ADVISORY AGREEMENT
AFD EXCHANGE RESERVES
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
March 23, 1994
Alliance Capital Management L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
We herewith agree with you as follows:
1. We are an open-end, diversified management
investment company registered under the Investment Company Act of
1940 (the "Act"). We are currently authorized to issue three
classes of shares and our Trustees 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 Statement of Additional Information constituting a
part of the Registration Statement filed on our behalf under the
Securities Act of 1933 and the Act ("Registration Statement").
We are engaged in the business of investing and reinvesting our
assets in securities of the type and in accordance with the
limitations specified in our Agreement and Declaration of Trust
("Declaration of Trust"), By-Laws, 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 Trustees. 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 assets in each of our
Portfolios 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 securities in each of our Portfolios.
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 our assets. In all purchases, sales and other transactions in
securities in each of our Portfolios 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.
(c) You will report to our Trustees at each
meeting thereof all changes in each Portfolio since the prior
report, and will also inform us of important developments
affecting any Portfolio 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
banks or other companies whose securities are included in our
Portfolios, the banking or other industries in which they engage,
or the conditions prevailing in the money market or the economy
generally. You will also furnish us with such statistical and
analytical information with respect to securities in each of our
Portfolios as you may believe appropriate or as we reasonably may
request. In making such purchases and sales of securities in
each of our Portfolios, you will bear in mind the policies set
from time to time by our Trustees as well as the limitations
imposed by our Declaration of Trust and in our Registration
Statement, the limitations in the Act and of the Internal Revenue
Code in respect of regulated investment companies and the
investment objective, policies and restrictions for 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
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 at our request you will provide to us persons
satisfactory to our Trustees 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
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services to us at such rates as shall from time to time be agreed
upon between us, provided that all time devoted to the investment
or reinvestment of securities in each of our Portfolios or to the
promotion of the sale of our shares 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
(other than us) shall furnish us without charge with such
administrative and 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
(other than us) 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 other
reports to shareholders and fees related to registration with the
Securities and Exchange Commission and with state regulatory
authorities).
3. It is further agreed that you shall be
responsible for the portion of the net expenses of each of our
Portfolios (except interest, taxes, brokerage, fees paid in
accordance with an effective plan pursuant to Rule 12b-1 under
the Act, expenditures which are capitalized in accordance with
generally accepted accounting principles and extraordinary
expenses, all to the extent permitted by applicable state law and
regulation) incurred by us during each of our fiscal years or
portion thereof that this agreement is in effect between us
which, as to a Portfolio, in any such year exceeds the limits
applicable to such Portfolio under the laws or regulations of any
state in which our shares are qualified for sale (reduced pro
rata for any portion of less than a year). We hereby confirm
that, subject to the foregoing, we shall be responsible and
hereby assume the obligation for payment of all our other
expenses, including: (a) payment of the fee payable to you under
paragraph 5 hereof; (b) custody, transfer, and dividend
disbursing expenses; (c) fees of trustees 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 maintaining our existence;
(i) interest charges, taxes, brokerage fees and commissions;
(j) cost of stationery and supplies; (k) expenses and fees
related to registration and filing with the Securities and
Exchange Commission and with state regulatory authorities; and
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(l) such promotional expenses as may be contemplated by an
effective plan pursuant to Rule 12b-1 under the Act; provided,
however, that our payment of such promotional expenses shall be
in the amounts, and in accordance with the procedures, set forth
in such plan.
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
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 for each Portfolio at the annual rate of: .25 of 1% of
the first $1.25 billion of that Portfolio's average daily net
assets; .24 of 1% of the next $.25 billion of such assets; .23 of
1% of the next $.25 billion of such assets; .22 of 1% of the next
$.25 billion of such assets; .21 of 1% of the next $1 billion of
such assets, and; .20 of 1% of such average daily net assets in
excess of $3 billion. Such fee shall be accrued by us daily and
shall be payable in arrears on the last day of each calendar
month for services performed hereunder during such month. Your
reimbursement, if any, of our expenses, as provided in paragraph
3 hereof, shall be estimated and paid to us monthly in arrears,
at the same time as our payment to you for such month.
6. This agreement shall become effective on the
date hereof and shall remain in effect until September 30, 1995
and thereafter for successive twelve-month periods (computed from
each October 1), with respect to each Portfolio provided that
such continuance is specifically approved at least annually by
our Trustees or by majority vote of the holders of the
outstanding voting securities (as defined in the Act) of such
Portfolio, and, in either case, by a majority of our trustees who
are not parties to this agreement or interested persons, as
defined in the Act, of any such party (other than as trustees of
our Trust) 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
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this agreement, it shall supersede all previous 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 so defined) of such Portfolio,
or by a vote of a majority of our Trustees on sixty days' written
notice to you, or by you with respect to any Portfolio on sixty
days' written notice to us.
7. This agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged by you
and 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 interpretation thereof contained in rules
or regulations promulgated by the Securities and Exchange
Commission thereunder.
8. (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, officers, or any of the Directors of Alliance Capital
Management Corporation, your general partner, or employees who
may also be a trustee, officer or employee of ours, or persons
otherwise affiliated with us (within the meaning of the Act) to
engage in any other business or 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
general partners or your partnership within a reasonable time
after such change.
9. 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 the assets and
property of our Trust.
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If the foregoing is in accordance with your
understanding, you will kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
AFD EXCHANGE RESERVES
By /s/ Xxxxx X. Xxxxxxx
_________________________
President
Accepted: 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.AA3
