UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 10-K
|
ý
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For
the Fiscal Year Ended December 31, 2006
OR
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For
the transition period from
to
Commission
file number 000-29961
ALLIANCEBERNSTEIN
L.P.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
13-4064930
|
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
|
|
1345
Avenue of the Americas, New York, N.Y.
|
10105
|
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
|
Registrant’s
telephone number, including area code:
(212) 969-1000
|
||
Securities
registered pursuant to Section 12(b) of the Act:
None
Securities
registered pursuant to Section 12(g) of the
Act:
|
Title
of Class
|
Name
of each exchange on which registered
|
|
|
units
of limited partnership interest
|
None
|
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined
in
Rule 405 of the Securities Act. Yes ý No o
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 o No ý
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 ý No o
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. ý
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer” and “large accelerated filer” in Rule 12b-2 of the Act. (Check
one):
|
Large
accelerated filer ý
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes o No ý
The
number of units of limited partnership interest outstanding as of
January 31, 2007 was 259,313,247.
DOCUMENTS
INCORPORATED BY REFERENCE
This
Form 10-K does not incorporate any document by reference.
TABLE
OF CONTENTS
|
ii
|
||||
|
Part I
|
||||
|
Item
1.
|
1 | |||
| 1 | ||||
| 4 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 7 | ||||
| 16 | ||||
| 17 | ||||
| 17 | ||||
| 19 | ||||
| 19 | ||||
| 20 | ||||
| 21 | ||||
|
Item
1A.
|
22 | |||
|
Item
1B.
|
26 | |||
|
Item
2.
|
27 | |||
|
Item
3.
|
27 | |||
|
Item
4.
|
29 | |||
|
Part II
|
||||
|
Item
5.
|
30 | |||
|
Item
6.
|
32 | |||
|
Item
7.
|
33 | |||
|
Item
7A.
|
46 | |||
|
Item
8.
|
48 | |||
|
Item
9.
|
84 | |||
|
Item
9A.
|
84 | |||
|
Item
9B.
|
85 | |||
|
Part III
|
||||
|
Item
10.
|
85 | |||
|
Item
11.
|
93 | |||
|
Item
12.
|
104 | |||
|
Item
13.
|
109 | |||
|
Item
14.
|
112 | |||
|
Part IV
|
||||
|
Item
15.
|
113 | |||
|
116
|
||||
GLOSSARY
OF CERTAIN DEFINED TERMS
“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.
“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.
“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
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.
PART I
| Item 1. |
Business
|
The
words
“we” and “our” in this Form 10-K refer collectively to Holding,
AllianceBernstein and its subsidiaries, 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. Holding Unitholders own
partnership interests in a holding company whose principal source of income
and
cash flow is attributable to its ownership of limited partnership interests
in
AllianceBernstein.
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.
General
Clients
AllianceBernstein
provides research, diversified investment management and related services
globally to a broad range of clients, including:
|
•
|
institutional
clients, including unaffiliated corporate and public employee pension
funds, endowment funds, domestic and foreign institutions and governments,
and various affiliates;
|
|
•
|
retail
clients;
|
|
•
|
private
clients, including high-net-worth individuals, trusts and estates,
charitable foundations, partnerships, private and family corporations,
and
other entities; and
|
|
•
|
institutional
investors desiring independent institutional
research.
|
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. We are dedicated to creating and sustaining a fiduciary culture.
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
comply with
all
applicable rules and regulations and internal compliance 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. Some of the
specific steps we’ve taken in recent years 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; and
|
|
•
|
initiating
firm-wide compliance and ethics training
programs.
|
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 specialist 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:
|
•
|
To
our institutional clients, we offer separately managed accounts,
sub-advisory relationships, structured products, group trusts, mutual
funds, and other investment vehicles (“Institutional Investment
Services”);
|
|
•
|
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 that are sponsored by
various
financial intermediaries worldwide (“Separately Managed Account
Programs”), and other investment vehicles (collectively, “Retail
Services”);
|
|
•
|
To
our private clients, we offer separately managed accounts, hedge
funds,
mutual funds, and other investment vehicles (“Private Client Services”);
and
|
|
•
|
To
our institutional investors, we offer in-depth, independent, fundamental
research, portfolio strategy, trading, and brokerage-related services
(“Institutional Research
Services”).
|
This
broad range of investment services is provided by a group of investment
professionals with significant expertise in their respective disciplines. As
of
December 31, 2006, our 329 research analysts, located around the world,
supported our 174 portfolio managers. Our portfolio managers have an average
of 19
years
of experience in the industry and 10 years of experience with AllianceBernstein.
Together, they oversee a number of different types of investment products within
various vehicles and strategies, including separately managed accounts, mutual
funds, hedge funds, structured products, and other investment vehicles. Our
investment services include:
|
•
|
Growth
equities, generally targeting stocks with under-appreciated growth
potential;
|
|
•
|
Value
equities, generally targeting stocks that are out of favor and that
may
trade at bargain prices;
|
|
•
|
Fixed
income securities, including both taxable and tax-exempt
securities;
|
|
•
|
Passive
management, including both index and enhanced index strategies;
and
|
|
•
|
Blend
strategies, combining style pure investment components with systematic
rebalancing.
|
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 an increasingly important component of our product line. As
of
December 31, 2006, blend AUM were $134 billion (representing 19% of our
company-wide AUM), an increase of 52% from $88 billion as of December 31,
2005 and 154% from $53 billion as of December 31, 2004.
Sub-advisory
client mandates span our investment strategies, including growth, value, fixed
income, and blend. We serve as sub-adviser for retail mutual funds, insurance
products, retirement platforms, and institutional investment products. Dedicated
marketing and client servicing professionals are responsible for servicing
these
relationships.
Global
Reach
We
serve
clients in major global markets through operations in 47 cities
in
24 countries.
Our client base includes investors throughout the Americas, Europe, Asia,
Africa, and Australia. We utilize an integrated global investment platform
that
provides our clients with access to local (country-specific), international,
and
global research and investment strategies.
Assets
under management by client domicile and investment service as of December 31,
2006, 2005, and 2004 were as follows:
|
By
Client Domicile ($ in billions):
|
||
 |
 |
 |
|
December 31,
2006
|
December 31,
2005
|
December 31,
2004
|
|
By
Investment Service ($ in billions):
|
||
 |
 |
 |
|
December 31,
2006
|
December 31,
2005
|
December 31,
2004
|
As
the
above charts indicate, our business continues to become increasingly global.
Our
international client base increased by 44% during 2006 and 30% during 2005
and,
likewise, our global and international AUM increased by 50% during 2006 and
38%
during 2005. In addition, approximately 76%, 69%, and 51% of our gross asset
inflows (sales / new accounts) during 2006, 2005, and 2004, respectively, were
invested in global and international investment services.
Revenues
We
earn
revenues 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, with such 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 increase
or decrease. Increases in AUM generally result from market appreciation,
positive investment performance for clients, or net asset inflows from new
or
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
sometimes charge a performance-based fee in addition to or in lieu of a base
fee. Performance-based fees are 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, and they are recorded as revenue
at
the end of the measurement period. Accordingly, as performance-based fees
continue to become an increasingly important part of our business, the
seasonality and volatility of our revenues and earnings may become more
significant.
We
sometimes experience periods when the number of new accounts or the amount
of
AUM increases significantly, as well as periods when the number of client
accounts or the amount of AUM decreases significantly. These shifts result
from
wide-ranging factors, including conditions of financial markets, our investment
performance for clients, and changes in the investment preferences of our
clients.
We
earn
revenues from clients to whom we provide fundamental research, trading, 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 clients.
For
additional information about possible fluctuation in our revenues, see
“Risk Factors” in Item 1A.
Employees
As
of
December 31, 2006, we had 4,914 full-time employees, including 329 research
analysts, 174 portfolio managers, 61 traders, and 28 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 15 years. We consider our employee relations to
be
good.
Institutional
Investment Services
We
serve
our institutional clients through AllianceBernstein Institutional Investments,
a
unit of AllianceBernstein, and through other units in our international
subsidiaries and one of our joint ventures. 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, group trusts, mutual funds,
and
other investment vehicles. As of December 31, 2006, institutional assets
under management were $455 billion, or 64% of our company-wide assets under
management. 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 2,200 separate accounts
for
these clients, which are located in more than 40 countries. As
of
December 31, 2006, we managed employee benefit plan assets for 47
of the
Fortune 100 companies, and we managed public pension fund assets for
37 states
and/or municipalities in those states.
Our
Institutional Investment Services are becoming increasingly global. As of
December 31, 2006, our institutional AUM invested in global and
international investment services increased to $269 billion, or 59% of
institutional AUM, from $172 billion, or 48% of institutional AUM, as of
December 31, 2005, and from $124 billion, or 40% of institutional AUM, as
of December 31, 2004. Similarly, as of December 31, 2006, the AUM we
invested for clients domiciled outside the United States increased to $214
billion, or 47% of institutional AUM, from $137 billion, or 38% of institutional
AUM, as of December 31, 2005, and from $103 billion, or 33% of
institutional AUM, as of December 31, 2004.
Retail
Services
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”). As
of December 31, 2006, retail AUM, which are determined by subtracting
applicable liabilities from AUM, were $167 billion, or 23% 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 Services are designed to provide disciplined, research-based investments
that contribute to a well-diversified investment portfolio. We distribute our
Retail Products through financial intermediaries, including broker-dealers,
insurance sales representatives, banks, registered investment advisers, and
financial planners.
Our
Retail Products 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. Also among these products are
Separately Managed Account Programs, which are sponsored by various financial
intermediaries worldwide 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.
AllianceBernstein
Investments serves as the principal underwriter and distributor of the U.S.
Funds. AllianceBernstein Investments employs approximately 175 sales
representatives who devote their time exclusively to promoting the sale of
U.S.
Funds and certain other Retail Products by financial intermediaries.
AllianceBernstein Investments services approximately 3.9 million
shareholder accounts.
AllianceBernstein
(Luxembourg) S.A. (“AllianceBernstein Luxembourg”), one of our wholly-owned
subsidiaries, generally serves as the placing or distribution agent for the
Non-U.S. Funds. AllianceBernstein Luxembourg employs approximately 65 sales
representatives who devote their time exclusively to promoting the sale of
Non-U.S. Funds and other Retail Products by financial
intermediaries.
Our
Retail Services are also becoming increasingly global. As of December 31,
2006, our retail AUM invested in global and international investment services
increased to $86 billion, or 52% of retail AUM, from $65 billion, or 45% of
retail AUM, as of December 31, 2005, and from $48 billion, or 30% of retail
AUM, as of December 31, 2004. As of December 31, 2006, the AUM we
invested for clients domiciled outside the U.S. increased to $40 billion, or
24%
of retail AUM, from $39 billion, or 27% of retail AUM, as of December 31,
2005, and from $32 billion, or 19% of retail AUM, as of December 31,
2004.
We
offer
the following Retail Products to clients domiciled outside the United
States:
|
•
|
Internationally-distributed
retail funds that currently offer 35 different
portfolios to non-U.S. investors distributed by local financial
intermediaries by means of distribution agreements in most major
international markets (retail AUM in these funds totaled $23 billion
as of
December 31, 2006);
|
|
•
|
Local-market
funds that we distribute through financial intermediaries in specific
countries, including Japan, Hong Kong, Singapore, and Taiwan (retail
AUM
in these funds totaled $5 billion as of December 31, 2006);
and
|
|
•
|
Retail
sub-advisory mandates (AUM in these relationships totaled $12 billion
as
of December 31, 2006).
|
Our
U.S.
Funds, which include retail funds, our variable products series fund (an
insurance product), and the Sanford C. Bernstein Funds (principally Private
Client Services products), currently offer 124 different portfolios to U.S.
investors. As of December 31, 2006, retail U.S. Funds AUM was approximately
$58 billion, or 35% 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, which totaled $27 billion as of December 31, 2006, as private client
AUM.
Cash
Management Services
During
June 2005, AllianceBernstein and Federated Investors, Inc. (“Federated”)
completed a transaction pursuant to which Federated acquired our retail cash
management services. For additional information, see
Note 21 to AllianceBernstein’s consolidated financial statements in Item
8.
Private
Client Services
Bernstein
GWM combines the former private client services group of Bernstein, which has
served private clients for over 35 years, and the former private client group
of
Alliance Capital. As of December 31, 2006, private client AUM was $95
billion, or 13% 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 $400,000.
Our
Private Client Services are built on a direct sales effort that
involves approximately
298 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 any other relevant factors. Our private clients have access to 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., including 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.
Financial advisors have also been based in London since
the
third quarter of 2006. Bernstein GWM added 37 financial advisors in 2006 (a
14.2% increase from 2005), and plans to add additional advisors in
2007.
Non-U.S.
investment services have become increasingly important in the private client
channel. As of December 31, 2006, our private client AUM invested in global
and international investment services increased to $29 billion, or 30% of
private client AUM, from $20 billion, or 26% of private client AUM, as of
December 31, 2005, and from $14 billion, or 22% of private client AUM, as
of December 31, 2004.
Institutional
Research Services
Institutional
Research Services (“IRS”) consist of in-depth, independent, fundamental
research, portfolio strategy, trading and brokerage-related services provided
to
institutional investors such as pension fund, hedge fund, and mutual fund
managers, and other institutional investors. Trade execution and
brokerage-related services are provided by SCB LLC in the United States and
SCBL
primarily in Europe. As of December 31, 2006, SCB LLC and SCBL (together,
“SCB”) served approximately 1,325 clients in the U.S. and approximately 390
clients outside the U.S. For more information concerning the revenues we derive
from IRS, see
“Assets Under Management, Revenues, and Fees” in this Item 1.
SCB
provides in-depth fundamental company and industry research, along with
disciplined research into securities valuation and factors affecting stock-price
movements. Company and industry analysts are consistently among the highest
ranked research analysts in industry surveys conducted by third-party
organizations. Along
with quantitative analysts and portfolio strategists, our IRS research team
totals approximately 160 people, including 52 senior analysts.
In
2006,
SCB expanded its research capabilities in London and now has 16 published
analysts covering industries and companies in Europe. In addition, SCB LLC’s
trading and brokerage operations were enhanced in 2005 with the launch of
several proprietary algorithmic trading products. These product additions
complemented other major changes already undertaken to transform our
trading capability, including the launch of a dedicated sector block trading
desk and the expansion of our product specialist team.
Assets
Under Management, Revenues, and
Fees
The
following tables summarize our AUM and revenues by distribution
channel:
Assets
Under Management(1)(2)
|
December 31,
|
% Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in millions)
|
||||||||||||||||
|
Institutional
Investment Services
|
$
|
455,069
|
$
|
358,545
|
$
|
309,883
|
26.9
|
%
|
15.7
|
%
|
||||||
|
Retail
Services
|
166,928
|
145,134
|
134,882
|
15.0
|
7.6
|
|||||||||||
|
Private
Client Services
|
94,898
|
74,873
|
63,600
|
26.7
|
17.7
|
|||||||||||
|
716,895
|
578,552
|
508,365
|
23.9
|
13.8
|
||||||||||||
|
Dispositions(3)
|
—
|
—
|
30,399
|
—
|
(100.0
|
)
|
||||||||||
|
Total
|
$
|
716,895
|
$
|
578,552
|
$
|
538,764
|
23.9
|
7.4
|
||||||||
____________
|
(1)
|
Excludes
certain non-discretionary client
relationships.
|
|
(2)
|
Starting
in 2005, we revised the way we classify our AUM to better align publicly
reported AUM with our internal reporting. AUM as of December 31, 2004
has been reclassified by investment service and distribution channel,
including the fixed income portions of balanced accounts previously
reported in equity, to conform to the 2005 and 2006
presentation.
|
|
(3)
|
Includes
AUM of cash management services, South African joint venture interest,
and
Indian mutual funds. For information about these dispositions,
see
Note 21 to AllianceBernstein’s consolidated financial statements in Item
8.
|
Revenues(1)
|
Years Ended December 31,
|
% Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in thousands)
|
||||||||||||||||
|
Institutional
Investment Services
|
$
|
1,221,780
|
$
|
894,781
|
$
|
727,696
|
36.5
|
%
|
23.0
|
%
|
||||||
|
Retail
Services
|
1,303,849
|
1,188,553
|
1,288,939
|
9.7
|
(7.8
|
)
|
||||||||||
|
Private
Client Services
|
882,881
|
673,216
|
543,446
|
31.1
|
23.9
|
|||||||||||
|
Institutional
Research Services
|
375,075
|
352,757
|
420,141
|
6.3
|
(16.0
|
)
|
||||||||||
|
Other
|
354,655
|
199,281
|
108,007
|
78.0
|
84.5
|
|||||||||||
|
Total
Revenues
|
4,138,240
|
3,308,588
|
3,088,229
|
25.1
|
7.1
|
|||||||||||
|
Less:
Interest Expense
|
187,833
|
95,863
|
32,796
|
95.9
|
192.3
|
|||||||||||
|
Net
Revenues
|
$
|
3,950,407
|
$
|
3,212,725
|
$
|
3,055,433
|
23.0
|
5.1
|
||||||||
____________
| (1) |
Certain
prior-year amounts have been reclassified to conform to our 2006
presentation. See
Note 2 to AllianceBernstein’s consolidated financial statements in Item
8.
|
AXA
Financial, AXA Equitable, and our other affiliates, whose AUM consist primarily
of fixed income investments, together constitute our largest client. Our
affiliates represented approximately 16%, 19%, and 19% of our company-wide
AUM
as of December 31, 2006, 2005, and 2004, respectively. We also earned
approximately 5% of our company-wide net revenues from them for each of 2006,
2005, and 2004. We manage some of these assets as part of our Institutional
Investment Services and some as part of 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
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in millions)
|
||||||||||||||||
|
Growth
Equity:
|
||||||||||||||||
|
U.S.
|
$
|
36,670
|
$
|
39,721
|
$
|
39,600
|
(7.7
|
)%
|
0.3
|
%
|
||||||
|
Global and
International
|
66,242
|
39,327
|
23,326
|
68.4
|
68.6
|
|||||||||||
|
102,912
|
79,048
|
62,926
|
30.2
|
25.6
|
||||||||||||
|
Value
Equity:
|
||||||||||||||||
|
U.S.
|
55,562
|
50,556
|
51,006
|
9.9
|
(0.9
|
)
|
||||||||||
|
Global and
International
|
158,572
|
101,791
|
68,595
|
55.8
|
48.4
|
|||||||||||
|
214,134
|
152,347
|
119,601
|
40.6
|
27.4
|
||||||||||||
|
Fixed
Income:
|
||||||||||||||||
|
U.S.
|
73,414
|
74,964
|
77,314
|
(2.1
|
)
|
(3.0
|
)
|
|||||||||
|
Global and
International
|
39,166
|
27,709
|
25,859
|
41.3
|
7.2
|
|||||||||||
|
112,580
|
102,673
|
103,173
|
9.6
|
(0.5
|
)
|
|||||||||||
|
Index
/ Structured:
|
||||||||||||||||
|
U.S.
|
19,942
|
20,908
|
19,297
|
(4.6
|
)
|
8.3
|
||||||||||
|
Global and
International
|
5,501
|
3,569
|
4,886
|
54.1
|
(27.0
|
)
|
||||||||||
|
25,443
|
24,477
|
24,183
|
3.9
|
1.2
|
||||||||||||
|
Total:
|
||||||||||||||||
|
U.S.
|
185,588
|
186,149
|
187,217
|
(0.3
|
)
|
(0.6
|
)
|
|||||||||
|
Global and
International
|
269,481
|
172,396
|
122,666
|
56.3
|
40.5
|
|||||||||||
|
455,069
|
358,545
|
309,883
|
26.9
|
15.7
|
||||||||||||
|
Dispositions(2)
|
—
|
—
|
1,375
|
—
|
(100.0
|
)
|
||||||||||
|
Total
|
$
|
455,069
|
$
|
358,545
|
$
|
311,258
|
26.9
|
15.2
|
||||||||
____________
|
(1)
|
Excludes
certain non-discretionary client
relationships.
|
|
(2)
|
Represents
AUM of South African joint venture interest. For information about
this
disposition, see
Note 21 to AllianceBernstein’s consolidated financial statements in Item
8.
|
Revenues
From Institutional Investment Services(1)
(by
Investment Service)
|
Years Ended December 31,
|
% Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in thousands)
|
||||||||||||||||
|
Investment
Advisory and Services Fees:
|
||||||||||||||||
|
Growth
Equity:
|
||||||||||||||||
|
U.S.
|
$
|
122,132
|
$
|
126,894
|
$
|
141,264
|
(3.8
|
)%
|
(10.2
|
)%
|
||||||
|
Global and
International
|
226,293
|
115,403
|
70,321
|
96.1
|
64.1
|
|||||||||||
|
348,425
|
242,297
|
211,585
|
43.8
|
14.5
|
||||||||||||
|
Value
Equity:
|
||||||||||||||||
|
U.S.
|
154,163
|
155,046
|
154,681
|
(0.6
|
)
|
0.2
|
||||||||||
|
Global and
International
|
570,185
|
362,181
|
213,565
|
57.4
|
69.6
|
|||||||||||
|
724,348
|
517,227
|
368,246
|
40.0
|
40.5
|
||||||||||||
|
Fixed
Income:
|
||||||||||||||||
|
U.S.
|
97,452
|
95,585
|
113,581
|
2.0
|
(15.8
|
)
|
||||||||||
|
Global and
International
|
38,825
|
29,887
|
24,108
|
29.9
|
24.0
|
|||||||||||
|
136,277
|
125,472
|
137,689
|
8.6
|
(8.9
|
)
|
|||||||||||
|
Index
/ Structured:
|
||||||||||||||||
|
U.S.
|
4,993
|
5,159
|
5,116
|
(3.2
|
)
|
0.8
|
||||||||||
|
Global and
International
|
7,177
|
4,197
|
5,060
|
71.0
|
(17.1
|
)
|
||||||||||
|
12,170
|
9,356
|
10,176
|
30.1
|
(8.1
|
)
|
|||||||||||
|
Total
Investment Advisory and Services Fees:
|
||||||||||||||||
|
U.S.
|
378,740
|
382,684
|
414,642
|
(1.0
|
)
|
(7.7
|
)
|
|||||||||
|
Global and
International
|
842,480
|
511,668
|
313,054
|
64.7
|
63.4
|
|||||||||||
|
1,221,220
|
894,352
|
727,696
|
36.5
|
22.9
|
||||||||||||
|
Distribution
Revenues
|
560
|
429
|
—
|
30.5
|
n/m
|
|||||||||||
|
Total
|
$
|
1,221,780
|
$
|
894,781
|
$
|
727,696
|
36.5
|
23.0
|
||||||||
____________
|
(1)
|
Certain
prior-year amounts have been reclassified to conform to our 2006
presentation. We reclassified transaction charge revenues earned
from
certain Institutional Investment Services clients from investment
advisory
and services fees to Institutional Research
Services.
|
As
of
December 31, 2006, 2005, and 2004, Institutional Investment Services
represented approximately 64%, 62%, and 58%, respectively, of our company-wide
AUM. The fees we earned from these services represented approximately 31%,
28%,
and 24% of our company-wide net revenues for 2006, 2005, and 2004,
respectively.
We
manage
assets for AXA and its subsidiaries, which together constitute our largest
institutional client. These assets accounted for approximately 17%, 18%, and
20%
of our total institutional AUM as of December 31, 2006, 2005, and 2004,
respectively, and approximately 7%, 8%, and 9% of our total institutional
revenues for 2006, 2005, and 2004, respectively.
The
institutional AUM we manage for our affiliates, along with our nine other
largest institutional accounts, account for approximately 31% of our total
institutional AUM as of December 31, 2006 and approximately 16% of our
total institutional net revenues for the year ended December 31, 2006. 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, 2006.
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
charge
performance-based fees on approximately 15%
of
institutional assets under management. Performance-based fees provide for a
relatively low asset-based fee plus an additional fee based on investment
performance.
Retail
Services
The
following tables summarize our Retail Services AUM and revenues:
Retail
Services Assets Under Management
(by
Investment Service)
|
December 31,
|
% Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in millions)
|
||||||||||||||||
|
Growth
Equity:
|
||||||||||||||||
|
U.S.
|
$
|
28,587
|
$
|
31,193
|
$
|
33,436
|
(8.4
|
)%
|
(6.7
|
)%
|
||||||
|
Global and
International
|
19,937
|
19,523
|
14,670
|
2.1
|
33.1
|
|||||||||||
|
48,524
|
50,716
|
48,106
|
(4.3
|
)
|
5.4
|
|||||||||||
|
Value
Equity:
|
||||||||||||||||
|
U.S.
|
35,749
|
32,625
|
32,113
|
9.6
|
1.6
|
|||||||||||
|
Global
and International
|
38,797
|
16,575
|
8,600
|
134.1
|
92.7
|
|||||||||||
|
74,546
|
49,200
|
40,713
|
51.5
|
20.8
|
||||||||||||
|
Fixed
Income:
|
||||||||||||||||
|
U.S.
|
11,420
|
12,053
|
17,076
|
(5.3
|
)
|
(29.4
|
)
|
|||||||||
|
Global and
International
|
27,614
|
27,648
|
23,742
|
(0.1
|
)
|
16.5
|
||||||||||
|
39,034
|
39,701
|
40,818
|
(1.7
|
)
|
(2.7
|
)
|
||||||||||
|
Index
/ Structured:
|
||||||||||||||||
|
U.S.
|
4,824
|
4,230
|
4,203
|
14.0
|
0.6
|
|||||||||||
|
Global and
International
|
—
|
1,287
|
1,042
|
(100.0
|
)
|
23.5
|
||||||||||
|
4,824
|
5,517
|
5,245
|
(12.6
|
)
|
5.2
|
|||||||||||
|
Total:
|
||||||||||||||||
|
U.S.
|
80,580
|
80,101
|
86,828
|
0.6
|
(7.7
|
)
|
||||||||||
|
Global and
International
|
86,348
|
65,033
|
48,054
|
32.8
|
35.3
|
|||||||||||
|
166,928
|
145,134
|
134,882
|
15.0
|
7.6
|
||||||||||||
|
Dispositions(1)
|
—
|
—
|
28,670
|
—
|
(100.0
|
)
|
||||||||||
|
Total
|
$
|
166,928
|
$
|
145,134
|
$
|
163,552
|
15.0
|
(11.3
|
)
|
|||||||
____________
|
(1)
|
Includes
AUM of cash management services and Indian mutual funds. For information
about these dispositions, see
Note 21 to AllianceBernstein’s consolidated financial statements in Item
8.
|
Revenues
From Retail Services(1)
(by
Investment Service)
|
Years Ended December 31,
|
% Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in thousands)
|
||||||||||||||||
|
Investment
Advisory and Services Fees:
|
||||||||||||||||
|
Growth
Equity:
|
||||||||||||||||
|
U.S.
|
$
|
143,344
|
$
|
140,428
|
$
|
152,207
|
2.1
|
%
|
(7.7
|
)%
|
||||||
|
Global and
International
|
152,883
|
119,173
|
101,088
|
28.3
|
17.9
|
|||||||||||
|
296,227
|
259,601
|
253,295
|
14.1
|
2.5
|
||||||||||||
|
Value
Equity:
|
||||||||||||||||
|
U.S.
|
123,355
|
119,545
|
115,907
|
3.2
|
3.1
|
|||||||||||
|
Global and
International
|
133,314
|
64,718
|
27,957
|
106.0
|
131.5
|
|||||||||||
|
256,669
|
184,263
|
143,864
|
39.3
|
28.1
|
||||||||||||
|
Fixed
Income:
|
||||||||||||||||
|
U.S.(2)
|
43,705
|
88,714
|
177,916
|
(50.7
|
)
|
(50.1
|
)
|
|||||||||
|
Global and
International
|
186,196
|
156,068
|
147,183
|
19.3
|
6.0
|
|||||||||||
|
229,901
|
244,782
|
325,099
|
(6.1
|
)
|
(24.7
|
)
|
||||||||||
|
Index
/ Structured:
|
||||||||||||||||
|
U.S.
|
1,673
|
1,507
|
1,661
|
11.0
|
(9.3
|
)
|
||||||||||
|
Global and
International
|
3,363
|
3,640
|
3,130
|
(7.6
|
)
|
16.3
|
||||||||||
|
5,036
|
5,147
|
4,791
|
(2.2
|
)
|
7.4
|
|||||||||||
|
Total
Investment Advisory and Services Fees:
|
||||||||||||||||
|
U.S.
|
312,077
|
350,194
|
447,691
|
(10.9
|
)
|
(21.8
|
)
|
|||||||||
|
Global and
International
|
475,756
|
343,599
|
279,358
|
38.5
|
23.0
|
|||||||||||
|
787,833
|
693,793
|
727,049
|
13.6
|
(4.6
|
)
|
|||||||||||
|
Distribution
Revenues(3)
|
418,780
|
395,402
|
445,911
|
5.9
|
(11.3
|
)
|
||||||||||
|
Shareholder
Servicing Fees(3)
|
97,236
|
99,358
|
115,979
|
(2.1
|
)
|
(14.3
|
)
|
|||||||||
|
Total
|
$
|
1,303,849
|
$
|
1,188,553
|
$
|
1,288,939
|
9.7
|
(7.8
|
)
|
|||||||
____________
|
(1)
|
Certain
prior-year amounts have been reclassified to conform to our 2006
presentation. We reclassified transaction charge revenues earned
from
certain Retail Services clients from investment advisory and services
fees
to Institutional Research Services.
|
| (2) | Reflects disposition of cash management services. See Note 21 to AllianceBernstein’s consolidated financial statements in Item 8. |
|
(3)
|
For
a description of distribution revenues and shareholder servicing
fees,
see
below.
|
Fees
for
our Retail Products are generally charged as a percentage of average daily
AUM.
As certain of the U.S. Funds have grown, we have 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 and 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. 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.
Our
Retail Products include variable products, which are open-end mutual funds
designed to fund variable annuity contracts and variable life insurance policies
offered by the separate accounts of life insurance companies (“Variable
Products”). We manage the AllianceBernstein Variable Products
Series Fund, Inc. (“ABVPS”), which serves as the investment vehicle
for insurance products offered by unaffiliated insurance companies, and we
sub-advise mutual funds sponsored by the following affiliates: EQAT, AXA
Enterprise Trust, AXA Premier VIP Trust, and AXA Asia Pacific Holdings Limited
and its subsidiaries (“AXA Asia Pacific”). As of December 31, 2006, the AUM
of Variable Products portfolios totaled approximately $58 billion.
EQAT,
AXA
Enterprise Trust, AXA Premier VIP Trust, AXA Asia Pacific, together with other
AXA affiliates, constitute our largest retail client. They accounted for
approximately 24%, 29%, and 24% of our total retail AUM as of December 31,
2006, 2005, and 2004, respectively, and approximately 7%, 8%, and 7% of our
total retail revenues for 2006, 2005 and 2004, respectively.
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 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 deferred sales commissions 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 $23.7 million, $21.4 million, and $32.9 million, totaled
approximately $98.7 million, $74.2 million, and $44.6 billion during 2006,
2005,
and 2004, respectively.
The
rules of the National Association of Securities Dealers, Inc. (“NASD”)
effectively cap the aggregate sales charges that may be received 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 not more than
60 days) and do not obligate the financial intermediary to sell any specific
amount of fund shares. A small amount of mutual fund sales is made directly
by
AllianceBernstein Investments, in which case AllianceBernstein Investments
retains the entire sales charge.
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 be
associated with our funds’ status on a financial intermediary’s preferred list
of 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 sometimes also receive sub-transfer agency or recordkeeping
payments from us and our U.S. Funds.
During
2006, the 10 financial intermediaries responsible for the largest volume of
sales of open-end AllianceBernstein Funds were responsible for 36% 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 2%, 3%, and 4%
of
total sales of shares of open-end AllianceBernstein Funds in 2006, 2005, and
2004, 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.
Subsidiaries
of Merrill Lynch & Co., Inc. (collectively “Merrill Lynch”) were
responsible for approximately 6%, 5%, and 6% of open-end AllianceBernstein
Fund
sales in 2006, 2005, and 2004, respectively. Citigroup Inc. (and its
subsidiaries, “Citigroup”) was responsible for approximately 5% of open-end
AllianceBernstein Fund sales in 2006, 5% in 2005, and 7% in 2004. 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
(December 2006), our market share in the U.S. mutual fund industry is 1.14%
of total industry assets and we accounted for 0.86% of total open-end industry
sales in the U.S. during 2006. 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.
Under
current interpretations of U.S. laws and regulations governing depository
institutions, banks and certain of their affiliates generally are permitted
to
act as agent for their customers in connection with the purchase of mutual
fund
shares and to receive as compensation a portion of the sales charges paid with
respect to such purchases. During 2006, banks and their affiliates accounted
for
approximately 14% of open-end U.S. Funds and Variable Products
sales.
During
2004, each of the U.S. Funds appointed an independent compliance officer
reporting to the independent directors of each U.S. Fund. The expense of this
officer and his staff is borne by AllianceBernstein.
AllianceBernstein
Investor Services, Inc. (“Investor Services”), one of our wholly-owned
subsidiaries, 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. As of December 31, 2006, Investor Services employed
239 people. Investor Services operates in Secaucus, New Jersey, and San Antonio,
Texas. 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.
Most
AllianceBernstein Funds utilize our personnel to perform legal, clerical,
and accounting services not required to be provided by AllianceBernstein.
Payments by the U.S. Funds and certain Non-U.S. Funds for these services must
be
specifically approved in advance by the fund’s board of directors or trustees.
Currently, AllianceBernstein and Investor Services record revenues for providing
these services to the AllianceBernstein Funds at the rate of approximately
$7.0 million per year.
AllianceBernstein
Investor Services, a unit of AllianceBernstein Luxembourg (“ABIS Lux”), is the
transfer agent of substantially all of the Non-U.S. Funds. As of
December 31, 2006, ABIS Lux employed 59 people. ABIS Lux operates in
Luxembourg (and is supported by operations in Singapore, Hong Kong, and the
United States) and receives a monthly fee for its transfer agency services
and a
transaction-based fee under various services agreements, which agreements
may be terminated by either party upon 60 days’ notice.
AllianceBernstein (Luxembourg) S.A. is one of our wholly-owned
subsidiaries.
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
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in millions)
|
||||||||||||||||
|
Growth
Equity:
|
||||||||||||||||
|
U.S.
|
$
|
13,237
|
$
|
9,986
|
$
|
7,022
|
32.6
|
%
|
42.2
|
%
|
||||||
|
Global and
International
|
9,418
|
6,390
|
4,001
|
47.4
|
59.7
|
|||||||||||
|
22,655
|
16,376
|
11,023
|
38.3
|
48.6
|
||||||||||||
|
Value
Equity:
|
||||||||||||||||
|
U.S.
|
27.703
|
23,725
|
22,411
|
16.8
|
5.9
|
|||||||||||
|
Global and
International
|
19,091
|
12,959
|
9,874
|
47.3
|
31.2
|
|||||||||||
|
46,794
|
36,684
|
32,285
|
27.6
|
13.6
|
||||||||||||
|
Fixed
Income:
|
||||||||||||||||
|
U.S.
|
25,032
|
21,471
|
20,111
|
16.6
|
6.8
|
|||||||||||
|
Global and
International
|
328
|
241
|
75
|
36.1
|
221.3
|
|||||||||||
|
25,360
|
21,712
|
20,186
|
16.8
|
7.6
|
||||||||||||
|
Index
/ Structured:
|
||||||||||||||||
|
U.S.
|
80
|
101
|
106
|
(20.8
|
)
|
(4.7
|
)
|
|||||||||
|
Global and
International
|
9
|
—
|
—
|
—
|
—
|
|||||||||||
|
89
|
101
|
106
|
(11.9
|
)
|
(4.7
|
)
|
||||||||||
|
Total:
|
||||||||||||||||
|
U.S.
|
66,052
|
55,283
|
49,650
|
19.5
|
11.3
|
|||||||||||
|
Global and
International
|
28,846
|
19,590
|
13,950
|
47.2
|
40.4
|
|||||||||||
|
94,898
|
74,873
|
63,600
|
26.7
|
17.7
|
||||||||||||
|
Dispositions(1)
|
—
|
—
|
354
|
—
|
(100.0
|
)
|
||||||||||
|
Total
|
$
|
94,898
|
$
|
74,873
|
$
|
63,954
|
26.7
|
17.1
|
||||||||
____________
|
(1)
|
Includes
AUM of cash management services. For information about this disposition,
see
Note 21 to AllianceBernstein’s consolidated financial statements in Item
8.
|
Revenues
From Private Client Services(1)
(by
Investment Service)
|
Years Ended December 31,
|
% Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in thousands)
|
||||||||||||||||
|
Investment
Advisory and Services Fees:
|
||||||||||||||||
|
Growth
Equity:
|
||||||||||||||||
|
U.S.
|
$
|
134,070
|
$
|
93,716
|
$
|
62,892
|
43.1
|
%
|
49.0
|
%
|
||||||
|
Global and
International
|
83,615
|
58,308
|
39,086
|
43.4
|
49.2
|
|||||||||||
|
217,685
|
152,024
|
101,978
|
43.2
|
49.1
|
||||||||||||
|
Value
Equity:
|
||||||||||||||||
|
U.S.
|
293,281
|
256,580
|
237,796
|
14.3
|
7.9
|
|||||||||||
|
Global and
International
|
260,529
|
161,793
|
97,380
|
61.0
|
66.1
|
|||||||||||
|
553,810
|
418,373
|
335,176
|
32.4
|
24.8
|
||||||||||||
|
Fixed
Income:
|
||||||||||||||||
|
U.S.
|
108,418
|
99,868
|
104,010
|
8.6
|
(4.0
|
)
|
||||||||||
|
Global and
International
|
1,188
|
879
|
257
|
35.2
|
242.0
|
|||||||||||
|
109,606
|
100,747
|
104,267
|
8.8
|
(3.4
|
)
|
|||||||||||
|
Index
/ Structured:
|
||||||||||||||||
|
U.S.
|
75
|
103
|
653
|
(27.2
|
)
|
(84.2
|
)
|
|||||||||
|
Global and
International
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
75
|
103
|
653
|
(27.2
|
)
|
(84.2
|
)
|
||||||||||
|
Total
Investment Advisory and Services Fees:
|
||||||||||||||||
|
U.S.
|
535,844
|
450,267
|
405,351
|
19.0
|
11.1
|
|||||||||||
|
Global and
International
|
345,332
|
220,980
|
136,723
|
56.3
|
61.6
|
|||||||||||
|
881,176
|
671,247
|
542,074
|
31.3
|
23.8
|
||||||||||||
|
Distribution
Revenues
|
1,705
|
1,969
|
1,372
|
(13.4
|
)
|
43.5
|
||||||||||
|
Total
|
$
|
882,881
|
$
|
673,216
|
$
|
543,446
|
31.1
|
23.9
|
||||||||
____________
|
(1)
|
Certain
prior-year amounts have been reclassified to conform to our 2006
presentation. We reclassified transaction charge revenues earned
from
certain Private Client Services clients from investment advisory
and
services fees to Institutional Research
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. For providing services to private
clients, we are compensated by fees calculated as a percentage of AUM and that
vary 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 charge performance-based fees
on
approximately 7% of private client assets under management, primarily assets
held in hedge funds.
We
market
and distribute our hedge funds globally to high-net-worth clients and, to a
lesser extent, institutional investors. Hedge fund AUM totaled $7.2 billion
as
of December 31, 2006, $5.8 billion of which was private client AUM and
$1.4 billion
of which was institutional AUM.
We
eliminated transaction charges during 2005 on U.S. equity services for most
private clients as part of a management initiative that changed the structure
of
investment advisory and services fees charged for our services. The
restructuring eliminated transaction charges for trade execution performed
by
SCB LLC for most private clients; the transaction charges were replaced by
higher asset-based fees. This new fee structure provides greater transparency
and predictability of asset management costs for our private clients. The
elimination of transaction charges was not the result of the NYAG AoD
(see
“Regulation” in this Item 1 for the definition of NYAG AoD and additional
information)
or an
agreement with any other regulator.
Revenues
from Private Client Services represented approximately 22%, 21%, and 18% of
our
company-wide net revenues for the years ended December 31, 2006, 2005, and
2004, respectively.
Institutional
Research Services
The
following table summarizes Institutional Research Services
revenues:
Revenues
From Institutional Research Services
|
Years Ended December 31,
|
% Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in thousands)
|
||||||||||||||||
|
Transaction
Execution and Research:
|
||||||||||||||||
|
U.S.
Clients
|
$
|
296,736
|
$
|
290,511
|
$
|
371,127
|
2.1
|
%
|
(21.7
|
)%
|
||||||
|
Non-U.S.
Clients
|
69,279
|
57,870
|
45,598
|
19.7
|
26.9
|
|||||||||||
|
366,015
|
348,381
|
416,725
|
5.1
|
(16.4
|
)
|
|||||||||||
|
Other
|
9,060
|
4,376
|
3,416
|
107.0
|
28.1
|
|||||||||||
|
Total
|
375,075
|
352,757
|
420,141
|
6.3
|
(16.0
|
)
|
||||||||||
|
Reclassification(1)
|
(1,760
|
)
|
(31,476
|
)
|
(116,532
|
)
|
(94.4
|
)
|
(73.0
|
)
|
||||||
|
Without
Reclassification
|
$
|
373,315
|
$
|
321,281
|
$
|
303,609
|
16.2
|
5.8
|
||||||||
____________
|
(1)
|
SCB
earned revenues of approximately $1.8 million in 2006 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)
which previously were reported as investment advisory and services
fees.
Since January 1, 2006, we have reported all revenues earned by SCB
from brokerage transactions executed for these clients as Institutional
Research Services revenues. Accordingly, we reclassified $31.5 million
and
$116.5 million of transaction charge revenue in 2005 and 2004,
respectively, from investment advisory and services fees to Institutional
Research Services to conform to our 2006 presentation.
|
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 9%, 11%, and
14%
of our company-wide net revenues for the years ended December 31, 2006, 2005,
and 2004, respectively.
Fee
rates
charged for brokerage transactions have declined significantly in recent years,
but increases in transaction volume and market share in both the U.S. and Europe
have more than offset decreases in fee rates. For additional information,
see
“Risk Factors” in Item 1A and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations - Executive Overview” in Item
7.
Custody
and Brokerage
Custody
SCB
LLC
acts as custodian for the majority of AllianceBernstein’s
private client AUM and some of AllianceBernstein’s hedge fund AUM and
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 to 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 paying the
lowest possible commission rate, we take into account such factors as current
market conditions, 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 (“Soft Dollar Services”) a broker provides to us for the benefit of our
clients. Soft Dollar Services, 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 Soft Dollar 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 higher than
those charged by electronic trading networks and other “low-touch”
venues.
We
sometimes execute client transactions through SCB LLC or SCBL, our affiliated
broker-dealers. 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 (e.g.,
our
obligation to obtain best execution). In 2006, we executed approximately $4.8
million in transactions through SCB. We may use 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.
We
have a
Brokerage Allocation Committee that covers equities and has principal oversight
responsibility for evaluating brokerage matters, including how to use the Soft
Dollar Services we receive in a manner that is in the best interests of our
clients and consistent with current regulatory requirements.
Service
Marks
In
connection with our name changes to AllianceBernstein L.P. and AllianceBernstein
Holding L.P. in February 2006, we applied to register a number of service marks
with the U.S. Patent and Trademark Office and various foreign patent 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”.
Regulation
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. Investor Services is registered with the SEC as a transfer
agent.
SCB
LLC
and AllianceBernstein Investments are registered with the SEC as broker-dealers.
SCB LLC is a member of the NYSE. SCBL is a broker regulated by the Financial
Services Authority of the United Kingdom (“FSA”) and is a member of the London
Stock Exchange. SCB LLC and AllianceBernstein Investments are subject to minimum
net capital requirements imposed by the SEC, and SCBL is subject to the
financial resources requirements of the FSA, as follows:
|
Minimum Net Capital/
Financial Resources as
of
December 31, 2006
|
|||||||
|
Required
|
Actual
|
||||||
|
(in millions)
|
|||||||
|
AllianceBernstein
Investments
|
$
|
21.6
|
$
|
42.4
|
|||
|
SCB
|
41.5
|
154.1
|
|||||
|
SCBL
|
16.0
|
30.7
|
|||||
|
Total
|
$
|
79.1
|
$
|
227.2
|
|||
Holding
Units trade publicly on the NYSE under the ticker symbol “AB”. Holding is an
NYSE listed company and, therefore, subject to the applicable regulations set
forth in the NYSE Listed Company Manual.
AllianceBernstein
Trust Company, LLC, a wholly-owned subsidiary of AllianceBernstein, is a
non-depository trust company chartered under New Hampshire law.
AllianceBernstein Trust Company was chartered in order to serve as trustee
and
investment adviser to company-sponsored collective investment trusts and is
authorized to act as trustee, executor, transfer agent, 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,
AllianceBernstein Trust Company must comply with New Hampshire laws applicable
to trust company operations (such as NH Revised Statutes Annotated Part 392),
certain federal laws (such as ERISA and sections of the Bank Secrecy Act),
and
the New Hampshire banking laws.
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 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 effort to comply.
Market
Timing Investigations
On
December 18, 2003, we entered into agreements with the SEC and the New
York State Attorney General (“NYAG”) in connection with their
investigations into trading practices in the shares of certain of our sponsored
mutual funds. Our agreement with the SEC was reflected in an Order of the
Commission (“SEC Order”) dated December 18, 2003 (amended and restated
January 15, 2004), while our final agreement with the NYAG was reflected in
the Assurance of Discontinuance dated September 1, 2004 (“NYAG AoD”). We took a
number of important initiatives to resolve these matters,
including:
|
•
|
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 (resulting
in an approximate $66 million reduction in 2006 advisory fees, a
$63
million reduction in 2005 advisory fees, and a $70 million reduction
in
2004 advisory fees), and we will maintain these reduced fee rates
for at
least the five-year period that commenced January 1, 2004;
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
reoccur.
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. To the extent it is
determined that the harm to mutual fund shareholders caused by market timing
exceeds $200 million, we will be required to contribute additional monies to
the
Restitution Fund. On September 30, 2005, the IDC submitted to the SEC Staff
the portion of his report concerning his methodology for determining damages
and
a proposed distribution plan, which addresses the mechanics of distribution.
The
Restitution Fund proceeds will not be distributed until after the SEC has issued
an order approving the distribution plan. Until then, it is not possible to
predict the exact timing, method, or amount of the distribution.
Certain
market timing-related litigation to which we are currently subject involves
the
State of West Virginia. For a description of these matters, see
“Legal Proceedings - Market Timing-related Matters” in Item 3.
Taxes
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% 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. Separate state and local
income tax returns are filed. Foreign corporate subsidiaries are generally
subject to taxes in the jurisdictions where they are located. Holding is a
publicly traded partnership for federal income tax purposes and is subject
to
the 4.0% UBT, net of credits for UBT paid by AllianceBernstein, and a 3.5%
federal tax on partnership gross income from the active conduct of a trade
or
business.
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.
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 become subject to income tax.
History
and Structure
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. 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 business. For additional details about our business combination,
see
Item 12.
As
of
December 31, 2006, the condensed ownership structure of AllianceBernstein
was as follows (for a more complete description of our ownership structure,
see
Item 12):
|
(1)
|
Direct
and indirect ownership including unallocated Holding Units held in
a trust
for our deferred compensation
plans.
|
As
of
December 31, 2006, AXA, through certain of its subsidiaries (see
Item 12),
beneficially owned approximately 1.7% of the issued and outstanding Holding
Units and approximately 59.3% of the issued and outstanding AllianceBernstein
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, as of December 31,
2006, AXA, through certain of its subsidiaries, had an approximate 60.3%
economic interest in AllianceBernstein.
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
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 area 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 (including reinsurance),
asset management, and other financial services (including banks).
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.
AXA,
AXA
Financial, AXA Equitable and certain of their direct and indirect 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 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:
|
•
|
our
commitment to place the interests of our clients
first;
|
|
•
|
the
quality of our research;
|
|
•
|
our
ability to attract, retain, and motivate highly skilled, and often
highly
specialized, personnel;
|
|
•
|
our
investment performance for clients;
|
|
•
|
the
array of investment products we
offer;
|
|
•
|
the
fees we charge;
|
|
•
|
our
operational effectiveness;
|
|
•
|
our
ability to further develop and market our brand;
and
|
|
•
|
our
global presence.
|
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.
Other
Information
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 450
Fifth Street, NW, Washington, DC 20549. 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.
| Item 1A. |
Risk
Factors
|
Please
read this section along with the description of our business in
Item 1,
the
competition section just above, and the 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 our discussion of risks associated with 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 could
have
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, interest rates, inflation rates, tax regulation changes, and other
factors that are difficult to predict affect the mix, market values, and levels
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 towards fixed income products might 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.
Declines
in financial markets or higher redemption levels in our mutual funds, or both,
as compared to the assumptions we have used to estimate undiscounted future
cash
flows from distribution plan fees, as described in
Item 7,
could
result in impairment of the deferred sales commission asset. Due to the
volatility of financial markets and changes in redemption rates, we are unable
to predict whether or when a future impairment of the deferred sales commission
asset might occur. The occurrence of an impairment would result in a material
charge to our earnings.
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 not more than 60 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 mutual funds, sub-advisory services, and investment
services is partly dependent on our access to a client base of corporate and
public employee pension funds, endowment funds, domestic and foreign
institutions and governments, insurance companies, 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 we are not always
considered among the best choices by all 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.
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.
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.
Poor
investment performance 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. Our
inability to meet 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.
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 where we earn a relatively
low base advisory fee and an additional fee if our investment performance
exceeds a specified benchmark. If we do not exceed our investment return target
for a particular period, we will not earn a performance-based fee for that
period and, if the target is based on cumulative returns, our ability to earn
performance-based fees in future periods may be impaired.
We
currently charge performance-based fees on approximately 15% of the assets
we
manage for our institutional clients and approximately 7% of the assets we
manage for private clients. Our performance-based fees are an increasingly
important part of our business. As the percentage of our AUM subject to
performance-based fees grows, seasonality and volatility of revenue and earnings
may become more significant.
Unpredictable
events, including natural disaster, technology failure, and terrorist attack,
could adversely impact our ability to conduct business.
War,
terrorist attack, power failure, natural disaster, and rapid spread of serious
disease could interrupt our operations by:
|
•
|
causing
disruptions in U.S. or global economic conditions, thus decreasing
investor confidence and making investment products generally less
attractive;
|
|
•
|
inflicting
loss of life;
|
|
•
|
triggering
massive technology failures or delays;
and
|
|
•
|
requiring
substantial capital expenditures and operating expenses to remediate
damage and restore operations.
|
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.
A
failure in our operational systems or infrastructure, or those of third parties,
could disrupt our operations, damage our reputation, and reduce our
revenues.
Weaknesses
or failures in our internal processes, people 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
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 and can have
a
material adverse effect on our revenues, financial
condition, results of operations, and business prospects.
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.
We
may not always successfully manage 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 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 enforcement actions.
Rates
we charge for brokerage transactions have declined significantly in recent
years, and we expect those declines to continue, which could have an adverse
effect on our revenues.
Fee
rates
charged for brokerage transactions have declined significantly in recent years
and this has affected our Institutional Research Services revenues. To date,
increases in transaction volume and market share have more than offset decreases
in rates, but this may not continue. Brokerage transaction revenues are also
affected by the increasing use of electronic trading systems which charge
transaction fees for execution-only services that are a small fraction of the
full service fee rates traditionally charged by SCB and other brokers for
brokerage services and the provision of proprietary research. Also, regulatory
changes in the United Kingdom and the United States have resulted or will result
in investors being given more information regarding the allocation of amounts
they are paying for brokerage between execution services and research services
and this may further reduce the willingness of investors to pay current
rates for full-service brokerage. All of these factors may result in
reductions in per transaction brokerage fees that SCB charges its clients;
we
expect these reductions to continue.
The
costs of insurance are substantial and may increase.
Our
insurance expenses increased significantly between 2001 and 2004 and, although
they decreased slightly in 2005 and 2006, 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,
a
revised premium-sharing arrangement with certain U.S. Funds, 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 various federal and state laws and
regulations, rules of various 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 highly competitive.
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. As our global
presence continues to expand, 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.
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 revenues, financial condition,
results of operations, and business prospects.
We
are
involved in various matters, including employee arbitrations, regulatory
inquiries, administrative proceedings, and litigation, some of which allege
material 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 all pending material
legal proceedings in
Item 3.
Risks
related to the Partnerships’ structure
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. The respective 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 Internal
Revenue Code of 1986, as amended, 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 10.09 to this
Form 10-K.
Failure
to properly maintain the partnership structure of Holding and AllianceBernstein
would have significant tax ramifications.
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. Holding is a publicly traded
partnership for federal income tax purposes and is subject to the 4.0% UBT,
net
of credits for UBT paid by AllianceBernstein, and a 3.5% federal tax on
partnership gross income from the active conduct of a trade or
business.
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.
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 income tax as set forth
above.
| Item 1B. |
Unresolved
Staff Comments
|
Neither
AllianceBernstein nor Holding has unresolved comments from the staff of the
SEC
to report.
| Item 2. |
Properties
|
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 837,270 square feet of space at this location. We also occupy
approximately 226,374 square feet of space at 135 West 50th Street, New York,
New York under a lease expiring in 2029 and approximately 210,756 square feet
of
space at One North Lexington, White Plains, New York under a lease expiring
in
2031. AllianceBernstein Investments and Investor Services occupy approximately
134,261 square feet of space in Secaucus, New Jersey, and approximately 92,067
square feet of space in San Antonio, Texas, under leases expiring in 2007 and
2009, respectively. We exercised an early lease termination option, effective
2007, for Secaucus, New Jersey; that lease originally expired in
2016.
We
also
lease space in 19 other cities in the United States. Our subsidiaries and joint
ventures lease space in London, England under leases expiring in 2013, 2015,
and
2016, in Tokyo, Japan under leases expiring in 2009, and in 23 other cities
outside the United States.
| Item 3. |
Legal
Proceedings
|
With
respect to all significant litigation matters, we conduct a probability
assessment of 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 (“SFAS No. 5”), “Accounting
for Contingencies”,
and
Financial Accounting Standards Board (“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
indicate 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.
On
April 8, 2002, In
re
Enron Corporation Securities Litigation,
a
consolidated complaint (as subsequently amended, “Enron Complaint”) was filed in
the United States District Court for the Southern District of Texas, Houston
Division, against numerous defendants, including AllianceBernstein, alleging
that AllianceBernstein violated Sections 11 and 15 of the Securities Act with
respect to a registration statement filed by Enron Corp. On January 2, 2007,
the
court issued a final judgment dismissing the Enron Complaint as the allegations
therein pertained to AllianceBernstein. The parties have agreed that there
will
be no appeal.
Market
Timing-related Matters
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 AllianceBernstein, Holding, the General Partner,
AXA Financial, the U.S. Funds, the registrants and issuers of those funds,
certain officers of AllianceBernstein (“AllianceBernstein defendants”), and
certain unaffiliated defendants, as well as unnamed Doe defendants. The Hindo
Complaint was filed in the United States District Court for the Southern
District of New York by alleged shareholders of two of the U.S. Funds. The
Hindo
Complaint alleges that certain of the AllianceBernstein defendants failed to
disclose that they improperly allowed certain hedge funds and other unidentified
parties to engage in “late trading” and “market timing” of U.S. Fund securities,
violating Sections 11 and 15 of the Securities Act, Sections 10(b) and
20(a) of the Exchange Act, and Sections 206 and 215 of the Investment
Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages
and
rescission of their contracts with AllianceBernstein, including recovery of
all
fees paid to AllianceBernstein pursuant to such contracts.
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. All state court
actions against AllianceBernstein either were voluntarily dismissed or removed
to federal court. On February 20, 2004, the Judicial Panel on Multidistrict
Litigation transferred all federal actions to the United States District Court
for the District of Maryland (“Mutual Fund MDL”). 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 ERISA by participants in the Profit Sharing Plan for Employees
of
AllianceBernstein. All four complaints included substantially identical factual
allegations, which appear to be based in large part on the SEC Order and the
NYAG AoD.
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 (“MOU”) 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.
On
April 11, 2005, a complaint entitled
The
Attorney General of the State of West Virginia v. AIM Advisors, Inc., et
al.
(“WVAG
Complaint”) was filed against AllianceBernstein, Holding, and various
unaffiliated defendants. The WVAG Complaint was filed in the Circuit Court
of
Marshall County, West Virginia by the Attorney General of the State of West
Virginia. The WVAG Complaint makes factual allegations generally similar to
those in the Hindo Complaint. On October 19, 2005, the WVAG Complaint was
transferred to the Mutual Fund MDL. On August 30, 2005, the WV Securities
Commissioner signed a Summary Order to Cease and Desist, and Notice of Right
to
Hearing (“Summary Order”) addressed to AllianceBernstein and Holding. The
Summary Order claims that AllianceBernstein and Holding violated the West
Virginia Uniform Securities Act and makes factual allegations generally
similar to those in the SEC Order and NYAG AoD. On January 25, 2006,
AllianceBernstein and Holding moved to vacate the Summary Order. In early
September 2006, the court denied this motion, and the Supreme Court of Appeals
in West Virginia denied our petition for appeal. On September 22, 2006, we
filed
an answer and moved to dismiss the Summary Order with the WV Securities
Commissioner.
We
intend
to vigorously defend against the allegations in the WVAG Complaint and the
Summary Order. At the present time, we are unable to predict the outcome or
estimate a possible loss or range of loss in respect of these matters because
of
the inherent uncertainty regarding the outcome of complex litigation, the fact
that plaintiffs did not specify an amount of damages sought in their complaint,
and the fact that, to date, we have not engaged in settlement
negotiations.
Revenue
Sharing-related Matters
On
June 22, 2004, a purported class action complaint entitled
Aucoin, et al. v. Alliance Capital Management L.P., et al.
(“Aucoin Complaint”) was filed against AllianceBernstein, Holding, the General
Partner, AXA Financial, AllianceBernstein Investments, certain current and
former directors of the U.S. Funds, and unnamed Doe defendants. The Aucoin
Complaint names the U.S. Funds as nominal defendants. The Aucoin Complaint
was
filed in the United States District Court for the Southern District of New
York
by alleged shareholders of the AllianceBernstein Growth & Income Fund.
The Aucoin Complaint alleges, among other things, (i) that certain of the
defendants improperly authorized the payment of excessive commissions and other
fees from U.S. Fund assets to broker-dealers in exchange for preferential
marketing services, (ii) that certain of the defendants misrepresented and
omitted from registration statements and other reports material facts concerning
such payments, and (iii) that certain defendants caused such conduct as
control persons of other defendants. The Aucoin Complaint asserts claims for
violation of Sections 34(b), 36(b) and 48(a) of the Investment Company
Act, Sections 206 and 215 of the Advisers Act, breach of common law fiduciary
duties, and aiding and abetting breaches of common law fiduciary duties.
Plaintiffs seek an unspecified amount of compensatory damages and punitive
damages, rescission of their contracts with AllianceBernstein, including
recovery of all fees paid to AllianceBernstein pursuant to such contracts,
an
accounting of all U.S. Fund-related fees, commissions and soft dollar payments,
and restitution of all unlawfully or discriminatorily obtained fees and
expenses.
On
February 2, 2005, plaintiffs filed a consolidated amended class action
complaint (“Aucoin Consolidated Amended Complaint”) that asserted claims
substantially similar to the Aucoin Complaint and nine additional
subsequently-filed lawsuits. On October 19, 2005, the United States
District Court for the Southern District of New York dismissed each of the
claims set forth in the Aucoin Consolidated Amended Complaint, except for
plaintiffs’ claim under Section 36(b) of the Investment Company Act.
On January 11, 2006, the District Court granted defendants’ motion for
reconsideration and dismissed the remaining Section 36(b) claim. On
May 31, 2006, the District Court denied plaintiffs’ motion for leave to file
their amended complaint. On July 5, 2006, plaintiffs filed a notice of appeal,
which was subsequently withdrawn subject to plaintiffs’ right to reinstate it at
a later date.
We
believe that plaintiffs’ allegations in the Aucoin Consolidated Amended
Complaint are without merit and intend to vigorously defend against these
allegations. 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, the fact
that plaintiffs did not specify an amount of damages sought in their complaint,
and the fact that, to date, we have not engaged in settlement
negotiations.
We
are
involved in various other matters, including employee arbitrations, regulatory
inquiries, administrative proceedings, and litigation, some of which allege
material damages. While any proceeding or litigation has the element of
uncertainty, we believe that the outcome of any one of the other 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.
| Item 4. |
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 2006.
PART II
| 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 trade publicly on the NYSE 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 10.09 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
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 2006 and 2005 and the high and low sale
prices of Holding Units on the NYSE during 2006 and 2005:
|
Quarters Ended 2006
|
|||||||||||||
|
December 31
|
September 30
|
June 30
|
March 31
|
||||||||||
|
Cash
distributions per AllianceBernstein Unit(1)
|
$
|
1.60
|
$
|
0.96
|
$
|
0.99
|
$
|
0.87
|
|||||
|
Cash
distributions per Holding Unit(1)
|
$
|
1.48
|
$
|
0.87
|
$
|
0.89
|
$
|
0.78
|
|||||
|
Holding
Unit prices:
|
|||||||||||||
|
High
|
$
|
82.92
|
$
|
71.03
|
$
|
72.11
|
$
|
66.60
|
|||||
|
Low
|
$
|
68.27
|
$
|
56.10
|
$
|
55.50
|
$
|
56.12
|
|||||
|
Quarters Ended 2005
|
|||||||||||||
|
December 31
|
September 30
|
June 30
|
March 31
|
||||||||||
|
Cash
distributions per AllianceBernstein Unit(1)
|
$
|
1.12
|
$
|
0.82
|
$
|
0.76
|
$
|
0.63
|
|||||
|
Cash
distributions per Holding Unit(1)
|
$
|
1.02
|
$
|
0.74
|
$
|
0.68
|
$
|
0.56
|
|||||
|
Holding
Unit prices:
|
|||||||||||||
|
High
|
$
|
58.46
|
$
|
48.39
|
$
|
47.75
|
$
|
49.90
|
|||||
|
Low
|
$
|
46.00
|
$
|
43.65
|
$
|
42.35
|
$
|
40.25
|
|||||
____________
|
(1)
|
Declared
and paid during the following
quarter.
|
On
January 31, 2007, the closing price of Holding Units on the NYSE was $90.09
per Unit and there were approximately 1,106 Holding Unitholders of record for
approximately 90,000 beneficial owners. On January 31, 2007, there were
approximately 512 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
As
reported in our Form 10-Q for the quarter ended March 31, 2005, on
February 25, 2005 and April 1, 2004, we allocated 131,873 and 262,510
Holding Units, respectively, with aggregate values of $5,538,640 and $9,191,996,
respectively, for the benefit of certain of our employees under an employee
award plan. An exemption from registration under Section 4(2) of the
Securities Act was available for the allocation of the Holding Units because
such transactions did not involve a public offering.
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
|
Period
|
(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
|
|||||||||
|
10/1/06-10/31/06(1)
|
74,405
|
$
|
68.99
|
—
|
—
|
||||||||
|
11/1/06-11/30/06
|
—
|
—
|
—
|
—
|
|||||||||
|
12/1/06-12/31/06(2)
|
40,642
|
76.98
|
—
|
—
|
|||||||||
|
Total
|
115,047
|
$
|
71.81
|
—
|
—
|
||||||||
___________
|
(1)
|
On
October 2, 2006, 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.
|
|
(2)
|
On
December 1, 2006, 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.
|
The
following table provides information relating to any AllianceBernstein 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
|
Period
|
(a)
Total Number
of
AllianceBernstein
Units Purchased
|
(b)
Average Price
Paid Per
AllianceBernstein
Unit, net of
Commissions
|
(c)
Total Number of
AllianceBernstein
Units Purchased as
Part of Publicly
Announced Plans
or Programs
|
(d)
Maximum
Number
(or Approximate
Dollar Value) of
AllianceBernstein
Units that May Yet
Be Purchased
Under the Plans or
Programs
|
|||||||||
|
10/1/06-10/31/06
|
—
|
$
|
—
|
—
|
—
|
||||||||
|
11/1/06-11/30/06
|
—
|
—
|
—
|
—
|
|||||||||
|
12/1/06-12/31/06(1)
|
1,300
|
79.70
|
—
|
—
|
|||||||||
|
Total
|
1,300
|
$
|
79.70
|
—
|
—
|
||||||||
____________
|
(1)
|
On
December 7, 2006, AXA Financial purchased a total of 1,300
AllianceBernstein Units from two unaffiliated unitholders in private
transactions.
|
| Item 6. |
Selected
Financial Data
|
ALLIANCEBERNSTEIN
L.P.
Selected
Consolidated Financial Data
|
Years Ended December 31,
|
||||||||||||||||
|
2006
|
2005(1)
|
2004(1)
|
2003(1)
|
2002(1)
|
||||||||||||
|
(in
thousands, except per unit amounts and unless otherwise
indicated)
|
||||||||||||||||
|
INCOME
STATEMENT DATA:
|
||||||||||||||||
|
Revenues:
|
||||||||||||||||
|
Investment
advisory and services fees
|
$
|
2,890,229
|
$
|
2,259,392
|
$
|
1,996,819
|
$
|
1,769,562
|
$
|
1,724,962
|
||||||
|
Distribution
revenues
|
421,045
|
397,800
|
447,283
|
436,037
|
467,463
|
|||||||||||
|
Institutional
research services
|
375,075
|
352,757
|
420,141
|
380,705
|
417,824
|
|||||||||||
|
Dividend
and interest income
|
266,520
|
152,781
|
72,743
|
37,841
|
52,024
|
|||||||||||
|
Investment
gains (losses)
|
53,134
|
28,631
|
14,499
|
12,408
|
(6,933
|
)
|
||||||||||
|
Other
revenues
|
132,237
|
117,227
|
136,744
|
148,790
|
154,323
|
|||||||||||
|
Total
revenues
|
4,138,240
|
3,308,588
|
3,088,229
|
2,785,343
|
2,809,663
|
|||||||||||
|
Less:
interest expense
|
187,833
|
95,863
|
32,796
|
20,415
|
31,939
|
|||||||||||
|
Net
revenues
|
3,950,407
|
3,212,725
|
3,055,433
|
2,764,928
|
2,777,724
|
|||||||||||
|
Expenses:
|
||||||||||||||||
|
Employee
compensation and benefits
|
1,547,627
|
1,262,198
|
1,085,163
|
914,529
|
907,075
|
|||||||||||
|
Promotion
and servicing:
|
||||||||||||||||
|
Distribution
plan payments
|
292,886
|
291,953
|
374,184
|
370,575
|
392,780
|
|||||||||||
|
Amortization
of deferred sales commissions
|
100,370
|
131,979
|
177,356
|
208,565
|
228,968
|
|||||||||||
|
Other
|
218,944
|
198,004
|
202,327
|
197,079
|
228,624
|
|||||||||||
|
General
and administrative
|
583,296
|
384,339
|
426,389
|
339,706
|
329,059
|
|||||||||||
|
Interest
on borrowings
|
23,124
|
25,109
|
24,232
|
25,286
|
27,385
|
|||||||||||
|
Amortization
of intangible assets
|
20,710
|
20,700
|
20,700
|
20,700
|
20,700
|
|||||||||||
|
Charge
for mutual fund matters and legal proceedings
|
—
|
—
|
—
|
330,000
|
—
|
|||||||||||
|
2,786,957
|
2,314,282
|
2,310,351
|
2,406,440
|
2,134,591
|
||||||||||||
|
Operating
income
|
1,163,450
|
898,443
|
745,082
|
358,488
|
643,133
|
|||||||||||
|
Non-operating
income
|
20,196
|
34,446
|
—
|
—
|
—
|
|||||||||||
|
Income
before income taxes
|
1,183,646
|
932,889
|
745,082
|
358,488
|
643,133
|
|||||||||||
|
Income
taxes
|
75,045
|
64,571
|
39,932
|
28,680
|
32,155
|
|||||||||||
|
Net
income
|
$
|
1,108,601
|
$
|
868,318
|
$
|
705,150
|
$
|
329,808
|
$
|
610,978
|
||||||
|
Basic
net income per unit
|
$
|
4.26
|
$
|
3.37
|
$
|
2.76
|
$
|
1.30
|
$
|
2.42
|
||||||
|
Diluted
net income per unit
|
$
|
4.22
|
$
|
3.35
|
$
|
2.74
|
$
|
1.29
|
$
|
2.39
|
||||||
|
Operating
margin(2)
|
29.5
|
%
|
28.0
|
%
|
24.4
|
%
|
13.0
|
%
|
23.2
|
%
|
||||||
|
CASH
DISTRIBUTIONS PER UNIT(3)
|
$
|
4.42
|
$
|
3.33
|
$
|
2.40
|
$
|
1.65
|
$
|
2.44
|
||||||
|
BALANCE
SHEET DATA AT PERIOD END:
|
||||||||||||||||
|
Total
assets
|
$
|
10,601,105
|
$
|
9,490,480
|
$
|
8,779,330
|
$
|
8,171,669
|
$
|
7,217,970
|
||||||
|
Debt
|
$
|
334,901
|
$
|
407,291
|
$
|
407,517
|
$
|
405,327
|
$
|
426,907
|
||||||
|
Partners’
capital
|
$
|
4,570,997
|
$
|
4,302,674
|
$
|
4,183,698
|
$
|
3,778,469
|
$
|
3,963,451
|
||||||
|
ASSETS
UNDER MANAGEMENT AT PERIOD END (in millions)
|
$
|
716,895
|
$
|
578,552
|
$
|
538,764
|
$
|
477,267
|
$
|
388,743
|
||||||
____________
|
(1)
|
Certain
prior-year amounts have been reclassified to conform to our 2006
presentation. See
Note 2 to AllianceBernstein’s consolidated financial statements in Item
8
for a discussion of
reclassifications.
|
|
(2)
|
Operating
income as a percentage of net
revenues.
|
|
(3)
|
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.
|
| Item 7. |
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
Executive
Overview
We
were
quite pleased with our 2006 full year results. Our firm’s organic growth rate,
as measured by net new client cash inflows, was very strong. We ended the year
with record AUM of $716.9 billion, an increase of 23.9% from year-end 2005,
as
market appreciation, investment performance, and net inflows contributed $138.3
billion to AUM. Capital markets produced strong gains, driven by a growing
global economy and robust corporate earnings. All four major U.S. capital market
indices were up significantly, with equity indices posting their strongest
year
since 2003. The S&P 500’s gain of 15.8% for the year was more than 500 basis
points ahead of its 15-year average. Non-U.S. capital markets also had an
outstanding year. The three major MSCI indices posted twelve-month returns
ranging from 20.1% to 32.2%.
In
terms
of relative performance, our value equity services generally continued to
outperform benchmarks, while our fixed income services achieved substantial
investment performance improvement. The one-, three-, and five-year relative
returns in our value equities were quite strong, and, in certain cases,
outstanding. Within our fixed income services, we generally performed above
benchmarks for our institutional clients and above Lipper averages for our
retail clients, as our investments in research, analytical tools, and portfolio
construction continue to benefit these clients.
In
our
growth equity services, performance materially lagged their respective
benchmarks for the year, especially in the U.S. However, we believe the gap
in
valuation between growth and value equities has reached a point where continued
market underperformance by growth relative to value appears unlikely and that
our growth services are well-positioned to benefit from an improvement in the
relative performance of growth equities.
Institutional
Investment Services AUM was $455.1 billion at year end, or 63.5% of our overall
AUM. For the year, we achieved record net inflows of more than $27.3 billion.
Our value equity and blend strategies services accounted for roughly 71% of
new
assets, while global and international services accounted for approximately
85%
of all new assets - continuing a trend. Our pipeline of won but unfunded new
institutional mandates at year-end 2006 remains strong.
Retail
Services AUM was up 15.0% for the year, representing $166.9 billion, or 23.3%
of
our total AUM. Net inflows were $12.1 billion (compared to $1.1 billion of
net
inflows in 2005), for an organic growth rate of 8.4%, which was our best year
since 2000. Significant increases in net asset inflows occurred in our global
and international and multi-strategy services. Lastly, 2006 marked the first
year of net inflows for U.S. retail mutual funds since 2001.
Private
Client Services AUM was $94.9 billion, or 13.2% of our total AUM. AUM of our
high-net-worth clients grew by 26.7% year-over-year, primarily as a result
of
double-digit organic growth and market appreciation. We continued to invest
in
our Private Client Services in 2006, including the opening of our U.K. office
and increasing the number of financial advisors by 37, or 14.2%, to
298.
Our
Institutional Research Services recorded revenues of $375.1 million in 2006,
a
6.3% increase from 2005. However, after adjusting for a reclassification of
transaction fees related to advisory clients, revenues were up 16.2%. Our market
share improved in the U.S. primarily due to strong growth in algorithmic trading
volumes and increased demand for our highly-ranked research services. These
gains, however, were partly offset by pricing pressure and a shift in mix to
“low-touch” trading services with lower revenue yields. We also achieved market
share gains in Europe, where we plan to launch our algorithmic trading platform
in the first quarter of 2007.
The
quality of our Institutional Research Services, as ranked in the 2006
Institutional
Investor “Best
U.S. Independents” survey, was once again excellent. Our research analysts were
ranked in 26 sectors, including first place finishes in 23 sectors.
Our
financial success is the result of providing superior service to, and meeting
the investment objectives of, our clients, and we continue to make long-term
investments for the future. Looking ahead, we believe our continued focus
on
these objectives will help us achieve our goal of becoming the most admired
investment firm in the world.
Assets
Under Management
Effective
January 1, 2006, we transferred certain client accounts among distribution
channels to reflect changes in the way we service these accounts (shown as
transfers in the tables below).
Assets
under management by distribution channel were as follows:
|
As of December 31,
|
% Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in
billions)
|
||||||||||||||||
|
Institutional
Investments
|
$
|
455.1
|
$
|
358.6
|
$
|
311.3
|
26.9
|
%
|
15.2
|
%
|
||||||
|
Retail
|
166.9
|
145.1
|
163.5
|
15.0
|
(11.3
|
)
|
||||||||||
|
Private
Client
|
94.9
|
74.9
|
64.0
|
26.7
|
17.1
|
|||||||||||
|
Total
|
$
|
716.9
|
$
|
578.6
|
$
|
538.8
|
23.9
|
7.4
|
||||||||
Assets
under management by investment service were as follows:
|
As of December 31,
|
% Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in
billions)
|
||||||||||||||||
|
Growth
Equity:
|
||||||||||||||||
|
U.S.
|
$
|
78.5
|
$
|
80.9
|
$
|
80.1
|
(3.0
|
)%
|
1.1
|
%
|
||||||
|
Global &
international
|
95.6
|
65.3
|
43.2
|
46.5
|
51.0
|
|||||||||||
|
174.1
|
146.2
|
123.3
|
19.1
|
18.6
|
||||||||||||
|
Value
Equity:
|
||||||||||||||||
|
U.S.
|
119.0
|
106.9
|
105.5
|
11.3
|
1.3
|
|||||||||||
|
Global &
international
|
216.5
|
131.3
|
87.1
|
64.8
|
50.8
|
|||||||||||
|
335.5
|
238.2
|
192.6
|
40.8
|
23.7
|
||||||||||||
|
Fixed
Income:
|
||||||||||||||||
|
U.S.
|
109.9
|
108.5
|
143.2
|
1.3
|
(24.2
|
)
|
||||||||||
|
Global &
international
|
67.1
|
55.6
|
50.2
|
20.7
|
10.8
|
|||||||||||
|
177.0
|
164.1
|
193.4
|
7.9
|
(15.1
|
)
|
|||||||||||
|
Index/Structured:
|
||||||||||||||||
|
U.S.
|
24.8
|
25.3
|
23.6
|
(1.6
|
)
|
6.9
|
||||||||||
|
Global &
international
|
5.5
|
4.8
|
5.9
|
13.5
|
(18.1
|
)
|
||||||||||
|
30.3
|
30.1
|
29.5
|
0.9
|
1.9
|
||||||||||||
|
Total:
|
||||||||||||||||
|
U.S.
|
332.2
|
321.6
|
352.4
|
3.3
|
(8.8
|
)
|
||||||||||
|
Global &
international
|
384.7
|
257.0
|
186.4
|
49.7
|
37.9
|
|||||||||||
|
Total
|
$
|
716.9
|
$
|
578.6
|
$
|
538.8
|
23.9
|
7.4
|
||||||||
Changes
in assets under management during 2006 were as follows:
|
Distribution Channel
|
Investment Service
|
|||||||||||||||||||||||||||
|
Institutional
Investments
|
Retail
|
Private
Client
|
Total
|
Growth
Equity
|
Value
Equity
|
Fixed
Income
|
Index/
Structured
|
Total
|
||||||||||||||||||||
|
(in
billions)
|
||||||||||||||||||||||||||||
|
Balance
as of January 1, 2006
|
$
|
358.6
|
$
|
145.1
|
$
|
74.9
|
$
|
578.6
|
$
|
146.2
|
$
|
238.2
|
$
|
164.1
|
$
|
30.1
|
$
|
578.6
|
||||||||||
|
Long-term
flows:
|
||||||||||||||||||||||||||||
|
Sales/new
accounts
|
53.8
|
44.3
|
14.4
|
112.5
|
33.9
|
54.8
|
22.8
|
1.0
|
112.5
|
|||||||||||||||||||
|
Redemptions/terminations
|
(18.1
|
)
|
(31.1
|
)
|
(2.9
|
)
|
(52.1
|
)
|
(17.5
|
)
|
(15.9
|
)
|
(15.5
|
)
|
(3.2
|
)
|
(52.1
|
)
|
||||||||||
|
Cash
flow/unreinvested dividends
|
(8.4
|
)
|
(1.1
|
)
|
(3.1
|
)
|
(12.6
|
)
|
(2.6
|
)
|
(7.4
|
)
|
(0.5
|
)
|
(2.1
|
)
|
(12.6
|
)
|
||||||||||
|
Net
long-term inflows (outflows)
|
27.3
|
12.1
|
8.4
|
47.8
|
13.8
|
31.5
|
6.8
|
(4.3
|
)
|
47.8
|
||||||||||||||||||
|
Acquisition
|
0.3
|
0.1
|
—
|
0.4
|
0.3
|
—
|
0.1
|
—
|
0.4
|
|||||||||||||||||||
|
Transfers
|
7.9
|
(9.1
|
)
|
1.2
|
—
|
(0.8
|
)
|
0.8
|
—
|
—
|
—
|
|||||||||||||||||
|
Market
appreciation
|
61.0
|
18.7
|
10.4
|
90.1
|
14.6
|
65.0
|
6.0
|
4.5
|
90.1
|
|||||||||||||||||||
|
Net
change
|
96.5
|
21.8
|
20.0
|
138.3
|
27.9
|
97.3
|
12.9
|
0.2
|
138.3
|
|||||||||||||||||||
|
Balance
as of December 31, 2006
|
$
|
455.1
|
$
|
166.9
|
$
|
94.9
|
$
|
716.9
|
$
|
174.1
|
$
|
335.5
|
$
|
177.0
|
$
|
30.3
|
$
|
716.9
|
||||||||||
Changes
in assets under management during 2005 were as follows:
|
Distribution Channel
|
Investment Service
|
|||||||||||||||||||||||||||
|
Institutional
Investments
|
Retail
|
Private
Client
|
Total
|
Growth
Equity
|
Value
Equity
|
Fixed
Income
|
Index/
Structured
|
Total
|
||||||||||||||||||||
|
(in
billions)
|
||||||||||||||||||||||||||||
|
Balance
as of January 1, 2005
|
$
|
311.3
|
$
|
163.5
|
$
|
64.0
|
$
|
538.8
|
$
|
123.3
|
$
|
192.6
|
$
|
193.4
|
$
|
29.5
|
$
|
538.8
|
||||||||||
|
Long-term
flows:
|
||||||||||||||||||||||||||||
|
Sales/new
accounts
|
39.5
|
30.4
|
10.8
|
80.7
|
27.5
|
34.6
|
18.1
|
0.5
|
80.7
|
|||||||||||||||||||
|
Redemptions/terminations
|
(19.2
|
)
|
(27.5
|
)
|
(2.8
|
)
|
(49.5
|
)
|
(16.6
|
)
|
(12.8
|
)
|
(18.0
|
)
|
(2.1
|
)
|
(49.5
|
)
|
||||||||||
|
Cash
flow/unreinvested dividends
|
(0.6
|
)
|
(1.8
|
)
|
(1.3
|
)
|
(3.7
|
)
|
(3.6
|
)
|
—
|
(0.4
|
)
|
0.3
|
(3.7
|
)
|
||||||||||||
|
Net
long-term inflows (outflows)
|
19.7
|
1.1
|
6.7
|
27.5
|
7.3
|
21.8
|
(0.3
|
)
|
(1.3
|
)
|
27.5
|
|||||||||||||||||
|
Dispositions
|
(1.3
|
)
|
(28.7
|
)
|
(0.4
|
)
|
(30.4
|
)
|
(1.2
|
)
|
—
|
(29.2
|
)
|
—
|
(30.4
|
)
|
||||||||||||
|
Transfers
|
0.6
|
—
|
(0.6
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
|
Market
appreciation
|
28.3
|
9.2
|
5.2
|
42.7
|
16.8
|
23.8
|
0.2
|
1.9
|
42.7
|
|||||||||||||||||||
|
Net
change
|
47.3
|
(18.4
|
)
|
10.9
|
39.8
|
22.9
|
45.6
|
(29.3
|
)
|
0.6
|
39.8
|
|||||||||||||||||
|
Balance
as of December 31, 2005
|
$
|
358.6
|
$
|
145.1
|
$
|
74.9
|
$
|
578.6
|
$
|
146.2
|
$
|
238.2
|
$
|
164.1
|
$
|
30.1
|
$
|
578.6
|
||||||||||
Average
assets under management by distribution channel and investment service were
as
follows:
|
Years Ended December 31,
|
% Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in
billions)
|
||||||||||||||||
|
Distribution
Channel:
|
||||||||||||||||
|
Institutional
Investments
|
$
|
405.6
|
$
|
325.9
|
$
|
275.9
|
24.4
|
%
|
18.1
|
%
|
||||||
|
Retail
|
150.8
|
146.7
|
156.1
|
2.8
|
(6.0
|
)
|
||||||||||
|
Private
Client
|
84.6
|
68.6
|
57.6
|
23.5
|
18.9
|
|||||||||||
|
Total
|
$
|
641.0
|
$
|
541.2
|
$
|
489.6
|
18.4
|
10.5
|
||||||||
|
Years Ended December 31,
|
% Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in
billions)
|
||||||||||||||||
|
Investment
Service:
|
||||||||||||||||
|
Growth
Equity
|
$
|
160.2
|
$
|
128.4
|
$
|
118.9
|
24.8
|
%
|
7.9
|
%
|
||||||
|
Value
Equity
|
281.1
|
208.9
|
163.0
|
34.6
|
28.2
|
|||||||||||
|
Fixed
Income
|
169.2
|
174.5
|
179.6
|
(3.1
|
)
|
(2.9
|
)
|
|||||||||
|
Index/Structured
|
30.5
|
29.4
|
28.1
|
3.8
|
4.8
|
|||||||||||
|
Total
|
$
|
641.0
|
$
|
541.2
|
$
|
489.6
|
18.4
|
10.5
|
||||||||
Consolidated
Results of Operations
|
Years
Ended December 31,
|
%
Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in
millions, except per unit amounts)
|
||||||||||||||||
|
Net
revenues
|
$
|
3,950.4
|
$
|
3,212.7
|
$
|
3,055.4
|
23.0
|
%
|
5.1
|
%
|
||||||
|
Expenses
|
2,786.9
|
2,314.3
|
2,310.3
|
20.4
|
0.2
|
|||||||||||
|
Operating
income
|
1,163.5
|
898.4
|
745.1
|
29.5
|
20.6
|
|||||||||||
|
Non-operating
income
|
20.2
|
34.5
|
—
|
(41.4
|
)
|
n/m
|
||||||||||
|
Income
before income taxes
|
1,183.7
|
932.9
|
745.1
|
26.9
|
25.2
|
|||||||||||
|
Income
taxes
|
75.1
|
64.6
|
39.9
|
16.2
|
61.7
|
|||||||||||
|
Net
income
|
$
|
1,108.6
|
$
|
868.3
|
$
|
705.2
|
27.7
|
23.1
|
||||||||
|
Diluted
net income per unit
|
$
|
4.22
|
$
|
3.35
|
$
|
2.74
|
26.0
|
22.3
|
||||||||
|
Distributions
per unit
|
$
|
4.42
|
$
|
3.33
|
$
|
2.40
|
32.7
|
38.8
|
||||||||
|
Operating
margin(1)
|
29.5
|
%
|
28.0
|
%
|
24.4
|
%
|
||||||||||
____________
|
(1)
|
Operating
income as a percentage of net
revenues.
|
In
2006,
net income increased $240.3 million, or 27.7%, to $1,108.6 million, and net
income per unit increased $0.87, or 26.0%, to $4.22. The increase was due
primarily to higher investment advisory and services fees, partially offset
by
higher employee compensation and benefits expenses and higher general and
administrative expenses. Our operating margin expanded 1.5% to 29.5% in 2006,
benefiting significantly from the increase in our fee revenues and the
moderation of our employee compensation and benefits growth rate.
As
contemplated in our January 24, 2007 earnings announcement, our results have
been adjusted to include a charge 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. The $56.0 million fourth
quarter 2006 pre-tax charge ($54.5 million, net of the related income tax
benefit), recorded as general and administrative expense, is somewhat larger
than the amount contemplated in the earnings announcement, and reflects our
identification of additional class actions and client accounts subject to the
claim processing error during an extensive review of our procedures.
Accordingly, net income and diluted net income per unit for 2006 was $1,108.6
million and $4.22, respectively, compared to the unadjusted amounts of $1,163.1
million and $4.43, respectively, we reported on January 24, 2007. Our
estimate of the cost is based on our review to date; as we continue our review,
our estimate and the ultimate cost we incur may change. We continue to
believe that most of this cost will ultimately be recovered from residual
settlement proceeds and insurance.
The
fourth quarter distribution of $1.60 per unit paid on February 15, 2007 was
based on unadjusted fourth quarter net income per unit of $1.60. As a result,
to
the extent that all or a portion of the cost is recovered in subsequent periods,
we do not anticipate treating those amounts as Available Cash Flow (as defined
the AllianceBernstein Partnership Agreement), and would not
distribute those amounts to unitholders.
In
2005,
net income increased $163.1 million, or 23.1%, to $868.3 million, and diluted
net income per unit increased $0.61, or 22.3%, to $3.35. The increase was due
primarily to higher investment advisory and services fees, gains recognized
on
the dispositions of our cash management services, Indian mutual funds and South
African joint venture interest, lower promotion and servicing expenses, and
lower general and administrative expenses, partially offset by higher employee
compensation and benefits and lower distribution revenues. The operating margin
increase of 3.6% in 2005 primarily reflects increased revenues and the gains
we
recognized on the dispositions, together with virtually no expense
growth.
Net
Revenues
The
following table summarizes the components of net revenues:
|
Years Ended December 31,
|
%
Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in
millions)
|
||||||||||||||||
|
Investment
advisory and services fees:
|
||||||||||||||||
|
Institutional
Investments:
|
||||||||||||||||
|
Base
fees
|
$
|
1,108.2
|
$
|
821.3
|
$
|
691.8
|
34.9
|
%
|
18.7
|
%
|
||||||
|
Performance
fees
|
113.0
|
73.1
|
35.9
|
54.7
|
103.5
|
|||||||||||
|
1,221.2
|
894.4
|
727.7
|
36.5
|
22.9
|
||||||||||||
|
Retail:
|
||||||||||||||||
|
Base
fees
|
787.5
|
693.1
|
728.8
|
13.6
|
(4.9
|
)
|
||||||||||
|
Performance
fees
|
0.3
|
0.7
|
(1.7
|
)
|
(56.8
|
)
|
n/m
|
|||||||||
|
787.8
|
693.8
|
727.1
|
13.6
|
(4.6
|
)
|
|||||||||||
|
Private
Client:
|
||||||||||||||||
|
Base
fees
|
758.8
|
613.1
|
483.7
|
23.8
|
26.8
|
|||||||||||
|
Performance
fees
|
122.4
|
58.1
|
58.4
|
110.5
|
(0.4
|
)
|
||||||||||
|
881.2
|
671.2
|
542.1
|
31.3
|
23.8
|
||||||||||||
|
Total:
|
||||||||||||||||
|
Base
fees
|
2,654.5
|
2,127.5
|
1,904.3
|
24.8
|
11.7
|
|||||||||||
|
Performance
fees
|
235.7
|
131.9
|
92.6
|
78.7
|
42.6
|
|||||||||||
|
2,890.2
|
2,259.4
|
1,996.9
|
27.9
|
13.1
|
||||||||||||
|
Distribution
revenues
|
421.1
|
397.8
|
447.3
|
5.8
|
(11.1
|
)
|
||||||||||
|
Institutional
research services
|
375.1
|
352.8
|
420.1
|
6.3
|
(16.0
|
)
|
||||||||||
|
Dividend
and interest income
|
266.5
|
152.8
|
72.7
|
74.4
|
110.0
|
|||||||||||
|
Investment
gains (losses)
|
53.1
|
28.6
|
14.5
|
85.6
|
97.5
|
|||||||||||
|
Other
revenues
|
132.2
|
117.2
|
136.7
|
12.8
|
(14.3
|
)
|
||||||||||
|
Total
revenues
|
4,138.2
|
3,308.6
|
3,088.2
|
25.1
|
7.1
|
|||||||||||
|
Less:
Interest expense
|
187.8
|
95.9
|
32.8
|
95.9
|
192.3
|
|||||||||||
|
Net
revenues
|
$
|
3,950.4
|
$
|
3,212.7
|
$
|
3,055.4
|
23.0
|
5.1
|
||||||||
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 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.
Certain
investment advisory contracts provide for a performance fee, in addition to
or
in lieu of a base fee. This fee 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. Performance fees are recorded as
revenue at the end of the measurement period and will be higher in favorable
markets and lower in unfavorable markets, which may increase the volatility
and seasonality of our revenues and earnings.
Brokerage
transaction charges earned by SCB LLC and SCBL for certain private client and
institutional investments client transactions
previously recorded as investment advisory and services fees are now recorded
as
Institutional Research Services revenue. Prior period amounts have been
reclassified to conform to the current period’s presentation.
Institutional
investments advisory and services fees increased 36.5% in 2006 as a result
of
increased assets under management, a more favorable fee mix, and an increase
in
performance fees of $39.9 million. The favorable fee mix reflects increases
in
average assets under management in our global and international services of
55.5%, where base fee rates are generally higher than domestic rates. During
2005, institutional investments advisory and services fees increased 22.9%
as a
result of an 18.1% increase in average assets under management, and an increase
in performance fees of $37.2 million.
Retail
investment advisory and services fees increased 13.6% in 2006 due primarily
to
an increase of 30.5% in global and international services average assets under
management, partially offset by the disposition of our cash management services
during the second quarter of 2005. For 2005, these fees decreased 4.6%,
primarily as a result of a 6.0% decrease in average assets under management,
reflecting the disposition of our cash management services.
Private
Client investment advisory and services fees increased 31.3% in 2006 as a result
of higher base fees from increased assets under management and a $64.3 million,
or 110.5%, increase in performance fees, earned largely from our hedge funds.
Private client investment advisory and services fees increased 23.8% in 2005,
primarily as a result of increased assets under management.
Distribution
Revenues
AllianceBernstein
Investments and AllianceBernstein Luxembourg 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 increased 5.8% in 2006, due primarily
to higher non-U.S. and 529 Plan revenues, partially offset by lower U.S.
revenues and the disposition of our cash management services during the second
quarter of 2005. Distribution revenues decreased 11.1% in 2005, principally
due
to the disposition of our cash management services.
Institutional
Research Services
Institutional
Research Services revenue consists principally of brokerage transaction charges
received for providing in-depth, independent, fundamental research and
brokerage-related services to institutional investors.
SCB earned revenues of approximately $1.8 million in 2006 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), which previously
were reported as investment advisory and services fees.
Since
January 1, 2006, we have reported all
revenues earned by SCB from
brokerage transactions executed for these
clients as Institutional Research Services revenues. Accordingly, we
reclassified $31.5 million and $116.5 million of transaction charge revenue
in
2005 and 2004, respectively, from investment advisory and services fees to
Institutional Research Services to conform to our 2006 presentation.
The
decrease in brokerage transaction charges in 2006 and 2005 is
the
result of our elimination of transaction
charges for most private clients, which was largely offset by increased
investment advisory fees.
Revenues
from Institutional Research Services, excluding the decline in transaction
charges related to the reclassification, increased 16.2% in 2006. U.S. revenues
were higher due to increased market volumes and higher market share, partly
offset by lower pricing. Revenues in London were also higher due to increased
market volumes and higher pricing. Revenues from Institutional Research
Services, excluding the decline in transaction charges related to the
Reclassification, increased 5.8% for 2005 due to higher market share, higher
average daily volumes in both the U.S. and U.K. stock markets and pricing
increases in the U.K., partly offset by pricing declines in the U.S.
Recent
declines in commission rates charged by broker-dealers are likely to continue
and may accelerate. Increasing use of electronic trading systems and algorithmic
trading strategies (which permit investors to execute securities transactions
at
a fraction of typical full-service broker-dealer charges) and pressure exerted
by funds and institutional investors are likely to result in continuing, perhaps
significant, declines in commission rates, which would, in turn, reduce the
revenues generated by our Institutional Research Services. See
“Risk Factors” in Item 1A.
Dividend
and Interest Income and Interest Expense
Dividend
and interest income consists of investment income, interest earned on United
States Treasury Bills and interest earned on collateral given for securities
borrowed from brokers and dealers. Interest
expense includes interest accrued on cash balances in customer accounts and
collateral received for securities loaned. Dividend and interest, net of
interest expense, increased $21.8 million in 2006. The increase was due
primarily to higher mutual fund dividends and increased stock borrowed income
as
a result of higher average customer credit balances and interest rates in
2006.
In
2005, dividend
and interest, net of interest expense, increased $17.0 million
as a
result of higher stock borrowed income and mutual fund dividends.
Investment
Gains (Losses)
In
2006 and 2005, realized and unrealized investment gains (losses) increased
$24.5
million and $14.1 million, respectively. The increases were due primarily to
higher mark-to-market gains on investments related to deferred compensation
plan
obligations.
Other
Revenues
Other
revenues consist of fees earned for transfer agency services provided to our
mutual funds, fees earned for administration and recordkeeping services provided
to our mutual funds and the general accounts of AXA and its subsidiaries, our
equity in the earnings of investments made in limited partnership hedge funds
that we sponsor and manage, and other miscellaneous revenues. Other revenues
increased 12.8% in 2006, primarily due to higher equity earnings. Other revenues
decreased 14.3% in 2005, principally due to lower transfer agency services
fees.
Expenses
The
following table summarizes the components of expenses:
|
Years Ended December 31,
|
% Change
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in millions)
|
||||||||||||||||
|
Employee
compensation and benefits
|
$
|
1,547.6
|
$
|
1,262.2
|
$
|
1,085.1
|
22.6
|
%
|
16.3
|
%
|
||||||
|
Promotion
and servicing
|
612.2
|
621.9
|
753.9
|
(1.6
|
)
|
(17.5
|
)
|
|||||||||
|
General
and administrative
|
583.3
|
384.4
|
426.4
|
51.8
|
(9.9
|
)
|
||||||||||
|
Interest
|
23.1
|
25.1
|
24.2
|
(7.9
|
)
|
3.6
|
||||||||||
|
Amortization
of intangible assets
|
20.7
|
20.7
|
20.7
|
—
|
—
|
|||||||||||
|
Total
|
$
|
2,786.9
|
$
|
2,314.3
|
$
|
2,310.3
|
20.4
|
0.2
|
||||||||
Employee
Compensation and Benefits
We
had
4,914 full-time employees as of December 31, 2006 compared to 4,312 in 2005
and 4,100 in 2004. Employee compensation and benefits, which represented
approximately 56%, 55%, and 47% of total expenses in 2006, 2005, and 2004,
respectively, includes base compensation, cash and deferred incentive
compensation, commissions, fringe benefits, and other employment
costs.
In
2006,
base compensation, fringe benefits and other employment costs increased $84.4
million, or 18.5%, primarily as a result of annual merit increases, additional
headcount, and higher fringe benefits reflecting increased compensation levels.
Incentive compensation increased $111.1 million, or 21.0%, primarily due to
higher short-term incentive compensation, reflecting increased headcount and
higher earnings, and higher deferred compensation amortization due to vesting
of
prior-year awards. Commission expense increased $89.9 million, or 32.5%,
reflecting higher sales and revenues.
In
2005,
base compensation, fringe benefits and other employment costs increased $44.5
million, or 10.8%, primarily as a result of annual merit increases and
additional headcount. Incentive compensation increased $89.7 million, or 20.4%,
primarily due to higher short-term incentive compensation reflecting higher
earnings and higher deferred compensation amortization due to vesting of
prior-year awards. Commission expense increased $42.9 million, or 18.3%,
reflecting higher sales and revenues.
Promotion
and Servicing
Promotion
and servicing expenses, which represent approximately 22%, 27%, and 33% of
total
expenses in 2006, 2005, and 2004, respectively, include distribution plan
payments to financial intermediaries for distribution of company-sponsored
mutual funds and cash management services products (in 2005 and 2004) and
amortization of deferred sales commissions paid to financial intermediaries
for
the sale of back-end load shares of our sponsored mutual funds. See
“Capital Resources and Liquidity” in this Item 7 and Notes 11 and 21 to
AllianceBernstein’s consolidated financial statements in Item 8
for a
further discussion of deferred sales commissions and the disposition of cash
management services. 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 1.6% in 2006 and decreased 17.5% in 2005.
The
decrease in 2006 was primarily due to a $31.6 million decrease in amortization
of deferred sales commissions as a result of lower sales of back-end load
shares, partly offset by higher travel and entertainment and promotional
materials costs. The decrease in 2005 was primarily due to an $82.2 million
decrease in distribution plan payments, largely reflecting the disposition
of
our cash management services during the second quarter of 2005, and a $45.4
million decrease in amortization of deferred sales commissions as a result
of
lower sales of back-end load shares.
General
and Administrative
General
and administrative expenses, which represented approximately 21%, 17%, and
18%
of total expenses in 2006, 2005, and 2004, respectively, are costs related
to
operations, including technology, professional fees, occupancy, communications,
minority interests in consolidated subsidiaries, and similar expenses. General
and administrative expenses increased $198.9 million, or 51.8% in 2006, and
decreased $42.0 million, or 9.9% in 2005.
The
increase in 2006 was primarily due to the charge we recorded 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 (see “Consolidated
Results of Operations” in this
Item
7 for a discussion of the charge), as well as higher occupancy
and legal costs. Occupancy
costs increased as a result of the expansion of certain private client offices
in the U.S., increased office space in New York, and new office space in London
and Hong Kong. Legal costs increased, reflecting our continued efforts to
resolve outstanding litigation in 2006, and the fact that 2005 legal costs
were
substantially offset by an $18.3 million insurance recovery and
a $5.1 million reimbursement of litigation expenses we received in connection
with a securities law claim we brought on behalf of certain clients. Other
increases in general and administrative expenses include higher market data
services and data processing costs.
The
decrease in 2005 was due primarily to lower legal costs as a result of insurance
recoveries, write-offs of obsolete software and leasehold improvements at
vacated facilities in 2004, and the impact of selling a consolidated variable
interest entity effective December 31, 2004.
Interest
on Borrowings
Interest
on our borrowings for 2006 decreased $2.0 million, or 7.9%.
The
decrease in 2006 reflects the retirement of our Senior Notes in August 2006,
partly offset by higher short-term borrowing levels in 2006.
Non-operating
Income
Non-operating
income consists primarily of the gains from the dispositions of our cash
management services, Indian mutual funds, and South African joint venture
interest in 2005. Non-operating income for 2006 decreased $14.3 million, or
41.4
%. See
Note 21 to AllianceBernstein’s consolidated financial statements in Item
8
for information about these dispositions.
Taxes
on Income
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
increase in taxes on income in 2006 is primarily due to higher pre-tax earnings,
partially offset by a lower effective tax rate. The increase in 2005 is
primarily due to higher pre-tax earnings and a higher effective tax rate.
Capital
Resources and Liquidity
The
following table identifies selected items relating to capital resources and
liquidity:
|
% Change
|
||||||||||||||||
|
2006
|
2005
|
2004
|
2006-05
|
2005-04
|
||||||||||||
|
(in
millions, except per unit amounts)
|
||||||||||||||||
|
As
of December 31:
|
||||||||||||||||
|
Partners’
capital
|
$
|
4,571.0
|
$
|
4,302.7
|
$
|
4,183.7
|
6.2
|
%
|
2.8
|
%
|
||||||
|
Cash
and cash equivalents
|
692.7
|
654.2
|
1,061.5
|
5.9
|
(38.4
|
)
|
||||||||||
|
For
the years ended December 31:
|
||||||||||||||||
|
Cash
flow from operations
|
1,204.3
|
460.1
|
968.2
|
161.8
|
(52.5
|
)
|
||||||||||
|
Purchases
of investments
|
(54.8
|
)
|
(7.4
|
)
|
(27.4
|
)
|
642.6
|
(73.1
|
)
|
|||||||
|
Capital
expenditures
|
(97.1
|
)
|
(72.6
|
)
|
(57.3
|
)
|
33.7
|
26.6
|
||||||||
|
Cash
distributions
|
(1,025.5
|
)
|
(800.5
|
)
|
(383.0
|
)
|
28.1
|
109.0
|
||||||||
|
Purchases
of Holding Units
|
(22.3
|
)
|
(33.3
|
)
|
(45.1
|
)
|
(32.8
|
)
|
(26.2
|
)
|
||||||
|
Issuance
of Holding Units
|
47.2
|
—
|
—
|
n/m
|
n/m
|
|||||||||||
|
Additional
investments by Holding with proceeds from exercise of compensatory
options
to buy Holding Units
|
100.5
|
42.4
|
46.7
|
136.9
|
(9.2
|
)
|
||||||||||
|
Issuance
(repayment) of commercial paper, net
|
328.1
|
(0.2
|
)
|
(0.1
|
)
|
n/m
|
63.0
|
|||||||||
|
Repayment
of long-term debt
|
(408.1
|
)
|
—
|
—
|
n/m
|
n/m
|
||||||||||
|
Available
cash flow
|
1,153.4
|
858.7
|
613.8
|
34.3
|
39.9
|
|||||||||||
|
Distributions
per AllianceBernstein Unit
|
4.42
|
3.33
|
2.40
|
32.7
|
38.8
|
|||||||||||
In
2006
and 2005, cash and cash equivalents increased $38.5 million and decreased $407.3
million, respectively. Cash inflows are primarily provided by operations, the
issuance of commercial paper, and the additional investment by Holding with
proceeds from exercise of compensatory options to buy Holding Units. Significant
cash outflows include cash distributions paid to the General Partner and
unitholders, repayment of our Senior Notes, capital expenditures, purchases
of
investments, purchases of Holding Units to fund deferred compensation plans
and
the purchase of the remaining interest in our joint venture in Hong
Kong.
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 $23.7 million, $21.4 million, and $32.9 million, respectively,
totaled approximately $98.7 million, $74.2 million, and $44.6 million
during 2006, 2005, and 2004, respectively.
Debt
and Credit Facilities
Total
available credit, debt outstanding, and weighted average interest rates as
of
December 31, 2006 and 2005 were as follows:
|
December 31,
|
|||||||||||||||||||
|
2006
|
2005
|
||||||||||||||||||
|
Credit
Available
|
Debt
Outstanding
|
Interest
Rate
|
Credit
Available
|
Debt
Outstanding
|
Interest
Rate
|
||||||||||||||
|
(in millions)
|
|||||||||||||||||||
|
Senior
notes
|
$
|
200.0
|
$
|
—
|
—
|
%
|
$
|
600.0
|
$
|
399.7
|
5.6
|
%
|
|||||||
|
Commercial
paper(1)
|
800.0
|
334.9
|
5.3
|
425.0
|
—
|
—
|
|||||||||||||
|
Revolving
credit facility(1)
|
—
|
—
|
—
|
375.0
|
—
|
—
|
|||||||||||||
|
Extendible
commercial notes
|
100.0
|
—
|
—
|
100.0
|
—
|
—
|
|||||||||||||
|
Other
|
—
|
—
|
—
|
n/a
|
7.6
|
4.6
|
|||||||||||||
|
Total
|
$
|
1,100.0
|
$
|
334.9
|
5.3
|
$
|
1,500.0
|
$
|
407.3
|
5.6
|
|||||||||
____________________
|
(1)
|
Our
revolving credit facility supports our commercial paper program;
amounts
borrowed under the commercial paper program reduce amounts available
for
other purposes under the revolving credit facility on a dollar-for-dollar
basis.
|
In
August 2001, we issued $400 million 5.625% Notes (“Senior Notes”) pursuant
to a shelf registration statement that originally permitted us to issue up
to
$600 million in senior debt securities. The Senior Notes matured in August
2006,
and were retired using cash flow from operations and proceeds from the issuance
of commercial paper. We currently have $200 million available under the shelf
registration statement for future issuances.
In
February 2006, we entered into an $800 million five-year revolving credit
facility with a group of commercial banks and other lenders. The revolving
credit facility is intended to provide back-up liquidity for our commercial
paper program, which we increased from $425 million to $800 million in
May 2006. Under the revolving credit facility, the 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, 2006.
As
of
December 31, 2006, we maintained a $100 million extendible commercial notes
(“ECN”) program as a supplement to our commercial paper program. ECNs are
short-term uncommitted debt instruments that do not require back-up liquidity
support.
In
2006,
SCB LLC entered into four separate uncommitted credit facility agreements with
various banks, each for $100 million. As of December 31, 2006, there were no
amounts outstanding under these credit facilities. During January and February
of 2007, SCB LLC increased three of the agreements to $200 million each and
entered into an additional agreement for $100 million with a new
bank.
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
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 2006, we were not required to perform under the agreement and
as of
December 31, 2006 had no liability outstanding in connection with the
agreement.
Aggregate
Contractual Obligations
The
following table summarizes
our
contractual obligations as of December 31, 2006:
|
Contractual Obligations
|
||||||||||||||||
|
Total
|
Less than
1
Year
|
1-3 Years
|
3-5 Years
|
More than 5
Years
|
||||||||||||
|
(in millions)
|
||||||||||||||||
|
Debt
|
$
|
334.9
|
$
|
334.9
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
|
Operating
leases, net of sublease commitments
|
1,866.9
|
96.8
|
192.0
|
187.9
|
1,390.2
|
|||||||||||
|
Accrued
compensation and benefits
|
360.6
|
215.8
|
79.4
|
42.7
|
22.7
|
|||||||||||
|
Total
|
$
|
2,562.4
|
$
|
647.5
|
$
|
271.4
|
$
|
230.6
|
$
|
1,412.9
|
||||||
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 our mutual funds) and accounts payable
and accrued expenses are excluded from the table above.
Certain
of our deferred compensation plans provide for election by participants to
have
their deferred compensation awards invested notionally in Holding Units and
in
company-sponsored investment services. Since January 1, 2007, we have made
purchases of mutual funds and hedge funds totaling $272.3 million to fund our
future obligations resulting from participant elections with respect to 2006
awards. We also allocated Holding Units with an aggregate value of approximately
$36.8 million within our deferred compensation trust to fund our future
obligations that resulted from participant elections with respect to 2006
awards.
We
expect
to make contributions to our qualified profit sharing plan of approximately
$25.0 million in each of the next four years. We currently expect to
contribute an estimated $3.7 million to our qualified, noncontributory, defined
benefit plan during 2007.
Acquisitions
On
May 2,
2006, we purchased the 50% interest in our Hong Kong joint venture (including
its wholly-owned Taiwanese subsidiary) owned by our joint venture partner for
$16.1 million in cash. The effect of this acquisition was not material to our
consolidated financial condition, results of operations or cash
flows.
Dispositions
See
Note 21 to AllianceBernstein’s consolidated financial statements in Item
8
for a
discussion of dispositions.
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 recoverability quarterly.
Significant assumptions utilized to estimate the company’s future average assets
under management and undiscounted future cash flows from back-end load shares
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, 2006,
management used average market return assumptions of 5% for fixed income and
8%
for equity 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 ranged from 24% to 26% for U.S. fund shares and
21%
to 29% for non-U.S. fund shares determined by reference to actual redemption
experience over the five-year, three-year, and one-year periods ended
December 31, 2006, calculated as a percentage of the company’s 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, 2006, management determined that the
deferred sales commission asset was not 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.
Goodwill
As
a
result of the adoption of SFAS No. 142, goodwill is tested at least
annually, as of September 30, for impairment. Significant assumptions are
required in performing goodwill impairment tests. Such tests include determining
whether the estimated fair value of AllianceBernstein, the reporting unit,
exceeds its book value. There are several methods of estimating
AllianceBernstein’s fair value, which includes valuation techniques such as
market quotations and discounted expected cash flows. In developing estimated
fair value using a discounted cash flow valuation technique, business growth
rate assumptions are applied over the estimated life of the goodwill asset
and
the resulting expected cash flows are discounted to arrive at a present value
amount that approximates fair value. These assumptions consider all material
events that have impacted, or that we believe could potentially impact, future
discounted expected cash flows. As of September 30, 2006, the impairment
test indicated that goodwill was not impaired. Also, as of December 31, 2006,
management believes that goodwill was not impaired. However, future tests may
be
based upon different assumptions which may or may not result in an impairment
of
this asset. Any impairment could reduce materially the recorded amount of the
goodwill asset with a corresponding charge to our earnings.
Intangible
Assets
Acquired
intangibles are recognized at fair value and amortized over their estimated
useful lives of twenty years. Intangible assets are evaluated for impairment
quarterly. A present value technique is applied to management’s best estimate of
future cash flows to estimate the fair value of intangible assets. Estimated
fair value is then compared to the recorded book value to determine whether
an
impairment is indicated. The estimates used include estimating attrition factors
of customer accounts, asset growth rates, direct expenses and fee rates. We
choose assumptions based on actual historical trends that may or may not occur
in the future. As of December 31, 2006, management believes that intangible
assets were not impaired. However, future tests may be based upon different
assumptions which may or may not 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, and 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 Lehman Brothers Aggregate Bond Index. The actual rate
of
return on plan assets was 9.0%, 13.7%, and 9.0% in 2006, 2005, and 2004,
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 2006 net
pension charge of $4.9 million by approximately $0.1 million.
The
objective of our discount rate assumption was to reflect the rate at which
the
pension benefits 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, 2006 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
5.90% discount rate as of December 31, 2006 represents the approximate
mid-point (to the nearest five basis points) of the single rate under two
independently constructed yield curves - one prepared by Mercer Human Resource
Consulting which produced a rate of 5.94%; and one prepared by Citigroup which
produced a rate of 5.89%. The discount rate as of December 31, 2005 was
5.65%, which was used in developing the 2006 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 2006 net pension charge of $4.9 million
by
approximately $0.6 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 (“SFAS No. 5”), “Accounting
for Contingencies”.
SFAS
No. 5 requires a loss contingency to be recorded if it is probable and
reasonably estimable as of the date of the financial statements.
Accounting
Pronouncements
See
Note 22 to AllianceBernstein’s consolidated financial statements in Item
8.
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, future acquisitions, competitive conditions and
government regulations, including changes in tax regulations and rates. 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 or 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 the outcome of litigation and the effect on future earnings
of the disposition of our cash management services to Federated
Investors, Inc. (“Disposition”). 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. The effect
of the Disposition on future earnings, resulting from contingent payments to
be
received in future periods, will depend on the amount of net revenue earned
by
Federated Investors, Inc. during these periods on assets under management
maintained in Federated’s funds by our former cash management clients. The
amount of gain ultimately realized from the Disposition depends on whether
we
receive a final contingent payment payable on the fifth anniversary of the
closing of the transaction (see
Note 21 to AllianceBernstein’s consolidated financial statements in Item
8).
The
forward-looking statements referred to above also include statements regarding
anticipated improvement in the relative performance of growth equities, our
estimate of what it will cost us to reimburse certain of our clients for losses
arising out of an error we made in processing class action claims, and
our ability to recover most of this cost. The actual performance of the capital
markets and other factors beyond our control will affect our investment success
for clients and asset inflows. Our estimate of the cost to reimburse clients is
based on our review to date; as we continue our review, our
estimate and the ultimate cost we incur may change. Our ability to
recover most of the cost of the error depends, in part, on the availability
of
funds from the related class-action settlement funds, the amount of which is
not
known, and the willingness of our insurers to reimburse us under existing
policies.
| Item 7A. |
Quantitative
and Qualitative Disclosures about Market Risk
|
Market
Risk, Risk Management and Derivative Financial
Instruments
AllianceBernstein’s
investments consist of investments, trading and available-for-sale, and other
investments. Investments, trading and available-for-sale, 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 investments,
available-for-sale, 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, 2006 and 2005. 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,
|
|||||||||||||
|
2006
|
2005
|
||||||||||||
|
Fair
Value
|
Effect of
+100
Basis Point
Change
|
Fair
Value
|
Effect of +100
Basis Point
Change
|
||||||||||
|
(in thousands)
|
|||||||||||||
|
Fixed
Income Investments:
|
|||||||||||||
|
Trading
|
$
|
31,669
|
$
|
(1,435
|
)
|
$
|
30,502
|
$
|
(1,424
|
)
|
|||
|
Available-for-sale
and other investments
|
31,957
|
(1,448
|
)
|
2,537
|
(118
|
)
|
|||||||
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, 2006 and 2005. 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,
|
|||||||||||||
|
2006
|
2005
|
||||||||||||
|
Fair
Value
|
Effect of
-10%
Equity Price
Change
|
Fair
Value
|
Effect of
-10%
Equity Price
Change
|
||||||||||
|
(in thousands)
|
|||||||||||||
|
Equity
Investments:
|
|||||||||||||
|
Trading
|
$
|
432,133
|
$
|
(43,213
|
)
|
$
|
282,719
|
$
|
(28,272
|
)
|
|||
|
Available-for-sale
and other investments
|
251,844
|
(25,184
|
)
|
115,656
|
(11,566
|
)
|
|||||||
Debt—Fair
Value
As
of
December 31, 2006 and 2005, the aggregate fair value of our debt was $335.0
million and $409.7 million, respectively. The table below provides the potential
fair value exposure with respect to our debt to an immediate 100 basis point
decrease in interest rates at all maturities and a ten percent decrease in
exchange rates from those prevailing as of December 31, 2006 and
2005:
|
As of December 31,
|
|||||||||||||||||||
|
2006
|
2005
|
||||||||||||||||||
|
Fair
Value
|
Effect
of -100 Basis Point Change
|
Effect
of -10% Exchange Rate Change
|
Fair
Value
|
Effect
of -100 Basis Point Change
|
Effect
of -10% Exchange Rate Change
|
||||||||||||||
|
(in thousands)
|
|||||||||||||||||||
|
Debt:
|
|||||||||||||||||||
|
Non-trading
|
$
|
335,000
|
$
|
14,372
|
$
|
—
|
$
|
409,676
|
$
|
18,190
|
$
|
760
|
|||||||
| Item 8. |
Financial
Statements and Supplementary Data
|
ALLIANCEBERNSTEIN
L.P.
AND
SUBSIDIARIES
Consolidated
Statements of Financial Condition
|
December 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(in
thousands, except unit amounts)
|
|||||||
|
ASSETS
|
|||||||
|
Cash
and cash equivalents
|
$
|
692,658
|
$
|
654,168
|
|||
|
Cash
and securities segregated, at market (cost $1,863,133 and
$1,720,295)
|
1,863,957
|
1,720,809
|
|||||
|
Receivables,
net:
|
|||||||
|
Brokers
and dealers
|
2,445,552
|
2,093,461
|
|||||
|
Brokerage
clients
|
485,446
|
429,586
|
|||||
|
Fees,
net
|
557,280
|
413,198
|
|||||
|
Investments
|
543,653
|
345,045
|
|||||
|
Furniture,
equipment and leasehold improvements, net
|
288,575
|
236,309
|
|||||
|
Goodwill,
net
|
2,893,029
|
2,876,657
|
|||||
|
Intangible
assets, net
|
284,925
|
305,325
|
|||||
|
Deferred
sales commissions, net
|
194,950
|
196,637
|
|||||
|
Other
investments
|
203,950
|
86,369
|
|||||
|
Other
assets
|
147,130
|
132,916
|
|||||
|
Total
assets
|
$
|
10,601,105
|
$
|
9,490,480
|
|||
|
LIABILITIES
AND PARTNERS’ CAPITAL
|
|||||||
|
Liabilities:
|
|||||||
|
Payables:
|
|||||||
|
Brokers
and dealers
|
$
|
661,790
|
$
|
1,057,274
|
|||
|
Brokerage
clients
|
3,988,032
|
2,929,500
|
|||||
|
AllianceBernstein
mutual funds
|
266,849
|
140,603
|
|||||
|
Accounts
payable and accrued expenses
|
333,007
|
286,449
|
|||||
|
Accrued
compensation and benefits
|
392,014
|
357,321
|
|||||
|
Debt
|
334,901
|
407,291
|
|||||
|
Minority
interests in consolidated subsidiaries
|
53,515
|
9,368
|
|||||
|
Total
liabilities
|
6,030,108
|
5,187,806
|
|||||
|
Commitments
and contingencies (See
Note 11)
|
|||||||
|
Partners’
capital:
|
|||||||
|
General
Partner
|
46,416
|
44,065
|
|||||
|
Limited
partners: 259,062,014 and 255,624,870 units issued and
outstanding
|
4,584,200
|
4,334,207
|
|||||
|
4,630,616
|
4,378,272
|
||||||
|
Capital
contributions receivable from General Partner
|
(29,590
|
)
|
(31,775
|
)
|
|||
|
Deferred
compensation expense
|
(63,196
|
)
|
(67,895
|
)
|
|||
|
Accumulated
other comprehensive income
|
33,167
|
24,072
|
|||||
|
Total
partners’ capital
|
4,570,997
|
4,302,674
|
|||||
|
Total
liabilities and partners’ capital
|
$
|
10,601,105
|
$
|
9,490,480
|
|||
See
Accompanying Notes to Consolidated Financial Statements.
ALLIANCEBERNSTEIN
L.P.
AND
SUBSIDIARIES
Consolidated
Statements of Income
|
Years Ended December 31,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
(in
thousands, except per unit amounts)
|
||||||||||
|
Revenues:
|
||||||||||
|
Investment
advisory and services fees
|
$
|
2,890,229
|
$
|
2,259,392
|
$
|
1,996,819
|
||||
|
Distribution
revenues
|
421,045
|
397,800
|
447,283
|
|||||||
|
Institutional
research services
|
375,075
|
352,757
|
420,141
|
|||||||
|
Dividend
and interest income
|
266,520
|
152,781
|
72,743
|
|||||||
|
Investment
gains (losses)
|
53,134
|
28,631
|
14,499
|
|||||||
|
Other
revenues
|
132,237
|
117,227
|
136,744
|
|||||||
|
Total
revenues
|
4,138,240
|
3,308,588
|
3,088,229
|
|||||||
|
Less:
Interest expense
|
187,833
|
95,863
|
32,796
|
|||||||
|
Net
revenues
|
3,950,407
|
3,212,725
|
3,055,433
|
|||||||
|
Expenses:
|
||||||||||
|
Employee
compensation and benefits
|
1,547,627
|
1,262,198
|
1,085,163
|
|||||||
|
Promotion
and servicing:
|
||||||||||
|
Distribution
plan payments
|
292,886
|
291,953
|
374,184
|
|||||||
|
Amortization
of deferred sales commissions
|
100,370
|
131,979
|
177,356
|
|||||||
|
Other
|
218,944
|
198,004
|
202,327
|
|||||||
|
General
and administrative
|
583,296
|
384,339
|
426,389
|
|||||||
|
Interest
on borrowings
|
23,124
|
25,109
|
24,232
|
|||||||
|
Amortization
of intangible assets
|
20,710
|
20,700
|
20,700
|
|||||||
|
2,786,957
|
2,314,282
|
2,310,351
|
||||||||
|
Operating
income
|
1,163,450
|
898,443
|
745,082
|
|||||||
|
Non-operating
income
|
20,196
|
34,446
|
—
|
|||||||
|
Income
before income taxes
|
1,183,646
|
932,889
|
745,082
|
|||||||
|
Income
taxes
|
75,045
|
64,571
|
39,932
|
|||||||
|
Net
income
|
$
|
1,108,601
|
$
|
868,318
|
$
|
705,150
|
||||
|
Net
income per unit:
|
||||||||||
|
Basic
|
$
|
4.26
|
$
|
3.37
|
$
|
2.76
|
||||
|
Diluted
|
$
|
4.22
|
$
|
3.35
|
$
|
2.74
|
||||
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
|
Total
Partners’
Capital
|
||||||||||||||
|
(in
thousands, except per unit amounts)
|
|||||||||||||||||||
|
Balance
as of December 31, 2003
|
$
|
39,195
|
$
|
3,858,538
|
$
|
(35,698
|
)
|
$
|
(111,134
|
)
|
$
|
27,568
|
$
|
3,778,469
|
|||||
|
Comprehensive
income (loss):
|
|||||||||||||||||||
|
Net
income
|
7,052
|
698,098
|
—
|
—
|
—
|
705,150
|
|||||||||||||
|
Other
comprehensive income (loss):
|
|||||||||||||||||||
|
Unrealized
gain (loss) on investments, net
|
—
|
—
|
—
|
—
|
(236
|
)
|
(236
|
)
|
|||||||||||
|
Foreign
currency translation adjustment, net
|
—
|
—
|
—
|
—
|
14,768
|
14,768
|
|||||||||||||
|
Comprehensive
income (loss)
|
7,052
|
698,098
|
—
|
—
|
14,532
|
719,682
|
|||||||||||||
|
Cash
distributions to General Partner and unitholders ($1.50 per
unit)
|
(3,838
|
)
|
(379,144
|
)
|
—
|
—
|
—
|
(382,982
|
)
|
||||||||||
|
Capital
contributions from General Partner
|
—
|
—
|
5,901
|
—
|
—
|
5,901
|
|||||||||||||
|
Purchases
of Holding Units to fund deferred compensation plans, net
|
9
|
(8,557
|
)
|
—
|
(36,532
|
)
|
—
|
(45,080
|
)
|
||||||||||
|
Compensatory
Holding Unit options expense
|
—
|
2,356
|
—
|
—
|
—
|
2,356
|
|||||||||||||
|
Amortization
of deferred compensation awards
|
—
|
—
|
—
|
58,647
|
—
|
58,647
|
|||||||||||||
|
Compensation
plan accrual
|
32
|
3,224
|
(3,256
|
)
|
—
|
—
|
—
|
||||||||||||
|
Additional
investment by Holding with proceeds from exercise of compensatory
options
to buy Holding Units
|
467
|
46,238
|
—
|
—
|
—
|
46,705
|
|||||||||||||
|
Balance
as of December 31, 2004
|
42,917
|
4,220,753
|
(33,053
|
)
|
(89,019
|
)
|
42,100
|
4,183,698
|
|||||||||||
|
Comprehensive
income (loss):
|
|||||||||||||||||||
|
Net
income
|
8,683
|
859,635
|
—
|
—
|
—
|
868,318
|
|||||||||||||
|
Other
comprehensive income (loss):
|
|||||||||||||||||||
|
Unrealized
gain (loss) on investments, net
|
—
|
—
|
—
|
—
|
1,985
|
1,985
|
|||||||||||||
|
Foreign
currency translation adjustment, net
|
—
|
—
|
—
|
—
|
(20,013
|
)
|
(20,013
|
)
|
|||||||||||
|
Comprehensive
income (loss)
|
8,683
|
859,635
|
—
|
—
|
(18,028
|
)
|
850,290
|
||||||||||||
|
Cash
distributions to General Partner and unitholders ($3.11 per
unit)
|
(8,005
|
)
|
(792,504
|
)
|
—
|
—
|
—
|
(800,509
|
)
|
||||||||||
|
Capital
contributions from General Partner
|
—
|
—
|
4,191
|
—
|
—
|
4,191
|
|||||||||||||
|
Purchases
of Holding Units to fund deferred compensation plans, net
|
16
|
(733
|
)
|
—
|
(32,536
|
)
|
—
|
(33,253
|
)
|
||||||||||
|
Compensatory
Holding Unit options expense
|
—
|
2,192
|
—
|
—
|
—
|
2,192
|
|||||||||||||
|
Amortization
of deferred compensation awards
|
—
|
—
|
—
|
53,660
|
—
|
53,660
|
|||||||||||||
|
Compensation
plan accrual
|
29
|
2,884
|
(2,913
|
)
|
—
|
—
|
—
|
||||||||||||
|
Additional
investment by Holding with proceeds from exercise of compensatory
options
to buy Holding Units
|
425
|
41,980
|
—
|
—
|
—
|
42,405
|
|||||||||||||
|
Balance
as of December 31, 2005
|
44,065
|
4,334,207
|
(31,775
|
)
|
(67,895
|
)
|
24,072
|
4,302,674
|
|||||||||||
|
Comprehensive
income (loss):
|
|||||||||||||||||||
|
Net
income
|
11,086
|
1,097,515
|
—
|
—
|
—
|
1,108,601
|
|||||||||||||
|
Other
comprehensive income (loss):
|
|||||||||||||||||||
|
Unrealized
gain (loss) on investments, net
|
—
|
—
|
—
|
—
|
5,198
|
5,198
|
|||||||||||||
|
Foreign
currency translation adjustment, net
|
—
|
—
|
—
|
—
|
10,821
|
10,821
|
|||||||||||||
|
Comprehensive
income (loss)
|
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
|
|||||
See
Accompanying Notes to Consolidated Financial Statements.
ALLIANCEBERNSTEIN
L.P.
AND
SUBSIDIARIES
Consolidated
Statements of Cash Flows
|
Years Ended December 31,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
(in
thousands)
|
||||||||||
|
Cash
flows from operating activities:
|
||||||||||
|
Net
income
|
$
|
1,108,601
|
$
|
868,318
|
$
|
705,150
|
||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||
|
Amortization
of deferred sales commissions
|
100,370
|
131,979
|
177,356
|
|||||||
|
Amortization
of deferred compensation
|
76,251
|
85,437
|
101,561
|
|||||||
|
Depreciation
and other amortization
|
72,445
|
67,980
|
74,878
|
|||||||
|
Other,
net
|
(19,898
|
)
|
(14,774
|
)
|
7,859
|
|||||
|
Changes
in assets and liabilities:
|
||||||||||
|
(Increase)
in segregated cash and securities
|
(143,148
|
)
|
(231,768
|
)
|
(203,240
|
)
|
||||
|
(Increase)
decrease in receivable from brokers and dealers
|
(324,640
|
)
|
(605,389
|
)
|
137,052
|
|||||
|
(Increase)
in receivable from brokerage clients
|
(31,974
|
)
|
(90,453
|
)
|
(21,154
|
)
|
||||
|
(Increase)
in fees receivable, net
|
(135,821
|
)
|
(65,861
|
)
|
(13,187
|
)
|
||||
|
(Increase)
in trading investments
|
(125,121
|
)
|
(135,121
|
)
|
(56,105
|
)
|
||||
|
(Increase)
in deferred sales commissions
|
(98,679
|
)
|
(74,161
|
)
|
(44,584
|
)
|
||||
|
(Increase)
in other investments
|
(115,317
|
)
|
(23,045
|
)
|
(29,996
|
)
|
||||
|
(Increase)
in other assets
|
(9,638
|
)
|
(27,645
|
)
|
(2,142
|
)
|
||||
|
(Decrease)
increase in payable to brokers and dealers
|
(422,492
|
)
|
279,926
|
(339,687
|
)
|
|||||
|
Increase
in payable to brokerage clients
|
1,035,367
|
268,608
|
761,098
|
|||||||
|
Increase
in payable to AllianceBernstein mutual funds
|
126,236
|
14,966
|
9,488
|
|||||||
|
Increase
(decrease) in accounts payable and accrued expenses
|
72,169
|
7,158
|
(267,879
|
)
|
||||||
|
Increase
(decrease) in accrued compensation and benefits, less deferred
compensation
|
39,579
|
3,927
|
(28,304
|
)
|
||||||
|
Net
cash provided by operating activities
|
1,204,290
|
460,082
|
968,164
|
|||||||
|
Cash
flows from investing activities:
|
||||||||||
|
Purchases
of investments
|
(54,803
|
)
|
(7,380
|
)
|
(27,407
|
)
|
||||
|
Proceeds
from sales of investments
|
12,812
|
12,717
|
38,046
|
|||||||
|
Additions
to furniture, equipment and leasehold improvements
|
(97,073
|
)
|
(72,586
|
)
|
(57,313
|
)
|
||||
|
Purchase
of business, net of cash acquired
|
(16,086
|
)
|
—
|
—
|
||||||
|
Net
cash used in investing activities
|
(155,150
|
)
|
(67,249
|
)
|
(46,674
|
)
|
||||
|
Cash
flows from financing activities:
|
||||||||||
|
Issuance
(repayment) of commercial paper, net
|
328,119
|
(150
|
)
|
(92
|
)
|
|||||
|
Repayment
of long-term debt
|
(408,149
|
)
|
—
|
—
|
||||||
|
Cash
distributions to General Partner and unitholders
|
(1,025,461
|
)
|
(800,509
|
)
|
(382,982
|
)
|
||||
|
Capital
contributions from General Partner
|
4,303
|
4,191
|
5,901
|
|||||||
|
Additional
investment by Holding with proceeds from exercise of compensatory
options
to buy Holding Units
|
100,469
|
42,405
|
46,705
|
|||||||
|
Purchases
of Holding Units to fund deferred compensation plans, net
|
(22,345
|
)
|
(33,253
|
)
|
(45,080
|
)
|
||||
|
Net
cash used in financing activities
|
(1,023,064
|
)
|
(787,316
|
)
|
(375,548
|
)
|
||||
|
Effect
of exchange rate changes on cash and cash equivalents
|
12,414
|
(12,872
|
)
|
12,723
|
||||||
|
Net
increase (decrease) in cash and cash equivalents
|
38,490
|
(407,355
|
)
|
558,665
|
||||||
|
Cash
and cash equivalents as of beginning of the period
|
654,168
|
1,061,523
|
502,858
|
|||||||
|
Cash
and cash equivalents as of end of the period
|
$
|
692,658
|
$
|
654,168
|
$
|
1,061,523
|
||||
|
Cash
paid:
|
||||||||||
|
Interest
|
$
|
229,009
|
$
|
122,152
|
$
|
55,102
|
||||
|
Income
taxes
|
59,704
|
56,521
|
33,516
|
|||||||
|
Non-cash
financing activities:
|
||||||||||
|
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. and
AllianceBernstein L.P. and its subsidiaries, 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.
|
Organization
and Business Description
|
AllianceBernstein
provides research, diversified investment management and related services
globally to a broad range of clients. Its principal services are:
|
·
|
Institutional
Investments Services - servicing institutional investors, 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, group trusts, mutual funds (sponsored by AllianceBernstein
or
our affiliated joint venture companies), and other investment
vehicles.
|
|
·
|
Retail
Services - servicing individual investors, primarily by means of
retail
mutual funds sponsored by AllianceBernstein or our affiliated joint
venture companies, sub-advisory relationships in respect of mutual
funds
sponsored by third parties, separately managed account programs that
are
sponsored by various financial intermediaries worldwide, and other
investment vehicles.
|
|
·
|
Private
Client Services - servicing 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 institutional investors desiring
institutional research services including in-depth, independent,
fundamental research, portfolio strategy, trading, and brokerage-related
services.
|
We
also
provide distribution, shareholder servicing, and administrative services to
our
sponsored mutual funds.
We
provide a broad range of investment services with expertise in:
|
·
|
Growth
equities, generally targeting stocks with under-appreciated growth
potential;
|
|
·
|
Value
equities, generally targeting stocks that are out of favor and that
may trade at bargain prices;
|
|
·
|
Fixed
income securities, including both taxable and tax-exempt
securities;
|
|
·
|
Passive
management, including both index and enhanced index strategies;
and
|
|
·
|
Blend
strategies, combining style pure investment components with systematic
rebalancing.
|
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
high-quality, in-depth fundamental research is the foundation of our business.
AllianceBernstein’s research disciplines include fundamental research,
quantitative research, economic research, and currency forecasting capabilities.
In addition, AllianceBernstein has created several specialist 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.
As
of
December 31, 2006, 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 1.7%
of the issued and outstanding Holding Units.
As
of
December 31, 2006, the ownership of AllianceBernstein, as a percentage of
general and limited partnership interests, was as follows:
|
AXA
and its subsidiaries
|
59.7
|
%
|
||
|
Holding
|
32.8
|
|||
|
SCB
Partners Inc. (a wholly-owned subsidiary of SCB Inc.; formerly known
as
Sanford
C. Bernstein Inc.)
|
6.2
|
|||
|
Other
|
1.3
|
|||
|
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. Each general partnership unit in
Holding is entitled to receive quarterly distributions equal to those received
by each limited partnership unit. Including the general partnership interests
in
AllianceBernstein and Holding, and their equity interest in Holding, as of
December 31, 2006, AXA and its subsidiaries had an approximate 60.3%
economic interest in AllianceBernstein.
|
2.
|
Summary
of Significant Accounting
Policies
|
Basis
of Presentation
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.
The
equity method of accounting is used for unconsolidated joint ventures and,
in
accordance with Emerging Issues Task Force D-46, “Accounting
for Limited Partnership Investments”,
for
investments made in limited partnership hedge funds that we sponsor and manage.
The investments are included in “other investments” on the consolidated balance
sheets and the related investment income and gains and losses are included
in
“other revenues” on the consolidated statements of income.
Variable
Interest Entities
In
accordance with 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 include certain mutual fund products, hedge
funds, structured products, group trusts, and joint ventures.
We
derive
no benefit from client assets under management of these entities other than
investment management fees and cannot utilize those assets in our
operations.
As
of
December 31, 2006, we have significant variable interests in certain structured
products and hedge funds with approximately $226.4 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. 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 and highly liquid
investments including money market accounts 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
Investments,
principally investments in United States Treasury Bills, unconsolidated
company-sponsored mutual funds and securities held by consolidated
company-sponsored mutual funds, are classified as either trading or
available-for-sale securities. The trading investments are stated at fair value
with unrealized gains and losses reported in net income. Available-for-sale
investments are stated at fair value 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.
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. AXA Financial purchased approximately 32.6 million newly issued
AllianceBernstein Units for $1.6 billion on June 21, 2000, to fund the cash
portion of the purchase price.
The
Bernstein Transaction was accounted for under the purchase method with the
results of Bernstein included in the consolidated financial statements from
the
acquisition date. The cost of the acquisition was allocated on the basis of
the
estimated fair value of the assets acquired and the liabilities assumed.
Portions of the purchase price were identified as net tangible assets of $0.1
billion and costs assigned to contracts acquired of $0.4 billion. 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.
During
the second quarter of 2006, we made an acquisition which resulted in the
recognition of approximately $16.4 million of goodwill (see
Note 20).
In
accordance with Statement of Financial Accounting Standards No. 142 (“SFAS
No. 142”), “Goodwill
and Other Intangible Assets”,
we test
goodwill at least annually, as of September 30, for impairment. As of
September 30, 2006, the impairment test indicated that goodwill was not
impaired. Also, as of December 31, 2006, management believes that goodwill
was not impaired. However, future tests may be based upon different assumptions
which may or may not result in an impairment of this asset. Any impairment
could
reduce materially the recorded amount of the goodwill asset with a corresponding
charge to our earnings.
Intangible
Assets, Net
Intangible
assets consist primarily of costs assigned to investment management contracts
of
SCB Inc. less accumulated amortization. In order to determine the fair market
value and the remaining useful lives of these investment management contracts,
we performed an analysis as of the acquisition date that considered the
following factors:
|
·
|
The
nature and characteristics of the intangible assets,
including:
|
|
·
|
The
historical and expected future economic benefits associated with
the
assets as of the valuation date,
|
|
·
|
The
historical and expected attrition associated with the assets,
and
|
|
·
|
Any
special rights associated with the
assets;
|
|
·
|
The
historical and then-current financial condition and operating results
of
SCB Inc.;
|
|
·
|
Discussions
with management of SCB Inc. and others to augment our understanding
of the
nature of the intangible assets;
and
|
|
·
|
Reviews
of market data and other available information relating to SCB Inc.
and
the investment management industry.
|
As
a
result of the analysis, management determined that the intangible assets have
an
estimated useful life of approximately 20 years.
The
gross
carrying amount of intangible assets subject to amortization totaled $414.3
million and $414.0 million as of December 31, 2006 and 2005,
respectively, and accumulated amortization was $129.4 million as of
December 31, 2006 and $108.7 million as of December 31, 2005,
resulting in the net carrying amount of intangible assets subject to
amortization of $284.9 million as of December 31, 2006 and $305.3 million as
of
December 31, 2005. Amortization expense was $20.7 million for each of the
years ended December 31, 2006, 2005, and 2004, and estimated amortization
expense for each of the next five years is approximately
$20.7 million.
Management
tests intangible assets for impairment quarterly. As of December 31, 2006,
management believes that intangible assets were not impaired. However, future
tests may be based upon different assumptions which may or may not 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.
Significant assumptions utilized to estimate the company’s future average assets
under management and undiscounted future cash flows from back-end load shares
include expected future market performance and redemption rates. 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. Management considers the results of these analyses performed
at various dates. If management determines in the future that an impairment
exists, a loss would be recorded. The amount of the 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.
Loss
Contingencies
With
respect to all significant litigation matters, we conduct a probability
assessment of 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 (“SFAS No. 5”), “Accounting
for Contingencies”,
and
Financial Accounting Standards Board (“FASB”) Interpretation No. 14 (“FIN
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
indicate 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.
Revenue
Recognition
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 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
of a stated benchmark over a specified period of time. Performance-based fees
are recorded as revenue at the end of each measurement period. Institutional
research services revenue consists of brokerage transaction charges received
by
SCB LLC and SCBL for in-depth 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 interest income are accrued as earned.
Mutual
Fund Underwriting Activities
Purchases
and sales of shares of our 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 our mutual funds are generally realized within three business days from
trade
date, in conjunction with the settlement of the related payables to our 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 among notional investments in Holding Units,
certain of our investment services we provide to our clients, or a money market
fund, or investments in options to buy Holding Units. We typically purchase
the
investments that are notionally elected by the participants and hold such
investments, which are classified as trading securities, in a consolidated
rabbi
trust. Vesting periods for annual awards range from immediate to four years,
depending on the terms of the individual awards, the age of the participants,
or
in the case of our 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 of 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), is recognized on a straight-line basis over the applicable
vesting periods. Mark-to-market gains or losses on notional investments (other
than in Holding Units) are recognized currently as investment gains (losses)
in
the consolidated statements of income.
Compensatory
Option Plans
In
December 2004, the FASB issued Statement of Financial Accounting Standards
No. 123 (revised 2004), (“SFAS No. 123-R”), “Share
Based Payment”.
SFAS
No. 123-R requires that compensation cost related to share-based payments,
based on the fair value of the equity instruments issued, be recognized in
financial statements. SFAS No. 123-R supersedes Accounting Principles Board
Opinion No. 25 (“APB No. 25”), “Accounting
for Stock Issued to Employees”,
and
its related implementation guidance. We adopted SFAS No. 123-R effective
January 1, 2006 utilizing the modified prospective method. Prior period
amounts have not been restated.
Prior
to
January 1, 2006, we utilized the fair value method of recording compensation
expense (including a straight-line amortization policy), related to compensatory
option awards of Holding Units granted subsequent to 2001, as permitted by
Statement of Financial Accounting Standards No. 123
(“SFAS No. 123”), “Accounting
for Stock-Based Compensation”,
as
amended by Statement of Financial Accounting Standards No. 148
(“SFAS No. 148”), “Accounting
for Stock-Based Compensation—Transition and Disclosure”.
Under
the fair value method, compensation 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 over the vesting period.
For
compensatory option awards granted prior to 2002, we applied the provisions
of
APB No. 25, under which compensation expense is recognized only if the
market value of the underlying Holding Units exceeds the exercise price at
the
date of grant. We did not record compensation expense for compensatory option
awards made prior to 2002 because those options were granted with exercise
prices equal to the market value of the underlying Holding Units on the date
of
grant. Had we recorded compensation expense for those options based on their
fair value at grant date under SFAS No. 123, net income for 2005 and
2004 would have been reduced to the pro forma amounts indicated
below:
|
Years Ended December 31,
|
|||||||
|
2005
|
2004
|
||||||
|
(in thousands, except
per unit amounts)
|
|||||||
|
SFAS
No. 123 pro forma net income:
|
|||||||
|
Net
income as reported
|
$
|
868,318
|
$
|
705,150
|
|||
|
Add:
stock-based compensation expense included in net income, net of
tax
|
2,040
|
2,231
|
|||||
|
Deduct:
total stock-based compensation expense determined under fair value
method
for all awards, net of tax
|
(3,918
|
)
|
(7,132
|
)
|
|||
|
SFAS
No. 123 pro forma net income
|
$
|
866,440
|
$
|
700,249
|
|||
|
Net
income per unit:
|
|||||||
|
Basic
net income per unit as reported
|
$
|
3.37
|
$
|
2.76
|
|||
|
Basic
net income per unit pro forma
|
$
|
3.37
|
$
|
2.74
|
|||
|
Diluted
net income per unit as reported
|
$
|
3.35
|
$
|
2.74
|
|||
|
Diluted
net income per unit pro forma
|
$
|
3.34
|
$
|
2.72
|
|||
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 losses were
$0.2
million, $0.7 million, and $1.8 million for 2006, 2005, and 2004,
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 its
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 24, 2007, the General Partner declared a distribution of $418.7
million, or $1.60 per AllianceBernstein Unit, representing a distribution from
Available Cash Flow for the three months ended December 31, 2006. The
distribution was paid on February 15, 2007 to holders of record as of
February 5, 2007.
Comprehensive
Income
Total
accumulated other comprehensive income is reported in the consolidated
statements of changes in partners’ capital and comprehensive income and includes
net income, 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. The accumulated
balance of comprehensive income items is displayed separately in the partners’
capital section of the consolidated statements of financial
condition.
Reclassifications
Certain
prior period amounts have been reclassified to conform to the current period
presentation. These include the following reclassifications in the consolidated
statements of income:
|
•
|
the
reclassification of $31.5 million and $116.5 million of transaction
charge
revenues from investment advisory and services fees to institutional
research services for the years ended December 31, 2005 and 2004,
respectively;
|
|
•
|
gains
on dispositions (previously included in other revenues) and related
expenses (previously included in employee compensation and benefits
and
general and administrative) are now classified as non-operating
income;
|
|
•
|
dividend
and interest income, investment gains and losses, and broker-dealer
related interest expense, previously included in other revenues,
are now
shown separately; and
|
|
•
|
shareholder
servicing fees ($99.4 million and $116.0 million for the years ended
December 31, 2005 and 2004, respectively), previously shown separately,
are now included in other revenues.
|
|
3.
|
Cash
and Securities Segregated Under Federal Regulations and Other
Requirements
|
As
of
December 31, 2006 and 2005, $1.9 billion and $1.7 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”). During the first week of January 2007, we deposited an additional $0.2
billion in United States Treasury Bills in this special account pursuant to
Rule
15c 3-3 requirements.
|
4.
|
Net
Income Per Unit
|
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
as
follows:
|
Years Ended December 31,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
(in thousands, except per unit amounts)
|
||||||||||
|
Net
income
|
$
|
1,108,601
|
$
|
868,318
|
$
|
705,150
|
||||
|
Weighted
average units outstanding—basic
|
257,719
|
254,883
|
253,121
|
|||||||
|
Dilutive
effect of compensatory options
|
2,243
|
1,714
|
1,644
|
|||||||
|
Weighted
average units outstanding—diluted
|
259,962
|
256,597
|
254,765
|
|||||||
|
Basic
net income per unit
|
$
|
4.26
|
$
|
3.37
|
$
|
2.76
|
||||
|
Diluted
net income per unit
|
$
|
4.22
|
$
|
3.35
|
$
|
2.74
|
||||
As
of
December 31, 2006, there were no out-of-the-money options (i.e., options with
an
exercise price greater than the weighted average closing price of a unit for
the
year). As of December 31, 2005 and 2004, we excluded 3,950,100 and 4,336,500
out-of-the-money options, respectively, from the diluted net income per unit
computation due to their anti-dilutive effect.
|
5.
|
Receivables,
Net and Payables
|
Receivables,
net are comprised of:
|
December 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(in
thousands)
|
|||||||
|
Brokers
and dealers:
|
|||||||
|
Collateral
for securities borrowed (fair value $2,117,885 in 2006 and $1,893,594
in
2005)
|
$
|
2,182,167
|
$
|
1,966,000
|
|||
|
Other
|
263,385
|
127,461
|
|||||
|
Total
brokers and dealers
|
2,445,552
|
2,093,461
|
|||||
|
Brokerage
clients
|
485,446
|
429,586
|
|||||
|
Fees,
net:
|
|||||||
|
AllianceBernstein
mutual funds
|
180,260
|
143,737
|
|||||
|
Unaffiliated
clients (net of allowance of $1,113 in 2006 and $939 in 2005)
|
369,690
|
262,279
|
|||||
|
Affiliated
clients
|
7,330
|
7,182
|
|||||
|
Total
fees receivable, net
|
557,280
|
413,198
|
|||||
|
Total
receivables, net
|
$
|
3,488,278
|
$
|
2,936,245
|
|||
Payables
are comprised of:
|
December 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(in
thousands)
|
|||||||
|
Brokers
and dealers:
|
|||||||
|
Collateral
for securities loaned (fair value $470,798 in 2006 and $942,985 in
2005)
|
$
|
489,093
|
$
|
976,985
|
|||
|
Other
|
172,697
|
80,289
|
|||||
|
Total
brokers and dealers
|
661,790
|
1,057,274
|
|||||
|
Brokerage
clients
|
3,988,032
|
2,929,500
|
|||||
|
AllianceBernstein
mutual funds
|
266,849
|
140,603
|
|||||
|
Total
payables
|
$
|
4,916,671
|
$
|
4,127,377
|
|||
|
6.
|
Investments
|
As
of
December 31, 2006 and 2005, investments consisted of investments
available-for-sale, principally company-sponsored mutual funds, and trading
investments, principally United States Treasury Bills and company-sponsored
mutual funds. As of December 31, 2006 and 2005, United States Treasury Bills
with a fair market value of $17.0 million and $16.9 million, respectively,
were
on deposit with various clearing organizations.
The
following is a summary of the cost and fair value of investments as of
December 31, 2006 and 2005:
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
||||||||||
|
(in thousands)
|
|||||||||||||
|
December 31,
2006:
|
|||||||||||||
|
Available-for-sale:
|
|||||||||||||
|
Equity
investments
|
$
|
39,232
|
$
|
8,665
|
$
|
(3
|
)
|
$
|
47,894
|
||||
|
Fixed
income investments
|
31,476
|
486
|
(5
|
)
|
31,957
|
||||||||
|
70,708
|
9,151
|
(8
|
)
|
79,851
|
|||||||||
|
Trading:
|
|||||||||||||
|
Equity
investments
|
407,790
|
34,264
|
(9,921
|
)
|
432,133
|
||||||||
|
Fixed
income investments
|
31,155
|
517
|
(3
|
)
|
31,669
|
||||||||
|
438,945
|
34,781
|
(9,924
|
)
|
463,802
|
|||||||||
|
Total
investments
|
$
|
509,653
|
$
|
43,932
|
$
|
(9,932
|
)
|
$
|
543,653
|
||||
|
December 31,
2005:
|
|||||||||||||
|
Available-for-sale:
|
|||||||||||||
|
Equity
investments
|
$
|
26,787
|
$
|
3,777
|
$
|
(18
|
)
|
$
|
30,546
|
||||
|
Fixed
income investments
|
1,102
|
181
|
(5
|
)
|
1,278
|
||||||||
|
27,889
|
3,958
|
(23
|
)
|
31,824
|
|||||||||
|
Trading:
|
|||||||||||||
|
Equity
investments
|
262,153
|
23,701
|
(3,135
|
)
|
282,719
|
||||||||
|
Fixed
income investments
|
30,503
|
290
|
(291
|
)
|
30,502
|
||||||||
|
292,656
|
23,991
|
(3,426
|
)
|
313,221
|
|||||||||
|
Total
investments
|
$
|
320,545
|
$
|
27,949
|
$
|
(3,449
|
)
|
$
|
345,045
|
||||
Proceeds
from sales of investments available-for-sale were approximately $12.8 million,
$12.7 million, and $38.0 million in 2006, 2005, and 2004, respectively. Net
realized gains from our sales of available-for-sale investments were $1.0
million, $0.9 million, and $2.4 million in 2006, 2005, and 2004,
respectively.
We
assess
valuation declines to determine the extent to which such declines are
fundamental to the underlying investment or attributable to market-related
factors. Based on this assessment, we do not believe the declines are other
than
temporary.
|
7.
|
Furniture,
Equipment and Leasehold Improvements,
Net
|
Furniture,
equipment and leasehold improvements, net are comprised of:
|
December 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(in thousands)
|
|||||||
|
Furniture
and equipment
|
$
|
426,848
|
$
|
369,092
|
|||
|
Leasehold
improvements
|
254,421
|
217,137
|
|||||
|
681,269
|
586,229
|
||||||
|
Less:
Accumulated depreciation and amortization
|
(392,694
|
)
|
(349,920
|
)
|
|||
|
Furniture,
equipment and leasehold improvements, net
|
$
|
288,575
|
$
|
236,309
|
|||
Depreciation
and amortization expense on furniture, equipment, and leasehold improvements
were $43.8 million, $45.8 million, and $52.7 million for the years ended
December 31, 2006, 2005, and 2004, respectively.
|
8.
|
Deferred
Sales Commissions, Net
|
The
components of deferred sales commissions, net for the years ended
December 31, 2006 and 2005 were as follows:
|
December 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(in thousands)
|
|||||||
|
Gross
carrying amount of deferred sales commissions
|
$
|
530,231
|
$
|
692,148
|
|||
|
Less:
Accumulated amortization
|
(250,626
|
)
|
(421,620
|
)
|
|||
|
Cumulative
CDSC received
|
(84,655
|
)
|
(73,891
|
)
|
|||
|
Deferred
sales commissions, net
|
$
|
194,950
|
$
|
196,637
|
|||
Amortization
expense was $100.4 million, $132.0 million, and $177.4 million for the
years ended December 31, 2006, 2005, and 2004, respectively. Estimated
future amortization expense related to the December 31, 2006 net asset
balance is as follows (in thousands):
|
2007
|
$
|
77,776
|
||
|
2008
|
54,145
|
|||
|
2009
|
39,303
|
|||
|
2010
|
18,334
|
|||
|
2011
|
4,866
|
|||
|
2012
|
526
|
|||
|
$
|
194,950
|
|
9.
|
Other
Investments
|
Other
investments consist of investments made primarily to seed limited partnership
hedge funds that we sponsor and manage, securities held by a consolidated
venture capital fund, and investments in unconsolidated joint ventures. The
components of other investments as of December 31, 2006 and 2005 were as
follows:
|
December 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(in thousands)
|
|||||||
|
Investments
in sponsored partnerships and other investments
|
$
|
168,324
|
$
|
77,856
|
|||
|
Securities
held by a consolidated venture capital fund
|
33,996
|
—
|
|||||
|
Investments
in unconsolidated affiliates
|
1,630
|
8,513
|
|||||
|
Other
investments
|
$
|
203,950
|
$
|
86,369
|
|||
|
10.
|
Debt
|
Total
available credit, debt outstanding and weighted average interest rates as of
December 31, 2006 and 2005 were as follows:
|
December 31,
|
|||||||||||||||||||
|
2006
|
2005
|
||||||||||||||||||
|
Credit
Available
|
Debt
Outstanding
|
Interest
Rate
|
Credit
Available
|
Debt
Outstanding
|
Interest
Rate
|
||||||||||||||
|
(in millions)
|
|||||||||||||||||||
|
Senior
notes
|
$
|
200.0
|
$
|
—
|
—
|
%
|
$
|
600.0
|
$
|
399.7
|
5.6
|
%
|
|||||||
|
Commercial
paper(1)
|
800.0
|
334.9
|
5.3
|
425.0
|
—
|
—
|
|||||||||||||
|
Revolving
credit facility(1)
|
—
|
—
|
—
|
375.0
|
—
|
—
|
|||||||||||||
|
Extendible
commercial notes
|
100.0
|
—
|
—
|
100.0
|
—
|
—
|
|||||||||||||
|
Other
|
—
|
—
|
—
|
n/a
|
7.6
|
4.6
|
|||||||||||||
|
Total
|
$
|
1,100.0
|
$
|
334.9
|
5.3
|
$
|
1,500.0
|
$
|
407.3
|
5.6
|
|||||||||
____________________
|
(1)
|
Our
revolving credit facility supports our commercial paper program;
amounts
borrowed under the commercial paper program reduce amounts available
for
other purposes under the revolving credit facility on a dollar-for-dollar
basis.
|
In
August 2001, we issued $400 million 5.625% Notes (“Senior Notes”) pursuant
to a shelf registration statement that originally permitted us to issue up
to
$600 million in senior debt securities. The Senior Notes matured in August
2006,
and were retired using cash flow from operations and proceeds from the issuance
of commercial paper. We currently have $200 million available under the shelf
registration statement for future issuances.
In
February 2006, we entered into an $800 million five-year revolving credit
facility with a group of commercial banks and other lenders. The revolving
credit facility is intended to provide back-up liquidity for our commercial
paper program, which we increased from $425 million to $800 million in
May 2006. Under the revolving credit facility, the 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, 2006.
As
of
December 31, 2006, we maintained a $100 million extendible commercial notes
(“ECN”) program as a supplement to our commercial paper program. ECNs are
short-term uncommitted debt instruments that do not require back-up liquidity
support.
In
2006,
SCB LLC entered into four separate uncommitted credit facility agreements with
various banks, each for $100 million. As of December 31, 2006, there were no
amounts outstanding under these credit facilities. During January and February
of 2007, SCB LLC increased three of the agreements to $200 million each and
entered into an additional agreement for $100 million with a new
bank.
|
11.
|
Commitments
and Contingencies
|
Operating
Leases
We
lease
office space, furniture and office equipment under various operating leases.
The
future minimum payments under non-cancelable leases, sublease commitments,
and
payments, net of sublease commitments as of December 31, 2006 are as
follows:
|
Payments
|
Sublease
|
Net
Payments
|
||||||||
|
(in millions)
|
||||||||||
|
2007
|
$
|
100.7
|
$
|
3.9
|
$
|
96.8
|
||||
|
2008
|
101.8
|
3.3
|
98.5
|
|||||||
|
2009
|
96.5
|
3.0
|
93.5
|
|||||||
|
2010
|
98.3
|
3.0
|
95.3
|
|||||||
|
2011
|
95.6
|
3.0
|
92.6
|
|||||||
|
2012
and thereafter
|
1,406.3
|
16.1
|
1,390.2
|
|||||||
|
Total
future minimum payments
|
$
|
1,899.2
|
$
|
32.3
|
$
|
1,866.9
|
||||
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 $99.7 million, $76.0
million, and $78.5 million, respectively, for the years ended December 31,
2006, 2005, and 2004, respectively, net of sublease income of $3.7 million,
$5.9
million, and $5.3 million for the years ended December 31, 2006, 2005, and
2004, respectively.
Deferred
Sales Commission Asset
Payments
of sales commissions made by AllianceBernstein Investments, Inc.
(“AllianceBernstein Investments”), a wholly-owned subsidiary of
AllianceBernstein, 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 $195.0 million and $196.6 million as of December 31,
2006 and 2005, 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 $23.7
million, $21.4 million, and $32.9 million, respectively, totaled approximately
$98.7 million, $74.2 million, and $44.6 million during 2006, 2005, and
2004, respectively.
Management
tests the deferred sales commission asset for recoverability quarterly.
Significant assumptions utilized to estimate the company’s future average assets
under management and undiscounted future cash flows from back-end load shares
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, 2006,
management used average market return assumptions of 5% for fixed income and
8%
for equity 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 24% to 26% for U.S. fund shares and
21%
to 29% for non-U.S. fund shares, determined by reference to actual redemption
experience over the five-year, three-year, and one-year periods ended
December 31, 2006, calculated as a percentage of the company’s 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, 2006, management determined that the
deferred sales commission asset was not 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
2006, U.S. equity markets increased by approximately 15.8% as measured by the
change in the Standard & Poor’s 500 Stock Index and U.S. fixed income
markets increased by approximately 4.3% as measured by the change in the Lehman
Brothers’ Aggregate Bond Index. The redemption rate for domestic back-end load
shares was 25.0% in 2006. Non-U.S. capital markets increases ranged from 20.1%
to 32.2% as measured by the MSCI World, Emerging Market, and EAFE Index. The
redemption rate for non-U.S. back-end load shares was 29.1% in 2006. 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
With
respect to all significant litigation matters, we conduct a probability
assessment of 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 SFAS No. 5 and FIN No. 14. If the
likelihood of a negative outcome is reasonably possible and we are able to
indicate 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.
On
April 8, 2002, In
re
Enron Corporation Securities Litigation,
a
consolidated complaint (as subsequently amended, “Enron Complaint”) was filed in
the United States District Court for the Southern District of Texas, Houston
Division, against numerous defendants, including AllianceBernstein, alleging
that AllianceBernstein violated Sections 11 and 15 of the Securities Act of
1933, as amended (“Securities Act”), with respect to a registration statement
filed by Enron Corp. On January 2, 2007, the court issued a final judgment
dismissing the Enron Complaint as the allegations therein pertained to
AllianceBernstein. The parties have agreed that there will be no
appeal.
Market
Timing-related Matters
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 AllianceBernstein, Holding, the General Partner,
AXA Financial, the AllianceBernstein-sponsored mutual funds (“U.S. Funds”) that
are registered under the Investment Company Act of 1940, as amended (“Investment
Company Act”), the registrants and issuers of those funds, certain officers of
AllianceBernstein (“AllianceBernstein defendants”), and certain unaffiliated
defendants, as well as unnamed Doe defendants. The Hindo Complaint was filed
in
the United States District Court for the Southern District of New York by
alleged shareholders of two of the U.S. Funds. The Hindo Complaint alleges
that
certain of the AllianceBernstein defendants failed to disclose that they
improperly allowed certain hedge funds and other unidentified parties to engage
in “late trading” and “market timing” of U.S. Fund securities, violating
Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of
the Exchange Act, and Sections 206 and 215 of the Investment Advisers Act of
1940, as amended (“Advisers Act”). Plaintiffs seek an unspecified amount of
compensatory damages and rescission of their contracts with AllianceBernstein,
including recovery of all fees paid to AllianceBernstein pursuant to such
contracts.
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. All state court
actions against AllianceBernstein either were voluntarily dismissed or removed
to federal court. On February 20, 2004, the Judicial Panel on Multidistrict
Litigation transferred all federal actions to the United States District Court
for the District of Maryland (“Mutual Fund MDL”). 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. All four complaints included substantially identical factual
allegations, which appear to be based in large part on the Order of the U.S.
Securities and Exchange Commission (“SEC”) dated December 18, 2003 (as amended
and restated January 15, 2004, “SEC Order”) and the New York State Attorney
General Assurance of Discontinuance dated September 1, 2004 (“NYAG AoD”).
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 (“MOU”) 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.
On
April 11, 2005, a complaint entitled
The
Attorney General of the State of West Virginia v. AIM Advisors, Inc., et
al.
(“WVAG
Complaint”) was filed against AllianceBernstein, Holding, and various
unaffiliated defendants. The WVAG Complaint was filed in the Circuit Court
of
Marshall County, West Virginia by the Attorney General of the State of West
Virginia. The WVAG Complaint makes factual allegations generally similar to
those in the Hindo Complaint. On October 19, 2005, the WVAG Complaint was
transferred to the Mutual Fund MDL. On August 30, 2005, the WV Securities
Commissioner signed a Summary Order to Cease and Desist, and Notice of Right
to
Hearing (“Summary Order”) addressed to AllianceBernstein and Holding. The
Summary Order claims that AllianceBernstein and Holding violated the West
Virginia Uniform Securities Act and makes factual allegations generally
similar to those in the SEC Order and NYAG AoD. On January 25, 2006,
AllianceBernstein and Holding moved to vacate the Summary Order. In early
September 2006, the court denied this motion, and the Supreme Court of Appeals
in West Virginia denied our petition for appeal. On September 22, 2006, we
filed
an answer and moved to dismiss the Summary Order with the WV Securities
Commissioner.
We
intend
to vigorously defend against the allegations in the WVAG Complaint and the
Summary Order. At the present time, we are unable to predict the outcome or
estimate a possible loss or range of loss in respect of these matters because
of
the inherent uncertainty regarding the outcome of complex litigation, the fact
that plaintiffs did not specify an amount of damages sought in their complaint,
and the fact that, to date, we have not engaged in settlement
negotiations.
Revenue
Sharing-related Matters
On
June 22, 2004, a purported class action complaint entitled
Aucoin, et al. v. Alliance Capital Management L.P., et al.
(“Aucoin Complaint”) was filed against AllianceBernstein, Holding, the General
Partner, AXA Financial, AllianceBernstein Investments, certain current and
former directors of the U.S. Funds, and unnamed Doe defendants. The Aucoin
Complaint names the U.S. Funds as nominal defendants. The Aucoin Complaint
was
filed in the United States District Court for the Southern District of New
York
by alleged shareholders of the AllianceBernstein Growth & Income Fund.
The Aucoin Complaint alleges, among other things, (i) that certain of the
defendants improperly authorized the payment of excessive commissions and other
fees from U.S. Fund assets to broker-dealers in exchange for preferential
marketing services, (ii) that certain of the defendants misrepresented and
omitted from registration statements and other reports material facts concerning
such payments, and (iii) that certain defendants caused such conduct as
control persons of other defendants. The Aucoin Complaint asserts claims for
violation of Sections 34(b), 36(b) and 48(a) of the Investment Company
Act, Sections 206 and 215 of the Advisers Act, breach of common law fiduciary
duties, and aiding and abetting breaches of common law fiduciary duties.
Plaintiffs seek an unspecified amount of compensatory damages and punitive
damages, rescission of their contracts with AllianceBernstein, including
recovery of all fees paid to AllianceBernstein pursuant to such contracts,
an
accounting of all U.S. Fund-related fees, commissions and soft dollar payments,
and restitution of all unlawfully or discriminatorily obtained fees and
expenses.
On
February 2, 2005, plaintiffs filed a consolidated amended class action
complaint (“Aucoin Consolidated Amended Complaint”) that asserted claims
substantially similar to the Aucoin Complaint and nine additional
subsequently-filed lawsuits. On October 19, 2005, the United States
District Court for the Southern District of New York dismissed each of the
claims set forth in the Aucoin Consolidated Amended Complaint, except for
plaintiffs’ claim under Section 36(b) of the Investment Company Act.
On January 11, 2006, the District Court granted defendants’ motion for
reconsideration and dismissed the remaining Section 36(b) claim. On
May 31, 2006, the District Court denied plaintiffs’ motion for leave to file
their amended complaint. On July 5, 2006, plaintiffs filed a notice of appeal,
which was subsequently withdrawn subject to plaintiffs’ right to reinstate it at
a later date.
We
believe that plaintiffs’ allegations in the Aucoin Consolidated Amended
Complaint are without merit and intend to vigorously defend against these
allegations. 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, the fact
that plaintiffs did not specify an amount of damages sought in their complaint,
and the fact that, to date, we have not engaged in settlement
negotiations.
We
are
involved in various other matters, including employee arbitrations, regulatory
inquiries, administrative proceedings, and litigation, some of which allege
material damages. While any proceeding or litigation has the element of
uncertainty, we believe that the outcome of any one of the other 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 a $56.0 million pre-tax charge as
general and administrative expense 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. The charge and related income tax
benefit decreased 2006 net income and diluted net income per unit by $54.5
million and $0.21, respectively. Our
estimate of the cost is based on our review to date; as we continue our review,
our estimate and the ultimate cost we incur may change. We believe that
most of this cost will ultimately be recovered from residual settlement proceeds
and insurance.
|
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, 2006, SCB LLC had net
capital of $154.1 million, which was $112.6 million in excess of the
minimum net capital requirement of $41.5 million. Advances, dividend
payments and other equity withdrawals by SCB LLC are restricted by the
regulations of the SEC, NYSE, and other securities agencies. As of
December 31, 2006, $103.7 million was not available for payment of
cash dividends and advances.
SCBL
is a
member of the London Stock Exchange. As of December 31, 2006, SCBL was
subject to financial resources requirements of $16.0 million imposed by the
Financial Services Authority of the United Kingdom and had aggregate regulatory
financial resources of $30.7 million, an excess of $14.7 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, 2006 was $42.4 million, which was $20.8 million in
excess of its required net capital of $21.6 million.
|
13.
|
Counterparty
Risk
|
Customer
Activities
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, which
constitute the majority of the receivables from and payable to brokers and
dealers, 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.
|
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
generally limited to the maximum amount deductible for federal income tax
purposes. Aggregate contributions for 2006, 2005, and 2004 were $25.3 million,
$22.0 million, and $21.1 million, 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 and primary
Social Security benefits. 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,
funded status and amounts recognized in the consolidated statements of financial
condition were as follows:
|
Years Ended December 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(in thousands)
|
|||||||
|
Change
in projected benefit obligation:
|
|||||||
|
Projected
benefit obligation at beginning of year
|
$
|
83,815
|
$
|
81,204
|
|||
|
Service
cost
|
4,048
|
4,268
|
|||||
|
Interest
cost
|
4,578
|
4,274
|
|||||
|
Actuarial
gains
|
(4,916
|
)
|
(3,685
|
)
|
|||
|
Benefits
paid
|
(2,842
|
)
|
(2,246
|
)
|
|||
|
Projected
benefit obligation at end of year
|
84,683
|
83,815
|
|||||
|
Change
in plan assets:
|
|||||||
|
Plan
assets at fair value at beginning of year
|
47,406
|
40,665
|
|||||
|
Actual
return on plan assets
|
4,414
|
5,487
|
|||||
|
Employer
contribution
|
4,337
|
3,500
|
|||||
|
Benefits
paid
|
(2,842
|
)
|
(2,246
|
)
|
|||
|
Plan
assets at fair value at end of year
|
53,315
|
47,406
|
|||||
|
Projected
benefit obligation in excess of plan assets
|
(31,368
|
)
|
(36,409
|
)
|
|||
|
Amounts
not recognized:
|
|||||||
|
Unrecognized
net loss from past experience different from that assumed and effects
of
changes and assumptions
|
—
|
13,728
|
|||||
|
Unrecognized
prior service cost
|
—
|
307
|
|||||
|
Unrecognized
net plan assets as of January 1, 1987 being recognized over 26.3
years
|
—
|
(1,048
|
)
|
||||
|
Accrued
pension liability included in accrued compensation and
benefits
|
$
|
(31,368
|
)
|
$
|
(23,422
|
)
|
|
We
adopted Statement of Financial Accounting Standards No. 158, “Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans, an
amendment of FASB Statements No. 87, 88, 106, and 132(R)”,
(“SFAS
No. 158”), as of December 31, 2006. This pronouncement requires an employer to
recognize the underfunded status of a defined benefit plan as a liability in
its
statement of financial position and to recognize changes in that funded status
in the year in which the changes occur as a component of other comprehensive
income.
The
effect of adopting SFAS No. 158 on individual line items in the consolidated
statement of financial condition was as follows (in thousands):
|
Before
Application
of
SFAS
No. 158
|
Adjustments
|
After
Application
of
SFAS
No. 158
|
||||||||
|
Other
assets (deferred tax asset)
|
$
|
146,674
|
$
|
456
|
$
|
147,130
|
||||
|
Accrued
compensation and benefits
|
384,634
|
7,380
|
392,014
|
|||||||
|
Accumulated
other comprehensive income (loss)
|
40,091
|
(6,924
|
)
|
33,167
|
||||||
The
amounts included in accumulated other comprehensive income (loss) as of December
31, 2006 were as follows (in thousands):
|
Unrecognized
net loss from experience different from that assumed and effects
of
changes and assumptions
|
$
|
(7,430
|
)
|
|
|
Unrecognized
prior service cost
|
(343
|
)
|
||
|
Unrecognized
net plan assets as of January 1, 1987 being recognized over 26.3
years
|
849
|
|||
|
Accumulated
other comprehensive income (loss)
|
$
|
(6,924
|
)
|
The
estimated initial plan assets and prior service cost for the Retirement Plan
that will be amortized from accumulated other comprehensive income over the
next
year is $143,000 and $59,000, respectively.
The
accumulated benefit obligation for the plan was $68.4 million and $66.9 million
as of December 31, 2006 and 2005, respectively. The accumulated benefit
obligation differs from the projected benefit obligation in that it includes
no
assumption about future compensation levels. We currently estimate we will
contribute $3.7 million to the plan during 2007. 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, 2006
and 2005 (measurement dates) were made utilizing the following weighted-average
assumptions:
|
2006
|
2005
|
||||||
|
Discount
rate on benefit obligations
|
5.90
|
%
|
5.65
|
%
|
|||
|
Annual
salary increases
|
3.50
|
%
|
3.35
|
%
|
|||
The
Retirement Plan’s asset allocation percentages consisted of:
|
December 31,
|
|||||||
|
2006
|
2005
|
||||||
|
Equity
securities
|
69
|
%
|
80
|
%
|
|||
|
Debt
securities
|
22
|
19
|
|||||
|
Real
estate
|
9
|
—
|
|||||
|
Other
|
—
|
1
|
|||||
|
100
|
%
|
100
|
%
|
||||
The
following benefit payments, which reflect expected future service, are expected
to be paid as follows (in thousands):
|
2007
|
$
|
3,542
|
||
|
2008
|
1,932
|
|||
|
2009
|
2,544
|
|||
|
2010
|
3,634
|
|||
|
2011
|
3,505
|
|||
|
2012-2016
|
26,026
|
Net
expense under the Retirement Plan was comprised of:
|
Years Ended December 31,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
(in thousands)
|
||||||||||
|
Service
cost
|
$
|
4,048
|
$
|
4,268
|
$
|
4,925
|
||||
|
Interest
cost on projected benefit obligations
|
4,578
|
4,274
|
4,109
|
|||||||
|
Expected
return on plan assets
|
(3,800
|
)
|
(3,225
|
)
|
(2,853
|
)
|
||||
|
Amortization
of prior service credit
|
(59
|
)
|
(59
|
)
|
(59
|
)
|
||||
|
Amortization
of transition asset
|
(143
|
)
|
(143
|
)
|
(143
|
)
|
||||
|
Amortization
of loss
|
280
|
501
|
438
|
|||||||
|
Net
pension charge
|
$
|
4,904
|
$
|
5,616
|
$
|
6,417
|
||||
Actuarial
computations used to determine net periodic costs were made utilizing the
following weighted-average assumptions:
|
Years Ended December 31,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
Discount
rate on benefit obligations
|
5.65
|
%
|
5.75
|
%
|
6.25
|
%
|
||||
|
Expected
long-term rate of return on plan assets
|
8.00
|
%
|
8.00
|
%
|
8.00
|
%
|
||||
|
Annual
salary increases
|
3.50
|
%
|
3.35
|
%
|
3.40
|
%
|
||||
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. Management has 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 Lehman Brothers Aggregate Bond Index.
Variances
between actuarial assumptions and actual experience are amortized over the
estimated average remaining service lives of employees participating in the
Retirement Plan.
|
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. Benefits owed to executives under
the
Contractual Arrangements vested on or before December 31, 1987. 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, 2006, 2005, and
2004 were $2.1 million, $2.9 million, and $3.3 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, 2006, 2005, and 2004 were $3.6 million, $29.1
million, and $61.3 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.
|
|
·
|
Until
distributed, liability for the 1995 through 1998 awards increased
or
decreased through December 31, 2005 based on our earnings growth
rate.
|
|
·
|
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.
|
|
·
|
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.
|
|
·
|
A
subsidiary of AllianceBernstein purchases Holding Units to fund the
related benefits.
|
|
·
|
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 may elect 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 Program”); the firm matches this allocation on a
two-for-one basis (for additional information about the Special Program,
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 2006, 2005,
and
2004 aggregating $238.5 million, $202.0 million, and $181.8 million,
respectively. In January 2007, $9.8 million of the 2006 award was allocated
to
options to buy Holding Units (see
Note 16).
The
amounts charged to employee compensation and benefits expense for the years
ended December 31, 2006, 2005, and 2004 were $191.9 million, $133.1
million, and $75.8 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. We made awards totaling $40.1 million in 2006, $31.8
million in 2005, and $29.6 million in 2004. The amounts charged to employee
compensation and benefits expense for the years ended December 31, 2006, 2005,
and 2004 were $27.0 million, $15.8 million, and $6.3 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 $14.5 million and $14.1
million in 2006 and 2005, respectively. The amount charged to employee
compensation and benefits expense for the years ended December 31, 2006 and
2005
were $4.2 million and $0.5 million.
In
accordance with the terms of the employment agreement between Mr. Sanders,
Chairman and CEO, and AllianceBernstein dated October 26, 2006 (and the terms
of
Mr. Sanders’s prior employment agreement), Mr. Sanders is 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. Mr. Sanders must
notionally invest his awards among certain of our investment services. The
2004
award of $12.0 million vests 40% in December 2005, 40% in December 2006, and
20%
in June 2007. The 2005 award of $14.8 million vests 67% in December 2006 and
33%
in June 2007. The 2006 award of $19.0 million vests 65% in December 2007 and
35%
in December 2008. The amounts charged to employee compensation and benefits
expense for the years ended December 31, 2006 and 2005 were $15.0 million and
$4.8 million, respectively.
|
16.
|
Compensatory
Unit Award and Option
Plans
|
In
1988,
we established an employee unit option plan (the “Unit Option Plan”), under
which options to buy Holding Units were granted to certain key employees.
Options were granted for terms of up to 10 years and 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 have been granted under the Unit Option Plan since it expired in
1999.
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; 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. 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,
2006, options to buy 10,796,116 Holding Units, net of forfeitures, had been
granted and 1,035,237 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 29,168,647 Holding
Units were available for grant as of December 31, 2006.
During
2006, 2005, and 2004, options to buy 9,712, 17,604, and 40,000 Holding Units,
respectively, were granted to independent directors of the General Partner
under
the 1997 Plan; no options were granted to employees. The weighted average fair
value of options to buy Holding Units granted during 2006, 2005, and 2004 was
$12.35, $7.04, and $8.00, respectively, on the date of grant, determined using
the Black-Scholes option valuation model with the following
assumptions:
|
2006
|
2005
|
2004
|
||||||||
|
Risk-free
interest rate
|
4.9
|
%
|
3.7
|
%
|
4.0
|
%
|
||||
|
Expected
cash distribution yield
|
6.0
|
%
|
6.2
|
%
|
3.5
|
%
|
||||
|
Historical
volatility factor
|
31.0
|
%
|
31.0
|
%
|
32.0
|
%
|
||||
|
Expected
term
|
6.5
years
|
3
years
|
5
years
|
|||||||
The
following table summarizes the activity in options under our various option
plans:
|
Holding
Units
|
Weighted Average
Exercise Price
Per Holding Unit
|
||||||
|
Outstanding
as of December 31, 2003
|
13,793,100
|
$
|
35.55
|
||||
|
Granted
|
40,000
|
33.00
|
|||||
|
Exercised
|
(2,468,380
|
)
|
18.43
|
||||
|
Forfeited
|
(1,795,300
|
)
|
46.96
|
||||
|
Outstanding
as of December 31, 2004
|
9,569,420
|
37.82
|
|||||
|
Granted
|
17,604
|
45.45
|
|||||
|
Exercised
|
(1,712,520
|
)
|
24.13
|
||||
|
Forfeited
|
(424,300
|
)
|
47.10
|
||||
|
Outstanding
as of December 31, 2005
|
7,450,204
|
40.45
|
|||||
|
Granted
|
9,712
|
65.02
|
|||||
|
Exercised
|
(2,567,017
|
)
|
38.40
|
||||
|
Forfeited
|
(73,800
|
)
|
38.19
|
||||
|
Outstanding
as of December 31, 2006
|
4,819,099
|
41.62
|
|||||
|
Exercisable
as of December 31, 2004
|
7,161,820
|
||||||
|
Exercisable
as of December 31, 2005
|
6,366,700
|
||||||
|
Exercisable
as of December 31, 2006
|
4,437,351
|
||||||
The
total
intrinsic value of options exercised during 2006, 2005, and 2004 was $79.0
million, $40.6 million, and $46.0 million, respectively.
The
following table summarizes information concerning outstanding and exercisable
options as of December 31, 2006:
|
Options Outstanding
|
Options Exercisable
|
||||||||||||||||||||
|
Range of Exercise Prices:
|
Number
Outstanding
as of
12/31/06
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
Weighted
Average
Exercise
Price
|
Number
Exercisable
as of
12/31/06
|
Weighted
Average
Exercise
Price
|
||||||||||||||||
|
$
|
18.47
|
- |
$
|
25.63
|
202,000
|
1.00
|
$
|
18.75
|
202,000
|
$
|
18.75
|
||||||||||
|
25.65
|
- |
30.25
|
711,550
|
2.58
|
28.74
|
709,550
|
28.74
|
||||||||||||||
|
32.52
|
- |
48.50
|
1,875,537
|
5.27
|
37.86
|
1,506,501
|
38.87
|
||||||||||||||
|
50.15
|
- |
50.56
|
1,116,800
|
4.92
|
50.25
|
1,115,800
|
50.25
|
||||||||||||||
|
51.10
|
- |
65.02
|
913,212
|
4.02
|
53.90
|
903,500
|
53.78
|
||||||||||||||
|
$
|
18.47
|
- |
$
|
65.02
|
4,819,099
|
4.37
|
41.62
|
4,437,351
|
42.24
|
||||||||||||
The
total
intrinsic value of options outstanding and exercisable as of December 31, 2006
was $186.9 million and $169.3 million, respectively.
The
following table summarizes activity of unvested options during the year ended
December 31, 2006:
|
Holding
Units
|
Weighted Average
Exercise Price
Per Holding Unit
|
||||||
|
Unvested
as of January 1, 2006
|
1,083,504
|
$
|
38.47
|
||||
|
Granted
|
9,712
|
65.02
|
|||||
|
Vested
|
(637,668
|
)
|
41.26
|
||||
|
Forfeited
|
(73,800
|
)
|
38.19
|
||||
|
Unvested
as of December 31, 2006
|
381,748
|
34.53
|
|||||
The
total
fair value of options vested during 2006 was $26.3 million.
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 $2.7 million,
$2.2 million, and $2.4 million, respectively, for the years ended December
31,
2006, 2005, and 2004. As of December 31, 2006, there was $1.7 million of
compensation cost related to unvested share-based compensation arrangements
granted under the option plans for unvested awards not yet recognized. That
cost
is expected to be recognized over a weighted average period of one
year.
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, 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.
Other
Unit Awards
Restricted
Units
In
2006
and 2005, restricted Holding Units (“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
1,848 and 2,644 Restricted Units in 2006 and 2005, respectively, with grant
date
market values of $65.02 and $45.45 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, 2006, 3,170 Restricted Units, net of
distributions made upon retirement of two directors, were outstanding. We
recorded compensation expense of $164,000 and $48,000 in 2006 and 2005,
respectively, related to Restricted Units.
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. In 2006, awards totaling 36,020
Holding Units with a market value on the date of award of $63.82 per Holding
Unit were granted, and 2,605 previously awarded Holding Units were forfeited.
In
2005, awards totaling 33,800 Holding Units with a market value on the date
of
award of $46.60 per Holding Unit were granted, and 4,493 previously awarded
Holding Units were forfeited.
The
following table summarizes the activity of unvested Century Club units during
2006:
|
Holding
Units
|
||||
|
Unvested as
of January 1, 2006
|
53,250
|
|||
|
Granted
|
36,020
|
|||
|
Vested
|
(25,973
|
)
|
||
|
Forfeited
|
(2,605
|
)
|
||
|
Unvested
as of December 31, 2006
|
60,692
|
|||
We
recorded compensation expense relating to the Century Club Plan of $1.5 million,
$1.1 million, and $1.0 million, respectively, for the years ended December
31,
2006, 2005, and 2004. As of December 31, 2006, there was $2.1 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.
|
17.
|
Income
Taxes
|
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.
Income
tax expense is comprised of:
|
Years Ended December 31,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
(in thousands)
|
||||||||||
|
Partnership
UBT
|
$
|
23,696
|
$
|
16,365
|
$
|
14,240
|
||||
|
Corporate
subsidiaries:
|
||||||||||
|
Federal
|
4,901
|
7,100
|
3,687
|
|||||||
|
State
and local
|
374
|
1,236
|
479
|
|||||||
|
Foreign
|
41,061
|
35,676
|
18,572
|
|||||||
|
Current
tax expense
|
70,032
|
60,377
|
36,978
|
|||||||
|
Deferred
tax expense
|
5,013
|
4,194
|
2,954
|
|||||||
|
Income
tax expense
|
$
|
75,045
|
$
|
64,571
|
$
|
39,932
|
||||
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,
|
|||||||||||||||||||
|
2006
|
2005
|
2004
|
|||||||||||||||||
|
(in thousands)
|
|||||||||||||||||||
|
UBT
statutory rate
|
$
|
47,346
|
4.0
|
%
|
$
|
37,315
|
4.0
|
%
|
$
|
29,803
|
4.0
|
%
|
|||||||
|
Corporate
subsidiaries’ federal, state, local, and foreign income
taxes
|
40,708
|
3.4
|
37,114
|
3.9
|
20,648
|
2.8
|
|||||||||||||
|
Other
non-deductible and permanent items, primarily income not taxable
resulting
from use of UBT business apportionment factors
|
(13,009
|
)
|
(1.1
|
)
|
(9,858
|
)
|
(1.0
|
)
|
(10,519
|
)
|
(1.4
|
)
|
|||||||
|
Income
tax expense and effective tax rate
|
$
|
75,045
|
6.3
|
$
|
64,571
|
6.9
|
$
|
39,932
|
5.4
|
||||||||||
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 differences 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,
|
|||||||
|
2006
|
2005
|
||||||
|
(in thousands)
|
|||||||
|
Deferred
tax asset:
|
|||||||
|
Differences
between book and tax basis:
|
|||||||
|
Deferred
compensation plans
|
$
|
9,768
|
$
|
9,850
|
|||
|
Intangible
assets
|
512
|
631
|
|||||
|
Charge
for mutual fund matters, legal proceedings, and claims processing
contingency
|
5,612
|
4,900
|
|||||
|
Other,
primarily revenues taxed upon receipt and accrued
expenses deductible when paid
|
2,452
|
827
|
|||||
|
18,344
|
16,208
|
||||||
|
Valuation
allowance
|
(1,761
|
)
|
(2,113
|
)
|
|||
|
Deferred
tax asset, net of valuation allowance
|
16,583
|
14,095
|
|||||
|
Deferred
tax liability:
|
|||||||
|
Differences
between book and tax basis:
|
|||||||
|
Furniture,
equipment and leasehold improvements
|
848
|
142
|
|||||
|
Investment
partnerships
|
3,136
|
573
|
|||||
|
Intangible
assets
|
12,427
|
10,288
|
|||||
|
Translation
adjustment
|
2,106
|
—
|
|||||
|
Other,
primarily undistributed earnings of certain foreign
subsidiaries
|
2,686
|
1,920
|
|||||
|
21,203
|
12,923
|
||||||
|
Net
deferred tax (liability) asset
|
$
|
(4,620
|
)
|
$
|
1,172
|
||
The
valuation allowance primarily relates to uncertainties on the deductibility
of
certain compensation items. The deferred tax asset, net of valuation allowance,
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, 2006, $159.0 million
of accumulated undistributed earnings of non-U.S. corporate subsidiaries were
permanently invested. At the existing federal income tax rate, additional taxes
of approximately $4.7 million would need to be provided if such earnings were
remitted.
On
October 22, 2004, the American Jobs Creation Act of 2004 (“Act”) was signed
into law. The Act contained a one-time foreign dividend repatriation provision,
which provided for a special deduction with respect to certain qualifying
dividends from foreign subsidiaries until December 31, 2005. In December
2005, our foreign subsidiaries distributed $42.7 million of previously
unremitted earnings which qualified for the special deduction under the Act.
The
company incurred income taxes of less than $0.5 million as a result of these
distributions.
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.
Effective
January 1, 2007, we will adopt the provisions in FIN
48.
See
Note 22.
|
18.
|
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, 2006, 2005, and 2004 were as
follows:
Services
Net
revenues derived from our various research, investment management and related
services were as follows:
|
Years Ended December 31,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
(in millions)
|
||||||||||
|
Institutional
investments
|
$
|
1,222
|
$
|
895
|
$
|
728
|
||||
|
Retail
|
1,304
|
1,189
|
1,289
|
|||||||
|
Private
client
|
883
|
673
|
543
|
|||||||
|
Institutional
research services
|
375
|
353
|
420
|
|||||||
|
Other
|
354
|
199
|
108
|
|||||||
|
Total
revenues
|
4,138
|
3,309
|
3,088
|
|||||||
|
Less:
Interest expense
|
188
|
96
|
33
|
|||||||
|
Net
revenues
|
$
|
3,950
|
$
|
3,213
|
$
|
3,055
|
||||
Geographic
Information
Net
revenues and long-lived assets, related to our U.S. and international
operations, as of and for the years ended December 31, were:
|
2006
|
2005
|
2004
|
||||||||
|
(in millions)
|
||||||||||
|
Net
revenues:
|
||||||||||
|
United
States
|
$
|
2,733
|
$
|
2,376
|
$
|
2,398
|
||||
|
International
|
1,217
|
837
|
657
|
|||||||
|
Total
|
$
|
3,950
|
$
|
3,213
|
$
|
3,055
|
||||
|
Long-lived
assets:
|
||||||||||
|
United
States
|
$
|
3,619
|
$
|
3,597
|
$
|
3,649
|
||||
|
International
|
42
|
18
|
24
|
|||||||
|
Total
|
$
|
3,661
|
$
|
3,615
|
$
|
3,673
|
||||
Major
Customers
Our
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 2%, 3%, and 4% of our open-end mutual fund sales
in
2006, 2005, and 2004, respectively. Subsidiaries of Merrill Lynch &
Co., Inc. (“Merrill Lynch”) were responsible for approximately 6%, 5%, and
6% of our open-end mutual fund sales in 2006, 2005, and 2004, respectively.
Citigroup, Inc. and its subsidiaries (“Citigroup”), was responsible for
approximately 5%, 5%, and 7% of our open-end mutual fund sales in 2006, 2005,
and 2004, respectively. AXA Advisors, Merrill Lynch and Citigroup are under
no
obligation to sell a specific amount of shares of our 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, 2006, 2005, and 2004. No single institutional client other
than AXA and its subsidiaries accounted for more than 1% of total revenues
for
the years ended December 31, 2006, 2005, and 2004,
respectively.
|
19.
|
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,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
(in thousands)
|
||||||||||
|
Investment
advisory and services fees
|
$
|
840,453
|
$
|
728,492
|
$
|
744,663
|
||||
|
Distribution
revenues
|
421,045
|
397,800
|
447,283
|
|||||||
|
Shareholder
servicing fees
|
97,236
|
99,358
|
115,979
|
|||||||
|
Other
revenues
|
6,917
|
8,014
|
8,770
|
|||||||
|
Institutional
research services
|
1,414
|
3,496
|
5,244
|
|||||||
AXA
and its Subsidiaries
We
provide investment management and certain administration services to AXA and
its
subsidiaries. In addition, AXA and its subsidiaries distribute our mutual funds,
for which they receive commissions and distribution payments. Sales of our
mutual funds through AXA and its subsidiaries, excluding cash management
products, aggregated approximately $0.5 billion, $0.5 billion, $0.4 billion,
for
the years ended December 31, 2006, 2005, and 2004, respectively. Also, we
are covered by various insurance policies maintained by AXA subsidiaries and
we
pay fees for other services and technology 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,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
(in thousands)
|
||||||||||
|
Revenues:
|
||||||||||
|
Investment
advisory and services fees
|
$
|
184,122
|
$
|
168,124
|
$
|
156,352
|
||||
|
Institutional
research services
|
520
|
2,051
|
4,163
|
|||||||
|
Other
revenues
|
736
|
734
|
3,231
|
|||||||
|
$
|
185,378
|
$
|
170,909
|
$
|
163,746
|
|||||
|
Expenses:
|
||||||||||
|
Commissions
and distribution payments to financial intermediaries
|
$
|
5,708
|
$
|
5,500
|
$
|
6,325
|
||||
|
Other
promotion and servicing
|
772
|
858
|
843
|
|||||||
|
General
and administrative
|
9,533
|
6,665
|
8,916
|
|||||||
|
$
|
16,013
|
$
|
13,023
|
$
|
16,084
|
|||||
|
Balance
Sheet:
|
||||||||||
|
Institutional
investment advisory and services fees receivable
|
$
|
7,330
|
$
|
7,182
|
$
|
6,532
|
||||
|
Other
due (to) from AXA and its subsidiaries
|
(965
|
)
|
1,362
|
(1,405
|
)
|
|||||
|
$
|
6,365
|
$
|
8,544
|
$
|
5,127
|
|||||
During
2001, AllianceBernstein and AXA Asia Pacific Holdings Limited (“AXA Asia
Pacific”) established 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 $61.1 million,
$44.6 million, and $33.3 million for the years ended December 31, 2006, 2005,
and 2004, respectively, of which approximately $21.3 million, $19.9 million,
and
$17.6 million, respectively, were from AXA affiliates and are included in
the table above. Minority interest recorded for these companies was $8.8
million, $5.9 million, and $3.7 million, for the years ended December 31, 2006,
2005, and 2004, 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 $34 million of investments on the consolidated
statement of financial condition as of December 31, 2006. 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, 2006, 2005, and 2004 are as follows:
|
December 31,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
(in thousands)
|
||||||||||
|
Due
from Holding, net
|
$
|
7,149
|
$
|
7,197
|
$
|
7,664
|
||||
|
Due
from (to) unconsolidated joint ventures, net
|
$
|
376
|
$
|
(2,678
|
)
|
$
|
(1,287
|
)
|
||
|
20.
|
Acquisition
|
On
May 2,
2006, we purchased the 50% interest in our Hong Kong joint venture (including
its wholly-owned Taiwanese subsidiary) owned by our joint venture partner for
$16.1 million in cash. The effect of this acquisition was not material to our
consolidated financial condition, results of operations or cash
flows.
|
21.
|
Dispositions
|
Cash
Management Services
In
June 2005, AllianceBernstein and Federated Investors, Inc. (“Federated”)
completed a transaction pursuant to which Federated acquired our cash management
services. In the transaction, $19.3 billion in assets under management from
22
of our third-party distributed money market funds were transitioned into
Federated money market funds.
The
total
sales price (much of which is contingent) is estimated to be approximately
$95.0
million, which is composed of three parts: (1) an initial cash payment of
$25.0 million which was received in the second quarter of 2005, (2) annual
contingent purchase price payments payable over a five-year period ending 2010,
which we estimate will total $60.0 million, and (3) a final contingent
$10.0 million payment, which is based on comparing revenues generated by
applicable assets during the fifth year following the closing of the transaction
to the revenues generated by those assets during a specified period prior to
the
closing of the transaction.
The
annual contingent purchase price payments are calculated as a percentage of
revenues, less certain expenses, directly attributed to these assets and certain
other assets of our former cash management clients transferred to Federated.
Income is accrued as earned. The contingent payments received from Federated
in
the five years following the closing of the transaction are expected to largely
offset the loss of operating income that would have been earned for managing
the
cash in money market fund customer accounts. As a result, this transaction
is
not expected to have a material impact on future results of operations, cash
flow or liquidity during that period.
During
2005, we recorded a $19.4 million pre-tax gain as non-operating income, net
of
transaction expenses and a “clawback” provision that would have required us to
pay Federated up to $7.5 million if average daily transferred assets for the
six-month period ended June 29, 2006 had fallen below a certain percentage
of initial assets transferred at closing. We were not required to make a payment
under the clawback provision and, accordingly, we recognized a gain of $7.5
million during the second quarter of 2006. In addition, we earned contingent
purchase price payments of $12.8 million during 2006.
Indian
Mutual Funds
In
the
third quarter of 2005, Alliance Capital Asset Management (India) Pvt. Ltd.,
75%
owned by AllianceBernstein, whose principal activity was to sponsor and serve
as
the investment advisor to AllianceBernstein mutual funds in India,
transferred those mutual funds and its rights to manage those mutual funds
to
Birla Sun Life. During 2005, we recorded a pre-tax gain of $8.1 million from
this transaction, net of related expenses, as non-operating income.
South
African Joint Venture
AllianceBernstein
completed a transaction on December 31, 2005 pursuant to which Investec Asset
Management (Proprietary) Ltd. acquired AllianceBernstein’s interest in Alliance
Capital Management (Proprietary) Ltd., the firm’s South African domestic
investment management subsidiary, including Alliance Capital Management
(Proprietary) Namibia Ltd, its wholly-owned Namibian subsidiary.
In
the
fourth quarter of 2005, we recorded a pre-tax gain of $7.0 million as
non-operating income consisting of $8.9 million of cash proceeds, offset by
$0.3
million of transaction charges and $1.6 million of payments to former minority
shareholders.
|
22.
|
Accounting
Pronouncements
|
During
2006, we adopted SFAS No. 123-R, “Accounting for Stock-Based
Compensation”, and SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans”. See Notes 2 and
16 for a discussion of the adoption of SFAS 123-R and Note 14 for
a discussion of the adoption of SFAS 158.
In
June
2006, the Financial Accounting Standards Board (“FASB”) issued FASB
Interpretation No. 48 (“FIN No. 48”), “Accounting
for Uncertainty in Income Taxes”,
an
interpretation of SFAS No. 109. FIN No. 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. FIN No. 48 became effective on January 1, 2007. We currently
estimate that the implementation of FIN No. 48 will not have a material impact
on our results of operations, liability for income taxes, or partners’ capital
in 2007.
|
23.
|
Quarterly
Financial Data (Unaudited)
|
|
Quarters Ended 2006
|
|||||||||||||
|
December 31
|
September 30
|
June 30
|
March 31
|
||||||||||
|
(in thousands, except per unit amounts)
|
|||||||||||||
|
Net
revenues
|
$
|
1,186,698
|
$
|
934,711
|
$
|
933,330
|
$
|
895,668
|
|||||
|
Net
income
|
$
|
366,952
|
$
|
252,974
|
$
|
261,102
|
$
|
227,573
|
|||||
|
Basic
net income per unit(1)
|
$
|
1.40
|
$
|
0.97
|
$
|
1.00
|
$
|
0.88
|
|||||
|
Diluted
net income per unit(1)
|
$
|
1.39
|
$
|
0.96
|
$
|
0.99
|
$
|
0.87
|
|||||
|
Cash
distributions per unit(2)
|
$
|
1.60
|
$
|
0.96
|
$
|
0.99
|
$
|
0.87
|
|||||
|
Quarters Ended 2005
|
|||||||||||||
|
December 31
|
September 30
|
June 30
|
March 31
|
||||||||||
|
(in thousands, except per unit amounts)
|
|||||||||||||
|
Net
revenues
|
$
|
910,586
|
$
|
795,332
|
$
|
756,258
|
$
|
750,549
|
|||||
|
Net
income
|
$
|
289,886
|
$
|
211,928
|
$
|
197,997
|
$
|
168,507
|
|||||
|
Basic
net income per unit(1)
|
$
|
1.12
|
$
|
0.82
|
$
|
0.77
|
$
|
0.66
|
|||||
|
Diluted
net income per unit(1)
|
$
|
1.12
|
$
|
0.82
|
$
|
0.76
|
$
|
0.65
|
|||||
|
Cash
distributions per unit(2)
|
$
|
1.12
|
$
|
0.82
|
$
|
0.76
|
$
|
0.63
|
|||||
____________
| (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.
|
Report
of Independent Registered Public Accounting Firm
To the
General Partner and Unitholders
AllianceBernstein
L.P.:
We
have
completed an integrated audit of
AllianceBernstein L.P.’s 2006 consolidated financial statements and of its
internal control over financial reporting as of December 31, 2006 in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Our opinions, based on our audit, are presented
below.
Consolidated
financial statements
In
our
opinion, the accompanying consolidated statement 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. (“AllianceBernstein”) and its
subsidiaries at December 31, 2006 and for the year then ended in conformity
with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of AllianceBernstein’s management.
Our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance with
the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit of financial statements includes 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.
We believe that our audit provides a reasonable basis for our
opinion.
Internal
control over financial reporting
Also,
in
our opinion, management’s assessment, included in the accompanying Management's
Report on Internal Control over Financial Reporting,
that
AllianceBernstein maintained effective internal control over financial reporting
as of December 31, 2006, based on criteria established in Internal
Control - Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO),
is fairly stated, in all material respects, based on those criteria.
Furthermore, in our opinion, AllianceBernstein, maintained, in all material
respects, effective internal control over financial reporting as of December
31,
2006, based on criteria established in Internal
Control - Integrated Framework
issued
by the COSO. AllianceBernstein's management is responsible for maintaining
effective internal control over financial reporting and for its assessment
of
the effectiveness of internal control over financial reporting. Our
responsibility is to express opinions on management’s assessment and on the
effectiveness of AllianceBernstein's internal control over financial reporting
based on our audit. We conducted our audit of internal control over financial
reporting in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. An audit of internal control over financial reporting includes
obtaining an understanding of internal control over financial reporting,
evaluating management’s assessment, testing and evaluating the design and
operating effectiveness of internal control, and performing such other
procedures as we consider necessary in the circumstances. We believe that our
audit provides 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
27, 2007
Report
of Independent Registered Public Accounting Firm
The
General Partner and Unitholders
AllianceBernstein
L.P.:
We
have
audited the accompanying consolidated statement of financial condition of
AllianceBernstein L.P. and subsidiaries (“AllianceBernstein”), formerly Alliance
Capital Management L.P., as of December 31, 2005, and the related consolidated
statements of income, changes in partners’ capital and comprehensive income and
cash flows for each of the years in the two-year period ended December 31,
2005.
These consolidated financial statements are the responsibility of the management
of the General Partner. Our responsibility is to express an opinion on these
consolidated financial statements based on our 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 audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In
our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of AllianceBernstein as of
December 31, 2005, and the results of their operations and their cash flows
for
each of the years in the two-year period ended December 31, 2005, in conformity
with U.S. generally accepted accounting principles.
|
/s/
KPMG LLP
|
|
|
New
York, New York
|
|
|
February
24, 2006
|
|
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
As
we
disclosed in a Form 8-K filed on March 13, 2006, on March 8, 2006, the Audit
Committee (“Audit Committee”) of the Board engaged PricewaterhouseCoopers LLP
(“PwC”) as the independent registered public accountant to audit the financial
statements of Holding and the consolidated financial statements of
AllianceBernstein for the year ending December 31, 2006 (collectively,
“Financial Statements”). The Committee engaged PwC in order to facilitate the
audit of the consolidated financial statements of AXA Group, which includes
the
consolidated financial statements of AllianceBernstein. (PwC is the independent
registered public accountant that audits AXA Group’s consolidated financial
statements.) The Audit Committee reached the decision after considering the
facts and circumstances that the Audit Committee considered pertinent, including
PwC’s professional qualifications, PwC’s independence from the Partnerships, and
the amount of fees estimated by PwC to be charged for the audits of the
Financial Statements. The Audit Committee concluded that the engagement of
PwC
is in the best interests of the Partnerships and their respective unitholders.
Accordingly, on March 8, 2006, the Committee dismissed KPMG LLP as the
independent registered public accountant of the Partnerships.
Neither
AllianceBernstein nor Holding had any disagreements with accountants in respect
of accounting or financial disclosure.
|
Item
9A.
|
Controls
and Procedures
|
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, 2006. 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”). Management did not identify any material weakness in either
Holding’s or AllianceBernstein’s internal control over financial
reporting.
Based
on
its assessment, management believes that, as of December 31, 2006, each of
Holding and AllianceBernstein maintained effective internal control over
financial reporting based on the COSO criteria.
PricewaterhouseCoopers
LLP, the registered public accounting firm that audited the 2006 financial
statements included in this Form 10-K, has issued an attestation report on
management’s assessment of each of Holding’s and AllianceBernstein’s internal
control over financial reporting. 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 2006 that materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting. We believe that the
documentation, testing, and remediation of internal controls that we undertook
to make the assessment above has served generally to strengthen such internal
control.
|
Item
9B.
|
Other
Information
|
Both
AllianceBernstein and Holding reported all information required to be disclosed
on Form 8-K during the fourth quarter of 2006.
PART III
|
Item
10.
|
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 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 Equitable.
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 quarterly distributions equal to those
received by each limited partnership unit.
The
General Partner is reimbursed by AllianceBernstein for all 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 as employees of
AllianceBernstein) and the cost of directors and officers liability insurance
obtained by the General Partner. In 2006, the General Partner was reimbursed
only for directors and officers/errors and omissions liability insurance
premiums.
Directors
and Executive Officers
The
directors and executive officers of the General Partner are as follows (officers
of the General Partner may also serve as officers of AllianceBernstein and
Holding):
|
Name
|
Age
|
Position
|
||
|
Lewis
A. Sanders
|
60
|
Chairman
of the Board and Chief Executive Officer
|
||
|
Dominique
Carrel-Billiard
|
40
|
Director
|
||
|
Henri
de Castries
|
52
|
Director
|
||
|
Christopher
M. Condron
|
59
|
Director
|
||
|
Denis
Duverne
|
53
|
Director
|
||
|
Peter
Etzenbach
|
39
|
Director
|
||
|
Weston
M. Hicks
|
50
|
Director
|
||
|
Gerald
M. Lieberman
|
60
|
Director,
President and Chief Operating Officer
|
||
|
Lorie
A. Slutsky
|
54
|
Director
|
||
|
A.W.
(Pete) Smith, Jr.
|
63
|
Director
|
||
|
Peter
J. Tobin
|
62
|
Director
|
||
|
Lawrence
H. Cohen
|
45
|
Executive
Vice President
|
||
|
Laurence
E. Cranch
|
60
|
Executive
Vice President and General Counsel
|
||
|
Edward
J. Farrell
|
46
|
Senior
Vice President and Controller
|
||
|
Sharon
E. Fay
|
46
|
Executive
Vice President
|
||
|
Marilyn
G. Fedak
|
60
|
Executive
Vice President
|
||
|
James
A. Gingrich
|
48
|
Executive
Vice President
|
||
|
Mark
R. Gordon
|
53
|
Executive
Vice President
|
||
|
Thomas
S. Hexner
|
50
|
Executive
Vice President
|
||
|
Robert
H. Joseph, Jr.
|
59
|
Senior
Vice President and Chief Financial Officer
|
||
|
Mark
R. Manley
|
44
|
Senior
Vice President, Deputy General Counsel and Chief Compliance
Officer
|
||
|
Seth
J. Masters
|
47
|
Executive
Vice President
|
||
|
Marc
O. Mayer
|
49
|
Executive
Vice President
|
||
|
Douglas
J. Peebles
|
41
|
Executive
Vice President
|
||
|
Jeffrey
S. Phlegar
|
40
|
Executive
Vice President
|
||
|
James
G. Reilly
|
45
|
Executive
Vice President
|
||
|
Paul
C. Rissman
|
50
|
Executive
Vice President
|
||
|
Lisa
A. Shalett
|
43
|
Executive
Vice President
|
||
|
David
A. Steyn
|
47
|
Executive
Vice President
|
||
|
Christopher
M. Toub
|
47
|
Executive
Vice President
|
Biographies
Mr. Sanders
was elected Chairman of the Board of the General Partner effective
January 1, 2005 and Chief Executive Officer of AllianceBernstein effective
July 1, 2003. Before taking on his current roles, he 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 since June 30,
2006.
Mr. Carrel-Billiard joined AXA in May 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
and 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.
Carrel-Billiard also led the European Retail Savings and Life Insurance
practice, with focus on distribution issues for asset gathering products to
retail investors. AXA and AXA Financial are parents of AllianceBernstein. AXA
Financial and AXA Investment Managers are subsidiaries of AXA.
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.
Prior thereto, he served AXA in various capacities, including Vice Chairman
of
the 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 and Chief Executive Officer 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. Duverne
was elected a Director of the General Partner in February 1996. He has been
Chief Financial Officer of AXA since May 2003 and, from January 2000 to May
2003, 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.
Etzenbach was elected a Director of the General Partner in May 2006.
He
is
Senior Vice President-Business Support and Development of AXA in charge of
AXA
Equitable, asset management, and reinsurance. He joined the AXA Group in 2005
as
a lead strategic auditor in the AXA Group Audit Department. Prior to joining
AXA, Mr. Etzenbach was an Executive Director of Goldman Sachs in investment
banking and equity capital markets. During the 13 years he spent at Goldman
Sachs, Mr. Etzenbach held various management roles, including Business Unit
Manager for the European Investment Banking Division (2001 to 2002) and Chief
Operating Officer for the Sovereign Effort, a position which reported to the
Vice Chairman of Goldman Sachs International (2004).
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
and from March 1999 through March 2001, he was a Managing Director of J.P.
Morgan Securities.
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
AXA’s 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. 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,
since
January 1990. 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. He was President
and
Chief Executive Officer of the Private Sector Council, a non-profit public
service organization dedicated to improving the efficiency, management and
productivity of the federal government, from September 2000 until his retirement
in May 2005. He is President of Smith Consulting.
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 since March 1999.
Mr. Cohen
has been Executive Vice President and Chief Technology Officer since joining
AllianceBernstein in 2004. 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
has been Executive Vice President and General Counsel since joining
AllianceBernstein in 2004. 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 has been Senior Vice President and Controller since joining
AllianceBernstein in 2003. 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
joined Bernstein in 1990 as a research analyst in investment management,
following the airlines, lodging, trucking, and retail industries, and has been
Executive Vice President and Chief Investment Officer-Global Value Equities
of
AllianceBernstein since 2003, overseeing all portfolio management and research
activities relating to cross-border and non-U.S. value investment portfolios
and
chairing the Global Value Investment Policy Group. Until January 2006,
Ms. Fay was Co-Chief Investment Officer-European and U.K. Value Equities, a
position she assumed with Bernstein in 1999.
Between
1997 and 1999, she was Chief Investment Officer-Canadian Value Equities with
Bernstein. Prior to that, she had been a senior portfolio manager of
International Value Equities since 1995.
Ms. Fedak
joined Bernstein in 1984 as a senior portfolio manager. An Executive Vice
President of AllianceBernstein since 2000, she is Head of Global Value Equities
and Chair of the U.S. Large Cap Value Equity Investment Policy Group. From
1993
through 2000, Ms. Fedak was Chief Investment Officer for U.S. Value Equities;
in
2003, she named a Co-CIO. Ms. Fedak is also a Director of
SCB Inc.
Mr.
Gingrich joined Bernstein in 1999 as a senior research analyst covering the
U.S.
household and personal products industry. 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 for SCB LLC’s U.S. and European
operations. Mr. Gingrich was elected a Senior Vice President of
AllianceBernstein in 2002.
Mr. Gordon
joined Bernstein 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 Bernstein 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 AllianceBernstein 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. Manley
joined AllianceBernstein 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 company’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.
Mr. Masters
joined Bernstein in 1991 as a research analyst covering banks, insurance
companies, and other financial firms. He currently heads the AllianceBernstein
Blend Strategies team and is Chief Investment Officer for Style Blend, roles
he
has held since 2002. 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. Mayer
joined Bernstein in 1989 as a research analyst and research director in the
institutional research services group and has been an Executive Vice President
of AllianceBernstein since 2000. He was elected Executive Managing Director
of
AllianceBernstein Investments in November 2003; he was Head of
AllianceBernstein Institutional Investments from 2001 until that time. Prior
to
2001, Mr. Mayer was Head of SCB LLC. Mr. Mayer is a Director of
SCB Inc.
Mr. Peebles
joined AllianceBernstein in 1987 and has been an Executive Vice President of
AllianceBernstein and Co-Chief Investment Officer of AllianceBernstein Fixed
Income since 2004. He is also Director of Global Fixed Income, with investment
responsibility for the institutional and retail global fixed income portfolios
managed by AllianceBernstein and oversight responsibility for all global and
non-U.S. regional fixed income teams. Mr. Peebles served as a Senior Vice
President in Global Fixed Income from 1998 until 2004.
Mr. Phlegar
joined AllianceBernstein in 1993 and has been an Executive Vice President of
AllianceBernstein and Co-Chief Investment Officer of AllianceBernstein Fixed
Income since 2004. 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 AllianceBernstein in 1985 as a Vice President and quantitative and
fundamental research analyst covering airlines and railroads, and is currently
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.
Mr. Rissman
joined AllianceBernstein in 1989 as a quantitative analyst and earlier this
year
became our firm’s Chief Investment Officer of Growth Equities while continuing
as the head of growth equity services, a role he has held since 2004. He had
been Director of Research—Global Growth Equities since 2000. Mr. Rissman has
been an Executive Vice President of AllianceBernstein since 2000. He led the
Relative Value investment team from 1995 to 2004.
Ms. Shalett
joined Bernstein in 1995. In February 2007, she became Head of Global Research
for Growth Equities. Prior to this role on the buy-side, Ms. Shalett lead our
sell-side equity research business as Chair and Chief Executive Officer of
SCB
LLC, a position she had held since 2002. Previously, Ms. Shalett served as
Director of Global Research for U.S. and European companies and as senior
research analyst covering capital goods and diversified industrials, again
both
on the sell-side. She has been an Executive Vice President of AllianceBernstein
since 2002.
Mr. Steyn
joined Bernstein in 1999, having been the founding co-Chief Executive Officer
of
Bernstein’s London office, and has been an Executive Vice President of
AllianceBernstein and Head of AllianceBernstein Institutional Investments since
November 2003. Mr. Steyn was elected a Senior Vice President of
AllianceBernstein in 2000.
Mr. Toub
joined AllianceBernstein 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.
Recent
Director Resignations
Stanley
B. Tulin resigned from the Board effective January 1, 2007.
Roger
Hertog resigned from the Board effective December 31, 2006.
W.
Edwin
Jarmain resigned from the Board effective February 25, 2006.
Corporate
Governance
Board
of Directors
The
Board
holds quarterly meetings, generally in February, May, July/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, Corporate Governance, Audit, 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 2006.
Committees
of the Board
The
Executive Committee of the Board (“Executive Committee”) is composed of
Messrs. Condron, Duverne, Lieberman, Sanders (Chair), and Tobin, and
Ms. Slutsky. 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 2006.
A
more
complete description of the Executive Committee’s functions is set forth in the
committee’s charter, which is available online at our Internet site
(http://www.alliancebernstein.com).
The
Corporate Governance Committee of the Board (“Governance Committee”) is composed
of Mr. Condron, Mr. Sanders, 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 2006.
A
more
complete description of the Governance Committee’s functions is set forth in the
committee’s charter, which is available online at our Internet site
(http://www.alliancebernstein.com).
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 nine meetings in 2006.
A
more
complete description of the Audit Committee’s functions is set forth in the
committee’s charter, which is available online at our Internet site
(http://www.alliancebernstein.com).
The
Compensation Committee of the Board (“Compensation Committee”) is composed of
Messrs. Condron (Chair), Sanders, and Smith, and Ms. Slutsky. 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 related unitholder derivative suits and
distributing 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 met once during 2006.
Audit
Committee Financial Expert
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 February 2007
regular meeting. The Board also determined at that meeting 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
The
Governance Committee, after reviewing materials prepared by management,
recommended that the Board determine that each of 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
Mr. Hicks (relating to Alleghany Corporation being a client of SCB LLC), and
Ms.
Slutsky (relating to contributions made by AllianceBernstein to The New York
Community Trust, of which she is President and Chief Executive Officer) and
then
determined, at its February 2007 regular meeting, that each of 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 Rule 17j-1 under
the Investment Company Act and recommendations issued by the Investment Company
Institute regarding, among other things, practices and standards with respect
to
securities transactions of investment professionals, as well as Rule 204A-1
under the Investment Advisers Act and Section 303A.10 of the NYSE Listed
Company Manual. 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 the 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).
NYSE
Governance Matters
Section
303A.00 of the NYSE Listed Company Manual exempts limited partnerships from
compliance with Section 303A.01 (majority of independent directors), 303A.04
(corporate governance committee with only independent directors as its members),
and 303A.05 (compensation committee with only independent directors as its
members) of the NYSE Listed Company Manual. Holding is a limited partnership
(as
is AllianceBernstein). In addition, because the General Partner is a
wholly-owned subsidiary of AXA Equitable, 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
Code of Business Conduct, and AXA Financial Policy Statement on Ethics from
any
director or executive officer of the General Partner. Any such waiver that
has
been granted is set forth in the “Corporate Governance” portion of our Internet
site (http://www.alliancebernstein.com).
No
such waivers were granted during the fourth quarter of 2006.
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 (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
or solicitations of various kinds, and are best addressed by
management.
The
2006
Certification by our Chief Executive Officer under NYSE Listed Company Manual
Section 303A.12(a) was submitted to the NYSE on March 8,
2006.
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
and AllianceBernstein Unitholders may request a copy of any committee charter,
the Guidelines, and the Code of Business Conduct and Ethics by contacting the
Corporate Secretary of AllianceBernstein (corporate.secretary@alliancebernstein.com).
The
charters and memberships of the Corporate Governance Committee and the
Compensation Committee, as well as the Executive Committee and the Audit
Committee, 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, Lieberman, Manley, Masters, Mayer, Peebles, Phlegar,
Reilly, Rissman, Sanders, Steyn, and Toub, and Mesdames Fay, Fedak, 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. Sanders 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
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 2006:
(i) all Section 16(a) filing requirements relating to Holding
were complied with, except that a Form 4 was filed late for each of Ms. Shalett
and Messrs. Cohen, Cranch, Farrell, Hexner, Lieberman, Peebles, and Reilly
in
respect of each person’s decision to notionally invest a portion of his or her
2005 award under the Amended and Restated AllianceBernstein Partners
Compensation Plan in Holding Units; and
(ii) all Section 16(a) filing requirements relating to
AllianceBernstein were complied with. You can find our Section 16 filings under
“Investor & Media Relations” / “Reports & SEC Filings” on our Internet
site (http://www.alliancebernstein.com).
|
Item
11.
|
Executive
Compensation
|
Compensation
Discussion and Analysis (“CD&A”)
Overview
of Compensation Philosophy and Program
The
intellectual capital possessed by 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 retain and motivate them.
As
a
result, employee compensation and benefits are significant, comprising
approximately 56% of our operating expenses and approximately 39% of our net
revenues for 2006.
These
percentages are not unusual for companies in the financial services industry.
The magnitude of this expense also 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 factors that enhance the long-term value of our company. Our key
compensation goals are to attract highly-qualified executive talent, retain
our
key leaders, 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, ultimately, our Unitholders. We believe that fundamental
success in achieving good results for the firm, and for our Unitholders, must
flow from achieving investment success for our clients. Accordingly, in recent
years, our deferred incentive compensation award program has encouraged our
executives to allocate their 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.
Historically,
we have used a variety of compensation elements to achieve the goals described
above. Currently, we use 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.
We
do not
set financial performance targets for the firm, and management efforts are
not
directed at meeting any such specific targets. Estimates are developed for
budgeting and strategic planning purposes, but no employee or officer
compensation is directly tied to “hitting” or “missing” target revenue or income
figures, although some salespeople do have compensation incentives based on
sales levels.
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, and in doing so contribute
to
long-term Unitholder value. We rely upon our judgment about each executive’s
performance — rather than utilizing quantitative formulas—in determining the
amount and mix of compensation elements and whether each particular payment
or
award provides an appropriate reward for the current year’s performance. Key
factors that we consider include: performance compared to the operational and
strategic goals established for the executive at the beginning of the year;
nature, scope, and level of responsibilities; contribution to the company’s
commitment to create and maintain a fiduciary culture in which clients’
interests are paramount; and contribution to our overall financial
results.
We
also
consider each executive’s current salary, and prior-year cash bonus and deferred
award, 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 addition, we review information provided by McLagan Associates,
compensation consultants retained by management, about compensation levels
at
other companies that we believe provide useful comparisons. In
general, we believe that 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. Because deferred awards are notionally invested in the firm’s
investment products (no more than 50% of an award may be allocated to Holding
Units and options to buy Holding Units), employees’ interests are aligned with
client success.
The
gross amount of incentive compensation available is a function of our overall
financial performance; a “bonus pool” is calculated based on annual operating
income and institutional research revenues. In 2005 and 2006, we granted
incentive compensation awards that, in the aggregate, were significantly less
than the bonus pool calculation permitted.
As
discussed above, we believe that alignment of the interests of employees and
clients is key to providing superior long-term returns for Unitholders. However,
there is a relatively small group of individuals 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 of their exceptional individual contributions to the
company’s success. In January 2007, the Compensation Committee approved the
Special Option Program (“Special Program”). The Special Program permits selected
senior officers to voluntarily allocate up to a specified portion of their
annual Partners Plan (described in greater detail below) award to
options to buy Holding Units; the firm matches this allocation on a two-for-one
basis. Only one member of the Management Executive Committee has been selected
to participate in the Special Program.
The
value
allocated to each such option 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 was January
26, 2007, the date of the meeting of the Compensation Committee at which it
approved the granting of the options. One-third of the options have a 10-year
term and vest in equal annual increments on each of the first five anniversaries
of the grant date; two-thirds of the options have an 11-year term and vest
in
equal annual increments on each of the sixth through tenth anniversaries of
the
grant date.
Options
granted pursuant to the Special 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).
Compensation
Elements for Executive Officers
Below
we
describe the key 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 executive management at
peer firms. Each of our chief executive officer and our former vice chairman
received a base salary for 2006 in the amount of $275,000; generally no other
officer at the firm was paid a base salary greater than $200,000 except for
amounts reflecting service in non-U.S. locations and related foreign exchange
rates. 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 2006 to our chief executive officer,
chief
financial officer, and our three most highly compensated executive officers
(the
“named executive officers”) are shown in column (c) of the Summary Compensation
Table.
2.
Cash
Bonus.
We pay
annual cash bonuses in late December from the cash bonus pool 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 our business, and operational goals
established at the beginning of the year, and in the context of our overall
performance. The cash bonuses we awarded last year to our named executive
officers are shown in column (d) of the Summary Compensation Table.
3.
Deferred
Compensation.
The
Partners Plan is an unfunded, non-qualified deferred compensation plan under
which awards may be granted to eligible employees. Since 2003, participants
have
been permitted to allocate their Partners Plan awards in a combination of
notional investments in certain of our investment services offered to clients
and notional investments in Holding Units. No more than 50% of an annual award
may be allocated to Holding Units. As described above, we have created a Special
Program which permits a limited number of employees to allocate a portion of
their Partners Plan award to options to buy Holding Units. A participant’s
allocation to options is subject to this 50% limitation.
The
value
used for Holding Units to effect a participant’s allocation to Holding Units
(but not to options) depends upon whether the trust related to the Partners
Plan
holds sufficient unallocated Holding Units to satisfy all such employee
allocations. If the trust does hold a sufficient number of Holding Units, then
the value used for the allocation is the closing price as reported for NYSE
composite transactions on a day shortly following the release of fourth quarter
earnings (“Post-Earnings Closing Price”). If the trust does not hold a
sufficient number of Holding Units, the company has historically directed the
trust to purchase additional Holding Units on the open market, in which case
the
Holding Units are valued for allocation purposes using the weighted average
of
the Post-Earnings Closing Price and the cost paid by AllianceBernstein to
acquire any additional Holding Units required.
Vesting
periods for Partners Plan awards range from four years to immediate, depending
on the age of the participant; all awards fully vest if a participant remains
in
our employ through December 1 in the year during which he or she turns
65.
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. 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.
Mr.
Sanders, our chief executive officer, is compensated in accordance with the
October 2006 employment agreement between himself and our company. Substantially
all of the compensation to be paid to him under that agreement vests on a
deferred basis in accordance with the terms of the agreement, and is distributed
to Mr. Sanders upon vesting. The deferral of such awards, and the notional
investments available for such awards, serve essentially the same function
as
the deferral of Partners Plan awards. Holding Units are not a permitted
investment under this agreement.
4.
Special
Option Program.
As
discussed above, the Compensation Committee recently approved the Special
Program, which provides for a select group of senior management 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. Because the Special Program is
designed to retain individuals whom we believe will make up the next generation
of the firm’s leadership, the named executive officers listed in the Summary
Compensation Table below were not selected to participate in the Special
Program.
5.
Defined
Contribution Plan.
All
employees are eligible to participate in the Amended and Restated Profit Sharing
Plan for Employees of AllianceBernstein L.P. (“Profit Sharing Plan”), a
tax-qualified 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). In recent years, we have matched employee deferral contributions
on a one-to-one basis up to five percent of eligible compensation; profit
sharing contributions have been an additional five percent of eligible
compensation.
Compensation
Committee
The
Compensation Committee is composed of Messrs. Condron (Chair), Sanders, and
Smith, and Ms. Slutsky. 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. Because AXA owns, indirectly, an approximate 60% economic
interest in AllianceBernstein, and because compensation expense is such a
significant factor in our financial results, Mr. Condron, President and Chief
Executive Officer of AXA Financial, serves as chairman of the Compensation
Committee.
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 (Mr. Sanders
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. The Compensation Committee held three meetings in 2006, and approved
the
Special Program on January 26, 2007.
The
Compensation Committee’s year-end process has generally focused on the cash
bonus and deferred awards granted to management. In respect of year-end 2006,
it
has given particular attention to the Special Program and awards thereunder.
Mr.
Sanders plays an active role in the work of the Compensation Committee. Messrs.
Lieberman and Sanders, working with other members of senior management, provide
recommendations of awards to the Compensation Committee for their consideration.
In recent years, management has retained McLagan Associates to assist in
providing industry benchmarking data to the Compensation Committee. The
Compensation Committee has not retained its own consultants.
Mr.
Sanders’s annual compensation is determined pursuant to his employment
agreement, entered into on October 26, 2006 following its approval by the
Compensation Committee. The agreement sets forth minimum amounts of annual
base
salary and of deferred compensation awards based on the firm’s profitability.
The Compensation Committee may award amounts in excess of each minimum; they
did
not do so at year-end 2006. For additional information about Mr. Sanders’s
employment agreement, see
“Other Information regarding Compensation of Named Executive Officers” in this
Item 11.
A
more
complete description of the Compensation Committee’s functions is set forth 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 Internal Revenue 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 Internal Revenue Code.
All
compensation awards that involve the issuance of Holding Units are made under
the Amended and Restated 1997 Long Term Incentive Plan (“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. As of December 31, 2006,
29,168,647 Holding Units are available for future awards under the 1997
Plan.
Compensation
Committee Interlocks and Insider Participation
Mr.
Condron is the President and Chief Executive Officer of AXA Equitable, the
sole
stockholder of the General Partner. AXA Equitable and its affiliates own an
aggregate 60% economic interest in AllianceBernstein. Mr. Sanders is Chairman
and Chief Executive Officer of the General Partner, and accordingly also serves
in those positions 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)
|
Lewis
A. Sanders
|
|
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 2006:
|
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-
Equity
Incentive
Plan
Compen-
sation
($)
|
Change
in
Pension
Value
and
Nonquali-
fied
Deferred
Compensation
Earnings
($)
|
All
Other
Compen-
sation
($)
|
Total
($)
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|
Lewis
A. Sanders
Chairman
& Chief
Executive
Officer
|
2006
|
275,002
|
0
|
0
|
0
|
0
|
0
|
19,501,985
|
19,776,987
|
|
Gerald
M. Lieberman
President
& Chief
Operating
Officer
|
2006
|
200,000
|
4,050,000
|
0
|
61,192
|
0
|
0
|
6,224,070
|
10,535,262
|
|
Marilyn
G. Fedak
Executive
Vice
President
|
2006
|
140,769
|
4,000,000
|
0
|
0
|
0
|
0
|
6,123,707
|
10,264,476
|
|
Sharon
E. Fay
Executive
Vice
President
|
2006
|
150,000
|
3,900,000
|
0
|
0
|
0
|
0
|
6,100,062
|
10,150,062
|
|
Robert
H. Joseph, Jr.
Senior
Vice President
&
Chief Financial
Officer
|
2006
|
175,000
|
1,050,000
|
0
|
22,947
|
0
|
31,041
|
868,726
|
2,147,714
|
Each
named executive officer received a base salary for 2006 and 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.
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”).
Column
(i) reflects awards under the Partners Plan, Mr. Sanders’s deferred award under
his employment 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 company 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 grant
Holding Units. In addition, awards under the Partners Plan are not accounted
for
under SFAS No. 123-R.
During
2006, we owned fractional interests in two aircraft with an aggregate operating
cost of $3,277,654 (including $1,175,531 in
maintenance fees, $1,440,963 in usage fees, and $661,160 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,
2006 was $10,633,385.
Our
interests in aircraft facilitate business travel of members of our management
executive committee. In 2006, we also permitted our Chief Executive Officer,
our
President, and our former Vice Chairman to use the aircraft for personal travel.
Overall, personal travel constituted approximately 38.1% of our actual use
of
the aircraft in 2006.
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, 2006 for personal use imputed to Mr. Sanders
is
$66,368 and to Mr. Lieberman is $12,958. Ms. Fedak, 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 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
2006,
column (i) includes:
for
Mr.
Sanders, $19,012,000 for his 2006 annual award under his employment agreement,
$303,935 for personal use of aircraft, $162,862 for personal use of a car
(including lease costs ($38,146), driver salary ($103,339), and other
car-related costs ($21,377) such as parking, gas, tolls, and repairs and
maintenance), a $22,000 contribution to the Profit Sharing Plan, and $1,188
of
life insurance premiums.
for
Mr.
Lieberman, $6,050,000 for his 2006 Partners Plan award, $11,234 for personal
use
of aircraft, $142,836 for personal use of a car (including lease costs
($27,355), driver salary ($97,719), and other car-related costs ($17,762) such
as parking, gas, tolls, and repairs and maintenance), and a $20,000 contribution
to the Profit Sharing Plan.
for
Ms.
Fedak, $6,100,000 for her 2006 Partners Plan award, $8,755 of sick-pay and
short-term disability pay, and a $14,952 contribution to the Profit Sharing
Plan.
for
Ms.
Fay, $5,700,000 for her 2006 Partners Plan award, $199,303 for London living
expenses, $185,579 in tax equalization payments to compensate for U.K.-based
taxes, a $15,000 contribution to the Profit Sharing Plan, and $180 of life
insurance premiums.
for
Mr.
Joseph, $825,000 for his 2006 Partners Plan award, $13,869 for personal use
of a
car (including lease costs ($6,516) and other car-related costs ($7,353) such
as
parking, gas, tolls, and repairs and maintenance), $8,100 in business club
dues,
a $17,500 contribution to the Profit Sharing Plan, and $4,257 of life insurance
premiums.
Grant
of Plan-based Awards
We
have
not granted Holding Units or options to buy Holding Units to the named executive
officers for a number of years, and the Partners Plan cannot be categorized
as
an “incentive plan” under relevant SEC rules. Accordingly, we made no grants of
plan-based awards to the named executive officers in 2006, and we have omitted
the related table.
Outstanding
Equity Awards at Fiscal Year-End
The
following table describes any outstanding equity awards as of December 31,
2006
of our named executive officers, if any:
|
Option
Awards
|
Stock
Awards
|
||||||||
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
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)
|
|
Lewis
A. Sanders
|
0
|
0
|
0
|
n/a
|
n/a
|
0
|
0
|
0
|
0
|
|
Gerald
M. Lieberman
|
32,000
40,000
|
8,000
0
|
0
0
|
33.18
50.25
|
12/06/12
12/07/11
|
0
0
|
0
0
|
0
0
|
0
0
|
|
Marilyn
G. Fedak
|
0
|
0
|
0
|
n/a
|
n/a
|
0
|
0
|
0
|
0
|
|
Sharon
E. Fay
|
0
|
0
|
0
|
n/a
|
n/a
|
0
|
0
|
0
|
0
|
|
Robert
H. Joseph, Jr.
|
12,000
15,000
15,000
50,000
15,000
20,000
|
3,000
0
0
0
0
0
|
0
0
0
0
0
0
|
33.18
50.25
53.75
48.50
30.25
26.31
|
12/06/12
12/07/11
12/11/10
06/20/10
12/06/09
12/10/08
|
0
0
0
0
0
0
|
0
0
0
0
0
0
|
0
0
0
0
0
0
|
0
0
0
0
0
0
|
Of
the
named executive officers, only Messrs. Lieberman and Joseph have been granted
options to buy Holding Units. No named executive officer has been awarded
Holding Units. The unexercisable options shown in column (c) vest in December
2007.
Option
Exercises and Stock Vested
The
following table describes all option exercises and stock vesting of our named
executive officers during 2006, if any:
|
Option
Awards
|
Stock
Awards
|
|||
|
Name
|
Number
of Shares
Acquired
on Exercise
(#)
|
Value
Realized
on
Exercise
($)
|
Number
of Shares
Acquired
on Vesting
(#)
|
Value
Realized
on
Vesting
($)
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
Lewis
A. Sanders
|
0
|
0
|
0
|
0
|
|
Gerald
M. Lieberman
|
0
|
0
|
0
|
0
|
|
Marilyn
G. Fedak
|
0
|
0
|
0
|
0
|
|
Sharon
E. Fay
|
0
|
0
|
0
|
0
|
|
Robert
H. Joseph, Jr.
|
40,000
|
2,247,332
|
0
|
0
|
Column
(c) reflects the pre-tax amount of proceeds, net of payment of exercise
price.
Pension
Benefits
The
following table describes the accumulated benefit under our company pension
plan
belonging to each of our named executive officers as of December 31, 2006,
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)
|
|
Lewis
A. Sanders
|
n/a
|
0
|
0
|
0
|
|
Gerald
M. Lieberman
|
n/a
|
0
|
0
|
0
|
|
Marilyn
G. Fedak
|
n/a
|
0
|
0
|
0
|
|
Sharon
E. Fay
|
n/a
|
0
|
0
|
0
|
|
Robert
H. Joseph, Jr.
|
Retirement
Plan for Employees of AllianceBernstein L.P.
|
22
|
407,866
|
0
|
Of
the
named executive officers, only Mr. Joseph, who was an employee of Alliance
Capital Management L.P. prior to the Bernstein Transaction, participates in
the
Retirement Plan and continues to accrue benefits thereunder. This 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, the participant’s average compensation
over prescribed periods and Social Security covered compensation. The maximum
annual benefit payable under the plan may not exceed the lesser of $100,000
or
100% of a participant’s average aggregate compensation for the three consecutive
years in which he or she received the highest aggregate compensation from us
or
such lower limit as may be imposed by the Internal Revenue Code on certain
participants by reason of their coverage under another qualified retirement
plan
we maintain. A participant is fully vested after the completion of five years
of
service. The plan generally provides for payments to, or on behalf of, each
vested employee upon such employee’s retirement at the normal retirement age
provided under the plan or later, although provision is made for payment of
early retirement benefits on an actuarially reduced basis. Normal retirement
age
under the plan is 65. Death benefits are payable to the surviving spouse of
an
employee who dies with a vested benefit under the plan.
For
additional information regarding interest rates and actuarial assumptions,
see
Note 14 to AllianceBernstein’s consolidated financial statements in Item
8.
Non-Qualified
Deferred Compensation
The
following table describes our named executive officers’ non-qualified deferred
compensation contributions, earnings, and distributions during 2006 and their
non-qualified deferred compensation plan balances as of December 31,
2006:
|
Name
|
Executive
Contributions
in
Last
FY ($)
|
Registrant
Contributions
in
Last
FY ($)
|
Aggregate
Earnings
in
Last FY
($)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance
at
Last FYE ($)
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|
Lewis
A. Sanders
|
0
|
19,012,000
|
3,915,884
|
(14,426,335)
|
35,706,588
|
|
Gerald
M. Lieberman
|
0
|
6,050,000
|
3,072,864
|
(5,467,209)
|
21,383,790
|
|
Marilyn
G. Fedak
|
0
|
6,100,000
|
3,487,064
|
0
|
21,700,465
|
|
Sharon
E. Fay
|
0
|
5,700,000
|
1,502,762
|
(5,289,529)
|
13,264,093
|
|
Robert
H. Joseph, Jr.
|
0
|
825,000
|
1,959,200
|
(499,494)
|
8,692,037
|
For
each
named executive officer other than Mr. Joseph, the amounts shown reflect the
aggregate of the officer’s interest in both the SCB Deferred Compensation Award
Plan (“SCB Deferred Plan”), under which the last awards were permitted to be
made in 2003, and the Partners Plan (and, for Mr. Sanders, awards under his
employment agreement and his former employment agreement). Amounts shown for
Mr.
Joseph reflect the Partners Plan and a de minimis amount in respect of the
annual elective deferral plan (a non-qualified deferred compensation plan
pursuant to which participants could elect to defer a portion of their 2000
and
2001 annual cash bonus or commission and invest it in Holding Units). For
information about the SCB Deferred Plan, the Partners Plan, and Mr. Sanders’s
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, 2006. As of that date, Mr. Lieberman notionally held
approximately 55,619 Holding Units in the Partners Plan, Ms. Fay notionally
held
approximately 13,097 Holding Units in the SCB Deferred Plan, and Mr. Joseph
notionally held approximately 57,946 Holding Units in the Partners
Plan.
Other
Information regarding Compensation of Named Executive
Officers
There
are
no amounts payable to any of the named executive officers upon a change in
control of the company.
On
October 26, 2006, Lewis A. Sanders and AllianceBernstein entered into an
employment agreement pursuant to which Mr. Sanders shall serve as Chairman
and Chief Executive Officer of the General Partner through December 31,
2011 (“Employment Term”) unless the agreement is terminated in accordance with
its terms. Mr. Sanders will be paid a minimum base salary of $275,000 per
year during the Employment Term and, for calendar year 2006 and each subsequent
calendar year during the Employment Term, he is 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 AllianceBernstein’s bonus pool) for such calendar
year. Mr. Sanders is entitled to perquisites on the same terms as other
senior executives through the Employment Term, including personal use of
aircraft and a car and driver (our President is the only other officer entitled
to personal use of aircraft and a car and driver).
Mr.
Sanders may receive payments upon termination pursuant to his employment
agreement. During any year in which we terminate Mr. Sanders without “cause” (as
defined below), he is entitled to (i) his annual base salary for that year,
(ii)
the deferred compensation award described above calculated as of his termination
date, (iii) all unvested deferred compensation awards, (iv) health and welfare
benefits for Mr. Sanders, his spouse, and his dependents through the end of
that
year, (v) if the termination occurs prior to December 31, 2007, a cash payment
equal to $20,000 times the number of plan years for which Mr. Sanders will
not
receive a company contribution under the Profit Sharing Plan, and (vi) if the
termination occurs prior to December 31, 2007, the continued receipt of
perquisites, reimbursements, and support described above through the end of
that
year. The above elements, assuming 2006 costs, would have resulted in a payment
to Mr. Sanders of approximately $36.5 million had he been terminated without
cause as of January 1, 2007.
During
any year in which Mr. Sanders is terminated for “cause”, he is entitled to (i)
the pro rata portion of his annual salary for that year for services rendered
to
the date of termination, to the extent not previously paid, and (ii) all
deferred compensation awards described above that have vested prior to such
termination. Mr. Sanders would be entitled to no other payments or benefits
under the agreement, which defines “cause” as Mr. Sanders’s (i) willful failure
to perform his duties, (ii) engaging in conduct found by a court to (A)
constitute employment disqualification or a felony and which is materially
and
demonstrably injurious to our business or reputation, or (B) materially violate
federal or state securities laws, (iii) absent the finding in clause (ii) above,
a good faith determination by the Board that conduct by Mr. Sanders constitutes
such a disqualification, felony or violation, and that his continued employment
would be materially and demonstrably injurious to our business or reputation,
or
(iv) breach of the confidentiality or non-competition covenants contained in
the
agreement, which breach is material to our business.
Director
Compensation
The
following table describes how we compensated our independent directors during
2006:
|
Name
|
Fees
Earned
or
Paid in
Cash ($)
|
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)
|
|
Weston
M. Hicks
|
58,000
|
30,000
|
30,000
|
0
|
0
|
0
|
118,000
|
|
W.
Edwin Jarmain
|
16,000
|
0
|
0
|
0
|
0
|
0
|
16,000
|
|
Lorie
A. Slutsky
|
68,500
|
30,000
|
30,000
|
0
|
0
|
0
|
128,500
|
|
A.W.
(Pete) Smith, Jr.
|
62,500
|
30,000
|
30,000
|
0
|
0
|
0
|
122,500
|
|
Peter
J. Tobin
|
88,000
|
30,000
|
30,000
|
0
|
0
|
0
|
148,000
|
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, which is why Mr. Jarmain, who resigned
from the Board effective February 25, 2006, received less than $40,000
in
2006);
|
|
·
|
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 15, 2006, at a regularly scheduled meeting of the Board, 462 restricted
Holding Units and options to buy 2,428 Holding Units at $65.02 per Unit were
granted to Ms. Slutsky, and to Messrs. Hicks, Smith, and 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 2005. The exercise price of the options was the
closing price on the NYSE on the grant date. Due to rounding, directors received
slightly more than the value of the grant (but in no case greater than
approximately $12.35, the Black-Scholes value of each option, in respect of
the
option grant, or $65.02, the price of the Holding Unit, for the grant of
restricted Holding Units). 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 immediately 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.
|
Item
12.
|
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, 2006:
Equity
Compensation Plan Information(1)
|
Plan Category
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)
|
Weighted average
exercise price of
outstanding options,
warrants and rights
(b)
|
Number of securities
remaining available for
future issuance
(c)
|
|||||||
|
Equity
compensation plans approved by security holders
|
4,819,099
|
$
|
41.62
|
29,168,647
|
||||||
|
Equity
compensation plans not approved by security holders
|
—
|
—
|
—
|
|||||||
|
Total
|
4,819,099
|
$
|
41.62
|
29,168,647
|
||||||
____________
|
(1)
|
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 rather than issuing new Holding Units. For
additional information concerning such 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
Long Term Incentive Plan, Century Club Plan), see
Note 16 to AllianceBernstein’s consolidated financial statements in Item
8.
Principal
Security Holders
As
of
January 31, 2007, we had no information that any person beneficially owned
more
than 5% of the outstanding Holding Units.
As
of
January 31, 2007, we had no information that any person beneficially owned
more
than 5% of the outstanding AllianceBernstein Units except (i) AXA and
certain of its wholly-owned subsidiaries as reported on Forms 4 filed with
the
SEC on December 11, 2006 pursuant to the Exchange Act, (ii) AXA and certain
of
its wholly-owned subsidiaries as reported on Schedule 13D/A filed with the
SEC on December 23, 2004 pursuant to the Exchange Act, and
(iii) SCB Inc. and SCB Partners Inc. (SCB Partners Inc. is a
wholly-owned subsidiary of SCB Inc.) as reported on Schedule 13D/A
filed with the SEC on December 23, 2004 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.
On
February 23, 2007, SCB Partners sold to AXA Financial 8,160,000
AllianceBernstein Units pursuant to an agreement (see
Note 6 below)
entered
into in connection with the Bernstein Transaction; the beneficial ownership
of
AllianceBernstein Units discussed in the table below does not reflect this
sale.
|
Name and Address of
Beneficial Owner
|
Amount and Nature of Beneficial
Ownership Reported on Schedule
|
Percent of Class
|
|||||
|
AXA(1)(2)(3)(4)(6)
25
avenue Matignon 75008 Paris, France
|
153,581,609
|
59.2
|
%
|
||||
|
SCB
Inc.,(5)(6) SCB
Partners Inc.(5)(6)
50
Main Street, Suite 1000, White Plains, NY 10606
|
16,320,000
|
6.3
|
%
|
||||
____________
|
(1)
|
Based
on information provided by AXA Financial, on December 31, 2006, AXA
and certain of its subsidiaries beneficially owned all of AXA Financial’s
outstanding common stock. For insurance regulatory purposes the shares
of
capital 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 Claude Bébéar, Henri de
Castries and Denis Duverne, each of whom serves either on the Management
Board or on the Supervisory 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.
|
|
(2)
|
Based
on information provided by AXA, as of December 31, 2006, 14.26% of
the
issued ordinary shares (representing 20.65% of the voting power)
of AXA
were owned directly and indirectly by three French mutual insurance
companies (the “Mutuelles AXA”).
|
|
(3)
|
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.
|
|
(4)
|
By
reason of their relationships, AXA, the Voting Trustees, the Mutuelles
AXA, AXA Financial, AXA Equitable, ACMC Inc., and ECMC, LLC 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 153,581,609 AllianceBernstein
Units.
|
|
(5)
|
SCB
Partners Inc. is a wholly-owned subsidiary of SCB Inc.
Mr. Sanders is a Director and the Chairman and Chief Executive
Officer of SCB Inc., and is the owner of a 22.13% equity interest in
SCB Inc. Mr. Lieberman is a Director and the Senior Vice
President—Finance and Administration of SCB Inc., and is the owner of
a less than 1% equity interest in SCB Inc. Ms. Fedak is
a Director and Senior Vice President of SCB Inc., and is the owner
of a
2.67% equity interest in SCB Inc. Ms. Fay is the owner of a less than
1% equity interest in SCB Inc. Mr. Sanders,
Mr. Lieberman, Ms. Fedak, and Ms. Fay disclaim beneficial
ownership of the 16,320,000 AllianceBernstein Units owned by SCB
Partners Inc., except to the extent of their pecuniary interests
therein. For additional information about these pecuniary interests,
see
“Management” in this Item 12.
|
|
(6)
|
In
connection with the Bernstein Transaction, SCB Inc.,
AllianceBernstein and AXA Financial entered into a purchase agreement
under which SCB Inc. has 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. has 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. The Put rights expire on October 2, 2010. Generally,
SCB Inc. may exercise its Put rights only once per year and
SCB Inc. may not deliver 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, and February 23, 2007, AXA Financial or certain of
its 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.
|
As
of
January 31, 2007, Holding was the record owner of 85,919,404, or 33.1%, of
the
issued and outstanding AllianceBernstein Units.
Management
The
following table sets forth, as of January 31, 2007, 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
|
|||||
|
Lewis
A. Sanders(1)
|
0
|
*
|
|||||
|
Dominique
Carrel-Billiard(1)
|
0
|
*
|
|||||
|
Henri
de Castries(1)
|
2,000
|
*
|
|||||
|
Christopher
M. Condron(1)
|
20,000
|
*
|
|||||
|
Denis
Duverne(1)
|
2,000
|
*
|
|||||
|
Peter
Etzenbach(1)
|
0
|
*
|
|||||
|
Weston
M. Hicks
|
462
|
*
|
|||||
|
Gerald
M. Lieberman(1,2)
|
120,259
|
*
|
|||||
|
Lorie
A. Slutsky(1,3)
|
16,750
|
*
|
|||||
|
A.W.
(Pete) Smith, Jr.
|
712
|
*
|
|||||
|
Peter
J. Tobin(1,4)
|
30,590
|
*
|
|||||
|
Marilyn
G. Fedak(1)
|
0
|
*
|
|||||
|
Sharon
E. Fay(1)
|
16,745
|
*
|
|||||
|
Robert
H. Joseph, Jr.(1,5)
|
152,774
|
*
|
|||||
|
All
directors and executive officers of the General Partner as a group
(30 persons)(6)
|
2,167,058
|
2.5
|
%
|
||||
____________
|
*
|
Number
of Holding Units listed represents less than 1% of the Units
outstanding.
|
|
(1)
|
Excludes
Holding Units beneficially owned by AXA and its subsidiaries.
Messrs. Carrel-Billiard, de Castries, Condron, Duverne, Etzenbach,
Lieberman, and Tobin, and Ms. Slutsky, are directors and/or officers
of
AXA, AXA Financial, and/or AXA Equitable. Messrs. Sanders, Lieberman,
and Joseph, and Mesdames Fedak and Fay, are directors and/or officers
of
the General Partner.
|
|
(2)
|
Includes
72,000 Holding Units Mr. Lieberman can acquire within 60 days under
an
AllianceBernstein option plan.
|
|
(3)
|
Includes
14,217 Holding Units Ms. Slutsky can acquire within 60 days under
an
AllianceBernstein option plan.
|
|
(4)
|
Includes
29,467 Holding Units Mr. Tobin can acquire within 60 days under an
AllianceBernstein option plan.
|
|
(5)
|
Includes
127,000 Holding Units Mr. Joseph can acquire within 60 days under
AllianceBernstein option plans.
|
|
(6)
|
Includes
862,684 Holding Units the directors and executive officers as a group
can
acquire within 60 days under AllianceBernstein option
plans.
|
As
of
January 31, 2007, our directors and executive officers beneficially owned
AllianceBernstein Units only to the extent of their respective indirect
pecuniary interests in 16,320,000 AllianceBernstein Units beneficially owned
by
SCB Partners Inc. Based on their respective equity interests in SCB Inc. and/or
notional interests in the AllianceBernstein Units through an SCB Partners Inc.
profit sharing plan, the individuals named below may be deemed to own
beneficially and indirectly the number of AllianceBernstein Units set forth
opposite their respective names.
On
February 23, 2007, SCB Partners sold to AXA Financial 8,160,000
AllianceBernstein Units pursuant to an agreement (see
Note 6 to “Principal Security Holders” in this Item 12)
entered
into in connection with the Bernstein Transaction; the beneficial ownership
of
AllianceBernstein Units discussed in the table below does not reflect this
sale.
|
Name of Beneficial Owner
|
Number of
AllianceBernstein
Units
and Nature of
Beneficial Ownership
|
Percent of Class
|
|||||
|
Lewis
A. Sanders
|
3,199,893
|
1.2
|
%
|
||||
|
Gerald
M. Lieberman
|
92,834
|
*
|
|||||
|
Sharon
E. Fay
|
50,773
|
*
|
|||||
|
Marilyn
G. Fedak
|
383,420
|
*
|
|||||
|
Mark
R. Gordon
|
217,030
|
*
|
|||||
|
Thomas
S. Hexner
|
166,589
|
*
|
|||||
|
Seth
J. Masters
|
72,609
|
*
|
|||||
|
Marc
O. Mayer
|
101,281
|
*
|
|||||
|
Lisa
A. Shalett
|
10,950
|
*
|
|||||
|
David
A. Steyn
|
1,825
|
*
|
|||||
|
All
directors and executive officers of the General Partner as a group
(30 persons)
|
4,297,204
|
1.7
|
%
|
||||
____________
|
*
|
Number
of AllianceBernstein Units listed represents less than 1% of the
outstanding AllianceBernstein
Units.
|
The
following table sets forth, as of January 31, 2007, 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
|
|||||
|
Lewis
A. Sanders
|
0
|
*
|
|||||
|
Dominique
Carrel-Billiard(2)
|
33,376
|
*
|
|||||
|
Henri
de Castries(3)
|
5,807,601
|
*
|
|||||
|
Christopher
M. Condron(4)
|
3,575,217
|
*
|
|||||
|
Denis
Duverne(5)
|
1,815,226
|
*
|
|||||
|
Peter
Etzenbach(6)
|
11,534
|
*
|
|||||
|
Weston
M. Hicks
|
0
|
*
|
|||||
|
Gerald
M. Lieberman
|
0
|
*
|
|||||
|
Lorie
A. Slutsky
|
203
|
*
|
|||||
|
A.W.
(Pete) Smith, Jr.
|
0
|
*
|
|||||
|
Peter
J. Tobin(7)
|
7,695
|
*
|
|||||
|
Marilyn
G. Fedak
|
0
|
*
|
|||||
|
Sharon
E. Fay
|
0
|
*
|
|||||
|
Robert
H. Joseph, Jr.
|
0
|
*
|
|||||
|
All
directors and executive officers of the General Partner as a group
(30
persons)(8)
|
11,250,852
|
*
|
|||||
____________
|
*
|
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)
|
Includes
30,810 shares Mr. Carrel-Billiard can acquire within 60 days under
option
plans.
|
|
(3)
|
Includes
4,771,410 shares and 292,308 ADSs Mr. de Castries can acquire within
60
days under option plans.
|
|
(4)
|
Includes
1,576,208 ADSs Mr. Condron can acquire within 60 days under option
plans.
Also includes 244,293 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.
|
|
(5)
|
Includes
1,364,031 shares and 99,932 ADSs Mr. Duverne can acquire within 60
days
under option plans.
|
|
(6)
|
Includes
6,809 shares Mr. Etzenbach can acquire within 60 days under options
plans.
|
|
(7)
|
Includes
636 ADSs Mr. Tobin can acquire within 60 days under option plans.
Also
includes 3,540 ADSs Mr. Tobin owns jointly with his
spouse.
|
|
(8)
|
Includes
6,173,060 shares and 1,969,084 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 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,” 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 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 a partner has duties (including
fiduciary duties) and liabilities relating thereto to a limited partnership
or
to another partner, those duties and liabilities may be expanded, restricted,
or
eliminated by provisions in a partnership agreement (provided that a partnership
agreement may not (i) eliminate the implied contractual covenant of good faith
and fair dealing, or (ii) limit or eliminate liability for any act or omission
that constitutes a bad faith violation of the implied 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.
| Item 13. |
Transactions
with Related Persons, Promoters and Certain Control
Persons
|
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 four independent directors on the Board. We are not aware of any
transaction during 2006 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 2006. 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
|
Amounts Received or
Accrued for in 2006
|
||||
|
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.
|
|
$
|
79,376,000
|
|
|
|
AXA
Asia Pacific(2)
|
We
provide investment management services.
|
|
$
|
39,225,000
|
||
|
AXA
Equitable(2)
|
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.
|
|
$
|
35,871,000
(of which
$272,000 relates
to the ancillary services)
|
||
|
MONY
Life Insurance Company and its subsidiaries(2)(3)
|
We
provide investment management services and ancillary accounting
services.
|
|
$
|
9,628,000
(of which $150,000 relates to the ancillary services)
|
||
|
AXA
Group Life Insurance
|
We
provide investment management services.
|
|
$
|
7,688,000
|
||
|
AXA
Sun Life(2)
|
We
provide investment management services.
|
|
$
|
3,657,000
|
||
|
AXA
U.K. Group Pension Scheme
|
We
provide investment management services.
|
|
$
|
2,924,000
|
|
|
|
AXA
Rosenberg Investment Management
Asia
Pacific(2)
|
We
provide investment management services.
|
|
$
|
2,177,000
|
||
|
AXA
(Canada)(2)
|
We
provide investment management services.
|
|
$
|
2,170,000
|
||
|
AXA
Corporate Solutions(2)
|
We
provide investment management services.
|
|
$
|
937,000
|
||
|
AXA
France(2)
|
We
provide investment management services.
|
|
$
|
509,000
|
||
|
AXA
Reinsurance Company(2)
|
We
provide investment management services.
|
|
$
|
487,000
|
|
|
|
AXA
Investment Managers Limited(2)
|
We
provide investment management services.
|
|
$
|
314,000
|
|
|
|
AXA
Foundation, Inc., a subsidiary of AXA Financial
|
We
provide investment management services.
|
|
$
|
180,000
|
|
|
|
Various
AXA subsidiaries
|
We
provide investment management services.
|
|
$
|
235,000
|
|
|
____________
|
(1)
|
AllianceBernstein
is a party to each transaction.
|
|
(2)
|
This
entity is a subsidiary of AXA. AXA is an indirect parent of
AllianceBernstein.
|
|
(3)
|
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 2006
|
||||
|
AXA
Advisors
|
AXA
Advisors distributes certain of our Retail Products.
|
|
$
|
5,708,000
|
|
|
|
AXA
Equitable
|
AXA
Equitable provides certain data processing services and related
functions.
|
|
$
|
3,725,000
|
||
|
AXA
Equitable
|
We
are covered by various insurance policies maintained by AXA
Equitable.
|
|
$
|
3,139,000
|
|
|
|
AXA
Business Services
|
AXA
Business Services provides data processing services and support for
certain investment operations functions.
|
|
$
|
1,060,000
|
|
|
|
GIE
Informatique AXA (“GIE”)
|
GIE
provides cooperative technology development and procurement services
to us
and to various other subsidiaries of AXA.
|
|
$
|
891,000
|
||
|
AXA
Advisors
|
AXA
Advisors sells shares of our mutual funds under Distribution Services
and
Educational Support agreements.
|
|
$
|
772,000
|
|
|
|
AXA
Technology Services India Pvt. Ltd.
|
AXA
Technology Services India Pvt. Ltd. provides certain data processing
services and functions.
|
|
$
|
763,000
|
|
|
____________
|
(1)
|
AllianceBernstein
is a party to each transaction.
|
|
(2)
|
Each entity
is a subsidiary of AXA. AXA is an indirect parent of
AllianceBernstein.
|
Additional
Transactions with Related Persons
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 $49.4 billion in client assets,
and earned $61.1 million in management fees in 2006.
AXA
Advisors was our ninth
largest distributor of U.S. Funds in 2006, for which we paid AXA Advisors sales
concessions on sales of $524 million. Various subsidiaries of AXA distribute
certain of our Non-U.S. Funds, for which such entities received aggregate
distribution payments of approximately $427,000 in 2006.
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 (now part
of Credit Suisse First Boston LLC) as well as obligations of AllianceBernstein
to various employees and their beneficiaries under AllianceBernstein’s Capital
Accumulation Plan. In 2006, ACMC Inc. made capital contributions to
AllianceBernstein in the amount of approximately $4.3 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 4,914
employees.
Gerald
M.
Lieberman’s daughter, Andrea L. Feldman, is employed in AllianceBernstein
Institutional Investments and received 2006 compensation of $130,000 (salary
and
bonus). Mr. Lieberman’s son-in-law, Jonathan H. Feldman, the spouse of
Andrea L. Feldman, is employed in Retail Services and received 2006 compensation
of $225,000 (salary and bonus). Gerald M. Lieberman is Director of the General
Partner and the President and Chief Operating Officer of
AllianceBernstein.
James
G.
Reilly’s brother, Michael J. Reilly, is a U.S. Large Cap Growth portfolio
manager and received 2006 compensation of $2,617,000 (salary, bonus, and
deferred compensation). James G. Reilly is an Executive Vice President of
AllianceBernstein and our U.S. Large Cap Growth team leader.
|
Item
14.
|
Principal
Accountant Fees and
Services
|
The
following table presents fees for professional audit services rendered by
PricewaterhouseCoopers LLP (“PwC”) for the audit of AllianceBernstein’s and
Holding’s annual financial statements for 2006, and fees for other services
rendered by PwC ($ in thousands):
|
2006
|
||||||||||
|
Domestic
|
International
|
Total
|
||||||||
|
Audit
Fees(1)
|
$
|
6,319
|
$
|
1,356
|
$
|
7,675
|
||||
|
Audit
Related Fees(2)
|
1,300
|
782
|
2,082
|
|||||||
|
Tax
Fees(3)
|
1,309
|
361
|
1,670
|
|||||||
|
All
Other Fees(4)
|
27
|
30
|
57
|
|||||||
|
Total
|
$
|
8,955
|
$
|
2,529
|
$
|
11,484
|
||||
____________
|
(1)
|
Includes
$175,000 in respect of audit services for
Holding.
|
|
(2)
|
Audit
related fees consist principally of fees for audits of financial
statements of certain employee benefit plans, internal control reviews,
and accounting consultation.
|
|
(3)
|
Tax
fees consist of fees for tax consultation and tax compliance
services.
|
|
(4)
|
All
other fees in 2006 consisted of miscellaneous non-audit
services.
|
The
following table presents fees for professional audit services rendered by KPMG
LLP for the audit of AllianceBernstein’s and Holding’s annual financial
statements for 2005, and fees for other services rendered by KPMG LLP ($ in
thousands):
|
2005
|
||||||||||
|
Domestic
|
International
|
Total
|
||||||||
|
Audit
Fees(1)
|
$
|
6,222
|
$
|
1,051
|
$
|
7,273
|
||||
|
Audit
Related Fees(2)
|
712
|
588
|
1,300
|
|||||||
|
Tax
Fees(3)
|
524
|
326
|
850
|
|||||||
|
All
Other Fees(4)
|
6
|
—
|
6
|
|||||||
|
Total
|
$
|
7,464
|
$
|
1,965
|
$
|
9,429
|
||||
____________
|
(1)
|
Includes
$127,000 in respect of audit services for
Holding.
|
|
(2)
|
Audit
related fees consist principally of fees for audits of financial
statements of certain employee benefit plans, Sarbanes-Oxley
Section 404 documentation assistance and internal control
reviews.
|
|
(3)
|
Tax
fees consist of fees for tax consultation and tax compliance
services.
|
|
(4)
|
All
other fees 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.
PART IV
|
Item
15.
|
Exhibits,
Financial Statement
Schedules
|
|
(a)
|
There
is no document filed as part of this
Form 10-K.
|
Financial
Statement Schedules.
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, 2006, 2005, and 2004. PwC’s report regarding the 2006 schedule
and KPMG LLP’s report regarding the 2005 and 2004 schedules are also
attached.
|
(b)
|
Exhibits.
|
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).
|
|
|
Amended
and Restated AllianceBernstein Partners Compensation
Plan.
|
||
|
Amended
and Restated 1997 Long Term Incentive
Plan.
|
||
|
Form
of Award Agreement under the Amended and Restated AllianceBernstein
Partners Compensation Plan.
|
||
|
Forms
of Award Agreement under the Special Option Program.
|
||
|
Form
of Award Agreement under the AllianceBernstein Commission Substitution
Plan.
|
||
|
Form
of Award Agreement under the AllianceBernstein L.P. Financial Advisor
Wealth Accumulation Plan.
|
||
|
Amendment
and Restatement of the Profit Sharing Plan for Employees of
AllianceBernstein L.P., as amended through November 30,
2006.
|
||
|
Amendment
and Restatement of the Retirement Plan for Employees of AllianceBernstein
L.P., as amended through November 30, 2006.
|
||
|
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.
|
||
|
10.10
|
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).
|
|
|
10.11
|
Amended
and Restated Commercial Paper Dealer Agreement, dated as of May 3,
2006
(incorporated by reference to Exhibit 10.1 to Form 10-Q for the
quarterly period ended March 31, 2006, as filed May 8,
2006).
|
|
|
10.12
|
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).
|
|
|
10.13
|
Revolving
Credit Facility dated as of February 17, 2006 among AllianceBernstein,
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).
|
|
|
10.14
|
AllianceBernstein
Commission Substitution Plan, as amended and restated as of January
1,
2005 (incorporated by reference to Exhibit 10.5 to Form 10-K for
the
fiscal year ended December 31, 2005, as filed February 24,
2006).
|
|
|
10.15
|
AllianceBernstein
L.P. Financial Advisor Wealth Accumulation Plan effective August
1, 2005
(incorporated by reference to Exhibit 99.3 to Form S-8, as filed
August 5,
2005).
|
|
|
10.16
|
Investment
Advisory and Management Agreement for MONY Life (incorporated by
reference
to Exhibit 10.4 to Form 10-K for the fiscal year ended December 31,
2004,
as filed March 15, 2005).
|
|
|
10.17
|
Investment
Advisory and Management Agreement for the General Account of AXA
Equitable
(incorporated by reference to Exhibit 10.5 to Form 10-K for the fiscal
year ended December 31, 2004, as filed March 15, 2005).
|
|
|
10.18
|
Summary
of AllianceBernstein L.P.’s Lease at 1345 Avenue of the Americas, New
York, New York 10105 (incorporated by reference to Exhibit 10.3 to
Form 10-K for the fiscal year ended December 31, 2003, as filed
March 10, 2004).
|
|
|
10.19
|
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).
|
|
|
10.20
|
Services
Agreement dated as of April 22, 2001 between Alliance Capital
Management L.P. and AXA Equitable (incorporated by reference to
Exhibit 10.19 to Form 10-K for the fiscal year ended
December 31, 2001, as filed March 28, 2002).
|
|
|
10.21
|
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).
|
|
|
10.22
|
Purchase
Agreement dated as of June 20, 2000 by and among Alliance Capital
Management L.P., AXA Financial 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).
|
|
10.23
|
Alliance
Capital Management L.P. Annual Elective Deferral Plan (incorporated
by
reference to Exhibit 99 to Form S-8, as filed November 6,
2000).
|
|
|
10.24
|
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).
|
|
|
10.25
|
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
(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).
|
|
|
10.26
|
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 (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).
|
|
|
10.27
|
AllianceBernstein
L.P. Century Club Plan (incorporated by reference to Exhibit 4.3 to
Form S-8, as filed July 12, 1993).
|
|
|
10.28
|
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, 2006, 2005, and 2004.
|
||
|
Subsidiaries
of AllianceBernstein.
|
||
|
Consent
of PricewaterhouseCoopers LLP.
|
||
|
Consent
of KPMG LLP.
|
||
|
Certification
of Mr. Sanders 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. Sanders 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
L.P.
|
|||
|
Date:
February 27, 2007
|
By:
|
/s/
Lewis A. Sanders
|
|
|
Lewis
A. Sanders
|
|||
|
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 27, 2007
|
/s/
Robert H. Joseph, Jr.
|
||
|
Robert
H. Joseph, Jr.
|
|||
|
Senior
Vice President and
Chief
Financial Officer
|
|||
|
/s/
Edward J. Farrell
|
|||
|
Date:
February 27, 2007
|
Edward
J. Farrell
|
||
|
Senior
Vice President and
Chief
Accounting Officer
|
DIRECTORS
|
/s/
Lewis A. Sanders
|
/s/
Weston M. Hicks
|
|
|
Lewis
A. Sanders
|
Weston
M. Hicks
|
|
|
Chairman
of the Board
|
Director
|
|
|
/s/
Dominique Carrel-Billiard
|
/s/
Gerald M. Lieberman
|
|
|
Dominique
Carrel-Billiard
|
Gerald
M. Lieberman
|
|
|
Director
|
Director
|
|
|
/s/
Christopher M. Condron
|
/s/
Lorie A. Slutsky
|
|
|
Christopher
M. Condron
|
Lorie
A. Slutsky
|
|
|
Director
|
Director
|
|
|
/s/
Henri de Castries
|
/s/
A.W. (Pete) Smith, Jr.
|
|
|
Henri
de Castries
|
A.W.
(Pete) Smith, Jr.
|
|
|
Director
|
Director
|
|
|
/s/
Denis Duverne
|
/s/
Peter J. Tobin
|
|
|
Denis
Duverne
|
Peter
J. Tobin
|
|
|
Director
|
Director
|
|
|
/s/
Peter Etzenbach
|
||
|
Peter
Etzenbach
|
||
|
Director
|
||
SCHEDULE
II
AllianceBernstein
L.P.
Valuation
and Qualifying Account - Allowance for Doubtful Accounts
For
the Three Years Ending December 31, 2006, 2005 and 2004
|
Description
|
Balance
at Beginning of Period
|
Charged
to Costs and Expenses
|
Deductions
|
Balance
at End of Period
|
|||||||||
|
(in
thousands)
|
|||||||||||||
|
|
|
|
|
||||||||||
|
For
the year ended December 31, 2004
|
$
|
2,922
|
$
|
-
|
$
|
1,215
|
(a)
|
$
|
1,707
|
||||
|
For
the year ended December 31, 2005
|
$
|
1,707
|
$
|
55
|
$
|
823
|
(b)
|
$
|
939
|
||||
|
For
the year ended December 31, 2006
|
$
|
939
|
$
|
251
|
$
|
77
|
(c)
|
$
|
1,113
|
||||
(a)
Includes accounts written-off as uncollectible of $1,115 and reduction of
allowance balance of $100.
(b)
Includes accounts written-off as uncollectible of $123 and reduction of
allowance balance of $700.
(c)
Includes accounts written-off as uncollectible of $93 and a net addition
to the
allowance balance of $16.
Report
of Independent Registered Public Accounting Firm on
Financial
Statement Schedule
To
the
Board of Directors
of
AllianceBernstein L.P.
Our
audits of the
consolidated financial
statements, of management’s assessment of the effectiveness of internal control
over financial reporting and of the effectiveness of internal control over
financial reporting referred to in our report dated February 27,
2007 appearing
in the 2006 Annual Report to Shareholders 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 schedules listed in Item
15(a)
of this Form 10-K. In our opinion, based
on
our audits and the report of other auditors,
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
New
York,
New York
February
27, 2007
Report
of Independent Registered Public Accounting Firm
The
General Partner and Unitholders
AllianceBernstein
L.P.:
Under
date of February 24, 2006, we reported on the consolidated statement of
financial condition of AllianceBernstein L.P. and subsidiaries
(“AllianceBernstein”) as of December 31, 2005, and the related consolidated
statements of income, changes in partners’ capital and comprehensive income and
cash flows for each of the years in the two-year period ended December 31,
2005, which are included in this Form 10-K. In connection with our audits
of the aforementioned consolidated financial statements, we also audited
the
related consolidated financial statement schedule referenced in Item 15
(a) of
this Form 10-K. This financial statement schedule is the responsibility of
the General Partner’s management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.
In
our
opinion, such financial statement schedule, when considered in relation
to the
basic consolidated financial statements taken as a whole, present fairly,
in all
material respects, the information set forth therein.
|
/s/
KPMG LLP
|
|
|
New
York, New York
February
24, 2006
|
|
EXHIBIT
10.01
AMENDED
AND RESTATED
ALLIANCEBERNSTEIN
PARTNERS
COMPENSATION PLAN
As
Amended and Restated Effective as of January
26, 2007
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, “AllianceBernstein”)
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”).
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.
Notwithstanding the foregoing or anything else herein, none of
AllianceBernstein, Holding, any Affiliate, the Committee nor 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.
1
(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,
with respect to a Participant, a good faith determination by the Committee
that
the Participant is physically or mentally incapacitated and has been unable
for
a period of six consecutive months to perform, with or without reasonable
accommodation, substantially all of the duties for which the Participant
was
responsible immediately before the commencement of the incapacity. In order
to
assist the Committee in making such a determination and as reasonably requested
by the Committee, a Participant will (i) make himself or herself available
for
medical examination by one or more physicians chosen by the Committee and
approved by the Participant, whose approval shall not be unreasonably withheld,
(ii) grant the Committee and any such physicians access to all relevant medical
information relating to the Participant, (iii) arrange to furnish copies
of
medical records to the Committee and such physicians, and (iv) use his or
her
best efforts to cause the Participant’s own physicians to be available to
discuss the Participant’s health with the Committee and its chosen
physicians.
(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.
2
(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 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.
(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.
3
(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.
(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 Code 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 Section 152(a) of the Code) 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).
4
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 that
percentage of such Participant’s Award which 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. 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.
5
(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,
as
soon as administratively practicable 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 Sections 4.03 and 4.04.
6
(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,
EXPIRATIONAND
FORFEITURES
Section
3.01 General.
(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.
7
(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
|
8
(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 or 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, Disability, 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).
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.
9
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 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 as soon as administratively practicable after such portion vests under
the
applicable Vesting Period of Section 3.01.
(b) Subject
to Section 4.04, 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 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.
(ii) In
the
event of a Participant’s Termination of Employment due to the Participant’s
Disability or, with respect to Pre-1999 Awards, Retirement, such distribution
will be made to the Participant in a single lump sum payment as soon as
administratively practicable following the six month anniversary of any such
Termination of Employment, as applicable.
(iii) 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 as the balance 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 Sections 4.03(b) and 4.04, 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 a Termination of Employment for any reason other than death
or
Disability, the vested portion of such Participant’s Award, including Earnings
thereon, will be distributed to him as soon as administratively practicable
following the benefit commencement date specified on such Deferral Election
Form
and in the form of payment elected on such form.
(b) Subject
to Section 4.04, 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 has a Termination of Employment due to death or Disability,
the
elections made by such Participant on his Deferral Election Form shall be
disregarded, and the vested portion of such Participant’s Award, including
Earnings thereon, will be distributed to him as soon as administratively
practicable following such Termination of Employment in a single lump sum
payment; provided,
however,
that
with respect to a Termination of Employment due to Disability, no such
distribution may be made before the date which is 6 months after such
Termination of Employment.
10
Section
4.04 Payment
Following Death. Notwithstanding
Sections 4.02 and 4.03 to the contrary, in the event of the death of a
Participant or a former Participant, any undistributed portion of such
individual’s vested Award, including Earnings thereon, will be distributed to
his Beneficiary in a single lump sum distribution, as soon as administratively
practicable following the later of the date the Committee receives (i) written
notification in a form satisfactory to it of such individual’s death, and (ii)
any tax waiver or other document deemed relevant by the Committee with respect
to making the payment.
Section
4.05 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 or by liquidation of the individual’s assets (to the extent the
liquidation of such assets would not itself cause severe financial hardship).
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:
11
(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 prior restatement of
this
Plan which is hereby incorporated herein by reference, including the method
of
adjusting such Award for “earnings” as defined therein.
12
(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 of the Code), 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
as soon as administratively practicable after January 31, 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.
13
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” 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.
14
(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.
15
(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.
16
EXHIBIT
10.02
1997
Long Term Incentive Plan
SECTION
1. Purpose.
The
purposes of AllianceBernstein L.P.’s 1997 Long Term Incentive Plan (the
“Plan”)
are to
promote the interest of AllianceBernstein L.P. (together with any successor
thereto, the “Partnership”)
and its
partners by (i) attracting and retaining officers, key employees or directors
of
the Partnership and its Affiliates, (ii) motivating such employees or directors
by means of performance-related incentives to achieve longer-range performance
goals, and (iii) enabling such employees or directors to participate in the
long-term growth and financial success of the Partnership.
SECTION
2. Definitions.
As
used
in the Plan, the following terms shall have the meanings set forth
below:
“Affiliate”
shall
mean (i) any entity that, directly or indirectly, is controlled by the
Partnership and (ii) any entity in which the Partnership has a significant
equity interest, in either case as determined by the Board or, if so authorized
by the Board, the Committee.
“Award”
shall
mean any Option, Restricted Unit, Phantom Restricted Unit, Performance Award
or
Other Unit-Based Award.
“Award
Agreement” shall
mean any written agreement, contract or other instrument or document evidencing
any Award, which may, but need not, be executed or acknowledged by a
Participant.
“Board”
shall
mean the Board of Directors of the general partner of the
Partnership.
“Committee”
shall
mean the Board or one or more committees of the Board designated by the Board
to
administer the Plan.
“Director”
shall
mean any member of the Board.
“Employee”
shall
mean (i) an officer or employee of the Partnership of any Affiliate, or (ii)
an
advisor or consultant to the Partnership or to any Affiliate, in each case
as
determined by the Committee.
“Exchange
Act” shall
mean the U.S. Securities Exchange Act of 1934, as amended.
“Fair
Market Value” shall
mean, as of any given date and except as otherwise expressly provided by
the
Board: (i) with respect to a Unit, the closing price of a Unit on the New
York
Stock Exchange on such date or, if no sale of Units occurs on the New York
Stock
Exchange on such a date, the closing price of a Unit on such Exchange on
the
last preceding day on which such sale occurred; and (ii) with respect to
any
other property, the fair market value of such a property as determined by
the
Board in its sole discretion.
“Non-Employee
Director” shall
mean a member of the Board who is not an officer or employee of the Partnership
or of any of its subsidiaries.
“Option”
shall
mean an option granted under Section 6(a) of the Plan.
“Other
Unit-Based Award” shall
mean any right granted under Section 6(d) of the Plan.
“Participant”
shall
mean any Employee or Director granted an Award under the Plan.
“Performance
Award” shall
mean any right granted under Section 6(c) of the Plan.
“Person”
shall
mean any individual, corporation, partnership, association, joint-stock company,
trust, unincorporated organization, government or political subdivision thereof
or other entity.
“Phantom
Restricted Unit” shall
mean any Award granted under Section 6(b) of the Plan and designated as a
Phantom Restricted Unit.
“Restricted
Unit” shall
mean any Unit granted under Section 6(b) of the Plan and designated as a
Restricted Unit.
“Restoration
Option” shall
mean an Option granted under Section 6(a)(iv) of the Plan.
“Substitute
Awards” shall
mean Awards granted in assumption of, or in substitution for, outstanding
awards
previously granted by a company acquired by the Partnership or its affiliate,
or
with which the Partnership or its Affiliate combines.
“Units”
means
units representing assignments of beneficial ownership of limited partnership
interests in AllianceBernstein Holding L.P. (“Holding”).
SECTION
3. Administration.
(a)
Authority
of Committee.
The
Plan shall be administered by the Committee. Subject to the terms of the
Plan
and applicable law, in addition to other express powers and authorizations
conferred on the Committee by the Plan, and except as otherwise limited by
the
Board, the Committee shall have full power and authority to (i) designate
Participants; (ii) determine the type or types of Awards to be granted to
an
eligible Employee or, subject to Section 3(b), Director; (iii) determine
the
number of Units to be covered by, or with respect to which payments, rights,
or
other matters are to be calculated in connection with, Awards; (iv) determine
the terms and conditions of any Award; (v) determine whether, to what extent,
and under what circumstances Awards may be exercised, canceled, forfeited,
or
suspended and the method or methods by which Awards may be exercised, canceled,
forfeited, or suspended; (vi) determine whether, to what extent, and under
what
circumstances Units, other securities, other Awards, other property and other
amounts payable with respect to an Award shall be deferred either automatically
or at the election of the holder thereof or of the Committee; (vii) interpret
and administer the Plan and any instrument or agreement relating to, or Award
made under, the Plan; (viii) establish, amend, suspend, or waive such rules
and
regulations and appoint such agents as it shall deem appropriate for the
proper
administration of the Plan; and (ix) make any other determination and take
any
other action that the Committee deems necessary or desirable for the
administration of the Plan.
2
(b)
Grants
of Awards to Non-Employee Directors.
Notwithstanding the provisions of Section 3(a), grants of Awards to Non-Employee
Directors must be approved by the Board.
(c)
Committee
Discretion Binding.
Unless
otherwise expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions under or with respect to the Plan or
any
Award shall be within the sole discretion of the Committee, may be made at
any
time and shall be final, conclusive, and binding upon all Persons, including
the
Partnership, any Affiliate, any Participant, any holder or beneficiary of
any
Award, any Unitholder and any Employee or, subject to Section 3(b),
Director.
SECTION
4. Units
Available for Awards.
(a)
Units Available.
(i)
Subject to adjustment as provided in Section 4(c), the number of Units with
respect to which Awards may be granted under the Plan shall be 41 million
less
the excess of (i) the number of Units awarded (and not forfeited) under the
Partnership’s Century Club Plan (the “Century
Club Plan”)
over
(ii) the Pre-1997 Century Club Limit, as defined in the Century Club
Plan.
(ii)
If,
after the effective date of the Plan, any Units covered by an Award granted
under the Plan or by an award granted under any prior Unit award plan of
the
Partnership, or to which such an Award or award related, are forfeited, or
if
such an Award or award terminates or is canceled without the delivery of
Units,
then the Units covered by such Award or award, or to which such Award or
award
relates, or the number of Units otherwise counted against the aggregate number
of Units with respect to which Awards may be granted, to the extent of any
such
forfeiture, termination or cancellation, shall again become Units with respect
to which Awards may be granted. In the event that any Option or other Award
granted hereunder or any award granted under any prior Unit award plan of
the
Partnership is exercised through the delivery of Units or in the event that
withholding tax liabilities arising from such Award or award are, with the
approval of the Board, satisfied by the withholding of Units by the Partnership,
the number of Units available for Awards under the Plan shall be increased
by
the number of Units so surrendered or withheld. Any Units underlying Substitute
Awards shall not be counted against the Units available for Awards under
the
Plan.
3
(b)
Units
Available for Awards other than Options.
Subject
to adjustment as provided in Section 4(c), and except as otherwise expressly
provided by the Board, of the number of Units with respect to which Awards
may
be granted in accordance with Section 4(a), the number of Units with respect
to
which Awards may be granted under Sections 6(b), (c), or (d) of the Plan
shall
be 2 million. If, after the effective date of the Plan, Awards granted under
Sections 6(b), (c), or (d) are forfeited, terminated, or canceled, or if,
with
the approval of the Board, Units otherwise deliverable pursuant to such Awards
are applied to satisfy withholding tax liabilities, then the applicable number
of Units shall not be counted against the limit set forth in the preceding
sentence, to the same extent such Units again become Units with respect to
which
Awards may be granted under Section 4(a) or are otherwise not counted against
the limit set forth in Section 4(a). Any Units underlying Substitute Awards
shall not be counted against the limit set forth in the first sentence of
this
Section 4(b).
(c)
Adjustments.
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
the Partnership or Holding, issuance of warrants or other rights to purchase
limited partnership interests or other securities of the Partnership or Holding,
any incorporation (or other change in form) of the Partnership or Holding,
or
other similar transaction or event affects the 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 any or all of (i) the number of Units
or
other securities of the Partnership or Holding (or number and kind of other
securities or property) with respect to which Awards may be granted under
Sections 4(a) and 4(b), (ii) the number of Units or other securities of the
Partnership or Holding (or number and kind of other securities or property)
subject to outstanding Awards, and (iii) the grant or exercise price with
respect to any Award, or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award. In the event of incorporation
(or
other change in form) of the Partnership or Holding, the Committee may, if
so
authorized by the Board, make such adjustments as it deems appropriate and
equitable with respect to Options for the optionee to purchase stock in the
resulting corporation in place of the Options. Any such adjustment or
arrangement may provide for the elimination without compensation of any
fractional Unit which might otherwise become subject to an Option, and shall
be
final and binding upon the optionee.
SECTION
5. Eligibility.
Subject
to Section 3(b), any Employee or Director shall be eligible to be designated
a
Participant.
SECTION
6. Awards.
(a)
Options.
(i)
Grant. Subject
to the provisions of the Plan, the Committee shall (subject to Section 3(b))
have sole and complete authority to determine the Employees and/or Directors
to
whom Options shall be granted, the number of Units to be covered by each
Option,
the exercise price therefor and the conditions and limitations applicable
to the
exercise of the Option.
4
(ii)
Exercise
Price. Unless
otherwise expressly determined or authorized by the Board, the exercise price
of
an Option shall be not less than the Fair Market Value of the Units subject
to
the Option on the date the Option is granted.
(iii)
Exercise.
Unless
otherwise determined or authorized by the Committee, (A) no Option (other
than a
Restoration Option or an Option that is a Substitute Award) shall become
initially exercisable at a rate in excess of 20% of the Units subject to
the
Option on each anniversary of the date of grant beginning with the first
such
anniversary, and (B) no Option shall be exercisable after the expiration
of ten
years from the date of grant. The right to exercise an Option shall be
cumulative, so that to the extent that an Option is not exercised when it
becomes initially exercisable with respect to any Units, it shall be exercisable
with respect to such Units at any time thereafter until the expiration of
the
term of the Option. The Committee may impose such conditions with respect
to the
exercise of Options, including without limitation, any relating to the
application of federal or state securities laws, as it may deem necessary
or
advisable.
(iv)
Restoration
Options.
In the
event that any Participant delivers Units in payment of the exercise price
of
any Option granted hereunder in accordance with Section 7(b), or in the event
that the withholding tax liability arising upon exercise of any Option by
a
Participant is satisfied through the withholding by the Partnership of Units
otherwise deliverable upon exercise of the Option, the Committee shall have
the
authority, if so authorized by the Board, to grant or provide for the automatic
grant of a Restoration Option to such Participant. The grant of a Restoration
Option shall be subject to the satisfaction of such conditions or criteria
as
the Committee in its sole discretion shall establish from time to time, to
the
extent authorized by the Board. A Restoration Option shall entitle the holder
thereof to purchase a number of Units equal to the number of such Units so
delivered or withheld upon exercise of the original Option, in the discretion
of
the Committee. A Restoration Option shall have a per Unit exercise price
and
such other terms and conditions as the Committee in its sole discretion shall
determine, to the extent authorized by the Board.
(b)
Restricted
Units and Phantom Restricted Units.
(i)
Grant. Subject
to
the provisions of the Plan, the Committee shall (subject to Section 3(b))
have
sole and complete authority to determine the Employees and/or Directors to
whom
Restricted Units and Phantom Restricted Units shall be granted, the number
of
Restricted Units and/or the number of Phantom Restricted Units to be granted
to
each Participant, the duration of the period during which, and the conditions
under which, the Restricted Unit and Phantom Restricted Units may be forfeited
to the Partnership, and the other terms and conditions of such
Awards.
(ii)
Transfer
Restrictions.
Restricted Units and Phantom Restricted Units may not be sold, assigned,
transferred, pledged or otherwise encumbered, except, in the case of Restricted
Units, as provided in the Plan or the applicable Award Agreements. Each
certificate issued in respect of Restricted Units with respect to which transfer
restrictions remain in effect shall bear a legend describing the restrictions
to
which the Restricted Units are subject. Upon the lapse of the restrictions
applicable to such Restricted Units, the owner thereof may surrender to the
Partnership the certificate or certificates representing such Units and receive
in exchange therefor a new certificate or certificates representing such
Units
free of the legend and a certificate or certificates representing the remainder
of the Units, if any, with the legend.
5
(iii)
Payment.
Each
Phantom Restricted Unit shall have a value equal to the Fair Market Value
of a
Unit. Phantom Restricted Units shall be paid in Units, other securities or
other
property, as determined in the sole discretion of the Committee, upon the
lapse
of the restrictions applicable thereto, or otherwise in accordance with the
applicable Award Agreement.
(iv)
Distributions.
Distributions paid on or in respect of any Restricted Units or Phantom
Restricted Units may be paid directly to the Participant, or may be reinvested
in additional Restricted Units or in additional Phantom Restricted Units,
as
determined by the Committee in its sole discretion.
(c)
Performance
Awards.
(i)
Grant.
The
Committee shall (subject to Section 3(b)) have sole and complete authority
to
determine the Employees and/or Directors who shall receive a “Performance
Award”, which shall consist of a right which is (i) denominated in Units, (ii)
valued, as determined by the Committee, in accordance with the achievement
of
such performance goals during such performance periods as the Committee shall
establish, and (iii) payable at such time and in such form as the Committee
shall determine.
(ii)
Terms
and Conditions.
Subject
to the terms of the Plan and any applicable Award Agreement, the Committee
shall
determine the performance goals to be achieved during any performance period,
the length of any performance period, the amount of any Performance Award
and
the amount and kind of any payment or transfer to be made pursuant to any
Performance Award.
(iii)
Payment
of Performance Awards.
Performance Awards may be paid in a lump sum or in installments following
the
close of the performance period or, in accordance with procedures established
by
the Committee, on a deferred basis.
(d)
Other
Unit-Based Awards.
The
Committee shall (subject to Section 3(b)) have authority to grant to eligible
Employees and/or Directors an “Other Unit-Based Award”, which shall consist of
any right which is (i) not an Award described in paragraphs (a) through (c)
above of this Section 6 and (ii) an Award of Units or an Award denominated
or
payable in, valued in whole or in part by reference to, or otherwise based
on or
related to, Units (including, without limitation, securities convertible
into
Units), as deemed by the Committee to be consistent with the purposes of
the
Plan. Subject to the terms of the Plan and any applicable Award Agreement,
the
Committee shall determine the terms and conditions of any such Other Unit-Based
Award.
6
SECTION
7. General
Provisions Applicable to Awards.
(a)
Awards
May be Granted Separately or Together.
Awards
may, in the discretion of the Committee, be granted either alone or in addition
to, in tandem with, or in substitution for any other Award granted under
the
Plan or any award granted under any other plan of the Partnership or any
Affiliate. Awards granted in addition to or in tandem with other Awards or
awards granted under any other plan of the Partnership or any Affiliate may
be
granted either at the same time as or at a different time from the grant
of such
other Awards or awards.
(b)
Forms
of Payment by Partnership Under Awards. Subject
to the terms of the Plan and of any applicable Award Agreement and the
requirements of applicable law, payments or transfers to be made by the
Partnership or an Affiliate upon the grant, exercise or payment of an Award
may
be made in such form or forms as the Committee shall determine, including
Units,
other securities, other Awards or other property, or any combination thereof,
and may be made in a single payment or transfer, in installments, or on a
deferred basis, in each case in accordance with rules and procedures established
by the Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on installment
or
deferred payments.
(c)
Limits
on Transfer of Awards.
Except
as otherwise provided by the Committee with respect to any Award, no Award
shall
be transferable by a holder other than by will or the laws of descent and
distribution.
(d)
Terms
of Awards.
The
term of each Award shall be for such period as may be determined by the
Committee.
(e)
Consideration
for Grants.
Awards
may be granted for no cash consideration, for such nominal cash consideration
as
may be required by applicable law or for such greater amount as may be
established by the Committee.
SECTION
8. Amendment
and Termination.
(a)
Amendments
to the Plan.
The
Board may amend, alter, suspend, discontinue, or terminate the Plan or any
portion thereof at any time; provided that no such amendment, alteration,
suspension, discontinuation or termination shall be made without the approval
of
the limited partners of the Partnership if such approval is necessary to
comply
with any tax or regulatory requirement for which or with which the Board
deems
it necessary or desirable to qualify or comply. Notwithstanding anything
to the
contrary herein, the Board or, if so authorized by the Board, the Committee
may
amend the Plan in such manner as may be necessary so as to have the Plan
conform
with local rules and regulations in any jurisdiction outside the United Sates.
(b)
Amendments
to Awards.
The
Board or, if so authorized by the Board, the Committee may waive any conditions
or rights under, amend any terms of, or alter, suspend, discontinue, cancel
or
terminate, any Award theretofore granted, prospectively or retroactively;
provided that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would adversely affect the
rights of any Participant or any holder or beneficiary of any Award theretofore
granted shall not to that extent be effective without the consent of the
affected Participant, holder or beneficiary.
7
(c)
Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events.
The
Committee is hereby authorized to make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described
in
Section 4(c) hereof) affecting the Partnership, any Affiliate, or the financial
statements of the Partnership or any Affiliate, or of changes in applicable
laws, regulations, or accounting principles, whenever the Committee determines
that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan.
(d)
Cancellation.
Any
provision of this Plan or any Award Agreement to the contrary notwithstanding,
the Committee may, if so authorized by the Board, cause any Award granted
hereunder to be canceled in consideration of a cash payment or alternative
Award
made to the holder of such canceled Award equal in value to the Fair Market
Value of such canceled award.
SECTION
9. Miscellaneous.
(a)
No
Rights to Awards. No
Employee, Director or Participant or other Person shall have any claim to
be
granted any Award, and there is no obligation for uniformity of treatment
of
Employees, Directors, Participants, or holders or beneficiaries of Awards.
The
terms and conditions of Awards need not be the same with respect to each
recipient.
(b)
Unit
Certificates.
All
certificates for Units or other securities of the Partnership or any Affiliate
delivered under the Plan pursuant to any Award or the exercise thereof shall
be
subject to such stop transfer orders and other restrictions as the Committee
may
deem advisable under the Plan or the rules, regulations, and other requirements
of the U.S. Securities and Exchange Commission, any Unit exchange upon which
such Units or other securities are then listed, and any applicable Federal
or
state laws, and the Committee may cause a legend or legends to be put on
any
such certificates to make appropriate reference to such
restrictions.
(c)
Delegation.
Subject
to the terms of the Plan and applicable law, the Committee, if so authorized
by
the Board, may delegate to one or more officers or managers of the Partnership
or any Affiliate, or to a committee of such officers or managers, the authority,
subject to the terms and limitations as the Committee, as authorized by the
Board, shall determine, to grant Awards to, or to cancel, modify or waive
rights
with respect to, or to alter, discontinue, suspend, or terminate Awards held
by,
Employees who are not officers or directors of the Partnership for purposes
of
Section 16 of the Exchange Act, or any successor section thereto, or who
are
otherwise not subject to such Section.
(d)
Withholding.
A
Participant may be required to pay to the Partnership or any Affiliate and
the
Partnership or any Affiliate shall have the right and is hereby authorized
to
withhold from any Award, from any payment due or transfer made under any
Award
or under the Plan or from any compensation or other amount owing to a
Participant the amount (in cash, Units, other securities, other Awards or
other
property) of any applicable withholding taxes in respect of an Award, its
exercise, or any payment or transfer under an Award or under the Plan and
to
take such other actions as may be necessary in the opinion of the Partnership
to
satisfy all obligations for the payment of such taxes.
8
(e)
Award
Agreements. Each
award hereunder shall be evidenced by an Award Agreement which shall be
delivered to the Participant and shall specify the terms and conditions of
the
Award and any rules applicable thereto, including but not limited to the
effect
on such Award of the death, retirement or other termination of employment
of a
Participant.
(f)
No
Limit on Other Compensation Arrangements.
Nothing
contained in the Plan shall prevent the Partnership or any Affiliate from
adopting or continuing in effect other compensation arrangements, including
without limitation any such arrangements that provide for the grant of options,
restricted Units, Units and other types of Awards provided for hereunder
(subject to approval of the limited partners of the Partnership if such approval
is required), and such arrangements may be either generally applicable or
applicable only in specific cases.
(g)
No
Right to Employment or Directorship.
The
grant of an Award shall not be construed as giving a Participant the right
to be
retained in the employ of the Partnership or any Affiliate, or to be retained
as
a Director. Further, the Partnership or an Affiliate may at any time dismiss
a
Participant from service, free from any liability or any claim under the
Plan,
unless otherwise expressly provided in the Plan, in any Award Agreement or
in
any other agreement between the Partnership or any Affiliate and the
Participant.
(h)
No
Rights as Unitholder.
Subject
to the provisions of the applicable Award, no Participant or holder or
beneficiary of any Award shall have any rights as a Unitholder with respect
to
any Units to be distributed under the Plan until he or she has become the
holder
of such Units. Notwithstanding the foregoing, in connection with each grant
of a
Restricted Unit hereunder, the applicable Award shall specify if and to what
extent the Participant shall not be entitled to the rights of a Unitholder
in
respect of such Restricted Unit.
(i)
Governing
Law.
The
validity, construction, and effect of the Plan and any rules and regulations
relating to the Plan shall be determined in accordance with the internal
laws of
the State of New York.
(j)
Severability.
If any
provisions of the Plan or any Award is or becomes or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction or as to any Person or Award,
or
would disqualify the Plan or any Award under any law deemed applicable by
the
Committee, such provision shall be construed or deemed amended to conform
to
applicable laws, or if it cannot be construed or deemed amended without,
in the
determination of the Committee, materially altering the intent of the Plan
or
the Award, such provision shall be stricken as to such jurisdiction, Person
or
Award and the remainder of the Plan and any such Award shall remain in full
force and effect.
(k)
Additional
Powers.
The
Committee may refuse to issue or transfer any Units or other consideration
under
an Award if, acting in its sole discretion, it determines that the issuance
or
transfer of such Units or such other consideration might violate any applicable
law or regulation or entitle the Partnership to recover the same under Section
16(b) of the Exchange Act, and any payment tendered to the Partnership by
a
Participant, other holder or beneficiary in connection with the exercise
of such
Award shall be promptly refunded to the relevant Participant, holder or
beneficiary. Without limiting the generality of the foregoing, no Award granted
hereunder shall be construed as an offer to sell securities of the Partnership,
and no such offer shall be outstanding, unless and until the Committee in
its
sole discretion has determined that any such offer, if made, would be in
compliance with all applicable requirements of the U.S. federal securities
laws
and any other laws to which such offer, if made, would be
subject.
9
(l)
No
Trust or Fund Created.
Neither
the Plan nor any Award shall create or be construed to create a trust or
separate fund of any kind or fiduciary relationship between the Partnership
or
any Affiliate and a Participant or any other Person. To the extent that any
Person acquires a right to receive payments from the Partnership or any
Affiliate pursuant to an Award, such right shall be no greater than the right
of
any unsecured general creditor of the Partnership or any Affiliate.
(m)
No
Fractional Units.
No
fractional Units shall be issued or delivered pursuant to the Plan or any
Award,
and the Committee shall determine whether cash, other securities, or other
property shall be paid or transferred in lieu of any fractional Units or
whether
such fractional Units or any rights thereto shall be canceled, terminated
or
otherwise eliminated.
(n)
Headings.
Headings are given to the Sections and subsections of the Plan solely as
a
convenience to facilitate reference. Such headings shall not be deemed in
any
way material or relevant to the construction or interpretation of the Plan
or
any provision thereof.
SECTION
10. Term
of
the Plan.
(a)
Effective Date. This
amended Plan shall be effective as of November 20, 1997, subject to approval
by
the limited partners of the Partnership within one year thereafter.
(b)
Expiration
Date.
No
Award shall be granted under the Plan after July 26, 2010. However, unless
otherwise expressly provided in the Plan or in an applicable Award Agreement,
any Award theretofore granted may, and the authority of the Board or the
Committee to amend, alter, adjust, suspend, discontinue, or terminate any
such
Award or to waive any conditions or rights under any such Award shall, extend
beyond such date.
10
EXHIBIT
10.03
AWARD
AGREEMENT
UNDER
THE AMENDED AND RESTATED
ALLIANCE
PARTNERS COMPENSATION PLAN
You
have
been granted an award under the Amended and Restated Alliance Partners
Compensation Plan (the “Plan”), as specified below:
Participant:
Amount
of
Award:
Date
of
Grant:
In
connection with your award (the “Award”), you, AllianceBernstein Holding
L.P.(“Holding”) and AllianceBernstein L.P. (“Alliance”) 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 will be 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 will be 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 .
|
AllianceBernstein
L.P.
|
||
|
By:
AllianceBernstein L.P., General Partner
|
||
|
/s/
Robert H. Joseph, Jr.
|
||
|
Signature
|
||
|
Participant
|
||
|
Signature
|
||
|
Name:
|
||
EXHIBIT
10.04
SPECIAL
OPTION
PROGRAM
UNDER
THE
1997
LONG
TERM
INCENTIVE
PLAN
INITIAL
AWARD
AGREEMENT
AGREEMENT,
dated as of January 26, 2007, among AllianceBernstein L.P.
(“Partnership”), AllianceBernstein Holding
L.P. (“Holding”) and <PARTC_NAME>(Participant”),
an employeeof
the
Partnership or a subsidiaryof
the
Partnership.
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 (i) options
(“Initial Options”) to purchase units representing assignments of the
benefi-cial ownership of limited partnership interests in Holding (“Units”) that
vest over the first five anniversaries of grant date, and (ii) options (“Match
Options” and, together with the Initial Options, “Options”) to purchase Units
that vest over the next five anniversaries of grant date.
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 the Participant Initial 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
(Match Options are granted pursuant to a Match Award Agreement, dated as
of
January 26, 2007, among the parties hereto).
2. Term
and Vesting Schedule.
(a)
The
Initial Options shall not be exercisable to any extent prior to January 26,
2008
or after January 26, 2017 (“Initial Expiration
Date”).
Subject to the terms and condi-tions of this Agreement and the Plan, the
Participant shall be entitled to exercise the Initial Options prior to the
Initial Expiration Date and to purchase Units pursuant to the Initial Options
in
accordance with the schedule set forth in Section 3 of Schedule A.
(b)
The
Match
Options shall not be exercisable to any extent prior to January 26, 2013
or
after January 26, 2018 (“Match Expiration
Date”).
Subject to the terms and condi-tions of this Agreement and the Plan, the
Participant shall be entitled to exercise the Match Options prior to the
Match
Expiration Date and to purchase Units pursuant to the Match Options in
accordance with the schedule set forth in Section 6 of Schedule
A.
(c)
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 their respective Expiration Dates, 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 their respective Expiration Dates (i.e., any Units subject to the Options
that have not been purchased on or before the relevant Expiration Date may
no
longer be purchased). A Unit shall be considered to have been purchased on
or
before the relevant Expiration Date if the Partnership has been given notice
of
the purchase and the Partnership has actually received payment therefor,
pursuant to Sections 3 and 14, on or before the relevant 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 14 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 the
Option may be either authorized and unissued 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 exer-cised 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 the Options, to the extent that the Participant was entitled
to do so on the date of termination of employ-ment, for a period which ends
not
later than the earlier of (i) three months after such termination, and (ii)
the
Initial Expi-ration Date for the Initial Options and the Match Expiration
Date
for the Match Options. “Disability” shall mean a determination by the
Administrator that the Participant is physically or mentally incapacitated
and
has been unable for a period of six con-secutive months to perform the duties
for which the Participant was responsible immediately before the onset of
incapacity. In order to assist the Administrator in making a determina-tion
as
to the Disability of the Participant for purposes of this paragraph (a),
the
Participant shall, as reasonably re-quested by the Administrator, (A) be
available for medical examinations by one or more physicians chosen by the
Administrator and approved by the Participant, whose approval shall not
unreasonably be withheld, and (B) grant the Admin-istrator 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.
-
2 -
(b) Death.
If the
Participant dies (i) while in the employ of the Partnership, or (ii) within
one
month after termination of employment with the Partnership because of Disability
(as determined in accordance with paragraph (a) above), or (iii) within one
month after the Partnership terminates the Participant’s employment for any
reason other than for Cause (as determined in accordance with paragraph (c)
be-low), the Options may be exercised, to the extent that the Participant
was
entitled to do so on the date of the Participant’s death, by the person or
persons to whom the Options shall have been transferred by will or by the
laws
of descent and distribu-tion, 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 Initial
Expi-ration Date for the Initial Options and the Match Expiration Date for
the
Match Options.
(c) Other
Termination.
If the
Partnership terminates the Participant's employment for any reason other
than
death, Disability 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 Initial Expi-ration Date for the Initial Options and the Match Expiration
Date for the Match Options. “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 obliga-tion of confidentiality or
non-competition to the Partnership.
-
3 -
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 Sections 2 and 5 of
Schedule A, as it deems appropriate and equitable. In the event of
incorpo-ra-tion (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 adjust-ment
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.
-
4 -
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 pur-chase is given
and
payment in full is received by the Partnership and Holding under Sections
3 and
14 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.
-
5 -
15. Notices.
Any
notice under this Agreement shall be in writing and shall be deemed to have
been
duly given when deliv-ered 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 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 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 require-ments 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.
| ALLIANCEBERNSTEIN L.P. | ||
| ALLIANCEBERNSTEIN HOLDING L.P. | ||
|
By:
|
/s/
Gerald M. Lieberman
|
|
|
Gerald
M. Lieberman
|
||
|
President
and Chief Operating Officer
|
||
To
accept
the terms of this Initial Award Agreement, please click the “Accept” button
below:
ACCEPT
DECLINE
-
6 -
SCHEDULE
A
TO
SPECIAL
OPTION
PROGRAM
AGREEMENT
INITIAL
OPTIONS
|
1.
|
The
number of Units that the Participant is entitled to purchase pursuant
to
the Initial Options granted under this Agreement is <OPTS_GRANTED>.
|
|
2.
|
The
per Unit price
to purchase Units pursuant to the Initial Options granted under
this
Agreement is $90.65 per Unit.
|
|
3.
|
Percentage
of Units With Respect to
|
Which
the
Initial Options First Become
Exercisable
on the Date Indicated
|
1.
January 26, 2008
|
20.0%
|
|
2.
January 26, 2009
|
40.0%
|
|
3.
January 26, 2010
|
60.0%
|
|
4.
January 26, 2011
|
80.0%
|
|
5.
January 26, 2012
|
100.0%
|
SPECIAL
OPTION
PROGRAM
UNDER
THE
1997
LONG
TERM
INCENTIVE
PLAN
MATCH
AWARD
AGREEMENT
AGREEMENT,
dated as of January 26, 2007, among AllianceBernstein L.P.
(“Partnership”), AllianceBernstein Holding
L.P. (“Holding”) and <PARTC_NAME>(Participant”),
an employeeof
the
Partnership or a subsidiaryof
the
Partnership.
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 (i) options
(“Initial Options”) to purchase units representing assignments of the
benefi-cial ownership of limited partnership interests in Holding (“Units”) that
vest over the first five anniversaries of grant date, and (ii) options (“Match
Options” and, together with the Initial Options, “Options”) to purchase Units
that vest over the next five anniversaries of grant date.
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 the Participant Match 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
(Initial Options are granted pursuant to an Initial Award Agreement, dated
as of
January 26, 2007, among the parties hereto); and
2. Term
and Vesting Schedule.
(a) The
Initial Options shall not be exercisable to any extent prior to January 26,
2008
or after January 26, 2017 (“Initial Expiration
Date”).
Subject to the terms and condi-tions of this Agreement and the Plan, the
Participant shall be entitled to exercise the Initial Options prior to the
Initial Expiration Date and to purchase Units pursuant to the Initial Options
in
accordance with the schedule set forth in Section 3 of Schedule A.
(b)
The
Match
Options shall not be exercisable to any extent prior to January 26, 2013
or
after January 26, 2018 (“Match Expiration
Date”).
Subject to the terms and condi-tions of this Agreement and the Plan, the
Participant shall be entitled to exercise the Match Options prior to the
Match
Expiration Date and to purchase Units pursuant to the Match Options in
accordance with the schedule set forth in Section 6 of Schedule
A.
-
8 -
(c)
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 their respective Expiration Dates, 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 their respective Expiration Dates (i.e., any Units subject to the Options
that have not been purchased on or before the relevant Expiration Date may
no
longer be purchased). A Unit shall be considered to have been purchased on
or
before the relevant Expiration Date if the Partnership has been given notice
of
the purchase and the Partnership has actually received payment therefor,
pursuant to Sections 3 and 14, on or before the relevant 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 14 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 the
Option may be either authorized and unissued 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 exer-cised 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 the Options, to the extent that the Participant was entitled
to do so on the date of termination of employ-ment, for a period which ends
not
later than the earlier of (i) three months after such termination, and (ii)
the
Initial Expi-ration Date for the Initial Options and the Match Expiration
Date
for the Match Options. “Disability” shall mean a determination by the
Administrator that the Participant is physically or mentally incapacitated
and
has been unable for a period of six con-secutive months to perform the duties
for which the Participant was responsible immediately before the onset of
incapacity. In order to assist the Administrator in making a determina-tion
as
to the Disability of the Participant for purposes of this paragraph (a),
the
Participant shall, as reasonably re-quested by the Administrator, (A) be
available for medical examinations by one or more physicians chosen by the
Administrator and approved by the Participant, whose approval shall not
unreasonably be withheld, and (B) grant the Admin-istrator 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.
-
9 -
(b) Death.
If the
Participant dies (i) while in the employ of the Partnership, or (ii) within
one
month after termination of employment with the Partnership because of Disability
(as determined in accordance with paragraph (a) above), or (iii) within one
month after the Partnership terminates the Participant’s employment for any
reason other than for Cause (as determined in accordance with paragraph (c)
be-low), the Options may be exercised, to the extent that the Participant
was
entitled to do so on the date of the Participant’s death, by the person or
persons to whom the Options shall have been transferred by will or by the
laws
of descent and distribu-tion, 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 Initial
Expi-ration Date for the Initial Options and the Match Expiration Date for
the
Match Options.
(c) Other
Termination.
If the
Partnership terminates the Participant's employment for any reason other
than
death, Disability 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 Initial Expi-ration Date for the Initial Options and the Match Expiration
Date for the Match Options. “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 obliga-tion of confidentiality or
non-competition to the Partnership.
-
10 -
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 Sections 2 and 5 of
Schedule A, as it deems appropriate and equitable. In the event of
incorpo-ra-tion (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 adjust-ment
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.
-
11 -
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 pur-chase is given
and
payment in full is received by the Partnership and Holding under Sections
3 and
14 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.
-
12 -
15. Notices.
Any
notice under this Agreement shall be in writing and shall be deemed to have
been
duly given when deliv-ered 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 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 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 require-ments 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.
|
ALLIANCEBERNSTEIN
L.P.
|
||
|
ALLIANCEBERNSTEIN
HOLDING
L.P.
|
||
|
By:
|
/s/
Gerald M. Lieberman
|
|
|
Gerald
M. Lieberman
|
||
|
President
and Chief Operating Officer
|
||
To
accept
the terms of this Initial Award Agreement, please click the “Accept” button
below:
ACCEPT
DECLINE
-
13 -
SCHEDULE
A
TO
SPECIAL
OPTION
PROGRAM
AGREEMENT
MATCH
OPTIONS
|
1.
|
The
number of Units that the Participant is entitled to purchase pursuant
to
the Initial Options granted under this Agreement is <OPTS_GRANTED>.
|
|
2.
|
The
per Unit price to purchase Units pursuant to the Initial Options
granted
under this Agreement is $90.65 per
Unit.
|
|
3.
|
Percentage
of Units With Respect to
|
Which
the
Match Options First Become
Exercisable
on the Date Indicated
|
1.
January 26, 2013
|
20.0%
|
|
2.
January 26, 2014
|
40.0%
|
|
3.
January 26, 2015
|
60.0%
|
|
4.
January 26, 2016
|
80.0%
|
|
5.
January 26, 2017
|
100.0%
|
EXHIBIT
10.05
AWARD
AGREEMENT
UNDER
THE ALLIANCE
COMMISSION
SUBSTITUTION PLAN
You
have
been granted an Award under the Alliance Commission Substitution Plan (the
“Plan”), as specified below:
Participant
(“you”):
Projected
Amount of Award:
Date
of
Grant:
In
connection with your grant of the Award, you and the Company 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 this Agreement.
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. It is further
expressly understood and agreed by you that:
(a) 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.
(b) This
Agreement will be subject to all applicable laws, rules, and
regulations.
(c) This
Agreement will be governed by, and construed in accordance with, the laws
of the
state of New York (without regard to conflict of law provisions).
(d) This
Agreement and the Plan constitute the entire understanding between you and
the
Company 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.
1
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 December 31, 2006.
|
AllianceBernstein
L.P.
|
||
|
By:
|
/s/
Robert H. Joseph, Jr.
|
|
|
Name:
Robert H Joseph, Jr.
|
||
|
Title:
CFO, Senior Vice President
|
||
|
Participant
|
||
|
Name:
|
||
2
EXHIBIT
10.06
ALLIANCEBERNSTEIN
L.P.
FINANCIAL
ADVISOR WEALTH ACCUMULATION PLAN
INCENTIVE
AWARD AGREEMENT
THIS
AGREEMENT,
made as
of the 1st day of December, 2006, 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:
|
VESTING
DATE
|
VESTED
PERCENTAGE
|
|
January
1, 2008
|
14.3%
|
|
January
1, 2009
|
14.3%
|
|
January
1, 2010
|
14.3%
|
|
January
1, 2011
|
14.3%
|
|
January
1, 2012
|
14.3%
|
|
January
1, 2013
|
14.3%
|
|
January
1, 2014
|
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. Replacement
of Certain Eligible Revenues.
If
during the first year of participation in the Plan, the revenues
from a single client relationship previously used to calculate the
Eligible Revenues decrease due to net asset withdrawals of more than $25
million, the Participant shall replace the lost assets in excess of $25 million
with client assets from client relationships not previously used to
calculate Eligible Revenues. If in any year of participation any client
relationship whose revenues were used to calculate the Eligible Revenues is
reassigned to another employee, the Participant shall replace
the reassigned client relationships with relationships having equivalent
revenues that were not previously used to calculate Eligible Revenues. The
Company also shall have the right, in the foregoing circumstances, to deem
revenues from other client relationships serviced by the Participant as
Eligible Revenues. The Company shall define client relationships in
its sole discretion.
5. 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.
6. 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.
-2-
7. 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.
8. 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.
|
ALLIANCEBERNSTEIN
L.P.
|
||
|
By
|
/s/
Robert H. Joseph, Jr.
|
|
|
Officer
|
||
-3-
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:
|
|
¨
|
As
soon as administratively possible following my Separation of Service,
as
defined in the Plan.
|
|
¨
|
January
31,
20____
(this date must be later than date on which the Incentive Benefits
will
become 100% vested under
Agreement).
|
|
2.
|
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:
|
|
¨
|
Substantially
equal annual installments paid over a period of _____ years (not
exceeding
10 years).
|
|
¨
|
A
single lump sum.
|
These
elections, upon becoming effective, shall revoke and supersede all prior
elections.
|
|
|
|||
|
Signature
of
|
||||
|
Participant:
|
Date:
|
-4-
ALLIANCEBERNSTEIN
L.P.
FINANCIAL
ADVISOR WEALTH ACCUMULATION PLAN
ADMINISTRATIVE
GUIDELINES
_____________________________
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 Adviser 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 prior to
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 upon the Financial Advisor’s Eligible
Revenues, which are selected from the new account and base servicing revenue
for
the trailing four calendar quarters prior to the Incentive Award attributable
to
eligible client relationships serviced by the Advisor. 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, 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.
-5-
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 the Hedge Fund rules for withdrawals.
Available
Investment Elections
|
·
|
AllianceBernstein
Holding Units
|
|
·
|
AllianceBernstein
Small Cap Growth Portfolio
|
|
·
|
AllianceBernstein
Small/Mid-Cap Value Fund
|
|
·
|
AllianceBernstein
Real Estate Investment Fund
|
|
·
|
Federated
Prime Obligation Fund
|
|
·
|
Bernstein
Strategic Value Portfolio
|
|
·
|
Bernstein
Strategic Growth Portfolio
|
|
·
|
Bernstein
International Portfolio
|
|
·
|
Bernstein
Emerging Markets Fund
|
|
·
|
Bernstein
Intermediate Duration Fund
|
|
·
|
Bernstein
Short Duration Fund
|
|
·
|
AllianceBernstein
Global Style Blend DBT
|
|
·
|
Bernstein
Advanced Value Hedge Fund
|
|
·
|
Bernstein
Global Opportunities Hedge Fund
|
|
·
|
Bernstein
Global Diversified Hedge Fund
|
|
·
|
AllianceBernstein
Global Diversified Strategies L.P. Hedge Fund
A
|
|
·
|
AllianceBernstein
Global Diversified Strategies L.P. Hedge Fund
B
|
|
·
|
Bernstein
Multi-Strategy Fixed Income Hedge
Fund
|
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 as defined by the Plan. 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.
Incentive
Award Distributions
The
vested portion of the Incentive Award will be paid in cash, except portions
elected to be invested in AllianceBernstein Holding Units, which will be
paid in
Holding Units. Payments will be made 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
their employment or some date certain in the future. Additionally, they 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.
-6-
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 client relationships used in the
Eligible Revenues calculation will be 3% of Base Servicing Revenue for the
period of the award. Upon acceptance of an Incentive Award, Base Level Servicing
provisions in the Advisor’s employment agreement will be superceded by the
foregoing sentence.
New
accounts which are opened in the same tax relationship as accounts whose
revenue
was included in Eligible Revenues will be considered as additions to existing
accounts and will receive a Base Level Servicing commission of 3% on those
revenues during the vesting period. New accounts which are also new tax
relationships will receive a Base Level Servicing payout in accordance with
the
compensation schedule attached to the Advisor’s employment contract, as amended
from time to time. Full Production Bonus will be paid on all New Accounts
regardless of when the tax relationship was established.
Adjustments
To Incentive Awards
Subject
to the following paragraph, the firm 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 Award in those periods when net
asset
growth is positive.
If
during
a Participant’s first year of participation in the Plan, the revenues
from a single client relationship previously used to calculate the
Eligible Revenues decrease due to net asset withdrawals of more than $25
million, the Participant shall replace the lost assets in excess of $25 million
with client assets from client relationships not previously used to
calculate Eligible Revenues. If in any year of participation any client
relationship whose revenues were used to calculate the Eligible Revenues is
reassigned to another employee, the Participant shall replace
the reassigned client relationships with relationships having equivalent
revenues that were not previously used to calculate Eligible Revenues. The
Company also shall have the right, in such circumstances, to deem revenues
from
other client relationships serviced by the Participant as Eligible
Revenues. The Company shall define client relationships in its sole
discretion.
-7-
The
Base
Level Servicing payout on accounts used to replace Eligible Revenues will
be
paid at the 3% rate set forth above.
Plan
Adminsitration
The
Newport Group initially 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 firm
will inform you of any change of plan administrator.
-8-
EXHIBIT
10.07
AMENDMENT
AND
RESTATEMENT
OF
THE
PROFIT
SHARING
PLAN
FOR
EMPLOYEES
OF
ALLIANCEBERNSTEIN
L.P.
(As
amended through November 30, 2006)
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
|
ALLOCATIONS
OF COMPANY CONTRIBUTIONS AND FORFEITURES
|
25
|
||
|
ARTICLE
VII
|
ACCOUNTS,
ALLOCATIONS AND LOANS
|
28
|
||
|
ARTICLE
VIII
|
VALUATION
|
31
|
||
|
ARTICLE
IX
|
DETERMINATION
OF BENEFITS
|
34
|
||
|
ARTICLE
X
|
TIME
AND MANNER OF PAYMENT OF BENEFITS
|
36
|
||
|
ARTICLE
XI
|
ADMINISTRATION
OF THE PLAN
|
40
|
||
|
ARTICLE
XII
|
THE
TRUST FUND
|
48
|
||
|
ARTICLE
XIII
|
CERTAIN
RIGHTS AND OBLIGATIONS OF THE COMPANY
|
49
|
||
|
ARTICLE
XIV
|
NON-ALIENATION
OF BENEFITS
|
51
|
||
|
ARTICLE
XV
|
AMENDMENTS
|
52
|
||
|
ARTICLE
XVI
|
LIMITATIONS
ON BENEFITS AND CONTRIBUTIONS
|
53
|
||
|
ARTICLE
XVII
|
TOP-HEAVY
PLAN YEARS
|
54
|
||
|
ARTICLE
XVIII
|
MISCELLANEOUS
|
57
|
||
|
|
||||
|
APPENDIX
A.
|
REQUIRED
DISTRIBUTION RULES
|
61
|
i
PROFIT
SHARING
PLAN
FOR
EMPLOYEES
OF
ALLIANCEBERNSTEIN
L.P.
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;
NOW,
THEREFORE, the Plan is hereby 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.
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 Committee for a
Member:
(a) his
Company Contributions Account;
(b) his
Member Contributions Account;
(c) his
Member Salary Deferral Account; and
(d) 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 Committee under uniform and non-discriminatory procedures
established by the Committee.
Section
1.04. “Anniversary
Year”
means
each twelve (12) month period beginning on an Employee’s Employment Commencement
Date or any annual anniversary thereof.
Section
1.05. “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
1.06. “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
1.07. “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
1.08. “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.
2
Section
1.09. “Break
in Service”
means,
with respect to any Employee, any Anniversary Year ending on or after the date
of his Separation from Service and before his date of re-employment, if any,
in
which he does not complete more than five hundred (500) Hours of Service with
Employees or Affiliates.
Section
1.10. “Code”
means
the Internal Revenue Code of 1986, as amended from time to time.
Section
1.11. “Committee”
or
“Administrative
Committee”
means
the administrative committee appointed pursuant to Section 11.01. “Investment
Committee” means the investment committee appointed pursuant to Section
11.02.
Section
1.12. “Company”
means
Alliance Bernstein 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
1.13. “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
1.14. “Company
Contributions Account”
means
the Account consisting of the balance attributable to Company
Contributions.
Section
1.15. “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 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.
3
Section
1.16. “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
1.17. “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
1.18. (a) “Employee”
means,
except as provided in Subsection (c), any person employed by an Employer or
an
Affiliate.
(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 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
4
(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; or
(7) is
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.
Section
1.19. “Employer”
means
the Company and any Affiliate which, with the consent of the Board, has adopted
the Plan as a participant herein, and any successor to any such
Employer.
Section
1.20. “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 Separation from
Service.
Section
1.21. “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 to a Member Salary Deferral
Account established in accordance with the provisions of Article V, “Entry Date”
shall mean the first day of the calendar month occurring after the completion
of
the Member’s first regular payroll period.
Section
1.22. “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”.
5
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 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,
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
1.23. “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 separation from service 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
1.24. (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.
6
(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 1.09, 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
7
(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 Committee,
on a
timely basis, such information as the 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 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
1.25. “Inactive
Member”
means
a
Member described in Section 2.02(b). An Inactive Member shall be treated as
a
Member for purposes of Article VII and Section 11.03, but shall not otherwise
be
deemed a Member of the Plan.
Section
1.26. “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 7.10 to perform
the functions described therein.
Section
1.27. “Investment
Fund”
means
those investment funds which may, from time to time, be made available for
investment pursuant to Article VII.
Section
1.28. “Leave
of Absence”
means
any absence or leave approved by an Employee’s Employer.
Section
1.29. “Loan
Account”
means
the account maintained by the Committee for a “Borrower” as defined in Section
7.07 in which a loan by the Borrower made pursuant to that Section is
held.
Section
1.30. “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 VII and Section 11.03, the term “Member”
includes a former Member or Beneficiary for whom an Account is maintained under
the Plan.
8
Section
1.31. “Member
Contributions Account”
means
the Account maintained for a Member in which are held voluntary contributions
made under the Plan by the Member prior to 1989, if any, or (b) “member
contributions” (as defined in the ECMC Plan) made under the ECMC Plan prior to
January 1, 1995, if any.
Section
1.32. “Member
Salary Deferral”
means
an elective salary deferral made by a Member in accordance with Section
5.01.
Section
1.33. “Member
Salary Deferral Account”
means
the Account of a Member established pursuant to Section 7.02 consisting of
the
balance attributable to his Member Salary Deferrals.
Section
1.34. “Normal
Retirement Date”
means
the first day of the calendar month coincident with or next following a Member’s
sixty-fifth (65th) birthday.
Section
1.35. “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
1.36. “Plan”
means
this Profit Sharing Plan, as herein set forth, and as hereafter amended from
time to time.
Section
1.37. “Plan
Year”
means
the calendar year.
Section
1.38. “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) Separation from Service; provided
that, if such a Member who has commenced receiving minimum distributions in
accordance with Section 401(a)(9) of the Code does not elect, pursuant to
Section 10.08(h) of the Plan, to cease receiving such minimum distributions,
the
Required Beginning Date of such Member shall be age 70½.
Section
1.39. “Retirement”
means
a
Separation from Service (a) on or after a Member’s Normal Retirement Date; or
(b) on account of his Permanent Disability.
9
Section
1.40. “Rollover
Account”
means
the Account attributable to contributions and transfers referred to in Section
5.03.
Section
1.41. “Rollover
Contribution”
means
an amount contributed or transferred to the Trust in accordance with Section
5.03.
Section
1.42. “Separation
from Service”
means
termination of employment with an Employer or Affiliate for any reason;
provided, however, that no Separation from Service shall be deemed to occur
upon
an Employee’s transfer from the employ of one Employer or Affiliate to another
Employer or Affiliate.
Section
1.43. “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 1.15
of the Plan.
Section
1.44. “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 1.22) 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
1.45. “Trust”
means
the trust established pursuant to the Trust Agreement to hold the assets of
the
Plan.
Section
1.46. “Trust
Agreement”
means
the trust agreement providing for the Trust Fund.
Section
1.47. “Trust
Fund”
means
all the assets of the Plan which are held by the Trustee under the Trust
Agreement.
10
Section
1.48. “Trustee”
means
the trustee or trustees from time to time in office under the Trust
Agreement.
Section
1.49. “Unallocated
Forfeitures Account”
means
the Account to be maintained by the Committee pursuant to 9.06(b).
Section
1.50. “Unit”
means
a
unit representing the assignment of beneficial ownership of limited partnership
interests in AllianceBernstein Holding L.P.
Section
1.51. “Years
of Service”
means
the aggregate period of service with which an Employee is credited under the
provisions of Article III.
11
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 to a Member Salary Deferral Account established in accordance
with the provisions of Article V, 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 VI, 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).
12
Section
2.02. Termination
of Membership and Inactive Membership.
(a) A
Member
shall cease to be a Member as of the date of his Separation from Service, if
he
incurs a Break in Service in the Anniversary Year of such Separation from
Service 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 Separation from Service. 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
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
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 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 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 commencement of any installment payments
pursuant to Section 10.01(b), his lawfully married spouse on the date of his
death.
13
(2) in
the
case of a Member who dies after the commencement of any installment payments
pursuant to Section 10.01(b), 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).
14
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) had
no
vested interest in his Salary Deferral Account or 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.
15
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 9.04, 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 9.04, 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 9.04, 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 Participants.
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.
16
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 VI
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 XVI. 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.
17
(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.
18
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 (or such other amount as the Committee may direct) of
his
“Salary Reduction Compensation” while a Member for the Plan Year, in such
increments that the 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 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 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 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 XVI.
(b) “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 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 1.15
of the Plan. Salary Reduction Compensation for any Plan Year shall not exceed
the applicable Code Section 401(a)(17) dollar limit.
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
7.03.
19
Section
5.03. Rollover
Contributions.
(a) An
Employee may, with the consent of the 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 Committee for the Trust to accept a Rollover Contribution shall
not give rise to any liability by the 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 Committee,
be
made at any time during the Plan Year, shall not be subject to the limitations
of Article XVI, 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; provided
that, the Plan shall not accept a Rollover Contribution of any after-tax
employee contributions that would not otherwise be includible in the Member’s
taxable gross income.
(b) 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 Committee) prior to any Accounting Date, request the Committee
to direct the Trustees to, and upon such request, the 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.
(c) Any
Employee who makes or causes to be made a contribution or transfer pursuant
to
Subsection (a) 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 6.01, be
considered a Member of this Plan.
20
Section
5.04. Return
of Excess Member Salary
Deferral Elections.
(a) Notwithstanding
any other provisions of the Plan, a Member may request the 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’s
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.
21
(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 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’s 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 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. Effective with respect to nondiscrimination testing for Plan Years
beginning on and after 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.
22
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 established by the Committee, a Catch-up Eligible
Member may make additional Member Salary 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 section 401(a)(30), 402(h),
403(b)(1)(E), 404(h), 408(k), 408(p), 415 or 457; or (iii) the Actual Deferral
Percentage limitations described in Article 5 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 5 and Code section 401(k)(8)(C) (the “Applicable
Maximum”). To the extent the Member Salary Deferrals by a Catch-up Eligible
Member for any year exceed the Applicable Maximum, such Member’s 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
$3,000 for any year beginning with 2004 or such other amount as provided under
Code section 414(v).
(c) Notwithstanding
any other provision of the Plan (other than this Section 5.07), Catch-up
Contributions shall not be taken into account in applying the limits of Code
sections 401(a)(30), 402(h), 403(b), 408, 415(c) or 457 under the Plan or any
other plan maintained by the Employer. In addition, Catch-up Contributions
shall
not be taken into account in applying any provision under the Plan which
effectuates any of the foregoing limitations, including without limitation
the
provisions of Articles 5, 16 and 17.
23
(d) 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.
(e) “Catch-up
Contribution” means a contribution under the Plan by a Catch-up Eligible Member,
pursuant to Section 5.07.
(f) “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
paragraph (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.
24
ARTICLE
VI
ALLOCATIONS
OF COMPANY CONTRIBUTIONS AND FORFEITURES
Section
6.01. 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 8.01) 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 VI 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
6.02. Allocation
to Company Contributions Accounts.
Effective
for Plan Years beginning after December 31, 1989, the entire amount allocated
under Section 6.01(b) to a Member for a Plan Year shall be credited to his
Company Contributions Account.
Section
6.03. Actual
Contribution Percentage Test.
(a) As
used
in this Section 6.03, 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.
25
(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 Per-centage Test (as described in Section 401(k)(2)
of the Code), set forth in Sec-tion 5.05 hereof except as other-wise
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 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 6.03, 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.
26
Section
6.04. Return
of Excess Aggregate Contributions.
(a) Notwithstanding
any other provision of the Plan, any amount determined by the 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 6.04(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 6.04(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 6.04 means a Company
Matching Contribution attributable to a Highly Compensated Emp1oyee 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 6.04 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.
27
ARTICLE
VII
ACCOUNTS,
ALLOCATIONS AND LOANS
Section
7.01. 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 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
7.02. Separate
Accounts.
The
Committee shall maintain a separate Company Contributions Account, Member
Contributions Account, Member Salary 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 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 8.07. 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
7.03. Investing
of the Company Contributions.
All
contributions allocated to a Member’s Account as well as the portion of a
Rollover Contribution allocated to a Member’s Member Contribution Account shall
be allocated among the Investment Funds in accordance with the then current
investment election. If no proper election is on file governing the
contributions involved, such contributions shall be invested in the Investment
Fund specified for such purpose by the Investment Committee.
Section
7.04. Elections.
(a) The
Committee shall prescribe such rules as it deems appropriate regarding the
form,
filing frequency and timeliness of elections under Section 7.03 as well as
concerning the percentage or amounts of a contribution which may be invested
in
an Investment Fund. In these rules, the Committee may specify that each Account
of a Member be invested in the Investment Funds selected by the Member in the
same proportion. An election properly on file shall remain in force until
changed. Effective July 1, 2004, each Member shall be permitted to make no
more
than one transfer pursuant to this paragraph in any calendar
quarter.
Section
7.05. Inter-Account
Transfers.
(a) A
Member
may elect, on a form provided by and timely filed with the 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 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.
28
(b) A
transfer made pursuant to an election pursuant to Subsection (a) shall be
effected as of the last Accounting Date of the calendar quarter (or such other
dates as the Committee shall prescribe from time to time) immediately following
timely receipt by the Committee of the election.
Section
7.06. 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 Committee.
Section
7.07. Loans.
(a) Notwithstanding
anything in this Plan to the contrary, the 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 Committee and must include, but need not be
limited to, the following:
29
(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 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).
30
ARTICLE
VIII
VALUATION
Section
8.01. 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 Committee among the Company Contributions Accounts, Member
Contributions Accounts, Member Salary Deferral Accounts and Rollover Accounts,
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
8.02. 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 8.01, 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 VI, minus
(d) any
distributions from, and transfers out of, such portion since the last preceding
Accounting Date.
Section
8.03. Valuation
of Member Contributions Account.
The
value
of a Member’s 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 8.01, plus
31
(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 7.05, minus
(d) any
distributions from, and transfers out of, such portion since the last preceding
Accounting Date.
Section
8.04. Valuation
of Member Salary Deferral Accounts.
The
value
of a Member’s 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 8.01, plus
(c) the
amount, if any, transferred into such portion pursuant to Section 7.05 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
8.05. Valuation
of Rollover Accounts.
The
value
of a Member’s 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 8.01, plus
(c) the
amount of transfer, if any, into such portion since the last preceding
Accounting Date pursuant to Section 5.03, minus
(d) any
distributions from, and transfers out of, such portion since the preceding
Accounting Date.
Section
8.06. Valuation
of Loan Accounts.
The
value
of a Member’s 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.
32
Section
8.07. Statement
to Members.
Within
two hundred ten (210) days after the last Accounting Date of each Plan Year,
the
Committee shall mail or deliver to each Member a statement of the value of
his
Accounts and his Loan Account, if any, as of such Accounting Date.
Section
8.08. Unallocated
Forfeitures Account
The
value
of the Unallocated Forfeitures Account shall be determined as provided in
Section 8.02 applied as if the addition to the Unallocated Forfeitures Account
was a Company Contributions Account.
33
ARTICLE
IX
DETERMINATION
OF BENEFITS
Section
9.01. Retirement.
Upon
a
Member’s Retirement on or after his Normal Retirement Date, he shall become
entitled, at the time specified in Article X, to a distribution of his Accounts
and his Loan Account, if any, valued as of the Accounting Date specified in
Section 10.01.
Section
9.02. Disability.
Upon
a
Member’s Retirement on account of his Permanent Disability, the Member shall
become entitled, at the time specified in Article X, to a distribution of his
Accounts and his Loan Account, if any, valued as of the Accounting Date
applicable under Section 10.02.
Section
9.03. Death.
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 X, 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 10.03; provided, however, that if a valuation date
was
already fixed for payment pursuant to Article X due to the Member’s Retirement
or Permanent Disability, that date shall be used.
Section
9.04. Vesting.
Any
Member who has 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
becomes a Member after that date shall not be vested to any extent in any
balance in his Company Contributions Account except the amount thereof, until
his completion of three (3) Years of Service which shall be calculated from
the
Member’s Employment Commencement Date. After completion of three (3) Years of
Service as so calculated, each such Member shall be fully (100%) vested at
all
times in the balance in his Company Contributions Account. However, a Member
who
is not otherwise vested shall, upon reaching his Normal Retirement Date, become
and thereafter at all times be fully (100%) vested in the balance in his Company
Contributions Account. 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 Rollover Account, if any, and his Loan Account, if any.
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
9.05. Other
Separation From Service.
In
the
event of a Member’s Separation from Service 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 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 10.04. Such
distributions shall be made in the manner and at the time provided in Article
X.
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 Separation from Service.
34
Section
9.06. 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
Separation from Service. If the Member subsequently recommences employment
prior
to incurring five (5) consecutive Breaks in Service, he shall be recredited
with
the forfeited amounts upon recommencement of employment, provided that he repays
any distribution made to him hereunder.
(b) Any
Company Contributions Account balance forfeited by a Member shall be held in
an
Unallocated Forfeiture Account until applied to reduce the Company Contribution
to be made to the Trust as of or following the date the forfeiture occurs.
Any
Company Contributions made to the Plan by mistake, other than contributions
made
by reason of mistake of fact which may be properly repaid to the Company, may
be
held in a subaccount under the Unallocated Forfeiture Account until applied
to
reduce the Company Contribution to be made to the Trust as of or following
the
date the mistake occurs.
(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.
35
ARTICLE
X
TIME
AND MANNER OF PAYMENT OF BENEFITS
Section
10.01. Retirement
Benefits.
Retirement
benefits, determined pursuant to Section 9.01, shall be paid in a single cash
sum, valued as of the Accounting Date immediately preceding the
payment.
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 ninety (90) 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 Committee shall provide the Member with a notice as to his
or
her rights and benefits under the Plan not more than ninety (90) 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
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
10.02. Disability
Benefits.
Disability
benefits, determined pursuant to Section 9.02 shall be paid or commence to
be
paid at the time and in the manner provided in Section 10.01 (substituting
Permanent Disability for Retirement).
Section
10.03. Death
Benefits.
Death
benefits, determined pursuant to Section 9.03, shall be paid to the Member’s
Beneficiary in a single cash sum as soon as reasonably practicable after the
Member’s death.
Section
10.04. Termination
Benefits.
The
benefits payable to a Member upon his Separation from Service, determined
pursuant to Section 9.05, shall, subject to Section 10.09, be paid or commence
to be paid at the time and in the manner provided in Section 10.01 (substituting
Separation from Service for Retirement).
Section
10.05. 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 X 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), the 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 Committee of the identity of the
eligible retirement plan at the time and in the manner that the Committee shall
prescribe and the 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.”
36
(b) 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 VII 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(a)(5) with respect to that distribution, the 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.
(c) The
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 Committee may in its discretion determine. The 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.
Section
10.06. 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 Separation from Service.
Section
10.07. Indirect
Payment of Benefits.
If
any
Member or Beneficiary is, in the judgment of the 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 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.
37
Section
10.08. 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.
38
(e) For
purposes of this Section 10.08, 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
10.08
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 Separation from Service.
Section
10.09. Consent
to Distributions.
No
amount
shall be distributed to a Member pursuant to Section 10.01, 10.02 or 10.04
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 10.09,
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 Committee.
Section
10.10. Pre-Retirement
Distribution.
(a) On
or
after a Member’s attainment at age 59-½, the 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) Each
Member who was a participant in the SCB Savings or Cash Option Plan for
Employees may elect to withdraw his Member Contributions Account and the actual
earnings thereon at any time but not more than once in any Plan
Year.
(c) In
the
event that the Committee makes a distribution pursuant to this Section 10.10
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
10.10 shall be made in a manner consistent with other applicable provisions
of
this Article X, including, but not limited to, all notice and consent
requirements of Code Section 411(a)(11) and the Regulations
thereunder.
39
ARTICLE
XI
ADMINISTRATION
OF THE PLAN
Section
11.01. 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. The Administrative Committee shall operate
in
accordance with the terms of the Plan, including the Charter for the
Administrative Committee which is attached to the Plan as Exhibit A and
incorporated herein.
Section
11.02. Investment
Committee.
There
is
hereby created an Investment Committee for the Plan. The Investment Committee
shall operate in accordance with the terms of the Plan, including the Charter
for the Investment Committee which is attached to the Plan as Exhibit B and
incorporated herein.
Section
11.03. 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
11.04. 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;
40
(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 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
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.
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
11.05. 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 Committee,
and the members of the 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
11.06. 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 Committee shall
administer the Plan in accordance with the Employer’s regular personnel policies
at the time in effect.
Section
11.07. 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.
41
Section
11.08. 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.
Section
11.09. 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.
Section
11.10. 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 benefit to conform to the
Participant’s actual age and offset future monthly payments to recoup any
overpayments caused by the Participant’s misrepresentation.
Section
11.11. 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
11.12. Spouse’s
Consent.
In
addition to when such consent is expressly required by the terms of this Plan,
the 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
11.13. 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.
42
Section
11.14. 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 Committee under the Plan.
Section
11.15. Liability.
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.
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.
Section
11.16. Claim
and Appeal Procedure.
(a) Initial
Claim.
(i) 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 Committee (or its
designee) for such purpose. The 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. If a Claimant is denied benefits under the
Plan, the 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 Committee receives the claim, provided that in the event of special
circumstances such period may be extended.
43
(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 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 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.
(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 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 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 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 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
Committee expects to make a determination with respect to the claim and such
information as required under clause (III) below.
44
(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 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
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.
(iv) 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(a)
of ERISA following an adverse determination on review.
(b) Claim
Denial Review.
(i) 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 (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:
45
(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 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 one hundred twenty (120) 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 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 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 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
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.
(iv) 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.
46
(v) The
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 ERISA.
(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 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 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.
(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.
Section
11.17. 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 Committee.
47
ARTICLE
XII
THE
TRUST FUND
Section
12.01. 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
12.02. Trustee’s
Power and Duties.
The
Trustee shall manage and control the Trust Fund in accordance with the terms
of
the Trust Agreement.
Section
12.03. 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.
Section
12.04. 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 Committee.
48
ARTICLE
XIII
CERTAIN
RIGHTS AND OBLIGATIONS OF THE COMPANY
Section
13.01. 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
13.02. 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 Committee in accordance
with
this Plan. Upon termination of the Trust, distribution to each Member shall
be
made as soon as practicable thereafter in one of the manners described in
Section 10.01. Until fully distributed, Members’ accounts shall be revalued from
time to time in accordance with Section 8.01. 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
13.03. 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.
49
Section
13.04. 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 1.08 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
13.05. 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.
50
ARTICLE
XIV
NON-ALIENATION
OF BENEFITS
Section
14.01. 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
14.02. 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 Committee, cease, and the 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 Committee may deem proper.
Section
14.03. Exceptions.
Notwithstanding
anything herein to the contrary, effective August 5, 1997, the provisions of
this Article XIV 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.
51
ARTICLE
XV
AMENDMENTS
Section
15.01. 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 9.04, 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 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 Committee.
Section
15.02. 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.
52
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.
Section
16.02.
(a) Other
than as provided in Subsection (b), if, with respect to any Plan Year before
1992, contributions to a Member’s Account must be reduced to conform to the
limitations on “annual additions” as explained and defined in Code Sections
415(c) (1) and 415(c) (2), Members’ Salary Deferrals made pursuant to Section
5.01, and any allocable earnings thereon, shall be distributed to the Member
on
a timely basis; next, Company Contributions for the Plan Year made pursuant
to
Section 4.02 shall be reduced until the limitations are met or this category
of
contributions is exhausted, whichever first occurs; next, if such contributions
were made for the Plan Year, Company Contributions made pursuant to Section
4.01
shall likewise be reduced; and last, Member Salary Deferrals made pursuant
to
Section 6.02(c), and allocable earnings thereon, shall be distributed to the
affected Member on a timely basis.
(b) If,
with
respect to 1990 and any Plan Year after 1991, contributions to a Member’s
Account must be reduced to conform to the limitations referred to in Subsection
(a), 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.
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.
53
ARTICLE
XVII
TOP-HEAVY
PLAN YEARS
Section
17.01. For
purposes of this Article XVII, 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 1.15
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.
54
(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.
55
(4) For
purposes of (1) and (2) above, in the case of a distribution from the Plan
made
for any reason other than separation from service, 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 1.15
of the Plan.
Section
17.02. If
the
Plan is or becomes top-heavy in any Plan Year, the provisions of Section 17.04
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 17.01(e) or 17.01(f) enables a defined benefit plan
described in Section 17.01(f) to meet the requirements of Code Sections
401(a)(4) or Section 410, the minimum contribution required under this Section
17.04 shall be the amount specified in Section 17.04(a)(1).
56
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,
except to the extent that such laws have been superseded by the
Act.
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 1.15
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.
57
APPENDIX
A
REQUIRED
DISTRIBUTION RULES
Section
1.
General.
Pursuant
to Section 10.08 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).
58
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 Participant’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 Participant’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 Participant’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.
59
(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 Participant’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 Participant’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.
60
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 1.38 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.
61
EXHIBIT
A
CHARTER
OF
THE
PROFIT
SHARING PLAN
ADMINISTRATIVE COMMITTEE
1. Purpose.
The
primary purpose of the Administrative
Committee (the “Committee”) is to act
on
behalf of AllianceBernstein L.P. (the “Company”) in the Company’s role as the
administrator
of the
Profit Sharing Plan for Employees of AllianceBernstein L.P. (the “Plan”) in
accordance with the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
2. Composition
and Term.
The
Committee shall be composed of at least two members. The members of the
Committee shall be appointed by the Compensation
Committee of the board
of
directors (the “Board”) of AllianceBernstein Corporation, the general partner of
the Company
(the
“General Partner”),
and each
such member shall serve at the pleasure of the Board. The Compensation Committee
of the Board may remove any member of the Committee at any time, with or
without
cause. The Compensation Committee of the Board shall appoint a new member
of the
Committee as soon as is reasonably possible after such a removal. Until a
new
appointment is made, the remaining members of the Committee shall have full
authority to act, subject to the limitation set forth in the last sentence
of
this Section. No person shall be ineligible to be a member of the Committee
because he or she is, was or may become entitled to benefits under the Plan
or
because he or she is a member
of
the Board
and/or
an
officer
of the Company or related entity or a trustee for the Plan; provided that,
no
member of the Committee shall participate in any determination by the Committee
specifically relating to the disposition of his or her benefits
under
the Plan.
3. Appointment
to and Resignation From the Committee.
Any
person appointed to be a member of the Committee shall signify his or her
acceptance in writing to the Secretary of the General Partner. Any member
of the
Committee may resign by delivering his or her written resignation to the
Secretary of the General Partner. Such resignation shall become effective
upon
delivery or at any later date specified therein.
4. Internal
Structure of Committee.
The
members of the Committee may elect from their number a Chairman. The Committee
may designate any member of the Committee to execute documents on its behalf
as
it deems necessary or appropriate to carry out its responsibilities hereunder.
The Committee may form and delegate authority to subcommittees
(which
may consist of only one member of the Committee, and which may include persons
who are not members of the Committee)
to the
extent the Committee deems necessary or appropriate.
5. Reimbursement
of Committee Expenses.
The
members of the Committee shall serve without compensation for their services
as
such members. The Plan shall pay or reimburse the members of the Committee
for
all reasonable expenses incurred in connection with their duties with respect
to
the Plan unless the Company or other affiliate participating in the Plan
pays or
reimburses the members of the Committee for such expenses. Such expenses
shall
include any expenses incidental to the operation of the Plan,
including, but not limited to, fees of legal counsel, actuaries, accountants,
investment advisors and other agents or specialists and similar costs, provided
that any such advisor
shall be
retained only as approved by the majority of the members of the Committee
except
to the extent that an issue involves a breach of fiduciary duty and the majority
of members of the Committee has refused to retain appropriate advisors. To
the
extent that the members of the Committee are required to serve subject to
a
bond, the Company shall pay the premiums thereon.
62
6. Action
by Majority of the Committee.
A
majority of the members of the Committee at the time in office may do any
act
which the Plan authorizes or requires the Committee to do, and the action
of
such majority of the members expressed from time to time by a vote at a meeting,
shall
constitute the action of the Committee and shall have the same effect for
all
purposes as if assented to by all the members. Persons may participate in
meetings by means of telephone conference or similar communications equipment
allowing all persons participating in the meeting to hear each other at the
same
time. All of the members of Committee at any time in office, acting unanimously,
may do any act which the Plan authorizes or requires the Committee to do,
which
act may be evidenced by a writing without a meeting (and such writing may
include facsimile transmissions, e-mail or other forms of electronic writing).
The writing evidencing each action taken without a meeting shall require
the
signature or other affirmative indication of consent of each member of the
Committee at the time in office. The Secretary of the Committee shall maintain
minutes reflecting the Committee’s meetings and shall cause each action taken in
writing without a meeting to be included in the minutes of the Committee.
Minutes of each meeting shall be distributed to the entire
Committee.
Except
in
extraordinary circumstances as determined by the Chairman of the Committee,
notice shall be delivered to all Committee members at least 48 hours in advance
of the scheduled meeting. Attendance at any meeting,
whether
in person or telephonically,
by a
member of the Committee shall be a conclusive waiver of any objection to
the
notice of such meeting given to such member.
7. Administrative
Matters.
The
Committee shall meet at such times and from time-to-time
as
it deems appropriate. The Committee may request members of management or
others,
including, without limitation, legal counsel, actuaries, accountants, investment
advisors and internal auditors, to attend meetings and provide pertinent
information as necessary.
The
Committee may establish procedures for (i) the allocation of fiduciary
responsibilities (other than “trustee responsibilities,” as defined in Section
405(c) of ERISA) under the Plan among its members and (ii) the designation
of
persons other than named fiduciaries to carry out fiduciary responsibilities
(other than trustee responsibilities) under the Plan. If any fiduciary
responsibility is allocated or if any person is designated to carry out any
responsibility pursuant to the preceding sentence, the named fiduciary will
not
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.
8. Counsel
and Agents.
The
Committee may employ such advisors, including legal counsel, actuaries,
accountants, investment advisors, and
such
other service providers as it may require in carrying out the provisions
of the
Plan or their duties to the Plan. Unless otherwise provided by law, any person
so employed by the Committee may be legal or other counsel to the Company
or an
affiliate thereof, a member of the Committee or an officer or member of the
governing board of a participating entity or an affiliate thereof, including
the
Board.
63
9. ERISA
Fiduciary Responsibility.
The
Committee shall be the “Named Fiduciary,” as defined in Section 402(a)(2) of
ERISA, for the Plan except
with
respect to the control and management of the assets of the Plan and the
appointment of investment managers
(with
respect to which the Investment Committee is the named fiduciary).
10. Powers
of the Committee.
Subject
to the limitations of the Plan and as set forth in Section 9 above, the
Committee shall have, without exclusion, all powers conferred on it under
the
terms of the Plan, including, without limitation, the following powers with
respect to the Plan (it being intended that these powers be construed in
the
broadest possible manner):
(a)
To
make
such rules and regulations as it deems necessary or proper for the
administration of the Plan and the transaction of business thereunder which
are
not inconsistent with the terms and provisions of the Plan and which relate
to
the duties or responsibilities of the Committee;
(b)
To
appoint and monitor the performance of insurance carriers, investment managers,
investment consultants
or other
entities as it deems necessary for the proper administration and operation
of
the
Plan
and to assign and reassign assets to and among such insurance carriers and
investment managers;
(c)
To
take such other action or make such determinations in accordance with the
Plan
as it deems appropriate;
(d)
To make
or obtain such analyses, evaluations, advice or opinions, and retain such
legal
counsel, actuaries, accountants, investment advisors and other persons,
including persons employed by the Company, as it may deem necessary or
advisable;
(e)
To
designate one or more persons, other than a member of the Committee, to whom
the
Committee may delegate, and among whom the Committee may allocate,
specified fiduciary responsibilities; provided
that any
such delegation
shall be
in writing, shall specify the person so designated and the terms of the
delegation and shall be terminable by the Committee or the Board;
(f)
To
designate any of the members of the Committee to execute and deliver on its
behalf documents and instruments of such types and bearing on such matters
as
may be specified in a
resolution, and any such document or instrument may be accepted and relied
upon
as the act of the Committee;
(g)
To
report to the Compensation Committee of the Board, not less often than annually,
on the performance of its responsibilities and on the performance of any
trustee,
investment manager, insurance carrier
or
other
persons
to whom any of its powers and responsibilities may have been delegated pursuant
to this Charter and on the financial condition of the
Plan
for the
preceding year; and
(h)
To
recommend to the Compensation Committee of the Board changes to this
Charter.
64
The
foregoing list of powers is not intended to be either complete or exclusive,
and
the Committee shall, in addition, have such powers as may be necessary for
the
performance of its duties under the Plan and its
trust
agreement.
11. Accounts
and Records.
The
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.
12. Standard
of Conduct.
The
members of the Committee shall discharge their duties with respect to the
Plan
solely in the interests of the participants in the Plan and their beneficiaries,
and
(a)
for
the exclusive purpose of providing benefits to participants and their
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 person, 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; and
(c)
in
accordance with the documents and instruments governing the Plan, insofar
as
such documents and instruments are consistent with the provisions of
ERISA.
13. Limitation
of Committee Role.
While
the Committee has the responsibilities and powers set forth in this Charter,
it
is not the duty of the Committee to make
investment related decisions with respect to the Plan, including the appointment
of one or more investment managers for the Plan, or establish or carry out,
an
investment policy with respect to the Plan. These are the responsibilities
of
the Investment Committee for the Plan. Nor is it the duty of the Committee
to
approve amendments to the Plan that are “settlor” in nature.
14. Integration
with Plan.
This
Charter constitutes a part of the Plan and may
be
amended only by
action
of the
Compensation Committee
of the
Board.
65
EXHIBIT
B
CHARTER
OF
THE
PROFIT
SHARING PLAN INVESTMENT COMMITTEE
1. Purpose.
The
primary purpose of the Investment Committee (the “Committee”) is to oversee the
investment of the assets of the Profit Sharing Plan for Employees of
AllianceBernstein L.P. (the “Plan”) and subject to the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), on behalf of
AllianceBernstein L.P. (the “Company”).
2. Composition
and Term.
The
Committee shall be composed of at least two members. The members of the
Committee shall be appointed by the Compensation Committee of the board of
directors (the “Board”) of AllianceBernstein Corporation, the general partner of
the Company (the “General Partner”), and each such member shall serve at the
pleasure of the Board. The Compensation Committee of the Board may remove
any
member of the Committee at any time, with or without cause. The Compensation
Committee of the Board shall appoint a new member of the Committee as soon
as is
reasonably possible after such a removal. Until a new appointment is made,
the
remaining members of the Committee shall have full authority to act, subject
to
the limitation set forth in the last sentence of this Section. No person
shall
be ineligible to be a member of the Committee because he or she is, was or
may
become entitled to benefits under the Plan or because he or she is a member
of
the Board and/or an officer of the Company or related entity or a trustee
for
the Plan; provided that, no member of the Committee shall participate in
any
determination by the Committee specifically relating to the disposition of
his
or her benefits under the Plan.
3. Appointment
to and Resignation From the Committee.
Any
person appointed to be a member of the Committee shall signify his or her
acceptance in writing to the Secretary of the General Partner. Any member
of the
Committee may resign by delivering his or her written resignation to the
Secretary of the General Partner. Such resignation shall become effective
upon
delivery or at any later date specified therein.
4. Internal
Structure of Committee.
The
members of the Committee may elect from their number a Chairman. The Secretary
or any Assistant Secretary of the General Partner shall be the Secretary
of the
Committee. The Committee may designate any member of the Committee to execute
documents on its behalf as it deems necessary or appropriate to carry out
its
responsibilities hereunder. The Committee may form and delegate authority
to
subcommittees (which may consist of only one member of the Committee, and
which
may include persons who are not members of the Committee) to the extent the
Committee deems necessary or appropriate.
5. Reimbursement
of Committee Expenses.
The
members of the Committee shall serve without compensation for their services
as
such members. The Plan shall pay or reimburse the members of the Committee
for
all reasonable expenses incurred in connection with their duties with respect
to
the Plan unless the Company or other affiliate participating in the Plan
pays or
reimburses the members of the Committee for such expenses. Such expenses
shall
include any expenses incidental to the operation of the Plan, including,
but not
limited to, fees of legal counsel, actuaries, accountants, investment advisors
and other agents or specialists and similar costs, provided that any such
advisor shall be retained only as approved by the majority of the members
of the
Committee except to the extent that an issue involves a breach of fiduciary
duty
and the majority of members of the Committee has refused to retain appropriate
advisors. To the extent that the members of the Committee are required to
serve
subject to a bond, the Company shall pay the premiums thereon.
66
6. Action
by Majority of the Committee.
A
majority of the members of the Committee at the time in office may do any
act
which the Plan authorizes or requires the Committee to do, and the action
of
such majority of the members expressed from time to time by a vote at a meeting,
shall constitute the action of the Committee and shall have the same effect
for
all purposes as if assented to by all the members. Persons may participate
in
meetings by means of telephone conference or similar communications equipment
allowing all persons participating in the meeting to hear each other at the
same
time. All of the members of Committee at any time in office, acting unanimously,
may do any act which the Plan authorizes or requires the Committee to do,
which
act may be evidenced by a writing without a meeting (and such writing may
include facsimile transmissions, e-mail or other forms of electronic writing).
The writing evidencing each action taken without a meeting shall require
the
signature or other affirmative indication of consent of each member of the
Committee at the time in office. The Secretary of the Committee shall maintain
minutes reflecting the Committee’s meetings and shall cause each action taken in
writing without a meeting to be included in the minutes of the Committee.
Minutes of each meeting shall be distributed to the entire
Committee.
Except
in
extraordinary circumstances as determined by the Chairman of the Committee,
notice shall be delivered to all Committee members at least 48 hours in advance
of the scheduled meeting. Attendance at any meeting, whether in person or
telephonically, by a member of the Committee shall be a conclusive waiver
of any
objection to the notice of such meeting given to such member.
7. Administrative
Matters.
The
Committee shall meet at such times and from time to time as it deems
appropriate. The Committee may request members of management or others,
including, without limitation, legal counsel, actuaries, accountants, investment
advisors and internal auditors, to attend meetings and provide pertinent
information as necessary.
The
Committee may establish procedures for (i) the allocation of fiduciary
responsibilities (other than “trustee responsibilities,” as defined in Section
405(c) of ERISA) under the Plan among its members and (ii) the designation
of
persons other than named fiduciaries to carry out fiduciary responsibilities
(other than trustee responsibilities) under the Plan. If any fiduciary
responsibility is allocated or if any person is designated to carry out any
responsibility pursuant to the preceding sentence, the named fiduciary will
not
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.
8. Counsel
and Agents.
The
Committee may employ such advisors, including legal counsel, actuaries,
accountants, investment advisors, and such other service providers as it
may
require in carrying out the provisions of the Plan or their duties to the
Plan.
Unless otherwise provided by law, any person so employed by the Committee
may be
legal or other counsel to the Company or an affiliate thereof, a member of
the
Committee or an officer or member of the governing board of a participating
entity or an affiliate thereof, including the Board.
67
9. ERISA
Fiduciary Responsibility.
The
Committee shall be the “Named Fiduciary,” as defined in Section 402(a)(2) of
ERISA, for the Plan with respect to the control and management of the assets
of
the Plan and the appointment of investment managers.
10. Powers
of the Committee.
Subject
to the limitations of the Plan and as set forth in Section 9 above, the
Committee shall have, without exclusion, all powers conferred on it under
the
terms of the Plan, including, without limitation, the following powers with
respect to the Plan (it being intended that these powers be construed in
the
broadest possible manner):
(a)
To
adopt a statement of investment policy for the Plan;
(b)
To
make such rules and regulations as it deems necessary or proper for the
administration of the Plan and the transaction of business thereunder which
are
not inconsistent with the terms and provisions of the Plan and which relate
to
the duties or responsibilities of the Committee;
(c)
To
control and manage the assets of the Plan consistent with the purpose and
terms
of the Plan, including, but not by way of limitation, the investment policy
of
the Plan, taking into account short-term and long-term liquidity
needs;
(d)
To
designate, add, remove or change investment alternatives under the Plan,
which
may include mutual funds or other investment vehicles that are managed by
the
Company or its affiliates and securities issued by the Company or its
affiliates, among which participants may elect to invest their accounts under
the Plan and to consider the appropriateness of complying with Section 404(c)
of
ERISA;
(e)
To
appoint and monitor the performance of insurance carriers, investment managers,
investment consultants or other entities as it deems necessary for the proper
administration and operation of the Plan and to assign and reassign assets
to
and among such insurance carriers and investment managers;
(f)
To
take such other action or make such determinations in accordance with the
Plan
as it deems appropriate;
(g)
To
make or obtain such analyses, evaluations, advice or opinions, and retain
such
legal counsel, actuaries, accountants, investment advisors and other persons,
including persons employed by the Company, as it may deem necessary or
advisable;
(h)
To
designate one or more persons, other than a member of the Committee, to whom
the
Committee may delegate, and among whom the Committee may allocate, specified
fiduciary responsibilities; provided that any such delegation shall be in
writing, shall specify the person so designated and the terms of the delegation
and shall be terminable by the Committee or the Board;
68
(i)
To
designate any of the members of the Committee to execute and deliver on its
behalf documents and instruments of such types and bearing on such matters
as
may be specified in a resolution, and any such document or instrument may
be
accepted and relied upon as the act of the Committee;
(j)
To
report to the Compensation Committee of the Board, not less often than annually,
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 pursuant to this Charter
and
on the financial condition of a plan for the preceding year; and
(k)
To
recommend to the Compensation Committee of the Board changes to this
Charter.
The
foregoing list of powers is not intended to be either complete or exclusive,
and
the Committee shall, in addition, have such powers as may be necessary for
the
performance of its duties under the Plan and its trust agreement.
11. Accounts
and Records.
The
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.
12. Standard
of Conduct.
The
members of the Committee shall discharge their duties with respect to the
Plan
solely in the interests of the participants in the Plan and their beneficiaries,
and
(a)
for
the exclusive purpose of providing benefits to participants and their
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 person, 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 Plan 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.
13. Limitation
of Committee Role.
While
the Committee has the responsibilities and powers set forth in this Charter,
it
is not the duty of the Committee to take other administration-related actions
or
decisions with respect to the Plan. These are the responsibilities of the
Administrative Committee of the Plan. Further it is not the duty of the
Committee to approve amendments to the Plan that are “settlor” in
nature.
14. Integration
with Plan.
This
Charter constitutes a part of the Plan and may be amended only by action
of the
Compensation Committee of the Board.
69
EXHIBIT
10.08
AMENDMENTAND
RESTATEMENT
OF
THE
RETIREMENT
PLAN
FOR
EMPLOYEES
OF
ALLIANCEBERNSTEIN
L.P.
(As
Amended through November 30, 2006)
TABLE
OF
CONTENTS
|
ARTICLE
I
|
DEFINITIONS
|
1
|
||
|
ARTICLE
II
|
ELIGIBILITY
FOR PARTICIPATION
|
17
|
||
|
ARTICLE
III
|
RETI
REMENT ON OR AFTER NORMAL RETIREMENT DATE
|
19
|
||
|
ARTICLE
IV
|
VESTING
|
24
|
||
|
ARTICLE
V
|
EARLY
RETIREMENT AND DISABILITY BENEFIT
|
26
|
||
|
ARTICLE
VI
|
OPTIONAL
METHODS OF PAYMENT
|
27
|
||
|
ARTICLE
VII
|
DEATH
BENEFIT
|
32
|
||
|
ARTICLE
VIII
|
DIRECT
ROLLOVER DISTRIBUTIONS
|
33
|
||
|
ARTICLE
IX
|
EMPLOYER
CONTRIBUTION AND FUNDING POLICY
|
34
|
||
|
ARTICLE
X
|
LIMITATIONS
ON BENEFITS
|
35
|
||
|
ARTICLE
XI
|
TOP-HEAVY
PLAN YEARS
|
36
|
||
|
ARTICLE
XII
|
NON-ALIENABILITY
|
40
|
||
|
ARTICLE
XIII
|
AMENDMENT
OF THE PLAN
|
45
|
||
|
ARTICLE
XIV
|
TERMINATION
OF THE PLAN
|
46
|
||
|
ARTICLE
XV
|
TRUST
AND ADMINISTRATION
|
48
|
||
|
ARTICLE
XVI
|
CLAIM
AND APPEAL PROCEDURE
|
50
|
||
|
ARTICLE
XVII
|
MISCELLANEOUS
|
55
|
||
|
|
||||
|
ARTICLE
XVIII
|
ADMINISTRATION
OF THE PLAN
|
56
|
i
RETIREMENT
PLAN
FOR
EMPLOYEES
OF
ALLIANCEBERNSTEIN
L.P.
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 Allied 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.
NOW,
THEREFORE, the Plan is hereby 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.
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.
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
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 for the month of September 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” or “COMMITTEE” means the administrative committee appointed by the
Board pursuant to Section 15.02. The term “Investment Committee” shall mean the
investment committee appointed by the Board pursuant to Section
18.02.
1
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 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.
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.
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 date of his Retirement or other Termination of Employment,
whichever is applicable, in which he received his highest aggregate Compensation
(or his Compensation for his consecutive full calendar Years of Service, if
less
than five (5)), and dividing the sum thus obtained by five (5) (or the number
of
his full calendar Years of Service if less than five (5)). Notwithstanding
the
foregoing, partial calendar Years of Service, 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.
2
(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) 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. The increase in the limit provided under
Section 401(a)(17) of the Code under the Economic Growth and Tax Relief
Reconciliation Act of 2001 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.
3
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.
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.
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.
1.18.1 “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 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.
4
1.19 “EARLY
RETIREMENT” means Retirement on or after a Participant’s Early Retirement Date
and prior to his Normal Retirement Date.
1.20 “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).
1.21 “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.
1.22 “EFFECTIVE
DATE” means January 1, 1980.
5
1.23 “EMPLOYEE”
means an individual described in Sections 3121(d) (1) or (2) of the Code who
is
employed by an Employer or an Affiliate.
1.24 “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.
1.25 “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.
1.26 “ENTRY
DATE” means the first day of each Plan Year.
1.27 “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from
time
to time.
1.28 (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
6
(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.
1.29 “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 or on the last day of the calendar year immediately preceding the
date
of his Retirement or other Termination of Employment, whichever is applicable,
(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 1.29 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.
7
1.30 “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
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
Section 318 of the Code); 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.”
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
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 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”.
1.31 “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 separation from service 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 Section 414(q) of the Code
definition is applicable.
8
1.32 (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 1.34(a)
or (b), 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 Committee on
a
timely basis such information as the Committee shall reasonably require to
establish
9
(i) that
the
absence from work is for reasons described in Subparagraph (A) hereof;
and
(ii) 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 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) 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 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).
1.33 “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.
1.34 “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.
10
In
granting or withholding Leaves of Absence, each Employer or Affiliate shall
apply uniform and non-discriminatory rules to all Employees in similar
circumstances.
1.35 “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.
1.36 “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.
1.37 “PARTICIPANT”
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.
1.38 “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(a)(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)).
1.39 “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.
1.40 “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 1.14 (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 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.
11
(2) As
soon
as practicable after a Participant’s Termination of employment, the 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.
1.41 “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 one-half
(½) 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
Joint and Survivor Annuity shall be the Actuarial Equivalent of the
Participant’s Retirement Pension.
1.42 “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(a) 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.
12
1.43 “REQUIRED
BEGINNING DATE”
(a) for
a
Participant who is not a 5-percent 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 5-percent owner (as defined in Section 416 of
the Code) 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 Participant attains age 70½.
1.44 “RETIRED
PARTICIPANT” means any Participant or former Participant who is entitled to
benefits pursuant to Article III, IV or V.
1.45 “RETIREMENT”
means any Termination of Employment, other than by reason of death, on or after
an Employee’s Early or Normal Retirement Date.
1.46 “RETIREMENT
PENSION” b)
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
under the provisions of Section 3.03 or to elect any optional form of payment
under the provisions of Article VI.
1.47 “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.
1.48 “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;
13
(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.
1.49 “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 as
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 Committee or by a notary public;
or
(b) it
is
established to the 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.
1.50 “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.
1.51 “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
1.30) 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;
14
(c) Employees
who normally work less than six (6) months during a year; and
(d) Employees
who have not yet attained age 21.
1.52 “TREASURY
REGULATIONS” means the regulations promulgated by the Internal Revenue Service
and the Secretary of the Treasury under the Code.
1.53 “TRUST”
means the trust forming part of this Plan.
1.54 “TRUST
FUND” means all the assets of the Plan which are held by the
Trustee.
1.55 “TRUSTEE”
means the persons or entity acting, at any time, as trustee of the Trust
Fund.
1.56 “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;
15
(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.
16
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 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.
17
(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.
18
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 and, with respect to distributions made on or after
January 1, 2001, 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. This preceding sentence shall continue in
effect until the end of the last calendar year beginning before the effective
date of the final regulations under Section 401(a)(9) of the Code or such other
date as may be specified in guidance published by the Internal Revenue
Service.
3.02 (a)
A
Participant shall be fully (100%) vested in his Accrued Benefit on his
sixty-fifth (65th)
birthday. Upon his Retirement on or after his Normal Retirement Date, a
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
19
(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.
20
(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 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 commences 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
21
(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
ninety (90) day period 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
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
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 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
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.
22
(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 1.48 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.
23
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).
24
(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(a)(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(a)(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.
25
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.
26
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.
(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:
(A)
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.
27
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.
28
(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.
29
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;
30
(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
and, with respect to distributions made on or after January 1, 2001, 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.
This subsection (g) shall continue in effect until the end of the last calendar
year beginning before the effective date of the final regulations under Section
401(a)(9) of the Code or such other date as may be specified in guidance
published by the Internal Revenue Service.
(h) 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
and 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.
31
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
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.
32
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), 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 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.
33
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.
34
ARTICLE
X
LIMITATIONS
ON BENEFITS
10.01 (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
5
percent 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 5 percent
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 Code Section
417(e)(3), the interest rate assumption shall be the greater of (i) the
Applicable Interest Rate or (ii) 5.5 percent. 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 Code Section 417(e)(3), the
interest rate assumption shall be the greater of (i) the Applicable Interest
Rate, (ii) 5.5 percent 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.
35
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 (as adjusted under Section
416(i)(1) of the Code 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. 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.
36
(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.
37
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 separation from service, death or Disability,
“5 year period” shall be substituted for “1-year period” wherever such term
is found.
(ii) “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 60 percent 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 60 percent.
(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 60 percent.
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:
38
(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.
39
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.
40
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 dc 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.
41
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.
42
(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) (1)
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
(2) 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.
43
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 1.41 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 1.41;
(2) the
Retirement Pension thus provided is supplemented, to the extent necessary to
provide the full Retirement Pension in the form provided in Section 1.41 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.
44
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).
45
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
Reserved.
15.03
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.
15.04
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 Members
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.
15.05
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.
15.06
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.
15.07
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;
46
(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.
15.08
(a)
The
Trustees are hereby designated as “named fiduciaries” 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 in SubSections (c) and (d), 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 names 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.
15.09
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.
15.10
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.
47
15.11
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 Trustee 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 Trustee 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;
48
(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.
15.12
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.
15.13
(a)
The
Trustees shall keep accurate and detailed accounts of all investments, receipts,
disbursements and other transactions hereunder.
(b) Within
two hundred ten (210) days following the close of each Plan Year, 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.
15.14
Any
Trustee may be removed by the Company at any time. A Trustee may resign at
any
time upon thirty (30) days’ notice in writing to the Company, which notice may
be waived by the Company. Upon such removal or resignation of a Trustee, or
upon
the death or disability of a Trustee, the Company may, or in the event there
is
no then acting Trustee, shall appoint a successor Trustee, who shall have the
same powers and duties as those conferred upon the Trustees hereunder. The
Company 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.
15.15
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.
49
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 Committee for such
purpose. 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 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 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 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 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.
(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 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 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 Committee expects to make a determination with
respect to the claim and such information as required under clause (III)
below.
50
(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 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
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 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
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.
(iv) 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;
51
(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.
(b) Claim
Denial Review.
(i) 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 (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 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 one hundred twenty (120) days.
52
(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 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 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 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
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.
(iv) 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.
(v) The
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.
(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 Committee shall consult with a health
care professional who has appropriate training and experience in the field
of
medicine involved in the medical judgment.
53
(c) 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.
(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.
54
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
This
Plan
shall be governed, construed, administered and regulated in all respects under
the laws of the State of New York, except insofar as they have been superseded
by the provisions of ERISA.
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 Trustee 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.
55
ARTICLE
XVIII
ADMINISTRATION
OF THE PLAN
Section
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. The Administrative Committee shall operate
in
accordance with the terms of the Plan, including the Charter for the
Administrative Committee which is attached to the Plan as Exhibit A and
incorporated herein.
Section
18.02
Investment
Committee.
There
is hereby created an Investment Committee for the Plan. The Investment Committee
shall operate in accordance with the terms of the Plan, including the Charter
for the Investment Committee which is attached to the Plan as Exhibit B and
incorporated herein.
Section
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.
Section
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
56
(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.
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
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 Committee,
and the members of the 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
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 Committee shall
administer the Plan in accordance with the Employer’s regular personnel policies
at the time in effect.
Section
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.
Section
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.
Section
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.
57
Section
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.
Section
18.11
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
18.12
Spouse’s
Consent.
In
addition to when such consent is expressly required by the terms of this Plan,
the 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
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.
Section
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 Committee under the Plan.
Section
18.15
Liability.
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.
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.
58
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 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. 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.
Appendix
A-1
(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:
Appendix
A-2
(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 2.2(a) or (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.
Appendix
A-3
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 2.2(a) or
(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 2.2(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.
Appendix
A-4
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 1.43 of the Plan.
Appendix
A-5
EXHIBIT
A
CHARTER
OF
THE
RETIREMENT
PLAN
ADMINISTRATIVE COMMITTEE
1. Purpose.
The
primary purpose of the Administrative
Committee (the “Committee”) is to act
on
behalf of AllianceBernstein L.P. (formerly known as Alliance Capital Management
L.P.) (the “Company”) in the Company’s role as the administrator
of the
Retirement Plan for Employees of AllianceBernstein L.P. (formerly known as
the
Retirement Plan for Employees of Alliance Capital Management L.P.) (the “Plan”)
in accordance with the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
2. Composition
and Term.
The
Committee shall be composed of at least two members. The members of the
Committee shall be appointed by the Compensation
Committee of the board
of
directors (the “Board”) of AllianceBernstein Corporation (formerly known as
Alliance Capital Management Corporation), the general partner of the
Company
(the
“General Partner”),
and each
such member shall serve at the pleasure of the Board. The Compensation Committee
of the Board may remove any member of the Committee at any time, with or without
cause. The Compensation Committee of the Board shall appoint a new member of
the
Committee as soon as is reasonably possible after such a removal. Until a new
appointment is made, the remaining members of the Committee shall have full
authority to act, subject to the limitation set forth in the last sentence
of
this Section. No person shall be ineligible to be a member of the Committee
because he or she is, was or may become entitled to benefits under the Plan
or
because he or she is a member
of
the Board
and/or
an
officer
of the Company or related entity or a trustee for the Plan; provided that,
no
member of the Committee shall participate in any determination by the Committee
specifically relating to the disposition of his or her benefits
under
the Plan.
3. Appointment
to and Resignation From the Committee.
Any
person appointed to be a member of the Committee shall signify his or her
acceptance in writing to the Secretary of the General Partner. Any member of
the
Committee may resign by delivering his or her written resignation to the
Secretary of the General Partner. Such resignation shall become effective upon
delivery or at any later date specified therein.
4. Internal
Structure of Committee.
The
members of the Committee may elect from their number a Chairman. The Committee
may designate any member of the Committee to execute documents on its behalf
as
it deems necessary or appropriate to carry out its responsibilities hereunder.
The Committee may form and delegate authority to subcommittees
(which
may consist of only one member of the Committee, and which may include persons
who are not members of the Committee)
to the
extent the Committee deems necessary or appropriate.
5. Reimbursement
of Committee Expenses.
The
members of the Committee shall serve without compensation for their services
as
such members. The Plan shall pay or reimburse the members of the Committee
for
all reasonable expenses incurred in connection with their duties with respect
to
the Plan unless the Company or other affiliate participating in the Plan pays
or
reimburses the members of the Committee for such expenses. Such expenses shall
include any expenses incidental to the operation of the Plan,
including, but not limited to, fees of legal counsel, actuaries, accountants,
investment advisors and other agents or specialists and similar costs, provided
that any such advisor
shall be
retained only as approved by the majority of the members of the Committee except
to the extent that an issue involves a breach of fiduciary duty and the majority
of members of the Committee has refused to retain appropriate advisors. To
the
extent that the members of the Committee are required to serve subject to a
bond, the Company shall pay the premiums thereon.
Exh.
A-1
6. Action
by Majority of the Committee.
A
majority of the members of the Committee at the time in office may do any act
which the Plan authorizes or requires the Committee to do, and the action of
such majority of the members expressed from time to time by a vote at a meeting,
shall
constitute the action of the Committee and shall have the same effect for all
purposes as if assented to by all the members. Persons may participate in
meetings by means of telephone conference or similar communications equipment
allowing all persons participating in the meeting to hear each other at the
same
time. All of the members of Committee at any time in office, acting unanimously,
may do any act which the Plan authorizes or requires the Committee to do, which
act may be evidenced by a writing without a meeting (and such writing may
include facsimile transmissions, e-mail or other forms of electronic writing).
The writing evidencing each action taken without a meeting shall require the
signature or other affirmative indication of consent of each member of the
Committee at the time in office. The Secretary of the Committee shall maintain
minutes reflecting the Committee’s meetings and shall cause each action taken in
writing without a meeting to be included in the minutes of the Committee.
Minutes of each meeting shall be distributed to the entire
Committee.
Except
in
extraordinary circumstances as determined by the Chairman of the Committee,
notice shall be delivered to all Committee members at least 48 hours in advance
of the scheduled meeting. Attendance at any meeting,
whether
in person or telephonically,
by a
member of the Committee shall be a conclusive waiver of any objection to the
notice of such meeting given to such member.
7. Administrative
Matters.
The
Committee shall meet at such times and from time-to-time
as
it deems appropriate. The Committee may request members of management or others,
including, without limitation, legal counsel, actuaries, accountants, investment
advisors and internal auditors, to attend meetings and provide pertinent
information as necessary.
The
Committee may establish procedures for (i) the allocation of fiduciary
responsibilities (other than “trustee responsibilities,” as defined in Section
405(c) of ERISA) under the Plan among its members and (ii) the designation
of
persons other than named fiduciaries to carry out fiduciary responsibilities
(other than trustee responsibilities) under the Plan. If any fiduciary
responsibility is allocated or if any person is designated to carry out any
responsibility pursuant to the preceding sentence, the named fiduciary will
not
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.
8. Counsel
and Agents.
The
Committee may employ such advisors, including legal counsel, actuaries,
accountants, investment advisors, and
such
other service providers as it may require in carrying out the provisions of
the
Plan or their duties to the Plan. Unless otherwise provided by law, any person
so employed by the Committee may be legal or other counsel to the Company or
an
affiliate thereof, a member of the Committee or an officer or member of the
governing board of a participating entity or an affiliate thereof, including
the
Board.
Exh.
A-2
9. ERISA
Fiduciary Responsibility.
The
Committee shall be the “Named Fiduciary,” as defined in Section 402(a)(2) of
ERISA, for the Plan except
with
respect to the control and management of the assets of the Plan and the
appointment of investment managers
(with
respect to which the Investment Committee is the named fiduciary).
10. Powers
of the Committee.
Subject
to the limitations of the Plan and as set forth in Section 9 above, the
Committee shall have, without exclusion, all powers conferred on it under the
terms of the Plan, including, without limitation, the following powers with
respect to the Plan (it being intended that these powers be construed in the
broadest possible manner):
(a) To
make
such rules and regulations as it deems necessary or proper for the
administration of the Plan and the transaction of business thereunder which
are
not inconsistent with the terms and provisions of the Plan and which relate
to
the duties or responsibilities of the Committee;
(b) To
appoint and monitor the performance of insurance carriers, investment managers,
investment consultants
or other
entities as it deems necessary for the proper administration and operation
of
the
Plan
and to assign and reassign assets to and among such insurance carriers and
investment managers;
(c) To
take
such other action or make such determinations in accordance with the Plan as
it
deems appropriate;
(d) To
make
or obtain such analyses, evaluations, advice or opinions, and retain such legal
counsel, actuaries, accountants, investment advisors and other persons,
including persons employed by the Company, as it may deem necessary or
advisable;
(e) To
designate one or more persons, other than a member of the Committee, to whom
the
Committee may delegate, and among whom the Committee may allocate,
specified
fiduciary responsibilities;
provided
that any
such delegation shall
be
in writing, shall specify the person so designated and the terms of the
delegation and shall be terminable by the Committee or the Board;
(f) To
designate any of the members of the Committee to execute and deliver on its
behalf documents and instruments of such types and bearing on such matters
as
may be specified in a
resolution, and any such document or instrument may be accepted and relied
upon
as the act of the Committee;
(g) To
report
to the Compensation Committee of the Board, not less often than annually, on
the
performance of its responsibilities and on the performance of any
trustee,
investment manager, insurance carrier
or
other
persons
to whom any of its powers and responsibilities may have been delegated pursuant
to this Charter and on the financial condition of the
Plan
for the
preceding year; and
Exh.
A-3
(h) To
recommend to the Compensation Committee of the Board changes to this
Charter.
The
foregoing list of powers is not intended to be either complete or exclusive,
and
the Committee shall, in addition, have such powers as may be necessary for
the
performance of its duties under the Plan and its
trust
agreement.
11. Accounts
and Records.
The
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.
12. Standard
of Conduct.
The
members of the Committee shall discharge their duties with respect to the Plan
solely in the interests of the participants in the Plan and their beneficiaries;
and
(a) for
the
exclusive purpose of providing benefits to participants and their 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 person, 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;
and
(c) in
accordance with the documents and instruments governing the Plan, insofar as
such documents and instruments are consistent with the provisions of
ERISA.
13. Limitation
of Committee Role.
While
the Committee has the responsibilities and powers set forth in this Charter,
it
is not the duty of the Committee to make
investment- related decisions with respect to the Plan, including the
appointment of one or more investment managers for the Plan, or establish or
carry out an investment policy with respect to the Plan. These are the
responsibilities of the Investment Committee for the Plan. Nor is it the duty
of
the Committee to approve amendments to the Plan that are “settlor” in
nature.
14. Integration
with Plan.
This
Charter constitutes a part of the Plan and may be amended only by
action
of the
Compensation Committee
of the
Board.
Exh.
A-4
EXHIBIT
B
CHARTER
OF
THE
RETIREMENT
PLAN INVESTMENT COMMITTEE
1. Purpose.
The
primary purpose of the Investment Committee (the “Committee”) is to oversee the
investment of the assets of the Retirement Plan for Employees of
AllianceBernstein L.P. (formerly known as the Retirement Plan for Employees
of
Alliance Capital Management L.P.) (the “Plan”) in accordance with investment
guidelines in effect from time to time and subject to the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), on behalf of
AllianceBernstein L.P. (formerly known as Alliance Capital Management L.P.)
(the
“Company”).
2. Composition
and Term.
The
Committee shall be composed of at least two members. The members of the
Committee shall be appointed by the Compensation Committee of the board of
directors (the “Board”) of AllianceBernstein Corporation (formerly known as
Alliance Capital Management Corporation), the general partner of the Company
(the “General Partner”), and each such member shall serve at the pleasure of the
Board. The Compensation Committee of the Board may remove any member of the
Committee at any time, with or without cause. The Compensation Committee of
the
Board shall appoint a new member of the Committee as soon as is reasonably
possible after such a removal. Until a new appointment is made, the remaining
members of the Committee shall have full authority to act, subject to the
limitation set forth in the last sentence of this Section. No person shall
be
ineligible to be a member of the Committee because he or she is, was or may
become entitled to benefits under the Plan or because he or she is a member
of
the Board and/or an officer of the Company or related entity or a trustee for
the Plan; provided that, no member of the Committee shall participate in any
determination by the Committee specifically relating to the disposition of
his
or her benefits under the Plan.
3. Appointment
to and Resignation From the Committee.
Any
person appointed to be a member of the Committee shall signify his or her
acceptance in writing to the Secretary of the General Partner. Any member of
the
Committee may resign by delivering his or her written resignation to the
Secretary of the General Partner. Such resignation shall become effective upon
delivery or at any later date specified therein.
4. Internal
Structure of Committee.
The
members of the Committee may elect from their number a Chairman. The Secretary
or any Assistant Secretary of the General Partner shall be the Secretary of
the
Committee. The Committee may designate any member of the Committee to execute
documents on its behalf as it deems necessary or appropriate to carry out its
responsibilities hereunder. The Committee may form and delegate authority to
subcommittees (which may consist of only one member of the Committee, and which
may include persons who are not members of the Committee) to the extent the
Committee deems necessary or appropriate.
5. Reimbursement
of Committee Expenses.
The
members of the Committee shall serve without compensation for their services
as
such members. The Plan shall pay or reimburse the members of the Committee
for
all reasonable expenses incurred in connection with their duties with respect
to
the Plan unless the Company or other affiliate participating in the Plan pays
or
reimburses the members of the Committee for such expenses. Such expenses shall
include any expenses incidental to the operation of the Plan, including, but
not
limited to, fees of legal counsel, actuaries, accountants, investment advisors
and other agents or specialists and similar costs, provided that any such
advisor shall be retained only as approved by the majority of the members of
the
Committee except to the extent that an issue involves a breach of fiduciary
duty
and the majority of members of the Committee has refused to retain appropriate
advisors. To the extent that the members of the Committee are required to serve
subject to a bond, the Company shall pay the premiums thereon.
Exh.
B-1
6. Action
by Majority of the Committee.
A
majority of the members of the Committee at the time in office may do any act
which the Plan authorizes or requires the Committee to do, and the action of
such majority of the members expressed from time to time by a vote at a meeting,
shall constitute the action of the Committee and shall have the same effect
for
all purposes as if assented to by all the members. Persons may participate
in
meetings by means of telephone conference or similar communications equipment
allowing all persons participating in the meeting to hear each other at the
same
time. All of the members of Committee at any time in office, acting unanimously,
may do any act which the Plan authorizes or requires the Committee to do, which
act may be evidenced by a writing without a meeting (and such writing may
include facsimile transmissions, e-mail or other forms of electronic writing).
The writing evidencing each action taken without a meeting shall require the
signature or other affirmative indication of consent of each member of the
Committee at the time in office. The Secretary of the Committee shall maintain
minutes reflecting the Committee’s meetings and shall cause each action taken in
writing without a meeting to be included in the minutes of the Committee.
Minutes of each meeting shall be distributed to the entire
Committee.
Except
in
extraordinary circumstances as determined by the Chairman of the Committee,
notice shall be delivered to all Committee members at least 48 hours in advance
of the scheduled meeting. Attendance at any meeting, whether in person or
telephonically, by a member of the Committee shall be a conclusive waiver of
any
objection to the notice of such meeting given to such member.
7. Administrative
Matters.
The
Committee shall meet at such times and from time to time as it deems
appropriate. The Committee may request members of management or others,
including, without limitation, legal counsel, actuaries, accountants, investment
advisors and internal auditors, to attend meetings and provide pertinent
information as necessary.
The
Committee may establish procedures for (i) the allocation of fiduciary
responsibilities (other than “trustee responsibilities,” as defined in Section
405(c) of ERISA) under the Plan among its members and (ii) the designation
of
persons other than named fiduciaries to carry out fiduciary responsibilities
(other than trustee responsibilities) under the Plan. If any fiduciary
responsibility is allocated or if any person is designated to carry out any
responsibility pursuant to the preceding sentence, the named fiduciary will
not
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.
8. Counsel
and Agents.
The
Committee may employ such advisors, including legal counsel, actuaries,
accountants, investment advisors, and such other service providers as it may
require in carrying out the provisions of the Plan or their duties to the Plan.
Unless otherwise provided by law, any person so employed by the Committee may
be
legal or other counsel to the Company or an affiliate thereof, a member of
the
Committee or an officer or member of the governing board of a participating
entity or an affiliate thereof, including the Board.
Exh.
B-2
9. ERISA
Fiduciary Responsibility.
The
Committee shall be the “Named Fiduciary,” as defined in Section 402(a)(2) of
ERISA, for the Plan with respect to the control and management, including,
without limitation, the investment, of the assets of the Plan and the
appointment of investment managers.
10. Powers
of the Committee.
Subject
to the limitations of the Plan and as set forth in Section 9 above, the
Committee shall have, without exclusion, all powers conferred on it under the
terms of the Plan, including, without limitation, the following powers with
respect to the Plan (it being intended that these powers be construed in the
broadest possible manner):
(a) To
adopt
a statement of investment policy for the Plan;
(b) To
make
such rules and regulations as it deems necessary or proper for the
administration of the Plan and the transaction of business thereunder which
are
not inconsistent with the terms and provisions of the Plan and which relate
to
the duties or responsibilities of the Committee;
(c) To
control and manage the assets of the Plan consistent with the purpose and terms
of the Plan, including, but not by way of limitation, the investment policy
of
the Plan, taking into account short-term and long-term liquidity
needs;
(d) To
appoint “investment managers,” as defined in Section 3(38) of ERISA, who will
invest and reinvest the assets of the Plan in such securities or other property,
real or personal, within or without the United States, as it in their sole
discretion shall deem proper including, without limitation, interests or part
interests in any bond and mortgage or note and mortgage, mutual funds,
certificates of deposit, commercial paper and other short-term or demand
obligations, secured or unsecured, whether issued by governmental or
quasi-governmental agencies or corporations or by any firm or corporation;
provided that the Committee may in its sole discretion direct the investment
managers to keep such portion of the assets of the Plan in cash or cash balances
for such reasonable periods as the Committee may from time to time deem
prudent;
(e) To
appoint and monitor the performance of insurance carriers, investment managers,
investment consultants or other entities as it deems necessary for the proper
administration and operation of the Plan and to assign and reassign assets
to
and among such insurance carriers and investment managers;
(f) To
take
such other action or make such determinations in accordance with the Plan as
it
deems appropriate;
(g) To
make
or obtain such analyses, evaluations, advice or opinions, and retain such legal
counsel, actuaries, accountants, investment advisors and other persons,
including persons employed by the Company, as it may deem necessary or
advisable;
Exh.
B-3
(h) To
designate one or more persons, other than a member of the Committee, to whom
the
Committee may delegate, and among whom the Committee may allocate, specified
fiduciary responsibilities; provided that any such delegation shall be in
writing, shall specify the person so designated and the terms of the delegation,
and shall be terminable by the Committee or the Board;
(i) To
designate any of the members of the Committee to execute and deliver on its
behalf documents and instruments of such types and bearing on such matters
as
may be specified in a resolution, and any such document or instrument may be
accepted and relied upon as the act of the Committee;
(j) To
report
to the Compensation Committee of the Board, not less often than annually, 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 pursuant to this Charter and on the
financial condition of a plan for the preceding year; and
(k) To
recommend to the Compensation Committee of the Board changes to this
Charter.
The
foregoing list of powers is not intended to be either complete or exclusive,
and
the Committee shall, in addition, have such powers as may be necessary for
the
performance of its duties under the Plan and its trust agreement.
11. Accounts
and Records.
The
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.
12. Standard
of Conduct.
The
members of the Committee shall discharge their duties with respect to the Plan
solely in the interests of the participants in the Plan and their beneficiaries;
and
(a) for
the
exclusive purpose of providing benefits to participants and their 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 person, 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 Plan 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.
13. Limitation
of Committee Role.
While
the Committee has the responsibilities and powers set forth in this Charter,
it
is not the duty of the Committee to take other administration-related actions
or
decisions with respect to the Plan. These are the responsibilities of the
Administrative Committee of the Plan. Further it is not the duty of the
Committee to approve amendments to the Plan that are “settlor” in
nature.
Exh.
B-4
14. Integration
with Plan.
This
Charter constitutes a part of the Plan and may be amended only by action of
the
Compensation Committee of the Board.
Exh.
B-5
EXHIBIT
10.09
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:
|
q
|
Additional
required documentation should be verified with AllianceBernstein’s
transfer agent, Mellon Investor Services, LLC, at
866-737-9896.
|
|
|
|
-
Unit Certificate(s)
|
|||
|
|
-
Executed “Stock” Power Form, with guaranteed signature
|
|||
|
|
-
Letter from Seller
|
|||
|
|
-
Letter from Purchaser
|
|||
|
|
||||
|
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:
|
q
|
Documentation
required for consideration of approval includes:
|
|
|
-
Unit
Certificate(s)
|
- Unit
Certificate(s)
|
|||
|
-
Executed
“Stock” Power Form, with guaranteed signature
|
- Executed
“Stock” Power Form, with guaranteed signature
|
|||
|
-
Copy
of death certificate
-
Required
Inheritance Tax Waiver for applicable states
|
- 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 Alliance Capital’s transfer agent, Mellon Investor Services, LLC, at 866-737-9896 |
q
|
Additional required documentation should be verified with AllianceBernstein’s transfer agent, Mellon Investor Services, LLC, 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
|
AllianceBernstein
L.P.
Policy Regarding Partners’ Requests for Consent to
Transfer
Limited Partnership Interests to Third Parties
Pursuant
to the 2% Safe Harbor in Treasury Regulations Section 1.7704-1(j)
Any
transfer of a limited partnership interest in AllianceBernstein L.P. (formerly
known as Alliance Capital Management L.P., “AllianceBernstein”) requires the
approval of AllianceBernstein’s general partner (the “General Partner”) and AXA
Equitable Life Insurance Company (formerly known as The Equitable Life Assurance
Society of the United States, “AXA Equitable”) pursuant to Article 12 of
AllianceBernstein’s partnership agreement. Summarized below is the policy that
the General Partner and AXA Equitable will follow for considering requests
for
consent to the transfer of AllianceBernstein limited partnership interests
to
third parties pursuant to the 2% safe harbor contained in Treasury Regulations
Section 1.7704.1(j). The General Partner and AXA Equitable will follow this
policy so that they may treat those requests equitably while taking into
account
the interests of AllianceBernstein and all of its partners.
In
order
to facilitate equitable access to the limited available capacity under the
2%
safe harbor, the General Partner and AXA Equitable will, in general, consider
transfer requests from limited partners during the last month of each calendar
quarter. All partners seeking to transfer limited partnership interests should
therefore submit their written requests, as well as all supporting documentation
that is either required by the AllianceBernstein partnership agreement or
customarily required by transfer agents, to AllianceBernstein no later than
the
end of the second calendar month of each calendar quarter in order to be
considered in that calendar quarter.
The
General Partner and AXA Equitable propose to allow transfers in each of the
first three calendar quarters of each calendar year not in excess of one-sixth
of the available capacity under the 2% safe harbor. In the fourth calendar
quarter of each calendar year, the General Partner and AXA Equitable propose
to
allow transfers not exceeding the balance of the available capacity under
the 2%
safe harbor. The available capacity for any calendar quarter will reflect
all
prior transfers required to be taken into account under the applicable Treasury
Regulations. If the total requested transfers in any calendar quarter exceeds
the available capacity for that calendar quarter, transfers will be permitted
on
a first-come, first-serve basis, based on the date on which the General Partner
received each transfer request. Requests for transfers that are not permitted
in
any calendar quarter will be “rolled over” to succeeding quarters unless
withdrawn by the requesting limited partner.
In
order
to facilitate compliance with the federal securities laws, the General Partner
and AXA Equitable expect that limited partners will be responsible for
identifying prospective transferees and negotiating and documenting the terms
of
any proposed transfer. AllianceBernstein and its affiliates do not maintain
a
list of interested purchasers nor will they participate in maintaining a
formal
or informal market in AllianceBernstein limited partnership
interests.
This
policy applies only to transfers by limited partners to third parties. The
General Partner and AXA Equitable may, from time to time, as they in their
sole
discretion see fit, consent to transfers at times or in amounts not in
accordance with this policy, including transfers to AllianceBernstein or
its
affiliates. Such transfers may have the effect of reducing the maximum number
of
transfers available under this policy.
The
General Partner and AXA Equitable, in determining which transfers are
permissible pursuant to the 2% safe harbor, will interpret the applicable
Treasury Regulations strictly and conservatively so as to ensure that there
is
no risk that AllianceBernstein will be treated as a publicly traded partnership.
The General Partner and AXA Equitable reserve the right to refuse any transfer
that they believe may require registration under the federal securities law.
The
General Partner and AXA Equitable also reserve the right to refuse transfers
to
the extent that they, in their sole discretion, determine that it is necessary
to accommodate other transfers or transactions that they deem to be in the
best
interests of AllianceBernstein and AllianceBernstein Holding L.P.
The
General Partner and AXA Equitable reserve the right to amend or withdraw
this
policy at any time that they determine it is in the best interest of
AllianceBernstein to do so, including if the number of transfer requests
being
received is sufficiently small as not to warrant, in the judgment of the
General
Partner and AXA Equitable, the administrative burdens of continuing this
policy.
Exhibit
12.01
AllianceBernstein
L.P.
Consolidated
Ratio Of Earnings To Fixed Charges
(In
Thousands)
|
Years
Ended December 31,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
Fixed
Charges:
|
||||||||||
|
Interest
Expense
|
$
|
23,124
|
$
|
25,109
|
$
|
24,232
|
||||
|
Estimate
of Interest Component In Rent Expense (1)
|
-
|
-
|
-
|
|||||||
|
Total
Fixed Charges
|
$
|
23,124
|
$
|
25,109
|
$
|
24,232
|
||||
|
Earnings:
|
||||||||||
|
Income
Before Income Taxes
|
$
|
1,183,646
|
$
|
932,889
|
$
|
745,082
|
||||
|
Other
|
(1,054
|
)
|
3,893
|
14,030
|
||||||
|
Fixed
Charges
|
23,124
|
25,109
|
24,232
|
|||||||
|
Total
Earnings
|
$
|
1,205,716
|
$
|
961,891
|
$
|
783,344
|
||||
|
Consolidated
Ratio Of Earnings To Fixed Charges
|
52.14
|
38.31
|
32.33
|
|||||||
(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)
ACM
Software Services Ltd.
(Delaware)
Alliance
Capital Management (Asia) Ltd.
(Delaware)
Alliance
Capital Management (Japan) Inc.
(Delaware)
Alliance
Eastern Europe
(Delaware)
Alliance
Barra Research Institute, Inc.
(Delaware)
Alliance
Capital Management LLC
(Delaware)
Cursitor
Alliance LLC
(Delaware)
Alliance
Capital Real Estate, Inc.
(Delaware)
AllianceBernstein
Venture Fund I, L.P.
(Delaware;
10%-owned)
AllianceBernstein
Trust Company, LLC
(New
Hampshire)
AllianceBernstein
Canada, Inc.
(Canada)
AllianceBernstein
Investmentimentos (Brasil) Ltda.
(Brazil)
AllianceBernstein
(Argentina) S.R.L.
(Argentina)
AllianceBernstein
Limited
(U.K.)
AllianceBernstein
Services Limited
(U.K.)
AllianceBernstein
Fixed Income Limited
(U.K.)
ACM
Investments Limited
(U.K.)
Sanford
C. Bernstein Limited
(U.K.)
Sanford
C. Bernstein (CREST Nominees) Limited
(U.K.)
Whittingdale
Holdings Limited
(U.K.)
AllianceBernstein
(Luxembourg) S.A.
(Luxembourg)
AllianceBernstein
(France) S.A.S
(France)
ACM
Bernstein GmbH
(Germany)
ACM
Bernstein (Deutschland) GmbH
(Germany)
AllianceBernstein
South Africa (Proprietary) Limited
(South
Africa)
AllianceBernstein
Investment Research and Management (India) Pvt. Ltd.
(India)
Alliance
Capital Asset Management (India) Pvt. Ltd.
(India;
75%-owned)
ACAM
Trust Company Private Ltd.
(India)
Alliance
Capital (Mauritius) Private Limited
(Mauritius)
AllianceBernstein
Japan Ltd.
(Japan)
AllianceBernstein
Hong Kong Limited (“Hong Kong”)
(Hong
Kong)
ACM
New-Alliance (Luxembourg) S.A.
(Luxembourg;
99%-owned)
AllianceBernstein
(Singapore) Ltd.
(Singapore)
AllianceBernstein
(Taiwan) Limited
(Taiwan;
(99%-owned)
AllianceBernstein
Investment Management Australia Limited (“Australia”)
(Australia)
AllianceBernstein
Australia Limited
(Australia;
50%-owned)
AllianceBernstein
New Zealand Limited
(New
Zealand; 50%-owned)
Far
Eastern-Alliance Asset Management Co., Ltd.
(Taiwan;
20%-owned)
EXHIBIT
23.01
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
hereby
consent to the incorporation by reference in the Registration Statements
on Form
S-3 (No. 333-64886) and Form S-8 (No. 333-47192) of AllianceBernstein L.P.
of
our report dated February 27, 2007 relating to the financial statements,
financial statement schedule, management’s assessment of the effectiveness of
internal control over financial reporting and the effectiveness of internal
control over financial reporting, which appears in this Form 10-K.
/s/
PricewaterhouseCoopers LLP
New
York,
New York
February
27, 2007
EXHIBIT
23.02
Consent
of Independent Registered Public Accounting Firm
The
General Partner and Unitholders
AllianceBernstein
L.P.:
We
consent to the incorporation by reference in the Registration Statements
(No.
333-47192) on Form S-8 and (No. 333-64886) on Form S-3 of AllianceBernstein
L.P.
of our report dated February 24, 2006, with respect to the consolidated
statement of financial condition of AllianceBernstein L.P. and subsidiaries
as
of December 31, 2005, and the related consolidated statements of income,
changes in partners’ capital and comprehensive income and cash flows for each of
the years in the two-year period ended December 31, 2005, which report
appears in the December 31, 2006 annual report on Form 10-K of AllianceBernstein
L.P. We also consent to the incorporation by reference of our report dated
February 24, 2006 relating to the financial statement schedule, that is
referenced in Item 15 (a) of this Form 10-K.
|
/s/
KPMG LLP
|
|
|
New
York, New York
|
|
|
February
27, 2007
|
|
EXHIBIT
31.01
I,
Lewis
A. Sanders, Chief Executive Officer, certify that:
|
1.
|
I
have reviewed this annual report on Form 10-K of AllianceBernstein
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
27, 2007
|
/s/
Lewis A. Sanders
|
|
|
Lewis
A. Sanders
|
||
|
Chief
Executive Officer
|
||
|
AllianceBernstein
L.P.
|
||
EXHIBIT
31.02
I,
Robert
H. Joseph, Jr., Chief Financial Officer, certify that:
|
1.
|
I
have reviewed this annual report on Form 10-K of
AllianceBernstein 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
27, 2007
|
/s/
Robert H. Joseph, Jr.
|
|
|
Robert
H. Joseph, Jr.
|
||
|
Chief
Financial Officer
|
||
|
AllianceBernstein L.P.
|
||
EXHIBIT
32.01
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 L.P. (the “Company”) on
Form 10-K for the period ended December 31, 2006 to be filed with the Securities
and Exchange Commission on or about March 1, 2007 (the “Report”), I, Lewis A.
Sanders, Chief Executive Officer of the Company, certify, for the purpose
of
complying with Rule 13a-14(b) or 15d-14(b) of the Securities Exchange Act
of
1934, as amended (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 27, 2007
|
/s/
Lewis A. Sanders
|
|
|
Lewis
A. Sanders
|
||
|
Chief
Executive Officer
|
||
|
AllianceBernstein 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 L.P. (the “Company”) on
Form 10-K for the period ended December 31, 2006 to be filed with the Securities
and Exchange Commission on or about March 1, 2007 (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 15d-14(b) of the Securities Exchange Act
of
1934, as amended (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 27, 2007
|
/s/
Robert H. Joseph, Jr.
|
|
|
Robert
H. Joseph, Jr.
|
||
|
Chief
Financial Officer
|
||
|
AllianceBernstein L.P.
|
||