AllianceBernstein
Annual Report 2013

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K xxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2013 OR ooTRANSITION 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 registeredunits 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 x No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during 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 filingrequirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired 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 shorterperiod that the registrant was required to submit and post such files). Yes x No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein,and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. Seedefinitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer oAccelerated filer oNon-accelerated filer xSmaller reporting company oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x The number of units of limited partnership interest outstanding as of December 31, 2013 was 268,373,419. DOCUMENTS INCORPORATED BY REFERENCE This Form 10-K does not incorporate any document by reference. Table of ContentsGlossary of Certain Defined Termsii Part I Item 1.Business1Item 1A.Risk Factors15Item 1B.Unresolved Staff Comments22Item 2.Properties22Item 3.Legal Proceedings23Item 4.Mine Safety Disclosures23 Part II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities24Item 6.Selected Financial Data26Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations27Item 7A.Quantitative and Qualitative Disclosures About Market Risk48Item 8.Financial Statements and Supplementary Data50Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure90Item 9A.Controls and Procedures90Item 9B.Other Information90 Part III Item 10.Directors, Executive Officers and Corporate Governance91Item 11.Executive Compensation100Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters117Item 13.Certain Relationships and Related Transactions, and Director Independence122Item 14.Principal Accounting Fees and Services124 Part IV Item 15.Exhibits, Financial Statement Schedules125Signatures127iTable of ContentsGlossary of Certain Defined Terms“AllianceBernstein” – AllianceBernstein L.P. (Delaware limited partnership formerly known as Alliance Capital Management L.P., “Alliance Capital”), theoperating partnership, and its subsidiaries and, where appropriate, its predecessors, Holding and ACMC, Inc. and their respective subsidiaries.“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.“AXA” – AXA (société anonyme organized under the laws of France), the holding company for an international group of insurance and related financialservices companies engaged in the financial protection and wealth management businesses. AXA’s operations are diverse geographically, with major operationsin 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 fiveoperating business segments: life and savings, property and casualty, international insurance, asset management and other financial services.“AXA Equitable” – AXA Equitable Life Insurance Company (New York stock life insurance company), a subsidiary of AXA Financial, and itssubsidiaries other than AllianceBernstein and its subsidiaries.“AXA Financial” – AXA Financial, Inc. (Delaware corporation), a subsidiary of AXA.“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 subsidiary of AXAEquitable, and, where appropriate, ACMC, LLC, 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 asamended 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.“SEC” – the United States Securities and Exchange Commission.“Securities Act” – the Securities Act of 1933, as amended.“WPS Acquisition” – on December 12, 2013, AllianceBernstein acquired W.P. Stewart & Co., Ltd. (“WPS”), a concentrated growth equity investmentmanager.iiTable of ContentsPART IItem 1.BusinessThe words “we” and “our” in this Form 10-K refer collectively to AllianceBernstein and its subsidiaries, or to its officers and employees. Similarly,the words “company” and “firm” refer to AllianceBernstein. 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 nationsother than the United States.We use “emerging markets” in this Form 10-K to refer to countries included in the Morgan Stanley Capital International (“MSCI”) emergingmarkets index, which are, as of December 31, 2013, Brazil, Chile, China, Columbia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia,Malaysia, Mexico, Peru, the Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand and Turkey.ClientsWe provide research, diversified investment management and related services globally to a broad range of clients through three buy-side distribution channels,Institutions, Retail and Private Client, and our sell-side business, Bernstein Research Services. See “Distribution Channels” in this Item 1 for additionalinformation.As of December 31, 2013, 2012 and 2011, our client assets under management (“AUM”) were $450 billion, $430 billion and $406 billion, respectively, andour net revenues for the years ended December 31, 2013, 2012 and 2011 were $2.9 billion, $2.7 billion and $2.7 billion, respectively. AXA, our parentcompany, and its subsidiaries, whose AUM consist primarily of fixed income investments, together constitute our largest client. Our affiliates representedapproximately 23%, 25% and 23% of our AUM as of December 31, 2013, 2012 and 2011, respectively, and we earned approximately 5%, 4% and 4% of ournet revenues from services we provided to our affiliates in 2013, 2012 and 2011, respectively. See “Distribution Channels” below and “Assets UnderManagement” and “Net Revenues” in Item 7 for additional information regarding our AUM and net revenues.Generally, we are compensated for our investment services principally on the basis of investment advisory and services fees calculated as a percentage ofAUM. For additional information about our investment advisory and services fees, including performance-based fees, see “Risk Factors” in Item 1A and“Net Revenues – Investment Advisory and Services Fees” in Item 7.ResearchOur high-quality, in-depth research is the foundation of our business. We believe that our global team of research professionals, whose disciplines includeeconomic, fundamental equity, fixed income and quantitative research, gives us a competitive advantage in achieving investment success for our clients. Wealso have experts focused on multi-asset strategies, wealth management and alternatives. The breadth of our research expertise is reflected in the range ofproducts and investment solutions we offer to our clients, which we discuss below in “Investment Services”.Investment ServicesOur investment services include:·Actively-managed equity strategies, including style-pure (e.g., value and growth) and absolute return-focused strategies;·Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;·Passive management, including index and enhanced index strategies;·Alternative investments, including hedge funds, fund of funds and private equity (e.g., direct real estate investing); and·Multi-asset services and solutions, including dynamic asset allocation, customized target-date and target-risk funds, and other strategies tailored tohelp clients meet their investment goals.Our services employ 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, emerging markets, regional and local), in major markets aroundthe world. Table of ContentsOur AUM by client domicile and investment service as of December 31, 2013, 2012 and 2011 were as follows:By Client Domicile ($ in billions): By Investment Service ($ in billions): Distribution ChannelsInstitutionsTo our institutional clients, which include private and public pension plans, foundations and endowments, insurance companies, central banks andgovernments worldwide, and various of our affiliates, we offer separately-managed accounts, sub-advisory relationships, structured products, collectiveinvestment trusts, mutual funds, hedge funds and other investment vehicles (“Institutional Services”).We manage the assets of our institutional clients pursuant to written investment management agreements or other arrangements, all of which generally areterminable at any time or upon relatively short notice by either party. In general, our written investment management agreements may not be assigned withoutclient consent. For information about our institutional investment advisory and services fees, including performance-based fees, see “Risk Factors” in Item1A and “Net Revenues – Investment Advisory and Services Fees” in Item 7.AXA and its subsidiaries together constitute our largest institutional client. Their AUM accounted for approximately 31%, 35% and 31% of our institutionalAUM as of December 31, 2013, 2012 and 2011, respectively, and approximately 22%, 17% and 13% of our institutional revenues for 2013, 2012 and 2011,respectively. No single institutional client other than AXA and its subsidiaries accounted for more than approximately 1% of our net revenues for the yearended December 31, 2013.2Table of ContentsAs of December 31, 2013, 2012 and 2011, Institutional Services represented approximately 50%, 51% and 55%, respectively, of our AUM, and the fees weearned from providing these services represented approximately 15%, 18% and 22% of our net revenues for 2013, 2012 and 2011, respectively. Ourinstitutional AUM and revenues are as follows:Institutional Services Assets Under Management(by Investment Service) December 31, % Change 2013 2012 2011 2013-12 2012-11 (in millions) Equity Actively Managed: U.S. $8,438 $5,748 $12,855 46.8% (55.3)%Global & Non-US 21,100 25,797 44,637 (18.2) (42.2)Total 29,538 31,545 57,492 (6.4) (45.1) Equity Passively Managed(1): U.S. 14,111 11,494 11,050 22.8 4.0 Global & Non-US 6,555 6,131 3,432 6.9 78.6 Total 20,666 17,625 14,482 17.3 21.7 Total Equity 50,204 49,170 71,974 2.1 (31.7) Fixed Income Taxable: U.S. 81,823 90,727 83,426 (9.8) 8.8 Global & Non-US 58,647 53,841 44,866 8.9 20.0 Total 140,470 144,568 128,292 (2.8) 12.7 Fixed Income Tax-Exempt: U.S. 1,611 1,385 1,046 16.3 32.4 Global & Non-US — — — — — Total 1,611 1,385 1,046 16.3 32.4 Fixed Income Passively Managed(1): U.S. 63 62 — 1.6 — Global & Non-US 194 334 238 (41.9) 40.3 Total 257 396 238 (35.1) 66.4 Total Fixed Income 142,338 146,349 129,576 (2.7) 12.9 Other(2): U.S. 1,211 471 2,240 157.1 (79.0)Global & Non-US 32,237 23,829 20,084 35.3 18.6 Total 33,448 24,300 22,324 37.6 8.9 Total: U.S. 107,257 109,887 110,617 (2.4) (0.7)Global & Non-US 118,733 109,932 113,257 8.0 (2.9)Total $225,990 $219,819 $223,874 2.8 (1.8) Affiliated $69,619 $77,569 $69,071 (10.2) 12.3 Non-affiliated 156,371 142,250 154,803 9.9 (8.1)Total $225,990 $219,819 $223,874 2.8 (1.8) (1)Includes index and enhanced index services.(2)Includes asset allocation services and certain other alternative investments.3Table of ContentsRevenues from Institutional Services(by Investment Service) Years Ended December 31, % Change 2013 2012 2011 2013-12 2012-11 (in thousands) Equity Actively Managed: U.S. $48,327 $43,400 $71,657 11.4% (39.4)%Global & Non-US 98,553 143,163 307,707 (31.2) (53.5)Total 146,880 186,563 379,364 (21.3) (50.8) Equity Passively Managed(1): U.S. 2,720 2,334 2,139 16.5 9.1 Global & Non-US 5,359 5,533 5,212 (3.1) 6.2 Total 8,079 7,867 7,351 2.7 7.0 Total Equity 154,959 194,430 386,715 (20.3) (49.7) Fixed Income Taxable: U.S. 96,138 95,139 87,388 1.1 8.9 Global & Non-US 117,228 105,139 96,756 11.5 8.7 Total 213,366 200,278 184,144 6.5 8.8 Fixed Income Tax-Exempt: U.S. 1,992 1,543 1,847 29.1 (16.5)Global & Non-US — — — — — Total 1,992 1,543 1,847 29.1 (16.5) Fixed Income Passively Managed(1): U.S. 76 78 83 (2.6) (6.0)Global & Non-US 227 54 122 320.4 (55.7)Total 303 132 205 129.5 (35.6) Fixed Income Servicing(2): U.S. 14,038 8,911 17,346 57.5 (48.6)Global & Non-US 1,602 4,370 948 (63.3) 361.0 Total 15,640 13,281 18,294 17.8 (27.4) Total Fixed Income 231,301 215,234 204,490 7.5 5.3 Other(3): U.S. 11,952 46,400 13,511 (74.2) 243.4 Global & Non-US 39,896 28,651 10,813 39.2 165.0 Total 51,848 75,051 24,324 (30.9) 208.5 Total Investment Advisory and Services Fees: U.S. 175,243 197,805 193,971 (11.4) 2.0 Global and International 262,865 286,910 421,558 (8.4) (31.9) 438,108 484,715 615,529 (9.6) (21.3)Distribution Revenues 305 574 662 (46.9) (13.3)Shareholder Servicing Fees 533 362 596 47.2 (39.3)Total $438,946 $485,651 $616,787 (9.6) (21.3) Affiliated $96,729 $82,930 $82,965 16.6 — Non-affiliated 342,217 402,721 533,822 (15.0) (24.6)Total $438,946 $485,651 $616,787 (9.6) (21.3) (1)Includes index and enhanced index services.(2)Fixed Income Servicing includes advisory-related services fees not based on AUM, including derivative transaction fees, capital purchase program relatedadvisory services and other fixed income advisory services.(3)Includes asset allocation services and certain other alternative services.4Table of ContentsRetailWe provide investment management and related services to a wide variety of individual retail investors, both in the U.S. and internationally, through retailmutual funds we sponsor, mutual fund sub-advisory relationships, separately-managed account programs (see below), and other investment vehicles (“Retail Products and Services”).We distribute our Retail Products and Services through financial intermediaries, including broker-dealers, insurance sales representatives, banks, registeredinvestment advisers and financial planners. These products and services include open-end and closed-end funds that are either (i) registered as investmentcompanies under the Investment Company Act (“U.S. Funds”), or (ii) not registered under the Investment Company Act and generally not offered to UnitedStates persons (“Non-U.S. Funds” and, collectively with the U.S. Funds, “AllianceBernstein Funds”). They also include separately-managed accountprograms, which are sponsored by financial intermediaries and generally charge an all-inclusive fee covering investment management, trade execution, assetallocation, and custodial and administrative services. In addition, we provide distribution, shareholder servicing, transfer agency services and administrativeservices for our Retail Products and Services. See “Net Revenues – Investment Advisory and Services Fees” in Item 7 for information about our retailinvestment advisory and services fees. See Note 2 to our consolidated financial statements in Item 8 for a discussion of the commissions we pay tofinancial intermediaries in connection with the sale of open-end AllianceBernstein Funds.Fees paid by the U.S. Funds are reflected in the applicable investment management agreement, which generally must be approved annually by the boards ofdirectors or trustees of those funds, including by a majority of the independent directors or trustees. Increases in these fees must be approved by fundshareholders; decreases need not be, including any decreases implemented by a fund’s directors or trustees. In general, each investment management agreementwith the U.S. Funds 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 mustbe approved by the relevant regulatory authority, depending on the domicile and structure of the fund, and Non-U.S. Fund shareholders must be givenadvance notice of any fee increases.The mutual funds we sub-advise for AXA and its subsidiaries together constitute our largest retail client. They accounted for approximately 23%, 20% and20% of our retail AUM as of December 31, 2013, 2012 and 2011, respectively, and approximately 2%, 3% and 3% of our retail net revenues for 2013, 2012and 2011, respectively.Certain subsidiaries of AXA, including AXA Advisors, LLC (“AXA Advisors”), a subsidiary of AXA Financial, were responsible for approximately 2%,4% and 1% of total sales of shares of open-end AllianceBernstein Funds in 2013, 2012 and 2011, respectively. During 2013, UBS AG was responsible forapproximately 12% of our open-end AllianceBernstein Fund sales. Neither our affiliates nor UBS AG are under any obligation to sell a specific amount ofAllianceBernstein Fund shares and each also sells shares of mutual funds that it sponsors and that are sponsored by unaffiliated organizations. No otherentity accounted for 10% or more of our open-end AllianceBernstein Fund sales. 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 U.S. Funds have entered into such agreements withus, and we have entered into selling and distribution agreements pursuant to which we pay sales commissions to the financial intermediaries that distribute ouropen-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 anyspecific amount of fund shares. As of December 31, 2013, retail U.S. Fund AUM were approximately $47 billion, or 31% of retail AUM, as compared to $45 billion, or 31%, as of December31, 2012, and $41 billion, or 36%, as of December 31, 2011. Non-U.S. Fund AUM, as of December 31, 2013, totaled $56 billion, or 36% of retail AUM,as compared to $60 billion, or 42%, as of December 31, 2012, and $35 billion, or 31%, as of December 31, 2011.5Table of ContentsAs of December 31, 2013, 2012 and 2011, our Retail Services represented approximately 34%, 34% and 28% of our AUM, and the fees we earned fromproviding these services represented approximately 47%, 44% and 40% of our net revenues for the years ended December 31, 2013, 2012 and 2011,respectively. Our retail AUM and revenues are as follows: Retail Services Assets Under Management(by Investment Service) December 31, % Change 2013 2012 2011 2013-12 2012-11 (in millions) Equity Actively Managed: U.S. $27,656 $17,738 $16,328 55.9% 8.6%Global & Non-US 13,997 16,415 19,435 (14.7) (15.5)Total 41,653 34,153 35,763 22.0 (4.5) Equity Passively Managed(1): U.S. 21,514 16,716 15,705 28.7 6.4 Global & Non-US 6,615 5,491 2,933 20.5 87.2 Total 28,129 22,207 18,638 26.7 19.1 Total Equity 69,782 56,360 54,401 23.8 3.6 Fixed Income Taxable: U.S. 4,597 2,738 2,438 67.9 12.3 Global & Non-US 56,304 65,990 42,829 (14.7) 54.1 Total 60,901 68,728 45,267 (11.4) 51.8 Fixed Income Tax-Exempt: U.S. 8,243 8,532 6,384 (3.4) 33.6 Global & Non-US 14 — — — — Total 8,257 8,532 6,384 (3.2) 33.6 Fixed Income Passively Managed(1): U.S. 4,531 2,385 1,422 90.0 67.7 Global & Non-US 4,179 4,730 3,082 (11.6) 53.5 Total 8,710 7,115 4,504 22.4 58.0 Total Fixed Income 77,868 84,375 56,155 (7.7) 50.3 Other(2): U.S. 3,208 1,981 968 61.9 104.6 Global & Non-US 2,132 1,676 1,081 27.2 55.0 Total 5,340 3,657 2,049 46.0 78.5 Total: U.S. 69,749 50,090 43,245 39.2 15.8 Global & Non-US 83,241 94,302 69,360 (11.7) 36.0 Total $152,990 $144,392 $112,605 6.0 28.2 Affiliated $35,194 $28,535 $22,561 23.3 26.5 Non-affiliated 117,796 115,857 90,044 1.7 28.7 Total $152,990 $144,392 $112,605 6.0 28.2 (1)Includes index and enhanced index services.(2)Includes asset allocation services and certain other alternative investments.6Table of ContentsRevenues from Retail Services(by Investment Service) Years Ended December 31, % Change 2013 2012 2011 2013-12 2012-11 (in thousands) Equity Actively Managed: U.S. $134,312 $92,422 $93,664 45.3% (1.3)%Global & Non-US 96,337 114,221 164,776 (15.7) (30.7)Total 230,649 206,643 258,440 11.6 (20.0) Equity Passively Managed(1): U.S. 12,570 13,862 12,950 (9.3) 7.0 Global & Non-US 8,298 3,780 1,898 119.5 99.2 Total 20,868 17,642 14,848 18.3 18.8 Total Equity 251,517 224,285 273,288 12.1 (17.9) Fixed Income Taxable: U.S. 16,074 13,252 10,715 21.3 23.7 Global & Non-US 483,171 405,209 327,433 19.2 23.8 Total 499,245 418,461 338,148 19.3 23.8 Fixed Income Tax-Exempt: U.S. 35,993 28,906 22,124 24.5 30.7 Global & Non-US 78 — — — — Total 36,071 28,906 22,124 24.8 30.7 Fixed Income Passively Managed(1): U.S. 5,445 3,485 1,578 56.2 120.8 Global & Non-US 9,012 7,389 5,210 22.0 41.8 Total 14,457 10,874 6,788 33.0 60.2 Total Fixed Income 549,773 458,241 367,060 20.0 24.8 Other(2): U.S. 13,879 7,829 1,457 77.3 437.3 Global & Non-US 9,785 7,698 2,255 27.1 241.4 Total 23,664 15,527 3,712 52.4 318.3 Total Investment Advisory and Services Fees: U.S. 218,273 159,756 142,488 36.6 12.1 Global and International 606,681 538,297 501,572 12.7 7.3 824,954 698,053 644,060 18.2 8.4 Distribution Revenues 461,944 406,467 356,895 13.6 13.9 Shareholder Servicing Fees 89,472 88,375 91,606 1.2 (3.5)Total $1,376,370 $1,192,895 $1,092,561 15.4 9.2 Affiliated $43,264 $31,089 $31,301 39.2 (0.7)Non-affiliated 1,333,106 1,161,806 1,061,260 14.7 9.5 Total $1,376,370 $1,192,895 $1,092,561 15.4 9.2 (1)Includes index and enhanced index services.(2)Includes asset allocation services and certain other alternative investments.7Table of ContentsPrivate ClientTo our private clients, which include high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and familycorporations, and other entities (including most institutions for which we manage accounts with less than $25 million in AUM), we offer separately-managedaccounts, hedge funds, mutual funds and other investment vehicles (“Private Client Services”).Private client accounts generally are managed pursuant to a written investment advisory agreement among the client, AllianceBernstein and Sanford C.Bernstein & Co., LLC (one of our subsidiaries, “SCB LLC”), which agreement usually is terminable at any time or upon relatively short notice by anyparty. In general, these agreements may not be assigned without the consent of the client. For information about our private client investment advisory andservices fees, including performance-based fees, see “Risk Factors” in Item 1A and “Net Revenues – Investment Advisory and Services Fees” in Item 7. As of December 31, 2013, 2012 and 2011, Private Client Services represented approximately 16%, 15% and 17%, respectively, of our AUM, and the fees weearned from providing these services represented approximately 20%, 21% and 24% of our net revenues for 2013, 2012 and 2011, respectively. Our privateclient AUM and revenues are as follows:Private Client Services Assets Under Management(by Investment Service) December 31, % Change 2013 2012 2011 2013-12 2012-11 (in millions) Equity Actively Managed: U.S. $21,620 $16,506 $17,626 31.0% (6.4)%Global & Non-US 15,003 13,222 13,461 13.5 (1.8)Total 36,623 29,728 31,087 23.2 (4.4) Equity Passively Managed(1): U.S. 83 67 57 23.9 17.5 Global & Non-US 397 371 352 7.0 5.4 Total 480 438 409 9.6 7.1 Total Equity 37,103 30,166 31,496 23.0 (4.2) Fixed Income Taxable: U.S. 7,468 8,962 9,499 (16.7) (5.7)Global & Non-US 2,128 1,755 1,808 21.3 (2.9)Total 9,596 10,717 11,307 (10.5) (5.2) Fixed Income Tax-Exempt: U.S. 18,843 20,835 22,564 (9.6) (7.7)Global & Non-US 2 — 193 — (100.0)Total 18,845 20,835 22,757 (9.6) (8.4) Fixed Income Passively Managed(1): U.S. 11 31 — (64.5) — Global & Non-US 357 355 112 0.6 217.0 Total 368 386 112 (4.7) 244.6 Total Fixed Income 28,809 31,938 34,176 (9.8) (6.5) Other(2): U.S. 1,375 804 367 71.0 119.1 Global & Non-US 4,144 2,898 3,379 43.0 (14.2)Total 5,519 3,702 3,746 49.1 (1.2) Total: U.S. 49,400 47,205 50,113 4.6 (5.8)Global & Non-US 22,031 18,601 19,305 18.4 (3.6)Total $71,431 $65,806 $69,418 8.5 (5.2) (1)Includes index and enhanced index services.(2)Includes asset allocation services and certain other alternative investments.8Table of ContentsRevenues From Private Client Services(by Investment Service) Years Ended December 31, % Change 2013 2012 2011 2013-12 2012-11 (in thousands) Equity Actively Managed: U.S. $211,926 $209,263 $247,708 1.3% (15.5)%Global & Non-US 153,064 149,732 179,274 2.2 (16.5)Total 364,990 358,995 426,982 1.7 (15.9) Equity Passively Managed(1): U.S. 316 65 204 386.2 (68.1)Global & Non-US 1,799 1,666 1,323 8.0 25.9 Total 2,115 1,731 1,527 22.2 13.4 Total Equity 367,105 360,726 428,509 1.8 (15.8) Fixed Income Taxable: U.S. 44,260 48,905 52,351 (9.5) (6.6)Global & Non-US 13,029 12,319 10,748 5.8 14.6 Total 57,289 61,224 63,099 (6.4) (3.0) Fixed Income Tax-Exempt: U.S. 104,867 117,035 121,021 (10.4) (3.3)Global & Non-US 18 — — — — Total 104,885 117,035 121,021 (10.4) (3.3) Fixed Income Passively Managed(1): U.S. 88 26 15 238.5 73.3 Global & Non-US 3,105 1,184 688 162.2 72.1 Total 3,193 1,210 703 163.9 72.1 Total Fixed Income 165,367 179,469 184,823 (7.9) (2.9) Other(2): U.S. 12,699 9,593 2,727 32.4 251.8 Global & Non-US 40,872 31,919 31,670 28.0 0.8 Total 53,571 41,512 34,397 29.0 20.7 Total Investment Advisory and Services Fees: U.S. 374,156 384,887 424,026 (2.8) (9.2)Global and International 211,887 196,820 223,703 7.7 (12.0)Total 586,043 581,707 647,729 0.7 (10.2)Distribution Revenues 3,175 2,447 3,165 29.8 (22.7)Shareholder Servicing Fees 2,140 1,637 1,203 30.7 36.1 Total $591,358 $585,791 $652,097 1.0 (10.2) (1)Includes index and enhanced index services.(2)Includes asset allocation services and certain other alternative investments.9Table of ContentsBernstein Research ServicesWe offer high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options to institutional investors such aspension fund, hedge fund and mutual fund managers, and other institutional investors (“Bernstein Research Services”). We serve our clients, which arebased in the United States, Europe, Asia, the Middle East and Canada, through various subsidiaries, including SCB LLC, Sanford C. Bernstein Limitedand Sanford C. Bernstein (Hong Kong) Limited (collectively, “SCB”). Our sell-side analysts, who provide fundamental company and industry research alongwith quantitative research into securities valuation and factors affecting stock-price movements, are consistently among the highest ranked research analystsin industry surveys conducted by third-party organizations.We earn revenues for providing investment research to, and executing brokerage transactions for, institutional clients. These clients compensate us principallyby directing SCB to execute brokerage transactions on their behalf, for which we earn commissions. These services accounted for approximately 15%, 15%and 16% of our net revenues for the years ended December 31, 2013, 2012 and 2011, respectively.For information regarding trends in fee rates charged for brokerage transactions, see “Risk Factors” in Item 1A.Our Bernstein Research Services revenues are as follows:Revenues From Bernstein Research Services Years Ended December 31, % Change 2013 2012 2011 2013-12 2012-11 (in thousands) Bernstein Research Services $445,083 $413,707 $437,414 7.6% (5.4)% CustodySCB LLC acts as custodian for the majority of our private client AUM and some of our institutional AUM. Other custodial arrangements are maintained byclient-designated banks, trust companies, brokerage firms or custodians.EmployeesAs of December 31, 2013, our firm had 3,295 full-time employees, representing a 0.7% decrease compared to the end of 2012. We consider our employeerelations to be good.Service MarksWe have registered a number of service marks with the U.S. Patent and Trademark Office and various foreign trademark offices, including the combinationof an “AB” design 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”.In connection with the WPS Acquisition, we acquired all of the rights and title in, and to, the WPS service marks, including the logo “WPSTEWART”. See“W.P. Stewart” in this Item 1 for information regarding the WPS Acquisition.RegulationVirtually all aspects of our business are subject to various federal and state laws and regulations, rules of various securities regulators and exchanges, andlaws in the foreign countries in which our subsidiaries conduct business. These laws and regulations primarily are intended to protect clients and fundshareholders and generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business forfailure to comply with such laws and regulations. Possible sanctions that may be imposed include the suspension of individual employees, limitations onengaging 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 and six of our subsidiaries (SCB LLC, AllianceBernstein Global Derivatives Corporation (“GlobalDerivatives”), Alliance Corporate Finance Group Incorporated, WPS, WPS Advisors, Inc. and W.P. Stewart Asset Management Ltd.) are registered with theSEC as investment advisers under the Investment Advisers Act. Also, Holding is an NYSE-listed company and, accordingly, is subject to applicableregulations promulgated by the NYSE. In addition, AllianceBernstein, SCB LLC and Global Derivatives are registered with the Commodity Futures TradingCommission (“CFTC”) as commodity pool operators and commodity trading advisers; SCB LLC also is registered with the CFTC as a futures commissionsmerchant.10Table of ContentsEach U.S. Fund is registered with the SEC under the Investment Company Act and each Non-U.S. Fund is subject to the laws in the jurisdiction in which thefund is registered. For example, our platform of Luxembourg-based Funds operates pursuant to Luxembourg laws and regulations, including CollectiveInvestment in Transferable Securities Directives, and is authorized and supervised by the Commission de Surveillance du Secteur Financier (“CSSF”), theprimary regulator in Luxembourg. AllianceBernstein Investor Services, Inc. (“ABIS”), one of our subsidiaries, is registered with the SEC as a transfer andservicing agent.SCB LLC and AllianceBernstein Investments, Inc. (another of our subsidiaries, “AllianceBernstein Investments”), are registered with the SEC as broker-dealers, and both are members of the Financial Industry Regulatory Authority. In addition, SCB LLC is a member of the NYSE and other principal U.S.exchanges.Many of our subsidiaries are subject to the oversight of regulatory authorities in the jurisdictions outside the United States where they operate, including theFinancial Conduct Authority in the U.K., the CSSF in Luxembourg, the Financial Services Agency in Japan, the Securities & Futures Commission in HongKong, the Monetary Authority of Singapore, the Financial Services Commission in Korea and the Financial Supervisory Commission in Taiwan. While theseregulatory requirements often may be comparable to the requirements of the SEC and other U.S. regulators, they are sometimes more restrictive and may causeus to incur substantial expenditures of time and money in our efforts to comply.Iran Threat Reduction and Syria Human Rights ActAllianceBernstein, Holding and their global subsidiaries had no transactions or activities requiring disclosure under the Iran Threat Reduction and SyriaHuman Rights Act (“Iran Act”), nor were they involved in the AXA Group matters described immediately below.The non-U.S. based subsidiaries of AXA operate in compliance with applicable laws and regulations of the various jurisdictions where they operate, includingapplicable international (United Nations and European Union) laws and regulations. While AXA Group companies based and operating outside the UnitedStates generally are not subject to U.S. law, as an international group, AXA has in place policies and standards (including the AXA Group InternationalSanctions Policy) that apply to all AXA Group companies worldwide and often impose requirements that go well beyond local law. For additional informationregarding AXA, see “Principal Security Holders” in Item 12.AXA has reported to us that 14 insurance policies underwritten by one of AXA’s European insurance subsidiaries, AXA France IARD, that were in-force attimes during 2013 (two of which were in-force during the fourth quarter of 2013) potentially come within the scope of the disclosure requirements of the IranAct. Each of these insurance policies relates to property and casualty insurance (homeowners, auto, accident, liability and/or fraud policies) covering propertylocated in France where the insured is a company or other entity that may have direct or indirect ties to the Government of Iran, including Iranian entitiesdesignated under Executive Orders 13224 and 13382. AXA France IARD is a French company, based in Paris, which is licensed to operate in France. Theannual aggregate revenue AXA derived from these 14 policies is approximately $22,000 and the related net profit, which is difficult to calculate with precision,is estimated to be $11,000.AXA France IARD has ten additional insurance policies that were originally written in previous years that remained in effect throughout 2013 and may requirereporting. These policies involve auto or property insurance provided to companies or other entities that may have direct or indirect ties to the Government ofIran, including Iranian entities designated under Executive Orders 13224 and 13382. The annual aggregate revenue AXA derived from all ten policies isapproximately $12,000 and the related net profit, which is difficult to calculate with precision, is estimated to be $6,000.Also, AXA has informed us that AXA Konzern AG, an AXA European insurance subsidiary, provides property insurance to MCS International GMBH (“MCS”). MCS was designated a Specially Designated National (“SDN”) with the identifier [IRAN] by the Office of Foreign Assets Control (“OFAC”)during the second quarter of 2013, after the insurance policy had been completed. The premium received by AXA in respect of this insurance policy isapproximately $15,000 and the related net profit, which is difficult to calculate with precision, is estimated to be $8,000.As of the date of this report, AXA France IARD and AXA Konzern AG have taken actions necessary to terminate coverage under all 25 of the above-referencedinsurance policies.Additionally, AXA has reported to us that an insurance policy (“Swiss Policy”) underwritten by another of AXA’s European insurance subsidiaries, AXAWinterthur, that was in-force during the first quarter of 2013 potentially comes within the scope of the disclosure requirements of the Iran Act. AXAWinterthur is a Swiss company, based in Winterthur, Switzerland, and is licensed to operate in Switzerland.11Table of ContentsThe Swiss Policy relates to insurance provided to the International Road Transport Union (“IRU”), a nongovernmental organization based in Geneva which,among other things, acts as the implementing partner of the Transports Internationaux Routiers Customs Transit System (“TIR System”) under mandate ofthe United Nations. The TIR System is an international harmonized system of customs control that facilitates trade and transport by TIR Carnets, which arecustoms transit documents used to prove the existence of the international guarantee for duties and taxes for the goods transported under the TIR System, withthe IRU guaranteeing payment to the contracting countries. The TIR Convention includes more than 70 contracting countries, including the United States, eachmember of the European Union and many other countries, including Iran.During the first quarter of 2013, AXA Winterthur provided global cover to the IRU insuring it against financial losses that the IRU may incur if a carrier failsto pay the duty charges under the terms of a TIR Carnet. Under this policy, AXA Winterthur guaranteed duty payments on behalf of the IRU to the TIRnational transport associations in each of the more than 70 participating countries, which includes Iran’s TIR System national transport association (the IranChamber of Commerce Industry Mines and Agriculture). The annual premium received by AXA in respect of this insurance policy, only a small portion ofwhich related to Iran, is approximately $884,000 and the related net profit, which is difficult to calculate with precision, is estimated to be $442,000. AXAWinterthur has restructured coverage under the Swiss Policy to specifically exclude Iran and notified the IRU accordingly.Lastly, AXA has informed us about a pension contract in place between a subsidiary in Hong Kong, AXA China Region Trustees Limited (“AXA CRT”),and Hong Kong Intertrade Ltd (“HKIL”), an entity that OFAC has designated an SDN with the identifier [IRAN]. There is only one employee of HKIL (“Employee”) enrolled in this pension contract, who himself also has been designated an SDN with the identifier [IRAN]. The pension contract with HKILwas entered into, and the enrollment of the Employee took place, in May 2012. HKIL was first designated an SDN in July 2012 and the Employee was firstdesignated an SDN in May 2013. The pension contract remains in place, but AXA CRT is discussing with local authorities its ability to terminate thecontract. In 2013, the pension contributions received under this pension contract totaled approximately $7,800 and the related net profit, which is difficult tocalculate with precision, is estimated to be $3,900.The aggregate premium during 2013 for the above-referenced pension contract and 26 insurance policies was approximately $940,800, representingapproximately 0.0008% of AXA’s consolidated revenues, which are in excess of $100 billion. The related net profit, which is difficult to calculate withprecision, is estimated to be $470,900, representing approximately 0.008% of AXA’s aggregate net profit.History and StructureWe have been in the investment research and management business for more than 40 years. Alliance Capital was founded in 1971 when the investmentmanagement department of Donaldson, Lufkin & Jenrette, Inc. (since November 2000, a part of Credit Suisse Group) merged with the investment advisorybusiness 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 theNYSE since that time.In October 1999, Holding reorganized by transferring its business and assets to AllianceBernstein, a newly-formed operating partnership, in exchange for allof the AllianceBernstein Units (“Reorganization”). Since the date of the Reorganization, AllianceBernstein has conducted the business formerly conducted byHolding and Holding’s activities have consisted of owning AllianceBernstein Units and engaging in related activities. Unlike Holding Units, AllianceBernsteinUnits do not trade publicly and are subject to significant restrictions on transfer. The General Partner is the general partner of both AllianceBernstein andHolding.In October 2000, our two legacy firms, Alliance Capital and Bernstein, combined, bringing together Alliance Capital’s expertise in growth equity and corporatefixed income investing, and its family of retail mutual funds, with Bernstein’s expertise in value equity and tax-exempt fixed income management, and itsprivate client and Bernstein Research Services businesses. For additional details about this business combination, see Note 2 to our consolidated financialstatements in Item 8.12Table of ContentsAs of December 31, 2013, the condensed ownership structure of AllianceBernstein is as follows (for a more complete description of our ownership structure,see “Principal Security Holders” in Item 12): The ownership of Holding by AllianceBernstein directors, officers and employees decreased to 34.3% as of December 31, 2013 from 42.2% as of December 31,2012, with a corresponding increase in public ownership. This decrease reflects our retirement, since July 1, 2013, of all unallocated Holding Units inAllianceBernstein’s consolidated rabbi trust (which Holding Units were considered held by directors, officers and employees), partially offset by the HoldingUnits we newly issued in December 2013 to help fund obligations under our incentive compensation award program (for additional information, see Note 2in our consolidated financial statements in Item 8).The General Partner owns 100,000 general partnership units in Holding and a 1% general partnership interest in AllianceBernstein. Including these generalpartnership interests, AXA, through certain of its subsidiaries (see “Principal Security Holders” in Item 12), had an approximate 63.7% economic interestin AllianceBernstein as of December 31, 2013.CompetitionWe 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 featuresand 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 competitorsare larger, have a broader range of product choices and investment capabilities, conduct business in more markets, and have substantially greater resourcesthan 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 enhanceour current client relationships, and create new ones, will be successful.In addition, AXA and its subsidiaries provide financial services, some of which compete with those we offer. The AllianceBernstein Partnership Agreementspecifically allows AXA and its subsidiaries (other than the General Partner) to compete with AllianceBernstein and to exploit opportunities that may beavailable to us. AXA, AXA Financial, AXA Equitable and certain of their respective subsidiaries have substantially greater financial resources than we do andare not obligated to provide resources to us.To grow our business, we must be able to compete effectively for AUM. 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, motivate and retain 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.13Table of ContentsCompetition is an important risk that our business faces and should be considered along with the other risk factors we discuss in Item 1A below.Available InformationWe file or furnish annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to such reports, and other reports(and amendments thereto) required to comply with federal securities laws, including Section 16 beneficial ownership reports on Forms 3, 4 and 5, registrationstatements and proxy statements. We maintain an Internet site (http://www.alliancebernstein.com) where the public can view these reports, free of charge, assoon as reasonably practicable after each report is filed with, or furnished to, the SEC. In addition, the SEC 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.W.P. Stewart On December 12, 2013, we acquired WPS, an equity investment manager that managed, as of December 12, 2013, approximately $2.1 billion in U.S.,Global, and Europe, Australasia (Australia and New Zealand) and Far East (“EAFE”) concentrated growth equity strategies for its clients, primarily in theU.S. and Europe. On the date of the WPS Acquisition, each of approximately 4.9 million outstanding shares of WPS common stock (other than certainspecified shares, as previously disclosed in Amendment No. 2 to Form S-4 filed by AllianceBernstein on November 8, 2013) was converted into the right toreceive $12 per share and one transferable contingent value right (“CVRs”) entitling the holders to an additional $4 per share cash payment if the AssetsUnder Management (as such term is defined in the Contingent Value Rights Agreement (“CVR Agreement”) dated as of December 12, 2013, a copy of whichwe filed as Exhibit 4.01 to this Form 10-K) in the acquired WPS investment services exceed $5 billion on or before December 12, 2016, subject tomeasurement procedures and limitations set forth in the CVR Agreement. The foregoing description of the CVR Agreement does not purport to be complete andis qualified in its entirety by the full text of the CVR Agreement included as Exhibit 4.01.As of December 31, 2013, the Assets Under Management are approximately $2.2 billion. As noted above, payment pursuant to the CVRs is triggered ifAssets Under Management exceed $5 billion on or prior to December 12, 2016, subject to certain measurement procedures and limitations. See the definitionof AUM Milestone in Exhibit 4.01 for additional information regarding the circumstances that trigger payment pursuant to the CVRs.Management has determined that the AUM Milestone did not occur during the fourth quarter of 2013. 14Table of ContentsItem 1A.Risk FactorsPlease consider this section along with the description of our business in Item 1, the competition section immediately above and our financial informationcontained in Items 6, 7 and 8. The majority of the risk factors discussed below directly affect AllianceBernstein. These risk factors also affect Holdingbecause 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.Business-related RisksOur revenues and results of operations depend on the market value and composition of our AUM, which can fluctuate significantly based onvarious factors, including many factors outside of our control.We derive most of our revenues from investment advisory and services fees, which typically are calculated as a percentage of the value of AUM as of aspecified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size of theaccount and the total amount of assets we manage for a particular client. The value and composition of our AUM can be adversely affected by several factors,including:·Our Investment Performance. Our ability to achieve investment returns for clients that meet or exceed investment returns for comparable asset classesand competing investment services is a key consideration when clients decide to keep their assets with us or invest additional assets, and when aprospective client is deciding whether to invest with us. Poor investment performance, both in absolute terms and/or relative to peers and statedbenchmarks, may result in clients withdrawing assets and in prospective clients choosing to invest with competitors.·Market Factors. Reductions in stock and/or bond prices, such as those we experienced at times during 2013, particularly during June 2013 (largelydue to investor anxiety over the direction of interests rates), cause the value of our AUM to decrease and may cause our clients to redeem theirinvestments, which would further reduce our AUM and revenues. Additionally, increases in interest rates, particularly if rapid, as well asuncertainty pertaining to the future direction of interest rates, likely would decrease the total return of many bond investments due to lower marketvaluations of existing bonds. These factors could have a significant adverse effect on our revenues and results of operations as our AUM in fixedincome investments have become a larger component of our AUM.·Client Preferences. Generally, our clients may withdraw their assets at any time and on short notice. Also, changing market dynamics and investmenttrends, particularly with respect to retirement savings, may reduce interest in some of the investment products we offer, and/or clients and prospectsmay seek investment products that we may not currently offer, such as retail money market funds. Loss of, or decreases in, AUM may reduce ourinvestment advisory and services fees and revenues.·Investing Trends. Our fee rates vary significantly among the various investment products and services we offer to our clients. For example, we oftenearn higher fees from assets invested in our actively-managed equity services than in our actively-managed fixed income services or passive services.Also, we often earn higher fees from global and international services than we do from U.S. services (see “Net Revenues” in Item 7 for additionalinformation regarding our fee rates). An adverse change in the mix of the services we provide can have a material adverse effect on our investmentadvisory and services fees and revenues. ·Service Changes. We may be required to reduce our fee levels, restructure the fees we charge or adjust the services we offer to our clients because of,among other things, regulatory initiatives (whether industry-wide or specifically targeted), court decisions and competitive considerations. A reductionin fees would reduce our revenues.A decrease in the value of our AUM, or a decrease in the amount of AUM we manage, or an adverse mix shift, can have a material adverse effect on ourinvestment advisory and services fees and revenues. A reduction in revenues, without a commensurate reduction in expenses, would adversely affect ourresults of operations.Our reputation could suffer if we are unable to deliver consistent, competitive investment performance.Our business is based on the trust and confidence of our clients. Damage to our reputation can substantially reduce our AUM and impair our ability tomaintain or grow our business.Maintaining adequate liquidity for our general business needs depends on certain factors, including operating cash flows and our access to crediton 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 andgrow AUM 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, ouraccess to credit on reasonable terms is partially dependent on our firm’s credit ratings.15Table of ContentsMoody’s Investors Service, Inc. downgraded AllianceBernstein’s long-term credit rating in May 2013 and changed its outlook from negative to stable, whileStandard & Poor’s Ratings Service affirmed AllianceBernstein’s long-term credit rating and revised their outlook to stable from negative in June 2013. Futurechanges in our credit ratings are possible and any downgrade to our ratings is likely to increase our borrowing costs and limit our access to the capitalmarkets. If this occurs, we may be forced to incur unanticipated costs or revise our strategic plans, which could have a material adverse effect on our financialcondition, results of operations and business prospects.Our business is dependent on investment advisory agreements with clients, and selling and distribution agreements with various financialintermediaries and consultants, which, generally, 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 andprivate clients, and selling and distribution agreements with financial intermediaries that distribute AllianceBernstein Funds. Generally, the investmentmanagement agreements (and other arrangements), including our agreements with AXA and its subsidiaries (our largest client), are terminable at any time orupon relatively short notice by either party. The investment management agreements pursuant to which we manage the U.S. Funds must be renewed andapproved by the Funds’ boards of directors annually. A significant majority of the directors are independent. Consequently, there can be no assurance that theboard of directors of each fund will approve the fund’s investment management agreement each year, or will not condition its approval on revised terms thatmay be adverse to us. In addition, investors in AllianceBernstein Funds can redeem their investments without notice. Any termination of, or failure to renew, asignificant number of these agreements, or a significant increase in redemption rates, could have a material adverse effect on our results of operations andbusiness prospects.Similarly, the selling and distribution agreements with securities firms, brokers, banks and other financial intermediaries (including our agreement with UBSAG, with respect to which UBS AG was responsible for approximately 12% of our open-end AllianceBernstein Fund sales in 2013) are terminable by eitherparty upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares. These intermediaries generallyoffer their clients investment products that compete with our products. In addition, certain institutional investors rely on consultants to advise them onchoosing an investment adviser and, in previous years, some of our equities services have not been considered among the best choices by consultants. As aresult, a number of investment consultants advised their clients to move their assets invested with us to other investment advisers, which contributed tosignificant net outflows in such years. This trend may continue. Also, our Private Client Services group relies on referrals from financial planners, registeredinvestment advisers and other professionals. We cannot be certain that we will continue to have access to, or receive referrals from, these third parties. Loss ofsuch access or referrals could have a material adverse effect on our results of operations and business prospects.We may be unable to continue to attract, motivate and retain key personnel, and the cost to retain key personnel could put pressure on ouroperating margin.Our business depends on our ability to attract, motivate and retain 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 advisors, traders and other professionals is extremely competitive and ischaracterized by frequent movement of these investment professionals among different firms. Portfolio managers and financial advisors often maintain strong,personal relationships with their clients so their departure may cause us to lose client accounts, which could have a material adverse effect on our results ofoperations and business prospects.Also, a decline in revenues may limit our ability to pay our employees at competitive levels, and maintaining (or increasing) compensation without a revenueincrease, in order to retain key personnel, may adversely affect our adjusted operating margin. As a result, we will continue to be vigilant about aligning ourcost structure (including headcount) with our revenue base. For additional information regarding our compensation practices, see "Compensation Discussionand Analysis" in Item 11.Performance-based fee arrangements with our clients cause greater fluctuations in our revenues.We sometimes charge our clients performance-based fees, whereby we charge a base advisory fee and are eligible to earn an additional performance-based fee orincentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmarkover a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client accountunderperforms relative to its performance target (whether absolute or relative to a specified benchmark), it must gain back such underperformance before wecan collect future performance-based fees. Therefore, if we fail to achieve the performance target for a particular period, we will not earn a performance-basedfee for that period and, for accounts with a high-watermark provision, our ability to earn future performance-based fees will be impaired.16Table of ContentsWe are eligible to earn performance-based fees on approximately 10% of the assets we manage for institutional clients and approximately 3% of the assets wemanage for private clients (in total, approximately 6% of our AUM). If the percentage of our AUM subject to performance-based fees grows, seasonality andvolatility of revenue and earnings are likely to become more significant. Our performance-based fees in 2013, 2012 and 2011 were $53.6 million, $66.6million (including $39.6 million pertaining to winding up the PPIP fund, see “Net Revenues” in Item 7), and $16.5 million, respectively.An impairment of goodwill may occur.Determining whether an impairment of the goodwill asset exists requires management to exercise significant judgment. In addition, to the extent that securitiesvaluations are depressed for prolonged periods of time and market conditions deteriorate, or if we experience significant net redemptions, our AUM, revenues,profitability and unit price may be adversely affected. Although the price of a Holding Unit is just one factor in the calculation of fair value, if current HoldingUnit price levels decline significantly, reaching the conclusion that fair value exceeds carrying value will, over time, become more difficult. In addition, controlpremiums, industry earnings multiples and discount rates are impacted by economic conditions. As a result, subsequent impairment tests may occur morefrequently and be based on more negative assumptions and future cash flow projections, and may result in an impairment of goodwill. An impairment mayresult in a material charge to our earnings. For additional information about our impairment testing, see Item 7.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 similartransactions, some of which may be material. These transactions, if undertaken, may involve a number of risks and present financial, managerial andoperational 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. Additionally, theacquisition of investment personnel poses the risk that we may lose the AUM we expected to manage, which could adversely affect our results of operations.Furthermore, strategic transactions may require us to increase our leverage or, if we issue AllianceBernstein Units or Holding Units to fund an acquisition,would 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 significant portions of our net revenues and expenses, as well as our AUM, presently are derived from the United States, we have subsidiariesoutside of the United States with functional currencies other than the U.S. dollar. As a result, fluctuations in exchange rates to the U.S. dollar affect ourreported 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 anegative effect on our reported financial results.Our hedged and unhedged seed capital investments are subject to market risk. While we enter into various futures, forward and swap contractsto economically hedge certain of these investments, we also may be exposed to market risk and credit-related losses in the event of non-performance by counterparties to these derivative instruments.We have a seed investment program for the purpose of sponsoring new products. As our new product launches have increased in recent years, so too has ouruse of seed capital for investment purposes. These seed capital investments are subject to market risk. Our risk management team oversees a seed hedgingprogram that attempts to minimize this risk, subject to practical and cost considerations. Also, not all seed investments are deemed appropriate to hedge, andin those cases we are exposed to market risk. As a result, volatility in the capital markets may cause significant changes in our period-to-period financial andoperating results.We use various derivative instruments, including futures, forward and swap contracts, in conjunction with our seed hedging program. While in most casesbroad market risks are hedged, our hedges are imperfect and some market risk remains. In addition, our use of derivatives results in counterparty risk (i.e.,the risk that we may be exposed to credit-related losses in the event of non-performance by counterparties to these derivative instruments), regulatory risk (e.g.,short selling restrictions) and cash/synthetic basis risk (i.e., the risk that the underlying positions do not move identically to the related derivativeinstruments).17Table of ContentsDespite our efforts to manage exposures from principal positions taken by our sell-side business, these positions are subject to market risk.Bernstein Research Services may use the firm’s capital to facilitate customer transactions, primarily relating to trading activities in listed options. Theresulting principal positions are exposed to market risk. We seek to manage this risk both by engaging in transactions designed to hedge the market risk andby maintaining a risk platform that includes the measurement and monitoring of financial exposures and operational processes. Our ability to manage thisrisk may be limited, however, by adverse changes in the liquidity of the security or the hedging instrument and in the correlation of price movements betweenthe security and the hedging instrument. Similarly, the risk monitoring and risk mitigation techniques we employ and the related judgments we make cannotanticipate every possible economic and financial circumstance and outcome. Consequently, we may incur losses, which would require us to increase SCB'sregulatory capital and could adversely affect our results of operations.Rates we charge for brokerage transactions have declined significantly over the past decade, and declines may continue. In addition, turmoil inglobal capital markets and economies has reduced market trading volumes, which may continue into the future. Combined, these two factorsmay adversely affect Bernstein Research Services revenue.Electronic, or “low-touch”, trading approaches represent a significant percentage of buy-side trading activity and produce transaction fees for execution-onlyservices that are a small fraction of traditional full service fee rates. As a result, blended pricing for the industry and SCB has declined over the past decade. Inaddition, fee rates charged by SCB and other brokers for traditional brokerage services also have historically experienced price pressure, and we expect thesetrends to continue. While increases in transaction volume and market share have in the past often offset decreases in rates, this may not continue. Economicand market turmoil in recent years has severely impacted much of SCB’s client base, which in the near-term may adversely affect transaction volumegenerally.The individuals, counterparties or issuers on whom we rely to perform services for us or our clients may be unable or unwilling to honor theircontractual 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 market disruption in June 2013, may cause our counterparties andother vendors to experience significant cash flow problems or even render them insolvent, which may expose us to significant costs.We may not accurately value the securities we hold on behalf of our clients or our company investments.In accordance with applicable regulatory requirements, contractual obligations or client direction, we employ procedures for the pricing and valuation ofsecurities and other positions held in client accounts or for company investments. We have established a Valuation Committee, composed of senior officersand employees, which oversees pricing controls and valuation processes. If market quotations for a security are not readily available, the Valuation Committeedetermines a fair value for the security.Extraordinary volatility in financial markets, significant liquidity constraints or our failure to adequately consider one or more factors when fair valuing asecurity based on information with limited market observability could result in our failing to properly value securities we hold for our clients or investmentsaccounted for on our balance sheet. Improper valuation likely would result in our basing fee calculations on inaccurate AUM figures, our striking incorrect netasset values for company-sponsored mutual funds or hedge funds or, in the case of company investments, our inaccurately calculating and reporting ourfinancial condition and operating results. Although the overall percentage of our AUM that we fair value based on information with limited marketobservability is not significant, inaccurate fair value determinations can harm our clients, create regulatory issues and damage our reputation.We may not have sufficient information to confirm or review the accuracy of valuations provided to us by underlying external managers for thefunds in which certain of our alternative investment products invest.Certain of our alternative investment services invest in funds managed by external managers (“External Managers”) rather than investing directly insecurities and other instruments. As a result, our abilities will be limited with regard to (i) monitoring such investments, (ii) regularly obtaining complete,accurate and current information with respect to such investments and (iii) exercising control over such investments. Accordingly, we may not have sufficientinformation to confirm or review the accuracy of valuations provided to us by External Managers. In addition, we will be required to rely on ExternalManagers’ compliance with any applicable investment guidelines and restrictions. Any failure of an External Manager to operate within such guidelines or toprovide accurate information with respect to the investment could subject our alternative investment products to losses and cause damage to our reputation.18Table of ContentsThe quantitative models we use in certain of our investment services may contain errors, resulting in imprecise risk assessments and unintendedoutput.We use quantitative models in a variety of our investment services, generally in combination with fundamental research. Our quantitative models are validatedby senior quantitative professionals. We have a Model Risk Working Group, the purpose of which is to formalize and oversee a quantitative model governanceframework, including minimum validation standards. However, due to the complexity of such models, it is possible that errors in the models could exist andour controls could fail to detect such errors. Failure to detect errors could result in client losses and damage to our reputation.We may not always successfully manage actual and potential conflicts of interest that arise in our business.Increasingly, we must manage actual and potential conflicts of interest, including situations where our services to a particular client conflict, or are perceived toconflict, with the interests of another client. Failure to adequately address potential conflicts of interest could adversely affect our reputation, results ofoperations and business prospects.We have procedures and controls that are designed to identify and mitigate conflicts of interest, including those designed to prevent the improper sharing ofinformation. However, appropriately managing conflicts of interest is complex and difficult. Our reputation could be damaged and the willingness of clients toenter 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. Inaddition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions.Unpredictable events, including natural disaster, dangerous weather conditions, technology failure, terrorist attack and political unrest, mayadversely affect our ability to conduct business.War, terrorist attack, political unrest in the Middle East, the Pacific Rim and elsewhere, power failure, climate change, natural disaster and rapid spread ofinfectious diseases could interrupt our operations by:·causing disruptions in global economic conditions, thereby decreasing investor confidence and making investment products generally lessattractive;·inflicting loss of life;·triggering massive technology failures or delays; and·requiring substantial capital expenditures and operating expenses to remediate damage and restore operations.Despite the contingency plans and facilities we have in place, including system security measures, information back-up and disaster recovery processes, ourability to conduct business may be adversely affected by a disruption in the infrastructure that supports our operations and the communities in which they arelocated. This may include a disruption involving electrical, communications, transportation or other services we may use or third parties with which weconduct 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 toother locations, our ability to conduct business with and on behalf of our clients may suffer, and we may not be able to successfully implement contingencyplans that depend on communication or travel. Furthermore, unauthorized access to our systems as a result of a security breach, the failure of our systems, orthe loss of data could give rise to legal proceedings or regulatory penalties under laws protecting the privacy of personal information, disrupt operations, anddamage our reputation.Our operations require experienced, professional staff. Loss of a substantial number of such persons or an inability to provide properly equipped places forthem to work may, by disrupting our operations, adversely affect our financial condition, results of operations and business prospects. In addition, ourproperty and business interruption insurance may not be adequate to compensate us for all losses, failures, or breaches that may occur.We are highly dependent on various software applications, technologies and other systems for our business to function properly and to safeguardconfidential information; any significant limitation, failure or security breach of these systems could constrain our operations.We utilize software and related technologies throughout our business, including both proprietary systems and those provided by outside vendors. We use ourtechnology to, among other things, obtain securities pricing information, process client transactions, and provide reports and other customer services to theclients of the funds we manage. Although we take protective measures, including measures to effectively secure information through system securitytechnology and established and tested business continuity plans, we may experience system delays and interruptions as a result of natural disasters, powerfailures, acts of war and third-party failures. We cannot predict with certainty all of the adverse effects that could result from our failure, or the failure of athird party, to efficiently address and resolve these delays and interruptions. These adverse effects could include the inability to perform critical businessfunctions or failure to comply with financial reporting and other regulatory requirements, which could lead to loss of client confidence, reputational damage,exposure to disciplinary action and liability to our clients. Accordingly, potential system failures and the cost necessary to correct those failures could have amaterial adverse effect on our results of operations and business prospects.19Table of ContentsIn addition, we could be subject to losses if we fail to properly safeguard sensitive and confidential information. As part of our normal operations, we maintainand transmit confidential information about our clients as well as proprietary information relating to our business operations. Although we take protectivemeasures, our systems still could be vulnerable to unauthorized access, computer viruses or other events that have a security impact, such as an authorizedemployee or vendor inadvertently or intentionally causing us to 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. Moreover,loss of confidential client information could harm our reputation and subject us to liability under laws that protect confidential personal data, resulting inincreased costs or loss of revenues.Also, most of the software applications that we use in our business are licensed from, and supported, upgraded and maintained by, third-party vendors. Asuspension or termination of certain of these licenses or the related support, upgrades and maintenance could cause temporary system delays or interruption.Additionally, technology rapidly evolves and we cannot guarantee that our competitors may not implement more advanced technology platforms for theirproducts and services, which may place us at a competitive disadvantage and adversely affect our results of operations and business prospects.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 orharm 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 highlycomplex, across numerous and diverse markets. These transactions generally must comply with client investment guidelines, as well as stringent legal andregulatory standards.Our obligations to clients require us to exercise skill, care and prudence in performing our services. Despite our employees being highly trained and skilled, thelarge number of transactions we process makes it highly likely that errors will occasionally occur. If we make a mistake in performing our services thatcauses financial harm to a client, we have a duty to act promptly to put the client in the position the client would have been in had we not made the error. Theoccurrence of mistakes, particularly significant ones, can have a material adverse effect on our reputation, results of operations and business prospects.Our insurance policies may be insufficient to protect us against large losses.We can make no assurance that a claim or claims will be covered by our insurance policies or, if covered, will not exceed the limits of available insurancecoverage, or that our insurers will remain solvent and meet their obligations.Our business is subject to pervasive, complex and frequently evolving global regulation, the compliance with which could involve substantialexpenditures 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 andregulations in the foreign jurisdictions 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 restriction or revocation of our and our subsidiaries’ professional licenses or registrations, revocation of the licenses ofour employees, censures, fines, or temporary suspension or permanent bar from conducting business. Any such liability or sanction could have a materialadverse effect on our financial condition, results of operations and business prospects. A regulatory proceeding, even if it does not result in a finding ofwrongdoing or sanction, could require substantial expenditures of time and money.Moreover, regulators sometimes change their policies or laws in a manner that may make compliance more expensive and/or restrict or otherwise impede ourability to register, market and distribute our investment products.In addition, there is uncertainty associated with the regulatory environments in which we operate, including uncertainty created by the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”). The Dodd-Frank Act fundamentally changed the U.S. financialregulatory landscape and may impose additional restrictions and limitations on our business as the various rules and regulations required for implementationcontinue to be adopted.Changes to the rules governing Rule 12b-1 Fees may affect the revenues we derive from our Retail Services.In July 2010, the SEC proposed a new rule and rule amendments that would alter Rule 12b-1 Fees. The new rule and amendments would continue to allowfunds to bear promotional costs within certain limits and would also preserve the ability of funds to provide investors with alternatives for paying salescharges (e.g., at the time of purchase, at the time of redemption or through a continuing fee charged to fund assets). Unlike the current Rule 12b-1 framework,however, the proposed rules would limit the cumulative sales charges each investor pays, regardless of how they are imposed.20Table of ContentsIf rules are adopted as proposed, changes in Rule 12b-1 Fees for a number of share classes offered by our U.S. Funds would be required, which would reducethe net fund distribution revenues we receive from our U.S. Funds. The impact of this rule change is dependent upon the final rules adopted by the SEC, anyphase-in or grandfathering period, and any other changes made with respect to share class distribution arrangements.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, regulatorsand industry participants in the relevant market, which could adversely affect our ability to expand. Furthermore, if we are unable to maintain and/or continueto improve our investment performance during 2014, our client flows may be adversely affected, which may make it more difficult for us to competeeffectively.Also, 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. 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 orcombination 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 significant damages, andwe may be involved in additional matters in the future. Litigation is subject to significant uncertainties, particularly when plaintiffs allege substantial orindeterminate damages, the litigation is in its early stages, or when the litigation is highly complex or broad in scope.Structure-related RisksThe partnership structure of Holding and AllianceBernstein limits Unitholders’ abilities to influence the management and operation ofAllianceBernstein’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 tomanage, conduct, control and operate their respective businesses, except as otherwise expressly stated in their respective Amended and Restated Agreements ofLimited Partnership. Holding and AllianceBernstein Unitholders have more limited voting rights on matters affecting AllianceBernstein than do holders ofcommon stock in a corporation. Both Amended and Restated Agreements of Limited Partnership provide that Unitholders do not have any right to vote fordirectors of the General Partner and that Unitholders only can vote on certain extraordinary matters (including removal of the General Partner under certainextraordinary circumstances). Additionally, the AllianceBernstein Partnership Agreement includes significant restrictions on transfers of AllianceBernsteinUnits and provisions that have the practical effect of preventing the removal of the General Partner, which provisions are highly likely to prevent a change incontrol of AllianceBernstein’s management.AllianceBernstein Units are illiquid and subject to significant transfer restrictions.There is no public trading market for AllianceBernstein Units and AllianceBernstein does not anticipate that a public trading market will develop. TheAllianceBernstein Partnership Agreement restricts our ability to participate in a public trading market or anything substantially equivalent to one by providingthat any transfer which may cause AllianceBernstein to be classified as a “publicly traded partnership” (“PTP”) as defined in Section 7704 of the InternalRevenue Code of 1986, as amended (“Code”), shall be deemed void and shall not be recognized by AllianceBernstein. In addition, AllianceBernstein Unitsare subject to significant restrictions on transfer, including the written consent of AXA Equitable and the General Partner pursuant to the AllianceBernsteinPartnership Agreement. Generally, neither AXA Equitable nor the General Partner will permit any transfer that it believes would create a risk thatAllianceBernstein would be treated as a corporation for tax purposes. AXA Equitable and the General Partner have implemented a transfer program thatrequires a seller to locate a purchaser, and imposes annual volume restrictions on transfers. You may request a copy of the transfer program from ourCorporate Secretary (corporate_secretary@alliancebernstein.com). Also, we have filed the transfer program as Exhibit 10.06 to this Form 10-K.21Table of ContentsChanges in the partnership structure of Holding and AllianceBernstein and/or changes in the tax law governing partnerships would havesignificant 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 orbusiness, is a “grandfathered” PTP 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” PTP for federal income tax purposes, managementensures that Holding does not directly or indirectly (through AllianceBernstein) enter into a substantial new line of business. A “new line of business” includesany business that is not closely related to AllianceBernstein’s historical business of providing research and diversified investment management and relatedservices 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% ofits 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 localincome taxes, generally are included in the filing of a consolidated federal income tax return with separate state and local income tax returns being filed. Foreigncorporate subsidiaries generally are subject to taxes in the foreign jurisdiction where they are located. As our business increasingly operates in countries otherthan the U.S., AllianceBernstein’s effective tax rate is expected to increase over time because our international subsidiaries are subject to corporate level taxes inthe 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 consideredpublicly traded. 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 ofAllianceBernstein, would lose its status as a grandfathered PTP and would become subject to corporate income tax as set forth above. For information aboutthe significant restrictions on transfer of AllianceBernstein Units, see the risk factor immediately above.In years prior to 2010, Congress proposed tax legislation that would cause certain PTPs to be taxed as corporations, thus subjecting their income to a higherlevel of income tax. Holding is a PTP that derives its income from investment management services through its ownership interest in AllianceBernstein. Thelegislation, in the form proposed, would not have affected Holding’s tax status. Also, this proposed legislation would not have affected AllianceBernsteinbecause it is a private partnership.In addition, recent decisions by members of Congress and their staffs regarding the need for fundamental tax reform and possible tax law changes to raiseadditional revenue have included suggestions that all large partnerships (which would include both AllianceBernstein and Holding) be taxed as corporations.However, we cannot predict whether, or in what form, tax legislation will be proposed in the future, and are unable to determine what effect any new legislationmight have on us. If Holding and AllianceBernstein were to lose their federal tax status as partnerships, they would be subject to corporate income tax, whichwould reduce materially their net income and quarterly distributions to unitholders.Item 1B.Unresolved Staff CommentsWe have no unresolved comments from the staff of the SEC to report.Item 2.PropertiesOur principal executive offices at 1345 Avenue of the Americas, New York, New York are occupied pursuant to a lease expiring in 2019 with options to extendto 2029 (for more information regarding this lease, see Exhibit 10.09 to this Form 10-K). At this location, we currently lease 1,033,984 square feet of space,within which we currently occupy approximately 629,258 square feet of space and have sub-let (or are seeking to sub-let) approximately 404,726 square feetof space. We also lease space at two other locations in New York City, one of which leases we acquired in connection with the WPS Acquisition.In addition, we lease approximately 263,083 square feet of space at One North Lexington, White Plains, New York under a lease expiring in 2021 with optionsto extend to 2031. At this location, we currently occupy approximately 104,480 square feet of space and have sub-let (or are seeking to sub-let) approximately158,603 square feet of space.AllianceBernstein Investments and AllianceBernstein Investor Services lease 92,067 square feet of space in San Antonio, Texas under a lease expiring in 2019with options to extend to 2029. At this location, we currently occupy approximately 59,004 square feet of space and have sub-let (or are seeking to sub-let)approximately 33,063 square feet of space.We also lease space in 19 other cities in the United States.22Table of ContentsOur subsidiaries lease space in 26 cities outside the United States, the most significant of which are in London, England under leases expiring in 2022, andin Tokyo, Japan under a lease expiring in 2018. In London, we currently lease 98,910 square feet of space, within which we currently occupy approximately54,746 square feet of space and have sub-let (or are seeking to sub-let) approximately 44,164 square feet of space. In Tokyo, we currently lease and occupyapproximately 34,615 square feet of space.Item 3.Legal ProceedingsWith respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome isprobable, 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 anegative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, ifany, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate apossible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages, thelitigation is in its early stages, or when the litigation is highly complex or broad in scope. In such cases, we disclose that we are unable to predict the outcomeor estimate a possible loss or range of loss.During the first quarter of 2012, we received a legal letter of claim (the “Letter of Claim”) sent on behalf of Philips Pension Trustees Limited and PhilipsElectronics UK Limited (“Philips”), a former pension fund client, alleging that AllianceBernstein Limited (one of our subsidiaries organized in the U.K.) wasnegligent and failed to meet certain applicable standards of care with respect to the initial investment in, and management of, a £500 million portfolio of U.S.mortgage-backed securities. The alleged damages range between $177 million and $234 million, plus compound interest on an alleged $125 million of realizedlosses in the portfolio. On January 2, 2014, Philips filed a claim form (“Claim”) in the High Court of Justice in London, England, which formallycommences litigation with respect to the allegations in the Letter of Claim.We believe that any losses to Philips resulted from adverse developments in the U.S. housing and mortgage market that precipitated the financial crisis in 2008and not from any negligence or failure on our part. We believe that we have strong defenses to these claims, which were set forth in our October 12, 2012response to the Letter of Claim, and will defend this matter vigorously. Currently, we are unable to estimate a reasonably possible range of loss because thematter remains in its early stages.In addition to the Claim discussed immediately above, we are involved in various other matters, including regulatory inquiries, administrative proceedingsand litigation, some of which allege significant damages.In management’s opinion, an adequate accrual has been made as of December 31, 2013 to provide for any probable losses regarding any litigation matters forwhich we can reasonably estimate an amount of loss. It is reasonably possible that we could incur additional losses pertaining to these matters, but currentlywe cannot estimate any such additional losses.Management, after consultation with legal counsel, currently believes that the outcome of any matter that is pending or threatened, or all of them combined,will not have a material adverse effect on our results of operations, financial condition or liquidity. However, as any inquiry, proceeding or litigation has theelement of uncertainty, management cannot determine whether further developments relating to any matter that is pending or threatened, or all of themcombined, will have a material adverse effect on our results of operations, financial condition or liquidity in any future reporting period.Item 4.Mine Safety DisclosuresNot applicable.23Table of ContentsPART IIItem 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket for Holding Units and AllianceBernstein Units; Cash DistributionsHolding Units are listed on the NYSE and trade publicly under the ticker symbol “AB”. There is no established public trading market for AllianceBernsteinUnits, which are subject to significant restrictions on transfer. For information about these transfer restrictions, see “Structure-related Risks” in Item 1A.Holding’s principal source of income and cash flow is attributable to its limited partnership interests in AllianceBernstein.Each of Holding and AllianceBernstein distributes on a quarterly basis all of its Available Cash Flow, as defined in the Holding Partnership Agreement and theAllianceBernstein Partnership Agreement, to its unitholders and the General Partner. For additional information concerning distribution of Available Cash Flowby Holding, see Note 2 to Holding’s financial statements in Item 8 of Holding’s Form 10-K for the year ended December 31, 2013. For additionalinformation concerning distribution of Available Cash Flow by AllianceBernstein, see Note 2 to our consolidated financial statements in Item 8.The distributions of Available Cash Flow made by AllianceBernstein and Holding during 2013 and 2012 and the high and low sale prices of Holding Unitsreflected on the NYSE composite transaction tape during 2013 and 2012 are as follows: Quarters Ended 2013 December 31 September 30 June 30 March 31 Total Cash distributions per AllianceBernstein Unit(1) $0.66 $0.46 $0.44 $0.41 $1.97 Cash distributions per Holding Unit(1) $0.60 $0.40 $0.41 $0.38 $1.79 Holding Unit prices: High $23.00 $23.25 $27.38 $23.25 Low $19.50 $18.77 $20.05 $17.65 Quarters Ended 2012 December 31 September 30 June 30 March 31 Total Cash distributions per AllianceBernstein Unit(1) $0.38 $0.41 $0.26 $0.31 $1.36 Cash distributions per Holding Unit(1) $0.40 $0.36 $0.21 $0.26 $1.23 Holding Unit prices: High $18.29 $15.99 $15.84 $16.75 Low $15.11 $11.44 $11.55 $13.01 (1)Declared and paid during the following quarter.On December 31, 2013, the closing price of a Holding Unit on the NYSE was $21.34 per Unit and there were 996 Holding Unitholders of record forapproximately 65,000 beneficial owners. On December 31, 2013, there were 444 AllianceBernstein Unitholders of record, and we do not believe there aresubstantial additional beneficial owners.Recent Sales of Unregistered Securities; Use of Proceeds from Registered SecuritiesWe did not engage in any unregistered sales of our securities during the years ended December 31, 2013, 2012 and 2011.Purchases of Equity Securities by the Issuer and Affiliated PurchasersEach quarter, since the third quarter of 2011, AllianceBernstein has implemented plans to repurchase Holding Units pursuant to Rule 10b5-1 under theExchange Act. The plan adopted during the fourth quarter of 2013 expired at the close of business on February 11, 2014. AllianceBernstein did not buy anyHolding Units pursuant to this plan during the fourth quarter of 2013. AllianceBernstein may adopt additional Rule 10b5-1 plans in the future to engage inopen-market purchases of Holding Units to help fund anticipated obligations under the firm’s incentive compensation award program and for other corporatepurposes. For additional information about Rule 10b5-1 plans, see “Units Outstanding” in Item 7.24Table of ContentsHolding Units bought by us or one of our affiliates during the fourth quarter of 2013 are as follows:Issuer Purchases of Equity Securities Total Number ofHolding UnitsPurchased Average PricePaid Per HoldingUnit, net of Commissions Total Number ofHolding UnitsPurchased as Part ofPubliclyAnnounced Plans orPrograms Maximum Number(or Approximate Dollar Value)of Holding Units thatMay Yet Be Purchased Underthe Plans or Programs Period 10/1/13-10/31/13(1) 117 $19.59 — — 11/1/13-11/30/13(1) — — — — 12/1/13-12/31/13(1) 3,065,090 22.19 — — Total 3,065,207 $22.19 — — (1)During the fourth quarter of 2013, we purchased from employees 3,065,207 Holding Units to allow them to fulfill statutory withholding tax requirementsat the time of distribution of long-term incentive compensation awards.AllianceBernstein Units bought by us or one of our affiliates during the fourth quarter of 2013 are as follows:Issuer Purchases of Equity Securities Total Number ofAllianceBernstein Units Purchased Average Price Paid PerAllianceBernsteinUnit, net of Commissions Total Number ofAllianceBernsteinUnits Purchased as Part of PubliclyAnnounced Plans or Programs Maximum Number(or Approximate Dollar Value)of AllianceBernsteinUnits that May Yet Be PurchasedUnder the Plans or Programs Period 10/1/13-10/31/13 — $— — — 11/1/13-11/30/13(1) 60,419 22.21 — — 12/1/13-12/31/13 — — — — Total 60,419 $22.21 — — (1)On November 8, 2013, we purchased 60,419 AllianceBernstein Units in private transactions.25Table of ContentsItem 6.Selected Financial Data Selected Consolidated Financial Data Years Ended December 31, 2013 2012(1) 2011(1) 2010(1) 2009(1) (in thousands, except per unit amounts and unless otherwise indicated) INCOME STATEMENT DATA: Revenues: Investment advisory and services fees $1,849,105 $1,764,475 $1,907,318 $2,041,264 $1,909,619 Bernstein research services 445,083 413,707 437,414 430,521 434,605 Distribution revenues 465,424 409,488 360,722 349,025 288,041 Dividend and interest income 19,962 21,286 21,499 22,902 26,730 Investment gains (losses) 33,339 29,202 (82,081) (1,410) 144,447 Other revenues 105,058 101,801 107,569 109,803 107,848 Total revenues 2,917,971 2,739,959 2,752,441 2,952,105 2,911,290 Less: interest expense 2,924 3,222 2,550 3,548 4,411 Net revenues 2,915,047 2,736,737 2,749,891 2,948,557 2,906,879 Expenses: Employee compensation and benefits: Employee compensation and benefits 1,212,011 1,168,645 1,246,898 1,320,495 1,296,386 Long-term incentive compensation charge — — 587,131 — — Promotion and servicing: Distribution-related payments 423,200 367,090 302,684 286,676 234,203 Amortization of deferred sales commissions 41,279 40,262 37,675 47,397 54,922 Other 208,192 202,191 219,197 193,822 178,070 General and administrative: General and administrative 423,043 507,682 532,896 516,014 520,372 Real estate charges 28,424 223,038 7,235 101,698 8,276 Contingent payment arrangements (10,174) 682 682 171 — Interest on borrowings 2,962 3,429 2,545 2,078 2,696 Amortization of intangible assets 21,859 21,353 21,417 21,344 21,126 Total expenses 2,350,796 2,534,372 2,958,360 2,489,695 2,316,051 Operating income (loss) 564,251 202,365 (208,469) 458,862 590,828 Non-operating income — — — 6,760 33,657 Income (loss) before income taxes 564,251 202,365 (208,469) 465,622 624,485 Income taxes 36,829 13,764 3,098 38,523 45,977 Net income (loss) 527,422 188,601 (211,567) 427,099 578,508 Net income (loss) of consolidated entities attributable to non-controlling interests 9,746 (315) (36,799) (15,320) 22,381 Net income (loss) attributable to AllianceBernsteinUnitholders $517,676 $188,916 $(174,768) $442,419 $556,127 Basic net income (loss) per AllianceBernstein Unit $1.89 $0.67 $(0.62) $1.59 $2.07 Diluted net income (loss) per AllianceBernstein Unit $1.88 $0.67 $(0.62) $1.58 $2.07 Operating margin(2) 19.0% 7.4% n/m 16.1% 19.6%CASH DISTRIBUTIONS PER ALLIANCEBERNSTEINUNIT(3) $1.97 $1.36 $1.38 $1.58 $2.06 BALANCE SHEET DATA AT PERIOD END: Total assets $7,385,851 $8,115,050 $7,708,389 $7,580,315 $7,214,940 Debt $268,398 $323,163 $444,903 $224,991 $248,987 Total Capital $4,069,726 $3,803,268 $4,029,487 $4,495,356 $4,701,955 ASSETS UNDER MANAGEMENT AT PERIOD END(in millions) $450,411 $430,017 $405,897 $478,019 $486,683 (1)Certain prior-year amounts have been reclassified to conform to our 2013 presentation. See Note 2 to our consolidated financial statements in Item 8 fora discussion of reclassifications.(2)Operating income excluding net income (loss) attributable to non-controlling interests as a percentage of net revenues.(3)AllianceBernstein is required to distribute all of its Available Cash Flow, as defined in the AllianceBernstein Partnership Agreement, to its unitholders andthe General Partner; 2013 distributions reflect the impact of non-GAAP adjustments; 2012 distributions exclude a total of $207.0 million of non-cash realestate charges recorded in the third and fourth quarters of 2012; 2011 distributions exclude the $587.1 million one-time, non-cash long-term incentivecompensation charge.26Table of ContentsItem 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsPercentage change figures are calculated using assets under management rounded to the nearest million and financial statement amounts rounded tothe nearest thousand.Executive OverviewThe fourth quarter of 2013 concluded another year of progress for AllianceBernstein in executing our long-term growth strategy. We completed our purchase ofWPS, recently reached an agreement to acquire CPH Capital, a Danish global core equity manager, and added $3.0 billion in diverse new business mandatesto our Institutional pipeline (resulting in a net quarterly increase in the pipeline of $0.9 billion).We are demonstrating momentum across our business, as we continue to strive to deliver for clients with improved investment performance, a broader globalbusiness mix, innovative and relevant offerings and strong financials that fund our growth initiatives and improve our competitive positioning. In fixedincome, even after a year of extreme volatility and rising yields in the global debt markets, we maintained highly competitive long-term track records: at year-end, our percentage of fixed income assets in outperforming strategies totaled 85% for the three- and five-year periods. Meanwhile, our equities investmentperformance continued to improve with nearly two-thirds of our equity assets in strategies that beat their benchmarks for the one-year period at year end.Our total AUM as of December 31, 2013 was $450.4 billion, up $20.4 billion, or 4.7%, during 2013. The increase in AUM was driven by marketappreciation of $30.6 billion, partially offset by net outflows of $12.3 billion, primarily in the Retail channel.Institutional AUM increased $6.2 billion, or 2.8%, to $226.0 billion during 2013. The increase in AUM primarily resulted from market appreciation of $6.9billion, partially offset by net outflows of $1.0 billion. The net outflows primarily were due to the loss of $6.8 billion of fixed income assets in October 2013as a result of AXA’s sale of one of its subsidiaries, MONY Life Insurance Company (“MONY”). The loss of these assets will not have a material impact onour revenues as these are low fee assets. Gross sales increased $3.6 billion, or 17.0%, from $21.3 billion in 2012 to $24.9 billion in 2013, due primarily tosignificant gross sales growth in every asset class and in every region, except Asia ex-Japan. In addition, redemptions and terminations decreased $20.3billion, or 52.4%, from $38.8 billion in 2012 to $18.5 billion in 2013.Retail AUM increased $8.6 billion, or 6.0%, to $153.0 billion during 2013. The increase in AUM primarily resulted from market appreciation of $15.4billion, partially offset by net outflows of $7.5 billion. Gross sales declined $7.2 billion, or 12.7%, from $56.3 billion in 2012 to $49.1 billion in 2013. Thedecline was driven by lower Asia ex-Japan sales coming off record high sales in 2012, partially offset by strong double-digit growth in the U.S., Europe,Middle East and Africa, and Latin America markets, where combined gross sales increased more than $4.0 billion in 2013. However, redemptions andterminations increased $17.1 billion, or 52.2%, from $33.0 billion in 2012 to $50.1 billion in 2013.Private Client AUM increased $5.6 billion, or 8.5%, to $71.4 billion during 2013. The increase in AUM primarily resulted from market appreciation of $8.3billion, partially offset by net outflows of $3.8 billion. Flows have improved substantially since 2012, as clients have responded well to our newer and moreflexible offerings. Gross sales were up this year for the first time since 2010, redemptions fell to their lowest level since 2011 and net outflows were down58.0% compared to 2012. Gross sales increased $2.1 billion, or 48.4%, from $4.3 billion in 2012 to $6.4 billion in 2013. Redemptions and terminationsdecreased $2.4 billion, or 22.2%, from $10.9 billion in 2012 to $8.5 billion in 2013.Bernstein Research Services revenue increased $31.4 million, or 7.6%, to $445.1 million in 2013, as a result of strong growth in Europe and Asia.Our full year 2013 revenues increased $178.3 million, or 6.5%, to approximately $2.9 billion in 2013. The increase was driven by higher investmentadvisory base fees of $97.7 million, higher distribution revenues of $55.9 million and higher Bernstein Research Services revenues of $31.4 million. Fullyear 2013 operating expenses decreased $183.6 million, or 7.2%, to approximately $2.4 billion in 2013, due to lower real estate charges of $194.6 million andlower general and administrative expenses (excluding the real estate charges) of $84.6 million, partially offset by higher promotion and servicing expenses of$63.1 million and higher employee compensation and benefits expense of $43.4 million.Lastly, we are managing our expenses and expanding our operating margin. Through a number of cost-cutting initiatives, we have reduced our adjusted non-compensation expenses by more than $125 million in the last two years. We also increased our adjusted operating margin this year to 24.0% from 18.8% in2012 and 17.0% in 2011, even as we have continued to invest in new talent, processes, offerings and business opportunities.27Table of Contents Assets Under ManagementDuring the first quarter of 2013, we altered our AUM disclosure in order to provide greater transparency regarding the impact of prevailing industry trends onour asset mix and fee realization rate. The new disclosure addresses the long-term industry-wide trend of increasing asset flows into passive products byproviding a breakout of both equity and fixed income AUM into actively managed assets and passively managed assets, which include index and enhancedindex services. In addition, in acknowledgement of our significant growth in fixed income assets over the past several years and the current size of thebusiness, we now break out our active fixed income AUM into taxable and tax-exempt assets.Assets under management by distribution channel were as follows: As of December 31, % Change 2013 2012 2011 2013-12 2012-11 (in billions) Institutions $226.0 $219.8 $223.9 2.8% (1.8)%Retail 153.0 144.4 112.6 6.0 28.2 Private Client 71.4 65.8 69.4 8.5 (5.2)Total $450.4 $430.0 $405.9 4.7 5.9 Assets under management by investment service were as follows: As of December 31, % Change 2013 2012 2011 2013-12 2012-11 (in billions) Equity Actively Managed $107.8 $95.4 $124.3 13.0% (23.3)%Passively Managed (1) 49.3 40.3 33.5 22.4 20.1 Total Equity 157.1 135.7 157.8 15.8 (14.0) Fixed Income Actively Managed Taxable 211.0 224.0 184.9 (5.8) 21.2 Tax-exempt 28.7 30.8 30.2 (6.6) 1.9 239.7 254.8 215.1 (5.9) 18.5 Passively Managed (1) 9.3 7.9 4.9 18.2 62.7 Total Fixed Income 249.0 262.7 220.0 (5.2) 19.4 Other (2) 44.3 31.6 28.1 40.0 12.6 Total $450.4 $430.0 $405.9 4.7 5.9 (1)Includes index and enhanced index services.(2)Includes asset allocation services and certain other alternative investments.28 Distribution Channel Institutions Retail PrivateClient Total (in billions) Balance as of December 31, 2012 $219.8 $144.4 $65.8 $430.0 Long-term flows: Sales/new accounts 24.9 49.1 6.4 80.4 Redemptions/terminations (18.5) (50.1) (8.5) (77.1)Cash flow/unreinvested dividends (7.4) (6.5) (1.7) (15.6)Net long-term (outflows) (1.0) (7.5) (3.8) (12.3)Acquisition 0.3 0.7 1.1 2.1 Market appreciation 6.9 15.4 8.3 30.6 Net change 6.2 8.6 5.6 20.4 Balance as of December 31, 2013 $226.0 $153.0 $71.4 $450.4 Balance as of December 31, 2011 $223.9 $112.6 $69.4 $405.9 Long-term flows: Sales/new accounts 21.3 56.3 4.3 81.9 Redemptions/terminations (38.8) (33.0) (10.9) (82.7)Cash flow/unreinvested dividends (4.1) (7.1) (2.4) (13.6)Net long-term (outflows) inflows (21.6) 16.2 (9.0) (14.4)Transfers (0.1) 0.1 — — Market appreciation 17.6 15.5 5.4 38.5 Net change (4.1) 31.8 (3.6) 24.1 Balance as of December 31, 2012 $219.8 $144.4 $65.8 $430.0 Table of ContentsChanges in assets under management during 2013 and 2012 were as follows: Investment Service EquityActivelyManaged EquityPassivelyManaged(1) FixedIncomeActivelyManaged- Taxable FixedIncomeActivelyManaged -Tax-Exempt FixedIncomePassivelyManaged(1) Other(2) Total (in billions) Balance as of December 31,2012 $95.4 $40.3 $224.0 $30.8 $7.9 $31.6 $430.0 Long-term flows: Sales/new accounts 15.9 3.4 49.5 4.9 1.4 5.3 80.4 Redemptions/terminations (22.4) (0.7) (46.9) (5.1) (0.7) (1.3) (77.1)Cash flow/unreinvesteddividends (6.0) (4.7) (7.9) (1.4) 0.9 3.5 (15.6)Net long-term (outflows)inflows (12.5) (2.0) (5.3) (1.6) 1.6 7.5 (12.3)Acquisition 2.1 — — — — — 2.1 Market appreciation(depreciation) 22.8 11.0 (7.7) (0.5) (0.2) 5.2 30.6 Net change 12.4 9.0 (13.0) (2.1) 1.4 12.7 20.4 Balance as of December31, 2013 $107.8 $49.3 $211.0 $28.7 $9.3 $44.3 $450.4 Balance as of December 31,2011 $124.3 $33.5 $184.9 $30.2 $4.9 $28.1 $405.9 Long-term flows: Sales/new accounts 9.5 4.6 57.2 4.8 3.0 2.8 81.9 Redemptions/terminations (46.0) (1.5) (29.7) (3.9) (0.2) (1.4) (82.7)Cash flow/unreinvesteddividends (7.4) (1.5) (2.0) (1.6) 0.6 (1.7) (13.6)Net long-term (outflows)inflows (43.9) 1.6 25.5 (0.7) 3.4 (0.3) (14.4)Market appreciation(depreciation) 15.0 5.2 13.6 1.3 (0.4) 3.8 38.5 Net change (28.9) 6.8 39.1 0.6 3.0 3.5 24.1 Balance as of December31, 2012 $95.4 $40.3 $224.0 $30.8 $7.9 $31.6 $430.0  (1)Includes index and enhanced index services.(2)Includes asset allocation services and certain other alternative investments.29Table of ContentsAverage assets under management by distribution channel and investment service were as follows: Years Ended December 31, % Change 2013 2012 2011 2013-12 2012-11 (in billions) Distribution Channel: Institutions $225.4 $218.9 $252.6 2.9% (13.3)%Retail 149.4 128.2 124.0 16.5 3.4 Private Client 67.9 68.9 75.3 (1.3) (8.6)Total $442.7 $416.0 $451.9 6.4 (8.0) Investment Service: Equity Actively Managed $100.0 $109.8 $177.2 (8.9)% (38.1)%Equity Passively Managed(1) 45.1 36.1 33.7 25.1 7.1 Fixed Income Actively Managed – Taxable 221.4 202.0 181.3 9.6 11.4 Fixed Income Actively Managed – Tax-exempt 30.1 31.1 29.8 (3.4) 4.4 Fixed Income Passively Managed(1) 8.6 5.9 3.9 46.3 52.3 Other(2) 37.5 31.1 26.0 20.8 19.3 Total $442.7 $416.0 $451.9 6.4 (8.0) (1)Includes index and enhanced index services.(2)Includes asset allocation services and certain other alternative investments.Our Institutional channel average AUM of $225.4 billion increased by $6.5 billion, or 2.9%, compared to 2012, primarily due to our Institutional channelAUM increasing $6.2 billion, or 2.8%, over the last twelve months to $226.0 billion at December 31, 2013. The $6.2 billion increase in AUM over the pasttwelve months primarily was due to $6.9 billion of market appreciation and $0.3 billion of new assets from the WPS Acquisition, offset by net outflows of$1.0 billion (consisting of outflows of $9.5 billion in equity services, offset by inflows of $5.0 billion in other services and $3.5 billion in fixed incomeservices). The net outflows primarily were due to the loss of $6.8 billion of fixed income assets in October 2013 as a result of AXA’s sale of MONY. During2012, Institutional AUM decreased $4.1 billion to $219.8 billion, resulting in average AUM of $218.9 billion for 2012. The $4.1 billion decline in AUMduring 2012 primarily was due to $21.6 billion of net outflows (consisting of net outflows of $30.7 billion in equity services and $1.5 billion in otherservices, offset by net inflows of $10.6 billion in fixed income services), offset by market appreciation of $17.6 billion.Our Retail channel average AUM of $149.4 billion increased by $21.2 billion, or 16.5%, compared to 2012, primarily due to our Retail channel AUMincreasing $8.6 billion, or 6.0%, over the last twelve months to $153.0 billion at December 31, 2013, as well as AUM at December 31, 2012 of $144.4 billionhaving been significantly higher than 2012 average AUM of $128.2 billion due to the significant growth in the Retail channel throughout 2012. The $8.6billion increase in AUM over the past twelve months primarily was due to market appreciation of $15.4 billion and $0.7 billion of new assets from the WPSAcquisition, offset by net outflows of $7.5 billion (consisting of outflows of $5.8 billion in fixed income sevices and $2.8 billion in equity services, offset byinflows of $1.1 billion in other services). During 2012, Retail AUM increased $31.8 billion to $144.4 billion, resulting in average AUM of $128.2 billion for2012. The $31.8 billion increase in AUM during 2012 primarily was due to $16.2 billion of net inflows (consisting of net inflows of $21.2 billion and $1.5billion in fixed income services and other services, respectively, offset by outflows of $6.5 billion in equity services) and market appreciation of $15.5billion.Our Private Client channel average AUM of $67.9 billion declined by $1.0 billion, or 1.3%, compared to 2012, while our Private Client channel AUMincreased $5.6 billion, or 8.5%, over the last twelve months to $71.4 billion at December 31, 2013. The $5.6 billion increase in AUM over the past twelvemonths primarily was due to market appreciation of $8.3 billion and approximately $1.1 billion of new assets from the WPS Acquisition, offset by netoutflows of $3.8 billion (consisting of outflows of $2.9 billion in fixed income services and $2.2 billion in equity services, offset by inflows of $1.3 billion inother services). The increase in AUM of $5.6 billion during 2013 as compared to the decrease of $1.0 billion in year-to-year average AUM is due to the AUMat December 31, 2012 of $65.8 billion having been lower than 2012 average AUM of $68.9 billion as a result of a $2.3 billion decrease in AUM in the fourthquarter of 2012. During 2012, Private Client AUM decreased $3.6 billion to $65.8 billion, resulting in average AUM of $68.9 billion for 2012. The $3.6billion decrease in AUM during 2012 was due to $9.0 billion of net outflows (consisting of net outflows of $5.1 billion in equity services, $3.6 billion infixed income services and $0.3 billion in other services), offset by market appreciation of $5.4 billion.30Table of ContentsAbsolute investment composite returns, net of fees, and relative performance compared to benchmarks for certain representative Institutional (except asotherwise indicated) equity and fixed income services were as follows for the years ended December 31: 2013 2012 2011 Global High Income (fixed income) Absolute return 6.9% 18.5% 2.0%Relative return (vs. 33% Barclays High Yield, 33% JPM EMBI Global and 33% JPM GBI-EM) 8.6 0.3 (0.3)Global Fixed Income (fixed income) Absolute return (5.2) 3.9 12.1 Relative return (vs. CITI WLD GV BD-USD/JPM GLBL BD) (1.2) 2.2 5.7 Intermediate Municipal Bonds (fixed income) (Private Client composite) Absolute return (1.3) 3.4 7.2 Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg) 0.0 (0.3) 0.8 U.S. Strategic Core Plus (fixed income) Absolute return (1.9) 5.9 7.1 Relative return (vs. Barclays U.S. Aggregate) 0.1 1.7 (0.7)Emerging Market Debt (fixed income) Absolute return (6.7) 20.5 6.0 Relative return (vs. JPM EMBI Global/JPM EMBI) (0.1) 2.0 (2.5)Global Plus (fixed income) Absolute return (3.3) 5.2 6.2 Relative return (vs. Barclays Global Aggregate) (0.7) 0.9 0.6 Emerging Markets Value Absolute return (7.7) 14.7 (23.3)Relative return (vs. MSCI EM Index) (5.1) (3.5) (4.9)Global Value Absolute return 32.6 13.9 (15.8)Relative return (vs. MSCI World Index) 5.9 (1.9) (10.3)Global Strategic Value Absolute return 34.7 12.0 (16.0)Relative return (vs. MSCI ACWI Index) 11.9 (4.1) (8.6)U.S. Small & Mid Cap Value Absolute return 37.7 18.6 (8.1)Relative return (vs. Russell 2500 Value Index) 4.4 (0.6) (4.8)U.S. Strategic Value Absolute return 39.9 13.3 (7.6)Relative return (vs. Russell 1000 Value Index) 7.4 (4.2) (8.0)U.S. Small Cap Growth Absolute return 45.4 14.9 4.4 Relative return (vs. Russell 2000 Growth Index) 2.1 0.3 7.3 U.S. Large Cap Growth Absolute return 37.6 15.9 (2.3)Relative return (vs. Russell 1000 Growth Index) 4.1 0.6 (4.9)U.S. Strategic Growth (Private Client composite) Absolute return 37.4 15.2 (4.3)Relative return (vs. S&P 500 Index) 5.0 (0.8) (6.4)Select U.S. Equity Absolute return 30.9 16.2 3.8 Relative return (vs. S&P 500 Index) (1.5) 0.2 1.7 International Style Blend – Developed Absolute return 20.9 15.6 (17.7)Relative return (vs. MSCI EAFE Index) (1.8) (1.7) (5.6)During 2013, we saw somewhat elevated bond market volatility and, beginning in May, sharply higher bond yields and outflows from bond mutual fundsfueled by investors' concerns over the U.S. Federal Reserve’s potential tapering of their bond buying program. In this environment, government bondsgenerally underperformed non-government bonds, and performance across our fixed income services was mixed.Underweights in Japan and peripheral European countries detracted from relative returns in our global multi-sector portfolios, as did our overweight and yieldcurve positioning in the U.S. Our emerging market debt portfolios also were modestly behind their benchmarks after fees, with small local currency positionsdetracting from returns. Performance in our U.S. multi-sector portfolios was ahead of benchmarks, with credit sector overweights helping. Performance in ourglobal high income portfolios exceeded benchmarks due to the portfolios’ underweight in emerging market debt in favor of developed market credit sectorssuch as high yield.31Lower real estate charges $194.6 Higher base advisory fees 97.7 Lower general and administrative (excluding real estate charges) 84.6 Higher Bernstein Research Services revenues 31.4 Higher employee compensation and benefits (43.4)Higher income taxes (23.1)Lower performance-based fees (13.0) $328.8 Table of ContentsThe municipal market generally experienced negative returns in 2013 driven by record mutual fund outflows. Our U.S. municipal portfolios’ performancewas flat relative to their benchmarks. Our underweight to the longest maturity bonds added to relative returns, offset by security selection which detractedfrom performance.Performance of our equity services improved over the full year 2013 period, with the majority of these services outperforming their benchmarks, as research-based stock selection returned to favor among investors and drove portfolio returns. Emerging Markets Value continued to be an exception, as long-term valuecharacteristics, such as inexpensive cash flows, continued to under-perform, unlike in other parts of the world, reflecting investor anxiety about the macrooutlook in several large emerging markets. International Style Blend and Select U.S. Equity slightly lagged their benchmarks as the modest bias towardshigher quality stocks in the Select U.S. portfolio and the growth sleeve in International Style Blend hurt performance.Consolidated Results of Operations Years Ended December 31, % Change 2013 2012 2011 2013-12 2012-11 (in millions, except per unit amounts) Net revenues $2,915.0 $2,736.7 $2,749.9 6.5% (0.5)%Expenses 2,350.8 2,534.4 2,958.4 (7.2) (14.3)Operating income (loss) 564.2 202.3 (208.5) 178.8 n/mIncome taxes 36.8 13.7 3.1 167.6 344.3 Net income (loss) 527.4 188.6 (211.6) 179.6 n/m Net income (loss) of consolidated entities attributable to non-controlling interests 9.7 (0.3) (36.8) n/m (99.1)Net income (loss) attributable to AllianceBernsteinUnitholders $517.7 $188.9 $(174.8) 174.0 n/m Diluted net income (loss) per AllianceBernstein Unit $1.88 $0.67 $(0.62) 180.6 n/m Distributions per AllianceBernstein Unit(1) $1.97 $1.36 $1.38 44.9 (1.4)Operating margin(2) 19.0% 7.4% n/m (1)2013 distributions reflect the impact of non-GAAP adjustments; 2012 distributions exclude the impact of $207.0 million of non-cash real estate chargesrecorded in the third and fourth quarters of 2012; 2011 distributions exclude the impact of the $587.1 million one-time, non-cash long-term incentivecompensation charge.(2)Operating income excluding net income (loss) attributable to non-controlling interests as a percentage of net revenues.Net income attributable to AllianceBernstein unitholders for the year ended December 31, 2013 increased $328.8 million from the year ended December 31,2012. The change primarily was due to (in millions):32Higher real estate charges $(215.8)Lower base advisory fees (194.3)Lower Bernstein Research Services revenues (23.7)2011 long-term incentive compensation charge 587.1 Lower employee compensation and benefits (excluding $587.1 million compensation charge) 78.3 Higher performance-based fees 50.1 Higher long-term incentive compensation investment gains 37.0 Seed capital investment gains compared to 2011 losses 28.2 Lower other promotion and servicing expenses 17.0 Other (0.2) $363.7 Table of ContentsNet income attributable to AllianceBernstein unitholders for the year ended December 31, 2012 was $188.9 million, as compared to net loss attributable toAllianceBernstein unitholders of $174.8 million for the year ended December 31, 2011. The change primarily was due to (in millions): Real Estate ChargesDuring 2010, we performed a comprehensive review of our real estate requirements in New York in connection with our workforce reductions commencing in2008. As a result, during 2010 we decided to sub-lease over 380,000 square feet in New York (in excess of 90% of this space has been sublet) and largelyconsolidate our New York-based employees into two office locations from three. We recorded pre-tax real estate charges of $101.7 million in 2010, reflecting thenet present value of the difference between the amount of our ongoing contractual operating lease obligations for this space and our estimate of current marketrental rates ($76.2 million), as well as the write-off of leasehold improvements, furniture and equipment related to this space ($25.5 million). We periodicallyreview the assumptions and estimates we used in recording these charges.During 2011, we recorded pre-tax real estate charges totaling $7.2 million for our office space in London, England, New York and other U.S. locations. TheLondon charge was $8.8 million, consisting of a $5.8 million payment to the party to which the lease was assigned, as well as the write-off of $3.0 million ofleasehold improvements, furniture and equipment related to the space. We also wrote off an additional $1.5 million of leasehold improvements, furniture andequipment related to the New York space and had miscellaneous charges of $0.4 million. These charges were offset by a $3.5 million credit we recorded in2011 due to changes in estimates of our 2010 charge.During the first half of 2012, we recorded pre-tax real estate charges totaling $16.1 million, reflecting $8.8 million resulting from the abandonment of ourleased New York City Data Center office space and $7.3 million resulting from a change in estimates relating to previously recorded real estate charges. TheNew York City Data Center charge consisted of the net present value of the difference between the amount of ongoing contractual operating lease obligations forthis space and our estimate of current market rental rates ($7.1 million) and the write-off of leasehold improvements, furniture and equipment related to thisspace ($1.7 million).During the third quarter of 2012, in an effort to further reduce our global real estate footprint, we completed a comprehensive review of our worldwide officelocations and began implementing a global space consolidation plan. As a result, our intention is to sub-lease approximately 510,000 square feet of office space(approximately 70% of this space has been sublet), more than 70% of which is New York office space (in addition to the 380,000 square feet space reduction in2010), with the remainder consisting of office space in England, Australia and various U.S. locations.During the second half of 2012, we recorded pre-tax real estate charges of $207.0 million, reflecting the net present value of the difference between the amountof our ongoing contractual operating lease obligations for this space and our estimate of current market rental rates ($163.8 million), as well as the write-off ofleasehold improvements, furniture and equipment related to this space ($39.7 million), and changes in estimates relating to previously recorded real estatecharges ($3.5 million).During 2013, we recorded pre-tax real estate charges of $28.4 million, comprising $17.2 million from a change in estimates related to previously recorded realestate charges ($16.9 million related to the 2010 and 2012 plans and $0.3 million to other real estate charges), $0.3 million for the write-off of leaseholdimprovements, furniture and equipment related to the 2012 plan, and new real estate charges of $10.9 million ($1.5 million related to the 2012 plan, $5.3million related to other real estate charges and $4.1 million related to the write-off of leasehold improvements, furniture and equipment).33Table of ContentsAs of December 31, 2013, we have recorded pre-tax real estate charges totaling $123.9 million and $217.4 million for the office space consolidation initiativescommenced in 2010 and 2012, respectively. These initiatives have reduced annual operating expenses by approximately $70 million since 2009.Long-term Incentive Compensation ChargeDuring the fourth quarter of 2011, we implemented changes to our employee long-term incentive compensation award program to ensure that our compensationpractices are competitive, and to better align the costs of employee compensation and benefits with the company’s current year financial performance andprovide employees with a higher degree of certainty that they will receive the incentive compensation they are awarded. We amended all outstanding year-endlong-term incentive compensation awards of active employees (i.e., those employees who we employed as of December 31, 2011), so that employees whoterminate their employment or are terminated without cause may retain their awards, subject to compliance with certain agreements and restrictive covenants setforth in the applicable award agreement, including restrictions on competition and employee and client solicitation, and a claw-back for failing to followexisting risk management policies. Most equity replacement, sign-on or similar long-term incentive compensation awards included in separate employmentagreements or arrangements were not amended in 2011 to reflect these changes.We recognize compensation expense related to equity compensation grants in the financial statements using the fair value method. Fair value of restrictedHolding Unit awards is the closing price of a Holding Unit on the grant date; fair value of options is determined using the Black-Scholes option valuationmodel. 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 overthe required service period. Prior to the changes made to the employee long-term incentive compensation award program in the fourth quarter of 2011, anemployee’s service requirement typically was the same as the delivery dates. These changes eliminated employee service requirements but did not modifydelivery dates contained in the original award agreements. As a result of these changes, we recorded a one-time, non-cash charge of $587.1 million in thefourth quarter of 2011 for all unrecognized long-term incentive compensation on the amended outstanding awards from prior years.Awards granted in 2011 contained the provisions described above, as did awards granted in 2012 and 2013, and we expect to include these provisions inlong-term incentive compensation awards in future years. Accordingly, our annual incentive compensation expense will reflect 100% of the expense associatedwith the long-term incentive compensation awarded in each year. This approach to expense recognition will more closely match the economic cost of awardinglong-term incentive compensation to the period in which the related service is performed.Units OutstandingWe engage in open-market purchases of Holding Units to help fund anticipated obligations under our incentive compensation award program and for othercorporate purposes, and purchase Holding Units from employees to allow them to fulfill statutory tax withholding requirements at the time of distribution oflong-term incentive compensation awards. During 2013 and 2012, we purchased 5.2 million and 15.7 million Holding Units for $111.3 million and $239.5million, respectively (on a trade date basis). These amounts reflect open-market purchases of 1.9 million and 12.3 million Holding Units for $38.5 millionand $182.3 million, respectively, with the remainder relating to purchases of Holding Units from employees to allow them to fulfill statutory tax withholdingrequirements at the time of distribution of long-term incentive compensation awards, offset by Holding Units purchased by employees as part of a distributionreinvestment election.Each quarter, since the third quarter of 2011, we have implemented plans to repurchase Holding Units pursuant to Rule 10b5-1 under the Securities ExchangeAct of 1934, as amended. A Rule 10b5-1 plan allows a company to repurchase its shares at times when it otherwise might be prevented from doing so becauseof self-imposed trading blackout periods and because it possesses material non-public information. Each broker we have selected has the authority under theterms and limitations specified in the plan to repurchase Holding Units on our behalf in accordance with the terms of the plan. Repurchases are subject to SECregulations as well as certain price, market volume and timing constraints specified in the plan. The plan adopted during the fourth quarter of 2013 expired atthe close of business on February 11, 2014. AllianceBernstein did not buy any Holding Units pursuant to this plan during the fourth quarter of 2013. We mayadopt additional Rule 10b5-1 plans in the future to engage in open-market purchases of Holding Units to help fund anticipated obligations under our incentivecompensation award program and for other corporate purposes.During 2013, we granted to employees and Eligible Directors 13.9 million restricted Holding Unit awards (including 6.5 million granted in December 2013 for2013 year-end awards and 6.5 million granted in January 2013 for 2012 year-end awards). During 2012, we granted to employees and Eligible Directors 12.1million restricted Holding Unit awards (including 2.7 million granted in June 2012 to Peter Kraus, our Chief Executive Officer, in connection with hisextended employment agreement and 8.7 million granted in January 2012 for 2011 year-end awards). Prior to the third quarter of 2013 (and our decisiondescribed in the next paragraph to retire unallocated Holding Units in AllianceBernstein’s consolidated rabbi trust), we funded awards by allocating previouslyrepurchased Holding Units that had been held in the rabbi trust. In December 2013, Holding newly issued 3.9 million Holding Units to fund the restrictedHolding Unit awards granted in December 2013.34Table of ContentsEffective July 1, 2013, management retired all unallocated Holding Units in AllianceBernstein’s consolidated rabbi trust. To retire such units,AllianceBernstein delivered the unallocated Holding Units held in its consolidated rabbi trust to Holding in exchange for the same amount of AllianceBernsteinunits. Each entity then retired its respective units. As a result, on July 1, 2013, each of AllianceBernstein’s and Holding’s units outstanding decreased byapproximately 13.1 million units. AllianceBernstein and Holding intend (subject to compliance with applicable safe harbor rules to avoid AllianceBernsteinbeing treated as a publicly traded partnership) to retire additional units as AllianceBernstein purchases Holding Units on the open market or whenAllianceBernstein purchases Holding Units from employees to allow them to fulfill statutory tax withholding requirements at the time of distribution of long-term incentive compensation awards, if such units are not required to fund new employee awards in the near future. If a sufficient number of Holding Units isnot available in the rabbi trust to fund new awards, Holding will newly issue Holding Units in exchange for newly-issued AllianceBernstein units, as wasdone in December 2013.Generally, when a corporate entity repurchases its shares, the shares no longer are deemed outstanding. Because of our two-tier partnership structure, HoldingUnits purchased by AllianceBernstein and held in its consolidated rabbi trust are considered outstanding (unlike repurchased shares of a single corporateentity). Accordingly, management’s decision to retire repurchased Holding Units rather than allowing them to remain outstanding in the rabbi trust moreclosely aligns the effect of our Holding Unit purchases with that of corporate entities that repurchase their shares. Assuming constant net income, retirement ofunits outstanding has a favorable impact on earnings per unit, and the issuance of new units has a negative impact on earnings per unit.During 2013, Holding issued 887,642 Holding Units upon exercise of options to buy Holding Units. Holding used the proceeds of $15.1 million to purchasethe equivalent number of newly-issued AllianceBernstein Units.Cash DistributionsWe are required to distribute all of our Available Cash Flow, as defined in the AllianceBernstein Partnership Agreement, to its unitholders (including theGeneral Partner). Typically, in the past, Available Cash Flow was the diluted earnings per unit for the quarter multiplied by the number of general and limitedpartnership interests at the end of the quarter, except when, as was the case with the compensation-related charge in the fourth quarter of 2011 and the realestate charge in the third quarter of 2012, the effects of the non-cash charges were eliminated. Starting in the third quarter of 2012, Available Cash Flow hasbeen the adjusted diluted net income per unit for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. Infuture periods, management anticipates that Available Cash Flow typically will be based on adjusted diluted net income per unit, unless managementdetermines that one or more of the non-GAAP adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flowcalculation. See Note 2 to our consolidated financial statements contained in Item 8 for a description of Available Cash Flow.35Table of ContentsManagement Operating MetricsWe are providing the non-GAAP measures “adjusted net revenues”, “adjusted operating income” and “adjusted operating margin” because they are theprincipal operating metrics management uses in evaluating and comparing period-to-period operating performance and we believe they are useful to investors.Management principally uses these metrics in evaluating performance because they present a clearer picture of our operating performance, and allowmanagement to see long-term trends without the distortion primarily caused by long-term incentive compensation-related mark-to-market adjustments, realestate consolidation charges and other adjustment items. Similarly, these management operating metrics help investors better understand the underlying trendsin our results and, accordingly, we believe they provide a valuable perspective for investors.These non-GAAP measures are provided in addition to, and not as substitutes for, net revenues, operating income and operating margin, and they may not becomparable to non-GAAP measures presented by other companies. Management uses both accounting principles generally accepted in the United States ofAmerica ("US GAAP") and non-GAAP measures in evaluating our financial performance. The non-GAAP measures alone may pose limitations because theydo not include all of our revenues and expenses. Years Ended December 31, 2013 2012 2011 (in thousands) Net revenues, US GAAP basis $2,915,047 $2,736,737 $2,749,891 Exclude: Long-term incentive compensation-related investment (gains) losses (16,842) (16,711) 20,302 Long-term incentive compensation-related dividends and interest (2,557) (2,245) (4,364)90% of consolidated venture capital fund investment (gains) losses (10,610) (1,118) 35,778 Distribution-related payments (423,200) (367,090) (302,684)Amortization of deferred sales commissions (41,279) (40,262) (37,675)Pass-through fees and expenses (28,390) (49,010) (35,103)Adjusted net revenues $2,392,169 $2,260,301 $2,426,145 Operating income (loss), US GAAP basis $564,251 $202,365 $(208,469)Exclude: Long-term incentive compensation-related items (405) (1,508) 1,567 2011 long-term incentive compensation charge — — 587,131 Real estate charges 28,424 223,038 7,235 Insurance proceeds — — (10,691)Acquisition-related expenses 3,373 — — Contingent payment arrangements (10,840) — — Sub-total of non-GAAP adjustments 20,552 221,530 585,242 Less: Net income (loss) of consolidated entities attributable to non-controlling interests 9,746 (315) (36,799)Adjusted operating income $575,057 $424,210 $413,572 Adjusted operating margin 24.0% 18.8% 17.0%Adjusted operating income for the year ended December 31, 2013 increased $150.8 million, or 35.6%, from the year ended December 31, 2012, primarily asa result of higher investment advisory base fees of $100.7 million, lower general and administrative expenses (excluding real estate charges) of $65.7 millionand higher Bernstein Research Services revenues of $31.4 million, offset by higher employee compensation expense (excluding the impact of long-termincentive compensation-related items) of $40.5 million. Adjusted operating income for the year ended December 31, 2012 increased $10.6 million, or 2.6%,from the year ended December 31, 2011, primarily as a result of lower employee compensation expense (excluding the impact of long-term incentivecompensation-related items) of $110.1 million, lower general and administrative expenses (excluding real estate charges) of $52.0 million, higher investmentgains of $37.4 million and higher performance-based fees of $32.1 million, offset by lower base advisory fees of $192.4 million and lower Bernstein ResearchServices revenues of $23.7 million.36Table of ContentsAdjusted Net RevenuesAdjusted net revenues exclude investment gains and losses and dividends and interest on long-term incentive compensation-related investments, and 90% ofthe investment gains and losses of our consolidated venture capital fund attributable to non-controlling interests. In addition, adjusted net revenues offsetdistribution-related payments to third parties as well as amortization of deferred sales commissions against distribution revenues. We believe offsetting netrevenues by distribution-related payments is useful for our investors and other users of our financial statements because such presentation appropriatelyreflects the nature of these costs as pass-through payments to third parties who perform functions on behalf of our sponsored mutual funds and/orshareholders of these funds. We offset amortization of deferred sales commissions against net revenues because such costs, over time, essentially offset ourdistribution revenues. We also exclude additional pass-through expenses we incur (primarily through our transfer agency) that are reimbursed and recorded asfees in revenues. During 2012, we offset sub-advisory payments to third parties against performance-based fees earned on the Public-Private InvestmentProgram (“PPIP”) fund we managed. These fees have no impact on operating income, but they do have an impact on our operating margin. As such, weexclude these fees from adjusted net revenues.Adjusted Operating IncomeAdjusted operating income represents operating income on a US GAAP basis excluding (1) the impact on net revenues and compensation expense of the mark-to-market gains and losses (as well as the dividends and interest) associated with employee long-term incentive compensation-related investments, (2) the 2011compensation charge, (3) real estate charges, (4) insurance proceeds, (5) acquisition-related expenses, (6) adjustments to contingent payment arrangements and(7) the net income or loss of consolidated entities attributable to non-controlling interests.Prior to 2009, a large proportion of employee compensation was in the form of long-term incentive compensation awards that were notionally invested inAllianceBernstein investment services and generally vested over a period of four years. AllianceBernstein economically hedged the exposure to marketmovements by purchasing and holding these investments on its balance sheet. All such investments have vested as of year-end 2012 and the investments havebeen distributed to the participants, except for those investments with respect to which the participant elected a long-term deferral. The investments’appreciation or depreciation is recorded within investment gains and losses on the income statement, as well as increasing or decreasing compensation expense.Because this plan is economically hedged, management believes it is useful to reflect the offset achieved from hedging the investments’ market exposure in thecalculation of adjusted operating income and adjusted operating margin. The non-GAAP measures exclude gains and losses and dividends and interest onlong-term incentive compensation-related investments included in revenues and compensation expense.Real estate charges have been excluded because they are not considered part of our core operating results when comparing financial results from period to periodand to industry peers.In the third quarter of 2011, we received significant insurance proceeds from the settlement of a claim that are not considered part of our core operating resultsand, therefore, have been excluded.Acquisition-related expenses, primarily severance and professional fees incurred as a result of the WPS Acquisition, have been excluded because they are notconsidered part of our core operating results when comparing financial results from period to period and to industry peers.The recording of a change in estimate of the contingent consideration payable relating to contingent payment arrangements included in the acquisition of SunAmerica’s alternative investment group (discussed in Note 22 to our consolidated financial statements in Item 8) is not considered part of our core operatingresults and, accordingly, has been excluded.Most of the net income or loss of consolidated entities attributable to non-controlling interests relates to the 90% limited partner interests held by third parties inour consolidated venture capital fund. We own a 10% limited partner interest in the fund. Because we are the general partner of the venture capital fund and aredeemed to have a controlling interest, US GAAP requires us to consolidate the financial results of the fund. However, recognizing 100% of the gains or lossesin operating income while only retaining 10% is not reflective of our underlying financial results at the operating income level. As a result, we are excluding the90% limited partner interests we do not own from our adjusted operating income. Similarly, net income of joint ventures attributable to non-controllinginterests, although not significant, is excluded because it does not reflect the economic interest attributable to AllianceBernstein.Adjusted Operating MarginAdjusted operating margin allows us to monitor our financial performance and efficiency from period to period and to compare our performance to industrypeers without the volatility noted above in our discussion of adjusted operating income. Adjusted operating margin is derived by dividing adjusted operatingincome by adjusted net revenues.37Table of ContentsNet RevenuesThe components of net revenues were as follows: Years Ended December 31, % Change 2013 2012 2011 2013-12 2012-11 (in millions) Investment advisory and services fees: Institutions: Base fees $402.0 $425.4 $599.5 (5.5)% (29.0)%Performance-based fees 36.1 59.3 16.0 (39.1) 271.1 438.1 484.7 615.5 (9.6) (21.3)Retail: Base fees 817.5 695.1 644.1 17.6 7.9 Performance-based fees 7.4 2.9 — 148.2 n/m 824.9 698.0 644.1 18.2 8.4 Private Client: Base fees 576.0 577.3 647.2 (0.2) (10.8)Performance-based fees 10.1 4.4 0.5 129.3 658.6 586.1 581.7 647.7 0.8 (10.2)Total: Base fees 1,795.5 1,697.8 1,890.8 5.8 (10.2)Performance-based fees 53.6 66.6 16.5 (19.6) 302.6 1,849.1 1,764.4 1,907.3 4.8 (7.5)Bernstein research services 445.1 413.7 437.4 7.6 (5.4)Distribution revenues 465.4 409.5 360.7 13.7 13.5 Dividend and interest income 20.0 21.3 21.5 (6.2) (1.0)Investment gains (losses) 33.3 29.2 (82.1) 14.2 n/mOther revenues 105.0 101.8 107.6 3.2 (5.4)Total revenues 2,917.9 2,739.9 2,752.4 6.5 (0.5)Less: Interest expense 2.9 3.2 2.5 (9.2) 26.4 Net revenues $2,915.0 $2,736.7 $2,749.9 6.5 (0.5)Investment Advisory and Services FeesInvestment advisory and services fees are the largest component of our revenues. These fees generally are calculated as a percentage of the value of AUM as ofa specified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size ofaccount and the total amount of assets we manage for a particular client. Accordingly, fee income generally increases or decreases as AUM increase or decreaseand is therefore affected by market appreciation or depreciation, the addition of new client accounts or client contributions of additional assets to existingaccounts, withdrawals of assets from and termination of client accounts, purchases and redemptions of mutual fund shares, shifts of assets between accountsor products with different fee structures, and acquisitions. Our average basis points realized (investment advisory fees divided by average AUM) generallyapproximate 50 to 70 basis points for actively managed equity services, 15 to 50 basis points for actively managed fixed income services and 5 to 20 basispoints for passively managed services. As such, a shift of client assets from active equity services toward fixed income services and/or other services resultsin a decline in revenues just as a shift of assets toward active equity services would increase revenues.We calculate AUM using established market-based valuation methods and fair valuation (non-observable market) methods. Market-based valuation methodsinclude: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognized pricing vendorsfor fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps; and quoted bidsor spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include: discounted cash flow models, evaluation of assetsversus liabilities or any other methodology that is validated and approved by our Valuation Committee (see paragraph immediately below for moreinformation regarding 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. Investments utilizing fair valuation methods typically make up an insignificant amount of our totalAUM. Market volatility has not had a significant effect on our ability to acquire market data and, accordingly, our ability to use market-based valuationmethods.The Valuation Committee, which is composed of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments heldin client and AllianceBernstein portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply topricing and valuing investments held in these portfolios. We also have a Pricing Group, which reports to the Valuation Committee, and is responsible foroverseeing the pricing process for all investments.38Table of ContentsWe 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 statedbenchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client accountunderperforms relative to its performance target (whether absolute or relative to a specified benchmark), it must gain back such underperformance before wecan collect future performance-based fees. Therefore, if we fail to achieve our performance target for a particular period, we will not earn a performance-basedfee 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 toearn performance-based fees on approximately 10% of the assets we manage for institutional clients and approximately 3% of the assets we manage for privateclients (in total, approximately 6% of our company-wide AUM).Our investment advisory and services fees increased $84.7 million, or 4.8%, in 2013, due to a $97.7 million, or 5.8%, increase in base fees, which primarilyresulted from a 6.4% increase in average AUM, partially offset by a $13.0 million decrease in performance-based fees. The decrease in performance-based feeswas primarily related to the $39.6 million performance-based fee we earned ($18.0 million of which was paid to third party sub-advisors) during the thirdquarter of 2012 after we completed the liquidation of our Public-Private Investment Partnership fund (“PPIP Fee”). Our investment advisory and services feesdecreased $142.9 million, or 7.5%, in 2012, primarily due to a decrease in base fees of $193.0 million, or 10.2%, which primarily resulted from an 8.0%decrease in average AUM and a continued shift in product mix from actively managed equity services to actively managed fixed income services in ourInstitutional AUM, offset by a $50.1 million increase in performance-based fees (primarily as a result of the PPIP Fee).Institutional investment advisory and service fees decreased $46.6 million, 9.6%, in 2013. The decrease primarily was due to a $23.4 million, or 5.5%,decrease in base fees due to the continued significant shift in product mix from actively managed equity services to actively managed fixed income services anda $23.2 million decrease in performance-based fees (primarily as a result of the PPIP Fee). Average AUM for actively managed equity services decreased29.6% while average AUM for actively managed fixed income services increased 7.3%. Institutional investment advisory and services fees decreased $130.8million, or 21.3%, in 2012, due to a $174.1 million, or 29.0%, decrease in base fees, partly offset by a $43.3 million increase in performance-based fees(primarily as a result of the PPIP Fee). The decrease in base fees primarily was due to a decrease in average AUM of 13.3% as well as a continued shift inproduct mix from actively managed equity services to actively managed fixed income services. Average AUM for actively managed equity services decreased52.8% while average AUM for actively managed fixed income services increased 8.5%.Retail investment advisory and services fees increased $126.9 million, or 18.2%, in 2013, primarily due to a 16.5% increase in average AUM. Retailinvestment advisory and services fees increased $53.9 million, or 8.4%, in 2012, due to a 3.4% increase in average AUM. The increase in fees in 2013 and2012 as compared to an increase in average AUM primarily is due to a shift in product mix from long-term U.S. mutual funds and other Retail products andservices towards long-term non-U.S. global fixed income mutual funds, which generally have higher fees as compared to long-term U.S. mutual funds andother Retail products and services.Private Client investment advisory and services fees increased $4.4 million, or 0.8%, in 2013, primarily due to an increase in performance-based fees of $5.7million, partially offset by a decrease in base fees of $1.3 million, or 0.2%, as average billable AUM decreased 1.9%. The increase in fees reflected the impactof an asset mix shift from fixed income services to actively managed equity services and other (principally alternatives) services. Private Client investmentadvisory and services fees decreased $66.0 million, or 10.2%, in 2012, primarily as a result of a decline in base fees of $69.9 million, or 10.8%, reflecting adecrease in average billable AUM of 8.5% and the impact of a shift in product mix.Bernstein Research ServicesBernstein Research Services revenue consists principally of equity commissions received for providing equity research and brokerage-related services toinstitutional investors.Revenues from Bernstein Research Services increased $31.4 million, or 7.6%, in 2013. The increase in 2013 was the result of strong growth in Europe andAsia. Revenues from Bernstein Research Services decreased $23.7 million, or 5.4%, in 2012. The decrease in 2012 was the result of a significant decline inmarket trading volumes, partially offset by market share gains.Distribution RevenuesAllianceBernstein Investments and AllianceBernstein (Luxembourg) S.A. (one of our subsidiaries) act as distributors and/or placing agents of company-sponsored mutual funds and receive distribution services fees from certain of those funds as partial reimbursement of the distribution expenses they incur.Period-over-period fluctuations of distribution revenues are typically in line with fluctuations of the corresponding average AUM of these mutual funds.39Table of ContentsDistribution revenues increased $55.9 million, or 13.7%, and $48.8 million, or 13.5%, in 2013 and 2012, respectively, while the corresponding averageAUM of these mutual funds grew 14.9% and 14.6%, respectively. Average AUM of non B-share and non C-share mutual funds (which have lowerdistribution fee rates than B-share and C-share mutual funds) increased 18.3% in both periods, while average AUM of B-share and C-share mutual fundsdecreased by 0.5% in 2013 and increased by 0.6% in 2012.Dividend and Interest Income and Interest ExpenseDividend and interest income consists primarily of investment income and interest earned on customer margin balances and U.S. Treasury Bills. Interestexpense principally reflects interest accrued on cash balances in customers’ brokerage accounts. Dividend and interest income, net of interest expense,decreased $1.0 million and $0.9 million, in 2013 and 2012, respectively.Investment Gains (Losses)Investment gains (losses) consist of realized and unrealized investment gains or losses on: (i) employee long-term incentive compensation-related investments,(ii) investments owned by our consolidated venture capital fund, (iii) U.S. Treasury Bills, (iv) market-making in cash equities and exchange-traded optionsand equities, (v) seed capital investments and (vi) derivatives. Investment gains (losses) also include realized gains or losses on the sale of seed capitalinvestments classified as available-for-sale securities and equity in earnings of proprietary investments in limited partnership hedge funds that we sponsor andmanage.Investment gains (losses) are as follows: Years Ended December 31, 2013 2012 2011 (in millions) Long-term incentive compensation-related investments Realized gains (losses) $1.8 $1.3 $(8.3)Unrealized gains (losses) 15.0 15.4 (12.0) Consolidated private equity fund investments Realized gains (losses) Non-public investments (6.5) (8.4) (3.1)Public securities (3.8) (8.6) 2.3 (10.3) (17.0) (0.8)Unrealized gains (losses) Non-public investments 11.3 11.0 (2.1)Public securities 10.8 7.2 (36.9) 22.1 18.2 (39.0)Seed capital investments Realized gains (losses) Seed capital 21.3 14.6 7.7 Derivatives (20.7) (35.7) 8.1 0.6 (21.1) 15.8 Unrealized gains (losses) Seed capital 9.9 39.1 (22.1)Derivatives 1.6 0.1 (3.7) 11.5 39.2 (25.8)Brokerage-related investments Realized gains (losses) (7.6) (4.8) (12.4)Unrealized gains (losses) 0.2 (2.0) 0.4 $33.3 $29.2 $(82.1)Other RevenuesOther revenues consist of fees earned for transfer agency services provided to company-sponsored mutual funds, fees earned for administration andrecordkeeping services provided to company-sponsored mutual funds and the general accounts of AXA and its subsidiaries, and other miscellaneousrevenues. Other revenues increased $3.2 million, or 3.2%, in 2013 primarily due to higher shareholder servicing fees. Other revenues decreased $5.8 million,or 5.4%, in 2012 due to lower shareholder servicing fees.40Table of ContentsExpenses The components of expenses were as follows: Years Ended December 31, % Change 2013 2012 2011 2013-12 2012-11 (in millions) Employee compensation and benefits: Employee compensation and benefits $1,212.0 $1,168.6 $1,246.9 3.7% (6.3)%Long-term incentive compensation charge — — 587.1 — n/m 1,212.0 1,168.6 1,834.0 3.7 (36.3)Promotion and servicing: Distribution-related payments 423.2 367.1 302.7 15.3 21.3 Amortization of deferred sales commissions 41.3 40.3 37.7 2.5 6.9 Other 208.2 202.2 219.2 3.0 (7.8) 672.7 609.6 559.6 10.4 8.9 General and administrative: General and administrative 423.1 507.7 532.9 (16.7) (4.7)Real estate charges 28.4 223.0 7.2 (87.3) n/m 451.5 730.7 540.1 (38.2) 35.3 Contingent payment arrangements (10.2) 0.7 0.7 n/m — Interest 3.0 3.4 2.6 (13.6) 34.7 Amortization of intangible assets 21.8 21.4 21.4 2.4 — Total $2,350.8 $2,534.4 $2,958.4 (7.2) (14.3)Employee Compensation and BenefitsEmployee compensation and benefits consist of base compensation (including salaries and severance), annual short-term incentive compensation awards (cashbonuses), annual long-term incentive compensation awards, commissions, fringe benefits and other employment costs (including recruitment, training,temporary help and meals).As a result of the changes made to our long-term incentive compensation program in 2011 (discussed earlier in this Item 7), we recorded a one-time, non-cashcharge of $587.1 million in the fourth quarter of 2011 for all unrecognized long-term incentive compensation on outstanding awards from prior years.Compensation expense as a percentage of net revenues was 41.6%, 42.7% and 45.3% (excluding the one-time, non-cash charge) for the years ended December31, 2013, 2012 and 2011, respectively. Compensation expense generally is determined on a discretionary basis and is primarily a function of our firm’sfinancial performance. Amounts are awarded to help us achieve our key compensation goals of attracting, motivating and retaining top talent, by providingawards for the past year’s performance and providing incentives for future performance, while also helping ensure that our firm’s unitholders receive anappropriate return on their investment. Senior management, with the approval of the Compensation Committee of the Board of Directors of AllianceBernsteinCorporation (“Compensation Committee”), confirmed that the appropriate metric to consider in determining the amount of incentive compensation is theratio of adjusted employee compensation and benefits expense to adjusted net revenues. Adjusted net revenues used in the adjusted compensation ratio are thesame as the adjusted net revenues presented as a non-GAAP measure (discussed earlier in this Item 7). Adjusted employee compensation and benefits expenseis total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals (which were1.1%, 1.1% and 1.4% of adjusted net revenues for 2013, 2012 and 2011, respectively), and excludes the impact of mark-to-market vesting expense, as well asdividends and interest expenses, associated with employee long-term incentive compensation-related investments. Senior management, with the approval of theCompensation Committee, also established as an objective that adjusted employee compensation and benefits expense generally should not exceed 50% of ouradjusted net revenues except in unexpected or unusual circumstances. Our ratios of adjusted compensation expense as a percentage of adjusted net revenueswere 48.7%, 49.8% and 50.3%, respectively, for the years ended December 31, 2013, 2012 and 2011. During the first nine months of 2013, we accruedadjusted compensation expense using a 50.0% ratio to record our estimate of incentive compensation to be awarded at year-end. During the fourth quarter of2013, we maintained our estimate of incentive compensation to be awarded at year-end despite higher than forecasted revenues in the quarter. As a result, weaccrued adjusted compensation expense using a 45.3% ratio, which resulted in a 48.7% full-year 2013 ratio.In 2013, employee compensation and benefits expense increased $43.4 million, or 3.7%, primarily due to higher incentive compensation ($52.0 million) andcommissions ($9.9 million), partially offset by lower base compensation ($17.0 million). In 2012, employee compensation and benefits expense decreased$665.4 million, or 36.3%, primarily due to the one-time compensation charge ($587.1 million) in 2011, lower base compensation ($53.7 million) and lowerpayroll taxes ($10.5 million).41Table of ContentsPromotion and ServicingPromotion and servicing expenses include distribution-related payments to financial intermediaries for distribution of AllianceBernstein mutual funds andamortization of deferred sales commissions paid to financial intermediaries for the sale of back-end load shares of AllianceBernstein mutual funds. Alsoincluded in this expense category are costs related to travel and entertainment, advertising and promotional materials.Promotion and servicing expenses increased $63.1 million, or 10.4%, in 2013. The increase primarily was the result of higher distribution-related payments of$56.1 million (due to higher AUM), higher marketing costs of $2.2 million, higher trade execution and clearing costs of $2.0 million and higher transfer feesof $1.2 million. Promotion and servicing expenses increased $50.0 million, or 8.9%, in 2012. The increase reflects higher distribution-related payments of$64.4 million, higher amortization of deferred sales commissions of $2.6 million and higher marketing and advertising costs of $2.7 million, partially offsetby lower travel and entertainment of $11.4 million, lower trade execution of $5.0 million and lower transfer fees of $4.5 million, all due to the prior year’sincreased business activity and new product launches.General and AdministrativeGeneral and administrative expenses include technology, professional fees, occupancy, communications and similar expenses. General and administrativeexpenses as a percentage of net revenues were 15.5% (14.5% excluding real estate charges), 26.7% (18.6% excluding real estate charges) and 19.6% (19.4%excluding real estate charges) for the years ended December 31, 2013, 2012 and 2011, respectively. General and administrative expenses decreased $279.2million, or 38.2%, in 2013, primarily due to lower real estate charges of $194.6 million, lower occupancy expenses of $37.5 million (excluding real estatecharges), lower portfolio services expenses of $22.5 million, lower professional fees of $12.9 million and lower technology expenses of $6.9 million. Generaland administrative expenses increased $190.6 million, or 35.3%, in 2012, primarily due to higher real estate charges of $215.8 million, higher portfolioservices expenses of $18.6 million (primarily due to PPIP sub-advisor payments) and higher legal expenses of $15.6 million (primarily due to our receipt ofinsurance proceeds of $10.7 million in 2011), partially offset by lower occupancy expenses of $27.7 million (excluding real estate charges), lower technologyexpenses of $13.7 million and a cash receipt of $6.5 million in 2012 relating to the finalization of a claims processing contingency originally recorded in2006.Contingent Payment ArrangementsContingent payment arrangements reflect changes in estimates of contingent payment liabilities established in connection with acquisitions in previous periods,as well as accretion expense of these liabilities. The credit to operating expenses of $10.2 million in 2013 reflects the change in estimate of the contingentconsideration payable relating to the acquisition of Sun America’s alternative investment group of $10.8 million recorded in the fourth quarter of 2013, offsetby accretion expense of $0.6 million.Income TaxesAllianceBernstein, a private limited partnership, is not subject to federal or state corporate income taxes, but is subject to a 4.0% New York Cityunincorporated business tax (“UBT”). Our domestic corporate subsidiaries are subject to federal, state and local income taxes, and generally are included inthe filing of a consolidated federal income tax return. Separate state and local income tax returns also are filed. Foreign corporate subsidiaries generally aresubject to taxes in the jurisdictions where they are located.Income tax expense increased $23.1 million, or 167.6%, in 2013 compared to 2012. The increase is primarily due to significantly higher pre-tax earnings (inlarge part due to the 2012 real estate charges), partially offset by the impact of a lower effective tax rate in the current year of 6.5% compared to 6.8% in 2012.Income tax expense increased $10.6 million, or 344.3%, in 2012 compared to 2011. The increase primarily was due to higher operating income in 2012 (inlarge part due to the 2011 compensation charge offset by the 2012 real estate charges), partially offset by the UBT tax benefit recorded in the third quarter of2012 ($5.7 million). In the third quarter of 2012, application of the New York City tax law that sources various types of receipts from services performed byregistered brokers and dealers of securities and commodities for purposes of apportioning income resulted in a reduction of our rate of tax for 2012 and to therate of tax that we expect to pay in the future. As a result, we recognized a $5.7 million tax benefit in the third quarter of 2012 relating to our full year 2011 andnine months 2012 UBT.Net Income (Loss) in Consolidated Entities Attributable to Non-Controlling InterestsNet income (loss) of consolidated entities attributable to non-controlling interests consists of limited partner interests owned by other investors representing90% of the total limited partner interests in our consolidated venture capital fund. In 2013, we had $9.7 million of net income of consolidated entitiesattributable to non-controlling interests, primarily due to an $11.8 million net investment gain attributable to our consolidated venture capital fund (of which90% belongs to non-controlling interests) and management fees of $0.9 million. In 2012, we had a $0.3 million net loss of consolidated entities attributable tonon-controlling interests, primarily due to a $1.2 million net investment gain attributable to our consolidated venture capital fund and management fees of$1.5 million.42Table of ContentsCapital Resources and LiquidityDuring 2013, net cash provided by operating activities was $505.6 million, compared to $684.0 million during 2012. The change primarily was due to agreater decrease in broker-dealer related payables (net of receivables and segregated U.S. Treasury Bills activity) of $264.4 million, a decrease in accountspayable and accrued expenses of $189.8 million, and higher net purchases of investments of $147.7 million, due primarily to higher broker-dealer relatedpurchases, partially offset by higher cash provided by net income of $453.6 million. During 2012, net cash provided by operating activities was $684.0million, compared to $578.2 million during 2011. The change primarily was due to lower net purchases of investments of $247.5 million, primarily relatedto broker-dealer investments and seed capital investments, and lower broker-dealer related net receivables and segregated U.S. Treasury Bills of $80.4 million,partially offset by lower cash provided by net income of $103.6 million and increases in fees receivable and deferred sales commissions.During 2013, net cash used in investing activities was $57.1 million, compared to $18.3 million during 2012, reflecting the acquisition we made in thecurrent year for $38.6 million (cash paid, net of cash acquired). During 2012, net cash used in investing activities was $18.3 million, compared to $76.7million during 2011. The change primarily was due to the three acquisitions we made during 2011 for an aggregate of $41.8 million. In addition, our netadditions to furniture, equipment and leasehold improvements decreased $19.3 million in 2012 as compared to 2011.During 2013, net cash used in financing activities was $562.4 million, compared to $682.2 million during 2012. The change reflects lower purchases ofHolding Units of $126.4 million, lower net repayments of commercial paper of $67.5 million, an increase in overdrafts payable of $52.5 million andadditional investment by Holding with the proceeds from the exercise of compensatory options to buy Holding Units of $15.1 million, partially offset byhigher distributions to the General Partner and unitholders of $139.8 million as a result of higher earnings (distributions on earnings are paid one quarter inarrears). During 2012, net cash used in financing activities was $682.2 million, compared to $512.2 million during 2011. The increase reflects commercialpaper net payments of $123.3 million in 2012 compared to $219.4 million of net issuances during 2011, offset by lower distributions to the General Partnerand unitholders of $155.0 million as a result of lower earnings (distributions on earnings are paid one quarter in arrears) and changes in overdrafts payable of$38.4 million.As of December 31, 2013, AllianceBernstein had $509.9 million of cash and cash equivalents, all of which is available for liquidity, but consists primarilyof cash on deposit for our broker dealers to comply with various customer clearing activities and cash held by foreign entities for which a permanentinvestment election for U.S. tax purposes is taken. If the cash held at our foreign subsidiaries of $371.1 million, which includes cash on deposit for ourforeign broker dealers, was to be repatriated to the U.S., we would be required to accrue and pay U.S. income taxes on these funds, based on the unremittedamount. Our current intent is to permanently reinvest these earnings outside the U.S.Debt and Credit FacilitiesAs of December 31, 2013 and 2012, AllianceBernstein had $268.4 million and $323.2 million, respectively, in commercial paper outstanding with weightedaverage interest rates of approximately 0.3% and 0.5%, respectively. The commercial paper is short term in nature, and as such, recorded value is estimated toapproximate fair value (and considered a Level 2 security in the fair value hierarchy). Average daily borrowings of commercial paper during 2013 and 2012were $282.0 million and $404.9 million, respectively, with weighted average interest rates of approximately 0.3% and 0.4%, respectively.AllianceBernstein has a $1.0 billon committed, unsecured senior revolving credit facility (the “Credit Facility”) with a group of commercial banks and otherlenders, which matures on January 17, 2017. The Credit Facility provides for possible increases in the principal amount by up to an aggregate incrementalamount of $250 million, any such increase being subject to the consent of the affected lenders. The Credit Facility is available for AllianceBernstein’s andSCB LLC’s business purposes, including the support of AllianceBernstein’s $1.0 billion commercial paper program. Both AllianceBernstein and SCB LLCcan draw directly under the Credit Facility and management may draw on the Credit Facility from time to time. AllianceBernstein has agreed to guarantee theobligations of SCB LLC under the Credit Facility.The Credit Facility contains affirmative, negative and financial covenants, which are customary for facilities of this type, including, among other things,restrictions on dispositions of assets, restrictions on liens, a minimum interest coverage ratio and a maximum leverage ratio. As of December 31, 2013, wewere in compliance with these covenants. The Credit Facility also includes customary events of default (with customary grace periods, as applicable),including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or lender’s commitments may beterminated. Also, under such provisions, upon the occurrence of certain insolvency- or bankruptcy-related events of default, all amounts payable under theCredit Facility would automatically become immediately due and payable, and the lender’s commitments would automatically terminate.43Table of ContentsAmounts under the Credit Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. Voluntary prepaymentsand commitment reductions requested by us are permitted at any time without fee (other than customary breakage costs relating to the prepayment of anydrawn loans) upon proper notice and subject to a minimum dollar requirement. Borrowings under the Credit Facility bear interest at a rate per annum, whichwill be, at our option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AllianceBernstein, plus one of thefollowing indexes: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate.As of December 31, 2013 and 2012, we had no amounts outstanding under the Credit Facility. During 2013 and 2012, we did not draw upon the CreditFacility.In addition, SCB LLC has five uncommitted lines of credit with four financial institutions. Two of these lines of credit permit us to borrow up to an aggregateof approximately $200.0 million, with AllianceBernstein named as an additional borrower, while three lines have no stated limit. As of December 31, 2013 and2012, SCB LLC had no bank loans outstanding. Average daily borrowings of bank loans during 2013 and 2012 were $6.2 million and $18.1 million,respectively, with weighted average interest rates of approximately 1.0% and 1.3%, respectively.Our financial condition and access to public and private debt markets should provide adequate liquidity for our general business needs. Management believesthat cash flow from operations and the issuance of debt and AllianceBernstein Units or Holding Units will provide us with the resources necessary to meet ourfinancial obligations. See “Risk Factors” in Item 1A and “Cautions Regarding Forward-Looking Statements” in this Item 7 for a discussion of creditmarkets and our ability to renew our credit facilities at expiration. Off-Balance Sheet Arrangements and Aggregate Contractual ObligationsGuaranteesUnder various circumstances, AllianceBernstein guarantees the obligations of its consolidated subsidiaries.AllianceBernstein maintains a guarantee in connection with the $1.0 billion Credit Facility. If SCB LLC is unable to meet its obligations, AllianceBernsteinwill pay the obligations when due or on demand. In addition, AllianceBernstein maintains guarantees totaling $400 million for three of SCB LLC’suncommitted lines of credit.AllianceBernstein maintains a guarantee with a commercial bank, under which we guarantee the obligations in the ordinary course of business of SCB LLC,SCBL and AllianceBernstein Holdings (Cayman) Ltd. (“AB Cayman”). We also maintain three additional guarantees with other commercial banks underwhich we guarantee approximately $448 million of obligations for SCBL. In the event that SCB LLC, SCBL or AB Cayman is unable to meet its obligations,AllianceBernstein will pay the obligations when due or on demand.We also have three smaller guarantees with a commercial bank totaling approximately $3 million, under which we guarantee certain obligations in the ordinarycourse of business of two 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.44Table of ContentsAggregate Contractual ObligationsOur contractual obligations as of December 31, 2013 are as follows: Payments Due by Period Total Less than1 Year 1-3 Years 3-5 Years More than5 Years (in millions) Commercial paper $268.4 $268.4 $— $— $— Operating leases, net of sublease commitments 1,332.9 110.8 208.0 197.8 816.3 Funding commitments 22.8 3.5 19.3 — — Accrued compensation and benefits 314.5 182.3 76.8 24.1 31.3 Unrecognized tax benefits 3.0 1.0 1.3 0.7 — Total $1,941.6 $566.0 $305.4 $222.6 $847.6 During 2009, we entered into a subscription agreement under which we committed to invest up to $35 million, as amended in 2011, in a venture capital fundover a six-year period. As of December 31, 2013, we have funded $24.9 million of this commitment.During 2010, as general partner of AllianceBernstein U.S. Real Estate L.P. (the “Real Estate Fund”), we committed to invest $25 million in the Real EstateFund. As of December 31, 2013, we have funded $12.4 million of this commitment.During 2012, we entered into an investment agreement under which we committed to invest up to $8 million in an oil and gas fund over a three-year period. Asof December 31, 2013, we have funded $7.9 million of this commitment.Accrued compensation and benefits amounts in the table above exclude our accrued pension obligation. Offsetting our accrued compensation obligations arelong-term incentive compensation-related investments and money market investments we funded totaling $123.7 million, which are included in ourconsolidated statement of financial condition. Any amounts reflected on the consolidated statement of financial condition as payables (to broker-dealers,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 $13 million in each of the next four years. We currently estimate that wewill contribute $6 million to our qualified, defined benefit retirement plan during 2014.ContingenciesSee Note 13 to our consolidated financial statements in Item 8 for a discussion of our commitments and contingencies.Critical Accounting EstimatesThe preparation of the consolidated financial statements and notes to consolidated financial statements requires management to make estimates and judgmentsthat 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 themethods and assumptions used.Variable Interest EntitiesIn accordance with ASU 2009-17, Consolidations (Topic 810) – Improvements to Financial Reporting by Enterprises Involved with Variable InterestEntities, the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design, acompany’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance, and whether a company is obligated toabsorb losses or receive benefits that could potentially be significant to the entity. The standard also requires ongoing assessments of whether a company is theprimary beneficiary of a variable interest entity (“VIE”).Significant judgment is required in the determination of whether we are the primary beneficiary of a VIE. If we, together with our related party relationships,are determined to be the primary beneficiary of a VIE, the entity will be consolidated within our consolidated financial statements. In order to determine whetherwe are the primary beneficiary of a VIE, management must make significant estimates and assumptions of probable future cash flows and assignprobabilities to different cash flow scenarios. Assumptions made in such analyses include, but are not limited to, market prices of securities, market interestrates, potential credit defaults on individual securities or default rates on a portfolio of securities, gain realization, liquidity or marketability of certainsecurities, discount rates and the probability of certain other outcomes.45Table of ContentsWe provide seed capital to our investment teams to develop new products and services for our clients. Our original seed investment typically represents all or amajority of the equity investment in the new product. Our seed investment portfolio has a weighted average age of approximately 14 months and we typicallyturn over approximately 50% of the seed investments annually. These investments are temporary in nature, and our equity ownership in these funds mayfluctuate above and below 50% from one reporting period to the next. Our large seed capital investments range from $1 million to $30 million, with an averagesize of $11 million. The Audit Committee of the Board of Directors has established a ceiling of $550 million for the seed investment program. We evaluateour seed investments on a quarterly basis and consolidate such investments as required pursuant to US GAAP.GoodwillAs of December 31, 2013, we had goodwill of $3.0 billion on the consolidated statement of financial condition. We have determined that AllianceBernstein hasonly one reporting segment and reporting unit. We test our goodwill annually, as of September 30, for impairment. As of September 30, 2013, the impairmenttest indicated that goodwill was not impaired. The carrying value of goodwill is also reviewed if facts and circumstances occur that suggest possibleimpairment, such as significant declines in AUM, revenues, earnings or the price of a Holding Unit.On an annual basis, or when circumstances suggest it is necessary, we start with step one of our two-step goodwill impairment test. The first step of thegoodwill impairment test is used to identify potential impairment by comparing the fair value of AllianceBernstein, the reporting unit, with its carrying value,including goodwill. If the fair value of the reporting unit exceeds its carrying value, goodwill is considered not impaired and the second step of the impairmenttest is not performed. However, if the carrying value of the reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed tomeasure the amount of impairment loss, if any. The second step compares the implied fair value of the reporting unit to the aggregated fair values of itsindividual assets and liabilities to determine the amount of impairment, if any.AllianceBernstein estimates its fair value under both the market approach and income approach. Under the market approach, the fair value of the reportingunit is based on its unadjusted market valuation (AllianceBernstein Units outstanding multiplied by the price of a Holding Unit) and adjusted marketvaluations assuming a control premium and earnings multiples. The price of a publicly-traded AllianceBernstein Holding Unit serves as a reasonable startingpoint for valuing an AllianceBernstein Unit because each represents the same fractional interest in our underlying business. Our market approach analysisalso includes control premiums, which are based on an analysis of control premiums for relevant recent acquisitions, and comparable industry earningsmultiples applied to our earnings forecast. Under the income approach, the fair value of the reporting unit is based on the present value of estimated futurecash flows. Determining estimated fair value using a discounted cash flow valuation technique consists of applying business growth rate assumptions over theestimated life of the goodwill asset and then discounting the resulting expected cash flows using an estimated weighted average cost of capital of marketparticipants to arrive at a present value amount that approximates fair value.Real Estate ChargesDuring 2010 and 2012, we performed comprehensive reviews of our office real estate requirements and determined to consolidate office space and sub-lease theexcess office space. As a result, we recorded real estate charges that reflect the net present value of the difference between the amount of our on-going contractuallease obligations for the vacated floors and our estimate of current market rental rates for such floors. The charges we recorded were based on currentassumptions at the time of the charges regarding sublease marketing periods, costs to prepare the properties to market, market rental rates, brokercommissions and subtenant allowances/incentives, all of which are factors largely beyond our control. If our assumptions prove to be incorrect, we may needto record additional charges or reduce previously recorded charges. We review the assumptions and estimates we used in recording these charges on a quarterlybasis.Loss ContingenciesManagement continuously reviews with legal counsel the status of regulatory matters and pending or threatened litigation. We evaluate the likelihood that a losscontingency exists and record a loss contingency if it is both probable and reasonably estimable as of the date of the financial statements. See Note 13 to ourconsolidated financial statements in Item 8.Accounting PronouncementsSee Note 2 to our consolidated financial statements in Item 8.46Table of ContentsCautions Regarding Forward-Looking StatementsCertain statements provided by management in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Actof 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from futureresults expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: theperformance of financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economicconditions, industry trends, future acquisitions, competitive conditions and government regulations, including changes in tax regulations and rates and themanner in which the earnings of publicly-traded partnerships are taxed. We caution readers to carefully consider such factors. Further, such forward-lookingstatements speak only as of the date on which such statements are made; we undertake no obligation to update any forward-looking statements to reflect eventsor circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actualresults 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 withor 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 listedin “Risk Factors” and those listed below could also adversely affect our revenues, financial condition, results of operations and business prospects.The forward-looking statements referred to in the preceding paragraph include statements regarding:•Our belief that the cash flow Holding realizes from its investment in AllianceBernstein will provide Holding with the resourcesnecessary to meet its financial obligations: Holding’s cash flow is dependent on the quarterly cash distributions it receives fromAllianceBernstein. Accordingly, Holding’s ability to meet its financial obligations is dependent on AllianceBernstein’s cash flow from itsoperations, which is subject to the performance of the capital markets and other factors beyond our control.•Our financial condition and ability to access the public and private capital markets providing adequate liquidity for our generalbusiness needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capitalmarkets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to access the publicand private capital markets on reasonable terms may be limited by adverse market conditions, our firm’s long-term credit ratings, our profitabilityand changes in government regulations, including tax rates and interest rates.•The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do notexpect certain pending legal proceedings to have a material adverse effect on our results of operations, financial condition or liquidity, any settlementor judgment with respect to a pending or future legal proceeding could be significant, and could have such an effect.•The possibility that we will engage in open market purchases of Holding Units to help fund anticipated obligations under our incentivecompensation award program: The number of Holding Units AllianceBernstein may decide to buy in future periods, if any, to help fundincentive compensation awards is dependent upon various factors, some of which are beyond our control, including the fluctuation in the price of aHolding Unit (NYSE: AB) and the availability of cash to make these purchases.•The pipeline of new institutional mandates not yet funded: Before they are funded, institutional mandates do not represent legally bindingcommitments to fund and, accordingly, the possibility exists that not all mandates will be funded in the amounts and at the times currentlyanticipated.•Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues: Aggregateemployee compensation reflects employee performance and competitive compensation levels. Fluctuations in our revenues and/or changes incompetitive compensation levels could result in adjusted employee compensation expense being higher than 50% of our adjusted net revenues.47Table of ContentsItem 7A.Quantitative and Qualitative Disclosures about Market Risk Market Risk, Risk Management and Derivative Financial InstrumentsOur investments consist of trading, available-for-sale investments and other investments. Trading and available-for-sale investments include United StatesTreasury Bills, mutual funds, exchange-traded options and various separately-managed portfolios consisting of equity and fixed income securities. Tradinginvestments are purchased for short-term investment, principally to fund liabilities related to long-term incentive compensation plans and to seed newinvestment services. Although available-for-sale investments are purchased for long-term investment, the portfolio strategy considers them available-for-salefrom time to time due to changes in market interest rates, equity prices and other relevant factors. Other investments include investments in hedge funds wesponsor, our consolidated venture capital fund and other private equity investment vehicles.We enter into various futures, forwards and swaps to economically hedge our seed capital investments. In addition, we have currency forwards thateconomically hedge certain cash accounts. We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives andHedging. See Note 7 to our consolidated financial statements in Item 8.Trading and Non-Trading Market Risk Sensitive InstrumentsInvestments with Interest Rate Risk—Fair ValueThe table below provides our potential exposure with respect to our fixed income investments, measured in terms of fair value, to an immediate 100 basis pointincrease in interest rates at all maturities from the levels prevailing as of December 31, 2013 and 2012. Such a fluctuation in interest rates is a hypothetical ratescenario used to calibrate potential risk and does not represent our view of future market changes. While these fair value measurements provide arepresentation of interest rate sensitivity of our investments in fixed income mutual funds and fixed income hedge funds, they are based on our exposures at aparticular point in time and may not be representative of future market results. These exposures will change as a result of ongoing changes in investments inresponse to our assessment of changing market conditions and available investment opportunities: As of December 31, 2013 2012 Fair Value Effect of +100Basis PointChange Fair Value Effect of +100Basis PointChange (in thousands) Fixed Income Investments: Trading $237,325 $(12,910) $206,998 $(10,412)Available-for-sale and other investments 64 (3) 6,296 (317)48Table of ContentsInvestments with Equity Price Risk—Fair ValueOur investments also include investments in equity securities, mutual funds and hedge funds. The following table provides our potential exposure with respectto our equity investments, measured in terms of fair value, to an immediate 10% drop in equity prices from those prevailing as of December 31, 2013 and2012. A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent our view of future market movements.While these fair value measurements provide a representation of equity price sensitivity of our investments in equity securities, mutual funds and hedgefunds, 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 aresult of ongoing portfolio activities in response to our assessment of changing market conditions and available investment opportunities: As of December 31, 2013 2012 Fair Value Effect of -10%Equity PriceChange Fair Value Effect of -10%Equity PriceChange (in thousands) Equity Investments: Trading $336,786 $(33,679) $268,541 $(26,854)Available-for-sale and other investments 205,419 (20,542) 250,666 (25,067)49Table of ContentsItem 8.Financial Statements and Supplementary Data Report of Independent Registered Public Accounting FirmTo the General Partner and Unitholders ofAllianceBernstein L.P.:In our opinion, the accompanying consolidated statements of financial condition and the related consolidated statements of income, comprehensive income,changes in partners’ capital and cash flows present fairly, in all material respects, the financial position of AllianceBernstein L.P. and its subsidiaries(“AllianceBernstein”) at December 31, 2013 and December 31, 2012, and the results of their operations and their cash flows for each of the three years in theperiod ended December 31, 2013 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, 2013, based on criteria establishedin Internal Control-Integrated Framework (1992) 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 itsassessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reportingappearing under Item 9A. Our responsibility is to express opinions on these financial statements and on AllianceBernstein’s internal control over financialreporting 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 ofmaterial misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financialstatements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accountingprinciples used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control overfinancial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such otherprocedures 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 andthe preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflectthe transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention ortimely 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 ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPNew York, New YorkFebruary 12, 201450Table of ContentsAllianceBernstein L.P. and SubsidiariesConsolidated Statements of Financial Condition December 31, 2013 2012 (in thousands,except unit amounts) ASSETS Cash and cash equivalents $509,891 $627,182 Cash and securities segregated, at fair value (cost $980,458 and $1,551,177) 980,584 1,551,326 Receivables, net: Brokers and dealers 323,446 408,037 Brokerage clients 938,148 942,034 Fees 289,039 265,685 Investments: Long-term incentive compensation-related 117,579 122,977 Other 662,015 609,357 Furniture, equipment and leasehold improvements, net 174,518 196,125 Goodwill 2,986,539 2,954,327 Intangible assets, net 168,875 169,208 Deferred sales commissions, net 70,574 95,430 Other assets 164,643 173,362 Total assets $7,385,851 $8,115,050 LIABILITIES AND CAPITAL Liabilities: Payables: Brokers and dealers $291,023 $220,736 Securities sold not yet purchased 71,983 63,838 Brokerage clients 1,698,469 2,563,061 AllianceBernstein mutual funds 133,005 156,679 Accounts payable and accrued expenses 529,004 499,076 Accrued compensation and benefits 324,243 485,229 Debt 268,398 323,163 Total liabilities 3,316,125 4,311,782 Commitments and contingencies (See Note 13) Capital: General Partner 40,382 41,213 Limited partners: 268,373,419 and 277,600,901 units issued and outstanding 4,078,676 4,165,461 Receivables from affiliates (16,542) (8,441)Holding Units held for long-term incentive compensation plans (39,649) (389,941)Accumulated other comprehensive income (loss) (35,381) (48,526)Partners’ capital attributable to AllianceBernstein Unitholders 4,027,486 3,759,766 Non-controlling interests in consolidated entities 42,240 43,502 Total capital 4,069,726 3,803,268 Total liabilities and capital $7,385,851 $8,115,050 See Accompanying Notes to Consolidated Financial Statements.51Table of ContentsAllianceBernstein L.P. and SubsidiariesConsolidated Statements of Income Years Ended December 31, 2013 2012 2011 (in thousands, except per unit amounts) Revenues: Investment advisory and services fees $1,849,105 $1,764,475 $1,907,318 Bernstein research services 445,083 413,707 437,414 Distribution revenues 465,424 409,488 360,722 Dividend and interest income 19,962 21,286 21,499 Investment gains (losses) 33,339 29,202 (82,081)Other revenues 105,058 101,801 107,569 Total revenues 2,917,971 2,739,959 2,752,441 Less: Interest expense 2,924 3,222 2,550 Net revenues 2,915,047 2,736,737 2,749,891 Expenses: Employee compensation and benefits: Employee compensation and benefits 1,212,011 1,168,645 1,246,898 Long-term incentive compensation charge — — 587,131 Promotion and servicing: Distribution-related payments 423,200 367,090 302,684 Amortization of deferred sales commissions 41,279 40,262 37,675 Other 208,192 202,191 219,197 General and administrative: General and administrative 423,043 507,682 532,896 Real estate charges 28,424 223,038 7,235 Contingent payment arrangements (10,174) 682 682 Interest on borrowings 2,962 3,429 2,545 Amortization of intangible assets 21,859 21,353 21,417 Total expenses 2,350,796 2,534,372 2,958,360 Operating income (loss) 564,251 202,365 (208,469) Income tax expense 36,829 13,764 3,098 Net income (loss) 527,422 188,601 (211,567) Net income (loss) of consolidated entities attributable to non-controlling interests 9,746 (315) (36,799) Net income (loss) attributable to AllianceBernstein Unitholders $517,676 $188,916 $(174,768) Net income (loss) per AllianceBernstein Unit: Basic $1.89 $0.67 $(0.62)Diluted $1.88 $0.67 $(0.62)See Accompanying Notes to Consolidated Financial Statements.52Table of ContentsAllianceBernstein L.P. and SubsidiariesConsolidated Statements of Comprehensive Income Years Ended December 31, 2013 2012 2011 (in thousands) Net income (loss) $527,422 $188,601 $(211,567)Other comprehensive income (loss): Foreign currency translation adjustments (12,422) (1,253) 1,802 Income tax benefit (expense) — 796 (1,405)Foreign currency translation adjustments, net of tax (12,422) (457) 397 Unrealized (losses) gains on investments: Unrealized gains arising during period 819 1,375 225 Less: reclassification adjustment for gains (losses) included in net income 4,715 47 (34)Changes in unrealized (losses) gains on investments (3,896) 1,328 259 Income tax benefit (expense) 1,130 (780) 302 Unrealized (losses) gains on investments, net of tax (2,766) 548 561 Changes in employee benefit related items: Amortization of transition asset (47) (143) (143)Amortization of prior service cost 5,828 107 107 Recognized actuarial gain (loss) 22,853 (10,074) (15,408)Changes in employee benefit related items 28,634 (10,110) (15,444)Income tax (expense) benefit (444) (134) 340 Employee benefit related items, net of tax 28,190 (10,244) (15,104)Other comprehensive income (loss) 13,002 (10,153) (14,146)Less: Comprehensive income (loss) in consolidated entities attributable to non-controlling interests 9,603 (354) (37,316)Comprehensive income (loss) attributable to AllianceBernstein Unitholders $530,821 $178,802 $(188,397)See Accompanying Notes to Consolidated Financial Statements.53Table of ContentsAllianceBernstein L.P. and SubsidiariesConsolidated Statements of Changes in Partners’ Capital Years Ended December 31, 2013 2012 2011 (in thousands) General Partner’s Capital Balance, beginning of year $41,213 $42,632 $48,986 Net income (loss) 5,177 1,889 (1,748)Cash distributions to General Partner (4,623) (3,226) (4,775)Long-term incentive compensation plans activity 643 (82) 132 Retirement of AllianceBernstein Units, net of issuances (2,028) — — Purchase of Australian joint venture non-controlled interest — — 37 Balance, end of year 40,382 41,213 42,632 Limited Partners' Capital Balance, beginning of year 4,165,461 4,306,760 4,905,037 Net income (loss) 512,498 187,027 (173,020)Cash distributions to unitholders (456,659) (318,208) (471,691)Long-term incentive compensation plans activity 59,924 (6,923) 49,290 Retirement of AllianceBernstein Units, net of issuances (202,548) (3,195) (6,522)Purchase of Australian joint venture non-controlled interest — — 3,666 Balance, end of year 4,078,676 4,165,461 4,306,760 Receivables from Affiliates Balance, beginning of year (8,441) (12,135) (15,973)Capital contributions from General Partner 3,386 4,440 4,793 Compensation plan accrual (695) (746) (955)Reclass of receivable from Holding (9,226) — — Capital contributions to Holding (1,566) — — Balance, end of year (16,542) (8,441) (12,135)Holding Units held for Long-term Incentive Compensation Plans Balance, beginning of year (389,941) (323,382) (535,410)Purchases of Holding Units to fund long-term compensation plans, net (111,619) (238,015) (220,813)Reclassification from liability-based awards 130,777 130,281 — Retirement of AllianceBernstein Units, net of issuances 202,772 — — Long-term incentive compensation awards expense 162,771 20,661 437,743 Re-valuation of Holding Units held in rabbi trust (34,409) 20,514 (4,902)Balance, end of year (39,649) (389,941) (323,382)Accumulated Other Comprehensive Income (Loss) Balance, beginning of year (48,526) (38,413) (31,801)Unrealized gain (loss) on investments, net of tax (2,766) 548 528 Foreign currency translation adjustment, net of tax (12,279) (417) 7,964 Changes in employee benefit related items, net of tax 28,190 (10,244) (15,104)Balance, end of year (35,381) (48,526) (38,413)Total Partners' Capital attributable to AllianceBernstein Unitholders 4,027,486 3,759,766 3,975,462 Non-controlling Interests in Consolidated Entities Balance, beginning of year 43,502 54,025 124,517 Net income (loss) 9,746 (315) (36,799)Unrealized (loss) gain on investments — — 33 Foreign currency translation adjustment (143) (39) (550)Acquisitions — (1) (32,103)Distributions to non-controlling interests of our consolidated venture capital fund activities (10,865) (10,168) (1,073)Balance, end of year 42,240 43,502 54,025 Total Capital $4,069,726 $3,803,268 $4,029,487 See Accompanying Notes to Consolidated Financial Statements.54Table of ContentsAllianceBernstein L.P. and SubsidiariesConsolidated Statements of Cash Flows Years Ended December 31, 2013 2012 2011 (in thousands) Cash flows from operating activities: Net income (loss) $527,422 $188,601 $(211,567)Adjustments to reconcile net income (loss) to net cash provided by operating activities: Amortization of deferred sales commissions 41,279 40,262 37,675 Non-cash long-term incentive compensation expense 159,020 21,830 474,103 Depreciation and other amortization 60,009 76,257 83,489 Unrealized (gains) losses on long-term incentive compensation-related investments (14,985) (15,395) 12,037 Unrealized (gains) losses on consolidated venture capital fund (22,148) (18,233) 38,974 Unrealized (gains) losses on other investments (4,947) (40,541) 23,535 Real estate asset write-off charges 3,837 41,450 4,639 Other, net (70) 1,552 5,069 Changes in assets and liabilities: Decrease (increase) in segregated cash and securities 570,742 (271,471) (169,964)Decrease (increase) in receivables 140,254 (226,553) 1,164 (Increase) decrease in investments (10,781) 136,901 (110,600)(Increase) in deferred sales commissions (16,423) (75,693) (21,518)Decrease (increase) in other assets 755 4,363 (26,048)(Decrease) increase in payables (867,447) 613,345 284,680 (Decrease) increase in accounts payable and accrued expenses (51,880) 137,898 (26,343)(Decrease) increase in accrued compensation and benefits (9,076) 69,406 178,870 Net cash provided by operating activities 505,561 683,979 578,195 Cash flows from investing activities: Purchases of investments (7,702) (108) (56)Proceeds from sales of investments 10,884 780 3,507 Purchases of furniture, equipment and leasehold improvements (21,615) (21,650) (39,590)Proceeds from sales of furniture, equipment and leasehold improvements 12 2,636 1,251 Purchase of businesses, net of cash acquired (38,636) — (41,835)Net cash used in investing activities (57,057) (18,342) (76,723) Cash flows from financing activities: (Repayment) issuance of commercial paper, net (55,754) (123,250) 219,363 Increase (decrease) in overdrafts payable 52,277 (244) (38,640)Distributions to General Partner and unitholders (461,282) (321,434) (476,466)Distributions to non-controlling interests in consolidated entities (10,865) (10,168) (1,073)Capital contributions from General Partner 3,386 4,440 4,793 Capital contributions to Holding (1,566) — — Payments of contingent payment arrangements (4,426) — — Additional investments by Holding with proceeds from exercise of compensatory options to buyHolding Units 15,138 — 1,478 Additional investments by Holding from distributions paid to AllianceBernstein consolidated rabbitrust 14,076 11,595 5,727 Purchases of Holding Units to fund long-term incentive compensation plan awards, net (111,619) (238,015) (220,813)Purchases of AllianceBernstein Units (1,805) (3,195) (6,522)Other 62 (1,964) (95)Net cash used in financing activities (562,378) (682,235) (512,248)Effect of exchange rate changes on cash and cash equivalents (3,417) 5,099 (734)Net (decrease) in cash and cash equivalents (117,291) (11,499) (11,510)Cash and cash equivalents as of beginning of the period 627,182 638,681 650,191 Cash and cash equivalents as of end of the period $509,891 $627,182 $638,681 Cash paid: Interest paid $3,692 $4,809 $3,001 Income taxes paid 13,423 10,063 29,477 Non-cash investing activities: Fair value of assets acquired 81,929 — 30,368 Fair value of liabilities assumed 43,293 — 4,999 Non-cash financing activities: Payables recorded under contingent payment arrangements 17,100 — 4,400 See Accompanying Notes to Consolidated Financial Statements.55Table of ContentsAllianceBernstein L.P. and SubsidiariesNotes to Consolidated Financial StatementsThe words “we” and “our” refer collectively to AllianceBernstein L.P. and its subsidiaries (“AllianceBernstein”), or to their officers and employees.Similarly, the word “company” refers to AllianceBernstein. Cross-references are in italics.1. Business Description and OrganizationWe provide 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 private and public pension plans, foundations and endowments, insurancecompanies, central banks and governments worldwide, and affiliates such as AXA and its subsidiaries, by means of separately-managedaccounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles.•Retail Services—servicing our retail 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 financialintermediaries worldwide and other investment vehicles.•Private Client Services—servicing our private clients, including high-net-worth individuals and families, trusts and estates, charitablefoundations, partnerships, private and family corporations, and other entities (including most institutions for which we manage accounts with lessthan $25 million in assets), by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles.•Bernstein Research Services—servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options.We also provide distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds we sponsor.Our high-quality, in-depth research is the foundation of our business. Our research disciplines include economic, fundamental equity, fixed income andquantitative research. In addition, we have experts focused on multi-asset strategies, wealth management and alternatives.We provide a broad range of investment services with expertise in:•Actively-managed equity strategies, including style-pure (e.g., value and growth) and absolute return-focused strategies;•Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;•Passive management, including index and enhanced index strategies;•Alternative investments, including hedge funds, fund of funds and private equity (e.g., direct real estate investing); and•Multi-asset services and solutions, including dynamic asset allocation, customized target date funds, target risk funds and other strategies tailoredto help clients meet their investment goals.Our services employ 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, emerging markets, regional and local), in major markets aroundthe world.As of December 31, 2013, AXA, a société anonyme organized under the laws of France and the holding company for an international group of insurance andrelated financial services companies, through certain of its subsidiaries (“AXA and its subsidiaries”) owned approximately 1.5% of the issued andoutstanding units representing assignments of beneficial ownership of limited partnership interests in AllianceBernstein Holding L.P. (“Holding Units”).56Table of ContentsAs of December 31, 2013, the ownership structure of AllianceBernstein, expressed as a percentage of general and limited partnership interests, was as follows:AXA and its subsidiaries 63.1%Holding 35.4 Unaffiliated holders 1.5 100.0%AllianceBernstein Corporation (an indirect wholly-owned subsidiary of AXA, “General Partner”) is the general partner of both AllianceBernstein HoldingL.P. (“Holding”) and AllianceBernstein. AllianceBernstein Corporation owns 100,000 general partnership units in Holding and a 1% general partnershipinterest in AllianceBernstein. Including both the general partnership and limited partnership interests in Holding and AllianceBernstein, AXA and itssubsidiaries had an approximate 63.7% economic interest in AllianceBernstein as of December 31, 2013.2. Summary of Significant Accounting PoliciesBasis of PresentationThe consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“USGAAP”). The preparation of the consolidated financial statements requires management to make certain estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reportedamounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.Principles of ConsolidationThe consolidated financial statements include AllianceBernstein and its majority-owned and/or controlled subsidiaries. All significant inter-companytransactions and balances among the consolidated entities have been eliminated.Recently Adopted Accounting PronouncementsIn December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-11, Disclosures aboutOffsetting Assets and Liabilities. The amended standard requires an entity to disclose information about offsetting and related arrangements to enable users ofits financial statements to understand the effect of those arrangements on its financial position. We adopted this standard effective as of January 1, 2013 (seeNote 8) and there was no material impact on our consolidated financial statements.In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The standardrequires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. We adopted thisstandard effective as of January 1, 2013. However, no additional disclosures are required because amounts reclassified out of accumulated othercomprehensive income are not material.Accounting Pronouncements Not Yet AdoptedIn March 2013, the FASB issued ASU 2013-05, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of CertainSubsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. The amendment is effective prospectively for fiscalyears (and interim reporting periods within those years) beginning after December 15, 2013 and is not expected to have a material impact on our financialcondition or results of operations.In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar TaxLoss, or a Tax Credit Carryforward Exists. The amendment is effective prospectively for fiscal years (and interim periods within those years) beginningafter December 15, 2013 and is not expected to have a material impact on our financial condition or results of operations.ReclassificationsDuring 2013, we reclassified prior-period amounts relating to the servicing portion of the investment advisory base fees earned by AllianceBernstein Japan Ltd.(one of our subsidiaries) for the distribution of local-market funds from investment advisory base fees to distribution revenues in the consolidated statementsof income to conform to the current year’s presentation. This reclassification is consistent with the methodology used by AllianceBernstein Luxembourg S.A.(another of our subsidiaries, “AllianceBernstein Luxembourg”) related to the distribution of our funds that are not registered in the U.S. and generally notoffered to U.S. persons (“Non-U.S Funds”).57Table of ContentsAccretion expense related to contingent payment arrangements previously presented as a component of general and administrative expense is now presentedseparately for all periods as contingent payment arrangements in the consolidated statements of income to conform to the current year’s presentation.Variable Interest EntitiesIn accordance with ASU 2009-17, Consolidation (Topic 810) – Improvements to Financial Reporting by Enterprises Involved with Variable InterestEntities, the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design, acompany’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance, and whether a company is obligated toabsorb losses or receive benefits that could potentially be significant to the entity. The standard also requires ongoing assessments of whether a company is theprimary beneficiary of a variable interest entity (“VIE”). In January 2010, the FASB deferred portions of ASU 2009-17 that relate to asset managers. Wedetermined that all entities for which we are a sponsor and/or investment manager, other than collateralized debt obligations and collateralized loan obligations(collectively, “CDOs”), qualify for the scope deferral and will continue to be assessed for consolidation under prior accounting guidance for consolidation ofVIEs.For all new investment products and entities developed by the company (other than CDOs), we first determine whether the entity is a VIE, which involvesdetermining an entity’s variability and variable interests, identifying the holders of the equity investment at risk and assessing the five characteristics of aVIE. Once an entity has been determined to be a VIE, we then identify the primary beneficiary of the VIE. If we are deemed to be the primary beneficiary ofthe VIE, then we consolidate the entity.We provide seed capital to our investment teams to develop new products and services for our clients. Our original seed investment typically represents all or amajority of the equity investment in the new product. Our seed investment portfolio has a weighted average age of approximately 14 months and we typicallyturn over approximately 50% of the seed investments annually. These investments are temporary in nature, and our equity ownership in these funds mayfluctuate above and below 50% from one reporting period to the next. Our large seed capital investments range from $1 million to $30 million, with an averagesize of $11 million. The Audit Committee of the Board of Directors has established a ceiling of $550 million for the seed investment program. We evaluateour seed investments on a quarterly basis and consolidate such investments as required pursuant to US GAAP.As of December 31, 2013, we were the investment manager for four CDOs that meet the definition of a VIE primarily due to the lack of unilateral decision-making authority of the equity holders. The CDOs are alternative investment vehicles created for the sole purpose of issuing collateralized debt instrumentsthat offer investors the opportunity for returns that vary with the risk level of their investment. Our management fee structure for these CDOs typically willinclude a senior management fee, and may also include subordinated and incentive management fees. We hold no equity interest in any of these CDOs. Foreach of the CDOs, we evaluated the management fee structure, the current and expected economic performance of the entities and other provisions included inthe governing documents of the CDOs that might restrict or guarantee an expected loss or residual return. In accordance with ASC 810, Consolidation, weconcluded that our investment management contract does not represent a variable interest in three of the four CDOs. As such, we are not required to consolidatethese entities.For the remaining CDO, we concluded our collateral management agreement represented a variable interest primarily due to the level of subordinated fees. Weevaluated whether we possessed both of the following characteristics of a controlling financial interest: (1) the power to direct the activities of the VIE that mostsignificantly impact the entity’s economic performance, and (2) the obligation to absorb losses of the entity or the right to receive benefits from the entity thatcould potentially be significant to the VIE. We determined that we possessed the decision-making power noted in criteria (1).In evaluating criteria (2), we considered all facts regarding the design, terms and characteristics of the CDO and concluded that we do not meet the criteria. Ourconclusion was based on the following quantitative and qualitative factors: (a) we have no involvement with the CDO beyond providing investmentmanagement services, (b) we hold no equity or debt interests in the CDO, (c) we are not a transferor of any of the assets of the CDO, (d) our expected aggregatefees in future periods are insignificant relative to the expected cash flows of the CDO, (e) the variability of our expected fees in relation to the expected cashflows of the CDO is insignificant, (f) our maximum exposure to loss for the CDO is our investment management fee, which is based upon the fair value of theCDO’s assets, (g) the CDO has no recourse against us for any losses sustained in the CDO structure, (h) we have not provided, nor do we expect to provide,any financial or other support to the CDO, and (i) there are no liquidity arrangements, guarantees and/or other commitments by third parties that wouldimpact our variable interest in the CDO. As such, we do not have a controlling financial interest in the CDO and we do not consolidate the CDO into ourconsolidated financial statements. The cash, collateral investments (at fair value) and notes payable (at amortized cost) as of December 31, 2013 of this CDOwere $17.9 million, $241.8 million and $254.4 million, respectively.For the entities that meet the scope deferral, management reviews its agreements quarterly and its investments in, and other financial arrangements with, certainentities that hold client assets under management (“AUM”) to determine the VIEs that we are required to consolidate. These entities include certain mutual fundproducts, hedge funds, structured products, group trusts, collective investment trusts and limited partnerships. We earn investment management fees onAUM of these entities, but we derive no other benefit from the AUM and cannot use them in our operations.58Table of ContentsAs of December 31, 2013, we have significant variable interests in certain structured products and hedge funds with approximately $25.8 million in AUM.However, these VIEs do not require consolidation because management has determined that we are not the primary beneficiary of the expected residual returnsor expected losses of these entities. Our maximum exposure to loss is limited to our investment of $0.2 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 withoriginal 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, NetFees receivable are shown net of allowances. An allowance for doubtful accounts related to investment advisory and services fees is determined through ananalysis of the aging of receivables, assessments of collectibility based on historical trends and other qualitative and quantitative factors, including thefollowing: our relationship with the client, the financial health (or ability to pay) of the client, current economic conditions and whether the account is closed oractive. The allowance for doubtful accounts is not material to fees receivable.Collateralized Securities TransactionsCustomers’ 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 clients include amounts due on cash and margin transactions. Securities owned by customers are held as collateral forreceivables; such collateral is not reflected in the consolidated financial statements. We have the ability by contract or custom to sell or re-pledge this collateral,and have done so at various times. As of December 31, 2013, the fair value of these securities re-pledged was $2.8 million. Principal securities transactionsand 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”), each of whichis our subsidiary, are recorded at the amount of cash collateral advanced or received in connection with the transaction and are included in receivables fromand payables to brokers and dealers in the consolidated statements of financial condition. Securities borrowed transactions require SCB LLC and SCBL todeposit cash collateral with the lender. As of December 31, 2013 and 2012, cash collateral on deposit with lenders was $83.6 million and $106.3 million,respectively. With respect to securities loaned, SCB LLC (SCBL does not participate in security lending arrangements) receives cash collateral from theborrower. As of December 31, 2013 and 2012, cash collateral received from borrowers was $65.1 million and $12.5 million, respectively. The initialcollateral advanced or received approximates or is greater than the fair value of securities borrowed or loaned. SCB LLC and SCBL monitor the fair value ofthe securities borrowed and loaned on a daily basis and request additional collateral or return excess collateral, as appropriate. As of December 31, 2013 and2012, there is no allowance provision required for the collateral advanced. Income or expense is recognized over the life of the transactions.As of December 31, 2013 and 2012, we had $26.5 million and $25.8 million, respectively, of cash on deposit with clearing organizations for tradefacilitation purposes. In addition, as of December 31, 2013 and 2012, SCB LLC held U.S. Treasury Bills with values totaling $39.0 million and $28.0million, respectively, in its investment account that are pledged as collateral with clearing organizations. These clearing organizations have the ability bycontract or custom to sell or re-pledge this collateral.InvestmentsInvestments include United States Treasury Bills, unconsolidated mutual funds and limited partnership hedge funds we sponsor and manage, variousseparately-managed portfolios comprised of equity and fixed income securities, exchange-traded options and investments owned by a consolidated venturecapital fund in which we own a controlling interest as the general partner and a 10% limited partnership interest.Investments in United States Treasury Bills, mutual funds, and equity and fixed income securities are classified as either trading or available-for-salesecurities. Trading investments are stated at fair value with unrealized gains and losses reported in investment gains and losses on the consolidated statementsof income. Available-for-sale investments are stated at fair value with unrealized gains and losses reported as a separate component of accumulated othercomprehensive income in partners’ capital. Realized gains and losses on the sale of investments are reported in investment gains and losses on the consolidatedstatements of income. 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 fundinvestments is reported in investment gains and losses on the consolidated statements of income.59Table of ContentsThe investments owned by our consolidated venture capital fund generally are illiquid and initially are valued at cost. These investments are adjusted to fairvalue to reflect the occurrence of “significant developments” (i.e., capital transactions or business, economic or market events). Adjustments to fair value arereported in investment gains and losses on the consolidated statements of income. There are three private equity investments that we own directly outside of ourconsolidated venture capital fund. One of the investments is accounted for using the cost method; the other two are accounted for at fair value.See Note 9 for a description of how we measure the fair value of our investments.Furniture, Equipment and Leasehold Improvements, NetFurniture, 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 amortizedon a straight-line basis over the lesser of their estimated useful lives or the terms of the related leases.GoodwillIn 2000, AllianceBernstein acquired SCB Inc., an investment research and management company formerly known as Sanford C. Bernstein Inc. (“Bernstein”). The Bernstein acquisition was accounted for under the purchase method and the cost of the acquisition was allocated on the basis of theestimated fair value of the assets acquired and the liabilities assumed. The excess of the purchase price over the fair value of identifiable assets acquired, net ofliabilities assumed, resulted in the recognition of goodwill of approximately $3.0 billion.As of December 31, 2013, goodwill of $3.0 billion on the consolidated statement of financial condition included $2.8 billion as a result of the Bernsteinacquisition and $186 million in regard to various smaller acquisitions. We have determined that AllianceBernstein has only one reporting segment andreporting unit.We test our goodwill annually, as of September 30, for impairment. As of September 30, 2013, the impairment test indicated that goodwill was not impaired.The carrying value of goodwill is also reviewed if facts and circumstances occur that suggest possible impairment, such as significant declines in AUM,revenues, earnings or the price of a Holding Unit.Intangible Assets, NetIntangible assets consist primarily of costs assigned to acquired investment management contracts of SCB Inc. based on their estimated fair value at the timeof acquisition, less accumulated amortization. As of December 31, 2013, intangible assets, net of accumulated amortization, of $168.9 million on theconsolidated statement of financial condition was composed of $158.9 million of definite-lived intangible assets subject to amortization, of which $139.7million relates to the Bernstein acquisition, and $10.0 million of indefinite-lived intangible assets not subject to amortization in regard to other acquisitions.Intangible assets are recognized at fair value and generally are amortized on a straight-line basis over their estimated useful life of approximately 20 years. Thegross carrying amount of intangible assets totaled $436.8 million as of December 31, 2013 and $425.3 million as of December 31, 2012, and accumulatedamortization was $277.9 million as of December 31, 2013 and $256.1 million as of December 31, 2012, resulting in the net carrying amount of intangibleassets subject to amortization of $158.9 million as of December 31, 2013 and $169.2 million as of December 31, 2012. Amortization expense was $21.9million for 2013, $21.4 million for 2012 and $21.4 million for 2011. Estimated annual 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 thecarrying value exceeds fair value, additional impairment tests are performed to measure the amount of the impairment loss, if any.Deferred Sales Commissions, NetWe pay commissions to financial intermediaries in connection with the sale of shares of open-end company-sponsored mutual funds sold without a front-endsales charge (“back-end load shares”). These commissions are capitalized as deferred sales commissions and amortized over periods not exceeding five andone-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 generally arerecovered. 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 unamortizeddeferred sales commissions when received. Since January 31, 2009, our U.S. mutual funds have not offered back-end load shares to new investors. However,our Non-U.S. Funds continue to offer back-end load shares.We periodically review the deferred sales commission asset for impairment as events or changes in circumstances indicate that the carrying value may not berecoverable. If the carrying value exceeds fair value, additional impairment tests are performed to measure the amount of the impairment loss, if any.60Table of ContentsLoss ContingenciesWith respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome isprobable, 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 anegative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, ifany, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate apossible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages, thelitigation is in its early stages, or when the litigation is highly complex or broad in scope. In such cases, we disclose that we are unable to predict the outcomeor estimate a possible loss or range of loss.Revenue RecognitionInvestment advisory and services fees, generally calculated as a percentage of AUM, are recorded as revenue as the related services are performed. Certaininvestment advisory contracts, including those associated with hedge funds or other alternative investments, provide for a performance-based fee, in additionto a base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a statedbenchmark 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 market-based valuation methods and fair valuation (non-observable market) methods. Market-based valuation methodsinclude: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognized pricing vendorsfor fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps; and quoted bidsor spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include: discounted cash flow models, evaluation of assetsversus liabilities or any other methodology that is validated and approved by our Valuation Committee (see paragraph immediately below for additionalinformation about our Valuation Committee). Fair valuation methods are used only where AUM cannot be valued using market-based valuation methods, suchas in the case of private equity or illiquid securities. Investments utilizing fair valuation methods typically make up an insignificant amount 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 heldin client and AllianceBernstein portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply topricing and valuing investments held in these portfolios. We also have a Pricing Group, which reports to the Valuation Committee, and is responsible foroverseeing the pricing process for all investments.Bernstein Research Services revenue consists primarily of brokerage commissions received by SCB LLC and SCBL for research and brokerage-relatedservices provided to institutional investors. Brokerage commissions earned and related expenses are recorded on a trade-date basis.Distribution revenues, shareholder servicing fees (included in other revenues), and dividend and interest income are accrued as earned.Contingent Payment ArrangementsWe periodically enter into contingent payment arrangements in connection with our business combinations. In these arrangements, we agree to pay additionalconsideration to the sellers to the extent that certain performance targets are achieved. We estimate the fair value of these potential future obligations at the time abusiness combination is consummated and record a liability on our consolidated statements of financial condition. We then accrete the obligation to its expectedpayment amount over the period until the arrangement is measured. If our expected payment amount subsequently changes, the obligation is reduced orincreased in the current period resulting in a gain or loss. Both gains and losses resulting from changes to expected payments and the accretion of theseobligations to their expected payment amounts are reflected within contingent payment arrangements in our consolidated statements of income.Mutual Fund Underwriting ActivitiesPurchases and sales of shares of company-sponsored mutual funds in connection with the underwriting activities of our subsidiaries, including relatedcommission income, are recorded on trade date. Receivables from brokers and dealers for sale of shares of company-sponsored mutual funds generally arerealized within three business days from trade date, in conjunction with the settlement of the related payables to company-sponsored mutual funds for sharepurchases. Distribution plan and other promotion and servicing payments are recognized as expense when incurred.61Table of ContentsLong-term Incentive Compensation PlansWe maintain several unfunded, non-qualified long-term incentive compensation plans, under which we grant annual awards to our employees, generally in thefourth quarter.Awards granted in December 2013, 2012 and 2011 allowed participants to allocate their awards between restricted Holding Units and deferred cash.Participants (except certain members of senior management) generally could allocate up to 50% of their awards to deferred cash, not to exceed a total of$250,000 per award. Each of our employees based outside of the Unites States (other than expatriates) who received a 2013 award of $100,000 or less couldhave allocated up to 100% of his or her award to deferred cash. For the 2013 awards, participants made their elections prior to the Compensation Committeemeeting on December 12, 2013, the date on which the awards were granted and were valued using the closing price of a Holding Unit on that day. For the 2012and 2011 awards, participants had until mid-January 2013 and 2012, respectively, to make their elections. The number of restricted Holding Units issuedequaled the remaining dollar value of the award divided by the average of the closing prices of a Holding Unit for a five business day period in January afterparticipants made their elections each year. For the 2011 through 2013 awards:·We engaged in open-market purchases of Holding Units, or purchased newly-issued Holding Units from Holding, that were awarded to participantsand held them in a consolidated rabbi trust.·Quarterly distributions on vested and unvested Holding Units are paid currently to participants, regardless of whether or not a long-term deferralelection has been made.·Interest on deferred cash is accrued monthly based on our monthly weighted average cost of funds.We recognize compensation expense related to equity compensation grants in the financial statements using the fair value method. Fair value of restrictedHolding Unit awards is the closing price of a Holding Unit on the grant date; fair value of options is determined using the Black-Scholes option valuationmodel. 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 overthe required service period. Prior to a change made to the employee long-term incentive compensation award program in the fourth quarter of 2011 (asdescribed below), an employee’s service requirement typically was the same as the delivery dates. This change eliminated employee service requirements, butdid not modify delivery dates contained in the original award agreements.During 2013, we recorded $157.7 million of expense associated with our 2013 long-term incentive compensation awards and we awarded 6.5 millionrestricted Holding Units.During 2012, we recorded $150.1 million of expense associated with our 2012 long-term incentive compensation awards. In January 2013, 6.5 millionrestricted Holding Units held in the consolidated rabbi trust were used to fund the 2012 awards and we reclassified $129.2 million of the liability to partners’capital as equity-based awards.During the fourth quarter of 2011, we implemented changes to our employee long-term incentive compensation award program to ensure that our compensationpractices are competitive, and to better align the costs of employee compensation and benefits with our current year financial performance and provideemployees with a higher degree of certainty that they will receive the incentive compensation they are awarded. Specifically, we amended all outstanding year-end long-term incentive compensation awards of active employees, so that employees who terminate their employment or are terminated without cause mayretain their award, subject to compliance with certain agreements and restrictive covenants set forth in the applicable award agreement, including restrictionson competition and employee and client solicitation, and a claw-back for failing to follow existing risk management policies. Most equity replacement, sign-onor similar deferred compensation awards included in separate employment agreements or arrangements were not amended in 2011 to reflect these changes.As a result of these changes, we recorded a one-time, non-cash charge of $587.1 million in the fourth quarter of 2011 for all unrecognized long-term incentivecompensation on the amended outstanding awards from prior years. In addition, upon approval and communication of the dollar value of the 2011 awards inDecember 2011, we recorded 100% of the expense associated with our 2011 long-term incentive compensation awards of $159.9 million. In January 2012, 8.7million restricted Holding Units held in the consolidated rabbi trust were used to fund the 2011 awards and we reclassified $130.3 million of the liability topartners’ capital as equity-based awards.Grants of restricted Holding Units and options to buy Holding Units typically are awarded to eligible members of the Board of Directors (“EligibleDirectors”) of the General Partner during the second quarter. Restricted Holding Units are distributed on the third anniversary of the grant date and the optionsbecome exercisable ratably over three years. These restricted Holding Units and options are not forfeitable (except if the Eligible Director is terminated for“Cause”, as that term is defined in the applicable award agreement). Due to there being no service requirement, we fully expense these awards on each grantdate.We fund our restricted Holding Unit awards either by purchasing Holding Units on the open market or purchasing newly-issued Holding Units from Holding,all of which are then held in a consolidated rabbi trust until they are distributed to employees upon vesting or retired. In accordance with the Amended andRestated Agreement of Limited Partnership of AllianceBernstein (“AllianceBernstein Partnership Agreement”), when AllianceBernstein purchases newly-issued Holding Units from Holding, Holding is required to use the proceeds it receives from AllianceBernstein to purchase the equivalent number of newly-issued AllianceBernstein Units, thus increasing its percentage ownership interest in AllianceBernstein. Holding Units held in the consolidated rabbi trust arecorporate assets in the name of the trust and are available to the general creditors of AllianceBernstein.62Table of ContentsDuring 2013 and 2012, we purchased 5.2 million and 15.7 million Holding Units for $111.3 million and $239.5 million, respectively (on a trade datebasis). These amounts reflect open-market purchases of 1.9 million and 12.3 million Holding Units for $38.5 million and $182.3 million, respectively, withthe remainder relating to purchases of Holding Units from employees to allow them to fulfill statutory tax withholding requirements at the time of distributionof long-term incentive compensation awards, offset by Holding Units purchased by employees as part of a distribution reinvestment election.Each quarter, since the third quarter of 2011, we have implemented plans to repurchase Holding Units pursuant to Rule 10b5-1 under the Securities ExchangeAct of 1934, as amended (“Exchange Act”). A Rule 10b5-1 plan allows a company to repurchase its shares at times when it otherwise might be preventedfrom doing so because of self-imposed trading blackout periods and because it possesses material non-public information. Each broker we select has theauthority under the terms and limitations specified in the plan to repurchase Holding Units on our behalf in accordance with the terms of the plan.Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the plan. The plan adopted during thefourth quarter of 2013 expired at the close of business on February 11, 2014. We did not buy any Holding Units pursuant to this plan during the fourthquarter of 2013. We may adopt additional Rule 10b5-1 plans in the future to engage in open-market purchases of Holding Units to help fund anticipatedobligations under our incentive compensation award program and for other corporate purposes.During 2013, we granted to employees and Eligible Directors 13.9 million restricted Holding Unit awards (including 6.5 million granted in December 2013 for2013 year-end awards and 6.5 million granted in January 2013 for 2012 year-end awards). During 2012, we granted to employees and Eligible Directors 12.1million restricted Holding Unit awards (including 2.7 million granted in June 2012 to Peter Kraus, our Chief Executive Officer, in connection with hisextended employment agreement and 8.7 million granted in January 2012 for 2011 year-end awards). Prior to the third quarter of 2013 (and our decisiondescribed in the next paragraph to retire unallocated Holding Units in AllianceBernstein’s consolidated rabbi trust), we funded awards by allocating previouslyrepurchased Holding Units that had been held in the rabbi trust. In December 2013, Holding newly issued 3.9 million Holding Units to fund the restrictedHolding Unit awards granted in December 2013.Effective July 1, 2013, management retired all unallocated Holding Units in AllianceBernstein’s consolidated rabbi trust. To retire such units,AllianceBernstein delivered the unallocated Holding Units held in its consolidated rabbi trust to Holding in exchange for the same amount of AllianceBernsteinunits. Each entity then retired its respective units. As a result, on July 1, 2013, each of AllianceBernstein’s and Holding’s units outstanding decreased byapproximately 13.1 million units. AllianceBernstein and Holding intend (subject to compliance with applicable safe harbor rules to avoid AllianceBernsteinbeing treated as a publicly traded partnership) to retire additional units as AllianceBernstein purchases Holding Units on the open market or from employees toallow them to fulfill statutory tax withholding requirements at the time of distribution of long-term incentive compensation awards, if such units are notrequired to fund new employee awards in the near future. If a sufficient number of Holding Units is not available in the rabbi trust to fund new awards,Holding will newly issue Holding Units in exchange for newly-issued AllianceBernstein units, as was done in December 2013.Generally, when a corporate entity repurchases its shares, the shares no longer are deemed outstanding. Because of our two-tier partnership structure, HoldingUnits purchased by AllianceBernstein and held in its consolidated rabbi trust are considered outstanding (unlike repurchased shares of a single corporateentity). Accordingly, management’s decision to retire repurchased Holding Units rather than allowing them to remain outstanding in the rabbi trust moreclosely aligns the effect of our Holding Unit purchases with that of corporate entities that repurchase their shares.During 2013, Holding issued 887,642 Holding Units upon exercise of options to buy Holding Units. Holding used the proceeds of $15.1 million to purchasethe equivalent number of newly-issued AllianceBernstein Units.Foreign Currency TranslationAssets and liabilities of foreign subsidiaries are translated from the functional currencies into United States dollars (“US$”) at exchange rates in effect at thebalance sheet dates, and related revenues and expenses are translated into US$ at average exchange rates in effect during each period. Net foreign currencygains and losses resulting from the translation of assets and liabilities of foreign operations into US$ are reported as a separate component of othercomprehensive income in the consolidated statements of comprehensive income. Net foreign currency transaction losses were $3.1 million, $1.1 million and$2.4 million for 2013, 2012 and 2011, respectively.Cash Distributions AllianceBernstein is required to distribute all of its Available Cash Flow, as defined in the AllianceBernstein Partnership Agreement, to its unitholders and tothe General Partner. Available Cash Flow can be summarized as the cash flow received by AllianceBernstein from operations minus such amounts as theGeneral Partner determines, in its sole discretion, should be retained by AllianceBernstein for use in its business, or plus such amounts as the General Partnerdetermines, in its sole discretion, should be released from previously retained cash flow.63Table of ContentsThe 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 purposesand 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 12, 2014, the General Partner declared a distribution of $0.66 per AllianceBernstein Unit, representing a distribution of Available Cash Flow forthe three months ended December 31, 2013. 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 13, 2014 to holders of record on February 24, 2014.Total cash distributions per Unit paid to the General Partner and unitholders during 2013, 2012 and 2011 were $1.69, $1.15 and $1.70, respectively.Comprehensive Income We report all changes in comprehensive income in the consolidated statements of comprehensive income. Comprehensive income includes net income, as wellas unrealized gains and losses on investments classified as available-for-sale, foreign currency translation adjustments, and unrecognized actuarial net lossesand transition assets. Deferred taxes are not recognized on foreign currency translation adjustments for foreign subsidiaries whose earnings are consideredpermanently invested outside the United States.3. Real Estate ChargesDuring 2010, we performed a comprehensive review of our real estate requirements in New York in connection with our workforce reductions commencing in2008. As a result, during 2010 we decided to sub-lease over 380,000 square feet in New York (in excess of 90% of this space has been sublet) and largelyconsolidate our New York-based employees into two office locations from three. We recorded pre-tax real estate charges of $101.7 million in 2010 that reflectedthe net present value of the difference between the amount of our ongoing contractual operating lease obligations for this space and our estimate of currentmarket rental rates ($76.2 million), as well as the write-off of leasehold improvements, furniture and equipment related to this space ($25.5 million). Weperiodically review the assumptions and estimates we used in recording these charges.During 2011, we recorded pre-tax real estate charges totaling $7.2 million for our office space in London, England, New York and other U.S. locations. TheLondon charge was $8.8 million, consisting of a $5.8 million payment to the party to which the lease was assigned, as well as the write-off of $3.0 million ofleasehold improvements, furniture and equipment related to the space. We also wrote off an additional $1.5 million of leasehold improvements, furniture andequipment related to the New York space and had miscellaneous charges of $0.4 million. These charges were offset by a $3.5 million credit we recorded in2011 due to changes in estimates of our 2010 charge.During the first half of 2012, we recorded pre-tax real estate charges totaling $16.1 million, reflecting $8.8 million resulting from the abandonment of ourleased New York City Data Center office space and $7.3 million resulting from a change in estimates relating to previously recorded real estate charges. TheNew York City Data Center charge consisted of the net present value of the difference between the amount of ongoing contractual operating lease obligations forthis space and our estimate of current market rental rates ($7.1 million) and the write-off of leasehold improvements, furniture and equipment related to thisspace ($1.7 million).During the third quarter of 2012, in an effort to further reduce our global real estate footprint, we completed a comprehensive review of our worldwide officelocations and began implementing a global space consolidation plan. As a result, our intention is to sub-lease approximately 510,000 square feet of office space(approximately 70% of this space has been sublet), more than 70% of which is New York office space (in addition to the 380,000 square feet space reduction in2010), with the remainder consisting of office space in England, Australia and various U.S. locations.During the second half of 2012, we recorded pre-tax real estate charges of $207.0 million, reflecting the net present value of the difference between the amountof our ongoing contractual operating lease obligations for this space and our estimate of current market rental rates ($163.8 million), as well as the write-off ofleasehold improvements, furniture and equipment related to this space ($39.7 million), and changes in estimates relating to previously recorded real estatecharges ($3.5 million).64Table of ContentsDuring 2013, we recorded pre-tax real estate charges of $28.4 million, comprising $17.2 million from a change in estimates relating to previously recorded realestate charges ($16.9 million related to the 2010 and 2012 plans and $0.3 million to other real estate charges), $0.3 million for the write-off of leaseholdimprovements, furniture and equipment related to the 2012 plan and new real estate charges of $10.9 million ($1.5 million related to the 2012 plan, $5.3million related to other real estate charges and $4.1 million related to the write-off of leasehold improvements, furniture and equipment).As of December 31, 2013, we have recorded pre-tax real estate charges totaling $123.9 million and $217.4 million for the office space consolidation initiativescommenced in 2010 and 2012, respectively.The activity in the liability account relating to our 2010 and 2012 office space consolidation initiatives for the following periods is as follows: Years Ended December 31, 2013 2012 (in thousands) Balance as of January 1, $238,784 $71,164 Expense incurred 18,371 181,589 Deferred rent 326 27,000 Payments made (62,627) (42,833)Interest accretion 4,673 1,864 Balance as of end of period $199,527 $238,784 4. Net Income (Loss) Per UnitBasic net income (loss) per unit is derived by reducing net income (loss) for the 1% general partnership interest and dividing the remaining 99% by the basicweighted average number of units outstanding for each year. Diluted net income (loss) per unit is derived by reducing net income (loss) for the 1% generalpartnership interest and dividing the remaining 99% by the total of the basic weighted average number of units outstanding and the dilutive unit equivalentsresulting from outstanding compensatory options to buy Holding Units as follows: Years Ended December 31, 2013 2012 2011 (in thousands, except per unit amounts) Net income (loss) attributable to AllianceBernstein Unitholders $517,676 $188,916 $(174,768) Weighted average units outstanding—basic 271,258 277,721 278,018 Dilutive effect of compensatory options to buy Holding Units 961 1 — Weighted average units outstanding—diluted 272,219 277,722 278,018 Basic net income (loss) per AllianceBernstein Unit $1.89 $0.67 $(0.62)Diluted net income (loss) per AllianceBernstein Unit $1.88 $0.67 $(0.62)For the years ended December 31, 2013, 2012 and 2011, we excluded 2,923,035, 8,438,902 and 3,813,567 options, respectively, from the diluted netincome (loss) per unit computation due to their anti-dilutive effect.As discussed in Note 2, on July 1, 2013, management retired all unallocated Holding Units in AllianceBernstein’s consolidated rabbi trust, and continued toretire units during the third and fourth quarters of 2013 as we purchased Holding Units on the open market or from employees to allow them to fulfill statutorytax withholding requirements at the time of distribution of long-term incentive compensation awards.5. Cash and Securities Segregated Under Federal Regulations and Other RequirementsAs of December 31, 2013 and 2012, $0.9 billion and $1.5 billion, respectively, of United States Treasury Bills were segregated in a special reserve bankcustody account for the exclusive benefit of brokerage customers of SCB LLC under Rule 15c3-3 of the Exchange Act.65Table of ContentsAllianceBernstein Investments, Inc. (one of our subsidiaries, “AllianceBernstein Investments”), the distributor of company-sponsored mutual funds,maintains several special bank accounts for the exclusive benefit of customers. As of December 31, 2013 and 2012, $56.0 million and $42.2 million,respectively, of cash were segregated in these bank accounts. 6. InvestmentsInvestments consist of: December 31, 2013 2012 (in thousands) Available-for-sale (primarily seed capital) $4,858 $13,361 Trading: Long-term incentive compensation-related 88,385 90,825 United States Treasury Bills 38,986 27,982 Seed capital 316,681 307,795 Equities and exchange-traded options 130,059 48,937 Investments in limited partnership hedge funds: Long-term incentive compensation-related 29,194 32,152 Seed capital 75,354 109,328 Consolidated private equity fund (10% seed capital) 45,741 47,045 Private equity (seed capital) 45,360 47,853 Other 4,976 7,056 Total investments $779,594 $732,334 Total investments related to long-term incentive compensation obligations of $117.6 million and $123.0 million as of December 31, 2013 and 2012,respectively, consist of company-sponsored mutual funds and hedge funds. For long-term incentive compensation awards granted before 2009, we typicallymade investments in our services that were notionally elected by plan participants and maintained them (and continue to maintain them) in a consolidatedrabbi trust or separate custodial account. The rabbi trust and custodial account enable us to hold such investments separate from our other assets for thepurpose of settling our obligations to participants. The investments held in the rabbi trust and custodial account remain available to the general creditors ofAllianceBernstein.The underlying investments of hedge funds in which we invest include long and short positions in equity securities, fixed income securities (including variousagency and non-agency asset-based securities), currencies, commodities and derivatives (including various swaps and forward contracts). These investmentsare valued at quoted market prices or, where quoted market prices are not available, are fair valued based on the pricing policies and procedures of theunderlying funds.United States Treasury Bills are held by SCB LLC in its investment account, the majority of which are pledged as collateral with clearing organizations.These clearing organizations have the ability by contract or custom to sell or re-pledge this collateral.We provide seed capital to our investment teams to develop new products and services for our clients.Trading securities also include long positions in corporate equities and long exchange-traded options traded through our options desk.66Table of ContentsThe cost and fair value of available-for-sale and trading investments held as of December 31, 2013 and 2012 were as follows: AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses FairValue (in thousands) December 31, 2013: Available-for-sale: Equity investments $8,261 $158 $(3,625) $4,794 Fixed income investments 493 2 (431) 64 $8,754 $160 $(4,056) $4,858 Trading: Equity investments $324,432 $32,486 $(20,132) $336,786 Fixed income investments 242,647 2,150 (7,472) 237,325 $567,079 $34,636 $(27,604) $574,111 December 31, 2012: Available-for-sale: Equity investments $5,769 $1,445 $(149) $7,065 Fixed income investments 6,265 33 (2) 6,296 $12,034 $1,478 $(151) $13,361 Trading: Equity investments $239,368 $32,003 $(2,830) $268,541 Fixed income investments 199,191 12,098 (4,291) 206,998 $438,559 $44,101 $(7,121) $475,539 Proceeds from sales of available-for-sale investments were approximately $10.9 million, $0.8 million and $3.5 million in 2013, 2012 and 2011, respectively.Realized gains from our sales of available-for-sale investments were $4.7 million in 2013, $0.1 million in 2012 and $0.1 million in 2011. Realized losses fromour sales of available-for-sale investments were zero in 2013, $0.1 million in 2012 and $0.1 million in 2011. We assess valuation declines to determine theextent to which such declines are fundamental to the underlying investment or attributable to temporary market-related factors. Based on our assessment, wedo not believe the declines are other than temporary as of December 31, 2013.7. Derivative InstrumentsWe enter into various futures, forwards and swaps to economically hedge certain of our seed money investments. In addition, we have currency forwards thateconomically hedge certain cash accounts. We do not hold any derivatives designated in a formal hedge relationship under Accounting Standards Codification(“ASC”) 815-10, Derivatives and Hedging.The notional value, fair value and gains and losses recognized in investment gains (losses) as of December 31, 2013 and 2012 for derivative instruments notdesignated as hedging instruments were as follows: NotionalValue DerivativeAssets DerivativeLiabilities Gains(Losses) (in thousands) December 31, 2013: Exchange-traded futures $63,107 $289 $2,542 $(10,492)Currency forwards 111,774 576 927 (2,555)Interest rate swaps 81,253 1,149 573 621 Credit default swaps 42,270 696 126 (1,126)Option swaps 144 87 86 (399)Total return swaps 85,107 488 2,057 (5,157)Total derivatives $383,655 $3,285 $6,311 $(19,108)67Table of Contents NotionalValue DerivativeAssets DerivativeLiabilities Gains(Losses) (in thousands) December 31, 2012: Exchange-traded futures $89,901 $64 $1,598 $(18,291)Currency forwards 80,445 473 429 (503)Interest rate swaps 55,435 73 888 (1,358)Credit default swaps 53,775 457 272 (8,598)Option swaps 103 83 92 (424)Total return swaps 90,673 1,475 3,791 (6,470)Total derivatives $370,332 $2,625 $7,070 $(35,644)As of December 31, 2013 and 2012, the derivative assets and liabilities are included in both receivables and payables to brokers and dealers on ourconsolidated statements of financial condition. Gains and losses on derivative instruments are reported in investments gains and losses on the consolidatedstatements of income.We may be exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. We take steps to minimize ourcounterparty exposure through a credit review and approval process. In addition, we executed various collateral arrangements with counterparties to the over-the-counter derivative transactions that require both pledging and accepting collateral in the form of cash. As of December 31, 2013 and 2012, we held $1.4million and $1.5 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in payables to brokers anddealers in our consolidated statements of financial condition.Although notional amount is the most commonly used measure of volume in the derivative market, it is not used as a measure of credit risk. Generally, thecurrent credit exposure of our derivative contracts is limited to the net positive estimated fair value of derivative contracts at the reporting date after taking intoconsideration the existence of netting agreements and any collateral received. A derivative with positive value (a derivative asset) indicates existence of creditrisk because the counterparty would owe us if the contract were closed. Alternatively, a derivative contract with negative value (a derivative liability) indicateswe would owe money to the counterparty if the contract were closed. Generally, if there is more than one derivative transaction with a single counterparty, amaster netting arrangement exists with respect to derivative transactions with that counterparty to provide for aggregate net settlement.Certain of our standardized contracts for over-the-counter derivative transactions (“ISDA Master Agreements”) contain credit risk related contingentprovisions related to each counterparty's credit rating. In some ISDA Master Agreements, if the counterparty’s credit rating (or in some agreements, our AUM)falls below a specified threshold, either a default or a termination event permitting the counterparty to terminate the ISDA Master Agreement would be triggered.In all agreements that provide for collateralization, various levels of collateralization of net liability positions are applicable, depending on the credit rating ofthe counterparty. As of December 31, 2013 and 2012, we delivered $8.9 million and $8.4 million, respectively, of cash collateral into brokerage accounts,which is reported in cash and cash equivalents in our consolidated statements of financial condition.8. Offsetting Assets and LiabilitiesEffective January 1, 2013, we adopted ASU 2011-11, Disclosures about Offsetting Assets and Liabilities. The amended standard requires an entity todisclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on itsfinancial position. Derivative instruments (see Note 7), which are subject to master netting arrangements, are not considered material and are excluded fromthe below disclosures.Offsetting of securities borrowed as of December 31, 2013 and 2012 was as follows: GrossAmounts ofRecognizedAssets Gross AmountsOffset in theStatement ofFinancialPosition Net Amountsof AssetsPresented inthe Statementof FinancialPosition FinancialInstruments CashCollateralPledged NetAmount (in thousands) December 31, 2013 $83,619 $— $83,619 $— $83,619 $— December 31, 2012 $106,350 $— $106,350 $— $106,350 $— 68Table of ContentsOffsetting of securities loaned as of December 31, 2013 and 2012 was as follows: GrossAmounts ofRecognizedLiabilities Gross AmountsOffset in theStatement ofFinancialPosition Net Amountsof LiabilitiesPresented inthe Statementof FinancialPosition FinancialInstruments CashCollateralReceived Net Amount (in thousands) December 31, 2013 $65,101 $— $65,101 $— $65,101 $— December 31, 2012 $12,517 $— $12,517 $— $12,517 $— 9. Fair ValueFair 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 betweenmarket 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. Thesefinancial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into thedetermination of fair value require significant management judgment or estimation.Assets and Liabilities Measured at Fair Value on a Recurring BasisValuation of our financial instruments by pricing observability levels as of December 31, 2013 and 2012 was as follows: December 31, 2013 Level 1 Level 2 Level 3 Total (in thousands) Money markets $153,630 $— $— $153,630 U.S. Treasury Bills — 964,953 — 964,953 Equity securities Growth 114,217 — — 114,217 Value 33,952 — — 33,952 Multi-asset and asset allocation 53,519 — — 53,519 Other(1) 116,037 1,235 — 117,272 Fixed Income securities Taxable(2) 180,495 3,452 — 183,947 Tax-exempt(3) 13,654 801 — 14,455 Derivatives 290 2,995 — 3,285 Long exchange-traded options 22,621 — — 22,621 Private equity 19,836 8,934 52,081 80,851 Total assets measured at fair value $708,251 $982,370 $52,081 $1,742,702 Securities sold not yet purchased Short equities-corporate $46,978 $— $— $46,978 Short exchange-traded options 25,005 — — 25,005 Derivatives 2,542 3,769 — 6,311 Total liabilities measured at fair value $74,525 $3,769 $— $78,294 69Table of Contents December 31, 2012 Level 1 Level 2 Level 3 Total (in thousands) Money markets $170,120 $— $— $170,120 U.S. Treasury Bills — 1,537,150 — 1,537,150 U.K. Treasury Bills — 125 — 125 Equity securities Growth 125,242 — — 125,242 Value 36,126 — — 36,126 Multi-asset and asset allocation 59,449 — — 59,449 Other(1) 39,702 — — 39,702 Fixed Income securities Taxable(2) 177,635 1,219 — 178,854 Tax-exempt(3) 5,661 797 — 6,458 Derivatives 64 2,561 — 2,625 Long exchange-traded options 15,087 — — 15,087 Private equity 7,695 — 76,953 84,648 Total assets measured at fair value $636,781 $1,541,852 $76,953 $2,255,586 Securities sold not yet purchased Short equities-corporate $54,370 $— $— $54,370 Short exchange-traded options 9,197 — — 9,197 Other 271 — — 271 Derivatives 1,598 5,472 — 7,070 Total liabilities measured at fair value $65,436 $5,472 $— $70,908 (1)Primarily long positions in corporate equities traded through our options desk.(2)Primarily corporate and government securities.(3)Primarily municipal bonds.Following is a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instrumentspursuant to the valuation hierarchy:•Money markets: We invest excess cash in various money market funds that are valued based on quoted prices in active markets; these are includedin Level 1 of the valuation hierarchy.•Treasury Bills: We hold United States Treasury Bills, which are primarily segregated in a special reserve bank custody account as required byRule 15c3-3 of the Exchange Act. We also hold United Kingdom Treasury Bills. These securities are valued based on quoted yields in secondarymarkets and are included in Level 2 of the valuation hierarchy.•Equity and fixed income securities: Our equity and fixed income securities consist principally of company-sponsored mutual funds with net assetvalues and various separately-managed portfolios consisting primarily of equity and fixed income securities with quoted prices in active markets,which are included in Level 1 of the valuation hierarchy. In addition, some securities are valued based on observable inputs from recognized pricingvendors, which are included in Level 2 of the valuation hierarchy.•Derivatives: We hold exchange-traded futures with counterparties that are included in Level 1 of the valuation hierarchy. In addition, we holdcurrency forward contracts, interest rate swaps, credit default swaps, option swaps and total return swaps with counterparties that are included inLevel 2 of the valuation hierarchy.•Options: We hold long exchange-traded options that are included in Level 1 of the valuation hierarchy.70Table of Contents•Private equity: Generally, the valuation of private equity investments owned by our consolidated venture capital fund requires significantmanagement judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such investments. Privateequity investments are valued initially at cost. The carrying values of private equity investments are adjusted either up or down from cost to reflectexpected exit values as evidenced by financing and sale transactions with third parties, or when determination of a valuation adjustment is confirmedthrough ongoing review in accordance with our valuation policies and procedures. A variety of factors are reviewed and monitored to assess positiveand 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 outlooks and the third party financing environment over time. Indetermining valuation adjustments resulting from the investment review process, particular emphasis is placed on current company performance andmarket conditions. For these reasons, which make the fair value of private equity investments unobservable, equity investments are included inLevel 3 of the valuation hierarchy. However, if private equity investments owned by our consolidated venture capital fund become publicly-traded,they are included in Level 1 of the valuation hierarchy. Also, if they contain trading restrictions, publicly-traded equity investments are included inLevel 2 of the valuation hierarchy. During the first quarter of 2012, one of our private securities went public and, due to a trading restriction period,$13.5 million was transferred from a Level 3 classification to a Level 2 classification. During the third quarter of 2012, the trading restriction periodfor one of our public securities lapsed and, as a result, $6.0 million was transferred from a Level 2 classification to a Level 1 classification. Duringthe second quarter of 2013, one of our private securities went public and, due to a trading restriction period, $19.2 million was transferred from aLevel 3 classification to a Level 2 classification. During the fourth quarter of 2013, the trading restriction period for one of our public securitieslapsed and, as a result, $19.8 million was transferred from a Level 2 classification to a Level 1 classification. Also, during the fourth quarter of2013, one of our private securities merged with a public company and, due to a trading restriction period, $8.9 million was transferred from a Level3 to a Level 2 classification.•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 change in carrying value associated with Level 3 financial instruments carried at fair value is as follows: December 31,2013 December 31,2012 (in thousands) Balance as of beginning of period $76,953 $64,466 Transfers out (28,155) (13,548)Purchases 4,058 19,660 Sales (3,518) (1,823)Realized gains (losses), net (6,578) (7,524)Unrealized gains (losses), net 9,321 15,722 Balance as of end of period $52,081 $76,953 Transfers into and out of all levels of the fair value hierarchy are reflected at end-of-period fair values. Realized and unrealized gains and losses on Level 3financial instruments are recorded in investment gains and losses in the consolidated statements of income. Approximately one-third of the Level 3 investmentsare private equity investments owned by our consolidated venture capital fund, of which we own 10% and non-controlling interests own 90%.Quantitative information about Level 3 fair value measurements as of December 31, 2013 and 2012 is as follows: Fair Valueas ofDecember31, 2013 Valuation TechniqueUnobservable Input Range (in thousands) Private Equity: Technology, Media andTelecommunications $13,956 Market comparable companiesRevenue multiple 2.5 – 3.5 Discount rate 18% Discount years 1 .0 Healthcare and Cleantech $2,892 Market comparable companiesRevenue multiple(1) 1.2 – 49.0 R&D multiple(1) 1.1 – 17.1 Discount for lack ofmarketability and riskfactors 50-60% (1)The median for the Healthcare and Cleantech revenue multiple is 12.5; the median R&D multiple is 11.0.71Table of Contents Fair Valueas ofDecember31, 2012 Valuation TechniqueUnobservable Input Range (in thousands) Private Equity: Technology, Media andTelecommunications $23,256 Market comparable companiesRevenue multiple 2.5 – 6 Discount rate 18% Discount years 1 - 2 Healthcare and Cleantech $14,871 Market comparable companiesRevenue multiple(1) 0.6 – 62.5 R&D multiple(1) 1.0 – 30.6 Discount for lack ofmarketability and riskfactors 40-60% (1)The median for the Healthcare and Cleantech revenue multiple is 10.1; the majority of the R&D multiples fall between 4.0 and 11.4.The significant unobservable inputs used in the fair value measurement of the reporting entities’ venture capital securities in the technology, media andtelecommunications areas are enterprise value to revenue multiples and a discount rate to account for the time until the securities are likely monetized andvarious risk factors. Significant increases (decreases) in the enterprise value to revenue multiple inputs in isolation would result in a significantly higher(lower) fair value measurement. Significant increases (decreases) in the discount rate would result in a significantly lower (higher) fair value measurement.The significant unobservable inputs used in the fair value measurement of the reporting entities’ venture capital securities in the healthcare and cleantech areasare enterprise value to revenue multiples, enterprise value to R&D investment multiples, and a discount for lack of marketability and various risk factors.Significant increases (decreases) in the enterprise value to revenue multiple and enterprise value to R&D investment multiple inputs in isolation would result ina significantly higher (lower) fair value measurement. Significant increases (decreases) in the discount for lack of marketability and various risk factors inisolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the level of enterprise value torevenue multiple is accompanied by a directionally similar change in the assumption used for the enterprise value to R&D multiple. In addition, a change inthe assumption used for the discount for lack of marketability and various risk factors is not correlated to changes in the assumptions used for the enterprisevalue to revenue multiple or the enterprise value to R&D investment multiple.One of our private equity investments is a venture capital fund (fair value of $30.2 million and unfunded commitment of $10.1 million as of December 31,2013) that invests in communications, consumer, digital media, healthcare and information technology markets. Also, we have an investment in a privateequity fund focused exclusively on the energy sector (fair value of $5.0 million and unfunded commitment of $0.1 million as of December 31, 2013). Inaddition, one of the investments included in our consolidated private equity fund (fair value of $0.1 million and unfunded commitment of $0.2 million as ofDecember 31, 2013) is a venture capital fund investing in clean energy, resource and energy efficiency and other sustainable industries. The fair value of eachof these investments has been estimated using the capital account balances provided by the partnerships. The interests in these partnerships cannot beredeemed.Assets and Liabilities Measured at Fair Value on a Nonrecurring BasisWe did not have any material assets or liabilities that were measured at fair value for impairment on a nonrecurring basis during the years ended December 31,2013 or 2012.72Table of Contents10. Furniture, Equipment and Leasehold Improvements, NetFurniture, equipment and leasehold improvements, net consist of: December 31, 2013 2012 (in thousands) Furniture and equipment $526,478 $525,292 Leasehold improvements 258,061 273,433 784,539 798,725 Less: Accumulated depreciation and amortization (610,021) (602,600)Furniture, equipment and leasehold improvements, net $174,518 $196,125 Depreciation and amortization expense on furniture, equipment and leasehold improvements were $36.5 million, $52.8 million and $60.9 million for theyears ended December 31, 2013, 2012 and 2011, respectively.During 2013, 2012 and 2011, we recorded $28.4 million, $223.0 million and $7.2 million, respectively, in pre-tax real estate charges. Included in thesecharges were $4.4 million, $41.4 million and $4.6 million, respectively, worth of leasehold improvements, furniture and equipment we wrote off related to therespective spaces. See Note 3 for further discussion of the real estate charges.11. Deferred Sales Commissions, NetThe components of deferred sales commissions, net for the years ended December 31, 2013 and 2012 were as follows (excluding amounts related to fullyamortized deferred sales commissions): December 31, 2013 2012 (in thousands) Carrying amount of deferred sales commissions $813,636 $758,127 Less: Accumulated amortization (516,311) (475,032)Cumulative CDSC received (226,751) (187,665)Deferred sales commissions, net $70,574 $95,430 Amortization expense was $41.3 million, $40.3 million and $37.7 million for the years ended December 31, 2013, 2012 and 2011, respectively. Estimatedfuture amortization expense related to the December 31, 2013 net asset balance, assuming no additional CDSC is received in future periods, is as follows (inthousands):2014 $29,157 2015 19,971 2016 15,406 2017 5,456 2018 500 2019 84 $70,574 12. DebtAs of December 31, 2013 and 2012, AllianceBernstein had $268.4 million and $323.2 million, respectively, in commercial paper outstanding with weightedaverage interest rates of approximately 0.3% and 0.5%, respectively. The commercial paper is short term in nature, and as such, recorded value is estimated toapproximate fair value (and considered a Level 2 security in the fair value hierarchy). Average daily borrowings of commercial paper during 2013 and 2012were $282.0 million and $404.9 million, respectively, with weighted average interest rates of approximately 0.3% and 0.4%, respectively.AllianceBernstein has a $1.0 billion committed, unsecured senior revolving credit facility (the “Credit Facility”) with a group of commercial banks and otherlenders, which matures on January 17, 2017. The Credit Facility provides for possible increases in the principal amount by up to an aggregate incrementalamount of $250 million, any such increase being subject to the consent of the affected lenders. The Credit Facility is available for AllianceBernstein’s andSCB LLC’s business purposes, including the support of AllianceBernstein’s $1.0 billion commercial paper program. Both AllianceBernstein and SCB LLCcan draw directly under the Credit Facility and management may draw on the Credit Facility from time to time. AllianceBernstein has agreed to guarantee theobligations of SCB LLC under the Credit Facility.73Table of ContentsThe Credit Facility contains affirmative, negative and financial covenants, which are customary for facilities of this type, including, among other things,restrictions on dispositions of assets, restrictions on liens, a minimum interest coverage ratio and a maximum leverage ratio. As of December 31, 2013, wewere in compliance with these covenants. The Credit Facility also includes customary events of default (with customary grace periods, as applicable),including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or lender’s commitments may beterminated. Also, under such provisions, upon the occurrence of certain insolvency- or bankruptcy-related events of default, all amounts payable under theCredit Facility would automatically become immediately due and payable, and the lender’s commitments would automatically terminate.Amounts under the Credit Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. Voluntary prepaymentsand commitment reductions requested by us are permitted at any time without fee (other than customary breakage costs relating to the prepayment of anydrawn loans) upon proper notice and subject to a minimum dollar requirement. Borrowings under the Credit Facility bear interest at a rate per annum, whichwill be, at our option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AllianceBernstein, plus one of thefollowing indexes: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate.As of December 31, 2013 and 2012, we had no amounts outstanding under the Credit Facility. During 2013 and 2012, we did not draw upon the CreditFacility.In addition, SCB LLC has five uncommitted lines of credit with four financial institutions. Two of these lines of credit permit us to borrow up to an aggregateof approximately $200.0 million, with AllianceBernstein named as an additional borrower, while three lines have no stated limit. As of December 31, 2013 and2012, SCB LLC had no bank loans outstanding. Average daily borrowings of bank loans during 2013 and 2012 were $6.2 million and $18.1 million,respectively, with weighted average interest rates of approximately 1.0% and 1.3%, respectively.13. Commitments and ContingenciesOperating LeasesWe lease office space, furniture and office equipment under various operating leases. The future minimum payments under non-cancelable leases, subleasecommitments and related payments we are obligated to make, net of sublease commitments of third party lessees to make payments to us, as of December 31,2013, are as follows: Payments SubleaseReceipts NetPayments (in millions) 2014 $140.1 $29.3 $110.8 2015 140.2 36.1 104.1 2016 139.5 35.6 103.9 2017 140.9 36.2 104.7 2018 129.1 36.0 93.1 2019 and thereafter 957.2 140.9 816.3 Total future minimum payments $1,647.0 $314.1 $1,332.9 Office leases contain escalation clauses that provide for the pass through of increases in operating expenses and real estate taxes. Rent expense, which isamortized on a straight-line basis over the life of the lease, was $74.7 million, $100.4 million and $121.2 million, respectively, for the years ended December31, 2013, 2012 and 2011, net of sublease income of $3.4 million, $3.2 million and $3.2 million, respectively, for the years ended December 31, 2013, 2012and 2011. In addition, we accelerated rent of $24.0 million, $181.6 million and $2.6 million in 2013, 2012 and 2011, respectively. See Note 3 for furtherdiscussion of the real estate charges.Legal ProceedingsDuring the first quarter of 2012, we received a legal letter of claim (the “Letter of Claim”) sent on behalf of Philips Pension Trustees Limited and PhilipsElectronics U.K. Limited (“Philips”), a former pension fund client, alleging that AllianceBernstein Limited (one of our subsidiaries organized in the U.K.)was negligent and failed to meet certain applicable standards of care with respect to the initial investment in, and management of, a £500 million portfolio ofU.S. mortgage-backed securities. The alleged damages range between $177 million and $234 million, plus compound interest on an alleged $125 million ofrealized losses in the portfolio. On January 2, 2014, Philips filed a claim form (“Claim”) in the High Court of Justice in London, England, which formallycommences litigation with respect to the allegations in the Letter of Claim.74Table of ContentsWe believe that any losses to Philips resulted from adverse developments in the U.S. housing and mortgage market that precipitated the financial crisis in 2008and not from any negligence or failure on our part. We believe that we have strong defenses to these claims, which are set forth in our October 12, 2012response to the Letter of Claim, and will defend this matter vigorously. Currently, we are unable to estimate a reasonably possible range of loss because thematter remains in its early stages.In addition to the Claim discussed immediately above, we are involved in various other matters, including regulatory inquiries, administrative proceedingsand litigation, some of which allege significant damages.In management’s opinion, an adequate accrual has been made as of December 31, 2013 to provide for any probable losses regarding any litigation matters forwhich we can reasonably estimate an amount of loss. It is reasonably possible that we could incur additional losses pertaining to these matters, but currentlywe cannot estimate any such additional losses.Management, after consultation with legal counsel, currently believes that the outcome of any matter that is pending or threatened, or all of them combined,will not have a material adverse effect on our results of operations, financial condition or liquidity. However, as any inquiry, proceeding or litigation has theelement of uncertainty, management cannot determine whether further developments relating to any matter that is pending or threatened, or all of themcombined, will have a material adverse effect on our results of operation, financial condition or liquidity in any future reporting period.OtherDuring 2009, we entered into a subscription agreement under which we committed to invest up to $35 million, as amended in 2011, in a venture capital fundover a six-year period. As of December 31, 2013, we have funded $24.9 million of this commitment.During 2010, as general partner of AllianceBernstein U.S. Real Estate L.P. (the “Real Estate Fund”), we committed to invest $25 million in the Real EstateFund. As of December 31, 2013, we have funded $12.4 million of this commitment.During 2012, we entered into an investment agreement under which we committed to invest up to $8 million in an oil and gas fund over a three-year period. Asof December 31, 2013, we have funded $7.9 million of this commitment.14. Net CapitalSCB 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 theExchange Act. SCB LLC computes its net capital under the alternative method permitted by the rule, which requires that minimum net capital, as defined,equals the greater of $1 million or two percent of aggregate debit items arising from customer transactions, as defined. As of December 31, 2013, SCB LLChad net capital of $160.1 million, which was $141.7 million in excess of the minimum net capital requirement of $18.4 million. Advances, dividendpayments and other equity withdrawals by SCB LLC are restricted by regulations of the U.S. Securities and Exchange Commission (“SEC”), the FinancialIndustry Regulatory Authority, Inc., and other securities agencies.SCBL is a member of the London Stock Exchange. As of December 31, 2013, SCBL was subject to financial resources requirements of $20.6 millionimposed by the Financial Conduct Authority of the United Kingdom and had aggregate regulatory financial resources of $45.6 million, an excess of $25.0million.AllianceBernstein Investments serves as distributor and/or underwriter for certain company-sponsored mutual funds. AllianceBernstein Investments isregistered as a broker-dealer under the Exchange Act and is subject to the minimum net capital requirements imposed by the SEC. AllianceBernsteinInvestments’ net capital as of December 31, 2013 was $47.3 million, which was $47.0 million in excess of its required net capital of $0.3 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 ofDecember 31, 2013, each of our subsidiaries subject to a minimum net capital requirement satisfied the applicable requirement.15. Counterparty Risk Customer ActivitiesIn the normal course of business, brokerage activities involve the execution, settlement and financing of various customer securities trades, which may exposeSCB 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 thecustomer is unable to fulfill its contractual obligations.75Table of ContentsSCB 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. Inconnection with these activities, SCB LLC may execute and clear customer transactions involving the sale of securities not yet purchased. SCB LLC seeks tocontrol the risks associated with margin transactions by requiring customers to maintain collateral in compliance with the aforementioned regulatory andinternal guidelines. SCB LLC monitors required margin levels daily and, pursuant to such guidelines, requires customers to deposit additional collateral, orreduce positions, when necessary. A majority of SCB LLC’s customer margin accounts are managed on a discretionary basis whereby AllianceBernsteinmaintains control over the investment activity in the accounts. For these discretionary accounts, SCB LLC’s margin deficiency exposure is minimized throughmaintaining 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 riskassociated with these contracts by monitoring these positions on a daily basis, as well as by virtue of AllianceBernstein’s discretionary authority and SCBLLC’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 daysafter 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 oftheir contracts, in which case SCB LLC and SCBL may have to purchase or sell financial instruments at prevailing market prices. The risks assumed bySCB LLC and SCBL in connection with these transactions are not expected to have a material adverse effect on AllianceBernstein’s, SCB LLC’s, or SCBL’sfinancial condition or results of operations.Other CounterpartiesSCB LLC and SCBL are engaged in various brokerage activities on behalf of clients, including Sanford C. Bernstein (Hong Kong) Limited (one of oursubsidiaries), in which counterparties primarily include broker-dealers, banks and other financial institutions. In the event counterparties do not fulfill theirobligations, SCB LLC and SCBL may be exposed to loss. 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, each counterparty’s creditworthiness.In connection with security borrowing and lending arrangements, SCB LLC and SCBL enter into collateralized agreements, which may result in creditexposure in the event the counterparty to a transaction is unable to fulfill its contractual obligations. Security borrowing arrangements require SCB LLC andSCBL to deposit cash collateral with the lender. With respect to security lending arrangements, SCB LLC (SCBL does not participate in security lendingarrangements) receives collateral in the form of cash in amounts generally in excess of the market value of the securities loaned. SCB LLC minimizes creditrisk associated with these activities by establishing credit limits for each broker and monitoring these limits on a daily basis. Additionally, security borrowingand lending collateral is marked to market on a daily basis, and additional collateral is deposited by or returned to SCB LLC and SCBL as necessary.AllianceBernstein enters into various futures, forwards and swaps to economically hedge certain of its seed money investments, as well as currency forwardsto hedge certain cash accounts. AllianceBernstein is exposed to credit losses in the event of nonperformance by counterparties to these derivative financialinstruments. See Note 7 for further discussion.16. Qualified Employee Benefit PlansWe maintain a qualified profit sharing plan covering U.S. employees and certain foreign employees. Employer contributions are discretionary and generallylimited to the maximum amount deductible for federal income tax purposes. Aggregate contributions for 2013, 2012 and 2011 were $12.8 million, $13.0million and $13.7 million, respectively.We maintain several defined contribution plans for foreign employees working for our subsidiaries in the United Kingdom, Australia, Japan and otherlocations outside the United States. Employer contributions generally are consistent with regulatory requirements and tax limits. Defined contribution expensefor foreign entities was $6.0 million, $6.7 million and $7.7 million in 2013, 2012 and 2011, respectively.We maintain a qualified, noncontributory, defined benefit retirement plan (“Retirement Plan”) covering current and former employees who were employed byAllianceBernstein in the United States prior to October 2, 2000. Benefits are based on years of credited service, average final base salary (as defined in theRetirement Plan), and primary Social Security benefits. Service and compensation after December 31, 2008 are not taken into account in determiningparticipants’ retirement benefits.Our policy is to satisfy our funding obligation for each year in an amount not less than the minimum required by the Employee Retirement Income SecurityAct of 1974, as amended, and not greater than the maximum amount we can deduct for federal income tax purposes. We contributed $4.0 million to theRetirement Plan during 2013. We currently estimate that we will contribute $6.0 million to the Retirement Plan during 2014. Contribution estimates, which aresubject to change, are based on regulatory requirements, future market conditions and assumptions used for actuarial computations of the Retirement Plan’sobligations and assets. Management, at the present time, has not determined the amount, if any, of additional future contributions that may be required.76Table of ContentsThe Retirement Plan’s projected benefit obligation, fair value of plan assets, and funded status (amounts recognized in the consolidated statements of financialcondition) were as follows: Years Ended December 31, 2013 2012 (in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $107,806 $94,655 Interest cost 4,640 4,633 Actuarial (gain) loss (15,534) 13,481 Benefits paid (3,364) (4,963)Projected benefit obligation at end of year 93,548 107,806 Change in plan assets: Plan assets at fair value at beginning of year 71,620 63,325 Actual return on plan assets 11,575 8,408 Employer contribution 4,000 4,850 Benefits paid (3,364) (4,963)Plan assets at fair value at end of year 83,831 71,620 Funded status $(9,717) $(36,186)The amounts recognized in other comprehensive income (loss) for 2013, 2012 and 2011 were as follows: 2013 2012 2011 (in thousands) Unrecognized net gain (loss) from experience different from that assumed and effectsof changes and assumptions $22,871 $(9,194) $(15,231)Unrecognized net plan assets as of January 1, 1987 being recognized over 26.3 years (47) (143) (143) 22,824 (9,337) (15,374)Income tax (expense) benefit (388) (126) 332 Other comprehensive gain (loss) $22,436 $(9,463) $(15,042)The amounts included in accumulated other comprehensive income (loss) as of December 31, 2013 and 2012 were as follows: 2013 2012 (in thousands) Unrecognized net loss from experience different from that assumed and effects of changes andassumptions $(25,393) $(48,264)Unrecognized net plan assets as of January 1, 1987 being recognized over 26.3 years — 47 (25,393) (48,217)Income tax benefit 335 723 Accumulated other comprehensive loss $(25,058) $(47,494)The estimated amortization of loss for the Retirement Plan that will be amortized from accumulated other comprehensive income over the next year is$472,258. The accumulated benefit obligation for the plan was $93.5 million and $107.8 million, respectively, as of December 31, 2013 and 2012.The discount rates used to determine benefit obligations as of December 31, 2013 and 2012 (measurement dates) were 5.3% and 4.4%, respectively.Benefit payments are expected to be paid as follows (in thousands):2014 $2,926 2015 4,630 2016 5,512 2017 4,609 2018 5,080 2019-2023 29,919 77Table of ContentsNet expense under the Retirement Plan consisted of: Years Ended December 31, 2013 2012 2011 (in thousands) Interest cost on projected benefit obligations$4,640$4,633$4,627Expected return on plan assets (5,347) (4,969) (5,133)Amortization of transition asset (47) (143) (143)Recognized actuarial loss 1,109 848 399 Net pension expense (benefit) $355 $369 $(250)Actuarial computations used to determine net periodic costs were made utilizing the following weighted-average assumptions: Years Ended December 31, 2013 2012 2011 Discount rate on benefit obligations 4.40% 5.10% 5.50%Expected long-term rate of return on plan assets 7.50 8.00 8.00 In developing the expected long-term rate of return on plan assets of 7.5%, management considered the historical returns and future expectations for returns foreach 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 expectedreturns for each asset class.The Retirement Plan’s asset allocation percentages consisted of: December 31, 2013 2012 Equity securities 59% 67%Debt securities 21 28 Real estate — 2 Other 20 3 100% 100%The guidelines regarding allocation of assets are formalized in the Investment Policy Statement adopted by the Investment Committee for the Retirement Plan.The objective of the investment program is to enhance the portfolio of the Plan through total return (capital appreciation and income), thereby promoting theongoing ability of the Plan to meet future liabilities and obligations, while minimizing the need for additional contributions. The guidelines specify anallocation weighting of 30% to 60% for return seeking investments (target of 40%), 10% to 30% for risk mitigating investments (target of 15%), 0% to 25% fordiversifying investments (target of 17%) and 18% to 38% for dynamic asset allocation (target of 28%). Investments in mutual funds, hedge funds (and otheralternative investments), and other commingled investment vehicles are permitted under the guidelines. Investments are permitted in overlay portfolios(regulated mutual funds) to complement the long-term strategic asset allocation. This portfolio overlay strategy is designed to manage short-term portfolio riskand mitigate the effect of extreme outcomes by varying the asset allocation of a portfolio through investment in the overlay portfolios.See Note 9 for a description of how we measure the fair value of our plan assets.The valuation of our Retirement Plan assets by pricing observability levels as of December 31, 2013 and 2012 was as follows: December 31, 2013 Level 1 Level 2 Level 3 Total (in thousands) Cash $444 $— $— $444 Hedge fund — 5,758 5,758 Fixed income mutual funds 28,920 — — 28,920 Equity mutual fund 14,795 — — 14,795 Equity securities 23,440 — — 23,440 Equity private investment trusts — 10,474 — 10,474 Total assets measured at fair value $67,599 $16,232 $— $83,831 78Table of Contents December 31, 2012 Level 1 Level 2 Level 3 Total (in thousands) Cash $2,197 $— $— $2,197 Fixed income mutual funds 22,135 — — 22,135 Equity mutual fund 12,356 — — 12,356 Equity securities 23,933 — — 23,933 Equity private investment trusts — 10,999 — 10,999 Total assets measured at fair value $60,621 $10,999 $— $71,620 The Retirement Plan’s investments include the following:·two fixed income mutual funds, each of which seeks to generate income consistent with preservation of capital. One mutual fund invests in aportfolio of fixed income securities of U.S. and non-U.S. companies and U.S. and non-U.S. government securities and supranational entities,including lower-rated securities, while the second fund invests in a broad range of fixed income securities in both developed and emerging marketswith a range of maturities from short- to long-duration;·separate equity and fixed income mutual funds which seek to moderate the volatility of equity and fixed income oriented asset allocation over the longterm, as part of an investor’s overall asset allocation managed by AllianceBernstein;·a multi-style, multi-cap integrated portfolio adding incremental U.S. equity diversification to its value and growth equity selections, designed todeliver a long-term premium to the S&P 500 with greater consistency across a range of market environments;·two equity private investment trusts, one of which invests primarily in equity securities of non-U.S. companies located in emerging marketcountries, and the other trust invests in equity securities of established non-U.S. companies located in the countries comprising the MSCI EAFEIndex, plus Canada; and·a hedge fund that seeks to provide attractive risk-adjusted returns over full market cycles with less volatility than the broad equity markets byallocating all or substantially all of its assets among portfolio managers through portfolio funds that employ a broad range of investment strategies(2013 only).We provide postretirement medical benefits which allow retirees between the ages of 55 and 65 meeting certain service requirements, at their election, tocontinue to participate in our group medical program by paying 100% of the applicable group premium. Retirees older than 65 also may continue to participatein 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, weincur the cost of providing a post-retirement medical benefit. During 2013, our net periodic benefit (credit) was $(0.9) million, and our aggregate benefitobligation as of December 31, 2013 was $0.2 million.17. Long-term Incentive Compensation PlansWe maintain an unfunded, non-qualified incentive compensation program known as the AllianceBernstein 2013 Incentive Compensation Award Program (the“Incentive Compensation Program”), under which annual awards may be granted to eligible employees. See Note 2, "Summary of Significant AccountingPolicies – Long-term Incentive Compensation Plans" for a discussion of the award provisions.Under the Incentive Compensation Program, we made awards in 2013, 2012 and 2011 aggregating $157.7 million, $150.1 million and $159.9 million,respectively. The amounts charged to employee compensation and benefits for the years ended December 31, 2013, 2012 and 2011 were $162.3 million,$151.4 million and $654.3 million (which includes $509.1 million of the one-time, non-cash compensation charge), respectively.Effective as of July 1, 2010, we established the AllianceBernstein 2010 Long Term Incentive Plan, as amended (“2010 Plan”), which was adopted by HoldingUnitholders at a special meeting of Holding Unitholders held on June 30, 2010. Since the 2010 Plan was adopted, the following forms of awards have beenavailable for grant to employees and Eligible Directors: (i) restricted Holding Units or phantom restricted Holding Units (a “phantom” award is a contractualright to receive Holding Units at a later date or upon a specified event); (ii) options to buy Holding Units; and (iii) other Holding Unit-based awards(including, without limitation, Holding Unit appreciation rights and performance awards). The purpose of the 2010 Plan is to promote the interest ofAllianceBernstein by: (i) attracting and retaining talented officers, employees and directors, (ii) motivating such officers, employees and directors by means ofperformance-related incentives to achieve longer-range business and operational goals, (iii) enabling such officers, employees and directors to participate in thelong-term growth and financial success of AllianceBernstein, and (iv) aligning the interests of such officers, employees and directors with those of HoldingUnitholders. The 2010 Plan will expire on June 30, 2020, and no awards under the 2010 Plan will be made after that date. Under the 2010 Plan, the aggregatenumber of Holding Units with respect to which awards may be granted is 60.0 million, including no more than 30.0 million newly-issued Holding Units.79Table of ContentsThe 2010 Plan was amended by the Board in May 2011, expanding the universe of persons eligible to receive awards under the 2010 Plan to include anymember of the Board who is a former executive or former employee of an affiliate of Holding. For purposes of this amendment, “affiliate” includes anycompany or other entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with,AllianceBernstein.The 2010 Plan was further amended by the Compensation Committee of the Board (“Compensation Committee”) in December 2011, clarifying that, whereduly authorized by the Compensation Committee or the Board, continued vesting of awards after a Termination (as those terms are defined in the 2010 Plan orthe applicable award agreement) in circumstances where such continued vesting is conditioned on compliance with (A) one or more restrictive covenants,and/or (B) a standard of conduct regarding appropriate consideration of risk set forth in the applicable award agreement, shall count towards satisfying theminimum vesting requirement set forth in Section 6(b)(i) of the 2010 Plan.The 2010 Plan was further amended by the Board in May 2012, when the Board authorized management to reacquire on the open market or otherwise all 60.0million Holding Units available for awards under the 2010 Plan (less one Holding Unit for every newly-issued Holding Unit already awarded under the 2010Plan), while maintaining the 30.0 million Holding Unit limitation on newly-issued Holding Units available for awards under the 2010 Plan.As of December 31, 2013, 248,281 options to buy Holding Units had been granted and 37,844,646 Holding Units, net of forfeitures, were subject to otherHolding Unit awards made under the 2010 Plan. Holding Unit-based awards (including options) in respect of 21,907,073 Holding Units were available forgrant as of December 31, 2013.In 1997, we established the 1997 Long Term Incentive Plan (“1997 Plan”), under which options to buy Holding Units, restricted Holding Units andphantom restricted Holding Units, performance awards, and other Holding Unit-based awards were available for grant to key employees and Eligible Directorsof the General Partner for terms established at the time of grant (generally 10 years).Options granted to employees generally are exercisable at a rate of 20% of the Holding Units subject to such options on each of the first five anniversary datesof the date of grant; options granted to Eligible Directors generally are exercisable at a rate of 33.3% of the Holding Units subject to such options on each of thefirst three anniversary dates of the date of grant. Restricted Holding Units awarded to Eligible Directors vest on the third anniversary of the grant date orimmediately upon a director’s resignation. Restricted Holding Units awarded to our CEO in December 2008 pursuant to his initial employment agreement (asdescribed below under “Restricted Holding Unit Awards”) vested 20% on each of the first five anniversary dates of the grant date. Restricted HoldingUnits awarded under the Incentive Compensation Program vest 25% on December 1st of the subsequent four years. The 1997 Plan expired on July 26, 2010.Option AwardsOptions to buy Holding Units (including grants to Eligible Directors) were granted as follows: 37,690 options were granted during 2013, 114,443 options weregranted during 2012 and 70,238 options were granted during 2011. The weighted average fair value of options to buy Holding Units granted during 2013,2012 and 2011 was $5.44, $3.67 and $5.98, respectively, on the date of grant, determined using the Black-Scholes option valuation model with thefollowing assumptions: 2013 2012 2011 Risk-free interest rate 0.8 – 1.7% 0.7% 1.9%Expected cash distribution yield 8.0 – 8.3% 6.2% 5.4%Historical volatility factor 49.7 – 49.8% 49.2% 47.3%Expected term6.0 years 6.0 years 6.0 years Due to a lack of sufficient historical data, we have chosen to use the simplified method to calculate the expected term of options.80Table of ContentsThe activity in our option plan during 2013 is as follows: Options toBuyHoldingUnits WeightedAverageExercise PricePer Option WeightedAverageRemainingContractualTerm (Years) AggregateIntrinsicValue Outstanding as of December 31, 2012 8,553,345 $39.77 5.8 Granted 37,690 25.47 Exercised (887,642) 17.05 Forfeited (602,374) 60.10 Expired (26,880) 36.50 Outstanding as of December 31, 2013 7,074,139 40.82 4.9 $— Exercisable as of December 31, 2013 4,684,512 34.97 4.8 — Vested or expected to vest as of December 31, 2013 7,074,139 40.82 4.9 — The aggregate intrinsic value as of December 31, 2013 on options outstanding, exercisable and expected to vest is negative, and is therefore presented as zero inthe table above. The total intrinsic value of options exercised during 2013, 2012 and 2011 was $5.0 million, zero and $0.4 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 usingthe Black-Scholes option valuation model) and is recognized over the required service period. We recorded compensation (credit) expense relating to optiongrants of $(3.8) million, $1.2 million and $36.4 million (which includes $35.2 million of the one-time, non-cash compensation charge), respectively, for theyears ended December 31, 2013, 2012 and 2011. As of December 31, 2013, there was no compensation cost related to unvested option grants not yetrecognized in the consolidated statement of income.Restricted Holding Unit AwardsIn 2013, 2012 and 2011, restricted Holding Units were awarded to Eligible Directors. These Holding Units give the Eligible Directors, in most instances, allthe rights of other Holding Unitholders subject to such restrictions on transfer as the Board may impose. We awarded 28,693, 28,812 and 19,313 restrictedHolding Units, respectively, in 2013, 2012 and 2011 with grant date fair values per restricted Holding Unit of $20.12 and $26.44 in 2013, $14.58 in 2012and $21.75 in 2011. All of the restricted Holding Units vest on the third anniversary of grant date or immediately upon a director’s resignation. We fullyexpensed these awards on each grant date. We recorded compensation expense relating to these awards of $0.7 million, $0.4 million and $0.4 million,respectively, for the years ended December 31, 2013, 2012 and 2011.In connection with the commencement of Mr. Kraus’s employment as our CEO on December 19, 2008, he was granted 2.7 million restricted Holding Unitswith a grant date fair value of $19.20. Mr. Kraus’s restricted Holding Units vested ratably on each of the first five anniversaries of December 19, 2008,commencing December 19, 2009, as a result of his continued employment by AllianceBernstein on the vesting dates. During June 2012, Mr. Kraus enteredinto an agreement (the “Extended Employment Agreement”) pursuant to which Mr. Kraus will continue to serve as our CEO from January 3, 2014, the dayfollowing the end of the term of his initial employment agreement, until January 2, 2019 (the “Extended Employment Term”), unless the ExtendedEmployment Agreement is terminated in accordance with its terms. In connection with the signing of the Extended Employment Agreement, Mr. Kraus wasgranted 2.7 million restricted Holding Units, vesting ratably over the Extended Employment Term. Under US GAAP, the compensation expense for theHolding Unit award under the Extended Employment Agreement of $33.1 million (based on the $12.17 grant date Holding Unit price) must be amortized on astraight-line basis over 6.5 years, beginning on the grant date. As a result, even though Mr. Kraus will not receive any incremental cash compensation or cashdistributions related to the restricted Holding Unit award pursuant to the Extended Employment Agreement prior to its commencement on January 3, 2014, weincurred $2.5 million of incremental compensation expense during the second half of 2012 and $5.1 million of such expense during 2013. We recordedcompensation expense relating to the CEO restricted Holding Unit grants of $15.5 million, $13.0 million and $10.5 million, respectively, for the years endedDecember 31, 2013, 2012 and 2011.In 1993, we established the Century Club Plan, under which employees of AllianceBernstein whose primary responsibilities are to assist in the distribution ofcompany-sponsored mutual funds and who meet certain sales targets, are eligible to receive an award of restricted Holding Units. Awards granted prior toDecember 2010 vested ratably over three years and subsequent awards vest ratably over four years. The service requirement for Century Club participantswas affected in the same manner as other long-term incentive compensation awards by the amendment to the employee long-term incentive compensation awardprogram in the fourth quarter of 2011 (see Note 2 for a description of the amendment). We awarded 55,000, 47,450 and 57,828 restricted Holding Units in2013, 2012 and 2011, respectively. The grant date fair values per Holding Unit of these awards were $21.67 in 2013, $17.91 in 2012 and $13.38 in 2011.We recorded compensation expense relating to the Century Club Plan grants of $1.1 million, $0.7 million and $3.0 million (which includes $2.2 million of theone-time, non-cash compensation charge), respectively, for the years ended December 31, 2013, 2012 and 2011.81Table of ContentsSince 2009, we have awarded restricted Holding Units under the Incentive Compensation Program. We awarded 13.2 million restricted Holding Units in 2013(which included 6.5 million restricted Holding Units granted in January 2013 for 2012 year-end awards, 0.2 million additional restricted Holding Unitsgranted in the second quarter of 2013 relating to the 2012 year-end awards and 6.5 million restricted Holding Units in December 2013 for the 2013 year-endawards) and 8.7 million restricted Holding Units in 2012 (all of which were granted in January 2012 for 2011 year-end awards) with grant date fair values perrestricted Holding Unit ranging between $19.80 and $25.30 in 2013 and $14.90 in 2012.We also award restricted Holding Units in connection with certain employment and separation agreements with vesting schedules ranging between two and fiveyears. The fair value of the restricted Holding Units is amortized over the required service period as employee compensation expense. We awarded 0.6 million,0.6 million and 1.6 million restricted Holding Units in 2013, 2012 and 2011, respectively, with grant date fair values per restricted Holding Unit rangingbetween $12.13 and $24.15 in 2013, $12.13 and $17.58 in 2012 and $16.29 and $22.71 in 2011. We recorded compensation expense relating to restrictedHolding Unit grants in connection with certain employment and separation agreements of $19.0 million, $20.1 million and $32.9 million (which includes$15.8 million of the one-time, non-cash compensation charge), respectively, for the years ended December 31, 2013, 2012 and 2011.Changes in unvested restricted Holding Units during 2013 were as follows: HoldingUnits Weighted AverageGrant Date FairValue per HoldingUnit Unvested as of December 31, 2012 18,437,489 $18.79 Granted 13,935,259 20.81 Vested (9,323,858) 21.16 Forfeited (865,580) 19.96 Unvested as of December 31, 2013 22,183,310 19.02 The total grant date fair value of restricted Holding Units that vested during 2013, 2012 and 2011 was $197.3 million, $184.2 million and $140.2 million,respectively. As of December 31, 2013, there was $47.8 million of compensation expense related to unvested restricted Holding Unit awards granted and notyet recognized in the consolidated statement of income. The expense is expected to be recognized over a weighted average period of 4.2 years.18. Units OutstandingChanges in limited partnership units outstanding for the years ended December 31, 2013 and 2012 were as follows: 2013 2012 Outstanding as of January 1, 277,600,901 277,847,588 Options exercised 887,642 — Units issued 3,935,345 — Units retired (14,050,469) (246,687)Outstanding as of December 31, 268,373,419 277,600,901 During 2013 and 2012, we purchased 82,634 and 246,687 AllianceBernstein Units, respectively, in private transactions and retired them.As discussed in Note 2, Summary of Significant Accounting Policies - Long-term Incentive Compensation Plans, on July 1, 2013, management retired allunallocated Holding Units in AllianceBernstein’s consolidated rabbi trust, and continued to retire units during the third and fourth quarters of 2013 as wepurchased Holding Units on the open market or from employees to allow them to fulfill statutory tax withholding requirements at the time of distribution oflong-term incentive compensation awards.19. Income TaxesAllianceBernstein is a private partnership for federal income tax purposes and, accordingly, is not subject to federal or 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 aresubject to federal, state and local income taxes, generally are included in the filing of a consolidated federal income tax return with separate state and localincome tax returns being filed. Foreign corporate subsidiaries are generally subject to taxes in the jurisdictions where they are located.82Table of ContentsIn order to preserve AllianceBernstein’s status as a private partnership for federal income tax purposes, AllianceBernstein Units must not be consideredpublicly traded. The AllianceBernstein Partnership Agreement provides that all transfers of AllianceBernstein Units must be approved by AXA Equitable LifeInsurance Company (a subsidiary of AXA, “AXA Equitable”) and the General Partner; AXA Equitable and the General Partner approve only those transferspermitted pursuant to one or more of the safe harbors contained in relevant treasury regulations. If AllianceBernstein Units were considered readily tradable,AllianceBernstein’s net income would be subject to federal and state corporate income tax, reducing its quarterly distribution to Holding. Furthermore, shouldAllianceBernstein 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 itsquarterly distributions to Holding unitholders.Earnings (loss) before income taxes and income tax expense consist of: Years Ended December 31, 2013 2012 2011 (in thousands) Earnings (loss) before income taxes: United States $471,813 $177,347 $(120,159)Foreign 92,438 25,018 (88,310)Total $564,251 $202,365 $(208,469)Income tax expense: Partnership UBT $4,403 $2,626 $8,737 Corporate subsidiaries: Federal 7,032 2,367 10,600 State and local 2,318 541 1,772 Foreign 26,139 8,852 11,411 Current tax expense 39,892 14,386 32,520 Deferred tax (benefit) (3,063) (622) (29,422)Income tax expense $36,829 $13,764 $3,098 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, 2013 2012 2011 (in thousands) UBT statutory rate $22,570 4.0% $8,095 4.0% $(8,339) 4.0%Corporate subsidiaries’ federal, state, localand foreign income taxes 27,766 4.9 12,547 6.2 2,998 (1.4)Effect of ASC 740 adjustments,miscellaneous taxes, and other (687) (0.1) (2,073) (1.0) 7,785 (3.8)Income not taxable resulting from use ofUBT business apportionment factors (12,820) (2.3) (4,805) (2.4) 654 (0.3)Income tax expense and effective taxrate $36,829 6.5 $13,764 6.8 $3,098 (1.5)Income tax expense increased $23.1 million, or 167.6%, in 2013 compared to 2012. The increase is primarily due to significantly higher pre-tax earnings (inlarge part due to the 2012 real estate charges), partially offset by the impact of a lower effective tax rate in the current year of 6.5% compared to 6.8% in 2012.Income tax expenses increased $10.7 million, or 344.3%, in 2012 compared to 2011. The increase primarily was due to higher operating income in 2012 (inlarge part due to the 2011 compensation charge offset by the 2012 real estate charges), partially offset by the UBT tax benefit recorded in the third quarter of2012 ($5.7 million). In the third quarter of 2012, application of the New York City tax law that sources various types of receipts from services performed byregistered brokers and dealers of securities and commodities for purposes of apportioning income resulted in a reduction of our rate of tax for the current yearand to the rate of tax that we expect to pay in the future. As a result, we recognized a $5.7 million tax benefit in the third quarter of 2012 relating to our fullyear 2011 and nine months 2012 UBT.83Table of ContentsWe 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 onits technical merits. In making this assessment, we assume that the taxing authority will examine the tax position and have full knowledge of all relevantinformation.A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Years Ended December 31, 2013 2012 2011 (in thousands) Balance as of beginning of period $3,672 $4,028 $5,326 Additions for prior year tax positions - 158 190 Reductions for prior year tax positions (580) - - Additions for current year tax positions 706 918 761 Reductions for current year tax positions - - - Reductions related to closed years/settlements with tax authorities (823) (1,432) (2,249)Balance as of end of period $2,975 $3,672 $4,028 The amount of unrecognized tax benefits as of December 31, 2013, 2012 and 2011 when recognized, is recorded as a reduction to income tax expense andreduces 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 interestexpense (credit) recorded in income tax expense during 2013, 2012 and 2011 was $0.1 million, $(0.3) million and $(0.2) million, respectively. The totalamount of accrued interest payable recorded on the consolidated statements of financial condition as of December 31, 2013, 2012 and 2011 are $0.2 million,$0.2 million and $0.5 million, respectively. There were no accrued penalties as of December 31, 2013, 2012 or 2011.Generally, the company is no longer subject to U.S. federal, or state and local income tax examinations by tax authorities for any year prior to 2010, except asset forth below.The Internal Revenue Service initiated an examination of our domestic corporate subsidiaries’ federal tax returns for the year 2011 in the fourth quarter of2013. This examination remains in progress and we do not believe a reserve is necessary.In addition, an examination of one of AllianceBernstein’s domestic corporate subsidiaries by a state taxing authority was closed in 2013 with no change to ourtax filing.The Canadian Revenue Agency has completed their examination of AllianceBernstein’s Canadian subsidiary tax returns for the years 2005 through 2007 withno change to our tax filings. Currently, there are no other income tax examinations at our significant non-U.S. subsidiaries. Years that remain open and may besubject to examination vary under local law, and range from one to seven years.During the third quarter of 2011, the City of New York notified us of an examination of AllianceBernstein’s UBT returns for the years 2007 and 2008. Theexamination was closed in the third quarter of 2013 and was settled for $0.3 million and the remaining reserves were released.There are no significant examinations for the years 2010 and forward, so we do not expect any recognition of unrecognized tax benefits. However, adjustmentto the reserve could occur due to changing facts and circumstances with respect to any future examinations.84Table of ContentsDeferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposesand 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, 2013 2012 (in thousands) Deferred tax asset: Differences between book and tax basis: Benefits from net operating loss carryforwards $32,171 $15,352 Long-term incentive compensation plans 21,957 28,340 Other, primarily accrued expenses deductible when paid 19,060 12,825 73,188 56,517 Less: valuation allowance (27,580) (12,789)Deferred tax asset 45,608 43,728 Deferred tax liability: Differences between book and tax basis: Intangible assets 5,917 6,971 Translation adjustment 8,725 8,655 Other, primarily undistributed earnings of certain foreign subsidiaries 6,563 — Deferred tax liability 21,205 15,626 Net deferred tax asset $24,403 $28,102 Valuation allowances of $27.6 million and $12.8 million were established as of December 31, 2013 and 2012, respectively, due to the uncertainty of realizingcertain net operating loss (“NOL”) carryforwards given the future losses expected to be incurred by the applicable subsidiaries. We had NOL carryforwards atDecember 31, 2013 of approximately $106.5 million in certain foreign locations with an indefinite expiration period (including approximately $29.6 millionas a result of our acquisition of W.P. Stewart & Co., Ltd.; see Note 22). Also as a result of our acquisition of W.P. Stewart & Co., Ltd., we had NOLcarryforwards at December 31, 2013 of approximately $177.2 million in certain domestic locations with expiration periods between 15 and 20 years. We hadNOL carryforwards at December 31, 2012 of approximately $73.7 million in certain foreign locations with an indefinite expiration period.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 onanticipated 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 permanentlyinvested outside the United States. As of December 31, 2013, $726.9 million of accumulated undistributed earnings of non-U.S. corporate subsidiaries werepermanently invested. At existing applicable income tax rates, additional taxes of approximately $43.0 million, net of foreign tax credits, would need to beprovided if such earnings were remitted.85Table of Contents20. Business Segment InformationManagement has assessed the requirements of ASC 280, Segment Reporting, and determined that, because we utilize a consolidated approach to assessperformance and allocate resources, we have only one operating segment. Enterprise-wide disclosures as of and for the years ended December 31, 2013, 2012and 2011, were as follows:ServicesNet revenues derived from our investment management, research and related services were as follows: Years Ended December 31, 2013 2012 2011 (in millions) Institutions $439 $485 $617 Retail 1,377 1,193 1,093 Private client 591 586 652 Bernstein research services 445 414 437 Other 66 62 (47)Total revenues 2,918 2,740 2,752 Less: Interest expense 3 3 2 Net revenues $2,915 $2,737 $2,750 Our AllianceBernstein Global High Yield Portfolio, an open-end fund incorporated in Luxembourg (ACATEUH: LX), generated approximately 14%, 12% and10% of our investment advisory and service fees and 14%, 13% and 11% of our net revenues during 2013, 2012 and 2011, respectively.Geographic InformationNet revenues and long-lived assets, related to our U.S. and international operations, as of and for the years ended December 31, were as follows: 2013 2012 2011 (in millions) Net revenues: United States $1,723 $1,700 $1,725 International 1,192 1,037 1,025 Total $2,915 $2,737 $2,750 Long-lived assets: United States $3,353 $3,363 International 48 52 Total $3,401 $3,415 Major CustomersCompany-sponsored mutual funds are distributed to individual investors through broker-dealers, insurance sales representatives, banks, registeredinvestment advisers, financial planners and other financial intermediaries. Certain subsidiaries of AXA, including AXA Advisors, LLC, have entered intoselected dealer agreements with AllianceBernstein Investments and have been responsible for 2%, 4% and 1% of our open-end mutual fund sales in 2013, 2012and 2011, respectively. During 2013, UBS AG was responsible for approximately 12% of our open-end mutual fund sales. Neither AXA nor UBS AG isunder any obligation to sell a specific amount of AllianceBernstein Fund shares and each also sells shares of mutual funds that it sponsors and that aresponsored by unaffiliated organizations.AXA and the general and separate accounts of AXA Equitable (including investments by the separate accounts of AXA Equitable in the funding vehicle EQAdvisors Trust) accounted for approximately 5%, 4% and 4% of total revenues for the years ended December 31, 2013, 2012 and 2011, respectively. Nosingle institutional client other than AXA and its subsidiaries accounted for more than 1% of total revenues for the years ended December 31, 2013, 2012 and2011.86Table of Contents21. Related Party TransactionsMutual FundsWe provide investment management, distribution, shareholder, administrative and brokerage services to individual investors by means of retail mutual fundssponsored by our company, our subsidiaries and our affiliated joint venture companies. We provide substantially all of these services under contracts thatspecify 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 ofdirectors or trustees and, in certain circumstances, by the mutual funds’ shareholders. Revenues for services provided or related to the mutual funds are asfollows: Years Ended December 31, 2013 2012 2011 (in thousands) Investment advisory and services fees $1,009,901 $878,848 $830,502 Distribution revenues 455,327 407,531 359,787 Shareholder servicing fees 90,718 89,117 91,931 Other revenues 5,682 5,127 5,643 Bernstein research services 113 133 66 Also, we have receivables from AllianceBernstein mutual funds recorded in our consolidated statements of financial condition of $171.1 million and $154.4million as of December 31, 2013 and 2012, respectively.AXA and its SubsidiariesWe provide investment management and certain administration services to AXA and its subsidiaries. In addition, AXA and its subsidiaries distributecompany-sponsored mutual funds, for which they receive commissions and distribution payments. Sales of company-sponsored mutual funds through AXAand its subsidiaries aggregated approximately $0.7 billion, $1.7 billion and $0.4 billion for the years ended December 31, 2013, 2012 and 2011, respectively.Also, we are covered by various insurance policies maintained by AXA and its subsidiaries and we pay fees for technology and other services provided byAXA and its subsidiaries. Aggregate amounts included in the consolidated financial statements for transactions with AXA and its subsidiaries, as of and forthe years ended December 31, are as follows: 2013 2012 2011 (in thousands) Revenues: Investment advisory and services fees $129,937 $112,636 $113,992 Bernstein research services 1,152 982 802 Distribution revenues 9,823 1,383 274 Other revenues 815 599 599 $141,727 $115,600 $115,667 Expenses: Commissions and distribution payments to financial intermediaries $13,338 $7,924 $7,411 General and administrative 18,311 19,779 22,191 Other 1,425 1,550 1,467 $33,074 $29,253 $31,069 Balance Sheet: Institutional investment advisory and services fees receivable $8,809 $7,878 Prepaid insurance 1,647 1,342 Other due (to) from AXA and its subsidiaries (4,908) (3,732) $5,548 $5,488 During the first quarter of 2011, AXA sold its 50% interest in our consolidated Australian joint venture to an unaffiliated third party as part of a largertransaction. On March 31, 2011, we purchased that 50% interest from the unaffiliated third party making our Australian entity a wholly-owned subsidiary.Investment advisory and services fees earned by this company were approximately $8.5 million for the first three months of 2011, of which approximately$3.0 million were from AXA affiliates and are included in the table above. Minority interest recorded for this company was $0.4 million for the first threemonths of 2011.87Table of ContentsAllianceBernstein Venture Fund I, L.P. was launched during 2006. It seeks to achieve its investment objective, which is long-term capital appreciation throughequity and equity-related investments, by acquiring early-stage growth companies in private transactions. One of our subsidiaries is the general partner of thefund and, as a result, the fund is included in our consolidated financial statements, with approximately $46 million and $47 million of investments in theconsolidated statements of financial condition as of December 31, 2013 and 2012, respectively. AXA Equitable holds a 10% limited partnership interest in thisfund.We maintain an unfunded, non-qualified long-term incentive compensation plan known as the Capital Accumulation Plan and also have assumed obligationsunder contractual unfunded long-term incentive compensation arrangements covering certain executives (“Contractual Arrangements”). The CapitalAccumulation Plan was frozen on December 31, 1987 and no additional awards have been made. The Board may terminate the Capital Accumulation Plan atany time without cause, in which case our liability would be limited to benefits that have vested. Payment of vested benefits under both the CapitalAccumulation Plan and the Contractual Arrangements generally will be made over a ten-year period commencing at retirement age. The General Partner isobligated to make capital contributions to AllianceBernstein in amounts equal to benefits paid under the Capital Accumulation Plan and the ContractualArrangements. Amounts paid by the General Partner to AllianceBernstein for the Capital Accumulation Plan and the Contractual Arrangements for the yearsended December 31, 2013, 2012 and 2011 were $3.4 million, $4.4 million and $4.8 million, respectively.Other Related PartiesThe consolidated statements of financial condition include a net receivable from Holding as a result of cash transactions for fees and expense reimbursements.The net receivable balance included in the consolidated statements of financial condition as of December 31, 2013 and 2012 was $10.8 million and $6.1million, respectively. 22. AcquisitionsAcquisitions are accounted for under ASC 805, Business Combinations.On October 1, 2010, we acquired SunAmerica’s alternative investment group, an experienced team that manages a portfolio of hedge fund and private equityfund investments. The purchase price of this acquisition was $49.0 million, consisting of $14.3 million of cash payments, $2.5 million of assumed deferredcompensation liabilities and $32.2 million of net contingent consideration payable. The net contingent consideration payable consists of the net present value ofthree annual payments of $1.5 million to SunAmerica based on its assets under management transferred to us in the acquisition and the net present value ofprojected revenue sharing payments of $35.5 million based on projected newly-raised assets under management by the acquired group. This contingentconsideration payable was offset by $4.1 million of performance-based fees earned in 2010 determined to be pre-acquisition consideration. The excess of thepurchase price over the fair value of identifiable assets acquired resulted in the recognition of $46.1 million of goodwill. During the fourth quarter of 2013, wedecreased the net contingent consideration payable by $10.8 million (with a corresponding credit to contingent payment arrangements in our consolidatedstatement of income) due to lower projected revenue sharing payments.As noted above in Note 21, during the first quarter of 2011, AXA sold its 50% interest in our consolidated Australian joint venture to an unaffiliated thirdparty as part of a larger transaction. As a result, we eliminated $32.1 million of non-controlling interests in consolidated entities and increased partner’s capitalattributable to AllianceBernstein unitholders by $10.7 million.On May 31, 2011, we acquired Pyrander Capital Management, LLC, an investment management company jointly owned by Caxton Associates L.P. (“Caxton”) and Kurt Feuerman, a Caxton portfolio manager. We hired Mr. Feuerman and members of his team from Caxton, and acquired investmentmanagement contracts of the investment vehicles the team managed. The purchase price of this acquisition was $10.2 million, consisting of $5.5 million ofcash payments, $4.4 million payable in 2012 and 2013 (contingent upon Mr. Feuerman remaining with our company; these amounts were paid in thoseyears) and a miscellaneous liability of $0.3 million. The excess of the purchase price over the fair value of identifiable assets acquired resulted in therecognition of $5.7 million of goodwill. We also recorded $2.5 million of indefinite-lived intangible assets relating to the acquired fund’s investmentmanagement contracts and $2.0 million of definite-lived intangible assets relating to separately managed account relationships. Mr. Feuerman also received tworestricted Holding Unit awards: one with a three-year service condition (the award was amended in December 2011 to eliminate the service condition); and onewith a five-year service condition (with three specific service dates) and performance conditions (with three specific assets under management targets, lateramended to two). As a result of the service conditions at the time of the acquisition, for accounting purposes these awards are considered compensationexpense, not part of the purchase price. Also, we were contingently liable to pay Caxton up to an additional $4.4 million if Mr. Feuerman met all of his serviceconditions and performance targets. During 2013, we paid Caxton the additional $4.4 million as a result of Mr. Feuerman meeting all of his service conditionsand performance targets.On November 30, 2011, we acquired Taiwan International Investment Management Co. (“TIIM”) to expand our business in the Taiwanese market. Thepurchase price of this acquisition was a cash payment of $15.0 million, net of cash acquired. The valuation of the fair value of assets and liabilities acquiredhad been determined provisionally as of December 31, 2011. The excess of the purchase price over the current fair value of identifiable net assets acquiredresulted in the recognition of $9.5 million of goodwill and intangible assets relating to customer relationships of $0.3 million.88Table of ContentsOn December 12, 2013, we acquired W.P. Stewart & Co., Ltd. (“WPS”), an equity investment manager that managed approximately $2.1 billion in U.S.,Global and EAFE concentrated growth equity strategies for its clients, primarily in the U.S. and Europe. On the acquisition date, we made a cash payment of$12 per share for the approximate 4.9 million WPS shares outstanding and issued to WPS shareholders transferable contingent value rights (“CVRs”)entitling the holders to an additional $4 per share if the assets under management in the acquired WPS investment services exceed $5 billion on or before thethird anniversary of the acquisition date. The excess of the purchase price over the fair value of identifiable assets acquired resulted in the recognition of $32.2million of goodwill. We also recorded $7.5 million of indefinite-lived intangible assets relating to the acquired fund’s investment contracts and $14.0 million ofdefinite-lived intangible assets relating to separately managed account relationships. As of the acquisition date, we recorded a contingent consideration payableof $17.1 million in regard to the CVRs.The 2013, 2011 and 2010 acquisitions have not had a significant impact on 2013, 2012 or 2011 revenues and earnings. As a result, we have not providedsupplemental pro forma information.On January 20, 2014, we signed a share purchase agreement with Formuepleje A/S, Fondsmaeglerselskab and certain individual shareholders to acquire CPHCapital Fondsmaeglerselskab A/S, a Danish asset management firm that currently manages approximately $3 billion in global core equity assets forinstitutional investors. This acquisition requires approval from the Danish Financial Services Authority, which approval is expected to take approximately 60business days after submission of the executed agreement and filing of a related application. This acquisition is not expected to have a significant impact on2014 revenues and earnings.23. Quarterly Financial Data (Unaudited) Quarters Ended 2013 December 31 September 30 June 30 March 31 (in thousands, except per unit amounts) Net revenues $765,572 $706,078 $734,275 $709,122 Net income attributable to AllianceBernstein Unitholders $182,498 $99,948 $120,714 $114,516 Basic net income per AllianceBernstein Unit(1) $0.68 $0.37 $0.43 $0.41 Diluted net income per AllianceBernstein Unit(1) $0.68 $0.37 $0.43 $0.41 Cash distributions per AllianceBernstein Unit(2)(3) $0.66 $0.46 $0.44 $0.41 Quarters Ended 2012 December 31 September 30 June 30 March 31 (in thousands, except per unit amounts) Net revenues $704,607 $708,158 $642,163 $681,809 Net income (loss) attributable to AllianceBernstein Unitholders $71,699 $(44,246) $74,185 $87,278 Basic net income (loss) per AllianceBernstein Unit(1) $0.26 $(0.16) $0.26 $0.31 Diluted net income (loss) per AllianceBernstein Unit(1) $0.26 $(0.16) $0.26 $0.31 Cash distributions per AllianceBernstein Unit(2)(3) $0.38 $0.41 $0.26 $0.31 (1)Basic and diluted net income (loss) per unit are computed independently for each of the periods presented. Accordingly, the sum of the quarterly netincome (loss) per unit amounts may not agree to the total for the year.(2)Declared and paid during the following quarter.(3)Commencing in the third quarter of 2012, distributions reflect the impact of our non-GAAP adjustments.89Table of ContentsItem 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureWe did not have any changes in or disagreements with accountants in respect of accounting or financial disclosure. Item 9A.Controls and ProceduresDisclosure Controls and ProceduresEach of Holding and AllianceBernstein maintains a system of disclosure controls and procedures that is designed to ensure that information required to bedisclosed in our reports under the Exchange Act is (i) recorded, processed, summarized and reported in a timely manner, and (ii) accumulated andcommunicated 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 ChiefExecutive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of disclosure controls and procedures. Based on thisevaluation, 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 ReportingManagement acknowledges its responsibility for establishing and maintaining adequate internal control over financial reporting for each of Holding andAllianceBernstein.Internal control over financial reporting is a process designed by, or under the supervision of, a company’s principal executive officer and principal financialofficer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with accounting principles generally accepted in the United States of America (“US 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 thecompany;•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with USGAAP and receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of thecompany; and•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets thatcould 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 effectivecan 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 futureperiods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.Management assessed the effectiveness of Holding’s and AllianceBernstein’s internal control over financial reporting as of December 31, 2013. In making itsassessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (1992) (“COSO criteria”).Based on its assessment, management concluded that, as of December 31, 2013, each of Holding and AllianceBernstein maintained effective internal controlover financial reporting based on the COSO criteria.PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the 2013 financial statements included in this Form 10-K, hasissued an attestation report on the effectiveness of each of Holding’s and AllianceBernstein’s internal control over financial reporting as of December 31,2013. The report pertaining to AllianceBernstein can be found in Item 8. The report pertaining to Holding can be found in Item 8 of Holding’s Form 10-K forthe year ended December 31, 2013.Changes in Internal Control Over Financial ReportingNo changes in our internal control over financial reporting occurred during the fourth quarter of 2013 that materially affected, or are reasonably likely tomaterially affect, our internal control over financial reporting. Item 9B.Other InformationWe reported all information required to be disclosed on Form 8-K during the fourth quarter of 2013.90Table of ContentsPART IIIItem 10.Directors, Executive Officers and Corporate GovernanceWe use “Internet Site” in Items 10 and 11 to refer to our company’s internet site, www.alliancebernstein.com.To contact our company’s Corporate Secretary, you may send an email to corporate_secretary@alliancebernstein.com or write to Corporate Secretary,AllianceBernstein L.P., 1345 Avenue of the Americas, New York, New York 10105.General PartnerThe Partnerships’ activities are managed and controlled by the General Partner. The Board of the General Partner (“Board”) acts as the Board of each of thePartnerships. Neither AllianceBernstein Unitholders nor Holding Unitholders have any rights to manage or control the Partnerships or to elect directors of theGeneral Partner. The General Partner is a subsidiary of AXA.The General Partner does not receive any compensation from the Partnerships for services rendered to them as their general partner. The General Partner holds a1% general partnership interest in AllianceBernstein and 100,000 units of general partnership interest in Holding. Each general partnership unit in Holding isentitled to receive distributions equal to those received by each Holding Unit.The General Partner is entitled to reimbursement by AllianceBernstein for any expenses it incurs in carrying out its activities as general partner of thePartnerships, including compensation paid by the General Partner to its directors and officers (to the extent such persons are not compensated directly byAllianceBernstein).Board of DirectorsOur Board currently consists of 13 members, including our Chief Executive Officer, four senior executives of AXA and certain of its other subsidiaries, andeight independent directors. While we do not have a formal, written diversity policy in place, we believe that an effective board consists of a diverse group ofindividuals who collectively possess a variety of complementary skills and perspectives and who will work together to provide a board with the neededleadership and experience to successfully guide our company. As set forth in its charter, the Corporate Governance Committee of the Board (“GovernanceCommittee”) assists the Board in identifying and evaluating such candidates, determining Board composition, developing and monitoring a process toassess Board effectiveness, developing and implementing corporate governance guidelines, and reviewing programs relating to matters of corporateresponsibility.As we indicate below, our directors have a combined wealth of leadership experience derived from extensive service leading large, complex organizations in theirroles as either senior executives or board members and in government and academia. Each has the integrity, business judgment, collegiality and commitmentthat are among the essential characteristics for a member of our Board. Collectively, they have substantive knowledge and skills applicable to our business,including expertise in regulatory; public accounting and financial reporting; finance; risk management; business development; operations; strategic planning;management development, succession planning and compensation; corporate governance; public policy; international matters; and financial services areas.As of February 12, 2014, our directors are as follows:Peter S. KrausMr. Kraus, age 61, was elected Chairman of the Board of the General Partner and Chief Executive Officer of the General Partner, AllianceBernstein andHolding in December 2008. Mr. Kraus has in-depth experience in financial services, including investment banking, asset management and private wealthmanagement. From September 2008 through December 2008, he served as an executive vice president, the head of global strategy and a member of theManagement Committee of Merrill Lynch & Company Inc. (“Merrill Lynch”). Prior to joining Merrill Lynch, Mr. Kraus spent 22 years with Goldman SachsGroup Inc. (“Goldman”), where he most recently served as co-head of the Investment Management Division and a member of the Management Committee, aswell 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 wasnamed a partner at Goldman in 1994 and managing director in 1996.In April 2010, Mr. Kraus was appointed a member of the Management Committee of AXA, which was formed by Mr. de Castries in April 2010 to assist himwith the operational management of AXA. He has been a Director of AXA Financial, AXA Equitable and MONY Life Insurance Company of America (asubsidiary of AXA Financial, “MLOA”) since February 2009. He is not compensated for serving in these roles for AXA and its subsidiaries. Mr. Kraus isalso Chairman of the Investment Committee of Trinity College, Chair of the Board of Overseers of CalArts, Co-Chair of the Friends of Carnegie International,a member of the Board of Directors of Lincoln Center for the Performing Arts and the Chairman of Lincoln Center’s Art Committee, a member of the Board ofKeewaydin Foundation, and a member of the National Board of Young Audiences, Inc., a non-profit organization that works with educational systems, thearts community and private and public sectors to provide arts education to children.91Table of ContentsMr. Kraus brings to the Board extensive knowledge of our industry and in-depth experience in financial services, including experience as our CEO for the pastfive years and, previously, as co-head of the Investment Management Division and head of firm-wide strategy at Goldman.Christopher M. CondronMr. Condron, age 66, was elected a Director of the General Partner in May 2001. Effective January 1, 2011, he retired as Director, President and ChiefExecutive Officer of AXA Financial, a post he held since May 2001. Prior to retiring, he was also Chairman of the Board, Chief Executive Officer andPresident of AXA Equitable and a member of the Management Committee of AXA. During 2010, he assumed the additional responsibility of overseeing AXA’sGlobal Life & Savings and Health businesses. Prior to joining AXA Financial, Mr. Condron served as both President and Chief Operating Officer of MellonFinancial Corporation (“Mellon”), from 1999, and as Chairman and Chief Executive Officer of The Dreyfus Corporation, a subsidiary of Mellon, from1995. Mr. Condron sits on the Board of Directors and the Executive Committee, and serves as Chairman of the Compensation Committee, of The AmericanIreland Fund. He also serves as Chairman of the Board at The University of Scranton.Mr. Condron brings to the Board extensive financial services, insurance, sales and sell-side experience obtained from his service to AXA and Mellon.Henri de CastriesMr. de Castries, age 59, was elected a Director of the General Partner in October 1993. In April 2010, in connection with a change in AXA’s governancestructure from dual boards (the Supervisory Board and the Management Board) to a single Board of Directors, Mr. de Castries was appointed Chairman andChief Executive Officer of AXA. From May 2000 through the change in AXA’s governance, Mr. de Castries was 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-FinancialServices and Life Insurance Activities in the United States, Germany, the United Kingdom and Benelux from 1996 to 2000; Senior Executive Vice President-Financial Services and Life Insurance Activities from 1993 to 1996; Corporate Secretary from 1991 to 1993; and Central Director of Finances from 1989to 1991. Before joining AXA, Mr. de Castries was part of the French Finance Ministry Inspection Office. He is a director or officer of AXA Financial, AXAEquitable and various other privately-held subsidiaries and affiliates of the AXA Group. Mr. de Castries was elected Vice Chairman of AXA Financial inFebruary 1996 and was elected Chairman of AXA Financial in April 1998. In addition, Mr. de Castries joined the board of directors and audit committee ofNestle, Inc. (VTX: NESN) in April 2012.Mr. de Castries brings to the Board his extensive experience as an AXA executive and, prior thereto, his financial and public sector experience gained fromworking in French government. The Board also benefits from his invaluable perspective as the Chairman and Chief Executive Officer of AXA.Denis DuverneMr. Duverne, age 60, was elected a Director of the General Partner in February 1996. In April 2010, he was appointed the Deputy Chief Executive Officer ofAXA and a member of the Board of Directors of AXA. In January 2010, he was selected to oversee AXA Group strategy, finance and operations with AXA’sChief Operating Officer, Chief Financial Officer and Chief Risk Officer reporting to him. Mr. Duverne was a member of the AXA Management Board fromFebruary 2003 through the change in AXA’s governance in April 2010. He was Chief Financial Officer of AXA from May 2003 through December 2009. FromJanuary 2000 to May 2003, Mr. Duverne served as Group Executive Vice President-Finance, Control and Strategy. Mr. Duverne joined AXA as Senior VicePresident in 1995. He is a Director of AXA Financial, AXA Equitable and various other privately-held subsidiaries and affiliates of the AXA Group.Mr. Duverne brings to the Board the highly diverse experience he has attained throughout the years from the many key roles he has served for AXA.Steven G. ElliottMr. Elliott, age 67, was elected a Director of the General Partner in January 2011. Until his retirement in December 2010, Mr. Elliott had served as Senior ViceChairman of The Bank of New York Mellon (“BNY Mellon”) since 1998. In this role, he helped oversee numerous company-wide growth initiatives and co-headed the integration of The Bank of New York and Mellon from 2007 to 2009. Mr. Elliott was Chief Financial Officer of Mellon from 1990 to 2002 andHead of Finance from 1987 to 1990, while also leading some of Mellon’s diverse lines of business, including asset servicing, securities lending, global cashmanagement and institutional banking. Before joining BNY Mellon, he held senior positions at First Commerce Corporation (1986-87), Crocker NationalBank (1984-86), Continental Illinois National Bank (1977-84) and United California Bank (1974-77). Since January 2011, he has been a member of theboards of directors of Huntington Bancshares Inc. (NASDAQ: HBAN) and PPL Corporation (NYSE: PPL). Since April 2011, he has served as Chairman ofHuntington Bancshares’s risk oversight committee and, since January 2012, he has served as Chairman of PPL Corporation’s audit committee. Mr. Elliottserved as a director of Mellon (NYSE: MEL) from 2001 to the July 2007 merger with The Bank of New York and then as a director of BNY Mellon (NYSE:BK) through July 2008.92Table of ContentsMr. Elliott, an audit committee financial expert, brings to the Board the four decades of auditing and banking expertise he has gained in the financial servicesindustry.Deborah S. HechingerMs. Hechinger, age 63, was elected a Director of the General Partner in May 2007. Currently an independent consultant on non-profit governance, she wasPresident 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 theNonprofit Sector to make recommendations to Congress on ways to improve the governance and accountability of non-profit organizations. She also served onthe Advisory Board for the Center for Effective Philanthropy and was a Member of the Ethics and Accountability Committee at Independent Sector. Prior tojoining BoardSource, Ms. Hechinger was the Executive Vice President of the World Wildlife Fund, a large, global conservation organization, where sheoversaw all fundraising, communication and operations activities. She also has served as a Deputy Comptroller and as Director of the Securities andCorporate Practices Division at the Office of the Comptroller of the Currency and has held senior executive positions in the Division of Enforcement at theSEC. A graduate of Georgetown Law School, Ms. Hechinger has been a member in good standing of the District of Columbia Bar Association since 1975.Ms. Hechinger brings to the Board the significant knowledge of corporate governance matters and public policy she has gained through her extensive experiencein both the private and public sectors.Weston M. HicksMr. Hicks, age 57, was elected a Director of the General Partner in July 2005. He has been a Director and the President and chief executive officer of AlleghanyCorporation (NYSE: Y, “Alleghany”), an insurance and diversified financial services holding company, since December 2004 and was Executive VicePresident of Alleghany from October 2002 until December 2004. From March 2001 through October 2002, Mr. Hicks was Executive Vice President and ChiefFinancial Officer of The Chubb Corporation.Mr. Hicks brings to the Board extensive financial expertise, including his unique perspective as the chief executive officer of an unaffiliated publicly-tradedcompany, his background as a professional investor and CFA charter holder, and his ten years of experience as an equity research analyst.Mark PearsonMr. Pearson, age 55, was elected a Director of the General Partner in February 2011. Also during February 2011, he succeeded Mr. Condron as Director,President and Chief Executive Officer of AXA Financial, and as Chairman and Chief Executive Officer of AXA Equitable. Mr. Pearson joined AXA in 1995when AXA acquired National Mutual Funds Management Limited (presently AXA Asia Pacific Holdings Limited) and became a member of the ExecutiveCommittee of AXA in 2008 and the Management Committee of AXA in 2011. He was appointed Regional Chief Executive of AXA Asia Life in 2001 and, in2008, was named President and Chief Executive Officer of AXA Japan Holding Co., Ltd. and AXA Life Insurance Co., Ltd. Prior to joining AXA, Mr.Pearson spent approximately 20 years in the insurance sector, holding several senior management positions at National Mutual and Friends Provident.Mr. Pearson brings to the Board the in-depth knowledge of Asian markets and diverse experience he has developed through the key roles he has served forAXA.Scott A. SchoenMr. Schoen, age 55, was elected a Director of the General Partner in July 2013. He has served as Chief Executive Officer of Baylon Capital Partners, L.P. (“Baylon”), a private family investment office, since April 2013. In addition, Mr. Schoen has served as a Senior Advisor to Thomas Lee Partners, L.P. (“THL”), a private equity firm, since 2012 and, prior thereto, held various senior management roles with THL, including Vice Chairman from 2010 to 2011,Co-President from 2003 to 2009 and Senior Managing Director from 1998 to 2003. Mr. Schoen began his career in the investment banking group atGoldman. He serves as Chairman of the Board of Trustees of Partners Continuing Care and Spaulding Rehabilitation Hospital, a Member of the Board ofTrustees of Partners Healthcare System, a Member of the President’s Council of Massachusetts General Hospital, and a Director of Share Our Strength.Mr. Schoen brings to the Board extensive private equity and investment banking experience, as well as his executive experience as the CEO of Baylon.93Table of ContentsLorie A. SlutskyMs. Slutsky, age 61, was elected a Director of the General Partner in July 2002. Since January 1990, she has been President and Chief Executive Officer ofThe New York Community Trust (“NYCT”), a community foundation that manages a $2.3 billion endowment and annually grants more than $140 millionto non-profit organizations. Ms. Slutsky is Treasurer and a board member of the Independent Sector and co-chaired its National Panel on the Non-ProfitSector, which focused on reducing abuse and improving governance practices at non-profit organizations. She served on the Board of Directors ofBoardSource from 1999 to 2008 and served as its Chair from 2005 to 2007. Ms. Slutsky also served as Trustee and Chair of the Budget Committee ofColgate University from 1989 to 1997 and as a member of the Council on Foundations from 1989 to 1995, for which she also served as Chair from 1993to 1995. She has been a Director of AXA Financial, AXA Equitable and MLOA since September 2006. In addition, Ms. Slutsky was a member of AXAFinancial’s Audit Committee from 2006 through 2010. She has been a member of AXA Financial’s Organization and Compensation Committee since 2006and was elected Chair of the Organization and Compensation Committee in February 2012.Ms. Slutsky brings to the Board extensive corporate governance experience achieved through her executive and managerial roles at NYCT, BoardSource,Independent Sector and various other non-profit organizations. She also brings valuable insight gained from serving on boards and board committees at certainof our parent companies.Christian ThimannMr. Thimann, age 47, was elected a Director of the General Partner in February 2014. In January 2014, he joined AXA as Group Head of Strategy & PublicAffairs and as a member of AXA’s Executive Committee. Prior to joining AXA, Mr. Thimann held several senior positions spanning 15 years with theEuropean Central Bank, including, most recently, Director General and Adviser to the President from November 2008 until December 2013. From 1995 to1998, he worked with the International Monetary Fund. Mr. Thimann is Trustee of the Max-Planck-Institute for Tax Law and Public Finance and haspublished numerous articles on international finance, monetary economics and macroeconomics. He earned a PhD in economics in 1995.Mr. Thimann brings to the Board his vast experience in public affairs and international finance.Peter J. TobinMr. Tobin, age 69, was elected a Director of the General Partner in May 2000. From September 2003 to June 2005, he was Special Assistant to the President ofSt. 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 September2003. As Dean, Mr. Tobin was the chief executive and academic leader of the College of Business. Mr. Tobin was Chief Financial Officer at The ChaseManhattan Corporation from 1996 to 1997. Prior thereto, he was Chief Financial Officer of Chemical Bank (which merged with Chase in 1996) from 1991to 1996 and Chief Financial Officer of Manufacturers Hanover Trust (which merged with Chemical in 1991) from 1985 to 1991. Mr. Tobin has served onthe board of directors of CIT Group Inc. (NYSE: CIT) since 1985 (except for one year during which CIT Group was owned by Tyco). Until his retirement inFebruary 2012, he had been a Director of AXA Financial and AXA Equitable since March 1999 and also served on AXA Financial’s Audit Committee,Investment Committee, Investment and Finance Committee, Organization and Compensation Committee, and Executive Committee.Mr. Tobin brings to the Board invaluable expertise as an audit committee financial expert and key leadership and analytical skills from his positions inacademia.Joshua A. WeinreichMr. Weinreich, age 53, was elected a Director of the General Partner in July 2013. A career finance executive, Mr. Weinreich retired in 2004 after 20 years withBankers Trust/Deutsche Bank where he served as Global Head of Hedge Funds for Deutsche Bank, Chief Executive Officer of Deutsche Asset Management,Americas, Co-Head of Bankers Trust Private Bank, Chief Investment Officer for Bankers Trust Private Bank, as well as President of BT Futures, andHead of Corporate Capital Markets (US). He plays key roles on several boards, which roles currently include Vice Chair of the Community FoodBank ofNew Jersey and Chair of the Overlook Hospital Foundation Investment Committee, and director of Newark Academy, Skybridge Capital Hedge FundPortfolios, and Houseparty Inc.Mr. Weinreich brings to the Board the financial expertise and managerial skills he cultivated while working with Deutsche Bank and the philanthropicexperiences he has cultivated since retiring.Resignation of Directors and Appointment of New Directors The following changes to our Board composition have occurred since we filed our Form 10-K for the year ended December 31, 2012, or will occur in the nearfuture: ·On May 21, 2013, Kevin Molloy resigned from the Board;·On July 30, 2013, Messrs. Schoen and Weinreich were elected as new members of the Board;·On September 12, 2013, Andrew J. McMahon resigned from the Board;94Table of Contents·On November 18, 2013, A.W. (Pete) Smith, Jr. retired from the Board in accordance with our Corporate Governance Guidelines;·On February 11, 2014, Mr. Thimann was elected as a new member of the Board; and·On March 4, 2014, Mr. Tobin will retire from the Board in accordance with our Corporate Governance Guidelines.Executive Officers (other than Mr. Kraus)Laurence E. Cranch, General CounselMr. Cranch, age 67, has been our General Counsel since he joined our firm in 2004. Prior to joining AllianceBernstein, Mr. Cranch was a partner of CliffordChance, an international law firm. Mr. Cranch joined Clifford Chance in 2000 when Rogers & Wells, a New York law firm of which he was ManagingPartner, merged with Clifford Chance.James A. Gingrich, Chief Operating OfficerMr. Gingrich, age 55, joined our firm in 1999 as a senior research analyst with SCB LLC and has been our firm’s Chief Operating Officer since December2011. Prior to becoming COO, Mr. Gingrich held senior managerial positions with SCB LLC, including Chairman and Chief Executive Officer of SCB LLCfrom February 2007 to November 2011 and Global Director of Research from December 2002 to January 2007.Lori A. Massad, Head of Human Capital and Chief Talent OfficerMs. Massad, age 49, joined our firm in 2006 as Chief Talent Officer. In February 2009, her role was expanded to include oversight of Human Capital inaddition to Talent Development. Prior to joining our firm, Ms. Massad served as Chief Talent Officer and Chief Operating Officer at Marakon Associates, astrategy consulting firm from 2004 to 2006. Before joining 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). Prior to helping found EmployeeMatters, she spent eight years at The BostonConsulting Group, where she became a senior manager on the consulting staff and leader of the firm’s recruiting, training and development programs. Whilewith The Boston Consulting Group, Ms. Massad was also an adjunct professor at New York University’s Leonard Stern School of Business.Robert P. van Brugge, Chairman and Chief Executive Officer of SCB LLCMr. van Brugge, age 45, has been Chairman of the Board and Chief Executive Officer of SCB LLC since December 2011. Prior to becoming Chairman andCEO, Mr. van Brugge served as Global Director of Research from January 2008 to December 2011. He joined our firm in 2002 as a senior research analystwith SCB LLC.John C. Weisenseel, Chief Financial OfficerMr. Weisenseel, age 54, joined our firm in May 2012 as Senior Vice President and Chief Financial Officer. From 2004 to April 2012, he worked at TheMcGraw Hill Companies (“McGraw Hill”), where he served initially as Senior Vice President and Corporate Treasurer and, since 2007, as Chief FinancialOfficer of the firm’s Standard & Poor’s subsidiary. Prior to joining McGraw Hill, Mr. Weisenseel was Vice President and Corporate Treasurer for Barnes &Noble, Inc. Prior to joining Barnes & Noble, he spent ten years in various derivatives trading and financial positions at Citigroup. A Certified PublicAccountant, Mr. Weisenseel also worked at KPMG LLP.Board MeetingsIn 2013, the Board held:·regular meetings in February, April, May, July, September and November; and·special meetings in June and August.Generally, the Board holds six meetings annually: in February, April, May, July or August, September, and November. In addition, the Board holds specialmeetings 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. Each member of the Board attended 75% or more of the aggregateof all Board and committee meetings that he or she was entitled to attend in 2013, except Mr. de Castries.Committees of the BoardThe Executive Committee of the Board (“Executive Committee”), during 2013, consisted of Ms. Slutsky and Messrs. Condron, de Castries, 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 insession, or when it is impractical to assemble the full Board. The Executive Committee held four meetings in 2013.95Table of ContentsThe Governance Committee, during 2013, consisted of Mses. Hechinger (Chair) and Slutsky and Messrs. Condron, Duverne and Kraus. The GovernanceCommittee:·assists the Board and the sole stockholder of the General Partner in:oidentifying and evaluating qualified individuals to become Board members; andodetermining the composition of the Board and its committees, and ·assists the Board in:odeveloping and monitoring a process to assess Board effectiveness;odeveloping and implementing our corporate governance guidelines; andoreviewing our policies and programs that relate to matters of corporate responsibility of the General Partner and the Partnerships.The Governance Committee held three meetings in 2013.The Audit Committee of the Board (“Audit Committee”) consisted of Messrs. Elliott, Hicks, Smith and Tobin (Chair), and commencing in July 2013, Mr.Schoen. Mr. Smith retired from the Board (and each Board committee of which he was a member) in November 2013. The primary purposes of the AuditCommittee are to:·assist the Board in its oversight of:othe integrity of the financial statements of the Partnerships;othe Partnerships’ status and system of compliance with legal and regulatory requirements and business conduct;othe independent registered public accounting firm’s qualification and independence; andothe performance of the Partnerships’ internal audit function; and·oversee the appointment, retention, compensation, evaluation and termination of the Partnerships’ independent registered public accounting firm.Consistent with these functions, the Audit Committee encourages continuous improvement of, and fosters adherence to, the Partnerships’ policies, proceduresand practices at all levels. With respect to these matters, the Audit Committee provides an open avenue of communication among the independent registeredpublic accounting firm, senior management, the Internal Audit Department and the Board. The Audit Committee held seven meetings in 2013.The Compensation Committee of the Board (“Compensation Committee”) consisted of Ms. Slutsky and Messrs. Condron (Chair), Duverne, Elliott, Krausand Smith, until Mr. Smith retired in November 2013. The Compensation Committee held three meetings in 2013. For additional information about theCompensation Committee, see “Compensation Discussion and Analysis—Compensation Committee” in Item 11.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.The Special Committee of the Board (“Special Committee”) consists of all of the independent directors and, in 2013, included Mses. Hechinger and Slutskyand Messrs. Elliott, Hicks, Schoen, Smith, Tobin (Chair) and Weinreich. Messrs. Schoen and Weinreich joined the Special Committee upon joining theBoard in July 2013. Mr. Smith retired from the Special Committee upon retiring from the Board in November 2013. The Special Committee has the authorityto 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 therelationship among AllianceBernstein, Holding and AXA. The members of the Special Committee do not receive any additional compensation for their serviceon the Special Committee, apart from the ordinary meeting fees described in “Director Compensation” in Item 11. The Special Committee did not meet in2013.Audit Committee Financial Experts; Financial LiteracyIn January 2013 and 2014, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each ofMessrs. Elliott and Tobin is an “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K. The Board so determined at its regularmeetings in February 2013 and 2014.In January 2013, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Messrs.Elliott, Hicks, Smith and Tobin is financially literate and possesses accounting or related financial management expertise, as contemplated by Section303A.07(a) of the NYSE Listed Company Manual (“Financially Literate”). The Board so determined at its regular meeting in February 2013.In July 2013, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that Mr. Schoen isFinancially Literate. The Board so determined at its regular meeting in July 2013.96Table of ContentsIn January 2014, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Messrs.Elliott, Hicks, Schoen and Tobin is Financially Literate. The Board so determined at its regular meeting in February 2014.Independence of Certain DirectorsIn January 2013, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Mses.Hechinger and Slutsky and Messrs. Elliott, Hicks, Smith and Tobin is “independent” within the meaning of Section 303A.02 of the NYSE Listed CompanyManual. The Board considered immaterial relationships of Mr. Elliott (relating to the fact that AllianceBernstein and its family of mutual funds are clients ofBNY Mellon and Mr. Elliott’s equity stake in BNY Mellon), Mr. Hicks (relating to the fact that Alleghany is a client of SCB LLC and Mr. Hicks wasemployed by Bernstein from 1991 to 1999), Ms. Slutsky (relating to contributions formerly made by AllianceBernstein to NYCT and the fact that she is amember of the boards of directors of AXA Financial and AXA Equitable) and Mr. Tobin (relating to the fact that, until his retirement in February 2012, hewas a member of the boards of directors of AXA Financial and AXA Equitable) and then determined, at its February 2013 regular meeting, that each of Mses.Hechinger and Slutsky and Messrs. Elliott, Hicks, Smith and Tobin is independent within the meaning of the relevant rules.In July 2013, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Messrs.Schoen and Weinreich is independent within the meaning of the relevant rules. The Board so determined at its regular meeting in July 2013.In January 2014, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Mses.Hechinger and Slutsky and Messrs. Condron, Elliott, Hicks, Schoen, Tobin and Weinreich is independent. The Board considered immaterial relationships ofMr. Condron (relating to the fact that, from May 2001 through December 31, 2010, he was an executive officer of AXA Financial), Mr. Hicks (relating to thefact that Alleghany is a client of SCB LLC), Ms. Slutsky (relating to a contribution AllianceBernstein intends to make to NYCT in February 2014 and thefact that she is a member of the boards of directors of AXA Financial and AXA Equitable) and Mr. Tobin (relating to the fact that, until his retirement inFebruary 2012, he was a member of the boards of directors of AXA Financial and AXA Equitable), and determined, at its February 2014 regular meeting, thateach of Mses. Hechinger and Slutsky and Messrs. Condron, Elliott, Hicks, Schoen, Tobin and Weinreich is independent within the meaning of the relevantrules.Board Leadership Structure and Role in Risk OversightLeadershipThe Board, together with the Governance Committee, is responsible for reviewing the Board’s leadership structure. In determining the appropriate individual toserve as our Chairman and Chief Executive Officer, the Board and the Governance Committee consider, among other things, the composition of the Board, therole of the Board’s lead director (discussed more fully below), our company’s strong corporate governance practices, and the challenges and opportunitiesspecific to our company.We believe that our company derives significant benefits from having one individual hold the positions of both Chairman and Chief Executive Officer,provided we have sufficient counter-balancing governance in place. We see significant value in having the leader in the Board room also manage the affairs ofour company, and we believe any potential doubts as to our Board’s objectivity in evaluating management are offset by the lead independent director we havein place and the fact that the affirmative consent of our largest Unitholder (AXA) is required in order for any action taken by the Executive Committee or theCompensation Committee to be effective.Lead Independent DirectorOur lead independent director, Peter J. Tobin, was appointed unanimously by our Board in November 2005. He presides at all executive sessions of non-management and independent directors and makes himself available, if requested by Unitholders, for consultation and communication. Interested partieswishing to communicate directly with Mr. Tobin may send an e-mail, with “confidential” in the subject line, to our Corporate Secretary or address mail to Mr.Tobin in care of our Corporate Secretary. Our Corporate Secretary will promptly forward such e-mail or mail to Mr. Tobin. We have posted this information inthe “Management & Governance” section of our Internet Site.The Board, at its February 2014 regular meeting, unanimously appointed, consistent with the Governance Committee’s recommendation, Steven G. Elliott asour lead independent director, effective upon Mr. Tobin’s retirement on March 4, 2014.97Table of ContentsRisk OversightThe Board, together with the Audit Committee, has oversight for our company’s risk management framework, both investment risk and operational risk, andis responsible for helping to ensure that our company’s risks are managed in a sound manner. The Board has delegated to the Audit Committee,which consists entirely of independent directors, the responsibility to consider our company’s policies and practices with respect to operational riskassessment and operational risk management, including discussing with management the major financial risk exposures and the steps taken to monitor andcontrol such exposures. Members of the company’s Risk Management team, who are responsible for identifying, managing and controlling the array ofoperational and investment risks inherent in our company’s business and operations, make quarterly reports to the Audit Committee, including an annualrisk review that addresses operational risk identification, assessment and monitoring. The Chief Risk Officer, whose expertise encompasses both quantitativeresearch and associated investment risks, makes periodic presentations to the Board. He reports directly to our Chairman and Chief Executive Officer and,since 2013, has had a reporting line to the Audit Committee.The Board has determined that its leadership and risk oversight are appropriate for our company. Mr. Kraus’s in-depth knowledge of financial services andextensive executive experience in the investment management industry make him uniquely suited to serve as our Chairman and Chief Executive Officer, whileMr. Tobin’s leadership and expertise have proven invaluable at enhancing the overall functioning of the Board. The Board believes that the combination of asingle Chairman and Chief Executive Officer, a lead independent director, the Audit Committee, a specialized risk management team, and significantinvolvement from our largest Unitholder (AXA) provide the appropriate leadership to help ensure effective risk oversight by the Board.Code of Ethics and Related PoliciesAll 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 ofthe NYSE Listed Company Manual, Rule 204A-1 under the Investment Advisers Act and Rule 17j-1 under the Investment Company Act, as well as withrecommendations issued by the Investment Company Institute regarding, among other things, practices and standards with respect to securities transactions ofinvestment professionals. The Code of Business Conduct and Ethics establishes certain guiding principles for all of our employees, including sensitivity toour fiduciary obligations and ensuring that we meet those obligations. Our Code of Business Conduct and Ethics may be found in the “Management &Governance” section of our Internet Site.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 theSarbanes-Oxley Act of 2002 (“Item 406 Code”). The Item 406 Code, which may be found in the “Management & Governance” section of our Internet Site,was adopted in October 2004 by the Executive Committee. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding certainamendments to, or waivers from, provisions of the Item 406 Code that apply to the Chief Executive Officer, the Chief Financial Officer and the ChiefAccounting Officer by posting such information on our Internet Site. To date, there have been no such amendments or waivers.NYSE Governance MattersSection 303A.00 of the NYSE Listed Company Manual exempts limited partnerships from compliance with the following sections of the Manual: Section303A.01 (board must have a majority of independent directors), 303A.04 (corporate governance committee must have only independent directors as its membersand must have a charter that addresses, among other things, the committee’s purpose and responsibilities), and 303A.05 (compensation committee must haveonly independent directors as its members and must have a charter that addresses, among other things, the committee’s purpose and responsibilities). Holdingis a limited partnership (as is AllianceBernstein). In addition, because the General Partner is a subsidiary of AXA, and the General Partner controls Holding(and AllianceBernstein), we believe we also would qualify for the “controlled company” exemption. Notwithstanding the foregoing, we comply voluntarily withthe charter requirements set forth in Sections 303A.04 and 303A.05.Our Corporate Governance Guidelines (“Guidelines”) promote the effective functioning of the Board and its committees, promote the interests of thePartnerships’ respective Unitholders (with appropriate regard to the Board’s duties to the sole stockholder of the General Partner), and set forth a common setof expectations as to how the Board, its various committees, individual directors and management should perform their functions. The Guidelines may befound in the “Management & Governance” section of our Internet Site.The Governance Committee is responsible for considering any request for a waiver under the Code of Business Conduct and Ethics, the Item 406 Code, theAXA Group Compliance and Ethics Guide, and the AXA Financial Policy Statement on Ethics from any director or executive officer of the General Partner.No such waiver has been granted to date and, if a waiver is granted in the future, such waiver would be described in the “Management & Governance” sectionof our Internet Site.98Table of ContentsOur Internet Site, under the heading “Meet our Directors”, provides an e-mail address for any interested party, including Unitholders, to communicate with theBoard. Our Corporate Secretary reviews e-mails sent to that address and has some discretion in determining how or whether to respond, and in determining towhom such e-mails should be forwarded. In our experience, substantially all of the e-mails received are ordinary client requests for administrative assistancethat are best addressed by management, or solicitations of various kinds.The 2013 Certification by our Chief Executive Officer under NYSE Listed Company Manual Section 303A.12(a) was submitted to the NYSE on February19, 2013.Certifications by our Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 have been furnished asexhibits 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 andEthics, and the Item 406 Code by contacting our Corporate Secretary. The charters and memberships of the Executive, Audit, Governance and CompensationCommittees may be found in the “Management & Governance” section of our Internet Site.Fiduciary CultureWe 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 equitabletreatment of all our clients, and to compliance with all applicable rules and regulations and internal policies to which our business is subject. We pursue thesegoals 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 mitigate conflicts of interest.The Ethics Committee oversees all matters relating to issues arising under our Code of Business Conduct and Ethics. The Ethics Committee meets on aquarterly basis and at such other times as circumstances warrant. The Ethics Committee and its subcommittee, the Personal Trading Subcommittee, haveoversight 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 totime, and oversees implementation of those solutions. The Compliance Committee meets on a quarterly basis and at such other times as circumstanceswarrant.Section 16(a) Beneficial Ownership Reporting ComplianceSection 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% ofthe Holding Units or AllianceBernstein Units, to file with the SEC initial reports of ownership and reports of changes in ownership of Holding Units orAllianceBernstein Units. To the best of our knowledge, during 2013, we complied with all Section 16(a) filing requirements relating to Holding andAllianceBernstein, except a Form 4 for each of Messrs. Schoen and Weinreich was filed late (each Form 4 related to the equity compensation awarded to eachsuch director in September 2013 in connection with the commencement of his service on the Board). Our Section 16 filings can be found under “Investor &Media Relations” / “Reports & SEC Filings” on our Internet Site.99Table of ContentsItem 11.Executive CompensationCompensation Discussion and Analysis (“CD&A”)Overview of Compensation Philosophy and GoalsThe 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, thecosts of employee compensation and benefits are significant, comprising approximately 51.6% of our operating expenses and representing approximately41.6% of our net revenues (48.7% of our adjusted net revenues, as defined below in “Overview of 2013 Incentive Compensation Program”), for 2013.Although these percentages are not unusual for companies in the financial services industry, the magnitude of these costs requires that they be monitored bymanagement, and overseen by the Board, with particular attention by 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 goalsinclude the following:·attracting, motivating and retaining highly-qualified executive talent;·providing rewards for the past year’s performance;·providing incentives for future performance; and·aligning 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 arefocused on ensuring that our compensation practices are competitive with industry peers and provide sufficient potential for wealth creation for our executivesand employees, which we believe will enable us to meet our compensation goals.Compensation Elements for Executive OfficersWe 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 and a defined contribution plan, each of which we discuss in detail below:Base SalariesBase salaries comprise a relatively small portion of our executives’ total compensation and are maintained at levels generally lower than the salaries ofexecutives at peer firms. Within the narrow range of base salaries paid to our executives, we consider individual experience, responsibilities and tenure with thefirm.Annual Short-term Incentive Compensation Awards (Cash Bonuses)Annual cash bonuses, which generally reflect individual performance and the firm’s current year financial performance, provide a shorter-term incentive toremain through year end because such bonuses typically are paid during the last week of the year.In 2013, we paid annual cash bonuses in late December. These bonuses were based on management’s evaluation (subject to the Compensation Committee’sreview and approval) of each executive’s performance during the year, and the performance of the executive’s business unit or function, compared to businessand operational goals established at the beginning of the year, and in the context of the firm’s current year financial performance. For more informationregarding the factors considered when determining cash bonuses to executives, see “Factors Considered When Determining Executive Compensation” inthis Item 11.Long-term Incentive Compensation AwardsLong-term incentive compensation awards generally are denominated in restricted Holding Units. We employ this structure 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, asstrong performance for our clients generally contributes directly to increases in assets under management and thus improved financial performance for thefirm.In 2013, we granted annual long-term incentive compensation awards in December to eligible employees to supplement cash bonuses and to encourage retentionof our executives. These awards are made pursuant to the Incentive Compensation Program, an unfunded, non-qualified incentive compensation plan, and,when the award is Holding Unit-based, the 2010 Plan, our equity compensation plan.100Table of ContentsThe restricted Holding Units granted pursuant to long-term incentive compensation awards generally vest ratably over four years. Since 2011, we haveprovided our employees, except certain members of senior management, with the opportunity to diversify their long-term incentive compensation awards byallocating up to 50% of their awards to cash, up to a maximum cash amount of $250,000 (“Deferred Cash”). Each of our employees who was based outsideof the United States (other than expatriates) who received a 2013 award of $100,000 or less could have allocated up to 100% of his or her award to DeferredCash. The portion of an award allocated to Deferred Cash is subject to the same multi-year vesting periods (generally, four years) as the portion of the awardallocated to Holding Units.Award recipients who resign or are terminated without cause continue to vest in their long-term incentive compensation awards if the award recipients complywith certain agreements and restrictive covenants set forth in the applicable award agreement, including restrictions on competition, employee and clientsolicitation, and a claw-back for failing to follow existing risk management policies. As such, for accounting purposes, there is no employee servicerequirement and awards are fully expensed when granted. (As used in this Item 11, “vest” refers to the time at which the awards are no longer subject toforfeiture for breach of these restrictions or risk management policies, which we discuss further below in “Consideration of Risk Matters in DeterminingCompensation”.) Withdrawals prior to vesting are not permitted. Upon vesting, awards are distributed to participants unless the award recipient has, in advance, voluntarilyelected to defer receipt to future periods. Quarterly cash distributions on vested and unvested restricted Holding Units are paid currently to award recipients. IfDeferred Cash is elected, interest accrues monthly based on our monthly weighted average cost of funds and is credited to the award recipient annually. Ourcost of funds during 2013 was approximately 0.3%, representing a nominal return.Defined Contribution PlanU.S. employees of AllianceBernstein (including our named executive officers, as defined below in “Factors Considered When Determining ExecutiveCompensation”) are eligible to participate in the Profit Sharing Plan for Employees of AllianceBernstein L.P. (as amended and restated as of January 1, 2010,“Profit Sharing Plan”), a tax-qualified retirement plan. The Compensation Committee determines the amount of company contributions (both the level ofannual matching by the firm of an employee’s pre-tax salary deferral contributions and the annual company profit sharing contribution).For 2013, the Compensation Committee determined that employee deferral contributions would be matched on a one-to-one basis up to five percent of eligiblecompensation and there would be no profit sharing contribution.Consideration of Risk Matters in Determining CompensationWe have considered whether our compensation practices encourage unnecessary or excessive risk-taking and whether any risks arising from our compensationpractices are reasonably likely to have a material adverse effect on our company. For the reasons set forth below, we have determined that our currentcompensation practices do not incentivize, and actually discourage, our employees from engaging in unnecessary or excessively risky activities. Accordingly,we have concluded that our compensation practices do not create risks that are reasonably likely to have a material adverse effect on our company.In our effort to foster the spirit of partnership among our employees and to better align their interests with those of our Unitholders and our clients, eligibleemployees receive at least half of their long-term incentive compensation awards in the form of restricted Holding Units, with multi-year vesting periods (asdescribed above, generally, four years). Our Chairman and Chief Executive Officer firmly believes that compensating key employees with equity ownershipfosters a true partnership community, one that will help us grow and achieve our firm’s goals. We believe that as our employees become more focused onpartnering with each other to achieve our firm’s overall goals, they will serve as checks and balances on each other in assessing risk and performance.As described above in “Compensation Elements for Executive Officers – Long-term Incentive Compensation Awards” in this Item 11, our approach tolong-term incentive compensation is designed to reflect the firm’s current year and long-term financial performance and the specific performance of eachindividual employee. The initial amount of an employee’s award is based on the performance of the firm and the employee for the current year. A substantialportion of the award is denominated in Holding Units that are not distributed until subsequent years, so the ultimate value that the employee derives from theaward depends on the long-term performance of the firm. Denominating a substantial portion of the award in Holding Units and deferring their delivery alsosensitizes employees to risk outcomes and discourages them from taking excessive risks that could lead to a decrease in the value of the Holding Units.Furthermore, and as noted above, generally all outstanding long-term incentive compensation awards include a provision permitting us to “claw-back” theunvested portion of an employee’s long-term incentive compensation award (whether denominated in restricted Holding Units or Deferred Cash) if theCompensation Committee determines that (i) the employee failed to follow existing risk management policies and (ii) as a result of the employee’s failure, therehas been or reasonably could be expected to be a material adverse impact on our firm or the employee’s business unit.Overview of 2013 Incentive Compensation ProgramIn 2013, employees with total compensation in excess of $200,000 received a portion of their incentive compensation in the form of an annual cash bonus anda portion in the form of long-term incentive compensation (as described above, at least 50% of which must have been allocated to restricted Holding Units).The split between the annual cash bonus and long-term incentive compensation varied depending on the eligible employee’s total compensation, with lower-paidemployees receiving a greater percentage of their incentive compensation as cash bonuses than more highly-paid employees. (For additional information aboutthese compensatory elements, see “Compensation Elements for Executive Officers” in this Item 11.)101Table of ContentsAlthough estimates are developed for budgeting and strategic planning purposes, incentive compensation is not correlated with meeting any specific targets(except that some of our salespeople have compensation incentives based on sales levels). Instead, the aggregate amount of incentive compensation generally isdetermined on a discretionary basis and is primarily a function of our firm’s current year financial performance. Amounts are awarded to help us achieve ourgoal of attracting, motivating and retaining top talent while also helping ensure that our Unitholders receive an appropriate return on their investment.Senior management, with the approval of the Compensation Committee, confirmed that the appropriate metric to consider in determining the amount ofincentive compensation for 2013 is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues, each of which is describedimmediately below:·Adjusted net revenues (see our discussion of “Management Operating Metrics” in Item 7) exclude investment gains and losses and dividends andinterest on employee long-term incentive compensation-related investments and 90% of the investment gains and losses of our consolidated venturecapital fund attributable to non-controlling interests. In addition, adjusted net revenues offset distribution-related payments to third parties as well asamortization of deferred sales commissions against distribution revenues. We also exclude from adjusted net revenues additional pass-through expenseswe incur (primarily through our transfer agent) that are reimbursed and recorded as fees in revenues.·Adjusted employee compensation and benefits expense is total employee compensation and benefits expense minus other employment costs such asrecruitment, training, temporary help and meals, and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense,associated with employee long-term incentive compensation-related investments.In 2013, senior management, with the approval of the Compensation Committee, also confirmed that the firm’s adjusted employee compensation and benefitsexpense should not exceed 50% of our adjusted net revenues, except in unexpected or unusual circumstances. As the table below indicates, in 2013, adjustedemployee compensation and benefits expense amounted to approximately 48.7% of adjusted net revenues (in thousands):Net Revenues $2,915,047 Adjustments (see above) (522,878)Adjusted Net Revenues $2,392,169 Employee Compensation & Benefits Expense $1,212,011 Adjustments (see above) (46,156)Adjusted Employee Compensation & Benefits Expense $1,165,855 Adjusted Compensation Ratio(1) 48.7% (1)For the year ended December 31, 2013, the adjusted compensation ratio included incremental compensation expense recognized during each quarter of2013 attributable to the restricted Holding Unit award granted to our Chief Executive Officer pursuant to his extended employment agreement dated as ofJune 21, 2012 (discussed below in “Overview of Our Chief Executive Officer’s Compensation” in this Item 11, “Extended EmploymentAgreement”). See our discussion of “Employee Compensation and Benefits” in Item 7 and Note 17 to our consolidated financial statements inItem 8 for information about the accounting impact associated with the Extended Employment Agreement.Our 2013 adjusted compensation ratio of approximately 48.7% reflects the need to keep compensation levels competitive with industry peers in order to attract,motivate and retain highly-qualified executive talent. Senior management, in 2013, retained McLagan Partners (“McLagan”) to provide compensationbenchmarking data (“McLagan Data”), which data summarized compensation levels for 2012 at selected asset management companies and bankscomparable to ours in terms of size and business mix (“Comparable Companies”), to assist in determining the appropriate level of compensation for thefirm’s executives (see “Factors Considered When Determining Executive Compensation” immediately below for the list of Comparable Companies). TheCompensation Committee considered this information in concluding that the compensation levels paid in 2013 to our named executive officers were appropriateand reasonable. See “Factors Considered When Determining Executive Compensation” immediately below for more information pertaining to theMcLagan Data.Factors Considered When Determining Executive CompensationDecisions about executive compensation are based primarily on our assessment of each executive’s leadership, operational performance and potential toenhance investment returns and service for our clients, all of which contribute to long-term Unitholder value. We do not utilize quantitative formulas whendetermining the compensation of our Chief Executive Officer (“CEO”), our Chief Financial Officer (“CFO”) and our other three most highly-compensatedexecutive officers (together with the CEO and CFO, “named executive officers”), but rather rely on our judgment about each executive’s performance in lightof business and operational goals established at the beginning of the year and whether each particular payment or award provides an appropriate reward for theexecutive officer’s and the firm’s current year performance. We begin this process, which is conducted by the CEO working with other members of seniormanagement, by determining the total incentive compensation amounts available for a particular year (as more fully explained above in “Overview of 2013Incentive Compensation Program”).102Table of ContentsWe then consider a number of key factors for each of the named executive officers (other than Mr. Kraus, our CEO, whose compensation is described belowin “Overview of Our Chief Executive Officer’s Compensation”). Because specific factors will vary among business units, among individuals and duringdifferent business cycles, we do not adopt any specific weighting or formula under which these metrics are applied. Key factors we consider include:·the firm’s financial performance in the current year;·the firm’s strategic and operational considerations;·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 of the named executive officer to our overall financial results; and·the named executive officer’s management effectiveness, talent development, contribution to our firm’s fiduciary culture in which clients’ interestsare paramount, and adherence to risk management and regulatory compliance.In 2013, as noted above in “Overview of 2013 Incentive Compensation Program”, we also considered the McLagan Data when determining the totalcompensation of our named executive officers, which data provided ranges of compensation levels at the Comparable Companies for executive positionssimilar to those held by our named executive officers, including salary, total cash compensation and total compensation. The McLagan Data indicated that thetotal compensation paid to our named executive officers in 2013 fell within or below the ranges of total compensation paid to executives at the ComparableCompanies. The Comparable Companies, which management selected with input from McLagan, included Bank of America Merrill Lynch, Barclays CapitalGroup, BlackRock, Credit Suisse, Deutsche Bank, Franklin Templeton, Goldman Sachs & Co., Goldman Sachs Asset Management, Invesco Plc,JPMorgan Asset Management, JPMorgan Chase, Morgan Stanley, Morgan Stanley Investment Management, Nomura Securities, PIMCO Advisors, T. RowePrice Associates, UBS and The Vanguard Group.We then provided specific incentive compensation recommendations to the Compensation Committee, which recommendations were supported by the factorslisted above. We also provided the Compensation Committee with the McLagan Data, which was not used in a formulaic or mechanical way to determinenamed executive officer compensation levels, but rather, as noted immediately above, provided the Compensation Committee with compensation levels paidto executives at the Comparable Companies. The Compensation Committee then made the final incentive compensation decisions.We have described in the table below the business and operational goals established at the beginning of 2013 for our named executive officers (other than Mr.Kraus) and their achievements during 2013:Named Executive Officer2013 Business and Operational Goals2013 Goals AchievedJames A. GingrichChief Operating Officer- increase operating efficiency;- optimize retail, institutional and private clientstrategy and sales efforts;- enhance planning and organizational processes;- optimize revenue and profitability of BernsteinResearch Services;- foster a culture of meritocracy, empowerment andaccountability among business leaders; and- recruit and retain top talent.- reduced operating costs significantly comparedto 2012;- made additional progress to right-size ourfirm’s real estate footprint;- increased operating margins;- implemented processes and metrics to bettermanage costs;- improved client flows in most channels andgeographies;- helped recruit new personnel in several keypositions;- negotiated and helped complete the W.P. Stewartacquisition; and- helped improve Bernstein Research Servicesrevenues and margins.Robert P. van BruggeChairman and CEO, SCB LLC- optimize the revenue and profit contribution ofBernstein Research Services;- further enhance this unit’s research capabilities,trading services and product array;- extend this unit’s geographic platform; and- attract, motivate and retain top talent. - increased Bernstein Research Servicesprofitability;- achieved excellent results in third-partyresearch surveys; and- made significant progress in expanding thebusiness in Asia.103Table of ContentsNamed Executive Officer2013 Business and Operational Goals2013 Goals AchievedLori A. MassadHead of Human Capital andChief Talent Officer- solidify the firm’s culture of “relentlessingenuity”;- redesign our U.S. medical benefit programs;- assess progress in strengthening employeeengagement; and- enhance our firm’s diversity initiatives,including fostering an environment in whichdiverse talent thrives and progresses. - facilitated culture forums between seniorleaders and employees across regions;- established new competency models thatsupport and align with the firm’s culture ofrelentless ingenuity;- redesigned our U.S. medical benefit plans toaddress the challenges of rising health carecosts while maintaining competitive benefits;- introduced a comprehensive education programto U.S. employees to help them understand thenew medical plans;- identified employee engagement issues througha global survey and began pursuing initiativesto address those issues; and- developed diversity programs to create a moreinclusive work environment and encouragediverse talent.John C. WeisenseelChief Financial Officer- focus on improving the firm’s adjusted operatingmargin with a particular emphasis on reducingthe firm’s cost structure, including its global realestate footprint;- ensure adherence to internal control structure andfinancial reporting standards;- help evaluate and support new businessdevelopment opportunities;- enhance internal financial reporting, including anincreased focus on management operatingmetrics, to provide more useful information tosenior management; and- identify and develop the next generation of leadersin the Finance and Administrative ServicesDepartments.- improved adjusted operating margin with aparticular emphasis on reducing the firm’scost structure pertaining to various general andadministrative services expense items;- reduced further the firm’s real estate footprintby approximately 500,000 square feet, whichgenerated annual savings of more than $40million;- maintained active dialogues with the investmentcommunity and credit rating agencies;- provided accounting and tax guidance instructuring new business opportunities andassisted with related integration;- identified improvements to internal financialreporting to enhance transparency andaccountability of senior business leaders; and- added senior leaders to the Finance team andreorganized the Finance and AdministrativeServices Departments to provide better clientservice within our firm.As indicated in the table above, each of the named executive officers included in the table successfully achieved his or her goals in 2013. The compensationof each of these named executive officers reflected Mr. Kraus’s and the Compensation Committee’s judgment in assessing the importance of his or herachievements to our firm’s financial results.104Table of ContentsOverview of Our Chief Executive Officer’s CompensationDuring 2013, Peter S. Kraus was compensated based on the terms set forth in his employment agreement (“Kraus Employment Agreement”), pursuant towhich he served as Chairman of the Board of Directors of the General Partner and CEO of the General Partner, AllianceBernstein and Holding from December19, 2008 to January 2, 2014 (“Employment Term”). Mr. Kraus will continue to serve in these roles pursuant to his extended employment agreement datedas of June 21, 2012 (“Extended Employment Agreement” and, together with the Kraus Employment Agreement, the “Kraus EmploymentAgreements”), which has a term that runs from January 3, 2014 until January 2, 2019 (the “Extended Employment Term”), unless the ExtendedEmployment Agreement is terminated in accordance with its terms. Although the Extended Employment Term did not begin until January 3, 2014, certainprovisions of the Extended Employment Agreement became effective on June 21, 2012, the date the agreement was signed, including those provisionssummarized below relating to the 2,722,052 restricted Holding Units Mr. Kraus was awarded pursuant to the Extended Employment Agreement (“Additional Grant”) and termination of employment.Negotiation and Approval of the Kraus Employment AgreementsThe 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 (which are described in detail below), including the compensation elements, were discussed and approved by the Compensation Committee andthe full Board on December 19, 2008 and reflected their decision to structure the allocation of Mr. Kraus’s compensation heavily toward a grant of restrictedHolding Units. In addition, the Board, when it reviewed and approved the Kraus Employment Agreement, considered compensation benchmarking data fromMcLagan, which data indicated that Mr. Kraus’s compensation arrangement was fully competitive, reasonable and appropriate given our size, scope andcomplexity, and Mr. Kraus’s experience, credentials and proven track record.The terms of the Extended Employment Agreement also were the result of arm’s-length negotiations between Mr. Kraus, members of the CompensationCommittee, who discussed this matter during four Special Meetings of the Compensation Committee, and other members of the Board. In addition, theCompensation Committee considered comparative compensation benchmarking data from Johnson Associates, Inc. (“Johnson”), a compensation consultantengaged by the Compensation Committee, which data summarized CEO compensation levels for 2011 at selected asset management companies and bankscomparable to ours in terms of size and business mix. This data provided ranges of compensation levels for CEOs at these companies, including salary, cashbonus, total cash compensation and total compensation. In addition, this data indicated that the compensation terms for Mr. Kraus set forth in the ExtendedEmployment Agreement were fully competitive and consistent with industry standards given our size, scope and complexity, the importance of CEOcontinuity, Mr. Kraus’s experience and integral role in the ongoing execution of our firm’s long-term growth strategy, and the allocation of Mr. Kraus’scompensation more heavily to restricted equity. The comparable companies, which management selected with input from Johnson, included AffiliatedManagers, Ameriprise Financial, Bank of New York Mellon, BlackRock Financial Management, Credit Suisse Asset Management, Eaton Vance, FederatedInvestors, Franklin Resources, Invesco Plc, Janus Capital Group, JPMorgan Asset Management, Lazard, Legg Mason, Morgan Stanley, Northern TrustCorp., State Street and T. Rowe Price Associates.The Compensation Committee and the Executive Committee, based on the Johnson data and other inquiry as needed, decided to structure the allocation of Mr.Kraus’s compensation under the Extended Employment Agreement heavily toward the Additional Grant. For information regarding the Executive Committee,see “Committees of the Board” in Item 10.Compensation ElementsBase SalaryMr. Kraus was paid an annual base salary of $275,000 throughout the Employment Term. The $275,000 base salary was in line with our firm’s policygenerally to keep base salaries of executives and other highly-compensated employees low in relation to total compensation.Mr. Kraus’s annual base salary under the Extended Employment Agreement originally was also $275,000, subject to increase by the CompensationCommittee. Effective January 1, 2014, the Compensation Committee approved an increase in Mr. Kraus’s annual base salary to $400,000. This amount isequal to the annual base salary paid to our executives generally and continues to be in line with our firm’s policy to keep base salaries of executives and otherhighly-compensated employees low in relation to total compensation.Cash BonusesMr. Kraus, pursuant to the Kraus Employment Agreement, was paid a $6 million cash bonus in 2009, which represented the amount that Mr. Kraus and theBoard agreed represented a reasonable and appropriate short-term financial inducement for Mr. Kraus to join AllianceBernstein based on the factors listedabove in “Negotiation and Approval of the Kraus Employment Agreements” and reflected the significant uncertainty surrounding the level of 2009quarterly cash distributions on Holding Units when he was hired (see “Restricted Holding Units” immediately below); it most directly reflects thecompany’s goal of attracting highly-qualified executive talent.105Table of ContentsMr. Kraus did not receive a cash bonus in 2010, 2011, 2012 or 2013, nor is he entitled to receive a cash bonus during the Extended Employment Term. Anyfuture cash bonus to Mr. Kraus is entirely in the discretion of the Compensation Committee.Restricted Holding UnitsMr. Kraus was granted 2,722,052 restricted Holding Units (“Restricted Holding Unit Grant”) when he began his tenure as our firm’s CEO on December19, 2008. The Restricted Holding Unit Grant vested ratably on each of the first five anniversaries of December 19, 2008, commencing December 19, 2009.In connection with the Extended Employment Agreement, AllianceBernstein amended the Kraus Employment Agreement to permit Mr. Kraus to defer thedelivery of the last tranche of the Restricted Holding Unit Grant remaining to be delivered under the Kraus Employment Agreement. As a result, 544,410restricted Holding Units that vested on December 19, 2013 will be delivered to Mr. Kraus on the earlier of December 19, 2018, Mr. Kraus’s death and the dateon which a change in control of AllianceBernstein occurs. Mr. Kraus will continue to receive distributions on these Holding Units until such delivery.The Restricted Holding Unit Grant’s five-year vesting schedule provided Mr. Kraus with a strong incentive to remain with our firm throughout theEmployment Term and to cause our firm to have strong financial performance during each of those five years. 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 managementcompanies.During the Employment Term, Mr. Kraus was paid the cash distributions payable with respect to his unvested restricted Holding Units and a dollar amountequal to the cash distributions payable with respect to any Holding Units that were withheld by AllianceBernstein to cover Mr. Kraus’s tax withholdingobligations as the Holding Units vested (“Withheld Units”). These cash distributions were paid at the time distributions are made to Holding Unitholdersgenerally. As specified in the Kraus Employment Agreement, no cash distributions with a record date following December 19, 2013 will be payable to Mr.Kraus with respect to the Withheld Units.Mr. Kraus was awarded the Additional Grant on June 21, 2012, when he signed the Extended Employment Agreement. The size of the Additional Grant,which had a value of approximately $33 million based on the market price of a Holding Unit on June 21, 2012, reflected the determination by Mr. Kraus andthe Board that this was a reasonable and appropriate amount of long-term incentive compensation in view of Mr. Kraus’s expertise and experience, his pastcompensation, and the compensation of other chief executive officers of the comparable asset management companies described above in “Negotiation andApproval of the Kraus Employment Agreements”.Subject to accelerated vesting clauses in the Extended Employment Agreement (e.g., immediate vesting upon a “change in control” of our firm, as discussed indetail below), the Additional Grant will vest ratably on each of the first five anniversaries of December 19, 2013, commencing December 19, 2014, provided,with respect to each installment, Mr. Kraus continues to be employed by AllianceBernstein on the vesting date. However, Mr. Kraus has elected to delaydelivery of all of the restricted Holding Units until December 19, 2018, the final vesting date, subject to acceleration upon a “change in control” of our firmand certain qualifying events of termination of employment (see “Terms relating to Change in Control and Termination of Employment” below).During the Extended Employment Term, Mr. Kraus will be paid the cash distributions payable with respect to his unvested and vested restricted HoldingUnits until the Holding Units are delivered or forfeited. These cash distributions will be paid at the time distributions are made to Holding Unitholdersgenerally.AllianceBernstein had no commitment to grant Mr. Kraus additional equity-based awards during the Employment Term, nor is AllianceBernstein committedto grant any additional equity-based awards to Mr. Kraus during the Extended Employment Term (with any additional equity-based awards entirely in thediscretion of the Compensation Committee). Accordingly, during the terms of the Kraus Employment Agreements, the totality of Mr. Kraus’s compensation(other than his salary) was and, absent any additional awards the Compensation Committee may choose to grant, will be dependent on the level of cashdistributions on the restricted Holding Units granted to Mr. Kraus and the evolution of the trading price of Holding Units, both of which are partiallydependent on the financial and operating results of our firm. Therefore, his long-term interests have been, and will continue to be, directly aligned with theinterests of our Unitholders and also indirectly aligned with the interests of our clients, as strong performance for our clients generally contributes directly toincreases in assets under management and, thus, improved financial performance for the firm.Perquisites and BenefitsUnder the Kraus Employment Agreement, Mr. Kraus was entitled to receive the following perquisites and benefits:·full tax gross-ups by AllianceBernstein with respect to personal air travel on company-owned aircraft;·personal use of a company car and driver;106Table of Contents·following termination of his employment due to death or disability, continued health and welfare benefits (see note 7 to “Potential Payments uponTermination or Change in Control” table for additional information); and·following termination of his employment by AllianceBernstein without cause or by Mr. Kraus for good reason, payments equal to the cost ofCOBRA coverage for the period for which he is entitled to COBRA.The terms in the Extended Employment Agreement regarding perquisites and benefits are substantially the same as the comparable terms in the KrausEmployment Agreement, except that, during the Extended Employment Term, Mr. Kraus must reimburse AllianceBernstein for any incremental cost toAllianceBernstein associated with his personal use of company-owned (or company-leased) aircraft. In addition, Mr. Kraus is not entitled to receive tax gross-ups by AllianceBernstein for personal use of such aircraft or personal use of a company car and driver.Terms relating to Change in Control and Termination of EmploymentThe Restricted Holding Unit Grant awarded under the Kraus Employment Agreement would have vested immediately upon a “change in control” of our firm. A change in control is defined as:·AXA ceasing to control the management of AllianceBernstein’s business; or·Holding ceasing to be publicly traded.Mr. Kraus negotiated the change-in-control provisions described immediately above in order to ensure that AllianceBernstein would continue to be operated asa separately-managed entity, and with a certain degree of independence, and that Holding would continue as a publicly-traded entity. Both AXA and Mr. Krausbelieved that this arrangement added significant value to AllianceBernstein. The Board understood that AXA had no intention of changing this arrangementduring the Employment Term and, accordingly, concluded that the change-in-control provisions were acceptable and necessary in order to recruit Mr. Kraus.The Kraus Employment Agreement also provided for the immediate vesting of the next two installments of restricted Holding Units or, if fewer remained as ofthe termination date, the balance of the installments that were unvested, upon certain qualifying terminations of employment, including termination of Mr.Kraus’s employment:·by AllianceBernstein without cause, where “cause” includes, among other things:othe continued, willful failure by Mr. Kraus to perform substantially his duties with AllianceBernstein after a written demand forsubstantial performance is delivered to him by the Board;oMr. Kraus’s conviction of, or plea of guilty or nolo contendere to, a crime that constitutes a felony;othe willful engaging by Mr. Kraus in misconduct that is materially and demonstrably injurious to AllianceBernstein or any of its affiliates;othe willful breach by Mr. Kraus of the covenant not to disclose any confidential information pertaining to AllianceBernstein or its affiliatesor the covenant not to compete with AllianceBernstein or its affiliates; oroMr. Kraus’s failure to comply with a material written company workplace policy applicable to him, and·by Mr. Kraus for good reason, where “good reason” generally includes actions taken by AllianceBernstein resulting in a material negative change inMr. Kraus’s employment relationship, such as:oassignment to Mr. Kraus of duties materially inconsistent with his position;oany material breach of the Kraus Employment Agreement by AllianceBernstein;oa requirement by AllianceBernstein that Mr. Kraus be based at any office or location more than 25 miles commuting distance fromcompany headquarters; oroa requirement that Mr. Kraus report to an officer or employee of AllianceBernstein instead of reporting directly to the Board and the CEO ofAXA.In addition, had Mr. Kraus died or become disabled during the Employment Term, Mr. Kraus immediately would have vested in a pro-rated portion of anyrestricted Holding Units otherwise due to vest on the next vesting date.Mr. Kraus negotiated the provisions described immediately above in order to preserve the value of his long-term incentive compensation arrangement. TheBoard agreed to these provisions because they were typical of executive compensation agreements for executives at Mr. Kraus’s level and because the Boardconcluded 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 within AllianceBernstein’s overallcompensation objectives because they permitted AllianceBernstein to attract and retain a highly-qualified chief executive officer, were consistent with AXA’sand the Board’s expectations with respect to the manner in which AllianceBernstein and Holding would be operated during Mr. Kraus’s tenure, were consistentwith 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 abilityto terminate the agreement with good reason (and, thereby, aligning with AllianceBernstein’s goal of providing Mr. Kraus with effective incentives for futureperformance), and to align his long-term interests with those of AllianceBernstein’s Unitholders and clients.107Table of ContentsThe terms set forth in the Extended Employment Agreement regarding potential payments to Mr. Kraus upon a change in control of AllianceBernstein or atermination of employment are substantially the same as the comparable terms in the Kraus Employment Agreement, except for the terms governing atermination of employment by AllianceBernstein without “cause” or by Mr. Kraus for “good reason”, as described immediately below:·If the Extended Employment Agreement had been terminated for one of these reasons before December 19, 2012, Mr. Kraus would have forfeited theentire Additional Grant.·If the Extended Employment Agreement had been terminated for one of these reasons after December 19, 2012 but before December 19, 2013, Mr.Kraus immediately would have vested in the installment of restricted Holding Units scheduled to vest on December 19, 2014.·If the Extended Employment Agreement is terminated for one of these reasons after December 19, 2013, Mr. Kraus immediately will vest in the nexttwo installments of restricted Holding Units or, if fewer remain as of the termination date, the balance of the installments that are unvested.Compensation CommitteeIn 2013, the Compensation Committee consisted of Ms. Slutsky and Messrs. Condron (Chair), Duverne, Elliott, Kraus and Smith, until Mr. Smith’sretirement on November 18, 2013. The Compensation Committee held three meetings in 2013.As discussed in “Corporate Governance—NYSE Governance Matters” in Item 10, Holding, as a limited partnership, is exempt from NYSE rules thatrequire public companies to have a compensation committee composed solely of independent directors. AXA owns, indirectly, an approximate 63.7% economicinterest in AllianceBernstein (as of December 31, 2013), and compensation expense is a significant component of our financial results. For these reasons, Mr.Duverne, Deputy Chief Executive Officer of AXA, is a member of the Compensation Committee, and any action taken by the Compensation Committeerequires the affirmative vote or consent of an executive officer of one or more of our parent companies. (Presently, Mr. Duverne is the only member of theCompensation 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:·determining cash bonuses;·determining contributions and awards under incentive plans or other compensation arrangements (whether qualified or non-qualified) foremployees of AllianceBernstein and its subsidiaries, and amending or terminating such plans or arrangements or any welfare benefit plan orarrangement or making recommendations to the Board with respect to adopting any new incentive compensation plan, including equity-basedplans;·reviewing and approving the compensation of our CEO, evaluating his performance, and determining and approving his compensation level basedon this evaluation; and·reviewing and discussing the CD&A, and recommending to the Board its inclusion in the Partnerships’ Forms 10-K and, when applicable, proxystatements.The Compensation Committee’s year-end process generally has focused on the cash bonuses and long-term incentive compensation awards granted to seniormanagement. Mr. Kraus plays an active role in the work of the Compensation Committee, but he does not participate in any committee discussions or votesregarding his own compensation. Mr. Kraus, working with other members of senior management, provides recommendations for individual employee awardsto the Compensation Committee for its consideration. As part of this process, management provides the committee with compensation benchmarking data fromone or more compensation consultants. For 2013, we paid $17,120 to McLagan for executive compensation benchmarking data and an additional $245,748for survey and consulting services relating to the amount and form of compensation paid to employees other than executives.The Compensation Committee held its regularly-scheduled meeting regarding year-end compensation on December 12, 2013, at which meeting it discussed andapproved senior management’s compensation recommendations. The Compensation Committee, at this meeting, also approved an increase in Mr. Kraus’sannual base salary to $400,000, effective January 1, 2014. The Compensation Committee did not retain its own consultants.The Compensation Committee’s functions are more fully described in the committee’s charter, which is available online in the “Management & Governance”section of our Internet Site.Other Compensation-Related MattersAllianceBernstein and Holding are, respectively, private and public limited partnerships, and are subject to taxes other than federal and state corporate incometax (see “Structure-related Risks” in Item 1A and Note 19 to our consolidated financial statements in Item 8). 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 AllianceBernsteinor Holding.108Table of ContentsCompensation Committee Interlocks and Insider ParticipationMr. Duverne is the Deputy Chief Executive Officer of AXA, the ultimate parent company of the General Partner.Mr. Condron served as the Chairman of the Board, President and Chief Executive Officer of AXA Equitable, the sole stockholder of the General Partner, untilhis retirement on January 1, 2011.Mr. Kraus is Chairman of the Board and Chief Executive Officer of the General Partner and, accordingly, also serves in that capacity for AllianceBernsteinand Holding. Mr. Kraus is also a director of AXA Financial, AXA Equitable and MLOA. In addition, Mr. Kraus is a member of the Management Board ofAXA. Other than Mr. Kraus, no executive officer of AllianceBernstein served as (i) a member of a compensation committee or (ii) a director of another entity,an executive officer of which served as a member of AllianceBernstein’s Compensation Committee or Board.As of December 31, 2013, AXA and its subsidiaries owned an aggregate 63.7% economic interest in AllianceBernstein.Compensation Committee ReportThe 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 to the Board its inclusion in this Form 10-K.Christopher M. Condron (Chair)Denis DuverneSteven G. ElliottPeter S. KrausLorie A. Slutsky 109Table of ContentsSummary Compensation TableTotal compensation of our named executive officers for 2013, 2012 and 2011, as applicable, is as follows:Name andPrincipal PositionYear Salary ($) Bonus ($) StockAwards(1)(2)($) All OtherCompensation($) Total ($) Peter S. Kraus(3)2013 275,000 — — 3,168,218 3,443,218 Chairman and CEO2012 275,000 — 33,127,373 2,634,830 36,037,203 2011 275,000 — — 3,982,527 4,257,527 James A. Gingrich2013 400,000 3,940,000 3,660,000 654,791 8,654,791 Chief Operating Officer2012 400,000 2,485,000 3,114,993 304,781 6,304,774 2011 400,000 1,685,000 1,915,000 346,352 4,346,352 Robert P. van Brugge(4)2013 400,000 1,565,000 1,285,000 563,175 3,813,175 Chairman and CEO of SCB LLC2012 389,808 1,490,778 1,609,224 86,237 3,576,047 2011 375,000 1,470,000 930,002 356,910 3,131,912 Lori A. Massad(5)2013 400,000 940,000 660,000 177,131 2,177,131 Head of Human Capital and ChiefTalent Officer2012 400,000 805,000 595,006 128,851 1,928,857 John C. Weisenseel(6)2013 375,000 710,000 440,000 116,180 1,641,180 CFO2012 229,327 755,050 1,244,969 40,207 2,269,553 (1)The figures in the “Stock Awards” column provide the aggregate grant date fair value of the awards calculated in accordance with FASB ASC Topic 718.For the assumptions made in determining these values, see Note 17 to our consolidated financial statements in Item 8.(2)See “Grants of Plan-Based Awards in 2013” in this Item 11 for information regarding the 2013 long-term incentive compensation awards granted toour named executive officers.(3)Mr. Kraus’s compensation structure is set forth in the Kraus Employment Agreements, the terms of which are described in “Overview of Our ChiefExecutive Officer’s Compensation” in this Item 11.(4)See “Non-Qualified Deferred Compensation for 2013” in this Item 11 for information regarding the $250,000 portion of Mr. van Brugge’s 2011 long-term incentive compensation award under the Incentive Compensation Program that he elected to allocate to Deferred Cash.(5)We have not provided 2011 compensation for Ms. Massad because she was not a named executive officer for 2011.(6)Mr. Weisenseel joined our firm as Chief Financial Officer in May 2012.See “Outstanding Equity Awards at 2013 Fiscal Year-End” in this Item 11 for information regarding the restricted Holding Units awarded to Mr.Weisenseel in connection with his recruitment and as replacement equity for awards he forfeited by leaving McGraw Hill.See “Non-Qualified Deferred Compensation for 2013” in this Item 11 for information regarding the $100,050 portion of Mr. Weisenseel’s 2012 long-term incentive compensation award under the Incentive Compensation Program that he elected to allocate to Deferred Cash.The “All Other Compensation” column above includes the aggregate incremental cost to our company of certain other expenses and perquisites, includingleased car and driver expenses, contributions to the Profit Sharing Plan, life insurance premiums, medical and dental coverage, financial planning, and taxservices and tax gross-ups, as applicable.For 2013, the “All Other Compensation” column includes:For Mr. Kraus, $2,624,886 for quarterly distributions related to his Restricted Holding Unit Grant ($865,612 of which was paid on Holding Units Mr.Kraus owned and $1,759,274 of which was paid on Withheld Units), $231,354 for personal use of aircraft, $187,360 for personal use of a car anddriver (including lease costs ($15,586), driver compensation ($149,000) and other car-related costs ($22,774), such as parking, gas, tolls, and repairsand maintenance), $111,868 for gross-ups related to imputed income for personal use of aircraft and car, and a $12,750 contribution to the ProfitSharing Plan.110Name Grant Date All Other Stock Awards:Number of Shares of Stockor Units (#) Grant Date Fair Valueof Stock Awards ($) Peter S. Kraus — — — James A. Gingrich(1) 12/12/2013 168,897 3,660,000 Robert P. van Brugge(1) 12/12/2013 59,299 1,285,000 Lori A. Massad(1) 12/12/2013 30,457 660,000 John C. Weisenseel(1) 12/12/2013 20,305 440,000 Table of Contentsfor Mr. Gingrich, $640,235 for quarterly distributions on Holding Units awarded as long-term incentive compensation ($527,365 of which was paid onunvested Holding Units and $112,870 of which was paid on vested Holding Units, the delivery of which Holding Units Mr. Gingrich, in advance,elected to defer to future periods), a $12,750 contribution to the Profit Sharing Plan and $1,806 of life insurance premiums.for Mr. van Brugge, $270,948 for quarterly distributions on Holding Units awarded as long-term incentive compensation, a $12,750 contribution to theProfit Sharing Plan, $20,000 for financial planning services, $255,327 for gross-ups related to imputed income for tax payments made on his behalfrelated to his assignment in the U.K. during 2009 and 2010, $3,520 for tax preparation services and $630 of life insurance premiums.for Ms. Massad, $143,751 for quarterly distributions on Holding Units awarded as long-term incentive compensation, $20,000 for financial planningservices, a $12,750 contribution to the Profit Sharing Plan, and $630 of life insurance premiums.for Mr. Weisenseel, $102,533 for quarterly distributions on Holding Units awarded as long-term incentive compensation, a $12,750 contribution to theProfit Sharing Plan and $897 of life insurance premiums.During 2013, we leased two aircraft to facilitate business travel of senior management with an aggregate operating cost of $6,709,864 (including $2,171,736in leasing costs, $2,188,272 in maintenance fees and $2,349,856 in usage fees). In 2013, we permitted Mr. Kraus to use the aircraft for personal travel. Hispersonal travel constituted approximately 8.8% of our actual use of the aircraft in 2013.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 theaircraft type and weight, number of miles flown, flight time, number of passengers, and a variable fee), but excludes our leased aircraft operating costsdiscussed above.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 ofcompany-owned aircraft. Using the SIFL methodology, which was approved by our Compensation Committee, limits our ability to deduct the full cost ofpersonal use of company-owned aircraft by our executive officers. Taxable income for the 12 months ended October 31, 2013 for personal use imputed to Mr.Kraus is $69,604.Grants of Plan-based Awards in 2013Grants of awards under the 2010 Plan, our equity compensation plan, during 2013 made to our named executive officers are as follows: (1)As discussed above in “Overview of 2013 Incentive Compensation Program” and “Compensation Elements for Executive Officers—Long-termIncentive Compensation” in this Item 11, long-term incentive compensation awards generally are denominated in restricted Holding Units. The 2013long-term incentive compensation awards granted to our named executive officers under the Incentive Compensation Program and the 2010 Plan are shownin the “All Other Stock Awards” column of this table, the “Stock Awards” column of the Summary Compensation Table and the “Holding Unit Awards”columns of the Outstanding Equity Awards at 2013 Fiscal Year-End Table.In 2013, the number of restricted Holding Units comprising long-term incentive compensation awards was based on the closing price of a Holding Unit asreported for NYSE composite transactions on December 12, 2013, the date on which the Compensation Committee approved the awards.111Table of ContentsOutstanding Equity Awards at 2013 Fiscal Year-EndOutstanding equity awards held by our named executive officers as of December 31, 2013 are as follows: Option Awards Holding Unit Awards Name Number ofSecuritiesUnderlyingUnexercisedOptionsExercisable (#) Number ofSecuritiesUnderlyingUnexercisedOptionsUnexercisable(#) OptionExercise Price($) OptionExpirationDate Number of Sharesor Units of Stock ThatHave Not Vested (#) Market Valueof Shares orUnits of Stock ThatHave Not Vested ($) Peter S. Kraus(1) — — — — 2,722,052 58,088,590 James A. Gingrich(2)(3) 210,826 52,707 17.05 1/23/19 377,965 8,065,773 Robert P. van Brugge(4) — — — — 165,938 3,541,117 Lori A. Massad(5) — — — — 82,908 1,769,257 John C. Weisenseel(6) — — — — 64,318 1,372,546 (1)For details concerning the restricted Holding Units awarded to Mr. Kraus under the Kraus Employment Agreements, see “Overview of Our ChiefExecutive Officer’s Compensation – Restricted Holding Units” in this Item 11.(2)Mr. Gingrich was awarded (i) 168,897 restricted Holding Units in December 2013 that are scheduled to vest in 25% increments on each of December 1,2014, 2015, 2016 and 2017, (ii) 155,968 restricted Holding Units in December 2012, 25% of which vested on December 1, 2013, and the remainder ofwhich is scheduled to vest in additional 25% increments on each of December 1, 2014, 2015 and 2016, (iii) 128,558 restricted Holding Units inDecember 2011, 25% of which vested on each of December 1, 2012 and 2013, and the remainder of which is scheduled to vest in additional 25%increments on each of December 1, 2014 and 2015, and (iv) 111,253 restricted Holding Units in December 2010, 25% of which vested on each ofDecember 1, 2011, 2012 and 2013, and the remainder of which is scheduled to vest in an additional 25% increment on December 1, 2014.(3)Mr. Gingrich was granted 263,533 options to buy Holding Units in January 2009, 20% of which vested and became exercisable on each of January 23,2010, 2011, 2012 and 2013, and the remainder of which was scheduled to vest and become exercisable (and did vest and become exercisable) in anadditional 20% increment on January 23, 2014.(4)Mr. van Brugge was awarded (i) 59,299 restricted Holding Units in December 2013 that are scheduled to vest in 25% increments on each of December1, 2014, 2015, 2016 and 2017, (ii) 80,574 restricted Holding Units in December 2012, 25% of which vested on December 1, 2013, and the remainderof which is scheduled to vest in additional 25% increments on each of December 1, 2014, 2015 and 2016, (iii) 62,433 restricted Holding Units inDecember 2011, 25% of which vested on each of December 1, 2012 and 2013, and the remainder of which is scheduled to vest in additional 25%increments on each of December 1, 2014 and 2015, and (iv) 59,970 restricted Holding Units in December 2010, 25% of which vested on each ofDecember 1, 2011, 2012 and 2013, and the remainder of which is scheduled to vest in an additional 25% increment on December 1, 2014.(5)Ms. Massad was awarded (i) 30,457 restricted Holding Units in December 2013 that are scheduled to vest in 25% increments on each of December 1,2014, 2015, 2016 and 2017, (ii) 29,792 restricted Holding Units in December 2012, 25% of which vested on December 1, 2013, and the remainder ofwhich is scheduled to vest in additional 25% increments on each of December 1, 2014, 2015 and 2016, (iii) 36,923 restricted Holding Units inDecember 2011, 25% of which vested on each of December 1, 2012 and 2013, and the remainder of which is scheduled to vest in additional 25%increments on each of December 1, 2014 and 2015, and (iv) 46,585 restricted Holding Units in December 2010, 25% of which vested on each ofDecember 1, 2011, 2012 and 2013, and the remainder of which is scheduled to vest in an additional 25% increment on December 1, 2014.(6)Mr. Weisenseel was awarded (i) 20,305 restricted Holding Units in December 2013 that are scheduled to vest in 25% increments on each of December 1,2014, 2015, 2016 and 2017, and (ii) 12,265 restricted Holding Units in December 2012, 25% of which vested on December 1, 2013, and the remainderof which is scheduled to vest in additional 25% increments on each of December 1, 2014, 2015 and 2016. In addition, Mr. Weisenseel was granted, as ofMay 14, 2012 (his first date of employment, “JCW Hire Date”), in accordance with the terms and conditions of the Incentive Compensation Program,an award of restricted Holding Units initially valued at $1,000,000 in connection with his recruitment and as replacement equity for awards he forfeitedby leaving McGraw Hill. The number of restricted Holding Units (69,629) was determined by dividing $1,000,000 by the average closing price on theNYSE of a Holding Unit for the period covering the four trading days immediately preceding the JCW Hire Date, the JCW Hire Date and the five tradingdays immediately following the JCW Hire Date (this calculation resulted in an average price of $14.362) and rounded up to the nearest whole number. Twenty-five percent (25%) of this award vested on each of December 1, 2012 and 2013 and the remainder of this award is scheduled to vest in additional25% increments on each of December 1, 2014 and 2015. This award is shown in the “Holding Unit Awards” columns of this table and the “StockAwards” column of the Summary Compensation Table.112 Holding Unit Awards Name Number of HoldingUnits Acquired on Vesting (#) Value Realized on Vesting ($) Peter S. Kraus(1) 544,410 11,672,150 James A. Gingrich 122,607 2,720,649 Robert P. van Brugge 63,768 1,415,012 Lori A. Massad 37,958 842,288 John C. Weisenseel 20,473 454,296 Table of ContentsOption Exercises and Holding Units Vested in 2013Holding Units held by our named executive officers that vested during 2013 are as follows: (1)Mr. Kraus deferred the delivery of the 544,410 restricted Holding Units that vested in December 2013. See “Overview of Our Chief Executive Officer’sCompensation – Restricted Holding Units” in this Item 11 for additional information.Pension Benefits for 2013None of our named executive officers are entitled to benefits under the Amended and Restated Retirement Plan for Employees of AllianceBernstein L.P. (“Retirement Plan”), our company pension plan. For additional information regarding the Retirement Plan, including interest rates and actuarialassumptions, see Note 16 to our consolidated financial statements in Item 8.Non-Qualified Deferred Compensation for 2013Vested and unvested non-qualified deferred compensation contributions, earnings and distributions of our named executive officers during 2013 and their non-qualified deferred compensation plan balances as of December 31, 2013 are as follows:Name ExecutiveContributions inLast FY ($) AggregateEarnings in LastFY ($) AggregateWithdrawals/Distributions ($) AggregateBalance at LastFYE ($) Peter S. Kraus(1) 11,672,150 (54,441) — 11,617,709 James A. Gingrich(2) — 285,431 (705,708) 2,217,370 Robert P. van Brugge(3) — 548 (63,048) 125,000 Lori A. Massad — — — — John C. Weisenseel(3) — 293 (25,305) 75,038 (1)Mr. Kraus deferred delivery of the 544,410 restricted Holding Units that vested in December 2013 until the earlier of December 19, 2018, his death andthe date on which a change in control of AllianceBernstein occurs. See “Overview of Our Chief Executive Officer’s Compensation – RestrictedHolding Units” in this Item 11 for additional information.(2)Amounts shown reflect Mr. Gingrich’s interests from pre-2009 awards under the predecessor plan to the Incentive Compensation Program, under whichplan participants were permitted to allocate their awards (i) among notional investments in Holding Units, certain of the investment services we providedto clients and a money market fund, or (ii) under limited circumstances, in options to buy Holding Units. For additional information about the IncentiveCompensation Program, see Notes 2 and 17 to our consolidated financial statements in Item 8. Amounts of quarterly distributions on Mr. Gingrich’snotional investments in Holding Units are reflected as earnings in the “Aggregate Earnings in Last FY” column and, to the extent distributed to him during2013, as distributions in the “Aggregate Withdrawals/Distributions” column. The “Aggregate Balance at Last FYE” column represents the value as ofDecember 31, 2013 of Mr. Gingrich’s pre-2009 plan balance, which includes the value of his notional investment in 6,842 Holding Units.(3)The amounts shown in the “Aggregate Earnings in Last FY” column for Messrs. van Brugge and Weisenseel reflect the interest payments associated withthe Deferred Cash portions of their respective long-term incentive compensation awards (in 2011 for Mr. van Brugge and in 2012 for Mr. Weisenseel).Interest accrues monthly based on our monthly weighted average cost of funds (approximately 0.3% in December 2013) and will be credited to Messrs.van Brugge and Weisenseel annually until the cash is distributed to them in installments over the four-year vesting period. The amounts shown in the“Aggregate Withdrawals/Distributions” column for Messrs. van Brugge and Weisenseel represent their respective Deferred Cash distributions during2013, and the amounts shown in the “Aggregate Balance at Last FYE” column represent their respective Deferred Cash balances as of December 31, 2013.113Table of ContentsPotential Payments upon Termination or Change in ControlEstimated payments and benefits to which our named executive officers would have been entitled upon a change in control of AllianceBernstein or the specifiedqualifying events of termination of employment as of December 31, 2013 are as follows:Name CashPayments(1)(2)($) Acceleration ofRestrictedHolding UnitAwards(2) ($) Accelerationof OptionAwards(2) ($) OtherBenefits ($) Peter S. Kraus(3)(4) Change in control – Kraus Employment Agreement — — — 18,637 Change in control - Extended Employment Agreement — 58,088,590 — 18,637 Termination by AllianceBernstein without cause-Kraus Employment Agreement — — — 18,637 Termination by AllianceBernstein without cause-Extended Employment Agreement — 23,235,436 — 18,637 Termination by Mr. Kraus for good reason-Kraus Employment Agreement — — — 18,637 Termination by Mr. Kraus for good reason-Extended Employment Agreement — 23,235,436 — 18,637 Death or disability(5)(6)(7) - Kraus Employment Agreement — — — 18,637 Death or disability(5)(6)(7) - Extended Employment Agreement — — — 18,637 James A. GingrichResignation or termination by AllianceBernstein without cause(complies with applicable agreements and restrictive covenants)(2) — 8,065,773 226,113 — Death or disability(8) — 8,065,773 226,113 — Robert P. van BruggeResignation or termination by AllianceBernstein without cause(complies with applicable agreements and restrictive covenants)(2) 125,000 3,541,117 — — Death or disability(8) 125,000 3,541,117 — — Lori A. MassadResignation or termination by AllianceBernstein without cause(complies with applicable agreements and restrictive covenants)(2) — 1,769,257 — — Death or disability(8) — 1,769,257 — — John C. WeisenseelResignation or termination by AllianceBernstein without cause(complies with applicable agreements and restrictive covenants)(2) 75,038 1,372,546 — — Death or disability(8) 75,038 1,372,546 — — (1)For Messrs. van Brugge and Weisenseel, amounts shown represent the portions of their awards they elected to allocate to Deferred Cash pursuant to theIncentive Compensation Program that were unvested as of December 31, 2013, and the vesting of which would have accelerated had their employmentterminated as of such date under the circumstances specified in the table. (Mr. van Brugge allocated a portion of his 2011 award to Deferred Cash andMr. Weisenseel allocated a portion of his 2012 award to Deferred Cash.) In addition, it is possible that each named executive officer (other than Mr.Kraus) could receive a cash severance payment on the termination of his or her employment. Because the amounts of any such cash severance paymentswould be determined at the time of such termination, we are unable to estimate such amounts.(2)See Notes 2 and 17 in our consolidated financial statements in Item 8 and “Compensation Elements for Executive Officers – Long-term IncentiveCompensation” in this Item 11 for a discussion of the terms set forth in long-term incentive compensation award agreements relating to termination ofemployment.(3)If a change in control of AllianceBernstein or a qualifying event of termination of employment had occurred as of December 31, 2013, Mr. Kraus wouldhave been entitled to receive (i) accelerated vesting under the Extended Employment Agreement of the entire Additional Grant (in the case of a change incontrol of AllianceBernstein) or the portions of the Additional Grant scheduled to vest on December 19, 2014 and 2015 (in the case of a qualifying eventof termination of employment), as shown in the “Acceleration of Restricted Holding Unit Awards” column, and (ii) a payment of $18,637 for continuinghealth and welfare benefits, as shown in the “Other Benefits” column. For additional information, including a detailed description of terms in the KrausEmployment Agreements relating to change in control and qualifying events of termination of employment, see “Overview of Our Chief ExecutiveOfficer’s Compensation” in this Item 11.114Table of Contents(4)Mr. Kraus deferred the delivery of the 544,410 restricted Holding Units that vested on December 19, 2013 until the earlier of December 19, 2018, hisdeath and the date on which a change in control of AllianceBernstein occurs. See “Overview of Our Chief Executive Officer’s Compensation –Restricted Holding Units” in this Item 11 for additional information.(5)The Kraus Employment Agreements indicate that, if Mr. Kraus dies or becomes disabled, he immediately vests in a pro-rated portion of any restrictedHolding Units otherwise due to vest on the next vesting date. However, because Mr. Kraus’s Restricted Holding Unit Grant had fully vested as ofDecember 19, 2013 and the Extended Employment Term did not begin until January 3, 2014, Mr. Kraus would not have been entitled to acceleratedvesting of any Holding Units had he died or become disabled as of December 31, 2013.(6)The Kraus Employment Agreements define “Disability” as a good faith determination by AllianceBernstein that Mr. Kraus is physically or mentallyincapacitated and has been unable for a period of 120 days in the aggregate during any 12-month period to perform substantially all of the duties forwhich he is responsible immediately before the commencement of the incapacity.(7)Under the Kraus Employment Agreements, upon termination of Mr. Kraus’s employment due to death or disability, AllianceBernstein will provide at itsexpense continued health and welfare benefits for Mr. Kraus, his spouse and his dependents through the end of the calendar year in which terminationoccurs. Thereafter, until the date Mr. Kraus (or, in the case of his spouse, his spouse) reaches age 65, AllianceBernstein will provide Mr. Kraus and hisspouse with access to participation in AllianceBernstein’s medical plans at Mr. Kraus’s (or his spouse’s) sole expense based on a reasonably determinedfair market value premium rate.(8)“Disability” is defined in the Incentive Compensation Program award agreements of each of Ms. Massad and Messrs. Gingrich, van Brugge andWeisenseel, and in the Special Option Program award agreement of Mr. Gingrich, as the inability to engage in any substantial gainful activity by reason ofany medically determinable physical or mental impairment that can be expected to last for a continuous period of not less than 12 months, as determinedby the carrier of the long-term disability insurance program maintained by AllianceBernstein or its affiliate that covers the executive officer.Director Compensation in 2013During 2013, we compensated our directors who are not employed by our company or by any of our affiliates (“Eligible Directors”) as follows: Name Fees EarnedorPaid in Cash($) StockAwards(1)(3)($) OptionAwards(2)(3)($) Total ($) Christopher M. Condron 77,000 60,000 60,000 197,000 Steven G. Elliott 77,000 120,000 — 197,000 Deborah S. Hechinger 75,500 — 120,000 195,500 Weston M. Hicks 72,500 120,000 — 192,500 Scott A. Schoen(4) 32,500 50,000 — 82,500 Lorie A. Slutsky 75,500 120,000 — 195,500 A.W. (Pete) Smith, Jr.(5) 75,500 120,000 — 195,500 Peter J. Tobin 96,500 120,000 — 216,500 Joshua A. Weinreich(4) 29,500 25,000 25,000 79,500 (1)The aggregate number of restricted Holding Units underlying awards outstanding at December 31, 2013 was: for Mr. Condron, 9,145 Holding Units; forMs. Hechinger, 6,875 Holding Units; for Mr. Schoen, 2,485 Holding Units; for Mr. Weinreich, 1,243 Holding Units; and for each of Ms. Slutsky andMessrs. Elliott, Hicks, Smith and Tobin, 11,414 Holding Units.(2)The aggregate number of options outstanding at December 31, 2013 was: for Mr. Condron, options to buy 37,022 Holding Units; for Mr. Elliott, optionsto buy 26,383 Holding Units; for Ms. Hechinger, options to buy 63,787 Holding Units; for Mr. Hicks, options to buy 44,938 Holding Units; for Ms.Slutsky, options to buy 56,227 Holding Units; for Mr. Smith, options to buy 44,938 Holding Units; for Mr. Tobin, options to buy 59,339 HoldingUnits; and for Mr. Weinreich, options to buy 5,774 Holding Units. Mr. Schoen did not own any options to buy Holding Units.(3)Reflects the aggregate grant date fair value of the awards calculated in accordance with FASB ASC Topic 718. For the assumptions made in determiningthese values, see Note 17 to our consolidated financial statements in Item 8.115Table of Contents(4)Messrs. Schoen and Weinreich joined the Board on July 30, 2013; their compensation during 2013 was pro-rated to reflect their five months of service.(5)Mr. Smith retired from the Board on November 18, 2013.The General Partner only pays fees, and makes equity-based awards, to Eligible Directors. Through December 31, 2013, these fees and awards consisted of:•an annual retainer of $50,000 (paid quarterly after any quarter during which an Eligible 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 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 Governance Committee; and•an annual equity-based grant under an equity compensation plan consisting of (at each Eligible Director’s election):•restricted Holding Units with a grant date value of $120,000;•options to buy Holding Units with a grant date value of $120,000; or•restricted Holding Units with a grant date value of $60,000 and options to buy Holding Units with a grant date value of $60,000. Equity grants to Eligible Directors generally are made at the May meeting of the Board. The dates of the May meetings are set by the Board the previous year.At a regularly-scheduled meeting of the Board held during May 2013, the Board, consistent with elections made by our then-serving Eligible Directors duringJanuary 2013, granted to (i) Mr. Condron, 2,270 restricted Holding Units and options to buy 10,639 Holding Units at $26.44 per Holding Unit, (ii) Ms.Hechinger, options to buy 21,277 Holding Units at $26.44 per Holding Unit, and (iii) each of Ms. Slutsky and Messrs. Elliott, Hicks, Smith and Tobin,4,539 restricted Holding Units. The exercise price of the options was the closing price of a Holding Unit as reported for NYSE composite transactions on May20, 2013, the date on which the Board approved the awards. For information about how the Black-Scholes value was calculated, see Notes 2 and 17 to ourconsolidated financial statements in Item 8.At a regularly-scheduled meeting of the Board held during September 2013, the Board, consistent with elections made by Messrs. Schoen and Weinreichduring August 2013 in connection with the commencement of their service on the Board, granted to (i) Mr. Schoen, 2,485 restricted Holding Units, and (ii)Mr. Weinreich, 1,243 restricted Holding Units and options to buy 5,774 Holding Units at $20.12 per Holding Unit. The exercise price of the options was theclosing price of a Holding Unit as reported for NYSE composite transactions on September 13, 2013, the date on which the Board approved the awards.Options granted to Eligible Directors become exercisable ratably over three years. Restricted Holding Units granted to Eligible Directors “cliff” vest after threeyears (i.e., 100% of the award is distributed on the third anniversary of the grant date). In order to avoid any perception that our directors’ exercise of theirfiduciary duties might be impaired, these options and restricted Holding Units are not forfeitable. Accordingly, vesting and exercisability of options continuesfollowing an Eligible Director’s resignation from the Board. Restricted Holding Units are distributed as soon as administratively possible following an EligibleDirector’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. Thesereimbursements are subject to any relevant provisions of the Holding Partnership Agreement and the AllianceBernstein Partnership Agreement.116Table of ContentsItem 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersSecurities Authorized for Issuance under Equity Compensation PlansHolding Units to be issued pursuant to our equity compensation plans as of December 31, 2013 are as follows:Equity Compensation Plan InformationPlan Category Number ofsecurities to be issued uponexercise of outstandingoptions, warrants and rights Weighted averageexercise price of outstandingoptions, warrants and rights Number of securitiesremaining available forfuture issuance(1) Equity compensation plans approved by security holders 7,074,139 $40.82 21,907,073 Equity compensation plans not approved by security holders — — — Total 7,074,139 $40.82 21,907,073 (1)All Holding Units remaining available for future issuance will be issued pursuant to the 2010 Plan.There are no AllianceBernstein Units to be issued pursuant to an equity compensation plan.For information about our equity compensation plans (2010 Plan, 1997 Plan, Century Club Plan), see Note 17 to our consolidated financial statements inItem 8.Principal Security HoldersAs of December 31, 2013, we had no information that any person beneficially owned more than 5% of the outstanding Holding Units.As of December 31, 2013, we had no information that any person beneficially owned more than 5% of the outstanding AllianceBernstein Units, except asreported by AXA and certain of its subsidiaries on Schedule 13D/A and Forms 4 filed with the SEC on December 20, 2013 pursuant to the Exchange Act. Wehave prepared the following table, and the notes that follow, in reliance on such filings:Name and Address of Beneficial OwnerAmount and Nature of BeneficialOwnership Reported on Schedule Percent of Class AXA(1)(2)(3)(4)25 avenue Matignon 75008Paris, France170,121,745(4)(5)63.4%(4)(5) (1)Based on information provided by AXA Financial, on December 31, 2013, AXA and certain of its subsidiaries beneficially owned all of AXA Financial’soutstanding common stock. For insurance regulatory purposes, the shares of common stock of AXA Financial beneficially owned by AXA and itssubsidiaries have been deposited into a voting trust (“Voting Trust”), the term of which has been extended until April 29, 2021. The trustees of the VotingTrust (“Voting Trustees”) are Henri de Castries, Denis Duverne and Mark Pearson. Messrs. de Castries and Duverne serve on the Board of Directors ofAXA, while Mr. Pearson serves on the Management Committee of AXA. The Voting Trustees have agreed to exercise their voting rights to protect thelegitimate economic interests of AXA, but with a view to ensuring that certain minority shareholders of AXA do not exercise control over AXA Financial orcertain of its insurance subsidiaries.(2)Based on information provided by AXA, as of December 31, 2013, 14.18% of the issued ordinary shares (representing 23.54% of the voting power) ofAXA were owned directly and indirectly by two French mutual insurance companies (AXA Assurances IARD Mutuelle and AXA Assurances VieMutuelle) engaged in the Property & Casualty insurance business and the Life & Savings insurance business in France (“Mutuelles AXA”).117Table of Contents(3)The Voting Trustees and the Mutuelles AXA, as a group, may be deemed to be beneficial owners of all AllianceBernstein Units beneficially owned byAXA 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 theAllianceBernstein Units. AXA and its subsidiaries have the power to dispose or direct the disposition of all shares of the capital stock of AXA Financialdeposited 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 thedisposition of all the AllianceBernstein Units beneficially owned by AXA and its subsidiaries. The address of each of AXA and Messrs. de Castries andDuverne is 25 avenue Matignon, 75008 Paris, France. The address of Mr. Pearson is 1290 Avenue of the Americas, New York, NY 10104. The addressof the Mutuelles AXA is 313 Terrasses de l’Arche, 92727 Nanterre Cedex, France.(4)By reason of their relationships, AXA, the Voting Trustees, the Mutuelles AXA, AXA America Holdings, Inc. (a subsidiary of AXA, “”),AXA Equitable Financial Services, LLC (a subsidiary of AXA America), AXA IM Rose Inc. (a 95.82%-owned subsidiary of AXA), AXA Financial,AXA Equitable, Coliseum Reinsurance Company (a subsidiary of AXA Financial), ACMC, LLC (a subsidiary of AXA Financial) and MLOA may bedeemed to share the power to vote or to direct the vote and to dispose or direct the disposition of all or a portion of the 170,121,745 issued and outstandingAllianceBernstein Units.(5)As indicated above in note 4, AXA owns approximately 95.82% of AXA IM Rose Inc., which means that approximately 4.18% of the AllianceBernsteinUnits beneficially owned by AXA IM Rose Inc. as of December 31, 2013 were not beneficially owned by AXA. As a result, as of December 31, 2013,AXA beneficially owned 168,368,879 AllianceBernstein Units, or 62.7% of the issued and outstanding AllianceBernstein Units.As of December 31, 2013, Holding was the record owner of 96,028,494, or 35.8%, of the issued and outstanding AllianceBernstein Units.ManagementAs of December 31, 2013, the beneficial ownership of Holding Units by each director and named executive officer of the General Partner and by all directorsand executive officers as a group is as follows:Name of Beneficial Owner Number of HoldingUnits and Nature ofBeneficial Ownership Percent of Class Peter S. Kraus(1)(2) 4,337,643 4.5%Christopher M. Condron(3) 66,282 * Henri de Castries(1) 2,000 * Denis Duverne(1) 2,000 * Steven G. Elliott(4) 23,551 * Deborah S. Hechinger(5) 38,644 * Weston M. Hicks(6) 51,073 * Mark Pearson(1) — * Scott A. Schoen 52,485 Lorie A. Slutsky(1)(7) 59,183 * Christian Thimann(1) — * Peter J. Tobin(8) 61,135 * Joshua A. Weinreich 1,243 James A. Gingrich(1)(9) 888,340 * Lori A. Massad(1)(10) 147,655 * Robert P. van Brugge(1)(11) 196,534 * John C. Weisenseel(1)(12) 88,350 * All directors and executive officers of the General Partner as a group (18 persons)(13)(14) 6,272,403 6.5% *Number of Holding Units listed represents less than 1% of the Units outstanding.(1)Excludes Holding Units beneficially owned by AXA and its subsidiaries. Ms. Slutsky and Messrs. Kraus, de Castries, Duverne, Pearson and Thimannare directors and/or officers of AXA, AXA Financial, and/or AXA Equitable. Ms. Massad and Messrs. Kraus, Gingrich, van Brugge and Weisenseel aredirectors and/or officers of the General Partner.118Table of Contents(2)Includes restricted Holding Units awarded to Mr. Kraus pursuant to the Restricted Holding Unit Grant and the Additional Grant. See “Overview of OurChief Executive Officer’s Compensation – Restricted Holding Units” in Item 11 for additional information regarding Mr. Kraus’s Holding Unitawards.(3)Includes 12,137 Holding Units Mr. Condron can acquire within 60 days under an AllianceBernstein option plan.(4)Includes 12,137 Holding Units Mr. Elliott can acquire within 60 days under an AllianceBernstein option plan.(5)Includes 28,264 Holding Units Ms. Hechinger can acquire within 60 days under an AllianceBernstein option plan.(6)Includes 30,692 Holding Units Mr. Hicks can acquire within 60 days under an AllianceBernstein option plan.(7)Includes 41,981 Holding Units Ms. Slutsky can acquire within 60 days under an AllianceBernstein option plan.(8)Includes 45,093 Holding Units Mr. Tobin can acquire within 60 days under an AllianceBernstein option plan.(9)Includes 263,533 Holding Units Mr. Gingrich can acquire within 60 days under an AllianceBernstein option plan and 479,457 restricted Holding Unitsawarded to Mr. Gingrich as long-term incentive compensation that have not yet vested or been distributed to him. For information regarding Mr. Gingrich’slong-term incentive compensation awards, see “Grants of Plan-based Awards in 2013” and “Outstanding Equity Awards at 2013 Fiscal Year-End”in Item 11.(10)Includes 82,909 restricted Holding Units awarded to Ms. Massad as long-term incentive compensation that have not yet vested or been distributed to her.For information regarding Ms. Massad’s long-term incentive compensation awards, see “Grants of Plan-based Awards in 2013” and “OutstandingEquity Awards at 2013 Fiscal Year-End” in Item 11.(11)Includes 165,939 restricted Holding Units awarded to Mr. van Brugge as long-term incentive compensation that have not yet vested or been distributed tohim. For information regarding Mr. van Brugge’s long-term incentive compensation awards, see “Grants of Plan-based Awards in 2013” and“Outstanding Equity Awards at 2013 Fiscal Year-End” in Item 11.(12)Includes 64,319 restricted Holding Units awarded to Mr. Weisenseel as long-term incentive compensation that have not vested or been distributed to him. For information regarding Mr. Weisenseel’s long-term incentive compensation awards, see “Grants of Plan-based Awards in 2013” and “OutstandingEquity Awards at 2013 Fiscal Year-End” in Item 11.(13)Includes 512,185 Holding Units the directors and executive officers as a group can acquire within 60 days under AllianceBernstein option plans.(14)Includes 4,223,374 restricted Holding Units awarded to the executive officers as a group as long-term incentive compensation that have not yet vested orbeen distributed to them.As of December 31, 2013, our directors and executive officers did not beneficially own any AllianceBernstein Units.119Table of ContentsAs of December 31, 2013, the beneficial ownership of the common stock of AXA by each director and named executive officer of the General Partner and byall directors and executive officers as a group is as follows:AXA Common Stock(1)Name of Beneficial Owner Number of Sharesand Nature ofBeneficial Ownership Percent of Class Peter S. Kraus — * Christopher M. Condron(2) 2,567,617 * Henri de Castries(3) 4,028,531 * Denis Duverne(4) 2,445,609 * Steven G. Elliott — * Deborah S. Hechinger — * Weston M. Hicks — * Mark Pearson(5) 266,775 * Scott A. Schoen — * Lorie A. Slutsky(6) 32,560 * Christian Thimann — * Peter J. Tobin(7) 19,122 * Joshua A. Weinreich — * James A. Gingrich — * Lori A. Massad — * Robert P. van Brugge — * John C. Weisenseel — * All directors and executive officers of the General Partner as a group (18 persons)(8) 9,360,214 * *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 toreceive one AXA ordinary share.(2)Includes 2,104,197 shares Mr. Condron can acquire within 60 days under option plans. Also includes 324,665 deferred restricted ADS units underAXA’s Variable Deferred Compensation Plan for Executives.(3)Includes 2,362,379 shares Mr. de Castries can acquire within 60 days under option plans. Also includes 292,400 unvested AXA performance shares,which are paid out when vested based on the price of AXA at that time and are subject to achievement of internal performance conditions.(4)Includes 1,739,078 shares Mr. Duverne can acquire within 60 days under option plans.(5)Includes 143,363 shares Mr. Pearson can acquire within 60 days under options plans. Also includes 84,000 unvested AXA performance shares, whichare paid out when vested based on the price of AXA at that time and are subject to achievement of internal performance conditions.(6)Includes 648 shares and 6,402 ADSs Ms. Slutsky can acquire within 60 days under option plans.(7)Includes 11,660 shares Mr. Tobin can acquire within 60 days under option plans.(8)Includes 6,361,325 shares the directors and executive officers as a group can acquire within 60 days under option plans. Partnership MattersThe General Partner makes all decisions relating to the management of AllianceBernstein and Holding. The General Partner has agreed that it will conduct nobusiness 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.120Table of ContentsSection 17-403(b) of the Delaware Revised Uniform Limited Partnership Act (“Delaware Act”) states in substance that, except as provided in the DelawareAct or the applicable partnership agreement, a general partner of a limited partnership has the liabilities of a general partner in a general partnership governedby the Delaware Uniform Partnership Law (as in effect on July 11, 1999) to the partnership and to the other partners. Accordingly, while under Delaware lawa 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 applicablepartnership agreement. The AllianceBernstein Partnership Agreement and Holding Partnership Agreement (together, “Partnership Agreements”) each setsforth limitations on the duties and liabilities of the General Partner. Each Partnership Agreement provides that the General Partner is not liable for monetarydamages 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 assertingsuch 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 tocause 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 actualfraud. Whenever the Partnership Agreements provide that the General Partner is permitted or required to make a decision (i) in its “discretion” or under a grantof 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 considerany interest of or other factors affecting the Partnerships or any Unitholder of AllianceBernstein or Holding or (ii) in its “good faith” or under another expressstandard, the General Partner will act under that express standard and will not be subject to any other or different standard imposed by either PartnershipAgreement or applicable law or in equity or otherwise. Each Partnership Agreement further provides that to the extent that, at law or in equity, the GeneralPartner has duties (including fiduciary duties) and liabilities relating thereto to either Partnership or any partner, the General Partner acting under eitherPartnership Agreement, as applicable, will not be liable to the Partnerships or any partner for its good faith reliance on the provisions of the PartnershipAgreement.In addition, each Partnership Agreement grants broad rights of indemnification to the General Partner and its directors and affiliates and authorizesAllianceBernstein and Holding to enter into indemnification agreements with the directors, officers, partners, employees and agents of AllianceBernstein andits affiliates and Holding and its affiliates. The Partnerships have granted broad rights of indemnification to officers and employees of AllianceBernstein andHolding. 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.Each Partnership Agreement also allows transactions between AllianceBernstein and Holding and the General Partner or its affiliates, as we describe in“Policies and Procedures Regarding Transactions with Related Persons” in Item 13. The Delaware courts have held that provisions in partnership orlimited liability company agreements that permit affiliate transactions so long as they are on an arms-length basis operate to establish a contractually-agreed-tofiduciary duty standard of entire fairness on the part of the general partner or manager in connection with the approval of affiliate transactions. Also, eachPartnership Agreement expressly permits all affiliates of the General Partner to compete, directly or indirectly, with AllianceBernstein and Holding, as wediscuss in “Competition” in Item 1. The Partnership Agreements further provide that, except to the extent that a decision or action by the General Partner istaken 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 noliability or obligation with respect to, and no challenge of, decisions or actions of the General Partner that would otherwise be subject to claims or otherchallenges as improperly benefiting affiliates of the General Partner to the detriment of the Partnerships or otherwise involving any conflict of interest or breachof 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 tothe 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, apartner has duties (including fiduciary duties) to a limited partnership or to another partner, those duties may be expanded, restricted, or eliminated byprovisions in a partnership agreement (provided that a partnership agreement may not eliminate the implied contractual covenant of good faith and fairdealing). 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 alimited partnership or another partner for breach of contract or breach of duties (including fiduciary duties); provided, however, that a partnership agreementmay 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 fairdealing. 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 apartnership agreement otherwise applicable fiduciary duties and liability for breach of duties. However, the Delaware courts have required that a partnershipagreement make clear the intent of the parties to displace otherwise applicable fiduciary duties (the otherwise applicable fiduciary duties often being referred toas “default” fiduciary duties). Judicial inquiry into whether a partnership agreement is sufficiently clear to displace default fiduciary duties is necessarily factdriven and is made on a case by case basis. Accordingly, the effectiveness of displacing default fiduciary obligations and liabilities of general partnerscontinues to be a developing area of the law and it is not certain to what extent the foregoing provisions of the Partnership Agreements are enforceable underDelaware law.121Table of ContentsItem 13.Certain Relationships and Related Transactions, and Director IndependencePolicies and Procedures Regarding Transactions with Related PersonsThe Partnership Agreements each 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 (ormore favorable to each such Partnership than) those that would prevail in a transaction with an unaffiliated party. This requirement is conclusively presumedto be satisfied as to any transaction or arrangement that (i) in the reasonable and good faith judgment of the General Partner, meets that unaffiliated partystandard, 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 theGeneral Partner.In practice, our management pricing committees review investment advisory agreements with AXA Affiliates, which is the manner in which the GeneralPartner reaches a judgment regarding the appropriateness of the fees. Other transactions with AXA Affiliates are submitted to the Audit Committee for theirreview and approval. (See “Committees of the Board” in Item 10 for details regarding the Audit Committee.) We are not aware of any transaction during2013 between our company and any related person with respect to which these procedures were not followed.Our relationships with AXA Affiliates also are subject to applicable provisions of the insurance laws and regulations of New York and other states. Undersuch laws and regulations, the terms of certain investment advisory and other agreements we enter into with AXA Affiliates are required to be fair andequitable, charges or fees for services performed must be reasonable, and, in some cases, are subject to regulatory approval.We do not have written policies regarding the employment of immediate family members of any of our related persons. Compensation and benefits for all ofour employees is established in accordance with our employment and compensation practices applicable to employees with equivalent qualifications andresponsibilities who hold similar positions.Financial Arrangements with AXA AffiliatesThe General Partner has, in its reasonable and good faith judgment (based on its knowledge of, and inquiry with respect to, comparable arrangements with orbetween unaffiliated parties), approved the following arrangements with AXA Affiliates as being comparable to, or more favorable to AllianceBernstein than,those that would prevail in a transaction with an unaffiliated party.Transactions between AllianceBernstein and related persons during 2013 are as follows (the first table summarizes services we provide to related persons andthe second table summarizes services our related persons provide to us):Parties(1) General Description of Relationship(2) Amounts Receivedor Accrued for in 2013 AXA Equitable(3)We provide investment management services and ancillaryaccounting, valuation, reporting, treasury and other services to thegeneral and separate accounts of AXA Equitable and its insurancecompany subsidiaries.$46,578,000 (of which$449,000 relates to theancillary services)EQAT, AXA Enterprise Trust and AXA Premier VIP TrustWe serve as sub-adviser to these open-end mutual funds, each ofwhich is sponsored by a subsidiary of AXA Financial. $23,708,000 AXA Life Japan Limited(3) $19,025,000 AXA AB FundsWe provide investment management, distribution and shareholderservicing-related services. $11,317,000 AXA Re Arizona Company(3) $10,327,000 MONY Life Insurance Company and its subsidiaries(3)(4)(5) $7,157,000 AXA Hong Kong Life(3) $4,459,000 AXA Germany(3) $4,182,000 AXA Switzerland Life(3) $3,176,000 AXA France(3) $2,758,000 AXA U.K. Group Pension Scheme $2,617,000 AXA Belgium(3) $1,698,000 AXA Mediterranean(3) $1,376,000 AXA Investment Managers Ltd. Paris(3) $1,090,000 AXA Corporate Solutions(3) $960,000 AXA Switzerland Property and Casualty(3) $228,000 AXA General Insurance Hong Kong Ltd.(3) $210,000 AIM Deutschland GmbH(3) $201,000 AXA Foundation, Inc.(3) $161,000 Coliseum Reinsurance(3) $154,000 AXA Insurance Company(3) $152,000 122Table of ContentsParties(1)(3) General Description of Relationship Amounts Paidor Accrued for in 2013 AXA AdvisorsDistributes certain of our Retail Products and provides Private Clientreferrals. $13,338,000 AXA EquitableWe are covered by various insurance policies maintained by AXAEquitable. $5,062,000 AXA Business Services Pvt. Ltd.Provides data processing services and support for certain investmentoperations functions. $4,197,000 AXA Technology Services India Pvt.Provides certain data processing services and functions. $3,685,000 AXA Group Solutions Pvt. Ltd.Provides maintenance and development support for applications. $3,175,000 AXA AdvisorsSells shares of our mutual funds under Distribution Services andEducational Support agreements. $1,405,000 AXA WealthProvides portfolio-related services for assets we manage under the AXACorporate Trustee Investment Plan. $1,014,000 GIE Informatique AXAProvides cooperative technology development and procurement services tous and to various other subsidiaries of AXA. $965,000 (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.(4)Subsidiaries include MONY Life Insurance Company of America and U.S. Financial Life Insurance Company.(5)AXA completed its sale of MONY in October 2013. MLOA continues to be a subsidiary of AXA.Additional Transactions with Related PersonsAXA Equitable and its affiliates are not obligated to provide funds to us, except for ACMC, LLC’s and the General Partner’s obligation to fund certain of ourincentive compensation and employee benefit plan obligations. ACMC, LLC and the General Partner are obligated, subject to certain limitations, to makecapital contributions to AllianceBernstein in an amount equal to the payments AllianceBernstein is required to make as incentive compensation under theemployment agreements entered into in connection with AXA Equitable’s 1985 acquisition of Donaldson, Lufkin and Jenrette Securities Corporation (sinceNovember 2000, a part of Credit Suisse Group) as well as obligations of AllianceBernstein to various employees and their beneficiaries underAllianceBernstein’s Capital Accumulation Plan. In 2013, ACMC, LLC made capital contributions to AllianceBernstein in the amount of approximately $3.4million in respect of these obligations. ACMC, LLC’s obligations to make these contributions are guaranteed by Equitable Holdings, LLC (a wholly-ownedsubsidiary of AXA Equitable), subject to certain limitations. All tax deductions with respect to these obligations, to the extent funded by ACMC, LLC, theGeneral Partner or Equitable Holdings, LLC, will be allocated to ACMC, LLC or the General Partner.Arrangements with Immediate Family Members of Related PersonsDuring 2013, we did not have arrangements with immediate family members of our directors and executive officers.Director IndependenceSee “Corporate Governance—Independence of Certain Directors” in Item 10.123Table of ContentsItem 14.Principal Accounting Fees and ServicesFees for professional audit services rendered by PricewaterhouseCoopers LLP (“PwC”) for the audit of AllianceBernstein’s and Holding’s annual financialstatements for 2013 and 2012, respectively, and fees for other services rendered by PwC are as follows: 2013 2012 (in thousands) Audit fees(1) $4,911 $5,102 Audit-related fees(2) 3,435 3,330 Tax fees(3) 2,225 1,806 All other fees(4) 5 6 Total $10,576 $10,244 (1)Includes $64,914 paid for audit services to Holding in each of 2013 and 2012.(2)Audit-related fees consist principally of fees for audits of financial statements of certain employee benefit plans, internal control reviews and accountingconsultation.(3)Tax fees consist of fees for tax consultation and tax compliance services.(4)All other fees in 2013 and 2012 consisted of miscellaneous non-audit services.The Audit Committee has a policy to pre-approve audit and non-audit service engagements with the independent registered public accounting firm. Theindependent registered public accounting firm must provide annually a comprehensive and detailed schedule of each proposed audit and non-audit service tobe performed. The Audit Committee then affirmatively indicates its approval of the listed engagements. Engagements that are not listed, but that are of similarscope 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 Committeehas delegated to its chairman the ability to approve any permissible non-audit engagement where the fees are expected to be less than $100,000.124Table of ContentsPART IVItem 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 endedDecember 31, 2013, 2012 and 2011. PwC's report regarding the schedule also is 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 Description3.01 Amended and Restated Certificate of Limited Partnership dated February 24, 2006 of Holding (incorporated by reference to Exhibit 99.06 toForm 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 toExhibit 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. (incorporatedby 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 Exhibit99.07 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 byreference 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 byreference 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 toForm 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).4.01 Contingent Value Rights Agreement, dated as of December 12, 2013, by and between AllianceBernstein L.P. and American Stock Transfer &Trust Company, LLC.10.01 AllianceBernstein 2013 Incentive Compensation Award Program.*10.02 AllianceBernstein 2013 Deferred Cash Compensation Program.*10.03 AllianceBernstein L.P. 2010 Long Term Incentive Plan, as amended.*10.04 Form of Award Agreement under Incentive Compensation Award Program, Deferred Cash Compensation Program and 2010 Long TermIncentive Plan.*10.05 Form of Award Agreement under 2010 Long Term Incentive Plan relating to equity compensation awards to Eligible Directors.*10.06 Guidelines for Transfer of AllianceBernstein L.P. Units.10.07 Employment Agreement among Peter S. Kraus, AllianceBernstein Corporation, AllianceBernstein Holding L.P. and AllianceBernstein L.P.,dated as of June 21, 2012 (incorporated by reference to Exhibit 99.01 to Form 8-K/A, as filed June 26, 2012).*10.08 Amendment No. 1 to Employment Agreement dated as of December 19, 2008 among Peter S. Kraus, AllianceBernstein Corporation,AllianceBernstein Holding L.P. and AllianceBernstein L.P., dated as of June 21, 2012 (incorporated by reference to Exhibit 99.02 to Form 8-K,as filed June 21, 2012).*10.09 Summary of AllianceBernstein’s Lease at 1345 Avenue of the Americas, New York, New York 10105 (incorporated by reference to Exhibit10.07 to Form 10-K for the fiscal year ended December 31, 2011, as filed February 10, 2012).10.10 Revolving Credit Agreement, dated as of December 9, 2010 and Amended and Restated as of January 17, 2012, among AllianceBernstein L.P.and Sanford C. Bernstein & Co., LLC, as Borrowers; Bank of America, N.A., as Administrative Agent; Merrill Lynch, Pierce, Fenner &Smith Incorporated, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Joint Book Managers, andthe other lenders party thereto (incorporated by reference to Exhibit 10.01 to Form 8-K , as filed January 20, 2012).125Table of Contents10.11 Form of Award Agreement under the Special Option Program (incorporated by reference to Exhibit 10.05 to Form 10-K for the fiscal year endedDecember 31, 2008, as filed February 23, 2009).*10.12 Amended and Restated Commercial Paper Dealer Agreement, dated as of February 10, 2009, among Banc of America Securities LLC, MerrillLynch Money Markets Inc., Deutsche Bank Securities Inc. and AllianceBernstein L.P. (incorporated by reference to Exhibit 10.11 to Form 10-Kfor the fiscal year ended December 31, 2008, as filed February 23, 2009).10.13 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).*10.14 Amended and Restated 1997 Long Term Incentive Plan, as amended through November 28, 2007 (incorporated by reference to Exhibit 10.02 toForm 10-K for the fiscal year ended December 31, 2007, as filed February 25, 2008).*10.15 Amended and Restated Issuing and Paying Agency Agreement, dated as of May 3, 2006 (incorporated by reference to Exhibit 10.2 to Form 10-Qfor the quarterly period ended March 31, 2006, as filed May 8, 2006).10.16 Investment Advisory and Management Agreement for MONY Life Insurance Company (incorporated by reference to Exhibit 10.4 to Form 10-Kfor the fiscal year ended December 31, 2004, as filed March 15, 2005).10.17 Investment Advisory and Management Agreement for the General Account of AXA Equitable Life Insurance Company (incorporated byreference to Exhibit 10.5 to Form 10-K for the fiscal year ended December 31, 2004, as filed March 15, 2005).10.18 Alliance Capital Management L.P. Partners Plan of Repurchase adopted as of February 20, 2003 (incorporated by reference to Exhibit 10.2 toForm 10-K for the fiscal year ended December 31, 2002, as filed March 27, 2003).10.19 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).10.20 Extendible Commercial Notes Dealer Agreement, dated as of December 14, 1999 (incorporated by reference to Exhibit 10.10 to the Form 10-Kfor 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 HoldingL.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 CapitalManagement Holding L.P., Alliance Corporate Finance Group Incorporated, and AXA Equitable Life Insurance Company (incorporated byreference 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, asfiled March 31, 1989).*12.01 AllianceBernstein Consolidated Ratio of Earnings to Fixed Charges in respect of the years ended December 31, 2013, 2012 and 2011.21.01Subsidiaries of AllianceBernstein.23.01 Consent of PricewaterhouseCoopers LLP.31.01 Certification of Mr. Kraus furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.02 Certification of Mr. Weisenseel furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.01 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 of1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.02 Certification of Mr. Weisenseel furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101.INS XBRL Instance Document.101.SCH XBRL Taxonomy Extension Schema.101.CAL XBRL Taxonomy Extension Calculation Linkbase.101.LAB XBRL Taxonomy Extension Label Linkbase.101.PRE XBRL Taxonomy Extension Presentation Linkbase.101.DEF XBRL Taxonomy Extension Definition Linkbase.* Denotes a compensatory plan or arrangement126Table of ContentsSignaturesPursuant 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 theundersigned, thereunto duly authorized. AllianceBernstein L.P. Date: February 12, 2014By:/s/ Peter S. Kraus Peter S. Kraus Chairman of the Board and Chief Executive OfficerPursuant 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 onthe dates indicated.Date: February 12, 2014/s/ John C. Weisenseel John C. Weisenseel Chief Financial Officer Date: February 12, 2014/s/ Edward J. Farrell Edward J. Farrell Chief Accounting Officer 127Table of ContentsDirectors/s/ Peter S. Kraus /s/ Mark PearsonPeter S. Kraus Mark PearsonChairman of the Board Director /s/ Christopher M. Condron /s/ Scott A. SchoenChristopher M. Condron Scott A. SchoenDirector Director /s/ Henri de Castries /s/ Lorie A. SlutskyHenri de Castries Lorie A. SlutskyDirector Director /s/ Denis Duverne /s/ Christian ThimannDenis Duverne Christian ThimannDirector Director /s/ Steven G. Elliott /s/ Peter J. TobinSteven G. Elliott Peter J. TobinDirector Director /s/ Deborah S. Hechinger /s/ Joshua A. WeinreichDeborah S. Hechinger Joshua A. WeinreichDirector Director /s/ Weston M. Hicks Weston M. Hicks Director 128SCHEDULE I I AllianceBernstein L.P.Valuation and Qualifying Account - Allowance for Doubtful AccountsFor the Three Years Ending December 31, 2013, 2012 and 2011Description Balance atBeginningof Period Credited toCosts andExpenses Deductions Balance atEnd of Period (in thousands) For the year ended December 31, 2011 $876 $- $124 (a) $752 For the year ended December 31, 2012 $752 $100 $8 (b) $844 For the year ended December 31, 2013 $844 $- $81 (c) $763 (a) Includes accounts written-off as uncollectible of $123 and a net reduction to the allowance balance of $1.(b) Includes accounts written-off as uncollectible of $15 and a net addition to the allowance balance of $7.(c) Includes accounts written-off as uncollectible of $84 and a net addition to the allowance balance of $3.129Report of Independent Registered Public Accounting Firm onFinancial Statement ScheduleTo the General Partner and Unitholders ofAllianceBernstein 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 February12, 2014, appearing in Item 8, also included an audit of the financial statement schedule listed in Item 15(a) of this Form 10-K. In our opinion, this financialstatement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financialstatements./s/ PricewaterhouseCoopers LLPNew York, New YorkFebruary 12, 2014 130EXHIBIT 4.01 EXECUTION VERSIONCONTINGENT VALUE RIGHTS AGREEMENT by and between ALLIANCEBERNSTEIN L.P. and AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC Dated as of December 12, 2013 TABLE OF CONTENTS Page ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION1SECTION 1.1Definitions1SECTION 1.2Compliance and Opinions8SECTION 1.3Form of Documents Delivered to Trustee9SECTION 1.4Acts of Holders9SECTION 1.5Notices, etc., to Trustee and Company10SECTION 1.6Notice to Holders; Waiver11SECTION 1.7Conflict with Trust Indenture Act11SECTION 1.8Effect of Headings and Table of Contents11SECTION 1.9Benefits of Agreement11SECTION 1.10Governing Law12SECTION 1.11Legal Holidays12SECTION 1.12Separability Clause12SECTION 1.13No Recourse Against Others13SECTION 1.14Counterparts13SECTION 1.15Acceptance of Trust13SECTION 1.16Termination13 ARTICLE 2 SECURITY FORMS13SECTION 2.1Forms Generally13 ARTICLE 3 THE SECURITIES14SECTION 3.1Title and Payment Terms14SECTION 3.2Registrable Form15SECTION 3.3Execution, Authentication, Delivery and Dating15SECTION 3.4Temporary Securities15SECTION 3.5Registration, Registration of Transfer and Exchange16SECTION 3.6Mutilated, Destroyed, Lost and Stolen Securities17SECTION 3.7Payments with Respect to CVR Certificates17SECTION 3.8Persons Deemed Owners17SECTION 3.9Cancellation18SECTION 3.10CUSIP Numbers18 ARTICLE 4 THE TRUSTEE18SECTION 4.1Certain Duties and Responsibilities18SECTION 4.2Certain Rights of Trustee19SECTION 4.3Notice of Breach20SECTION 4.4Not Responsible for Recitals or Issuance of Securities21SECTION 4.5May Hold Securities21SECTION 4.6Money Held in Trust21iSECTION 4.7Compensation and Reimbursement21SECTION 4.8Disqualification; Conflicting Interests21SECTION 4.9Corporate Trustee Required; Eligibility22SECTION 4.10Resignation and Removal; Appointment of Successor22SECTION 4.11Acceptance of Appointment of Successor23SECTION 4.12Merger, Conversion, Consolidation or Succession to Business24SECTION 4.13Preferential Collection of Claims Against Company24 ARTICLE 5 HOLDERS’ LISTS AND REPORTS BY THE TRUSTEE AND COMPANY24SECTION 5.1Company to Furnish Trustee with Names and Addresses of Holders24SECTION 5.2Preservation of Information; Communications to Holders24SECTION 5.3Reports by Trustee25SECTION 5.4Reports by Company25 ARTICLE 6 AMENDMENTS26SECTION 6.1Amendments without Consent of Holders26SECTION 6.2Amendments with Consent of Holders27SECTION 6.3Execution of Amendments27SECTION 6.4Effect of Amendments; Notice to Holders27SECTION 6.5Conformity with Trust Indenture Act28SECTION 6.6Reference in Securities to Amendments28 ARTICLE 7 COVENANTS28SECTION 7.1Payment of Amounts, if any, to Holders28SECTION 7.2Maintenance of Office or Agency28SECTION 7.3Money for Security Payments to Be Held in Trust29SECTION 7.4Certain Purchases and Sales30SECTION 7.5Books and Records30SECTION 7.6AUM Review Procedures30SECTION 7.7Restrictive Covenants31SECTION 7.8Milestone31SECTION 7.9Notice of Breach32SECTION 7.10Non-Use of Name32SECTION 7.11Mid-Month Measurement32 ARTICLE 8 REMEDIES OF THE TRUSTEE AND HOLDERS IN THE EVENT OF BREACH32SECTION 8.1Breach Defined; Waiver of Breach32SECTION 8.2Collection by the Trustee; the Trustee May Prove Payment Obligations34SECTION 8.3Application of Proceeds35SECTION 8.4Suits for Enforcement36SECTION 8.5Restoration of Rights on Abandonment of Proceedings36SECTION 8.6Limitations on Suits by Holders36SECTION 8.7Unconditional Right of Holders to Institute Certain Suits37iiSECTION 8.8Powers and Remedies Cumulative; Delay or Omission Not Waiver of Breach37SECTION 8.9Control by Holders37SECTION 8.10Waiver of Past Breaches38SECTION 8.11Trustee to Give Notice of Breach, But May Withhold in Certain Circumstances38SECTION 8.12Right of Court to Require Filing of Undertaking to Pay Costs38 ARTICLE 9 CONSOLIDATION, MERGER, SALE OR CONVEYANCE39SECTION 9.1Company May Consolidate, etc., on Certain Terms39SECTION 9.2Successor Person Substituted39SECTION 9.3Opinion of Counsel to Trustee40SECTION 9.4Successors40Annex A — Form of CVR Certificate Note:This table of contents shall not, for any purpose, be deemed to be a part of this CVR Agreement.iiiReconciliation and tie between Trust Indenture Act of 1939 and Contingent Value Rights Agreement, dated as of December 12, 2013. Trust Indenture Act SectionAgreement SectionSection 310(a)(1)4.9(a)(2)4.9(a)(3)Not Applicable(a)(4)Not Applicable(a)(5)4.9(b)4.8, 4.10Section 311(a)4.13(b)4.13Section 312(a)5.1, 5.2(a)(b)5.2(b)(c)5.2(c)Section 313(a)5.3(a)(b)5.3(a)(c)5.3(a)(d)5.3(b)Section 314(a)5.4(b)Not Applicable(c)(1)1.2(a)(c)(2)1.2(a)(c)(3)Not Applicable(d)Not Applicable(e)1.2(b)Section 315(a)4.1(a), 4.1(b)(b)8.11(c)4.1(a)(d)4.1(c)(d)(1)4.1(a), 4.1(b)(d)(2)4.1(c)(ii)(d)(3)4.1(c)(iii)(e)8.12Section 316(a)(last sentence)1.1 (Definition of“Outstanding”)(a)(1)(A)8.9(a)(1)(B)8.10(a)(2)Not Applicable(b)8.7Section 317(a)(1)8.2(a)(2)8.2(b)7.3Section 318(a)1.7Note:This reconciliation and tie shall not, for any purpose, be deemed to be a part of this CVR Agreement.ivTHIS CONTINGENT VALUE RIGHTS AGREEMENT, dated as of December 12, 2013 (this “CVR Agreement”), by and betweenAllianceBernstein L.P., a Delaware limited partnership (the “Company”), and American Stock Transfer & Trust Company, LLC, a New York limitedliability trust company, as trustee (the “Trustee”), in favor of each person who from time to time holds one or more Contingent Value Rights (the “Securities”or “CVRs” and, each individually, a “Security” or a “CVR”) to receive cash payments in the amounts and subject to the terms and conditions set forth herein. W I T N E S S E T H: WHEREAS, this CVR Agreement is entered into pursuant to the Agreement and Plan of Merger, dated as of August 15, 2013 (the “MergerAgreement”), by and among the Company, AllianceBernstein 2013 Merger Company, Inc. (“Merger Sub”) and W.P. Stewart & Co., Ltd. (“WPS”); WHEREAS, pursuant to the Merger Agreement, Merger Sub shall merge with and into WPS (the “Merger”), with WPS being the survivingcorporation in the Merger and becoming a wholly owned Subsidiary of the Company; WHEREAS, the CVRs shall be issued in accordance with and pursuant to the terms of the Merger Agreement; and WHEREAS, a registration statement on Form S-4 (No. 333-191155) with respect to the CVRs has been prepared and filed by the Company with theCommission (as defined below) and has become effective in accordance with the Securities Act of 1933, as amended. NOW, THEREFORE, in consideration of the foregoing premises and the consummation of the transactions contemplated by the Merger Agreement, itis covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE 1DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1 Definitions. For all purposes of this CVR Agreement, except as otherwise expressly provided or unless the context otherwiserequires: (a) the terms defined in this Article 1 have the meanings assigned to them in this Article, and include the plural as well as the singular; (b) all accounting terms used herein and not expressly defined herein shall, except as otherwise noted, have the meanings assigned tosuch terms in accordance with applicable Accounting Standards, where “Accounting Standards” means generally accepted accounting principles inthe United States of America at the time of any computation; (c) all capitalized terms used in this CVR Agreement without definition shall have the respective meanings ascribed to them in theMerger Agreement;(d) all other terms used herein which are defined in the Trust Indenture Act (as defined herein), either directly or by reference therein,have the respective meanings assigned to them therein; and (e) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this CVR Agreement as a whole and not toany particular Article, Section or other subdivision. “Act” shall have the meaning set forth in Section 1.4 of this CVR Agreement. “Acting Holders” means, at the time of determination, Holders of at least a majority of the Outstanding CVRs. “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect commoncontrol with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct themanagement and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms“controlling” and “controlled” have meanings correlative to the foregoing. “Annual AUM Report” shall have the meaning set forth in Section 7.6 of this CVR Agreement. “Assets Under Management” means, without duplication, the assets under management (i) in the Mutual Fund (which shall be deemed to include (x)the assets under management in any Successor Mutual Fund except for the amount of assets under management of the fund into which the Mutual Fund ismerged as of immediately prior to the effective time of such merger that remain assets of the Successor Mutual Fund immediately following the effective time ofsuch merger, and (y) any growth in such invested assets or in other assets of the Successor Mutual Fund following such merger), (ii) in the Private Funds(which shall be deemed to include (x) the assets under management in any Successor Private Fund except for the amount of assets under management of thefund into which the applicable Private Fund is merged as of immediately prior to the effective time of such merger that remain assets of the Successor PrivateFund immediately following the effective time of such merger, and (y) any growth in such invested assets or in other assets of the Successor Private Fundfollowing such merger), and (iii) in any separately managed accounts to the extent advised or sub-advised by WPS Group (which shall be deemed to includeall such accounts of WPS immediately prior to the Merger that continue under management by the Company or its subsidiaries following the Merger, and anyassets in any other accounts to the extent managed by the Company or any of its subsidiaries through any member of the WPS Group following the Merger)other than assets in accounts serviced by the Global Wealth Management Group of the Company on a discretionary basis immediately prior to such accountsbeing advised or sub-advised by WPS Group (provided that any growth in such assets thereafter and new assets added to such accounts thereafter shall beincluded in Assets Under Management); provided, that, except as provided in each of (i) – (iii), any assets under management resulting from the investment offunds managed by the Company or any of its Affiliates other than WPS Group shall be excluded from Assets Under Management.2“AUM Milestone” means the first date, on or prior to the third anniversary of the date on which the Effective Time (as defined in the MergerAgreement) of the Merger occurs, on which any one or more of the following shall occur: (i) Assets Under Management exceeds $5,000,000,000 (provided,that such date shall be either (x) the last day of a calendar month or (y) a Mid-Month Measuring Date), (ii) any merger or consolidation of WPS with or intoany Person or any sale or disposition to any Person or Persons of all or substantially all of the common stock or assets of WPS in any transaction or series oftransactions, unless in each case the Company or one or more of its Affiliates (or their ultimate parent company) would wholly own (other than any employeeequity interests) the surviving or resulting company or substantially all of the assets used in the investment advisory business of WPS immediately thereafter(for the avoidance of doubt, not including any consolidation or merger, share exchange, reorganization, tender or exchange offer or any other businesscombination transaction involving the Company or any parent company of the Company), (iii) the discontinuation or cessation of all or substantially all of thebusiness of WPS Group, (iv) any willful and material Breach of the Specified Conduct obligations set forth in Section 7.8 of this CVR Agreement, or (v) theoccurrence of any Breach that materially and adversely impacts the ability to achieve the AUM Milestone. “AUM Milestone Payment” means four dollars ($4.00) per CVR. “AUM Milestone Payment Date” means, with respect to the AUM Milestone, the date that is twenty (20) Business Days following the date of theachievement of the AUM Milestone. “AUM Record Date” shall have the meaning set forth in Section 3.1(c) of this CVR Agreement. “AUM Statement” shall have the meaning set forth in Section 5.4 of this CVR Agreement. “AXA” means AXA, a société anonyme organized under the laws of France, and its Affiliates (other than AllianceBernstein Holding L.P., theCompany and the controlled Affiliates thereof). “Board of Directors” means the Board of Directors of the General Partner of AllianceBernstein L.P. or any other body performing similar functions,or any duly authorized committee of that board. “Board Resolution” means a copy of a resolution certified by the Chairman of the Board of Directors, the Chief Executive Officer or the CorporateSecretary to the Board of Directors, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, anddelivered to the Trustee. “Breach” shall have the meaning set forth in Section 8.1 of this CVR Agreement. “Breach Interest Rate” means a per annum rate equal to the prime rate of interest quoted by Bloomberg, or similar reputable data source, plus threepercent (3%), calculated daily on the basis of a three hundred sixty (360) day year consisting of twelve (12) thirty (30) day months or, if lower, the highest ratepermitted under applicable Law.3“Business Day” means any day (other than a Saturday or a Sunday) on which banking institutions in The City of New York, New York are notauthorized or obligated by Law or executive order to close and, if the CVRs are listed on a national securities exchange, electronic trading network or othersuitable trading platform, such exchange, electronic network or other trading platform is open for trading on which the CVRs are primarily listed. “Code” means the Internal Revenue Code of 1986, as amended. “Commission” means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any timeafter the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then thebody performing such duties at such time. “Common Stock” means the common stock, par value $0.01 per share, of WPS. “Company” means the Person named as the “Company” in the first paragraph of this CVR Agreement, until a successor Person shall have becomesuch pursuant to the applicable provisions of this CVR Agreement, and thereafter “Company” shall mean such successor Person. “Company Request” or “Company Order” means a written request or order signed in the name of the Company by the chairman of the Board ofDirectors, the Chief Executive Officer, a president or any vice president, or any other person duly authorized to act on behalf of the Company for suchpurpose or for any general purpose, and delivered to the Trustee. “Competing Product” shall have the meaning set forth in Section 7.8 of this CVR Agreement. “Corporate Trust Office” means the office of the Trustee at which at any particular time its corporate trust business shall be principallyadministered, which office at the date of execution of this CVR Agreement is located at 6201 15th Avenue, Brooklyn, New York 11219. “CVRs” shall have the meaning set forth in the Preamble of this CVR Agreement. “CVR Agreement” means this instrument as originally executed and as it may from time to time be supplemented or amended pursuant to theapplicable provisions hereof. “CVR Certificate” means a certificate representing any of the CVRs; provided, that, notwithstanding anything in this CVR Agreement to thecontrary, the CVRs may be issued in book-entry form and, if so issued, any reference herein to a “CVR Certificate” shall be deemed to include CVRs issuedin book-entry form, to the extent applicable, and, notwithstanding anything in this CVR Agreement to the contrary, CVRs so issued shall be deemedauthenticated upon valid delivery thereof by the Trustee to the depositary of the CVRs or its nominee; provided, further, that if a CVR is so issued in book-entry form, then where this CVR Agreement calls for presentment or surrender of any CVR Certificate, presentment or surrender of the beneficial interest ofsuch CVR Certificate may be made in accordance with such depositary’s or its nominee’s applicable procedures.4“CVR Shortfall” shall have the meaning set forth in Section 7.6(b) of this CVR Agreement. “Diligent Efforts” means the efforts that a Person operating a business similar to the business of such Person would use in the reasonable exercise ofdiscretion and good faith, as judged by the standards of the applicable business community, taking into consideration such Person’s own interests andfinancial and operating limitations; provided, however, that such efforts do not require such Person to incur a financial detriment in excess of what is, orspend in excess of what is, reasonable in relation to the benefit to be obtained by such Person from the transaction to which such efforts relate. Theperformance by the Company of the Specified Conduct shall create a presumption that the Company has used Diligent Efforts to achieve the AUM Milestone. “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Exchange Act Documents” shall have the meaning set forth in Section 5.4 of this CVR Agreement. “Final AUM Report” shall have the meaning set forth in Section 7.6 of this CVR Agreement. “Governmental Entity” means any domestic (federal or state), or foreign court, commission, governmental body, regulatory or administrative agencyor other political subdivision thereof. “Holder” means a Person in whose name a Security is registered in the Security Register. “Independent Accountant” shall have the meaning set forth in Section 7.6(a) of this CVR Agreement. “Initial CVR Securities” means the aggregate amount of Securities issued pursuant to the terms of the Merger Agreement. “Law” means any foreign, federal, state, local or municipal laws, rules, judgments, orders, regulations, statutes, ordinances, codes, decisions,injunctions, decrees, international treaties and conventions or requirements of any Governmental Entity. “Merger” shall have the meaning set forth in the Recitals of this CVR Agreement. “Merger Agreement” shall have the meaning set forth in the Recitals of this CVR Agreement. “Merger Sub” shall have the meaning set forth in the Recitals of this CVR Agreement. “Mid-Month Measuring Date” shall have the meaning set forth in Section 7.11 of this CVR Agreement.5“Month-End Triggering Date” shall have the meaning set forth in Section 7.11 of this CVR Agreement. “Mutual Fund” means W.P. Stewart & Co. Growth Fund and any other open-end investment company, closed-end investment company, unitinvestment trust or business development company registered or required to be registered under the Investment Company Act of 1940, as amended, and therules and regulations thereunder, that is advised or sub-advised by WPS Group. “Officer’s Certificate” when used with respect to the Company means a certificate signed by the Chief Executive Officer, a president or any vicepresident, the Chief Financial Officer or any other person duly authorized to act on behalf of the Company for such purpose or for any general purpose. “Opinion of Counsel” means a written opinion of counsel, who may be counsel for the Company. “Outstanding” when used with respect to Securities (“Outstanding Securities”) means, as of the date of determination, all Securities theretoforeauthenticated and delivered under this CVR Agreement, except: (a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation and(b) Securities in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this CVR Agreement, other than any suchSecurities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser inwhose hands the Securities are valid obligations of the Company, provided, however, that in determining whether the Holders of the requisite OutstandingSecurities have given any request, demand, authorization, direction, consent, waiver or other action hereunder, Securities owned by the Company or any of itsAffiliates, whether held as treasury securities or otherwise, shall be disregarded and deemed not to be Outstanding, except that for the purposes of determiningwhether the Trustee shall be protected in relying on any such request, demand, authorization, direction, consent, waiver or other action, only Securities that aResponsible Officer of the Trustee actually knows are so owned shall be so disregarded (but the Trustee need not confirm or investigate the accuracy ofmathematical calculations or other facts stated in such request, demand, authorization, direction, consent, waiver or other action). “Party” shall mean the Trustee, the Company and/or Holder(s), as applicable. “Paying Agent” means any Person authorized by the Company to pay the amount determined pursuant to Section 3.1, if any, on any Securities onbehalf of the Company. “Person” means any individual, corporation, partnership, joint venture, association, jointstock company, trust, limited liability company,unincorporated organization or government or any agency or political subdivision thereof. “Private Fund” means any pooled investment vehicle, other than the Mutual Fund, that is sponsored or controlled by WPS or any of its subsidiariesor for which WPS or any of its subsidiaries acted as investment adviser, sub-adviser, general partner, managing member or manager, in each case, prior tothe Merger, as well as each pooled investment vehicle, other than the Mutual Fund or any Successor Mutual Fund, for which WPS Group is the adviser, sub-adviser, general partner, managing member or manager following the Merger.6“Responsible Officer” when used with respect to the Trustee means any officer assigned to the Corporate Trust Office and also means, with respectto any particular corporate trust matter, any other officer of the Trustee to whom such matter is referred because of his or her knowledge of and familiaritywith the particular subject. “Securities” shall have the meaning set forth in the Preamble of this CVR Agreement. “Security Register” shall have the meaning set forth in Section 3.5(a) of this CVR Agreement. “Security Registrar” shall have the meaning set forth in Section 3.5(a) of this CVR Agreement. “Shortfall Interest Rate” means a per annum rate equal to the prime rate of interest quoted by Bloomberg, or similar reputable data source, plus twopercent (2%), calculated daily on the basis of a three hundred sixty (360) day year consisting of twelve (12) thirty (30) day months or, if lower, the highest ratepermitted under applicable Law. “Specified Conduct” shall have the meaning set forth in Section 7.8 of this CVR Agreement. “Subsidiary” means, with respect to any Person, any corporation, limited liability company, association, partnership or other business entity ofwhich more than fifty percent (50%) of the total voting power of shares of Voting Securities is at the time owned or controlled, directly or indirectly, by: (a)such Person; (b) such Person and one or more Subsidiaries of such Person; or (c) one or more Subsidiaries of such Person. “Successor Mutual Fund” means any open-end investment company, closed-end investment company, unit investment trust or businessdevelopment company registered or required to be registered under the Investment Company Act of 1940, as amended, and the rules and regulationsthereunder, into which the Mutual Fund is merged and for which the Company or any of its Subsidiaries acts as investment adviser, sub-adviser, sponsor ormanager. “Successor Private Fund” means any pooled investment vehicle other than any Mutual Fund or Successor Mutual Fund into which any Private Fundis merged. “Tax” means any federal, state, local or foreign income, profits, gross receipts, license, payroll, employment, severance, stamp, occupation,premium, windfall profits, environmental, customs duty, capital stock, franchise, sales, social security, unemployment, disability, use, property,withholding, excise, transfer, registration, production, value added, alternative minimum, occupancy, estimated or any other tax of any kind whatsoever,together with any interest, penalty or addition thereto, imposed by any Governmental Entity responsible for the imposition of any such tax, whether disputedor not.7“Tax Return” means any return, report, declaration, claim or other statement (including attached schedules) relating to Taxes. “Termination Date” means the earlier of (a) the third anniversary of the date on which the Effective Time of the Merger occurs and (b) ten (10) daysafter the date on which the Holders are paid the AUM Milestone Payment by the Trustee or the Paying Agent, as applicable. “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended from time to time. “Trustee” means the Person named as the “Trustee” in the first paragraph of this CVR Agreement, until a successor Trustee shall have become suchpursuant to the applicable provisions of this CVR Agreement, and thereafter “Trustee” shall mean such successor Trustee. “Voting Securities” means securities or other interests, including general or limited partnership interests, having voting power, or the right, to elect orappoint a majority of the directors, or any Persons performing similar functions, irrespective of whether or not stock or other interests of any other class orclasses shall have or might have voting power or any right by reason of the happening of any contingency. “WPS” shall have the meaning set forth in the Recitals of this CVR Agreement. “WPS Group” means, without duplication, (i) WPS and its subsidiaries and (ii) to the extent providing services to the Company or any of itsAffiliates (including WPS and its subsidiaries), whether as employee, consultant or independent contractor, the investment professionals who providedinvestment advisory services on behalf of WPS or any of its subsidiaries immediately prior to the consummation of the Merger, and (iii) employees,consultants and independent contractors of the Company or any of its Affiliates (including WPS and its subsidiaries) who continue WPS’s investmentbusiness as was in effect immediately prior to the consummation of the Merger (i.e., new hires in connection with the growth of the WPS business or to replaceemployees who have or have been terminated), as determined in the Company’s reasonable discretion. SECTION 1.2 Compliance and Opinions. (a) Upon any application or request by the Company to the Trustee to take any action under any provision of this CVR Agreement, theCompany shall furnish to the Trustee an Officers’ Certificate stating that, in the opinion of the signor, all conditions precedent, if any, provided for in thisCVR Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating, subject to customary exceptions, that in theopinion of such counsel all such conditions precedent, if any, have been complied with, except that, in the case of any such application or request as to whichthe furnishing of such documents is specifically required by any provision of this CVR Agreement relating to such particular application or request, noadditional certificate or opinion need be furnished.8(b) Every certificate or opinion with respect to compliance with a condition or covenant provided for in this CVR Agreement shall include: (i) astatement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (ii) a briefstatement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion arebased; (iii) a statement that, in the opinion of each such individual, he or she has made such examination or investigation as is necessary to enable him or herto express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether, in the opinion ofeach such individual, such condition or covenant has been complied with. SECTION 1.3 Form of Documents Delivered to Trustee. (a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary thatall such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one suchPerson may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify orgive an opinion as to such matters in one or several documents. (b) Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of,or representations by, counsel. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinionof, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of theCompany. (c) Any certificate, statement or opinion of an officer of the Company or of counsel may be based, insofar as it relates to accounting matters,upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Company. Any certificate or opinion of anyindependent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent. (d) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions orother instruments under this CVR Agreement, they may, but need not, be consolidated and form one instrument. SECTION 1.4 Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this CVR Agreement to be given ortaken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by anagent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instrumentsare delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein andevidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any suchinstrument or of a writing appointing any such agent shall be sufficient for any purpose of this CVR Agreement and (subject to Section 4.1) conclusive infavor of the Trustee and the Company, if made in the manner provided in this Section 1.4. The Company may set a record date for purposes of determiningthe identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted under this CVR Agreement, which date shall be nogreater than ninety (90) days and no less than ten (10) days prior to the date of such vote or consent to any action by vote or consent authorized or permittedunder this CVR Agreement. If not previously set by the Company, (i) the record date for determining the Holders entitled to vote at a meeting of the Holdersshall be the date preceding the date notice of such meeting is mailed to the Holders, or if notice is not given, on the day next preceding the day such meeting isheld, and (ii) the record date for determining the Holders entitled to consent to any action in writing without a meeting shall be the first date on which a signedwritten consent setting forth the action taken or proposed to be taken is delivered to the Company. If a record date is fixed, those Persons who were Holders ofSecurities at such record date (or their duly designated proxies), and only those Persons, shall be entitled to take such action by vote or consent or, except withrespect to clause (d) below, to revoke any vote or consent previously given, whether or not such Persons continue to be Holders after such record date. Nosuch vote or consent shall be valid or effective for more than one hundred twenty (120) days after such record date.9(b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any reasonable manner which theTrustee deems sufficient. (c) The ownership of Securities shall be proved by the Security Register. Neither the Company nor the Trustee nor any Agent of the Companyor the Trustee shall be affected by any notice to the contrary. (d) At any time prior to (but not after) the evidencing to the Trustee, as provided in this Section 1.4, of the taking of any action by the Holdersof the Securities specified in this CVR Agreement in connection with such action, any Holder of a Security the serial number of which is shown by theevidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing written notice at theCorporate Trust Office and upon proof of holding as provided in this Section 1.4, revoke such action so far as concerns such Security. Any request,demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security orthe Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done, suffered oromitted to be done by the Trustee, any Paying Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Security. SECTION 1.5 Notices, etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of theHolders or other document provided or permitted by this CVR Agreement to be made upon, given or furnished to, or filed with: (a) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed, inwriting, to or with the Trustee at its Corporate Trust Office; or (b) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first-class postageprepaid, to the Company addressed to it at AllianceBernstein L.P., 1345 Avenue of the Americas, New York, NY 10105, Attention: Laurence E. Cranch, or atany other address previously furnished in writing to the Trustee by the Company.10SECTION 1.6 Notice to Holders; Waiver.(a) Where this CVR Agreement provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise hereinexpressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at the Holder’s address as it appears in theSecurity Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice toHolders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency ofsuch notice with respect to other Holders. Where this CVR Agreement provides for notice in any manner, such notice may be waived in writing by the Personentitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall befiled with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. (b) In case by reason of the suspension of regular mail service or by reason of any other cause, it shall be impracticable to mail notice of anyevent as required by any provision of this CVR Agreement, then any method of giving such notice as shall be satisfactory to the Trustee shall be deemed to bea sufficient giving of such notice. SECTION 1.7 Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which isrequired to be included in this CVR Agreement by any of the provisions of the Trust Indenture Act, such required provision shall control. SECTION 1.8 Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenienceonly and shall not affect the construction hereof. SECTION 1.9 Benefits of Agreement. Nothing in this CVR Agreement or in the Securities, express or implied, shall give to any Person (otherthan the Parties hereto and their successors hereunder, any Paying Agent and the Holders) any benefit or any legal or equitable right, remedy or claim underthis CVR Agreement or under any covenant or provision herein contained, all such covenants and provisions being for sole benefit of the Parties hereto andtheir successors, any Paying Agent and of the Holders.11SECTION 1.10 Governing Law. THIS CVR AGREEMENT AND ALL CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACTOR TORT) THAT MAY BE BASED UPON, ARISE OUT OF OR RELATE TO THIS CVR AGREEMENT, OR THE NEGOTIATION, EXECUTIONOR PERFORMANCE OF THIS CVR AGREEMENT (INCLUDING ANY CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF ORRELATED TO ANY REPRESENTATION OR WARRANTY MADE IN OR IN CONNECTION WITH THIS CVR AGREEMENT OR AS ANINDUCEMENT TO ENTER INTO THIS CVR AGREEMENT) OR THE SECURITIES, SHALL BE GOVERNED BY AND CONSTRUED INACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OFTHE NEW YORK GENERAL OBLIGATIONS LAW WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. EACH OF THECOMPANY, THE TRUSTEE AND EACH OF THE HOLDERS BY THEIR ACCEPTANCE OF THE SECURITIES, HEREBY IRREVOCABLYSUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN INTHE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK INRESPECT OF ALL CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) THAT MAY BE BASED UPON, ARISE OUT OFOR RELATE TO THIS CVR AGREEMENT, OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS CVR AGREEMENT(INCLUDING ANY CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF OR RELATED TO ANY REPRESENTATION ORWARRANTY MADE IN OR IN CONNECTION WITH THIS CVR AGREEMENT OR AS AN INDUCEMENT TO ENTER INTO THIS CVRAGREEMENT), OR THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY ANDUNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH OF THE COMPANY AND THE TRUSTEE AGREES THATPROCESS MAY BE SERVED UPON THEM IN ANY MANNER AUTHORIZED BY THE LAWS OF THE STATE OF NEW YORK FOR SUCHPERSONS. EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OFMOTION, AS A DEFENSE, COUNTERCLAIM OR OTHERWISE, IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS CVRAGREEMENT (A) THE DEFENSE OF SOVEREIGN IMMUNITY, (B) ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THEJURISDICTION OF THE ABOVE-NAMED COURTS FOR ANY REASON OTHER THAN THE FAILURE TO SERVE PROCESS IN ACCORDANCEWITH THIS SECTION 1.10, (C) THAT IT OR ITS PROPERTY IS EXEMPT OR IMMUNE FROM JURISDICTION OF ANY SUCH COURT ORFROM ANY LEGAL PROCESS COMMENCED IN SUCH COURTS (WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TOJUDGMENT, ATTACHMENT IN AID OF EXECUTION OF JUDGMENT, EXECUTION OF JUDGMENT OR OTHERWISE), AND (D) TO THEFULLEST EXTENT PERMITTED BY APPLICABLE LAW THAT (I) THE SUIT, ACTION OR PROCEEDING IN SUCH COURT IS BROUGHT INAN INCONVENIENT FORUM, (II) THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER AND (III) THIS CVR AGREEMENT,OR THE SUBJECT MATTER HEREOF, MAY NOT BE ENFORCED IN OR BY SUCH COURTS. SECTION 1.11 Legal Holidays. In the event that the AUM Milestone Payment Date shall not be a Business Day, then (notwithstanding anyprovision of this CVR Agreement or the Securities to the contrary) payment on the Securities need not be made on such date, but may be made, without theaccrual of any interest thereon, on the next succeeding Business Day with the same force and effect as if made on such Payment Date. SECTION 1.12 Separability Clause. In the event any provision in this CVR Agreement or in the CVRs shall be invalid, illegal or unenforceable,the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.12SECTION 1.13 No Recourse Against Others. No director, officer or employee, as such, of the Company or an Affiliate of the Company or theTrustee shall have any liability for any obligations of the Company or the Trustee under the Securities or this CVR Agreement or for any claim based on, inrespect of or by reason of such obligations or their creation. By accepting a Security each Holder waives and releases all such liability. The waiver and releaseare part of the consideration for the issue of the Securities. SECTION 1.14 Counterparts. This CVR Agreement shall be signed in any number of counterparts with the same effect as if the signatures to eachcounterpart were upon a single instrument, and all such counterparts together shall be deemed an original of this CVR Agreement. SECTION 1.15 Acceptance of Trust. American Stock Transfer & Trust Company, LLC, the Trustee named herein, hereby accepts the trusts inthis CVR Agreement declared and provided, upon the terms and conditions set forth herein. SECTION 1.16 Termination. This CVR Agreement shall terminate and be of no further force or effect, and the parties hereto shall have noliability hereunder, at 11:59 p.m., New York City time, on the Termination Date; provided, that if the AUM Milestone has been achieved prior to theTermination Date, but the AUM Milestone Payment has not been paid on or prior to the Termination Date, this CVR Agreement shall not terminate until suchAUM Milestone Payment has been paid in full in accordance with the terms of the CVR Agreement; provided, further, that the obligations of the Parties to thisCVR Agreement set forth in Articles 1 and 8 and Section 4.7 shall survive termination of this CVR Agreement in accordance with its terms, and the obligationsof the Parties to this CVR Agreement set forth in Sections 7.1 and 7.6 shall survive termination of this CVR Agreement for a period of forty-five (45) BusinessDays following the delivery of the Final AUM Report to the Holders; and provided, further, that no termination of this CVR Agreement shall be deemed toaffect the rights of the parties set forth in Article 8 of this CVR Agreement to bring suit in the case of a Breach occurring prior to such Termination Date. ARTICLE 2SECURITY FORMS SECTION 2.1 Forms Generally. (a) The Securities and the Trustee’s certificate of authentication shall be in the forms set forth in Annex A, attached hereto and incorporatedherein by this reference, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this CVR Agreementand may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with therules of any securities exchange or as may be required by Law or any rule or regulation pursuant thereto, all as may be determined by the officers executingsuch Securities, as evidenced by their execution of the Securities. Any portion of the text of any Security may be set forth on the reverse thereof, with anappropriate reference thereto on the face of the Security.13(b) The definitive Securities shall be typewritten, printed, lithographed or engraved on steel engraved borders or produced by any combinationof these methods or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all asdetermined by the officers executing such Securities, as evidenced by their execution of such Securities. ARTICLE 3THE SECURITIES SECTION 3.1 Title and Payment Terms. (a) The aggregate number of CVRs in respect of which CVR Certificates may be authenticated and delivered under this CVR Agreement islimited to a number equal to 4,902,778, except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, otherSecurities pursuant to Section 3.4, 3.5, 3.6 or 6.6. (b) The Securities shall be known and designated as the “Contingent Value Rights” of the Company. (c) On the AUM Milestone Payment Date, the Company shall pay to the Trustee, by wire transfer to the account designated by the Trustee onthe date hereof, an amount equal to the product of (i) the AUM Milestone Payment due on such AUM Milestone Payment Date multiplied by (ii) the number ofSecurities Outstanding, and the Trustee shall promptly (but in any event within two (2) Business Days) pay to each Holder of record of the Securities as ofthe close of business in New York City, three (3) Business Days prior to such AUM Milestone Payment Date (an “AUM Record Date”) an amount equal to theproduct of (i) such AUM Milestone Payment multiplied by (ii) the number of Securities held by such Holder as of such AUM Record Date. Notwithstandingthe foregoing, in no event shall the Company be required to pay the AUM Milestone Payment with respect to any CVR more than once, and the Company shallnot be required to pay the AUM Milestone Payment if the AUM Milestone occurs after the Termination Date. (d) The Holders of the CVR Certificates, by acceptance thereof, agree that no joint venture, partnership or other fiduciary relationship iscreated hereby or by the Securities. (e) Other than in the case of interest on amounts due and payable after the occurrence of a Breach or with respect to any CVR Shortfall, nointerest or dividends shall accrue on any amounts payable in respect of the CVRs. (f) Except to the extent otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code, the Parties heretoshall determine the portion of any AUM Milestone Payment required to be treated as interest for U.S. federal income tax purposes pursuant to Section 483 ofthe Code and the Treasury Regulations promulgated thereunder. (g) The Holder of any CVR or CVR Certificate is not, and shall not, by virtue thereof, be entitled to any rights of a holder of any VotingSecurities or other equity security or other ownership interest of the Company, in any constituent company to the Merger or in any of such companies’Affiliates or other Subsidiaries, either at Law or in equity, and the rights of the Holders are limited to those contractual rights expressed in this CVRAgreement.14(h) In the event that all of the CVR Certificates not previously cancelled shall have become due and payable pursuant to the terms hereof, alldisputes with respect to amounts payable to the Holders brought pursuant to the terms and conditions of this CVR Agreement have been resolved, and theCompany has paid or caused to be paid or deposited with the Trustee all amounts payable to the Holders under this CVR Agreement, then this CVR Agreementshall cease to be of further effect and shall be deemed satisfied and discharged. Notwithstanding the satisfaction and discharge of this CVR Agreement, theobligations of the Company under Section 4.7(c) shall survive. SECTION 3.2 Registrable Form. The Securities shall be issuable only in registered form. SECTION 3.3 Execution, Authentication, Delivery and Dating. (a) The Securities shall be executed on behalf of the Company by its Chief Executive Officer or any other person duly authorized to act onbehalf of the Company for such purpose or any general purpose, but need not be attested. The signature of any of these persons on the Securities may bemanual or facsimile. (b) Securities bearing the manual or facsimile signatures of individuals who were, at the time of execution, the proper officers of the Companyshall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery ofsuch Securities or did not hold such offices at the date of such Securities. (c) At any time and from time to time after the execution and delivery of this CVR Agreement, the Company may deliver Securities executedby the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities; and the Trustee, inaccordance with such Company Order, shall authenticate and deliver such Securities as provided in this CVR Agreement and not otherwise. (d) Each Security shall be dated the date of its authentication. (e) No Security shall be entitled to any benefit under this CVR Agreement or be valid or obligatory for any purpose unless there appears onsuch Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee, by manual or facsimile signature of anauthorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticatedand delivered hereunder and that the Holder is entitled to the benefits of this CVR Agreement. SECTION 3.4 Temporary Securities. (a) Pending the preparation of definitive Securities, the Company may execute, and upon Company Order, the Trustee shall authenticate anddeliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, substantially of the tenor of the definitiveSecurities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing suchSecurities may determine with the concurrence of the Trustee. Temporary Securities may contain such reference to any provisions of this CVR Agreement asmay be appropriate. Every temporary Security shall be executed by the Company and be authenticated by the Trustee upon the same conditions and insubstantially the same manner, and with like effect, as the definitive Securities.15(b) If temporary Securities are issued, the Company shall cause definitive Securities to be prepared without unreasonable condition or delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securitiesat the office or agency of the Company designated for such purpose pursuant to Section 7.2, without charge to the Holder. Upon surrender for cancellation ofany one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like amount of definitiveSecurities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this CVR Agreement as definitive Securities. SECTION 3.5 Registration, Registration of Transfer and Exchange. (a) The Company shall cause to be kept at the office of the Trustee a register (the register maintained in such office and in any other office oragency designated pursuant to Section 7.2 being herein sometimes referred to as the “Security Register”) in which, subject to such reasonable regulations as itmay prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby initially appointed “SecurityRegistrar” for the purpose of registering Securities and transfers of Securities as herein provided. Notwithstanding anything herein to the contrary, noSecurities shall be transferred on the Security Register following the AUM Record Date. (b) Upon surrender for registration of transfer of any Security at the office or agency of the Company designated pursuant to Section 7.2, theCompany shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new CVRCertificates representing the same aggregate number of CVRs represented by the CVR Certificate so surrendered that are to be transferred and the Companyshall execute and the Trustee shall authenticate and deliver, in the name of the transferor, one or more new CVR Certificates representing the aggregate numberof CVRs represented by such CVR Certificate that are not to be transferred. (c) At the option of the Holder, CVR Certificates may be exchanged for other CVR Certificates that represent in the aggregate the same numberof CVRs as the CVR Certificates surrendered at such office or agency. Whenever any CVR Certificates are so surrendered for exchange, the Company shallexecute, and the Trustee shall authenticate and deliver, the CVR Certificates which the Holder making the exchange is entitled to receive. If the CVRs areissued in book-entry form and any beneficial owner of book-entry CVRs notifies the Company that it requests to take delivery thereof in the form of aphysical CVR Certificate, then upon presentment of such information as the Company shall reasonably request in order to verify the identity of suchbeneficial owner, the Company shall issue and the Trustee shall authenticate, all in accordance with Section 3.3, a CVR Certificate in respect of the beneficialinterest so requested to be delivered, and the Trustee shall cause the number of CVRs in book-entry form to be reduced accordingly in accordance with Section3.9 hereof.16(d) All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencingthe same rights, and entitled to the same benefits under this CVR Agreement, as the Securities surrendered upon such registration of transfer or exchange. (e) Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the SecurityRegistrar) be accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Security Registrar, duly executed by theHolder thereof or his attorney duly authorized in writing. (f) No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sumsufficient to cover any documentary, stamp or similar tax or other similar governmental charge payable in connection with any registration of transfer orexchange of Securities, other than exchanges pursuant to Sections 3.4, 3.6 or 6.6 not involving any transfer. SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities. (a) If (i) any mutilated Security is surrendered to the Trustee, or (ii) the Company and the Trustee receive evidence to their reasonablesatisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company and the Trustee an affidavit of loss in respect of suchSecurity and an indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that suchSecurity has been acquired by a bona fide purchaser, the Company shall execute and, upon delivery of a Company Order, the Trustee shall authenticate anddeliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new CVR Certificate of like tenor and amountof CVRs, bearing a number not contemporaneously outstanding. (b) In case any such mutilated, destroyed, lost or stolen Security has become or is to become finally due and payable within fifteen (15) days,the Company in its discretion may, instead of issuing a new CVR Certificate, pay to the Holder of such Security on the applicable Payment Date, as the casemay be, all amounts due and payable with respect thereto. (c) The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to thereplacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 3.7 Payments with Respect to CVR Certificates. Payment of any amounts pursuant to the CVRs shall be made in such coin orcurrency of the United States of America as at the time is legal tender for the payment of public and private debts. The Company may, at its option, pay suchamounts by wire transfer or check payable in such money. SECTION 3.8 Persons Deemed Owners. Prior to the time of due presentment for registration of transfer, the Company, the Trustee and any agentof the Company or the Trustee may treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receivingpayment on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor anyagent of the Company or the Trustee shall be affected by notice to the contrary.17SECTION 3.9 Cancellation. All Securities surrendered for payment, registration of transfer or exchange shall, if surrendered to any Person otherthan the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company shall promptly deliver to the Trustee for cancellation anySecurities previously authenticated and delivered hereunder which the Company has acquired in any manner whatsoever, and all Securities so delivered shallbe promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section3.9, except as expressly permitted by this CVR Agreement. All cancelled Securities held by the Trustee shall be destroyed and a certificate of destruction shallbe issued by the Trustee to the Company, unless otherwise directed by a Company Order. SECTION 3.10 CUSIP Numbers. The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, theTrustee shall use “CUSIP” numbers in notices as a convenience to Holders; provided, that any such notice may state that no representation is made as to thecorrectness of such numbers either as printed on the Securities or as contained in any notice and that reliance may be placed only on the other identificationnumbers printed on the Securities, and any such notice shall not be affected by any defect in or omission of such numbers. The Company shall promptlynotify the Trustee in writing of any change in the “CUSIP” numbers. ARTICLE 4THE TRUSTEE SECTION 4.1 Certain Duties and Responsibilities. (a) With respect to the Holders, the Trustee, prior to the occurrence of a Breach (as defined in Section 8.1) with respect to the Securities andafter the curing or waiving of all Breaches which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth inthis CVR Agreement and no implied covenants shall be read into this CVR Agreement against the Trustee. In case a Breach with respect to the Securities hasoccurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this CVR Agreement, and use the samedegree of care and skill in their exercise, as a reasonably prudent person would exercise or use under the circumstances in the conduct of his or her ownaffairs. (b) In the absence of bad faith, gross negligence or willful misconduct on its part, prior to the occurrence of a Breach and after the curing orwaiving of all such Breaches which may have occurred, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinionsexpressed therein, upon certificates or opinions furnished to the Trustee which conform to the requirements of this CVR Agreement; but in the case of anysuch certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty toexamine the same to determine whether or not they conform to the requirements of this CVR Agreement.18(c) No provision of this CVR Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own willfulbreach of this Agreement, its own negligent failure to act, or its own willful misconduct, except that (i) this Subsection (c) shall not be construed to limit theeffect of Subsections (a) and (b) of this Section 4.1; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer,unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any actiontaken or omitted to be taken by it in good faith in accordance with the direction of the Holders pursuant to Section 8.9 relating to the time, method and place ofconducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this CVR Agreement. (d) Whether or not therein expressly so provided, every provision of this CVR Agreement relating to the conduct or affecting the liability of oraffording protection to the Trustee shall be subject to the provisions of this Section 4.1. SECTION 4.2 Certain Rights of Trustee. Subject to the provisions of Section 4.1, including, without limitation, the duty of care that the Trusteeis required to exercise upon the occurrence of a Breach: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement,instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper ordocument reasonably believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties hereunder and theTrustee need not investigate any fact or matter stated in the document; (b) any request or direction or order of the Company mentioned herein shall be sufficiently evidenced by a Company Request orCompany Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution and the Trustee shall not be liablefor any action it takes or omits to take in good faith reliance thereon; (c) whenever in the administration of this CVR Agreement the Trustee shall deem it desirable that a matter be proved or establishedprior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absenceof bad faith on its part, rely upon an Officers’ Certificate and the Trustee shall not be liable for any action it takes or omits to take in good faithreliance thereon or an Opinion of Counsel; (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and completeauthorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice orOpinion of Counsel;19(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this CVR Agreement at the request ordirection of any of the Holders pursuant to this CVR Agreement, unless such Holders shall have offered to the Trustee reasonable security orindemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement,instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper ordocument, but the Trustee in its discretion may make such further inquiry or investigation into such facts or matters as it may see fit, and if theTrustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of theCompany, personally or by agent or attorney, as necessary for such inquiry or investigation; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or throughagents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with duecare by it hereunder; (h) the Trustee shall not be liable for any action taken, suffered or omitted to be taken by it in good faith and believed by it to beauthorized or within the discretion or rights or powers conferred upon it by this CVR Agreement; (i) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to beindemnified, are extended to, and shall be enforceable by, the Paying Agent, the Security Registrar, the Trustee in each of its capacities hereunder,and each agent, custodian and other Person employed to act hereunder; (j) in no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever(including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage andregardless of the form of action; and (k) certain of the Trustee’s duties hereunder may be performed by the Paying Agent or Security Registrar. SECTION 4.3 Notice of Breach. If a breach occurs hereunder with respect to the Securities, the Trustee shall give the Holders notice of any suchbreach actually known to it as and to the extent applicable and provided by the Trust Indenture Act; provided, however, that in the case of any breach of thecharacter specified in Section 8.1(b) with respect to the Securities, no notice to Holders shall be given until at least thirty (30) days after the occurrence thereof. For the purpose of this Section 4.3, the term “breach” means any event that is, or after notice or lapse of time or both would become, a Breach with respect tothe Securities.20SECTION 4.4 Not Responsible for Recitals or Issuance of Securities. The Trustee shall not be accountable for the Company’s use of theSecurities. The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of theCompany, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this CVRAgreement or of the Securities. SECTION 4.5 May Hold Securities. The Trustee, any Paying Agent, Security Registrar or any other agent of the Company, in its individual orany other capacity, may become the owner or pledgee of Securities, and, subject to Sections 4.8 and 4.13, may otherwise deal with the Company with the samerights it would have if it were not Trustee, Paying Agent, Security Registrar or such other agent. SECTION 4.6 Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extentrequired by Law. The Trustee shall be under no liability for interest on any money received by it hereunder, except as otherwise agreed by the Trustee inwriting with the Company. SECTION 4.7 Compensation and Reimbursement. The Company agrees: (a) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amount as theCompany and the Trustee shall agree from time to time (which compensation shall not be limited by any provision of Law in regard to thecompensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursementsand advances incurred or made by the Trustee in accordance with any provision of this CVR Agreement (including the reasonable compensation andthe reasonable expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable tothe Trustee’s negligence, bad faith or willful misconduct; and (c) to indemnify the Trustee and each of its agents, officers, directors and employees for, and to hold it harmless against, any loss,liability or expense (including attorneys fees and expenses) incurred without negligence or bad faith or willful misconduct on its part, arising out of orin connection with the acceptance or administration of this trust and the performance of its duties hereunder, including the reasonable costs andexpenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. TheCompany’s payment obligations pursuant to this Section 4.7 shall survive the termination of this CVR Agreement. When the Trustee incursexpenses after the occurrence of a Breach specified in Section 8.1(c) or 8.1(d) with respect to the Company, the expenses are intended to constituteexpenses of administration under bankruptcy Laws. SECTION 4.8 Disqualification; Conflicting Interests. (a) If applicable, to the extent that the Trustee or the Company determines that the Trustee has a conflicting interest within the meaning of theTrust Indenture Act, the Trustee shall immediately notify the Company of such conflict and, within ninety (90) days after ascertaining that it has suchconflicting interest, either eliminate such conflicting interest or resign to the extent and in the manner provided by, and subject to the provisions of, the TrustIndenture Act and this CVR Agreement. The Company shall take prompt steps to have a successor appointed in the manner provided in this CVR Agreement.21(b) In the event the Trustee shall fail to comply with the foregoing Subsection 4.8(a), the Trustee shall, within ten (10) days of the expiration ofsuch ninety (90) day period, transmit a notice of such failure to the Holders in the manner and to the extent provided in the Trust Indenture Act and this CVRAgreement. (c) In the event the Trustee shall fail to comply with the foregoing Subsection 4.8(a) after written request therefor by the Company or anyHolder, any Holder of any Security who has been a bona fide Holder for at least six (6) months may on behalf of himself and all others similarly situated,petition any court of competent jurisdiction for the removal of such Trustee and the appointment of a successor Trustee. SECTION 4.9 Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which satisfies the applicable requirementsof Sections 310(a)(1) and (5) of the Trust Indenture Act and has a combined capital and surplus of at least fifty million dollars ($50,000,000). If suchcorporation publishes reports of condition at least annually, pursuant to Law or to the requirements of a supervising or examining authority, then for thepurposes of this Section 4.9, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in itsmost recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 4.9, it shallresign immediately in the manner and with the effect hereinafter specified in this Article 4. SECTION 4.10 Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article 4 shall become effective untilthe acceptance of appointment by the successor Trustee under Section 4.11. (b) The Trustee, or any trustee or trustees hereafter appointed, may resign at any time by giving written notice thereof to the Company. If aninstrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within thirty (30) days after the giving of such notice ofresignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by a demand in writing by the Holders of at least a majority of the Outstanding CVRs deliveredto the Trustee and to the Company. (d) If at any time: (i) the Trustee shall fail to comply with Section 4.8 after written request therefor by the Company or by any Holder who has been abona fide Holder of a Security for at least six (6) months; or22(ii) the Trustee shall cease to be eligible under Section 4.9 and shall fail to resign after written request therefor by the Company or byany such Holder; or (iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of itsproperty shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose ofrehabilitation, conservation or liquidation, then, in any case, (A) the Company, by a Board Resolution or action of the Chief Executive Officer, may remove the Trustee, or (B) the Holder of anySecurity who has been a bona fide Holder of a Security for at least six (6) months may, on behalf of himself and all others similarly situated, petition anycourt of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, theCompany, by a Board Resolution and/or action of the Chief Executive Officer, shall promptly appoint a successor Trustee. If, within one (1) year after anyremoval by the Holders of at least a majority of the Outstanding CVRs, a successor Trustee shall be appointed by act of the Holders of at least a majority ofthe Outstanding CVRs delivered to the Company and the retiring Trustee the successor Trustee so appointed shall, forthwith upon its acceptance of suchappointment in accordance with Section 4.11, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successorTrustee shall have been so appointed by the Company or the Holders of the Securities and accepted appointment within sixty (60) days after the retiringTrustee tenders its resignation or is removed, the retiring Trustee may, or, the Holder of any Security who has been a bona fide Holder for at least six (6)months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee bymailing written notice of such event by first-class mail, postage prepaid, to the Holders of Securities as their names and addresses appear in the SecurityRegister. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. If the Company fails to send such noticewithin ten (10) days after acceptance of appointment by a successor Trustee, it shall not be a breach hereunder but the successor Trustee shall cause the noticeto be mailed at the expense of the Company. SECTION 4.11 Acceptance of Appointment of Successor. (a) Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee aninstrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee,without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, upon request of theCompany or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successorTrustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and moneyheld by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully andcertainly vesting in and confirming to such successor Trustee all such rights, powers and trusts.23(b) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified andeligible under this Article 4. SECTION 4.12 Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged orconverted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be aparty, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, by sale or otherwise shall be the successor of theTrustee hereunder; provided, such corporation shall be otherwise qualified and eligible under this Article 4, without the execution or filing of any paper or anyfurther act on the part of any of the Parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, anysuccessor by merger, conversion, sale or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities soauthenticated with the same effect as if such successor Trustee had itself authenticated such Securities; and such certificate shall have the full force which it isanywhere in the Securities or in this CVR Agreement provided that the certificate of the Trustee shall have; provided, that the right to adopt the certificate ofauthentication of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. SECTION 4.13 Preferential Collection of Claims Against Company. If and when the Trustee shall be or shall become a creditor, directly orindirectly, secured or unsecured, of the Company (or any other obligor upon the Securities), excluding any creditor relationship set forth in Section 311(b) ofthe Trust Indenture Act, if applicable, the Trustee shall be subject to the applicable provisions of the Trust Indenture Act regarding the collection of claimsagainst the Company (or any such other obligor). ARTICLE 5HOLDERS’ LISTS AND REPORTS BY THE TRUSTEE AND COMPANY SECTION 5.1 Company to Furnish Trustee with Names and Addresses of Holders. The Company shall furnish or cause to be furnished to theTrustee (a) promptly after the issuance of the Securities, and semi-annually thereafter, a list, in such form as the Trustee may reasonably require, of thenames and addresses of the Holders as of a recent date, and (b) at such times as the Trustee may request in writing, within thirty (30) days after receipt by theCompany of any such request, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not morethan fifteen (15) days prior to the time such list is furnished; provided, however, that if and so long as the Trustee shall be the Security Registrar, no such listneed be furnished. SECTION 5.2 Preservation of Information; Communications to Holders.24(a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders contained in themost recent list furnished to the Trustee as provided in Section 5.1 and the names and addresses of Holders received by the Trustee in its capacity as SecurityRegistrar. The Trustee may destroy any list furnished to it as provided in Section 5.1 upon receipt of a new list so furnished. (b) The rights of the Holders to communicate with other Holders with respect to their rights under this CVR Agreement and the correspondingrights and privileges of the Trustee shall be as provided by Section 312(b)(2) of the Trust Indenture Act, if applicable. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor theTrustee shall be deemed to be in violation of Law or held accountable by reason of the disclosure of any such information as to the names and addresses of theHolders made pursuant to the Trust Indenture Act (if applicable) regardless of the source from which such information was derived. SECTION 5.3 Reports by Trustee. (a) Within sixty (60) days after December 31 of each year commencing with the December 31 following the date of this CVR Agreement, theTrustee shall transmit to all Holders such reports concerning the Trustee and its actions under this CVR Agreement as may be required pursuant to the TrustIndenture Act to the extent and in the manner provided pursuant thereto. The Trustee shall also comply with Section 313(b)(2) of the Trust Indenture Act, ifapplicable. The Trustee shall also transmit by mail all reports as required by Section 313(c) of the Trust Indenture Act, if applicable. (b) A copy of each such report shall, at the time of such transmission to the Holders, be filed by the Trustee with each stock exchange, if any,upon which the Securities are listed, with the Commission and also with the Company. The Company shall promptly notify the Trustee if the Securities arelisted on any stock exchange. SECTION 5.4 Reports by Company. The Company shall: (a) file with the Trustee, and, solely with respect to clause (ii) below, mail or cause tobe mailed to each of the Holders at their addresses shown on the Security Register, and solely with respect to clauses (iv) and (v) below, include in a CurrentReport on Form 8-K filed by the Company with the Commission, (i) within fifteen (15) days after the Company files or furnishes the same with theCommission, copies of the annual reports filed on Form 10-K and quarterly reports filed on Form 10-Q and of the information, documents and other reports(or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company isrequired to file with or furnish to the Commission, pursuant to Section 13 or Section 15(d) of the Exchange Act (such annual reports and requiredinformation, documents and other reports, together the “Exchange Act Documents”), (ii) if the Company is not required to file Exchange Act Documents withor to the Commission, within forty-five (45) days after each calendar quarter (other than the last quarter of each calendar year), quarterly financial informationand, within ninety (90) days after each calendar year, annual financial information, in each case calculated in accordance with Accounting Standards appliedconsistently with the application of such standards in either the Company’s prior quarterly earnings reports on Form 10-Q and annual reports on Form 10-K,as applicable, or in the Company’s prior reported financial statements filed or furnished in its home jurisdiction, (iii) copies of any quarterly financialinformation or earnings reports made public by the Company or made available on the Company’s website, within fifteen (15) days after such information orreports are furnished or otherwise made public or available, (iv) within fifty (50) days after the end of each calendar quarter, a statement (the “AUMStatement”) setting forth the Assets Under Management as of the end of such calendar quarter and an assertion by management of the Company as to whetherthe AUM Milestone has occurred during such calendar quarter, and (v) within four (4) Business Days after the occurrence of the AUM Milestone, a noticesetting forth the occurrence of the AUM Milestone, the amount of the payment payable in connection with such AUM Milestone and the AUM MilestonePayment Date; (b) file with the Trustee such additional information, documents and reports with respect to compliance by the Company with the conditionsand covenants of this CVR Agreement as may be required from time to time by the rules and regulations of the Commission; and (c) make available to theHolders on the Company’s website as of an even date with the filing of such materials with the Trustee, the information, documents and reports required to befiled by the Company pursuant to Subsections (a) or (b) of this Section 5.4 or pursuant to Section 7.9.25ARTICLE 6 AMENDMENTS SECTION 6.1 Amendments without Consent of Holders. Without the consent of any Holders, the Company and the Trustee, at any time andfrom time to time, may enter into one or more amendments hereto or to the Securities, for any of the following purposes: (a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Securities any property or assets; (b) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of theCompany herein and in the Securities; (c) to add to the covenants of the Company such further covenants, restrictions, conditions or provisions as the Board of Directorsand/or the Chief Executive Officer of the Company and the Trustee shall consider to be and shall be for the protection of the Holders of Securities; (d) to cure any ambiguity, or to correct or supplement any provision herein or in the Securities which may be defective or inconsistentwith any other provision herein; provided, that such amendment shall not adversely affect the interests of the Holders; (e) to make any amendments or changes necessary to comply or maintain compliance with the Trust Indenture Act, if applicable; or (f) to make any change that does not adversely affect the interests of the Holders.26Promptly following any amendment of this CVR Agreement or the Securities in accordance with this Section 6.1, the Trustee shall notify the Holdersof the Securities of such amendment; provided that any failure so to notify the Holders shall not affect the validity of such amendment. SECTION 6.2 Amendments with Consent of Holders. With the consent of the Holders of at least a majority of the Outstanding CVRs, by Act ofsaid Holders delivered to the Company and the Trustee (including, without limitation, consents obtained in connection with a purchase of, or tender offer orexchange offer for, the Securities), the Company and the Trustee may enter into one or more amendments hereto or to the Securities for the purpose of addingany provisions to or changing in any manner or eliminating any of the provisions of this CVR Agreement or to the Securities or of modifying in any mannerthe rights of the Holders under this CVR Agreement or to the Securities; provided, however, that no such amendment shall, without the consent of the Holderof each Outstanding Security affected thereby: (a) modify in a manner adverse to the Holders (i) any provision contained herein with respect to the termination of this CVR Agreementor the Securities, (ii) the time for payment and amount of the AUM Milestone Payment, or otherwise extend the time for payment of the Securities orreduce the amounts payable in respect of the Securities or modify any other payment term or payment date; (b) reduce the number of CVRs, the consent of whose Holders is required for any such amendment; or (c) modify any of the provisions of this Section 6.2, except to increase the percentage of Holders from whom consent is required or toprovide that certain other provisions of this CVR Agreement cannot be modified or waived without the consent of the Holder of each Security affectedthereby. SECTION 6.3 Execution of Amendments. In executing any amendment permitted by this Article 6, the Trustee (subject to Section 4.1) shall befully protected in relying upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this CVR Agreement. TheTrustee shall execute any amendment authorized pursuant to this Article 6 if the amendment does not adversely affect the Trustee’s own rights, duties orimmunities under this CVR Agreement or otherwise. Otherwise, the Trustee may, but need not, execute such amendment. SECTION 6.4 Effect of Amendments; Notice to Holders. (a) Upon the execution of any amendment under this Article 6, this CVR Agreement and the Securities shall be modified in accordancetherewith, and such amendment shall form a part of this CVR Agreement and the Securities for all purposes; and every Holder of Securities theretofore orthereafter authenticated and delivered hereunder shall be bound thereby. (b) Promptly after the execution by the Company and the Trustee of any amendment pursuant to the provisions of this Article 6, the Companyshall mail a notice thereof by first-class mail to the Holders of Securities at their addresses as they shall appear on the Security Register, setting forth in generalterms the substance of such amendment. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair oraffect the validity of any such amendment.27SECTION 6.5 Conformity with Trust Indenture Act. Every amendment executed pursuant to this Article 6 shall conform to the applicablerequirements of the Trust Indenture Act, if any. SECTION 6.6 Reference in Securities to Amendments. If an amendment changes the terms of a Security, the Trustee may require the Holder ofthe Security to deliver it to the Trustee. Securities authenticated and delivered after the execution of any amendment pursuant to this Article 6 may, and shall ifrequired by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such amendment. If the Company shall sodetermine, new Securities so modified as to conform, in the opinion of the Trustee on the one hand and the Board of Directors and/or the Chief ExecutiveOfficer on the other hand, to any such amendment may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchangefor Outstanding Securities. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment. ARTICLE 7 COVENANTS SECTION 7.1 Payment of Amounts, if any, to Holders. The Company and, upon receipt of such amounts from the Company, the Trustee andthe Paying Agent, as applicable, shall duly and punctually pay the amounts, if any, on the Securities in accordance with the terms of the Securities and thisCVR Agreement. Such amounts shall be considered paid on the AUM Milestone Payment Date if on such date the Trustee or the Paying Agent (if the PayingAgent is a Person other than the Company or an Affiliate (other than AXA) of the Company), as applicable, holds in accordance with this CVR Agreementmoney sufficient to pay all such amounts then due. Notwithstanding any other provision of this CVR Agreement, the Company or any of its Affiliates(including WPS, as applicable), the Trustee or the Paying Agent, shall be entitled to deduct and withhold, or cause to be deducted and withheld, from anyamounts payable or otherwise deliverable pursuant to this CVR Agreement to any Holder such amounts as are required to be deducted and withheld therefromunder the United States Internal Revenue Code of 1986, as amended, or the Treasury Regulations thereunder or any other Tax Law. Amounts withheld incompliance with such withholding requirements shall, for purposes of this CVR Agreement, be treated as paid to the Holder with respect to which suchwithholding was made. The consent of a Holder shall not be required for any such withholding. SECTION 7.2 Maintenance of Office or Agency. (a) As long as any of the Securities remain Outstanding, the Company shall maintain in the Borough of Manhattan, The City of New Yorkan office or agency (i) where Securities may be presented or surrendered for payment, (ii) where Securities may be surrendered for registration of transfer orexchange and (iii) where notices and demands to or upon the Company in respect of the Securities and this CVR Agreement may be served. The office oragency of the Trustee at 6201 15th Avenue, Brooklyn, New York 11219 shall be such office or agency of the Company, unless the Company shall designateand maintain some other office or agency for one or more of such purposes. The Company or any of its Subsidiaries may act as Paying Agent, registrar ortransfer agent; provided, that such Person shall take appropriate actions to avoid the commingling of funds. The Company shall give prompt written notice tothe Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to furnish the Trustee with the address thereof,such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appointsthe Trustee as its agent to receive all such presentations, surrenders, notices and demands.28(b) The Company may from time to time designate one or more other offices or agencies (in or outside of The City of New York) where theSecurities may be presented or surrendered for any or all such purposes, and may from time to time rescind such designation; provided, however, that nosuch designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, TheCity of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and any change inthe location of any such office or agency. SECTION 7.3 Money for Security Payments to Be Held in Trust. (a) If the Company or any of its Affiliates (other than AXA) shall at any time act as the Paying Agent, it shall, on or before the AUMMilestone Payment Date, segregate and hold in trust for the benefit of the Holders all sums held by such Paying Agent for payment on the Securities until suchsums shall be paid to the Holders as herein provided, and shall promptly notify the Trustee of any failure of the Company to make payment on the Securities. (b) Whenever the Company shall have one or more Paying Agents for the Securities, it shall, on or before the AUM Milestone Payment Datedeposit with a Paying Agent a sum in same day funds sufficient to pay the amount, if any, so becoming due; such sum to be held in trust for the benefit of thePersons entitled to such amount, and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of such action or any failureso to act. (c) The Company shall cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which suchPaying Agent shall agree with the Trustee, subject to the provisions of this Section 7.3, that (i) such Paying Agent shall hold all sums held by it for thepayment of any amount payable on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwisedisposed of as herein provided and shall notify the Trustee of the sums so held and (ii) that it shall give the Trustee notice of any failure by the Company (orby any other obligor on the Securities) to make any payment on the Securities when the same shall be due and payable. (d) Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment on any Security andremaining unclaimed for one (1) year after the Payment Date shall be paid to the Company on Company Request, or (if then held by the Company) shall bedischarged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof,and all liability of the Trustee or such Paying Agent with respect to such trust money shall thereupon cease.29SECTION 7.4 Certain Purchases and Sales. Nothing contained herein shall prohibit the Company or any of its Subsidiaries from acquiring inopen market transactions, private transactions or otherwise, any Securities. SECTION 7.5 Books and Records. The Company shall keep, and shall cause its Subsidiaries to keep, true, complete and accurate records insufficient detail to enable the amounts payable under this CVR Agreement to be determined by the Holders and their consultants or professional advisors. SECTION 7.6 AUM Review Procedures. (a) Until the AUM Milestone Payment has been paid, prior to February 9 of each year during the term of this Agreement, the Company shallprovide an independent certified public accounting firm of nationally recognized standing selected by the Board of Directors (the “Independent Accountant”)with access during normal business hours to such of the records of the Company as may be reasonably necessary to verify (i) the accuracy of the statementsset forth in the AUM Statements for the immediately preceding calendar year and the figures underlying the calculations set forth therein and (ii) the accuracyof management’s assertion as to whether the AUM Milestone had been achieved at any time during the immediately preceding calendar year. The fees chargedby such accounting firm shall be paid by the Company. The Company shall cause the Independent Accountant to disclose in writing to the Trustee withinninety (90) days after the applicable calendar year end that it has verified the accuracy of management’s assertion as to whether the AUM Milestone has beenachieved at any time during the preceding calendar year or concluded that such assertion is incorrect (such disclosure, the “Annual AUM Report”). If theAUM Milestone Payment has not been paid prior to the three year anniversary of the Effective Time, then no later than ten (10) Business Days after the threeyear anniversary of the Effective Time, the Company shall provide the Independent Accountant with access during normal business hours to such of therecords of the Company as may be reasonably necessary to verify (i) the accuracy of the statements set forth in the AUM Statements and the figuresunderlying the calculations set forth therein and (ii) the accuracy of management’s assertion as to whether the AUM Milestone had been achieved at any timeduring the period following the year with respect to the most recently delivered Annual AUM Report until and including the three year anniversary of theEffective Time. The Company shall cause the Independent Accountant to disclose in writing to the Trustee no later than ninety (90) days after the three yearanniversary of the Effective Time whether management has determined that the AUM Milestone had been achieved at any time during the period covered bysuch report and that it has verified the accuracy of management’s assertion as to whether the AUM Milestone has been achieved at any time during theapplicable period or concluded that such assertion is incorrect (such disclosure, the “Final AUM Report”). The Independent Accountant shall provide theCompany with a copy of all disclosures made to the Trustee. Following receipt of any such disclosures, the Company shall file such disclosures with theTrustee, and shall promptly mail a copy of any such Annual AUM Report or Final AUM Report, as applicable, to all Holders.30(b) If the AUM Milestone Payment should have been paid but was not paid when due, the Company shall pay each Holder of a CVR theAUM Milestone Payment plus interest thereon at the Shortfall Interest Rate from the date the AUM Milestone Payment Date should have occurred (if theCompany had given notice of achievement of such AUM Milestone pursuant Section 5.4(a)(v) of this CVR Agreement) to the date of actual payment (suchamount including interest being the “CVR Shortfall”). The Company shall pay the CVR Shortfall to the CVR Holders of record as of a date that is three (3)Business Days prior to the AUM Milestone Payment Date selected by the Company, which such date must be within twenty (20) Business Days after the datethat the Annual AUM Report or Final AUM Report, as applicable, showing that the AUM Milestone had been achieved at any time during the period coveredthereby was delivered to the Holders. (c) No CVR Holder shall have any right to inspect the books and records of the Company or its Affiliates by virtue of such CVR Holder’sinterest in a CVR or under this CVR Agreement, except (i) indirectly as provided in Section 7.6(a) above or as may be required by applicable law or (ii) solelywith respect to the Security Register, for the purposes of seeking to obtain any Act of the Holders hereunder. SECTION 7.7 Restrictive Covenants. So long as any of the Securities remain Outstanding, subject to Article 9, the Company shall notvoluntarily liquidate, dissolve or wind-up. SECTION 7.8 Milestone. The Company shall use, and shall cause its Subsidiaries (including the WPS Group) to use, Diligent Efforts toachieve the AUM Milestone. Without limitation of the foregoing, the Company shall, and shall cause its Subsidiaries to, cause the WPS Group to (i) beoperated as a distinct investment team and (ii) use commercially reasonable efforts to operate in compliance with Law in all material respects. The Companyshall use Diligent Efforts to maintain a running calculation of Assets Under Management such that it can promptly determine whether the AUM Milestone hasbeen met. In furtherance of the foregoing, the Company agrees to operate the business of WPS following the Merger in accordance with the followingrequirements (the obligations set forth in subsections (a)-(d) below, the “Specified Conduct”): (a) The Company agrees that neither it nor any of its Subsidiaries shall offer any investment product with substantially the sameinvestment strategy as the investment strategy of WPS immediately prior to the Merger in the same geographic markets as such comparable WPSinvestment product is marketed (a “Competing Product”), unless the WPS Group does not otherwise have sufficient investment capacity to offersuch Competing Product; provided, however, that the foregoing shall not (x) prevent the Company or any of its Affiliates from acquiring any otherPerson or business that manages or distributes any Competing Products as part of an acquisition where the Competing Products were not the primaryfocus of the acquisition, or from operating the business of such Person thereafter in a manner materially consistent with the past practice of suchacquired business or (y) apply in respect of any third party (together with its pre-acquisition Subsidiaries) that manages or distributes CompetingProducts that acquires the Company or any of its Affiliates (whether through a merger, consolidation, tender or exchange offer, sale of all orsubstantially all assets or otherwise).31(b) The Company shall provide or cause to be provided to the investment professionals comprising the WPS Group, with marketingand distribution support that, in the aggregate, is no less favorable to the WPS Group than is generally made available to similarly situated financialproducts and services of the Company or its Subsidiaries (other than WPS Group), as applicable; (c) The Company shall not, directly or indirectly, materially amend, change, revise or alter the WPS Group’s investment strategy aswas in effect immediately prior to the Effective Time without the prior written consent of the lead investment managers of the WPS Group, whichconsent shall not be unreasonably withheld, conditioned or delayed; and (d) The Company and its Subsidiaries shall devote such financial and other resources for product development by the WPS Group asare devoted to similarly situated Subsidiaries and investment teams of the Company and its Subsidiaries. SECTION 7.9 Notice of Breach. The Company shall file with the Trustee written notice of the occurrence of any Breach or other breach underthis CVR Agreement within five (5) Business Days of its becoming aware of any such Breach or other breach. SECTION 7.10 Non-Use of Name. Neither the Trustee nor the Holders (solely in their capacities as such) shall use the name, trademark, tradename or logo of the Company, its Affiliates, or their respective employees in any publicity or news release relating to this CVR Agreement or its subject matter,without the prior express written permission of the Company, other than (in the case of the name of the Company, its Affiliates, or their respective employeesonly) with respect to a dispute pursuant to this CVR Agreement between any of the Holders, the Trustee, the Company or its Affiliates. SECTION 7.11 Mid-Month Measurement. If, at any calendar month-end prior to the Termination Date, Assets Under Management exceeds$4,500,000,000 (such day, a “Month-End Triggering Date”), the Company shall, within five (5) Business Days, indicate such fact in a Current Report onForm 8-K filed by the Company with the Commission. Upon the occurrence of any Month-End Triggering Date, the Holders shall then have the right, uponthe Act of the Holders of not less than twenty-five percent (25%) of the Outstanding Securities, and upon fifteen (15) days’ notice to the Company, to requirethe Company to determine the amount of Assets Under Management as of the close of business on the fifteenth (15th) day of any calendar month after theMonth-End Triggering Date (any such day, a “Mid-Month Measuring Date”); provided, however, that the Holders may only exercise such right up to six (6)times in any calendar year. ARTICLE 8REMEDIES OF THE TRUSTEE AND HOLDERS IN THE EVENT OF BREACH SECTION 8.1 Breach Defined; Waiver of Breach. “Breach” with respect to the Securities, means each one of the following events which shallhave occurred and be continuing (whatever the reason for such Breach and whether it shall be voluntary or involuntary or be effected by operation of Law orpursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):32(a) failure to pay all or any part of the AUM Milestone Payment after a period of three (3) Business Days after such AUM MilestonePayment shall become due and payable on the AUM Milestone Payment Date or otherwise; or (b) material breach in the performance, or breach in any material respect, of any covenant or warranty of the Company in respect ofthe Securities (other than a covenant or warranty in respect of the Securities, a breach in whose performance or other breach is elsewhere in thisSection 8.1 specifically dealt with), and continuance of such breach for a period of ninety (90) days after there has been given, by registered orcertified mail, to the Company by the Trustee or to the Company and the Trustee by the Acting Holders, a written notice specifying such breach andrequiring it to be remedied and stating that such notice is a “Notice of Breach” hereunder; or (c) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company in an involuntary caseunder any applicable bankruptcy, insolvency or other similar Law now or hereafter in effect, or appointing a receiver, liquidator, assignee,custodian, trustee or sequestrator (or similar official) of the Company or for any substantial part of its property or ordering the winding up orliquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of ninety (90) consecutive days; or (d) the Company shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar Law now or hereafterin effect, or consent to the entry of an order for relief in an involuntary case under any such Law, or consent to the appointment of or takingpossession by a receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Company or for any substantial part of itsproperty, or make any general assignment for the benefit of creditors. Except where authorization and/or appearance of each of the Holders is required by applicable Law, if a Breach described above occurs and iscontinuing, then either the Trustee by notice in writing to the Company, or the Trustee upon the written request of the Acting Holders by notice in writing to theCompany and to the Trustee, shall bring suit to protect the rights of the Holders, including to obtain payment for any amounts then due and payable, whichamounts shall bear interest at the Breach Interest Rate from the date such amounts were due and payable until payment is made to the Trustee. The foregoing provisions, however, are subject to the condition that if, at any time after the Trustee shall have begun such suit, and before anyjudgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit withthe Trustee a sum sufficient to pay all amounts which shall have become due and payable (with interest upon such overdue amount at the Breach Interest Rateto the date of such payment or deposit) and such amount as shall be sufficient to cover reasonable compensation to the Trustee, its external agents andcounsel, and all other reasonable expenses of the Trustee, and if any and all Breaches under this CVR Agreement shall have been cured, waived or otherwiseremedied as provided herein, then and in every such case Holders of at least a majority of the Outstanding CVRs, by Act of said Holders delivered to theCompany and the Trustee, may waive all breaches with respect to the Securities, but no such waiver or rescission and annulment shall extend to or shallaffect any subsequent breach or shall impair any right consequent thereof.33SECTION 8.2 Collection by the Trustee; the Trustee May Prove Payment Obligations. The Company covenants that in the case of any failure topay all or any part of the Securities when the same shall have become due and payable, then upon demand of the Trustee, the Company shall pay to theTrustee for the benefit of the Holders of the Securities the whole amount that then shall have become due and payable on all Securities (with interest from thedate due and payable to the date of such payment upon the overdue amount at the Breach Interest Rate); and in addition thereto, such further amount as shallbe sufficient to cover the reasonable costs and expenses of collection, including reasonable compensation to the Trustee and the reasonable fees and expenses ofits agents and counsel, except as a result of its negligence, bad faith or willful misconduct. The Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings asthe Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this CVRAgreement or in aid of the exercise of any power granted herein, or to enforce any other remedy. In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust,shall be entitled and empowered to institute any action or proceedings at Law or in equity for the collection of the sums so due and unpaid, and may prosecuteany such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Company or other obligor uponsuch Securities and collect in the manner provided by Law out of the property of the Company or other obligor upon such Securities, wherever situated, themoneys adjudged or decreed to be payable. In any judicial proceedings relative to the Company or other obligor upon the Securities, irrespective of whether any amount is then due and payablewith respect to the Securities, the Trustee is authorized: (a) to file and prove a claim or claims for the whole amount owing and unpaid in respect of the Securities, and to file such other papersor documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to theTrustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilitiesincurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence, bad faith or willful misconduct) andof the Holders allowed in any judicial proceedings relative to the Company or other obligor upon the Securities, or to their respective property;34(b) unless prohibited by and only to the extent required by applicable Law, to vote on behalf of the Holders in any election of a trusteeor a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similarfunctions in comparable proceedings; and (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amountsreceived with respect to the claims of the Holders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or othersimilar official is hereby authorized by each of the Holders to make payments to the Trustee, and, in the event that the Trustee shall consent to themaking of payments directly to the Holders, to pay to the Trustee such amounts as shall be sufficient to cover the reasonable costs and expenses ofcollection, including reasonable compensation to the Trustee and the reasonable fees and expenses of its agents and counsel, except as a result of itsnegligence, bad faith or willful misconduct, and all other amounts due to the Trustee pursuant to Section 4.7. To the extent that such payment ofreasonable compensation, expenses, disbursements, advances and other amounts out of the estate in any such proceedings shall be denied for anyreason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, moneys, securities andother property which the Holders may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization orsafeguard arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holder anyplan of reorganization, safeguard arrangement, adjustment or composition affecting the Securities, or the rights of any Holder thereof, or to authorize theTrustee to vote in respect of the claim of any Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similarperson. All rights of action and of asserting claims under this CVR Agreement, or under any of the Securities, may be enforced by the Trustee without thepossession of any of the Securities or the production thereof and any trial or other proceedings instituted by the Trustee shall be brought in its own name astrustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, eachpredecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders. In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this CVR Agreement to whichthe Trustee shall be a party) the Trustee shall be held to represent all the Holders, and it shall not be necessary to make any Holders of such Securities partiesto any such proceedings (unless required by applicable Law). SECTION 8.3 Application of Proceeds. Any monies collected by the Trustee pursuant to this Article 8 in respect of any Securities shall beapplied in the following order at the date or dates fixed by the Trustee upon presentation of the several Securities in respect of which monies have been collectedand stamping (or otherwise noting) thereon the payment in exchange for the presented Securities if only partially paid or upon surrender thereof if fully paid:35FIRST: To the payment of reasonable costs and expenses in respect of which monies have been collected, including to cover the reasonablecosts and expenses of collection, including reasonable compensation to the Trustee and the reasonable fees and expenses of its agents and counsel,except as a result of its negligence, bad faith or willful misconduct, and all other amounts due to the Trustee or any predecessor Trustee pursuant toSection 4.7; SECOND: To the payment of the whole amount then owing and unpaid upon all the Securities, with interest at the Breach Interest Rate onall such amounts, and in case such monies shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities, then to thepayment of such amounts without preference or priority of any security over any other Security, ratably to the aggregate of such amounts due andpayable; and THIRD: To the payment of the remainder, if any, to the Company. SECTION 8.4 Suits for Enforcement. In case a Breach has occurred, has not been waived and is continuing, the Trustee may in its discretion,and upon the Act of the Holders of not less than twenty-five percent (25%) of the Outstanding Securities and together with an offer to the Trustee of reasonableindemnity against the costs, expenses and liabilities to be incurred therein or thereby shall, proceed to protect and enforce the rights vested in it by this CVRAgreement by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights (unless authorizationand/or appearance of each of the Holders is required by applicable Law), either at Law or in equity or in bankruptcy or otherwise, whether for the specificenforcement of any covenant or agreement contained in this CVR Agreement or in aid of the exercise of any power granted in this CVR Agreement or to enforceany other legal or equitable right vested in the Trustee by this CVR Agreement or by Law. SECTION 8.5 Restoration of Rights on Abandonment of Proceedings. In case the Trustee or any Holder shall have proceeded to enforce any rightunder this CVR Agreement and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to theTrustee or to such Holder, then and in every such case the Company and the Trustee and the Holders shall be restored respectively to their former positionsand rights hereunder, and all rights, remedies and powers of the Company, the Trustee and the Holders shall continue as though no such proceedings hadbeen taken. SECTION 8.6 Limitations on Suits by Holders. Subject to the right of the Acting Holders under Section 7.6 and the rights of the Holders underSection 8.7, no Holder of any Security shall have any right by virtue or by availing of any provision of this CVR Agreement to institute any action orproceeding at Law or in equity or in bankruptcy or otherwise upon or under or with respect to this CVR Agreement, or for the appointment of a trustee,receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such Holder previously shall have given to the Trusteewritten notice of breach and of the continuance thereof, as hereinbefore provided, and unless also the Holders of not less than twenty-five percent (25%) of theOutstanding Securities shall have made written request upon the Trustee to institute such action or proceedings in its own name as trustee hereunder and shallhave offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and theTrustee for fifteen (15) days after its receipt of such notice and request shall have failed to institute any such action or proceeding and no direction inconsistentwith such written request shall have been given to the Trustee pursuant to Section 8.9; it being understood and intended, and being expressly covenanted bythe taker and Holder of every Security with every other taker and Holder and the Trustee, that no one or more Holders of Securities shall have any right in anymanner whatever by virtue or by availing of any provision of this CVR Agreement to effect, disturb or prejudice the rights of any other such Holder ofSecurities, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this CVR Agreement, except in themanner herein provided and for the equal, ratable and common benefit of all Holders of Securities. For the protection and enforcement of the provisions of thisSection 8.6, each and every Holder and the Trustee shall be entitled to such relief as can be given either at Law or in equity.36SECTION 8.7 Unconditional Right of Holders to Institute Certain Suits. Notwithstanding any other provision in this CVR Agreement and anyprovision of any Security, the right of any Holder of any Security to receive payment of the amounts payable in respect of such Security on or after therespective due dates expressed in such Security, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not beimpaired or affected without the consent of such Holder. SECTION 8.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Breach. (a) Except as provided in Section 8.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to beexclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by Law, be cumulative and in addition to every other right andremedy given hereunder or now or hereafter existing at Law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, orotherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. (b) No delay or omission of the Trustee or of any Holder to exercise any right or power accruing upon any Breach occurring and continuing asaforesaid shall impair any such right or power or shall be construed to be a waiver of any such Breach or an acquiescence therein; and, subject to Section 8.6,every power and remedy given by this CVR Agreement or by Law to the Trustee or to the Holders may be exercised from time to time, and as often as shall bedeemed expedient, by the Trustee or by the Holders. SECTION 8.9 Control by Holders. (a) The Holders of at least a majority of the Outstanding CVRs shall have the right to direct the time, method and place of conducting anyproceeding for any remedy available to the Trustee, or exercising any power conferred on the Trustee with respect to the Securities by this CVR Agreement;provided that such direction shall not be otherwise than in accordance with Law and the provisions of this CVR Agreement; and provided, further, that(subject to the provisions of Section 4.1) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shalldetermine that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, the executive committee,or a committee of directors or Responsible Officers of the Trustee shall determine that the action or proceedings so directed would involve the Trustee inpersonal liability or if the Trustee in good faith shall so determine that the actions or forbearances specified in or pursuant to such direction would be undulyprejudicial to the interests of Holders of the Securities not joining in the giving of said direction.37(b) Nothing in this CVR Agreement shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee andwhich is not inconsistent with such direction or directions by Holders. SECTION 8.10 Waiver of Past Breaches. (a) In the case of a breach or a Breach specified in clause (b), (c) or (d) of Section 8.1, the Holders of at least a majority of the OutstandingCVRs may waive any such Breach, and its consequences except a breach in respect of a covenant or provision hereof which cannot be modified or amendedwithout the consent of the Holder of each Security affected. In the case of any such waiver, the Company, the Trustee and the Holders of the Securities shallbe restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other breach or impair any rightconsequent thereon. (b) Upon any such waiver, such breach shall cease to exist and be deemed to have been cured and not to have occurred, and any Breacharising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this CVR Agreement; but no such waiver shall extend toany subsequent or other Breach or other breach of any kind or impair any right consequent thereon. SECTION 8.11 Trustee to Give Notice of Breach, But May Withhold in Certain Circumstances. The Trustee shall transmit to the Holders, as thenames and addresses of such Holders appear on the Security Register (as provided under Section 313(c) of the Trust Indenture Act, if applicable), notice bymail of all breaches which have occurred and are known to the Trustee, such notice to be transmitted within ninety (90) days after the occurrence thereof,unless such breaches shall have been cured before the giving of such notice (the term “breach” for the purposes of this Section 8.11 being hereby defined tomean any event or condition which is, or with notice or lapse of time or both would become, a Breach); provided, that, except in the case of a failure to pay theamounts payable in respect of any of the Securities, the Trustee shall be protected in withholding such notice if and so long as the board of directors, theexecutive committee, or a trust committee of directors or trustees and/or Responsible Officers of the Trustee in good faith determines that the withholding ofsuch notice is in the interests of the Holders. SECTION 8.12 Right of Court to Require Filing of Undertaking to Pay Costs. All Parties to this CVR Agreement agree, and each Holder of anySecurity by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right orremedy under this CVR Agreement or in any suit against the Trustee for any action taken, suffered or omitted by it as the Trustee, the filing by any partylitigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including attorneys’fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but theprovisions of this Section 8.12 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder or group of Holders holding in theaggregate more than ten percent (10%) of the Securities Outstanding or to any suit instituted by any Holder for the enforcement of the payment of any Securityon or after the due date expressed in such Security.38ARTICLE 9CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1 Company May Consolidate, etc., on Certain Terms. The Company covenants that it shall not merge or consolidate with or intoany other Person (other than a wholly-owned subsidiary of the Company), or sell or convey all or substantially all of its assets to any Person, unless (a) theCompany shall be the continuing Person, or the successor Person or the Person which acquires by sale or conveyance all or substantially all the assets of theCompany (or its ultimate parent company) shall expressly assume by an instrument supplemental hereto, executed and delivered to the Trustee, in formreasonably satisfactory to the Trustee, the due and punctual payment of the Securities, according to their tenor, and the due and punctual performance andobservance of all of the covenants and conditions of this CVR Agreement to be performed or observed by the Company and (b) the Company, or suchsuccessor Person, as the case may be, shall not, immediately after such merger or consolidation, or such sale or conveyance, be in breach in the performanceof any such covenant or condition. SECTION 9.2 Successor Person Substituted. (a) In case of any such consolidation, merger, sale or conveyance, and following such an assumption by the successor Person, suchsuccessor Person shall succeed to and be substituted for the Company with the same effect as if it had been named herein. Such successor Person may causeto be signed, and may issue either in its own name or in the name of the Company prior to such succession any or all of the Securities issuable hereunderwhich theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor corporation instead of theCompany and subject to all the terms, conditions and limitations in this CVR Agreement prescribed, the Trustee shall authenticate and shall deliver anySecurities which previously shall have been signed and delivered to the Trustee for authentication, and any Securities which such successor corporationthereafter shall cause to be signed and delivered to the Trustee for that purpose. All of the Securities so issued shall in all respects have the same legal rankand benefit under this CVR Agreement as the Securities theretofore or thereafter issued in accordance with the terms of this CVR Agreement as though all ofsuch Securities had been issued at the date of the execution hereof. (b) In case of any such consolidation, merger, sale or conveyance, such changes in phraseology and form (but not in substance) may be madein the Securities thereafter to be issued as may be appropriate. The successor entity to such consolidation, merger, sale or conveyance may satisfy theobligations of Section 5.4(a)(i) and (ii) of this CVR Agreement by providing copies of such successor entity’s Exchange Act Documents in the case of Section5.4(a)(i) or such successor entity’s financial information in the case of Section 5.4(a)(ii).39(c) In the event of any such sale, transfer or conveyance (other than a conveyance by way of lease) the Company or any Person which shalltheretofore have become such in the manner described in this Article 9 shall be discharged from all obligations and covenants under this CVR Agreement andthe Securities and may be liquidated and dissolved. SECTION 9.3 Opinion of Counsel to Trustee. The Trustee, subject to the provisions of Sections 4.1 and 4.2, shall receive an Officer’sCertificate and Opinion of Counsel, prepared in accordance with Sections 1.2 and 1.3, as conclusive evidence that any such consolidation, merger, sale orconveyance, and any such assumption, and any such liquidation or dissolution, complies with the applicable provisions of this CVR Agreement, and if asupplemental agreement is required in connection with such transaction, such supplemental agreement complies with this Article 9 and that there has beencompliance with all conditions precedent herein provided for or relating to such transaction. SECTION 9.4 Successors. All covenants, provisions and agreements in this CVR Agreement by or for the benefit of the Company, the Trusteeor the Holders shall bind and inure to the benefit of their respective successors, assigns, heirs and personal representatives, whether so expressed or not. TheCompany may assign this CVR Agreement without the prior written consent of the other Parties to this CVR Agreement to one or more of its direct or indirectSubsidiaries; provided, however, that in the event of any such assignment the Company shall remain subject to its obligations and covenants hereunder.40IN WITNESS WHEREOF, the Parties hereto have caused this CVR Agreement to be duly executed, all as of the day and year first above written. ALLIANCEBERNSTEIN L.P. By:/s/ Laurence E. Cranch Name: Laurence E. Cranch Title: General Counsel AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, as the Trustee By:/s/ Michael A. Nespoli Name: Michael A. Nespoli Title: Executive Director41ANNEX A ALLIANCEBERNSTEIN L.P. No.Certificate forContingent Value RightsThis certifies that , or registered assigns (the “Holder”), is the registered holder of the number of Contingent Value Rights (“CVRs”or “Securities”) set forth above. Each CVR entitles the Holder, subject to the provisions contained herein and in the CVR Agreement referred to on the reversehereof, to payments from AllianceBernstein L.P., a Delaware limited partnership (the “Company”), in the amounts and in the forms determined pursuant tothe provisions set forth on the reverse hereof and as more fully described in the CVR Agreement referred to on the reverse hereof. Such payments shall be madeon the AUM Milestone Payment Date, as defined in the CVR Agreement referred to on the reverse hereof. Payment of any amounts pursuant to this CVR Certificate shall be made only to the registered Holder (as defined in the CVR Agreement) of this CVRCertificate. Such payment shall be made in the Borough of Manhattan, The City of New York, or at any other office or agency maintained by the Companyfor such purpose, in such coin or currency of the United States of America as at the time is legal tender for the payment of public and private debts; provided,however, the Company may pay such amounts by wire transfer or check payable in such money. American Stock Transfer & Trust Company, LLC hasbeen initially appointed as Paying Agent at its office or agency in the Borough of Manhattan, The City of New York. Reference is hereby made to the further provisions of this CVR Certificate set forth on the reverse hereof, which further provisions shall for allpurposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been duly executed by the Trustee referred to on the reverse hereof by manual signature, this CVRCertificate shall not be entitled to any benefit under the CVR Agreement, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. ALLIANCEBERNSTEIN L.P. By: Name: Title:Dated: Attest: Authorized SignatureA-1[Form of Reverse of CVR Certificate] 1. This CVR Certificate is issued under and in accordance with the Contingent Value Rights Agreement, dated as of December 12, 2013 (the“CVR Agreement”), between the Company and American Stock Transfer & Trust Company, LLC, a New York limited liability trust company, as trustee(the “Trustee,” which term includes any successor Trustee under the CVR Agreement), and is subject to the terms and provisions contained in the CVRAgreement, to all of which terms and provisions the Holder of this CVR Certificate consents by acceptance hereof. The CVR Agreement is hereby incorporatedherein by reference and made a part hereof. Reference is hereby made to the CVR Agreement for a full statement of the respective rights, limitations of rights,duties, obligations and immunities thereunder of the Company, the Trustee and the Holders of the CVRs. All capitalized terms used in this CVR Certificatewithout definition shall have the respective meanings ascribed to them in the CVR Agreement. Copies of the CVR Agreement can be obtained by contacting theTrustee. 2. In the event of any conflict between this CVR Certificate and the CVR Agreement, the CVR Agreement shall govern and prevail. 3. Subject to the terms and conditions of the CVR Agreement, on the AUM Milestone Payment Date, the Company shall pay to the Trustee orthe Paying Agent, for the benefit of the Holder hereof as of the record date, for each CVR represented hereby, the AUM Milestone Payment. 4. The AUM Milestone Payment, if any, and interest thereon, if any, shall be payable by the Company in such coin or currency of theUnited States of America as at the time is legal tender for the payment of public and private debts; provided, however, the Company may pay such amountsby its check or wire transfer payable in such money. American Stock Transfer & Trust Company, LLC has been initially appointed as Paying Agent at itsoffice or agency in the Borough of Manhattan, The City of New York. 5. If a Breach occurs and is continuing, either the Trustee or the Acting Holders, by notice to the Company and to the Trustee, may bringsuit in accordance with the terms and conditions of the CVR Agreement to protect the rights of the Holders, including to obtain payment of all amounts thendue and payable. 6. No reference herein to the CVR Agreement and no provision of this CVR Certificate or of the CVR Agreement shall alter or impair theobligation of the Company, which is absolute and unconditional, to pay any amounts determined pursuant to the terms hereof and of the CVR Agreement atthe times, place and amount, and in the manner, herein prescribed. 7. As provided in the CVR Agreement and subject to certain limitations therein set forth, the transfer of the CVRs represented by this CVRCertificate is registrable on the Security Register, upon surrender of this CVR Certificate for registration of transfer at the office or agency of the Companymaintained for such purpose in the Borough of Manhattan, The City of New York, accompanied by a written instrument of transfer in form satisfactory tothe Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new CVRCertificates, for the same amount of CVRs, shall be issued to the designated transferee or transferees. The Company hereby initially designates the office ofAmerican Stock Transfer & Trust Company, LLC at 6201 15th Avenue, Brooklyn, New York 11219 as the office for registration of transfer of this CVRCertificate.A-28. As provided in the CVR Agreement and subject to certain limitations therein set forth, this CVR Certificate is exchangeable for one or moreCVR Certificates representing the same number of CVRs as represented by this CVR Certificate as requested by the Holder surrendering the same. 9. No service charge shall be made for any registration of transfer or exchange of CVRs, but the Company may require payment of a sumsufficient to cover any documentary, stamp or similar tax or other similar governmental charge payable in connection with any registration of transfer orexchange of Securities, other than exchanges pursuant to Sections 3.4, 3.6 or 6.6 of the CVR Agreement not involving any transfer. 10. Prior to the time of due presentment of this CVR Certificate for registration of transfer, the Company, the Trustee and any agent of theCompany or the Trustee may treat the Person in whose name this CVR Certificate is registered as the owner hereof for all purposes, and neither the Company,the Trustee nor any agent shall be affected by notice to the contrary. 11. Neither the Company nor the Trustee has any duty or obligation to the Holder of this CVR Certificate, except as expressly set forth hereinor in the CVR Agreement. 12. As provided in the CVR Agreement and subject to certain limitations therein set forth, the rights of the Holder of this CVR Certificate shallterminate on the Termination Date. 13. THIS CVR CERTIFICATE AND THE CVR AGREEMENT AND ALL CLAIMS OR CAUSES OF ACTION (WHETHER INCONTRACT OR TORT) THAT MAY BE BASED UPON, ARISE OUT OF OR RELATE TO THIS CVR CERTIFICATE AND THE CVRAGREEMENT, OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS CVR CERTIFICATE AND THE CVR AGREEMENT(INCLUDING ANY CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF OR RELATED TO ANY REPRESENTATION ORWARRANTY MADE IN OR IN CONNECTION WITH THIS CVR CERTIFICATE AND THE CVR AGREEMENT OR AS AN INDUCEMENT TOACCEPT THIS CVR CERTIFICATE) OR THE SECURITIES, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THELAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORKGENERAL OBLIGATIONS LAW WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. EACH OF THE COMPANY, THETRUSTEE AND EACH OF THE HOLDERS BY THEIR ACCEPTANCE OF THE SECURITIES, HEREBY IRREVOCABLY SUBMITS TO THEEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEWYORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ALLCLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) THAT MAY BE BASED UPON, ARISE OUT OF OR RELATE TOTHIS CVR CERTIFICATE AND THE CVR AGREEMENT, OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS CVRCERTIFICATE AND THE CVR AGREEMENT (INCLUDING ANY CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF ORRELATED TO ANY REPRESENTATION OR WARRANTY MADE IN OR IN CONNECTION WITH THIS CVR CERTIFICATE AND THE CVRAGREEMENT OR AS AN INDUCEMENT TO ACCEPT THIS CVR CERTIFICATE), OR THE SECURITIES, AND IRREVOCABLY ACCEPTS FORITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.A-3TRUSTEE’S CERTIFICATE OF AUTHENTICATION This is one of the CVR Certificates referred to in the within-mentioned CVR Agreement. AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, as the Trustee By: Authorized Signatory Dated: A-4EXHIBIT 10.01ALLIANCEBERNSTEIN 2013 INCENTIVE COMPENSATION AWARD PROGRAMThis AllianceBernstein 2013 Incentive Compensation Award Program (the “Program”) under the AllianceBernstein L.P. 2010 Long Term IncentivePlan, as amended (the “2010 Plan”) has been adopted by the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) ofAllianceBernstein Corporation, the general partner of AllianceBernstein L.P. (“AllianceBernstein”) and AllianceBernstein Holding L.P. (“Holding”). Anyincentive compensation awards granted under the 2010 Plan shall be governed solely by the 2010 Plan document, this Program and the terms of any relatedaward agreement. The right to defer Awards hereunder shall be considered a separate plan within the Program. Such separate plan shall be referred to as the “APCPDeferral Plan.” The APCP Deferral Plan is maintained primarily for the purpose of providing deferred compensation to a select group of management orhighly 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 the Program 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, theCommittee, their affiliates, and their agents make any guarantee with respect to the treatment of payments under the Program and shall not be responsible inany event with regard to the Program’s compliance with Section 409A, the payments contained herein are intended to be exempt from Section 409A orotherwise comply with the requirements of Section 409A, and the Program shall be limited, construed and interpreted in accordance with the foregoing. Noneof 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 1DEFINITIONS Section 1.01 Definitions. Whenever used in the Program, 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) “Award”: any award granted subject to the Program. (c) “Award Agreement”: an agreement between a Participant and a Company setting forth the terms of an Award. (d) “Beneficiary”: one or more Persons, trusts, estates or other entities, designated in accordance with Section 6.04(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 Program.(e) “Beneficiary Designation Form”: the form established from time to time by the Committee that a Participant completes, signs and returns tothe Committee to designate one or more Beneficiaries. (f) “Board”: the Board of Directors of the general partner of Holding and AllianceBernstein. (g) “Cause”: shall have the meaning assigned to it in the Award Agreement. To the extent that the term “Cause” is not defined in the AwardAgreement, all references to the term “Cause” herein shall be inapplicable. (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 Program. (j) “Company”: Holding, AllianceBernstein and any corporation or other entity of which Holding or AllianceBernstein (i) has sufficient votingpower (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 theCommittee 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 theAward 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 Committeedetermines that Awards made for the subsequent calendar year shall be eligible for deferral, the Committee or its designee shall specify in writing prior to suchcalendar year those Eligible Employees, or the methodology used to determine those Eligible Employees, who shall be eligible to participate in the APCPDeferral 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 Section409A. Any advance deferral election made by such Eligible Employee is made on the condition that such Eligible Employee satisfies the conditionsestablished 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 theCommittee, 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 YorkStock 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 theWall 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 yearand who thereafter remains employed by a Company. (s) “Person”: any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government orpolitical subdivision thereof or other entity. (t) “Program”: the AllianceBernstein 2013 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 andconditions established hereunder or by the Committee. (v) “Termination of Employment”: the Participant is no longer performing services as an employee of any Company, other than pursuant to aseverance or special termination arrangement, and has had a “separation from service” within the meaning of Section 409A. (w) “Unforeseeable Emergency”: a severe financial hardship to a Participant or former Participant within the meaning of Section 409Aresulting from (i) an illness or accident of the Participant or former Participant, the spouse of the Participant or former Participant, or a dependent (as definedin 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 theParticipant or former Participant due to casualty or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond thecontrol of the Participant or former Participant, all as determined in the sole discretion of the Committee.3ARTICLE 2PARTICIPATION Section 2.01 Eligibility. The Committee, in its sole discretion, will designate those Eligible Employees employed by a Company who will receiveAwards with respect to a calendar year. In making such designation, the Committee may consider any criteria that it deems relevant, which may include anEligible 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 theCompany. The Committee may vary the amount of Awards to a particular Participant from year to year and may determine that a Participant who received anAward 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 Committeeduring 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 absolutediscretion 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 ofthe 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 asof 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 Unitsdetermined pursuant to the preceding sentence. Awards vest in accordance with the terms set forth in the Award Agreement, and any such vested Award will besubject 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 ofeach calendar year, a statement shall be provided to each such Participant indicating the current balance in each Account maintained for the Participant as ofthe 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 eachParticipant in an amount (the “Equivalent Distribution Amount”) equal to the number of such Restricted Units (whether vested or unvested) credited to theParticipant’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 anypurposes 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 respectto an Award or, if the Committee so elects, such fractional unit amounts may be cancelled. (c) Holding Units shall be subject to adjustment in accordance with Section 4(c) of the 2010 Plan (or such applicable successor provision).4ARTICLE 3VESTING AND FORFEITURES Section 3.01 Vesting. Terms related to vesting of Awards are set forth in the Award Agreement. Section 3.02 Forfeitures. Terms related to forfeiture of Awards are set forth in the Award Agreement.ARTICLE 4DISTRIBUTIONS Section 4.01 General. No Award will be distributed unless such distribution is permitted under this Article 4. The distribution of the vestedportion 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 theCommittee), or unless otherwise provided in the Award Agreement, a Participant who has not incurred a Disability or a Termination of Employment will havethe 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 theAward 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 theCommittee), or unless otherwise provided in the Award Agreement, a Participant who has had a Disability or a Termination of Employment will have thebalance 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’sDisability. (ii) In the event of a Participant’s Termination of Employment due to the Participant’s death, a distribution will be made to theParticipant’s Beneficiary within 70 days following the 180th day anniversary of the death. (iii) In the event of a Participant’s Termination of Employment for any reason other than Disability or death, distributions due with respectto the Award, if any, shall be made in the same manner as prescribed in Section 4.02(a) above.5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 andthe Participant has not incurred a Disability but has a Termination of Employment for any reason other than death, the vested portion of such Participant’sAward 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 Participantsubsequently incurs a Termination of Employment due to death, the elections made by such Participant in his or her Deferral Election Form shall bedisregarded, 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 asubsequent 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 anUnforeseeable Emergency, such individual may petition the Committee to (i) suspend any deferrals under a Deferral Election Form submitted by suchindividual 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, thatsuch amount may not exceed the amount necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as aresult of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation byinsurance 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 Program. Section 4.05 Documentation. Each Participant and Beneficiary shall provide the Committee with any documentation required by the Committeefor purposes of administering the Program.6ARTICLE 5DEFERRALS 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 theCommittee 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 Awardwhich vests distributed as of a permitted distribution commencement date elected by the Participant that occurs following the date that such Award becomes oris scheduled to become 100% vested under the applicable vesting period set forth in the Award Agreement and specifying among the forms of distributionalternatives permitted by the Committee and specified on the Deferral Election Form. In addition, if permitted by the Committee and specified on the DeferralElection Form, a Participant who elects a distribution commencement date may also elect that if a Termination of Employment occurs prior to suchdistribution commencement date, the distribution commencement date shall be six months after the Termination of Employment. A Participant may make thedeferral 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 permittedby the Committee at the time of deferral (including, if permitted by the Committee, a single distribution or distribution of a substantially equal number ofHolding 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 (orits 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 permittedby 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) nolater 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). (b) In the case of the first year in which a Participant becomes eligible to participate in the Program and with respect to services to be performedsubsequent to such deferral election, a Deferral Election Form may be submitted within 30 days after the date the Participant becomes eligible to participate inthe Program. (c) A Deferral Election Form may be submitted at such other time or times as permitted by the Committee in accordance with Section 409A ofthe Code. Section 5.02 Changes in Time and Form of Distribution. The elections set forth in a Participant’s Deferral Election Form governing the paymentof 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 bythe Committee, a Participant shall be permitted to change the time and form of distribution of such Award by making a subsequent election on a DeferralElection Form supplied by the Committee for this purpose in accordance with procedures established by the Committee from time to time, provided that anysuch subsequent election does not take effect for at least 12 months, is made at least 12 months prior to the scheduled distribution commencement date forsuch Award and the subsequent election defers commencement of the distribution for at least five years from the date such payment otherwise would have beenmade. 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 apayment under the Program specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall bewithin the sole discretion of the Committee.7ARTICLE 6ADMINISTRATION; MISCELLANEOUS Section 6.01 Administration. The Program is intended to constitute an unfunded, non-qualified incentive plan within the meaning of ERISA andshall be administered by the Committee as such. The APCP Deferral Plan is intended to be an unfunded, non-qualified deferred compensation plan within themeaning of ERISA and shall be administered by the Committee as such. The right of any Participant or Beneficiary to receive distributions under the Programshall be as an unsecured claim against the general assets of AllianceBernstein. Notwithstanding the foregoing, AllianceBernstein, in its sole discretion, mayestablish a “rabbi trust” or separate custodial account to pay benefits hereunder. The Committee shall have the full power and authority to administer andinterpret the Program and to take any and all actions in connection with the Program, including, but not limited to, the power and authority to prescribe allapplicable procedures, forms and agreements. The Committee’s interpretation and construction of the Program 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, subjectto such terms and conditions as the Committee shall determine in its discretion. Section 6.03 Amendment, Suspension and Termination of the Program. The Committee reserves the right at any time, without the consent of anyParticipant or Beneficiary and for any reason, to amend, suspend or terminate the Program in whole or in part in any manner; provided that no suchamendment, suspension or termination shall reduce the balance in any Account prior to such amendment, suspension or termination or impose additionalconditions 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 theParticipant would otherwise have been entitled under the Program. A Participant may, from time to time, revoke or change his or her Beneficiary designationby 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 designatedBeneficiary 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’sBeneficiary.8(b) Neither the establishment of the Program nor the grant of any Award or any action of any Company, the Board, or the Committee pursuant tothe Program, shall be held or construed to confer upon any Participant any legal right to be continued in the employ of any Company. Each Companyexpressly reserves the right to discharge any Participant without liability to the Participant or any Beneficiary, except as to any rights which may expressly beconferred upon the Participant under the Program. (c) An Award hereunder shall not be treated as compensation, whether upon such Award’s grant, vesting, payment or otherwise, for purposes ofcalculating 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 Program, and no action taken pursuant to the Program, shall create or be construed to create a fiduciary relationshipbetween any Company and any other person. (e) Neither the establishment of the Program nor the granting of an Award hereunder shall be held or construed to create any rights to anycompensation, including salary, bonus or commissions, nor the right to any other Award or the levels thereof under the Program. (f) No Award or right to receive any payment may be transferred or assigned, pledged or otherwise encumbered by any Participant or Beneficiaryother than by will, by the applicable laws of descent and distribution or by a court of competent jurisdiction. Any other attempted assignment or alienation ofany payment hereunder shall be void and of no force or effect. (g) If any provision of the Program shall be held illegal or invalid, the illegality or invalidity shall not affect the remaining provisions of theProgram, and the Program shall be construed and enforced as if the illegal or invalid provision had not been included in the Program. (h) Any notice to be given by the Committee under the Program to any party shall be in writing addressed to such party at the last address shownfor 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 Committeeunder the Program 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 Program. (j) The Program 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 Program any tax or other charge required to be withheld therefrom pursuantto 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 aParticipant any tax imposed by Section 3101 of the Code, or any successor provision, on any amount credited to the Participant; provided, however, that iffor any reason the Company does not so withhold the entire amount of such tax on a timely basis, the Participant shall be required to reimburseAllianceBernstein for the amount of the tax not withheld promptly upon AllianceBernstein’s request therefore. With respect to Restricted Units: (i) in the eventthat 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 thevesting of Restricted Units (a “Withholding Amount”) then, in the discretion of the Committee, either (X) prior to or contemporaneously with the delivery ofHolding Units to the recipient, the recipient shall pay the Withholding Amount to AllianceBernstein in cash or in vested Holding Units already owned by therecipient (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, asdetermined by the Committee, equal to the Withholding Amount; (Y) AllianceBernstein shall retain from any vested Holding Units to be delivered to therecipient that number of Holding Units having a fair market value, as determined by the Committee, equal to the Withholding Amount (or such portion of theWithholding Amount that is not satisfied under clause (X) as payment of the Withholding Amount; or (Z) if Holding Units are delivered without the paymentof the Withholding Amount pursuant to either clause (X) or (Y), the recipient shall promptly pay the Withholding Amount to AllianceBernstein on at leastseven 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 othersecurity interest), or a combination of cash and such Holding Units, having a total fair market value, as determined by the Committee, equal to theWithholding Amount, and (ii) in the event that the recipient does not pay the Withholding Amount to AllianceBernstein as required pursuant to clause (i) ormake arrangements satisfactory to AllianceBernstein regarding payment thereof, AllianceBernstein may withhold any unpaid portion thereof from any amountotherwise due the recipient from AllianceBernstein. 10EXHIBIT 10.02 ALLIANCEBERNSTEIN 2013 DEFERRED CASH COMPENSATION PROGRAMThis AllianceBernstein 2013 Deferred Cash Compensation Program (the “Program”), under the AllianceBernstein 2013 Incentive CompensationAward Program (the “ICAP”), has been adopted by the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) ofAllianceBernstein Corporation, the general partner of AllianceBernstein L.P. (“AllianceBernstein”) and AllianceBernstein Holding L.P. (“Holding”). Anycash awards granted under this Program shall be governed solely by this Program document, the ICAP and the terms of any related award agreement. ARTICLE 1DEFINITIONS Section 1.01 Definitions. Whenever used in the Program, 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) “Award”: any award granted subject to the Program. (c) “Award Agreement”: an agreement between a Participant and a Company setting forth the terms of an Award. (d) “Beneficiary”: one or more Persons, trusts, estates or other entities, designated in accordance with Section 5.04(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 Program. (e) “Beneficiary Designation Form”: the form established from time to time by the Committee that a Participant completes, signs and returns tothe Company to designate one or more Beneficiaries. (f) “Board”: the Board of Directors of the general partner of Holding and AllianceBernstein. (g) “Cause”: shall have the meaning assigned to it in the Award Agreement. To the extent that the term “Cause” is not defined in the AwardAgreement, all references to the term “Cause” herein shall be inapplicable. (h) “Code”: the Internal Revenue Code of 1986, as amended from time to time. (i) “Committee”: the Compensation Committee of the Board or one or more other committees of the Board designated by the Board toadminister the Program; or if no such committee exists or is designated, the Board.(j) “Company”: Holding, AllianceBernstein and any corporation or other entity of which Holding or AllianceBernstein currently has sufficientvoting power 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 causethe direction of its management and policies. (k) “Disability”: shall have the meaning assigned to it in the Award Agreement. To the extent that the term “Disability” is not defined in theAward Agreement, all references to the term “Disability” herein shall be inapplicable. (l) “Effective Date”: the date Awards are approved by the Committee. (m) “Eligible Employee”: an active employee of a Company who the Committee determines to be eligible for an Award. (n) “ERISA”: the Employee Retirement Income Security Act of 1974, as amended. (o) “Participant”: any Eligible Employee of any Company who has been designated by the Committee to receive an Award for any calendaryear and who thereafter remains employed by a Company. (p) “Person”: any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government orpolitical subdivision thereof or other entity. (q) “Program”: the AllianceBernstein 2013 Deferred Cash Compensation Program, as amended. (r) “Termination of Employment”: the Participant is no longer performing services as an employee of any Company, other than pursuant to aseverance or special termination arrangement, and has had a “separation from service” within the meaning of Section 409A of the Code. ARTICLE 2PARTICIPATION Section 2.01 Eligibility. The Committee, in its sole discretion, will designate those Eligible Employees who will receive Awards with respect to acalendar year. In making such designation, the Committee may consider any criteria that it deems relevant, which may include an Eligible Employee’sposition with a Company and the manner in which the Eligible Employee is expected to contribute to the future growth and success of the Company. TheCommittee 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 aparticular 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 aparticular 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.2Section 2.02 Grant of Awards. The amount of cash constituting an Award will be determined by the Committee in its sole and absolute discretionin U.S. dollars and will be credited to the Participant’s Account as of such Effective Date. If the Participant is based outside the United States, such amountwill be converted into the local currency of the Participant as of the Effective Date for such Award based on the exchange rates on such Effective Date; fromand after such Effective Date, the Award shall be treated for all purposes as a grant in that currency. Awards vest in accordance with the terms set forth in theAward Agreement, and any such vested Award will be subject to the rules on distributions set forth below in Articles 4 and 5, respectively. As soon asreasonably practicable after the end of each calendar year, a statement shall be provided to each such Participant indicating the current balance in each Accountmaintained for the Participant as of the end of the calendar year. Section 2.03 Interest.Interest on Awards will be accrued monthly based on AllianceBernstein’s monthly weighted average cost of funds. The returnwill be nominal. The interest earned will be credited to the Participant’s Account balance annually. ARTICLE 3VESTING AND FORFEITURES Section 3.01 Vesting. Terms related to vesting of Awards are set forth in the Award Agreement. Section 3.02 Forfeitures. Terms related to forfeiture of Awards are set forth in the Award Agreement.ARTICLE 4DISTRIBUTIONS Section 4.01 General. No Award will be distributed unless such distribution is permitted under this Article 4. The distribution of the vestedportion of an Award shall be made in cash in the local currency of the Participant. Any portion of an Award that is not vested will not be distributed hereunder. Section 4.02 Distributions. (a) Unless otherwise provided in the Award Agreement, a Participant who has not incurred a Disability or a Termination of Employment willhave 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 forthin the Award Agreement. (b) Unless otherwise provided in the Award Agreement, a Participant who has had a Disability or a Termination of Employment will have thebalance of any vested Award not distributed under Section 4.02(a) distributed to him or her as follows:3(i) In the event of a Participant’s Disability, a distribution will be made to the Participant within 70 days following the Participant’sDisability. (ii) In the event of a Participant’s Termination of Employment due to the Participant’s death, a distribution will be made to theParticipant’s Beneficiary within 70 days following the 180th day anniversary of the death. (iii) In the event of a Participant’s Termination of Employment for any reason other than Disability or death, distributions due withrespect to the Award, if any, shall be made in the same manner as prescribed in Section 4.02(a) above. Section 4.03 Documentation. Each Participant and Beneficiary shall provide the Committee with any documentation required by the Committeefor purposes of administering the Program.ARTICLE 5ADMINISTRATION; MISCELLANEOUS Section 5.01 Administration. To the extent a Participant is a U.S. taxpayer or receives U.S. source income, the Program is intended to constitutean unfunded, non-qualified incentive plan within the meaning of ERISA and shall be administered by the Committee as such. The right of any Participant orBeneficiary to receive distributions under the Program shall be as an unsecured claim against the general assets of AllianceBernstein. Notwithstanding theforegoing, AllianceBernstein, in its sole discretion, may establish a “rabbi trust” or separate custodial account to pay benefits hereunder. The Committee shallhave the full power and authority to administer and interpret the Program and to take any and all actions in connection with the Program, including, but notlimited to, the power and authority to prescribe all applicable procedures, forms and agreements. The Committee’s interpretation and construction of theProgram shall be conclusive and binding on all Persons. Section 5.02 Authority to Vary Terms of Awards. The Committee shall have the authority to grant Awards other than as described herein, subjectto such terms and conditions as the Committee shall determine in its discretion. Section 5.03 Amendment, Suspension and Termination of the Program. The Committee reserves the right at any time, without the consent ofany Participant or Beneficiary and for any reason, to amend, suspend or terminate the Program in whole or in part in any manner; provided that no suchamendment, suspension or termination shall reduce the balance in any Account prior to such amendment, suspension or termination or impose additionalconditions on the right to receive such balance, except as required by law.4Section 5.04 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 theParticipant would otherwise have been entitled under the Program. A Participant may, from time to time, revoke or change his or her Beneficiary designationby 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 designatedBeneficiary 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’sBeneficiary. (b) Neither the establishment of the Program nor the grant of any Award or any action of any Company, the Board or the Committee pursuant tothe Program, shall be held or construed to confer upon any Participant any legal right to be continued in the employ of any Company. Each Companyexpressly reserves the right to discharge any Participant without liability to the Participant or any Beneficiary, except as to any rights which may expressly beconferred upon the Participant under the Program. (c) An Award hereunder shall not be treated as compensation, whether upon such Award’s grant, vesting, payment or otherwise, for purposes ofcalculating 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 Program, and no action taken pursuant to the Program, shall create or be construed to create a fiduciary relationshipbetween any Company and any other Person. (e) Neither the establishment of the Program nor the granting of an Award hereunder shall be held or construed to create any rights to anycompensation, including salary, bonus or commissions, nor the right to any other Award or the levels thereof under the Program. (f) No Award or right to receive any payment may be transferred or assigned, pledged or otherwise encumbered by any Participant or Beneficiaryother than by will, by the applicable laws of descent and distribution or by a court of competent jurisdiction. Any other attempted assignment or alienation ofany payment hereunder shall be void and of no force or effect. (g) If any provision of the Program shall be held illegal or invalid, the illegality or invalidity shall not affect the remaining provisions of theProgram, and the Program shall be construed and enforced as if the illegal or invalid provision had not been included in the Program. (h) Any notice to be given by the Committee under the Program to any party shall be in writing addressed to such party at the last address shownfor 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 Committeeunder the Program shall be in writing addressed to the Committee at the address of AllianceBernstein.5(i) Section headings herein are for convenience of reference only and shall not affect the meaning of any provision of the Program. (j) To the extent not preempted by ERISA, the Program shall be governed and construed in accordance with the laws of the State of New York. (k) There shall be withheld from each payment made pursuant to the Program any tax or other charge required to be withheld therefrom pursuantto 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 aParticipant any tax imposed by Section 3101 of the Code, or any successor provision, on any amount credited to the Participant; provided, however, that iffor any reason the Company does not so withhold the entire amount of such tax on a timely basis, the Participant shall be required to reimburseAllianceBernstein for the amount of the tax not withheld promptly upon AllianceBernstein’s request therefore. 6EXHIBIT 10.03 ALLIANCE BERNSTEIN L.P.2010 LONG TERM INCENTIVE PLANEFFECTIVE AS OF JULY 1, 2010 AND WITH AMENDMENTS THROUGH MAY 15, 2012SECTION 1. Purpose. The purpose of the AllianceBernstein L.P. 2010 Long Term Incentive Plan (the “PLAN”) is to promote the interest of AllianceBernstein L.P. (together withany successor thereto, the “PARTNERSHIP”) by (i) attracting and retaining talented officers, employees and directors of the Partnership and its Affiliates, (ii)motivating such officers, employees and directors by means of performance-related incentives to achieve longer-range business and operational goals, (iii)enabling such officers, employees and directors to participate in the long-term growth and financial success of the Partnership, and (iv) aligning the interests ofsuch officers, employees and directors with those of AllianceBernstein Holding L.P (“HOLDING”) Unitholders. SECTION 2. Definitions. As used in the Plan, the following terms shall have the meanings set forth below: “AFFILIATE” shall mean (i) any entity that, directly or indirectly, is controlled by the Partnership and (ii) any entity in which the Partnership has asignificant equity interest, in either case as determined by the Committee. “AWARD” shall mean any Option, Restricted Unit, Phantom Restricted Unit or Other Unit-Based Award. “AWARD AGREEMENT” shall mean any written agreement, contract, offer letter or other instrument or document evidencing any Award. “BOARD” shall mean the Board of Directors of the general partner of the Partnership. “CAUSE” shall mean with respect to a Participant’s Termination of Employment, unless otherwise specified in the applicable Award Agreement, any ofthe following: (a) conviction, whether following trial or by plea of guilty or nolo contendere (or similar plea), in a criminal proceeding (i) on a misdemeanorcharge involving fraud, false statements or misleading omissions, wrongful taking, embezzlement, bribery, forgery, counterfeiting or extortion; (ii) on a felonycharge; or (iii) on a charge equivalent to any of the charges set forth in clauses (i) and (ii) in any jurisdiction that does not use such designations; (b) engagingin any conduct that constitutes an employment disqualification under applicable law (including any “statutory disqualification”, as defined under theExchange Act); (c) failure to perform satisfactorily the duties associated with the Participant’s job function or to follow reasonable requests of his or hermanager; (d) violation of any securities or commodities laws, any rules or regulations issued pursuant to such laws, or the rules and regulations of anysecurities or commodities exchange or association to which the Partnership or any Affiliate is subject; (e) violation of any Partnership policy concerningconfidential or proprietary information, or material violation of any other Partnership policy in effect from time to time; (f) engaging in any act or making anystatement which impairs, impugns, denigrates, disparages or negatively reflects upon the name, reputation or business interests of the Partnership or anyAffiliate; or (g) engaging in any conduct detrimental to the Partnership or any Affiliate, including any activity deemed by management, the Committee or theBoard to be competitive with the Partnership or any Affiliate. With respect to a Participant’s Termination of Directorship, unless otherwise specified in theapplicable Award Agreement, “cause” shall mean an act or failure to act that constitutes cause for removal of a director under applicable Delaware law. “CLOSING PRICE” on any date shall mean the closing price for a Unit or, if no sale of a Unit occurred on such date, the closing price for a Unit on themost recent preceding date on which the sale of a Unit occurred, in either case as reported on the principal stock market or exchange on which the Units arequoted or traded on such date or, if the Units are not so quoted or traded on such date, in such manner as determined by the Committee in its sole discretion. “CODE” shall mean the U.S. Internal Revenue Code of 1986, as amended. “COMMITTEE” shall mean the Compensation Committee of the Board as appointed from time to time by the Board, or another committee of the Boarddesignated by the Board to administer the Plan. “ELIGIBLE EMPLOYEE” shall mean any employee of the Partnership or any Affiliate. “EXCHANGE ACT” shall mean the U.S. Securities Exchange Act of 1934, as amended. “FAIR MARKET VALUE” shall mean, unless otherwise required by any applicable provision of the Code, as of any date and except as provided below, (i)with respect to a Unit, the Closing Price for such Unit on such date, and (ii) with respect to any other property, the fair market value of such property asdetermined by the Board or the Committee in its sole discretion. “NON-MANAGEMENT DIRECTOR” shall mean a member of the Board who is (i) “independent” within the meaning of Section 303A.02 of the New YorkStock Exchange Listed Company Manual or other applicable law or applicable stock exchange rules, as determined by the Board in its business judgment, or(ii) a former executive or former employee of an affiliate of Holding (for this purpose only, “affiliate” includes any company or other entity that directly, orindirectly through one or more intermediaries, controls, is controlled by or is under common control with, the Partnership).1“OPTION” shall mean an option granted under Section 6(a). “OTHER UNIT-BASED AWARD” shall mean any right granted under Section 6(c). “PARTICIPANT” shall mean any Eligible Employee or Non-Management Director granted an Award under the Plan. “PERSON” shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporatedorganization, government or political subdivision thereof or other entity.“PHANTOM RESTRICTED UNIT” shall mean any Award granted under Section 6(b) as a Phantom Restricted Unit. “PRIOR PLAN” shall mean either of the Partnership’s (i) Amended and Restated 1997 Long Term Incentive Plan as amended and restated effective as ofJanuary 1, 2005 (as amended through November 28, 2007) or (ii) Century Club Plan. “RESTRICTED UNIT” shall mean any Unit granted under Section 6(b) as a Restricted Unit. “SUBSTITUTE AWARDS” shall mean Awards granted in assumption of, or in substitution for, outstanding awards previously granted by an entity orbusiness acquired by the Partnership or any Affiliate, or with which the Partnership or any Affiliate combines. “TERMINATION” shall mean a Termination of Directorship or Termination of Employment, as applicable. “TERMINATION OF DIRECTORSHIP” shall mean that a Participant has ceased to be a director of the Partnership; except that if the Participant becomes anEligible Employee upon the termination of his or her directorship, unless otherwise determined by the Board or the Committee in its sole discretion, theParticipant shall not experience a Termination until the Participant has a Termination of Employment. “TERMINATION OF EMPLOYMENT” shall mean: (a) a termination of employment of a Participant from the Partnership and its Affiliates; or (b) an entityemploying a Participant ceasing to be an Affiliate, unless the Participant otherwise is, or thereupon becomes, employed by the Partnership or another Affiliateat the time the entity ceases to be an Affiliate. Notwithstanding the foregoing, the Committee may otherwise define Termination of Employment in the AwardAgreement or, if no rights of a Participant are adversely affected, may otherwise define Termination of Employment thereafter. “UNITS” shall mean units representing assignments of beneficial ownership of limited partnership interests in Holding. SECTION 3. Administration. (a) Authority of Committee. The Plan shall be administered by the Committee. Subject to the terms of the Plan and applicable law, in addition to otherexpress powers and authorizations conferred on the Committee by the Plan, and except as otherwise limited by the Board, the Committee shall have full powerand authority to (i) designate Participants; (ii) determine the type or types of Awards to be granted to an Eligible Employee or, subject to Section 3(b), a Non-Management Director; (iii) determine the number of Units to be covered by, or with respect to which payments, rights or other matters are to be calculated inconnection with, Awards; (iv) determine the terms and conditions of Awards, not inconsistent with the terms of the Plan; (v) determine whether, to what extentand under what circumstances Awards may be exercised, settled, canceled, forfeited or suspended and the method or methods by which Awards may beexercised, settled, canceled, forfeited or suspended; (vi) determine whether and under what circumstances Awards may be exercised for or settled in cash,Units and/or Restricted Units, (vii) determine whether, to what extent and under what circumstances cash, Units and/or Restricted Units payable with respectto an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee, and in any event, in accordance with Section409A of the Code; (viii) determine whether to require a Participant, as a condition of the granting of an Award, to not sell or otherwise dispose of Unitsacquired pursuant to the exercise or settlement of the Award for a period of time as determined by the Committee, in its sole discretion; (ix) determine the termsof any Award Agreement, including terms relating to retirement, forfeiture, termination, garden leave and restrictive covenants (such as non-competition, non-solicitation and non-disparagement); (x) determine whether an Option shall cease to be exercisable or an Award shall be forfeited, or that proceeds or profitsapplicable to an Award shall be returned to the Partnership, in each case, in the event that the applicable Participant fails to adhere to the terms and conditionsspecified in the applicable Award Agreement; (xi) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, thePlan; (xii) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administrationof the Plan; (xiii) subject to the terms of the Plan and applicable law, delegate to one or more officers or managers of the Partnership or any Affiliate, or to acommittee of such officers or managers, the authority, subject to such terms and limitations as the Committee shall determine, to grant Awards to, or to cancel,modify or waive rights with respect to, or to alter, discontinue, suspend or terminate Awards held by, individuals who receive Awards as part of recruitment,severance or retirement arrangements and/or Eligible Employees who are not executive officers or directors of the Partnership for purposes of Section 16 of theExchange Act, or any successor section thereto, or who are otherwise not subject to such Section; and (xiv) make any other determination and take any otheraction that the Committee deems necessary or desirable for the administration of the Plan. (b) Grants of Awards to Non-Management Directors. Notwithstanding the provisions of Section 3(a), grants of Awards to Non-ManagementDirectors must be approved by the Board.2(c) Committee Discretion Binding. Unless otherwise expressly provided in the Plan, and subject to Section 3(b), all designations, determinations,interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at anytime and shall be final, conclusive and binding upon all Persons, including the Partnership, any Affiliate, any Participant, any holder or beneficiary of anyAward, any Unitholder and any Eligible Employee or any Non-Management Director. (d) Guidelines. Subject to Section 8, the Committee shall have the authority to: (i) adopt, alter and repeal such administrative rules, guidelines andpractices governing the Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by applicable law and applicable stockexchange rules), as it shall, from time to time, deem advisable; (ii) construe and interpret the terms and provisions of the Plan and any Award (and anyagreements relating to the Plan or such Award); and (iii) otherwise supervise the administration of the Plan. The Committee may correct any defect, supply anyomission or reconcile any inconsistency in the Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate thepurpose and intent of the Plan. Notwithstanding the foregoing, no action of the Committee under this Section 3(d) shall materially reduce the rights of anyParticipant relating to any existing Award without the Participant’s consent. To the extent applicable, the Plan is intended to comply with the applicablerequirements of Rule 16b-3 under the Exchange Act, and the Plan shall be limited, construed and interpreted in a manner so as to comply therewith. Withoutlimiting the generality of the foregoing, the Committee may adopt special guidelines and provisions for persons who are residing in or employed in, or subjectto the taxes of, any domestic or foreign jurisdictions, to comply with applicable laws, regulations, or accounting, listing or other rules with respect to suchdomestic or foreign jurisdictions, including but not limited to otherwise defining Fair Market Value and Closing Price. (e) Assistance of Employees and Advisors; Liability and Indemnification. (i) The Committee may designate employees of the Partnership and professional advisors to assist the Committee in the administration of the Planand (to the extent permitted by applicable law and applicable exchange rules) may grant authority to officers or other employees to execute agreements or otherdocuments on behalf of the Committee. (ii) The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan and mayrely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred bythe Committee or the Board in the engagement of any such counsel, consultant or agent shall be paid by the Partnership. The Committee, its members and anyperson designated pursuant to Section 3(e)(i) shall not be liable for any action or determination made in good faith with respect to the Plan. To the maximumextent permitted by applicable law, no officer of the Partnership or member or former member of the Committee or the Board shall be liable for any action ordetermination made in good faith with respect to the Plan or any Award. (iii) To the maximum extent permitted by applicable law and the amended and restated agreements of limited partnership of the Partnership and/orHolding (“ORGANIZATIONAL DOCUMENTS”), each officer and member or former member of the Committee or the Board shall be indemnified and held harmlessby the Partnership and Holding against any cost or expense (including reasonable fees of counsel reasonably acceptable to the Committee) or liability (includingany sum paid in settlement of a claim with the approval of the Committee), and advanced amounts necessary to pay the foregoing at the earliest time and to thefullest extent permitted, arising out of any act or omission to act in connection with the administration of the Plan, except to the extent arising out of suchofficer’s, member’s or former member’s own fraud or bad faith. Such indemnification shall be in addition to any rights of indemnification such officer,member or former member may have under applicable law or under the Organizational Documents, the organizational documents of any Affiliate or anyagreement of indemnification. Notwithstanding anything else herein, this indemnification will not apply to the actions or determinations made by an individualwith regard to Awards granted to him or her under the Plan. SECTION 4. Units Available for Awards. (a) Units Available. (i) Subject to adjustment as provided in Sections 4(b) and (c), the number of Units with respect to which Awards may be granted under the Planshall be 30 million, less one Unit for every one Unit that was subject to an award (including options) granted after the effective date of the Plan under either ofthe Prior Plans. Any Units that are subject to Awards (including Options) shall be counted against this limit as one Unit for each Unit granted. (ii) If any Units covered by an Award granted under the Plan (other than Substitute Awards) or by an award granted after the effective date of thePlan under either of the Prior Plans, or to which such Award or award related, are forfeited, or if such Award or award terminates or is canceled without thedelivery of Units, or is exercised for or settled in cash, then the Units covered by such Award or award, or to which such Award or award relates, or thenumber of Units otherwise counted against the aggregate number of Units with respect to which Awards may be granted, to the extent of any such forfeiture,termination, cancellation, or cash exercise or settlement, shall again become Units with respect to which Awards may be granted in accordance with thisSection 4. (b) Availability of Certain Units. (i) In determining the number of Units available for Awards, if Units otherwise deliverable in respect of Awards under the Plan (other thanSubstitute Awards) or awards granted after the effective date of the Plan under either of the Prior Plans are withheld for payment of withholding taxes in respectof such Awards or awards, the number of Units so withheld shall be available for Awards under the Plan.3(ii) Units reacquired by the Partnership on the open market or otherwise also shall be available for Awards under the Plan, provided that theaggregate number of such reacquired Units the Partnership may use to make Awards under the Plan shall not exceed 30 million; and provided further that thePartnership may use up to 30 million additional such reacquired Units to make Awards under the Plan if and to the extent that Units with respect to whichAwards may be granted under Section 4(a)(i) above have not been granted. (iii) The Units available for Awards under the Plan shall also be available to exchange for units of limited partnership interest in the Partnershipon a one-for-one basis if, and to the extent to which, the Partnership issues such units to Eligible Employees under the Partnership’s employee incentivecompensation programs. Any Units that are so exchanged will be counted against the Unit limit under the Plan. (iv) To avoid double-counting, any Units underlying Substitute Awards shall not be counted against the Units available for Awards under thePlan. Additionally, in the event that an entity acquired by the Partnership or an Affiliate, or with which the Partnership or an Affiliate combines, has securitiesavailable under a pre-existing plan approved by equity holders and not adopted in contemplation of such acquisition or combination, the securities availablefor grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratioor formula used in such acquisition or combination to determine the consideration payable to the holders of securities of the entities party to such acquisition orcombination) may be used for Awards under the Plan and shall not reduce the number of Units authorized for grant under the Plan; provided that Awardsusing such available securities shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent suchacquisition or combination, and shall not be made to individuals who were employed by the Partnership or its Affiliates immediately before such acquisitionor combination. (c) Adjustments. (i) In the event 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, orexchange of limited partnership interests or other securities of the Partnership or Holding, issuance of warrants or other rights to purchase limited partnershipinterests or other securities of the Partnership or Holding, any incorporation (or other change in form) of the Partnership or Holding, or other similartransaction or event affects the Units such that an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or potential benefitsintended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust, as applicable, (A) the number ofUnits or other securities of the Partnership or Holding (or the number and kind of other securities or property) with respect to which Awards may be grantedunder Sections 4(a) and (b), (B) the number of Units or other securities of the Partnership or Holding (or the number and kind of other securities or property)subject to outstanding Awards, and (C) the exercise or purchase price with respect to any Award, or, if deemed appropriate, make provision for a cashpayment to the holder of an outstanding Award. In the event of incorporation (or other change in form) of the Partnership or Holding, the Committee shall makesuch adjustments as it deems appropriate and equitable with respect to Options for the optionee to purchase stock in the resulting corporation in place of theOptions. Any such adjustment or arrangement may provide for the elimination without compensation of any fractional Unit which might otherwise becomesubject to an Option, and shall be subject to Section 3(c). (ii) In the event of (A) the consummation of any merger or consolidation of the Partnership or Holding in which the Partnership or Holding (asapplicable) is not the continuing or surviving entity, (B) any transaction that results in the acquisition of all or substantially all of the outstanding Units by asingle person or entity or by a group of persons and/or entities acting in concert, or (C) the sale or transfer of all or substantially all of the Partnership’s orHolding’s assets (each of the foregoing being referred to as an “ACQUISITION EVENT”), then the outstanding Awards held by each Participant shall be subject tothe agreement with respect to such Acquisition Event, which agreement may, subject to the terms of the applicable Award Agreements and in accordance withSection 409A of the Code, provide for (i) the continuation or assumption of such Awards by the Partnership or Holding (or the successor or surviving entity);(ii) the substitution for such Awards by such successor or surviving entity with equity-based awards with substantially the same terms and economic value;(iii) the acceleration prior to the closing of such Acquisition Event of the vesting and exercisability of any such Awards that are Options or Other Unit-BasedAwards that are scheduled to become exercisable by such Participant, and the expiration of such Awards to the extent not timely exercised by such Participantprior to such closing or such other earlier time determined by the Committee, after reasonable advance written notice thereof to such Participant; provided thatany such exercise shall be contingent on the consummation of such Acquisition Event; and/or (iv) the cancellation of all or any portion of such Awards as ofimmediately prior to such Acquisition Event, in exchange for a cash payment on such terms and conditions as determined by the Committee, the amount ofwhich may be zero in the case of any Option with an exercise price that exceeds the Fair Market Value of the Units subject to such Option. SECTION 5. Eligibility. All Eligible Employees and Non-Management Directors shall be eligible to be granted Awards and to be designated as Participants under the Plan.Awards and actual participation in the Plan shall be determined by the Committee (subject to Section 3(b)) or the Board in its sole discretion.4SECTION 6. Awards. (a) Options. (i) Grant. Subject to the terms of the Plan, the Committee shall (subject to Section 3(b)) have sole and complete authority to determine the EligibleEmployees and Non-Management Directors to whom Options shall be granted and, with respect to each Option, the number of Units to be covered by suchOption, the exercise price of such Option and the conditions and limitations applicable to the exercise of such Option. (ii) Exercise Price. The exercise price of an Option shall be not less than the Fair Market Value of the Units subject to the Option on the date theOption is granted. (iii) Exercise. The Committee shall specify in the applicable Award Agreement the rate at which an Option shall become initially exercisable. NoOption shall be exercisable after the expiration of ten years from the date of grant. The right to exercise an Option shall be cumulative, so that to the extent thatan Option is not exercised when it becomes initially exercisable, it shall be exercisable at any time thereafter until the expiration of the term of the Option. TheCommittee may impose such conditions with respect to the exercise of Options, including without limitation, any relating to the application of federal or statesecurities laws, as it may deem necessary or advisable. (iv) Prohibition on Re-pricing. Other than pursuant to Section 4(c), in the absence of approval by the holders of Units, neither the Board nor theCommittee shall be permitted to (A) lower the exercise price per Unit of an Option after it is granted, (B) cancel an Option when the exercise price per Unitexceeds the Fair Market Value of the underlying Units in exchange for cash or another Award (other than in connection with Substitute Awards), or (C) takeany other action with respect to an Option that may be treated as a re-pricing under the rules and regulations of the New York Stock Exchange or the applicablestock exchange upon which the Units are then listed. (v) Termination by Death or Disability. Except as otherwise (A) provided in the applicable Award Agreement or (B) determined by theCommittee at grant or (if no rights of the Participant are adversely affected) thereafter, if a Participant’s Termination is by reason of death or “disability” (asdefined in the applicable Award Agreement), all Options that are held by such Participant (whether or not they have previously vested) at the time of suchTermination may be exercised by such Participant (or, in the case of death, by the legal representative of the Participant’s estate) at any time within a period ofone year from the date of such Termination, but in no event beyond the expiration of the stated term of such Options; provided, however, that in the case of“disability”, if such Participant dies within such exercise period, all unexercised Options held by such Participant (whether or not they have previouslyvested) shall thereafter be exercisable for a minimum period of six months from the date of such death, but in no event beyond the expiration of the stated termof such Option. (vi) Termination for Cause. Except as otherwise (A) provided in the applicable Award Agreement or (B) determined by the Committee at grant or(if no rights of the Participant are adversely affected) thereafter, if a Participant’s Termination is (i) for Cause or (ii) a voluntary Termination after theoccurrence of an event that would be grounds for a Termination for Cause, all Options then held by such Participant (whether or not they have previouslyvested) shall thereupon terminate and expire as of the date of such Termination or, if earlier, the date of the Cause event. If a Participant’s service with thePartnership is suspended pending an investigation of whether such Participant shall be terminated for Cause, all of such Participant’s rights under any Optionshall be suspended during the period of investigation. (vii) Termination without Cause. Except as otherwise (A) provided in the applicable Award Agreement or (B) determined by the Committee atgrant or (if no rights of the Participant are adversely affected) thereafter, if a Participant’s Termination is without Cause (other than by reason of death or“disability” or such Participant’s voluntary Termination), all Options held by such Participant that are vested and exercisable at the time of such Terminationmay be exercised by such Participant at any time within a period of 90 days from the date of such Termination, but in no event beyond the expiration of thestated term of such Options. (viii) Voluntary Termination. Except as otherwise (A) provided in the applicable Award Agreement or (B) determined by the Committee at grant or(if no rights of the Participant are adversely affected) thereafter, if a Participant’s Termination is by reason of such Participant’s voluntary Termination, allOptions then held by such Participant (whether or not they have previously vested) shall terminate and expire as of the date of such Termination. (ix) Unvested Options. Except as otherwise (A) provided in the applicable Award Agreement or in Section 6(a)(v) or (B) determined by theCommittee at grant or (if no rights of the Participant are adversely affected) thereafter, Options that are not vested as of the date of a Participant’s Terminationof Employment shall terminate and expire as of the date of such Termination. (b) Restricted Units and Phantom Restricted Units. (i) Grant. Subject to the terms of the Plan, the Committee shall (subject to Section 3(b)) have sole and complete authority to determine the EligibleEmployees and Non-Management Directors to whom Restricted Units and Phantom Restricted Units shall be granted, the number of Restricted Units and/orPhantom Restricted Units to be granted to each Participant, the duration of the period during which, and the conditions under which, the Restricted Unitsand/or Phantom Restricted Units vest, are distributed and may be forfeited to the Partnership, and the other terms and conditions of such Awards. Except forrestrictions applicable to non-routine Awards (e.g., Awards for recruitment, severance or retirement) and Substitute Awards, restrictions applicable to Awardsof Restricted Units and/or Phantom Restricted Units that lapse purely based on service shall lapse over a period of not less than three years (whether suchlapse occurs ratably or otherwise, so long as such restrictions lapse not more than 50% in the first year), except upon a Termination due to death, “disability”or “retirement” (as such terms are defined in the applicable Award Agreement), or a change in control, unless (A) the grant of an Award (or acceleration of thelapse of restrictions applicable to an outstanding Award) is authorized by the Committee or the Board and (B) the cumulative number of Units subject to suchAwards does not exceed 5% of the number of Units available for grant pursuant to Section 4(a) (as may be adjusted pursuant to Sections 4(b) and (c)); andprovided that, where duly authorized by the Committee or the Board, continued vesting of Awards after a Termination in circumstances where such continuedvesting is conditioned on compliance with (A) one or more restrictive covenants, and/or (B) a standard of conduct regarding appropriate consideration of riskset forth in the applicable Award Agreement, shall count towards satisfying the minimum vesting requirement of this Section 6(b)(i).5(ii) Transfer Restrictions. Subject to Section 7(c), Restricted Units and Phantom Restricted Units may not be sold, assigned, transferred,pledged or otherwise encumbered, except as provided in the Plan or the applicable Award Agreement. Any certificate issued in respect of Restricted Units withrespect to which transfer restrictions remain in effect shall bear a legend describing the restrictions to which the Restricted Units are subject. Upon the lapse ofthe restrictions applicable to such Restricted Units, the holder thereof may surrender to the Partnership the certificate or certificates representing such Unitsand receive in exchange therefor a new certificate or certificates representing such Units free of the legend (or an electronic transfer of such Units to a designatedbrokerage account of such holder’s choosing) and a certificate or certificates representing the remainder of the Units, if any, with the legend. (iii) Payment. Any Phantom Restricted Unit shall have a value equal to the Fair Market Value of a Unit. Phantom Restricted Units shall be paidin Units, other securities, cash or other property, as determined in the sole discretion of the Committee, upon the lapse of the restrictions applicable thereto, orotherwise in accordance with the applicable Award Agreement. (iv) Termination. Except as otherwise (A) provided in the applicable Award Agreement or (B) determined by the Committee at grant or (if no rightsof the Participant are adversely affected) thereafter, subject to the terms of the Plan, upon a Participant’s Termination for any reason during the relevantrestriction period, all Restricted Units and Phantom Restricted Units still subject to restriction will vest, continue to vest, be settled or be forfeited inaccordance with the terms and conditions established by the Committee at grant or thereafter (if no rights of the Participant are adversely affected). (c) Other Unit-Based Awards. The Committee shall (subject to Section 3(b)) have authority to grant to Eligible Employees and/or Non-ManagementDirectors an Other Unit-Based Award, which shall consist of any right (including, without limitation, Unit appreciation rights and performance Awards)which is (i) not an Award described in Section 5, 6(a) or 6(b), and (ii) an Award of Units or an Award denominated or payable in, valued in whole or in partby reference to, or otherwise based on or related to, Units (including, without limitation, securities convertible into Units), as deemed by the Committee to beconsistent with the purposes of the Plan. Subject to the terms of the Plan and the applicable Award Agreement, the Committee shall determine the terms andconditions of any such Other Unit-Based Award. SECTION 7. General Provisions Applicable to Awards. (a) Awards May be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, intandem with, or in substitution for any other Award granted under the Plan or any award granted under any other plan of the Partnership or any Affiliate.Awards granted in addition to or in tandem with such other Award or award may be granted either at the same time as or at a different time from the grant ofsuch other Award or award. (b) Forms of Payment by the Partnership Under Awards. Subject to the terms of the Plan and of any applicable Award Agreement and therequirements of applicable law, payments or transfers to be made by the Partnership or an Affiliate upon the grant, exercise or payment of an Award may bemade in such form or forms as the Committee shall determine, including cash, Units, other securities, other Awards or other property, or any combinationthereof, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and proceduresestablished by the Committee in accordance with Section 409A of the Code. Such rules and procedures may include, without limitation, provisions for thepayment or crediting of reasonable interest on installment or deferred payments. (c) Limits on Transfers of Awards. Except as otherwise provided by the Committee, no Award shall be transferable by a holder other than by will or thelaws of descent and distribution. (d) Terms of Awards. The term of each Award shall be for such period as may be determined by the Committee, to the extent not inconsistent with theterms of the Plan. (e) Consideration for Grants. Awards may be granted for no cash consideration, for such nominal cash consideration as may be required byapplicable law or for such greater amount as may be established by the Committee. (f) Distributions and Distribution Equivalents. Subject to the terms of the Plan and compliance with Section 409A of the Code, the terms of anyAward other than an Option (including a deferred Award) may provide, if so determined by the Committee in its sole discretion, for the payment of cash,Units or other property in respect of Unitholder distributions relating to the number of Units subject to such Award.6SECTION 8. Amendment and Termination. (a) Amendments to the Plan. The Board or the Committee may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at anytime; provided, however, that no such amendment, alteration, suspension, discontinuation or termination shall be made without the approval of the limitedpartners of Holding (i) to increase the aggregate number of Units that may be issued under the Plan (except by operation of Section 4(c) or solely to reflect areorganization, Unit split, merger, spinoff or similar transaction); (ii) change the maximum term of any Option; (iii) extend the period during which newAwards may be granted under the Plan; (iv) expand the types of Awards available under the Plan; (v) materially expand the class of officers, employees ordirectors eligible to participate in the Plan; (vi) alter Section 6(a)(iv) or any other language regarding re-pricing; or (vii) if such approval is necessary to complywith any tax or regulatory requirement for which or with which the Committee deems it necessary or desirable to qualify or comply. Notwithstanding anythingto the contrary herein, the Committee may amend the Plan in such manner as may be necessary or advisable so as to have the Plan conform with local rulesand regulations in any jurisdiction outside the United States. (b) Amendments to Awards. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel orterminate, any Award theretofore granted, prospectively or retroactively; provided, however, that any such waiver, amendment, alteration, suspension,discontinuance, cancellation or termination that would adversely affect the rights of any Participant or any holder or beneficiary of any Award theretoforegranted shall not to that extent be effective without the consent of such Participant, holder or beneficiary.SECTION 9. Miscellaneous. (a) No Rights to Awards. No Eligible Employee, Non-Management Director, Participant or other Person shall have any claim to be granted any Award,and there is no obligation for uniformity of treatment of Eligible Employees, Non-Management Directors, Participants, or holders or beneficiaries of Awards.The terms and conditions of Awards need not be the same with respect to each recipient. (b) Unit Certificates. All certificates for Units or other securities of the Partnership or any Affiliate delivered under the Plan pursuant to any Award orthe exercise or settlement thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or therules, regulations, and other requirements of the U.S. Securities and Exchange Commission, any stock exchange upon which such Units or other securitiesare then listed, and any applicable federal, state or foreign laws or regulations, and the Committee may cause a legend or legends to be put on any suchcertificates to make appropriate reference to such restrictions. (c) Withholding. A Participant may be required to pay to the Partnership or any Affiliate, and the Partnership or any Affiliate shall have the right and ishereby authorized to withhold from any Award, from any payment due or transfer made under any Award or the Plan or from any compensation or otheramount owing to a Participant, the amount (in cash, Units, other securities, other Awards or other property) of any applicable withholding taxes in respect ofany Award, its exercise, or any payment or transfer under such Award or the Plan and to take such other actions as may be necessary in the opinion of thePartnership to satisfy all obligations for the payment of such taxes. (d) Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement which shall be made available to the Participant (whetherelectronically or otherwise) and shall specify the terms and conditions of such Award and any rules applicable thereto, including but not limited to the effect onsuch Award of the death, disability, retirement or other termination of service of a Participant. (e) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Partnership or any Affiliate from adopting orcontinuing in effect other compensation arrangements, including without limitation any such arrangements that provide for the grant of options, restrictedUnits, phantom restricted Units and other types of awards provided for hereunder (subject to approval of the limited partners of the Partnership if suchapproval is required), and such arrangements may be either generally applicable or applicable only in specific cases. (f) No Right to Employment or Retention as Director. The grant of an Award shall not be construed as giving a Participant the right to be retained inthe employ of the Partnership or any Affiliate, or to be retained as a Non-Management Director. Further, the Partnership or an Affiliate may at any time dismissa Participant from service, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan, any Award Agreement or anyother agreement between the Partnership or any Affiliate and the Participant.(g) No Rights as Unitholder. Subject to the provisions of the applicable Award Agreement, no Participant or holder or beneficiary of any Award shallhave any rights as a Unitholder with respect to any Units to be distributed under the Plan until he or she has become the holder of such Units. (h) Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined inaccordance with the internal laws of the State of New York. (i) Severability. If any provision of the Plan or any Award Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in anyjurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provisionshall be construed or deemed amended to conform to applicable laws, or if it cannot be construed or deemed amended without, in the determination of theCommittee, materially altering the intent of the Plan or such Award Agreement, such provision shall be stricken as to such jurisdiction, Person or Award andthe remainder of the Plan and such Award Agreement shall remain in full force and effect.7(j) Additional Powers. The Committee may refuse to issue or transfer any Units or other consideration under an Award if, acting in its sole discretion,it determines that the issuance or transfer of such Units or such other consideration might violate any applicable law or regulation or entitle the Partnership torecover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Partnership by a Participant, other holder or beneficiary inconnection with the exercise of such Award shall be promptly refunded to such Participant, holder or beneficiary. Without limiting the generality of theforegoing, no Award granted hereunder shall be construed as an offer to sell securities of the Partnership, and no such offer shall be outstanding, unless anduntil the Committee in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S.federal securities laws and any other laws to which such offer, if made, would be subject. (k) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or fiduciaryrelationship between the Partnership or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive paymentsfrom the Partnership or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Partnership orsuch Affiliate. (l) No Fractional Units. No fractional Units shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whethercash, other securities or other property shall be paid or transferred in lieu of any fractional Units or whether such fractional Units or any rights thereto shall becanceled, terminated or otherwise eliminated. (m) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not bedeemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. SECTION 10. Term of the Plan. (a) Effective Date. The Plan shall be effective as of July 1, 2010 subject to approval by the limited partners of Holding and shall have a term of 10years. (b) Expiration Date. No Award shall be granted under the Plan after June 30, 2020. However, unless otherwise expressly provided in the Plan or in anapplicable Award Agreement, any Award theretofore granted may, and the authority of the Board or the Committee to amend, alter, adjust, suspend,discontinue, or terminate such Award or to waive any conditions or rights under any such Award shall, extend beyond such date. SECTION 11. Section 409A of the Code. (a) Although none of the Committee, the Partnership, Holding, any of their affiliates or any of their agents make any guarantee with respect to the Plan orAwards granted hereunder and shall not be responsible in any event with regard to compliance with Section 409A of the Code, the Plan and the Awards grantedhereunder are intended to be exempt from Section 409A of the Code or otherwise comply with the requirements of Section 409A of the Code, and the Plan andthe applicable Award Agreements shall be limited, construed and interpreted in accordance with the foregoing. None of the Committee, the Partnership,Holding, any of their affiliates or any of their agents shall have any liability to any Participant or beneficiary as a result of any tax, interest, penalty or otherpayment required to be paid or due pursuant to, or because of a violation of, Section 409A of the Code. (b) With regard to any distribution or payment with respect to an Award that is considered “nonqualified deferred compensation” under Section 409A ofthe Code, a Termination shall not be deemed to have occurred unless such Termination is also a “separation from service” within the meaning of Section 409Aof the Code and, for purposes of such distribution or payment, references to a “Termination,” “Termination of Employment,” “Termination of Directorship”or like terms in the applicable Award Agreement or the Plan shall mean “separation from service.” If the Participant is deemed on the date of Termination to be a“specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code, then with regard to any distribution or payment that isconsidered “nonqualified deferred compensation” under Section 409A of the Code payable on account of a “separation from service,” such distribution orpayment shall be paid or provided on the date (the “PAYMENT DATE”) which is the earlier of (i) the expiration of the six-month period measured from the date ofsuch “separation from service,” and (ii) the date of the Participant’s death. On the Payment Date, all distributions and payments delayed pursuant to thisSection 11(b) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or provided to theParticipant in a lump sum, and any remaining distributions and payments due under the Plan shall be paid or provided in accordance with the normalpayment dates specified in the applicable Award Agreement or the Plan. EXHIBIT 10.04 ALLIANCEBERNSTEININCENTIVE COMPENSATION AWARD PROGRAM,DEFERRED CASH COMPENSATION PROGRAM AND2010 LONG TERM INCENTIVE PLANAWARD AGREEMENT FOR [INSERT AWARD YEAR] AWARDS [ANDCERTAIN AMENDMENTS TO PRIOR-YEAR AWARDS]1AWARD AGREEMENT, DATED AS OF [INSERT AWARD DATE], AMONG ALLIANCEBERNSTEIN L.P. (TOGETHER WITH ITS SUBSIDIARIES,“ALLIANCEBERNSTEIN”), ALLIANCEBERNSTEIN HOLDING L.P. (“HOLDING”) AND (“PARTICIPANT”), AN EMPLOYEE OF ALLIANCEBERNSTEIN.WHEREAS, THE COMPENSATION COMMITTEE (“COMMITTEE” OR “ADMINISTRATOR”) OF THE BOARD OF DIRECTORS (“BOARD”) OF ALLIANCEBERNSTEINCORPORATION (“CORPORATION”), PURSUANT TO THE ALLIANCEBERNSTEIN [INSERT YEAR] INCENTIVE COMPENSATION AWARD PROGRAM (“INCENTIVE COMPENSATIONPROGRAM”) AND THE ALLIANCEBERNSTEIN 2010 LONG TERM INCENTIVE PLAN, AS AMENDED (“2010 PLAN” AND, TOGETHER WITH THE INCENTIVE COMPENSATIONPROGRAM, 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 CERTAINRESTRICTIONS DESCRIBED HEREIN (“RESTRICTED UNITS”), AND AUTHORIZED THE EXECUTION AND DELIVERY OF THIS AWARD AGREEMENT;WHEREAS, THE COMMITTEE HAS GRANTED TO THE PARTICIPANT THE RIGHT TO RECEIVE A PORTION OF THE AWARD IN CASH INSTEAD OF RESTRICTED UNITS, ASCONTEMPLATED IN THE ALLIANCEBERNSTEIN [INSERT YEAR] DEFERRED CASH COMPENSATION PROGRAM (“DEFERRED CASH PROGRAM”); AND[WHEREAS, THE COMMITTEE HAS APPROVED THE ADDITION OF CLARIFYING LANGUAGE TO CERTAIN AWARD AGREEMENTS (CONSISTENT WITH CLARIFYING LANGUAGEINCLUDED IN THIS AWARD AGREEMENT) PERTAINING TO PREVIOUSLY-GRANTED DEFERRED INCENTIVE COMPENSATION AWARDS, INCLUDING INCENTIVE COMPENSATION PROGRAMAWARDS, PARTNERS COMPENSATION PLAN AWARDS (TO THE EXTENT LONG-TERM DEFERRAL ELECTIONS REMAIN IN PLACE), CENTURY CLUB PLAN AWARDS, AWARDS OF OPTIONSTO BUY HOLDING UNITS (WHETHER PURSUANT TO THE SPECIAL OPTION PROGRAM OR OTHERWISE), DEFERRED CASH AWARDS AND RESTRICTED UNIT AWARDS;]2NOW, THEREFORE, IN ACCORDANCE WITH THE GRANT OF THE AWARD, AND AS A CONDITION THERETO, ALLIANCEBERNSTEIN, HOLDING AND THE PARTICIPANTAGREE AS FOLLOWS:1 INCLUDE IF APPLICABLE. 2 INCLUDE IF APPLICABLE.1. GRANT. SUBJECT TO AND UNDER THE TERMS AND CONDITIONS SET FORTH IN THIS AWARD AGREEMENT AND THE PLANS, THE COMMITTEE HEREBYAWARDS TO THE PARTICIPANT THE AMOUNT OF DEFERRED CASH (“DEFERRED CASH”) ELECTED BY THE PARTICIPANT AND AS SET FORTH IN SECTION 2 OF SCHEDULE A ANDTHE NUMBER OF RESTRICTED UNITS SET FORTH IN SECTION 3 OF SCHEDULE A, TOGETHER WITH THE RIGHT TO RECEIVE INTEREST ON DEFERRED CASH, IF ELECTED, ASSPECIFIED IN SECTION 2 BELOW AND REGULAR CASH DISTRIBUTIONS WITH REGARD TO THE UNDERLYING HOLDING UNITS PURSUANT TO SECTION 2.03(A) OF THE INCENTIVECOMPENSATION PROGRAM. THE AGGREGATE DOLLAR AMOUNT OF THE AWARD (INCLUDING DEFERRED CASH AND RESTRICTED UNITS) WAS DETERMINED BY THE COMMITTEEON [INSERT DATE OF COMPENSATION COMMITTEE MEETING AT WHICH AWARDS WERE APPROVED], WITH THE NUMBER OF RESTRICTED UNITSBEING BASED ON THE CLOSING PRICE OF A HOLDING UNIT ON THAT DATE.2. EARNINGS ON DEFERRED CASH. INTEREST ON DEFERRED CASH, IF ELECTED, WILL BE ACCRUED MONTHLY BASED ON ALLIANCEBERNSTEIN’S MONTHLYWEIGHTED AVERAGE COST OF FUNDS. THE RETURN WILL BE NOMINAL. THE INTEREST EARNED WILL BE CREDITED TO THE PARTICIPANT’S DEFERRED CASH BALANCEANNUALLY. 3. VESTING AND DISTRIBUTION. THE DEFERRED CASH AND RESTRICTED UNITS SHALL VEST IN ACCORDANCE WITH SECTION 5 OF SCHEDULE A SO LONG ASTHE PARTICIPANT REMAINS EMPLOYED BY ALLIANCEBERNSTEIN ON EACH VESTING ANNIVERSARY, EXCEPT AS SPECIFICALLY SET FORTH IN SECTION 7 OF THIS AWARDAGREEMENT. ONCE THE DEFERRED CASH, IF ELECTED, HAS VESTED, CASH SHALL BE DISTRIBUTED TO THE PARTICIPANT AS SPECIFIED IN ARTICLE 4 OF THE DEFERRED CASHPROGRAM. ONCE RESTRICTED UNITS HAVE VESTED, HOLDING UNITS SHALL BE DISTRIBUTED TO THE PARTICIPANT AS SPECIFIED IN ARTICLE 4 OF THE INCENTIVECOMPENSATION PROGRAM.4. 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 ALLIANCEBERNSTEIN WITH PRIOR WRITTEN NOTICE OF THE PARTICIPANT’S INTENT TO RESIGN BASED ON THE SCHEDULE SET FORTH BELOW. NOTWITHSTANDING THE TERMS OF ANY OTHER AGREEMENT BETWEEN THE PARTICIPANT AND ALLIANCEBERNSTEIN (OR ITS SUBSIDIARIES), INCLUDING, BUT NOT LIMITED TO,ANY EMPLOYMENT AGREEMENT, WHICH AGREEMENT SHALL BE DEEMED AMENDED BY THIS AWARD AGREEMENT, THE PARTICIPANT WILL CONTINUE TO BE ELIGIBLE FOR BASESALARY OR DRAW, AVAILABLE HEALTH AND WELFARE BENEFITS, AND QUARTERLY DISTRIBUTION PAYMENTS ON UNVESTED RESTRICTED UNITS, SO LONG AS THE PARTICIPANT’SEMPLOYMENT WITH ALLIANCEBERNSTEIN CONTINUES DURING THE NOTICE PERIOD. ONCE THE PARTICIPANT HAS PROVIDED ALLIANCEBERNSTEIN WITH PRIOR WRITTEN NOTICE OFTHE PARTICIPANT’S INTENT TO RESIGN, ALLIANCEBERNSTEIN MAY, IN ITS SOLE DISCRETION, EITHER SHORTEN THE PARTICIPANT’S NOTICE PERIOD AT ANY TIME DURING THENOTICE PERIOD IN ACCORDANCE WITH SECTION 9 OF THIS AWARD AGREEMENT OR REQUIRE THE PARTICIPANT TO DISCONTINUE OR LIMIT REGULAR DUTIES, INCLUDING PROHIBITINGTHE PARTICIPANT FROM FURTHER ENTRY TO ANY OF ALLIANCEBERNSTEIN’S PREMISES. (IN EITHER CASE, THE PARTICIPANT SHALL BE TREATED AS HAVING INFORMEDALLIANCEBERNSTEIN OF HIS OR HER INTENT TO RESIGN AND CONTINUE TO BE OBLIGATED TO SATISFY THE REQUIREMENTS OF SECTION 7(C) OF THIS AWARD AGREEMENT.) IFALLIANCEBERNSTEIN SHORTENS THE PARTICIPANT’S NOTICE PERIOD, THE PARTICIPANT’S RESIGNATION SHALL BECOME EFFECTIVE AS OF THE END OF THE SHORTENED NOTICEPERIOD AND, THEREAFTER, THE PARTICIPANT SHALL NOT RECEIVE SALARY OR DRAW, HEALTH AND WELFARE BENEFITS, QUARTERLY DISTRIBUTION PAYMENTS ON UNVESTEDRESTRICTED UNITS, OR ANY RESTRICTED UNITS OR DEFERRED CASH THAT OTHERWISE WOULD HAVE VESTED IN ACCORDANCE WITH SECTION 5 OF SCHEDULE A. THE NOTICEPERIOD SHALL BE AS FOLLOWS:- 2 -SENIOR VICE PRESIDENT OR ABOVE:90 DAYSVICE PRESIDENT:60 DAYSASSISTANT VICE PRESIDENT OR BELOW:30 DAYS5. COVENANTS. AS AN ADDITIONAL CONDITION OF RECEIVING THE AWARD, THE PARTICIPANT AGREES TO THE FOLLOWING COVENANTS AND REMEDIES FORFAILURE TO COMPLY:(A) COMPETITION. AT NO TIME WHILE EMPLOYED BY ALLIANCEBERNSTEIN (INCLUDING ANY APPLICABLE NOTICE PERIOD) SHALL THEPARTICIPANT PROVIDE COMPETING SERVICES, IN ANY CAPACITY, WHETHER AS AN EMPLOYEE, CONSULTANT, INDEPENDENT CONTRACTOR, OWNER, PARTNER,SHAREHOLDER, DIRECTOR OR OTHERWISE, TO ANY DIRECT COMPETITOR; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL PREVENT THE PARTICIPANTFROM BEING A PASSIVE OWNER OF NOT MORE THAN 5% OF THE OUTSTANDING EQUITY OF ANY CLASS OF SECURITIES OF AN ENTITY THAT IS PUBLICLYTRADED AND THAT OWNS OR MAY ACQUIRE ANY CORPORATION OR BUSINESS THAT COMPETES WITH ALLIANCEBERNSTEIN. “COMPETING SERVICES” MEANSSERVICES PROVIDED TO A DIRECT COMPETITOR THAT INVOLVE (I) THE DIRECT OR INDIRECT SOLICITATION (INCLUDING THROUGH FINANCIAL INTERMEDIARIES ORCONSULTANTS) OF ACTUAL OR PROSPECTIVE CLIENTS OF ALLIANCEBERNSTEIN WITH RESPECT TO INVESTMENT MANAGEMENT OR RESEARCH PRODUCTS ORSERVICES; (II) THE CREATION, MANAGEMENT OR MAINTENANCE (OR PROVIDING MATERIAL SUPPORT FOR, OR MANAGING OR SUPERVISING, THE CREATION,MANAGEMENT OR MAINTENANCE) OF AN INVESTMENT MANAGEMENT OR RESEARCH PRODUCT OR SERVICE THAT COMPETES DIRECTLY WITH A SIGNIFICANTINVESTMENT MANAGEMENT OR RESEARCH PRODUCT OR SERVICE THEN OFFERED OR PROVIDED BY ALLIANCEBERNSTEIN OR THAT ALLIANCEBERNSTEININTENDS TO OFFER OR PROVIDE AS PART OF A PLANNED BUSINESS; OR (III) THE PARTICIPANT FUNCTIONING IN A SENIOR EXECUTIVE, OPERATIONAL,ADMINISTRATIVE, FINANCIAL, ADVISORY OR CONSULTING ROLE, WHICH IS THE SAME AS OR SUBSTANTIALLY SIMILAR TO THE PARTICIPANT’S ROLE WITHALLIANCEBERNSTEIN. “DIRECT COMPETITOR” MEANS A BUSINESS THAT OFFERS OR PROVIDES PRODUCTS OR SERVICES THAT COMPETE DIRECTLY WITHPRODUCTS OR SERVICES OFFERED OR PROVIDED BY ALLIANCEBERNSTEIN OR THAT ALLIANCEBERNSTEIN INTENDS TO OFFER OR PROVIDE AS PART OF APLANNED BUSINESS, WHERE THE BUSINESS ACTIVITIES OF THE DIRECT COMPETITOR EITHER CONSTITUTE OR CAN REASONABLY BE EXPECTED TOCONSTITUTE MEANINGFUL COMPETITION FOR ALLIANCEBERNSTEIN. “PLANNED BUSINESS” MEANS A BUSINESS: (I) THAT THE PARTICIPANT IS AWARE THATALLIANCEBERNSTEIN PLANS TO ENTER WITHIN SIX MONTHS AFTER THE PARTICIPANT’S LAST DATE OF EMPLOYMENT, (II) THAT IS MATERIAL TO THEALLIANCEBERNSTEIN ENTITY OR BUSINESS UNIT THAT PLANS TO ENTER SUCH BUSINESS, AND (III) IN WHICH SUCH ALLIANCEBERNSTEIN ENTITY ORBUSINESS UNIT HAS INVESTED MATERIAL RESOURCES (INCLUDING TIME OF SENIOR MANAGEMENT) IN PREPARATION FOR LAUNCH.(B) EMPLOYEE SOLICITATION. AT NO TIME WHILE EMPLOYED BY ALLIANCEBERNSTEIN (INCLUDING ANY APPLICABLE NOTICE PERIOD) SHALLTHE PARTICIPANT (WHETHER DIRECTLY OR INDIRECTLY THROUGH INSTRUCTION TO ANY OTHER PERSON OR ENTITY) RECRUIT, SOLICIT OR HIRE ANY EMPLOYEEOF ALLIANCEBERNSTEIN TO WORK FOR THE PARTICIPANT OR ANY OTHER PERSON OR ENTITY.- 3 -(C) CONFIDENTIALITY. FROM THE DATE HEREOF AND CONTINUING AFTER THE PARTICIPANT’S LAST DATE OF EMPLOYMENT, AND EXCEPT ASOTHERWISE 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 ALLIANCEBERNSTEIN) ANY TRADE SECRETS, PROPRIETARY KNOWLEDGE OR CONFIDENTIAL INFORMATIONTHAT THE PARTICIPANT SHALL HAVE OBTAINED DURING HIS OR HER EMPLOYMENT BY ALLIANCEBERNSTEIN AND THAT SHALL NOT BE GENERALLY KNOWN TOOR RECOGNIZED BY THE GENERAL PUBLIC. ALL INFORMATION REGARDING OR RELATING TO ANY ASPECT OF THE BUSINESS OF ALLIANCEBERNSTEIN,INCLUDING BUT NOT LIMITED TO THAT RELATING TO EXISTING OR CONTEMPLATED BUSINESS PLANS, ACTIVITIES OR PROCEDURES, CURRENT OR PROSPECTIVECLIENTS, 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 THEPRODUCTS OR SERVICES OF ALLIANCEBERNSTEIN), OR ANY OTHER INFORMATION ACQUIRED BECAUSE OF THE PARTICIPANT’S EMPLOYMENT BYALLIANCEBERNSTEIN, SHALL BE CONCLUSIVELY PRESUMED TO BE CONFIDENTIAL; PROVIDED, HOWEVER, THAT CONFIDENTIAL INFORMATION SHALL NOTINCLUDE ANY INFORMATION KNOWN GENERALLY TO THE PUBLIC (OTHER THAN AS A RESULT OF UNAUTHORIZED DISCLOSURE BY THE PARTICIPANT). THEPARTICIPANT’S OBLIGATIONS UNDER THIS SECTION 5(C) SHALL BE IN ADDITION TO ANY OTHER CONFIDENTIALITY OR NONDISCLOSURE OBLIGATIONS THEPARTICIPANT HAS TO ALLIANCEBERNSTEIN AT LAW OR UNDER ANY OTHER OF ALLIANCEBERNSTEIN’S POLICIES OR AGREEMENTS.(D) NON-DISPARAGEMENT. THE PARTICIPANT SHALL NOT MAKE INTENTIONALLY DISPARAGING REMARKS ABOUT ALLIANCEBERNSTEIN, ORISSUE ANY COMMUNICATION, WRITTEN OR OTHERWISE, THAT REFLECTS ADVERSELY ON OR ENCOURAGES ANY ADVERSE ACTION AGAINSTALLIANCEBERNSTEIN, EXCEPT IF TESTIFYING TRUTHFULLY UNDER OATH PURSUANT TO ANY SUBPOENA, ORDER, DIRECTIVE, REQUEST OR OTHER LEGALPROCESS, OR AS MAY BE OTHERWISE REQUIRED BY LAW.(E) REMEDIES. IF THE PARTICIPANT FAILS TO COMPLY WITH THE AGREEMENTS AND COVENANTS SET FORTH IN SECTION 4 OR THIS SECTION5, ALLIANCEBERNSTEIN SHALL HAVE THE FOLLOWING REMEDIES:(I) THE PARTICIPANT AGREES THAT IN THE EVENT OF A BREACH OF ANY OF THE AGREEMENTS OR COVENANTS CONTAINED IN SECTION 4 ORTHIS SECTION 5, ANY DEFERRED CASH OR RESTRICTED UNITS THAT HAVE NOT VESTED OR HAVE VESTED BUT HAVE NOT BEEN DELIVERED (OTHER THAN ASA RESULT OF A VOLUNTARY LONG-TERM DEFERRAL ELECTION) SHALL BE FORFEITED.- 4 -(II) WITHOUT INTENDING TO LIMIT THE REMEDIES AVAILABLE TO ALLIANCEBERNSTEIN, THE PARTICIPANT ACKNOWLEDGES THAT A BREACH OFANY OF THE AGREEMENTS OR COVENANTS CONTAINED IN SECTION 4 OR THIS SECTION 5 SHALL RESULT IN MATERIAL IRREPARABLE INJURY TOALLIANCEBERNSTEIN FOR WHICH THE FORFEITURE REMEDY DESCRIBED IN SECTION (I) ABOVE MAY NOT BE ADEQUATE AND THAT, IN THE EVENT OF SUCH ABREACH OR THREAT THEREOF, ALLIANCEBERNSTEIN SHALL BE ENTITLED TO OBTAIN A TEMPORARY RESTRAINING ORDER AND/OR A PRELIMINARY ORPERMANENT INJUNCTION RESTRAINING THE PARTICIPANT FROM ENGAGING IN ACTIVITIES PROHIBITED BY THIS AWARD AGREEMENT OR SUCH OTHER RELIEF ASMAY BE REQUIRED TO SPECIFICALLY ENFORCE ANY OF THE AGREEMENTS OR COVENANTS IN SECTION 4 OR THIS SECTION 5. THE PARTICIPANTACKNOWLEDGES THAT THE ABOVE RESTRICTIONS ARE PART OF A PROGRAM OF ALLIANCEBERNSTEIN COVERING EMPLOYEES IN MANY JURISDICTIONS AND THATIT IS NECESSARY TO MAINTAIN CONSISTENCY OF ADMINISTRATION AND INTERPRETATION WITH RESPECT TO SUCH PROGRAM, AND ACCORDINGLY, THEPARTICIPANT CONSENTS TO THE APPLICABILITY OF NEW YORK LAW AND JURISDICTION IN ACCORDANCE WITH SECTION 15 HEREOF. IN THE EVENT THAT ANYCOURT OR TRIBUNAL OF COMPETENT JURISDICTION SHALL DETERMINE THIS SECTION 5 TO BE UNENFORCEABLE OR INVALID FOR ANY REASON, THEPARTICIPANT AGREES THAT THIS SECTION 5 SHALL BE INTERPRETED TO EXTEND ONLY OVER THE MAXIMUM PERIOD OF TIME FOR WHICH IT MAY BEENFORCEABLE, AND/OR OVER THE MAXIMUM GEOGRAPHICAL AREA AS TO WHICH IT MAY BE ENFORCEABLE, AND/OR TO THE MAXIMUM EXTENT IN ANY ANDALL RESPECTS AS TO WHICH IT MAY BE ENFORCEABLE, ALL AS DETERMINED BY SUCH COURT OR TRIBUNAL.(III) IN ADDITION TO THE REMEDIES SET FORTH IN CLAUSES (I) AND (II) ABOVE, ALLIANCEBERNSTEIN RETAINS THE RIGHT TO SEEK DAMAGESAND OTHER RELIEF FOR ANY BREACH BY THE PARTICIPANT OF ANY AGREEMENT OR COVENANT CONTAINED IN THIS AWARD AGREEMENT.6. FORFEITURE FOR FAILURE TO CONSIDER CERTAIN RISKS. IF THE COMMITTEE DETERMINES THAT, DURING THE CALENDAR YEAR IN WHICH THE AWARDWAS GRANTED, (A) THE PARTICIPANT PARTICIPATED IN THE STRUCTURING OR MARKETING OF ANY INVESTMENT MANAGEMENT OR RESEARCH PRODUCT OR SERVICE, ORPARTICIPATED ON BEHALF OF ALLIANCEBERNSTEIN OR ANY OF ITS CLIENTS IN THE PURCHASE OR SALE OF ANY SECURITY OR OTHER PROPERTY AS PART OF PROVIDING INVESTMENTMANAGEMENT SERVICES OR OTHERWISE, AND (B) (I) THE PARTICIPANT FAILED TO FOLLOW OR VIOLATED ANY WRITTEN ALLIANCEBERNSTEIN POLICY GUIDELINE OR PROCESSDESIGNED IN WHOLE OR IN PART TO MANAGE OR MITIGATE RISK; (II) AS A RESULT, APPROPRIATE CONSIDERATION WAS NOT GIVEN TO THE RISK TO ALLIANCEBERNSTEIN OR THEPARTICIPANT’S BUSINESS UNIT (FOR EXAMPLE, WHERE THE PARTICIPANT HAS IMPROPERLY ANALYZED SUCH RISK OR WHERE THE PARTICIPANT FAILED SUFFICIENTLY TO RAISECONCERNS ABOUT SUCH RISK); AND (III) THERE HAS BEEN, OR REASONABLY COULD BE EXPECTED TO BE, A MATERIAL ADVERSE IMPACT ON ALLIANCEBERNSTEIN OR THEPARTICIPANT’S BUSINESS UNIT, THE PARTICIPANT SHALL FORFEIT ALL UNVESTED DEFERRED CASH, IF ELECTED, AND ALL UNVESTED RESTRICTED UNITS GRANTED PURSUANTTO SUCH AWARD.7. TERMINATION OF EMPLOYMENT. THE DEFERRED CASH AND RESTRICTED UNITS SHALL VEST IN ACCORDANCE WITH SECTION 5 OF SCHEDULE A ONLYWHILE THE PARTICIPANT IS EMPLOYED BY ALLIANCEBERNSTEIN, EXCEPT AS FOLLOWS (AND UNLESS THE COMMITTEE DETERMINES OTHERWISE):- 5 -(A) DISABILITY. ANY UNVESTED DEFERRED CASH AND RESTRICTED UNITS SHALL FULLY VEST IMMEDIATELY UPON A PARTICIPANT’SDISABILITY AND SHALL BE DISTRIBUTED TO THE PARTICIPANT AS SPECIFIED IN ARTICLE 4 OF EACH OF THE DEFERRED CASH PROGRAM AND THE INCENTIVECOMPENSATION PROGRAM. THE PARTICIPANT SHALL BE DEEMED TO HAVE INCURRED A “DISABILITY” IF THE PARTICIPANT IS UNABLE TO ENGAGE IN ANYSUBSTANTIAL GAINFUL ACTIVITY BY REASON OF ANY MEDICALLY DETERMINABLE PHYSICAL OR MENTAL IMPAIRMENT THAT CAN BE EXPECTED TO LAST FOR ACONTINUOUS PERIOD OF NOT LESS THAN 12 MONTHS, AS DETERMINED BY THE CARRIER OF THE LONG-TERM DISABILITY INSURANCE PROGRAM MAINTAINEDBY ALLIANCEBERNSTEIN OR ITS AFFILIATE THAT COVERS THE PARTICIPANT, OR SUCH OTHER PERSON OR ENTITY DESIGNATED BY THE ADMINISTRATOR IN ITSSOLE DISCRETION. IN ORDER TO ASSIST IN THE PROCESS DESCRIBED IN THIS SECTION 7(A), THE PARTICIPANT SHALL, AS REASONABLY REQUESTED BY THEADMINISTRATOR, (I) BE AVAILABLE FOR MEDICAL EXAMINATIONS BY ONE OR MORE PHYSICIANS CHOSEN BY THE LONG-TERM DISABILITY INSURANCE PROVIDEROR THE ADMINISTRATOR AND APPROVED BY THE PARTICIPANT, WHOSE APPROVAL SHALL NOT BE UNREASONABLY WITHHELD, AND (II) GRANT THE LONG-TERMDISABILITY INSURANCE PROVIDER, THE ADMINISTRATOR AND ANY SUCH PHYSICIANS ACCESS TO ALL RELEVANT MEDICAL INFORMATION CONCERNING THEPARTICIPANT, ARRANGE TO FURNISH COPIES OF MEDICAL RECORDS TO THEM, AND USE BEST EFFORTS TO CAUSE THE PARTICIPANT’S OWN PHYSICIANS TO BEAVAILABLE TO DISCUSS THE PARTICIPANT’S HEALTH WITH THEM.(B) DEATH. IF THE PARTICIPANT DIES (I) WHILE IN THE EMPLOY OF ALLIANCEBERNSTEIN, OR (II) WHILE THE PARTICIPANT OTHERWISE HOLDSOUTSTANDING UNVESTED DEFERRED CASH OR RESTRICTED UNITS, ANY UNVESTED DEFERRED CASH AND ALL UNVESTED RESTRICTED UNITS HELD BYTHE PARTICIPANT (AND NOT PREVIOUSLY FORFEITED OR CANCELLED) SHALL VEST IMMEDIATELY AND BE DISTRIBUTED IN ACCORDANCE WITH ARTICLE 4 OFEACH OF THE DEFERRED CASH PROGRAM AND THE INCENTIVE COMPENSATION PROGRAM.(C) RESIGNATION. IF THE PARTICIPANT RESIGNS OR OTHERWISE VOLUNTARILY TERMINATES HIS OR HER EMPLOYMENT WITHALLIANCEBERNSTEIN (OTHER THAN DUE TO THE PARTICIPANT’S DISABILITY), ANY UNVESTED DEFERRED CASH AND ALL UNVESTED RESTRICTED UNITSHELD BY THE PARTICIPANT (AND NOT PREVIOUSLY FORFEITED OR CANCELLED) ON THE DATE OF RESIGNATION SHALL CONTINUE TO VEST AS SPECIFIED INSECTION 5 OF SCHEDULE A AND BE DISTRIBUTED AS SPECIFIED IN ARTICLE 4 OF EACH OF THE DEFERRED CASH PROGRAM AND THE INCENTIVECOMPENSATION PROGRAM. THE PROVISIONS IN THIS SECTION 7(C) ARE CONDITIONED UPON THE PARTICIPANT’S CONTINUED COMPLIANCE WITH THEAGREEMENTS AND COVENANTS SET FORTH IN SECTIONS 4 AND 5 OF THIS AWARD AGREEMENT FROM THE DATE OF RESIGNATION UNTIL THE DEFERREDCASH AND RESTRICTED UNITS HAVE FULLY VESTED AND BEEN DELIVERED (OR WOULD HAVE BEEN DELIVERED BUT FOR A VOLUNTARY LONG-TERM DEFERRALELECTION), THE PARTICIPANT PROVIDING TO ALLIANCEBERNSTEIN IN WRITING (IN A FORM TO BE PROVIDED BY ALLIANCEBERNSTEIN, A “RESIGNATIONQUESTIONNAIRE”) WITHIN 10 DAYS FROM THE FIRST DATE THE PARTICIPANT INFORMS ALLIANCEBERNSTEIN ABOUT HIS OR HER RESIGNATION, INFORMATION RELATING TO THE PARTICIPANT’S NEW EMPLOYMENT OPPORTUNITY, IF ANY, THE PARTICIPANT CONFIRMING CONTINUED COMPLIANCE WITH THE AGREEMENTSAND COVENANTS SET FORTH IN SECTIONS 4 AND 5 OF THIS AWARD AGREEMENT IN WRITING (IN A FORM TO BE PROVIDED BY ALLIANCEBERNSTEIN, A“CONFIRMATION CERTIFICATE”) IN CONNECTION WITH EACH VESTING DATE, AND THE PARTICIPANT EXECUTING AND COMPLYING WITH A STANDARDRELEASE IN FAVOR OF ALLIANCEBERNSTEIN (IN A FORM TO BE PROVIDED BY ALLIANCEBERNSTEIN, A “RELEASE”); PROVIDED, HOWEVER, THAT THE ONLYREMEDY AVAILABLE TO ALLIANCEBERNSTEIN FOR ANY BREACH BY THE PARTICIPANT OF THE AGREEMENTS AND COVENANTS SET FORTH IN SECTIONS 4,5(A) AND 5(B) OF THIS AWARD AGREEMENT THAT OCCURS AFTER THE PARTICIPANT’S LAST DATE OF EMPLOYMENT (INCLUDING ANY APPLICABLE NOTICEPERIOD), OR FOR THE PARTICIPANT FAILING TO PROVIDE TO ALLIANCEBERNSTEIN THE RESIGNATION QUESTIONNAIRE, THE RELEASE OR EACH ANNUALCONFIRMATION CERTIFICATE, SHALL BE THE FORFEITURE REMEDY DESCRIBED IN SECTION 5(E)(I). IN ADDITION, THE TERMS OF THIS SECTION 7(C) AREALSO CONDITIONED ON THE PARTICIPANT NOT RECEIVING REPLACEMENT EQUITY FROM A NEW EMPLOYER FOR THE UNVESTED DEFERRED CASH ANDRESTRICTED UNITS AS TO WHICH CONTINUED VESTING IS TO APPLY AND THE PARTICIPANT CONFIRMING SUCH FACT IN THE RESIGNATION QUESTIONNAIREAND EACH CONFIRMATION CERTIFICATE.- 6 -(D) TERMINATION WITHOUT CAUSE. IF ALLIANCEBERNSTEIN TERMINATES THE PARTICIPANT’S EMPLOYMENT WITHOUT CAUSE (OTHERTHAN DUE TO THE PARTICIPANT’S DISABILITY OR DEATH), ANY UNVESTED DEFERRED CASH AND ALL UNVESTED RESTRICTED UNITS HELD BY THEPARTICIPANT (AND NOT PREVIOUSLY FORFEITED OR CANCELLED) ON THE DATE OF SUCH TERMINATION SHALL CONTINUE TO VEST AS SPECIFIED IN SECTION 5OF SCHEDULE A AND BE DISTRIBUTED AS SPECIFIED IN ARTICLE 4 OF EACH OF THE DEFERRED CASH PROGRAM AND THE INCENTIVE COMPENSATIONPROGRAM. THE PROVISIONS IN THIS SECTION 7(D) ARE CONDITIONED UPON THE PARTICIPANT’S CONTINUED COMPLIANCE WITH THE COVENANTS SET FORTHIN SECTION 5 OF THIS AWARD AGREEMENT (EXCEPT SECTION 5(A), WITH RESPECT TO WHICH THE PARTICIPANT NEED NOT COMPLY AFTER THEPARTICIPANT’S TERMINATION DATE) UNTIL THE DEFERRED CASH AND RESTRICTED UNITS HAVE FULLY VESTED AND BEEN DELIVERED (OR WOULD HAVEBEEN DELIVERED BUT FOR A VOLUNTARY LONG-TERM DEFERRAL ELECTION), SIGNING AND RETURNING A CONFIRMATION CERTIFICATE TOALLIANCEBERNSTEIN IN CONNECTION WITH EACH VESTING DATE, AND EXECUTING AND COMPLYING WITH A STANDARD RELEASE IN FAVOR OFALLIANCEBERNSTEIN (IN A FORM TO BE PROVIDED BY ALLIANCEBERNSTEIN); PROVIDED, HOWEVER, THAT THE ONLY REMEDY AVAILABLE TOALLIANCEBERNSTEIN FOR ANY BREACH BY THE PARTICIPANT OF THE COVENANT SET FORTH IN SECTION 5(B) OF THIS AWARD AGREEMENT THAT OCCURSAFTER THE PARTICIPANT’S LAST DATE OF EMPLOYMENT (INCLUDING ANY APPLICABLE NOTICE PERIOD) SHALL BE THE FORFEITURE REMEDY DESCRIBED INSECTION 5(E)(I).(E) TERMINATION FOR CAUSE. IF ALLIANCEBERNSTEIN TERMINATES THE PARTICIPANT’S EMPLOYMENT FOR CAUSE (OR, IF AFTERTERMINATION OF THE PARTICIPANT’S EMPLOYMENT OTHER THAN FOR “CAUSE”, AS THAT TERM IS DEFINED IN THE 2010 PLAN, ALLIANCEBERNSTEINDETERMINES THAN AN EVENT OCCURRED DURING THE PARTICIPANT’S EMPLOYMENT THAT WOULD HAVE ENTITLED ALLIANCEBERNSTEIN TO TERMINATE THEPARTICIPANT’S EMPLOYMENT FOR CAUSE), THE PARTICIPANT SHALL FORFEIT ALL UNVESTED DEFERRED CASH AND RESTRICTED UNITS. - 7 -8. [ADDITION OF CLARIFYING LANGUAGE TO PREVIOUS AWARD AGREEMENTS. IN CONSIDERATION FOR ALLIANCEBERNSTEIN ENTERING INTO THISAGREEMENT, THE PARTICIPANT AGREES THAT EACH AWARD AGREEMENT, IF ANY, THAT WAS PREVIOUSLY ENTERED INTO BETWEEN ALLIANCEBERNSTEIN AND THE PARTICIPANTAS PART OF A YEAR-END INCENTIVE COMPENSATION PROCESS AND THAT SETS FORTH TERMS AND CONDITIONS RELATING TO AWARDS OF DEFERRED INCENTIVE COMPENSATION(INCLUDING, BUT NOT LIMITED TO, INCENTIVE COMPENSATION PROGRAM AWARDS, PARTNERS COMPENSATION PLAN AWARDS (TO THE EXTENT LONG-TERM DEFERRAL ELECTIONSREMAIN IN PLACE), CENTURY CLUB PLAN AWARDS, AWARDS OF OPTIONS TO BUY HOLDING UNITS, DEFERRED CASH AWARDS, FINANCIAL ADVISOR WEALTH ACCUMULATIONPLAN AWARDS AND RESTRICTED UNIT AWARDS) IS HEREBY AMENDED SO THAT IT INCLUDES THE CLARIFYING LANGUAGE SET FORTH IN SECTIONS 4, 7(C) AND 9 OF THIS AWARDAGREEMENT REGARDING ALLIANCEBERNSTEIN’S RIGHT TO SHORTEN THE PARTICIPANT’S NOTICE PERIOD AND THE RELATED CONSEQUENCES. CONSISTENT WITH THE PROVISIONSAND INTENT OF THIS SECTION 8, THE TERMS AND PROVISIONS OF SECTIONS 4, 7(C) AND 9 OF THIS AWARD AGREEMENT SHALL GOVERN IN THE EVENT THAT ANY TERM ORPROVISION OF A PREVIOUSLY EXECUTED AWARD AGREEMENT CONFLICTS WITH, OR IS INCONSISTENT WITH, SUCH SECTIONS.]39. NO RIGHT TO CONTINUED EMPLOYMENT. NEITHER THE AWARD NOR ANY TERM OF THIS AWARD AGREEMENT IS INTENDED TO CREATE A CONTRACT OFEMPLOYMENT OR ALTER THE AT-WILL STATUS OF THE PARTICIPANT, WHO IS EMPLOYED ON AN AT-WILL BASIS, NOR SHALL THEY CONFER UPON THE PARTICIPANT ANY RIGHT TOCONTINUE IN THE EMPLOY OF ALLIANCEBERNSTEIN BEFORE, DURING OR AFTER ANY APPLICABLE NOTICE PERIOD. IN ADDITION, NEITHER THE AWARD NOR ANY TERM OF THISAWARD AGREEMENT SHALL INTERFERE IN ANY WAY WITH THE RIGHT OF ALLIANCEBERNSTEIN TO TERMINATE THE SERVICE OF THE PARTICIPANT AT ANY TIME FOR ANY REASON,OR SHORTEN ANY NOTICE PERIOD AT ANY TIME AS PRESCRIBED BY SECTION 4 OF THIS AWARD AGREEMENT.10. NON-TRANSFERABILITY. THE PARTICIPANT MAY NOT SELL, ASSIGN, TRANSFER, PLEDGE OR OTHERWISE DISPOSE OF OR ENCUMBER ANY OF THEDEFERRED CASH OR RESTRICTED UNITS, OR ANY INTEREST THEREIN, UNTIL THE PARTICIPANT’S RIGHTS IN SUCH DEFERRED CASH OR RESTRICTED UNITS VEST INACCORDANCE WITH THIS AWARD AGREEMENT. ANY PURPORTED SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OR ENCUMBRANCE IN VIOLATION OF THIS AWARDAGREEMENT WILL BE VOID AND OF NO EFFECT.11. PAYMENT OF WITHHOLDING TAX. THE PROVISIONS SET FORTH IN SECTION 5.04(K) OF THE DEFERRED CASH PROGRAM AND SECTION 6.04(K) OF THEINCENTIVE COMPENSATION PROGRAM SHALL APPLY IN THE EVENT THAT ALLIANCEBERNSTEIN DETERMINES THAT ANY FEDERAL, STATE OR LOCAL TAX OR ANY OTHER CHARGE ISREQUIRED BY LAW TO BE WITHHELD WITH RESPECT TO A VESTING OR DISTRIBUTION OF DEFERRED CASH OR RESTRICTED UNITS.12. DILUTION AND OTHER ADJUSTMENTS. THE EXISTENCE OF THE AWARD SHALL NOT IMPAIR THE RIGHT OF ALLIANCEBERNSTEIN, HOLDING OR THEIRRESPECTIVE PARTNERS TO, AMONG OTHER THINGS, CONDUCT, MAKE OR EFFECT ANY CHANGE IN ALLIANCEBERNSTEIN’S OR HOLDING’S BUSINESS, ANY DISTRIBUTION (WHETHERIN THE FORM OF CASH, LIMITED PARTNERSHIP INTERESTS, OTHER SECURITIES OR OTHER PROPERTY), RECAPITALIZATION (INCLUDING, WITHOUT LIMITATION, ANY SUBDIVISION ORCOMBINATION OF LIMITED PARTNERSHIP INTERESTS), REORGANIZATION, CONSOLIDATION, COMBINATION, REPURCHASE OR EXCHANGE OF LIMITED PARTNERSHIP INTERESTS OR OTHERSECURITIES OF ALLIANCEBERNSTEIN OR HOLDING, ISSUANCE OF WARRANTS OR OTHER RIGHTS TO PURCHASE LIMITED PARTNERSHIP INTERESTS OR OTHER SECURITIES OFALLIANCEBERNSTEIN OR HOLDING, OR ANY INCORPORATION (OR OTHER CHANGE IN FORM) OF ALLIANCEBERNSTEIN OR HOLDING. HOLDING UNITS SHALL BE SUBJECT TOADJUSTMENT IN ACCORDANCE WITH SECTION 4(C) OF THE 2010 PLAN (OR SUCH APPLICABLE SUCCESSOR PROVISION).3 INCLUDE IF APPLICABLE.- 8 -13. ELECTRONIC DELIVERY. THE PLANS CONTEMPLATE THAT EACH AWARD SHALL BE EVIDENCED BY AN AWARD AGREEMENT WHICH SHALL BE DELIVERED TOTHE PARTICIPANT. IT IS HEREBY UNDERSTOOD THAT ELECTRONIC DELIVERY OF THIS AWARD AGREEMENT CONSTITUTES DELIVERY UNDER THE PLANS. 14. ADMINISTRATOR. IF AT ANY TIME THERE SHALL BE NO COMMITTEE, THE BOARD SHALL BE THE ADMINISTRATOR.15. GOVERNING LAW. THIS AWARD AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OFNEW YORK. THE PARTICIPANT HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK, COUNTY OFNEW YORK, WITH RESPECT TO ANY LEGAL ACTION, DISPUTE OR OTHERWISE, ARISING OUT OF, RELATED TO, OR IN CONNECTION WITH THIS AWARD AGREEMENT. THEPARTICIPANT HEREBY WAIVES ANY OBJECTION IN ANY SUCH ACTION OR PROCEEDING BASED ON FORUM NON-CONVENIENS, AND ANY OBJECTION TO VENUE WITH RESPECT TO ANYSUCH LEGAL ACTION, WHICH MAY BE INSTITUTED IN ANY OF THE AFOREMENTIONED COURTS.16. SECTIONS AND HEADINGS. ALL SECTION REFERENCES IN THIS AWARD AGREEMENT ARE TO SECTIONS HEREOF FOR CONVENIENCE OF REFERENCE ONLYAND ARE NOT TO AFFECT THE MEANING OF ANY PROVISION OF THIS AWARD AGREEMENT.17. INTERPRETATION. THE PARTICIPANT ACCEPTS THE AWARD SUBJECT TO ALL THE TERMS AND PROVISIONS OF THE PLANS AND THIS AWARD AGREEMENT. INTHE EVENT OF ANY CONFLICT BETWEEN ANY CLAUSE OF THE PLANS AND THIS AWARD AGREEMENT, THIS AWARD AGREEMENT SHALL CONTROL. THE PARTICIPANT ACCEPTS ASBINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE ADMINISTRATOR OR BOARD UPON ANY QUESTIONS ARISING UNDER THE PLANS AND/OR THIS AWARDAGREEMENT.18. NOTICES. ANY NOTICE UNDER THIS AWARD AGREEMENT SHALL BE IN WRITING AND SHALL BE DEEMED TO HAVE BEEN DULY GIVEN WHEN DELIVEREDPERSONALLY (WHETHER BY HAND OR BY FACSIMILE) OR WHEN DEPOSITED IN THE UNITED STATES MAIL, REGISTERED, POSTAGE PREPAID, AND ADDRESSED, IN THE CASE OFALLIANCEBERNSTEIN AND HOLDING, TO THE CORPORATE SECRETARY AT 1345 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10105, OR IF ALLIANCEBERNSTEINSHOULD MOVE ITS PRINCIPAL OFFICE, TO SUCH PRINCIPAL OFFICE, AND, IN THE CASE OF THE PARTICIPANT, TO HIS OR HER LAST PERMANENT ADDRESS AS SHOWN ONALLIANCEBERNSTEIN'S RECORDS, SUBJECT TO THE RIGHT OF EITHER PARTY TO DESIGNATE SOME OTHER ADDRESS AT ANY TIME HEREAFTER IN A NOTICE SATISFYING THEREQUIREMENTS OF THIS SECTION 18.- 9 -19. ENTIRE AGREEMENT; AMENDMENT. THIS AWARD AGREEMENT SUPERSEDES ANY AND ALL EXISTING AGREEMENTS BETWEEN THE PARTICIPANT,ALLIANCEBERNSTEIN 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: [NAME] [TITLE]THE PARTICIPANT HEREBY ACKNOWLEDGES AND ACCEPTS THE TERMS AND CONDITIONS SET FORTH IN THIS AWARD AGREEMENT, INCLUDING ALLIANCEBERNSTEIN’S REMEDIES IFTHE PARTICIPANT FAILS TO COMPLY WITH THE AGREEMENTS AND COVENANTS SET FORTH IN SECTIONS 4 AND 5 OF THIS AWARD AGREEMENT, AND THE FORFEITURE OFUNVESTED DEFERRED CASH AND RESTRICTED UNITS FOR FAILURE TO CONSIDER CERTAIN RISKS AS DESCRIBED IN SECTION 6 OF THIS AWARD AGREEMENT. TO ACCEPT THETERMS OF THIS AWARD AGREEMENT, INCLUDING THE CLARIFICATIONS TO YOUR PREVIOUSLY EXECUTED AWARD AGREEMENTS, IF ANY, PURSUANT TO SECTION 8 OF THIS AWARDAGREEMENT, PLEASE CLICK THE “ACCEPT” BUTTON BELOW:ACCEPTDECLINE- 10 -SCHEDULE ATOAWARD AGREEMENT1. [INSERT AWARD AMOUNT]2. [INSERT DEFERRED CASH AWARD AMOUNT, IF ANY] (MAY NOT EXCEED THE LESSER OF [INSERT ANY APPLICABLE DOLLAR AND/OR PERCENTAGE OFAWARD LIMIT ON THE DEFERRED CASH AMOUNT])3. [INSERT NUMBER OF RESTRICTED UNITS] HAVE BEEN AWARDED PURSUANT TO THIS AWARD AGREEMENT.4. THE PER HOLDING UNIT PRICE USED TO DETERMINE THE NUMBER OF RESTRICTED UNITS AWARDED HEREUNDER IS $_____ PER HOLDING UNIT, WHICH IS THECLOSING PRICE OF A HOLDING UNIT AS PUBLISHED FOR COMPOSITE TRANSACTIONS ON THE NEW YORK STOCK EXCHANGE ON [INSERT DATE OFCOMPENSATION COMMITTEE MEETING AT WHICH AWARDS WERE APPROVED].5. [INSERT APPLICABLE FOUR-YEAR VESTING SCHEDULE OR OTHER APPLICABLE VESTING SCHEDULE]- 11 -SCHEDULE ATOAWARD AGREEMENTFOR ALLIANCEBERNSTEIN SALES PROFESSIONALS1. [INSERT AWARD AMOUNT]2. [INSERT DEFERRED CASH AWARD AMOUNT, IF ANY (MAY NOT EXCEED THE LESSER OF [INSERT ANY APPLICABLE DOLLAR AND/OR PERCENTAGE OFAWARD LIMIT ON THE DEFERRED CASH AMOUNT]3. [INSERT NUMBER OF RESTRICTED UNITS] HAVE BEEN AWARDED PURSUANT TO THIS AWARD AGREEMENT.4. THE PER HOLDING UNIT PRICE USED TO DETERMINE THE NUMBER OF RESTRICTED UNITS AWARDED HEREUNDER IS $_____ PER HOLDING UNIT, WHICH IS THECLOSING PRICE OF A HOLDING UNIT AS PUBLISHED FOR COMPOSITE TRANSACTIONS ON THE NEW YORK STOCK EXCHANGE ON [INSERT DATE OFCOMPENSATION COMMITTEE MEETING AT WHICH AWARDS WERE APPROVED].5. [INSERT APPLICABLE FOUR-YEAR VESTING SCHEDULE OR OTHER APPLICABLE VESTING SCHEDULE] - 12 -Exhibit 10.05 2010 LONG TERM INCENTIVE PLAN, AS AMENDEDAWARD AGREEMENT AWARD AGREEMENT, dated as of [INSERT AWARD DATE], among AllianceBernstein L.P. (“Partnership”), AllianceBernstein Holding L.P. (“Holding”) and [INSERT PARTICIPANT] (“Participant”), a member of the Board of Directors of AllianceBernstein Corporation (“Board”), the generalpartner of the Partnership and Holding.WHEREAS, the Board, pursuant to the Partnership’s 2010 Long Term Incentive Plan, as amended (“Plan”), a copy of which has been delivered tothe Participant, has granted to the Participant an award (“Award”), based on an election by the Participant, that consists of either (1) an option (“Option”) topurchase the number of units representing assignments of the beneficial ownership of limited partnership interests in Holding (“Units”) where the Option has avalue of $120,000 calculated in accordance with Black-Scholes methodology, (2) the number of Units having an aggregate fair value of $120,000 based onthe closing price of a Unit on [INSERT AWARD DATE] as reported for New York Stock Exchange composite transactions (“Closing Price”), which Unitsare subject to certain restrictions described herein (“Restricted Units”), or (3)(a) an Option to purchase the number of Units where the Option has a value of$60,000 calculated in accordance with Black-Scholes methodology and (b) the number of Restricted Units having an aggregate fair value of $60,000 based onthe Closing Price; andWHEREAS, the form by which the Participant made such election is attached hereto as Schedule A; andWHEREAS, the Board has 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 asfollows:1. Grant. Subject to and under the terms and conditions set forth in this Award Agreement and the Plan, the Board hereby awards theParticipant:(a) an Option to purchase from the Partnership the number of Units set forth in Section 1 of Schedule B, at the per Unit price set forth inSection 2 of Schedule B, subject to the vesting schedule set forth in Section 3 of Schedule B; and/or(b) the number of Restricted Units set forth in Section 4 of Schedule B, subject to the vesting schedule set forth in Section 5 of Schedule B.2. Term and Vesting Schedule. (a) Subject to Section 4(a) below, the Option shall not be exercisable to any extent prior to [INSERT VESTINGDATE] or after [INSERT EXPIRATION DATE] (“Expiration Date”). Subject to the terms and conditions of this Award Agreement and the Plan, theParticipant shall be entitled to exercise the Option prior to the Expiration Date and to purchase Units pursuant to the Option in accordance with the schedule setforth in Section 3 of Schedule B.The right to exercise the Option shall be cumulative so that to the extent the Option is not exercised when it becomes initially exercisable with respect toany Units, it shall be exercisable with respect to such Units at any time thereafter until the Expiration Date. Any Units subject to the Option that have not beenpurchased on or before the Expiration Date may not, thereafter, be purchased hereunder. A Unit shall be considered to have been purchased on or before theExpiration Date if the Partnership has been given notice of the purchase and the Partnership has actually received payment therefor pursuant to Sections 3(a)and 14, on or before the Expiration Date.(b) The Restricted Units shall vest in accordance with the schedule set forth in Section 5 of Schedule B and shall be distributed to the Participantpromptly after vesting.3. Notice of Exercise, Payment, Certificate and Account. (a) Exercise of the Option, in whole or in part, shall be by delivery of a written notice to thePartnership and Holding pursuant to Section 14, which specifies the number of Units being purchased and is accompanied by payment therefor in cash. TheParticipant may pay the Partnership as many as three business days subsequent to the exercise date through a financial intermediary designated by the Board. Promptly after receipt of such notice and purchase price, the Partnership shall cause the Partnership’s transfer agent (“Transfer Agent”), currentlyComputershare Shareowner Services LLC, to deliver the number of Units purchased. Units to be issued upon the exercise of the Option may be authorizedand unissued Units or Units that have been reacquired by the Partnership, a subsidiary of the Partnership, Holding or a subsidiary of Holding.(b) The Partnership shall establish an uncertificated account (“Account”) with the Transfer Agent representing the Restricted Units within areasonable time after the Participant’s execution and delivery of this Award Agreement. The Partnership shall deliver to the Participant a certificate representingUnits that have vested pursuant to this Award Agreement within a reasonable time after such Units vest. The Transfer Agent will adjust the Account to reflectthe number of Units covered by each such certificate and will reduce the Account to the extent that any unvested Restricted Units are forfeited pursuant to theterms of this Award Agreement.4. Termination. Unless the Board determines otherwise, the provisions of this Section 4 shall apply on termination of the Participant’s service on theBoard.(a) The Option may be exercised by the Participant and the Restricted Units may be distributed to the Participant only while the Participantserves on the Board; provided, however, that upon termination of the Participant's service by reason of the Participant's voluntary mid-term resignation,declining to stand for re-election (whether as a result of the general partner’s mandatory retirement program or otherwise), becoming an employee of thePartnership or a subsidiary thereof, or because the Participant incurs a Disability, the outstanding portion of the Option held by the Participant on the date ofsuch termination shall continue to become exercisable as specified in Section 3 of Schedule B and shall expire on the earlier of the Expiration Date and the datethat is [insert applicable post-termination expiration date], and the outstanding Restricted Units held by the Participant on the date of such termination shall bedistributed to the Participant promptly after the date of such termination. In the event of the death of the Participant (whether before or after termination ofservice), the outstanding portion of the Option held by the Participant (and not previously canceled or expired) on the date of death shall be fully exercisable bythe Participant's legal representative within [insert applicable post-death expiration date] (without regard to Section 3 of Schedule B, but not later than theExpiration Date), and the outstanding Restricted Units held by the Participant on the date of death shall be distributed to the Participant’s beneficiary (or theParticipant’s estate, if the Participant has not designated a beneficiary) promptly after such date. “Disability” means the Participant’s inability to engage inany substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to last for a continuous period ofnot less than 12 months, as determined by the carrier of the long-term disability insurance program maintained by the Partnership or its affiliate that coversthe Participant, if any, or such other person or entity designated by the Partnership in its sole discretion. In order to assist in the process described in thisparagraph, the Participant shall, as reasonably requested by the Partnership or its designee, (i) be available for medical examinations by one or morephysicians chosen by the long-term disability insurance provider or the Partnership and approved by the Participant, whose approval shall not unreasonablybe withheld, and (ii) grant the long-term disability insurance provider, the Partnership and any such physicians access to all relevant medical informationconcerning the Participant, arrange to furnish copies of medical records to them, and use best efforts to cause the Participant’s own physicians to be availableto discuss the Participant’s health with them. (b) The Participant shall immediately forfeit the vested and unvested portions of both the Option and the Restricted Units awarded underthis Award Agreement if the Participant’s service as a Director is terminated for Cause. “Cause” shall mean the Participant’s (1) continuing willful failure toperform his duties as a Director (other than as a result of his total or partial incapacity due to physical or mental illness), (2) gross negligence or malfeasancein the performance of his or her duties, (3) a finding by a court or other governmental body with proper jurisdiction that an act or acts by the Participantconstitutes (A) a felony under the laws of the United States or any state thereof, or (B) a violation of federal or state securities law, by reason of which findingthe Board determines in good faith that the continued service of the Participant would be seriously detrimental to the Partnership and its business, (4) in theabsence of such a finding by a court or other governmental body with proper jurisdiction, such a determination in good faith by the Board by reason of suchact or acts constituting such a felony, serious crime or violation, or (5) any breach by the Participant of any obligation of confidentiality, non-competition, ornon-solicitation to the Partnership.5. No Right to Continued Directorship. The granting of the Award shall not confer upon the Participant any right to continue to be retained as aDirector, and shall not interfere in any way with the right of the Partnership to terminate the service of the Participant at any time for any reason.6. Non-Transferability. (a) The Option is not transferable other than by will or the laws of descent and distribution and, except as otherwiseprovided in Section 4, during the lifetime of the Participant this Option is exercisable only by the Participant; except that a Participant may transfer thisOption, without consideration, subject to such rules as the Board may adopt to preserve the purposes of the Plan (including limiting such transfers to transfersby Participants who are Director Participants or senior executives), to a trust solely for the benefit of the Participant and the Participant's spouse, children orgrandchildren (including adopted and stepchildren and grandchildren).(b) Except as otherwise provided in this Award Agreement, the Participant may not sell, assign, transfer, pledge or otherwise dispose of orencumber any of the Units subject to the Option or any of the Restricted Units, or any interest therein, until the Participant’s rights in such Units vest inaccordance with this Award Agreement. Any purported sale, assignment, transfer, pledge or other disposition or encumbrance in violation of this AwardAgreement will be void and of no effect.7. Payment of Withholding Tax. (a) In the event that the Partnership or Holding determines that any federal, state or local tax or any other charge isrequired by law to be withheld with respect to the exercise of the Option or the grant of the Restricted Units, the Participant shall, either directly or through afinancial intermediary, promptly pay to the Partnership, a subsidiary specified by the Partnership, Holding or a subsidiary specified by Holding, on fourbusiness days’ notice, an amount equal to such withholding tax or charge, or (b) if the Participant does not promptly so pay the entire amount of suchwithholding tax or charge in accordance with such notice, or make arrangements satisfactory to the Partnership and Holding regarding payment thereof, thePartnership, any subsidiary of the Partnership, Holding or any subsidiary of Holding may withhold the remaining amount thereof from any amount due theParticipant from the Partnership, its subsidiary, Holding or its subsidiary.8. Dilution and Other Adjustments. The existence of the Award shall not impair the right of the Partnership, Holding or their respective partners to,among other things, conduct, make or effect any change in the Partnership’s or Holding’s business, any distribution (whether in the form of cash, limitedpartnership interests, other securities, or other property), recapitalization (including, without limitation, any subdivision or combination of limited partnershipinterests), 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 of thePartnership or Holding. In the event of such a change in the partnership interests of the Partnership or Holding, the Board shall make such adjustments to theAward, including the purchase price of the Option specified in Section 2 of Schedule B, as it deems appropriate and equitable. In the event of incorporation ofthe Partnership or Holding, the Board shall make such arrangements as it deems appropriate and equitable with respect to the Award for the Participant topurchase stock in the resulting corporation in place of the Units subject to the Option and the Restricted Units. Any such adjustment or arrangement mayprovide for the elimination of any fractional Unit or shares of stock that might otherwise become subject to this Option. Any decision by the Board under thisSection shall be final and binding upon the Participant.9. Rights as an Owner of a Unit. (a) The Participant (or a transferee of the Option pursuant to Sections 4 and 6 hereof) shall have no rights as anowner of a Unit with respect to any Unit covered by the Option until he or she becomes the holder of record of such Unit, which shall be deemed to occur atthe time that notice of purchase is given and payment in full is received by the Partnership and Holding under Sections 3(a) and 14 of this Award Agreement. By such actions, the Participant (or such transferee) shall be deemed to have consented to, and agreed to be bound by, all other terms, conditions, rights andobligations set forth in the then current Amended and Restated Agreement of Limited Partnership of Holding and the then current Amended and RestatedAgreement of Limited Partnership of the Partnership (“Partnership Agreement”). Except as provided in Section 8 hereof, no adjustment shall be made withrespect to any Unit for any distribution for which the record date is prior to the date on which the Participant becomes the holder of record of the Unit,regardless of whether the distribution is ordinary or extraordinary, in cash, securities or other property, or of any other rights.(b) Except as provided in the Partnership Agreement, as of the date of this Award Agreement, the Participant shall have all of the rights under thePartnership Agreement that a Unitholder would have with respect to the Restricted Units awarded to the Participant hereunder (including, without limitation,the right to receive quarterly distributions payable with respect to such Units on or after that date).10. Administrator. The Board shall be the Administrator.11. Governing Law. This Award Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.12. Entire Agreement; Amendment. This Award Agreement supersedes any and all existing agreements between the Participant, the Partnership andHolding relating to the Option and Restricted Unit awards. It may not be amended except by a written agreement signed by both parties.13. Interpretation. The Participant accepts this Award subject to all the terms and provisions of the Plan, which shall control in the event of anyconflict between any provision of the Plan and this Award Agreement, and accepts as binding, conclusive and final all decisions or interpretations of the Boardupon any questions arising under the Plan and/or this Award Agreement.14. Notices. Any notice under this Award Agreement shall be in writing and shall be deemed to have been duly given when delivered personally orwhen deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Partnership and Holding, to the Corporate Secretary oran Assistant Secretary at 1345 Avenue of the Americas, New York, New York 10105, or if the Partnership should move its principal office, to such principaloffice, and, in the case of the Participant, to his last permanent address as shown on the Partnership's records, subject to the right of either party to designatesome other address at any time hereafter in a notice satisfying the requirements of this Section.15. Sections and Headings. All section references in this Award Agreement are to sections hereof for convenience of reference only and are not toaffect the meaning of any provision of this Award Agreement. ALLIANCEBERNSTEIN L.P. By:/s/ [Name] [Title] ALLIANCEBERNSTEIN HOLDING L.P. By:/s/ [Name] [Title] /s/ SCHEDULE AAllianceBernstein 2010 Long Term Incentive Plan, As AmendedEquity Compensation Election Form ELECTION FORM, dated as of [INSERT FORM DATE], among AllianceBernstein L.P. (“Partnership”), AllianceBernstein Holding L.P. (“AllianceBernstein Holding”) and the undersigned (“Participant”), a member of the Board of Directors of AllianceBernstein Corporation (“Board”), thegeneral partner of the Partnership and Holding.WHEREAS, the Board determined at its meeting held on [INSERT DATE] that the equity grant to each Non-Management Director (consisting ofoptions and/or AllianceBernstein Holding units) shall be based on the election by each such Director, in January of each year, to receive, pursuant to theAllianceBernstein 2010 Long Term Incentive Plan, as amended, or any successor equity compensation plan, an award consisting of (1) an option to purchasethe number of AllianceBernstein Holding units where the option has a value of $[INSERT AMOUNT] calculated in accordance with Black-Scholesmethodology, (2) the number of AllianceBernstein Holding units having a value of $[INSERT AMOUNT] based on the closing price of AllianceBernsteinHolding units on the date of grant as reported for New York Stock Exchange composite transactions, or (3) an equity grant consisting of (a) an option topurchase a number of AllianceBernstein Holding units where the option has a value of $[INSERT AMOUNT] calculated in accordance with Black-Scholesmethodology and (b) the number of AllianceBernstein Holding units having a value of $[INSERT AMOUNT] based on the closing price of AllianceBernsteinHolding units on the date of grant as reported for New York Stock Exchange composite transactions;NOW, THEREFORE, I hereby elect to receive my [INSERT YEAR] equity compensation award, pursuant to the AllianceBernstein 2010 Long TermIncentive Plan, as amended, in the following form: o an option to purchase the number of AllianceBernstein Holding units where the option has a value of $[INSERT AMOUNT] calculated inaccordance with Black-Scholes methodology; o the number of AllianceBernstein Holding units having a value of $[INSERT AMOUNT] based on the closing price of AllianceBernstein Holdingunits on the date of grant as reported for New York Stock Exchange composite transactions; oro an equity award consisting of (a) an option to purchase the number of AllianceBernstein Holding units where the option has a value of $[INSERTAMOUNT] calculated in accordance with Black-Scholes methodology, and (b) the number of AllianceBernstein Holding units having a value of$[INSERT AMOUNT] based on the closing price of AllianceBernstein Holding units on the date of grant as reported for New York Stock Exchangecomposite transactions.By:/s/ Name: Date: SCHEDULE B 1. The number of Units that the Participant is entitled to purchase pursuant to the Option granted under this Award Agreement is [INSERT NUMBER OFUNITS, IF ANY].2. The per Unit price to purchase Units pursuant to the Option granted under this Award Agreement is $[INSERT CLOSING PRICE] per Unit.3. [INSERT APPLICABLE VESTING SCHEDULE RELATING TO OPTIONS]* * *4.[INSERT NUMBER OF RESTRICTED UNITS, IF ANY] Restricted Units have been awarded pursuant to this Award Agreement.5.[INSERT APPLICABLE DELIVERY SCHEDULE RELATING TO RESTRICTED UNITS] Exhibit 10.06 Guidelines for Transfer of AllianceBernstein L.P. UnitsNo transfer of ownership of the units of AllianceBernstein L.P. (the private partnership) is permitted without prior approval ofAllianceBernstein 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:qYou must first identify the buyer for your Units. AllianceBernstein can not maintain a list of prospective buyers.qThe unitholder and the prospective buyer must submit a request for transfer of ownership of the Units and obtain approval of AllianceBernstein andAXA Equitable for the transaction.qDocumentation required for consideration of approval includes:-Unit Certificate(s)-Executed “Stock” Power Form, with guaranteed signature-Letter from Seller-Letter from PurchaserTo have private Units re-registered to your name if they have been left to you by a deceased party:qThe beneficiary must obtain approval of AllianceBernstein and AXA Equitable for the transfer of units.qDocumentation required for consideration of approval includes:-Unit Certificate(s)-Executed “Stock” Power Form, with guaranteed signature-Copy of death certificate-Required Inheritance Tax Waiver for applicable statesqAdditional required documentation (which varies by state) should be verified with AllianceBernstein’s transfer agent, Computershare, at 866-737-9896and www.computershare.com/investor. To donate the Units:qThe donor must obtain approval of AllianceBernstein and AXA Equitable for the transfer of units.qDocumentation required for consideration of approval includes:-Unit Certificate(s)-Executed “Stock” Power Form, with guaranteed signature-Letter from TransfereeqAdditional required documentation should be verified with AllianceBernstein’s transfer agent, Computershare, at 866-737-9896 andwww.computershare.com/investor. To re-register your certificate to reflect a legal change of name or change in custodian:qThe unitholder must obtain approval of AllianceBernstein and AXA Equitable for the change of name/registration on the unit certificate.qDocumentation required for consideration of approval includes:-Unit Certificate(s)-Executed “Stock” Power Form, with guaranteed signature-Specific instruction letter indicating the manner in which the new unit certificate should be registeredqAdditional required documentation should be verified with AllianceBernstein’s transfer agent, Computershare, at 866-737-9896 andwww.computershare.com/investor.Once AllianceBernstein and AXA Equitable approve the transfer request, AllianceBernstein will inform you of the approval and begin processing the transfer. You should not begin to prepare necessary documentation until you have contacted: David Lesser Legal and Compliance Department – Transfer Program AllianceBernstein L.P. 1345 Avenue of the Americas New York, NY 10105 Phone: (212) 969-1429 Exhibit 12.01AllianceBernstein L.P.Consolidated Ratio Of Earnings To Fixed Charges Years Ended December 31, 2013 2012 2011 (in thousands) Fixed Charges: Interest Expense $2,962 $3,429 $2,545 Estimate of Interest Component In Rent Expense (1) - - - Total Fixed Charges $2,962 $3,429 $2,545 Earnings: Income (Loss) Before Income Taxes and Non-Controlling $564,251 $202,365 $(208,469)Interest in Earnings of Consolidated Entities Other 16,337 24,675 (6,029)Fixed Charges 2,962 3,429 2,545 Total Earnings $583,550 $230,469 $(211,953) Consolidated Ratio Of Earnings To Fixed Charges 197.01 67.21 N/A(2) (1)AllianceBernstein L.P. has not entered into financing leases during these periods.(2)The ratio of earnings to fixed charges was negative for the year ended December 31, 2011. Additional earnings of $214.5 million would be needed to havea one-to-one ratio of earnings to fixed charges. EXHIBIT 21.01 SUBSIDIARIES OFALLIANCEBERNSTEIN L.P. EACH OF THE ENTITIES LISTED BELOW ARE WHOLLY-OWNED SUBSIDIARIES OF ALLIANCEBERNSTEIN, UNLESS A SPECIFIC PERCENTAGE OWNERSHIP IS INDICATED:ALLIANCEBERNSTEIN INTERNATIONAL LLC(DELAWARE)ALLIANCEBERNSTEIN TRUST COMPANY, LLC(NEW HAMPSHIRE)ALLIANCEBERNSTEIN CORPORATION OF DELAWARE(DELAWARE)ALLIANCEBERNSTEIN HOLDINGS (CAYMAN) LTD.(CAYMAN ISLANDS)SANFORD C. BERNSTEIN & CO., LLC(DELAWARE)ALLIANCEBERNSTEIN REAL ESTATE INVESTMENTS 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)ALLIANCEBERNSTEIN CANADA, INC.(CANADA)ALLIANCEBERNSTEIN (MEXICO), S. DE R.L. DE C.V.(MEXICO)ALLIANCEBERNSTEIN ADMINISTRADORA DE CARTEIRAS (BRASIL) LTDA.(BRAZIL)ALLIANCEBERNSTEIN (ARGENTINA) S.R.L.(ARGENTINA)ALLIANCEBERNSTEIN HOLDINGS LIMITED(U.K.)ALLIANCEBERNSTEIN PREFERRED LIMITED(U.K.)ALLIANCEBERNSTEIN LIMITED(U.K.)ALLIANCEBERNSTEIN SERVICES LIMITED(U.K.)SANFORD C. BERNSTEIN LIMITED(U.K.)SANFORD C. BERNSTEIN (CREST NOMINEES) LIMITED(U.K.)SANFORD C. BERNSTEIN (SCHWEIZ) GMBH(SWITZERLAND)ALLIANCEBERNSTEIN (LUXEMBOURG) S.A.R.L(LUXEMBOURG)ALLIANCEBERNSTEIN (FRANCE) SAS(FRANCE)ACM BERNSTEIN GMBH(GERMANY)ALLIANCEBERNSTEIN JAPAN LTD.(JAPAN)ALLIANCEBERNSTEIN HONG KONG LIMITED(HONG KONG)SANFORD C. BERNSTEIN (HONG KONG) LIMITED(HONG KONG)ALLIANCEBERNSTEIN ASSET MANAGEMENT (KOREA) LTD.(KOREA)ALLIANCEBERNSTEIN INVESTMENT RESEARCH (PROPRIETARY) LIMITED(SOUTH AFRICA; 80%-OWNED)ALLIANCEBERNSTEIN INVESTMENT MANAGEMENT AUSTRALIA LIMITED(AUSTRALIA)ALLIANCEBERNSTEIN AUSTRALIA LIMITED(AUSTRALIA)ALLIANCEBERNSTEIN NEW ZEALAND LIMITED(NEW ZEALAND)ALLIANCEBERNSTEIN (SINGAPORE) LTD.(SINGAPORE)ALLIANCEBERNSTEIN INVESTMENTS TAIWAN LIMITED(TAIWAN)ALLIANCE CAPITAL (MAURITIUS) PRIVATE LIMITED(MAURITIUS)ALLIANCEBERNSTEIN INVESTMENT RESEARCH AND MANAGEMENT (INDIA) PRIVATE LTD.(INDIA)W.P. STEWART & CO., LTD.(DE)WPS ADVISORS, INC.(DE)W.P. STEWART ASSET MANAGEMENT LTD.(DE)W.P. STEWART & CO. (EUROPE), LTD.(U.K.)W.P. STEWART ASSET MANAGEMENT (NA), INC.(NY)W.P. STEWART ASSET MANAGEMENT (CURACAO), N.V.(CURACAO)W.P. STEWART ASSET MANAGEMENT (EUROPE), N.V.(NETHERLANDS)TPR CURACAO N.V.(CURACAO)WPSH MANAGEMENT N.V.(CURACAO)W.P. STEWART SECURITIES LLC(DE)W.P. STEWART FUND MANAGEMENT, S.A.(LUXEMBOURG)BOWEN ASIA LIMITED(HONG KONG) EXHIBIT 23.01 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe 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) ofAllianceBernstein L.P. of our reports dated February 12, 2014 relating to the financial statements, financial statement schedule and the effectiveness of internalcontrol over financial reporting, which appear in this Annual Report on Form 10-K./s/ PricewaterhouseCoopers LLPNew York, New YorkFebruary 12, 2014 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial 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 inExchange 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal 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 theeffectiveness 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 recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially 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 theregistrant’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 reasonablylikely 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 controlover financial reporting. Date: February 12, 2014/s/ Peter S. Kraus Peter S. Kraus Chief Executive Officer AllianceBernstein L.P. Exhibit 31.02 I, John C. Weisenseel, 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial 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 inExchange 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal 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 theeffectiveness 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 recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially 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 theregistrant’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 reasonablylikely 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 controlover financial reporting. Date: February 12, 2014/s/ John C. Weisenseel John C. Weisenseel Chief Financial Officer AllianceBernstein L.P. Exhibit 32.01 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of AllianceBernstein L.P. (the “Company”) on Form 10-K for the period ending December 31, 2013 to be filed with theSecurities and Exchange Commission on or about February 12, 2014 (the “Report”), I, Peter S. Kraus, Chief Executive Officer of the Company, certify, forthe 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, asadopted 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 theCompany. Date: February 12, 2014/s/ Peter S. Kraus Peter S. Kraus Chief Executive Officer AllianceBernstein L.P. Exhibit 32.02 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 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, 2013 to be filed with theSecurities and Exchange Commission on or about February 12, 2014 (the “Report”), I, John C. Weisenseel, 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, asadopted 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 theCompany.Date: February 12, 2014/s/ John C. Weisenseel John C. Weisenseel Chief Financial Officer AllianceBernstein L.P. 

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