ADVISORY AGREEMENT
ALLIANCE PRIVATE INVESTORS SERIES, INC.
0000 Xxxxxx Xx Xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
June [ ], 1998
ALLIANCE CAPITAL MANAGEMENT L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Alliance Private Investors Series, Inc. herewith
confirms our agreement with you as follows:
1. We are an open-end, non-diversified management
investment company registered under the Investment Company Act of
1940, as amended (the "Act"). We are currently authorized to
issue separate classes of shares and our Directors are authorized
to reclassify and issue any unissued shares to any number of
additional classes or series (portfolios) each having its own
investment objective, policies and restrictions, all as more
fully described in the prospectus and the statement of additional
information constituting parts of our Registration Statement on
Form N-1A filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, and
the Act (the "Registration Statement"). We propose to engage in
the business of investing and reinvesting the assets of each of
our portfolios in securities ("the portfolio assets") of the type
and in accordance with the limitations specified in our Articles
of Incorporation, By-Laws and Registration Statement, and any
representations made in our prospectus and statement of
additional information, all in such manner and to such extent as
may from time to time be authorized by our Board of Directors.
We enclose copies of the documents listed above and will from
time to time furnish you with any amendments thereof.
2. (a) We hereby employ you to manage the investment
and reinvestment of the portfolio assets as above specified and,
without limiting the generality of the foregoing, to provide
management and other services specified below.
(b) You will make decisions with respect to all
purchases and sales of the portfolio assets. To carry out such
decisions, you are hereby authorized, as our agent and attorney-
in-fact, for our account and at our risk and in our name, to
place orders for the investment and reinvestment of the portfolio
assets. In all purchases, sales and other transactions in the
portfolio assets you are authorized to exercise full discretion
and act for us in the same manner and with the same force and
effect as we might or could do with respect to such purchases,
sales or other transactions, as well as with respect to all other
things necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions.
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(c) You will report to our Board of Directors at
each meeting thereof all changes in the portfolio assets since
the prior report, and will also keep us in touch with important
developments affecting the portfolio assets and on your own
initiative will furnish us from time to time with such
information as you may believe appropriate for this purpose,
whether concerning the individual issuers whose securities are
included in the portfolio assets, the industries in which they
engage, or the conditions prevailing in the economy generally.
You will also furnish us with such statistical and analytical
information with respect to the portfolio assets as you may
believe appropriate or as we reasonably may request. In making
such purchases and sales of the portfolio assets, you will bear
in mind the policies set from time to time by our Board of
Directors as well as the limitations imposed by our Articles of
Incorporation and in our Registration Statement, in each case as
amended from time to time, the limitations in the Act and of the
Internal Revenue Code of 1986, as amended, in respect of
regulated investment companies and the investment objective,
policies and practices, including restrictions applicable to each
of our portfolios.
(d) It is understood that you will from time to
time employ or associate with yourselves such persons as you
believe to be particularly fitted to assist you in the execution
of your duties hereunder, the cost of performance of such duties
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to be borne and paid by you. No obligation may be incurred on
our behalf in any such respect. During the continuance of this
Agreement and at our request you will provide to us persons
satisfactory to our Board of Directors to serve as our officers.
You or your affiliates will also provide persons, who may be our
officers, to render such clerical, accounting and other services
to us as we may from time to time request of you. Such personnel
may be employees of you or your affiliates. We will pay to you
or your affiliates the cost of such personnel for rendering such
services to us, provided that all time devoted to the investment
or reinvestment of the portfolio assets shall be for your
account. Nothing contained herein shall be construed to restrict
our right to hire our own employees or to contract for services
to be performed by third parties. Furthermore, you or your
affiliates shall furnish us without charge with such management
supervision and assistance and such office facilities as you may
believe appropriate or as we may reasonably request subject to
the requirements of any regulatory authority to which you may be
subject. You or your affiliates shall also be responsible for
the payment of any expenses incurred in promoting the sale of our
shares (other than the portion of the promotional expenses to be
borne by us in accordance with an effective plan pursuant to Rule
12b-1 under the Act and the costs of printing our prospectuses
and reports to shareholders and fees related to registration with
the Commission and with state regulatory authorities).
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3. We hereby confirm that we shall be responsible and
hereby assume the obligation for payment of all of our expenses,
including: (a) payment to you of the fee provided for in
paragraph 5 below; (b) custody, transfer and dividend disbursing
expenses; (c) fees of directors who are not your affiliated
persons; (d) legal and auditing expenses; (e) clerical,
accounting and other office costs; (f) the cost of personnel
providing services to us, as provided in subparagraph (d) of
paragraph 2 above; (g) costs of printing our prospectuses and
shareholder reports; (h) cost of maintenance of our corporate
existence; (i) interest charges, taxes, brokerage fees and
commissions; (j) costs of stationery and supplies; (k) expenses
and fees related to registration and filing with the Commission
and with state regulatory authorities; and (l) such promotional,
shareholder servicing and other expenses as may be contemplated
by one or more effective plans pursuant to Rule 12b-1 under the
Act or one or more duly approved and effective non-Rule 12b-1
shareholder servicing plans, in each case provided, however, that
our payment of such promotional, shareholder servicing and other
expenses shall be in the amounts, and in accordance with the
procedures, set forth in such plan or plans.
4. We shall expect of you, and you will give us the
benefit of, your best judgment and efforts in rendering these
services to us, and we agree as an inducement to your undertaking
these services that you shall not be liable hereunder for any
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mistake of judgment or in any event whatsoever, except for lack
of good faith, provided that nothing herein shall be deemed to
protect, or purport to protect, you against any liability to us
or to our security holders to which you would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties
hereunder.
5. In consideration of the foregoing we will pay you a
fee comprised of a basic fee (the "Basic Fee") and an adjustment
to the Basic Fee based on the investment performance of the Class
A shares of the Fund in relation to the investment record of the
Xxxxxxx 1000(R) Growth Index (the "Index"). Such fee shall be
calculated and payable as described below.
(a) Beginning with the month of July 1999 and for each
succeeding month, the Basic Fee shall be a monthly fee equal to
1/12th of 1.10% (1.10% on an annualized basis) of the average of
the net assets of the Fund for each day included in the
applicable performance period. The performance period for each
such month shall be from July 1998 to the most recent month end,
until this agreement has been in effect for 36 full calendar
months, when it shall become a rolling 36-month period ending
with the most recent calendar month. The Basic Fee for each such
month shall be increased at the rate of 1/12th of .05% for each
percentage point in excess of two, rounded to the nearer point
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(the higher point if exactly one-half a point), that the
investment performance of the Class A shares of the Fund for the
performance period then ended exceeds the percentage change in
the investment record of the Index for such performance period
(up to a maximum of eight percentage points). If, however, the
investment performance of the Class A shares of the Fund for such
performance period shall be exceeded by the percentage change in
the investment record of the Index for such performance period,
then such Basic Fee shall be decreased at the rate of 1/12th of
.05% for each percentage point in excess of two, rounded to the
nearer point (the higher point if exactly one-half), that the
percentage change in the investment record of the Index exceeds
the investment performance of the Class A shares of the Fund for
such performance period (up to a maximum of eight percentage
points). The maximum increase or decrease in the Basic Fee for
any month may not exceed 1/12th of .30%; the maximum monthly fee,
as adjusted, may not exceed 1/12th of 1.40%; and the minimum
monthly fee, as adjusted, may not be less than 1/12th of .80%.
(b) For the period from July 1, 1998 through June 30,
1999, you will receive a minimum fee (the "Minimum Fee"), payable
monthly, equal to .80%, annualized, of the average of the net
assets of the Fund for each day included in such annual period.
The performance period relating to such annual period will be
from July 1, 1998 through June 30, 1999. The fee receivable by
you for such annual period may be increased to 1.40% from the
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Minimum Fee. The increase, if any, will be equal to the
difference between (i) the Basic Fee as adjusted for such annual
period in accordance with the preceding paragraph and (ii) the
Minimum Fee. The maximum increase in the Minimum Fee for such
annual period may not exceed .60%, with the rate of any increase
being applied on an annualized basis. You will receive the
Minimum Fee for any period prior to July 1, 1998.
(c) The investment performance of the Class A shares of
the Fund for any period, expressed as a percentage of the Fund's
net asset value per Class A share at the beginning of such
period, shall mean and be the sum of: (i) the change in the
Fund's net asset value per Class A share during such period;
(ii) the value of the Fund's cash distributions per Class A share
accumulated to the end of such period; and (iii) the value of
capital gains taxes per Class A share paid or payable on
undistributed realized long-term capital gains accumulated to the
end of such period. For this purpose, the value of distributions
per Class A share of realized capital gains, of dividends per
Class A share paid from investment income and of capital gains
taxes per Class A share paid or payable on undistributed realized
long-term capital gains shall be treated as reinvested in Class A
shares of the Fund at the net asset value per share in effect at
the close of business on the record date for the payment of such
distributions and dividends and the date on which provision is
made for such taxes, after giving effect to such distributions,
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dividends and taxes. Notwithstanding any provisions of this
subparagraph (c) or of the other subparagraphs of Paragraph 5
hereof to the contrary, the investment performance of the Class A
shares of the Fund for any period shall not include, and there
shall be excluded from the change in the Fund's net asset value
per Class A share during such period and the value of the Fund's
cash distributions per Class A share accumulated to the end of
such period shall be adjusted for, any increase or decrease in
the investment performance of the Fund for such period computed
as set forth in the preceding two sentences and resulting from
the Fund's issuance, sale, repurchase or redemption of any shares
of Common Stock of the Fund.
(d) The investment record of the Index for any period,
expressed as a percentage of the Index level at the beginning of
such period, shall mean and be the sum of (i) the change in the
level of the Index during such period; and (ii) the value,
computed consistently with the Index, of cash distributions made
by companies whose securities comprise the Index accumulated to
the end of such period. For this purpose, cash distributions on
the securities which comprise the Index shall be treated as
reinvested in the Index at the end of each calendar month
following the payment of the dividend.
(e) Any calculation of the investment performance of the
Fund and the investment record of the Index shall be in
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accordance with any then applicable rules of the Securities and
Exchange Commission.
(f) In the event of any termination of this agreement,
the fee provided for in this Paragraph 5 shall be calculated on
the basis of a period ending on the last day on which this
agreement is in effect, subject to a pro rata adjustment based on
the number of days elapsed in the current period as a percentage
of the total number of days in such period.
6. This Agreement shall become effective on the date
hereof and shall remain in effect until , 2000 and
continue in effect thereafter with respect to a portfolio only so
long as its continuance with respect to that portfolio is
specifically approved at least annually by our Board of Directors
or by a vote of a majority of the outstanding voting securities
(as defined in the Act) of such portfolio, and, in either case,
by a vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of our Directors who are
not parties to this Agreement or interested persons, as defined
in the Act, of any party to this Agreement (other than as our
Directors), and provided further, however, that if the
continuation of this Agreement is not approved as to a portfolio,
you may continue to render to such portfolio 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
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agreements between us covering the subject matter hereof. This
Agreement may be terminated with respect to any portfolio at any
time, without the payment of any penalty, by vote of a majority
of the outstanding voting securities (as defined in the Act) of
such portfolio, or by a vote of our Board of Directors on 60
days' written notice to you, or by you with respect to any
portfolio on 60 days' written notice to us.
7. This Agreement shall not be amended as to any
portfolio unless such amendment is approved by vote, cast in
person at a meeting called for the purpose of voting on such
approval, of a majority of our Directors who are not parties to
this Agreement or interested persons, as defined in the Act, of
any party to this Agreement (other than as our Directors), and,
if required by law, by vote of a majority of the outstanding
voting securities (as defined in the Act) of such portfolio.
Shareholders of a portfolio not affected by any such amendment
shall have no right to participate in any such vote.
8. As to any particular portfolio, this Agreement may
not be transferred, assigned, sold or in any manner hypothecated
or pledged by you and, as to such portfolio, this Agreement shall
terminate automatically in the event of any such transfer,
assignment, sale, hypothecation or pledge by you. The terms
"transfer", "assignment" and "sale" as used in this paragraph
shall have the meanings ascribed thereto by governing law and any
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interpretation thereof contained in rules or regulations
promulgated by the Commission thereunder.
9. (a) Except to the extent necessary to perform your
obligations hereunder, nothing herein shall be deemed to limit or
restrict your right, or the right of any of your employees, or
any of the officers or directors of Alliance Capital Management
Corporation, your general partner, who may also be a Director,
officer or employee of ours, or persons otherwise affiliated with
us (within the meaning of the Act), to engage in any other
business or to devote time and attention to the management or
other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other
trust, corporation, firm, individual or association.
(b) You will notify us of any change in the general
partners of your partnership within a reasonable time after such
change.
10. If you cease to act as our investment adviser, or, in
any event, if you so request in writing, we agree to take all
necessary action to change our name to a name not including the
term "Alliance." You may from time to time make available
without charge to us for our use such marks or symbols owned by
you, including marks or symbols containing the term "Alliance" or
any variation thereof, as you may consider appropriate. Any such
marks or symbols so made available will remain your property and
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you shall have the right, upon notice in writing, to require us
to cease the use of such xxxx or symbol at any time.
11. This Agreement shall be construed in accordance with the
laws of the State of New York, provided, however, that nothing
herein shall be construed as being inconsistent with the Act.
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If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
ALLIANCE PRIVATE INVESTORS
SERIES, INC.
By__________________________
Agreed to and accepted
as of the date first set forth above.
ALLIANCE CAPITAL MANAGEMENT L.P.
By ALLIANCE CAPITAL MANAGEMENT
CORPORATION, its general
partner
By_______________________________
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00250242.AA3
