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SIGNATURE JOSEPH REZABEK
TITLE ASST. VICE PRESIDENT
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<NAME> ALLIANCE BALANCED SHARES, INC.
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Alliance Balanced Shares, Inc. Exhibit 77M
811-00134
77M - Mergers
At the Regular Meeting of the Board of Directors of Alliance Balanced
Shares, Inc. ("ABS") held on July 15, 1998, the Directors of ABS
approved a form of Plan of Reorganization and Liquidation (the "Plan")
between ABS and The Alliance Portfolios - Alliance Strategic Balanced
Fund ("TAP-SB") governing the proposed acquisition of the assets of
TAP-SB by ABS and authorized the officers of ABS to take certain other
actions in connection therewith. In addition, the Directors of ABS
also authorized the issuance of shares of common stock as contemplated
in the Plan and also made certain other determinations pursuant to the
requirements of Rule 17a-8 under the Investment Company Act of 1940.
Subsequently, at a Special Meeting of Shareholders of TAP-SB held on
December 18, 1998, the shareholders of TAP-SB approved the Agreement
and Plan of Reorganization and Liquidation providing for the transfer
of all the assets and liabilities of TAP-SB in exchange for shares of
ABS, the distribution of such shares to shareholders of TAP-SB and the
subsequent dissolution of TAP-SB. The sale of assets took place on
February 1, 1999. TAP-SB has ceased to be an investment company as
defined by the Act.
Alliance Balanced Shares, Inc. Exhibit 77Q1(g)
811-00134
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION dated as of
February 1, 1999 between Alliance Balanced Shares, Inc., a Maryland
corporation ("Balanced Shares") and The Alliance Portfolios, a
Massachusetts business trust ("TAP"), on behalf of its series,
Alliance Strategic Balanced Fund ("Strategic").
In consideration of the mutual promises herein contained, the
parties hereto agree as follows:
1. Shareholder Approval
A meeting of the shareholders of Strategic shall be called and held
for the purpose of acting upon this Agreement and the transactions
contemplated herein. Balanced Shares shall furnish to Strategic such
data and information relating to Balanced Shares as shall be reasonably
requested by Strategic for inclusion in the information to be furnished
to shareholders of Strategic in connection with the meeting for the
purpose of acting upon this Agreement and the transactions contemplated
herein. Approval by the shareholders of Strategic of this Agreement and
the transactions contemplated herein shall, to the extent necessary to
permit the consummation of the transactions contemplated herein without
violating any investment objective, policy or restriction of Strategic,
be deemed to constitute approval by the shareholders of a temporary
amendment of any investment objective, policy or restriction that would
otherwise be inconsistent with or violated upon the consummation of
such transactions solely for the purpose of consummating such
transactions.
2. Reorganization
The transactions described in this section are hereinafter
collectively referred to as the "Reorganization."
(a) Plan of Reorganization and Liquidation.
(i) Strategic agrees to and will grant, bargain, sell, convey,
assign, transfer and deliver to Balanced Shares at the closing
provided for in Section 2(b) (the "Closing") all of the assets,
rights, claims and businesses of every kind, character and
description (whether tangible or intangible, whether real, personal
or mixed, whether absolute, accrued, contingent or otherwise,
whether or not determinable at the time of the Closing, and wherever
located) of Strategic to the extent they exist on or after the
Closing. In consideration thereof, at the Closing, Balanced Shares
agrees to and will (A) assume and pay, to the extent that they exist
on the Closing, all liabilities of Strategic and (B) deliver to
Strategic the number of full and fractional Class A shares, Class B
shares, Class C shares and Advisor Class shares of Balanced Shares,
par value $.01 per share (the "Balanced Shares shares"), equal to
the number of full and fractional Class A shares, Class B shares,
Class C shares and Advisor Class shares of Strategic (the
"Strategic shares") determined by multiplying the number of
Strategic shares of that class by the exchange ratio as computed as
set forth below, the product of such multiplication to be carried to
the third decimal place. For purposes of this section, Class A,
Class B, Class C and Advisor Class Strategic shares will correspond
to Class A, Class B, Class C and Advisor Class shares, respectively,
of Balanced Shares. The exchange ratio for each class of Strategic
shares shall be the number determined by dividing the net asset
value per share of that class of Strategic shares by the net asset
value per share of the corresponding class of the Balanced Shares
shares. In each case, such net asset values are to be determined on
a consistent basis by the appropriate officers of TAP or Balanced
Shares, as the case may be, as of the close of regular trading on
the New York Stock Exchange, Inc. (the "Exchange") next preceding
the Closing. The exchange ratio shall be carried to the fourth
decimal place.
(ii) At the Closing, Strategic will liquidate and distribute pro
rata to the holders of record of each class of Strategic shares as
of the Closing the Balanced Shares shares of the corresponding class
received by Strategic pursuant to this Section 2(a). Such
liquidation and distribution will be accompanied by the
establishment of an open account on the share records of Balanced
Shares in the name of each holder of a class of Strategic shares and
representing the number of Balanced Shares shares of the
corresponding class due such shareholder. Fractional Balanced Shares
shares will be carried to the third decimal place. Simultaneously
with such crediting of the Balanced Shares shares to the
shareholders, the Strategic shares held by such shareholders shall
be canceled. Certificates representing Balanced Shares shares will
be issued in accordance with the then-current Balanced Shares
prospectus; provided, however, that any certificate representing
Balanced Shares shares to be issued in replacement of a certificate
representing the Strategic shares shall be issued only upon the
surrender of such latter certificate.
(iii) Following the Closing, Strategic will be terminated as a
series of TAP.
(b) Closing. The Closing shall occur at the later of (i) the final
adjournment of the meeting of the holders of Strategic shares at which
this Agreement and the transactions contemplated hereby will be
considered and (ii) such later time as the parties hereto may mutually
agree.
3. Articles of Incorporation; By-Laws; Board of Directors; Officers
Balanced Shares hereby covenants and agrees as follows:
(a) Charter. The Charter of Balanced Shares in effect at the
Closing shall continue to be the Charter of Balanced Shares until
altered, amended or repealed as provided by law.
(b) By-Laws. The By-laws of Balanced Shares in effect at the
Closing shall continue to be the By-laws of Balanced Shares until
the same shall thereafter be altered, amended or repealed in
accordance with the Articles of Incorporation or By-laws of Balanced
Shares.
(c) Directors. The directors of Balanced Shares at the Closing
shall continue to be the directors of Balanced Shares until they
resign or their successors shall have been elected and qualified.
(d) Officers. Subject to the provisions of the By-laws of
Balanced Shares, the officers of Balanced Shares at the Closing
shall continue to be the officers of Balanced Shares until they
resign or their successors shall have been elected and qualified.
(e) Vacancies. If at the Closing a vacancy shall exist on the
Board of Directors or in any of the offices of Balanced Shares, such
vacancy may thereafter be filled in the manner provided by the By-
laws of Balanced Shares, consistent with the provisions of Section
16 of the Investment Company Act of 1940, as amended (the "Act").
4. Representations, Warranties and Covenants of Balanced Shares
Balanced Shares represents and warrants to, and covenants with, TAP
on behalf of Strategic, as follows:
(a) Organization, Existence, Etc. Balanced Shares is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Maryland and has the power to carry
on its business as it is now being conducted and as described in its
currently effective Registration Statement on Form N-1A. Balanced
Shares is qualified to do business under the laws of every
jurisdiction in which such qualification is required, except where
the failure to so qualify would not have a material adverse effect
on Balanced Shares. Balanced Shares has all necessary federal, state
and local authorizations to own all of its properties and assets and
to carry on its business as now being conducted and as described in
its currently effective Registration Statement on Form N-1A.
(b) Registration as Investment Company. Balanced Shares is
registered under the Act as an open-end investment company of the
management type; such registration has not been revoked or rescinded
and is in full force and effect.
(c) Capitalization. The authorized capital stock of Balanced
Shares consists of 3,000,000,000 shares of Class A Common Stock,
3,000,000,000 shares of Class B Common Stock, 3,000,000,000 shares
of Class C Common Stock, and 3,000,000,000 shares of Advisor Class
Common Stock, each having a par value $.01 per share. As of December
31, 1998, there were outstanding 9,136,151 shares of Class A Common
Stock, 5,073,541 shares of Class B Common Stock, 3,646,488 shares of
Class C Common Stock and 160,090 shares of Advisor Class Common
Stock. All of the outstanding shares of common stock of Balanced
Shares have been duly authorized and are validly issued, fully paid
and nonassessable. Because Balanced Shares is an open-end investment
company engaged in the continuous offering and redemption of its
shares, the number of outstanding Balanced Shares shares may change
prior to the Closing.
(d) Financial Statements. The financial statements of Balanced
Shares for the year ended July 31, 1998, which are audited (the
"Balanced Shares Financial Statements"), previously delivered to
Strategic, fairly present the financial position of Balanced Shares
as of the dates thereof and the results of its operations and
changes in its net assets for the periods indicated.
(e) Shares to be Issued Upon Reorganization. The Balanced Shares
shares to be issued in connection with the Reorganization have been
duly authorized and upon consummation of the Reorganization will be
validly issued, fully paid and nonassessable, and no shareholder of
Balanced Shares has any preemptive right to subscribe or purchase in
respect thereof.
(f) Authority Relative to this Agreement. Balanced Shares has the
power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by Balanced Shares' Board of Directors and no other
action by Balanced Shares is necessary to authorize its officers to
effectuate this Agreement and the transactions contemplated hereby.
Balanced Shares is not subject to any provision of its Charter or
By-laws, nor is Balanced Shares a party to or obligated under any
charter, by-law, indenture or contract provision or any other
commitment or obligation, or subject to any order or decree, that
would be violated by its executing and carrying out this Agreement
and the transactions contemplated hereby.
(g) Liabilities. There are no liabilities of Balanced Shares,
whether or not determined or determinable, other than liabilities
disclosed or provided for in the Balanced Shares Financial
Statements and liabilities incurred in the ordinary course of
business or otherwise previously disclosed in writing to Strategic.
(h) Litigation. To the knowledge of Balanced Shares, there are no
claims, actions, suits or proceedings pending against Balanced
Shares. In addition, to the knowledge of Balanced Shares, there are
no claims, actions, suits or proceedings threatened against Balanced
Shares that would materially adversely affect Balanced Shares or its
assets or business or which would prevent or hinder consummation of
the transactions contemplated hereby.
(i) Contracts. Except for contracts, agreements, franchises,
licenses or permits entered into or granted in the ordinary course
of its business or disclosed in its current Registration Statement
on Form N-1A filed under the Act, in each case under which no
default exists, Balanced Shares is not a party to or subject to any
material contract, debt instrument, employee benefit plan, lease,
franchise, license or permit of any kind or nature whatsoever.
(j) Taxes. The federal income tax returns of Balanced Shares have
been filed for all taxable years to and including the taxable year
ended July 31, 1997 and all taxes payable pursuant to such returns
have been paid. The federal income tax return of Balanced Shares for
the taxable year ending July 31, 1998 will be filed, and any taxes
payable pursuant thereto will be paid, prior to their due date
(including extensions). Balanced Shares has qualified as a regulated
investment company under the Internal Revenue Code of 1986, as
amended (the "Code"), in respect of each taxable year since the
commencement of its operations and has no reason to believe that it
will not so qualify in respect of its current fiscal year.
(k) Registration Statement. Balanced Shares shall file with the
Securities and Exchange Commission (the "Commission") a
Registration Statement on Form N-14 (the "Registration Statement")
under the Securities Act of 1933 (the "Securities Act") relating
to the Balanced Shares shares issuable hereunder. At the time it
becomes effective, the Registration Statement (i) will comply in all
material respects with the provisions of the Securities Act and the
rules and regulations of the Commission thereunder (the
"Regulations") and (ii) will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
and at the time the Registration Statement becomes effective, at the
time of the shareholders' meeting referred to in Section 1 hereof
and at the Closing, the prospectus (the "Prospectus") and
statement of additional information included therein (the
"Statement of Additional Information"), as amended or supplemented
by any amendments or supplements filed with the Commission by
Balanced Shares and delivered to Strategic, will not contain an
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that none of the representations and warranties in this
subsection (k) shall apply to statements in or omissions from the
Registration Statement, Prospectus or Statement of Additional
Information made in reliance upon and in conformity with information
furnished by Strategic for use in the Registration Statement,
Prospectus or Statement of Additional Information as provided in
Section 5(k).
(l) No Material Adverse Change. Since July 31, 1998, there has
been no material adverse change in the financial condition, results
of operations, business, properties or assets of Balanced Shares.
(m) Operations in the Ordinary Course. Except as otherwise
contemplated by this Agreement, Balanced Shares will conduct its
business in the ordinary course.
5. Representations, Warranties and Covenants of TAP, on Behalf of
Strategic
TAP, on behalf of Strategic, represents and warrants to, and
covenants with, Balanced Shares as follows:
(a) Organization, Existence, Etc. TAP is a business trust duly
organized and validly existing under the laws of the Commonwealth of
Massachusetts and has the power to carry on its business as it is
now being conducted and as described in its current effective
Registration Statement on Form N-1A. TAP is qualified to do business
under the laws of every jurisdiction in which such qualification is
required, except where the failure to so qualify would not have a
material adverse effect on TAP. TAP has all necessary federal, state
and local authorizations to own all of its properties and assets and
to carry on its business as now being conducted and as described in
its current effective Registration Statement on Form N-1A.
(b) Registration as Investment Company. TAP is registered under
the Act as an open-end investment company of the management type;
such registration has not been revoked or rescinded and is in full
force and effect.
(c) Capitalization. TAP has an unlimited number of authorized
Class A, Class B, Class C and Advisor Class shares of beneficial
interest, par value $.00001 per share. The shares are currently
designated among five series, including Strategic. As of December
31, 1998, there were outstanding 1,440,022 Class A shares of
beneficial interest, 1,464,612 Class B shares of beneficial
interest, 218,989 Class C shares of beneficial interest and -0-
Advisor Class shares of beneficial interest of Strategic. All of the
outstanding shares of Strategic have been duly authorized and are
validly issued, fully paid and nonassessable. Because TAP is an
open-end investment company engaged in the continuous offering and
redemption of its shares, the number of outstanding shares of
Strategic may change prior to the Closing.
(d) Financial Statements. The financial statements of Strategic
for the year ended July 31, 1998, which are audited (the "Strategic
Financial Statements"), and were previously delivered to Balanced
Shares, fairly present the financial position of Strategic as of the
date thereof and the results of its operations and changes in its
net assets for the periods indicated.
(e) Authority Relative to this Agreement. TAP, on behalf of
Strategic, has the power to enter into this Agreement and to carry
out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by TAP's Trustees and, except for
approval by the shareholders of Strategic, no other action by TAP is
necessary to authorize its officers to effectuate this Agreement and
the transactions contemplated hereby. TAP is not subject to any
provision of its Declaration of Trust or its By-laws, nor is TAP a
party to or obligated under any charter, by-law, indenture or
contract provision or any other commitment or obligation, or subject
to any order or decree, that would be violated by its executing and
carrying out this Agreement and the transactions contemplated
hereby.
(f) Liabilities. There are no liabilities of Strategic, whether
or not determined or determinable, other than liabilities disclosed
or provided for in the Strategic Financial Statements and
liabilities incurred in the ordinary course of business subsequent
to July 31, 1998 or otherwise previously disclosed in writing to
Balanced Shares.
(g) Litigation. To the knowledge of Strategic there are no
claims, actions, suits or proceedings pending against Strategic. In
addition, to the knowledge of Strategic, there are no claims,
actions, suits or proceedings threatened against Strategic that
would materially adversely affect Strategic or its assets or
business or which would prevent or hinder consummation of the
transactions contemplated hereby.
(h) Contracts. Except for contracts, agreements, franchises,
licenses or permits entered into or granted in the ordinary course
of its business, in each case under which no default exists, TAP, on
behalf of Strategic, is not a party to or subject to any material
contract, debt instrument, employee benefit plan, lease, franchise,
license or permit of any kind or nature whatsoever.
(i) Taxes. The federal income tax returns of Strategic,
previously delivered to Balanced Shares, have been filed for all
taxable years to and including the taxable year ended July 31, 1997
and all taxes payable pursuant to such returns have been paid. The
federal income tax return of Strategic for the taxable year ending
July 31, 1998 will be filed, and any taxes payable pursuant thereto
will be paid, prior to their due date (including extensions).
Strategic has qualified as a regulated investment company under the
Code in respect of each taxable year since the commencement of its
operations and has no reason to believe that it will not so qualify
in respect of its current fiscal year.
(j) Portfolio Securities. TAP, on behalf of Strategic, will
prepare and deliver to Balanced Shares at the Closing a Schedule of
Investments (the "Schedule") listing all the assets owned by
Strategic as of the Closing. All assets to be listed on the Schedule
as of the Closing will be owned by Strategic free and clear of any
liens, claims, charges, options and encumbrances, except as
indicated in the Schedule, and, except as so indicated, none of such
assets is or, after the Reorganization as contemplated hereby, will
be subject to any restrictions, legal or contractual, on the
disposition thereof (including restrictions as to the public
offering or sale thereof under the Securities Act) and, except as so
indicated, all such assets are or will be readily marketable.
(k) Registration Statement. In connection with the Registration
Statement, Strategic will cooperate with Balanced Shares and will
furnish to Balanced Shares, as reasonably requested by Balanced
Shares, the information relating to Strategic required by the
Securities Act and the Regulations to be set forth in the
Registration Statement (including the Prospectus and Statement of
Additional Information). At the time the Registration Statement
becomes effective, the Registration Statement, insofar as it relates
to Strategic, (i) will comply in all material respects with the
provisions of the Securities Act and the Regulations and (ii) will
not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading; and at the time the
Registration Statement becomes effective, at the time of the
shareholders' meeting referred to in Section 1 hereof and at the
Closing, the Prospectus and Statement of Additional Information, as
amended or supplemented by any amendments or supplements filed with
the Commission by Balanced Shares and delivered to Strategic,
insofar as they relate to Strategic, will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection
(k) shall apply only to statements in or omissions from the
Registration Statement, Prospectus or Statement of Additional
Information made in reliance upon and in conformity with information
furnished by Strategic for use in the Registration Statement,
Prospectus or Statement of Additional Information as provided in
this subsection (k).
(l) No Material Adverse Change. Since July 31, 1998 there has
been no material adverse change in the financial condition, results
of operations, business, properties or assets of Strategic.
(m) Operations in the Ordinary Course. Except as otherwise
contemplated by this Agreement, Strategic will conduct its business
in the ordinary course.
6. Conditions to Obligations of TAP, on Behalf of Strategic
The obligations of TAP hereunder with respect to the consummation of
the Reorganization as it relates to Strategic are subject to the
satisfaction of the following conditions:
(a) Approval by Shareholders. This Agreement and the transactions
contemplated by the Reorganization shall have been approved by the
affirmative vote of two-thirds of the outstanding shares of
Strategic entitled to be voted with respect thereto.
(b) Covenants, Warranties and Representations. Balanced Shares
shall have complied with each of its covenants contained herein.
Each of the representations and warranties of Balanced Shares
contained herein shall be true in all material respects as of the
Closing, there shall have been no material adverse change in the
financial condition, results of operations, business, properties or
assets of Balanced Shares since July 31, 1998, and Strategic shall
have received a certificate of the President of Balanced Shares
satisfactory in form and substance to Strategic so stating.
(c) Regulatory Approval. The Registration Statement shall have
been declared effective by the Commission and no stop order under
the Securities Act pertaining thereto shall have been issued; all
necessary orders or exemptions under the Act with respect to the
transactions contemplated hereby shall have been granted by the
Commission; and all necessary approvals, registrations, and
exemptions under federal and state laws shall have been obtained.
(d) Tax Opinion. TAP shall have received the opinion of Seward &
Kissel, dated as of the Closing, addressed to it and in form and
substance satisfactory to TAP, as to certain of the federal income
tax consequences of the Reorganization under the Code to Balanced
Shares, Strategic and the shareholders of Strategic. For purposes of
rendering the opinion, Seward & Kissel may rely exclusively and
without independent verification as to factual matters upon the
statements made in this Agreement and the Registration Statement,
and upon such other written representations as to matters of fact as
an executive officer of each of TAP and Balanced Shares will have
verified as of the Closing. The opinion of Seward & Kissel will be
to the effect that, based on the facts and assumptions stated
therein, for federal income tax purposes: (i) the Reorganization
will constitute a reorganization within the meaning of section
368(a) of the Code and that TAP, on behalf of Strategic, and
Balanced Shares will each be "a party to a reorganization" within
the meaning of section 368(b) of the Code; (ii) Strategic or
Balanced Shares will not recognize any gain or loss upon the
transfer of all the assets of Strategic to Balanced Shares in
exchange for Balanced Shares shares and the assumption by Balanced
Shares of the liabilities of Strategic pursuant to this Agreement or
upon distribution of Balanced Shares shares to shareholders of
Strategic in exchange for their Strategic shares; (iii) the
shareholders of Strategic who receive Balanced Shares shares
pursuant to the Reorganization will not recognize any gain or loss
upon the exchange of their Strategic shares for Balanced Shares
shares (including any fractional share interests they are deemed to
have received) in the Reorganization; (iv) the aggregate tax basis
of the Balanced Shares shares received by each shareholder of
Strategic will be the same as the aggregate tax basis of the
Strategic shares surrendered in the exchange; (v) the holding period
of Balanced Shares shares received by each shareholder of Strategic
will include the holding period of the Strategic shares that are
surrendered in exchange therefor, provided that the Strategic shares
constitute capital assets of such shareholder at the Closing; (vi)
the holding period and tax basis of the assets of Strategic acquired
by Balanced Shares will be the same as the holding period and tax
basis that Strategic had in such assets immediately prior to the
Reorganization; and (vii) Balanced Shares will succeed to the
capital loss carryovers of Strategic, if any, pursuant to section
381 of the Code, but the use by Balanced Shares of any such capital
loss carryovers may be subject to limitation under section 383 of
the Code.
(e) Opinion of Counsel. Strategic shall have received the opinion
of Seward & Kissel, as counsel for Balanced Shares, dated as of the
Closing, addressed to and in form and substance satisfactory to
Strategic, to the effect that: (i) Balanced Shares is a corporation
duly organized and validly existing under the laws of the State of
Maryland; (ii) Balanced Shares is a diversified, open-end investment
company of the management type registered under the Act; (iii) this
Agreement and the Reorganization provided for herein and the
execution of this Agreement have been duly authorized and approved
by requisite action of Balanced Shares, and this Agreement has been
duly executed and delivered by Balanced Shares and is a valid and
binding obligation of Balanced Shares, subject to applicable
bankruptcy, insolvency, fraudulent conveyance and similar laws or
court decisions regarding enforcement of creditors' rights
generally, and to general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity); (iv) the Registration Statement has been declared effective
under the Securities Act and to Seward & Kissel's knowledge no stop
order has been issued or threatened suspending its effectiveness;
(v) to Seward & Kissel's knowledge, no consent, approval, order or
other authorization of any federal or state court or administrative
or regulatory agency is required for Balanced Shares to enter into
this Agreement or carry out its terms that will not have been
obtained by the Closing, other than as may be required under the
securities or "blue sky" laws of any state and other than where
the failure to obtain any such consent, approval, order or
authorization would not have a material adverse effect on the
operations of Balanced Shares; and (vi) the Class A, Class B, Class
C and Advisor Class shares of Balanced Shares to be issued in the
Reorganization have been duly authorized and upon issuance thereof
in accordance with this Agreement will be validly issued, fully paid
and nonassessable, and no shareholder of Balanced Shares has any
preemptive right to subscribe or purchase in respect thereof.
(f) Non-Termination. The parties shall not have terminated this
Agreement pursuant to Section 8(c) hereof.
(g) Further Assurances. Strategic shall have received such
further assurances, including, but not limited to, further
assurances from Balanced Shares or any other person, concerning the
performance of its obligations hereunder and the consummation of the
Reorganization as it shall deem necessary, advisable or appropriate.
7. Conditions to Obligations of Balanced Shares
The obligations of Balanced Shares hereunder with respect to the
consummation of the Reorganization are subject to the satisfaction of
the following conditions:
(a) Approval by Shareholders. This Agreement and the transactions
contemplated by the Reorganization shall have been approved by the
affirmative vote of two-thirds of the outstanding shares of
Strategic entitled to be voted with respect thereto.
(b) Covenants, Warranties and Representations. TAP, on behalf of
Strategic, shall have complied with each of its covenants contained
herein. Each of the representations and warranties of TAP, on behalf
of Strategic, contained herein shall be true in all material
respects as of the Closing, there shall have been no material
adverse change in the financial condition, results of operations,
business, properties or assets of Strategic since July 31, 1998, and
Balanced Shares shall have received a certificate of the President
of TAP satisfactory in form and substance to Balanced Shares so
stating.
(c) Portfolio Securities. All securities and other assets to be
acquired by Balanced Shares in the Reorganization shall have been
approved for acquisition by the investment adviser of Balanced
Shares as consistent with the investment policies of Balanced
Shares, and all such securities and other assets on the books of
Strategic that are not readily marketable shall be valued on the
basis of an evaluation acceptable to Strategic and Balanced Shares
at the expense of Strategic.
(d) Regulatory Approval. The Registration Statement shall have
been declared effective by the Commission and no stop order under
the Securities Act pertaining thereto shall have been issued; all
necessary orders of exemption under the Act with respect to the
transactions contemplated hereby shall have been granted by the
Commission, and all necessary approvals, registrations, and
exemptions under federal and state laws shall have been obtained.
(e) Tax Opinion. Balanced Shares shall have received the opinion
of Ropes & Gray, counsel to Strategic, dated as of the Closing,
addressed to and in form and substance satisfactory to Balanced
Shares, as to certain of the federal income tax consequences of the
Reorganization under the Code to Balanced Shares, Strategic and the
shareholders of Strategic. For purposes of rendering the opinion,
Ropes & Gray may rely exclusively and without independent
verification as to factual matters upon the statements made in this
Agreement and the Registration Statement, and upon such other
written representations as to matters of fact as an executive
officer of each of TAP and Balanced Shares will have verified as of
the Closing. The opinion of Ropes & Gray will be to the effect that,
based on the facts and assumptions stated therein, for federal
income tax purposes: (i) the Reorganization will constitute a
reorganization within the meaning of section 368(a) of the Code and
that TAP, on behalf of Strategic, and Balanced Shares will each be
"a party to a reorganization" within the meaning of section 368(b)
of the Code; (ii) neither Strategic nor Balanced Shares recognize
any gain or loss upon the transfer of all the assets of Strategic to
Balanced Shares in exchange for Balanced Shares shares and the
assumption by Balanced Shares of the liabilities of Strategic
pursuant to this Agreement or upon the distribution of Balanced
Shares shares to shareholders of Strategic in exchange for their
respective Strategic shares; (iii) the holding period and tax basis
of the assets of Strategic acquired by Balanced Shares will be the
same as the holding period and tax basis that Strategic had in such
assets immediately prior to the Reorganization; and (iv) Balanced
Shares will succeed to the capital loss carryovers of Strategic, if
any, pursuant to section 381 of the Code, but the use by Balanced
Shares of any such capital loss carryovers may be subject to
limitation under section 383 of the Code.
(f) Opinion of Counsel. Balanced Shares shall have received the
opinion of Ropes & Gray, as counsel for Strategic, dated as of the
Closing, addressed to and in form and substance satisfactory to
Balanced Shares, to the effect that (i) TAP is a business trust duly
organized and validly existing under the laws of the Commonwealth of
Massachusetts; (ii) TAP is a diversified, open-end investment
company of the management type registered under the Act; (iii) this
Agreement and the Reorganization provided for herein and the
execution of this Agreement have been duly authorized and approved
by requisite action of TAP, on behalf of Strategic, and this
Agreement has been duly executed and delivered by TAP, on behalf of
Strategic, and is a valid and binding obligation of TAP, on behalf
of Strategic, subject to applicable bankruptcy, insolvency,
fraudulent conveyance and similar laws or court decisions regarding
enforcement of creditors' rights generally, and to general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); (iv) the
Reorganization has been approved by the requisite vote of the
shareholders of Strategic; and (v) to Ropes & Gray's knowledge, no
consent, approval, order or other authorization of any federal or
state court or administrative or regulatory agency is required for
TAP, on behalf of Strategic, to enter into this Agreement or carry
out its terms that will not have been obtained by the Closing other
than where the failure to obtain any such consent, approval, order
or authorization would not have a material adverse effect on the
operations of Strategic.
(g) Non-Termination. The parties shall not have terminated this
Agreement pursuant to Section 8(c) hereof.
(h) Further Assurances. Balanced Shares shall have received such
further assurances, including, but not limited to, further
assurances from Strategic or any other person, concerning the
performance of their obligations hereunder and the consummation of
the Reorganization as it shall deem necessary, advisable or
appropriate.
8. Amendments; Waivers; Termination; Survival; Cooperation
(a) Amendments. TAP and Balanced Shares may, by agreement in writing
authorized by their respective Boards of Trustees or Directors, amend
this Agreement at any time before or after approval hereof by the
shareholders of Strategic, but after such approval, no amendment shall
be made that materially alters the obligations of any party hereto.
(b) Waivers. At any time prior to the Closing, any party may by
written instrument signed by it (i) waive the effect of any
inaccuracies in the representations and warranties made to it contained
herein and (ii) waive compliance with any of the covenants or
conditions made for its benefit contained herein.
(c) Termination. Each party may terminate this Agreement at any time
prior to the Closing by notice to the other party if (i) a material
condition to its performance hereunder or a material covenant of the
other party contained herein shall not be fulfilled on or before the
date specified for the fulfillment thereof or (ii) a material default
or material breach of this Agreement shall be made by the other party.
This Agreement may be terminated at any time prior to the Closing,
whether before or after approval by the shareholders of Strategic,
without liability on the part of either party hereto or its respective
Board of Directors or Trustees, officers or shareholders, by any party
on notice to the other party in the event that the Board of Directors
or Trustees of the party giving such notice determines that proceeding
with this Agreement is not in the best interest of that party's
shareholders. Unless the parties hereto shall otherwise agree in
writing, this Agreement shall terminate, without liability to any
party, as of the close of business on October 31, 1999 if the Closing
is not held on or prior to such date.
(d) Survival. No representations, warranties or covenants in or
pursuant to this Agreement (including certificates of officers) shall
survive the Reorganization.
(e) Cooperation. Each of the parties hereto will cooperate with the
other in fulfilling its obligations under this Agreement and will
provide such information and documentation as is reasonably requested
by the other in carrying out the terms hereof.
9. Expenses
Alliance Capital Management L.P., the investment adviser to each
party hereto, will bear all expenses incurred in connection with this
Agreement, and all transactions contemplated hereby, whether or not the
Reorganization is consummated; provided, however, that TAP shall bear
any cost or expense incurred through the time of the Closing for
purposes of satisfying the conditions set forth in Section 7(c) above.
10. General
This Agreement supersedes all prior agreements between the parties
(written or oral), is intended as a complete and exclusive statement of
the terms of the Agreement between the parties and may not be changed
or terminated orally. This Agreement may be executed in counterparts,
which shall be considered one and the same agreement, and shall become
effective when the counterparts have been executed by TAP and Balanced
Shares and delivered to each of the parties hereto. The headings
contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Nothing in this Agreement, expressed or implied, is intended to confer
upon any other person any rights or remedies under or by reason of this
Agreement. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to
agreements made and to be performed in New York.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first above written.
THE ALLIANCE PORTFOLIOS, on
behalf of Alliance Strategic
Balanced Shares
By:
Edmund P. Bergan, Jr.
Secretary
ALLIANCE BALANCED SHARES, INC.
By:
Edmund P. Bergan, Jr.
Secretary
Accepted and agreed to as to Section 9:
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management Corporation,
its General Partner
By:
John D. Carifa
President, Chief Operating Officer
and Director
Mf_legal\bullock\abs\nsar-77M.sep99.doc
[DESCRIPTION]Report of 10f-3 Transactions
Securities Purchased in Underwritings Involving
Transactions with Donaldson, Lufkin, & Jenrette Securities Corporation
Subject to Rule 10f-3 Under the Investment Company Act of 1940
ALLIANCE BALANCED SHARES FUND
<TABLE>
10f-3 TRANSACTIONS FOR THE PERIOD AUGUST 1,1998 THROUGH JULY 31,1999
<CAPTION>
Total % of
Shares Shares Offering Shares
Date Shares % of FundPrice perPurchased bOffered PurchasedPurchased Held
Security* PurchasedPurchasedAssets Share Fund Group (000) By Group From 07/31/99
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pepsi Bottling Group, Inc.03/30/99 37,700 0.00% $23.00 1,004,000 100,000 1.00% Merrill Lynch 42,000
Pepsi Bottling Group, Inc.03/30/99 1,000 0.00% $23.00 1,004,000 100,000 1.00% Arnold & S Bleichroeder42,000
Lyondell Chemical Company 05/12/99 10,500 0.00% $19.00 875,000 35,000 2.50% JP Morgan 52,000
</TABLE>
* Unless otherwise indicated, the securities were part of an issue registered
under the Securities Act of 1933 and offered to the public.
**Indicates the puchase of an Eligible Rule 144A Security.
1) Purchases by all Alliance Funds, including the Fund, may not exceed: (a) if
purchased in an offering other than an Eligible Rule 144A Offering, 25% of the
principal amount of the offering of such class; or (b) if purchased in an
Eligible Rule 144A Offering, 25% of the total of (i) the principal amount
of the offering of such class sold by underwriters or members of the
selling syndicate to qualified institutional buyers, plus (ii) the principal
amount of the offering of such class in any concurrent public offering.
