Exhibit (e)(2)
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
CLASS B
DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made as of the 5th day of January, 1999
between ALLIANCE VARIABLE PRODUCTS SERIES FUND, 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 to
the separate accounts ("Eligible Separate Accounts") of insurance
companies;
WHEREAS, variable insurance and annuity product
("Variable Products") net premiums, contributions and
considerations will be allocated to Eligible Separate Accounts
for investment in the Fund;
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;
WHEREAS, the Fund has adopted a distribution plan in
respect of its Class B shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940 ("Investment Company Act");
WHEREAS, the Fund desires that the Underwriter undertake
marketing activities with respect to Class B shares of the Fund's
constituent Portfolios and to compensate the Underwriter for
services rendered and expenses borne (including payments made to
third parties) in connection therewith;
NOW, THEREFORE, the parties agree as follows:
SECTION 1. Policy on Conflicts; Appointment of the
Underwriter.
(a) The Fund has ratified a Policy on Conflicts (the
"Policy"). This Agreement shall be subject to the provisions of
the Policy, the terms of which are incorporated herein by
reference, made a part hereof and controlling. The Policy may be
amended or superseded, without prior notice, and this Agreement
shall be deemed amended to the extent the Policy is amended or
superseded. The Underwriter represents and warrants that it will
act in a manner consistent with such Policy as set forth and as
it may be amended or superseded, so long as it is a principal
underwriter of the Class B shares of the Fund. This provision
shall survive the termination of this Agreement.
(b) The Fund hereby appoints the Underwriter as the
principal underwriter and distributor of the Fund to sell Class B
shares of common stock of the Fund (sometimes herein referred to
as "shares") to the separate accounts of insurance companies 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 Class B Shares from the Fund.
(a) The Fund will commence a continuous offering of its
Class B shares and, thereafter, 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 the separate accounts of insurance companies. 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
the separate accounts of insurance companies at a public offering
price, as set forth in Section 3(c) 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 separate accounts of insurance
companies, shall be the public offering price determined in
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accordance with the current Class B Prospectus of the Fund (the
"Prospectus") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to 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 Fund shall be
determined by the Fund, or any agent of the Fund, in accordance
with the method set forth in the Prospectus and Class B Statement
of Additional Information ("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 Class B 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 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 stock 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 Class B
Shares by the Fund.
(a) Any of the outstanding Class B 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 Section (3)(d) of ARTICLE FIFTH
of 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 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 business day subsequent to its
having the notice of redemption in proper form.
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(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 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. 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 Class B 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 such number of copies of the Prospectus and Statement
of Additional Information 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 qualifications may be withheld,
terminated or withdrawn by the Fund at any time in its
discretion. As provided in Section 8(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 qualifications.
(d) As compensation for services rendered and expenses
borne in connection with the distribution of Class B shares, each
Portfolio shall pay the Underwriter a monthly fee (payable on or
before the fifth business day of the following month) at a rate
equal to .25% per annum of the average daily net assets of the
Portfolio attributable to Class B shares.
(e) The Fund will furnish, in reasonable quantities
upon request by the Underwriter, copies of annual and interim
reports of the Fund.
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SECTION 6. Duties of the Underwriter.
(a) The Underwriter shall devote reasonable time and
effort to effect sales of Class B 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.
(b) In selling shares of the Fund, the Underwriter
shall use its best efforts in all respects duly to conform with
the requirements of all federal and state laws relating to the
sale of such securities. Neither the Underwriter nor any
selected dealer nor any other person is authorized by the Fund to
give any information or to make any representations, other than
those contained in the Fund's Registration Statement (the
"Registration Statement"), as amended from time to time, under
the Securities Act and the Investment Company Act or the Fund's
Prospectus and Statement of Additional Information as from time
to time 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 separate accounts of insurance companies, the collection
of amounts payable by investors 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 7. Sales Agreements.
(a) The Underwriter is hereby authorized, from time to
time, to enter into separate written agreements ("Sales
Agreements" or, individually, a "Sales Agreement"), on terms and
conditions not inconsistent with this Agreement, with insurance
companies that have Eligible Separate Accounts and that agree to
participate in the distribution of the Fund's Class B shares,
directly or through affiliated broker dealers (collectively with
the insurance companies, the "Participating Insurance Companies),
by means of distribution of Variable Products and to use their
efforts to solicit applications for Variable Products. The
Underwriter may not enter into any Sales Agreement with any
Participating Insurance Company that is more favorable than that
maintained with any other Participating Insurance Company and
Eligible Separate Account, except that not all portfolios of the
Fund need be made available for investment by all Participating
Insurance Companies, Eligible Separate Accounts or Variable
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Products. Each Sales Agreement shall be entered into jointly
with the Participating Insurance Company and the Eligible
Separate Accounts.
(b) Such Participating Insurance Companies and their
agents or representatives soliciting applications for Variable
Products shall be duly and appropriately licensed, registered or
otherwise qualified for the sale of Variable Products under any
applicable insurance laws and any applicable securities laws of
one or more states or other jurisdictions in which Variable
Products may be lawfully sold. Each such Participating Insurance
Company shall, when required by law, be both registered as a
broker dealer under the Securities Exchange Act of 1934, as
amended, and a member of the NASD. Each such Participating
Insurance Company shall agree to comply with all laws and
regulations, whether federal or state, and whether relating to
insurance, securities or other general areas, including but not
limited to the record-keeping and sales supervision requirements
of such laws and regulations.
SECTION 8. 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 Class B 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
5(c) 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 5(c) hereof.
SECTION 9. 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
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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 either
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 either 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 9. 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
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 9 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
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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
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 right
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
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otherwise than on account of the indemnity agreement contained in
this Section 9.
SECTION 10. 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 11. Term of Agreement.
(a) This agreement shall become effective on the date
hereof and shall remain in effect as to the Class B shares of
each Portfolio until December 31, 1999 and continue in effect
thereafter with respect to the Class B shares of a Portfolio only
so long as its continuance with respect to the Class B shares of
that Portfolio is specifically approved at least annually by the
Board of Directors of the Fund or by vote of a majority of the
outstanding voting securities (as defined in the Investment
Company Act) represented by the Class B shares of such Portfolio,
and, in either case, by a majority of the Board of 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; provided, however, that if the continuation of this
agreement is not approved as to a Portfolio, the Underwriter may
continue to render to such Portfolio the services described
herein in the manner and to the extent permitted by the
Investment Company Act and the rules and regulations thereunder.
This agreement may be terminated (i) by the Fund with respect to
any Portfolio at any time, without the payment of any penalty, by
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the vote of a majority of the outstanding voting securities (as
so defined) represented by the Class B shares of such Portfolio,
or by a vote of a majority of the Board of Directors of the Fund
on sixty days' written notice to the Underwriter; or (ii) by the
Underwriter with respect to any Portfolio 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
any material amendments of the terms hereof will become effective
only upon approval as provided in the first sentence of Section
11(a) hereof.
SECTION 12. 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 13. 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 14. 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.
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IN WITNESS WHEREOF, the parties hereto have executed
this Agreement.
ALLIANCE VARIABLE PRODUCTS SERIES
FUND, INC.
By /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
President
ALLIANCE FUND DISTRIBUTORS, INC.
By /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
President
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00250292.BQ2
