Exhibit (7)(a)
DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made as of the 1st day of November, 1986, as
amended and restated as of the 27th day of February, 1987, the
20th day of October, 1987, the 21st day of April, 1988 and the
19th day of July, 1988, between ALLIANCE BALANCED SHARES, INC., a
Maryland corporation (the "Fund"), and ALLIANCE FUND
DISTRIBUTORS, INC., a Delaware corporation (the "Underwriter").
WITNESSETH
WHEREAS, the Fund is registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"),
as an open-end management investment company and it is in the
interest of the Fund to offer its shares for sale continuously;
WHEREAS, the Underwriter is a securities firm engaged in
the business of selling shares of companies either directly to
purchasers or through other securities dealers;
WHEREAS, the Fund and the Underwriter wish to enter into
an agreement with each other with respect to the continuous
offering of the Fund's shares in order to promote the growth of
the Fund and facilitate the distribution of its shares;
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Underwriter.
The Fund hereby appoints the Underwriter as the
principal underwriter and distributor of the Fund to sell shares
of Common Stock of the Fund (sometimes herein referred to as
"shares") to the public and hereby agrees during the term of this
Agreement to sell shares of the Fund 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 Fund 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
Fund, (b) the Fund'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
Fund's shareholders of dividends or other distributions.
Section 3. Purchase of Shares from the Fund.
(a) The Underwriter shall have the right to buy from
the Fund the shares needed to fill unconditional orders for
shares of the Fund placed with the Underwriter by investors,
securities dealers or depository institutions acting as agent for
their customers. The price which the Underwriter shall pay for
the shares so purchased from the Fund 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 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 or depository institutions
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(s) of the shares, i.e.,
the price per share at which the Underwriter or selected dealers
or agents may sell shares to the public, shall be the public
offering price determined in accordance with the then currently
effective Prospectus of the Fund 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, plus a sales charge equal to a specified
percentage or percentages of the public offering price as set
forth in the current Prospectus of the Fund. Shares may be sold
to certain classes of persons at reduced sales charges or without
any sales charge as from time to time set forth in the current
Prospectus and Statement of Additional Information of the Fund.
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 Fund shall be
determined by the Fund, or any agent of the Fund, in accordance
with the method set forth in the Prospectus and Statement of
Additional Information and guidelines established by the
Directors of the Fund.
(e) The Fund reserves the right to suspend the offering
of its shares at any time in the absolute discretion of its
Directors.
(f) The Fund, or any agent of the Fund designated in
writing to the Underwriter by the Fund, shall be promptly advised
by the Underwriter of all purchase orders for shares received by
the Underwriter. Any order may be rejected by the Fund; provided,
however, that the Fund will not arbitrarily or without reasonable
cause refuse to accept or confirm orders for the purchase of
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shares. The Fund (or its agent) will confirm orders upon their
receipt, will make appropriate book entries and upon receipt by
the Fund (or its agent) of payment thereof, will deliver deposit
receipts or certificates for such shares pursuant to the
instructions of the Underwriter. Payment shall be made to the
Fund in New York Clearing House funds. The Underwriter agrees to
cause such payment and such instructions to be delivered promptly
to the Fund (or its agent).
Section 4. Repurchase or Redemption of Shares by
the Fund.
(a) Any of the outstanding shares may be tendered for
redemption at any time, and the Fund agrees to redeem or
repurchase the shares so tendered in accordance with its
obligations as set forth in its Articles of Incorporation and in
accordance with the applicable provisions set forth in the
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. All payments by the Fund hereunder shall be
made in the manner set forth below. The redemption or repurchase
by the Fund of any of the shares purchased by or through the
Underwriter will not affect the sales charge secured by the
Underwriter, or any selected dealer or agent (unless such
selected dealer or agent has otherwise agreed with the
Underwriter), in the course of the original sale, regardless of
the length of the time period between purchase by an investor and
his tendering for redemption or repurchase.
The Fund (or its agent) shall pay the total amount of
the redemption price as defined in the above paragraph pursuant
to the instructions of the Underwriter in New York Clearing House
funds on or before the seventh calendar day subsequent to its
having 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, when trading on
said Exchange is closed, when trading on said Exchange is
restricted, when an emergency exists as a result of which
disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund
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
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the meaning of Rule 12b-1 adopted by the Securities and Exchange
Commission under the Investment Company Act.
(b) The Fund will pay to the Underwriter each month a
distribution services fee which will not exceed, on an annualized
basis, .30 of 1% of the aggregate average daily net assets of the
Fund. Such distribution services fees will be used in their
entirety by the Underwriter to make payments (i) to compensate
broker-dealers or other persons for providing distribution
assistance, (ii) to otherwise promote the sale of shares of the
Fund, including paying for the preparation, printing and
distribution of prospectuses and sales literature or other
promotional activities, and (iii) to compensate banks and other
institutions for providing administrative and accounting services
with respect to Fund shareholders.
(c) Alliance Capital Management L.P., the Fund's
Adviser (the "Adviser"), may from time to time make payments from
its own resources for the purposes described in Section 5(b)
hereof.
(d) Payments for distribution assistance or
administrative and accounting services are subject to the terms
and conditions of the written agreements between each broker-
dealer or other person and the Underwriter. Such agreements will
be in a form satisfactory to the Directors of the Fund.
(e) The Treasurer of the Fund will prepare and furnish
to the Directors of the Fund, and the Directors 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 Fund is not obligated to pay any distribution
expense in excess of the distribution services fee described in
subparagraph (b) hereof, and any expenses of distribution of the
Fund's shares accrued by the Underwriter in one fiscal year of
the Fund may not be paid from distribution services fees received
from the Fund in subsequent fiscal years, and also will not be
used to pay any interest expense, carrying charges or other
financing costs, or allocation of overhead of the Underwriter.
SECTION 6. Duties of the Fund.
(a) The Fund shall furnish to the Underwriter copies of
all information, financial statements and other papers which the
Underwriter may reasonably request for use in connection with the
distribution of shares of the Fund, and this shall include one
certified copy, upon request by the Underwriter, of all financial
statements prepared for the Fund by independent public
accountants. The Fund shall make available to the Underwriter
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such number of copies of the Prospectus as the Underwriter shall
reasonably request.
(b) The Fund shall take, from time to time, but subject
to the necessary approval of its shareholders, all necessary
action to fix the number of authorized shares and such steps as
may be necessary to register the same 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 Fund 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 Fund may approve. Any such qualification may be withheld,
terminated or withdrawn by the Fund 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 Fund. The Underwriter shall furnish such information and
other material relating to its affairs and activities as may be
required by the Fund in connection with such qualification.
(d) The Fund will furnish, in reasonable quantities
upon request by the Underwriter, copies of annual and interim
reports of the Fund.
Section 7. Duties of the Underwriter.
(a) The Underwriter shall devote reasonable time and
effort to effect sales of shares of the Fund, but shall not be
obligated to sell any specific number of shares. The services of
the Underwriter to the Fund hereunder are not to be deemed
exclusive and nothing herein contained 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; provided, however,
that so long as this Agreement shall remain in effect neither the
Underwriter nor any other subsidiary of Alliance Capital
Management L.P. shall enter into such arrangements with any other
investment company having investment objectives and fundamental
policies substantially similar to those of the Corporation if
such company is, or would by virtue of such arrangements become,
a competitor of the Corporation, unless Alliance Capital
Management L.P. (or any successor thereto) is the investment
adviser or manager to such company.
(b) In selling shares of the Fund, the Underwriter
shall duly conform with the requirements of all federal and state
laws relating to the sale of such securities. Neither the
Underwriter, nor any selected dealer or agent, nor any other
person is authorized by the Fund to give any information or to
make any representations, other than those contained in the
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Fund's Prospectus and Statement of Additional Information as from
time to time is in effect, 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 Fund, for the confirmation of
sales to investors and selected dealers or agents, the collection
of amounts payable by investors and selected dealers or agents on
such sales, and the cancellation of unsettled transactions, as
may be necessary to comply with the requirements of the National
Association of Securities Dealers, Inc. (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 or selected agent agreements with
securities dealers or depository institutions, respectively, of
its choice for the sale of shares and fix therein the portion of
the sales charge which may be allocated to the selected dealers
or agents; provided, that the Fund shall approve the forms of
agreements with such dealers or agents and the 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 of the Fund shall be
resold by such dealers or agents only at the public offering
price(s) set forth in the Prospectus and Statement of Additional
Information.
(b) Within the United States, the Underwriter shall
offer and sell shares only to such securities dealers as are
members in good standing of the NASD.
Section 9. Payment of Expenses.
(a) The Fund shall bear all costs and expenses of the
Fund, 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).
(b) The Fund shall bear the cost of expenses of
qualification of shares for sale, and, if necessary or advisable
in connection therewith, of qualifying the Fund (but not the
Underwriter) as an issuer or as a broker or dealer, in such
states of the United States or other jurisdictions as shall be
selected by the Fund and the Underwriter pursuant to Section 6(c)
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hereof and the cost and expenses payable to each such state for
continuing qualification therein until the Fund decides to
discontinue such qualification pursuant to Section 6(c) hereof.
Section 10. Indemnification.
(a) The Fund 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
Fund's Registration Statement or Prospectus or Statement 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
thereof or necessary to make the statements in any thereof not
misleading, except insofar as such claims, demands, liabilities
or expenses arise out of or are based upon any such untrue
statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with information
furnished in writing by the Underwriter to the Fund for use in
the Fund's Registration Statement, Prospectus or Statement of
Additional Information; provided, however, that in no event shall
anything herein contained be so construed as to protect the
Underwriter against any liability to the Fund 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 Fund's agreement to indemnify the Underwriter and
any such controlling person as aforesaid is expressly conditioned
upon the Fund'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 Fund at its principal office in New York, New York, and
sent to the Fund 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 Fund
of the commencement of any such action shall not relieve the Fund
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 Fund 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 Fund
and approved by the Underwriter. In the event the Fund does not
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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 Fund
does not elect to assume the defense of any such suit, or in case
the Underwriter does not approve of counsel chosen by the Fund,
the Fund 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 Fund'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 Fund
agrees promptly to notify the Underwriter of the commencement of
any litigation or proceeding against the Fund in connection with
the issue and sale of any of its shares.
(b) The Underwriter agrees to indemnify, defend and
hold the Fund, its several officers and directors, and any person
who controls the Fund 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
Fund, 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 Fund, its officers and directors 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 Fund for use in its Registration Statement
or Prospectus or Statement 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, Prospectus or Statement of Additional
Information or necessary to make such information not misleading.
The Underwriter's agreement to indemnify the Fund, its officers
and directors, and any such controlling person as aforesaid is
expressly conditioned upon the Underwriter being notified of the
commencement of any action brought against the Fund, its officers
or directors or any such controlling person, such notification to
be given by letter or telegram addressed to the Underwriter at
its principal office in New York, and sent to the Underwriter by
the person against whom such action is brought, within ten days
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after the summons or other first legal process shall have been
served. The Underwriter shall have a right to control the defense
of such action, with counsel of its own choosing, satisfactory to
the Fund, if such action is based solely upon such alleged
misstatement or omission on its part, and in any other event the
Underwriter and the Fund, and their officers and directors or
such controlling person, shall each have the Tight to participate
in the defense or preparation of the defense of any such action.
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 Fund, to its officers and
Directors, 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.
Section 11. Notification by the Fund.
The Fund agrees to advise the Underwriter immediately:
(a) of any request by the Securities and Exchange
Commission for amendments to the Fund'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 Fund'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 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 Fund's
Registration Statement, Prospectus or Statement 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 remain in effect until September 30, 1987 and
thereafter for successive twelve-month periods (computed from
each October 1); provided, however, that such continuance is
specifically approved at least annually by the Directors of the
Fund or by majority vote of the holders of the outstanding voting
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securities (as defined in the Investment Company Act), and, in
either case, by a majority of the Directors of the Fund who are
not parties to this agreement or interested persons, as defined
in the Investment Company Act, of any such party (other than as
directors of the Fund) 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, the Underwriter
may continue to render the services described herein in the
manner and to the extent permitted by the Act and the rules and
regulations thereunder. Upon the 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 Fund at any time, without the payment of
any penalty, by the vote of a majority of the outstanding voting
securities (as so defined), or by a vote of a majority of the
Directors of the Fund who are not interested persons, as defined
in the Investment Company Act, of the Fund and have no direct Or
indirect financial interest in the operation of the Plan or any
agreement related thereto; in either 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 Fund 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 on sixty days' written
notice to the Fund.
(b) This Agreement may be amended at any time with the
approval of the Directors of the Fund; provided, however, that
(i) any material amendments of the terms hereof will become
effective only upon approval as provided in the first proviso of
Section 12(a) hereof, and (ii) any amendment to increase
materially the amount to be expended for distribution assistance,
administrative and accounting services and other activities
designed to promote the sale of shares of the Fund hereunder will
be effective only upon the additional approval by a vote of a
majority of the outstanding voting securities of the Fund as
defined in the Investment Company Act.
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.
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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 last address
furnished by such other party to the party giving notice and
unless and until changed pursuant to the foregoing provisions
hereof addressed to the Fund 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. Non-interested Directors of the Fund.
While the Plan is in effect, the nomination and
selection of the Directors who are not "interested persons" of
the Fund (as defined in the Investment Company Act) will be
committed to the discretion of such disinterested Directors.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement.
ALLIANCE BALANCED SHARES, INC.
July 19, 1988 By /s/ Xxxxxx X. Xxxxxx, Xx.
---------------------------
ALLIANCE FUND DISTRIBUTORS, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------
Accepted as to
Sections 5, 12 and 16:
ALLIANCE CAPITAL MANAGEMENT L.P.
By /s/ Xxxx X. Xxxxxx
----------------------------
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00250236.AC2
