DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made as of March 23, 1994 between AFD
EXCHANGE RESERVES, a Massachusetts business trust (the "Trust"),
and ALLIANCE FUND DISTRIBUTORS, INC., a Delaware corporation (the
"Underwriter").
WITNESSETH
WHEREAS, the Trust is registered under the
Investment Company Act of 1940, as amended (the "Investment
Company Act"), as a diversified, open-end management investment
company and it is in the interest of the Trust to offer its
shares for sale continuously;
WHEREAS, the Underwriter is a securities firm
engaged in the business of selling shares of investment companies
either directly to purchasers or through other securities
dealers;
WHEREAS, the Trust and the Underwriter wish to
enter into an agreement with each other with respect to the
continuous offering of the Trust's shares in order to promote the
growth of the Trust and facilitate the distribution of its
shares;
NOW, THEREFORE, the parties agree as follows:
SECTION 1. Appointment of the Underwriter. The
Trust hereby appoints the Underwriter as the principal
underwriter and distributor of the Trust to sell to the public
shares of its Class A shares, Class B shares and Class C shares,
the Class A shares, the Class B shares and the Class C shares
being collectively referred to herein as the "shares"). The
Trust hereby agrees during the term of this Agreement to sell
shares to the Underwriter upon the terms and conditions herein
set forth.
SECTION 2. Exclusive Nature of Duties. The
Underwriter shall be the exclusive representative of the Trust to
act as principal underwriter and distributor except that the
rights given under this Agreement to the Underwriter shall not
apply to shares issued in connection with (a) the merger or
consolidation of any other investment company with the Trust,
(b) the Trust's acquisition by purchase or otherwise of all or
substantially all of the assets or stock of any other investment
company or (c) the reinvestment in shares by the Trust's
shareholders of dividends or other distributions.
SECTION 3. Purchase of Shares from the Trust.
(a) The Underwriter shall have the right to buy
from the Trust the shares needed to fill unconditional orders for
shares of the Trust placed with the Underwriter by investors or
securities dealers, depository institutions or other financial
intermediaries acting as agent for their customers. The price
which the Underwriter shall pay for the shares so purchased from
the Trust shall be the net asset value, determined as set forth
in Section 3(d) hereof, used in determining the public offering
price on which such orders are based.
(b) The shares so purchased are to be resold by
the Underwriter to investors at a public offering price, as set
forth in Section 3(c) hereof, or to securities dealers,
depository institutions or other financial intermediaries acting
as agent for their customers having agreements with the
Underwriter upon the terms and conditions set forth in Section 8
hereof.
(c) The public offering price of the shares, i.e.,
the price per share at which the Underwriter or selected dealers
or selected agents (each as defined in Section 8(a) below) may
sell shares to the public, shall be the public offering price
determined in accordance with the then current Prospectus and
Statement of Additional Information of the Trust (the
"Prospectus" and "Statement of Additional Information,"
respectively) under the Securities Act of 1933, as amended (the
"Securities Act"), relating to such shares, but not to exceed the
net asset value at which the Underwriter is to purchase such
shares. All payments to the Fund hereunder shall be made in the
manner set forth in Section 3(f) hereof.
(d) The net asset value of shares of the Trust
shall be determined by the Trust, or any agent of the Trust, as
of the close of regular trading on the New York Stock Exchange on
each Trust business day in accordance with the method set forth
in the Prospectus and Statements of Additional Information and
guidelines established by the Trustees of the Trust.
(e) The Trust reserves the right to suspend the
offering of its shares at any time in the absolute discretion of
its Trustees.
(f) The Trust, or any agent of the Trust
designated in writing to the Underwriter by the Trust, shall be
promptly advised by the Underwriter of all purchase orders for
shares received by the Underwriter. Any order may be rejected by
the Trust; provided, however, that the Trust will not arbitrarily
or without reasonable cause refuse to accept or confirm orders
for the purchase of shares. The Trust (or its agent) will
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confirm orders upon their receipt, will make appropriate book
entries and upon receipt by the Trust (or its agent) of payment
thereof, will deliver deposit receipts or certificates for such
shares pursuant to the instructions of the Underwriter. The
Underwriter agrees to cause such instructions to be delivered
promptly to the Trust (or its agent).
SECTION 4. Repurchase or Redemption of
Shares by the Trust.
(a) Any of the outstanding shares may be tendered
for redemption at any time, and the Trust agrees to redeem or
repurchase the shares so tendered in accordance with its
obligations as set forth in Section 6.2 of Article 6 of its
Agreement and Declaration of Trust and in accordance with the
applicable provisions set forth in the relevant Prospectus and
Statement of Additional Information. The price to be paid to
redeem or repurchase the shares shall be equal to the net asset
value calculated in accordance with the provisions of
Section 3(d) hereof less, in the case of Class B shares, a
deferred sales charge equal to a specified percentage or
percentages of the net asset value of the Class B shares or their
cost, whichever is less. Class B shares that have been
outstanding for a specified period of time may be redeemed
without payment of a deferred sales charge as from time to time
set forth in the relevant Prospectus. All payments by the Trust
hereunder shall be made in the manner set forth below. The
redemption or repurchase by the Trust of any of the Class A
shares will not affect the sales charge secured by the
Underwriter or any selected dealer or compensation paid to any
selected agent (unless such selected dealer or selected agent has
otherwise agreed with the Underwriter), in the course of the sale
to such Class A shareholder of the mutual fund shares exchanged
for such Class A shares (or exchanged for other mutual fund
shares that, ultimately through one or a series of exchanges,
were exchanged for such Class A shares), regardless of the length
of the time period between purchase by an investor and his
tendering for redemption or repurchase.
The Trust (or its agent) shall pay the total amount
of the redemption price and, except as may be otherwise required
by the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. (the "NASD") and any interpretations
thereof ("NASD rules and interpretations"), the deferred sales
charges, if any, as defined in the above paragraph, pursuant to
the instructions of the Underwriter in New York Clearing House
funds on or before the seventh business day subsequent to its
having received the notice of redemption in proper form.
(b) Redemption of shares or payment may be
suspended at times when the New York Stock Exchange is closed,
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when trading thereon is closed, when trading thereon is
restricted, when an emergency exists as a result of which
disposal by the Trust of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Trust
fairly to determine the value of its net assets, or during any
other period when the Securities and Exchange Commission, by
order, so permits.
SECTION 5. Plan of Distribution.
(a) It is understood that Sections 5, 12, and 16
hereof together constitute a plan of distribution (the "Plan")
within the meaning of Rule 12b-1 adopted by the Securities and
Exchange Commission under the Investment Company Act ("Rule 12b-
1").
(b) Except as may be required by NASD rules and
interpretations, the Trust will pay to the Underwriter each month
a distribution services fee with respect to each Portfolio equal,
on an annualized basis, to .50 of 1% of the aggregate average
daily net assets of the Portfolio attributable to the Class A
shares, 1.00% of the aggregate average daily net assets of the
Portfolio attributable to the Class B shares and .75 of 1% of the
aggregate average daily net assets of the Portfolio attributable
to the Class C shares. The Underwriter may spend such amounts as
it deems appropriate on any activities or expenses primarily
intended to result in the sale of shares of the Portfolio,
including, but not limited to, compensation of its employees,
compensation and expenses, including overhead and telephone and
other communication expenses, of the Underwriter and other
broker-dealers, depository institutions and other financial
intermediaries that engage in or support the distribution of
shares of the Trust, the preparation, printing and distribution
of Prospectuses, Statements of Additional Information, sales
literature and advertising materials, and other promotional
activities. The Underwriter may, if it wishes, retain all or any
portion of the distribution services fees received pursuant
hereto for its own purposes. A portion of the distribution
services fee that will not exceed, on an annualized basis, .25 of
1% of the aggregate average daily net assets of the Portfolio
attributable to each of the Class A shares, Class B shares and
Class C shares will constitute a service fee that will used by
the Underwriter for personal service and/or the maintenance of
shareholder accounts within the meaning of NASD rules and
interpretations.
(c) The Adviser may make payments from time to
time from its own resources for the purposes described in
Section 5(b) hereof.
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(d) Payments to broker-dealers, depository
institutions and other financial intermediaries for the purposes
set forth in Section 5(b) are subject to the terms and conditions
of the written agreements between the Underwriter and each
broker-dealer, depository institution or other financial
intermediary. Such agreements will be in a form satisfactory to
the Trustees of the Trust.
(e) The Treasurer of the Trust will prepare and
furnish to the Trust's Trustees, and the Trustees will review, at
least quarterly, a written report complying with the requirements
of Rule 12b-1 setting forth all amounts expended hereunder and
the purposes for which such expenditures were made.
(f) The Trust is not obligated to pay any
distribution expense in excess of the distribution services fee
described above in Section 5(b) hereof. The amount of
distribution services fees payable by the Trust with respect to
each of the Class A shares, the Class B shares and the Class C
shares is not related directly to the amount of expenses incurred
by the Underwriter with respect to each such class in connection
with providing distribution services, which expenses may be
greater or less than such fees and the Trust will not be
obligated to reimburse the Underwriter for such expenses. The
distribution services fee payable by the Trust with respect to
each such class of shares may be paid in respect of services
rendered and expenses borne in the past in connection with each
such class of shares as to which, on account of the limitations
described above in Section 5(b), no distribution services fee was
paid. The distribution services fees payable by the Trust with
respect to each such class of shares are to be paid by the Trust
to the Underwriter until either the Plan or this Agreement is
terminated or is not continued with respect to that class as
provided in Section 12 below. In the event this Agreement is
terminated by either party or is not continued with respect to a
class of shares as provided in Section 12 below: (i) no
distribution services fees (other than current amounts accrued
but not yet paid) will be owed by the Trust to the Underwriter
with respect to that class, and (ii) the Trust will not be
obligated to pay the Underwriter for any amounts expended
hereunder not previously reimbursed by the Trust from
distribution services fees in respect of shares of such class or
recovered through deferred sales charges described in Section
4(a) above. The distribution services fee of a particular class
of shares may not be used to subsidize the sale of shares of any
other class.
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SECTION 6. Duties of the Trust.
(a) The Trust shall furnish to the Underwriter
copies of all information, financial statements and other papers
that the Underwriter may reasonably request for use in connection
with the distribution of shares of the Trust, and this shall
include one certified copy, upon request by the Underwriter, of
all financial statements prepared for the Trust by independent
public accountants. The Trust shall make available to the
Underwriter such number of copies of the Prospectuses as the
Underwriter shall reasonably request.
(b) The Trust shall take, from time to time, such
steps as may be necessary to register the shares under the
Securities Act, to the end that there will be available for sale
such number of shares as the Underwriter reasonably may be
expected to sell.
(c) The Trust shall use its best efforts to
qualify and maintain the qualification of an appropriate number
of its shares under the securities laws of such states as the
Underwriter and the Trust may approve. Any such qualification
may be withheld, terminated or withdrawn by the Trust at any time
in its discretion. As provided in Section 9(b) hereof, the
expense of qualification and maintenance of qualification shall
be borne by the Trust. The Underwriter shall furnish such
information and other material relating to its affairs and
activities as may be required by the Trust in connection with
such qualification.
(d) The Trust will furnish, in reasonable
quantities upon request by the Underwriter, copies of annual and
interim reports of the Trust.
SECTION 7. Duties of the Underwriter.
(a) The Underwriter shall devote reasonable time
and effort to effect sales of shares of the Trust, but shall not
be obligated to sell any specific number of shares. The services
of the Underwriter to the Trust hereunder are not to be deemed
exclusive and nothing in this Agreement shall prevent the
Underwriter from entering into like arrangements with other
investment companies so long as the performance of its
obligations hereunder is not impaired thereby.
(b) In selling shares of the Trust, the
Underwriter shall use its best efforts in all material respects
duly to conform with the requirements of all federal and state
laws relating to the sale of such securities. Neither the
Underwriter, any selected dealer, any selected agent nor any
other person is authorized by the Trust to give any information
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or to make any representations, other than those contained in the
Trust's Registration Statement (the "Registration Statement"), as
amended from time to time, under the Securities Act and the
Investment Company Act or the Prospectus and Statement of
Additional Information or any sales literature specifically
approved in writing by the Fund.
(c) The Underwriter shall adopt and follow
procedures, as approved by the officers of the Trust, for the
confirmation of sales to investors and selected dealers, the
collection of amounts payable by investors and selected dealers
on such sales, and the cancellation of unsettled transactions, as
may be necessary to comply with the requirements of the NASD, as
such requirements may from time to time exist.
SECTION 8. Selected Dealer and Agent Agreements.
(a) The Underwriter shall have the right to enter
into selected dealer agreements with securities dealers of its
choice ("selected dealers") and selected agent agreements with
depository institutions and other financial intermediaries of its
choice ("selected agents") for the sale of shares and fix therein
the portion of the sales charge that may be allocated to the
selected dealers and selected agents; provided that the Trust
shall approve the forms of agreements with selected dealers and
selected agents and the selected dealer and selected agent
compensation set forth therein and shall evidence such approval
by filing said forms and amendments thereto as exhibits to its
then currently effective Registration Statement. Shares sold to
selected dealers or through selected agents shall be for resale
by such selected dealers and selected agents only at the public
offering price set forth in the relevant Prospectus and relevant
Statement of Additional Information.
(b) Within the United States, the Underwriter
shall offer and sell shares only to such selected dealers as are
members in good standing of the NASD.
SECTION 9. Payment of Expenses.
(a) The Trust shall bear all costs and expenses of
the Trust, including fees and disbursements of its counsel and
auditors, in connection with the preparation and filing of its
Registration Statement and Prospectus and Statement of Additional
Information, and all amendments and supplements thereto, and
preparing and mailing annual and interim reports and proxy
materials to shareholders (including but not limited to the
expense of setting in type any such registration statements,
prospectuses, annual or interim reports or proxy materials).
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(b) The Trust shall bear the cost of expenses of
qualification of shares for sale, and, if necessary or advisable
in connection therewith, of qualifying the Trust as an issuer or
as a broker or dealer, in such states of the United States or
other jurisdiction as shall be selected by the Trust and the
Underwriter pursuant to Section 6(c) hereof and the cost and
expenses payable to each such state for continuing qualification
therein until the Trust decides to discontinue such qualification
pursuant to Section 6(c) hereof.
SECTION 10. Indemnification.
(a) The Trust agrees to indemnify, defend and hold
the Underwriter, and any person who controls the Underwriter
within the meaning of Section 15 of the Securities Act, free and
harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Underwriter or
any such controlling person may incur, under the Securities Act,
or under common law or otherwise, arising out of or based upon
any alleged untrue statement of a material fact contained in the
Trust's Registration Statement, Prospectuses or Statements of
Additional Information in effect from time to time under the
Securities Act or arising out of or based upon any alleged
omission to state a material fact required to be stated in any
one thereof or necessary to make the statements in any one
thereof not misleading; provided, however, that in no event shall
anything herein contained be so construed as to protect the
Underwriter against any liability to the Trust or its security
holders to which the Underwriter would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of the Underwriter's
reckless disregard of its obligations and duties under this
Agreement. The Trust's agreement to indemnify the Underwriter
and any such controlling person as aforesaid is expressly
conditioned upon the Trust's being notified of the commencement
of any action brought against the Underwriter or any such
controlling person, such notification to be given by letter or by
telegram addressed to the Trust at its principal office in New
York, New York, and sent to the Trust by the person against whom
such action is brought within ten days after the summons or other
first legal process shall have been served. The failure to so
notify the Trust of the commencement of any such action shall not
relieve the Trust from any liability which it may have to the
person against whom such action is brought by reason of any such
alleged untrue statement or omission otherwise than on account of
the indemnity agreement contained in this Section 10. The Trust
will be entitled to assume the defense of any suit brought to
enforce any such claim, and to retain counsel of good standing
chosen by the Trust and approved by the Underwriter. In the
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event the Trust does not elect to assume the defense of any such
suit and retain counsel of good standing approved by the
Underwriter, the defendant or defendants in such suit shall bear
the fees and expenses of any additional counsel retained by any
of them; but in case the Trust does not elect to assume the
defense of any such suit, or in case the Underwriter does not
approve of counsel chosen by the Trust, the Trust will reimburse
the Underwriter or the controlling person or persons named as
defendant or defendants in such suit, for the fees and expenses
of any counsel retained by the Underwriter or such persons. The
indemnification agreement contained in this Section 10 shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Underwriter or any
controlling person and shall survive the sale of any of the
Trust's shares made pursuant to subscriptions obtained by the
Underwriter. This agreement of indemnity will inure exclusively
to the benefit of the Underwriter, to the benefit of its
successors and assigns, and to the benefit of any controlling
persons and their successors and assigns. The Trust agrees
promptly to notify the Underwriter of the commencement of any
litigation or proceeding against the Trust in connection with the
issue and sale of any of its shares.
(b) The Underwriter agrees to indemnify, defend
and hold the Trust, its several officers and trustees, and any
person who controls the Trust within the meaning of Section 15 of
the Securities Act, free and harmless from and against any and
all claims, demands, liabilities, and expenses (including the
cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection
therewith) which the Trust, its officers or directors, or any
such controlling person may incur under the Securities Act or
under common law or otherwise, but only to the extent that such
liability, or expense incurred by the Trust, its officers,
trustees or such controlling person resulting from such claims or
demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained in information furnished
in writing by the Underwriter to the Trust for use in its
Registration Statement, Prospectuses or Statements of Additional
Information in effect from time to time under the Securities Act,
or shall arise out of or be based upon any alleged omission to
state a material fact in connection with such information
required to be stated in the Registration Statement, Prospectuses
or Statements of Additional Information or necessary to make such
information not misleading. The Underwriter's agreement to
indemnify the Trust, its officers and trustees, and any such
controlling person as aforesaid is expressly conditioned upon the
Underwriter being notified of the commencement of any action
brought against the Trust, its officers or trustees or any such
controlling person, such notification to be given by letter or
telegram addressed to the Underwriter at its principal office in
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New York, and sent to the Underwriter by the person against whom
such action is brought, within ten days after the summons or
other first legal process shall have been served. The failure so
to notify the Underwriter of the commencement of any such action
shall not relieve the Underwriter from any liability which it may
have to the Trust, to its officers and trustees, or to such
controlling person by reason of any such untrue statement or
omission on the part of the Underwriter otherwise than on account
of the indemnity agreement contained in this Section 10. The
Underwriter shall have a right to control the defense of such
action, with counsel of its own choosing, satisfactory to the
Trust, if such action is based solely upon such alleged
misstatement or omission on its part, and in any other event the
Underwriter and the Trust, and their officers and trustees or
such controlling person, shall each have the right to participate
in the defense or preparation of the defense of any such action.
SECTION 11. Notification by the Trust.
The Trust agrees to advise the Underwriter
immediately:
(a) of any request by the Securities and Exchange
Commission for amendments to the Trust's Registration
Statement, Prospectus or Statement of Additional Information
or for additional information,
(b) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending the
effectiveness of the Trust's Registration Statement,
Prospectus or Statement of Additional Information or the
initiation of any proceeding for that purpose,
(c) of the happening of any material event which
makes untrue any statement made in the Fund's Registration
Statement, Prospectus or Statement of Additional Information
or which requires the making of a change in any one thereof
in order to make the statements therein not misleading, and
(d) of all actions of the Securities and Exchange
Commission with respect to any amendments to the Trust's
Registration Statement, Prospectuses or Statements of
Additional Information which may from time to time be filed
with the Securities and Exchange Commission under the
Securities Act.
SECTION 12. Term of Agreement.
(a) This Agreement shall become effective on the
date hereof and shall continue in effect until September 30,
1994, and thereafter for successive twelve-month periods
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(computed from each October 1) with respect to each class;
provided, however, that such continuance is specifically
approved at least annually by the Trustees of the Trust or
by vote of the holders of a majority of the outstanding
voting securities (as defined in the Investment Company Act)
of that class, and, in either case, by a majority of the
Trustees of the Trust who are not parties to this Agreement
or interested persons, as defined in the Investment Company
Act, of any such party (other than as trustees of the Trust)
and who have no direct or indirect financial interest in the
operation of the Plan or any agreement related thereto;
provided further, however, that if the continuation of this
Agreement is not approved as to a class or a Portfolio, the
Underwriter may continue to render to such class or
Portfolio the services described herein in the manner and to
the extent permitted by the Act and the rules and
regulations thereunder. Upon effectiveness of this
Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter
hereof. This Agreement may be terminated (i) by the Trust
with respect to any class or Portfolio at any time, without
the payment of any penalty, by vote of a majority of the
outstanding voting securities (as so defined) of such class
or Portfolio, or by vote of a majority of the Trustees of
the Trust who are not interested persons, as defined in the
Investment Company Act, of the Trust (other than as trustees
of the Trust) and have no direct and indirect financial
interest in the operation of the Plan or any agreement
related thereto, in any such event on sixty days' written
notice to the Underwriter; provided, however, that no such
notice shall be required if such termination is stated by
the Trust to relate only to Sections 5 and 16 hereof (in
which event Sections 5 and 16 shall be deemed to have been
severed herefrom and all other provisions of this Agreement
shall continue in full force and effect), or (ii) by the
Underwriter with respect to any Portfolio on sixty days'
written notice to the Trust.
(b) This Agreement may be amended at any time with
the approval of the Trustees of the Trust, provided that
(i) any material amendments of the terms hereof will become
effective only upon approval as provided in the first
proviso of the first sentence of Section 12(a) hereof, and
(ii) any amendment to increase materially the amount to be
expended for distribution services fees pursuant to Section
5(b) hereof will be effective only upon the additional
approval by a vote of majority of the outstanding voting
securities as defined in the Investment Company Act of the
class or Portfolio affected.
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SECTION 13. No Assignment. This Agreement may not
be transferred, assigned, sold or in any manner hypothecated
or pledged by either party hereto and this Agreement shall
terminate automatically in the event of any such transfer,
assignment, sale, hypothecation or pledge. The terms
"transfer", "assignment", and "sale" as used in this
paragraph shall have the meanings ascribed thereto by
governing law and any interpretation thereof contained in
rules or regulations promulgated by the Securities and
Exchange Commission thereunder.
SECTION 14. Notices. Any notice required or
permitted to be given hereunder by either party to the other
shall be deemed sufficiently given if sent by registered
mail, postage prepaid, addressed by the party giving such
notice to the other party at the address last furnished by
such other party to the party given notice, and unless and
until changed pursuant to the foregoing provisions hereof
addressed to the Trust or the Underwriter.
SECTION 15. Governing Law. The provisions of this
Agreement shall be, to the extent applicable, construed and
interpreted in accordance with the laws of the State of New
York.
SECTION 16. Disinterested Trustees of the Trust.
While the Agreement is in effect, the selection and
nomination of the Trustees who are not "interested persons"
of the Trust (as defined in the Investment Company Act) will
be committed to the discretion of such disinterested
Trustees.
Section 17. Notice is hereby given that this
Agreement is entered into on our behalf by an officer of our
Trust in his capacity as an officer and not individually and
that the obligations of or arising out of this Agreement are
not binding upon any of our Trustees, officers,
shareholders, employees or agents individually but are
binding only upon that assets and property of our Trust.
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IN WITNESS WHEREOF, the parties hereto have
executed this Agreement.
AFD EXCHANGE RESERVES
By /s/ Xxxxx X. Xxxxxxx
-------------------------
President
ALLIANCE FUND DISTRIBUTORS,
INC.
By /s/ Xxxxxx X. Xxxxxx
-------------------------
President
Accepted as to
Sections 5, 12 and 16
as of March 23, 1994:
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management Corporation,
General Partner
By /s/ Xxxx X. Xxxxxx
--------------------------
President
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00250163.AA2
