AXA to the
extent AXA must pay on its guarantee.
On
February 1, 2001, AllianceBernstein and AXA Asia Pacific entered into a
Subscription and Shareholders Agreement under which they established two
investment management companies in Australia and New Zealand named
AllianceBernstein Australia Limited and AllianceBernstein New Zealand Limited,
respectively. AXA Asia Pacific and AllianceBernstein each own fifty percent
(50%) of the equity of each company and have equal representation on the boards.
These companies currently manage approximately $28.4 billion in client assets,
and earned approximately $68.3 million in management fees in 2008 (of which
$19.6 million is included in the table above).
AXA Advisors was our
fourth largest
distributor of U.S. Funds in 2008, for which we paid AXA Advisors sales
concessions on sales of approximately $703 million. Various subsidiaries of AXA
distribute certain of our Non-U.S. Funds, for which such entities received
aggregate distribution payments of approximately $364,000 in 2008.
AXA
Equitable and its affiliates are not obligated to provide funds to us, except
for ACMC Inc.’s and the General Partner’s obligation to fund certain of our
deferred compensation and employee benefit plan obligations. ACMC Inc. and the
General Partner are obligated, subject to certain limitations, to make capital
contributions to AllianceBernstein in an amount equal to the payments
AllianceBernstein is required to make as deferred compensation under the
employment agreements entered into in connection with AXA Equitable’s 1985
acquisition of Donaldson, Lufkin and Jenrette Securities Corporation (since
November 2000, a part of Credit Suisse Group) as well as obligations of
AllianceBernstein to various employees and their beneficiaries under
AllianceBernstein’s Capital Accumulation Plan. In 2008, ACMC Inc. made capital
contributions to AllianceBernstein in the amount of approximately $4.9 million
in respect of these obligations. ACMC Inc.’s obligations to make these
contributions are guaranteed by
Equitable Holdings, LLC
(a wholly-owned subsidiary of AXA Equitable), subject to certain limitations.
All tax deductions with respect to these obligations, to the extent funded by
ACMC Inc., the General Partner or Equitable Holdings, LLC, will be allocated to
ACMC Inc. or the General Partner.
Arrangements
with Immediate Family Members of Related Persons
Two of
our executive officers, one of whom is also a director, have immediate family
members whom we employ. We established the compensation and benefits of each
such family member in accordance with our employment and compensation practices
applicable to employees with equivalent qualifications and responsibilities who
hold similar positions. These employees are three of our 4,997
employees.
Gerald M.
Lieberman’s daughter, Andrea L. Feldman, is employed in Institutional Investment
Services and received 2008 compensation of $140,762 (salary, bonus and
contribution to the Profit Sharing Plan). Mr. Lieberman’s son-in-law, Jonathan
H. Feldman, Ms. Feldman’s spouse, is employed in Retail Services and received
2008 compensation of $251,286 (salary, bonus, deferred compensation,
contribution to the Profit Sharing Plan and life insurance premiums). Gerald M.
Lieberman is Director of the General Partner and the President and Chief
Operating Officer of the General Partner, AllianceBernstein and
Holding.
James G.
Reilly’s brother, Michael J. Reilly, is a U.S. Large Cap Growth portfolio
manager and received 2008 compensation of $1,640,703 (salary, bonus, deferred
compensation, options amortization, contribution to the Profit Sharing Plan and
life insurance premiums). James G. Reilly is an Executive Vice President of the
General Partner, AllianceBernstein and Holding, and he is our U.S. Large Cap
Growth team leader.
Director
Independence
See “Corporate
Governance—Independence of Certain Directors” in Item 10
.
|
Principal
Accounting Fees and Services
|
The
following table presents fees for professional audit services rendered by
PricewaterhouseCoopers LLP (“PwC”) for the audit of AllianceBernstein’s and
Holding’s annual financial statements for 2008 and 2007, respectively, and fees
for other services rendered by PwC ($ in thousands):
|
|
2008
|
|
|
2007
|
|
Audit
Fees
(1)
|
|
$
|
7,490
|
|
|
$
|
7,212
|
|
Audit
Related Fees
(2)
|
|
|
2,408
|
|
|
|
2,530
|
|
Tax
Fees
(3)
|
|
|
2,376
|
|
|
|
2,003
|
|
All
Other Fees
(4)
|
|
|
5
|
|
|
|
27
|
|
Total
|
|
$
|
12,279
|
|
|
$
|
11,772
|
|
|
Includes
$105,000 paid for audit services to Holding in each of 2008 and
2007.
|
|
Audit
related fees consist principally of fees for audits of financial
statements of certain employee benefit plans, internal control reviews and
accounting consultation.
|
|
Tax
fees consist of fees for tax consultation and tax compliance
services.
|
|
All
other fees in 2008 and 2007 consisted of miscellaneous non-audit
services.
|
On
November 9, 2005, the Audit Committee adopted a policy to pre-approve audit and
non-audit service engagements with the independent registered public accounting
firm. This policy was revised on August 3, 2006. The independent registered
public accounting firm is to provide annually a comprehensive and detailed
schedule of each proposed audit and non-audit service to be performed. The Audit
Committee then affirmatively indicates its approval of the listed engagements.
Engagements that are not listed, but that are of similar scope and size to those
listed and approved, may be deemed to be approved, if the fee for such service
is less than $100,000. In addition, the Audit Committee has delegated to its
chairman the ability to approve any permissible non-audit engagement where the
fees are expected to be less than $100,000.
Item
15.
|
Exhibits,
Financial Statement Schedules
|
(a)
|
There
is no document filed as part of this Form
10-K.
|
Financial
Statement Schedule.
Attached
to this Form 10-K is a schedule describing Valuation and Qualifying
Account-Allowance for Doubtful Accounts for the three years ended December 31,
2008, 2007 and 2006. PwC’s report regarding the schedule is also
attached.
The
following exhibits required to be filed by Item 601 of Regulation S-K are filed
herewith or incorporated by reference herein, as indicated:
Exhibit
|
Description
|
2.01
|
|
Agreement
between Federated Investors, Inc. and Alliance Capital Management L.P.
dated as of October 28, 2004 (incorporated by reference to Exhibit 2.1 to
Form 10-Q for the quarterly period ended September 30, 2004, as filed
November 8, 2004).
|
|
|
|
2.02
|
|
Acquisition
Agreement dated as of June 20, 2000 and Amended and Restated as of October
2, 2000 among Alliance Capital Management L.P., Alliance Capital
Management Holding L.P., Alliance Capital Management LLC, SCB Inc.,
Bernstein Technologies Inc., SCB Partners Inc., Sanford C. Bernstein &
Co., LLC and SCB LLC (incorporated by reference to Exhibit 2.1 to Form
10-K for the fiscal year ended December 31, 2000, as filed April 2,
2001).
|
|
|
|
3.01
|
|
Amended
and Restated Certificate of Limited Partnership dated February 24, 2006 of
Holding (incorporated by reference to Exhibit 99.06 to Form 8-K, as filed
February 24, 2006).
|
|
|
|
3.02
|
|
Amendment
No. 1 dated February 24, 2006 to Amended and Restated Agreement of Limited
Partnership of Holding (incorporated by reference to Exhibit 3.1 to Form
10-Q for the quarterly period ended September 30, 2006, as filed November
8, 2006).
|
|
|
|
3.03
|
|
Amended
and Restated Agreement of Limited Partnership dated October 29, 1999 of
Alliance Capital Management Holding L.P. (incorporated by reference to
Exhibit 3.2 to Form 10-K for the fiscal year ended December 31, 2003, as
filed March 10, 2004).
|
|
|
|
3.04
|
|
Amended
and Restated Certificate of Limited Partnership dated February 24, 2006 of
AllianceBernstein (incorporated by reference to Exhibit 99.07 to Form 8-K,
as filed February 24, 2006).
|
|
|
|
3.05
|
|
Amendment
No. 1 dated February 24, 2006 to Amended and Restated Agreement of Limited
Partnership of AllianceBernstein (incorporated by reference to Exhibit 3.2
to Form 10-Q for the quarterly period ended September 30, 2006, as filed
November 8, 2006).
|
|
|
|
3.06
|
|
Amended
and Restated Agreement of Limited Partnership dated October 29, 1999 of
Alliance Capital Management L.P. (incorporated by reference to Exhibit 3.3
to Form 10-K for the fiscal year ended December 31, 2003, as filed March
10, 2004).
|
|
|
|
3.07
|
|
Certificate
of Amendment to the Certificate of Incorporation of AllianceBernstein
Corporation (incorporated by reference to Exhibit 99.08 to Form 8-K, as
filed February 24, 2006).
|
|
|
|
3.08
|
|
AllianceBernstein
Corporation By-Laws with amendments through February 24, 2006
(incorporated by reference to Exhibit 99.09 to Form 8-K, as filed February
24, 2006).
|
|
|
|
|
|
Amendment
and Restatement of the Profit Sharing Plan for Employees of
AllianceBernstein L.P., as of January 1, 2008.
|
|
|
|
|
|
Amendment
and Restatement of the Retirement Plan for Employees of AllianceBernstein
L.P., as of January 1, 2008.
|
|
|
|
|
|
Amended
and Restated AllianceBernstein Partners Compensation Plan, as amended and
restated January 23, 2009.
|
|
|
|
|
|
Amended
and Restated AllianceBernstein L.P. Financial Advisor Wealth Accumulation
Plan, as amended and restated December 5, 2008.
|
|
|
|
|
|
Amended
and Restated AllianceBernstein Commission Substitution Plan, as amended
and restated December 5, 2008.
|
|
|
|
|
|
Form
of Award Agreement under the Amended and Restated AllianceBernstein
Partners Compensation Plan.
|
|
|
|
|
|
Form
of Award Agreement under the Special Option Program.
|
|
|
|
|
|
Form
of Award Agreement under the AllianceBernstein L.P. Financial Advisor
Wealth Accumulation Plan.
|
|
|
|
|
|
Summary
of AllianceBernstein L.P.’s Lease at 1345 Avenue of the Americas, New
York, New York 10105.
|
|
|
|
|
|
Guidelines
for Transfer of AllianceBernstein L.P. Units and AllianceBernstein L.P.
Policy Regarding Partners’ Requests for Consent to Transfer of Limited
Partnership Interests to Third Parties.
|
|
|
|
|
|
Amended
and Restated Commercial Paper Dealer Agreement, dated as of February 10,
2009, among Banc of America Securities LLC, Merrill Lynch Money Markets
Inc., Deutsche Bank Securities Inc. and AllianceBernstein
L.P.
|
|
|
|
10.12
|
|
Employment
Agreement among Peter S. Kraus, AllianceBernstein Corporation,
AllianceBernstein Holding L.P. and AllianceBernstein L.P., dated as of
December 19, 2008 (incorporated by reference to Exhibit 99.02 to Form 8-K,
as filed December 24, 2008).
|
|
|
|
10.13
|
|
Retirement
Agreement between Lewis A. Sanders and AllianceBernstein L.P. dated as of
December 19, 2008 (incorporated by reference to Exhibit 99.01 to Form 8-K,
as filed December 24, 2008).
|
|
|
|
10.14
|
|
Revolving
Credit Agreement dated as of January 25, 2008 among Sanford C. Bernstein
& Co., LLC, as Borrower, AllianceBernstein L.P., as U.S. Guarantor,
Citibank, N.A., as Administrative Agent, Citigroup Global Markets Inc., as
Arranger, JPMorgan Chase Bank, N.A. and Bank of America, N.A., as
Co-Syndication Agents, HSBC Bank USA, National Association, as
Documentation Agent, and the financial institutions whose names appear on
the signature pages as “Banks” (incorporated by reference to Exhibit 10.08
to Form 10-K for the fiscal year ended December 31, 2007, as filed
February 25,
2008).
|
Exhibit
|
Description
|
10.15
|
|
Amended
and Restated 1997 Long Term Incentive Plan, as amended through November
28, 2007 (incorporated by reference to Exhibit 10.02 to Form 10-K for the
fiscal year ended December 31, 2007, as filed February 25,
2008).
|
|
|
|
10.16
|
|
Amended
and Restated AllianceBernstein Century Club Plan (incorporated by
reference to Exhibit 10.04 to Form 10-K for the fiscal year ended December
31, 2007, as filed February 25, 2008).
|
|
|
|
10.17
|
|
Uncommitted
Line of Credit Agreement dated as of January 23, 2008 between
AllianceBernstein L.P. and Citibank, N.A. (incorporated by reference to
Exhibit 10.09 to Form 10-K for the fiscal year ended December 31, 2007, as
filed February 25, 2008).
|
|
|
|
10.18
|
|
Supplement
dated November 2, 2007 to the Revolving Credit Facility (incorporated by
reference to Exhibit 10.10 to Form 10-K for the fiscal year ended December
31, 2007, as filed February 25, 2008). (
See Exhibit
10.22.
)
|
|
|
|
10.19
|
|
Amendment
to Letter Agreement entered into by Lewis A. Sanders and AllianceBernstein
L.P. on December 17, 2007 (incorporated by reference to Exhibit 99.01 to
Form 8-K, as filed December 20, 2007).
|
|
|
|
10.20
|
|
Letter
Agreement entered into by Lewis A. Sanders and AllianceBernstein L.P. on
October 26, 2006 (incorporated by reference to Exhibit 99.31 to Form 8-K,
as filed October 31, 2006).
|
|
|
|
10.21
|
|
Amended
and Restated Issuing and Paying Agency Agreement, dated as of May 3, 2006
(incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarterly
period ended March 31, 2006, as filed May 8, 2006).
|
|
|
|
10.22
|
|
Revolving
Credit Facility dated as of February 17, 2006 among AllianceBernstein
L.P., as Borrower, Bank of America, N.A., as Administrative Agent, Banc of
America Securities LLC, as Arranger, Citibank N.A. and The Bank of New
York, as Co-Syndication Agents, Deutsche Bank Securities Inc. and JPMorgan
Chase Bank, N.A., as Co-Documentation Agents, and The Various Financial
Institutions Whose Names Appear on the Signature Pages as “Banks”
(incorporated by reference to Exhibit 10.1 to Form 10-K for the fiscal
year ended December 31, 2005, as filed February 24,
2006).
|
|
|
|
10.23
|
|
Investment
Advisory and Management Agreement for MONY Life Insurance Company
(incorporated by reference to Exhibit 10.4 to Form 10-K for the fiscal
year ended December 31, 2004, as filed March 15, 2005).
|
|
|
|
10.24
|
|
Investment
Advisory and Management Agreement for the General Account of AXA Equitable
Life Insurance Company (incorporated by reference to Exhibit 10.5 to Form
10-K for the fiscal year ended December 31, 2004, as filed March 15,
2005).
|
|
|
|
10.25
|
|
Alliance
Capital Management L.P. Partners Plan of Repurchase adopted as of February
20, 2003 (incorporated by reference to Exhibit 10.2 to Form 10-K for the
fiscal year ended December 31, 2002, as filed March 27,
2003).
|
|
|
|
10.26
|
|
Services
Agreement dated as of April 22, 2001 between Alliance Capital Management
L.P. and AXA Equitable Life Insurance Company (incorporated by reference
to Exhibit 10.19 to Form 10-K for the fiscal year ended December 31, 2001,
as filed March 28, 2002).
|
|
|
|
10.27
|
|
Registration
Rights Agreement dated as of October 2, 2000 by and among Alliance Capital
Management L.P., SCB Inc. and SCB Partners Inc. (incorporated by reference
to Exhibit 10.17 to Form 10-K for the fiscal year ended December 31, 2000,
as filed April 2, 2001).
|
|
|
|
10.28
|
|
Purchase
Agreement dated as of June 20, 2000 by and among Alliance Capital
Management L.P., AXA Financial, Inc. and SCB Inc. (incorporated by
reference to Exhibit 10.18 to Form 10-K for the fiscal year ended December
31, 2000, as filed April 2, 2001).
|
|
|
|
10.29
|
|
Alliance
Capital Management L.P. Annual Elective Deferral Plan (incorporated by
reference to Exhibit 99 to Form S-8, as filed November 6,
2000).
|
|
|
|
10.30
|
|
Extendible
Commercial Notes Dealer Agreement, dated as of December 14, 1999
(incorporated by reference to Exhibit 10.10 to the Form 10-K for the
fiscal year ended December 31, 1999, as filed March 28,
2000).
|
|
|
|
10.31
|
|
Amended
and Restated Investment Advisory and Management Agreement dated January 1,
1999 among Alliance Capital Management Holding L.P., Alliance Corporate
Finance Group Incorporated, and AXA Equitable Life Insurance Company
(incorporated by reference to Exhibit (a)(6) to Form 10-Q/A for the
quarterly period ended September 30, 1999, as filed on September 28,
2000).
|
|
|
|
10.32
|
|
Amended
and Restated Accounting, Valuation, Reporting and Treasury Services
Agreement dated January 1, 1999 between Alliance Capital Management
Holding L.P., Alliance Corporate Finance Group Incorporated, and AXA
Equitable Life Insurance Company (incorporated by reference to Exhibit
(a)(7) to the Form 10-Q/A for the quarterly period ended September 30,
1999, as filed September 28, 2000).
|
|
|
|
10.33
|
|
Alliance
Capital Accumulation Plan (incorporated by reference to Exhibit 10.11 to
Form 10-K for the fiscal year ended December 31, 1988, as filed March 31,
1989).
|
|
|
|
|
|
AllianceBernstein
Consolidated Ratio of Earnings to Fixed Charges in respect of the years
ended December 31, 2008, 2007 and 2006.
|
|
|
|
|
|
Subsidiaries
of AllianceBernstein.
|
|
|
|
|
|
Consents
of PricewaterhouseCoopers LLP.
|
|
|
|
|
|
Certification
of Mr. Kraus furnished pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
|
|
|
|
|
|
Certification
of Mr. Joseph furnished pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
|
|
|
|
|
|
Certification
of Mr. Kraus furnished for the purpose of complying with Rule 13a-14(b) or
Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
|
|
|
|
|
Certification
of Mr. Joseph furnished for the purpose of complying with Rule 13a-14(b)
or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of
2002.
|
Signatures
Pursuant
to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
AllianceBernstein
Holding L.P.
|
|
|
|
Date:
February 20, 2009
|
By:
|
/s/
Peter S. Kraus
|
|
|
Peter
S. Kraus
|
|
|
Chairman
of the Board and Chief Executive
Officer
|
Pursuant
to the requirements of the Exchange Act, this report has been signed by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
|
|
|
Date:
February 20, 2009
|
|
/s/
Robert H. Joseph, Jr.
|
|
|
Robert
H. Joseph, Jr.
|
|
|
Senior
Vice President and Chief Financial Officer
|
|
|
|
Date:
February 20, 2009
|
|
/s/
Edward J. Farrell
|
|
|
Edward
J. Farrell
|
|
|
Senior
Vice President and Chief Accounting
Officer
|
Directors
/s/
Peter S. Kraus
|
|
/s/
Weston M. Hicks
|
Peter
S. Kraus
|
|
Weston
M. Hicks
|
Chairman
of the Board
|
|
Director
|
|
|
|
/s/
Dominique Carrel-Billiard
|
|
/s/
Nick Lane
|
Dominique
Carrel-Billiard
|
|
Nick
Lane
|
Director
|
|
Director
|
|
|
|
/s/
Christopher M. Condron
|
|
/s/
Gerald M. Lieberman
|
Christopher
M. Condron
|
|
Gerald
M. Lieberman
|
Director
|
|
Director
|
|
|
|
/s/
Henri de Castries
|
|
/s/
Lorie A. Slutsky
|
Henri
de Castries
|
|
Lorie
A. Slutsky
|
Director
|
|
Director
|
|
|
|
/s/
Denis Duverne
|
|
/s/
A.W. (Pete) Smith, Jr.
|
Denis
Duverne
|
|
A.W.
(Pete) Smith, Jr.
|
Director
|
|
Director
|
|
|
|
/s/
Richard S. Dziadzio
|
|
/s/
Peter J. Tobin
|
Richard
S. Dziadzio
|
|
Peter
J. Tobin
|
Director
|
|
Director
|
|
|
|
/s/
Deborah S. Hechinger
|
|
|
Deborah
S. Hechinger
|
|
|
Director
|
|
|
SCHEDULE
I I
AllianceBernstein
L.P.
Valuation
and Qualifying Account - Allowance for Doubtful Accounts
For
the Three Years Ending December 31, 2008, 2007 and 2006
Description
|
|
Balance
at Beginning of Period
|
|
|
Charged
(Credited) to Costs and Expenses
|
|
|
Deductions
|
|
|
|
Balance
at End of Period
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the year ended December 31, 2006
|
|
$
|
939
|
|
|
$
|
251
|
|
|
$
|
77
|
|
(a)
|
|
$
|
1,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the year ended December 31, 2007
|
|
$
|
1,113
|
|
|
$
|
955
|
|
|
$
|
276
|
|
(b)
|
|
$
|
1,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the year ended December 31, 2008
|
|
$
|
1,792
|
|
|
$
|
(192
|
)
|
|
$
|
112
|
|
(c)
|
|
$
|
1,488
|
|
(a)
Includes accounts written-off as uncollectible of $93 and a net addition to the
allowance balance of $16.
(b)
Includes accounts written-off as uncollectible of $267 and a net reduction of
the allowance balance of $9.
(c)
Includes
accounts written-off as uncollectible of $31 and a net reduction to the
allowance balance of $81.
Report
of Independent Registered Public Accounting Firm on
Financial
Statement Schedule
To the
General Partner and Unitholders
AllianceBernstein
L.P.:
Our
audits of the consolidated financial statements and of the effectiveness of
internal control over financial reporting referred to in our report dated
February 20, 2009 appearing in the 2008 Annual Report to Unitholders of
AllianceBernstein L.P. (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedule listed in Item 15(a) of this Form
10-K. In our opinion, this financial statement schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers
LLP
February
20, 2009
Exhibit 10.1
Amendment
and Restatement
of
the
Profit
Sharing Plan for Employees
of
AllianceBernstein
l.p.
(As of
January 1, 2008)
TABLE OF
CONTENTS
|
|
PAGE
|
ARTICLE
I
|
DEFINITIONS
|
2
|
ARTICLE
II
|
MEMBERSHIP
|
12
|
ARTICLE
III
|
CREDITING
OF SERVICE
|
15
|
ARTICLE
IV
|
COMPANY
CONTRIBUTIONS
|
17
|
ARTICLE
V
|
MEMBER
SALARY DEFERRAL ELECTIONS, SALARY DEFERRAL CONTRIBUTIONS AND ROLLOVER
CONTRIBUTIONS
|
19
|
ARTICLE
VI
|
ROTH
ELECTIVE DEFERRALS
|
26
|
ARTICLE
VII
|
ALLOCATIONS
OF COMPANY CONTRIBUTIONS AND FORFEITURES
|
27
|
ARTICLE
VIII
|
ACCOUNTS,
ALLOCATIONS AND LOANS
|
30
|
ARTICLE
IX
|
VALUATION
|
33
|
ARTICLE
X
|
DETERMINATION
OF BENEFITS
|
37
|
ARTICLE
XI
|
TIME
AND MANNER OF PAYMENT OF BENEFITS
|
40
|
ARTICLE
XII
|
ADMINISTRATION
OF THE PLAN
|
45
|
ARTICLE
XIII
|
THE
TRUST FUND
|
55
|
ARTICLE
XIV
|
CERTAIN
RIGHTS AND OBLIGATIONS OF THE COMPANY
|
56
|
ARTICLE
XV
|
NON-ALIENATION
OF BENEFITS
|
58
|
ARTICLE
XVI
|
AMENDMENTS
|
59
|
ARTICLE
XVII
|
LIMITATIONS
ON BENEFITS AND CONTRIBUTIONS
|
60
|
ARTICLE
XVIII
|
TOP-HEAVY
PLAN YEARS
|
61
|
ARTICLE
XIX
|
MISCELLANEOUS
|
64
|
|
|
|
APPENDIX
A.
|
REQUIRED
DISTRIBUTION RULES
|
60
|
APPENDIX
B.
|
COMMON
OR COLLECTIVE TRUST FUNDS OR POOLED INVESTMENT FUNDS
|
64
|
Amended
And Restated
Profit
Sharing Plan for Employees
of
AllianceBernstein l.p.
(as
of January 1, 2008)
WHEREAS,
the Profit Sharing Plan for Employees of AllianceBernstein L.P. (the “Plan”)
(formerly known as the Profit Sharing Plan for Employees of Alliance Capital
Management L.P.) was originally established effective as of January 1, 1972 by
the predecessor of Alliance Capital Management L.P.; and
WHEREAS,
the Plan was amended and restated from time to time to reflect changes in the
predecessor’s business, changes in applicable law and the investment in Units of
AllianceBernstein Holding L.P. (“AllianceBernstein Holding”); and
WHEREAS,
the Plan was amended effective January 1, 1995 to reflect the merger of the
Alliance Capital Management L.P. Profit Sharing Plan for Former Employees of
Equitable Capital Management Corporation with and into this Plan;
and
WHEREAS,
the Plan was amended to comply with the Economic Growth and Tax Relief
Reconciliation Act of 2001 (“EGTRRA”) and other applicable legislation, which
provisions reflecting EGTRRA are intended as good faith compliance with the
requirements of EGTRRA and are to be construed in accordance with EGTRRA and
guidance issued thereunder; and
WHEREAS,
the Plan was amended and restated, effective as of January 1, 2006, to
incorporate all Plan amendments adopted since the Plan was last amended and
restated and certain additional design changes, changes required to comply with
applicable law and to reflect the name change of Alliance Capital Management
L.P. to AllianceBernstein L.P.; and
WHEREAS,
the Plan has been amended and is hereby amended and restated to comply with the
Pension Protection Act of 2006, other applicable legislation, and certain
additional design changes.
NOW,
THEREFORE, the Plan is hereby amended and restated, as of January 1,
2008.
ARTICLE
I
DEFINITIONS.
For the
purposes of this Plan, except as otherwise herein expressly provided or unless
the context otherwise requires, when capitalized:
Section
1.01
. “
Account
” means any
one or more of the following accounts maintained by the Administrative Committee
for a Member:
|
(a)
|
his
Company Contributions Account;
|
|
(b)
|
his
Member Contributions Account;
|
|
(c)
|
his
Member Salary Deferral Account;
|
|
(d)
|
Roth
Elective Deferral Account; and
|
|
(e)
|
his
Rollover Account.
|
Section
1.02
. “
Act
” means the
Employee Retirement Income Security Act of 1974, as amended from time to
time.
Section
1.03
. “
Accounting Date
”
means the last business day of each Plan Year and any other date which may be
determined by the Administrative Committee under uniform and non-discriminatory
procedures established by the Committee.
Section
1.04
“
Administrative
Committee
” means the administrative committee appointed pursuant to
Section 12.01.
Section
1.05
. “
After-Tax Rollover
Contributions
” means an amount of after-tax employee contributions
contributed or transferred to the Trust in accordance with Section
5.03(b).
Section
1.06
“
Anniversary Year
”
means each twelve (12) month period beginning on an Employee’s Employment
Commencement Date or any annual anniversary thereof.
Section
1.07
. “
Affiliate
” means any
corporation or unincorporated business (a) controlled by, or under common
control with, the Company within the meaning of Code Sections 414(b) and (c), or
(b) which is a member of an “affiliated service group”, as defined in Code
Section 414(m), of which the Company is a member.
Section
1.08
. “
Assignor Limited
Partner
” shall mean Alliance ALP, Inc., a Delaware corporation, or any
individual, corporation, association, partnership, joint venture, entity, estate
or other entity or organization designated by the general partner of the Company
to serve as a substitute therefore.
Section
1.09
. “
Beneficiary
” means
the person (including a trust or estate of a Member) designated by a Member, or
who may otherwise be entitled under the terms of the Plan to receive the
balance, if any, of the Member’s Accounts upon the Member’s death.
Section
1.10
. “
Board
” means the
Board of Directors of the general partner of the Company responsible for the
management of the Company’s business, or a committee thereof designated by such
Board.
Section
1.11
. “
Break in Service
”
means, with respect to any Employee, any Anniversary Year ending on or after the
date of his Severance from Employment and before his date of re-employment, if
any, in which he does not complete more than five hundred (500) Hours of Service
with Employers or Affiliates.
Section
1.12
. “
Code
” means the
Internal Revenue Code of 1986, as amended from time to time.
Section
1.13
. “
Company
” means
AllianceBernstein L.P. and any successor thereto; prior to February 24, 2006,
known as Alliance Capital Management L.P.; and prior to April 21, 1988, known as
Alliance Capital Management Corporation.
Section
1.14
. “
Company Contribution
”
means a contribution for a Plan Year made by an Employer to the Trust pursuant
to Section 4.01 or Section 4.02, but not Section 5.01, including any amount to
be applied from the Unallocated Forfeitures Account in reduction of the
contribution which would otherwise be made for the Plan Year
involved.
Section
1.15
. “
Company Contributions
Account
” means the Account consisting of the balance attributable to
Company Contributions.
Section
1.16
. “
Compensation
” means a
Member’s base salary (or Draw, if no base salary) received for services rendered
to an Employer, which term shall include the amount of a Member’s Member Salary
Deferral and any other salary deferrals pursuant to Code Sections 401(k), 125 or
132(f), but shall not include overtime pay, bonuses, severance pay,
distributions on Units, reimbursement for moving expenses, reimbursement for
educational expenses, reimbursement for any other expenses, contributions or
benefits paid under this Plan or any other plan of deferred compensation, or any
other extraordinary item of compensation or income; provided that in the case of
a Member whose compensation from an Employer includes commissions, commissions
shall be included only to the extent that the Member’s aggregate compensation
taken into account does not exceed $100,000 and provided further that such
amount shall be prorated for those Members (based on amount of service as a
Member (as defined pursuant to Article IV)) for purposes of Company Profit
Sharing Contributions and Company Matching Contributions. In
addition, Compensation shall not include amounts paid to non-resident aliens
which do not constitute income from United States sources (within the meaning of
Code Section 862) except in the case of a non-resident alien who is a Member and
for whom the Company so specifies. Effective as of January 1, 2006,
Compensation of a Member in excess of $220,000 (or such other amount prescribed
under Code Section 401(a)(17), including any cost-of-living adjustments) shall
not be taken into account under the Plan for the purpose of determining
benefits.
Compensation
shall include Deemed 125 Compensation. “Deemed 125 Compensation”
shall mean, in accordance with Internal Revenue Service Revenue Ruling 2002-27,
2002-20 I.R.B. 925, any amounts not available to a Member in cash in lieu of
group health coverage because the Member is unable to certify that he or she has
other health coverage. An amount shall be treated as Deemed 125
Compensation only if the Employer does not request or collect information
regarding the Member’s other health coverage as part of the enrollment process
for the health plan.
Section
1.17
. “
Draw
” means
compensation received on a regular basis at a consistent rate which may be
offset against commissions earned by an Employee who does not receive base
salary.
Section
1.18
. “
ECMC Plan
” means the
Alliance Capital Management L.P. Profit Sharing Plan for Former Employees of
Equitable Capital Management Corporation as in effect immediately prior to
January 1, 1995.
Section
1.19
. (a) “
Employee
” means,
except as provided in Subsection (c), any person employed by an Employer or an
Affiliate, but excluding any person who is an independent
contractor.
(b)
An Excluded Employee (as defined in Subsection
(c)) shall be considered an Employee for all purposes under the Plan except
that:
(1)
an Excluded Employee may not become a Member while he remains
an Excluded Employee; and
(2)
a Member who becomes an Excluded Employee shall be an Inactive
Member while he remains an Excluded Employee.
(c)
An Excluded Employee shall mean an individual in the employ
of an Employer or an Affiliate who:
(1)
is employed by an Affiliate that is not an Employer;
or
(2)
included in a unit of employees covered by a collective
bargaining agreement between employee representatives and one or more Employers
or Affiliates, if retirement benefits were the subject of good faith bargaining
between such employee representatives and any such Employer or Affiliate;
or
(3)
is not an Excluded Employee under Paragraph (4) of this
Subsection (c) and is neither a resident nor a citizen of the United States, nor
receives “earned income”, within the meaning of Code Section 911(b), from an
Employer or Affiliate that constitutes income from sources within the United
States, within the meaning of Code Section 861(a)(3), unless the individual
became a Member prior to becoming a non- resident alien and the Company
stipulates that he shall not be an Excluded Employee; or
(4)
is not a citizen of the United States, unless the
individual (A) was initially engaged as an Employee by an Employer or an
Affiliate to render services entirely or primarily in the United States; or (B)
is an Employee of an Employer which is a United States entity, and unless, in
the case of an individual referred to in either Subparagraph (A) or (B) of this
Paragraph 4, the Company stipulates that he shall not be an Excluded Employee;
or
(5)
is accruing benefits and/or receiving
contributions under a retirement plan of an Affiliate which operates entirely or
primarily outside the United States other than this Plan or the Retirement Plan
for Employees of AllianceBernstein L.P. unless, in either case, the Company
stipulates that he shall not be an Excluded Employee; or
(6)
is a “Leased Employee.” For purposes of this
Plan, “Leased Employee” means, any person (other than an Employee of the
recipient) who pursuant to an agreement between the recipient and any other
person (“leasing organization”) has performed services for the recipient (or for
the recipient and related persons determined in accordance with Code Section
414(n)(6) on a substantially full time basis for a period of at least one year,
and such services are performed under primary direction or control by the
recipient employer.
Section
1.20
. “
Employer
” means the
Company and any Affiliate which, with the consent of the Board, has adopted the
Plan as a Member herein, and any successor to any such Employer.
Section
1.21
. “
Employment Commencement
Date
” means:
(a)
the date on which an Employee first performs an
Hour of Service; or
(b)
in
the case of a former Employee who has incurred a Break in Service, the date on
which he first completes an Hour of Service following his Severance from
Employment.
Section
1.22
. “
Entry Date
” means
January 1 and July 1 of each Plan Year after 1988. Notwithstanding
the foregoing, as provided in Section 2.01(b), for purposes of a Member’s
eligibility to make Member Salary Deferrals, “Entry Date” shall mean the first
day of the calendar month occurring after the completion of the Member’s first
regular payroll period; and further provided that, effective on and after
September 1, 2007, “Entry Date” shall mean the first day that is
administratively feasible as determined by the Investment Committee or the
Administrative Committee following the Employee’s Employment Commencement
Date.
Section
1.23
. “
Highly Compensated
Employee
” means an Employee who, with respect to the “determination
year”:
(a)
owned
(or is considered as owning within the meaning of Code Section 318) at any time
during the “determination year” or “look-back year” more than five percent of
the outstanding stock of the Employer or stock possessing more than five percent
of the total combined voting power of all stock of the Employer (the attribution
of ownership interest to “Family Members” shall be used pursuant to Code Section
318); or
(b)
who
received “415 Compensation” during the “look-back year” from the Employer in
excess of $80,000 and was in the Top Paid Group of Employees for the “look-back
year”.
The
“determination year” shall be the Plan Year for which testing is being
performed. The “look-back year” shall be the Plan Year immediately preceding the
“determination year.”
For
purposes of this Section, “415 Compensation” shall mean compensation reported as
wages, tips and other compensation on Form W-2 and shall include: (i) any
elective deferral (as defined in Code Section 402(g)(3)) and (ii) any amount
which is contributed or deferred by the Employer at the election of the Employee
and which is not includible in the gross income of the Employee by reason of
Code Sections 125, 132(f)(4), 401(k) or 457.
The
dollar threshold amount specified in (b) above shall be adjusted at such time
and in such manner as is provided in Regulations. In the case of such an
adjustment, the dollar limits which shall be applied are those for the calendar
year in which the “determination year” or “look-back year” begins.
In
determining who is a Highly Compensated Employee, Employees who are
nonresident aliens and who received no earned income (within the meaning of
Code Section 911(d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees.
Additionally,
all Affiliated Employers shall be taken into account as a single employer and
Leased Employees within the meaning of Code Sections 414(n)(2) and 414(o)(2)
shall be considered Employees unless such Leased Employees are covered by a plan
described in Code Section 414(n)(5) and are not covered in any qualified plan
maintained by the Employer. The exclusion of Leased Employees for this purpose
shall be applied on a uniform and consistent basis for all of the Employer’s
retirement plans. Highly Compensated Former Employees shall be
treated as Highly Compensated Employees without regard to whether they performed
services during the “determination year”.
Section
1.24
. “
Highly Compensated Former
Employee
” means a former Employee who had a separation year prior to the
“determination year” and was a Highly Compensated Employee in the year of
severance from employment or in any “determination year” after attaining age 55.
Highly Compensated Former Employees shall be treated as Highly Compensated
Employees. The method set forth in this Section for determining who is a “Highly
Compensated Former Employee” shall be applied on a uniform and consistent basis
for all purposes for which the Code Section 414(q) definition is
applicable.
Section
1.25
. (a) “
Hour of Service
”
means:
(1)
each hour for which an Employee is paid, or entitled to
payment, by an Employer or Affiliate for the performance of duties for such
Employer or Affiliate, credited for the Plan Year or other computation period in
which such duties were performed; or
(2)
each hour of a period during which no duties are performed due
to vacation, holiday, illness, incapacity, layoff, jury duty, military duty or
leave of absence, determined in accordance with the following rule: he shall be
credited with (45) Hours of Service for each week or partial week of the period
of absence.
(3)
each hour during the Employee’s period of service in the Armed
Forces of the United States, credited on the basis of forty (40) Hours of
Service for each week, or eight (8) Hours of Service for each weekday, of such
service, if the Employee retains re-employment rights under the Military
Selective Service Act and is re-employed by an Employer or Affiliate within the
period provided by such Act; and
(4)
each hour for which an Employee has been awarded, or is
otherwise entitled to, back pay from an Employer or Affiliate, irrespective of
mitigation of damages, if he is not entitled to credit for such hour under any
other paragraph in this Subsection (a).
(5) (A) solely
for purposes of Section 1.10, each hour of an Employee’s absence commencing on
or after January 1, 1985:
(i)
by reason of leave pursuant to the FMLA;
(ii)
by reason of the pregnancy of such Employee;
(iii)
by
reason of the birth of a child of such Employee;
(iv)
by
reason of the placement of a child in connection with the adoption of such child
by the Employee; or
(v)
for purposes of caring for such child for a period
beginning immediately following such birth or placement, determined in
accordance with Subparagraphs (B), (C) and (D).
(B)
The
number of hours credited to an Employee pursuant to Subparagraph (A) shall
be:
(i)
the number of hours which otherwise would normally have
been credited to such Employee but for such absence; or
(ii)
in any case in which the Plan cannot determine the
number of hours which would normally be credited to such individual, a total of
eight (8) Hours of Service for each day of such absence,
except
that the total number of Hours of Service credited to an Employee under this
Paragraph (5) shall not exceed 501 Hours of Service for any such period of
absence.
(C)
The
Hours of Service credited to an Employee pursuant to this Paragraph (5) shall be
credited:
(i)
only in the Anniversary Year in which such period of absence
began, if such Employee would be prevented from incurring a Break in Service in
such Anniversary Year solely because of the crediting of Hours of Service during
such period of absence pursuant to this Paragraph (5); or
(ii)
in any other case, in the Anniversary Year next succeeding the
commencement of such period of absence.
(D)
Notwithstanding
the foregoing, an Employee shall not be credited with Hours of Service pursuant
to this Paragraph (5) unless such Employee shall furnish to the Administrative
Committee, on a timely basis, such information as the Administrative Committee
shall reasonably require to establish:
(i)
that the absence from work is for a reason described in
Subparagraph (A) hereof; and
(ii)
the number of days during which such absence
continued.
(b)
The number of Member’s Hours of Service and the
Plan Year or other computation period to which they are to be credited shall be
determined in accordance with Section 2530.200b-2 of the Rules and Regulations
for minimum Standards for Employee Pension Benefit Plans, which Section is
hereby incorporated by reference into this Plan.
(c)
An Employee’s Hours of Service need not be determined from
employment records, and such Employee may, in accordance with uniform and
non-discriminatory rules adopted by the Administrative Committee, be credited
with forty-five (45) Hours of Service for each week in which he would be
credited with any Hours of Service under the provisions of Subsection (a) or
(b).
Section
1.26
. “
Inactive Member
”
means a Member described in Section 2.02(b). An Inactive Member shall
be treated as a Member for purposes of Article VIII and Section 12.03, but shall
not otherwise be deemed a Member of the Plan.
Section
1.27
. “
Independent
Fiduciary
” means a person or entity who is not an employee or officer of
the Company or its Affiliates who is appointed by the Company pursuant to
Section 12.07 to perform the functions described therein.
Section
1.28
. “
Initial Automatic Enrollment
Percentage
” means the percentage of a Member’s Salary Reduction
Compensation as defined in Section 5.01(c) that is contributed to his Member
Salary Deferral Account where a Member fails to make an affirmative election of
a Member Salary Deferral percentage. The Initial Automatic Enrollment
Percentage shall be three percent (3%).
Section
1.29
.
“
Investment Committee
”
means the investment committee appointed by the Board pursuant
to Section 12.02.
Section
1.30
. “
Investment Fund
”
means those investment funds which may, from time to time, be made available for
investment pursuant to Article VIII.
Section
1.31
. “
Leave of Absence
”
means any absence or leave approved by an Employee’s Employer.
Section
1.32
. “
Loan Account
” means
the account maintained by the Administrative Committee for a “Borrower” as
defined in Section 8.07 in which a loan by the Borrower made pursuant to that
Section is held.
Section
1.33
. “
Member
” means any
person who has been admitted to membership in this plan pursuant to Section 2.01
or 2.03 and whose membership has not terminated pursuant to Section
2.02. In addition, for purposes of Article VIII and Section 12.03,
the term “Member” includes a former Member or Beneficiary for whom an Account is
maintained under the Plan.
Section
1.34
. “
Member Contributions
Account
” means the Account maintained for a Member in which are held (a)
voluntary contributions made under the Plan by the Member prior to 1989, if any,
(b) “member contributions” (as defined in the ECMC Plan) made under the ECMC
Plan prior to January 1, 1995, if any, (c) after-tax contributions made under
the SCB Savings or Cash Option Plan for Employees, if any, and (d) After-Tax
Rollover Contributions made hereunder on or after September 1, 2007, if
any.
Section
1.35
. “
Member Salary
Deferral
” means an elective salary deferral made by a Member in
accordance with Section 5.01.
Section
1.36
. “
Member Salary Deferral
Account
” means the Account of a Member established pursuant to Section
8.02 consisting of the balance attributable to his Member Salary
Deferrals. The balance of a Member Salary Deferral Account does not
include Roth Elective Deferrals.
Section
1.37
. “
Normal Retirement
Date
” means the first day of the calendar month coincident with or next
following a Member’s sixty-fifth (65th) birthday.
Section
1.38
. “
Permanent Disability
”
means a physical or mental disability which a licensed physician acceptable to
the Company has certified as permanent or likely to be permanent and as
rendering the Member unable to perform his customary duties. In the
determination of Permanent Disability, the Company shall act in a uniform and
non-discriminatory manner with respect to all Employees similarly
situated.
Section
1.39
. “
Plan
” means this
Profit Sharing Plan, as herein set forth, and as hereafter amended from time to
time.
Section
1.40
. “
Plan Year
” means the
calendar year.
Section
1.41
. “
Required Beginning
Date
” means
(a)
for a Member who is not a 5-percent
owner (as defined in Code Section 416) in the Plan Year in which he attains age
70½ and who attains age 70½ after December 31, 1998, April 1 of the calendar
year following the calendar year in which occurs the later of the Member’s (i)
attainment of age 70½ or (ii) Retirement.
(b)
for a Member who (i) is a 5-percent owner (as
defined in Code Section 416) in the Plan Year in which he attains age 70½, or
(ii) attains age 70½ before January 1, 1999, April 1 of the calendar year
following the calendar year in which the Member attains age 70½.
Notwithstanding
the foregoing, effective January 1, 2004, the Required Beginning Date of any
Member who attained age 70½ prior to January 1, 1998 is the April 1 of the
calendar year following the calendar year in which occurs the later of the
Member’s (i) attainment of age 70½ or (ii) Severance from Employment; provided
that, if such a Member who has commenced receiving minimum distributions in
accordance with Code Section 401(a)(9) does not elect, pursuant to Section
11.08(h) of the Plan, to cease receiving such minimum distributions, the
Required Beginning Date of such Member shall be age 70½.
Section
1.42
. “
Retirement
” means a
Severance from Employment (a) on or after a Member’s Normal Retirement Date; or
(b) on account of his Permanent Disability.
Section
1.43
. “
Rollover Account
”
means the Account attributable to contributions and transfers referred to in
Section 5.03(a).
Section
1.44
. “
Rollover
Contribution
” means an amount contributed or transferred to the Trust in
accordance with Section 5.03(a).
Section
1.45
. “
Roth Elective
Deferral
” means an elective deferral made in accordance with Section 6.01
that is
(a)
designated
irrevocably by the Member at the time of the cash or deferred election as a Roth
elective deferral that is being made in lieu of all or a portion of the pre-tax
elective deferrals the Member is otherwise eligible to make under the Plan;
and
(b)
treated
by the Employer as includible in the Member’s income at the time the Member
would have received that amount in cash if the Member had not made a cash or
deferred election.
Section
1.46
. “
Roth Elective Deferral
Account
” means the Account attributable to Roth Elective Deferrals
referred to in Section 6.02.
Section
1.47
. “
Severance from
Employment
” means termination of employment with an Employer or Affiliate
for any reason; provided, however, that no Severance from Employment shall be
deemed to occur upon an Employee’s transfer from the employ of one Employer or
Affiliate to another Employer or Affiliate.
Section
1.48
. “
Testing Compensation
”
means income reported as wages, tips and other compensation on Form W-2 plus
pre-tax deductions under Code Sections 125, 132(f), 401(k), and
402(g)(3). Testing Compensation shall include Deemed 125
Compensation, as defined in Section 1.16 of the Plan.
Section
1.49
.
“Top Paid Group”
means the top 20 percent of Employees who performed services for the Employer
during the applicable year, ranked according to the amount of “415 Compensation”
(determined for this purpose in accordance with Section 1.23) received from the
Employer during such year. All Affiliated Employers shall be taken into account
as a single employer, and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are not
covered in any qualified plan maintained by the Employer. Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code Section 911(d)(2) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, for the purpose of determining the number of active
Employees in any year, the following additional Employees shall also be
excluded; however, such Employees shall still be considered for the purpose of
identifying the particular Employees in the Top Paid Group:
|
(a)
|
Employees
with less than six (6) months of
service;
|
|
(b)
|
Employees
who normally work less than 17 ½ hours per
week;
|
|
(c)
|
Employees
who normally work less than six (6) months during a year;
and
|
|
(d)
|
Employees
who have not yet attained age 21.
|
Section
1.50
. “
Trust
” means the
trust established pursuant to the Trust Agreement to hold the assets of the
Plan.
Section
1.51
. “
Trust Agreement
”
means the trust agreement providing for the Trust Fund.
Section
1.52
. “
Trust Fund
” means all
the assets of the Plan which are held by the Trustee under the Trust
Agreement.
Section
1.53
. “
Trustee
” means the
trustee or trustees from time to time in office under the Trust
Agreement.
Section
1.54
. “
Unallocated Forfeitures
Account
” means the Account to be maintained by the Administrative
Committee pursuant to Section 10.06(b).
Section
1.55
“
Uncashed Check
Account
” means the Account to be maintained by the Administrative
Committee pursuant to Section 10.06(d).
Section
1.56
. “
Unit
” means a unit
representing the assignment of beneficial ownership of limited partnership
interests in AllianceBernstein Holding L.P.
Section
1.57
. “
Years of Service
”
means the aggregate period of service with which an Employee is credited under
the provisions of Article III.
ARTICLE
II
MEMBERSHIP
|
Section
2.01
.
|
Admission to the
Plan
.
|
(a)
Each individual who was a Member of the Plan on
December 31, 1988 and who did not cease to be a Member on that date shall
continue to be a Member on January 1, 1989. Each Employee whose
Employment Commencement Date was before January 1, 1989 and who prior to January
1, 1989 completed at least one (1) Year of Service shall become a Member on
January 1, 1989, or on the first Entry Date subsequent to the date on which he
attains his twenty-first (21st) birthday, whichever is later, provided he is an
Employee on such January 1, 1989 or other Entry Date, as applicable. Each
Employee who would have been eligible to participate in the ECMC Plan as of
January 1, 1995, if the ECMC Plan had not been merged with and into this Plan
effective that date, shall become a Member of this Plan on January 1,
1995. Any person who was either (i) a participant in the SCB Savings
or Cash Option Plan for Employees prior to December 31, 2003 or (ii) eligible to
participate in the SCB Savings or Cash Option Plan for Employees prior to
December 31, 2003, shall become a Member for all purposes of the Plan on January
1, 2004, or if not an Employee on January 1, 2004, on the Employee’s rehire
date.
(b)
(i) Except as otherwise provided in Section
2.01(a) or 2.03, an Employee of an Employer shall become a Member of the Plan
solely for purposes of eligibility to make Member Salary Deferrals, on the first
Entry Date subsequent to the Employee’s Employment Commencement Date (and, prior
to January 1, 2007, or, if later, the first Entry Date subsequent to the date on
which he attains his twenty-first (21st) birthday).
(ii)
Except
as otherwise provided in Section 2.01(a) or 2.03, an Employee of an Employer
shall become a Member of the Plan, solely for purposes of eligibility to receive
Company Contributions under Articles IV and VII, on the later of:
(A)
the
first Entry Date subsequent to the date on which he attains his twenty-first
(21st) birthday, or
(B)
the
first Entry Date subsequent to the first Anniversary Year in which he completes
one (1) Year of Service.
(c)
Each
Employee who is employed by an Affiliate that is not an Employer and who
subsequently becomes an Employee of an Employer shall become a Member of the
Plan:
(1) immediately
upon becoming an Employee of such Employer, if he previously satisfied the age
(if any) and service requirements of Subsection (b); or
(2) in
accordance with Subsection (b), if he does not become a Member pursuant to
Subsection (c)(1).
(d)
Notwithstanding
anything contained herein to the contrary, an individual
classified by the Employer at the time services are provided as
either an independent contractor, or an individual who is not classified as an
Employee due to an Employer’s treatment of any services provided by him as being
provided by another entity which is providing such individual’s services to the
Employer, shall not be eligible to participate in this Plan during the period
the individual is so initially classified, even if such individual is later
retroactively reclassified as an Employee during all or part of such period
during which services were provided pursuant to applicable law or
otherwise. Leased Employees will not be eligible to participate in
this Plan.
|
Section
2.02
.
|
Termination of
Membership and Inactive
Membership
.
|
(a)
A
Member shall cease to be a Member as of the date of his Severance from
Employment, if he incurs a Break in Service in the Anniversary Year of such
Severance from Employment or in the following Anniversary Year.
(b)
A
Member shall become an Inactive Member as of the last day of his first
Anniversary Year in which he completes five hundred (500) or fewer Hours of
Service without having incurred a Severance from Employment. An
Inactive Member shall continue to be such until either (1) the date on which he
ceases to be a Member pursuant to Subsection (a) or (2) the date on which he
again becomes a Member pursuant to Section 2.03.
|
Section
2.03
.
|
Readmission to the
Plan
.
|
A
former Member shall again become a Member coincident with or immediately after
the date he becomes an employee, provided he is an Employee of an Employer on
such rehire date. An Inactive Member shall become a Member coincident
with or immediately after the date he returns to active employment.
|
Section
2.04
.
|
Designation of
Beneficiary
.
|
(a)
Each
Member may designate in writing on a form prescribed by and filed with the
Administrative Committee, a Beneficiary to receive the aggregate balance of his
Accounts and his Loan Account, if any, in the event that his death should occur
before the entire amount of such balance has been paid to him, except that if
the Member has an Eligible Spouse, such designation shall not be effective
unless the Eligible Spouse has consented in writing to the designation of a
Beneficiary other than such Eligible Spouse and such consent is witnessed by a
member of the Administrative Committee or a Notary Public. In
addition, such designation may include the designation of a secondary
Beneficiary to receive such death benefit if the primary Beneficiary does not
qualify or survive.
(b)
If
no Beneficiary has been designated, or if, for any reason no person qualifies as
a Beneficiary at the time of the Member’s death, or if no designated Beneficiary
survives the Member, the interest of the deceased Member shall be paid to the
Eligible Spouse. If the Member has no Eligible Spouse, the
Administrative Committee may, but shall not be required to, designate a
Beneficiary, but only from among the Member’s spouse, descendants (including
adoptive descendants), parents, brothers and sisters or nephews and nieces and
may consider requests from any Beneficiary which it designates as to the manner
of payment of the benefit. If the Administrative Committee declines
to make such designation, the benefit payable hereunder upon the
Member’s death shall be paid in a lump sum to his
estate.
(c)
“Eligible
Spouse” means, subject to applicable federal law and except to the extent as may
otherwise be provided in any “qualified domestic relations order” within the
meaning of Code Section 414(p):
(1) in
the case of a Member who dies before the distribution of his Retirement benefit
pursuant to Section 11.01, his lawfully married spouse on the date of his
death.
(2) in
the case of a Member who dies after the commencement of any installment payment
pursuant to Section 11.01, his lawfully married spouse on the date such payments
commenced.
Section
2.05
.
Qualified Military Service
Provisions
.
Notwithstanding
any provision of this Plan to the contrary, effective as of December 12, 1994,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with Code Section
414(u).
ARTICLE
III
CREDITING OF
SERVICE
|
Section
3.01
|
Year of
Service
.
|
Each
Employee shall be credited with one Year of Service for each Anniversary Year
ending after December 31, 1975 during which he completes more than five hundred
(500) Hours of Service; provided, however, that:
(a)
if an individual becomes a Member of
the Plan after December 31, 1975, he shall not receive credit for a Year of
Service for any Anniversary Year before the Anniversary Year in which he first
completes one thousand (1,000) Hours of Service; and
(b)
an
Employee shall be credited with a Year of Service for the last Anniversary Year
during which he is an Employee only if he completes at least one thousand
(1,000) Hours of Service in such Anniversary Year.
|
Section
3.02
|
Number of Years of
Service
.
|
An
Employee’s aggregate number of Years of Service shall be computed by adding (a)
his number of Years of Service completed since his last Break in Service, if
any, and (b) the number of Years of Service restored pursuant to Section
3.03.
|
Section
3.03
.
|
Restoration of
Service
.
|
(a)
If
a former Member again becomes a Member after having incurred a Break in Service,
he shall be credited with the Years of Service which he had completed prior to
such Break in Service for all purposes.
(b)
If a former Member:
(1)
has incurred a number of consecutive Breaks in
Service which equals or exceeds the greater of (A) five (5) or (B) the number of
his Years of Service before such Breaks in Service;
(2)
never had a vested interest in his Salary Deferral
Account or Roth Elective Deferral Account and had no vested interest in his
Company Contributions Account at the time of such Break in Service;
and
(3)
again becomes a Member,
his
Years of Service prior to such Breaks in Service shall be disregarded for all
purposes under this Plan.
|
Section
3.04
.
|
Service with
Non-employer Affiliates
.
|
Any
Years of Service completed by an Employee while in the employ of an Affiliate
that is not an Employer shall be credited under this Article III on the same
basis as service with an Employer.
|
Section
3.05
.
|
Service with Equitable
Capital Management
Corporation
.
|
For
purposes of determining an Employee’s eligibility to participate in the Plan
under Article II and vesting under Section 10.04, the Employee shall be credited
under the Plan with the number of “hours of service” and “years of service”, as
such terms are defined in the ECMC Plan, credited to that Employee for the
corresponding purpose under the ECMC Plan immediately prior to January 1, 1995,
including service credited under the Equitable Investment Plan for Employees,
Managers and Agents maintained by The Equitable Life Assurance Society of the
United States, but disregarding in determining such Employee’s eligibility to
participate and vesting under this Plan any periods of service which were
disregarded under the ECMC Plan, such as service disregarded due to “breaks in
service”, as defined in the ECMC Plan. Notwithstanding anything to
the contrary in this Section 3.05 or elsewhere in the Plan, no period shall be
taken into account more than once in determining the Hours of Service and Years
of Service of any Employee by reason of this Section 3.05.
|
Section
3.06
.
|
Service with Shields
and Regent
.
|
For
purposes of determining an Employee’s eligibility to participate in the Plan
under Article II and vesting under Section 10.04, in the case of an Employee who
was an employee of either Shields Asset Management, Incorporated (“Shields”) or
Regent Investor Services Incorporated (“Regent”) on March 4, 1994 and on that
date became an Employee of an Employer or an Affiliate, the Employee’s service
with Shields or Regent on or prior to such date shall be considered as service
with an Employer or an Affiliate.
|
Section
3.07
.
|
Cursitor
Service
.
|
For
purposes of determining an Employee’s eligibility to participate in the Plan
under Article II and vesting under Section 10.04, in the case of an Employee who
was an employee of Cursitor Holdings, L.P. or Cursitor Holdings Limited
(individually and collectively, “Cursitor”) on February 29, 1996, and on that
date either was employed by or continued in the employment of Cursitor Al1iance
LLC, Cursitor Holdings Limited, Draycott Partners, Ltd. or Cursitor-Eaton Asset
Management Company, the Employee’s service with Cursitor on or prior to that
date shall be considered as service with an Emp1oyer or an
Affiliate.
|
Section
3.08
.
|
Sanford Bernstein
Members
.
|
With
respect to each Employee who was an employee of either Sanford C. Bernstein
& Co, Inc. (“SCB”) or Bernstein Technologies Inc. (“BTI”) or one of their
respective subsidiaries and who became an Employee of an Employer or an
Affiliate on or after October 2, 2000, the Employee’s service with SCB, BTI and
their respective subsidiaries on or prior to such date shall be considered as
service with an Employer or Affiliate.
ARTICLE
IV
COMPANY
CONTRIBUTIONS
|
Section
4.01
.
|
Company Profit Sharing
Contributions
.
|
The
Board shall determine the Company Contribution, if any, which shall be
contributed to the Trust Fund out of the Company’s current and accumulated
earnings and allocated to the Members’ Company Contributions Accounts pursuant
to Article VII in respect of each Plan Year. No Company Contribution
under this Section 4.01 or Section 4.02 may be made which cannot be allocated
under the provisions of Article XVII. For purposes of this Section
4.01 and Section 4.02, “current and accumulated earnings” means current and
accumulated net income for book purposes. Notwithstanding anything herein to the
contrary, a Member for purposes of Article IV means only those Employees who
have satisfied the applicable age and service requirements of Sections 2.01(a),
(b)(ii) or (c).
|
Section
4.02
.
|
Company Matching
Contributions
.
|
Effective
for Plan Years beginning after December 31, 1989, the Company shall contribute
to the Trust Fund out of the Company’s current and accumulated earnings an
amount equivalent to that percentage, not to exceed 100% of each Member’s Member
Salary Deferral elected for the Plan Year involved, such percentage to be fixed
by the Board; provided that the Company may establish a limit on the amount of
Member Salary Deferrals that are so matched specified either as a dollar amount
or as a percentage of Compensation and provided further that any such
limit may be established based on the period in which any individual is a Member
of the Plan. The contribution determined under this Section 4.02 for
a particular Member shall be allocated to the Member’s Company Contributions
Account on the basis of that Member’s Member Salary Deferrals for that Plan
Year, subject to any Company-established limits on Member Salary Deferrals to be
matched for that Plan Year. For purposes of this Section 4.02, no
contribution shall be made pursuant to this Section 4.02 with respect to
Catch-up Contributions.
|
Section
4.03
.
|
Time of
Contributions
.
|
Contributions
may be made in one or more installments at such time or times during the Plan
Year, or during any additional period provided by law for the making of
contributions in respect of such Plan Year, as the Company shall
determine. Except as otherwise provided in the Plan, for purposes of
valuing the Trust Fund and making allocations to Accounts, all contributions in
respect of any Plan Year shall be deemed to have been made on the last
Accounting Date of the Plan Year, regardless of the actual date of
contribution.
|
Section
4.04
.
|
Irrevocability of
Contributions
.
|
(a)
Except
as provided in Subsection (b), any and all contributions made by the Company
shall be irrevocable and shall be transferred to the Trustee to be used in
accordance with the provisions of this Plan for providing the benefits and
paying the expenses thereof. Neither such contributions nor any
income therefrom shall be used for, or diverted to, purposes other than for the
exclusive benefit of Members or their Beneficiaries and payment of expenses of
this Plan and the Trust.
(b)
(1)
If any contribution is made to this Plan by a
mistake of fact, such contribution shall be returned to the Company within one
(1) year following the date that such contribution is made.
(2)
Each Company Contribution made to this Plan is conditioned upon its
deductibility under Code Section 404. Each contribution, to the
extent disallowed as a deduction, may be returned to the Company within one (1)
year following the date of disallowance.
ARTICLE
V
MEMBER SALARY DEFERRAL
ELECTIONS,
SALARY DEFERRAL
CONTRIBUTIONS
AND ROLLOVER
CONTRIBUTIONS
|
Section
5.01
.
|
Member Salary Deferral
Elections
.
|
(a) For
each Plan Year beginning after December 31, 2005, any Member may elect to defer
the receipt of a portion of his “Salary Reduction Compensation” while a Member
for the Plan Year, in such increments that the Board, the Investment Committee
or the Administrative Committee may decide, and direct the Employer
to contribute the amount so deferred into the Trust to be invested in the
Investment Fund or Funds designated by the Member. A Member’s
election shall be made in a form prescribed by the Administrative Committee
filed with the Member’s Employer, prior to the date that the
Compensation would, but for the election, be made available to the Member, and
the election shall remain in effect until it is modified or terminated, all in
accordance with rules established by the Administrative Committee. In
no event may a Member’s salary deferral exceed the $15,000 dollar limitation (or
any higher amount that may be allowed by Treasury Regulations), as provided in
Code Section 402(g). Any Member’s salary deferral for any pay period may be
further adjusted, at the Administrative Committee’s direction and discretion, to
comply with the discrimination standards applicable to Code Section 401(k)
arrangements in particular, to all plans qualified under Code Section 401(a) in
general, and/or with the limitations contained in Article XVII.
(b) (1)
Effective on and after September 1, 2007, in accordance
with any rules, regulations and/or administrative guidelines prescribed by the
Investment Committee or the Administrative Committee and unless and until
otherwise elected by a Member, a Member who fails to make an affirmative
election with regard to his Member Salary Deferral percentage shall be deemed as
having made an election (A) to make contributions to his Member Salary Deferral
Account pursuant to Section 5.01(a) equal to the Initial Automatic Enrollment
Percentage and (B) if no proper election is on file, to invest such
contributions in the Investment Fund or Funds prescribed by the Investment
Committee in its sole discretion for such purpose. For purposes of
this Section 5.01(b), an Employee who satisfies the requirements to be a Member
and whose deferral percentage in effect as of the first payroll period on or
after September 1, 2007 is zero percent (0%) and who has no Member Salary
Deferral Account balance shall be auto-enrolled hereunder unless such Employee
makes an affirmative election regarding his enrollment in accordance with the
rules, regulations and/or administrative guidelines prescribed by the Investment
Committee or the Administrative Committee.
(2)
Effective with respect to Plan Years beginning on or after January
1, 2009, an Employee who satisfies the requirements to be a Member as of the
first payroll period commencing on or after each February 1 and whose Member
Salary Deferral percentage in effect for such payroll period is zero percent
(0%) shall be auto-enrolled hereunder effective with the first administratively
feasible payroll that occurs sixty (60) days after that payroll date, unless
such Employee makes an affirmative election regarding his enrollment in
accordance with the rules, regulations and/or administrative guidelines
prescribed by the Investment Committee or the Administrative
Committee.
(3)
Effective on and after January 1, 2009, unless or until
a Member makes an affirmative election otherwise, such a Member’s deemed
election shall automatically be increased by one percent (1%) each January 1 to
a maximum of five percent (5%) of Salary Reduction Compensation; provided,
however, that if a Member’s Employment Commencement Date occurs on or after July
1 of a Plan Year, such automatic increase shall not apply in the following Plan
Year. No deemed election nor automatic increase described in this
Section 5.01(b) shall result in the Member’s salary deferral exceeding the
deferral limitation set forth in Section 5.01(a) above without respect to
Catch-up Contributions under Section 5.07. The Investment Committee
or the Administrative Committee may establish and adopt written rules,
regulations and/or administrative guidelines designed to facilitate the
administration and operation of the provisions of this paragraph, as it may deem
necessary or proper, in its sole discretion.
(4)
Notwithstanding this Section 5.01(b), a
Member may affirmatively elect to make contributions to his Member Salary
Deferral Account in an amount equal to, less than or greater than the Initial
Automatic Enrollment Percentage or the automatically increased contribution
percentage, as applicable subject to such deferral limitation.
(c) “Salary
Reduction Compensation” means a Member’s base salary, Draw and other draws,
overtime pay, bonuses and commissions received for services rendered to an
Employer, which term shall include the amount of a Member’s Member Salary
Deferral and any other salary deferrals pursuant to Code Sections 401(k), 125 or
132(f), but shall not include, by way of example rather than by way of
limitation, severance pay, distributions on Units, reimbursement for moving
expenses, reimbursement for educational or other expenses, contributions or
benefits paid under this Plan or any other plan of deferred compensation,
expatriate tax equalization or similar payments, or any other extraordinary item
of compensation or income. In addition, Salary Reduction Compensation shall not
include amounts paid to non-resident aliens which do not constitute income from
United States sources (within the meaning of Code Section 862) except in the
case of a non-resident alien who is a Member and for whom the Company so
specifies. Salary Reduction Compensation shall include Deemed 125
Compensation, as defined in Section 1.16 of the Plan. Salary
Reduction Compensation may also include regular pay after Severance from
Employment if: (i) the payment is regular compensation from services rendered
during the Member’s regular working hours, or compensation for services outside
the Member’s regular working hours (such as overtime or shift differential),
commissions, bonuses, accrued sick pay or vacation pay, or other similar
payments; and (ii) the payment would have been made to the Member prior to
Severance from Employment if the Member had continued in employment with the
Employer, provided such amounts are paid no later than the later of two and
one-half (2-1/2) months following Severance from Employment or the last day of
the Plan Year in which the Severance from Employment occurs. Salary
Reduction Compensation for any Plan Year shall not exceed the applicable Code
Section 401(a)(17) dollar limit. All Member Salary Deferrals shall
cease in the payroll period in which Severance from Employment occurs or as soon
as administratively feasible thereafter.
|
Section
5.02
.
|
Allocation of Member
Salary Deferral Elections
.
|
A
Salary Deferral Election made in accordance with Section 5.01 shall be allocated
among the Investment Funds in accordance with the provisions of Section
8.03.
|
Section
5.03
.
|
Rollover Contributions
and After-Tax Rollover
Contributions
.
|
(a)
An
Employee may, with the consent of the Administrative Committee, contribute to
the Plan, or authorize the plan sponsor, administrator or trustee of a qualified
employee benefit plan in which he previously participated to transfer to the
Trust, any distribution or other payment or amount which is permitted to be
contributed or transferred to the Trust in accordance with Code Section 402,
403(a) or 408(d)(3)(A)(ii) or any other applicable provision of the Code or the
regulations or rulings thereunder permitting the contribution or
transfer. Any such Rollover Contribution shall be received by the
Trustee subject to the condition precedent that its transfer complies in all
respects with the requirements of the applicable Code provisions, regulations or
rules pertaining thereto and, upon any discovery that any such contribution or
transfer does not so comply, the amount of the Rollover Contribution, together
with all changes in the value of the Trust Fund allocated thereto, shall revert
to the individual by or on whose behalf it was made as of the next following
Accounting Date. The decision of the Administrative Committee for the
Trust to accept a Rollover Contribution shall not give rise to any liability by
the Administrative Committee, the Company, the Plan or the Trustee to the
Employee or any other party on account of a subsequent determination that such
Rollover Contribution does not qualify to be held in the Trust. A
Rollover Contribution may, subject to the consent of the Administrative
Committee, be made at any time during the Plan Year, shall not be subject to the
limitations of Article XVII, and shall as of the Accounting Date next following
receipt of the Rollover Contribution by the Trustee be allocated in full to the
Member’s Rollover Account except as regards the amount thereof equal to the
Member’s voluntary contributions, if any, to a qualified plan, which amount
shall be allocated to the Member’s Member Contributions
Account. Until so allocated the amount of a Rollover Contribution
shall be held unallocated in the Trust Fund.
Notwithstanding
the foregoing provisions of this Section, effective January 1, 2004, the Plan
will accept a Rollover Contribution from a qualified plan described in Sections
401(a) or 403(a) of the Code, an annuity contract described in Section 403(b) of
the Code and an eligible plan under Section 457(b) of the Code which is
maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state and the portion
of a distribution from an individual retirement account or annuity described in
Section 408(a) or 408(b) of the Code that is eligible to be rolled over and
would otherwise be includible in the Member’s taxable gross income.
(b)
Subject
to the provisions of Section 5.03(a) above, effective on and after September 1,
2007, the Plan shall accept a rollover of After-Tax Rollover Contributions that
would not otherwise be includible in the Member’s taxable gross
income. Prior to such date, a rollover of after-tax employee
contributions is not permitted hereunder.
(c)
Notwithstanding
anything herein, the Plan will accept a rollover contribution of Roth Elective
Deferrals only if it is a direct rollover from another Roth elective deferral
account under an applicable retirement plan described in Code Section 402A(e)(1)
and only to the extent the rollover is permitted under the rules of Code Section
402(c).
(d)
Each
Employee or former Employee who becomes a participant in a pension, profit
sharing or stock bonus plan described in Code Section 401(a) (a “transferee
plan”) may, not later than thirty (30) days (or such lesser period as is
acceptable to the Administrative Committee) prior to any Accounting Date,
request the Administrative Committee to direct the Trustees to, and upon such
request, the Administrative Committee in its sole discretion may direct the
Trustees to, transfer in cash the nonforfeitable balance in such Employee’s
Accounts to an account maintained by any such transferee plan on the Employee’s
behalf, as of such Accounting Date; provided, however, that such transferee
plan permits such transfer.
(e)
Any
Employee who makes or causes to be made a contribution or transfer pursuant to
Subsections (a) or (b) and who has not become a Member pursuant to the
provisions of Article II shall, except for purposes of Sections 4.01, 5.01 and
7.01, be considered a Member of this Plan.
|
Section
5.04
.
|
Return of Excess
Member
Salary Deferral
Elections
.
|
(a)
Notwithstanding any other provisions of the Plan, a Member may
request the Administrative Committee in writing by no later than the March 1
following the end of the preceding calendar year, to have distributed to the
Member from the Trust the amount of the Member Salary Deferrals which are in
excess of the amount permitted under Code Section 402(g) for such calendar year
(“Excess Deferrals”).
(b)
Excess Deferrals claimed under Subsection (a) and any income allocable to
such amount including, as of January 1, 2006, income attributable to the period
between the end of the Plan Year and the date of distribution, in accordance
with applicable Treasury Regulations, shall be distributed from the Plan no
later than April 15 of the calendar year in which the request was
made. This Section 5.04 shall also apply to amounts deferred under
the terms of Section 6.02(c) for Plan Years beginning after December 31,
1986.
|
Section
5.05
.
|
Actual Deferral
Percentage Test
.
|
(a)
As
used in this Section 5.05, each of the following terms shall have the meaning
for that term set forth in this Section 5.05:
(i)
Actual Deferral
Percentage
means the ratio (expressed as a percentage) of
Member Salary Deferrals (other than Excess Deferrals of non-Highly
Compensated Employees made under plans maintained by the Company or an
Affiliate) on behalf of the Member for the Plan Year to the Member’s Testing
Compensation for the Plan Year.
(ii)
Average
Actual Deferral Percentage
means the average (expressed as a percentage)
of the Actual Deferral Percentages of the Members in a group, including those
Members whose Actual Deferral Percentage is zero.
(b)
For
each Plan Year, the amount of Member Salary Deferrals shall be subject to the
following:
(i)
For Plan Years beginning on or after January 1, 2001,
the Average Actual Deferral Percentage for Members who are Highly Compensated
Employees for the Plan Year must satisfy one of the following
tests:
(A)
The Average Actual Deferral
Percentage for Members who are Highly Compensated Employees for the Plan Year
shall not exceed the Average Actual Deferral Percentage for Members who are
non-Highly Compensated Employees for the Plan Year multiplied by 1.25;
or
(B)
The Average Actual Deferral
Percentage for Members who are Highly Compensated Employees for the Plan Year
shall not exceed the Average Actual Deferral Percentage for Members who are
non-Highly Compensated Employees for the Plan Year multiplied by 2.0, provided
that the Average Actual Deferral Percentage for Members who are Highly
Compensated Employees does not exceed the Average Actual Deferral Percentage for
Members who are non-Highly Compensated Employees by more than two (2) percentage
points.
(ii)
For Plan Years prior to 1997, the Excess Contributions
(as defined in Section 5.06) under the Plan shall be eliminated by reducing the
Member Salary Deferral of each Highly Compensated Employee in order of Actual
Deferral Percentage beginning with the highest percentage. For Plan Years after
1996, the Excess Contributions (as defined in Section 5.06) under the Plan shall
be eliminated by reducing the Member Salary Deferral of each Highly Compensated
Employee in order of the dollar amount of Member Salary Deferrals on behalf of
such Highly Compensated Employee, beginning with the highest dollar
amount.
(c)
For
purposes of determining the Actual Deferral Percentage of a Member for a Plan
Year, a Member Salary Deferral shall be taken into account only if such Member
Salary Deferral: (i) is attributed to the Member’s Account as of a
date within the Plan Year; (ii) is not contingent upon any subsequent event
(except as may be necessary to comply with the Code); (iii) is actually paid to
the Trust within one year of the end of the Plan Year; and (iv) relates to
Salary Reduction Compensation which would have been received by the Member in
the Plan Year but for the Member’s election to defer. Any Member
Salary Deferral that fails to satisfy the foregoing requirements shall be
treated as a contribution by the Employer which is not subject to Code Section
401(k) or 401(m).
(d)
(i)
For purposes of this Section 5.05, the Actual Deferral
Percentage for any Member who is a Highly Compensated Employee for the Plan Year
and who is eligible to have elective deferrals allocated to his or her account
under two or more plans or arrangements described in Code Section 401(k) that
are maintained by the Company or an Affiliate shall be determined as if all such
elective deferrals were made under a single arrangement.
(ii)
If two or more plans are aggregated
for purposes of Code Section 410(b) or 401(a)(4), such plans shall be aggregated
for purposes of the Average Actual Deferral Percentage test.
|
Section
5.06
.
|
Return of Excess
Contributions
.
|
(a)
Notwithstanding
any other provision of the Plan, any amount determined by the Administrative
Committee to be an “Excess Contribution” as determined under Section
5.05(b)(ii), shall be distributed to Members who are Highly Compensated
Employees by no later than the last day of the Plan Year following the Plan Year
in which the Excess Contribution occurred.
(b)
“Excess
Contribution” for purposes of this Section 5.06 means a Member Salary Deferral
attributable to a Highly Compensated Employee which exceeds the maximum amount
of such deferral permitted under Code Section 401(k)(3)(A)(ii), and which is
described in Code Section 401(k)(8)(B), plus the income allocable to such
amount. The allocable income shall be calculated by multiplying the
total income earned on all of the Member Salary Deferrals for the Plan Year in
which the Excess Contribution is being returned by a fraction, the numerator
being the Member Salary Deferral in excess of the permitted amount and the
denominator being the Member’s account balance in his Member Salary Deferral
Account and Roth Elective Deferral Account, as applicable, on the Accounting
Date of the prior Plan Year. The Excess Contribution otherwise
distributable under this Section 5.06 shall be adjusted for investment losses
and for prior distributions to the Members affected, as permitted by Treasury
Regulations. With respect to nondiscrimination testing for the Plan
Year beginning January 1, 2006, income shall be allocated to Excess
Contributions during the period between the end of the Plan Year and the date of
distribution of the Excess Contributions in accordance with guidance published
by the Internal Revenue Service. The Excess Contributions
attributable to all Highly Compensated Employees, in the aggregate, shall be
determined as the sum of the Excess Contributions (if any) determined for each
Highly Compensated Employee, as follows: The amount (if any) by which the Member
Salary Deferral of each Highly Compensated Employee must be reduced for the
Member’s Actual Deferral Percentage to equal the highest permitted Actual
Deferral Percentage under the Plan shall be determined. To calculate the highest
permitted Actual Deferral Percentage under the Plan, the Actual Deferral
Percentage of the Highly Compensated Employee with the highest Actual Deferral
Percentage is reduced by the amount required to cause the Employee’s Actual
Deferral Percentage to equal the Actual Deferral Percentage of the Highly
Compensated Employee with the next highest Actual Deferral Percentage. If a
lesser reduction would enable the Plan to satisfy the Actual Deferral Percentage
test, only this lesser reduction may be made. This process must be repeated
until the Plan would satisfy the Actual Deferral Percentage test. The sum of the
foregoing reductions determined for each Highly Compensated Employee shall equal
the dollar amount of the Excess Contributions attributable to all Highly
Compensated Employees, in the aggregate.
|
Section
5.07
.
|
Catch-up
Contributions
.
|
(a)
Notwithstanding
any other provision of the Plan (other than this Section 5.07), in accordance
with election procedures set forth in Subsection (b) below, a Catch-up Eligible
Member (as defined in Subsection (e) below) may make additional Member Salary
Deferrals (which, pursuant to Section 6.01(b) below, shall include Roth Elective
Deferrals) for any Plan Year, without regard to: (i) the limitations
on Member Salary Deferral Elections set forth in Section 5.01; (ii) the
limitations provided in Code Sections 401(a)(30), 402(h), 403(b)(1)(E), 404(h),
408(k), 408(p), 415(c) or 457(b)(2) (without regard to Section 457(b)(3)), and
without regard to any Plan provisions which effectuate the limitations in this
Subsection; (iii) the Actual Deferral Percentage limitations described in
Article V of the Plan and Code Section 401(k)(3), but only, in the case of
clause (iii) as applied to a Member who is a Highly Compensated Employee, to the
extent of the highest amount of Member Salary Deferrals that could be retained
under the Plan by such Member for such year in accordance with Article V and
Code Section 401(k)(8)(C) (the “Applicable Maximum”); or (iv) except as provided
in Code Section 414(v)(4), any of the requirements of Code Sections 401(a)(4),
401(k)(3), 401(k)(11), 403(b)(12), 408(k), 410(b), or 416. To the
extent the Member Salary Deferrals by a Catch-up Eligible Member for any year
exceed the Applicable Maximum, such Member’s Member Salary Deferrals shall be
deemed to be Catch-up Contributions under the Plan..
(b)
The
Catch-up Contributions by any Member during any Plan Year shall not exceed
$5,000 for any year beginning with 2006 or such other amount as provided under
Code Section 414(v). The Catch-Up Contribution elections and changes
shall be on a form acceptable to the Administrative Committee in accordance with
its rules and regulations.
(c)
This
Section 5.07 is intended to comply with Code Section 414(v), Treasury Regulation
Section 1.414(v)-1, and any successor or other guidance issued by the Department
of Treasury, and accordingly shall be interpreted consistently with such
intention.
(d)
“Catch-up
Contribution” means a contribution under the Plan by a Catch-up Eligible Member,
pursuant to Section 5.07.
(e)
“Catch-up
Eligible Member” means a Member who (a) is eligible to make Member Salary
Deferrals pursuant to Section 5.01 and (b) is age 50 or older. For
purposes of Subsection (b) above, a Member who is projected to attain age 50
before the end of the Plan Year shall be deemed to be age 50 as of January 1 of
such Plan Year. The determination of a “Catch-up Eligible Member”
shall be made in accordance with the requirements of Treasury Regulation Section
1.414(v)-1 and any successor or other guidance provided under Code Section
414(v) by the Department of Treasury.
ARTICLE
VI
ROTH ELECTIVE
DEFERRALS
|
Section
6.01
.
|
General
Application
.
|
(a) Effective
as of the later of January 1, 2009 or such other date determined by the
Investment Committee in its sole discretion, the Plan will accept Roth Elective
Deferrals made on behalf of Members. A Member’s Roth Elective
Deferrals will be allocated to a separate account maintained for such
contributions as described in Section 6.02 of the Plan.
(b) Unless
specifically stated otherwise, Roth Elective Deferrals will be treated as Member
Salary Deferrals for all purposes under the Plan.
|
Section
6.02
.
|
Separate
Accounting
.
|
(a) Contributions
and withdrawals of Roth Elective Deferrals will be credited and debited to the
Roth Elective Deferral Account maintained for each Member.
(b) The
Plan will maintain a record of the amount of Roth Elective Deferrals in each
Member’s Account
.
(c) Gains,
losses, and other credits or charges must be separately allocated on a
reasonable and consistent basis to each Member’s Roth Elective Deferral Account
and the Member’s other Accounts under the Plan.
(d) No
contributions (or forfeitures) other than Roth Elective Deferrals and properly
attributable earnings will be credited to each Member’s Roth Elective Deferral
Account.
|
Section
6.03
.
|
Correction of Excess
Contributions
.
|
In
the case of a distribution of Excess Contributions, Roth Election Deferrals will
be distributed first and then pre-tax elective deferrals will be
distributed.
ARTICLE
VII
ALLOCATIONS OF COMPANY
CONTRIBUTIONS AND FORFEITURES
|
Section
7.01
.
|
Contributions
.
|
(a)
Members Eligible to Share in
Company Contributions
.
The
Company Contribution for each Plan Year shall be allocated and credited to the
Members’ Company Contributions Account in accordance with this Article as of the
last Accounting Date of the Plan Year (immediately following the allocation of
income and appreciation in accordance with Section 9.01) among those Members who
are Employees of an Employer or an Affiliate on the Accounting
Date. Notwithstanding anything herein to the contrary, a Member for
purposes of Article VII means only those Employees who have satisfied the
applicable age and service requirements of Sections 2.01(a), (b)(ii) or
(c).
(b)
Allocation of Company
Contribution
.
The
Company Contribution under Section 4.01 for each Plan Year, determined without
regard to Section 6.02(c), shall be allocated among the Members eligible for
allocation in the proportion which each such Member’s Compensation for such Plan
Year while a Member bears to the total Compensation for all Members eligible to
share in allocations pursuant to Subsection (a). The Company
Contribution under Section 4.02 shall be allocated on the same basis upon which
it was determined.
|
Section
7.02
.
|
Allocation to Company
Contributions Accounts
.
|
Effective
for Plan Years beginning after December 31, 1989, the entire amount allocated
under Section 7.01(b) to a Member for a Plan Year shall be credited to his
Company Contributions Account.
|
Section
7.03
.
|
Actual Contribution
Percentage Test
.
|
(a)
As used in this Section 7.03, each of the
following terms shall have the meaning for that term set forth
below:
(i)
Average Contribution
Percentage
means the average (expressed as a percentage) of the
Contribution Percentages of the Members in a group, including those Members
whose Contribution Percentage is zero.
(ii)
Company Matching
Contribution
means the Company Contribution described in Section 4.02 of
the Plan.
(iii)
Contribution
Percentage
means the ratio (expressed as a percentage) of a Member’s
Company Matching Contributions (excluding Company Matching Contributions
forfeited hereunder to correct Excess Aggregate Contributions or because the
contributions to which they relate are Excess Deferrals, Excess Contributions or
Excess Aggregate Contributions) to the Member’s Testing Compensation for the
Plan Year.
(b)
Company Matching Contributions for each Plan Year
must satisfy one of the following tests:
(i)
For Plan Years beginning on or after January 1, 2001, the
Average Contribution Percentage for Members who are Highly Compensated Employees
for the Plan Year shall not exceed the Average Contribution Percentage for
Members who are non-Highly Compensated Employees for the Plan Year
multiplied by 1.25; or
(ii)
For Plan Years beginning on or after January 1,
2001, the Average Contribution Percentage for Members who are Highly Compensated
Employees for the Plan Year shall not exceed the Average Contribution Percentage
for Members who are non-Highly Compensated Employees for the Plan
Year multiplied by 2.0, provided that the Average Contribution Percentage for
Members who are Highly Compensated Employees does not exceed the Average
Contribution Percentage for Members who are non-Highly Compensated Employees by
more than 2 percentage points.
In
satisfying the Actual Contribution Percentage Test set forth above, Member
Salary Deferrals may be treated as if they were Company Matching Contributions,
provided that the requirements of Treasury Regulation Section
1.401(m)-2(a)(6)(ii)
are
satisfied. If used to satisfy the Actual Contribution Percentage
Test, such Member Salary Deferrals shall not be used to help other Member Salary
Deferrals satisfy the Actual Deferral Percentage Test (as described in
Section 401(k)(2) of the Code), set forth in Section 5.05 hereof except as
otherwise permitted by applicable law.
(c)
For
purposes of determining the Contribution Percentage of a Member for a Plan Year,
the Member’s Company Matching Contributions shall be taken into account only if
such Company Matching Contributions (i) are based on the Member’s Member Salary
Deferrals (which, pursuant to Section 6.01(b) below, shall include Roth Elective
Deferrals) for such Plan Year; (ii) are attributed to the Member’s Account as of
a date within such Plan Year; and (iii) are paid to the Trust by the end of the
twelfth month following the close of such Plan Year. Any Company
Matching Contribution that fails to satisfy the foregoing requirements shall be
treated as a contribution which is not subject to Code Section
401(m).
(d)
(i)
For purposes of this Section 7.03, the Contribution
Percentage for any Member who is a Highly Compensated Employee for the Plan Year
and who is eligible to receive Company Matching Contributions or to make
Employee after-tax contributions under one or more other plans described in Code
Section 401(a) that are maintained by the Company or an Affiliate shall be
determined as if all such contributions were made under a single
plan.
(ii)
If two or more plans are aggregated for
purposes of Code Section 410(b) or 401(a)(4), such plans shall be aggregated for
purposes of the Average Contribution Percentage test.
|
Section
7.04
.
|
Return of Excess
Aggregate Contributions
.
|
(a)
Notwithstanding any other provision
of the Plan, any amount determined by the Administrative Committee to be an
“Excess Aggregate Contribution” as defined in Subsection (b), shall be
distributed to Members who are Highly Compensated Employees by no later than the
last day of the Plan Year following the Plan Year in which the Excess Aggregate
Contribution occurred. For Plan Years prior to 1997, the Excess
Aggregate Contributions (as defined in Section 7.04(b)) under the Plan shall be
eliminated by reducing the Company Matching Contributions of each Highly
Compensated Employee in order of Contribution Percentage beginning with the
highest percentage. For Plan Years after 1996, the Excess Aggregate
Contributions (as defined in Section 7.04(b)) under the Plan shall be eliminated
by reducing the Company Matching Contributions of each Highly Compensated
Employee in order of the dollar amount of Company Matching Contributions on
behalf of such Highly Compensated Employee, beginning with the highest dollar
amount.
(b)
“Excess Aggregate Contribution” for
purposes of this Section 7.04 means a Company Matching Contribution attributable
to a Highly Compensated Employee which exceeds the maximum amount of such
Company Matching Contributions permitted under Code Section 401(m)(3), and which
is described in Code Section 401(m)(6)(B), plus the income allocable to such
amount. The allocable income shall be calculated by multiplying the
total income earned on all of the Member’s Company Matching Contributions for
the Plan Year in which the Excess Aggregate Contribution is being returned by a
fraction, the numerator being the Member Company Matching Contributions in
excess of the permitted amount and the denominator being the Member’s account
balance in his Company Contribution Account attributable to Company Matching
Contributions on the Accounting Date of the prior Plan Year. The
Excess Contribution otherwise distributable under this Section 7.04 shall be
adjusted for investment losses and for prior distributions to the Members
affected, as permitted by Treasury Regulations. Effective with
respect to nondiscrimination testing for Plan Years beginning on and after
January 1, 2006, income shall be allocated to Excess Aggregate Contributions
during the period between the end of the Plan Year and the date of distribution
of the Excess Aggregate Contributions in accordance with guidance published by
the Internal Revenue Service. The Excess Aggregate Contributions
attributable to all Highly Compensated Employees, in the aggregate, shall be
determined as the sum of the Excess Aggregate Contributions (if any) determined
for each Highly Compensated Employee, as follows: The amount (if any) by which
the Company Matching Contribution of each Highly Compensated Employee must be
reduced for the Member’s Contribution Percentage to equal the highest permitted
Contribution Percentage under the Plan shall be determined. To
calculate the highest permitted Contribution Percentage under the Plan, the
Contribution Percentage of the Highly Compensated Employee with the highest
Contribution Percentage is reduced by the amount required to cause the
Employee’s Contribution Percentage to equal the Contribution Percentage of the
Highly Compensated Employee with the next highest Contribution Percentage. If a
lesser reduction would enable the Plan to satisfy the Actual Contribution
Percentage Test, only this lesser reduction may be made. This process must be
repeated until the Plan would satisfy the Actual Contribution Percentage Test.
The sum of the foregoing reductions determined for each Highly Compensated
Employee shall equal the dollar amount of the Excess Aggregate Contributions
attributable to all Highly Compensated Employees, in the
aggregate.
ARTICLE
VIII
ACCOUNTS, ALLOCATIONS AND
LOANS
|
Section
8.01
.
|
Investment
Funds
.
|
Subject
to the provisions of any applicable state and Federal securities laws and to the
regulations and rulings of any regulatory agencies administering such laws, the
Trustee shall, at the direction of the Investment Committee, establish separate
Investment Funds within and as a part of the Trust Fund for the purpose of
investing the balances held in the Accounts and in the Unallocated Forfeitures
Account.
|
Section
8.02
.
|
Separate
Accounts
.
|
The
Administrative Committee shall maintain a separate Company Contributions
Account, Member Contributions Account, Member Salary Deferral Account, Roth
Elective Deferral Account, Rollover Account and Loan Account for each Member as
relevant. Any amount transferred from a Member’s “Company Matching
Contribution Account” under the ECMC Plan (as defined thereunder) shall be held
in the Member’s Rollover Account. The Administrative Committee and/or
the Investment Committee shall maintain records of each Member’s balance in each
such Account and each Investment Fund in which the Account is invested in order
to provide an accurate and current statement to the Member pursuant to Section
9.09. Effective January 1, 1995, each account of a participant or
beneficiary under the ECMC Plan shall automatically be deemed an Account of the
corresponding type under the Plan for the Member or Beneficiary for whom such
account was maintained under the ECMC Plan.
|
Section
8.03
.
|
Investing of the
Company Contributions
.
|
All
contributions allocated to a Member’s Account shall be allocated among the
Investment Funds in accordance with a Member’s investment
election(s). If no proper election is on file governing the
contributions involved, such contributions shall be invested in the Investment
Fund(s) specified for such purpose by the Investment Committee.
|
Section
8.04
.
|
Elections
.
|
(a)
The
Investment Committee shall prescribe such rules as it deems appropriate
regarding the form, filing frequency and timeliness of elections under Section
8.03 as well as concerning the percentage or amounts of a contribution which may
be invested in an Investment Fund. In these rules, the Investment Committee may
specify that each Account of a Member be invested in the Investment Funds
selected by the Member in the same proportion, or the Investment Committee may
prescribe such other rule as it deems appropriate with respect to any
Account. An election properly on file shall remain in force until
changed.
|
Section
8.05
.
|
Inter-Account
Transfers
.
|
(a)
A
Member may elect, on a form provided by and timely filed with the Investment
Committee and/or the Administrative Committee, to transfer all or a portion of
the balance of any Account which is invested in an Investment Fund to one or
more other Investment Funds. The Investment Committee and/or the
Administrative Committee shall prescribe such rules as it deems appropriate
regarding the frequency and timeliness of elections and the percentage of or
amount from an Account which may be so transferred.
(b)
A
transfer made pursuant to an election pursuant to Subsection (a) shall be
effected as soon as administratively practicable immediately
following timely receipt by the Investment Committee of the
election.
|
Section
8.06
.
|
Unallocated Forfeiture
Account
.
|
The
amount held from time to time in the Unallocated Forfeiture Account shall be
allocated among the Investment Funds as specified by the Investment
Committee.
(a)
Notwithstanding
anything in this Plan to the contrary, the Investment Committee and/or the
Administrative Committee, in its discretion, may authorize a loan to a Member
who is a “party in interest” with respect to the Plan within the meaning of
Section 3(14) of the Act under the circumstances listed in Subsection (b)
below:
(b)
(1) loans shall be made available on a reasonably
equivalent basis; (2) loans shall not be made available to Highly Compensated
Employees in a manner that is more favorable than the manner loans are made
available to other Members; (3) loans shall bear a reasonable rate of interest;
(4) loans shall be adequately secured; and (5) loans shall provide for repayment
over a reasonable period of time.
(c)
Loans
made pursuant to this Section (when added to the outstanding balance of all
other loans made by the Plan to the Member) shall be limited to the lesser
of:
(1)
$50,000 reduced by the excess (if any) of the highest outstanding
balance of loans from the Plan to the Member during the one-year period ending
on the day before the date on which such loan is made, over the outstanding
balance of loans from the Plan to the Member on the date on which such loan was
made, or
(2) one-half (1/2) of the
present value of the non-forfeitable accrued benefit of the Member under the
Plan.
For
purposes of this limit, all plans of the Employer shall be considered one
plan.
(d)
Loans
shall provide for level amortization with payment to be made not less frequently
than quarterly over a period not to exceed five (5) years, unless the loan is
for the purpose of acquiring a dwelling unit used within a reasonable time as
the principal residence of the Member. All loans shall be due and
payable upon termination of employment.
(e)
All loans shall be made pursuant to a Member loan
program. Such loan program shall be established in writing by the
Investment Committee and/or the Administrative Committee and must include, but
need not be limited to, the following:
(1)
the identity of the person(s) or position(s) authorized to
administer the Member loan program;
(2)
a procedure for applying for loans;
(3)
the basis on which loans will be approved or
denied;
(4)
limitations, if any, on the types and amounts of
loans offered;
(5)
the procedure under the program for determining a
reasonable rate of interest;
(6)
the types of collateral which may secure a Member
loan; and
(7)
the events constituting default and the steps that
will be taken to preserve Plan assets.
Such
Member loan program shall be contained in a separate written document which,
when properly executed, is hereby incorporated by reference and made a part of
the Plan. Furthermore, such Member loan program may be modified or
amended by the Investment Committee and/or the Administrative Committee in
writing from time to time without the necessity of amending this
Section.
(f)
Notwithstanding
any other provision to the contrary, a Borrower who has a loan (or loans)
outstanding under the SCB Savings or Cash Option Plan for Employees on December
31, 2003 which is transferred to the Plan as a result of the merger of SCB
Savings or Cash Option Plan for Employees into the Plan shall be entitled to
keep such loan (or loans) outstanding under the Plan until the loan (or loans)
is repaid pursuant to the terms of such outstanding loan (or
loans).
ARTICLE
IX
VALUATION
|
Section
9.01
.
|
Valuation of Trust
Fund
.
|
All
changes in the value of each Investment Fund as determined by the Trustee in
accordance with the Trust Agreement (including income and expenses and realized
and unrealized appreciation and depreciation of assets of the Investment Fund,
determined in the case of mutual funds by reference to the net asset value of
such mutual funds on the Accounting Date, but excluding Company Contributions,
Member Salary Deferrals and contributions or transfers pursuant to Section 5.03
made or allocated subsequent to the last preceding Accounting Date), shall be
allocated by the Investment Committee and/or the Administrative Committee among
the Company Contributions Accounts, Member Contributions Accounts, Member Salary
Deferral Accounts, Roth Elective Deferral Accounts, Rollover Accounts and the
Uncashed Check Account, portions of which are held in the Investment Fund as of
each Accounting Date pro rata to the value of all such Accounts, respectively,
at the last preceding Accounting Date, but first reducing the balance of each
such Account as of the last preceding Accounting Date by any distributions from
the Account since that Accounting Date.
|
Section
9.02
.
|
Valuation of Company
Contributions Accounts
.
|
The
value of a Member’s Company Contributions Account as of any Accounting Date
shall be the aggregate of the portions of such Account invested in each
Investment Fund as of that date. The value of that portion of such
Account invested in an Investment Fund shall be the sum of:
(a)
the value of such portion as of the last preceding Accounting
Date, plus or minus
(b)
all
changes in the value of the Investment Fund since the last preceding Accounting
Date allocable thereto pursuant to Section 9.01, plus
(c)
the
amount of transfer, if any, into such portion and the amount of the Company
Contribution, if any, allocable thereto since the last preceding Accounting Date
pursuant to Article VII, minus
(d)
any
distributions from, and transfers out of, such portion since the last preceding
Accounting Date.
|
Section
9.03
.
|
Valuation of Member
Contributions Account
.
|
The
value of a Member Contributions Account as of any Accounting Date shall be the
aggregate of the portions of such Account invested in each Investment Fund as of
that date. The value of that portion of such Account invested in an
Investment Fund shall be the sum of:
(a)
the
value of such portion as of the last preceding Accounting Date, plus or
minus
(b)
all
changes in the value of the Investment Fund since the last preceding Accounting
Date allocable thereto pursuant to Section 9.01, plus
(c)
the
amount, if any, transferred into such portion pursuant to Section 5.04 in an
amount equal to voluntary contributions by the Member to the transferor
qualified plan or pursuant to Section 8.05, minus
(d)
any
distributions from, and transfers out of, such portion since the last preceding
Accounting Date.
|
Section
9.04
.
|
Valuation of Member
Salary Deferral Accounts
.
|
The
value of a Member Salary Deferral Account as of any Accounting Date shall be the
aggregate of the portions of such Account invested in each Investment Fund as of
that date. The value of that portion of such Account invested in an
Investment Fund shall be the sum of:
(a)
the
value of such portion as of the last preceding Accounting Date, plus or
minus
(b)
all
changes in the value of the Investment Fund since the last preceding Accounting
Date allocable thereto pursuant to Section 9.01, plus
(c)
the
amount, if any, transferred into such portion pursuant to Section 8.05 and the
amount of Member Salary Deferrals, if any, allocable thereto since the last
preceding Accounting Date, minus
(d)
any
distributions from, and transfers out of, such portion since the last preceding
Accounting Date.
|
Section
9.05
.
|
Valuation of Roth
Elective Deferral Accounts
.
|
The
value of a Roth Elective Deferral Account as of any Accounting Date shall be the
aggregate of the portions of such Account invested in each Investment Fund as of
that date. The value of that portion of such Account invested in an
Investment Fund shall be the sum of:
(a)
the
value of such portion as of the last preceding Accounting Date, plus or
minus
(b)
all
changes in the value of the Investment Fund since the last preceding Accounting
Date allocable thereto pursuant to Section 9.01, plus
(c)
the
amount, if any, transferred into such portion pursuant to Section 8.05 and the
amount of Roth Elective Deferrals, if any, allocable thereto since the last
preceding Accounting Date, minus
(d)
any
distributions from, and transfers out of, such portion since the last preceding
Accounting Date.
|
Section
9.06
.
|
Valuation of Rollover
Accounts
.
|
The
value of a Rollover Account as of any Accounting Date shall be the aggregate of
the portions of such Account invested in each Investment Fund as of that
date. The value of that portion of such Account invested in an
Investment Fund shall be the sum of:
(a)
the
value of such portion as of the last preceding Accounting Date, plus or
minus
(b)
all
changes in the value of the Investment Fund since the last preceding Accounting
Date allocable thereto pursuant to Section 9.01, plus
(c)
the
amount of transfer, if any, into such portion since the last preceding
Accounting Date pursuant to Section 5.03(a), minus
(d)
any
distributions from, and transfers out of, such portion since the preceding
Accounting Date.
|
Section
9.07
.
|
Valuation of Uncashed
Check Account
.
|
The
value of the Uncashed Check Account as of any Accounting Date shall be the
aggregate of the portions of such Account invested in each Investment Fund as of
that date. The value of that portion of such Account invested in an
Investment Fund shall be the sum of:
(a)
the
value of such portion as of the last preceding Accounting Date, plus or
minus
(b)
all
changes in the value of the Investment Fund since the last preceding Accounting
Date allocable thereto pursuant to Section 9.01, plus
(c)
the
amount, if any, transferred into such portion pursuant to Section 10.06(d)
since the last preceding Accounting Date, minus
(d)
any
distributions from, and transfers out of, such portion since the last preceding
Accounting Date.
|
Section
9.08
.
|
Valuation of Loan
Accounts
.
|
The value
of a Loan Account as of any Accounting Date shall be the amount of the
outstanding principal and accrued interest on the loan held therein plus the
amount of any cash held therein as of an Accounting Date.
|
Section
9.09
.
|
Statement to
Members
.
|
The
Administrative Committee shall mail or deliver to each Member a statement of
the value of his Accounts and his Loan Account, if any, on a
quarterly basis.
|
Section
9.10
.
|
Unallocated
Forfeitures Account
|
The
value of the Unallocated Forfeitures Account shall be determined as provided in
Section 9.02 applied as if the addition to the Unallocated Forfeitures Account
was a Company Contributions Account.
ARTICLE
X
DETERMINATION OF
BENEFITS
|
Section
10.01
.
|
Retirement
.
|
Upon
a Member’s Retirement on or after his Normal Retirement Date, he shall become
entitled, at the time specified in Article XI, to a distribution of his Accounts
and his Loan Account, if any, valued as of the Accounting Date specified in
Section 11.01.
|
Section
10.02
.
|
Disability
.
|
Upon
a Member’s Retirement on account of his Permanent Disability, the Member shall
become entitled, at the time specified in Article XI, to a distribution of his
Accounts and his Loan Account, if any, valued as of the Accounting Date
applicable under Section 11.02.
Upon
a Member’s death, his Eligible Spouse or, if there is no Eligible Spouse or the
Eligible Spouse consents in the manner required under Section 2.04(a) to the
designation of a Beneficiary, that Beneficiary shall become entitled, at the
time specified in Article XI, to a distribution of the then balance of such
Member’s Accounts and his Loan Account, if any, valued as of the Accounting Date
applicable under Section 11.03; provided, however, that if a valuation date was
already fixed for payment pursuant to Article XI due to the Member’s Retirement
or Permanent Disability, that date shall be used.
|
Section
10.04
.
|
Vesting
.
|
(a)
Any
Member who is employed by an Employer or an Affiliate on or after September 1,
2007 shall be fully vested in his Company Contributions Account.
(b)
Any
Member who is not employed by an Employer or an Affiliate on or after September
1, 2007 and who had Company Contributions credited to his Account as of December
31, 1988 shall at all times be fully (100%) vested in the balance in his
Accounts. Effective for Plan Years beginning after December 31, 1988,
any individual who became a Member after that date and who is not employed by an
Employer or an Affiliate on or after September 1, 2007 shall be fully (100%)
vested in the balance in his Accounts if, prior to his Severance from
Employment, he completed three (3) Years of Service calculated from the Member’s
Employment Commencement Date or reached his Normal Retirement Date prior to his
Severance from Employment. A Member shall be at all times fully
(100%) vested in the balance in his Member Contributions Account, if any, his
Member Salary Deferral Account, if any, his Roth Elective Deferral Account, if
any, his Rollover Account, if any, and his Loan Account, if
any.
(c)
Notwithstanding
any other provision to the contrary, each Member who was a participant in the
SCB Savings or Cash Option Plan for Employees prior to December 31, 2003 shall
be fully vested in his Account.
|
Section
10.05
.
|
Other Severance from
Employment
.
|
In
the event of a Member’s Severance from Employment other than by reason of death,
Retirement or Permanent Disability, he shall be entitled to a distribution of
the entire balance in his Member Contributions Account, if any, his Member
Salary Deferral Account, if any, his Roth Elective Deferral Account, if any, his
Loan Account, if any, his Rollover Account, if any, and the vested balance in
his Company Contributions Account, if any, determined as of the Accounting Date
applicable under Section 11.04. Such distributions shall be made in
the manner and at the time provided in Article XI. The unvested
portion of the Member’s Company Contributions Account shall be forfeited upon
the Accounting Date coincident with or immediately following the Member’s
Severance from Employment.
|
Section
10.06
.
|
Forfeitures
.
|
(a)
A
Member who separates from service prior to the full vesting of his entire
Company Contributions Account, shall forfeit the unvested balance in that
Account upon the Accounting Date coincident with or immediately following the
Member’s Severance from Employment. If the Member subsequently
recommences employment prior to incurring five (5) consecutive Breaks in
Service, he shall be recredited with the forfeited amounts as soon as
administratively feasible upon recommencement of employment.
(b)
Any
amount held in an Unallocated Forfeiture Account may be applied to reduce the
Company Contribution to be made to the Trust or to pay administrative expenses
of the Plan, at the election of the Administrative Committee in its sole
discretion. Any Company Contributions made to the Plan in error and
any other excess amounts received by the Plan in error may be held in a
subaccount under the Unallocated Forfeiture Account until applied in accordance
with the foregoing.
(c)
Effective
January 1, 1995, amounts credited to the “unallocated forfeitures account” (as
defined under the ECMC Plan) under the ECMC Plan shall be transferred to the
Unallocated Forfeitures Account.
(d)
Effective
on and after September 1, 2007, in the event that any portion of a distribution
payable to a Member hereunder shall be unclaimed for a period designated by the
Administrative Committee, such amount shall be allocated to the Uncashed Check
Account, and if the amount remains unclaimed from such account at the expiration
of a period determined by the Administrative Committee, the amount so
distributable shall be held in an Unallocated Forfeiture Account until applied
in accordance with the foregoing. In the event the Member is located
subsequent to his benefit being forfeited, such benefit shall be
restored. The Administrative Committee will establish and adopt
related rules, regulations and/or administrative guidelines designed to
facilitate the administration of unclaimed checks, including the institution of
any procedures intended to ascertain the whereabouts of a missing Member, and
may cease to implement the procedure set forth in this paragraph and any other
related rules, regulations and/or administrative guidelines in its discretion at
any time.
ARTICLE
XI
TIME AND MANNER OF PAYMENT
OF BENEFITS
Section
11.01
.
Retirement
Benefits
.
Retirement
benefits, determined pursuant to Section 10.01, shall be paid in a single or
partial cash lump sum, valued as of the Accounting Date immediately preceding
the payment.
A Member
who wishes to commence the distribution of his Retirement benefits shall notify
the Administrative Committee of such intent no sooner than thirty (30) days
following the Member’s Severance from Employment. Such distribution
shall be made to the Member on or as soon as administratively feasible following
the benefit starting date selected by the Member as provided
below. The Member may only select a benefit starting date which may
not be more than one-hundred-eighty (180) days after such election and, except
as provided below, may not be less than thirty (30) days after such
election. Except as provided in the next sentence, the Administrative
Committee shall provide the Member with a notice as to his or her rights and
benefits under the Plan not more than one-hundred-eighty (180) days or less than
thirty (30) days prior to the Member’s Accounting
Date. Notwithstanding the foregoing, a Member may elect a
benefit starting date earlier than thirty (30) days after receiving such notice
from the Company, provided that:
(1)
the Administrative Committee clearly informs the Member
that the Member has a right to a period of at least thirty (30) days after
receiving the notice to consider the decision of whether or not to elect a
distribution; and
(2)
the Member, after receiving the notice, affirmatively elects a
distribution.
Section
11.02
.
Disability
Benefits
.
Disability
benefits, determined pursuant to Section 10.02 shall be paid or commence to be
paid at the time and in the manner provided in Section 11.01 (substituting
Permanent Disability for Retirement).
Section
11.03
.
Death
Benefits
.
Death
benefits, determined pursuant to Section 10.03, shall be paid to the Member’s
Beneficiary in a single cash sum as soon as reasonably practicable after the
Member’s death. A Member’s Beneficiary who wishes to commence the
distribution of such benefits shall notify the Administrative Committee of such
intent no sooner than thirty (30) days following the Member’s
death. Notwithstanding the foregoing, if the Beneficiary is the
Member’s spouse, then death benefits, determined pursuant to Section 10.03,
shall be paid to the Member’s Beneficiary at the time and in the manner provided
in Section 11.01 (substituting death for Retirement), subject to Code Section
401(a)(9).
|
Section
11.04
.
|
Termination
Benefits
.
|
The
benefits payable to a Member upon his Severance from Employment, determined
pursuant to Section 10.05, shall, subject to Section 11.09, be paid or commence
to be paid at the time and in the manner provided in Section 11.01 (substituting
Severance from Employment for Retirement).
|
Section
11.05
.
|
Direct Rollover
Distributions
.
|
(a)
Upon receiving directions from a Member who is eligible to receive a
distribution from the Plan pursuant to the provisions of this Article XI which
constitutes an “eligible rollover distribution,” as defined in Code Section
402(c)(4), to transfer all or any part of such distribution to an “eligible
retirement plan,” as defined in Code Section 402(c)(8)(B) or to a Roth IRA as
discussed in Code Section 408A (subject to the restrictions therein), the
Administrative Committee shall cause the portion of the distribution
which the Member has elected to so transfer to be transferred directly to such
“eligible retirement plan”; provided, however, that the Member shall be required
to notify the Administrative Committee of the identity of the eligible
retirement plan at the time and in the manner that the Administrative Committee
shall prescribe and the Administrative Committee may require the Member or the
eligible retirement plan to provide a statement that the eligible retirement
plan is intended to be qualified under Code Section 401(a) (if the plan is
intended to be so qualified) or otherwise meets the requirements necessary to be
an “eligible retirement plan.”
(b)
Notwithstanding
anything herein a direct rollover of a distribution from a Roth Elective
Deferral Account under the Plan will only be made to another Roth elective
deferral account under an applicable retirement plan described in Code Section
402A(e)(1) or to a Roth IRA described in Code Section 408A, and only to the
extent the rollover is permitted under the rules of Code Section
402(c).
(c)
Eligible
rollover distributions from a Member’s Roth Elective Deferral Account are taken
into account in determining whether the total amount of the Member’s Account
balance under the Plan exceeds $1,000 for purposes of mandatory distributions
from the Plan.
(d)
Upon
receiving instructions from a Beneficiary who is the Member’s Eligible Spouse or
an alternate payee under a “qualified domestic relations order” as defined in
Code Section 414(p), in either case who is eligible to receive a distribution
pursuant to the provisions of Article VIII that constitutes an
“eligible rollover distribution” as defined in Code Section 402(c)(4), to
transfer all or any part of such distribution to a plan that constitutes an
“eligible retirement plan” under Code Section 402(c)(8)(B) with respect to that
distribution, the Administrative Committee shall cause the portion of the
distribution which such Eligible Spouse or alternate payee has elected to so
transfer to the eligible retirement plan so designated.
(e)
The
Administrative Committee may accomplish the direct transfer described in
Subsection (a) or (b), as applicable, by delivering a check to the Member,
Eligible Spouse or alternate payee (in each case, a “Distributee”) which is
payable to the trustee, custodian or other appropriate fiduciary of the
“eligible retirement plan,” or by such other means as the Administrative
Committee may in its discretion determine. The Administrative
Committee may establish such rules and procedures regarding minimum amounts
which may be the subject of direct transfers and other matters pertaining to
direct transfers as it deems necessary from time to time.
(f)
In
the case of an “eligible rollover distribution” to a nonspousal distributee (a
“Nonspouse Rollover”), an “eligible retirement plan” is an individual retirement
account described in Code Section 408(a) or an individual retirement annuity
described in Code Section 408(b) that was established for the purpose of
receiving the distribution on behalf of such nonspousal
distributee. In order for such eligible retirement plan to accept a
Nonspouse Rollover on behalf of a nonspousal distributee (1) a direct
trustee-to-trustee transfer must be made to such eligible retirement plan and
shall be treated as an eligible rollover distribution for purposes of the Code,
(2) the individual retirement plan shall be treated as an inherited individual
retirement account or individual retirement annuity (within the meaning of Code
Section 408(d)(3)(C)) for purposes of the Code, and (3) Code Section
401(a)(9)(B) (other than clause (iv) thereof) shall apply to such
plan. Any Nonspouse Rollover shall be made in accordance with the
Pension Protection Act of 2006, Internal Revenue Service Notice 2007-7 and any
subsequent guidance.
|
Section
11.06
.
|
Latest Commencement of
Benefits
.
|
Notwithstanding
other provision of the Plan to the contrary, a Member shall be eligible to
receive payment, or to commence payment, under the Plan of his benefits no later
than sixty (60) days after the end of the Plan Year in which the latest of the
following occurs:
(a)
the
Member’s attainment of age his Normal Retirement Date;
(b)
The
tenth (10th) anniversary of the year in which the Member began participation in
the Plan; or
(c)
The
Member’s Severance from Employment.
|
Section
11.07
.
|
Indirect Payment of
Benefits
.
|
If
any Member or Beneficiary is, in the judgment of the Administrative Committee,
legally, physically or mentally incapable of personally receiving and receipting
for any payment due hereunder, payment may be made to the guardian or other
legal representative of such Member or Beneficiary or, if none, to any other
person or institution, which, in the opinion of the Administrative Committee, is
then maintaining or has custody of such Member or Beneficiary. Such
payment shall constitute a full discharge with respect to the obligations
hereunder.
|
Section
11.08
.
|
Limitations on
Distributions
.
|
Notwithstanding
anything to the contrary contained in this Plan:
(a)
The
entire interest of each Member must either:
(1)
be paid to him not later than the Required Beginning
Date; or
(2)
commence to be paid to him by not later than
the Required Beginning Date and paid, in accordance with regulations
prescribed by the Secretary of the Treasury, over a period not extending beyond
the life expectancy of the Member or the joint and last survivor life expectancy
of the Member and his Designated Beneficiary; provided, however, that if the
distribution of a Member’s Account balances has commenced in accordance with
this Paragraph (2), any portion remaining to be distributed at the Member’s
death shall continue to be distributed at least as rapidly as under the method
of distribution in effect as of such Member’s death.
(b)
If
a Member dies prior to the commencement of distributions to him in accordance
with Paragraph (a)(2), the entire interest of the Member shall be
distributed:
(1)
not later than December 31 of the calendar year which contains
the fifth anniversary of the Member’s death; or
(2)
where distribution is to be made to the Member’s
Designated Beneficiary, commencing
(A)
on or before December 31 of the calendar
year immediately following the calendar year in which the Member died;
or
(B)
if the Designated Beneficiary is
the Member’s surviving Spouse, no later than the later of the date described in
Paragraph (A), above or December 31 of the calendar year in which such Member
would have attained age seventy and one-half (70-1/2), and payable, in
accordance with regulations prescribed by the Secretary of the Treasury, over a
period not extending beyond the life expectancy of such Designated
Beneficiary.
(c)
For
purposes of Paragraphs (a)(2) and (b)(2), prior to the Required Beginning Date,
the Member (or his spouse, if the spouse is the Member’s Beneficiary) may make
an irrevocable election to have the Member’s (and/or his spouse’s) life
expectancy recalculated not more frequently than annually. If no such
election is made prior to the Member’s Required Beginning Date, the Member’s
(and/or his spouse’s) life expectancy shall automatically be recalculated
annually.
(d)
Under
regulations prescribed by the Secretary of the Treasury, any amount paid to a
Member’s child shall be treated as if it had been paid to such Member’s
surviving spouse if such amount will become payable to such spouse upon the
child reaching maturity or such other designated event which may be permitted
under such regulations.
(e)
For
purposes of this Section 11.08, the term “Designated Beneficiary” shall mean a
Member’s surviving spouse or an individual designated by the Member pursuant to
Section 2.04.
(f)
Notwithstanding
any provision of this Plan to the contrary, the provisions of this Section 11.08
shall be construed in a manner that complies with Code Section 401(a)(9) and,
with respect to distributions made on or after January 1, 2001, the Plan will
apply the minimum distribution requirements of Code Section 401(a)(9) in
accordance with the Treasury Regulations thereunder that were proposed in
January 2001, the provisions of which are hereby incorporated by
reference. This Subsection (f) shall continue in effect until the end
of the last calendar year beginning before the effective date of the final
regulations under Code Section 401(a)(9) or such other date as may be specified
in guidance published by the Internal Revenue Service.
(g)
Effective
as of January 1, 2003, notwithstanding anything to the contrary contained in
this Plan, distributions shall be made in a manner that complies with Code
Section 401(a)(9) and Appendix A attached hereto.
(h)
Each
Member who (i) attained age 70-½ before January 1, 1999, (ii) commenced
distributions pursuant to Code Section 401(a)(9) and (iii) is an Employee of the
Employer on January 1, 2004, may make an irrevocable affirmative election,
subject to the terms of any applicable “qualified domestic relations order” as
defined in Section 414(p) of the Code, to cease receiving such distributions at
any time prior to the Member’s Severance from Employment.
|
Section
11.09
.
|
Consent to
Distributions
.
|
No
amount shall be distributed to a Member pursuant to Section 11.01, 11.02 or
11.04 without his written consent, unless the amount to be distributed to the
Member is not in excess of $1,000 ($5,000 prior to March 28,
2005). In the event a Member’s consent to a distribution is required
pursuant to this Section 11.09, such distribution shall be made or commence to
be made as soon as reasonably practicable after the Accounting Date coincident
with or next following the date on which such consent is received by the
Administrative Committee.
|
Section
11.10
.
|
Pre-Retirement
Distribution
.
|
(a)
On
or after a Member’s attainment at age 59-½, the Administrative Committee,
at the election of the Member, shall direct the Trustees to
make an in-service distribution of any portion of the vested balance of the
Member’s Account.
(b)
Effective
on and after September 1, 2007, each Member may elect to withdraw all or a
portion of his Member Contributions Account and the actual earnings thereon at
any time. Prior to such date, only a Member who was a participant in
the SCB Savings or Cash Option Plan for Employees could elect to withdraw his
Member Contributions Account and the actual earnings thereon.
(c)
In
the event that the Administrative Committee makes a distribution pursuant to
this Section 11.10 the Member shall continue to be eligible to participate in
the Plan on the same basis as any other Employee. Any distribution
made pursuant to this Section 11.10 shall be made in a manner consistent with
other applicable provisions of this Article XI, including, but not limited to,
all notice and consent requirements of Code Section 411(a)(11) and the
Regulations thereunder.
|
Section
11.11
.
|
Partial
Withdrawals
.
|
Effective
on and after September 1, 2007, a Member who has a Severance from Employment but
who has not otherwise been paid the balance of his Account pursuant to this
Article XI may at any time request a partial distribution of his Account in a
minimum amount equal to $1,000 (or the Account balance, if less than
$1,000).
ARTICLE
XII
ADMINISTRATION OF THE
PLAN
|
Section
12.01
.
|
Administrative
Committee
.
|
There
is hereby created an Administrative Committee for the Plan. The
general administration of the Plan on behalf of the Plan Administrator shall be
placed in the Administrative Committee.
|
Section
12.02
.
|
Investment
Committee
.
|
There
is hereby created an Investment Committee for the Plan which shall oversee the
investment of the assets of the Trust Fund subject to ERISA.
|
Section
12.03
.
|
Payment of Benefits
(Administrative Committee)
.
|
The
Administrative Committee shall advise the Trustee in writing with respect to all
benefits which become payable under the terms of the Plan and shall direct the
Trustee to pay such benefits on order of the Administrative
Committee. In the event that the Trust Fund shall be invested in
whole or in part in one or more insurance contracts, the Administrative
Committee shall be authorized to give to any insurance company issuing such a
contract such instructions as may be necessary or appropriate in order to
provide for the payment of benefits in accordance with the Plan.
|
Section
12.04
.
|
Powers and Authority;
Action Conclusive (Administrative
Committee)
.
|
Except
as otherwise expressly provided in the Plan or in the Trust Agreement, or by the
Investment Committee, the Administrative Committee shall have the exclusive
right, power, and authority, in its sole and absolute discretion, to administer,
apply and interpret the Plan, Trust Agreement and any other Plan documents and
to decide all matters arising in connection with the operation or administration
of the Plan and the Trust. Subject to the immediately preceding
sentence, the Administrative Committee shall have all powers necessary or
helpful for the carrying out of its responsibilities, and the decisions or
action of the Administrative Committee in good faith in respect of any matter
hereunder shall be conclusive and binding upon all parties
concerned.
Without
limiting the generality of the foregoing, the Administrative Committee has the
complete authority, in its sole and absolute discretion, to:
(1)
Determine all questions arising out of or in connection with the interpretation
of the terms and provisions of the Plan except as otherwise expressly provided
herein;
(2)
Make rules and regulations for the administration of the Plan
which are not inconsistent with the terms and provisions of the Plan, and fix
the annual accounting period of the trust established under the Trust Agreement
as required for tax purposes;
(3)
Construe all terms, provisions, conditions of and limitations to the
Plan;
(4)
Determine all questions relating to (A) the eligibility of
persons to receive benefits hereunder, (B) the periods of service, including
Hours of Service, Credited Service and Years of Service, and the amount of
Compensation of a Member during any period hereunder, and (C) all other matters
upon which the benefits or other rights of a Member or other person shall be
based hereunder;
(5)
Determine all questions relating to the
administration of the Plan (A) when disputes arise between the Employer and a
Member or his Beneficiary, Spouse or legal representatives, and (B) whenever the
Administrative Committee deems it advisable to determine such questions in order
to promote the uniform administration of the Plan; and
(6)
Interpret Plan terms to reflect the Company’s intent, such that in
the event of a scrivener's error that renders a Plan term
inconsistent with the Company’s intent, the Company’s intent controls, and any
inconsistent Plan term is made expressly subject to this
requirement.
The
Administrative Committee may recoup on behalf of the Plan any payment made in
error by the Plan to any person, and any such amount will be returned to the
Plan.
All
determinations made by the Administrative Committee with respect to any matter
arising under the Plan Trust Agreement and any other Plan documents shall be
final and binding on all parties. The foregoing list of powers is not
intended to be either complete or exclusive and the Administrative Committee
shall, in addition, have such powers as the Plan Administrator deems appropriate
and delegates to it and such powers as may be necessary for the performance of
its duties under the Plan and the Trust Agreement.
|
Section
12.05
.
|
Reliance on
Information (Administrative
Committee)
.
|
The
members of the Administrative Committee and any Employer or affiliate thereof
(including the Company) and its officers, directors and employees shall be
entitled to rely upon all tables, valuations, certificates, opinions and reports
furnished by any accountant, trustee, insurance company, counsel or other expert
who shall be engaged by the Company or an affiliate thereof or the
Administrative Committee, and the members of the Administrative Committee and
any Employer or affiliate thereof (including the Company) and
its officers, directors and employees shall be fully protected in respect of any
action taken or suffered by them in good faith in reliance thereon, and all
action so taken or suffered shall be conclusive upon all persons affected
thereby.
|
Section
12.06
.
|
Actions to be Uniform;
Regular Personnel Policies to be
Followed
.
|
Any
discretionary actions to be taken under this Plan by the Administrative
Committee or Investment Committee with respect to the classification of the
Employees, contributions, or benefits shall be uniform in their nature and
applicable to all Employees similarly situated. With respect to
service with the Employer, leaves of absence and other similar matters, the
Administrative Committee shall administer the Plan in accordance with the
Employer’s regular personnel policies at the time in
effect.
|
Section
12.07
.
|
Fiduciaries
.
|
Any
person or group of persons may serve in more than one fiduciary capacity with
respect to the Plan. The Company is the Named Fiduciary under the
Plan. The Named Fiduciary and any fiduciary designated by the Named
Fiduciary to whom such power is granted by the Named Fiduciary under the Plan,
may employ one or more persons to render advice with regard to any
responsibility such fiduciary has under the Plan.
|
Section
12.08
.
|
Plan
Administrator
.
|
The
Company shall be the administrator of the Plan, as defined in Section 3(16)(A)
of the Act, and shall be responsible for the preparation and filing of any
required returns, reports, statements or other filings with appropriate
governmental agencies. The Company or its authorized designee shall
also be responsible for the preparation and delivery of information to persons
entitled to such information under any applicable law.
|
Section
12.09
.
|
Notices and Elections
(Administrative Committee)
.
|
A
Member shall deliver to the Administrative Committee all directions, orders,
designations, notices or other communications on appropriate forms to be
furnished by the Administrative Committee. The Administrative
Committee shall also receive notices or other communications directed to Members
from the Trustee and transmit them to the Members. All elections
which may be made by a Member under this Plan shall be made in a time, manner
and form determined by the Administrative Committee unless a specific time,
manner or form is set forth in the Plan.
|
Section
12.10
.
|
Misrepresentation of
Age
.
|
In
making a determination or calculation based upon a Member’s age, the
Administrative Committee shall be entitled to rely upon any information
furnished by the Member. If a Member misrepresents the Member’s age,
and the misrepresentation is relied upon by a Member Company, an affiliate
thereof (including the Company) or the Administrative Committee, the
Administrative Committee will adjust the Member’s benefit to conform to the
Member’s actual age and offset future monthly payments to recoup any
overpayments caused by the Member’s misrepresentation.
|
Section
12.11
.
|
Decisions of
Administrative Committee are
Binding
.
|
The
decisions of the Administrative Committee with respect to any matter it is
empowered to act on shall be made in the Administrative Committee’s sole
discretion and shall be final, conclusive and binding on all persons, based on
the Plan documents. In carrying out its functions under the Plan, the
Administrative Committee shall endeavor to act by general rules so as to
administer the Plan in a uniform and nondiscriminatory manner as to all persons
similarly situated.
|
Section
12.12
.
|
Spouse’s
Consent
.
|
In
addition to when such consent is expressly required by the terms of this Plan,
the Administrative Committee may, in its sole discretion, also require the
written consent of the Employee’s Spouse to any other election or revocation of
election made under this Plan before such election or revocation shall be
effective.
|
Section
12.13
.
|
Accounts and
Records
.
|
The
Administrative Committee and Investment Committee shall maintain such accounts
and records regarding the fiscal and other transactions of the Plan and such
other data as may be required to carry out its functions under the Plan and to
comply with all applicable laws. The Administrative Committee shall
report annually to the Board on the performance of its responsibilities and on
the performance of any trustee or other persons to whom any of its powers and
responsibilities may have been delegated and on the administrative operation of
the Plan for the preceding year. The Investment Committee shall
report annually to the Board on the performance of its responsibilities and on
the performance of any trustee, investment manager, insurance carrier or persons
to whom any of its powers and responsibilities may have been delegated and on
the financial condition of the Plan for the preceding year.
To
the extent that the form or method prescribed by the Administrative Committee to
be used in the operation and administration of the Plan does not conflict with
the terms and provisions of the Plan, such form shall be evidence of (a) the
Administrative Committee’s interpretation, construction and administration of
this Plan and (b) decisions or rules made by the Administrative Committee
pursuant to the authority granted to the Administrative Committee under the
Plan.
|
Section
12.15
.
|
Liability and
Indemnification
.
|
The
functions of the Trustees, Administrative Committee, the Investment Committee,
the Board, and the Employer under the Plan are fiduciary in nature and each
shall be carried out solely in the interest of the Members and other persons
entitled to benefits under the Plan for the exclusive purpose of providing the
benefits under the Plan (and for the defraying of reasonable expenses of
administering the Plan). The Administrative Committee, the Investment
Committee, the Board, and the Employer shall carry out their respective
functions in accordance with the terms of the Plan with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims. No
member of the Administrative Committee or Investment Committee and no officer,
director, or employee of the Employer shall be liable for any action or inaction
with respect to his functions under the Plan unless such action or inaction is
adjudicated to be a breach of the fiduciary standard of conduct set forth
above.
The
Company shall indemnify and hold harmless any person who, by virtue of
membership on the Board, Administrative Committee, Investment Committee or any
other committee or by virtue of such person’s status as a director, officer or
employee of the Employer, is deemed or held to be a fiduciary of the Plan within
the meaning of the Act, to the extent not covered by the Company’s insurance,
against any and all claims, loss, damages, expenses, including legal fees and
other expenses of litigation and liability arising from any action or failure to
act, provided that such act or failure to act is not judicially determined to be
due to the gross negligence or willful misconduct of such person, except that
the Company may, in its sole discretion, elect not to enforce this provision in
a case of gross negligence or willful misconduct. Further, no member
of the Administrative Committee or Investment Committee shall be personally
liable merely by virtue of any instrument executed by him or on his behalf as a
member of the Administrative Committee or Investment Committee. The
Company may secure and maintain in full force and effect such insurance as may
be reasonably available on behalf of the persons described in this section, to
cover liability or losses from which the Company is obligated to indemnify such
persons. The amount and conditions of such insurance shall be
determined by the Company in its sole discretion.
|
Section
12.16
.
|
Claim and Appeal
Procedure
.
|
(a)
Initial
Claim
.
(1) Any
claim by an Employee, Member or Beneficiary (“Claimant”) with respect to
eligibility, participation, contributions, benefits or other aspects of the
operation of the Plan shall be made in writing to the Administrative Committee
(or its designee) for such purpose. The Administrative Committee (or its
designee) shall provide the Claimant with the necessary forms and make all
determinations as to the right of any person to a disputed
benefit. An authorized representative of a Claimant may act on behalf
of the Claimant in pursuing a benefit claim or any subsequent appeal of an
adverse benefit determination hereunder. If a Claimant is denied
benefits under the Plan, the Administrative Committee (or its designee) shall
notify the Claimant in writing of the denial of the claim within ninety (90)
days (or within forty-five (45) days if the claim involves a determination of a
claim for disability benefits) after the Administrative Committee receives the
claim, provided that in the event of special circumstances such period may be
extended.
(2) In
the event of special circumstances, the maximum period in which a claim must be
determined may be extended as follows:
(A) With
respect to any claim, other than a claim that involves a determination of a
claim for disability benefits, the ninety (90) day period may be extended for a
period of up to ninety (90) days (for a total of one hundred eighty (180)
days). If the initial ninety (90) day period is extended, the
Administrative Committee or its designee shall notify the Claimant in writing
within ninety (90) days of receipt of the claim. The written notice
of extension shall indicate the special circumstances requiring the extension of
time and provide the date by which the Administrative Committee expects to make
a determination with respect to the claim. If the extension is
required due to the Claimant’s failure to submit information necessary to decide
the claim, the period for making the determination shall be tolled from the date
on which the extension notice is sent to the Claimant until the earlier of (i)
the date on which the Claimant responds to the Administrative Committee’s
request for information, or (ii) expiration of the forty-five (45) day period
commencing on the date that the Claimant is notified that the requested
additional information must be provided.
(B) With
respect to a claim that involves a determination of a claim for disability
benefits, the forty-five (45) day period may be extended as
follows:
(I) Initially,
the forty-five (45) day period may be extended for a period to up to an
additional thirty (30) days (the “Initial Disability Extension Period”),
provided that the Administrative Committee determines that such an extension is
necessary due to matters beyond the control of the Plan and, within forty-five
(45) days of receipt of the claim, the Administrative Committee or its designee
notifies the Claimant in writing of such extension, the special circumstances
requiring the extension of time, the date by which the Administrative Committee
expects to make a determination with respect to the claim and such information
as required under clause (III) below.
(II) Following
the Initial Disability Extension Period the period for determining the
Claimant’s claim may be extended for a period of up to an additional thirty (30)
days, provided that the Administrative Committee determines that such an
extension is necessary due to matters beyond the control of the Plan and within
the Initial Disability Extension Period, notifies the Claimant in writing of
such additional extension, the special circumstances requiring the extension of
time, the date by which the Administrative Committee expects to make a
determination with respect to the claim and such information as required under
clause (III) below.
(III) Any
notice of extension pursuant to this Paragraph (B) shall specifically explain
the standards on which entitlement to a benefit is based, the unresolved issues
that prevent a decision on the claim, and the additional information needed to
resolve those issues, and the Claimant shall be afforded forty-five (45) days
within which to provide the specified information.
(IV) If
an extension is required due to the Claimant’s failure to submit information
necessary to decide the claim, the period for making the determination shall be
tolled from the date on which the extension notice is sent to the Claimant until
the earlier of (i) the date on which the Claimant responds to
the Administrative Committee’s request for information, or (ii)
expiration of the forty-five (45) day period commencing on the date that the
Claimant is notified that the requested additional information must be
provided.
(3) Reserved.
(4) If
a claim is wholly or partially denied, the notice to the Claimant shall set
forth:
(A) The
specific reason or reasons for the denial;
(B) Specific
reference to pertinent Plan provisions upon which the denial is
based;
(C) A
description of any additional material information necessary for the Claimant to
complete the claim request and an explanation of why such material or
information is necessary;
(D) Appropriate
information as to the steps to be taken and the applicable time limits if the
Claimant wishes to submit the adverse determination for review; and
(E) A
statement of the Claimant’s right to bring a civil action under Section 502(a)
of the Act following an adverse determination on review.
(5)
In addition, in the case of a disability claim that is wholly or partially
denied, the notice to the Claimant shall set forth:
(A) if
an internal rule, guideline, protocol, or other similar criterion was relied
upon in making the adverse determination, either the specific rule, guideline,
protocol, or other similar criterion; or a statement that such a rule,
guideline, protocol, or other similar criterion was relied upon in making the
adverse determination and that a copy of such rule, guideline, protocol, or
other criterion will be provided free of charge to the Claimant upon request;
and
(B) if
the denial is based on a medical necessity or experimental treatment or similar
exclusion or limit, either an explanation of the scientific or clinical judgment
for the determination, applying the terms of the Plan to the Claimant's medical
circumstances, or a statement that such explanation will be provided free of
charge upon request.
(b)
Claim
Denial Review
.
(1) If
a claim has been wholly or partially denied, the Claimant may submit the claim
for review by the Administrative Committee. Any request for review of
a claim must be made in writing to the Administrative Committee no later than
sixty (60) days (or within one hundred and eighty (180) days if the claim
involves a determination of a claim for disability benefits) after the Claimant
receives notification of denial or, if no notification was provided, the date
the claim is deemed denied. The Claimant or his duly authorized
representative may:
(A) Upon
request and free of charge, be provided with reasonable access to, and copies
of, relevant documents, records, and other information relevant to the
Claimant’s claim; and
(B) Submit
written comments, documents, records, and other information relating to the
claim. The review of the claim determination shall take into account
all comments, documents, records, and other information submitted by the
Claimant relating to the claim, without regard to whether such information was
submitted or considered in the initial claim determination.
(2) The
decision of the Administrative Committee upon review shall be made within sixty
(60) days (or within forty-five (45) days if the claim involves a determination
of a claim for disability benefits) after receipt of the Claimant’s request for
review, unless special circumstances (including, without limitation, the need to
hold a hearing) require an extension. In the event of special
circumstances, the maximum period in which a claim must be determined may be
extended as follows:
(A)
With respect to any claim, other than a claim that involves a
determination of a claim for disability benefits, the sixty (60) day period may
be extended for a period of up to sixty (60) days.
(B)
With respect to a claim that involves a determination of a claim for disability
benefits, the forty-five (45) day period may be extended for a period of up to
forty-five (45) days.
(3)
If the sixty (60) day period (or forty-five (45) day period where the claim
involves a determination of a claim for disability benefits) is extended, the
Administrative Committee or its designee shall, within sixty (60) days (or
within forty-five (45) days if the claim involves a determination of a claim for
disability benefits) of receipt of the claim for review, notify the Claimant in
writing. The written notice of extension shall indicate the special
circumstances requiring the extension of time and provide the date by which the
Administrative Committee expects to make a determination with respect to the
claim upon review. If the extension is required due to the Claimant’s failure to
submit information necessary to decide the claim, the period for making the
determination shall be tolled from the date on which the extension notice is
sent to the Claimant until the earlier of (i) the date on which the Claimant
responds to the Administrative Committee’s request for information, or (ii)
expiration of the forty-five (45) day period commencing on the date that the
Claimant is notified that the requested additional information must be
provided.
(4) The
Administrative Committee, in its sole discretion, may hold a hearing regarding
the claim and request that the Claimant attend. If a hearing is held,
the Claimant shall be entitled to be represented by counsel.
(5) The
Administrative Committee’s decision upon review on the Claimant’s claim shall be
communicated to the Claimant in writing. If the claim upon review is
denied, the notice to the Claimant shall set forth:
(A) The
specific reason or reasons for the decision, with references to the specific
Plan provisions on which the determination is based;
(B) A
statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to the claim; and
(C) A
statement of the Claimant’s right to bring a civil action under Section 502(a)
of the Act.
(D) In
addition, in the case of a disability claim that is wholly or partially denied,
the notice to the Claimant shall set forth:
(I)
if an internal rule, guideline, protocol, or other
similar criterion was relied upon in making the adverse determination, either
the specific rule, guideline, protocol, or other similar criterion; or a
statement that such rule, guideline, protocol, or other similar criterion was
relied upon in making the adverse determination and that a copy of the rule,
guideline, protocol, or other similar criterion will be provided free of charge
to the Claimant upon request; and
(II) if
the adverse benefit determination is based on a medical necessity or
experimental treatment or similar exclusion or limit, either an explanation of
the scientific or clinical judgment for the determination, applying the terms of
the Plan to the Claimant's medical circumstances, or a statement that such
explanation will be provided free of charge upon request.
(6) Any
review of a claim involving a determination of a claim for disability benefits
shall not afford deference to the initial adverse benefit determination and
shall not be determined by any individual who made the initial adverse benefit
determination or a subordinate of such individual. In deciding a
review of any adverse benefit determination that is based in whole or in part on
a medical judgment, including determinations with regard to whether a particular
treatment, drug, or other item is experimental, investigational, or not
medically necessary or appropriate, the Administrative Committee shall consult
with a health care professional who has appropriate training and experience in
the field of medicine involved in the medical judgment.
(c)
All
interpretations, determinations and decisions of the Administrative Committee
with respect to any claim, including without limitation the appeal of any claim,
shall be made by the Administrative Committee, in its sole discretion, based on
the Plan and comments, documents, records, and other information presented to
it, and shall be final, conclusive and binding.
(d)
The
claims procedures set forth in this section are intended to comply with United
States Department of Labor Regulation § 2560.503-1 and should be construed in
accordance with such regulation. In no event shall it be interpreted
as expanding the rights of Claimants beyond what is required by United States
Department of Labor Regulation § 2560.503-1.
(e)
A
Claimant, or his or her duly authorized representative, may commence a lawsuit
to obtain benefits only after he or she has exhausted the claims procedures
described in this section, and a final decision has been rendered or deemed
rendered on appeal. Notwithstanding anything herein to the contrary,
unless prohibited by law, any lawsuit with regard to the denial of benefits
under the Plan must be commenced within one (1) year from the earliest of (i)
the date that the appeal was denied or (ii) the expiration of the time by which
the Plan was required to render a decision on appeal under the procedures set
forth above if an appeal had been made. All lawsuits commenced after
such period shall be deemed to have been waived by the Claimant and shall
thereafter be wholly unenforceable. Nothing in this paragraph shall
be construed to extend any otherwise applicable statute of limitations period
set forth under ERISA or any under any other applicable law.
|
Section
12.17
.
|
Elections by Former
Employees of Equitable Capital Management
Corporation
.
|
Any
designation or election by a Member or the beneficiary of a Member who had an
account balance under the ECMC Plan on December 31, 1994, including, without
limitation, a designation of one or more beneficiaries, investment elections or
an election to receive a distribution that was in effect under the ECMC Plan as
of that date for the corresponding purpose under this Plan shall continue to be
effective under this Plan, as if made in respect of this Plan, until otherwise
changed in accordance with the terms of this Plan or any rules or procedures
established by the Administrative Committee.
ARTICLE
XIII
THE TRUST
FUND
|
Section
13.01
.
|
The Trust
Agreement
.
|
The
Company shall enter into a Trust Agreement for the establishment of the Trust
with one or more individuals or with a bank or trust company organized and doing
business under the laws of the United States or of any state and authorized
under the laws of its jurisdiction of incorporation to exercise corporate trust
powers. The Trust Agreement shall be deemed to form a part of the
Plan, and all rights which may accrue to any Person under the Plan shall be
subject to the terms of the Trust Agreement.
|
Section
13.02
.
|
Trustee’s Power and
Duties
.
|
The
Trustee shall manage and control the Trust Fund in accordance with the terms of
the Trust Agreement.
|
Section
13.03
.
|
Use of Trust
Fund
.
|
The
Trust Fund shall be used to provide the benefits and pay the expenses of this
Plan and of the Trustee, and no part of the corpus or income shall be used for
or diverted to purposes other than for the exclusive benefit of Members and
their Beneficiaries under this Plan and the payment of expenses of the Plan and
Trust. A transaction between the Plan and a common or collective
trust fund or pooled investment fund maintained by a party in interest which is
a bank or trust company supervised by a State or Federal agency, or a pooled
investment fund of an insurance company qualified to do business in a State, and
listed on Appendix B as amended from time to time shall be permitted in
accordance with Section 408(b)(8) of the Act if the transaction is a sale or
purchase of an interest in the fund, and the bank, trust company, or insurance
company receives not more than reasonable compensation. All or any
part of the assets of the Trust Fund may be invested in any group trust which
then provides for the pooling of the assets of plans described in Code Section
401(a) and is exempt from tax under Code Section 501(a) in accordance with
Revenue Ruling 81-100, provided that the provisions of the document governing
such group trust, as it may be amended from time to time, shall govern any
investment therein and are hereby made a part of this Plan.
|
Section
13.04
.
|
Payment of
Expenses
.
|
All
administrative and other expenses of the Plan and Trust shall be paid out of the
Trust Fund unless paid by the Company. Taxes related to the unrelated
business taxable income of the Trust that are paid out of the Trust Fund, shall
be paid from and charged solely to the Account or Accounts involved, either on a
specific or proportionate basis, as determined by the Administrative
Committee. The Company may make advances or extend credit to
the Plan for the purpose of paying Plan benefits or expenses to the extent
permitted, and in accordance with, applicable law.
ARTICLE
XIV
CERTAIN RIGHTS AND
OBLIGATIONS OF THE COMPANY
|
Section
14.01
.
|
Disclaimer of
Liability
.
|
(a)
Although
it is the intention of the Company to continue this Plan and to make substantial
and regular contributions each year, nothing contained in this Plan or the Trust
Agreement shall be deemed to require the Company to make any contributions
whatsoever under this Plan or to continue the Plan.
(b)
Nothing
in this Plan shall be construed as the assumption by the Company of the
obligation for any payment of any benefits or claims hereunder, and Members and
their Beneficiaries, and all persons claiming under or through them, shall have
recourse only to the Trust Fund for payment of any benefit
hereunder.
(c)
The
rights of the Members, their Beneficiaries and all other persons are hereby
expressly limited to those stated in, and shall be construed only in accordance
with, the Provisions of the Plan.
|
Section
14.02
.
|
Termination
.
|
The
Company reserves the right in its sole discretion to terminate this Plan at any
time. A “termination” shall be deemed to take place if the Company
terminates the Plan, partially terminates it (within the meaning of Code Section
411(d)(3)(A)) or completely discontinues contributions under this
Plan. (For this purpose a suspension of contributions which is merely
temporary shall not be deemed a complete discontinuance.) In the event of a
termination, the Company may direct the Trustee to continue to maintain the
Trust, and the assets thereof shall be applied at the continued direction of the
Administrative Committee in accordance with this Plan. Upon
termination of the Trust, distribution to each Member shall be made as soon as
practicable thereafter in the manner described in Section
11.01. Until fully distributed, Members’ accounts shall be revalued
from time to time in accordance with Section 9.01. Upon termination
or partial termination of the Plan, the rights of all affected Members to the
amounts credited to their Accounts to the date of such termination shall become
non-forfeitable.
|
Section
14.03
.
|
Employer-Employee
Relationship
.
|
The
adoption of this Plan shall in no way be construed as conferring any legal or
other rights upon any Employee or any Person with respect to continuation of
employment, nor shall it in any way interfere with the right of an Employer to
discharge any Employee or otherwise act with respect to him. Any
Employer may take any action (including discharge) with respect to any Employee
or other Person without regard to the effect which such action might have upon
his rights as a Member of this Plan.
|
Section
14.04
.
|
Merger,
Etc.
|
(a)
The
merger or consolidation of an Employer with or into another company or the
acquisition of its assets by any other Person shall not of itself cause the
termination of this Plan or be deemed a termination of employment as to any
Employee, nor shall anything in this Plan prevent the consolidation or merger of
any Employer with or into any corporation or prevent the sale by any Employer of
any of its assets. The merger of this Plan with another retirement
plan shall not of itself cause the termination of this Plan.
(b)
In
the event of the dissolution, merger, consolidation or reorganization of the
Company, provision may be made by which the Plan and Trust will be continued by
the successor; and in such event such successor shall be substituted for the
Company under the Plan. The substitution of the successor shall
constitute an assumption of Plan liabilities by the successor, and the
successor shall have all of the powers, duties and responsibilities
of the Company under the Plan.
(c)
In
the event of any merger or consolidation of the Plan with, or transfer in whole
or in part of the assets and liabilities of the Trust Fund to, another trust
fund held under any other plan of deferred compensation maintained or to be
established for the benefit of all or some of the Members of this Plan, the
assets of the Trust Fund applicable to such members shall be transferred to such
other trust fund only if:
(1) the
values of the Accounts and the vested percentage of the Company Contributions
Account of each Member, immediately after the merger, consolidation or transfer,
shall be equal to or greater than such values and percentage immediately before
the merger, consolidation or transfer;
(2) resolutions
of the general partner referred to in Section 1.09 and of the governing body any
new or successor employer of the affected Members shall authorize such transfer
of assets; and, in the case of the new or successor employer of the affected
Members, its resolutions shall include an assumption of liabilities with respect
to such Members’ inclusion in the new employer’s plan; and
(3) such
other plan and trust are qualified under Code Sections 401(a) and
501(a).
|
Section
14.05
.
|
Determination
Final
.
|
Any
determinations made hereunder shall be made in a manner consistent with the
Company’s accounting practices and shall be final and conclusive for all
purposes, notwithstanding any late adjustments in the tax returns of the
Company.
ARTICLE
XV
NON-ALIENATION OF
BENEFITS
|
Section
15.01
.
|
Provisions with
Respect to Assignment and
Levy
.
|
Except
as may be required under the terms of a “qualified domestic relations order” as
defined in Code Section 414(p), no benefit under this Plan shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, garnishment, attachment, levy or charge and any attempt to so
anticipate, alienate, sell, transfer, assign, pledge, encumber, garnish, attach,
levy upon or charge the same shall be void; nor shall any benefit be in any
manner liable for or subject to the debts or other liabilities of the Person
entitled thereto.
|
Section
15.02
.
|
Alternate
Application
.
|
If
any Member or Beneficiary under this Plan becomes bankrupt or attempts to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any
benefit under this Plan, except as specifically provided herein, or if any
benefit shall be garnished, attached or levied upon other than pursuant to a
qualified domestic relations order as defined in Code Section 414(p), then such
benefits shall, in the discretion of the Administrative Committee, cease, and
the Administrative Committee may hold or apply the same or any part thereof to
or for the benefit of such Member or Beneficiary, his spouse, children or other
dependents or any of them in such manner and in such proportion as the
Administrative Committee may deem proper.
|
Section
15.03
.
|
Exceptions
.
|
Notwithstanding
anything herein to the contrary, effective August 5, 1997, the provisions of
this Article XV shall not apply to any offset of a Member’s benefits provided
under the Plan against an amount that the Member is ordered or required to pay
to the Plan under any of the circumstances set forth in Code Section
401(a)(13)(C) and Sections 206(d)(4) and 206(d)(5) of the Act.
AMENDMENTS
|
Section
15.04
.
|
Company’s
Rights
.
|
(a)
The
Company reserves the right, at any time and from time to time, by action of the
Board, to modify or amend in whole or in part any or all of the provisions of
this Plan; provided, however, that no such modification or amendment may (i)
result in a retroactive reduction in the then value of any Member’s Account or
Loan Account; or (ii) except to the extent as may be provided in regulations
promulgated by the Secretary of the Treasury, have the effect of eliminating an
optional form of benefit. Notwithstanding anything in this Plan to the contrary,
the Board, in its sole discretion, may make any modifications, amendments,
additions or deletions in this Plan, as to benefits or otherwise and
retroactively or prospectively and regardless of the effect on the rights of any
particular Members, which it deems appropriate in order to bring this Plan into
conformity with or to satisfy any conditions of the Act and in order to continue
or maintain the qualification of the Plan and Trust under Code Section 401(a)
and to have the Trust declared exempt and maintained exempt from taxation under
Code Section 501(a).
(b)
No
amendment may change the vesting schedule under Section 10.04, either directly
or indirectly, unless each Member having not less than three Years of Service is
permitted to elect, within a reasonable period specified by the Administrative
Committee after the adoption of such amendment, to have his or her vested
percentage computed without regard to such amendment. The period
during which the election may be made shall commence with the date the amendment
is adopted and shall end as of the later of:
(i)
sixty
days after the amendment is adopted;
(ii)
sixty
days after the amendment becomes effective; or
(iii)
sixty
days after the Member is issued written notice by the Administrative
Committee.
|
Section
15.05
.
|
Provision Against
Diversion
.
|
No
part of the assets of the Trust Fund shall, by reason of any modification or
amendment or otherwise, be used for, or diverted to, purposes other than for the
exclusive benefit of Members or their Beneficiaries under this Plan and the
payment of the administrative expenses of this Plan.
ARTICLE
XVI
LIMITATIONS ON BENEFITS AND
CONTRIBUTIONS
Section
16.01
. The limitations of Code Section 415
applicable to “defined contribution plans” as defined in Code Section 414(i) are
hereby incorporated by reference in this Plan; provided, however, that where the
Code so provides, contribution limitations in effect under prior law shall be
applicable to account balances accrued as of the last effective day of such
prior law. Effective as of January 1, 2008, in no event shall annual
additions, as defined under Code Section 415(c)(2), made to a Member’s Account
for a Limitation Year exceed the lesser of 100 percent (100%) of Compensation or
$46,000 (in 2008) and as adjusted in later Plan Years for cost-of-living
increases pursuant to Code Sections 415(c)(1), 415(d)(1), 415(d)(3) and
415(d)(4), and Treasury Regulation Section 1.415(c)-1.
(a)
If,
with respect to any Plan Year beginning on and after January 1, 1992 and prior
to January 1, 2008, contributions to a Member’s Account must be reduced to
conform to the limitations on “annual additions” as defined in Code Section
415(c)(2), the reduction shall be achieved first by the distribution to the
affected Member on a timely basis of Member Salary Deferrals made pursuant to
Section 5.01, together with allocable earnings thereon, until the limitations
are met or this category of contributions is exhausted, whichever first
occurs. Concurrent with the return of such Member Salary Deferrals,
Company Contributions made pursuant to Section 4.02 attributable to such
returned Member Salary Deferrals shall be reduced. Finally, if necessary,
Company Contributions for the Plan Year made pursuant to Section 4.01 shall be
reduced.
(b)
Effective
as of January 1, 2008, notwithstanding anything herein to the contrary, in the
event the annual additions, as defined under Code Section 415(c)(2), on behalf
of a Member in any Plan Year exceed the limitations of Code Section 415, the
Plan may only correct such excess in accordance with the Employee Plans
Compliance Resolution System (EPCRS) as set forth in Revenue Procedure 2008-50
or any superseding guidance, including, but not limited to, the preamble of the
final Section 415 regulations.
Section
16.03
. In the case of a Member who is, or
has ever been, a participant in one or more “defined benefit plans” as defined
in Code Section 414(j), maintained by an Employer or any predecessor of the
Employer, if Contributions or benefits need to be reduced due to the application
of Code Section 415(e), then benefits under the defined benefit plans shall be
reduced with respect to that Member before any contributions credited to the
Member under this Plan, or any other defined contribution plan maintained by the
Employer, shall be reduced. Notwithstanding the foregoing, the
limitations of Code Section 415(e) shall cease to apply as of the first day of
the first Plan Year beginning on or after January 1, 2000.
ARTICLE
XVII
TOP-HEAVY PLAN
YEARS
Section
17.01
. For purposes of this Article XVIII, the
following definitions shall apply:
(a)
“Determination
Date” means, for any Plan Year subsequent to the first Plan Year, the last day
of the preceding Plan Year. For the first Plan Year of a plan, the
last day of that year.
(b)
“Employee”
means any employee of an Employer and any beneficiary of such an
employee.
(c)
“Employer”
means the Employer and any Affiliate.
(d)
“Key
Employee” means an Employee as defined in Section 416(i)(1) and the
Regulations thereunder. For Plan Years beginning after December 31, 2001, “Key
Employee” means any Employee or former Employee (including any deceased
Employee) who at any time during the Plan Year that includes the “Determination
Date” was an officer of the Employer having annual compensation greater than
$130,000 (as adjusted under Code Section 416(i)(1) for Plan Years beginning
after December 31, 2002), a 5-percent owner of the Employer or a 1-percent owner
of the Employer having annual compensation of more than $150,000. As
used in this definition, “annual compensation” means compensation within the
meaning of Code Section 415(c)(3). For Plan Years beginning before
December 31, 2001, “Key Employee” means any Employee or former Employee (and the
Beneficiaries of such Employee) who, at any time during the
determination period, was an officer of the Employer if such individual’s
Top-Heavy Compensation exceeds 50% of the dollar limitation under Code Section
415(b) (1) (A), an owner (or considered an owner under Code Section 318) of one
of the ten largest interests in the Employer if such individual’s Top-Heavy
Compensation exceeds 100% of such dollar limitation, a 5 percent owner of the
Employer, or a 1 percent owner of the Employer who has annual
Top-Heavy Compensation of more than $150,000. The
determination period is the Plan Year containing the Determination Date and the
4 preceding Plan Years.
(e)
“Permissive
Aggregation Group” means the Required Aggregation Group of plans plus any other
plan or plans of the Employer which, when considered as a group with the
Required Aggregation Group, would continue to satisfy the requirements of Code
Sections 401(a)(4) and 410.
(f)
“Required Aggregation Group” means (1) each
qualified plan of the Employer in which at least one Key Employee participates;
and (2) any other qualified plan of the Employer which enables a plan described
in (1) to meet the requirements of Code Sections 401(a)(4) or 410.
(g)
“Top-Heavy
Compensation” means the Employee’s compensation as defined in Code Section
414(q)(7). Top-Heavy Compensation shall include Deemed 125
Compensation, as defined in Section 1.16 of the Plan.
(h)
“Top-Heavy
Ratio” means:
(1)
If, in addition to this Plan, the Employer maintains one or
more other defined contribution plans (including any simplified employee pension
plan) and the Employer has not maintained any defined benefit plan which, during
the 1-year period ending on the Determination Date, has or has had accrued
benefits, the top-heavy ratio for this Plan alone or for the Required or
Permissive Aggregation Group, as appropriate, is a fraction, the numerator of
which is the sum of the account balances of all Key Employees as of the
Determination Date (including any part of any account balance distributed in the
1-year period ending on the Determination Date), and the denominator of which is
the sum of all account balances (including any part of any account balance
distributed in the 1-year period ending on the Determination Date), both
computed in accordance with Code Section 416 and the regulations thereunder.
Both the numerator and denominator of the Top-Heavy Ratio are adjusted to
reflect any contribution not actually made as of the Determination Date, but
which is required to be taken into account on that date under Code Section 416
and the regulations thereunder.
(2) If,
in addition to this Plan, the Employer maintains one or more defined
contribution plans (including any simplified employee pension plan), and the
Employer maintains or has maintained one or more defined benefit plans which,
during the 5-year period ending on the Determination Date, has or has had any
accrued benefits, the Top-Heavy Ratio for any Required or Permissive Aggregation
Group, as appropriate, is a fraction, the numerator of which is the sum of
account balances under the aggregated defined contribution plan or plans for all
Key Employees, determined in accordance with (1) above, and the present value of
accrued benefits under the aggregated defined benefit plan or plans for all Key
Employees as of the Determination Date, and the denominator of which is the sum
of the account balances under the aggregated defined contribution plan or plans
for all participants, determined in accordance with (1) above, and the present
value of accrued benefits under the defined benefit plan or plans for all
participants as of the Determination Date, all determined in accordance with
Code Section 416 and the regulations thereunder. The accrued benefits
under a defined benefit plan in both the numerator and denominator of the
Top-Heavy Ratio are adjusted for any distribution of an accrued benefit made in
the 1-year period ending on the Determination Date.
(3) For
purposes of (1) and (2) above, the value of account balances and the present
value of accrued benefits will be determined as of the most recent Valuation
Date that falls within or ends with the 12-month period ending on the
Determination Date, except as provided in Code Section 416 and the regulations
thereunder for the first and the second plan years of a defined benefit
plan. The account balances and accrued benefits of a participant (x)
who is not a Key Employee but who was a Key Employee in a prior year; or (y) who
has not received any Top-Heavy Compensation from any Employer maintaining the
Plan at any time during the 5-year period ending on the Determination Date, will
be disregarded. Notwithstanding the above, for Plan Years beginning
after December 31, 2001, the accrued benefits and accounts of any participant
who has not performed services for the Employer during the 1-year period ending
on the Determination Date will be disregarded. The calculation of the
Top-Heavy Ratio, and the extent to which distributions, rollovers, and transfers
are taken into account will be made in accordance with Code Section 416 and the
regulations thereunder. Deductible Employee contributions will not be taken into
account for purposes of computing the Top-Heavy Ratio. When
aggregating plans the value of account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall within the same
calendar year.
(4) For
purposes of (1) and (2) above, in the case of a distribution from the Plan made
for any reason other than severance from employment, death or disability,
“5-year period” shall be substituted for “1-year period” wherever such term is
found.
(i)
“Valuation
Date” means the last day of the Plan Year.
Top-Heavy
Compensation shall include Deemed 125 Compensation, as defined in Section 1.16
of the Plan.
Section
17.02
. If the Plan is or becomes
top-heavy in any Plan Year, the provisions of Section 18.04 will automatically
supersede any conflicting provision of the Plan.
Section
17.03
. The Plan shall be considered
top-heavy for any Plan Year if any of the following conditions
exists:
(a)
If
the Top-Heavy Ratio for this Plan exceeds 60 percent and this Plan is not part
of any Required Aggregation Group or Permissive Aggregation Group
of plans.
(b)
If
this Plan is part of a Required Aggregation Group of plans but not part of a
Permissive Aggregation Group and the Top-Heavy Ratio for the group of plans
exceeds 60 percent.
(c)
If
this Plan is part of a Required Aggregation Group of plans and part of a
Permissive Aggregation Group and the Top-Heavy Ratio for the Permissive
Aggregation Group exceeds 60 percent.
Section 17.04
.
(a)
Except
as provided in Subsection (b), the amount of the Company contribution made on
behalf of each Member who is not a Key Employee for any Plan Year for which the
Plan is a Top-Heavy Plan shall be at least equal to the lesser of:
(1) three
percent (3%) of such Member’s Top-Heavy Compensation less any amount contributed
on behalf of the Member under any other defined contribution plan maintained by
an Employer or an Affiliate; or
(2) the
percentage of Top-Heavy Compensation represented by the Company Contributions
and Member Salary Deferrals made on behalf of the Key Employee for whom such
percentage is the highest for such Plan Year, determined by dividing the sum of
the Company Contribution and Member Salary Deferrals made on behalf of each such
Key Employee by so much of his Top-Heavy Compensation as does not exceed
$200,000.
(3) Where
the inclusion of this Plan in a Permissive Aggregation Group or Required
Aggregation Group pursuant to Section 18.01(e) or 18.01(f) enables a defined
benefit plan described in Section 18.01(f) to meet the requirements of Code
Sections 401(a)(4) or Section 410, the minimum contribution required under this
Section 18.04 shall be the amount specified in Section
18.04(a)(1).
ARTICLE
XVIII
MISCELLANEOUS
|
Section
18.01
.
|
Binding on Heirs,
Etc.
|
This
Plan shall extend to and be binding upon the heirs, executors, administrators,
successors and assigns of the Members and their Beneficiaries and all successors
to the Company by way of merger, consolidation, acquisition of assets or
otherwise.
|
Section
18.02
.
|
Governing
Law
.
|
All
questions pertaining to the validity, construction and administration of the
Plan shall be determined in accordance with the laws of the State of New York
(without reference to its Conflict of Laws provisions), except to the extent
that such laws have been superseded by the Act, the Code, or other federal law,
including the Defense of Marriage Act, and subject to the applicable provisions
of the laws of the United States of America.
|
Section
18.03
.
|
Separability
.
|
If
any provision of this Plan shall be held illegal or invalid for any reason, such
illegality or invalidity shall not affect the remaining parts of this Plan, and
the Plan shall be construed and enforced as if such illegal and invalid
provisions had never been inserted herein.
|
Section
18.04
.
|
Captions and
Gender
.
|
The
captions herein are for convenience of reference only and are not to be
construed as part of the Plan. As used herein, the masculine shall
include the feminine and the neuter and vice versa, as the context
requires.
|
Section
18.05
.
|
Merger of
SCOPE
.
|
Effective
January 1, 2004, the SCB Savings or Cash Option Plan for Employees is merged
into and with the Plan and the balances held in participants’ accounts under
SCOPE shall be transferred into the corresponding accounts under the Plan to be
maintained on behalf of such Members. Unless otherwise provided
herein, the benefits of each participant in the SCB Savings or Cash Option Plan
for Employees who is not credited with an hour of service after December 31,
2003 shall be governed by the terms of such plan as of the date of the
participant’s termination of employment. Any election made under
SCOPE by a participant shall be deemed to have been made under the Plan;
provided that a salary deferral election made under SCOPE shall be applied under
the Plan as if it were a salary deferral election made with respect to
Compensation, as defined under 1.16 of the Plan, and shall be reduced, to the
extent necessary to avoid exceeding the maximum limits on the amount that may be
deferred pursuant to Section 5.01 by a Member.
APPENDIX
A
REQUIRED
DISTRIBUTION RULES
Section 1
.
General
.
Pursuant to
Section 11.08 of the Plan, this Appendix A describes the required distribution
rules for Members who have reached their Required Beginning Date, as those terms
are defined in the Plan, as well as the incidental death benefit
requirements. The terms of this Appendix A shall apply solely to the
extent required under Code Section 401(a)(9) and shall be null and void to the
extent that they are not required under Section 401(a)(9) of the
Code. Any capitalized terms not otherwise defined in this Appendix A
have the meaning given those terms in the Plan. Notwithstanding any
other provision of the Plan, distributions must be made in compliance with
Treasury Regulations under Code Section 401(a)(9).
Section
2
.
Required
Distributions
. As of any Member’s Required Beginning Date, the
Member must begin to receive distributions of his or her benefits under the
Plan.
Section 3
.
Single-Sum
Distribution
.
A Member may
satisfy the requirements of this Appendix A by receiving a single lump-sum
distribution on or before his or her Required Beginning Date.
Section 4
.
Time and
Manner of Distribution
.
4.1.
Death of Member Before
Distributions Begin
. If the Member dies before distributions
begin, the Member’s entire interest must be distributed, or begin to be
distributed no later than as follows:
(a) If
the Member’s surviving spouse is the Member’s sole designated beneficiary, then
distributions to the surviving spouse will begin by December 31 of the calendar
year immediately following the calendar year in which the Member died, or by
December 31 of the calendar year in which the Member would have attained age
70½, if later.
(b) If
the Member’s surviving spouse is not the Member’s sole designated beneficiary,
then distributions to the designated beneficiary will begin by December 31 of
the calendar year immediately following the calendar year in which the Member
died.
(c) If
there is no designated beneficiary as of September 30 of the year following the
year of the Member’s death, the Member’s entire interest will be distributed by
December 31 of the calendar year containing the fifth anniversary of the
Member’s death.
(d) If
the Member’s surviving spouse is the Member’s sole designated beneficiary and
the surviving spouse dies after the Member but before distributions to the
surviving spouse begin, this Section 4.1, other than Section 4.1(a), will apply
as if the surviving spouse were the Member.
For
purposes of this Section 4.1 and Section 6, unless Section 4.1(d) applies,
distributions are considered to begin on the Member’s Required Beginning
Date. If Section 4.1(d) applies, distributions are considered to
begin on the date distributions are required to begin to the surviving spouse
under Section 4.1(a).
4.2.
Forms of
Distribution
. Unless the Member’s interest is distributed in a
single sum on or before the Required Beginning Date, as of the first
Distribution Calendar Year distributions must be made no slower than required
under Sections 5 and 6 of this Appendix A.
Section
5
.
Required
Minimum Distributions During Member’s Lifetime
.
5.1.
Amount of Required Minimum
Distribution for Each Distribution Calendar Year
. During the
Member’s lifetime, the minimum amount that will be distributed for each
Distribution Calendar Year is the lesser of:
(a) the
quotient obtained by dividing the Member’s Account Balance by the distribution
period in the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the
Treasury Regulations, using the Member’s age as of the Member’s birthday in the
Distribution Calendar Year, or
(b) if
the Member’s sole designated beneficiary for the Distribution Calendar Year is
the Member’s spouse, the quotient obtained by dividing the Member’s Account
Balance by the number in the Joint and Last Survivor Table set forth in Section
1.401(a)(9)-9 of the Treasury Regulations, using the Member’s and spouse’s
attained ages as of the Member’s and spouse’s birthdays in the Distribution
Calendar Year.
5.2.
Lifetime Required Minimum
Distributions Continue Through Year of Member’s
Death
. Required minimum distributions will be determined under
this Section 5 beginning with the first Distribution Calendar Year and up to and
including the Distribution Calendar Year that includes the Member’s date of
death.
Section
6
.
Required
Minimum Distributions After Member’s Death
.
6.1.
Death On or After Date
Distributions Begin
.
(a) Member
Survived by Designated Beneficiary. If the Member dies on or after
the date distributions begin and there is a designated beneficiary, the minimum
amount that will be distributed for each Distribution Calendar Year after the
year of the Member’s death is the quotient obtained by dividing the Member’s
Account Balance by the longer of the remaining Life Expectancy of the Member or
the remaining Life Expectancy of the Member’s designated beneficiary, determined
as follows:
(1) The
Member’s remaining Life Expectancy is calculated using the age of the Member in
the year of death, reduced by one for each subsequent year.
(2) If
the Member’s surviving spouse is the Member’s sole designated beneficiary, the
remaining Life Expectancy of the surviving spouse is calculated for each
Distribution Calendar Year after the year of the Member’s death using the
surviving spouse’s age as of the spouse’s birthday in that year. For
Distribution Calendar Years after the year of the surviving spouse’s death, the
remaining Life Expectancy of the surviving spouse is calculated using the age of
the surviving spouse as of the spouse’s birthday in the calendar year of the
spouses death, reduced by one for each subsequent calendar
year.
(3) If
the Member’s surviving spouse is not the Member’s sole designated beneficiary,
the designated beneficiary’s remaining Life Expectancy is calculated using the
age of the beneficiary in the year following the year of the Member’s death,
reduced by one for each subsequent year.
(b) No
Designated Beneficiary. If the Member dies on or after the date
distributions begin and there is no designated beneficiary as of September 30 of
the year after the year of the Member’s death, the minimum a mount that will be
distributed for each Distribution Calendar Year after the year of the Member’s
death is the quotient obtained by dividing the Member’s Account Balance by the
Member’s remaining Life Expectancy calculated using the age of the Member in the
year of death, reduced by one for each subsequent year.
6.2.
Death Before Date
Distributions begin
.
(a)
Member Survived by Designated Beneficiary. If the Member dies before
the date distributions begin and there is a designated beneficiary, the minimum
amount that will be distributed for each Distribution Calendar Year after the
year of the Member’s death is the quotient obtained by dividing the Member’s
Account Balance by the remaining Life Expectancy of the Member’s designated
beneficiary, determined as provided in Section 6.1.
(b) No
Designated Beneficiary. If the Member dies before the date
distributions begin and there is no designated beneficiary as of September 30 of
the year following the year of the Member’s death, distribution of the Member’s
entire interest will be completed by December 31 of the calendar year containing
the fifth anniversary of the Member’s death.
(c) Death
of Surviving Spouse Before Distributions to Surviving Spouse Are Required to
Begin. If the Member dies before the date distributions begin, the
Member’s surviving spouse is the Member’s sole designated beneficiary, and the
surviving spouse dies before distributions are required to begin to the
surviving spouse under Section 4.1(a), this Section 6.2 will apply as if the
surviving spouse were the Member.
6.3.
Election to Apply 5-Year
Rule to Distributions to Designated Beneficiaries
. If the
Member dies before distributions begin and there is a designated beneficiary,
distribution to the designated beneficiary is not required to begin by the date
specified in Section 4 of this Appendix, but the Member’s entire interest will
be distributed to the designated beneficiary by December 31 of the calendar year
containing the fifth anniversary of the Member’s death. If the Member’s
surviving spouse is the Member’s sole designated beneficiary and the surviving
spouse dies after the Member but before distributions to either the Member or
the surviving spouse begin, this election will apply as if the surviving spouse
were the Member.
Section
7
.
Definitions
.
7.1.
Designated
Beneficiary
. The individual who is designated as the beneficiary under
Section 2.04 of the Plan and is the designated beneficiary under Section
401(a)(9) of the Internal Revenue Code and Section 1.401(a)(9)-4, Q&A-1, of
the Treasury Regulations.
7.2.
Distribution Calendar
Year
. A calendar year for which a minimum distribution is
required. For distributions beginning before the Member’s death, the
first Distribution Calendar Year is the calendar year immediately preceding the
calendar year which contains the Member’s Required Beginning
Date. For distributions beginning after the Member’s death, the first
Distribution Calendar Year is the calendar year in which distributions are
required to begin under Section 4.1. The required minimum
distribution for the Member’s first Distribution Calendar Year will be made on
or before the Member’s Required Beginning Date. The required minimum
distribution for other Distribution Calendar Years, including the required
minimum distribution for the Distribution Calendar Year in which the Member’s
Required Beginning Date occurs, will be made on or before December 31 of that
Distribution Calendar Year.
7.3.
Life
Expectancy
. Life expectancy as computed by use of the Single
Life Table in Section 1.401(a)(9)-9 of the Treasury Regulations.
7.4.
Member’s Account
Balance
. The account balance as of the last valuation date in
the calendar year immediately preceding the Distribution Calendar Year
(valuation calendar year) increased by the amount of any contributions made and
allocated or forfeitures allocated to the account balance as of dates in the
valuation calendar year after the valuation date and decreased by distributions
made in the valuation calendar year after the valuation date. The
account balance for the valuation calendar year includes any amounts rolled over
or transferred to the plan either in the valuation calendar year or in the
Distribution Calendar Year if distributed or transferred in the valuation
calendar year.
7.5.
Required Beginning
Date
. The date specified in Section 1.40 of the
Plan.
Section
8
. Under regulations prescribed by the Secretary of the
Treasury, any amount paid to a Member’s child shall be treated as if it had been
paid to such Member’s surviving spouse if such amount will become payable to
such spouse upon the child reaching maturity or such other designated event
which may be permitted under such regulations.
Section
9
.
TEFRA
Section 242(b)(2) Elections
. Notwithstanding the other provisions of this
Appendix A, other than the last sentence of Section 1 of this Appendix A,
distributions may be made under a designation made before January 1, 1984, in
accordance with Section 242(b)(2) of the Tax Equity and Fiscal Responsibility
Act (TEFRA) and the provisions of the plan that relate to Section 242(b)(2) of
TEFRA.
Section 10
. This
Appendix is not intended to defer the timing of distribution beyond the date
otherwise required under the Plan or to create any benefits (including but not
limited to death benefits) or distribution forms that are not otherwise offered
under the Plan.
APPENDIX
B
COMMON OR
COLLECTIVE TRUST FUNDS OR
POOLED
INVESTMENT FUNDS
AllianceBernstein
Wealth Appreciation Strategy Collective Trust
AllianceBernstein
Balanced Wealth Strategy Collective Trust
AllianceBernstein
Wealth Preservation Strategy Collective Trust
AllianceBernstein
US Short Duration Plus Collective Trust
AllianceBernstein
US Strategic Core-Plus Fixed Income Collective Trust
AllianceBernstein
US Style Blend Collective Trust
AllianceBernstein
International Style Blend Collective Trust
AllianceBernstein
Global All Country Blend Collective Trust
Bernstein
Global Real Estate Securities Collective Trust
AllianceBernstein
Customized Retirement Strategies
Exhibit
10.02
Amendment and
Restatement
of the
Retirement Plan for
Employees
of
AllianceBernstein
l.p.
(As of
January, 1, 2008)
TABLE OF
CONTENTS
ARTICLE
I
|
DEFINITIONS
|
1
|
|
|
|
ARTICLE
II
|
ELIGIBILITY
FOR PARTICIPATION
|
21
|
|
|
|
ARTICLE
III
|
RETIREMENT
ON OR AFTER NORMAL RETIREMENT DATE
|
23
|
|
|
|
ARTICLE
IV
|
VESTING
|
29
|
|
|
|
ARTICLE
V
|
EARLY
RETIREMENT AND DISABILITY BENEFIT
|
31
|
|
|
|
ARTICLE
VI
|
OPTIONAL
METHODS OF PAYMENT
|
32
|
|
|
|
ARTICLE
VII
|
DEATH
BENEFIT
|
38
|
|
|
|
ARTICLE
VIII
|
DIRECT
ROLLOVER DISTRIBUTIONS
|
40
|
|
|
|
ARTICLE
IX
|
EMPLOYER
CONTRIBUTION AND FUNDING POLICY
|
42
|
|
|
|
ARTICLE
X
|
LIMITATIONS
ON BENEFITS
|
43
|
|
|
|
ARTICLE
XI
|
TOP-HEAVY
PLAN YEARS
|
48
|
|
|
|
ARTICLE
XII
|
NON-ALIENABILITY
|
53
|
|
|
|
ARTICLE
XIII
|
AMENDMENT
OF THE PLAN
|
54
|
|
|
|
ARTICLE
XIV
|
TERMINATION
OF THE PLAN
|
56
|
|
|
|
ARTICLE
XV
|
TRUST
AND ADMINISTRATION
|
60
|
|
|
|
ARTICLE
XVI
|
CLAIM
AND APPEAL PROCEDURE
|
65
|
|
|
|
ARTICLE
XVII
|
MISCELLANEOUS
|
71
|
|
|
|
ARTICLE
XVIII
|
ADMINISTRATION
OF THE PLAN
|
73
|
|
|
|
APPENDIX
A
|
REQUIRED
MINIMUM DISTRIBUTION RULES
|
|
|
|
|
APPENDIX
B
|
COMMON
OR COLLECTIVE TRUST FUNDS OR POOLED INVESTMENT FUNDS
|
|
Amended
and Restated
Retirement
Plan for Employees
of
AllianceBernstein l.p.
(as
of January 1, 2008)
WHEREAS,
the Retirement Plan for Employees of AllianceBernstein L.P. (the “Plan”)
(formerly known as the Retirement Plan for Employees of Alliance Capital
Management L.P.) was originally established effective as of January 1, 1980 by
the predecessor of Alliance Capital Management L.P.; and
WHEREAS,
the Plan was amended and restated from time to time to reflect changes in the
predecessor’s business, certain other changes and changes in applicable law;
and
WHEREAS,
the Plan was amended to comply with the Economic Growth and Tax Relief
Reconciliation Act of 2001 (“EGTRRA”) and other applicable legislation, and the
provisions reflecting EGTRRA are intended as good faith compliance with the
requirements of EGTRRA and are to be construed in accordance with EGTRRA and
guidance issued thereunder; and
WHEREAS,
any Employee of the Company hired on or after October 2, 2000 is not eligible to
participate in the Plan; and
WHEREAS,
the Plan was amended and restated, effective as of January 1, 2006, to
incorporate all Plan amendments adopted since the Plan was last amended and
restated and certain additional design changes, changes required to comply with
applicable law and to reflect the name change of Alliance Capital Management
L.P. to AllianceBernstein L.P.; and
WHEREAS,
with regard to all Employees, all benefit accruals under the Plan shall cease as
of December 31, 2008 (the Freeze Date, as defined below); and
WHEREAS,
the Plan has been amended and is hereby amended and restated to reflect the
foregoing freeze and to comply with the Pension Funding Equity Act of 2004, the
Pension Protection Act of 2006, other applicable legislation, and certain
additional design changes.
NOW,
THEREFORE, the Plan is hereby amended and restated, as of January 1,
2008.
ARTICLE
I
DEFINITIONS
The
following words and phrases as used herein shall, when initially capitalized,
have the following meanings unless a different meaning is required by the
context:
1.01 “ACCRUED
BENEFIT” as of any specified date, means the Retirement Pension, commencing on
his Normal Retirement Date, earned by a Participant as of such date, which shall
be equal to the Retirement Pension, computed in accordance with Section 3.02, to
which he would have been entitled had he continued as an Employee until his
Normal Retirement Date, had been credited with one (1) Year of Service in each
year of employment during such period and had the same Average Final
Compensation, Final Average Compensation and Past Final Average Compensation, as
applicable, at his date of Retirement as that which he would have had if his
Average Final Compensation, Final Average Compensation and Past Final Average
Compensation, as applicable, had been computed as of the date of computation of
his Accrued Benefit, such amounts to be multiplied by a fraction, the numerator
of which is his number of years of Credited Service as of the specified date,
and the denominator of which is the number of such years which he would have
completed as of his Normal Retirement Date. A Participant’s Accrued
Benefit under the Plan shall be frozen as of the Freeze Date.
1.02 “ACTUARIAL
EQUIVALENT” means, except as provided below, a benefit of equivalent value that
is actuarially calculated based on an annual investment rate of 6% compounded
annually and mortality determined in accordance with the UP-1984 mortality table
with ages set back one year.
Notwithstanding
the foregoing, for purposes of determining actuarial equivalent with respect to
any distribution under the Plan after December 31, 1995:
(a)
whether
or not the consent of the Participant (and if applicable, the Participant’s
Spouse) is necessary prior to distribution of the Participant’s
benefit,
(b)
the single sum value of
the Participant’s benefit, and
(c)
the value of a benefit under Option 4
or Option 5 provided for in Section 6.01, a benefit of equivalent value shall be
the greater of that determined in accordance with the assumptions set forth
above, and that determined by applying the Applicable Interest Rate available in
September for the prior month of the Plan Year immediately preceding the Plan
Year with respect to which the benefit is being determined and the Applicable
Mortality Table; provided, however, in no event shall the single sum value of
the Participant’s benefit distributed during the 1996 calendar year be less than
would result by applying the Applicable Interest Rate for January 1996 and the
Applicable Mortality Table.
1.03 “ADMINISTRATIVE
COMMITTEE” means the administrative committee appointed by the Board
pursuant to Section 18.01.
1.04 “AFFILIATE”
means any corporation or unincorporated business (i) controlled by, or under
common control with, the Company within the meaning of Sections 414(b) and (c)
of the Code, provided, however, that for all purposes of the Plan, “Affiliate”
status shall be determined by application of Section 415(h) of the Code
,
or (ii) which is a member of
an “affiliated service group”, as defined in Section 414(m)(2) of the Code, of
which the Company is a member.
1.05 “ANNUITY
PURCHASE RATE” means, effective as of July 1, 1994, (a) the interest rate which
would be used by the Pension Benefit Guaranty Corporation as of the first day of
the Plan Year of the date of the distribution involved for the purpose of
determining the present value of a single sum distribution in connection with
the termination of the Plan if the present value of the applicable vested
Accrued Benefit (using such rate) does not exceed $25,000, or (b) one hundred
twenty percent (120%) of the rate used by the Pension Benefit
Guaranty Corporation for that purpose if the present value of the vested Accrued
Benefit, as determined in accordance with clause (a) exceeds $25,000, provided
that in no event shall the present value of a Participant’s vested Accrued
Benefit determined by application of this clause (b) be less than $25,000;
provided that the Annuity Purchase Rate with respect to the Accrued Benefit as
of such first day of the Plan Year shall not be larger than the Annuity Purchase
Rate which would have been computed under the definition of Annuity Purchase
Rate in effect immediately prior to July 1, 1994.
1.06 “APPLICABLE
INTEREST RATE” means an annual investment rate equal to the annual interest rate
on 30-year Treasury securities as specified by the Commissioner of Internal
Revenue. Notwithstanding the above, effective January 1, 2008,
Applicable Interest Rate shall mean the interest rate specified in
Section 417(e)(3)(C) of the Code as determined in accordance with published
guidance from the Internal Revenue Service.
1.07 “APPLICABLE
MORTALITY TABLE” means the mortality table based on the then prevailing standard
table (described in Section 807(d)(5)(A) of the Code) used to determine reserves
for group annuity contracts issued as of the date as of which the value of the
benefit involved is determined (without regard to any other subparagraph of
Section 807(d)(5) of the Code) that is prescribed by the Commissioner of
Internal Revenue for purposes of determining the value of
benefits. Notwithstanding the foregoing, effective January 1, 2008,
Applicable Mortality Table shall mean the table specified in Section
417(e)(3)(B) of the Code (as periodically updated) as provided in Revenue Ruling
2007-67 and any other applicable guidance from the Internal Revenue
Service.
1.08 (a) “AVERAGE
FINAL COMPENSATION” means an amount obtained by totaling the Compensation of a
Participant for the five (5) consecutive full calendar years preceding the
earlier of (1) the date of his Retirement or other Termination of
Employment, whichever is applicable, or (2) January 1, 2009, in which he
received his highest aggregate Compensation (or his Compensation for his
consecutive full calendar Years of Service prior to January 1, 2009, if less
than five (5)), and dividing the sum thus obtained by five (5) (or the number of
his full calendar Years of Service prior to January 1, 2009, if less than five
(5)). Notwithstanding the foregoing, partial calendar Years of
Service prior to January 1, 2009, other than the year of termination of
employment, shall be taken into account in determining Average Final
Compensation, if the Participant completed at least 750 Hours of Service in each
of such partial years. If any partial Year of Service is to be taken
into account under the preceding sentence, the Compensation for such year shall
be included in the calculation of Average Final Compensation as
follows: The Compensation for any such partial Year of Service shall
be added to the Compensation for the full calendar years included in calculating
Average Final Compensation, and the total of such Compensation shall be divided
by the sum of (i) the number of full calendar years included in calculating
Average Final Compensation and (ii) the fraction whose numerator is the number
of days worked during the partial Year of Service (including any weekends,
holiday or vacation that occur during a continuous period of employment) and
whose denominator is 365.
(b)
If, during any of the calendar years taken into
account in determining a Participant’s Average Final Compensation, there was a
period during which such Participant was an Inactive Participant, or was on
unpaid Leave of Absence, or was compensated for fewer hours than are customary
for his job category by reason of disability, the Compensation paid in such
period shall be included in his Compensation for such calendar year (solely for
the purpose of determining Average Final Compensation) at the rate of
Compensation he was receiving immediately preceding such period.
1.09 “BENEFICIARY”
means such person or persons as may be designated by a Participant or Retired
Participant or as may otherwise be entitled, upon his death, to receive any
benefits or payments under the terms of this Plan.
1.10 “BOARD
OF DIRECTORS” or “BOARD” means the Board of Directors of the general partner of
the Company responsible for the management of the Company’s business or a
committee thereof designated by such Board.
1.11 “BREAK
IN SERVICE” with respect to any Employee, means any calendar year in which he
completes fewer than five hundred and one (501) Hours of Service with Employers
or Affiliates.
1.12 “CODE”
means the Internal Revenue Code of 1986, as amended from time to
time.
1.13 “COMPANY”
means AllianceBernstein L.P. and any successor thereto; prior to February 24,
2006, known as Alliance Capital Management L.P.; and prior to April 21, 1988,
known as Alliance Capital Management Corporation.
1.14 (a) “COMPENSATION”
means, for any calendar year, an amount equal to a Participant’s base salary;
provided that in the case of a Participant whose Compensation from an Employer
includes commissions, commissions shall be included only up to the annual amount
of the Participant’s draw against actual commissions in effect at the beginning
of the Plan Year involved.
(b)
There shall be excluded from Compensation overtime pay,
bonuses, severance pay, distributions on Units representing assignments of
beneficial ownership of limited partnership interests in the Company, and any
amounts paid or payable to or for a Participant or Retired Participant pursuant
to any welfare plan or any pension plan, profit sharing plan or any other plan
of deferred compensation, or any other extraordinary item of compensation or
income.
(c)
Compensation of a Member in excess of $200,000, or such other
amount prescribed under Section 401(a)(17) of the Code (as adjusted each
year with cost of living adjustments in the manner set forth in
Section 415(d) of the Code), shall not be taken into account under the Plan for
the purpose of determining benefits. The increase in the limit
provided under Section 401(a)(17) of the Code under EGTRRA shall only be applied
with respect to Participants who accrue a benefit under the Plan on or after
January 1, 2002.
(d)
For any year for which Compensation is relevant under
the Plan, in connection with any Employee who is paid based on an annual rate of
salary that applies for only a portion of the year, the Compensation
attributable to that portion of the year for such Employee shall be equal to the
product of (i) such annual rate of salary, multiplied by (ii) a fraction, the
numerator of which is the number of pay periods during such year during which
such Employee was paid at that annual rate of salary, and the denominator of
which is 26.
The
determination of eligible Compensation shall be in accordance with records
maintained by the Employer and shall be conclusive.
Compensation
shall include Deemed 125 Compensation. “Deemed 125 Compensation”
shall mean, in accordance with Internal Revenue Service Revenue Ruling 2002-27,
2002-20 I.R.B. 925, any amounts not available to a Participant in cash in lieu
of group health coverage because the Participant is unable to certify that he or
she has other health coverage. An amount shall be treated as Deemed
125 Compensation only if the Employer does not request or collect information
regarding the Participant’s other health coverage as part of the enrollment
process for the health plan.
Notwithstanding
anything herein to the contrary, Compensation earned after the Freeze Date shall
not be taken into account under the Plan for any purpose.
1.15 (a) “CREDITED
SERVICE” means, unless excluded by Subsection (b), an Employee’s Years of
Service;
(b)
Credited Service shall not include:
(1)
With respect
to all Employees, Years of Service ending on or before December 31, 1969;
or
(2)
Any Year of Service
during any part of which an Employee is an Excluded Employee; provided that if
the Employee is employed by an Employer after employment with an Affiliate who
during a period of employment with the Affiliate maintained a “defined benefit
plan” within the meaning of Section 414(j) of the Code, the service with the
Affiliate while an Affiliate upon which the Employees accrued benefits under the
Affiliate’s plan is based shall be considered Credited Service hereunder, but in
no event shall any period be counted more than once in computing a Participant’s
Credited Service and any retirement pension related to such service shall be
taken into account as set forth in Section 3.02(b) of the Plan.
Notwithstanding
anything herein to the contrary, Credited Service shall not include any service
for the Employer after the Freeze Date.
1.16 “DEFERRED
RETIREMENT” means an Employee’s continued employment after his sixty-fifth
(65th) birthday.
1.17 “DEFERRED
RETIREMENT DATE” means the first day of the calendar month coincident with or
next following the date of an Employee’s Retirement provided such Retirement
occurs after his Normal Retirement Date.
1.18 “DISABILITY”
means the mental or physical incapacity of an Employee which, in the opinion of
a physician approved by the Administrative Committee, renders him totally and
permanently incapable of performing his assigned duties with an Employer or an
Affiliate.
1.19 “DOMESTIC
PARTNER” means, in the case of a Participant who dies before his Retirement
Pension Starting Date, his Domestic Partner (as defined below) on the date of
his death if such Domestic Partner satisfied the requirements for being a
Domestic Partner as set forth below. “Domestic Partner” is an
individual who, together with the Participant, satisfies the following
requirements: (i) both the Participant and the domestic partner are
at least 18 years of age; (ii) both the Participant and the domestic partner are
of the same gender; (iii) both the Participant and the domestic partner are
mentally competent to enter into a contract according to the laws of the state
in which they reside; (iv) each of the Participant and the domestic partner is
the sole domestic partner of the other; (v) neither of the Participant nor the
domestic partner is legally married to any other individual, and, if previously
married, a legal divorce or annulment has been obtained or the former spouse is
deceased; (vi) neither of the Participant nor the domestic partner is related by
blood to a degree of closeness that would prohibit legal marriage in the
jurisdiction in which they legally reside, if they were not of the same sex;
(vii) the Participant and the domestic partner reside together in the same
residence, have done so for a period of no less than the most recent six-month
period, intend to do so indefinitely and share the common necessities of life;
(viii) the Participant and domestic partner have mutually agreed to be
responsible for each other’s common welfare; and (ix) the Participant has
designated the domestic partner as his or her domestic partner by completing and
returning an ‘Affidavit of Same-Sex Domestic Partnership’ to the appropriate
Company person indicated on such affidavit.
1.20 “EARLY
RETIREMENT” means Retirement on or after a Participant’s Early Retirement Date
and prior to his Normal Retirement Date.
1.21 “EARLY
RETIREMENT DATE” means the first day of the month coincident with or next
following the date upon which the Participant shall have attained the age of
fifty-five (55) and the sum of the Participant’s age and Years of Service equals
eighty (80).
1.22 “ELIGIBLE
EMPLOYEE” means any Employee of an Employer other than:
(a)
any Employee
included in a unit of Employees covered by a collective bargaining agreement
between an Employer and Employee representatives in the negotiation of which
retirement benefits were the subject of good faith bargaining,
unless: (i) such bargaining agreement provides for participation in
the Plan, (ii) the Employee representatives represented an organization more
than half of whose members are owners, officers or executives of such Employer,
or (iii) 2% or more of the Employees who are covered pursuant to that agreement
are professionals as defined in Treasury Regulation Section 1.410(b) -
6(d);
(b)
Employees whose principal place of
Employment is outside the United States, U.S. Virgin Islands, Guam and Puerto
Rico;
(c)
an individual classified by the Employer at the
time services are provided as either an independent contractor, or an individual
who is not classified as an Employee due to an Employer’s treatment of any
services provided by him as being provided by another entity which is providing
such individual’s services to the Employer, even if such individual is later
retroactively reclassified as an Employee during all or part of such period
during which services were provided pursuant to applicable law or
otherwise;
(d)
any individual listed in Section 2.09 of this
Plan.
1.23 “EFFECTIVE
DATE” means January 1, 1980.
1.24 “EMPLOYEE”
means an individual described in Sections 3121(d) (1) or (2) of the Code who is
employed by an Employer or an Affiliate.
1.25 “EMPLOYER”
means the Company and any Affiliate which, with the consent of the Board of
Directors, has adopted the Plan as a participant herein and any successor to any
such Employer.
1.26 “EMPLOYMENT
COMMENCEMENT DATE” means:
(a)
the first day
in respect of which an Employee receives Compensation from an Employer or an
Affiliate for the performance of services; or
(b)
in the case of a
former Employee who returns to the employ of an Employer or Affiliate after a
Break in Service, the first day in respect of which, after such Break in
Service, he receives Compensation from an Employer or Affiliate for the
performance of services.
1.27 “ENTRY
DATE” means the first day of each Plan Year.
1.28 “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time.
1.29 (a) “EXCLUDED
EMPLOYEE” means an individual in the employ of an Employer or an Affiliate
who:
(1)
is employed by an Affiliate that is
not an Employer; or
(2)
is included in a unit of employees covered
by a collective bargaining agreement between employee representatives and one or
more Employers or Affiliates, if retirement benefits were the subject of good
faith bargaining between such employee representatives and such Employer;
or
(3)
is not an Excluded Employee under Paragraph (4)
of this subsection (a) and is neither a resident nor a citizen of the United
States of America, nor receives “earned income”, within the meaning of Section
911(b) of the Code, from an Employer or Affiliate that constitutes income from
sources within the United States, within the meaning of Section 861(a)(3) of the
Code, unless the individual became a Participant prior to becoming a
non-resident alien and the Company stipulates that he shall not be an Excluded
Employee; or
(4)
is not a citizen of the United
States, unless the individual (A) was initially engaged as an Employee by an
Employer or an Affiliate to render services entirely or primarily in the United
States or (B) is an Employee of an Employer which is a United States entity, and
unless, in the case of an individual referred to in either Subparagraph (A) or
(B) of this Paragraph 4, the Company stipulates that he shall not be an Excluded
Employee; or
(5)
is accruing benefits and/or receiving
contributions under a retirement plan of an Affiliate which operates entirely or
primarily outside the United States other than this Plan or the Profit Sharing
Plan for Employees of AllianceBernstein L.P. unless, in either case, the Company
stipulates that he shall not be an Excluded Employee; or
(6)
is compensated on a commission
arrangement which does not provide for payment of periodic draws against actual
commissions earned; or
(7)
is a “leased employee.” For purposes
of this Plan, a “leased employee” means any person (other than an Employee of
the recipient) who pursuant to an agreement between the recipient and any other
person (“leasing organization”) has performed services for the recipient (or for
the recipient and related persons determined in accordance with Section
414(n)(6) of the Code on a substantially full time basis for a period of at
least one year), and such services are performed under primary direction or
control by the recipient employer.
(b)
An Excluded Employee shall be deemed an Employee for all purposes
under this Plan except that:
(1)
an Excluded Employee may not become a
Participant while he remains an Excluded Employee; and
(2)
a Participant shall not receive any
Credited Service for any Year of Service during any part of which he remains an
Excluded Employee unless the Company specifies otherwise.
1.30 “FINAL
AVERAGE COMPENSATION” means an amount obtained by totaling the Compensation of a
Participant for the three (3) consecutive full calendar Years of Service (which
for any such year cannot exceed the taxable wage base in effect for that year)
ending on the last day of the calendar year coinciding with or immediately
preceding the earlier of (i) the date of his Retirement or other Termination of
Employment, whichever is applicable or (ii) the Freeze Date, (or his
Compensation for the number of his full calendar years and fractions thereof
then ending if less than three (3)), and dividing the sum thus obtained by three
(3) (or such number of full calendar years and fractions thereof if less than
three (3)), but limited to Covered Compensation. Notwithstanding the
foregoing, partial calendar Years of Service, other than the year of termination
of employment, shall be taken into account in determining Final Average
Compensation, if the Participant completed at least 750 Hours of Service in each
of such partial years. If any partial Year of Service is to be taken
into account under the preceding sentence, the Compensation for such year shall
be included in the calculation of Final Average Compensation as
follows: The Compensation for any such partial Year of Service shall
be added to the Compensation for the full calendar years included in calculating
Final Average Compensation, and the total of such Compensation shall be divided
by the sum of (i) the number of full calendar years included in calculating
Final Average Compensation and (ii) the fraction whose numerator is the number
of days worked during the partial Year of Service (including any weekends,
holiday or vacation that occur during a continuous period of employment) and
whose denominator is 365. “Covered Compensation” for this Section
1.30 means the average of the taxable wage bases for the thirty-five (35)
calendar years ending with the year an individual attains social security
retirement age.
If
Termination of Employment or Retirement occurs before a Participant reaches that
age, the taxable wage base in effect for the year in which such Participant
leaves is used for subsequent years. Notwithstanding anything
contained herein to the contrary, for purposes of calculating Covered
Compensation, if a Participant terminates or retires after December 31, 2008 and
before reaching their social security retirement age, the taxable wage base in
effect for calendar year 2008 shall be used for subsequent years.
1.31 “FREEZE
DATE” means December 31, 2008.
1.32 “HIGHLY
COMPENSATED EMPLOYEE” means an Employee who, with respect to the “determination
year”:
(a)
owned (or is
considered as owning within the meaning of Section 318 of the Code) at any time
during the “determination year” or “look-back year” more than five percent (5%)
of the outstanding stock of the Employer or stock possessing more than five
percent (5%) of the total combined voting power of all stock of the Employer
(the attribution of ownership interest to Family Members shall be used pursuant
to Section 318 of the Code); or
(b)
who received “415
Compensation” during the “look-back year” from the Employer in excess of the
$80,000 limit under Section 414(q) of the Code (with cost of living adjustments
in the manner set forth under Section 415(d) of the Code) and was in the Top
Paid Group of Employees for the “look-back year.”
The
“determination year” shall be the Plan Year for which testing is being
performed. The “look-back year” shall be the Plan Year immediately
preceding the “determination year.”
The term
“415 Compensation” shall mean compensation reported as wages, tips
and other compensation on Form W-2 and shall include: (i) any
elective deferral (as defined in Section 402(g)(3) of the Code) and (ii) any
amount which is contributed or deferred by the Employer at the election of the
Employee and which is not includible in the gross income of the Employee by
reason of Sections 125, 132(f)(4), 401(k) or 457 of the Code. 415
Compensation shall include Deemed 125 Compensation, as defined in Section 1.14
of the Plan.
The
$80,000 dollar threshold amount specified in (b) above shall be adjusted, in the
manner set forth in Section 415(d) of the Code, at such time and in
such manner as is provided in Regulations. In the case of such an
adjustment, the dollar limits which shall be applied are those for the calendar
year in which the “determination year” or “look-back year” begins.
In
determining who is a Highly Compensated Employee, Employees who are nonresident
aliens and who received no earned income (within the meaning of Section
911(d)(2) of the Code) from the Employer constituting United States source
income within the meaning of Section 861(a)(3) of the Code shall not be treated
as Employees.
Additionally,
all Affiliated Employers shall be taken into account as a single employer and
Leased Employees within the meaning of Sections 414(n)(2) and 414(o)(2) of the
Code shall be considered Employees unless such Leased Employees are covered by a
plan described in Section 414(n)(5) of the Code and are not covered in any
qualified plan maintained by the Employer. The exclusion of Leased
Employees for this purpose shall be applied on a uniform and consistent basis
for all of the Employer’s retirement plans. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees without regard to
whether they performed services during the “determination
year”.
1.33 “HIGHLY
COMPENSATED FORMER EMPLOYEE” means a former Employee who had a separation year
prior to the “determination year” and was a Highly Compensated Employee in the
year of severance from employment or in any “determination year” after attaining
age 55. Highly Compensated Former Employees shall be treated as
Highly Compensated Employees. The method set forth in this Section
1.33 for determining who is a “Highly Compensated Former Employee” shall be
applied on a uniform and consistent basis for all purposes for which the Section
414(q) of the Code definition is applicable.
1.34 (a) “HOUR
OF SERVICE” means each hour:
(1)
for which an
Employee is paid, or entitled to payment, by an Employer or Affiliate for the
performance of duties for an Employer or Affiliate, credited for the Plan Year
in which such duties were performed; or
(2)
for which an
Employee is directly or indirectly paid, or entitled to payment, by an Employer
or Affiliate on account of a period of Leave of Absence, credited for the Plan
Year in which such Leave of Absence occurs; or
(3)
for which an Employee has
been awarded, or is otherwise entitled to, back pay from an Employer or
Affiliate, irrespective of mitigation of damages, if he is not entitled to
credit for such hour under any other Paragraph of this Subsection (a);
or
(4)
during which an Employee is on
an unpaid Leave of Absence described in Section 1.37(a), credited at the rate of
which he would have accrued Hours of Service if he had performed his normal
duties during such Leave of Absence.
(5)
(A) solely for purposes of Section
1.11, each hour of an Employee’s absence which commences on or after January,
1985 by reason of a leave pursuant to the FMLA, the pregnancy of such Employee,
the birth of a child of such Employee, the placement of a child in connection
with the adoption of such child by the Employee or the caring for such child for
a period beginning immediately following such birth or placement.
(B)
under
this Paragraph (5) an Employee shall be credited with the number of hours which
would normally have been credited to him but for such absence, or in any case in
which such number cannot be determined, a total of eight (8) Hours of Service
for each day of such absence, except that no more than 501 Hours of Service
shall be credited to an Employee for any such period of absence and such Hours
of Service shall be credited to an Employee only in the Plan Year in which such
period of absence began if such Employee would be prevented from incurring a
Break in Service in such Plan Year solely because of the crediting of such Hours
of Service, or in any other case, in the next succeeding Plan
Year.
(C)
Notwithstanding the foregoing, an Employee shall not be credited with
Hours of Service pursuant to this Paragraph (5) unless such Employee shall
furnish to the Administrative Committee on a timely basis such information as
the Administrative Committee shall reasonably require to establish
that the
absence from work is for reasons described in Subparagraph (A) hereof;
and
the
number of days which such absence continued.
(b)
Except as provided in Paragraph (a) (5), the number of
a Participant’s Hours of Service and the Plan Year or other compensation period
to which they are to be credited shall be determined in accordance with
Department of Labor Reg. § 2530.200b-2, which section is hereby incorporated by
reference into this Plan.
(c)
If the Participant’s compensation while an Employee was not
determined on the basis of certain amounts for each hour worked, his Hours of
Service need not be determined from employment records, and he may, in
accordance with uniform and nondiscriminatory rules adopted by the
Administrative Committee, be credited with forty-five (45) Hours of Service for
each week in which he would be credited with any Hours of Service under the
provisions of Subsection (a) or (b).
(d)
Notwithstanding anything herein to the contrary, Hours of Service shall
not include any service for the Employer after the Freeze Date, except with
respect to vesting and eligibility for early retirement benefits.
1.35 “INACTIVE
PARTICIPANT” means:
(a)
an Employee who was a Participant during the preceding Plan Year but who,
during the current Plan Year, neither completed a Year of Service nor incurred a
Break in Service; and
(b)
an Excluded Employee who was a Participant or an
Inactive Participant during the preceding Plan Year but who, during the current
Plan Year, did not incur a Break in Service.
An
Inactive Participant shall be deemed a Participant for all purposes under this
Plan, except that he shall not accrue any benefit hereunder for any Plan Year
during which he is an Inactive Participant.
1.36 “INVESTMENT
COMMITTEE” shall mean the investment committee appointed by the Board pursuant
to Section 18.02.
1.37 “LEAVE
OF ABSENCE” means:
(a)
absence on leave approved by an Employee’s
Employer, if the period of such leave does not exceed two (2) years and the
Employee returns to the employ of an Employer or an Affiliate upon its
termination; or
(b)
absence due to service in the Armed Forces of the
United States, if such absence is caused by war or other national emergency or
an Employee is required to serve under the laws of conscription in time of
peace, and if the Employee returns to the employ of an Employer or an Affiliate
within the period provided by law; or
(c)
absence for a period not in excess of thirteen (13) consecutive
weeks due to leave granted by an Employer, military service, vacation, holiday,
illness, incapacity, layoff, or jury duty, if the Employee does not return to
the employ of an Employee or Affiliate at the end of such period.
In
granting or withholding Leaves of Absence, each Employer or Affiliate shall
apply uniform and non-discriminatory rules to all Employees in similar
circumstances.
1.38 “NORMAL
RETIREMENT DATE” means the first day of the month coincident with or next
following the sixty fifth (65th) birthday of the Participant or Retired
Participant.
1.39 “OPTION”
means any of the optional methods of payment of a Retirement Pension which a
Participant or Retired Participant may elect in accordance with Article
VI.
1.40 “PARTICIPANT”
or “MEMBER” means any individual who has become a Participant in the Plan in
accordance with Sections 2.01, 2.02 or 2.06 and whose participation has not
terminated pursuant to Section 2.05.
1.41 “PAST
FINAL AVERAGE COMPENSATION” means the amount which would have been obtained by
totaling the Compensation of a Participant for the five (5) consecutive full
calendar Years of Service during the last ten (10) calendar year period ending
on December 31, 1988 for which the Participant received his highest aggregate
Compensation (or his Compensation for the number of his consecutive full
calendar Years of Service ending December 31, 1988 if less than five (5)),
except that for purposes of Section 3.02(3), the calculation period shall end on
December 31, 1989 rather than December 31, 1988; and dividing said aggregate
Compensation by five (5) (or such number of consecutive full calendar Years of
Service if less than five (5)).
1.42 “PLAN
YEAR” means the twelve (12) consecutive month period beginning on January 1 and
ending on December 31 in any year commencing on or after January 1,
1980.
1.43 “PRIMARY
SOCIAL SECURITY BENEFIT”
(a)
means the estimated old age retirement benefit payable to a
Participant under the Federal Old-Age and Survivors Insurance System upon his
Retirement on his Normal Retirement Date or Deferred Retirement Date whichever
is applicable; provided, however, that (i) in the event that either his
Termination of Employment or December 31, 1989 occurs before his Normal
Retirement Date, his Primary Social Security Benefit shall be estimated by
computing such benefit, determined without regard to any Social Security benefit
increases that become effective after his Termination of Employment or December
31, 1988, whichever is later, as if in each calendar year beginning in the
calendar year in which occurred the earlier of his Termination of Employment or
1989, he continued to receive the same Compensation (defined as, Compensation in
the calendar year preceding the earlier of his Termination of Employment or
1989, but including overtime, bonuses and commissions otherwise excluded under
Section (b)), as he received in the Plan Year last preceding the earlier of his
Termination of Employment or 1989; and (ii) the Participant’s calendar year
earnings in the year of his Employment Commencement Date and for the prior
calendar years shall be estimated by applying a salary scale, projected
backwards, to the Participant’s Compensation for the calendar year immediately
following the calendar year of the Participant’s Employment Commencement Date,
such salary scale being the actual change in the average wages from year to year
as determined by the Social Security Administration.
(b)
(1) Notwithstanding the provisions of
Subsection (a), each Participant may have his Primary Social Security Benefit
determined on the basis on his actual salary history for the period ending on
the earlier of the Freeze Date, his Termination of Employment, or the December
31 applicable to the Participant for purposes of Subsection (a) within ninety
(90) days after the later of (A) his Termination of Employment or (B) the date
on which he is notified of the benefit to which he is entitled.
(2)
As soon as practicable after a Participant’s
Termination of employment, the Administrative Committee shall mail or personally
deliver to the Participant a notice informing him (A) of his right to supply the
actual salary history described in Paragraph (b) (1), (B) of the financial
consequences of failing to supply such history and (C) that he can obtain such
actual salary history from the Social Security Administration.
Notwithstanding
anything contained herein to the contrary, under no circumstances shall the
Primary Social Security Benefit reflect compensation increases or Social
Security law changes after the Freeze Date.
1.44 “QUALIFIED
JOINT AND SURVIVOR ANNUITY” means an annuity for the life of a Participant,
with, if the Participant is married to a Spouse on his Retirement Pension
Starting Date, a survivor annuity for the life of such Spouse which is: (a)
one-half (½) of the amount of the annuity payable during the joint lives of the
Participant and such Spouse (a “50% Qualified Joint and Survivor Annuity”); (b)
the full amount of the annuity payable during the joint lives of the Participant
and such Spouse; or (c) a QOSA. Any benefit payable in the form of a
Qualified Joint and Survivor Annuity shall be the Actuarial Equivalent of the
Participant’s Retirement Pension.
1.45 “QUALIFIED
OPTIONAL SURVIVOR ANNUITY” or “QOSA” means an annuity for the life of a
Participant, with, if the Participant is married to a Spouse on his Retirement
Pension Starting Date, a survivor annuity for the life of such Spouse which is
three-quarters (3/4) of the amount of the annuity payable during the joint lives
of the Participant and such Spouse. Any benefit payable in the form
of a Qualified Optional Survivor Annuity shall be the Actuarial Equivalent of
the Participant’s Retirement Pension.
1.46 “QUALIFIED
PRERETIREMENT SURVIVOR ANNUITY” means:
(a)
in the case
of a Participant who dies after his Early Retirement Date, a monthly life
annuity for a Participant’s Spouse or Domestic Partner equal to fifty percent
(50%) of the benefit such Participant would have received had he retired on the
day before his death and commenced receiving his Retirement Pension on such
date, reduced in accordance with Section 5.01, except that no reduction shall be
made for the joint and survivor factor; and
(b)
in the case of a
Participant who dies on or prior to his Early Retirement Date, a monthly life
annuity for a Participant’s Spouse or Domestic Partner equal to fifty
percent (50%) of the benefit such Participant would have received if the
Participant’s Termination of Employment had occurred on the date of his death,
and such Participant had survived to his Early Retirement Date, had retired
immediately upon attainment of his Early Retirement Date and immediately
commenced receiving his Retirement Pension, reduced as provided in Section 5.01,
except that a reduction shall be made for the joint and survivor
factor. The annuity described in this Subsection (b) shall commence
to be payable, at the election of such Spouse or Domestic Partner , as of the
first day of any month coincident with or next following the date on which the
Participant would have attained his Early Retirement Date.
(c)
in the case of any vested Participant
referred to in Section 4.04 of this Plan (a “Vested Terminated Participant”) who
dies on or prior to his Early Retirement or Normal Retirement, a monthly life
annuity for the Vested Terminated Participant’s Spouse or Domestic Partner equal
to fifty percent (50%) of the benefit such Vested Terminated Participant would
have received if the Vested Terminated Participant’s Termination of Employment
had occurred on the date of his death, and such Vested Terminated Participant
had survived to his Early Retirement Date, had retired immediately upon
attainment of his Early Retirement Date and immediately commenced receiving his
Retirement Pension, reduced as provided in Section 5.01, except that a reduction
shall be made for the joint and survivor factor. The annuity
described in this Subsection (c) shall commence to be payable, at the election
of such Spouse or Domestic Partner , as of the first day of any month coincident
with or next following the date on which the Vested Terminated Participant would
have attained his Early Retirement Date.
1.47 “REQUIRED
BEGINNING DATE”
(a)
for a Participant who is not a five-percent (5%) owner (as defined
in Section 416 of the Code) in the Plan Year in which he attains age 70½ and who
attains age 70½ after December 31, 1998, April 1 of the calendar year following
the calendar year in which occurs the later of the Participant’s (i) attainment
of age 70½ or (ii) Retirement.
(b)
for a Participant who (i) is a five-percent (5%) owner (as defined in
Section 416 of the Code) in the Plan Year in which he attains age 70
1
/
2
, or (ii) attains age 70
1
/
2
before January 1, 1999, April
1 of the calendar year following the calendar year in which the Participant
attains age 70
1
/
2
.
1.48 “RETIRED
PARTICIPANT” means any Participant or former Participant who is entitled to
benefits pursuant to Article III, IV or V.
1.49 “RETIREMENT”
means any Termination of Employment, other than by reason of death, on or after
an Employee’s Early or Normal Retirement Date.
1.50 “RETIREMENT
PENSION” (a) means the annual pension to which a Participant shall
become entitled pursuant to Article III, IV or V. Except as otherwise
provided in this Plan, such Retirement Pension shall be a non-assignable annuity
payable in monthly installments, each of which shall be equal to one-twelfth
(1/12th) of the Retirement Pension determined pursuant to Article III, IV or V,
whichever is applicable. The first payment of such Retirement Pension
shall be made in accordance with the appropriate provisions of Article III, IV
or V, and, except as otherwise provided in this Plan, the last such payment
shall be made on the first day of the month within which the Retired
Participant’s death occurs.
(b)
Nothing herein shall affect or lessen the
rights of any Participant or Beneficiary or the right of any Participant to
receive a Qualified Joint and Survivor Annuity or Qualified Optional Survivor
Annuity under the provisions of Section 3.03 or to elect any optional form of
payment under the provisions of Article VI.
1.51 “RETIREMENT
PENSION STARTING DATE” means the date as of which a Retired Participant’s
Retirement Pension commences to be payable under the terms of this
Plan. A Participant’s Retirement Pension Starting Date shall in no
event be later than the sixtieth (60th) day after the last day of the Plan Year
in which occurs the later of the date on which he attains the age of sixty-five
(65) years or the date of his Termination of Employment, but in no event later
than the Participant’s Required Beginning Date.
1.52 “SPOUSE”
means, subject to applicable federal law:
(a)
in the case
of a Participant who dies before his Retirement Pension Starting Date, his
lawfully married spouse on the date of his death if such spouse was married to
such Participant;
(b)
in the case of a
Participant who dies on or after his Retirement Pension Starting Date, his
lawfully married spouse on his Retirement Pension Starting Date;
and
(c)
a former spouse of the
Participant to the extent provided in a qualified domestic relations order as
described in Section 414(p) of the Code.
1.53 “SPOUSAL
CONSENT” means with respect to the election by a married Participant not to
receive a Qualified Joint and Survivor Annuity pursuant to Section 3.03 or a
Qualified Preretirement Survivor Annuity pursuant to Section 7.02(a) or to the
consent of a Participant’s Spouse to the commencement of a Participant’s
Retirement Pension pursuant to Section 4.04 or 5.01, that
(a)
the Participant’s Spouse consents in writing to such election or
Retirement Pension commencement, and the Spouse’s consent acknowledges the
effect of such election and is witnessed by a member of the Administrative
Committee or by a notary public; or
(b)
it is established to the Administrative Committee’s satisfaction that the
consent required under Subsection (a) hereof is unobtainable because the
Participant is unmarried, because the Participant’s Spouse cannot be located, or
because of such other circumstances as the Secretary of the Treasury may by
regulation prescribe.
Any such
consent and any such determination as to the impossibility of obtaining such
consent shall be effective only with respect to the individual who signs such
consent or with respect to whom such determination is made and not with respect
to any individual who may subsequently become the Spouse of such
Participant.
1.54 “TERMINATION
OF EMPLOYMENT” means the date on which an Employee ceases to be employed by an
Employer or Affiliate for any reason; provided, however, that no Termination of
Employment shall be deemed to occur upon an Employee’s transfer from the employ
of one employer or Affiliate to the employ of another Employer or
Affiliate.
1.55 “TOP
PAID GROUP” means the top twenty percent (20%) of Employees who performed
services for the Employer during the applicable year, ranked according to the
amount of “415 Compensation” (determined for this purpose in accordance with
Section 1.32) received from the Employer during such year. All
Affiliated Employers shall be taken into account as a single employer, and
Leased Employees within the meaning of Sections 414(n)(2) and 414(o)(2) of the
Code shall be considered Employees unless such Leased Employees are covered by a
plan described in Section 414(n)(5) of the Code and are not covered in any
qualified plan maintained by the Employer. Employees who are
non-resident aliens and who received no earned income (within the meaning of
Section 911(d)(2) of the Code from the Employer constituting United States
source income within the meaning of Section 861(a)(3) of the Code shall not be
treated as Employees. Additionally, for the purpose of determining
the number of active Employees in any year, the following additional Employees
shall also be excluded; however, such Employees shall still be considered for
the purpose of identifying the particular Employees in the Top Paid
Group:
(a)
Employees
with less than six (6) months of service;
(b)
Employees who
normally work less than 17½ hours per week;
(c)
Employees who normally work
less than six (6) months during a year; and
(d)
Employees who have not yet attained
age 21.
1.56 “TREASURY
REGULATIONS” means the regulations promulgated by the Internal Revenue Service
and the Secretary of the Treasury under the Code.
1.57 “TRUST”
means the trust forming part of this Plan.
1.58 “TRUST
FUND” means all the assets of the Plan which are held by the
Trustee.
1.59 “TRUSTEE”
means the persons or entity acting, at any time, as trustee of the Trust
Fund.
1.60 “YEARS
OF SERVICE” means the following:
(a)
all Plan
Years during each of which an Employee completes at least one thousand (1,000)
Hours of Service;
(b)
for an Employee
employed by the Company as of December 31, 1979, “Years of Service” shall
include any calendar year during which he was employed on a full-time basis for
the entire year prior to the Effective Date by either the Company, or Donaldson,
Lufkin & Jenrette Inc. (“DLJ”), or an affiliated company of DLJ, or Wood,
Struthers & Winthrop, Inc. or Pershing Co., Inc.;
(c)
in the case of any Plan Year
consisting of fewer than twelve (12) months, the number of Hours of Service
required to complete a Year of Service shall be determined by multiplying the
number of months in such short Plan Year by eighty-three and one-third
(83-1/3);
(d)
for the purpose of applying the rules
in Section 4.03 to the eligibility provisions in Article II, pursuant to Section
2.06(c), Years of Service shall include the twelve (12) month period, beginning
on an Employee’s Employment Commencement Date, during which he has completed one
thousand (1000) Hours of Service; and
(e)
solely for the purposes of the eligibility
provisions of Article II and the vesting provisions of Article IV and not for
purposes of determining Credited Service under Section 1.15, in the case of an
Employee who was an employee of Eberstadt Asset Management, Inc. (“Eberstadt”)
on November 20, 1984, service with Eberstadt on or prior to such date shall be
considered as service with an Employer or an Affiliate;
(f)
any other provision of the Plan notwithstanding, including
but not limited to Section 3.02(b) and the proviso contained in Section
1.13(b)(2) solely for the purposes of the eligibility provisions of Article II
and the vesting provisions of Article IV and not for purposes of determining
Credited Service under Section 1.15, in the case of an Employee who was an
employee of Equitable Capital Management Corporation (“ECMC”) on July 22, 1993,
service with ECMC on or prior to such date shall be considered as service with
an Employer or an Affiliate;
(g)
for purposes of determining an
Employee’s Early Retirement Date under the Plan, in the case of any individual
who became an Employee on March 3, 1970, such an Employee (whether or not
employed on January 1, 1993) shall be credited with a full Year of Service with
respect to calendar year 1970, regardless of whether a Year of Service would
otherwise have been credited under the Plan.
(h)
solely for the purposes of the eligibility
provisions of Article II and the vesting provisions of Article IV and not for
purposes of determining Credited Service under Section 1.15, in the case of an
Employee who was an employee of either Shields Asset Management, Incorporated
(“Shields”) or Regent Investor Services Incorporated (“Regent”) on March 4, 1994
and on that date became an Employee of an Employer or an Affiliate, the
Employee’s service with Shields or Regent on or prior to such date shall be
considered as service with an Employer or an Affiliate.
(i)
solely for the purposes of the eligibility provisions of
Article II and the vesting provisions of Article IV and not for purposes of
determining Credited Service under Section 1.15, in the case of an Employee who
was an employee of Cursitor Holdings, L.P. or Cursitor Holdings Limited
(individually and collectively, “Cursitor”) on February 29, 1996, and on that
date either was employed by or continued in the employment of Cursitor Alliance
LLC, Cursitor Holdings Limited, Draycott Partners, Ltd. or Cursitor-Eaton Asset
Management Company, the Employee’s service with Cursitor on or prior to that
date shall be considered as service with an Employer or an
Affiliate.
(j)
Notwithstanding anything herein to the contrary, Years of Service shall
not include any service for the Employer after the Freeze Date, except with
respect to vesting and eligibility for early retirement
benefits.
ARTICLE
II
ELIGIBILITY FOR
PARTICIPATION
2.01 Each
Employee who was a Participant on the Restatement Effective Date shall remain a
Participant hereunder.
2.02 An
Employee who does not become a Participant pursuant to Section 2.01 and who has
attained age twenty-one (21) shall become a Participant as follows:
(a)
if he shall have
completed one thousand (1,000) Hours of Service during the twelve (12) month
period beginning on his Employment Commencement Date, he shall become a
Participant as of the Entry Date of the Plan Year in which occurs the end of
such twelve (12) month period;
(b)
if he has not satisfied
the service requirements of Subsection (a), he shall become a Participant as of
the Entry Date of the Plan Year immediately following the first Plan Year in
which he completes one thousand (1,000) Hours of Service.
2.03 If
an Employee has not attained age twenty-one (21) on the date on which he
satisfies the service requirement of Section 2.02, he shall become a Participant
on the Entry Date of the Plan Year in which he attains his twenty-first (21st)
birthday.
2.04 If
the Administrative Committee so requests, an Employee who has qualified for
participation in the Plan shall file with the Administrative Committee a
statement in such form as the Administrative Committee may prescribe, setting
forth his age and giving such proof thereof as the Administrative Committee may
require.
2.05 A
Participant shall cease to be a Participant as of either:
(a)
the date of
his Termination of Employment if he incurs a Break in Service during the Plan
Year of such Termination of Employment or in the next succeeding Plan Year;
or
(b)
the first day of
the first Plan Year in which he incurs a Break in Service, if he incurs a Break
in Service without incurring a Termination of Employment.
2.06 (a)
A former Participant who
has incurred a Break in Service following a Termination of Employment and who is
re-employed by an Employer or Affiliate shall again become a Participant on the
earlier of:
(1)
his most recent Employment Commencement Date, if he
completes one thousand (1,000) Hours of Service during the twelve (12) month
period beginning on such date; or
(2)
the first day of the first Plan Year
following his most recent Employment Commencement Date during which he completes
one thousand (1,000) Hours of Service.
(b)
A former Participant who has incurred a
Break in Service without a Termination of Employment shall again become a
Participant as of the first day of the subsequent Plan Year during which he
completes one thousand (1,000) Hours of Service.
(c)
If the provisions of Section 4.03 are
applicable to a former Participant, then Section 2.06(a) or (b) shall be
inapplicable, and such former Participant shall again become a Participant when
he satisfies the provisions of Section 2.02.
2.07 An
Employee who is an Excluded Employee on the date on which he would otherwise
become a Participant pursuant to Sections 2.01, 2.02, 2.03 or 2.06, shall become
a Participant on the date, if any, on which he ceases to be an Excluded
Employee, if he is then an Employee.
2.08 Notwithstanding
any provision of this Plan to the contrary, effective as of December 12, 1994,
contributions, benefits and service credit with respect to qualified military
service shall be provided in accordance with Section 414(u) of the
Code.
2.09 Notwithstanding
any other provision of the Plan, the following individuals shall not be eligible
to participate or be a Participant in this Plan: (i) any person who
becomes an Employee on or after October 2, 2000 and (ii) employees of Sanford C.
Bernstein, Inc., Sanford C. Bernstein & Co., Inc. and Bernstein Technologies
Inc. and their subsidiaries who became Employees upon or after the consummation
of the transactions described in that certain Acquisition Agreement dated as of
June 20, 2000, as amended and restated as of October 2, 2000, among Alliance
Capital Management L.P., Alliance Capital Management Holding L.P., Alliance
Capital Management LLC, Sanford C. Bernstein Inc., Bernstein Technologies Inc.,
SCB Partners Inc., Sanford C. Bernstein & Co., LLC and SCB
LLC.
ARTICLE
III
RETIREMENT ON OR AFTER
NORMAL RETIREMENT DATE
3.01 Each
Participant shall be retired no later than on his seventieth (70th) birthday if
permitted under the provisions of the Age Discrimination in Employment Act,
unless both he and his Employer agree that he shall be continued as an Employee
beyond that date. Payments from the Plan shall begin in any event on
the Participant’s Required Beginning Date in accordance with Section 3.03(a),
applied as if the Participant’s Retirement occurred on the last day of the
calendar year immediately preceding his Required Beginning Date. If a
Participant continues as an Employee following his Required Beginning Date, the
amount of the Participant’s Retirement Pension payable upon his actual
Retirement shall be actuarially reduced, using an investment rate of 6% and the
UP 1984 mortality table with ages set back one year, to reflect any payments the
Participant received prior to such Retirement following the Required Beginning
Date; provided, however, that the preceding reduction shall not apply to any
Participant who attained his Required Beginning Date before January 1,
1996. Notwithstanding any provision of this Plan to the contrary, the
provisions of this Section 3.01 shall be construed in a manner that
complies with Section 401(a)(9) of the Code. With respect to
distributions made on or after January 1, 2001 and prior to January 1, 2003, the
Plan will apply the minimum distribution requirements of Section 401(a)(9) of
the Code in accordance with the Treasury Regulations thereunder that were
proposed in January 2001, the provisions of which are hereby incorporated by
reference. With respect to distributions made on or after January 1,
2003, notwithstanding any provision of this Plan to the contrary, the Plan will
apply the minimum distribution requirements of Section 401(a)(9) of the Code in
accordance with the final Treasury Regulations thereunder, as reflected in
Appendix A to the Plan.
3.02 (a)
A Participant shall be
fully (100%) vested in his Accrued Benefit on his sixty-fifth (65
th
)
birthday. Upon his Retirement on or after his Normal Retirement Date,
the Participant shall be entitled to receive a Retirement Pension, commencing on
such date, equal to:
(1) (A)
one
and one-half percent (1-1/2%) of his Average Final Compensation multiplied by
the number, not exceeding thirty-five (35), of his years of Credited Service
completed prior to his Retirement, reduced by
(B)
sixty-five one
hundredths of one percent (.65%) of his Final Average Compensation multiplied by
the number, not exceeding thirty five (35), of his years of Credited Service
completed prior to his Retirement, plus
(C)
one percent
(1%) of his Average Final Compensation multiplied by the number, if any, of his
years of Credited Service exceeding thirty-five (35) completed prior to his
Retirement, or
(2)
(A)
one and
one-half percent (1-1/2%) of his Past Final Average Compensation multiplied by
the number of his years of Credited Service completed as of December 31, 1988,
reduced by
(B)
one and
two-thirds percent (1-2/3%) of his Primary Social Security Benefit multiplied by
the number of his years of Credited Service completed as of December 31, l988,
but in no event by more than eighty-three and a third percent (83-1/3%) of his
Primary Social Security Benefit, plus
(C)
one and
one-half percent (1-1/2%) of his Average Final Compensation multiplied by the
number, not exceeding thirty-five (35) (less the number of years of Credited
Service referred to in Paragraph (2) (A) hereof, but not reduced below zero), of
his years of Credited Service completed after 1988 and prior to January 1, 1991,
reduced by
(D)
sixty-five one
hundredths of one percent (.65%) of his Final Average Compensation multiplied by
the number, not exceeding thirty-five (35) (less the number of years of Credited
Service referred to in Paragraph (2) (A) hereof, but not reduced below zero), of
his years of Credited Service completed after 1988 and prior to January 1, 1991,
plus
(E)
one percent
(1%) of his Average Final Compensation multiplied by the number, if any, of his
years of Credited Service exceeding thirty-five (35) completed after 1988 and
prior to January 1, 1991.
(3)
Notwithstanding Paragraphs (1) and (2)
above, in the case of a Participant who is not a Highly Compensated Employee
described in Section 414(q)(1)(A) or (B) of the Code, the Retirement Pension
shall not be less than:
(A)
one and
one-half percent (1-1/2%) of his Past Final Average Compensation multiplied by
the number of his years of Credited Service completed prior to 1990, reduced
by
(B)
one and
two-thirds percent (1-2/3%) of his Primary Social Security Benefit, multiplied
by the number of his years of Credited Service completed prior to 1990, but in
no event by more than eighty-three and one third percent (83-1/3%) of his
Primary Social Security Benefit.
(b)
Notwithstanding Subsection (a), the Retirement
Pension of a Participant who is referred to in the proviso of Section 1.15(b)(2)
shall be reduced, but not below the amount computed under Subsection (a) without
regard to the Participant’s Credited Service referred to in that proviso, by the
retirement pension based on the Credited Service referred to in the proviso
which the Participant is entitled to receive upon his Retirement on or after his
Normal Retirement Date pursuant to the “defined benefit plan” of any Affiliate
referred to in the proviso or any successor or transferor plan or that he would
have been entitled to receive but for the prior payment of all or a portion of
his benefits under any such plan.
(c)
Notwithstanding the foregoing, the retirement
pension to which a participant is entitled upon his actual date of Retirement
shall in no case be less than the Retirement Pension to which he would have been
entitled if he had retired on any earlier date on or after his Early Retirement
Date.
(d)
Notwithstanding any other provision of this Plan,
the Retirement Pension of a Participant, calculated on a life annuity basis, may
not exceed $100,000 per year.
(e)
Notwithstanding the foregoing, the Retirement
Pension of a Participant described in this subsection (e) shall be equal to the
greater of:
(1)
the Participant’s Retirement Pension determined
under Section 3.02(a)-(d) as applied to the Participant’s total years of
Credited Service under the Plan; or
(2)
the sum of: (A) the Participant’s Retirement
Pension as of December 31, 1993, frozen in accordance with Treasury Regulation
Section 1.401(a)(4)-13, and (B) the Participant’s Retirement Pension determined
under 3.02(a)-(d), as applied to the Participant’s years of Credited Service
accrued after December 31, 1993.
The
previous sentence shall apply only to a Participant whose Retirement Pension
determined on or after January 1, 1994 is based, at least in part, on
Compensation for a Plan Year beginning prior to January 1, 1994 that exceeded
$150,000.
(f)
If a Participant (other than a 5%
owner as described in Section 414(q) of the Code) continues as an Employee after
the April 1 of the calendar year following the calendar year in which such
Participant attains age 70½ (the “April 1 Date”), the provisions of this Section
3.02(f) shall apply in place of the provisions of Section 3.04(a) for periods of
employment after the April 1 Date. The Participant’s Accrued Benefit,
determined as of any date after the April 1 Date, shall equal the greater
of:
(1)
the Actuarial Equivalent, as of
the date of such determination, of the Participant’s Accrued Benefit determined
as of the April 1 Date (if the determination is made in the Plan Year in which
the April 1 Date occurs), or determined as of the last day of the prior Plan
Year (if the determination is made in any later year), or
(2)
the Participant’s Accrued Benefit
determined as of the last day of the prior Plan Year, increased by any
additional accrual due to Credited Service earned in the current Plan
Year.
3.03 (a)
(1) Notwithstanding any other
provision of the Plan and except as provided in Paragraph (2) hereof and in
Subsection (b), the Retirement Pension of a married Participant or former
married Participant shall be paid in the form of a 50% Qualified Joint and
Survivor Annuity , and if the Participant is not married, in the form of a
Single Life Annuity.
(2)
Distribution to a Participant in a
single sum payment of the entire Actuarial Equivalent of the Accrued Benefit to
which he has become entitled shall be made:
(A)
if such
distribution is made prior to the date on which payment of the Qualified Joint
and Survivor Annuity or Qualified Optional Survivor Annuity commences and the
amount of such distribution is $5,000 or less; or
(B)
in any case not
described in subparagraph (A), with the written consent of the Participant and
his Spouse (or, if the Participant has died, of his surviving
Spouse).
For
purposes of this Subsection, if the Actuarial Equivalent of the Retirement
Pension to which a Participant has become entitled is zero, the Participant
shall be deemed to have fully received a distribution of such zero Retirement
Pension in a single sum.
Effective
as of March 28, 2005, single sum payments pursuant to subparagraph 3.03(a)(2)(A)
will be made without the Participant’s consent if the amount of the distribution
is $1,000 or less and will be made only with the Participant’s consent if the
amount exceeds $1,000 but is not in excess of $5,000.
(b)
A Participant or former Participant shall have the right to elect, during
the 180 day period (90 day period prior to January 1, 2007) terminating on his
Retirement Pension Starting Date and subject to Spousal Consent, not to receive
his Retirement Pension in the form of a Qualified Joint and Survivor
Annuity. Any election made under this Subsection (b) may be
revoked at any time and, once revoked, may be made again.
(c)
The Administrative Committee shall provide
to each Participant, no less than 30 days and no more than 180 days (90 days
before January 1, 2007) before his or her Retirement Pension Starting Date, a
written explanation of:
(1)
the terms and conditions of the Qualified Joint
and Survivor Annuity;
(2)
the Participant’s right to make, and the effect of, an
election under Subsection (b) to waiver the Qualified Joint and Survivor
Annuity; and
(3)
the rights of the Participant’s Spouse with respect to such
election; and
(4)
the right to make, and the effect of, a revocation of any such
election.
A
Participant may elect (with any applicable spousal consent) to waive the
requirement that the written explanation be provided at least 30 days before the
Retirement Pension Starting Date if the distribution commences more than 7 days
after such explanation is provided.
(d)
The written notification described in
Subsection (c) shall be furnished by the Administrative Committee by mail or
personal delivery to the Participant or, to the extent permitted by regulations,
by posting such notification, in accordance with Treasury Regulation Section
1.7476-2(c) (1), at all locations normally used by the Employer for the posting
of employee matters.
(e)
If a Participant so requests on or before the
sixtieth (60th) day after the information described in Subsection (c) is
furnished to him (or by such later date as the Administrative Committee shall
prescribe), within thirty (30) days after its receipt of such request,
personally deliver or mail to him a written explanation of the terms and
conditions of the Qualified Joint and Survivor Annuity and Qualified Optional
Survivor Annuity and of the financial effect on the Participant’s Retirement
Pension (in terms of dollars per Retirement Pension payment), of electing and of
not electing to receive benefits in such form.
(f)
A Participant who elects not to receive his Retirement
Pension in the form of a Qualified Joint and Survivor Annuity or whose Spouse
does not meet the requirements of Section 1.52 shall receive his Retirement
Pension in the form specified by the Option which he has elected pursuant to
Article VII or, if no such Option has been elected, in the form of an annuity
for his own life.
3.04 Notwithstanding
anything to the contrary contained in this Plan (except to the extent otherwise
provided in Section 3.02(f)),
(a)
If
a Participant continues as an Employee after his Normal Retirement Date, the
Participant’s Accrued Benefit shall be actuarially increased to take into
account the period after his Normal Retirement Date during which the Participant
was not receiving any benefits under the Plan. The Participant’s
Accrued Benefit, determined as of any date after his Normal Retirement Date,
shall equal the greater of:
(1)
the
Actuarial Equivalent, as of the date of such determination, of the Participant’s
Accrued Benefit determined as of his Normal Retirement Date (if the
determination is made in the Plan Year in which he reaches his Normal Retirement
Date), or determined as of the last day of the prior Plan Year (if the
determination is made in any later year), or
(2)
the
Participant’s Accrued Benefit determined as of the last day of the prior Plan
Year, increased by any additional accrual due to Credited Service earned in the
current Plan Year.
(b)
If
a Participant, after his Normal Retirement Date, again becomes an Employee, his
Retirement Pension shall be suspended during the period of his
reemployment. The amount of such reemployed Participant’s Retirement
Pension payable upon his subsequent retirement shall be determined in accordance
with Section 3.04(a), except that (1) the Participant’s date of reemployment
shall be substituted for the Participant’s Normal Retirement Date and (2) such
Retirement Pension shall be reduced by the Actuarial Equivalent of the
retirement benefits previously received.
ARTICLE
IV
VESTING
4.01 (a) Participant
whose Termination of Employment occurs, other than by reason of his death or
Disability, prior to his Early Retirement Date, shall have a vested interest in
his Accrued Benefit determined in accordance with the following
schedule:
Years of Service
|
Percentage Vested
|
Fewer
than Five
|
0%
|
Five
or more
|
100%
|
provided
that the applicable percentage for a Participant who had four (4) but fewer than
five (5) Years of Service prior to October 25, 1989 shall in no event be less
than forty percent (40%).
(b)
Notwithstanding the foregoing, a Participant shall be
fully (100%) vested upon his death, upon his Termination of Employment due to
Disability, or upon attaining his Early Retirement Date.
4.02 If
a former Employee again becomes an Employee after having incurred a Break in
Service, the Years of Service which he had completed prior to such Break in
Service shall be disregarded for all purposes under this Plan until he shall
have completed one (1) Year of Service after such Break in Service.
4.03 If
a former Employee:
(a)
has incurred
a number of consecutive Breaks in Service which equals or exceeds the greater of
(i) five (5) or (ii) the number of his Years of Service before such Breaks in
Service;
(b)
had no vested
interest in his Accrued Benefit at the time of such Break in Service;
and
(c)
again becomes an Employee, his
Years of Service prior to such Breaks in Service shall be disregarded for all
purposes under this plan.
4.04 (a) A
vested Participant whose Termination of Employment occurs, other than by reason
of his death or Disability, prior to his Early Retirement Date shall be entitled
to a Retirement Pension:
(1)
commencing on his Early
Retirement Date; or
(2)
at his written election, commencing on the first
day of any month after his Early Retirement Date but not later than his Normal
Retirement Date;
and which
is the Actuarial Equivalent, as of his Retirement Pension Starting Date, of his
Accrued Benefit; provided, that without the written consent of the Participant,
and if the Participant is married, Spousal Consent, such Retirement Pension
shall not commence prior to his Normal Retirement Date if the Actuarial
Equivalent of such Retirement Pension is greater than $5,000 (for Participants
whose Termination of Employment occurs before January 1, 1998,
$3,500).
(b)
Notwithstanding any other provision of this
Plan, if a Participant is entitled to a Retirement Pension pursuant to the
provisions of this Article IV, such Retirement Pension shall be paid in
accordance with the provisions of Section 3.04.
4.05 In
the case of a former Participant who is reemployed by any Employer or an
Affiliate before such Participant’s Normal Retirement Date:
(a)
if he is receiving a Retirement
Pension at the time of his reemployment, such Retirement Pension shall be
suspended during the period of his reemployment, and any years of Credited
Service with respect to which he has received any benefits under this Plan shall
be taken into account for purposes of determining his benefit under benefit
accrual provisions of Section 3.02 or Subsection 11.04(2), but the amount of his
Retirement Pension, when payable, shall be reduced by the Actuarial Equivalent
of such benefits previously received;
(b)
if he had received a single sum
distribution (or been deemed to have received such a distribution under
Subsection 3.03(a)(2) hereof) or any optional payment under the terms of the
Plan, his Years of Credited Service with respect to which he had received any
benefits under this Plan shall be taken into account for purposes of determining
his benefit under the benefit accrual provisions of Section 3.01 or Subsection
11.04(2), but the amount of his Retirement Pension, when payable, shall be
reduced by the Actuarial Equivalent of the benefits previously
received. In the case of an Employee whose period of reemployment
extends beyond his Normal Retirement Date, the provisions of Section 3.04(a)
shall apply in addition to the provisions of this Section 4.05.
ARTICLE
V
EARLY RETIREMENT AND
DISABILITY BENEFIT
5.01 Upon
Retirement on or after his Early Retirement Date but before his Normal
Retirement Date, a Participant shall be entitled to elect to receive, with his
written consent and the consent of his Spouse, if applicable, a Retirement
Pension commencing on:
(a)
the first day
of the month coincident with or next following the date of his Retirement;
or
(b)
the first day of
any month which precedes his Normal Retirement Date;
which is
the Actuarial Equivalent as of his Normal Retirement Date of his Accrued
Benefit.
Notwithstanding
the foregoing, however, in no event shall the Participant’s Retirement Pension
payable pursuant to this Section 5.01 be less than the Participant’s Retirement
Pension determined under this Section as of December 31, 1995 based on the
Annuity Purchase Rate and mortality determined by application of the UP-1984
mortality table set back one year.
5.02 Upon
a Participant’s Termination of Employment due to Disability, he shall be fully
(100%) vested in his Accrued Benefit and shall be entitled to receive a
Retirement Pension commencing on his Normal Retirement which is equal to his
Accrued Benefit as of the date of his Termination of Employment.
5.03 Notwithstanding
any other provision of this Plan, if a Participant is entitled to a Retirement
Pension pursuant to the provisions of this Article V, such Retirement Pension
shall be paid in accordance with the provisions of Section
3.04.
ARTICLE
VI
OPTIONAL METHODS OF
PAYMENT
6.01 The
optional methods of payment set forth in this Section 6.01 shall be available
under the Plan and shall be elected in the manner provided herein.
(a)
Election
Procedure
.
A
Participant or Retired Participant may elect any of the Options provided herein,
which Option shall be the Actuarial Equivalent (determined as of his Retirement
Pension Starting Date) of the Retirement Pension otherwise payable to him in
accordance with Article III, IV or V, whichever is applicable; provided,
however, that no Option may be elected which would permit his Beneficiary (other
than his Spouse) to receive a benefit which is fifty percent (50%) or more of
the Actuarial Equivalent (determined as of the Participant’s projected
Retirement Pension Starting Date) of the combined benefits payable to such
Beneficiary and such Participant or Retired Participant. Such
election shall be made in accordance with Section 3.03(b). Except as
otherwise provided in this Article VI, an Option shall become effective on the
later of (1) the date a Participant elects an Option, or (2) his Retirement
Pension Starting Date. If a Participant or Retired Participant dies
before the date on which an Option becomes effective, any election of such
Option shall be null and void. A married Participant may elect an
Option only if he elects, in accordance with Section 3.03, not to receive
benefits in the form of a Qualified Joint and Survivor Annuity or Qualified
Optional Survivor Annuity.
(b)
The following
Options may be elected by a Participant
:
Option 1
Life
Annuity
: A Participant or Retired Participant may elect to
receive his Retirement Pension in the form of an annuity for his own life
only.
Option 2
Joint and Survivor
Annuity
: (1) A Participant or Retired Participant
may elect to receive an actuarially adjusted Retirement Pension payable to
himself in equal monthly installments for his lifetime and thereafter payable to
his Beneficiary, if such Beneficiary survives him, in equal monthly installments
at a rate of fifty percent (50%), seventy-five percent (75%) or one hundred
percent (100%), as the Participant or Retired Participant may designate, of the
Retirement Pension payable during their joint lifetimes. Election of
this Option is conditioned upon the statement of the name and gender of the
Beneficiary in such election, and in addition, the delivery to the
Administrative Committee within ninety (90) days after filing such election of
proof, satisfactory to the Administrative Committee, of the age of the
Beneficiary.
(2) If
his Beneficiary dies before the Retirement Pension Starting Date of the
Participant or Retired Participant, any election of this Option 2 shall be null
and void.
(3) If
his Beneficiary dies after the Retired Participant’s Retirement Pension Starting
Date, the election of this Option 2 shall be effective, and the Participant or
Retired Participant shall receive or continue to receive the same actuarially
adjusted Retirement Pension as if his Beneficiary had not predeceased
him.
Option 3
Life Annuity - Period
Certain
: A Participant or Retired Participant may elect to
receive an actuarially adjusted Retirement Pension payable in equal monthly
installments for his lifetime or over a period certain not longer than the
greater of the Participant’s life expectancy on his Retirement Pension Starting
Date, or the joint life and last survivor expectancy of the Participant or
Retired Participant and his Beneficiary on his Retirement Pension Starting Date,
determined under the Treasury Regulations under Section 72 of the
Code. If the Participant or Retired Participant dies prior to the end
of the period certain, the remaining installments shall be paid to his
Beneficiary. Notwithstanding the foregoing, effective 180 days after
the adoption of this amended and restated Plan document, the period certain
option shall be limited to a period certain of either ten (10) years or fifteen
(15) years as elected by a Participant.
Option 4
Single Sum
Distribution
: A Participant or Retired Participant may elect
to receive the Actuarial Equivalent of his Accrued Benefit, computed as of his
Retirement date, in the form of a single sum distribution. Such amount shall be
paid to him, or, if he dies between the date on which the distribution first
becomes payable and the date of actual distribution, to his Beneficiary, within
sixty days after the date which would otherwise have been his Retirement Pension
Starting Date; provided, however, that the entire amount shall be distributed
within a single taxable year of the recipient. In no event shall a
Participant’s benefit payable under this Option 4 be less than would have been
payable under the terms of the Plan in effect on December 31, 1995 based on the
Participant’s Accrued Benefit as of that date.
Option 5
Payment in
Installments
: A Participant or Retired Participant may elect
to have the Actuarial Equivalent of his Accrued Benefit, computed as of his
Retirement date, paid to him in approximately equal installments, payable no
less often than annually, over a period certain not longer than the greater of
the Participant’s life expectancy on his Retirement Pension Starting Date, or
the joint life and last survivor expectancy of the Participant or Retired
Participant and his Beneficiary on his Retirement Pension Starting Date,
determined under the Treasury Regulations under Section 72 of the
Code. If the Participant or Retired Participant dies prior to the end
of the period certain, the remaining installments shall be paid to his
Beneficiary. In no event shall a Participant’s benefit payable under
this Option 5 be less than would have been payable under the terms of the Plan
in effect on December 31, 1995 based on the Participant’s Accrued Benefit as of
that date. Notwithstanding the foregoing, effective 180 days after
the adoption of this amended and restated Plan document, the installment option
shall be limited to a period certain of either ten (10) years or fifteen (15)
years as elected by a Participant.
(c)
Change of
Option
:
A
Participant or Retired Participant may elect to change the Option then in effect
at any time during the period provided in Subsection (a) within which an Option
may be elected; provided, however, that a Participant or Retired Participant may
not elect to change the Option then in effect more frequently than once during
any consecutive twelve (12) month period.
(d)
Designation of
Beneficiary
:
(1)
Upon receipt
of notification from the Administrative Committee that he has qualified for
participation in the Plan, a Participant may designate a Beneficiary or
Beneficiaries and a successor Beneficiary or Beneficiaries. A
Participant or Retired Participant may change such designation from time to time
by filing a new designation with the Administrative Committee. No
change of Beneficiary shall require the consent of any previously designated
Beneficiary, and no Beneficiary shall have any rights under this Plan except as
specifically provided by its terms.
(2)
If a Retired Participant
(other than one who has elected Option 1 or 2) has failed to designate a
Beneficiary, or if his Beneficiary has predeceased him, or if he has instructed
the Administrative Committee in writing to designate a Beneficiary, the
Administrative Committee shall designate a Beneficiary or Beneficiaries on his
behalf, but only from among his Spouse, descendants (including adoptive
descendants), parents, brothers and sisters, or nephews and nieces; provided,
however, that if the Retired Participant had instructed the Administrative
Committee in writing to designate in a specified order or from a specified
group, the Administrative Committee shall act only in accordance with such
written instructions. If a Retired Participant has no validly
designated Beneficiary, the Actuarial Equivalent of any amounts which would
otherwise have been payable to a Beneficiary shall be paid to the Retired
Participant’s estate.
(3)
If the Beneficiary of a Participant
or Retired Participant predeceases him the rights of such Beneficiary shall
thereupon terminate.
(4)
If a Retired Participant dies after any
installment of his Retirement Pension has become due but has not yet been paid
to him, the balance of such installment shall be paid to his
Beneficiary.
6.02 The
Administrative Committee is authorized and empowered from time to time to adopt
and fairly to administer regulations relating to the exercise or operation of an
Option; provided, however, that no such regulation shall be inconsistent with
the provisions of Section 6.01. Without limiting the generality of
the foregoing such regulations may prescribe:
(a)
such terms
and conditions as the Administrative Committee shall deem appropriate in respect
of the exercise of any Option;
(b)
the form of
application;
(c)
any information or proof
thereof to be furnished by a Participant, a Retired Participant or a Beneficiary
in connection with any Option; and
(d)
any other requirement or condition
relating to any Option.
6.03 The
Administrative Committee may, in its sole discretion, at any time or from time
to time, provide the benefits to which any Retired Participant or his
Beneficiary is entitled under this Plan by purchase of any form of nonassignable
annuity contract. Upon the purchase of any such contract, the rights
of the Retired Participant and his Beneficiary to receive any payments pursuant
to this Plan shall be exclusively limited to such rights as may accrue under
such contract, and neither such Retired Participant nor his Beneficiary shall
have any further claim against his Employer, the Administrative Committee, the
Trustee or any other person.
6.04 If,
at any time, any Retired Participant or his Beneficiary is, in the judgment of
the Administrative Committee, legally, physically or mentally incapable of
personally receiving and receipting for any payment due hereunder, payment may,
in the discretion of the Administrative Committee, be made to the guardian or
legal representative of such Retired Participant or Beneficiary or, if none
exists, to any other person or institution which, in the judgment of the
Administrative Committee, is then maintaining, or then has custody of, such
Retired Participant or Beneficiary.
6.05 Notwithstanding
anything to the contrary contained in this Plan:
(a)
The entire
interest of each Participant must be distributed or begin to be distributed no
later than the Participant’s Required Beginning Date.
(b)
Distributions, if
not made in a single sum, may only be made over one of the following periods (or
a combination thereof):
(1)
the life of the
Participant,
(2)
the life of the Participant and
Designated Beneficiary,
(3)
a period certain not extending beyond the
life expectancy of the Participant, or
(4)
a period certain not extending beyond the joint
and last survivor expectancy of the Participant and his Designated
Beneficiary.
(c)
If the Participant dies after distribution of his or
her interest has begun, the remaining portion of such interest will continue to
be distributed at least as rapidly as under the method of distribution being
used prior to the Participant’s death.
(d)
If the Participant dies before distribution of his or her
interest begins, distribution of the Participant’s entire interest shall be
completed by December 31 of the calendar year containing the fifth (5th)
anniversary of the Participant’s death except to the extent that an election is
made to receive distributions in accordance with (1) or (2) below:
(1)
If any portion of the Participant’s interest is payable to a Beneficiary,
distributions may be made over the life or over a period certain not greater
than the life expectancy of the Designated Beneficiary commencing on or before
December 31 of the calendar year immediately following the calendar year in
which the Participant died;
(2)
If the Beneficiary is the Participant’s
surviving Spouse, the date distributions are required to begin in accordance
with (a) above shall not be earlier than December 31 of the calendar year in
which the Participant would have attained age 70-1/2;
(3)
If the surviving Spouse dies before the
distributions to such spouse begin, the provisions of this Section 6.05(d),
shall be applied as if the surviving spouse were the
Participant.
(e)
Any amount paid to a child of the Participant
will be treated as if it has been paid to the surviving Spouse if the amount
becomes payable to the surviving spouse when the child reaches the age of
majority.
(f)
The life expectancy of a Participant and his Spouse may be
recalculated annually. The life expectancy of a non-Spouse
beneficiary may not be recalculated.
(g)
Notwithstanding any provision of this Plan to the contrary, the
provisions of this Section 6.05 shall be construed in a manner that complies
with Section 401(a)(9) of the Code. With respect to distributions
made on or after January 1, 2001 and prior to January 1, 2003, the Plan will
apply the minimum distribution requirements of Section 401(a)(9) of the Code in
accordance with the Treasury Regulations thereunder that were proposed in
January 2001, the provisions of which are hereby incorporated by
reference. With respect to distributions made on or after January 1,
2003, notwithstanding any provision of this Plan to the contrary, the Plan will
apply the minimum distribution requirements of Section 401(a)(9) of the Code in
accordance with the final Treasury Regulations thereunder, as reflected in
Appendix A to the Plan.
6.06 Notwithstanding
anything contained herein to the contrary, unless the Participant elects
otherwise, distributions to the Participant will commence no later than the 60th
day after the close of the Plan Year in which occurs the latest of:
(1)
the
Participant’s attainment of age 65;
(2)
the 10th
anniversary of the year in which the Participant commenced participation in the
Plan; or
(3)
the Participant’s
termination of service with the Employer.
Notwithstanding
the foregoing, the failure of a Participant and his Spouse to consent to a
distribution at any time that any portion of the Accrued Benefit could be
distributed to the Participant or his surviving Spouse prior to the time the
Participant attains (or would have attained if not deceased) age 65, shall be
deemed to be an election to defer payment of any benefit sufficient to satisfy
this Section 6.06.
ARTICLE
VII
DEATH
BENEFIT
7.01 No
benefits under this Plan shall be payable on account of the death of a
Participant or Retired Participant other than a death benefit pursuant to
Section 3.03, an Option validly elected under Article VI, or this Article
VII.
7.02 (a) Except
as provided in Subsection (b), if a Participant who is vested in any portion of
his Accrued Benefit should die prior to his Retirement Pension Starting Date,
his Spouse or Domestic Partner shall be entitled to receive a Qualified
Preretirement Survivor Annuity.
(b)
Notwithstanding any other provision of this Article VII, distributions of the
Actuarial Equivalent of the Qualified Preretirement Survivor Annuity to which a
surviving Spouse or Domestic Partner has become entitled shall
immediately be made or commence to be made to the surviving Spouse or Domestic
Partner in a form other than the Qualified Preretirement Survivor
Annuity:
(1)
if such
distribution is made prior to the date on which payments of the Qualified
Preretirement Survivor Annuity commence and the amount of such distribution is
$5,000 (for Participants whose Termination of Employment occurs before January
1, 1998, $3,500) or less; or
(2)
in any case not
described in Paragraph (1), with the written consent of such surviving
Spouse.
7.03 (a) The
Administrative Committee shall provide each Participant within the “applicable
period” for such Participant a written explanation of the Qualified
Preretirement Survivor Annuity comparable to the explanation required in Section
3.03(c).
(b)
The applicable period is whichever of the following periods ends
last:
(1)
the period
beginning with the first day of the Plan Year in which the Participant attains
age 32 and ending with the close of the Plan Year preceding the Plan Year in
which the Participant attains age 35;
(2)
“a reasonable period” ending
after the individual becomes a Participant; and
(3)
“a reasonable period” ending after
this Section 7.03 first applies to the Participant.
For
purposes of this Section 7.03, “a reasonable period” is the end of the two year
period beginning one year prior to the date the applicable event occurs, and
ending one year after that date.
(c)
Notwithstanding the foregoing in the case of a Participant who separates
from service before the Plan Year in which age 35 is attained, notice shall be
provided within the two year period beginning one year prior to separation and
ending one year after separation. If the Participant thereafter
returns to employment with the Employer, the “applicable period” for such
participant shall be redetermined.
ARTICLE
VIII
DIRECT ROLLOVER
DISTRIBUTIONS
8.01 Upon
receiving directions from a Member who is eligible to receive a distribution
from the Plan which constitutes an eligible rollover distribution, as defined in
Section 402(c)(4)of the Code, to transfer all or any part of such distribution
to an eligible retirement plan, as defined in Section 402(c)(8)(B) or to a Roth
IRA under Section 408A (subject to the restrictions therein), the Administrative
Committee shall cause the portion of the distribution which the Participant has
elected to so transfer to be transferred directly to such eligible retirement
plan; provided, however, that the Participant shall be required to notify the
Administrative Committee of the identity of the eligible retirement plan at the
time and in the manner that the Administrative Committee shall prescribe and the
Administrative Committee may require the Participant or the eligible retirement
plan to provide a statement that the eligible retirement plan is intended to be
qualified under Section 401(a) of the Code (if the plan is intended to be so
qualified) or otherwise meets the requirements necessary to be an eligible
retirement plan.
8.02 Upon
receiving instructions from a Beneficiary who is the Participant’s Spouse who is
eligible to receive a distribution pursuant to the Plan that constitutes an
eligible rollover distribution as defined in Section 402(c)(4) of the Code, to
transfer all or any part of such distribution to a plan that constitutes an
eligible retirement plan under Section 402(c)(8)(B) of the Code with respect to
that distribution, the Administrative Committee shall cause the portion of the
distribution which such Spouse has elected to so transfer to the eligible
retirement plan so designated; provided, however, that the Spouse shall be
required to notify the Administrative Committee of the identity of the eligible
retirement plan at the time and in the manner that the Administrative Committee
shall prescribe.
8.03 The
Administrative Committee may accomplish the direct transfer described in Section
8.01 or Section 8.02, as applicable, by delivering a check to the Participant or
Spouse (in each case, a “Distributee”) which is payable to the trustee,
custodian or other appropriate fiduciary of the eligible retirement plan, or by
such other means as the Administrative Committee may in its discretion
determine. The Administrative Committee may establish such rules and
procedures regarding minimum amounts which may be the subject of direct
transfers and other matters pertaining to direct transfers as it deems necessary
from time to time.
8.04 Effective
for distributions made pursuant to the Plan after December 31, 2006, in the case
of an “eligible rollover distribution” to a nonspousal distributee (a “Nonspouse
Rollover”), an “eligible retirement plan” is an individual retirement account
described in Section 408(a) of the Code or an individual retirement annuity
described in Section 408(b) of the Code that was established for the purpose of
receiving the distribution on behalf of such nonspousal
distributee. In order for such eligible retirement plan to accept a
Nonspouse Rollover on behalf of a nonspousal distributee (1) a direct
trustee-to-trustee transfer must be made to such eligible retirement plan and
shall be treated as an eligible rollover distribution for purposes of the Code,
(2) the individual retirement plan shall be treated as an inherited individual
retirement account or individual retirement annuity (within the meaning of
Section 408(d)(3)(C) of the Code) for purposes of the Code, and (3) Section
401(a)(9)(B) of the Code (other than clause (iv) thereof) shall apply to such
plan. Any Nonspouse Rollover shall be made in accordance with the
Pension Protection Act of 2006, Internal Revenue Service Notice 2007-7 and any
subsequent guidance.
ARTICLE
IX
EMPLOYER CONTRIBUTION AND
FUNDING POLICY
9.01 This
Plan contemplates that each Employer shall, from time to time, contribute such
amounts as may, in accordance with Section 412 of the Code and sound actuarial
principles (as recommended by an actuary enrolled pursuant to Section 3042 of
ERISA), be deemed necessary by such Employer to provide the benefits
contemplated hereunder.
9.02 All
contributions made by any Employer shall be paid directly to the Trustee for
deposit in the Trust Fund.
9.03 Any
forfeiture arising under the provisions of this Plan shall be applied to reduce
contributions which would otherwise be required to be made by the Employers
pursuant to Section 9.01.
9.04 The
Company shall establish a funding policy and method consistent with the
objectives of the Plan and the requirements of Title I of ERISA. In
establishing and reviewing such funding policy and method, the Company shall
endeavor to determine the Plan’s short-term and long-term financial needs,
taking into account the need for liquidity to pay benefits and the need for
investment growth.
ARTICLE
X
LIMITATIONS ON
BENEFITS
10.01 The
limitations of this Section 10.01 shall apply in limitation years beginning
prior to July 1, 2007, except as otherwise provided herein.
(a)
The limitations of Section 415 of the Code applicable to “defined benefit
plans” as defined in Section 414(j) of the Code are hereby incorporated by
reference in this Plan; provided, however, that where the Code so provides,
benefit limitations in effect under prior law shall be applicable to benefits
accrued as of the last effective day of such prior law. In the case
of a Participant who is, or has ever been, a participant in one or more “defined
contribution plans” as defined in Section 414(i) of the Code
maintained by Employer or any predecessor of the Employer, if benefits or
contributions need to be reduced due to the application of Section 415(e) of the
Code, then benefits under this Plan shall be reduced with respect to the
affected Participant before any contributions credited to the Participant under
any defined contribution plan maintained by the Employer shall be
reduced. Notwithstanding the foregoing, the limitations of Section
415(e) of the Code shall cease to apply as of the first day of the first Plan
Year beginning on or after January 1, 2000.
(b)
For purposes of applying the limitations described in this Section 10.01,
if benefits under the Plan are received in any form other than a straight life
annuity, or if such benefits relate to rollover contributions to the Plan, then
such benefit must be adjusted to a straight life annuity, beginning at the same
age, which is the actuarial equivalent of such benefit. In order to
determine the actuarial equivalence of different forms of benefit payment for
this purpose, the interest rate assumptions may not be less than the greater of
five percent (5%) or the rate specified for purposes of Section 1.02 of the
Plan. For limitation years beginning on or after January 1, 1995, the
actuarially equivalent straight life annuity for purposes of applying the
limitations under Section 415(b) of the Code to benefits that are not subject to
Section 417(e)(3) of the Code is equal to the greater of the equivalent annual
benefit computed using the interest rate and mortality table, or tabular factor,
specified in Section 1.02 of the Plan for actuarial equivalence for the
particular form of benefit payable, and the equivalent annual benefit computed
using a five percent (5%) interest rate assumption and the applicable mortality
table. For Plan benefits subject to Section 417(e)(3) of the Code,
the equivalent annual straight life annuity is equal to the greater of the
equivalent annual benefit computed using the interest rate and mortality table,
or tabular factor, specified in Section 1.02 of the Plan for actuarial
equivalence for the particular form of benefit payable, and the equivalent
annual benefit computed using the annual interest rate on 30-year Treasury
securities as specified by the Commissioner of the Internal Revenue Service, and
the mortality table described in Revenue Ruling 2001-62 or any successor table
(Revenue Ruling 95-6 for distributions with annuity starting dates prior to
December 31, 2002). For limitation years beginning in 2004 or 2005,
for the purposes of determining the Actuarial Equivalent value for a form of
payment that is subject to Section 417(e)(3) of the Code, the interest rate
assumption shall be the greater of (i) the Applicable Interest Rate or (ii) five
and one half percent (5.5%). For limitation years beginning in 2006
and thereafter, for the purposes of determining the Actuarial Equivalent value
for a form of payment that is subject to Section 417(e)(3) of the Code, the
interest rate assumption shall be the greater of (i) the Applicable Interest
Rate, (ii) five and one half percent (5.5%) or (iii) the rate that provides a
benefit of not more than 105% of the benefit that would be provided if the rate
(or rates) applicable in determining minimum lump sums were
used.
10.02 The
limitations of this Section 10.02 shall apply in limitation years beginning on
or after July 1, 2007, except as otherwise provided herein.
(a)
The application of the provisions of this Section 10.02 shall not cause
the maximum permissible benefit for any Participant to be less than the
Participant’s accrued benefit under all the defined benefit plans of the
Employer or a predecessor employer as of the end of the last limitation year
beginning before July 1, 2007 under provisions of the plans that were both
adopted and in effect before April 5, 2007. The preceding sentence applies only
if the provisions of such defined benefit plans that were both adopted and in
effect before April 5, 2007 satisfied the applicable requirements of statutory
provisions, regulations, and other published guidance relating to Section 415 of
the Code in effect as of the end of the last limitation year beginning before
July 1, 2007, as described in section 1.415(a)-1(g)(4) of the Treasury
Regulations.
(b)
Notwithstanding anything contained in the Plan to the contrary, the
limitations, adjustments, and other requirements prescribed in the Plan shall
comply with the provisions of Section 415 of the Code and the final regulations
promulgated thereunder, the terms of which are specifically incorporated herein
by reference as of July 1, 2007, except where an earlier effective date is
otherwise provided in the final regulations or in this Section
10.02. However, where the final regulations permit the Plan to
specify an alternative option to a default option set forth in the regulations,
and the alternative option was available under statutory provisions,
regulations, and other published guidance relating to Section 415 of the Code as
in effect prior to April 5, 2007, and the Plan provisions in effect as of April
5, 2007 incorporated the alternative option, said alternative option shall
remain in effect as a plan provision for limitation years beginning on or after
July 1, 2007 unless another permissible option is selected in this Section
10.02.
(c)
For purposes of the Plan’s provisions reflecting Section 415(b)(3)
of the Code (i.e., limiting the annual benefit payable to no more than 100% of
the Participant’s average annual compensation), a Participant’s average
compensation shall be the average compensation for the three consecutive Years
of Service that produces the highest average, except that a Participant’s
compensation for a Year of Service shall not include compensation in excess of
the limitation under Section 401(a)(17) of the Code that is in effect for the
calendar year in which such year of service begins. If the
Participant has less than three consecutive Years of Service, compensation shall
be averaged over the Participant’s longest consecutive period of service,
including fractions of years, but not less than one year. In the case
of a Participant who is rehired by the Employer after a severance of employment,
the Participant’s high three-year average compensation shall be calculated by
excluding all years for which the Participant performs no services for and
receives no compensation from the Employer (the “Break Period”), and by treating
the years immediately preceding and following the Break Period as
consecutive.
In the
case of a Participant who has had a “severance from employment” (as defined in
Section 401(k) of the Code) with the Employer, the defined benefit dollar
limitation applicable to the Participant in any Limitation Year beginning after
the date of severance shall be automatically adjusted in the manner set forth in
Section 415(d) of the Code.
10.03 Benefit
Forms Not Subject to the Present Value Rules of Section 417(e)(3) of the
Code.
(a)
Form of
benefit. Notwithstanding any provision of this Plan to the contrary,
the Single Life Annuity that is the Actuarial Equivalence of the Participant’s
form of benefit shall be determined under this Section if the form of the
Participant’s benefit is either:
(i)
a nondecreasing annuity (other than a Single Life
Annuity) payable for a period of not less than the life of the Participant (or,
in the case of a Qualified Preretirement Survivor Annuity, the life of the
surviving Spouse), or
(ii)
an annuity that decreases during the life of the Participant merely
because of: (i) the death of the survivor annuitant (but only if the reduction
is not below 50% of the benefit payable before the death of the survivor
annuitant), or (ii) the cessation or reduction of Social Security supplements or
qualified disability payments (as defined in Section 401(a)(11) of the
Code).
(b)
Notwithstanding any provision of this Plan to the
contrary, for limitation years beginning before July 1, 2007, the Actuarial
Equivalence of the Single Life Annuity is equal to the annual amount of the
Single Life Annuity commencing at the same Benefit Starting Date that has the
same actuarial present value as the Participant’s form of benefit computed using
whichever of the following produces the greater annual amount:
(i)
the Applicable Interest Rate and the Applicable
Mortality Table (or other tabular factor) specified in the Plan for adjusting
benefits in the same form; and
(ii)
a five percent (5%) interest rate assumption and the
Applicable Mortality Table for that Benefit Starting Date.
(c)
Notwithstanding any provision of this Plan to the
contrary, for limitation years beginning on or after July 1, 2007, the Actuarial
Equivalence of the Single Life Annuity is equal to the greater of:
(i)
the annual
amount of the Single Life Annuity (if any) payable to the Participant under the
Plan commencing at the same Benefit Starting Date as the Participant’s form of
benefit; and
(ii)
the annual amount of the
Single Life Annuity commencing at the same Benefit Starting Date that has the
same actuarial present value as the Participant’s form of benefit, computed
using a five percent (5%) interest rate assumption and the Applicable Mortality
Table for that Benefit Starting Date.
10.04 Benefit
Forms Subject to the Present Value Rules of Section 417(e)(3) of the
Code.
(a)
Form of
benefit. Notwithstanding any provision of this Plan to the contrary,
the Single Life Annuity that is the Actuarial Equivalence of the Participant’s
form of benefit shall be determined as indicated under this Section if the form
of the Participant’s benefit is other than a benefit form described in Section
10.03.
(b)
Annuity Starting
Date in Plan Years Beginning After
2005. Notwithstanding any provision of this Plan to the
contrary, if the Benefit Starting Date of the Participant’s form of benefit is
in a Plan Year beginning after December 31, 2005, the Actuarial Equivalence of
the Single Life Annuity is equal to the greatest of:
(i)
the annual amount of the
Single Life Annuity commencing at the same Benefit Starting Date that has the
same actuarial present value as the Participant’s form of benefit, computed
using the Applicable Interest Rate and the Applicable Mortality Table (or other
tabular factor) specified in the Plan for adjusting benefits in the same
form;
(ii)
the annual amount of the Single Life
Annuity commencing at the same Benefit Starting Date that has the same actuarial
present value as the Participant’s form of benefit, computed using a five and
one half percent (5.5%) interest rate assumption and the applicable mortality
table for the distribution under Section 1.417(e)-1(d)(2) of the Treasury
regulations; and
(iii)
the
annual amount of the Single Life Annuity commencing at the same Benefit Starting
Date that has the same actuarial present value as the Participant’s form of
benefit, computed for the distribution under Section 1.417(e)-1(d)(3) of the
Treasury regulations and the applicable mortality table for the distribution
under section 1.417(e)-1(d)(2) of the Treasury regulations, multiplied by
1.05.
(c)
Annuity Starting Date in Plan Years Beginning in 2004
or 2005. Notwithstanding any provision of this Plan to the contrary,
if the Benefit Starting Date of the Participant’s form of benefit is in a Plan
Year beginning in 2004 or 2005, the Actuarial Equivalence of the Single Life
Annuity is equal to the annual amount of the Single Life Annuity commencing at
the same Benefit Starting Date that has the same actuarial present value as the
Participant’s form of benefit, computed using whichever of the following
produces the greater annual amount:
(i)
the Applicable Interest Rate and the
Applicable Mortality Table (or other tabular factor) specified in the Plan for
adjusting benefits in the same form; and
(ii)
five and one half percent (5.5%) interest rate
assumption and the applicable mortality table for the distribution under section
1.417(e)-1(d)(2) of the Treasury regulations.
ARTICLE
XI
TOP-HEAVY PLAN
YEARS
11.01 For
purposes of this Article XI, the following definitions shall apply:
(a)
“Determination
Date” means for any Plan Year subsequent to the first Plan Year, the last day of
the preceding Plan Year, for the first Plan Year, the last day of that Plan
Year.
(b)
“Employee” means
any employee of an Employer and any beneficiary of such an
employee.
(c)
“Employer” means the Employer
and any Affiliate.
(d)
“Key Employee” means, for Plan Years
beginning after December 31, 2000, any Employee or former Employee (including
any deceased Employee) who at any time during the Plan Year that includes the
determination date was an officer of the Employer having annual compensation
greater than $130,000 (with cost of living adjustments in the manner set forth
in Section 415(d) of the Code), a 5-percent owner of the employer, or a
1-percent owner of the employer having annual compensation of more than
$150,000. For this purpose, annual compensation means compensation
within the meaning of Section 415(c)(3) of the Code. The
determination of who is a Key Employee will be made in accordance with Section
416(i)(1) of the Code and the applicable regulations and other guidance of
general applicability issued thereunder.
(e)
“Permissive Aggregation Group” means the Required
Aggregation Group of plans plus any other plan or plans of the Employer which,
when considered as a group with the Required Aggregation Group, would continue
to satisfy the requirements of Sections 401(a)(4) and 410 of the
Code.
(f)
“Required Aggregation Group” means (1) each qualified plan of
the Employer in which at least one Key Employee participates, and (2) any other
qualified plan of the Employer which enables a plan described in (1) to meet the
requirements of Sections 401(a)(4) or 410 of the Code.
(g)
“Top-Heavy Compensation” means the first $200,000 (or such higher
amount as may be prescribed pursuant to Treasury Regulations) of W-2 earnings
actually paid in the Plan Year by an Employer or an Affiliate for services as an
Employee. Top-Heavy Compensation shall include Deemed 125
Compensation, as defined in Section 1.14 of the Plan.
(h)
“Top-Heavy Ratio”:
(1)
If in addition to this Plan the Employer
maintains one or more other defined benefit plans (including any simplified
employee pension plan) and the Employer has not maintained any defined
contribution plan which during the 1-year period ending on the Determination
Date has or has had account balances, the top-heavy ratio for this Plan alone or
for the Required or Permissive Aggregation Group, as appropriate, is a fraction,
the numerator of which is the sum of the present value of accrued benefits of
all Key Employees as of the Determination Date (including any part of any
accrued benefit distributed in the 1-year period ending on the Determination
Date), and the denominator of which is the sum of the present value of all
accrued benefits (including any part of any accrued benefit distributed in the
1-year period ending on the Determination Date), both computed in accordance
with Section 416 of the Code and the regulations thereunder.
(2)
If in addition to this Plan the Employer maintains one or
more defined benefit plans (including any simplified employee pension plan) and
the Employer maintains or has maintained one or more defined contribution plans
which during the 1-year period ending on the Determination Date has or has had
any account balances, the Top-Heavy Ratio for any Required or Permissive
Aggregation Group, as appropriate, is a fraction, the numerator of which is the
sum of the present value of accrued benefits under the aggregated defined
benefit plan or plans for all Key Employees, determined in accordance with (1)
above, and the sum of the account balances under the aggregated defined
contribution plan or plans for all Key Employees as of the Determination Date,
and the denominator of which is the sum of the present value of accrued benefits
under the aggregated defined benefit plan or plans for all participants,
determined in accordance with (1) above, and the sum of the account balances
under the aggregated defined contribution plan or plans for all participants as
of the Determination Date, all determined in accordance with Section 416 of the
Code and the regulations thereunder. The account balances accrued
benefits under a defined contribution plan in both the numerator and denominator
of the Top-Heavy Ratio are increased for any distribution of an account balance
made in the 1-year period ending on the Determination Date.
(3)
For purposes of (1) and (2) above, the value of account balances and the
present value of accrued benefits will be determined as of the most recent
Valuation Date that falls within or ends with the 12-month period ending on the
Determination Date, except as provided in Section 416 of the Code and the
regulations thereunder for the first and the second plan years of a defined
benefit plan. The account balances and accrued benefits of a
participant (x) who is not a Key Employee but who was a Key Employee in a prior
year, or (y) who has not received any Top-Heavy Compensation from any Employer
maintaining the Plan at any time during the 5-year period ending on the
Determination Date will be disregarded. Notwithstanding the above,
for Plan Years beginning after December 31, 2001, the accrued benefits and
accounts of any Participant who has not performed services for the Employer
during the 1-year period ending on the Determination Date will be
disregarded. The calculation of the Top-Heavy Ratio, and the extent
to which distributions, rollovers, and transfers are taken into account will be
made in accordance with Section 416 of the Code and the regulations
thereunder. Deductible Employee contributions will not be taken into
account for purposes of computing the Top-Heavy Ratio. When
aggregating plans the value of account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall within the same
calendar year.
The
accrued benefit of a Participant other than a Key Employee shall be determined
under (x) the method, if any, that uniformly applies for accrual purposes under
all defined benefit plans maintained by the Employer, or (y) if there is no such
method, as if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional rule of Section 411(b)(1)(C) of the
Code.
(4)
For purposes of (1) and (2) above, in the case of a
distribution from the Plan made for a reason other than severance from
employment, death or Disability, “5 year period” shall be substituted for
“1-year period” wherever such term is found.
(5)
“Valuation Date” means the last day of a Plan
Year.
11.02 If
the Plan is or becomes top-heavy in any Plan Year, the provisions of Sections
11.04 through 11.05 will automatically supersede any conflicting provision of
the Plan.
11.03 The
Plan shall be considered top-heavy for any Plan Year if any of the following
conditions exists:
(a)
If the Top-Heavy Ratio for the Plan exceeds sixty
percent (60%) and the Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans.
(b)
If the Plan is part of a Required Aggregation Group of plans
but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the
group of plans exceeds sixty percent (60%).
(c)
If the Plan is part of a Required Aggregation
Group of plans and part of a Permissive Aggregation Group and the Top-Heavy
Ratio for the Permissive Aggregation Group exceeds sixty percent
(60%).
11.04 (a) The
Retirement Pension, commencing on or after the Normal Retirement Date of each
individual, other than a Key Employee, who was a Participant during any
Top-Heavy Plan year shall be the greater of:
(1)
such Participant’s
Retirement Pension determined under Section 3.02; or
(2)
an amount equal to two
percent (2%) of such Participant’s Highest Average Compensation for each of the
first ten (10) years of his Top-Heavy Service; provided, however, that in the
case of a Participant whose Retirement Pension Starting Date is later than his
Normal Retirement Date, the amount determined under this Paragraph (2)
commencing on such Retirement Pension Starting Date shall not be less than the
Actuarial Equivalent of the Retirement Pension that would have been payable
pursuant to this Paragraph (2) on the Participant’s Normal Retirement
Date
(b)
For purposes of this Section 11.04:
(1)
“Highest
Average Compensation” means a Participant’s average Top-Heavy Compensation for
the five (5) consecutive years during which his aggregate Top-Heavy Compensation
was highest, excluding compensation earned by such Participant:
(A)
after the close
of the last Top-Heavy Plan Year; or
(B)
prior to
January 1, 1984, except to the extent that compensation prior to January 1, 1984
is required to be taken into account so that such average is based on a five (5)
year period.
(2)
“Top-Heavy Service”
means each Year of Service:
(A)
in which ended
a Plan Year which was not a Top-Heavy Plan Year; or
(B)
completed in a
Plan Year beginning prior to January 1, 1984.
For Plan
Years beginning after December 31, 2001, for purpose of satisfying the minimum
benefit requirements of Section 416(c)(1) of the Code and this Plan, in
determining Years of Service, any service with Employer shall be disregarded to
the extent that such service occurs during a Plan Year when the Plan benefits
(within the meaning of Section 410(b) of the Code) no Key Employee or former Key
Employee.
(c)
In the case of a Participant who is also a
Participant in a defined contribution plan maintained by an Employer or an
Affiliate, the amount described in Paragraph (a) (2) shall be reduced by the
actuarial equivalent, determined as of the date of the Participant’s Retirement
Pension Starting Date, of the Participant’s account balance under such defined
contribution plan derived from employer contributions (which account balance
shall be deemed to include prior withdrawals made by the Participant accumulated
at interest to the Participant’s Retirement Pension Starting
Date). For purposes of this Subsection (c), actuarial equivalence and
the interest rate referred to in the preceding sentence shall be determined
using the actuarial assumptions described in Section 1.02.
11.05 (a) For
any Top-Heavy Plan Year, each Participant shall be vested in his Accrued Benefit
in accordance with the following schedule:
Years of Service
|
Nonforfeitable
Percentage
|
|
|
Fewer
than Two Years
|
0%
|
Two
Years but less than Three Years
|
20%
|
Three
Years but less than Four Years
|
40%
|
Four
Years but less than Five Years
|
60%
|
Five
or more Years
|
100%
|
(b)
Any portion of a Participant’s Accrued Benefit
which has become vested pursuant to Subsection (1) shall remain vested after the
Plan has ceased to be a Top-Heavy Plan.
(c)
Any Participant who has completed at least five (5) Years of
Service prior to the beginning of the Plan Year in which the Plan ceased to be a
Top-Heavy Plan shall continue to vest in his Accrued Benefit according to the
schedule set forth in Subsection (a) after the Plan has ceased to be a Top-Heavy
Plan.
ARTICLE
XII
NON-ALIENABILITY
12.01 Except
in the case of a qualified domestic relations order described in Section 414(p)
of the Code, no benefit under this Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, charge,
encumbrance, garnishment, levy or attachment; and any attempt to so anticipate,
alienate, sell, transfer, assign, pledge, charge, encumber, garnish, levy upon
or attach the same shall be void; nor shall any such benefit be in any manner
liable for or subject to the debts, contracts, liabilities, engagements or torts
of the person entitled thereto.
12.02 If
any Participant or Beneficiary under this Plan becomes bankrupt or attempts to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any
benefit under this Plan, the Administrative Committee may (but shall not be
required to) terminate the payment of such benefit to such Participant or
Beneficiary. If payment is thus terminated, the Administrative
Committee shall direct the Trustee to hold or apply future payments for the
benefit of such Participant, his Beneficiary, his spouse or children or other
dependents, or any of them, in such manner and in such proportion as the
Administrative Committee may deem proper.
12.03 Notwithstanding
anything herein to the contrary, effective August 5, 1997, the provisions of
this Article XII shall not apply to any offset of a Participant’s benefits
provided under the Plan against an amount that the Participant is ordered or
required to pay to the Plan under any of the circumstances set forth in Section
401(a)(13)(C) of the Code and Sections 206(d)(4) and 206(d)(5) of
ERISA.
ARTICLE
XIII
AMENDMENT OF THE
PLAN
13.01 The
Company shall have the right by action of the Board, at any time and from time
to time, to amend in whole or in part any of the provisions of this Plan, and
any such amendment shall be binding upon the Participants and their
Beneficiaries, the Trustee, the Administrative Committee, any Employer, and all
parties in interest; provided, however, that no such amendment shall authorize
or permit any of the assets of the Trust Fund to be used for or directed to
purposes other than the exclusive benefit of the Participants or their
Beneficiaries. Any such amendment shall become effective as of the
date specified therein.
13.02 No
amendment to the Plan including a change in the actuarial basis for determining
optional or early retirement benefits shall be effective to the extent that it
has the effect of decreasing a Participant’s Accrued
Benefit. Notwithstanding the preceding sentence, a Participant’s
Accrued Benefit may be reduced to the extent permitted under Section 412(c)(8)
of the Code. For purposes of this paragraph, a Plan amendment which
has the effect of (1) eliminating or reducing an early retirement benefit or a
retirement-type subsidy, or (2) eliminating an optional form of benefit, with
respect to benefits attributable to service before the amendment shall be
treated as reducing accrued benefits. In the case of a
retirement-type subsidy, the preceding sentence shall apply only with respect to
a participant who satisfies either before or after the amendment the
preamendment conditions for the subsidy. In general, a
retirement-type subsidy is a subsidy that continues after retirement, but does
not include a qualified disability benefit, a medical benefit, a social security
supplement, a death benefit (including life insurance). Furthermore,
no amendment to the Plan shall have the effect of decreasing a Participant’s
vested interest determined without regard to such amendment as of the later of
the date such amendment is adopted, or becomes effective.
13.03 If
at any time the vesting schedule set forth in Section 4.01 is amended, or the
Plan is amended in any way that directly or indirectly affects the computation
of the Participant’s nonforfeitable percentage or if the Plan is deemed amended
by an automatic change to or from a top-heavy vesting schedule, each Participant
with at least three Years of Service may elect, within a reasonable period after
the adoption of the amendment or change, to have the nonforfeitable percentage
computed under the Plan without regard to such amendment or
change. For Participants who do not have at least one Hour of Service
in any Plan Year beginning after December 31, 1988, the preceding sentence shall
be applied by substituting “five Years of Service” for ‘three Years of Service”
where such language appears. The period during which the election may
be made shall commence with the date the amendment is adopted or deemed to be
made and shall end on the latest of:
(i)
60 days after the amendment is
adopted;
(ii)
60 days after the amendment becomes effective;
or
(iii)
60
days after the Participant is issued written notice of the amendment by the
Employer or the Plan Administrator.
ARTICLE
XIV
TERMINATION OF THE
PLAN
14.01 The
Company may, by action of the Board and by appropriate notice to the Trustee,
determine that it shall terminate the Plan in its entirety or withdraw from the
Plan and terminate the same with respect to itself. The Company may
by action of the Board at any time determine that any other Employer shall
withdraw from the Plan, and any other Employer by action of its Board of
Directors may determine that it shall so withdraw, and upon any such
determination, the Plan, in respect of such Employer, shall be
terminated.
14.02 Any
termination or partial termination shall be effective as of the date specified
in the resolution providing therefor, if any, and shall be binding upon the
Employer, the Trustee, all Participants and Beneficiaries and all parties in
interest.
14.03 Upon
termination of the Plan in its entirety, each Participant shall be fully (100%)
vested in his Accrued Benefit, determined as of the date of such
termination. A Participant’s Accrued Benefit shall be payable only
from the Trust Fund, except to the extent otherwise provided in Title IV of
ERISA.
14.04 In
the event of a partial termination of the Plan, within the meaning of Section
411(d)(3)(A) of the Code, each affected Participant shall, insofar as required
by applicable law, be fully (100%) vested in his Accrued Benefit, determined as
of the date of such partial termination.
14.05 Upon
termination of the Plan in its entirety or upon a partial termination of the
Plan, the assets comprising the Trust Fund shall be allocated in accordance with
the statutory priorities set forth in Section 4044(d)(2) of ERISA and
regulations promulgated thereunder. Subject to the limitations
imposed by Section 4044(d)(2) of ERISA and Section 14.06, any funds remaining
after satisfaction of all liabilities to Plan Participants shall be returned to
the Employer.
14.06 (a) As
used in this Section 14.06:
(1)
“Applicable
Early Termination Date” means the tenth (10th) anniversary of the effective date
of any increase in benefits under this Plan.
(2)
“Predecessor Plan’
means any retirement plan which (A) was maintained by a corporation or
unincorporated business before it became an Employer and (B) has merged into the
Plan.
(3)
“Twenty-five Highest Paid Employees” means the
twenty-five (25) highest paid Employees on the tenth (10th) anniversary
preceding the Applicable Early Termination Date (including any such Employees)
who were not then, or were not eligible to become, Participants in the Plan),
excluding any Participant whose Retirement Pension will not exceed
$1,500.
(4)
“Unrestricted Benefits” means benefits in the form provided
under this Plan equal to the amount provided by the greatest of:
(A)
employer
contributions (or funds attributable thereto) under the Plan or a Predecessor
Plan which would have been applied to provide the Participant’s Accrued Benefit
if the Plan or such Predecessor Plan, as in effect on the tenth (10th)
anniversary preceding the Applicable Early Termination Date, had continued
without change;
(B)
$20,000;
or
(C)
an amount equal
to the sum of (A) employer contributions (or funds attributable thereto) which
would have been applied to provide the Participant’s Accrued Benefit under the
Plan or any Predecessor Plan if the Plan or such Predecessor Plan had terminated
on the tenth (10th) anniversary preceding the Applicable Early Termination Date
and (B) twenty percent (20%) of the first $50,000 of the Participant’s average
Compensation during the preceding five (5) years, multiplied by the number of
years in respect of which the full current costs of the Plan have been met since
the tenth (10th) anniversary preceding the Applicable Early Termination
Date;
(D)
(I) for a Participant who is not a “substantial owner” as
defined in Section 4022(b)(5) of ERISA, an amount which equals the present value
of the maximum benefit of such Participant described in Section 4022(b)(3)(B) of
ERISA, determined on the date the Plan terminates or the Participant’s
Retirement Pension Starting Date, whichever is earlier and determined in
accordance with regulations of the Pension Benefit Guaranty Corporation
(“PBGC”), without regard to any other limitations in Section 4022 of ERISA;
or
(II)
for a Participant who is a “substantial
owner,” as defined in Section 4022(b)(5) of ERISA, the greatest of the amounts
in (A), (B), (C) or an amount which equals the present value of the benefit
guaranteed upon termination of the Plan for such Participant under Section 4022
of ERISA, or if the Plan has not terminated, the present value of the benefit
that would be guaranteed if the Plan terminated on such Participant’s Retirement
Pension Starting Date, determined in accordance with regulations of the
PBGC.
(b)
Subject to the provisions of Section 4044 of
ERISA, in the event that:
(1)
the Plan is terminated in
respect of an Employer at any time prior to the Applicable Early Termination
Date; or
(2)
the benefits of any Participant
became payable (A) at any time prior to the Applicable Early Termination Date or
(B) subsequent to the Applicable Early Termination Date but before the full
current costs of the Plan for the period prior to the Applicable Early
Termination Date have been funded, the benefits (as defined in Treasury
Regulation 1.401-4(c)(2)(vi)(a)) which any of the Twenty-Five Highest Paid
Employees may receive (including any Unrestricted Benefits) shall not exceed his
Unrestricted Benefits at any time.
In the
case of a Participant described in Subparagraph (2) (B), if on the Applicable
Early Termination Date the full current costs are not met, the restrictions
contained in this Section 14.06 shall continue in force until the full current
costs are funded for the first time.
(c)
The provisions of this Section 14.06 shall not
restrict the current payment of full retirement benefits called for by this Plan
to any Retired Participant or his Beneficiary while the Plan is in full effect
and its full current costs have been met.
(d)
If any funds are released by operation of the
provisions of this Section 14.06, they shall be applied solely for the benefit
of Participants and Beneficiaries other than the Twenty-five Highest Paid
Employees or, if not required for the funding of benefits for such Participants
and Beneficiaries, shall revert to the appropriate Employer.
(e)
The restrictions contained in Subsection (b) may
be exceeded for the purpose of making current Retirement Pension payments to a
Retired Participant who would otherwise be subject to such restrictions
if:
(1)
such Retirement Pension is in the form
described in Section 1.44 or 3.02, whichever is applicable, or under an Option
which does not provide level pension benefits greater than those provided by the
form described in Section 1.44;
(2)
the Retirement Pension thus provided is
supplemented, to the extent necessary to provide the full Retirement Pension in
the form provided in Section 1.44 or 3.02, by current payments to such Retired
Participant as installments of such Retirement Pension come due;
and
(3)
such supplemental payments are made at any time
only if (A) the full current costs of the Plan have then been funded or (B) the
aggregate of such supplemental payments for all such Retired Participants for
the current year does not exceed the aggregate of the Employer contributions
already made in respect of such year.
(f)
If there shall be more than one Employer, the
provisions of this Section 14.06 shall be applied separately in respect of each
such Employer.
(g)
A Participant who is one of the Twenty-five Highest
Paid Employees may elect to receive his benefits under this Plan in the form of
a lump sum distribution only if he agrees to deposit with an acceptable
depository property having a market value equal to one hundred twenty-five
percent (125%) of the difference between the amount of such distribution and the
Actuarial Equivalent of his Unrestricted Benefits as security for his repayment
of any benefits paid to him in excess of the maximum permitted by this Section
14.06. Additional deposits of security, in the amount necessary to
increase the fair market value of such security to one hundred twenty-five
percent (125%) of the difference between the amount of the distribution and the
actuarial Equivalent of his Unrestricted Benefits shall be made whenever the
fair market value of such security is less than one hundred ten percent (110%)
of such difference.
14.07 If
the Plan shall merge or consolidate with, or transfer its assets or
liabilities to, any other “pension plan”, as defined in Section 3(2) of ERISA,
each Participant shall be entitled to receive a benefit immediately after such
merger, consolidation or transfer (assuming that the Plan had then terminated)
which is equal to or greater than the benefit which he would have been entitled
to receive immediately before such merger, consolidation or transfer (assuming
that the Plan had then terminated).
ARTICLE
XV
TRUST AND
ADMINISTRATION
15.01 The
assets of the Trust Fund shall be held by the Trustees, who shall consist of not
fewer than two (2) individuals, or a bank or trust company appointed by the
Board. The Trustees shall hold office until their or its successors
have been duly appointed or until death, resignation or removal.
15.02 The
investment of the assets of the Plan shall be managed, except to the extent that
such responsibility has been allocated or delegated, by the
Trustee.
15.03 The
Trustees shall act unanimously; provided, however, that if at any time there are
more than two (2) Trustees acting hereunder, they shall act by majority vote and
may act either by vote at a meeting or in writing without a
meeting. Notwithstanding the foregoing:
(a)
checks and
other instruments for the payment of money and instruments relating to the
purchase, sale or other disposition of securities or other property held in the
Trust and checks and other instruments in payment of distributions to
Participants and Beneficiaries or in payment of proper expenses under the Plan
may be signed by any one Trustee or by any person or persons authorized by
unanimous action of all the Trustees then acting hereunder with the same force
and effect as if signed by all Trustees; and
(b)
the Trustees may,
by written authorization, empower one of them individually to execute any other
document or documents on behalf of the Trustees, such authorization to remain in
effect until revoked by any Trustee.
15.04 The
Trustees may appoint such independent accountants, enrolled actuaries, legal
counsel, investment advisors and other agents or specialists as they deem
necessary or desirable in connection with the performance of their duties
hereunder. The Trustees shall be entitled to rely conclusively upon,
and shall be fully protected in any action taken by them in good faith in
relying upon, any opinions or reports which are furnished to them by any such
independent accountant, enrolled actuary, legal counsel, investment advisor or
other specialist.
15.05 The
Trustees shall serve without compensation for services as such. All
expenses of the Trust shall be paid by the Trust unless paid by
Employers. Such expenses shall include any expenses incidental to the
operation of the Trust, including, but not limited to, fees of independent
accountants, enrolled actuaries, legal counsel, investment advisors and other
agents or specialists and similar costs. The Employers may make
advances or extend credit to the Plan for the purpose of paying Plan benefits or
expenses to the extent permitted, and in accordance with, applicable
law.
15.06 The
Trustees shall discharge their duties with respect to the Plan solely in the
interests of the Participants and their Beneficiaries; and
(a)
for the
exclusive purpose of providing benefits to Participants and the Beneficiaries
and defraying reasonable expenses of administering the Plan;
(b)
with the care,
skill, prudence and diligence under the circumstances then prevailing that a
prudent man, acting in like capacity and familiar with such matters, would use
in the conduct of an enterprise of a like character and with like
aims;
(c)
by diversifying the investments
of the Trust Fund so as to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(d)
in accordance with the documents and
instruments governing the Plan, insofar as such documents and instruments are
consistent with the provisions of ERISA.
15.07 (a) The
Company is hereby designated as “named fiduciary” within the meaning of Section
402(a) of ERISA, with respect to the investment of the assets of the Plan and
shall, except to the extent provided below, direct the investment of
such assets and possess all powers which may be necessary to carry out such
duty.
(b)
At the direction of the Investment Committee, the
Trustees may appoint an investment manager, as defined in Section 3(38) of
ERISA, in which case, unless otherwise provided by ERISA, no Trustee shall be
liable for the acts or omissions of such investment manager or be under any
obligation to invest or otherwise manage any asset of the Trust Fund which is
subject to the management of such manager.
(c) (1) The
Administrative Committee and the Trustees may establish procedures for (A) the
allocation of fiduciary responsibilities (other than “trustee responsibilities”
as defined in Section 405(c)(3) of ERISA under the Plan among themselves, and
(B) the designation of persons other than named fiduciaries to carry out
fiduciary responsibilities (other than trustee responsibilities) under the
Plan.
(2)
If any fiduciary responsibility is
allocated or if any person is designated to carry out any responsibility
pursuant to Paragraph (1), no named fiduciary shall be liable for any act or
omission of such person in carrying out such responsibility, except as provided
in Section 405(c)(2) of ERISA.
15.08 The
Trustees shall receive any contributions paid to them in cash and shall
establish the Trust Fund hereunder. The Trust Fund shall be held,
managed and administered in accordance with the terms of this Plan. A
transaction between the Plan and a common or collective trust fund or pooled
investment fund maintained by a party in interest which is a bank or trust
company supervised by a State or Federal agency, or a pooled
investment fund of an insurance company qualified to do business in a State, and
listed on Appendix B as amended from time to time shall be permitted in
accordance with ERISA Section 408(b)(8) if the transaction is a sale or purchase
of an interest in the fund, and the bank, trust company, or insurance company
receives not more than reasonable compensation. All or any part of
the assets of the Trust Fund may be invested in any group trust which then
provides for the pooling of the assets of plans described in Section 401(a) of
the Code and is exempt from tax under Section 501(a) of the Code in accordance
with Revenue Ruling 81-100, provided that the provisions of the document
governing such group trust, as it may be amended from time to time, shall govern
any investment therein and are hereby made a part of this Plan.
15.09 The
Trustees shall invest and reinvest the Trust Fund and keep the Trust Fund
invested, without distinction between principal and income, in such securities
or other property, real or personal, foreign or domestic, wherever situated, as
the Trustees shall deem advisable, including, but not limited to, the general
account or a separate account of an insurance company licensed to do business in
the State of New York, shares in a regulated investment company or plans for the
accumulation of such shares, common or preferred stocks, bonds and mortgages,
and other evidences of ownership or indebtedness. In making such
investments, the Trustee shall not be restricted to securities or other property
of the character authorized or required by applicable law for trust
investments.
15.10 The
Trustees shall have the following powers and authority in the investment of the
assets of the Trust Fund:
(a)
to purchase,
or subscribe for, any securities (including shares in a regulated investment
company or plans for the accumulation of such shares) or other property and to
retain the same in trust, the Trustees being specifically authorized to limit
investment, in their own discretion, to shares of regulated investment companies
or to plans for the accumulation of such shares;
(b)
to sell, exchange,
convey, transfer or otherwise dispose of, by private contract or at public
auction, any securities or other property held by them; and no person dealing
with the Trustees shall be bound to see to the application of the purchase money
or to inquire into the validity, expediency or propriety of any such sale or
other disposition;
(c)
to vote any stocks, bonds or other
securities; to give general or special proxies or powers of attorney with or
without power of substitution; to exercise any conversion privileges,
subscription rights or other options and to make any payments incidental
thereto; to oppose, consent to, or otherwise participate in, corporate
reorganizations or other changes affecting corporation securities; to pay any
assessments or charges in connection with any security; to delegate any
discretionary powers; and generally to exercise any of the powers of an owner
with respect to stocks, bonds, securities or other property held as part of the
Trust Fund;
(d)
to cause any securities or other
property held as part of the Trust Fund to be registered in their own names or
in the name of one or more nominees, and to hold any investments in bearer form,
but the books and records of the Trustees shall at all times
show that all such investments are part of the Trust
Fund;
(e)
to borrow or raise money for the purposes of the
Plan in such amount and upon such terms and conditions as the Trustees shall
deem advisable; and for any sum so borrowed, to issue their promissory note as
Trustees and to secure the repayment thereof by pledging all, or any part, of
the Trust Fund; and no person lending money to the Trustees shall be bound to
see to the application of the money lent or to inquire into the validity,
expediency or propriety of any such borrowing;
(f)
to keep such portion of the Trust Fund in cash or cash
balances as the Trustees may, from time to time, deem to be in the best
interests of the Plan, without liability for interest thereon;
(g)
to accept and retain for such time as may seem advisable any
securities or other property received or acquired by them as Trustees hereunder,
whether or not such securities or other property would normally be purchased as
investments hereunder;
(h)
to sell call options on any national securities exchange with respect to
securities held in the Trust Fund, and to purchase call options for the purpose
of closing out previous sales of call option;
(i)
to appoint a bank or trust company as corporate Trustee, and
to enter into and execute an agreement with any such corporate Trustee to
provide for the investment and reinvestment of assets of the Trust
Fund.
15.11 The
Trustees, at the direction of the Administrative Committee, shall from time to
time make payments out of the Trust Fund in accordance with the provisions of
the Plan in such manner, in such amounts and for such purposes as they may
determine, and when any such payment has been made, the amount thereof shall no
longer constitute a part of the Trust Fund.
15.12 (a) The
Trustees shall keep accurate and detailed accounts of all investments, receipts,
disbursements and other transactions hereunder.
(b)
Within the time required by law, the Trustees shall file with the Company
a written account setting forth all investments, receipts, disbursements and
other transactions effected by them during such Plan Year. Except as
provided to the contrary by Section 413(a) of ERISA, upon the expiration of
ninety (90) days from the date of filing of such account, the Trustees shall be
forever released and discharged from all liability and accountability to anyone
with respect to the propriety of their acts and transactions shown in such
account, except with respect to any such acts or transactions as to which the
Company shall file with the Trustees written objections within such ninety (90)
day period.
(c)
The filing by the Trustees with the Company of an annual report in
accordance with Section 103 of ERISA shall constitute the filing of an account
within the meaning of this Section.
15.13 Any
Trustee may be removed by the Board at any time. A Trustee may resign
at any time upon thirty (30) days’ notice in writing to the Board, which notice
may be waived by the Board. Upon such removal or resignation of a
Trustee, or upon the death or disability of a Trustee, the Board may appoint a
successor Trustee, who shall have the same powers and duties as those conferred
upon the Trustees hereunder. The Board may at any time appoint one or
more additional Trustees, who shall have the same powers and duties as those
conferred upon the Trustees hereunder.
15.14 In
any case in which any person is required or permitted to make an election under
this Plan, such election shall be made in writing and filed with the
Administrative Committee on the form provided by them or made in such other
manner as the Administrative Committee may direct.
ARTICLE
XVI
CLAIM AND APPEAL
PROCEDURE
16.01 (a) Initial
Claim
(i)
Any claim by
an Employee, Participant or Beneficiary “Claimant”) with respect to eligibility,
participation, contributions, benefits or other aspects of the operation of the
Plan shall be made in writing to the Administrative Committee for such
purpose. An authorized representative of a Claimant may act on behalf
of the Claimant in pursuing a benefit claim or any subsequent appeal of an
adverse benefit determination hereunder. The Administrative Committee shall
provide the Claimant with the necessary forms and make all determinations as to
the right of any person to a disputed benefit. If a Claimant is
denied benefits under the Plan, the Administrative Committee or its designee
shall notify the Claimant in writing of the denial of the claim within ninety
(90) days (or within forty-five (45) days if the claim involves a determination
of a claim for disability benefits) after the Administrative Committee
receives the claim, provided that in the event of special
circumstances such period may be extended.
(ii)
In the event of special
circumstances, the maximum period in which a claim must be determined may be
extended as follows:
(A)
With respect to
any claim, other than a claim that involves a determination of a claim for
disability benefits, the ninety (90) day period may be extended for a period of
up to ninety (90) days (for a total of one hundred eighty (180)
days). If the initial ninety (90) day period is extended, the
Administrative Committee or its designee shall notify the Claimant in writing
within ninety (90) days of receipt of the claim. The written notice
of extension shall indicate the special circumstances requiring the extension of
time and provide the date by which the Administrative Committee expects to make
a determination with respect to the claim. If the extension is
required due to the Claimant’s failure to submit information necessary to decide
the claim, the period for making the determination shall be tolled from the date
on which the extension notice is sent to the Claimant until the earlier of (i)
the date on which the Claimant responds to the Administrative Committee’s
request for information, or (ii) expiration of the forty-five (45) day period
commencing on the date that the Claimant is notified that the requested
additional information must be provided.
(B)
With respect to
a claim that involves a determination of a claim for disability benefits, the
forty-five (45) day period may be extended as follows:
(I)
Initially, the forty-five (45) day
period may be extended for a period to up to an additional thirty (30) days (the
“Initial Disability Extension Period”), provided that the Administrative
Committee determines that such an extension is necessary due to matters beyond
the control of the Plan and, within forty-five (45) days of receipt of the
claim, the Administrative Committee or its designee notifies the Claimant in
writing of such extension, the special circumstances requiring the extension of
time, the date by which the Administrative Committee expects to make a
determination with respect to the claim and such information as required under
clause (III) below.
(II)
Following the Initial Disability Extension
Period the period for determining the Claimant’s claim may be extended for a
period of up to an additional thirty (30) days, provided that the Administrative
Committee determines that such an extension is necessary due to matters beyond
the control of the Plan and within the Initial Disability Extension Period,
notifies the Claimant in writing of such additional extension, the special
circumstances requiring the extension of time, the date by which the
Administrative Committee expects to make a determination with respect to the
claim and such information as required under clause (III) below.
(III)
Any
notice of extension pursuant to this Paragraph (B) shall specifically explain
the standards on which entitlement to a benefit is based, the unresolved issues
that prevent a decision on the claim, and the additional information needed to
resolve those issues, and the Claimant shall be afforded forty-five (45) days
within which to provide the specified information.
(IV)
If
an extension is required due to the Claimant’s failure to submit information
necessary to decide the claim, the period for making the determination shall be
tolled from the date on which the extension notice is sent to the Claimant until
the earlier of (i) the date on which the Claimant responds to the Administrative
Committee’s request for information, or (ii) expiration of the forty-five (45)
day period commencing on the date that the Claimant is notified that the
requested additional information must be provided.
(iii)
If
a claim is wholly or partially denied, the notice to the Claimant shall set
forth:
(A)
The specific
reason or reasons for the denial;
(B)
Specific
reference to pertinent Plan provisions upon which the denial is
based;
(C)
A description
of any additional material or information necessary for the Claimant to complete
the claim request and an explanation of why such material or information is
necessary;
(D)
Appropriate
information as to the steps to be taken and the applicable time limits if the
Claimant wishes to submit the adverse determination for review; and
(E)
A statement of
the Claimant’s right to bring a civil action under Section 502 of ERISA
following an adverse determination on review.
(iv)
In
addition, in the case of a disability claim that is wholly or partially denied,
the notice to the Claimant shall set forth:
(A)
if an internal
rule, guideline, protocol, or other similar criterion was relied upon in making
the adverse determination, either the specific rule, guideline, protocol, or
other similar criterion; or a statement that such a rule, guideline, protocol,
or other similar criterion was relied upon in making the adverse determination
and that a copy of such rule, guideline, protocol, or other criterion will be
provided free of charge to the Claimant upon request; and
(B)
if the denial
is based on a medical necessity or experimental treatment or similar exclusion
or limit, either an explanation of the scientific or clinical judgment for the
determination, applying the terms of the Plan to the Claimant's medical
circumstances, or a statement that such explanation will be provided free of
charge upon request.
(b)
Claim Denial Review.
(i)
If a claim has been wholly or partially denied, the
Claimant may submit the claim for review by the Administrative
Committee. Any request for review of a claim must be made in writing
to the Administrative Committee no later than sixty (60) days (or within one
hundred and eighty (180) days if the claim involves a determination of a claim
for disability benefits) after the Claimant receives notification of denial or,
if no notification was provided, the date the claim is deemed
denied.
The
Claimant or his duly authorized representative may:
(A)
Upon request
and free of charge, be provided with reasonable access to, and copies of,
relevant documents, records, and other information relevant to the Claimant’s
claim; and
(B)
Submit written
comments, documents, records, and other information relating to the
claim. The review of the claim determination shall take into account
all comments, documents, records, and other information submitted by the
Claimant relating to the claim, without regard to whether such information was
submitted or considered in the initial claim determination.
(ii)
The decision of the Administrative Committee upon
review shall be made within sixty (60) days (or within forty-five (45) days if
the claim involves a determination of a claim for disability benefits) after
receipt of the Claimant’s request for review, unless special circumstances
(including, without limitation, the need to hold a hearing) require an
extension. In the event of special circumstances, the maximum period
in which a claim must be determined may be extended as follows:
(A)
With respect to
any claim, other than a claim that involves a determination of a claim for
disability benefits, the sixty (60) day period may be extended for a period of
up to sixty (60) days.
(B)
With respect to
a claim that involves a determination of a claim for disability benefits, the
forty-five (45) day period may be extended for a period of up to forty-five (45)
days.
If the
sixty (60) day period (or forty-five (45) day period where the claim involves a
determination of a claim for disability benefits) is extended, the
Administrative Committee or its designee shall, within sixty (60) days (or
within forty-five (45) days if the claim involves a determination of a claim for
disability benefits) of receipt of the claim for review, notify the Claimant in
writing. The written notice of extension shall indicate the special
circumstances requiring the extension of time and provide the date by which the
Administrative Committee expects to make a determination with respect to the
claim upon review. If the extension is required due to the Claimant’s
failure to submit information necessary to decide the claim, the period for
making the determination shall be tolled from the date on which the extension
notice is sent to the Claimant until the earlier of (i) the date on which the
Claimant responds to the Administrative Committee’s request for information, or
(ii) expiration of the forty-five (45) day period commencing on the date that
the Claimant is notified that the requested additional information must be
provided.
(iii)
Reserved.
(iv)
The
Administrative Committee, in its sole discretion, may hold a hearing regarding
the claim and request that the Claimant attend. If a hearing is held,
the Claimant shall be entitled to be represented by counsel.
(v)
The Administrative Committee’s decision upon review on
the Claimant’s claim shall be communicated to the Claimant in
writing. If the claim upon review is denied, the notice to the
Claimant shall set forth:
(A)
The specific
reason or reasons for the decision, with references to the specific Plan
provisions on which the determination is based;
(B)
A statement
that the Claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other
information relevant to the claim; and
(C)
A statement of
the Claimant’s right to bring a civil action under Section 502 of
ERISA.
(D)
In addition, in
the case of a disability claim that is wholly or partially denied, the notice to
the Claimant shall set forth:
(I)
if an internal rule, guideline, protocol, or
other similar criterion was relied upon in making the adverse determination,
either the specific rule, guideline, protocol, or other similar criterion; or a
statement that such rule, guideline, protocol, or other similar criterion was
relied upon in making the adverse determination and that a copy of the rule,
guideline, protocol, or other similar criterion will be provided free of charge
to the Claimant upon request; and
(II)
if the adverse benefit determination is based on a
medical necessity or experimental treatment or similar exclusion or limit,
either an explanation of the scientific or clinical judgment for the
determination, applying the terms of the Plan to the Claimant's medical
circumstances, or a statement that such explanation will be provided free of
charge upon request.
(vi)
Any
review of a claim involving a determination of a claim for disability benefits
shall not afford deference to the initial adverse benefit determination and
shall not be determined by any individual who made the initial adverse benefit
determination or a subordinate of such individual. In deciding a
review of any adverse benefit determination that is based in whole or in part on
a medical judgment, including determinations with regard to whether a particular
treatment, drug, or other item is experimental, investigational, or not
medically necessary or appropriate, the Administrative Committee
shall consult with a health care professional who has appropriate training and
experience in the field of medicine involved in the medical
judgment.
(c)
All interpretations, determinations and
decisions of the Administrative Committee with respect to any claim, including
without limitation the appeal of any claim, shall be made by the Administrative
Committee, in its sole discretion, based on the Plan and comments, documents,
records, and other information presented to it, and shall be final, conclusive
and binding.
(d)
The claims procedures set forth in
this Section are intended to comply with U.S. Department of Labor Regulation §
2560.503-1 and should be construed in accordance with such
regulation. In no event shall it be interpreted as expanding the
rights of Claimants beyond what is required by Department of Labor Regulation §
2560.503-1.
(e)
A Claimant, or his or her duly authorized
representative, may commence a lawsuit to obtain benefits only after he or she
has exhausted the claims procedures described in this Section 16.01, and a final
decision has been rendered or deemed rendered on
appeal. Notwithstanding anything herein to the contrary, unless
prohibited by law,
any lawsuit with regard
to the denial of benefits under the Plan must be commenced within one (1) year
from the earliest of (i) the date that the appeal was denied or (ii) the
expiration of the time by which the Plan was required to render a decision on
appeal under the procedures set forth above if an appeal had been
made. All lawsuits commenced after such period shall be deemed to
have been waived by the Claimant and shall thereafter be wholly
unenforceable. Nothing in this paragraph shall be construed to extend
any otherwise applicable statute of limitations period set forth under ERISA or
any under any other applicable law.
ARTICLE
XVII
MISCELLANEOUS
17.01 If
any provision of this Plan shall be held illegal or invalid for any reason, such
illegality or invalidity shall not affect the remaining parts of this Plan, but
such illegal or invalid provision shall be deemed modified to the extent
necessary to conform to applicable law and carry out the purposes of this Plan,
or, if such modification is impossible, the Plan shall be construed and enforced
as if such illegal or invalid provision had never been inserted
herein.
17.02 The
Plan shall be governed, construed and enforced in accordance with the laws of
the State of New York (without reference to its Conflict of Laws provisions),
except to the extent preempted by ERISA, the Code, or other federal law,
including the Defense of Marriage Act, and subject to the applicable provisions
of the laws of the United States of America.
17.03 Wherever
any words are used herein in the masculine gender, they shall be construed as
though they were also used in the feminine gender in all cases where they would
so apply, and
vice
versa
, and wherever any words are used herein in the singular form, they
shall be construed as through they were also used in the plural form in all
cases where they would so apply, and
vice
versa
.
17.04 The
adoption and maintenance of this Plan shall not be deemed to constitute a
contract between any Employer and any person or to be a consideration for the
employment of any person. Nothing contained herein shall be deemed to
give any person the right to be retained in the employ of any Employer or to
derogate from the right of any Employer or discharge any person at any time
without regard to the effect of such discharge upon the rights of such person as
a Participant in this Plan.
17.05 Except
as otherwise provided by ERISA, no liability shall attach to any Employer for
payment of any benefits or claims hereunder, and all participants and
Beneficiaries, and all persons claiming under or through them, shall have
recourse only to the Trust Fund for payment of any benefit
hereunder.
17.06 Nothing
in this Plan, express or implied, is intended, or shall be construed, to confer
upon or give to any person, firm, association or corporation, other than the
parties hereto and their successors in interest, any right, remedy or claim
under or by reason of this Plan or any covenants, condition or stipulation
hereof, and all covenants, conditions and stipulations in this plan, by or on
behalf of any party, shall be for the sole and exclusive benefit of the parties
hereto.
(a)
Any contribution to the Plan made by an
Employer by a mistake in fact may be returned to such Employer at the direction
of the Administrative Committee within one (1) year after the date of the
payment of such contribution.
(b)
Each contribution made to this Plan
by an Employer is conditioned upon its deductibility under Section 404 of the
Code. If the deduction is disallowed, such contribution shall, to the
extent disallowed as a deduction, be returned to such Employer within one (1)
year following the date of disallowance.
(c)
This Plan is established for the exclusive
benefit of the Participants herein and their Beneficiaries. Except as
provided in Section 14.05 and this Section 17.06, it shall be impossible for any
assets of the Trust to revert to any Employer prior to the satisfaction of all
liabilities hereunder with respect to all Participants and their
Beneficiaries.
ARTICLE
XVIII
ADMINISTRATION OF THE
PLAN
18.01
Administrative
Committee
. There is hereby created an Administrative Committee
for the Plan. The general administration of the Plan on
behalf of the Plan Administrator shall be placed in the Administrative
Committee.
18.02
Investment
Committee
. There is hereby created an Investment Committee for
the Plan, which shall oversee the investment of the assets of the Trust Fund
subject to ERISA.
18.03
Payment of Benefits
(Administrative Committee)
. The Administrative Committee shall
advise the Trustee in writing with respect to all benefits which become payable
under the terms of the Plan and shall direct the Trustee to pay such benefits on
order of the Administrative Committee. In the event that the Trust
Fund shall be invested in whole or in part in one or more insurance contracts,
the Administrative Committee shall be authorized to give to any insurance
company issuing such a contract such instructions as may be necessary or
appropriate in order to provide for the payment of benefits in accordance with
the Plan.
18.04
Powers and Authority; Action
Conclusive (Administrative Committee)
. Except as otherwise
expressly provided in the Plan or in the Trust Agreement, or by the Investment
Committee, the Administrative Committee shall have the exclusive right, power,
and authority, in its sole and absolute discretion, to administer, apply and
interpret the Plan, Trust Agreement and any other Plan documents and to decide
all matters arising in connection with the operation or administration of the
Plan and the Trust. Subject to the immediately preceding sentence,
the Administrative Committee shall have all powers necessary or helpful for the
carrying out of its responsibilities, and the decisions or action of the
Administrative Committee in good faith in respect of any matter hereunder shall
be conclusive and binding upon all parties concerned.
Without
limiting the generality of the foregoing, the Administrative Committee has the
complete authority, in its sole and absolute discretion, to:
(a)
Determine all
questions arising out of or in connection with the interpretation of the terms
and provisions of the Plan except as otherwise expressly provided
herein;
(b)
Make rules and
regulations for the administration of the Plan which are not inconsistent with
the terms and provisions of the Plan, and fix the annual accounting period of
the trust established under the Trust Agreement as required for tax
purposes;
(c)
Construe all terms, provisions,
conditions of and limitations to the Plan;
(d)
Determine all questions relating to (A) the
eligibility of persons to receive benefits hereunder, (B) the periods of
service, including Hours of Service, Credited Service and Years of Service, and
the amount of Compensation of a Participant during any period hereunder, and (C)
all other matters upon which the benefits or other rights of a Participant or
other person shall be based hereunder; and
(e)
Determine all questions relating to the
administration of the Plan (A) when disputes arise between the Employer and a
Participant or his Beneficiary, Spouse or legal representatives, and (B)
whenever the Administrative Committee deems it advisable to determine such
questions in order to promote the uniform administration of the
Plan.
The
Administrative Committee may recoup on behalf of the Plan any payment made in
error by the Plan to any person, and any such amount will be returned to the
Plan.
All
determinations made by the Administrative Committee with respect to any matter
arising under the Plan Trust Agreement and any other Plan documents shall be
final and binding on all parties. The foregoing list of powers is not
intended to be either complete or exclusive and the Administrative Committee
shall, in addition, have such powers as the Plan Administrator deems appropriate
and delegates to it and such powers as may be necessary for the performance of
its duties under the Plan and the Trust Agreement.
18.05
Reliance on Information
(Administrative Committee)
. The members of the Administrative
Committee and any Employer or affiliate thereof (including the Company) and its
officers, directors and employees shall be entitled to rely upon all tables,
valuations, certificates, opinions and reports furnished by any accountant,
trustee, insurance company, counsel or other expert who shall be engaged by the
Company or an affiliate thereof or the Administrative Committee, and the members
of the Administrative Committee and any Employer or affiliate thereof (including
the Company) and its officers, directors and employees shall be fully protected
in respect of any action taken or suffered by them in good faith in reliance
thereon, and all action so taken or suffered shall be conclusive upon all
persons affected thereby.
18.06
Actions to be Uniform;
Regular Personnel Policies to be Followed
. Any discretionary
actions to be taken under this Plan by the Administrative Committee or
Investment Committee with respect to the classification of the Employees,
contributions, or benefits shall be uniform in their nature and applicable to
all Employees similarly situated. With respect to service with the
Employer, leaves of absence and other similar matters, the Administrative
Committee shall administer the Plan in accordance with the Employer’s regular
personnel policies at the time in effect.
18.07
Fiduciaries
. Any
person or group of persons may serve in more than one fiduciary capacity with
respect to the Plan. Any Named Fiduciary under the Plan, and any
fiduciary designated by a Named Fiduciary to whom such power is
granted by a Named Fiduciary under the Plan, may employ one or more persons to
render advice with regard to any responsibility such fiduciary has under the
Plan.
18.08
Plan
Administrator
. The Company shall be the administrator of the
Plan, as defined in Section 3(16)(A) of ERISA and shall be responsible for the
preparation and filing of any required returns, reports, statements or other
filings with appropriate governmental agencies. The Company or its
authorized designee shall also be responsible for the preparation and delivery
of information to persons entitled to such information under any applicable
law.
18.09
Notices and Elections
(Administrative Committee)
. A Participant shall deliver to the
Administrative Committee all directions, orders, designations, notices or other
communications on appropriate forms to be furnished by the Administrative
Committee. The Administrative Committee shall also receive notices or
other communications directed to Participants from the Trustee and transmit them
to the Participants. All elections which may be made by a Participant
under this Plan shall be made in a time, manner and form determined by the
Administrative Committee unless a specific time, manner or form is set forth in
the Plan.
18.10
Misrepresentation of
Age
. In making a determination or calculation based upon a
Participant’s age, the Administrative Committee shall be entitled to rely upon
any information furnished by the Participant. If a Participant
misrepresents the Participant’s age, and the misrepresentation is relied upon by
a Member Company, an affiliate thereof (including the Company) or the
Administrative Committee, the Administrative Committee will adjust the
Participant’s Accrued Benefit to conform to the Participant’s actual age and
offset future monthly payments to recoup any overpayments caused by the
Participant’s misrepresentation.
18.11
Decisions of Administrative
Committee are Binding
. Notwithstanding anything in the Plan to
the contrary, the Administrative Committee shall have discretionary and final
authority to (a) determine all questions concerning eligibility, elections,
contributions and benefits under the Plan, (b) construe all terms of the Plan,
including any uncertain terms, and (c) determine all questions concerning Plan
administration. The Administrative Committee also has discretion and
authority to interpret Plan terms to reflect the Plan Sponsor's
intent. In the event of a scrivener's error that renders a Plan term
inconsistent with the Plan Sponsor's intent, the Plan Sponsor's intent controls,
and any inconsistent Plan term is made expressly subject to this
requirement. In carrying out its functions under the Plan, the
Administrative Committee shall endeavor to act by general rules so as to
administer the Plan in a uniform and nondiscriminatory manner as to all persons
similarly situated. The Administrative Committee has the authority to review
objective evidence to conform the Plan term to be consistent with the Plan
Sponsor's intent. Any determination made by the Administrator shall
be given deference in the event it is subject to judicial review and shall be
overturned only if it is arbitrary and capricious.
18.12
Spouse’s
Consent
. In addition to when such consent is expressly
required by the terms of this Plan, the Administrative Committee may in its sole
discretion also require the written consent of the Employee’s Spouse to any
other election or revocation of election made under this Plan before such
election or revocation shall be effective.
18.13
Accounts and
Records
. The Administrative Committee and Investment Committee
shall maintain such accounts and records regarding the fiscal and other
transactions of the Plan and such other data as may be required to carry out its
functions under the Plan and to comply with all applicable laws. The
Administrative Committee shall report annually to the Board on the performance
of its responsibilities and on the performance of any trustee or other persons
to whom any of its powers and responsibilities may have been delegated and on
the administrative operation of the Plan for the preceding year. The
Investment Committee shall report annually to the Board on the performance of
its responsibilities and on the performance of any trustee, investment manager,
insurance carrier or persons to whom any of its powers and responsibilities may
have been delegated and on the financial condition of the Plan for the preceding
year.
18.14
Forms
. To
the extent that the form or method prescribed by the Administrative Committee to
be used in the operation and administration of the Plan does not conflict with
the terms and provisions of the Plan, such form shall be evidence of (a) the
Administrative Committee’s interpretation, construction and administration of
this Plan and (b) decisions or rules made by the Administrative Committee
pursuant to the authority granted to the Administrative Committee under the
Plan.
18.15
Liability and
Indemnification
. The functions of the Trustees,
Administrative Committee, the Investment Committee, the Board, and
the Employer under the Plan are fiduciary in nature and each shall be carried
out solely in the interest of the Participants and other persons entitled to
benefits under the Plan for the exclusive purpose of providing the benefits
under the Plan (and for the defraying of reasonable expenses of administering
the Plan). The Administrative Committee, the Investment Committee,
the Board, and the Employer shall carry out their respective functions in
accordance with the terms of the Plan with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. No member of the
Administrative Committee or Investment Committee and no officer, director, or
employee of the Employer shall be liable for any action or inaction with respect
to his functions under the Plan unless such action or inaction is adjudicated to
be a breach of the fiduciary standard of conduct set forth
above.
The
Company shall indemnify and hold harmless any person who, by virtue of
membership on the Board, Administrative Committee, Investment Committee or any
other committee or by virtue of such person’s status as a director, officer or
employee of the Employer, is deemed or held to be a fiduciary of the Plan within
the meaning of the Act, to the extent not covered by the Company’s insurance,
against any and all claims, loss, damages, expenses, including legal fees and
other expenses of litigation and liability arising from any action or failure to
act, provided that such act or failure to act is not judicially determined to be
due to the gross negligence or willful misconduct of such person, except that
the Company may, in its sole discretion, elect not to enforce this provision in
a case of gross negligence or willful misconduct. Further, no member
of the Administrative Committee or Investment Committee shall be personally
liable merely by virtue of any instrument executed by him or on his behalf as a
member of the Administrative Committee or Investment Committee. The
Company may secure and maintain in full force and effect such insurance as may
be reasonably available on behalf of the persons described in this Section
18.15, to cover liability or losses from which the Company is obligated to
indemnify such persons. The amount and conditions of such insurance
shall be determined by the Company in its sole discretion.
APPENDIX
A
REQUIRED
MINIMUM DISTRIBUTION RULES
Section
1.
General
Rules
1.1.
Effective
Date
. The provisions of this Appendix will apply for purposes
of determining required minimum distributions for calendar years beginning with
the 2003 calendar year.
1.2.
Scope.
This
Appendix A describes the required distribution rules for Participants who have
reached their Required Beginning Date, as those terms are defined in the Plan,
as well as the incidental death benefit requirements. The terms of
this Appendix A shall apply solely to the extent required under Section
401(a)(9) of the Code and shall be null and void to the extent that they are not
required under Section 401(a)(9) of the Code. This Appendix A is not
intended to defer the timing of a distribution beyond the date otherwise
required under the Plan or to create any benefits (including but not limited to
death benefits) or distribution forms that are not otherwise offered under the
Plan. Any capitalized terms not otherwise defined in this Appendix A
have the meaning given those terms in the Plan.
1.3.
Precedence
. The
requirements of this Appendix A will take precedence over any inconsistent
provisions of the Plan.
1.4.
Requirements of Treasury Regulations
Incorporated.
All distributions required under this Appendix A
will be determined and made in accordance with the Treasury Regulations under
Section 401(a)(9) of the Internal Revenue Code.
1.5.
TEFRA Section 242(b)(2)
Elections
. Notwithstanding the other provisions of this
Appendix A, other than Section 1.4, distributions may be made under a
designation made before January 1, 1984, in accordance with Section 242(b)(2) of
the Tax Equity and Fiscal Responsibility Act (TEFRA) and any provisions of the
Plan that relate to Section 242(b)(2) of TEFRA.
Section
2.
Time and Manner of
Distribution.
2.1.
Required Beginning
Date
. The Participant’s entire interest will be distributed,
or begin to be distributed, to the Participant no later than the Participant’s
Required Beginning Date.
2.2.
Death of Participant Before
Distributions Begin
. If the Participant dies before
distributions begin, the Participant’s entire interest will be distributed, or
begin to be distributed, no later than as follows:
(a)
If the Participant’s surviving Spouse is the
Participant’s sole designated beneficiary, then distributions to the surviving
Spouse will begin by December 31 of the calendar year immediately following the
calendar year in which the Participant died, or by December 31 of the calendar
year in which the Participant would have attained age 70 1/2, if
later.
(b)
If the Participant’s surviving Spouse is not the
Participant’s sole designated beneficiary, then distributions to the designated
beneficiary will begin by December 31 of the calendar year immediately following
the calendar year in which the Participant died.
(c)
If there is no designated beneficiary as of September 30 of the year
following the year of the Participant’s death, the Participant’s entire interest
will be distributed by December 31 of the calendar year containing the fifth
anniversary of the Participant’s death.
(d)
If the Participant’s surviving Spouse is the Participant’s sole designated
beneficiary and the surviving Spouse dies after the Participant but before
distributions to the surviving Spouse begin, this Section 2.2, other than
Section 2.2(a), will apply as if the surviving Spouse were the
Participant.
For
purposes of this Section 2.2 and Section 5, distributions are considered to
begin on the Participant’s Required Beginning Date (or, if Section 2.2(d)
applies, the date distributions are required to begin to the surviving Spouse
under Section 2.2(a)). If annuity payments irrevocably commence to
the Participant before the Participant’s Required Beginning Date (or to the
Participant’s surviving Spouse before the date distributions are required to
begin to the surviving Spouse under Section 2.2(a)), the date distributions are
considered to begin is the date distributions actually commence.
2.3.
Form of
Distribution
. Unless the Participant’s interest is distributed
in the form of an annuity purchased from an insurance company or in a single sum
on or before the Required Beginning Date, as of the first distribution calendar
year distributions will be made in accordance with Sections 3, 4 and 5 of this
Appendix A. If the Participant’s interest is distributed in the form
of an annuity purchased from an insurance company, distributions thereunder will
be made in accordance with the requirements of Section 401(a)(9) of the Code and
the Treasury Regulations. Any part of the Participant’s interest
which is in the form of an individual account described in Section 414(k) of the
Code will be distributed in a manner satisfying the requirements of Section
401(a)(9) of the Code and the Treasury Regulations that apply to individual
accounts.
Section
3.
Determination of Amount to be
Distributed Each Year.
3.1.
General Annuity
Requirements
. If the Participant’s interest is paid in the
form of annuity distributions under the Plan, payments under the annuity will
satisfy the following requirements:
(a)
the annuity distributions will be paid in periodic payments made at
intervals not longer than one year;
(b)
the distribution period will be over a life (or lives) or over a period
certain not longer than the period described in Section 4 or 5;
(c)
once payments have begun over a period
certain, the period certain will not be changed even if the period certain is
shorter than the maximum permitted;
(d)
payments will either be nonincreasing or
increase only as follows:
(1)
by an annual
percentage increase that does not exceed the annual percentage increase in a
cost-of-living index that is based on prices of all items and issued by the
Bureau of Labor Statistics;
(2)
to the extent of the
reduction in the amount of the Participant’s payments to provide for a survivor
benefit upon death, but only if the Beneficiary whose life was being used to
determine the distribution period described in Section 4 dies or is no longer
the Participant’s Beneficiary pursuant to a qualified domestic relations order
within the meaning of Section 414(p);
(3)
to provide cash refunds of employee
contributions upon the Participant’s death; or
(4)
to pay increased benefits that result from a
plan amendment.
3.2.
Amount Required to be Distributed by
Required Beginning Date
. The amount that must be distributed
on or before the Participant’s Required Beginning Date (or, if the Participant
dies before distributions begin, the date distributions are required to begin
under Section 2.22.2(a) or 2.2(b)) is the payment that is required for one
payment interval. The second payment need not be made until the end
of the next payment interval even if that payment interval ends in the next
calendar year. Payment intervals are the periods for which payments
are received, e.g., bi-monthly, monthly, semi-annually, or
annually. All of the Participant’s benefit accruals as of the last
day of the first distribution calendar year will be included in the calculation
of the amount of the annuity payments for payment intervals ending on or after
the Participant’s Required Beginning Date.
3.3.
Additional Accruals After First
Distribution Calendar Year
. Any additional benefits accruing
to the Participant in a calendar year after the first distribution calendar year
will be distributed beginning with the first payment interval ending in the
calendar year immediately following the calendar year in which such amount
accrues.
Section
4.
Requirements For Annuity
Distributions That Commence During Participant’s Lifetime.
4.1.
Joint Life Annuities Where the
Beneficiary Is Not the Participant’s Spouse.
If the
Participant’s interest is being distributed in the form of a joint and survivor
annuity for the joint lives of the Participant and a nonspouse Beneficiary,
annuity payments to be made on or after the Participant’s Required Beginning
Date to the designated beneficiary after the Participant’s death must not at any
time exceed the applicable percentage of the annuity payment for such period
that would have been payable to the Participant using the table set forth in
Q&A-2 of Section 1.401(a)(9)-6T of the Treasury Regulations. If
the form of distribution combines a joint and survivor annuity for the joint
lives of the Participant and a nonspouse Beneficiary and a period certain
annuity, the requirement in the preceding sentence will apply to annuity
payments to be made to the designated beneficiary after the expiration of the
period certain.
4.2.
Period Certain
Annuities
. Unless the Participant’s Spouse is the sole
designated beneficiary and the form of distribution is a period certain and no
life annuity, the period certain for an annuity distribution commencing during
the Participant’s lifetime may not exceed the applicable distribution period for
the Participant under the Uniform Lifetime Table set forth in Section
1.401(a)(9)-9 of the Treasury Regulations for the calendar year that contains
the annuity starting date. If the annuity starting date precedes the
year in which the Participant reaches age 70, the applicable distribution period
for the Participant is the distribution period for age 70 under the Uniform
Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury Regulations
plus the excess of 70 over the age of the Participant as of the Participant’s
birthday in the year that contains the annuity starting date. If the
Participant’s Spouse is the Participant’s sole designated beneficiary and the
form of distribution is a period certain and no life annuity, the period certain
may not exceed the longer of the Participant’s applicable distribution period,
as determined under this Section 4.2, or the joint life and last survivor
expectancy of the Participant and the Participant’s Spouse as determined under
the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9 of the
Treasury Regulations, using the Participant’s and Spouse’s attained ages as of
the Participant’s and Spouse’s birthdays in the calendar year that contains the
annuity starting date.
Section
5.
Requirements For
Minimum Distributions Where Participant Dies Before Date Distributions
Begin.
5.1.
Participant Survived by Designated
Beneficiary.
If the Participant dies before the date
distribution of his or her interest begins and there is a designated
beneficiary, the Participant’s entire interest will be distributed, beginning no
later than the time described in Section 2.22.2(a) or 2.2(b), over the life of
the designated beneficiary or over a period certain not exceeding:
(a)
unless the annuity starting date is before
the first distribution calendar year, the life expectancy of the designated
beneficiary determined using the Beneficiary’s age as of the Beneficiary’s
birthday in the calendar year immediately following the calendar year of the
Participant’s death; or
(b)
if the annuity starting date is before the first
distribution calendar year, the life expectancy of the designated beneficiary
determined using the Beneficiary’s age as of the Beneficiary’s birthday in the
calendar year that contains the annuity starting date.
5.2.
No Designated
Beneficiary.
If the Participant dies before the date
distributions begin and there is no designated beneficiary as of September 30 of
the year following the year of the Participant’s death, distribution of the
Participant’s entire interest will be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant’s death.
5.3.
Death of Surviving Spouse Before
Distributions to Surviving Spouse Begin.
If the Participant
dies before the date distribution of his or her interest begins, the
Participant’s surviving Spouse is the Participant’s sole designated beneficiary,
and the surviving Spouse dies before distributions to the surviving Spouse
begin, this Section 5 will apply as if the surviving Spouse were the
Participant, except that the time by which distributions must begin will be
determined without regard to Section 2.22.2(a).
Section
6.
Definitions.
6.1.
Designated
beneficiary
. The individual who is designated as the
Beneficiary under Section 1.09 of the Plan
and is the designated
beneficiary under Section 401(a)(9) of the Internal Revenue Code and Section
1.401(a)(9)-4, Q&A-1, of the Treasury Regulations.
6.2.
Distribution calendar
year
. A calendar year for which a minimum distribution is
required. For distributions beginning before the Participant’s death,
the first distribution calendar year is the calendar year immediately preceding
the calendar year which contains the Participant’s Required Beginning
Date. For distributions beginning after the Participant’s death, the
first distribution calendar year is the calendar year in which distributions are
required to begin pursuant to Section 2.2.
6.3.
Life
expectancy
. Life expectancy as computed by use of the Single
Life Table in Section 1.401(a)(9)-9 of the Treasury Regulations.
6.4.
Required Beginning
Date
. The date specified in Section 1.46 of the
Plan.
APPENDIX
B
COMMON OR
COLLECTIVE TRUST FUNDS OR
POOLED
INVESTMENT FUNDS
Bernstein
Global Style Blend Series
Alliance
Institutional Enhanced Sector Rotation Fund
Appendix B-1
AMENDED
AND RESTATED
ALLIANCE
BERNSTEIN
PARTNERS
COMPENSATION PLAN
As
Amended and Restated Effective as of
January
23, 2009
AllianceBernstein
Holding L.P. (together with any successor to all or substantially all of its
business and assets, “
Holding
”) and its successor
and affiliate AllianceBernstein L.P. (together with any successor to all or
substantially all of its business and assets, “
Alliance
Bernstein
”) have
established this Amended and Restated AllianceBernstein Partners Compensation
Plan (the “
Plan
”) to (i)
create a compensation program to attract and retain eligible employees expected
to make a significant contribution to the future growth and success of Holding
and AllianceBernstein, including their respective subsidiaries and (ii) foster
the long-term commitment of these employees through the accumulation of capital
and increased ownership of equity interests in Holding.
The right
to defer Awards hereunder shall be considered a separate plan within the
Plan. Such separate plan shall be referred to as the “
APCP Deferral
Plan
.” The APCP Deferral Plan is maintained primarily for the
purpose of providing deferred compensation to a select group of management or
highly compensated employees (a “
Top Hat
Employee
”). No one who is not a Top Hat Employee may defer
compensation under the APCP Deferral Plan.
The Plan
was amended and restated effective as of January 1, 2005 to clarify and reflect
administrative practices and to comply in good faith with Section 409A of the
Internal Revenue Code (the “
Code
”) and the guidance issued
thereunder (“
Section
409A
”). The Plan was again amended and restated
effective December 5, 2008 to incorporate prior amendments and additional
changes to clarify and reflect administrative practices and to comply with the
final regulations issued under Section 409A. The Plan is hereby
amended and restated effective January 23, 2009 to incorporate changes relating
to the Committee’s discretion to apply alternative forfeiture provisions with
respect to any Post-2000 Award (as defined in Article 1) invested in Options (as
defined in Article 1). Any deferral or payment hereunder is subject
to the terms of the Plan and compliance with Section 409A, as interpreted by the
Committee in its sole discretion. Although none of the Company, the
Committee, their affiliates, and their agents make any guarantee with respect to
the treatment of payments under this Plan and shall not be responsible in any
event with regard to the Plan’s compliance with Section 409A, the payments
contained herein are intended to be exempt from Section 409A or otherwise comply
with the requirements of Section 409A, and the Plan shall be limited, construed
and interpreted in accordance with the foregoing. None of the
Company, the Committee, any of their affiliates, and any of their agents shall
have any liability to any Participant or Beneficiary as a result of any tax,
interest, penalty or other payment required to be paid or due pursuant to, or
because of a violation of, Section 409A.
ARTICLE
1
Definitions
Section
1.01
Definitions
. Whenever
used in the Plan, each of the following terms shall have the meaning for that
term set forth below:
(a) “
Account
” means a separate
bookkeeping account established for each Participant for each Award, with such
Award, as described in Article 2, credited to the Account maintained for such
Award together with Earnings credited thereon.
(b) “
Affiliate
” means (i) any
entity that, directly or indirectly, is controlled by AllianceBernstein and (ii)
any entity in which AllianceBernstein has a significant equity interest, in
either case as determined by the Board or, if so authorized by the Board, the
Committee.
(c) “
Approved Fund
” means any
money-market, debt or equity fund designated by the Committee from time to time
as an Approved Fund.
(d) “
Award
” means any Pre-1999
Award, 1999-2000 Award or Post-2000 Award.
(e) “
Beneficiary
” means one or more
Persons, trusts, estates or other entities, designated in accordance with
Section 8.04(a), that are entitled to receive, in the event of a Participant’s
death, any amount or property to which the Participant would otherwise have been
entitled under the Plan.
(f) “
Beneficiary Designation Form
”
means the form established from time to time by the Committee that a Participant
completes, signs and returns to the Committee to designate one or more
Beneficiaries.
(g) “
Board
” means the Board of
Directors of the general partner of Holding and AllianceBernstein.
(h) “
Code
” means the Internal
Revenue Code of 1986, as amended from time to time.
(i)
“
Committee
” means the
Board or one or more committees of the Board designated by the Board to
administer the Plan.
(j)
“
Company
” means Holding,
AllianceBernstein and any corporation or other entity of which Holding or
AllianceBernstein (i) has sufficient voting power (not depending on the
happening of a contingency) to elect at least a majority of its board of
directors or other governing body, as the case may be, or (ii) otherwise has the
power to direct or cause the direction of its management and
policies.
(k)
“
Deferral Election Form
”
means the form(s) established from time to time by the Committee that a
Participant completes, signs and returns to the Committee to elect to defer the
distribution of an Award, including Earnings thereon, pursuant to Article
5.
(l) “
Disability
” means unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, as determined by the carrier of the long-term disability insurance
program maintained by the Company or its Affiliate that covers the Participant,
or such other person or entity designated by the Committee in its sole
discretion.
(m) “
Earnings
” on any Account
during any period means the amounts of gain or loss that would have been
incurred with respect to such period if an amount equal to the balance of such
Account at the beginning of such period had been actually invested in accordance
with a Participant’s investment direction.
(n) “
Effective Date
” of an Award
means December 31 of the calendar year for which the Award is initially granted
under the Plan.
(o)
“Eligible Employee”
means, for
any calendar year commencing on and after January 1, 2005, an active employee of
a Company whom the Committee determines to be eligible for an
Award. Notwithstanding the foregoing, no Eligible Employee whose
Total Compensation for a calendar year is less than such amount, if any, as
established by the Committee in writing shall be eligible to participate in the
APCP Deferral Plan for that calendar year and any advance deferral election made
by such Eligible Employee is made on the condition that such Eligible Employee
satisfies the Total Compensation requirement and, if not, such deferral election
shall be null and void
ab
initio
.
(p) “
ERISA
” means the Employee
Retirement Income Security Act of 1974, as amended from time to
time.
(q) “
Fair Market Value
” means, with
respect to a Holding Unit as of any given date and except as otherwise expressly
provided by the Board or the Committee, the closing price of a Holding Unit on
such date as published in the Wall Street Journal or, if no sale of Holding
Units occurs on the New York Stock Exchange on such date, the closing price of a
Holding Unit on such Exchange on the last preceding day on which such sale
occurred as published in the Wall Street Journal.
(r) “
Holding Units
” means units
representing assignments of beneficial ownership of limited partnership
interests in Holding.
(s) “
Investment Election Form
”
means the form established from time to time by the Committee that a Participant
completes, signs and returns to the Committee to designate the percentage of
such Award to be treated as notionally invested in Restricted Units or Approved
Funds, pursuant to Section 2.03.
(t) “
1999-2000 Award
” means any
Award granted hereunder with respect to calendar years 1999 or 2000, as
applicable. Special rules for 1999-2000 Awards are provided in
Article 7.
(u) “
Option
” means an option to buy
Holding Units; all Options shall be issued under AllianceBernstein’s Amended and
Restated 1997 Long Term Incentive Plan or any similar equity compensation plan
AllianceBernstein may provide for in the future.
(v) “
Participant
” means any
Eligible Employee of any Company who has been designated by the Committee to
receive an Award for any calendar year and who thereafter remains employed by a
Company.
(w) “
Person
” means any individual,
corporation, partnership, association, joint-stock company, trust,
unincorporated organization, government or political subdivision thereof or
other entity.
(x) “
Plan
” means the Amended and
Restated AllianceBernstein Partners Compensation Plan, as set forth herein and
as amended from time to time.
(y) “
Post-2000 Award
” means any
Award granted hereunder with respect to calendar years beginning after December
31, 2000.
(z) “
Pre-1999 Award
” means any
Award granted hereunder with respect to calendar years beginning before January
1, 1999. Special rules for Pre-1999 Awards are provided in Article
6.
(aa) “
Restricted Unit
” means a right
to receive a Holding Unit in the future, as accounted for in an Account, subject
to vesting and any other terms and conditions established hereunder or by the
Committee.
(bb) “
Retirement
” with respect to a
Participant means that the employment of the Participant with the Company has
terminated either (i) on or after the Participant’s attaining age 65, or (ii) on
or after the Participant’s attaining age 55 at a time when the sum of the
Participant’s age and aggregate full calendar years of service with the Company,
including service prior to April 21, 1988 with the corporation then named
Alliance Capital Management Corporation, equals or exceeds 70.
(cc)
“
Special Program
”
means the granting of permission to
certain eligible employees of the Company to allocate a portion of their Awards
to Options.
(dd) “
Termination of Employment
”
means that the Participant involved is no longer performing services as an
employee of any Company, other than pursuant to a severance or special
termination arrangement, and has had a “separation from service” within the
meaning of Section 409A.
(ee) “
Total Compensation
” for a
calendar year means base salary paid during such calendar year, bonus paid for
such calendar year even if paid after the end of such calendar year or deferred,
commissions paid during such calendar year and the Award for such calendar
year.
(ff) “
Unforeseeable Emergency
” means
a severe financial hardship to a Participant or former Participant within the
meaning of Section 409A resulting from (i) an illness or accident of the
Participant or former Participant, the spouse of the Participant or former
Participant, or a dependent (as defined in Code Section 152, without regard to
Code Sections 152(b)(1), (b)(2), and (d)(1)(B)) of the Participant or former
Participant, (ii) loss of property of the Participant or former Participant due
to casualty or (iii) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant or former
Participant, all as determined in the sole discretion of the
Committee.
(gg) “
Vesting Period
” means the
applicable vesting period with respect to an Award, as provided for in Section
3.01(a).
ARTICLE
2
Participation
Section
2.01
Eligibility
. The
Committee, in its sole discretion, will designate those Eligible Employees
employed by a Company who will receive Awards with respect to a calendar
year. In making such designation, the Committee may consider any
criteria that it deems relevant, which may include an Eligible Employee’s
position with a Company and the manner in which the Eligible Employee is
expected to contribute to the future growth and success of the
Company. The Committee may vary the amount of Awards to a particular
Participant from year to year and may determine that a Participant who received
an Award to a particular year is not eligible to receive any Award with respect
to any subsequent year. An Eligible Employee who is a member of the
Committee during a particular year shall be eligible to receive an Award for
that year only if the Award is approved by the majority of the other members of
the Committee.
Section
2.02
Grant of
Awards
. The nominal amount of an Award will be determined by
the Committee in its sole and absolute discretion, and such amount will be
credited to the Participant’s Account as of the Effective Date for such
Award. An Award, including Earnings thereon, vests in accordance with
the terms of Article 3, and any such vested Award will be subject to the rules
on distributions and deferral elections under Articles 4 and 5,
respectively.
Section
2.03
Investment
Elections
. Each Participant shall submit, in accordance with
deadlines and procedures established from time to time by the Committee, an
Investment Election Form with respect to each Award. Such Investment
Election Form shall designate what percentage of such Participant’s Award shall
be treated for purposes of the Plan as (a) notionally invested in (i) Restricted
Units and (ii) each of the Approved Funds, and (b) invested in Options through
the Special Program; provided that with respect to a designation to invest in
Options through the Special Program, the Board reserves the absolute right, in
its sole discretion, to accept and reject such investment
election. The Committee in its sole discretion may, but shall not be
obligated to, permit each Participant to reallocate notional investments in each
Account among Restricted Units and the various Approved Funds or just among the
Approved Funds, subject to, without limitation, restrictions as to the frequency
with which such reallocations may be made. The Committee may
determine for each calendar year a minimum percentage and a maximum percentage
of each Award that may be treated as notionally invested in Restricted Units and
each Approved Fund. The Committee may also determine for each
calendar year a minimum and a maximum percentage of each Award that may be
allocated to Options. As soon as reasonably practicable after the end
of each calendar year, a statement shall be provided to each such Participant
indicating the current balance in each Account maintained for the Participant as
of the end of the calendar year, and the amounts in such Account notionally
allocated to Restricted Units and each of the Approved Funds, and the amount in
such Account allocated to Options.
|
Section
2.04
|
Earnings on an
Account
.
|
(a) Each
Award for which an Investment Election Form has been validly submitted shall be
credited to a separate Account in the proportions set forth in such Investment
Election Form or as directed by the Committee. The amount of such
Account shall be treated as notionally invested in Restricted Units or Approved
Funds, as applicable, as of a date determined by the Committee (the “
Earnings Date
”), which shall
be no later than forty-five days after the Effective
Date. Notwithstanding Sections 2.05 and 2.06, Earnings will be
credited or debited, as applicable, beginning from the Earnings Date but will
not be credited or debited for any period prior to the Earnings
Date.
(b) Not
less frequently than as of the end of each calendar year following the year
during which an Account is established in connection with an Award, each Account
maintained under the Plan will be credited or debited, as applicable, with the
amount, if any, necessary to reflect Earnings as of that date.
|
Section
2.05
|
Awards Invested in Approved
Funds
.
|
(a) To
the extent the Committee or an Investment Election Form validly directs the
notional investment of all or a part of any Award in Approved Funds, that
portion of such Award so designated shall, as of a date determined by the
Committee, be treated as notionally invested in such Approved
Funds. If a cash dividend or other cash distribution is made with
respect to Approved Funds, as of a date determined and as calculated by the
Committee in its sole discretion, a Participant whose Account is notionally
invested in Approved Funds (whether vested or unvested) will have such notional
investment increased by an amount equal to the cash dividend or other cash
distribution that would have been due on the Account had there actually been an
investment in Approved Funds. Such increase shall be proportionately
allocated by the Committee in its sole discretion between Approved Funds, as
applicable, and such increase shall be vested at all times.
(b) To
the extent any Approved Fund is terminated, liquidated, merged with another fund
or experiences a major change in investment strategy or other extraordinary
event, the Committee may, if so authorized by the Board, in such manner as it
may in its sole discretion deem equitable, reallocate or otherwise adjust the
amount of any Account under this Article 2 to reflect the occurrence of such
event.
|
Section
2.06
|
Awards Invested in Restricted
Units
.
|
(a) To
the extent the Committee or an Investment Election Form validly directs the
notional investment of all or part of any Award in Restricted Units, that
portion of such Award so designated shall, as of a date and based on a Fair
Market Value of a Holding Unit as determined by the Committee and pursuant to
procedures established by the Committee from time to time, be converted into a
whole number of Restricted Units. From and after the date of such
conversion, that portion of an Award which has been validly made to notionally
invest in Restricted Units shall be denominated, and shall thereafter be treated
for all purposes as, a grant of that number of Restricted Units determined
pursuant to the preceding sentence.
(b) If
a cash dividend or other cash distribution is made with respect to Holding
Units, within 90 days thereafter, a distribution will be made to a Participant
whose Account is credited with Restricted Units (whether vested or unvested) in
an amount (the “
Equivalent
Distribution Amount
”) equal to the number of such Restricted Units
credited to the Participant’s Account, times the value of the cash dividend or
other cash distribution per Holding Unit;
provided, however
, if a
Participant defers distribution of his Award under Article 5, the Equivalent
Distribution Amount will be converted at such time or times and in accordance
with such procedures as shall be established by the Committee, into vested
Restricted Units based on the Fair Market Value of a Holding Unit as determined
by the Committee, and such converted benefit shall be distributed in accordance
with Section 4.03.
(c) Fractional
unit amounts remaining after conversion under this Section 2.06 may be used for
any purposes for the benefit of the Participant as determined by the Committee
in its sole discretion, including but not limited to the payment of taxes with
respect to an Award or deposit in the Approved Funds.
(d) In
the event that the Committee determines that any distribution (whether in the
form of cash, limited partnership interests, other securities, or other
property), recapitalization (including, without limitation, any subdivision or
combination of limited partnership interests), reorganization, consolidation,
combination, repurchase, or exchange of limited partnership interests or other
securities of Holding, issuance of warrants or other rights to purchase limited
partnership interests or other securities of Holding, any incorporation of
Holding, or other similar transaction or events affects Holding Units such that
an adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Committee may, if so authorized by
the Board, in such manner as it may deem equitable, adjust the number of
Restricted Units or securities of Holding (or number and kind of other
securities) subject to outstanding Awards, or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award.
|
Section
2.07
|
Awards Invested in
Options
|
(a) To
the extent the Committee or an Investment Election Form validly directs the
investment of all or part of any Award in Options, that portion of such Award so
designated shall, as of a date and as determined by the Committee, be used to
purchase Options having a value calculated in accordance with Black-Scholes
methodology (“
Initial
Award
”). From and after the date of such conversion, that
portion of an Award which has been validly made to invest in Options shall be
denominated, and shall thereafter be treated for all purposes as, a grant of
that number of Options determined pursuant to the preceding
sentence.
(b) To
the extent an Award is validly invested in Options under the Special Program,
the Committee may authorize an additional award to a Participant, which may be
based on such Participant’s Initial Award (“
Match
”).
ARTICLE
3
Vesting,
Expiration and Forfeitures
(a) Subject
to Section 3.01(b) below, an Award, including Earnings thereon, shall vest in
equal annual installments during the vesting period (the “
Vesting Period
”) specified
below, as applicable, with respect to each such Award, with the first such
installment vesting on the first anniversary of the date determined for this
purpose by the Committee in connection with such Award (the “
Grant Date
”), and the
remaining installments vesting on subsequent anniversaries of the Grant Date,
provided in each case that the Participant is employed by a Company on such
anniversary. For purposes of this Plan, the “
vesting
” of a Restricted Unit
shall mean the lapsing of the restrictions thereon with respect to such
Restricted Unit. For purposes of this Plan and the Special Program,
the “
vesting
” of Options
shall mean the percentage of Holding Units subject to the Options with respect
to which the Options may be exercised by the Participant.
(i)
Each Post-2000 Award, including Earnings thereon, but not including any portion
of a Post-2000 Award invested in Options, shall vest as set forth in the
following table, based on the Participant’s age as of the Effective Date with
respect to such Award, unless the Committee in its sole discretion determines
that an alternative Vesting Period should apply with respect to any Post-2000
Award, notwithstanding such table:
Age
of Participant
|
|
As of Effective Date
|
Vesting Period
|
|
|
Up
to and including 61
|
4
years
|
62
|
3
years
|
63
|
2
years
|
64
|
1
year
|
65
or older
|
Fully
vested at
grant
|
(ii) The
portion of each Post-2000 Award that is invested in Options shall vest and
expire as set forth in the following tables, unless the Committee, in its sole
discretion, determines that an alternative Vesting Period or expiration date
should apply with respect to such portion of any Post-2000 Award,
notwithstanding such tables:
Options
|
Vesting Period
|
Initial
Award
|
5
years (20% in each year)
|
Match
|
10
years (20% in each of years 6 through
10)
|
Options
|
Expiration Date
|
Initial
Award
|
10
years from grant date
|
Match
|
11
years from grant
date
|
(iii) Each
1999-2000 Award, including Earnings thereon, shall vest as set forth in the
following table, based on the Participant’s age as of the Effective Date with
respect to such Award:
Age
of Participant as of
Effective
Date
|
Vesting Period
|
|
|
Up
to and including 47
|
8
years
|
48
|
7
years
|
49
|
6
years
|
50-57
|
5
years
|
58
|
4
years
|
59
|
3
years
|
60
|
2
years
|
61
|
1
year
|
62
or older
|
Fully
vested at
grant
|
(iv) The
Vesting Period of each Pre-1999 Award made for 1995, including Earnings thereon,
is three years. The Vesting Period of each Pre-1999 Award made for a
calendar year after 1995, including Earnings thereon, is eight
years.
(b) The
unvested portion of any Award held by such Participant shall become 100% vested
upon a Participant’s Termination of Employment due to death, upon a
Participant’s Disability, and with respect to a Pre-1999 Award only, upon a
Participant’s Termination of Employment due to Retirement.
Section
3.02
Forfeitures
. A
Participant shall forfeit the balance of any Account maintained for him or her
which has not been vested in accordance with the applicable Vesting Period of
Section 3.01 on the effective date of the Participant’s Termination of
Employment for any reason other than death, and, only with respect to a Pre-1999
Award, the Participant’s Termination of Employment due to Retirement;
provided, however
, that, the
Committee may determine, in its sole discretion, and only if a Participant
executes a release of liability in favor of the Company in a form approved by
the Committee and satisfies such other conditions as established by the
Committee that such Participant who would otherwise forfeit all or part of his
Account following a Termination of Employment will nonetheless continue to vest
in the balance of such Account following his Termination of Employment at the
same time(s) that such balance would have otherwise vested under Section
3.01(a). In addition, the Committee may, in its sole discretion,
determine that alternative forfeiture provisions will apply with respect to any
Post-2000 Award invested in Options which shall be reflected in the applicable
option award agreements.
ARTICLE
4
Distributions
Section
4.01
General
. Subject
to Section 2.06(b), no Award will be distributed unless such distribution is
permitted under this Article 4. The payment of the vested portion of
an Award, including Earnings thereon, shall be treated as drawn proportionately
from the investment alternative(s) in effect as of the relevant payment
date. Any such payment shall be made in Holding Units to the extent
such payment is attributable to an Award notionally invested in Restricted
Units. Any portion of an Award, including Earnings thereon, that is
not vested will not be distributed hereunder.
|
Section
4.02
|
Distributions If Deferral
Election Is Not In Effect.
|
(a) Unless
a Participant elects otherwise on a Deferral Election Form under Sections 5.01
or 5.02 (if such election is permitted by the Committee), a Participant who has
not incurred a Disability or a Termination of Employment will have the vested
portion of his Award, including Earnings thereon, distributed to him annually in
the form of a lump sum within 70 days after such portion vests under the
applicable Vesting Period of Section 3.01.
(b) Unless
a Participant elects otherwise on a Deferral Election Form under Sections 5.01
or 5.02 (if such election is permitted by the Committee), a Participant who has
had a Disability or a Termination of Employment will have the balance of any
vested Award not paid under Section 4.02(a), including Earnings thereon,
distributed to him as follows:
(i)
In the event of a Participant’s Disability, such distribution will be made to
the Participant in a single lump sum payment within 90 days following the
Participant’s Disability.
(ii)
In
the event of a Participant’s Termination of Employment due to the Participant’s
death, such distribution will be made to the Participant’s Beneficiary in a
single lump sum payment in the calendar year in which the 180th day anniversary
of the death occurs.
(iii)
With
respect to Pre-1999 Awards, in the event of a Participant’s Termination of
Employment due to Retirement, such distribution will be made to the Participant
in a single lump sum payment within 90 days following the six month anniversary
of such Termination of Employment.
(iv)
In
the event that the Committee determines in its sole discretion under Section
3.02 that a Participant shall continue to vest following his Termination of
Employment, payments with respect to the Award, including Earnings thereon, will
be made within 70 days after each portion vests; provided, however, that any
such payment that becomes payable prior to the six month anniversary of such
Termination of Employment shall be paid within 70 days following such
anniversary.
|
Section
4.03
|
Distributions If Deferral
Election Is In Effect.
|
(a) Subject
to Section 4.03(b), in the event that a deferral election is in effect with
respect to a Participant pursuant to Sections 5.01 or 5.02 and the Participant
has not incurred a Disability but has a Termination of Employment for any reason
other than death, the vested portion of such Participant’s Award, including
Earnings thereon, will be distributed to him within 90 days following the
benefit commencement date specified on such Deferral Election Form and in the
form of payment elected on such form.
(b) In
the event that a Deferral Election Form is in effect with respect to a
Participant pursuant to Sections 5.01 or 5.02 and such Participant subsequently
incurs Termination of Employment due to death, the elections made by such
Participant on his Deferral Election Form shall be disregarded, and the
Participant’s Award, including Earnings thereon, will be distributed to his
Beneficiary in a single lump sum payment in the calendar year in which the
180
th
day
anniversary of the death occurs.
In the
event that a Participant incurs a Disability on or after January 1, 2009,
payment will be made in accordance with such Participant’s election on his
Deferral Election Form. Such an election may be made with regard to
awards granted on or after January 1, 2009 and, pursuant to transition guidance
issued by the Internal Revenue Service in connection with Section 409A,
including Internal Revenue Service Notice 2007-86, with regard to awards granted
prior to such date. Notwithstanding the foregoing, in the event that
a Participant incurs a Disability prior to January 1, 2009, the Participant’s
Award, including Earnings thereon, will be distributed to him or his
Beneficiary, as applicable
,
in a
single lump sum payment within 90 days following the Participant’s
Disability.
Section
4.04
Unforeseeable
Emergency.
Notwithstanding the foregoing to the contrary, if a
Participant or former Participant experiences an Unforeseeable Emergency, such
individual may petition the Committee to (i) suspend any deferrals under a
Deferral Election Form submitted by such individual and/or (ii) receive a
partial or full distribution of a vested Award, including Earnings thereon,
deferred by such individual. The Committee shall determine, in its
sole discretion, whether to accept or deny such petition, and the amount to be
distributed, if any, with respect to such Unforeseeable Emergency;
provided, however
, that such
amount may not exceed the amount necessary to satisfy such Unforeseeable
Emergency plus amounts necessary to pay taxes reasonably anticipated as a result
of the distribution, after taking into account the extent to which such hardship
is or may be relieved through reimbursement or compensation by insurance or
otherwise, by liquidation of the individual’s assets (to the extent the
liquidation of such assets would not itself cause severe financial hardship),
and by suspension of the individual’s deferral(s) under the Plan.
Section
4.05
Documentation.
Each
Participant and Beneficiary shall provide the Committee with any documentation
required by the Committee for purposes of administering this Plan.
ARTICLE
5
Deferrals
of Compensation
Section
5.01
Initial Deferral
Election
. The Committee may permit deferral elections of
Pre-1999 Awards, 1999-2000 Awards and/or Post-2000 Awards in its sole and
absolute discretion in accordance with procedures established by the Committee
for this purpose from time to time (except to the extent that any such Award is
invested in Options). If so permitted, a Participant may elect in
writing on a Deferral Election Form to have the portion of the Award which
vests, including Earnings thereon, distributed as of a distribution commencement
date elected by the Participant that occurs following the date that such Award
becomes or is scheduled to become 100% vested under the applicable Vesting
Period of Section 3.01(a), or if earlier and so permitted by the Committee, six
months following such Participant’s Termination of Employment. Any
such distribution shall be made in such form(s) as permitted by the Committee at
the time of deferral (including, if permitted by the Committee, a single lump
sum or substantially equal annual installments over a period of up to ten years)
as elected by the Participant. If the Participant has failed to
properly elect a distribution commencement date, the Participant will be deemed
to have elected to have the Award distributed as the Award vests, and if the
Participant has failed to properly elect a method of payment, the Participant
will be deemed to have elected to have the Award distributed in the form of a
lump sum. If deferrals are permitted by the Committee, such Deferral
Election Form must submitted to the Committee (or its delegate) no later than
the last day of the calendar year prior to the Effective Date of an Award,
except that a Deferral Election Form may also be submitted to the Committee (or
its delegate) in accordance with the following:
(a) In
the case of the first year in which a Participant becomes eligible to
participate in the Plan and with respect to services to be performed subsequent
to such deferral election, a Deferral Election Form may be submitted within 30
days after the date the Participant becomes eligible to participate in the
Plan.
(b) With
respect to the deferral of an Award subject to Section 409A of the Code that
relates all or in part to services performed between January 1, 2005 and
December 31, 2005, a Deferral Election Form may be submitted by March 15,
2005.
(c) A
Deferral Election Form may be submitted at such other time or times as permitted
by the Committee in accordance with Section 409A of the Code.
Section
5.02
Changes in Time and Form of
Distribution
. The elections set forth in a Participant’s
Deferral Election Form governing the payment of the vested portion of an Award,
including Earnings thereon, pursuant to Section 5.01 shall be irrevocable as to
the Award covered by such election;
provided, however
, if
permitted by the Committee, a Participant shall be permitted to change the time
and form of distribution of such Award by making a subsequent election on a
Deferral Election Form supplied by the Committee for this purpose in accordance
with procedures established by the Committee from time to time, provided that
any such subsequent election does not take effect for at least 12 months, is
made at least 12 months prior to the scheduled distribution commencement date
for such Award and the subsequent election defers commencement of the
distribution for at least five years from the date such payment otherwise would
have been made.
ARTICLE
6
Special
Rules For Pre-1999 Awards
Section
6.01
Generally
. Except
as otherwise provided in Section 6.02, Articles 1 through 5 hereunder shall
apply with respect to Pre-1999 Awards.
|
Section
6.02
|
Pre-1999 Award
Election
.
|
(a) Each
Participant whose Account is credited with a Pre-1999 Award may make a one-time
election, effective January 1, 2006, conditioned on the Participant’s being
employed by any of the Companies on such date, in accordance with procedures
established by the Committee and on an election form supplied by the Committee,
to have all of his Pre-1999 Award Accounts notionally invested in one or both of
(i) Restricted Units or (ii) any Approved Fund designated by the Committee from
time to time (a “
Pre-1999 Award
Election
”). Each such notional investment shall be adjusted
for Earnings. The deadline for properly submitting a Pre-1999 Award
Election to the Committee (or its delegate) is December 9, 2005.
(b) To
the extent that any Pre-1999 Award Election is not effective, such notional
investments are not permitted and such Pre-1999 Award is subject to the terms
and conditions applicable thereto as specified in the version of this Plan in
effect prior to January 1, 2005 which is hereby incorporated herein by
reference, including the method of adjusting such Award for “earnings” as
defined therein.
(c) With
respect to any Pre-1999 Award Election designating a notional investment in
Restricted Units effective January 1, 2006, the Participant’s Pre-1999 Award
Account (or portion thereof) is converted into Restricted Units by dividing the
proportion of the closing balance of the Pre-1999 Award Account on December 31,
2005 so designated, by the closing price of a Holding Unit on the New York Stock
Exchange on December 31, 2005 as published in the Wall Street
Journal.
(d) To
the extent that a Pre-1999 Award subject to a Pre-1999 Award Election is not
vested on January 1, 2006, the notional investment in Restricted Units and
Approved Funds, as applicable, shall be subject to the vesting schedule
remaining on such Pre-1999 Awards.
(e) Any
Participant making a Pre-1999 Award Election shall contemporaneously also elect
a distribution commencement date, not earlier than January 31, 2007, for the
commencement of the distribution of his vested investment under such Pre-1999
Award Election, in accordance with procedures established by the
Committee. Distributions shall commence as of the distribution
commencement date elected, or if earlier and so elected by the Participant at
the time the distribution commencement date is elected, the date of the
Participant’s “separation from service” (within the meaning of Section 409A),
subject to a six month delay following such separation from service in all cases
other than in the event of the Participant’s death. If the
Participant has failed to properly elect a distribution commencement date, the
Committee will commence distribution in calendar year 2007. A
Participant may elect to receive the distribution of the amounts deferred under
this section in (i) a single lump sum distribution, (ii) substantially equal
annual installments over a period of up to 10 years or (iii) a 50% lump sum with
the remainder in five annual installments, as elected by the Participant in
accordance with procedures established by the Committee. If the
Participant has failed to properly elect a method of payment, the method of
payment shall be a lump sum. A Participant who has made a Pre-1999
Award Election to utilize Restricted Units shall receive his distribution in the
form of Holding Units.
ARTICLE
7
Special
Rules For 1999-2000 Awards
Section
7.01
Generally
. Except
as otherwise provided in Section 7.02, Articles 1 through 5 hereunder shall
apply with respect to 1999-2000 Awards.
Section
7.02
Notional Investment in Restricted
Units
. 1999-2000 Awards are notionally invested in Restricted
Units only. Except as otherwise specified by the Committee,
Participants receiving such Awards are not permitted to elect to notionally
invest any such Award or part thereof in, or reallocate any notional investment
in Restricted Units to, any Approved Fund. The use of an Investment
Election Form is not applicable with respect to 1999-2000 Awards, and the
Committee shall administer such 1999-2000 Awards, including the crediting of a
Participant’s Account with his Award, and the adjustment of Earnings thereon,
without the Participant’s submission of such an Investment Election Form;
provided, however,
that the
foregoing shall not limit the Committee from requiring such a Participant to
submit any other forms or documentation that the Committee requires in its sole
discretion.
ARTICLE
8
Administration;
Miscellaneous
Section
8.01
Administration of the
Plan
. The Plan is intended to be an unfunded, non-qualified
incentive plan and the APCP Deferral Plan is intended to be an unfunded,
non-qualified deferred compensation plan within the meaning of ERISA and shall
be administered by the Committee as such. The right of any
Participant or Beneficiary to receive distributions under the Plan shall be as
an unsecured claim against the general assets of
AllianceBernstein. Notwithstanding the foregoing, AllianceBernstein,
in its sole discretion, may establish a “rabbi trust” or separate custodial
account to pay benefits hereunder. The Committee shall have the full
power and authority to administer and interpret the Plan and to take any and all
actions in connection with the Plan, including, but not limited to, the power
and authority to prescribe all applicable procedures, forms and
agreements. The Committee’s interpretation and construction of the
Plan, including its computation of notional investment returns and Earnings,
shall be conclusive and binding on all Persons having an interest in the
Plan.
Section
8.02
Authority to Vary Terms of
Awards
. The Committee shall have the authority to grant Awards
other than as described herein, subject to such terms and conditions as the
Committee shall determine in its discretion.
Section
8.03
Amendment, Suspension and
Termination of the Plan
. The Committee reserves the right at
any time, without the consent of any Participant or Beneficiary and for any
reason, to amend, suspend or terminate the Plan in whole or in part in any
manner; provided that no such amendment, suspension or termination shall reduce
the balance in any Account prior to such amendment, suspension or termination or
impose additional conditions on the right to receive such balance, except as
required by law.
|
Section
8.04
|
General
Provisions
.
|
(a) To
the extent provided by the Committee, each Participant may file with the
Committee a written designation of one or more Persons, including a trust or the
Participant’s estate, as the Beneficiary entitled to receive, in the event of
the Participant’s death, any amount or property to which the Participant would
otherwise have been entitled under the Plan. A Participant may, from
time to time, revoke or change his or her Beneficiary designation by filing a
new designation with the Committee. If (i) no such Beneficiary designation is in
effect at the time of a Participant’s death, (ii) no designated Beneficiary
survives the Participant, or (iii) a designation on file is not legally
effective for any reason, then the Participant’s estate shall be the
Participant’s Beneficiary.
(b) Neither
the establishment of the Plan nor the grant of any Award or any action of any
Company, the Board, or the Committee pursuant to the Plan, shall be held or
construed to confer upon any Participant any legal right to be continued in the
employ of any Company. Each Company expressly reserves the right to
discharge any Participant without liability to the Participant or any
Beneficiary, except as to any rights which may expressly be conferred upon the
Participant under the Plan.
(c) An
Award hereunder shall not be treated as compensation, whether upon such Award’s
grant, vesting, payment or otherwise, for purposes of calculating or accruing a
benefit under any other employee benefit plan except as specifically provided by
such other employee benefit plan.
(d) Nothing
contained in the Plan, and no action taken pursuant to the Plan, shall create or
be construed to create a fiduciary relationship between any Company and any
other person.
(e) Neither
the establishment of the Plan nor the granting of an Award hereunder shall be
held or construed to create any rights to any compensation, including salary,
bonus or commissions, nor the right to any other Award or the levels thereof
under the Plan.
(f)
No Award or right to receive any payment, including Restricted Units, under the
Plan may be transferred or assigned, pledged or otherwise encumbered by any
Participant or Beneficiary other than by will, by the applicable laws of descent
and distribution or by a court of competent jurisdiction. Any other
attempted assignment or alienation of any payment hereunder shall be void and of
no force or effect.
(g) If
any provision of the Plan shall be held illegal or invalid, the illegality or
invalidity shall not affect the remaining provisions of the Plan, and the Plan
shall be construed and enforced as if the illegal or invalid provision had not
been included in the Plan.
(h) Any
notice to be given by the Committee under the Plan to any party shall be in
writing addressed to such party at the last address shown for the recipient on
the records of any Company or subsequently provided in writing to the
Committee. Any notice to be given by a party to the Committee under
the Plan shall be in writing addressed to the Committee at the address of
AllianceBernstein.
(i) Section
headings herein are for convenience of reference only and shall not affect the
meaning of any provision of the Plan.
(j) The
provisions of the Plan shall be governed and construed in accordance with the
laws of the State of New York.
(k) There
shall be withheld from each payment made pursuant to the Plan any tax or other
charge required to be withheld therefrom pursuant to any federal, state or local
law. A Company by whom a Participant is employed shall also be
entitled to withhold from any compensation payable to a Participant any tax
imposed by Section 3101 of the Code, or any successor provision, on any amount
credited to the Participant;
provided, however
, that if
for any reason the Company does not so withhold the entire amount of such tax on
a timely basis, the Participant shall be required to reimburse AllianceBernstein
for the amount of the tax not withheld promptly upon AllianceBernstein’s request
therefore. With respect to Restricted Units: (i) in the event that
the Committee determines that any federal, state or local tax or any other
charge is required by law to be withheld with respect to the Restricted Units or
the vesting of Restricted Units (a “
Withholding Amount
”) then, in
the discretion of the Committee, either (X) prior to or contemporaneously
with the delivery of Holding Units to the recipient, the recipient shall pay the
Withholding Amount to AllianceBernstein in cash or in vested Holding Units
already owned by the recipient (which are not subject to a pledge or other
security interest), or a combination of cash and such Holding Units, having a
total fair market value, as determined by the Committee, equal to the
Withholding Amount; (Y) AllianceBernstein shall retain from any vested Holding
Units to be delivered to the recipient that number of Holding Units having a
fair market value, as determined by the Committee, equal to the Withholding
Amount (or such portion of the Withholding Amount that is not satisfied under
clause (X) as payment of the Withholding Amount; or (Z) if Holding Units are
delivered without the payment of the Withholding Amount pursuant to either
clause (X) or (Y), the recipient shall promptly pay the Withholding Amount to
AllianceBernstein on at least seven business days notice from the Committee
either in cash or in vested Holding Units owned by the recipient (which are not
subject to a pledge or other security interest), or a combination of cash and
such Holding Units, having a total fair market value, as determined by the
Committee, equal to the Withholding Amount, and (ii) in the event that the
recipient does not pay the Withholding Amount to AllianceBernstein as required
pursuant to clause (i) or make arrangements satisfactory to AllianceBernstein
regarding payment thereof, AllianceBernstein may withhold any unpaid portion
thereof from any amount otherwise due the recipient from
AllianceBernstein.
Exhibit
10.04
AllianceBernstein
l.p.
Financial
Advisor Wealth Accumulation Plan
Effective
August 1, 2005
As
Amended and Restated as of December 5, 2008
TABLE OF
CONTENTS
|
|
Page
|
|
|
|
Section
1.
|
PURPOSE.
|
1
|
|
|
|
Section
2.
|
DEFINITIONS.
|
1
|
|
|
|
Section
3.
|
AWARD.
|
4
|
|
|
|
Section
4.
|
VESTING.
|
4
|
|
|
|
Section
5.
|
MEASUREMENT
OF EARNINGS.
|
4
|
|
|
|
Section
6.
|
DISTRIBUTION
OF INCENTIVE BENEFIT.
|
6
|
|
|
|
Section
7.
|
CLAIMS
PROCEDURES.
|
8
|
|
|
|
Section
8.
|
NO
FUNDING OBLIGATION.
|
10
|
|
|
|
Section
9.
|
NON-TRANSFERABILITY
OF RIGHTS UNDER THE PLAN.
|
10
|
|
|
|
Section
10.
|
MINORS
AND INCOMPETENTS.
|
10
|
|
|
|
Section
11.
|
WITHHOLDING
TAXES.
|
11
|
|
|
|
Section
12.
|
ASSIGNMENT.
|
11
|
|
|
|
Section
13.
|
LIMITATION
OF RIGHTS.
|
11
|
|
|
|
Section
14.
|
ADMINISTRATION.
|
11
|
|
|
|
Section
15.
|
AMENDMENT
OR TERMINATION OF PLAN.
|
12
|
|
|
|
Section
16.
|
SEVERABILITY
OF PROVISIONS.
|
13
|
|
|
|
Section
17.
|
ENTIRE
AGREEMENT.
|
13
|
|
|
|
Section
18.
|
HEADINGS
AND CAPTIONS.
|
13
|
|
|
|
Section
19.
|
NON-EMPLOYMENT.
|
13
|
|
|
|
Section
20.
|
PAYMENT
NOT SALARY.
|
13
|
|
|
|
Section
21.
|
GENDER
AND NUMBER.
|
13
|
|
|
|
Section
22.
|
CONTROLLING
LAW.
|
13
|
AllianceBernstein
L.P.
Financial
Advisor Wealth Accumulation Plan
Effective
August 1, 2005
As
Amended and Restated as of December 5, 2008
1.1
Purpose
.
AllianceBernstein Holding
L.P. (together with any successor to all or substantially all of its business
and assets, “
Holding
”)
and its affiliate, AllianceBernstein L.P. (together with any successor to all or
substantially all of its business and assets, “
Company
”) have established
this AllianceBernstein L.P. Financial Advisor Wealth Accumulation Plan to create
a compensation program to attract and retain eligible employees expected to make
a significant contribution to the future growth and success of Bernstein Global
Wealth Management, a unit of the Company. The Plan was established
effective August 1, 2005 and is hereby amended and restated to reflect prior
amendments and certain administrative changes effective as of December 5,
2008.
1.2
Compliance
With Section 409A
. The Plan is intended to conform to the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended,
and any regulations and guidance promulgated thereunder (“Section
409A”). Any deferral or payment hereunder is subject to the terms of
the Plan and compliance with Section 409A, as interpreted by the Committee in
its sole discretion. Although none of the Company, the Committee,
their affiliates, and their agents make any guarantee with respect to the
treatment of payments under this Plan and shall not be responsible in any event
with regard to the Plan’s compliance with Section 409A, the payments contained
herein are intended to be exempt from Section 409A or otherwise comply with the
requirements of Section 409A, and all provisions of the Plan shall be limited,
construed and interpreted in accordance with the foregoing. None of
the Company, the Committee, any of their affiliates, and any of their agents
shall have any liability to any Participant or Beneficiary as a result of any
tax, interest, penalty or other payment or damages required to be paid or due
pursuant to, or because of a violation of, Section 409A.
Unless
the context requires otherwise, the following words, as used in the Plan, shall
have the meanings ascribed to each below:
2.1 “
Account
” shall mean the book
entry-account which shall be credited with a Participant’s Incentive Award
pursuant to Section 3 herein and Earnings thereon.
2.2 “
Affiliate
” shall mean any
entity affiliated with the Company within the meaning of Code Section 414(b)
with respect to a controlled group of corporations, Code Section 414(c) with
respect to trades or businesses under common control with the Company, Code
Section 414(m) with respect to affiliated service groups and any other
entity required to be aggregated with the Company under Code
Section 414(o). No entity shall be treated as an Affiliate
for any period during which it is not part of the controlled group, under common
control or otherwise not required to be aggregated with the Company under Code
Section 414.
2.3 “
Available Fund
” means any
money-market, debt or equity fund or pooled investment vehicle sponsored by the
Company or its Affiliate or other fund or security that is designated by the
Committee from time to time as an Available Fund.
2.4 “
Award Agreement
” shall mean an
agreement entered into between a Participant and the Company which specifies the
terms of the Participant’s Incentive Compensation, including the amount of such
Incentive Award, the Elective Distribution Date and the Elective Distribution
Form. An Award Agreement shall contain such provisions, consistent
with the provisions of the Plan, as may be established from time to time by the
Committee. An Award Agreement may, to the extent permitted by the
Committee and by applicable law, be made by paper or electronic
means.
2.5 “
Beneficiary
” shall mean the
person or trust designated by the Participant to receive benefits payable under
this Plan in the event of the Participant’s death. If no Beneficiary
is designated, then the Participant’s Beneficiary shall be his
estate. Upon the acceptance by the Committee of a new Beneficiary
designation, all Beneficiary designations previously filed shall be
canceled. A Participant’s designation of a Beneficiary (or any
election to revoke or change a prior Beneficiary designation) must be made and
filed with the Committee, in writing, on such form(s) and in such manner
prescribed by the Committee. The Committee shall be entitled to rely
on the last Beneficiary designation filed by the Participant and accepted by the
Committee prior to his death.
2.6 “
Board
” shall mean the
Compensation Committee of the Board of Directors of AllianceBernstein
Corporation or a duly authorized committee thereof.
2.7 “
Code
” shall mean the Internal
Revenue Code of 1986, as amended and as hereafter amended from time to time, and
any regulations promulgated thereunder.
2.8 “
Committee
” shall mean the
committee or committees of management designated by the Board to administer the
Plan or a designee of any such committee or committees.
2.9 “
Company
” shall mean
AllianceBernstein L.P. and any successor entity by merger, consolidation or
transfer of all or substantially all of its assets.
2.10 “
Disabled
” shall mean that a
Participant is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, as determined by the carrier of the long-term
disability insurance program maintained by the Company or its Affiliate that
covers the Participant, or such other person or entity designated by the
Committee in its sole discretion.
2.11 “
Earnings
” shall mean earnings
and/or losses on amounts credited to an Account in accordance with Section 5
hereof.
2.12 “
Elective
Distribution Date
” shall mean,
as elected by the Participant:
|
(a)
|
The
Participant’s Separation from Service or, with respect to each Participant
who is a Key Employee, six (6) months following his Separation from
Service, as defined under Section 409A;
or
|
|
(b)
|
Subject
to the requirements of Section 409A, a date elected by the Participant
within a period permitted by the Committee as set forth in the
Administrative Guidelines for the
Plan.
|
2.13 “
Elective Distribution Form
”
means either a lump sum or substantially equal annual installments over a period
permitted by the Committee.
2.14 “
ERISA
” shall mean the Employee
Retirement Income Security Act of 1974, as amended.
2.15 “
Holding Units
” mean units
representing assignments of beneficial ownership of limited partnership
interests in Holding.
2.16 “
Incentive Award
” shall mean
the amount credited to a Participant’s Account pursuant to Section
3.
2.17 “
Incentive Benefit
” shall mean
the vested benefit payable under the Plan, which shall be payable in accordance
with Section 6 hereof.
2.18 “
Key Employee
” shall mean a
“specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code
(or any successor provision).
2.19 “
Participant
” shall mean a
financial advisor employed by the Company or its Affiliates who is designated as
eligible to participate in this Plan by the Board, or if authorized by the
Board, the Chief Executive Officer of the Company, and who enters into an Award
Agreement with the Company. Notwithstanding any other provision to
the contrary, a financial advisor who is designated as being eligible to
participate in the Plan must enter into an Award Agreement within thirty (30)
days of such designation. If such financial advisor does not enter
into an Award Agreement within thirty (30) days of being designated as eligible
to participate in the Plan, such financial advisor shall not be eligible to
become a Participant until the first day of the following Plan Year provided
that such Award Agreement is entered into before the first day of such Plan Year
and the Participant’s eligibility to participate in the Plan has not been
rescinded.
2.20 “
Plan
” shall mean the
AllianceBernstein L.P. Financial Advisor Wealth Accumulation Plan, as amended
from time to time.
2.21 “
Plan Year
” shall mean the
calendar year.
2.22 “
Section 409A
” shall mean Code
Section 409A and any regulations and guidance promulgated
thereunder.
2.23 “
Separation from Service
” shall
mean separation from the employment of the Company and its Affiliates for any
reason, including, but not limited to, retirement, death, resignation,
dismissal, or the cessation of an entity as an Affiliate. In the
event that all or substantially all of the assets of the Company or an Affiliate
are sold or transferred, any Participant who in connection with, or as a result
of, such sale becomes employed by the acquirer of such assets shall not be
deemed to have incurred a Separation from Service unless and until the earlier
of (i) the individual is no longer employed by such acquirer or any entity
thereafter acquiring the aforesaid assets or (ii) the Committee determines,
in its sole discretion, that such individual has incurred a Separation from
Service and when such Separation from Service is deemed to have
occurred. For purposes of the foregoing sentence, and only for such
purposes, a sale or transfer of stock of the Company or Affiliate shall be
deemed to be a sale or transfer of “assets.”
Notwithstanding
the foregoing, a Participant shall not be considered to have had a Separation
from Service if, for purposes of Section 409A, the Participant would not be
considered to have had a “separation from service.”
The
Company shall make a book entry contribution to the Account of a Participant in
an amount equal to the amount of the Participant’s Incentive Award as designated
in the Participant’s Award Agreement. The Participant’s Award
Agreement shall evidence the Participant’s agreement to the terms of the
Plan.
A
Participant’s Account will vest or be forfeited in accordance with the terms and
conditions set forth in the Award Agreement.
Section
5.
|
MEASUREMENT OF
EARNINGS
.
|
5.1
Election
between Notional Investments
. Each Participant shall
designate, in accordance with deadlines and procedures established from time to
time by the Committee, in his Award Agreement, that percentage of such
Participant’s Incentive Award which shall be treated for purposes of the Plan as
notionally invested in (i) Holding Units or (ii) each of the Available Funds;
provided, that the Committee may establish a minimum percentage of each
Incentive Award that must be notionally invested in the Holding Units and a
maximum percentage of each Incentive Award that may be notionally invested in
Holding Units. No more than fifty percent (50%) of a Participant’s
Incentive Award may be notionally invested in Holding
Units. Following the Participant’s election between Holding Units and
Available Funds, the Participant shall not be permitted to elect to change the
percentage of his or her Incentive Award that may be notionally invested in
Holding Units.
The
Participant’s Account shall be treated as notionally invested in the Available
Funds or Holding Units (in accordance with the Participant’s election) as of a
date as determined by the Committee (the “Earnings Date”) which shall be no
later than thirty days after the effective date of the Participant’s Award
Agreement (the “Effective Date”), in the proportions set forth in the
Participant’s Investment Election Form. Notwithstanding the
foregoing, varying arrangements with respect to the crediting of earnings in
such notional investments may be made in connection with special programs as
determined by the Committee in its sole discretion.
5.2
Notional
Investment in Available Funds
. After the Earnings Date, the
portion of a Participant’s Account that is invested in Available Funds will be
credited or debited, as applicable, with notional investment earnings, gains and
losses, as though the amounts in such Account had been actually invested in the
Available Funds in the proportions reflected in the Account. The
Committee in its sole discretion may permit each Participant to reallocate
notional investments in each Account among the various Available Funds, subject
to, without limitation, restrictions as to the frequency with which such
reallocations may be made. As soon as reasonably practicable after
the end of each calendar year, a statement shall be provided to each such
Participant indicating the current balance in each Account maintained for the
Participant as of the end of the calendar year, and the amounts in such Account
notionally allocated to each of the Available Funds.
5.3
Special
Rules Applicable to Notional Investments in Holding Units
.
|
(a)
|
Recapitalization
. In
the event that the Committee determines that any distribution (whether in
the form of cash, limited partnership interests, other securities, or
other property), recapitalization (including, without limitation, any
subdivision or combination of limited partnership interests),
reorganization, consolidation, combination, repurchase, or exchange of
limited partnership interests or other securities of Holding, issuance of
warrants or other rights to purchase limited partnership interests or
other securities of Holding, any incorporation of Holding, or other
similar transaction or event affects the Holding Units such that an
adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee may, if
so authorized by the Board, in such manner as it may deem equitable,
adjust the number of Holding Units held in Participant’s
Account.
|
|
(b)
|
Deferral
of Holding Units
. Any Holding Units with respect to
which a Participant has elected to notionally invest his or her Account
shall be posted to the Participant’s Account. Whenever
quarterly or special distribution are paid with respect to Holding Units,
an amount equal to the amount of such distribution per Holding Unit shall
be deemed credited to the Participant’s Account with respect to each
Holding Unit credited to the Participant’s Account and converted into
additional Holding Units at such intervals as may be established by the
Committee in such manner as determined by the Committee, but in any event
no less frequently than annually, based on the fair market value of a
Holding Unit on the date of such conversion, as determined by the
Committee, in its sole discretion. In no event shall any
distributions be paid, or any Holding Units converted pursuant to this
subsection be distributed, to the Participant before the date that the
Participant’s Incentive Benefits are paid pursuant to Section 6
hereof.
|
Section
6.
|
DISTRIBUTION OF
INCENTIVE BENEFIT
.
|
6.1
Incentive
Benefits
. Subject to Sections 6.2, 6.3 and 6.4 below and the
remainder of this Section 6.1, a Participant’s vested Incentive Benefits shall
be paid to the Participant in installments as vesting occurs. Each
installment shall consist of the vested portion of the Participant’s Incentive
Benefits not previously paid and be paid on or within seventy (70) days
following each date on which the Participant becomes vested in a portion of his
Incentive Benefits in accordance with the Plan and the Participant’s Award
Agreement; provided that in no event shall the first payment of the
Participant’s Incentive Benefit be made before the third anniversary of the
Effective Date. Notwithstanding anything herein to the contrary,
including Section 6.3 hereof, the Committee in its sole discretion may elect to
modify the payment provisions described herein, subject to the requirements of
Section 409A and the applicable transition rules.
6.2
Initial
Election of Elective Distribution Date
. If permitted by the
Committee, in its sole discretion, and subject to Section 409A, a Participant
may elect an Elective Distribution Date upon which to commence receiving his
Incentive Benefits and an Elective Distribution Form in which to receive his
Incentive Benefits; provided, however, that any such election to defer payment
of all or a portion of a Participant’s Incentive Award shall be made by the
Participant in accordance with Section 409A and rules of the Committee as in
effect from time to time. If a Participant makes an election pursuant
to this Section 6.2, the payment of the Incentive Benefits to the Participant
shall commence within seventy (70) days following the Participant’s Elective
Distribution Date, if elected and in the Elective Distribution Form, if
elected.
6.3
Changes
to Elective Distribution Date and/or Elective Distribution Form.
Subject to any limitations
imposed by Section 409A, if permitted by the Committee, in its sole discretion,
a Participant may change his election regarding the Elective Distribution Date
on which his Incentive Benefit will commence to be paid and/or his Elective
Distribution Form in accordance with the following requirements to the extent
imposed by Section 409A:
|
(a)
|
Subject
to subsections (b) and (c) of this Section, such election may not take
effect until the twelve (12) month anniversary of the date the election is
made and filed with the Committee (or a designee of the
Committee);
|
|
(b)
|
In
connection with an election made by a Participant pursuant to this Section
6.3, the Participant must elect a new Elective Distribution Date that is
no earlier than the five year anniversary of the Participant’s previous
Elective Distribution Date (regardless of whether the Participant’s new
election was solely to change his Elective Distribution Form);
and
|
|
(c)
|
Any
election related to a payment of Incentive Benefits at an Elective
Distribution Date described in Section 2.12(b) shall not be effective
unless made at least twelve (12) months prior to the Elective Distribution
Date that such election is changing (regardless if the new election merely
changes the Elective Distribution
Form).
|
6.4
Death
. Notwithstanding
any provision of the Plan to the contrary, if a Participant dies prior to
receiving all of his Incentive Benefits, all unvested benefits will vest and the
unpaid portion of such vested Incentive Benefits shall be paid to the
Participant’s Beneficiary in the form of a lump sum distribution in the calendar
year during which the 180
th
day
anniversary of the death occurs.
6.5
Disability
. Notwithstanding
any provision of the Plan to the contrary, if a Participant incurs a Disability
prior to receiving all of his Incentive Benefits, all unvested benefits will
immediately become vested. The unpaid portion of such vested
Incentive Benefits shall be paid to the Participant in the form of a lump sum
distribution on or within ninety (90) days following the Participant’s
Disability; provided, however, that in the event that a Participant incurs a
Disability on or after January 1, 2009, payment will be made in accordance with
such Participant’s Elective Distribution Date, if elected, in the form of a lump
sum distribution. Such an election may be made with regard to awards
granted on or after January 1, 2009, and pursuant to transition guidance issued
by the Internal Revenue Service in connection with Section 409A, including
Internal Revenue Service Notice 2007-86, with regard to awards granted prior to
such date.
6.6
Severe
Financial Hardship Withdrawals
.
|
(a)
|
Upon
the request of a Participant, the Committee, in its sole discretion, may
approve, due to the Participant’s “Unforeseeable Emergency,” an immediate
lump sum distribution to the Participant of all or a portion of a
Participant’s unpaid vested Incentive Benefits. For the
purposes of this Section 6.6, an “Unforeseeable Emergency” means a severe
financial hardship to a Participant or former Participant within the
meaning of Section 409A resulting from (i) an illness or accident of the
Participant, former Participant or spouse, or a dependent (as defined in
Code Section 152 (without regard to Sections 152(b)(1), (b)(2), and
(d)(1)(B)) of the Participant or former Participant, (ii) loss of property
of the Participant or former Participant due to casualty or (iii) other
similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant or former Participant, all
as determined in the sole discretion of the
Committee.
|
|
(b)
|
The
amount to be paid pursuant to Section 6.6(a) of the Plan shall not exceed
the amount necessary to satisfy the applicable Unforeseeable Emergency
plus amounts necessary to pay taxes reasonably anticipated as a result of
the payment, after taking into account the extent to which such hardship
is or may be relieved through reimbursement or compensation by insurance
or otherwise or by liquidation of the Participant’s assets (to the extent
such assets would not itself cause severe
hardship).
|
6.7
Form of
Payment
. Any payment of Incentive Benefits to the Participant
(or in the event of his or her death, to the Participant’s Beneficiary) shall
consist of (i) cash equal to the fair market value of the interest of the
Participant’s Account in the Available Funds and (ii) Holding Units equal to the
number of Holding Units notionally credited to the Participant’s
Account. The number of fractional Holding Units shall be aggregated
to create a whole number of Holding Units, which shall be distributed in the
form of Holding Units. Notwithstanding the foregoing, cash shall be
distributed in lieu of the excess number of fractional Holding
Units.
Section
7.
|
CLAIMS
PROCEDURES
.
|
7.1
Initial
Claim
.
|
(a)
|
Any
claim by any employee, Participant or Beneficiary (“Claimant”) with
respect to eligibility, participation, vesting, contributions, benefits or
other aspects of the operation of the Plan shall be made in writing to the
Committee. The Committee shall provide the Claimant with the
necessary forms and make all determinations as to the right of any person
to a disputed benefit. If a Claimant is denied benefits under
the Plan, the Committee or its designee shall give written or electronic
notice to the Claimant of the denial of the claim within ninety (90) days
after the Committee or its designee receives the claim, provided that in
the event of special circumstances such period may be
extended.
|
|
(b)
|
In
the event of special circumstances, the ninety (90) day period may be
extended for a period of up to ninety (90) days (for a total of one
hundred eighty (180) days). If the initial ninety (90) day
period is extended, the Committee or its designee shall give written
notice to the Claimant within ninety (90) days of receipt of the
claim. The notice of extension shall indicate the special
circumstances requiring the extension of time and provide the date by
which the Committee expects to make a determination with respect to the
claim. If the extension is required due to the Claimant’s
failure to submit information necessary to decide the claim, the period
for making the determination shall be tolled from the date on which the
extension notice is sent to the Claimant until the earlier of (i) the
date on which the Claimant responds to the Committee’s request for
information, or (ii) expiration of the forty-five (45) day period
commencing on the date that the Claimant is notified that the requested
additional information must be
provided.
|
|
(c)
|
If
notice of the denial of a claim is not furnished within the required time
period described herein, the claim shall be deemed denied as of the last
day of such period.
|
|
(d)
|
If
a claim is wholly or partially denied, the notice to the Claimant shall
set forth:
|
|
(i)
|
The
specific reason or reasons for the
denial;
|
|
(ii)
|
Specific
reference to the pertinent Plan provisions upon which the denial is
based;
|
|
(iii)
|
A
description of any additional material or information necessary for the
Claimant to complete the claim request and an explanation of why such
material or information is
necessary;
|
|
(iv)
|
A
description of the Plan’s review procedures and steps to be taken, as well
as the applicable time limits if the Claimant wishes to submit the adverse
determination for review; and
|
|
(v)
|
A
statement of the Claimant’s right to bring a civil action under Section
502(a) of ERISA following an adverse benefit determination on
review.
|
7.2
Claim
Denial Review
.
|
(a)
|
If
a claim has been wholly or partially denied, the Claimant may submit the
claim for review by the Committee. Any request for review of a
claim must be made in writing to the Committee no later than sixty (60)
days after the Claimant receives notification of denial or, if no
notification was provided, the date the claim is deemed
denied. The Claimant or his duly authorized representative
may:
|
|
(i)
|
Upon
written request and free of charge, be provided with reasonable access to,
and copies of, relevant documents, records, and other information relevant
to the Claimant’s claim; and
|
|
(ii)
|
Submit
written comments, documents, records, and other information relating to
the claim. The review of the claim determination shall take
into account all comments, documents, records, and other information
submitted by the Claimant relating to the claim, without regard to whether
such information was submitted or considered in the initial claim
determination.
|
|
(b)
|
The
decision of the Committee upon review shall be made within sixty
(60) days after receipt of the Claimant’s request for review, unless
special circumstances (including, without limitation, the need to hold a
hearing) require an extension. In the event of special
circumstances, the sixty (60) day period may be extended by the Committee
in its sole discretion for a period of up to one hundred twenty (120)
days.
|
|
(c)
|
If
notice of the decision upon review is not furnished within the required
time period described herein, the claim on review shall be deemed denied
as of the last day of such period.
|
|
(d)
|
The
Committee, in its sole discretion, may hold a hearing regarding the claim
and request that the Claimant attend. If a hearing is held, the
Claimant shall be entitled to be represented by
counsel.
|
|
(e)
|
The
Committee’s decision upon review on the Claimant’s claim shall be
communicated in writing or electronically to the Claimant. If
the claim upon review is denied, the notice to the Claimant shall set
forth:
|
|
(i)
|
The
specific reason or reasons for the decision, with references to the
specific Plan provisions on which the determination is
based;
|
|
(ii)
|
A
statement that the Claimant is entitled to receive, upon request and free
of charge, reasonable access to, and copies of, all documents, records and
other information relevant to the claim;
and
|
|
(iii)
|
A
statement of the Claimant’s right to bring a civil action under
Section 502(a) of ERISA.
|
7.3
Discretion
. All
interpretations, determinations and decisions of the Committee with respect to
any claim, including without limitation the appeal of any claim, shall be made
by the Committee, in its sole discretion, based on the Plan and comments,
documents, records, and other information presented to it, and shall be final,
conclusive and binding.
7.4
Regulation
§ 2560.503-1
. The claims procedures set forth in this
Section 7 are intended to comply with United States Department of Labor
Regulation § 2560.503-1 and should be construed in accordance with such
regulation. In no event shall it be interpreted as expanding the
rights of Claimants beyond what is required by United States Department of Labor
Regulation § 2560.503-1.
Section
8.
|
NO FUNDING
OBLIGATION
.
|
The Plan
shall not be construed to require the Company to fund any of the benefits
payable under the Plan or to set aside or earmark any monies or other assets
specifically for payments under the Plan. The Plan is “unfunded” and
Incentive Benefits shall be paid by the Company out of its general
assets. Participants and their Beneficiaries shall not have any
interest in any specific asset of the Company as a result of this
Plan. Nothing contained in this Plan and no action taken pursuant to
the provisions of this Plan shall create or be construed to create a trust of
any kind, or a fiduciary relationship amongst the Company, the Committee, and
the Participants, their Beneficiaries or any other person. Any funds
which may be invested under the provisions of this Plan shall continue for all
purposes to be part of the general funds of the Company and no person other than
the Company shall by virtue of the provisions of this Plan have any interest in
such funds. To the extent that any person acquires a right to receive
payments from the Company under this Plan, such right shall be no greater than
the right of any unsecured general creditor of the Company. The
Company may, in its sole discretion, establish a “rabbi trust” to pay Incentive
Benefits hereunder. If the Company decides to establish any accrued
reserve on its books against the future expense of benefits payable hereunder,
or if the Company establishes a rabbi trust under this Plan, such reserve or
trust shall not under any circumstances be deemed to be an asset of the Plan,
the Participants or their Beneficiaries.
Section
9.
|
NON-TRANSFERABILITY OF
RIGHTS UNDER THE PLAN
.
|
The
benefits payable or other rights under the Plan shall not be subject to
alienation, transfer, assignment, garnishment, execution, or levy of any kind,
and any attempt to be so subjected shall not be recognized.
Section
10.
|
MINORS AND
INCOMPETENTS
.
|
In the
event that the Committee finds that a Participant is unable to care for his
affairs because of illness or accident, including as a result of a Disability,
then Incentive Benefits, unless claim has been made therefor by a duly appointed
guardian, committee, or other legal representative, may be paid in such manner
as the Committee in its sole and absolute discretion shall determine, and the
application thereof shall be a complete discharge of all liability for any
payments or benefits to which such Participant was or would have been otherwise
entitled under the Plan.
Any
payments to a minor from this Plan may be paid by the Committee in its sole and
absolute discretion (a) directly to such minor; (b) to the legal or
natural guardian of such minor; or (c) to any other person, whether or not
appointed guardian of the minor, who shall have the care and custody of such
minor. The receipt by such individual shall be a complete discharge
of all liability under the Plan therefor.
Section
11.
|
WITHHOLDING
TAXES
.
|
The
Company shall have the right to make such provisions as it deems necessary or
appropriate to satisfy any obligations it may have to withhold federal
(including without limitation, employment taxes imposed by the Federal Insurance
Contributions Act), state or local income or other taxes incurred by reason
of payments pursuant to the Plan. In lieu thereof, the Company shall
have the right to withhold the amount of such taxes from any other sums due or
to become due from the Company to the Participant upon such terms and conditions
as the Company may prescribe.
Subject
to Section 9 of the Plan, the Plan shall be binding upon and inure to the
benefit of the Company, its successors and assigns and the Participants and
their heirs, executors, administrators and legal representatives. In
the event that the Company sells all or substantially all of the assets of its
business and the acquiror of such assets assumes the obligations hereunder, the
Company shall be released from any liability imposed herein and shall have no
obligation to provide any benefits payable hereunder.
Section
13.
|
LIMITATION OF
RIGHTS
.
|
Nothing
contained herein shall be construed as conferring upon any individual the right
to continue in the employ of the Company or its Affiliates as an executive or in
any other capacity or to interfere with the right of the Company or its
Affiliate to discharge him at any time for any reason whatsoever.
Section
14.
|
ADMINISTRATION
.
|
On behalf
of the Company, the Plan shall be administered by the Board or, to the extent
specifically delegated by the Board and permitted under the terms of the Plan,
the Plan shall be administered by the Committee. The
Committee may, to the extent specifically permitted under the terms of the Plan,
delegate its authority to administer the Plan to a designee of the Committee;
provided
that
, if any
authority to administer the Plan is delegated by the Board, such administration
shall be subject to the oversight of the Board, and if any authority to
administer the Plan is delegated by the Committee, such administration shall be
subject to the oversight of the Committee. The Committee (or its
designee) shall have the exclusive right, power, and authority, in its sole and
absolute discretion, to administer, apply and interpret the Plan and any other
Plan documents and to decide all matters arising in connection with the
operation or administration of the Plan. Without limiting the
generality of the foregoing, the Committee shall have the sole and absolute
discretionary authority: (a) to take all actions and make all
decisions with respect to the eligibility for, and the amount of, benefits
payable under the Plan; (b) to formulate, interpret and apply rules,
regulations and policies necessary to administer the Plan in accordance with its
terms; (c) to decide questions, including legal or factual questions,
relating to the calculation and payment of benefits under the Plan; (d) to
resolve and/or clarify any ambiguities, inconsistencies and omissions arising
under the Plan or other Plan documents; and (e) to process and approve or
deny benefit claims and rule on any benefit exclusions. In the event
of a scrivener’s error that renders a Plan term inconsistent with the Company’s
intent, the Company’s intent controls, and any inconsistent Plan term is made
expressly subject to this requirement. All determinations made by the
Committee (or any designee) with respect to any matter arising under the Plan
and any other Plan documents including, without limitation, any question
concerning eligibility and the interpretation and administration of the Plan
shall be final, binding and conclusive on all parties. To the extent
that a form prescribed by the Committee to be used in the operation and
administration of the Plan does not conflict with the terms and provisions of
the Plan document, such form shall be evidence of (i) the Committee’s
interpretation, construction and administration of this Plan and
(ii) decisions or rules made by the Committee pursuant to the authority
granted to the Committee under the Plan.
Decisions
of the Committee shall be made by a majority of its members attending a meeting
at which a quorum is present (which meeting may be held telephonically), or by
unanimous written action in accordance with applicable law.
No member
of the Committee and no officer, director or employee of the Company or any
other Affiliate shall be liable for any action or inaction with respect to his
functions under the Plan unless such action or inaction is adjudged to be due to
fraud. Further, no such person shall be personally liable merely by
virtue of any instrument executed by him or on his behalf in connection with the
Plan.
The
Company shall indemnify, to the fullest extent permitted by law and its
governing documents (but only to the extent not covered by insurance maintained
by the Company directly covering the individuals) its officers and directors
(and any employee involved in carrying out the functions of the Company under
the Plan) and each member of the Committee against any expenses, including
amounts paid in settlement of a liability, which are reasonably incurred in
connection with any legal action to which such person is a party by reason of
his duties or responsibilities with respect to the Plan (other than as a
Participant), except with regard to matters as to which he or she shall be
adjudged in such action to be liable for fraud in the performance of his
duties.
Section
15.
|
AMENDMENT OR
TERMINATION OF PLAN
.
|
On behalf
of the Company, the Board may, in its sole and absolute discretion, amend the
Plan from time to time and at any time in such manner as it deems appropriate or
desirable, and the Board may, in its sole and absolute discretion, terminate the
Plan for any reason from time to time and at any time in such manner as it deems
appropriate or desirable. In the event the Board terminates or
freezes the Plan, there shall be no further accrual of Incentive Benefits
hereunder (other than the crediting of Earnings).
Section
16.
|
SEVERABILITY OF
PROVISIONS
.
|
In case
any provision of this Plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions hereof, and
the Plan shall be construed and enforced as if such provisions had not been
included.
Section
17.
|
ENTIRE
AGREEMENT
.
|
This
Plan, along with the Participant’s elections hereunder, constitutes the entire
agreement between the Company and the Participant pertaining to the subject
matter herein and supersedes any other plan or agreement, whether written or
oral, pertaining to the subject matter herein. No agreements or
representations, other than as set forth herein, have been made by the Company
with respect to the subject matter herein.
Section
18.
|
HEADINGS AND
CAPTIONS
.
|
The
headings and captions herein are provided for reference and convenience
only. They shall not be considered part of the Plan and shall not be
employed in the construction of the Plan.
Section
19.
|
NON-EMPLOYMENT
.
|
The Plan
is not an agreement of employment and it shall not grant an employee any rights
of employment.
Section
20.
|
PAYMENT NOT
SALARY
.
|
Except to
the extent a plan otherwise provides, any amounts payable under this Plan shall
not be deemed salary or other compensation to the Participant or Beneficiary for
the purposes of computing benefits to which he or she may be entitled under any
pension plan or other arrangement of the Company.
Section
21.
|
GENDER AND
NUMBER
.
|
Wherever
used in this Plan, the masculine shall be deemed to include the feminine and the
singular shall be deemed to include the plural, unless the context clearly
indicates otherwise.
Section
22.
|
CONTROLLING
LAW
.
|
The Plan
is established in order to provide deferred compensation to a select group of
management and highly compensated employees within the meanings of Sections
201(2) and 301(a)(3) of ERISA. The Plan is intended to comply with
the requirements imposed under Section 409A and the provisions of the Plan shall
be construed in a manner consistent with the requirements of such section of the
Code. To the extent legally required, the Code and ERISA shall govern
the Plan and, if any provision hereof is in violation of any applicable
requirement thereof, the Company reserves the right to retroactively amend the
Plan to comply therewith. To the extent not governed by the Code and
ERISA, the Plan shall be governed by the laws of the State of New York without
giving effect to conflict of law provisions.
Section
23.
|
SECTION
409A
.
|
23.1
Six Month
Delay for Key Employee
.
Notwithstanding
anything in the Plan to the contrary, if a Participant is deemed on the
Separation from Service to be a “Key Employee,” (i) with regard to any payment
or the provision of any benefit that is considered deferred compensation under
Section 409A payable on account of a Separation from Service, such payment or
benefit shall be delayed for a period of six (6) months following such
Separation from Service (or until death if earlier), and shall be paid on the
expiration of such six (6) month period or earlier death, and (ii) any payments
and benefits not required to be so delayed shall be paid or provided in
accordance with the Plan.
23.2
Discretion
of Company to Pay Within Number of Days.
Whenever a payment under the
Plan specifies a payment period with reference to a number of days (e.g.,
“payment shall be made within 30 days following the date of termination”), the
actual date of payment within the specified period shall be within the sole
discretion of the Company.
23.3
Installments
Treated as Separate Payments
. If under the Plan, an amount is
to be paid in two or more installments, for purposes of Section 409A each
installment shall be treated as a separate payment.
Exhibit
10.05
ALLIANCEBERNSTEIN
COMMISSION SUBSTITUTION PLAN
As
Amended And Restated Effective As Of December 5, 2008
AllianceBernstein
Holding L.P. maintains this AllianceBernstein Commission Substitution Plan (the
“
Plan
”) to create a
compensation program to attract and retain eligible employees expected to make a
significant contribution to the future growth and success of
AllianceBernstein. The Plan was originally effective as of January 1,
2003.
The right
to defer Awards hereunder shall be considered a separate plan within the
Plan. Such separate plan shall be referred to as the “
ACSP Deferral
Plan
.” The ACSP Deferral Plan is maintained primarily for the
purpose of providing deferred compensation to a select group of management or
highly compensated employees (a “
Top Hat
Employee
”). No one who is not a Top Hat Employee may defer
compensation under the ACSP Deferral Plan.
The Plan
was amended and restated effective as of January 1, 2005 to clarify and reflect
administrative practices and to comply in good faith with Section 409A of the
Internal Revenue Code (the “
Code
”) and the guidance issued
thereunder (“
Section
409A
”). The Plan is hereby amended and restated effective
December 5, 2008 to incorporate prior amendments and additional changes to
clarify and reflect administrative practices and to comply with the final
regulations issued under Section 409A. Any deferral or payment
hereunder is subject to the terms of the Plan and compliance with Section 409A,
as interpreted by the Committee in its sole discretion. Although none
of AllianceBernstein, Holding, the Committee, their affiliates, and their agents
make any guarantee with respect to the treatment of payments under this Plan and
shall not be responsible in any event with regard to the Plan’s compliance with
Section 409A, the payments contained herein are intended to be exempt from
Section 409A or otherwise comply with the requirements of Section 409A, and the
Plan shall be limited, construed and interpreted in accordance with the
foregoing. None of AllianceBernstein, Holding, the Committee, their
affiliates, and their agents shall have any liability to any Participant or
Beneficiary as a result of any tax, interest, penalty or other payment required
to be paid or due pursuant to, or because of a violation of, Section
409A. This restatement incorporates and supersedes all of the
amendments to the Plan through November 28, 2007.
ARTICLE
1
Definitions
Section
1.01.
Definitions
. Whenever
used in the Plan, each of the following terms shall have the meaning for that
term set forth below:
(a)
“
Account
” means a separate
bookkeeping account established for each Participant for each Award, with such
Award, as described in Article 2, credited to the Account maintained for such
Award together with Earnings credited thereon.
(b)
“
Affiliate
” means (i) any
entity that, directly or indirectly, is controlled by AllianceBernstein and (ii)
any entity in which AllianceBernstein has a significant equity interest, in
either case as determined by the Committee.
(c)
“
AllianceBernstein
” means
AllianceBernstein Holding L.P., including any successor to all or substantially
all of its business and assets.
(d)
“
Approved Fund
” means any
money-market, debt or equity fund designated by the Committee from time to time
as an Approved Fund.
(e)
“
Award
” means any award which
the Committee shall grant under Section 2.01 of this Plan.
(f)
“
Beneficiary
” means one or more
Persons, trusts, estates or other entities, designated in accordance with
Section 6.03(a), that are entitled to receive, in the event of a Participant’s
death, any amount or property to which the Participant would otherwise have been
entitled under the Plan.
(g)
“
Beneficiary Designation Form
”
means the form established from time to time by the Committee that a Participant
completes, signs and returns to the Committee to designate one or more
Beneficiaries.
(h)
“
Board
” means the Board of
Directors of the general partner of Holding and AllianceBernstein or a duly
authorized committee of thereof.
(i)
“
Cause
” means: (i) an act or
acts constituting a felony under the laws of the United States or any state
thereof; (ii) willful dishonesty in the performance of a Participant’s duties;
(iii) acts or omissions by a Participant in the performance of his or her duties
which are substantially injurious to the financial condition or business
reputation of any of the Companies; (iv) a Participant’s continued failure
substantially to perform his or her duties; or (v) willful insubordination or
failure to follow a lawful directive.
(j)
“
Code
” means the Internal
Revenue Code of 1986, as amended from time to time.
(k)
“
Committee
” means the
administrative committee designated by AllianceBernstein’s management from time
to time to administer the plan.
(l)
“
Company
” means
AllianceBernstein and any corporation or other entity of which AllianceBernstein
or AllianceBernstein Holding L.P. (“
Holding
”) (i) has sufficient
voting power (not depending on the happening of a contingency) to elect at least
a majority of its board of directors or other governing body, as the case may
be, or (ii) otherwise has the power to direct or cause the direction of its
management and policies.
(m)
“
Deferral Election Form
” means
the form(s) established from time to time by the Committee that a Participant
completes, signs and returns to the Committee to elect to defer the distribution
of an Award, including Earnings thereon, pursuant to Article 5.
(n)
“
Disability
” means unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, as determined by the carrier of the long-term disability insurance
program maintained by the Company or its Affiliate that covers the Participant,
or such other person or entity designated by the Committee in its sole
discretion.
(o)
“
Earnings
” on any Account
during any period means the amounts of gain or loss that would have been
incurred with respect to such period if an amount equal to the balance of such
Account at the beginning of such period had been actually invested in accordance
with a Participant’s investment direction.
(p)
“Eligible Employee”
means, for
any calendar year commencing on and after January 1, 2005, an active employee of
a Company whom the Committee determines to be eligible for an
Award. Notwithstanding the foregoing, no Eligible Employee whose
Total Compensation for a calendar year is less than such amount, if any, as
established by the Committee in writing shall be eligible to participate in the
ACSP Plan for that calendar year and any advance deferral election made by such
Eligible Employee is made on the condition that such Eligible Employee satisfies
the Total Compensation requirement and, if not, such deferral election shall be
null and void
ab
initio
.
(q)
“
ERISA
” means the Employee
Retirement Income Security Act of 1974, as amended from time to
time.
(r)
“
Fair Market Value
” means, with
respect to a Holding Unit as of any given date and except as otherwise expressly
provided by the Board or the Committee, the closing price of a Holding Unit on
such date as published in the Wall Street Journal or, if no sale of Holding
Units occurs on the New York Stock Exchange on such date, the closing price of a
Holding Unit on such Exchange on the last preceding day on which such sale
occurred as published in the Wall Street Journal.
(s)
“
Holding Units
” means units
representing assignments of beneficial ownership of limited partnership
interests in Holding.
(t)
“
Investment Election Form
”
means the form established from time to time by the Committee that a Participant
completes, signs and returns to the Committee to designate the percentage of
such Award to be treated as notionally invested in Restricted Units or Approved
Funds, pursuant to Section 2.02.
(u)
“
Participant
” means any
Eligible Employee of any Company whose principal duties are to sell or market
the products or services of a Company, whose compensation is entirely or mostly
commission-based, and who has been designated by the Committee as a Participant
of the Plan.
(v)
“
Person
” means any individual,
corporation, partnership, association, joint-stock company, trust,
unincorporated organization, government or political subdivision thereof or
other entity.
(w)
“
Plan
” means the
AllianceBernstein Commission Substitution Plan, as set forth herein and as
amended from time to time.
(x)
“
Restricted Unit
” means a right
to receive a Holding Unit in the future, as accounted for in an Account, subject
to vesting and any other terms and conditions established hereunder or by the
Committee.
(y)
“
Retirement
” with respect to a
Participant means that the employment of the Participant with the Company has
terminated on or after the Participant’s attaining age 65.
(z)
“
Termination of Employment
”
means that the Participant involved is no longer performing services as an
employee of any Company other than pursuant to a severance or special
termination arrangement, and has had a “separation from service” within the
meaning of Section 409A.
(aa)
“
Total Compensation
” for a
calendar year means base salary paid during such calendar year, bonus paid for
such calendar year even if paid after the end of such calendar year or deferred,
commissions paid during such calendar year and the Award for such calendar
year.
(bb)
“
Unforeseeable Emergency
” means
a severe financial hardship to a Participant or former Participant within the
meaning of Section 409A resulting from (i) an illness or accident of the
Participant or former Participant, the spouse of the Participant or former
Participant, or a dependent (as defined in Code Section 152(a), without regard
to Code Sections 152(b)(1),(b)(2) and (d)(1)(B)) of the Participant or former
Participant, (ii) loss of property of the Participant or former Participant due
to casualty or (iii) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant or former
Participant, all as determined in the sole discretion of the
Committee.
(cc)
“Vesting Schedule”
means the
“Default Vesting Schedule” or the “Alternative Vesting Schedule,” as applicable,
as provided for in Section 3.01.
ARTICLE
2
Participation
Section
2.01.
Grant
. The
Committee shall have the authority to provide from time to time for the grant of
Awards to Participants. The amount of any such Award and the identity
of any such Participant shall be designated by the Committee in its sole and
absolute discretion. The total nominal amount of each Award will be
credited to an Account established for such Award for the relevant Participant,
as of the end of the calendar year for which the decision to grant such Award is
made (the “
Effective
Date
” for such Award). An Award, including Earnings thereon,
vests in accordance with the terms of Article 3, and any such vested Award will
be subject to the rules on distributions and deferral elections under Articles 4
and 5, respectively.
Section
2.02.
Investment
Elections.
Each Participant shall submit, in accordance with
deadlines and procedures established from time to time by the Committee, an
Investment Election Form with respect to each Award. Such Investment
Election Form shall designate that percentage of such Participant’s Award which
shall be treated for purposes of the Plan as notionally invested in (i)
Restricted Units and (ii) each of the Approved Funds. The Committee
in its sole discretion may, but shall not be obligated to, permit each
Participant to reallocate notional investments in each Account among Restricted
Units and the various Approved Funds or just among the Approved Funds, subject
to, without limitation, restrictions as to the frequency with which such
reallocations may be made. The Committee may determine for each
calendar year a minimum percentage and a maximum percentage of each Award that
may be treated as notionally invested in Restricted Units and each Approved
Fund. As soon as reasonably practicable after the end of each
calendar year, a statement shall be provided to each such Participant indicating
the current balance in each Account maintained for the Participant as of the end
of the calendar year, and the amounts in such Account notionally allocated to
Restricted Units and each of the Approved Funds.
Section
2.03.
Earnings on an
Account
.
(a)
Each
Award for which an Investment Election Form has been validly submitted shall be
credited to a separate Account in the proportions set forth in such Investment
Election Form or as directed by the Committee. The amount of such
Account shall be treated as notionally invested in Restricted Units or Approved
Funds, as applicable, as of a date determined by the Committee (the “
Earnings Date
”), which shall
be no later than forty-five days after the Effective
Date. Notwithstanding Sections 2.04 and 2.05, Earnings will be
credited or debited, as applicable, beginning from the Earnings Date but will
not be credited or debited for any period prior to the Earnings
Date.
(b)
Not
less frequently than as of the end of each calendar year following the year
during which an Account is established in connection with an Award, each Account
maintained under the Plan will be credited or debited, as applicable, with the
amount, if any, necessary to reflect Earnings as of that date.
Section
2.04.
Awards Invested in Approved
Funds
.
(a)
To
the extent the Committee or an Investment Election Form validly directs the
notional investment of all or a part of any Award in Approved Funds, that
portion of such Award so designated shall, as of a date determined by the
Committee, be treated as notionally invested in such Approved
Funds. If a cash dividend or other cash distribution is made with
respect to Approved Funds, as of a date determined and as calculated by the
Committee in its sole discretion, a Participant whose Account is notionally
invested in Approved Funds (whether vested or unvested) will have such notional
investment increased by an amount equal to the cash dividend or other cash
distribution that would have been due on the Account had there actually been an
investment in Approved Funds. Such increase shall be proportionately
allocated by the Committee in its sole discretion between Approved Funds, as
applicable, and such increase shall be vested at all times.
(b)
To
the extent any Approved Fund is terminated, liquidated, merged with another fund
or experiences a major change in investment strategy or other extraordinary
event, the Committee may, if so authorized by the Board, in such manner as it
may in its sole discretion deem equitable, reallocate or otherwise adjust the
amount of any Account under this Article 2 to reflect the occurrence of such
event.
Section
2.05.
Awards
Invested in Restricted Units.
(a)
To
the extent the Committee or an Investment Election Form validly directs the
notional investment of all or part of any Award in Restricted Units, that
portion of such Award so designated shall, as of a date and based on a Fair
Market Value of a Holding Unit as determined by the Committee and pursuant to
procedures established by the Committee from time to time, be converted into a
whole number of Restricted Units. From and after the date of such
conversion, that portion of an Award which has been validly made to notionally
invest in Restricted Units shall be denominated, and shall thereafter be treated
for all purposes as, a grant of that number of Restricted Units determined
pursuant to the preceding sentence.
(b)
If
a cash dividend or other cash distribution is made with respect to Holding
Units, within 90 days thereafter, a distribution will be made to a Participant
whose Account is credited with Restricted Units (whether vested or unvested) in
an amount (the “
Equivalent
Distribution Amount
”) equal to the number of such Restricted Units
credited to the Participant’s Account, times the value of the cash dividend or
other cash distribution per Holding Unit;
provided, however
, if a
Participant defers distribution of his Award under Article 5, the Equivalent
Distribution Amount will be converted at such time or times and in accordance
with such procedures as shall be established by the Committee, into vested
Restricted Units based on the Fair Market Value of a Holding Unit as determined
by the Committee, and such converted benefit shall be distributed in accordance
with Section 4.03.
(c)
Fractional
unit amounts remaining after conversion under this Section 2.05 may be used for
any purposes for the benefit of the Participant as determined by the Committee
in its sole discretion, including but not limited to the payment of taxes with
respect to an Award or deposit in the Approved Funds.
(d)
In
the event that the Committee determines that any distribution (whether in the
form of cash, limited partnership interests, other securities, or other
property), recapitalization (including, without limitation, any subdivision or
combination of limited partnership interests), reorganization, consolidation,
combination, repurchase, or exchange of limited partnership interests or other
securities of Holding, issuance of warrants or other rights to purchase limited
partnership interests or other securities of Holding, any incorporation of
Holding, or other similar transaction or events affects Holding Units such that
an adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Committee may, if so authorized by
the Board, in such manner as it may deem equitable, adjust the number of
Restricted Units or securities of Holding (or number and kind of other
securities) subject to outstanding Awards, or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award.
ARTICLE
3
Vesting
and Forfeitures
Section
3.01.
General
. Subject
to Section 3.02, with respect to any Award credited to an Account maintained for
a Participant in connection with such Award, the Participant will vest, on each
of the first three anniversaries of the date on which the Award is credited to
the Account, in an amount equal to one-third of the relevant Award, plus an
aliquot portion of the Earnings thereon (the “
Default Vesting
Schedule
”). Notwithstanding the foregoing, at the time of any
Award, the Committee may provide for an alternative vesting schedule rather than
the Default Vesting Schedule (the “
Alternative Vesting
Schedule
”). If a Participant has a Termination of Employment
as a result of a termination for Cause or the Participant’s resignation for any
reason, the Participant shall forfeit the balance of any Account maintained for
him or her which has not been vested in accordance with the Default Vesting
Schedule or the Alternative Vesting Schedule, as the case may be (the “
Vesting Schedule
”) on the
effective date of the Participant’s Termination of Employment;
provided, however
, that, the
Committee may determine, in its sole discretion, and only if a Participant
executes a release of liability in favor of the Company in a form approved by
the Committee and satisfies such other conditions as established by the
Committee, that the Participant who has a termination for Cause or has resigned
for any reason will continue to vest in the balance of such Account following
such Termination of Employment at the same time(s) that such balance would have
otherwise vested under the Vesting Schedule. For purposes of this
Plan, the “
vesting
” of a
Restricted Unit shall mean the lapsing of the restrictions thereon with respect
to such Restricted Unit.
Section
3.02.
Death, Disability, Retirement or
Termination Without Cause
. Notwithstanding Section 3.01, a
Participant’s Account will become 100% vested upon the Participant’s Termination
of Employment due to death, upon the Participant’s Disability, Retirement or a
termination without Cause.
ARTICLE
4
Distributions
Section
4.01.
General
. Subject
to Section 2.05(b), no Award will be distributed unless such distribution is
permitted under this Article 4. The payment of the vested portion of
an Award, including Earnings thereon, shall be treated as drawn proportionately
from the investment alternative(s) in effect as of the relevant payment
date. Any such payment shall be made in Holding Units to the extent
such payment is attributable to an Award notionally invested in Restricted
Units. Any portion of an Award, including Earnings thereon, that is
not vested will not be distributed hereunder.
Section
4.02.
Distributions If Deferral Election
Is Not In Effect
.
(a)
Unless
a Participant elects otherwise on a Deferral Election Form under Sections 5.01
or 5.02 (if such election is permitted by the Committee), a Participant who has
not had a Disability or a Termination of Employment will have the vested portion
of his Award, including Earnings thereon, distributed to him annually in the
form of a lump sum within [70 oe 90] days after such portion vests under the
applicable Vesting Schedule of Section 3.01.
(b)
Unless
a Participant elects otherwise on a Deferral Election Form under Sections 5.01
or 5.02 (if such election is permitted by the Committee), a Participant who has
had a Disability or a Termination of Employment will have the balance of any
vested Award not paid under Section 4.02(a), including Earnings thereon,
distributed to him as follows:
(i) In
the event of a Participant’s Termination of Employment due to the Participant’s
death, such distribution will be made to the Participant’s Beneficiary in a
single lump sum
payment in the calendar year in which the 180
th
day anniversary of the
death occurs.
(ii)
In
the event of a Participant’s Disability, such distribution will be made to the
Participant in a single lump sum payment within 90 days following such
Disability.
(iii)
In
the event of a Participant’s Termination of Employment due to the Participant’s
Retirement or termination without Cause, such distribution will be made to the
Participant in a single lump sum payment within 90 days following the six month
anniversary of any such Termination of Employment.
(iv)
In
the event that the Committee determines in its sole discretion under Section
3.01 that a Participant shall continue to vest following his Termination of
Employment, payments with respect to the Award, including Earnings thereon, will
be made within [70 or 90] days after each portion vests;
provided, however
, that such
payments may not commence prior to the six month anniversary of such Termination
of Employment.
Section
4.03.
Distributions If Deferral Election
Is In Effect.
(a)
Subject
to Section 4.03(b), in the event that a deferral election is in effect with
respect to a Participant pursuant to Sections 5.01 or 5.02 and the Participant
has not incurred a Disability but has a Termination of Employment for any reason
other than death, the vested portion of such Participant’s Award, including
Earnings thereon, will be distributed to him within 90 days following the
benefit commencement date specified on such Deferral Election Form and in the
form of payment elected on such form.
(
b
)
In
the event that a Deferral Election Form is in effect with respect to a
Participant pursuant to Sections 5.01 or 5.02 and such Participant subsequently
incurs Termination of Employment due to death, the elections made by such
Participant on his Deferral Election Form shall be disregarded, and the
Participant’s Award, including Earnings thereon, will be distributed to his
Beneficiary in a single lump sum payment in the calendar year in which the
180
th
day
anniversary of the death occurs.
In the
event that a Participant incurs a Disability on or after January 1, 2009,
payment will be made in accordance with such Participant’s election on his
Deferral Election Form. Such an election may be made with regard to
awards granted on or after January 1, 2009 and, pursuant to transition guidance
issued by the Internal Revenue Service in connection with Section 409A,
including Internal Revenue Service Notice 2007-86, with regard to awards granted
prior to such date. Notwithstanding the foregoing, in the event that
a Participant incurs a Disability prior to January 1, 2009, the Participant’s
Award, including Earnings thereon, will be distributed to him or his
Beneficiary, as applicable, in a single lump sum payment within 90 days
following the Participant’s Disability.
Section
4.04.
Unforeseeable
Emergency
. Notwithstanding the foregoing to the contrary, if a
Participant or former Participant experiences an Unforeseeable Emergency, such
individual may petition the Committee to (i) suspend any deferrals under a
Deferral Election Form submitted by such individual and/or (ii) receive a
partial or full distribution of a vested Award, including Earnings thereon,
deferred by such individual. The Committee shall determine, in its
sole discretion, whether to accept or deny such petition, and the amount to be
distributed, if any, with respect to such Unforeseeable Emergency;
provided, however,
that such
amount may not exceed the amount necessary to satisfy such Unforeseeable
Emergency plus amounts necessary to pay taxes reasonably anticipated as a result
of the distribution, after taking into account the extent to which such hardship
is or may be relieved through reimbursement or compensation by insurance or
otherwise, by liquidation of the individual’s assets (to the extent the
liquidation of such assets would not itself cause severe financial hardship),
and by suspension of the individual’s deferral(s) under the Plan.
Section
4.05.
Documentation.
Each
Participant and Beneficiary shall provide the Committee with any documentation
required by the Committee for purposes of administering this Plan.
ARTICLE
5
Deferrals
of Compensation
Section
5.01.
Initial Deferral
Election
. The Committee may permit deferral elections in its
sole and absolute discretion in accordance with procedures established by the
Committee for this purpose from time to time. If so permitted, a
Participant may elect in writing on a Deferral Election Form to have the portion
of the Award which vests, including Earnings thereon, distributed as of a
distribution commencement date elected by the Participant that occurs following
the date that such Award becomes or is scheduled to become 100% vested under the
applicable Vesting Schedule, or, if earlier and so permitted by the Committee,
six months following such Participant’s Termination of
Employment. Any such distribution shall be made in such form(s) as
permitted by the Committee at the time of deferral (including, if permitted by
the Committee, a single lump sum or substantially equal annual installments over
a period of up to ten years) as elected by the Participant. If the
Participant has failed to properly elect a distribution commencement date, the
Participant will be deemed to have elected to have the Award distributed as the
Award vests, and if the Participant has failed to properly elect a method of
payment, the Participant will be deemed to have elected to have the Award
distributed in the form of a lump sum. If deferrals are permitted by
the Committee, such Deferral Election Form must submitted to the Committee (or
its delegate) no later than the last day of the calendar year prior to the
Effective Date of an Award under Section 2.01, except that a Deferral Election
Form may also be submitted to the Committee (or its delegate) in accordance with
the following:
(a)
In
the case of the first year in which a Participant becomes eligible to
participate in the Plan and with respect to services to be performed subsequent
to such deferral election, a Deferral Election Form may be submitted within 30
days after the date the Participant becomes eligible to participate in the
Plan.
(b)
With
respect to the deferral of an Award subject to Section 409A of the Code that
relates all or in part to services performed in a calendar year, a Deferral
Election Form may be submitted by March 15 of such calendar year.
(c)
A
Deferral Election Form may be submitted at such other time or times as permitted
by the Committee in accordance with Section 409A of the Code.
Section
5.02.
Changes in Time and Form of
Distribution
. The elections set forth in a Participant’s
Deferral Election Form governing the payment of the vested portion of an Award,
including Earnings thereon, pursuant to Section 5.01 shall be irrevocable as to
the Award covered by such election;
provided, however
, if
permitted by the Committee, a Participant shall be permitted to change the time
and form of distribution of such Award by making a subsequent election on a
Deferral Election Form supplied by the Committee for this purpose in accordance
with procedures established by the Committee from time to time, provided that
any such subsequent election does not take effect for at least 12 months, is
made at least 12 months prior to the scheduled distribution commencement date
for such Award and the subsequent election defers commencement of the
distribution for at least five years from the date such payment otherwise would
have been made.
ARTICLE
6
Administration;
Miscellaneous
Section
6.01.
Administration of the
Plan
. The Plan is intended to be an unfunded, non-qualified
incentive plan and the ACSP Deferral Plan is intended to be an unfunded,
non-qualified deferred compensation plan within the meaning of ERISA and shall
be administered by the Committee as such. The right of any
Participant or Beneficiary to receive distributions under the Plan shall be as
an unsecured claim against the general assets of
AllianceBernstein. Notwithstanding the foregoing, AllianceBernstein,
in its sole discretion, may establish a “rabbi trust” or separate custodial
account to pay benefits hereunder. The Committee shall have the full
power and authority to administer and interpret the Plan and to take any and all
actions in connection with the Plan, including, but not limited to, the power
and authority to prescribe all applicable procedures, forms and
agreements. The Committee’s interpretation and construction of the
Plan, including its computation of notional investment returns and Earnings,
shall be conclusive and binding on all Persons having an interest in the
Plan.
Section
6.02.
Amendment, Suspension and
Termination of the Plan
. The Committee reserves the right at
any time, without the consent of any Participant or Beneficiary and for any
reason, to amend, suspend or terminate the Plan in whole or in part in any
manner; provided that no such amendment, suspension or termination shall reduce
the balance in any Account prior to such amendment, suspension or termination or
impose additional conditions on the right to receive such balance, except as
required by law.
Section
6.03.
General
Provisions
.
(a)
To
the extent provided by the Committee, each Participant may file with the
Committee a written designation of one or more Persons, including a trust or the
Participant’s estate, as the Beneficiary entitled to receive, in the event of
the Participant’s death, any amount or property to which the Participant would
otherwise have been entitled under the Plan. A Participant may, from
time to time, revoke or change his or her Beneficiary designation by filing a
new designation with the Committee. If (i) no such Beneficiary
designation is in effect at the time of a Participant’s death, (ii) no
designated Beneficiary survives the Participant, or (iii) a designation on file
is not legally effective for any reason, then the Participant’s estate shall be
the Participant’s Beneficiary.
(b)
Neither
the establishment of the Plan nor the grant of any Award or any action of any
Company, the Board, or the Committee pursuant to the Plan, shall be held or
construed to confer upon any Participant any legal right to be continued in the
employ of any Company. Each Company expressly reserves the right to
discharge any Participant without liability to the Participant or any
Beneficiary, except as to any rights which may expressly be conferred upon the
Participant under the Plan.
(c)
An
Award hereunder shall not be treated as compensation, whether upon such Award’s
grant, vesting, payment or otherwise, for purposes of calculating or accruing a
benefit under any other employee benefit plan except as specifically provided by
such other employee benefit plan.
(d)
Nothing
contained in the Plan, and no action taken pursuant to the Plan, shall create or
be construed to create a fiduciary relationship between any Company and any
other person.
(e)
Neither
the establishment of the Plan nor the granting of an Award hereunder shall be
held or construed to create any rights to any compensation, including salary,
bonus or commissions, nor the right to any other Award or the levels thereof
under the Plan.
(f)
No
Award nor right to receive any payment, including Restricted Units, under the
Plan may be transferred or assigned, pledged or otherwise encumbered by any
Participant or Beneficiary other than by will, by the applicable laws of descent
and distribution or by a court of competent jurisdiction. Any other
attempted assignment or alienation of any payment hereunder shall be void and of
no force or effect.
(g)
If
any provision of the Plan shall be held illegal or invalid, the illegality or
invalidity shall not affect the remaining provisions of the Plan, and the Plan
shall be construed and enforced as if the illegal or invalid provision had not
been included in the Plan.
(h)
Any
notice to be given by the Committee under the Plan to any party shall be in
writing addressed to such party at the last address shown for the recipient on
the records of any Company or subsequently provided in writing to the
Committee. Any notice to be given by a party to the Committee under
the Plan shall be in writing addressed to the Committee at the address of
AllianceBernstein.
(i)
Section
headings herein are for convenience of reference only and shall not affect the
meaning of any provision of the Plan.
(j)
The
provisions of the Plan shall be governed and construed in accordance with the
laws of the State of New York.
(k)
There
shall be withheld from each payment made pursuant to the Plan any tax or other
charge required to be withheld therefrom pursuant to any federal, state or local
law. A Company by whom a Participant is employed shall also be
entitled to withhold from any compensation payable to a Participant any tax
imposed by Section 3101 of the Code, or any successor provision, on any amount
credited to the Participant;
provided, however
, that if
for any reason the Company does not so withhold the entire amount of such tax on
a timely basis, the Participant shall be required to reimburse AllianceBernstein
for the amount of the tax not withheld promptly upon AllianceBernstein’s request
therefore. With respect to Restricted Units: (i) in the event that
the Committee determines that any federal, state or local tax or any other
charge is required by law to be withheld with respect to the Restricted Units or
the vesting of Restricted Units (a “
Withholding Amount
”) then, in
the discretion of the Committee, either (X) prior to or contemporaneously with
the delivery of Holding Units to the recipient, the recipient shall pay the
Withholding Amount to AllianceBernstein in cash or in vested Holding Units
already owned by the recipient (which are not subject to a pledge or other
security interest), or a combination of cash and such Holding Units, having a
total fair market value, as determined by the Committee, equal to the
Withholding Amount; (Y) AllianceBernstein shall retain from any vested Holding
Units to be delivered to the recipient that number of Holding Units having a
fair market value, as determined by the Committee, equal to the Withholding
Amount (or such portion of the Withholding Amount that is not satisfied under
clause (X) as payment of the Withholding Amount; or (Z) if Holding Units are
delivered without the payment of the Withholding Amount pursuant to either
clause (X) or (Y), the recipient shall promptly pay the Withholding Amount to
AllianceBernstein on at least seven business days notice from the Committee
either in cash or in vested Holding Units owned by the recipient (which are not
subject to a pledge or other security interest), or a combination of cash and
such Holding Units, having a total fair market value, as determined by the
Committee, equal to the Withholding Amount, and (ii) in the event that the
recipient does not pay the Withholding Amount to AllianceBernstein as required
pursuant to clause (i) or make arrangements satisfactory to AllianceBernstein
regarding payment thereof, AllianceBernstein may withhold any unpaid portion
thereof from any amount otherwise due the recipient from
AllianceBernstein.
12
Exhibit 10.06
AWARD
AGREEMENT
UNDER
THE AMENDED AND RESTATED
ALLIANCEBERNSTEIN
PARTNERS COMPENSATION PLAN
You have
been granted an award under the Amended and Restated AllianceBernstein Partners
Compensation Plan (the "Plan"), as specified below:
Participant:
Amount of
Award:
Date of
Grant:
12/31/2008
In
connection with your award (the "Award"), you, AllianceBernstein Holding
L.P.("Holding") and AllianceBernstein L.P. ("AllianceBernstein") agree as set
forth in this agreement (the "Agreement"). The Plan provides a description of
the terms and conditions governing the Award. If there is any inconsistency
between the terms of this Agreement and the terms of the Plan, the Plan's terms
completely supersede and replace the conflicting terms of this Agreement. All
capitalized terms have the meanings given them in the Plan, unless specifically
stated otherwise in the Agreement.
You will
be asked to make an election with respect to the investment of your Award as
described in Section 3(b) of the Plan. Once you have made this election in
accordance with the terms of the Plan and the election form, your Award will be
treated as invested in either restricted Units of Holding, or in one or more
designated money-market, debt or equity fund sponsored by Alliance or its
Affiliate in accordance with the terms of the Plan applicable to Post-2000
Awards.
It is
expressly understood that the Committee is authorized to administer, construe,
and make all determinations necessary or appropriate to the administration of
the Plan and this Agreement, all of which shall be binding upon you. The
Committee is under no obligation to treat you or your award consistently with
the treatment provided for other participants in the Plan.
This
Agreement does not confer upon you any right to continuation of employment by a
Company, nor does this Agreement interfere in any way with a Company's right to
terminate your employment at any time.
This
Agreement is subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.
This
Agreement is governed by, and construed in accordance with, the laws of the
state of New York (without regard to conflict of law provisions).
This
Agreement and the Plan constitute the entire understanding between you and the
Companies regarding this award. Any prior agreements, commitments or
negotiations concerning this award are superseded. This Agreement may be amended
only by another written agreement, signed by both parties.
BY
SIGNING BELOW, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND
IN THE PLAN.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
effective as of January 23, 2009.
AllianceBernstein
L.P.
By:
AllianceBernstein L.P., General Partner
By:
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/s
/ Robert H.
Joseph, Jr.
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Robert
H. Joseph, Jr.
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SVP
and Chief Financial Officer
|
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Signature
Participant
Name:
Exhibit
10.07
Special
Option Program under the
1997
Long Term Incentive Plan
Option
Award Agreement
Agreement
,
dated as of January 23, 2009, among AllianceBernstein L.P. (“Partnership”),
AllianceBernstein Holding L.P. (“Holding”) and <PARTC_NAME>
(“Participant”), an employee of the Partnership or a subsidiary of the
Partnership.
Whereas,
The Compensation Committee (“Committee” or “Administrator”) of the Board
of Directors (“Board”) of AllianceBernstein Corporation (“Corporation”),
pursuant to the Partnership’s Amended and Restated 1997 Long Term Incentive Plan
(“Plan”), a copy of which has been delivered electronically to the Participant,
has granted to the Participant an award (“Award”) consisting of options
(“Options”) to purchase units representing assignments of the beneficial
ownership of limited partnership interests in Holding (“Units”) that vest over
the first five anniversaries of grant date;
Now,
Therefore
,
in accordance
with the grant of the Award, and as a condition thereto, the Partnership,
Holding and the Participant agree as follows:
1.
Grant
. Subject
to and under the terms and conditions set forth in this Agreement and the Plan,
the Committee hereby awards to the Participant Options, which permit the
Participant to purchase from the Partnership the number of Units set forth in
Section 1 of Schedule A, at the per Unit price set forth in Section 2 of
Schedule A, subject to the vesting schedule set forth in Section 3 of Schedule
A.
2.
Term
and Vesting Schedule
.
(a) The Options shall not
be exercisable to any extent prior to January 23, 2010 or after January 23, 2019
(“Option Expiration
Date”). Subject to the terms and
conditions of this Agreement and the Plan, the Participant shall be
entitled to exercise the Options prior to the Option Expiration Date and to
purchase Units pursuant to the Options in accordance with the schedule set forth
in Section 3 of Schedule A.
(b)
The right to
exercise the Options shall be cumulative so that to the extent the Options are
not exercised when they become initially exercisable with respect to any Units,
they shall be exercisable with respect to such Units at any time thereafter
until the Option Expiration Date, subject to any guidelines or restrictions in
the Partnership’s Code of Business Conduct and Ethics or the U.S.
federal securities laws. Options awarded hereunder may not be
exercised after the Option Expiration Date (
i.e
., any Units subject to
the Options that have not been purchased on or before the Option Expiration Date
may no longer be purchased). A Unit shall be considered to have been
purchased on or before the Option Expiration Date if the Partnership has been
given notice of the purchase and the Partnership has actually received payment
therefor, pursuant to Sections 3, 7 and 15, on or before the Option Expiration
Date.
3.
Notice of Exercise, Payment,
Certificate and Account
. Exercise of the Options, in whole or
in part, shall be by delivery of a written notice to the Partnership and Holding
pursuant to Section 15, which specifies the number of Units being purchased and
is accompanied by payment therefor in cash. The Participant may pay
the Partnership as many as three business days subsequent to exercise date and
may pay the Partnership directly or through a financial
intermediary. Promptly after receipt of such notice and purchase
price, the Partnership shall cause the Partnership’s transfer agent to deliver
the number of Units purchased. Units to be issued upon the exercise
of Options may be authorized and newly-issued Units or Units that have been
reacquired by the Partnership, a subsidiary of the Partnership, Holding or a
subsidiary of Holding.
4.
Termination
. The
Options may be exercised by the Participant only while the Participant is
employed full-time by the Partnership, except as follows:
(a)
Disability
. If
the Participant’s employment with the Partnership terminates because of
Disability, the Participant (or the Participant’s personal representative) shall
have the right to exercise all outstanding Options held by the Participant (and
not previously cancelled or expired) for a period which ends
not later than the earlier of (i) three months after such
termination, and (ii) the Option Expiration Date. The Participant shall be
deemed to have incurred a “Disability” if the Participant is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to last for a
continuous period of not less than 12 months, as determined by the carrier of
the long-term disability insurance program maintained by the Partnership or its
affiliate that covers the Participant, or such other person or entity designated
by the Administrator in its sole discretion. In order to assist in the process
described in this paragraph (a), the Participant shall, as reasonably
requested by the Administrator, (A) be available for medical examinations
by one or more physicians chosen by the long-term disability insurance provider
or the Administrator and approved by the Participant, whose approval shall not
unreasonably be withheld, and (B) grant the long-term disability insurance
provider, the Administrator and any such physicians access to all relevant
medical information concerning the Participant, arrange to furnish copies of
medical records to them, and use best efforts to cause the Participant’s own
physicians to be available to discuss the Participant’s health with
them.
(b)
Death
. If
the Participant dies (i) while in the employ of the Partnership, (ii) within one
month after incurring a Disability (as determined in accordance with paragraph
(a) above), (iii) at any time after the Participant’s Retirement (as defined in
paragraph (c) below), or (iv) within one month after
the Participant’s employment is terminated for any reason other than
Disability, Retirement or for Cause (as determined in accordance with paragraph
(d) below), all outstanding Options held by the Participant (and
not previously cancelled or expired) may be exercised by the person or persons
to whom the Options shall have been transferred by will or by the laws of
descent and distribution for a period which ends not later than the earlier of
(A) six months from the date of the Participant’s death, and (B) the Option
Expiration Date.
(c)
Retirement
. If the
Participant’s employment with the Partnership terminates because of the
Participant’s Retirement, the outstanding Options held by the Participant (and
not previously cancelled or expired) on his or her Retirement date shall expire
on the earlier of the Option Expiration Date and the date that is five years
from the date of such Retirement. Furthermore, to the extent any such
Options are not fully vested on the Participant’s Retirement date, the Options
shall continue to vest as specified in Section 3 of Schedule
A. “Retirement” with respect to a Participant means that the
employment of the Participant with the Partnership or any subsidiary of the
Partnership has terminated either (i) on or after the Participant’s attaining
the age 65, or (ii) on or after the Participant’s attaining the age 55 at a time
when the sum of the Participant’s age and aggregate full calendar years of
service with the Partnership or any subsidiary of the Partnership, including
service prior to April 21, 1988 with the corporation then named Alliance Capital
Management Corporation, equals or exceeds 70. The vesting and
termination provisions in this paragraph (c) are conditioned upon the retiring
Participant executing and complying with a standard release and non-competition
agreement in favor of the Partnership and its subsidiaries (as defined below) in
a form to be provided by the Partnership.
(d)
Other
Termination
. If the Partnership terminates the Participant's
employment for any reason other than death, Disability, Retirement or for Cause,
the Participant shall have the right to exercise the Options, to the extent that
the Participant was entitled to do so on the date of the termination of the
Participant’s employment, for a period which ends not later than the earlier of
(i) three months after such termination, and (ii) the Option Expiration
Date. “Cause” shall mean (A) the Participant’s continuing willful
failure to perform the Participant’s duties as an employee (other than as a
result of total or partial incapacity due to physical or mental illness), (B)
gross negligence or malfeasance in the performance of the Participant’s duties,
(c) a finding by a court or other governmental body with proper jurisdiction
that an act or acts by the Participant constitutes (1) a felony under the laws
of the United States or any state thereof (or, if the Participant’s place of
employment is outside of the United States, a serious crime under the laws of
the foreign jurisdiction where the Participant is employed, which crime if
committed in the United States would be a felony under the laws of the United
States or the laws of New York), or (2) a violation of federal or state
securities law (or, if the Participant’s place of employment is outside of the
United States, of federal, state or foreign securities law) by reason of which
finding of violation described in this clause (2) the Board determines in good
faith that the continued employment of the Participant by the Partnership would
be seriously detrimental to the Partnership and its business, (D) in the absence
of such a finding by a court or other governmental body with proper
jurisdiction, such a determination in good faith by the Board by reason of such
act or acts constituting such a felony, serious crime or violation, or (E) any
breach by the Participant of any obligation of confidentiality or
non-competition to the Partnership.
For
purposes of this Agreement, employment by a subsidiary of the Partnership shall
be deemed to be employment by the Partnership. A “subsidiary” of the
Partnership shall be any corporation or other entity of which the Partnership
and/or its subsidiaries (a) have sufficient voting power (not depending on the
happening of a contingency) to elect at least a majority of its board of
directors, or (b) otherwise have the power to direct or cause the direction of
its management and policies.
5.
No Right to Continued
Employment
. The Options shall not confer upon the
Participant any right to continue in the employ of the Partnership or any
subsidiary of the Partnership, and shall not interfere in any way with the right
of the Partnership to terminate the service of the Participant at any time for
any reason.
6.
Non-Transferability
. The
Options are not transferable other than by will or the laws of descent and
distribution and, except as otherwise provided in Section 4, during the lifetime
of the Participant the Options are exercisable only by the Participant; except
that Participant may transfer the Options, without consideration, subject to
such rules as the Committee may adopt to preserve the purposes of the Plan
(including limiting such transfers to transfers by Participants who are senior
executives), to a trust solely for the benefit of the Participant and the
Participant's spouse, children or grandchildren (including adopted children and
grandchildren and step-children and step-grandchildren) (each a “Permitted
Transferee”).
7.
Payment of Withholding
Tax
. In the event that the Partnership or Holding determines
that any federal, state or local tax or any other charge is required by law to
be withheld with respect to the exercise of Options, the Participant shall,
either directly or through a financial intermediary, promptly pay to the
Partnership, a subsidiary specified by the Partnership, Holding or a subsidiary
specified by Holding, no later than the third business day after exercise date,
an amount equal to such withholding tax or charge. If the Participant
does not promptly so pay the entire amount of such withholding tax or charge in
accordance with such notice, or make arrangements satisfactory to the
Partnership and Holding regarding payment thereof, the Partnership, any
subsidiary of the Partnership, Holding or any subsidiary of Holding may withhold
the remaining amount thereof from any amount due the Participant from the
Partnership, its subsidiary, Holding or its subsidiary.
8.
Dilution and Other
Adjustments
. The existence of the Award shall not impair the
right of the Partnership, Holding or their respective partners to, among other
things, conduct, make or effect any change in the Partnership’s or Holding’s
business, any distribution (whether in the form of cash, limited partnership
interests, other securities, or other property), recapitalization (including,
without limitation, any subdivision or combination of limited partnership
interests), reorganization, consolidation, combination, repurchase or exchange
of limited partnership interests or other securities of the Partnership or
Holding, issuance of warrants or other rights to purchase limited partnership
interests or other securities of the Partnership or Holding, or any
incorporation (or other change in form) of the Partnership or
Holding. In the event of such a change in the partnership interests
of the Partnership or Holding, the Board shall make such adjustments to the
Award, including the purchase price of the Units specified in Section 2 of
Schedule A, as it deems appropriate and equitable. In the event of
incorporation (or other change of form) of the Partnership or Holding,
the Board shall make such arrangements as it deems appropriate and equitable
with respect to the Award for the Participant to purchase stock in the resulting
corporation in place of the Units subject to the Options. Any such
adjustment or arrangement may provide for the elimination of any fractional
Unit or shares of stock that might otherwise become subject to the
Options. Any decision by the Board under this Section shall be final
and binding upon the Participant.
9.
Rights as an Owner of a
Unit
. The Participant (or a transferee of the Options pursuant to
Sections 4 and 6 hereof) shall have no rights as an owner of a Unit with respect
to any Unit covered by the Options until the Participant becomes the holder of
record of such Unit, which shall be deemed to occur at the time that notice of
purchase is given and payment in full is received by the Partnership and
Holding under Sections 3, 7 and 15 of this Agreement. By such
actions, the Participant (or such transferee) shall be deemed to have consented
to, and agreed to be bound by, all other terms, conditions, rights and
obligations set forth in the then current Amended and Restated Agreement of
Limited Partnership of Holding and the then current Amended and Restated
Agreement of Limited Partnership of the Partnership (“Partnership
Agreement”). Except as provided in Section 8 hereof, no adjustment
shall be made with respect to any Unit for any distribution for which the record
date is prior to the date on which the Participant becomes the holder of record
of the Unit, regardless of whether the distribution is ordinary or
extraordinary, in cash, securities or other property, or of any other
rights.
10.
Electronic
Delivery
. The Plan contemplates that each award under the Plan
shall be evidenced by an Award Agreement which shall be delivered to the
Participant. It is hereby understood that electronic delivery of this
Award Agreement constitutes delivery under the Plan.
11.
Administrator
. If
at any time there shall be no Committee, the Board shall be the
Administrator.
12.
Governing
Law
. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13.
Sections and
Headings
. All section references in this Agreement are to
sections hereof for convenience of reference only and are not to affect the
meaning of any provision of this Agreement.
14.
Interpretation
. The
Participant accepts this Award subject to all the terms and provisions of the
Plan, which shall control in the event of any conflict between any provision of
the Plan and this Agreement, and accepts as binding, conclusive and final all
decisions or interpretations of the Administrator or Board upon any questions
arising under the Plan and/or this Agreement.
15.
Notices
. Any
notice under this Agreement shall be in writing and shall be deemed to have been
duly given when delivered personally (whether by hand or by facsimile) or
when deposited in the United States mail, registered, postage prepaid, and
addressed, in the case of the Partnership and Holding, to the Corporate
Secretary at 1345 Avenue of the Americas, New York, New York 10105, or if the
Partnership should move its principal office, to such principal office, and, in
the case of the Participant, to his or her last permanent address as shown on
the Partnership's records, subject to the right of either party to designate
some other address at any time hereafter in a notice satisfying the
requirements of this Section.
16.
Entire Agreement;
Amendment
. This Agreement supersedes any and all existing
agreements between the Participant, the Partnership and Holding relating to the
Options. It may not be amended except by a written agreement signed
by both parties.
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AllianceBernstein
l.p.
|
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AllianceBernstein
Holding l.p.
|
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By:
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/s/
Gerald M. Lieberman
|
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Gerald
M. Lieberman
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President
and Chief Operating Officer
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To accept
the terms of this Option Award Agreement, please click the “Accept” button
below:
ACCEPT
DECLINE
Schedule
A
to
Special
Option Program Agreement
1.
|
The
number of Units that the Participant is entitled to purchase pursuant to
the Options granted under this Agreement is
<OPTS_GRANTED>
.
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2.
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The per Unit
price to purchase Units pursuant to the Options granted under this
Agreement is $17.05 per
Unit.
|
3.
|
Percentage
of Units With Respect to
|
Which the
Options First Become
Exercisable on the Date
Indicated
1.
January 23,
2010
20.0%
2.
January 23,
2011
40.0%
3.
January 23,
2012
60.0%
4.
January 23,
2013
80.0%
5.
January 23,
2014 100.0%
Exhibit
10.08
ALLIANCEBERNSTEIN
L.P.
FINANCIAL
ADVISOR WEALTH ACCUMULATION PLAN
INCENTIVE
AWARD AGREEMENT
THIS AGREEMENT
, made as of the
1st day of December, 2007, by and between AllianceBernstein L.P., a Delaware
limited partnership (the “Company”), and (the “Participant”).
Preliminary
Statement
The
Participant has been authorized to receive the following Incentive Award under
the AllianceBernstein Financial Advisor Wealth Accumulation Plan (the
“Plan”). Unless otherwise indicated, any capitalized term used but
not defined herein shall have the meaning ascribed to such term in the Plan and
the Administrative Guidelines attached hereto. A copy of the Plan has
been delivered to the Participant. By signing and returning this
Agreement, the Participant acknowledges having received and read a copy of the
Plan and agrees to comply with it and this Agreement, the attached
Administrative Guidelines and all applicable laws and regulations.
Accordingly,
the Company and the Participant agree as follows:
1.
Incentive
Award
. Subject to the restrictions, terms and conditions of
the Plan and this Agreement (including its attachments), the Company hereby
awards an Incentive Award to the Participant of $________.
2.
Vesting
.
(a) Except
as set forth in subsection (b) below, the Incentive Award shall become vested
and cease to be forfeitable (but shall remain subject to the other terms of this
Agreement) as follows if the Participant has been continuously employed by the
Company or an Affiliate until such date:
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Vesting
Date
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|
Vested
Percentage
|
|
|
|
|
|
|
|
January
1, 2009
|
|
14.3%
|
|
|
|
|
|
|
|
January
1, 2010
|
|
14.3%
|
|
|
|
|
|
|
|
January
1, 2011
|
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14.3%
|
|
|
|
|
|
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|
January
1, 2012
|
|
14.3%
|
|
|
|
|
|
|
|
January
1, 2013
|
|
14.3%
|
|
|
|
|
|
|
|
January
1, 2014
|
|
14.3%
|
|
|
|
|
|
|
|
January
1, 2015
|
|
14.2%
|
|
There
shall be no proportionate or partial vesting in the periods prior to the
applicable vesting dates and all vesting shall occur only on the appropriate
vesting date.
(b) Notwithstanding
Paragraph (a), a Participant’s Incentive Benefit shall become immediately vested
and cease to be forfeitable upon the Participant’s death or when the participant
becomes Disabled or upon
Termination
of Employment by the Company without Cause
.
For purposes of
this Section, “Cause” shall mean a termination of employment due to the
Participant’s insubordination, dishonesty, fraud, moral turpitude, misconduct,
refusal to perform his or her duties or responsibilities for any reason other
than illness or incapacity or materially unsatisfactory performance of his or
her duties for the Company or its Affiliates; the failure to remain licensed (to
the extent required by applicable law) to perform his employment duties or the
failure of the Participant to obtain all relevant licenses to perform such
duties; the violation of any employment rules, policies or procedures of the
Company (including internal compliance rules); an act or acts constituting a
felony under the laws of the United States or any state thereof; or a violation
of the federal or state securities laws.
3.
Forfeiture
. If
the Participant’s employment with the Company or any Affiliate is terminated for
any reason, other than as described in Section 2(b) above, prior to becoming
vested in accordance with Section 2(a) above, the Participant shall forfeit to
the Company, without compensation, any and all unvested Incentive
Benefits.
4.
Payment
. The
Participant may make an election using the form attached hereto to elect when
and how his or her vested Incentive Benefits will be paid in lieu of the default
payment method provided under the Plan.
5.
Post-Termination
Obligations
.
The Participant
agrees that the Plan and the Incentive Award being made thereunder are in
further consideration of the Participant’s confidentiality and non-solicitation
obligations, which are set forth in Paragraphs 3, 4 and 5 of the Participant’s
employment agreement with AllianceBernstein L.P. Accordingly,
Participant agrees that the provisions of those Paragraphs 3, 4 and 5 are
incorporated in this Agreement by reference as if fully set forth.
6.
Death
. The
Participant’s Beneficiary shall be the persons designated pursuant to the form
attached hereto. The Participant may change his designation of
beneficiary(ies) at any time prior to his death by submitting a new beneficiary
form to the Company.
7.
Controlling
Law
. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
conflict of law provisions.
IN WITNESS WHEREOF
, the
parties hereto have caused this Agreement to be duly executed as of the day and
year first above written.
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ALLIANCEBERNSTEIN
L.P.
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By:
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/s/
Robert H. Joseph, Jr.
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Robert
H. Joseph, Jr.
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SVP
and Chief Financial Officer
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[NAME
OF PARTICIPANT]
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ALLIANCEBERNSTEIN
L.P.
FINANCIAL
ADVISOR WEALTH ACCUMULATION PLAN
ELECTIVE
DISTRIBUTION DATE & ELECTION DISTRIBUTION FORM
ELECTION
FORM
The
undersigned hereby elects under the AllianceBernstein L.P. Financial Advisor
Wealth Accumulation Plan (the “Plan”) as follows:
1.
|
In
lieu of receiving my Incentive Benefits in accordance with Section 6.1 of
the Plan, I elect to receive (or commence receiving) my vested Incentive
Benefits under the Plan on the following Elective Distribution
Date:
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£
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As
soon as administratively possible following my Separation of Service, as
defined in the Plan.
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£
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January
31
,
20
__
__ (this
date must be later than date on which the Incentive Benefits will become
100% vested under Agreement).
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2.
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In
lieu of receiving my Incentive Benefits in accordance with Section 6.1 of
the Plan, I elect to receive my Incentive Benefits under the Plan in the
following Elective Distribution Form:
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£
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Substantially
equal annual installments paid over a period of _____ years (not exceeding
10 years).
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£
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A
single lump sum.
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These
elections, upon becoming effective, shall revoke and supersede all prior
elections.
Signature
of
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Participant:
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Date
:
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ALLIANCEBERNSTEIN
L.P.
FINANCIAL
ADVISOR WEALTH ACCUMULATION PLAN
AMENDED
ADMINISTRATIVE GUIDELINES
(EFFECTIVE
AS OF JANUARY 1, 2007)
Plan
Eligibility
Individuals
who have completed eight years of service as a Financial Advisor, have $500
million or more in assets under management, and service no more than 150
eligible client relationships, as defined by the firm, at the time of any
Incentive Award may be selected by the firm to participate in the
AllianceBernstein L.P. Financial Advisor Wealth Accumulation Plan (the
“Plan”). Unless otherwise indicated, any capitalized term used but
not defined herein shall have the meaning ascribed to such term in the Plan and
the Award Agreement.
Participation Is Not
Mandatory
After
being selected, each eligible Financial Advisor may choose whether or not to
participate.
Participation
Deadlines
A
Financial Advisor selected by the firm to participate in the Plan will have 30
days from the notification of his or her selection to accept an Incentive Award,
but in all cases must accept the Incentive Award by December 31 immediately
preceding the first year of participation. Each Financial Advisor
should analyze his or her own circumstances when deciding to participate in the
Plan. Incentive Awards are granted as of January 1 of each year.
Financial Advisors will be notified of their selection annually.
Determining the Amount of
the Incentive Award
The
amount of an Incentive Award is based on the Financial Advisor’s Eligible
Revenues, a fixed amount that is selected from the new account and base
servicing revenue for the Advisor’s trailing four calendar quarters prior to the
Incentive Award. Seven percent (7%) of the Eligible Revenues are
multiplied by the number of years the Financial Advisor elects to be a
participant in the Plan. The minimum term of participation is five years and the
maximum is seven years. An Incentive Award equal to the resulting
amount will be granted and recorded as a book entry in a Plan account on behalf
of the Financial Advisor.
The
Company determines, in its sole discretion and at any time, which revenues are
Eligible Revenues. Accounts on which Base Level Servicing revenue is
shared among two or more Financial Advisors do not produce Eligible Revenues and
may not be included in the calculation of any Incentive Award.
Investment of the Incentive
Award
Investment
returns on the Incentive Award will be measured pursuant to the participating
Financial Advisor’s elections in a selected family of investment products. The
Financial Advisor will have the ability to change his or her investment
measurement allocation with a frequency consistent with firm
policies. However, any investment election in AllianceBernstein
Holding Units cannot be changed after such election, and investment elections in
Hedge Fund products must meet minimum investment requirements and other
applicable qualifications, and abide by Hedge Fund rules for
withdrawals.
Available Investment
Elections
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·
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AllianceBernstein
Small Cap Growth Portfolio
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·
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AllianceBernstein
Small/Mid-Cap Value Fund
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·
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AllianceBernstein
Real Estate Investment Fund
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·
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Federated
Government Obligation Fund
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·
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Bernstein
Strategic Value Portfolio
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·
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Bernstein
Strategic Growth Portfolio
|
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·
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Bernstein
International Portfolio
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·
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Bernstein
Global Style Blend Portfolio
|
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·
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Bernstein
Emerging Markets Fund
|
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·
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Bernstein
Intermediate Duration Fund
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·
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Bernstein
Short Duration Fund
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·
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Bernstein
Advanced Value Hedge Fund
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·
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Bernstein
Global Opportunities Hedge Fund
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·
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Bernstein
Global Diversified Hedge Fund
|
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·
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AllianceBernstein
Global Diversified Strategies - Hedge Fund
A
|
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·
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AllianceBernstein
Global Diversified Strategies - Hedge Fund
B
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·
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AllianceBernstein
Holding Units
1
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Incentive Award Vesting
Schedule
Each
Incentive Award will vest annually on January 1 on a pro-rata basis in equal
installments over the term of the Incentive Award. All Incentive Awards shall
vest immediately, however, upon the participant’s death or if the participant
becomes Disabled. If the participant’s employment is terminated for
any reason other than those set forth in the Award Agreement, any portion of the
award that has not vested will be forfeited.
______________________
1
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AllianceBernstein
Holding Units in which Plan participants obtain a notional interest are
issued pursuant to a registration statement on Form S-8 and
prospectus. Copies of these documents are available, free of
charge, from the Company or the plan
administrator.
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Incentive Award
Distributions
The
vested portion of an Incentive Award notionally invested in the Company’s
investment products will be paid in cash in the first calendar quarter following
the end of the third year and annually thereafter. The vested portion
of an Incentive Award notionally invested in AllianceBernstein Holding Units
will be paid in kind in the first calendar quarter following the end of the
third year and annually thereafter. Subject to the following
paragraph, the Financial Advisor may also elect, at the time of the Incentive
Award, to defer payments, once 100% vested, until termination of his or her
employment or some date certain in the future. Additionally, he or she may elect
to receive annual payments over an extended period of up to 10 years. Further
deferrals are available as described in the plan document.
Any
change in either the Elective Distribution Date or form of the distribution
requires the Financial Advisor to elect a new distribution date that is no
earlier than the fifth anniversary of the Participant’s previous Elective
Distribution Date (regardless of whether the Participant’s new election was
solely to change the Elective Distribution Form). Any change in the Elective
Distribution Date must be made at least twelve months prior to the Elective
Distribution Date that is changing.
Effect of Plan Participation
on Commissions
The
future Base Level Servicing commissions on any revenues deemed Eligible Revenues
will be 3% of Base Servicing Revenue for the period of the Incentive
Award. During the period of the Incentive Award, the 3% rate may be
applied to revenues generated by any relationships, accounts or assets on a
Participant’s base in an amount equal to the Participant’s Eligible Revenues
amount. Upon acceptance of an Incentive Award, Base Level Servicing
provisions in the Advisor’s employment agreement will be superseded by the
foregoing sentences.
Base
Level Servicing on revenues in excess of the Eligible Revenues amount will be
paid at the rate set by the Participant’s employment agreement.
Full
Production Bonus will be paid on all New Accounts and New Assets regardless of
whether the assets or accounts are within relationships used to calculate the
Eligible Revenues amount at the time the Incentive Award was
made.
Adjustments To Incentive
Awards
The
Company bears the risk of poor markets or excessive negative cash flow as it
relates to the Incentive Award amount. Accordingly, there is no
downward adjustment to the Incentive Award due to those
reasons. There also is no upward adjustment to the Incentive Award in
those periods of upward market performance or positive net asset
growth.
Plan
Adminsitration
The
Newport Group will administer the recordkeeping for the Plan and provide monthly
statements to each Participant. Account access will be available via the
internet at any time, and changes in investment elections may be initiated
through
www.plandestination.com.
The
Company will inform you of any change of plan administrator.
Exhibit 10.09
SUMMARY OF ALLIANCEBERNSTEIN
L.P.’S LEASE AT
1345 AVENUE OF THE AMERICAS,
NEW YORK, NEW YORK
TABLE OF
CONTENTS
Parties
and Documents
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1
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Demised
Premises
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4
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Monthly
Fixed Rent
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7
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Electricity
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12
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Tax
Escalation
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15
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Expense
Escalation
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17
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Cleaning
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19
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Maintenance
and Repairs
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22
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Alterations
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23
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Miscellaneous
Matters Relating to Improvements
|
24
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SNDA
& Estoppel
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26
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Insurance
and Liability
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27
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Use
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28
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Term
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29
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Services
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31
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Casualty/Condemnation
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35
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Assignment/Subletting
|
36
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Rights
to Additional Space
|
38
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Default
and Landlord Remedies
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40
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Access
|
42
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Notices
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43
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PARTIES
Landlord:
|
1345
Leasehold LLC, a Delaware limited liability company
(“Landlord”)
|
Tenant:
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AllianceBernstein
L.P. (formerly known as Alliance Capital Management L.P.), a Delaware
limited partnership (“Alliance”)
|
Agreement
of Lease dated July 3, 1985 among The Fisher-Sixth Avenue Company and Hawaiian
Sixth Avenue Corp. as landlord, and Alliance Capital Management Corporation, as
tenant (“orig.”)
Supplemental
Agreement dated September 30, 1985 among The Fisher-Sixth Avenue Company and
Hawaiian Sixth Avenue Corp. as landlord, and Alliance Capital Management
Corporation, as tenant (“Sup1”)
Second
Supplemental Agreement dated December 31, 1985 among The Fisher-Sixth Avenue
Company and Hawaiian Sixth Avenue Corp. as landlord, and Alliance Capital
Management Corporation, as tenant
Third
Supplemental Agreement dated July 29, 1987 among The Fisher-Sixth Avenue Company
and Hawaiian Sixth Ave. Corp. as landlord, and Alliance Capital Management
Corporation, as tenant
Fourth
Supplemental Agreement dated February, 1989 among The Fisher-Sixth Avenue
Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant
(“Sup4”)
Fifth
Supplemental Agreement dated October 9, 1989 among The Fisher-Sixth Avenue
Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant
(“Sup5”)
Sixth
Supplemental Agreement dated December 13, 1991 among The Fisher-Sixth Avenue
Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant
(“Sup6”)
Seventh
Supplemental Agreement dated May 27, 1993 among The Fisher-Sixth Avenue Company
and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant
(“Sup7”)
Eighth
Supplemental Agreement dated June 1, 1994 among The Fisher-Sixth Avenue Company
and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant
(“Sup8”)
Ninth
Supplemental Agreement dated August 16, 1994 among The Fisher-Sixth Avenue
Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant
(“Sup9”)
Tenth
Supplemental Agreement dated December 31, 1994 among The Fisher-Sixth Avenue
Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant
(“Sup10”)
Eleventh
Supplemental Agreement dated April 30, 1995 among The Fisher-Sixth Avenue
Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant
(“Sup11”)
Letter
Agreement dated December 21, 1995 among The Fisher-Sixth Avenue Company and
Hawaiian Sixth Ave. Corp., Carter-Wallace, Inc., Arnhold and S. Bleichroeder,
Inc. and Alliance (“LTR1”)
Letter
Agreement dated December 21, 1995 among The Fisher-Sixth Avenue Company,
Hawaiian Sixth Ave. Corp. and Alliance
Twelfth
Supplemental Agreement dated September 9, 1998 between 1345 Leasehold
Limited Partnership and Alliance (“Sup12”)
Letter
Agreement dated October 7, 1998 between 1345 Leasehold Limited Partnership and
Alliance
Thirteenth
Supplemental Agreement dated March 15, 1999 between 1345 Leasehold Limited
Partnership and Alliance (“Sup13”)
Fourteenth
Supplemental Agreement dated February 8, 2000 between 1345 Leasehold Limited
Partnership and Alliance (“Sup14”)
Fifteenth
Supplemental Agreement dated August 3, 2000 between 1345 Leasehold Limited
Partnership and Alliance (“Sup15”)
Letter
dated September 7, 2000 from Alliance to Landlord (“LTR2”)
Sixteenth
Supplemental Agreement dated August 31, 2001 between 1345 Leasehold Limited
Partnership and Alliance (“Sup16”)
Seventeenth
Supplemental Agreement dated October 31, 2001 between 1345 Leasehold Limited
Partnership and Alliance (“Sup17”)
Eighteenth
Supplemental Agreement dated February 15, 2002 between 1345 Leasehold Limited
Partnership and Alliance (“Sup18”)
Nineteenth
Supplemental Agreement dated December 4, 2002 between 1345 Leasehold Limited
Partnership and Alliance (“Sup19”)
Twentieth
Supplemental Agreement dated December 4, 2002 between 1345 Leasehold Limited
Partnership and Alliance (“Sup20”)
Letter
Agreement dated December 4, 2002 between Alliance and Hearst Communications,
Inc. (“LTR3”)
Twenty-first
Supplemental Agreement dated December 22, 2003 between Landlord and Alliance
(“Sup21”)
Twenty-second
Supplemental Agreement dated October 31, 2004 between Landlord and Alliance
(“Sup22”)
Twenty-third
Supplemental Agreement dated June 30, 2007 between Landlord and Alliance
(“Sup23”)
Twenty-fourth
Supplemental Agreement dated July 31, 2007 between Landlord and Alliance
(“Sup24”)
Twenty-fifth
Supplemental Agreement dated July 31, 2007 between Landlord and Alliance
(“Sup25”)
Twenty-sixth
Supplemental Agreement dated July 31, 2007 between Landlord and Alliance
(“Sup26”)
Twenty-seventh
Supplemental Agreement dated August 30, 2008 between Landlord and Alliance
(“Sup27”)
Cleaning
Agreements
Cleaning
Agreement (“CAO”) dated August 16, 1994 between 1345 Cleaning Service Co.
(“Original Cleaning Contractor”) and Alliance regarding the office
space
First
Amendment to Cleaning Agreement (“CAO-1”) dated December 31, 1994 between
Original Cleaning Contractor and Alliance
Second
Amendment to Cleaning Agreement (“CAO-2”) dated April 30, 1995 between Original
Cleaning Contractor and Alliance
Third
Amendment to Cleaning Agreement (“CAO-3”) dated September 9, 1998 between
Original Cleaning Contractor and Alliance
Fourth
Amendment to Cleaning Agreement (“CAO-4”) dated February 8, 2000 between
Original Cleaning Contractor and Alliance
Fifth
Amendment to Cleaning Agreement (“CAO-5”) dated August 3, 2000 between Original
Cleaning Contractor and Alliance
Sixth
Amendment to Cleaning Agreement (“CAO-6”) dated August 31, 2001 between Original
Cleaning Contractor and Alliance
Seventh
Amendment to Cleaning Agreement (“CAO-7”) dated October 31, 2001 between
Original Cleaning Contractor and Alliance
Eighth
Amendment to Cleaning Agreement (“CAO-8”) dated February 15, 2002 between
Original Cleaning Contractor and Alliance
Ninth
Amendment to Cleaning Agreement (“CAO-9”) dated October 31, 2004 between
Original Cleaning Contractor and Alliance
Tenth
Amendment to Cleaning Agreement (“CAO-10”) dated July 31, 2007 between 1345
Cleaning Service Company II, L.P. (“Cleaning Contractor”) and
Alliance
Eleventh
Amendment to Cleaning Agreement (“CAO-11”) dated July 31, 2007 between Cleaning
Contractor and Alliance
Twelfth
Amendment to Cleaning Agreement (“CAO-12”) dated July 31, 2007 between Cleaning
Contractor and Alliance
Cleaning
Agreement (“CAG”) dated as of March 15, 1999 between Original Cleaning
Contractor and Alliance regarding the ground floor space
SNDAs
Subordination,
Non-Disturbance and Attornment Agreement (Ground Lease) dated August 3, 2000
between 1345 Fee Limited Partnership, as owner, and Alliance, as
tenant (“SNDA-G”)
Subordination,
Nondisturbance and Attornment Agreement dated July 6, 2005 between Alliance,
Morgan Stanley Mortgage Capital Inc. and UBS Rea Estate Investments
Inc. (“SNDA-M”)
First
Amendment to Subordination, Nondisturbance and Attornment Agreement dated July
6, 2005 between Alliance and LaSalle Bank National Association, as
Trustee
DEMISED
PREMISES
Floor
(entire floor unless
otherwise noted)
|
Delivery
Date
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Concourse
(part) (Sup15 §23(a), Sup17 §13, Sup23 §2a)
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Delivered.
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Ground
Floor (part)
**
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The
Ground Floor (part) formerly leased to Alliance has been surrendered and
deleted from the demised premises. Landlord has leased the
Ground Floor (part) to Wachovia Bank, National Association (“Wachovia”)
pursuant to the Agreement of Lease dated December 22, 2003 (the “Wachovia
Lease”), for a term coterminous with Alliance's lease which Wachovia may
extend pursuant to its three 5-year extension options. If the
term of the Wachovia Lease expires or terminates prior to the expiration
or termination of Alliance’s lease, then, on the day after said
termination, the Ground Floor (part) will be added back to the demised
premises on substantially the same terms (including the rent terms) as
were in effect prior to its surrender and deletion from the demised
premises (Sup21 §3). For more information regarding the terms
of the surrender of Ground Floor part, see below.
|
2,
8, 9, 11 through 14 (Sup15 §2(a); Ltr2; Sup16
§11)
|
Delivered.
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10
(Sup19 §3(a))
***
|
Delivered.
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15
(Sup12 §2(a))
|
Delivered.
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16
(Sup12 §2(b))
|
Delivered.
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17
(Sup16 §2(b); Sup17 §2(b); Sup18 §2(b); Sup22 §2(b))
|
Delivered.
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31
(part) (Sup7 §2(c))
|
Delivered.
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31
(part) (Sup24 §2(a))
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Anticipated
to be May 1, 2010.
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32
(Sup6 §2)
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Delivered.
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33
(Sup7 §2(a))
|
Delivered.
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34
(NW Cor. 94) (Sup8 §2(a))
|
Delivered.
|
34
(NW Cor. 95) (Sup8 §1(c))
|
Delivered.
|
34
(balance) (Sup7 §2(b))
|
Delivered.
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35
(Sup14 §2(a))
|
Delivered.
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36
(Sup14 §2(b))
|
Delivered.
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37
(NE Cor.) (orig. intro.)
|
Delivered.
|
37
(NW Cor.) (orig. §46.01)
|
Delivered.
|
37
(SE Cor.) (Sup1 §2)
|
Delivered.
|
37
(SW Cor.) (Sup5 §2)
|
Delivered.
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38
(orig. intro.)
|
Delivered.
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39
(Sup4 §2)
|
Delivered.
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40,
41 and 45 (Sup9 §3(a); LTR1 par 2)
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Delivered.
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42
(Sup25 §2(a))
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Delivered.
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43
and 44 (Sup26 §2(a))
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Anticipated
to be May 1,
2011.
|
**
Ground Floor
(part)
:
For a
summary of the payments Alliance makes in lieu of rent and the credits Alliance
receives in respect of the Ground Floor (part), see Monthly Fixed Rent, Tax
Escalation and Expense Escalation. Other terms of the surrender and
deletion of Ground Floor (part) from the demised premises are summarized
below.
·
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Enforcement: Landlord
will make reasonable efforts to enforce the Wachovia Lease (including the
rent obligations). If Wachovia defaults under the Wachovia
Lease, then Alliance may, at its option, participate in any action
Landlord takes in respect of said default. If Landlord does not
take any action, then Alliance may, at its option, (1) cause the Landlord
to assign its right to proceed against Wachovia, in which case Alliance
may then proceed directly against Wachovia provided that Alliance
indemnifies Landlord from any loss arising from such action, or (2)
require the Landlord to proceed against Wachovia in which case Alliance
will reimburse Landlord within 30 days after demand for any reasonable
out-of-pocket expenses incurred by Landlord in respect of enforcing the
Wachovia Lease (Sup21 §4(f)).
|
·
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Amendments,
Terminations, Extensions and Consents: Landlord is prohibited
from amending the Wachovia Lease or waiving any provision thereof without
first obtaining Alliance’s consent. Alliance must be reasonable
in respect of consenting to any amendment that would not have an economic
or adverse impact on Alliance and Alliance’s failure to respond to a
request for such a consent within 5 business days of receipt is deemed
consent. Landlord is prohibited from terminating the term of
the Wachovia Lease except in the event of a default thereunder or
extending the term of the Wachovia Lease except pursuant to the express
provisions thereof without first obtaining Alliance's consent (Sup21
§5(a)). Landlord is prohibited from granting its consent to any
matter contemplated by the Wachovia Lease (e.g., subleases and
alterations) without first obtaining Alliance’s
consent. Alliance's rights in respect of Wachovia signage is
summarized in more detail below. Alliance is required to be
reasonable in granting its consent to any such matter if Landlord is
obligated to be reasonable under the Wachovia Lease. Alliance
is required to respond in the same time period as Landlord is obligated to
respond to any request for consent and Alliance will be deemed to have
given its consent if it fails to respond (Sup21 §5(c); LTR3
§3).
|
·
|
Signage: Wachovia
is prohibited from displaying signage on the window, doors or the exterior
of the perimeter walls of its demised premises unless Wachovia obtains the
prior written reasonable consent of the Landlord and said signage is in
conformity with the building standard sign program (Wachovia Lease
§46.2(e)). However, Wachovia has the right to install signage
on the interior and exterior of the demised premises that conforms with
Wachovia's standard national or NYC signage program provided that said
signage pertains primarily to general retail banking, safe deposits or
electronic banking and not to certain permitted ancillary uses (e.g.
brokerage, insurance, investment services). Nevertheless,
Wachovia has the right to display temporary signage which describes said
ancillary uses in certain designated areas provided that Wachovia is
obligated to remove said signage if either Landlord or Alliance reasonably
believes that said temporary signage is not in keeping with the quality or
character of the building. The size and location of signage on
or visible from the exterior of the Ground Floor (part) is subject to the
reasonable approval and Landlord and Alliance. Wachovia also
has the right to display promotional banners provided the size, color and
location of said banners is subject to the reasonable approval of Landlord
and Alliance. Landlord's (and, therefore, Alliance's) failure
to respond within 15 business days to any request for consent regarding
signage is deemed consent (Wachovia Lease
§46.3(a)).
|
·
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Assignment/Subletting
Profits: Landlord and Alliance will share equally any sublease
or assignment of lease profits payable to Landlord under the Wachovia
Lease (Sup21 §6(a)).
|
·
|
Hold
Over by Wachovia: If Wachovia holds over following the
termination of the Wachovia Lease term, then Landlord will promptly
commence summary dispossess proceedings and will use commercially
reasonable efforts to evict Wachovia. Landlord will pay to
Alliance any amounts recovered from Wachovia arising from said proceedings
after first deducting Landlord's actual out-of-pocket expenses, provided
that if the amounts paid over by Landlord exceed the sums paid by Alliance
in respect of the Ground Floor (part) for the corresponding period, then
Landlord will be permitted to retain 50% of said excess (Sup21
§8).
|
·
|
Reimbursement
of Landlord on Account of Payments to Cushman & Wakefield,
Inc.: Alliance will reimburse Landlord up to $601,854.52 in
respect of any amounts paid by Landlord to Cushman & Wakefield, Inc.
arising from Sup21 (Sup21 §10).
|
MONTHLY FIXED
RENT
Concourse
(part)
:
Approximately 3,000
rsf
:
|
12/01/01
through 11/30/06:
|
$7,000
(Sup17 §13(b)(i))
|
|
12/01/06
through 11/30/11:
|
$8,250
(Sup17 §13(b)(ii))
|
|
12/01/11
through 12/31/19:
|
$9,500
(Sup17 §13(b)(iii))
|
Balance of Concourse Space
Leased Pursuant to Sup15
:
Date the
concourse space (or portion thereof) is included in the demised premises through
the day before the 5
th
anniversary of such inclusion date: $28 per rsf (Sup15
§23(d)).
5
th
anniversary of such inclusion date through the day before the 10
th
anniversary of such inclusion date: $33 per rsf (Sup15
§23(d)).
10
th
anniversary of such inclusion date through 12/31/19: $38 per rsf
(Sup15 §23(d)).
Concourse Space Leased
Pursuant to Sup23
:
Date the
concourse space is included in the demised premises through the day before the
5
th
anniversary of such inclusion date: $9,616.25 (Sup23
§3(a)(1)).
5
th
anniversary of such inclusion date through the day before the 10
th
anniversary of such inclusion date: $10,440.50 (Sup23
§3(a)(2)).
10
th
anniversary of such inclusion date through 12/31/19: $11,264.75
(Sup23 §3(a)(3)).
Ground Floor (part) -
Payments in Lieu of Rent and Credits
:
Notwithstanding
that the Ground Floor (part) has been deleted from the demised premises,
Alliance is obligated to pay monthly installments equal to the fixed rent and
the tax and operating expense escalation payments Alliance would have been
obligated to pay had the Ground Floor (part) not been deleted from the demised
premises. The rate for the payment in lieu of the fixed rent payment
is described below and the payments in lieu of the tax and operating expense
escalations are described in the applicable portions of this
summary.
Payment in Lieu of Fixed
Rent
01/16/05
through 01/15/10:
$58,333.33
(Sup13 §3(a)(2))
01/16/10
through 12/31/19:
$62,500.00
(Sup13 §3(a)(3); Sup20 §3(b))
Wachovia
Credit
Wachovia
pays monthly installments of fixed rent as follows (assuming that the lease
commencement date was January 1, 2004):
|
06/01/07
through 05/31/10:
|
$107,662.50
|
|
06/01/10
through 05/31/13:
|
$118,428.75
|
|
06/01/13
through 05/31/16:
|
$130,271.58
|
|
06/01/16
through 12/30/19:
|
$143,298.79
|
Wachovia
also pays a tax escalation based on a 0.483% share of the excess over a 2003/04
base year.
Each
month, Landlord and Alliance apportion the fixed rent and tax escalation
payments (if any) made by Wachovia that month and the portion to which Alliance
is entitled is a credit against rent next payable. The apportionment
is done as follows:
First, to
Alliance up to the sum of the fixed rent and tax and operating expense
escalation payments Alliance made for such month in respect of the Ground Floor
(part);
Second,
to Alliance up to $10,408.26 a month provided that the aggregate of such
installments cannot exceed $1,935,9410.10);
Third, to
Landlord up to $2,889.79 a month provided that the aggregate of such
installments cannot exceed $537,500; and
Finally,
any remainder is shared equally between Landlord and Tenant (Sup21
§4).
2
nd
, 8
th
,
9
th
,
11
th
through 14
th
Floors
:
09/01/04
through 08/31/09:
$1,419,941.25
(Sup15 §3(a); Sup19 §26))
09/01/09
through 08/31/14:
$1,532,635.00
(Sup15 §3(a); Sup19 §26)
09/01/14
through 12/31/19:
$1,645,328.75
(Sup15 §3(a); Sup19 §26))
This
schedule assumes that all of this space was delivered simultaneously on May 1,
2004. It was anticipated, however, that floors 8 and 9 would be
delivered six months after Floors 2, 11-14 are delivered (Sup16
§11). If that occurred, the commencement and subsequent increases in
fixed rent for Floors 8 and 9 occurs six months after the commencement of and
subsequent increases in fixed rent for Floors 2, 11-14.
10th
Floor
:
|
From
the termination or expiration of the Hearst Lease through
04/30/09:
|
$203,589.75
(Sup19 §3(b)(1))
|
|
05/01/09
through 04/30/14:
|
$219,747.67
(Sup19 §3(b)(2))
|
|
05/01/14
through 12/31/19:
|
$235,905.58
(Sup19 §3(b)(3))
|
15
th
Floor
:
12/01/04
through 11/30/10:
$172,851.87
(Sup12 §3(a)(1))
12/01/09
through 12/31/16:
$189,313.95
(Sup12 §3(a)(1))
01/01/17
through 12/31/19: Rent for the 15th, 16th, 31st (part), 32nd-41st and
45
th
floors will be the product of the average of fixed annual rent per square foot
as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse
space, multiplied by the square footage of such space (Sup15 §12(b)); Sup20
§3(a)).
16
th
Floor
:
05/01/05
through 04/30/09: $172,851.87 (Sup12 §3(b)(1))
05/01/10
through 12/31/16: $189,313.95 (Sup12 §3(b)(1))
01/01/17
through 12/31/19: Rent for the Ground (part), 15th, 16th, 31st
(part), 32nd-41st and 45
th
floors
will be the product of the average of fixed annual rent per square foot as of
12/30/16 of all space leased to Alliance other than concourse/subconcourse
space, multiplied by the square footage of such space (Sup15 §12(b); Sup20
§3(a)).
17th
Floor
:
02/01/07
through 01/31/12:
$90,995.33
(Sup16 §3(a)) + $35,054.00 (Sup17 §3(a)) + $14,104.33 (Sup18 §3(a)) + $65,104.58
(Sup22 §3(a)) = $205,258.24
02/01/12
through 12/31/19:
$97,686.17
(Sup16 §3(a)) + $37,631.50 (Sup17 §3(a)) + $15,141.42 (Sup18 §3(a)) + $70,161.25
(Sup22 §3(a)) = $220,620.34
*Fixed
annual rent on the portion of the 17
th
floor
demised under the 22
nd
Supplemental Agreement is abated through July 31, 2005.
31
st
Floor
(part)
:
7/1/94
through 10/31/09: $45,180.84 (Sup7 §3(c))
11/1/09
through 12/31/16: For the aggregate of Floors 31 (part)-34 and 37-39,
$1,031,773.10 (Sup9 §4(b)). Note that by 11/1/09, Floors 31 (part)-34
and 37-39 are scheduled to have check meters and, therefore, Alliance will be
charged separately for electricity for such floors instead of paying electricity
charges as a “rent inclusion factor” included in fixed rent for such
floors.
01/01/17
through 12/31/19: Rent for the 15th, 16th, 31st (part), 32nd-41st and
45
th
floors will be the product of the average of fixed annual rent per square foot
as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse
space, multiplied by the square footage of such space (Sup15 §12(b); Sup20
§3(a)).
31
st
Floor
(part)
:
commencement
through April 30, 2015: $194,794.67 (Sup24 §3(a)(1)), except that the
first 5 months are abated (Sup24 §3(b)).
5/1/09
through 12/31/19: $209,616 (Sup24 §3(b)).
32
nd
Floor
:
05/01/94
through 10/31/09: $120,936.94 (Sup6 §3(a) and §7(b); Sup7
§7))
11/1/09
through 12/31/16: For the aggregate of Floors 31 (part)-34 and 37-39,
$1,031,773.10 (Sup9 §4(b)). Note that by 11/1/09, Floors 31 (part)-34
and 37-39 are scheduled to have check meters and, therefore, Alliance will be
charged separately for electricity for such floors instead of paying electricity
charges as a “rent inclusion factor” included in fixed rent for such
floors.
01/01/17
through 12/31/19: Rent for the Ground (part), 15th, 16th, 31st
(part), 32nd-41st and 45
th
floors
will be the product of the average of fixed annual rent per square foot as of
12/30/16 of all space leased to Alliance other than concourse/subconcourse
space, multiplied by the square footage of such space (Sup15 §12(b); Sup20
§3(a)).
33
rd
Floor
:
1/1/94
through 10/31/09: $105,185.28 (Sup7 §3(a)(i) and §7)
(Note: Calendar
1994’s rent is deferred and will be paid in monthly installments of $11,007.76
beginning July 1, 1995 through December 1, 2004 with $7,339.00 due on January 1,
2005 (Sup7 §3(a)(ii)). (Rent for the first half of calendar 1995 is
deferred and will be paid in monthly installments of $3,668.76 due on January 1,
2005 and $11,007.76 per month beginning February 1, 2005 through October 1, 2009
(Sup7 §3(a)(iii)).
11/01/09
through 12/31/16: For the aggregate of Floors 31 (part)-34 and 37-39,
$1,031,773.10 (Sup9 §4(b)). Note that by 11/1/09, Floors 31 (part)-34
and 37-39 are scheduled to have check meters and, therefore, Alliance will be
charged separately for electricity for such floors instead of paying electricity
charges as a “rent inclusion factor” included in fixed rent for such
floors.
01/01/17
through 12/31/19: Rent for the 15th, 16th, 31st (part), 32nd-41st and
45
th
floors will be the product of the average of fixed annual rent per square foot
as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse
space, multiplied by the square footage of such space (Sup15 §12(b); Sup20
§3(a)).
34
th
Floor
:
05/01/99
through 10/31/09: $114,614.66 (Sup7 §3(b) and §7)
11/01/09
through 12/31/16: For the aggregate of Floors 31 (part)-34 and 37-39,
$1,031,773.10 (Sup9 §4(b)). Note that by 11/1/09, Floors 31 (part)-34
and 37-39 are scheduled to have check meters and, therefore, Alliance will be
charged separately for electricity for such floors instead of paying electricity
charges as a “rent inclusion factor” included in fixed rent for such
floors.
01/01/17
through 12/31/19: Rent for the 15th, 16th, 31st (part), 32nd-41st and 45
th
floors
will be the product of the average of fixed annual rent per square foot as of
12/30/16 of all space leased to Alliance other than concourse/subconcourse
space, multiplied by the square footage of such space (Sup15 §12(b); Sup20
§3(a)).
35
th
Floor
:
08/01/05
through 07/31/10: $215,974.08 (Sup14 §3(a)(1))
08/01/10
through 12/31/16: $232,979.92 (Sup14 §3(a)(1))
01/01/17
through 12/31/19: Rent for the 15th, 16th, 31st (part), 32nd-41st and 45
th
floors
will be the product of the average of fixed annual rent per square foot as of
12/30/16 of all space leased to Alliance other than concourse/subconcourse
space, multiplied by the square footage of such space (Sup15 §12(b) ; Sup20
§3(a)).
36
th
Floor (assuming that the
space is delivered on 07/01/01, as anticipated)
:
08/01/05
through 07/31/10: $216,201.63 (Sup14 §3(b)(1))
08/01/10
through 12/31/16: $233,225.38 (Sup14 §3(b)(1))
01/01/17
through 12/31/19: Rent for the 15th, 16th, 31st (part), 32nd-41st and 45
th
floors
will be the product of the average of fixed annual rent per square foot as of
12/30/16 of all space leased to Alliance other than concourse/subconcourse
space, multiplied by the square footage of such space (Sup15 §12(b); Sup20
§3(a)).
37
th
, 38
th
and 39
th
Floors
:
11/01/06
through 10/31/09: $437,872.58 (Sup7 §7)
11/01/09
through 12/31/16: For the aggregate of Floors 31 (part)-34 and 37-39,
$1,031,773.10 (Sup9 §4(b)). Note that by 11/1/09, Floors 31 (part)-34
and 37-39 are scheduled to have check meters and, therefore, Alliance will be
charged separately for electricity for such floors instead of paying electricity
charges as a “rent inclusion factor” included in fixed rent for such
floors.
01/01/17
through 12/31/19: Rent for the Ground (part), 15th, 16th, 31st (part), 32nd-41st
and 45
th
floors
will be the product of the average of fixed annual rent per square foot as of
12/30/16 of all space leased to Alliance other than concourse/subconcourse
space, multiplied by the square footage of such space (Sup15
§12(b)).
40
th
, 41
st
and 45
th
Floors
:
Through
11/30/16: $422,395.67 (Sup11 §2(c)(i); LTR1)
01/01/17
through 12/31/19: Rent for the 15th, 16th, 31st (part), 32nd-41st and 45
th
floors
will be the product of the average of fixed annual rent per square foot as of
12/30/16 of all space leased to Alliance other than concourse/subconcourse
space, multiplied by the square footage of such space (Sup15 §12(b); Sup20
§3(a)).
42
nd
Floor
Through
4/30/11: $214,170.05 (Sup25 §3(a)(i)).
5/1/11
through 9/30/11: Abated (Sup25 §3(b)).
10/1/11
through 4/30/16: $337,624.00 (Sup25 §3(a)(ii)).
5/1/16
through 12/31/19: $362,242.41 (Sup25 §3(a)(iii)).
Note that
by 5/1/11, Floor 42 is scheduled to have check meters and, therefore, Alliance
will be charged separately for electricity for Floor 42 instead of paying
electricity charges as a “rent inclusion factor” included in fixed rent for
Floor 42.
43
rd
and 44
th
Floors
commencement
through 4/30/12: $670,920.00 (Sup26 §3(a)(i)), except that the first
131 days are abated (Sup26 §3(b))
5/1/12
through 4/30/17: $740,807.50 (Sup26 §3(a)(ii))
5/1/17
through 12/31/19: $810,695 (Sup26 §3(a)(iii))
ELECTRICITY
Check
Meters:
|
All
floors have check meters except for Floors 31 (part), 32-34, and 37-39,
which will have check meters on or before November 1, 2009 (Sup9 §5) and
Floor 42, which will have check meters on or before May 1, 2011 (Sup25
§4(c)(i)). The check meters measure electricity demand and
consumption for each floor during a calendar month. Alliance
pays Landlord, within 30 days after receipt of a bill, Landlord’s cost of
the electricity consumed based on the applicable rate charged to the
Landlord by the supplying utility, plus a 2% administrative fee (Sup9
§5(b) and (c); Sup12 §4(b) and (c); Sup14 §4(b) and (c); Sup15 §4(b) and
(c); Sup22 §4(b); Sup24 §4(b); Sup25 §4(c); Sup26
§4(b)). Landlord will provide check meters for any portion of
the Concourse (part) space measuring at least 3,000 contiguous rsf (Sup15
§23(f)(i)). If the check meters for Floors 31 (part), 32-34,
and 37-39 are not installed by November 1, 2009, then Alliance will pay
Landlord what Landlord’s electrical consultant determines to be Landlord’s
cost for such electricity, provided that Alliance may dispute such
determination in accordance with a specified procedure.
|
|
|
Dispute:
|
Each
bill is binding on Alliance unless Alliance disputes such bill within 90
days of receipt. In case of a dispute, Alliance’s electrical
consultant will submit its determination within such 90 day period and
Landlord and Alliance will seek a resolution. Upon Alliance’s
request, Landlord will make available its utility bills for the building
for at least the last 3 years. If Landlord and Alliance cannot agree, they
will choose a third electrical consultant to perform a limited review
(Sup12, §5(c)(ii); Sup12 §4(c)(ii); Sup14 §4(c)(ii); Sup15 §4(c)(ii);
Sup22 §4(c)(ii); Sup24 §4(c)(ii); Sup25 §4(c)(iii); Sup26
§4(b)).
|
|
|
Wattage:
|
6
watts per usable square foot excluding building HVAC systems and other
base building systems (Sup9 §5(e); Sup12 §4(e); Sup14 §4(e);
Sup15 §4(e); Sup22 §4(e); Sup24 §4(e); Sup25 §4(e); Sup26
§4(e)).
|
|
|
Additional
Capacity:
|
Upon
notice from Alliance, Landlord will provide Alliance with (1) an
additional 400 amperes in the aggregate for the 15
th
and 16
th
floors (Sup12 §4(e)), and (2) up to another 1,800 amperes for the entire
demised premises (Sup14 §4(f)). Such notice will be given by Alliance on
or before, with regard to the 15
th
and 16
th
floors, the date Alliance delivers to Landlord its plans for its initial
fit-out of the 15
th
floor (but in no event later than June 30, 2001), and, with regard to the
rest of the demised premises, by December 31, 2001 (Sup12 §4(e) and Sup14
§4(e)). Alliance is responsible for any construction costs it
would incur in connection with alterations relating to such additional
electricity supply, as well as a pro-rata share of Landlord’s construction
costs (Sup12 §4(e); Sup14 §4(e); and Sup15 §4(f)).
|
|
|
Discontinuance
of Service:
|
Landlord
may discontinue furnishing electricity to Alliance only if Landlord
simultaneously discontinues service to 80% of the other building tenants
(Sup15 §4(d)), upon 60 days’ written notice, provided such period is
extended as reasonably necessary to permit Alliance to obtain electricity
from the utility company servicing the Building. In such case,
Alliance may use the existing wiring. The cost of installation
of any additional wiring will be borne, if such discontinuance is
voluntary, by Landlord, and if such discontinuance is involuntary, by
Landlord and Alliance with Alliance’s share equal to the total cost of
such additional wiring multiplied by a fraction, the numerator of which is
remaining months of the Lease term and the denominator of which is as
follows:
|
|
Floor(s)
|
Denominator
|
|
2,
8-14
|
188
(Sup15 §4(d))
|
|
15,
16
|
248
(Sup12 §4(d) and (h); Sup15 §4(d))
|
|
17
|
182
for the space demised by Sup22, 214 for the space demised by Sup18 and 219
for all other space on Floor 17 (Sup22 §4(d)).
|
|
31
(part), 32-34, 37-41, 45
|
294
(Sup9 §15(d); Sup15 §4(d))
|
|
31
(part)
|
116
(Sup24 §4(d))
|
|
35
and 36
|
237
(Sup14 §4(d); Sup15 §4(d))
|
|
42
|
150
(Sup25 §4(d))
|
|
43
and 44
|
104
(Sup26
§4(d))
|
Electricity Rent Inclusion
Factor for Floors 31 (part), 32-34, and 37-39
:
|
Until
November 1, 2009, the charge for electricity for Floors 31 (part), 32-34,
and 37-39 (the “ERIF”) is included in fixed annual rent (orig.
§7.02(a)). Such charge, however, is separately quantified (as
listed below) and is subject to increase or decrease (but in no event
below $2.75 per s.f. per annum) in proportion to increases or decreases in
Landlord’s electricity costs for the building (orig.
§7.02(a)).
|
|
Floor
(entire floor unless otherwise noted)
|
Original
ERIF
|
|
31(part),
33, 34
|
$249,902.46
(Sup7 §3(g))
|
|
32
|
$104,337.75
(Sup6 §3(c))
|
|
37
(NE Cor.), 38
|
$127,187.50
(orig. §7.02(a))
|
|
37
(NW Cor.)
|
$27,500.00
(orig. §46.02(d))
|
|
37
(SE Cor.)
|
$13,750.00
(Sup1 §3(e)
|
|
37
(SW Cor.)
|
$27,912.50
(Sup5 §3(c))
|
|
39
|
$96,937.50
(Sup4
§3(c))
|
|
A
determination by Landlord of a change in the ERIF as a result of a survey
of electrical consumption in the Demised Premises will be binding on
Alliance unless Alliance disputes such determination within 15 days of
receipt of such determination. If Alliance disputes such
determination, it will have its own electrical consultant at its own cost,
attempt to resolve the dispute in consultation with Landlord’s electrical
consultant. If they cannot agree on a resolution, they will
choose a third electrical consultant who’s decision will control (orig.
§7.03(b)).
|
Electricity Rent Inclusion
Factor for 42
nd
Floor
:
|
Until
May 1, 2011, the charge for electricity for Floor 42 is included in fixed
annual rent. The initial amount of such charge is $5.81 per
s.f. and is subject to increase or decrease (but in no event below $5.81
per s.f. per annum) in proportion to increases or decreases in Landlord’s
electricity costs for the building as well based on Alliance’s electricity
consumption. A determination by Landlord of a change in the
rent inclusion charge as a result of a survey of electrical consumption in
the Demised Premises will be binding on Alliance unless Alliance disputes
such determination within 30 days of receipt of such
determination. If Alliance disputes such determination, it will
have its own electrical consultant at its own cost attempt to resolve the
dispute in consultation with Landlord’s electrical
consultant. If they cannot agree on a resolution, they will
choose a third electrical consultant who’s decision will control (Sup25
§4(b)).
|
Supplies:
|
At
Landlord’s option, Alliance is required to purchase (for a reasonable
charge) from Landlord all lighting tubes, lamps, bulbs and ballasts used
in the demised premises (orig. §7.05(b)).
|
|
|
Concourse
Space:
|
Subject
to the following sentence, for any portion of the demised premises located
on the concourse consisting of less than 3,000 contiguous rsf, Alliance
will pay an ERIF of $0.75/rsf, subject to increase if Alliance uses the
space for anything other than storage (Sup15 §23(f)(ii)). For
the portion of the demised premises located on the concourse and leased
pursuant to Sup23, however, Landlord will provide electricity at no
additional charge provided that if Landlord determines on a reasonable
basis that Alliance is consuming excessive electricity, then Landlord may
commence charging Alliance for such electricity on either (at Landlord’s
option) a rent inclusion or submeter
basis.
|
TAX
ESCALATION
FLOOR
|
BASE YEAR
|
PERCENTAGE
|
Ground
Floor (part)
|
1999/2000
(Sup13§3(c)(1)).
|
0.483%
(Sup13
§3(c)(2))
|
2,
8, 9, 11-14
|
Average
of 2000/01 and 2001/02 (Sup15 §3(d)(i)).
|
14.72%
(Sup15
§3(d)(ii); Sup19 §2(d))
|
10
|
Average
of 2000/01 and 2001/02 (Sup15 §3(d)(i)).
|
2.11%
(Sup19 §3(d))
|
15
|
1999/2000
(Sup12 §3(a)(4)(a)).
|
2.150%
(Sup12
§3 (a)(4)(b))
|
16
|
1999/2000
(Sup12 §3(b)(4)(a)).
|
2.150%
(Sup12
§3(b)(4)(b))
|
17
|
Average
of 2000/01 and 2001/02 (Sup16 §3(d)(i); Sup17 §3(d)(i); Sup18 §3(d)(i))
Except with respect to the Sup22 17
th
floor space, for which it is the average of 2003/04 and 2004/05 (Sup22
§3(d)(i)).
|
2.147%
(Sup16 §3(d)(ii); Sup17 §3(d)(ii); Sup18 §3(d)(ii);
Sup22 §3(d)(ii))
|
31
(part), 33, 34
|
Average
of 1994/95 and 1995/96 (Sup7 §(3)(f)(i)). Beginning on
11/01/09, changed to 1995/96 (Sup9 §4(e)).
|
5.130%
(Sup7
§3(f)(ii))
|
31
(part)
|
Average
of 2007/08 and 2008/09 (Sup24 §3(d)(i)).
|
1.35%
(Sup24 §3(d)(ii))
|
32
|
1993/94 (Sup6
§3(b)(i)). Beginning on 11/01/09, changed to
1995/96 (Sup9 §4(e)).
|
2.150%
(Sup6
§3(b)(ii))
|
35
|
2000/01
(Sup14 §3(a)(4)(a)).
|
2.150%
(Sup14
§3(a)(4)(b))
|
36
|
2000/01
(Sup14 §3(b)(4)(a)).
|
2.150%
(Sup14
§3(b)(4)(b))
|
37
(NE Cor.), 38
|
1985/86 (orig.
§4.01(a)(i)). Beginning on 11/01/09, changed to 1995/96 (Sup9
§4(e)).
|
2.820%
(orig.
§4.01(a)(ii)
|
37
(NW Cor.)
|
1985/86 (orig.
§4.01(a)(i)). Beginning on 11/01/09, changed to 1995/96 (Sup9
§4(e)).
|
0.610%
(orig.
§46.02(b))
|
37
(SE Cor.)
|
1985/86
(Sup1 §3(a)). Beginning on 11/01/09, changed to 1995/96 (Sup9
§4(e)).
|
0.300%
(Sup1
§3(b))
|
37
(SW Cor.)
|
1988/89 (Sup5,
§3(b)(i)). Beginning on 11/01/09, changed to 1995/96 (Sup9
§4(e)).
|
0.618%
(Sup5
§3(b)(ii)
|
39
|
1988/89 (Sup4
§3(b)(i)). Beginning on 11/01/09, changed to 1995/96 (Sup9
§4(e)).
|
2.150%
(Sup4
§3(b)(ii))
|
40,
41, 45
|
1995/96 (Sup9
§4(d)(i)).
|
6.446%
(Sup10
§2(a))
|
42
|
1988/89
(Sup25 §3(d)(i)(a)). Beginning on 5/1/11, changed to average of
2007/08 and 2008/09 (Sup25 §3(d)(i)(b)).
|
2.24%
(Sup25
§3(d)(ii))
|
43
and 44
|
Average
of 2007/08 and 2008/09 (Sup26 §3(d)(i)).
|
4.45%
(Sup26
§3(d)(ii))
|
Due
Date
: 6/1 and 12/1 of each comparative year, subject to
rescheduling based on the date tax payments are due from Landlord (orig
§4.01(b)(1)).
Audit/Dispute
: Landlord’s
real estate tax statements given to Alliance are binding unless Alliance
challenges such statement in writing within 90 days (Sup7 §6(d)) of
receipt. Alliance must make payments in accordance with the statement
pending dispute resolution (orig §4.01(b)(4)).
Tax Increase upon
Disposition
: Under certain circumstances, if, as a result of
the sale of an interest in the property or entity owning the property, the real
estate taxes increase, Alliance will receive an abatement of the resulting
escalation, and thereafter this Lease provision is deleted. Under
certain circumstances, if, after Fisher-Sixth Avenue Company’s or a Fisher
family affiliate’s purchase of Hawaiian Sixth Avenue Corp.’s or its successor’s
interest in the property or the entity owning the property, as a result of a
sale of a less than majority interest in the property or the entity owning the
property or the admission into the entity owning the property of an entity
owning less than a majority interest in such entity, the real estate taxes
increase, Landlord will pay Alliance $1,500,000.00 (Sup9 §15; Sup12
§17).
Building Square
Footage
: Total rentable area of the office and store space in
the building is 1,641,000 sf for tax escalation purposes (orig
§4.01(a)(ii)).
Concourse
Space
: Alliance will pay a tax escalation for its concourse space
only if the previous tenant of such space was subject to a tax
escalation. The base year for any such escalation will be the average
of 2000/01 and 2001/02 (Sup15, §23(g)).
EXPENSE
ESCALATION
Floor
|
Base
|
Percentage
|
Ground
(part)
|
Expenses
for 1999 calendar year (Sup13 §3(c)(3)).
|
0.483%
(Sup13
§3(c)(4))
|
2,
8, 9, 11-14
|
Expenses
for 2001 calendar year (Sup15 §3(d)(ii)).
|
15.67%
(Sup15
§3(d)(iv); Sup19 §2(c))
|
15
|
Expenses
for 1999 calendar year (Sup12 §3(a)(4)(c)).
|
2.290%
(Sup12
§3(c)(4)(d))
|
16
|
Expenses
for 1999 calendar year (Sup12 §3(b)(4)(c)).
|
2.290%
(Sup12
§3(b)(4))
|
17
|
Expenses
for 2001 calendar year (Sup16 §3(d)(iii); Sup17 §3(d)(iii); Sup18
§3(d)(iii)), except for the Sup22 17
th
floor space, for which it is 2004 (Sup22 §3(d)(iii)).
|
2.288%
(Sup16 §3(d)(iv); Sup17 §3(d)9iv); Sup18 §3(d)(iv) and Sup22
§3(d)(iv))
|
31
(part), 33, 34
|
Expenses
for 1995 calendar year (Sup7 §3(f)(iii); Sup9 §4(e)).
|
5.450%
(Sup7
§3(f)(iv))
|
31
(part)
|
Expenses
for 2008 calendar year (Sup24 §3(d)(iii)).
|
1.43%
(Sup24
§3(d)(iv))
|
32
|
Expenses
for 1993 calendar year (Sup6 §3(b)(iii)). As of 11/01/09,
changed to expenses for calendar year 1995 (Sup9 §4(e)).
|
2.290%
(Sup6
§3(b)(iv))
|
35
|
Expenses
for 2000 calendar year (Sup14 §3(a)(4)(c)).
|
2.290%
(Sup14
§3(a)(4)(d))
|
36
|
Expenses
for 2000 calendar year (Sup14 §3(b)(4)(c)).
|
2.290%
(Sup14
§3(b)(4)(d))
|
37
(NE Cor.) and 38
|
$6,509,748 (orig
§5.01(a)(i)). As of 11/01/09, changed to expenses for 1995
calendar year (Sup9 §4(e)).
|
3.000%
(orig
§5.01(a)(iv))
|
37
(NW Cor.)
|
$6,509,748 (orig.
§5.01(a)(i)). As of 11/01/09, changed to expenses for 1995
calendar year (Sup9 §4(e)).
|
0.650%
(orig.
§46.01(b))
|
37
(SE Cor.)
|
$6,509,748 (Sup1
§5.01(a)(i)). As of 11/01/09, changed to expenses for calendar
year 1995 (Sup9 §4(e)).
|
0.330%
(Sup1
§3(c))
|
37
(SW Cor.)
|
Expenses
for calendar year 1989 (Sup5 §3(b)(iii)). As of 11/01/09,
changed to expenses for calendar year 1995 (Sup9 §4(e)).
|
0.659%
(Sup5
§3(b)(iv)
|
39
|
Expenses
for calendar year 1989 (Sup4 §3(b)(iii)). As
of 11/01/09, changed to expenses for calendar year 1995 (Sup9
§4(e)).
|
2.290%
(Sup4
§3(b)(iv))
|
40,
41, 45
|
Expenses
for calendar year 1995 (Sup9 §4(d)9iii)).
|
6.865%
(Sup11 §2(c))
|
42
|
Expenses
for calendar year 1989 (Sup25 §3(d)(iii)(a)). As of 5/1/11,
changed to expenses for calendar year 2008 (Sup25
§3(d)(iii)(b)).
|
2.38%
(Sup25
§3(d)(iv))
|
43
and 44
|
Expenses
for calendar year 2008 (Sup26 §3(d)(iii)).
|
4.73%
(Sup26
§3(d)(iv))
|
Management
Fee
: The management fee included in building expenses is an
amount equal to the greater of (a) $152,250, and (b) the product of $152,250
multiplied by a fraction the numerator of which is building expenses (exclusive
of management fees for such year) and the denominator of which is $6,357,498
(orig §5.01(a)(v)).
Payment
Frequency
: Monthly, equal to 1/12
th
of
Alliance’s share of previous comparative year’s annual escalation over the base
year, subject to adjustment for reasonably anticipated increases (orig
§5.01(b)(1)).
Audit/Dispute:
Landlord’s
expense statements given to Alliance are final and determinative unless Alliance
challenges such statement in writing (which will also set forth the basis of
such challenge with particularity) within 90 days (Sup7 §6(d)) of
receipt. Alliance must make payments in accordance with the statement
pending dispute resolution. So long as Alliance has continued to pay
the expense escalation pursuant to Landlord’s statements, Alliance has the right
to examine Landlord’s books and records provided such examination is commenced
within 60 days and concluded within 90 days (Sup7 §6(d)) following the rendition
of the expense statement in dispute. Landlord and Alliance will
resolve the dispute by arbitration with 3 arbitrators, each of whom will have at
least 10 years experience in the operation and management of major Manhattan
office buildings (orig. §5.01(b)(2)).
Concourse
Space
: Alliance will pay an expense escalation for its
concourse space only if the previous tenant of such space was subject to an
expense escalation. The base year for any such escalation will be
calendar year 2001 (Sup15, §23(g)).
Building Square
Footage
Total rentable area of the building is 1,540,000 sf
for expense escalation purposes (orig. §5.01 (a)(iv)).
CLEANING
Cleaning
services are provided by the Cleaning Contractor pursuant to two separate
agreements, one covering the office space and the other covering the ground
floor space. The following summary is applicable to both such
agreements. Unless otherwise noted, the section references are also
applicable to both agreements.
Services:
|
The
Cleaning Contractor provides certain cleaning services for the office
areas and lavatories of the demised premises (§1(a)). The
cleaning services provided do not include the cleaning of below-grade
space, kitchen, pantry or dining space, storage, shipping, computer or
word-processing space, or private or executive lavatories
(§1(b)). The Cleaning Contractor is not responsible for
removing debris and rubbish from areas under construction in the demised
premises (§2). The quality of the cleaning services will be
comparable to that provided in first class buildings in midtown Manhattan
(§1(a)).
|
|
|
Access:
|
The
Cleaning Contractor has access to the demised premises from 6 p.m. to 2
a.m. on business days. The Cleaning Contractor has the right to
use Alliance’s light, power and water, as reasonably required
(§1(a)).
|
|
|
Term:
|
The
cleaning agreements are co-terminous with the Lease
(§2).
|
|
|
Fee:
|
Alliance
pays the Cleaning Contractor, for the office space, a fixed monthly fee of
$310,465.73, plus an amount equal to the fee for Floor 36 multiplied by
the percentage increase in the labor rate in 2000 over 1999, plus an
amount equal to the fee for Floors 2, 8, 9, 11-14 multiplied by the
percentage increase in the labor rate in 2001 over 2000, plus an amount
equal to the fee for Floor 10 multiplied by the percentage increase in the
labor rate in 2001 over 2000 (CAO §3; CAO-2 §3; CAO-3 §3; CAO-4
§3; CAO-5 §3; CAO-6 §3; CAO-7 §3; CAO-8 §3; CAO-9 §3; CAO-11
§3). Alliance pays the Cleaning Contractor a fixed monthly fee
of $2,833.33 for the ground floor space (CAG §3). The fixed
monthly fee for cleaning the office space will increase by $11,087.73 plus
an adjustment based on the increase in the labor rate in 2008 over 2007
with the addition of remainder of Floor 31 to demised premises (CAO-10 §3)
and will increase by $36,604.68 plus an adjustment based on the increase
in the labor rate in 2008 over 2007 with the addition of Floor 10 to
demised premises (CAO-12 §3). The fixed monthly fee is
inclusive of sales tax and is payable in advance on the first of each
month (§3). Payment for any additional cleaning services will
be made by Alliance within 20 days of demand. The cost of such additional
services must be comparable to services provided in comparable buildings
(§1(a)). In addition to the fixed fee, Alliance pays the
Cleaning Contractor a percentage of annual increases in cleaning costs
(which annual increases are equal to the annual percentage increase in
porters’ wages over a porter’s wage base year) over an amount representing
base year cleaning costs. The percentage for the office space
is 53.899% (CAO §3 and §4; CAO-2 §3; CAO-3 §3; CAO-4 §3; CAO-5 §3; CAO-6
§3; CAO-7 §3; CAO-8 §3; CAO-9 §3; CAO-11 §3) and 0.483% for the ground
floor space (CAG §4). The percentage for the office space will
increase by 1.46% (CAO-10 §3) to with the addition of the remainder of
Floor 31 and will increase by 4.82% with the addition of Floors 43 and
44. The other variables in such calculation are as
follows:
|
|
Floor
|
Base Year
for
Porter’s
Wages
|
Base for Cleaning Costs
|
|
Ground
(part)
|
1999
(CAG §4)
|
$6,286,271.55
(CAG §4)
|
|
2,
8-14
|
2001
(CAO-5, §4)
|
$6,444,056.97
(CAO-5, §4)
|
|
15
and 16
|
1999
(CAO-3 §4)
|
$6,247,986
(CAO-3, §4)
|
|
17
(except for the part demised by Sup22)
|
2001
(CAO-6 §4; CAO-7 §4; CAO-8 §4)
|
$6,629,645.81
|
|
17
(the part demised by Sup22)
|
2004
(CAO-9 §4)
|
$7,606,434.69
(CAO-9 §4)
|
|
31
(part) , 32-34, 37-41 and 45
|
1995
(CAO §4(a)(i))
|
$5,827,772
(CAO §4(a)(iii))
|
|
31
(the part demised by Sup24)
|
2008
(CAO-10 §4)
|
$8,408,948.97
(CAO-10 §4)
|
|
35
and 36
|
2000
(CAO-4 §4)
|
$6,381,693
(CAO-4 §4)
|
|
42
|
2008
(CAO-11 §4)
|
$8,408,948.97
(CAO-11 §4)
|
|
43
and 44
|
2008
(CAO-12 §4)
|
$8,408,948.97
(CAO-12 §4)
|
Dispute
with Cleaning Contractor:
|
If
Alliance believes that the Cleaning Contractor is not adequately
performing under a cleaning agreement, and the Cleaning Contractor has not
corrected such inadequate performance within 10 days after notice,
Alliance may arbitrate whether the Cleaning Contractor is adequately
performing. If a majority of the required arbitrators find that
the Cleaning Contractor is not adequately performing, then the Cleaning
Contractor will correct such inadequate performance within 10 days of such
finding. If Contractor fails to do so, Alliance may terminate
the cleaning agreement upon 10 days notice. (§5).
|
|
|
Default
by Alliance:
|
If
Alliance fails to make a payment due under a cleaning agreement within 15
days of notice of such failure, the Cleaning Contractor may, upon 10 days
notice terminate the cleaning agreement if Alliance also fails to make
such payment within such 10 day period. In case of such
termination, Alliance may only use the approved cleaning contractor for
the building (§6). If a payment is not made within 3 days of
notice of such failure, such payment accrues interest from the due date at
prime rate, provided that Cleaning Contractor is not obligated to give
such notice more than twice a year
(§12).
|
Rent
Credit:
|
Alliance
is entitled to a credit against the monthly installment of fixed rent in
the amount of $169,479.10 per month (Sup9 §4(c); Sup10 §2(c); Sup11 §2(c);
LTR1; Sup12 §3(a)(3) and §3(b)(3); Sup14 §3(a)(3) and §3(b)(3); Sup15
§3(c)) Sup16 §3(c); Sup17 §3(c); Sup18 §3(c) and Sup22 §3(c) plus an
amount equal to the credit for Floor 36 multiplied by the percentage
increase in the labor rate in 2000 over 1999 (Sup14
§3(b)(3)). The monthly credit will increase by (i) $92,734.38
plus an adjustment based on the increase in the labor rate in 2001 over
2000 with the addition of Floors 2, 8, 9, 11-14 to the demised premises
(Sup15 §3(c); Sup19 §2(c)), (ii) by $13,296.17 plus an adjustment based on
the increase in the labor rate in 2001 over 2000 with the addition of
Floor 10 to the demised premises (Sup19 §3(c)); (iii) by $11,087.72 plus
an adjustment based on the increase in the labor rate in 2008 over 2007
with the addition of remainder of Floor 31 to the demised premises (Sup24
§3(c)); (iv) by $220,539.40 plus an adjustment based on the increase in
the labor rate in 2008 over 2007 on May 1, 2011 (Sup25 §3(c)); and (v) by
$439,256.17 plus an adjustment based on the increase in the labor rate in
2008 over 2007 on May 1, 2011.
|
|
|
Termination
of Cleaning Agreement:
|
In
the event the cleaning agreement for the office space is terminated,
Landlord will provide cleaning services and Alliance will pay Landlord on
a monthly basis for the office space (assuming that all of the office
space demised under the lease is delivered to Alliance at that time)
60.17% (Sup26 §7(a)) of annual increases in cleaning costs (which annual
increases are equal to annual percentage increases in porter’s wages) over
Landlord’s cleaning costs for the entire building during the first full
calendar year after the Cleaning Agreement’s termination (orig. §6.04, as
modified by Sup9 §8(a)). Landlord’s cleaning cost escalation
statements are final and determinative unless Alliance challenges such
statement in writing within 90 days (Sup7 §6(d)) of
receipt. Alliance must make payment in accordance with such
statement pending dispute resolution. Landlord and Alliance
will resolve any dispute by arbitration with 3 arbitrators, each of whom
will have at least 10 years’ experience in the operation and management of
major Manhattan office buildings (orig.
§6.01(d)).
|
Total
rentable area of the building is 1,515,000 sf for cleaning cost escalation
purposes.
MAINTENANCE &
REPAIRS
Alliance’s
Responsibility
|
Alliance
will make repairs to the demised premises necessitated by its acts,
omissions, occupancy or negligence (except for fire or other casualty
caused by Alliance’s negligence if Landlord’s insurance is not invalidated
thereby) (orig. §9.01).
|
|
|
Landlord’s
Responsibility
|
Landlord
will maintain the building and its common areas in a manner appropriate to
a first class office building. The building exterior, the
window sills outside the window and the windows are not part of the
demised premises (orig.
§9.01).
|
Approval:
|
All
alterations require Landlord’s prior written approval, which will not be
unreasonably withheld or delayed, provided that it does not (1) affect the
structural integrity of the building, (2) affect the exterior of the
building, or (3) adversely affect the building’s systems without, in
Landlord’s opinion, adequate mitigation (orig. §8.01).
|
|
|
Landlord’s
Reimbursement:
|
Alliance
will reimburse Landlord’s out-of-pocket costs incurred in reviewing
alterations (orig. §8.01).
|
|
|
Contractors:
|
Landlord’s
affiliate will act as general contractor for any alteration work performed
anywhere in the demised premises for one year after the delivery of the
2
nd
and 8
th
-14
th
floors, for a fee not to exceed 6% of the aggregate cost of such
work. In acting as general contractor, Landlord’s affiliate
will obtain competitive bids from at least 3 subcontractors approved by
Landlord for each category of work, except that there is only one approved
subcontractor for air conditioning balancing work (although Alliance may
have another subcontractor verify the work) and there are only 2
unaffiliated subcontractors for the base building work (Sup15
§6(a)). Alliance and Plaza Construction Corp., Landlord's
affiliate, have subsequently entered into that certain Master Agreement
dated January 27, 2004 pursuant to which Plaza Construction Corp. will
provide construction management services to Alliance in respect of
construction projects at the building. Landlord must have given
its approval of any contractors performing
alterations. Alliance will inform the Landlord of the name of
any contractors or subcontractors Alliance proposes to do any alterations
at least 10 days prior to work commencement (orig. §8.01
2(a)).
|
|
|
Insurance
Certificates:
|
Prior
to commencing any alterations, Alliance will deliver to Landlord an
insurance certificate evidencing the existence of workmen’s compensation
insurance covering all persons involved in such alterations and reasonable
comprehensive general liability and property damage insurance with
coverage of at least $1 million single limit (orig.
§8.01(7)).
|
|
|
Records:
|
Alliance
will keep records of alterations exceeding $25,000 in cost and provide
copies of such records to Landlord within 45 days of demand (orig.
§8.07).
|
|
|
38
th
/39
th
Floor Staircase:
|
Alliance
has the right to install a staircase between the 38
th
and 39
th
floors provided that Landlord approves the plans therefor and the
staircase is installed in compliance with Articles 8 and 45 of the lease
(Sup4 §14).
|
|
|
Expiration
of Term:
|
All
improvements installed by Landlord are the property of the Landlord (orig.
§8.03) and all permanent improvements (including, therefore, any kitchen,
pantry or dining room) will remain at the expiration of the term without
Alliance being obligated to remove such permanent
improvements. (orig. §8.04) All fixtures (other than
trade fixtures) installed by Landlord become the property of the Landlord,
and will remain as part of the demised premises, upon expiration of the
lease. All furnishings and trade fixtures supplied by Alliance
at its expense are Alliance’s property and, with regard to Alliance’s
furniture and movable office equipment only (Sup7 §6(e)), will be removed
upon the expiration of the lease term following the lease expiration
unless Landlord notifies Alliance (within 30 days after Alliance’s notice,
which notice will be given at least 3 months prior to expiration of the
lease term) that such property may remain in the demised premise following
the lease term expiration (orig. §8.05). Alliance has no
obligation to remove any staircases in the demised premises (Sup9
§21).
|
MISCELLANEOUS MATTERS
RELATING TO IMPROVEMENTS
Emergency
Generator:
|
Alliance
is permitted to install a 2800 KW Detroit diesel emergency generator
back-up power system in specified locations in the building (Sup27
§2(b)). Alliance is permitted to connect the back-up power
system to the building’s emergency generator system. Up to 1500
KW of the power generated by the back-up power system will back-up the
building’s emergency generator system (Sup27 §2(d)). Landlord
will operate and maintain the back-up power system at Alliance’s expense
and, as part of such obligation, Landlord will enter into a maintenance
contract for same subject to the reasonable approval of Alliance (Sup27
§2(d)). Alliance is obligated to pay a one-time fee for such
emergency generator rights equal to $75,000, adjusted for inflation based
on increases in the Consumer Price Index (Sup27
§2(f)). Alliance will pay for its proportionate share (based on
KW capacity) of fuel purchased for the emergency generator system and has
the right, subject to Landlord’s reasonable approval, to install its own
fuel storage tanks (Sup27 §2(g)). The back-up power system will
remain and not be removed at the end of the lease term (Sup27
§2(i)). Alliance has, through 1/31/10, a limited right of first
offer to lease space to install another emergency
generator. Alliance has 15 days to accept any such offer (Sup27
§3).
|
|
|
Communications
Antenna or Dish:
|
Alliance
has the right, subject to the other alteration provisions of the Lease and
to all applicable legal requirements, to install a communications antenna
or dish on the roof in a location reasonably determined by
Landlord. Landlord may require Alliance to relocate the
antenna, at Landlord’s expense, to mitigate interference with other uses,
so long as the antenna is able to function in its relocated position,
provided that if such relocation does mitigate the interference, Landlord
may require Alliance to remove the antenna so long as no other antennas
are allowed to be installed on the roof and Landlord bears the cost of
such removal and the unamortized value of the antenna. If
deemed reasonably advisable by Landlord’s engineer, Landlord will, at
Alliance’s expense, reinforce the area under the antenna and, upon lease
expiration, Alliance will remove the antenna and restore any damage caused
thereby. Alliance will pay Landlord one-half of fair market
rent for the roof space used by the antenna. Alliance, under
Landlord’s supervision (the cost of which Alliance is obligated to
reimburse, has access to the roof and other areas of the building as
reasonably necessary to maintain and repair the antenna (Sup9
§20).
|
|
|
Communications
Wiring:
|
Landlord
will provide Alliance a reasonable area in a common vertical riser shaft
in the building for the installation of data, communications and security
system cabling.
|
|
|
Initial
Fit-Out of Balance of 31st Floor:
|
Alliance,
at its expense, will prepare a complete set of plans for the work, which
is subject to the reasonable approval of Landlord (orig.
§45.01). Although Alliance is permitted to use its own
engineer, such plans ultimately are subject to the reasonable approval of
Landlord’s designated engineer. There is no deadline for the
delivery to Landlord of the plans for Alliance’s initial fit-out (Sup24
§6(a)). Landlord will provide Alliance with a $762,240
allowance for the hard costs and certain soft costs of the
fit-out. The allowance can be disbursed in installments upon
Alliance’s request and any unused portion will be credited against fixed
rent (Sup24 §6(b)(i)). Alliance may use the allowance to pay
for construction work undertaken in the demised premises leased prior to
Sup24, but if Alliance draws on the allowance prior to May 1, 2010 then
the allowance will be reduced by the future value of the amount drawn upon
calculated at 6% per year (Sup24
§6(b)(ii)).
|
Initial
Fit-Out of 42
nd
Floor:
|
Alliance,
at its expense, will prepare a complete set of plans for the work, which
is subject to the reasonable approval of Landlord (orig.
§45.01). Although Alliance is permitted to use its own
engineer, such plans ultimately are subject to the reasonable approval of
Landlord’s designated engineer. There is no deadline for the
delivery to Landlord of the plans for Alliance’s initial fit-out (Sup25
§6(a)). Landlord will provide Alliance with a $1,266,090
allowance for the hard costs and certain soft costs of the
fit-out. The allowance can be disbursed in installments upon
Alliance’s request and any unused portion will be credited against fixed
rent (Sup25 §6(b)). If, however, Alliance draws on the
allowance prior to May 1, 2011 then the allowance will be reduced by the
future value of the amount drawn upon calculated at 6% per year (Sup25
§6(b)(ii)).
|
|
|
Initial
Fit-Out of 43
rd
and 44
th
Floors:
|
Alliance,
at its expense, will prepare a complete set of plans for the work, which
is subject to the reasonable approval of Landlord (orig.
§45.01). Although Alliance is permitted to use its own
engineer, such plans ultimately are subject to the reasonable approval of
Landlord’s designated engineer. There is no deadline for the
delivery to Landlord of the plans for Alliance’s initial fit-out (Sup26
§6(a)).
|
Subordination,
Non-Disturbance and Attornment:
|
The
Lease is subordinate to all present and future mortgages and ground leases
only to the extent Alliance receives a subordination, non-disturbance and
attornment agreement from the holder thereof (orig. §11.01; Sup15
§8). Alliance will not exercise any right to terminate the
lease due to an act or omission of Landlord without first giving notice of
such act or omission to any mortgagee or ground lessor of which Alliance
has been notified and giving such mortgagee or ground lessor an
opportunity to cure such act or omission within a reasonable period of
time after such notice provided that such mortgagee or ground lessor
notifies Alliance that it will commence and continue to remedy such act or
omission (orig. §11.02). Alliance and the property’s mortgagee
are parties to a subordination, non-disturbance and attornment agreement
(SNDA-M). Alliance and the property’s ground lessor are parties
to a subordination, non-disturbance and attornment agreement
(SNDA-G).
|
|
|
Estoppel:
|
Alliance
will provide an estoppel certificate within 10 days after Landlord’s
request. The estoppel certificate will certify:
(a)
that the Lease is unmodified and in full force and effect or, if there has
been any modification that the same is in full force and effect as
modified and state any such modification;
(b)
whether the term of the Lease has commenced and rent become payable
thereunder; and whether Alliance has accepted possession of the demised
premises;
(c)
whether or not there are then existing any defenses or offsets which are
not claims under paragraph (e) below against the enforcement of any of the
agreements, terms, covenants, or conditions of the Lease any modification
thereof upon the part of Alliance to be performed or complied with, and,
if so, specifying the same;
(d)
the dates to which the fixed annual rent, and additional rent, and other
charges hereunder, have been paid; and
(e)
whether or not Alliance has made any claim against Landlord under the
Lease and if so the nature thereof and the dollar amount, if any, of such
claim (orig. §36).
|
Insurance:
|
Alliance
will reimburse Landlord for any increases in Landlord’s fire insurance
caused by Alliance (orig. §10.03).
|
|
|
Landlord
|
Landlord
is not liable for damage or injury to property or persons unless caused by
or due to the negligence of Landlord or its agents, servants or employees
(orig. §12.01). Alliance will look solely to Landlord’s estate
in the Building for the satisfaction of any judgment (o rig.
§12.05).
|
|
|
Alliance:
|
Alliance
will reimburse Landlord for all costs incurred by Landlord that Landlord
does not recover from insurance resulting from Alliance’s breach under the
lease, by reason of damage or injury caused by Alliance in connection with
the moving of Alliance’s property except as provided in the lease, and by
reason of the negligence of Alliance or its agents, servants or employees
in the use or occupancy of the demised premises (orig.
§12.03). Alliance will indemnify, defend and save Landlord
harmless from any liability arising from Alliance’s use of the demised
premises, breach of the lease, or holding over, except for any liability
arising from Landlord’s negligence (orig. 35.01).
|
|
|
Waiver
of Subrogation
|
Both
parties are required to obtain waivers of their insurer’s rights of
subrogation provided that such waiver does not result in an additional
expense to the party waiving the right of subrogation, unless the other
party agrees to be responsible for such additional expense (orig.
§12.06(a) and (b)).
|
General:
|
The
demised premises are permitted to be used for executive and general
offices (orig. §2). Landlord represents that such use does not
violate the certificate of occupancy for the demised premises (orig.
§17). The demised premises may not be used for a banking office
open to street traffic or certain other undesirable businesses (orig.
§42.01).
|
|
|
Dwyer
Unit:
|
Alliance
may, subject to Landlord’s consent which may not be unreasonably withheld,
install in the demised premises a Dwyer Unit at its sole cost expense
provided that:
(a) it
is used for Alliance’s employees and guests;
(b) no
installation of ventilation equipment is required and no odors emanate
from the demised premises from the use thereof;
(c) no
additional air conditioning service is required thereby;
(d) use
of the unit is expressly subject to the extra cleaning and water
consumption provisions of the lease; and
(e) Alliance
will engage an extermination service (orig. §49.01; Sup7
§18).
|
|
|
Dining:
|
Alliance
may, subject to Landlord’s consent which may not unreasonably be withheld,
install a dining room with kitchen for use by Alliance’s employees and
guests in the demised premises (Sup7 §18), provided that such facilities
(a) comply with all applicable laws, (b) are properly ventilated and (c)
all wet garbage is bagged and stored so that no odor emanates therefrom
(orig. §49.06). If Alliance installs such facilities, then (a)
Alliance will pay landlord the cost of an extermination service and (b)
will have a refrigerated garbage storage room or other means of disposing
of garbage therefrom reasonably satisfactory to Landlord (orig. 32.08 (as
modified by Sup9 §6(b)); orig. §49.02), but such refrigerated room will
only be required if such wet garbage creates an odor or pest problem
(orig. §49.02). Alliance may install additional dining
facilities on any floor of the demised premises comparable to the dining
facility located on the 39
th
floor (as it existed as of 8/16/94). (Sup9
§25)
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|
|
Corporate
Training Facility:
|
Subject
to the other terms of the lease and all applicable laws, Alliance may use
a portion of the demised premises for a corporate training facility (Sup5
§11(c)).
|
|
|
Concourse:
|
Subject
to the following sentence, the portion of demised premises located on the
concourse may be used for storage, mailroom, computer printing room,
incidental office, dining room or cafeteria purposes and any other legal
purpose (Sup15 §23(e)). The portion of the demised premises
located on the concourse and leased pursuant to Sup23, however, may be
used only for storage purposes except that Alliance may also install
electrical switches therein in certain specified
locations (Sup23
§4).
|
Expiration
Date:
|
December
31, 2019 (Sup15 §12(a)).
|
|
|
|
Early
Termination (45
th
Floor):
|
Provided
Alliance never occupies the 45
th
floor, Alliance may upon written notice to Landlord given on or before
1/1/15, terminate the Lease with respect to the 45
th
floor effective 12/31/16 without penalty (Sup15, §21).
|
|
|
|
Landlord’s
5 Year Extension Option:
|
·
|
Landlord
may upon written notice to Alliance given on or before 11/30/16, extend
the term from 12/31/19 to 12/31/24 (Sup15 §13(a)(i)).
|
|
|
|
|
·
|
Fixed
annual rent during such extension period would be at the rate of the
average fixed annual rent per s.f. being paid by Alliance on 12/30/19 for
all of its space in building (other than ground floor, concourse or
subconcourse space). The method of calculating escalations
would remain unchanged for such period (Sup15 §13(a)(ii) and (iii); Sup21
§9(a)).
|
|
|
|
Alliance’s
5 Year Extension Option:
|
·
|
If
Landlord extends the term to 12/31/24 as provided above, then on or before
12/31/16, Alliance may extend the term to 12/31/29 (Sup15
§13(b)).
|
|
|
|
|
·
|
Fixed
annual rent during such extension period would be at the rate of the
average fixed annual rent per s.f. being paid by Alliance on 12/30/19 for
all of its space in the building (other than concourse or subconcourse
space). The method of calculating escalations would remain
unchanged for such period (Sup15 §13(b)).
|
|
|
|
|
·
|
Upon
exercise of this 5 year extension option, Alliance loses its right to
exercise its 10 year extension option described below.
|
|
|
|
Alliance’s
10 Year Extension Option:
|
·
|
Alliance
has the option to extend the term for 10 years (Sup9 §12(a)) to expire on
12/31/29 if Landlord does not exercise its 5 year extension option, or
12/31/34 if Landlord does exercise its 5 year extension option and
Alliance does not exercise its 5 year extension option.
|
|
|
|
|
·
|
If
Landlord does not exercise its 5 year extension option, the exercise
deadline for Alliance’s 10 year extension option is no later than 1/31/17,
but no earlier than 12/1/16 (Sup15 §13(c)). If Landlord does
exercise its 5 year extension option and Alliance does not exercise its 5
year extension option, then the exercise deadline for Alliance’s 10 year
extension option is 12/31/21 (Sup9 §12(a)(i)).
|
|
|
|
|
·
|
As
conditions to the exercise of Alliance’s 10 year extension option, as of
the date of exercise and as of the first day of the extension period (i)
Alliance can not be in default of beyond applicable notice and grace
periods of its obligation to pay fixed annual rent, tax escalations and
expense escalations, and (ii) Alliance and its affiliates must occupy at
least 200,000 rsf (Sup9 §12(a)(ii) and (iii)).
|
|
|
|
|
·
|
The
fixed annual rent for Alliance’s 10 year extension period is 95% of fair
market rent determined as of 36 months before what would have been the
expiration of the term if the term had not been extended by Alliance’s ten
year extension option, as determined by Landlord and notified to Alliance
in writing within 30 days thereafter, plus an increase in proportion to
the increase over such 36 month period of the average of the CPI for Urban
Consumers and CPI for Urban Wage Earners (both New York, NY-Northeast NJ,
base year 1982-84 =100, “All Items”) (Sup9 §12(b)). If Alliance
disputes Landlord’s determination of the rent, then Landlord and Alliance
will resolve the dispute according to a specified arbitration process
(Sup9 §12(b) and §16).
|
|
·
|
For
purposes of calculating real estate tax escalations, the base year during
such extension period is 2019/20 if Landlord does not exercise its 5 year
extension option, or 2024/25 if Landlord does exercise its 5 year
extension option (Sup9 §12(c)(i); Sup15 §13(b) and (c)). For
purposes of calculating expense escalations, the base year for building
expenses during such extension period is calendar year 2019 if Landlord
does not exercise its 5 year extension option, or calendar year 2024 if
Landlord does exercise its 5 year extension option. (Sup9 §12(c)(ii) and
(iii); Sup15 §13(b) and
(c)).
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Electricity:
|
See
page 14.
|
|
|
|
Elevator:
|
Passenger
:
Service will
be provided as necessary on business days between 8 am and 6 pm and
sufficient service at all other times (orig. §32.01). In case
of special events at the demised premises, upon 24 hours notice from
Alliance, Landlord will provide 2 dedicated elevators staffed by Landlord
personnel, the labor cost of which will be reimbursable by Alliance within
30 days of demand (Sup9 §24(a)). Landlord is required to have,
in 1996, reconfigured the elevators so that the 32
nd
floor and the 37
th
,
38
th
and 39
th
floors are served by the same elevators (Sup6, §4(c)).
Freight
:
Landlord will
provide reasonable freight elevator service on business days from 8 am to
6 pm and after-hours service at landlord’s established rates (orig.
§32.01). During tenant’s initial fit-out of the remainder of
the 31
st
floor, and the 42
nd
,
43
rd
and 44
th
floors, Alliance has priority but not exclusive use of one freight
elevator and non-priority use of a second freight elevator at no charge
(Sup14 §13(a); Sup15 §16(a); Sup24 §10(a); Sup25 §10; Sup26
§10). Subject to the terms of the alterations provisions and so
long as Alliance is leasing floors 31 (part) through
41, Alliance has the right, at its expense, to make alterations
so that any elevator servicing Floors 31 (part) through 41 can stop on any
other floor leased by Alliance (Sup15 §24).
|
|
|
|
HVAC:
|
Regular
Service
:
During regular hours of
operation on business days as from time to time determined by Landlord,
but always at least from 8 am to 6 pm, but excluding 9pm to 8 am (orig.
§32.02(a)).
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|
|
|
|
After-Hours
Service
:
Available upon reasonable notice at
Landlord’s established rates, payable upon presentation of bill, provided
that:
|
|
|
|
|
·
|
if
any other tenants in the same air conditioning zone obtain after-hours
service, the charge therefore will be equitably pro-rated (orig.
§32.02(d)), and
|
|
|
|
|
·
|
Landlord
will provide HVAC to Alliance free of charge on any non-business day that
the New York Stock Exchange is open (Sup9 §24(b)).
|
|
|
|
|
Supplemental
AC
:
Subject to the lease
provisions (including the alterations section) and all applicable laws,
Alliance may at its expense install self-contained package
air-conditioning units in the demised premises. Alliance is
responsible for the maintenance and repair of such
units. Alliance may connect such units to any existing
supplementary air-conditioning systems located in the demised premises as
of the date the lease commenced with respect to the 37
th
and 38
th
floors (orig. §32.10). Alliance has the right to install at its
own expense additional supplemental air conditioning in the demised
premises subject to service being available from Landlord at Landlord’s
established per ton per annum connected load and line charge (Sup5
§11(d)). Alliance has the right to install a supplemental air
conditioning system on the 31 (part)-34
th
,
and 37
th
-39
th
floors and Landlord will provide condenser water therefor at a connected
load and line charge fee of $500 per ton per annum increased after 1991 in
proportion to the lease’s expense escalations (Sup6 §17;
Sup7 §19).
|
|
Condenser Water
:
|
|
|
|
|
·
|
Floors
2, 8-14: Alliance has reserved 190 tons of condenser water for
use on the 2
nd
and 8
th
-14
th
floors, with an option to reserve up to an additional 80 tons upon written
notice to Landlord on or before 8/30/04. Landlord’s charge for
such condenser water is $568.35 plus annual increases based on the
percentage increases in building and parking expenses. Alliance
begins paying for such condenser water upon use (but no later after 1 year
after delivery of the 2
nd
and 8
th
through 14
th
floors). If Alliance requires more than 270 tons of condenser
water for such space, then Landlord will use best efforts to obtain
additional condenser from the building’s existing supply and, if
unsuccessful, will enter into good faith discussions regarding the
installation of an additional cooling tower and allocation of costs
relating thereto (Sup15 §16(b)).
|
|
|
|
|
·
|
Floors
15-16: The 15
th
floor has an existing supply of 12 tons of condenser water and the 16
th
floor has an existing supply of 11 tons of condenser
water. Alliance has the right to install at its own expense,
pursuant to the alterations provisions of the Lease, a supplemental
air-conditioning system on the 15
th
and 16
th
floors. Alliance was to have reserved its requirements of condenser water
for such supplemental system from the existing supply on or before May 1,
1999 and of additional condenser water (up to 100 tons) by June 30, 2001
(Sup14 §13(b)(ii)). We have been advised by Judd S. Meltzer Co.
Inc., however, that Landlord has agreed to reduce such available tonnage
to 60 tons in exchange for increasing the available tonnage to 100 tons
with respect to Floors 35-36. Landlord’s charge for such
condenser water is $552/ton per annum plus annual increases over a 1997
base year (Sup12 §14).
|
|
|
|
|
·
|
Floors
2, 8-14, 17 (part): Alliance was required to notify the
Landlord of the amount of additional condenser water required by Alliance
for its premises on Floors 2, 8-14 and 17 (part), which amount cannot
exceed 20 tons, by August 31, 2002. Alliance begins paying
for such condenser water upon use at a rate equal to $594.90 per ton per
annum increased annually from 2001 at the same percentage rate that
building operating expenses increase (Sup16 §10(b)).
|
|
|
|
|
·
|
Floors
31 (part) - 34, 40, 41, 45: We have been advised by Judd S.
Meltzer Co. Inc. that Alliance has exercised its right to have Landlord
supply Alliance with 250 tons condenser water for use in supplemental air
conditioning units on Floors 31 (part)-34 or 40, 41 and 45 at a cost
$250/ton/yr for the first 250 tons/yr and $500/ton/yr (plus annual
increases over the 1994 expenses base year). Any condenser
water already being provided for Floors 31(part)-34 and 40, 41 and 45 are
included in determining such rates. Alliance pays for the
condenser water that Landlord has agreed to commit to Alliance, regardless
of whether Alliance actually uses it (Sup9 §24(f)).
|
|
|
|
|
·
|
Floors
35-36: Alliance may purchase up to 60 tons (in the aggregate)
of condenser water for use in connection with its supplemental
air-conditioning on the 35
th
and 36
th
floors. We have been advised, however, by Judd S. Meltzer Co. Inc. that
Landlord has agreed to increase such available tonnage to 100 tons in
exchange for reducing the available tonnage of additional condenser water
to 60 tons with respect to Floors 15-16. Alliance must reserve
the condenser water it wishes to purchase by February 8, 2001 (in respect
of the 35
th
floor) and December 31, 2001 (in respect of the 36
th
floor) Landlord’s charge for such condenser water is $568.35/ton per annum
plus annual increases over a 1999 base year (Sup14
§13(b)).
|
|
Standards
:
|
|
|
|
|
·
|
indoor
conditions to be 75° 50% RH when outdoor conditions are 92° DB and 74° WB;
indoor conditions to be 70° when outdoor conditions are
11°
|
|
|
|
|
·
|
outdoor
air at a minimum of 20 cfm per person
|
|
|
|
|
assumes
occupancy of 1 person per 100 usf, electric demand load of 5 watts per
usf, and appropriate use of blinds (Sup9 §24(c)(ii)).
|
|
|
|
Water:
|
Landlord
is required to supply an adequate quantity for ordinary lavatory,
drinking, cleaning and pantry purposes. Water consumed for any
additional purposes is subject to charge therefor and, separate
metering. Alliance is subject to charge and separate metering
for water used for any additional purposes.
|
|
|
|
Housekeeping
Supplies:
|
Landlord
must approve, in its reasonable discretion, suppliers of laundry, linen,
towels, drinking water, ice and similar supplies to be consumed in the
demised premises. Landlord may designate exclusive suppliers of
any such supply provided that such suppliers’ rates and quality are
comparable to other suppliers (orig. §32.05).
|
|
|
|
Food
& Beverages:
|
Landlord
must approve, in
its reasonable discretion any vendor of food or beverages to be consumed
in the demised premises (orig. §32.06).
|
|
|
|
Cleaning:
|
See
page 21.
|
|
|
|
Building
Directory and Concierge:
|
Alliance
is provided with its proportionate share (based upon the same percentage
used in calculating Alliance’s share of operating expense escalations) of
listings for itself, and any other person or entity in occupancy of the
demised premises and their employees. Landlord may reduce the
number of such listings provided that Alliance always has its share in
proportion to the space it occupies in the building (Sup6
§23).
|
|
|
|
So
long as Alliance and its affiliates are in occupancy of at least 200,000
rsf, Alliance, at no additional cost, is permitted to station 1 or, if
practicable, 2 of its employees at the lobby’s concierge desk with a
telephone, an employee telephone directory, guest passes and an
identifying sign (Sup9 §10(f)).
|
|
|
|
Signage
and Flag:
|
So
long as Alliance and its affiliates are in occupancy of at least 200,000
rsf, Alliance has exclusive right to name the building after itself or,
subject to Landlord’s consent, any of its affiliates, and Alliance has the
right to install signage with its name and logo:
|
|
|
|
|
·
above
the lobby entrance (which may be illuminated subject to Landlord’s
reasonable approval, but not neon, and provided that any other exterior
signage is subject to Alliance’s
approval),
|
|
|
|
|
·
on
the building plaza kiosks (with signage for the building’s retail tenants
on such kiosks subject to Alliance’s reasonable approval and any other
kiosk signage or retail signage subject to Alliance’s
approval),
|
|
|
|
|
·
behind
the lobby concierge desk (which may be illuminated subject to Landlord’s
reasonable approval, but not neon, and which will be the only sign behind
the lobby concierge desk, although Landlord may install less prominent
signage for other tenants elsewhere in the lobby subject to Alliance’s
reasonable approval),
and
|
|
·
place “tombstone”
signs on the building plaza
|
|
|
|
|
If
occupancy decreases to less than 200,000, Landlord may remove Alliance’s
signage (Sup9 §10(a)). Landlord has reasonable approval rights
as to the design and location of Alliance’s signage. All
installation, maintenance and removal work relating to Alliance’s signage
will be performed by Landlord at Alliance’s reasonable expense (Sup9
§10(b)).
|
|
|
|
|
So
long as Alliance and its affiliates are in occupancy of at least 200,000
rsf, Alliance may fly a flag bearing its name and logo, the design of
which is subject to landlord’s reasonable approval, from a flagpole on the
building plaza. No other flagpole may be installed on the
building plaza without Alliance’s approval (Sup9
§10(d)).
|
|
|
|
|
Landlord
is prohibited from installing any signage in the area of the lobby’s upper
elevator bank for an Alliance competitor occupying Floors 46-50, or a
majority thereof (Sup13 §19(d)).
|
|
|
|
General
Contractor:
|
Landlord’s
affiliate will act as general contractor for any alteration work performed
anywhere in the demised premises for one year after Landlord delivers the
2
nd
and 8
th-
14
th
floors to Alliance following substantial completion of Landlord’s work
thereon, for a fee not to exceed 6% of the aggregate cost of such work
(Sup15 §6(a)). Alliance and Plaza Construction Corp., Landlord's
affiliate, have subsequently entered into that certain Master Agreement
dated January 27, 2004 pursuant to which Plaza Construction Corp. will
provide construction management services to Alliance in respect of
construction projects at the building.
|
|
|
|
Parking:
|
37
spaces in the building garage at the garage’s standard rates and terms,
but the first 25 are at a 10% discount if Alliance reserved such spaces
before the Sup9 Adjustment Date (Sup9 §18; Sup12
§12). Landlord’s parking obligations continue so long as
Landlord is the garage operator or so long as the garage is generally
available to building tenants (Sup15 §22).
|
|
|
|
Allowances
and Credits:
|
The
following allowances and credit may have been used or
applied:
|
|
|
|
|
10th
Floor: $130,000 credit against fixed annual rent due from and
after Floor 10 is included in the demised premises (Sup19
§9).
|
|
|
|
|
15
th
Floor: $987,725 for tenant’s initial fit-out and professional
fees relating thereto. Any portion not used for such purposes
is credited against fixed annual rent (Sup12 §6(b)).
|
|
|
|
|
16
th
Floor: $987,725 for cost of initial fit out and professional
fees relating thereto. Any portion not used for such purposes
is credited against fixed annual rent (Sup12
§6(c)).
|
CASUALTY/CONDEMNATION
Casualty:
|
In
case of casualty, Landlord is required to restore the building and/or the
demised premises (other than property installed by or on behalf of
Alliance). Fixed annual rent and additional rent is abated to
the extent that the demised premises or a portion thereof are unrentable
and are not occupied by Alliance for the conduct of its
business. In case of substantial casualty affecting the demised
premises, Alliance may terminate the lease if Landlord’s restoration is
not completed within 1 year, subject to extension of up to an additional 6
months for circumstances beyond Landlord’s reasonable control. (orig.
§13.01). In case the building or the demised premises are
substantially damaged in the last 2 years of the term, either Landlord or
Alliance may cancel the lease upon notice given within 60 days of such
casualty (orig. §13.02). Landlord may terminate the lease upon
30 days’ notice given within 120 days of a casualty that so damages the
building that Landlord decides to demolish it or not rebuild it (orig.
§13.03).
|
|
|
Condemnation:
|
In
case of a total condemnation of the demised premises, the lease terminates
(orig. §14.01). In case of a condemnation other than a total
condemnation of the demised premises, the lease will continue, but fixed
annual rent and additional rent, will be abated proportionately, provided
that if more than 25% of the demised premises is condemned, Alliance may
terminate the lease upon 30 days notice given within 30 days after such
condemnation (orig. §14.02). Landlord is required to repair any
damage caused by such condemnation (orig. §14.02). In case of a
condemnation of more than 25% of the demised premises, Landlord will, to
the extent of the condemnation award, repair damage caused by such
condemnation within 6 months of the condemnation, as such period may be
extended due to force majeure. If Landlord fails to complete
repairs within 6 months, as extended due to force majeure, Alliance may
terminate upon 30 days’ notice (orig. §14.04). In case of any
partial condemnation within the last 2 years of the term, either party may
terminate the lease within 32 days of the condemnation upon 30 days notice
(orig. §14.04). In case of a temporary taking of all or part of
the of the demised premises, there will be no abatement of rent, but
Alliance is entitled to any condemnation award and if such temporary
taking occurs in the last 3 years of the terms, Alliance may terminate the
lease upon 30 days’ notice given within the 30 days of title vesting in
such condemnation (orig.
§14.05).
|
|
Subletting
the demised premises, assigning the Lease, allowing others to use the
demised premises, and advertising for a subtenant or assignee are not
permitted without the consent of Landlord (§15.01), which consent will not
unreasonably be withheld (§15.05) except with regard to the ground floor
portion of the demised premises. Landlord has no recapture
rights. Alliance may, without Landlord’s consent, assign or
sublet to a corporation into or with which Alliance is merged, with an
entity to which substantially all of Alliance’s assets are transferred, or
to an entity which controls or is controlled by Alliance or is under
common control with Alliance, subject to a net worth test
(§15.02). Also, Alliance may, without Landlord’s consent,
permit an affiliate (defined as “an entity which controls or is controlled
by Alliance or is under common control with Alliance”) to occupy all or a
portion of the premises (orig. §15.08). Any permitted
assignment or sublease will not be effective until Alliance delivers to
Landlord a recordable sublease or assignment agreement reasonably
satisfactory to Landlord pursuant to which the subtenant or assignee
assumes all of Alliance’s obligations under the Lease. Alliance
will remain fully liable under the lease for the payment of rent and the
performance of all of Alliance’s other obligations under the Lease
notwithstanding any such assignment or sublease (orig.
§15.03).
|
|
|
Landlord’s
Consent to assignment or sub-subletting by an assignee or
subtenant:
|
Landlord’s
consent will not be unreasonably withheld or delayed, provided that such
further assignment or sub-sublease is subject to all of the other terms
and conditions of the Lease regarding assignment and subletting (Sup7
§12(b)).
|
|
|
Profits:
|
If
Alliance assigns the lease or sublets any portion of the demised premises
other than to a corporation into which Alliance is merged or consolidated,
or to which Alliance’s assets are transferred or to any entity which
controls or is controlled by Alliance or is under common control with
Alliance, then Alliance will pay Landlord 50% of any profits after first
deducting reasonable expenses incurred in connection with such
assignment/sublease amortized on a straight line basis over the balance of
the lease term (in case of an assignment) or over the term of the sublease
(in case of a sublease) (orig. §15.07). For the first 50% of
rsf of demised premises other than ground floor space (including Floors 2
and 8-14 after such floors are delivered to Alliance (Sup15 §19(a))
assigned or sublet by Alliance, Alliance will have the right to deduct as
such a reasonable expense a “Tenant Improvement Deduction”, determined as
of the commencement date of such sublease or assignment, and calculated as
follows:
|
|
|
|
((A/2
– B) ÷ C) x D, where
|
|
|
|
A =
amortized value of Alliance leasehold improvements (regardless of whether
paid for with tenant allowance) based upon the average value of Alliance’s
unamortized leasehold improvements on a per rentable square foot basis for
all of the demised premises other than any concourse space (Sup15 §19(b)
or ground floor space (Sup20 §2(a)), amortized on a straight line basis
from completion date until 10/31/09 (if located on Floors 37-39 and
completed prior to 8/16/94 and such calculation is being made prior to the
delivery of Floors 2 and 8-14 (Sup15 §19(a))) or the lease expiration date
(in all other cases)
|
|
|
|
B =
total landlord cash contribution or allowance to Alliance for leasehold
improvements under the lease,
|
|
C =
total rsf of the demised premises, and
|
|
|
|
D =
rsf of the space being sublet or assigned. (Sup9
§13(d))
|
|
|
|
In
determining profits, Alliance is permitted to take into account its
electricity expenses under the lease and cleaning expenses (whether under
separate agreement with Landlord’s contractor or pursuant to the lease)
(Sup9 §13(d)), and its rental cost for the space being sublet or assigned
will be determined using an average, on a rentable square foot basis, of
its rental cost for the entire demised premises other than any concourse
space or ground floor space (Sup20 §2(b)) except with respect to any
sublease or assignment of the 2
nd
,
8
th
-14
th
or 17
th
(part) floors made before Alliance ever occupies such space (which
is the case for Floor 10 (Sup19 §6(b)) in which case Alliance’s rental
cost will be based on its actual rental without including any deduction
for unamortized tenant improvements (Sup15 §19(d); Sup16 §12, Sup17 §11;
Sup18 §11). If Alliance subleases any part of Floors 2 and 8-14
or assigns the Lease with respect thereto after first occupying such
space, then Alliance will have the right to take a “Tenant Improvement
Deduction” as provided
above.
|
RIGHTS TO ADDITIONAL
SPACE
Except as
noted below, all of the following rights are subject to the condition that
Alliance and its affiliates are occupying at least 200,000 rsf of the building
and to the condition that Alliance is not in default beyond the expiration of
applicable notice and cure periods under any of the terms, provisions and
conditions of the Lease.
Ground
Floor:
|
Alliance
has the right of first offer to lease all or a portion of the space
occupied by European American Bank as of August 16, 1994, upon such space
(or portion thereof) becoming available, at 95% of fair market rent (as
determined by Landlord but subject to a specified arbitration process if
Landlord and Alliance cannot agree within 60 days of Alliance’s acceptance
of the offer) (Sup9 §14(a)). So long as Alliance and its
affiliates occupy at least 200,000 rsf of the building, Landlord is
restricted from leasing such space to a competitor of Alliance (Sup9
§14(a)(ii)). This right of first offer is not subject to the condition
that Alliance not be in default beyond the expiration of applicable notice
and cure periods under any of the terms, provisions and conditions of the
Lease.
|
|
|
24
th
and 25
th
Floors:
|
[Note: The
24
th
and the 25
th
floors are currently used for the building’s mechanical equipment and are
not leased to tenants.]
|
|
|
26
th
,
27
th
and 28
th
Floors:
|
Subject
to the superior rights (as of 8/16/94) of any then-existing tenant or
occupant of the building and the superior rights of any tenant that leases
floors 26 through 28, Alliance has the right of first offer to lease, at
fair market rent (as determined by Landlord but subject to a specified
arbitration process if Landlord and Alliance cannot agree within 60 days
of Alliance’s acceptance of the offer), the 26
th
,
27
th
and 28
th
floors (or a portion of any such floor, if offered to Alliance as a
partial floor), upon availability (Sup9 §14(c)). We have been
advised by Judd S. Meltzer Co. Inc. that this space is presently leased to
Avon pursuant to a lease which expires on October 31, 2016 and that Avon
has three 5-year extension options which are superior to Alliance’s right
of first offer.
|
|
|
29
th
Floor:
|
Subject
to the superior rights (as of 8/16/94) of any then-existing tenant or
occupant of the building and the superior rights of any tenant that leases
floors 26 through 28, Alliance has the right of first offer to lease, at
fair market rent (as determined by Landlord but subject to a specified
arbitration process if Landlord and Alliance cannot agree within 60 days
of Alliance’s acceptance of the offer), the 29
th
floor (or a portion thereof, if offered to Alliance as a partial floor),
upon availability (Sup9 §14(c)). We have been advised by Judd
S. Meltzer Co. Inc. that this space is presently leased to Dean Witter
pursuant to a lease which expires on February 28, 2005 and that Avon has
superior rights to this right of first offer.
|
|
|
30
th
Floor:
|
Subject
to the superior rights (as of 8/16/94) of any then-existing tenant or
occupant of the building and the superior rights of any tenant that leases
floors 26 through 28, Alliance has the right of first offer to lease, at
fair market rent (as determined by Landlord but subject to a specified
arbitration process if Landlord and Alliance cannot agree within 60 days
of Alliance’s acceptance of the offer), the 30
th
floor (or a portion of any such floor, if offered to Alliance as a partial
floor), upon availability (Sup9 §14(c)). We have been advised
by Judd S. Meltzer Co. Inc. that this space is presently leased to
Rubenstein pursuant to a lease which expires on December 31, 2009 and that
Rubenstein has one 5-year extension option which may be preempted by
Alliance.
|
46
th
through 50
th
Floors:
|
Subject
to the superior rights (as of 8/16/94) of any then-existing tenant or
occupant of the building and the superior rights of any tenant that leases
floors 26 through 28, Alliance has the right of first offer to lease, at
fair market rent (as determined by Landlord but subject to a specified
arbitration process if Landlord and Alliance cannot agree within 60 days
of Alliance’s acceptance of the offer), the 49
th
and 50
th
floors (or a portion of any such floor, if offered to Alliance as a
partial floor), upon availability (Sup9 §14(c)). This right of first offer
also applies to the 46
th
through
48
th
floors (Sup10 §4(b); Sup14 §16). We have been advised by Judd S. Meltzer
Co. Inc. that this space is presently leased to Pimco pursuant to a lease
which expires on December 31, 2016 and that there are no superior rights
to this right of first offer.
|
|
|
|
|
All
other space:
|
We
have been advised by Judd S. Meltzer Co. Inc. that the companies listed
below have leased the floors under leases expiring as
follows:
|
|
|
|
|
|
Tenant
|
Floor(s)
|
Lease Expiration
|
|
|
|
|
|
Arthur
Andersen
|
3
through 7
|
04/30/04
|
|
Linklaters
|
19
|
11/30/13
|
|
Stern
Stewart
|
20
|
04/30/08
|
|
Smith
Barney
|
21
and 22
|
04/30/05
|
|
Nichimen
|
23
|
04/30/12
|
|
|
|
|
|
Alliance
has the right of first offer to lease all other space in the building it
does not already lease or that is not subject to another of Alliance’s
rights of first offer, upon availability, at fair market rent (as
determined by landlord but subject to a specified arbitration process if
Landlord and Alliance cannot agree within 60 days of Alliance’s acceptance
of the offer) (Sup15 §9(a)(1); Sup16 §14). This right of first
offer is subject to the conditions that Alliance and its affiliates are in
occupancy of at least 400,000 rsf and is subject to any rights of first
offer or refusal held by any other building occupant or tenant existing as
of August 3, 2000 (Sup15 §9(a)(i) and
(ii)). (Note: We have been advised by Judd S.
Meltzer Co. Inc. that the following superior rights
exist: Linklaters has two 5-year extension options with respect
to the 19
th
floor, Smith Barney has one 5-year extension option with respect to the
21
st
and 22
nd
floors; Nichimen has one 5-year extension option with respect to the
23
rd
floor and Avon has rights to the 23
rd
floor.) Alliance may not exercise such right of first offer
during the last 10 years of the term unless (i) Alliance simultaneously
extends the lease term pursuant to the Lease, or (ii) such offer is made
during the period beginning 10 years before the expiration date and ending
5 years before the expiration date and is for 2 or fewer floors (provided
that if it is for more than 2 floors and Alliance wishes to accept the
offer, Alliance must accept Landlord’s terms (including, perhaps, a
non-coterminous expiration date) for those excess floors) (15 Sup,
§9(a)(iii)(7)).
|
DEFAULT AND LANDLORD
REMEDIES
Events
of Default:
|
Landlord
may terminate the lease upon 10 days’ notice if:
|
|
|
|
(i)
|
Alliance
fails to pay fixed annual rent or any other lease payment within 10 days
after notice from Landlord of such failure;
|
|
|
|
|
(ii)
|
Alliance
fails to cure its default under any of its other obligations under the
lease, or fails to re-occupy the demised premises after abandoning the
demised premises, within 30 days after notice from Landlord (reduced to 5
days in case of default under Alliance’s obligation to use the demised
premises in conformance with the certificate of occupancy or Alliance’s
failure to provide an estoppel), but if such default cannot be cured
within such period, such period is extended as necessary to permit
Alliance with diligence and good faith, to cure such default;
or
|
|
|
|
|
(iii)
|
an
execution or attachment against Alliance or its property results in a
party other than Alliance continuing to occupy the demised premises after
30 days’ notice from Landlord (orig. §19.01).
|
|
|
|
|
Upon
termination, Landlord may re-enter the demised premises and dispossess
Alliance (orig. §19.02).
|
|
|
|
Alliance’s
obligation to pay fixed annual rent and additional rent survives any
termination of the lease due to Alliance’s default (orig.
§19.03). Upon such termination, Alliance will pay landlord
re-letting expenses and at Landlord’s option, either a lump sum
representing the present value of the excess of Alliance’s combined fixed
annual rent and additional rent over the rental value for the terminated
portion of the term, or on a monthly basis the excess of Alliance’s
combined fixed annual rent and additional rent over the rent received from
any re-letting of the demised premises for the period representing the
terminated lease term (orig. §20.01).
|
|
|
Landlord’s
Right to Cure:
|
If
Alliance fails to cure a default within any applicable grace period after
notice of such default (provided that no notice is required in case of
emergency), then Landlord may cure such default and bill Alliance for the
cost of such cure, which bill will be due upon receipt (orig.
§21.01).
|
|
|
Right
to Contest:
|
Alliance
may contest any law that Alliance is obligated to comply with under the
lease and compliance thereunder, provided that:
|
|
|
|
(a)
|
such
non-compliance will not subject Landlord to criminal prosecution or
subject the building to lien or sale;
|
|
|
|
|
(b)
|
such
non-compliance does not violate any fee mortgage, ground lease or
leasehold mortgage thereon;
|
|
|
|
|
(c)
|
Alliance
will deliver a bond or other security to Landlord; and
|
|
|
|
|
(d)
|
Alliance
will diligently prosecute such
contest.
|
Arbitration:
|
Where
arbitration is required by the lease, unless otherwise expressly provided,
the arbitration will be in New York City in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and the lease,
and judgment may be entered in any court having jurisdiction (orig.
§33.01).
|
|
|
Limits
on Alliance’s Remedies:
|
Alliance
cannot, in response to Landlord’s act or omission, terminate the lease or
set-off rent before giving any ground lessor or mortgagee of the fee or
ground leasehold estate for which Alliance has been given an address
notice of such act or omission and a reasonable period of time to
cure. Such ground lessor or mortgagee, however, has no
obligation to cure such act or
omission.
|
Landlord:
|
Landlord
may enter the demised premises to perform alteration work, to inspect the
demised premises or to exhibit the demised premises to prospective
purchasers, mortgagees or lessors of the building and (during the last 6
months of the term) to prospective lessees of the demised premises,
provided that Landlord provides Alliance advance notice (which may be
oral) of such entry (orig. §16.01). Landlord will exercise
reasonable diligence so as to minimize the disturbance (orig.
§16.01).
|
|
|
Carter-Wallace,
Inc.
|
Carter-Wallace,
Inc. is allowed, once a month upon reasonable notice during business
hours, access in the vicinity of column 63 on the northeast side of the
41
st
floor to service a humidifier, provided that Carter-Wallace, Inc. will
move such portion of humidifier off the 41
st
floor if Alliance reasonably requires Carter-Wallace, Inc. to do so as
part of Alliance’s alteration work on the 41
st
floor (LTR1, par 2).
|
|
All
notices required to be given by the lease or by law are required to be in
writing. Notices, which are required to be sent by certified or
registered mail, are deemed sent by the sender and received by the
recipient when deposited in the exclusive care and custody of the U.S.
mail. Notices to Landlord are to be addressed as
follows:
1345
Leasehold Limited Partnership
c/o
Fisher Brothers
299
Park Avenue
New
York, New York
|
|
|
|
with
a copy to:
|
|
|
|
Fisher
Brothers
299
Park Avenue
New
York, New York
Attn: General
Counsel
|
|
|
|
(orig.
§31.01)
|
43
Exhibit
10.10
Guidelines
for Transfer of AllianceBernstein L.P.
Units
|
No
transfer of ownership of the units of AllianceBernstein L.P. (the private
partnership) is permitted without prior approval of AllianceBernstein and
AXA Equitable Life Insurance Company (“AXA
Equitable).
|
|
Under
the terms of the Transfer Program, transfers of ownership will be
considered once every calendar
quarter.
|
To
sell your Units to a third party:
|
|
To
donate the Units
:
|
q
|
You
must first identify the buyer for your Units. AllianceBernstein
can not maintain a list of prospective buyers nor will AllianceBernstein
act as a buyer.
|
|
q
|
The
donor must obtain approval of AllianceBernstein and AXA Equitable for the
transfer of units.
|
q
|
The
unitholder and the prospective buyer must submit a request for transfer of
ownership of the Units and obtain approval of AllianceBernstein and AXA
Equitable for the transaction.
|
|
q
|
Documentation
required for consideration of approval includes
-
Unit
Certificate(s):
-
Executed
“Stock” Power Form, with guaranteed signature
-
Letter
from Transferee
|
q
|
Documentation required for
consideration of approval includes:
-
Unit
Certificate(s)
-
Executed
“Stock” Power Form, with guaranteed signature
-
Letter
from Seller
-
Letter
from Purchaser
|
|
q
|
Additional
required documentation should be verified with AllianceBernstein’s
transfer agent, BNY Mellon Shareowner Services, at
866-737-9896.
|
|
|
|
|
|
To
have private Units re-registered to your name if they have been left to
you by a deceased party:
|
|
To
re-register your certificate to reflect a legal change of name or change
in custodian:
|
q
|
The
beneficiary must obtain approval of Alliance Capital and AXA Equitable for
the transfer of units.
|
|
q
|
The
unitholder must obtain approval of AllianceBernstein and AXA Equitable for
the change of name/registration on the unit certificate
|
q
|
Documentation required for
consideration of approval includes:
-
Unit
Certificate(s)
-
Executed
“Stock” Power Form, with guaranteed signature
-
Copy
of death certificate
-
Required
Inheritance Tax Waiver for applicable states
|
|
q
|
Documentation
required for consideration of approval includes:
-
Unit
Certificate(s)
-
Executed
“Stock” Power Form, with guaranteed signature
-
Specific
instruction letter indicating the manner in which the new unit certificate
should be registered
|
q
|
Additional
required documentation (which varies by state) should be verified with
AllianceBernstein’s transfer agent, BNY Mellon Shareowner Services, at
866-737-9896
|
|
q
|
Additional
required documentation should be verified with AllianceBernstein’s
transfer agent, BNY Mellon Shareowner Services, at
866-737-9896.
|
Once
AllianceBernstein and AXA Equitable approve the transfer request,
AllianceBernstein will inform you of the approval and begin processing the
transfer.
You
should not begin to prepare necessary documentation until you have
contacted:
|
David
Lesser
|
|
|
Legal
and Compliance Department – Transfer Program
|
|
|
AllianceBernstein
L.P.
|
|
|
1345
Avenue of the Americas
|
|
|
New
York, NY 10105
|
|
|
Phone:
(212) 969-1429
|
|
Exhibit
10.11
AMENDED AND RESTATED
COMMERCIAL PAPER DEALER AGREEMENT
[4(2)
Commercial Paper Program]
This
Amended and Restated Commercial Paper Dealer Agreement, dated as of February 10,
2009, confirms the agreement among Banc of America Securities LLC (“BAS”),
Merrill Lynch Money Markets Inc. (“Merrill”), Deutsche Bank Securities Inc.
(“Deutsche Bank”) and AllianceBernstein L.P., formerly known as Alliance Capital
Management L.P. (the “Partnership”), whereby each of BAS, Merrill and Deutsche
Bank, severally and not jointly, will act as a dealer with respect to the
promissory notes to be issued by the Partnership, which will be issued either in
physical bearer form or book-entry form, and amends and restates the Amended and
Restated Commercial Paper Dealer Agreement, dated as of May 3, 2006 (the “2006
Dealer Agreement”) among BAS, Merrill and the Partnership. Each of
BAS, Merrill and Deutsche Bank is also sometimes referred to herein as a
“Dealer” and collectively as the “Dealers.” Notes in book-entry form
will be represented by master notes registered in the name of a nominee of The
Depository Trust Company (“DTC”) and recorded in the book-entry system
maintained by DTC. The promissory notes shall (a) be issued in
denominations of not less than $250,000; (b) have maturities not exceeding
270 days from the date of issue; and (c) not contain any condition of
redemption or right to prepay. Such notes, including the master
notes, shall hereinafter be referred to as “Commercial Paper” or
“Notes.” Certain terms used in this Agreement are defined in
paragraph 11 below. Any Exhibits described in this Agreement are
hereby incorporated by reference into this Agreement and made fully a part
hereof.
1. (a)
The Partnership represents and warrants to the Dealers
that: (i) the Partnership has been duly organized and is validly
existing as a limited partnership in good standing under the laws of the State
of Delaware; (ii) this Agreement and the amended and restated issuing and
paying agency agreement dated as of May 3, 2006 with Deutsche Bank National
Trust Company (the “Issuing and Paying Agent”, which term shall include any
successor issuing and paying agent under such agreement), a copy of which has
been provided to each of the Dealers (as such agreement may be amended or
supplemented from time to time, the “Issuing Agreement”), have been duly
authorized, executed and delivered by the Partnership and each constitutes the
valid and legally binding obligation of the Partnership enforceable in
accordance with its respective terms subject to any applicable law relating to
or affecting indemnification for liability under the securities laws, and except
to the extent such enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors’ rights generally and the applicability
of equitable principles thereto whether in a proceeding of law or in equity;
(iii) the Notes have been duly authorized and, when issued and duly
delivered in accordance with the Issuing Agreement, will constitute the valid
and legally binding obligations of the Partnership, enforceable in accordance
with their terms, except to the extent such enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting creditors’ rights
generally and the applicability of equitable principles thereto whether in a
proceeding of law or in equity; (iv) the private placement memorandum
approved by the Partnership for distribution pursuant to Section 7 hereof
(the “Private Placement Memorandum”) and the Annual Report on Form 10-K of
the Partnership, for the fiscal year ended December 31, 2007 and other
documents subsequently filed with the Securities and Exchange Commission (“SEC”)
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), by the Partnership (together, the “Offering Materials”),
taken as a whole, except insofar as any information therein relates to BAS,
Merrill or Deutsche Bank (or their respective affiliates), each in its
respective capacity as dealer hereunder, do not include any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading; (v) the offer and sale of the Notes in the manner
contemplated by this Agreement will be exempt from the registration requirements
of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to
Section 4(2) thereof, and no indenture in respect of the Notes is required
to be qualified under the Trust Indenture Act of 1939, as amended; (vi) the
Partnership is not an “investment company” or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act of 1940,
as amended; (vii) the Notes will rank at least pari passu with all other
unsecured and unsubordinated indebtedness of the Partnership; (viii) no consent
or action of, or filing or registration with, any governmental or public
regulatory body or authority, including the SEC, is required for the Partnership
to authorize, or is otherwise required in connection with the execution,
delivery or performance by the Partnership of, this Agreement, the Notes or the
Issuing Agreement, except as may be required by the securities or Blue Sky laws
of the various states in connection with the offer and sale of the Notes; (ix)
neither the execution and delivery of this Agreement and the Issuing Agreement,
nor the issuance of the Notes in accordance with the Issuing Agreement, nor the
fulfillment of or compliance with the terms and provisions hereof or thereof by
the Partnership, will (A) result in the creation or imposition of any
mortgage, lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Partnership, which mortgage, lien, charge or
encumbrance would have a material adverse effect on the financial condition or
operations of the Partnership and its subsidiaries considered as one enterprise,
or (B) violate or result in a breach or a default under any of the terms of the
Partnership’s limited partnership certificate or agreement, any contract or
instrument to which the Partnership is a party or by which it or its property is
bound, or any law or regulation, or any order, writ, injunction or decree of any
court or government instrumentality, to which the Partnership is subject or by
which it or its property is bound, which violation, breach or default would have
a material adverse effect on the financial condition or operations of the
Partnership and its subsidiaries considered as one enterprise or the ability of
the Partnership to perform its obligations under this Agreement, the Notes or
the Issuing Agreement; and (x) except as may be disclosed in the Offering
Materials, there is no litigation or governmental proceeding pending, or to the
knowledge of the Partnership threatened, against or affecting the Partnership or
any of its subsidiaries which would have a material adverse effect on the
financial condition or operations of the Partnership and its subsidiaries
considered as one enterprise or the ability of the Partnership to perform its
obligations under this Agreement, the Notes or the Issuing
Agreement.
(b)
Each sale of a Note by the Partnership under this
Agreement shall constitute an affirmation that the foregoing representations and
warranties remain true and correct at the time of sale, and will remain true and
correct at the time of delivery, of such Note, and since the date of the most
recent Private Placement Memorandum, there has been no material adverse change
in the financial condition or operations of the Partnership and its subsidiaries
considered as one enterprise which has not been disclosed to the Dealers in
writing.
2. Each
of the Dealers may, from time to time, but shall not be obligated to, purchase
Commercial Paper from the Partnership.
3. Prior
to the initial issuance of Commercial Paper, the Partnership shall have
delivered to each of the Dealers an incumbency certificate identifying persons
authorized to sign Commercial Paper on the Partnership’s behalf and containing
the true signatures of each of such persons.
4. Prior
to the initial issuance of Commercial Paper, the Partnership shall have supplied
each of the Dealers with an opinion or opinions of counsel addressing the
matters set forth in paragraph 1(a)(i)-(iii), (v) – (vi) and (viii) above
and such other matters as the Dealers shall reasonably request, such opinion or
opinions to be in form and substance satisfactory to the Dealers.
5.
All transactions in Commercial Paper between
each of the Dealers and the Partnership shall be in accordance with the custom
and practice in the commercial paper market. In accordance with such
custom and practice, the purchase of Commercial Paper by the applicable Dealer
shall be negotiated verbally between the applicable Dealer’s personnel and the
authorized representative of the Partnership. Such negotiation shall
determine the principal amount of Commercial Paper to be sold, the discount rate
or interest rate applicable thereto, and the maturity thereof. The
applicable Dealer’s fee for such sales shall be included in the discount rate
with respect to Commercial Paper issued at a discount, or stated separately as a
fee, in the case of Commercial Paper bearing interest. The applicable
Dealer shall confirm each transaction made with the Partnership in writing in
such Dealer’s customary form. Delivery and payment of Commercial
Paper shall be effected in accordance with the Issuing Agreement.
6. The
applicable Dealer shall pay for the Notes purchased by such Dealer in
immediately available funds on the business day such Notes, executed in a manner
satisfactory to such Dealer, are delivered to such Dealer in the case of
physical bearer Notes, or in the case of book-entry Notes, on the business day
such Notes are credited to such Dealer’s Participant Account at
DTC. Payment shall be made in any manner permitted in the Issuing
Agreement. The amount payable by the applicable Dealer to the
Partnership shall be (i) in the case of discount Notes, the face value
thereof less the original issue discount and less the compensation payable to
such Dealer and (ii) in the case of interest to follow Notes, the face
value thereof less the compensation payable to such Dealer.
7. From
and after the date of this Agreement, the Partnership will supply to each of the
Dealers on a continuing basis three copies of all annual and quarterly and other
reports filed by the Partnership pursuant to Section 13 of the Exchange
Act, and reports mailed by the Partnership to its unitholders (in their capacity
as unitholders), plus such other information as the Dealers may reasonably
request; provided, however, that so long as such reports or other information is
available on the Partnership’s website, delivery to each of the Dealers shall be
deemed to have occurred when such information first becomes available on the
Partnership’s website. The Partnership understands, however, that the
Dealers shall distribute or otherwise use any informational documents concerning
the Partnership, including the Private Placement Memorandum, only with the prior
review and approval of the Partnership. The Partnership further
undertakes to supply copies of such reports when requested by any Commercial
Paper customer of the Dealers, as set forth in the Private Placement
Memorandum. The Partnership further agrees to notify the Dealers
promptly upon the occurrence of any event or other development, the result of
which causes the informational documents and the Partnership’s annual or
quarterly and other reports filed pursuant to Section 13 of the Exchange
Act, taken as a whole, to include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading. The Partnership agrees promptly to supplement or amend
the Private Placement Memorandum so that the Private Placement Memorandum, as
amended or supplemented, shall not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and the Partnership shall make such supplement or amendment
available to the Dealers.
8. (a)
Partnership agrees to indemnify and hold harmless each
Dealer, each person, if any, who controls such Dealer within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act and
each of their respective directors and officers (collectively, the
“Indemnitee”), against any and all losses, claims, damages, liabilities or
expenses, joint or several, to which any Indemnitee may become subject, under
the Act, the Exchange Act, or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of material
fact contained in the Offering Materials, taken as a whole, or the omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in the light of the circumstances in which they are made,
not misleading, or (ii) the breach by the Partnership of any agreement, covenant
or representation made in or pursuant to this Agreement, and the Partnership
further agrees to reimburse each Indemnitee for any legal or other expenses
reasonably incurred by it in connection with investigating or defending any such
loss, claim, damage, liability, expense or action; provided, however, that the
Partnership will not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon an
untrue statement or omission contained in the Offering Materials which relates
to a Dealer (or its affiliates) in its capacity as dealer hereunder provided by
such Dealer in writing expressly for inclusion in the Private Placement
Memorandum. At the date hereof, the only such material is such
Dealer’s contact information included in the Private Placement
Memorandum.
(b)
Promptly after receipt by an Indemnitee of notice of the existence of any
such loss, claim, damage, liability or expense, such Indemnitee will, if a claim
in respect thereof is to be made against the Partnership, notify the Partnership
in writing of the existence thereof; provided that (i) the omission so to notify
the Partnership will not relieve the Partnership from any liability which it may
have hereunder unless and except to the extent it did not otherwise learn of
such claim and such failure results in the forfeiture by the Partnership of
substantial rights and defenses, and (ii) the omission so to notify the
Partnership will not relieve it from liability which it may have to an
Indemnitee otherwise than on account of this Agreement. In case any
such claim is made against any Indemnitee and it notifies the Partnership of the
existence thereof, the Partnership will be entitled to participate therein, and
to the extent that it may elect by written notice delivered to the Indemnitee,
to assume the defense thereof, with counsel reasonably satisfactory to such
Indemnitee; provided that if the defendants in any such claim include both the
Indemnitee and the Partnership, and the Indemnitee shall have concluded that
there may be legal defenses available to it which are different from or
additional to those available to the Partnership, the Partnership shall not have
the right to direct the defense of such claim on behalf of such Indemnitee, and
the Indemnitee shall have the right to select separate counsel to assert such
legal defenses on behalf of such Indemnitee. Upon receipt of notice
from the Partnership to such Indemnitee of the Partnership’s election so to
assume the defense of such claim and approval by the Indemnitee of counsel, the
Partnership will not be liable to such Indemnitee for expenses incurred
thereafter by the Indemnitee in connection with the defense thereof (other than
reasonable costs of investigation) unless (i) the Indemnitee shall have employed
separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the Partnership shall not be liable for the expenses of more than
one separate counsel (in addition to any local counsel in the jurisdiction in
which any claim is brought), approved by the applicable Dealer, representing the
Indemnitee who is party to such claim), (ii) the Partnership shall not have
employed counsel reasonably satisfactory to the Indemnitee to represent the
Indemnitee within a reasonable time after notice of existence of the claim or
(iii) the Partnership has authorized in writing the employment of counsel for
the Indemnitee. The indemnity, reimbursement and contribution
obligations of the Partnership hereunder shall be in addition to any other
liability the Partnership may otherwise have to an Indemnitee and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Partnership and any Indemnitee. The
Partnership agrees that without the applicable Dealer’s prior written consent,
it will not settle, compromise or consent to the entry of any judgment in any
claim in respect of which indemnification may be sought under the
indemnification provision of this Agreement (whether or not such Dealer or any
other Indemnitee is an actual or potential party to such claim), unless such
settlement, compromise or consent (i) includes an unconditional release of each
Indemnitee from all liability arising out of such claim and (ii) does not
include a statement as to or an admission of fault, culpability or failure to
act, by or on behalf of any Indemnitee.
(c)
In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in paragraph 8(a) is for any reason held
unavailable (otherwise than in accordance with the provision stated therein),
the Partnership shall contribute to the aggregate costs of satisfying any loss,
damage, liability or expense sought to be charged against or incurred by any
Indemnitee in such proportion as is appropriate to reflect the relative benefits
received by the Partnership on the one hand and the Dealers on the other from
the offering of the Notes. For purposes of this paragraph 8(c),
the “relative benefits” received by the Partnership shall be equal to the
aggregate net proceeds received by the Partnership from Notes sold pursuant to
this Agreement and the “relative benefits” received by each Dealer shall be
equal to the aggregate commissions and fees earned by such Dealer
hereunder.
9. The
Dealers and the Partnership hereby establish and agree to observe the following
procedures in connection with offers, sales and subsequent resales or other
transfers of the Notes:
(a)
Offers
and sales of the Notes by or through the Dealers shall be made only
to: (i) investors reasonably believed by the applicable Dealer
to be Qualified Institutional Buyers or Institutional Accredited Investors and
(ii) non-bank fiduciaries or agents that will be purchasing Notes for one
or more accounts, each of which is reasonably believed by the Dealer to be an
Institutional Accredited Investor.
(b)
Resales
and other transfers of the Notes by the holders thereof shall be made only in
accordance with the restrictions in the legend described in clause (e)
below.
(c)
No
"general solicitation or general advertising" within the meaning of Regulation D
shall be used in connection with the offering of the Notes. Without
limiting the generality of the foregoing, without the prior written approval of
the other parties hereto, no party hereto shall issue any press release or place
or publish any “tombstone” or other advertisement relating to the
Notes.
(d)
No sale
of Notes to any one purchaser shall be for less than $250,000 principal or face
amount, and no Note shall be issued in a smaller principal or face
amount. If the purchaser is a non-bank fiduciary acting on behalf of
others, each person for whom such purchaser is acting must purchase at least
$250,000 principal or face amount of Notes.
(e)
Offers
and sales of the Notes by the Partnership through a Dealer acting as agent for
the Partnership shall be made in accordance with Rule 506 under the
Securities Act, and shall be subject to the restrictions described in the legend
appearing on Exhibit A hereto. A legend substantially to the
effect of such Exhibit A shall appear as part of the Private Placement
Memorandum used in connection with offers and sales of Notes hereunder, as well
as on each individual certificate representing a Note and each master note
representing book-entry Notes offered and sold pursuant to this
Agreement.
(f)
Each
Dealer shall furnish or shall have furnished to each purchaser of Notes for
which it has acted as the Dealer a copy of the then-current Private Placement
Memorandum unless such purchaser has previously received a copy of the Private
Placement Memorandum as then in effect. The Private Placement
Memorandum shall expressly state that any person to whom Notes are offered shall
have an opportunity to ask questions of, and receive information from, the
Partnership and the applicable Dealer and shall provide the names, addresses and
telephone numbers of the persons from whom information regarding the Partnership
may be obtained.
(g)
The
Partnership agrees, for the benefit of the Dealers and each of the holders and
prospective purchasers from time to time of the Notes that, if at any time the
Partnership shall not be subject to Section 13 or 15(d) of the Exchange
Act, the Partnership will furnish, upon request and at its expense, to the
Dealers and to holders and prospective purchasers of Notes information required
by Rule 144A(d)(4)(i) in compliance with Rule 144A(d).
(h)
In the
event that any Note offered or to be offered by the Dealers would be ineligible
for resale under Rule 144A, the Partnership shall immediately notify the
Dealers (by telephone, confirmed in writing) of such fact and shall promptly
prepare and deliver to the Dealers an amendment or supplement to the Private
Placement Memorandum describing the Notes that are ineligible, the reason for
such ineligibility and any other relevant information relating
thereto.
(i)
The
Partnership will give the Dealers prompt notice (but in any event prior to any
subsequent issuance of Notes hereunder) of any amendment to, modification of or
waiver with respect to, the Notes or the Issuing Agreement, including a complete
copy of any such amendment, modification or waiver.
(j)
The
Partnership shall, whenever there shall occur any adverse change in the
financial condition or operations of the Partnership and its subsidiaries
considered as one enterprise or any other adverse development or occurrence in
relation to the Partnership that, in either case, would be material to holders
of the Notes or potential holders of the Notes (including any downgrading or
receipt of any notice of intended or potential downgrading or any review for
potential change in the rating accorded any of the Partnership’s securities by
any nationally recognized statistical rating organization which has published a
rating of the Notes), promptly, and in any event prior to any subsequent
issuance of Notes hereunder, notify the Dealers (by telephone, confirmed in
writing) of such change, development or occurrence.
(k)
The
Partnership will take all such action as the Dealers may reasonably request to
ensure that each offer and each sale of the Notes will comply with any
applicable state Blue Sky laws; provided, however, that the Partnership shall
not be obligated to file any general consent to service of process or to qualify
as a foreign partnership in any jurisdiction in which it is not so qualified or
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject.
10. The
Partnership hereby represents and warrants to each Dealer, in connection with
offers, sales and resales of Notes, as follows:
(a)
The Partnership hereby confirms to each Dealer that within the preceding six
months neither the Partnership nor any person other than the Dealers acting on
behalf of the Partnership has offered or sold any Notes, or any substantially
similar security of the Partnership to, or solicited offers to buy any such
security from, any person other than the Dealers; provided, that the parties
hereto acknowledge that, within the preceding six months, BAS and Goldman, Sachs
& Co. (“Goldman”) have offered extendible commercial notes on behalf of the
Partnership as pursuant to the extendible commercial notes dealer agreement,
dated as of December 14, 1999, among BancAmerica, Goldman and the
Partnership. The Partnership also agrees that as long as the Notes
are being offered for sale by the Dealers as contemplated hereby and until at
least six months after the offer of Notes hereunder has been terminated, neither
the Partnership nor any person other than the Dealers will offer the Notes or
any substantially similar security of the Partnership for sale to, or solicit
offers to buy any such security from, any person other than the Dealers if, as a
result of the doctrine of “integration” referred to in Rule 502 under the
Securities Act, such offer or sale would render invalid the exemption from the
registration requirements of the Securities Act provided by Section 4(2)
thereof for the offer and sale of the Notes, it being understood that such
agreement is made with a view to bringing the offer and sale of the Notes within
the exemption provided by Section 4(2) of the Securities Act and shall
survive any termination of this Agreement. The Partnership hereby
represents and warrants that it has not taken or omitted to take, and will not
take or omit to take, any action that would cause the offering and sale of Notes
hereunder to be integrated with any other offering of securities, whether such
offering is made by the Partnership or some other party or
parties.
(b)
The Partnership represents and agrees that the proceeds of the sale of the Notes
are not currently contemplated to be used for the purpose of buying, carrying or
trading securities within the meaning of Regulation T and the
interpretations thereunder by the Board of Governors of the Federal Reserve
System. In the event that the Partnership determines to use such
proceeds for the purpose of buying, carrying or trading securities, whether in
connection with an acquisition of another company or otherwise, the Partnership
shall give the Dealers at least five business days’ prior written notice to that
effect. The Partnership shall also give the Dealers prompt notice of
the actual date that it commences to purchase securities with the proceeds of
the Notes. Thereafter, in the event that a Dealer purchases Notes as
principal and does not resell such Notes on the day of such purchase, to the
extent necessary to comply with Regulation T and the interpretations
thereunder, such Dealer will sell such Notes either (i) only to offerees it
reasonably believes to be Qualified Institutional Buyers or to Qualified
Institutional Buyers it reasonably believes are acting for other Qualified
Institutional Buyers, in each case in accordance with Rule 144A or
(ii) in a manner which would not cause a violation of Regulation T and
the interpretations thereunder.
11. The
following are definitions for certain terms used in this Agreement:
(a)
“Institutional Accredited Investor” shall mean an institutional investor
that is an accredited investor within the meaning of Rule 501 under the
Securities Act and that has such knowledge and experience in financial and
business matters that it is capable of evaluating and bearing the economic risk
of an investment in the Notes, including, but not limited to, a bank, as defined
in Section 3(a)(2) of the Securities Act, or a savings and loan association
or other institution, as defined in Section 3(a)(5)(A) of the Securities
Act, whether acting in its individual or fiduciary capacity.
(b)
“Non-bank fiduciary or agent” shall mean a fiduciary or agent other
than (a) a bank, as defined in Section 3(a)(2) of the Securities Act,
or (b) a savings and loan association, as defined in
Section 3(a)(5)(A) of the Securities Act.
(c)
“Qualified Institutional Buyer” shall have the meaning assigned to that
term in Rule 144A under the Securities Act.
(d)
“Regulation D” shall mean Regulation D (Rules 501 et seq.)
under the Securities Act.
(e)
“Rule 144A” shall mean Rule 144A under the Securities
Act.
12. This
Agreement may be terminated by the Partnership or either Dealer, with respect to
such Dealer, upon thirty days’ written notice to the Dealers or the Partnership,
as the case may be. Any such termination, however, shall not affect
the obligations of the Partnership under Sections 8 and Section 14
hereof. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
13. This
Agreement shall inure to the benefit of and be binding upon the undersigned
parties and their respective successors and assigns, but no other person,
partnership, association, company or corporation.
14. The
Partnership and each Dealer agree that any suit, action or proceeding brought by
the Partnership against a Dealer, or by a Dealer against the Partnership, in
connection with or arising out of this Agreement or the Notes or the offer and
sale of the Notes shall be brought solely in the United States federal courts
located in the Borough of Manhattan or the courts of the State of New York
located in the Borough of Manhattan. EACH DEALER AND THE PARTNERSHIP
WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
15. This
Agreement is not assignable by the Partnership without the written consent of
the Dealers or by a Dealer without the consent of the Partnership; provided,
however, that, upon prior written notice, a Dealer may assign its rights and
obligations under this Agreement to any affiliate of such Dealer.
16. The
Partnership acknowledges and agrees that (i) the purchase and sale of the Notes
pursuant to this Agreement, including the determination of the offering price of
the Notes and any related discounts and commissions, is an arm's-length
commercial transaction between the Partnership, on the one hand, and the
applicable Dealer, on the other hand, (ii) in connection with the offering
contemplated hereby and the process leading to such transaction each Dealer is
and has been acting solely as a dealer and is not the fiduciary, or, except to
the extent expressly set forth herein, the agent, of the Partnership or its
unitholders, creditors, employees or any other party, (iii) each Dealer has not
assumed nor will it assume an advisory or fiduciary responsibility in favor of
the Partnership with respect to the offering contemplated hereby or the process
leading thereto (irrespective of whether such Dealer has advised or is currently
advising the Partnership on other matters) and the Dealers have no obligation to
the Partnership with respect to the offering contemplated hereby except the
obligations expressly set forth in this Agreement, (iv) each Dealer and its
affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Partnership, and (v) the Dealers have
not provided any legal, accounting, regulatory or tax advice with respect to the
offering contemplated hereby and the Partnership has consulted its own legal,
accounting, regulatory and tax advisors to the extent it deemed
appropriate.
17. Unless
otherwise expressly provided herein, all notices under this Agreement to parties
hereto shall be in writing and shall be effective when received at the address
of the respective party set forth as follows:
For
the Partnership:
|
|
|
|
Address:
|
1345
Avenue of the Americas
New
York, New York 10105
|
|
|
Attention:
|
Treasury
|
Telephone
number:
|
212-823-3232
|
Fax
number:
|
212-823-3250
|
|
|
For
Banc of America Securities LLC:
|
|
|
|
Address:
|
600
Montgomery Street
CA5-801-15-31
San
Francisco, California 94111
|
|
|
Attention:
|
Manager,
Money Market Finance
|
Telephone
number:
|
415-913-3689
|
Fax
number:
|
415-913-6288
|
|
|
For
Merrill Lynch Money Markets Inc.:
|
|
|
|
Address:
|
World
Financial Center, 11th Floor
New
York, New York 10080
|
|
|
Attention:
|
Money
Markets Origination
|
Telephone
number:
|
212-449-3264
|
Fax
number:
|
212-449-8939
|
For
Deutsche Bank Securities Inc.:
|
|
|
|
Address:
|
60
Wall Street
New
York, New York 10005
|
|
|
Attention:
|
Vaughn
Smith
|
Telephone
number:
|
212-250-7179
|
Fax
number:
|
212-797-5177
|
Attention:
|
Christopher
Shirk
|
Telephone
number:
|
212-250-7179
|
Fax
number:
|
212-797-5177
|
Attention:
|
Raj
Sodhi
|
Telephone
number:
|
212-250-7179
|
Fax
number:
|
212-797-5177
|
(Remainder
of page left blank intentionally; Signature Page
follows)
If the
foregoing accurately reflects our agreement, please sign the enclosed copy in
the space provided below and return it to the undersigned.
The
parties hereto have caused the execution of this Agreement on the date first
provided above.
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AllianceBernstein
L.P.
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By:
|
/s/
John J. Onofrio, Jr.
|
|
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|
Name: John
J. Onofrio, Jr.
Title: Vice
President and Treasurer
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|
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Banc
of America Securities LLC
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By:
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/s/
Robert Porter
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Name: Robert
Porter
Title: Managing
Director
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Merrill
Lynch Money Markets Inc.
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By:
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/s/
Robert J. Little
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Name: Robert
J. Little
Title: Managing
Director
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Deutsche
Bank Securities Inc.
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By:
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/s/
John Cipriani
|
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Name: John
Cipriani
Title: Director
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By:
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/s/
Vaughn Smith
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Name: Vaughn
Smith
Title: Director
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EXHIBIT
A
FORM OF
LEGEND FOR
PRIVATE
PLACEMENT MEMORANDUM AND NOTES
THE NOTES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR ANY OTHER APPLICABLE SECURITIES LAW, AND OFFERS AND SALES THEREOF MAY
BE MADE ONLY IN COMPLIANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. BY
ITS ACCEPTANCE OF A NOTE, THE PURCHASER WILL BE DEEMED TO REPRESENT THAT IT HAS
BEEN AFFORDED AN OPPORTUNITY TO INVESTIGATE MATTERS RELATING TO THE ISSUER AND
THE NOTES, THAT IT IS NOT ACQUIRING SUCH NOTE WITH A VIEW TO ANY DISTRIBUTION
THEREOF AND THAT IT IS (A) AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED
INVESTOR WITHIN THE MEANING OF RULE 501(a) UNDER THE ACT (AN “INSTITUTIONAL
ACCREDITED INVESTOR”) AND THAT EITHER IS PURCHASING NOTES FOR ITS OWN ACCOUNT,
IS A U.S. BANK (AS DEFINED IN SECTION 3(a)(2) OF THE ACT) OR A SAVINGS AND
LOAN ASSOCIATION OR OTHER INSTITUTION (AS DEFINED IN SECTION 3(a)(5)(A) OF
THE ACT) ACTING IN ITS INDIVIDUAL OR FIDUCIARY CAPACITY OR IS A FIDUCIARY OR
AGENT (OTHER THAN A U.S. BANK OR SAVINGS AND LOAN ASSOCIATION) PURCHASING NOTES
FOR ONE OR MORE ACCOUNTS EACH OF WHICH IS SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR OR (B) A QUALIFIED INSTITUTIONAL BUYER (“QIB”) WITHIN THE MEANING
OF RULE 144A UNDER THE ACT THAT IS ACQUIRING NOTES FOR ITS OWN ACCOUNT OR
FOR ONE OR MORE OTHER ACCOUNTS, EACH OF WHICH IS A QIB AND WITH RESPECT TO EACH
OF WHICH THE PURCHASER HAS SOLE INVESTMENT DISCRETION; AND THE PURCHASER
ACKNOWLEDGES THAT IT IS AWARE THAT THE SELLER MAY RELY UPON THE EXEMPTION FROM
THE REGISTRATION PROVISIONS OF SECTION 5 OF THE ACT PROVIDED BY
RULE 144A. BY ITS ACCEPTANCE OF A NOTE, THE PURCHASER THEREOF
SHALL ALSO BE DEEMED TO AGREE THAT ANY RESALE OR OTHER TRANSFER THEREOF WILL BE
MADE ONLY (A) IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE ACT,
EITHER (1) TO THE ISSUER OR TO BANC OF AMERICA SECURITIES LLC, DEUTSCHE
BANK SECURITIES INC., MERRILL LYNCH MONEY MARKETS INC. OR ANOTHER PERSON
DESIGNATED BY THE ISSUER AS A PLACEMENT AGENT FOR THE NOTES (COLLECTIVELY, THE
“PLACEMENT AGENTS”), NONE OF WHICH SHALL HAVE ANY OBLIGATION TO ACQUIRE SUCH
NOTE,
(2) THROUGH
A PLACEMENT AGENT TO AN INSTITUTIONAL ACCREDITED INVESTOR OR A QIB, OR
(3) TO A QIB IN A TRANSACTION THAT MEETS THE REQUIREMENTS OF RULE 144A
AND (B) IN MINIMUM AMOUNTS OF $250,000.
A-1
AllianceBernstein L.P.
Consolidated Ratio Of Earnings To
Fixed Charges
(In Thousands)
|
|
Years
Ended
|
|
|
|
12/31/2008
|
|
|
12/31/2007
|
|
|
12/31/2006
|
|
Fixed
Charges:
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
$
|
13,077
|
|
|
$
|
23,970
|
|
|
$
|
23,124
|
|
Estimate
of Interest Component In Rent Expense
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
Fixed Charges
|
|
|
13,077
|
|
|
|
23,970
|
|
|
|
23,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Before Income Taxes and Non-Controlling Interest in Earnings of
Consolidated Entities
|
|
|
944,229
|
|
|
|
1,405,004
|
|
|
|
1,192,038
|
|
Other
|
|
|
(72,965
|
)
|
|
|
(6,861
|
)
|
|
|
(9,446
|
)
|
Fixed
Charges
|
|
|
13,077
|
|
|
|
23,970
|
|
|
|
23,124
|
|
Total
Earnings
|
|
$
|
884,341
|
|
|
$
|
1,422,113
|
|
|
$
|
1,205,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Ratio Of Earnings To Fixed Charges
|
|
|
67.63
|
|
|
|
59.33
|
|
|
|
52.14
|
|
(1)
AllianceBernstein L.P. has not entered into financing leases during these
periods.
Exhibit
21.01
Subsidiaries
of
AllianceBernstein
l.p.
Each of
the entities listed below are wholly-owned subsidiaries of AllianceBernstein,
unless a specific percentage ownership is indicated:
AllianceBernstein
Corporation of Delaware
(Delaware)
Sanford
C. Bernstein & Co., LLC
(Delaware)
AllianceBernstein
Investments, Inc.
(Delaware)
AllianceBernstein
Investor Services, Inc.
(Delaware)
AllianceBernstein
Global Derivatives Corporation
(Delaware)
AllianceBernstein
Oceanic Corporation
(Delaware)
Alliance
Corporate Finance Group Incorporated
(Delaware)
AllianceBernstein
Japan Inc.
(Delaware)
Alliance
Capital Management LLC
(Delaware)
Alliance
Capital Real Estate, Inc.
(Delaware)
AllianceBernstein
ESG Venture Management, L.P.
(Delaware;
10%-owned)
AllianceBernstein
Trust Company, LLC
(New
Hampshire)
AllianceBernstein
Canada, Inc.
(Canada)
AllianceBernstein
(Mexico), S. de R.L. de C.V.
(Mexico)
AllianceBernstein
Investmentimentos (Brasil) Ltda.
(Brazil)
AllianceBernstein
(Argentina) S.R.L.
(Argentina)
AllianceBernstein
Limited
(U.K.)
AllianceBernstein
Services Limited
(U.K.)
Sanford
C. Bernstein Limited
(U.K.)
Sanford
C. Bernstein (CREST Nominees) Limited
(U.K.)
AllianceBernstein
(Luxembourg) S.A.
(Luxembourg)
AllianceBernstein
(France) S.A.S
(France)
ACM
Bernstein GmbH
(Germany)
ACM
Bernstein (Deutschland) GmbH
(Germany)
AllianceBernstein
Investment Research (Proprietary) Limited
(South
Africa; 80%-owned)
AllianceBernstein
Investment Research and Management (India) Pvt. Ltd.
(India)
Alliance
Capital (Mauritius) Private Limited
(Mauritius)
AllianceBernstein
Japan Ltd.
(Japan)
AllianceBernstein
Asset Management (Korea) Limited
(Korea)
AllianceBernstein
Hong Kong Limited
(Hong
Kong)
AllianceBernstein
(Singapore) Ltd.
(Singapore)
AllianceBernstein
(Taiwan) Limited
(Taiwan;
99%-owned)
AllianceBernstein
Investment Management Australia Limited
(Australia)
AllianceBernstein
Australia Limited
(Australia;
50%-owned)
AllianceBernstein
New Zealand Limited
(New
Zealand; 50%-owned)
Exhibit 23.01
Securities
and Exchange Commission
100 F
Street, N.E.
Washington,
DC 20549
CONSENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
We hereby
consent to the incorporation by reference in the Registration Statement on Form
S-8 (Nos. 333-153151, No. 333-142199, No. 333-142202, No. 033-52387,
No. 333-127223, No. 333-51418, No. 333-49392, No. 333-47194,
No. 333-47665, No. 333-47667, No. 033-65932, No. 033-65930,
and No. 033-28534) of AllianceBernstein Holding L.P. of our report dated
February 20, 2008 relating to the financial statements and the effectiveness of
internal control over financial reporting, which appears in the Annual Report to
Unitholders, which is incorporated in this Annual Report on Form
10-K. We also consent to the incorporation by reference of our report
dated February 20, 2008 relating to the financial statement schedules, which
appears in this Form 10-K.
/s/ PricewaterhouseCoopers
LLP
New York,
New York
February
20, 2008
Securities
and Exchange Commission
100 F
Street, N.E.
Washington,
DC 20549
CONSENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
We hereby
consent to the incorporation by reference in the Registration Statement on Form
S-3 (No. 333-64886) and Form S-8 (No. 333-47192) of AllianceBernstein L.P. of
our report dated February 20, 2008 relating to the financial statements and the
effectiveness of internal control over financial reporting, which appears in the
Annual Report to Unitholders, which is incorporated in this Annual Report on
Form 10-K. We also consent to the incorporation by reference of our
report dated February 20, 2008 relating to the financial statement schedules,
which appears in this Form 10-K.
/s/ PricewaterhouseCoopers
LLP
New York,
New York
February
20, 2008
I, Peter
S. Kraus, certify that:
1.
|
I
have reviewed this annual report on Form 10-K of AllianceBernstein Holding
L.P.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: February
20, 2009
|
|
/s/ Peter S. Kraus
|
|
|
|
Peter
S. Kraus
|
|
|
|
Chief
Executive Officer
|
|
|
|
AllianceBernstein
Holding L.P.
|
|
Exhibit 31.02
I, Robert
H. Joseph, Jr., certify that:
1.
|
I
have reviewed this annual report on Form 10-K of AllianceBernstein Holding
L.P.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: February
20, 2009
|
|
/s/ Robert H. Joseph, Jr.
|
|
|
|
Robert
H. Joseph, Jr.
|
|
|
|
Chief
Financial Officer
|
|
|
|
AllianceBernstein
Holding L.P.
|
|
CERTIFICATION PURSUANT
TO
18 U.S.C. SECTION
1350,
AS ADOPTED PURSUANT
TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report of AllianceBernstein Holding L.P. (the
“Company”) on Form 10-K for the period ending December 31, 2008 to be filed with
the Securities and Exchange Commission on or about March 2, 2009 (the “Report”),
I, Peter S. Kraus, Chief Executive Officer of the Company, certify, for the
purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities
Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. § 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(1)
|
The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Exchange Act; and
|
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Date: February
20, 2009
|
|
/s/ Peter S. Kraus
|
|
|
|
Peter
S. Kraus
|
|
|
|
Chief
Executive Officer
|
|
|
|
AllianceBernstein
Holding L.P.
|
|
Exhibit 32.02
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION
1350,
AS ADOPTED PURSUANT
TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report of AllianceBernstein Holding L.P. (the
“Company”) on Form 10-K for the period ending December 31, 2008 to be filed with
the Securities and Exchange Commission on or about March 2, 2009 (the “Report”),
I, Robert H. Joseph, Jr., Chief Financial Officer of the Company, certify, for
the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities
Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. § 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(1)
|
The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Exchange Act; and
|
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Date: February
20, 2009
|
|
/s/ Robert H. Joseph, Jr.
|
|
|
|
Robert
H. Joseph, Jr.
|
|
|
|
Chief
Financial Officer
|
|
|
|
AllianceBernstein
Holding L.P.
|
|