form10k.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

T
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2009

OR

£
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 T  No £

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.     Yes £  No T

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 T  No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes £ No £

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  T        Accelerated filer  £        Non-accelerated filer  £        Smaller reporting company  £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  £ No T
 
The number of units of limited partnership interest outstanding as of December 31, 2009 was 274,745,592.

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
 
5
 
6
 
13
 
14
 
14
 
15
 
15
 
16
 
17
Item 1A.
18
Item 1B.
25
Item 2.
26
Item 3.
27
Item 4.
28
     
Part II
   
Item 5.
29
Item 6.
31
Item 7.
32
Item 7A.
46
Item 8.
48
Item 9.
82
Item 9A.
83
Item 9B.
84
     
Part III
   
Item 10.
85
Item 11.
91
Item 12.
106
Item 13.
110
Item 14.
113
     
Part IV
   
Item 15.
114
 
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, dated as of October 29, 1999 and as amended February 24, 2006.

“AllianceBernstein Units” – units of limited partnership interest in AllianceBernstein.

“AUM” – assets under management for clients.

“AXA” – AXA (société anonyme organized under the laws of France), the holding company for an international group of insurance and related financial services companies engaged in the financial protection and wealth management businesses.

“AXA Equitable” – AXA Equitable Life Insurance Company (New York stock life insurance company), an indirect wholly-owned subsidiary of AXA Financial, and its subsidiaries other than AllianceBernstein and its subsidiaries.

“AXA Financial” – AXA Financial, Inc. (Delaware corporation), a wholly-owned subsidiary of AXA.

“Bernstein GWM” – Bernstein Global Wealth Management, a unit of AllianceBernstein that services private clients.

“Bernstein Transaction” – on October 2, 2000, AllianceBernstein’s acquisition of the business and assets of SCB Inc., formerly known as Sanford C. Bernstein Inc., and assumption of the liabilities of that business.

“Exchange Act” – the Securities Exchange Act of 1934, as amended.

“ERISA” – the Employee Retirement Income Security Act of 1974, as amended.

“General Partner” – AllianceBernstein Corporation (Delaware corporation), the general partner of AllianceBernstein and Holding and a wholly-owned subsidiary of AXA Equitable, and, where appropriate, ACMC, Inc., its predecessor.

“Holding” – AllianceBernstein Holding L.P. (Delaware limited partnership).

“Holding Partnership Agreement” – the Amended and Restated Agreement of Limited Partnership of Holding, dated as of October 29, 1999 and as amended February 24, 2006.

“Holding Units” – units representing assignments of beneficial ownership of limited partnership interests in Holding.

“Investment Advisers Act” – the Investment Advisers Act of 1940, as amended.

“Investment Company Act” – the Investment Company Act of 1940, as amended.

“NYSE” – the New York Stock Exchange, Inc.

“Partnerships” – AllianceBernstein and Holding together.

“SCB” – SCB LLC and SCBL together.

“SCB LLC” – Sanford C. Bernstein & Co., LLC (Delaware limited liability company), a wholly-owned subsidiary of AllianceBernstein that provides Bernstein research services in the United States.

“SCBL” – Sanford C. Bernstein Limited (U.K. company), a wholly-owned subsidiary of AllianceBernstein that provides Bernstein research services primarily in Europe.

“SEC” – the United States Securities and Exchange Commission.

“Securities Act” – the Securities Act of 1933, as amended.


PART I

Business

The words “we” and “our” in this Form 10-K refer collectively to Holding and AllianceBernstein, or to their officers and employees. Similarly, the words “company” and “firm” refer to both Holding and AllianceBernstein. Where the context requires distinguishing between Holding and AllianceBernstein, we identify which of them is being discussed. Cross-references are in italics.

We use “global” in this Form 10-K to refer to all nations, including the United States; we use “international” or “non-U.S.” to refer to nations other than the United States.

We use “emerging markets” in this Form 10-K to refer to countries considered to be developing countries by the international financial community and countries included in the Morgan Stanley Capital International (“MSCI”) emerging markets index. As of December 31, 2009, examples of such countries were Brazil, Chile, China, Columbia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Malaysia, Mexico, Morocco, Peru, the Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand and Turkey.

We use the term “hedge funds” in this Form 10-K to refer to private investment partnerships we sponsor that utilize various alternative strategies such as leverage, short selling of securities, and utilizing forward contracts, currency options and other derivatives.


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, including U.S. and offshore mutual funds, variable annuities, insurance products and sub-advisory relationships;

 
private clients, including high-net-worth individuals, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities; and

 
institutional investors seeking high-quality research and related services, and issuers of publicly-traded securities seeking equity capital markets services.

We also provide distribution, shareholder servicing and administrative services to our sponsored mutual funds.

Our firm’s mission is to be the most trusted investment firm in the world by placing our clients’ interests first and foremost, utilizing our research capabilities to have more knowledge than any other investment firm, and using and sharing knowledge better than our competitors to help our clients achieve financial peace of mind and investment success.


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, quantitative and economic research, as well as currency forecasting. In addition, we have created several specialized research units, including one 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, collective investment trusts, mutual funds, hedge funds and other investment vehicles (“Institutional Services”);

 
To our retail clients, we offer retail mutual funds sponsored by AllianceBernstein, our subsidiaries and our affiliated joint venture companies, sub-advisory services to mutual funds sponsored by third parties, separately-managed account programs sponsored by various financial intermediaries worldwide (“Separately-Managed Account Programs”) and other investment vehicles (collectively, “Retail Services”);

 
To our private clients, we offer diversified investment management services through separately-managed accounts, hedge funds, mutual funds and other investment vehicles (“Private Client Services”); and


 
To institutional investors, we offer research, portfolio strategy and brokerage-related services, and, to issuers of publicly-traded securities, we offer equity capital markets services (“Bernstein Research Services”).

These services are provided by teams of investment professionals with significant expertise in their respective disciplines (see “Employees” in this Item 1). Our buy-side research analysts support our portfolio managers and, together, they oversee a number of different types of investment services within various vehicles (discussed above) and strategies (discussed below). Our sell-side research analysts provide the foundation for our Bernstein Research Services.

Our services include:

 
Value equities, generally targeting stocks that are out of favor and considered undervalued;

 
Growth equities, generally targeting stocks with under-appreciated growth potential;

 
Fixed income securities, including taxable and tax-exempt securities;

 
Blend strategies, combining style-pure investment components with systematic rebalancing;

 
Passive management, including index and enhanced index strategies;

 
Alternative investments, such as hedge funds, currency management strategies, venture capital and, beginning in 2010, direct real estate investing; and

 
Asset allocation services, by which we offer blend strategies specifically-tailored for our clients (e.g., customized target-date fund retirement services for defined contribution plan sponsors).

We manage these services using various investment disciplines, including market capitalization (e.g., large-, mid- and small-cap equities), term (e.g., long-, intermediate- and short-duration debt securities), and geographic location (e.g., U.S., international, global and emerging markets), as well as local and regional disciplines in major markets around the world.

Blend strategies are a key component of our product line. As of December 31, 2009, blend strategies AUM was $90 billion (representing 18% of our company-wide AUM), an increase of 6% from $85 billion as of December 31, 2008 and a decrease of 49% from $175 billion as of December 31, 2007.

We market and distribute alternative investment products (which include hedge funds, venture capital and currency management strategies) globally to high-net-worth clients and institutional investors. Alternative product AUM totaled $3.9 billion as of December 31, 2009, $2.5 billion of which was private client AUM (primarily hedge funds) and $1.4 billion of which was institutional AUM (primarily currency services).

Sub-advisory client mandates span our investment strategies, including growth, value, fixed income and blend. We serve as sub-adviser for retail mutual funds, insurance products, retirement platforms and institutional investment products.

In August 2008, we created an initiative called AllianceBernstein Defined Contribution Investments (“ABDC”) focused on expanding our firm’s capabilities in the defined contribution (“DC”) market. ABDC seeks to provide the most effective DC investment solutions in the industry, as measured by product features, reliability, cost and flexibility, to meet specialized client needs by integrating research and investment design, product strategy, strategic partnerships (e.g., record-keeper partnerships and operations collaboration), and client implementation and service. As of December 31, 2009, our DC assets under management, which are distributed in all three of our buy-side distribution channels, totaled $25 billion.

In April 2009, we were selected by the U.S. Treasury Department as one of only three firms to manage its portfolio of assets issued by banks and other institutions taking part in the Capital Purchase Program of the Troubled Assets Relief Program. In addition, we were selected by the U.S. Treasury Department as one of nine pre-qualified fund managers under the Public-Private Investment Program and, during the fourth quarter of 2009, we were one of five firms that closed an initial Public-Private Investment Fund of at least $500 million.


Global Reach

We serve clients in major global markets through operations in 45 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, 2009, 2008 and 2007 were as follows:

By Client Domicile ($ in billions):


graph 1
December 31, 2009   
graph 2
December 31, 2008
graph 3
December 31, 2007


By Investment Service ($ in billions):


graph 4
December 31, 2009   
graph 5
December 31, 2008
graph 6
December 31, 2007

Our international client base stabilized during 2009, decreasing by 1% compared to a decrease of 43% during 2008. Our global and international AUM increased by 6% during 2009 compared to a decrease of 47% during 2008. Approximately 62%, 76% and 80% of our gross asset inflows (sales/new accounts) during 2009, 2008 and 2007, respectively, were invested in global and international investment services.


Revenues

We earn revenues primarily by charging fees for managing the investment assets of, and providing research to, our clients.

We generally calculate investment advisory fees as a percentage of the value of AUM at a specific point in time or as a percentage of the value of average AUM for the applicable billing period, with these percentages varying by type of investment service, size of account and total amount of assets we manage for a particular client. Accordingly, fee income generally increases or decreases as AUM increases or decreases. Increases in AUM generally result from market appreciation, positive investment performance for clients or net asset inflows from new and existing clients. Similarly, decreases in AUM generally result from market depreciation, negative investment performance for clients, or net asset outflows due to client redemptions, account terminations or asset withdrawals.

We are eligible to earn performance-based fees on hedge fund services, as well as some long-only services provided to our institutional clients. In these situations, we charge a base advisory fee and are eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. In addition, some performance-based fees include a high-watermark provision, which generally provides that if a client account underperforms relative to its performance target (whether absolute or relative to a specified benchmark), it must gain back such underperformance before we can collect future performance-based fees. Therefore, if we fail to achieve our performance target for a particular period, we will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, our ability to earn future performance-based fees will be impaired. If the percentage of our AUM subject to performance-based fees grows, seasonality and volatility of revenue and earnings are likely to become more significant. Our performance-based fees in 2009, 2008 and 2007 were $29.8 million, $13.4 million and $81.2 million, respectively. For additional information about performance-based fees, see “Risk Factors” in Item 1A and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7.


We sometimes experience periods when the number of new accounts or the amount of AUM increases or decreases significantly. These changes result from wide-ranging factors, including conditions of financial markets, our investment performance for clients and changes in our clients’ investment preferences.

We earn revenues from clients to whom we provide fundamental research and brokerage-related services, primarily in the form of transaction fees calculated as either “cents per share” (generally in the U.S. market) or a percentage of the value of the securities traded (generally in the European market) for these clients.  In 2009, we re-launched our equity capital markets business, through which we earn revenues from issuers of publicly-traded securities to which we provide these services in the form of underwriting fees, management fees and/or selling concessions, depending on our role in the offering.

Our revenues may fluctuate for a number of reasons; see “Risk Factors” in Item 1A and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7.


Employees

The substantial decrease in our assets under management and the resulting decrease in fee revenues from levels during the first nine months of 2008 led us to undertake initiatives in 2008 and 2009 that resulted in significant reductions in operating expenses and capital expenditures.

We reduced our headcount by 628, or 13%, during 2009 to 4,369 which, along with the reduction in force that occurred during the fourth quarter of 2008, represents a total reduction of nearly 1,300 staff members, or 23%, from our headcount peak during the third quarter of 2008. These actions reduced our fixed compensation costs (salaries and fringe benefits) by approximately $130 million. Despite these measures, we believe we have retained the intellectual capital required to service our clients and grow our business.

Our firm’s 4,369 full-time employees, who are located in 24 countries, include 300 research analysts, 158 portfolio managers, 46 traders and 23 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 17 years. We consider our employee relations to be good.


Institutional Services

We serve our institutional clients primarily through AllianceBernstein Institutional Investments (“Institutional Investments”), a unit of AllianceBernstein, and through other units in our international subsidiaries and one of our joint ventures (institutional relationships of less than $25 million are generally serviced by Bernstein GWM, our Private Client channel, discussed below). Institutional Services include actively managed equity accounts (including growth, value and blend accounts), fixed income accounts and balanced accounts (which combine equity and fixed income), as well as passive management of index and enhanced index accounts. These services are provided through separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds and other investment vehicles. As of December 31, 2009, institutional AUM was $300 billion, or 61% of our company-wide AUM as compared to $291 billion, or 63%, as of December 31, 2008 and $508 billion, or 63%, as of December 31, 2007. 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 1,762 mandates for these clients, which are located in 42 countries. As of December 31, 2009, we managed employee benefit plan assets for 42 of the Fortune 100 companies, and we managed public pension fund assets for 39 states and/or municipalities in those states.


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 and Services”). As of December 31, 2009, retail AUM was $121 billion, or 24% of our company-wide AUM as compared to $102 billion, or 22%, as of December 31, 2008 and $183 billion, or 23%, as of December 31, 2007. For more information concerning retail AUM, revenues and fees, see “Assets Under Management, Revenues and Fees” in this Item 1.

Our Retail Products and Services are designed to provide disciplined, research-based investments that contribute to a well-diversified investment portfolio. We distribute these products and services through financial intermediaries, including broker-dealers, insurance sales representatives, banks, registered investment advisers and financial planners.

Our Retail Products and Services include open-end and closed-end funds that are either (i) registered as investment companies under the Investment Company Act (“U.S. Funds”), or (ii) not registered under the Investment Company Act and generally not offered to United States persons (“Non-U.S. Funds” and, collectively with the U.S. Funds, “AllianceBernstein Funds”). They provide a broad range of investment options, including local and global growth equities, value equities, blend strategies and fixed income securities. They also include Separately-Managed Account Programs, which are sponsored by financial intermediaries and generally charge an all-inclusive fee covering investment management, trade execution, asset allocation, and custodial and administrative services. We also provide distribution, shareholder servicing and administrative services for our Retail Products and Services.


Our U.S. Funds, which include retail funds, our variable products series fund (a component of an insurance product) and the retail share classes of the Sanford C. Bernstein Funds (principally Private Client Services products, SCB Funds), currently offer 99 different portfolios to U.S. investors. As of December 31, 2009, retail U.S. Funds AUM was approximately $45 billion, or 37% of total retail AUM as compared to $39 billion, or 38%, as of December 31, 2008 and $66 billion, or 36%, as of December 31, 2007. Because of the way they are marketed and serviced, we report substantially all of the AUM in the SCB Funds, which totaled $26 billion as of December 31, 2009, as private client AUM.

Our Non-U.S. Funds are distributed internationally by local financial intermediaries to non-U.S. investors in most major international markets by means of distribution agreements. As of December 31, 2009, these funds consisted of 70 different portfolios and AUM in these funds was $20 billion. We also offer local-market funds that we distribute in Japan through financial intermediaries. As of December 31, 2009, retail AUM in these funds was $3 billion.

AllianceBernstein Investments serves as the principal underwriter and distributor of the U.S. Funds. AllianceBernstein Investments employs approximately 140 sales representatives who devote their time exclusively to promoting the sale of U.S. Funds and certain other Retail Products and Services offered by financial intermediaries.

AllianceBernstein (Luxembourg) S.A. (“AllianceBernstein Luxembourg”), a Luxembourg management company and one of our wholly-owned subsidiaries, generally serves as the placing or distribution agent for the Non-U.S. Funds. AllianceBernstein Luxembourg employs approximately 60 sales representatives who devote their time exclusively to promoting the sale of Non-U.S. Funds and other Retail Products and Services offered by financial intermediaries.


Private Client Services

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, with a minimum initial account size of $500,000. As of December 31, 2009, private client AUM was $75 billion, or 15% of our company-wide AUM as compared to $69 billion, or 15%, as of December 31, 2008 and $109 billion, or 14%, as of December 31, 2007. For more information concerning private client AUM, revenues and fees, see “Assets Under Management, Revenues and Fees” in this Item 1.

Our Private Client Services are built on a sales effort that involves 292 financial advisors based in 18 cities in the U.S. and in London, England. These advisors do not manage money, but work with private clients and their tax, legal and other advisors to assist them in determining a suitable mix of U.S. and non-U.S. equity securities and fixed income investments. The diversified portfolio created for each client is intended to maximize after-tax investment returns, in light of the client’s individual investment goals, income requirements, risk tolerance, tax situation and other relevant factors. In creating these portfolios, we utilize our research reports, investment planning services and the Wealth Management Group, which has in-depth knowledge of trust, estate and tax planning strategies.


Bernstein Research Services

Bernstein Research Services consist of fundamental research, quantitative services and brokerage-related services in equities and listed options provided to institutional investors such as pension fund, hedge fund and mutual fund managers, and other institutional investors. Brokerage-related services are provided by SCB LLC in the United States and SCBL primarily in Europe, with research services also provided by Sanford C. Bernstein, a unit of AllianceBernstein Hong Kong Limited (a wholly-owned subsidiary of AllianceBernstein, “AB Hong Kong”), in Asia. For more information concerning the revenues we derive from Bernstein Research Services, see “Assets Under Management, Revenues and Fees” in this Item 1.

We provide fundamental company and industry research along with disciplined research into securities valuation and factors affecting stock-price movements. Our analysts are consistently among the highest ranked research analysts in industry surveys conducted by third-party organizations.

Additionally, we provide equity capital markets services to issuers of publicly-traded securities, primarily in initial public offerings and follow-on offerings, acting as manager, syndicate member or selling group member.


Assets Under Management, Revenues and Fees

The following tables summarize our AUM and revenues by distribution channel:

Assets Under Management(1)

   
December 31,
   
% Change
 
   
2009
   
2008
   
2007
    2009-08     2008-07  
         
(in millions)
                       
                                   
Institutional Services
  $ 300,052     $ 291,361     $ 508,081       3.0 %     (42.7 )%
Retail Services
    120,697       101,643       183,165       18.7       (44.5 )
Private Client Services
    74,753       68,947       109,144       8.4       (36.8 )
Total
  $ 495,502     $ 461,951     $ 800,390       7.3       (42.3 )
_____________
(1)
Excludes certain non-discretionary client relationships.


Revenues

   
Years Ended December 31,
   
% Change
 
   
2009
   
2008
   
2007
    2009-08     2008-07  
         
(in thousands)
                       
                                   
Institutional Services
  $ 811,164     $ 1,240,636     $ 1,481,885       (34.6 )%     (16.3 ) %
Retail Services
    888,256       1,227,538       1,521,201       (27.6 )     (19.3 )
Private Client Services
    589,665       849,830       960,669       (30.6 )     (11.5 )
Bernstein Research Services
    434,605       471,716       423,553       (7.9 )     11.4  
Other(1)
    187,600       (239,037 )     332,441       n/m       n/m  
Total Revenues
    2,911,290       3,550,683       4,719,749       (18.0 )     (24.8 )
Less: Interest Expense
    4,411       36,524       194,432       (87.9 )     (81.2 )
Net Revenues
  $ 2,906,879     $ 3,514,159     $ 4,525,317       (17.3 )     (22.3 )
_____________
(1)
Other revenues primarily consist of dividend and interest income, investment gains (losses) and shareholder servicing fees. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7.

AXA and its subsidiaries, whose AUM consists primarily of fixed income investments, together constitute our largest client. Our affiliates represented approximately 22%, 21% and 15% of our company-wide AUM as of December 31, 2009, 2008 and 2007, respectively. We earned approximately 4%, 5% and 5% of our company-wide net revenues from our affiliates for each of 2009, 2008 and 2007, respectively. This AUM is included in our Institutions and Retail buy-side distribution channels.


Institutional Services

The following tables summarize our Institutional Services AUM and revenues:

Institutional Services Assets Under Management(1)
(by Investment Service)

   
December 31,
   
% Change
 
   
2009
   
2008
   
2007
    2009-08     2008-07  
   
(in millions)
                 
Value Equity:
                                 
U.S.
  $ 19,028     $ 22,598     $ 49,235       (15.8 )%     (54.1 )%
Global and International
    88,758       84,787       192,472       4.7       (55.9 )
      107,786       107,385       241,707       0.4       (55.6 )
Growth Equity:
                                       
U.S.
    18,124       16,075       31,908       12.7       (49.6 )
Global and International
    34,762       38,034       88,691       (8.6 )     (57.1 )
      52,886       54,109       120,599       (2.3 )     (55.1 )
Fixed Income:
                                       
U.S.
    71,832       66,151       73,240       8.6       (9.7 )
Global and International(2)
    41,083       37,900       44,066       8.4       (14.0 )
      112,915       104,051       117,306       8.5       (11.3 )
Other(3):
                                       
U.S.
    9,677       6,617       12,426       46.2       (46.7 )
Global and International(2)
    16,788       19,199       16,043       (12.6 )     19.7  
      26,465       25,816       28,469       2.5       (9.3 )
Total:
                                       
U.S.
    118,661       111,441       166,809       6.5       (33.2 )
Global and International
    181,391       179,920       341,272       0.8       (47.3 )
Total
  $ 300,052     $ 291,361     $ 508,081       3.0       (42.7 )
_____________
(1)
Excludes certain non-discretionary client relationships.

(2)
Certain client assets were reclassified among investment services to more accurately reflect how these assets are managed by our firm.

(3)
Includes index, structured, asset allocation services and other non-actively managed AUM.


Revenues from Institutional Services
(by Investment Service)

   
Years Ended December 31,
   
% Change
 
   
2009
   
2008
   
2007
    2009-08     2008-07  
   
(in thousands)
                 
Investment Advisory and Services Fees:
                                 
Value Equity:
                                 
U.S.
  $ 57,596     $ 108,921     $ 153,747       (47.1 )%     (29.2 )%
Global and International
    375,914       607,431       747,957       (38.1 )     (18.8 )
      433,510       716,352       901,704       (39.5 )     (20.6 )
Growth Equity:
                                       
U.S.
    51,017       70,119       108,691       (27.2 )     (35.5 )
Global and International
    150,612       276,676       311,727       (45.6 )     (11.2 )
      201,629       346,795       420,418       (41.9 )     (17.5 )
Fixed Income:
                                       
U.S.
    90,798       85,333       91,144       6.4       (6.4 )
Global and International
    73,316       77,640       53,533       (5.6 )     45.0  
      164,114       162,973       144,677       0.7       12.6  
Other(1):
                                       
U.S.
    1,895       2,883       4,441       (34.3 )     (35.1 )
Global and International
    9,343       11,633       10,353       (19.7 )     12.4  
      11,238       14,516       14,794       (22.6 )     (1.9 )
Total Investment Advisory and Services Fees:
                                       
U.S.
    201,306       267,256       358,023       (24.7 )     (25.4 )
Global and International
    609,185       973,380       1,123,570       (37.4 )     (13.4 )
      810,491       1,240,636       1,481,593       (34.7 )     (16.3 )
Distribution Revenues(2)
                292             (100.0 )
Shareholder Servicing Fees(2)
    673                   n/m        
Total
  $ 811,164     $ 1,240,636     $ 1,481,885       (34.6 )     (16.3 )
_____________
(1)
Includes index, structured, asset allocation services and other non-actively managed AUM.

(2)
For a description of distribution revenues and shareholder servicing fees, see “Retail Services” below.


As of December 31, 2009, 2008 and 2007, Institutional Services represented approximately 61%, 63% and 63%, respectively, of our company-wide AUM. The fees we earned from these services represented approximately 28%, 35% and 33% of our company-wide net revenues for 2009, 2008 and 2007, respectively.

AXA and its subsidiaries together constitute our largest institutional client. Their AUM accounted for approximately 26%, 25% and 16% of our total institutional AUM as of December 31, 2009, 2008 and 2007, respectively, and approximately 10%, 8% and 7% of our total institutional revenues for 2009, 2008 and 2007, respectively.

The institutional AUM we manage for our affiliates, along with our nine other largest institutional accounts, accounted for approximately 40% of our total institutional AUM as of December 31, 2009 and approximately 19% of our total institutional revenues for the year ended December 31, 2009. 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, 2009.

We manage the assets of our institutional clients through written investment management agreements or other arrangements, all of which are generally terminable at any time or upon relatively short notice by either party. In general, our written investment management agreements may not be assigned without client consent.

We are compensated principally on the basis of investment advisory fees calculated as a percentage of assets under management. The percentage we charge varies with the type of investment service, the size of the account and the total amount of assets we manage for a particular client.

We are eligible to earn performance-based fees on approximately 13% of institutional assets under management, which are primarily invested in long-only equity and fixed income services. Performance-based fees provide for a relatively low asset-based fee plus an additional fee based on investment performance. For additional information about performance-based fees, see “General—Revenues” in this Item 1 and “Risk Factorsin Item 1A.


Retail Services

The following tables summarize our Retail Services AUM and revenues:

Retail Services Assets Under Management
(by Investment Service)

   
December 31,
   
% Change
 
   
2009
   
2008
   
2007
    2009-08     2008-07  
   
(in millions)
                 
Value Equity:
                                 
U.S.
  $ 11,253     $ 12,086     $ 33,488       (6.9 )%     (63.9 )%
Global and International
    26,232       28,053       56,560       (6.5 )     (50.4 )
      37,485       40,139       90,048       (6.6 )     (55.4 )
Growth Equity:
                                       
U.S.
    9,552       8,494       24,637       12.5       (65.5 )
Global and International
    14,339       11,544       23,530       24.2       (50.9 )
      23,891       20,038       48,167       19.2       (58.4 )
Fixed Income:
                                       
U.S.
    9,635       9,857       10,627       (2.3 )     (7.2 )
Global and International
    30,263       20,178       29,855       50.0       (32.4 )
      39,898       30,035       40,482       32.8       (25.8 )
Other(1):
                                       
U.S.
    16,416       9,851       4,468       66.6       120.5  
Global and International
    3,007       1,580             90.3       n/m  
      19,423       11,431       4,468       69.9       155.8  
Total:
                                       
U.S.
    46,856       40,288       73,220       16.3       (45.0 )
Global and International
    73,841       61,355       109,945       20.4       (44.2 )
Total
  $ 120,697     $ 101,643     $ 183,165       18.7       (44.5 )
_____________
(1)
Includes index, structured, asset allocation services and other non-actively managed AUM.


Revenues from Retail Services
(by Investment Service)

   
Years Ended December 31,
   
% Change
 
   
2009
   
2008
   
2007
    2009-08     2008-07  
   
(in thousands)
                 
Investment Advisory and Services Fees:
                                 
Value Equity:
                                 
U.S.
  $ 45,211     $ 88,394     $ 129,125       (48.9 )%     (31.5 )%
Global and International
    121,514       216,561       262,369       (43.9 )     (17.5 )
      166,725       304,955       391,494       (45.3 )     (22.1 )
Growth Equity:
                                       
U.S.
    46,672       84,651       119,880       (44.9 )     (29.4 )
Global and International
    85,583       130,247       168,817       (34.3 )     (22.8 )
      132,255       214,898       288,697       (38.5 )     (25.6 )
Fixed Income:
                                       
U.S.
    30,219       30,888       39,644       (2.2 )     (22.1 )
Global and International
    175,595       195,373       224,335       (10.1 )     (12.9 )
      205,814       226,261       263,979       (9.0 )     (14.3 )
Other(1):
                                       
U.S.
    8,972       3,702       1,868       142.4       98.2  
Global and International
    9,429       1,297             627.0       n/m  
      18,401       4,999       1,868       268.1       167.6  
Total Investment Advisory and Services Fees:
                                       
U.S.
    131,074       207,635       290,517       (36.9 )     (28.5 )
Global and International
    392,121       543,478       655,521       (27.8 )     (17.1 )
      523,195       751,113       946,038       (30.3 )     (20.6 )
Distribution Revenues(2)
    275,372       376,372       471,031       (26.8 )     (20.1 )
Shareholder Servicing Fees(2)
    89,689       100,053       104,132       (10.4 )     (3.9 )
Total
  $ 888,256     $ 1,227,538     $ 1,521,201       (27.6 )     (19.3 )
_____________
(1)
Includes index, structured, asset allocation services and other non-actively managed AUM.

(2)
For a description of distribution revenues and shareholder servicing fees, see below.


Investment advisory fees and distribution fees for our Retail Products and Services are generally charged as a percentage of average daily AUM. In the past, as certain of the U.S. Funds grew, we revised our fee schedules to provide lower incremental fees above certain asset levels. Fees paid by the U.S. Funds, EQ Advisors Trust (“EQAT”), AXA Enterprise Multimanager Funds Trust (“AXA Enterprise Trust”) and AXA Premier VIP Trust are reflected in the applicable investment management agreement, which generally must be approved annually by the boards of directors or trustees of those funds, including by a majority of the independent directors or trustees. Increases in these fees must be approved by fund shareholders; decreases need not be, including any decreases implemented by a fund’s directors or trustees. In general, each investment management agreement with the AllianceBernstein Funds, EQAT, AXA Enterprise Trust and AXA Premier VIP Trust provides for termination by either party at any time upon 60 days’ notice.

Fees paid by Non-U.S. Funds are reflected in investment management agreements that continue until they are terminated. Increases in these fees generally must be approved by the relevant regulatory authority, depending on the domicile and structure of the fund, and Non-U.S. Fund shareholders must be given advance notice of any fee increases.

Revenues from Retail Services represented approximately 31%, 35% and 34% of our company-wide net revenues for the years ended December 31, 2009, 2008 and 2007, respectively.

Our Retail Products and Services include open-end mutual funds designed to fund benefits under variable annuity contracts and variable life insurance policies offered by unaffiliated life insurance companies (“Variable Product Series Fund”), and we sub-advise variable product mutual funds sponsored by affiliates. As of December 31, 2009, we managed or sub-advised approximately $36 billion of Variable Product Series Fund AUM.

The mutual funds we sub-advise for AXA and its subsidiaries together constitute our largest retail client. They accounted for approximately 25%, 21% and 22% of our total retail AUM as of December 31, 2009, 2008 and 2007, respectively, and approximately 5%, 7% and 7% of our total retail revenues for 2009, 2008 and 2007, 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 generally pays sales commissions to financial intermediaries distributing the funds from the front-end sales charge it receives from investors at the time of the sale. For back-end load shares, AllianceBernstein Investments pays sales commissions to financial intermediaries at the time of sale and also receives higher ongoing distribution services fees from the mutual funds. In addition, investors who redeem back-end load shares before the expiration of the minimum holding period (which ranges from one year to four years) pay a contingent deferred sales charge (“CDSC”) to AllianceBernstein Investments. We expect to recover sales commissions for back-end load shares over periods not exceeding five and one-half years through receipt of a CDSC and/or the higher ongoing distribution services fees we receive from holders of back-end load shares. Payments of sales commissions made to financial intermediaries in connection with the sale of back-end load shares under the System, net of CDSC received of $18.7 million, $33.7 million and $31.1 million, totaled approximately $31.6 million, $9.1 million and $84.1 million during 2009, 2008 and 2007, respectively. We have not offered back-end load shares to new investors in U.S. Funds since January 31, 2009.

The rules of the Financial Industry Regulatory Authority, Inc. (“FINRA”) effectively cap the aggregate sales charges that may be received from each open-end U.S. Fund by AllianceBernstein Investments at 6.25% of cumulative gross sales (plus interest at the prime rate plus 1% per annum).

Most open-end U.S. Funds have adopted a plan under Rule 12b-1 of the Investment Company Act that allows the fund to pay, out of assets of the fund, distribution and service fees for the distribution and sale of its shares (“Rule 12b-1 Fees”). The open-end AllianceBernstein Funds have entered into agreements with AllianceBernstein Investments under which they pay a distribution services fee to AllianceBernstein Investments. AllianceBernstein Investments has entered into selling and distribution agreements pursuant to which it pays sales commissions to the financial intermediaries that distribute our open-end U.S. Funds. These agreements are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares.

In addition to Rule 12b-1 Fees, AllianceBernstein Investments, at its own expense, currently provides additional payments under distribution services and educational support agreements to financial intermediaries that sell shares of our funds, a practice sometimes referred to as revenue sharing. Although the amount of payments made 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.

Financial intermediaries that provide accounting or record-keeping services with respect to their customers’ investments in AllianceBernstein Funds may receive specified payments from these funds or from affiliates of AllianceBernstein, including AllianceBernstein Investor Services, Inc. (one of our wholly-owned subsidiaries, “AllianceBernstein Investor Services”) and AllianceBernstein Investments.

During 2009, 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%, 4% and 2% of total sales of shares of open-end AllianceBernstein Funds in 2009, 2008 and 2007, 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.


Morgan Stanley Smith Barney LLC (formed in 2009 by the combination of the Global Wealth Management group of Morgan Stanley & Co. Inc. and the Smith Barney division of Citigroup Global Markets Inc., “MSSB”) was responsible for approximately 5% of our open-end AllianceBernstein Fund sales in 2009.  Merrill Lynch & Co., Inc. (and its subsidiaries, “Merrill Lynch”), which was acquired by Bank of America Corporation in 2008, was responsible for approximately 5%, 8% and 7% of open-end AllianceBernstein Fund sales in 2009, 2008 and 2007, respectively. Citigroup Inc. (and its subsidiaries, “Citigroup”) was responsible for approximately 4%, 7% and 7% of open-end AllianceBernstein Fund sales in 2009, 2008 and 2007, respectively. MSSB, Merrill Lynch and Citigroup are not under any obligation to sell a specific amount of AllianceBernstein Fund shares and each also sells shares of mutual funds that it sponsors and that are sponsored by unaffiliated organizations.

No dealer or agent has in any of the last three years accounted for more than 10% of total sales of shares of our open-end AllianceBernstein Funds.

Based on industry sales data reported by the Investment Company Institute, our market share in the U.S. mutual fund industry was approximately 1% of total industry assets in the U.S. during 2009. 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 our shareholder services (see below) and the amounts and types of distribution assistance and administrative services payments we make to financial intermediaries, which we believe are competitive with others in the industry.

AllianceBernstein Investor Services, which operates in San Antonio, Texas, provides transfer agency and related services for each open-end U.S. Fund (except the SCB Funds) and provides shareholder servicing for each open-end U.S. Fund’s shareholder accounts (approximately 3.5 million accounts in total), for which it receives a monthly fee under servicing agreements with each open-end U.S. Fund based on the number and type of shareholder accounts serviced. Each servicing agreement must be approved annually by the relevant open-end U.S. Fund’s board of directors or trustees, including a majority of the independent directors or trustees, and may be terminated by either party without penalty upon 60 days’ notice.

AllianceBernstein Funds utilize our personnel to perform most legal, clerical and accounting services. Payments to us by the U.S. Funds and certain Non-U.S. Funds for these services, which approximate $7 million per year, must be specifically approved in advance by each fund’s board of directors or trustees.

A unit of AllianceBernstein Luxembourg (“ABIS Lux”) is the transfer agent for substantially all of the Non-U.S. Funds. ABIS Lux, based in Luxembourg and supported by operations in Singapore, Hong Kong and the United States, receives a monthly fee for its transfer agency services and a transaction-based fee under various services agreements with the Non-U.S. Funds. Each agreement may be terminated by either party upon 60 days’ notice.


Private Client Services

The following tables summarize Private Client Services AUM and revenues:

Private Client Services Assets Under Management
(by Investment Service)

   
December 31,
   
% Change
 
   
2009
   
2008
   
2007
    2009-08     2008-07  
         
(in millions)
                       
Value Equity:
                                 
U.S.
  $ 14,137     $ 13,254     $ 25,259       6.7 %     (47.5 )%
Global and International
    11,751       11,627       25,497       1.1       (54.4 )
      25,888       24,881       50,756       4.0       (51.0 )
Growth Equity:
                                       
U.S.
    10,384       8,425       16,004       23.3       (47.4 )
Global and International
    6,941       5,709       12,175       21.6       (53.1 )
      17,325       14,134       28,179       22.6       (49.8 )
Fixed Income:
                                       
U.S.
    30,862       29,287       29,498       5.4       (0.7 )
Global and International
    621       606       676       2.5       (10.4 )
      31,483       29,893       30,174       5.3       (0.9 )
Other(1):
                                       
U.S.
    15       21       25       (28.6 )     (16.0 )
Global and International
    42       18       10       133.3       80.0  
      57       39       35       46.2       11.4  
Total:
                                       
U.S.
    55,398       50,987       70,786       8.7       (28.0 )
Global and International
    19,355       17,960       38,358       7.8       (53.2 )
Total
  $ 74,753     $ 68,947     $ 109,144       8.4       (36.8 )
_____________
(1)
Includes index, structured, asset allocation services and other non-actively managed AUM.


Revenues from Private Client Services
(by Investment Service)

   
Years Ended December 31,
   
% Change
 
   
2009
   
2008(1)
   
2007(1)
    2009-08     2008-07  
   
(in thousands)
                 
                                   
Investment Advisory and Services Fees:
                                 
Value Equity:
                                 
U.S.
  $ 143,390     $ 232,662     $ 286,851       (38.4 )%     (18.9 ) %
Global and International
    113,908       191,805       244,492       (40.6 )     (21.5 )
      257,298       424,467       531,343       (39.4 )     (20.1 )
Growth Equity:
                                       
U.S.
    106,131       159,622       161,078       (33.5 )     (0.9 )
Global and International
    68,693       106,358       121,628       (35.4 )     (12.6 )
      174,824       265,980       282,706       (34.3 )     (5.9 )
Fixed Income:
                                       
U.S.
    152,205       154,936       142,078       (1.8 )     9.0  
Global and International
    2,126       2,336       2,316       (9.0 )     0.9  
      154,331       157,272       144,394       (1.9 )     8.9  
Other(2):
                                       
U.S.
    17       15       23       13.3       (34.8 )
Global and International
    176       43       91       309.3       (52.7 )
      193       58       114       232.8       (49.1 )
Total Investment Advisory and Services Fees:
                                       
U.S.
    401,743       547,235       590,030       (26.6 )     (7.3 )
Global and International
    184,903       300,542       368,527       (38.5 )     (18.4 )
      586,646       847,777       958,557       (30.8 )     (11.6 )
Distribution Revenues(3)
    1,956       2,053       2,112       (4.7 )     (2.8 )
Shareholder Servicing Fees(3)
    1,063                   n/m        
Total
  $ 589,665     $ 849,830     $ 960,669       (30.6 )     (11.5 )
_____________
(1)
Certain 2008 and 2007 investment advisory fee amounts have been reclassified to confirm to our 2009 product classification.

(2)
Includes index, structured, asset allocation services and other non-actively managed AUM.

(3)
For a description of distribution revenues and shareholder servicing fees, see “Retail Services” above.


Private client accounts generally are managed pursuant to a written investment advisory agreement among the client, AllianceBernstein and SCB LLC, which usually is terminable at any time or upon relatively short notice by any party. In general, these contracts may not be assigned without the consent of the client. We are compensated under these contracts by fees calculated as a percentage of AUM at a specific point in time or as a percentage of the value of average assets under management for the applicable billing period, with these fees varying based on the types of investment services 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 include performance-based fees, incentive allocations or carried interests in addition to asset-based fees. We are eligible to earn performance-based fees on approximately 4% of private client AUM, substantially all of which is held in hedge funds.

Revenues from Private Client Services represented approximately 20%, 24% and 21% of our company-wide net revenues for the years ended December 31, 2009, 2008 and 2007, respectively.


Bernstein Research Services

The following table summarizes Bernstein Research Services revenues:

Revenues from Bernstein Research Services

   
Years Ended December 31,
   
% Change
 
   
2009
   
2008
   
2007
    2009-08     2008-07  
   
(in thousands)
                 
                                   
Bernstein Research Services
  $ 434,605     $ 471,716     $ 423,553       (7.9 )     11.4  

We earn revenues for providing investment research to, and executing brokerage transactions for, institutional clients. These clients compensate us principally by directing SCB LLC and SCBL to execute brokerage transactions on their behalf, for which we earn transaction charges. These services accounted for approximately 15%, 13% and 9% of our company-wide net revenues for the years ended December 31, 2009, 2008 and 2007, respectively.

Fee rates charged for brokerage transactions have declined significantly in recent years, but increases in transaction volume in both the U.S. and Europe have more than offset these decreases. For additional information, see “Risk Factors” in Item 1A and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7.

We also earn revenues from the equity capital markets services we provide to issuers of publicly-traded securities.  Depending on our role in a particular equity issuance, these revenues may take the form of underwriting fees, management fees and/or selling concessions.


Custody and Brokerage


Custody

SCB LLC acts as custodian for the majority of AllianceBernstein’s private client AUM and some of AllianceBernstein’s institutional AUM. Other custodial arrangements are maintained by client-designated banks, trust companies, brokerage firms or custodians.


Brokerage

AllianceBernstein generally has the discretion to select the broker-dealers that execute securities transactions for client accounts. When selecting brokers, we are required to obtain “best execution”. Although there is no single statutory definition, SEC releases and other legal guidelines make clear that the duty to obtain best execution requires us to seek “the most advantageous terms reasonably available under the circumstances for a customer’s account”. In addition to commission rate, we take into account such factors as current market conditions, the broker’s financial strength, and the ability and willingness of the broker to commit capital by taking positions in order to execute transactions.

While we select brokers primarily on the basis of their execution capabilities, we may also take into consideration the quality and amount of research services a broker provides to us for the benefit of our clients. These research services, which are paid for with client commissions and which we purchase to augment our own research capabilities, are governed by Section 28(e) of the Exchange Act. We use broker-dealers that provide these services in consideration for commissions paid for the execution of client trades, subject at all times to our duty to seek best execution, and with respect to which we reasonably conclude, in good faith, that the value of the execution and other services we receive from the broker-dealer is reasonable in relation to the amount of commissions paid. The commissions charged by these full-service brokers are generally higher than those charged by electronic trading networks and other “low-touch” trading venues.


We regularly execute transactions for our private clients through SCB LLC or SCBL, our affiliated broker-dealers, because these clients have generally subscribed to an all-inclusive package of services that includes brokerage, custody and investment advice. We sometimes execute institutional client transactions through SCB LLC or SCBL. We do so only when our clients have consented to our use of affiliated broker-dealers or we are otherwise permitted to do so, and only when we can execute these transactions in accordance with applicable law (i.e., our obligation to obtain best execution).

We may use third-party brokers to effect client transactions that also sell shares of AllianceBernstein Funds or third party funds we sub-advise; however, we prohibit our investment professionals who place trades from considering these other relationships or the sale of fund shares as a factor when selecting brokers to effect transactions.

Our Brokerage Allocation Committee has principal oversight responsibility for evaluating equity-related brokerage matters, including how to use research services we receive in a manner that is in the best interests of our clients and consistent with current regulatory requirements.


Service Marks

We have registered a number of service marks with the U.S. Patent and Trademark Office and various foreign trademark offices, including an “AB” design logo and the combination of such logo with the mark “AllianceBernstein”.

In connection with the Bernstein Transaction, we acquired all of the rights and title in, and to, the Bernstein service marks, including the mark “Bernstein”.


Regulation

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 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.

AllianceBernstein, Holding, the General Partner, SCB LLC, AllianceBernstein Global Derivatives Corporation (a wholly-owned subsidiary of AllianceBernstein, “Global Derivatives”) and Alliance Corporate Finance Group Incorporated (a wholly-owned subsidiary of AllianceBernstein) are investment advisers registered under the Investment Advisers Act. SCB LLC and Global Derivatives are also registered with the Commodity Futures Trading Commission as commodity pool operators.

Each U.S. Fund is registered with the SEC under the Investment Company Act and the shares of most U.S. Funds are qualified for sale in all states in the United States and the District of Columbia, except for U.S. Funds offered only to residents of a particular state. AllianceBernstein Investor Services is registered with the SEC as a transfer and servicing agent.

SCB LLC and AllianceBernstein Investments are registered with the SEC as broker-dealers, and both are members of FINRA. SCB LLC is also a member of the NYSE and other principal U.S. exchanges. SCBL is a broker regulated by the Financial Services Authority of the United Kingdom (“FSA”) and is a member of the London Stock Exchange.  Sanford C. Bernstein, a unit of AB Hong Kong, is regulated by the Hong Kong Securities and Futures Commission.

AllianceBernstein Trust Company, LLC (“ABTC”), a wholly-owned subsidiary of AllianceBernstein, is a non-depository trust company chartered under New Hampshire law as a limited liability company. ABTC is authorized to act as trustee, executor, transfer agent, assignee, receiver, custodian, investment adviser and in any other capacity authorized for a trust company under New Hampshire law. As a state-chartered trust company exercising fiduciary powers, ABTC must comply with New Hampshire laws applicable to trust company operations (such as New Hampshire Revised Statutes Annotated Part 392), certain federal laws (such as ERISA and sections of the Bank Secrecy Act), and New Hampshire banking laws. The primary fiduciary activities of ABTC consist of serving as trustee to a series of collective investment funds, the investors of which currently are defined benefit and defined contribution retirement plans.

Many of our subsidiaries around the world are subject to minimum net capital requirements by the local laws and regulations to which they are subject. As of December 31, 2009, each of our subsidiaries subject to a minimum net capital requirement satisfied the applicable requirement.

Holding Units are listed on the NYSE and trade publicly under the ticker symbol “AB”. As a listed company, Holding is subject to applicable regulations promulgated by the NYSE.

Our relationships with AXA and its subsidiaries are subject to applicable provisions of the insurance laws and regulations of New York and other states. Under such laws and regulations, the terms of certain investment advisory and other agreements we enter into with AXA or its subsidiaries are required to be fair and equitable, charges or fees for services performed must be reasonable, and, in some cases, are subject to regulatory approval.


Some of our subsidiaries are subject to the oversight of regulatory authorities in Europe, including the FSA in the U.K., and in Asia, including the Financial Services Agency in Japan, the Securities and Futures Commission in Hong Kong and the Monetary Authority of Singapore. While the requirements of these foreign regulators are often comparable to the requirements of the SEC and other U.S. regulators, they are sometimes more restrictive and may cause us to incur substantial expenditures of time and money in our efforts to comply.


Taxes

Holding, having elected under Section 7704(g) of the Internal Revenue Code of 1986, as amended (“Code”), to be subject to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business, is a “grandfathered” publicly-traded partnership for federal income tax purposes. Holding is also subject to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AllianceBernstein. In order to preserve Holding’s status as a “grandfathered” publicly-traded partnership for federal income tax purposes, management ensures that Holding does not directly or indirectly (through AllianceBernstein) enter into a substantial new line of business. A “new line of business” would be any business that is not closely related to AllianceBernstein’s historical business of providing research and diversified investment management and related services to its clients. A new line of business is “substantial” when a partnership derives more than 15% of its gross income from, or uses more than 15% of its total assets in, the new line of business.

AllianceBernstein is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes. However, AllianceBernstein is subject to the 4.0% UBT. Domestic corporate subsidiaries of AllianceBernstein, which are subject to federal, state and local income taxes, are generally included in the filing of a consolidated federal income tax return with separate state and local income tax returns also being filed. Foreign corporate subsidiaries are generally subject to taxes at higher rates in the foreign jurisdictions where they are located so, as our business increasingly operates in countries other than the U.S., our effective tax rate continues to increase.

For additional information, see “Risk Factors” in Item 1A.


History and Structure

We have been in the investment research and management business for approximately 40 years. Alliance Capital was founded in 1971 when the investment management department of Donaldson, Lufkin & Jenrette, Inc. (since November 2000, a part of Credit Suisse Group) merged with the investment advisory business of Moody’s Investor Services, Inc. Bernstein was founded in 1967.

In April 1988, Holding “went public” as a master limited partnership. Holding Units, which trade under the ticker symbol “AB”, have been listed on the NYSE since that time.

In October 1999, Holding reorganized by transferring its business and assets to AllianceBernstein, a newly-formed operating partnership, in exchange for all of the AllianceBernstein Units (“Reorganization”). Since the date of the Reorganization, AllianceBernstein has conducted the business formerly conducted by Holding and Holding’s activities have consisted of owning AllianceBernstein Units and engaging in related activities. As stated above, Holding Units trade publicly; AllianceBernstein Units do not trade publicly and are subject to significant restrictions on transfer. The General Partner is the general partner of both AllianceBernstein and Holding.

In October 2000, our two legacy firms, Alliance Capital and Bernstein, combined, bringing together Alliance Capital’s expertise in growth equity and corporate fixed income investing, and its family of retail mutual funds, with Bernstein’s expertise in value equity and tax-exempt fixed income management, and its Private Client and Bernstein Research Services businesses. For additional details about this business combination, see Note 2 to AllianceBernstein’s consolidated financial statements in Item 8.


As of December 31, 2009, the condensed ownership structure of AllianceBernstein was as follows (for a more complete description of our ownership structure, see “Principal Security Holders” in Item 12):
 

Graph 7
_____________
(1)
Direct and indirect ownership including unallocated Holding Units held in a trust for our long-term incentive compensation plans.


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 1.4% equity interest in Holding, AXA, through certain of its subsidiaries (see “Principal Security Holders” in Item 12), had an approximate 62.1% economic interest in AllianceBernstein as of December 31, 2009.

AXA and its subsidiaries own all of the issued and outstanding shares of the common stock of AXA Financial. AXA Financial indirectly owns all of the issued and outstanding shares of AXA Equitable. See “Principal Security Holders” in Item 12.

AXA, a société anonyme organized under the laws of France, is the holding company for an international group of insurance and related financial services companies engaged in the financial protection and wealth management businesses. AXA’s operations are diverse geographically, with major operations in Western Europe, North America and the Asia/Pacific regions and, to a lesser extent, in other regions including the Middle East and Africa. AXA has five operating business segments: life and savings, property and casualty, international insurance, asset management and other financial services.


Competition

The financial services industry is intensely competitive and new entrants are continually attracted to it. No single or small group of competitors is dominant in the industry.

We compete in all aspects of our business with numerous investment management firms, mutual fund sponsors, brokerage and investment banking firms, insurance companies, banks, savings and loan associations, and other financial institutions that often provide investment products that have similar features and objectives as those we offer. Our competitors offer a wide range of financial services to the same customers that we seek to serve. Some of our competitors are larger, have a broader range of product choices and investment capabilities, conduct business in more markets, and have substantially greater resources than we do. These factors may place us at a competitive disadvantage, and we can give no assurance that our strategies and efforts to maintain and enhance our current client relationships, and create new ones, will be successful.

AXA and its subsidiaries provide financial services, some of which are competitive with those offered by AllianceBernstein. The AllianceBernstein Partnership Agreement specifically allows AXA Financial and its subsidiaries (other than the General Partner) to compete with AllianceBernstein and to exploit opportunities that may be available to AllianceBernstein. AXA, AXA Financial, AXA Equitable and certain of their respective subsidiaries have substantially greater financial resources than we do and are not obligated to provide resources to us.

To grow our business, we must be able to compete effectively for assets under management. Key competitive factors include:

 
our investment performance for clients;

 
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;

 
the array of investment products we offer;

 
the fees we charge;

 
Morningstar/Lipper rankings for the AllianceBernstein Funds;


 
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, which could have a material adverse effect on our 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 100 F Street, NE, Washington, DC 20549, on official business days during the hours of 10:00 a.m. to 3:00 p.m. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

AllianceBernstein and Holding maintain an Internet site (http://www.alliancebernstein.com). The portion of the site at “Investor & Media Relations” and “Reports & SEC Filings” links to both companies’ annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. These reports are available through the site free of charge as soon as reasonably practicable after such material is filed with, or furnished to, the SEC.


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 “Cautions Regarding Forward-Looking Statements” in Item 7.

Poor investment performance may lead to loss of clients and a decline in AUM and revenues.

Our ability to achieve investment returns for clients that meet or exceed investment returns for comparable asset classes and competing investment services is a key consideration when clients decide to keep their assets with us or invest additional assets, as well as a prospective client’s decision to invest with us. Our inability to meet or exceed relevant investment benchmarks could result in clients withdrawing assets and in prospective clients choosing to invest with competitors. This could also result in lower investment management fees, including minimal or no performance-based fees, which could result in a decline in our revenues.

Throughout 2008, and in particular during the fourth quarter, we underperformed benchmarks in virtually all of our services, in some cases by substantial amounts. In so doing, we failed to meet client expectations, which contributed to net outflows across each of our three buy-side distribution channels in 2008 and 2009. Although our investment performance improved significantly in 2009, we continued to experience net outflows in each of our three buy-side distribution channels, particularly in the Institutions channel.  Although we are hopeful that our net outflows will continue to decline, this will depend on a number of factors, including our ability to sustain our improved investment performance, which cannot be assured, and the view that clients have of us as investment managers. Continuation of substantial net outflows for an extended period may have a significantly adverse effect on our results of operations and business prospects.

Changes in financial market levels have a direct and significant impact on our assets under management; a significant reduction in assets under management has a material adverse effect on our results of operations and business prospects.

Performance of financial markets (both domestic and international), global economic conditions, industry trends, interest rates, inflation rates, tax regulation changes and other factors that are difficult to predict affect the mix, market value and level of assets under management. Investment advisory and services fees, the largest component of revenues, are generally calculated as a percentage of the value of assets under management and vary with the type of account managed. Accordingly, fee income generally increases or decreases as assets under management increase or decrease and is affected by market appreciation or depreciation, inflow of new client assets (including purchases of mutual fund shares) and outflow of client assets (including redemption of mutual fund shares). In addition, changing market conditions and investment trends, particularly with respect to retirement savings, may reduce interest in certain of our investment products and may result in a reduction in assets under management

Significant weakness and volatility in global credit markets, particularly the rapid deterioration of the mortgage markets in the United States and Europe, during the second half of 2007 and early in 2008 was followed by global economic turmoil during the second half of 2008 and early in 2009. These conditions had a significant adverse affect on our 2009 and 2008 results of operations.  Although global markets improved during 2009, there can be no assurance that such improvement will continue or that market conditions will not deteriorate again, which may have a significant adverse effect on our results of operations and business prospects.

Prolonged weakness in asset values may result in impairment of goodwill, intangible assets and the deferred sales commission asset.

If market conditions deteriorate significantly and securities valuations are depressed for prolonged periods of time (factors that are beyond our control), our AUM, revenues, profitability and unit price may be adversely affected. As a result, goodwill, intangible assets and/or the deferred sales commission asset may become impaired. The occurrence of an impairment would require a material charge to our earnings. For additional information about our impairment testing, see Item 7.

Our business is dependent on investment advisory, selling and distribution agreements that are subject to termination or non-renewal on short notice.

We derive most of our revenues pursuant to written investment management agreements (or other arrangements) with institutional investors, mutual funds and private clients, and selling and distribution agreements between AllianceBernstein Investments and financial intermediaries that distribute AllianceBernstein Funds. Generally, the investment management agreements (and other arrangements) are terminable at any time or upon relatively short notice by either party. The selling and distribution agreements are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares. In addition, investors in AllianceBernstein Funds can redeem their investments without notice. Any termination of, or failure to renew, a significant number of these agreements, or a significant increase in redemption rates, could have a material adverse effect on our results of operations and business prospects.

Furthermore, the investment management agreements pursuant to which we manage the U.S. Funds must be renewed and approved by the Funds’ boards of directors or trustees annually.  A significant majority of the directors/trustees are independent.  Consequently, there can be no assurance that the board of directors or trustees of each fund will approve the fund’s investment management agreement each year, or will not condition its approval on revised terms that may be adverse to us.


Our ability to establish new client relationships and maintain existing ones is partly dependent on our relationships with various financial intermediaries and consultants that are not obligated to continue to work with us.

Our ability to market our Retail Products and Services, sub-advisory services and certain other investment services is partly dependent on our access to securities firms, brokers, banks and other intermediaries. These intermediaries generally offer their clients investment products in addition to, and in competition with, our products. In addition, certain institutional investors rely on consultants to advise them on the choice of investment adviser, and our Institutional Services are not always considered among the best choices by consultants. Also, our Private Client Services group relies on referrals from financial planners, registered investment advisers and other professionals. We cannot be certain that we will continue to have access to, or receive referrals from, these third parties. Loss of such access or referrals could have a material adverse effect on our results of operations and business prospects. For example, one or more investment consultants could advise their clients to move their assets away from us to other investment advisers, which could result in significant net outflows.

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 results of operations and business prospects.

We may enter into more performance-based fee arrangements with our clients in the future, which could cause greater fluctuations in our revenues.

We sometimes charge our clients performance-based fees. In these situations, we charge a base advisory fee and are eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. In addition, some performance-based fees include a high-watermark provision, which generally provides that if a client account underperforms relative to its performance target (whether absolute or relative to a specified benchmark), it must gain back such underperformance before we can collect future performance-based fees. Therefore, if we fail to achieve the performance target for a particular period, we will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, our ability to earn future performance-based fees will be impaired. We are eligible to earn performance-based fees on approximately 13% of the assets we manage for institutional clients and approximately 4% of the assets we manage for private clients (in total, approximately 9% of our company-wide AUM). If the percentage of our AUM subject to performance-based fees grows, seasonality and volatility of revenue and earnings are likely to become more significant. Our performance-based fees in 2009, 2008 and 2007 were $29.8 million, $13.4 million and $81.2 million, respectively.

Approximately 72% of our hedge fund AUM is subject to high-watermarks, and we ended the fourth quarter of 2009 with approximately 89% of this AUM below high-watermarks by 10% or more. This will make it very difficult for us to earn performance-based fees in most of our hedge funds in 2010.

If we are unable to maintain our fee levels, or if our mix of assets under management changes, our results of operations may be adversely affected.

A shift from active equity services towards fixed income services and passive services may result in a corresponding decline in revenues and income because we generally earn higher fees from assets invested in our active equity services than in our fixed income services or passive services. A shift from global and international services to U.S. services may have a similar effect. The global economic turmoil experienced during the second half of 2008 and early in 2009 caused some investors to shift their investment preferences from active equities to fixed income, passive and money market products (some of which we do not offer), and this trend may continue or accelerate.

In addition, we may be required to reduce our fee levels, or restructure the fees we charge, because of, among other things, regulatory initiatives (whether industry-wide or specifically targeted), court decisions and competitive considerations.  A reduction in fees will reduce our revenues.  A reduction in revenues, without a commensurate reduction in expenses, will adversely affect our results of operations.

We may engage in strategic transactions that could pose risks.

As part of our business strategy, we consider potential strategic transactions, including acquisitions, dispositions, consolidations, joint ventures and similar transactions, some of which may be material.  These transactions, if undertaken, may involve a number of risks and present financial, managerial and operational challenges, including:

 
·
adverse effects on our earnings if acquired intangible assets or goodwill become impaired;

 
·
existence of unknown liabilities or contingencies that arise after closing; and

 
·
potential disputes with counterparties.


Acquisitions also pose the risk that any business we acquire may lose customers or employees or could underperform relative to expectations. Furthermore, strategic transactions may require us to increase our leverage or, if we issue AllianceBernstein Units or Holding Units to fund an acquisition, dilute the holdings of our existing Unitholders.

Because many of our subsidiary operations are located outside of the United States and have functional currencies other than the U.S. dollar, changes in exchange rates to the U.S. dollar affect our reported financial results from one period to the next.

Although the largest components of our net revenues and expenses, as well as our AUM, are presently derived from the United States, we have subsidiaries outside of the United States whose functional currencies are not the U.S. dollar.  As a result, fluctuations in exchange rates to the U.S. dollar affect our reported financial results from one period to the next.  We may not be successful in our efforts to hedge our exposure to such fluctuations, which could have a negative effect on our reported financial results.

The individuals, counterparties or issuers on which we rely in the course of performing services for us or our clients may be unable or unwilling to honor their contractual obligations to us.

We rely on various third party counterparties and other vendors to fulfill their obligations to us, whether specified by contract, course of dealing or otherwise. Default rates, downgrades and disputes with counterparties as to the valuation of collateral increase significantly in times of market stress.  Furthermore, disruptions in the financial markets and other economic challenges, like those presented by the recent global financial crisis, may cause our counterparties and other vendors to experience significant cash flow problems or even render them insolvent, which may expose us to significant costs.

Maintaining adequate liquidity for our general business needs depends upon certain factors, including operating cash flows and our access to credit on reasonable terms.

Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to issue public or private debt on reasonable terms may be limited by adverse market conditions, our profitability, our creditworthiness as perceived by lenders and changes in government regulations, including tax rates and interest rates.  Furthermore, our access to bank credit or the debt markets depends significantly on our credit ratings.  A downgrade to our credit ratings could increase our borrowing costs and limit our access to the capital markets. If we are unable to obtain funds and/or financing, we may be forced to incur unanticipated costs or revise our strategic plans, which could have a material adverse effect on our financial condition, results of operations and business prospects.

Unpredictable events, including natural disaster, technology failure and terrorist attack, may adversely affect our ability to conduct business.

War, terrorist attack, power failure, natural disaster and rapid spread of serious disease could interrupt our operations by:

 
causing disruptions in U.S. or global economic conditions, thereby 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 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 results of operations and business prospects.

In addition, we could be subject to losses if we fail to properly safeguard sensitive and confidential information. As part of our normal operations, we maintain and transmit confidential information about our clients as well as proprietary information relating to our business operations. Our systems could be damaged by unauthorized users or corrupted by computer viruses or other malicious software code, or authorized persons could inadvertently or intentionally release confidential or proprietary information. Such disclosure could, among other things, allow competitors access to our proprietary business information and require significant time and expense to investigate and remediate the breach.


Our own operational failures or those of third parties we rely on, including failures arising out of human error, could disrupt our business, damage our reputation and reduce our revenues.

Weaknesses or failures in our internal processes or systems could lead to disruption of our operations, liability to clients, exposure to disciplinary action or harm to our reputation. Our business is highly dependent on our ability to process, on a daily basis, large numbers of transactions, many of which are highly complex, across numerous and diverse markets. These transactions generally must comply with 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 we may use or third parties with which we conduct business. If a disruption occurs in one location and our employees in that location are unable to occupy our offices or communicate with or travel to other locations, our ability to conduct business with and on behalf of our clients may suffer, and we may not be able to successfully implement contingency plans that depend on communication or travel.

Our obligations to clients require us to exercise skill, care and prudence in performing our services. Despite our employees being highly trained and skilled, the large number of transactions we process makes it highly likely that errors will occasionally occur. Should we make a mistake in performing our services that costs our clients money, we have a duty to act promptly to put the clients in the position they would have been in had we not made the error. The occurrence of mistakes, particularly significant ones, can have a material adverse effect on our reputation, results of operations and business prospects.

We may not accurately value the securities we hold on behalf of our discretionary clients or our company investments.

In accordance with applicable regulatory requirements, our obligations under investment management agreements with our clients and, if the client is a U.S. Fund, the approval and direction of the U.S. Fund’s board of directors or trustees, we employ procedures for the pricing and valuation of securities and other positions held in client accounts or for company investments. We have established a Valuation Committee, composed of senior officers and employees, which oversees pricing controls and valuation processes. Where market quotations for a security are not readily available, the Valuation Committee determines a fair value for the security.

Extraordinary volatility in financial markets, significant liquidity constraints or our not adequately accounting for one or more factors when fair valuing a security based on information with limited market observability could result in our failing to properly value securities we hold for our clients or investments accounted for on our balance sheet. Improper valuation would likely result in our basing fee calculations on inaccurate AUM figures, our striking incorrect net asset values for company-sponsored mutual funds or, in the case of company investments, our inaccurately calculating and reporting our financial condition and operating results. Although the overall percentage of our AUM that we fair value based on information with limited market observability is not significant, inaccurate fair value determinations can harm our clients and create regulatory issues.

Our business is based on the trust and confidence of our clients; any damage to that trust and confidence can cause assets under management to decline.

We are dedicated to earning and maintaining the trust and confidence of our clients; the good reputation created thereby is essential to our business. Damage to our reputation could substantially impair our ability to maintain or grow our business.

Our substantial underperformance in virtually all of our investment services during 2008 injured our reputation among many clients, prospects and consultants. We are focused on continuing the improved investment performance we delivered in 2009 and, in so doing, rebuilding our reputation. Failure in this endeavor, however, could have a material adverse effect on our reputation, results of operations and business prospects.

We may not always successfully manage actual and potential conflicts of interest that arise in our business.

Our reputation is one of our most important assets. As our business and client base expands, we increasingly must manage actual and potential conflicts of interest, including situations where our services to a particular client conflict, or are perceived to conflict, with the interests of another client, as well as situations where certain of our employees have access to material non-public information that may not be shared with all employees of our firm. Failure to adequately address potential conflicts of interest could adversely affect our reputation, results of operations and business prospects.

We have procedures and controls that are designed to address and manage conflicts of interest, including those designed to prevent the improper sharing of information. However, appropriately managing conflicts of interest is complex and difficult, and our reputation could be damaged and the willingness of clients to enter into transactions in which such a conflict might arise may be affected if we fail, or appear to fail, to deal appropriately with conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions.


Rates we charge for brokerage transactions have declined significantly in recent years, and we expect those declines to continue. In addition, recent capital markets and economic turmoil may reduce market volumes. Combined, these two factors may adversely affect Bernstein Research Services revenue.

Electronic, or “low-touch”, trading approaches represent a growing percentage of buy-side trading activity and produce transaction fees for execution-only services that are a small fraction of traditional full service fee rates. As a result, blended pricing for the industry and SCB has declined in recent years. In addition, fee rates charged by SCB and other brokers for traditional brokerage services have also historically experienced price pressure, and we expect these trends to continue. While increases in transaction volume and market share have in the past more than offset decreases in rates, this may not continue. Recent economic and market turmoil has severely impacted much of SCB’s client base, which in the near-term may adversely affect transaction volume generally.

Despite our efforts to manage exposures from principal positions taken by our sell-side business, these positions are subject to market risk.

Our sell-side business may use the firm’s capital to facilitate customer transactions, primarily relating to our trading activities in listed options.  The resulting principal positions are exposed to market risk.  We seek to manage this risk both by engaging in transactions designed to hedge the market risk and by maintaining a risk platform that includes the measurement and monitoring of financial exposures and operational processes.  Our ability to manage this risk may be limited, however, by adverse changes in the liquidity of the security or the hedging instrument and in the correlation of price movements between the security and the hedging instrument.  Similarly, the risk monitoring and risk mitigation techniques we employ and the related judgments we make cannot anticipate every possible economic and financial circumstance and outcome.  Consequently, we may incur losses, which would adversely affect our results of operations and require us to increase our regulatory capital.

The costs of insurance are substantial and may increase.

Our insurance expenses are significant and can fluctuate significantly from year to year. Although these expenses slightly decreased in 2009, future increases 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. Also, there can be no assurance that a claim or claims will be covered by our insurance policies or, if covered, will not exceed the limits of available insurance coverage, or that our insurers will remain solvent and meet their obligations.

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 may result in material adverse consequences.

Virtually all aspects of our business are subject to federal and state laws and regulations, rules of securities regulators and exchanges, and laws in the foreign countries in which our subsidiaries conduct business. If we violate these laws or regulations, we could be subject to civil liability, criminal liability or sanction, including revocation of our and our subsidiaries’ registrations as investment advisers or broker-dealers, revocation of the licenses of our employees, censures, fines, or temporary suspension or permanent bar from conducting business. A regulatory proceeding, even if it does not result in a finding of wrongdoing or sanction, could require substantial expenditures of time and money. Any such liability or sanction could have a material adverse effect on our 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.

Regulation of the financial services industry is evolving.

As an investment firm, we are subject to financial services laws, regulations, corporate governance requirements, administrative actions and policies in each location in which we operate. In 2009, as many emergency government programs slowed or wound down, global regulatory and legislative focus generally moved to a second phase of broader reform and a restructuring of financial institution regulation. Legislators and regulators, particularly in the United States and Europe, are currently considering a wide range of proposals that, if enacted, may result in changes to the manner in which our global operations are regulated.


The financial services industry is intensely competitive.

We compete on the basis of a number of factors, including our array of investment services, our investment performance for our clients, innovation, reputation and price. By having a global presence, we may face competitors with more experience and more established relationships with clients, regulators and industry participants in the relevant market, which could adversely affect our ability to expand. Furthermore, our poor investment performance during 2008, and what may be diminished confidence in our services on the part of clients and consultants, may make it more difficult for us to compete effectively.  For additional information regarding competitive factors, see “Competition” in Item 1.

We are involved in various legal proceedings and regulatory matters and may be involved in such proceedings in the future, any one or combination of which could have a material adverse effect on our financial condition, results of operations and business prospects.

We are involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which allege substantial damages, and we may be involved in additional matters in the future. Litigation is subject to significant uncertainties, particularly when plaintiffs allege substantial or indeterminate damages, or when the litigation is highly complex or broad in scope. We have described pending material legal proceedings in Item 3.


Structure-related Risks

The partnership structure of Holding and AllianceBernstein limits unitholders’ abilities to influence the management and operation of AllianceBernstein’s business and is highly likely to prevent a change in control of Holding and AllianceBernstein.

The General Partner, as general partner of both Holding and AllianceBernstein, generally has the exclusive right and full authority and responsibility to manage, conduct, control and operate their respective businesses, except as otherwise expressly stated in their respective Amended and Restated Agreements of Limited Partnership. Holding and AllianceBernstein Unitholders have more limited voting rights on matters affecting AllianceBernstein than do holders of common stock in a corporation. Both Amended and Restated Agreements of Limited Partnership provide that unitholders do not have any right to vote for directors of the General Partner and that unitholders can only vote on certain extraordinary matters (including removal of the General Partner under certain extraordinary circumstances). Additionally, the AllianceBernstein Partnership Agreement includes significant restrictions on transfers of AllianceBernstein Units and provisions that have the practical effect of preventing the removal of the General Partner, which are highly likely to prevent a change in control of AllianceBernstein’s management.

AllianceBernstein Units are illiquid.

There is no public trading market for AllianceBernstein Units and AllianceBernstein does not anticipate that a public trading market will ever develop. The AllianceBernstein Partnership Agreement restricts our ability to participate in a public trading market or anything substantially equivalent to one by providing that any transfer which may cause AllianceBernstein to be classified as a “publicly-traded partnership” as defined in Section 7704 of the Code shall be deemed void and shall not be recognized by AllianceBernstein. In addition, AllianceBernstein Units are subject to significant restrictions on transfer; all transfers of AllianceBernstein Units are subject to the written consent of AXA Equitable and the General Partner pursuant to the AllianceBernstein Partnership Agreement. Generally, neither AXA Equitable nor the General Partner will permit any transfer that it believes would create a risk that AllianceBernstein would be treated as a corporation for tax purposes. AXA Equitable and the General Partner have implemented a transfer policy that requires a seller to locate a purchaser, and imposes annual volume restrictions on transfers. You may request a copy of the transfer program from our corporate secretary (corporate_secretary@alliancebernstein.com). Also, we have filed the transfer program as Exhibit 10.06 to this Form 10-K.

Changes in the partnership structure of Holding and AllianceBernstein and/or changes in the tax law governing partnerships would have significant tax ramifications.

Holding, having elected under Section 7704(g) of the Code, to be subject to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business, is a “grandfathered” publicly-traded partnership (“PTP”) for federal income tax purposes. Holding is also subject to the 4.0% UBT, net of credits for UBT paid by AllianceBernstein. In order to preserve Holding’s status as a “grandfathered” publicly-traded partnership for federal income tax purposes, management ensures that Holding does not directly or indirectly (through AllianceBernstein) enter into a substantial new line of business. A “new line of business” would be any business that is not closely related to AllianceBernstein’s historical business of providing research and diversified investment management and related services to its clients. A new line of business is “substantial” when a partnership derives more than 15% of its gross income from, or uses more than 15% of its total assets in, the new line of business.

AllianceBernstein is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes. However, AllianceBernstein is subject to the 4.0% UBT. Domestic corporate subsidiaries of AllianceBernstein, which are subject to federal, state and local income taxes, are generally included in the filing of a consolidated federal income tax return with separate state and local income tax returns being filed. Foreign corporate subsidiaries are generally subject to taxes at higher rates in the foreign jurisdiction where they are located. As our business increasingly operates in countries other than the U.S., our effective tax rate may increase because our international subsidiaries are subject to corporate level taxes in the jurisdictions where they are located.


In order to preserve AllianceBernstein’s status as a private partnership for federal income tax purposes, AllianceBernstein Units must not be considered publicly traded. The AllianceBernstein Partnership Agreement provides that all transfers of AllianceBernstein Units must be approved by AXA Equitable and the General Partner; AXA Equitable and the General Partner approve only those transfers permitted pursuant to one or more of the safe harbors contained in relevant treasury regulations. If such units were considered readily tradable, AllianceBernstein would be subject to federal and state corporate income tax on its net income. Furthermore, as noted above, should AllianceBernstein enter into a substantial new line of business, Holding, by virtue of its ownership of AllianceBernstein, would lose its status as a grandfathered publicly-traded partnership and would become subject to corporate income tax as set forth above.

In 2007 and again in 2009, Congress proposed tax legislation that would cause certain PTPs to be taxed as corporations, thus subjecting their income to a higher level of income tax. Holding is a PTP that derives its income from asset manager or investment management services through its ownership interest in AllianceBernstein. The legislation, in the form proposed, would not affect Holding’s tax status. However, we cannot predict whether, or in what form, the proposed tax legislation will pass, and are unable to determine what effect any new legislation might have on us. If Holding were to lose its federal tax status as a grandfathered PTP, it would be subject to corporate income tax, which would reduce materially its net income and quarterly distributions to Holding Unitholders.

In its current form, the proposed legislation would not affect AllianceBernstein because it is a private partnership.


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 882,770 square feet of space at this location. We also occupy approximately 312,301 square feet of space at 135 West 50th Street, New York, New York under a lease expiring in 2029 and approximately 249,217 square feet of space at One North Lexington, White Plains, New York under a lease expiring in 2031. AllianceBernstein Investments and AllianceBernstein Investor Services occupy approximately 92,067 square feet of space in San Antonio, Texas under a lease expiring in 2029. We also lease space in 18 other cities in the United States.

Our subsidiaries and joint venture companies lease space in 27 cities outside the United States, the most significant of which are in London, England under leases expiring between 2010 and 2022, and in Tokyo, Japan under a lease expiring in 2018.


Item 3.
Legal Proceedings

With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable, and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to significant uncertainties, particularly when plaintiffs allege substantial or indeterminate damages, or when the litigation is highly complex or broad in scope.

We have previously reported the filing of a purported class action complaint entitled Hindo, et al. v. AllianceBernstein Growth & Income Fund, et al. and our involvement in various other market timing-related matters. There have been no significant developments in these matters since we filed our Form 10-Q for the quarter ended September 30, 2009, in which these matters are more completely described. These matters are also described in Note 11 to our consolidated financial statements in Item 8.

We are involved in various other matters, including regulatory inquiries, administrative proceedings and litigation, some of which allege substantial damages. While any inquiry, proceeding or litigation has the element of uncertainty, management believes that the outcome of any one of the other regulatory inquiries, administrative proceedings, lawsuits or claims that is pending or threatened, or all of them combined, will not have a material adverse effect on our financial condition, results of operations or business prospects.


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 2009.


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 are listed on the NYSE and trade publicly under the ticker symbol “AB”.

There is no established public trading market for AllianceBernstein Units, which are subject to significant restrictions on transfer. In general, transfers of AllianceBernstein Units will be allowed only with the written consent of both AXA Equitable and the General Partner. Generally, neither AXA Equitable nor the General Partner will permit any transfer that it believes would create a risk that AllianceBernstein would be treated as a corporation for tax purposes. AXA Equitable and the General Partner have implemented a transfer policy, a copy of which you may request from our corporate secretary (corporate_secretary@alliancebernstein.com). Also, we have filed the transfer program as Exhibit 10.06 to this Form 10-K.

Each of Holding and AllianceBernstein distributes on a quarterly basis all of its Available Cash Flow, as defined in the Holding Partnership Agreement and the AllianceBernstein Partnership Agreement, to its unitholders and the General Partner. For additional information concerning distribution of Available Cash Flow by Holding, see Note 2 to Holding’s financial statements in Item 8. For additional information concerning distribution of Available Cash Flow by AllianceBernstein, see Note 2 to AllianceBernstein’s consolidated financial statements in Item 8.

Holding’s principal source of income and cash flow is attributable to its limited partnership interests in AllianceBernstein.

The tables set forth below provide the distributions of Available Cash Flow made by AllianceBernstein and Holding during 2009 and 2008 and the high and low sale prices of Holding Units reflected on the NYSE composite transaction tape during 2009 and 2008:

   
Quarters Ended 2009
       
   
December 31
   
September 30
   
June 30
   
March 31
   
Total
 
                                         
Cash distributions per AllianceBernstein Unit(1)
  $ 0.70     $ 0.74     $ 0.48     $ 0.14     $ 2.06  
Cash distributions per Holding Unit(1)
  $ 0.62     $ 0.67     $ 0.41     $ 0.07     $ 1.77  
Holding Unit prices:
                                       
High
  $ 28.91     $ 27.81     $ 22.62     $ 23.27          
Low
  $ 24.40     $ 17.83     $ 14.28     $ 10.12          


   
Quarters Ended 2008
       
   
December 31
   
September 30
   
June 30
   
March 31
   
Total
 
                                         
Cash distributions per AllianceBernstein Unit(1)
  $ 0.37     $ 0.70     $ 1.06     $ 0.94     $ 3.07  
Cash distributions per Holding Unit(1)
  $ 0.29     $ 0.60     $ 0.96     $ 0.83     $ 2.68  
Holding Unit prices:
                                       
High
  $ 38.90     $ 57.11     $ 67.75     $ 78.00          
Low
  $ 11.49     $ 32.00     $ 54.50     $ 53.63          
_____________
(1)
Declared and paid during the following quarter.

On December 31, 2009, the closing price of a Holding Unit on the NYSE was $28.10 per Unit and there were 1,148 Holding Unitholders of record for approximately 80,000 beneficial owners. On December 31, 2009, there were 507 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

We did not engage in any unregistered sales of our securities during the last three years.


Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information relating to any Holding Units bought by us or one of our affiliates in the fourth quarter of the fiscal year covered by this report:

Issuer Purchases of Equity Securities

   
Total Number of Holding Units Purchased
   
Average Price Paid Per Holding Unit, net of Commissions
   
Total Number of Holding Units Purchased as Part of Publicly Announced Plans or Programs
   
Maximum Number (or Approximate Dollar Value) of Holding Units that May Yet Be Purchased Under the Plans or Programs
 
     (a)      (b)      (c)      (d)  
Period
                       
10/1/09-10/31/09(1)
    3,167     $ 24.74              
11/1/09-11/30/09
                       
12/1/09-12/31/09(2)
    292,350       25.92              
Total
    295,517     $ 25.91              
_____________
(1)
On October 2 and 16, 2009, we purchased from employees 2,932 Holding Units and 235 Holding Units, respectively, to allow them to fulfill statutory withholding tax requirements at the time of distribution of long-term incentive compensation awards.

(2)
On December 1 and 18, 2009, we purchased from employees 12,086 Holding Units and 280,264 Holding Units, respectively, to allow them to fulfill statutory withholding tax requirements at the time of distribution of long-term incentive compensation awards.

Neither AllianceBernstein nor any of our affiliates purchased AllianceBernstein Units during the fourth quarter of the fiscal year covered by this report.


Item 6.
Selected Financial Data
 
Selected Consolidated Financial Data

   
Years Ended December 31,
 
   
2009
   
2008(1)
   
2007(1)
   
2006(1)
   
2005(1)
 
   
(in thousands, except per unit amounts and unless otherwise indicated)
 
INCOME STATEMENT DATA:
     
Revenues:
                             
Investment advisory and services fees
  $ 1,920,332     $ 2,839,526     $ 3,386,188     $ 2,890,229     $ 2,259,392  
Distribution revenues
    277,328       378,425       473,435       421,045       397,800  
Bernstein research services
    434,605       471,716       423,553       375,075       352,757  
Dividend and interest income
    26,730       91,752       284,014       266,520       152,781  
Investment gains (losses)
    144,447       (349,172 )     29,690       62,200       29,070  
Other revenues
    107,848       118,436       122,869       123,171       116,788  
Total revenues
    2,911,290       3,550,683       4,719,749       4,138,240       3,308,588  
Less: interest expense
    4,411       36,524       194,432       187,833       95,863  
Net revenues
    2,906,879       3,514,159       4,525,317       3,950,407       3,212,725  
                                         
Expenses:
                                       
Employee compensation and benefits
    1,298,053       1,454,691       1,833,796       1,547,627       1,262,198  
Promotion and servicing:
                                       
Distribution plan payments
    207,643       274,359       335,132       292,886       291,953  
Amortization of deferred sales commissions
    54,922       79,111       95,481       100,370       131,979  
Other
    173,250       207,506       252,468       218,944       198,004  
General and administrative
    558,361       539,198       574,506       574,904       378,856  
Interest on borrowings
    2,696       13,077       23,970       23,124       25,109  
Amortization of intangible assets
    21,126       20,716       20,716       20,710       20,700  
Total expenses
    2,316,051       2,588,658       3,136,069       2,778,565       2,308,799  
Operating income
    590,828       925,501       1,389,248       1,171,842       903,926  
Non-operating income
    33,657       18,728       15,756       20,196       34,446  
Income before income taxes
    624,485       944,229       1,405,004       1,192,038       938,372  
Income taxes
    45,977       95,803       127,845       75,045       64,571  
Net income
    578,508       848,426       1,277,159       1,116,993       873,801  
Net income of consolidated entities attributable to non-controlling interests
    (22,381 )     (9,186 )     (16,715 )     (8,392 )     (5,483 )
Net income attributable to AllianceBernstein Unitholders
  $ 556,127     $ 839,240     $ 1,260,444     $ 1,108,601     $ 868,318  
Basic net income per AllianceBernstein Unit
  $ 2.07     $ 3.18     $ 4.80     $ 4.26     $ 3.37  
Diluted net income per AllianceBernstein Unit
  $ 2.07     $ 3.18     $ 4.77     $ 4.22     $ 3.35  
Operating margin(2)
    19.6 %     26.1 %     30.3 %     29.5 %     28.0 %
CASH DISTRIBUTIONS PER ALLIANCEBERNSTEIN UNIT(3)
  $ 2.06     $ 3.07     $ 4.77     $ 4.42     $ 3.33  
BALANCE SHEET DATA AT PERIOD END:
                                       
Total assets
  $ 7,214,940     $ 8,503,459     $ 9,368,754     $ 10,601,105     $ 9,490,480  
Debt
  $ 248,987     $ 284,779     $ 533,872     $ 334,901     $ 407,291  
Total Capital
  $ 4,701,955     $ 4,486,826     $ 4,688,878     $ 4,624,512     $ 4,312,042  
ASSETS UNDER MANAGEMENT AT PERIOD END (in millions)
  $ 495,502     $ 461,951     $ 800,390     $ 716,921     $ 578,552  
_____________
(1)
Certain prior-year amounts have been reclassified to conform to our 2009 presentation. See Note 2 to AllianceBernstein’s consolidated financial statements in Item 8 for a discussion of reclassifications.

(2)
Operating income less net income attributable to non-controlling interests as a percentage of net revenue.

(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

Our firm rebounded from a very difficult 2008, posting strong relative investment returns for clients across our global platform.  While we enhanced our investment process using the lessons learned last year, we stayed true to our philosophy of fusing our high-quality, in-depth fundamental research with innovative quantitative tools to deliver outperformance to our clients.

The strong capital markets of 2009, coupled with our broad-based relative outperformance, enabled us to grow client assets under management (“AUM”) in 2009, despite increased client outflows for the full year.  These outflows peaked in the second quarter of 2009, and we are confident that the trend of improving sales over the second half of 2009 will continue into 2010.  The successful launch of new services in all our buy-side distribution channels, which we are aggressively pursuing, will aid in achieving this goal.

For the fourth quarter of 2009, the performance of our investment services relative to benchmarks or peer averages was strong in non-U.S. growth equities and fixed income but mixed in our value services.  For the full year 2009, most of our services outperformed, materially so in many cases, exemplified by the exceptional returns in our blend strategies portfolios, with our top four institutional blend services outperforming their benchmarks by 280 to over 1,000 basis points for the year.  Furthermore, fixed income services had a stellar year, with three of our five largest institutional services outperforming benchmarks by more than 1,000 basis points.  In addition, three of our four largest retail fixed income services generated returns of more than 1,500 basis points above peer averages.

Our total AUM increased $33.5 billion, or 7.3% during 2009, driven by market appreciation of $107.4 billion, partly offset by net outflows of $73.9 billion.  Net outflows occurred primarily in our value and growth equity services, while our fixed income services experienced modest net outflows and our other investment services achieved modest net inflows.

Institutional AUM increased $8.6 billion, or 3.0%, to $300.0 billion during 2009, due to strong investment returns of $66.1 billion, largely offset by net outflows of $57.7 billion.  While our pipeline of won but unfunded mandates decreased by 52.2% to $3.6 billion from $7.6 billion during 2009, our pipeline increased by 27.6% during the second half of 2009 from $2.8 billion at the end of the second quarter.  Strong relative performance led to some notable account wins in the latter part of the year, most notably in fixed income and regional value services.

Retail AUM increased $19.1 billion, or 18.7%, to $120.7 billion during 2009, led by market appreciation of $28.3 billion, partly offset by net outflows of $9.2 billion.  Virtually all of the year’s net outflows occurred during the first three quarters of 2009.  Gross sales continued to improve throughout the year to $7.8 billion in the fourth quarter of 2009 as compared to $5.9 billion during the previous quarter.

Private Client AUM increased $5.8 billion, or 8.4%, to $74.8 billion during 2009, as market appreciation of $13.0 billion was partly offset by net outflows of $7.0 billion.  Gross sales of $2.4 billion and net outflows of $0.8 billion in the fourth quarter compared favorably to the first three quarters of 2009.

Despite lower Bernstein Research Services revenues in 2009 compared to 2008, due primarily to market forces, our sell-side business made important strides in gaining market share and launching new products.  We anticipate this trend will continue as we further globalize our research footprint and expand our array of client services in 2010.  Specifically, we aim to increase our U.S. and European research market share, build out our newly-established Asia research platform, expand equity derivatives and electronic trading services, and develop our nascent equity capital markets business.

Our full year 2009 net revenues decreased $607.3 million, or 17.3%, compared to 2008, led by a $919.2 million, or 32.4%, decrease in investment advisory and services fees and a $101.1 million decrease in distribution revenues.  Conversely, investment gains (losses) had a positive effect on net revenues of $493.7 million, primarily the result of 2009 gains of $120.5 million on investments related to employee deferred compensation awards, as compared to 2008 losses of $325.0 million.  Full year operating expenses declined $272.6 million, or 10.5%, compared to 2008 driven mostly by lower employee compensation and benefits of $156.6 million, a reflection of the 22.9% reduction in headcount during the last 15 months, and lower promotion and servicing expenses of $125.2 million principally resulting from lower average Retail Services AUM.  Accordingly, 2009 diluted net income per Holding Unit fell to $1.80, down 35.5% compared to $2.79 for 2008.  In addition, our operating margin decreased 650 basis points from 26.1% in 2008 to 19.6% in 2009, due primarily to the decrease in investment advisory and services fees, partially offset by positive investment gains and lower operating expenses.

Global equity markets are still only halfway back to their October 2007 peak.  Furthermore, cumulative 10-year returns for the S&P 500 and MSCI World indices are both still negative.  With profitability at 30-year lows, we expect corporate earnings to rise and to see significant opportunities emerge for active asset managers.


Our firm experienced a transitional year in 2009.  We began the year with three main objectives: improving investment performance, reducing net asset outflows and right sizing our firm.  We believe we succeeded on all three fronts.  We are now focused on continuing to provide solid investment returns and world class service for our clients, expanding our product offerings, acquiring new clients, engaging and motivating our employees, and improving returns for Unitholders.

 
Assets Under Management

Assets under management by distribution channel were as follows:

 
As of December 31,
   
% Change
 
 
2009
 
2008
 
2007
    2009-08     2008-07  
 
(in billions)
                 
                             
Institutions
  $ 300.0     $ 291.4     $ 508.1       3.0 %     (42.7 )%
Retail
    120.7       101.6       183.2       18.7       (44.5 )
Private Client
    74.8       69.0       109.1       8.4       (36.8 )
Total
  $ 495.5     $ 462.0     $ 800.4       7.3       (42.3 )

Assets under management by investment service were as follows:

   
As of December 31,
   
% Change
 
   
2009
   
2008
   
2007
    2009-08     2008-07  
   
(in billions)
                 
Equity
                                 
Value:
                                 
U.S.
  $ 44.4     $ 47.9     $ 108.0       (7.3 )%     (55.6 )%
Global & international
    126.8       124.5       274.5       1.8       (54.7 )
      171.2       172.4       382.5       (0.7 )     (54.9 )
Growth:
                                       
U.S.
    38.1       33.0       72.5       15.4       (54.5 )
Global & international
    56.0       55.3       124.4       1.4       (55.6 )
      94.1       88.3       196.9       6.6       (55.2 )
Total Equity
    265.3       260.7       579.4       1.8       (55.0 )
Fixed Income:
                                       
U.S.
    112.3       105.3       113.4       6.7       (7.1 )
Global & international(1)
    72.0       58.7       74.6       22.6       (21.3 )
      184.3       164.0       188.0       12.4       (12.8 )
Other (2):
                                       
U.S.
    26.1       16.5       16.9       58.3       (2.5 )
Global & international(1)
    19.8       20.8       16.1       (4.6 )     29.6  
      45.9       37.3       33.0       23.2       13.1  
Total:
                                       
U.S.
    220.9       202.7       310.8       9.0       (34.8 )
Global & international
    274.6       259.3       489.6       5.9       (47.0 )
Total
  $ 495.5     $ 462.0     $ 800.4       7.3       (42.3 )
_____________
(1)
Certain client assets were reclassified among investment services to more accurately reflect how these assets are managed by our firm.

(2)
Includes index, structured, asset allocation services and other non-actively managed AUM.


Changes in assets under management during 2009 were as follows:

   
Distribution Channel
   
Investment Service
 
   
Institutions
   
Retail
   
Private
Client
   
Total
   
Value
Equity
   
Growth
Equity
   
Fixed
Income(1)
   
Other
(1)(2)
   
Total
 
   
(in billions)
 
                                                       
Balance as of December 31, 2008
  $ 291.4     $ 101.6     $ 69.0     $ 462.0     $ 172.4     $ 88.3     $ 164.0     $ 37.3     $ 462.0  
Long-term flows:
                                                                       
Sales/new accounts
    16.2       23.0       7.5       46.7       8.7       6.4       24.6       7.0       46.7  
Redemptions/terminations
    (56.2 )     (25.8 )     (8.0 )     (90.0 )     (46.3 )     (22.2 )     (19.9 )     (1.6 )     (90.0 )
Cash flow/unreinvested dividends
    (17.7 )     (6.4 )     (6.5 )     (30.6 )     (11.8 )     (6.1 )     (7.9 )     (4.8 )     (30.6 )
Net long-term (outflows) inflows
    (57.7 )     (9.2 )     (7.0 )     (73.9 )     (49.4 )     (21.9 )     (3.2 )     0.6       (73.9 )
Transfers
    0.2             (0.2 )                                    
Market appreciation
    66.1       28.3       13.0       107.4       48.2       27.7       23.5       8.0       107.4  
Net change
    8.6       19.1       5.8       33.5       (1.2 )     5.8       20.3       8.6       33.5  
Balance as of December 31, 2009
  $ 300.0     $ 120.7     $ 74.8     $ 495.5     $ 171.2     $ 94.1     $ 184.3     $ 45.9     $ 495.5  
_____________
(1)
Certain client assets were reclassified among investment services to more accurately reflect how these assets are managed by our firm.

(2)
Includes index, structured, asset allocation services and other non-actively managed AUM.

Changes in assets under management during 2008 were as follows:

   
Distribution Channel
   
Investment Service
 
   
Institutions
   
Retail
   
Private
Client
   
Total
   
Value
Equity
   
Growth
Equity
   
Fixed
Income(1)
   
Other
(1)(2)
   
Total
 
   
(in billions)
 
                                                       
Balance as of December 31, 2007
  $ 508.1     $ 183.2     $ 109.1     $ 800.4     $ 382.5     $ 196.9     $ 188.0     $ 33.0     $ 800.4  
Long-term flows:
                                                                       
Sales/new accounts
    38.5       23.3       11.0       72.8       30.9       16.3       21.8       3.8       72.8  
Redemptions/terminations
    (34.9 )     (39.8 )     (8.3 )     (83.0 )     (41.1 )     (23.0 )     (18.6 )     (0.3 )     (83.0 )
Cash flow/unreinvested dividends
    (18.0 )     (8.6 )     (7.4 )     (34.0 )     (19.1 )     (11.5 )     (11.5 )     8.1       (34.0 )
Net long-term (outflows) inflows
    (14.4 )     (25.1 )     (4.7 )     (44.2 )     (29.3 )     (18.2 )     (8.3 )     11.6       (44.2 )
Transfers
    (10.6 )     10.6                                            
Market depreciation
    (191.7 )     (67.1 )     (35.4 )     (294.2 )     (180.8 )     (90.4 )     (15.7 )     (7.3 )     (294.2 )
Net change
    (216.7 )     (81.6 )     (40.1 )     (338.4 )     (210.1 )     (108.6 )     (24.0 )     4.3       (338.4 )
Balance as of December 31, 2008
  $ 291.4     $ 101.6     $ 69.0     $ 462.0     $ 172.4     $ 88.3     $ 164.0     $ 37.3     $ 462.0  
_____________
(1)
Certain client assets were reclassified among investment services to more accurately reflect how these assets are managed by our firm.

(2)
Includes index, structured, asset allocation services and other non-actively managed AUM.

Average assets under management by distribution channel and investment service were as follows:

 
Years Ended December 31,
   
% Change
 
 
2009
 
2008
 
2007
    2009-08     2008-07  
 
(in billions)
                 
                             
Distribution Channel:
                                 
Institutions
  $ 284.9     $ 426.5     $ 491.1       (33.2 )%     (13.1 )%
Retail
    105.1       145.4       180.5       (27.7 )     (19.4 )
Private Client
    68.6       93.2       104.8       (26.4 )     (11.1 )
Total
  $ 458.6     $ 665.1     $ 776.4       (31.1 )     (14.3 )
                               
Investment Service:
                             
Value Equity
  $ 160.6     $ 297.9     $ 373.3       (46.1 )%     (20.2 )%
Growth Equity
    86.1       152.6       186.0       (43.6 )     (17.9 )
Fixed Income(1)
    170.8       182.2       179.0       (6.2 )     1.8  
Other(1)(2)
    41.1       32.4       38.1       26.6       (14.8 )
Total
  $ 458.6     $ 665.1     $ 776.4       (31.1 )     (14.3 )
_____________
(1)
Certain client assets were reclassified among investment services to more accurately reflect how these assets are managed by our firm.

(2)
Includes index, structured, asset allocation services and other non-actively managed AUM.


Consolidated Results of Operations

   
Years Ended December 31,
   
% Change
 
   
2009
   
2008
   
2007
    2009-08     2008-07  
   
(in millions, except per unit amounts)
                 
                                   
Net revenues
  $ 2,906.9     $ 3,514.2     $ 4,525.3       (17.3 )%     (22.3 )%
Expenses
    2,316.1       2,588.7       3,136.1       (10.5 )     (17.5 )
Operating income
    590.8       925.5       1,389.2       (36.2 )     (33.4 )
Non-operating income
    33.7       18.7       15.8       79.7       18.9  
Income before income taxes
    624.5       944.2       1,405.0       (33.9 )     (32.8 )
Income taxes
    46.0       95.8       127.9       (52.0 )     (25.1 )
Net income
    578.5       848.4       1,277.1       (31.8 )     (33.6 )
Net income of consolidated entities attributable to non-controlling interests
    (22.4 )     (9.2 )     (16.7 )     143.6       (45.0 )
Net income attributable to AllianceBernstein Unitholders
  $ 556.1     $ 839.2     $ 1,260.4       (33.7 )     (33.4 )
Diluted net income per AllianceBernstein Unit
  $ 2.07     $ 3.18     $ 4.77       (34.9 )     (33.3 )
Distributions per AllianceBernstein Unit(1)
  $ 2.06     $ 3.07     $ 4.77       (32.9 )     (35.6 )
Operating margin(2)
    19.6 %     26.1 %     30.3 %                
_____________
(1)
2008 distribution excludes a $35.3 million insurance reimbursement.
  
(2)
Operating income less net income attributable to non-controlling interests as a percentage of net revenues.

In 2009, net income attributable to AllianceBernstein Unitholders decreased $283.1 million, or 33.7%, to $556.1 million and net income per AllianceBernstein Unit decreased $1.11, or 34.9%, to $2.07.  The decrease was primarily due to lower investment advisory and services fees and distribution revenues, partially offset by investment gains (compared to losses in 2008), lower promotion and servicing expenses and lower employee compensation and benefits expenses.

In 2008, net income attributable to AllianceBernstein Unitholders decreased $421.2 million, or 33.4%, to $839.2 million, and net income per AllianceBernstein Unit decreased $1.59, or 33.3%, to $3.18. The decrease was due primarily to lower investment advisory and services fees resulting from lower AUM and significant mark-to-market losses on investments related to deferred compensation plan obligations, partially offset by lower employee compensation and benefits and promotion and servicing expenses.

Expense Reduction

The substantial decrease in AUM and the resulting decrease in fee revenues from levels during the first nine months of 2008 led us to undertake initiatives in the fourth quarter of 2008 that resulted in significant reductions in operating expenses and capital expenditures.

We continued those initiatives in 2009 as we reduced our headcount by 628, or 12.6%, during the year to 4,369, which, along with the reduction in force that occurred during the fourth quarter of 2008, represents a reduction of nearly 1,300 staff members, a 22.9% decline from our headcount peak during the third quarter of 2008. These actions reduced our fixed compensation costs (salaries and fringe benefits) by approximately $130 million.  Despite taking these measures, we believe we have retained the intellectual capital required to service our clients and grow our business.

We have also reduced other controllable operating expenses, including print, mail, travel and entertainment, recruitment, seminars, market data services, communications, temporary help and technology consulting, by approximately $75 million in 2009 as compared to 2008. In addition, we have eliminated or deferred nearly $150 million of planned capital expenditures since the beginning of 2008.

If AUM increases, higher revenues should result which, when supported by a lower expense base, will generate a greater amount of income.

Units Outstanding

In December 2009, we issued approximately 8.5 million Holding Units to fund the 2009 restricted Holding Unit awards to eligible employees.  The dilutive effect to earnings per Unit (“EPU”) during the fourth quarter of 2009 was not significant due to the timing of the issuance.  However, the dilutive effect to EPU and per Unit distributions in 2010 will be approximately 3%.  At the present time, management has not determined the extent to which we will repurchase units during future periods to minimize this dilutive impact.


Net Revenues

The following table summarizes the components of net revenues:

   
Years Ended December 31,
   
% Change
 
   
2009
   
2008
   
2007
    2009-08     2008-07  
   
(in millions)
                 
Investment advisory and services fees:
 
 
   
 
   
 
                 
Institutions:
 
 
   
 
   
 
                 
Base fees
  $ 792.4     $ 1,229.1     $ 1,416.0       (35.5 )%     (13.2 )%
Performance-based fees
    18.1       11.5       65.6       56.6       (82.4 )
      810.5       1,240.6       1,481.6       (34.7 )     (16.3 )
Retail:
                                       
Base fees
    522.8       751.0       946.0       (30.4 )     (20.6 )
Performance-based fees
    0.4       0.1             394.6       n/m  
      523.2       751.1       946.0       (30.3 )     (20.6 )
Private Client:
                                       
Base fees
    575.3       846.0       943.0       (32.0 )     (10.3 )
Performance-based fees
    11.3       1.8       15.6       521.3       (88.3 )
      586.6       847.8       958.6       (30.8 )     (11.6 )
Total:
                                       
Base fees
    1,890.5       2,826.1       3,305.0       (33.1 )     (14.5 )
Performance-based fees
    29.8       13.4       81.2       121.8       (83.4 )
      1,920.3       2,839.5       3,386.2       (32.4 )     (16.1 )
Distribution revenues
    277.3       378.4       473.4       (26.7 )     (20.1 )
Bernstein research services
    434.6       471.7       423.5       (7.9 )     11.4  
Dividend and interest income
    26.7       91.8       284.0       (70.9 )     (67.7 )
Investment gains (losses)
    144.5       (349.2 )     29.7       n/m       n/m  
Other revenues
    107.9       118.5       122.9       (8.9 )     (3.6 )
Total revenues
    2,911.3       3,550.7       4,719.7       (18.0 )     (24.8 )
Less: Interest expense
    4.4       36.5       194.4       (87.9 )     (81.2 )
Net revenues
  $ 2,906.9     $ 3,514.2     $ 4,525.3       (17.3 )     (22.3 )

Investment Advisory and Services Fees

Investment advisory and services fees are the largest component of our revenues. These fees are generally calculated as a percentage of the value of assets under management as of a specified date, or as a percentage of the value of average assets under management for the applicable billing period, and vary with the type of investment service, the size of account and the total amount of assets we manage for a particular client. Accordingly, fee income generally increases or decreases as average assets under management increase or decrease and is therefore affected by the amount and timing of market appreciation or depreciation, the addition of new client accounts or client contributions of additional assets to existing accounts, withdrawals of assets from and termination of client accounts, purchases and redemptions of mutual fund shares, and shifts of assets between accounts or products with different fee structures.

We calculate AUM using established fair valuation methodologies, including market-based valuation methods and fair valuation methods. Market-based valuation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognized pricing vendors for fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps; and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include discounted cash flow models, evaluation of assets versus liabilities or any other methodology that is validated and approved by our Valuation Committee. Fair valuation methods are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities. Fair valued investments typically make up less than 1% of our total AUM. Market volatility has not had a significant effect on our ability to acquire market data and, accordingly, our ability to use market-based valuation methods.

The Valuation Committee, which is composed of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments held in client and AllianceBernstein portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply to pricing and valuing investments held in client and AllianceBernstein portfolios. We have also established a Pricing Group, which reports to the Valuation Committee. The Valuation Committee has delegated to the Pricing Group responsibility for monitoring the pricing process for all investments.

We sometimes charge our clients performance-based fees. In these situations, we charge a base advisory fee and are eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client account underperforms relative to its performance target (whether absolute or relative to a specified benchmark), it must gain back such underperformance before we can collect future performance-based fees. Therefore, if we fail to achieve our performance target for a particular period, we will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, our ability to earn future performance-based fees will be impaired. We are eligible to earn performance-based fees on approximately 13% of the assets we manage for institutional clients and approximately 4% of the assets we manage for private clients (in total, approximately 9% of our company-wide AUM). If the percentage of our AUM subject to performance-based fees grows, seasonality and volatility of revenue and earnings are likely to become more significant. Approximately 72% of our hedge fund AUM is subject to high-watermarks and we ended the fourth quarter of 2009 with approximately 89% of this AUM below high-watermarks by 10% or more. This will make it very difficult for us to earn performance-based fees in most of our hedge funds in 2010.


Our investment advisory and services fees decreased 32.4% in 2009, primarily due to a decrease of 31.1% in average assets under management. For 2008, investment advisory and services fees decreased 16.1%, primarily due to a 14.3% decrease in average assets under management.

Institutional investment advisory and services fees decreased $430.1 million, or 34.7%, in 2009, primarily as a result of a decrease of 33.2% in average assets under management and the impact of a shift in product mix. For information regarding product mix changes, see “Risk Factors” in Item 1A.  Institutional investment advisory and services fees decreased 16.3% in 2008 as a result of a decrease in average assets under management of 13.1% and a decrease in performance-based fees of $54.1 million.

Retail investment advisory and services fees decreased $227.9 million, or 30.3%, in 2009, as average assets under management decreased 27.7% and fee realization rates declined due to product mix changes. Retail investment advisory and services fees decreased 20.6% in 2008 due primarily to a decrease of 19.4% in average assets under management.

Private Client investment advisory and services fees decreased $261.2 million, or 30.8%, in 2009, primarily as a result of lower base fees reflecting a decrease in billable assets under management of 27.6% and the impact of product mix changes. Private Client investment advisory and services fees decreased 11.6% in 2008 as a result of lower base fees from a 7.4% decrease in billable assets under management and the impact of a change in product mix.

Distribution Revenues

AllianceBernstein Investments and AllianceBernstein (Luxembourg) S.A. (each a wholly-owned subsidiary of AllianceBernstein) act as distributor and/or placing agent of company-sponsored mutual funds and receive distribution services fees from certain of those funds as partial reimbursement of the distribution expenses they incur. Distribution revenues decreased $101.1 million, or 26.7%, and $95.0 million, or 20.1%, in 2009 and 2008, respectively, principally due to lower average mutual fund assets under management.

Bernstein Research Services

Bernstein Research Services revenue consists principally of transaction charges received for providing equity research and brokerage-related services to institutional investors. Bernstein Research Services also earns revenues in the form of underwriting fees, management fees and/or selling concessions from issuers of publicly-traded securities to which we provide equity capital markets services. Revenues from Bernstein Research Services decreased $37.1 million, or 7.9%, in 2009. Despite higher volumes in the U.S. and Europe, reflecting market share gains, and revenues from new services, revenue declined due to a mix shift towards low-touch trading and lower security valuations in Europe, where trades are priced in basis points.  Revenues from Bernstein Research Services increased 11.4% for 2008 due to significantly higher revenues from U.S. operations partially offset by a decline in Europe.

Dividend and Interest Income and Interest Expense

Dividend and interest income consists primarily of investment income and interest earned on customer margin balances and U.S. Treasury Bills. Interest expense principally reflects interest accrued on cash balances in customers’ brokerage accounts. Dividend and interest income, net of interest expense, decreased $33.0 million, or 59.6%, in 2009 due primarily to lower interest earned on U.S. Treasury Bill balances and other investments, reflecting lower interest rates and lower average balances, partially offset by lower interest expense reflecting lower balances in customers’ brokerage accounts and lower interest rates. Dividend and interest income, net of interest expense, decreased $34.3 million, or 38.3%, in 2008. The decrease was due primarily to lower dividends from our deferred compensation-related investments as well as lower interest earned on our stock borrow and loan activity resulting from the outsourcing of our hedge fund prime brokerage operations in the fourth quarter of 2007.

Investment Gains (Losses)

Investment gains (losses) consists primarily of realized and unrealized investment gains or losses on trading investments and investments owned by our consolidated venture capital fund, realized gains or losses on the sale of available-for-sale investments, and equity in earnings of investments in limited partnership hedge funds that we sponsor and manage. Investment gains (losses) increased $493.7 million, primarily due to gains on investments related to deferred compensation plan obligations of $120.5 million in 2009 compared to losses of $325.0 million in 2008, as well as realized and unrealized gains on other investments. Investment gains (losses) decreased $378.9 million in 2008, due primarily to significant realized and unrealized losses on investments related to deferred compensation plan obligations in 2008 of $325.0 million as compared to gains in 2007 of $4.8 million, as well as realized and unrealized losses on other investments.


Other Revenues, Net

Other revenues consist of fees earned for transfer agency services provided to company-sponsored mutual funds, fees earned for administration and recordkeeping services provided to company-sponsored mutual funds and the general accounts of AXA and its subsidiaries, and other miscellaneous revenues. Other revenues decreased 8.9% in 2009 and 3.6% in 2008, due primarily to lower shareholder servicing fees as a result of fewer shareholder accounts.

Expenses

The following table summarizes the components of expenses:

 
Years Ended December 31,
   
% Change
 
 
2009
 
2008
 
2007
    2009-08     2008-07  
 
(in millions)
                 
 
 
 
 
 
 
                 
Employee compensation and benefits
  $ 1,298.1     $ 1,454.7     $ 1,833.8       (10.8 )%     (20.7 )%
Promotion and servicing
    435.8       561.0       683.1       (22.3 )     (17.9 )
General and administrative
    558.4       539.2       574.5       3.6       (6.1 )
Interest
    2.7       13.1       24.0       (79.4 )     (45.4 )
Amortization of intangible assets
    21.1       20.7       20.7       2.0        
Total
  $ 2,316.1     $ 2,588.7     $ 3,136.1       (10.5 )     (17.5 )

Employee Compensation and Benefits

We had 4,369 full-time employees as of December 31, 2009 compared to 4,997 as of year-end 2008 and 5,580 as of year-end 2007. Employee compensation and benefits, which represented approximately 56%, 56% and 58% of total expenses in 2009, 2008 and 2007, respectively, consist of  salaries (including severance), annual cash incentive awards, annual expense associated with the accrual of unvested deferred incentive compensation awards (net of forfeitures), commissions, fringe benefits and other employment costs (including recruitment, training, temporary help and meals).

In 2009, base compensation, fringe benefits and other employment costs decreased $131.4 million, or 18.3%, compared to 2008 primarily from workforce reductions.  Incentive compensation increased $85.5 million, or 23.2%, primarily due to higher deferred compensation expense resulting from mark-to-market gains on related investments, partially offset by lower cash incentive payments. Commission expense declined by $110.8 million, or 29.9%, reflecting lower sales volume and revenues across all distribution channels.

In 2008, base compensation, fringe benefits and other employment costs increased $69.9 million, or 10.8%, compared to 2007 primarily as a result of higher salaries from higher headcount throughout most of the year and $42.7 million in severance and severance-related items due to workforce reductions primarily in the fourth quarter, partially offset by lower recruitment costs and lower payroll taxes as a result of lower incentive compensation. Incentive compensation decreased $370.6 million, or 50.2%, primarily as a result of lower annual cash payments and lower deferred compensation expense resulting from mark-to-market losses on related investments. Commission expense decreased $78.4 million, or 17.4%, reflecting lower sales volumes and revenues across our Institutions, Retail and Private Client distribution channels.

Promotion and Servicing

Promotion and servicing expenses, which represented approximately 19%, 22% and 22% of total expenses in 2009, 2008 and 2007, respectively, include distribution plan payments to financial intermediaries for distribution of AllianceBernstein mutual funds and amortization of deferred sales commissions paid to financial intermediaries for the sale of back-end load shares of AllianceBernstein mutual funds. See “Capital Resources and Liquidity” in this Item 7 and Note 11 to AllianceBernstein’s consolidated financial statements in Item 8 for further discussion of deferred sales commissions. Also included in this expense category are costs related to travel and entertainment, advertising, promotional materials, and investment meetings and educational seminars for financial intermediaries that distribute our mutual fund products.

Promotion and servicing expenses decreased 22.3% in 2009 and 17.9% in 2008, primarily due to lower distribution plan payments (resulting from lower average Retail Services assets under management), lower amortization of deferred sales commissions, and lower travel and entertainment expenses.


General and Administrative

General and administrative expenses, which represented approximately 24%, 21% and 18% of total expenses in 2009, 2008 and 2007, respectively, include technology, professional fees, occupancy, communications and similar expenses. General and administrative expenses increased $19.2 million or 3.6% in 2009, and decreased $35.3 million, or 6.1% in 2008.

The increase in 2009 was due to an insurance reimbursement of $35.3 million received in 2008 and foreign exchange losses in 2009 compared to gains in 2008, partially offset by lower office-related and technology expenses.

The decrease in 2008 reflects the insurance reimbursement of $35.3 million, reduced operational errors and higher foreign exchange gains, partially offset by higher occupancy costs.

Interest on Borrowings

Interest on our borrowings decreased $10.4 million, or 79.4%, in 2009, primarily as a result of significantly lower interest rates and lower borrowing levels. Interest on our borrowings for 2008 decreased $10.9 million, or 45.4%, the result of lower interest rates.

Non-Operating Income

Non-operating income consists of contingent purchase price payments earned from the disposition in 2005 of our cash management services. Non-operating income increased $15.0 million, or 79.7% in 2009, primarily due to a one-time $10.0 million contingent payment we earned during the third quarter of 2009.  We will continue to earn annual contingent payments through March 2010. Non-operating income for 2008 increased $2.9 million, or 18.9%, due to higher contingent payments earned in 2008.

Income Taxes

AllianceBernstein, a private limited partnership, is not subject to federal or state corporate income taxes. However, we are subject to the New York City unincorporated business tax. Our domestic corporate subsidiaries are subject to federal, state and local income taxes, and are generally included in the filing of a consolidated federal income tax return. Separate state and local income tax returns are also filed. Foreign corporate subsidiaries are generally subject to taxes in the foreign jurisdictions where they are located.

Income tax expense decreased $49.8 million, or 52.0% in 2009.  The decrease is primarily the result of lower earnings and a lower effective tax rate, reflecting lower pre-tax earnings of our foreign subsidiaries where tax rates are generally higher. Income tax expense decreased $32.1 million, or 25.1%, in 2008 reflecting lower pre-tax earnings and the recognition of $12.9 million of net unrecognized tax benefits during the fourth quarter of 2008 due primarily to the settlement of certain tax audits.

Net Income of Consolidated Entities Attributable to Non-Controlling Interests

Net income of consolidated entities attributable to non-controlling interests consists of 90% limited partner interests in our consolidated venture capital fund (of which 10% is owned by AXA and its subsidiaries and 80% is owned by an unaffiliated client) and our 50% interests in consolidated joint ventures in Australia and New Zealand (of which the remaining 50% is owned by AXA and its subsidiaries). Net income of consolidated entities attributable to non-controlling interests increased $13.2 million due to higher gains on investments owned by our consolidated venture capital fund, partly offset by lower joint venture earnings. Net income of consolidated entities attributable to non-controlling interests decreased $7.5 million in 2008, primarily as a result of lower net unrealized gains on investments owned by our consolidated venture capital fund.


Capital Resources and Liquidity

The following table identifies selected items relating to capital resources and liquidity:

                     
% Change
 
   
2009
   
2008
   
2007
    2009 - 08     2008 - 07  
   
(in millions, except per unit amounts)
                 
As of December 31:
                                 
Total capital
  $ 4,702.0     $ 4,486.8     $ 4,688.9       4.8 %     (4.3 )%
Cash and cash equivalents
    614.2       552.6       576.4       11.2       (4.1 )
For the years ended December 31:
                                       
Cash flow from operations
    625.5       1,364.8       1,215.2       (54.2 )     12.3  
Proceeds from sales (purchases) of investments, net
    (3.5 )     21.0       26.5       n/m       (20.6 )
Capital expenditures
    (53.8 )     (75.2 )     (137.5 )     (28.5 )     (45.3 )
Distributions paid to General Partners and unitholders
    (464.7 )     (1,019.7 )     (1,364.6 )     (54.4 )     (25.3 )
Purchases of Holding Units to fund deferred compensation plan awards, net
    (7.0 )     (2.4 )     (50.9 )     196.1       (95.4 )
Issuance of Holding Units to fund deferred compensation plan awards
    272.2       70.9             284.1       n/m  
Additional investment by Holding with proceeds from exercise of compensatory options to buy Holding Units
    -       13.5       50.1       (100.0 )     (73.0 )
(Repayment) issuance of commercial paper, net
    (36.8 )     (260.1 )     175.8       (85.9 )     n/m  
Available Cash Flow
    559.7       810.2       1,253.2       (30.9 )     (35.3 )

Cash and cash equivalents increased $61.6 million in 2009 and decreased $23.8 million in 2008. Cash inflows are primarily provided by operations, issuance of commercial paper and proceeds from sales of investments. Significant cash outflows include cash distributions paid to the General Partner and unitholders, capital expenditures, repayment of commercial paper and purchases of Holding Units to fund deferred compensation plans.  Issuances of Holding Units increased significantly in 2009 due to the grant of restricted Holding Units as long-term incentive compensation (see Note 16 to AllianceBernstein’s consolidated financial statements in Item 8 and “Compensation Elements for Executive Officers—Long-term Incentive Compensation” in Item 11 for a further description of restricted Holding Unit Awards).

Contingent Deferred Sales Charge

See Note 11 to AllianceBernstein’s consolidated financial statements in Item 8.

Debt and Credit Facilities

Total credit available, debt outstanding and weighted average interest rates were as follows:

 
As of December 31,
 
 
2009
 
2008
 
 
 
Credit
Available
 
Debt
Outstanding
   
Interest
Rate
 
Credit
Available
 
Debt
Outstanding
   
Interest
Rate
 
 
(in millions)
 
                             
Revolving credit facility(1)
  $ 751.0     $       %   $ 715.2     $       %
Commercial paper(1)
    249.0       249.0       0.2       284.8       284.8       1.8  
Total revolving credit facility - AllianceBernstein(1)
    1,000.0       249.0       0.2       1,000.0       284.8       1.8  
Revolving credit facility – SCB LLC(1)
    950.0                   950.0              
Uncommitted line of credit – SCB LLC
                                   
Uncommitted bank facilities – SCB LLC
                                   
Total
  $ 1,950.0     $ 249.0       0.2     $ 1,950.0     $ 284.8       1.8  
_____________
(1)
Commercial paper and amounts outstanding under the revolving credit facility are short-term in nature, and as such, recorded value is estimated to approximate fair value.

We have a $1.0 billion five-year revolving credit facility with a group of commercial banks and other lenders which expires in 2011. The revolving credit facility is intended to provide back-up liquidity for our $1.0 billion commercial paper program, although we borrow directly under the facility from time to time. Amounts borrowed under the commercial paper program reduce amounts available for direct borrowing under the revolving credit facility on a dollar-for-dollar basis. Our interest rate, at our option, is a floating rate generally based upon a defined prime rate, a rate related to the London Interbank Offered Rate (“LIBOR”) or the Federal Funds rate. The revolving credit facility contains covenants which, among other things, require us to meet certain financial ratios. We are in compliance with these covenants.


SCB LLC has a $950 million three-year revolving credit facility with a group of commercial banks to fund its activities resulting from engaging in certain securities trading (including derivatives) and custody activities on behalf of private clients and participating in equity capital offerings on behalf of issuers of publicly-traded securities. The facility expires in 2011.  Under the revolving credit facility, the interest rate, at the option of SCB LLC, is a floating rate generally based upon a defined prime rate, a rate related to LIBOR or the Federal Funds rate. This revolving credit facility contains covenants which, among other things, require AllianceBernstein, as guarantor, to meet the same financial ratios contained in its $1.0 billion revolving credit facility. We are in compliance with these covenants.

SCB LLC has four separate uncommitted credit facilities with various banks totaling $525 million, a decrease from five facilities totaling $775 million as of December 31, 2008.  In addition, SCB LLC has two lines of credit with a commercial bank as of December 31, 2009 and 2008, one for $75 million secured by pledges of U.S. Treasury Bills and a second for $50 million secured by pledges of equity securities.

Our financial condition and access to public and private debt markets should provide adequate liquidity for our general business needs. Management believes that cash flow from operations and the issuance of debt and AllianceBernstein Units or Holding Units will provide us with the resources necessary to meet our financial obligations. See “Risk Factors” in Item 1A and “Cautions Regarding Forward-Looking Statements” in this Item 7 for a discussion of credit markets and our ability to renew our credit facilities at expiration.

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 January 2008, AllianceBernstein and AXA executed guarantees in connection with the $950 million SCB LLC facility. If SCB LLC is unable to meet its obligations, AllianceBernstein or AXA will pay the obligations when due or on demand. AllianceBernstein will reimburse AXA to the extent AXA must pay on its guarantee. This agreement remains in effect until the later of payment in full of any borrowings under the credit facility has been made or the facility expires.

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.

We also have three smaller guarantees totaling approximately $12 million, under which we guaranteed certain obligations in the ordinary course of business of three foreign subsidiaries.

We have not been required to perform under any of the above agreements and currently have no liability in connection with these agreements.

Aggregate Contractual Obligations

The following table summarizes our contractual obligations as of December 31, 2009:

 
Contractual Obligations
 
 
Total
 
Less than
1 Year
 
1-3 Years
 
3-5 Years
 
More than
5 Years
 
 
(in millions)
 
                     
Commercial paper
  $ 249.0     $ 249.0     $ -     $ -     $ -  
Operating leases, net of sublease commitments
    2,361.1       120.0       269.5       278.7       1,692.9  
Funding commitments
    55.9       22.7       16.0       14.8       2.4  
Accrued compensation and benefits
    295.7       166.1       66.3       32.3       31.0  
Unrecognized tax benefits
    7.4       2.6       4.8       -       -  
Total
  $ 2,969.1     $ 560.4     $ 356.6     $ 325.8     $ 1,726.3  

During July 2009, we entered into a subscription agreement under which we committed to invest up to $40 million in a venture capital fund over a six-year period. As of December 31, 2009, we have not funded any of this commitment. In February 2010, we received an initial $1.6 million capital call. Also during July 2009, we were selected by the U.S. Treasury Department as one of nine pre-qualified investment managers under the Public-Private Investment Program. As part of the program, each investment manager is required to invest a minimum of $20 million in the Public-Private Investment Fund they manage. As of December 31, 2009, we had funded $4.1 million of this commitment.


Accrued compensation and benefits amounts in the table above exclude our accrued pension obligation. Any amounts reflected on the consolidated balance sheet as payables (to broker-dealers, securities sold not yet purchased, brokerage clients and company-sponsored mutual funds) and accounts payable and accrued expenses are excluded from the table above.

We expect to make contributions to our qualified profit sharing plan of approximately $15.0 million in each of the next four years and to contribute an estimated $6.0 million to our qualified retirement plan during 2010.

Contingencies

See Note 11 to AllianceBernstein’s consolidated financial statements in Item 8 for a discussion of our mutual fund distribution system and related deferred sales commission asset and certain legal proceedings to which we are a party.

Critical Accounting Estimates

The preparation of the consolidated financial statements and notes to consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.

Management believes that the critical accounting policies and estimates discussed below involve significant management judgment due to the sensitivity of the methods and assumptions used.

Deferred Sales Commission Asset

Management tests the deferred sales commission asset for impairment quarterly by comparing undiscounted future cash flows to the recorded value, net of accumulated amortization. Significant assumptions utilized to estimate the company’s future average assets under management and undiscounted future cash flows from back-end load shares are updated quarterly and include expected future market levels and redemption rates. Market assumptions are selected using a long-term view of expected average market returns based on historical returns of broad market indices. As of December 31, 2009, management used average market return assumptions of 5% for fixed income securities and 8% for equities to estimate annual market returns. Higher actual average market returns would increase undiscounted future cash flows, while lower actual average market returns would decrease undiscounted future cash flows. Future redemption rate assumptions, determined by reference to actual redemption experience over the five-year, three-year, one-year and three-month periods ended December 31, 2009, and calculated as a percentage of the company’s average assets under management represented by back-end load shares, ranged from 21% to 24% for U.S. fund shares and 27% to 40% for non-U.S. fund shares. An increase in the actual rate of redemptions would decrease undiscounted future cash flows, while a decrease in the actual rate of redemptions would increase undiscounted future cash flows. Estimates of undiscounted future cash flows and the remaining life of the deferred sales commission asset are made from these assumptions and the aggregate undiscounted future cash flows are compared to the recorded value of the deferred sales commission asset. As of December 31, 2009, management determined that the deferred sales commission asset was not impaired. However, if redemption rates increase in 2010, this asset may become impaired. If management determines in the future that the deferred sales commission asset is not recoverable, an impairment condition would exist and a loss would be measured as the amount by which the recorded amount of the asset exceeds its estimated fair value. Estimated fair value is determined using management’s best estimate of future cash flows discounted to a present value amount. Any impairment could reduce materially the recorded amount of the deferred sales commission asset with a corresponding charge to our earnings.  Effective January 31, 2009, back-end load shares are no longer offered by our U.S. Funds to new investors.

Goodwill

We test goodwill annually, as of September 30, for impairment. The carrying value of goodwill is also reviewed if facts and circumstances, such as significant declines in assets under management, revenues, earnings or our Holding Unit price, occur, suggesting possible impairment. As of September 30, 2009, the impairment test indicated that goodwill was not impaired.

The impairment analysis is a two-step process. The first step involves determining whether the estimated fair value of AllianceBernstein, the reporting unit, exceeds its book value. If the fair value of the company exceeds its book value, goodwill is not impaired. However, if the book value exceeds the fair value of the company, goodwill may be impaired and additional analysis is required. The second step compares the fair value of the company to the aggregated fair values of its individual assets and liabilities to determine the amount of impairment, if any.

There are several methods of estimating AllianceBernstein’s fair value, including valuation techniques such as discounted expected cash flows and market valuation (the number of AllianceBernstein Units outstanding multiplied by Holding Unit price). Determining estimated fair value using a discounted cash flow valuation technique consists of applying business growth rate assumptions over the estimated life of the goodwill asset and then discounting the resulting expected cash flows to arrive at a present value amount that approximates fair value. In our tests, our discounted expected cash flow model uses management’s current business plan, which factors in current market conditions and all material events that have impacted, or that we believed at the time could potentially impact, future expected cash flows for the first four years and a compounded annual growth rate thereafter.


To the extent that securities valuations are depressed for prolonged periods of time, our assets under management, revenues, profitability and unit price would likely be adversely affected. As a result, subsequent impairment tests may be based upon different assumptions and future cash flow projections, which may result in an impairment of this asset. Any impairment could reduce materially the recorded amount of goodwill with a corresponding charge to our earnings.

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. Key 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.

As of December 31, 2008, we amended the retirement plan to provide that participants will not accrue any additional benefits (i.e., service and compensation after December 31, 2008 will not be taken into account in determining participants’ retirement benefits).

In developing the expected long-term rate of return on plan assets of 8.0%, we considered the historical returns and future expectations for returns for each asset category, as well as the target asset allocation of the portfolio. The expected long-term rate of return on assets is based on weighted average expected returns for each asset class. We assumed a target allocation weighting of 50% to 70% for equity securities, 20% to 40% for debt securities, and 0% to 10% for real estate investment trusts. Exposure of the total portfolio to cash equivalents on average should not exceed 5% of the portfolio’s value on a market value basis. The plan seeks to provide a rate of return that exceeds applicable benchmarks over rolling five-year periods. The benchmark for the plan’s large cap domestic equity investment strategy is the S&P 500 Index; the small cap domestic equity investment strategy is measured against the Russell 2000 Index; the international equity investment strategy is measured against the MSCI EAFE Index; and the fixed income investment strategy is measured against the Barclays Aggregate Bond Index. The actual rates of return on plan assets were 29.4%, (45.8)% and 4.1% in 2009, 2008 and 2007, 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 2009 net pension expense of $1.6 million by approximately $0.1 million.

The objective of our discount rate assumption was to reflect the rate at which our pension obligations could be effectively settled. In making this determination, we took into account the timing and amount of benefits that would be payable under the plan’s lump sum option. Our methodology for selecting the discount rate as of December 31, 2009 was to match the plan’s cash flows to that of a yield curve that provides the equivalent yields on zero-coupon corporate bonds for each maturity. Benefit cash flows due in a particular year can be “settled” theoretically by “investing” them in the zero-coupon bond that matures in the same year. The discount rate is the single rate that produces the same present value of cash flows. The selection of the 6.05% discount rate as of December 31, 2009 represents the Mercer Human Resources yield curve (to the nearest five basis points). The discount rate as of December 31, 2008 was 6.20%, which was used in developing the 2009 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 2009 net pension expense of $1.6 million by approximately $0.1 million.

Loss Contingencies

Management continuously reviews with legal counsel the status of regulatory matters and pending or threatened litigation. We evaluate the likelihood that a loss contingency exists and record a loss contingency if it is probable and reasonably estimable as of the date of the financial statements. See Note 11 to AllianceBernstein’s consolidated financial statements in Item 8.

Accounting Pronouncements

See Note 22 to AllianceBernstein’s consolidated financial statements in Item 8.

Cautions Regarding Forward-Looking Statements

Certain statements provided by management in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economic conditions, industry trends, future acquisitions, competitive conditions and government regulations, including changes in tax regulations and rates and the manner in which the earnings of publicly-traded partnerships are taxed. We caution readers to carefully consider such factors. Further, such forward-looking statements speak only as of the date on which such statements are made; we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actual results to differ, see “Risk Factors” in Item 1A. Any or all of the forward-looking statements that we make in this Form 10-K, other documents we file with or furnish to the SEC, and any other public statements we issue, may turn out to be wrong. It is important to remember that other factors besides those listed in “Risk Factors” and those listed below could also adversely affect our financial condition, results of operations and business prospects.


The forward-looking statements referred to in the preceding paragraph include statements regarding:
 
 
Our optimism regarding improving sales and declining net outflows: Our ability to sustain our improved investment performance, as well as the actual performance of the capital markets and other factors beyond our control, will affect our asset flows.
 
 
Our pipeline of new institutional client mandates not yet funded: Before they are funded, institutional mandates do not represent legally binding commitments to fund and, accordingly, the possibility exists that not all mandates will be funded in the amounts and at the times we currently anticipate.
 
 
Our expectation that we will further globalize our sell-side research footprint and expand our array of client services in 2010:  Factors beyond our control, including the effect of the performance of the financial markets on our results of operations, may adversely affect our ability to implement our strategic initiatives.
 
 
Our expectation that corporate earnings will rise: The extent to which global economies have recently stabilized is not necessarily indicative of future earnings growth and there are significant obstacles that may hinder sustained growth. The actual performance of the capital markets and other factors beyond our control will affect our investment success for clients and asset flows.
 
 
The cash flow Holding realizes from its investment in AllianceBernstein providing Holding with the resources necessary to meet its financial obligations: Holding’s cash flow is dependent on the quarterly cash distributions it receives from AllianceBernstein. Accordingly, Holding’s ability to meet its financial obligations is dependent on AllianceBernstein’s cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control.
 
 
Our expectation that increased levels of AUM should lead to increased revenues which, when supported by a lower expense base, will generate a greater amount of income: Unanticipated events and factors, including pursuit of strategic initiatives, may cause us to expand our expense base, thus limiting the extent to which we benefit from any positive leverage in future periods. Growth in our revenues will depend on the level of our assets under management, which in turn depends on factors such as the actual performance of the capital markets, the performance of our investment products and other factors beyond our control.
 
 
Our financial condition and access to public and private debt providing adequate liquidity for our general business needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our access to public and private debt, as well as the market for debt or equity we may choose to issue on reasonable terms, may be limited by adverse market conditions, our profitability and changes in government regulations, including tax rates and interest rates.
 
 
The possibility that prolonged weakness in the value of client assets under management may result in impairment of goodwill, intangible assets and the deferred sales commission asset: To the extent that securities valuations are depressed for prolonged periods of time, client assets under management and our revenues, profitability and unit price may be adversely affected. As a result, subsequent impairment tests may be based upon different assumptions and future cash flow projections, which may result in an impairment of goodwill, intangible assets and the deferred sales commission asset.
 
 
The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect certain legal proceedings to have a material adverse effect on our results of operations or financial condition, any settlement or judgment with respect to a legal proceeding could be significant, and could have such an effect.
 

Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
 
Market Risk, Risk Management and Derivative Financial Instruments

AllianceBernstein’s investments consist of trading and available-for-sale investments, and other investments. Trading and available-for-sale investments include United States Treasury Bills, equity and fixed income mutual funds investments, exchange-traded options and various separately-managed portfolios. Trading investments are purchased for short-term investment, principally to fund liabilities related to deferred compensation plans and to seed new investment services.  Although available-for-sale investments are purchased for long-term investment, the portfolio strategy considers them available-for-sale from time to time due to changes in market interest rates, equity prices and other relevant factors. Other investments include investments in hedge funds sponsored by AllianceBernstein and other private investment vehicles.

Trading and Non-Trading Market Risk Sensitive Instruments

Investments with Interest Rate Risk—Fair Value

The table below provides our potential exposure with respect to our fixed income investments, measured in terms of fair value, to an immediate 100 basis point increase in interest rates at all maturities from the levels prevailing as of December 31, 2009 and 2008. 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,
 
 
2009
 
2008
 
 
Fair Value
 
Effect of +100
Basis Point
Change
 
Fair Value
 
Effect of +100
Basis Point
Change
 
 
(in thousands)
 
Fixed Income Investments:
                       
Trading
  $ 125,906     $ (5,766 )   $ 76,153     $ (3,099 )
Available-for-sale and other investments
    178       (8 )     160       (7 )


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, 2009 and 2008. 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,
 
 
2009
 
2008
 
 
Fair Value
 
Effect of -10%
Equity Price
Change
 
Fair Value
 
Effect of -10%
Equity Price
Change
 
 
(in thousands)
 
Equity Investments:
                       
Trading
  $ 358,676     $ (35,868 )   $ 246,394     $ (24,639 )
Available-for-sale and other investments
    290,069       (29,007 )     255,136       (25,514 )


Item 8.
Financial Statements and Supplementary Data
 
AllianceBernstein L.P. and Subsidiaries

Consolidated Statements of Financial Condition

   
December 31,
 
   
2009
   
2008
 
   
(in thousands, except unit amounts)
 
ASSETS
           
Cash and cash equivalents
  $ 614,216     $ 552,577  
Cash and securities segregated, at fair value (cost $985,213 and $2,568,339)
    985,331       2,572,569  
Receivables, net:
               
Brokers and dealers
    170,148       251,644  
Brokerage clients
    582,248       398,979  
Fees, net
    346,482       377,167  
Investments:
               
Deferred compensation-related
    400,959       305,809  
Other
    373,870       272,034  
Furniture, equipment and leasehold improvements, net
    359,674       365,804  
Goodwill, net
    2,893,029       2,893,029  
Intangible assets, net
    223,992       243,493  
Deferred sales commissions, net
    90,187       113,541  
Other assets
    174,804       156,813  
Total assets
  $ 7,214,940     $ 8,503,459  
                 
LIABILITIES AND CAPITAL
               
Liabilities:
               
Payables:
               
Brokers and dealers
  $ 120,574     $ 110,488  
Securities sold not yet purchased
    31,806       167  
Brokerage clients
    1,430,835       2,755,104  
AllianceBernstein mutual funds
    86,054       195,617  
Accounts payable and accrued expenses
    278,398       310,392  
Accrued compensation and benefits
    316,331       360,086  
Debt
    248,987       284,779  
Total liabilities
    2,512,985       4,016,633  
Commitments and contingencies (See Note 11)
               
Capital:
               
General Partner
    48,671       45,010  
Limited partners: 274,745,592 and 263,717,610 units issued and outstanding
    4,850,601       4,485,564  
Capital contributions receivable from General Partner
    (19,664 )     (23,168 )
Holding Units held for deferred compensation plans
    (327,384 )     (117,600 )
Accumulated other comprehensive income (loss)
    (21,862 )     (72,147 )
Partners’ capital attributable to AllianceBernstein Unitholders
    4,530,362       4,317,659  
Non-controlling interests in consolidated entities
    171,593       169,167  
Total capital
    4,701,955       4,486,826  
Total liabilities and capital
  $ 7,214,940     $ 8,503,459  

See Accompanying Notes to Consolidated Financial Statements.


AllianceBernstein L.P. and Subsidiaries

Consolidated Statements of Income

   
Years Ended December 31,
 
   
2009
   
2008
   
2007
 
   
(in thousands, except per unit amounts)
 
                   
Revenues:
                 
Investment advisory and services fees
  $ 1,920,332     $ 2,839,526     $ 3,386,188  
Distribution revenues
    277,328       378,425       473,435  
Bernstein research services
    434,605       471,716       423,553  
Dividend and interest income
    26,730       91,752       284,014  
Investment gains (losses)
    144,447       (349,172 )     29,690  
Other revenues
    107,848       118,436       122,869  
Total revenues
    2,911,290       3,550,683       4,719,749  
Less: Interest expense
    4,411       36,524       194,432  
Net revenues
    2,906,879       3,514,159       4,525,317  
                         
Expenses:
                       
Employee compensation and benefits
    1,298,053       1,454,691       1,833,796  
Promotion and servicing:
                       
Distribution plan payments
    207,643       274,359       335,132  
Amortization of deferred sales commissions
    54,922       79,111       95,481  
Other
    173,250       207,506       252,468  
General and administrative
    558,361       539,198       574,506  
Interest on borrowings
    2,696       13,077       23,970  
Amortization of intangible assets
    21,126       20,716       20,716  
Total expenses
    2,316,051       2,588,658       3,136,069  
                         
Operating income
    590,828       925,501       1,389,248  
                         
Non-operating income
    33,657       18,728       15,756  
                         
Income before income taxes
    624,485       944,229       1,405,004  
                         
Income taxes
    45,977       95,803       127,845  
                         
Net income
    578,508       848,426       1,277,159  
                         
Net income of consolidated entities attributable to non-controlling interests
    (22,381 )     (9,186 )     (16,715 )
                         
Net income attributable to AllianceBernstein Unitholders
  $ 556,127     $ 839,240     $ 1,260,444  
                         
Net income per AllianceBernstein Unit:
                       
Basic
  $ 2.07     $ 3.18     $ 4.80  
Diluted
  $ 2.07     $ 3.18     $ 4.77  

See Accompanying Notes to Consolidated Financial Statements.


AllianceBernstein L.P. and Subsidiaries

Consolidated Statements of Changes in Partners’ Capital and Comprehensive Income

   
Year Ended December 31,
 
   
2009
   
2008
   
2007
 
   
(in thousands)
 
General Partner’s Capital
                 
Balance, beginning of year
  $ 45,010     $ 45,932     $ 46,416  
Net income
    5,561       8,392       12,605  
Cash distributions to General Partner
    (4,647 )     (10,197 )     (13,646 )
Purchases of Holding Units to fund deferred compensation plan awards, net
    5              
Issuance of Holding Units to fund deferred compensation plan awards
    2,722       709        
Allocation of Holding Units from the rabbi trust to fund deferred compensation plan awards
    8       30       36  
Forfeitures of Holding Units under deferred compensation plans
    (2 )     (7 )     (1 )
Compensation plan accrual
    14       17       17  
Additional investment by Holding with proceeds from exercise of compensatory options to buy Holding Units
          135       501  
ACM New Alliance Liquidation
          (1 )      
Impact of initial adoption of ASC 740
                4  
Balance, end of year
    48,671       45,010       45,932  
Limited Partners' Capital
                       
Balance, beginning of year
    4,485,564       4,526,126       4,584,200  
Net income
    550,566       830,848       1,247,839  
Cash distributions to unitholders
    (460,086 )     (1,009,482 )     (1,350,965 )
Purchases of Holding Units to fund deferred compensation plan awards, net
    (6,986 )     (2,358 )     (50,853 )
Issuance of Holding Units to fund deferred compensation plan awards
    269,445       70,158        
Allocation of Holding Units from the rabbi trust to fund deferred compensation plan awards
    12,533       58,252       42,667  
Forfeitures of Holding Units under deferred compensation plans
    (13,711 )     (10,702 )     (4,380 )
Compensatory Holding Unit options expense
    11,889       7,737       5,947  
Compensation plan accrual
    1,387       1,642       1,683  
Additional investment by Holding with proceeds from exercise of compensatory options to buy Holding Units
          13,390       49,550  
ACM New Alliance Liquidation
          (47 )      
Impact of initial adoption of ASC 740
                438  
Balance, end of year
    4,850,601       4,485,564       4,526,126  
Capital Contributions Receivable
                       
Balance, beginning of year
    (23,168 )     (26,436 )     (29,590 )
Capital contributions from General Partner
    4,905       4,927       4,854  
Compensation plan accrual
    (1,401 )     (1,659 )     (1,700 )
Balance, end of year
    (19,664 )     (23,168 )     (26,436 )
Holding Units Held for Deferred Compensation Plans
                       
Balance, beginning of year
    (117,600 )     (57,501 )     (63,196 )
Awards of Holding Units to fund deferred compensation plans
    (284,708 )     (129,149 )     (42,703 )
Amortization of deferred compensation awards
    61,211       58,341       44,017  
Forfeitures of Holding Units under deferred compensation plans
    13,713       10,709       4,381  
Balance, end of year
    (327,384 )     (117,600 )     (57,501 )
Accumulated Other Comprehensive Income (Loss)
                       
Balance, beginning of year
    (72,147 )     53,105       33,167  
Unrealized gain (loss) on investments, net of tax
    4,232       (3,511 )     (8,859 )
Foreign currency translation adjustment, net of tax
    39,098       (96,978 )     18,757  
Changes in retirement plan related items, net of tax
    6,955       (24,763 )     10,040  
Balance, end of year
    (21,862 )     (72,147 )     53,105  
Total Partners' Capital attributable to AllianceBernstein Unitholders
    4,530,362       4,317,659       4,541,226  
Non-controlling Interests in Consolidated Entities
                       
Balance, beginning of year
    169,167       147,652       53,515  
Net income
    22,381       9,186       16,715  
Unrealized gain (loss) on investments
    159       (451 )     59  
Foreign currency translation adjustment
    4,074       (3,290 )     1,114  
Cash distributions to joint venture partners
          (10,387 )     (5,904 )
Contributions from (distributions to) non-controlling interests of our consolidated venture capital fund activities
    (24,188 )     26,457       82,153  
Balance, end of year
    171,593       169,167       147,652  
Total Capital
  $ 4,701,955     $ 4,486,826     $ 4,688,878  

See Accompanying Notes to Consolidated Financial Statements.


AllianceBernstein L.P. and Subsidiaries

Consolidated Statements of Cash Flows

   
Years Ended December 31,
 
   
2009
   
2008
   
2007
 
   
(in thousands)
 
Cash flows from operating activities:
                 
Net income
  $ 578,508     $ 848,426     $ 1,277,159  
Adjustments to reconcile net income to net cash provided by operating activities:
                       
Amortization of deferred sales commissions
    54,922       79,111       95,481  
Amortization of non-cash deferred compensation
    73,101       66,078       49,815  
Depreciation and other amortization
    83,851       97,746       102,394  
Unrealized (gains) losses on deferred compensation related investments
    (184,384 )     254,686       21,701  
Other, net
    (19,867 )     13,082       (6,932 )
Changes in assets and liabilities:
                       
Decrease (increase) in segregated cash and securities
    1,587,238       (132,792 )     (360,181 )
Decrease in receivables
    66,314       331,916       1,871,138  
Decrease (increase) in investments
    19,787       (34,189 )     (211,909 )
(Increase) in deferred sales commissions
    (31,568 )     (9,081 )     (84,101 )
(Increase) decrease in other assets
    (18,626 )     6,223       (14,648 )
(Decrease) increase in payables
    (1,520,959 )     4,658       (1,625,583 )
(Decrease) increase in accounts payable and accrued expenses
    (21,493 )     (50,740 )     25,370  
(Decrease) increase in accrued compensation and benefits
    (41,361 )     (110,346 )     75,477  
Net cash provided by operating activities
    625,463       1,364,778       1,215,181  
                         
Cash flows from investing activities:
                       
Purchases of investments
    (10,378 )     (22,221 )     (25,932 )
Proceeds from sales of investments
    6,924       43,229       52,393  
Additions to furniture, equipment and leasehold improvements
    (53,763 )     (75,208 )     (137,547 )
Net cash used in investing activities
    (57,217 )     (54,200 )     (111,086 )
                         
Cash flows from financing activities:
                       
(Repayment) issuance of commercial paper, net
    (36,751 )     (260,146 )     175,750  
(Decrease) increase in overdrafts payable
    (16,860 )     (11,524 )     23,321  
Distributions to General Partner and unitholders
    (464,733 )     (1,019,679 )     (1,364,611 )
Distributions to Joint Venture Partners
          (10,387 )     (5,904 )
(Distributions to) contributions from non-controlling interests in consolidated entities
    (24,188 )     26,457       82,153  
Capital contributions from General Partner
    4,905       4,927       4,854  
Additional investment by Holding with proceeds from exercise of compensatory options to buy Holding Units
          13,525       50,051  
Purchases of Holding Units to fund deferred compensation plan awards, net
    (6,981 )     (2,358 )     (50,853 )
Other
    132              
Net cash used in financing activities
    (544,476 )     (1,259,185 )     (1,085,239 )
Effect of exchange rate changes on cash and cash equivalents
    37,869       (75,232 )     10,783  
Net increase (decrease) in cash and cash equivalents
    61,639       (23,839 )     29,639  
Cash and cash equivalents as of beginning of the period
    552,577       576,416       546,777  
Cash and cash equivalents as of end of the period
  $ 614,216     $ 552,577     $ 576,416  
                         
Cash paid:
                       
Interest
  $ 5,433     $ 47,933     $ 218,398  
Income taxes
    64,085       132,491       87,329  

See Accompanying Notes to Consolidated Financial Statements.


AllianceBernstein L.P. and Subsidiaries
Notes to Consolidated Financial Statements

The words “we” and “our” refer collectively to AllianceBernstein Holding L.P. (“Holding”) and AllianceBernstein L.P. and its subsidiaries (“AllianceBernstein”), or to their officers and employees. Similarly, the word “company” refers to both Holding and AllianceBernstein. Where the context requires distinguishing between Holding and AllianceBernstein, we identify which of them is being discussed. Cross-references are in italics.

1. Business Description and Organization

AllianceBernstein provides research, diversified investment management and related services globally to a broad range of clients. Our principal services include:

 
Institutional Services—servicing our institutional clients, including unaffiliated corporate and public employee pension funds, endowment funds, domestic and foreign institutions and governments, and affiliates such as AXA and certain of its insurance company subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles.

 
Retail Services—servicing our individual clients, primarily by means of retail mutual funds sponsored by AllianceBernstein or an affiliated company, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles.

 
Private Client Services—servicing our private clients, including high-net-worth individuals, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles.

 
Bernstein Research Services—servicing institutional investors seeking research, portfolio strategy and brokerage-related services, and issuers of publicly-traded securities seeking equity capital markets services.

We also provide distribution, shareholder servicing and administrative services to the mutual funds we sponsor.

We provide a broad range of services with expertise in:

 
Value equities, generally targeting stocks that are out of favor and considered undervalued;

 
Growth equities, generally targeting stocks with under-appreciated growth potential;

 
Fixed income securities, including taxable and tax-exempt securities;

 
Blend strategies, combining style-pure investment components with systematic rebalancing;

 
Passive management, including index and enhanced index strategies;

 
Alternative investments, such as hedge funds, currency management strategies and venture capital; and

 
Asset allocation, by which we offer blend strategies specifically-tailored for our clients (e.g., customized target-date fund retirement services for defined contribution plan sponsors).

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.

Recently, we were selected by the U.S. Treasury Department as one of only three firms to manage its portfolio of assets issued by banks and other institutions taking part in the Capital Purchase Program of the Troubled Assets Relief Program.  In addition, we were selected by the U.S. Treasury Department as one of nine pre-qualified fund managers under the Public-Private Investment Program and, during the fourth quarter of 2009, we were one of five firms that closed an initial Public-Private Investment Fund of at least $500 million.

Our research is the foundation of our business. Our research disciplines include fundamental research, quantitative research, economic research and currency forecasting.  In addition, we have created several specialized research units, including one 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, 2009, 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, through certain of its subsidiaries (“AXA and its subsidiaries”) owned approximately 1.4% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in Holding (“Holding Units”).


As of December 31, 2009, the ownership structure of AllianceBernstein, expressed as a percentage of general and limited partnership interests, was as follows:

AXA and its subsidiaries
    61.6 %
Holding
    36.5  
Unaffiliated holders
    1.9  
      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. Including both the general partnership and limited partnership interests in Holding and AllianceBernstein, AXA and its subsidiaries had an approximate 62.1% economic interest in AllianceBernstein as of December 31, 2009.

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.

Subsequent Events

We evaluated subsequent events through February 11, 2010, the date the financial statements were issued.

FASB Codification

For annual and interim periods ending after September 15, 2009, the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification”) became the single authoritative source of generally accepted accounting principles (“GAAP”) in the United States.

Reclassifications and Revisions

Effective January 1, 2009, we adopted amended accounting principles related to non-controlling interests in consolidated financial statements. The objective of this amendment is to improve the relevance, comparability and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the non-controlling interest in a subsidiary. The disclosure provisions of the amendment require retrospective application for all periods presented. As a result, certain prior period amounts have been reclassified to conform to the current year presentation. These include: (i) net income of consolidated entities attributable to non-controlling interests, previously included within general and administrative expenses, currently shown separately in the consolidated statements of income, (ii) non-controlling interests in consolidated entities previously included in liabilities, currently shown as a component of total capital in the consolidated statements of financial condition, and (iii) change in non-controlling interests in consolidated entities previously included within cash provided by operating activities, currently included in net cash used in financing activities in the consolidated statements of cash flows.
 
In addition, securities sold not yet purchased, previously included in payable to brokers and dealers in the consolidated statements of financial condition, is currently shown separately.
 
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 (“AUM”) to determine the variable interest entities that the company is required to consolidate. These entities include certain mutual fund products, hedge funds, structured products, group trusts, collective investment trusts and limited partnerships. We earn investment management fees on client assets under management of these entities, but we derive no other benefit from these assets and cannot use them in our operations.

As of December 31, 2009, we have significant variable interests in certain structured products and hedge funds with approximately $60.3 million in AUM. However, these variable interest entities do not require consolidation because management has determined that we are not the primary beneficiary of the expected losses or expected residual returns of these entities. Our maximum exposure to loss is limited to our investment of $0.1 million in these entities.


Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits, money market accounts, overnight commercial paper and highly liquid investments with original 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.

Securities borrowed and securities loaned by Sanford C. Bernstein & Co., LLC (“SCB LLC”) and Sanford C. Bernstein Limited (“SCBL”), both wholly-owned subsidiaries, 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 include United States Treasury Bills, unconsolidated mutual funds and limited partnership hedge funds we sponsor and manage, various separately-managed portfolios, exchange-traded options and investments owned by a consolidated venture capital fund in which we own a controlling interest as the general partner and in which we hold a 10% limited partnership interest.

Investments in United States Treasury Bills, mutual funds, and other equity and fixed income securities are classified as either trading or available-for-sale securities. 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. Average cost is used to determine realized gain or loss on investments sold.

We use the equity method of accounting for investments in limited partnership hedge funds. The equity in earnings of our limited partnership hedge fund investments is included in investment gains and losses on the consolidated statements of income.

The investments owned by our consolidated venture capital fund are generally illiquid and are initially valued at cost. These investments are adjusted to fair value to reflect the occurrence of “significant developments” (i.e., capital transactions or business, economic or market events). Adjustments to fair value are recorded as unrealized gains and losses in investment gains and losses on the consolidated statements of income. There is one private equity investment which represents an approximate 11% ownership in a company that we own directly, outside of our consolidated venture capital fund. This investment is accounted for using the cost method.

See Note 7 for a description of how we measure the fair value of our investments.

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

In 2000, AllianceBernstein acquired the business and assets of SCB Inc., an investment research and management company formerly known as Sanford C. Bernstein Inc. (“Bernstein”), and assumed the liabilities of Bernstein (“Bernstein Transaction”). The purchase price consisted of a cash payment of approximately $1.5 billion and 40.8 million newly-issued AllianceBernstein Units. The Bernstein Transaction was accounted for under the purchase method and the cost of the acquisition was allocated on the basis of the estimated fair value of the assets acquired and the liabilities assumed. The excess of the purchase price over the fair value of identifiable assets acquired resulted in the recognition of goodwill of approximately $3.0 billion.


We test our goodwill annually, as of September 30, for impairment. The carrying value of goodwill is also reviewed if facts and circumstances, such as significant declines in assets under management, revenues, earnings or the Holding Unit price, occur, suggesting possible impairment. As of September 30, 2009, the impairment test indicated that goodwill was not impaired.

To the extent that securities valuations are depressed for prolonged periods of time, our assets under management, revenues, profitability and unit price would likely be adversely affected. As a result, subsequent impairment tests may be based upon different assumptions and future cash flow projections, which may result in an impairment of this asset. Any impairment could reduce materially the recorded amount of goodwill with a corresponding charge to our earnings.

Intangible Assets, Net

Intangible assets consist primarily of costs assigned to acquired investment management contracts of SCB Inc. based on their estimated fair value at the time of acquisition less accumulated amortization. Intangible assets are recognized at fair value and are amortized on a straight-line basis over their estimated useful life of approximately 20 years. The gross carrying amount of intangible assets totaled $415.9 million as of December 31, 2009 and $414.3 million as of December 31, 2008, and accumulated amortization was $191.9 million as of December 31, 2009 and $170.8 million as of December 31, 2008, resulting in the net carrying amount of intangible assets subject to amortization of $224.0 million as of December 31, 2009 and $243.5 million as of December 31, 2008. Amortization expense was $21.1 million for 2009 and $20.7 million for each of the years 2008 and 2007, and estimated amortization expense for each of the next five years is approximately $22 million.

We periodically review intangible assets for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If the carrying value exceeds fair value, additional impairment tests are performed to measure the amount of the impairment loss, if any.

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. Effective January 31, 2009, back-end load shares are no longer offered to new investors by our U.S. mutual funds. Management tests the deferred sales commission asset for recoverability quarterly and determined that the balance as of December 31, 2009 was not impaired.

Loss Contingencies

With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable, and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages, or when the litigation is highly complex or broad in scope. In such cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss.

Revenue Recognition

Investment advisory and services fees, generally calculated as a percentage of AUM, are recorded as revenue as the related services are performed. Certain investment advisory contracts, including those associated with hedge funds, provide for a performance-based fee, in addition to or in lieu of a base fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. Performance-based fees are recorded as a component of revenue at the end of each contract’s measurement period.

We calculate AUM using established fair valuation methodologies, including market-based valuation methods and fair valuation methods. Market-based valuation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognized pricing vendors for fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps; and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include discounted cash flow models, evaluation of assets versus liabilities or any other methodology that is validated and approved by our Valuation Committee. Fair valuation methods are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities. Fair valued investments typically make up less than 1% of our total AUM. Recent market volatility has not had a significant effect on our ability to acquire market data and, accordingly, our ability to use market-based valuation methods.


The Valuation Committee, which is composed of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments held in client and AllianceBernstein portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply to pricing and valuing investments held in client and AllianceBernstein portfolios. We have also established a Pricing Group, which reports to the Valuation Committee. The Valuation Committee has delegated to the Pricing Group responsibility for monitoring the pricing process for all investments.

Bernstein Research Services revenue consists primarily of brokerage transaction charges received by SCB LLC and SCBL for research and brokerage-related services provided to institutional investors. Brokerage transaction charges earned and related expenses are recorded on a trade-date basis. SCB LLC also receives revenues from its equity capital markets activities in the form of underwriting fees, management fees and/or selling concessions, which are recognized when earned.

Distribution revenues, shareholder servicing fees, and dividend and interest income are accrued as earned.

Mutual Fund Underwriting Activities

Purchases and sales of shares of company-sponsored mutual funds in connection with the underwriting activities of our subsidiaries, including related commission income, are recorded on trade date. Receivables from brokers and dealers for sale of shares of company-sponsored mutual funds are generally realized within three business days from trade date, in conjunction with the settlement of the related payables to company-sponsored mutual funds for share purchases. Distribution plan and other promotion and servicing payments are recognized as 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. For awards made before 2009, participants were permitted to allocate their awards: (i) among notional investments in Holding Units, certain of the investment services we provide to our clients, and a money market fund, (ii) restricted Holding Units or (iii) under certain circumstances, in options to buy Holding Units. Awards in 2009 consisted solely of restricted Holding Units. We typically make investments in our services that are notionally elected by the participants and maintain them in a consolidated rabbi trust or separate custodial account. Awards generally vest over four years but can vest as soon as immediately upon grant depending on the terms of the individual award, the age of the participant, or the terms of an employment, separation or retirement 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 or restricted Holding Units for which a long-term deferral election has not been made are paid currently to participants. For awards made prior to December 2009, quarterly cash distributions on notional investments in Holding Units and income credited on notional investments in our investment services or the money market fund for which a long-term deferral election has been made are reinvested and distributed as elected by participants. For awards made in December 2009, quarterly cash distributions on vested and unvested restricted Holding Units for which a long-term deferral election has been made are paid currently to participants.

Compensation expense for awards under the plans, including changes in participant account balances resulting from gains and losses on related investments (other than in Holding Units and options to buy Holding Units), is recognized on a straight-line basis over the applicable vesting periods. Mark-to-market gains or losses on investments made to fund deferred compensation obligations (other than in Holding Units and options to buy Holding Units) are recognized currently as investment gains (losses) in the consolidated statements of income. In addition, our equity in the earnings of investments in limited partnership hedge funds made to fund deferred compensation obligations is recognized currently as investment gains (losses) in the consolidated statements of income.

Compensatory Unit Awards and Option Plans

We recognize compensation expense related to grants of restricted Holding Units and options to buy Holding Units in the financial statements. Under the fair value method, compensatory expense is measured at the grant date based on the estimated fair value of the award and is recognized over the vesting period. Fair value of unit awards is the grant date unit price; fair value of options is determined using the Black-Scholes option valuation model. New Holding Units are issued upon exercise of options.

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) gains were $(0.4) million, $20.1 million and $7.1 million for 2009, 2008 and 2007, respectively.


Cash Distributions

AllianceBernstein is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Agreement of Limited Partnership of AllianceBernstein (“AllianceBernstein Partnership Agreement”), to its unitholders and to the General Partner. Available Cash Flow can be summarized as the cash flow received by AllianceBernstein from operations minus such amounts as the General Partner determines, in its sole discretion, should be retained by AllianceBernstein for use in its business.

The General Partner computes cash flow received from operations by determining the sum of:

 
net cash provided by operating activities of AllianceBernstein,

 
proceeds from borrowings and from sales or other dispositions of assets in the ordinary course of business, and

 
income from investments in marketable securities, liquid investments and other financial instruments that are acquired for investment purposes and that have a value that may be readily established,

and then subtracting from this amount the sum of:

 
payments in respect of the principal of borrowings, and

 
amounts expended for the purchase of assets in the ordinary course of business.

On February 11, 2010, the General Partner declared a distribution of $194.2 million, or $0.70 per AllianceBernstein Unit, representing a distribution of Available Cash Flow for the three months ended December 31, 2009. The General Partner, as a result of its 1% general partnership interest, is entitled to receive 1% of each distribution. The distribution is payable on March 4, 2010 to holders of record on February 22, 2010.

During the third quarter of 2008, we recorded approximately $35.3 million in insurance recoveries relating to payments made for a class action claims processing error for which we recorded a charge of $56.0 million in the fourth quarter of 2006. Our fourth quarter 2006 cash distribution was based on net income as calculated prior to recording the charge. Accordingly, the insurance recoveries ($0.13 per unit) were not included in our cash distribution to unitholders for the third quarter of 2008.

Total cash distributions per unit paid to the General Partner and unitholders during 2009, 2008 and 2007 were $1.73, $3.87 and $5.20, respectively.

Comprehensive Income

We report all changes in comprehensive income in the consolidated statements of changes in partners’ capital and comprehensive income. Comprehensive income includes net income, as well as unrealized gains and losses on investments classified as available-for-sale, foreign currency translation adjustments, and unrecognized actuarial net losses, prior service cost and transition assets, all net of tax.

3. Cash and Securities Segregated Under Federal Regulations and Other Requirements

As of December 31, 2009 and 2008, $0.9 billion and $2.5 billion, respectively, of United States Treasury Bills were segregated in a special reserve bank custody account for the exclusive benefit of brokerage customers of SCB LLC under Rule 15c3-3 of the Securities Exchange Act of 1934, as amended (“Exchange Act”).

AllianceBernstein Investments, Inc. (“AllianceBernstein Investments”), a wholly-owned subsidiary of AllianceBernstein and the distributor of company-sponsored mutual funds, maintains several special bank accounts for the exclusive benefit of customers. As of December 31, 2009 and 2008, $37.4 million and $47.9 million of cash, respectively, were segregated in these bank accounts.


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 to buy Holding Units as follows:

   
Years Ended December 31,
 
   
2009
   
2008
   
2007
 
   
(in thousands, except per unit amounts)
 
                   
Net income attributable to AllianceBernstein Unitholders
  $ 556,127     $ 839,240     $ 1,260,444  
                         
Weighted average units outstanding—basic
    266,300       260,965       259,854  
Dilutive effect of compensatory options to buy Holding Units
    244       531       1,807  
Weighted average units outstanding—diluted
    266,544       261,496       261,661  
                         
Basic net income per AllianceBernstein Unit
  $ 2.07     $ 3.18     $ 4.80  
Diluted net income per AllianceBernstein Unit
  $ 2.07     $ 3.18     $ 4.77  

For the years ended December 31, 2009, 2008 and 2007, we excluded 5,752,877, 5,050,605 and 1,678,985 out-of-the-money options (i.e., options with an exercise price greater than the weighted average closing price of a unit for the relevant period), respectively, from the diluted net income per unit computation due to their anti-dilutive effect.

5. Fees Receivables, Net

Fees receivable, net consists of:

   
December 31,
 
   
2009
 
2008
 
   
(in thousands)
 
           
AllianceBernstein mutual funds
  $ 112,535     $ 89,530  
Unaffiliated clients (net of allowance of $1,393 in 2009 and $1,488 in 2008)
    222,660       280,288  
Affiliated clients
    11,287       7,349  
Total fees receivables, net
  $ 346,482     $ 377,167  

6. Investments

Investments consist of:

   
December 31,
 
   
2009
   
2008
 
   
(in thousands)
 
             
Available-for-sale
  $ 18,246     $ 7,566  
Trading:
               
Deferred compensation-related
    326,364       238,136  
United States Treasury Bills
    28,000       52,694  
Other
    130,218       31,717  
Investments in limited partnership hedge funds:
               
Deferred compensation-related
    74,595       67,673  
Other
    16,579       2,191  
Private equity investments
    172,747       176,823  
Other investments
    8,080       1,043  
Total investments
  $ 774,829     $ 577,843  

Total investments related to deferred compensation obligations of $401.0 million and $305.8 million as of December 31, 2009 and 2008, respectively, consist of company-sponsored mutual funds and limited partnership hedge funds. We typically make investments in our services that are notionally elected by deferred compensation plan participants and maintain them in a consolidated rabbi trust or separate custodial account. The rabbi trust and custodial account enable us to hold such investments separate from our other assets for the purpose of settling our obligations to participants. The investments held in the rabbi trust and custodial account remain available to the general creditors of AllianceBernstein.


The underlying investments of the hedge funds in which we invest include long and short positions in equity securities, fixed income securities (including various agency and non-agency asset-based securities), currencies, commodities and derivatives (including various swaps and forward contracts). Such investments are valued at quoted market prices or, where quoted market prices are not available, are fair valued based on the pricing policies and procedures of the underlying funds.

United States Treasury Bills are held by SCB LLC in their investment account and are pledged as collateral with clearing organizations.

The following is a summary of the cost and fair value of available-for-sale and trading investments held as of December 31, 2009 and 2008:

   
Amortized
Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Fair
Value
 
   
(in thousands)
 
December 31, 2009:
                       
Available-for-sale:
                       
Equity investments
  $ 12,827     $ 5,241     $     $ 18,068  
Fixed income investments
    153       27       (2 )     178  
    $ 12,980     $ 5,268     $ (2 )   $ 18,246  
Trading:
                               
Equity investments
  $ 217,076     $ 141,950     $ (350 )   $ 358,676  
Fixed income investments
    114,606       12,278       (978 )     125,906  
    $ 331,682     $ 154,228     $ (1,328 )   $ 484,582  
                                 
December 31, 2008:
                               
Available-for-sale:
                               
Equity investments
  $ 11,822     $ 264     $ (4,680 )   $ 7,406  
Fixed income investments
    235       4       (79 )     160  
    $ 12,057     $ 268     $ (4,759 )   $ 7,566  
Trading:
                               
Equity investments
  $ 434,909     $ 67     $ (188,582 )   $ 246,394  
Fixed income investments
    79,594       65       (3,506 )     76,153  
    $ 514,503     $ 132     $ (192,088 )   $ 322,547  

Proceeds from sales of available-for-sale investments were approximately $6.9 million, $42.0 million and $52.4 million in 2009, 2008 and 2007, respectively. Realized gains from our sales of available-for-sale investments were zero in 2009, zero in 2008 and $8.5 million in 2007. Realized losses from our sales of available-for-sale investments were $2.5 million in 2009, $6.4 million in 2008 and zero in 2007. We assess valuation declines to determine the extent to which such declines are fundamental to the underlying investment or attributable to temporary market-related factors. Based on our assessment, we do not believe the declines are other than temporary as of December 31, 2009.


7. Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The three broad levels of fair value hierarchy are as follows:

 
Level 1—Quoted prices in active markets are available for identical assets or liabilities as of the reported date.

 
Level 2—Quoted prices in markets that are not active or other pricing inputs that are either directly or indirectly observable as of the reported date.

 
Level 3—Prices or valuation techniques that are both significant to the fair value measurement and unobservable as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

Assets Measured at Fair Value on a Recurring Basis

The following table summarizes the valuation of our financial instruments by pricing observability levels as of December 31, 2009:

   
Level 1
   
Level 2
   
Level 3
   
Total
 
   
(in thousands)
 
                         
Cash equivalents
  $ 178,875     $ 177,772     $     $ 356,647  
Securities segregated
          947,888             947,888  
Receivables from brokers and dealers
    (15 )     612             597  
Investments – available-for-sale
    18,246                   18,246  
Investments – trading
                               
Mutual fund investments
    332,340                   332,340  
Equity and fixed income securities
    90,611       32,900       731       124,242  
U.S. Treasury bills
          28,000             28,000  
Investments – private equity
    2,913       62,006       97,828       162,747  
Total assets measured at fair value
  $ 622,970     $ 1,249,178     $ 98,559     $ 1,970,707  
                                 
Securities sold not yet purchased
  $ 31,806     $     $     $ 31,806  
Total liabilities measured at fair value
  $ 31,806     $     $     $ 31,806  

The following table summarizes the valuation of our financial instruments pricing observability levels as of December 31, 2008:

   
Level 1
   
Level 2
   
Level 3
   
Total
 
   
(in thousands)
 
                         
Cash equivalents
  $ 184,404     $     $     $ 184,404  
Securities segregated
          2,524,698             2,524,698  
Receivables from brokers and dealers
    (46 )     680             634  
Investments – available-for-sale
    7,566                   7,566  
Investments – trading
                               
Mutual fund investments
    237,529                   237,529  
Equity and fixed income securities
    25,027       6,874       423       32,324  
U.S. Treasury Bills
          52,694             52,694  
Investments – private equity
    4,694             162,129       166,823  
Total assets measured at fair value
  $ 459,174     $ 2,584,946     $ 162,552     $ 3,206,672  
                                 
Securities sold not yet purchased
  $ 167     $     $     $ 167  
Total liabilities measured at fair value
  $ 167     $     $     $ 167  

Following is a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:

 
Cash equivalents: We invest excess cash in various money market funds that are valued based on quoted prices in active markets; these are included in Level 1 of the valuation hierarchy. We also hold United Kingdom Treasury Bills, which are valued based on quoted yields in secondary markets and are included in Level 2 of the valuation hierarchy.


 
Securities segregated: We hold United States Treasury Bills, which are segregated in a special reserve bank custody account as required by Rule 15c3-3 of the Exchange Act. These securities are valued based on quoted yields in secondary markets, and are included in Level 2 of the valuation hierarchy.

 
Receivables from brokers and dealers: We hold several exchange-traded futures and currency forward contracts with counterparties that are included in Level 1 and Level 2, respectively, of the valuation hierarchy.

 
Investments—available-for-sale and trading: Our available-for-sale investments consist principally of company-sponsored mutual funds with exchange listed net asset values. Our trading investments mainly comprise company-sponsored mutual funds with exchange listed net asset values, United States Treasury Bills, exchange-traded options and various separately-managed portfolios consisting primarily of equity securities with quoted prices in active markets. These investments are included in Level 1 or Level 2 of the valuation hierarchy. Trading investments also include separately-managed portfolios of fixed income securities that are included in Level 2 or Level 3 of the valuation hierarchy.

 
Investments—private equity: The valuation of non-public private equity investments owned by a consolidated venture capital fund requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such investments. Private equity investments are valued initially at cost. The carrying values of private equity investments are adjusted either up or down from cost to reflect expected exit values as evidenced by financing and sale transactions with third parties, or when determination of a valuation adjustment is confirmed through ongoing review in accordance with our valuation policies and procedures. A variety of factors are reviewed and monitored to assess positive and negative changes in valuation including, but not limited to, current operating performance and future expectations of investee companies, industry valuations of comparable public companies, changes in market outlook and the third party financing environment over time. In determining valuation adjustments resulting from the investment review process, particular emphasis is placed on current company performance and market conditions. Non-public equity investments are included in Level 3 of the valuation hierarchy because they trade infrequently and, therefore, the fair value is unobservable. Publicly-traded equity investments are included in Level 1 of the valuation hierarchy.  If they contain trading restrictions, publicly-traded equity investments are included in Level 2 of the valuation hierarchy.

 
Securities sold not yet purchased: Securities sold not yet purchased, primarily reflecting short positions in equities and exchange-traded options, are included in Level 1 of the valuation hierarchy.

The following table summarizes the changes in carrying value associated with Level 3 financial instruments carried at fair value:

   
Years Ended December 31,
 
   
2009
   
2008
 
    (in thousands)  
             
Balance as of beginning of period
  $ 162,552     $ 125,020  
Transfers out, net
    (85,606 )      
Purchases, net
    8,170       31,070  
Realized (losses) gains, net
    (1,739 )     9  
Unrealized gains, net
    15,182       6,453  
Balance as of end of period
  $ 98,559     $ 162,552  

Realized and unrealized gains and losses on Level 3 financial instruments are recorded in investment gains and losses in the consolidated statements of income. Substantially all of the Level 3 investments are private equity investments owned by our consolidated venture capital fund, of which we own 10% and non-controlling interests own 90%.

Assets Measured at Fair Value on a Nonrecurring Basis

We adopted Accounting Standards Codification (“ASC”) 820-10-65-1 for nonfinancial assets and nonfinancial liabilities on January 1, 2009. There were no impairments recognized for goodwill, intangible assets or other long-lived assets as of December 31, 2009.


8. Furniture, Equipment and Leasehold Improvements, Net

Furniture, equipment and leasehold improvements, net consist of:

 
 
December 31,
 
 
 
2009
   
2008
 
 
 
(in thousands)
 
 
 
 
   
 
 
Furniture and equipment
  $ 544,493     $ 522,913  
Leasehold improvements
    348,222       322,803  
 
    892,715       845,716  
Less: Accumulated depreciation and amortization
    (533,041 )     (479,912 )
Furniture, equipment and leasehold improvements, net
  $ 359,674     $ 365,804  

Depreciation and amortization expense on furniture, equipment and leasehold improvements were $61.4 million, $65.6 million and $58.4 million for the years ended December 31, 2009, 2008 and 2007, respectively.

9. Deferred Sales Commissions, Net

The components of deferred sales commissions, net for the years ended December 31, 2009 and 2008 were as follows:

   
December 31,(1)
 
   
2009
   
2008
 
   
(in thousands)
 
   
 
   
 
 
Carrying amount of deferred sales commissions
  $ 571,599     $ 521,334  
Less:   Accumulated amortization
    (349,697 )     (294,775 )
Cumulative CDSC received
    (131,715 )     (113,018 )
Deferred sales commissions, net
  $ 90,187     $ 113,541  
_____________
(1)
Excludes amounts related to fully amortized deferred sales commissions.

Amortization expense was $54.9 million, $79.1 million and $95.5 million for the years ended December 31, 2009, 2008 and 2007, respectively. Estimated future amortization expense related to the December 31, 2009 net asset balance, assuming no additional CDSC is received in future periods, is as follows (in thousands):

2010
  $ 41,208  
2011
    24,717  
2012
    15,168  
2013
    7,913  
2014
    1,050  
2015
    131  
    $ 90,187  


10. Debt

Total credit available, debt outstanding and weighted average interest rates were as follows:

   
As of December 31,
 
   
2009
   
2008
 
   
Credit
Available
   
Debt
Outstanding
   
Interest
Rate
   
Credit
Available
   
Debt
Outstanding
   
Interest
Rate
 
   
(in millions)
 
 
Revolving credit facility(1)
  $ 751.0     $       %   $ 715.2     $       %
Commercial paper(1)
    249.0       249.0       0.2       284.8       284.8       1.8  
Total revolving credit facility – AllianceBernstein(1)
    1,000.0       249.0       0.2       1,000.0       284.8       1.8  
Revolving credit facility – SCB LLC(1)
    950.0                   950.0              
Uncommitted lines of credit  – SCB LLC(1)
                                   
Uncommitted bank facilities – SCB LLC
                                   
Total
  $ 1,950.0     $ 249.0       0.2     $ 1,950.0     $ 284.8       1.8  
_________________________
(1)
Commercial paper and amounts outstanding under the revolving credit facility are short-term in nature and, as such, recorded value is estimated to approximate fair value.

AllianceBernstein has a $1.0 billion five-year revolving credit facility with a group of commercial banks and other lenders which expires in 2011. The revolving credit facility is intended to provide back-up liquidity for our $1.0 billion commercial paper program, although we borrow directly under the facility from time to time. Amounts borrowed under the commercial paper program reduce amounts available for direct borrowing under the revolving credit facility on a dollar-for-dollar basis. Our interest rate, at our option, is a floating rate generally based upon a defined prime rate, a rate related to the London Interbank Offered Rate (“LIBOR”) or the Federal Funds rate. The revolving credit facility contains covenants which, among other things, require us to meet certain financial ratios. We are in compliance with these covenants.

SCB LLC has a $950 million three-year revolving credit facility with a group of commercial banks to fund its activities resulting from engaging in certain securities trading (including derivatives) and custody activities on behalf of private clients and participating in equity capital offerings on behalf of issuers of publicly-traded securities.  The facility expires in 2011. Under the revolving credit facility, the interest rate, at the option of SCB LLC, is a floating rate generally based upon a defined prime rate, a rate related to LIBOR or the Federal Funds rate. This revolving credit facility contains covenants which, among other things, require AllianceBernstein, as guarantor, to meet the same financial ratios contained in its $1.0 billion revolving credit facility. We are in compliance with these covenants.

AllianceBernstein and AXA executed guarantees in regard to the $950 million SCB LLC facility. In the event SCB LLC is unable to meet its obligations, AllianceBernstein or AXA will pay the obligations when due or on demand. AllianceBernstein will reimburse AXA to the extent AXA must pay on its guarantee. This agreement is continuous and remains in effect until the later of payment in full of any such obligation under the credit facility has been made or the maturity date.

SCB LLC has four separate uncommitted credit facilities with various banks totaling $525 million, a decrease from five facilities totaling $775 million as of December 31, 2008.  In addition, SCB LLC has two lines of credit with a commercial bank as of December 31, 2009 and 2008, one for $75 million secured by pledges of U.S. Treasury Bills and a second for $50 million secured by pledges of equity securities.


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 related payments we are obligated to make, net of sublease commitments of third party lessees to make payments to us, as of December 31, 2009 are as follows:

   
Payments
   
Sublease
Receipts
   
Net
Payments
 
   
(in millions)
 
                   
2010
  $ 126.2     $ 6.2     $ 120.0  
2011
    133.7       3.4       130.3  
2012
    142.8       3.6       139.2  
2013
    143.2       3.7       139.5  
2014
    142.8       3.6       139.2  
2015 and thereafter
    1,702.3       9.4       1,692.9  
Total future minimum payments
  $ 2,391.0     $ 29.9     $ 2,361.1  

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 $133.6 million, $125.7 million and $106.8 million for the years ended December 31, 2009, 2008 and 2007, respectively, net of sublease income of $3.4 million, $3.3 million and $3.4 million for the years ended December 31, 2009, 2008 and 2007, respectively.

Deferred Sales Commission Asset

Payments of sales commissions made by AllianceBernstein Investments to financial intermediaries in connection with the sale of back-end load shares under our mutual fund distribution system (the “System”) are capitalized as deferred sales commissions (“deferred sales commission asset”) and amortized over periods not exceeding five and one-half years for U.S. mutual fund shares and four years for non-U.S. mutual 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 $90.2 million and $113.5 million as of December 31, 2009 and 2008, 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 $18.7 million, $33.7 million and $31.1 million, totaled approximately $31.6 million, $9.1 million and $84.1 million during 2009, 2008 and 2007, respectively. Effective January 31, 2009, back-end load shares are no longer offered to new investors in U.S. mutual funds.

Management tests the deferred sales commission asset for impairment quarterly by comparing undiscounted future cash flows to the recorded value, net of accumulated amortization. Significant assumptions utilized to estimate the company’s future average assets under management and undiscounted future cash flows from back-end load shares are updated quarterly and include expected future market levels and redemption rates. Market assumptions are selected using a long-term view of expected average market returns based on historical returns of broad market indices. As of December 31, 2009, management used average market return assumptions of 5% for fixed income securities and 8% for equities to estimate annual market returns. Higher actual average market returns would increase undiscounted future cash flows, while lower actual average market returns would decrease undiscounted future cash flows. Future redemption rate assumptions range from 21% to 24% for U.S. fund shares and 27% to 40% for non-U.S. fund shares. These assumptions are determined by reference to actual redemption experience over the five-year, three-year, one-year and three-month periods ended December 31, 2009, calculated as a percentage of our average assets under management represented by back-end load shares. An increase in the actual rate of redemptions would decrease undiscounted future cash flows, while a decrease in the actual rate of redemptions would increase undiscounted future cash flows. These assumptions are reviewed and updated quarterly. Estimates of undiscounted future cash flows and the remaining life of the deferred sales commission asset are made from these assumptions and the aggregate undiscounted future cash flows are compared to the recorded value of the deferred sales commission asset. As of December 31, 2009, management determined that the deferred sales commission asset was not impaired. However, 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 2009, U.S. equity markets increased by approximately 26.5% as measured by the change in the Standard & Poor’s 500 Stock Index and U.S. fixed income markets increased by approximately 5.9% as measured by the change in the Barclays Aggregate Bond Index. The redemption rate for domestic back-end load shares was 21.1% in 2009. Increases in non-U.S. capital markets ranged from 30.0% to 78.5% as measured by the MSCI World, Emerging Market and EAFE Indices. The redemption rate for non-U.S. back-end load shares was 27.3% in 2009. Declines in financial markets or higher redemption levels, or both, as compared to the assumptions used to estimate undiscounted future cash flows, as described above, could result in the impairment of the deferred sales commission asset. Due to the volatility of the capital markets and changes in redemption rates, management is unable to predict whether or when a future impairment of the deferred sales commission asset might occur. Any impairment would reduce materially the recorded amount of the deferred sales commission asset with a corresponding charge to earnings.


Legal Proceedings

On October 2, 2003, a purported class action complaint entitled Hindo, et al. v. AllianceBernstein Growth & Income Fund, et al. (“Hindo Complaint”) was filed against, among others, AllianceBernstein, Holding and the General Partner. The Hindo Complaint alleges that certain defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in “late trading” and “market timing” of certain of our U.S. mutual fund securities, violating various securities laws.

Following October 2, 2003, additional lawsuits making factual allegations generally similar to those in the Hindo Complaint were filed in various federal and state courts against AllianceBernstein and certain other defendants. On September 29, 2004, plaintiffs filed consolidated amended complaints with respect to four claim types: mutual fund shareholder claims; mutual fund derivative claims; derivative claims brought on behalf of Holding; and claims brought under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) by participants in the Profit Sharing Plan for Employees of AllianceBernstein.

On April 21, 2006, AllianceBernstein and attorneys for the plaintiffs in the mutual fund shareholder claims, mutual fund derivative claims and ERISA claims entered into a confidential memorandum of understanding containing their agreement to settle these claims. The agreement will be documented by a stipulation of settlement and will be submitted for court approval at a later date. The settlement amount ($30 million), which we previously expensed and disclosed, has been disbursed. The derivative claims brought on behalf of Holding, in which plaintiffs seek an unspecified amount of damages, remain pending.

We intend to vigorously defend against the lawsuit involving derivative claims brought on behalf of Holding. At the present time, we are unable to predict the outcome or estimate a possible loss or range of loss in respect of this matter because of the inherent uncertainty regarding the outcome of complex litigation, and the fact that the plaintiffs did not specify an amount of damages sought in their complaint.

We are involved in various other matters, including regulatory inquiries, administrative proceedings and litigation, some of which allege significant damages. While any inquiry, proceeding or litigation has the element of uncertainty, management believes that the outcome of any one of the other regulatory inquiries, administrative proceedings, lawsuits or claims that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations or financial condition.

Other

During July 2009, we entered into a subscription agreement under which we committed to invest up to $40 million in a venture capital fund over a six-year period. As of December 31, 2009, we have not funded any of this commitment. In February 2010, we received an initial $1.6 million capital call.

Also during July 2009, we were selected by the U.S. Treasury Department as one of nine pre-qualified investment managers under the Public-Private Investment Program. As part of the program, each investment manager is required to invest a minimum of $20 million in the Public-Private Investment Fund they manage. As of December 31, 2009, we funded $4.1 million of this commitment.

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, 2009, SCB LLC had net capital of $163.5 million, which was $152.0 million in excess of the minimum net capital requirement of $11.5 million. Advances, dividend payments and other equity withdrawals by SCB LLC are restricted by the regulations of the U.S. Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority, Inc., and other securities agencies.

SCBL is a member of the London Stock Exchange. As of December 31, 2009, SCBL was subject to financial resources requirements of $14.8 million imposed by the Financial Services Authority of the United Kingdom and had aggregate regulatory financial resources of $41.8 million, an excess of $27.0 million.

AllianceBernstein Investments serves as distributor and/or underwriter for certain company-sponsored mutual funds. AllianceBernstein Investments is registered as a broker-dealer under the Exchange Act and is subject to the minimum net capital requirements imposed by the SEC. AllianceBernstein Investments’ net capital as of December 31, 2009 was $55.2 million, which was $49.2 million in excess of its required net capital of $6.0 million.


Many of our subsidiaries around the world are subject to minimum net capital requirements by the local laws and regulations to which they are subject. As of December 31, 2009, each of our subsidiaries subject to a minimum net capital requirement satisfied the applicable requirement.

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 on 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 on behalf of clients in which counterparties primarily include broker-dealers, banks and other financial institutions. In the event counterparties do not fulfill their obligations, SCB LLC and SCBL may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is SCB LLC’s and SCBL’s policy to review, as necessary, the credit standing of each counterparty.

In connection with SCB LLC’s security borrowing and lending arrangements, SCB LLC enters into collateralized agreements which may result in credit exposure in the event the counterparty to a transaction is unable to fulfill its contractual obligations. Security borrowing arrangements require SCB LLC to deposit cash collateral with the lender. With respect to security lending arrangements, SCB LLC receives collateral in the form of cash in amounts generally in excess of the market value of the securities loaned. SCB LLC minimizes credit risk associated with these activities by establishing credit limits for each broker and monitoring these limits on a daily basis. Additionally, security borrowing and lending collateral is marked to market on a daily basis, and additional collateral is deposited by or returned to SCB LLC as necessary. During the fourth quarter of 2007, SCB LLC outsourced its hedge fund related prime brokerage operations, resulting in the elimination of a substantial portion of its security borrowing and security lending activity.

14. Qualified Employee Benefit Plans

We maintain a qualified profit sharing plan covering U.S. employees and certain foreign employees. Employer contributions are discretionary and generally limited to the maximum amount deductible for federal income tax purposes. Aggregate contributions for 2009, 2008 and 2007 were $15.2 million, $24.5 million and $29.4 million, respectively.

We maintain several defined contribution plans for foreign employees in the United Kingdom, Australia, New Zealand, Japan and our other foreign entities. Employer contributions are generally consistent with regulatory requirements and tax limits. Defined contribution expense for foreign entities was $7.7 million, $10.6 million and $8.3 million in 2009, 2008 and 2007, respectively.

We maintain a qualified, noncontributory, defined benefit retirement plan (“Retirement Plan”) covering current and former employees who were employed by AllianceBernstein in the United States prior to October 2, 2000. Benefits are based on years of credited service, average final base salary (as defined), and primary Social Security benefits. Service and compensation after December 31, 2008 are not taken into account in determining participants’ retirement benefits.  This change, considered a plan curtailment, resulted in a decrease in our projected obligation of $13.1 million. This decrease in our projected obligation was offset against existing deferred losses in accumulated other comprehensive income (loss). In addition, as a result of all future service being eliminated, we accelerated recognition of the existing prior service credit of $3.5 million in the fourth quarter of 2008.


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. We contributed $12.8 million to the Retirement Plan during 2009. We currently estimate we will contribute $6.0 million to the Retirement Plan during 2010. 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.

The Retirement Plan’s projected benefit obligation, fair value of plan assets, and funded status (amounts recognized in the consolidated statements of financial condition) were as follows:

   
Years Ended December 31,
 
   
2009
   
2008
 
   
(in thousands)
 
Change in projected benefit obligation:
           
Projected benefit obligation at beginning of year
  $ 72,230     $ 76,731  
Service cost
          2,995  
Interest cost
    4,420       4,996  
Actuarial loss
    3,427       3,891  
Plan curtailment
          (13,133 )
Benefits paid
    (2,913 )     (3,250 )
Projected benefit obligation at end of year
    77,164       72,230  
Change in plan assets:
               
Plan assets at fair value at beginning of year
    33,383       56,786  
Actual return on plan assets
    13,368       (25,770 )
Employer contribution
    12,754       5,617  
Benefits paid
    (2,913 )     (3,250 )
Plan assets at fair value at end of year
    56,592       33,383  
Funded status
  $ (20,572 )   $ (38,847 )

The amounts recognized in other comprehensive income (loss), net of taxes, for 2009 and 2008 were as follows:

   
2009
   
2008
 
   
(in thousands)
 
       
Unrecognized net gain (loss) from experience different from that assumed and effects of changes and assumptions
  $ 7,098     $ (20,811 )
Unrecognized prior service credit
          (3,844 )
Unrecognized net plan assets as of January 1, 1987 being recognized over 26.3 years
    (143 )     (108 )
Other comprehensive income (loss)
  $ 6,955     $ (24,763 )


The amounts included in accumulated other comprehensive income (loss), net of taxes, as of December 31, 2009 and 2008 were as follows:

   
2009
   
2008
 
   
(in thousands)
 
       
Unrecognized net loss from experience different from that assumed and effects of changes and assumptions
  $ (15,151 )   $ (22,249 )
Unrecognized net plan assets as of January 1, 1987 being recognized over 26.3 years
    459       602  
Accumulated other comprehensive loss
  $ (14,692 )   $ (21,647 )

The estimated initial plan assets and amortization of loss for the Retirement Plan that will be amortized from accumulated other comprehensive income over the next year is $143,000 and $223,000, respectively. The accumulated benefit obligation for the plan was $77.2 million and $72.2 million as of December 31, 2009 and 2008, respectively.

Actuarial computations used to determine benefit obligations as of December 31, 2009 and 2008 (measurement dates) were made utilizing the following weighted-average assumptions:

 
2009
 
2008
 
 
 
 
 
 
Discount rate on benefit obligations
    6.05 %     6.20 %
Annual salary increases
    0.00       3.11  

The following benefit payments, which reflect expected future service, are expected to be paid as follows (in thousands):

2010
  $ 3,438  
2011
    2,696  
2012
    4,158  
2013
    3,257  
2014
    2,876  
2015-2019
    24,153  

Net expense under the Retirement Plan consisted of:

   
Years Ended December 31,
 
   
2009
   
2008
   
2007
 
   
(in thousands)
 
                   
Service cost
  $     $ 2,995     $ 3,447  
Interest cost on projected benefit obligations
    4,419       4,996       4,769  
Expected return on plan assets
    (3,110 )     (4,590 )     (4,310 )
Amortization of prior service credit
          (431 )     (59 )
Amortization of transition asset
    (143 )     (143 )     (143 )
Curtailment gain recognized
          (3,510 )      
Recognized actuarial loss
    431              
Net pension charge (benefit)
  $ 1,597     $ (683 )   $ 3,704  

Actuarial computations used to determine net periodic costs were made utilizing the following weighted-average assumptions:

 
Years Ended December 31,
 
 
2009
 
2008
 
2007
 
 
 
 
 
 
 
 
Discount rate on benefit obligations
    6.20 %     6.55 %     5.90 %
Expected long-term rate of return on plan assets
    8.00       8.00       8.00  
Annual salary increases
    0.00       3.14       3.14  


The Retirement Plan’s asset allocation percentages consisted of:

   
December 31,
 
   
2009
   
2008
 
   
 
   
 
 
Equity securities
    61 %     56 %
Debt securities
    31       30  
Real estate
    8       14  
      100 %     100 %

In developing the expected long-term rate of return on plan assets of 8.0%, management considered the historical returns and future expectations for returns for each asset category, as well as the target asset allocation of the portfolio. The expected long-term rate of return on assets is based on weighted average expected returns for each asset class.

The guidelines regarding allocation of assets formalized in the Investment Policy Statement were adopted by the Investment Committee for the Retirement Plan to reflect the Plan’s liquidity requirements, funded status, growth expectations and risk tolerance. The guidelines specify an allocation weighting of 50% to 70% for global equity securities (target of 60%), 20% to 40% for fixed income securities (target of 30%) and 0% to 10% for real estate investment trusts (target of 10%). Alternative investments are permitted under the guidelines, with such investments to be allocated to one or more of the above security classes and subject to the indicated tactical ranges.

Exposure of the total portfolio to cash equivalents on average should not exceed 5% of the portfolio’s value on a market value basis. The plan seeks to provide a rate of return that exceeds applicable benchmarks over rolling five-year periods. The benchmark for the plan’s large cap domestic equity investment strategy is the S&P 500 Index; the small cap domestic equity investment strategy is measured against the Russell 2000 Index; the international equity investment strategy is measured against the MSCI EAFE Index; and the fixed income investment strategy is measured against the Barclays Aggregate Bond Index.

The following table summarizes the valuation of our Retirement Plan assets by pricing observability levels as of December 31, 2009:

   
Level 1
   
Level 2
   
Level 3
   
Total
 
   
(in thousands)
 
                         
Cash
  $ 12     $     $     $ 12  
Short-term investments           1,435             1,435  
Mutual fund
    4,233                   4,233  
Offshore hedge funds
          6,539             6,539  
Private investment trusts
          44,373             44,373  
Total assets measured at fair value
  $ 4,245     $ 52,347     $     $ 56,592  

See Note 7 for a description of how we measure the fair value of our plan assets.

The Retirement Plan invests in a mutual fund which is an open-end fund that seeks total return from long-term growth of capital and income. Typically the mutual fund invests at least 80% of its net assets in real estate investment trusts (“REITs”) and other real estate industry companies. The mutual fund is subject to certain risks associated with the direct ownership of real estate and with the real estate industry in general. To the extent that assets underlying the mutual fund’s investments are concentrated geographically, by property type or in certain other respects, the mutual fund may be subject to additional risks.

Additionally, the Retirement Plan invests in two offshore hedge funds and two private investment trusts. One of the hedge funds seeks to deliver long-term returns in excess of balanced allocations of equities and fixed income instruments with comparable volatility over time, while the other hedge fund attempts to significantly outperform the returns of global markets over full market cycles. One of the private investment trusts invests primarily in investment grade, U.S. dollar-denominated fixed income securities. The other private investment trust primarily invests in equity securities of companies located around the world.

The short-term investments held by the Retirement Plan consist mainly of United States Treasury Bills.

We provide postretirement medical benefits which allow retirees between the ages of 55 and 65 meeting certain service requirements, at their election, to continue to participate in our group medical program by paying 100% of the applicable group premium. Retirees older than 65 may also continue to participate in our group medical program, but are required to pay the full expected cost of benefits. To the extent that retirees’ medical costs exceed premiums paid, we incur the cost of providing a postretirement medical benefit. During 2009, our net periodic benefit cost was $0.5 million, and our aggregate benefit obligation as of December 31, 2009 is $4.0 million.


15. Long-term Incentive Compensation Plans

We maintain an unfunded, non-qualified incentive compensation program known as the Amended and Restated AllianceBernstein Incentive Compensation Award Program (formerly known as the Amended and Restated AllianceBernstein Partners Compensation Plan, the “Incentive Compensation Program”) under which annual awards may be granted to eligible employees.

Effective December 7, 2009, awards under the Incentive Compensation Program are governed by the Post-December 1, 2009 Award Provisions under the Incentive Compensation Program (“2009 ICP Provisions”).  As a result, all 2009 awards under the Incentive Compensation Program were in the form of restricted Holding Units, which vest ratably over four years.  The 2009 ICP Provisions include a “rule of 65” retirement provision (employees must have attained age 55 and completed at least 10 years of service) that will allow qualified employees to retire from the company and continue to vest in their award provided they comply with covenants and agreements in the award agreement (e.g., non-competition and non-solicitation).  Upon vesting, awards are distributed to participants unless a voluntary election to defer receipt has been made.  Quarterly cash distributions on vested and unvested restricted Holding Units are paid currently to participants.  As an eligible employee’s total compensation increases, the percentage of his or her annual incentive compensation paid in equity awards increases relative to other employees.

Prior to 2009, participants in the Incentive Compensation Program allocated their awards among notional investments in Holding Units and certain of our investment services and, in certain instances, in options to buy Holding Units.  The Compensation Committee of the Board of Directors of the General Partner had the discretion to determine each calendar year a minimum and a maximum percentage of each award that could have been treated as notionally invested in Holding Units or certain of our investment services, or, under certain circumstances, allocated to options to buy Holding Units.

For 2001 through 2008 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 had been made and income earned on notional investments in company-sponsored mutual funds are treated as fully vested and are reinvested and distributed as elected by participants.

 
For 2008 awards, executives and those senior officers previously participating in the Special Option Program were permitted to allocate up to half of their awards to investments in options to buy Holding Units (see Note 16).

 
For 2006 and 2007 awards, selected senior officers were permitted to elect to allocate up to a specified portion of their awards to investments in options to buy Holding Units (“Special Option Program”); the firm matched this allocation on a two-for-one basis (for additional information about the Special Option Program, see Note 16).

 
Beginning with 2003 awards, participants were permitted to allocate their awards to a combination of notional investments in Holding Units (up to 50%) and notional investments in certain of our investment services.

 
For 2002 awards, participants were permitted to allocate their awards to a combination of notional investments in Holding Units and notional investments in certain of our investment services.

 
For 2001 awards, 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.

 
Awards made for 1999 and 2000 are notionally invested in Holding Units and vested over periods ranging from eight years to immediate depending on the age of the participant.

 
Awards made from 1995 through 1998 generally vested ratably over eight years.

 
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 an 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.

The Incentive Compensation Program (including the 2009 ICP Provisions) may be terminated at any time without cause, in which case our liability would be limited to vested benefits. We made awards in 2009, 2008 and 2007 aggregating $223.1 million, $236.0 million and $314.6 million, respectively. In January 2009, $22.9 million of the 2008 award was allocated to options to buy Holding Units (see Note 16). The 2007 award is net of $9.9 million allocated to the December 2007 Special Option Program’s awards. The amounts charged to employee compensation and benefits expense for the years ended December 31, 2009, 2008 and 2007 were $199.7 million, $59.9 million and $227.2 million, respectively.

During December 2008, Mr. Sanders, our former Chairman and CEO, retired from the company.  Based on his employment and retirement agreements, unvested deferred compensation awards fully vested in 2008. The amounts charged to employee compensation and benefits expense under his agreements for the years ended December 31, 2008 and 2007 were $40.9 million and $19.7 million, respectively.


Effective August 1, 2005, we established the AllianceBernstein Financial Advisor Wealth Accumulation Plan (“Wealth Accumulation Plan”), a voluntary unfunded, non-qualified incentive plan. The Wealth Accumulation Plan was established to attract and retain eligible employees expected to make significant contributions to the future growth and success of Bernstein Global Wealth Management, the unit of AllianceBernstein that services private clients. 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 $16.5 million in 2009, $15.2 million in 2008, and $23.5 million in 2007. The amounts charged to employee compensation and benefits expense for the years ended December 31, 2009, 2008 and 2007 were $9.5 million, $8.7 million and $8.0 million, respectively.

During 2003, we established the AllianceBernstein Commission Substitution Plan (“Commission Substitution Plan”), 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 were eligible for an award under this plan. Participants designated the percentage of their awards to be allocated to notional investments in Holding Units or in certain of our investment services. Awards vested ratably over a three-year period and were amortized as employee compensation expense. The Commission Substitution Plan was terminated in 2007 and no awards have been made since 2006. The amounts charged to employee compensation and benefits expense for the years ended December 31, 2009, 2008 and 2007 were $10.5 million, $21.7 million and $31.9 million, respectively.

We maintain an unfunded, non-qualified deferred compensation plan known as the Capital Accumulation Plan and also have assumed obligations under contractual unfunded deferred compensation arrangements covering certain executives (“Contractual Arrangements”). The Capital Accumulation Plan was frozen on December 31, 1987 and no additional awards have been made. The Board of Directors of the General Partner (“Board”) may terminate the Capital Accumulation Plan at any time without cause, in which case our liability would be limited to benefits that have vested. Payment of vested benefits under both the Capital Accumulation Plan and the Contractual Arrangements will generally be made over a ten-year period commencing at retirement age. The General Partner is obligated to make capital contributions to AllianceBernstein in amounts equal to benefits paid under the Capital Accumulation Plan and the Contractual Arrangements. Amounts included in employee compensation and benefits expense for the Capital Accumulation Plan and the Contractual Arrangements for the years ended December 31, 2009, 2008 and 2007 were $1.4 million, $1.7 million and $1.7 million, respectively.

16. Compensatory Unit Awards and Option Plans

In 1997, we established the 1997 Long Term Incentive Plan (“1997 Plan”), under which options to buy Holding Units, restricted Holding Units and phantom restricted Holding Units, performance awards, and other Holding Unit-based awards may be granted to key employees and independent directors of the General Partner for terms established at the time of grant (generally 10 years). Options granted to employees are generally exercisable at a rate of 20% of the Holding Units subject to such options on each of the first five anniversary dates of the date of grant (except for certain options awarded under the Special Option Program, which are described below); options granted to independent directors are generally exercisable at a rate of 33.3% of the Holding Units subject to such options on each of the first three anniversary dates of the date of grant. Restricted Holding Units awarded to independent directors of the General Partner vest on the third anniversary of the grant date or immediately upon a director’s resignation. Restricted Holding Units awarded to our CEO (as described below under “Restricted Holding Unit Awards”) vest 20% on each of the first five anniversary dates of the grant date. Restricted Holding Units awarded under the Incentive Compensation Program vest 25% on December 1st of the subsequent four years. The aggregate number of Holding Units that can be the subject of options granted or that can be issued under the 1997 Plan may not exceed 41,000,000 Holding Units. As of December 31, 2009, options to buy 19,574,923 Holding Units, net of forfeitures, had been granted and 15,168,431 Holding Units, net of forfeitures, were issued for other unit awards made under the 1997 Plan (as described below). Holding Unit-based awards (including options) in respect of 6,256,646 Holding Units were available for grant of options or issuance of Holding Units as of December 31, 2009.  The 1997 Plan will expire on July 26, 2010.  We intend to convene a special meeting of Holding Unitholders during 2010 to seek approval for a new long-term equity compensation plan.

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.

Option Awards

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 annual long-term incentive compensation award to options to buy Holding Units and the company matches this allocation on a two-for-one basis. Also on January 26, 2007, and pursuant to the Special Option Program, the Compensation Committee granted two separate awards of options to buy Holding Units to 67 participants. The exercise price for both awards is $90.65, the closing price of Holding Units on the grant date. The first grant, with a fair value of $17.69 per option, awarded options to buy 555,985 Holding Units, vesting in equal increments on each of the first five anniversaries of the grant date and expiring in 10 years. The second grant, with a fair value of $17.67 per option, awarded options to buy 1,113,220 Holding Units, vesting in equal annual increments on each of the sixth through tenth anniversaries of the grant date and expiring in 11 years.


On December 7, 2007, the Compensation Committee granted two separate awards of options to buy Holding Units to 68 participants under the Special Option Program. The exercise price for both awards is $80.46, the closing price of Holding Units on the grant date. The first grant, with a fair value of $13.30 per option, awarded options to buy 740,633 Holding Units, vesting in equal increments on each of the first five anniversaries of the grant date and expiring in 10 years. The second grant, with a fair value of $15.28 per option, awarded options to buy 1,289,321 Holding Units, vesting in equal annual increments on each of the sixth through tenth anniversaries of the grant date and expiring in 11 years.

On January 23, 2009, the Compensation Committee granted an award of options to buy 6,534,182 Holding Units to 67 selected senior officers. The exercise price is $17.05, the closing price of Holding Units on the grant date, and the fair value is $3.51 per option.

Options to buy Holding Units (including grants to independent directors) were granted as follows: 6,565,302 options were granted during 2009, 13,825 options were granted during 2008 and 3,708,939 options were granted during 2007. The weighted average fair value of options to buy Holding Units granted during 2009, 2008 and 2007 was $3.52, $10.85 and $15.96, respectively, on the date of grant, determined using the Black-Scholes option valuation model with the following assumptions:

   
2009
   
2008
   
2007
 
                   
Risk-free interest rate
    1.6 – 2.1 %     3.2 %     3.5 – 4.9 %
Expected cash distribution yield
    5.2 – 6.1 %     5.4 %     5.6 – 5.7 %
Historical volatility factor
    40.0 – 44.6 %     29.3 %     27.7–30.8 %
Expected term
 
6.0 – 6.5 years
   
6.0 years
   
6.0 – 9.5 years
 

Due to a lack of sufficient historical data, we have chosen to use the simplified method to calculate the expected term of options.

The following table summarizes the activity in options under our various option plans:

   
Holding Units
   
Weighted Average Exercise Price Per Holding Unit
   
Weighted Average Remaining Contractual Term
   
Aggregate Intrinsic Value
 
                     
(in thousands)
 
                         
Outstanding as of December 31, 2008
    6,685,808     $ 66.11       6.3        
Granted
    6,565,302       17.06                
Exercised
                         
Forfeited
    (948,888 )     45.09                
Expired
    (254,700 )     30.21                
Outstanding as of December 31, 2009
    12,047,522       41.79       7.3     $  
Exercisable as of December 31, 2009
    2,804,042       51.91       2.9        
Vested or expected to vest as of December 31, 2009
    11,530,174       41.26       7.3        

The aggregate intrinsic value as of December 31, 2009 on options outstanding, exercisable and expected to vest is negative, and is therefore presented as zero in the table above. The total intrinsic value of options exercised during 2009, 2008 and 2007 was zero, $6.3 million and $58.8 million, respectively.

Under the fair value method, compensation expense is measured at the grant date based on the estimated fair value of the options awarded (determined using the Black-Scholes option valuation model) and is recognized over the vesting period. We recorded compensation expense relating to option grants of $11.9 million, $7.7 million and $5.9 million, respectively, for the years ended December 31, 2009, 2008 and 2007. As of December 31, 2009, there was $47.9 million of compensation cost related to unvested option grants not yet recognized in the consolidated statements of income. The cost is expected to be recognized over a weighted average period of 4.7 years.


Restricted Holding Unit Awards

In 2009, 2008 and 2007, restricted Holding Units were awarded to the independent directors of the General Partner. These 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 8,210, 2,335 and 1,705 restricted Holding Units in 2009, 2008 and 2007, respectively, with grant date fair values of $18.27, $64.24 and $87.98 per restricted Holding Unit, respectively. All of the restricted Holding Units vest on the third anniversary of grant date or immediately upon a director’s resignation. We fully expensed these awards on each grant date.

In accordance with the terms of the employment agreement between Mr. Kraus, Chairman and CEO, the General Partner, Holding and AllianceBernstein dated December 19, 2008, Mr. Kraus was granted 2,722,052 restricted Holding Units with a grant date fair value of $19.20.  Subject to accelerated vesting provisions in Mr. Kraus’s employment agreement, his restricted Holding Units vest ratably on each of the first five anniversaries of December 19, 2008, commencing December 19, 2009, provided, with respect to each installment, Mr. Kraus continues to be employed by AllianceBernstein on the vesting date. The agreement provides for immediate vesting upon AXA ceasing to control the management of AllianceBernstein’s business or Holding ceasing to be publicly traded and certain qualifying terminations of employment, including termination of Mr. Kraus’s employment (i) by AllianceBernstein without cause, (ii) by Mr. Kraus for good reason (“good reason” generally means actions taken by AllianceBernstein resulting in a material negative change in Mr. Kraus’s employment relationship, including assignment to Mr. Kraus of duties materially inconsistent with his position or a requirement that Mr. Kraus report to an officer or employee of AllianceBernstein instead of reporting directly to the Board), and (iii) due to death or disability.

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 restricted Holding Units. Awards vest ratably over three years and are amortized over the vesting period as employee compensation expense. We awarded 46,163, 46,030 and 45,072 restricted Holding Units in 2009, 2008 and 2007, respectively, with grant date fair values of $12.17, $62.05 and $82.37 per Holding Unit, respectively.

Beginning in 2009, we awarded restricted Holding Units under the Incentive Compensation Program (see Note 15). Restricted Holding Unit awards vest ratably over four years and are amortized over the vesting period as employee compensation expense. We awarded 8,345,805 restricted Holding Units in 2009 with a grant date fair value of $26.73 per restricted Holding Unit.

We also awarded restricted Holding Units in connection with certain employment and separation agreements with vesting schedules ranging between two to five years.  The fair value of the restricted Holding Units is amortized over the required service period as employee compensation expense. We awarded 1,443,227 Holding Units in 2009 with grant date fair values ranging between $16.79 and $28.38 per restricted Holding Unit.

The following table summarizes the activity of unvested restricted Holding Units during 2009:

   
Holding Units
   
Weighted Average Grant Date Fair Value
 
             
Unvested as of December 31, 2008
    2,806,846     $ 20.71  
Granted
    9,843,405       26.13  
Vested
    (591,566 )     22.82  
Forfeited
    (3,001 )     43.78  
Unvested as of December 31, 2009
    12,055,684       25.03  

The total grant date fair value of restricted Holding Units that vested during 2009, 2008 and 2007 was $14.7 million, $2.3 million and $2.5 million, respectively.

We recorded compensation expense relating to restricted Holding Unit awards of $30.5 million, $2.9 million and $2.5 million, respectively, for the years ended December 31, 2009, 2008 and 2007. As of December 31, 2009, there was $236.2 million of compensation cost related to unvested restricted Holding Unit awards granted and not yet recognized in the consolidated statement of income. The cost is expected to be recognized over a weighted average period of 4.0 years.


17. Units Outstanding

The following table summarizes the activity in units:

Outstanding as of December 31, 2007
    260,341,992  
Options to buy Holding Units exercised
    315,467  
Holding Units issued
    3,063,761  
Holding Units forfeited
    (3,610 )
Outstanding as of December 31, 2008
    263,717,610  
Options to buy Holding Units exercised
    -  
Holding Units issued
    11,030,983  
Holding Units forfeited
    (3,001 )
Outstanding as of December 31, 2009
    274,745,592  

Holding Units issued pertain to Holding Units newly issued under our Amended and Restated 1997 Long Term Incentive Plan and include: (i) restricted Holding Unit awards to independent members of the Board of Directors of the General Partner, (ii) restricted Holding Unit awards to eligible employees, (iii) Holding Unit issuances to fund deferred compensation notional investment elections by plan participants, (iv) Century Club Plan restricted Holding Unit awards and (v) restricted Holding Unit issuances in connection with certain employee separation agreements.

18. 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.

In order to preserve AllianceBernstein’s status as a private partnership for federal income tax purposes, AllianceBernstein Units must not be considered publicly traded. The AllianceBernstein Partnership Agreement provides that all transfers of AllianceBernstein Units must be approved by AXA Equitable and the General Partner; AXA Equitable and the General Partner approve only those transfers permitted pursuant to one or more of the safe harbors contained in relevant treasury regulations. If such units were considered readily tradable, AllianceBernstein’s net income would be subject to federal and state corporate income tax. Furthermore, should AllianceBernstein enter into a substantial new line of business, Holding, by virtue of its ownership of AllianceBernstein, would lose its status as a “grandfathered” publicly-traded partnership and would become subject to corporate income tax which would reduce materially Holding’s net income and its quarterly distributions to Holding unitholders.

Earnings before income taxes and income tax expense consist of:

   
Years Ended December 31,
 
   
2009
   
2008
   
2007
 
   
(in thousands)
 
                   
Earnings before income taxes:
                 
United States
  $ 539,002     $ 669,205     $ 1,113,185  
Foreign
    85,483       275,024       291,819  
Total
  $ 624,485     $ 944,229     $ 1,405,004  
Income tax expense:
                       
Partnership UBT
  $ 2,420     $ 9,945     $ 30,219  
Corporate subsidiaries:
                       
Federal
    5,550       13,713       6,852  
State and local
    632       1,762       2,733  
Foreign
    32,001       78,367       87,494  
Current tax expense
    40,603       103,787       127,298  
Deferred tax expense (benefit)
    5,374       (7,984 )     547  
Income tax expense
  $ 45,977     $ 95,803     $ 127,845  


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,
 
 
2009
 
2008
 
2007
 
 
(in thousands)
 
                               
UBT statutory rate
  $ 24,979       4.0 %   $ 37,769       4.0 %   $ 55,532       4.0 %
Corporate subsidiaries’ federal, state, local and foreign income taxes
    32,585       5.2       77,732       8.2       83,195       5.9  
Effect of ASC 740 adjustments, miscellaneous taxes, and other
    (1,988 )     (0.3 )     (11,929 )     (1.3 )     2,684       0.2  
Income not taxable resulting from use of UBT business apportionment factors
    (9,599 )     (1.5 )     (7,769 )     (0.8 )     (13,566 )     (1.0 )
Income tax expense and effective tax rate
  $ 45,977       7.4     $ 95,803       10.1     $ 127,845       9.1  

We recognize the effects of a tax position 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, we assume that the taxing authority will examine the tax position and have full knowledge of all relevant information.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

   
Years Ended December 31,
 
   
2009
   
2008
   
2007
 
    (in thousands)  
                         
Balance as of beginning of period
  $ 8,805     $ 19,016     $ 17,862  
Additions for prior year tax positions
    174       324       2,000  
Reductions for prior year tax positions
    -       (603 )     (1,452 )
Additions for current year tax positions
    1,182       1,649       3,317  
Reductions for current year tax positions
    (52 )     (715 )     (303 )
Reductions related to settlements with tax authorities/closed years
    (2,744 )     (10,866 )     (2,408 )
Balance as of end of period
  $ 7,365     $ 8,805     $ 19,016  

The amount of unrecognized tax benefits as of December 31, 2009, 2008 and 2007 when recognized, is recorded as a reduction to income tax expense and reduces the company’s effective tax rate.

Interest and penalties, if any, relating to tax positions are recorded in income tax expense on the consolidated statements of income. The total amount of interest expense (credit) recorded in income tax expense during 2009, 2008 and 2007 was $(0.1) million, $(1.4) million and $0.5 million, respectively.  The total amount of accrued interest recorded on the consolidated statements of financial condition as of December 31, 2009, 2008 and 2007 are $0.8 million, $0.9 million and $2.2 million, respectively. There were no accrued penalties as of December 31, 2009, 2008 or 2007.

The company is generally no longer subject to U.S. federal, or state and local income tax examinations by tax authorities for any year prior to 2006 except as noted below. The Internal Revenue Service (“IRS”) completed an examination of our domestic corporate subsidiaries’ federal tax returns for 2005 in the second quarter of 2009. This examination was settled resulting in a tax payment to the U.S. Treasury in the amount of $0.2 million. The IRS has not indicated whether they will examine our domestic corporate subsidiaries’ federal tax returns for the years subsequent to 2005. The State of New York has begun an examination of the Partnership’s tax returns for the years 2005 and 2006.  This examination is in the preliminary stage and we do not believe an increase in the reserve is necessary. In addition, an assessment has been received resulting from a state and local examination of AllianceBernstein’s corporate subsidiary tax returns for years 2001 through 2004. This matter is in the appeal stage, however, we do not believe an increase in the reserve is necessary.

During December 2008, the examinations of AllianceBernstein’s New York City Partnership tax returns for the years 2003 through 2005 were formerly settled. As a result, we recognized approximately $12.1 million of net unrecognized tax benefits, including accrued interest, during the fourth quarter of 2008.

The Canadian Revenue Agency has commenced an examination of AllianceBernstein’s Canadian subsidiary tax returns for the years 2005-2007. The examination remains in the preliminary stage and we do not believe an increase to the reserve is necessary. Currently, there are no other income tax examinations at our significant non-U.S. subsidiaries. Years that remain open and may be subject to examination vary under local law, and range from one to seven years.

Adjustment to the reserve could occur in light of changing facts and circumstances with respect to aforementioned on-going examinations.


Subject to the results of the examinations for the tax years 2001-2007, under our existing policy for determining whether a tax position is effectively settled for purposes of recognizing previously unrecognized tax benefits, there is the possibility that recognition of unrecognized tax benefits of approximately $2.9 million including accrued interest could occur over the next twelve months.

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 asset (liability) is as follows:

   
December 31,
 
   
2009
   
2008
 
   
(in thousands)
 
Deferred tax asset:
           
Differences between book and tax basis:
           
Deferred compensation plans
  $ 9,593     $ 14,704  
Charge for mutual fund matters, legal proceedings and claims processing contingency
    71       4,179  
Other, primarily accrued expenses deductible when paid
    11,489       5,235  
Deferred tax asset
    21,153       24,118  
Deferred tax liability:
               
Differences between book and tax basis:
               
Intangible assets
    14,056       17,075  
Translation adjustment
    5,902       2,700  
Other, primarily undistributed earnings of certain foreign subsidiaries
    4,576       3,050  
      24,534       22,825  
Net deferred tax asset (liability)
  $ (3,381 )   $ 1,293  

The deferred tax asset is included in other assets. Management has determined that realization of the deferred tax asset is more likely than not based on anticipated future taxable income.

The company provides income taxes on the undistributed earnings of non-U.S. corporate subsidiaries except to the extent that such earnings are permanently invested outside the United States. As of December 31, 2009, $534.4 million of accumulated undistributed earnings of non-U.S. corporate subsidiaries were permanently invested. At existing applicable income tax rates, additional taxes of approximately $26.5 million would need to be provided if such earnings were remitted.


19. Business Segment Information

 Management has assessed the requirements of ASC 280, Segment Reporting, 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, 2009, 2008 and 2007 were as follows:

Services

Net revenues derived from our investment management, research and related services were as follows:

   
Years Ended December 31,
 
   
2009
   
2008
   
2007
 
   
(in millions)
 
   
 
   
 
   
 
 
Institutions
  $ 811     $ 1,241     $ 1,482  
Retail
    888       1,227       1,521  
Private client
    590       850       961  
Bernstein research services
    435       472       424  
Other
    187       (239 )     332  
Total revenues
    2,911       3,551       4,720  
Less: Interest expense
    4       37       195  
Net revenues
  $ 2,907     $ 3,514     $ 4,525  

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:

   
2009
   
2008
   
2007
 
   
(in millions)
 
Net revenues:
 
 
   
 
   
 
 
United States
  $ 2,038     $ 2,258     $ 3,013  
International
    869       1,256       1,512  
Total
  $ 2,907     $ 3,514     $ 4,525  
Long-lived assets:
                       
United States
  $ 3,488     $ 3,576     $ 3,656  
International
    79       40       52  
Total
  $ 3,567     $ 3,616     $ 3,708  

Major Customers

Company-sponsored mutual funds are distributed to individual investors through broker-dealers, insurance sales representatives, banks, registered investment advisers, financial planners and other financial intermediaries. AXA Advisors, LLC (“AXA Advisors”), a wholly-owned subsidiary of AXA Financial that uses members of the AXA Equitable insurance agency sales force as its registered representatives, has entered into a selected dealer agreement with AllianceBernstein Investments and has been responsible for 2%, 4% and 2% of our open-end mutual fund sales in 2009, 2008 and 2007, respectively. Subsidiaries of Merrill Lynch & Co., Inc. (“Merrill Lynch”), which was acquired by Bank of America Corporation in 2008, was responsible for approximately 5%, 8% and 7% of our open-end mutual fund sales in 2009, 2008 and 2007, respectively. Morgan Stanley Smith Barney LLC (formed by the combination of the Global Wealth Management Group of Morgan Stanley & Co. Incorporated and the Smith Barney division of Citigroup Global Markets Inc.) was responsible for approximately 5% of open-end mutual fund sales in 2009.  Citigroup, Inc. and its subsidiaries (“Citigroup”), was responsible for approximately 7% of our open-end mutual fund sales in 2008 and 2007. AXA Advisors, Merrill Lynch, Morgan Stanley Smith Barney and Citigroup are under no obligation to sell a specific amount of shares of company-sponsored mutual funds, and each also sells shares of mutual funds that it sponsors and that are sponsored by unaffiliated organizations (in the case of Merrill Lynch, Morgan Stanley Smith Barney 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 4%, 5% and 5% of total revenues for each of the years ended December 31, 2009, 2008 and 2007, respectively. No single institutional client other than AXA and its subsidiaries accounted for more than 1% of total revenues for the years ended December 31, 2009, 2008 and 2007.


20. Related Party Transactions

Mutual Funds

Investment management, distribution, shareholder and administrative, and brokerage services are provided to individual investors by means of retail mutual funds sponsored by our company, our subsidiaries and our affiliated joint venture companies. Substantially all of these services are provided under contracts that set forth the services to be provided and the fees to be charged. The contracts are subject to annual review and approval by each of the mutual funds’ boards of directors or trustees and, in certain circumstances, by the mutual funds’ shareholders. Revenues for services provided or related to the mutual funds are as follows:

 
Years Ended December 31,
 
 
2009
 
2008
 
2007
 
 
(in thousands)
 
             
Investment advisory and services fees
  $ 658,476     $ 870,524     $ 1,027,636  
Distribution revenues
    277,328       378,425       473,435  
Shareholder servicing fees
    90,141       99,028       103,604  
Other revenues
    6,962       6,868       6,502  
Bernstein research services
    1,138       1,233       1,583  

AXA and its Subsidiaries

We provide investment management and certain administration services to AXA and its subsidiaries. In addition, AXA and its subsidiaries distribute company-sponsored mutual funds, for which they receive commissions and distribution payments. Sales of company-sponsored mutual funds through AXA and its subsidiaries, excluding cash management products, aggregated approximately $0.3 billion, $0.7 billion and $0.5 billion for the years ended December 31, 2009, 2008 and 2007, respectively. Also, we are covered by various insurance policies maintained by AXA subsidiaries and we pay fees for technology and other services provided by AXA and its subsidiaries that are included in General and Administrative expenses. Aggregate amounts included in the consolidated financial statements for transactions with AXA and its subsidiaries are as follows:

   
Years Ended December 31,
 
   
2009
   
2008
   
2007
 
   
(in thousands)
 
Revenues:
                 
Investment advisory and services fees
  $ 129,012     $ 180,689     $ 208,786  
Bernstein research services
    71       225       606  
Other revenues
    568       697       824  
    $ 129,651     $ 181,611     $ 210,216  
Expenses:
                       
Commissions and distribution payments to financial intermediaries
  $ 6,918     $ 9,408     $ 7,178  
Other promotion and servicing
    1,935       703       1,409  
General and administrative
    17,285       13,843       10,219  
    $ 26,138     $ 23,954     $ 18,806  
Balance Sheet:
                       
Institutional investment advisory and services fees receivable
  $ 11,287     $ 7,349     $ 10,103  
Other due (to) from AXA and its subsidiaries
    (3,888 )     (2,679 )     (2,405 )
    $ 7,399     $ 4,670     $ 7,698  

AllianceBernstein and AXA Asia Pacific Holdings Limited (“AXA Asia Pacific”) own 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 $40.9 million, $68.3 million and $77.6 million, for the years ended December 31, 2009, 2008 and 2007, respectively, of which approximately $14.0 million, $19.6 million and $22.9 million, respectively, were from AXA affiliates and are included in the table above. Minority interest recorded for these companies was $3.7 million, $9.7 million and $11.1 million for the years ended December 31, 2009, 2008 and 2007, respectively.

AllianceBernstein Venture Fund I, L.P. was launched during the fourth quarter of 2006.  It seeks to achieve its investment objective, which is long-term capital appreciation through equity and equity-related investments, by acquiring early-stage growth companies in private transactions. 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 $163 million, $167 million and $136 million of investments on the consolidated statement of financial condition as of December 31, 2009, 2008 and 2007, respectively. AXA Equitable holds a 10% limited partnership interest in this fund.


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 (see Note 15). Amounts paid by the General Partner to AllianceBernstein for the Capital Accumulation Plan and the Contractual Arrangements for the years ended December 31, 2009, 2008 and 2007 was $4.9 million.

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, 2009, 2008 and 2007 are as follows:

   
December 31,
 
   
2009
 
2008
 
2007
 
   
(in thousands)
 
               
Due from Holding, net
  $ 1,484     $ 4,825     $ 7,460  
                         
Due from unconsolidated joint ventures, net
  $     $     $ 255  

21. Comprehensive Income

Comprehensive income consisted of:

   
Years Ended December 31,
 
   
2009
   
2008
   
2007
 
   
(in thousands)
 
       
Net income
  $ 578,508     $ 848,426     $ 1,277,159  
Other comprehensive income (loss), net of tax:
                       
Unrealized gains (losses) on investments
    4,391       (3,962 )     (8,800 )
Foreign currency translation adjustment
    43,172       (100,268 )     19,871  
Changes in retirement plan related items
    6,955       (24,763 )     10,040  
Comprehensive income
    633,026       719,433       1,298,270  
Comprehensive (income) loss of consolidated entities attributable to non-controlling interests
    (26,614 )     (5,445 )     (17,888 )
Comprehensive income attributable to AllianceBernstein Unitholders
  $ 606,412     $ 713,988     $ 1,280,382  

22. Accounting Pronouncements

In June 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-17, Consolidations (Topic 810) – Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This standard changes how a company determines when an entity that is insufficiently capitalized or is not controlled through voting should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. This standard will require additional disclosures about involvement with variable interest entities and any significant changes in risk exposure due to that involvement, including how involvement with a variable interest entity affects the financial statements. The provisions of this standard are effective January 1, 2010. In January 2010, the FASB deferred portions of ASU 2009-17 as they relate to asset managers.  Management is currently evaluating the impact that the adoption of this standard will have on our consolidated financial statements. The adoption of this standard may require that a significant amount of assets, liabilities, revenues and expenses of certain variable interest entities in which we have a minimal financial ownership interest be included in our consolidated financial statements, with corresponding offsets to non-controlling interests.


23. Quarterly Financial Data (Unaudited)

   
Quarters Ended 2009
 
   
December 31
   
September 30
   
June 30
   
March 31
 
   
(in thousands, except per unit amounts)
 
   
 
   
 
   
 
   
 
 
Net revenues
  $ 781,861     $ 806,014     $ 721,440     $ 597,564  
Net income attributable to AllianceBernstein Unitholders
  $ 191,640     $ 199,341     $ 128,295     $ 36,851  
Basic net income per AllianceBernstein Unit(1)
  $ 0.71     $ 0.74     $ 0.48     $ 0.14  
Diluted net income per AllianceBernstein Unit(1)
  $ 0.70     $ 0.74     $ 0.48     $ 0.14  
Cash distributions per AllianceBernstein Unit(2)
  $ 0.70     $ 0.74     $ 0.48     $ 0.14  


   
Quarters Ended 2008
 
   
December 31
   
September 30
   
June 30
   
March 31
 
   
(in thousands, except per unit amounts)
 
   
 
   
 
   
 
   
 
 
Net revenues
  $ 580,522     $ 840,991     $ 1,063,624     $ 1,029,022  
Net income attributable to AllianceBernstein Unitholders
  $ 91,979     $ 219,529     $ 280,289     $ 247,443  
Basic net income per AllianceBernstein Unit(1)
  $ 0.35     $ 0.83     $ 1.06     $ 0.94  
Diluted net income per AllianceBernstein Unit(1)
  $ 0.35     $ 0.83     $ 1.06     $ 0.94  
Cash distributions per AllianceBernstein Unit(2) (3) (4)
  $ 0.37     $ 0.70     $ 1.06     $ 0.94  
_____________
(1)
Basic and diluted net income per unit are computed independently for each of the periods presented. Accordingly, the sum of the quarterly net income per unit amounts may not agree to the total for the year.

(2)
Declared and paid during the following quarter.

(3)
During the fourth quarter of 2006, we recorded a $56.0 million pre-tax charge ($54.5 million, net of related income tax benefit) for the estimated cost of reimbursing certain clients for losses arising out of an error we made in processing claims for class action settlement proceeds on behalf of these clients, which include some AllianceBernstein-sponsored mutual funds. During the third quarter of 2008, we recorded approximately $35.3 million in insurance recoveries relating to this error. AllianceBernstein’s and Holding’s fourth quarter 2006 cash distributions were based on net income as calculated prior to AllianceBernstein recording the charge. Accordingly, the related insurance recoveries ($0.13 per unit) were not included in AllianceBernstein’s or Holding’s cash distribution to unitholders for the third quarter of 2008.

(4)
During the fourth quarter of 2008, we recorded an additional $5.1 million ($0.02 per unit) provision for income taxes subsequent to the declaration of the fourth quarter 2008 cash distribution of $0.37 per unit. As a result, the cash distribution per unit in the fourth quarter of 2008 is $0.02 higher than diluted net income per unit.


Report of Independent Registered Public Accounting Firm

To the General Partner and Unitholders
AllianceBernstein L.P.:

In our opinion, the accompanying consolidated statements of financial condition and the related consolidated statements of income, changes in partners’ capital and comprehensive income and cash flows present fairly, in all material respects, the financial position of AllianceBernstein L.P. and its subsidiaries (“AllianceBernstein”) at December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, AllianceBernstein maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). AllianceBernstein’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on AllianceBernstein’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/  PricewaterhouseCoopers LLP   
New York, New York
February 11, 2010


Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Neither AllianceBernstein nor Holding had any changes in or disagreements with accountants in respect of accounting or financial disclosure.


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 that 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 officer, 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 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, 2009. In making its assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (“COSO criteria”).

Based on its assessment, management concluded that, as of December 31, 2009, each of Holding and AllianceBernstein maintained effective internal control over financial reporting based on the COSO criteria.

PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the 2009 financial statements included in this Form 10-K, has issued an attestation report on the effectiveness of each of Holding’s and AllianceBernstein’s internal control over financial reporting as of December 31, 2009. 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 2009 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Item 9B.
Other Information

Both AllianceBernstein and Holding reported all information required to be disclosed on Form 8-K during the fourth quarter of 2009.


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 each of the Partnerships. The General Partner has agreed that it will conduct no active business other than managing the Partnerships, although it may make certain investments for its own account. Neither AllianceBernstein Unitholders nor Holding Unitholders have any rights to manage or control the Partnerships, or to elect directors of the General Partner. The General Partner is an indirect, wholly-owned subsidiary of AXA.

The General Partner does not receive any compensation from AllianceBernstein or Holding for services rendered to them as their general partner. The General Partner holds a 1% general partnership interest in AllianceBernstein and 100,000 units of general partnership interest in Holding. Each general partnership unit in Holding is entitled to receive distributions equal to those received by each limited partnership unit.

The General Partner is entitled to reimbursement by AllianceBernstein for any expenses it incurs in carrying out its activities as general partner of the Partnerships, including compensation paid by the General Partner to its directors and officers (to the extent such persons are not compensated directly by AllianceBernstein).

Directors and Executive Officers

As of February 11, 2010, the directors and executive officers of the General Partner were as follows (officers of the General Partner serve as equivalent officers of AllianceBernstein and Holding):

Name
Age
Position
Peter S. Kraus
57
Chairman of the Board and Chief Executive Officer
Dominique Carrel-Billiard
43
Director
Christopher M. Condron
62
Director
Henri de Castries
55
Director
Denis Duverne
56
Director
Richard S. Dziadzio
46
Director
Deborah S. Hechinger
59
Director
Weston M. Hicks
53
Director
Nick Lane
36
Director
Lorie A. Slutsky
57
Director
A.W. (Pete) Smith, Jr.
66
Director
Peter J. Tobin
65
Director
     
Laurence E. Cranch
63
General Counsel
James A. Gingrich
51
Chairman and Chief Executive Officer of SCB LLC
Robert H. Joseph, Jr.
62
Chief Financial Officer
Lori A. Massad
45
Chief Talent Officer – Talent Development and Human Capital
David A. Steyn
50
Chief Operating Officer


Biographies

Mr. Kraus was elected Chairman of the Board of the General Partner and Chief Executive Officer of the General Partner, AllianceBernstein and Holding in December 2008. Mr. Kraus has in-depth experience in the financial markets, including investment banking, asset management and private wealth management. Most recently, he served as an executive vice president, the head of global strategy and a member of the Management Committee of Merrill Lynch from September 2008 through December 2008. Prior to joining Merrill Lynch, Mr. Kraus spent 22 years with Goldman Sachs Group Inc. (“Goldman”), where he most recently served as co-head of the Investment Management Division and a member of the Management Committee, as well as head of firm-wide strategy and chairman of the Strategy Committee. Mr. Kraus also served as co-head of the Financial Institutions Group. He was named a partner at Goldman in 1994 and managing director in 1996. Mr. Kraus is a member of the Management Board of AXA (“AXA Management Board”) and was named a Director of AXA Financial, AXA Equitable, MONY Life Insurance Company (a wholly-owned subsidiary of AXA Financial, “MONY”) and MONY Life Insurance Company of America (a wholly-owned subsidiary of MONY, "MLOA") on February 12, 2009. He is also Chairman of the Investment Committee of Trinity College, Chairman of the Board of Overseers of CalArts, Co-Chair of the Friends of the Carnegie International, a member of the board of Keewaydin Camp and a member of the board of Young Audiences, Inc., a non-profit organization that works with educational systems, the arts community and private and public sectors to provide arts education to children.

Mr. Carrel-Billiard was elected a Director of the General Partner in July 2004. He has been Chief Executive Officer of AXA Investment Managers S.A. (“AXA IM”), a subsidiary of AXA, since June 2006 and was named to the AXA Group Executive Committee in January 2009. He is also a member of the boards of directors of various other privately-held subsidiaries and affiliates of the AXA Group. Mr. Carrel-Billiard joined AXA in June 2004 as the Senior Vice President-Business Support and Development in charge of AXA Financial, asset management and reinsurance. Prior to joining AXA, Mr. Carrel-Billiard was a Partner of McKinsey & Company (“McKinsey”), a strategic consulting firm, 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. Condron was elected a Director of the General Partner in May 2001. He has been Director, President and Chief Executive Officer of AXA Financial since May 2001. He is Chairman of the Board, Chief Executive Officer and President of AXA Equitable and a member of the AXA Management Board. In addition, Mr. Condron is Chairman of the Board, President and Chief Executive Officer of MONY and MLOA, which AXA Financial acquired in July 2004. In January 2010, he assumed the additional responsibility of overseeing AXA’s global Life & Savings and Health businesses. 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 has been a member of the Board of Directors of Keefe Bruyette & Woods, Inc. (NYSE: KBW), a full-service investment bank and broker-dealer, since January 2007. He also serves as Chairman of KBW’s compensation committee and as a member of its audit committee and its corporate governance and nominating committee. Mr. Condron is also a member of the boards of directors of The American Council of Life Insurers and the Financial Services Round Table.

Mr. de Castries was elected a Director of the General Partner in October 1993. Since May 2000, he has been Chairman of the AXA Management Board. Prior thereto, he served AXA in various capacities, including Vice Chairman of the AXA 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 in February 1996 and was elected Chairman of AXA Financial in April 1998.

Mr. Duverne was elected a Director of the General Partner in February 1996. In January 2010, he was selected to oversee AXA Group strategy, finance and operations with AXA’s Chief Operating Officer, Chief Financial Officer and Chief Risk Officer reporting to him.  Mr. Duverne has been a member of the AXA Management Board since February 2003. He was Chief Financial Officer of AXA from May 2003 through December 2009. From January 2000 to May 2003, Mr. Duverne served as Group Executive Vice President-Finance, Control and Strategy. Mr. Duverne joined AXA as Senior Vice President in 1995. He is a Director of AXA Financial, AXA Equitable and various other subsidiaries and affiliates of the AXA Group.

Mr. Dziadzio was re-elected a Director of the General Partner in May 2007. (He had previously served on the Board from February 2001 to May 2004.) The Chief Financial Officer of AXA Financial and AXA Equitable since January 2007, Mr. Dziadzio was elected Senior Executive Vice President of AXA Equitable in January 2010. He joined AXA Financial and AXA Equitable in July 2004 and was elected Executive Vice President in September 2004. He became Deputy Chief Financial Officer of AXA Financial and AXA Equitable in September 2005.  Prior to joining AXA Financial, Mr. Dziadzio held various positions with subsidiaries and affiliates of the AXA Group, which he originally joined in 1994 as a senior analyst in the corporate finance department, working primarily on mergers and acquisitions. In 1997, he was promoted to corporate finance officer, handling corporate finance activities for the group in insurance and asset management in the U.S. and U.K. In 1998, Mr. Dziadzio became head of finance and administration for AXA Real Estate Investment Managers, a subsidiary of AXA. From February 2001 to June 2004, he was responsible for business support and development for AXA Financial, AllianceBernstein and AXA IM.

Ms. Hechinger was elected a Director of the General Partner in May 2007. Currently an independent consultant on non-profit governance, she was President and Chief Executive Officer of BoardSource, a leading governance resource for non-profit organizations, from 2003 to 2007. From 2004 to 2007, Ms. Hechinger also served as co-convener of the Governance and Fiduciary Responsibilities work group, one of the five groups established by the Panel on the Nonprofit Sector to make recommendations to Congress on ways to improve the governance and accountability of non-profit organizations. She also served on the Advisory Board for the Center for Effective Philanthropy and was a Member of the Ethics and Accountability Committee at Independent Sector. Prior to joining BoardSource, Ms. Hechinger was the Executive Vice President of the World Wildlife Fund, a large, global conservation organization, where she oversaw all fundraising, communication and operations activities. She has also served as a Deputy Comptroller and as Director of the Securities and Corporate Practices Division at the Office of the Comptroller of the Currency and has held senior executive positions in the Division of Enforcement at the SEC.

Mr. Hicks was elected a Director of the General Partner in July 2005. A professional investor and CFA charter holder, he has been a Director and the President and chief executive officer of Alleghany Corporation (NYSE: Y, “Alleghany”), an insurance and diversified financial services holding company, since December 2004 and was Executive Vice President of Alleghany from October 2002 until December 2004. From March 2001 through October 2002, Mr. Hicks was Executive Vice President and Chief Financial Officer of The Chubb Corporation.

Mr. Lane was elected a Director of the General Partner in July 2008. He is currently the head of AXA Group strategy and he is the Business Support Development representative for AXA Equitable, AXA IM, AllianceBernstein and AXA’s global Life & Savings business. Previously, Mr. Lane served as Vice Chairman of AXA Advisors LLC and AXA Network LLC where he was charged with overseeing the Retail Broker Dealer and Network Business as well as its enterprise operations and supervision systems. Prior to joining AXA Equitable, Mr. Lane worked for McKinsey where he was a leader in their sales and marketing practice. His previous experiences also include serving as an infantry officer in the United States Marine Corps and working on the floor of the NYSE. AXA IM, AXA Advisors and AXA Network are subsidiaries of AXA.


Ms. Slutsky was elected a Director of the General Partner in July 2002. Since January 1990, she has been President and Chief Executive Officer of The New York Community Trust, a community foundation that manages a $2 billion endowment and annually grants more than $150 million. Ms. Slutsky served on the Board of Directors of BoardSource from 1999 to 2008 and served as its Chair from 2005 to 2007.  She has been a Director of AXA Financial (as well as a member of its Audit Committee and Organization and Compensation Committee), AXA Equitable, MONY and MLOA since September 2006.

Mr. Smith was elected a Director of the General Partner in July 2005. The former CEO of Watson Wyatt Worldwide, he was also President of the Private Sector Council, a non-profit public service organization dedicated to improving the efficiency of the federal government, from September 2000 until May 2005. Mr. Smith has been President of Smith Consulting, a privately-held company specializing in executive compensation consulting, since June 2005.

Mr. Tobin was elected a Director of the General Partner in May 2000. From September 2003 to June 2005, he was Special Assistant to the President of St. John’s University. Prior thereto, Mr. Tobin served as Dean of the Tobin College of Business of St. John’s University from August 1998 to September 2003. As Dean, Mr. Tobin was the chief executive and academic leader of the College of Business. Mr. Tobin was Chief Financial Officer at The Chase Manhattan Corporation from 1996 to 1997. Prior thereto, he was Chief Financial Officer of Chemical Bank (which merged with Chase in 1996) from 1991 to 1996 and Chief Financial Officer of Manufacturers Hanover Trust (which merged with Chemical in 1991) from 1985 to 1991. Mr. Tobin has served on the board of directors of CIT Group Inc. (NYSE: CIT) since 1985 (except for one year during which CIT Group was owned by Tyco). He has been a Director of AXA Financial and AXA Equitable since March 1999 and also serves on AXA Financial's Audit Committee, Investment Committee, Investment and Finance Committee, Organization and Compensation Committee, and Executive Committee.

Mr. Cranch has been our General Counsel since he joined our firm 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. Gingrich joined our firm in 1999 as a senior research analyst on the sell-side and has been Chairman and Chief Executive Officer of SCB LLC since February 2007. Prior to becoming Chairman and CEO of SCB LLC, Mr. Gingrich had served as Global Director of Research from December 2002 to January 2007.

Mr. Joseph joined our firm in 1984 and held various financial positions until his election as Chief Financial Officer in 1994. Before joining AllianceBernstein, Mr. Joseph was a Senior Audit Manager with Price Waterhouse for 13 years.

Ms. Massad joined our firm in 2006 as Chief Talent Officer.  In February 2009, her role was expanded to include oversight of Human Capital in addition to Talent Development. Prior to joining our firm, Ms. Massad served as Chief Talent Officer and Chief Operating Officer at Marakon Associates, a strategy consulting firm from 2004 to 2006. Before Marakon, Ms. Massad was a founding member of two start-ups: Spencer Stuart Talent Network (in 2001) and EmployeeMatters, a human resources outsourcing firm (in 2000). Before that, she spent eight years at The Boston Consulting Group, where she became a senior manager on the consulting staff and leader of the firm’s recruiting, training and development programs. While with The Boston Consulting Group, Ms. Massad was also an adjunct professor at New York University’s Leonard Stern School of Business.

Mr. Steyn joined our firm in 1999, having been the founding co-Chief Executive Officer of Bernstein’s London office, and has been Chief Operating Officer of AllianceBernstein since July 2009.  As COO, the heads of Distribution Services (Institutions, Retail and Private Clients) and the heads of Corporate and Fiduciary Services (IT, Operations, Finance, and Legal & Compliance) report to him.  Mr. Steyn was the Global Head of Distribution Services from April 2007 through July 2009, prior to which he had been Head of Institutions since November 2003.

Corporate Governance

Board of Directors

The Board holds regular quarterly meetings, generally in February, May, July or August, and November of each year, and holds special meetings or takes action by unanimous written consent as circumstances warrant. The Board has standing Executive, Audit, Corporate Governance, Compensation and Special Committees, each of which is described in further detail below. Of the directors, only Mr. de Castries attended fewer than 75% of the aggregate of all Board and committee meetings which he was entitled to attend in 2009.


Committees of the Board

The Executive Committee of the Board (“Executive Committee”) is composed of Ms. Slutsky and Messrs. Condron, Duverne, Kraus (Chair) and Tobin. The Executive Committee exercises all of the powers and authority of the Board (with limited exceptions) when the Board is not in session, or when it is impractical to assemble the full Board. The Executive Committee held four meetings in 2009.

The Corporate Governance Committee of the Board (“Governance Committee”) is composed of Mr. Condron, Ms. Hechinger (Chair), Mr. Kraus, and Ms. Slutsky. 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 2009.

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 ten meetings in 2009.

The functions of each of the committees discussed above are more fully described in each committee’s charter.  The charters are available on our Internet site (http://www.alliancebernstein.com).

The Compensation Committee of the Board (“Compensation Committee”) is composed of Mr. Condron (Chair), Mr. Kraus, Ms. Slutsky and Mr. Smith. For additional information about the Compensation Committee, see “Compensation Discussion & Analysis—Compensation Committee” in Item 11.

The Special Committee of the Board (“Special Committee”) is composed of Ms. Hechinger, Mr. Hicks, Ms. Slutsky, Mr. Smith and Mr. Tobin (Chair).  The Special Committee has the authority to direct and oversee any matters referred to it by the Board and/or management including, but not limited to, matters relating to conflicts of interest and the relationship among AllianceBernstein, Holding and AXA.  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 held five meetings during 2009.

Audit Committee Financial Experts

In January 2009, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Weston M. Hicks and Peter J. Tobin is an “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K. The Board so determined at its regular meeting in February 2009. The Board also determined at this 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.

In February 2010, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that Peter J. Tobin is an “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K. The Board so determined at its regular meeting in February 2010. The Board also determined at this 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

In January 2009 and February 2010, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Ms. Hechinger, Mr. Hicks, Ms. Slutsky, Mr. Smith and Mr. Tobin is “independent” within the meaning of Section 303A.02 of the NYSE Listed Company Manual. The Board considered immaterial relationships of Ms. Hechinger (relating to her service as an executive officer of BoardSource concurrently with Ms. Slutsky serving as that company’s Chairperson), Mr. Hicks (relating to Alleghany Corporation being a client of SCB LLC and Mr. Hicks having been employed by Bernstein from 1991 to 1999) and Ms. Slutsky (relating to contributions formerly made by AllianceBernstein to The New York Community Trust, of which she is President and Chief Executive Officer) and then determined, at both its February 2009 and February 2010 regular meetings, that each of Ms. Hechinger, Mr. Hicks, Ms. Slutsky, Mr. Smith and Mr. Tobin is independent within the meaning of the relevant rules.


Code of Ethics and Related Policies

All of our directors, officers and employees are subject to our Code of Business Conduct and Ethics. The code is intended to comply with Section 303A.10 of the NYSE Listed Company Manual, Rule 204A-1 under the Investment Advisers Act and Rule 17j-1 under the Investment Company Act, as well as with recommendations issued by the Investment Company Institute regarding, among other things, practices and standards with respect to securities transactions of investment professionals. The Code of Business Conduct and Ethics establishes certain guiding principles for all of our employees, including sensitivity to our fiduciary obligations and ensuring that we meet those obligations. Our Code of Business Conduct and Ethics may be found in the “Corporate Governance” portion of our Internet site (http://www.alliancebernstein.com).

We have adopted a Code of Ethics for the Chief Executive Officer and Senior Financial Officers, which is intended to comply with Section 406 of the Sarbanes-Oxley Act of 2002 (“Item 406 Code”). The Item 406 Code was adopted on October 28, 2004 by the Executive Committee. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding certain amendments to, or waivers from, provisions of the Item 406 Code that apply to the Chief Executive Officer, Chief Financial Officer and Controller by posting such information on our Internet site (http://www.alliancebernstein.com). To date, there have been no such amendments or waivers.

NYSE Governance Matters

Section 303A.00 of the NYSE Listed Company Manual exempts limited partnerships from compliance with the following sections of the Manual: Section 303A.01 (board must have a majority of independent directors), 303A.04 (corporate governance committee must have only independent directors as its members), and 303A.05 (compensation committee must have only independent directors as its members). Holding is a limited partnership (as is AllianceBernstein). In addition, because the General Partner is a wholly-owned subsidiary of AXA, and the General Partner controls Holding (and AllianceBernstein), we believe we would also qualify for the “controlled company” exemption. Notwithstanding the foregoing, the Board has adopted a Corporate Governance Committee Charter that complies with Section 303A.04 and a Compensation Committee Charter that complies with Section 303A.05. However, not all members of these committees are independent.

Our Corporate Governance Guidelines (“Guidelines”) promote the effective functioning of the Board and its committees, promote the interests of the Partnerships’ respective unitholders, with appropriate regard to the Board’s duties to the sole stockholder of the General Partner, and set forth a common set of expectations as to how the Board, its various committees, individual directors and management should perform their functions. The Guidelines may be found in the “Corporate Governance” portion of our Internet site (http://www.alliancebernstein.com).

The Corporate Governance Committee is responsible for considering any request for a waiver under the Code of Business Conduct and Ethics, the Item 406 Code, the AXA Group Compliance and Ethics Guide, and the AXA Financial Policy Statement on Ethics from any director or executive officer of the General Partner. Any such waiver that has been granted would be set forth in the “Corporate Governance” portion of our Internet site (http://www.alliancebernstein.com).

Peter J. Tobin has been chosen to preside at all executive sessions of non-management and independent directors. Interested parties wishing to communicate directly with Mr. Tobin may send an e-mail, with “confidential” in the subject line, to corporate_secretary@alliancebernstein.com. Upon receipt, our Corporate Secretary will promptly forward all such e-mails to Mr. Tobin. Interested parties may also address mail to Mr. Tobin in care of Corporate Secretary, AllianceBernstein Corporation, 1345 Avenue of the Americas, New York, NY 10105, and the Corporate Secretary will promptly forward such mail to Mr. Tobin. We have posted this information in the “Corporate Governance” portion of our Internet site (http://www.alliancebernstein.com).

Our Internet site (http://www.alliancebernstein.com), under the heading “Contact our Directors”, provides an e-mail address for any interested party, including unitholders, to communicate with the Board of Directors. Our Corporate Secretary reviews e-mails sent to that address and has some discretion in determining how or whether to respond, and in determining to whom such e-mails should be forwarded. In our experience, substantially all of the e-mails received are ordinary client requests for administrative assistance that are best addressed by management or solicitations of various kinds.

The 2009 Certification by our Chief Executive Officer under NYSE Listed Company Manual Section 303A.12(a) was submitted to the NYSE on March 13, 2009.

Certifications by our Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 have been furnished as exhibits to this Form 10-K.

Holding Unitholders and AllianceBernstein Unitholders may request a copy of any committee charter, the Guidelines, the Code of Business Conduct and Ethics, and the Item 406 Code by contacting our Corporate Secretary (corporate_secretary@alliancebernstein.com). The charters and memberships of the Executive, Audit, Corporate Governance and Compensation Committees may be found in the “Corporate Governance” portion of our Internet site (http://www.alliancebernstein.com).


Fiduciary Culture

We maintain a robust fiduciary culture and, as a fiduciary, we place the interests of our clients first and foremost. We are committed to the fair and equitable treatment of all our clients, and to compliance with all applicable rules and regulations and internal policies to which our business is subject. We pursue these goals through education of our employees to promote awareness of our fiduciary obligations, incentives that align employees’ interests with those of our clients, and a range of measures, including active monitoring, to ensure regulatory compliance. Specific steps we have taken to help us achieve these goals include:

 
establishing two committees, the Code of Ethics Oversight Committee (“Ethics Committee”) and the Internal Compliance Controls Committee (“Compliance Committee”), composed of our executive officers and other senior executives to oversee and resolve code of ethics and compliance-related issues;

 
creating an ombudsman office, where employees and others can voice concerns on a confidential basis;

 
initiating firm-wide compliance and ethics training programs; and

 
appointing a Conflicts Officer and establishing a Conflicts Committee to identify and manage conflicts of interest.

The Ethics Committee oversees all matters relating to issues arising under the AllianceBernstein Code of Business Conduct and Ethics. The Ethics Committee meets on a quarterly basis and at such other times as circumstances warrant. The Ethics Committee and its subcommittee, the Personal Trading Subcommittee, have oversight of personal trading by our employees.

The Compliance Committee 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 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 2009: (i) all Section 16(a) filing requirements relating to Holding were complied with, except that a Form 4 was not timely filed for Mr. Cranch relating to his 2009 restricted Holding Unit award; and (ii) all Section 16(a) filing requirements relating to AllianceBernstein were complied with. Our Section 16 filings can be found under “Investor & Media Relations” / “Reports & SEC Filings” on our Internet site (http://www.alliancebernstein.com).


Item 11.
Executive Compensation

Compensation Discussion and Analysis (“CD&A”)

Overview of Compensation Philosophy and Program

The intellectual capital of our employees is collectively the most important asset of our firm. We invest in people—we hire qualified people, train them, encourage them to give their best thinking to the firm and our clients, and compensate them in a manner designed to motivate and retain them. As a result, the costs of employee compensation and benefits are significant, comprising approximately 56% of our operating expenses and representing approximately 48.5% of our adjusted revenues (as defined below) for 2009. Although these percentages are not unusual for companies in the financial services industry, the magnitude of this expense requires that it be monitored by management, and overseen by the Board, with the particular attention of the Compensation Committee.

We believe that the quality, skill, and dedication of our executives are critical to enhancing the long-term value of our company. Our key compensation goals are to attract and retain highly-qualified executive talent, provide rewards for the past year’s performance, provide incentives for future performance and align our executives’ long-term interests with those of our clients and Unitholders. We believe that success in achieving good results for the firm, and for our Unitholders, flows from achieving investment success for our clients.

We utilize a variety of compensation elements to achieve the goals described above, including base salary, annual short-term incentive compensation awards (cash bonuses), a long-term incentive compensation award program under which awards of restricted Holding Units are made and a defined contribution plan, all of which are discussed in more detail below.

Although estimates are developed for budgeting and strategic planning purposes, executive compensation is not correlated with meeting any specific targets. (Some of our salespeople have compensation incentives based on sales levels.)

In addition to the compensation goals discussed above, in 2009, we also focused on adjusting our compensation practices to make them more competitive with industry peers and increasing the potential for wealth creation for our executives and employees in order to attract, motivate and retain top talent.  As a result (and as we noted in Note 2 to the consolidated financial statements in our Forms 10-Q for the quarters ended June 30, 2009 and September 30, 2009), we changed our approach regarding long-term incentive compensation.  Specifically, in 2009, all long-term incentive compensation awards were in the form of restricted Holding Units and, accordingly, unlike in previous years, executives (and employees) were not able to notionally allocate any of their 2009 awards to our investment services.

Overview of 2009 Incentive Compensation Program

Our 2009 incentive compensation, generally consisting of annual cash bonuses and restricted Holding Unit awards, is intended to reward our executives (and any other employee with 2009 total compensation in excess of $200,000) for their performance and encourage them to remain with the firm. Annual cash bonuses generally reflect individual performance and the financial performance of the firm and provide a shorter-term incentive to remain through year-end because such bonuses are typically paid during the last week of the year. Restricted Holding Unit awards provide future earnings potential and encourage longer-term retention because such awards vest over time and are subject to forfeiture; recipients are therefore encouraged to remain with the firm.

The aggregate amount of incentive compensation (i.e., the amount available to pay annual cash bonuses and make restricted Holding Unit awards to executives and other employees) is determined on a discretionary basis and is primarily a function of our firm’s financial performance.  Amounts are awarded to help us achieve our goal of attracting, motivating and retaining top talent while also helping ensure that our unitholders receive an appropriate return on their investment.  In 2009, senior management, with the approval of the Compensation Committee, determined that the appropriate metric to consider in determining the amount of incentive compensation for 2009 and future years is the ratio of adjusted employee compensation and benefits expense to adjusted revenues.  (We define adjusted employee compensation and benefits expense as employee compensation and benefits expense minus other employment costs such as recruitment, meals, temporary help, and training and seminars.  We define adjusted revenues as net revenues minus distribution revenues.)  Senior management, with the approval of the Compensation Committee, also determined that adjusted employee compensation and benefits expense should range between 45% and 50% of our adjusted revenues except in unexpected or unusual circumstances.


As shown in the table below, in 2009, adjusted employee compensation and benefits expense amounted to 48.5% of adjusted revenue (in thousands):


Net Revenues
  $ 2,906,879  
Distribution Revenues
  $ (277,328 )
Adjusted Revenues
  $ 2,629,551  
         
Employee Compensation & Benefits Expense
  $ 1,298,053  
Other Employment Costs
  $ (23,806 )
Adjusted Employee Compensation & Benefits Expense
  $ 1,274,247  
         
Adjusted Compensation Ratio
    48.5 %


Our 2009 adjusted compensation ratio is towards the high end of the range discussed above, reflecting the need to keep compensation levels competitive with industry peers.  In determining the appropriate level of compensation for the firm’s executives, senior management considered compensation benchmarking data from McLagan Partners (“McLagan”), which included comparisons of estimated 2009 executive compensation to executive compensation in 2008 as well as 2007.

Employees with total compensation in excess of $200,000 received a portion of their incentive compensation in the form of a cash bonus and a portion in the form of restricted Holding Units.  The split between cash bonus and restricted Holding Units varied depending on the employee’s total compensation, with lower-paid employees receiving a greater percentage of their incentive compensation as cash bonuses than more highly-paid employees. Quarterly cash distributions on vested and unvested restricted Holding Units are paid currently to award recipients.


Overview of our Chief Executive Officer’s Compensation

On December 19, 2008, Peter S. Kraus, the General Partner, AllianceBernstein and Holding entered into an agreement (“Kraus Employment Agreement”) pursuant to which Mr. Kraus is to serve as Chairman of the Board of the General Partner and CEO of the General Partner, AllianceBernstein and Holding until January 2, 2014 (“Employment Term”) unless the Kraus Employment Agreement is terminated in accordance with its terms.

In connection with the commencement of Mr. Kraus’s employment, on December 19, 2008, he was granted 2,722,052 restricted Holding Units (“Restricted Holding Unit Grant”). Subject to accelerated vesting clauses in the Kraus Employment Agreement, Mr. Kraus’s restricted Holding Units vest ratably on each of the first five anniversaries of December 19, 2008, commencing December 19, 2009, provided, with respect to each installment, Mr. Kraus continues to be employed by AllianceBernstein on the vesting date. The agreement provides for immediate vesting upon AXA ceasing to control the management of AllianceBernstein’s business or Holding ceasing to be publicly traded and certain qualifying terminations of employment, including termination of Mr. Kraus’s employment (i) by AllianceBernstein without cause, (ii) by Mr. Kraus for good reason (“good reason” generally means actions taken by AllianceBernstein resulting in a material negative change in Mr. Kraus’s employment relationship, including assignment to Mr. Kraus of duties materially inconsistent with his position or a requirement that Mr. Kraus report to an officer or employee of AllianceBernstein instead of reporting directly to the Board), and (iii) due to death or disability.  Mr. Kraus will be paid the cash distributions payable with respect to his unvested restricted Holding Units and a dollar amount equal to the cash distributions payable with respect to the number of any Holding Units that are withheld by AllianceBernstein to cover Mr. Kraus’s withholding tax obligations as the Holding Units vest. These cash distributions will be paid at the time distributions are made to Holding Unitholders generally, provided that no such payments to Mr. Kraus will be required with respect to any cash distribution with a record date following the earlier of (i) the termination of Mr. Kraus’s employment for any reason, and (ii) December 19, 2013.

Mr. Kraus is paid an annual base salary of $275,000 and received a 2009 cash bonus of $6 million.

During the Employment Term, AllianceBernstein has no commitment to pay any cash bonuses to Mr. Kraus beyond the $6 million he was paid in 2009 (with any additional bonuses being entirely in the discretion of the Board) or to make any additional equity-based awards to him. Consequently, for years after 2009 during the Employment Term, the totality of Mr. Kraus’s compensation (other than his salary) will be dependent on the level of cash distributions on the restricted Holding Units granted to him and the evolution of the trading price of Holding Units, thereby directly aligning Mr. Kraus’s interests with those of other holders of Holding Units.


Mr. Kraus is also entitled to receive perquisites and benefits, including full tax gross-ups by AllianceBernstein with respect to personal air travel on company aircraft, personal use of a company car and driver, any continued medical coverage due to termination by death or disability, and any payments for COBRA coverage due to termination of employment by AllianceBernstein without cause or by Mr. Kraus for good reason.

The terms of the Kraus Employment Agreement were the result of arm’s-length negotiations between Mr. Kraus and a member of the Compensation Committee.  These terms, including the compensation elements, were discussed and approved by the Compensation Committee and the full Board on December 19, 2008 and reflect their decision to structure the allocation of Mr. Kraus’s compensation more heavily toward a restricted Holding Unit award.  As a result, Mr. Kraus’s compensation consists almost entirely of the Restricted Holding Unit Grant.  The $6 million cash bonus applied only with respect to 2009.

The amount of compensation ultimately realized by Mr. Kraus from the Restricted Holding Unit Grant will depend on the future market price of Holding Units and the amount of cash distributions paid on Holding Units, both of which are partially dependent on the financial and operating results of AllianceBernstein.  Given the five-year vesting, Mr. Kraus has a strong incentive to remain with our firm for the full five-year term of the Kraus Employment Agreement and to cause our firm to have strong financial performance during each of those five years.  Thus, his long-term interests are directly aligned with the interests of our Unitholders and also indirectly aligned with the interests of our clients, as strong performance for our clients generally contributes directly to increases in assets under management and thus improved financial performance for the firm.  The size of the Restricted Holding Unit Grant, which had a value of approximately $52 million based on the market price of a Holding Unit on December 19, 2008, reflected the determination by Mr. Kraus and the Board that this was a reasonable and appropriate amount of long-term incentive compensation in view of Mr. Kraus’s expertise and experience, his past compensation, the compensation of his predecessor and the compensation of other chief executive officers of comparable asset management companies.

The $6 million cash bonus for 2009 represents the amount which Mr. Kraus and the Board agreed represented an appropriate short-term financial inducement for Mr. Kraus to join AllianceBernstein based on these same factors and reflected the significant uncertainty surrounding the level of 2009 quarterly cash distributions on Holding Units when he was hired; it most directly reflects the goal of attracting highly qualified executive talent.  The $275,000 base salary is in line with our firm’s policy to keep base salaries low in relation to total compensation.  The terms of the perquisites and benefits received by Mr. Kraus reflect the results of the arm’s-length negotiation process.

Factors Considered when Determining Executive Compensation

Decisions about executive compensation are based primarily on our assessment of each executive’s leadership, operational performance, and potential to enhance investment returns and service for our clients, all of which contribute to long-term Unitholder value. We do not utilize quantitative formulas when determining the compensation of our Chief Executive Officer, our Chief Financial Officer and our other three most highly-compensated executives (“named executive officers”), but rather rely on our judgment about each executive’s performance and whether each particular payment or award provides an appropriate reward for the current year’s performance. We begin this process by determining the total incentive compensation amounts available for a particular year (as more fully explained above in “Overview of 2009 Incentive Compensation Program”). We then consider a number of key factors for each of the named executive officers (other than Mr. Kraus, our CEO, whose compensation is described above in “Overview of our Chief Executive Officer’s Compensation”). These factors include: total compensation paid to the named executive officer in the previous year; the increase or decrease in the current year’s total incentive compensation amounts available; the named executive officer’s performance compared to individual business and operational goals established at the beginning of the year; the nature, scope and level of responsibilities of the named executive officer; the contribution to our overall financial results; and the contribution of the executive’s business unit to the company’s fiduciary culture in which clients’ interests are paramount. We also consider data provided by McLagan to benchmark the total compensation paid to each of our named executive officers.

This process, which is conducted by the Chief Executive Officer working with other members of senior management, results in specific incentive compensation recommendations to the Compensation Committee supported by the factors considered. The Compensation Committee then makes the final incentive compensation decisions. The Compensation Committee did not analyze quantifiable goals relating to the firm’s business units in determining the cash bonus of each of the named executive officers.

Business and operational goals established in 2009 for our named executive officers other than Mr. Kraus are as follows:

 
For Mr. Steyn, the main elements of his business and operational goals included: restoring financial leverage to the firm through the right-sizing, rationalization and re-engineering of the Distribution Services’ units (Private Clients, Institutions and Retail) and the Corporate and Fiduciary Services’ units (Finance, Legal and Compliance, IT and Operations); leading the continued collaboration and co-operation of the three distribution channels; focusing the distribution channels on key strategic initiatives and new product launches; integrating the local management of the overseas offices (in particular London, Hong Kong, Tokyo and Sydney) into the global management of the distribution channels; and working with Human Capital and Finance on the overhaul of the firm’s incentive and deferred compensation programs.


 
For Mr. Gingrich, the main elements of his business and operational goals included:  optimizing the revenue and profit contribution of our Bernstein Research Services unit; further enhancing this unit’s research capabilities, trading services and product array; extending this unit’s geographic platform; and attracting, motivating and retaining top talent.

 
For Mr. Cranch, the main elements of his business goals included: maintaining the firm’s good compliance record; sustaining and improving the Legal and Compliance Department’s level of client service; minimizing litigation against the firm; and creating a high performance culture among staff in the Legal and Compliance department.

 
For Mr. Joseph, the main elements of his business and operational goals included: assuming global responsibility for administrative functions and restructuring our firm’s finance organization to achieve greater operational efficiency and an improved control environment; leading a firm-wide initiative to reduce controllable operating expenses by at least 15%; accelerating our firm’s monthly closing process; enhancing management reporting and decision support; implementing procedures to better allocate capital, de-risk our firm’s balance sheet and secure an appropriate level of liquidity; and identifying and developing our firm’s next generation of finance leaders.

Consistent with the management approach taken by AllianceBernstein for its executives generally, the 2009 goals of our named executive officers (other than Mr. Kraus, whose compensation is described above in “Overview of our Chief Executive Officer’s Compensation”) did not include specific revenue or profit targets. By their nature, the business and operational goals for each of these other named executive officers are difficult to measure quantitatively and thus management uses discretion to determine whether those goals and objectives have been met. In the case of each of these four named executive officers, management determined that the main elements of the established business and operational goals had been met in 2009.

In addition to considering the extent to which our named executive officers met their business and operational goals, we consider each executive’s current salary, and prior-year short-term and long-term incentive compensation awards, and the compensation paid to the executive’s peers within the company. In general, we believe that key employees should be well-compensated, but that significant portions of compensation should be deferred and earned for service in future periods, which provides an incentive for key employees to remain with the firm.

Furthermore, during the fourth quarter of each year, McLagan provides us with comparative compensation benchmarking data, which summarizes compensation levels for the prior year at selected asset management companies comparable to ours. This data provides ranges of compensation levels for executive positions at these companies similar to those held by our named executive officers, including salary, total cash compensation and total compensation. The comparable companies are selected in order to provide appropriate comparables for the size and business mix of AllianceBernstein and the roles played by the named executive officers.  In 2009, the McLagan data we used to benchmark the compensation of our named executive officers was based on compensation comparisons from a number of selected asset management companies and banks, including the following: Bank of America, Barclays Global Investors, BlackRock Financial Management, Citigroup, Deutsche Bank, Franklin Templeton Investments, Goldman Sachs Asset Management, Morgan Stanley Investment Management, PIMCO Advisors, T. Rowe Price Associates and The Vanguard Group. For a complete listing of the comparable companies provided by McLagan, see Exhibit 99.01 to this Form 10-K.

Total compensation paid to our named executive officers fell within the ranges of total compensation paid to executives in similar positions by the companies included in the McLagan data. Additionally, the Board, when it reviewed and approved the Kraus Employment Agreement on December 19, 2008, considered McLagan data indicating that Mr. Kraus’s compensation arrangement was fully competitive and appropriate given our size, scope and complexity, and Mr. Kraus’s experience, credentials and proven track record.

Our Chief Executive Officer, and the Compensation Committee, retain discretion as to how to utilize the McLagan benchmarking data. The data is not used in a formulaic or mechanical way to determine named executive officer compensation levels. The Compensation Committee considered McLagan data in concluding that the compensation levels paid in 2009 to our named executive officers were appropriate and reasonable.

Compensation Elements for Executive Officers

Below we describe the major elements of our executive compensation.

1. Base Salary. Base salaries comprise a small portion of executives’ total compensation and are maintained at low levels relative to salaries of executives at peer firms. Within the relatively narrow range of base salaries paid to executives, we consider individual experience, responsibilities and tenure with the firm. The salaries we paid during 2009 to our named executive officers are shown in column (c) of the Summary Compensation Table.


2. Short-term Incentive Compensation (Cash Bonus). We pay annual cash bonuses in late December to reward individual performance for the year. These bonuses are based on management’s evaluation (subject to the Compensation Committee’s review and approval) of each executive’s performance during the year, and the performance of the executive’s business unit or function, compared to business and operational goals established at the beginning of the year, and in the context of the firm’s overall financial performance. The cash bonuses we awarded in 2009 to our named executive officers are shown in column (d) of the Summary Compensation Table.

3. Long-term Incentive Compensation. We grant annual long-term incentive compensation awards in December to supplement cash bonuses and to encourage retention of our executives.  These awards are made under an unfunded, non-qualified incentive compensation plan under which awards may be granted to eligible employees.

As discussed above in “Overview of 2009 Incentive Compensation Program”, in 2009 we changed our approach regarding long-term incentive compensation by requiring that all awards be in the form of restricted Holding Units.  We implemented this change to directly align our executives’ long-term interests with the interests of our Unitholders while also indirectly aligning our executives' long-term interests with the interests of our clients as strong performance for our clients generally contributes directly to increases in assets under management and thus improved financial performance for the firm. As a result of this change, award recipients are not able to allocate their 2009 awards to notional investments in certain of our investment services offered to clients. The 2009 restricted Holding Unit awards granted to our named executive officers are shown in column (i) of the Grants of Plan-based Awards Table.

Restricted Holding Units were awarded as part of total incentive compensation based on a customized set of goals for each executive. The relative level of cash bonus compared to restricted Holding Units is generally fixed using a sliding scale based on the total compensation level of the executive, with lower-paid executives receiving a greater percentage of their incentive compensation as cash bonuses than more highly-paid executives.

In 2009, the value used for restricted Holding Units was the closing price as reported for NYSE composite transactions on the day the Compensation Committee approved incentive compensation awards (December 7, 2009).

Awards of restricted Holding Units generally vest ratably over four years.  However, if the recipient of such an award is at least 55 years old and has at least ten years of service, the award recipient qualifies for “Retirement”.  Any award recipient who qualifies for “Retirement” continues to vest post-Retirement, provided the award recipient complies with agreements and covenants contained in the award agreement (including covenants not to compete with AllianceBernstein, not to solicit AllianceBernstein’s clients or employees, to maintain confidentiality of AllianceBernstein’s trade secrets and proprietary information, and not to disparage AllianceBernstein) until the Holding Units have fully vested.

Withdrawals prior to vesting are not permitted. Upon vesting, awards are distributed to participants unless the participant has, in advance, voluntarily elected to defer receipt to future periods. Quarterly cash distributions on vested and unvested restricted Holding Units are paid currently to participants and are included in column (i) of the Summary Compensation Table.  For awards made prior to 2009, quarterly cash distributions on vested and unvested Holding Units for which a voluntary deferral election has been made, and earnings credited on investment services, are reinvested and distributed as elected by participants. These are shown as “earnings” in column (d) of the Non-Qualified Deferred Compensation Table.

4. Defined Contribution Plan. Employees of AllianceBernstein L.P. are eligible to participate in the Profit Sharing Plan for Employees of AllianceBernstein L.P. (as amended and restated as of January 1, 2008, “Profit Sharing Plan”), a tax-qualified retirement plan. The Compensation Committee determines the amount of company contributions (both the level of annual matching by the firm of an employee’s pre-tax salary deferral contributions and the annual company profit sharing contribution). For 2009, the Compensation Committee determined that employee deferral contributions would be matched on a one-to-one basis up to five percent of eligible compensation and there would be no profit sharing contribution. Company contributions to the Profit Sharing Plan on behalf of the named executive officers are shown in column (i) of the Summary Compensation Table.

5. CEO Arrangements. See Overview of our Chief Executive Officer’s Compensationin this Item 11.

6. Former President and Chief Operating Officer Arrangements.  Gerald M. Lieberman, formerly a member of the Board and our President and Chief Operating Officer, retired effective July 31, 2009 (“Retirement Date”).

Pursuant to our agreement with Mr. Lieberman (“Lieberman Retirement Agreement”) and in recognition of his years of service to our firm and his assistance with transitioning his responsibilities, Mr. Lieberman received his base salary of $200,000, less applicable tax withholdings and other payroll deductions, through January 31, 2010.   In addition, Mr. Lieberman received a lump sum separation payment of $2,600,000, less applicable tax withholdings and other payroll deductions, and was awarded 157,898 restricted Holding Units.  The number of restricted Holding Units was determined by dividing $3,400,000 by the average closing price on the NYSE of a Holding Unit for the period covering the four trading days immediately preceding the Retirement Date, the Retirement Date and the five trading days immediately following the Retirement Date, and rounded up to the nearest whole number.  Mr. Lieberman’s 157,898 restricted Holding Units vest ratably on July 31 in each of 2010, 2011 and 2012, provided Mr. Lieberman complies with the terms of the Lieberman Retirement Agreement (including non-competition, non-solicitation, confidentiality, non-disparagement and cooperation).  Mr. Lieberman also receives, until July 31, 2012, a number of continuing benefits from AllianceBernstein as described in the Lieberman Retirement Agreement, which has been filed as Exhibit 10.04 to this Form 10-K.  These benefits include access to comparable medical and dental coverage, office space, administrative assistance and a company car and driver.


Compensation Committee

The Compensation Committee consists of Mr. Condron, Mr. Kraus, Ms. Slutsky and Mr. Smith. As discussed above (see “Directors, Executive Officers and Corporate Governance—NYSE Governance Matters” in Item 10), because it is a limited partnership, Holding is exempt from NYSE rules that require public companies to have a compensation committee made up solely of independent directors. AXA owns, indirectly, an approximate 62.1% economic interest in AllianceBernstein (as of December 31, 2009), and compensation expense is a significant component of our financial results. For these reasons, Mr. Condron, President and Chief Executive Officer of AXA Financial, serves as chairman of the Compensation Committee, and any action taken by the Compensation Committee requires the affirmative vote or consent of an executive officer of one or more of our parent companies. (Presently, Mr. Condron is the only member of the Compensation Committee who is also an executive officer of one or more of our parent companies.)

The Compensation Committee has general oversight of compensation and compensation-related matters, including: (i) determining cash bonuses; (ii) determining contributions and awards under incentive plans or other compensation arrangements (whether qualified or non-qualified) for employees of AllianceBernstein and its subsidiaries, and amending or terminating such plans or arrangements or any welfare benefit plan or arrangement or making recommendations to the Board with respect to adopting any new incentive compensation plan, including equity-based plans; (iii) reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer, evaluating his performance in light of those goals and objectives, and determining and approving his compensation level based on this evaluation (our Chief Executive Officer will recuse himself from voting on his own compensation); and (iv) reviewing the CD&A, and recommending to the Board its inclusion in the Partnerships’ Forms 10-K. In December 2007, the Compensation Committee delegated responsibility for managing AllianceBernstein’s non-qualified plans to the Omnibus Committee for Non-Qualified Plans (“Omnibus Committee”), consisting of six members who are senior officers of AllianceBernstein. The Compensation Committee held seven meetings in 2009. The Omnibus Committee held two meetings in 2009 and acted by unanimous written consent twice.

The Compensation Committee’s year-end process has generally focused on the cash bonuses and long-term incentive compensation awards granted to senior management. Mr. Kraus plays an active role in the work of the Compensation Committee. Mr. Kraus, working with other members of senior management, provides recommendations for individual employee awards to the Compensation Committee for their consideration.

The Compensation Committee held its regularly-scheduled meeting regarding year-end compensation on December 7, 2009, at which it discussed and approved senior management’s compensation recommendations. The Compensation Committee has not retained its own consultants.

The Compensation Committee’s functions are more fully described in the committee’s charter, which is available online at our Internet site (http://www.alliancebernstein.com).

Other Compensation-Related Matters

AllianceBernstein and Holding are, respectively, private and public limited partnerships, and are subject to taxes other than federal and state corporate income tax. (See “Business—Taxes” in Item 1.) Accordingly, Section 162(m) of the Code, which limits tax deductions relating to executive compensation otherwise available to entities taxed as corporations, is not applicable to either AllianceBernstein or Holding.

We have amended our qualified and non-qualified plans to the extent necessary to comply with applicable law.

For long-term incentive compensation awards made during or before 2007, we typically purchased the investments that were notionally elected by plan participants and held these investments in a consolidated rabbi trust. Effective January 1, 2009, investments we previously made in our investment services offered to clients are held in a custodial account, while we continue to hold investments in Holding Units in the rabbi trust. These investments are subject to the general creditors of AllianceBernstein.

All compensation awards that involve the issuance of Holding Units are made under the 1997 Long Term Incentive Plan, as amended and restated November 28, 2007 (“1997 Plan”), which Holding Unitholders initially approved in 1997. Holding Unitholders approved amendments to the 1997 Plan (increasing the number of Holding Units that may be issued thereunder, and extending its life) in 2000. No more than 41 million Holding Units may be awarded under the 1997 Plan. As of December 31, 2009, 6,256,646 Holding Units were available for new awards under the 1997 Plan through July 26, 2010, the 1997 Plan’s expiration date. We intend to convene a special meeting of Holding Unitholders during 2010 to seek approval for a new long-term equity compensation plan.


Compensation Committee Interlocks and Insider Participation

Mr. Condron is the Chairman of the Board, President and Chief Executive Officer of AXA Equitable, the sole stockholder of the General Partner. As of December 31, 2009, AXA Equitable and its affiliates owned an aggregate 62.1% economic interest in AllianceBernstein. Mr. Kraus is Chairman of the Board and Chief Executive Officer of the General Partner and, accordingly, also serves in that capacity for AllianceBernstein and Holding. Mr. Kraus is also a director of AXA Financial, AXA Equitable, MONY and MLOA. No other executive officer of AllianceBernstein served as a member of a compensation committee or a director of another entity an executive officer of which served as a member of AllianceBernstein’s Compensation Committee or Board.

Compensation Committee Report

The members of the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth above and, based on such review and discussion, recommended its inclusion in this Form 10-K.


Christopher M. Condron (Chair)
Peter S. Kraus
Lorie A. Slutsky
A.W. (Pete) Smith, Jr.


Summary Compensation Table

The following table summarizes the total compensation of our named executive officers as of the end of 2009, 2008 and 2007 (including Mr. Lieberman, who is no longer an executive officer as a result of his retirement on July 31, 2009):

Name and Principal Position
Year
 
Salary
($)
   
Bonus
($)
   
Stock Awards(1)
($)
   
Option Awards(1)
($)
   
Non-Equity Incentive Plan Compensation
($)
   
Change in Pension Value and Nonqualified Deferred Compensation Earnings
($)
   
All Other Compensation
($)
   
Total(1)
($)
 
(a)
(b)
 
(c)
   
(d)
   
(e)
   
(f)
   
(g)
   
(h)
   
(i)
   
(j)
 
                                                   
Peter S. Kraus(2)
2009
    275,000       6,000,000       10,452,680                         4,175,132       20,902,812  
Chairman and Chief
2008
                                               
Executive Officer
                                                                 
David A. Steyn
2009
    176,048       1,672,503                               16,569       1,865,120  
Chief Operating Officer
                                                                 
James A. Gingrich
2009
    200,000       1,270,000             167,225                   10,414       1,647,639  
Chairman and CEO of
                                                                 
SCB LLC
                                                                 
Laurence E. Cranch
2009
    200,000       770,000             173,684                   11,188       1,154,872  
General Counsel
                                                                 
Robert H. Joseph, Jr.
2009
    195,000       395,000       410,011                   47,830       38,977       1,086,818  
Chief Financial Officer
2008
    195,000       400,000                         63,612       692,285       1,350,897  
 
2007
    185,000       1,050,000             16,091             18,664       1,088,406       2,358,161  
                                                                   
Gerald M. Lieberman
2009
    200,000             3,382,175       1,040,000                   3,140,351       7,762,526  
Former President and
2008
    200,000       1,000,000                               1,827,920       3,027,920  
Chief Operating Officer
2007
    200,000       4,050,000             42,908                   7,568,795       11,861,703  
_____________
(1)
The figures in columns (e) and (f) of the above table provide the amount of amortization expense incurred by our firm in connection with awards made to the named executive officers, as required by Item 402(c) of Regulation S-K.  The total compensation figures in column (j) of the above table do not include the grant date fair value of awards made in 2009.  For information about these awards, see “Grants of Plan-based Awards in 2009” later in this Item 11.
 
(2)
Mr. Kraus joined AllianceBernstein in December 2008.  Accordingly, Mr. Kraus did not receive any compensation in 2008 or 2007. His compensation structure is set forth in the Kraus Employment Agreement, the terms of which are described above in “Compensation Discussion and AnalysisOverview of our Chief Executive Officer’s Compensation” and described below in “Potential Payments upon Termination or Change in Control”.
 
For information about how salary and bonus relate to total compensation, see “Compensation Elements for Executive Officers” in this Item 11. Mr. Steyn’s salary is paid in U.K. pounds sterling and then converted into U.S. dollars.

Mr. Steyn’s compensation reflects his role as Chief Operating Officer of AllianceBernstein and the contribution he makes in restoring financial leverage to the firm, leading continued collaboration and co-operation among our three buy-side distribution channels, focusing those channels on key strategic initiatives and new product launches, and working with Human Capital and Finance on the overhaul of the firm’s incentive compensation program.

Mr. Gingrich’s compensation reflects his role as Chief Executive Officer of Sanford C. Bernstein & Co., LLC, our sell-side business, and his leadership role in optimizing the revenue and profit contribution of our sell-side business and further enhancing that business’s research capabilities, trading services and product array.

Mr. Cranch’s compensation reflects his role as General Counsel of AllianceBernstein and the contribution he makes in maintaining a good compliance record, minimizing litigation against the firm and creating a culture of high performance among the firm’s Legal and Compliance personnel.

Mr. Joseph’s compensation reflects his role as the Chief Financial Officer of AllianceBernstein and the contribution he makes in ensuring that our business and operations are adequately funded and accurately reflected in our financial records and reports and that adequate internal controls over financial reporting are in place and operating effectively.

For 2009, Column (e) includes:

for Mr. Kraus, AllianceBernstein's amortization expense in respect of the vesting of his Restricted Holding Unit Grant, based on the value of the grant on the grant date (see “Compensation Discussion and AnalysisOverview of our Chief Executive Officer’s Compensation” in this Item 11).

for Mr. Joseph, AllianceBernstein's amortization expense in respect of the vesting of his 2009 restricted Holding Unit award due to his qualifying for Retirement (see “Compensation Elements for Executive Officers—Long-term Incentive Compensation” in this Item 11), based on the value of the grant on the grant date.

for Mr. Lieberman, AllianceBernstein's amortization expense in respect of the restricted Holding Unit award granted pursuant to the Lieberman Retirement Agreement (see “Compensation Elements for Executive Officers—Former President and Chief Operating Officer Arrangements” in this Item 11).

Column (f) reflects AllianceBernstein’s amortization expense in respect of the vesting of option grants based on the value of those grants on the grant date. For additional information, see Note 16 to AllianceBernstein’s consolidated financial statements in Item 8.

Column (h) reflects the change in pension value for Mr. Joseph, the only named executive officer who participates in the Amended and Restated Retirement Plan for Employees of AllianceBernstein L.P. (“Retirement Plan”). Benefits under the Retirement Plan ceased accruing as of December 31, 2008. For additional information about the Retirement Plan, see Note 14 to AllianceBernstein’s consolidated financial statements in Item 8 and “Pension Benefits in 2009” in this Item 11.

Column (i) reflects 2008 and 2007 awards under the Incentive Compensation Award Program (formerly known as the Partners Compensation Plan, “Incentive Compensation Program”) and other items. We report Incentive Compensation Program awards granted prior to 2009 under column (i) because, while they were designed to provide incentives to recipients, they could not be categorized as having been granted under an “incentive plan” under relevant SEC rules because there were no specific performance measures that were required to be met before a participant could receive his or her award. Also, as described in Note 15 to AllianceBernstein’s consolidated financial statements in Item 8 and “Compensation Discussion and Analysis—Overview of Compensation Philosophy and Program” in this Item 11, any allocation of awards by recipients to equity of the firm was voluntary; until 2009, we did not unilaterally make awards of Holding Units to the named executive officers. In addition, awards granted under the Incentive Compensation Program before 2009 were not accounted for under ASC 718, Compensation--Stock Compensation.


During 2009, we owned fractional interests in two aircraft with an aggregate operating cost of $2,747,698 (including $988,877 in maintenance fees, $1,243,262 in usage fees and $515,559 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, 2009 was $6,437,249.  We also leased an aircraft during 2009 with an aggregate operating cost of $2,681,769 (including $650,552 in leasing costs, $649,569 in maintenance fees and $1,381,648 in usage fees).

Our interests in aircraft facilitate business travel of senior management.  In 2009, we permitted our Chief Executive Officer and former President to use the aircraft for personal travel. Overall, personal travel constituted approximately 5.7% of our actual use of the aircraft in 2009.

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 the SIFL 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 12 months ended October 31, 2009 for personal use imputed to Mr. Kraus is $19,139 and to Mr. Lieberman is $15,072. Messrs. Steyn, Gingrich, Cranch and Joseph did not make personal use of company-owned aircraft during those 12 months, so no income was imputed to them.

Column (i) also includes the aggregate incremental cost to our company of certain other expenses and perquisites, including leased cars, drivers, contributions to the Profit Sharing Plan, life insurance premiums, medical and dental coverage, office space, administrative assistance, business club dues and parking, as applicable.

For 2008, a portion ($1,040,000) of Mr. Lieberman's total in column (i) has been re-allocated to column (f) in 2009, representing a subsequent election to allocate part of his 2008 Incentive Compensation Program award to options. In addition, the $1,040,000 is now disclosed in column (l) of the Grants of Plan-based Awards table.


For 2009, column (i) includes:

for Mr. Kraus, $3,919,755 for quarterly distributions related to his Restricted Holding Unit Grant, $62,015 for personal use of aircraft, $167,926 for personal use of a car and driver (including lease costs ($25,732), driver compensation ($120,334) and other car-related costs ($21,860), such as parking, gas, tolls, and repairs and maintenance) and $25,436 for gross-ups related to imputed income for personal use of aircraft and car.

for Mr. Steyn, a $14,084 contribution to the Alliance Trust Full Self Invested Personal Pension (a profit sharing plan for our U.K. employees) and $2,485 for car-related parking costs.

for Mr. Gingrich, a $10,000 contribution to the Profit Sharing Plan and $414 of life insurance premiums.

for Mr. Cranch, a $10,000 contribution to the Profit Sharing Plan and $1,188 of life insurance premiums.

for Mr. Joseph, a $9,750 contribution to the Profit Sharing Plan, $14,839 for personal use of a car (including lease costs ($6,000) and other car-related costs ($8,839), such as parking, gas, tolls, and repairs and maintenance), $7,326 of life insurance premiums and $7,062 in business club dues.

for Mr. Lieberman, $2,600,000 in severance, $170,530 for quarterly distributions on restricted Holding Units, $47,389 for personal use of aircraft, $157,013 for personal use of a car and driver (including lease costs ($28,738), driver compensation ($102,980) and other car-related costs ($25,295), such as parking, gas, tolls, and repairs and maintenance), $5,538 for medical and dental coverage, $63,750 for office space, $73,131 for administrative assistance and $23,000 in other benefit-related costs.
 

Grants of Plan-based Awards in 2009

The following table describes each grant of an award made to a named executive officer during 2009 under the 1997 Plan, an equity compensation plan (including Mr. Lieberman, who is no longer an executive officer as a result of his retirement on July 31, 2009):

 
       
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
   
Estimated Future Payouts Under Equity Incentive Plan Awards
                         
Name
 
Grant Date
   
Threshold
($)
   
Target
($)
   
Maximum
($)
   
Threshold
(#)
   
Target
(#)
   
Maximum
(#)
   
All Other Stock Awards: Number of Shares of Stock or Units
(#)
   
All Other Option Awards: Number of Securities Underlying Options
(#)
   
Exercise or Base Price of Option Awards
($/Sh)
   
Grant Date Fair Value of Stock and Option Awards
 
(a)
 
(b)
   
(c)
   
(d)
   
(e)
   
(f)
   
(g)
   
(h)
   
(i)
   
(j)
   
(k)
   
(l)
 
                                                                   
Peter S. Kraus
                                                              $  
David A. Steyn
 
12/7/09
                                          146,083                   3,904,799  
James A. Gingrich
 
12/7/09
                                          94,650                   2,529,995  
   
1/23/09
                                                263,533       17.05       925,000  
Laurence E. Cranch
 
12/7/09
                                          38,534                   1,030,014  
   
1/23/09
                                                78,348       17.05       275,000  
Robert H. Joseph, Jr.
 
12/7/09
                                          15,339                   410,011  
                                                                                       
Gerald M. Lieberman
 
1/23/09
                                                296,297       17.05       1,040,000  
    8/7/09        —                                      157,898        —        —        3,382,175  
 
Outstanding Equity Awards at 2009 Fiscal Year-End

The following table describes any outstanding equity awards as of December 31, 2009 of our named executive officers (including Mr. Lieberman, who is no longer an executive officer as a result of his retirement on July 31, 2009):

 
Option Awards
   
Holding Unit Awards
 
Name
 
Number of Securities Underlying Unexercised Options Exercisable
(#)
   
Number of Securities Underlying Unexercised Options Unexercisable
(#)
   
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)
   
Option Exercise Price
($)
   
Option Expiration Date
   
Number of Shares or Units of Stock That Have Not Vested
(#)
   
Market Value of Shares or Units of Stock That Have Not Vested
($)
   
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)
   
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)
 
(a)
 
(b)
   
(c)
   
(d)
   
(e)
   
(f)
   
(g)
   
(h)
   
(i)
   
(j)
 
                                   
Peter S. Kraus(1)
                                  2,177,642       61,191,740              
David A. Steyn(2)
                                  146,083       4,104,932              
James A. Gingrich(2)(3)
          263,533             17.05    
1/23/19
      94,650       2,659,665              
Laurence E. Cranch(2)(3)
          78,348             17.05    
1/23/19
      38,534       1,082,805              
Robert H. Joseph, Jr.(2)(4)
    15,000                   33.18    
12/06/12
      15,339       431,026              
      15,000                   50.25    
12/07/11
                         
      15,000                   53.75    
12/11/10
                         
      50,000                   48.50    
06/20/10
                         
                                                                       
Gerald M. Lieberman(3)(5)
          296,297             17.05    
1/23/19
      157,898       4,436,934              
_____________
(1)
Mr. Kraus’s Restricted Holding Unit Award vests ratably on December 19, 2010, 2011, 2012 and 2013.


(2)
These restricted Holding Unit awards vest ratably on December 1, 2010, 2011, 2012 and 2013.

(3)
These option awards vest ratably on January 23, 2010, 2011, 2012, 2013 and 2014.

(4)
Mr. Joseph’s option awards are fully vested.
 
(5)
Mr. Lieberman's restricted Holding Unit award vests ratably on July 31, 2010, 2011 and 2012. 
 

 
Option Exercises and Holding Units Vested in 2009

The following table describes any Holding Units vested for our named executive officers during 2009 (including Mr. Lieberman, who is no longer an executive officer as a result of his retirement on July 31, 2009).  None of our named executive officers exercised options during 2009:

   
Option Awards
   
Holding Unit Awards
 
Name
 
Number of Units Acquired on Exercise
(#)
   
Value Realized on Exercise
($)
   
Number of Holding Units Acquired on Vesting
(#)
   
Value Realized on Vesting
($)
 
(a)
 
(b)
   
(c)
   
(d)
   
(e)
 
 
                       
Peter S. Kraus
                544,410       14,116,562  
David A. Steyn
                       
James A. Gingrich
                       
Laurence E. Cranch
                       
Robert H. Joseph, Jr.
                       
                                 
Gerald M. Lieberman
                       


Pension Benefits for 2009

The following table describes the accumulated benefit under our company pension plan belonging to each of our named executive officers as of December 31, 2009, if any (including Mr. Lieberman, who is no longer an executive officer as a result of his retirement on July 31, 2009):

Name
 
Plan Name
   
Number of Years Credited Service
(#)
   
Present Value of Accumulated Benefit
($)
   
Payments During Last Fiscal Year
($)
 
(a)
 
(b)
   
(c)
   
(d)
   
(e)
 
 
 
 
   
 
   
 
   
 
 
Peter S. Kraus
  n/a                    
David A. Steyn
  n/a                    
James A. Gingrich
  n/a                    
Laurence E. Cranch
  n/a                    
Robert H. Joseph, Jr.
 
Retirement Plan
      24       537,972 (1)      
                               
Gerald M. Lieberman
  n/a                    
_____________
(1)
The Executive Committee has determined that no new benefits shall be accrued under the Retirement Plan, effective as of the close of business on December 31, 2008.

The Retirement Plan is a qualified, noncontributory, defined benefit retirement plan covering current and former employees who were employed in the United States prior to October 2, 2000. Each participant’s benefits are determined under a formula which takes into account years of credited service through December 31, 2008, the participant’s average compensation over prescribed periods and Social Security covered compensation. The maximum annual benefit payable under the Retirement Plan may not exceed the lesser of $100,000 or 100% of a participant’s average aggregate compensation for the three consecutive years in which he or she received the highest aggregate compensation from us or such lower limit as may be imposed by the Code on certain participants by reason of their coverage under another qualified retirement plan we maintain. A participant is fully vested after the completion of five years of service. The Retirement Plan generally provides for payments to, or on behalf of, each vested employee upon such employee’s retirement at the normal retirement age provided under the plan or later, although provision is made for payment of early retirement benefits on an actuarially reduced basis. Normal retirement age under the plan is 65. Death benefits are payable to the surviving spouse of an employee who dies with a vested benefit under the Retirement Plan. For additional information regarding interest rates and actuarial assumptions, see Note 14 to AllianceBernstein’s consolidated financial statements in Item 8.


Non-Qualified Deferred Compensation for 2009

The following table describes our named executive officers’ non-qualified deferred compensation contributions, earnings and distributions during 2009 and their non-qualified deferred compensation plan balances as of December 31, 2009 (including Mr. Lieberman’s, although he is no longer an executive officer as a result of his retirement on July 31, 2009):

Name
 
Executive Contributions in Last FY
($)
   
Registrant Contributions in Last FY
($)
   
Aggregate Earnings in Last FY
($)
   
Aggregate Withdrawals/ Distributions
($)
   
Aggregate Balance at Last FYE
($)
 
(a)
 
(b)
   
(c)
   
(d)
   
(e)
   
(f)
 
 
                             
Peter S. Kraus
                             
David A. Steyn
                2,194,329       (1,652,275 )     6,722,898  
James A. Gingrich
                1,055,504       (1,419,365 )     4,326,464  
Laurence E. Cranch
                629,506             2,445,279  
Robert H. Joseph, Jr.
                1,331,215       (954,879 )     4,605,132  
                                         
Gerald M. Lieberman
                507,375       (2,637,478 )     1,679,427  

For Messrs. Steyn, Gingrich, Cranch, Joseph and Lieberman, amounts shown reflect their respective interests from pre-2009 awards under the Incentive Compensation Program. For additional information about the Incentive Compensation Program, see Note 15 to AllianceBernstein’s consolidated financial statements in Item 8.  For individuals with notional investments in Holding Units (Messrs. Gingrich, Cranch and Joseph), amounts of quarterly 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, 2009. As of that date, Messrs. Gingrich, Cranch and Joseph notionally held 24,576 Holding Units, 7,703 Holding Units and 64,679 Holding Units, respectively, as a result of pre-2009 awards under the Incentive Compensation Program.  Mr. Steyn and Mr. Lieberman did not notionally hold any Holding Units.


Potential Payments upon Termination or Change in Control

In connection with the commencement of Mr. Kraus’s employment, on December 19, 2008, he was granted 2,722,052 restricted Holding Units. During Mr. Kraus’s Employment Term, AllianceBernstein has no commitment to pay any cash bonuses to Mr. Kraus beyond the $6 million in 2009 (with any additional bonuses being entirely at the discretion of the Board) or to make any additional equity-based awards to him. Consequently, for years after 2009 during the Employment Term, the totality of Mr. Kraus’s compensation (other than his salary and absent any additional awards the Board may choose to grant) will be dependent on the level of cash distributions on the restricted Holding Units granted to him and the evolution of the trading price of Holding Units, thereby directly aligning Mr. Kraus’s interests with those of other holders of Holding Units. For additional information about Mr. Kraus’s compensation, see “Overview of our Chief Executive Officer’s Compensation” in this Item 11.

The Kraus Employment Agreement contains a number of accelerated vesting clauses, including immediate vesting upon a “change in control” of our firm (i.e., AXA, our parent company, ceasing to control the management of AllianceBernstein’s business or Holding ceasing to be publicly traded); and immediate vesting upon certain qualifying terminations of employment, including termination of Mr. Kraus’s employment (i) by AllianceBernstein “without cause”, (ii) by Mr. Kraus for “good reason” and (iii) due to death or disability.
 
The change-in-control provisions in the Kraus Employment Agreement were required by Mr. Kraus as part of his negotiation in order to assure him that AllianceBernstein would continue to be operated as a separately-managed entity, and with a certain degree of independence, and that Holding would continue as a publicly-traded entity.  Both AXA and Mr. Kraus believe that this arrangement adds significant value to AllianceBernstein.  The Board understood that AXA had no intention of changing this arrangement during the term of Mr. Kraus’s Employment Term and thus concluded that the change-in-control provisions were acceptable and necessary in order to recruit Mr. Kraus.


The provisions requiring accelerated vesting upon termination without cause or for good reason were required by Mr. Kraus in order to preserve the value of his long-term incentive compensation arrangement.  The Board agreed to these provisions because they were typical of executive compensation agreements for executives at Mr. Kraus’s level and because the Board concluded that they were necessary to recruit Mr. Kraus.

The Board concluded that the change-in-control and termination provisions in the Kraus Employment Agreement fit into AllianceBernstein’s overall compensation objectives because they permitted AllianceBernstein to attract and retain a highly-qualified chief executive officer, were consistent with AXA’s and the Board’s expectations with respect to the manner in which AllianceBernstein and Holding would be operated from 2009 to 2013, were consistent with the Board’s expectations that Mr. Kraus would not be terminated without cause and that no steps would be taken that would provide him with the ability to terminate the agreement with good reason (and thus that there was no inconsistency between these provisions and AllianceBernstein’s goal of providing Mr. Kraus with effective incentives for future performance), and to align his long-term interests with those of AllianceBernstein’s Unitholders and clients.

It is the current intention and expectation of AllianceBernstein’s management and the Board that provisions similar to those included in the Kraus Employment Agreement, such as change-in-control, termination by AllianceBernstein without cause and termination by an executive for good reason, will not be included in employment agreements with other executives of AllianceBernstein, and thus that the decisions made with respect to the Kraus Employment Agreement should not affect the decisions made in the future regarding compensation elements for other executives.

There are no other amounts payable to the named executive officers upon a change in control of the company.

The following table sets forth estimated payments and benefits to which our named executive officers (other than Mr. Lieberman) would be entitled upon a change in control of AllianceBernstein or the specified terminations of employment as of December 31, 2009, along with the actual payments and benefits that Mr. Lieberman received in connection with his retirement on July 31, 2009:

Name
 
Cash Payments(1)
($)
   
Acceleration or Grant of Restricted Holding Unit Awards(2)
($)
   
Option Awards(3)
($)
   
Other Benefits
($)
 
(a)
 
(b)
   
(c)
   
(d)
   
(e)
 
 
                       
Peter S. Kraus
                       
Change in control
          61,191,740              
Termination by AllianceBernstein without cause
          61,191,740              
Termination by Mr. Kraus for good reason
          61,191,740              
Death or disability(4)(5)
          61,191,740              
David A. Steyn
                               
Death or disability(6)
          4,104,932              
James A. Gingrich
                               
Death or disability(6)
          2,659,665       2,912,040        
Laurence E. Cranch
                               
Death or disability(6)
          1,082,805       865,745        
Robert H. Joseph, Jr.
                               
Death or disability(6)
          431,026              
                                 
Gerald M. Lieberman
                               
Retirement(6)(7)
    2,600,000       4,436,934       3,274,082       1,246,263  
_____________
(1)
Messrs. Steyn, Gingrich, Cranch and Joseph are not entitled to any payments or benefits upon termination of their employment by AllianceBernstein without cause.  Nevertheless, it is our expectation that each would receive a cash severance payment.  As the amounts of any such payments would be determined at the time of such termination, we are unable to estimate the amount of any such payments.

(2)
Restricted Holding Unit awards made in December 2009 to Messrs. Steyn, Gingrich, Cranch and Joseph are subject to a “Rule of 65” retirement provision.  An award recipient qualifies for “retirement” if the recipient is at least 55 years old and has completed at least 10 years of service.  Any award recipient who qualifies for “retirement” retains the right to receive distribution of the underlying Holding Units post-retirement provided the recipient complies with agreements and covenants in the award agreement until the Holding Units have fully vested.

(3)
Options awarded to Messrs. Gingrich, Cranch and Lieberman, which are set forth in the “Outstanding Equity Awards at 2009 Fiscal Year-End” table above, are subject to a “Rule of 70” retirement provision.  An award recipient qualifies for retirement if the recipient: (i) is at least 65 years old; or (ii) is at least 55 years old and the recipient’s age and years of service added together equal or exceed 70.  An award recipient who qualifies for retirement continues to vest post-retirement provided the recipient complies with any agreements and covenants enforced by AllianceBernstein.


(4)
The Kraus Employment Agreement defines “Disability” as a good faith determination by AllianceBernstein that Mr. Kraus is physically or mentally incapacitated and has been unable for a period of one hundred and twenty (120) days in the aggregate during any twelve-month period to perform substantially all of the duties for which he is responsible immediately before the commencement of the incapacity.

(5)
Upon termination of Mr. Kraus’s employment due to death or disability, AllianceBernstein will provide at its expense continued health and welfare benefits for Mr. Kraus, his spouse and his dependants through the end of the calendar year in which termination occurs.  Thereafter, until the date Mr. Kraus (or, in the case of his spouse, his spouse) reaches age 65, AllianceBernstein shall provide Mr. Kraus and his spouse with access to participation in AllianceBernstein’s medical plans at Mr. Kraus’s (or his spouse’s) sole expense based on a reasonably determined fair market value premium rate.

(6)
“Disability” is defined in the Incentive Compensation Program award agreements of Messrs. Steyn, Gingrich, Cranch and Joseph, and in the Special Option Program award agreements of Messrs. Gingrich, Cranch and Lieberman, as the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to last for a continuous period of not less than 12 months, as determined by the carrier of the long-term disability insurance program maintained by AllianceBernstein or its affiliate that covers the executive officer.

(7)
For additional information relating to Mr. Lieberman’s $2,600,000 severance payment, restricted Holding Unit award and other benefits that he received in connection with his retirement, see “Compensation Elements for Executive Officers—Former President and Chief Operating Officer Arrangements”.

Director Compensation in 2009

The following table describes how we compensated our independent directors during 2009:

Name
 
Fees Earned or Paid in Cash
($)
   
Stock Awards(1)
($)
   
Option Awards(2)
($)
   
Non-Equity Incentive Plan Compensation
($)
   
Change in Pension Value and Nonqualified Deferred Compensation Earnings
($)
   
All Other Compensation
($)
   
Total
($)
 
(a)
 
(b)
   
(c)
   
(d)
   
(e)
   
(f)
   
(g)
   
(h)
 
 
                                         
Deborah S. Hechinger
    56,500       30,000       30,000                         116,500  
Weston M. Hicks
    67,000       30,000       30,000                         127,000  
Lorie A. Slutsky
    77,500       30,000       30,000                         137,500  
A.W. (Pete) Smith, Jr.
    76,000       30,000       30,000                         136,000  
Peter J. Tobin
    94,000       30,000       30,000                         154,000  
_____________
(1)
As of December 31, 2009, our independent directors had outstanding restricted Holding Unit awards in the following amounts: Ms. Hechinger owned 2,450 Holding Units, Mr. Hicks owned 2,912 Holding Units, Ms. Slutsky owned 3,573 Holding Units, Mr. Smith owned 2,912 Holding Units and Mr. Tobin owned 3,573 Holding Units.

(2)
As of December 31, 2009, our independent directors had outstanding option awards in the following amounts: Ms. Hechinger owned options to buy 10,945 Holding Units, Mr. Hicks owned options to buy 13,373 Holding Units, Ms. Slutsky owned options to buy 42,524 Holding Units, Mr. Smith owned options to buy 13,373 Holding Units and Mr. Tobin owned options to buy 57,774 Holding Units.

The General Partner only pays fees, and makes equity awards, to directors who are not employed by our company or by any of our affiliates. Such fees and awards consist of:

 
an annual retainer of $40,000 (paid quarterly after any quarter during which a director serves on the Board);

 
a fee of $1,500 for participating in a meeting of the Board, or any duly constituted committee of the Board, whether he or she participates in person or by telephone;

 
an annual retainer of $15,000 for acting as Chair of the Audit Committee;

 
an annual retainer of $7,500 for acting as Chair of the Corporate Governance Committee; and

 
an annual equity-based grant under the 1997 Plan consisting of:

 
restricted Holding Units having a value of $30,000 based on the closing price of Holding Units on the NYSE as of the grant date; and

 
options to buy Holding Units with a value of $30,000 calculated using the Black-Scholes method.

On May 21, 2009, at a regularly-scheduled meeting of the Board, 1,642 restricted Holding Units and options to buy 6,224 Holding Units at $18.27 per Unit were granted to each of Ms. Hechinger, Mr. Hicks, Ms. Slutsky, Mr. Smith and Mr. Tobin. Such grants have generally been made at the May meeting of the Board. The date of the meeting was set at a Board meeting in 2008. The exercise price of the options was the closing price on the NYSE on the grant date. For information about how the Black-Scholes value was calculated, see Note 16 to AllianceBernstein’s consolidated financial statements in Item 8. Options granted to independent directors vest ratably over three years. Restricted Holding Units granted to independent directors “cliff” vest after three years (i.e., 100% of the award vests and gets distributed on the third anniversary of the grant date). In order to avoid any perception that our directors’ independence might be impaired, these options and restricted Holding Units are not forfeitable. Vesting of options continues following a director’s resignation from the Board. Restricted Holding Units vest and are distributed as soon as administratively feasible following an independent director’s resignation from the Board.


The General Partner may reimburse any director for reasonable expenses incurred in participating in Board meetings. Holding and AllianceBernstein, in turn, reimburse the General Partner for expenses incurred by the General Partner on their behalf, including amounts in respect of directors’ fees and expenses. These reimbursements are subject to any relevant provisions of the Holding Partnership Agreement and AllianceBernstein Partnership Agreement.


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, 2009:

Equity Compensation Plan Information

Plan Category
 
Number of securities to be issued upon exercise of outstanding options, warrants and rights
   
Weighted average exercise price of outstanding options, warrants and rights
   
Number of securities remaining available for future issuance
 
 
 
(a)
   
(b)
   
(c)
 
 
                 
Equity compensation plans approved by security holders
    12,047,522     $ 41.79       6,256,646  
Equity compensation plans not approved by security holders
                 
Total
    12,047,522     $ 41.79       6,256,646  
 
There are no AllianceBernstein Units to be issued pursuant to an equity compensation plan.

For information about our equity compensation plans (1993 Unit Option Plan, 1997 Plan, Century Club Plan), see Note 16 to AllianceBernstein’s consolidated financial statements in Item 8.


Principal Security Holders

As of December 31, 2009, we had no information that any person beneficially owned more than 5% of the outstanding Holding Units.

As of December 31, 2009, we had no information that any person beneficially owned more than 5% of the outstanding AllianceBernstein Units except AXA and certain of its wholly-owned subsidiaries as reported on Schedule 13D/A, Forms 3 and Forms 4 filed with the SEC on April 1, 2009 pursuant to the Exchange Act.

The table below and the notes following it have been prepared in reliance upon such filings for the nature of ownership and an explanation of overlapping ownership.

Name and Address of Beneficial Owner
   
Amount and Nature of Beneficial Ownership Reported on Schedule
   
Percent of Class
 
               
AXA(1)(2)(3)(4)
25 avenue Matignon 75008
Paris, France
    170,121,745 (5)     61.9 %
_____________
(1)
Based on information provided by AXA Financial, on December 31, 2009, AXA and certain of its subsidiaries beneficially owned all of AXA Financial’s outstanding common stock. For insurance regulatory purposes the shares of common stock of AXA Financial beneficially owned by AXA and its subsidiaries have been deposited into a voting trust (“Voting Trust”), the term of which has been extended until May 12, 2012. The trustees of the Voting Trust (the “Voting Trustees”) are Henri de Castries, Denis Duverne and Christopher M. Condron, each of whom serves on the AXA Management Board. 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, 2009, 14.12% of the issued ordinary shares (representing 22.20% of the voting power) of AXA were owned directly and indirectly by two French mutual insurance companies engaged in the Property & Casualty insurance business and the Life & Savings insurance business in France (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 America Holdings, Inc. (a wholly-owned subsidiary of AXA), AXA IM Rose Inc. (a 95.29%-owned subsidiary of AXA), AXA Financial, AXA Equitable, AXA Financial (Bermuda) Ltd. (a wholly-owned subsidiary of AXA Financial), Coliseum Reinsurance Company (a wholly-owned subsidiary of AXA Financial), ACMC Inc. (a wholly-owned subsidiary of AXA Financial), MONY Life Insurance Company (a wholly-owned subsidiary of AXA Financial) and MONY Life Insurance Company of America (a wholly-owned subsidiary of MONY Life Insurance Company) may be deemed to share the power to vote or to direct the vote and to dispose or direct the disposition of all or a portion of the 168,146,626 AllianceBernstein Units.

(5)
As indicated above in note 4, AXA IM Rose Inc. is a 95.29%-owned subsidiary of AXA, meaning that 4.71% of the AllianceBernstein Units beneficially owned by AXA IM Rose Inc. as of December 31, 2009 were not beneficially owned by AXA.  As a result, as of December 31, 2009, AXA beneficially owned 168,146,626 AllianceBernstein Units, or 61.2% of the issued and outstanding AllianceBernstein Units.


As of December 31, 2009, Holding was the record owner of 101,351,749, or 36.9%, of the issued and outstanding AllianceBernstein Units.


Management

The following table sets forth, as of December 31, 2009, the beneficial ownership of Holding Units by each director and named executive officer of the General Partner and by all directors and executive officers as a group:

Name of Beneficial Owner
 
Number of Holding Units and Nature of Beneficial Ownership
   
Percent of Class
 
 
           
Peter S. Kraus(1)(2)
    2,441,789       2.4 %
Dominique Carrel-Billiard(1)
          *  
Christopher M. Condron(1)
    35,000       *  
Henri de Castries(1)
    2,000       *  
Denis Duverne(1)
    2,000       *  
Richard S. Dziadzio(1)
          *  
Deborah S. Hechinger(3)
    4,675       *  
Weston M. Hicks(4)
    12,565       *  
Nick Lane(1)
          *  
Lorie A. Slutsky(1)(5)
    38,415       *  
A.W. (Pete) Smith, Jr.(6)
    9,084       *  
Peter J. Tobin(1)(7)
    52,627       *  
David A. Steyn(1)(8)
    155,662       *  
James A. Gingrich(1)(9)
    201,142       *  
Laurence E. Cranch(1)(10)
    61,905       *  
Robert H. Joseph, Jr.(1)(11)
    214,114       *  
Gerald M. Lieberman(12)
    217,157       *  
All directors and executive officers of the General Partner as a group (18 persons)(13)(14)
    3,488,867       3.4 %
_____________
*
Number of Holding Units listed represents less than 1% of the Units outstanding.

(1)
Excludes Holding Units beneficially owned by AXA and its subsidiaries. Ms. Slutsky and Messrs. Kraus, Carrel-Billiard, de Castries, Condron, Duverne, Dziadzio, Lane, and Tobin are directors and/or officers of AXA, AXA IM, AXA Financial, and/or AXA Equitable. Messrs. Kraus, Steyn, Gingrich, Cranch and Joseph are directors and/or officers of the General Partner.

(2)
In connection with the commencement of Mr. Kraus’s employment, on December 19, 2008, he was granted 2,722,052 restricted Holding Units. Subject to accelerated vesting clauses in the Kraus Employment Agreement (e.g., immediate vesting upon AXA ceasing to control the management of AllianceBernstein’s business or Holding ceasing to be publicly traded and certain qualifying terminations of employment), Mr. Kraus’s restricted Holding Units will vest ratably on each of the first five anniversaries of December 19, 2008, commencing December 19, 2009, provided, with respect to each installment, Mr. Kraus continues to be employed by AllianceBernstein on the vesting date. Mr. Kraus sold 280,263 Holding Units to cover withholding tax obligations when his first tranche of Holding Units vested.

(3)
Includes 2,225 Holding Units Ms. Hechinger can acquire within 60 days under an AllianceBernstein option plan.

(4)
Includes 4,653 Holding Units Mr. Hicks can acquire within 60 days under an AllianceBernstein option plan.

(5)
Includes 33,804 Holding Units Ms. Slutsky can acquire within 60 days under an AllianceBernstein option plan.

(6)
Includes 4,653 Holding Units Mr. Smith can acquire within 60 days under an AllianceBernstein option plan.

(7)
Includes 49,054 Holding Units Mr. Tobin can acquire within 60 days under an AllianceBernstein option plan.

(8)
Includes 146,083 restricted Holding Units Mr. Steyn was awarded in December 2009.

(9)
Includes 52,706 Holding Units Mr. Gingrich can acquire within 60 days under an AllianceBernstein option plan, 94,650 restricted Holding Units awarded in December 2009 and 24,576 restricted Holding Units to which he previously allocated portions of incentive compensation awards.

(10)
Includes 15,669 Holding Units Mr. Cranch can acquire within 60 days under an AllianceBernstein option plan, 38,533 restricted Holding Units awarded in December 2009 and 7,703 restricted Holding Units to which he previously allocated portions of incentive compensation awards.

(11)
Includes 95,000 Holding Units Mr. Joseph can acquire within 60 days under AllianceBernstein option plans, 15,339 restricted Holding Units awarded in December 2009 and 64,679 restricted Holding Units to which he previously allocated portions of incentive compensation awards.

(12)
Includes 59,259 Holding Units Mr. Lieberman can acquire within 60 days under an AllianceBernstein option plan and 157,898 restricted Holding Units awarded under the Lieberman Retirement Agreement.  For additional information regarding he Lieberman Retirement Agreement, see “Compensation Elements for Executive Officers—Former President and Chief Operating Officer Arrangements” in Item 11.

(13)
Includes 317,023 Holding Units the directors and executive officers as a group can acquire within 60 days under AllianceBernstein option plans.

(14)
Includes 333,139 restricted Holding Units awarded in December 2009 to the executive officers as a group and 98,608 restricted Holding Units to which the executive officers as a group previously allocated portions of incentive compensation awards.


As of December 31, 2009, our directors and executive officers did not beneficially own any AllianceBernstein Units.


The following table sets forth, as of December 31, 2009, the beneficial ownership of the common stock of AXA by each director and named executive officer of the General Partner and by all directors and executive officers as a group:

AXA Common Stock(1)

Name of Beneficial Owner
 
Number of Shares and Nature of Beneficial Ownership
   
Percent of Class
 
 
           
Peter S. Kraus
          *  
Dominique Carrel-Billiard(2)
    140,053       *  
Christopher M. Condron(3)
    3,408,754       *  
Henri de Castries(4)
    6,493,930       *  
Denis Duverne(5)
    2,537,149       *  
Richard S. Dziadzio(6)
    202,036       *  
Deborah S. Hechinger
          *  
Weston M. Hicks
          *  
Nick Lane(7)
    9,232       *  
Lorie A. Slutsky(8)
    5,804       *  
A.W. (Pete) Smith, Jr.
          *  
Peter J. Tobin(9)
    23,969       *  
David A. Steyn
          *  
James A. Gingrich
          *  
Laurence E. Cranch
          *  
Robert H. Joseph, Jr.
          *  
Gerald M. Lieberman
          *  
All directors and executive officers of the General Partner as a group (18 persons)(10)
    12,820,927       *  
_____________
*
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 87,653 shares Mr. Carrel-Billiard can acquire within 60 days under option plans. Also includes 268 unvested AXA performance shares, which are paid out when vested based on the price of AXA at that time.

(3)
Includes 1,051,533 shares and 1,544,743 ADSs Mr. Condron can acquire within 60 days under option plans. Also includes 193,096 unvested performance units, which are paid out when vested based on the price of ADSs at that time; payout will be 70% in cash and 30% in ADSs.

(4)
Includes 4,831,150 shares Mr. de Castries can acquire within 60 days under option plans. Also includes 175,099 unvested AXA performance shares, which are paid out when vested based on the price of AXA at that time.

(5)
Includes 1,708,368 shares Mr. Duverne can acquire within 60 days under option plans. Also includes 143,766 unvested AXA performance shares, which are paid out when vested based on the price of AXA at that time.

(6)
Includes 169,880 shares Mr. Dziadzio can acquire within 60 days under option plans. Also includes 21,080 unvested performance units, which are paid out when vested based on the price of ADSs at that time; payout will be 70% in cash and 30% in ADSs.

(7)
Includes 6,212 ADSs Mr. Lane can acquire within 60 days under options plans.

(8)
Includes 944 ADSs Ms. Slutsky can acquire within 60 days under option plans.

(9)
Includes 5,579 ADSs Mr. Tobin can acquire within 60 days under option plans.

(10)
Includes 7,848,584 shares and 1,557,478 ADSs the directors and executive officers as a group can acquire within 60 days under option plans.


Partnership Matters

The General Partner makes all decisions relating to the management of AllianceBernstein and Holding. The General Partner has agreed that it will conduct no business other than managing AllianceBernstein and Holding, although it may make certain investments for its own account. Conflicts of interest, however, could arise between AllianceBernstein and Holding, the General Partner and the Unitholders of both Partnerships.

Section 17-403(b) of the Delaware Revised Uniform Limited Partnership Act (“Delaware Act”) states in substance that, except as provided in the Delaware Act or the applicable partnership agreement, a general partner of a limited partnership has the liabilities of a general partner in a general partnership governed by the Delaware Uniform Partnership Law (as in effect on July 11, 1999) to the partnership and to the other partners. Accordingly, while under Delaware law a general partner of a limited partnership is liable as a fiduciary to the other partners, those fiduciary obligations may be altered by the terms of the applicable partnership agreement. The AllianceBernstein Partnership Agreement and Holding Partnership Agreement both set forth limitations on the duties and liabilities of the General Partner. Each partnership agreement provides that the General Partner is not liable for monetary damages for errors in judgment or for breach of fiduciary duty (including breach of any duty of care or loyalty) unless it is established (the person asserting such liability having the burden of proof) that the General Partner’s action or failure to act involved an act or omission undertaken with deliberate intent to cause injury, with reckless disregard for the best interests of the Partnerships or with actual bad faith on the part of the General Partner, or constituted actual fraud. Whenever the AllianceBernstein Partnership Agreement and the Holding Partnership Agreement provide that the General Partner is permitted or required to make a decision (i) in its “discretion” or under a grant of similar authority or latitude, the General Partner is entitled to consider only such interests and factors as it desires and has no duty or obligation to consider any interest of or other factors affecting the Partnerships or any Unitholder of AllianceBernstein or Holding or (ii) in its “good faith” or under another express standard, the General Partner will act under that express standard and will not be subject to any other or different standard imposed by the AllianceBernstein Partnership Agreement and the Holding Partnership Agreement or applicable law or in equity or otherwise. The partnership agreements further provide that to the extent that, at law or in equity, the General Partner has duties (including fiduciary duties) and liabilities relating thereto to either Partnership or any partner, the General Partner acting under the AllianceBernstein Partnership Agreement or the Holding Partnership Agreement, as applicable, will not be liable to the Partnerships or any partner for its good faith reliance on the provisions of the partnership agreement.


In addition, the AllianceBernstein Partnership Agreement and the Holding Partnership Agreement grant broad rights of indemnification to the General Partner and its directors and affiliates and authorize AllianceBernstein and Holding to enter into indemnification agreements with the directors, officers, partners, employees and agents of AllianceBernstein and its affiliates and Holding and its affiliates. The Partnerships have granted broad rights of indemnification to officers and employees of AllianceBernstein and Holding. The foregoing indemnification provisions are not exclusive, and the Partnerships are authorized to enter into additional indemnification arrangements. AllianceBernstein and Holding have obtained directors and officers/errors and omissions liability insurance.

The AllianceBernstein Partnership Agreement and the Holding Partnership Agreement also allow transactions between AllianceBernstein and Holding and the General Partner or its affiliates if the transactions are on terms determined by the General Partner to be comparable to (or more favorable to AllianceBernstein or Holding than) those that would prevail with an unaffiliated party. The partnership agreements provide that those transactions are deemed to meet that standard if such transactions are approved by a majority of those directors of the General Partner who are not directors, officers or employees of any affiliate of the General Partner (other than AllianceBernstein and its subsidiaries or Holding) or, if in the reasonable and good faith judgment of the General Partner, the transactions are on terms substantially comparable to (or more favorable to AllianceBernstein or Holding than) those that would prevail in a transaction with an unaffiliated party.

The AllianceBernstein Partnership Agreement and the Holding Partnership Agreement expressly permit all affiliates of the General Partner (including AXA Equitable and its other subsidiaries) to compete, directly or indirectly, with AllianceBernstein and Holding, to engage in any business or other activity and to exploit any opportunity, including those that may be available to AllianceBernstein and Holding. AXA, AXA Financial, AXA Equitable and certain of their subsidiaries currently compete with AllianceBernstein. (See “Business—Competition” in Item 1.) The partnership agreements further provide that, except to the extent that a decision or action by the General Partner is taken with the specific intent of providing an improper benefit to an affiliate of the General Partner to the detriment of AllianceBernstein or Holding, there is no liability or obligation with respect to, and no challenge of, decisions or actions of the General Partner that would otherwise be subject to claims or other challenges as improperly benefiting affiliates of the General Partner to the detriment of the Partnerships or otherwise involving any conflict of interest or breach of a duty of loyalty or similar fiduciary obligation.

Section 17-1101(c) of the Delaware Act provides that it is the policy of the Delaware Act to give maximum effect to the principle of freedom of contract and to the enforceability of partnership agreements. Further, Section 17-1101(d) of the Delaware Act provides in part that to the extent that, at law or in equity, a partner has duties (including fiduciary duties) to a limited partnership or to another partner, those duties may be expanded, restricted, or eliminated by provisions in a partnership agreement (provided that a partnership agreement may not eliminate the implied contractual covenant of good faith and fair dealing). In addition, Section 17-1101(f) of the Delaware Act provides that a partnership agreement may limit or eliminate any or all liability of a partner to a limited partnership or another partner for breach of contract or breach of duties (including fiduciary duties); provided, however, that a partnership agreement may not limit or eliminate liability for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing. Decisions of the Delaware courts have recognized the right of parties, under the above provisions of the Delaware Act, to alter by the terms of a partnership agreement otherwise applicable fiduciary duties and liability for breach of duties. However, the Delaware Courts have required that a partnership agreement make clear the intent of the parties to displace otherwise applicable fiduciary duties (the otherwise applicable fiduciary duties often being referred to as “default” fiduciary duties). Judicial inquiry into whether a partnership agreement is sufficiently clear to displace default fiduciary duties is necessarily fact driven and is made on a case by case basis. Accordingly, the effectiveness of displacing default fiduciary obligations and liabilities of general partners continues to be a developing area of the law and it is not certain to what extent the foregoing provisions of the AllianceBernstein Partnership Agreement and the Holding Partnership Agreement are enforceable under Delaware law.


Item 13.
Certain Relationships and Related Transactions, and Director Independence

Policies and Procedures Regarding Transactions with Related Persons

Each of the Holding Partnership Agreement and the AllianceBernstein Partnership Agreement expressly permits AXA and its affiliates, which includes AXA Equitable and its affiliates (collectively, “AXA Affiliates”), to provide services to AllianceBernstein and Holding if the terms of the transaction are approved by the General Partner in good faith as being comparable to (or more favorable to each such partnership than) those that would prevail in a transaction with an unaffiliated party. This requirement is conclusively presumed to be satisfied as to any transaction or arrangement that (i) in the reasonable and good faith judgment of the General Partner, meets that unaffiliated party standard, or (ii) has been approved by a majority of those directors of the General Partner who are not also directors, officers or employees of an Affiliate of the General Partner.

In practice, our management pricing committees review investment advisory agreements with AXA Affiliates, which is the manner in which the General Partner reaches a judgment regarding the appropriateness of the fees. Other transactions with AXA Affiliates are submitted to the Audit Committee for their review and approval; the unanimous consent of the Audit Committee constitutes the consent of three of five independent directors on the Board. We are not aware of any transaction during 2009 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 2009. The first table summarizes services we provide to related persons, and the second table summarizes services our related persons provide to us:

Parties(1)
 
General Description of Relationship(2)
 
Amounts Received or Accrued for in 2009
 
 
 
 
     
AXA Asia Pacific(2)(3)
 
 
  $ 31,441,000  
AXA Equitable(3)
 
We provide investment management services and ancillary accounting, valuation, reporting, treasury and other services to the general and separate accounts of AXA Equitable and its insurance company subsidiaries.
  $
29,751,000
(of which $418,000 relates to the ancillary services)
 
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.
  $ 27,619,000  
AXA Life Japan Limited(2)(3)
      $ 11,400,000  
MONY Life Insurance Company and its subsidiaries(3)(4)
 
We provide investment management services and ancillary accounting services.
  $
8,576,000
(of which $150,000 relates to the ancillary services)
 
AXA Sun Life(2)(3)
      $ 4,271,000  
AXA Bermuda(2)(3)
      $ 3,531,000  
AXA France(2)(3)
      $ 2,179,000  
AXA Winterthur(2)(3)
      $ 2,010,000  
AXA Rosenberg Investment Management Asia Pacific(2)(3)
      $ 1,939,000  
AXA (Canada)(2)(3)
      $ 1,710,000  
AXA U.K. Group Pension Scheme(2)
      $ 1,634,000  
AXA Corporate Solutions(2)(3)
      $ 1,313,000  
AXA Germany(2)(3)
      $ 966,000  
AXA Belgium(2)(3)
      $ 618,000  
AXA Mediterranean(2)(3)
      $ 176,000  
AXA Reinsurance Company(2)(3)
      $ 171,000  
AXA Foundation, Inc., a subsidiary of AXA Financial(2)
      $ 159,000  
Other AXA subsidiaries(2)
      $ 187,000  
_____________
(1)
AllianceBernstein or one of its subsidiaries is a party to each transaction.


(2)
We provide investment management services unless otherwise indicated.

(3)
This entity is a subsidiary of AXA. AXA is an indirect parent of AllianceBernstein.

(4)
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 2009
 
 
 
 
 
 
 
AXA Business Services Pvt. Ltd.
 
AXA Business Services provides data processing services and support for certain investment operations functions.
  $ 6,921,000  
AXA Advisors
 
AXA Advisors distributes certain of our Retail Products and provides Private Client referrals.
  $ 6,918,000  
AXA Equitable
 
We are covered by various insurance policies maintained by AXA Equitable.
  $ 3,872,000  
AXA Equitable
 
AXA Equitable provides certain data processing services and related functions.
  $ 2,591,000  
AXA Advisors
 
AXA Advisors sells shares of our mutual funds under Distribution Services and Educational Support agreements.
  $ 1,935,000  
AXA Group Solutions Pvt. Ltd.
 
AXA Group Solution Pvt. Ltd provides maintenance and development support for applications.
  $ 1,586,000  
AXA Technology Services India Pvt. Ltd.
 
AXA Technology Services India Pvt. Ltd. provides certain data processing services and functions.
  $ 1,317,000  
GIE Informatique AXA (“GIE”)
 
GIE provides cooperative technology development and procurement services to us and to various other subsidiaries of AXA.
  $ 998,000  
_____________
(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

In January 2008, AllianceBernstein and AXA executed guarantees in connection with a three-year $950 million Revolving Credit Agreement (“SCB LLC Credit Agreement”). If SCB LLC is unable to meet its obligations, AllianceBernstein or AXA will pay the obligations when due or on demand.  AllianceBernstein will reimburse AXA to the extent AXA must pay on its guarantee.  This arrangement remains in effect until the later of payment in full of any borrowings under the SCB LLC Credit Agreement has been made or the credit agreement expires.

On February 1, 2001, AllianceBernstein and AXA Asia Pacific entered into a Subscription and Shareholders Agreement under which they established two investment management companies in Australia and New Zealand named AllianceBernstein Australia Limited and AllianceBernstein New Zealand Limited, respectively. AXA Asia Pacific and AllianceBernstein each own fifty percent (50%) of the equity of each company and have equal representation on the boards. These companies currently manage approximately $28.3 billion in client assets, and earned approximately $40.9 million in management fees in 2009 (of which $14.0 million is included in the table above). AllianceBernstein and AXA Asia Pacific have agreed to combine their New Zealand operations with and into their Australia operations.  As a result, New Zealand client service, portfolio management and operations will be performed in Australia.  The transition is expected to be completed during the first quarter of 2010.

AXA Advisors was our 18th largest distributor of U.S. Funds in 2009, for which we paid AXA Advisors sales concessions on sales of approximately $303 million. Various subsidiaries of AXA distribute certain of our Non-U.S. Funds, for which such entities received aggregate distribution payments of approximately $229,000 in 2009.

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 incentive 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 incentive compensation under the employment agreements entered into in connection with AXA Equitable’s 1985 acquisition of Donaldson, Lufkin and Jenrette Securities Corporation (since November 2000, a part of Credit Suisse Group) as well as obligations of AllianceBernstein to various employees and their beneficiaries under AllianceBernstein’s Capital Accumulation Plan. In 2009, ACMC Inc. made capital contributions to AllianceBernstein in the amount of approximately $4.9 million in respect of these obligations. ACMC Inc.’s obligations to make these contributions are guaranteed by Equitable Holdings, LLC (a wholly-owned subsidiary of AXA Equitable), subject to certain limitations. All tax deductions with respect to these obligations, to the extent funded by ACMC Inc., the General Partner or Equitable Holdings, LLC, will be allocated to ACMC Inc. or the General Partner.


Arrangements with Immediate Family Members of Related Persons

Two individuals who served as executive officers during a portion of 2009, one of whom was 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 4,369 employees.

Gerald M. Lieberman’s daughter, Andrea L. Feldman, is employed in Financial Planning & Analysis and received 2009 compensation of $119,000 (salary, cash bonus and contribution to the Profit Sharing Plan). Mr. Lieberman’s son-in-law, Jonathan H. Feldman, Ms. Feldman’s spouse, is employed in Retail Services and received 2009 compensation of $237,086 (salary, cash bonus, long-term incentive compensation, contribution to the Profit Sharing Plan and life insurance premiums). Gerald M. Lieberman was Director of the General Partner and the President and Chief Operating Officer of the General Partner, AllianceBernstein and Holding until his retirement on July 31, 2009.

James G. Reilly’s brother, Michael J. Reilly, is a U.S. Large Cap Growth portfolio manager and received 2009 compensation of $1,380,971 (salary, cash bonus, long-term incentive compensation, options amortization, contribution to the Profit Sharing Plan and life insurance premiums). James G. Reilly is a Senior Vice President of the General Partner, AllianceBernstein and Holding, and he is our U.S. Large Cap Growth team leader.


Director Independence

See “Corporate Governance—Independence of Certain Directors” in Item 10.


Item 14.
Principal Accounting Fees and Services

The following table presents fees for professional audit services rendered by PricewaterhouseCoopers LLP (“PwC”) for the audit of AllianceBernstein’s and Holding’s annual financial statements for 2009 and 2008, respectively, and fees for other services rendered by PwC:

   
2009
   
2008
 
    (in thousands)  
             
Audit fees(1)
  $ 6,173     $ 7,490  
Audit related fees(2)
    2,439       2,408  
Tax fees(3)
    2,167       2,376  
All other fees(4)
    5       5  
Total
  $ 10,784     $ 12,279  
_____________
(1)
Includes $87,675 and $105,000 paid for audit services to Holding in 2009 and 2008, respectively.

(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 2009 and 2008 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 Schedule.

Attached to this Form 10-K is a schedule describing Valuation and Qualifying Account-Allowance for Doubtful Accounts for the three years ended December 31, 2009, 2008 and 2007. PwC’s report regarding the schedule is 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).
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 Incentive Compensation Award Program (as amended and restated as of December 7, 2009).
Post-December 1, 2009 Award Provisions under the Amended and Restated AllianceBernstein Incentive Compensation Award Program.
Form of 2009 Award Agreement under Incentive Compensation Award Program and 1997 Long Term Incentive Plan.
Retirement Agreement between Gerald M. Lieberman, AllianceBernstein Corporation and AllianceBernstein L.P. dated as of June 9, 2009.
Summary of AllianceBernstein L.P.’s Lease at 1345 Avenue of the Americas, New York, New York 10105.
Guidelines for Transfer of AllianceBernstein L.P. Units.
10.07
Form of Award Agreement under the Special Option Program (incorporated by reference to Exhibit 10.05 to Form 10-K for the fiscal year ended December 31, 2008, as filed February 23, 2009).
10.08
Amended and Restated Commercial Paper Dealer Agreement, dated as of February 10, 2009, among Banc of America Securities LLC, Merrill Lynch Money Markets Inc., Deutsche Bank Securities Inc. and AllianceBernstein L.P. (incorporated by reference to Exhibit 10.11 to Form 10-K for the fiscal year ended December 31, 2008, as filed February 23, 2009).
10.09
Employment Agreement among Peter S. Kraus, AllianceBernstein Corporation, AllianceBernstein Holding L.P. and AllianceBernstein L.P., dated as of December 19, 2008 (incorporated by reference to Exhibit 99.02 to Form 8-K, as filed December 24, 2008).
10.10
Revolving Credit Agreement dated as of January 25, 2008 among Sanford C. Bernstein & Co., LLC, as Borrower, AllianceBernstein L.P., as U.S. Guarantor, Citibank, N.A., as Administrative Agent, Citigroup Global Markets Inc., as Arranger, JPMorgan Chase Bank, N.A. and Bank of America, N.A., as Co-Syndication Agents, HSBC Bank USA, National Association, as Documentation Agent, and the financial institutions whose names appear on the signature pages as “Banks” (incorporated by reference to Exhibit 10.08 to Form 10-K for the fiscal year ended December 31, 2007, as filed February 25, 2008).
10.11
Amended and Restated 1997 Long Term Incentive Plan, as amended through November 28, 2007 (incorporated by reference to Exhibit 10.02 to Form 10-K for the fiscal year ended December 31, 2007, as filed February 25, 2008).
10.12
Supplement dated November 2, 2007 to the Revolving Credit Facility (incorporated by reference to Exhibit 10.10 to Form 10-K for the fiscal year ended December 31, 2007, as filed February 25, 2008). (See Exhibit 10.14.)

 
Exhibit
Description
   
10.13
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).
10.14
Revolving Credit Facility dated as of February 17, 2006 among AllianceBernstein L.P., as Borrower, Bank of America, N.A., as Administrative Agent, Banc of America Securities LLC, as Arranger, Citibank N.A. and The Bank of New York, as Co-Syndication Agents, Deutsche Bank Securities Inc. and JPMorgan Chase Bank, N.A., as Co-Documentation Agents, and The Various Financial Institutions Whose Names Appear on the Signature Pages as “Banks” (incorporated by reference to Exhibit 10.1 to Form 10-K for the fiscal year ended December 31, 2005, as filed February 24, 2006).
10.15
Investment Advisory and Management Agreement for MONY Life Insurance Company (incorporated by reference to Exhibit 10.4 to Form 10-K for the fiscal year ended December 31, 2004, as filed March 15, 2005).
10.16
Investment Advisory and Management Agreement for the General Account of AXA Equitable Life Insurance Company (incorporated by reference to Exhibit 10.5 to Form 10-K for the fiscal year ended December 31, 2004, as filed March 15, 2005).
10.17
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).
10.18
Services Agreement dated as of April 22, 2001 between Alliance Capital Management L.P. and AXA Equitable Life Insurance Company (incorporated by reference to Exhibit 10.19 to Form 10-K for the fiscal year ended December 31, 2001, as filed March 28, 2002).
10.19
Alliance Capital Management L.P. Annual Elective Deferral Plan (incorporated by reference to Exhibit 99 to Form S-8, as filed November 6, 2000).
10.20
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).
10.21
Amended and Restated Investment Advisory and Management Agreement dated January 1, 1999 among Alliance Capital Management Holding L.P., Alliance Corporate Finance Group Incorporated, and AXA Equitable Life Insurance Company (incorporated by reference to Exhibit (a)(6) to Form 10-Q/A for the quarterly period ended September 30, 1999, as filed on September 28, 2000).
10.22
Amended and Restated Accounting, Valuation, Reporting and Treasury Services Agreement dated January 1, 1999 between Alliance Capital Management Holding L.P., Alliance Corporate Finance Group Incorporated, and AXA Equitable Life Insurance Company (incorporated by reference to Exhibit (a)(7) to the Form 10-Q/A for the quarterly period ended September 30, 1999, as filed September 28, 2000).
10.23
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, 2009, 2008 and 2007.
Subsidiaries of AllianceBernstein.
Consent of PricewaterhouseCoopers LLP.
Certification of Mr. Kraus furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Mr. Joseph furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Mr. Kraus furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Mr. Joseph furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
List of comparable companies utilized by McLagan Partners to generate 2009 compensation benchmarking data.


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 11, 2010
By:
/s/ Peter S. Kraus
 
 
Peter S. Kraus
 
 
Chairman of the Board and Chief Executive Officer

Pursuant to the requirements of the Exchange Act, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


   
   
Date: February 11, 2010
/s/ Robert H. Joseph, Jr.
 
Robert H. Joseph, Jr.
 
Chief Financial Officer
   
Date: February 11, 2010
/s/ Edward J. Farrell
 
Edward J. Farrell
 
Chief Accounting Officer


Directors


/s/ Peter S. Kraus
 
/s/ Deborah S. Hechinger
Peter S. Kraus
 
Deborah S. Hechinger
Chairman of the Board
 
Director
     
/s/ Dominique Carrel-Billiard
 
/s/ Weston M. Hicks
Dominique Carrel-Billiard
 
Weston M. Hicks
Director
 
Director
     
/s/ Christopher M. Condron
 
/s/ Nick Lane
Christopher M. Condron
 
Nick Lane
Director
 
Director
     
/s/ Henri de Castries
 
/s/ Lorie A. Slutsky
Henri de Castries
 
Lorie A. Slutsky
Director
 
Director
     
/s/ Denis Duverne
 
/s/ A.W. (Pete ) Smith, Jr.
Denis Duverne
 
A.W. (Pete) Smith, Jr.
Director
 
Director
     
/s/ Richard S. Dziadzio
 
/s/ Peter J. Tobin
Richard S. Dziadzio
 
Peter J. Tobin
Director
 
Director

 
SCHEDULE I I
AllianceBernstein L.P.
Valuation and Qualifying Account - Allowance for Doubtful Accounts
For the Three Years Ending December 31, 2009, 2008 and 2007

Description
 
Balance at Beginning of Period
   
Charged (Credited) to Costs and Expenses
   
Deductions
   
Balance at End of Period
 
   
(in thousands)
 
                         
For the year ended December 31, 2007
  $ 1,113     $ 955     $ 276 (a)   $ 1,792  
                                 
For the year ended December 31, 2008
  $ 1,792     $ (192 )   $ 112 (b)   $ 1,488  
                                 
For the year ended December 31, 2009
  $ 1,488     $ (88 )   $ 7 (c)   $ 1,393  

(a)
Includes accounts written-off as uncollectible of $267 and a net reduction of the allowance balance of $9.
(b)
Includes accounts written-off as uncollectible of $31 and a net reduction to the allowance balance of $81.
(c)
Includes accounts written-off as uncollectible of $41 and a net addition to the allowance balance of $34.
 
 
Report of Independent Registered Public Accounting Firm on
Financial Statement Schedule



To the General Partner and Unitholders
AllianceBernstein L.P.:

Our audits of the consolidated financial statements and of the effectiveness of internal control over financial reporting referred to in our report dated February 11, 2010 also included an audit of the financial statement schedule listed in Item 15(a) of this Form 10-K.  In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.


/s/ PricewaterhouseCoopers LLP
New York, New York
February 11, 2010
 
 
119

Unassociated Document

Exhibit 10.01
 
AMENDED AND RESTATED
ALLIANCEBERNSTEIN INCENTIVE COMPENSATION AWARD PROGRAM
 
As Amended and Restated Effective as of December 7, 2009

 
AllianceBernstein Holding L.P. (together with any successor to all or substantially all of its business and assets, “Holding”) and its successor and affiliate AllianceBernstein L.P. (together with any successor to all or substantially all of its business and assets, “AllianceBernstein”) have established this Amended and Restated AllianceBernstein Incentive Compensation Award Program (formerly known as the AllianceBernstein Partners Compensation Plan, the “Plan”) under the AllianceBernstein L.P. Amended and Restated 1997 Long Term Incentive Plan (the “1997 Plan”) to (i) create a compensation program to attract and retain eligible employees expected to make a significant contribution to the future growth and success of Holding and AllianceBernstein, including their respective subsidiaries and (ii) foster the long-term commitment of these employees through the accumulation of capital and increased ownership of equity interests in Holding.
 
The right to defer Awards hereunder shall be considered a separate plan within the Plan.  Such separate plan shall be referred to as the “APCP Deferral Plan.”  The APCP Deferral Plan is maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees (a “Top Hat Employee”).  No one who is not a Top Hat Employee may defer compensation under the APCP Deferral Plan.
 
The Plan was amended and restated effective as of January 1, 2005 to clarify and reflect administrative practices and to comply in good faith with Section 409A of the Internal Revenue Code (the “Code”) and the guidance issued thereunder (“Section 409A”).  The Plan was again amended and restated effective December 5, 2008 to incorporate prior amendments and additional changes to clarify and reflect administrative practices and to comply with the final regulations issued under Section 409A.   The Plan was again amended and restated effective January 23, 2009 to incorporate changes relating to the Committee’s discretion to apply alternative forfeiture provisions with respect to any Post-2000 Award (as defined in Article 1) invested in Options (as defined in Article 1).  The Plan is hereby amended and restated to change the name of the Plan to the AllianceBernstein Incentive Compensation  Program and to add to the Plan the attached Addendum A entitled “Post December 1, 2009 Award Provisions under the Amended and Restated AllianceBernstein Incentive Compensation  Program” which shall govern Awards made after December 1, 2009 and to clarify certain provisions hereof. as they relate to Awards made after December 1, 2009.  Any deferral or payment hereunder is subject to the terms of the Plan and compliance with Section 409A, as interpreted by the Committee in its sole discretion.  Although none of the Company, the Committee, their affiliates, and their agents make any guarantee with respect to the treatment of payments under this Plan and shall not be responsible in any event with regard to the Plan’s compliance with Section 409A, the payments contained herein are intended to be exempt from Section 409A or otherwise comply with the requirements of Section 409A, and the Plan shall be limited, construed and interpreted in accordance with the foregoing.  None of the Company, the Committee, any of their affiliates, and any of their agents shall have any liability to any Participant or Beneficiary as a result of any tax, interest, penalty or other payment required to be paid or due pursuant to, or because of a violation of, Section 409A.
 
 
 

 

ARTICLE 1
Definitions
 
Section 1.01        Definitions.  Whenever used in the Plan, each of the following terms shall have the meaning for that term set forth below:
 
(a)           “Account” means a separate bookkeeping account established for each Participant for each Award, with such Award, as described in Article 2, credited to the Account maintained for such Award together with Earnings credited thereon.
 
(b)           “Affiliate” means (i) any entity that, directly or indirectly, is controlled by AllianceBernstein and (ii) any entity in which AllianceBernstein has a significant equity interest, in either case as determined by the Board or, if so authorized by the Board, the Committee.
 
(c)           “Approved Fund” means any money-market, debt or equity fund designated by the Committee from time to time as an Approved Fund.
 
(d)           “Award” means any Pre-1999 Award, 1999-2000 Award or Post-2000 Award.
 
(e)           “Beneficiary” means one or more Persons, trusts, estates or other entities, designated in accordance with Section 8.04(a), that are entitled to receive, in the event of a Participant’s death, any amount or property to which the Participant would otherwise have been entitled under the Plan.
 
(f)           “Beneficiary Designation Form” means the form established from time to time by the Committee that a Participant completes, signs and returns to the Committee to designate one or more Beneficiaries.
 
(g)           “Board” means the Board of Directors of the general partner of Holding and AllianceBernstein.
 
(h)           “Code” means the Internal Revenue Code of 1986, as amended from time to time.
 
(i)           “Committee” means the Board or one or more committees of the Board designated by the Board to administer the Plan.
 
(j)           “Company” means Holding, AllianceBernstein and any corporation or other entity of which Holding or AllianceBernstein (i) has sufficient voting power (not depending on the happening of a contingency) to elect at least a majority of its board of directors or other governing body, as the case may be, or (ii) otherwise has the power to direct or cause the direction of its management and policies.
 
(k)           “Deferral Election Form” means the form(s) established from time to time by the Committee that a Participant completes, signs and returns to the Committee to elect to defer the distribution of an Award, including Earnings thereon, pursuant to Article 5.
 
 
2

 

(l)           “Disability” means unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, as determined by the carrier of the long-term disability insurance program maintained by the Company or its Affiliate that covers the Participant, or such other person or entity designated by the Committee in its sole discretion.
 
(m)           “Earnings” on any Account during any period means the amounts of gain or loss that would have been incurred with respect to such period if an amount equal to the balance of such Account at the beginning of such period had been actually invested in accordance with a Participant’s investment direction.
 
(n)           “Effective Date” of an Award means December 31 of the calendar year for which the Award is initially granted under the Plan.
 
(o)           “Eligible Employee” means, for any calendar year commencing on and after January 1, 2005, an active employee of a Company whom the Committee determines to be eligible for an Award.  Notwithstanding the foregoing, no Eligible Employee whose Total Compensation for a calendar year is less than such amount, if any, as established by the Committee in writing shall be eligible to participate in the APCP Deferral Plan for that calendar year and any advance deferral election made by such Eligible Employee is made on the condition that such Eligible Employee satisfies the Total Compensation requirement and, if not, such deferral election shall be null and void ab initio.
 
(p)           “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
 
(q)           “Fair Market Value” means, with respect to a Holding Unit as of any given date and except as otherwise expressly provided by the Board or the Committee, the closing price of a Holding Unit on such date as published in the Wall Street Journal or, if no sale of Holding Units occurs on the New York Stock Exchange on such date, the closing price of a Holding Unit on such Exchange on the last preceding day on which such sale occurred as published in the Wall Street Journal.
 
(r)           “Holding Units” means units representing assignments of beneficial ownership of limited partnership interests in Holding.
 
(s)           “Investment Election Form” means the form established from time to time by the Committee that a Participant completes, signs and returns to the Committee to designate the percentage of such Award to be treated as notionally invested in Restricted Units or Approved Funds, pursuant to Section 2.03.
 
(t)           “1999-2000 Award” means any Award granted hereunder with respect to calendar years 1999 or 2000, as applicable.  Special rules for 1999-2000 Awards are provided in Article 7.
 
 
3

 

(u)           “Option” means an option to buy Holding Units; all Options shall be issued under AllianceBernstein’s Amended and Restated 1997 Long Term Incentive Plan or any similar equity compensation plan AllianceBernstein may provide for in the future.
 
(v)           “Participant” means any Eligible Employee of any Company who has been designated by the Committee to receive an Award for any calendar year and who thereafter remains employed by a Company.
 
(w)           “Person” means any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity.
 
(x)           “Plan” means the Amended and Restated AllianceBernstein Partners Compensation Plan, including Addendum A, as set forth herein and as amended from time to time.
 
(y)           “Post-2000 Award” means any Award granted hereunder with respect to calendar years beginning after December 31, 2000.
 
(z)           “Pre-1999 Award” means any Award granted hereunder with respect to calendar years beginning before January 1, 1999.  Special rules for Pre-1999 Awards are provided in Article 6.
 
(aa)         “Restricted Unit” means a right to receive a Holding Unit in the future, as accounted for in an Account, subject to vesting and any other terms and conditions established hereunder or by the Committee.
 
(bb)         “Retirement” with respect to a Participant means that the employment of the Participant with the Company has terminated either (i) on or after the Participant’s attaining age 65, or (ii) on or after the Participant’s attaining age 55 at a time when the sum of the Participant’s age and aggregate full calendar years of service with the Company, including service prior to April 21, 1988 with the corporation then named Alliance Capital Management Corporation, equals or exceeds 70.
 
                (cc)         Special Program means the granting of permission to certain eligible employees of the Company to allocate a portion of their Awards to Options.
 
(dd)         “Termination of Employment” means that the Participant involved is no longer performing services as an employee of any Company, other than pursuant to a severance or special termination arrangement, and has had a “separation from service” within the meaning of Section 409A.
 
(ee)          “Total Compensation” for a calendar year means base salary paid during such calendar year, bonus paid for such calendar year even if paid after the end of such calendar year or deferred, commissions paid during such calendar year and the Award for such calendar year.
 
 
4

 

(ff)           “Unforeseeable Emergency” means a severe financial hardship to a Participant or former Participant within the meaning of Section 409A resulting from (i) an illness or accident of the Participant or former Participant, the spouse of the Participant or former Participant, or a dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)) of the Participant or former Participant, (ii) loss of property of the Participant or former Participant due to casualty or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or former Participant, all as determined in the sole discretion of the Committee.
 
(gg)           “Vesting Period” means the applicable vesting period with respect to an Award, as provided for in Section 3.01(a).
 
ARTICLE 2
Participation
 
Section 2.01    Eligibility.  The Committee, in its sole discretion, will designate those Eligible Employees employed by a Company who will receive Awards with respect to a calendar year.  In making such designation, the Committee may consider any criteria that it deems relevant, which may include an Eligible Employee’s position with a Company and the manner in which the Eligible Employee is expected to contribute to the future growth and success of the Company.  The Committee may vary the amount of Awards to a particular Participant from year to year and may determine that a Participant who received an Award to a particular year is not eligible to receive any Award with respect to any subsequent year.  An Eligible Employee who is a member of the Committee during a particular year shall be eligible to receive an Award for that year only if the Award is approved by the majority of the other members of the Committee.
 
Section 2.02     Grant of Awards.  The nominal amount of an Award will be determined by the Committee in its sole and absolute discretion, and such amount will be credited to the Participant’s Account as of the Effective Date for such Award.  An Award, including Earnings thereon, vests in accordance with the terms of Article 3, and any such vested Award will be subject to the rules on distributions and deferral elections under Articles 4 and 5, respectively.
 
Section 2.03     Investment Elections.  Each Participant shall submit, in accordance with deadlines and procedures established from time to time by the Committee, an Investment Election Form with respect to each Award.  Such Investment Election Form shall designate what percentage of such Participant’s Award shall be treated for purposes of the Plan as (a) notionally invested in (i) Restricted Units and (ii) each of the Approved Funds, and (b) invested in Options through the Special Program; provided that with respect to a designation to invest in Options through the Special Program, the Board reserves the absolute right, in its sole discretion, to accept and reject such investment election.  The Committee in its sole discretion may, but shall not be obligated to, permit each Participant to reallocate notional investments in each Account among Restricted Units and the various Approved Funds or just among the Approved Funds, subject to, without limitation, restrictions as to the frequency with which such reallocations may be made.  The Committee may determine for each calendar year a minimum percentage and a maximum percentage of each Award that may be treated as notionally invested in Restricted Units and each Approved Fund.  The Committee may also determine for each calendar year a minimum and a maximum percentage of each Award that may be allocated to Options.  As soon as reasonably practicable after the end of each calendar year, a statement shall be provided to each such Participant indicating the current balance in each Account maintained for the Participant as of the end of the calendar year, and the amounts in such Account notionally allocated to Restricted Units and each of the Approved Funds, and the amount in such Account allocated to Options.
 
 
5

 

Section 2.04      Earnings on an Account.
 
(a)           Each Award for which an Investment Election Form has been validly submitted shall be credited to a separate Account in the proportions set forth in such Investment Election Form or as directed by the Committee.  The amount of such Account shall be treated as notionally invested in Restricted Units or Approved Funds, as applicable, as of a date determined by the Committee (the “Earnings Date”), which shall be no later than forty-five days after the Effective Date.  Notwithstanding Sections 2.05 and 2.06, Earnings will be credited or debited, as applicable, beginning from the Earnings Date but will not be credited or debited for any period prior to the Earnings Date.
 
(b)           Not less frequently than as of the end of each calendar year following the year during which an Account is established in connection with an Award, each Account maintained under the Plan will be credited or debited, as applicable, with the amount, if any, necessary to reflect Earnings as of that date.
 
Section 2.05       Awards Invested in Approved Funds.
 
(a)           To the extent the Committee or an Investment Election Form validly directs the notional investment of all or a part of any Award in Approved Funds, that portion of such Award so designated shall, as of a date determined by the Committee, be treated as notionally invested in such Approved Funds.  If a cash dividend or other cash distribution is made with respect to Approved Funds, as of a date determined and as calculated by the Committee in its sole discretion, a Participant whose Account is notionally invested in Approved Funds (whether vested or unvested) will have such notional investment increased by an amount equal to the cash dividend or other cash distribution that would have been due on the Account had there actually been an investment in Approved Funds.  Such increase shall be proportionately allocated by the Committee in its sole discretion between Approved Funds, as applicable, and such increase shall be vested at all times.
 
(b)           To the extent any Approved Fund is terminated, liquidated, merged with another fund or experiences a major change in investment strategy or other extraordinary event, the Committee may, if so authorized by the Board, in such manner as it may in its sole discretion deem equitable, reallocate or otherwise adjust the amount of any Account under this Article 2 to reflect the occurrence of such event.
 
 
6

 

Section 2.06       Awards Invested in Restricted Units.
 
(a)           To the extent the Committee or an Investment Election Form validly directs the notional investment of all or part of any Award in Restricted Units, that portion of such Award so designated shall, as of a date and based on a Fair Market Value of a Holding Unit as determined by the Committee and pursuant to procedures established by the Committee from time to time, be converted into a whole number of Restricted Units.  From and after the date of such conversion, that portion of an Award which has been validly made to notionally invest in Restricted Units shall be denominated, and shall thereafter be treated for all purposes as, a grant of that number of Restricted Units determined pursuant to the preceding sentence.
 
(b)           If a cash dividend or other cash distribution is made with respect to Holding Units, within 90 days thereafter, a distribution will be made to a Participant whose Account is credited with Restricted Units (whether vested or unvested) in an amount (the “Equivalent Distribution Amount”) equal to the number of such Restricted Units credited to the Participant’s Account, times the value of the cash dividend or other cash distribution per Holding Unit; provided, however, if a Participant defers distribution of his Award under Article 5, the Equivalent Distribution Amount will be converted at such time or times and in accordance with such procedures as shall be established by the Committee, into vested Restricted Units based on the Fair Market Value of a Holding Unit as determined by the Committee, and such converted benefit shall be distributed in accordance with Section 4.03.
 
(c)           Fractional unit amounts remaining after conversion under this Section 2.06 may be used for any purposes for the benefit of the Participant as determined by the Committee in its sole discretion, including but not limited to the payment of taxes with respect to an Award or deposit in the Approved Funds.
 
(d)           In the event that the Committee determines that any distribution (whether in the form of cash, limited partnership interests, other securities, or other property), recapitalization (including, without limitation, any subdivision or combination of limited partnership interests), reorganization, consolidation, combination, repurchase, or exchange of limited partnership interests or other securities of Holding, issuance of warrants or other rights to purchase limited partnership interests or other securities of Holding, any incorporation of Holding, or other similar transaction or events affects Holding Units such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee may, if so authorized by the Board, in such manner as it may deem equitable, adjust the number of Restricted Units or securities of Holding (or number and kind of other securities) subject to outstanding Awards, or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award.
 
 
7

 

Section 2.07       Awards Invested in Options
 
(a)           To the extent the Committee or an Investment Election Form validly directs the investment of all or part of any Award in Options, that portion of such Award so designated shall, as of a date and as determined by the Committee, be used to purchase Options having a value calculated in accordance with Black-Scholes methodology (“Initial Award”).  From and after the date of such conversion, that portion of an Award which has been validly made to invest in Options shall be denominated, and shall thereafter be treated for all purposes as, a grant of that number of Options determined pursuant to the preceding sentence.
 
(b)           To the extent an Award is validly invested in Options under the Special Program, the Committee may authorize an additional award to a Participant, which may be based on such Participant’s Initial Award (“Match”). 
 

ARTICLE 3
Vesting, Expiration and Forfeitures
 
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.
 
(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
 
 
8

 

                      (ii)           The portion of each Post-2000 Award that is invested in Options shall vest and expire as set forth in the following tables, unless the Committee, in its sole discretion, determines that an alternative Vesting Period or expiration date should apply with respect to such portion of any Post-2000 Award, notwithstanding such tables:
 
Options
Vesting Period
Initial Award
5 years (20% in each year)
Match
10 years (20% in each of years 6 through 10)

 
Options
Expiration Date
Initial Award
10 years from grant date
Match
11 years from grant date

 
(iii)           Each 1999-2000 Award, including Earnings thereon, shall vest as set forth in the following table, based on the Participant’s age as of the Effective Date with respect to such Award:
 
Age of Participant as of Effective Date
Vesting Period
   
Up to and including 47
8 years
48
7 years
49
6 years
50-57
5 years
58
4 years
59
3 years
60
2 years
61
1 year
62 or older
Fully vested at grant

(iv)           The Vesting Period of each Pre-1999 Award made for 1995, including Earnings thereon, is three years.  The Vesting Period of each Pre-1999 Award made for a calendar year after 1995, including Earnings thereon, is eight years.
 
(b)           The unvested portion of any Award held by such Participant shall become 100% vested upon a Participant’s Termination of Employment due to death, upon a Participant’s Disability, and with respect to a Pre-1999 Award only, upon a Participant’s Termination of Employment due to Retirement.
 
 
9

 

Section 3.02      Forfeitures.  A Participant shall forfeit the balance of any Account maintained for him or her which has not been vested in accordance with the applicable Vesting Period of Section 3.01 on the effective date of the Participant’s Termination of Employment for any reason other than death, and, only with respect to a Pre-1999 Award, the Participant’s Termination of Employment due to Retirement; provided, however, that, the Committee may determine, in its sole discretion, and only if a Participant executes a release of liability in favor of the Company in a form approved by the Committee and satisfies such other conditions as established by the Committee that such Participant who would otherwise forfeit all or part of his Account following a Termination of Employment will nonetheless continue to vest in the balance of such Account following his Termination of Employment at the same time(s) that such balance would have otherwise vested under Section 3.01(a).  In addition, the Committee may, in its sole discretion, determine that alternative forfeiture provisions will apply with respect to any Post-2000 Award invested in Options which shall be reflected in the applicable option award agreements.
 
ARTICLE 4
Distributions
 
Section 4.01      General.  Subject to Section 2.06(b), no Award will be distributed unless such distribution is permitted under this Article 4.  The payment of the vested portion of an Award, including Earnings thereon, shall be treated as drawn proportionately from the investment alternative(s) in effect as of the relevant payment date.  Any such payment shall be made in Holding Units to the extent such payment is attributable to an Award notionally invested in Restricted Units.  Any portion of an Award, including Earnings thereon, that is not vested will not be distributed hereunder.
 
Section 4.02      Distributions If Deferral Election Is Not In Effect.
 
(a)           Unless a Participant elects otherwise on a Deferral Election Form under Sections 5.01 or 5.02 (if such election is permitted by the Committee), a Participant who has not incurred a Disability or a Termination of Employment will have the vested portion of his Award, including Earnings thereon, distributed to him annually in the form of a lump sum within 70 days after such portion vests under the applicable Vesting Period of Section 3.01.
 
(b)           Unless a Participant elects otherwise on a Deferral Election Form under Sections 5.01 or 5.02 (if such election is permitted by the Committee), a Participant who has had a Disability or a Termination of Employment will have the balance of any vested Award not paid under Section 4.02(a), including Earnings thereon, distributed to him as follows:
 
(i)           In the event of a Participant’s Disability, such distribution will be made to the Participant in a single lump sum payment within 90 days following the Participant’s Disability.
 
(ii)           In the event of a Participant’s Termination of Employment due to the Participant’s death, such distribution will be made to the Participant’s Beneficiary in a single lump sum payment in the calendar year in which the 180th day anniversary of the death occurs.
 
 
10

 

(iii)           With respect to Pre-1999 Awards, in the event of a Participant’s Termination of Employment due to Retirement, such distribution will be made to the Participant in a single lump sum payment within 90 days following the six month anniversary of such Termination of Employment.
 
(iv)           In the event that the Committee determines in its sole discretion under Section 3.02 that a Participant shall continue to vest following his Termination of Employment, payments with respect to the Award, including Earnings thereon, will be made within 70 days after each portion vests; provided, however, that any such payment that becomes payable prior to the six month anniversary of such Termination of Employment shall be paid within 70 days following such anniversary.
 
Section 4.03      Distributions If Deferral Election Is In Effect.
 
(a)           Subject to Section 4.03(b), in the event that a deferral election is in effect with respect to a Participant pursuant to Sections 5.01 or 5.02 and the Participant has not incurred a Disability but has a Termination of Employment for any reason other than death, the vested portion of such Participant’s Award, including Earnings thereon, will be distributed to him within 70 days following the benefit commencement date specified on such Deferral Election Form and in the form of payment elected on such form.
 
(b)           In the event that a Deferral Election Form is in effect with respect to a Participant pursuant to Sections 5.01 or 5.02 and such Participant subsequently incurs Termination of Employment due to death, the elections made by such Participant on his Deferral Election Form shall be disregarded, and the Participant’s Award, including Earnings thereon, will be distributed to his Beneficiary in a single lump sum payment in the calendar year in which the 180th day anniversary of the death occurs.
 
In the event that a Participant incurs a Disability on or after January 1, 2009, payment will be made in accordance with such Participant’s election on his Deferral Election Form.  Such an election may be made with regard to awards granted on or after January 1, 2009 and, pursuant to transition guidance issued by the Internal Revenue Service in connection with Section 409A, including Internal Revenue Service Notice 2007-86, with regard to awards granted prior to such date.  Notwithstanding the foregoing, in the event that a Participant incurs a Disability prior to January 1, 2009, the Participant’s Award, including Earnings thereon, will be distributed to him or his Beneficiary, as applicable, in a single lump sum payment within 90 days following the Participant’s Disability.
 
Section 4.04     Unforeseeable Emergency.  Notwithstanding the foregoing to the contrary, if a Participant or former Participant experiences an Unforeseeable Emergency, such individual may petition the Committee to (i) suspend any deferrals under a Deferral Election Form submitted by such individual and/or (ii) receive a partial or full distribution of a vested Award, including Earnings thereon, deferred by such individual.  The Committee shall determine, in its sole discretion, whether to accept or deny such petition, and the amount to be distributed, if any, with respect to such Unforeseeable Emergency; provided, however, that such amount may not exceed the amount necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise, by liquidation of the individual’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship), and by suspension of the individual’s deferral(s) under the Plan.
 
 
11

 

Section 4.05      Documentation.  Each Participant and Beneficiary shall provide the Committee with any documentation required by the Committee for purposes of administering this Plan.
 
ARTICLE 5
Deferrals of Compensation
 
Section 5.01     Initial Deferral Election.  The Committee may permit deferral elections of Pre-1999 Awards, 1999-2000 Awards and/or Post-2000 Awards in its sole and absolute discretion in accordance with procedures established by the Committee for this purpose from time to time (except to the extent that any such Award is invested in Options).  If so permitted, a Participant may elect in writing on a Deferral Election Form to have the portion of the Award which vests, including Earnings thereon, distributed as of a distribution commencement date elected by the Participant that occurs following the date that such Award becomes or is scheduled to become 100% vested under the applicable Vesting Period of Section 3.01(a), or if earlier and so permitted by the Committee, six months following such Participant’s Termination of Employment.  Any such distribution shall be made in such form(s) as permitted by the Committee at the time of deferral (including, if permitted by the Committee, a single lump sum or substantially equal annual installments over a period of up to ten years) as elected by the Participant.  If the Participant has failed to properly elect a distribution commencement date, the Participant will be deemed to have elected to have the Award distributed as the Award vests, and if the Participant has failed to properly elect a method of payment, the Participant will be deemed to have elected to have the Award distributed in the form of a lump sum.  If deferrals are permitted by the Committee, such Deferral Election Form must be submitted to the Committee (or its delegate) no later than the last day of the calendar year prior to the Effective Date of an Award, except that a Deferral Election Form may also be submitted to the Committee (or its delegate) in accordance with the following:
 
(a)           In the case of the first year in which a Participant becomes eligible to participate in the Plan and with respect to services to be performed subsequent to such deferral election, a Deferral Election Form may be submitted within 30 days after the date the Participant becomes eligible to participate in the Plan.
 
(b)           With respect to the deferral of an Award subject to Section 409A of the Code that relates all or in part to services performed between January 1, 2005 and December 31, 2005, a Deferral Election Form may be submitted by March 15, 2005.
 
(c)           A Deferral Election Form may be submitted at such other time or times as permitted by the Committee in accordance with Section 409A of the Code.
 
 
12

 

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.  With regard to any installment payments, each installment thereof shall be deemed a separate payment for purposes of Section 409A, provided, however, the Committee may limit the ability to treat the deferral as a separate installment for purposes of changing the time and form of payment.  Whenever a payment under the Plan specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Committee.
 
ARTICLE 6
Special Rules For Pre-1999 Awards
 
Section 6.01      Generally.  Except as otherwise provided in Section 6.02, Articles 1 through 5 hereunder shall apply with respect to Pre-1999 Awards.
 
Section 6.02     Pre-1999 Award Election.
 
(a)           Each Participant whose Account is credited with a Pre-1999 Award may make a one-time election, effective January 1, 2006, conditioned on the Participant’s being employed by any of the Companies on such date, in accordance with procedures established by the Committee and on an election form supplied by the Committee, to have all of his Pre-1999 Award Accounts notionally invested in one or both of (i) Restricted Units or (ii) any Approved Fund designated by the Committee from time to time (a “Pre-1999 Award Election”).  Each such notional investment shall be adjusted for Earnings.  The deadline for properly submitting a Pre-1999 Award Election to the Committee (or its delegate) is December 9, 2005.
 
(b)           To the extent that any Pre-1999 Award Election is not effective, such notional investments are not permitted and such Pre-1999 Award is subject to the terms and conditions applicable thereto as specified in the version of this Plan in effect prior to January 1, 2005 which is hereby incorporated herein by reference, including the method of adjusting such Award for “earnings” as defined therein.
 
(c)           With respect to any Pre-1999 Award Election designating a notional investment in Restricted Units effective January 1, 2006, the Participant’s Pre-1999 Award Account (or portion thereof) is converted into Restricted Units by dividing the proportion of the closing balance of the Pre-1999 Award Account on December 31, 2005 so designated, by the closing price of a Holding Unit on the New York Stock Exchange on December 31, 2005 as published in the Wall Street Journal.
 
 
13

 

(d)           To the extent that a Pre-1999 Award subject to a Pre-1999 Award Election is not vested on January 1, 2006, the notional investment in Restricted Units and Approved Funds, as applicable, shall be subject to the vesting schedule remaining on such Pre-1999 Awards.
 
(e)           Any Participant making a Pre-1999 Award Election shall contemporaneously also elect a distribution commencement date, not earlier than January 31, 2007, for the commencement of the distribution of his vested investment under such Pre-1999 Award Election, in accordance with procedures established by the Committee.  Distributions shall commence as of the distribution commencement date elected, or if earlier and so elected by the Participant at the time the distribution commencement date is elected, the date of the Participant’s “separation from service” (within the meaning of Section 409A), subject to a six month delay following such separation from service in all cases other than in the event of the Participant’s death.  If the Participant has failed to properly elect a distribution commencement date, the Committee will commence distribution in calendar year 2007.  A Participant may elect to receive the distribution of the amounts deferred under this section in (i) a single lump sum distribution, (ii) substantially equal annual installments over a period of up to 10 years or (iii) a 50% lump sum with the remainder in five annual installments, as elected by the Participant in accordance with procedures established by the Committee.  If the Participant has failed to properly elect a method of payment, the method of payment shall be a lump sum.  A Participant who has made a Pre-1999 Award Election to utilize Restricted Units shall receive his distribution in the form of Holding Units.
 
ARTICLE 7
Special Rules For 1999-2000 Awards
 
Section 7.01    Generally.  Except as otherwise provided in Section 7.02, Articles 1 through 5 hereunder shall apply with respect to 1999-2000 Awards.
 
Section 7.02    Notional Investment in Restricted Units.  1999-2000 Awards are notionally invested in Restricted Units only.  Except as otherwise specified by the Committee, Participants receiving such Awards are not permitted to elect to notionally invest any such Award or part thereof in, or reallocate any notional investment in Restricted Units to, any Approved Fund.  The use of an Investment Election Form is not applicable with respect to 1999-2000 Awards, and the Committee shall administer such 1999-2000 Awards, including the crediting of a Participant’s Account with his Award, and the adjustment of Earnings thereon, without the Participant’s submission of such an Investment Election Form; provided, however, that the foregoing shall not limit the Committee from requiring such a Participant to submit any other forms or documentation that the Committee requires in its sole discretion.
 
 
14

 

ARTICLE 8
Administration; Miscellaneous
 
Section 8.01     Administration of the Plan.  The Plan is intended to be an unfunded, non-qualified incentive plan and the APCP Deferral Plan is intended to be an unfunded, non-qualified deferred compensation plan within the meaning of ERISA and shall be administered by the Committee as such.  The right of any Participant or Beneficiary to receive distributions under the Plan shall be as an unsecured claim against the general assets of AllianceBernstein.  Notwithstanding the foregoing, AllianceBernstein, in its sole discretion, may establish a “rabbi trust” or separate custodial account to pay benefits hereunder.  The Committee shall have the full power and authority to administer and interpret the Plan and to take any and all actions in connection with the Plan, including, but not limited to, the power and authority to prescribe all applicable procedures, forms and agreements.  The Committee’s interpretation and construction of the Plan, including its computation of notional investment returns and Earnings, shall be conclusive and binding on all Persons having an interest in the Plan.
 
Section 8.02     Authority to Vary Terms of Awards.  The Committee shall have the authority to grant Awards other than as described herein, subject to such terms and conditions as the Committee shall determine in its discretion.
 
Section 8.03   Amendment, Suspension and Termination of the Plan.  The Committee reserves the right at any time, without the consent of any Participant or Beneficiary and for any reason, to amend, suspend or terminate the Plan in whole or in part in any manner; provided that no such amendment, suspension or termination shall reduce the balance in any Account prior to such amendment, suspension or termination or impose additional conditions on the right to receive such balance, except as required by law.
 
Section 8.04    General Provisions.
 
(a)           To the extent provided by the Committee, each Participant may file with the Committee a written designation of one or more Persons, including a trust or the Participant’s estate, as the Beneficiary entitled to receive, in the event of the Participant’s death, any amount or property to which the Participant would otherwise have been entitled under the Plan.  A Participant may, from time to time, revoke or change his or her Beneficiary designation by filing a new designation with the Committee. If (i) no such Beneficiary designation is in effect at the time of a Participant’s death, (ii) no designated Beneficiary survives the Participant, or (iii) a designation on file is not legally effective for any reason, then the Participant’s estate shall be the Participant’s Beneficiary.
 
(b)           Neither the establishment of the Plan nor the grant of any Award or any action of any Company, the Board, or the Committee pursuant to the Plan, shall be held or construed to confer upon any Participant any legal right to be continued in the employ of any Company.  Each Company expressly reserves the right to discharge any Participant without liability to the Participant or any Beneficiary, except as to any rights which may expressly be conferred upon the Participant under the Plan.
 
 
15

 

(c)           An Award hereunder shall not be treated as compensation, whether upon such Award’s grant, vesting, payment or otherwise, for purposes of calculating or accruing a benefit under any other employee benefit plan except as specifically provided by such other employee benefit plan.
 
(d)           Nothing contained in the Plan, and no action taken pursuant to the Plan, shall create or be construed to create a fiduciary relationship between any Company and any other person.
 
(e)           Neither the establishment of the Plan nor the granting of an Award hereunder shall be held or construed to create any rights to any compensation, including salary, bonus or commissions, nor the right to any other Award or the levels thereof under the Plan.
 
(f)           No Award or right to receive any payment, including Restricted Units, under the Plan may be transferred or assigned, pledged or otherwise encumbered by any Participant or Beneficiary other than by will, by the applicable laws of descent and distribution or by a court of competent jurisdiction.  Any other attempted assignment or alienation of any payment hereunder shall be void and of no force or effect.
 
(g)           If any provision of the Plan shall be held illegal or invalid, the illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included in the Plan.
 
(h)           Any notice to be given by the Committee under the Plan to any party shall be in writing addressed to such party at the last address shown for the recipient on the records of any Company or subsequently provided in writing to the Committee.  Any notice to be given by a party to the Committee under the Plan shall be in writing addressed to the Committee at the address of AllianceBernstein.
 
(i)           Section headings herein are for convenience of reference only and shall not affect the meaning of any provision of the Plan.
 
(j)           The provisions of the Plan shall be governed and construed in accordance with the laws of the State of New York.
 
16

 
(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.
 
 
17

Unassociated Document

Exhibit 10.02
 
Addendum A

POST DECEMBER 1, 2009 AWARD PROVISIONS
UNDER THE AMENDED AND RESTATED
ALLIANCEBERNSTEIN INCENTIVE COMPENSATION AWARD PROGRAM

 
AllianceBernstein Holding L.P. (together with any successor to all or substantially all of its business and assets, “Holding”) and AllianceBernstein L.P. (together with any successor to all or substantially all of its business and assets, “AllianceBernstein”) have established an Amended and Restated AllianceBernstein Incentive Compensation Award Program (formerly known as the AllianceBernstein Partners Compensation Plan, the “Plan”) under the AllianceBernstein L.P. Amended and Restated 1997 Long Term Incentive Plan (the “1997 Plan”).  The provisions set forth below, which relate to incentive compensation awards granted after December 1, 2009 (“Provisions”), are an addendum to, and form part of, the Plan.  Any incentive compensation awards granted after December 1, 2009 shall be governed solely by these Provisions and the terms of any related award agreement.
 
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.
 
Any deferral or payment hereunder is subject to the terms of these Provisions and compliance with Section 409A of the Internal Revenue Code (the “Code”) and the guidance issued thereunder (“Section 409A”), as interpreted by the Committee in its sole discretion.  Although none of the Company, the Committee, their affiliates, and their agents make any guarantee with respect to the treatment of payments under these Provisions and shall not be responsible in any event with regard to the Provisions’ compliance with Section 409A, the payments contained herein are intended to be exempt from Section 409A or otherwise comply with the requirements of Section 409A, and the Provisions shall be limited, construed and interpreted in accordance with the foregoing.  None of the Company, the Committee, any of their affiliates, and any of their agents shall have any liability to any Participant or Beneficiary as a result of any tax, interest, penalty or other payment required to be paid or due pursuant to, or because of a violation of, Section 409A.
 
ARTICLE 1
Definitions
 
Section 1.01     Definitions.  Whenever used in the Provisions, each of the following terms shall have the meaning for that term set forth below:
 
(a)           “Account”: 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.
 
 
 

 

(b)           “Affiliate”: (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)            “Award”: any award granted subject to these Provisions.
 
(d)           “Award Agreement”: an agreement between a Participant and a Company setting forth the terms of an Award.
 
(e)           “Beneficiary”: 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 Provisions.
 
(f)           “Beneficiary Designation Form”: 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”: the Board of Directors of the general partner of Holding and AllianceBernstein.
 
(h)           “Code”: the Internal Revenue Code of 1986, as amended from time to time.
 
(i)           “Committee”: the Board or one or more committees of the Board designated by the Board to administer the Plan.
 
(j)           “Company”: 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”: 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 pursuant to Article 5.
 
(l)           “Disability”: shall have the meaning assigned to it in the Award Agreement.  To the extent that the term “Disability” is not defined in the Award Agreement, all references to the term “Disability” herein shall be inapplicable.
 
(m)           “Effective Date”: the date Awards are approved by the Committee.
 
(n)           “Eligible Employee”: an active employee of a Company whom the Committee determines to be eligible for an Award.  If the Committee determines that Awards made for the subsequent calendar year shall be eligible for deferral, the Committee or its designee shall specify in writing prior to such calendar year those Eligible Employees, or the methodology used to determine those Eligible Employees, who shall be eligible to participate in the APCP Deferral Plan for that calendar year and so notify those Eligible Employees prior to the end of the then calendar year or such later date permitted by Section 409A.  Any advance deferral election made by such Eligible Employee is made on the condition that such Eligible Employee satisfies the conditions established by the Committee and, if not, such deferral election shall be null and void ab initio.
 
 
2

 

(o)           “ERISA”: the Employee Retirement Income Security Act of 1974, as amended.
 
(p)           “Fair Market Value”: 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.
 
(q)           “Holding Units”: units representing assignments of beneficial ownership of limited partnership interests in Holding.
 
(r)           “Participant”: 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.
 
(s)           “Person”: any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity.
 
(t)           “Plan”: the Amended and Restated AllianceBernstein Incentive Compensation Award Program, as amended.
 
(u)           “Restricted Unit”: 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.
 
(v)           “Retirement”: shall have the meaning assigned to it in the Award Agreement.  To the extent that the term “Retirement” is not defined in the Award Agreement, all references to the term “Retirement” herein shall be inapplicable.
 
(w)           “Termination of Employment”: the Participant is no longer performing services as an employee of any Company, other than pursuant to a severance or special termination arrangement, and has had a “separation from service” within the meaning of Section 409A.
 
(x)           “Unforeseeable Emergency”: a severe financial hardship to a Participant or former Participant within the meaning of Section 409A resulting from (i) an illness or accident of the Participant or former Participant, the spouse of the Participant or former Participant, or a dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)) of the Participant or former Participant, (ii) loss of property of the Participant or former Participant due to casualty or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or former Participant, all as determined in the sole discretion of the Committee.
 
 
3

 

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 for 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 number of Restricted Units constituting an Award will be determined by the Committee in its sole and absolute discretion and, in the event the Committee elects to designate Awards by dollar amount, such amount will be converted into a number of Restricted Units as of the Effective Date for such Award based on the Fair Market Value of a Holding Unit on such Effective Date and will be credited to the Participant’s Account as of such Effective Date.  From and after such Effective Date, the Award shall be treated for all purposes as a grant of that number of Restricted Units determined pursuant to the preceding sentence.  Awards vest in accordance with the terms set forth in the Award Agreement, and any such vested Award will be subject to the rules on distributions and deferral elections set forth below in Articles 4 and 5, respectively.  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.
 
Section 2.03       Distributions on Holding Units.
 
(a)           When a regular cash distribution is made with respect to Holding Units, within 70 days thereafter, a distribution will be made to each Participant in an amount (the “Equivalent Distribution Amount”) equal to the number of such Restricted Units (whether vested or unvested) credited to the Participant’s Account as of the record date for such cash distribution times the value of the regular cash distribution per Holding Unit.
 
(b)           If an Award is designated by dollar amount, fractional unit amounts remaining after conversion under Section 2.02 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, if the Committee so elects, such fractional unit amounts may be cancelled.
 
(c)           Notwithstanding the provisions of Section 2.06(d) of the Plan, Holding Units shall be subject to adjustment in accordance with Section 4(c) of the 1997 Plan (or such applicable successor provision).
 
 
4

 

ARTICLE 3
Vesting and Forfeitures
 
Section 3.01     Vesting.  Terms related to vesting of Awards are set forth in the Award Agreement.
 
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 set forth in the Award Agreement on the effective date of the Participant’s Termination of Employment for any reason other than death, Disability or 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 and distributed under the terms set forth in the Award Agreement.
 
ARTICLE 4
Distributions
 
Section 4.01     General.  No Award will be distributed unless such distribution is permitted under this Article 4.  The distribution of the vested portion of an Award shall be made in Holding Units.  Any portion of an Award that is not vested will not be distributed hereunder.
 
Section 4.02     Distributions If Deferral Election Is Not In Effect.
 
(a)           Unless a Participant elects otherwise on a Deferral Election Form under Sections 5.01 or 5.02 (if such election is permitted by the Committee), a Participant who has not incurred a Disability or a Termination of Employment will have the vested portion of his or her Award distributed to him or her within 70 days after such portion vests under the applicable vesting provisions set forth in the Award Agreement.
 
(b)           Unless a Participant elects otherwise on a Deferral Election Form under Sections 5.01 or 5.02 (if such election is permitted by the Committee), a Participant who has had a Disability or a Termination of Employment will have the balance of any vested Award not distributed under Section 4.02(a) distributed to him or her as follows:
 
(i)           In the event of a Participant’s Disability, a distribution will be made to the Participant within 70 days following the Participant’s Disability.
 
(ii)           In the event of a Participant’s Termination of Employment due to the Participant’s death, a distribution will be made to the Participant’s Beneficiary within 70 days following the 180th day anniversary of the death.
 
(iii)          Unless otherwise provided in the Award Agreement, in the event of a Participant’s Termination of Employment due to Retirement, distributions with respect to the Award shall be made in the same manner as other distributions due hereunder, if any, upon Termination of Employment, other than a Termination of Employment due to death.
 
 
5

 

(iv)           In the event that the Committee determines in its sole discretion under Section 3.02 that a Participant shall continue to vest following his Termination of Employment, payments with respect to the Award will be made within 70 days after each portion vests.
 
Section 4.03      Distributions If Deferral Election Is In Effect.
 
(a)           Subject to Section 4.03(b), in the event that a deferral election is in effect with respect to a Participant pursuant to Sections 5.01 or 5.02 and the Participant has not incurred a Disability but has a Termination of Employment for any reason other than death, the vested portion of such Participant’s Award will be distributed to him within 70 days following the benefit commencement date specified on such Deferral Election Form.
 
(b)           In the event that a Deferral Election Form is in effect with respect to a Participant pursuant to Sections 5.01 or 5.02 and such Participant subsequently incurs a Termination of Employment due to death, the elections made by such Participant in his or her Deferral Election Form shall be disregarded, and the Participant’s Award will be distributed to his or her Beneficiary within 70 days following the 180th day anniversary of the death.
 
(c)           In the event that a Deferral Election is in effect with respect to a Participant pursuant to Section 5.01 or 5.02 and such Participant incurs a subsequent Disability, distribution will be made in accordance with such Participant’s election in his or her Deferral Election Form.
 
Section 4.04      Unforeseeable Emergency.  Notwithstanding the foregoing to the contrary, if a Participant or former Participant experiences an Unforeseeable Emergency, such individual may petition the Committee to (i) suspend any deferrals under a Deferral Election Form submitted by such individual and/or (ii) receive a partial or full distribution of a vested Award deferred by such individual.  The Committee shall determine, in its sole discretion, whether to accept or deny such petition, and the amount to be distributed, if any, with respect to such Unforeseeable Emergency; provided, however, that such amount may not exceed the amount necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise, by liquidation of the individual’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship), and by suspension of the individual’s deferral(s) under the Plan.
 
Section 4.05      Documentation.  Each Participant and Beneficiary shall provide the Committee with any documentation required by the Committee for purposes of administering these Provisions.
 
 
6

 

ARTICLE 5
Deferrals of Compensation
 
Section 5.01     Initial Deferral Election.
 
(a)           The Committee may permit deferral elections of Awards in its sole and absolute discretion in accordance with procedures established by the Committee for this purpose from time to time.  If so permitted, a Participant may elect in writing on a Deferral Election Form to have the portion of the Award which vests distributed as of a permitted 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 set forth in the Award Agreement and specifying among  the forms of distribution alternatives permitted by the Committee and specified on the Deferral Election Form.  In addition, if permitted by the Committee and specified on the Deferral Election Form, a Participant who elects a distribution commencement date may also elect that if a Termination of Employment occurs prior to such distribution commencement date, the distribution commencement date shall be six months after the Termination of Employment.  A Participant may make the deferral election with respect to all or a portion of an Award as permitted by the Committee.  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 distribution or distribution of a substantially equal number of Holding Units over a period of up to ten years) as elected by the Participant.  If the Participant fails to properly fully complete and file with the Committee (or its designee) the Deferral Election Form on a timely basis, the Deferral Election Form and the deferral election shall be null and void.  If deferrals are permitted by the Committee and the Participant is eligible to make a deferral election, such Deferral Election Form must be 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 provisions set forth in Section 5.01(b) and (c).  The deferral election made in 2008 shall apply to the 2009 Awards.
 
(b)           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.
 
(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 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.  With regard to any installment payments, each installment thereof shall be deemed a separate payment for purposes of Section 409A, provided, however, the Committee may limit the ability to treat the deferral as a separate installment for purposes of changing the time and form of payment.  Whenever a payment under the Provisions specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Committee.
 
 
7

 

ARTICLE 6
Administration; Miscellaneous
 
Section 6.01     Administration.  These Provisions are intended to form part of the Plan, which is intended to constitute an unfunded, non-qualified incentive plan within the meaning of ERISA and shall be administered by the Committee as such.  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 these Provisions shall be as an unsecured claim against the general assets of AllianceBernstein.  Notwithstanding the foregoing, AllianceBernstein, in its sole discretion, may establish a “rabbi trust” or separate custodial account to pay benefits hereunder.  The Committee shall have the full power and authority to administer and interpret the Provisions and to take any and all actions in connection with the Provisions, 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 Provisions shall be conclusive and binding on all Persons.
 
Section 6.02     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 6.03    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 and the Provisions in whole or in part in any manner; provided that no such amendment, suspension or termination shall reduce the balance in any Account prior to such amendment, suspension or termination or impose additional conditions on the right to receive such balance, except as required by law.
 
Section 6.04     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 Provisions.  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.
 
 
8

 

(b)           Neither the establishment of the Provisions nor the grant of any Award or any action of any Company, the Board, or the Committee pursuant to the Provisions, 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 Provisions.
 
(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 or these Provisions, and no action taken pursuant to the Plan or these Provisions, shall create or be construed to create a fiduciary relationship between any Company and any other person.
 
(e)           Neither the establishment of the Plan or these Provisions 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 or these Provisions.
 
(f)           No Award or right to receive any payment 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 or these Provisions shall be held illegal or invalid, the illegality or invalidity shall not affect the remaining provisions of the Plan or these Provisions, and the Plan and provisions shall be construed and enforced as if the illegal or invalid provision had not been included in the Plan and Provisions.
 
(h)           Any notice to be given by the Committee under the Provisions 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 Provisions 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 Provisions.
 
(j)           The Provisions shall be governed and construed in accordance with the laws of the State of New York.
 
 
9

 

(k)           There shall be withheld from each payment made pursuant to the Provisions 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.
 
 
10

Unassociated Document

Exhibit 10.03
 
Incentive Compensation Award Program and
1997 Long Term Incentive Plan

2009 Award Agreement

Agreement, dated as of December 7, 2009, among AllianceBernstein L.P. (together with its subsidiaries, “Partnership”), AllianceBernstein Holding L.P. (“Holding”) and <PARTC_NAME> (“Participant”), an employee of the Partnership.

Whereas, the Compensation Committee (“Committee” or “Administrator”) of the Board of Directors (“Board”) of AllianceBernstein Corporation (“Corporation”), pursuant to the Post December 1, 2009 Award Provisions (“Provisions”) under the Partnership’s Amended and Restated Incentive Compensation Award Program (“Incentive Compensation Program”) and the Partnership’s Amended and Restated 1997 Long Term Incentive Plan (“1997 Plan” and, together with the Provisions and the Incentive Compensation Program, the “Plans”), copies of which have been delivered electronically to the Participant, has granted to the Participant an award (“Award”) consisting of units representing assignments of the benefi­cial ownership of limited partnership interests in Holding (“Holding Units”) subject to certain restrictions described herein (“Restricted Units”), and authorized the execution and delivery of this Award Agreement;

Now, Therefore, in accordance with the grant of the Award, and as a condition thereto, the Partnership, Holding and the Participant agree as follows:

1.             Grant.  Subject to and under the terms and conditions set forth in this Agreement and the Plans, the Committee hereby awards to the Participant the number of Restricted Units set forth in Section 2 of Schedule A, together with the right to receive regular cash distributions with regard to the underlying Holding Units pursuant to Section 2.03(a) of the Provisions.

2.             Vesting and Distribution.  The Restricted Units shall vest in accordance with Section 4 of Schedule A.  Once Restricted Units have vested, Holding Units shall be distributed to the Participant as specified in Article 4 of the Provisions, as modified herein.

3.             Notice of Resignation.  As a condition of receiving the Award, the Participant agrees that in the event of the Participant’s resignation, the Participant shall provide the Partnership with prior written notice of the Participant’s intent to terminate employment with the Partnership based on the schedule set forth below.  The Participant will continue to be eligible for base compensation (salary and/or commissions) and benefits during the notice period provided that the Partnership may, in its sole discretion, require the Participant to discontinue regular duties, including prohibiting the Participant from further entry to any of the Partnership’s premises.  The notice period shall be as follows:

 
 

 

Senior Vice President or above:
90 days
Vice President:
60 days
Assistant Vice President or below:
30 days

4.             Covenants.  As an additional condition of receiving the Award, the Participant agrees to the following covenants and remedies for failure to comply:

(a)           Competition.  At no time while employed by the Partnership shall the Participant provide services, in any capacity, whether as an employee, consultant, independent contractor, owner, partner, shareholder, director, or otherwise, to any person or entity that provides products or services that compete with any present or planned business of the Partnership; provided, however, that nothing herein shall prevent the Participant from being a passive owner of not more than 5% of the outstanding equity of any class of securities of an entity that is publicly traded and that owns or may acquire any corporation or business that competes with the Partnership. A “planned business” for purposes of the preceding sentence shall mean a business: (i) that the Participant is aware that the Partnership plans to enter within six months after the Participant’s last date of employment, (ii) that is material to the entity that plans to enter such business, and (iii) in which such entity has invested material resources (including time of senior management) in preparation for launch.

(b)           Client Solicitation.  At no time while employed by the Partnership, and except as may be requested by the Partnership, shall the Participant solicit (whether directly or on the Participant’s behalf through instruction to any other person or entity) the business of any client or prospective client of the Partnership for any purpose other than to obtain, maintain and/or service the client’s business for the Partnership.

(c)           Employee Solicitation.  At no time while employed by the Partnership shall the Participant (whether directly or indirectly through instruction to any other person or entity) recruit, solicit or hire any employee of the Partnership to work for the Participant or any other person or entity.

(d)           Confidentiality.  From the date hereof and continuing after the Participant’s last date of employment, and except as otherwise required by law, the Participant shall not disclose or make accessible to any business, person or entity, or make use of (other than in the course of the business of the Partnership) any trade secrets, proprietary knowledge or confidential information which the Participant shall have obtained during his or her employment by the Partnership and which shall not be generally known to or recognized by the general public.  All information regarding or relating to any aspect of the business of the Partnership, including but not limited to that relating to existing or contemplated business plans, activities or procedures, current or prospective clients, current or prospective contracts or other business arrangements, current or prospective products, facilities and methods, manuals, intellectual property, price lists, financial information (including the revenues, costs, or profits associated with any of the products or services of the Partnership), or any other information acquired because of the Participant’s employment by the Partnership, shall be conclusively presumed to be confidential; provided, however, that confidential information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by the Participant).  The Participant’s obligations under this Section 4(d) shall be in addition to any other confidentiality or nondisclosure obligations the Participant has to the Partnership at law or under any other of the Partnership’s policies or agreements.

 
- 2 - -

 

(e)           Non-disparagement.  Participant shall not make intentionally disparaging remarks about the Partnership, or issue any communication, written or otherwise, that reflects adversely on or encourages any adverse action against the Partnership, except if testifying truthfully under oath pursuant to any subpoena, order, directive, request or other legal process, or as may be otherwise required by law.

(f)           Remedies.  If the Participant fails to comply with the covenants set forth in this Section 4, the Partnership shall have the following remedies:

(i)           Without intending to limit the remedies available to the Partnership, the Participant acknowledges that a breach of any of the agreements or covenants contained in this Section 4 or in Section 3 hereof shall result in material irreparable injury to the Partnership for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of such a breach or threat thereof, the Partnership shall be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction restraining the Participant from engaging in activities prohibited by this Award Agreement or such other relief as may be required to specifically enforce any of the agreements or covenants in this Section 4 or Section 3 hereof.  The Participant acknowledges that the above restrictions are part of a program of the Partnership covering employees in many jurisdictions and that it is necessary to maintain consistency of administration and interpretation with respect to such program, and accordingly, the Participant consents to the applicability of New York law and jurisdiction in accordance with Section 12 hereof.  In the event that any court or tribunal of competent jurisdiction shall determine this Section to be unenforceable or invalid for any reason, the Participant agrees that this Section shall be interpreted to extend only over the maximum period of time for which it may be enforceable, and/or over the maximum geographical area as to which it may be enforceable, and/or to the maximum extent in any and all respects as to which it may be enforceable, all as determined by such court or tribunal.

 
- 3 - -

 

(ii)           The Participant agrees that in the event of a breach of any of the agreements or covenants contained in this Section 4 or Section 3 hereof, any Restricted Units which have not vested or have vested but have not been delivered (other than as a result of a deferral election) shall be forfeited.

(iii)           In addition to the remedies set forth in clauses (i) and (ii) above), the Partnership retains the right to seek damages and other relief for any breach by the participant of any agreement or covenant contained this Award Agreement.
 
5.             Termination of Employment.  The Restricted Units shall vest in accordance with Section 4 of Schedule A only while the Participant is employed by the Partnership, except as follows:

(a)Disability.  Any unvested Restricted Units shall fully vest immediately upon a Participant’s Disability and shall be distributed to the Participant as specified in Article 4 of the Provisions.  The Participant shall be deemed to have incurred a “Disability” if the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to last  for a continuous period of not less than 12 months, as determined by the carrier of the long-term disability insurance program maintained by the Partnership or its affiliate that covers the Participant, or such other person or entity designated by the Administrator in its sole discretion.  In order to assist in the process described in this paragraph (a), the Participant shall, as reasonably re­quested by the Administrator, (i) be available for medical examinations by one or more physicians chosen by the long-term disability insurance provider or the Administrator and approved by the Participant, whose approval shall not unreasonably be withheld, and (ii) grant the long-term disability insurance provider, the Admin­istrator and any such physicians access to all relevant medical information concerning the Participant, arrange to furnish copies of medical records to them, and use best efforts to cause the Participant’s own physicians to be available to discuss the Participant’s health with them.

(b)Death.  If the Participant dies (i) while in the employ of the Partnership, or (ii) while the Participant otherwise holds outstanding unvested Restricted Units, all unvested Restricted Units held by the Participant (and not previously forfeited or cancelled) shall vest immediately and be distributed in accordance with Article 4 of the Provisions.

(c)Retirement. If the Participant’s employment with the Partnership terminates because of the Participant’s Retirement, any unvested Restricted Units held by the Participant (and not previously forfeited or cancelled) on his or her Retirement date shall continue to vest as specified in Section 4 of Schedule A and be distributed as specified in Article 4 of the Provisions.  “Retirement” with respect to a Participant means that the employment of the Participant with the Partnership has terminated on or after the Participant’s attaining the age 55 and fulfilling 10 full years of service at a time when the sum of the Participant’s age and years of service with the Partnership equals or exceeds 65.  The provisions in this paragraph (c) are conditioned upon the retiring Participant’s continued compliance with the agreements and covenants set forth in Sections 3 and 4 of this Award Agreement until the Restricted Units have fully vested and been delivered, and executing and complying with a standard release in favor of the Partnership in a form to be provided by the Partnership; provided, however, that the only remedy for a retiring Participant’s breach of Sections 3 and 4 available to the Partnership shall be the forfeiture remedy described in Section 4(f)(ii).

 
- 4 - -

 

(d)If the Partnership terminates the Participant's employment for any reason other than death, Disability or Retirement, or if the Participant resigns, the Participant shall forfeit all unvested Restricted Units.  

6.             No Right to Continued Employment.   The Restricted Units shall not confer upon the Participant any right to continue in the employ 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.

7.             Non-Transferability.  The Participant may not sell, assign, transfer, pledge or otherwise dispose of or encumber any of the Restricted Units, or any interest therein, until the Participant’s rights in such Units vest in accordance with this Agreement.  Any purported sale, assignment, transfer, pledge or other disposition or encumbrance in violation of this Agreement will be void and of no effect.

8.             Payment of Withholding Tax.  The provisions set forth in Section 6.04(k) of the Provisions shall apply in the event that the Partnership determines that any federal, state or local tax or any other charge is required by law to be withheld with respect to a vesting or distribution of Restricted Units.

9.             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. Holding Units shall be subject to adjustment in accordance with Section 4(c) of the 1997 Plan (or such applicable successor provision).

 
- 5 - -

 

10.             Electronic Delivery.  The Plans contemplate that each award 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 Plans.
 
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.  The Participant hereby consents to the exclusive jurisdiction of any state or federal court located within the State of New York, County of New York, with respect to any legal action, dispute or otherwise, arising out of, related to, or in connection with this Agreement.  The Participant hereby waives any objection in any such action or proceeding based on forum non-conveniens, and any objection to venue with respect to any such legal action, which may be instituted in any of the aforementioned courts.

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 Provisions, which shall control in the event of any conflict between any clause of the Provisions and this Agreement, and accepts as binding, conclusive and final all decisions or interpretations of the Administrator or Board upon any questions arising under the Plan and/or this Agreement.

15.             Notices.  Any notice under this Agreement shall be in writing and shall be deemed to have been duly given when deliv­ered personally (whether by hand or by facsimile) or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Partnership and Holding, to the Corporate Secretary at 1345 Avenue of the Americas, New York, New York 10105, or if the Partnership should move its principal office, to such principal office, and, in the case of the Participant, to his or her last permanent address as shown on the Partnership's records, subject to the right of either party to designate some other address at any time hereafter in a notice satisfying the require­ments of this Section.

 
- 6 - -

 

16.     Entire Agreement; Amendment.  This Agreement supersedes any and all existing agreements between the Participant, the Partnership and Holding relating to the Award.  It may not be amended except by a written agreement signed by both parties.

 
AllianceBernstein l.p.
 
AllianceBernstein Holding l.p.
     
     
 
By:
/s/ David A. Steyn
   
David A. Steyn
   
Chief Operating Officer

To accept the terms of this Award Agreement, please click the “Accept” button below:

ACCEPT

DECLINE

 
- 7 - -

 

Schedule A
to
Award Agreement
 
1.
$___________ 2009 Award

2.
____________ Restricted Units have been awarded pursuant to this Agreement.
 
3.
The per Holding Unit price used to determine the number of Restricted Units awarded hereunder is $_____ per Holding Unit, which was the closing price of a Holding Unit as published for composite transactions on the New York Stock Exchange on December 7, 2009.
 
4.
Restrictions lapse with respect to the Holding Units in accordance with the following schedule:

Date
Percentage of Awarded Holding Units Vested on the Date Indicated
   
December 1, 2010
25.0%
December 1, 2011
50.0%
December 1, 2012
75.0%
December 1, 2013
100.0%

 

ex10_04.htm

Exhibit 10.04
 
June 9, 2009

Gerald M. Lieberman
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10015


Dear Jerry:

This letter sets forth the terms of your Agreement with AllianceBernstein Corporation (the “Company”) and AllianceBernstein L.P. (the “Partnership”).

1.             Effective as of July 31, 2009 (the “Retirement Date”), your employment as President and Chief Operating Officer of the Company and as an employee of the Partnership will terminate.

2.             Payments/Benefits.  (a)   From August 1, 2009 through January 31, 2010, your base salary shall continue to be paid at the rate of $200,000, less applicable tax withholdings and other payroll deductions. In addition, you shall receive a lump sum separation payment of $2,600,000 less applicable tax withholdings and other payroll deductions, in the payroll following the expiration of the revocation period set forth in paragraph 3. You acknowledge and agree that you will be receiving payments and benefits under this paragraph of the Agreement which are in excess of those to which you are now or in the future may be entitled and that such payments and benefits are being provided in consideration for your acceptance and execution of and in reliance upon your representations in this Agreement.

(b)  The Company shall award to you restricted limited partnership units (“Restricted Units”) in AllianceBernstein Holding L.P. (“Holding”) in an amount equal to $3,400,000, which shall be determined by dividing $3,400,000 by the average closing price on the New York Stock Exchange of a limited partnership unit in Holding for the period covering the four (4) days immediately preceding the Retirement Date, the Retirement Date and the five (5) trading days immediately following the Retirement Date, and rounded up to the nearest whole number. The Restricted Units shall vest ratably on July 31 of each of 2010, 2011 and 2012, provided, with respect to each installment, you are in compliance with the terms of paragraphs 5, 6, 7 and 8 hereof. The Restricted Units that have not vested shall be retained by the Partnership and subject to forfeiture until July 31, 2012 if, at any time prior to that date, you are not in compliance with the terms of paragraphs 5, 6, 7 and 8 hereof. For the avoidance of doubt, Restricted Units that have vested shall not be subject to the restriction or forfeiture provisions of this Agreement. You will not make an Internal Revenue Code Section 83(b) election with respect to the Restricted Units. Applicable U.S. federal, state and local income and FICA tax withholding in respect of the Restricted Units will be satisfied by the Company retaining a number of Restricted Units having a fair market value (based on the closing price of a Holding unit on July 31, 2010, 2011 and 2012, as the case may be, or the trading date immediately following that date in the event it is not a trading day) equal to the tax withholding obligations on the installment of Restricted Units vesting on such date. The vested Restricted Units, less applicable withholdings, will be distributed to you in unrestricted registered NYSE – listed units of Holding (one such unit for each one such vested Restricted Unit) as soon as practicable (but not later than 30 days) after each vesting anniversary. The Company shall pay to you the cash distributions, equivalent to quarterly distributions on Holding Units, payable with respect to both unvested and undistributed vested Restricted Units, as and when quarterly distributions are paid to unitholders of Holding.

 
 

 

(c)  As of the Retirement Date, your participation in and contributions to all welfare, non-qualified and qualified plans of the Partnership and its affiliates, including, but not limited to, the AllianceBernstein Partners Compensation Plan and the Special Option Program under the AllianceBernstein 1997 Long Term Incentive Compensation Plan, shall cease, and your rights to a distribution, rollover, form of payment, exercise or deferral regarding your account balances shall be determined in accordance with the terms and conditions of the respective plans and associated agreements.

(d)  From August 1, 2009 through January 31, 2010, and in accordance with applicable Company policy, as amended from time to time, the Partnership will continue in effect your medical coverage under its group medical plan.  As of February 1, 2010, and until July 31, 2012, the Company shall continue to provide you and your spouse with access to comparable medical and dental coverage and will reimburse you monthly for the cost of such coverage.

(e)  Until July 31, 2012, the Company will provide you with (i) a furnished and equipped office at a location of your choice in New York City and the Company will pay for the cost of the lease and operation expenses at a cost not to exceed $12,750 per month, (ii) a secretary with compensation and abilities commensurate with your current secretary and (iii) the services of a company-provided car and chauffer.  You may continue to use an office on the Company’s premises in New York City while your office is being located, furnished and equipped for up to six months following the Retirement Date.

(f)  Following the execution of this Agreement , and the expiration of the revocation period set forth in paragraph 3, you shall receive outplacement support for a period of six (6) months, which shall be provided by a third party company designated by the Company. You must begin using the outplacement support no later than December 31, 2010.

(g)  Promptly following the Retirement Date, the Company shall reimburse you for all business expenses incurred by you on or prior to the Retirement Date in accordance with Company policy.

3.             Acknowledgment.   You hereby acknowledge that you have carefully read this Agreement, fully understand and accept all of its provisions and sign it voluntarily of your own free will. You further acknowledge that you have been provided a full opportunity to review and consider the terms of this Agreement and have been advised by the Company to seek the advice of legal counsel of your choice. You acknowledge that you have been given a period of 21 days to consider this Agreement before signing it. To the extent that you have elected to enter into this Agreement prior to such time, you have done so voluntarily and have knowingly waived such 21 day review period .  You may revoke this Agreement within seven days of your signing it.  For such revocation to be effective, written notice must be received by the Company no later than the close of business on the seventh day after you sign this Agreement. If you revoke this Agreement it shall be of no further force and effect.

 
- 2 - -

 

4.             Release. (a) In consideration of the payments and benefits to be provided to you pursuant to paragraph 2 above, you, your heirs, executors, administrators, trustees, legal representatives, successors and assigns (hereinafter referred to collectively as “Releasors”) forever release and discharge the Company and the Partnership, and their past, present and/or future parent entities, subsidiaries, divisions, affiliates and related business entities, assets, employee benefit plans or funds, successors or assigns and any and all of their past, present and/or future officers, directors, fiduciaries, partners, attorneys, employees, agents, trustees, administrators or assigns, whether acting as agents for the Company or the Partnership or in their individual  capacities (hereinafter referred to collectively as “Company Entities”) from any and all claims, demands, causes of action, fees and liabilities of any kind whatsoever, whether known or unknown, which Releasors  ever had, now have, or may have against any of the Company Entities by reason of any act, omission, transaction, practice, plan, policy, procedure, conduct, occurrence, or other matter up to an including the Retirement Date; provided, however, that this Agreement shall not release any claims for (i) the payments, benefits and obligations set forth herein; (ii) vested benefits which you have as a participant in the AllianceBernstein Partners Compensation Plan, the Special Option Program under the 1997 Long Term Incentive Compensation Plan and the Profit Sharing Plan for Employees of AllianceBernstein L.P. in accordance with the terms of each such plan, or (iii) defense and indemnity under the Partnership’s partnership agreement and/or applicable law.

(b)  Without limiting the generality of the foregoing, this Agreement is intended to and shall release the Company Entities from any and all claims, whether known or unknown, which Releasors ever had, now have, or may have against the Company Entities arising out of your employment and/or your separation of employment with the Company or Partnership, including, but not limited to: (i) any claim under the Age Discrimination in Employment Act (“ADEA”), Title VII of the Civil Rights Act of 1964, the Americans with Disabilities  Act, the Employee Retirement Income Security Act of 1974, and the Family and Medical Leave Act; (ii) any claim under the New York State Human Rights Law or the New York City Administrative Code; (iii) any other claim (whether based on federal, state, or local law, statutory or decisional) relating to or arising out of your employment, the terms and conditions or such employment, the termination of such employment, and/or any of the events relating directly or indirectly to or surrounding the termination of that employment, including but not limited to breach of contract (express or implied), wrongful discharge, detrimental reliance, defamation, emotional distress or compensatory or punitive damages; (iv) any claim for attorneys’ fees, costs, disbursements and/or the like; and (v) any claim for remuneration of any type, including, without limitation, any claim for any deferred or unvested compensation.

(c)  You represent and warrant that you have not commenced, maintained, prosecuted or participated in any action, suit, charge, grievance, complaint or proceeding of any kind against the Company Entities in any court or before any administrative or legislative body or agency and/or that you are hereby withdrawing with prejudice any such complaints, charges, or actions that you may have filed against the Company Entities.  You further acknowledge and agree that by virtue of the foregoing, you have waived all relief available to you (including without limitation, monetary damages, equitable relief and reinstatement) under any of the claims and/or causes of action waived in this paragraph 4.

 
- 3 - -

 

(d)  You further covenant that you shall not sue, or otherwise consent to participate in any action against, and shall not assist in the instigation, commencement, maintenance, or prosecution of any action, suit, proceeding, or charge against any of the Company Entities based upon any matter whatsoever (except to enforce this Agreement or as otherwise required by law), nor shall you testify, assist, or participate (except in response to subpoena or judicial order) in such action, suit, proceeding or charge.  This agreement shall not prevent you from filing a charge with the relevant federal, state or local administrative agency, but you agree to waive your rights with respect to any monetary or other financial relief arising from any such administrative proceeding.  You further understand that the provision of this paragraph shall not be effective with respect to, or adversely affect your rights under, the ADEA with respect to any challenge you make under the ADEA to the validity of this Agreement.

(e)  In consideration of the foregoing agreements by you, the Partnership and the Company hereby agree to and do fully release, discharge and waive all known claims, complaints, causes of action, action, suits, debts, sums of money, contracts, controversies, agreements, promises or demands of whatever kind, in law or equity, which they know they have, or which they and their subsidiaries, affiliates, predecessors, successors and assigns, and each and all of their officers, directors, partners, associates, agents, shareholders and employees know they have against you by reason of any event, matter, cause or thing which has occurred to the date of execution of this Agreement.

5.             Non-competition and Non-solicitation.  You shall receive the Restricted Units in accordance with paragraph 2 above, provided that, for the entire three (3) year period from the Retirement Date through July 31, 2012, you shall not, on your own behalf or on behalf of anyone else, directly or indirectly, (a) provide services, in any capacity, whether as an employee, consultant, independent contractor, owner, partner, shareholder, director, or otherwise, to any person or entity that provides products or services that compete with any financial services business of the Company or the Partnership or any of their controlled affiliates; (b) solicit the business of any customer of the Company or the Partnership or any of their controlled affiliates, or otherwise seek to encourage or induce any such customer to cease doing business with, or reduce the extent of its business dealings with, the Company, the Partnership or any of their controlled affiliates; and (c) recruit, solicit or hire any employees of the Company, the partnership or any of their controlled affiliates to work for you or any other person or entity. It is understood and agreed that forfeiture of your Restricted Units shall be the Company’s and the Partnership’s exclusive remedy for your non-compliance with the requirements of this paragraph 5.

6.             Confidentiality.  As an employee of the Partnership, you have had access to confidential and proprietary information of the Partnership and/or its employees (the “Confidential Information”).  You acknowledge and agree that the Confidential Information is confidential and proprietary to the Partnership and its employees and that disclosure or use of any of the Confidential Information would be detrimental to the Partnership and/or its clients.  You agree that any and all Confidential Information shall be kept confidential and you further agree that you shall not furnish or disclose to any third party or use, directly or indirectly, for your own use or benefit or that of any other person or entity any Confidential Information of the Partnership, nor shall you attempt to access any Confidential Information.  In the event that you are: (i) threatened or served with an action or motion to force disclosure of Confidential Information, or (ii) compelled to disclose Confidential Information by valid order of a court or other government entity with the authority to compel the disclosure of such information, you will notify the Partnership in writing, as promptly as possible (and prior to making any disclosure if possible), in order to provide the Partnership the opportunity to intervene and object to, or seek restrictions on, the disclosure of such Confidential Information.  If, nevertheless, the Confidential Information is ordered to be disclosed, you will furnish only that portion of the Confidential Information as to which you receive a reasonable opinion of counsel that such portion of the Confidential Information is legally required to be disclosed.  You will notify the Partnership immediately upon discovery of any unauthorized use or disclosure of Confidential Information or any other breach of this paragraph.  You agree to cooperate with the Partnership in every reasonable way to help the Partnership regain possession of such Confidential Information and prevent its further unauthorized use.

 
- 4 - -

 

The parties agree to keep the terms, amount, and existence of this Agreement completely confidential.  You may disclose the terms, amount and existence of this Agreement to your immediate family, and the parties may disclose the terms, amount and existence of this Agreement to their respective legal counsel, accountants or as required by law or legal process.  If, as anticipated, this Agreement becomes publicly available as a result of the Partnership filing it with the Securities and Exchange Commission, these confidentiality restrictions regarding this agreement shall no longer apply.

7.             Nondisparagement.  You agree not to make intentionally disparaging remarks about the Company or the Partnership, or their parents, officers, directors, employees or agents.  The Company and the Partnership agree not to intentionally authorize any public statements intended to disparage or defame your reputation.

8.             Cooperation. You agree that you will reasonably assist and cooperate with the Company and the Partnership in connection with the defense or prosecution of any claim that may  be made against or by the Company or the Partnership, or in connection with any ongoing or future investigation or dispute or claim of any kind involving the Company or the Partnership, including any proceeding before any arbitral, administrative, judicial, legislative or other body or agency, including preparing for and testifying in any proceeding to the extent such claims, investigations or proceedings relate to services performed or required to be performed by you, pertinent knowledge possessed by you, or any act or omission by you. You further agree to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this paragraph. The Company or the Partnership will reimburse you for all reasonable expenses incurred in connection with such assistance and cooperation, including, without limitation, travel, lodging and meals, in a level of comfort akin to the level of comfort applicable to your business travel as of the date hereof.

9.             Partnership Property.  No later than the Retirement Date, you shall return to the Partnership all documents, files and property belonging to the Partnership or the Company except you shall return to the Partnership the leased Partnership automobile in your possession on or before the expiration of the lease; and except that you may keep your Blackberry and your laptop computer if all confidential information and propriety data and software have been deleted.

 
- 5 - -

 

10.            Successors; Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, heirs (in your case) and assigns.  Any successor of the Company or the Partnership shall assume the obligations of the Company or the Partnership, as the case may be, under this Agreement and perform any duties and responsibilities in the same manner and to the same extent that the Company or the Partnership would be required to perform if no such succession had taken place. In the event of your death prior to the payment of all amounts and benefits hereunder, the unpaid amounts (including unvested Restricted Units, which upon your death shall fully vest) shall be paid to your estate, as soon as practicable (but not later than 30 days) after your death.

11.            Severability.  If any provision of this Agreement is held by a court of competent jurisdiction to be illegal, void or unenforceable, such provision shall have no effect; however, the remaining provisions shall be enforced to the maximum extent possible.  Further, if a court should determine that any portion of this Agreement is overbroad or unreasonable, such provision shall be given effect to the maximum extent possible by narrowing or enforcing in part that aspect of the provision found overbroad or unreasonable.  Additionally, you agree that if you breach the terms of paragraphs 4, 6, 7 or 8, it shall constitute a material breach of this Agreement as to which the Company and/or the Partnership may seek all relief available under the law.

12.            Attorney’s Fees.  The Company shall pay all reasonable attorneys’ and related fees and expenses incurred by you in connection with your retirement as provided herein.

13.            Indemnification.  From and after the Retirement Date, you shall continue to be an “Indemnified Person” under the Agreement of Limited Partnership of the Partnership and shall continue to be covered by the Partnership’s director’s and officer’s liability policies, in each case in respect of conduct occurring on or prior to the Retirement Date.

14.            409A Compliance.  The parties hereto intend that all benefits and payments to be made to you hereunder will be provided or paid to you in compliance with all applicable provisions of Section 409A of the Internal Revenue Code of 1986 as amended, and the regulations issued hereunder, and the rulings, notices, and other guidance issued by the Internal Revenue Service interpreting the same (the “Code”).  This Agreement shall be construed and administered in accordance with such intent; provided, however, that nothing hereunder shall: (i) guarantee that the payments will not be subject to taxes, interest and penalties under Section 409A of the Code; or (ii) entitle you to a reimbursement on any tax liability incurred in connection with payments provided hereunder.

15.            Entire Agreement.  Except as expressly provided herein, effective as of the Retirement Date, all prior agreements relating to your employment by the Partnership and its affiliates will terminate and be of no further effect.  This Agreement contains the entire understanding with respect to the subject matter hereof, and supersedes any and all prior agreements and understandings, whether written or oral, among you, the Company, the Partnership or any affiliate thereof with respect to the subject matter hereof.

 
- 6 - -

 

This Agreement may not be altered, modified or amended except by written instrument signed by you, the Company and the Partnership.  This Agreement shall be governed by New York law, without reference to principles of conflicts of law.

Sincerely,
 
     
ALLIANCEBERNSTEIN CORPORATION
 
     
     
By:
/s/ Laurence E. Cranch
 
 
Laurence E. Cranch
 
 
Executive Vice President and General Counsel
 
     
     
ALLIANCEBERNSTEIN L.P.
 
     
By:
ALLIANCEBERNSTEIN CORPORATION,
 
 
its General Partner
 
     
     
By:
/s/ Laurence E. Cranch
 
 
Laurence E. Cranch
 
 
Executive Vice President and General Counsel
 


AGREED TO AND ACCEPTED BY
 
   
/s/ Gerald M. Lieberman
 
Gerald M. Lieberman
 
   
June 10, 2009
 
Date
 
 
 
- 7 -

ex10_05.htm

Exhibit 10.05
 
SUMMARY OF ALLIANCEBERNSTEIN L.P.’S LEASE AT
 
1345 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK
 
 
TABLE OF CONTENTS

Parties and Documents
1
Demised Premises
4
Monthly Fixed Rent
7
Electricity
12
Tax Escalation
15
Expense Escalation
17
Cleaning
19
Maintenance and Repairs
22
Alterations
23
Miscellaneous Matters Relating to Improvements
24
SNDA & Estoppel
25
Insurance and Liability
26
Use
27
Term
28
Services
29
Casualty/Condemnation
33
Assignment/Subletting
34
Rights to Additional Space
35
Default and Landlord Remedies
37
Access
38
Notices
39
 
 
 

 
 
PARTIES
 
Landlord:
1345 Leasehold LLC, a Delaware limited liability company (“Landlord”)
 
Tenant:
AllianceBernstein L.P. (formerly known as Alliance Capital Management L.P.), a Delaware limited partnership (“Alliance”)
 
DOCUMENTS
 
Agreement of Lease dated July 3, 1985 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Avenue Corp. as landlord, and Alliance Capital Management Corporation, as tenant (“orig.”)
 
Supplemental Agreement dated September 30, 1985 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Avenue Corp. as landlord, and Alliance Capital Management Corporation, as tenant (“Sup1”)
 
Second Supplemental Agreement dated December 31, 1985 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Avenue Corp. as landlord, and Alliance Capital Management Corporation, as tenant
 
Third Supplemental Agreement dated July 29, 1987 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance Capital Management Corporation, as tenant
 
Fourth Supplemental Agreement dated February, 1989 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant (“Sup4”)
 
Fifth Supplemental Agreement dated October 9, 1989 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant (“Sup5”)
 
Sixth Supplemental Agreement dated December 13, 1991 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant (“Sup6”)
 
Seventh Supplemental Agreement dated May 27, 1993 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant (“Sup7”)
 
Eighth Supplemental Agreement dated June 1, 1994 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant (“Sup8”)
 
Ninth Supplemental Agreement dated August 16, 1994 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant (“Sup9”)
 
Tenth Supplemental Agreement dated December 31, 1994 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant (“Sup10”)
 
Eleventh Supplemental Agreement dated April 30, 1995 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Ave. Corp. as landlord, and Alliance, as tenant (“Sup11”)
 
Letter Agreement dated December 21, 1995 among The Fisher-Sixth Avenue Company and Hawaiian Sixth Ave. Corp., Carter-Wallace, Inc., Arnhold and S. Bleichroeder, Inc. and Alliance (“LTR1”)
 
Letter Agreement dated December 21, 1995 among The Fisher-Sixth Avenue Company, Hawaiian Sixth Ave. Corp. and Alliance
 
 
1

 
 
Twelfth Supplemental Agreement dated  September 9, 1998 between 1345 Leasehold Limited Partnership and Alliance (“Sup12”)
 
Letter Agreement dated October 7, 1998 between 1345 Leasehold Limited Partnership and Alliance
 
Thirteenth Supplemental Agreement dated March 15, 1999 between 1345 Leasehold Limited Partnership and Alliance (“Sup13”)
 
Fourteenth Supplemental Agreement dated February 8, 2000 between 1345 Leasehold Limited Partnership and Alliance (“Sup14”)
 
Fifteenth Supplemental Agreement dated August 3, 2000 between 1345 Leasehold Limited Partnership and Alliance (“Sup15”)
 
Letter dated September 7, 2000 from Alliance to Landlord (“LTR2”)
 
Sixteenth Supplemental Agreement dated August 31, 2001 between 1345 Leasehold Limited Partnership and Alliance (“Sup16”)
 
Seventeenth Supplemental Agreement dated October 31, 2001 between 1345 Leasehold Limited Partnership and Alliance (“Sup17”)
 
Eighteenth Supplemental Agreement dated February 15, 2002 between 1345 Leasehold Limited Partnership and Alliance (“Sup18”)
 
Nineteenth Supplemental Agreement dated December 4, 2002 between 1345 Leasehold Limited Partnership and Alliance (“Sup19”)
 
Twentieth Supplemental Agreement dated December 4, 2002 between 1345 Leasehold Limited Partnership and Alliance (“Sup20”)
 
Letter Agreement dated December 4, 2002 between Alliance and Hearst Communications, Inc. (“LTR3”)
 
Twenty-first Supplemental Agreement dated December 22, 2003 between Landlord and Alliance (“Sup21”)
 
Twenty-second Supplemental Agreement dated October 31, 2004 between Landlord and Alliance (“Sup22”)
 
Twenty-third Supplemental Agreement dated June 30, 2007 between Landlord and Alliance (“Sup23”)
 
Twenty-fourth Supplemental Agreement dated July 31, 2007 between Landlord and Alliance (“Sup24”)
 
Twenty-fifth Supplemental Agreement dated July 31, 2007 between Landlord and Alliance (“Sup25”)
 
Twenty-sixth Supplemental Agreement dated July 31, 2007 between Landlord and Alliance (“Sup26”)
 
Twenty-seventh Supplemental Agreement dated August 30, 2008 between Landlord and Alliance (“Sup27”)
 
Cleaning Agreements
 
Cleaning Agreement (“CAO”) dated August 16, 1994 between 1345 Cleaning Service Co. (“Original Cleaning Contractor”) and Alliance regarding the office space
 
 
2

 
 
First Amendment to Cleaning Agreement (“CAO-1”) dated December 31, 1994 between Original Cleaning Contractor and Alliance
 
Second Amendment to Cleaning Agreement (“CAO-2”) dated April 30, 1995 between Original Cleaning Contractor and Alliance
 
Third Amendment to Cleaning Agreement (“CAO-3”) dated September 9, 1998 between Original Cleaning Contractor and Alliance
 
Fourth Amendment to Cleaning Agreement (“CAO-4”) dated February 8, 2000 between Original Cleaning Contractor and Alliance
 
Fifth Amendment to Cleaning Agreement (“CAO-5”) dated August 3, 2000 between Original Cleaning Contractor and Alliance
 
Sixth Amendment to Cleaning Agreement (“CAO-6”) dated August 31, 2001 between Original Cleaning Contractor and Alliance
 
Seventh Amendment to Cleaning Agreement (“CAO-7”) dated October 31, 2001 between Original Cleaning Contractor and Alliance
 
Eighth Amendment to Cleaning Agreement (“CAO-8”) dated February 15, 2002 between Original Cleaning Contractor and Alliance
 
Ninth Amendment to Cleaning Agreement (“CAO-9”) dated October 31, 2004 between Original Cleaning Contractor and Alliance
 
Tenth Amendment to Cleaning Agreement (“CAO-10”) dated July 31, 2007 between 1345 Cleaning Service Company II, L.P. (“Cleaning Contractor”) and Alliance
 
Eleventh Amendment to Cleaning Agreement (“CAO-11”) dated July 31, 2007 between Cleaning Contractor and Alliance
 
Twelfth Amendment to Cleaning Agreement (“CAO-12”) dated July 31, 2007 between Cleaning Contractor and Alliance
 
Cleaning Agreement (“CAG”) dated as of March 15, 1999 between Original Cleaning Contractor and Alliance regarding the ground floor space
 
SNDAs
 
Subordination, Non-Disturbance and Attornment Agreement (Ground Lease) dated August 3, 2000 between 1345 Fee Limited Partnership, as owner, and Alliance, as tenant  (“SNDA-G”)
 
Subordination, Nondisturbance and Attornment Agreement dated July 6, 2005 between Alliance, Morgan Stanley Mortgage Capital Inc. and UBS Rea Estate Investments Inc.  (“SNDA-M”)
 
First Amendment to Subordination, Nondisturbance and Attornment Agreement dated July 6, 2005 between Alliance and LaSalle Bank National Association, as Trustee
 
 
3

 

DEMISED PREMISES
 
Floor (entire floor unless otherwise noted)
Delivery Date
Concourse (part)  (Sup15 §23(a), Sup17 §13, Sup23 §2a)
Delivered.
Ground Floor (part) **
The Ground Floor (part) formerly leased to Alliance has been surrendered and deleted from the demised premises.  Landlord has leased the Ground Floor (part) to Wachovia Bank, National Association (“Wachovia”) pursuant to the Agreement of Lease dated December 22, 2003 (the “Wachovia Lease”), for a term coterminous with Alliance's lease which Wachovia may extend pursuant to its three 5-year extension options.  If the term of the Wachovia Lease expires or terminates prior to the expiration or termination of Alliance’s lease, then, on the day after said termination, the Ground Floor (part) will be added back to the demised premises on substantially the same terms (including the rent terms) as were in effect prior to its surrender and deletion from the demised premises (Sup21 §3).  For more information regarding the terms of the surrender of Ground Floor part, see below.
2, 8, 9, 11 through 14  (Sup15 §2(a); Ltr2; Sup16 §11)
Delivered.
10 (Sup19 §3(a)) ***
Delivered.
15 (Sup12 §2(a))
Delivered.
16 (Sup12 §2(b))
Delivered.
17 (Sup16 §2(b); Sup17 §2(b); Sup18 §2(b); Sup22 §2(b))
Delivered.
31 (part) (Sup7 §2(c))
Delivered.
31 (part) (Sup24 §2(a))
Anticipated to be May 1, 2010.
32 (Sup6 §2)
Delivered.
33 (Sup7 §2(a))
Delivered.
34 (NW Cor. 94) (Sup8 §2(a))
Delivered.
34 (NW Cor. 95) (Sup8 §1(c))
Delivered.
34 (balance) (Sup7 §2(b))
Delivered.
35 (Sup14 §2(a))
Delivered.
36 (Sup14 §2(b))
Delivered.
37 (NE Cor.) (orig. intro.)
Delivered.
37 (NW Cor.) (orig. §46.01)
Delivered.
37 (SE Cor.) (Sup1 §2)
Delivered.
37 (SW Cor.) (Sup5 §2)
Delivered.
38 (orig. intro.)
Delivered.
39 (Sup4 §2)
Delivered.
40, 41 and 45 (Sup9 §3(a); LTR1 par 2)
Delivered.
42 (Sup25 §2(a))
Delivered.
43 and 44 (Sup26 §2(a))
Anticipated to be May 1, 2011.
 
 
4

 

**Ground Floor (part):
 
For a summary of the payments Alliance makes in lieu of rent and the credits Alliance receives in respect of the Ground Floor (part), see Monthly Fixed Rent, Tax Escalation and Expense Escalation.  Other terms of the surrender and deletion of Ground Floor (part) from the demised premises are summarized below.
 
·
Enforcement:  Landlord will make reasonable efforts to enforce the Wachovia Lease (including the rent obligations).  If Wachovia defaults under the Wachovia Lease, then Alliance may, at its option, participate in any action Landlord takes in respect of said default.  If Landlord does not take any action, then Alliance may, at its option, (1) cause the Landlord to assign its right to proceed against Wachovia, in which case Alliance may then proceed directly against Wachovia provided that Alliance indemnifies Landlord from any loss arising from such action, or (2) require the Landlord to proceed against Wachovia in which case Alliance will reimburse Landlord within 30 days after demand for any reasonable out-of-pocket expenses incurred by Landlord in respect of enforcing the Wachovia Lease (Sup21 §4(f)).
 
·
Amendments, Terminations, Extensions and Consents:  Landlord is prohibited from amending the Wachovia Lease or waiving any provision thereof without first obtaining Alliance’s consent.  Alliance must be reasonable in respect of consenting to any amendment that would not have an economic or adverse impact on Alliance and Alliance’s failure to respond to a request for such a consent within 5 business days of receipt is deemed consent.  Landlord is prohibited from terminating the term of the Wachovia Lease except in the event of a default thereunder or extending the term of the Wachovia Lease except pursuant to the express provisions thereof without first obtaining Alliance's consent (Sup21 §5(a)).  Landlord is prohibited from granting its consent to any matter contemplated by the Wachovia Lease (e.g., subleases and alterations) without first obtaining Alliance’s consent.  Alliance's rights in respect of Wachovia signage is summarized in more detail below.  Alliance is required to be reasonable in granting its consent to any such matter if Landlord is obligated to be reasonable under the Wachovia Lease.  Alliance is required to respond in the same time period as Landlord is obligated to respond to any request for consent and Alliance will be deemed to have given its consent if it fails to respond (Sup21 §5(c); LTR3 §3).
 
 
5

 

·
Signage:  Wachovia is prohibited from displaying signage on the window, doors or the exterior of the perimeter walls of its demised premises unless Wachovia obtains the prior written reasonable consent of the Landlord and said signage is in conformity with the building standard sign program (Wachovia Lease §46.2(e)).  However, Wachovia has the right to install signage on the interior and exterior of the demised premises that conforms with Wachovia's standard national or NYC signage program provided that said signage pertains primarily to general retail banking, safe deposits or electronic banking and not to certain permitted ancillary uses (e.g. brokerage, insurance, investment services).  Nevertheless, Wachovia has the right to display temporary signage which describes said ancillary uses in certain designated areas provided that Wachovia is obligated to remove said signage if either Landlord or Alliance reasonably believes that said temporary signage is not in keeping with the quality or character of the building.  The size and location of signage on or visible from the exterior of the Ground Floor (part) is subject to the reasonable approval and Landlord and Alliance.  Wachovia also has the right to display promotional banners provided the size, color and location of said banners is subject to the reasonable approval of Landlord and Alliance.  Landlord's (and, therefore, Alliance's) failure to respond within 15 business days to any request for consent regarding signage is deemed consent (Wachovia Lease §46.3(a)).
 
·
Assignment/Subletting Profits:  Landlord and Alliance will share equally any sublease or assignment of lease profits payable to Landlord under the Wachovia Lease (Sup21 §6(a)).
 
·
Hold Over by Wachovia:  If Wachovia holds over following the termination of the Wachovia Lease term, then Landlord will promptly commence summary dispossess proceedings and will use commercially reasonable efforts to evict Wachovia.  Landlord will pay to Alliance any amounts recovered from Wachovia arising from said proceedings after first deducting Landlord's actual out-of-pocket expenses, provided that if the amounts paid over by Landlord exceed the sums paid by Alliance in respect of the Ground Floor (part) for the corresponding period, then Landlord will be permitted to retain 50% of said excess (Sup21 §8).
 
·
Reimbursement of Landlord on Account of Payments to Cushman & Wakefield, Inc.:  Alliance will reimburse Landlord up to $601,854.52 in respect of any amounts paid by Landlord to Cushman & Wakefield, Inc. arising from Sup21 (Sup21 §10).
 
 
6

 

MONTHLY FIXED RENT
 
Concourse (part):
 
 
Approximately 3,000 rsf:
 
12/01/01 through 11/30/06:
$7,000 (Sup17 §13(b)(i))
 
12/01/06 through 11/30/11:
$8,250 (Sup17 §13(b)(ii))
 
12/01/11 through 12/31/19:
$9,500 (Sup17 §13(b)(iii))
 
Balance of Concourse Space Leased Pursuant to Sup15:
 
Date the concourse space (or portion thereof) is included in the demised premises through the day before the 5th anniversary of such inclusion date:  $28 per rsf (Sup15 §23(d)).
 
5th anniversary of such inclusion date through the day before the 10th anniversary of such inclusion date:  $33 per rsf (Sup15 §23(d)).
 
10th anniversary of such inclusion date through 12/31/19:  $38 per rsf (Sup15 §23(d)).
 
Concourse Space Leased Pursuant to Sup23:
 
Date the concourse space is included in the demised premises through the day before the 5th anniversary of such inclusion date:  $9,616.25 (Sup23 §3(a)(1)).
 
5th anniversary of such inclusion date through the day before the 10th anniversary of such inclusion date:  $10,440.50 (Sup23 §3(a)(2)).
 
10th anniversary of such inclusion date through 12/31/19:  $11,264.75 (Sup23 §3(a)(3)).
 
Ground Floor (part) - Payments in Lieu of Rent and Credits:
 
Notwithstanding that the Ground Floor (part) has been deleted from the demised premises, Alliance is obligated to pay monthly installments equal to the fixed rent and the tax and operating expense escalation payments Alliance would have been obligated to pay had the Ground Floor (part) not been deleted from the demised premises.  The rate for the payment in lieu of the fixed rent payment is described below and the payments in lieu of the tax and operating expense escalations are described in the applicable portions of this summary.
 
Payment in Lieu of Fixed Rent
 
01/16/05 through 01/15/10:  $58,333.33 (Sup13 §3(a)(2))
 
01/16/10 through 12/31/19:  $62,500.00 (Sup13 §3(a)(3); Sup20 §3(b))
 
Wachovia Credit
 
Wachovia pays monthly installments of fixed rent as follows (assuming that the lease commencement date was January 1, 2004):
 
 
7

 
 
06/01/07 through 05/31/10:  $107,662.50
 
06/01/10 through 05/31/13:  $118,428.75
 
06/01/13 through 05/31/16:  $130,271.58
 
06/01/16 through 12/30/19:  $143,298.79
 
Wachovia also pays a tax escalation based on a 0.483% share of the excess over a 2003/04 base year.
 
Each month, Landlord and Alliance apportion the fixed rent and tax escalation payments (if any) made by Wachovia that month and the portion to which Alliance is entitled is a credit against rent next payable.  The apportionment is done as follows:
 
First, to Alliance up to the sum of the fixed rent and tax and operating expense escalation payments Alliance made for such month in respect of the Ground Floor (part);
 
Second, to Alliance up to $10,408.26 a month provided that the aggregate of such installments cannot exceed $1,935,941.10);
 
Third, to Landlord up to $2,889.79 a month provided that the aggregate of such installments cannot exceed $537,500; and
 
Finally, any remainder is shared equally between Landlord and Tenant (Sup21 §4).
 
2nd, 8th, 9th, 11th through 14th Floors:
 
09/01/04 through 08/31/09:  $1,419,941.25 (Sup15 §3(a); Sup19 §26))
 
09/01/09 through 08/31/14:  $1,532,635.00 (Sup15 §3(a); Sup19 §26)
 
09/01/14 through 12/31/19:  $1,645,328.75 (Sup15 §3(a); Sup19 §26))
 
This schedule assumes that all of this space was delivered simultaneously on May 1, 2004.  It was anticipated, however, that floors 8 and 9 would be delivered six months after Floors 2, 11-14 are delivered (Sup16 §11).  If that occurred, the commencement and subsequent increases in fixed rent for Floors 8 and 9 occurs six months after the commencement of and subsequent increases in fixed rent for Floors 2, 11-14.
 
10th Floor:
 
From the termination or expiration of the Hearst Lease through 04/30/09:  
$203,589.75 (Sup19 §3(b)(1))
 
05/01/09 through 04/30/14:
$219,747.67 (Sup19 §3(b)(2))
 
05/01/14 through 12/31/19:
$235,905.58 (Sup19 §3(b)(3))
 
15th Floor:
 
12/01/04 through 11/30/10:  $172,851.87 (Sup12 §3(a)(1))
 
12/01/09 through 12/31/16:  $189,313.95 (Sup12 §3(a)(1))
 
01/01/17 through 12/31/19:  Rent for the 15th, 16th, 31st (part), 32nd-41st and 45th floors will be the product of the average of fixed annual rent per square foot as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse space, multiplied by the square footage of such space (Sup15 §12(b)); Sup20 §3(a)).

 
8

 
 
16th Floor:
 
05/01/05 through 04/30/09:  $172,851.87 (Sup12 §3(b)(1))
 
05/01/10 through 12/31/16:  $189,313.95 (Sup12 §3(b)(1))
 
01/01/17 through 12/31/19:  Rent for the Ground (part), 15th, 16th, 31st (part), 32nd-41st and 45th floors will be the product of the average of fixed annual rent per square foot as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse space, multiplied by the square footage of such space (Sup15 §12(b); Sup20 §3(a)).
 
17th Floor:
 
02/01/07 through 01/31/12:
 
$90,995.33 (Sup16 §3(a)) + $35,054.00 (Sup17 §3(a)) + $14,104.33 (Sup18 §3(a)) + $65,104.58 (Sup22 §3(a)) = $205,258.24
 
02/01/12 through 12/31/19:
 
$97,686.17 (Sup16 §3(a)) + $37,631.50 (Sup17 §3(a)) + $15,141.42 (Sup18 §3(a)) + $70,161.25 (Sup22 §3(a)) = $220,620.34
 
*Fixed annual rent on the portion of the 17th floor demised under the 22nd Supplemental Agreement is abated through July 31, 2005.
 
31st Floor (part):
 
7/1/94 through 10/31/09:  $45,180.84 (Sup7 §3(c))
 
11/1/09 through 12/31/16:  For the aggregate of Floors 31 (part)-34 and 37-39, $1,031,773.10 (Sup9 §4(b)).  Note that by 11/1/09, Floors 31 (part)-34 and 37-39 are scheduled to have check meters and, therefore, Alliance will be charged separately for electricity for such floors instead of paying electricity charges as a “rent inclusion factor” included in fixed rent for such floors.
 
01/01/17 through 12/31/19:  Rent for the 15th, 16th, 31st (part), 32nd-41st and 45th floors will be the product of the average of fixed annual rent per square foot as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse space, multiplied by the square footage of such space (Sup15 §12(b); Sup20 §3(a)).
 
31st Floor (part):
 
commencement through April 30, 2015:  $194,794.67 (Sup24 §3(a)(1)), except that the first 5 months are abated (Sup24 §3(b)).
 
5/1/09 through 12/31/19:  $209,616 (Sup24 §3(b)).
 
32nd Floor:
 
05/01/94 through 10/31/09:  $120,936.94 (Sup6 §3(a) and §7(b); Sup7 §7))
 
11/1/09 through 12/31/16:  For the aggregate of Floors 31 (part)-34 and 37-39, $1,031,773.10 (Sup9 §4(b)).  Note that by 11/1/09, Floors 31 (part)-34 and 37-39 are scheduled to have check meters and, therefore, Alliance will be charged separately for electricity for such floors instead of paying electricity charges as a “rent inclusion factor” included in fixed rent  for such floors.
 
01/01/17 through 12/31/19:  Rent for the Ground (part), 15th, 16th, 31st (part), 32nd-41st and 45th floors will be the product of the average of fixed annual rent per square foot as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse space, multiplied by the square footage of such space (Sup15 §12(b); Sup20 §3(a)).

 
9

 
 
33rd Floor:
 
1/1/94 through 10/31/09:  $105,185.28 (Sup7 §3(a)(i) and §7)
 
(Note:  Calendar 1994’s rent is deferred and will be paid in monthly installments of $11,007.76 beginning July 1, 1995 through December 1, 2004 with $7,339.00 due on January 1, 2005 (Sup7 §3(a)(ii)).  (Rent for the first half of calendar 1995 is deferred and will be paid in monthly installments of $3,668.76 due on January 1, 2005 and $11,007.76 per month beginning February 1, 2005 through October 1, 2009 (Sup7 §3(a)(iii)).
 
11/01/09 through 12/31/16: For the aggregate of Floors 31 (part)-34 and 37-39, $1,031,773.10 (Sup9 §4(b)).  Note that by 11/1/09, Floors 31 (part)-34 and 37-39 are scheduled to have check meters and, therefore, Alliance will be charged separately for electricity for such floors instead of paying electricity charges as a “rent inclusion factor” included in fixed rent  for such floors.
 
01/01/17 through 12/31/19:  Rent for the 15th, 16th, 31st (part), 32nd-41st and 45th floors will be the product of the average of fixed annual rent per square foot as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse space, multiplied by the square footage of such space (Sup15 §12(b); Sup20 §3(a)).
 
34th Floor:
 
05/01/99 through 10/31/09:  $114,614.66 (Sup7 §3(b) and §7)
 
11/01/09 through 12/31/16: For the aggregate of Floors 31 (part)-34 and 37-39, $1,031,773.10 (Sup9 §4(b)).  Note that by 11/1/09, Floors 31 (part)-34 and 37-39 are scheduled to have check meters and, therefore, Alliance will be charged separately for electricity for such floors instead of paying electricity charges as a “rent inclusion factor” included in fixed rent  for such floors.
 
01/01/17 through 12/31/19: Rent for the 15th, 16th, 31st (part), 32nd-41st and 45th floors will be the product of the average of fixed annual rent per square foot as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse space, multiplied by the square footage of such space (Sup15 §12(b); Sup20 §3(a)).
 
35th Floor:
 
08/01/05 through 07/31/10: $215,974.08 (Sup14 §3(a)(1))
 
08/01/10 through 12/31/16: $232,979.92 (Sup14 §3(a)(1))
 
01/01/17 through 12/31/19: Rent for the 15th, 16th, 31st (part), 32nd-41st and 45th floors will be the product of the average of fixed annual rent per square foot as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse space, multiplied by the square footage of such space (Sup15 §12(b) ; Sup20 §3(a)).
 
36th Floor (assuming that the space is delivered on 07/01/01, as anticipated):
 
08/01/05 through 07/31/10: $216,201.63 (Sup14 §3(b)(1))
 
08/01/10 through 12/31/16: $233,225.38 (Sup14 §3(b)(1))
 
01/01/17 through 12/31/19: Rent for the 15th, 16th, 31st (part), 32nd-41st and 45th floors will be the product of the average of fixed annual rent per square foot as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse space, multiplied by the square footage of such space (Sup15 §12(b); Sup20 §3(a)).

 
10

 

 
37th, 38th and 39th  Floors:
 
11/01/06 through 10/31/09:  $437,872.58  (Sup7 §7)
 
11/01/09 through 12/31/16: For the aggregate of Floors 31 (part)-34 and 37-39, $1,031,773.10 (Sup9 §4(b)).  Note that by 11/1/09, Floors 31 (part)-34 and 37-39 are scheduled to have check meters and, therefore, Alliance will be charged separately for electricity for such floors instead of paying electricity charges as a “rent inclusion factor” included in fixed rent  for such floors.
 
01/01/17 through 12/31/19: Rent for the Ground (part), 15th, 16th, 31st (part), 32nd-41st and 45th floors will be the product of the average of fixed annual rent per square foot as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse space, multiplied by the square footage of such space (Sup15 §12(b)).
 
40th, 41st and 45th Floors:
 
Through 11/30/16: $422,395.67 (Sup11 §2(c)(i); LTR1)
 
01/01/17 through 12/31/19: Rent for the 15th, 16th, 31st (part), 32nd-41st and 45th floors will be the product of the average of fixed annual rent per square foot as of 12/30/16 of all space leased to Alliance other than concourse/subconcourse space, multiplied by the square footage of such space (Sup15 §12(b); Sup20 §3(a)).
 
42nd Floor
 
Through 4/30/11:  $214,170.05 (Sup25 §3(a)(i)).
 
5/1/11 through 9/30/11:  Abated (Sup25 §3(b)).
 
10/1/11 through 4/30/16:  $337,624.00 (Sup25 §3(a)(ii)).
 
5/1/16 through 12/31/19:  $362,242.41 (Sup25 §3(a)(iii)).
 
Note that by 5/1/11, Floor 42 is scheduled to have check meters and, therefore, Alliance will be charged separately for electricity for Floor 42 instead of paying electricity charges as a “rent inclusion factor” included in fixed rent for Floor 42.
 
43rd and 44th Floors
 
commencement through 4/30/12:  $670,920.00 (Sup26 §3(a)(i)), except that the first 131 days are abated (Sup26 §3(b))
 
5/1/12 through 4/30/17:  $740,807.50 (Sup26 §3(a)(ii))
 
5/1/17 through 12/31/19:  $810,695 (Sup26 §3(a)(iii))

 
11

 

ELECTRICITY

Check Meters:
All floors have check meters except for Floors 31 (part), 32-34, and 37-39, which will have check meters on or before November 1, 2009 (Sup9 §5) and Floor 42, which will have check meters on or before May 1, 2011 (Sup25 §4(c)(i)).  The check meters measure electricity demand and consumption for each floor during a calendar month.  Alliance pays Landlord, within 30 days after receipt of a bill, Landlord’s cost of the electricity consumed based on the applicable rate charged to the Landlord by the supplying utility, plus a 2% administrative fee (Sup9 §5(b) and (c); Sup12 §4(b) and (c); Sup14 §4(b) and (c); Sup15 §4(b) and (c); Sup22 §4(b); Sup24 §4(b); Sup25 §4(c); Sup26 §4(b)).  Landlord will provide check meters for any portion of the Concourse (part) space measuring at least 3,000 contiguous rsf (Sup15 §23(f)(i)).  If the check meters for Floors 31 (part), 32-34, and 37-39 are not installed by November 1, 2009, then Alliance will pay Landlord what Landlord’s electrical consultant determines to be Landlord’s cost for such electricity, provided that Alliance may dispute such determination in accordance with a specified procedure.
 
Dispute:
Each bill is binding on Alliance unless Alliance disputes such bill within 90 days of receipt.  In case of a dispute, Alliance’s electrical consultant will submit its determination within such 90 day period and Landlord and Alliance will seek a resolution.  Upon Alliance’s request, Landlord will make available its utility bills for the building for at least the last 3 years. If Landlord and Alliance cannot agree, they will choose a third electrical consultant to perform a limited review (Sup12, §5(c)(ii); Sup12 §4(c)(ii); Sup14 §4(c)(ii); Sup15 §4(c)(ii); Sup22 §4(c)(ii); Sup24 §4(c)(ii); Sup25 §4(c)(iii); Sup26 §4(b)).
 
Wattage:
6 watts per usable square foot excluding building HVAC systems and other base building systems  (Sup9 §5(e); Sup12 §4(e); Sup14 §4(e); Sup15 §4(e); Sup22 §4(e); Sup24 §4(e); Sup25 §4(e); Sup26 §4(e)).
 
Additional Capacity:
Upon notice from Alliance, Landlord will provide Alliance with (1) an additional 400 amperes in the aggregate for the 15th and 16th floors (Sup12 §4(e)), and (2) up to another 1,800 amperes for the entire demised premises (Sup14 §4(f)). Such notice will be given by Alliance on or before, with regard to the 15th and 16th floors, the date Alliance delivers to Landlord its plans for its initial fit-out of the 15th floor (but in no event later than June 30, 2001), and, with regard to the rest of the demised premises, by December 31, 2001 (Sup12 §4(e) and Sup14 §4(e)).  Alliance is responsible for any construction costs it would incur in connection with alterations relating to such additional electricity supply, as well as a pro-rata share of Landlord’s construction costs (Sup12 §4(e); Sup14 §4(e); and Sup15 §4(f)).
 
Discontinuance of Service:
Landlord may discontinue furnishing electricity to Alliance only if Landlord simultaneously discontinues service to 80% of the other building tenants (Sup15 §4(d)), upon 60 days’ written notice, provided such period is extended as reasonably necessary to permit Alliance to obtain electricity from the utility company servicing the Building.  In such case, Alliance may use the existing wiring.  The cost of installation of any additional wiring will be borne, if such discontinuance is voluntary, by Landlord, and if such discontinuance is involuntary, by Landlord and Alliance with Alliance’s share equal to the total cost of such additional wiring multiplied by a fraction, the numerator of which is remaining months of the Lease term and the denominator of which is as follows:
 
 
12

 

Floor(s)
Denominator
2, 8-14
188 (Sup15 §4(d))
15, 16
248 (Sup12 §4(d) and (h); Sup15 §4(d))
17
182 for the space demised by Sup22, 214 for the space demised by Sup18 and 219 for all other space on Floor 17 (Sup22 §4(d)).
31 (part), 32-34, 37-41, 45
294 (Sup9 §15(d); Sup15 §4(d))
31 (part)
116 (Sup24 §4(d))
35 and 36
237 (Sup14 §4(d); Sup15 §4(d))
42
150 (Sup25 §4(d))
43 and 44
104 (Sup26 §4(d))
 

Electricity Rent Inclusion Factor for Floors 31 (part), 32-34, and 37-39:
Until November 1, 2009, the charge for electricity for Floors 31 (part), 32-34, and 37-39 (the “ERIF”) is included in fixed annual rent (orig. §7.02(a)).  Such charge, however, is separately quantified (as listed below) and is subject to increase or decrease (but in no event below $2.75 per s.f. per annum) in proportion to increases or decreases in Landlord’s electricity costs for the building (orig. §7.02(a)).
 

Floor (entire floor unless otherwise noted)
Original ERIF
31(part), 33, 34
$249,902.46 (Sup7 §3(g))
32
$104,337.75 (Sup6 §3(c))
37 (NE Cor.), 38
$127,187.50 (orig. §7.02(a))
37 (NW Cor.)
$27,500.00 (orig. §46.02(d))
37 (SE Cor.)
$13,750.00 (Sup1 §3(e)
37 (SW Cor.)
$27,912.50 (Sup5 §3(c))
39
$96,937.50 (Sup4 §3(c))
 
A determination by Landlord of a change in the ERIF as a result of a survey of electrical consumption in the Demised Premises will be binding on Alliance unless Alliance disputes such determination within 15 days of receipt of such determination.  If Alliance disputes such determination, it will have its own electrical consultant at its own cost, attempt to resolve the dispute in consultation with Landlord’s electrical consultant.  If they cannot agree on a resolution, they will choose a third electrical consultant who’s decision will control (orig. §7.03(b)).

 
13

 
 
Electricity Rent Inclusion Factor for 42nd Floor:
Until May 1, 2011, the charge for electricity for Floor 42 is included in fixed annual rent.  The initial amount of such charge is $5.81 per s.f. and is subject to increase or decrease (but in no event below $5.81 per s.f. per annum) in proportion to increases or decreases in Landlord’s electricity costs for the building as well based on Alliance’s electricity consumption.  A determination by Landlord of a change in the rent inclusion charge as a result of a survey of electrical consumption in the Demised Premises will be binding on Alliance unless Alliance disputes such determination within 30 days of receipt of such determination.  If Alliance disputes such determination, it will have its own electrical consultant at its own cost attempt to resolve the dispute in consultation with Landlord’s electrical consultant.  If they cannot agree on a resolution, they will choose a third electrical consultant who’s decision will control (Sup25 §4(b)).
 
Supplies:
At Landlord’s option, Alliance is required to purchase (for a reasonable charge) from Landlord all lighting tubes, lamps, bulbs and ballasts used in the demised premises (orig. §7.05(b)).
 
Concourse Space:
Subject to the following sentence, for any portion of the demised premises located on the concourse consisting of less than 3,000 contiguous rsf, Alliance will pay an ERIF of $0.75/rsf, subject to increase if Alliance uses the space for anything other than storage (Sup15 §23(f)(ii)).  For the portion of the demised premises located on the concourse and leased pursuant to Sup23, however, Landlord will provide electricity at no additional charge provided that if Landlord determines on a reasonable basis that Alliance is consuming excessive electricity, then Landlord may commence charging Alliance for such electricity on either (at Landlord’s option) a rent inclusion or submeter basis.

 
14

 

TAX ESCALATION
 
FLOOR
BASE YEAR
PERCENTAGE
Ground Floor (part)
1999/2000 (Sup13§3(c)(1)).
0.483%
(Sup13 §3(c)(2))
2, 8, 9, 11-14
Average of 2000/01 and 2001/02 (Sup15 §3(d)(i)).
14.72%
(Sup15 §3(d)(ii); Sup19 §2(d))
10
Average of 2000/01 and 2001/02 (Sup15 §3(d)(i)).
2.11% (Sup19 §3(d))
15
1999/2000 (Sup12 §3(a)(4)(a)).
2.150%
(Sup12 §3 (a)(4)(b))
16
1999/2000 (Sup12 §3(b)(4)(a)).
2.150%
(Sup12 §3(b)(4)(b))
17
Average of 2000/01 and 2001/02 (Sup16 §3(d)(i); Sup17 §3(d)(i); Sup18 §3(d)(i)) Except with respect to the Sup22 17th floor space, for which it is the average of 2003/04 and 2004/05 (Sup22 §3(d)(i)).
2.147% (Sup16 §3(d)(ii); Sup17 §3(d)(ii); Sup18 §3(d)(ii); Sup22  §3(d)(ii))
31 (part), 33, 34
Average of 1994/95 and 1995/96 (Sup7 §(3)(f)(i)).  Beginning on 11/01/09, changed to 1995/96 (Sup9 §4(e)).
5.130%
(Sup7 §3(f)(ii))
31 (part)
Average of 2007/08 and 2008/09 (Sup24 §3(d)(i)).
1.35% (Sup24 §3(d)(ii))
32
1993/94  (Sup6 §3(b)(i)).  Beginning on 11/01/09, changed to 1995/96  (Sup9 §4(e)).
2.150%
(Sup6 §3(b)(ii))
35
2000/01 (Sup14 §3(a)(4)(a)).
2.150%
(Sup14 §3(a)(4)(b))
36
2000/01 (Sup14 §3(b)(4)(a)).
2.150%
(Sup14 §3(b)(4)(b))
37 (NE Cor.), 38
1985/86  (orig. §4.01(a)(i)).  Beginning on 11/01/09, changed to 1995/96 (Sup9 §4(e)).
2.820%
(orig. §4.01(a)(ii)
37 (NW Cor.)
1985/86  (orig. §4.01(a)(i)).  Beginning on 11/01/09, changed to 1995/96 (Sup9 §4(e)).
0.610%
(orig. §46.02(b))
37 (SE Cor.)
1985/86 (Sup1 §3(a)). Beginning on 11/01/09, changed to 1995/96  (Sup9 §4(e)).
0.300%
(Sup1 §3(b))
37 (SW Cor.)
1988/89  (Sup5, §3(b)(i)).  Beginning on 11/01/09, changed to 1995/96 (Sup9 §4(e)).
0.618%
(Sup5 §3(b)(ii)
39
1988/89  (Sup4 §3(b)(i)).  Beginning on 11/01/09, changed to 1995/96 (Sup9 §4(e)).
2.150%
(Sup4 §3(b)(ii))
40, 41, 45
1995/96  (Sup9 §4(d)(i)).
6.446%
(Sup10 §2(a))
42
1988/89 (Sup25 §3(d)(i)(a)).  Beginning on 5/1/11, changed to average of 2007/08 and 2008/09 (Sup25 §3(d)(i)(b)).
2.24%
(Sup25 §3(d)(ii))
43 and 44
Average of 2007/08 and 2008/09 (Sup26 §3(d)(i)).
4.45%
(Sup26 §3(d)(ii))
 
 
15

 
 
Due Date:  6/1 and 12/1 of each comparative year, subject to rescheduling based on the date tax payments are due from Landlord (orig §4.01(b)(1)).
 
Audit/Dispute:  Landlord’s real estate tax statements given to Alliance are binding unless Alliance challenges such statement in writing within 90 days (Sup7 §6(d)) of receipt.  Alliance must make payments in accordance with the statement pending dispute resolution (orig §4.01(b)(4)).
 
Tax Increase upon Disposition:  Under certain circumstances, if, as a result of the sale of an interest in the property or entity owning the property, the real estate taxes increase, Alliance will receive an abatement of the resulting escalation, and thereafter this Lease provision is deleted.  Under certain circumstances, if, after Fisher-Sixth Avenue Company’s or a Fisher family affiliate’s purchase of Hawaiian Sixth Avenue Corp.’s or its successor’s interest in the property or the entity owning the property, as a result of a sale of a less than majority interest in the property or the entity owning the property or the admission into the entity owning the property of an entity owning less than a majority interest in such entity, the real estate taxes increase, Landlord will pay Alliance $1,500,000.00 (Sup9 §15; Sup12 §17).
 
Building Square Footage:  Total rentable area of the office and store space in the building is 1,641,000 sf for tax escalation purposes (orig §4.01(a)(ii)).
 
Concourse Space:   Alliance will pay a tax escalation for its concourse space only if the previous tenant of such space was subject to a tax escalation.  The base year for any such escalation will be the average of 2000/01 and 2001/02 (Sup15, §23(g)).

 
16

 

EXPENSE ESCALATION
 
Floor
Base
Percentage
Ground (part)
Expenses for 1999 calendar year (Sup13 §3(c)(3)).
0.483%
(Sup13 §3(c)(4))
2, 8, 9, 11-14
Expenses for 2001 calendar year (Sup15 §3(d)(ii)).
15.67%
(Sup15 §3(d)(iv); Sup19 §2(c))
15
Expenses for 1999 calendar year (Sup12 §3(a)(4)(c)).
2.290%
(Sup12 §3(c)(4)(d))
16
Expenses for 1999 calendar year (Sup12 §3(b)(4)(c)).
2.290%
(Sup12 §3(b)(4))
17
Expenses for 2001 calendar year (Sup16 §3(d)(iii); Sup17 §3(d)(iii); Sup18 §3(d)(iii)), except for the Sup22 17th floor space, for which it is 2004 (Sup22 §3(d)(iii)).
2.288% (Sup16 §3(d)(iv); Sup17 §3(d)9iv); Sup18 §3(d)(iv) and Sup22 §3(d)(iv))
31 (part), 33, 34
Expenses for 1995 calendar year (Sup7 §3(f)(iii); Sup9 §4(e)).
5.450%
(Sup7 §3(f)(iv))
31 (part)
Expenses for 2008 calendar year (Sup24 §3(d)(iii)).
1.43%
(Sup24 §3(d)(iv))
32
Expenses for 1993 calendar year (Sup6 §3(b)(iii)).  As of 11/01/09, changed to expenses for calendar year 1995 (Sup9 §4(e)).
2.290%
(Sup6 §3(b)(iv))
35
Expenses for 2000 calendar year (Sup14 §3(a)(4)(c)).
2.290%
(Sup14 §3(a)(4)(d))
36
Expenses for 2000 calendar year (Sup14 §3(b)(4)(c)).
2.290%
(Sup14 §3(b)(4)(d))
37 (NE Cor.) and 38
$6,509,748  (orig §5.01(a)(i)).  As of 11/01/09, changed to expenses for 1995 calendar year (Sup9 §4(e)).
3.000%
(orig §5.01(a)(iv))
37 (NW Cor.)
$6,509,748  (orig. §5.01(a)(i)).  As of 11/01/09, changed to expenses for 1995 calendar year (Sup9 §4(e)).
0.650%
(orig. §46.01(b))
37 (SE Cor.)
$6,509,748  (Sup1 §5.01(a)(i)).  As of 11/01/09, changed to expenses for calendar year 1995 (Sup9 §4(e)).
0.330%
(Sup1 §3(c))
37 (SW Cor.)
Expenses for calendar year 1989 (Sup5 §3(b)(iii)).  As of 11/01/09, changed to expenses for calendar year 1995 (Sup9 §4(e)).
0.659%
(Sup5 §3(b)(iv)
39
Expenses for calendar year 1989 (Sup4 §3(b)(iii)).  As of  11/01/09, changed to expenses for calendar year 1995 (Sup9 §4(e)).
2.290%
(Sup4 §3(b)(iv))
40, 41, 45
Expenses for calendar year 1995 (Sup9 §4(d)9iii)).
6.865% (Sup11 §2(c))
42
Expenses for calendar year 1989 (Sup25 §3(d)(iii)(a)).  As of 5/1/11, changed to expenses for calendar year 2008 (Sup25 §3(d)(iii)(b)).
2.38%
(Sup25 §3(d)(iv))
43 and 44
Expenses for calendar year 2008 (Sup26 §3(d)(iii)).
4.73%
(Sup26 §3(d)(iv))
 
 
17

 

Management Fee:  The management fee included in building expenses is an amount equal to the greater of (a) $152,250, and (b) the product of $152,250 multiplied by a fraction the numerator of which is building expenses (exclusive of management fees for such year) and the denominator of which is $6,357,498 (orig §5.01(a)(v)).

Payment Frequency:  Monthly, equal to 1/12th of Alliance’s share of previous comparative year’s annual escalation over the base year, subject to adjustment for reasonably anticipated increases (orig §5.01(b)(1)).

Audit/Dispute:  Landlord’s expense statements given to Alliance are final and determinative unless Alliance challenges such statement in writing (which will also set forth the basis of such challenge with particularity) within 90 days (Sup7 §6(d)) of receipt.  Alliance must make payments in accordance with the statement pending dispute resolution.  So long as Alliance has continued to pay the expense escalation pursuant to Landlord’s statements, Alliance has the right to examine Landlord’s books and records provided such examination is commenced within 60 days and concluded within 90 days (Sup7 §6(d)) following the rendition of the expense statement in dispute.  Landlord and Alliance will resolve the dispute by arbitration with 3 arbitrators, each of whom will have at least 10 years experience in the operation and management of major Manhattan office buildings (orig. §5.01(b)(2)).

Concourse Space:  Alliance will pay an expense escalation for its concourse space only if the previous tenant of such space was subject to an expense escalation.  The base year for any such escalation will be calendar year 2001 (Sup15, §23(g)).

Building Square Footage  Total rentable area of the building is 1,540,000 sf for expense escalation purposes (orig. §5.01 (a)(iv)).
 
 
18

 

CLEANING
 
Cleaning services are provided by the Cleaning Contractor pursuant to two separate agreements, one covering the office space and the other covering the ground floor space.  The following summary is applicable to both such agreements.  Unless otherwise noted, the section references are also applicable to both agreements.
 
Services:
The Cleaning Contractor provides certain cleaning services for the office areas and lavatories of the demised premises (§1(a)).  The cleaning services provided do not include the cleaning of below-grade space, kitchen, pantry or dining space, storage, shipping, computer or word-processing space, or private or executive lavatories (§1(b)).  The Cleaning Contractor is not responsible for removing debris and rubbish from areas under construction in the demised premises (§2).  The quality of the cleaning services will be comparable to that provided in first class buildings in midtown Manhattan (§1(a)).
 
Access:
The Cleaning Contractor has access to the demised premises from 6 p.m. to 2 a.m. on business days.  The Cleaning Contractor has the right to use Alliance’s light, power and water, as reasonably required (§1(a)).
 
Term:
The cleaning agreements are co-terminous with the Lease (§2).
 
Fee:
Alliance pays the Cleaning Contractor, for the office space, a fixed monthly fee of $310,465.73, plus an amount equal to the fee for Floor 36 multiplied by the percentage increase in the labor rate in 2000 over 1999, plus an amount equal to the fee for Floors 2, 8, 9, 11-14 multiplied by the percentage increase in the labor rate in 2001 over 2000, plus an amount equal to the fee for Floor 10 multiplied by the percentage increase in the labor rate in 2001 over 2000  (CAO §3; CAO-2 §3; CAO-3 §3; CAO-4 §3; CAO-5 §3; CAO-6 §3; CAO-7 §3; CAO-8 §3; CAO-9 §3; CAO-11 §3).  Alliance pays the Cleaning Contractor a fixed monthly fee of $2,833.33 for the ground floor space (CAG §3).  The fixed monthly fee for cleaning the office space will increase by $11,087.73 plus an adjustment based on the increase in the labor rate in 2008 over 2007 with the addition of remainder of Floor 31 to demised premises (CAO-10 §3) and will increase by $36,604.68 plus an adjustment based on the increase in the labor rate in 2008 over 2007 with the addition of Floor 10 to demised premises (CAO-12 §3).  The fixed monthly fee is inclusive of sales tax and is payable in advance on the first of each month (§3).  Payment for any additional cleaning services will be made by Alliance within 20 days of demand. The cost of such additional services must be comparable to services provided in comparable buildings (§1(a)).  In addition to the fixed fee, Alliance pays the Cleaning Contractor a percentage of annual increases in cleaning costs (which annual increases are equal to the annual percentage increase in porters’ wages over a porter’s wage base year) over an amount representing base year cleaning costs.  The percentage for the office space is 53.899% (CAO §3 and §4; CAO-2 §3; CAO-3 §3; CAO-4 §3; CAO-5 §3; CAO-6 §3; CAO-7 §3; CAO-8 §3; CAO-9 §3; CAO-11 §3) and 0.483% for the ground floor space (CAG §4).  The percentage for the office space will increase by 1.46% (CAO-10 §3) to with the addition of the remainder of Floor 31 and will increase by 4.82% with the addition of Floors 43 and 44.  The other variables in such calculation are as follows:
 
 
19

 

Floor
Base Year for
Porter’s Wages
Base for Cleaning Costs
Ground (part)
1999 (CAG §4)
$6,286,271.55 (CAG §4)
2, 8-14
2001 (CAO-5, §4)
$6,444,056.97 (CAO-5, §4)
15 and 16
1999 (CAO-3 §4)
$6,247,986 (CAO-3, §4)
17 (except for the part demised by Sup22)
2001 (CAO-6 §4; CAO-7 §4; CAO-8 §4)
$6,629,645.81
17 (the part demised by Sup22)
2004 (CAO-9 §4)
$7,606,434.69 (CAO-9 §4)
31 (part) , 32-34, 37-41 and 45
1995 (CAO §4(a)(i))
$5,827,772 (CAO §4(a)(iii))
31 (the part demised by Sup24)
2008 (CAO-10 §4)
$8,408,948.97 (CAO-10 §4)
35 and 36
2000 (CAO-4 §4)
$6,381,693 (CAO-4 §4)
42
2008 (CAO-11 §4)
$8,408,948.97 (CAO-11 §4)
43 and 44
2008 (CAO-12 §4)
$8,408,948.97 (CAO-12 §4)
 
 
20

 

Dispute with Cleaning Contractor:
If Alliance believes that the Cleaning Contractor is not adequately performing under a cleaning agreement, and the Cleaning Contractor has not corrected such inadequate performance within 10 days after notice, Alliance may arbitrate whether the Cleaning Contractor is adequately performing.  If a majority of the required arbitrators find that the Cleaning Contractor is not adequately performing, then the Cleaning Contractor will correct such inadequate performance within 10 days of such finding.  If Contractor fails to do so, Alliance may terminate the cleaning agreement upon 10 days notice. (§5).
 
Default by Alliance:
If Alliance fails to make a payment due under a cleaning agreement within 15 days of notice of such failure, the Cleaning Contractor may, upon 10 days notice terminate the cleaning agreement if Alliance also fails to make such payment within such 10 day period.  In case of such termination, Alliance may only use the approved cleaning contractor for the building (§6).  If a payment is not made within 3 days of notice of such failure, such payment accrues interest from the due date at prime rate, provided that Cleaning Contractor is not obligated to give such notice more than twice a year (§12).
 
Rent Credit:
Alliance is entitled to a credit against the monthly installment of fixed rent in the amount of $169,479.10 per month (Sup9 §4(c); Sup10 §2(c); Sup11 §2(c); LTR1; Sup12 §3(a)(3) and §3(b)(3); Sup14 §3(a)(3) and §3(b)(3); Sup15 §3(c)) Sup16 §3(c); Sup17 §3(c); Sup18 §3(c) and Sup22 §3(c) plus an amount equal to the credit for Floor 36 multiplied by the percentage increase in the labor rate in 2000 over 1999 (Sup14 §3(b)(3)).  The monthly credit will increase by (i) $92,734.38 plus an adjustment based on the increase in the labor rate in 2001 over 2000 with the addition of Floors 2, 8, 9, 11-14 to the demised premises (Sup15 §3(c); Sup19 §2(c)), (ii) by $13,296.17 plus an adjustment based on the increase in the labor rate in 2001 over 2000 with the addition of Floor 10 to the demised premises (Sup19 §3(c)); (iii) by $11,087.72 plus an adjustment based on the increase in the labor rate in 2008 over 2007 with the addition of remainder of Floor 31 to the demised premises (Sup24 §3(c)); (iv) by $220,539.40 plus an adjustment based on the increase in the labor rate in 2008 over 2007 on May 1, 2011 (Sup25 §3(c)); and (v) by $439,256.17 plus an adjustment based on the increase in the labor rate in 2008 over 2007 on May 1, 2011.
 
Termination of Cleaning Agreement:
In the event the cleaning agreement for the office space is terminated, Landlord will provide cleaning services and Alliance will pay Landlord on a monthly basis for the office space (assuming that all of the office space demised under the lease is delivered to Alliance at that time) 60.17% (Sup26 §7(a)) of annual increases in cleaning costs (which annual increases are equal to annual percentage increases in porter’s wages) over Landlord’s cleaning costs for the entire building during the first full calendar year after the Cleaning Agreement’s termination (orig. §6.04, as modified by Sup9 §8(a)).  Landlord’s cleaning cost escalation statements are final and determinative unless Alliance challenges such statement in writing within 90 days (Sup7 §6(d)) of receipt.  Alliance must make payment in accordance with such statement pending dispute resolution.  Landlord and Alliance will resolve any dispute by arbitration with 3 arbitrators, each of whom will have at least 10 years’ experience in the operation and management of major Manhattan office buildings (orig. §6.01(d)).

Total rentable area of the building is 1,515,000 sf for cleaning cost escalation purposes.

 
21

 

MAINTENANCE & REPAIRS

Alliance’s Responsibility
Alliance will make repairs to the demised premises necessitated by its acts, omissions, occupancy or negligence (except for fire or other casualty caused by Alliance’s negligence if Landlord’s insurance is not invalidated thereby) (orig. §9.01).
 
Landlord’s Responsibility
Landlord will maintain the building and its common areas in a manner appropriate to a first class office building.  The building exterior, the window sills outside the window and the windows are not part of the demised premises (orig. §9.01).
 
 
22

 

ALTERATIONS

Approval:
All alterations require Landlord’s prior written approval, which will not be unreasonably withheld or delayed, provided that it does not (1) affect the structural integrity of the building, (2) affect the exterior of the building, or (3) adversely affect the building’s systems without, in Landlord’s opinion, adequate mitigation (orig. §8.01).
 
Landlord’s Reimbursement:
Alliance will reimburse Landlord’s out-of-pocket costs incurred in reviewing alterations (orig. §8.01).
 
Contractors:
Landlord’s affiliate will act as general contractor for any alteration work performed anywhere in the demised premises for one year after the delivery of the 2nd and 8th-14th floors, for a fee not to exceed 6% of the aggregate cost of such work.  In acting as general contractor, Landlord’s affiliate will obtain competitive bids from at least 3 subcontractors approved by Landlord for each category of work, except that there is only one approved subcontractor for air conditioning balancing work (although Alliance may have another subcontractor verify the work) and there are only 2 unaffiliated subcontractors for the base building work (Sup15 §6(a)).  Alliance and Plaza Construction Corp., Landlord's affiliate, have subsequently entered into that certain Master Agreement dated January 27, 2004 pursuant to which Plaza Construction Corp. will provide construction management services to Alliance in respect of construction projects at the building.  Landlord must have given its approval of any contractors performing alterations.  Alliance will inform the Landlord of the name of any contractors or subcontractors Alliance proposes to do any alterations at least 10 days prior to work commencement (orig. §8.01 2(a)).
 
Insurance Certificates:
Prior to commencing any alterations, Alliance will deliver to Landlord an insurance certificate evidencing the existence of workmen’s compensation insurance covering all persons involved in such alterations and reasonable comprehensive general liability and property damage insurance with coverage of at least $1 million single limit (orig. §8.01(7)).
 
Records:
Alliance will keep records of alterations exceeding $25,000 in cost and provide copies of such records to Landlord within 45 days of demand (orig. §8.07).
 
38th/39th Floor Staircase:
Alliance has the right to install a staircase between the 38th and 39th floors provided that Landlord approves the plans therefor and the staircase is installed in compliance with Articles 8 and 45 of the lease (Sup4 §14).
 
Expiration of Term:
All improvements installed by Landlord are the property of the Landlord (orig. §8.03) and all permanent improvements (including, therefore, any kitchen, pantry or dining room) will remain at the expiration of the term without Alliance being obligated to remove such permanent improvements.  (orig. §8.04)  All fixtures (other than trade fixtures) installed by Landlord become the property of the Landlord, and will remain as part of the demised premises, upon expiration of the lease.  All furnishings and trade fixtures supplied by Alliance at its expense are Alliance’s property and, with regard to Alliance’s furniture and movable office equipment only (Sup7 §6(e)), will be removed upon the expiration of the lease term following the lease expiration unless Landlord notifies Alliance (within 30 days after Alliance’s notice, which notice will be given at least 3 months prior to expiration of the lease term) that such property may remain in the demised premise following the lease term expiration (orig. §8.05).  Alliance has no obligation to remove any staircases in the demised premises (Sup9 §21).

 
23

 

MISCELLANEOUS MATTERS RELATING TO IMPROVEMENTS
 
Emergency Generator:
Alliance is permitted to install a 2800 KW Detroit diesel emergency generator back-up power system in specified locations in the building (Sup27 §2(b)).  Alliance is permitted to connect the back-up power system to the building’s emergency generator system.  Up to 1500 KW of the power generated by the back-up power system will back-up the building’s emergency generator system (Sup27 §2(d)).  Landlord will operate and maintain the back-up power system at Alliance’s expense and, as part of such obligation, Landlord will enter into a maintenance contract for same subject to the reasonable approval of Alliance (Sup27 §2(d)).  Alliance is obligated to pay a one-time fee for such emergency generator rights equal to $75,000, adjusted for inflation based on increases in the Consumer Price Index (Sup27 §2(f)).  Alliance will pay for its proportionate share (based on KW capacity) of fuel purchased for the emergency generator system and has the right, subject to Landlord’s reasonable approval, to install its own fuel storage tanks (Sup27 §2(g)).  The back-up power system will remain and not be removed at the end of the lease term (Sup27 §2(i)).  Alliance has, through 1/31/10, a limited right of first offer to lease space to install another emergency generator.  Alliance has 15 days to accept any such offer (Sup27 §3).
 
Communications Antenna or Dish:
Alliance has the right, subject to the other alteration provisions of the Lease and to all applicable legal requirements, to install a communications antenna or dish on the roof in a location reasonably determined by Landlord.  Landlord may require Alliance to relocate the antenna, at Landlord’s expense, to mitigate interference with other uses, so long as the antenna is able to function in its relocated position, provided that if such relocation does mitigate the interference, Landlord may require Alliance to remove the antenna so long as no other antennas are allowed to be installed on the roof and Landlord bears the cost of such removal and the unamortized value of the antenna.  If deemed reasonably advisable by Landlord’s engineer, Landlord will, at Alliance’s expense, reinforce the area under the antenna and, upon lease expiration, Alliance will remove the antenna and restore any damage caused thereby.  Alliance will pay Landlord one-half of fair market rent for the roof space used by the antenna.  Alliance, under Landlord’s supervision (the cost of which Alliance is obligated to reimburse, has access to the roof and other areas of the building as reasonably necessary to maintain and repair the antenna (Sup9 §20).
 
Communications Wiring:
Landlord will provide Alliance a reasonable area in a common vertical riser shaft in the building for the installation of data, communications and security system cabling.
 
Initial Fit-Out of Balance of 31st Floor:
Alliance, at its expense, will prepare a complete set of plans for the work, which is subject to the reasonable approval of Landlord (orig. §45.01).  Although Alliance is permitted to use its own engineer, such plans ultimately are subject to the reasonable approval of Landlord’s designated engineer.  There is no deadline for the delivery to Landlord of the plans for Alliance’s initial fit-out (Sup24 §6(a)).  Landlord will provide Alliance with a $762,240 allowance for the hard costs and certain soft costs of the fit-out.  The allowance can be disbursed in installments upon Alliance’s request and any unused portion will be credited against fixed rent (Sup24 §6(b)(i)).  Alliance may use the allowance to pay for construction work undertaken in the demised premises leased prior to Sup24, but if Alliance draws on the allowance prior to May 1, 2010 then the allowance will be reduced by the future value of the amount drawn upon calculated at 6% per year (Sup24 §6(b)(ii)).
 
Initial Fit-Out of 42nd Floor:
Alliance, at its expense, will prepare a complete set of plans for the work, which is subject to the reasonable approval of Landlord (orig. §45.01).  Although Alliance is permitted to use its own engineer, such plans ultimately are subject to the reasonable approval of Landlord’s designated engineer.  There is no deadline for the delivery to Landlord of the plans for Alliance’s initial fit-out (Sup25 §6(a)).  Landlord will provide Alliance with a $1,266,090 allowance for the hard costs and certain soft costs of the fit-out.  The allowance can be disbursed in installments upon Alliance’s request and any unused portion will be credited against fixed rent (Sup25 §6(b)).  If, however, Alliance draws on the allowance prior to May 1, 2011 then the allowance will be reduced by the future value of the amount drawn upon calculated at 6% per year (Sup25 §6(b)(ii)).
 
Initial Fit-Out of 43rd and 44th Floors:
Alliance, at its expense, will prepare a complete set of plans for the work, which is subject to the reasonable approval of Landlord (orig. §45.01).  Although Alliance is permitted to use its own engineer, such plans ultimately are subject to the reasonable approval of Landlord’s designated engineer.  There is no deadline for the delivery to Landlord of the plans for Alliance’s initial fit-out (Sup26 §6(a)).
 
 
24

 

SNDA & ESTOPPEL
 
Subordination, Non-Disturbance and Attornment:
The Lease is subordinate to all present and future mortgages and ground leases only to the extent Alliance receives a subordination, non-disturbance and attornment agreement from the holder thereof (orig. §11.01; Sup15 §8).  Alliance will not exercise any right to terminate the lease due to an act or omission of Landlord without first giving notice of such act or omission to any mortgagee or ground lessor of which Alliance has been notified and giving such mortgagee or ground lessor an opportunity to cure such act or omission within a reasonable period of time after such notice provided that such mortgagee or ground lessor notifies Alliance that it will commence and continue to remedy such act or omission (orig. §11.02).  Alliance and the property’s mortgagee are parties to a subordination, non-disturbance and attornment agreement (SNDA-M).  Alliance and the property’s ground lessor are parties to a subordination, non-disturbance and attornment agreement (SNDA-G).
 
Estoppel:
Alliance will provide an estoppel certificate within 10 days after Landlord’s request.  The estoppel certificate will certify:
 
(a) that the Lease is unmodified and in full force and effect or, if there has been any modification that the same is in full force and effect as modified and state any such modification;
 
(b) whether the term of the Lease has commenced and rent become payable thereunder; and whether Alliance has accepted possession of the demised premises;
 
(c) whether or not there are then existing any defenses or offsets which are not claims under paragraph (e) below against the enforcement of any of the agreements, terms, covenants, or conditions of the Lease any modification thereof upon the part of Alliance to be performed or complied with, and, if so, specifying the same;
 
(d) the dates to which the fixed annual rent, and additional rent, and other charges hereunder, have been paid; and
 
(e) whether or not Alliance has made any claim against Landlord under the Lease and if so the nature thereof and the dollar amount, if any, of such claim (orig. §36).

 
25

 

INSURANCE AND LIABILITY
 
Insurance:
Alliance will reimburse Landlord for any increases in Landlord’s fire insurance caused by Alliance (orig. §10.03).
 
Landlord
Landlord is not liable for damage or injury to property or persons unless caused by or due to the negligence of Landlord or its agents, servants or employees (orig. §12.01).  Alliance will look solely to Landlord’s estate in the Building for the satisfaction of any judgment (orig. §12.05).
 
Alliance:
Alliance will reimburse Landlord for all costs incurred by Landlord that Landlord does not recover from insurance resulting from Alliance’s breach under the lease, by reason of damage or injury caused by Alliance in connection with the moving of Alliance’s property except as provided in the lease, and by reason of the negligence of Alliance or its agents, servants or employees in the use or occupancy of the demised premises (orig. §12.03).  Alliance will indemnify, defend and save Landlord harmless from any liability arising from Alliance’s use of the demised premises, breach of the lease, or holding over, except for any liability arising from Landlord’s negligence (orig. 35.01).
 
Waiver of Subrogation
Both parties are required to obtain waivers of their insurer’s rights of subrogation provided that such waiver does not result in an additional expense to the party waiving the right of subrogation, unless the other party agrees to be responsible for such additional expense (orig. §12.06(a) and (b)).

 
26

 

USE
 
General:
The demised premises are permitted to be used for executive and general offices (orig. §2).  Landlord represents that such use does not violate the certificate of occupancy for the demised premises (orig. §17).  The demised premises may not be used for a banking office open to street traffic or certain other undesirable businesses (orig. §42.01).
 
Dwyer Unit:
Alliance may, subject to Landlord’s consent which may not be unreasonably withheld, install in the demised premises a Dwyer Unit at its sole cost expense provided that:
 
(a)  it is used for Alliance’s employees and guests;
 
(b)  no installation of ventilation equipment is required and no odors emanate from the demised premises from the use thereof;
 
(c)  no additional air conditioning service is required thereby;
 
(d)  use of the unit is expressly subject to the extra cleaning and water consumption provisions of the lease; and
 
(e)  Alliance will engage an extermination service (orig. §49.01; Sup7 §18).
 
Dining:
Alliance may, subject to Landlord’s consent which may not unreasonably be withheld, install a dining room with kitchen for use by Alliance’s employees and guests in the demised premises (Sup7 §18), provided that such facilities (a) comply with all applicable laws, (b) are properly ventilated and (c) all wet garbage is bagged and stored so that no odor emanates therefrom (orig. §49.06).  If Alliance installs such facilities, then (a) Alliance will pay landlord the cost of an extermination service and (b) will have a refrigerated garbage storage room or other means of disposing of garbage therefrom reasonably satisfactory to Landlord (orig. 32.08 (as modified by Sup9 §6(b)); orig. §49.02), but such refrigerated room will only be required if such wet garbage creates an odor or pest problem (orig. §49.02).  Alliance may install additional dining facilities on any floor of the demised premises comparable to the dining facility located on the 39th floor (as it existed as of 8/16/94).  (Sup9 §25)
 
Corporate Training Facility:
Subject to the other terms of the lease and all applicable laws, Alliance may use a portion of the demised premises for a corporate training facility (Sup5 §11(c)).
 
Concourse:
Subject to the following sentence, the portion of demised premises located on the concourse may be used for storage, mailroom, computer printing room, incidental office, dining room or cafeteria purposes and any other legal purpose (Sup15 §23(e)).  The portion of the demised premises located on the concourse and leased pursuant to Sup23, however, may be used only for storage purposes except that Alliance may also install electrical switches therein in certain specified locations  (Sup23 §4).
 
 
27

 

TERM
 
Expiration Date:
December 31, 2019 (Sup15 §12(a)).
 
Early Termination (45th Floor):
Provided Alliance never occupies the 45th floor, Alliance may upon written notice to Landlord given on or before 1/1/15, terminate the Lease with respect to the 45th floor effective 12/31/16 without penalty (Sup15, §21).
 
Landlord’s 5 Year Extension Option:
·
Landlord may upon written notice to Alliance given on or before 11/30/16, extend the term from 12/31/19 to 12/31/24 (Sup15 §13(a)(i)).
 
 
·
Fixed annual rent during such extension period would be at the rate of the average fixed annual rent per s.f. being paid by Alliance on 12/30/19 for all of its space in building (other than ground floor, concourse or subconcourse space).  The method of calculating escalations would remain unchanged for such period (Sup15 §13(a)(ii) and (iii); Sup21 §9(a)).
 
Alliance’s 5 Year Extension Option:
·
If Landlord extends the term to 12/31/24 as provided above, then on or before 12/31/16, Alliance may extend the term to 12/31/29 (Sup15 §13(b)).
 
 
·
Fixed annual rent during such extension period would be at the rate of the average fixed annual rent per s.f. being paid by Alliance on 12/30/19 for all of its space in the building (other than concourse or subconcourse space).  The method of calculating escalations would remain unchanged for such period (Sup15 §13(b)).
 
 
·
Upon exercise of this 5 year extension option, Alliance loses its right to exercise its 10 year extension option described below.
 
Alliance’s 10 Year Extension Option:
·
Alliance has the option to extend the term for 10 years (Sup9 §12(a)) to expire on 12/31/29 if Landlord does not exercise its 5 year extension option, or 12/31/34 if Landlord does exercise its 5 year extension option and Alliance does not exercise its 5 year extension option.
 
 
·
If Landlord does not exercise its 5 year extension option, the exercise deadline for Alliance’s 10 year extension option is no later than 1/31/17, but no earlier than 12/1/16 (Sup15 §13(c)).  If Landlord does exercise its 5 year extension option and Alliance does not exercise its 5 year extension option, then the exercise deadline for Alliance’s 10 year extension option is 12/31/21 (Sup9 §12(a)(i)).
 
 
·
As conditions to the exercise of Alliance’s 10 year extension option, as of the date of exercise and as of the first day of the extension period (i) Alliance can not be in default of beyond applicable notice and grace periods of its obligation to pay fixed annual rent, tax escalations and expense escalations, and (ii) Alliance and its affiliates must occupy at least 200,000 rsf (Sup9 §12(a)(ii) and (iii)).
 
 
·
The fixed annual rent for Alliance’s 10 year extension period is 95% of fair market rent determined as of 36 months before what would have been the expiration of the term if the term had not been extended by Alliance’s ten year extension option, as determined by Landlord and notified to Alliance in writing within 30 days thereafter, plus an increase in proportion to the increase over such 36 month period of the average of the CPI for Urban Consumers and CPI for Urban Wage Earners (both New York, NY-Northeast NJ, base year 1982-84 =100, “All Items”) (Sup9 §12(b)).  If Alliance disputes Landlord’s determination of the rent, then Landlord and Alliance will resolve the dispute according to a specified arbitration process (Sup9 §12(b) and §16).
 
 
·
For purposes of calculating real estate tax escalations, the base year during such extension period is 2019/20 if Landlord does not exercise its 5 year extension option, or 2024/25 if Landlord does exercise its 5 year extension option (Sup9 §12(c)(i); Sup15 §13(b) and (c)).  For purposes of calculating expense escalations, the base year for building expenses during such extension period is calendar year 2019 if Landlord does not exercise its 5 year extension option, or calendar year 2024 if Landlord does exercise its 5 year extension option. (Sup9 §12(c)(ii) and (iii); Sup15 §13(b) and (c)).

 
28

 

SERVICES
 
Electricity:
See page 14.
 
Elevator:
Passenger:  Service will be provided as necessary on business days between 8 am and 6 pm and sufficient service at all other times (orig. §32.01).  In case of special events at the demised premises, upon 24 hours notice from Alliance, Landlord will provide 2 dedicated elevators staffed by Landlord personnel, the labor cost of which will be reimbursable by Alliance within 30 days of demand (Sup9 §24(a)).  Landlord is required to have, in 1996, reconfigured the elevators so that the 32nd floor and the 37th, 38th and 39th floors are served by the same elevators (Sup6, §4(c)).
 
Freight:  Landlord will provide reasonable freight elevator service on business days from 8 am to 6 pm and after-hours service at landlord’s established rates (orig. §32.01).  During tenant’s initial fit-out of the remainder of the 31st floor, and the 42nd, 43rd and 44th floors, Alliance has priority but not exclusive use of one freight elevator and non-priority use of a second freight elevator at no charge (Sup14 §13(a); Sup15 §16(a); Sup24 §10(a); Sup25 §10; Sup26 §10).  Subject to the terms of the alterations provisions and so long as Alliance is leasing floors 31 (part) through 41,  Alliance has the right, at its expense, to make alterations so that any elevator servicing Floors 31 (part) through 41 can stop on any other floor leased by Alliance (Sup15 §24).
 
HVAC:
Regular Service: During regular hours of operation on business days as from time to time determined by Landlord, but always at least from 8 am to 6 pm, but excluding 9pm to 8 am (orig. §32.02(a)).
 
 
After-Hours Service:  Available upon reasonable notice at Landlord’s established rates, payable upon presentation of bill, provided that:
 
 
·
if any other tenants in the same air conditioning zone obtain after-hours service, the charge therefore will be equitably pro-rated (orig. §32.02(d)), and
 
 
·
Landlord will provide HVAC to Alliance free of charge on any non-business day that the New York Stock Exchange is open (Sup9 §24(b)).
 
 
29

 
 
 
Supplemental AC: Subject to the lease provisions (including the alterations section) and all applicable laws, Alliance may at its expense install self-contained package air-conditioning units in the demised premises.  Alliance is responsible for the maintenance and repair of such units.  Alliance may connect such units to any existing supplementary air-conditioning systems located in the demised premises as of the date the lease commenced with respect to the 37th and 38th floors (orig. §32.10).  Alliance has the right to install at its own expense additional supplemental air conditioning in the demised premises subject to service being available from Landlord at Landlord’s established per ton per annum connected load and line charge (Sup5 §11(d)).  Alliance has the right to install a supplemental air conditioning system on the 31 (part)-34th, and 37th-39th floors and Landlord will provide condenser water therefor at a connected load and line charge fee of $500 per ton per annum increased after 1991 in proportion to the lease’s expense escalations (Sup6 §17; Sup7 §19).

 
Condenser Water:
 
 
·
Floors 2, 8-14:  Alliance has reserved 190 tons of condenser water for use on the 2nd and 8th-14th floors, with an option to reserve up to an additional 80 tons upon written notice to Landlord on or before 8/30/04.  Landlord’s charge for such condenser water is $568.35 plus annual increases based on the percentage increases in building and parking expenses.  Alliance begins paying for such condenser water upon use (but no later after 1 year after delivery of the 2nd and 8th through 14th floors).  If Alliance requires more than 270 tons of condenser water for such space, then Landlord will use best efforts to obtain additional condenser from the building’s existing supply and, if unsuccessful, will enter into good faith discussions regarding the installation of an additional cooling tower and allocation of costs relating thereto (Sup15 §16(b)).
 
 
·
Floors 15-16:  The 15th floor has an existing supply of 12 tons of condenser water and the 16th floor has an existing supply of 11 tons of condenser water.  Alliance has the right to install at its own expense, pursuant to the alterations provisions of the Lease, a supplemental air-conditioning system on the 15th and 16th floors. Alliance was to have reserved its requirements of condenser water for such supplemental system from the existing supply on or before May 1, 1999 and of additional condenser water (up to 100 tons) by June 30, 2001 (Sup14 §13(b)(ii)).  We have been advised by Judd S. Meltzer Co. Inc., however, that Landlord has agreed to reduce such available tonnage to 60 tons in exchange for increasing the available tonnage to 100 tons with respect to Floors 35-36.  Landlord’s charge for such condenser water is $552/ton per annum plus annual increases over a 1997 base year  (Sup12 §14).
 
 
·
Floors 2, 8-14, 17 (part):  Alliance was required to notify the Landlord of the amount of additional condenser water required by Alliance for its premises on Floors 2, 8-14 and 17 (part), which amount cannot exceed 20 tons, by August 31, 2002.  Alliance begins paying for such condenser water upon use at a rate equal to $594.90 per ton per annum increased annually from 2001 at the same percentage rate that building operating expenses increase (Sup16 §10(b)).
 
 
·
Floors 31 (part) - 34, 40, 41, 45:  We have been advised by Judd S. Meltzer Co. Inc. that Alliance has exercised its right to have Landlord supply Alliance with 250 tons condenser water for use in supplemental air conditioning units on Floors 31 (part)-34 or 40, 41 and 45 at a cost $250/ton/yr for the first 250 tons/yr and $500/ton/yr (plus annual increases over the 1994 expenses base year).  Any condenser water already being provided for Floors 31(part)-34 and 40, 41 and 45 are included in determining such rates.  Alliance pays for the condenser water that Landlord has agreed to commit to Alliance, regardless of whether Alliance actually uses it (Sup9 §24(f)).
 
 
·
Floors 35-36:  Alliance may purchase up to 60 tons (in the aggregate) of condenser water for use in connection with its supplemental air-conditioning on the 35th and 36th floors. We have been advised, however, by Judd S. Meltzer Co. Inc. that Landlord has agreed to increase such available tonnage to 100 tons in exchange for reducing the available tonnage of additional condenser water to 60 tons with respect to Floors 15-16.  Alliance must reserve the condenser water it wishes to purchase by February 8, 2001 (in respect of the 35th floor) and December 31, 2001 (in respect of the 36th floor) Landlord’s charge for such condenser water is $568.35/ton per annum plus annual increases over a 1999 base year  (Sup14 §13(b)).
 
 
Standards:
 
 
·
indoor conditions to be 75° 50% RH when outdoor conditions are 92° DB and 74° WB; indoor conditions to be 70° when outdoor conditions are 11°
 
 
·
outdoor air at a minimum of 20 cfm per person
 
 
assumes occupancy of 1 person per 100 usf, electric demand load of 5 watts per usf, and appropriate use of blinds (Sup9 §24(c)(ii)).
 
 
30

 

Water:
Landlord is required to supply an adequate quantity for ordinary lavatory, drinking, cleaning and pantry purposes.  Water consumed for any additional purposes is subject to charge therefor and, separate metering.  Alliance is subject to charge and separate metering for water used for any additional purposes.
 
Housekeeping Supplies:
Landlord must approve, in its reasonable discretion, suppliers of laundry, linen, towels, drinking water, ice and similar supplies to be consumed in the demised premises.  Landlord may designate exclusive suppliers of any such supply provided that such suppliers’ rates and quality are comparable to other suppliers (orig. §32.05).
 
Food & Beverages:
Landlord must approve, in its reasonable discretion any vendor of food or beverages to be consumed in the demised premises (orig. §32.06).
 
Cleaning:
See page 21.
 
Building Directory and Concierge:
Alliance is provided with its proportionate share (based upon the same percentage used in calculating Alliance’s share of operating expense escalations) of listings for itself, and any other person or entity in occupancy of the demised premises and their employees.  Landlord may reduce the number of such listings provided that Alliance always has its share in proportion to the space it occupies in the building (Sup6 §23).
 
So long as Alliance and its affiliates are in occupancy of at least 200,000 rsf, Alliance, at no additional cost, is permitted to station 1 or, if practicable, 2 of its employees at the lobby’s concierge desk with a telephone, an employee telephone directory, guest passes and an identifying sign (Sup9 §10(f)).
 
Signage and Flag:
So long as Alliance and its affiliates are in occupancy of at least 200,000 rsf, Alliance has exclusive right to name the building after itself or, subject to Landlord’s consent, any of its affiliates, and Alliance has the right to install signage with its name and logo:
 
·      above the lobby entrance (which may be illuminated subject to Landlord’s reasonable approval, but not neon, and provided that any other exterior signage is subject to Alliance’s approval),
 
·      on the building plaza kiosks (with signage for the building’s retail tenants on such kiosks subject to Alliance’s reasonable approval and any other kiosk signage or retail signage subject to Alliance’s approval),
 
·      behind the lobby concierge desk (which may be illuminated subject to Landlord’s reasonable approval, but not neon, and which will be the only sign behind the lobby concierge desk, although Landlord may install less prominent signage for other tenants elsewhere in the lobby subject to Alliance’s reasonable approval), and
 
·      place  “tombstone” signs on the building plaza
 
If occupancy decreases to less than 200,000, Landlord may remove Alliance’s signage (Sup9 §10(a)).  Landlord has reasonable approval rights as to the design and location of Alliance’s signage.  All installation, maintenance and removal work relating to Alliance’s signage will be performed by Landlord at Alliance’s reasonable expense (Sup9 §10(b)).
 
So long as Alliance and its affiliates are in occupancy of at least 200,000 rsf, Alliance may fly a flag bearing its name and logo, the design of which is subject to landlord’s reasonable approval, from a flagpole on the building plaza.  No other flagpole may be installed on the building plaza without Alliance’s approval (Sup9 §10(d)).
 
Landlord is prohibited from installing any signage in the area of the lobby’s upper elevator bank for an Alliance competitor occupying Floors 46-50, or a majority thereof (Sup13 §19(d)).
 
 
31

 

General Contractor:
Landlord’s affiliate will act as general contractor for any alteration work performed anywhere in the demised premises for one year after Landlord delivers the 2nd and 8th- 14th floors to Alliance following substantial completion of Landlord’s work thereon, for a fee not to exceed 6% of the aggregate cost of such work (Sup15 §6(a)). Alliance and Plaza Construction Corp., Landlord's affiliate, have subsequently entered into that certain Master Agreement dated January 27, 2004 pursuant to which Plaza Construction Corp. will provide construction management services to Alliance in respect of construction projects at the building.
 
Parking:
37 spaces in the building garage at the garage’s standard rates and terms, but the first 25 are at a 10% discount if Alliance reserved such spaces before the Sup9 Adjustment Date (Sup9 §18; Sup12 §12).  Landlord’s parking obligations continue so long as Landlord is the garage operator or so long as the garage is generally available to building tenants (Sup15 §22).
 
Allowances and Credits:
The following allowances and credit may have been used or applied:
 
10th Floor:  $130,000 credit against fixed annual rent due from and after Floor 10 is included in the demised premises (Sup19 §9).
 
15th Floor:  $987,725 for tenant’s initial fit-out and professional fees relating thereto.  Any portion not used for such purposes is credited against fixed annual rent (Sup12 §6(b)).
 
 
16th Floor:  $987,725 for cost of initial fit out and professional fees relating thereto.  Any portion not used for such purposes is credited against fixed annual rent (Sup12 §6(c)).
 
 
32

 

CASUALTY/CONDEMNATION
 
Casualty:
In case of casualty, Landlord is required to restore the building and/or the demised premises (other than property installed by or on behalf of Alliance).  Fixed annual rent and additional rent is abated to the extent that the demised premises or a portion thereof are unrentable and are not occupied by Alliance for the conduct of its business.  In case of substantial casualty affecting the demised premises, Alliance may terminate the lease if Landlord’s restoration is not completed within 1 year, subject to extension of up to an additional 6 months for circumstances beyond Landlord’s reasonable control. (orig. §13.01).  In case the building or the demised premises are substantially damaged in the last 2 years of the term, either Landlord or Alliance may cancel the lease upon notice given within 60 days of such casualty (orig. §13.02).  Landlord may terminate the lease upon 30 days’ notice given within 120 days of a casualty that so damages the building that Landlord decides to demolish it or not rebuild it (orig. §13.03).
 
Condemnation:
In case of a total condemnation of the demised premises, the lease terminates (orig. §14.01).  In case of a condemnation other than a total condemnation of the demised premises, the lease will continue, but fixed annual rent and additional rent, will be abated proportionately, provided that if more than 25% of the demised premises is condemned, Alliance may terminate the lease upon 30 days notice given within 30 days after such condemnation (orig. §14.02).  Landlord is required to repair any damage caused by such condemnation (orig. §14.02).  In case of a condemnation of more than 25% of the demised premises, Landlord will, to the extent of the condemnation award, repair damage caused by such condemnation within 6 months of the condemnation, as such period may be extended due to force majeure.  If Landlord fails to complete repairs within 6 months, as extended due to force majeure, Alliance may terminate upon 30 days’ notice (orig. §14.04).  In case of any partial condemnation within the last 2 years of the term, either party may terminate the lease within 32 days of the condemnation upon 30 days notice (orig. §14.04).  In case of a temporary taking of all or part of the of the demised premises, there will be no abatement of rent, but Alliance is entitled to any condemnation award and if such temporary taking occurs in the last 3 years of the terms, Alliance may terminate the lease upon 30 days’ notice given within the 30 days of title vesting in such condemnation (orig. §14.05).
 
 
33

 

ASSIGNMENT/SUBLETTING
 
 
Subletting the demised premises, assigning the Lease, allowing others to use the demised premises, and advertising for a subtenant or assignee are not permitted without the consent of Landlord (§15.01), which consent will not unreasonably be withheld (§15.05) except with regard to the ground floor portion of the demised premises.  Landlord has no recapture rights.  Alliance may, without Landlord’s consent, assign or sublet to a corporation into or with which Alliance is merged, with an entity to which substantially all of Alliance’s assets are transferred, or to an entity which controls or is controlled by Alliance or is under common control with Alliance, subject to a net worth test (§15.02).  Also, Alliance may, without Landlord’s consent, permit an affiliate (defined as “an entity which controls or is controlled by Alliance or is under common control with Alliance”) to occupy all or a portion of the premises (orig. §15.08).  Any permitted assignment or sublease will not be effective until Alliance delivers to Landlord a recordable sublease or assignment agreement reasonably satisfactory to Landlord pursuant to which the subtenant or assignee assumes all of Alliance’s obligations under the Lease.  Alliance will remain fully liable under the lease for the payment of rent and the performance of all of Alliance’s other obligations under the Lease notwithstanding any such assignment or sublease (orig. §15.03).
 
Landlord’s Consent to assignment or sub-subletting by an assignee or subtenant:
Landlord’s consent will not be unreasonably withheld or delayed, provided that such further assignment or sub-sublease is subject to all of the other terms and conditions of the Lease regarding assignment and subletting (Sup7 §12(b)).
 
Profits:
If Alliance assigns the lease or sublets any portion of the demised premises other than to a corporation into which Alliance is merged or consolidated, or to which Alliance’s assets are transferred or to any entity which controls or is controlled by Alliance or is under common control with Alliance, then Alliance will pay Landlord 50% of any profits after first deducting reasonable expenses incurred in connection with such assignment/sublease amortized on a straight line basis over the balance of the lease term (in case of an assignment) or over the term of the sublease (in case of a sublease) (orig. §15.07).  For the first 50% of rsf of demised premises other than ground floor space (including Floors 2 and 8-14 after such floors are delivered to Alliance (Sup15 §19(a)) assigned or sublet by Alliance, Alliance will have the right to deduct as such a reasonable expense a “Tenant Improvement Deduction”, determined as of the commencement date of such sublease or assignment, and calculated as follows:
 
((A/2 – B) ÷ C)  x D, where
 
A = amortized value of Alliance leasehold improvements (regardless of whether paid for with tenant allowance) based upon the average value of Alliance’s unamortized leasehold improvements on a per rentable square foot basis for all of the demised premises other than any concourse space (Sup15 §19(b) or ground floor space (Sup20 §2(a)), amortized on a straight line basis from completion date until 10/31/09 (if located on Floors 37-39 and completed prior to 8/16/94 and such calculation is being made prior to the delivery of Floors 2 and 8-14 (Sup15 §19(a))) or the lease expiration date (in all other cases)
 
B = total landlord cash contribution or allowance to Alliance for leasehold improvements under the lease,
 
C = total rsf of the demised premises, and
 
D = rsf of the space being sublet or assigned. (Sup9 §13(d))
 
In determining profits, Alliance is permitted to take into account its electricity expenses under the lease and cleaning expenses (whether under separate agreement with Landlord’s contractor or pursuant to the lease) (Sup9 §13(d)), and its rental cost for the space being sublet or assigned will be determined using an average, on a rentable square foot basis, of its rental cost for the entire demised premises other than any concourse space or ground floor space (Sup20 §2(b)) except with respect to any sublease or assignment of the 2nd, 8th-14th or 17th (part) floors made before Alliance ever occupies such space (which is the case for Floor 10 (Sup19 §6(b)) in which case Alliance’s rental cost will be based on its actual rental without including any deduction for unamortized tenant improvements (Sup15 §19(d); Sup16 §12, Sup17 §11; Sup18 §11).  If Alliance subleases any part of Floors 2 and 8-14 or assigns the Lease with respect thereto after first occupying such space, then Alliance will have the right to take a “Tenant Improvement Deduction” as provided above.
 
 
34

 

RIGHTS TO ADDITIONAL SPACE
 
Except as noted below, all of the following rights are subject to the condition that Alliance and its affiliates are occupying at least 200,000 rsf of the building and to the condition that Alliance is not in default beyond the expiration of applicable notice and cure periods under any of the terms, provisions and conditions of the Lease.
 
Ground Floor:
Alliance has the right of first offer to lease all or a portion of the space occupied by European American Bank as of August 16, 1994, upon such space (or portion thereof) becoming available, at 95% of fair market rent (as determined by Landlord but subject to a specified arbitration process if Landlord and Alliance cannot agree within 60 days of Alliance’s acceptance of the offer) (Sup9 §14(a)).  So long as Alliance and its affiliates occupy at least 200,000 rsf of the building, Landlord is restricted from leasing such space to a competitor of Alliance (Sup9 §14(a)(ii)). This right of first offer is not subject to the condition that Alliance not be in default beyond the expiration of applicable notice and cure periods under any of the terms, provisions and conditions of the Lease.
 
24th and 25th Floors:
[Note:  The 24th and the 25th floors are currently used for the building’s mechanical equipment and are not leased to tenants.]
 
26th, 27th and 28th Floors:
Subject to the superior rights (as of 8/16/94) of any then-existing tenant or occupant of the building and the superior rights of any tenant that leases floors 26 through 28, Alliance has the right of first offer to lease, at fair market rent (as determined by Landlord but subject to a specified arbitration process if Landlord and Alliance cannot agree within 60 days of Alliance’s acceptance of the offer), the 26th, 27th and 28th floors (or a portion of any such floor, if offered to Alliance as a partial floor), upon availability (Sup9 §14(c)).  We have been advised by Judd S. Meltzer Co. Inc. that this space is presently leased to Avon pursuant to a lease which expires on October 31, 2016 and that Avon has three 5-year extension options which are superior to Alliance’s right of first offer.
 
29th Floor:
Subject to the superior rights (as of 8/16/94) of any then-existing tenant or occupant of the building and the superior rights of any tenant that leases floors 26 through 28, Alliance has the right of first offer to lease, at fair market rent (as determined by Landlord but subject to a specified arbitration process if Landlord and Alliance cannot agree within 60 days of Alliance’s acceptance of the offer), the 29th floor (or a portion thereof, if offered to Alliance as a partial floor), upon availability (Sup9 §14(c)).  We have been advised by Judd S. Meltzer Co. Inc. that this space is presently leased to Dean Witter pursuant to a lease which expires on February 28, 2005 and that Avon has superior rights to this right of first offer.
 
30thFloor:
Subject to the superior rights (as of 8/16/94) of any then-existing tenant or occupant of the building and the superior rights of any tenant that leases floors 26 through 28, Alliance has the right of first offer to lease, at fair market rent (as determined by Landlord but subject to a specified arbitration process if Landlord and Alliance cannot agree within 60 days of Alliance’s acceptance of the offer), the 30th floor (or a portion of any such floor, if offered to Alliance as a partial floor), upon availability (Sup9 §14(c)).  We have been advised by Judd S. Meltzer Co. Inc. that this space is presently leased to Rubenstein pursuant to a lease which expires on December 31, 2009 and that Rubenstein has one 5-year extension option which may be preempted by Alliance.
 
46th through 50th Floors:
Subject to the superior rights (as of 8/16/94) of any then-existing tenant or occupant of the building and the superior rights of any tenant that leases floors 26 through 28, Alliance has the right of first offer to lease, at fair market rent (as determined by Landlord but subject to a specified arbitration process if Landlord and Alliance cannot agree within 60 days of Alliance’s acceptance of the offer), the 49th and 50th floors (or a portion of any such floor, if offered to Alliance as a partial floor), upon availability (Sup9 §14(c)). This right of first offer also applies to the 46th through 48th floors (Sup10 §4(b); Sup14 §16). We have been advised by Judd S. Meltzer Co. Inc. that this space is presently leased to Pimco pursuant to a lease which expires on December 31, 2016 and that there are no superior rights to this right of first offer.
 
 
35

 

All other space:
We have been advised by Judd S. Meltzer Co. Inc. that the companies listed below have leased the floors under leases expiring as follows:
 
 
Tenant
Floor(s)
Lease Expiration
       
 
Arthur Andersen
3 through 7
04/30/04
 
Linklaters
19
11/30/13
 
Stern Stewart
20
04/30/08
 
Smith Barney
21 and 22
04/30/05
 
Nichimen
23
04/30/12
   
 
Alliance has the right of first offer to lease all other space in the building it does not already lease or that is not subject to another of Alliance’s rights of first offer, upon availability, at fair market rent (as determined by landlord but subject to a specified arbitration process if Landlord and Alliance cannot agree within 60 days of Alliance’s acceptance of the offer) (Sup15 §9(a)(1); Sup16 §14).  This right of first offer is subject to the conditions that Alliance and its affiliates are in occupancy of at least 400,000 rsf and is subject to any rights of first offer or refusal held by any other building occupant or tenant existing as of August 3, 2000 (Sup15 §9(a)(i) and (ii)).  (Note:  We have been advised by Judd S. Meltzer Co. Inc. that the following superior rights exist:  Linklaters has two 5-year extension options with respect to the 19th floor, Smith Barney has one 5-year extension option with respect to the 21st and 22nd floors; Nichimen has one 5-year extension option with respect to the 23rd floor and Avon has rights to the 23rd floor.)  Alliance may not exercise such right of first offer during the last 10 years of the term unless (i) Alliance simultaneously extends the lease term pursuant to the Lease, or (ii) such offer is made during the period beginning 10 years before the expiration date and ending 5 years before the expiration date and is for 2 or fewer floors (provided that if it is for more than 2 floors and Alliance wishes to accept the offer, Alliance must accept Landlord’s terms (including, perhaps, a non-coterminous expiration date) for those excess floors) (15 Sup, §9(a)(iii)(7)).
 
 
36

 

DEFAULT AND LANDLORD REMEDIES
 
Events of Default:
Landlord may terminate the lease upon 10 days’ notice if:
 
 
(i)
Alliance fails to pay fixed annual rent or any other lease payment within 10 days after notice from Landlord of such failure;
 
 
(ii)
Alliance fails to cure its default under any of its other obligations under the lease, or fails to re-occupy the demised premises after abandoning the demised premises, within 30 days after notice from Landlord (reduced to 5 days in case of default under Alliance’s obligation to use the demised premises in conformance with the certificate of occupancy or Alliance’s failure to provide an estoppel), but if such default cannot be cured within such period, such period is extended as necessary to permit Alliance with diligence and good faith, to cure such default; or
 
 
(iii)
an execution or attachment against Alliance or its property results in a party other than Alliance continuing to occupy the demised premises after 30 days’ notice from Landlord (orig. §19.01).
 
 
Upon termination, Landlord may re-enter the demised premises and dispossess Alliance (orig. §19.02).
 
 
Alliance’s obligation to pay fixed annual rent and additional rent survives any termination of the lease due to Alliance’s default (orig. §19.03).  Upon such termination, Alliance will pay landlord re-letting expenses and at Landlord’s option, either a lump sum representing the present value of the excess of Alliance’s combined fixed annual rent and additional rent over the rental value for the terminated portion of the term, or on a monthly basis the excess of Alliance’s combined fixed annual rent and additional rent over the rent received from any re-letting of the demised premises for the period representing the terminated lease term (orig. §20.01).
 
Landlord’s Right to Cure:
If Alliance fails to cure a default within any applicable grace period after notice of such default (provided that no notice is required in case of emergency), then Landlord may cure such default and bill Alliance for the cost  of such cure, which bill will be due upon receipt (orig. §21.01).
 
Right to Contest:
Alliance may contest any law that Alliance is obligated to comply with under the lease and compliance thereunder, provided that:
 
 
(a)
such non-compliance will not subject Landlord to criminal prosecution or subject the building to lien or sale;
 
 
(b)
such non-compliance does not violate any fee mortgage, ground lease or leasehold mortgage thereon;
 
 
(c)
Alliance will deliver a bond or other security to Landlord; and
 
 
(d)
Alliance will diligently prosecute such contest.
 
Arbitration:
Where arbitration is required by the lease, unless otherwise expressly provided, the arbitration will be in New York City in accordance with the Commercial Arbitration Rules of the American Arbitration Association and the lease, and judgment may be entered in any court having jurisdiction (orig. §33.01).
 
Limits on Alliance’s Remedies:
Alliance cannot, in response to Landlord’s act or omission, terminate the lease or set-off rent before giving any ground lessor or mortgagee of the fee or ground leasehold estate for which Alliance has been given an address notice of such act or omission and a reasonable period of time to cure.  Such ground lessor or mortgagee, however, has no obligation to cure such act or omission.
 
 
37

 

ACCESS
 
Landlord:
Landlord may enter the demised premises to perform alteration work, to inspect the demised premises or to exhibit the demised premises to prospective purchasers, mortgagees or lessors of the building and (during the last 6 months of the term) to prospective lessees of the demised premises, provided that Landlord provides Alliance advance notice (which may be oral) of such entry (orig. §16.01).  Landlord will exercise reasonable diligence so as to minimize the disturbance (orig. §16.01).
 
Carter-Wallace, Inc.
Carter-Wallace, Inc. is allowed, once a month upon reasonable notice during business hours, access in the vicinity of column 63 on the northeast side of the 41st floor to service a humidifier, provided that Carter-Wallace, Inc. will move such portion of humidifier off the 41st floor if Alliance reasonably requires Carter-Wallace, Inc. to do so as part of Alliance’s alteration work on the 41st floor (LTR1, par 2).
 
 
38

 

NOTICES
 
 
All notices required to be given by the lease or by law are required to be in writing.  Notices, which are required to be sent by certified or registered mail, are deemed sent by the sender and received by the recipient when deposited in the exclusive care and custody of the U.S. mail.  Notices to Landlord are to be addressed as follows:
 
1345 Leasehold Limited Partnership
c/o Fisher Brothers
299 Park Avenue
New York, New York
 
 
with a copy to:
 
 
Fisher Brothers
299 Park Avenue
New York, New York
Attn:  General Counsel
 
 
(orig. §31.01)
 
 
39

Unassociated Document

Exhibit 10.06

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:
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
   
-
Letter from Transferee
 
-
-
Letter from Seller
Letter from Purchaser
 
q
Additional required documentation should be verified with AllianceBernstein’s transfer agent, BNY Mellon Shareowner Services, at 866-737-9896.
             
To have private Units re-registered to your name if they have been left to you by a deceased party:
 
To re-register your certificate to reflect a legal change of name or change in custodian:
q
The beneficiary must obtain approval of Alliance Capital and AXA Equitable for the transfer of units.
 
q
 
The unitholder must obtain approval of AllianceBernstein and AXA Equitable for the change of name/registration on the unit certificate.
q
Documentation required for consideration of approval includes:
 
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 AllianceBernstein’s transfer agent, BNY Mellon Shareowner Services, at 866-737-9896
 
q
 
Additional required documentation should be verified with AllianceBernstein’s transfer agent, BNY Mellon Shareowner Services, at 866-737-9896.

Once AllianceBernstein and AXA Equitable approve the transfer request, AllianceBernstein will inform you of the approval and begin processing the transfer.

You should not begin to prepare necessary documentation until you have contacted:
 
 
David Lesser
 
Legal and Compliance Department – Transfer Program
 
AllianceBernstein L.P.
 
1345 Avenue of the Americas
 
New York, NY 10105
 
Phone: (212) 969-1429
 

ex12_01.htm

Exhibit 12.01

AllianceBernstein L.P.
Consolidated Ratio Of Earnings To Fixed Charges

   
Years Ended December 31,
 
   
2009
   
2008
   
2007
 
 
 
(in thousands)
 
       
Fixed Charges:                        
Interest Expense
  $ 2,696     $ 13,077     $ 23,970  
Estimate of Interest Component In Rent Expense (1)
    -       -       -  
Total Fixed Charges
    2,696       13,077       23,970  
                         
Earnings:
                       
Income Before Income Taxes and Non-Controlling
    624,485       944,229       1,405,004  
Interest in Earnings of Consolidated Entities
                       
Other
    21,307       (72,965 )     (6,861 )
Fixed Charges
    2,696       13,077       23,970  
Total Earnings
  $ 648,488     $ 884,341     $ 1,422,113  
                         
Consolidated Ratio Of Earnings To Fixed Charges
    240.54       67.63       59.33  

(1)
AllianceBernstein L.P. has not entered into financing leases during these periods.
 
 

Unassociated Document

Exhibit 21.01
 
Subsidiaries of
AllianceBernstein l.p.


Each of the entities listed below are wholly-owned subsidiaries of AllianceBernstein, unless a specific percentage ownership is indicated:


AllianceBernstein Corporation of Delaware
(Delaware)

Sanford C. Bernstein & Co., LLC
(Delaware)

AllianceBernstein Investments, Inc.
(Delaware)

AllianceBernstein Investor Services, Inc.
(Delaware)

AllianceBernstein Global Derivatives Corporation
(Delaware)

AllianceBernstein Oceanic Corporation
(Delaware)

Alliance Corporate Finance Group Incorporated
(Delaware)

AllianceBernstein Japan Inc.
(Delaware)

Alliance Capital Management LLC
(Delaware)

Alliance Capital Real Estate, Inc.
(Delaware)

AllianceBernstein Trust Company, LLC
(New Hampshire)

AllianceBernstein Canada, Inc.
(Canada)

AllianceBernstein (Mexico), S. de R.L. de C.V.
(Mexico)

 
 

 

AllianceBernstein Investmentimentos (Brasil) Ltda.
(Brazil)

AllianceBernstein (Argentina) S.R.L.
(Argentina)

AllianceBernstein Limited
(U.K.)

AllianceBernstein Services Limited
(U.K.)

Sanford C. Bernstein Limited
(U.K.)

Sanford C. Bernstein (CREST Nominees) Limited
(U.K.)

AllianceBernstein (Luxembourg) S.A.
(Luxembourg)

AllianceBernstein (France) SAS
(France)

ACM Bernstein GmbH
(Germany)

AllianceBernstein Investment Research (Proprietary) Limited
(South Africa; 80%-owned)

AllianceBernstein Investment Research and Management (India) Private Ltd.
(India)

Alliance Capital (Mauritius) Private Limited
(Mauritius)

AllianceBernstein Japan Ltd.
(Japan)

AllianceBernstein Asset Management (Korea) Ltd.
(Korea)

AllianceBernstein Hong Kong Limited
(Hong Kong)

 
 

 

AllianceBernstein (Singapore) Ltd.
(Singapore)

AllianceBernstein (Taiwan) Ltd.
(Taiwan; 99%-owned)

AllianceBernstein Investment Management Australia Limited
(Australia)

AllianceBernstein Australia Limited
(Australia; 50%-owned)

AllianceBernstein New Zealand Limited
(New Zealand; 50%-owned)

 

ex23_01.htm

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 11, 2010 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Annual Report on Form 10-K.  We also consent to the incorporation by reference of our report dated February 11, 2010 relating to the financial statement schedule, which appears in this Form 10-K.

 
 
 
/s/ PricewaterhouseCoopers LLP
New York, New York
February 11, 2010
 
 

ex31_01.htm

Exhibit 31.01
 
I, Peter S. Kraus, 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 11, 2010
/s/ Peter S. Kraus
 
 
Peter S. Kraus
 
Chief Executive Officer
 
AllianceBernstein L.P.

 

ex31_02.htm

Exhibit 31.02
 
I, Robert H. Joseph, Jr., 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 11, 2010
/s/ Robert H. Joseph, Jr.
 
 
Robert H. Joseph, Jr.
 
Chief Financial Officer
 
AllianceBernstein L.P.

 

ex32_01.htm
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 ending December 31, 2009 to be filed with the Securities and Exchange Commission on or about February 11, 2010 (the “Report”), I, Peter S. Kraus, Chief Executive Officer of the Company, certify, for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act; and

 
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:   February 11, 2010
/s/ Peter S. Kraus
 
 
Peter S. Kraus
 
Chief Executive Officer
 
AllianceBernstein L.P.

 

ex32_02.htm

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 ending December 31, 2009 to be filed with the Securities and Exchange Commission on or about February 11, 2010 (the “Report”), I, Robert H. Joseph, Jr., Chief Financial Officer of the Company, certify, for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act; and

 
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:   February 11, 2010
/s/ Robert H. Joseph, Jr.
 
 
Robert H. Joseph, Jr.
 
Chief Financial Officer
 
AllianceBernstein L.P.

 

ex99_01.htm

Exhibit 99.01
 
McLagan comparable companies
 
300 North Capital, LLC
Aberdeen Asset Management, Inc.
Acadian Asset Management, LLC
Adams Express Company, The
Adams Street Partners, LLC
Aegon USA  Realty Advisors, Inc.
AIG Investments
Alcatel-Lucent Investment Management Corporation
Fred Alger Management, Inc.
AllianceBernstein L.P.
Allianz of America, Inc.
Allianz Global Investors
Allstate Investments, LLC
American Century Investments
Ameriprise Financial, Inc.
Analytic Investments, LLC
Artio Global Management LLC
Ashfield Capital Partners, LLC
Aurora Investment Management L.L.C.
Aviva Investors
AXA Equitable
AXA Investment Managers
AXA Rosenberg Investment Management Ltd.
Babson Capital Management LLC
Banco Santander
Bank of America
Bank of Ireland Corporate Banking
Bank of New York Mellon (The)
Bank of Nova Scotia (The)
Barclays Capital Group
Barclays Global Investors, N.A.
Baring Asset Management, Inc.
BB&T Asset Management, Inc.
BlackRock Financial Management, Inc.
BMO Financial Group
BNP Paribas Asset Management Inc.
BNY Mellon Asset Management
Boston Company Asset Management, LLC, The
Brandes Investment Partners, L.P.
Brandywine Global Investment Management, LLC
Bridgeway Capital Management, Inc.
Bridgewater Associates, Inc.
Brown Advisory Holdings Incorporated
Brown Brothers Harriman & Co.
CAI Cheuvreux
Calyon
Capital Group Companies, Inc., The
CIBC World Markets
Citadel Investment Group, LLC
Calamos Investments
Capital One Financial
Capital Growth Management
Christian Brothers Investment Services, Inc.
Cigna Investment Management, LLC
Citigroup
Commerzbank
Copper Rock Capital Partners, LLC
Credit Suisse
CUNA Mutual Group
D.A. Davidson & Co.
Declaration Management & Research LLC
Delaware Investments
Deutsche Bank
Deutsche Asset Management
Diamond Hill Capital Management, Inc.
Dimensional Fund Advisors Inc.
Dresdner Kleinwort
Dreyfus Corporation
Driehaus Capital Management LLC
DuPont Capital Management
Dwight Asset Management, LLC
Eaton Vance Management
Edward Jones
Empirical-Research
Epoch Investment Partners, Inc.
EquiLend
Evergreen Investment Mgmt Co. (Wachovia)
Exelon Corp.
FAF Advisors, Inc. (US Bancorp)
FBR Capital Markets Corp.
Federated Investors, Inc.
Fidelity Investments
Fifth Third Asset Management
First Quadrant Corporation
Fischer, Francis Trees & Watts, Inc.
Fortis Financial Services LLC
Fortis Investment Management USA, Inc.
Fox-Pitt Kelton Cochran Caronia Waller
Franklin Templeton Investments
Frost National Bank
GE Asset Management
Goldman Sachs & Co.
Goldman Sachs Asset Management
Great-West Life Assurance Company
Harris Investment Management Inc.
Hartford Investment Management Company
Harvard Management Company, Inc.
Heitman
Henderson Global Investors (North America) Inc.
Howard Hughes Medical Institute
HSBC Global Asset Mgmt/Halbis Capital Mgmt
HBBC Global Banking and Markets
Invesco Plc
ICMA Retirement Corporation
ING
ING Investment Management
INTECH Investment Management LLC
Investment Counselors of Maryland, LLC
ITG
Jackson National Life
Jacobs Levy Equity Management, Inc.
Janney Montgomery Scott Inc.
Janus Capital Group
Jennison Associates, LLC
John Hancock Financial Services
JP Investment Bank
JPMorgan Asset Management
Kayne Anderson Rudnick Investment Mgmt, LLC
Landesbank Baden-Wurttemburg - US offices
Lazard Capital Markets
Legal & General Investment Mgmt (America)
Legg Mason & Co., LLC
Loomis, Sayles & Company, L.P.
Man Group plc
Matthews International Capital Management LLC
MEAG New York Corporation (Munich RE)
Mellon Capital Management
Mercer Global Investments
Merrill Lynch & Co., Inc.
MetLife Investments
MFS Investment Management
Mitsubushi Securities
Mizuho Alternative Investments
Morgan Keegan & Company, Inc.
Morgan Stanley
Morgan Stanley Investment Management
Morgan Stanley Asset Management
Natixis
Natixis Global Associates
National Railroad Retirement Investment Trust
Natixis Global Asset Management, L.P.
Nationwide
New York Life Investment Management LLC
NFJ Investment Group L.P.
Nicholas Applegate Capital Management
Nikko Asset Management Americas, Inc.
Nomura Asset Management U.S.A. Inc.
Nomura Corporate Research & Asset Management
Nomura Securities
Northwestern Mutual Life Insurance Company
Numeric Investors LLC
Nuveen Investments
NWQ Investment Management Company, LLC
Old Mutual Asset Management
Old Mutual Capital, Inc.
Oppenheimer Capital LLC
Oppenheimer Funds, Inc.
Pacific Life Insurance Company
PartnerReinsurance Capital Markets Corp.
PIMCO Advisors, L.P.
Pioneer Investment Management, USA
Piper Jaffray
Pitcairn Financial Group
PPM America, Inc.
Principal Global Investors
ProFund Advisors LLC / ProShare Advisors LLC
Promark Global Advisors (formerly GM Asset Mgmt)
Prudential Financial
Putnam Investments
Pyramis Global Advisors
Pzena Investment Management, LLC
Qwest Asset Management Company
Rabobank Nederland
Raymond James & Associates
RCM Capital Management LLC
Reich & Tang Asset Management
RidgeWorth Capital Management Inc. (SunTrust)
Robert W. Baird & Co. Inc.
Royal Bank of Canada
Royal Bank of Scotland
RS Investment Management Co. LLC
Russell Investments
Rydex Investments
SCM Advisors LLC
Sands Capital Management, LLC
Santa Barbara Asset Management, LLC
Schroder Investment Management N. A. Inc.
Charles Schwab Investment Management, Inc.
Sentinel Investments (National Life of Vermont)
Skandinaviska Endskilda Banken
Societe Generale
Southwest Securities
Sovereign Bank
Standard Life Investments (USA) Limited
Standish Mellon Asset Management
State Street Bank & Trust Company
State Street Global Advisors
Stone & Youngberg
SunTrust Banks
Susquehanna International Group
Swiss Re Asset Management
Symphony Asset Management LLC
T. Rowe Price Associates, Inc.
TD Securities
Thompson, Siegel & Walmsley, LLC
Thornburg Investment Management
Thrivent Financial for Lutherans
TIAA-CREF
Tradewinds Global Investors, LLC
Trilogy Global Advisors, LLC
Trust Company of the West
UBS
UBS Global Asset Management
UMB Financial Corporation
Unicredit
University of California, Office of the Treasurer
Urdang Capital Management/Urdang Securities Mgmt
UTIMCO (University of TX Investment Mgmt Company)
Vanguard Group, Inc., The
Verizon Investment Management Corp.
Victory Capital Management (KeyCorp)
Virtus Investment Partners, Inc.
Voyageur Asset Management Inc.
Wachovia Corporation
Waddell & Reed, Inc.
Wells Capital Management
Wellington Management Company, LLP
Western Asset Management Company
Westwood Holdings Group, Inc.
William Blair & Company, L.L.C.
Williams College
Winslow Capital Management Inc.
WisdomTree Investments, Inc.