DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made as of July 22, 1992, as amended as of April 30, 1993,
between ALLIANCE QUASAR 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 a diversified, 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 investment companies either directly to purchasers or
through other securities dealers;
WHEREAS, the Fund and the Underwriter wish to enter into an amended
agreement with each other with respect to the continuous offering of the Funds
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
to the public shares of its Class A Common Stock (the "Class A shares"), Class B
Common Stock (the "Class B shares") and Class C Common Stock (the "Class C
shares") (the Class A shares, Class B shares and Class C shares being
collectively referred to herein as the "shares") and 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 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 Funds 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 Funds 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 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 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, 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 Fund (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, plus, in
the case of Class A shares, a front-end sales charge equal to a specified
percentage or percentages of the public offering price of the Class A shares as
set forth in the Prospectus. Class A shares may be sold without such a sales
charge to certain classes of persons as from time to time set forth in the
Prospectus and Statement of Additional Information. 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, as of the close of regular trading on the
New York Stock Exchange on each Fund business day 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
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 Section 3 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 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 Prospectus. 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 Class A shares purchased by or through the
Underwriter 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 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 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, when trading thereon is closed, when
trading thereon is restricted, when an emergency exists as a result of which
disposal by the Fund or 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 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
Fund will pay to the Underwriter each month a distribution services fee with
respect to the Fund that will not exceed, on an annualized basis, .30% of the
aggregate average daily net assets of the Fund attributable to the Class A
shares, 1.00% of the aggregate average daily net assets of the Fund attributable
to the Class B shares and 1.00% of the aggregate average daily net assets of the
Fund attributable to the Class C shares. With respect to the Fund, the
distribution services fee will be used in its 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 payment for the preparation, printing and distribution of
prospectuses and sales literature or other promotional activities, and (iii) to
compensate broker- dealers, depository institutions and other financial
intermediaries for providing administrative, accounting and other services with
respect to the Funds shareholders. A portion of the distribution services fee
that will not exceed, on an annualized basis, .25% of the aggregate average
daily net assets of the Fund attributable to each of the Class A shares, Class B
shares and Class C shares will constitute a service fee that will be used by the
Underwriter for personal service and/or the maintenance of shareholder accounts
within the meaning of NASD rules and interpretations.
(c) Alliance Capital Management L.P., the Funds investment adviser
(the "Adviser"), may make payments from time to time from its own resources for
the purposes described in Section 5(b) hereof.
(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 Directors of the Fund.
(e) The Treasurer of the Fund will prepare and furnish to the Funds
Directors, 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 above in Section 5(b) hereof.
Any expenses of distribution of the Funds Class A 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 respect of Class A shares in another
fiscal year. Any expenses of distribution of the Funds Class B shares or Class C
shares accrued by the Underwriter in one fiscal year of the Fund may be carried
forward and paid from distribution services fees received from the Fund in
respect of such class of shares in another fiscal year. No portion of the
distribution services fees received from the Fund in respect of Class A shares
may be used to pay any interest expense, carrying charges or other financing
costs or allocation of overhead of the Underwriter. The distribution services
fees received from the Fund in respect of Class B shares and Class C shares may
be used to pay interest expenses, carrying charges and other financing costs or
allocation of overhead of the Underwriter to the extent permitted by Securities
and Exchange Commission rules, regulations or Securities and Exchange Commission
staff no-action or interpretative positions in effect from time to time. In the
event this Agreement is terminated by either party or is not continued with
respect to a class 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
Fund to the Underwriter with respect to that class, and (ii) the Fund will not
be obligated to pay the Underwriter for any amounts expended hereunder not
previously reimbursed by the Fund 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 may not
be used to subsidize the sale of shares of any other class.
SECTION 6. Duties of the Fund.
(a) The Fund 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
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 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 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 Fund, 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 Fund to give any information or to make any representations,
other than those contained in the Funds 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.
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 Fund 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 only at the public offering price 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 selected 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 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 Fund 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 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 Funds
Registration Statement, 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
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 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 Underwriters reckless disregard of its
obligations and duties under this Agreement. The Funds agreement to indemnify
the Underwriter and any such controlling person as aforesaid is expressly
conditioned upon the Funds 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 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 Funds 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, 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,
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
Underwriters 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 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.
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 Funds 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 Funds
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 Funds 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 Funds 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
continue in effect until September 30, 1993, and thereafter for successive
twelve-month periods (computed from each October 1) with respect to each class;
provided, however, that such continuance is specifically approved at least
annually by the Directors of the Fund 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 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 as to a class, the Underwriter
may continue to render to such class 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 Fund with respect to any class at any time, without
the payment of any penalty, by the vote of a majority of the outstanding voting
securities (as so defined) of such class, 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 (other than as directors of the Fund) 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 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 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 a majority of the outstanding voting securities as defined
in the Investment Company Act of the class affected.
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 last address furnished by such other party to
the party given 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. Disinterested Directors of the Fund. While the Agreement
is in effect, the selection and nomination of the Directors who are not
"interested persons" of the Fund (as defined in the Investment Company Act) will
be committee to the discretion of such disinterested Directors.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
ALLIANCE QUASAR FUND, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------
Xxxxxxx X. Xxxx
President
ALLIANCE FUND DISTRIBUTORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
President
Accepted as to
Sections 5, 12, and 16
As of July 22, 1992, as amended As of April 30, 1993:
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management Corporation,
General Partner
By: /s/ Xxxx Xxxxxx
--------------------
Xxxx Xxxxxx
Executive Vice President
