Date of Report (Date of earliest event reported):
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June 21, 2012
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Delaware
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001-09818
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13-3434400
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(State or other jurisdiction of
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(Commission File Number)
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(I.R.S. Employer Identification Number)
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incorporation or organization) |
1345 Avenue of the Americas, New York, New York
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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:
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212-969-1000
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o
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
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Item 9.01.
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Financial Statements and Exhibits.
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(d)
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Exhibits.
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Extended Employment Agreement.
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AllianceBernstein Holding l.p.
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Dated: June 26, 2012
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By:
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/s/ Laurence E. Cranch |
Laurence E. Cranch | ||
General Counsel |
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(a)
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delivering lectures and fulfilling speaking engagements;
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(b)
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engaging in charitable, community and other personal activities; and
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(c)
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corporate boards subject to the Company’s Code of Business Conduct and Ethics and approval of the Board of the Corporation;
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(a)
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Restricted Units in Respect of Partnership Units in Holding.
On June 21, 2012, the date that this Agreement is being executed, the Executive shall be granted 2,722,052 restricted units in respect of limited partnership units in Holding (the “Restricted Units”). Subject to accelerated vesting as described in Sections 7(b) and 7(c) or upon a “Change in Control” of the Company (as defined on Annex A attached hereto), the Restricted Units shall vest (and no longer be subject to forfeiture) ratably on each of December 19, 2014, 2015, 2016, 2017 and 2018, provided, with respect to each installment, that the Executive continues to be employed on the vesting date. Subject to accelerated delivery upon termination of employment as described in Section 7 or a Change in Control (provided that such Change in Control is also a “change in control event” as defined in Section 1.409A-(3)(i)(5) of the regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (a “409A CIC Event”)), all of the Holding units in respect of vested Restricted Units, subject to withholding as provided below, shall be delivered to the Executive as promptly as possible after December 19, 2018. In the event of a Change in Control of the Company, (i) the Restricted Units shall immediately and fully vest and no longer be subject to restriction or forfeiture and (ii) if such Change in Control is (A) a 409A CIC Event, all of the Holding units in respect of the Restricted Units shall be delivered to the Executive as promptly as possible (and in no event later than ten (10) business days) following such event, or (B) not a 409A CIC Event, all of the Holding units in respect of the Restricted Units shall be delivered to the Executive in accordance with the delivery terms of this Agreement.
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Unless otherwise elected by the Executive prior to the applicable vesting or delivery date, applicable FICA tax withholding in respect of vested but not yet delivered Restricted Units shall be satisfied by the Executive making a cash payment to the Company (by check or through reduction of other cash amounts payable to the Executive by the Company), and applicable U.S. federal, state and local income and FICA (to the extent not previously paid) tax withholding arising from any delivery of Holding units in respect of Restricted Units will be satisfied by the Company retaining the portion of the Holding units being delivered having a fair market value (based on the closing price of a Holding unit on the delivery date or the trading day immediately preceding the delivery date in the event the delivery date is not a trading day) equal to the tax withholding obligations on the number of Holding units being delivered on such date in respect of the Restricted Units. Starting on the Commencement Date, the Company shall pay to the Executive the cash distributions with respect to the unvested Restricted Units and any vested but undelivered Restricted Units on the same basis as cash distributions are paid to holders of Holding units as soon as reasonably practicable and in no event later than five (5) business days following the payment of distributions to holders of Holding units generally; provided that, no such payment shall be required with regard to any cash distributions to holders of Holding units with a record date that is (i) following the delivery date of Holding units in respect of vested Restricted Units (taking into account any delay of delivery as provided in this Agreement, including due to Section 409A of the Code as contemplated by Section 14(c) of this Agreement) or (ii) with respect to unvested Restricted Units, on or following the date on which such unvested Restricted Units are forfeited. The Executive shall be entitled to distribution payments on any delivered Restricted Units owned by him to the same extent as any other holder of Holding units. The grant of Restricted Units constitutes the entire commitment to the Executive with respect to equity compensation (i.e., is in lieu of annual equity grants) for the period 2014 through 2018. The Restricted Units will be granted under the Alliance Bernstein L.P. 2010 Long Term Incentive Plan (the “2010 Plan”) subject to the terms and conditions set forth in this Agreement and, in the event of a conflict between this Agreement and the Plan, the terms of this Agreement shall govern.
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(b)
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Base Salary.
The Executive shall be compensated at an annual base salary which initially shall be Two Hundred Seventy Five Thousand Dollars ($275,000) (the “Base Salary”). The Base Salary shall be reviewed for increase (if any) each year by the Compensation Committee of the Corporation’s Board of Directors and (the “Compensation Committee”), with the first such review to occur in respect of the Base Salary to be paid for the calendar year commencing January 1, 2014.
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(c)
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Annual Bonus
. Any cash bonus shall be determined in the sole discretion of the Compensation Committee. Any cash bonus shall be payable on the date annual cash bonuses are paid to executive officers of the Company generally, but in no event later than March 15 of the year following the year with respect to which such bonus payment was earned.
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(a)
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General Provisions.
Except as expressly provided in this Agreement, the Executive shall be eligible to participate in all employee benefit, welfare, fringe benefit and defined contribution plans offered by the Company (collectively referred to as the “Benefit Plans”), subject to their terms and conditions and on a basis that is no less favorable to the Executive than the basis on which such Benefit Plans are made available to other executive officers of the Company.
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(b)
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Vacation and Sick Leave.
The
Executive shall be entitled to vacation and sick leave in accordance with the vacation and sick leave policies adopted by the Company from time to time for executive officers.
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(c)
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Business Travel and Expenses.
The Executive shall be reimbursed by the Company for reasonable business expenses, which are incurred and accounted for in accordance with the Company’s normal practices and procedures for reimbursement of expenses applicable to executive officers.
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(d)
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Executive Car and Driver.
In order to ensure the accessibility and safety of the Executive during the Employment Term, the Company will provide the Executive with a car and driver for business and personal purposes.
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(e)
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Air Travel
. The Executive may travel for business purposes by means of private aircraft at the Company’s expense with such aircraft to be provided by the Company by any commercially reasonable method as long as such methods are available to the Company and subject to reasonable limitations which may be imposed from time to time by the Board of Directors of the Company. The Executive may use a private aircraft provided by the Company for business travel for occasional personal travel subject to reasonable limitations which may be imposed from time to time by the Board of Directors of the Company; provided that the Executive reimburses the Company for any incremental cost (determined on a basis consistent with the calculation methodology used to determine such incremental cost as disclosed in the Private Partnership’s 2011 Annual Report on Form 10-K) to the Company of the Executive’s personal use of such aircraft.
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(a)
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Termination by the Company for Cause.
Termination for “Cause” shall mean termination because of (i) the continued, willful failure by the Executive to perform substantially his duties with the Company after a written demand for substantial performance is delivered to the Executive by the Board of the Corporation which specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties; (ii) the Executive’s conviction of, or plea of guilty or nolo contendere to, a crime that constitutes a felony; (iii) the willful engaging by the Executive in misconduct that is materially and demonstrably injurious to the Company or any of its affiliates; (iv) the willful breach by the Executive of the covenant set forth in Section 9 below not to disclose any confidential information pertaining to the Company or any of its affiliates or the covenant set forth in Section 8(a) below relating to not competing with the Company or any of its affiliates; or (v) the Executive’s failure to comply with a material written Company policy applicable to the Executive and related to workplace conduct as may exist or be amended from time to time. No act or failure to act shall be considered “willful” for purposes hereof, unless it is done, or omitted to be done, by the Executive in bad faith and without reasonable belief that his action or omission is in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless (A) the Executive has been given written notice in reasonable detail by the Company of the occurrence of one or more of the circumstances claimed to constitute Cause within thirty (30) days of the Board of Directors of the Corporation becoming aware of such circumstances and, except for terminations pursuant to Section 6(a)(ii), an opportunity for thirty (30) days to cure any such circumstances (to the extent such circumstances are subject to cure), and such circumstances remain uncured at the end of such thirty (30)-day period (provided that, in the event that the Executive cures such circumstances, the notice of termination shall be nullified) and (B) there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the members of the Board of Directors of the Corporation (excluding the Executive) at a meeting of the Board of Directors of the Corporation called and held for such purpose (after reasonable notice is provided to the Executive and the Executive, together with counsel for the Executive, is afforded the opportunity to present whatever facts he reasonably believes are relevant to the Board for its consideration) finding that the Executive is guilty of the conduct described in clauses (i), (iii), (iv) or (v) above.
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(b)
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Death.
If the Executive’s employment terminates by reason of death, the date of his death shall be the date of termination for purposes of this Agreement.
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(c)
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Termination by the Executive for Good Reason.
Termination for “Good Reason” shall mean a termination of employment by the Executive after having delivered to the Company a notice of termination specifying in reasonable detail the circumstances constituting Good Reason, within thirty (30) days after the occurrence of one or more of the following circumstances without the Executive’s express written consent, which is not remedied by the Company within thirty (30) days of its receipt of the Executive’s notice of termination (provided that, in the event that the Company cures such circumstances, the notice of termination shall be nullified), and the Executive’s “separation from service” (within the meaning of Section 409A of the Code) occurs no later than 120 days following the initial existence of one or more of the circumstances giving rise to Good Reason:
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(i)
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an assignment to the Executive of duties materially inconsistent with his position (including offices, titles and reporting responsibilities), authority, duties or responsibilities;
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(ii)
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a requirement that the Executive report to an officer or employee instead of reporting directly to the Board of Directors of the Corporation, except that the Executive acknowledges that it shall not be grounds for termination that, in addition to reporting to the Board of Directors of the Corporation, he shall also have reporting responsibilities to the Chief Executive Officer of AXA as provided in Section 2 of this Agreement;
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(iii)
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any action or inaction that constitutes a material breach by the Company of this Agreement; or
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(iv)
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the Company’s requiring the Executive to be based at any office or location more than 25 miles commuting distance from the location referred to in Section 3 of this Agreement.
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(d)
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Termination for Disability
. Termination by the Company for “Disability” shall mean termination due to a good faith determination by the Company that the Executive is physically or mentally incapacitated and has been unable for a period of one hundred and twenty (120) days in the aggregate during any twelve-month period to perform substantially all of the duties for which he is responsible immediately before the commencement of the incapacity. In order to assist the Company in making such a determination and as reasonably requested by the Company, the Executive will (i) make himself available for medical examination by one or more physicians chosen by the Company and approved by the Executive, whose approval shall not be unreasonably withheld, (ii) grant the Company and any such physicians access to all relevant medical information relating to himself, (iii) arrange to furnish copies of medical records to the Company and such physicians, and (iv) use best efforts to cause his own physicians to be available to discuss his health with the Company and its chosen physicians.
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(a)
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Termination by the Company for Cause or by the Executive other than for Good Reason.
If the Executive’s employment hereunder is terminated by the Company for Cause as defined in Section 6(a) or by the Executive (other than for Good Reason as defined in Section 6(c)), then: (i) the Company shall pay the Executive, within thirty (30) days after the date of termination, any Base Salary and any reimbursable expenses accrued or owing the Executive hereunder as of the date of termination, any earned and unpaid annual bonus in respect of fiscal years of the Company completed prior to the date of termination (it being understood that, absent approval of the Compensation Committee, no such bonus shall have been deemed to have been earned for any year) and any cash distribution payments on the Restricted Units in accordance with and at the time specified in Section 4(a); (ii) the Company shall deliver to the Executive Holding units in respect of any vested Restricted Units on the 60
th
day following the date of termination (subject to any delay required by Section 409A of the Code as contemplated by Section 14(c)), subject to applicable withholding as provided in Section 4(a); (iii) the Executive shall immediately forfeit any unvested Restricted Units; and (iv) the Executive shall not be entitled to any other benefits under any Benefit Plan or policy except to the extent such benefits are vested as of the date of termination or required by statute or the express provisions of this Agreement (the “Other Benefits”). In addition, in the event of termination by the Executive other than for Good Reason (including, without limitation, after the expiration of the Employment Term), the Company shall provide the Executive and his spouse with access to participation in the Company’s medical plans at the Executive’s (or his spouse’s) sole expense based on a reasonably determined fair market value premium rate following the period of continued coverage under COBRA for as long as the Executive (or his spouse) elects to participate.
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(b)
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Termination Due to Death or Disability
. If the Executive’s employment hereunder is terminated by the Company due to death or Disability, then: (i) the Company shall pay the Executive, within thirty (30) days after the date of termination: (A) any Base Salary and any reimbursable expenses accrued or owing the Executive hereunder as of the date of termination and any earned and unpaid annual bonus in respect of fiscal years of the Company completed prior to the date of termination (it being understood that, absent approval of the Compensation Committee, no such bonus shall have been deemed to have been earned); and (B) the amount of Base Salary that would otherwise have been payable to the Executive had he remained employed through the end of the calendar year in which termination occurs, to the extent not previously paid; (ii) any cash distribution payments on the Restricted Units in accordance with and at the time specified in Section 4(a); (iii) upon termination of the Executive’s employment, and regardless of whether such termination occurs before or after the expiration of the Employment Term, the Company shall provide at the Company’s expense continued health and welfare benefits for the Executive, the Executive’s spouse and the Executive’s dependents through the end of the calendar year in which the date of termination occurs (which period of continued health care coverage shall run contemporaneously with the required COBRA coverage period), and thereafter, following the COBRA coverage period and for as long as the Executive (or his spouse) elects to participate, the Company shall provide the Executive and his spouse with access to participation in the Company’s medical plans at the Executive’s (or his spouse’s) sole expense based on a reasonably determined fair market value premium rate; (iv) the Executive shall immediately vest in a pro-rated portion of any Restricted Units otherwise due to vest on the next vesting date; (v) the Company shall deliver to the Executive Holding units in respect of any vested Restricted Units (A) as promptly as possible following the date of termination due to the Executive’s death and (B) on the 60
th
day following the date of termination due to the Executive’s Disability (subject to any delay required by Section 409A of the Code as contemplated by Section 14(c)), subject to applicable withholding as provided in Section 4(a); and (vi) the Executive shall be entitled to the Other Benefits.
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(c)
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Severance Benefits upon Termination by the Executive for Good Reason or by the Company other than for Cause, Death or Disability
. In the event the Executive’s employment hereunder is terminated by the Executive for Good Reason as defined in Section 6(c) or by the Company other than for reasons defined in Section 6(a), 6(b) or 6(d), the Executive shall be entitled to the following benefits, provided that the Executive executes and delivers a release substantially in the form of Exhibit A to this Agreement within 45 days after termination of his employment and does not exercise any right he may have to revoke such release:
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(i)
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within sixty (60) days after the date of termination, any Base Salary and any reimbursable expenses accrued or owing the Executive hereunder as of the date of termination and any earned and unpaid annual bonus in respect of fiscal years of the Company completed prior to the date of termination (it being understood that, absent approval of the Compensation Committee, no such bonus shall have been deemed to have been earned for any year);
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(ii)
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any cash distribution payments on the Restricted Units in accordance with and at the time specified in Section 4(a);
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(iii)
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the immediate vesting of the next two installments of Restricted Units referred to in Section 4(a) or, if fewer, the balance of the installments that are unvested; provided that, if the date of termination occurs before December 19, 2012, this section 7(c)(iii) shall not apply, and if the date of termination occurs after December 19, 2012 but before December 19, 2013, the benefit under this Section 7(c)(iii) shall be the immediate vesting of the installment of Restricted Units scheduled to vest on December 19, 2014 as provided in Section 4(a);
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(iv)
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delivery to the Executive of Holding units in respect of any vested Restricted Units, including those that vest as provided in Section 7(c)(iii) of this Agreement, on the 60
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day following the date of termination (subject to any delay required by Section 409A of the Code as contemplated by Section 14(c)), subject to applicable withholding as provided in Section 4(a);
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(v)
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payments equal to the cost of COBRA coverage for the Executive for the period during which the Executive is eligible for COBRA, with such monthly payments to be made on the first business day of each month during the COBRA continuation period, commencing with the calendar month following the date of termination;
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(vi)
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access for the Executive and his spouse to participation in the Company’s medical plans at the Executive’s (or his spouse's) sole expense based on a reasonably determined fair market value premium rate following the period of continued coverage under COBRA for as long as the Executive (or his spouse) elects to participate; and
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(vii)
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the Other Benefits.
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(a)
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During his employment with the Company and for a period of six months from the date of the Executive’s termination of employment hereunder for any reason, the Executive will not provide services, in any capacity, whether as an employee, consultant, independent contractor, owner, partner, shareholder, director, or otherwise, to any person or entity that provides products or services that compete with any present or planned business of the Company and any affiliate of the Company over which the Executive has or had during the six (6) months prior to the date of termination direct operating responsibility (an “Operational Affiliate”) (it being understood that, during the period of the Executive’s service on the Management Board of AXA, the Executive shall be considered to have direct operating responsibility over AXA and its controlled affiliates and that notwithstanding anything contained herein to the contrary, once he ceases to serve on the Management Board of AXA, he shall no longer be considered to have such direct operating responsibility solely by reason of his service on the Management Board of AXA); provided that, nothing herein shall prevent the Executive from being a passive owner of not more than 5% of the outstanding equity of any class of securities of an entity that is publicly traded and that owns or may acquire any corporation or business that competes with the Company or any of its affiliates. A “planned business” for purposes of the preceding sentence shall mean a business: (i) that the Executive is aware that the Company or an Operational Affiliate plans to enter within six months after the date of the termination of his employment, (ii) that is material to the entity that plans to enter such business, and (iii) in which such entity has invested material resources (including time of senior management) in preparation for launch.
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(b)
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For a period of one year following the termination of the Executive’s employment for any reason, the Executive will not solicit (whether directly or on his behalf through his instruction to any other person or entity) the business of any customer or prospective customer of the Company or any Operational Affiliate for any purpose other than to obtain, maintain and/or service the customer’s business for the Company or any of its affiliates.
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(c)
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For a period of one year following the termination of the Executive’s employment for any reason, the Executive agrees not to (whether directly or on his behalf through his instruction to any other person or entity) recruit, solicit or hire any employees of the Company or any Operational Affiliate to work for the Executive or any other person or entity.
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(d)
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Exclusive Property
. The Executive confirms that all confidential information is and shall remain the exclusive property of the Company. All business records, papers and documents kept or made by the Executive relating to the business of the Company or any of its affiliates shall be and remain the property of the Company. Upon the termination of his employment with the Company or upon the request of the Company at any time, the Executive shall promptly deliver to the Company, and shall not without the prior written consent of the Corporation’s Board of Directors retain copies of, any written materials not previously made available to the public or any records and documents made by the Executive in his possession concerning the business or affairs of the Company or any of its affiliates.
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(e)
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Remedies.
Without intending to limit the remedies available to the Company, the Executive acknowledges that a breach of any of the covenants contained in this Section 8 may result in material irreparable injury to the Company or its affiliates for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of such a breach or threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction restraining the Executive from engaging in activities prohibited by this Section 8 or such other relief as may be required to specifically enforce any of the covenants in this Section 8. The Company and its affiliates hereby agree that the covenants set forth herein are and shall be the exclusive covenants to which the Executive is subject and the remedies set forth herein shall be the exclusive remedies available to the Company and its affiliates with respect to a claimed breach.
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(a)
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Representation and Warranty of Executive.
Except for the covenants that have been previously disclosed to the Company (on a confidential basis), the
Executive represents and warrants that he is subject to no agreement or restriction that would limit his ability to execute and deliver this Agreement, or, as of the Commencement Date, immediately serve in the capacities and fully perform the services contemplated herein. It is the mutual intent of the Executive and the Company that the Executive will fully honor his post-employment obligations to his prior employer, and in recognition of such obligations, including those applicable to any equity awards in respect of his prior employer’s common stock, the Company and its affiliates shall not, directly or indirectly, require the Executive to take any action or engage in conduct that could reasonably be expected to result in a breach of such covenants.
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(b)
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Entire Agreement.
This Agreement constitutes the entire agreement between the Company and the Executive relating to the subject matter hereof and, except with respect to the rights under this Agreement that by their terms arise prior to the Commencement Date (such as those provided under Section 4(a) and Section 7), from and after the Commencement Date, supersedes the Existing Agreement (other than with respect to any rights under the Existing Agreement that expressly, or by reasonable implication, come into or continue in effect on or after the expiration of the term of the Existing Agreement, including without limitation any rights in respect of the restricted units granted under the Existing Agreement) and, except to the extent expressly provided herein or as required by law, any provisions of any plan, program, policy or other document of the Company pertaining to the subject matter hereof.
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(c)
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Assignment.
This Agreement and the rights and obligations contained herein shall not be assignable or otherwise transferable by either party to this Agreement without the prior written consent of the other party to this Agreement. Notwithstanding the foregoing, any amounts or benefits owing to the Executive upon his death shall inure to the benefit of his heirs, legatees, personal representatives, executor or administrator.
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(d)
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Notices.
Any and all notices provided for under this Agreement shall be in writing and hand delivered or sent by first class registered or certified mail, postage prepaid, return receipt requested, addressed to the Executive at his residence or to the Corporation, attention General Counsel, at its usual place of business, and all such notices shall be deemed effective at the time of delivery or at the time delivery is refused by the addressee upon presentation.
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(e)
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Amendment/Waiver.
No provision of this Agreement may be amended, waived, modified, extended or discharged unless such amendment, waiver, extension or discharge is agreed to in writing signed by both the Company and the Executive.
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(f)
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Applicable Law.
This Agreement and the rights and obligations of the parties hereunder shall be construed, interpreted, and enforced in accordance with the laws of the State of New York (applicable to contracts to be performed wholly
within such State).
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(g)
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Severability.
The Executive hereby expressly agrees that all of the covenants in this Agreement are reasonable and necessary in order to protect the Company and its business. If any provision or any part of any provision of this Agreement shall be invalid or unenforceable under applicable law, such part shall be ineffective only to the extent of such invalidity or unenforceability and shall not affect in any way the validity or enforceability of the remaining provisions of this Agreement, or the remaining parts of such provision.
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(h)
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Successor in Interests.
In the event the Corporation, Holding or the Private Partnership merges or consolidates with or into any other corporation or entity, or sells or otherwise transfers substantially all of its assets to another corporation or entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the corporation or entity surviving or resulting from the merger or consolidation or to which the assets are sold or transferred and, prior to the consummation of any such event, the Corporation, Holding or the Private Partnership, as applicable, shall obtain the express written assumption of this Agreement by the successor corporation or entity (other than in the case of a merger after which the Corporation, Holding or the Private Partnership is the surviving entity). All references herein to the Company refer with equal force and effect to each of the Corporation, Holding and the Private Partnership (unless the context clearly indicates otherwise) and any corporate or other successor of each such entity that acquires directly or indirectly by merger, consolidation, purchase or otherwise, all or substantially all of the assets of the Corporation, Holding or the Private Partnership.
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(i)
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Mitigation.
In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of whether the Executive obtains other employment.
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(j)
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Attorneys’ Fees
. The Company agrees to pay, within ten business days of receipt of an invoice from the Executive, to the fullest extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest by the Company, the Executive or others of the validity or enforceability of or liability under, or otherwise involving, any provision of this Agreement (whether such contest is between the Company and the Executive or between either of them and any third party), together with interest at the applicable federal rate under Code Section 1274(d), provided that the Executive prevails on one material issue in the dispute.
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(a)
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Determination of Gross-Up Payment.
In the event that the aggregate of all payments or benefits made or provided to or for the benefit of, or that may be made or provided to or for the benefit of, the Executive under this Agreement and under all other plans, programs and arrangements of the Company and its affiliates (the “Aggregate Payment”) is determined to constitute a “parachute payment” (as such term is defined in Section 280G(b)(2) of the Code), the Company shall pay to the Executive, prior to the time any excise tax imposed by Section 4999 of the Code (the “Excise Tax”) is payable with respect to such Aggregate Payment, an additional amount (the “Gross-Up Payment”) such that, after the imposition and payment of all income and excise taxes thereon (and any interest or penalties imposed with respect to such taxes) and the Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Aggregate Payment. Notwithstanding the foregoing provisions of this Section 13, if it shall be determined that the Executive is entitled to the Gross-Up Payment, but that the Parachute Value (as defined below) of the Aggregate Payment does not exceed 110% of the Safe Harbor Amount (as defined below), then no Gross-Up Payment shall be made to the Executive and the amounts payable under this Agreement shall be reduced so that the Parachute Value of the Aggregate Payment equals the Safe Harbor Amount.
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The reduction of the amounts payable under this Agreement, if applicable, shall be made by reducing the payments or benefits under the following Sections in the following order (to the extent such payments or benefits constitute parachute payments): (i) Section 7(c)(iv); and (ii) Section 7(c)(iii). If the reduction of the amounts payable under this Agreement would not result in a reduction of the Parachute Value of the Aggregate Payment to the Safe Harbor Amount, no amounts payable under this Agreement shall be reduced pursuant to this Section 13 and the Executive shall be entitled to the Gross-Up Payment. All determinations under this Section 13, including whether the Aggregate Payment constitutes a parachute payment exceeding 110% of the Safe Harbor Amount and the amount of the Gross-Up Payment to be paid to the Executive pursuant to this Section 13, shall be made by an independent auditor (the “Auditor”) jointly selected by the Company and the Executive and paid by the Company. The Auditor shall be a nationally recognized United States public accounting firm which has not, during the two (2) years preceding the date of its selection, acted as the primary auditor on behalf of the Company or any affiliate thereof. If the Executive and the Company cannot agree on the firm to serve as the Auditor, then the Executive and the Company shall each select one accounting firm and those two firms shall jointly select the accounting firm to serve as the Auditor.
Notwithstanding the foregoing, in the event that the amount of the Executive’s Excise Tax liability is subsequently determined to be greater than the Excise Tax liability with respect to which an initial Gross-Up Payment to the Executive under this Section 13 has been made, the Company shall pay to the Executive an additional amount with respect to such additional Excise Tax (and any interest and penalties thereon) in the amount determined by the Auditor so as to make the Executive whole, on an after-tax basis, with respect to such Excise Tax (and any interest and penalties thereon) and such additional amount paid by the Company.
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(b)
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Definitions.
For purposes of this Section 13, the following terms have the meanings set forth below:
(i) the “Parachute Value” of a payment, benefit or distribution shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such payment, benefit or distribution that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Auditor for purposes of determining whether and to what extent the Excise Tax will apply to such payment; and (ii) the “Safe Harbor Amount” means 2.99 times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.
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(a)
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General.
It is intended that this Agreement shall comply with the provisions of Code Section 409A and the Treasury regulations relating thereto, or an exemption to Code Section 409A, and payments, rights and benefits may only be made, satisfied or provided under this Agreement upon an event and in a manner permitted by Code Section 409A, to the extent applicable, so as not to subject the Executive to the payment of taxes and interest under Code Section 409A. In furtherance of this intent, this Agreement shall be interpreted, operated and administered in a manner consistent with these intentions, and to the extent that any regulations or other guidance issued under Code Section 409A would result in the Executive being subject to payment of additional income taxes or interest under Code Section 409A, the parties agree to amend this Agreement to maintain to the maximum extent practicable the original intent of this Agreement while avoiding the application of such taxes or interest under Code Section 409A. Severance benefits under this Agreement are intended to be exempt from Code Section 409A under the “separation pay exception,” to the maximum extent applicable.
Any payments that qualify for the “short-term deferral” exception or another exception under Code Section 409A shall be paid under the applicable exception. For purposes of the limitations on nonqualified deferred compensation under Code Section 409A, each payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of applying the Code Section 409A deferral election rules and the exclusion under Code Section 409A for certain short-term deferral amounts. All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under Code Section 409A. In no event may the Executive, directly or indirectly, designate the calendar year of any payment under this Agreement.
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(b)
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In-Kind Benefits and Reimbursements; Tax Gross-ups.
All reimbursements and in-kind benefits provided under this Agreement that constitute deferred compensation under Section 409A of the Code shall be made or provided in accordance with the requirements of Code Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement); (ii) the amount of expenses eligible for reimbursement, or in kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in kind benefits to be provided, in any other calendar year; (iii) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred; and (iv) the right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit. Any tax gross-up payments (other than a payment under Section 13) shall be paid no later than the date on which the taxes on the underlying income or imputed income are due to the applicable tax authority, and in any event prior to the end of the Executive’s taxable year next following the Executive’s taxable year in which the applicable taxes (and any income or other related taxes or interest or penalties thereon) are remitted to the applicable taxing authority.
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(c)
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Delay of Payments.
Notwithstanding any other provision of this Agreement to the contrary, if the Executive is considered a “specified employee” for purposes of Section 409A (as determined in accordance with the methodology established by the Company as in effect on the date of termination), any payment that constitutes nonqualified deferred compensation within the meaning of Code Section 409A, including the delivery of the Holding units in respect of the Restricted Units, that is otherwise due to the Executive under this Agreement during the six-month period following his separation from service (as determined in accordance with Code Section 409A) on account of the Executive’s separation from service shall be accumulated and paid or delivered to the Executive on the first business day of the seventh month following his separation from service (the “Delayed Payment Date”). The Executive shall be entitled to (i) interest on any delayed cash payments from the date of termination to the Delayed Payment Date at a rate equal to the applicable federal short-term rate in effect under Code Section 1274(d) for the month in which the Executive’s separation from service occurs and (ii) distributions on any Restricted Units as provided in Section 4(a) of this Agreement during the period of any delayed delivery. If the Executive dies during the postponement period, the amounts and entitlements delayed on account of Section 409A shall be paid (and the Holding units in respect of vested Restricted Units shall be delivered) to the personal representative of his estate on the first to occur of the Delayed Payment Date or thirty (30) days after the date of the Executive’s death.
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ALLIANCEBERNSTEIN L.P. | ||
By:
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ALLIANCEBERNSTEIN CORPORATION,
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its General Partner and on its own behalf
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By:
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/s/ Laurence E. Cranch
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Laurence E. Cranch
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General Counsel
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ALLIANCEBERNSTEIN HOLDING L.P. | ||
By:
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ALLIANCEBERNSTEIN CORPORATION,
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its General Partner and on its own behalf
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By:
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/s/ Laurence E. Cranch
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Laurence E. Cranch
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General Counsel
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AGREED TO AND ACCEPTED BY
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/s/ Peter S. Kraus
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Peter S. Kraus
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June 21, 2012
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Date
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Date:
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Peter S. Kraus
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Notary Public
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AllianceBernstein L.P. | ||||
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By:
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AllianceBernstein Holding L.P.
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Date:
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By:
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Name: | ||||
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AllianceBernstein Corporation
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